What best describes arbitration?

• A. A settlement negotiated by an outside party.
• B. A decision rendered by a judge after a trial.
• C. A form of negotiation between parties without third party involvement.
• D. A decision made by the tribunal itself.

Answer: (A)

Arbritration centers on bringing in a neutral outside party to help resolve the dispute. The defining feature is that a third, impartial person assists the involved parties to reach a settlement or, if needed, renders a binding decision. Among the options, the description of a settlement negotiated with the help of an outside party best fits this role, because it highlights the outside facilitator’s involvement in bringing about an agreement. The other options point to court trials, pure direct negotiation without any third party, or a decision by the tribunal without emphasizing the neutral facilitator’s role. In practice, arbitration outcomes are binding and rely on that outside party to guide the resolution.