ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms
Kappa Ltd is considering negotiation, mediation and arbitration for a dispute. Which of the following is the method in which a neutral third party makes a decision that is usually binding on the parties?
Arbitration is the method where a neutral third party, the arbitrator, decides the dispute and makes an award that is usually binding on the parties. Negotiation involves no third party, and mediation only helps the parties reach their own agreement.
- ANegotiation
- BMediation
- CArbitrationCorrect
Explanation
Arbitration involves an independent arbitrator who hears both sides and issues an award that is binding and generally enforceable. Negotiation has no third party, and a mediator only facilitates agreement.
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