ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms
A supply contract between Altan Ltd and Bexley Inc contains a med-arb clause. Mediation failed, so the same person now acts as arbitrator. Which statement best describes the effect of this hybrid process?
The arbitrator's award is binding. Med-arb combines non-binding mediation with a second, arbitral stage that ends in a binding decision if mediation fails. The parties do not return to mediation, and court proceedings are not required to resolve the dispute.
- AThe arbitrator's award following the failed mediation is binding on the partiesCorrect
- BThe parties must return to mediation because the arbitrator's views are only advisory
- CThe dispute can only be resolved by a court because mediation has failed
Explanation
Med-arb starts with mediation, which is non-binding, and moves to arbitration if mediation fails. The arbitration stage produces a binding award. The other options wrongly treat the later stage as advisory or require court action.
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