Source: http://loreelawfirm.com/blog/category/functus-officio/
Timestamp: 2019-04-19 08:43:48+00:00

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In our recent post on the Merion Construction case (here), we were pretty critical of New Jersey’s Superior Court, Appellate Division, for reversing a trial court decision confirming a modified arbitration award, finding it should have been vacated and the original award confirmed. Today’s post takes a brief look at a decision by another state’s Appellate Division—New York’s Supreme Court, Appellate Division, First Department—which held that another construction-industry award should be vacated.
In Merion Construction the New Jersey Appellate Division thought the arbitrator had no authority to correct his award to reflect the rulings he intended to make on two issues the parties had submitted to him. Re Colorado Management, LLC v. Lea Power Partners, LLC , ___ A.D.3d ___, ___, 2014 N.Y. Slip Op. 01253 at 1-3 (1st Dep’t Feb. 20, 2014), held that a final arbitration award had to be vacated because the arbitrator had no authority to rule upon an issue that was not presented to him in light of the parties’ submissions and a ruling made in the same proceeding by a predecessor arbitrator.
Today’s case, Merion Constr. Mgt., LLC v. Kemron Environmental Serv., Inc., No. A-2428-12T4, slip op. (N.J. App. Div. March 13, 2014), involved two disputed awards: the original arbitration award (the “Original Award”) and a subsequent, modified award (the “Modified Award”). The arbitrator (the “Arbitrator”) issued the Modified Award to correct a mistake in the Original Award, which had inadvertently omitted items of claimed damage that one of the parties had requested the Arbitrator to award. The Arbitrator said he intended to include those damage items in the Original Award. The Modified Award thus accurately reflected the parties’ agreement and submission and the Original Award did not.
Which Award should have been confirmed? Relying on the functus officio doctrine, and an American Arbitration Association (“AAA”) Rule concerning arbitral modification and correction of awards, the intermediate state appellate court reversed a trial court judgment confirming the Modified Award, and held that the Original Award should have been confirmed.
Regular readers have heard us preach about the importance of knowing arbitration law cold (here), understanding and identifying when an arbitration award is final (here), and being keenly aware of Federal Arbitration Act deadlines (here). The United States Court of Appeals for the Seventh Circuit recently decided a case that illustrates these points well. See Board of Trustees of the University of Illinois v. Organon Teknika Corp. LLC, ___ F.3d ___, slip op. (7th Cir. July 27, 2010) (Easterbrook, C.J.).
On June 28, 2009 we published a post concerning an article we wrote for AIRROC Matters about KX Reinsurance Co. v. General Reinsurance Corp., 08 Civ. 7807 (SAS), 2008 WL 4904882 (S.D.N.Y. Nov. 18, 2008) (Scheindlin, J.), where the court held that an arbitration panel exceeded its authority when, after resolving all the issues the parties submitted, it nevertheless retained jurisdiction. A copy of our post is here.
Around the time we published that post, my friend, colleague and fellow LinkedIn Commercial and Industry Arbitration and Mediation Group member, Theresa Hajost, told me that she had an article in the works that would treat in a very comprehensive fashion the issue of arbitrator authority to retain jurisdiction. (For those of you who do not already know her, Theresa is a partner at the Washington, D.C. office of Halloran & Sage LLP, where she practices insurance and reinsurance litigation and arbitration.) I thought that was a great idea and told her so.
Theresa recently published the article, Does An Arbitrator’s Retention of Jurisdiction After The Issuance of a Final Award Subject That Award To Vacatur?, in ADR Choices (Volume I Issue 10) (published by DRI). We highly recommend it as it surveys and discusses cases from all over the country on the issue of an arbitrator’s authority to retain jurisdiction, organizes those cases into helpful categories and offers insightful comments on the subject. It is an excellent resource for anyone who is interested in arbitral power, or who is confronted with a scenario where there is a question concerning an arbitration panel’s authority to remain constituted post award. You can read the article using the link Halloran & Sage has kindly provided here.
Global Arbitration Review Publishes Article on Hansen v. Everlast and Quotes Philip J. Loree Jr.
November 3rd, 2009 Arbitrability, Authority of Arbitrators, Awards, Functus Officio, New York Court of Appeals, Nuts & Bolts: Arbitration, Uncategorized, United States Court of Appeals for the Second Circuit Comments Off on Global Arbitration Review Publishes Article on Hansen v. Everlast and Quotes Philip J. Loree Jr.
Readers may recall our recent post on the New York Court of Appeals’ decision in Re Joan Hansen & Co v. Everlast World’s Boxing Headquarters Corp., ___ N.Y.3d ___, slip op. (Oct. 15, 2009), a case which demonstrates how important the parties’ submission is in determining arbitral authority. The Court held that, after an award, a party cannot reopen an arbitration proceeding to request that the arbitrators decide an issue that had not previously been submitted to the arbitrators. A copy of our post is here.
On November 2, 2009 Kyriaki Karadelis of the U.K.-based trade publication Global Arbitration Review (“GAR”) (website here) wrote what I thought was a concise and insightful article on the case. And we would have said that even if she had not quoted some of our comments in her article! But she did, and we’re flattered by that.
With Global Arbitration Review’s permission, and with the required copyright disclaimer, we have posted the article as a “Slide Share Presentation” in my LinkedIn profile, which you can view by clicking here. Also posted there (again with GAR’s permission and the required disclaimer) is a Global Arbitration Review Article on the United States Court of Appeals for the Second Circuit’s decision in ReliaStar Life Ins. Co. v. EMC National Life Co., ___ F.3d ___, ___ (2009) (Raggi, J.) (blogged here and here), in which the United States Court of Appeals for the Second Circuit held that an arbitration panel was authorized to award under the bad faith exception to the American Rule attorney and arbitrator fees to a ceding company in a case where the parties had agreed that “[e]ach party shall bear the expense of its own arbitrator. . . and related outside attorneys’ fees, and shall jointly and equally bear with the other party the expenses of the third arbitrator.” We reported on GAR’s article concerning ReliaStar case here, which also quotes some of our comments on that case.
We ask our readership to remember that GAR is a subscription-only publication and that it has copyrights in these posted materials. GAR has authorized us to post them online and distribute them for marketing purposes, but that authorization does not extend to others not similarly situated. Please do the right thing and respect GAR’s copyrights — GAR has to make a living just like the rest of us!
On October 15, 2009 The New York Court of Appeals decided Re Joan Hansen & Co v. Everlast World’s Boxing Headquarters Corp., ___ N.Y.3d ___, slip op. (Oct. 15, 2009) (here), a case which demonstrates how important the parties’ submission is in determining arbitral authority. The Court held that, after an award, a party cannot reopen an arbitration proceeding to request that the arbitrators decide an issue that had not previously been submitted to the arbitrators.
The power of arbitrators appointed to resolve a particular dispute or disputes is defined by the submission, not the arbitration agreement. The scope of the agreement to arbitrate tells us only what must be submitted to arbitration. It is the submission itself that “serves not only to define, but to circumscribe the authority of the arbitrators.” Ottley v. Schwartzberg, 819 F.2d 373, 376 (2d Cir. 1987) (here).
March 30th, 2009 Authority of Arbitrators, Awards, Functus Officio, Nuts & Bolts: Arbitration Comments Off on Nuts & Bolts: When is an Arbitration Award a Final Award and Why Does it Matter?

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