CMA Foundation · Fundamentals of Business Laws and Business Communication · Legal Methods and Court System in India
Two Indian firms, Kaveri Traders and Narmada Exports, agree to let a neutral person hear both sides and give a decision that is binding on them. Which method of dispute resolution is this?
This is arbitration. A neutral third person hears both parties and gives a decision, called an award, that binds them. Mediation and conciliation only assist the parties in settling by themselves, and negotiation involves no third party at all.
- AMediation
- BConciliation
- CNegotiation
- DArbitrationCorrect
Explanation
In arbitration, the parties refer the dispute to a neutral arbitrator whose award is binding. In mediation and conciliation the third party only helps the parties reach their own settlement and cannot impose a decision. Negotiation involves only the parties themselves.
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