Final-Offer Arbitration Law and Legal Definition

Final-offer arbitration refers to arbitration in which both parties are required to submit their final offer to an arbitrator, and may choose any offer upon the arbitrator’s discretion. This procedure gives each party an incentive to make a reasonable offer. The purpose of this type of arbitration is to counter arbitrators’ tendency to make compromise decisions halfway between two parties’ demands. The arbitrator must select the position of one of the parties and cannot select a compromise position.[ West Des Moines Education Asso. v. Public Employment Relations Board, 266 N.W.2d 118, 119 (Iowa 1978)]