Types of Award in Arbitration.

Posted on 09/07/2016 · Posted in Arbitration

Arbitration is a well-accepted form of alternative dispute resolution (‘ADR‘). Rather than undertaking costly and lengthy litigation through formal court proceedings, parties in dispute are turning to arbitration to help resolve their issues. In fact, the UK Courts actively encourage parties to seriously consider ADR before pursuing a case to trial.

The object of arbitration is “to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense”. Arbitration allows parties to have their dispute heard in a less formal setting, with the time and costs incurred usually being lower than court litigation. The additional benefit of arbitration hearings is that they are private and the final decisions are not publicized. Arbitration has also become far more popular in the commercial arena due to the parties abilities to enforce arbitration awards not only in the UK but also internationally by virtue of several conventions (in particular, the New York Convention 1958) and reciprocal agreements.

The virtue of justice consists in moderation, as regulated by wisdom”

An arbitration hearing can be conducted by a sole arbitrator or a panel of arbitrators, called a tribunal. A tribunal is usually an odd number of arbitrators to avoid a split decision). Fees will be payable to the arbitrators. The parties are free to agree on the powers that may be exercised by the arbitral tribunal during the proceedings; they may also be represented by a lawyer during the process. The arbitrators are often appointed for their technical knowledge of the issues in dispute; however, they can also have the power to appoint an expert, legal advisor or assessor to assist on complex points.

The decision of the arbitral tribunal is called an “Award” (even when the Claimant’s claim fails and no damages are paid), it is just as final and binding as a court judgment. Final awards cannot usually be appealed (although they can be challenged in limited circumstances such as bias). Courts generally try to uphold the jurisdiction of arbitrators, and therefore challenges waged on these grounds are rarely successful. However, any remedy awarded must be certain and capable of performance.

The parties are free to agree what costs of the arbitration are recoverable. If there is no such agreement the tribunal will award the recoverable costs of the arbitration on such a basis as it thinks fit.

Awards are not only made for damages. Parties can, for example, obtain injunctions ordering or prohibiting the doing of an act, specific performance of a contract or the rectification or cancellation of a deed or contract.

Several different types of arbitration award can be made:

  • Interim Award – This is a temporary award until the tribunal has given its final decision. A provisional award can only be made if the parties have agreed that “the tribunal may have the power to order on a provisional basis any relief which it would have power to grant in a final award” (s.39 Arbitration Act 1996).
  • This includes;

    1. making a provisional order for the payment of money or the disposition of property as between the parties; or
    2. an order to make an interim payment on account of the costs of the arbitration.

  • Partial Award – Some elements of the parties’ claim have been determined but other issues remain and need to be resolved before the final award is made. Parties can continue arbitrating the remaining issues.
  • Consent Award – Usually the parties have reached a settlement and agreed to terms which are then incorporated into an award which can be enforced similar to a Judgment by consent. A consent award enables one party to take enforcement proceedings when another party fails to comply with the terms of the settlement. Consent awards usually expedite the conclusion of arbitration proceedings.
  • Performance Award – It is most common to see awards made in monetary terms, however, a party can be ordered to perform specific works, hand over goods or rights. For example, a contractor may be required to carry out remedial works in a building to ensure work is finished to the quality required. The difficulty is that these types of award create grounds for further dispute. An arbitrator should award a monetary award where possible in these instances to avoid escalation of conflict.
  • Draft Award -This is not binding on the parties until it has been confirmed by the tribunal.
  • Final Award – This should usually be in writing and signed by all the arbitrators. The award must contain reasons and state where the arbitration took place. It must also be dated (this is important for calculating interest on payments). Once the final award is made this ends proceedings.
  • Additional Award – Usually once the final award it made, the tribunal has no further authority. However, the parties can request an additional award be made on an undecided issue still in dispute.

For directory of articles on arbitration services please click here.

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