In short. Choosing between DIAC and ad hoc arbitration really comes down to who runs the show. At the Delhi International Arbitration Centre, the Centre appoints arbitrators if you and the other side can't agree, fixes fees from a published schedule, holds deposits and offers an emergency arbitrator. In ad hoc arbitration you and the arbitrator manage all of it yourselves. Once a business relationship has soured, we'd usually pick DIAC. Ad hoc can work when both sides still trust each other and the arbitrator. First, read your clause. It may have chosen for you.
Is this your situation?
- Your company is signing a supply contract next week, and the draft just says 'disputes shall be settled by arbitration'. Someone has asked whether you should write DIAC in.
- The clause says 'arbitration in Delhi'. You've proposed three names for arbitrator. The other side hasn't replied to any of them.
- You're halfway through an ad hoc arbitration and the arbitrator has just asked for a higher fee, for the second time.
- Your clause lets the other party's managing director appoint the sole arbitrator, and you doubt you'll get a fair hearing.
- You need to stop something happening next week and want to know if an ad hoc arbitration gives you an emergency arbitrator.
- You run a startup. You want the cheaper option, but you don't want the timetable taken out of your hands.
- At a Section 11 hearing, the Delhi High Court asked your counsel whether you'd prefer DIAC or an arbitrator chosen by the parties.
The short answer
It's a question of who manages the case. At DIAC, the Delhi International Arbitration Centre does, under the DIAC (Arbitration Proceedings) Rules, 2023. The Delhi High Court set the Centre up, and it's been working since 2009. When the two sides can't agree on an arbitrator, it picks one from its panel. Fees come from the DIAC (Administrative Costs and Arbitrators' Fees) Rules, 2018. The Centre collects the deposits, gives you a hearing room and offers an emergency arbitrator. Ad hoc arbitration has none of that. Nobody stands behind the case except the parties and the arbitrator, who must agree on every point, from the venue and the stenographer to the fee and the dates. When they can't, somebody files in court.
You end up with the same kind of award. Section 34 of the Arbitration and Conciliation Act, 1996 governs the challenge and Section 36 the enforcement, in the same courts, whichever route you took. The road there is what differs. How long it takes to get a tribunal, how fees get fixed, what happens when one side goes slow, and who keeps the arbitrators on schedule.
With a cooperative opponent and an arbitrator you both trust, ad hoc can be cheaper and looser. Few disputes look like that by the time they reach arbitration, though. Usually the relationship is finished. DIAC removes most of the places where an ad hoc case jams.
What the two terms mean under Indian law
Section 2(1)(a) of the Arbitration Act defines arbitration as any arbitration, whether or not a permanent arbitral institution administers it. The Act covers both forms, and nearly all its provisions apply the same way to each. The difference in institutional arbitration is that you've agreed in advance to a rulebook and to an institution that will take certain decisions for you. Section 2(6) allows exactly that. Where the Act leaves a question to the parties, they can authorise an institution to decide it.
Ad hoc arbitration means you've agreed to arbitrate but not to any institution. The clause might name an arbitrator. It might describe how one is to be chosen. Or it might say nothing more than 'disputes shall be referred to arbitration'. Plenty do. Everything else comes from the Act and from whatever the parties and the tribunal settle at the first hearing. Under Section 6, an ad hoc tribunal can, with the parties' consent, get administrative help from an institution, say for hearing rooms or record keeping, without the case becoming institutional.
There's a third kind. In Delhi we see it constantly. The arbitration started without any institution, but the Delhi High Court sent it to DIAC on a Section 11 petition. From then on it runs under the DIAC Rules, and Rule 1.2 treats the parties as having agreed to them. Our page on how a Section 11 petition ends up at DIAC explains the process.
