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When presented with a challenge against a problematic arbitral award, national courts are faced with a dilemma: either to set the award aside or not. Setting aside leads not only to at least one frustrated party and delays, but to a wholesale waste of the time and expense of the arbitration. Remission of the award, on the other hand, represents an attractive middle ground between confirming a dubious, unclear or potentially unjust award and complete setting aside or annulment. It offers a step towards 'a reasonable counterpoise between arbitral autonomy and judicial control mechanisms'.2
Where permitted, certain courts have become increasingly disposed to remit an award rather than set it aside. To many users of arbitration, however, the mechanism remains little understood and can be overlooked when evaluating possible outcomes to setting aside proceedings. Moreover, some courts when remitting an award can leave the parties and former arbitral tribunal confused as to what has to be done. This article seeks to elucidate the mechanics of this procedural tool as well as to identify potential pitfalls that accompany its more widespread use.
II. Definition and history of remission
Given the remarkably diverse terminology available to describe the process referred to as 'remission',3 we commence with a brief discussion on definition.
Simply put, remission of an arbitral award occurs where the domestic court seized of an action to annul or set aside, declines either to annul or confirm the award and instead 'remands' or 'refers it back' for the tribunal to re-address one or more issues. This occurs generally where the court finds that the award fails on one or more statutory grounds,4 appears to be tainted by procedural irregularity,5 or produces an outcome contrary to public policy or natural justice.6
Remission does not refer to an arbitral tribunal's mere correction or interpretation of an arbitral award pursuant to a procedure envisioned by most arbitral rules7and national laws.8 It presupposes a domestic court order. A remission order serves to correct procedural or substantive flaws that would, if not corrected, prove fatal to the validity of the award, such as failure by the tribunal fully to address an issue raised [Page155:] by counsel,9 misapplication of substantive law,10 or, in some instances, procedural fraud.11 A court considering an award made pursuant to a fraudulent representation by counsel, for example, or that failed to address an issue raised in written pleadings,12 may possess the power to return the award to the issuing tribunal for reconsideration as an alternative to setting the award aside. Remission is accordingly quite different from correcting a mathematical error, or the name of a party, or clarifying minor ambiguities as to when parties must perform the relief ordered by the tribunal.
Nor is remission a form of the oft-debated appeal mechanism in arbitration. Although the grounds on which a court will decide to remit an arbitral award rather than set it aside could conceivably concern the merits of the matter or the legal basis of the tribunal's reasoning, the ultimate approach to the award differs insofar as appeal represents a direct challenge to the underlying reasoning and ultimate result of the tribunal's award. Remission, by contrast, serves to supplement the existing reasoning, address procedural irregularities or the possibility of fraud, or to adjust the manner in which the award will ultimately be performed. If appeal represents a second bite at the apple for the parties, remission occurs when all concerned realize belatedly that what they believed to be an apple is, in fact, an orange, or that the process by which the apple was cooked or the recipe chosen by the tribunal suffered from serious deficiencies.
Finally, remission must not be confused with its procedural cousins. Its effect differs markedly from that of annulment or setting aside under the UNCITRAL Model Law or other domestic statutes, or non-enforcement pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ('New York Convention').13 Whereas a court decision to set aside or annul an award deprives it of legal force in the jurisdiction of the seat of the arbitration (and, potentially, globally),14[Page156:] the consequences of remission are not so extreme. Indeed, rather than stripping the tribunal's award of any legal effect, remission attempts to preserve the possibility of a valid award by correcting significant internal flaws that would otherwise render it void: 15
In effect, this permits a court, presented with an annulment application, to allow the arbitrators an opportunity to take further steps or decisions, which might render the annulment application unnecessary or inappropriate.
That remission and setting aside constitute distinct procedural outcomes, however, does not preclude overlap at the statutory level. Setting aside or annulment of an award may, in some jurisdictions, be a precondition for remission of an award, while others prefer to begin from the possibility of remission and then move to setting aside as mutually exclusive remedies. An award set aside and then remitted has little in common with one that is simply set aside, however. The former may in future become a valid award: it is set aside in its most recent form but not devoid of potential future effect. The latter has been finally assessed and found invalid.
III. Remission under the national law of certain arbitral seats
A. UNCITRAL Model Law jurisdictions
Article 34(4) of the UNCITRAL Model Law expressly includes remission as a course of action for courts, stating:
The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal's opinion will eliminate the grounds for setting aside.
The extent and nature of this provision is, and apparently always has been, maddeningly unclear to some. Article 34(4) does not, for instance, identify what might constitute an appropriate 'period of time', nor the actions a tribunal might take to 'eliminate the grounds for setting aside'. A review of the process that might be carried out has promoted concerns over a host of assumptions:16
When a request for remission has been granted the court sets the arbitral tribunal to work again. This presumes that the mandate of the arbitral tribunal, terminated by its final award, revives. It may also be presumed that the court will hear both parties before deciding on the request and will also have ascertained that the arbitral tribunal can be brought together again. It also may be presumed that the court informs the arbitral tribunal about what it should reconsider in order to eliminate the grounds for setting aside [Page157:] within the period of time determined by the court. Furthermore, it may be presumed that, on a reasoned request of the arbitral tribunal, the court may extend the time limit for its new award.
Advocating its withdrawal, critics at the time observed that 'the provision was obscure, in particular, as regards the relationship between the court and the arbitral tribunal and as regards the scope of the function expected from the arbitral tribunal in a case of remission'.17 This was a prescient observation, for it is within precisely these lacunae that one finds discrepancies in practice and procedure across legal regimes. Courts within UNCITRAL Model Law jurisdictions differ as to whether remission constitutes a component of, or is an alternative to, the process of setting aside, and lack consensus as to whether they enjoy a general right to remit or may do so only on specific grounds - itself a vexed question when coupled with the previous inquiry regarding the precise relationship between setting aside and remission.
