Which of the following statements accurately describes the role of an arbitrator in legal disputes?

An arbitrator plays a crucial role in resolving legal disputes outside of traditional court settings through a process known as arbitration. The correct statement highlights that an arbitrator's decision can be overturned on appeal but only if it is shown that the arbitrator acted arbitrarily or capriciously. This means that if an arbitrator makes a decision that is unreasonable or not based on the evidence or the law, a party may seek to have that decision reviewed and potentially overturned by a court.

In arbitration, arbitrators are granted the authority to make binding decisions, unless otherwise agreed upon by the parties involved. This distinguishes arbitration from mediation, where mediators facilitate discussions and help parties reach a voluntary agreement but do not have the power to impose a decision. The focus on the potential for a court to overturn an arbitrator's decision underscores the importance of ensuring that the arbitration process is fair and that the arbitrator exercises their discretion within reasonable bounds.