Step 1: Understanding the Concept
The question describes a method of dispute resolution that is private, informal, flexible, and an alternative to going to court. The parties agree to have their dispute decided by a neutral third party (the arbitrator), and they agree to be bound by that decision (the award). This is a form of Alternative Dispute Resolution (ADR).
Step 2: Defining the Terms
(A) Arbitration: This is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. It is private, less formal than court, and the parties choose their decision-maker. This perfectly matches the description.
(B) Plea bargaining: A process in criminal law where the prosecutor and the defendant negotiate an agreement for the defendant to plead guilty to a lesser charge in exchange for a more lenient sentence. It is not for resolving general disputes.
(C) Ombudsman: An official appointed to investigate individuals' complaints against maladministration, especially that of public authorities. They investigate and recommend, but their decisions are not typically binding like an arbitrator's.
(D) Lokayuktha: A state-level anti-corruption ombudsman in India.
Step 3: Final Answer
The private arrangement for dispute resolution described in the question is Arbitration. Therefore, option (A) is the correct answer.