Section 18: Substantive Law to be followed by Arbitrators

1) The Nepal Law shall be the substantive law to be followed by the arbitrator, except when otherwise provided for in the agreement.

2) The arbitrator may settle the dispute according to the principle of justice and conscience (Ex aqua et bono) or natural justice (amiable compositor) only when explicitly authorised by the parties to do so.

3) Notwithstanding anything contained elsewhere in this act, the arbitrator shall settle the dispute according to the conditions stipulated in the concerned contract. While doing so, the arbitrator shall also pay attention to the commercial usages applicable to the concerned transaction.