An arbiter is a person that has the legal authority to decide disputes. The arbiter’s decisions are made based on the rules of law and equity. This is distinguishable from an arbitrator, who is not bound to follow substantive law when making their decisions, but rather is able to use their own discretion to come up with a decision according to the judgment of a reasonable person. Arbitrators are also restricted as they can only decide disputes that arise in the form of arbitration, whereas an arbiter can decide disputes outside of arbitration. Because arbiters are able to work on disputes in arbitration, they may sometimes be referred to as “arbitrators.”
Arbiters are typically chosen by the parties or may be chosen by the court on behalf of the parties. Before an arbiter becomes involved in a legal dispute, the parties will usually sign an agreement that explains the arbiter’s role and explains what behavior is not allowed, such as one party communicating with the arbiter in private. The arbiter must be impartial throughout the process. The agreement may also state that the arbiter’s decision is final and binding on the parties, which means the decision can only be appealed on the narrowest grounds. If the agreement states the arbiter’s decision is non-binding, parties are still able to pursue their claims through the courts.
Arbiters are able to encourage the parties to negotiate a settlement but will generally not involve themselves in the settlement process, outside of telling the parties their analysis of the case and their merit of legal arguments.
[Last updated in May of 2021 by the Wex Definitions Team]