Definition: Arbitration is a process by which two or more parties settle their dispute in a neutral third party's absence, typically through negotiation. The term originated from the Latin term "arbitro," meaning "Judge" or "Judgemaker." In its original context, an arbitrator would assess and resolve disputes, often involving financial matters, labor disputes, contracts, property rights, and other legal issues.
The key elements of an arbitration agreement include:
1.
Authorization:
The parties must agree to arbitrate their dispute.
2.
Non-contractual nature of the matter:
Arbitration is not a contract between two parties but rather a mechanism for resolving disputes through non-binding decisions, which are generally binding upon the disputing parties after they have been resolved by another form of dispute resolution, such as litigation or arbitration.
3.
No binding judgment:
An arbitrator cannot give an independent decision that may affect the outcome of the case.
4.
No right to arbitrate:
Neither party can enforce their arbitration rights outside the agreement.
The word 'arbitration' is derived from the Latin term 'arbitro,' which originally meant a "Judge" or "Judgemaker." In its modern context, it refers to any form of dispute resolution process, including those that are typically performed by an independent third party.
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