Chapter 14 - § 14.7 • SANCTIONS

• Jurisdiction: Colorado

§ 14.7 • SANCTIONS

The Massachusetts Supreme Court held that an arbitration panel had authority to impose a monetary sanction of $1,000 per day for a party's violation of a discovery order.⁷⁷ The court found that a dispute concerning withholding of materials establishing the claimant's damages was within the scope of the broad arbitration clause. The court also referred to the broad powers to fashion remedies during arbitration proceedings and to oversee discovery under the AAA Commercial Arbitration Rules.

A California court⁷⁸ held that the clause authorizing the arbitrator to "grant any remedy or relief under California law" allowed the arbitrator to award sanctions, as provided by the California Code of Civil Procedure, for the filing of a frivolous civil action. Compare AAA Commercial Arbitration Rule 58. If the arbitrator does not have inherent power to award sanctions,⁷⁹ the wording of a provision as to relief that can be granted may provide that power.

Sanctions may include denying one party the right to defend against certain claims. This sanction was formulated by an arbitrator upon finding that the party had fabricated evidence relating to those claims.⁸⁰

See § 11.8.1 as to the arbitrator's powers over parties and representatives. See also §§ 9.7.5, 13.5.3, and 16.6.9.

In an article by John W. Hinchey and Thomas V. Birch, "An Arbitrator's Authority to Award Attorney's Fees for Bad-Faith Arbitration,"⁸¹ the authors discuss an arbitrator's authority to award attorney fees for bad faith arbitration under the FAA, Uniform Arbitration Act (UAA), Revised Uniform Arbitration Act, and AAA Commercial Arbitration Rules. To briefly summarize:

AAA Rules

Rule 41(a) of the Commercial Arbitration Rules provides:

The arbitrator may grant any remedy or relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties. . . .

The Minnesota Supreme Court, under the UAA, confirmed an arbitration award of over $600 million in punitive sanctions for fabricating evidence. The arbitration agreement provided that the arbitrator could grant injunctions or other relief, and incorporated AAA rules which empowered the arbitrator to "grant any remedy or relief that would have been available had the matter been heard in court."⁸²

FAA

The Act is silent on the arbitrator's authority to award such fees. Some courts have found that arbitrators may award attorney fees for bad faith arbitration.⁸³ The court does not have inherent authority to...