Both arbitration and litigation refer to resolving a dispute.
Litigation means that the disputes are resolved through the normal court system, which starts by filing a complaint against the defendant.
Arbitraiton is a means to resolve disputes whereby the two sides select a neutral third party, known as an arbitrator, agree in advance to comply with the arbitrator's award, and then participate in a hearing at which both sides can present evidence and testimony. The arbitrator's award is usually final and binding, and courts may only re-examine if a legal error occurred in the proceeding.
