Originally from The College of Commercial Arbitrators Guide to Best Practices in Commercial Arbitration, Fifth Edition

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This chapter focuses on awards in U.S. domestic arbitration and only briefly mentions certain different requirements and practices for international arbitral awards. For more information on the latter, see chapter 18, infra.

I.           EXECUTION OF ARBITRAL POWERS: MAKING AN ENFORCEABLE AWARD

Arbitration’s fundamental goal is an enforceable award that finally resolves the parties’ dispute. Under the FAA, a court may vacate an award when “the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C.
§ 10(a)(4) (emphasis added). Nearly all state arbitration acts contain comparable provisions. These provisions state the overarching principle by which reviewing courts judge awards.

Court decisions provide instruction on the ways in which arbitrators “exceed[] their powers” or do not make a “final and definite award on the subject matter submitted.” Examples follow:

a.          Failing to decide all matters submitted to arbitration. See Norfolk Southern Ry. Co. v. Sprint Communications Co., 883 F.3d 417, 422-23 (4th Cir. 2018) (award that purportedly disposes of the entire case but fails to decide a material claim or defense is incomplete and therefore not “final” under 9 U.S.C. § 10(a)(4)). 

b.         Deciding matters that were not submitted. See PNY Techs., Inc. v. Netac Tech. Co., 800 F. App’x 110, 112 (3d Cir. 2020).

c.          Awarding relief outside the arbitrator’s authority. See High Concrete Structures, Inc. v. United Electrical, etc., Local 166, 879 F.2d 1215, 1218 (3rd Cir. 1989) (arbitrator exceeded his authority by rewriting part of a collective bargaining agreement); Black Hills Surgical Physicians v. Setliff, III, 855 N.W.2d 407, 408-13 (S.D. 2014) (award of attorneys’ fees was contrary to parties’ agreement); Rivera v. Thomas, 316 F.Supp.2d 256, 261 (D. Md. 2004) (arbitrator improperly apportioned the arbitration costs and fees between the parties where the employer had promised to pay all costs and fees).

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Prudence dictates that any doubts about authority to grant specific relief or arbitrability of any claim for or against any person or entity should trigger a request for briefing on those questions.

II.          SCOPE AND COMPLETENESS

The award must (a) stay within the substantive scope of the subject matter presented and (b) decide all issues submitted. Accordingly, arbitrators should ensure that, as early as practicable, each party clearly states each claim, defense, and other issues it wants decided and the specific relief it seeks. Ideally, the foregoing can be obtained readily from the pleadings. But the domestic arbitral institutional rules require only general pleading, and state and federal pleading rules do not apply to arbitrations (meaning there is no pleading required in ad hoc matters). See AAA Rule R-4(a)iv)d) (claimant need only state the “nature of the claim”); AAA Rule R-5(a) (“respondent may file an answering statement”); CPR Non-Admin. Rule 3.3d and CPR Admin. Rule 3.2d (claimant need only “state…the general nature of the . . . claim”); CPR Admin. Rule 3.7c and Non-Admin. Rule 3.5b (notice of defense need only state “general nature . . . of the . . . defense”). JAMS Rule 9, the most stringent, mandates “reasonable and timely notice of claims, affirmative defenses or counterclaims.”

Thus, the prudent arbitrator should require pleadings sufficient to identify all claims and defenses and at least a summary of facts alleged in support of each. And in some cases, the arbitrator may require the parties jointly to stipulate to a binding list of issues and sub-issues. For example, in cases with numerous claims (e.g., large construction cases), the arbitrator may ask the parties to format claims in a spreadsheet that, by issue, (i) states each party’s position, (ii) shows whether it is still in play, and (iii) makes references to and comments about key evidence.

Because the hearing may focus on only some of the claims and defenses pled, or just some elements of claims and defenses, arbitrators sometimes ask the parties to identify and address, in post-hearing briefs, each issue that remains contested or to submit a final joint stipulation regarding issue and relief scope. This process ensures the award addresses only the issues still in dispute and only the relief sought.