Litigation involves setting up legal action to resolve a dispute. There are two levels of litigation: the arbitration process and court. Arbitration is a milder form of litigation and is less formal, since it is presided over by an arbitrator rather than a judge. Witnesses come forward and the proceedings are antagonistic, with a win-lose orientation for both parties. Decision-making is left up to the arbitrator, who is at liberty to select aspects from each side of the argument, and whose decision is final.

When labor disputes reach a certain point, an arbitrator is sometimes appointed to settle the issues and in order to prevent work disruptions or labor strikes.