Originally from:

AAA Handbook on Arbitration Practice - Second Edition

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CHAPTER 42

PREVAILING PARTIES AND ATTORNEYS’ FEES

Stephen P. Gilbert

I. Introduction: The Arbitrator’s Challenge

Arbitrators are often confronted with agreements allowing or
requiring an award of attorneys’ fees to the “prevailing party.”1 Even
when arbitration agreements are silent about attorneys’ fees, during the
proceedings both sides often request them.

Statutes may allow arbitrators to award attorneys’ fees even when
not authorized by the parties’ agreement or requested by the parties.2

Rules governing arbitrations usually expressly empower arbitrators
to award attorneys’ fees. For example, AAA Commercial Arbitration
Rules, R-47(d)(ii) allows the arbitrator to award attorneys’ fees “if all
parties have requested such an award or it is authorized by law or their
arbitration agreement.”3 UNCITRAL Arbitration Rules, Article 40
requires the arbitration tribunal to “fix the costs of arbitration in the final
award” and defines “costs” to include “[t]he legal and other costs
incurred by the parties in relation to the arbitration to the extent that the
arbitral tribunal determines that the amount of such costs is reasonable.”4
Some rules allow the arbitrator to award attorneys’ fees even if not
explicitly authorized by the parties’ agreement or requested by the
parties. For example, ICDR International Arbitration Rules, Article 31
requires the arbitration tribunal to “fix the costs of arbitration in its award”
and specifies that “[s]uch costs may include … the reasonable costs for
legal representation of a successful party.”5

Whether the arbitration agreement allows or requires an award of
attorneys’ fees, all the parties later request them, or the governing
statutes or rules allow or mandate such an award, the arbitrator will
likely have to decide who is the “prevailing party” because (at least in
the U.S.) that seems to be the most common term used for denominating
to whom attorneys’ fees are to be awarded.

In court, “the general ‘American rule’ [is] that the prevailing party
may not recover attorneys’ fees as costs or otherwise.”6 Federal statutes
that allow or require an award of attorneys’ fees, and are thereby
exceptions to the general rule, include antitrust, patent, and civil rights
laws.7 Even if attorneys’ fees are not being awarded, it still may be