Moreover, states hoping to glean some insight into the implementation and application of Article 34(4) from their counterparts, particularly those with civil law traditions,18 will be disappointed: UNCITRAL currently lists only a single decision that directly addresses Article 34(4) in its CLOUT online database. In Cargo Carriers v. Industrial Bulk Carriers, the Quebec Court of Appeal held that an award ordering payment in excess of what the prevailing party had requested failed to qualify for remission, as the matter of appropriate compensation fell exclusively within the tribunal's jurisdiction.19
Without much guidance from statute or case law, it is hardly surprising that remission is an area that has struggled to achieve the uniformity promised by the UNICTRAL Model Law, as illustrated by the three examples that follow.
The German Code of Civil Procedure follows Article 34(4) of the UNCITRAL Model Law insofar as it presents remission as an explicit option to courts. Yet it differs from the Model Law in that returning an award to a tribunal falls within the ambit of setting aside, as opposed to being a distinct, stand-alone remedy:
If the reversal has been petitioned, the court may remand the matter to the arbitral tribunal where appropriate, as petitioned by a party, while reversing the arbitration award.20
Subsuming remission within the setting aside procedure also serves to remove any doubt over the grounds on which a party may request the return of the award to the original tribunal for further consideration. A party seeking remission of an award is limited in its request to the same grounds on which it might petition a court to set aside an award entirely.21 The same principle would appear to be implied into Article 34(4) of the Model Law. Although not specifically mentioned in the applicable law, courts have concluded that German public policy as mentioned in § 1059(2)2 encompasses the general prohibition against procedural fraud found at § 580 ZPO. Similarly, courts have seen fit to remit awards under circumstances of 'serious procedural irregularity'.22 The Higher Regional Court of Cologne, for example, returned an award to the tribunal for further consideration upon determining that the arbitral tribunal's order that the respondents be held jointly and severally liable, despite the claimant's having made no such request, constituted both a serious procedural irregularity and a breach of public policy.23
Note, however, that a German court will 'generally remand the case only where it is convinced that the "old" arbitral tribunal will render an award more quickly (and without leaving the award susceptible to further setting aside proceedings) than a new tribunal comprising different arbitrators'.24 For example, the Higher Regional Court in Munich opted to remit rather than set aside an award where shareholders of the respondent company, rather than the respondent itself, had been ordered to pay the claimant, on the ground that this would be more efficient than setting aside the award and forcing the parties to re-arbitrate their dispute.25
Both Singapore's international and domestic arbitration laws (which are separate statutes26) adopt the position of the UNCITRAL Model Law with respect to remission of awards. The domestic statute at section 48(3) empowers courts to return awards to arbitral tribunals for additional consideration or alteration. The international statute provides for the same in section 3, which simply implements the Model Law.
Singaporean courts have tended to treat their powers to remit awards as discretionary, where the court finds such a remedy appropriate.27 A specific application for remission by a party is not necessary.
As for the grounds for remission, Singaporean courts confine themselves to cases of procedural inadequacy28 or 'breach of the rules of natural justice'.29 The substance of such a breach is not defined in statute and, interestingly, courts have not always felt the need to refer to legislative authority when remitting an award on this ground.30 A court may not require a tribunal to reconsider a decision on jurisdiction. However, it may order arbitral proceedings to be reopened where it finds the tribunal failed completely to consider a matter put before it for adjudication.31 In Shanghai Tunnel Engineering Co Ltd v. Econ-NCC Joint Venture, for example, the Singapore High Court ordered the arbitral tribunal to reconsider its award after finding that the original award did not completely dispose of the question of the respondent's counterclaims for damages.32 More recently, the Singapore Court of Appeal opined in BLC & Ors v. BLB & Anor that, while even serious errors of law or fact may not rise to the level of a breach of natural justice sufficient to justify setting aside an award, such defects might serve as adequate grounds for remission pursuant to Article 34(4) of the Model Law, suggesting that the standard to remit may be somewhat less stringent than previously believed. 33
As of June 2011, Hong Kong abandoned its bifurcated system in favour of a single arbitration law applicable to both domestic and international awards. The Hong Kong Arbitration Ordinance (Cap 609) adopts the text of Article 34(4) of the UNCITRAL Model Law in full,34 and courts have tended to understand the grounds for remission as being limited to those for setting aside outlined in Articles 34(2) and 34(3). The text of the statute specifies that courts may not opt to set aside or remit an arbitral award 'on the ground of errors of fact or law on the face of the award',35 thereby implicitly distinguishing remission of an award for further consideration from a review to correct obvious errors of fact or law.36
The new law represents a marked change for domestic awards, where much wider grounds of remission were previously available, including mistake by the arbitrator or failure adequately to address questions of costs.37
In the recent case of A v. B,38 an application was made by party A to set aside the award on the basis that: (i) the arbitrator failed to deal with a time-bar defence party A relied on in the arbitration; and (ii) the enforcement of the award would be contrary to public policy. The Court of First Instance held that a violation of public policy would occur if the award were enforced. Party B argued that in such a case, the setting aside proceedings must be suspended and that the tribunal must resume the proceedings to eliminate the grounds for setting aside. Party A submitted that remission would be inappropriate as (i) confidence had been lost in the tribunal's ability to grapple with the key issues, (ii) the arbitrator could not reasonably be expected to have a clear or reliable recollection of the arguments, and (iii) it was difficult, if not impossible, for the arbitrator to change his mind, therefore giving an appearance of pre-judgment or bias.
The Court of First Instance rejected these arguments, deciding that: (i) irrespective of the findings on the merits of the claim in the award, a finding on the time-bar defence could lead to a different outcome; (ii) it would not be difficult for the arbitrator to recall the facts and arguments as they were set out in detailed closing submissions and it would be a simple matter for the arbitrator to make findings on the time-bar defence based on the factual findings already made in the award; and (iii) no suggestion of misconduct or bias had been made against the arbitrator and a claim had not been made that the hearing [Page161:] was flawed or had been mishandled by the arbitrator. Accordingly, the Court of First Instance remitted the award to the arbitrator to take such actions as he thought appropriate under Article 34(4).39
This case provides an example of a court's preference for remission, in appropriate circumstances, over the setting aside of an award. An important point to note is that the Court of First Instance appears to have taken the view that no additional pleadings were required because the findings of fact made in the award were sufficient for deciding on the time-bar issue in the remission. Would there have been a different outcome had new submissions on fact or law been required? This is a matter for conjecture, and would be an issue open for argument in future Hong Kong cases. The degree of new pleadings required and their interaction with the prior findings is likely to influence the decision.
