Originally from Dispute Resolution Journal

The debate as to whether arbitrators are empowered to authorize punitive damages is ongoing. Court decisions of the last several years have done little to clear the air, other than to make it even more apparent that there is a greater need for the parties to make their intentions clear as to the parameters of arbitral authority when agreeing to the language of the arbitration clause. "One thing is clear," says author Lorenzo Marinuzzi. "The standard boilerplate arbitration agreement is changing this very day." Marinuzzi takes a close look at the relevant case law.

When parties submit a disputed matter to arbitration, they seek a resolution independent of the judicial authority of the state. The promise of an often faster, less expensive, less formal and more convenient process makes arbitration a reasonable alternative to ordinary court proceedings.1 Punitive damages are generally awarded for the public benefit and in the interest of society as a whole. Punitive damages, unlike compensatory damages, do not seek to compensate a wronged party, but rather are in addition to compensatory damages. When a party is ordered to pay punitive damages, that party is punished so that they and others may be deterred from engaging in the same course of conduct in the future.2