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Is binding arbitration precedent setting?

Richmond, VA |

Incidentally, I am also curious to know (besides whether it can set a precedent for similar cases to follow) . . . is there a book of arbitration decisions? Thanks!

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I've been involved in arbitrations for thirty-plus years and have served as an arbitrator since the 1980s. It's important to understand some of the characteristics of arbitration to understand why the answer to your question is, "No."
Basically, in either federal or state court systems, decisions of trial courts don't get "reported" and therefore can't be "precedent" for anything. When those cases are appealed to higher courts, the higher court will study the facts, apply the law, and render a written opinion. Those opinions can then by "precedent" because they are used by later lawyers to argue, "when the facts resemble this prior case, the law should be applied as it was in this prior case."
But arbitrations typically are conducted privately, not publicly; and part of the streamlined process the parties bargain for in arbitration is that no opinion, typically, gets written. [There are exceptions but they are the minority of cases.] So, there's no way for these decisions to be useful for later cases as (1) they aren't recorded publicly and (2) don't include opinions.
Further, there are thousands of arbitrators in the United States. A decision of Virginia's highest court can be precedent for all courts in Virginia because it was rendered by a court the sits at the top of the hierarchy of the Commonwealth's court system. There is no such hierarchy among arbitrators; they are all like 'trial courts.'
So, in the arbitration arena, there are no arbitral decisions that stand as precedent and can be looked up in a book. What, then, do arbitrators look to for guidance? Attorney arbitrators, at least, will be "guided" by court decisions they know of, but they will not be "bound" by them.


My experience is that binding arbitration is not binding on other arbitrators, but there are several types of cases where arbitration is used. For example, arbitration is often used in labor cases and securities cases. Because of the answer to your first question is no, I do not believe that arbitration decisions in the securities area are kept in a book format.


The term"binding arbitration" means that the parties are bound by the arbitrators ruling whether they feel it is correct or not. The courts, under various laws providing for arbitration, cannot overturn an arbitration award that is appealed as the only grounds to appeal an arbitral decision is that the decision is not supported by the total facts in the record, or the decision is in conflicts of law or is unconstitutional. The courts cannot overturn the decision based upon the credibility of the witnesses. There are other types of arbitration, such as high-low where the parties set the parameters of the award and voluntary or more advisory awards. Binding arbitration is seen in most collective bargaining agreements between a union and an employer. In making an award, the arbitrator may look to other awards based upon the same or similar facts as being advisory but the fact that an award is binding has nor effect on precedent. The only exception to this rule is where the controversy that leads to the arbitration concerns the same parties and involves the same contract provisions , where the facts are identical or nearly so. In those rare instances, arbitrators may find that a prior decision acts as collateral estoppel or act to estop a party from seeking a conflicting interpretation of the contract language.


Arbitration is a private proceeding and typically the decision is not binding or "precedent" on any other parties in other proceedings or similar disputes. There are exceptions with respect to certain types of matters like many consumer disputes, labor disputes, and securities related matters where the agreement to arbitrate is mandatory and set forth in a contract the nature of which is not negotiable as to terms and which involves individuals who typically lack sufficient bargaining power to negotiate individualized terms of their agreement. In those instances, while the decisions are not "precedent" the panel of arbitrators will typically look to other decisions for guidance so as to provide some degree of uniformity in the final award. The concept being that similarly situated individuals with similar disputes, submitted to arbitration, should have similar outcomes.

Absent these unique circumstances, Arbitrator Awards / Decision are treated just like the rulings and judgments of any other lower court (trial courts) and do not create precedent.

One exception - while not creating precedent, an Arbitration Award might be considered res judicata or otherwise constitute collateral estoppel if there are subsequent proceedings involving the same parties to the Arbitration.

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