:
"Any controversy or claim arising out of or relating to this
contract, or the breach thereof, shall be settled by the
American Arbitration Association under its Commercial
Arbitration Rules, and the judgment on the award rendered
by the arbitrator(s) may be entered in any court having
By agreement of the parties or under state law, some arbitrations are non-binding. For example, in cases where the amount in controversy is less than $50,000 and the parties have not agreed to submit their dispute to binding arbitration, the parties may be ordered to submit it to arbitration by California civil courts. The arbitrator's award is final and binding, unless one of the parties to the dispute requests a trial de novo within 30 days after the arbitration award has been filed with the court. (Cal. Rules of Court 1600 and 1616).
Arbitrators are typically drawn from a panel of neutrals proposed by an arbitration organization, such as AAA, or they may be private arbitrators selected by the parties. In small disputes, single arbitrators decide cases. In larger disputes, the typical panel consists of three arbitrators, who, depending on the terms of the PDAA may all be selected as neutrals by the parties, or, in a variation, each of the parties select one arbitrator and either those two arbitrators or the arbitration organization selects a neutral who also serves as chairman of the panel. In the United States, arbitrators are usually but not always lawyers or retired judges. In securities arbitrations before the National Association of Securities Dealers ("NASD"), one of the three arbitrators must have a background in the securities industry and one must represent the public, either of whom may be but do not have to be lawyers.
Arbitration differs from other forms of alternative dispute resolution ("ADR") in that arbitrators have the power to decide the dispute. Mediation, for example, is "a process whereby a neutral third par...