InternationalArbitration ArbitrationReport MealeysInternational - PDF document

New฀York฀Law:฀฀ Awards฀Of฀Attorney’s฀Fees฀ International฀Arbitration Arbitration฀Report฀ Mealey’s฀International฀ May฀2005฀issue฀of reprinted฀from฀the฀ A฀commentary฀article Paris฀and฀London Jones฀Day Helen฀Conybeare฀Williams Paris Jones฀Day Michael฀W.฀Bühler฀ by฀ In฀International฀Arbitration Report MEALEY’S

not to be included in the costs to be allocated by the not including attorney’s fees, incurred in the conduct awarded against a party. Under New York law, “par- cluding attorney’s fees, in any award, such fees can be ever parties to an arbitration have agreed to fees, in- However, it is well settled New York law that when- award.” of the arbitration, shall be paid as provided in the tors’ expenses and fees, together with other expenses, ney’s fees as part of plaintiff provided in the agreement to arbitrate, the arbitra- arbitrator (CPLR, Section 7513): “Unless otherwise that may be fi arbitration expressly provide that attorney’s fees are e New York Civil Procedure Rules dealing with Ti ties may by contract agree to permit recovery of attor- ’s expenses in prosecuting attorney’s fees may be awarded in an ICC arbitration. there is a “prior agreement” to pay fees between the e parties may refer in their arbitration agreement Ti may provide for the award of parties’ attorney’s fees, Rules provides that the “costs of the arbitration” and defendant). plaintiff Sup. Ct. 1976) (award of attorney’s fees proper if suit.” Alland v. Consumers Credit Corp., of Rochester, 379 N.Y.S.2d 308, 314 (Monroe Cty. Walker v. Security Trust Co. under New York law”); Walker v. Security Trust Co. antee that provides for attorney’s fees is enforceable v. Miller, 990 F. Supp. 107, 112 (S.D.N.Y) (“A guar- 951, 955 (2d Cir. 1973); see Ford Motor Credit Co. Alland v. Consumers Credit Corp., 476 F.2d xed in an award shall include “reason- selecting New York law, even with a New York situs, c arbitration rules. Some of these rules practice in the London and Paris offi In many international business transactions, con- are welcome.] right 2005 by the authors. Replies to this commentary centrate on international commercial arbitration. Copy- ey both con- ces. Ti Counsel in Jones Day’s international dispute resolution law of their contract. Ti tion practice in Europe. Helen Conybeare Williams is coordinator of Jones Day’s international dispute resolu- ce of Jones Day, as well as of litigation in the Paris offi [Editor’s Note: Michael W. Bühler is a partner and head able legal and other costs incurred by the parties for the arbitration.” tracting parties choose New York law as the governing is is often true even where attorney’s fees, where there is a choice of law clause erent result than under the New York law standing the New York law prohibition on awards of rmed that, notwith- under the ICC Rules have confi e New York courts and arbitral tribunals acting Ti rule that each party bears its own attorney’s fees. lead to a diff none of the contracting parties are from the United choice of an international situs of the arbitration may reference to international arbitration rules and the international arbitration under New York law, the and counsel should be aware that, in the context of between them to international arbitration. Parties contracts, parties also agree to submit any disputes States, let alone from New York State. In many such to specifi LexisNexis MEALEY’S International Arbitration Report Vol. 20, #5 May 2005 Commentary New York Law: Awards Of Attorney’s Fees In International Arbitration By Michael W. Bühler And Helen Conybeare Williams Impact Of Reference To Arbitration Rules Under New York Law such as the ICC Rules. 1 Article 31(1) of the ICC ‘New York Rule’: No Award Of Attorney’s Fees 1

