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An arbitration award that is referred back to the arbitration panel for clarification is not a finalized award until the clarifications are received, a federal court in Connecticut held. Therefore, the period in which to challenge the award begins to run from the date of the finalized award.
In Phillips v. Merrill Lynch, Pierce, Fenner and Smith, Inc., Nos. 3:06cv100(AHN), 3:05cv1959(AHN), 2006 WL 3746692 (D. Conn. Dec. 15, 2006), Phillips moved to vacate an arbitration award issued in Merrill Lynch's favor.
Merrill Lynch argued that Phillips' motion to vacate was untimely filed under the Federal Arbitration Act, which requires that motions to vacate an arbitration award be served upon the opposing party within three months after the award is finalized. 9 U.S.C. § 12.
Phillips served his motion to vacate more than 14 months after the initial arbitration award was issued; however, the Court had previously referred that award back to the arbitration panel for clarification. The motion to vacate was filed within three months after the panel issued its clarified award.
The Court held that Phillips' motion was timely because the arbitration award was not finalized until the clarified award was issued. "[A]n award is...final if it resolves all issues submitted to arbitration, and determines each issue fully so that no further litigation is necessary." ConnTech Dev. Co. v. Univ. of Conn. Educ. Props, Inc., 102 F.3d 677, 686 (2d Cir. 1996).
The arbitrator's initial award was sent back to the arbitration panel because the award was unclear as to whether the panel had ruled on all of Phillips' substantive claims. Therefore, the award was not finalized until clarified, and Phillips' motion to vacate was filed on a timely manner. The Court confirmed the arbitration award in Merrill Lynch's favor.
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