On this appeal, we consider whether parties’ inclusion in an arbitration agreement of a general statement that each will bear the expenses of its own arbitrator and its own attorneys deprives the arbitration panel of authority to award such expenses as a sanction against a party whom the panel determines failed to arbitrate in good faith. We conclude that it does not and, accordingly, reverse the judgment of the United States District Court for the Southern District of New York (Lewis A. Kaplan, Judge), entered on February 14, 2007, insofar as it vacated that part of an arbitration award requiring respondent EMC National Life Company *84(“EMC”), successor in interest to National Travelers Life Company (“National Travelers”), to pay such fees to petitioner ReliaStar Life Insurance Co. of New York (“ReliaStar”). We remand the case so that the district court may enter a new judgment confirming the arbitration award in all respects.
I. Factual Background
A. The Agreement to Arbitrate
In December 1997, National Travelers and ReliaStar entered into two separate but related coinsurance agreements, one pertaining to certain ReliaStar insurance policies in force as of January 1, 1998, and the other pertaining to certain ReliaStar policies to be issued on or after that date. Because the agreements have identical terms and conditions, for purposes of this appeal we refer to them collectively as the “Coinsurance Agreements.”
Article X of the Coinsurance Agreements governed the parties’ agreement to arbitrate. It reads in relevant part as follows:
10.1 Appointment of Arbitrators. In the event of any disputes or differences arising hereafter between the parties with reference to any transaction under or relating in any way to this Agreement as to which agreement between the parties hereto cannot be reached, the same shall be decided by arbitration. Three arbitrators shall decide any dispute or difference....
10.2 Decision. The arbitrators shall consider customary and standard practices in the life or health reinsurance business, as applicable to the dispute. They shall decide by a majority vote of the arbitrators. There shall be no appeal from their written decision. Judgment may be entered on the decision of the arbitrators by any court having jurisdiction.
10.3 Expenses of Arbitration. Each party shall bear the expense of its own arbitrator (whether selected by that party, or by the other party pursuant to the procedures set out in Section 10.1) and related outside attorneys’ fees, and shall jointly and equally bear with the other party the expenses of the third arbitrator.
10.4 Applicable Law. Any arbitration instituted pursuant to this Article shall be held in New York, New York, or another site mutually agreed upon by the parties and the laws of the State of New York and to the extent applicable, the Federal Arbitration Act, shall govern the interpretation and application of this Agreement.
The particular focus of this appeal is section 10.3.
B. The Arbitration Award
When various disputes arose between the co-insurers, National Travelers initiated arbitration proceedings seeking (1) a declaration that the Coinsurance Agreements had been terminated and (2) approval for a proposed terminal accounting. ReliaStar opposed both National Travelers’ claim of termination and its proposed method for conducting a terminal accounting.
Following discovery, in May 2006, an arbitration panel conducted a two-week hearing. On August 4, 2006, the panel entered an interim award, finding that the Coinsurance Agreements remained in force between the parties and directing National Travelers to pay ReliaStar more than $21 million past due under that agreement. The panel directed the parties to meet to resolve issues related to the resumption of their relationship under the Coinsurance Agreements. Further, in paragraph 6 of the award, a majority of *85the panel, without explanation, awarded ReliaStar attorney’s and arbitrator’s fees and costs.
The parties complied with all aspects of the award, except for that part granting ReliaStar fees and costs, which they agreed National Travelers could submit for reconsideration to the panel and, if necessary, challenge in court. After further briefing on the issue of fees and costs, the arbitration panel entered a final award on October 20, 2006. A majority of the panel awarded ReliaStar fees for its attorneys and arbitrator in the amount of $3,169,496, costs of $691,903.75, as well as interest, explaining that it viewed the conduct of National Travelers in the arbitration “as lacking good faith.”
C. The District Court Proceedings
On October 20, 2006, ReliaStar petitioned the district court to confirm the final arbitration award, and on November 2, 2006, National Travelers filed a counter-petition to vacate the award to the extent it granted ReliaStar fees and costs. National Travelers argued that the arbitration panel had exceeded its authority in awarding fees and costs in light of section 10.3 of the Coinsurance Agreements, which obligates each party to “bear the expense of its own arbitrator ... and related outside attorneys’ fees.” The district court agreed and, accordingly, vacated that part of the final award requiring National Travelers to pay ReliaStar’s attorney’s and arbitrator’s fees before confirming it in all other respects.
ReliaStar appeals the vacatur.
II. Discussion
A. Standard of Review
In considering a challenge to a district court’s decision to vacate a portion of an arbitration award, we review its legal rulings de novo and its findings of fact for clear error. See Banco de Seguros del Estado v. Mut. Marine Office, Inc., 344 F.3d 255, 260 (2d Cir.2003).
