While playing with Cloak & Dagger, Entwined, I encountered what appears to be an incorrect interaction.

Steps to reproduce:

Cast Cloak & Dagger, Entwined.
Target an opponent and one of their creatures.
The opponent's revealed hand contained only a land card.
Arena displayed the prompt asking whether I wanted to exile a card from the opponent's hand.
The Accept button was disabled because there were no nonland cards in hand.
I clicked Decline.

Expected result:
Since there was no legal nonland card to exile from the opponent's hand, I expected Cloak & Dagger to exile the targeted creature instead, as the card reads: "You may exile a nonland card from their hand or the chosen creature until Cloak & Dagger leaves the battlefield."

Actual result:
After clicking Decline, the ability resolved without exiling either the opponent's creature or any card from their hand.

Could you please confirm whether this is the intended behavior or a bug with the Arena implementation?