Article 28(3) of the Model Law provides that:
“The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so.”
In practice, arbitration clauses which confer upon arbitrators the power to consider wider issues are very few in number, and the earliest appeared in reinsurance contracts. Case law on the validity of such clauses prior to the implementation of the Model Law was conflicting. The wording “The arbitrators shall interpret this treaty as an honourable engagement” was held in Maritime lnsurance Co v Assecuranz-Union von 18657 to render the reinsurance agreement void for uncertainty, though that decision was not followed in Home and Overseas lnsurance Co Ltd v Mentor lnsurance Co (UK) Ltd8, where similar wording was held to be binding. A clause permitting the arbitrators to resolve the dispute in accordance with equitable considerations was held permissible in Eagle Star lnsurance Co Ltd v Yuval lnsurance Co Ltd9 because it did no more than oust strict rules of construction and left other principles of law untouched. The matter has been resolved in England by s 46 of the 1996 Act, which follows the Model Law in slightly different language.
Ironically, now that their validity has been confirmed, honourable engagement and equity clauses are rarely seen in modem reinsurance contracts. Instead, the following provision is found in the Bermuda Form:
“The provisions ... of this policy are to be construed in an evenhanded fashion; where the language is ambiguous the issue shall be resolved in the manner most consistent with the relevant provisions ... (without regard to authorship of the language ... or reference to the reasonable expectations of either or to contra proferentem . . . or other extrinsic evidence).”
This again appears to have the limited effect of modifying the applicable law only in the sense of contract interpretation.
Whatever words are used, however, and even assuming that an appeal on a point of law could be mounted (which under Hong Kong law could only occur by means of an 'opt-in' agreement10), the court could scarcely intervene because to do so would entail substituting its own views for those of the almost certainly more knowledgeable arbitrators. In the recent decision of the Australian High Court in Westport lnsurance Corp v Gordian Runoff Ltd11, however, the Court appears to have done precisely that, and to have reached its own view on what a contract meant even though there was an equity provision in the arbitration clause.
7. (1935) 52 Ll LR 16 (High Court, England & Wales).
8.  3 All ER 74 (Court of Appeal, England & Wales).
9.  1 Lloyd's Rep 357 (Court of Appeal, England & Wales).
10. Editorial note: See the Arbitration Ordinance (Cap 609), s 99(e) and Sch 2, ss 5-7.
11.  HCA 37, 5 October 2011, unreported.