Originally from Dispute Resolution Journal

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Money damages may be awarded by a tribunal to an aggrieved party where that party has suffered harm when another (the culpable party) is held to be responsible for the harm.   “Harm” means injury, loss, or detriment to the aggrieved party’s person, property, or rights, whether through the culpable party’s commission or omission. “Loss” includes partial or complete loss of a thing the aggrieved party already properly possessed as well as a loss caused by not receiving some or all of a thing it properly should have received. 

The quantum of damages is the amount that compensates the aggrieved party for the harm (sometimes formulated as “the amount that makes the aggrieved party whole”). That requires (either explicitly or implicitly) creating a fictional “but for” world (i.e., the world if the wrong caused by the culpable party and resulting harm had never occurred); of course, that world does not exist—a world with the wrong and resulting harm is the reality.  The quantum of damages is found in the difference between the “but for” and actual worlds, subject to various possible limitations (contractual limitations, failure to mitigate, etc.).

An arbitration panel faces several challenges when asked to determine damages, starting with understanding as soon as possible what each side says may be owed and why (i.e., understanding what types of damages are being claimed by the aggrieved party, what amounts are being claimed, what lesser amounts the potentially culpable party is asserting may be owed if liability is found, and what the respective rationales (legal and factual) are for the parties’ positions).