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CS Professional · Arbitration, Mediation and Conciliation · International Law of Arbitration

In a Chennai-seated arbitration between Anand Exports Ltd and a Dubai company, the agreement says the tribunal may decide the dispute 'as it deems fair'. No other clause mentions ex aequo et bono or amiable compositeur. The tribunal decides purely on fairness, ignoring the contract terms. What is the position under section 28?

The approach is improper. A tribunal may decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorised it, and a vague fairness phrase is not that. In all cases the tribunal must also take into account the contract terms and applicable trade usages.

  1. AValid, since the phrase gives the tribunal wide discretion
  2. BValid, because a tribunal may decide on fairness in international arbitrations
  3. CImproper, because deciding ex aequo et bono needs express authorisation, and the tribunal must in all cases take into account the contract terms and trade usagesCorrect
  4. DValid, provided the award is signed by all arbitrators

Explanation

Section 28(2) allows decision ex aequo et bono or as amiable compositeur only if parties have expressly authorised it; a general phrase like 'as it deems fair' is not express authorisation. Section 28(3) also requires the tribunal in all cases to take into account the contract terms and trade usages. Option A wrongly treats a vague phrase as authority.

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