What type of legal resolution involves an impartial third party making a decision?

Arbitration is a process in which an impartial third party, known as an arbitrator, makes a binding decision to resolve a dispute between two or more parties. This method is often chosen because it is typically faster, less formal, and less expensive than traditional litigation. In arbitration, both sides present their case and evidence to the arbitrator, who then deliberates and issues a decision that both parties agree to abide by.

Mediation, on the other hand, involves a mediator who helps facilitate a discussion between parties, encouraging them to reach a mutually acceptable agreement; however, the mediator does not make a binding decision. Negotiation is a direct discussion between parties aimed at reaching a consensus, which does not involve a third party at all. Litigation refers to taking a dispute to court, where a judge or jury makes a decision; this process can be lengthy and adversarial compared to arbitration. Thus, the key distinction in arbitration is the binding nature of the arbitrator's decision, setting it apart from the other dispute resolution methods listed.