What Happens If You Ignore an Arbitration Notice – Risk Free Guide

Ignoring an arbitration notice is not a harmless mistake. It is a legal decision with serious and often irreversible consequences. Many individuals and businesses wrongly assume that arbitration is optional, informal, or easier to dismiss than a court lawsuit. That assumption is dangerous.

An arbitration notice is a formal legal communication that signals the start of a binding dispute resolution process. Once issued, it carries real legal force. Failing to respond can cost you money, rights, reputation, and control over the outcome.

This article explains what happens if you ignore an arbitration notice, the legal consequences, enforcement risks, and why early legal action is critical.

Understanding an Arbitration Notice

An arbitration notice is a formal notification that a dispute has been referred to arbitration under a contract, treaty, or statutory obligation. It informs you that the opposing party has initiated arbitration proceedings and that you are required to respond within a specified time.

Arbitration is commonly used in:

• Commercial contracts
• Employment agreements
• Construction projects
• International trade and investment
• Shareholder and partnership disputes

Unlike informal negotiations, arbitration is legally binding. Ignoring an arbitration notice does not stop the process. It simply removes your ability to defend yourself.

Is Arbitration Mandatory?

In most cases, yes.

If your contract contains an arbitration clause, both parties are legally bound to resolve disputes through arbitration instead of court litigation. Courts in most jurisdictions enforce arbitration agreements strictly.

This means:

• You cannot opt out just because you dislike arbitration
• Silence is not consent, but it is treated as non participation
• Arbitrators can proceed without you

Ignoring the arbitration notice does not invalidate the arbitration agreement. It strengthens the other party’s position.

What Happens If You Ignore an Arbitration Notice?

Ignoring an arbitration notice triggers a chain of legal consequences. These outcomes are rarely favorable.

1. Arbitration Proceeds Without You

The most immediate consequence is that arbitration will continue in your absence.

Arbitrators are not required to wait indefinitely for your response. Once the response deadline expires, the tribunal may proceed ex parte, meaning without your participation.

You lose the right to:

• Submit evidence
• Challenge claims
• Present witnesses
• Raise jurisdictional objections
• Argue on damages

This is the legal equivalent of abandoning your defense.

2. Default Arbitration Award Against You

If you ignore the arbitration notice, the arbitrator may issue a default award in favor of the claimant.

A default award means:

• The claimant’s version of facts is accepted
• Damages are assessed without your input
• Liability is presumed based on submitted evidence

Arbitrators are still required to review evidence, but without opposition, that review is one sided. This dramatically increases the risk of an unfavorable outcome.

Once issued, an arbitration award is extremely difficult to overturn.

3. Financial Liability Can Escalate

Ignoring arbitration does not reduce costs. It increases them.

Potential financial consequences include:

• Full damages claimed by the other party
• Interest on awarded amounts
• Arbitration costs and tribunal fees
• Legal costs incurred by the claimant
• Enforcement expenses across jurisdictions

In international arbitration, these amounts can be substantial. What starts as a manageable dispute can turn into a financially crippling judgment.

4. Enforcement Through Courts Worldwide

Arbitration awards are enforceable in courts.

Under international frameworks such as the New York Convention, arbitration awards can be enforced in over 160 countries. This means assets, bank accounts, shares, and property can be seized across borders.

If you ignore an arbitration notice and lose by default:

• Courts will not re examine the merits
• Enforcement is fast and aggressive
• Defenses are extremely limited

By the time enforcement begins, it is often too late to fix mistakes.

5. Loss of Opportunity to Settle or Negotiate

Early participation in arbitration creates leverage.

When you ignore the arbitration notice, you signal weakness or disinterest. This removes any incentive for the other party to negotiate.

You lose:

• Settlement leverage
• Cost control opportunities
• Ability to narrow disputed issues
• Chance to resolve quietly

Most arbitration disputes that are handled strategically settle before final awards. Ignoring the notice destroys that possibility.

6. Damage to Business Reputation

In commercial and international disputes, reputation matters.

Ignoring an arbitration notice can:

• Damage credibility with partners and investors
• Signal poor governance or bad faith
• Affect future contract negotiations
• Trigger cross default clauses in other agreements

In regulated industries, arbitration outcomes may also affect licensing and compliance status.

7. Limited Grounds to Challenge the Award Later

Many people believe they can challenge the arbitration award later if it goes badly. That belief is wrong.

Courts allow challenges only on narrow procedural grounds, such as:

• Lack of proper notice
• Arbitrator bias
• Serious procedural irregularity

You cannot challenge an award simply because:

• You did not participate
• You disagree with the outcome
• You failed to submit evidence

By ignoring the arbitration notice, you often waive your strongest defenses.

Why People Ignore Arbitration Notices

Understanding the common reasons helps explain why this mistake is so common.

People often ignore arbitration notices because:

• They do not understand arbitration
• They assume it is optional
• They believe the claim is weak
• They hope the issue will disappear
• They want to delay costs

Every one of these reasons leads to worse outcomes.

Arbitration rewards proactive strategy, not silence.

What You Should Do Instead

Ignoring the notice is the worst option. Even if you believe the claim is baseless, responding strategically protects your position.

The correct steps include:

• Reviewing the arbitration clause carefully
• Assessing jurisdiction and arbitrability
• Preparing a timely response
• Challenging improper claims early
• Exploring settlement where appropriate

Early legal advice can reduce exposure dramatically.

FAQs About Ignoring an Arbitration Notice

Conclusion: Ignoring an Arbitration Notice Is a Legal Disaster

Ignoring an arbitration notice is not passive. It is an active decision to surrender control of the dispute.

You risk default judgments, financial loss, enforcement actions, and permanent damage to your legal position. Arbitration is designed to move forward efficiently. Silence only helps the other side.

If you receive an arbitration notice, the smartest move is immediate, strategic legal action.

Dewey and LeBoeuf LLP provides cross border arbitration expertise across Dubai, the United Kingdom, Singapore, the United States, and globally. Our lawyers help clients respond decisively, protect assets, and resolve disputes with precision.

Book a consultation today and take control of your arbitration dispute before it controls you.