Arbitration Agreement Law and Legal Definition

Arbitration agreement is a written agreement between the parties to a dispute to designate a particular arbitrator to resolve their disputes arising out of a particular business relationship. It calls for a mandatory arbitration before an arbitrator. An Arbitration agreement is usually legally binding. Companies often require employees to sign an arbitration agreement which prevents the employee from suing the company in court. Arbitration agreements are unsafe to employees because they often require an employee to pay thousands of dollars to file a claim with an arbitration association where s/he could have paid a few hundred dollars, or in some cases nothing at all to file in court.