Arbitration is a form of alternative dispute resolution (ADR) where parties agree to submit their disputes to an arbitrator or a panel of arbitrators for a binding decision. Arbitration is a private, less formal, and often more flexible process than traditional litigation. It provides a means for parties to resolve their construction-related disagreements outside of the court system.

Key features of arbitration in construction contracts include:

1. Voluntary Agreement:
   Participation in arbitration is typically based on the voluntary agreement of the parties, either through an arbitration clause in the construction contract or through a separate agreement to arbitrate after a dispute arises.
2. Neutral Arbitrator:
   An arbitrator is a neutral third party, often chosen for their expertise in construction law or the specific subject matter of the dispute. The parties may agree on a single arbitrator or opt for a panel of arbitrators.
3. Private and Confidential:
   Arbitration proceedings are private, and the details of the dispute, evidence presented, and the final decision are generally kept confidential. This contrasts with court proceedings, which are generally a matter of public record.
4. Flexibility:
   Arbitration allows for flexibility in the process. The parties can choose the rules that will govern the arbitration, select the arbitrators, and determine the schedule and location of hearings.
5. Enforceability of Awards:
   The decision rendered by the arbitrator, known as an award, is binding on the parties. Arbitration awards are enforceable in court, and in many jurisdictions, they have the same legal status as a court judgement. The New York Convention which governs the enforceability of arbitration awards internationally, now has over 160 signatories, making arbitration the dispute resolution forum of choice.
6. Expertise of Arbitrators:
   Arbitrators are often selected for their expertise in the construction industry. Their knowledge of industry practices and standards can contribute to a more informed and specialised resolution of construction disputes.
7. Efficiency and Timeliness:
   Arbitration can be a more efficient and timelier process compared to litigation. The parties have more control over the schedule, and the proceedings can be tailored to suit the complexity and urgency of the dispute, although coordinating the arbitrators' diaries is often challenging.

Arbitration clauses are commonly included in construction contracts to provide a predetermined mechanism for resolving disputes that may arise during the course of the project. While arbitration offers advantages such as privacy, flexibility, and expertise, it is important for parties to carefully consider the specific terms of the arbitration agreement, including the rules governing the process and the selection of arbitrators, to ensure a fair and effective resolution.