Arbitration is another form of dispute resolution that occurs outside of legal courts. Here, the parties find an arbitrator or multiple arbitrators whom they hand the decision over to. Both parties will agree to abide by the decision of the arbitrator(s). The arbitrator reviews the evidence and then makes a legally binding decision to resolve the dispute. Often times arbitration is chosen voluntarily, but sometimes it is the pre-determined form of resolution as mandated by a previous contract. Arbitration is generally much faster than in-court litigation and so, can save money in legal fees. Another advantage of arbitration is that the 'judge' or arbitrator is chosen by the parties.
There are many types of arbitration including: judicial arbitration, high-low (bracketed) arbitration, binding arbitration, non-binding arbitration, and pendulum arbitration. These types of arbitration represent different collections of imposed conditions. For example, in bracketed arbitration, the arbitrator will be bound to make a decision that stays within a preset maximum and minimum. Depending on the agreement, the arbitrator may or may not even know what the maximum and minimum is, but regardless, the final arbitration award will not exceed either the upper or lower limit.