Parties often ask international arbitration lawyers about the role of international arbitration institutions in the conduct of an arbitration and their benefits as opposed to ad hoc arbitrations. It is important for the Parties to understand that, as international arbitrations do not enjoy the support of a judicial system (as opposed to national courts), it is necessary to provide for rules of procedure which will regulate the conduct of the Parties and aren’t provided for in the New York Convention or the domestic statutes.
While international arbitration institutions historically had very limited caseload, the number of commercial disputes submitted to an international tribunal under the aegis of leading international arbitration institutions (e.g. ICC, LCIA, CIETAC, SCC, SIAC, AAA/ICDR, HKIAC, etc) has grown exponentially over the past 20 to 30 years.
International arbitration institutions do not solve disputes and issue awards but provide procedural, administrative and logistical support to the Parties throughout the entire arbitration process, and determine the details of the framework within which the arbitration will be conducted by way of arbitration rules which a Secretariat or a Court is responsible for applying. For example, the Secretariat of the ICC Court of Arbitration is responsible for applying the ICC Arbitration Rules.
The arbitration rules promulgated by international arbitration institutions typically provide for the nomination, appointment and challenge of arbitrators, the transmission of submissions to other Parties and to the Tribunal, deadlines for submissions, hearings, interim measures, etc. The role of International arbitration institutions is crucial as they will most often hear challenge to arbitrator, establish arbitrator compensation, scrutinize the award for defects, etc.
Commercial Parties sometimes prefer not to conduct an international arbitration under the aegis of international arbitration institutions and their procedural rules and choose to rely on a national court to fulfill these functions; the arbitration is called an ad hoc arbitration.