One of the most common questions we hear about BAT cases is what law does the Tribunal use. The answer: ex aequo et bono, which is a Latin phrase that means “In equity and good conscience” legal-dictionary.com. The BAT rules state ex aequo et bono means the arbitrator applies “general considerations of justice and fairness without reference to any particular national or international law.” BAT Rule 15.1. But what does that mean? Essentially, the BAT decides cases based on fairness and equity for the betterment of the parties.
This can be a confusing concept for many who are used to state and federal statutes being applied in their home courts. Especially individuals who come from civil law jurisdictions based on the Napoleonic Code, which include most of Europe and Latin America. The civil code is a series of very specific statutes that pronounce the law in a particular state. The law is written, stemming from statutes, and is not decided by the particular tribunal hearing the dispute.
Americans and the Engish may have a better grasp on disputes being decided ex aequo et bono because their current court systems stem from English common law, which is law developed by judges through the decisions of the court. See legal-dictionary.com. Both American and English systems of law have recently evolved to be more dependent on statutes, however common “judge-made” law still remains in force today to a significant degree.
The issue with the BAT is that it routinely decides cases spread across at least three jurisdictions. The seat of the BAT lies in Geneva, Switzerland. But often the Claimant is from another country and the Respondent from a third. Thus what rule of law would be fair for the parties? That of the seat of the Arbitration or the state of the Claimant or Respondent?
The BAT obviously decided from the beginning that the only fair choice of law for BAT arbitrations was not that of any particular state but ex aequo et bono. In actuality however, the BAT often cites international and foreign law as guiding principles for its decisions.
For example, the BAT often awards interest on any amount due according to Swiss law. See 0230, Zouros vs. BC Zalgiris Kaunas.
In 0051, Pesic v. Dynamo, the arbitrator cited an internationally recognized law of contracts, “contra proferentum,” the Unidroit Principles on International Commercial Contracts of 2004, Article 4.6, the Swiss Federal Tribunal, the Court of Arbitration for Sport, and BAT precedent to decide that the English version of the contract at issue must prevail.
The BAT also routinely cites to international law and its own precedent when deciding to mitigate damages: “According to generally accepted principles of the law of damages and also of labor law, any amounts the Player earned during the remaining term of the Player Contract must be deducted. This has also repeatedly been confirmed by the BAT.” 0289, Lauwers v. S.S. Felice Scandone S.p.A., pg 11 § 44; see also 0237, Nikola Ivanovic and GPK Sports Management Limited v. Kolossos Rhodes BC.
So in the end, while the BAT official rules proclaim ex aequo et bono as the rule of law, the reality may be something more in line with “generally accepted principles of international and foreign law.”
 For an explanation of international law, see http://legal-dictionary.thefreedictionary.com/international+law, for foreign law, see http://legal-dictionary.thefreedictionary.com/foreign.