May 11, 2015
On April 21, 2015, the Missouri Court of Appeals in City of Chesterfield v. Frederich Construction Inc. upheld an arbitration award that included substantial attorneys’ fees to the prevailing party, in a construction case where neither the contract nor a statute provided for such an award. It did so because both parties had requested an award of their fees in the arbitration demand and answer and had agreed at the time of contracting that the Arbitration Rules of the American Arbitration Association (AAA) would govern any future arbitration.
These types of requests are frequently made whether or not the party is entitled to attorneys’ fees by contract or statute, because in most cases there is no jeopardy in doing so (“no harm, no foul”). The AAA’s Arbitration Rules turn this assumption on its head. And Frederich Constriction shows that courts will not lightly disturb an arbitrator’s award of fees based solely on a mutual demand for them made in passing. Businesses must now use extra caution when deciding whether to ask for their attorneys’ fees, as doing so may give rise to an obligation to pay the other side’s fees should it win the arbitration.

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