Arbitration Commercial and Industry-Specific Arbitration 1 — Questions and Answers
Question 1: What is FINRA arbitration primarily used for in the US financial industry?
- Resolving disputes between banks over interbank lending rates
- Resolving disputes between investors and broker-dealers or between industry parties (Correct answer)
- Arbitrating corporate merger disputes
- Resolving insurance coverage disputes
Correct answer: Resolving disputes between investors and broker-dealers or between industry parties
FINRA arbitration resolves customer disputes with broker-dealers and investment advisors as well as inter-industry employment and business disputes in the securities sector.
Question 2: What is 'construction arbitration' commonly used to resolve?
- Zoning disputes with local municipalities
- Disputes over design defects, delays, payment, and change orders in construction projects (Correct answer)
- Environmental compliance violations on job sites
- OSHA safety citation appeals
Correct answer: Disputes over design defects, delays, payment, and change orders in construction projects
Construction arbitration addresses disputes between owners, contractors, and subcontractors over payment, delays, defects, and contract interpretation on building projects.
Question 3: In US labor arbitration under collective bargaining agreements, what is a 'grievance arbitration'?
- A proceeding to negotiate new contract terms
- Arbitration to resolve a union member's claim that the employer violated the collective bargaining agreement (Correct answer)
- Arbitration between two competing unions
- A proceeding before the National Labor Relations Board
Correct answer: Arbitration to resolve a union member's claim that the employer violated the collective bargaining agreement
Grievance arbitration resolves disputes over whether an employer's action violated the terms of an existing collective bargaining agreement, as distinct from interest arbitration over new contract terms.
Question 4: Which federal statute governs labor arbitration arising from collective bargaining agreements in the US?
- Federal Arbitration Act
- Labor Management Relations Act (LMRA) Section 301 (Correct answer)
- National Labor Relations Act
- Railway Labor Act only
Correct answer: Labor Management Relations Act (LMRA) Section 301
LMRA Section 301 provides federal jurisdiction for suits to enforce collective bargaining agreements, and federal common law governs labor arbitration under this statute.
Question 5: What type of arbitration clause is common in consumer financial service agreements and has faced significant scrutiny?
- Ad hoc arbitration with full discovery rights
- Mandatory pre-dispute arbitration with class action waivers (Correct answer)
- Voluntary post-dispute arbitration
- Government-administered arbitration
Correct answer: Mandatory pre-dispute arbitration with class action waivers
Consumer financial service arbitration clauses often include mandatory pre-dispute arbitration with class action waivers, limiting consumers' ability to pursue collective relief.
Question 6: What is 'sports arbitration' and which body is considered the supreme court for international sports disputes?
- WADA arbitration — resolves doping violations in US professional leagues
- Court of Arbitration for Sport (CAS) — resolves international sports disputes including Olympic and anti-doping cases (Correct answer)
- IOC Arbitration Panel — handles only Olympic Games disputes
- FIFA Dispute Resolution Chamber — handles all global sports matters
Correct answer: Court of Arbitration for Sport (CAS) — resolves international sports disputes including Olympic and anti-doping cases
The Court of Arbitration for Sport (CAS), based in Lausanne, Switzerland, serves as the highest arbitral body for international sports disputes including anti-doping and eligibility cases.
Arbitration Commercial and Industry-Specific Arbitration 1
What is FINRA arbitration primarily used for in the US financial industry?