INTERNATIONAL AND DOMESTIC ARBITRATION IN SWITZERLAND

§ 1 Arbitration as a particular form of dispute resolution 7 1. Advantages and disadvantages The most important advantage offered by ad hoc arbitration is flexibility. This can be an advantage for the appointment and composition of the arbitral tribunal. It can facilitate the proceedings ( e.g. by accepting simplified rules of evidence) or dispense with time- consuming confirmation and scrutiny procedures, which are essential features of institutional arbitration. However, flexibility is only advantageous if there is a minimum spirit of cooperation between the parties and a basic understanding of how the arbitration should proceed. Especially in international cases, ad hoc arbitration relies on an “arbitration friendly” legal environment (as is the case with Switzerland) and the involvement of experienced arbitrators. Furthermore, it can be useful if the parties and/or their counsel have a similar cultural and legal background. In domestic arbitration, these conditions are usually met. This may explain why in Switzerland arbitration agreements providing for ad hoc arbitration are particularly common in cases without an international context. Predictability , as opposed to flexibility, is an important advantage of institutional arbitration. For parties from different legal cultures, this advantage often outweighs the disadvantage of limited manoeuvring that comes with institutional arbitration rules. Predictability protects against surprises. This can be useful with regard to the conduct of the arbitration in general and the taking of evidence in particular. Thanks to the detailed fee schedules contained in most institutional arbitration rules, parties are also better able to anticipate the costs that will be involved. Without these fee schedules, the issue of costs is usually addressed only once the arbitrators have been appointed. These advantages of institutional arbitration are more important in cross-border transactions. Even if the country of the seat of the arbitration offers efficient judicial assistance, institutional arbitration is better suited to ensure that, despite recalcitrant parties or uncooperative arbitrators, the arbitration can be properly concluded. While institutional arbitration can claim official status, which can be advantageous in terms of recognition and enforcement of arbitral awards in countries that do not favour arbitration, ad hoc arbitration usually offers a higher degree of privacy where this is a priority. In its scope, the NYC does not distinguish between institutional and ad hoc arbitral awards. Both types are treated equally (see Art.I(2) NYC; see also Art.2(a) UNCITRAL Model Law). 23 24