Memorandum for Claimant - Zivilistisches Seminar

Fifteenth Annual

Willem C. Vis International Commercial Arbitration Moot

14 - 20 March 2008

Memorandum for Claimant

Rechtswissenschaftliche Fakultät der Universität Bern

Faculty of Law of the University of Berne

ON BEHALF OF:

Mediterraneo Wine Cooperative

140 Vineyard Park

Blue Hills

Mediterraneo

CLAIMANT

AGAINST:

Equatoriana Super Markets S.A.

415 Central Business Centre

Oceanside

Equatoriana

RESPONDENT

COUNSEL:

Fabienne Claudon – Christian Dreier – Aylin Erb

Isabelle Ganz – Alain Muster – Leonora Schreier

Memorandum for Claimant University of Berne

- I -

Contents

Abbreviations................................................................................................................................................IV

Authorities ...................................................................................................................................................VII

Cases ........................................................................................................................................................ XIV

Awards ...................................................................................................................................................... XVI

Statement of Facts ...................................................................................................................................... 1

Summary of Argument................................................................................................................................ 2

Arguments on the procedural issues ........................................................................................................ 3

Issue 1: The Tribunal should not stay the arbitral proceedings ............................................................. 3

I. The Tribunal has the power to determine its own jurisdiction first ........................................................ 3

1. The Tribunal has competence-competence ................................................................................. 3

2. The Tribunal is not prevented from continuing proceedings even though the Court

has direct control of its jurisdiction................................................................................................ 4

3. In recognition of the principle of lis pendens, the Tribunal should have priority ........................... 5

II. The Tribunal’s jurisdiction is not seriously in dispute ............................................................................ 6

III. If the Tribunal continues with proceedings, there will be no risk of conflicting decisions

being taken ........................................................................................................................................... 6

IV. The Court cannot interfere with the arbitral proceedings ...................................................................... 7

1. DAL does not provide for anti-suit injunctions issued by courts.................................................... 7

2. Even if the Court had the power to issue an anti-suit injunction and make use of it,

this would not prevent the Tribunal from continuing proceedings................................................. 7

V. Result of Issue 1 ................................................................................................................................... 8

Issue 2: The arbitration agreement was effectively concluded............................................................... 8

I. The arbitration agreement would be in existence even if the sales contract had not

been concluded .................................................................................................................................... 8

1. The arbitration agreement is autonomous from the existence of the main contract ..................... 9

a) The principle of separability also applies to situations where the existence of

the arbitration agreement is disputed and not only its validity ................................................ 9

b) Art. 16(1) DAL enshrines the principle of separability........................................................... 10

c) The arbitration clause itself refers to the principle of separability ......................................... 11

d) Art. 17.1 JAMS Rules enshrines the principle of separability ............................................... 11

2. The arbitration agreement was effectively concluded................................................................. 12

a) The CISG is applicable to the arbitration agreement ............................................................ 12

b) The Parties consented to the arbitration clause ................................................................... 13

II. The arbitration agreement is in existence as part of the concluded sales contract............................. 15

III. Result of Issue 2 ................................................................................................................................. 15


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Issue 3: The Tribunal shall order RESPONDENT to stay its proceedings before the Court

and to pay the resulting costs.................................................................................................................. 15

I. RESPONDENT violated Art. 17(3) JAMS Rules ..................................................................................... 16

II. The Tribunal should draw the inferences that it considers appropriate............................................... 17

1. The Tribunal is competent to order RESPONDENT to stay its court proceedings ......................... 17

a) Conditions the Tribunal must consider when granting interim measures are

fulfilled .................................................................................................................................. 18

b) It is appropriate to issue an anti-suit injunction in the present case...................................... 19

2. The Tribunal shall award costs and expenses............................................................................ 20


Arguments on the substantive law issues .............................................................................................. 21

Issue 4: The contract was effectively concluded ................................................................................... 21

I. RESPONDENT’s offer was irrevocable .................................................................................................. 21

II. Alternatively the offer was not effectively revoked .............................................................................. 23

1. CLAIMANT has not consented to receiving electronic communications of that type,

in that format, at that specific address ........................................................................................ 23

2. CLAIMANT’s e-mail address was not the unilaterally designated information system .................. 24

3. CLAIMANT’s server failure has no consequences ........................................................................ 26

4. Even if the information was sent to the designated information system or no

information system was designated, RESPONDENT’s revocation did not become

effective prior to the dispatch of CLAIMANT’s acceptance............................................................ 27


Issue 5: “Blue Hills 2005” was in conformity with the contract ............................................................ 28

I. Blue Hills 2005 was in conformity with the agreed contractual obligations ......................................... 28

1. RESPONDENT purchased Blue Hills 2005 by sample................................................................... 28

a) RESPONDENT made its offer based on the wine tasted at the Durhan Wine Fair .................. 29

b) RESPONDENT has not made a reasonable examination ........................................................ 29

c) Any particular purpose not inherent to the sample is not of importance with

respect to the conformity of the contract............................................................................... 30

2. The wine was fit for the particular purpose in any event............................................................. 30

a) Promotion is not a specific quality requirement .................................................................... 30

b) Blue Hills 2005 is a prize-winning wine................................................................................. 31

c) Consumption of Blue Hills 2005 causes no health problems................................................ 31

d) Blue Hills 2005 fulfils all legitimate expectations .................................................................. 31

aa) Given its price, RESPONDENT could not expect a wine of high quality..................... 32

bb) The meteorological conditions in 2005 were not ideal for grape

growing................................................................................................................... 32


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e) Blue Hills 2005 was merchantable........................................................................................ 32

II. There was no fundamental breach of contract.................................................................................... 33

1. There is no substantial deprivation ............................................................................................. 33

2. CLAIMANT could not foresee any deprivation caused by its practices ......................................... 34


Relief sought.............................................................................................................................................. 35

Certificate ................................................................................................................................................. XVII


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Abbreviations

Abbreviation Full Text

§(§) paragraph(s)

AA-GBR English Arbitration Act of 1996

AcP Archiv für die civilistische Praxis (Tübingen)

ADRLJ The Arbitration and Dispute Resolution Law Journal (Colchester UK)

Art. Article

ASoC Amendment of Statement of Claim

BGE Entscheidungen des Schweizerischen Bundesgerichts, amtliche

Sammlung (Decisions of the Swiss Federal Supreme Court)

BGer Bundesgericht (Swiss Federal Supreme Court)

BGH Bundesgerichtshof (German Supreme Court)

BR Brussels Regulation EC 44/2001

CCP-GER German Code of Civil Procedure

CdA Cour d’appel (French Court of Appeal)

CdC Cour de cassation (French Court of Cassation)

C-EC United Nations Convention on the Use of Electronic

Communications in International Contracts of 23 November 2005

cf. confer

CISG United Nations Convention on Contracts for the International Sale of

Goods of 11 April 1980

Cl.Ex. Claimant’s Exhibit

CLAIMANT Mediterraneo Wine Cooperative

CoA Court of Appeal

Court Commercial Court of Vindobona

DAL Danubian Arbitration Law

Ed. Editor

E. Erwägung (consideration)

e.g. exempli gratia (for example)

et seq(q). et sequen(te)s (and the following)

EWCA (Civ) England and Wales Court of Appeal (Civil Division)

fn. foot note


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FTAC Foreign Trade Arbitration Commission of the USSR Chamber of

Commerce and Industry

Guide to ML-EC UNCITRAL Model Law on Electronic Commerce, Guide to

Enactment of 1996

HCHK High Court Hong Kong

HG Handelsgericht (Commercial Court)

Hrsg. Herausgeber (Editor)

ICC International Chamber of Commerce

ICCA International Council for Commercial Arbitration

ICSID International Centre for Settlement of Investment Disputes

i.c.w. in connection with

i.e. id est (that is)

