## Facts

- T. Co. Metals, LLC (TCM) agreed to sell steel pipe to Dempsey Pipe & Supply, Inc. (Dempsey) under two sales contracts.
- The contracts required arbitration under the American Arbitration Association’s International Centre for Dispute Resolution (ICDR) rules, with New York law governing and New York City as the seat.
- A dispute arose concerning unpaid invoices and allegedly defective pipe.
- In the ICDR arbitration, TCM sought payment on invoices (plus interest and costs), and Dempsey asserted counterclaims seeking substantial damages for the alleged defects.
- The sole arbitrator issued a Final Award on April 20, 2007 (the “Original Award”).
- Both sides requested corrections under ICDR Article 30(1). The arbitrator issued an Amendment Order on May 30, 2007 and an Amended Final Award on June 4, 2007 (the “Amended Award”).
- The arbitrator described the changes as corrections tied to errors in the inputs used to compute damages, including: misreading a unit of measure on an invoice, using an invoice for the wrong pipe size, and failing to separate invoices for pipes with different end pieces.
- TCM petitioned in the Southern District of New York to vacate the award under the Federal Arbitration Act (FAA), arguing the arbitrator awarded damages barred by the contracts’ limitation on consequential damages and did so in manifest disregard of governing law.
- Dempsey cross-petitioned to vacate or modify/correct, arguing the arbitrator lacked authority to issue the Amended Award after the Original Award (functus officio/excess of powers) and that the award contained material miscalculations correctable under FAA § 11.

## Issues

1. Whether the arbitrator acted in manifest disregard of the law by awarding Dempsey damages that TCM characterized as barred consequential (or lost-profit-type) damages under a contractual limitation of liability.
2. Whether the arbitrator exceeded his powers (including under the functus officio doctrine and the limited correction authority in ICDR Article 30(1)) by issuing the Amended Award based on revised damages inputs rather than purely clerical or arithmetic corrections.
3. Whether any portion of the award contained an evident material miscalculation of figures warranting modification or correction under FAA § 11.

## Decision

- The court denied TCM’s petition to vacate on manifest-disregard grounds.
- The court granted in part and denied in part Dempsey’s cross-petition.
- The court held the arbitrator exceeded his post-award authority by making changes in the Amended Award that went beyond narrow, correction-type revisions.
- The court vacated the Amended Award and confirmed the Original Award (subject to only limited court-ordered correction, if any, for evident miscalculations permitted by FAA § 11).
- The court declined to use FAA § 11 as a vehicle for a broad recomputation of damages based on different factual inputs.

## Legal Principles

- Review of arbitral awards under the FAA is highly limited; courts do not revisit the merits simply because a party claims legal or factual error.
- “Manifest disregard of the law” requires more than an arguable mistake; it requires a showing that governing law was clear, the arbitrator knew it, and the arbitrator refused to apply it.
- Under FAA § 10(a)(4), an award may be vacated when an arbitrator exceeds the authority granted by the parties’ agreement and the governing arbitration rules.
- Under the functus officio doctrine, once an arbitrator issues a final award, the arbitrator’s role generally ends, subject to narrow exceptions such as correcting clerical or computational mistakes as allowed by the parties’ rules.
- Correction provisions in arbitral rules (including ICDR Article 30(1)) are read narrowly in post-award practice and typically permit only limited fixes, not a renewed evaluation of evidence used to calculate damages.
- Under FAA § 11(a), a court may modify an award for an evident material miscalculation of figures, but it may not re-decide disputed factual inputs or reweigh the record under the label of “math correction.”

## Conclusion

The court refused to vacate the award on the theory that the arbitrator manifestly disregarded New York law governing damages and contractual limits, but it ruled that the arbitrator lacked authority to issue an amended award that reflected more than minor, correction-type edits after the original final award; the court therefore vacated the amended award, confirmed the original award, and allowed only narrow correction consistent with FAA § 11.


Dempsey Pipe & Supply, Inc. v. T. Co. Metals, 07 Civ. 7747 (PAC) (2008)