Qitzur Shulchan Arukh – 181:11

יא: עֲיָרוֹת שֶׁאֵין בָּהֶם חֲכָמִים הָרְאוּיִים לִהְיוֹת דַּיָּנִים, מְמַנִּים הַטּוֹבִים וְהַחֲכָמִים שֶׁבָּהֶם לְדַעַת אַנְשֵׁי הָעִיר, וְהֵם יָדוּנוּ אַף-עַל-פִּי שֶׁאֵינָם רְאוּיִים לְדַיָנִים, כְּדֵי שֶׁלֹּא יֵלְכוּ לִפְנֵי עַרְכָּאוֹת ֹשֶל גּוֹיִם. וְכֵיוָן שֶׁקִבְּלוּם עֲלֵיהֶם בְּנֵי הָעִיר, אֵין אַחֵר יָכוֹל לְפָסְלָן. וְכָל מַעֲשֵׂיהֶם יִהְיוּ לְשֵׁם-שָׁמָיִם

Cities that do not have within them sages worthy of being judges should chood the best and wisest from among them according to the knowledge of the people of the city, and they should judge even though they aren’t worthy of being judges, so that they shouldn’t go before the adjudication of the non-Jews. Since the people of the city accepted them upon themselves [as arbitrators], no one else may disqualify them. And all their actions should be for the sake of [the One in] heaven.

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