Arbitration is a type of dispute resolution process that occurs outside the courtroom. Arbitration is the most traditional form of private dispute resolution.Arbitration is a binding procedure. Arbitration is a formal method of dispute resolution involving a third party neutral who makes a binding decision. 44.1011 Definitions. Many businesses choose to include arbitration clauses when signing a contract with other parties. Find the complete AAA's StepbyStep Guide to Arbitration Filing, covering all aspects of arbitration including ICSID and ICC, in English.