International arbitration: Which institution?

This QuickGuide was last updated in May 2024.

Most international arbitration users favour institutional rather than ad hoc arbitration. However, while there are several institutions to choose from, there is little guidance available on the selection process itself. 

This Quickguide covers:

• the differences between institutional and ad hoc arbitration, and why most parties favour institutional arbitration; and
• the key factors to consider when choosing an arbitral institution.

Institutional vs ad hoc arbitration

Broadly speaking, the two forms of arbitration are institutional arbitration and ad hoc arbitration.

Institutional arbitration

Contracting parties that choose institutional arbitration agree to adopt the procedural rules of a particular institution and to have that institution administer and supervise the conduct of any arbitration that is commenced under the arbitration agreement. Specifically, this involves the institution (under its particular rules) administering the appointment of arbitrators (confirmation, default appointment, challenges, etc); determining the fees payable to the arbitrator (often by reference to a fixed methodology set out in the institution's rules); overseeing the taking of deposits and the making of payments to arbitrators; assisting in logistics for hearings (hearing rooms, transcript services, etc); and sometimes even scrutinising draft awards to ensure their enforceability.

Ad hoc arbitration

Ad hoc arbitration, on the other hand, is arbitration which the parties manage themselves. It is conducted under rules adopted for the purpose of the specific arbitration, without the involvement of any arbitral institution. The parties can draw up the arbitral rules themselves; leave the rules to the discretion of the arbitrators; or, as is more common, adopt rules specially written for ad hoc arbitration, such as the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules.¹ They then proceed to conduct the arbitration directly in conjunction with the arbitrator. In other words, the appointment of arbitrators and associated issues are managed by the parties, arbitrators' fees are negotiated directly with the arbitrator and paid directly by the parties, parties must arrange all logistics for the hearing, and there is no supervision of awards. 

Why institutional arbitration is often favoured

A survey of international arbitration users in 2015 found that 79 per cent of the arbitrations they were involved in during the previous five years (2010-2015) were institutional arbitrations.² This trend of favouring institutional arbitration over ad hoc arbitration has continued in recent years. 

Institutional arbitration is preferred for several reasons. An institution can lend political or moral weight to awards. More practically, institutional rules are designed to regulate the proceedings comprehensively from beginning to end, so the institutions are generally better equipped to handle any contingencies that arise, even if (as sometimes happens) a party fails or refuses to co-operate. By incorporating an institution's rules into the contract, contracting parties also avoid the time and expense of drafting a suitable ad hoc clause.

As noted above, the institution will also assume administrative responsibility for the arbitration and take care of fundamental aspects of the arbitration procedure. The fees and expenses of the arbitration are, with varying degrees of certainty, regulated, and some arbitral institutions independently vet awards to ensure enforceability. 

An ad hoc arbitration lacks the "support net" that an institution can provide. It relies on a spirit of co-operation between the parties, which is usually lacking once the dispute has arisen. The potential stumbling blocks of arbitration more generally, such as the ability to delay proceedings, are more likely to arise in an ad hoc arbitration.

Having said that, the additional layer of bureaucracy imposed by institutional arbitration may cause delay and, inevitably, additional fees are payable. Although the arbitrators' fees are reduced because they have less administration to do, the institution's fees can add a significant amount to the overall costs of the arbitration. This is particularly so where large amounts are in dispute and the fees are calculated by reference to the value of the claims (see below). Users of ad hoc arbitration also value the procedural flexibility it offers, which they feel enhances party autonomy compared with institutional arbitration.³ Ad hoc arbitration is favoured in certain sectors, e.g. the shipping and commodities sectors.

The major arbitral institutions

There are many institutions to choose from, however according to the 2021 International Arbitration Survey: Adapting Arbitration to a Changing World,⁴ the five most preferred institutions were: 

• the International Court of Arbitration at the International Chamber of Commerce (ICC);
• the Singapore International Arbitration Centre (SIAC);
• the Hong Kong International Arbitration Centre (HKIAC);
• the London Court of International Arbitration (LCIA); and
• the China International Economic and Trade Arbitration Commission (CIETAC).

Certain institutions with less of a global presence are more popular in the regions where they are based. For example, the Dubai International Arbitration Centre (DIAC) is popular in the Middle East, whereas Australian parties often prefer the Australian Centre for International Commercial Arbitration (ACICA).

A number of specialist institutions handle disputes in particular areas and industries. Examples include:

• the Panel of Recognised International Market Experts in Finance (P.R.I.M.E. Finance), an institution offering mediation, arbitration and other dispute resolution services to the finance sector;
• the World Intellectual Property Organization (WIPO) Arbitration and Mediation Center, which caters for intellectual property and technology disputes;
• the Court of Arbitration for Sport (CAS), which administers sports-related arbitrations; and
• the Chambre Arbitrale Maritime de Paris, which administers and supervises maritime arbitrations.

