An arbitration clause covers only those claims arising from or related to the content of the contract itself. An arbitration clause in a contract governing home renovation, for example, would likely not apply to potential personal injury claims between the contracting parties.
For those claims covered by the arbitration clause, there are a number of benefits afforded by arbitration. Arbitration is generally fast, cheap, low conflict, and flexible as compared to traditional litigation. For those with privacy concerns, arbitration is far superior to traditional litigation. Arbitration is a private matter, and the content of an arbitration is also deemed private (and parties typically sign a confidentiality agreement). With court litigation, on the other hand, the content of the lawsuit may be accessible to the public.
Contracting parties may also feel that having an informed, neutral arbitrator is better than having an uninformed judge. If the contract is related to a specific industry, technology, or service, the parties select an arbitrator with experience in such matters.