What to Do When the Other Side Ignores Arbitration

What are your options when the other side ignores arbitration in Minnesota?

Your options are to keep the arbitration moving without the other side and to go to court only for the steps an arbitrator cannot take. Silence from the other side does not stop an arbitration under Minnesota law or under the AAA rules, and it does not win the case for you either.

Each kind of silence has its own answer:

• No response to your demand. You start the arbitration yourself with proper notice, and under the AAA rules an unanswered demand is treated as denied.
• No arbitrator choice. The AAA or a court fills the seat, as the section on appointing an arbitrator explains.
• No payment of fees. You may advance the unpaid share and ask the arbitrator to charge it to the other side in the award.
• No appearance at the hearing. Under Minn. Stat. § 572B.15(c), “The arbitrator may hear and decide the controversy upon the evidence produced although a party who was duly notified of the arbitration proceeding did not appear.”
• A claim that no agreement exists, or a lawsuit filed instead. A court can order arbitration under Minn. Stat. § 572B.07 and pause the lawsuit.
• No payment of the award. A court confirms the award under Minn. Stat. § 572B.22, unless the award is modified, corrected, or vacated, and enters a judgment you can collect.

How do you start an arbitration the other side cannot later claim it never received?

You start it with written notice delivered the way your contract specifies or, if the contract is silent, by certified or registered mail with a return receipt you actually get back, or by formal service. The notice must describe the dispute and the remedy you want.

Minn. Stat. § 572B.09(a) provides: “A person initiates an arbitration proceeding by giving notice in a record to the other parties to the agreement to arbitrate in the agreed manner between the parties or, in the absence of agreement, by mail certified or registered, return receipt requested and obtained, or by service as authorized for the initiation of a civil action.” It adds: “The notice must describe the nature of the controversy and the remedy sought.”

Proper notice carries more weight when the other side stays away. One ground an absent party keeps for setting aside the award is that “the arbitration was conducted without proper notice of the initiation of an arbitration as required in section 572B.09 so as to prejudice substantially the rights of a party to the arbitration proceeding” (Minn. Stat. § 572B.23(a)). I suggest keeping the signed return receipt or proof of service with the demand, because that file is your answer to a later notice challenge.

If your clause adopts the AAA Commercial Arbitration Rules, you file the demand with the AAA, and Rule R-5(a) treats silence as a denial. A respondent that files no answering statement in the time the rule allows is deemed to deny the claim, and the missing answer does not delay the arbitration. These rules bind the parties only because the contract adopts them; a clause that adopts other rules carries its own procedures.

Starting the arbitration yourself is the step the Minnesota Court of Appeals pointed to in Community Partners Designs, Inc. v. City of Lonsdale, 697 N.W.2d 629 (Minn. App. 2005). An engineering firm sued a city that had been slow to pay its invoices, and the city moved to compel arbitration under the contract’s AAA-rules clause. Applying the former version of Minnesota’s arbitration statute, the court reversed the denial of the city’s motion and observed that “there was nothing stopping respondent from demanding payment on the debt, nor was there anything stopping respondent from initiating arbitration proceedings itself.”

How does an arbitrator get appointed when the other side will not choose one?

When the other side will not help choose an arbitrator, the administering organization or a court fills the seat. Minnesota law follows the contract’s appointment method unless that method fails, and then a court appoints the arbitrator on a party’s motion.

Minn. Stat. § 572B.11(a) states the order: “If the parties to an agreement to arbitrate agree on a method for appointing an arbitrator, that method must be followed, unless the method fails.” Then: “If the parties have not agreed on a method, the agreed method fails, or an arbitrator appointed fails or is unable to act and a successor has not been appointed, the court, on motion of a party to the arbitration proceeding, shall appoint the arbitrator.” A court-appointed arbitrator “has all the powers of an arbitrator designated in the agreement to arbitrate or appointed pursuant to the agreed method.”

In an AAA case, the rules fill the gap before a court is needed:

• List selection. Under Rule R-13(b), a party that does not return the AAA’s list of proposed arbitrators in the time specified is deemed to accept every person on the list.
• Party-appointed arbitrators. Under Rule R-14(d), where each side names an arbitrator and the contract sets no deadline, the AAA notifies the party to make its appointment, and the AAA makes the appointment itself if the party has not done so 14 calendar days after that notice was sent.

A clause that names no administering organization leaves the choice to the parties, so the court motion under § 572B.11(a) is how the seat gets filled when the other side will not cooperate. The tradeoffs between an administered arbitration or a private arbitrator are worth weighing at the drafting stage for this reason. In federal court, 9 U.S.C. § 5 works the same way: if a party “shall fail to avail himself of such method,” then “upon the application of either party to the controversy the court shall designate and appoint an arbitrator.” The appointment motion follows the same filing and service rules as a motion to compel, covered in the section on asking a court to order arbitration.

What happens when the other side will not pay its share of the arbitration fees?

