What happens when a respondent fails to participate in the arbitration? Can the local courts compel participation?
International Arbitration (4th edition)
If respondent fails to participate in the arbitration, the arbitration proceedings will move forward nonetheless. Parties cannot be compelled to participate in arbitration by local courts.
Under Austrian arbitration law, if a party refuses or fails to participate in the arbitration, the tribunal shall continue with the proceedings. It may not treat the non-participation as consent to the assertions of the other party. Local courts may not compel a party to participate in an arbitration.
The arbitral tribunal is still competent to hear the case even if the respondent does not file reply to the claim. Failure to submit a reply shall not be considered as recognition of the claim. The local courts have no authority to compel parties to arbitrate.
Canadian courts do not compel parties to arbitrate. Courts will only enforce arbitration agreements by denying access to courts. However, it has happened that courts have ordered fines for parties not arbitrating their disputes in a timely manner.
If a claimant wishes to continue the arbitration, the arbitrator has broad powers to do what they feel just in the circumstances under all the arbitration acts. They may continue the proceedings and make an award based on the evidence they have if they choose to. However, there is no equivalent to default judgment in arbitrations.
Under the FAA, courts have the power to compel the respondent’s participation in arbitration. See 9 U.S.C. § 4. Most state laws empower courts to do the same. See, e.g., N.Y. C.P.L.R. § 7503 (2012). Whereas courts may enter default judgment against a party that fails to appear, under applicable JAMS, National Arbitration and Mediation (“NAM”), and AAA rules, an arbitrator may not render an award solely on the basis of the default or absence of a party, but may make the award on the evidence presented to it by the appearing party. See, e.g., JAMS Rules, R.22(j); ICDR Rules art. 26(1)–(2). Such awards are generally enforceable in the United States.
(a)Unless otherwise agreed by the parties, if a respondent fails to participate in the arbitration pursuant to Section 25 (c) of Law 101/1987 the arbitral tribunal may continue the proceedings without treating the respondent’s failure as an admission of the claimant’s allegations.
(b) No the local courts cannot. But they can do so indirectly by stopping court proceedings brought by him either in the form of claim or as counter-claim.
Parties cannot be compelled to participate in arbitration proceedings. However, arbitration may be performed even if any of its parties does not take part.
Art. 25(b) of the UNCITRAL Model Law provides that, where ‘the respondent fails to communicate his statement of defence in accordance with Article 23(1), the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations’. Under Art. 16(3) of the UNCITRAL Model Law, a respondent may raise a plea that an arbitral tribunal has no jurisdiction to the tribunal itself and seek judicial review in the High Court of Singapore of any ruling on a preliminary question in which the tribunal does find that it has jurisdiction within thirty (30) days of receiving notice of the ruling. In addition, the Singapore Court of Appeal has recently determined the following in Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd,  2 SLR 131 at :
‘If the respondent believes that the arbitration tribunal has no jurisdiction, for one reason or another, he is perfectly entitled to sit by and do nothing in the belief that either the proceedings will not result in a final award against him or that, if an award is made, he will have valid grounds to resist enforcement. Such a respondent may therefore let the opportunity to challenge the tribunal’s jurisdiction afforded to him by Art 16 go unutilised.’
If a respondent fails to submit its statement of defense in the arbitral proceeding, the arbitral tribunal is empowered to continue the arbitral proceedings without deeming the failure as an admission (Article 26(2) of the Arbitration Act (the “Act”)). If a respondent fails to appear at a hearing or fails to produce documents as required, the arbitral tribunal may continue the proceedings and issue the award based on the evidence before it (Article 26(3) of the Act). There is no provision in the Act empowering courts to compel a respondent to participate in arbitration. The Korean Supreme Court has ruled that courts may intervene only in matters enumerated in the Act, and specifically held that applications for preliminary injunction to stay arbitration on grounds of nonexistence or invalidity of arbitration agreement would not be allowed (Supreme Court Decisions 2017Ma6087, 2 February 2018).
Should a respondent fail to reply to the request for arbitration pursuant to section 1046 (1) ZPO, the arbitral tribunal shall continue the proceedings, without the failure to comply with procedural rules as such being deemed to be an acknowledgment of the assertions made by the plaintiff. The arbitral tribunal may even issue an award on the basis of the evidence before it if the respondent fails to appear at the oral hearing or to produce documentary evidence although he was given sufficient advance notice (section 1048 (3) ZPO).
