North Carolina Adjuster Practice Exam

Which of the following statements about arbitration is NOT true?

1. Arbitration is a voluntary process

2. Arbitration decisions can be contested in court

3. Arbitration decisions are always legally binding

4. Arbitration can include the selection of an umpire

The correct answer is: Arbitration decisions can be contested in court

The statement that arbitration decisions can be contested in court is not true because, generally, arbitration results in a legally binding decision that is enforceable in a court of law, and the avenues to contest such decisions are very limited. Courts typically uphold arbitration awards unless there are substantial grounds for vacating the decision, such as evidence of fraud, arbitrator misconduct, or a violation of public policy. Understanding the other statements provides context: arbitration is primarily a voluntary process, meaning that both parties agree to resolve their dispute through arbitration instead of litigation. Options regarding the legal binding nature of arbitration decisions reflect the norm that these decisions are indeed binding, with very few exceptions. Additionally, the inclusion of an umpire arises in certain types of arbitration, particularly in cases where there are multiple arbitrators, serving to help resolve disagreements among them. This structured framework makes arbitration a favored method for resolving disputes outside the traditional court system.