Determination of applicable law / arbitrators invested in the contract with the powers of amiable composition / meaning and scope of amiable composition.

'The third paragraph of this arbitral clause attributes the authority of amiable compositeurs to the arbitrators. The arbitration practice and its doctrine have developed two concepts dealing with the range of meaning that should be given to the notion of amiable compositeurs.

Taken literally, the notion of "powers of amiable compositeurs" means that the arbitrators, if they are not exempt from the duty of determining an applicable law in conformity with the rules of private international law, are all the same freed of their obligation to apply a solution they would have thereby found, should they consider that solution too inequitable considering the circumstances of the particular case.

According to a more liberal interpretation which is more widely used in arbitration, the arbitrators invested with the authority of amiable compositeurs have the right to deviate from the applicable positive law according to the rules of international private law, given that they consider it is necessary and just, in conformity with the general objective of the contract, and more generally, when it is in view of a solution to the dispute. In this case, the arbitrators do not have to justify their divergence from the law which is normally applicable to the case.

The arbitrators have verified that none of the parties have expressed any opinion concerning the scope of the arbitral clause. It is nonetheless important that the arbitrators clearly define their interpretation of the actual text of the contract. In view of the fact that [ABC state] and [EFG state] laws are very much alike, the arbitrators consider that in this particular case the pursuit of a law legally applicable is necessary, however they reserve the right to deviate in the event that they deem that this applicable law would lead to an unfair solution.

This being said, the arbitrators, observant of the fact that the object of the contract of [date] is the construction on a turnkey basis of a factory in [EFG state], decide that the contract will be submitted as to substance to [EFG state] law.'