What is the term for the settlement of disputes outside of court?

The term for the settlement of disputes outside of court is arbitration. Arbitration is a process where disputing parties agree to submit their conflict to one or more impartial third-party arbitrators, who will make a binding decision on the matter. This method is commonly used in commercial disputes and allows the parties to bypass the traditional court system, providing a more private, often faster, and potentially less expensive resolution compared to litigation.

This approach can be advantageous as arbitration can be tailored to the needs of the parties involved, allowing for more flexibility in procedures and rules compared to formal court proceedings. The decision (or award) made by the arbitrator is usually final and enforceable in a court of law, giving it the effect of a judicial decision.

In contrast, litigation refers to the process of taking disputes through the courts, which involves a more formal procedure and typically can take longer and incur higher costs for the parties involved. Mediation, while it is also an alternative to court, involves a mediator who helps the parties negotiate but does not provide a binding decision, making it different from arbitration. Thus, arbitration is specifically recognized as a structured alternative dispute resolution method, distinguishing it clearly from the other options.