Desirable Reforms - Chapter 17 - The Reasoned Arbitration Award in the United States: Its Promise, Problems, Preparation and Preservation
John Burritt McArthur has been serving as an arbitrator since 1994. He has 23 years of experience as an arbitrator, 34 years as a trial lawyer in state and federal courts around the country, and is licensed to practice in Texas, California, and Alaska as well as in a variety of federal courts. He was a Partner at Susman Godfrey LLP, worked for Hosie McArthur LLP for several years, and today has a solo practice that combines arbitration practice with complex commercial trials. He has major litigation and arbitrator experience in five main areas: Energy, Oil and Gas, Electricity; Contract and Tort Business Disputes, including UCC Disputes; Antitrust; Investment Disputes, Fiduciary and Joint Venture Claims, Securities and Insurance. Mr. McArthur's broad work experience is equally suited to business and commercial arbitrations. He has represented plaintiffs and defendants in large, often highly technical commercial cases throughout his career. He has handled federal and state court cases, arbitrations, cases in MDL proceedings and class actions. His clients have ranged from some of the world's largest corporations, including Aetna and British Petroleum, to Alaska native corporations, States, individuals and small businesses. Mr. McArthur has been acknowledged for his litigation experience by his peers. He is currently chair of the LCA's International Institute on Natural Resources, Energy and Environmental Law. He has long held an "av" rating from Martindale-Hubbell. He is a member of the Million-Dollar and Multi-Million-Dollar Advocates Forum. He has published dozens of articles on legal issues, including on energy issues, arbitration, case management, various aspects of deregulation, and antitrust. He has also served as an expert in energy cases.
A statement of his arbitration philosophy can be found at http://www.johnmcarthurlaw.com/arbitration.htmz.
Chapters Seventeen–Eighteen: Reforms to make arbitration more reasoned when that is what the parties want. Readers who want recommendations on how to put reasoned awards on a firmer footing than they are in this Cat Charter era should turn to Chapter Seventeen. The chapter urges courts and providers to reorient their practices along the lines of Chapter One’s definition of reasoned award. Providers should define each major award form, and particularly define what “reasoned” means. The absence of a clear, authoritative definition hurts arbitration. Courts need to correct the wrong turn of the Cat Charter opinion and its followers. The AAA should consider whether to make reasoned awards its default form in commercial arbitration, not just its default form for certain of its specialized rules, or at least whether to make reasoned awards its default form in “big” cases, just as it has done with construction cases with a million dollars or more at stake.
from Chapter 17. Desirable Reforms
What rule changes would be most likely to strengthen arbitration, give the parties power to clarify when they want the arbitrators to explain the basis for their decisions, and thus make sure that parties get reasons when they are entitled to them? What changes will stop arbitrators from avoiding reasons when they are supposed to provide them? What might persuade the Eleventh, Fifth, and Second Circuits, and other courts unwisely thinking of following their weak, porous standard for reviewing reasoned awards, to abandon the Cat Charter standard, so that awards that force courts to guess or imply reasons no longer will be confirmed as reasoned?
Taking effective measures to enforce party choice on the form of award will strengthen arbitration. The most important step reflects the major theme of this book: providers, parties, and courts need a clear definition of reasoned awards. If the definition of “reasoned award” urged in Chapter One is adopted, either in haec verba or in other words that have the same substance, the definition will guide arbitrators away from defectively unreasoned awards. It will give much-needed guidance to the courts and, by bolstering judicial courage, make courts more comfortable about vacating awards that are not adequately reasoned.
This book has analyzed a number of problems with the level of reasoning in arbitration awards. Many of these problems were caused or at least encouraged by the lack of definitions and guidance on award forms. Domestic rules do not even define “award,” much less “reasoned” or “reasoned award.” Nor do treatises, the various Guides and Handbooks, statutes, or commentator articles. The omissions may be vestiges of the older, free-form model of arbitration and the understandable, but sometimes self-defeating, fear that the more rules tie arbitrators down, the more arbitration will accrue the delay, cost, and (on the theory that reasons expose awards to challenge and vacatur) lack of finality of court cases. Yet clarity on whether arbitrators need to explain their decisions, while restricting arbitrators somewhat, will not cripple arbitration. Clarifying the necessary content of each form of award will make awards better express the parties’ true preferences and thus serve arbitration’s deepest goal, which is to honor the parties’ instructions about how to resolve their disputes.