Which dispute resolution method involves a neutral outside party who reviews issues and issues a final binding settlement?

• A. Arbitration
• B. Negotiation
• C. Mediation
• D. Litigation

Answer: (D)

Arbitation involves a neutral outside party who reviews the dispute and issues a final binding decision. The key is that the arbitrator is impartial, listens to the evidence, and then delivers an award that both sides must accept and that is legally enforceable, similar to a court judgment but usually outside the public court system. This makes arbitration a private, final form of dispute resolution with limited opportunities for appeal.

Mediation, by contrast, uses a neutral mediator to help the parties negotiate a settlement, but the mediator does not issue a binding decision. Negotiation is just the parties speaking and trying to reach an agreement without a third party imposing any decision. Litigation is the formal process in court with a judge or jury deciding the outcome, and it is typically public rather than private arbitration, with decisions subject to appeal under civil procedure rules.