Legal arbitration is a form of alternative dispute resolution wherein a dispute between parties is settled by a third party that is neither judge nor jury but acts in the same capacity. An arbitrator or arbitral tribunal is the third party which resolves a disputed by handing out a judgment or decision, referred to as an award, as much as a judge or jury does. However, arbitration is not the same as a court trial as much as it acts as a scaled version of one.
Arbitrators often act as both judge and jury, they must evaluate and review the case presented before them in order to render a decision, one that may be legally binding upon all involved parties.
A case for each party is presented by arbitration lawyers to an arbitral tribunal or an arbitrator for evaluation and judgment. Like a court trial, evidence is presented alongside testimonies in order to prove the claim of each disputing party. The arbitrator acts like a judge in that he or she must hear all the necessary and relevant information presented by all involved parties before passing a decision that may or may not be legally binding depending on the terms of arbitration to which both parties agreed to.
An arbitration contract clause determines whether or not the decision reached by the arbitrator will be binding to both parties. If the disputing parties agree to a binding arbitration, the judgment of the arbitrator is final and the case can no longer be brought to a court of law.
This type of alternative dispute resolution is more commonly used for commercial and family cases. Legal arbitration is a more preferable alternative to actual litigation since it is more economical and less time-consuming.