The law is clear that because arbitration is “a matter of contraet[,] ... a party cannot be required to submit to arbitration any dispute which he has not agreed to so submit.” PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1198 (2d Cir.1996). The scope of an arbitrator’s authority thus “generally depends on the intention of the parties to an arbitration, and is determined by the agreement or submission.” Synergy Gas Co. v. Sasso, 853 F.2d 59, 63-64 (2d Cir.1988) (internal quotation marks omitted). Section 10(a)(4) of the Federal Arbitration Act allows courts to vacate an arbitral award “where the arbitrators exceeded their powers.” 9 U.S.C. § 10(a)(4). We have, however, “consistently accorded the narrowest of readings” to this provision of law, Banco de Seguros del Estado v. Mut. Marine Office, Inc., 344 F.3d at 262 (internal quotation marks omitted), in order to facilitate the purpose underlying arbitration: to provide parties with efficient dispute resolution, thereby obviating the need for protracted litigation, see, e.g., Amicizia Societa Navegazione v. Chilean Nitrate & Iodine Sales Corp., 274 F.2d 805, 808 (2d Cir.1960) (“[T]he court’s function in confirming or vacating an arbitration award is severely limited. If it were otherwise, the ostensible purpose for resort to arbitration, i.e., avoidance of litigation, would be frustrated.”).
Thus, in considering a section 10(b)(4) challenge, “[t]he principal question for the reviewing court is whether the arbitrator’s award draws its essence” from the agreement to arbitrate, “since the arbitrator is not free merely to dispense his own brand of industrial justice.” 187 Concourse Assocs. v. Fishman, 399 F.3d 524, 527 (2d Cir.2005) (internal quotation marks omitted). If the answer to this question is yes, however, the scope of the court’s re*86view of the award itself is limited. Notably, we do not consider “whether the arbitrators correctly decided [the] issue.” Banco de Seguros del Estado v. Mut. Marine Office, Inc., 344 F.3d at 262 (internal quotation marks omitted). If the parties agreed to submit an issue for arbitration, we will uphold a challenged award as long as the arbitrator offers “a barely colorable justification for the outcome reached.” Id. at 260 (internal quotation marks omitted). In other words, “as long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority,” a court’s conviction that the arbitrator has “committed serious error” in resolving the disputed issue “does not suffice to overturn his decision.” United Paperworkers Int’l Union AFL-CIO v. Misco, Inc., 484 U.S. 29, 38, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987); accord 187 Concourse Assocs. v. Fishman, 399 F.3d at 526.
Applying these principles to this case, we consider only whether, in light of the parties’ agreement to arbitrate, the arbitrators were authorized to sanction bad faith conduct by awarding attorney’s and arbitrator’s fees. We do not — nor does respondent ask us to — consider whether the arbitrators correctly identified bad faith conduct or whether the amount of fees awarded was an appropriate sanction for that conduct.
B. The Parties’ Broad Agreement to Arbitrate Conferred on the Arbitrators the Equitable Authority . to Sanction a Party’s Bad Faith Conduct
Where an arbitration clause is broad, arbitrators have the discretion to order such remedies as they deem appropriate. See Banco de Seguros del Estado v. Mut. Marine Office, Inc., 344 F.3d at 262. This is because it is “not the role of the courts to undermine the comprehensive grant of authority to arbitrators by prohibiting” them from fashioning awards or remedies to “ensure[ ] a meaningful final award.” Id. (concluding that arbitrators did not exceed their authority by requiring foreign reinsurer to post prehearing security); see also 1 Martin Domke, Domke on Commercial Arbitration § 35:1 (3d ed. 2008) (“Limited only by the broad concepts of equity and justice, the arbitrator has a plethora of remedies, both legal and equitable, to choose from in structuring a remedy.”).
Consistent with this principle, we here clarify that a broad arbitration clause, such as the one in this case, see Coinsurance Agreements § 10.1, confers inherent authority on arbitrators to sanction a party that participates in the arbitration in bad faith and that such a sanction may include an award of attorney’s or arbitrator’s fees.2 This conclusion finds support in Synergy Gas Co. v. Sasso, 853 F.2d 59, wherein this Court ruled that, after an arbitrator ordered the reinstatement of a discharged employee with backpay, the arbitrator did not exceed his authority in further awarding the employee’s union attorney’s fees. In so holding, we noted that “[ajrbitrators have ... occasionally awarded attorney’s fees” in circumstances where one party had acted in bad faith and that such fees fairly compensated the party for costs incurred as a result of such actions. Id. at 65. In that case, we specifically observed *87that “if Synergy had not acted in bad faith, then [the employee] Brown would have been reinstated more than six years ago and the attorney’s fees would not have been incurred.” Id. at 66. Accordingly, we concluded that such an award of attorney’s fees did not contravene New York’s public policy against punitive arbitration awards because the fees were compensatory, not penal, in nature and, thus, an appropriate form of damages granted to the aggrieved party.3 See id.
