Institutional arbitration guarantees a neutral proccess, a list of savvy arbitrators, predetermined procedures, a track record and, generally speaking, a safety net.
Why would I pass on institutional arbitration?
Well, let´s see some potential advantages of the ad hoc proccess:
1-.) Ability to negotiate multiple aspects of the arbitration proccess: place, language,…
Those usual suspects can be bargained under the aegis of an arbitral institution, too. Yes, that´s right, but with an ad hoc arbitration parties and arbitrator can fix the prices- probably with a discount if the parties expect issues to arise multiple times through the life of a contract.
2.-) Some aspects of the arbitration can be reshapen. Institutional arbitration uses some rules that ramp up the costs. Not only pecuniary costs. For example, the evidence could go back and forth- think of replication and rejoinder- in a written manner with sworn translators and a number of bothered people.
That means huge lawyer fees and other intrincacies which come with the territory. Then, if I want to be cost conscious, should I prefer mediation? Not neccessarily. Parties could prefer fast and simple procedures, and at the same time an award could be more suited to their needs than a longshot chance to reach an agreement.
3.-) Impartiality. Institutional arbitration is not always free of doubt. A chamber of commerce that administers issues within the relations of their associates could leave a suspicious taste about their awards. Yes, there are a number of reasons for an arbitrator to separe himself from the duty but the pressure could be there anyways, even if the cause for exclusion present in the rule doesn´t appear.