arbitration

ar·bi·tra·tion   (är'bĭ-trā'shən)    n.  The process by which the parties to a dispute submit their differences to the judgment of an impartial person or group appointed by mutual consent or statutory provision.

arbitration

The settling of disputes (especially labor disputes) between two parties by an impartial third party, whose decision the contending parties agree to accept. Arbitration is often used to resolve conflict diplomatically to prevent a more serious confrontation.

Arbitration

An informal hearing regarding a dispute. The dispute is judged by a group of people (generally three) who have been selected by an impartial panel. Once a decision has been reached, there is no further appeal process.

Investopedia Commentary

We frequently hear this term when professional sports teams are negotiating contracts with their athletes. Typically, one party aims unrealistically high and the other one aims really low, and the settlement occurs somewhere in the middle.

Related Links

Tips For Resolving Disputes With Your Financial Advisor

See also: Cooling-off Rule, Heads of Agreement, Judgment, Rescission

Also spelled: Arbitrator, Arbitrate

arbitration

A process for settling disputes between securities firms or between securities firms and their customers in which the parties submit their differences to the judgment of an impartial third party or parties. Many brokerage firms require their customers to sign an agreement for binding arbitration to resolve disputes. The agreement requires the customer to accept the arbitrator's decision and to waive the right to subsequent legal action. Pressure from the SEC and a 1990 court decision now allows investors the option of using an independent arbitration panel in place of a securities-industry panel. Compare mediation. See also NASD Dispute Resolution, Inc..

Main Entry: ar·bi·tra·tion
Pronunciation: "är-b&-'trA-sh&n
Function: noun
Etymology: Latin arbitratio, from arbitrari to judge, arbitrate, from arbiter onlooker, arbitrator
: the process of resolving a dispute (as between labor and management) or a grievance outside of the court system by presenting it to an impartial third party or panel for a decision that may or may not be binding —compare MEDIATION

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final offer arbitration
: interest arbitration in which the arbitrator must accept or reject the final offer of any party and may not decide to compromise

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grievance arbitration
: arbitration of a dispute over something in an existing collective bargaining agreement called also rights arbitration —compare INTEREST ARBITRATION in this entry

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interest arbitration
: arbitration of a dispute over the provisions to be entered in a new contract —compare GRIEVANCE ARBITRATION in this entry

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rights arbitration
: GRIEVANCE ARBITRATION in this entry —ar·bi·tra·tion·al /"är-b&-'trA-sh&-n&l/ adjective