Most courts by administrative order force the parties into one form of ADR prior to a judge or tribunal hearing the issues of the case. This is most commonly done through mediation. ADR in my opinion is a win win for all involved in the process. Arbitration has benefits but not in the same way as Mediation as mediation empowers the parties to facilitate there own outcome. Whereas in Arbitration, a third party makes a decision based on the facts and evidence presented for the parties.
Arbitration is usually less expensive than litigation and has become increasingly more popular for that reason. h
However arbitration can only be mandated if its a contractual term of the original agreement.
An Arbiters ruling is binding like a judge however it will not become public record. This can be beneficial if the parties wish to keep the issues private.
Like all non mandated ADR programs, the parties can agree to do whatever they wish to do so long as they are both in agreement, the agreement is voluntary and in writing signed by both parties.
Additionally, the more cases that are resolved trough ADR, the smaller the judges case dockets, which means less work for the courts and greater efficiency of justice, so to speak.
This is a very basic review of your situation based on limited facts presented and should not be construed as legal advise.
It could be good or it could be bad. Perhaps the court feels the matter is a waste of time and wants it resolved? Perhaps there is so much merit to your case the quick way to resolve it is arbitration. And, there are lots of other possibilities, too.
It probably means nothing substantive about the case. All of the local federal and state jurisdictions have language in routine orders suggesting mediation.