Ex Aequo Et Bono: De-Mystifying an Ancient Concept
Chicago Journal of International Law, Winter 2008
21 Pages Posted: 14 Jun 2007
The ancient concept, ex aequo et bono, holds that adjudicators should decide disputes according to that which is "fair," and in "good conscience". Despite its long history in international adjudication and even though it is enshrined in the Charter of the Permanent Court of International Justice, the concept of ex aequo et bono is often avoided on grounds that it operates outside of law, or is deemed to be contrary to law.
This article argues that the concept has a valuable and emerging significance in modern law. It is ideally suited to resolving disputes between parties who are engaged in complex and long-term relationship or in emerging fields in which the law is either inadequately developed or unsuitable to resolve complex disputes.
Tracing the evolution of the concept historically through the Medieval Law Merchant to modern times, the article sets out how ex aequo et bono might be revitalized in both international and domestic law. Arguing that ex aequo et bono operates along a continuum rather than at a fixed point between law and non-law, it illustrates how it can be both formulated and applied. It demonstrates how to relate ex aequo bono to the law of equity and how to reconcile it with "gap filling" under law. It also shows how discretion in applying ex aequo et bono can be subject to internal and external limits; and how parties can invoke it most effectively to resolve their disputes. The article concludes by presenting a methodology by which to guide the application of ex aequo et bono to such disputes.
Keywords: adjudication, international law, arbitration, international commercial arbitration, treaties, International Court of Justice, investment, equity
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