What is an Arbitration Award?

Dee Saale
Dee Saale

One of the most common forms of dispute resolution is arbitration. Through the arbitration process, an arbitrator listens to the disputes between two or more parties. Depending on the specific kind of arbitration, there may or may not be lawyers involved. There may be expert witnesses and even a presentation of physical evidence in many arbitration disputes. After hearing each party present their side of the dispute, the arbitrator then renders her decision, called an arbitration award.

Arbitration awards lack some of the in-depth explanation offered by a courtroom judge.
Arbitration awards lack some of the in-depth explanation offered by a courtroom judge.

A contract, written and signed long before a dispute arose, will usually dictate the specifics of the arbitration proceeding. For example, it will state whether lawyers can be present and, most importantly, whether the final decision of the arbitrator will be binding. In most cases, the award will hold firm, just like the decision of a courtroom judge. In the alternative, if the contract specifies that the decision is not binding, then the parties do not have to comply with the arbitrator’s decision.

In most cases, the arbitrator has about 30 days to reach her decision on the issues in dispute. As mentioned before, the decision is called the arbitration award. The award can be financial or it can be a matter of halting some form of labor practice, adding some form of employment incentive, or another form of non-financial award.

In a courtroom, a judge must give the parties the reasons behind his decision. In an arbitration proceeding, the arbitrator does not necessarily need to give a list of reasons behind the award. If the arbitrator does give the reasons behind the award, it is called a reasoned award. In the contrary, if no reasons are given to back her decision, it is called an abbreviated award.

Once an arbitration award is made, it is considered final and cannot usually be appealed. There are some exceptions to this rule. For example, if a party won the award using corruption or fraud, if the arbitrator engaged of some form of prejudicial misconduct, or if the arbitrator went beyond the powers stated in the arbitration clause of the contract, the award can be vacated. This means that the arbitration award has no effect – it is like it never happened. In addition, if one of the parties discovers that the arbitrator made an error in calculating a financial award, the award can be modified to compensate for the error.

Dee Saale
Dee Saale

Dee is a freelance writer based in Colorado. She has a B.A. in English Literature, as well as a law degree. Dee is especially interested in topics relating to medicine, legal issues, and home improvement, which are her specialty when contributing to wiseGEEK.

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Discussion Comments

So, fun fact about arbitration: those legal shows on television that show a "judge" deciding a civil case are actually showing a binding arbitration session! Someone told me that a few years ago, and I thought that was really interesting. Although in those cases, the arbitrator decides in a lot less time than 30 days.

Anyway, I have to wonder about arbitration award enforcement. What happens if someone doesn't comply with the arbitrator decision? Is the case then decided in regular court?


@SZapper - Yeah, clauses that demand the use of arbitration services are pretty common in contracts. It's definitely a good idea to make sure you know exactly what they entails before you sign something, as you said.

Anyway, I think I would be frustrated if I was involved in arbitration, and the arbitrator didn't have to give a reason behind the arbitration award. I guess I'm just a very detail oriented person, because I like to have all the information about stuff like that!

Also, I imagine this would be especially frustrating if the arbitrator doesn't decide in your favor! I know if I lost a legal battle, I would want to know exactly why.


A lot of contracts have an arbitration agreement in them, especially employment contracts and terms of service contracts. You have to really watch out, sometimes they specify the arbitration will take place in a certain jurisdiction.

A lot of times, arbitration agreements also state the any disagreement will be settled with binding arbitration. As the article said, that means the decision of the arbitrator regarding the issue will be final, not just a suggestion! So make sure to read all your contracts before you sign them so you know what you'll be getting yourself into!

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