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The difference between Ad Hoc arbitration and Institutional Arbitration
Alternative Dispute Resolution (ADR) is a category of methods to resolve disputes alternative to court litigation which is often long and expensive. ADR comprises methods such as mediation, arbitration, negotiation. Except for negotiation, all the other ADR methods require the involvement of a third person that usually is independent of the parties. The third person can facilitate discussions between the parties in reaching a settlement agreement as a mediator or determine the dispute with his decision as an arbitrator.
Arbitration is an ADR method closer to a court proceeding, which is more structured than other ADR methods but simultaneously offers great flexibility. The arbitrator, once appointed, will listen to parties’ positions, consider the evidence and finally render a binding decision called “arbitral award” that is binding for the disputing parties.
There are two types of arbitration – institutional arbitration and ad hoc arbitration. Depending on the parties involved and the matter in dispute, it is possible to determine which one represents the best option.
What is an Ad Hoc arbitration?
An Ad hoc arbitration is a type of arbitration proceeding not administered by an arbitral institution such as the Thailand Arbitration Center (THAC). The disputing parties are free to determine all aspects of the arbitration, including the number of arbitrators, their qualifications and how they have to be appointed, the law applicable to the proceeding and the matter in dispute and the seat of the arbitration.
The main benefit of an ad hoc arbitration is the flexibility, disputing parties have control over the time of the proceeding, costs and all the other aspects. In an ad hoc arbitration, parties could save all costs related to the administration of the proceeding that has to be paid to the arbitration center. Besides costs with an ad hoc arbitration, it is time-saving, and disputing parties can schedule all the different phases of the proceeding according to their needs. Alternatively, they can adopt rules to regulate those phases such as the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules.However, this type of arbitration requires that disputing parties have knowledge of arbitration and how the proceeding has to be conducted otherwise all the benefits that ad hoc arbitration can grant could be wasted.
What is Institutional arbitration?
Institutional arbitration is a type of arbitration proceeding which is administered by an arbitral institution such as the Thailand Arbitration Center (THAC). Institutions providing alternative dispute resolution services (ADR) have procedures to be followed and usually follow their own rules for mediation and arbitration proceedings. Moreover, arbitration centers often provide a model clause for mediation or arbitration, that can be used by disputing parties within their contract. This type of clause is a useful tool to determine before a dispute arises which procedure parties will follow to resolve it.
The choice of institutional arbitration is ideal for disputing parties that do not want to waste time in determining all the aspects of the arbitration proceeding. Arbitration centers provide rules, venues for hearings, experienced administrative staff and a panel of arbitrators within which is possible to select the most suitable arbitrator. Due to their experienced administrative staff, centers could support and guide disputing parties through the proceeding. Moreover, the panel of arbitrators provided by the arbitral institution allows parties to have a wider range of choices and easily identify the most suitable arbitrators for their dispute. Lastly, awards rendered under an institutional arbitration are usually scrutinized by the center, this prevents possible formal mistakes.
Which one is more suitable for you?
Depending on the parties’ needs, it is possible to choose the most suitable arbitration proceeding. With the parties’ agreement, it is always possible to move from an institutional to an ad hoc arbitration and vice-versa. Disputing parties who want to have the broadest control over the proceeding and all its aspects should opt for an ad hoc arbitration. However, due to different aspects on which parties should agree, this is not the most suitable solution when parties are not cooperative. Moreover, ad hoc arbitrations require experienced arbitrators that are entirely responsible for the proceeding and its administration because no arbitral institution is doing so.
Institutional arbitration has additional costs constituted by the administrative fees for the arbitral institution. However, these additional costs are compensated by the proceedings’ efficiency granted by the administration of an arbitral institution. Moreover, arbitration centers offer suitable venues with all the necessary equipment to ensure smooth hearings. Despite opting for an ad hoc arbitration it is always possible to rely on the arbitral institution rules or the list of arbitrators provided by a center. Arbitral institutions such as THAC, build confidence in arbitration proceedings providing high-quality services.
About THAC
The Thailand Arbitration Center (THAC) is a leading provider for alternative dispute resolution services including ODR. THAC could provide a list of experienced neutrals for both mediation and arbitration, for domestic and international disputes. The Thailand Arbitration Center is located in the heart of Bangkok, one of the most international and vibrant cities in South-East Asia. The THAC is easily accessible with its convenient locale in the vicinity of international airports. It offers high standard ADR services, affordable administration fees and state-of-the-art facilities for in-person and remote hearings. For further information, please feel free to contact us at [email protected] or +66 (0)2018 1615. THAC is looking forward to helping you.About THAC
