What is Arbitration?

There are several methods when it comes to alternative dispute resolution and negotiation. While mediation is a very common process for conflict resolution, arbitration could be considered to resolve issues between parties as well. 

Arbitration is a binding, adjudicatory process that can be used to settle disputes and resolve issues amongst two parties in private. 

This article will explain what arbitration is, the typical process of arbitration, and when you might choose arbitration instead of litigation, mediation or other legal processes to resolve cases. 

What is Arbitration?

Arbitration is a private dispute resolution process in which two parties agree to submit their dispute to one or more arbitrators for a binding decision. The agreement to arbitrate is typically found in a written contract agreed to by both parties. Parties will agree to submit their dispute to arbitrators from member organizations in the American Arbitration Association (AAA). This process remains a voluntary legal procedure and separate from the court system. The Federal Arbitration Act, coupled with the case’s state arbitration law, generally governs this private dispute resolution process. 

In this form of alternative dispute resolution, no single party directs an outcome. However, the complaining party will send the opposing party a notice of their intent to arbitrate a dispute, outlining the basis for the dispute per the rules of the contract. Arbitration mimics a courtroom trial minus the timeline and attorney involvement – evidence can be presented, arguments are made, witnesses can be called and questioned. The arbitrator or panel of arbitrators will then deliver a final ruling to both parties that is legally binding.

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