IHR Zeitschrift für das Recht des internationalen Warenkaufs und -

vertriebs (Hamburg)

ISBW Internationales Schiedsgericht der Bundeskammer der

gewerblichen Wirtschaft

JAMS Rules JAMS International Arbitration Rules of 2005

Jnl. Int. Arb. Journal of International Arbitration (Geneva)

LJ-R Letter JAMS to RESPONDENT on 21 June 2007

LSoC Letter of 18 June 2007 enclosed with Statement of Claim

ML-A UNCITRAL Model Law on International Commercial Arbitration as

adopted on 21 June 1985

ML-A (2006) UNCITRAL Model Law on International Commercial Arbitration as

adopted on 7 July 2006

ML-EC UNCITRAL Model Law on Electronic Commerce of 1996

NAI Netherlands Arbitration Institute

NJA Nytt Juridiskt Arkiv (Stockholm)

NJW Neue juristische Wochenschrift (München)

No. Number

N.Y. New York

NYC New York Convention on the Enforcement of Foreign Arbitral

Awards of 1958


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OLG Oberlandesgericht (German Regional Higher Court)

p.(p.) page(s)

PICC(94) UNIDROIT Principles of International Commercial Contract of 1994

PICC(04) UNIDROIT Principles of International Commercial Contract of 2004

PO Procedural Order

Q. Question

RESPONDENT Equatoriana Super Markets S.A.

Rev. arb. Revue de l’arbitrage (Paris)

RIW Recht der internationalen Wirtschaft (Frankfurt am Main)

sec. section

SchiedsVZ Die neue Zeitschrift für Schiedsverfahren (München)

sent. sentence

SoC Statement of Claim

SoD Statement of Defense

SSC Swedish Supreme Court

TC Tribunal Cantonal du Valais

UN United Nations

UNCITRAL United Nations Commission on International Trade Law

US$ United States Dollar

USDC United States District Court

Vol. Volume

v. versus (against)

YCA Yearbook Commercial Arbitration

Names of countries are generally abbreviated as three letters, according to the official code.


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Authorities

Books and Commentaries:

AUDIT B., La vente internationale de marchandise – Convention des Nations-Unies du 11 avril 1980, LGDJ, Paris 1990 (cited as: AUDIT)

BAMBERGER/ROTH, BGB - §§1297-2385 – EGBGB – CISG, Verlag C.H.Beck, München 2003 (cited as: BAMBERGER/ROTH, AUTHOR)

BERNSTEIN H./LOOKOFSKY J., Understanding the CISG in Europe, second Edition, Kluwer Law International, The Hague/London/New York 2003 (cited as: BERNSTEIN/LOOKOFSKY)

BIANCA C. M./BONELL M. J., Commentary on the International Sales Law – The 1980 Vienna Sales Convention, Giuffrè, Milan 1987 (cited as: BIANCA/BONELL, AUTHOR)

BOHNET M., Ullmann’s encyclopedia of industrial chemistry, Vol. 12, sixth Edition, Wiley – VCH, Weinheim 2003 (cited as: BOHNET)

BRUNNER C., UN-Kaufrecht-CISG – Kommentar zum Übereinkommen der Vereinten Nationen über Verträge über den internationalen Warenkauf von 1980 – Unter Berücksichtigung der Schnittstellen zum internen Schweizer Recht, Stämpfli Verlag AG, Bern 2004 (cited as: BRUNNER)

CALAVROS C., Das UNCITRAL-Modellgesetz über die internationale Handelsschiedsgerichtsbarkeit, in: Schriften zum deutschen und europäischen Zivil-, Handels- und Prozessrecht, Bd. 116, Verlag Ernst und Werner Gieseking, Bielefeld 1988 (cited as: CALAVROS)

FOUCHARD/GAILLARD/GOLDMAN, On International Commercial Arbitration – Commentary and Materials, Kluwer Law International, The Hague 1999 (cited as: FOUCHARD/GAILLARD/GOLDMAN)

HERBER R./CZERWENKA B., Internationales Kaufrecht – Kommentar zu den Übereinkommen der Vereinten Nationen vom 11. April 1980 über Verträge über den internationalen Warenkauf, Verlag C.H.Beck, München 1991

(cited as: HERBER/CZERWENKA)

HOLTZMANN H. M./NEUHAUS J. E., A Guide to the UNCITRAL Model Law on International Commercial Arbitration, Kluwer Law and Taxation Publishers, Deventer 1989 (cited as: HOLTZMANN/NEUHAUS)

HONNOLD J. O., Documentary History of the Uniform Law for International Sales, Kluwer Law and Taxation Publishers, The Hague 1989 (cited as: HONNOLD, Documentary History)

HONSELL H. (ED.), Kommentar zum UN-Kaufrecht, Springer Verlag, Berlin/Heidelberg/New York 1997 (cited as: HONSELL, AUTHOR)


- VIII -

HUBER P./MULLIS A., The CISG – A new Textbook for students and practitioners, Sellier European law publishers, München 2007 (cited as: HUBER/MULLIS, AUTHOR)

HUSSLEIN-STICH G., Das UNCITRAL-Modellgesetz über die internationale Handelsschiedsgerichtsbarkeit, Carl Heymanns Verlag KG, Köln/Berlin/Bonn/München 1990 (cited as: HUSSLEIN-STICH)

KAROLLUS M., UN-Kaufrecht – Eine systematische Darstellung für Studium und Praxis, Springer Verlag, Wien/New York 1991 (cited as: KAROLLUS)

KAUFMANN-KOHLER G./RIGOZZI A., Arbitrage international – Droit et pratique à la lumiere de la LDIP, Schulthess, Zurich/Bâle/Genève 2006

(cited as: KAUFMANN-KOHLER/RIGOZZI)

KRONKE H./MELIS W./SCHNYDER A. (Hrsg.), Handbuch Internationales Wirtschaftsrecht, Verlag Dr. Otto Schmidt, Köln 2005 (cited as: KRONKE/MELIS/SCHNYDER, AUTHOR)

LEW J. D. M./MISTELIS L. A./KRÖLL S. M., Comparative International Commercial Arbitration, Kluwer Law International, The Hague/London/New York 2003

(cited as: LEW/MISTELIS/KRÖLL)

NEUMAYER K. H./MING C., Convention de Vienne sur les contrats de vente internationale de marchandise – Commentaire, Publication Cediac, Lausanne 1993

(cited as: NEUMAYER/MING)

POUDRET J. F./BESSON S., Comparative Law of International Arbitration, second Edition, Thomson Sweet & Maxwell, London 2002 (cited as: POUDRET/BESSON)

REDFERN A./HUNTER M., Law and Practice of International Commercial Arbitration, fourth Edition, Thomson Sweet & Maxwell, London 2004

(cited as: REDFERN/HUNTER)

ROBINSON J., Jancis Robinson’s Wine Course, third Edition, Abbeville Press, London 2003 (cited as: ROBINSON)

SCHLECHTRIEM P., Internationales UN-Kaufrecht, vierte Auflage, Mohr Siebeck, Tübingen 2007 (cited as: SCHLECHTRIEM)

SCHLECHTRIEM P./SCHWENZER I. (ED.), Commentary on the UN Convention on the International Sale of Goods (CISG), second (English) Edition, Oxford University Press, Oxford/New York 2005 (cited as: SCHLECHTRIEM/SCHWENZER (E), AUTHOR)

SCHLECHTRIEM P./SCHWENZER I. (HRSG.), Kommentar zum Einheitlichen UN-Kaufrecht – CISG, vierte Auflage, Verlag C.H.Beck, München 2004 (cited as: SCHLECHTRIEM/SCHWENZER (D), AUTHOR)

SCHWAB K.-H./WALTER G., Schiedsgerichtsbarkeit, siebte Auflage, Helbing & Lichtenhahn, Basel 2005 (cited as: SCHWAB/WALTER)


