The doctrine of functus officio plays a fundamental role in defining the authority of arbitrators and its general purpose and basic principles are thus well known to arbitration practitioners and the courts. The concept of functus officio is, itself, rudimentary and merely serves as a “shorthand term for the common-law doctrine barring an arbitrator from revisiting the merits of an award once it has issued.” A certain degree of confusion nonetheless remains regarding the interrelationship between the doctrine and principles of finality. At least insofar as pertains to arbitral decisions on the merits of the parties’ dispute, functus officio and finality are inextricably related such that one cannot exist, either legally or logically, without the other. Because the doctrine finds its essence in the related concept of finality, arbitration statutes, the common law, and institutional rules, all recognize certain exceptions to the doctrine that are designed to effectuate the intent of a tribunal’s ruling by permitting the tribunal, or a court, to modify, correct, or clarify an award without altering the decision on the merits of the issues that were decided in that award. It therefore should be readily apparent that functus officio principles apply to interim and partial awards that are final in nature.
Nevertheless, on occasion courts have erroneously concluded that a tribunal’s “decision on liability [i.e., an interim or partial decision] is final for purposes of determining whether it can be reviewed by the district court, and not whether it may be revisited by the arbitrators.” From the case law, however, it is clear that no such distinction can be made and that finality and functus officio principles are inextricably related. The seminal case in this regard no doubt is Trade & Transport, Inc. v. Natural Petroleum Charterers Incorporated, in which the Court of Appeals for the Second Circuit stated as follows:
[I]f the parties agree that the panel is to make a final decision as to part of the dispute, the arbitrators have the authority and responsibility to do so. Second, once the arbitrators have finally decided the submitted issues, they are, in common-law parlance, “functus officio,” meaning that their authority over those questions is ended.
Although Gregory’s Award is “final,” functus officio has not occurred with Gregory’s Partial Final Award, because he was removed before he could make a decision on the Appeal that was submitted on January 2, 2014…
Source: James M. Gaitis, The Federal Arbitration Act: Risks and Incongruities Relating to the Issuance of Interim and Partial Awards in Domestic and International Arbitrations, 16 Am. Rev. Int’l Arb. 1, 82-84. 2006.