Arbitration was designed to provide a cheaper and more efficient alternative to litigation. One must only look at the definition of arbitration to understand the underlying reasons for its existence. The American Arbitration Association defines arbitration as "the reference of a dispute by voluntary agreement of the parties to an impartial person for determination on the basis of evidence and argument presented by parties, who agree in advance to accept the decisions of the arbitrator as final and binding." Arbitration, in short, is a trade-off in which the parties agree to exchange the benefits and risks of dispute resolution under the formal law for the benefits and risks of dispute resolution in a less formal setting. It is exactly this trade-off that has led courts to struggle with arbitration awards and the proper balance between the amount of deference that should be given to arbitrators' decisions and the appropriate scope of judicial review of those decisions

Imagine two parties entering into a contract and deciding that any and all disputes will be resolved through arbitration as opposed to resorting to litigation. These parties have made a conscious decision to have an arbitrator settle any disputes because arbitration offers a much quicker and cheaper route to resolving their problems. They realize that by choosing a more informal arena, they give up certain rights and options otherwise available to them in a court of law. However, the thought of having to go through lengthy trials in an already overcrowded judicial system makes them accept arbitration with open arms. Also, initially these parties have weighed their options and believe that an arbitration decision will leave them with a more definite and final result.

The goals of arbitration have been well documented and have shaped its development. Arbitration was designed to avoid the rather high costs, excessive formalities, and long delays that are associated with the modern judicial process. Another reason for the use of arbitration is overcrowded judicial dockets. The use of arbitration as a means of resolving commercial disputes without resort to the courts continues to be on the rise. The burden on the courts caused by expanding caseloads and increasingly complex issues in the commercial marketplace has lengthened the process of judicial dispute resolution in the courts. The delays inherent in judicial proceedings are often unacceptable to those involved in modern commercial transactions and a simpler, faster method of dispute resolution is required. Commercial arbitration is becoming the most widely utilized alternative.

Alternative dispute resolution procedures, like arbitration, have been embraced by many as a means of reducing the judiciary's workload, which seems to rise each and every year. The Uniform Arbitration Act (UAA), promulgated by the National Conference of Commissioners on Uniform State Laws in 1955, has been one the most successful uniform laws. To date, over thirty-five states have adopted it in its entirety and fourteen more are using it as a model for their state arbitration acts. The revisions to the UAA were necessary to deal with increased use of arbitration, the greater complexities of underlying arbitration disputes, and intervening changes in arbitration law The United Nations Commission on International Trade Law (UNCITRAL) adopted the Model Law on International Commercial Arbitration in 1985. The General Assembly of the United Nations has recommended that all countries should give due consideration to this Model Law in view of the desirability for uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice. The UNCITRAL also adopted in 1980 a set of Conciliation Rules. The General Assembly of the United Nations has recommended the use of these Rules in cases where the disputes arise in the context of international commercial relations and the parties seek amicable settlement of their disputes by recourse to conciliation. An important feature of the said UNCITRAL Model Law and Rules is that they have harmonized concepts on arbitration and conciliation of different legal systems of the world.

Arbitration has to be looked up to with all earnestness so that the litigant public has faith in the speedy process of resolving their disputes by this process. The success of the institution of arbitration like a judicial institution depends upon the confidence the institution could create and establish in the mind of the public. Confidence of the public depends upon the character, credibility, impartiality and uprightness of the persons who are called upon to arbitrate. It is the dedication and devotion of the arbitrator to the cause he is called upon to arbitrate with the proverbial judicial aloofness from the parties and the quickness of perception and perfection, exactitude and uprightness in the disposal of the cases that could bring image, reputation and popularity to the institution of arbitration.

In this Article, ADR includes "ways in which a society with a formal, state-sponsored adjudicative process prevents, manages, and resolves disputes without using that process." Generally, the term encompasses any conflict-handling procedure that has as its goal avoiding the cost and delay of litigation, relieving court congestion, providing a more "effective" or constructive resolution between disputants, enhancing community involvement in the process of resolving disputes, and facilitating access to justice. In order to advance these goals, ADR procedures usually are characterized as voluntary, informal, private, fast, and inexpensive. They tend to de-emphasize the adversarial method by discouraging lawyer participation, judicial involvement, and the application of substantive law, and by encouraging party participation. Of course, the best known examples of ADR mechanisms or processes are negotiation, mediation, and arbitration. The latter two involve third-party intervention. Important distinction between processes in which third parties intervene is whether the process is "conciliatory" or "adjudicative." A critical factor in making such a classification is whether or not the third party has the power to impose a solution. If so, the process is adjudicative; if not, the process is conciliatory. Mediation is a conciliatory process. Its aim is to achieve the settlement of disputes by adjustment or compromise among the claims, interests, and demands of the parties. Compromise" implies participation and choice in the resolution, which by implication will provide something for both disputants--a "all-win" solution.