Ex Aequo Et Bono is a Latin term which means what is just and fair or according to equity and good conscience. Something to be decided ex aequo et bono is something that is to be decided by principles of what is fair and just. A decision-maker who is authorized to decide ex aequo et bono is not bound by legal rules but may take account of what is just and fair.
Most legal cases are decided on the strict rule of law. For example, a contract will be enforced by the legal system no matter how unfair it may prove to be. But a case to be decided ex aequo et bono, overrides the strict rule of law and requires instead a decision based on what is fair and just under the given circumstances.
It is a term often used in international law when a matter is to be decided according to principles of equity rather than by points of law. Article 38(2) of the Statute of the International Court of Justice provides that the court may decide cases ex aequo et bono, if the parties agree thereto.
In the context of arbitration, it refers to the power of the arbitrators to dispense with consideration of the law and consider solely what they consider to be fair and equitable in the case at hand. Article 33 of the United Nations Commission on International Trade Law's Arbitration Rules (1976) provides that the arbitral tribunal should decide as ex aequo et bono only if the parties have expressly authorized the arbitral tribunal to do so and if the law applicable to the arbitral procedure permits such arbitration.