Arbitration

Definition

The term arbitration refers to a process in which a dispute is resolved by an impartial third party, and whose decision is binding to all parties.  Arbitration is a mechanism often used to settle disputes between a company's management team and its labor unions.

Explanation

Arbitration is a process that allows two parties to settle a legal dispute without seeking the help of the U.S. courts system.  In this proceeding, each party will present their evidence to an impartial adjudicator, who is responsible for rendering a decision that all parties agree is both final and binding.

Arbitration is oftentimes used when a company's management team and bargaining unit fail to come to agreement after conducting a series of local, then centralized, dispute resolution "steps."  These two parties will then seek the help of an arbitrator to settle their dispute.  The exact process will be documented in a collective bargaining unit agreement or contract.

The arbitrator can be a single individual or a group of individuals (arbitral tribunal), depending on the intricacy of the matter.  This process offers both parties the ability to quickly come to a final legal outcome without the expense or complexity of a case litigated in a courtroom.

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