Definition of Arbitration
Arbitration is considered a form of alternative dispute resolution (ADR). It allows two parties to bring their legal dispute before an arbiter, or third party. Arbitration is considered a simplified version of a trial where both parties will receive information prior to the hearing. During arbitration both parties can hear witness testimony and present evidence. Each party is also allowed to cross-examine witnesses. Then the arbiter hears the evidence and makes a decision, which is generally binding to both parties.
Arbitration allows disputes to be settled without going to court, thus saving both time and money. Arbitration and mediation have become the two most popular forms of alternative dispute resolution. Arbitration is considered a more formal process than mediation, and in some states litigants must first participate in arbitration or mediation before they can proceed to trial.