Ex aequo et bono
According to equity and good conscience.
Ex aequo et bono is a Latin expression denoting the resolution of a dispute on the basis of equity and reasonableness, rather than the strict application of the law.
Ex aequo et bono literally means “according to equity and the good”. In law, it means that a judge or arbitrator renders a decision on the basis of what is fair and reasonable, without strict adherence to statutory provisions. This mechanism is employed principally in arbitration, where the parties may expressly agree that the arbitrator may decide in this manner.
In Dutch law, this option is provided for in Article 33 of the Arbitration Act. Allowing the parties to choose ex aequo et bono affords greater flexibility, but also reduces predictability. It is particularly relevant in international trade disputes and commercial contracts where a tailored solution is desired.
In practice, ex aequo et bono is invoked to reach a practical and balanced outcome that satisfies the parties, without unnecessary legal formalities.
“The arbitrator ruled ex aequo et bono that the contractual penalty had to be reduced in light of the particular circumstances of the case.”
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