Arbitration is a form of alternative dispute resolution (ADR) where a neutral third party, known as the arbitrator, is appointed to resolve a dispute between two or more parties. Unlike court proceedings, arbitration is typically a private process, and the arbitrator’s decision, known as an “award,” is usually binding and enforceable in the same manner as a court judgment. The process is often chosen for its efficiency, confidentiality, and ability to provide a resolution by an expert in the specific field related to the dispute.
In the context of employment or recruitment, arbitration might be used to resolve disputes between an employer and an employee, such as disagreements over employment contracts, wrongful termination claims, or discrimination allegations. For instance, if an employee feels they were unjustly terminated and their employment contract includes an arbitration clause, they would bring their case before an arbitrator rather than a court.
An example of arbitration in use: “The company and the former employee agreed to arbitration to resolve the wrongful termination claim instead of pursuing a lengthy court battle.”
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