Ad hoc arbitration may be defined by contrasting it with the notion of institutional arbitration. Ad hoc arbitrations are conducted without the benefit of an arbitral institution or institutional arbitration rules, subject only to the parties’ agreement and the applicable law. Sometimes an arbitral institution may provide certain logistical services to an ad hoc arbitration (such arbitration is often seen as an “ad hoc arbitration administrated by an arbitral institution”). For instance, an arbitration conducted under the UNCITRAL Arbitration Rules and administered by an arbitral institution is generally believed to be an ad hoc arbitration, even though it may benefit from certain logistical services from an arbitral institution, such as acting as a fund holder of the arbitrators’ fees.
An arbitral institution is an indispensable element in institutional arbitration. Arbitral institution is usually defined as a permanent organization with a set of its own arbitration rules regulating the services provided by the organization and other procedural aspects of arbitration.1
Some treaties offer a choice to the investor or to the parties to agree on an ad hoc arbitration or institutional arbitration. According to a non-exhaustive statistical portrait, more than 90% of investment protection treaties provide for access to international arbitration.2 Treaties that do not provide for institutional investor-State arbitration include those signed by Brazil, Cameroon, China, Congo, Cote d’Ivoire, Egypt, the EU, Germany, Korea, Senegal, and Switzerland.3 The most commonly used fora in the investment protection treaties as well as in the practice of investor-State arbitration is ICSID. Ad hoc arbitration comes the next.4 Other arbitral institutions5, most notably the SCC and the ICC, also have experience in investor-State arbitration. However, some of the arbitrations under the auspices of ICC (42 cases as of 2019), the SCC (112 cases as of 2019) or other arbitral institutions were conducted in accordance with the UNCITRAL Rules and therefore were essentially ad hoc arbitrations.6
Generally speaking, the main advantages of institutional arbitration include the presence of default arbitration rules, the services from a permanent organization and a higher degree of certainty in respect of the procedural aspects of the arbitration. The involvement from arbitral institutions on issues relating to the procedural aspect of the arbitration, particularly at the beginning of the arbitral process, such as appointment of arbitrators or the selection of an arbitral seat, prove to be very useful in some cases. In comparison, ad hoc arbitration is often considered more private because fewer people are involved. Ad hoc arbitration also arguably gives more flexibility to the parties as there will be no automatically applicable arbitration rules or a predetermined schedule of arbitrator and institutional fees.7
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