Modern institutional arbitration rules encourage international arbitrators to address complex disputes surgically, by issuing partial and interim awards to prioritize solving the most difficult and contentious issues.  But American arbitration law offers arbitrators little helpful guidance about when their non-final awards may be confirmed or vacated.  And counsel in arbitrations seated in the US must do some educated guesswork as they try to fashion effective arbitration strategies with an eye toward judicial review . This is especially so as regards interim measures of protection, as the option of obtaining relief from the arbitral tribunal may be unattractive if the measures obtained cannot be judicially enforced.

The courts have identified three categories of non-final awards that are reviewable. Only one of the categories has the imprimatur of the US Supreme Court — and that in an unusual fashion  This might be termed the “procedural hardship exception,” and it is a by-product of the US Supreme Court decision in the Stolt-Nielsen case. In that case the arbitral tribunal made a “Partial Final Clause Construction Award,” finding that class arbitration was not prohibited by the arbitration clause, and in proceedings in the District Court and Second Circuit, no argument was raised that the Award was not eligible for judicial review under the FAA. That argument also was not raised as an objection to the granting of certiorari, but Justice Ginsburg in the dissenting opinion asserted that certiorari had been improvidently granted because the Award was not “ripe” for review. Whereas Justice Ginsburg’s dissent then surveyed the various approaches of lower federal courts to reviewability of non-final awards under the FAA, the question raised by the dissent apparently was one of statutory interpretation: i.e. what non-final dispositions by arbitrators are FAA awards? But Justice Alito for the majority treated the dissent as having questioned “ripeness” in the constitutional sense (i.e. the requirement of a “case or controversy” as a requirement for the exercise of the federal judicial power), and held that in the constitutional sense the matter was “ripe,” based largely on the procedural hardship imposed by the class arbitration process if a court might ultimately hold that the arbitrators lacked power to impose it.  The majority did not answer the statutory definition question. Nevertheless, after Stolt-Nielsen, courts have frequently cited its ” ripeness footnote”  to support the position that interlocutory class arbitration clause construction awards are reviewable under the FAA.

A second category, narrow and not as controversial, covers cases where the parties have stipulated to bifurcation of liability and damages and agreed that a partial award on liability should be made. (E.g. Global Gold Min. LLC v. Caldera Resources, Inc., 2013 WL 1655994 (S.D.N.Y. Apr. 15, 2013)).

The third category embraces what the courts have termed “separate and independent claims.” Stated in simple terms, if the matter resolved by the tribunal could have been a complete arbitration by itself, if the Claimant had elected not to advance the other claims, then a “separate and independent claim” has been resolved and the fact that other claims remain unresolved should not preclude courts from exercising jurisdiction to confirm or annul the partial award.  But this category has spawned definitional difficulties, as the distinction between an “issue” and a “claim” may be drawn liberally or restrictively depending on the court’s perception of the utility of judicial action in relation to the ongoing arbitration proceedings. To take some recent examples:

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Tags: American arbitration law, Arbitration Clause, Judicial Review, US Supreme Court