Android Studio Arctic Fox incompatible with JUnit4?

Yes. The JUnit4 runtime (Test Runner) isn't compatible. If you don't switch your tests to using Junit Jupiter, you'll receive "test events not received" when telling a test class to execute.

Another wrinkle is to realize that Roboelectric doesn't work with Jupiter. For those tests, you'll still need to use the JUnit 4 @Test and have Jupiter's vintage test runner in your dependencies: How to run a Junit5 test with Android dependencies and robolectric

Summary of gradle build changes:

android {
testOptions {
    execution 'ANDROIDX_TEST_ORCHESTRATOR'
    unitTests.all {
        useJUnitPlatform() // <--- this is the important part
    }
}

And for dependencies:

 dependencies { 
    testImplementation 'org.junit.jupiter:junit-jupiter-engine:5.7.1'
    //testImplementation 'junit:junit:4.+'  // should get rid of this old JUnit.
    testImplementation 'org.junit.vintage:junit-vintage-engine' //Let's Jupiter do the right thing when encountering a @RunWith(RobolectricTestRunner::class)
}