Under the AAA Commercial Rules, an unpaid share does not end the case if you choose to cover it. Rule R-59 lets the AAA tell the parties about unpaid fees so that one of them can advance the payment. If nobody pays, the AAA or the arbitrator may suspend the arbitration and later end it.

Rule R-59 sets out the sequence. After the AAA reports the unpaid fees, a party may ask the arbitrator, to the extent the law allows, to limit the nonpaying party’s ability to pursue its own claims and to file motions. Rule R-59(b) sets a limit: no party may be barred from defending a claim or counterclaim. Under Rule R-59(e), the arbitrator may suspend the arbitration for nonpayment, and the AAA may suspend it if no arbitrator has been appointed yet. Under Rule R-59(f), a suspended case may be terminated if the parties still have not made the full payments in the time allowed after the suspension.

Minnesota law then lets the award settle who bears those costs. Minn. Stat. § 572B.21(d) provides: “An arbitrator’s expenses and fees, together with other expenses, must be paid as provided in the award.” Attorney fees are narrower. Under § 572B.21(b), “An arbitrator may award attorney fees and other reasonable expenses of arbitration if such an award is authorized by law in a civil action involving the same claim or by the agreement of the parties to the arbitration proceeding.” I suggest asking for the fee allocation in your final submission to the arbitrator, because the award is where these amounts are decided.

How does an arbitration hearing go forward without the other side?

The arbitrator sets the hearing, gives notice, and may decide the case on the evidence you present even though the other side does not come. You still have to prove your claim, because the AAA Commercial Rules bar an award based only on the other side’s default.

Minn. Stat. § 572B.15(c) requires that “The arbitrator shall set a time and place for a hearing and give notice of the hearing not less than five days before the hearing.” It then allows the hearing to go forward: “The arbitrator may hear and decide the controversy upon the evidence produced although a party who was duly notified of the arbitration proceeding did not appear.” If the arbitrator is slow to act, “The court, on request, may direct the arbitrator to promptly conduct the hearing and render a timely decision.”

AAA Rule R-32 adds a condition for the party who shows up. Unless the law provides otherwise, the arbitration may go forward without a party that, after due notice, does not attend or obtain a postponement. The rule forbids an award made solely on a party’s default and requires the party who attends to submit the evidence the arbitrator needs to make an award. Rule R-60(a) separately forbids a default award as a sanction. Under these rules, the other side’s absence does not decide the case the way a default judgment in court can. I suggest presenting witnesses, documents, and a damages calculation the arbitrator can check, because the award must stand on that record if the absent party later challenges it.

Two other tools help when the other side stalls:

1. Discovery orders. If the arbitrator permits discovery and orders a party to comply, Minn. Stat. § 572B.17(d) lets the arbitrator “take action against a party to the arbitration proceeding who does not comply to the extent permitted by law as if the controversy were the subject of a civil action in this state.”
2. Interim court relief. Before an arbitrator is in place, Minn. Stat. § 572B.08(a) lets a court, “for good cause shown,” order provisional remedies “to protect the effectiveness of the arbitration proceeding,” to the same extent and under the same conditions as in a civil action. Once an arbitrator can act, § 572B.08(b) lets the arbitrator issue “orders for provisional remedies, including interim awards,” and allows a court request only if the matter is urgent and the arbitrator cannot act in time, or if the arbitrator cannot provide an adequate remedy. Under § 572B.08(c), asking for that relief “does not waive any right of arbitration.”

When does it make sense to ask a court to order arbitration first?

A court order makes sense when the other side does more than stay silent: it denies that any agreement to arbitrate exists, or the process cannot start without its cooperation. On a motion, a Minnesota court must order arbitration if the refusing party does not appear or does not oppose.

Minn. Stat. § 572B.07(a) provides: “On motion of a person showing an agreement to arbitrate and alleging another person’s refusal to arbitrate pursuant to the agreement, the court shall order the parties to arbitrate if the refusing party does not appear or does not oppose the motion.” If the other side does oppose, “the court shall proceed summarily to decide the issue. Unless the court finds that there is no enforceable agreement to arbitrate, it shall order the parties to arbitrate.” Under § 572B.07(c), the court “may not refuse to order arbitration because the claim subject to arbitration lacks merit.” Minn. Stat. § 572B.06(b) assigns the court the question of “whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate.” Under § 572B.06(c), however, “An arbitrator shall decide whether a condition precedent to arbitrability has been fulfilled and whether a contract containing a valid agreement to arbitrate is enforceable.” While the court decides, under § 572B.06(d), “the arbitration proceeding may continue pending final resolution of the issue by the court, unless the court otherwise orders.”

