Which conflict resolution method involves both parties agreeing to a third party’s decision?

The correct answer is Arbitration because it is an alternative dispute resolution method where an independent third party evaluates the arguments and issues a binding decision that both sides must accept.

• Step 1 (Understanding Arbitration): Unlike informal negotiations, arbitration acts as a private, out-of-court hearing. The neutral third party (the arbitrator) serves as a private judge. Before starting, the opposing parties agree that the arbitrator's final ruling (called an award) will be final and legally enforceable.


• Incorrect Options:
  
  
  
  • Mediation is incorrect because a mediator is a neutral facilitator who helps the parties communicate and design their own voluntary agreement; they do not possess the authority to make a decision for them.
  
  
  • Conciliation is incorrect because it is an informal process where a third party helps lower tensions and improve communication, but the parties retain full control over whether or not to settle.
  
  
  • Litigation is incorrect because litigation takes place inside a formal, public court system under a state or federal judge, rather than through an agreed-upon alternative third party.