- IX -

SCHWENZER I./FOUNTOULAKIS C., International Sales law, Routledge-Cavendish, Oxon 2007 (cited as: SCHWENZER/FOUNTOULAKIS)

SOERGEL H. TH./STEIN U., Bürgerliches Gesetzbuch – Schuldrechtliche Nebengesetze 2 – CISG, 13. Auflage, Verlag Kohlhammer, Stuttgart 2000 (cited as: SOERGEL, AUTHOR)

STAUDINGER J./MAGNUS U., Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Sellier – de Gruyter, Berlin 2005 (cited as: STAUDINGER/MAGNUS)

WITZ W./SALGER H.-C./LORENZ, International Einheitliches Kaufrecht, Verlag Recht und Wirtschaft GmbH, Heidelberg 2000 (cited as: WITZ/SALGER/LORENZ)


- X -

Articles

BACHAND F., The UNCITRAL Model Law’s Take on Anti-Suit Injunctions, in: Gaillard E. (Ed.), IAI Series on International Arbitration No. 2, Anti-Suit Injunctions in International Arbitration, Juris Publishing, Inc. and Staempfli Verlag AG, Berne/New York 2005, pp. 87 et seqq.

(cited as: BACHAND)

BURGARD U., Das Wirksamwerden empfangsbedürftiger Willensäusserungen im Zeitalter moderner Telekommunikation, in: Archiv für civilistische Praxis (AcP), 195. Band, 1995, pp. 74 et seqq. (cited as: BURGARD)

CHORNIAK J., How Sweet It Is: Chaptalization, available on: http://winemakermag.com/feature/216.html (cited as: CHORNIAK)

CLEMENS R., Die elektronische Willenserklärung – Chancen und Gefahren, in: Neue Juristische Wochenschrift (NJW) 1985, Heft 34, pp. 1998 et seqq. (cited as: CLEMENS)

DE BOISSÉSON M., Anti-Suit Injunctions Issued by National Courts At the Seat of the Arbitration or Elsewhere, in: Gaillard E. (Ed.), IAI Series on International Arbitration No. 2, Anti-Suit Injunctions in International Arbitration, Juris Publishing, Inc. and Staempfli Verlag AG, Berne/New York 2005, pp. 65 et seqq. (cited as: DE BOISSÉSON)

DIMOLITSA A., Separability and Kompetenz-Kompetenz, in: ICCA Congress series no. 9 (Paris/1999), pp. 217-256 (cited as: DIMOLITSA)

EISELEN S., E-Commerce and the CISG: Formation, Formality and Validity, Reproduced with permission of 6 Vindobona Journal of International Law & Arbitration (2002), pp. 305-318 (cited as: EISELEN)

GOLDMAN B., Note – Cour de cassation (1re Ch. civ.) 6 décembre 1988 – Société Navimpex Centrala Navala v. société Wiking Trader, in: Rev. arb. 1989 No. 4, pp. 641–652 (cited as: GOLDMAN)

FERRARI F., General Principles and International Uniform Commercial Law Convention: a Study of the 1980 Vienna Sales Convention and the 1988 Unidroit Conventions, in: Uniform Law Review – Revue de Droit Uniforme, 1997-1, pp. 451 et seqq.

(cited as: FERRARI)

GRAF VON BERNSTORFF C., Electronic-Commerce – Rechtsprobleme, in: Recht der Internationalen Wirtschaft (RIW) Heft 1/2000, pp. 14 et seqq. (cited as: GRAF VON BERNSTORFF)

HILBERG S. J., Das neue UN-Übereinkommen zum elektronischen Rechtsverkehr und dessen Verhältnis zum UN-Kaufrecht (Teil 1), in: Internationales Handelsrecht – International Commercial Law – Zeitschrift für das Recht des internationalen Warenkaufs und -vertriebs (IHR), 1/2007, pp. 12 et seqq.(cited as: HILBERG (1))

HILBERG S. J., Das neue UN-Übereinkommen zum elektronischen Rechtsverkehr und dessen Verhältnis zum UN-Kaufrecht (Teil 2), in: Internationales Handelsrecht – International Commercial Law – Zeitschrift für das Recht des internationalen Warenkaufs und -vertriebs (IHR), 2/2007, pp. 56 et seqq.

(cited as: HILBERG (2))


- XI -

KOCH R., The Concept of Fundamental Breach of Contract under the United Nations Convention on Contracts for the International Sales of Goods (CISG). Reproduced with permission of Pace ed., Review of the Convention on Contracts for the International Sale of Goods (CISG) 1998, Kluwer Law International (1999), pp. 177-354 (cited as: KOCH)

LEW J. D. M., Anti-Suit Injunctions Issued by National Courts to Prevent Arbitration Proceedings, in: Gaillard E. (Ed.), IAI Series on International Arbitration No. 2, Anti-Suit Injunctions in International Arbitration, Juris Publishing, Inc. and Staempfli Verlag AG, Berne/New York 2005, pp. 25 et seqq. (cited as: LEW)

LÉVY L., Anti-Suit Injunctions Issued by Arbitrators, in: Gaillard E. (Ed.), IAI Series on International Arbitration No. 2, Anti-Suit Injunctions in International Arbitration, Juris Publishing, Inc. and Staempfli Verlag AG, Berne/New York 2005, pp. 115 et seqq.

(cited as: LÉVY)

MAYER P., Note – Cour d’appel de Paris (1re Ch. suppl.) 28 novembre 1989; Cour d’appel de Paris (1re Ch. suppl.) 8 Mars 1990, in: Rev. arb. 1990 No. 3, pp. 675 et seqq. (cited as: MAYER, Note)

MAYER P., The Limits of Severability of the Arbitration Clause, in: ICCA Congress series no. 9 (Paris/1999), pp. 261 – 267 (cited as: MAYER, Limits)

MAZZOTTA F., Notes on the United Nations Convention on the use of Electronic Communications in International Contracts and its effects on the United Nations Convention on Contracts for the International Sale of Goods, in: Rutgers Computer & Technology Law Journal, Vol. 33, No. 2, 2007, pp. 252 et seqq.(cited as: MAZZOTTA)

NEUMAYER K. H., Offene Fragen zur Anwendung des Abkommens der Vereinten Nationen über den internationalen Warenkauf, in: Recht der Internationalen Wirtschaft (RIW), 1994, Heft 2, pp. 99 et seqq.(cited as: NEUMAYER)

PENGELLEY N., Separability Revisited: Arbitration Clauses and Bribery, Fiona Trust & Holding Corp. v. Privalov, in: Jnl. Int. Arb., Vol. 24 No. 5 (2007), pp. 445-454 (cited as: PENGELLEY)

SAMUEL A., Separability of Arbitration Clauses – some akward questions about the Law on Contracts, Conflict of Laws and the Administration of Justice, in: 9 ADRLJ (2000), p. 36 et seq. (cited as: SAMUEL)

SCHLECHTRIEM P., CISG – Auslegung Lückenfüllung und Weiterentwicklung, Vortrag gehalten auf einem Symposium zu Ehren von Dr. iur. Dr. h.c. Frank Vischer am 11. Mai 2004 in Basel (cited as: SCHLECHTRIEM, CISG-Auslegung)

SCHWENZER I./MOHS F., Old Habits Die Hard: Traditional Contract Formation in a Modern World, in: Internationales Handelsrecht – International Commercial Law – Zeitschrift für das Recht des internationalen Warenkaufs und -vertriebs (IHR), 6/2006, pp. 239 et seqq. (cited as: SCHWENZER/MOHS)


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SCHLOSSER P., Arbitral Tribunals or State Court - Who must defer to whom?, in: P. A. Karrer (Ed.), ASA Special Series No.15, Basel 2001, pp. 15 et seqq. (cited as: SCHLOSSER, ASA)

