MA SJC Holds AAA Arbitrators Cannot Award Attorneys’ Fees Pursuant to M.G.L. c. 231, s. 6FJanuary 7, 2016
The Massachusetts Supreme Judicial Court issued a decision this morning holding that, absent an agreement to the contrary, arbitrators in a American Arbitration Association (AAA) proceeding (applying the AAA’s commercial arbitration rules) cannot award attorneys’ fees under M.G.L. c. 231, s. 6F based on a finding that substantially all of the defenses were wholly insubstantial, frivolous, and not advanced in good faith. The MA statute codifies the “bad faith” exception to the American Rule. However, since the statute expressly permits only a “court” (as specifically defined in the statute) to award such fees, it did not apply in the AAA arbitration. The decision is Beacon Towers Condominium Trust v. Alex, SJC-11880.80.