What defines ‘ad hoc’ arbitration, and how does it differ from more typical varieties of arbitration? Ad hoc arbitration is a form of arbitration in which the parties and the arbitrator mutually decide on the rules and procedures of the arbitration without the involvement of an arbitral institution. It allows parties to conduct the arbitration in their own way, giving them greater flexibility and independence but less assistance. By contrast, institutional arbitration is where the parties designate an institution (such as the ICC or LCIA) to handle the arbitration. An institution will usually help the parties in their arbitration, from appointing an arbitrator to establishing procedural rules and enforcing the final award as provided in the arbitration agreement. Contracting parties may find the notion of adopting their own rules and managing disputes enticing. However, there are many risks associated with this. In terms of those risks, how does an absence of oversight from an arbitral institution affect the dispute resolution process? Ad hoc arbitration can provide parties with more leeway in making their own decisions. Moving away from the norms of highly recognised institutions has its risks. Ad hoc arbitration strongly depends on the parties’ willingness to co-operate. If one party attempts to hinder the procedures (e.g. fails to appoint an arbitrator or challenges the independence or impartiality of an arbitrator), the stalemate position normally demands the involvement of a state court. As a result, the efficiency of ad hoc arbitration is heavily reliant on ‘an appropriate judicial system at the place of arbitration’ which offers sufficient and prompt support if required. 96 LAWYERMONTHLY SEPTEMBER 2022 What Are the Benefits of AdHoc Arbitration? Thought Leader While most arbitrations are handled by an institution with its own set of rules for resolving disputes, parties in some cases choose to decide these rules between themselves. There are many benefits for doing so, including greater flexibility and cost reduction, but with significant associated risks. Arbitration specialist Rishabh Jogani outlines these risks and whether ‘ad hoc’ arbitration is worth braving them.
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