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8th LAWASIA International Moot 2013 L2020-C
At Kuala Lumpur Regional Centre for Arbitration
MEMORIAL
FOR
CLAIMANT
Claimant
Jack Small Ltd.
Respondent
Tan Sen Imports
2
Ⅰ.Table of Contents
Ⅰ.Table of Contents .................................................................................................................. 2
Ⅱ. Abbreviations ....................................................................................................................... 4
Ⅲ. Index of Authorities ............................................................................................................. 5
Ⅳ. Statement of Jurisdiction ...................................................................................................... 9
Ⅴ. Questions Presented ........................................................................................................... 10
Ⅵ. Statement of Facts .............................................................................................................. 11
Ⅶ. Summary of Pleadings ....................................................................................................... 13
Ⅷ. Pleadings of Claimant ........................................................................................................ 15
1. The scope of arbitration agreement includes not only damages but also permanent
injunction and penalty because these orders are relating to this dispute. ....................... 15
2. The applicable law to the substantive issue should be the law of Singapore. .................. 17
2.1. Tribunal shall determine the applicable law to the substantive issue according to the
conflict of law rules. ................................................................................................... 17
2.2 The conflict of law rules of Malaysia leading to application of the law of Singapore.
.................................................................................................................................... 17
3. Claimant has the right to demand damages and Tribunal should order the injunction to
Respondent on the basis of Passing Off in Economic Torts. ......................................... 18
3.1.The concept of Economic Torts ................................................................................. 18
3.2. Passing Off ................................................................................................................ 18
4. Tribunal should determine that Respondent is liable in the tort of Negligence for damage
suffered by Claimant. ..................................................................................................... 21
4.1. Duty of Care .............................................................................................................. 22
3
4.2. Breach of Duty .......................................................................................................... 26
4.3. Consequent Damage .................................................................................................. 27
5.Tribunal should award the Permanent Injunction and Penalty. ........................................ 30
5.1. Claimant requests both permanent injunction and penalty because of preventing the
loss of the sales of fur products served by Claimant .................................................. 30
5.2. This Tribunal has the authority to award the permanent injunction with penalty
under Fast Track Rules and MAA. ............................................................................. 32
6. Prayer for Relief ........................................................................................................... 34
4
Ⅱ. Abbreviations
LIST OF ABBREVIATIONS
Art.
CITES
ESA
Article
Convention on International Trade in Endangered
Species
Endangered Species (Import and Export) Act (Singapore)
Fast Track Rules
ICC
Inc.
KLRCA
Ltd
MAA
p.
Para. / ¶
%
UNCITRAL Model Law
Kuala Lumpur Regional Centre for Arbitration Fast Track
Rules
International Chamber of Commerce
Incorporation
Kuala Lumpur Regional Centre for Arbitration
Limited company
Malaysia Arbitration Act 2005
Page
Paragraph/ paragraphs
Percentage
UNCITRAL Model Law on International Commercial
Arbitration of 1985
5
Ⅲ. Index of Authorities
1. RULES AND LAWS
Abbreviation
Citation
Fast Track Rules
MAA
UNCITRAL Model Law
CITES
Para. No.
Passim
Passim
41(p.30)
2. SCHORALY WORKS
Author
Book/ Article
Para. No.
Diane L. Beers [Diane L. Beers]
For The Prevention of Cruelty The History and
Legacy of Animal Rights Activism in the United
States
p.188-192, Ohio University Press, 2006, UK
15(p.20)
B.S.Markesinis &
S.F.Deakin
[Markesinis, Deakin]
Tort Law 4th Edition
p.466, 174, 157 Oxford University Press, 1999,
UK
10(p.18),
20(p.22)
34(p.27)
John Murphy [Murphy]
Street on Torts 12th Edition
p.338-350, 35, 42 Oxford University Press, 2007,
11(p.18),
17(p.21),
20(p.22),
6
UK
25(p.23),
27(p.25)
38(p.28)
Belden Premaraj [Belden Premaraj]
The Choices of Law – Better Safe Than Sorry, The
Malaysian Arbitration Perspective
8(p.17)
Kevin Y.L. Tan [Kevin Tan ]
The Singapore Legal System
p.238, Singapore University Press, 1999,
Singapore
9(p.18)
wikiHow [wikiHow]
How to Tell the Difference Between Real Fur and
Faux Fur
http://www.wikihow.com/Tell-the-Difference-Bet
ween-Real-Fur-and-Faux-Fur/2013.08.29
13(p.20)
3. INDEX OF CASES
Citation Para. No.