Generally, these institutions publish rules tailored to the types of disputes they deal with, and maintain lists of arbitrators who specialise in those types of disputes. Most of the major arbitral institutions (like the ICC and LCIA) do not specialise in this way: the argument is that there is no need for the institution to be specialised as long as the selected arbitrator is a specialist, or is permitted by the institution's rules to appoint experts and/or rely on expert evidence from party-appointed experts. Nevertheless, a party may feel more comfortable dealing with an institution that specialises in its field.

Key factors to consider in choosing an arbitral institution

Having decided to select institutional arbitration, the first question in a party's mind is "which institution?" 

As a general rule, newly formed institutions or institutions without a proven track record should be avoided. That aside, there is no magic formula for choosing between them. Increasingly, institutions and institutional rules are offering similar processes with little to differentiate them. For example the widespread introduction of mechanisms such as summary dismissal and fast-track arbitrations, as well as the express provision for virtual or hybrid hearings. Given this similarity, subjective factors play an important role when parties are deciding which institution to use: the institution's reputation, parties' past experience with an institution, the depth and breadth of arbitrators, the quality and consistency of the institution's staff and costs, with some parties willing to consider lesser known institutions for a more competitive price.⁵

Another key consideration for parties is the seat of arbitration. Choice of seat is generally seen as more important than choice of institution, because it will likely determine the procedural law of the arbitration, the courts responsible for applying the procedural law, and the "nationality" of the award for enforcement purposes. A reputable institution based in the parties' chosen seat will often be viewed favourably for its perceived association with and knowledge of how things work in that seat, as well as for its geographic proximity. That said, there is nothing stopping parties from choosing an institution based in a jurisdiction other than the arbitral seat and the governing law (it is sensible to align the governing law and the seat). It is important to note that where parties fail to select a seat of arbitration, their chosen institutional rules may dictate the seat. For example, the LCIA Rules provide that the default arbitral seat in the absence of agreement between the parties is London.

The above considerations are important, but are often personal to the parties involved. However, some clear objective differences exist between the various institutions and their rules which parties can consider. See our comparison table of the leading arbitral institutions below. 

It is important to recognise that institutional arbitration rules provide only a framework for the procedure of the arbitration. The way in which the arbitration is conducted will largely be determined by the specific approach of the arbitrators. Among other things, their degree of experience in international arbitration, legal background and training, and their views on the legal issues to be determined in the arbitration will influence their approach. Therefore when selecting an arbitrator, a party should consider carefully the approach it wants the tribunal to take. Note that the institutional rules may impose limits on the parties' choice of arbitrator, including in respect of their nationality. In this regard, most major institutional rules provide that a sole arbitrator or chairperson must not be the same nationality as one of the parties, unless the parties agree otherwise or other circumstances apply (whereas the SIAC Rules for example are silent on arbitrator nationality).

Level of institutional involvement 

Arbitral institutions have varying levels of involvement in managing and administering arbitrations. Institutions such as the HKIAC promote their "light touch" approach with rules that emphasise party autonomy while entrusting arbitrators with the primary decision-making power. Other institutions, such as the ICC, are known for more intensive involvement in arbitrations.

We can observe these two contrasting approaches in terms of the scrutiny of arbitral awards. Some institutions including the ICC and SIAC engage in the mandatory scrutiny and approval of draft awards of the tribunal. The ICC Court performs the scrutiny process and may lay down modifications as to the form of the award and, without affecting the tribunal's freedom of decision, may also draw the tribunal's attention to points of substance. The idea is to prevent the award from suffering defects in form or substance that could give rise to difficulties at the enforcement stage. 

Many other institutions, such as the HKIAC and the LCIA, neither scrutinise nor approve the award: they leave it to the tribunal to render a valid award. This reflects the fact that some parties value the scrutiny process more than others: some consider the additional quality assurance to be a benefit, while others see it as imposing unnecessary delay and expense.

Fees

Perhaps one of the most important distinguishing features of the various institutions is the methodology used to calculate arbitrators' fees and administrative fees and, ultimately, the typical costs of an arbitration administered by them.

Many institutions (e.g. the ICC and SIAC) calculate both their administrative fees and their arbitrators' fees on an ad valorem basis; that is, by reference to the amount in dispute. Others, like the LCIA, calculate administrative and arbitrators' fees based on time spent and capped hourly rates. Note, however, that time spent may still be factored into an ad valorem system by fixing costs within minimum and maximum limits. Similarly, the claim value can be relevant in an hourly rate system, as the circumstances of the case are often factored in when determining the maximum hourly rate. 

Those institutions charging on an ad valorem basis provide a cost calculator on their website to give parties an insight into the likely cost of arbitration. Where institutions charge on the basis of time spent and hourly rates, parties must rely on data produced by the institution itself to obtain such an insight. Increasingly, institutions are publishing data on costs and duration of arbitration by reference to value of the claim. However, the different methodologies used can make comparisons difficult. 

