Final answer:
Arbitration is a dispute resolution process where an impartial arbitrator makes a binding decision to resolve a case outside of traditional courts. It ensures fairness and justice, differentiating from informal settlements, conciliation, litigation, and coercion. The process is part of the adversarial judicial system and provides an accessible and impartial avenue for justice.
Step-by-step explanation:
In the usual arbitration procedure, parties select a disinterested and informed party or parties, often referred to as the arbitrator, to serve as a referee to determine the merits of the case. The arbitrator will then make a judgment that both parties agree to honor under the law. This method is preferred when an informal approach hasn't worked. Arbitration provides a structured yet less formal setting than traditional court litigation and it often results in a final and binding decision, unless the parties stipulate otherwise.
It's important that the arbitrator is disinterested, meaning impartial, ensuring that the process is fair and just. Unlike conciliation or informal settlement, where the third party plays a more advisory role, in arbitration the third party makes a binding decision. It is also distinguished from litigation, which is a formal process carried out in courts, and from coercion, as the arbitration process is voluntary and requires consent from both parties.
Arbitration is embraced for its accessibility and impartial dispute resolution. It forms an integral part of the adversarial judicial system, where the neutral decision maker's role is critical to achieving justice, reflecting principles highlighted in both common law tradition and constitutional law.