Arbitration is a legally binding process that resolves contract disputes without having to take the disagreement to court. Arbitration is a process for settling disputes related to the contract.Many contracts contain a mandatory arbitration clause. Under Maryland law, arbitration provisions in employment contracts are enforceable, as long as they comply with Maryland contract law principles. Arbitration is a commonly used form of alternative dispute resolution (ADR). ADR is a process for resolving disputes outside of the public court system.