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If court statutes and arbitration rules often provide for ex aequo et bono adjudication, international adjudicatory bodies rarely use it. Less successful than its predecessor, absolute equity, ex aequo et bono adjudication is limited in contemporary times to less than a handful of investment arbitration cases. The chapter considers ex aequo et bono in light of the jurisprudence of international courts and tribunals, it explores the types of dispute for which an ex aequo et bono mandate is suitable and its compatibility with the judicial function. The chapter argues that ex aequo et bono powers must not be conflated with equity that international courts and tribunals can apply anyway, that ex aequo et bono adjudication is legal adjudication, and it shows that on the rare occasions when tribunals have been granted ex aequo et bono powers, they have tended to interpret them narrowly.

One approach to an inquiry into the justice of international law is to study the emerging role of equity in the jurisprudence of international tribunals. In fairness discourse, the most restrained justice-based claims may be advanced in the form of equity, which embodies a set of principles designed to analyse the law critically without seeming to depart too radically from the traditional preference for normativity in the exercise of authority, nor to present too bold a challenge to the community's expectations of legitimacy in legal rules and processes. This chapter surveys the development of equity in the international system since the turn of the century. First, it discusses equity as an instance of ‘law as justice’, encompassing such concepts as ‘unjust enrichment’, estoppel, and acquiescence. Secondly, it explores the difference between equitable decisions and decisions ex aequo et bono, that is, rendered outside the framework of the law. Finally, it considers equity as a tool for the allocation of scarce resources among states.

The book’s first chapter introduces the concept of equity in international law, with an emphasis on the various attempts that have been made to define it and its significance for contemporary international law. It gives an overview of one of the most controverted discussions about equity, and one that remains at the heart of the book, concerning the relationship between equity, law, and justice. This introductory chapter further presents the book’s overall purpose and main arguments; it explains the coverage of international courts and tribunals and of specialised fields of international law, and it outlines the book’s structure and chapters.

This chapter lays out the rules of law that pertain to substantive law determinations in international commercial arbitration and shows how these differ from the rules that apply within national legal systems. It first discusses three ways in which different rules of law may come to be applied to the same dispute in international arbitration and in national court litigation: differing choice of law rules, the availability of transnational rules of law, and the availability of amiable composition. Second, it describes the rules relating to the ascertainment of the content of the governing law in international arbitration, which may lead international arbitrators to interpret a given law differently from national courts.

The book’s concluding chapter summarises its main findings and arguments. The book has tried to make sense of the legal concept of equity as it operates in the international law of the 21st century, setting it on a new basis and dealing with some common misconceptions about it. The thrust of its argument is that equity is a legal concept and a source of international law whose reach stretches beyond what has previously been conceded. Equity contributes to the development of international law and, as international law grows, the value of equity grows with it. By definition circumstance-specific, equity must remain flexible in order to fulfil its function qua justice. As time goes by, equity will still inform new international law and it will continue to be relevant, as an imperative of law as justice that international courts and tribunals are bound to apply.