Biennial Conference, 2016 :
The Belt Road Initiatives –
Will it change the Arbitration and ADR?
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Organizers:The Chartered Institute of Arbitrators (East Asia Branch)
And
The China Academy of Arbitration Law
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Session Topic:-
“Choice of Seat and Choice of Institutional
Versus
Ad Hoc : the International Perspective”
RAJIV DUTTA
Senior Advocate (India)
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What holds the future of International Arbitration :
Institutional or Ad hoc?
 Any arbitration wherever it is conducted, is subject to mandatory rules of the
lex arbitri - That is the law of the place of Arbitration.
 The rules of every place will generally be broad based and not specific such as,
all parties will be treated with equality but these rules will not set out the way this
is to be achieved.
 Parties therefore have a choice - should the Arbitration be conducted ad hoc i.e. without involvement of an arbitral institution or should it be conducted
according to the rules of an established arbitral institution.
 While Ad hoc Arbitration has some advantages as the arbitral tribunal can have
its own rules of procedure or with the consent of parties follow any established set
of Rules, but along with procedure today management of arbitration has become
very important.
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It has been very aptly described by one of the leading authors on International
Arbitration - Redfern and Hunter on International Arbitration "The difference
between ad hoc arbitration and an institutional arbitration is like the difference
between a "tailor-made" suit and the one that is bought "off-the-peg".
 Model Law and UNCITRAL Arbitration Rules have played a very significant role
by bringing clarity and uniformity in arbitration around the world. These Rules
have been widely adopted by the international arbitration community.
 But, there are some significant disadvantages of ad hoc Arbitration as it is
dependent solely upon the conduct of parties and its lawyers. One of the major
disadvantage is the speed of the arbitral proceedings due to the lack of guiding
rules and the behaviour of parties can also affect the time taken for completion of
the arbitration.
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 While domestic arbitration involves entities who are residents in the same
country and dispute revolves around domestic laws. International arbitration is
quite different, as Sir Robert Jennings former President of International Court of
Justice (ICJ) said- "International Commercial disputes do not fit into orthodox
moulds of dispute procedures - they lie astraddle the frontiers of foreign and
domestic law - and raise questions that do not fit into the categories of private
international law either. Not least they raise peculiar problems of enforcement.“1
 Institutional arbitration is administered by a special body constituted only to
administer arbitration. These institutions have their own rules which are followed
very strictly. Some of the leading arbitral institutions are ICC, SIAC, LCIA, ICDR,
Swiss Chamber of Commerce, Geneva & Zurich.
The biggest advantage of such rules are that once they are incorporated in
the Arbitration Clause even if one party refuses to go ahead with arbitral
proceedings, the other party can easily proceed with arbitration.
1Redfern & Hunter on International Arbitration p. 57 (1.97), sixth edition
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 The "Rule Book" of the Arbitral Institution is a very well considered set of Rules
and provides from the beginning to finalization of Award the steps which have to
be taken by Arbitrators and parties. The office of the Institution keeps a very close
vigil on the entire process.
 In the arena of International Commercial Arbitration, the parties are generally
from different parts of the globe and the stakes involved are huge. Therefore, for a
long time internationally, parties prefer to adopt Institutional Arbitration to ad hoc
arbitration.
 Arbitral Institution has permanency, specialized staff, reasonable charges.
 A former President of LCIA Professor Park, concluded while evaluating
professional guidelines –
In evaluating whether professional guidelines will make arbitration better or
worse, the arbitration community must for now at least, put the matter into a box
labelled "Awaiting Further Light" Park 'A fair fight' : Professional guidelines in
International Arbitration (2014) 30 Arb. 21.579.
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 An important aspect which has given institutional arbitration importance is the
arena where a State enters into a commercial agreement with a private party. A
Neutral place, procedure and process, is then the call of the hour. This lack of
neutrality in the local remedies has given rise to Investor State Arbitrations. This
gave birth to institutions where one party to the dispute is a State such as ICSID in
Washington D.C., while increasing the work load of the Permanent Court of
Arbitration at Hague.
 International Conventions and Model Law have helped in developing and
creating a Universal System of law governing International Arbitration.
 From Montevideo Convention of 1889, The 1923 Geneva Protocol, Geneva
Convention of 1927, The New York Convention of 1958.
 After 1958, there have been Conventions but none have an impact like 1958
Convention.
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 BIT's, Model Law, UNCITRAL.
 Final Session in Vienna in June, 1985 where model law was recommended to
Member States.
