Arbitration

Plain English

Arbitration is an alternative to litigation where the parties hire a neutral decision-maker (called an arbitrator) to hear their case and decide the outcome. The arbitrator acts like a private judge, reviewing evidence and arguments from both sides, then issuing a binding decision. Arbitration is usually faster and more private than court litigation, and the parties can choose their arbitrator and set the rules. However, there's typically less opportunity to appeal an arbitrator's decision, and the process can still be expensive. Many contracts include arbitration clauses requiring disputes to be arbitrated rather than litigated.

Example

A consumer buys a smartphone and the purchase agreement includes an arbitration clause. When the phone malfunctions, the consumer cannot sue in court; instead, both parties must submit to arbitration before a private arbitrator who will decide whether the company must repair or replace the phone.

Used in a sentence

“The employment contract required arbitration of all disputes rather than allowing employees to file lawsuits.”

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