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The Tax Publishers Ad hoc Arbitration vis-a-vis Institutional Arbitration Pragya Lalwani Arbitration is one of the alternative modes of dispute resolution mechanism that provides procedural flexibility, confidentiality and saves time and money. Disputes might arise from agreements made, be it domestic, commercial or international relations. Arbitration allows even cross border disputes to be resolved through such practice. It, on the other hand reduces hardship and burden on Courts. Learned author in this article highlights aspects of both the forms of arbitration, viz. Ad hoc and Institutional. 1. Introduction No company at the time of entering into an agreement anticipates that dispute may arise in near future, however, it do arise number of times. In old times whenever a conflict occurred, people knocked the doors of Court and their claims went through the trials. Such justice system is robust but it consumes too much time and is too costly. Thus, need had been felt to offer such a mechanism which redresses the grievance of parties in minimum possible time and is less expensive. Arbitration is a form of alternative dispute resolution that allows disputes between two parties to be resolved outside of the court of law. Such a practice is flexible, speedy and less stressful for the parties to the dispute. Thus, now-a-days investors switch to alternate dispute resolution mechanism as opposed to litigations in the courtroom. What parties have to do is to state in the arbitration agreement that 'disputes between parties will be arbitrated'. Arbitration practice can be undergone in two ways, i.e., (i) Ad hoc arbitration; and (ii) institutional arbitration. Both of them have been elucidated with their pros and cons in length of this article. 2. Ad hoc Arbitration Ad hoc arbitration is a form of arbitration where parties itself determine and establish procedures for conducting arbitration. This type of arbitration is flexible in terms of adopting the procedure, appointing the arbitrators, choosing an individual for such role of arbitrator as parties only have to establish the rules, procedure and panel of arbitrators to resolve their dispute, as they deem fit. Thus, majority of people or companies prefer ad hoc arbitration over the institutional arbitration. Further, under ad hoc arbitration, no administrative fee is required to be paid to the institution as arbitration is conducted only by the appointed arbitrators or the arbitral tribunal and so only they are to be paid and not the institution. Procedures to be adopted should be with consensus of both the parties, previously agreed upon or as laid down by the arbitral tribunal, in absence of any agreement made. Although greater flexibility may lead to delayed proceedings as tribunal has to be constituted with mutual consent. Success of this kind of arbitration solely depends on the co-operation between parties and knowledge and experience of arbitrators otherwise it may result in bad awards. Even selection of unprofessional arbitrators and delayed proceedings may lead to intervention of Court and thereby litigation cost might increase. Also the cost effectiveness under this form of arbitration depends on the experience of arbitrators and understanding of arbitration procedures. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Ad hoc Arbitration vis-a-vis Institutional Arbitration

Pragya Lalwani

Arbitration is one of the alternative modes of dispute resolution mechanism that provides procedural flexibility, confidentiality and saves time and money. Disputes might arise from agreements made, be it domestic, commercial or international relations. Arbitration allows even cross border disputes to be resolved through such practice. It, on the other hand reduces hardship and burden on Courts. Learned author in this article highlights aspects of both the forms of arbitration, viz. Ad hoc and Institutional.

1. Introduction

No company at the time of entering into an agreement anticipates that dispute may arise in near future, however, it do arise number of times. In old times whenever a conflict occurred, people knocked the doors of Court and their claims went through the trials. Such justice system is robust but it consumes too much time and is too costly. Thus, need had been felt to offer such a mechanism which redresses the grievance of parties in minimum possible time and is less expensive. Arbitration is a form of alternative dispute resolution that allows disputes between two parties to be resolved outside of the court of law. Such a practice is flexible, speedy and less stressful for the parties to the dispute. Thus, now-a-days investors switch to alternate dispute resolution mechanism as opposed to litigations in the courtroom. What parties have to do is to state in the arbitration agreement that 'disputes between parties will be arbitrated'. Arbitration practice can be undergone in two ways, i.e., (i) Ad hoc arbitration; and (ii) institutional arbitration. Both of them have been elucidated with their pros and cons in length of this article.

2. Ad hoc Arbitration

Ad hoc arbitration is a form of arbitration where parties itself determine and establish procedures for conducting arbitration. This type of arbitration is flexible in terms of adopting the procedure, appointing the arbitrators, choosing an individual for such role of arbitrator as parties only have to establish the rules, procedure and panel of arbitrators to resolve their dispute, as they deem fit. Thus, majority of people or companies prefer ad hoc arbitration over the institutional arbitration.

Further, under ad hoc arbitration, no administrative fee is required to be paid to the institution as arbitration is conducted only by the appointed arbitrators or the arbitral tribunal and so only they are to be paid and not the institution. Procedures to be adopted should be with consensus of both the parties, previously agreed upon or as laid down by the arbitral tribunal, in absence of any agreement made. Although greater flexibility may lead to delayed proceedings as tribunal has to be constituted with mutual consent. Success of this kind of arbitration solely depends on the co-operation between parties and knowledge and experience of arbitrators otherwise it may result in bad awards. Even selection of unprofessional arbitrators and delayed proceedings may lead to intervention of Court and thereby litigation cost might increase. Also the cost effectiveness under this form of arbitration depends on the experience of arbitrators and understanding of arbitration procedures.