The Arbitration Ordinance also has opt-in provisions (and, in certain limited cases, automatically applicable provisions) that enable a party (i) to challenge an award on a ground of serious irregularity or (ii) to appeal against an arbitral award on a question of law. These provisions provide the court, among other things, with the power to set aside or remit the award.40 These provisions also contain the following qualification:
The Court must not exercise its power to set aside an award or to declare an award to be of no effect, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the arbitral tribunal for reconsideration.41
A presumption favouring remission is apparent in these provisions: only when the court is satisfied that remission is inappropriate can the court exercise its setting aside power.
B. Other jurisdictions
France does not permit courts to remit arbitral awards to arbitral tribunals.42 Article 1485 of the French Code of Civil Procedure provides that the issuance of an award places the dispute unequivocally beyond the jurisdictional reach of the tribunal,43 rendering any subsequent [Page162:] intervention ex functus officio. Article 1485 does, however, address and allow for the arbitral tribunal to correct or interpret the award or address issues raised by the parties but not adjudicated.44
Accordingly, although French law would appear to preclude remission per se, insofar as it makes no provision for reconsideration of an award pursuant to a court order, parties hoping to avoid setting aside are not entirely without recourse. While remission as a function of court intervention does not exist within the French legal regime, arbitral tribunals may undertake to modify a problematic award in certain circumstances, provided the request is made by one or both of the parties.45
The recently revised Dutch Arbitration Law, enacted on 27 May 2014, makes direct provision for revision in Article 1065(a), which permits the Court of Appeal to remit an award to the issuing tribunal either at the request of a party or on its own initiative. Before taking such a decision the court must afford the parties an opportunity to be heard on the appropriateness of such a measure (though not to appeal once the decision to remit has been made).46
One of the strongest proponents of remission among the jurisdictions we consider is England and Wales. The English Arbitration Act 1996 provides that a court is obliged to remit an award for further consideration, unless doing so would be inappropriate.47 Section 68(3) provides that:
The court shall not exercise its power to set aside or declare an award to be of no effect, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the tribunal for reconsideration.
An English court faced with an application to set aside an award must, therefore, consider the possibility of returning the decision to the tribunal before setting it aside. Hence, remission under the English Arbitration Act differs from remission in Germany and other UNCITRAL Model Law jurisdictions insofar as it obviates the process of setting aside, at least theoretically.
However, the English Arbitration Act follows its foreign counterparts insofar as the statute provides a single set of nine grounds on which to base an application for remission or setting aside.48 The Act specifically identifies fraud, procedural or otherwise, as a basis on which to request court intervention after the issuance of an award.49 Moreover, the blanket terms of section 68(2)(i), which indicates that 'any irregularity in the conduct of the proceedings or the award'50will suffice, potentially serves to capture a wide range of possibilities not otherwise expressly envisioned. Courts have naturally tended to regard the list of grounds as both exhaustive and exclusive,51 however, and to accord arbitral tribunals a high degree of deference in the discharge of their duties.52 They have also declined to import the American concept of 'manifest disregard of law'53 (despite its seeming compatibility with section 68(2)(b) 54), which permits setting aside or remission where a tribunal has exceeded its powers, subscribing to the view that this would render remission a 'soft option clause as an alternative to a failed application for leave to appeal'.55
Further, even where the irregularity in question does fall within any of the nine categories enumerated by the Act, petitioning parties face the additional hurdle of establishing that the anomaly 'has caused or will cause substantial injustice'56when applying for remission, and courts have taken pains to emphasize the two-pronged nature of the test:
Section 68 involves a two-stage investigation. The first stage involves asking whether there has been an irregularity of at least one of the nine [Page164:] kinds identified in sub-section (2)(a) to (i). The second stage involves asking whether the incidence of such irregularity has caused or will cause substantial injustice.57
Indeed, courts can and do find both that procedural irregularities exist but are of no consequence,58 and that major procedural irregularities have occurred but did not produce a 'substantial injustice'. In Al-Hadha Trading Co. v. Tradigrain SA, for example, the court was deeply concerned by the arbitral tribunal's failure to issue a reasoned award in direct violation of the English Arbitration Act, but concluded that, because the petitioning party suffered no obvious harm or ill-effect on this account, it lacked authority on which to remit the award to the tribunal with a request for expansion and clarification.59 'The test of "substantial injustice" is intended to be applied by a way of support of the arbitral process, not by way of interference with that process,' opined the court in Egmatra AG v. Marco Trading, 'Clause 68 is really designed as a long stop, only available in extreme cases where the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected.'60
Thus, any initial impression that England and Wales is a jurisdiction favourable to, perhaps even inviting of, remission should be tempered by an awareness that parties must pass the same high thresholds as they would to secure the setting aside of an award in order to reopen proceedings.
The USA has adopted a semi-bifurcated legal regime for the judicial control of arbitral awards, although international awards are ultimately subject to the provisions of the Federal Arbitration Act.61 Parties seeking the remission of an award may still avail themselves of the provision found in Chapter 1, provided the ultimate rationale for the challenge rests in Chapter 2 (Convention on the Recognition and Enforcement of International Arbitral Awards) or Chapter 3 (Inter-American Convention on International Commercial Arbitration).62 In other words, parties challenging an international award in the United States must base the petition on grounds listed in Chapters 2 and 3, which implement the New York and Panama Conventions, respectively, [Page165:] but may request remission of the award to the tribunal pursuant to section 10(a) of Chapter 1, provided the challenge falls within the enumerated categories.63
Again, one finds remission situated within the context of setting aside, part and parcel of the process of vacatur, though with an additional timing requirement. The petitioner hoping for remission will be disappointed if the challenge is filed beyond the date by which the tribunal must render an award, as a US court may reopen proceedings only if the tribunal, sitting in its original capacity, would not be time-barred from issuing a decision:64
If an award is vacated and the time within which the agreement required the award to be made has not expired, the court may, in its discretion, direct a rehearing by the arbitrators.
