Arbitration a form of alternative dispute resolution, is a way to resolve disputes outside the courts. The dispute will be decided by one or more persons, which renders the “arbitration award”. This award is legally binding on both sides and enforceable in the courts.
Arbitration is most commonly used in the resolution of commercial disputes and is distinct from mediation and conciliation, both of which are common in the settlement of labour disputes between management and labour unions. In mediation, the parties resort to a third party for recommendations towards settling the dispute or to help them to reach a compromise.