Originally from Employment Arbitration - 2nd Edition

Arbitration: A Definition

Thomas E. Carbonneau

Arbitration is a private, generally informal, and nonjudicial trial procedure for adjudicating disputes. It functions as an alternative to judicial litigation by providing binding determinations through presumably less expensive, more efficient and expert, and nonetheless fair proceedings. Although it can engender settlements, arbitration is not intended to operate as a means for achieving dispute resolution directly through party agreement. Arbitration is neither negotiation nor mediation. The parties confer upon the arbitrators’ full legal authority to adjudicate disputes, i.e., to render a final disposition on the matters submitted that can be enforced through coercive legal means. Party agreement sets the process in motion, but it does not dictate the outcome. Once the parties entrust the arbitral tribunal with the authority to rule, they relinquish control of the dispute and of its resolution to the arbitrators, unless there is a settlement.

The recourse to arbitration is consensual. The parties to a transaction or other relationship agree by contract to submit existing or prospective disputes to arbitration. The agreement to arbitrate is the centerpiece of the process—both in terms of legal doctrine and from a practical vantage point. The parties have the freedom—the legal right—to engage in arbitration and to make specific provisions for the implementation and operation of their arbitration.