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Default Award

Thursday, October 23, 2025 9:40 AM | Anonymous

Renzi & Baccei: i compagni di merende che hanno portato la Sicilia al default – La Voce di New York

The rules of some ADR institutions authorize the tribunal to issue a default award as a sanction. Do you believe that is a good idea in some circumstances? Have you ever heard of such a sanction occurring in an arbitration proceeding?

What are your thoughts?

Comments

  • Thursday, October 23, 2025 12:12 PM | Richard Wise
    I think it better practice to hold an abbreviated hearing where the Claimant presents a prima facie case in support of the award, either in person or by affidavit.
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  • Thursday, October 23, 2025 12:14 PM | Lee Hornberger
    Santamauro v Pultegroup, Inc, Michigan Court of Appeals No. 328404 (Dec 20, 2016). Plaintiff agreed to arbitrate claims arising from employment. He was discharged. He initiated arbitration alleging wrongful discharge. Arbitrator found plaintiff had deliberately spoiled evidence by removing hard drive of his Employer-owned laptop computer before returning it to company, and dismissed action. COA affirmed Circuit Court’s confirmation of award.
    https://www.courts.michigan.gov/49d807/siteassets/case-documents/uploads/opinions/final/coa/20161220_c328404_25_328404.opn.pdf
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  • Thursday, October 23, 2025 12:17 PM | James Elegante
    I agree with Richard's approach. I have conducted a number of arbitrations where the responding party does not participate in the arbitration. I ask the claimant to make its case and I write an award simply noting that no evidence was submitted in opposition to the claim as proven by the evidence.
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    • Thursday, October 23, 2025 12:28 PM | Mark Diamond
      I agee with one caveat. Make sure to subject the evidence submitted to the proper standard of proof and determine whether it is reasonably accurate and reliable. And say so in the award. It is possible the non-defaulting party has a lousy case.
      Link  •  Reply
    • Friday, October 24, 2025 7:03 AM | Denise Presley
      I’d add even with reliable evidence issuing an award sans one party’s participation is arguably a ‘constructive default’. So I require Claimant to comply with applicable state law/ rules concerning default. Otherwise, they risk not obtaining a judicial confirmation of the award in order to collect damages. .
      Link  •  Reply
  • Thursday, October 23, 2025 12:32 PM | Peter Rundle
    Claimant must always prove its case. With rare exceptions, Respondent must be allowed to defend. Sanctions short of default are a better practice (adverse inferences; exclusion of certain evidence or witnesses, etc.) There are probably extreme cases where striking a responding statement (answer) could survive scrutiny, but I think other tools are better employed.
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  • Thursday, October 23, 2025 12:48 PM | Scott Link
    This question involves two distinct scenarios in which a default judgment may be entered. The first is when one party refuses to participate in the process. That is they are not responding to discovery or otherwise participating in the process. The second circumstance occurs when the conduct of the party is systematically so egregious that it thwarts the ends of the arbitration process. In both instances, a hearing should be held and , if necessary, a lesser sanction should be awarded (such as attorneys fees to the non offending party) . If the inappropriate conduct continues the arbitrator should issue 'death penalty sanctions'. The sanction is to liability only. Generally, the Arbitrator issues a statement delineating the continuing offensive conduct of the party. Once 'death penalty sanctions' are issued, the non offending party still must proceed with a hearing in which he/she presents a prima facie case on liability and damages. Then the arbitrator my issue a Reasoned Award detailing the offending conduct and , of course, discussing the liability issues and the ensuing damages in the usual fashion proscribed by AAA guidelines.
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  • Thursday, October 23, 2025 12:59 PM | Sheila Carpenter
    AAA does not allow this and its requirement that a claimant must be put to its proof is a good one in most cases. However, where one party has repeatedly acted in bad faith, e.g., destroying or denying the existence of important evidence, lying to the Panel, encouraging key witnesses to be unavailable, having default as an option would encourage better behavior and, when appropriate, make the punishment fit the crime.
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  • Thursday, October 23, 2025 1:26 PM | Geoffrey M. Beresford Hartwell
    The absentee, or party who fails to comply with a direction, should be put on notice of a proposed default award and allowed ample time to reply. If the Claimant, he has to establish the claim

    The word 'sanction' is unattractive, as arbitrators have no coercive authority,
    Link  •  Reply
  • Thursday, October 23, 2025 1:32 PM | Carol Davis Zucker
    I have had a number of cases where the respondent did not participate in the arbitration. Although AAA rules do not allow a decision based upon a default, even without that rule I would not issue a default. I believe that, given the differences between arbitration and in-court litigation, it is even more important to preserve due process. Litigation involves a public filing open to the public whereas arbitration is not I made sure the respondent was informed the case would continue, copied upon every document leading up to the arbitration, informed of the arbitration hearing, made sure the claimant had proved its case with competent evidence and I made findings based up that.
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  • Thursday, October 23, 2025 1:38 PM | Julia E Sullivan
    If the respondent defaults I will still put the Claimant to their proof.
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  • Thursday, October 23, 2025 1:39 PM | Julia E Sullivan
    If the respondent defaults I will still put the Claimant to their proof.
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  • Thursday, October 23, 2025 1:51 PM | Jerry Hoover
    Default Awards should only be granted when 1) all parties have been given fair notice under the requisite due process provisions, and 2) the non-defaulting party puts on evidence of its claim or defenses. My preference for accomplishing # 2 above is via an ex parte hearing. I place great emphasis on fair notice and due process in the arbitration world, especially since the contracting parties give up their right to a trial by a jury.
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  • Thursday, October 23, 2025 1:52 PM | Kevin G Amadio
    i agree that If the respondent defaults I will still put the Claimant to their proof as the AAA Rules currently require. I would not support a change to the Rules on this issue.
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  • Thursday, October 23, 2025 1:58 PM | Lee Hornberger
    Hernandez v Gaucho, LLC, Michigan Court of Appeals 307544 (Feb 19, 2013). Parties arbitrated employment claim. Arbitrator ruled in favor of employee. Award based on default of employer, who failed to provide discovery during arbitration. Arbitrator did not conduct hearing, hear testimony, or take proofs. Employee moved to confirm award and defendants moved to vacate. Circuit Court concerned arbitrator never took evidence and there were ex parte communications between arbitrator and attorneys. Circuit Court granted motion to vacate and denied motion to confirm. COA affirmed. COA said arbitrator can hear testimony, take evidence, and issue award in absence of one of parties if that party, although on notice, has defaulted or failed to appear. Arbitrator may not issue award solely on basis of default, but must take evidence from non-defaulting party to justify award. Michigan Uniform Arbitration Act provides, even when arbitrator is entitled to proceed in absence of defaulting party, arbitrator required to “hear and decide the controversy on the evidence … .” MCL 691.1695(3).

