The Power of the Arbitrator under Arbitration Law
🔹 The Power of the Arbitrator under Arbitration Law
1. Introduction
In Arbitration Law, an arbitrator is a neutral third party chosen by disputing parties (or appointed by an authority) to resolve a legal conflict outside the formal court system. The power of the arbitrator refers to the legal authority conferred upon the arbitrator to:
Conduct proceedings,
Interpret laws and agreements,
Make findings of fact, and
Render binding awards.
The scope of these powers is defined by the arbitration agreement, applicable arbitration statutes, and judicial interpretation.
2. Sources of Arbitrator's Power
The arbitrator's powers are derived from:
The Arbitration Agreement (Contractual Power)
Arbitration Statutes (Statutory Power)
Institutional Rules (if applicable)
Judicial Endorsement or Limitations (Court Precedent)
3. Key Powers of an Arbitrator
a. Power to Determine Jurisdiction (Kompetenz-Kompetenz)
An arbitrator has the authority to decide on their own jurisdiction, including the validity, existence, or scope of the arbitration agreement.
Case Law Example:
✅ Case: Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967)
Held: The arbitrator, not the court, determines issues arising under the contract, including allegations of fraud, if the arbitration clause is valid.
Significance: Established arbitrators' authority to decide jurisdictional questions if not explicitly reserved to courts.
b. Power to Decide Disputes on Merits
Arbitrators can interpret contract terms, apply law, evaluate evidence, and render decisions—just like judges.
Case Law Example:
✅ Case: United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960)
Held: Arbitrators have wide discretion to interpret agreements, and courts must defer to their awards as long as they "draw their essence" from the contract.
Significance: Reinforced the arbitrator's interpretative authority over contract terms.
c. Power to Grant Remedies
Arbitrators may award:
Monetary damages
Specific performance
Injunctive relief (if permitted by agreement)
Costs and interest
Declaratory relief
Case Law Example:
✅ Case: Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52 (1995)
Held: Arbitrators may award punitive damages unless specifically restricted.
Significance: Shows broad remedial power unless expressly limited.
d. Power to Conduct Proceedings
Arbitrators can:
Set procedural rules (e.g., timelines, hearings)
Admit or reject evidence
Question witnesses
Decide in the absence of a party (ex parte), if they fail to appear with notice
Case Law Example:
✅ Case: Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1968)
Held: Arbitrators must maintain impartiality; process control must not be biased.
Significance: Power to conduct proceedings must be exercised fairly and neutrally.
e. Power to Issue Interim Measures (Conditional)
In many jurisdictions, arbitrators can grant interim relief, such as freezing orders, preservation of property, or temporary injunctions—if allowed by law or contract.
4. Limits on Arbitrator’s Power
While arbitrators have wide authority, their powers are not unlimited.
a. Bound by Arbitration Agreement
Must stay within the scope defined by parties.
Cannot rule on matters not submitted to arbitration.
b. Subject to Judicial Review (Limited Grounds)
Courts may vacate awards for:
Exceeding authority
Fraud, corruption, or misconduct
Lack of impartiality
Manifest disregard of the law (in some jurisdictions)
Case Law Example:
✅ Case: Hall Street Associates v. Mattel, Inc., 552 U.S. 576 (2008)
Held: Judicial review of arbitration awards is limited to statutory grounds.
Significance: Reinforces arbitrators' finality but acknowledges boundaries.
c. Cannot Exercise Inherent Judicial Powers
Arbitrators are not judges. They cannot:
Issue contempt orders
Enforce awards directly (must go to court)
Decide criminal matters or public law issues unless expressly authorized
5. Finality and Binding Nature of Awards
Arbitral awards are legally binding.
Subject to limited review and enforceable like court judgments under national and international laws (e.g., the New York Convention).
Case Law Example:
✅ Case: Eastern Associated Coal Corp. v. United Mine Workers, 531 U.S. 57 (2000)
Held: Arbitrator's decision must be honored unless it violates public policy.
Significance: Courts defer to arbitrator decisions unless clearly illegal or against public interest.
6. Conclusion
The power of an arbitrator is comprehensive within the framework set by parties and the law. Arbitrators are empowered to resolve disputes independently, fairly, and efficiently, without the formality of court proceedings. Their decisions, though subject to minimal judicial oversight, are respected and enforceable, making arbitration a preferred alternative dispute resolution mechanism.
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