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January 15, 2010

Post-Award Reconsideration by Arbitrators

Dear Readers:

It is not often I have the opportunity to write about my own cases. But today I do.

The Second Circuit yesterday decided a case called T. Co. Metals LLC v. Dempsey Pipe. It is found on 2d Cir. website, where you may read/download.

The portion of the decision that I hope is of interest involves the arbitrator’s issuance of an amended award altering the outcome on the merits, based on the arbitrator’s construction of ICDR Rule 30(1) permitting correction of “clerical” errors. Reversing the District Court, the Second Circuit holds that the arbitrator’s construction of the Rule was entitled to deference — and vacates the order confirming the original award, and remands for the amended award to be confirmed.

I invite your comments, as I am troubled by the decision for reasons that I think go beyond the disappointment of having my client on the losing side on this issue.

I argued that there had to be a limit to deference here, because there is no ground for the original award to be vacated. If the arbitrator may construe the clerical error rule, given judicial deference, to permit substantive chsnges in the outcome, there can be two enforceable awards with different outcomes (not to mention evisceration of the rules, like ICDR 30(1), limited changes to clerical,typographical and calculation errors.

The Court solves that problem by vacating the original award. But as I see it, there is no basis in the NY Convention (assuming it is a Convention award) to refuse confirmation of the original award, nor any such basis in FAA Chapter 1 if it is a domestic award. An appellate order vacating confirmation
strikes me as equivalent of district court order refusong confirmsation, and must be subject to the same FAA/Convention limits.

Is the vacatur of the order confirming orginal award is improper? I welcome your views on that!



One Response to “Post-Award Reconsideration by Arbitrators”

  1. Thank you for drawing our attention to this decision, which I read with interest.

    I am rather convinced by the decision of the Court.

    The difficulty you mention, i.e. vacating the original award, seems to me more technical than material. The Arbitral Tribunal issued two successive awards, the second correcting the first. The first award should normally not be enforced as such, but only as corrected by the second award.

    The true issue is whether the second award should be confirmed or vacated. This issue depends upon the scope of jurisdiction afforded to the arbitral tribunal by Article 30 (1) of the ICDR Rules.

    According to my understanding of this provision (and of similar provisions in other arbitration rules) it allows correction of calculation mistakes made by the arbitral tribunal, but not of mistakes made by the arbitral tribunal in the reading of evidence. It would seem to me that the Arbitral Tribunal in this case applied the provision beyond its scope.

    But you will certainly agree with the Court that the scope of jurisdiction of the arbitral tribunal to correct its award is a matter for the parties, not for the law (p. 19 of the decision). So the question turns upon the extent of control by the Court of the decision by the arbitral tribunal about its jurisdiction based on a correct interpretation of the applicable contractual rule. I appreciate that views can defer on this.

    Lastly, it would be interesting to submit to the ICDR the question about the scope of Article 30 (1). To the extent this provision could be construed differently by different arbitral tribunals, it could be desirable to clarify its scope, whether by a guideline or by a straight modification of this provision.