A couple of weeks ago, I received a call from a passenger on a cruise ship whose property was stolen while on board. After hearing her side of the story, I asked if she could send me her passenger ticket and agreement of passage. Low and behold, as with EVERY cruise line, there was an arbitration clause attached to the ticket requiring that all suits other than personal injury be brought before binding arbitration in Miami. Likewise, there was a contractual limit of a mere $100 that the cruise line would be limited to in the case of personal property theft or damage.
When cruise passengers book a trip, they often do not realize exactly what they are signing away. Contained in every cruise ticket is an extremely long and complicated contract of passage. This contract (that generally, no one other than maritime attorneys reads) effectively waives certain rights passengers have. These rights include such topics as where you may bring suit, the statute of limitations of your claims and whether you will be bound to arbitrate your claims in a forum selected by the cruise line.
Almost all cruise lines have what is called an arbitration clause in their contract of passage. An arbitration clause, defined in Black’s Law Dictionary, is “a contractual provision mandating arbitration, and thereby avoiding litigation, of disputes about the contracting parties’ rights, duties, and liabilities.” Arbitration is “a method of dispute resolution involving one or more neutral third parties who are usually agreed to by the disputing parties and whose decision is binding.” Essentially, these clauses mandate that if you have a personal property claim against the cruise line for damaging or losing your possessions, you must arbitrate your claim in front of their own arbitrators in a forum selected by them. The following are some sample limitation of liability and arbitration requirements from the world’s biggest cruise lines:
- Carnival Cruise (50% of the market) = Limits liability to $50 per bag and $100 per room. Carnival provides for up to 5% of the total claim if you report your property over the $100 amount before embarkation. All claims, other than for personal injury, must be brought in Miami-Dade County, Fla. under binding arbitration.
- Royal Caribbean (25% of the market) = Limits liability to $300 per person and 5% of the total claim above $300 if claimed before embarkation. Royal Caribbean also requires all suits, other than for personal injury, to be brought under binding arbitration in Miami-Dade County, Fla.
- Norwegian Cruise (11-12% of the market) = Limits liability to $100 and 5% of total claim over $100 if passenger, in writing, informs Norwegian that the value is over that amount before embarkation. Norwegian also requires that all suits, other than for personal injury, be brought through binding arbitration in Miami-Dade County, Fla.
- Princess Cruise (a subsidiary of Carnival Cruise) = Limits liability to $250 per bag. Princess requires all claims, other than for personal injury, be brought through binding arbitration in the County of Los Angeles, Cali.
- Disney Cruise (unreported market share) = Limits liability to $300 per guest and 5% of the true value declared in excess of $300 prior to embarkation. Disney requires all claims to be brought in Brevard County, Fla. or in the United States District Court, Middle District of Florida, Orlando Division.
Likewise, arbitration clauses are often used by cruise lines in their employment contracts. The marine industry, in general, uses foreign arbitration clauses, which place the forum to arbitrate overseas, instead of the United States. While there are laws in the United States to protect personal injury claims by both seamen and longshoremen from the abuses of crafty employment contracts, such as the Jones Act and Longshoremen and Harbor Workers Worker’s Compensation Act, arbitration clauses may still be applied in employment disputes to send the case to a foreign arbitrator before filing suit here in the U.S. Common foreign arbitration clauses place venue in locations like Bermuda, the Marshall Islands and even Monte Carlo.
There have been many court challenges to forced arbitration clauses. The courts routinely uphold these clauses by hiding under the “freedom of contract” theory. This legal theory says that parties are free to negotiate and contract as they see fit. However, there is also the legal theory of an adhesion contract, which, in my humble opinion, includes 99% of all consumer and employment contracts. An adhesion contract, according to Black’s Law Dictionary, is “a standard-form contract prepared by one party, to be signed by another party in a weaker position, usually a consumer, who adheres to the contract with little choice about the terms.” Adhesion contracts are supposed to be frowned upon by the courts because they take advantage of consumers who agree to terms of the contract without the opportunity to change them. In the context of employment agreements, I know of very few people (other than attorneys) who actually carefully read their employment contract and its various clauses. Even if they did read their contracts, are they really able to negotiate new terms if they are unsatisfied with the clause? Jobs are scarce since the Great Recession hit. Employers have the upper hand in these contracts because if a potential employee wants to change the terms, the next guy in line will be willing to accept them as is. The same is true for cruise line ticket purchasers. I am routinely seeing clients that have NO idea what they have signed away by simply purchasing a ticket online or through a travel agency.
The moral to take away from this information is BE CAREFUL WHAT YOU AGREE TO. Cruising is fun and enjoyable, but if you have been wronged in some shape or form, the industry has the upper hand. If you have been wronged by the cruise industry, call an experienced maritime attorney to ensure your rights are protected and that you get the compensation you deserve.