Binding arbitration

Binding arbitration is, generally, a form of dispute resolution, or arbitration, in which the parties to a (legal) dispute agree to abide by the decision of a third party (the arbitrator) without recourse to the courts. At times the parties agree to submit their desired outcomes to the arbitrator who then picks one or the other outcome but who may not be contractually authorized to make any other decision (such as "splitting the difference," for example).

Since arbitration is based upon contract law, the agreement between the parties to submit their dispute to arbitration is a legally binding contract. The contract can stipulate that the arbitral decision shall be "final and binding." This does not, however, void the requirements of law, which in some cases may stipulate a grace period during which the parties may challenge the arbitral decision in a court of competent jurisdiction. It should be noted that most courts are reluctant to overturn or alter arbitral decisions.

Also see mediation, conciliation and negotiation.

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