Arbitration is a means of resolving a dispute outside of court and typically is used because of an arbitration clause in a contract.

Arbitration clauses may be found in employment contracts and consumer contracts, and are considered a way for companies to control legal expenses and reduce the time involved in resolving legal disputes.

An arbitration clause makes arbitration either mandatory or voluntary. With mandatory arbitration, the parties typically agree not to sue in court, participate in a class action lawsuit, or appeal the arbitration decision. In voluntary arbitration, the parties can pursue arbitration if other options for resolving the dispute have been exhausted.

Arbitration is similar to a court trial except there is no judge or jury, and the hearing is conducted privately. During arbitration, a neutral third party called an arbitrator, considers the facts and arguments presented by the parties and renders a decision.

Although the process is less formal than a court trial, there are still procedures to be followed. The decision, which is usually put in writing, is often binding, meaning it cannot be overturned in court. The right to appeal the decision of the arbitrator (or panel of arbitrators) is very limited.

Arbitrators are often lawyers but can be any individual who has met specific criteria and are certified to act as an arbitrator after receiving special training. Some arbitration clauses can indicate details of the arbitration such as how arbitrators will be selected, where the arbitration will be held, who will pay attorney’s fees, and whether the final outcome must be kept confidential.

Both sides in the dispute have the right to an attorney as a legal consultant. If you will be involved in arbitration, and you decide to use a lawyer, you should select one who understands arbitration procedures and the preparation necessary to arbitrate a dispute.

Your lawyer will help you determine the strengths and weaknesses of your case, as well as the appropriate evidence and testimony to present during your hearing leading up to the arbitrator’s judgment.

Note: This information was prepared as a public service by the Illinois State Bar Association and is a joint project with the Illinois Press Association. Its purpose is to inform citizens of their legal rights and obligations.