Arbitration is a dispute-resolution process in which the disputing parties choose one or more neutral third parties to make a final and binding decision resolving the dispute. The parties to the dispute may choose a third party directly by mutual agreement, or indirectly, such as by agreeing to have an arbitration organization select the third party. If there are three arbiters selected for a panel, often times one party will choose one, the other party chooses the other and the two selected arbiters choose the third. The arbitrator(s) act like judges and render a decision after the process is completed. Unlike mediation, an arbitration award is binding on the parties. Arbitration awards may not be appealed and under limiting circumstances awards are vacated. Arbitration is far less expensive and time consuming than litigation.
This video explains the key differences between mediation and arbitration. This is important to understand when considering which type of ADR is better. Mediation often occurs as a prerequisite to arbitration.
International commercial arbitration plays a major role in the entertainment industry. This short video explains what international commercial arbitration is.