The United Kingdom
7
[Blyth v Birmingham Waterworks Company]
Court of exchequer, 1856/2/6, Blyth v Birmingham Waterworks Company
(1856) 11 Ex Ch 781
[Haley v. London Electricity Board]
House of Loads, 1964/7/28, Haley v. London Electricity Board [1965] AC
77
[Caparo Industries pic v. Dickman]
House of Loads,1990/2/8,Caparo Industries v. Dickman [1990] UKHL 2
[Burton v. Inlington HA]
Royal Courts of Justice,1992/3/18,Dillon LJ Burton v. Ishington HA [1993]
QB 204
[Sutradhar v. Natural Environment Research Council]
House of Loads,2006/7/5,Sutradhar v. Natural Environment Research
Council [2006] UKHL 33
[Network Rail Infrastructure Ltd. v. Conarken Group Ltd.]
Technology and Construction Court , 2010/7/21, Network Rail Infrastructure
Ltd. v. Conarken Group Ltd. [2010] EWHC 1852 (TCC)
33(p.26)
21(p.22)
20(p.21),
21(p.22),
25(p.23),
27(p.24)
19(p.21)
25(p.24)
30(p.25)
8
4. ARITRATION AWARDS
ICC
[p.65/ICC, Final Award in Case 7895]
ICC International Court of Arbitration Bulletin Vol.11/No.1 ‐ spring
2000,1994/8
48(p.33)
9
Ⅳ. Statement of Jurisdiction
Jack Small Ltd, as Claimant, has approached the Kuala Lumpur Regional Centre for
Arbitration, according to the agreement between Claimant and Tan Sen Imports as
Respondent. There is no dispute on the validity and enforceability of the provision of the
agreement.
10
Ⅴ. Questions Presented
1. Whether does the scope of arbitration agreement include discussion about permanent
injunction and penalty?
2. Whether could duty about Respondent’s unlawful act be recognized under the law of torts?
3. Whether does Arbitral Tribunal have authority to award the permanent injunction with
penalty on the basis of Respondent’s real fur products including endanger species?
4. Whether is the compliant which demands the permanent injunction with penalty accepted?
11
Ⅵ. Statement of Facts
The parties
The parties to this dispute are Jack small Ltd, as Claimant, which has been operated by
the small family, and Tan Sen Imports, as Respondent, which imports clothing and other
products primarily from India and China. Both parties sell fur clothing in Singapore.
Those furs are not only real fur but also faux fur. Respondent purchased its products
from China Fur Import & Export Company, which has its headquarters in Tianjin,
Peoples Republic of China. China Fur has no relationship with Tan Sen other than as its
supplier of the fur products involved in this problem.
The problem which occurred between the parties
Because some of the customers of Claimant told that Respondent sold a higher quality
product at a lower price, Claimant suspected that Respondent might sell the real fur
products despite that those are labeled as faux fur products. Therefore, Claimant filed the
complaints to the investigators of the Enforcement Support Office of the CIETS
Secretariat. Then, it examined a number of faux fur products purchased at the Chinese
Emporium run by Respondent. It proved that the fur products were made from real fur
which includes the fur of Asian Golden Cat. In fact, Respondent advertised those
products, which is labeled as faux fur, as “having the touch, feel and smell of real fur”.
Asian Golden Cat
One of the reasons why Asian Golden Cat is threatened is the hunting for its fur and it is
listed on CITES and the IUCN as “Near Threatened”.
Agreement on the arbitration
The parties agreed to submit the dispute to binding arbitration when they were unable to
12
resolve this dispute amicably. The agreement was jointly executed, and the Claimant
submitted the request for arbitration to the KLRCA in accordance with the agreement.
The validity and enforceability of the provisions of the agreement are not disputed.
13
Ⅶ. Summary of Pleadings
1. The scope of arbitration agreement should be interpreted under the parties’ purpose of the
arbitration. In this case, Claimant would like to resolve the dispute to reconstitute the fair
and stable competitive relationship. This purpose needs to prevent Respondent from
selling the fur of endangered species again, so Tribunal can award permanent injunction
and penalty.
2. When Intention of Respondent is accepted, Claimant has the right to demand damages and
Tribunal should order the injunction to Respondent on the basis of Passing Off in
Economic Torts.
3. The wrongfulness of the intention is to be stressed. Respondent made the false slogan and
use it to make customers believe that Respondent’s products are made of faux fur. The
purpose of using this slogan is presumed to suppress the facts intentionally. In addition, it
may cause loss of the faith in faux fur products for the customers who would like to select
animal friendly goods. So, the intention of Respondent is wrongful and this case should be
discussed based on Passing Off.
4. Even if the malicious intention of Respondent is not perfectly proved,
5. Tribunal should conclude that Respondent is liable in the tort of Negligence for the
damages to Claimant. The reasons are as following.