Within the family of common law countries, the USA has traditionally represented a middle ground between England and Singapore, allowing for vacatur - and, by extension remission - on grounds both statutory and non-statutory.65 More recently, however, the USA has moved to align itself more closely with the English approach, explaining in Hall Street Associates L.L.C. v. Mattel Inc. that the 'manifest disregard of law' ground articulated by Wilko v. Swann might be of use in interpreting the grounds laid out in section 10 of the Federal Arbitration Act, but that nothing in the language of the statute suggested leeway for courts (or private parties) to introduce new grounds for vacatur beyond those set down in black letter law,66 which include:
(1) where the award was procured by corruption, fraud, or undue means; (2) where there was evident partiality or corruption in the arbitrators, or either of them; (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehaviour by which the rights of any party have been prejudiced; or (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.67
Whatever permissiveness may continue to exist in the US approach with regard to broad grounds for review, it does have its limits. A court could approach the question of remission with the same circumspection as it might setting aside the award entirely. In Duke[Page166:]Energy International v. Republic of Peru, for example, the District Court for the District of Columbia denied the Republic of Peru's request for remand despite ample evidence of confusion regarding applicable provisions of tax law, noting that only ambiguity in the award would place remand within reach.68 Indeed, the court seemed to imply that nothing short of an award 'so ambiguous that a court is unable to discern how to enforce it' would satisfy the applicable standard.69 The court further noted that: 'The legal standards governing judicial review of arbitration awards are not complicated ... such review is "limited by design"'70 - a sentiment in line with that expressed in Litvak Packing Co. v. United Food & Commercial Workers, which stated that the standard for review of arbitral awards 'is among the narrowest in the law'.71 This latter comment does not suggest an overly permissive attitude toward the prospect of remission.
Of course, and as discussed below, the possibility of multiple rounds of challenge, appeal and remission available to parties litigating enforcement in a US court may give rise to timelines that belie an impression that the US is devoted to finality or expedience. The parties in U.S. Energy Corp. v. Nukem, Inc., for example, argued the issue of remission for a full decade before the Tenth Circuit Court of Appeals managed to issue a satisfactory order returning the award to the tribunal (to its displeasure, one imagines) for additional clarification on the matter of tax and interest rates.72
IV. Remission and institutional rules
How, then are arbitral institutions to react when faced with a remitted award? One would expect to find procedural guidance in arbitration rules, yet all but one set of leading international arbitral rules are silent on how the institution will handle a remitted award.73 Given that almost all administering institutions make some provision in their rules for the correction of clerical or computational errors, it is surprising that only the ICC Rules, as revised in 2012, speak directly of remission. The ICC's inspiration for this inclusion was the growth in the number of remitted cases that the ICC Court had to deal with under its 1998 Rules, which were silent on the issue.74 Article 35 of the 2012 ICC Rules, entitled 'Correction and Interpretation of the Award; Remission of Awards' states in paragraph 4:
Where a court remits an award to the arbitral tribunal, the provisions of Articles 31, 33, 34 and this Article 35 shall apply mutatis mutandis to any addendum or award made pursuant to the terms of such remission. The Court may take any steps as may be necessary to enable the arbitral tribunal to comply with the terms of such remission and may fix an advance to cover any additional fees and expenses of the arbitral tribunal and any additional ICC administrative expenses.
With its appropriately broad language - 'any steps as may be necessary' - the ICC Rules countenance the notion of remitted awards and provide for the reconstitution, fresh appointment or other administration of a tribunal necessary to ensure timely compliance with a national court order. Note, however, that the scope of Art 35(4) as regards the tribunal is considerably more circumscribed. Whatever flexibility it may enjoy with regard to determining the nature of the fresh proceedings - e.g. whether to hold new hearings or proceed on the basis of evidence previously presented - Article 35(4) plainly does not anticipate the tribunal considering the validity or basis of the remittance order, or venturing beyond its terms.75 Yet, one might imagine situations where that could be required.
No other major international arbitral rules address remissions, although many address its very distant relative - the procedure for correction and interpretation of awards by arbitral tribunals.
V. Problems and challenges of remission
A. Finality of the arbitral award
From one perspective, remission would appear to represent that which arbitration is intended to avoid - the reopening and reconsideration of a purportedly final and binding award for further examination on the merits. Add to this the fact that national arbitration laws set few, if any, limits on the number of requests for remission, then the potential for abuse or at least dissatisfied parties increases exponentially.76
Consider, for example, the saga of M&C Corporation v. Erwin Behr GmbH from the USA. Behr, a German manufacturer of luxury automobile parts and accessories, entered into a five-year sales and licensing agreement with M&C Corporation in 1985, wherein M&C Corporation became the exclusive vendor of Behr's products in the USA. In 1991, Behr terminated the contract in accordance with its terms, and M&C Corporation initiated arbitration proceedings seated in London to recover certain royalties and commissions allegedly still owed. Upon conclusion of the arbitration in March of 1994, the sole arbitrator, Andrew Berkeley, issued eleven final and binding awards concerning various aspects of [Page168:] the dispute, ordering payment of commissions, royalties and damages to M&C Corporation. M&C Corporation applied to enforce the award with the US District Court for the Eastern District of Michigan. Behr, predictably, resisted enforcement. However, its efforts proved fruitless, and the reviewing court ruled to recognize the awards. Not one to surrender easily or quibble over litigation costs, Behr next appealed the District Court's decision to the United States Court of Appeals for the Sixth Circuit, which in due course upheld the lower court's ruling and instructed Behr to pay up.77
Perhaps sensing the direction in which the winds were blowing, M&C Corporation had moved to begin enforcement proceedings during the pendency of Behr's appeal and was gratified by receiving payments in satisfaction of five of the eleven awards (nos. 4, 5, 7, 10 and 11). With regard to award no. 8, however, Behr contended that the language chosen by the arbitrator left in doubt the precise amount due and petitioned the District Court for a stay of enforcement on the basis of the argument that 'the amounts owing were not reduced to judgment' and 'the issues not finally addressed by the arbitrator'.78 The District Court concurred, ordered remission of award no. 8 to the arbitral tribunal for clarification, but the order was promptly reversed on appeal by the Sixth Circuit in Behr II for failing to adequately identify the supposed ambiguity.79 Ever obliging, the District Court reconsidered its reasoning and promptly reinstated its order to remit the award - taking pains to locate and explain the source of its (and, presumably, Behr's) confusion regarding award no. 8. The Sixth Circuit, in Behr III, was having none of it and again quashed the order to remit.80
