A recent Texas Lawyer story, “Disputed $45.8M Arbitration Award Includes $3.04M in Attorney Fees” reports that an international digital security company won a $45.8 million arbitration award, including $3.04 million in attorney fees, against a consortium of U.S. retailers that includes Wal-Mart.

Confirmation of the award is pending in state court in Dallas.  But the consortium has objected to award, arguing it should be vacated because the three-member arbitration panel exceeded its authority.

The consortium has also objected to the attorney fees, arguing that no statutory basis exists in Texas law upon which the digital security company, Amsterdam-based Gemalto, could obtain attorney fees.  Nor did the two sides include in their agreement to arbitrate any preset conditions for fees, the consortium argued.

But Gemalto, represented by Mayer Brown lawyers, countered—and persuaded the arbitration panel—that it is due the attorney fees because both sides sought attorney fees prior to the panel issuing Gemalto the damages award and that the American Arbitration Association's rules, specifically, Rule 47 (d), allow for attorney fee awards in such instances.

"That is a really key issue.  Our contract didn't really say if we should or should not get attorney fees.  It just said arbitrators would decide of costs.  We relied on AAA rule 47(d) that if both sides ask for attorney fees, then the arbitration panel can award them," said Carmine Zarlenga, a partner in the D.C. office of Mayer Brown, who helped the team representing Gemalto.

Rule 47 (d) states specifically that the arbitrators may include an award of attorney fees if all parties have requested such an award.

In the dispute, Gemalto alleged that the consortium, Merchant Customer Exchange, had wrongfully terminated a service contract for the development of a mobile payment platform for its convenience.  The consortium included, in addition to Wal-Mart, Target and Kohl's and operated more than 80,000 stores.

In March, the arbitration panel issued a 42-page ruling that the consortium had terminated a contract for its convenience and therefore owed Gemalto $40 million.  Then, after a separate bifurcated hearing, the same panel added to the award $5.8 million in pre-judgment interest and attorney fees.