Arbitration

What Is Arbitration? Arbitration is an alternative dispute resolution (ADR) method where parties agree to resolve their disagreements outside of court through a neutral third-party decision-maker called an arbitrator. It is governed by the Federal Arbitration Act and various state arbitration statutes. Many commercial contracts contain mandatory arbitration clauses. ## How Arbitration Works - Parties select one or more arbitrators, often with industry expertise - The process follows simplified rules of evidence and procedure - Hearings are private and confidential - The arbitrator issues a decision called an award - Binding arbitration awards are enforceable in court and have very limited grounds for appeal ## Arbitration vs. Litigation Arbitration is generally faster, less formal, and less expensive than traditional court litigation. However, parties trade certain procedural protections, including the right to a jury trial and broad discovery. Some critics argue that mandatory arbitration clauses in consumer and employment contracts can disadvantage the weaker party. Courts have increasingly scrutinized the enforceability of these provisions, particularly regarding unconscionability.