Arbitration can be conducted under the rules and administration of a recognised institution, or run by the parties themselves without institutional involvement. The choice affects cost, structure and predictability.
Institutional arbitration
An institution provides a procedural framework, administers the process, and often assists with arbitrator appointment where the parties cannot agree. This adds structure and predictability, generally at additional administrative cost.
Ad hoc arbitration
Ad hoc arbitration is run entirely by the parties and the arbitrator(s) without institutional administration, offering more flexibility and lower administrative cost, but placing more responsibility on the parties to manage the process and resolve procedural disagreements themselves.
Which suits which dispute
Institutional arbitration tends to suit parties who want a predictable, structured process and are less familiar with each other. Ad hoc arbitration can work well between sophisticated commercial parties with an existing relationship and a well-drafted clause.
What to do next
Decide this at the contract drafting stage — retrofitting institutional rules onto a dispute already underway ad hoc is far harder than choosing correctly at the outset.