DIAC and ad hoc, side by side
| Issue | DIAC arbitration | Ad hoc arbitration |
|---|---|---|
| Who appoints the arbitrator | Each side proposes names from the DIAC panel; if they don't match, or a party does nothing, DIAC appoints (Rule 8) | You agree on someone; failing that, it's a Section 11 petition |
| How many arbitrators | One or three, never more than three; one if nothing's agreed (Rule 8.1, 8.2) | Whatever's agreed, as long as it's an odd number; one if nothing's agreed (Section 10 of the Act) |
| Arbitrators' fees | Worked out from the DIAC schedule according to the amount in dispute | Settled with the tribunal, using the Fourth Schedule as a guide; the arbitrator can't simply announce a fee |
| Deposits, and what if one side won't pay | The Centre collects them, normally split equally; an unpaid claim or counter claim can be terminated after 30 days (Rule 33) | Section 38 lets the tribunal set deposits, and suspend or end the case if they aren't paid |
| Emergency arbitrator | Yes, Rule 14 | Only if the parties signed up to rules that have one; otherwise it's a Section 9 petition in court |
| Fast track | Rules 12 and 13, by written agreement; award within 6 months | Section 29B, by agreement; award within 6 months |
| Deadline for the award | Section 29A: 12 months after pleadings, plus 6 if both agree | Same, Section 29A |
| Getting rid of a slow arbitrator | DIAC can replace an arbitrator who isn't performing (Rule 11.2) | Apply to court under Sections 14, 15 or 29A |
| Venue and support | Hearing rooms at the Centre, e-filing, video hearings | You arrange it and you pay for it |
| Confidentiality | Rule 35 and Section 42A of the Act | Section 42A of the Act |
| Challenge and enforcement | Section 34 challenge, Section 36 enforcement | Same |
Appointing the arbitrator, where ad hoc cases usually get stuck
Appointment is where the two really part ways. Suppose the respondent in an ad hoc case simply won't agree on a name. The claimant's only option is a Section 11 petition in the High Court. Since In re Interplay (seven judges, 2023) and SBI General Insurance v. Krish Spinning (2024), the court at that stage looks only at whether, prima facie, an arbitration agreement exists. Every other objection is left for the tribunal. Petitions are shorter now. They're still court cases, though, with filing, notice, listing and adjournments, and months can slip by before the order comes.
Older Indian contracts often tried to get round this by giving one side, usually the employer or the bigger company, the right to name the sole arbitrator. Courts have closed that door. TRF (2017) and Perkins Eastman (2019) held that someone with a stake in the result can't pick the sole arbitrator, and Section 12(5) with the Seventh Schedule disqualifies many people linked to a party. In Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (2024) a Constitution Bench went further. Clauses giving one side the power to appoint offend the principle of equal treatment of parties. That's settled now.
At DIAC, nobody needs the other side's cooperation to get an arbitrator. For a sole arbitrator, both sides send five names from the panel and DIAC appoints from any overlap. If there's no overlap, the Chairperson or a Sub-Committee appoints (Rules 8.3 and 8.4). With three arbitrators, DIAC fills any gap within 21 days (Rule 8.6). A respondent who says nothing is presumed to have consented to arbitration under the Rules (Rule 5.1). Our guide on how DIAC appoints arbitrators explains the panel and how names get chosen.
Fees: a published scale, or a negotiation
DIAC fees come out of the schedules in its 2018 rules on administrative costs and arbitrators' fees. Under Rule 3(ii), the claim and counter claim are added together to work out the arbitrators' fee. There's a proviso, though. If one side refuses to pay its share, DIAC can assess the two separately, and in Samsung India Electronics v. Delhi International Arbitration Centre (18 March 2026) the Delhi High Court upheld exactly that. Administrative fees are charged on top. The schedule is public, and DIAC's website has a fee calculator, so you can estimate the bill before you file. Use the current schedule. Always. Old figures passed around in WhatsApp groups are often wrong.
Ad hoc fees are a matter of agreement between you and the tribunal. The Fourth Schedule to the Act offers a model scale, and High Courts lean on it, or something close, when they appoint arbitrators under Section 11. ONGC v. Afcons Gunanusa JV (2022) is the Supreme Court case to know. Arbitrators can't decide their own fees unilaterally. The fee has to be agreed with the parties at the outset, recorded in the terms of reference, and left alone midway unless the parties agreed otherwise. The Court read the Fourth Schedule's ceiling as applying per arbitrator, and said institutional cases follow the institution's rules.
