Arbitral panels can exceed court damage limits through punitive damages and fines.

Evidence

Unlike courts, whose award of damages is limited by either expectation damages or a valid liquidated damages clause, the DDC bylaws allow arbitrators to award any measure of damages they think is appropriate, including punitive damages. They can also order one or both of the parties to pay a fine to a third-party beneficiary such as a charity. The authority to award punitive damages means that they can make the promisee whole, and the authority to order payment of a fine enables them to create a deterrent to breach contract. Since transactors know they may be forced to pay a penalty in the event of breach, their incentive to breach in the first place will be greatly reduced. — Lisa Bernestein, Opting out of the Legal System, 232

Categorization

• XREF: Connects to how private-order governance substitutes for state sanction — resonates with Ellickson’s work on ranchers and other close-knit groups. — connects to: Private arbitration can impose punitive damages to deter breach where courts cannot.

Broader Connections

• Private arbitration can impose punitive damages to deter breach where courts cannot. #corroborates (0.95)