Q.1 What is the primary purpose of arbitration in commercial disputes?
To punish the parties involved
To resolve disputes outside the court system
To create new laws for businesses
To publicize the dispute
Explanation - Arbitration is a form of alternative dispute resolution (ADR) where parties agree to have their dispute resolved by an arbitrator, avoiding traditional court proceedings.
Correct answer is: To resolve disputes outside the court system
Q.2 Which of the following is a key feature of arbitration?
It is always public
The arbitrator’s decision is binding
It creates criminal liability
It cannot be used in commercial disputes
Explanation - Arbitration decisions, known as awards, are generally final and legally binding on the parties involved.
Correct answer is: The arbitrator’s decision is binding
Q.3 Which act governs arbitration and conciliation in India?
Indian Penal Code
Arbitration and Conciliation Act, 1996
Companies Act, 2013
Contract Act, 1872
Explanation - The Arbitration and Conciliation Act, 1996, provides a legal framework for the conduct of arbitration and conciliation in India.
Correct answer is: Arbitration and Conciliation Act, 1996
Q.4 Which of the following disputes is commonly resolved through arbitration?
Criminal offenses
Commercial contract disputes
Traffic violations
Election disputes
Explanation - Arbitration is widely used for resolving civil and commercial disputes, especially in contractual matters.
Correct answer is: Commercial contract disputes
Q.5 What does 'binding arbitration' mean?
The parties must follow the arbitrator's decision
The arbitrator only gives suggestions
The decision is temporary
The court must approve the decision
Explanation - In binding arbitration, parties agree in advance to accept the arbitrator’s decision as final and enforceable.
Correct answer is: The parties must follow the arbitrator's decision
Q.6 Which advantage does arbitration have over litigation?
Longer duration
Higher legal costs
Confidentiality of proceedings
Mandatory appeal process
Explanation - Arbitration is generally private, which helps parties maintain confidentiality, unlike court trials which are public.
Correct answer is: Confidentiality of proceedings
Q.7 Who appoints the arbitrator in institutional arbitration?
The government
The parties or the institution
The police
The local court only
Explanation - In institutional arbitration, the arbitrator is appointed either by the parties themselves or by the arbitration institution administering the case.
Correct answer is: The parties or the institution
Q.8 Which of the following is NOT a form of alternative dispute resolution?
Mediation
Arbitration
Negotiation
Imprisonment
Explanation - Alternative dispute resolution (ADR) methods include negotiation, mediation, and arbitration. Imprisonment is a legal penalty, not a dispute resolution mechanism.
Correct answer is: Imprisonment
Q.9 In arbitration, what is the term for the final decision given by the arbitrator?
Judgment
Award
Verdict
Ruling
Explanation - The arbitrator’s final decision in arbitration is called an award, which is enforceable like a court judgment.
Correct answer is: Award
Q.10 Which of the following is a role of an arbitrator?
To prosecute criminal cases
To facilitate negotiation only
To independently make decisions on disputes
To enforce laws against parties
Explanation - The arbitrator acts as a neutral decision-maker to resolve disputes according to agreed rules or law.
Correct answer is: To independently make decisions on disputes
Q.11 Which type of arbitration allows parties to participate in selecting the rules and procedures?
Institutional arbitration
Ad hoc arbitration
Mandatory arbitration
Court-annexed arbitration
Explanation - In ad hoc arbitration, parties have the flexibility to agree on procedures, rules, and arbitrators without relying on a specific institution.
Correct answer is: Ad hoc arbitration
Q.12 What is the main purpose of mediation?
To make a binding decision
To assist parties in reaching a mutual agreement
To conduct a trial
To enforce a law
Explanation - Mediation involves a neutral third party helping the disputing parties to negotiate and reach a voluntary settlement.
Correct answer is: To assist parties in reaching a mutual agreement
Q.13 Which is a limitation of arbitration?
It is always free of cost
The award may be difficult to appeal
It is public and transparent
It cannot handle commercial disputes
Explanation - Arbitration awards are generally final, and courts offer very limited grounds for appeal, making it difficult to challenge decisions.
Correct answer is: The award may be difficult to appeal
Q.14 Which of these is true about conciliation?
The conciliator imposes a decision
The parties are assisted to find a solution
It is the same as litigation
It always leads to a binding award
Explanation - Conciliation is an ADR method where the conciliator helps parties reach a mutually acceptable settlement without imposing a decision.
Correct answer is: The parties are assisted to find a solution
Q.15 Which of the following statements is correct about arbitration agreements?
They are legally unenforceable
They require court approval to be valid
They are contracts where parties agree to arbitrate disputes
They prevent parties from signing other contracts
Explanation - An arbitration agreement is a contractual agreement in which parties agree to resolve future disputes through arbitration rather than litigation.
Correct answer is: They are contracts where parties agree to arbitrate disputes
Q.16 What does 'institutional arbitration' imply?
The arbitration is conducted in court
An established institution administers the arbitration process
It is only for government disputes
It always involves criminal cases
Explanation - Institutional arbitration is administered by a recognized arbitration body, providing rules, procedures, and appointing arbitrators if necessary.
Correct answer is: An established institution administers the arbitration process
Q.17 Which principle ensures neutrality in arbitration?
Partisan selection
Impartiality of the arbitrator
Mandatory appeals
Public hearings
Explanation - An arbitrator must remain neutral and unbiased to ensure fairness and credibility in the arbitration process.
Correct answer is: Impartiality of the arbitrator
Q.18 Which is a common method of enforcing an arbitration award?
Filing a criminal case
Filing a petition in court for recognition and execution
Appealing to the police
Sending a notice to the public
Explanation - Arbitration awards, though binding, may require enforcement through a court to ensure compliance by the losing party.
Correct answer is: Filing a petition in court for recognition and execution
Q.19 Which is a disadvantage of arbitration compared to court litigation?
It is always slower than court
Limited scope for appeal
High publicity and media coverage
No enforceability of decisions
Explanation - Arbitration provides limited grounds for challenging awards, which can be a disadvantage if errors occur in the decision.
Correct answer is: Limited scope for appeal
Q.20 Which type of dispute is unsuitable for arbitration?
Commercial contract disputes
Family law matters with legal rights of children
Corporate disputes
Construction contract disputes
Explanation - Certain disputes, particularly involving statutory rights or criminal issues, are generally unsuitable for arbitration.
Correct answer is: Family law matters with legal rights of children
Q.21 Which is true about confidentiality in arbitration?
Proceedings are generally public
Parties may keep proceedings private
Awards must be published in newspapers
Courts conduct all proceedings
Explanation - One of the key advantages of arbitration is that parties can maintain confidentiality of both proceedings and awards.
Correct answer is: Parties may keep proceedings private
Q.22 Which is NOT a function of an arbitrator?
Determining liability
Deciding remedies
Enforcing the award directly
Reviewing evidence
Explanation - While the arbitrator decides the outcome and remedies, enforcement of the award typically requires court intervention.
Correct answer is: Enforcing the award directly
Q.23 Which type of arbitration is often faster and less formal?
Ad hoc arbitration
Institutional arbitration
Court litigation
Criminal arbitration
Explanation - Ad hoc arbitration, without institutional rules, can be faster and more flexible than court proceedings or institutional arbitration.
Correct answer is: Ad hoc arbitration
Q.24 Which of the following is a key principle of dispute resolution?
Forceful enforcement
Voluntary participation
Mandatory imprisonment
Unlimited litigation
Explanation - Effective dispute resolution methods like arbitration, mediation, and conciliation rely on the voluntary cooperation of parties.
Correct answer is: Voluntary participation