In the labor relations context, a process to establish the terms of a new or amended collective bargaining agreement (CBA) through arbitration, rather than collective bargaining negotiations. Typically, parties that reach an impasse in negotiations agree to a hearing to present arguments and evidence to the arbitrator on proposed terms for the new or amended CBA. The arbitrator's decision in an interest arbitration:

Final offer arbitration is a form of interest arbitration where the parties authorize the arbitrator to select one party's last proposal, or final offer. Typically, final offer arbitration is limited to a single issue.

Interest arbitration is often required in public sector collective bargaining and is prevalent in private sector collective bargaining under the Railway Labor Act (RLA). Interest arbitration is not prevalent in collective bargaining under the National Labor Relations Act, but parties occasionally use it for select disputes.

For more information, see Practice Notes, Labor Arbitration and Railway Labor Act: Overview.