With Churchillian determination81 Behr next argued that, per an interpretation of the underlying agreement handed down by the Sixth Circuit, it had actually overpaid M&C Corporation, remitting several hundred thousand dollars more than was owed to satisfy award no. 8.82 Both parties vigorously disputed the point and, in the end, the District Court again ordered that the award be remanded for a third time to the arbitrator so that he might clarify the exact sums of money owed.83 The usual round of appeals followed, with the distinction that, while waiting to appear before the Sixth Circuit, the parties also participated in hearings before the arbitrator aimed at finally and firmly resolving the numerical and linguistic penumbras of award no. 884 and informed a by now thoroughly annoyed Sixth Circuit that they expected to receive a revised award in April of 2005. Apparently of the mind that ten years85[Page169:] and three rounds of review and remand were quite enough, the Sixth Circuit took the unprecedented step in Behr IV of finally concluding the matter by effectively sitting as a trial court in damages. Remarking acidly that the Behr litigation proved the exception to the rule that arbitration agreements allow parties to avoid the costs of litigation,86 the court proceeded to dispense definitively with award no. 8 by proffering its own interpretation of the disputed terms, reversing the earlier order to remand and 'retain[ing] jurisdiction over this matter to finally determine the parties' respective monetary obligations under the arbitrator's Eighth Award'.87
All told, in order finally to gain a sum of some hundreds of thousands of dollars - an amount no doubt dwarfed by the legal fees associated with its collection - M&C Corporation waited over a decade entirely on account of remand. For those who fear the implications of reopening awards, let alone the possibility of appeal, one imagines there are few more horrifying stories.
Those who would cite Behr as an example of remission run amok must, however, acknowledge the extent to which the challenging party abused the process, as well as the District Court's recalcitrance in the face of clear signals from the Court of Appeals regarding the preferred course of action. Likewise, the charge that remission in and of itself poses a critical threat to the integrity of an overall arbitral regime fails to take into account the legislative measures put in place to limit its availability. In addition to the use of statutory time-bars requiring parties hoping for remission of an award to petition the courts within a specific time period,88 local arbitration laws have, as discussed above, tended to delineate sharply the narrow grounds on which such a request may be made. And jurisdictions that have not identified actual setting aside of the award as a prerequisite for remission reserve the remedy for 'extraordinary' cases and are at pains to make clear that remission is no 'soft option' to setting aside.89
Moreover, by virtue of either statute or discretion, courts may apply stringent standards when assessing purported irregularities of process. The test applied by Singaporean courts to identify a breach of natural justice, for example, requires parties successfully to identify not only the breach of a procedural right, but to explain the manner in which the breach prejudiced its rights and connect that breach to the making of the award.90 Likewise, English courts may consider remission only in cases of 'serious procedural irregularity', which, in turn, requires [Page170:] that the protesting party demonstrate not only the existence of some anomaly in the conduct of the proceedings, but that this anomaly also caused or, if left unanswered, will cause substantial injustice.
B. Impartiality and reconstitution of the tribunal
For those untroubled by the implications for finality presented by remission, the logistics of (re-)constituting an appropriate tribunal for review may give rise to concern. Granted, there are arguments in favour of this requirement. From the perspective of procedural economy, who better to reconsider the award than the original tribunal already familiar with the facts of the dispute, the witnesses and experts and, most saliently, the substance of the award?91 But problems may arise when, as in Singapore,92 the national arbitration law requires remission of the award to the original tribunal and the arbitrators in question are unwilling or unable to reconvene. One can easily imagine instances in which the members of the tribunal, having fulfilled their obligations towards the parties, have moved on to other, equally pressing matters and cannot gather for additional hearings or reconvene to reconsider their award for some months, if at all. In a world where calendars fill years in advance, even the statutory time limits for bringing a request to remit seem unlikely to provide relief where the members of the original tribunal had arranged to commence work on a new case not long after receiving the parties' first round of written submissions. And those arbitrators' obligations in the new case may preclude engagement with one or other of the parties for want of impartiality or independence. Institutions may attempt to accommodate such developments by empowering the arbitral authority to take whatever measures are necessary to permit the reissuance of the award, such as substituting members of the tribunal for others, but in some instances doing so could be inconsistent with the remittal order or the underlying law.
As we have seen, the Singaporean approach could leave litigants without recourse to remission at all, which seems problematic insofar as parties may, through no fault of their own, incur additional expenses or be deprived of a remedy. Even granting that remission is not a right, but rather a discretionary remedy, it seems unwise to foreclose its availability on largely arbitrary grounds, particularly as it may in some instances save parties from entirely relitigating their dispute. Better, perhaps, is the English or American position, which does not specify in statute what form the tribunal must take or delve into the mode of its constitution. Of course, this leaves open the possibility that, absent strict instruction from the remitting court as to the nature and scope of the issues for consideration on remission, a new tribunal hearing fresh evidence may need to render an award that departs entirely from its predecessor in critical ways - as might occur when arbitrators from different legal regimes are asked to assess the validity of a contract in [Page171:] light of new documents. (Not that precision on the part of the remitting court will necessarily cure all ills: the District Court in Behr, as the Sixth Circuit pointed out, managed to find ambiguity in a provision it had previously deemed unambiguous, leading to the second of three remissions.93)
Some might also argue that a party forced to 'make do' with its second or third choice of arbitrator in remission proceedings potentially does not enjoy a fully fair and technically adequate process. Think, in particular, of highly specialized disputes arising out of complex engineering or construction projects, or those that turn on arcane points of law. For the party that prizes the opportunity afforded it by arbitration to select an adjudicator well schooled in the intricacies of Greek administrative law or the mechanics of crude oil extraction, the prospect of relitigating key issues before neutrals it deems less than properly qualified to assess new facts or evidence may be unattractive. However, the situations in which remission is likely to be ordered will not usually require the significant rehearing of evidence.
