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 valid arbitration agreement requires a clear mutual consent by both parties to submit future disputes to arbitration rather than litigation.

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

The FAA places arbitration agreements on equal footing with other contracts, so they may be invalidated by general contract defenses like fraud, duress, or unconscionability.

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

Broad clauses use language like 'arising out of or relating to' and sweep in virtually all disputes, whereas narrow clauses restrict arbitration to specific, enumerated claims.

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

Specifying whether one or three arbitrators directly affects procedural complexity, cost, and the balancing of perspectives in deliberations.

Question 5

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

Accepted Answer

Escalation clause

Answer

An escalation clause (also called a multi-step or tiered dispute resolution clause) mandates that parties exhaust earlier resolution steps like negotiation or mediation before proceeding to arbitration.

Arbitration - Arbitration and Dispute Resolution Certification Practice Test

Arbitration - Arbitration and Dispute Resolution Certification Practice Test

Arbitration Drafting Arbitration Agreements and Clauses