Which costs less? Depends on the case. A small claim before a sole arbitrator who's agreed a modest fee can come in cheaper than DIAC's scale plus admin charges. For larger claims, or where the respondent fights over fees, knowing the figure upfront usually beats a possible saving. Our guide on what a DIAC arbitration costs goes into the numbers.
Speed: which finishes first?
Don't expect speed from either one by default. Section 29A of the Act covers both. Once pleadings close, the tribunal has twelve months for the award, and the parties can agree to add six. Beyond that, only a court can extend time. If the delay is the tribunal's fault, the court can also cut the arbitrator's fee. Section 23(4), meanwhile, asks that pleadings finish within six months of the arbitrator being appointed.
DIAC helps around the edges. The tribunal gets formed without a court case. The Centre collects the deposits, so nobody argues about money at hearings. And Rule 11.2 lets the Chairperson replace an arbitrator who isn't performing or isn't meeting time limits, after hearing from the arbitrator and the parties. In an ad hoc case, removing a slow arbitrator means applying to court under Section 14, 15 or 29A. More litigation.
Ad hoc can actually be faster when both sides want it to be. A named arbitrator who's happy to sit in the evenings, agreed timelines, no formal filing steps. For parties who still do business together, that's a real plus. But when one side wants delay, ad hoc hands it more chances. Our guide on the time limit for a DIAC award shows how the Section 29A clock runs at the Centre.
Urgent relief: the emergency arbitrator comes with the institution
Rule 14 of the DIAC Rules lets you get an emergency arbitrator before the tribunal is formed. Appointment within two business days, an order within fourteen days of appointment, and that order is valid for ninety days unless the tribunal acts. In Amazon v. Future Retail (2021) the Supreme Court treated such an order as enforceable under Section 17(2) of the Act.
The Arbitration Act doesn't create an emergency arbitrator on its own. So in an ad hoc case, unless the parties adopted rules that provide one, anyone needing urgent relief before the tribunal exists has to go to court under Section 9. Often that's fine, because courts can pass ex parte orders where notice would defeat the purpose, but it still means a public court file, court fee and waiting your turn on the court's roster. Not ideal. Our guide to the emergency arbitrator at DIAC has the details.
Once the tribunal exists, it evens out. DIAC and ad hoc tribunals have the same power to grant interim measures under Section 17.
Hearing rooms, records and the boring parts
DIAC gives you hearing rooms at the Centre, on the Delhi High Court campus at Shershah Road. It has an office that takes filings, keeps the record and writes to the parties, an e-filing module for pleadings and documents, and video conferencing where the tribunal allows it (Rule 26.1(a)); check current practice. The Centre holds the deposits and pays the arbitrators under its rules. You don't have to argue with the arbitrator about money. He doesn't chase you.
In an ad hoc case, the parties find and pay for a venue. Often it's a conference room, a hotel or the arbitrator's chambers. Someone has to keep the record, book a stenographer, send out orders and run the fee account. With cooperative parties, fine. With a hostile party, every small administrative step turns into its own little dispute. And hearings get eaten up by logistics.
Confidentiality is about the same either way. Section 42A of the Act requires the arbitrator, the institution and the parties to keep proceedings confidential, except the award where disclosure is needed to implement and enforce it. DIAC's Rule 35 adds a confidentiality duty of its own.
When ad hoc is the sensible choice
Ad hoc works when the parties still talk and can agree a name fast. Picture two family businesses in Chandni Chowk with decades of dealings between them who want a respected retired judge to sort out an accounting difference without anyone filing anything in Tis Hazari. Rare, but it happens. It also suits a narrow technical dispute where one engineer or chartered accountant is the obvious pick, and a simple procedure without formal filings will save months.
It makes sense too when cost drives everything and the claim is modest, provided the fee is agreed in writing at the start, as ONGC v. Afcons requires. And it's still the default in plenty of contracts with government bodies and public sector undertakings. Their standard forms carry their own appointment procedures, which are now subject to Section 12(5) and the 2024 Constitution Bench ruling.
