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Arbitration has been used for thousands of years to settle family and business disputes. King Solomon’s famous judgment in the Old Testament regarding two mothers claiming the same baby son is an example of its use in family law. As the two women argued about who was the boy’s mother, King Solomon suggested that he would resolve the issue by cutting the child in half. One woman said she would rather let the other woman have the boy so he would not be injured, while the other woman wanted the boy killed so that neither woman could have the child. King Solomon awarded the boy to the woman who put the welfare of the child above her own needs.

In terms of early commercial uses, the American Bar Association reports that arbitration was “used to resolve early commercial disputes in Marco Polo’s desert caravans, as well as between Greek and Phoenician traders.” In ancient Greece, Philip II of Macedonia, the father of Alexander the Great, used arbitration to resolve territorial disputes.

In the United States, both Native Americans and the colonists used arbitration to resolve personal and commercial disputes, but arbitration was not the preferred method of conflict resolution (except in specific contexts, such as bankruptcy and admiralty law) until the 20th century. In 1925, the Federal Arbitration Act (FAA) was passed. It established the basic legal principles for the use of arbitration in the United States and expanded the types of disputes that could be arbitrated. In 1926, the American Arbitration Association was founded to help implement and promote arbitration as an out-of-court solution to resolving disputes.

Today, arbitration has become a popular method of conflict resolution because it provides opposing parties with the opportunity to resolve disputes outside of court; have more control over the conflict resolution process; keep their private information from the prying eyes of the public, media, and business competitors (the arbitration process is usually confidential); and possibly save time and money.

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