Resource Centre > Glossary > Arbitration

Arbitration is a form of ADR, which in essence has lots in common with litigation:

it is quite formal, and it involves an independent third party who considers both sides of the dispute and makes a binding decision. Very popular in international disputes, commercial disputes (especially those between large corporations), but it is also commonly used in consumer disputes and employment rights disputes. Arbitration very often results from arbitration clauses in contracts. These are binding and thus if there is a dispute the parties ought to refer the case to the arbitrator (arbitration panel). In some legal systems (UK), there is an exception for consumer disputes – there the consumer is not bound by most arbitration clauses.

Arbitral awards are binding on the parties, and they can be enforced in court. These awards are based on good practice and reasonableness as well as on the law.

For further information about Arbitration: see for instance: 'ADRnow', Chartered Institute of Arbitrators, the London Court of International Arbitration, and a very useful journal: 'Arbitration International' (by Kluwer Law International).