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A process of settling legal disputes outside a court of law. In an arbitration proceeding, parties to a dispute submit the matter to an impartial third party for a resolution, agreeing in advance to comply with the judgment rendered. The arbitrator issues his decision after a hearing at which both sides are provided the opportunity to present evidence and testimony. The arbitrator's decision is usually final, and courts rarely re-examine it. Arbitration is a well-established and widely used means to end legal disputes. It is one of several categories of 'alternative dispute resolution' that offer the parties to a disagreement an option other than the typically expensive and unpleasant litigation process.

Traditionally, labor and commerce were the two largest areas of the law where disagreeing parties might resort to arbitration proceedings. However, since the mid-1970s, this form of dispute resolution has seen considerable expansion into other legal sectors. Today, for instance, a great many contracts will include clauses specifying arbitration in the event of a dispute between fellow contractees. Reliance on this mode of resolution is also becoming increasingly popular in the case of auto assurance claims and employment disputes. Even international business frictions are now frequently resolved by means of arbitration proceedings. A major reason for this development, no doubt, is that arbitration tends to be quicker, cheaper and more private than the more traditional civil court hearing.