Ex aequo et bono (Latin for "according to the right and good" or "from equity and conscience") is a phrase derived from Latin that is used as a legal term of art. In the context of arbitration, it refers to the power of the arbitrators to dispense with consideration of the law and consider solely what they consider to be fair and equitable in the case at hand.
Article 38(2) of the Statute of the International Court of Justice (ICJ) provides that the court may decide cases ex aequo et bono, but only where the parties agree thereto.[1] In 1984 the ICJ decided a case using "equitable criteria" in creating a boundary in the Gulf of Maine for Canada and the US. [2]
Article 33 of the United Nations Commission on International Trade Law's Arbitration Rules (1976)[3] provides that the arbitrators shall consider only the applicable law, unless the arbitral agreement allows the arbitrators to consider ex aequo et bono, or amiable compositeur, instead.[4] This rule is also expressed in many national and subnational arbitration laws, for example s. 22 of the Commercial Arbitration Act 1984 (NSW).
On the other hand, the constituent treaty of the Eritrea-Ethiopia Claims Commission explicitly forbids this body to interpret ex aequo et bono.