SCHLOSSER P., Der Grad der Unabhängigkeit einer Schiedsvereinbarung vom Hauptvertrag, in: Law of International Business and Dispute Settlement in the 21st Century, Liber Amicorum Karl-Heinz Böckstiegel, Carl Heymanns Verlag KG, Köln/Berlin/Bonn/München 2001, pp. 697-713 (cited as: SCHLOSSER, Unabhängigkeit)

SCHROETER U. G., Der Antrag auf Feststellung der Zulässigkeit eines schiedsrichterlichen Verfahrens gemäß § 1032 Abs. 2 ZPO, in: SchiedsVZ 2004, Heft 6, pp. 288 et seqq. (cited as: SCHROETER)

SILFVEN S., Weather rules winegrowing in cold-weather climates, available on: http://info.detnews.com/wine/columns/silfven/details.cfm?id=266(cited as: SILFVEN)

SPAIC A., Approaching Uniformity in International Sales Law: Comparative Analyses of the Concept of Fundamental Breach under the UN Convention on Contracts for the International Sale of Goods (CISG), December 2006, available on: <http://www.cisg.law.pace.edu/cisg/biblio/spaic.html> (cited as: SPAIC)

SVERNLÖV C. M., The Evolution of the Doctrine of Separability in England: Now Virtually Complete? The Doctrines of “Separability” of the Arbitration Agreement and “Compétence de la Compétence”, in: Jnl. Int. Arb., Vol. 9 No. 3 (1992), pp. 115-122 (cited as: SVERNLÖV)

VINCZE A., Remarks on whether and the extent to which the UNIDROIT Principles may be used to help interpret Art. 16 of the CISG, October 2004, available on: <http://www.cisg.law.pace.edu/cisg/text/anno-art-16.html>(cited as: VINCZE)


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Materials

CISG-Advisory Council, www.cisg law.pace.edu/cisg/CISG-AC-op1.htlm (cited as: CISG-Advisory council)

Commentary on the Draft Convention on Contracts for the International Sale of Goods prepared by the Secretariat; UN DOC. A/CONF. 97/5; available on <http://www.cisg-online.ch/cisg/materials-commentary.html> (cited as: Secretariat Commentary)

International Law Association, Conference Report Toronto 2006 (Final Report on lis pendens and Arbitration) (cited as: ILA Report)

Secretariat of UNCITRAL, Seventh Secretariat Note: Analytical Commentary on Draft Text A/CN.9/264, 25 March 1985 (cited as: Seventh Secretariat Note)

UNIDROIT Principles of International Commercial Contracts with Official Commentary (1994) (cited as: Official Commentary PICC(94))


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Cases

France

Cour de cassation (1re Chambre civile), 6 December 1988, Société Navimpex Centrala Navala v. Société Wiking Trader, Rev. arb. 1989 No. 4, p. 641

(cited as: CdC, FRA, 1988)

Cour de cassation (1re Chambre civile), 25 October 2005, Société Omenex v. M. Hugon, Rev. arb. 2005 No. 4, pp. 1098-1099 (cited as: CdC, FRA, 2005)

Cour d’appel de Paris (1re Chambre supplémentraire), 8 March 1990, Coumet et Ducler v. Société Polar-Rakennusos a Keythio, Rev. arb. 1990 No. 3, pp. 675 et seqq.

(cited as: CdA, FRA, 1990)

Germany

Oberlandesgericht Düsseldorf, 2 July 1993, No. 17 U 73/93 (cited as: OLG Düsseldorf, GER, 1993)

Oberlandesgericht Düsseldorf, 24 April 1997, No. 6 U 87/96 (cited as: OLG Düsseldorf, GER, 1997)

Bundesgerichtshof, 3 April 1996, CISG-online No. 135, VIII ZR 51/95 (cited as: BGH, GER, 1996)

Bundesgerichtshof, 25 April 2006, Az.: ZB 20/05 (cited as: BGH, GER, 2006)

Hong Kong

Supreme Court of Hong Kong, High Court, 29 October 1991, Fung Sang Trading Ltd. v. Kai Sun Sea Products & Food Co. Ltd., YCA, Vol. XVII (1992), pp. 289-304 (cited as: HCHK, HKG, 1991)

Sweden

Swedish Supreme Court, 24 March 1976, Hermansson v. AB Asfaltbeläggningar, NJA 1976, pp. 125 et seqq. (cited as: SSC, SWE, 1976)

Switzerland

Handelsgericht des Kantons Aargau, 11 June 1999, CISG-online No. 494, No. OR 98.00010 (cited as: HG Aargau, SUI, 1999)

Bundesgericht, 2 September 1993, National Power Corporation v. Westinghouse International Projects Company, Westinghouse Electric S.A., Westinghouse Electric Corporation, Burns & Roe, Enterprises Inc. et Tribunal arbitral, BGE 119 II 380

(cited as: BGer, SUI, 1993)

Bundesgericht, 14 May 2001, Fomento de Construcciones y Contratas S.A. v. Colon Container Terminal S.A., BGE 127 III 279

(cited as: BGer, SUI, 2001)


- XV -

Bundesgericht, 19 February 2007, B. Fund Ltd v. A. Group Ltd. und das Schiedsgericht, BGE 133 III 139 (cited as: BGer, SUI, 2007)

Tribunal cantonal du Valais, 28 October 1997, CISG-online No. 328, Cl 97 167 (cited as: TC Valais, SUI, 1997)

United Kingdom

Court of Appeal, 28 January 1993, Harbour Assurance Co. (UK) Ltd. v. Kansa General International Insurance Co. Ltd., YCA, Vol. XX (1995), pp. 771-790

(cited as: CoA, GBR, 1993)

Court of Appeal, 2 December 2004, Through Transport Mutual Insurance (Eurasia) Ltd. v. New India Assurance Association Company Ltd., EWCA Civ 1598 (cited as: CoA, GBR, 2004)

United States of America

United States District Court, Western District of New York, 1 August 1995, 94-CV-0827E(H), Comptek Telecommunications, Inc. v. IVD Corporation and Aicesa S.A. de C.V., YCA, Vol. XXII (1997), pp. 905 et seqq.

(cited as: USDC N.Y., USA, 1995)


- XVI -

Awards

Foreign Trade Arbitration Commission of the USSR Chamber of Commerce and Industry

Foreign Trade Arbitration Commission of the USSR Chamber of Commerce and Industry, 9 July 1984, Award No. 109/1980, All-Union Foreign Trade Association “Sojuznefteexport” (USSR) v. Joc Oil Limited (Bermuda), YCA, Vol. XVIII (1993), pp. 92-110

(cited as: FTAC, 1984)

International Chamber of Commerce

ICC Case No. 8887, April 1997, ICC Bull., Vol. 11, No. 1, 2000, p. 91 (cited as: ICC, 1997)

ICC Case No. 10596, 2000, Interlocutory Award, YCA, Vol. XXX (2005), pp. 66-76 (cited as: ICC, 2000)

ICC Case No. 10973, 2001, Interim Award, YCA, Vol. XXX (2005), pp. 77-84 (cited as: ICC, 2001)

ICC Case No. 8307, 14 May 2001, Interim Award, Gaillard E. (Ed.), IAI Series on International Arbitration No. 2, Anti-Suit Injunctions in International Arbitration, Juris Publishing, Inc. and Staempfli Verlag AG, Berne/New York 2005, pp. 307-315

(cited as: ICC, 5.2001)

ICC Case No. 10623, 7 December 2001, Salini Costruttori S.p.A. v. Federal Democratic Republic of Ethiopia, Gaillard E. (Ed.), IAI Series on International Arbitration No. 2, Anti-Suit Injunctions in International Arbitration, Juris Publishing, Inc. and Staempfli Verlag AG, Berne/New York 2005, pp. 228-306

(cited as: ICC, 12.2001)

International Center for Settlement of Investment Disputes

ICSID Case No. ARB/01/13, 16 October 2002, Procedural Order No. 2, SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan, ICSID Rev. – FIJL, 2003, pp. 290-292

(cited as: ICSID, 2002)

Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft (Vienna)

Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft, 15 June 1994, No.SCH-4366, Wien (Vienna), Austria (cited as: ISBW Vienna, 1994)

Netherlands Arbitration Institute

Netherlands Arbitration Institute, 15 October 2002, No. 2319 (cited as: NAI, 2002)


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Statement of Facts

CLAIMANT Mediterraneo Wine Cooperative is a producer and marketer of wine. The grapes for

the wine are grown by the members of the cooperative (SoC, §§1-2).

