The Pathologies of Unreasoned Awards - Chapter 5 - 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.
Chapter Five takes the recurrent failures of the awards discussed in Chapters One and Chapter Four and groups them into six “pathologies” of unreasoned awards. These categories should make defective awards much easier to spot. They can be used as a checklist or “cheat sheet” for testing the adequacy of an award’s reasoning. The categories should help arbitrators who want to make sure their reasoned awards are truly adequate, losing parties who need to decide whether gaps in an award’s reasoning are sufficiently serious to warrant challenging the award, and courts who have to decide whether an award violates the reasoned-award form. That the typical flaws in reasoning are recurrent and generalizable is cause for optimism. Predictable, repetitive defects usually can be cured. Losing parties should be able to easily spot such defects. The flaws are sufficiently glaring that arbitrators ought to be eager to avoid them, courts eager to replace the Cat Charter test with an effective one, and providers eager to finally adopt a definition of an adequately reasoned award.
from Chapter 5. The Pathologies of Unreasoned Awards
Every unreasoned award may seem to be unreasoned in its own particular way, in good part because every arbitration has its own particular facts and evolves in its own particular way. Some kinds of unreasoned awards, however, appear more frequently than others. Awards that are implausibly short, for instance, and leave no room for anything but a few stage-setting background facts, if that, and the arbitrators’ conclusions, are common. They are best called announcement awards. All they really do, all they have room to do, is announce the winner.
Partial announcement awards are awards that give reasons for some part of the arbitrators’ thinking, but not others. These awards remain unreasoned because they do not explain the outcome of all matters submitted to the arbitrators for decision.
There are cases in which arbitrators may describe so much of the parties’ positions, though not showing their hand on what they thought about either side’s arguments, that a court is fooled by a detailed description of contentions into thinking it is reading a reasoned award. This is a contention award. The arbitrators summarize the parties’ respective positions but never say why they find one side’s case more persuasive than the other’s. They omit their own thinking, the one thing everyone wants to know.
Other awards say nothing of substance, but assert that the arbitrators reviewed all pertinent categories of information. These are attestation awards. The arbitrators attest that they reached the outcome with proper reasoning and analysis but they do not demonstrate it by including their rationales.
Two sophisticated forms of attestation awards are burden-meeting and credibility awards. In these awards the arbitrators creep toward the realm of actual reasons by asserting that the winning party met its “burden,” or the losing party did not, or that the arbitrators found for a party based upon its greater “credibility.” Yet those generic statements could apply to any arbitration. The arbitrators could even draft them before the arbitration begins. They are empty labels. The arbitrators do not say how the winner met its burden or the losing party failed its burden, or why one side was more credible than the other.
Awards that frame the issues in some detail, or describe the parties’ contentions, or that otherwise have detailed descriptions, tend to take on considerable bulk. They can use so many words that they qualify as volumetric awards, awards with so many words that they look reasoned because they certainly have a lot to say. No matter how long an award, though, if it does not explain the arbitrators’ views on the merits, it is not reasoned.
An evidentiary list award is a special form of a volumetric award. It can list a lot of evidence, giving the award bulk and an appearance of having a lot of detail, but it is not reasoned if the arbitrators do not say what they think about the evidence listed.