Arbitration Commercial Arbitration Practice 1 — Questions and Answers
Question 1: What is the primary advantage of arbitration over litigation for commercial disputes in the United States?
- Arbitrators are government employees providing free services
- Arbitration offers privacy, finality, and expertise tailored to the dispute (Correct answer)
- Arbitration is always cheaper than litigation regardless of complexity
- Arbitration allows unlimited appeals unlike courts
Correct answer: Arbitration offers privacy, finality, and expertise tailored to the dispute
Commercial arbitration's main advantages include confidentiality, finality of the award, ability to select expert arbitrators, and flexible procedures.
Question 2: What is a 'demand for arbitration' under AAA Commercial Rules?
- A court motion requesting transfer of a case to arbitration
- The formal document filed with the AAA to initiate arbitration proceedings (Correct answer)
- A letter sent directly to the opposing party before arbitration
- A subpoena requiring a witness to appear at an arbitration hearing
Correct answer: The formal document filed with the AAA to initiate arbitration proceedings
Under AAA rules, arbitration is initiated by filing a Demand for Arbitration with the AAA, along with the required filing fee and copies of the arbitration agreement and relevant contract.
Question 3: Under AAA Commercial Arbitration Rules, what is the default number of arbitrators for disputes exceeding $1 million?
- One arbitrator
- Two arbitrators
- Three arbitrators (Correct answer)
- Five arbitrators
Correct answer: Three arbitrators
For disputes above $1 million, the AAA default is a three-arbitrator panel unless the parties agree otherwise, providing a broader perspective for high-stakes cases.
Question 4: What is an 'administered' arbitration?
- Arbitration supervised directly by a government agency
- Arbitration managed by an institution that provides procedural rules, case administration, and appointment services (Correct answer)
- Arbitration conducted entirely online without in-person hearings
- Arbitration where the court appoints the arbitrator
Correct answer: Arbitration managed by an institution that provides procedural rules, case administration, and appointment services
Administered arbitration involves an institution like the AAA, ICC, or JAMS managing the process, setting timelines, assisting with arbitrator appointments, and overseeing fee collection.
Question 5: What is a 'pre-hearing conference' in commercial arbitration typically used for?
- Settling the dispute before it reaches arbitration
- Addressing scheduling, procedural, and preliminary substantive issues before the main hearing (Correct answer)
- Selecting arbitrators
- Filing the final award
Correct answer: Addressing scheduling, procedural, and preliminary substantive issues before the main hearing
A pre-hearing conference allows the arbitrator and parties to set the schedule, identify key issues, establish discovery parameters, and agree on hearing logistics.
Question 6: What does 'class action waiver' in an arbitration agreement mean?
- A waiver allowing a party to bring claims as a class in arbitration
- A clause preventing parties from bringing or participating in class action claims, requiring individual arbitration (Correct answer)
- A provision waiving arbitration fees for class members
- A waiver of the right to appeal class certification decisions
Correct answer: A clause preventing parties from bringing or participating in class action claims, requiring individual arbitration
A class action waiver in an arbitration agreement requires each claimant to arbitrate individually rather than collectively, which the US Supreme Court upheld in AT&T Mobility v. Concepcion.
Arbitration Commercial Arbitration Practice 1
What is the primary advantage of arbitration over litigation for commercial disputes in the United States?