The Ninth Circuit has also rejected a challenge to an arbitration award of attorney’s fees, recognizing a bad faith exception to the general “American Rule” that each party bears its own attorney’s fees. See Todd Shipyards Corp. v. Cunard Line, Ltd., 943 F.2d 1056, 1064 (9th Cir.1991). The court explained: “Federal law takes an expansive view of arbitrator authority to decide disputes and fashion remedies .... In light of the broad power of arbitrators to fashion appropriate remedies and the accepted ‘bad faith conduct’ exception to the American Rule, we hold that it was within the power of the arbitration panel in this case to award attorneys’ fees.” Id.; see also Marshall & Co. v. Duke, 114 F.3d 188, 190 (11th Cir.1997) (noting that parties raised no jurisdictional challenge to attorney’s fee award, but observing that, “[i]n any event, the arbitrators have the power to award attorney’s fees pursuant to the ‘bad faith’ exception to the American Rule that each party bears its own attorney’s fees”).
EMC submits that this case is distinguishable because the agreement at issue in Todd Shipyards Corp. v. Cunard Line, Ltd. specifically integrated Rule 43 of the Commercial Rules of the American Arbitration Association, which states that “ ‘[t]he arbitrator may grant any remedy or relief which the Arbitrator deems just and equitable within the scope of the agreement of the parties.’” 943 F.2d at 1062-63 (quoting Rule 43). We do not, however, consider a reference to Rule 43 to be essential where, as in this case, the parties’ arbitration clause applies broadly to every dispute arising under their agreement, see Coinsurance Agreements § 10.1, and where the arbitrators find that a party did not arbitrate in good faith, see Domke on Commercial Arbitration § 35:8 (“As a general rule, each party to an arbitration must bear its own attorney fees associated with an arbitration action or the enforcement of an arbitration award. Nevertheless, [the Federal Arbitration Act] ... grant[s] wide authority to the arbitrator to determine entitlement to attorney fees.... Under some circumstances, the prevailing party may recover attorney fees if the parties provide for the remedy of attorney fees in their arbitration agreement or if authorized by a statute, or if justified by circumstances in which the losing party acted in bad faith.” (emphasis added)). Indeed, the underlying purposes of arbitration, ie., efficient and swift resolution of disputes without protracted litigation, could not be achieved but for good faith arbitration by the parties. Consequently, sanctions, including attorney’s fees, are appropriately viewed as a remedy within an arbitrator’s authority to effect the goals of arbitration.
C. Section 10.S of the Parties’ Agreement Did Not Limit the Arbitrators’ Authority to Award Attorney’s and Arbitrator’s Fees as a Sanction for Bad Faith Conduct
While a broad arbitration clause affords arbitrators considerable dis*88cretion to award such remedies as they deem appropriate, they may not “exceed the power granted to them by the contract itself.” Banco de Seguros del Estado v. Mut. Marine Office, Inc., 344 F.3d at 262. EMC does not contend that section 10.1 of the agreement to arbitrate is not sufficiently broad to authorize the arbitrators to sanction bad faith conduct. Rather, its position has consistently been that section 10.3 limits that sanction authority to exclude awards of attorney’s or arbitrator’s fees. We conclude that this is not a proper construction of section 10.3.
In interpreting a contract under New York law, “words and phrases ... should be given their plain meaning.” LaSalle Bank Nat'l Ass’n v. Nomura Asset Capital Corp., 424 F.3d 195, 206 (2d Cir. 2005) (internal quotation marks omitted). Section 10.3 simply states the general American Rule that each party will bear its own attorney’s fees and extends the principle to apply also to the fee of the arbitrator selected by each party. Thus, section 10.3 is fairly understood to reflect the parties’ agreement as to how fees are to be borne, regardless of the arbitration’s outcome, in the expected context of good faith dealings. See Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d 400, 407 (2d Cir. 2006) (holding that, under New York law, “a covenant of good faith and fair dealing” is implicit in every contract). Nothing in the section, however, signals the parties’ intent to limit the arbitrators’ inherent authority to sanction bad faith participation in the arbitration. Certainly, nothing in Article X generally, or section 10.3 specifically, references bad faith or sanction remedies. Accordingly, we have no basis for thinking that the parties to this agreement ever considered the question of whether to limit the arbitrators’ authority to sanction bad faith conduct. In contrast, they did expressly confer comprehensive arbitral authority in section 10.1. In light of that conferral, we conclude that section 10.3 is properly construed to reflect the parties’ agreement that the arbitrators may not factor attorney’s or arbitrator’s fees into awards that result from the parties’ expected good faith arbitration of a dispute. The section does not signal the parties’ intent to limit the conferral of comprehensive authority by precluding an award of attorney’s or arbitrator’s fees when a party’s bad faith dealings create a recognized exception to the American Rule.
