What is the process called where a neutral third party decides a disputed claim?

The correct answer is arbitration. This process involves a neutral third party, known as an arbitrator, who reviews the evidence and arguments presented by both parties in a dispute and makes a binding decision regarding the claim. Arbitration is often chosen because it tends to be less formal and quicker than litigation, which requires going through the court system. In many cases, the decision made by the arbitrator is final and cannot be appealed, providing a definitive resolution to the dispute.

Mediation, while also involving a neutral third party, differs significantly as it does not result in a binding decision. Instead, a mediator facilitates communication and negotiation between the parties to help them reach a mutually agreeable agreement. Litigation involves taking a case through the courts where a judge or jury decides the outcome, which can be more time-consuming and costly. Negotiation is the process of discussing terms and attempting to reach an agreement without involving third parties. Arbitration, therefore, is distinct in that it provides a decisive conclusion to a claim through the involvement of an arbitrator.