The reason to get that ruling early is the vacatur statute. On a party’s motion, the court shall vacate an award if “there was no agreement to arbitrate, unless the person participated in the arbitration proceeding without raising the objection under section 572B.15, subsection (c), not later than the commencement of the arbitration hearing” (Minn. Stat. § 572B.23(a)). That exception names a party that participated; the statute does not extend it to a party that stayed away. When the other side genuinely disputes that it agreed to arbitrate, a motion to compel arbitration gets a court’s answer before you pay for a hearing rather than after the award.

The motion has its own procedure. Under Minn. Stat. § 572B.05(b), the first motion “must be served in the manner provided by law for the service of a summons in a civil action.” That rule does not apply if “a civil action is already pending involving the agreement to arbitrate.” Under Minn. Stat. § 572B.27, the motion is filed in the county where the agreement says the hearing will be held, or where it was held. “Otherwise, the motion must be filed in any county in which an adverse party resides or has a place of business or, if no adverse party has a residence or place of business in this state, in the court of any county in this state.” Later motions go to the same court unless the court directs otherwise. In federal court, 9 U.S.C. § 4 lets a party facing another’s refusal to arbitrate under a written agreement petition any district court “which, save for such agreement, would have jurisdiction under title 28.” The federal court therefore needs its own basis for jurisdiction over the dispute.

What should you do when the other side files a lawsuit instead of arbitrating?

The answer is a motion to compel arbitration, filed in the court where the lawsuit is pending before you litigate the merits. The court must pause the lawsuit while it decides the motion and, if it orders arbitration, must pause the claims it sends to arbitration.

Under Minn. Stat. § 572B.07(d), “If a proceeding involving a claim referable to arbitration under an alleged agreement to arbitrate is pending in court, a motion under this section must be filed in that court.” Under § 572B.07(e), the court “shall on just terms stay any judicial proceeding that involves a claim alleged to be subject to the arbitration until the court renders a final decision under this section.” Under § 572B.07(f), “If the court orders arbitration, the court shall on just terms stay any judicial proceeding that involves a claim subject to the arbitration.”

Timing matters because the right can be lost. In Community Partners, the court wrote that “Minnesota favors arbitration as a means of conflict resolution, but the right to arbitration may be waived.” The city there served a draft motion about two weeks after it was sued and moved to compel about ten weeks after suit. The court found “nothing in the record that would reflect a voluntary and intentional relinquishment of the right to arbitrate by appellant.” I suggest raising arbitration in your first response to the complaint, because a party that litigates first gives the other side a waiver argument. The response deadline and the other first steps are in the first weeks after being served, and the motion itself is covered in moving to compel after a lawsuit is filed.

In federal court, 9 U.S.C. § 3 requires a stay of the trial “until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.” A party that itself stalled the arbitration risks losing that stay.

How does an award against an absent party become an enforceable judgment?

You file a motion to confirm the award, and the court must confirm it unless the award is modified, corrected, or vacated. The confirmed award becomes a judgment that can be recorded and enforced like any other Minnesota civil judgment.

Minn. Stat. § 572B.22 provides: “After a party to the arbitration proceeding receives notice of an award, the party may file a motion with the court for an order confirming the award, at which time the court shall issue such an order unless the award is modified or corrected pursuant to section 572B.20 or 572B.24 or is vacated pursuant to section 572B.23.” Under Minn. Stat. § 572B.25(a), the court “shall enter a judgment in conformity therewith. The judgment may be recorded, docketed, and enforced as any other judgment in a civil action.” The motion to confirm follows the same filing and service rules as a motion to compel, covered in the section on asking a court to order arbitration.

Costs and fees for the court stage follow two rules. Under § 572B.25(b), “A court may allow reasonable costs of the motion and subsequent judicial proceedings.” Attorney fees and other reasonable expenses of litigation for that stage under § 572B.25(c) are limited to “a prevailing party to a contested judicial proceeding,” so they depend on the other side actually contesting the confirmation or a challenge to the award.

The absent party may still move to vacate on the grounds in § 572B.23(a), including the no-agreement and notice grounds discussed above. The vacatur grounds and the filing deadline are covered in detail on their own page. Under § 572B.23(d), “If a motion to vacate an award is denied and a motion to modify or correct the award is not pending, the court shall confirm the award.” Collecting from a party that still will not pay is covered in an award the other side still will not pay.

Next Steps When the Other Side Goes Silent

A party that ignores arbitration loses its chance to shape the record, and the arbitration continues without it. Under chapter 572B and the rules your contract adopts, the sequence is to start the arbitration with notice you can prove, let the administrator or a court fill the arbitrator seat, advance fees if needed, prove your case at the hearing, and confirm the award as a judgment. A court order compelling arbitration is the added step when the other side disputes that it ever agreed to arbitrate or sues instead.

The contract’s arbitration clause and the rules it adopts control many of these steps, so they are the first documents to read. More on arbitration and mediation in Minnesota is on the practice page. If you want to know which of these steps fit an arbitration the other side is ignoring, email [email protected] with a short description of the dispute and what the other side has done since you demanded arbitration.