RESPONDENT Equatoriana Super Markets S.A. is the largest operator of supermarkets as well as the

largest retailer of wine in Equatoriana (SoC, §4).

7-10 May 2006 Mr. Cox, sales manager for CLAIMANT, and Mr. Wolf, wine buyer for RESPONDENT,

meet at a trade Fair in Durhan, Oceania. At this Fair, the wine “Blue Hills 2005”

produced by CLAIMANT wins a prize. Since RESPONDENT is interested in purchasing

this wine, Mr. Cox and Mr. Wolf exchange business cards with their addresses

(SoC, §5).

1 June 2006 After some initial correspondence between the Parties, Mr. Cox offers in a letter to

Mr. Wolf to sell “Blue Hills 2005” at a price of US$72 per case containing 12 bottles

(Cl.Ex.No.2) for an order of 10,000 cases and a price of US$68 per case for an order

of 20,000 cases (Cl.Ex.No.3).

10 June 2006 Mr. Wolf responds to this offer by making a counter offer including a contract, which

he sends to CLAIMANT by e-mail and courier (Cl.Ex.No.4-5). Therein he offers to

purchase 20,000 cases at a price of US$68 per case and indicates that RESPONDENT

would have to turn to another producer should the contract closing be delayed beyond

21 June 2006 (Cl.Ex.No.4).

11 June 2006 Ms. Kringle, assistant to Mr. Cox, informs Mr. Wolf that Mr. Cox is absent but will

return on 19 June 2006. She assures him that the purchase order will receive Mr. Cox’

immediate attention on his return (Cl.Ex.No.6).

11 June 2006 Mr. Wolf responds and asks Ms. Kringle to be sure to have Mr. Cox act on the

purchase order immediately on his return (Cl.Ex.No.7).

19 June 2006 Morning: Mr. Cox signs RESPONDENT’s contract and sends it back by courier

(Cl.Ex.No.8).

Afternoon: Mr. Cox receives an e-mail from Mr. Wolf in which he attempts to

withdraw the offer based on newspaper articles reporting that anti-freeze had been

used to sweeten wine in Mediterraneo (Cl.Ex.No.9). The e-mail is dated

18 June 2006, but was delayed by a service failure in the internal network of CLAIMANT

(SoC, §10; PO2, Q.26).


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20 June 2006 Mr. Cox writes to Mr. Wolf and insists that the contract was concluded. He explains

that the articles are completely incorrect and notifies him of the first shipment of wine

as stipulated in the contract (Cl.Ex.No.10).

Mr. Wolf answers the same day that RESPONDENT will not take delivery because it

claims to have withdrawn its offer (Cl.Ex.No.11).

15 July 2006 Mr. Cox submits an expert report to Mr. Wolf, prepared by Professor Sven Ericson, a

world renowned leader in research on improving wine production (Cl.Ex.No.12-13).

Mr. Cox explains that CLAIMANT is still holding the wine and is waiting for shipping

directions.

25 July 2006 Mr. Wolf answers that RESPONDENT still refuses to take delivery (Cl.Ex.No.14).

18 June 2007 CLAIMANT submits a Request for Arbitration and Statement of Claim to JAMS. A copy

is sent to RESPONDENT (LSoC).

6 July 2007 CLAIMANT receives a notice from the Commercial Court of Vindobona, Danubia, that

RESPONDENT has commenced an action requesting the Court to issue a decision

stipulating that no arbitration agreement existed between CLAIMANT and RESPONDENT

(ASoC, §2).

10 July 2007 CLAIMANT submits an amendment to the Request for Arbitration and the Statement of

Claim and asks the Tribunal to order RESPONDENT to terminate its litigation and pay

the full costs of the litigation (ASoC, §6).

17 July 2007 RESPONDENT submits its Statement of Defense in which it requests the Tribunal to

stay the proceedings until the Commercial Court of Vindobona has ruled on the

existence of the arbitration agreement (SoD, §21).

Summary of Argument

The following shall demonstrate in law and fact that:

• The Tribunal should exercise its discretionary power and not stay the arbitral proceedings [Issue 1].

• An arbitration agreement was validly concluded between the Parties [Issue 2].

• RESPONDENT’s action before the Commercial Court of Vindobona is in violation of Art. 17(3) JAMS

International Arbitration Rules and the Tribunal should therefore order RESPONDENT to terminate its

litigation in court and award all costs [Issue 3].

• A contract was validly concluded between the Parties [Issue 4].

• The wine offered by CLAIMANT was in conformity with the contract and RESPONDENT could therefore

not refuse to take delivery [Issue 5].


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Arguments on the procedural issues

Issue 1: The Tribunal should not stay the arbitral proceedings

1 The Tribunal is requested to find that it will continue the arbitral proceedings and that RESPONDENT’s

request for a stay, while the action filed before the Commercial Court of Vindobona (hereinafter

“Court”) is pending, is to be rejected.

2 The Parties chose, in their arbitration clause, Vindobona (Danubia) as the place of arbitration

(Cl.Ex.No.5, §13). Danubia has enacted the 1985 text of the UNCITRAL Model Law on International

Commercial Arbitration (hereinafter “ML-A”) with a single amendment to Art. 8 (SoC, §15). The law

governing the arbitration is the law at the seat of the arbitral tribunal, the so-called lex arbitri

(REDFERN/HUNTER, §2.14), and the Arbitration Law of Danubia (hereinafter “DAL”) therefore applies.

3 According to Art. 8(3) DAL, it is at the Tribunal’s discretion to decide whether or not the arbitral

proceedings should continue or stay while an action is pending before a court. The Tribunal has

already decided that there would be no immediate stay of the arbitral proceedings (PO1, §7).

4 In order to safeguard the efficiency and the speed of the arbitral proceedings and to give effect to the

Parties’ agreement to submit their disputes to arbitration, the Tribunal should continue and not grant

a stay. The reasons for this are: First, there is a widely recognized principle that an arbitral tribunal

has the power to decide on its own jurisdiction first [I.]. Second, the jurisdiction of the Tribunal is not

seriously in dispute [II.]. Third, if the Tribunal continued the arbitral proceedings, there would not be

a risk of contradictory decisions being taken [III.]. Fourth, the Tribunal is requested to take into

consideration that the Court cannot intervene with the arbitral proceedings [IV.].

I. The Tribunal has the power to determine its own jurisdiction first

5 CLAIMANT will demonstrate that a stay of the proceedings should not be granted due to the widely

recognized principle of competence-competence, which empowers the Tribunal to decide on its own

jurisdiction [I.1.]. The direct control of the Tribunal’s jurisdiction by the Court according to

Art. 8(2) DAL does not prevent the Tribunal from continuing its proceedings [I.2.]. Recognizing the

principle of lis pendens, which confers priority to the court first seized, the Tribunal should continue

its proceedings [I.3.].

