Final answer:
Arbitration is the process where a neutral third party, the arbitrator, resolves disputes in a binding manner. It's a form of dispute resolution alternative to court that is seen as quicker and more cost-efficient, and it is distinct from both non-binding mediation and formal adjudication in court.
Step-by-step explanation:
The process in which a neutral party resolves a dispute between two or more parties and the resolution is binding is known as arbitration. In arbitration, the neutral third-party, called the arbitrator, hears the evidence presented by all parties and makes a decision that is usually final and binding. This method of dispute resolution is often used when other informal approaches, such as mediation (in which the parties work towards a mutual agreement with the help of a mediator, but it's not binding), have failed. If parties do not want to settle their disputes through the courts, they might opt for arbitration believing it to be a quicker, more cost-effective alternative that offers accessible and impartial dispute resolution. This is in contrast to negotiation, where parties involved engage in bargaining concerning the status quo without the presence of a binding third-party decision, and adjudication, which typically involves the legal process of a judge making a binding decision.