EMC asserts that such a reading of section 10.3 is contrary to New York principles of contract interpretation. It submits that, because the American Rule would apply by default even in the absence of section 10.3, reading the section as a simple articulation of the American Rule would render it superfluous. See Galli v. Metz, 973 F.2d 145, 149 (2d Cir.1992) (noting that “[u]nder New York law, an interpretation of a contract that has the effect of rendering at least one clause superfluous or meaningless ... is not preferred and will be avoided if possible” (internal quotation marks omitted)). We are not persuaded. Parties to commercial arbitration agreements may choose explicitly to reference the American Rule for any number of reasons unrelated to the scope of the arbitrators’ sanction authority. For example, some arbitrators may not be attorneys and, thus, may be unfamiliar with the American Rule. Still other arbitrators may come from jurisdictions that employ the “English Rule” where the prevailing party’s fees are routinely paid by an unsuccessful opponent.
Precisely because the agreement in this case conferred broad authority on the arbitrators, because inherent in such authority is the power to sanction bad faith conduct, and because bad faith is a well-*89recognized exception to the American Rule for attorney’s fees, we conclude that the simple statement of that Rule in section 10.3 is insufficient by itself to swallow the exception.4 As sophisticated commercial entities, the parties were certainly capable of stating clearly any intent to exclude attorney’s and arbitrator’s fees from the broad range of sanctions generally available to arbitrators upon an identification of bad faith. Thus, our holding today should not be understood to preclude parties who wish to limit the scope of an arbitrator’s sanction authority to exclude attorney’s fees or arbitrator’s awards from doing so. We require only that they explicitly and clearly state that intent as part of their agreement to arbitrate.
III. Conclusion
To summarize, we conclude
(1) that the parties’ agreement to arbitrate in this case was sufficiently broad to confer equitable authority on the arbitrators to sanction a party’s bad faith participation in the arbitration;
(2) that an arbitrator’s identification of bad faith gives rise to an exception to the generally applicable American Rule that each party bears its own attorney’s fees; and
(3) that the statement of the American Rule in section 10.3 of the parties’ agreement is properly construed to limit the arbitrators’ authority to award attorney’s and arbitrator’s fees only where the parties participate in the arbitration in good faith; a more explicit statement would be necessary to manifest any intent to override the bad-faith exception to the American Rule and to preclude the arbitrators from awarding attorney’s and arbitrator’s fees as a sanction for bad faith conduct.
Accordingly, the judgment of the district court is Reversed in part insofar as it vacates the award of attorney’s and arbitrator’s fees and the case is Remanded with directions that the district court enter judgment confirming the arbitration award in all respects.
Judge POOLER dissents in a separate opinion.. Our dissenting colleague takes issue with the principle we articulate here, pointing out that "inherent authority is authority which is not conferred." Post at 93. But this misunderstands our point: We mean simply that the authority to sanction inheres in the comprehensive arbitral authority. As we discuss herein, the inherent authority of arbitrators to impose sanctions in such circumstances has been recognized by our own court and by sister circuits.
. Because National Travelers has not challenged the fee award on the ground that it was punitive, rather than compensatory, we have no occasion to consider an arbitrator’s authority to award attorney’s fees in excess of the amount necessary to compensate for the losses and expenses attributable to a party's arbitrating in bad faith.
. The dissent cites InterChem Asia 2000 Pte. Ltd. v. Oceana Petrochemicals AG, 373 F.Supp.2d 340 (S.D.N.Y.2005), for the proposition that only courts, not arbitrators, have the authority to impose attorney’s fees pursuant to the bad faith exception to the American Rule. See post at 92-93, 93-94. In InterChem, however, the district court confirmed part of the arbitrator’s award of attorney’s fees for bad faith. In upholding the arbitral award, the district court recognized that "[a]ttorney’s fees are normally not shifted onto a party under the 'American Rule'.... However, despite the 'American Rule,’ under some circumstances, the losing party can be assessed attorney fees where that party ‘acted in bad faith, vexatiously, wantonly, or for oppressive reasons.' ” Id. at 355 (internal citations omitted). In reaching that conclusion, the court relied on Todd Shipyards Corp. v. Cunard Line, Ltd., 943 F.2d 1056, which we have also cited in support of our conclusion that arbitrators have inherent authority to sanction bad faith as an exception to the American Rule.
The dissent's lengthy quote from InterChem is taken from the district court’s discussion of an arbitrator's authority to award attorney’s fees against the attorney who represented a party in the course of arbitration and who was not himself a party to the arbitration agreement. See id. at 355. We need not address the issue of such an award here because the challenged attorney’s fees were awarded only against National Travelers, a party in the arbitration proceedings.