Define "arbitration" as it pertains to legal disputes.

Arbitration is a method of resolving disputes outside the traditional court system, where an impartial third party, known as an arbitrator, is appointed to hear the evidence and make a determination regarding the matter at hand. This decision is typically binding, meaning that both parties must adhere to the outcome as though it was handed down by a judge in a court. This process is often chosen for its efficiency, cost-effectiveness, and the fact that it allows the parties to have more control over the resolution of their dispute than they would in a court setting.

The nature of arbitration includes aspects such as the selection of the arbitrator by the parties, the ability to set the rules of the hearing, and the confidential nature of the proceedings, which can be advantageous for parties preferring to keep the dispute private. This binding characteristic signifies that once the arbitrator renders a decision, it can only be challenged in very limited circumstances, enhancing the finality of the resolution provided.

In contrast, other options describe different processes that do not align with the definition of arbitration. Negotiating settlements in court pertains to discussions among the parties before formal proceedings, appealing relates to seeking a higher court’s review of a decision already made, and mediation involves a facilitator helping parties reach a voluntary