Define: Arbitration

UK Accounting Glossary

Definition: Arbitration


Quick Summary


In arbitration an independent third party considers both sides in a dispute, and makes a decision to resolve it.



What is the dictionary definition of Arbitration?

Dictionary Definition



Full Definition


In arbitration an independent third party considers both sides in a dispute, and makes a decision to resolve it. The arbitrator is impartial, means he or she does not take sides. In most cases the arbitrator’s decision is legally binding on both sides, so it is not possible to go to court if you are unhappy with the decision.

Most types of arbitration have the following in common:

  • Both parties must agree to use the process
  • It’s private
  • The decision is made by a third party, not the people involved
  • The arbitrator often decides on the basis of written information
  • If there is a hearing, it is likely to be less formal than court
  • The process is final and legally binding
  • There are limited grounds for challenging the decision

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