Arbitration Drafting Arbitration Agreements and Clauses 2

Question 1

What purpose does a choice-of-law clause serve in an arbitration agreement?

Accepted Answer

It specifies which jurisdiction's substantive law governs the merits of the dispute

Answer

It designates the country whose courts may vacate the arbitral award

Answer

It selects the language in which arbitration must be conducted

Answer

It limits the parties to remedies available only in the chosen jurisdiction's courts

Question 2

Why is a severability clause (also called a separability clause) included in many arbitration agreements?

Accepted Answer

To ensure the arbitration clause remains valid and enforceable even if other parts of the underlying contract are found void

Answer

To allow the arbitrator to sever and discard unfavorable evidence

Answer

To give courts the right to sever the arbitration clause from any award rendered

Answer

To separate the arbitrator's fee obligation from the parties' other contractual duties

Question 3

Which approach do most institutional arbitration rules (e.g., AAA, JAMS) take regarding the arbitrability of a dispute when the clause is ambiguous?

Accepted Answer

They favor a presumption of arbitrability, resolving doubts in favor of arbitration

Answer

They refer all ambiguity questions to the nearest federal district court

Answer

They require a second agreement between the parties before proceeding

Answer

They automatically dismiss the case until the clause is clarified by mutual amendment

Question 4

What is the 'seat' of arbitration and why does it matter when drafting an arbitration clause?

Accepted Answer

The legal place of arbitration that determines which jurisdiction's procedural law and supervisory courts govern the proceedings

Answer

The physical location where all hearings must physically take place

Answer

The nationality of the presiding arbitrator

Answer

The institutional administrator chosen to administer the arbitration

Question 5

When an arbitration clause limits discovery to document exchange only, what is the primary benefit parties typically seek?

Accepted Answer

Reduced cost and faster resolution by avoiding depositions and extensive interrogatories

Answer

Guaranteed confidentiality of all evidence produced during the proceeding

Answer

Elimination of the arbitrator's ability to order interim relief

Answer

Ensuring that no expert witnesses may testify at the hearing

Question 6

What risk does a party face if it drafts an arbitration clause that is found to be unconscionable by a court?

Accepted Answer

The clause may be invalidated and the parties may be required to litigate in court instead

Answer

The party must pay treble damages for including an unconscionable term

Answer

The arbitrator is automatically disqualified and must be replaced

Answer

The award is automatically increased in favor of the non-drafting party

Question 7

Which clause in an arbitration agreement allows one proceeding to address claims by or against multiple related parties simultaneously?

Accepted Answer

Consolidation or class arbitration clause

Answer

Interim measures clause

Answer

Confidentiality clause

Answer

Default award clause