THE ABC’S OF WRITING A “REASONED AWARD”
James R. Holbrook
There are three common forms of award in arbitration. The first is a standard award (a simple statement of who won any relief granted) or, if the award is issued under the Construction Industry Arbitration Rules of the American Arbitration Association, a concise written breakdown of the award. The second is a reasoned award or, as described in the AAA construction rules, “a written explanation of the award.” (These rules provide that the parties may request, in writing, a written explanation of the award prior to the appointment of the arbitrator). The third is an award based on findings of fact and conclusions of law.
In the past, arbitrators were advised to issue a naked standard award because of concern that a detailed written opinion “might expose the award to challenge in the courts, jeopardizing both the speed and finality of arbitration.” More recently, however, arbitrators have been encouraged to issue the type of award the parties want. For example, the AAA recommends: “In instances where both parties request an opinion, an arbitrator should comply.” Thus, arbitrators should give the parties the type of award specified in their arbitration agreement. If none is specified but the parties referenced the AAA construction rules,arbitrators should write the kind of award the rules require. However, under AAA rules, arbitrators have the discretion to write an explanation of the award if they believe it is appropriate to do so, even if the parties have not requested it. Because parties usually do not specify the type of award when they enter into project documents, arbitrators should raise this issue during the prehearing conference.
James R. Holbrook, an experienced arbitrator, serves on the AAA’s roster of neutrals and teaches ADR at the S.J. Quinney College of Law at the University of Utah.