Nonethless, proponents of expediency and predictability in arbitration would do well to consider the ramifications of remission as articulated by national laws and either plan or agitate for modifications accordingly. Proactive measures on the part of arbitral institutions also would not go amiss, and additional efforts in the vein of the ICC to anticipate and adjust for possible remission could do a great deal both to assuage concerns of parties that an award remitted is an award endlessly deferred and create consistency of practice across regions.
National law, though largely uniform in permitting some form of remission to an arbitral tribunal of its award, varies significantly across jurisdictions both with respect to the grounds on which courts may grant such relief, the time during which parties may request it, and the relationship between such a procedure and a petition to set aside. Even among UNCITRAL Model Law jurisdictions, one finds considerable discrepancies in the ways in which courts have chosen to approach remission, particularly with regard to whether an award must be set aside prior to remission, or whether parties may seek the remedy as an alternative to a final setting aside. Non-Model Law countries, for their part, wrangle with similar issues, as well as the added question of whether the tribunal to which an award is remitted must necessarily consist of the same members as the tribunal that issued the original award. Keeping in mind the virtues of flexibility, proponents of remission may wish to consider whether additional efforts should be made to encourage standardization in law and practice at the national legislative level, bearing in mind the desirability of broad harmonization in arbitral curial laws.
In its best form, remission provides courts with an additional procedural tool to manage defective and problematic awards. When used consistently across national and international jurisdictions, it may serve to assist tribunals to get the 'right' outcome. Most importantly, remission will often prove a better remedy than setting aside an award entirely, which would ordinarily leave the parties in the position of having to start their arbitration again from scratch. At its worst, however, remission may add another layer of obfuscation, uncertainty and expense to a process occasionally criticized for failing to live up to the promise of expediency. While national courts may, in their interpretation of applicable national laws, do much to moderate this impression through consistent and timely judgments, they must not allow recalcitrant parties to treat remission as yet another dilatory tactic to slow down the eventual enforcement of an award. Arbitral institutions, too, have their part to play, and should clarify the procedures to be followed in cases of remission, as well as how they will meet reasonable expectations with regard to timeliness and expense when dealing with a reconstituted tribunal.
Both authors are partners with Clifford Chance, Paris. Jason is also the global co-head of Clifford Chance's international arbitration group. Thanks are due to Ms Laura Wolfe and Ms Iryna Glushchenko, both former trainees at Clifford Chance, for their assistance with research for this article.
W.W. Park, 'Why Courts Review Arbitral Awards' in R. Briner et al., eds., Law of International Business and Dispute Settlement in the 21st Century, Liber Amicorum Karl-Heinz Böckstiegel (Carl Heymanns, 2001) 595 at 596.
Although various jurisdictions identify the process by different names - e.g. 'remittal', 'remittance', 'revision', 'revocazione', 'revocation', 'requête civile' - the authors will use the term 'remission' throughout this article to refer to a national court decision to return an arbitral award to the issuing tribunal for review or modification.
See also M. Conthe & A. Delgado, 'Could Awards on Remand Tackle the Inefficiencies of ICSID Annulment?' (2013) 1:2 Latin American Journal of International Trade Law 846 ('From an economic perspective, remission promotes efficiency and reduces waste by avoiding, in appropriate cases, the need to resubmit disputes and start from scratch.')
German Code of Civil Procedure (Zivilprozessordnung, 'ZPO'), § 1059(4); see also S. Riegler, 'The Award and the Courts: Remission of the Case from the State Court to the Arbitral Tribunal' in C. Klausegger, P. Klein et al., eds., Austrian Yearbook of International Arbitration (2012) 238 ('the most suitable cases might be those where a procedural defect (including a violation of the right to be heard) can easily be cured by remission and thereby the sword of Damocles - the award's annulment - may be avoided').
Singapore's Arbitration Act, §§ 47, 48(3).
See e.g. International Chamber of Commerce ('ICC') Arbitration Rules 2012, Art. 35(1) ('On its own initiative, the arbitral tribunal may correct a clerical, computational or typographical error, or any errors of similar nature contained in an award, provided such correction is submitted for approval to the Court within 30 days of the date of such award.'); see also London Court of International ('LCIA') Arbitration Rules 2014, Art. 27; Permanent Court of Arbitration ('PCA') Arbitration Rules 2012, Art. 38; United Nations Commission on International Trade Law ('UNCITRAL') Arbitration Rules 2010, Art. 38(1); Stockholm Chamber of Commerce (SCC) Arbitration Rules 2010, Art. 41(1).
See e.g. UNCITRAL Model Law on International Commercial Arbitration 1985, as amended 2006 ('UNCITRAL Model Law'), Art. 33 ('Correction and interpretation of award; additional award. (1) Within thirty days of receipt of the award, unless another period of time has been agreed upon by the parties: (a) a party, with notice to the other party, may request the arbitral tribunal to correct in the award any errors in computation, any clerical or typographical errors or any errors of similar nature…').
J.-P. Harb, E. Poulton, M. Wittinghofer, 'If All Else Fails: Putting Post-Award Remedies in Perspective', Global Arbitration Review, The European and Middle Eastern Arbitration Review 2012, 16.
English Arbitration Act 1996, s. 68(2)(i).
W. Gu, 'Recourse Against Arbitral Awards: How Far Can A Court Go? Supportive and Supervisory Role of Hong Kong Courts as Lessons to Mainland China Arbitration' (2005) 4:2 Chinese Journal of International Law 481 at 482.
See e.g. the decision of the Quebec Court of Appeal in Cargo Carriers v. Industrial Bulk Carriers, CLOUT case 185, Revue de droit judiciaire  418 (noting that certain grounds might suffice to set aside an award, but not to remit); P. Sanders, 'Quo Vadis Arbitration? Sixty Years of Arbitration Practice, A Comparative Study' (Kluwer, 1999) at 120 (noting that the Model Law presents remission as a possibility pending the setting aside of an award).
