Legal Dictionary
Arbitration
Definition
A method of dispute resolution involving one or more neutral third parties who are usually agreed to by the disputing parties and whose decision is binding.
Deep Dive
Arbitration is a form of alternative dispute resolution (ADR) where disputing parties agree to submit their conflict to one or more neutral third parties, known as arbitrators, for a final and binding decision. Unlike litigation in court, arbitration proceedings are typically less formal, more private, and often quicker. The arbitrators, who are often experts in the subject matter of the dispute, hear evidence, review documents, and listen to arguments from both sides before issuing a written award that is legally enforceable, much like a court judgment.
Examples & Use Cases
- 1Two corporations involved in a contract dispute agree to arbitration as stipulated in their original agreement, rather than filing a lawsuit.
- 2A consumer disputes a charge with a credit card company, and per the cardholder agreement, the matter is resolved through binding arbitration.
- 3An employment dispute between an employee and a large employer goes to arbitration, as outlined in the employee's onboarding documents.
Related Terms
MediationAlternative Dispute Resolution (ADR)Binding Decision