Arbitration Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Arbitration, written in plain English, along with examples of how it is used.

What is Arbitration?

n. a court officer, who is employed by a some party or some legal institution to manage some cause for them. Earliest records of the courts show first appearances of attorneys in England. By virtue of their work and duties performed, an attorney at law cannot be an attorney of both the litigating parties, in the same controversy.

History and Meaning of Arbitration

Arbitration is a form of alternative dispute resolution in which a neutral third party is appointed to decide a dispute between parties. It has been used since ancient times, with evidence of arbitration being present in the Code of Hammurabi from the ancient Babylonian era. However, modern arbitration systems can be traced back to the late 18th century, when arbitration laws were first introduced in several European countries.

In the United States, arbitration became popular during the late 19th century as a way to resolve labor disputes. Today, arbitration is used in a wide range of matters, including commercial disputes, construction disputes, employment disputes, and consumer disputes. An advantage of arbitration is that it is often faster and less expensive than traditional litigation.

Examples of Arbitration

  1. A company and one of its former employees have a dispute over a severance package. They agree to use an arbitrator to resolve the issue instead of going to court.

  2. A consumer has a dispute with an online retailer about a product that they purchased. The retailer’s terms and conditions state that all disputes must be resolved through arbitration.

  3. Two companies have a contract that includes an arbitration clause. One company accuses the other of a breach of contract and initiates arbitration proceedings.

Legal Terms Similar to Arbitration

  1. Mediation – a form of alternative dispute resolution in which a neutral third party facilitates negotiations between parties to help them reach a mutually agreeable resolution.

  2. Litigation – the process of taking legal action in court to resolve a dispute.

  3. Conciliation – a form of alternative dispute resolution in which a neutral third party assists parties in reaching a mutually agreeable resolution, but does not have the power to make a binding decision.