Final answer:
Arbitration is a method of resolving disputes outside of courts, where an arbitrator makes a binding decision. Designed to be more efficient than litigation, it is often chosen voluntarily or mandated by contract, and the decisions are generally final.
Step-by-step explanation:
What is Arbitration?, Arbitration is a form of alternative dispute resolution (ADR), where the parties to a dispute refer it to one or more arbitrators by whose decision (the arbitrator's order) they agree to be bound. It is a method that exists outside the courts, such as those found in the Victorian Civil and Administrative Tribunal (VCAT), and offers a less formal setting than traditional court proceedings.
Arbitration can be seen as a mid-point between negotiation and litigation, where an independent third party, the arbitrator, makes a binding decision to resolve the dispute. Often, arbitration is voluntarily chosen by the parties but sometimes it may be mandated by law or a contract clause.
Arbitration proceedings are generally private, and the arbitrator's orders are typically final and difficult to appeal. The process is intended to be faster and more cost-effective than litigation, with the parties holding the power to select specific arbitrators who have expertise in the relevant field. In the event that parties go through mediation and are unable to reach an agreement, they may then move on to arbitration, where the dispute will be finally settled.