Adjusting Contracts In Arbitration?

Arbitrators decide legal disputes – in lieu of state courts. But do arbitrators also enjoy the power to adapt contracts to changed circumstances?

Long-Term Contracts and the Need for Adaptation Over Time

Twenty or even thirty years can be a long time. Still, under many commercial contracts the parties agree to be bound to their bargain for such terms – be it in the field of energy, infrastructure, joint ventures, or others. Needless to say, these long-term contracts are inherently susceptible to change. A lot may happen in twenty or even thirty years: Governments rise and fall, the economy slows down and picks up again, society changes. All such changes may affect the original bargain of the parties. Typically, parties do expect circumstances to change. Hence, there is hardly a long-term contract which goes without some sort of "revision clause" (ie contractual adaptation clause).¹