Setting the Stage, Building the Foundation - Chapter 9 - 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 Nine–Fourteen: How to write a reasoned award. The six chapters in Part Three, the book’s longest section, discuss how to write reasoned awards. They are written primarily, of course, for arbitrators. Because these chapters propose standards for writing adequately reasoned versions of the award’s various sections, they can also assist parties and their counsel when they are considering challenging awards for lack of reasons, or considering defending them against such attacks. The chapters should help courts weighing the merit of attacks that claim the award needed to say more than it did as well.The six chapters move through the award section by section. Chapter Nine begins, appropriately enough, with the award’s introductory language and threshold or gateway questions.
from Chapter 9. Setting the Stage, Building the Foundation
Just knowing that an award must be reasoned does not tell arbitrators what they need to explain. In general, a reasoned award should explain any question that has to be decided in order to arrive at the outcome. When parties do not contest the building blocks that must be in place before they can get to the merits, issues like party and claims jurisdiction, the applicable law (and how far the arbitrators are bound by it), the burden of proof, the award’s form, and other threshold issues, the award still should describe these foundation stones upon which the arbitrators will mount the award.
Disputes over how much arbitrators ought to explain can arise from almost every aspect of an arbitration. It should be apparent throughout these “how-to” Chapters Nine through Fourteen that arbitrators have broad discretion over how much to write. They certainly need not address every hypothetical issue that someone might dispute, sometime, somewhere, on the same set of facts, or the merits of every abandoned argument, claim, and defense. But a reasoned award should address every claim and theory that might lead to a recovery, one way or the other – every “potentially dispositive” claim and every “live” defense that might block a claim. In addition, a reasoned award needs to establish the groundwork for the arbitrators’ decisions in clear language. Good, reasoned awards address “gateway” and threshold issues and explain how they resolved those in dispute.
Arbitrators writing reasoned awards need to establish why they have jurisdiction over the parties and over the claims, their reading of the law and any contract provisions they rely on for their powers, the burden of proof they employ, and the form of award they are called to deliver; the facts they find material based on the claims and arguments presented and how the arbitrators interpret that evidence; the legal issues they find material and how they read the law and contract; and why they award the remedies, be they actual damages, equitable relief, or something else. This chapter addresses the first section of the award, the portion treating the introductory and threshold questions.
Questions about the needs of reasoned awards usually are phrased as whether an award needs to contain its “rationale” or the authors’ “reasons,” as if this is a unitary question. It is not. Many different parts of a reasoned award can need to be explained – when disputed. When not disputed, the framework elements that are necessary to give an award a firm foundation usually can be demonstrated by citing evidence of the parties’ agreement (or at least the absence of dispute) on them.
This chapter and the next five chapters explore the nature of reasoned rationales in each area of the award. Naturally, the most important rationales usually pertain to the most commonly disputed terrain of the facts and of substantive law. In many cases, though, other issues, including threshold issues, are crucial.