Privacy & confidentiality

Confidentiality of proceedings is one of the key advantages of arbitration. The seat of the arbitration often determines the level of privacy and confidentiality provided and, where confidentiality is paramount, the parties should cater for it in their arbitration agreement. That said, the institution's approach to confidentiality may also be a factor when choosing the arbitral institution; not all institutions provide for it as a default rule.

The LCIA Rules, for example, have strict confidentiality obligations, which apply to the parties, the arbitrators and the LCIA itself. The LCIA does not publish awards, or parts of awards, even in redacted form.

The ICC Rules, on the other hand, do not automatically oblige parties to keep awards, materials and documents confidential, but simply empower the tribunal, on the request of a party, to make orders concerning the confidentiality of proceedings or of any other matters in connection with the arbitration. Further, the rules do not expressly prohibit publication of awards, and the ICC regularly publishes anonymised excerpts from awards.⁶ The ICC has adopted an opt-out approach to publication of its awards: from 1 January 2019, unredacted awards may be published within two years of notification, unless a party objects or requests redaction.⁷

Information security is becoming more important to parties and tribunals alike and the 2024 update to the HKIAC Rules introduced requirements that parties and tribunals consider information security when adopting procedures for the conduct of the arbitration. 

Expedited arbitration and summary dismissal 

A simplified "fast track" arbitration procedure for claims under a certain value has been a key focus for users of arbitration for many years.  Most institutions provide for expedited arbitration, which can be on a documents-only basis and involves a sole arbitrator; however this is typically only where the dispute is below a certain threshold. Those thresholds are gradually increasing as the institutions update their rules. For example, under the SIAC Rules, the expedited procedure can be applied for where the aggregate amount in dispute does not exceed SG$ 6 million (previously SG$ 5 million when the 2016 Rules were introduced), or the parties agree to use the procedure, or in cases of exceptional urgency. The ICC expedited procedure automatically applies to ICC arbitrations where the amounts in dispute are below US$ 2 million (or US$ 3 million where the arbitration agreement was concluded on or after 1 January 2021). Parties can choose to use the procedure for higher value cases. Contracting parties may want the flexibility a fast-track procedure can offer. The Stockholm Chamber of Commerce (SCC) has separate expedited arbitration rules (2023), which the parties can agree to use, and there is no threshold amount. 

One criticism of arbitration has been the inability to have a claim determined or dismissed at an early stage. However, all of the major institutional rules provide a mechanism for summary dismissal, early determination or otherwise (in stark contrast to, for example, the UNCITRAL Rules) either by way of an explicit procedure, general powers of the tribunal, or a combination of the two. For example, the HKIAC Rules provide for express powers of the tribunal to determine preliminary issues (introduced in 2024) in addition to an early determination procedure. 

Interim measures and emergency arbitrators

While the power of the tribunal to grant interim measures is a consistent feature across most major institutional rules, the scope of that power varies, as does its interplay with the power of the national courts to order such measures. 

It is also commonplace for institutional rules to provide for the appointment of an emergency arbitrator and/or the expedited formation of the tribunal to grant interim measures. The scope of the powers of an emergency arbitrator will depend on the particular rules, as well the time frame in which they are expected to make their decision. For example, under the CIETAC Rules and ICC Rules, the arbitrator's decision must be made within 15 days from the date of acceptance of the appointment in the former case and the transmission of the file to the emergency arbitrator in the latter case. 

Comparison of major institutional rules

We compare the rules of the five most preferred arbitral institutions according to the 2021 International Arbitration Survey: Adapting Arbitration to a Changing World ⁹ with respect to some of the key factors that parties should consider when choosing an institution.

 

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1. The UNCITRAL Rules (as revised in 2010, 2013 and 2021). Please note that UNCITRAL is not an arbitral institution and does not administer arbitrations.
2. 2015 International Arbitration Survey: Improvements and Innovations in International Arbitration by the School of International Arbitration at Queen Mary University of London (QMUL).
3. According to the 2021 QMUL International Arbitration Survey: Adapting Arbitration to a Changing World.
4. Ibid.
5. Ibid.
6. The Internal Rules of the International Court of Arbitration empower the President or Secretary General of the Court to authorise researchers to acquaint themselves with awards. The researchers must undertake to respect confidentiality and to refrain from publishing anything based upon the award without having previously submitted the text for approval to the Secretary General of the Court.
7. Paragraphs 56-64 of the ICC's updated Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration.
8. See 2015 QMUL International Arbitration Survey: Improvements and Innovations in International Arbitration: 92 per cent of respondents were in favour of the adoption of a simplified "fast track" arbitration procedure for claims under a certain value. The 2018 QMUL International Arbitration Survey: The Evolution of International Arbitration, also reflected this preference, with increased expedited procedures for claims regarded as one the key improvements that would lead to greater use of international arbitration across all industries and sectors. In the 2021 QMUL International Arbitration Survey: Adapting Arbitration to a Changing World, 'provision of expedited procedures' was listed as a key factor that would make other institutions or rules attractive to users.