What does arbitration refer to in legal terms?

Arbitration refers to the process or act of resolving a dispute outside of the traditional court system. In this method, the parties involved in a dispute agree to submit their conflict to one or more arbitrators, who are neutral third parties. These arbitrators listen to both sides of the argument and then make a binding decision, which the parties must adhere to. This form of dispute resolution is often favored because it can be more efficient and less formal than litigation, allowing for a quicker resolution to disagreements.

Understanding arbitration is essential, as it provides an alternative to litigation that can help reduce court caseloads and often offers a level of confidentiality that public trials cannot. It is also a mechanism commonly used in contracts and labor disputes, making it a critical aspect of legal frameworks in various contexts. The other options describe different types of dispute resolution processes or regulatory matters, but they do not encompass the formal arbitration process as defined in legal terminology.