Definition - What does Arbitration mean?
Arbitration is a process of alternative dispute resolution without judiciary assistance. In arbitration, the parties with a dispute designate, with mutual consent of statutory provision, an impartial third party to hear and mediate the dispute. Arbitration is preferred by parties who want a quick resolution of the dispute(s) between them. Arbitration can be voluntary, mandatory by a contractual provision, or court ordered.
Justipedia explains Arbitration
Parties with a dispute do not always want to resolve it with judiciary assistance. Arbitration allows the parties to designate an impartial individual or group of individuals to help resolve the dispute. Many contracts include an arbitration clause which states that in the case of any dispute, the parties will arbitrate instead of litigate. When parties in a dispute mutually agree to resolve it through arbitration, it's considered voluntary arbitration. Arbitration coming from a statute in a jurisdiction or as a clause in a contract is regarded as mandatory arbitration. Some states have enacted legislation for resolving certain cases through arbitration For example, laws in California mandate that cases related to vehicle insurance are initially resolved through arbitration.