IS INSTITUTIONAL ARBITRATION PREFERABLE?

Arbitration can be defined as the process of dispute resolving between two or more parties as per their mutual legal rights and liabilities, instead of the court. Arbitration works as an alternative to litigation and it does not take the place of the judicial machinery in all aspects.

INTRODUCTION:

An institutional arbitration termed to be a specialized institution intervenes and takes on the role of administering the arbitration process. Under institutional arbitration, the agreement set down that in case of differences and disputes arising between the parties, they will refer to a particular institution such as:

• Indian Council of Arbitration(ICA)
• Federation of Indian Chamber of Commerce & Industry(FICCI)
• International Chamber of Commerce(ICC)
• The International Centre for Alternative Dispute Resolution(ICADR)
• World Intellectual Property Organization (WIPO)
• London Court of International Arbitration(LCIA)

All above-mentioned institutions have framed their own rules and regulations for arbitral proceedings conducted by these respective institutions. Such rules are additional provisions of the Arbitration Act in matters of procedure and other details as the Act permits. They may be applicable for domestic arbitration or for international commercial arbitration or both and the nature of the matters may be general or specific.

The apex arbitration body in India that is “the Indian Council of Arbitration” has handled the largest number of international cases in India.

The Arbitral Institutions have fixed administrative expenses, qualified arbitration panel, arbitrator’s fees, and rules governing the arbitration proceedings, etc. This helps in the smooth and orderly conduct of the proceedings. At present India has about 35 arbitral institutions.

Also, Read- Remedies Against Arbitral Award

Some of the well-known institutions which conduct institutional arbitration in India are as follows:-

Parties have to be very careful while selecting arbitral institutions. Worldwide, there are approximately 1,200 institutions are working but only a few of them are good. There are chances that the institution will be unable to serve the objectives and to deliver the same what the institution motivated the parties over ad hoc proceedings.

Also, read- Seat of Arbitration

Advantages of Institutional Arbitration:

The advantages of institutional arbitration to those who can afford it are evident. These are:-

1. Parties are benefited with pre-established procedure and rules which provides the conformity to the parties and lawyers that they will work with proper guidelines.
2. Lists of qualified arbitrators. Parties can seek advice and guidelines from internationally experienced arbitrators.
3. An established/ se0ttled format with a specific record. The merit of the settled format drafting is that institution revised them periodically
4. Assistance in disinclined parties to proceed with arbitration.
5. Supportive services and facilities to the parties for arbitration.

Disadvantages of Institutional Arbitration:

The foremost disadvantages of institutional arbitration are:

1. Fees charged by the institution for administrative work and services. Most of the time institutions charged more than the actual amount and everyone cannot afford it.
2. Bureaucracy can lead to delays in work and additional charges.
3. The parties may be required to respond within unrealistic time frames.

Now comparing the institutional arbitration to the other type of arbitration which is ad hoc arbitration.

Ad hoc arbitration refers to the arbitration where the parties are the only masters to choose the arbitrators by referring to the procedure laid down by the tribunal and not by any institution. No doubt that ad hoc arbitration is less expensive than institutional arbitration, but parties have to make their own arrangements regarding the matter of arbitration, and a layman lacks the necessary knowledge and expertise.

Secondly, in complex cases, the tribunal by itself appoints the secretary to look and research the matters in dispute. And for that party have to pay the fees of the secretary, which reflects no cost-friendly at all.

CHALLENGES

• Misconceptions regarding institutional arbitration;
• Lack of governmental support for institutional arbitration;
• Problems with delays and excessive judicial involvement in arbitration proceedings.

CONCLUSION:

There is no harm in saying that parties are their own master of arbitration in case of ad hoc arbitration. But keeping other points in mind we can say institutional arbitration is the one that provides the backbone to the parties who are not sure for their mattes. There are parties who are not sure that whether they should approach for arbitration or not, institutional arbitrations are the ray of hope for them.

Ad hoc arbitration can be preferable for smaller disputes but when it comes to the dispute of complexity and internationally, institutional arbitration is those who work smoothly and with coordination, as they hold the experience and knowledge.

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Muskan Sharma

(Xth sem) B.Com LLB

Banasthali Vidyapith