[JURIST] The US Supreme Court [official website; JURIST news archive] ruled Tuesday that parties can contractually allocate the burden of attorneys' fees when litigation involves issues of federal bankruptcy law. In Travelers Casualty v. Pacific Gas & Electric Co. [Duke Law case backgrounder; JURIST report], Travelers sought to recover attorneys' fees according to its indemnification agreements with PG&E, but the lower courts did not allow recovery because the fees were incurred during the litigation of federal bankruptcy law, under which attorneys' fees cannot be collected.

The Supreme Court vacated the Ninth Circuit's decision [PDF text] in the case, holding that federal bankruptcy law does not disallow "contract-based claims for attorney's fees based solely on the fact that the fees at issue were incurred litigating issues of bankruptcy law." Read the Court's unanimous opinion [text] per Justice Alito. AP has more.