When Advocate B.K. Singh looks at an existing ad hoc clause for a client, the deciding question is rarely cost. It's trust. Will the other side agree on an arbitrator within thirty days? If the honest answer is no, the ad hoc route opens with a Section 11 petition. At that point the case for DIAC gets strong.
When DIAC is the better fit
DIAC suits disputes where the parties have fallen out and one side is likely to stall. It suits claims big enough that a fee fight would hurt, and cases where you might need urgent relief before a tribunal is in place. It also works for parties in different cities, or a foreign company dealing with an Indian one, who want neutral administration, a known rulebook and a New Delhi seat by default (Rule 23.1).
Some just want a budget. A published schedule, a known appointment process and a Centre that tracks deposits all help with that. The typical DIAC client, in our experience, is a supplier or service provider with a claim of Rs 50 lakh to Rs 5 crore, a respondent who ignores letters, and no appetite for months of Section 11 litigation.
If you're drafting now, keep it short. Name DIAC and its Rules, the number of arbitrators, the seat and the language. That alone avoids most of the problems above. Our guide on drafting a DIAC arbitration clause has wording points and common mistakes.
The law that applies either way
Sections 7, 8 and 11, Arbitration and Conciliation Act, 1996
The arbitration agreement must be in writing under Section 7. An exchange of emails can do. If one exists and the objection is taken in time, Section 8 obliges a court to send the parties to arbitration. And when the agreed way of appointing breaks down, Section 11 lets the court make the appointment. The Delhi High Court often hands such matters to DIAC.
Sections 12, 13 and 12(5) with the Fifth and Seventh Schedules
An arbitrator must disclose anything likely to give rise to justifiable doubts about independence or impartiality. You have 15 days from learning the facts to challenge. People with a Seventh Schedule relationship can't act at all, unless the parties, after the dispute has arisen, waive this by an express written agreement. None of this changes between DIAC and ad hoc.
Sections 17, 23(4), 29A, 29B and 38
Every tribunal can grant interim measures under Section 17, and they're enforced like a court's orders. Pleadings get six months under Section 23(4). The award gets twelve months after pleadings under Section 29A, or six months on the fast track under Section 29B if both sides agree. In ad hoc cases Section 38 lets the tribunal fix deposits in equal shares and suspend or end the case if they go unpaid. At DIAC, Rule 33 of the 2023 Rules covers that ground.
Sections 31(7), 31A, 34 and 36
Interest on the award, costs that generally follow the event, three months to challenge (with up to 30 more days for sufficient cause) and enforcement as a decree are identical in both. For commercial-value arbitrations, Section 10 of the Commercial Courts Act, 2015 sends challenges and enforcement to the Commercial Division or the Commercial Court.
Stuck with an ad hoc clause? Moving to DIAC
You're not locked out of DIAC just because your clause doesn't mention it. If both sides are willing, sign a memorandum of understanding referring the dispute to the Centre. Rule 4.1(e) allows this, and DIAC has a model format you can use. Then file a Request under Rule 4 with the memorandum attached. Our guide on filing a Request at DIAC covers the paperwork.
If they refuse to sign, file a Section 11 petition in the Delhi High Court, provided the seat or the cause of action gives it jurisdiction, and ask that the arbitration be run under DIAC. Judges frequently agree, and fix fees on DIAC's schedule. After that order, the DIAC Rules govern, even though the clause itself said nothing about the Centre.
Changing horses once an ad hoc arbitration is under way is harder. Both parties and the tribunal have to agree. Frankly, unless the case has completely stalled, it's rarely worth it.
How we work through the choice
This is the sequence we follow with clients, whether we're drafting a contract or a dispute has already started.
Read what your clause says
If it names DIAC, done. If it names another institution or a specific procedure, you're bound by that unless both sides agree to change it. If it's silent, you've got room.
Be honest about the relationship
Will the other side agree on an arbitrator and on fees within a month? If not, ad hoc will begin in court, and DIAC will usually get you to a tribunal sooner.
