What is arbitration?

What is arbitration?

• A. A private trial with three arbitrators (judges).
• B. A form of dispute resolution outside of court where a neutral third party helps reach a settlement.
• C. An agreement that resolves a dispute.
• D. An official in a court of law who keeps order.

Answer: (A)

Arbitration is a private dispute-resolution process where a neutral third party or panel hears the case outside the court system and issues a binding decision. The choice describing a private hearing with a panel of arbitrators fits this idea well, since it emphasizes a formal, outside-the-court process with impartial decision-makers who render a ruling that the parties must accept. This differs from mediation, which aims to reach a voluntary settlement; from an agreement that simply resolves a dispute (a settlement); and from a court official who maintains order in a courtroom.

Arbitration is a private dispute-resolution process where a neutral third party or panel hears the case outside the court system and issues a binding decision. The choice describing a private hearing with a panel of arbitrators fits this idea well, since it emphasizes a formal, outside-the-court process with impartial decision-makers who render a ruling that the parties must accept. This differs from mediation, which aims to reach a voluntary settlement; from an agreement that simply resolves a dispute (a settlement); and from a court official who maintains order in a courtroom.