Local courts can neither compel a respondent nor third parties to participate in the arbitration.
The arbitral tribunal has the power to proceed ex parte in a scenario if any of the parties fail to participate. Furthermore, as per section 25 of the Arbitration and Conciliation Act, 1996 if the respondent fails to communicate his statement of defence in accordance with sub-section (1) of section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant and shall have the discretion to treat the right of the respondent to file such statement of defence as having been forfeited. Furtehrmore, if a party without showing any suffucuent cause remain absent, the Tribunal can proced ex-parte against such party.
If, after being properly summoned, the respondent fails to appear on the date of the hearing, the arbitral tribunal is required to summon the respondent one more time. If within 10 days after the receipt of the second summons the respondent still fails to appear, the arbitral tribunal will continue the examination without the respondent, and the claim will be accepted in full unless it is without merit or is not based on law.
If a respondent fails to comment on the statement of claim within the agreed term or prior to the expiration of a deadline set by the arbitral tribunal, the arbitral proceedings are continued, unless the parties have agreed otherwise. In case the arbitral proceedings are continued, the arbitral tribunal must not, without more, conclude from the respondent’s failure to participate that the claimant’s statements in its statement of claim are to be held as being true. The same principle applies in case the respondent fails to take any other procedural step. The arbitral tribunal will continue the arbitral proceedings and will take a decision based on the results of the evidentiary proceedings. If the failure to participate is excused, the respondent may make up for the relevant procedural act.
In the event a respondent fails to communicate its statement of defence in accordance with Section 25(1) of the Arbitration Act, the arbitral tribunal shall continue the proceedings without treating such failure as an admission of the claimant’s allegations and/or claims.
It also worth noting that Section 27(c) of the Arbitration Act also provides that in the event a party to an arbitration proceeding fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award on the evidence before it.
French law does not provide rules on the default of a respondent to participate in an arbitration. French courts recognize the possibility to proceed with arbitral proceedings, irrespective of whether the respondent participates in the arbitration.
The Paris Court of Appeal imposes two requirements to enforce or recognize the award:
• Firstly, the respondent must have had the opportunity to participate in the proceedings.
• Secondly, the arbitral proceeding must take account of both sides’ (actual or potential) arguments.
Nothing under French law allows the courts to compel a respondent to participate in the arbitration. In practice, the administering institution or the juge d’appui will nominate the arbitrator in lieu of the respondent.
If a respondent fails to participate in the arbitration without a valid cause, the EAL enables the arbitral tribunal to continue with the proceedings and objectively assess the claims of the claimant, and to render the arbitral award based on the submitted elements of evidence. However, it should be noted that a non-participating or absent party should be duly notified of all the documents submitted and orders issued, and must be given a proper and adequate opportunity to present its case and defences at every stage of the proceedings. (article 35) Furthermore, if the submitted evidence is not sufficient for the arbitral tribunal to make an award, the proceedings may be terminated by a decision of the arbitral tribunal. (article 48.1)
Moreover, local court cannot compel participation of a respondent who failed to participate in the arbitration.
If one of the parties fail to participate in the arbitration proceedings, the arbitral tribunal shall continue with the proceedings and issue a final award based on the information and documentation presented by the party that indeed participate. Despite from the above, the failure of participating does not mean an acceptance of the claim brought by the claimant, this according to article 1441 of the Commerce Code.
As well, local courts are unable to compel parties to participate in arbitration proceedings.
Where a respondent fails to state his/her defence as required under the ACA, the arbitral tribunal can continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations. See section 21(b) of the ACA. Also, where any party fails to appear at a hearing or to produce evidence, the arbitral tribunal may proceed with the proceedings and make an award. See section 21(c) of the ACA.
Nigerian courts cannot compel the parties to arbitrate but may stay proceedings and direct the parties to arbitrate where a party to the arbitration agreement has commenced litigation instead of arbitration.
If the respondent fails to submit a defence without reasonable cause, the arbitral tribunal will continue the proceedings. Failure to submit a defence will not be deemed an acceptance of the claimant's claim. If the respondent does not appear at the hearing or fails to submit evidence, the tribunal may decide the case based on the facts at hand. The arbitral tribunal and local courts cannot compel the parties to cooperate.
