Mediation and Arbitration
Arbitration, a form of alternative dispute resolution, is a technique for the resolution of disputes outside the court system. The parties to a dispute refer it to arbitration by one or more persons and agree to be bound by the arbitration 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. The parties to a dispute refer it to arbitration by one or more persons and agree to be bound by the arbitration 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 Director of Arbitration for FINRA. [1]
Source-supported connections
Frequently asked questions
What does Mediation and Arbitration mean in the cited reference?
Arbitration, a form of alternative dispute resolution, is a technique for the resolution of disputes outside the court system. The parties to a dispute refer it to arbitration by one or more persons and agree to be bound by the arbitration decision. [1]
Mediation and Arbitration 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.