Skip to content

ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms

A contract between Epsilon Ltd and Zeta Ltd states: 'Disputes shall be resolved by arbitration.' It names no arbitrator and no rules. Zeta Ltd refuses to cooperate in appointing an arbitrator. Which statement is most accurate?

The arbitration agreement stays valid. Where the parties named no arbitrator and one refuses to cooperate, the applicable arbitration law or the court can provide a default method of appointing the arbitrator, so the refusing party cannot avoid arbitration.

  1. AThe arbitration agreement is void for uncertainty, so only the courts can hear the dispute
  2. BArbitration cannot proceed unless Zeta Ltd agrees to the appointment
  3. CThe arbitration agreement remains valid, and the arbitration law or the court can supply a mechanism to appoint the arbitratorCorrect

Explanation

Arbitration laws generally provide default procedures, and courts can appoint an arbitrator where the parties fail to do so, so a non-cooperating party cannot defeat the agreement. The clause is not void merely because it lacks detail. Therefore the third option is correct.

Did you get it right without looking?

One question tells you little. A timed set on Alternative dispute resolution mechanisms shows your real accuracy, how long you take and where you lose marks.

Practise Alternative dispute resolution mechanismsFree diagnostic mock

More Alternative dispute resolution mechanisms questions