When does a claim typically go to arbitration?

A claim typically goes to arbitration when negotiation has failed to resolve differences between the parties involved. Arbitration is often seen as a more formal process where an impartial third party reviews the evidence and makes a binding decision to settle the dispute. This step is usually considered after both parties have attempted to negotiate and reach a settlement on their own, but such efforts have not been successful.

In this context, arbitration serves as a mechanism to streamline the resolution process, providing a structured environment to resolve disputes without the need for lengthy and costly litigation.

The other options do not align with how arbitration generally operates. An agreement between parties is essential for arbitration to occur, but it is not a given that this will lead to arbitration, as negotiations could resolve the differences beforehand. Processing of payment does not directly correlate with the initiation of arbitration; it typically concerns whether a claim is valid and the amount due rather than conflict resolution. Lastly, arbitration is not universally applied to all types of claims, as different claims may follow distinct dispute resolution procedures based on nature or the parties involved.