Arbitration is a dispute resolution process where an independent third party (arbitrator) hears both sides of a disagreement and makes a binding decision. In municipal contexts, arbitration may resolve conflicts between neighbouring municipalities over shared services, boundary disputes, or cost-sharing arrangements. Labour arbitration settles disputes between municipalities and employee unions when contract negotiations fail. Compared to court proceedings, arbitration is typically faster, less formal, and less expensive. Provincial legislation often specifies when arbitration must be used and how arbitrators are selected, ensuring fair resolution of conflicts that might otherwise escalate or stall indefinitely.