ConstructionPro Week, Volume: 5 - Issue: 28 - 07/15/2016

Should Arbitrators Explain Their Decisions?

One attraction of binding arbitration as a mechanism for resolving disputes is the relative informality in comparison to judicial litigation. Informality can have disadvantages, however. One is the limited explanation of the basis for the arbitrators’ decision.

In a recent case, a project owner challenged an arbitration award in favor of a contractor. The owner contended the arbitrators did not render a “reasoned award,” as promised, because they failed to explain each element of the damages they awarded the contractor.

A federal appeals court said a reasoned arbitration award is not required to include a line-by-line analysis of the claim and resulting award. A substantive statement of the basic rationale for the overall damage award was sufficient.

How much of an explanation do you think arbitrators should provide? Should arbitration clauses be written to require detailed findings of fact and conclusions of law? Your comments are welcomed.

COMMENTS

If both parties are paying for the arbitration process, and it's spelled out as a deliverable in the scope of services, then yes, the rationale for the decision should be provided.
Posted by: Neal Milden - Friday, July 15, 2016 10:58 AM

Having recently been "victim" to an entirely unreasoned arbitration decision, I think that any such decision ought to be supported by reasonably detailed explanations of findings regarding the technical as well as legal merits. Lacking this requirement leaves the door wide open for unchecked bias. This is particularly true if the decision is binding.
Posted by: Wolfgang Roth - Friday, July 15, 2016 11:25 AM

Yes, any arbitration decision should include a detailed explanation. The arbitrator is being paid to provide a service that in most cases is a binding decision I do not understand why a reasonably detailed explanation of the decisions wouldn't already be a requirement of the arbitration process. These are cases of dispute that apparently cannot be resolved out of court without arbitration. Although the final decision may not be to one of the parties liking the explanation may help to provide some means of understanding and acceptance of the final decision.
Posted by: Michael Howard - Monday, July 18, 2016 3:38 PM

It depends upon what the parties want. A reasoned decision adds to the expense of the process but can help parties feel that proper consideration was given to their positions and can help guide future conduct.
Posted by: Tom Folk - Wednesday, July 20, 2016 2:26 PM