Be Careful What You Wish For
Attorney’s fees are only recoverable if they are provided for by statute or in a contract. This rule is generally applicable regardless of whether a matter is pursued in litigation through a court or in arbitration. However, the Tennessee Court of Appeals found that under the rules of the American Arbitration Association, attorney fees may be awarded if sought by both parties. In that case, which involved a subcontractor’s claim against a general contractor for non-payment, the parties’ contract did not contain an attorney fee provision. The contract contained an arbitration provision that incorporated the AAA Arbitration Rules for the Construction Industry. Those rules, in turn, provided attorney’s fees could be awarded when provided by statute, the parties contract or where both parties sought attorney fees. In essence, where both parties include a request for attorney fees, they implicitly authorize the arbitrator to issue an award that includes attorney fees. Therefore, notwithstanding the fact a statute did not permit attorney fees and the contract did not contain an attorney fee provision, the court of appeals found the arbitrator had authority to award attorney fees to the prevailing party. Accordingly, in cases where attorney fees are not authorized by statute or a contract, attorney fees may be available if sought by both parties. It is important to fully analyze whether to seek attorney fees in arbitration. Due to the limited nature of review in appealing an adverse award, you may be stuck with a bad decision and wind up paying for your adversary’s attorney.Alternative Dispute Resolution, Arbitration, Contractors, Subcontractors, Tennessee Case Law and tagged American Arbitration Association, Attorney Fees. Bookmark the permalink.