What is arbitration?
Arbitration is a way to settle a dispute outside a regular trial: a neutral person called an arbitrator hears both sides and then makes a decision. It can be binding or nonbinding, depending on what the parties agreed beforehand. Injury claims reach arbitration through court programs, insurance policies or contracts.
Last checked November 9, 2026 · Official sources (4)
How does arbitration work in an injury case? An Arizona example
EXAMPLE ONLY. Ben is rear-ended in Phoenix and sues for $30,000 in superior court. Because the amount is under the court's arbitration limit, the case is sent to compulsory arbitration. A local lawyer serves as arbitrator. The hearing takes one morning in an office, with Ben, the driver, the lawyers and Ben's medical records. Nobody waits a year for a trial date.
The arbitrator awards Ben $18,000. Ben thinks it is too low. He can appeal by demanding a new trial in court, but appealing has costs and risks, and a jury could award less. After weighing it, Ben accepts the award.
Why does arbitration matter if you were hurt?
Arbitration is usually faster and cheaper than a jury trial, with fewer formal rules. The tradeoffs are real: there is no jury, the decision may be final, and the chance to appeal is narrow or gone in binding arbitration.
Check your own auto policy. Many policies say disputes with your own insurer over uninsured or underinsured motorist benefits go to arbitration. You should know that before you file anything. Some other contracts, such as gym memberships, rideshare terms or nursing home admission papers, also contain arbitration clauses that can reach injury claims, so keep a copy of what you signed.
How does arbitration differ in Arizona and Texas?
| State | What the law says |
|---|---|
| Arizona | Superior courts must require arbitration in cases under a limit they set, which cannot exceed $65,000. Any party may appeal by demanding a new trial. |
| Texas | Under the state's ADR law, an award is binding only if the parties agreed in advance. Otherwise it is advisory. |
Arbitration vs. mediation vs. trial
In mediation, you decide whether to settle. In arbitration, an arbitrator decides for you, often in one short hearing. At trial, a judge or jury decides after a full public process that can take a year or more. Binding arbitration gives up the jury, so read any agreement before you sign it.
Questions
Is arbitration binding?
It can be binding or nonbinding, depending on what the parties agreed before the hearing.
Can I appeal an arbitration award?
In Arizona court-ordered arbitration, yes, by demanding a new trial in court. Binding arbitration from a private contract is much harder to undo.
Do I need a lawyer for arbitration?
You are allowed to go without one, but the insurer will have one. People commonly bring a lawyer, especially when the award will be binding.
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See if I’m owed moneySources (4)
- U.S. Courts, Glossary of Legal Terms, checked 2026-11-09. “A form of alternative dispute resolution in which an arbitrator (a neutral decision maker) issues a judgment on the legal issues involved in a case after listening to presentations by each party. Arbitration can be binding or nonbinding”
- A.R.S. § 12-133(A), checked 2026-11-09. “Establish jurisdictional limits of not to exceed sixty-five thousand dollars for submission of disputes to arbitration. 2. Require arbitration in all cases which are filed in superior court”
- Tex. Civ. Prac. & Rem. Code § 154.027(b), checked 2026-11-09. “If the parties stipulate in advance, the award is binding and is enforceable in the same manner as any contract obligation. If the parties do not stipulate in advance that the award is binding, the award is not binding”
- A.R.S. § 12-133(H), checked 2026-11-09. “Any party to the arbitration proceeding may appeal from the arbitration award to the court in which the award is entered by filing, within the time limited by rule of court, a demand for trial de novo on law and fact.”