6. First, Respondent owed Claimant the duty of care not to affect Claimant’s sale by unfair
business practice. This is because the requirement of foreseeability and proximity is
satisfied. Claimant and the type of damages in issue are foreseeable. Also there was a
proximate relationship between the parties because Respondent had complete control of
and responsibility for the situation which Respondent’s mislabeling could cause the harm
14
to Claimant. Moreover it is fair, just and reasonable to impose liability on Respondent for
his actions and the damages can be of the type recoverable under Negligence.
7. Second, Respondent breached a duty of care by causing the drop in the sales of Claimant.
8. Finally, Respondent caused damage to Claimant because the damages suffered by
Claimant would not have occurred ‘but for’ the conduct of Respondent. Respondent is
responsible for the probable consequences of the conduct of Respondent.
9. From the above, Respondent should be liable in the tort of Negligence for the damages to
Claimant as a result of mislabeling by Respondent.
10. Also, when the fact that Respondent used the fur of endangered species is disclosed to the
public, the reliance on faux fur products in Singapore must be seriously damaged. It may
cause huge loss in the business of Claimant’s faux fur products. Besides, Respondent may
continue to purchase the cheaper fur products containing the fur of endangered species in
order to keep in a better position than Claimant.
11. And, no rule prevents Tribunal from awarding permanent injunction and penalty under
Fast Track Rules and MAA. If anything, Tribunal has the power and is empowered to
award permanent injunction and penalty.
12. Therefore, Tribunal should award permanent injunction and penalty.
15
Ⅷ. Pleadings of Claimant
1. The scope of arbitration agreement includes not only damages but also permanent injunction and penalty because these orders are relating to this dispute.
1. In this case, Respondent purchased the fur products from China Fur at cheap price.
Although Respondent intended to sell them as faux fur products, Respondent ordered the
products made of the cheap pelts of “Asian Cats” [Clarifications p.1 A-2]. Thus,
Respondent was able to sell “a higher quality product at the lower price” [Further
Clarifications p.1 B-4]. Because of that, more consumers bought the false ‘faux-fur –
products’ served by Respondent than the real ‘faux fur products’ served by Claimant. So,
Claimant became to realize that Claimant was losing customers to Respondent [Further
Clarifications p.1 B-4]. As a result, total sales of Claimant have dropped 40%; sales of fur
products have dropped 70% [Clarifications p.2 B-8].
2. Although both parties had no contractual relationship, they mutually agreed to resolve the
dispute by arbitration after the problem became apparent that the parties would not be able
to resolve this matter amicably. Claimant used the phrase of “any dispute, controversy or
claim arising out of or relating to this contract” in arbitration agreement at the time of the
conclusion of arbitration agreement. In this case, both parties intended to the phrase
“arising out of…” to mean “arising out of or relating to this dispute” [Clarifications p.4
H-1]. Furthermore, “this dispute” need not be interpreted too narrow. So, the scope of
arbitration agreement should be interpreted under the parties’ purpose of the arbitration.
16
3. In this case, Claimant justifiably intended to resolve the dispute in order to reconstitute
the fair and stable competitive relationship, so that they can freely trade and make a profit
without illegal interferences by a competitor. Based on this, Claimant requests Tribunal to
award the three orders below to reconstitute this relationship.
4. Firstly, it is necessary to compensate the damages caused by the lost sales of Claimant’s
products, which was caused by Respondent’s unfair business practice. Secondly, there is a
potential risk of destructive impact on the faux-fur-business, which might occur when the
fact that the products made of endangered species were sold as faux far products is
disclosed to the public. This risk must be removed urgently, because Respondent might
continue to sell the fur products made of endangered species because of the advantages for
Respondent. So, permanent injunction prohibiting Respondent to carry, sell and/or
promote the products made of the endangered species is strongly required for Claimant to
avoid the risk. As there is enough possibility that Respondent will not comply with the
permanent injunction, the penalty against the non-observance of it is also necessary.
5. Considering the reasons mentioned above, it is Claimant’s position that damages,
permanent injunction and penalty are essential for the reconstruction of fair and stable
competitive relationship between the parties in their business.
17
2. The applicable law to the substantive issue should be the law of Singapore.
6. In this case, the law of Singapore should be the law of the substance of the dispute,
according to the conflict of law rules of Malaysia. Also, Tribunal shall refer to the
principle and the cases based on the English common law.
2.1. Tribunal shall determine the applicable law to the substantive issue according to
the conflict of law rules.
7. According to the Fast Track Rules Art.6 (1), Tribunal shall apply the law determined by the
conflict of law rules, in case the parties to the disputes have not designated the applicable
law to the substantive issue. In this dispute, there is no agreement on the applicable law to
the substantive issue. Therefore Tribunal shall apply the conflict of law rules to determine
it.
2.2 The conflict of law rules of Malaysia leading to application of the law of
Singapore.
