Ex Aequo et Bono or Amiable Compositeur

Unless the parties agree otherwise, the tribunal is obliged to decide the dispute between them in accordance with the law the parties have chosen or, in the absence of such choice, in accordance with the national law, or such other principles of law, as the tribunal determines should be applied.

It is possible, however, for the parties to agree to confer on the tribunal power to decide the matter in accordance with the tribunal's own notions of equity or justice. This has become known as allowing the arbitrator(s) to decide ex aequo et bono or as amiable compositeur.

Giving the tribunal this power means that the tribunal is not confined to a strict application of the law governing the contract. It can make an award according its notions of justice and equity between the parties. The agreement to allow the tribunal to decide the dispute in this way must be made expressly. Whether or not a tribunal sitting in a particular seat is permitted to decide in this manner depends upon the law of the seat. The extent to which allowing the tribunal to decide ex aequo et bono, or as amiable compositeur liberates the tribunal from the strict application of rules of law will depend upon the law governing the contract.

Conferring this right on the tribunal significantly reduces the ability to predict the outcome of the arbitration with any certainty. It should be approached with caution.

A word of warning: seek further advice from a member of Linklaters International Arbitration Group if you are considering including a right to the tribunal to decide matters in this way in your arbitration clause.