1. The Tribunal has competence-competence

6 The doctrine known as competence-competence states that “the arbitrators have jurisdiction to

determine their own jurisdiction” (FOUCHARD/GAILLARD/GOLDMAN, §650). It is derived from the

principle pursuant to which all tribunals have the competence to rule on their own jurisdiction and


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from the presumption that the parties intended to also submit this preliminary question to an arbitral

tribunal (POUDRET/BESSON, §457).

7 The main function of this principle is to resolve the conceptual problems that may arise when

arbitrators decide on their own jurisdiction, e.g. when an arbitral tribunal finds that no arbitration

agreement has been concluded. This would implicitly include the ruling that there was not even a

basis for such a decision either (LEW/MISTELIS/KRÖLL, §14.13). To avoid such circular arguments, the

arbitrators’ basis for ruling on their jurisdiction is not to be found in the arbitration agreement itself,

but instead in the principle of competence-competence. Even if no arbitration agreement has

effectively been concluded, an arbitral tribunal has the power to decide on its own jurisdiction due to

the principle of competence-competence (POUDRET/BESSON, §658).

8 In the present case, the principle of competence-competence is stipulated in DAL. According to

Art. 16(3) DAL, “[t]he arbitral tribunal may rule on a plea [that the arbitral tribunal does not have

jurisdiction] either as a preliminary question or in an award on the merits”. In the event of an action to

review a preliminary ruling on the jurisdiction, the Tribunal “may continue and make an award.”

9 Therefore the Tribunal has jurisdiction to determine its own jurisdiction even though the arbitration

agreement is in dispute.

2. The Tribunal is not prevented from continuing proceedings even though the Court has

direct control of its jurisdiction

10 DAL states in Art. 8(2) that “[p]rior to the constitution of the arbitral tribunal, an application may be

made to the court to determine whether or not arbitration is admissible”. According to this provision,

the Parties are allowed to seize a court directly with a declaratory action concerning the validity of

the arbitration agreement and the jurisdiction (POUDRET/BESSON, §483). Unlike the ML-A and the vast

majority of national arbitration laws, DAL provides for such a direct control. From a comparative

perspective, this form of control by courts is tending to disappear, as most legislations have

strengthened the jurisdiction of an arbitral tribunal in recognition of the competence-competence

doctrine (POUDRET/BESSON, §483).

11 The direct control of an arbitral tribunal’s jurisdiction is also specified in the German Code of Civil

Procedure (hereinafter “CCP-GER”). Art. 1032(2) CCP-GER is consistent with Art. 8(2) DAL (PO2,

Q.2). Direct control is used in Germany to determine the validity of an arbitration agreement and the

jurisdiction of an arbitral tribunal at an early phase in the proceedings (SCHROETER, p.288) by using

an accelerated and facilitated court procedure (SCHLOSSER, ASA, p.29). England is among those

legislations allowing a similar form of direct control. Since the Arbitration Act of 1996


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(hereinafter “AA-GBR”), however, direct control is now allowed only in exceptional cases in

sec. 32 and sec. 72 AA-GBR (POUDRET/BESSON, §485).

12 As direct control runs counter to the principle of competence-competence, its application should only

be justifiable if the claimant in court proceedings can show probable cause that unwarranted

arbitration would effect irreparable damage, that the initiation of arbitration is abusive or that there is

a manifest absence of an arbitration agreement (POUDRET/BESSON, §487).

13 As CLAIMANT will show in §§79-83 [Issue 3], the Parties have derogated from this direct control by the

Court with the application of the JAMS Rules.

14 In addition, the purpose of the direct control, namely to determine at an early stage in proceedings

the arbitrators’ jurisdiction, could not be achieved in the present case. The Court is not expected to

find a ruling prior to summer 2008 (PO2, Q.10), at which time the Tribunal will have already decided

on its jurisdiction, as oral hearings are scheduled in March 2008 (PO1, §13) and an award on

jurisdiction can be expected to be issued afterwards. Although the arbitration agreement might be in

dispute, there is no manifest absence of an arbitration agreement. If there had been, this would

justify the Court having direct control. CLAIMANT’s initiation of arbitration is not abusive as CLAIMANT

did file the request for arbitration in good faith.

15 Furthermore, it would be sufficient for RESPONDENT’s interests to challenge an award rendered by the

Tribunal according to Art. 16(3) DAL and thus obtain a court decision on the issue not much later

than summer 2008.

3. In recognition of the principle of lis pendens, the Tribunal should have priority

16 If the same legal action is pending before two different courts, the doctrine of lis pendens gives effect

to a first-in-time rule, which is very similar to the doctrine of forum non conveniens, where the order

in which the proceedings were commenced is one of several factors to consider (ILA Report, §1.5).

With the application of the principle of lis pendens, it is possible to find guidance for situations of

parallel proceedings and to avoid contradictory decisions. According to the principle of lis pendens,

the proceedings initiated first have priority.

17 In its strict sense, the first-in-time rule would only apply where parallel proceedings continue between

two different state courts of the same jurisdiction. Nevertheless, this situation is very akin to that

when an arbitral tribunal is involved (SCHWAB/WALTER, §16.13a). Since an award can be executed

the same way as a judgment, the principle of lis pendens should be applied by analogy (BGer,

SUI, 2001, E.2.c.).

18 Although DAL does not explicitly provide for the application of the principle of lis pendens, it should

be considered as a means to solve conflicts involving parallel proceedings. In the present case, there


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is not literally a conflict of parallel proceedings since there is a declaratory action pending before the

Court and an action on the merits pending before the Tribunal. Nevertheless, the question as to

which proceedings should have priority remains.

19 The Tribunal is the court first seized, as the arbitral proceedings commenced with the request for

arbitration being received by RESPONDENT (Art. 21 DAL) on 22 June 2007 (the Request was sent by

JAMS to RESPONDENT on 21 June 2007) (LJ-R) and the action before the Court was filed afterwards

on 4 July 2007 (PO2, Q.9). Thus, the Tribunal has priority and should continue its proceedings.

20 Conclusion of I.: The Tribunal has competence-competence and therefore it has the power to

determine its own jurisdiction. The direct control by the Court according to Art. 8(2) DAL does not

hinder the arbitral proceedings. Moreover, in recognition of the principle of lis pendens, the Tribunal

should not grant a stay since it was seized first.

II. The Tribunal’s jurisdiction is not seriously in dispute

21 The Tribunal should grant a stay of the proceedings “not too hastily” (SCHROETER, p.29) and only

when it has “serious concerns” about the existence of the arbitration agreement (HUSSLEIN-STICH,

p.50). Furthermore, a stay of arbitral proceedings should only be granted in exceptional cases with

compelling reasons (BGer, SUI, 2007, E.6.1).

22 In the present case, there are no such serious concerns or compelling reasons that would justify the

stay of the arbitral proceedings. RESPONDENT’s contract order included the arbitration clause

(Cl.Ex.No.5, §13), which CLAIMANT validly accepted. The alleged “withdrawal” of the offer to submit

any dispute to arbitration, including a dispute on the formation of the contract, does not lead to a

manifest inexistence of the arbitration agreement [Issue 2, §§38 et seqq.]. As there are no serious

concerns about the existence of the arbitration agreement, a stay of the arbitral proceedings is not

justified.

23 Furthermore, CLAIMANT will prove later that the arbitration agreement is not “null and void, inoperative

or incapable of being preformed” (Art. 8(1) DAL), and that the Court will therefore have to affirm the

jurisdiction of the Tribunal and refer the Parties to arbitration [Issue 2, §§35-77]. Keeping in mind the

future decision of the Court, a stay of the arbitral proceedings is not justified.

III. If the Tribunal continues with proceedings, there will be no risk of conflicting

decisions being taken

24 In the present case, the Court is the competent instance according to Art. 6 DAL and 8(2) DAL (PO2,

Q.10). This means that the same court is competent to decide the jurisdiction of the Tribunal and, if

necessary, later review an award, which eliminates the risk of conflicting decisions


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(POUDRET/BESSON, §484). The Tribunal should consider the risk of conflicting decisions if, e.g., a

court other than the competent court according to Art. 6 DAL were seized to assess the merits of the

dispute. However, this is clearly not an issue in the present case.

