The doctrine of functus officio has frustrated many for years, as it may prevent an arbitrator from correcting a mistake in a final award even though the arbitrator recognizes the mistake.
On January 17, 2023, the U.S. Court of Appeals for the Second Circuit concluded a U.S. district court had appropriately remanded an international arbitration award to the original arbitrator in New York City for reasoning notwithstanding the functus officio doctrine. This appellate opinion is useful for its explanations of (1) why the doctrine did not prevent the remand and (2) why remand was appropriate rather than vacatur of the award. The Second Circuit appeals opinion also contains a useful summary of federal case law from several circuits on exceptions to the functus officio doctrine. Smarter Tools Inc. v. Chongqing Senci Import & Export Trade Co., Ltd. (2d Cir. No. 21-724, January 17, 2023).
In Smarter Tools, an arbitrator acting as a tribunal of the international arm of the American Arbitration Association, the International Centre for Dispute Resolution, had issued an award in favor of Chongqing Senci. Upon considering subsequent competing motions for confirmation and vacatur, the district court determined that the arbitrator had failed to issue a reasoned award as requested by both sides and thus had exceeded his authority. Rather than vacating the award as sought by Smarter Tools Inc. (STI), though, the district court instead chose to remand to the arbitrator for “clarification of his findings.”