When two parties to a cross-border contract find themselves in dispute, one of the first strategic decisions often made years earlier, at the drafting stage, is whether an arbitrator will be appointed on an ad hoc basis or through an established institution’s panel. The choice shapes not only who sits on the tribunal but how quickly a case moves, what it costs and how enforceable the eventual award proves to be.
Understanding Ad Hoc Arbitration
Ad hoc arbitration is exactly what it sounds like: the parties agree on a set of procedural rules. Ad hoc arbitration places procedural control in the hands of the parties rather than in the hands of an arbitral institution. Instead of relying on an administering body, the parties determine the procedural framework, appoint the tribunal and agree on the mechanics of the proceedings, most commonly by adopting the UNCITRAL Arbitration Rules. Those Rules provide a comprehensive procedural structure while preserving the flexibility that distinguishes ad hoc arbitration from institutional proceedings. If the parties are unable to agree on the appointment of an arbitrator or other procedural matters, an agreed appointing authority such as the Secretary-General of the Permanent Court of Arbitration or another designated institution may intervene solely for those limited purposes without transforming the arbitration into an institutional one. This combination of party autonomy, procedural flexibility and the ability to appoint arbitrators with highly specialized industry expertise makes ad hoc arbitration particularly attractive for sophisticated commercial parties seeking a tailored dispute resolution process while avoiding the additional administrative costs associated with institutional arbitration.
Understanding Institutional Arbitration
Institutional or panel-based appointment works rather differently. Institutional arbitration offers a structured and professionally administered framework in which an arbitral institution assumes responsibility for the procedural administration of the case while leaving the determination of the dispute entirely to the tribunal. Institutions such as the ICC, LCIA, SIAC, HKIAC, MCIA and ICDR administer proceedings under their respective arbitration rules, providing established mechanisms for the appointment and replacement of arbitrators, determining challenges to an arbitrator’s independence or impartiality, fixing and collecting advances on costs, monitoring procedural timetables and facilitating expedited, emergency, consolidation and joinder procedures where their rules permit. Certain institutions, most notably the ICC, also scrutinise draft awards before they are issued to reduce procedural defects and enhance enforceability without interfering with the tribunal’s decision on the merits. Although institutional arbitration generally involves additional administrative fees, many commercial parties regard these costs as justified by the procedural certainty, administrative support and reduced risk of delays or deadlocks that institutional oversight provides, particularly in high-value, multi-party or technically complex international disputes.
Matching the Model to the Sector
The right choice tends to track the nature of the dispute itself, and an experienced sole arbitrator and a member of an arbitral tribunal will generally tailor the recommendation to the sector involved. In shipping and maritime dispute arbitrator, ad hoc arbitration under bodies such as the LMAA has long been the market norm, reflecting a tightly-knit community of specialist arbitrators who need little institutional scaffolding to function efficiently. By contrast, energy and oil & gas dispute arbitrator often gravitate toward institutional administration, given the scale of the sums at stake and the value of an institution’s scrutiny function on a multi-year, high-value award.
Investment treaty and sovereign dispute arbitrator sit at an interesting intersection: many such disputes are conducted under ICSID’s institutional framework, while others, particularly ad hoc bilateral investment treaty claims, proceed under UNCITRAL rules with the Permanent Court of Arbitration acting as registry rather than administering institution. Meanwhile, construction and infrastructure dispute arbitrator frequently favour institutional rules such as those of the ICC, given the multi-party, multi-contract structure typical of large FIDIC-based projects, where an institution’s consolidation and joinder provisions can prove invaluable.
Weighing the Right Fit
There is no universally superior model but only a better or worse fit for the dispute at hand. Parties negotiating a dispute resolution clause should weigh the sophistication of their counterparty, the value and complexity of the anticipated dispute, the enforceability regime of the likely seat and not least, whether they want an institution’s brand and procedural machinery standing behind the eventual award or whether they would rather retain full control and full responsibility for the process themselves.
The Constant Amid Different Forums
An experienced arbitrator, appointed either directly by the parties in an ad hoc proceeding or nominated through an institutional panel, brings the same core qualities to the table in either forum: independence, sector expertise and procedural judgment honed across jurisdictions. What changes is the scaffolding around that appointment, not the substance of the adjudication itself. For parties drafting new contracts or facing an emerging dispute, the wisest first step is often to ask which model their counterparty, their sector and their seat of arbitration are already accustomed to and to build the clause or the appointment strategy around that answer.
Mr Harshavardhan Sancheti welcomes appointment on either footing, ad hoc or institutional, and is presently empanelled with a number of arbitral institutions across several jurisdictions. Where parties wish to appoint him in a dispute seated before an institution with which he does not yet hold empanelment, he will gladly seek empanelment with that institution, so that the parties’ choice of arbitrator is never constrained by the forum in which their dispute happens to arise.
