Originally from The Reasoned Arbitration Award in the United States: Its Promise, Problems, Preparation and Preservation

Chapters Fifteen–Sixteen: Writing standard awards and findings of fact and conclusions of law. The next two chapters provide a brief interlude on standard awards and findings of fact and conclusions of law, the latter of course a form of reasoned award. They are addressed primarily to arbitrators tasked with writing these forms of award. Chapter Fifteen recommends bolstering standard awards by including evidence that the arbitrators did indeed attend to their job, even though a standard award does not let arbitrators actually explain the outcome. A little bit of procedural history and other concreteness can go a long way to establishing the credibility and legitimacy of standard awards.

PREVIEW.

from Chapter 15.  Making Standard Awards More Reasonable.

One could read this book, thus far, as an ode to the reasoned award. It recommends that all arbitration providers, including the AAA, treat reasoned awards as their default form and that arbitrators do the same in ad hoc arbitrations. But some parties have a different idea about what they want. They are looking to their arbitrators to make grounded, often sophisticated equitable judgments without being tightly bound by the law or by legal formalities. They want to know who won and what remedies are awarded, but without explanation. When the parties choose a standard award because they do not want an explanation, naturally a different set of principles applies.

Even if the world of arbitration is changing, an older kind of arbitration that leads to bare awards still plays a vital role in private dispute resolution. The continued availability of silent awards is absolutely necessary to preserve arbitration as a flexible process of user choice. Standard awards remain the form of choice in a number of industries. They leave their imprint in construction arbitration’s list awards, for instance, and explain much of the form of FINRA securities’ awards, too, even in those that FINRA calls “explained” awards.  Moreover, the shorter the hearing (on average) and the less at stake (again, on average), the less there is to put into an award. Some arbitrations really do deserve just a short decision.

In general, standard awards can avoid some cost and at least a little delay, sometimes more than a little delay, when those are paramount party concerns. The need to avoid swamping “small” disputes with formal procedures may be why the AAA still makes these awards the default in its commercial rules, even though those same rules switch to reasoned awards for construction cases with a million dollars or more at stake.  Standard awards can save parties in a close business relationship from fact findings that might so anger one or both sides that the written statement of wrongdoing destroys the ongoing venture. They maximize protection of confidentiality. Standard awards can prevent an award’s being used preclusively by other parties or by one of the same parties in other venues. Parties always have a right to select a standard award.

Requesting a standard award does not mean, though, that the parties want no evidence at all that the arbitrators did their job. They may not want to know the arbitrators’ thinking about the merits, but not necessarily avoid all nonsubstantive details about the arbitration, too. It is human nature to want an assurance that the arbitrators did fully understand the case, even when the parties for their own reasons do not want a permanent declaration of the rationale underlying the merits decision. Even in a standard award, adding a few details about how the arbitration proceeded can assure the parties that the process was indeed thorough and fair.

When drafting standard awards, arbitrators can display the reasonableness of their work and therefore its legitimacy by including concrete details about the arbitration’s history and the context of the decision-making. These relatively brief details demonstrate attention to the proceeding. They let arbitrators write awards that are “reasonable” even though not “reasoned.” At the same time, arbitrators must remain vigilant against the temptation of explaining factual and legal conclusions, because the parties have told them not to.