Generally, courts tend to view an engagement ring as a "conditional gift" such that it is given on the 'condition' that the couple are to marry. Should the marriage not happen, the the gift should be returned because the condition is unfulfilled. However, this is not a steadfast, no-matter-what rule and courts (or arbitrators) are allowed discretion when determining if the ring is to be returned. They can listen to the facts brought before them, and rule based on their interpretation of those facts. This means that an arbitrator has every right to rule that the ring not be returned.
There's no way to tell you why you lost without hearing both sides of the case as they were presented - and even then, as I previously stated, the individual decision maker is allowed discretion. So the reason for the outcome sits largely with the arbitrator hearing your case.
You should know that arbitration is binding, so this decision has the same weight as if a Judge issued the ruling.
Withiutnbeing in the room and hearing the entire testimony it is hard to second guess a decision. Even if the decision was the wrong one in the basis of the law the arbitrator's ruling is final. You can not appeal based upon a mistake of the law. You signed a consent form to arbitrate the case. It was a white card where both parties signed the back. Judge's decision may be appealed in small claims if y order the transcript and show a mistake of the law.
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As a matter of general law you should have won. The big issue is whether the decision is appealable. Was this a Judge (appealable) or a court refereee (probably not appealable). You may have signed someting in court... what does it say?
I am a former federal and State prosecutor and now handle criminal defense and personal injury/civil rights cases. Feel free to check out my web site and contact me at (212) 577-9797 or via email at Eric@RothsteinLawNY.com. I was named to the Super Lawyers list as one of the top attorneys in New York for 2012. No more than 5 percent of the lawyers in the state are selected by Super Lawyers. The above answer is for informational purposes only and not meant as legal advice.