What is Arbitration?

  • Arbitration is a well-established way used to end disputes.
  • Arbitration provides parties with a choice to settle the dispute without litigation.
  • Arbitration takes place out of the court room: the two parties involved select an impartial third party (known as an arbitrator) and both parties agree in advance to comply with the arbitrator’s award.
  • Both sides then participate in a hearing where each side can present evidence and testimony.

An arbitrator’s decision is usually final and the courts very rarely revisit the case once the arbitrator has made their decision.

Key Points of Arbitration

  • Arbitration is where an impartial person makes a decision in relation to a dispute.
  • ACAS Arbitration can be used to decide cases. The cases in which an arbitrator can make a decision are in relation to unfair dismissal or claims under the flexible working legislation.
  • Arbitration is more commonly used for employment related disputes, however, it can also be used to settle individual disputes.
  • Arbitration is an alternative to going to court, however, due to arbitration being voluntary both sides must agree to abide by the arbitrator’s decision.

Example of Arbitration in Practice

A trade union might be in dispute with an employer over the annual pay rise. The union could agree with the employer to ask ACAS to appoint an independent arbitrator from the panel of arbitrators to hear both sides of the case. Once both sides have had their say on the matter and have presented their evidence the arbitrator will then make an independent and impartial decision.

Example of Arbitration between Individuals

An individual and an employer may decide to go to arbitration to avoid

  • The expenses and
  • Stress of taking their case to an Employment Tribunal if the case cannot be resolved by internal procedures that are in place.


While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legalally does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.

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