Arbitrators may not award fees under 215 ILCS 5/155
In Amerisure Mutual Insurance Company v. Global Reinsurance Corporation of America, No. 08 CH 42242 (Ill. App. Ct. 1st Dist. Mar. 15, 2010), the court considered whether an arbitration panel exceeded its authority in awarding attorneys fees. Amerisure and Global had entered into an agreement in which Global agreed to reinsure Amerisure’s outstanding umbrella policies. In May 2006, Amerisure billed Global for a $1.5 million reinsurance claim. Global did not pay, and Amerisure demanded arbitration pursuant to the agreement. In its arbitration filings Amerisure sought attorneys fees pursuant to Section 155. On November 10, 2008, the arbitration panel awarded Amerisure the reinsurance amount plus attorneys fees. When Amerisure moved to confirm the award, Global filed an answer and counterapplication seeking to reject the award of attorneys fees. Global also filed a motion for summary judgment. The Circuit Court denied Global’s motion, finding that the arbitration panel did not exceed its authority and that no gross error of law appeared on the face of the award.
On appeal, the court noted “Rule 43(d)(2) of the AAA provides three bases upon which an arbitration panel may award attorneys fees: (1) ‘if all parties have requested such an award’; (2) if ‘it is authorized by law’; or (3) if it is authorized by ‘their arbitration agreement.’”
The only potential basis here was if Illinois law authorizes an award of attorneys fees. Under Illinois law, however, section 155 does not authorize arbitrators to award attorneys fees. Accordingly, the court vacated the fee award. The court did not address whether Section 155 can apply to reinsurance contracts generally “because, even assuming, arguendo, it does, the arbitrators did not have authority to award attorney fees pursuant to the statute.”
