What role does a neutral third-party play in arbitration?

In arbitration, a neutral third party serves a crucial role as an arbitrator who evaluates the evidence presented by both sides and then issues a binding decision that resolves the dispute. This decision, often referred to as an "award," is enforceable in a manner similar to a court judgment, meaning that the parties involved are obligated to adhere to the terms set forth by the arbitrator.

The binding nature of arbitration distinguishes it from other forms of dispute resolution, such as mediation, where the mediator facilitates discussion but has no authority to impose a decision. In contrast, the arbitrator's ruling is final and binding, providing a clear resolution to the conflict and reducing the likelihood of further litigation. This process is particularly valued for its efficiency and effectiveness in reaching a conclusion when compared to traditional court proceedings.