|Help

Punitive Damages in Arbitration: The Debate Continues - Chapter 43 - AAA Handbook on Commercial Arbitration - 2nd Edition

Author(s): 
Lorenzo Marinuzzi
Page Count: 
16 pages
Media Description: 
PDF from "AAA Handbook on Commercial Arbitration - 2nd Edition"
Published: 
September, 2010
Jurisdictions: 
United States
Practice Areas: 
Indemnity, Damages, Punitive Damages,
FAA
Author Detail: 

Lorenzo Marinuzzi is a graduate of the Fordham University School of Law and is partner at the law firm of Morrison & Foerster LLP in New York City.

PDF181.16 KB

$40.00
Description: 
 
I. Introduction
 
When parties submit a disputed matter to arbitration, they seek a resolution independent of the judicial authority of the state. The promise of an often faster, less expensive, less formal and more convenient process makes arbitration a reasonable alternative to ordinary court proceedings.1 Punitive damages are generally awarded for the public benefit and in the interest of society as a whole. Punitive damages, unlike compensatory damages, do not seek to compensate a wronged party, but rather are in addition to compensatory damages. When a party is ordered to pay punitive damages, that party is punished so that they and others may be deterred from engaging in the same course of conduct in the future.
 
Although it is well-established that courts may award punitive damages when the circumstances so permit, there is a dispute as to whether arbitrators are empowered to make such an award. The implications and ramifications are obvious. A contract that forces parties to arbitrate all disputes may shield a wrongful party from the penalty it might have been subject to in a court proceeding while, at the same time, the aggrieved party may be denied the reward he or she truly desires.
Table of Contents: