Procedural Good Faith in International Arbitration

    View Author August 2018

    Good faith is, in essence, a principle of “fair and open dealing”, one that contemplates high standards of both commercial morality and practice. In particular, good faith requires contracting parties to exercise their rights in such a way that the parties in question may enjoy the benefits derived out of the contract.

    The rationale behind the principle of good faith is to prevent parties from purporting to rely upon express contractual rights, where exercising the right would result in the party obtaining a benefit extraneous to the contract.

    To that end, the concept of “good faith” builds upon fundamental implied terms, such as:

    • To act reasonably, honestly and fairly
    • To do all things necessary as to co-operate in achieving the contractual aim
    • Not to prevent, impede, fetter or hinder the other party in the performance of the contract