1. to act as arbiter upon (a disputed question) : to settle (a dispute between two people or groups) after hearing the arguments and opinions of both. Learn how arbitration can resolve certain disputes out of the court.Instead of a judge, impartial arbitrators make the legal decision. Arbitration is an alternative to traditional judicial proceedings. Like court, arbitration involves a neutral person deciding the outcome of a dispute. Arbitration is a method of resolving disputes outside of court. Court authority for certain functions of arbitration assistance and supervision. Arbitration is a formal method of dispute resolution involving a third party neutral who makes a binding decision. It is the 'legal place' of an international arbitration. Washington's Uniform Family Law Arbitration Act (UFLAA) provides a framework for the use of arbitration in resolving family law disputes in Washington state.