No Agreement, No Award Of Fees

Attorney’s fees cannot be awarded in a arbitration proceeding unless the agreement to arbitrate so specifies, according to the Massachusetts Supreme Judicial Court.

Under G. L. c. 251, § 10, attorney’s fees may not be awarded in arbitration proceedings “[u]nless otherwise provided in the agreement to arbitrate.” The issue presented in this case is whether an arbitration panel applying the commercial arbitration rules of the American Arbitration Association (AAA rules), having found that the arbitration agreement did not authorize an award of attorney’s fees, nonetheless may award attorney’s fees based on its finding that “substantially all of the defenses were wholly insubstantial, frivolous and not advanced in good faith.” The appellant, George Alex, contends that the arbitration panel may award attorney’s fees in these circumstances for either of two reasons: first, because AAA rule 47(a) 1 authorizes an arbitrator to “grant any remedy or relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties”; or second, because AAA rule 47(d)(ii) provides that an arbitrator may award attorney’s fees if “it is authorized by law,” and the award of attorney’s fees in these circumstances is authorized by G. L. c. 231, § 6F. We conclude that an arbitrator lacks the authority to award attorney’s fees based on a finding that all the claims or defenses were wholly insubstantial, frivolous, and not advanced in good faith unless the parties have agreed that an arbitrator may award   fees in these circumstances.

 The court affirmed the lower court order vacating the fee award. (Mike Frisch)