Arbitration and Mediation
Arbitration, a form of alternative dispute resolution, is a technique for the resolution of disputes outside the court system. In arbitration, the parties agree to have their dispute heard by one or more arbitrators and agree to be bound by their decision.
Concept at a glance
Definition and explanation
Arbitration, a form of alternative dispute resolution, is a technique for the resolution of disputes outside the court system. In arbitration, the parties agree to have their dispute heard by one or more arbitrators and agree to be bound by their decision. [1]
Most account agreements between broker-dealers and their customers have arbitration clauses. The arbitration clauses usually require customers to arbitrate any disputes with the broker-dealer. They also usually prevent customers from suing broker-dealers in court. If no agreement to arbitrate exists, a broker-dealer may not compel its customer to arbitrate. However, FINRA’s Code of Arbitration Procedure allows a customer to compel a broker-dealer or person associated with a broker-dealer to arbitrate a dispute at the customer’s request. [1]
Arbitration, like a lawsuit in court (litigation), offers a final means of resolving a dispute. However, it is different from litigation in significant ways. For instance: [1]
Mediation, another form of alternative dispute resolution, is a voluntary, non-binding process that allows parties to work with a neutral mediator to try to quickly resolve differences. Prior to the outset of mediation, the parties must consent to mediate by written agreement, such as the FINRA Mediation Submission Agreement , and to be bound by a specific procedural code, such as the FINRA Code of Mediation Procedure . The mediator may either be selected by the parties or by the FINRA Director of Mediation. [1]
Source-supported connections
Frequently asked questions
What does Arbitration and Mediation mean in the cited reference?
Arbitration, a form of alternative dispute resolution, is a technique for the resolution of disputes outside the court system. In arbitration, the parties agree to have their dispute heard by one or more arbitrators and agree to be bound by their decision. [1]
Arbitration and Mediation connection map
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Sources and review dates
Reviewed 23 October 2026. Historical dates and award-time affiliations retain their original context. A review date is not an event date. Background sources are identified separately from official records.