Institutional vs. Ad Hoc
The distinction between institutional and ad hoc arbitration is fundamental. Arbitration is either conducted under the auspices of an arbitral institution or it is ad hoc (i.e. without the involvement of such an institution).
To appreciate the difference it is useful to look at the relationship between the state and arbitration. The following aspects can be distinguished:
- States provide legal rules for arbitration, usually allowing for a considerable degree of party autonomy;
- States provide assistance with respect to the constitution of the arbitral tribunal through the courts;
- State courts usually provide other types of assistance, e.g. for the collection of evidence;
- State legislation provides for a minimum amount of control (i.e. procedure to challenge an award); and
- State monopoly of coercive force benefits awards, since awards can be enforced by the state courts.
Arbitral institutions play a role with respect to the first and second aspect.
Pure ad hoc is rarely advisable, in particular in an international context. If parties chose ad hoc, they may be well advised in many instances to opt for the UNCITRAL Rules.