8. The conflict of law rules in Malaysia, which is the law of the seat of the arbitration,
provides that the applicable law to the substantive issue is to be the one with which “has
the closest and most real connection with the transaction.”[Belden Premaraj, p.27]. In the
present issue, the place of business of both parties is Singapore, and the place where the
issue happened is also in Singapore. Therefore, Tribunal should apply the law of
Singapore to the substantive issue.
9. Also, Law of Singapore is very similar to England law; there is “continuous reception of
18
English common law in practice” [Kevin Tan p.238]. Thus, Tribunal shall refer to the
principles and the cases based on the English Common law.
3. Claimant has the right to demand damages and Tribunal should order the injunction to Respondent on the basis of Passing Off in Economic Torts.
3.1.The concept of Economic Torts
10. The purpose of Economic Torts is to recover economic loss which occurs from business
or trade. To prove the damages or the possibility of damages is one of necessary
requirements to be satisfied. Also, it should be proved that the respondent intended to
injure other’s economic profits [Markesinis, Deakin, p.466]. In this case, the damages
suffered by Claimant was economic loss. Thus Claimant believes Respondent is liable in
economic torts for damages suffered by Claimant.
3.2. Passing Off
11. In law of tort, there are three forms: malice, intension, and negligence. And intension
seems to be concerned with this case. This is because intension signifies the state of mind
of a person who foresees and desires a particular result. In law of tort concerning intention,
Passing off especially is likely to be applied in this case. Moreover for establishing a
liability based on Passing off, five requirements are to be satisfied:
(1) there exists a misrepresentation; (2) the representation is made by a trader in the
course of trade; (3) the misrepresentation is made to his prospective customers, or to
ultimate consumer of his goods. (4) it is caluculated to injure the business or goodwill of
another trader; (5) it causes actual damage to the business or goodwill of the trader by
whom the action is brought, or will probably do so [Murphy, p.338-350].
19
12. In the present case, the false representations such as advertisements fulfill (1) above,
because Respondent intentionally made false declarations and sold the real fur products as
the faux fur products. Therefore, a misrepresentation by Respondent clearly existed. As to
(2) above, Respondent created the slogan of “the touch, feel and smell of real fur”
[Clarifications p.2 B-6]. And customers mistook real fur as faux fur because of this slogan.
As to (3), Respondent is Claimant’s competitor in the fur business. The sales of
Respondent’s leather products didn’t decrease. From the above, it is difficult to consider
that the decrease in sales result from the change of environment or customers preference.
So it is clearly presumed that Respondent attracted the customers of Claimant by unlawful
means. As to (3) and (4) above, Respondent knew that the product was made of real fur at
least [Clarifications p.1 A-2]. So, it is possible to say that Respondent intended to sell real
fur products as false “faux far” products, which were higher in quality and less expensive
than real “faux fur” sold by Claimant so as to attract the customers of Claimant
intentionally. Further analysis of the details about intention is to be followed. As to (5),
the business or goodwill of Claimant, was damaged, because, in this case, Claimant’s total
sales dropped 40%, and sales of fur products dropped 70% [Clarifications p.2 B-8].Given
the above, it can be recognized that the requirements of Passing off were satisfied.
13. In this case, it is important to stress that the intention of Respondent and the wrongfulness
of the intention were clearly existed. Respondent used the slogan of “the touch, feel and
smell of real fur” created by Respondent itself and sold the real fur goods as made of faux
fur. As a result, Claimant, which was Respondent’s competitor in the business, suffered
great loss because of the sharp drop in sales. Furthermore, there are problems about the
20
contents of this slogan. Feeling the fur is one of the ways to distinguish faux fur from real
fur. Generally, the real fur products feel very soft to touch. On the other hands, the faux
fur products feel rough to touch. So it is not difficult to identify them [wikiHow]. Taking
this point into account, it could be presumed that the purpose of this slogan is to prevent
the detection of the misrepresentation. In this respect, the slogan is wrongful and should
be criticized.
14. Furthermore, Respondent knew that the products were not made of faux fur, and created
the slogan based on the clear intention to make the customers believe that their products
were made of faux fur. So, Respondent sold real fur products as faux fur products. As a
result, it is natural that the customers were attracted to less expensive and higher quality
products. Therefore, Respondent intended to attract Claimant’s customers by unlawful
means.
15. In addition, faux fur is naturally more animal-friendly than real fur. Organizations
established for the purpose of animal welfare such as the Fund for Animals have
recommended faux fur products since faux fur was commercialized in 1950s [Diane L.
Beers, p.188-192]. And now, people who love animals all over the world would like to
buy faux products rather than real fur products. The circumstances were just the same in
Singapore [Problem p.1 ¶2].