Ask whether anything is urgent
If you might need relief before a tribunal is formed and it's fine for the other side to know, DIAC's emergency arbitrator helps. If you need ex parte relief, plan for a Section 9 petition whichever route you take.
Put numbers on both options
Run DIAC's fee calculator on your claim and the likely counter claim. Compare that with a realistic ad hoc fee agreed in writing, plus venue and stenographer. Your own lawyers cost about the same either way.
Look at the other routes
If you're a registered micro or small supplier, compare both with the MSME Facilitation Council under Section 18 of the MSMED Act. If the claim is small and the papers are clean, think about fast track under Section 29B or DIAC Rules 12 and 13.
Write the decision down
At the drafting stage, that means a clear clause. After a dispute, either sign a DIAC memorandum with the other side or, if you're going ad hoc, record the arbitrator, fees and timetable in written terms of reference at the first hearing.
Questions to settle before you choose or redraft
- Does your clause name an institution, a person, or a procedure for appointing the arbitrator?
- Does it let one party alone pick the arbitrator? That's no longer enforceable.
- Roughly how much is your claim worth, and what might they counter claim?
- Will the other side actually cooperate on choosing an arbitrator and agreeing fees?
- Could something happen before a tribunal is formed that you'd need to stop?
- Where should the seat be, and which court would then supervise the case?
- Are you a registered micro or small enterprise chasing a delayed payment?
- Is there a related contract with a different clause that could start a fight over jurisdiction?
- Who'll sign a DIAC memorandum on each side, and do they actually have the authority?
Different businesses, different answers
A supplier or trader holding clean invoices mostly wants an enforceable award as quickly as possible. If the buyer has stopped answering the phone, DIAC removes the fight over who the arbitrator will be. Registered micro and small enterprises may do even better at the MSME Facilitation Council, which our guide on DIAC and the MSME council discusses. In a quality dispute, an IT vendor or service firm needs an arbitrator who understands the technical side. DIAC's panel can supply one. In ad hoc, you'd have to agree on one.
Investors, lenders and parties to shareholder agreements lean towards institutional arbitration. Confidentiality matters to them, so do predictable fees, and the emergency arbitrator is handy when someone's about to transfer shares or reshuffle the board. Startups generally pick the cheapest option. That may well be ad hoc on an agreed fee. Still, if the other side is a larger company that won't help, a Section 11 petition could wipe out the saving.
Big companies and groups often have several contracts running with one counterparty. Institutional rules on disclosing related arbitrations and on consolidation (Rule 6 of the DIAC Rules, with consent) help them. Government contractors usually have no choice: it's the employer's standard clause. Where that clause lets the employer appoint alone, the 2024 Constitution Bench ruling tends to push the case into a Section 11 petition. Often it lands at DIAC after that.
Delhi, UP and Haryana: does where you are change things?
You don't have to be in Delhi to use DIAC. Companies from Noida, Ghaziabad, Gurugram and Faridabad file there all the time. Rule 23.1 puts the seat in New Delhi unless the parties have expressly agreed on another, and hearings can still take place elsewhere or by video. The seat matters. A lot. It fixes which court supervises the arbitration. Two companies based in Uttar Pradesh or Haryana with a DIAC case seated in New Delhi will find themselves before the Delhi courts.
Take a commercial matter seated in New Delhi. Section 10 of the Commercial Courts Act routes Section 9 applications, Section 34 challenges and execution to the Delhi High Court's Commercial Division if the value crosses Rs 2 crore, and below that to the district Commercial Court. Confirm the current limit. With an ad hoc seat in Gurugram or Ghaziabad, you'd go to the designated Commercial Court of that district, and appeals would lie to the Punjab and Haryana High Court or the Allahabad High Court.
Some businesses in UP and Haryana want a local ad hoc seat so the court work stays nearby. That's reasonable. But set it against what a contested appointment in a local court will cost in time and money.
An invented example: two clauses, two very different starts
None of this happened. It's an illustration. A logistics company in Gurugram is owed roughly Rs 80 lakh each by two customers. Under Contract A, disputes go to a sole arbitrator under the DIAC Rules. Contract B reads: disputes 'shall be referred to a sole arbitrator appointed by the customer'.
