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Topic – Equity in Arbitration and Arbitration ex aequo et bono



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jurisdictions promise justice to all men at all costs. This agreement of the
state with its subjects is an oversimplified version of what as equity in law.
A fundamental problem of securing the promised justice is the absence of
legislation to judge. Positive law is not exhaustive and cannot extend
solutions for all possible situations of conflict. Instances where a statute is
silent or application of the law will produce unnatural or unreasonable results
invokes adjudicators to apply equity. Legal historians, philosophers and jurists
have often discussed the relation of common law and equity. Law without equity
is incomplete, and equity without law is redundant.


is an adjudication, how the parties want. Like any other dispute resolution it
rests upon applicable laws and regulations, but the process itself derives
force from an agreement between the parties. Arbitration as a flexible
procedure facilitates individuals to agree on a particular law (lex arbitri)
or even no law at all. Parties may refer the dispute to be solved ex
aequo et bono, i.e. according to what is fair, equitable and good.
According to Black’s Law Dictionary, “a decision maker authorised to
decide ex aequo et bono is not bound by legal rules and instead may follow
equitable principles”.1 Authors have sometimes criticised
equity for being too subjective and dangerous.

criticism, equity finds a place in private and public international law
including arbitration regulations. This inclusion does not have the same
recognition as written codes in a precise application and flows only from the
agreement of parties. 


Research Questions

Does justice invoke equity? And can justice be ensured only through written

Do arbitrations decided ex aequo et bono or according to equity form a specific
species of arbitration?

What consideration must an arbitrator weigh upon while arbitrating ex aequo et
bono or according to equity?

Does an arbitrator authorised to resolve a dispute ex aequo et bono exceed
authority by referring to lex mercatoria (commercial law)?



best of independent judgment, analysing the topic and answering the questions
would initially require questioning the nature of concepts involved. A
jurisprudential approach would be better suited to ensure that the seemingly
abstract terms involved do not remain ambiguous.

an introduction and setting a foundation for a discussion I wish to contrast
between natural law; natural justice and positive law; positive
justice. Equity and fairness as requisites of justice will eventually form
the basis for the main argument. It will be significant in concluding that
supplements are essential for black letter law. Creating a clear vision regarding the terms including equity
and ex aequo et bono requires consultation of historical and modern
schools of legal thought. M.D.A Freeman, Lloyd’s Introduction to
Jurisprudence (7th Edition, Sweet and Maxwell 2001) provides
a detailed account of the same along with extracts from various authoritative
philosophers, thinkers and jurists. Max Planck Encyclopedia of Public
International Law (Oxford University Press 2015) is another source for
consultation, it discusses and differentiates the involved concepts along with
the problems in their usage.

brief insight of equity and ex aequo et bono in public international law will
also find a place. I find it necessary to mention these to find out why the
application of equity is not so frequent in the global scenario. Masahiro
Miyoshi, Considerations of Equity in the Settlement of Territorial
and Boundary Disputes (Martinus Nijhoff Publishers 1993) is a
monograph sufficient for this purpose.  

very evident problem with a philosophical or jurisprudential approach is its limitation
to the nature only and inability to look any further. To ensure a balanced view
and reach a solution, the dissertation will require deviation from the existing
methodology towards scope, application and problems in usage of equity and ex
aequo et bono in private international law. This necessitates reference to
trade-related arbitration laws, namely:


ICC Rules of Arbitration, and

ICSID Rules on Arbitration.

These regulations mention the
authority of a tribunal to settle a dispute ex aequo et bono and according to
equity provided the parties agree. Commentary on case laws dealt with these
regulations is essential. It will also include the problems faced in
enforcement of equitable awards from a generalised perspective rather than
limiting to specific jurisdictions. Journalistic research from following
publications will be necessary –

UNCITRAL Yearbook,

ICSID Review,

Arbitration Journal – Westlaw, and

Journal of Private International Law – Hein Online.

Periodic reference to Global
Community Yearbook of International Law and Jurisprudence (Oxford University
Press) will be of much help and use.


In conclusion, I wish to research
upon the scope of equity, and ex aequo et bono in international law focused
towards arbitration. Creating a successful argument that in a rapidly
globalising world, it would be best to let law grow naturally. And find why
this moral facet has not received the attention it deserves.


Blackaby, N., Paratasides, C.,
Redfern, A., Hunter, M., Redfern and Hunter on International Arbitration (6th
edn, Oxford University Press 2015)
Garner, B.A., Black’s
Law Dictionary (8th edn, Thomson Reuters 2015)
John E.C.
Brierly, ‘Equity and Good Conscience and Amiable Composition in Canadian
Arbitration Law’ (1991) 19 Canadian Business Law Journal 461-484
J. Manfred
Machs, “Equity in Arbitration and in Judicial Settlement of Disputes” (1993) 6
Leiden Journal of International Law 323-329
Markus Kotzur,
Max Planck Encyclopedia of Public International Law 1402 (1st July
Miyoshi, M., Considerations of
Equity in the Settlement of Territorial and Boundary Disputes (Martinus
Nijhoff Publishers 1993)
William W.
Notz, ‘Arbitration and Distributive Justice: Equity or Equality?’ (1987) 72(3)
Journal of Applied Psychology 359-365




United Nations Commission on International Trade Law

ICC             – International Chamber of

ICSID         – International Centre for Settlement
of Investment Disputes



1 Brian A. Garner, Black’s
Law Dictionary (8th Edn, Thomson Reuters 2015)

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