Originally from American Review of International Arbitration - ARIA

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Professor Hans Smit was a man of many talents, and his colleagues in the
international arbitration community were fortunate to know him in diverse
professional roles. He was at various times arbitrator, advocate, teacher and wise
counselor, and he also served on occasion as an expert witness on matters of
Dutch law and on issues of international arbitral procedure. I benefitted from
experience with Professor Smit in all of those contexts, including in the somewhat
daunting role of a competing expert witness.
The issues on which we offered differing opinions arose approximately a
decade ago from an international commercial arbitration that had taken place
before a tribunal sitting in New Jersey under the auspices of the American
Arbitration Association’s International Centre for Dispute Resolution applying the
AAA’s Commercial Arbitration Rules. The prevailing party in the arbitration
received a multi-million dollar damages award, but that party then failed to pay
the attorney fees of its counsel. When counsel sued their client, the prevailing
arbitration party, in a state court for the fees, the client counterclaimed on the
basis of alleged legal malpractice because of counsel’s failure to obtain an even
larger damage recovery. The basic issue in that regard was whether counsel
negligently missed an opportunity to recover an award of costs, consisting
primarily of its counsel fees, for their client and, if so, whether a court could
determine after the fact what if any proportion of those fees the arbitrators would
have awarded if timely requested to do so.
Professor Smit and I offered written opinions for the opposing parties in the
malpractice action. We addressed the extent of the opportunity available for the
tribunal to have awarded attorney fees as an element of costs under the applicable
rules and state law in the context of the facts of the arbitration. Questions arose,
too, about whether the three American lawyer arbitrators would have been
inclined to exercise such authority as they had to award attorney fees as costs. We
expressed differing views about the predictability of whether the tribunal actually
would have awarded a specific dollar amount of costs had it been asked to do so,
were it inclined to include attorney fees in a costs award. The quantum of fees
issue required consideration of the fact that the prevailing arbitration party had
been awarded a large portion, but not all, of the damages it had sought.
In those circumstances, Professor Smit stated that the prevailing, if not
universal, custom in international arbitration was for a costs award to “follow the
event” and be made in proportion to the extent of the prevailing party’s success
and for an award of attorney fees to be included as “costs” and calculated by