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the hearing and determining of a dispute or the settling of differences between parties by a person or persons chosen or agreed to by them:
Rather than risk a long strike, the union and management agreed to arbitration.
International Law. the application of judicial methods to the settlement of international disputes.
a comedy (c300 b.c.) by Menander, extant only as a fragment.
Contemporary Examples

If he simply decides to appeal, the case would go to an arbitration panel.
Lance Armstrong Rips Deal With Accusers in Doping Case as ‘Vendetta’ Howard Kurtz July 5, 2012

But when they came together in what worked like an arbitration process, they found common ground.
CEO Solutions to the Shutdown William L. McComb October 13, 2013

In the end, after Allred had dropped her, she went to arbitration against Citibank, representing herself, and lost.
My Gloria Allred Nightmare Tricia Romano June 12, 2012

The lawsuit against the Republic of Austria wound through the United States Supreme Court and an Austrian arbitration panel.
Remembering Maria Altmann, Holocaust Hero Who Won Back Klimt Paintings Isabel Wilkinson February 7, 2011

An appeals process also allows accused players to confront and question witnesses before an arbitration panel.
Major League Baseball’s Planned Suspensions Are Already a Bust David Roth June 4, 2013

Historical Examples

K The Transvaal War pertinently illustrates the prevailing want of knowledge regarding the true sphere of arbitration.
Appletons’ Popular Science Monthly, May, 1900 Various

It is therefore basically not a plan of arbitration, nor is it an industrial court.
Herbert Hoover Vernon Kellogg

Mr. Fraser, knowing well the man with whom he had to deal, submitted the affair to arbitration.
Memoirs of the Jacobites of 1715 and 1745 Mrs. Thomson

I hear that for the points now in dispute an arbitration will be proposed.
The Knight Of Gwynne, Vol. II (of II) Charles James Lever

The treaty of arbitration must stipulate the principles according to which the arbitrators have to give their verdict.
International Law. A Treatise. Volume II (of 2) Lassa Francis Oppenheim

noun
(law) the hearing and determination of a dispute, esp an industrial dispute, by an impartial referee selected or agreed upon by the parties concerned
(international law) the procedure laid down for the settlement of international disputes
n.

late 14c., “absolute decision,” from Old French arbitracion, from Latin arbitrationem (nominative arbitratio) “judgment, will,” noun of action from past participle stem of arbitrari “to be of an opinion, give a decision,” from arbiter (see arbiter). Meaning “settlement of a dispute by a third party” is from 1630s.

The settling of disputes (especially labor disputes) between two parties by an impartial third party, whose decision the contending parties agree to accept. Arbitration is often used to resolve conflict diplomatically to prevent a more serious confrontation.