Arbitration refers to a type of alternative to dispute resolution; it involves resolving of disputes outside courts. In this type of dispute resolution, arbitrators consider the case of each party and render arbitral award which is legally binding and enforceable in courts.
Arbitration has become widespread in the last few decades due to the fact that the law may require the disputing parties to take their case to arbitration. For instance, some states in America have laid down statues that demand that some dispute types have to be submitted to arbitration.