Legal Definitions - arbitration and award

Arbitration and Award is a legal defense used in a lawsuit. It asserts that the specific dispute or issue being brought before the court has already been resolved through a formal arbitration process, and a binding decision (known as the "award") has been issued by an impartial arbitrator. When this defense is raised, the defendant argues that because the matter has already been conclusively settled through an agreed-upon alternative dispute resolution method, the court should not hear the case again.

Here are some examples to illustrate this concept:

• Business Contract Dispute: Imagine a technology company and a client had a disagreement over the performance of a custom software system. Their contract included a clause stating that any disputes would be resolved through binding arbitration. After a series of arbitration hearings, the arbitrator issued an award, ruling that the software met the agreed-upon specifications. If the client later attempts to sue the technology company in court over the exact same software performance issues, the technology company could raise the defense of arbitration and award. They would present the arbitrator's decision as proof that the matter has already been definitively settled, arguing that the court should not revisit the issue.

• Employment Termination Claim: Consider an employee who was terminated and believed it was unfair. Their employment agreement stipulated that all disputes related to termination would be handled through binding arbitration. Both the employee and the employer participated in the arbitration process, and the arbitrator ultimately ruled that the termination was for legitimate business reasons, issuing an award in favor of the employer. If the employee subsequently files a lawsuit in court alleging wrongful termination based on the same facts, the employer could invoke arbitration and award as a defense, demonstrating that the issue has already been decided by an arbitrator.

• Construction Project Disagreement: A homeowner and a general contractor had a dispute regarding unexpected additional costs incurred during a home renovation. Their signed contract required all financial disagreements to be resolved via arbitration. An arbitrator reviewed all the evidence, including invoices and change orders, and issued an award determining the precise amount the homeowner owed for the extra work. If the contractor later sues the homeowner in court seeking a higher amount for those same additional costs, the homeowner could present the arbitration and award defense, showing that the financial aspect of the dispute was already resolved through a binding arbitration process.