Chapter 16 - § 16.3 • PROCEDURES AND REQUIREMENTS FOR AN AWARD

• Jurisdiction: Colorado

§ 16.3 • PROCEDURES AND REQUIREMENTS FOR AN AWARD

As set forth above, the FAA has no provisions defining the procedure for, form of, or requirements for an award, while the CRUAA defines only the basics.

§ 16.3.1—Majority Action Of The Arbitrators

The CRUAA provides that a three-arbitrator panel may exercise its powers by a majority, unless otherwise provided by the agreement to arbitrate.² The FAA is silent, but the result is no doubt the same.³

Under the Colorado Uniform Arbitration Act (CUAA), if during the hearing an arbitrator ceases to act, the remaining arbitrators appointed to act as neutrals may continue the hearing.⁴ It is unclear under the FAA and CRUAA whether two arbitrators of a panel of three arbitrators can continue, e.g., if the third dies or is disabled during the course of the hearing. However, the statutes provide for appointment of a replacement arbitrator.

There are no provisions in the statutes as to any right or obligation of a dissenting arbitrator to indicate his or her dissent or to write his or her reasons therefor. However, by agreement the parties could define whether a dissenter must state reasoning, may state reasoning, or may not state reasoning. Indeed, the agreement of the parties could indicate that dissents shall not be disclosed.

• Annot., Modern Status of Rules Respecting Concurrence of All Arbitrators as Condition of Binding Award Under Private Agreement Not Specifying Unanimity, 83 A.L.R.3d 996.
• Annot., Concurrence of All Arbitrators s Condition of Binding Award Under Submission to Arbitration, 77 A.L.R. 838.

§ 16.3.2—Time For Rendering The Award

FAA

The FAA does not have any provision as to timing of the award.

In Lagstein v. Certain Underwriters at Lloyd's, London,⁵ the panel closed the hearing on July 14, 2006. AAA Rule R-41 provided for the award no later than 30 days from the date of closing of the hearing. The parties stipulated to a 15-day extension for the award, until September 1, 2006. An "initial decision" awarding compensatory and emotional distress damages was issued on August 31, 2006. Thereafter, the panel held a punitive damages hearing on November 20 and 21, 2006, over the respondent's objection that the panel no longer had jurisdiction. The panel majority then awarded $4 million in punitive damages.

The Ninth Circuit held that the question of the time frame within which an arbitrator may issue an award is procedural. In the absence of an express agreement to the contrary, procedural questions are determined to the arbitrators. The arbitrators' interpretation of the scope of their powers is given the same deference as their determination of the merits. The court noted that AAA Commercial Rule R-53 (now R-8) "clearly contemplates that arbitrators will decide the meaning of the . . . [AAA] procedural rules." The court also noted that the panel plausibly determined that the "initial award" constituted an interim award; that the AAA Procedures for Large, Complex Commercial Disputes applied; and that Rule L-4 (now L-3) gave determination of the hearing schedule to the panel.

In Weinberg v. Silber,⁶ the Fifth Circuit rejected that a seven-month delay in issuing an award was per se unreasonable. No time period was defined in the agreement, and the appellant did not protest until receiving an adverse award.

Undoubtedly, the parties may agree upon a deadline for issuance of the award, and the arbitrator will be bound. On the other hand, in Hasbro, Inc. v. Catalyst USA, Inc.,⁷ the Seventh Circuit refused to vacate an arbitration award under the FAA that was not timely made, as neither the arbitration agreement itself nor the parties' conduct made time of the essence.

CRUAA

C.R.S. § 13-22-219(2) (2016) provides:

(2) An award must be made within the time specified by the agreement to arbitrate or, if not specified therein, within the time ordered by the court. The court may extend the time or the parties to the arbitration proceeding may agree in a record to extend the time. The court or the parties may do so within or after the time specified or ordered. A party shall be deemed to have waived any objection that an award was not timely made unless the party gives notice of the objection to the arbitrator before receiving notice of the award.

Thus,

• The parties or the court may define a deadline for the award to be made;
• The statute does not address the consequences for the award being made late;
• The court or the parties may extend the time for making the award;
• The extension can be made before or after the time has expired. It is uncertain whether the extension can be made after a late award is rendered; and
• Objections to late awards must be made before receiving notice of the award.

A question of the arbitrator's jurisdiction under the CUAA after rendering an award was presented in Sopko v. Clear Channel Satellite Services, Inc.⁸ After the hearing was held, on December 28, 2004, the AAA notified the parties that the hearing was closed. Twenty-seven days later, the arbitrator issued an "interim" award in favor of the claimant on two claims, and ordered a further hearing to hear additional evidence of the claimant's damages on the age discrimination claim and his claim for attorney fees. All other claims were dismissed.

Respondents objected to further proceedings (and to entry of any further awards) on the ground that the arbitrator's jurisdiction expired 30 days after the arbitration was formally closed pursuant to a clause in the arbitration agreement.

As here relevant, the arbitration agreement provided that unless the parties and the arbitrator otherwise agree "the arbitrator's award shall be due no later than thirty (30) days from the date the arbitration hearing concludes. . . ." The applicable...