Glossary
Arbitration
A private process where a neutral third party (the arbitrator) decides a dispute, similar to a judge but outside the court system. Arbitration awards are usually binding and very hard to overturn.
Arbitration looks like a mini-trial. Both sides present evidence and arguments to the arbitrator (or a panel of arbitrators). The arbitrator then issues a written decision called an "award" that resolves the dispute.
Many contracts (employment, consumer, financial services) require arbitration of any dispute instead of going to court. These arbitration clauses are generally enforceable, though plaintiffs sometimes challenge them when the terms seem unfair.
The trade-off: arbitration is usually faster and cheaper than court, but appeals are extremely limited. An arbitration award can typically only be vacated for narrow reasons like fraud or arbitrator bias: not because the arbitrator got the law wrong.