Originally from World Arbitration And Mediation Review (WAMR)

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I. INTRODUCTION
The foundation of every arbitration proceeding is the will of
the parties which is expressed in the form of an “arbitration
agreement” broadly defined in Article 7 of the 1985 UNCITRAL
Model Law on International Commercial Arbitration, as amended
in 2006 (the “Model Law”), and Article 1423 of Mexico’s
Commercial Code (the “Commercial Code”).1
An arbitrator is empowered to act in accordance with the
arbitration agreement, which establishes his authority to decide
either on the basis of the rule of law or on the basis of what he
considers fair and reasonable. In practice, it is common to find
arbitration agreements with authority to resolve the substance of
a dispute according to the rule of law. Others, which are less
common, establish a special and particular authority: ex aequo et
bono. This principle literally translated from Latin means
“according to the right and good.”2 Such power ex aequo et bono
is conferred upon the arbitrator by the so-called “equity clauses,”
which state that the dispute shall be resolved according to an
equitable interpretation instead of a strictly legal standard of
review.