Arbitration, << `ahr` buh TRAY shuhn, >> is the judging of a dispute by one or more impartial persons whose decision will be final and binding. The judges are called arbitrators or members of an arbitration board. The arbitrators are chosen by the parties to the dispute, or by some neutral agency designated by them. The decision of the arbitrators is known as an award. Arbitration may be employed between individuals, groups, or nations.
Commercial arbitration
is a process in which business organizations submit their disputes to one or more arbitrators selected to decide the controversy. It has been practiced in European countries for many years. In the United States, the American Arbitration Association maintains panels of arbitrators. The decisions of these panels have been enforced by the courts of many states.
Industrial, or labor, arbitration
is the settlement of disputes between employers and labor. In voluntary arbitration, management and labor agree to submit the dispute to arbitration and to abide by the award. In compulsory arbitration, the government orders a dispute to be submitted to arbitration because the dispute affects the public interest. Compulsory arbitration is usually ordered only after voluntary methods have failed.
Most industrial disputes involve fixing wages, hours, and conditions of labor. Arbitration is sometimes a way of settling grievances and avoiding or ending costly strikes and lockouts.
In the United States, arbitration has been used most widely in disputes over existing contracts, especially in the railroad industry. Soon after passage of the Interstate Commerce Act of 1887, Congress provided for voluntary arbitration of disputes arising between railroads and their workers. This policy was continued in U.S. laws passed in 1897, 1913, 1926, and 1934. In 1963, Congress prevented a national railroad strike over work rules by requiring compulsory arbitration. It was the first compulsory arbitration law ever passed in peacetime.
International arbitration
is the settlement of disputes that arise between two or more nations. The dispute is submitted to impartial judges who are chosen because of their knowledge of international affairs. These judges may be members of the Permanent Court of Arbitration or may be other individuals selected for the purpose. Their decisions are regarded as binding.
International arbitration has been used since the days of the Greek city-states. The United States and Britain used arbitration to settle the Alabama claims in 1871 and the Bering Sea controversy in 1892.
