In the absence of another definition in the contract, courts and arbitrators generally conclude that the « dominant party » is the party that receives a net recovery against the other, that it received only a small portion of the amount requested or recovered less than a prior transaction offer. In certain circumstances, such a simple and consistent interpretation may lead to unpredictable and unwarranted results that unduly reward an applicant who has grossly inflated his claim or maintained an inappropriate comparison position. Legal fees clauses are important provisions that can discourage reckless or excessive claims, promote a quick resolution and properly reward the successful complainant. Nevertheless, such provisions should be carefully developed and considered. By neglecting the establishment of standards for the court or arbitrator, which can be used to determine the dominant party, the benefits of these deferral clauses can often be lost, with potentially serious and unintended consequences. The dominant party is determined by comparing the amount allocated, including interest (if any), to the final settlement position of the parties concerned. Offers or receivables before the last billing position are not taken into account. Arbitrators transfer arbitration costs and costs, including Dennbe Counsel, to the dominant party, as determined by arbitrators at their discretion. A « dominant party clause, » such as the claim, may reduce the number of unst founded claims against an employer, since potential complainants must weigh the risk of paying employer fees when arbitrators decide that the employer was the dominant party. Many contracts contain a clause in the dispute settlement of the agreement stipulating that the « dominant party » is authorized to recover its legal fees from the other party.
The problem is twofold. It is of the utmost importance that professional liability policies do not cover the legal costs that an insured construction professional is required to pay only on the basis of a contractual liability clause such as the existing clause on the parties` legal fees. The compromise clause above requires the allocation of costs to the dominant party. The authors of the clause, if they wish, could also make costing a discretionary choice by simply changing the word « must » to « can. » It is also important to note that the above clause requires arbitrators to determine which party is the dominant party.