Attorney’s Fees Awarded in Arbitration

Kegler Brown Construction Newsletter

Generally attorney's fees cannot be recovered in a contract dispute unless authorized by statute or expressly by the express terms of the contract. A recent case arising from an AAA arbitration found that the arbitrators properly awarded attorney's fees to the prevailing party.

The 1997 AAA rules allow an award of fees if all parties have requested such an award or it is authorized "by law or the arbitration agreement" but the losing party argued that attorney's fees could not be awarded because both parties did not request attorney's fees in the award nor was it authorized by the contract.

The Tenth District Court of Appeals construed the Indemnification clause of the contract (ΒΆ4.16) dealing with property damage in such a manner as to permit attorney's fees to be awarded in this contract dispute. Victoria's Secret Stores v. Epstein Contracting, Case No. 00AP-209, March 8, 2001.

This case points out the risk associated with broadly drafted indemnification clauses and the wide discretion arbitrators are given in crafting equitable arbitration awards, including the award of attorney's fees and expenses.