A more thorough explanation:

Definition: Binding arbitration is a method of resolving disputes where one or more neutral third parties, agreed upon by the disputing parties, make a final decision that both parties must follow.

For example, if two companies have a disagreement over a contract, they may choose to use binding arbitration to resolve the issue. They would agree on an arbitrator who would listen to both sides and make a final decision that both companies must follow.

Binding arbitration is different from mediation, where a neutral third party helps the disputing parties come to a mutually agreed-upon solution, but the decision is not binding.

Other types of arbitration include:

• Ad hoc arbitration: Arbitration of only one issue.
• Compulsory arbitration: Arbitration required by law or forced by law on the parties.
• Final-offer arbitration: Arbitration in which each party must submit a “final offer” to the arbitrator, who may choose only one.
• Grievance arbitration: Arbitration that involves the violation or interpretation of an existing contract.
• Interest arbitration: Arbitration that involves settling the terms of a contract being negotiated between the parties.
• Judicial arbitration: Court-referred arbitration that is final unless a party objects to the award.
• Voluntary arbitration: Arbitration by the agreement of the parties.

These different types of arbitration are used in various fields, such as labor law, international trade, and other areas where disputes may arise.

The examples illustrate the definition by showing how binding arbitration is used to resolve disputes between parties who have agreed to use this method. The arbitrator's decision is final and binding, meaning both parties must follow it, even if they do not agree with it.