Fortress arbitration: an exposition of functus officio.

• Author: Cavendish, Michael

There is a rule as old as the common law itself making a peculiar living in private arbitrations. It is the doctrine of functus officio, Latin for "a task performed." (1) This doctrine encircles completed arbitrations with a wall of finality. It preserves the expedience, convenience, and efficiency of arbitral proceedings against sieges by rebuffed contestants. It is a tangible symbol of the legitimacy of private arbitration regimes. An ancient directive (2) with a thoroughly modern vocation, it persists at common law throughout the federal system and in most states. (3)

Yet functus officio has fallen under intermittent criticism for three decades. In recent memory, it has twice been surveyed by the plumb lines of respected federal jurists and found undermined, sapped, and crooked. This essay is a small exposition of the functus officio doctrine, and an apology for an important rule of law, this vital fortress of repose for exhausted private arbitrants, which is in some quarters regarded as nearly abandoned.

The Functus Officio Blueprint

Functus officio appeared in the U.S. in the mid-nineteenth century case of Bayne v. Morris, 68 U.S. (1 Wall.) 97, 99 (1863) ("Arbitrators exhaust their power when they make a final determination on the matters submitted to them. They have no power after having made an award to alter it; the authority conferred on them is then at an end."). As an adopted rule of federal common law in Article III courts, the functus officio doctrine is today stated thus:

Once an arbitrator had made and published a final award his authority is exhausted and he is functus officio and can do nothing more in regard to the subject matter of arbitration. (4)

The rationale behind the rule is the law's unwillingness to permit a nonjudicial officiant, someone who acts informally and sporadically as a lawgiver, to revisit a final decision once rendered. This discomfort with arbitral awards redux is said to be justified by the need to preserve the station of the arbitrator from ex parte or outside communication, or unilateral overtures; devices employed by disappointed parties who would, if the occasion arose, try and seek a self-serving change in the final award. (5)

There are two fundamental prerequisites to the doctrine's application: 1) there must be a final award executed by the arbitrator; and 2) that executed final award must be delivered or declared. (6)

Under functus officio, once a final award has been executed and delivered or declared, absent an exception, an arbitrator is powerless to vacate, modify, supplement, correct, (7) change, explain, (8) reconsider, (9) reopen, (10) revise, reexamine, (11) or withdraw (12) a final award. Likewise, absent an exception, an arbitrator, once having issued a final award, cannot hear an appeal thereon, or preside over any re-litigation of the decided issues, or order a new trial or final hearing. (13) The doctrine has been applied routinely in federal cases construing the Federal Arbitration Act, 9 U.S.C. [section] 1, (14) and in various state court opinions. (15)

Exceptions to Functus Officio

Recitations of the doctrine often identify only three instances in which it will not apply; (16) however, federal courts in the aggregate have identified no less than 10 exceptions (17) to functus officio: 1) the correction of a mistake apparent on the face of an award; (18) 2) the incompleteness of an award; (19) 3) ambiguity in an award; (20) 4) arbitrations conducted under [section] 301 of the Labor Management Relations (Taft-Hartley) Act (LMRA); (21) 5) the intersection of a broad arbitration clause and an ongoing, long-term contract; (22) 6) the arbitrator's commission of a fundamental procedural error; (23) 7) the occurrence of a post-award contingency; (24) 8) mutual agreement by the parties; (25) 9) reservation of jurisdiction to ensure compliance with the award; (26) and 10) a valid remand by a reviewing court. (27)

The ill-justified discard of the doctrine in LMRA arbitrations aside, (28) each of these exceptions are judicial formulations designed to first, allow a final award to speak the truth in a completed case, and second allow an arbitrator to finish his or her appointed job and render complete relief on the disputed issue. (29)

The exceptions are many, a criticism of the doctrine to be examined below. Yet, by and large, federal courts construing the doctrine take care to apply these exceptions reservedly, so that the exceptions do not overwhelm the rule and upset the critical finality it imparts to arbitral awards. This means that the exceptions cannot be applied in a manner that would embolden parties into post-award ex parte contact gauged to elicit a new or altered conclusion. (30) And the exceptions are not applied so as to threaten the integrity of a final award against objectively destabilizing, disenfranchising events. As a rule of thumb, exceptions cannot exist if they alter an award's supporting reasoning, redirect the distribution of a remedy, or alter a party's expectations about a right or liability expressed in a final award. (31) The rationale demanding the limited application of these exceptions, thus, preserves the arbitral product, the final award, and the process through shielding the arbitrator and innocent arbitrants from the potential shenanigans that post-award ex parte contact may implicate.

So for example, applied narrowly, the exception for the correction of apparent mistakes is limited to resolving an arbitrator's blunder in writing out the text of the opinion, such as typos and errors in arithmetic, and cannot be used as a vehicle to correct an arbitrator's mistaken view of a fact or the law. (32) If the alleged problem with the award is suggested as interpretive, analysis of the apparent mistake exception is stringent, since in hypothetical an agenda of alteration is easily couched in a request for further explanation. (33) When an extraneous fact would need to be considered to determine if there were a mistake on the face of the award, this exception is also unavailable. (34)

The exception applying in the event of incomplete awards is invoked only when an award fails to resolve an issue or specify the ruling or remedy rendered in definite terms. (35) The exception for ambiguity applies only to remove any lingering cloud of doubt in the text of an award as to whether an issue has been fully decided. (36) In something of a "Catch-22" scenario, the exception in instances of judicial remand by a reviewing court is sometimes construed so narrowly that it applies only when another recognized exception creates independent grounds for relief from the doctrine, an application that actually folds the remand exception into the other exceptions. (37)

Two Criticisms of Functus Officio in Federal Opinions

There have been two noteworthy criticisms of the doctrine in contemporary reported federal caselaw. The more recent was also the more spectacular, posing, in this observer's view, the greatest challenge to the doctrine's ongoing viability.

In 1995, Chief Judge Richard A. Posner of the U. S. Court of Appeals for the Seventh Circuit authored a 3-0 opinion in Glass, Molders, Pottery, Plastics and Allied Workers Int'l Union, AFL-CIO, CLC, Local 182-B v. Excelsior Foundry Co., 56 F.3d 844 (7th Cir. 1995). In Excelsior Foundry, the Seventh Circuit analyzed functus officio and found that the complained...