Bounded Arbitration

Sometimes also referred to as a Bracketed Arbitration, High/Low or Binding High/Low arbitration, it is an arbitration where the arbitral agreement identifies either a maximum or minimum amount of an award, or a fixed high and low amount – or alternately an award matrix where the parties agree what amount would be awarded in respect of a series of potential findings of fact or law.  In simple terms, if the outcome is A, the Respondent receives $/€ a higher amount, if it is B, X receives $/€ a lower amount.  Alternately, a series of terms of reference can be set, with each issueattracting a different sum as part of a cumulative award.

Typically in a Bounded Arbitration, that the Respondent is liable to the Claimant is not in dispute, the issue is the amount the Respondent should pay. They are, for example, used in earn out situations where the amount the vendor should receive is disputed or dependent on certain events that may occur after the transaction is closed, or for adjudicating insurance claims where the cap is the policy limit.

Related Terms