There are two types of arbitration:
Ad hoc arbitration is a proceeding that is not administered by an institution such as ICC, LCIA, etc and requires the parties to make their own arrangements for number of arbitrators, appointing those arbitrators and for designation of rules, applicable law, procedures and administrative support. Provided the parties approach the arbitration in a spirit of cooperation, ad hoc proceedings can be more flexible, cheaper and faster than an administered proceeding. The absence of administrative fees alone make this a popular choice
The primary advantage of ad hoc arbitration is flexibility, which enables the parties to decide upon the dispute resolution procedure. This necessarily requires a greater degree of effort, co-operation and expertise of the parties in determination of the arbitration rules. There are various sets of rules suitable to ad hoc arbitration, of which the UNCITRAL rules are considered most suitable
Another primary advantage of ad hoc arbitration is that it is less expensive than institutional arbitration. The parties only pay fees of the arbitrators’, lawyers or representatives, and the costs incurred for conducting the arbitration i.e. expenses of the arbitrators, venue charges, etc. They do not have to pay fees to an arbitration institution which, if the amount in dispute is considerable, can be prohibitively expensive
In ad hoc arbitration, parties negotiate and settle fees with the arbitrators directly, unlike institutional arbitration wherein the parties pay arbitrators’ fees as stipulated by the institution. This allows them the opportunity of negotiating a reduction in fees..
Parties can save time to solve the dispute because they can negotiate with arbitrator to reduce some unnecessary procedures
An institutional arbitration is one in which a specialised institution intervenes and takes on the role of administering the...