NCJ Number
157654
Journal
Fordham Law Review Volume: 63 Issue: 2 Dated: (November 1994) Pages: 529-572
Date Published
1994
Length
44 pages
Annotation
This article indicates that debate exists among courts and commentators about when arbitrators may award punitive damages and that the practical importance of the debate over punitive damages in arbitration has escalated as punitive damage awards have grown in size and frequency.
Abstract
The first part of the article emphasizes that the Federal Arbitration Act (FAA) requires the enforcement of arbitration agreements unless there is a defense to the enforcement of a contract. In the absence of such a defense, whether an arbitrator of a dispute has the power to award punitive damages depends on the agreement by which parties submitted the dispute to arbitration. Arbitration agreements may expressly confer or deny the arbitrator the power to award punitive damages, and courts must enforce either agreement. The second part of the article addresses State arbitration law and shows that the FAA, like any Federal law, preempts inconsistent State law. The third and final part of the article deals with constitutional challenges to the award of punitive damages in arbitration. These challenges are based on due process clauses of the fifth and fourteenth amendments. The author suggests that such challenges fail for at least two reasons: (1) there is no state action in the arbitral award of punitive damages; and (2) due process rights are waived by entering into an otherwise enforceable arbitration agreement. 204 footnotes