arbitration (redirected from Binding arbitration)

Arbitration

An informal hearing regarding a dispute. The dispute is judged by a group of people (generally three) who have been selected by an impartial panel. Once a decision has been reached, there is no further appeal process.

Notes:

We frequently hear this term when professional sports teams are negotiating contracts with their athletes. Typically, one party aims unrealistically high and the other one aims really low, and the settlement occurs somewhere in the middle.

See also: Cooling-off Rule, Heads of Agreement, Judgment, Rescission

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arbitration

A process for settling disputes between securities firms or between securities firms and their customers in which the parties submit their differences to the judgment of an impartial third party or parties. Many brokerage firms require their customers to sign an agreement for binding arbitration to resolve disputes. The agreement requires the customer to accept the arbitrator's decision and to waive the right to subsequent legal action. Pressure from the SEC and a 1990 court decision now allows investors the option of using an independent arbitration panel in place of a securities-industry panel. Compare mediation. See also NASD Dispute Resolution, Inc.