In negotiation, two or more parties discuss directly their conflict and try to resolve it. There are no third-parties involved.
In a mediation, the parties in conflict ask a third-party (the mediator) to try to help them resolve their conflict. The mediator is a neutral and does not decide what is "fair" or "right." Rather, the mediator's role is to moderate and guide the process in an attempt to bring the parties together by defining issues and eliminating obstacles to communication. Although a mediator may point out to the parties potential strengths or weaknesses in their positions in an effort to help facilitate resolution, the decision making power remains always with the parties to the conflict.
In an arbitration, the parties to the conflict have agreed that a third-party (the arbitrator) will hear the evidence presented by each of the parties and make a decision. The arbitrator's decision can either be binding on the parties or non-binding depending on the terms of the parties' arbitration agreement.
Litigation is the term used to describe the filing of a lawsuit in court and the process that follows the filing of the lawsuit. Most commonly in litigation involving workplace disputes, issues of law are decided by a judge and issues of fact are decided by a jury.