Negotiation and mediation seek agreement between the parties. Arbitration produces a binding decision through a private adjudicative process. Litigation produces a judicial decision through the courts.
Comparison
Negotiation: direct settlement discussions. Mediation: a neutral facilitator helps the parties seek voluntary settlement. Arbitration: an arbitrator or tribunal decides the dispute. Litigation: a court decides the dispute.
The right choice depends on contract terms, urgency, confidentiality, enforceability, cost, relationship and need for interim protection.