The claimant undertook to publish a press advertisement for the respondent. The parties' contract included the following special clause: 'Reservation of space to be confirmed before the 20th November 1995; if not annulled, then valid'. The claimant proceeded to prepare the advertisement, interpreting the respondent's silence as confirmation of its agreement. The respondent failed to pay the price of the advertisement and subsequently cancelled the contract. The claimant considered the cancellation too late and insisted on payment of the agreed price. Following unsuccessful attempts to settle the matter amicably, the claimant initiated arbitration proceedings.

'Merits

1. Law applicable to the merits

The Contract contains no choice of governing law. It provides that the Arbitrator shall act as "amiable compositeur" and decide the case "according to the principles of equity" . . .

According to Art. 13(4) 1988 ICC Rules, an arbitrator "shall assume the powers of an amiable compositeur if the parties are agreed to give him such powers". Such is the case here under Clause 5.2. Contract.

Art. 13(4) ICC Rules is in line with Art. 1497 NCCP, which empowers arbitrators sitting in an international arbitration in France to "decide as amiable compositeur if he is so authorised in the arbitration agreement".

In fact, Clause 5.2 goes further than Art. 13(4) ICC Rules, as it also specifically directs the Arbitrator to decide "according to the principles of equity", an expression which comes close to the "ex aequo et bono" concept of Art. 17(3) of the new ICC Rules.

The Arbitrator shall, therefore, decide the present dispute on the basis of fairness and equitable considerations.

Under French arbitration law, "where the institution of theamiable compositeur originated, the power of such a person to disregard the law appears very broad. Indeed, it is generally admitted that anamiable compositeur can disregard any laws from which a party will be free to derogate, i.e., all those other than mandatory rules of law. Moreover, anamiable compositeur in France may also depart, to some extent, from the strict application of the contract, without, however, being able to modify the basic terms of the parties' bargain" (see, Derains/Schwartz, A Guide to the New ICC Rules of Arbitration, ad Art. 17(3), page 227).

The Arbitrator shall, therefore, act accordingly, and while keeping within the basic terms of the Parties' bargain, shall feel free, if she deems it fair and equitable, to depart from the strict application of the Contract (see, also, Fouchard/Gaillard/Goldman, Traité de l'arbitrage commercial international, Nr. 1507, pages 851-853, in particular page 853).

. . . . . . . . .

5. Interest

Given the contents of the special provision added by the Parties in favour of the Defendant, the Arbitrator considers that the terms of Clause 1.1 Contract cannot be applied literally in the present case. Clause 1.2 provides indeed that interest for late payment is due either from the date of the Contract (as provided in Clause 1.1) or within 30 days from the date "established (…) on the front page".

The Arbitrator considers equitable and fair to hold that such "established" date was November 20, 1995 given the meaning of the special provision. The application of interest for late payment as of the date of the signature of the Contract would be contrary to the principles of equity.

The Arbitrator further considers that the rate of 1.8% per month mentioned in Clause 1.2, in the small print of the back page of the Contract, appears higher than statutory interest for late payment in the concerned countries and higher than the usual average inter-bank rate for the concerned period. The latter must be taken into account according to Art. 14(5) ICC Rules, all the more so when the Arbitrator acts as an "amiable compositeur".

It has been confirmed in prior cases and by legal commentators that an arbitrator acting as "amiable compositeur" may decide to reduce penalties payable under a contract or the interest rate by virtue of his/her powers of "amiable compositeur" (see, Jean-Denis Bredin, "L'Amiable composition et le contrat", 1984 Revue de l'Arbitrage pp. 259ff, in particular at 268).

Using such powers and applying the principles of equity pursuant to which this dispute must be decided according to Clause 5.2 Contract, the Sole Arbitrator considers it equitable and fair under the circumstances to reduce the applicable interest to 10% per annum.

Consequently, interest at the rate of 10% per annum will have to be paid by the Defendant on the Contract price owed to the Claimant, as from December 20, 1995.'