25 Thus, even if the Tribunal continued proceedings and the Court concluded that the Tribunal in fact

lacked jurisdiction to hear the dispute, there would still be no risk of conflicting decisions.

IV. The Court cannot interfere with the arbitral proceedings

26 RESPONDENT requests the Court to issue an order preventing CLAIMANT from continuing with the

arbitral proceedings, which is a so-called “anti-suit injunction” (LEW, p.25). CLAIMANT will show that

DAL does not provide for anti-suit injunctions [IV.1.]. However, if the Court were to consider issuing

an anti-suit injunction on the basis of a general rule, this would not prevent the Tribunal from

continuing proceedings [IV.2.].

1. DAL does not provide for anti-suit injunctions issued by courts

27 DAL is one of the legislations that do not allow any court to intervene in the arbitral proceedings

“except where so provided” (Art. 5 DAL). This means that all situations in which judicial intervention

is possible must be governed by DAL in order to increase certainty and predictability

(HOLTZMANN/NEUHAUS, p.216).

28 The cases in which the courts are allowed to assist to the arbitral process (Art. 9, 11, 14, 15, 27 and

36 DAL) and to control its legality (Art. 8, 13, 16(3) DAL) are governed by DAL (BACHAND, p.100).

29 Anti-suit injunctions are not among those measures which state courts are allowed to issue

according to DAL. Therefore, the Court is not empowered to interfere with the ongoing arbitral

proceedings by ordering CLAIMANT or the arbitrators to suspend arbitration (BACHAND, p.111).

2. Even if the Court had the power to issue an anti-suit injunction and make use of it, this

would not prevent the Tribunal from continuing proceedings

30 The Court could order CLAIMANT to suspend its arbitral proceedings on the basis of a general rule

that allows the courts to issue injunctions whenever it is “justified and convenient to do so”

(LEW, p.27). The application of this general rule would not be appropriate in cases of potentially

unwarranted arbitration since anti-suit injunctions are only justified in “extraordinarily rare cases”

(USDC N.Y., USA ,1995, §4).

31 Nonetheless, if the Court were to issue an anti-suit injunction, the Tribunal would not be bound to

suspend the proceedings (DE BOISSÉSON, p.67). Since it is the primary duty of the arbitrators to give

effect to the arbitration agreement, an arbitral tribunal should not grant a stay of the proceeding, as

“it would be improper […] to observe the injunctions” (ICC, 12.2001, §§177 et seq.).


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32 Finally, it should be recalled that Art. 8(3) DAL leaves it up to the discretion of the arbitrators to

decide whether or not to stay arbitral proceedings. The Tribunal has, therefore, a clear legal basis to

continue proceedings.

33 Conclusion of IV.: DAL does not contain provisions concerning anti-suit injunctions issued by state

courts. If the Court were to derive the power to order CLAIMANT to suspend arbitration from a general

rule, this would still not affect the arbitral proceedings.

V. Result of Issue 1

34 In order to ensure that the proceedings can be conducted efficiently and quickly to give effect to the

arbitration agreement, the arbitral proceedings should not be stayed. The principle of competence-

competence means the Tribunal has the power to determine its own jurisdiction. The fact that the

Tribunal is directly controlled by the Court does not prevent the Tribunal from continuing the

proceedings, especially as the Tribunal was seized first. Moreover, the jurisdiction of the Tribunal is

not seriously in dispute as there is an apparent existence of an arbitration agreement. If the Court did

not recognize the Tribunal’s jurisdiction, this would not lead to the problematic situation of conflicting

judgments. Not least of all, the Court cannot interfere with the arbitral proceedings.

Issue 2: The arbitration agreement was effectively concluded

35 The Tribunal is requested to find that it has jurisdiction to consider the dispute between CLAIMANT

and RESPONDENT (SoC, §23).

36 By concluding an arbitration agreement, parties oust the jurisdiction of state courts and opt for

arbitral proceedings. Therefore, the jurisdiction of an arbitral tribunal is based on an existing

arbitration agreement. It will be demonstrated that an agreement is in existence in the present case.

37 First, the arbitration agreement would still exist even if the sales contract had not been effectively

concluded [I.]. Second, in the present case the arbitration agreement exists as part of the sales

contract, and has thus necessarily been concluded anyway [II.].

I. The arbitration agreement would be in existence even if the sales contract had

not been concluded

38 RESPONDENT alleges that the offer containing the arbitration clause was validly “withdrawn” and that

therefore no arbitration agreement has been effectively concluded (SoD, §7). However, the mere fact

that a sales contract was not concluded does not per se affect the existence of an arbitration

agreement.


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39 It will be demonstrated that the arbitration agreement is autonomous from the existence of the main

contract [I.1.]. Furthermore, it will be shown that an arbitration agreement was effectively concluded

in the present case [I.2.].

1. The arbitration agreement is autonomous from the existence of the main contract

40 The principle of separability of the arbitration agreement from the main contract is widely recognized

(FTAC, 1984, p.97; DIMOLITSA, p.220; FOUCHARD/GAILLARD/GOLDMAN, §392; REDFERN/HUNTER,

§3.63). According to this principle, an arbitration agreement has to be treated separately from the

main contract in which it is contained. It is therefore not affected by any defect of the main contract,

as long as that defect does not affect the arbitration agreement itself (BGer, SUI, 1993, E.4.a; HCHK,

HKG, 1991, §27; HOLTZMANN/NEUHAUS, p.480; POUDRET/BESSON, §§163 et seq.). The circumstance

that an arbitration clause is included in the text of a contract and is not formulated in a separate

document does not change the legal nature of the arbitration agreement (FTAC, 1984, p.96).

41 The principle of separability is applicable in the present case for the following reasons: First, the

principle of separability also applies to situations where the existence of the arbitration agreement is

disputed and not only its validity [I.1.a)]. Second, the principle of separability is applicable as

Art. 16(1) DAL enshrines said principle [I.1.b)]. Third, even the arbitration clause itself refers to the

principle of separability [I.1.c)]. Fourth, the JAMS Rules as arbitration rules chosen by the Parties

also enshrine the principle of separability [I.1.d)].

a) The principle of separability also applies to situations where the existence of the

arbitration agreement is disputed and not only its validity

42 In the present case, it is not the validity of the main contract and the arbitration clause that is in

dispute but rather the question as to whether they ever came into existence.

43 Some authors have suggested that the principle of separability should not apply if a party alleges

that the main contract never came into existence. To reject the autonomy on this ground would

facilitate delaying tactics which the principle aims to prevent (FOUCHARD/GAILLARD/GOLDMAN, §411).

Therefore, the Tribunal shall have jurisdiction to determine whether the argument based on the

inexistence of the main contract is founded and, in the affirmative, whether this affects the arbitration

clause (GOLDMAN, p.649).

44 Even if the principle of separability applies to questions of contract formation, there is no risk of

parties being forced to participate in arbitral proceedings without having shown any consent to an

arbitration clause. If an offer to enter into a contract that contains an arbitration clause was never

accepted, the defect is the same for the main contract and for the arbitration agreement as neither of

them have ever been concluded. The party that alleges not to have consented to arbitral


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proceedings is therefore protected even if the principle of separability applies. Consequently, there is

no reason to refuse the application of this principle to questions of contract formation.

45 Several authors share the opinion that the principle of separability shall also apply to the case where

the existence of the main contract is disputed (DIMOLITSA, p.218; MAYER, Note, §I.B.;

FOUCHARD/GAILLARD/GOLDMAN, §411; POUDRET/BESSON, §167).

