Quite simply and obviously, arbitration is an agreement between two or more parties to have their disputes resolved by arbitration.
There are two types of arbitration agreement. An arbitration agreement entered into after a dispute has arisen (this is sometimes called a “submission agreement”) and more commonly an arbitration agreement contained in a wider contract between the parties and often referred to as the “arbitration clause”. The latter is an agreement to refer a dispute to arbitration before any dispute has arisen. Of course, a dispute may never arise, in which case the arbitration agreement will never be used. But if a dispute should arise then the arbitration agreement contained within the wider contract will become operative. It is important therefore to get the arbitration agreement right.