Anyone who has ever signed a mobile-phone or other consumer contract, a lease or an employment agreement has probably seen in the contract's fine print a provision known as an "arbitration clause." This widely used legal covenant requires that in the case of a dispute between the parties, the arbitration process be used to resolve their differences. In these situations, both sides to the dispute rely on an arbitrator, also known as a "neutral," for an informed, unbiased resolution.

Arbitration is an alternative to filing a lawsuit, and the neutral plays a critical role in settling disagreements. Instead of appearing before a judge in a courtroom, the opposing parties present their case to the arbitrator, whose decision is often final and, only in certain circumstances, cannot be appealed. Arbitration is used instead of courtroom proceedings because it is often quicker, less time consuming and not as costly. In addition to consumer disputes, commercial and real-estate controversies are often handled through the arbitration process. Arbitration is also frequently used to resolve family conflicts such as divorces because it can be cost effective and offers a degree of privacy, since it is not a part of the public record.

Online dispute resolution (ODR) is a relatively new form of arbitration. By using computers and specially developed software, the parties can file an initial dispute, find and appoint a neutral, produce evidence and even participate in hearings online. ODR significantly extends the geographic boundaries in which a neutral can work.

Next: What does an Arbitrator do?

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