By S&S Co. Advocates & Solicitors · Published 13 May 2026 · Informational content, not legal advice: see our disclaimer
Two Ways to Structure an Arbitration
When drafting an arbitration clause, parties face a foundational choice: administer the arbitration themselves under rules they design (or, more commonly, under the default procedural framework of the Arbitration and Conciliation Act, 1996 with minimal further specification): known as 'ad hoc' arbitration: or incorporate the rules and administrative support of an established arbitral institution, such as the Mumbai Centre for International Arbitration, the Delhi International Arbitration Centre, or one of the international institutions like the SIAC or ICC: known as 'institutional' arbitration.
The Case for Institutional Arbitration
Institutional arbitration offers a ready-made, tested procedural framework: the institution's rules typically address arbitrator appointment (including default mechanisms if a party fails to nominate, or the parties cannot agree), fee structures, emergency arbitrator relief, and administrative deadlines, reducing the number of contested procedural skirmishes that can otherwise consume the early months of an ad hoc arbitration. Institutions also provide case management support, which can be valuable in a complex, high-value or multi-party dispute, and their fee schedules, while an added cost, are usually known in advance, offering more cost predictability than an ad hoc tribunal's fees.
The Case for Ad Hoc Arbitration
Ad hoc arbitration avoids institutional administrative fees altogether, which can be a meaningful saving in lower-value disputes where the institution's overhead would be disproportionate to the amount in dispute. It also gives the parties (and, once constituted, the tribunal) greater flexibility to design procedure specifically for the dispute at hand, without being bound by an institution's standard rules. The trade-off is that ad hoc arbitration relies more heavily on the parties' own cooperation and, where that cooperation breaks down, on resort to the court's default powers under provisions like Section 11 for arbitrator appointment: which, while a workable safety net, can introduce delay that an institution's own administrative mechanism might have avoided.
The Policy Direction in India
India's policy direction, reflected in successive amendments to the Act and in judicial commentary, has increasingly favoured institutional arbitration as a way to reduce court intervention and bring greater procedural discipline and international credibility to Indian-seated arbitration. Government-related contracts and larger commercial transactions have progressively moved toward specifying institutional rules, though ad hoc arbitration remains entirely lawful and continues to be widely used, particularly in lower-value domestic disputes.
Frequently Asked Questions
Is institutional arbitration mandatory in India?
No: parties remain free to choose ad hoc arbitration for their contracts; institutional arbitration is a contractual choice, not a legal requirement, though it is increasingly encouraged as a matter of policy.
Is institutional arbitration always more expensive?
Not necessarily for higher-value disputes, where the institution's administrative structure can reduce procedural delay and disputes over arbitrator fees; for lower-value disputes, the added institutional fees can be disproportionate, making ad hoc arbitration more cost-effective.
Can I switch from ad hoc to institutional rules after a dispute has already arisen?
Generally, the arbitration framework is fixed by the arbitration clause in the underlying contract; switching after a dispute has arisen typically requires the mutual consent of both parties, since neither side can unilaterally rewrite the agreed arbitration clause.
Does institutional arbitration guarantee a faster outcome?
Not automatically. While institutional rules provide helpful default mechanisms and deadlines, the overall timeline still depends heavily on the complexity of the dispute, the tribunal's own management of the case, and the parties' conduct.
References & Further Reading
This article references the following statutory provisions. It is educational content, not advice on any specific dispute.
- Arbitration and Conciliation Act, 1996, as amended: statutory framework applicable to both institutional and ad hoc arbitration seated in India.
- See our Arbitration & Dispute Resolution practice area and our guide on drafting arbitration clauses for further reading.