Post-Award Matters - Chapter 14 - College of Commercial Arbitrators Guide to Best Practices in Commercial Arbitration - Fifth Edition

An arbitration has a finite life. The common law doctrine of functus officio, which literally means “the office has been performed,” holds that once arbitrators render a final decision, their power or jurisdiction over the parties and their dispute ends. The doctrine has been said to be based on an “unwillingness to permit one who is not a judicial officer and who acts informally and sporadically, to re-examine a final decision which he has already rendered, because of the potential evil of outside communication and unilateral influence which might affect a new conclusion.” La Vale Plaza, Inc. v. R.S. Noonan, Inc., 378 F.2d 569, 572-73 (3d Cir. 1967).

The doctrine is reflected in provider rules and case law. Courts recognize that an arbitrator’s authority terminates, and the arbitrator thus may be deemed functus officio when an award is rendered. See, e.g., Bosack v. Soward, 586 F.3d 1096, 1103 (9th Cir. 2009), cert. denied, 130 S. Ct. 522 (2010). It is routinely applied in cases brought under the Federal Arbitration Act. Hill v. Wackenhut Servs. Int’l, 971 F. Supp. 2d 5, 12 (D.D.C. 2013); Colonial Penn. Ins. Co. v. Omaha Indem. Co., 943 F.2d 327, 331 (3d Cir. 1991).

Application of the doctrine sometimes leads to what may appear to be an unfair result. Thus, in WMA Securities Co. v. Wynn, 105 F. Supp.2d 833 (S. D. Ohio 2000) aff’d, 32 Fed. Appx. 726 (6th Cir.2002), an arbitral tribunal that allowed a client of a brokerage firm to rescind a transaction but failed to order the return of securities to the brokerage firm was unable to issue a second “clarifying” award ordering the client to return the securities. And in Landis v. Pinkertons, Inc., 18 Cal. Rptr. 3d 890 (Ct. App. 2004), an arbitrator who committed a legal error when he awarded the claimant emotional distress damages on a contract claim was unable to correct the award by striking that portion of the award that granted damages on the emotional distress claim. In both cases, the panel was functus officio because commission of a legal error is not one of the three exceptions to the doctrine.

These apparent unfair results have often tempted courts to ignore the doctrine or suggest that it be discarded. A good example of a court’s frustration with the doctrine is Glass Molders, Pottery, Plastics & Allied Workers International Union v. Excelsior Foundry Co., 56 F. 3d 844 (7th Cir. 1995). In that case, employee Jackson filed a grievance against his employer after he was fired for allegedly using drugs and the dispute was arbitrated. The arbitrator ruled that Jackson should be reinstated provided that he complete a drug rehabilitation program in 60 days. A dispute arose over who would pay for the program, and the union asked the arbitrator to clarify the award on that issue. The arbitrator ruled that Jackson should pay. Jackson enrolled in the program, but it was clear that he would not be able to complete it within the sixty days required by the award because of the time lost following the dispute over payment. The union asked the arbitrator when the 60-day period began. The arbitrator ruled that the 60-day period began on the date that the award was clarified, thus enabling Jackson to complete the program on time. The employer, however, refused to reinstate Jackson, arguing that the arbitrator was functus officio when he issued the clarification. The district court agreed with the employer when the union attempted to enforce the award.

The Seventh Circuit reversed when the union appealed. Judge Posner described functus officio as “antiquated” and a relic of “the bad old days when judges were hostile to arbitration and ingenious in hamstringing it.” Id. at 846 (quoting Courier-Citizen Co. v. Boston Electrotypers Union No. 11, 702 F.2d 273, 278 (1st Cir. 1983)). He stated that since “the case for the exceptions seems stronger than the case for the rule, perhaps the time has come to discard the rule. It is judge-made; it can be judge-unmade.” Id. at 847. Nevertheless, he avoided the temptation to totally jettison the rule and instead allowed the union and Jackson “to crawl through the loophole in the doctrine of functus officio for clarification or completion, as distinct from alteration, of the arbitral award.” Id.

Judge Posner notwithstanding, the bottom line is that arbitrators should faithfully observe the tenets of functus officio. Arbitrators generally will be precluded from revising their decision on the merits of an issue once they have issued an award or decision intended to adjudicate the issue with finality. They therefore should be certain that any award they issue expresses the decision they intend. By doing so, they can foreclose a discussion of whether the doctrine applies or instead is negated by one of the exceptions.