South-Western Legal Studies in Business

Arbitrator Has Discretion Regarding Awarding of Attorney Fees

Indiana high court held that an arbitrator did not exceed his authority by not awarding attorney fees, even though the arbitration agreement called for reasonable attorney fees to be awarded to the winner, because the arbitrator could determine that no fee was most reasonable given the nature of the dispute.


Alternate Dispute Resolution

Key Words

Arbitration, Award, Arbitrator Authority, Error

C A S E   S U M M A R Y

Natare and DSI, competitors settled suits against each other by agreeing not so disseminate disparaging information about each other and to submit any future disagreements to arbitration. The settlement stated that if a party breached the agreement, the other party would be entitled to a minimum of $5,000 in damages plus attorney fees. Four years later, Natare complained in arbitration that it lost a contract because of disparagement by DSI, causing a loss of $45,000. The arbitrator held that there were no actual damages and awarded the $5,000 minimum but did not award attorney fees. Natare sued for judicial review of the arbitratorís decision, especially concerning attorney fees. The trial court upheld the award; the appeals court reversed, finding the arbitrator has exceeded his authority. The matter was appealed to the supreme court.


Arbitrator decision affirmed. The settlement agreement entitled the non-breaching party to reasonable attorney fees. Nevertheless, an arbitrator has authority not to award attorney fees if he concludes that the amount of reasonable fees to which the non-breaching party was entitled was zero. He did not exceed his authority by failing to award attorney fees.


Natare Corp. v. D.S.I. Duraplastec Systems, 855 N.E.2d 985 (Sup. Ct., Ind., 2006)

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