## Facts

- A reinsurer and a life insurer entered a 2002 yearly renewable term reinsurance agreement allowing the reinsurer to increase premiums only if based on a “change in anticipated mortality.”
- If premiums increased, the cedent could “recapture” policies, terminating reinsurance going forward.
- In 2014, the reinsurer raised premiums as the contract became unprofitable; the cedent invoked arbitration, and the parties maintained pre-increase premiums and claim payments during the proceedings.
- In 2015, a majority arbitration award found a qualifying change in anticipated mortality and allowed the premium increase.
- The award also set out recapture-related financial mechanics, but its operative language on calculating amounts owed was ambiguous and generated conflicting party interpretations.
- The arbitration panel later issued a clarification (a superseding order) explaining the intended calculation method.
- The reinsurer sought judicial confirmation of the original award only, arguing functus officio barred the panel from issuing the clarification; the cedent sought confirmation of the clarified award.

## Issues

1. Whether functus officio barred the arbitration panel from issuing a post-award clarification.
2. Whether an ambiguity in a final arbitration award permits arbitrators to clarify implementation details without impermissibly altering the merits.

## Decision

- The court affirmed the district court’s denial of the reinsurer’s petition to confirm only the original award and affirmed confirmation of the award as clarified.
- The court recognized an exception to functus officio: when a final award is ambiguous, arbitrators retain authority to clarify it.
- The clarification was permissible because it resolved ambiguity about calculating the amounts owed and did not reopen or change the panel’s substantive determination that the premium increase was contractually permitted.

## Legal Principles

- Functus officio generally prevents arbitrators from revisiting or modifying a final award after issuance.
- An exception applies when the award is ambiguous; arbitrators may clarify the award to make it workable and enforceable.
- A permissible clarification explains how to implement an existing decision (including calculation mechanics) rather than altering the merits or issuing a new liability determination.
- Confirming clarified awards in this context aligns with federal arbitration policy favoring enforcement of arbitral resolutions and reducing collateral litigation over award meaning.

## Conclusion

The Second Circuit held that an arbitration panel may clarify an ambiguous final award notwithstanding functus officio, and it affirmed confirmation of the clarified award where the panel explained calculation mechanics without changing the substantive outcome.


Gen. Re Life Corp. v. Lincoln Nat'l Life Ins. Co., 909 F.3d 544 (2d Cir. 2018)