Final answer:
Arbitration is a method of dispute settlement where an impartial third party, the arbitrator, makes a binding decision to resolve a dispute. It is recognized for its efficiency and cost-effectiveness compared to court litigation and is utilized in both domestic and international disputes, including those handled by organizations like the WTO.
Step-by-step explanation:
Arbitration is a popular form of dispute settlement that involves the use of an arbitrator—an independent and impartial third-party—to make a binding decision to resolve a dispute between parties. The process is often chosen for being more efficient, less formal, and less costly than litigation in court. In international contexts, organizations like the World Trade Organization (WTO) handle arbitration to maintain the stability and predictability of the global economy by enforcing rules-based settlement systems. Notably, arbitration contributes to the rule of law and can serve as a critical mechanism for managing trade relations and conflicts between different parties.
In domestic contexts, such as federalism, courts, including supreme courts, commonly use arbitration to resolve disputes between government levels or departments. Thus, the role of arbitration extends across various fields including agriculture, intellectual property, and the environment, reflecting its versatility and importance as a means of settlement in both legal and political realms.