An arbitration where each party submits a proposed settlement amount and, after a full hearing before an arbitrator or panel of arbitrators, the arbitrator or panel selects one of the proposed settlements as the final award. Baseball arbitration is a type of binding mediation, but unlike other types of arbitration, the arbitrator selects one of the parties' proposed settlements instead of calculating the award in another way.

For a description of how baseball arbitration is used in the context of real estate, see Practice Notes, Options for Additional Space in Commercial Leases: Determining Fair Market Rent with Baseball Arbitration and Ground Lease Rent Adjustment Determinations in the US.