Can an arbitrator award punitive damages?

In North Carolina, an arbitrator is not allowed to award punitive damages. Punitive damages are typically awarded in court as a way to punish a wrongdoer for a particularly egregious act or deliberate misconduct. However, in arbitration, the process is designed to be an informal and expeditious way to resolve a dispute without the need for a court case. Since the nature of arbitration is to provide a private resolution to disputes, punitive damages are seen as outside of its scope. Arbitration proceedings are limited to awarding what is known as “legal damages” which is meant to compensate the injured party in a dispute. Legal damages can include both compensatory and nominal damages but cannot include punitive damages since they are awarded as a form of punishment. Since punitive damages cannot be awarded, arbitrators have to stick with awarding legal damages that will be enforced by the parties of the dispute. Additionally, it is important to understand that while punitive damages may be banned in arbitration proceedings, parties to a dispute can still pursue punitive damages in court if it is determined that the actions of the other party require it. Arbitration is only meant to be an efficient way of resolving a dispute without going to court, but not a way to avoid legal consequences if the actions of the other party warrant retribution.

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Can an arbitrator award punitive damages?

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