On Contract A, the company sends its notice, then files a Request at DIAC naming five panel members and paying the admin charges. The customer ignores it for thirty days, so DIAC makes the appointment itself. When deposits are called, the customer pays nothing. The company pays both halves so its claim doesn't stall. Just over two months after filing, the first procedural meeting takes place.
Contract B goes differently. The company writes refusing any arbitrator the customer picks, citing Perkins Eastman and the 2024 Constitution Bench ruling. The customer won't budge. With the seat in Gurugram, the Section 11 petition goes to the Punjab and Haryana High Court. Months pass. Eventually the court names an independent arbitrator and sets fees by the Fourth Schedule, and the arbitration can finally start. All that time went on the forum. None of it on the money.
What to do now
For a fresh contract, our default is DIAC, unless there's a real reason to go ad hoc. Write in how many arbitrators, where the seat is and which language. If a dispute is already under way on an ad hoc clause, ask the other side in writing whether they'll sign a DIAC memorandum. A refusal, or silence, means a Section 11 petition is likely. For arbitrations outside DIAC, there's general guidance on arbitrationlawyer.in, and our DIAC arbitration lawyer page explains how we handle matters at the Centre. If the other side is already refusing to pay deposits, read our guide on what happens when the other party won't pay DIAC fees.
Not sure yet. Want your clause and correspondence looked at before you pick a route? Send them to Advocate B.K. Singh's team through the contact page.
Frequently asked questions
What's the difference between DIAC and ad hoc arbitration?
At DIAC, the Delhi International Arbitration Centre manages the case under its 2023 Rules. It deals with appointment, fees, deposits and emergency relief. In ad hoc arbitration there's no institution at all. You and the arbitrator handle everything, and disagreements go to court. Challenge and enforcement of the award work identically.
Is DIAC cheaper than ad hoc arbitration?
Sometimes, sometimes not. A small claim, a reasonable opponent and a modest agreed fee can make ad hoc cheaper. With larger sums, or an opponent who fights over fees, DIAC's public schedule and calculator tell you the cost in advance. That usually works out better.
Can an ad hoc clause be turned into a DIAC arbitration?
Yes. Both sides can sign a memorandum referring the dispute to DIAC, as Rule 4.1(e) of the DIAC Rules allows. If the other party won't, the Delhi High Court, where it has jurisdiction, can send the case to DIAC while deciding a Section 11 petition.
Does ad hoc arbitration have an emergency arbitrator?
The Arbitration Act doesn't provide one. You'd only have it if the parties adopted institutional rules with an emergency arbitrator, DIAC's Rule 14 being one example. If not, you go to court under Section 9 for urgent relief before the tribunal exists.
Can the other party appoint the sole arbitrator in an ad hoc case?
No. TRF (2017) and Perkins Eastman (2019) bar an interested party from appointing a sole arbitrator alone. And in 2024 a Constitution Bench ruled that one-sided appointment clauses offend equal treatment of parties.
Who decides the arbitrator's fee in ad hoc arbitration?
It's agreed between the parties and the arbitrator, usually at the first hearing. The Supreme Court in ONGC v. Afcons Gunanusa JV (2022) said arbitrators can't set their own fees unilaterally. The Fourth Schedule of the Act gives the model scale.
Is a DIAC award easier to enforce than an ad hoc one?
No. They're both domestic awards. You challenge either under Section 34 and enforce either as a decree under Section 36 of the Arbitration Act. Where DIAC helps is in getting to the award.
Which is faster, DIAC or ad hoc?
The Section 29A limit is the same: twelve months from the close of pleadings, plus six more if both sides consent. Against an uncooperative opponent, DIAC normally gets a tribunal in place sooner. When both sides want speed and agree on a name, ad hoc can win.
Advocate B.K. Singh
Founder of B.K. Singh & Associates. MCA, LL.B., LL.M. More than twenty years in practice before the Supreme Court, the Delhi High Court, district and commercial courts in Delhi NCR, and tribunals.
This guide explains the law in general terms and is not legal advice. For advice on your own papers, contact the team.