Arbitration, a form of alternative dispute resolution (ADR), is a process where two parties make their arguments to an arbitrator, who is a neutral third party, instead of litigating the matter in court. The arbitrator, typically a lawyer or retired judge, makes a decision following the arbitration hearing. The decision is legally binding and enforceable by the court, unless all parties stipulate that the arbitration process and decision are non-binding.
While arbitration may be court-ordered, it frequently occurs because the dispute involves a contract containing an arbitration clause. This contract is signed long before any disputes arise, meaning that both parties willingly agreed to resolve their disputes through arbitration from the moment that the contract and the clause are agreed to. Also, the contract will specify whether the arbitrator’s decision is binding or non-binding. If the arbitration is binding, then the parties are required to treat the arbitrator’s decision as a final decision. Non-binding means that the parties are not legally bound to the arbitrator’s decision and can litigate the issue in court if they are dissatisfied with the outcome from the arbitration process.
An arbitration award is the award granted by the arbitrator in their decision. This award can be money one party has to pay to the other party. It can also be a non-financial award, such as stopping a certain business practice or adding an employment incentive.
No. A jury award is an award, typically monetary damages, given by a jury in a civil court following a regular civil trial. An arbitration award is given by an arbitrator in an arbitration hearing, not in court.
As mentioned above, your ability to appeal an arbitration award usually depends on whether or not the arbitration was binding. If the arbitration is non-binding, you are free to appeal with award without needing a valid reason to appeal. However, if the arbitration is binding, then you need a valid reason to appeal the award in court, just as you would if it were a jury award.
The following are some reasons that will permit you to appeal a binding arbitration award:
- The arbitrator went beyond their powers outlined in the arbitration clause of the contract
- There was some prejudicial misconduct on the arbitrator’s part
- The contract containing the arbitration clause is unconscionable or otherwise void, meaning that the arbitration clause is unenforceable
- The winning party used fraud or corruption to obtain the positive decision
- The arbitrator made a mathematical error when calculating the wining party’s financial award
If you win an appeal contesting the arbitration award, the award is vacated. This means that award is no longer granted. Also, the dispute may then be litigated in court without having to go through the arbitration process again.
If you have a contract dispute and are required to arbitrate the dispute, contact a business lawyer. They can assist you in the arbitration process or with appealing the arbitration award given if you are unhappy with the outcome in the arbitration.