Arbitration is an alternative dispute resolution mechanism in which the parties agree to submit their dispute to one or more independent arbitrators, who issue a decision (award) that is binding. This process is private, more flexible, and allows the parties to choose the arbitrators and establish certain rules of procedure.
On the other hand, the judicial process is the traditional mechanism for conflict resolution, managed by the State courts. It is public, formal and regulated by strict procedural rules, and its final result can be appealed or reviewed by higher authorities.