Practical considerations for choosing between ad hoc and administered arbitrations

Although there may now be a general awareness of arbitration as a form of alternative dispute resolution, it has been frequently observed in practice that many parties and non-arbitration lawyers do not fully appreciate the differences between an ad hoc arbitration and an administered (or institutional) arbitration. The importance of choosing the type of arbitration cannot be overstated, as it has considerable ramifications for various aspects of the arbitral procedure.

As its name suggests, an administered arbitration is an arbitration administered by an arbitral institution. This means that, prior to the constitution of an arbitral tribunal, the institution will guide the parties in moving the arbitration forward. This is typically done by way of issuing letters to stipulate the next step to take under the applicable rules, such as setting a deadline for the respondent to file its Answer to the Notice of Arbitration, or appointing an arbitrator on behalf of a party, or the parties, if there is a failure to do so. An administered arbitration, therefore, may be desirable for parties who are not familiar with the process of arbitration and wish to submit their arbitration to an institution to be carried out in an expeditious manner.

To ensure an institution’s jurisdiction over the case, a clause should clearly indicate that a particular institution is to administer the arbitration pursuant to its rules. For example, the HKIAC model clause, which states “arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted”, shows an intent that the HKIAC will act as the administering body.

James Ng is a counsel to the Hong Kong International Arbitration Centre