THOMAS S. ZILLY, District Judge.
THIS MATTER comes before the Court on the motion of Defendant Seabourn Cruise Line Limited ("Seabourn") to compel arbitration, docket no. 6, Plaintiffs' motion for partial summary judgment, docket no. 14, and Seabourn's motion to strike, docket no. 20. Having reviewed all papers filed in support of, and in opposition to, each motion, the Court enters the following order.
The focus of this dispute is Seabourn's refusal to provide Plaintiffs a credit or refund when Plaintiffs cancelled their reservations on a cruise originally bound for Egypt. Through their travel agent, J.W. North Signature Travel ("North"), Plaintiffs booked a cruise on the Seabourn Sojourn at a cost of $23,900.00. Pls.' Compl., docket no. 1, at ¶ 2.2. Ms. Gilroy's desire to travel to Egypt was Plaintiffs' primary motivation for embarking on the cruise. Pls.' Compl., docket no. 1, at ¶ 2.5.
Following a U.S. State Department warning against travel to Egypt, on March 13, 2011, Seabourn canceled the Egyptian portion of the Seabourn Sojourn's itinerary. Pls.' Compl., docket no. 1, at ¶ 2.7-2.9. On March 17, 2011, Mr. Gilroy sent a letter to Seabourn attempting to cancel Plaintiffs' reservation and requesting a credit toward a future cruise with the original itinerary or a refund. Gilroy Decl., docket no. 14-1, Ex. B at 13. Pursuant to its guest cancelation policy, Seabourn denied the request for a credit or refund. Gilroy Decl., docket no. 14-1, Ex. C at 17-18.
At issue in this case is whether Plaintiffs' claims related to Seabourn's cancelation fees can be heard before this Court or whether Plaintiffs are bound by an arbitration clause that appeared in both pre-cruise documentation, Kidd Decl., docket no. 9, Ex. A at 19, as well as final cruise documentation, Kidd Decl., docket no. 10, Ex. F at 40. Plaintiffs argue that their relationship with Seabourn was international in nature and included relations with one or more foreign states sufficient to trigger application of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York 1958) ("Convention"). Plaintiffs argue that because the more stringent requirements of the Convention have not been met, the arbitration clause is unenforceable. Plaintiffs do not contest applicability of the FAA.
"Most arbitration agreements 2017falling under the Convention' arise from international commercial agreements between people or companies from different countries."
9 U.S.C. § 202 (emphasis added). Thus, while "diversity of national citizenship is not necessary" in order for the Convention to apply, the arbitration agreement must be "part of a contract that is international in character or relates to a foreign state."
In determining whether a contract is international in nature, courts look to the parties' relationship: "The true question is whether 2017there is a reasonable connection between the parties' commercial relationship and a foreign state that is independent of the arbitral clause itself.'"
The arbitration clause at issue in this case appears in Section 10 of the Cruise Contract and provides:
Kidd Decl., docket no. 7, at ¶ 10; Ex. F at pg. 40.
Plaintiffs argue that because the contract involved transport to and stays in several ports of foreign states, and because the ticket invoked foreign limitation of liability law, performance was envisaged abroad. But "[t]he law is clear that an agreement . . . to apply foreign law does not transform an otherwise domestic commercial relationship into one involving a foreign state."
Moreover, time on international water does not establish an international relationship. "2017[P]erformance abroad' is more than a simple geographic requirement meaning, for example, beyond the airspace or territorial waters of the United States. Such a formulaic interpretation would raise unnecessary questions about the international character of all manner of domestic legal relationships that incidentally touch upon extra-domestic spaces."
In this case, Plaintiffs' contract for transport on international waters does not constitute time abroad for purposes of the Convention without some greater connection to a foreign state. Seabourn drafted and issued the Cruise Contract in the United States, Plaintiffs accepted the contract in the United States, Plaintiffs paid in U.S. currency in the United States, and Plaintiffs were to be transported on international waters. Unlike in
Given that the parties' relationship lacks the international element required for the Convention to govern the contract, the remaining issue is whether the arbitration clause is enforceable under the FAA.
In deciding whether arbitration is required under the FAA, courts must determine (1) whether a valid agreement to arbitrate exists, and if it does, (2) whether the agreement encompasses the dispute at issue.
To the extent that Plaintiffs contest the validity of the arbitration agreement based upon their timely receipt of the contract, the Court finds that the terms of the agreement were reasonably communicated to Plaintiffs. The terms of a cruise passenger ticket are binding on a passenger when they have been reasonably communicated to the passenger prior to departure.
The physical characteristics of the ticket in this case reasonably communicated the arbitration clause to Plaintiffs. The contract includes a notice that the terms are important and binding:
Kidd Decl., docket no. 10, Ex. F at 31. The print appears at the top of the page, is the first introduction to the ticket terms, and appears in capital letters. Kidd Decl., docket no. 10, Ex. F at 31.
The circumstances surrounding receipt of the ticket were also reasonable because Plaintiffs expressly consented to the terms on November 28, 2010, when they completed the online registration, Kidd Decl., docket no. 10, Ex. C at 8; Ex. D at 12, and Plaintiffs received the Cruise Contract on two other occasions—first in Seabourn's pre-documentation packet, Kidd Decl., docket no. 9, Ex. A at 19, and second in Seabourn's final cruise documentation packet, Kidd Decl., docket no. 10, Ex. F at 40. Additionally, the complete terms of Seabourn's Cruise Contract were available on Seabourn's website at all times from June 2010 through March 2011. Kidd Decl., docket no. 7, at ¶ 8. The Court concludes that based upon the physical characteristics of the ticket and Plaintiffs' time to review the contract, the terms of the ticket contract are binding and the arbitration clause valid.
Plaintiffs' argument that Seabourn's cruise contract is illusory, and thus the arbitration clause non-binding, is not a matter for this Court to decide. Challenges to the validity of arbitration agreements can be divided into two types: Those that "challenge[] specifically the validity of the agreement to arbitrate" and those that "challenge[] the contract as a whole, either on a ground that directly affects the entire agreement (e.g., the agreement was fraudulently induced), or on the ground that the illegality of one of the contract's provisions renders the whole contract invalid."
For the foregoing reasons, Defendant's Motion to Compel Arbitration, docket no. 6, is GRANTED, and this case is STAYED pending arbitration.
Plaintiff's Motion for Summary Judgment, docket no. 14, is DENIED, and Seabourn's request to strike portions of reply on motion for partial summary judgment, docket no. 20, is STRICKEN as MOOT.
The Clerk is DIRECTED to send copies of this Order to all counsel of record, and to STAY this case.
IT IS SO ORDERED.