The respondent, a manufacturing company, entered into a contract with the claimant, an advertising company, for the purpose of placing an advertisement in a journal. The claimant brought arbitration proceedings to recover the amounts due under the contract, which the respondent refused to pay, claiming that it had cancelled the contact and that the draft advertisement had not been approved. The parties' contract contained an arbitration clause stating that the arbitrator would act as amiable compositeur.

'B. The applicable law

32. Before moving to an analysis of the specific claims, it is necessary to determine which law applies to the present case.

33. Pursuant to Article 17(2) of the ICC Rules, "In all cases the Arbitral Tribunal shall take account of the provisions of the contract and the relevant trade usages." Moreover, para. (3) of the same article states, "the Arbitral Tribunal shall assume the powers of an amiable compositeur or decide ex aequo et bono only if the parties have agreed to give it such powers".

34. In the present instance, the Parties have agreed to give the Arbitrator the powers of an amiable compositeur and to decide the case "according to the principles of equity" (Provision V.2 of the Contract). Neither Party has taken issue with this provision. Moreover, the Parties have not argued that a specific legal system should be the governing law of the arbitration. In the relevant section of the Request for Arbitration, the Claimant simply referred to the terms of Provision V.2 of the Contract as the applicable law. The Defendant does not dispute this point.

35. It is thus undisputed that the Parties intended to assign to the Arbitrator the powers of an amiable compositeur. The Arbitrator will now move on to define the scope of such powers.

36. Although ICC Rules do not provide a definition of the term amiable compositeur , it is generally accepted that an arbitrator acting as amiable compositeur does not have to apply a specific legal system, but enjoys greater flexibility and may resort to other criteria, such as the factual circumstances of the case as well as the terms of the relevant contract, in order to reach an equitable result. (In this respect, See, inter alia, Christie, R.H.: "Amiable Composition in French and English Law" Arbitration, November 1992, pp.259-266 and the case law and doctrine referred to therein; Redfern and Hunter: Law and Practice of Internal Arbitration, Second ed., Sweet and Maxwell, 1991, pp. 35-36, 121, 183-184, 214, 263; Craig, Park and Paulsson: International Chamber of Commerce Arbitration, Oceana, 1985, Chapter 18).

37. Indeed, as it has been observed, "the arbitrator is not necessarily obliged to apply a national law applicable to the substance" of the arbitration (Derains, Y.: Rev. arb., 1972, p. 99).

38. However, the arbitrator, in the exercise of his powers of amiable compositeur , must still adhere to the terms of the contract and only deviate from them when it is necessary for the sake of fairness. As it has been noted: "the paramount duty of the arbitrator, even as 'amiable compositeur', is to apply the contract of the parties, unless it is shown that the provisions relied on are clearly against the true intent of the parties, or violate a basic commonly accepted principle of public policy" (See, Case no. 3267, 1979, Collection of Arbitral Awards, 1974-1985, Kluwer, 1990, p.85).

Moreover, it should also be noted that the powers of amiable compositeur do not discharge the arbitrator from his duty to motivate the award.

39. On the basis of the foregoing, the Arbitrator will apply the terms of the Contract between the Parties, and general principles of international commercial law in the light of the specific circumstances of the case.

C. The Claimant's claim with regard to the principal amount and interest due under the Contract

40. The Claimant argues that the Defendant cancelled the Contract after the time limit stipulated under Provision IV.1 of the Contract and, that, therefore, the Defendant is still obliged to pay the whole sum due under the Contract amounting to . . . plus interest at the contractual rate of 1.8% per month. Such interest shall run from the date of 19 December 1995 for the first installment of . . . and from 6 January 1996 for the second installment of . . .

41. The Defendant contends that it is not obliged to pay the principal amount due under the Contract. The Defendant argues that it verbally cancelled the Contract prior to the period of 15 days provided for under the Contract and subsequently confirmed this cancellation in writing on 5 December 1995, i.e. after the time limit set forth in the Contract. As to the interest, the Defendant argues that, were the Arbitrator to rule in favour of the Claimant, the interest should run from 19 December 1995 and from 6 January 1996 for the two installments respectively.

42. Provision IV of the Contract reads as follows:

"4.1 Delay. The cancellation of an advertising order cannot be accepted, unless received within fifteen days after the signature of the present contract.

4.2 Consequences. Any demand for cancellation beyond this time limit shall be at the sole discretion of [Claimant] and may be either accepted or refused.

4.3 [Claimant] shall have the right, at its sole discretion, either not to publish the planned advertisement, the Advertiser being still obligated to pay the whole sum due as in the present contract, or to publish the planned advertisement. The Advertiser shall in both cases be obligated to pay the whole sum due as in the present contract."

43. The Arbitrator, even acting as amiable compositeur , is bound by the general principle "pacta sunt servanda" and thus must respect and apply the contractual provisions. Pursuant to the principle "pacta sunt servanda", the Defendant was obliged to abide by the provisions of the Contract which are the expression of the free will of the Parties.

44. The Defendant has failed to provide evidence supporting its statement that it cancelled the advertisement order by telephone within the contractual time limit of fifteen days. Moreover, the fax dated 5 December 1995 cancelling the order does not make any reference to a previous telephone call. Finally, the Claimant has supplied into the evidence an "Artwork Approval Form" signed by the Defendant on 5 February 1996 certifying that the Defendant had seen and revised the advertisement and was satisfied with its contents. The documentary evidence filed by the Defendant does not refer to this form, but there is no evidence in the record that the Defendant denied having signed this document . . .

45. In the light of these facts, the Arbitrator concludes that the right of cancellation was exercised beyond the stipulated notice of two weeks and rules that the Defendant is therefore obliged to pay the principal amount of . . . due under the Contract.

46. As to the interest due, there is no dispute between the Parties that such interest should be calculated at the rate of 1.8% per month running from the date of 5 December 1995 when the first installment of . . . was due to the date when payment is actually received, and from the date of 6 January 1996 to the date when payment is actually received for the second installment of . . . in conformity with Provision I.2 of the Contract.

47. The Arbitrator therefore decides that interest computed in the above-mentioned manner should be added to the principal amount of . . .'