Arbitration is a mechanism for resolving disputes between investors and brokers, or between brokers. Arbitration is a popular dispute resolution method that provides businesses an alternative to litigation.Arbitration is a private forum where an arbitrator (or multiple arbitrators) issue binding final decisions. Learn how arbitration can resolve certain disputes out of the court. Instead of a judge, impartial arbitrators make the legal decision. Arbitration is a commonly used form of alternative dispute resolution (ADR). ADR is a process for resolving disputes outside of the public court system. In an arbitration agreement, the parties agree to submit disputes to arbitration.