We established in the previous introductory essay on Code of Ethics – Practical Application[2] that virtues are attitudes, dispositions, or character traits that enable us to pursue the ideals we have adopted.  In our quest to sharpen our moral vision and align with the Code of Ethics of the Association of Arbitrators (Southern Africa) NPC (AoA), the focus of this essay is on prudence.  Rule 3 of the Code of Ethics states that ‘[m]embers who act as arbitrators undertake serious responsibilities to the parties as well as to the public.  Those responsibilities include ethical obligations[3]  (Emphasis added).

Prudence is the ethic of responsibility; a virtue that requires that we answer not just for our intentions, but also for the consequences of our acts.  Prudence is especially relevant to an arbitrator for at least two reasons:

(a) First, it lends, at its core, gravitas to the idea of the ‘reasonable person’. The concept of the bonus pater familias (English: good family father) originated in Roman law and is used synonymously with the expression, ‘the reasonable person’.  Members of the AoA assume that fellow members (i.e. experts in arbitration) will comply with a standard of conduct uniformly and that their conduct conforms to the ideals and standards set out in the AoA’s Code of Ethics and its published Rules for the Conduct of Arbitrations (Rules).[4]  Members who fail to meet these standards might be considered negligent and an argument could be made that they ought to  be held liable in damages.
(b) Second, it is now commonplace in most institutional arbitration rules and in the arbitration legislation to provide for the settlement of disputes by amiable composition and ex aequo et bono.[5] Article 35.2 of the Rules provides that the ‘arbitral tribunal shall decide as amiable compositeur or ex aequo et bono only if the parties have expressly authorised the arbitral tribunal to do so.’[6] (Emphasis added).

The Latin phrase ex aequo et bono means ‘according to what is equitable and good’.[7] What this essentially means, is that where the parties expressly have agreed on such an ‘equity clause’ – i.e., one authorising an arbitrator to resolve their dispute(s) according to what is equitable and good (ex aequo et bono) – the arbitrator’s award is not bound by strict rules of law, but may be based on fair, just, moral and commercially accepted principles.[8]  

Both the reasonable person standard for an arbitrator, and his or her freedom and responsibility when making awards that are decided ex aequo et bono, form the framework for this essay.  In the words of the late John F Kennedy (JFK):[9] The prudent heir takes careful inventory of his legacies and gives a faithful accounting to those whom he owes an obligation of trust.’

The reasonable person

‘[T]he reasonable person is a well-known, fictional, abstract character supposed to be endowed with the morals, virtues and reasoning ability which society expects from its members’.[10] 

The test for a reasonable person is both objective as well as subjective.  It is objective in the sense that it refers to a uniform standard that is applied to test for negligence, i.e., by determining whether the conduct of a person in the general community is wanting when compared with, and measured against, the hypothetical model of the ‘reasonable person’.  It is subjective in that the reasonable person standard relates to the personal (i.e. subjective) attributes of an individual, such as, among other things,  his or her age, knowledge, intelligence, experience, skill, physical attributes, and mental capacity.[11]  The reasonable person standard is thus normative, flexible and value-based.  Since arbitrators have specialised knowledge and skills the reasonable person standard is adjusted to encompass skills, such as extraordinary care and diligence, that is expected from the members of the AoA.  The burden and expectation required of arbitrators as ‘experts’ therefore well-exceeds the standard appropriate to the general community.

Having said that, it is instructive to know that the standard is not unattainable, i.e., because it requires nothing more than the application of prudence and common sense.  In S v Burger 1975(4) SA 877 (A) the Court (per Holmes JA):[12]  

‘One does not expect of a diligens paterfamilias any extremes such as Solomonic wisdom, prophetic foresight, chameleonic caution, headlong haste, nervous timidity, or the trained reflexes of a racing driver.  In short, a diligens paterfamilias treads life’s pathway with moderation and prudent common sense.’ (Emphasis added).

In order to understand what ‘prudent’ means, we need to examine the etymology of the word.


The Latin word prudentia is contracted from providentia, which means ‘seeing ahead, sagacity’.[13]  The word prudentia (or prudence) contradicts, and is almost in direct opposition to the eighteenth century French words ‘prudfemme’ (also ‘prud’femme’), and ‘prudhomme’ (also ‘prud’homme’), which refers respectively to a woman or a man being a prude – that is, a person who is overly modest or excessively attentive to propriety or decorum of behaviour, dress or speech.  Being a prude might have been a noble compliment in historical context, but prudentia, make no mistake, is no prude – it requires courage, creative thinking and a subtle and sophisticated intellectual boldness.

Prudence is practical wisdom that presupposes uncertainty, risk, chance and the unknown – it requires deliberation, decision and, ultimately, action.  The French writer and philosopher, André Comte-Sponville rightfully asks: ‘What good is the truth if we don’t know how to live? What good is justice, and why would we want it, if were incapable of acting justly?’  He points out that prudence is applied morality, and that without it all ‘the other virtues are merely good intentions that paves the way to hell.’[14]  Prudence is duly called the ‘charioteer of the virtue’[15] – it directs all the other virtues, pointing them to their proper end.  Without prudence, one’s life might look like a horse and chariot running away without a driver, i.e., a lot of energy, high speed and commotion, and certainly, not going in the right direction.

Practical application: The arbitrators’ role in deciding ex aequo et bono

Reality imposes its laws, its obstacles, its detours, and prudence is the art of taking them into account; it is lucid and reasonable and assumes courage.  Without courage ‘prudence amounts to pusillanimity, just as without prudence courage amounts to recklessness or folly.’[16]

If parties agree, arbitrators are given the power to adjudicate disputes according to fairness considerations, rather than through the strict application of legal norms.  This opportunity might be helpful in achieving positive and creative outcomes in a complex world and in emerging fields in which the law is inadequately developed.

