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arbitration

ahr-bi-TRAY-shuhn /ˌɑːrbɪˈtreɪʃn/

nounC1GMATLSAT

legalbusiness

The use of an independent person or body (an arbitrator) to settle a dispute without going to court.

Arbitration is usually binding, meaning the parties must follow the arbitrator's decision, unlike mediation.

The story behind the word. From 'arbiter', which originally meant a person who goes somewhere as a witness or judge. It shares a root with 'arbitrary', though arbitration is supposed to be the opposite of arbitrary (random) decision-making.

Word relationships

adjudication: Adjudication is a more general term for making a formal judgment; arbitration is a specific private alternative to court.

litigation: The process of resolving a dispute through the public court system.

Commonly confused with

mediation: In mediation, the third party suggests solutions; in arbitration, the third party imposes a decision.

Word family

arbitrator (noun): The person appointed to settle the dispute.
arbitrate (verb): To act as an arbitrator.

Collocations

binding arbitration
arbitration clause
submit to arbitration
arbitration panel

Example sentences

"The contract included a clause stating that all disputes must be resolved through binding arbitration rather than a jury trial." Employment contract
"The two nations agreed to submit their maritime border dispute to the Permanent Court of Arbitration." International law

Memory hook

An ARBITRATOR acts like a REF (referee) in a BITter dispute. The private judge.

When not to use

Do not use if the third party is only helping the two sides talk (that is mediation).

Fun facts

Many consumer contracts (like for cell phones or credit cards) contain 'mandatory arbitration' clauses that prevent you from suing the company in court.