Contract Adjustment in Arbitration – Should the Approach Be Adjusted?

Abstract

For decades, the general attitude has been moving towards accepting contract adjustment in arbitration. More and more, the question is when and how a contract may be adjusted and not whether the arbitrators may have such a power. The article will firstly discuss hardship as a basis for contract adjustment and provide general discussion on arbitrators’ position in cases of hardship. Once the scene is set the paper will focus on how the issue is approached in the area of long-term gas sale and purchase agreements and especially the price review clauses. Based on their example, it is concluded that arbitral tribunals should evaluate not only conditions of hardship but also the will of the parties to continue the contract and, in absence of any other guidance, request proposals for adjustment from the parties.