A lot of these tv judges (can't speak for this one specifically) are actual arbitrators. The deal that people get for being on the show is that they can avoid a costly court battle and the arbitration process is paid for by the network in exchange for the whole thing being televised. They are also contractually obligated to drop their legal claims and accept the ruling of the arbitrator (tv judge).

So even if these are hammed up and cut a certain way to make them more enticing to a tv audience, the disputes, involved parties, and rulings are actually real.