16. If the fact that real fur products were sold as faux far products is once made public, the
organizations promoting animal welfare will strongly criticize the faux fur products sold
on Singapore. And wider customers will have negative image for faux fur products
21
generally. So, Claimant’s products may also suffer a lot and lose the credibility, and it is
very easy to foresee this result. So, the malicious nature of Respondent’s conducts can
never be over emphasized. So, it is worthy that this case is discussed on the basis of
Passing Off.
17. From the above, Claimant can demand damages from Respondent according to the rules
of Passing Off. The purpose of compensation for damages in Passing Off is to recover the
loss of goodwill. Therefore, Tribunal should recognize that compensation for damages
resulting not only from the lost customers because of Claimant’s misrepresentation.
Tribunal should also take into account some expanded damage to be caused to its business
reputation or dilution [Murphy, p.349].
.
18. In addition, we will mention later about injunction. Furthermore even if the intention of
Respondent isn’t recognized, it could be recognized that Respondent neglect the duty of
care. So this case could be discussed on the basis of Negligence.
4. Tribunal should determine that Respondent is liable in the tort of Negligence for damage suffered by Claimant.
19. In the present case, Claimant would like to argue that Respondent is liable in the tort of
Negligence for the damages suffered by Claimant. A leading case made clear that three
elements are requited for constituting Negligence: Duty of care (4.1); Breach of that duty
(4.2); and Consequent damage (4.3) [Dillon LJ in Burton v. Islington HA] Therefore,
Claimant invites Tribunal to examine these three requirements more closely.
22
4.1. Duty of Care
20. Claimant believes that Respondent owed Claimant a duty of care not to affect Claimant’s
sale by unfair business practice. In order to determine whether there is a duty of care, most
of the recent cases rely on the basic test established by the judgment of Caparo Industries
pic v. Dickman [Murphy p.33]. According to the judgment of Caparo, a duty of care may
now be imposed on, if three requirements are satisfied [Murphy p.33]. Thus, we would
like to discuss them in order. Claimant, bearing in mind the kind of harm involved, must
be able to foresee the damages (4.1.1). There must be a Relationship of Proximately
between the parties (4.1.2). It must be Fair, Just and Reasonable in the circumstances for a
duty of case to be imposed on Respondent (4.1.3). Furthermore, many cases concerning
economic loss have been reluctant to give rise to a duty of care. This is because the duty
of care might be vast, if courts accepted claims concerning economic loss unduly
[Markesinis, Deakin p.174]. So, the damages suffered by Claimant can be recoverable
under Negligence so that Respondent owed Claimant a duty of care (4.1.4).
4.1.1. Respondent, bearing in mind the kind of harm involved, must be able to foresee
the damage.
21. First requirement is satisfied if it must be reasonably foreseeable for Respondent to occur
the damage on Claimant. There are two points to consider whether Respondent must be
able to foresee, bearing the kind of harm involved. For establishing the reasonable
foreseeability, two elements are to be satisfied: (1) Respondent must foresee that the
damage is to be caused to a particular Claimant rather than just to people in general. In
other words, Respondent must foresee that Claimant is part of a category of people who
23
might be affected by the conducts of Respondent [Haley v. London Electricity Board].
(2)The duty must relate to a particular kind of harm which Respondent could reasonably
foresee as arising from its actions [Caparo Industries pic v. Dickman].
22. In the present case, although Respondent intended to sell the imported products as the
faux fur products, Respondent ordered the products made from the cheaper pelts of “Asian
Cats” [Clarifications p.1 A-2]. Thus, Respondent was able to sell “a higher quality product
at a lower price” [Further Clarifications p.1 B-4]. Moreover, Respondent sold its real fur
products at cheaper price than the faux fur products served by Claimant. This meant that
Respondent sold more attractive products for customers than the products sold by
Claimant. As a natural result, customers bought more attractive products for themselves.
Thus, more customers bought the faux fur products served by Respondent than those
served by Claimant.
23. In this case, the products served by Respondent were in direct competition with
Claimant’s synthetic fur product [Clarification p.2 B-3]. Moreover, some of customers
told Claimant that Respondent sold a higher quality product at a lower price [Further
Clarification p.1 B-4]. So, this competitive relationship between Claimant and Respondent
was of common knowledge even though Respondent denies it.
24. From the foregoing reasons, Respondent clearly satisfied the two elements: As to (1)
above, the duty of Respondent related to a particular kind of harm, namely, drop in its
competitor’s sales of fur products. As to (2) above, Claimant was part of a category of
people who might be affected by the conducts of Respondent. In other words, Claimant
was a direct competitor of Respondent in the fur business.
