Powers of Arbitrators

When parties agree to arbitrate disputes, the law is not settled as to what powers an arbitrator has.  For example, do arbitrators have the power to enforce witness subpoenas, compel parties to comply with the arbitrator’s orders, issue injunctions, or hand down sanctions?  Additionally, if discovery is needed from third parties does the arbitrator have the authority to compel compliance with third party discovery requests or depositions?  An arbitrator’s powers generally derive from the agreement to arbitrate, and the law is not settled on the powers parties may agree to bestow on arbitrators.

If the agreement is silent on these issues, many arbitrators will not rule on these types of issues.  How then do parties handle these issues?  We often suggest clients in this situation initiate a lawsuit in conjunction with demanding arbitration, and then seek to agree with the opposing party(s) to abate the lawsuit, save and except those issues the arbitrator does not have the power, authority, or jurisdiction to resolve.  This allows the parties to seek judicial relief on those issues the arbitrator’s power or authority is questioned.  It also provides the needed avenue to reduce the arbitrator’s award to judgment once arbitration is concluded.

Again, this also speaks to the importance of the arbitration agreement, and the critical importance of knowing what you’re agreeing to when these provisions appear in contracts.  Experienced counsel in negotiating these agreements, and enforcing them, is well worth the investment.

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