What is the process of resolving disputes between a buyer and supplier through a neutral third party called?

The process of resolving disputes between a buyer and supplier through a neutral third party is known as arbitration. In this context, arbitration involves both parties agreeing to submit their conflict to an impartial third party, known as an arbitrator, who listens to the arguments and evidence from both sides and then makes a binding decision. This method is often preferred because it can be more straightforward, quicker, and less costly than going through formal legal channels.

Arbitration allows for a private resolution to disputes, which is particularly beneficial in commercial relationships as it keeps sensitive information out of the public eye. The arbitrator's ruling is typically final and enforceable, providing a resolution that both parties are legally bound to follow. This mechanism helps maintain business relationships by avoiding the adversarial nature of litigation, where public court proceedings may escalate tensions.