24
4.1.2. There was a proximate relationship between the parties.
25. Second requirement of Caparo test is the existence of proximate relationship between the
parties. In many cases, proximity and foreseeability are treated as coextensive and even
interdependent [Murphy p.35]. Thus, when Respondent must be able to foresee the
damage suffered by Claimant, the proximity is very likely to be satisfied. In addition,
proximity means “a measure of control over and responsibility for the potentially
dangerous situation” [Sutradhar v. Natural Environment Research Council].
26. In this case, Claimant’s sales of fur products were adversely affected by the mislabeling
goods sold by Respondent. Claimant belonged to a category of people who might
foreseeably be affected. So, Claimant and Respondent had sufficient proximity.
Furthermore, except for Respondent’s negligence, there is no reason why the damages
were suffered by Claimant. Respondent dared to sell real fur products. It is natural that
Respondent decided the products sold by them. So, Respondent had complete control of
and responsibility for the situation which could clearly result in harm to Claimant because
of the mislabeling. Thus, in the present case, there was a proximately relationship between
the parties.
4.1.3. It is fair, just and reasonable to impose liability on Respondent for its careless
actions.
27. Third requirement of Caparo test is that it was fair, just, and reasonable that Respondent
owed a duty of care. However, this requirement usually overlaps with the previous two.
Thus, this requirement is to be examined only when the public order might prevent
25
Respondent from owing a duty of care [Murphy p.42].
28. In this case, Respondent would reasonably be able to foresee the damage suffered by
Claimant. So, Respondent could have tried to prevent the damages. However, Respondent
intended to sell the real fur products as faux fur products. Respondent intended to cause
damages suffered by Claimant. Moreover, fur products were important for the business of
Claimant [Clarification p.2 B-7]. Thus, drop in the sales of fur products had a great
influence on Claimant. Moreover, it was likely that Respondent knew this influence on
Claimant. The reason was that Respondent competed with Claimant in the sales of faux
fur products. So, the conduct of Respondent was vicious one. Therefore, in the present
case, it is fair, just, and reasonable that Respondent was imposed a duty of care and
Tribunal need not consider public order.
4.1.4. The damages suffered by Claimant can be of the type recoverable under
Negligence.
29. The forth sub-requirement is that the damage suffered by Claimant can be recoverable. In
this case, the harm suffered by Claimant was the drop in faux fur sales. In other words, the
damage was the loss of profit that Claimant could have gained. Pure economic loss, such
as loss of profit, has not been able to be recovered under Negligence for long time
[Spartan Steel v. Martin]. This is because Defendant’s burden is too heavy, if it has to
compensate the damages for economic loss.
30. However, in these days, some of cases accepted claims seeking for the compensation of
economic loss. In one of these cases, loss of profit can be recoverable under Negligence
because there is no reason to avoid the claim to compensate loss of profit. If courts
26
determine that it is not too wide for Defendant to pay money, Defendant is liable under
Negligence for loss of profit suffered by Claimant [Network Rail Infrastructure Ltd. v.
Conarken Group Ltd.].
31. In this case, the damages claimed by Claimant derived from the drop in fur sales of
Claimant, which was caused by Respondent’s conduct. Moreover, Claimant did not claim
the loss that might be caused by future customer’s choices. So, Respondent’s burden is not
widely spread, even if we admit the recovery of economic loss. It is clear that the damages
are limited to a certain amount of money. In this circumstance, there is no reason to be
reluctance to admit the compensation of loss of profit. Therefore, Respondent is liable in
negligence although the damages suffered by Claimant was loss of profit. Thus,
Respondent owed the duty of care to Claimant.
4.2. Breach of Duty
32. In this case, Claimant believes that Respondent breached a duty of care which Respondent
owed to Claimant by causing the drop in the sales of Claimant.
33. It was established that Respondent did not satisfy the necessary standard of care. This
standard requires that Respondent should reach the standard of an ordinary person, not a
careful person [Blyth v. Birmingham Waterworks Company]. In this case, Respondent
knew that their products were made of real fur [Clarifications p.1 A-2]. Thus, Respondent
sold real fur products by Respondent’s decision. So, even though Respondent had no
knowledge of difference between real fur and high quality faux fur [Moot problem p.4 ¶1],
Respondent could have avoided the sale of real fur products as faux far products. In other
word, Respondent intended to cause damages to Claimant which an ordinary person
27
should have avoided. Respondent did not satisfy the standard of not only careful person
but also an ordinary person. Therefore, Respondent breached a duty of care which it owed
to Claimant.
4.3. Consequent Damage
34. In this case, Claimant believes that the conduct of Respondent caused damages to
Claimant. For making Respondent liable, it must be shown that the particular acts of
Respondent constituted the cause of the damages suffered by Claimant. We would like to
establish the two requirements for satisfying the existence of causation. Firstly, the
conduct of Respondent was the cause in fact. Secondly, Respondent is responsible for the
probable consequence [Markesinis and Deakin p.174].
