This is a scenario all too familiar to those in the legal profession: A client has entered into a contract that includes a binding arbitration clause, and when a dispute arises, the other side demands arbitrating it. You make a good faith effort to move forward in arbitration on your client’s behalf, but find the other party to be unresponsive, perhaps ignoring your correspondences altogether. When the other party refuses to engage in the process, is there any way to obtain a default judgment on your client’s behalf?
The answer is not as clear-cut as you might imagine. Basically, your legal options will hinge on a couple of factors:
- Whether the arbitrator’s policies make it viable to seek a judgment in this forum; and
- Whether your client has a legal case that’s pending, and that clears a way for you to request judicial termination of the arbitration.
In a two-part blog series, we’re going to take a look at a couple of different routes for overcoming arbitration gamesmanship. Today, we’ll look at the option of proceeding in arbitration.
Moving Forward in Arbitration
Sometimes, if the other party refuses to engage in the arbitration process, you may simply get lucky. The arbitrator may indeed agree to simply issue a default judgment. This is uncommon, however, and it’s much more likely that the arbitrator will give you two options: Seeking a judgment via a prove-up hearing or requesting an administrative suspension of the arbitration.
Prove-up hearings often look good on paper, but there may be some downsides. For example, seeking a judgment in arbitration can often be quite costly. The arbitrator may require your client to pay all requisite fees for themselves and for the other party. Sometimes, these fees will be prohibitively expensive for your client.
Second, note that the opposing party is allowed to show up and defend their position at any point in the arbitration process, even if they had previously refused to pay fees or engage in the process. In other words, the other party can wait until you have paid their fees, and then choose to appear in the process. This may seem unfair, but it is a legally viable strategy that the other party can use to undermine your client’s position.
What About Proceeding in Court?
That’s a quick look at the first option on the table. In part two of this series, we’ll consider the other possibility, which is proceeding in court. In the meantime, reach out to Dhillon Law Group directly with any questions about arbitration, employment law, and more.
