Ad hoc vs. institutional arbitration – what to choose?

Increasingly, disputes are resolved using arbitration, which entails many advantages. Partner Mikal Brøndmo recently spoke of “Ad hoc vs. institutional arbitration” at the 38th Norwegian Petroleum symposium in Bergen, and presented pros and cons of the two arbitration options. The audience mainly consisted of counsels from oil- and supplier companies, major law firms and representatives of the Norwegian authorities.

Increasingly, disputes are resolved using arbitration, which entails many advantages. Partner Mikal Brøndmo recently spoke of “Ad hoc vs. institutional arbitration” at the 38th Norwegian Petroleum symposium in Bergen, and presented pros and cons of the two arbitration options. The audience mainly consisted of counsels from oil- and supplier companies, major law firms and representatives of the Norwegian authorities.

By agreeing on arbitration, the authority to rule is handed to a private tribunal. Arbitration excludes dispute resolution of the same matter in an ordinary court, and the ruling cannot normally be appealed. On the subject of arbitration, the following benefits are usually highlighted:

  • Expertise
    • Parties can freely elect judges with relevant experience
  • Efficient processing
    • Award is final
  • Confidentiality
    • The case is not  public
  • International enforcement of awards
    • The New York convention on recognition and enforcement of foreign arbitral awards

When choosing arbitration; what are the options?

Ad hoc arbitration

In ad hoc arbitration, parties are responsible for selecting the arbitral tribunal, based on the arbitration clause, and the appointed tribunal manages the process. The case can be held at a location set by the parties and the tribunal determines its own compensation.

In addition to the agreement made between the parties, the national governing law of arbitration applies. In Norway, this implies that the parties inter alia have to agree on confidentiality principles, as this does not follow from the Norwegian Arbitration Act.

Institutional arbitration

Where the parties agree on arbitration in accordance with an institute’s rules, institutional arbitration is chosen. Examples of the most common arbitration institutions include ICC (International Chamber of Commerce), SCC (Stockholm Chamber of Commerce) and LCIA (London Court of International Arbitration). In his lecture, Brøndmo presented characteristics of many of the most common institutions.

The majority of arbitrations in Norway are resolved through ad hoc arbitration, which differs from a majority of countries where institutional arbitration is preferred.

Arbitration at Haavind

Some of the most experienced dispute resolution lawyers practice at Haavind, and we are experiencing an increase in the number of disputes resolved by arbitration; both ad hoc and institutional. In the same building as the Haavind offices there is also an arbitration court room for rent, enabling more efficient proceedings.