Advisories October 28, 2019

International Arbitration & Dispute Resolution Advisory: Eleventh Circuit Provides Smooth Sailing for International Arbitration Clauses

Executive Summary
Minute Read

Our International Arbitration & Dispute Resolution Team explores an Eleventh Circuit ruling in a case that pits arbitration provisions against the New York Convention’s public-policy defense.

  • Both parties agreed to mandatory arbitration under Panamanian law
  • The plaintiff sued under the Jones Act, a U.S. law
  • The Eleventh Circuit provides two reasons to support arbitration

On October 17, 2019, the Eleventh Circuit denied a petition to vacate or alternatively deny recognition and enforcement of an arbitral award, refusing to apply the New York Convention’s “public policy” exception. The Eleventh Circuit’s ruling in Cvoro v. Carnival Corp., No. 18-11815 (2019), is in line with its past precedents favoring recognition and enforcement of international arbitration awards. 

The case is about a Serbian woman, Sladjana Cvoro, who worked for Carnival Cruise Lines and developed carpal tunnel while waiting on tables. The ship’s doctors treated her condition, but it worsened. Carnival then paid for her to return to Serbia, where she was treated by Carnival-selected doctors. But a surgery left her with permanent disabilities in her left arm. As a result, Cvoro alleged that the Serbian doctor was negligent and caused her to suffer ongoing pain. 

When Cvoro was hired by Carnival, a Panamanian corporation, Cvoro’s employment agreement contained a mandatory arbitration clause. Cvoro initiated arbitration in Monaco for disability payments. Even though the arbitration agreement required the application of Panamanian law, Cvoro brought her claims under the U.S. Jones Act, which affords seamen a cause of action against their employer. 

The arbitrator rejected the Jones Act claim and applied Panamanian law, ruling that Cvoro’s claims failed because Carnival had met its obligations to her by paying for her medical expenses. Cvoro brought a petition to vacate the award or alternatively deny recognition and enforcement, arguing that Panamanian law did not afford her the same remedies the Jones Act would, therefore violating U.S. public policy and rendering the award infirm under the New York Convention. The district court denied the petition, and the Eleventh Circuit affirmed. 

The Eleventh Circuit noted that it “has never addressed at this arbitration-award-enforcement stage whether depriving a seaman of a Jones Act remedy violates U.S. public policy for purposes of the [New York Convention] defense.” Both U.S. Supreme Court and Eleventh Circuit precedent favor the enforcement of choice-of-law provisions in arbitration clauses even when the foreign law can result in remedies different from those available under U.S. law. 

The court concluded that even if remedies under Panamanian law are less favorable than those available under U.S. law, the arbitrator’s award did not violate U.S. policy for two main reasons. First, Cvoro was not disadvantaged by the arbitrator’s decision to apply Panamanian law because Carnival had met its obligations under Panamanian law by paying for her medical costs and because these are the benefits she would be entitled to under U.S. law anyway. Secondly, the panel said that Cvoro did not avail herself of any of the other remedies available under Panamanian law specifically for seafarers. 

Ultimately, this case reaffirms the Eleventh Circuit’s support for awards rendered in international arbitration pursuant to valid, mutually-agreed-upon arbitration provisions without allowing a broad interpretation of the New York Convention’s public-policy defense to erode such support. 

Media Contact
Nicholas Clarke
Senior Communications Manager
Phone: 212.210.1222

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