basis of the New York CPLR. cient, under New York law, that the under statute. Importantly, the choice of a foreign fo- fees unless parties have so agreed or otherwise provided arbitration, thereby excluding an award of attorney’s the agreement must conform to the New York law of ment means that arbitration of any dispute under case that mere reference to New York law in an agree- Furthermore, in international arbitration, it is not the amounts in legal fees in favor of the winning party. bitration cases have led to the awarding of important situs of the arbitration. Indeed, many such ICC ar- displace the general rule, even where New York is the providing for an award that includes attorney’s fees to parties have referred to international arbitration rules us, it is suffi of arbitration procedure at the place of arbitration (not Ti of attorney’s fees under ICC Rules). claimed lack of notice regarding potential for recovery WL 122712 at *5 (D.D.C. May 29, 1992) (rejecting des Bauxites de Guinee v. Hammermills, Inc., 1992 des Bauxites de Guinee v. Hammermills, Inc., Compagnie which allow for them.” Id. See also in Compagnie fees, while the instant case is subject to the ICC rules, cally grant attorneys’ the [AAA], which did not specifi noting that the contrary case “relied on the rules of (based on American Arbitration Association rules) rum in the arbitration agreement means that the rules New York) should control these proceedings. See Shaw ing that “New York allows a waiver of section 7513, .3d 274, 291 (5th Cir. 2004) (citing numerous that an award of attorney’s fees was precluded on the It was striking that the respondent wrongly assumed plicable law and Helsinki as the place of arbitration. counsel for claimant, with New York law as the ap- recent ICC arbitration, where the authors acted as e issue of an award of attorney’s fees arose in a Ti relevant rules of arbitration, as applicable). the award of attorney’s fees (in conjunction with the law at such foreign place of arbitration will determine selected a foreign situs of the arbitration, the procedural us, in the event that the parties have authorities). Ti 364 F Group Inc. v. Triplefi sahaan Pertambangan Minyak Dan Gas Bumi Negara, sahaan Pertambangan Minyak Dan Gas Bumi Negara applies to the arbitration.” Karaha Bodas Co. v. Peru- a presumption that the procedural law of that place ment specifying the place of the arbitration creates Convention on International Arbitration, “an agree- precisely the opposite is true. Under the New York arbitration law into the parties’ agreement”). Indeed, choice-of-law clauses “does not incorporate New York (2d Cir. 2003) (fact that agreement contains New York .3d 115, 124 ne Int’l Corp., 322 F Group Inc. v. Triplefi ne Int’l Corp. and the use of ICC rules provides such a waiver.” Id. at *2. Further, the court rejected contrary precedent that CPLR 7513 somehow precluded the award, not- e incorporation Inc., authorizing such award, where New York law tion Rules of the Society of Maritime Arbitrators, agreement by agreement to rules, Maritime Arbitra- authority to award attorneys’ fees into arbitration *6, n.6 (S.D.N.Y. Aug. 4, 1993) (parties incorporated (USA), Inc., No. 93 Civ. 0285, 1993 WL 300041, at (USA), Inc. Clarendon Marketing, Inc. v. CT Chemicals See Clarendon Marketing, Inc. v. CT Chemicals might otherwise create to an award of attorney’s fees. overcome whatever theoretical obstacle CPLR 7513 ces to reference, into the agreement of the parties, suffi of rules that provide for award of attorney’s fees, by rules incorporated by reference). Ti CPLR 7513 therefore inapplicable). 601, 604 (2d Cir. 1991) (American Stock Exchange Haviland v. Goldman, Sachs & Co., 947 F.2d see also Haviland v. Goldman, Sachs & Co. Dep’t 1988) (NASD rules incorporated by reference); v. First Investors Corp., 536 N.Y.S.2d 319, 319 (4th v. First Investors Corp. incorporated by reference into agreement); Luciano 539 N.Y.S.2d 944, 946 (1st Dep’t 1989) (AAA rules Faberge, Inc. v. Felsway Corp., tion agreement. See Faberge, Inc. v. Felsway Corp. such rules, by reference, as part of the parties’ arbitra- c rules of arbitration procedure incorporates to specifi As a general matter, under New York law, the reference cally rejected the argument applied and New York was the place of arbitration; Nor does CPLR 7513 require that an attorney’s fees e Triplefi e court specifi 2004). Ti Int’l Corp., 2004 WL 2940799 (2d Cir. Dec. 20, Int’l Corp. ne Stone & Webster, Inc. v. Triplefi ne New York). See Stone & Webster, Inc. v. Triplefi by the Second Circuit (the federal appeals court in rmed ne decision was recently affi Triplefi provision must be written in an arbitration clause ne tion). Ti ne Int’l Corp. rm award of attorney’s fees, where New York to confi incorporated by reference into the arbitration clause, at * (S.D.N.Y. Sept. 8, 2003) (applying ICC rules, ne Int’l Corp., 2003 WL 22077332 Inc. v. Triplefi (versus the arbitration rules incorporated by refer- ence in the arbitration clause). See Shaw Group, law applied and New York was the place of arbitra- Shaw Group, Inc. v. Triplefi Vol. 20, #5 May 2005 LexisNexis MEALEY’S International Arbitration Report Impact Of The Place Of Arbitration On Awards Of Attorney’s Fees Recent ICC Award On Attorney’s Fees, Under New York Law, Place Of Arbitration Helsinki 2