Arbitration is a private process of resolving disputes outside of a courtroom (i.e. , an alternative dispute resolution process).Arbitration is a vehicle for resolving disputes, and is an alternative to litigation or mediation. What is arbitration for dummies? Arbitration is the most traditional form of private dispute resolution. Arbitration is a binding procedure. Arbitration is when the parties to a dispute agree to let a neutral third partyan arbitratorhear the case and decide on a binding decision. Arbitration is a method of dispute resolution where parties agree to submit their disagreements to an impartial third party, known as an arbitrator. The Texas Comptroller's office has resources on binding arbitration for property owners and arbitrators. Arbitration is a alternative dispute resolution (ADR) in which an arbitrator renders a decision to resolve a dispute between parties.