International and Domestic Arbitration Procedure: The Need for a Rule Providing a Limited Opportunity for Arbitral Reconsideration of Reasoned Awards - Vol 15 No. 1 ARIA 2004
James M. Gaitis - Tucson, Arizona. BA, University of Notre Dame; JD, University of Iowa; Fellow, College of Commercial Arbitrators; Fellow and Chartered Arbitrator, Chartered Institute of Chartered Arbitrators. The author is a professional arbitrator who serves primarily in
complex oil & gas and commercial arbitrations. He is a member of the CPR Institute for Dispute Resolution’s Oil & Gas Panel, the American Arbitration Association’s National Energy Panel and National Roster of Neutrals, and the National Arbitration Forum’s Panel of Arbitrators.
Originally from American Review of International Arbitration - ARIA
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I. INTRODUCTION
Just as is true with the remainder of humankind, it would seem obvious that arbitrators are sometimes fallible and sometimes make mistakes. Commentators and the courts both nonetheless prefer to remind their readerships of that fact with varying degrees of emphasis.1 The fact of this fallibility is established in numerous court decisions finding or noting the occurrence of arbitral error,2 and essentially is acknowledged in the various institutional arbitration procedures that allow an arbitral tribunal, upon a timely request by a party, to correct errors in an arbitral award that are clerical, mathematical or computational in nature.3 Yet those same rules, with one limited exception,4 fail to acknowledge that other unintentional errors that concern objective matters, but which cannot be described as merely clerical, mathematical or computational, are bound to occur from time to time; just as arbitrators occasionally inject “ministerial” errors into their awards, arbitrators are bound, periodically, to commit unintentional, substantive errors relating to the correct operation and application of clearly established law, or the nature of objective evidence in the record. Thus, and while the various institutions that promulgate rules governing arbitrations in both international and domestic commercial arbitrations5 have engaged in meaningful and deliberate efforts to revise those rules to accommodate evolving perspectives and concerns relating to commercial arbitration, none of the most widely utilized rules have yet to be amended to provide for a formal procedure that would allow a party to request an arbitral tribunal to correct an unintended error in the actual “reasoning” of a reasoned arbitration award even when it is clear that the tribunal erroneously interpreted objective evidence or clearly established law. 6 The predictable result is that in an unknown number of instances the final arbitration award provides for a result that was not knowingly intended by the tribunal, and which the tribunal presumably would have corrected had a procedural avenue been available to the aggrieved party. This deficiency in the arbitraiton process has prompted prominent commentators and jurists to comment generally on the adverse consequences that flow from the lack of an arbitration procedure that would permit arbitral tribunals to correct substantive errors in their awards.
I. Introduction
II. Unintended Misstatements of Law and Fact in Arbitral Awards
A. The Issuance of Reasoned Awards Under Institutional Rules
B. The Nature of Potential Unintended Misstatements of Law or Fact in Reasoned Awards
1. Arbitral Errors in Interpreting Applicable Law
2. Arbitral Errors Relating to Objective Evidence
III. International and Domestic Arbitration Procedures and the Absence of a Right to Request the Arbitral Tribunal to Reconsider a Reasoned Award
A. The Absence of a Right to Request an Arbitral Tribunal to Reconsider a Reasoned Award in International Commercial Arbitrations
B. The Absence of a Right to Request an Arbitral Tribunal to Reconsider a Reasoned Award in Domestic Commercial Arbitrations
IV. The Limited Ability of Courts to Remedy Inadvertent Substantive Errors in Reasoned Awards
A. The Limited Ability of American Courts to Remedy Inadvertent Substantive Errors in a Reasoned Domestic Award
1. Sections 10 and 11 of the Federal Arbitration Act
2. The Application of Section 11 of the FAA, and Relief From Inadvertent Errors in the Application of Objective Evidence
3. Relief from Inadvertent Errors in the Application of Law—“Manifest Disregard of the Law”
4. Other “Common-Law” Exceptions to the Enforcement of Domestic Awards
B. The Limited Ability of Courts to Remedy Inadvertent Substantive Errors in the Reasoning of an International Arbitration Award
1. The Limited Opportunity to Obtain Vacatur of an International Award
2. The Limited Grounds for Resisting the Recognition and Enforcement of a Foreign Arbitral Award Containing Substantive Errors in the Interpretation of the Governing Law or Relevant Facts
a. The risk of recognition and enforcement of an annulled award
b. The public policy exception to the recognition and enforcement of foreign awards
V. Policy Considerations Relating to Whether Institutional Arbitration Rules Should be Revised to Provide for a Limited Opportunity for Arbitral Rehearing
A. The “Finality” of Arbitral Awards, and the Functus Officio Doctrine
B. The Efficient Resolution of the Parties’ Dispute
VI. A Proposal for an Arbitration Procedure Providing for a Limited Opportunity to Seek Arbitral Rehearing on Reasoned Awards