The Arbitral Institutions - Chapter 9 - The Dark Side of Arbitration
Originally from The Dark Side of Arbitration
I. Administered Arbitration versus Ad Hoc Arbitration
When an arbitral institution administers arbitrations, its role in the course of the proceedings is very important, although it will vary considerably from one institution to the other. In spite of these differences, my personal experience has been, however, that they generally fulfill their role in administered arbitration well. And yet, there is room for improvement, as I will discuss below. There are, indeed, light and shadow in the way the arbitral institutions perform their role.
I should say at the outset that I firmly believe that administered arbitration has many advantages over ad hoc arbitration. Without entering into too much detail, from a practical viewpoint, the benefits of an arbitral institution become very clear if one has been involved in ad hoc arbitrations, in which the much-vaunted advantages – such as greater flexibility, lower costs or greater confidentiality – often do not materialize, and are offset by the fact that there is no disciplined framework or predictability on such important aspects as: (a) the level of the arbitrators’ fees; (b) some measure of control over the independence and impartiality of the arbitrators; and (c) the duration of the proceedings. The parties to ad hoc arbitrations also do not receive any assistance, for example, with regard to the constitution of the arbitral tribunal. In deciding between administered and ad hoc arbitration, it is enough to consider that in ad hoc arbitration, where there is often no specified appointing authority, the respondent can stall the proceedings by simply refusing or delaying the appointment of its arbitrator.