Definition - What does Arbitration mean?
Arbitration is the process used to resolve a dispute without filing a lawsuit. It is a type of alternative dispute resolution which allows for a speedy settlement. It also helps participants avoid the costly battle of taking a case to court. Under arbitration each party will present their evidence and testimonies to a third party, known as an arbiter. Cross-examination is also allowed for each witness. After the evidence is presented the arbiter will make a decision, which can be binding or non-binding depending on the type of case.
Other types of alternative dispute resolution include mediation, which is less formal than arbitration. In some states litigants must first participate in arbitration or mediation before they can proceed to trial, or in some cases, the alternative dispute resolution may be required per the contractual agreement and the decision is binding.