CCNP Dispute Resolution 5 — Questions and Answers
Question 1: A contract includes a 'step negotiation' clause requiring disputes to be escalated from project managers to vice presidents to CEOs before arbitration. This structure is primarily designed to:
- Create delay mechanisms that benefit the party in breach of contract
- Ensure decision-makers with authority and business perspective attempt resolution before litigation (Correct answer)
- Waive all legal rights to arbitration if any step is skipped by either party
- Allow the CEO level to impose binding settlements on both parties unilaterally
Correct answer: Ensure decision-makers with authority and business perspective attempt resolution before litigation
Step negotiation clauses bring increasingly senior, business-focused decision-makers to the table, increasing the likelihood of settlement before costly formal proceedings begin.
Question 2: What risk does a broad arbitration clause (e.g., 'all disputes arising out of or related to this agreement') create compared to a narrow clause?
- It eliminates the parties' right to seek emergency injunctive relief in any forum
- It may sweep in tort claims, fraud, and statutory claims the parties did not intend to arbitrate (Correct answer)
- It automatically requires international arbitration regardless of party nationality
- It voids the contract's governing law clause by superseding it with arbitral law
Correct answer: It may sweep in tort claims, fraud, and statutory claims the parties did not intend to arbitrate
Broad 'arising out of or related to' language can capture claims beyond the contract itself—including torts and statutory violations—which parties may not have intended to arbitrate.
Question 3: In mediation, when a mediator meets with each party separately (outside the joint session), this is known as:
- Shuttle diplomacy
- Caucusing (Correct answer)
- Reality testing
- Single-text negotiation
Correct answer: Caucusing
Caucusing allows the mediator to hear confidential information, explore settlement options, and conduct reality testing with each party without the pressure of the joint session.
Question 4: When negotiating dispute resolution clauses in cross-border contracts, selecting a 'neutral seat' of arbitration is important because:
- The seat determines which country's tax treaties apply to any monetary award
- The seat's local courts have supervisory jurisdiction and its procedural law governs the arbitration (Correct answer)
- A neutral seat ensures the arbitration panel must include citizens of that country
- Awards issued at neutral seats are automatically enforceable without New York Convention review
Correct answer: The seat's local courts have supervisory jurisdiction and its procedural law governs the arbitration
The arbitral seat (legal domicile) determines which national court system has supervisory authority over the proceedings and which procedural law applies, making neutrality critical in cross-border disputes.
Question 5: A contract clause stating 'the prevailing party shall be entitled to recover reasonable attorneys' fees' in a dispute is known as a:
- Indemnification clause
- Fee-shifting clause (Correct answer)
- Cost-plus provision
- Damages cap provision
Correct answer: Fee-shifting clause
Fee-shifting clauses depart from the American Rule (each party pays its own fees) and allow the winner to recover legal costs, incentivizing reasonable settlement and deterring frivolous claims.
Question 6: Which statement best describes the role of a 'neutral evaluator' in early neutral evaluation (ENE)?
- The evaluator issues a binding decision that both parties must accept within 30 days
- An experienced neutral assesses the merits of each side's case and provides a non-binding opinion (Correct answer)
- The evaluator mediates the dispute using facilitative techniques only without expressing views
- ENE is exclusively available in federal court-annexed programs and cannot be contractually required
Correct answer: An experienced neutral assesses the merits of each side's case and provides a non-binding opinion
In ENE, a neutral expert evaluates each party's legal and factual arguments and provides a candid assessment of strengths, weaknesses, and likely outcomes to encourage informed settlement.
Question 7: A contract dispute resolution clause specifies 'JAMS Streamlined Arbitration Rules.' Compared to standard JAMS arbitration, the streamlined rules typically feature:
- A three-arbitrator panel with full discovery rights for high-value claims
- Expedited timelines, reduced discovery, and a sole arbitrator for smaller or simpler disputes (Correct answer)
- Mandatory appellate review by a second JAMS panel before the award is final
- Jurisdiction limited to employment and consumer disputes under federal law
Correct answer: Expedited timelines, reduced discovery, and a sole arbitrator for smaller or simpler disputes
JAMS Streamlined Rules are designed for lower-value or less complex disputes, featuring compressed schedules, limited discovery, and a single arbitrator to reduce cost and time.
CCNP Dispute Resolution 5
A contract includes a 'step negotiation' clause requiring disputes to be escalated from project managers to vice presidents to CEOs before arbitration.
This structure is primarily designed to: