Lessons From Lance Armstrong About the Finality of Arbitration Awards, by Liz Kramer, Arbitration Nation Blog (with hat tip to Karl Bayer, Disputing Blog)
On February 4, an arbitration panel ordered Lance Armstrong to pay $10 million to his former promotions company, SCA, as a result of his ‘unparalleled pageant of international perjury, fraud and conspiracy’ that covered up his use of performance-enhancing drugs. (Read the NYT story about it here.) What is curious about the award, from an arbitration law standpoint, is that SCA essentially re-opened an arbitration that it had lost with Armstrong in 2005 to obtain this new award.
The general rule of thumb is that arbitrators lose jurisdiction once they issue the final award. Other than the short period within which parties may request that arbitrators correct a clerical or computational error under the arbitral rules (AAA gives 20 days; JAMS gives only 7), the arbitrators turn into pumpkins for all practical purposes after the final award is issued. The arbitral rules do not have any equivalent to Rule 60, which in state and federal courts allows a judge to re-do a judgment or order based on newly discovered evidence, fraud, or mistake. (But even Rule 60 sets a deadline of one year after the judgment is entered to request that the judgment be vacated…)
There is even a fancy Latin name for the reason that arbitrators turn into pumpkins after they issue final awards: functus officio. The policy is that arbitration awards are supposed to bring finality, and we wouldn’t want arbitrators revisiting awards based on improper or ex parte information. However, one of my favorite arbitration resources, Domke on Arbitration, suggests that there are now so many exceptions to the functus officio doctrine that they just about swallow the rule. Courts have allowed arbitrators to revisit their awards to correct mistakes, to rule on an issue that was submitted but not decided, to clarify an ambiguity, and always, if the parties contractually authorize the same panel to hear a new issue.
That last exception explains how the SCA got a second bite at its arbitration with Armstrong. . . .