The arbitrator’s moral fibre is of utmost importance: ‘An arbitrator’s subjective perspective of fairness and good conscience remains as a final and exceptional gap-filler for determining the parties’ explicit and implicit intentions in ex aequo et bono awards’.[17]

The ethic of prudence thus highlights the obligation of an arbitrator to achieve moral self-mastery to enable him or her to attend to the specific context of a situation, and then, through deliberation and careful judgment to seek concrete outcomes that are legitimate and durable.

Practical application: Prudence and ex aequo et bono

Ex aequo et bono  decisions rely on proper contextual interpretation, such as the terms of contract, relevant trade usages, applicable laws, and cultural and socio-economic considerations.  To successfully understand and apply the principles of fairness, equity, justice and morality to the ‘contextual interpretation’ the core elements of prudence need to be heavily relied on.  The core elements of prudence are docilitas, circumspection, ratio, providentia, intelligentia and caution.

  • Docilitas is an open-mindedness that recognises variety and diversity in a complex world.
  • Circumspection is the ability to take all relevant circumstances (such as the prevailing and accepted customs within a particular trade and the respective parties’ implicit and explicit intentions) into account.
  • Ratio allows for discursive reasoning with the ability to research and compare alternatives such as relevant, applicable or comparable laws.
  • Providentia, or foresight, is the capacity to estimate whether particular actions can realise long term, predictable and stable goals that may be relevant in a cross-border context with the prospect of universal application.
  • Intelligentia is the understanding of first principles. First principles[18] refer to a priori facts and statements (propositions) that form the building blocks of well-reasoned arguments.
  • Caution is the ability to mitigate (outcome) risks when granting any remedy or relief that is deemed just and equitable and within the scope of the agreement.

The ethic of prudence serves as a vital moral resource for arbitrators.  It will be appreciated that in the absence of legal rules or principles in specific situations that arbitrators’ creative thinking processes have helped shape the law for centuries towards its perfection:

‘Certainly, to fill the gap in the law or to avoid the non-liquet situation judges and arbitrators have had often recourse to equity, equitable considerations, and fairness of dealing, etc., to render a decision and that is how the law has grown into maturity over centuries in many countries and is still growing as the time passes by.’[19]

Prudence is bound up with truth, knowledge and reason, and is fully applicable to a person’s real life living, trade and commerce, and should operate as the quintessence of our philosophy.  Prudence, in the ancient sense of the word, is the virtue of ‘risk and decisions’ and is as much applicable today as it was in antiquity and the Middle Ages.  ‘Prudence,’ says Augustine, ‘is love that chooses with sagacity between that which hinders and that which helps’.[20]  It is not only applicable to all our relationships, but also to all our actions and decisions with regard to the environment and humanity as a whole – it safeguards our rights and freedom in the now while holding a promise of a better future.  The ethic of prudence is indeed the true savoir-vivre in the art of living a happy and enjoyable life!

[1]      By Ms Maritza Breitenbach.  Ms Breitenbach is an artist and published author of an award-winning non-fiction book. She has a Bachelor of Science degree from North-West University (NWU); Teaching Diploma, NWU; Certificate in Small Business Management from NWU; and a Master’s Degree (Philosophy in Applied Biomedical Ethics) from the University of Stellenbosch (US).

[2]       See the ‘Tools of the Trade’ section in the May 2021 edition of the E-periodical Arbitrarily Speaking!

[3]       Association of Arbitrators (Southern Africa) NPC: The Code of Ethics, Rule 3.

[4]       The latest set of Rules for the Conduct of Arbitration is contained in the 2018 Edition, also referred to as the ‘Eighth (8th) edition’.

[5]       AFM Maniruzzaman Mealey’s International Arbitration Report (2003) Vol. 18, No. 12 (accessed 22 June 2021).

[6]        Association of Arbitrators (Southern Africa) NPC: Rules for The Conduct of Arbitrations (2018 ed.).

[7]        ‘x aeqEuo et bono’: Legal Dictionary, Merriam-Webster (accessed 9 Jul. 2021).

[8]       Amiable compositeur definition in Law Insider (accessed 28 June 2021).
[9]       JFK’s  ‘State of the Union Address’  January 30, 1960 (accessed 30 June 2021).

[10]      Raheel Amhed quotes Arberto Artosi in ‘The Standard of the Reasonable Person in Determining Negligence – Comparative Conclusions’ (2021) Potchefstroom Electronic Law Journal (PELJ), 24, 1 – 55 (accessed 28 June 2021).

[11]      R Ahmed (n 7 above).

[12]      At page 879 D – E.

[13]      Webster’s New World College Dictionary 4th Edition (2010) Houghton Mifflin Harcourt.

[14]      André Comte-Sponville, A Small Treatise on the Great Virtues: The Uses of Philosophy in Everyday Life (2002) William Heinemann: London.

[15]      E Shri ‘The Art of Living: The First Step of Prudence’ in Catechism of the Catholic Church no. 18    (accessed 30 June 2021).

[16]      Compte-Sponville (n 11 above) 35.

[17]    AFM Maniruzzaman  ‘The Arbitrator’s Prudence in Lex Mercatoria: Amiable Composition and Ex Aequo Et Bono in Decision Making’ in Mealey’s International Arbitration Report, Vol. 18, No. 12, December (2003) (accessed 20 June 2021).

[18]     See the ‘Tools of the Trade’ section in the May 2020, July 2020, September 2020, and November 2020 editions of the E-periodical Arbitrarily Speaking!

[19]      Maniruzzaman (n 15 above).

[20]      Augustine’s De Moribus Ecclesiae Catholicae, quoted in Compte-Sponville (n 11 above) 36.