Traditional arbitration is a form of dispute resolution which has been used an alternative to court trials for hundreds of years, especially in commercial disputes. Federal law, and statutes in every state, authorize the use of arbitration to resolve disputes. There are controversies in the courts and legislatures about whether traditional arbitration is a fair method of resolving consumer disputes.

Traditional arbitration occurs when the parties agree in a contract to resolve their disputes using the services of one or several private arbitrators. The agreement to arbitrate is usually found in a written contract entered into before the dispute arises, although sometimes, people agree to arbitrate after a dispute arises. After the traditional arbitration hearing is conducted, the arbitrator(s) render an award. The courts only become involved if the parties do not honor the award and enforcement must be sought.

Arbitration has many similarities to lawsuits tried to judges without juries. Claims in arbitration are asserted in writing in a manner similar to the presentation of claims in court (this is important because an arbitrator's power is limited to claims which have been agreed to be arbitrated and to the dispute presented). Depending upon the applicable arbitration rules there is usually some discovery but often much less than is available in court. Witness testimony and other evidence in arbitration are presented in a manner similar to trials, and arbitration hearings are conducted in a similar manner to trials. None of this is particularly surprising, for most but not all arbitrators are lawyers, most parties in arbitration are represented by lawyers, and awards in arbitration depend upon the courts for their enforceability.

But, there are also many differences between disputes presented to courts and disputes presented in arbitration. Some of the differences are apparent from the limits upon similarities just mentioned. There are never any juries in arbitration (but there is no right to a jury in many kinds of court litigation and it is not uncommon for commercial contracts to include a jury waiver). Appeals from the awards of arbitrators are generally limited to the adequacy of the process and there is much less room for appeal from an arbitration award than from a court judgment. The arbitration process is less public, if not more confidential, than litigation in court.

Generalities about the similarities and differences between arbitration and court litigation beyond those just mentioned are difficult to make because, on the one hand, a party's experience in court litigation will differ from court room to court room and state to state; on the other hand, a party's experience in arbitration will depend on the specifics of the rules of the arbitration service provider and from arbitrator to arbitrator.

In fact, the greatest consistency between arbitration hearings and trials is the uncertainty of outcome in a particular case on a given day - which is significant impetus in both venues to settlement.