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In this video, arbitration is explained as a system of private justice, distinct from court proceedings. The example given involves two parties, Patti and David, who have a contract dispute. Instead of going to court, they choose to have Alan act as an arbitrator to resolve their disagreement. By selecting Alan, they enter into an arbitration agreement. During the arbitration session, both parties can present evidence to support their claims. If Alan rules in favor of Patti, she may receive an arbitration award of $5,000. In this case, David would be obligated to pay the awarded amount. This illustrates how arbitration serves as an alternative to public court proceedings.
