Reed Smith Client Alerts

Obtaining an award against a party that fails to appear in an arbitration may prove more costly and time-consuming than appearing in court. In general, in court, a court may issue a default judgment if a party does not timely appear or otherwise fails to defend itself, often simply by demonstrating effective service on the defaulting party, and providing a minimal showing of the basis of its claim. By contrast, most arbitration providers require the arbitrator(s) to continue the arbitration in the absence of the defaulting party and to closely examine the evidence. This article discusses, compares, and contrasts the default procedures in litigation and various arbitration forums, and explains how including a well-drafted arbitration clause in an agreement may minimize the expense and time spent in seeking to obtain a default award in arbitration.

Authors: Casey D. Laffey Nana Boyer Ian M. Turetsky

I. Default Judgment in Court

Generally, the process for obtaining a default judgment in court is more streamlined than in arbitration, and does not require the production of extensive affirmative evidence in support of the party’s claim. In federal court, a default judgment may be granted against a party that has failed to plead or otherwise defend itself. See FRCP 55. A default judgment may be entered by the clerk of the court when only payment of a sum certain is sought, after plaintiff submits an affidavit stating that the defaulting party was properly served but failed to plead, and showing the amount due on a claim for a certain amount. A default judgment may also be entered by the court in all other cases when the moving party submits with its motion for default judgment (1) a clerk's certificate of entry of default, (2) a proposed form of default judgment, (3) a copy of the pleading to which no response has been made. The court will, upon these submissions, determine whether the plaintiff's allegations establish the defendant's liability as a matter of law, and ensure that there is a basis for the damages sought by a plaintiff.