Arbitration is a procedure by which parties to a contract agree in advance that any disputes arising out of that agreement will be submitted to a private individual or a panel of private individuals to issue a final decision referred to as an “award” that is final and binding upon the parties. Much like a court trial, in an arbitraiton, a single arbitrator or panel of arbitrators will hear testimony and take evidence presented by the parties or their legal counsel and then make findings of fact and law that lead to one party prevailing over the other.
Arbitration has become a very popular dispute resolution procedure in construction contract disputes because of its intended efficiency and finality. In general, the courts favor arbitration and, as a result, judicial interference in arbitration awards is very limited. In Connecticut, as in most states, a court will only vacate, modify or correct an arbitration award for a handful of statutory reasons, which do not include re-litigating the matter. In other words, you cannot convince a court to throw out an arbitration award merely by pointing out the arbitrator made a mistake of fact or law. Upon application, a court most likely will “confirm” an arbitration award thereby making it the equivalent of a court judgment that can be enforced through post judgment collection procedures.
In Cuomo-Smith v. Daily, 2013 WL 6671222 (Conn.Super.), 1 (Conn.Super.,2013), the Court elaborated upon when the arbitrator’s power ends. In Cuomo-Smith, “[t]he defendant relies on the doctrine of functus officio, which stands for the proposition that an officer who has fulfilled the function or purpose of his office has no further authority to act.” Specifically, the defendant claimed that an amended award that increased the amount to which the plaintiff was entitled was invalid because the arbitrator’s authority over the matter ended when the first award was issued. The Court noted that federal precedent originally applied the doctrine of functus officio to arbitration awards but now “federal precedent is clear that an arbitrator may revisit a final award where the award, although seemingly complete, leaves doubt whether the submission has been fully executed such that an ambiguity arises which the arbitrator is entitled to clarify.” Id.
Allowing arbitrators to amend their awards makes sense given the current law. As indicated above, courts, in general, will not interfere with an arbitration award despite evidence that a mistake of law or fact was made. The reason for that approach is to promote the finality of arbitration awards. If courts made a habit of overruling arbitration awards, most parties would not bother with the time and expense of arbitration and would come directly to court where already overcrowded dockets would then become even more crowded. However, there still must be a mechanism in place to address the situation where an arbitrator makes a mistake.
In Connecticut, a party may make application to vacate an award:
(1) If the award has been procured by corruption, fraud or undue means;
(2) If there has been evident partiality or corruption on the part of any arbitrator;
(3) If the arbitrators have been guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown or in refusing to hear evidence pertinent and material to the controversy or of any other action by which the rights of any party have been prejudiced; or
(4) If the arbitrators have exceeded their powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made.
CT ST § 52-418. Nowhere in that statute is an exception of where the arbitrator makes a mistake. Thus, if an arbitrator was unable to issue an amended award, then an erroneous award that no one intended – including the arbitrator – would stand.
In Cuomo-Smith v. Daily, the issue was that the arbitrator’s failure to award an amount equal to or greater than the insurance policy limits would prevent the plaintiff from also making a uninsured motorist coverage claim for the balance of plaintiff’s damages. Based upon the discussions during the hearing, it was not the arbitrator’s intent to issue such an award. Thus, when the issue was brought to the arbitrator’s attention, an amended award was issued.
The facts of Cuomo-Smith v. Daily would not apply in the construction context but the legal premise would. If a construction arbitration results in an ambiguous or potentially unintended result, the party’s attorney may be able to obtain an amended award by sending a letter that brings the issue to the arbitrator’s intention. Having that ability promotes justice because of the limited ability to achieve such relief through the courts.
If you have any questions about whether arbitration is right for you, please give me a call at (203) 640-8825.