Binding Arbitration
A form of alternative dispute resolution where parties agree to submit their conflict to a neutral third party (an arbitrator) whose decision is final and legally enforceable, waiving their right to a traditional court trial.
A form of alternative dispute resolution where parties agree to submit their conflict to a neutral third party (an arbitrator) whose decision is final and legally enforceable, waiving their right to a traditional court trial.
Example: Many employment contracts include a mandatory binding arbitration clause, meaning an employee who is wrongfully terminated must resolve the dispute through a private arbitrator rather than suing in court.
Common misconception: Arbitration is just a preliminary step before going to court. In binding arbitration, the arbitrator’s decision is final and can only be overturned by a court in extremely rare cases of fraud or procedural misconduct.