What is Arbitration

Arbitration is a method of dispute resolution used as an alternative to litigation. It is commonly designated in collective agreements between employers and employees as the way to resolve disputes. The parties select a neutral third party (an arbiter) to hold a formal or informal hearing on the disagreement. The arbiter then issues a decision binding on the parties. Both federal and state law governs the practice of arbitration. While the Federal Arbitration Act, by its own terms, is not applicable to employment contracts, federal courts are increasingly applying the law in labor disputes. Thirty-five states have adopted the Uniform Arbitration Act as state law. Thus, the arbitration agreement and decision of the arbiter may be enforceable under state and federal law.