Abstract This article assesses the structure and the process of commercial arbitration, which are determined by the different institutional contexts in which it arises. The simplest institutional context or setting is when two persons in a contract delineating a business relationship agree to settle any disputes that may arise under the contract by resort to arbitration before named arbitrators or persons to be named at the time of the dispute. A second type of arbitration arises within the context of a particular trade association or exchange. The third setting for commercial arbitration is found in administrative groups, such as the American Arbitration Association, which provide rules, facilities, and arbitrators for any persons desiring to settle disputes by arbitration. The article then distinguishes between those factors that can be said to produce a need for arbitration machinery in commercial groups and those factors that merely make it desirable.