Default by a party

On the issue of default by a party generally, it is important for an arbitration agreement always to include a default clause, so that, in the event that a party makes the decision not to participate in the arbitration, such an action does not have the effect of frustrating the whole process. The default clause does not appear in institutional model clauses and is very often neglected by the parties when they first conclude their arbitration agreement. However, it is one of the core considerations that a practitioner should have in mind and ensure that a client is advised accordingly.

Reference should be had to the applicable arbitration law as to the position where a party or a party’s representative fails to appear. Article 25(c) of the Model Law gives the arbitral tribunal power to continue proceedings in the absence of a party and to make an award on the evidence that it has heard. It is, however, a discretionary power. In order to exercise that power, and as reflected in art 24(c) of the Model Law and art 30(2) of the UNCITRAL Rules, the absent party must have had proper notice and must have failed to provide a justifiable reason for its absence.

In reality, an arbitral tribunal will always give a party every opportunity to attend, even if that means the matter having to be adjourned. At the same time, the party that has failed to appear will be expected to pay the wasted cost incurred (both of the party who was present and of the tribunal). Conversely, where a witness fails to attend, then the tribunal or a party with the approval of the tribunal may seek the assistance of the national court to secure that witness’s attendance.