Carolina Diab – Special Counsel, Guatemala
In arbitration—as in life—not everything is written. Beyond rules, deadlines, and formalities, there exists a principle that silently upholds the legitimacy of the process: good faith. It is not always mentioned and is rarely expressly regulated, yet when it is absent, arbitration suffers and loses its essence.
Revisiting this principle is not merely an academic exercise, but a practical necessity. Good faith, derived from the Latin fides, refers to trust, loyalty, and credibility—in other words, the idea that one’s word and conduct matter. In law, and particularly in alternative dispute resolution mechanisms, this notion carries significant weight: without trust, arbitration cannot function effectively.
Good faith is a concept of universal scope. Although deeply rooted in legal systems—especially in contract and obligations law—few jurisdictions provide an express definition. Its effects, however, are clear: the presence of good faith may mitigate or even exclude liability, while its absence—manifested through bad faith—may aggravate liability or give rise to adverse legal consequences.
More than mere compliance with rules, good faith requires a standard of conduct. It entails acting with honesty, consistency, and procedural loyalty, recognizing that arbitration is not a battle intended to exhaust the opposing party, but a mechanism to resolve disputes efficiently and fairly.
Manifestations of bad faith are often evident: strategic and unjustified challenges, irrelevant evidentiary requests, procedural incidents designed to delay proceedings, or submissions that confuse rather than clarify. Such conduct not only hinders arbitration—it undermines its substance. And although these actions are not always formally sanctioned, they almost invariably affect credibility before the arbitral tribunal.
The principle of good faith also operates silently when parties decide which battles to pursue and which to avoid. At times, restraint—not filing unnecessary motions, not advancing weak arguments, not delaying proceedings without justification—is the clearest demonstration of respect for the arbitral process. In this sense, good faith is not naïveté, but legal maturity.
In the international sphere, good faith takes on even greater relevance. A paradigmatic example is the Vienna Convention on the Law of Treaties, whose Article 31 establishes that treaties must be interpreted in good faith, in accordance with the ordinary meaning of their terms, in their context, and in light of their object and purpose. This principle also underpins the doctrine of conventionality control developed by the Inter-American human rights system, which requires States to comply with their international obligations without invoking domestic law as justification for non-compliance.
This logic has a direct impact on international arbitration, particularly in the application of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Paradoxically, most arbitration rules do not expressly regulate good faith. However, when it is explicitly recognized—as in the rules of institutions such as the Madrid Court of Arbitration or the London Court of International Arbitration (LCIA)—it serves as a reminder that arbitration is not merely a technical exercise, but also an ethical one.
A judicial or arbitral proceeding may be formally correct and yet profoundly unjust.
The doctrine of acts contra factum proprium, known in common law as estoppel, reinforces this idea: a party cannot act in one manner and later adopt a contradictory position. Consistency is not optional—it is a minimum requirement of good faith, and in arbitral proceedings, it is indispensable.
Perhaps for this reason, good faith—together with the principle of party autonomy—constitutes a silent pillar of arbitration: it may not always be visible, but when it is absent, the entire system begins to falter. Reaffirming its importance is not a theoretical exercise, but a defense of arbitration as a serious, efficient, and legitimate mechanism for dispute resolution.
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