Figure 2.6
Various types of arbitration can be employed depending on what the parties think is best for their
situation. (Credit: Tim Eiden/ pexels/ License: CC0)
To overcome this shortcoming, the building owner could write a lease agreement that stipulates that the
parties use binding baseball arbitration and use subject matter experts as arbitrators. In this case, that might
include real estate attorneys or commercial real estate investors. In baseball arbitration, each party would
submit a lease renewal figure to an arbitrator. For example, imagine that the renewing tenant submits an offer
of $10/per square foot, which is very much under market value, while the building owner submits an offer of
$35/square foot. In this scenario, the arbitrator chooses one offer or the other, without modification. This type
of arbitration incentivizes both parties to be fair in their dealings with one another because to do otherwise
would be to their own detriment.
Arbitration Awards
An arbiter can issue either a “bare bones” or a reasoned award. A bare bones award refers to one in which
the arbitrator simply states his or her decision, while a reasoned award lists the rationale behind the decision
and award amount. The decision of the arbitrator is often converted to a judgement, or legal tool that allows
the winning party to pursue collection action on the award. The process of converting an award to a
judgement is known as confirmation.
Judicial Enforcement of Arbitration Awards
While it might seem that the party that is awarded a settlement by an arbitrator has reason to be relieved that
the matter is resolved, sometimes this decision represents just one more step toward actually receiving the
award. While a party may honor the award and voluntarily comply, this outcome is not always the case. In
cases where the other party does not comply, the next step is to petition the court to enforce the arbitrator’s
decision. This task can be accomplished by numerous mechanisms, depending on the governing laws. These
include writs of execution, garnishment, and liens.
Chapter 2 Disputes and Dispute Settlement
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