Arbitration

Definition

Arbitration is a form of alternative dispute resolution where a neutral third party, known as an arbitrator, is appointed to hear and resolve a disagreement between two or more parties. The arbitrator's decision is typically binding, providing a final and legally enforceable resolution to the conflict.

5 Must Know Facts For Your Next Test

1. Arbitration is a private, confidential process that typically takes less time and is less expensive than going to court.
2. The arbitrator's decision is final and binding, meaning the parties must accept and comply with the outcome.
3. Arbitration can be used to resolve a wide range of disputes, including those related to employment, contracts, and intellectual property.
4. Parties can choose the arbitrator, the location, and the rules that will govern the arbitration process.
5. Arbitration is often preferred over litigation because it allows for more flexibility, privacy, and control over the outcome.

Review Questions

• Explain how arbitration can be used to resolve conflicts in organizations.
  • Arbitration can be an effective tool for resolving conflicts in organizations because it provides a private, binding, and often more efficient alternative to the traditional court system. By appointing a neutral third-party arbitrator to hear the dispute and make a final decision, organizations can avoid the time, cost, and public nature of litigation. This can help preserve relationships, maintain confidentiality, and reach a mutually acceptable resolution that addresses the interests of all parties involved.
• Analyze the key differences between arbitration and negotiation in the context of organizational conflict resolution.
  • The primary difference between arbitration and negotiation is the level of control the parties have over the outcome. In negotiation, the parties work together to reach a voluntary, mutually agreed-upon solution, whereas in arbitration, the decision is made by a neutral third-party arbitrator whose ruling is binding. Negotiation allows for more flexibility and shared decision-making, while arbitration provides a more structured, final, and enforceable resolution. Organizations may choose arbitration when negotiation has failed, or when the parties are unable to reach an agreement on their own, as it can help break deadlocks and provide a clear, authoritative outcome.
• Evaluate the role of arbitration in the broader context of organizational conflict resolution strategies, and how it can be used in conjunction with other approaches.
  • Arbitration is one of several conflict resolution strategies available to organizations, and it is often used in conjunction with other approaches. For example, organizations may first attempt to resolve conflicts through negotiation or mediation, where the parties work together to find a mutually acceptable solution. If these efforts fail, arbitration can provide a more formal, binding resolution. Arbitration can also be used as a complement to other strategies, such as incorporating it into employment contracts or organizational policies to establish a clear process for addressing disputes. By having a range of conflict resolution tools available, organizations can tailor their approach to the specific needs of the situation and the parties involved, ultimately helping to maintain productive working relationships and organizational effectiveness.

Related terms

Mediation: Mediation is a process where a neutral third party facilitates communication and negotiation between disputing parties to help them reach a voluntary, mutually acceptable agreement.

Negotiation: Negotiation is the process of discussing and bargaining with another party to reach a mutually acceptable agreement on a matter of common interest.

Conflict Resolution: Conflict resolution is the process of resolving a dispute or a conflict by meeting at least some of each party's needs and addressing their interests.