But see Yukos Capital SARL v. OJSC Rosneft Oil Company,  EWHC 2188 (Comm) (United Kingdom); Corporación Mexicana de Mantenimiento Integral, S. De R.L de C.V v. Pemex-Exploración y Producción, No. 10 Civ. 206 (AKH), 2013 WL 4517225 (S.D.N.Y. 27 Aug. 2013) (USA); Ciments Français v. OAO Holdingovaja Kompanija 'Siberskij Cement' et al., Arbitrazh Court of Kemerovo Oblast, case no. A27-781/2011, judgment dated 20 July 2011 (Russia); Société Pablak Ticaret Limited Sirketi v. Norsolor S.A., Court of Cassation, case no. 83-11.355, 9 Oct. 1984 (France).
See G. Born, International Commercial Arbitration, 2d ed. (Kluwer, 2014) at 3152.
P. Sanders, 'UNCITRAL's Model Law on International and Commercial Arbitration: Present Situation and Future' (2005) 21:4 Arbitration International 443 at 466 (emphasis added).
UNCITRAL, Report on 18th Session, 3-21 June 1985, UN Doc. A/40/17 (1985) § 305.
See J.D.M. Lew, L.A. Mistelis, S.M. Kröll, Comparative International Arbitration (Kluwer, 2003) 662 at 682, § 25-64 ('The concept of remission is relatively new in most civil law countries.'); UNCITRAL, supra note 17, § 305.
Cargo Carriers v. Industrial Bulk Carriers, CLOUT case 185, Revue de droit judiciaire  418.
ZPO, § 1059(4) (emphasis added) ('Ist die Aufhebung beantragt worden, so kann das Gericht in geeigneten Fällen auf Antrag einer Partei unter Aufhebung des Schiedsspruchs die Sache an das Schiedsgericht zurückverweisen.'); see also P. Sanders, supra note 13 at 120 ('the setting aside proceedings are not suspended but rather a definite setting aside is combined, where appropriate, [with] a remission of the case to the same arbitral tribunal').
Düsseldorf Higher Regional Court (Oberlandesgericht), 22 June 2005, SchiedsVZ 2005, 308; ZPO, § 1059(2); see also Munich Higher Regional Court, 29 Jan. 2007, Neue Juristische Wochenschrift 2007, 2129.
Munich Higher Regional Court, 29 Jan. 2007, supra note 21; Cologne Higher Regional Court, 28 June 2011, SchiedsVZ 2012, 161.
Cologne Higher Regional Court, 28 June 2011, supra note 22.
R. Kreindler et al., 'Germany', Arbitration Guide, IBA Arbitration Committee (Nov. 2013) 17, § XII(iv).
Munich Higher Regional Court, 29 Jan. 2007, supra note 22.
International Arbitration Act 2012 and Arbitration Act 2001, respectively.
L.S. Chan, Singapore Law on Arbitral Awards (2011) 205, § 6.212, 207, § 6.218.
Ibid. at 137, § 6.55.
International Arbitration Act 2012, s. 24; L.S. Chan, supra note 27 at 209, § 6.221.
BLC & Ors v. BLB & Anor,  SGCA 40; see also Front Row Investment Holdings (Singapore) Pte Ltd v. Daimler South East Asia Pte Ltd,  SGHC 80.
L.S. Chan, supra note 27 at 209, § 6.221.
Shanghai Tunnel Eng'g Co. Ltd v. Econ-NCC Joint Venture,  1 SLR 217 at 39, 40, 69.
30 July 2014,  SGCA 40; see also E. Chua, 'The Singapore Approach to Allegations of Awards Infra Petita - BLC & Ors v. BLB & Anor', Kluwer Arbitration Blog (26 Aug. 2014), http://kluwerarbitrationblog.com/blog/2014/08/26/the-singapore-approach-to-allegations-of-awards-infra-petita-blc-and-ors-v-blb-and-anor-2014-sgca-40.
Arbitration Ordinance (Cap. 609), Law No. 38 of 2011, 1 June 2011, s. 81.
J. Choong & J. Romesh Weeramantry, eds., 'The Hong Kong Arbitration Ordinance: Commentary and Annotations' (2011) 434, § 81.70(81.71; see also Chinney Construction Co. Ltd. v. Po Kwong Marble Factory Ltd,  3 HKRLD 758 at 786(787.
W. Gu, supra note 12 at 481.
 HKCFI 1077 (15 June 2015).
Ibid., §§ 36(41.
Arbitration Ordinance (Cap. 609), Schedule 2, §§ 4, 5.
Arbitration Ordinance (Cap. 609), Schedule 2, §§ 4(5), 5(7).
J.-P. Harb et al., supra note 9 at 16
Code de procédure civile ('CPC'), Art. 1485 ('La sentence dessaisit le tribunal arbitral de la contestation qu'elle tranche …').
Ibid. ('Toutefois, à la demande d'une partie, le tribunal arbitral peut interpréter la sentence, réparer les erreurs et omissions matérielles qui l'affectent ou la compléter lorsqu'il a omis de statuer sur un chef de demande. Il statue après avoir entendu les parties ou celles-ci appelées. Si le tribunal arbitral ne peut être à nouveau réuni et si les parties ne peuvent s'accorder pour le reconstituer, ce pouvoir appartient à la juridiction qui eût été compétente à défaut d'arbitrage.').
J.-P. Harb et al., supra note 9 at 17 ('As such, only the parties themselves, and not the state courts, may, under certain circumstances, remit to a tribunal an award that the parties had agreed would be final.' Emphasis added.).
M. Conthe & A. Delgado, supra note 4 at 849.
Primera Maritime (Hellas) Ltd et al. v. Jiangsu Eastern Heavy Industry Co. Ltd et al.,  EWHC 3066 (Comm), § 6 (describing the nine grounds of s. 68(2) as a 'closed list').
