Arbitration: the resolution of a disagreement between two or more persons for hearing and binding decision by a third-party, an arbitrator(s), who is neither a judge or a Court.
The agreement to submit and be bound by the third-party's decision (the arbitrator) is the salient feature of arbitration.
This is one of the two traditional variants of ADR, the other being mediation, the major distinction between the two is that arbitration produces a binding result; mediation, not necessarily.
As with mediation, the parties choose their own presiding officer; in the case of arbitration, called an arbitrator.
In law, formalized arbitration has been around since 1697, when the British Parliament enacted An Act for determining Differences by Arbitration.
Shakespeare, as early as 1602, used the word in Troilus, remarking with good judicial sense, that "time" was the ultimate "old common arbitrator".
The United Nations has adopted a Model Law on International Commercial Arbitration to foster international trade disputes.
In an attempt at alleviating an inefficient Court system, some jurisdictions impose mandatory arbitration in some fields, now rampant, for example, throughout Canadian labour law.