Types of Arbitration

Several variations of the basic arbitration model exist. Among them are high-low arbitration, in which the limits of the award are set before the hearing; final-offer arbitration, in which the arbitrator must pick one of the parties' final offers; and advisory arbitration, which is similar to regular arbitration, but the decision is not binding. Another nonbinding form of arbitration is court-annexed arbitration. This kind of arbitration, initiated by the judicial system to remedy court overloads, is mandatory but not binding. This means that some kinds of cases in particular jurisdictions—for instance, cases involving monetary damages under $50,000—are required to go to arbitration before they can be litigated. If the parties accept the arbitrator's finding, the case is settled. If one or both parties reject the ruling, they have a right to a new trial (called a trial de novo) in which the case is heard in a regular court. Many jurisdictions discourage such appeals by requiring that a party that fails to win more in court than it was offered in arbitration pay court costs or even an additional penalty.