A method of dispute resolution involving trying the case before usually one or three arbitrators (i.e., adjudicators paid for by the parties). Arbitration usually requires an agreement between the parties to the arbitral process, which specifies the arbitration rules to be followed, the place of arbitration, the language of the arbitration and the number of arbitrators. Such an agreement can be made when the dispute arises or may be the subject of an arbitration clause in an underlying contract. Arbitration is typically carried out under the auspices of an arbitration organization, such as the:

In most legal systems, a high standard of review applies to arbitration decisions and so it is quite difficult to appeal one, even if it appears perverse; however, one common exception is decisions relating to areas of law that are regarded as raising public policy issues, e.g., competition law, mandatory rights in employment law or legality of contract. Arbitration is one of a broad group of approaches to legal disputes referred to as alternative dispute resolution or ADR

Arbitration is often favoured in international commerce because of concerns about chauvinism in national courts as well as the ability to keep the legal dispute very private. Arbitration organisations will usually set an estimated fee or cost for the arbitration, which may be based on scale fees, which needs to be deposited prior to the arbitration commencing; if the complexity of the case increases, the organisation may seek additional deposits. See Escalation Clause, Mediation.

Related Terms