When Final Arbitration Awards are not Final.

The 2nd Circuit US Court of Appeals recently reaffirmed a growing trend among courts that allows arbitrators to revise and clarify their awards, even after everything has been wrapped up in the case.

The traditional rule has long been “functus officio” or “of no further official authority or legal effect.” That is to say that once an arbitrator issues the decision, the arbitrator’s work is concluded and the arbitrator is divested of authority to act further. In the case General Re Life Corporation v. Lincoln National Life Corporation, there was some confusion as to what payments needed to be made between the companies as a result of the decision made by the arbitrators.

The arbitration panel, after being asked by Lincoln National to resolve the lingering issues, did so, over the objection of General Re. A clarified decision was issued, confirmed by the trial court and upheld on appeal.

As noted by the American Bar Association’s Section of Litigation and its Alternative Dispute Resolution Committee, this decision “furthers the Federal Arbitration Act’s purpose of respecting the parties’ agreement to arbitrate by leaving potential clarifications to the arbitration as opposed to letting a court weigh in on a dispute issue about an ambiguous arbitration award.”

This is further evidence that Courts are recognizing that ADR can exist in lockstep with the judicial system rather than as a poor stepchild.