When including an arbitration clause in your contract, the parties may choose between two different forms of arbitration: binding and non-binding.
Binding arbitration is perhaps the most common form. A binding arbitration forces the parties to accept the decision of the arbitrator as the final, legally applicable decision. The decision in a binding arbitration cannot be appealed. After binding arbitration has completed, a court of law is required (assuming that the contract itself is valid) to enforce the decision made by the arbitrator.
Nonbinding arbitration gives the involved parties the option of accepting an arbitrator’s decision. If one of the parties is unhappy with the decision of the arbitrator and would like to proceed with court-based litigation, they are free to do so.
For contracting parties looking to minimize uncertainty, binding arbitration is generally a better choice (as non-binding arbitration may end up being quite costly due to the added costs of arbitration + traditional litigation).