Arbitration is a type of alternative dispute resolution. Arbitration in fact is not a novel system. On 21st June 1985, the United Nations enacted the UNCITRAL Model Law on International Commercial Arbitration. As early as 1794, the United Kingdom and the United States of America entered into the Treaty of Friendship, Commerce and Navigation, which provides that certain disputes shall be determined by arbitration. Hong Kong has also enacted the Arbitration Ordinance Cap. 609. Today, Hong Kong arbitral awards are enforceable in 157 countries, through the New York Convention and Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region. In 2014, the Department of Justice set up the Advisory Committee to promote arbitration in Hong Kong.

Arbitration is one of the dispute resolution mechanisms where both parties resolve their disputes in a private manner. It is also an alternative to court litigation. Arbitration proceedings are similar to court proceedings in a number of ways, but are different to mediation, in that an arbitration tribunal can decide the case which is enforceable in the same manner as a court judgment. Prior to conducting arbitration, the parties usually sign an arbitration agreement in order to submit their disputes to arbitration. The parties involved in arbitration generally have to treat arbitration proceedings as confidential.