Key Points
- Foreign seaman employment agreements remain subject to Convention arbitration despite the FAA’s seaman exclusion.
- A Cayman Islands court-jurisdiction clause did not conflict with a separate Cayman Islands arbitration clause.
- Nonsignatories may compel arbitration only when the pleaded misconduct is sufficiently interdependent and concerted.
- The court lacked jurisdiction to review the district court’s remand of the remaining claims.
The Eleventh Circuit affirmed in substantial part an order requiring Byron Chemaly to arbitrate maritime employment claims under a Cayman Islands agreement, holding that the New York Convention permits arbitration of his Jones Act, maintenance-and-cure, and failure-to-treat claims against his contractual employer. But the court reversed as to the Jones Act claim against two nonsignatories, concluding that Chemaly’s pleading did not allege the concerted misconduct needed to let them enforce the clause through equitable estoppel.
Chemaly, a seaman aboard the M/Y Fountainhead, alleged that he injured his right shoulder while helping recover an underwater scooter off the coast of Sag Harbor, New York. He sued after alleging that the vessel’s captain released his hold on the scooter while reaching for a radio, shifting its weight to Chemaly. The complaint also alleged that Chemaly was ordered to continue working after the injury, was denied pain medication, and was later repatriated to South Africa without his personal effects.
Chemaly’s employment agreement identified R. Operations Ltd. as his employer. R. Operations and Fountainhead Marine Ltd., the yacht’s record owner, were formed under Cayman Islands law. The agreement contained an arbitration clause providing that disputes arising from the agreement would be submitted to arbitration in the Cayman Islands. It also included a Cayman Islands choice-of-law and exclusive-jurisdiction provision.
The defendants removed the action to federal court under the Convention’s implementing statute and invoked admiralty jurisdiction. The district court compelled arbitration of Chemaly’s Jones Act negligence, maintenance-and-cure, and failure-to-treat claims against R. Operations, Fountainhead Marine and Eddie Lampert, then remanded the remaining claims to state court. Chemaly appealed the arbitration ruling, and the defendants cross-appealed the remand ruling.
The panel rejected Chemaly’s argument that the agreement’s Cayman Islands court-jurisdiction language displaced its arbitration clause. The provisions could operate together, the court said: one selected Cayman Islands law and a judicial forum for matters that reach court, while the other selected arbitration as the initial tribunal for disputes arising under the agreement. That reading satisfied the Convention’s requirement of an arbitration agreement in writing.
The decision also reaffirmed circuit precedent holding that the FAA’s exclusion for “contracts of employment of seamen” does not remove seamen’s foreign arbitration agreements from the Convention. The court said it remained bound by Bautista v. Star Cruises and Lindo v. NCL (Bahamas) Ltd., including their holdings that seamen’s employment contracts are commercial relationships under the Convention and that Congress has not created a Jones Act exception to arbitrability. The Supreme Court’s decision in GE Energy Power Conversion France SAS Corp. v. Outokumpu Stainless USA LLC did not abrogate those holdings, the panel concluded.
For maritime employers, the ruling confirms that a foreign-seat agreement can cover statutory seaman remedies even when the underlying dispute invokes the Jones Act’s jury-trial language and traditional maritime protections. The panel rejected Chemaly’s argument that a Jones Act claim was not a subject “capable of settlement by arbitration” under Article II of the Convention. It also concluded that his broader argument against arbitrating seamen’s employment claims was foreclosed by controlling circuit precedent.
The result differed for the nonsignatory parties’ effort to enforce the clause. Domestic equitable doctrines can allow nonsignatories to compel arbitration under the Convention, including where a signatory alleges substantially interdependent and concerted misconduct by the nonsignatory and a contract signatory. But Chemaly had pleaded the identity of his Jones Act employer in the alternative, rather than alleging that R. Operations, Fountainhead Marine and Lampert acted jointly to cause the scooter injury, the court held.
The panel found a different pleading basis for the maintenance-and-cure and failure-to-treat claims. Those allegations attributed post-injury conduct to the defendants collectively and concerned maritime duties arising from Chemaly’s seaman status. The court therefore affirmed arbitration of those two claims by R. Operations, Fountainhead Marine and Lampert, while reversing arbitration of the Jones Act claim by Fountainhead Marine and Lampert. It dismissed the defendants’ cross-appeal over the remanded claims for lack of jurisdiction. Judge Hull concurred except for the reversal on the Jones Act claim, reasoning that the allegations supported equitable estoppel for that claim as well.