Best examples of countries which have tilted towards institutional arbitration:-
INDIA :In 1996, India broke its shackles from the old Arbitration Act of 1940 and adopted
model law. But from 1996 to 2015, it became clear that to bring in an arbitration
friendly atmosphere and to stop the judicial interference drastic amendments will
have to be made in the 1996 Arbitration and Conciliation Act.
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 Positive amendments were suggested by the Law Commission of India in its
Report which were presented before the Parliament and later became the
Arbitration and Conciliation Amendment Act, 2015. There is a clear tilt towards
encouraging institutional arbitration and support from the Act for International
Commercial Arbitration.
 After the amendments in the 1996 Act in 2015, there is a major change brought
about relating to relationship between Indian Courts and International Arbitration
seated outside India.
Provisions both in Part - I and Part - II of the Act have been amended. Part - I
deals with Domestic Arbitrations and International Commercial Arbitrations, where
proceedings are seated in India involving an international element. Amendment in
Part - II deals with foreign seated International Arbitrations.
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 Amendment in Part - II provides parties in foreign - seated Arbitrations with
access to two valuable means of support from Indian Courts - interim relief and
assistance in obtaining evidence.
 Amendment also narrows down the public policy ground on which an Indian
Court may refuse to enforce an Arbitral Award.
 A lot of amendments in the 1996 Act became necessary since majority of the
arbitrations currently taking place within India occur on an ad hoc basis, which has
resulted in a lack of uniform standards and cost effectiveness, also huge delays.
 This resulted in many important arbitration cases to move out of India like
Vodafone, Deutsche Telekom.
 There is a huge effort to make India an attractive centre for International
Commercial Arbitration, for which purpose very recently the Mumbai Centre for
International Arbitration (MCIA) has been established.
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CHINA :The China International Economic and Trade Arbitration Commission (CIETAC)
revised its rules in the year 2012. The aim of these rules is to address the
increasing complexity of contemporary arbitration proceedings, and the
amendments were made to ensure that CIETAC remains competitive among
International Arbitration Centres, all of which have witnessed a rapid development
in China-related business.
 CIETAC Tribunals have power now to grant interim measures in certain
circumstances.
 Expert witnesses are now required to give oral evidence if the Tribunal considers
it necessary.
 CIETAC Arbitrations can now be consolidated with the consent of all parties.
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 CIETAC may specify a seat outside China, where parties are silent on the point
(previously, the seat could only be a place inside China).
 CIETAC will administer arbitrations conducted under the rules of other arbitral
institutions as well as rules of ad hoc arbitrations, and arbitrations under its own
rules.
 Where parties have not specified the language of the arbitration, CIETAC is now
free to determine the language (previously, the default language was only
Chinese).
 If the arbitration clause does not specify which CIETAC sub-commission is to
administer the proceedings, CIETAC's Beijing Headquarters will administer the
arbitration. (Previously, under such a clause the Claimant could choose to file the
case with one of the CIETAC locations).
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 Multi-party appointment of Arbitrators : where either the Claimants or
Respondents fail jointly to nominate an Arbitrator, CIETAC will appoint the entire
Tribunal; and
 CIETAC can now conduct mediation during the arbitration with the parties
agreement and not involving the arbitrators.
 CIETAC has now opened an office in Hong Kong.2
 Despite geographical divergence while in Europe and North America,
International Arbitration has always been prevalent where a number of institutions
had developed and had dominated the world for a very long time. But now with
the rise of International Arbitration in Asia Pacific, the Asian Arbitral Seats have
stated to rise and are digging deep into the market share of European and North
American seats.
2 Article titled as "The new CIETAC Arbitration Rules : a move towards internationalisation?" published in the IBA Arbitration
News, Vol. 17, No.2, September 2012.
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 In Africa and Latin America, International Arbitration is conducted outside the
region predominantly in Europe and North America.
 Nevertheless, International Arbitration is on the rise in all six regions,
generating an increasing interest in its Practice.3
3Article titled as "The current state and future of international arbitration - regional perspectives" published in the IBA
Arbitration News, Vol. 21, No.1, February, 2016.
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THANK YOU
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RAJIV DUTTA
Senior Advocate, Supreme Court of India
16, Todarmal Road, Bengali Market, New Delhi – 110001 (INDIA)
Phone : +91-11-23310290, Direct No.:+91-11-23355104
Mobile : +91-9810020468
E-mail : [email protected], [email protected]
Website : www.rajivdutta.com