    https://www.courts.michigan.gov/49d98b/siteassets/case-documents/uploads/opinions/final/coa/20130219_c307544_53_307544.opn.pdf
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  • Thursday, October 23, 2025 2:42 PM | Scott Skaletsky
    I don't believe that an arbitrator or arbitrators should issue default awards. Arbitration is an extra-judicial proceeding and as such, arbitrators should not take it upon themselves to pass judgment on litigants. Having said that, I think that the more appropriate manner of handling such a situation is that the arbitrator(s) should advise the party's attorney that another hearing will be set and that that party should reimburse the expenses, If any exist, of the appearing counsel. If it happens a second time, then the arbitrator(s) can recommend to the AAA that it should impose as a sanction a default against the non-appearing party.
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  • Thursday, October 23, 2025 2:44 PM | Anthony B. Zebouni
    Under the Federal Arbitration Act or a State Arbitration act there are only a few situations that would be the basis to vacate an award. Dismissal is an extreme sanction, and could an Arbitrator employ the “nuclear option”? Yes, but I would not. I’d issue a rule to show cause and impose the sanction of attorney fees or other appropriate measured sanction but would attempt to avoid the situation where a party was deprived of the opportunity to present evidence.
    Link  •  Reply
  • Thursday, October 23, 2025 8:14 PM | Michael S. Jordan
    I agree with most all of the comments. If a party fails to act when required, first issue an order for compliance with a set date or direct the party to explain why compliance is inappropriate. If there is no response or inadequate response, impose the least possible limit on the non compliant party escalating as appropriate but always require the claimant to prove their case with sufficient proof and proper notice to non compliant non appearing party so there may be no claim of improper ex party proceedings. Attorneys' fees and costs are usually deemed reasonable. If you impose the payment of all AAA and arbitrator fees on non compliant party you may find your fees are never paid until a reviewing court comes to your rescue. There is much more leverage with a claimant who is not compliant.
    Link  •  Reply
  • Friday, October 24, 2025 9:07 AM | Joe Catania
    I agree with all the comments regarding the absolute necessity of punctilious due process requirements before any sanctions of any nature or imposed. However, I believe that, frequently, sanctions are underutilized. Here's why:
    I have found that often the parties treat arbitration as some type of stepchild to plenary litigation that allows the parties to ignore or, jointly, continually delay disclosure or the hearing. At play here are the parties' natural reluctance to oppose requests for extension of disclosure. No one wants to be the "bad guy"and oppose another parties requests for adjournment of disclosure dates either because counsel know each other and frequently run into each other in other litigation or are afraid the worm turns and they will be the one with a problem with compliance the next time. This occurs regardless of language used in scheduling orders to the effect that all dates are "engraved in stone".
    I think the arbitrator's response is a little easier when one party requests extensions but other parties oppose it.
    What is more problematic is when all parties consent to continued extensions. While it is true that arbitration is a creature of contract, that contract explicitly or impliedly incorporates rules of arbitration and grants authority to an arbitrator. The parties choose this method of dispute resolution, presumably, because the parties recognize that, among other things, arbitration is or should be much more efficient than plenary litigation. The arbitrator, in my view, has an obligation not only to the parties but to the process itself and if the latter is not recognized the promise of arbitration is lost. Further, by contract the parties have given her this authority.
    To be clear, I am not suggesting here that arbitrators too quickly pull the trigger on nuclear options. But, a persistent reminder of the need to honor disclosure dates and hearing dates, requiring quick conferences to explore the reasons behind requests for extensions, ensuring that all extensions, if granted, are incorporated into an additional Order which references how many times extensions have been sought and granted as well as the rationale as to why this latest one may have been granted all subtly convey the message that the arbitrator's tolerance for delay can be stretched only so thin. There are numerous costs that can be imposed on recalcitrant parties ranging from payment of attorney's fees for the conferences referenced above, only partially granting extension of disclosure dates, ruling that any objections to long outstanding demands that haven't yet been interposed have been waived, etc. I think the message that arbitration, too, demands diligence, comes across pretty readily. And, if a party ignores that message it does so at its peril. I suppose, then, that what I am really saying is that if the arbitrator conveys the very real possibility of sanctions if or when disclosure delays look as if they are spinning out of control, that alone is usually sufficient to put everything back on track.
    That said, I am hard-pressed to remember an occasion, absent the complete default because of nonappearance of a party, where I have had to actually impose sanctions.
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