CCNP Dispute Resolution 3 — Questions and Answers
Question 1: A party seeking to compel arbitration under a contract clause must typically demonstrate which of the following to a court?
- That the opposing party has waived all defenses by participating in discovery
- That a valid arbitration agreement exists and the dispute falls within its scope (Correct answer)
- That the arbitration will be less expensive than litigation
- That the opposing party has already filed a counterclaim in arbitration
Correct answer: That a valid arbitration agreement exists and the dispute falls within its scope
To compel arbitration, the moving party must show a valid, enforceable arbitration agreement and that the claims asserted are within the agreed scope of arbitration.
Question 2: In international commercial arbitration, which principle allows arbitrators to determine their own jurisdiction?
- Res judicata
- Kompetenz-Kompetenz (Correct answer)
- Collateral estoppel
- Lex mercatoria
Correct answer: Kompetenz-Kompetenz
Kompetenz-Kompetenz (or 'competence-competence') is the doctrine allowing arbitral tribunals to rule on their own jurisdiction before courts can intervene.
Question 3: When negotiating a dispute resolution clause, why might a party prefer mediation over arbitration as the first formal step?
- Mediation produces a binding award enforceable in all jurisdictions
- Mediation preserves the relationship and allows creative, non-monetary solutions (Correct answer)
- Mediation is always faster and has strict statutory time limits
- Mediation eliminates the need for any subsequent arbitration or litigation
Correct answer: Mediation preserves the relationship and allows creative, non-monetary solutions
Mediation is non-binding and interest-based, allowing parties to craft flexible solutions and maintain business relationships that adversarial arbitration or litigation may damage.
Question 4: What does a 'liquidated damages' clause do in the context of contract dispute avoidance?
- Allows a party to seek punitive damages in addition to actual losses
- Pre-establishes the amount of damages for specified breaches, reducing future disputes over quantum (Correct answer)
- Requires the breaching party to liquidate assets to cover losses
- Eliminates any damages liability for performance delays
Correct answer: Pre-establishes the amount of damages for specified breaches, reducing future disputes over quantum
Liquidated damages clauses set a predetermined compensation amount for specific breaches, providing certainty and reducing costly disputes over calculating actual harm.
Question 5: Under the New York Convention (1958), signatory states are generally required to:
- Retry arbitrated disputes in their national courts before enforcement
- Recognize and enforce foreign arbitral awards subject to limited exceptions (Correct answer)
- Conduct arbitration proceedings under their own national procedural rules only
- Allow parties to appeal the merits of an arbitral award in local courts
Correct answer: Recognize and enforce foreign arbitral awards subject to limited exceptions
The New York Convention obligates the 170+ signatory states to recognize and enforce foreign arbitral awards, with only narrow exceptions such as public policy or lack of due process.
Question 6: In mediation, the technique of asking a party 'What would happen if this dispute were not resolved today?' is an example of:
- Position bargaining
- Reality testing (Correct answer)
- Shuttle diplomacy
- BATNA anchoring
Correct answer: Reality testing
Reality testing helps parties evaluate the consequences and costs of non-settlement, encouraging more realistic assessments of their alternatives to a negotiated resolution.
Question 7: Which clause type in a dispute resolution provision specifies the law that governs the contract's interpretation, distinct from the law governing procedure?
- Forum selection clause
- Governing law (choice of law) clause (Correct answer)
- Jurisdiction clause
- Service of process clause
Correct answer: Governing law (choice of law) clause
A governing law or choice of law clause designates which jurisdiction's substantive law applies to interpreting and enforcing the contract, separate from where or how disputes are heard.
CCNP Dispute Resolution 3
A party seeking to compel arbitration under a contract clause must typically demonstrate which of the following to a court?