In case of respondent’s failure to participate, resulting in failure to communicate the statement of defense, the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations. (Rule 4.25(b) and Rule 5, IRR). In any event, local courts can issue orders to direct a third party, who may be a witness, to comply with a subpoena issued by an arbitral tribunal to testify in an arbitral proceeding. (Rule 9, Special ADR Rules).
In an ad hoc arbitration, if one of the parties fails to participate in the arbitration by refusing to appoint an arbitrator, the other party can petition the competent court to compel the non-cooperating party to appoint an arbitrator. If the arbitration is administered by the SCCA, the administrator would appoint an arbitrator for the non-cooperating party.
If the defendant does not answer the claim, it will be considered as a refusal of the grounds of the claim (Art. 11 LAM). The absence of the defendant will not prevent the arbitration from continuing (Art. 14 LAM).
There is no legal norm in Ecuador that empowers local courts to force the parties to compel to arbitration. However, Art. 7 of the LAM provides the pro arbitri principle by which judges must inhibit to accept claims subject to an arbitration agreement. Such rule also provides the in dubio pro arbitri principle in favor of the arbitration agreement, so the judges must order to arbitrate the dispute.
Pursuant to Article 25 of the ICA Act, provided that a respondent has been duly notified on the commencement of the proceedings, if he or she then fails to participate, the arbitral tribunal shall continue the proceedings.
Chilean courts cannot compel party participation.
Except where a party fails to appoint an arbitrator when establishing the arbitral tribunal (in which case the state court will step in in lieu of the defaulting party), Swiss law does not entrust the state courts at the seat of the arbitral tribunal with authority to compel parties to arbitrate.
After an arbitral tribunal has been established, it is up to the arbitral tribunal to deal with a defaulting party. As Swiss law requires the arbitral tribunal to treat parties equally and to ensure the parties’ right to be heard, the arbitral tribunal must ensure that the parties – including non-participating parties to a proceeding – are properly served and informed. If these conditions are met, a default award is generally considered valid and enforceable.
In Swiss Rules arbitration, art. 28 Swiss Rules stipulates the procedure for the arbitral tribunal in case a party fails to take procedural acts. Provided that the parties are duly notified, the arbitral tribunal may proceed with the arbitration in case one of the parties fails to appear at a hearing without showing sufficient cause for its failure. On the same basis, the arbitral tribunal may render an award based on the evidence available to it if a party fails to produce evidence.
In domestic arbitration, pursuant to article 887 para. 1 GrCCP, unless otherwise agreed in the arbitration agreement, the case is tried and an award is rendered even if a summoned party defaults or fails in any other way to take part in the proceedings by pleading its assertions and submitting evidence. In international commercial arbitral proceedings having their seat in Greece, the issue is regulated by article 25 L. 2735/1999 which incorporates verbatim the respective rule of the Model Law. Hence, unless otherwise agreed by the parties, arbitral proceedings are terminated in case claimant fails to file his statement of claim in accordance with article 23 para. 1. In case the respondent fails to file his statement of defense according to the same article, the proceedings advance but the tribunal is not allowed to treat this failure per se as an admission of material facts pertaining to claimant’s allegations. In case any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award on the evidence before it. State courts may not compel the parties to the arbitration agreement to arbitrate. State Courts may only refer the dispute to arbitration in case a respective defense is raised as regards a complaint filed with them.
If a respondent fails to participate the arbitration, the arbitral tribunal shall continue the proceedings and the respondent shall not be deemed to accept of the claimant’s allegations. In addition to this, parties’ non-participation at hearings or evidence production phase without showing any just reason, would not prevent the tribunal proceed on the arbitral process and render the award according to the already existing evidence. Local courts cannot compel parties to arbitration.
Under the UAE Arbitration Law a respondent cannot be compelled to participate in the arbitration process.
Should a respondent choose not to participate in an arbitration, the respondent may attempt to nullify the final award.
The respondent may base its claim for nullification within Article 53(d).
Article 53(d) provides for nullification on the grounds that the respondent was ‘unable to submit his statement of defence due to that he was not given a proper notice of….the arbitration proceedings’.
A claimant may easily prove its compliance with the requirement to properly notify the respondent, if the arbitration was administered by the courts or an arbitral institution.
In an ad hoc arbitration, where notifications may not be as authoritative as they would be in an institutional arbitration, a party may utilise the services of a UAE Federal Court bailiff to deliver a legal notice (or any other formal notice) informing the other party of the commencement of arbitral proceedings or of any other procedural part that is of critical importance to communicate.