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Arbitration is a means to settle a disagreement by turning it over to an impartial agent, the arbitrator. In order to properly carry out arbitration, an arbitrator is chosen by the two parties involved in the dispute. The key purpose of arbitration is to resolve the dispute by determining an equitable settlement. Traditionally, arbitration is carried out as a binding procedure. That is every arbitration decision is final and arbitration does not give way to further appeals. In practice, however, arbitration is usually performed by each side selecting one arbitrator, which in turn selects the third one. The dispute of arbitration is then presented to the three arbitrators chosen, with a majority of the arbitrators rendering a final decision. In financial disputes arbitration is often favored as a prudent alternative to litigation, which is typically a lengthier, less predictable, and a more resource-consuming process.

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