The Main Institutions of International Arbitration
International arbitrations may be conducted under the administration of an institution and pursuant to its institutional arbitration rules (institutional arbitration), or they may be subject to the arbitration rules that lack the support of an arbitral institution (ad hoc arbitration). Both options present advantages and disadvantages, but on balance, the more structured and predictable approach of institutional arbitration is generally preferred.
Ad hoc versus institutional arbitration
Parties to an ad hoc arbitration are free to agree to existing ad hoc rules (e.g. the UNCITRAL Arbitration Rules) or establish their own rules of procedure and to tailor the procedure to their needs. Ad hoc arbitrations are usually less expensive than institutional proceedings, as there is no need to pay institutional fees. The main disadvantage of ad hoc arbitrations is that they could be derailed by uncooperative parties. For instance, a counterparty may refuse to appoint its own arbitrator or fail to agree with you on the selection of the arbitral seat, which can lead to a procedural deadlock.
The advantage of institutional arbitrations is that they do not depend on the parties’ cooperation to be effective. Institutional rules have been designed and refined through decades of practice to avoid procedural breakdowns when parties are unwilling to arbitrate. Therefore, when a party fails to appoint an arbitrator, the institution steps in to assist. Another advantage of institutional arbitrations is that they are administered by specialist staff in charge of all administrative matters, from collecting the arbitrators’ fees to organizing the logistics of the hearings.
The main arbitral institutions
There are many reputable institutions that parties may consider when opting for administered arbitration. Those institutions include, but are not limited to:
- International Chamber of Commerce (ICC)
- London Court of International Arbitration (LCIA)
- Permanent Court of Arbitration (PCA)
- Stockholm Chamber of Commerce Arbitration Institute (SCC)
- Swiss Chambers’ Arbitration Institution (SCAI)
- The International Centre for Dispute Resolution (ICDR), in the international branch of the American Arbitration Association (AAA)
- Singapore International Arbitration Centre (SIAC)
- Hong Kong International Arbitration Centre (HKIAC)
- China International Economic and Trade Arbitration Commission (CIETAC)
- Arbitration Center of the World Intellectual Property Organization (WIPO)
When selecting an institution, one factor to consider is whether the institution has developed rules with a specific kind of dispute in mind. For example, this is the case for WIPO with respect to intellectual property (IP) and domain name dispute.
Another factor to be considered is the geographic location of the institution with respect to the dispute. For instance, the AAA is the leading arbitral institution in the US, with considerable experience in administering US domestic arbitrations and international disputes through its ICDR body. SIAC was established in 1991 as a dispute resolution center for disputes in or around Singapore, although it has since expanded into a global forum for international disputes. HKIAC and CIETAC are more focused on Chinese-related disputes, while European parties are probably most familiar with the ICC, LCIA, SCC and SCAI rules.
Common features and key provisions of the main arbitral rules
Each institution has developed its model form of arbitration clause that may be incorporated into the main contract if the parties agree to choose that institution. Each institution also has adopted its own set of arbitral rules that will apply to the arbitrations it administers. All of these arbitral rules have similar features – from interim relief rules to fallback provisions for the appointment of missing arbitrator(s) or the selection of the arbitral seat – but significant differences still remain with respect to other crucial elements, such as confidentiality, emergency arbitrator provisions, default number of arbitrators, scrutiny of awards and fees.
Many arbitration rules impose an express duty of confidentiality on both parties and arbitrators, while the WIPO rules contain more extensive confidentiality provisions. Other institutions, such as the ICC, only provide for the privacy of the hearing and the award, absent a party’s request for an order concerning the confidentiality of the arbitral proceedings.
Most modern rules provide for emergency arbitrators to issue urgent interim relief even before the arbitral tribunal is constituted (ICC, LCIA, ICDR, WIPO, SCAI, SIAC, SCC, HKIAC and CIETAC).
Default number of arbitrators
The majority of arbitral rules provide for the appointment of a sole arbitrator, but some provide for a three-member tribunal (CIETAC), while others contain no presumption at all (SCC and HKIAC).
Specialized roster of arbitrators
Some institutions maintain a database of specialized arbitrators for certain kinds of disputes, such as IP and patent disputes (WIPO, LCIA, ICDR, SIAC and HKIAC), while others, like the ICC, do not maintain a public roster of arbitrators.
Scrutiny of awards
The ICC, SIAC, and CIETAC rules provide for the review of draft arbitral awards before they are released to the parties to ensure proper form and that the tribunal has dealt with all issues before it, but without interfering with the merits of the arbitrators’ decision or affecting the independence of the arbitral tribunal.
Most institutional rules give arbitrators discretion to decide the final allocation of arbitration costs between the parties (ICC, ICDR, SIAC, HKIAC, WIPO and SCC), while others adopt the default rule that the unsuccessful party shall bear the arbitration costs (LCIA, SCAI, PCA and CIETAC).
Arbitrators’ and administrative fees
Arbitral institutions assess fees by reference to the amount in dispute (ICC, SCAI, ICDR, SIAC, SCC, WIPO and CIETAC) or to the time spent on the case (LCIA and PCA), or they leave the parties the option to select one of these two cost regimes (HKIAC).
The choice of an arbitral institution is one of the key considerations in drafting an arbitration clause. Fortunately, there are many capable arbitral institutions throughout the world that can administer international arbitrations. If parties do not believe institutional administration is necessary, or they want a bespoke arbitration regime for the needs of a transaction, they can agree to ad hoc arbitration. Parties selecting ad hoc arbitration should, however, consider if any additional protections are needed given the lack of institution backing (e.g., designation of an appointing authority should there be a problem in selecting arbitrators).