arbitration

noun ar·bi·tra·tion \ ˌär-bə-ˈtrā-shən \
Updated on: 19 Nov 2017

Definition of arbitration

: the action of arbitrating; especially : the hearing and determination of a disputed case by an arbiter
  • a case that is in arbitration
  • They agreed to settle the dispute by arbitration.

arbitrational

play \-sh(ə-)nəl\ adjective

Recent Examples of arbitration from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'arbitration.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Are arbiter and arbitration arbitrary?

A large portion of the words we use today come from Latin roots. Many of these words retain a meaning that is closely related to their Latin ancestor, although sometimes they will drift a considerable distance from their roots (sinister, for instance, had the meaning of “on the left side” in Latin, but also meant “unlucky, inauspicious”). In some instances, a single Latin word will give rise to multiple words in English, some of which have strayed in meaning, and others which have not.

An example of this may be found in our word arbiter. We trace it to the Latin root with the same spelling, arbiter, meaning “eyewitness, onlooker, person appointed to settle a dispute.” A number of English words stem from the Latin arbiter, many of which have to do with judging or being a judge. An arbiter is a judge, and arbitration is the act of judging, or serving as an arbiter. Yet the most common meaning of arbitrary is “existing or coming about seemingly at random or by chance or as a capricious and unreasonable act of will,” which seems to be quite a bit different in meaning from the other two words. Arbitrary does indeed come from the same Latin root, and its oldest meaning in English was “depending on choice or discretion particularly regarding the decision of a judge or a tribunal.” But over time it developed additional senses that are somewhat removed from that initial meaning.

Origin and Etymology of arbitration

Middle English arbitracioun, borrowed from Anglo-French arbitracion, borrowed from Latin arbitrātiōn-, arbitrātiō, from arbitrārī "to consider, judge, arbitrate" + -tiōn-, -tiō, suffix of verbal action


Financial Definition of ARBITRATION

arbitration

What It Is

Arbitration is a process in which impartial parties (arbitrators) help disagreeing parties resolve a dispute. Contracts, particularly financial ones, with disputes often go to arbitration.

How It Works

In the financial world, arbitration sometimes begins with filing a statement of claim with the Financial Industry Regulatory Authority (FINRA). The claim describes who is involved, the nature of the problem, evidence related to the dispute, and the amount of the claim. (The arbitration process is simplified for claims below $25,000 and often does not require in-person meetings.)

Once the arbitration panel is assembled and the parties involved formally agree to abide by the panel's decision, the claimant pays for the arbitration fees and the arbitration begins. Arbitrators are usually very knowledgeable in the areas in which they arbitrate. It can take well over a year to complete the process, from filing to decision.

Why It Matters

The idea behind arbitration is to avoid long and expensive litigation. The process is generally cheaper than litigation, and it allows individuals to represent themselves more easily (though they may have legal representation if they choose).

However, financial contracts including those related to brokerage accounts, credit cards, loans, some utility contracts, etc. often contain mandatory arbitration clauses whereby the arbitration board is populated with members of an association to which the counterparty belongs. Thus, bias toward one of the parties can be a problem. Also, it is very difficult to appeal an arbitration decision (as opposed to court decisions, which are appealed all the time).


ARBITRATION Defined for English Language Learners

arbitration

noun

Definition of arbitration for English Language Learners

  • : a process of settling an argument or disagreement in which the people or groups on both sides present their opinions and ideas to a third person or group


ARBITRATION Defined for Kids

arbitration

noun ar·bi·tra·tion \ ˌär-bə-ˈtrā-shən \

Definition of arbitration for Students

: the settling of a disagreement in which both sides present their arguments to a third person or group for decision

Law Dictionary

arbitration

noun ar·bi·tra·tion \ ˌär-bə-ˈtrā-shən \

legal Definition of arbitration

: the process of resolving a dispute (as between labor and management) or a grievance outside of the court system by presenting it to an impartial third party or panel for a decision that may or may not be binding — compare mediation
final offer arbitration
: interest arbitration in which the arbitrator must accept or reject the final offer of any party and may not decide to compromise
grievance arbitration
: arbitration of a dispute over something in an existing collective bargaining agreement called also rights arbitration; compare interest arbitration in this entry
interest arbitration
: arbitration of a dispute over the provisions to be entered in a new contract — compare grievance arbitration in this entry
rights arbitration
: grievance arbitration in this entry

arbitrational

play \ˌär-bə-ˈtrā-shə-nəl\ adjective

Origin and Etymology of arbitration

Latin arbitratio, from arbitrari to judge, arbitrate, from arbiter onlooker, arbitrator



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