Definition: Legal proceedings conducted by an impartial third party called an arbitrator, that attempt to resolve disputes. Arbitration is an alternative to a lawsuit, but the final decision is just as legally binding. Collective bargaining agreements and other employment contracts might require arbitration to resolve union-employer or worker-employer disputes, instead of lawsuits. Government agencies might ask workers who file charges against employers to agree to arbitrate, instead of suing in court. Because the final decisions of arbitration are legally binding, it's a good idea to hire an attorney to sit on your side of the table. But it's typically not required.