Awards: Colorado Supreme Court Finds Statute Permits Arbitration 'Clarification.' (Web)
June 16, 2005
The Colorado Supreme Court holds that an arbitrator’s recalculation of an erroneous award is “a statutorily authorized clarification,” rather than an illegal redetermination on the merits.
Overturning an appellate court, Sooper Credit Union v. Sholar Group Architects, P.C., No. 04SC206 (June 13, 2005)(The Court’s advance sheet opinion is available at http://www.courts.state.co.us/supct/opinions/2004/04SC206.pdf), relies largely on the statutory interpretation of Section 13-22-211, 5 C.R.S. (2003).
The Colorado law empowers an arbitrator to clarify an award that is confusing due to an error, ambiguity, or general lack of clarity. This arbitrator held that the respondent charged excessive labor rates above the contractual standard rates, and the petitioner therefore prevailed on the merits.
Nevertheless, the initial award was internally inconsistent because the arbitrator double-charged the petitioner both standard and excessive labor rates when calculating the recovery amount. After receiving an application to correct the award from the petitioner, the arbitrator conceded he had miscalculated. He corrected the award, “eliminating confusion and effectuating his stated intent that Petitioner pay only standard labor rates,” according to the opinion.
The appellate court misinterpreted Section 13-22-211 to require that the award error needed to be “patent” or evident from its face. The holding returns to the statute itself, which allows the arbitrator to "modify or correct the award for the purpose of clarifying it." The arbitrator's corrected award did not alter the determination on the merits that the respondent overcharged the petitioner for labor. Although the actual recovery amount changed, a comparison of the two awards demonstrates that the arbitrator's ruling on the merits remained constant. The revision, therefore, is not an unauthorized redetermination on the merits, and the purely numerical recalculation should have been permitted by the appellate court as it was by the district court.