menu

ReliaStar Life Ins. Co. v. EMC Nat. Life Ins. Co.

Issue Discussed: Power of Arbitrators

Submitted by Alyssa Rower

Date Promulgated: February 13, 2007

Issue Decided: Whether an arbitration panel exceed its authority by granting petitioner attorney and arbitrator fees.

In ReliaStar Life Insurance Co. v. EMC National Life Insurance Co., 473 F. Supp. 2d 607 (S.D.N.Y. 2007), the Court held that the arbitration panel exceeded its authority when it granted petitioner attorney and arbitrator fees. Id. at 609. Petitioner and respondent were parties to a coinsurance arrangement that contained a broad arbitration clause. Id. at 607. The arbitration clause provided, in relevant part, that “[e]ach party shall bear the expense of its own arbitrator . . . and related outside attorneys’ fees.” Id. at 608. After a dispute arose as to respondent’s obligations under the arrangement, the parties engaged in arbitration. Id. at 607. The panel granted attorney and arbitrator fees and costs to petitioner, finding that respondent was not acting in good faith. Id. at 608. The Court vacated the award of attorney and arbitrator fees because the arbitration clause unmistakably provided that the parties had to bear the fees of their respective arbitrators and outside counsel. Id. at 609. The Court rejected petitioner’s arguments that New York law permitting the award of attorneys’ fees in exceptional cases should apply and that it was within the arbitrators’ discretion to award fees. Id. at 608-09. The agreement at issue made it clear that the arbitrators had no authority to award outside attorneys’ fees. Id. at 608.