What is arbitration?

Arbitration is a method of resolving disputes outside of the traditional court system, where an impartial third party, known as an arbitrator, is appointed to make a binding decision on the matter. This process is typically outlined in a contractual agreement between the parties involved, specifying that they will resolve their conflicts through arbitration rather than litigation.

In arbitration, the arbitrator listens to the evidence and arguments presented by both sides and then issues a ruling, which is usually final and legally binding. This differs from non-binding negotiations, such as mediation, where the mediator facilitates discussion but does not impose a decision. Arbitration is favored in many commercial contexts because it often provides a faster, more cost-effective resolution than lengthy court trials, while still ensuring that the parties are held to a definitive decision.