Certified Fraud Examiner Practice 2026 - Free Practice Questions and Study Guide

The main purpose of arbitration in dispute resolution is to accept the decision of an impartial outsider. In this process, parties to a dispute agree to submit their issues to a neutral third party, known as an arbitrator, who listens to both sides and makes a binding decision. This process is designed to provide a more efficient, cost-effective, and faster resolution compared to traditional court litigation.

Arbitration is rooted in the principles of compromise and agreement, allowing the parties to choose their arbitrator and establish the rules for the proceedings. This flexibility enhances the likelihood of a fair outcome that is accepted by both parties, as they have consented to the arbitrator's authority.

Other choices do not align with the fundamental role of arbitration. The imposition of a penalty is more characteristic of judicial proceedings rather than arbitration, which seeks resolution rather than punishment. Seeking public opinion does not fit into arbitration, as it is a private process, contrasting with public court proceedings. Reopening legal proceedings also diverges from arbitration's purpose, as the decision made by the arbitrator is typically final and binding, closing the dispute rather than reopening it. Thus, the primary purpose of arbitration is indeed to arrive at a decision made by an impartial outsider, facilitating resolution effectively.