Arbitration is one option when it comes to resolving financial disputes. With arbitration, an impartial arbitrator will decide who pays money, if any, and how much. An award acts as a judgment and it is a legal determination of that dispute.  But it is not enforceable as a judgment without first asking a local court to approve that award and convert it (or “reduce it”) into a court-enforceable judgment.   

In the arbitration process, the arbitrator will make a decision as to which party, defendant or plaintiff, owes money or damages. Typically in the case of a default, an arbitration may involve the responding party (the “defendant”) failing to respond or refusing to participate. 

Getting an Award

While that responding party may fail to participate, the plaintiff (or “petitioner”) will be required to provide evidence that there is a claim and that, ultimately, money is owed by the defendant.   Once that determination is made by the arbitrator, that arbitrator will issue an award that sets forth the decision and the amounts that must be paid. This award is enforceable by the court system once reduced to a judgment.

This award summarizes the Arbitrator’s review of the evidence and his or her decision, and also lays out in detail the amounts of money required to paid by the losing party.  The award clearly states the decision and the judge’s reasoning behind the decision and may become part of a public filing.

However, the award is also incredible leverage to get a case resolved and settled since most defendants don’t want a permanent judgment recorded against them in the event that they lose.  It can impact their credit, show up on a background check (such as in applying for a job), and is a recorded obligation.   

What Comes Next?

One option upon the award being issued is to have both parties come to a resolution before the award is reduced to a judgment. That might involve a payment plan or schedule for when the amount the defendant owes will be paid.  Failure to pay will result in the award being confirmed by the court.  

If the two parties cannot come to an agreement, the prevailing can and should file the award with the appropriate court to convert that award into a legally binding and enforceable judgment with all of the benefits of a judgment such as garnishment of wages, recording of judgment liens or abstracts and, of course, examination of the judgment debtor under oath.  

In filing your award, be sure to include the following:

  • The arbitration agreement
  • Any paperwork dealing with the selection of arbitrators or extensions of time
  • The award
  • Any notice, affidavit, or other documentation supporting the award

Not including all necessary paperwork may delay the process. Confirmation of the award with the court converts it to a court judgment, which is legally binding and enforceable.

When Do I Get Paid?

Once the award has been converted to a court judgment, the defendant is adjudged that he or she owes money as set forth in the award.

If the defendant does not initiate making payments per the award or judgment, the court can order automatic payments to be taken from the defendant’s paycheck as a garnishment.

If the defendant does not have the money to pay his or her debt, you may seek an order of execution from the court to seize assets to cover the debt amongst many other available post-judgment remedies.

Can the Defendant Appeal or Modify the Arbitration Award?

The only way an arbitration award can be appealed is if both parties agreed to an appealable award in their original contract or in some other binding agreement. If the award was not initially stated to be appealable, the defendant has no recourse once the award is issued and it is unlikely, without serious malfeasance or fraud, that a court will overturn an arbitration award.