Arbitration Drafting Arbitration Agreements and Clauses

Question 1

Which element is considered the most essential component of a valid pre-dispute arbitration agreement?

Accepted Answer

A clear and mutual agreement to arbitrate future disputes

Answer

A specified damages cap

Answer

A designated arbitration administrator named in advance

Answer

A waiver of all appeal rights

Question 2

Under the Federal Arbitration Act (FAA), an arbitration agreement is enforceable unless it is subject to which defenses?

Accepted Answer

Any defense available under general contract law such as fraud, duress, or unconscionability

Answer

Only defenses that are unique to arbitration clauses

Answer

Defenses based on the inconvenience of the arbitration location

Answer

Defenses raised solely by the party seeking arbitration

Question 3

What is the significance of a 'broad' arbitration clause versus a 'narrow' one?

Accepted Answer

A broad clause covers all disputes arising out of or relating to the contract, while a narrow clause limits arbitration to specific types of disputes

Answer

A broad clause allows either party to litigate while a narrow clause mandates arbitration

Answer

A broad clause requires international arbitration while a narrow clause allows domestic proceedings

Answer

A broad clause eliminates discovery while a narrow clause permits full discovery

Question 4

When drafting an arbitration clause, why is specifying the number of arbitrators important?

Accepted Answer

It determines the composition of the tribunal and can affect cost, timeline, and deliberation balance

Answer

It controls whether the award is subject to judicial review

Answer

It decides whether discovery is permitted in the proceeding

Answer

It sets the maximum damages the arbitrator may award

Question 5

Which term describes a clause requiring parties to attempt negotiation or mediation before initiating arbitration?

Accepted Answer

Escalation clause

Answer

Severability clause

Answer

Choice-of-law clause

Answer

Consolidation clause

Question 6

What is a 'carve-out' in an arbitration agreement?

Accepted Answer

A provision that excludes certain types of claims from arbitration and reserves them for court adjudication

Answer

A clause that removes the arbitrator's fee from the losing party's obligations

Answer

A term allowing one party unilaterally to withdraw from arbitration

Answer

A provision that limits the arbitral award to injunctive relief only

Question 7

Which doctrine allows a court to enforce an arbitration agreement against a non-signatory?

Accepted Answer

Equitable estoppel

Answer

Res judicata

Answer

Lis pendens

Answer

Forum non conveniens