It All Depends On Whether The Issue Is Substantive Or Procedural.
So, you have a commercial transaction in which an agreement has a choice-of-law clause indicating that attorney’s fees will be awarded under the English rule (by which the losing party has to pay reasonable attorney’s fees to the prevailing party). Does this automatically allow fee recovery at the federal level? Answer: Not necessarily, as we indicate in this interesting discussion of some federal cases, mainly from New York.
If the issue is determined to be substantive in nature, the choice-of-law foreign fee clause seems to be enforced. See, e.g., RLS Associates v. United Bank of Kuwait, 464 F.Supp.2d 206, 218-219 (S.D.N.Y. 2006); Atchison Casting v. Dofasca, 1995 WL 655183, at *1 (D. Kan. Oct. 24, 1995); El Paso Natural Gas Co. v. Amoco Prod. Co., 1994 WL 72881, at *1, 5 (Del. Ch. Dec. 16, 1994); Katz v. Berisford International, 2000 WL 959721, at *7 (S.D.N.Y. July 10, 2000).
However, if the fee clause issue is determined to be procedural in nature, some courts have determined that the state law interest in fee recovery, whether allowing for it or not, will take precedence. (Atomi v. RCA Trademark Management, S.A.S., 2015 WL 143329, at *1 (S.D.N.Y. Mar. 30, 2015); Deutsche Bank Trust Co. v. American General Life Ins. Co., 2016 WL 5719783, at *14 (S.D.N.Y. Sept. 30, 2016), aff’d, No. 16-3657-cv(L) (2d Cir. Dec. 22, 2017).) In this area, the fee clause sometimes has to be made unmistakable and clear with respect to fee-shifting under a foreign law.
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