4.3.1. Cause in Fact: the damages suffered by Claimant would not have occurred ‘but
for’ the conduct of Respondent.
35. First requirement is that the conduct of Respondent was a necessary condition of damages
suffered by Claimant. In this case, “total sales of Claimant have dropped 40%.” Moreover,
“sales of Claimant’s fur products have dropped 70%” [Clarifications p.2 B-8(former)]. It
is difficult to consider that the conduct of Claimant caused it such a large loss of profit.
36. Furthermore, in general, Singapore is known as a collection center of fur products in the
world. So, only by the impact of the faux fur products sold by Respondent, the total
amount of consumption was not likely to decrease as a whole. Thus, it is difficult to
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consider that the drop in sales Claimant suffered was caused by the general decrease of
consumption.
37. Respondent agreed to solve this dispute by arbitration in order to avoid potentially
harmful publicity by Respondent’s mislabeling [Moot problem p.3¶3]. This meant that
Respondent knew that Respondent would suffer loss of credibility by the disclosure of his
mislabeling to the public. Despite these risk of mislabeling, Respondent mislabeled
intentionally. This was because mislabeling would lead to increase its amount of sales.
Moreover, it is likely that Respondent could increase the sales of fur products. Also, from
the foregoing stream of facts, it is reasonable to assume that the rise in Respondent’s sales
corresponded to the drop in Claimant’s sales. Therefore, except for the conduct of
Respondent, there seems to be no reason why the drop in sales of Claimant occurred. It is
highly probable that Claimant’s loss would not have occurred but for the conduct of
Respondent.
4.3.2. Probable Consequence: Respondent is responsible for the probable
consequences of the conduct of Respondent.
38. Second requirement is that the conduct of Respondent was the main cause of the damage
suffered by Claimant. In this case, there was the conduct of customers between the
misconduct of Respondent and the damages suffered by Claimant. When there was an
intervening act of a third party, it is difficult to judge whether the conduct of Respondent
caused the damages suffered by Claimant. Thus, if such an occasion arises, it is to
consider whether Respondent is responsible in law for the damages suffered by Claimant
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[Murphy p.157].
39. Here, Claimant would like to assert that Respondent should be imposed of liability even
though there was intervening act of customers. In this case, Respondent intended that
more customers bought the faux fur products served by Respondent than the faux fur
products served by Claimant. As a result, Respondent achieved the result he intended. In
addition, the rise in Respondent’s sales caused Claimant the drop in faux fur sales (point
1). Moreover both parties have their principal places of business in Singapore and have no
store or outlet in any other country [Clarifications p.1 B-2]. Thus, it is likely that both
parties had many regular customers living in Singapore or surrounding countries (point2).
Furthermore, Claimant became aware that Claimant was losing customers to Respondent,
some of whom told Claimant as to Respondent’s products [Further Clarifications p.1 B-4].
Thus, it is presumable that Claimant and Respondent shared the same layer of customers
(point 3). From these three points, it is probable enough that substantial number of
customers were regular customers of both Claimant and Respondent. As a result, it is
possible enough that the loss of sales by Claimant was caused by the fact that Respondent
won the customers to Claimant. Therefore, Respondent should be liable although there
was intervening act of customers.
40. Conclusion: Thus, Respondent should be liable in the tort of Negligence for damage
suffered by Claimant because of mislabeling by Respondent.
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5.Tribunal should award the Permanent Injunction and Penalty.
5.1. Claimant requests both permanent injunction and penalty because of preventing
the loss of the sales of fur products served by Claimant
5.1.1. Permanent Injunction is required to prevent Respondent from keep selling the
fur products made of the fur of endangered species.
41. Respondent sold the fur products made of the Asian Golden Cats. Asian Golden Cat is
listed on CITES under Appendix I. According to Art.4, ESA, in Singapore, it is prohibited
that any person imports, exports, sells and advertises the products made of any
endangered species. As provided under Art.7 of ESA, some people who wish to import or
export have to apply to the Director-General for permit. However, in the present case,
Respondent did not have the permit to import [Clarifications p.3 D-2]. Therefore,
Respondent violated the Art.4 ESA by importing and selling the products containing the
fur of Asian Golden Cats.
42. Fur factories in China has been labeling their exports, particularly coats and jackets as
"synthetic" when they are actually made with real fur - dog fur, rabbit fur, or the fur from
local wild cats [Problem p.1 ¶4 ]. Moreover, it seems difficult to think that the
management system of a Chinese factory is good enough to check that the fur products do
not contain the fur of endangered species. So, there was enough possibility that the fur
products from China Fur contained the fur of endangered species. In fact, the fur of Asian
Golden Cat was included in the clothing from China Fur. Therefore, Respondent had to
check the quality of the imported products when it imports the products from such country
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as China. However, Respondent failed to do so. Thus, Respondent has legal responsibility
for the fact that it sold the clothing made with the fur of endangered.
