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Definition: Arbitration is a conflict resolution method outside the court, in which 2 or more parties agree in advance to be bound by the decision ("award") to be taken by one or more arbiters (a neutral, third party) after a hearing at which both parties have an opportunity to be heard.
The arbiter reviews the evidence in the case and imposes a decision that is legally binding and enforceable for both sides. Depending on the jurisdiction, also non-binding arbitration is conceivable.
A can be mandatory (based on a statute or contract) or voluntary.
A is frequently used for business disputes, in particular for international transactions, as well as for employment and consumer matters.