Will the reward for money that was customarily (عرفيًا) judged to be given to a party who had no right to it, and then that party spent it in the way of Allah, be for the one who spent it?

If the amount awarded does not rightfully belong to the claimant, and the defendant agrees to it to avoid conflict or in response to a customary arbitration session, then it is not permissible for the claimant to consume or spend that amount. This is because the ruling of an arbitrator or a reconciliation agreement resolves the dispute outwardly, but it does not make lawful for the oppressor what was awarded to him inwardly. As for the defendant, he will be rewarded if he presented the amount seeking Allah’s pleasure or endured with hope of reward.