Alternative dispute resolution is any process that allows you to work through a legal matter without the oversight of a court. Essentially, you and the other party meet and resolve the issue without needing a judge to make a ruling. In some types of ADR, the court will still need to make a final ruling, but in arbitration, that is different.
According to the American Bar Association, arbitration is a method of ADR that provides an arbitrator who can make rulings on the situation at hand. You will have to follow the ruling set by the arbitrator once he or she finalizes the case.
How it works
Arbitration involves you and the other party along with an arbitrator who is a neutral third party, similar to a judge. The arbitrator will oversee the process and listen as you each present your case. You can still have legal representation during arbitration as you would in court. The arbitrator will hear everything both sides present in the case and make a final ruling. The process is very much like what happens in a courtroom.
There are differences between going to court and using arbitration. With arbitration, the process is not as formal as court so some rules and laws will not apply. This allows for the arbitrator to move your case along more quickly than a court could, which has the potential to not only save time but money as well. Also, while many arbitration decisions are binding, some are not. If it is not binding, you and the other party must both agree to finalize the ruling.