Recently, a certain cell phone company changed its terms of service from "your only recourses are arbitration or small claims court" to "your only recourse is arbitration." Since this company doesn't have the greatest record for responding to complaints, this has left the company's customers wondering, what happens if a customer follows all procedures to file for an arbitration, and the company simply ignores it? Would this invalidate the arbitration agreement and restore their right to sue? If a company could just ignore arbitration requests, wouldn't that make it essentially impossible for anyone to pursue any claim against the company?
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1The arbitrator is supposed to be a neutral third party, right? Sometimes their neutrality might be in question but in any case they're not part of the company. I assume you file your complaint directly with the arbitrator, perhaps notifying the company as well. If the company doesn't respond, then the arbitrator rules in your favor by default.– Nate EldredgeCommented Apr 4, 2021 at 19:26
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The arbitrator has no power of enforcement - they make a decision and then they are done.– George WhiteCommented Apr 4, 2021 at 22:37
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1 Answer
what happens if a customer follows all procedures to file for an arbitration, and the company simply ignores it?
The customer might prevail on the basis that the company failed to appear at arbitration, but see DaleM's comment regarding the customer's need (at least in some jurisdictions) to prove his claim even in that scenario. Regardless, it is not in the company's best interest to ignore the proceedings that ensue from customer's filing for arbitration.
Would this invalidate the arbitration agreement and restore their right to sue?
Not really. In fact, filing suit instead of filing for arbitration would give the company an opportunity to move [in court] for dismissal or to compel arbitration on grounds that the customer knew he ought to proceed with arbitration. Altogether this would subject the customer to delays and greater expenses than if he filed for arbitration regardless of company's lack of response.
answered Apr 4, 2021 at 19:40
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It doesn’t necessarily follow that a person who doesn’t appear at an arbitration loses; the other party still needs to make out a prima-facile case. I’ve seen many adjudications (similar to arbitrations) where the Respondent has not participated but has nevertheless prevailed because the Claimant failed to demonstrate an entitlement to payment.– Dale M ♦Commented Apr 4, 2021 at 22:28