An arbitration agreement is a contract or a clause within a contract in which two or more parties agree to resolve any disputes through arbitration rather than through the court system. Arbitration is a form of alternative dispute resolution (ADR) where a neutral third-party arbitrator (or a panel of arbitrators) hears the details of the dispute and makes a decision, which can be either binding or non-binding, depending on the terms of the agreement.
: The decision made by the arbitrator(s) is final and enforceable in court. Parties usually cannot appeal the decision, except under very limited circumstances.
: The arbitrator's decision is advisory. If either party is not satisfied with the outcome, they may choose to pursue legal remedies in court.
Speed: Arbitration can often resolve disputes faster than traditional court litigation.
Cost: Arbitration can be less expensive than going to court, though this isn't always the case.
Flexibility: Parties may have more flexibility in setting procedural rules and selecting arbitrators.
Confidentiality: Unlike court trials, which are public, arbitration can be private and confidential.