Warborough Investments Ltd. v. S. Robinson & Sons (Holdings) Ltd,  EWCA Civ. 751, § 60 ('the courts should accord a reasonably generous margin of appreciation to arbitrators in the discharge of their functions').
L. Shore & G. Carey, 'Procedural Irregularity: Setting Aside or Remitting Awards Under English or Irish Law - a Comparative Assessment' (2005) 8:2 International Arbitration Law Review 58 at 60 ('England has effectively declined to import into s. 68 the American "manifest disregard of law" ground for overturning arbitral awards.').
See e.g. B v. A,  EWHC 1626 (Comm) (concluding that a conscious disregard for the applicable law is a 'necessary, but not sufficient requirement' to set aside an award pursuant to s. 68(2)(b)); Hussman (Europe), Ltd. v. Al Ameen Dev. & Trade Co.,  EWHC 210 (partially setting aside an award pursuant to s. 68(2) where the tribunal disregarded clearly applicable legal principles); see also New York City Bar Association, 'The 'Manifest Disregard of Law' Doctrine and International Arbitration in New York', Report by the Committee on International Commercial Disputes (August 2012) at 16 ('While it may be too soon to say that England embraces a "conscious disregard" doctrine per se, its review of arbitral awards under a variety of grounds for vacatur and the language the courts use in conducting that review approach the American doctrine of manifest disregard to a greater degree than other major arbitral seats.').
Checkpoint v. Strathclyde Pension Fund,  EWCA Civ. 84, § 60.
S. 68(2); see also L. Shore & G. Carey, supra note 53 at 58 (describing the structure of the English Arbitration Act).
Bulfacht (Cyprus) v. Bonsett Shipping: The MV Pamphilos,  EWHC 2292 (Comm); see also Primera Maritime, supra note 51, § 6 (dividing the test into three prongs: a significant procedural irregularity; the irregularities fall within the nine categories of s. 68(2); and the irregularity led to substantial injustice).
Warborough Investments Ltd, supra note 52, § 52.
Al-Hadha Trading Co. v. Tradigrain SA,  2 Lloyd's Report 512.
Egmatra AG v. Marco Trading,  Lloyd's Report 862.
9 U.S.C. § 1 et seq.
Chapter 2 of the Federal Arbitration Act (9 U.S.C. § 201 et seq.) adopts the United Nations Convention on the Recognition and Enforcement of International Arbitral Awards via transposition into federal law, while Chapter 3 (9 U.S.C. § 301 et seq.) does the same for the Inter-American Convention on International Commercial Arbitration.
M.W. Friedman & F. Lavaud, 'United States', Arbitration Guide, IBA Arbitration Committee (Sept. 2012) 2, § II(ii) (2012) ('Chapter 1 applies to domestic arbitration. Chapters 2 and 3 govern international arbitration by implementing the New York and Panama Conventions, respectively, with residual application of Chapter 1.').
Federal Arbitration Act, 9 U.S.C. § 10(b).
See Wilko v. Swan, 346 U.S. 427 at 436(437 (1953) (identifying 'manifest disregard of law' as a ground for vacatur); see also McCarthy v. Citigroup Global Markets, Inc., 463 F. 3d 87, 91 (CA1 2006); Prestige Ford v. Ford Dealer Comp. Services, Inc., 342 F.3d 391 at 395(396 (CA5 2003). But see Hall Street Associates L.L.C. v. Mattel Inc., 552 U.S. 576, 128 S. Ct. 1396 at 1404 (2008).
See Hall Street Associates, supra note 65 at 1404.
Federal Arbitration Act, 9 U.S.C. § 10(a)(1)((4).
Duke Energy International v. Republic of Peru, 2012 WL 4045191 (2012).
Ibid., quoting Telenor Mobile Communications, AS v. Storm LLC, 351 F. App'x 467 at 469 (2d Cir. 2009).
Litvak Packing Co. v. United Food & Commercial Workers, 886 F.2d 275, 276 (10th Cir. 1989); see also U.S. Energy Corp. v. Nukem Inc., 400 F.3d 822 (2005).
400 F.3d 822 (2005).
See e.g. UNCITRAL Arbitration Rules 2010; PCA Arbitration Rules 2012; SCC Arbitration Rules 2010.
For examples of such cases see J. Fry, S. Greenberg, F. Mazza, The Secretariat's Guide to ICC Arbitration (Paris, 2012) at 359, 360.
Ibid. at 357.
But see N. Voser & A. George, 'Revision of Arbitral Awards' in P. Tercier, ed., Post Award Issues, ASA Special Series No. 38 (Juris, 2011) 43 at 45 (pointing out that some states and the UNCITRAL Model Law impose time limits for applications to set aside awards).
M&C Corporation v. Erwin Behr GmbH, 87 F.3d 844 at 846(847 (6th Cir. 1996) (Behr I).
M&C Corporation v. Erwin Behr GmbH, 44 F.3d 749 at 752 (6th Cir. 2005) (Behr IV).
Ibid. at 753.
Sir Winston Churchill is credited with the saying 'Never, never, never give up'.
Behr IV at 755.
Ibid. at 756.
The arbitrator issued his original award in 1994.
Behr IV at 751
Ibid. at 762.
See e.g. German ZPO, § 1059; US Federal Arbitration Act, § 12; French CPC, Art. 1502.
See e.g. Checkpoint Ltd. v. Strathclyde Pension Fund,  ECWA 84 (Civ.), § 59, citing Egmatra v. Marco Trading Corp.,  1 Lloyd's Report 862 (Comm.); Ethyl Corp. v. United Steelworkers of America, AFL-CIO, 768 F.2d 180, 188 (7th Cir. 1985).
John Holland Pty Ltd v. Tokyo Engineering Corp. (Japan),  1 SLR(R) 443 at ; see also K.H. Shahdadpuri, 'The Natural Justice Fallibility in Singapore Arbitration Proceedings' (2014) 26 Singapore Academy of Law Journal 562 at 567.
See S. Riegler, supra note 5 at 239.
BLC & Ors v. BLB & Anor,  SGCA 40 (Singapore Court of Appeal, 30 July 2014).
Behr IV at 755.