An arbitration award (or arbitral award) is a determination on the merits by an arbitration tribunal in an arbitration, and is analogous to a judgment in a court of law. It is referred to as an 'award' even where all of the claimant's claims fail (and thus no money needs to be paid by either party), or the award is of a non-monetary nature.
Although a successful party in arbitration will typically be awarded compensation or damages, tribunals usually have a range of remedies that can form a part of the award.
Arbitration is particularly popular as a means of dispute resolution in the commercial sphere (for a summary of the various arenas in which arbitration is usually chosen, see the specific article on "arbitration"). One of the reasons for doing so is that, in international trade, it is often easier to enforce an arbitration award in a foreign country than it is to enforce a judgment of the court.
Under the New York Convention 1958, an award issued in a contracting state can generally be freely enforced in any other contracting state, only subject to certain, limited defences. Those defences are:
Virtually every significant commercial country in the world is a party to the Convention, but relatively few countries have a comprehensive network for cross-border enforcement of judgments of the court.[1] Hence in many countries, particularly in emerging markets, a foreign arbitration award is much easier to enforce than an award of the court. For example, it is very difficult to enforce foreign judgments in the former CIS countries, but it is considerably easier to enforce awards of an arbitration tribunal.
The other characteristic of cross-border enforcement of arbitration awards that makes them appealing to commercial parties is that they are not limited to awards of damages. Whereas in most countries only monetary judgments are enforceable in the cross-border context, no such restrictions are imposed on arbitration awards and so it is theoretically possible (although unusual in practice) to obtain an injunction or an order for specific performance in an arbitration proceeding which could then be enforced in another New York Convention contracting state.
The New York Convention is not actually the only treaty dealing with cross-border enforcement of arbitration awards. The earlier Geneva Convention on the Execution of Foreign Arbitral Awards 1927 [1] remains in force, but the success of the New York Convention means that the Geneva Convention is rarely utilised in practise.
In judicial proceedings in many countries, governments enjoy sovereign immunity from suit. However, governments can submit to arbitration, and certain international conventions exist in relation to the enforcement of awards against nation states.
Although it is common to talk of an arbitration award as a single concept, in most legal jurisdictions there are several sub-categories of award.
The legal requirements relating to the making of awards vary from country to country and, in some cases, according to the terms of the arbitration agreement. Although in most countries, awards can be oral, this is relatively uncommon and they are usually delivered in writing.
By way of example, in the United Kingdom, the following are requirements under the Arbitration Act 1996 which the award must comply with, unless the parties agree to vary them under section 52 of the Act:
Many countries have similar requirements, but most permit the parties to vary the conditions, which reflects the fact that arbitration is a party-driven process.
It is sometimes said that arbitration awards are not normally subject to appeal (often another reason given in favour of using arbitration), but that is usually an oversimplification.
Most countries in the world allow arbitration awards to be "challenged" in the court, although they usually limit the circumstances in which such challenges may be brought. The two most commonly permitted grounds of challenge are:
Arbitration awards are non-justiciable. Distinguish from an "expert determination" where the expert determines a matter of fact (which is ordinarily not subject to any form of appeal at all, except in cases of obvious bias or manifest error or bad faith).[14]
In addition, although not by way of challenge, many countries permit appeals on a point of law (although almost no countries permit appeals to be made in relation to findings of fact). This right is usually closely circumscribed to avoid undermining the commercial efficacy of arbitration.[15]