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

Corvin Inc and Delmar SA agreed to arbitrate any dispute. When a dispute arose, Corvin ignored the clause and issued court proceedings. Delmar wants the court case stopped. Which is the most likely outcome in a jurisdiction that follows the usual approach to valid arbitration agreements?

The court will normally stay or decline to hear the case and refer the parties to arbitration, because they validly agreed to arbitrate. Courts generally uphold arbitration agreements, and parties are allowed to choose arbitration instead of litigation for their disputes.

  1. AThe court will normally stay or decline the proceedings and refer the parties to arbitration, as they agreedCorrect
  2. BThe court must hear the case because parties cannot lawfully exclude the courts' jurisdiction
  3. CThe court will decide the case and the arbitrator will then only review the court's judgment

Explanation

Courts generally respect valid arbitration agreements and will stay or refuse to hear the claim, referring the parties to arbitration. Option B is wrong because parties may validly choose arbitration over courts. Option C invents a review role for the arbitrator that does not exist.

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