43. In this case, Claimant sells faux fur products. Faux fur clothing has been promoted as
animal-friendly alternative to real fur clothing and has become increasingly popular in
many countries. Hence, when the fact that Respondent sold the real fur goods as faux far
is disclosed to the public, the reliance on the faux fur products in Singapore must be
seriously damaged. What was even worse, the real fur goods included the fur of
endangered species prohibited to sell in ESA. So, the damage to the faux fur market in
Singapore must become destructive and can never be recoverable. Consequently, it will
cause huge loss in the business of Claimant’s faux fur products. Therefore, Respondent’s
sale of clothing containing the fur of endangered species constitutes a potential pressing
risk that will cause devastating impact on Claimant’s business.
5.1.2. Tribunal should award the penalty so as to prevent Respondent from
disobeying the permanent injunction.
44. In this case, if Tribunal awards only permanent injunction, Respondent might not comply
with it. This is because there is no effective sanction against Respondent in case of
no-observation. As a result, Respondent might keep getting the obvious merits by
purchasing the cheaper fur products containing the fur of endangered species as the faux
fur products. These products will attract the betrayed customers because of the high
quality and lower price. Therefore, Tribunal should award the penalty to prevent
Respondent from keeping on violating permanent injunction
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5.2. This Tribunal has the authority to award the permanent injunction with penalty
under Fast Track Rules and MAA.
5.2.1. No rule prevents Tribunal from awarding permanent injunction and penalty.
45. There is no rule to forbid awarding the permanent injunction in Fast Track Rules. On the
other hand, interim measures, which include something like preliminary injunction of
injunction, are prohibited under Art.12 (1) Fast Track Rules. This article provides that
“due to the overriding interest of an expeditious determination of the dispute(s) in the
reference as a whole, the parties agree that they shall not apply for an interim award under
these Rules.”
46. Precisely the parties agree to apply Fast Track Rules in order to save money and time.
Therefore, Art.12 (1) Fast Track Rules should be provided on the purpose of
“expeditiousness.” Against this purpose, interim measures need legal processes during the
arbitral proceeding. This is the reason why interim measures are forbidden.
47. In this case, however, the permanent injunction is awarded in the “final award”, so it does
not harm the expeditiousness of the determination. Therefore, even though interim
measures are forbidden in Fast Track Rules, the permanent injunction may not be
forbidden. Malaysia Arbitration Act also does not provide for the permanent injunction.
48. Furthermore, there is no provision about penalty under Fast Track Rules and MAA.
5.2.2. Tribunal has the power to grant permanent injunction with penalty.
49. In ICC Final Award 7589 of August 1994 in France, there was no provision either for the
permanent injunction and the penalty in ICC Rules. Tribunal decided that “under the ICC
Rules, and given the absence of (i) an agreement of the parties to the contrary and (ii) a
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mandatory provision of French procedural law (which was the law of the seat of the
arbitration) requiring otherwise, Tribunal has the power to grant an injunction coupled
with a fine in this Arbitration” [p.65/ICC, Final Award in Case 7895]. Tribunal decided
whether it granted the power to these remedies by itself or not.
50. In the present case, there is also no article to provide the permanent injunction and penalty
under Fast Track Rules. So, Claimant requests that Tribunal may award the permanent
injunction and the penalty when there is the absence of two points as mentioned in ICC
case.
51. In this case, firstly, there is no agreement in which the both parties forbidden Tribunal to
grant permanent injunction with penalty. Secondly, MAA, which is the arbitration law of
the seat of arbitration, does not provide the mandatory rule about the permanent injunction
and penalty. Therefore, it is natural to regard that Tribunal has the power to award
permanent injunction with penalty in the present case.
5.2.3. Tribunal is also empowered to award permanent injunction and penalty.
52. Pursuant to Art.6 (5) (a) Fast Track Rules, “the Arbitral Tribunal shall have the powers
permitted by law and under the Act to ensure the just, expeditious, economical and final
determination of the dispute(s) in the reference. In this regard, the Arbitral Tribunal shall
conduct the arbitration in such manner as the Arbitral Tribunal considers appropriate”
53. Claimants argues that, in this case, it is necessary that Tribunal award the permanent
injunction and penalty in the paragraph 43 of this Memorandum. So, if Tribunal admits
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Claimant’s argument about permanent injunction and penalty is appropriate, Tribunal
shall have the power to award these orders.
6. Prayer for Relief
For the reasons stated above, Claimant respectfully requests that Tribunal should:
(1)Award Claimant full compensation for damages caused by Torts.
(2)Award the Permanent Injunction and Penalty.
Recommended