46 In case law, the principle of separability is recognized in connection with the alleged inexistence of

the main contract. The Cour de cassation held that the principle of separability applies even if the

main contract could not enter into force (CdC, FRA, 1988). Two years later, the Cour d’appel de

Paris held that the arbitration clause has complete judicial autonomy from the main contract, and that

even if the main contract is inexistent or void this still has no effect at all on the arbitration clause

(CdA, FRA, 1990). The UK Court of Appeal also held that no distinction is to be made between

contracts that are void ab initio and those that are merely voidable, and between those contracts

which never existed at all and those which can be rescinded because of some supervening event

(CoA, GBR, 1993; cf. PENGELLEY, p.448). In a new case, the Cour de cassation reaffirmed that the

inexistence of the main contract does not affect the arbitration agreement (CdC, FRA, 2005, p.105).

47 In 1976, the Swedish Supreme Court had to decide a case where one party alleged that it had never

agreed to the main contract. The Court held that the principle of separability shall also apply in this

case (SSC, SWE, 1976).

48 To summarize, the application of the principle of separability to cases where the existence of the

main contract is disputed is widely accepted.

b) Art. 16(1) DAL enshrines the principle of separability

49 Art. 16(1) DAL stipulates the following:

The arbitral tribunal may rule on its own jurisdiction, including any objections with

respect to the existence or validity of the arbitration agreement. For that purpose,

an arbitration clause which forms part of a contract shall be treated as an

agreement independent of the other terms of the contract. A decision by the

arbitral tribunal that the contract is null and void shall not entail ipso jure the

invalidity of the arbitration clause.

50 When interpreting this provision, the first and third sentence appear to contradict each other at first

glance. To avoid this result, the third sentence has to be interpreted to mean that also a decision by

the tribunal that the contract is non-existent shall not entail ipso jure the invalidity of the arbitration

clause (POUDRET/BESSON, §173). Otherwise, the inexistence of the contract would deprive the

tribunal ipso jure of its jurisdiction. As a result, the tribunal could not decide on an objection with


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respect to the existence of the contract and the first sentence of Art. 16(1) DAL would remain

ineffective.

51 Furthermore, the wording of the second sentence (“For that purpose”) shows that the principle of

separability exists among other things to safeguard the arbitral tribunal’s competence to rule on its

own jurisdiction, including objections with respect to the existence of the arbitration agreement.

52 To sum up, Art. 16(1) DAL has to be interpreted as applying the principle of separability when the

existence of the main contract is disputed.

c) The arbitration clause itself refers to the principle of separability

53 The arbitration clause contained in the sales contract (Cl.Ex.No.5) stipulates the following:

13. Any dispute, controversy or claim arising out of or relating to this contract, including

the formation, […], will be referred to and finally determined by arbitration in accordance

with the JAMS International Arbitration Rules. […]

54 The arbitration clause is the basis of all arbitral proceedings (FOUCHARD/GAILLARD/GOLDMAN, §44).

As SVERNLÖV notes, the jurisdiction of the arbitral tribunal derives ultimately from the parties and their

written agreement. The application of the principle of separability is therefore contingent upon the

wording of the arbitration clause and the intent of the parties evidenced thereby (SVERNLÖV, p.119).

55 It lies within the autonomy of the parties to specify that questions of contract formation shall also be

determined by arbitration (SCHLOSSER, Unabhängigkeit, pp.703 et seq.). On the other hand, it is also

possible to draft the arbitration clause in a way that it becomes dependent on the main agreement

and thus the principle of separability would not be applicable (SAMUEL, p.6). Hence, the principle

should apply in situations in which refusal to give effect to the arbitration agreement would prevent

arbitration of issues that the parties intended to be resolved by arbitration (MAYER, Limits, p.263).

56 In the present case, the language of the clause is clear. Disputes concerning the formation of the

contract are explicitly included among the matters in dispute that are referred to and finally

determined by arbitration. It must therefore be presumed that it was the intention of the Parties to

submit such disputes to be finally settled by an arbitral tribunal.

57 In this context it must be noted that it was RESPONDENT who proposed the clause in question. It will

be shown under §§68 et seqq. that RESPONDENT is therefore precluded from arguing that it did not

consent to determining the present dispute by arbitration.

d) Art. 17.1 JAMS Rules enshrines the principle of separability

58 In their arbitration clause, the Parties refer to the JAMS Rules. Art. 17.1 JAMS Rules stipulates:


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The Tribunal will have the power to determine the existence or validity of a

contract of which an arbitration clause forms part. Such an arbitration clause will

be treated as an agreement independent of the other terms of the contract. A

decision by the Tribunal that the contract is null and void will not for that reason

alone render invalid the arbitration clause.

59 The wording is similar to that of Art. 16(3) DAL. As submitted above [§§49-52], the third sentence

must be interpreted to mean that a decision by the arbitral tribunal that the contract is non-existent

does not entail for that reason alone that the arbitration clause is invalid. Hence, the first sentence

entails the application of the principle of separability to questions of contract formation.

60 Where parties have referred to arbitration rules which enshrine the principle of separability, this

amounts to an indirect agreement between the parties to apply the rule (DIMOLITSA, p.222;

FOUCHARD/GAILLARD/GOLDMAN, §393). The principle should be applied to the extent that the

arbitration rules enshrine it.

61 It was shown that the JAMS Rules must be interpreted as enshrining the principle of separability also

in relation to questions of contract formation. Hence, the Parties are also from this perspective

presumed to have agreed to the application of the principle when the existence of the main contract

is disputed.

2. The arbitration agreement was effectively concluded

62 As demonstrated above, the arbitration agreement is autonomous from the main contract. The

second step is to see whether the requirements for an effective conclusion of the arbitration

agreement have been met in the present case.

63 The requirement of written form is clearly met as the arbitration clause is recorded in writing

(Art. 7(2) DAL). Of the various other requirements, only that of consent is disputed in the present

case. The law applying to this question is the United Nations Convention on Contracts for the

International Sale of Goods of 11 April 1980 (hereinafter “CISG”) [I.2.a)]. According to the CISG, the

Parties consented to the arbitration clause [I.2.b)].

a) The CISG is applicable to the arbitration agreement

64 Danubia has adopted the 1985 text of the ML-A with a single amendment to Art. 8 (SoC, §18). The

ML-A does not contain a choice-of-law provision that instructs the arbitral tribunal to apply certain

laws in determining the validity of the arbitration agreement. The Secretariat suggested that the

arbitral tribunal presumably should apply the same choice-of-law rules as contained in Art. 34 ML-A


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(Seventh Secretariat Note). This provision states that, in the absence of a choice of law by the

parties, the validity of the agreement will be governed by the law of the State adopting the ML-A.

65 This interpretation is consistent with Art. V(1)(a) NYC, which stipulates that the law of the country

where the award was made has to be applied. Several authors have agreed that the law of the place

of arbitration should apply (HUSSLEIN-STICH, p.86; REDFERN/HUNTER, §§2.92 et seqq.).

66 In this case, the Parties did not designate any law to be applicable to their arbitration agreement

(SoC, §15). In the absence of such a choice, the law of the place of arbitration, in this case Danubia,

applies. In contracts involving one or more foreign parties, the courts in Danubia seek to apply the

substantive law of the most appropriate country for the formation of contracts (PO2, Q.7). In the

present case, either the law of Mediterraneo, i.e. the seller’s country, or the law of Equatoriana, i.e.

the buyer’s country, may be applied. Both countries are party to the CISG (SoC, §15). The CISG is

implemented in the law of a country that has ratified the Convention. Therefore, the CISG is

applicable if parties choose the law of a state that is party to the Convention (BERNSTEIN/LOOKOFSKY,

p.13; SCHLECHTRIEM, §20). It does therefore not matter which country’s law applies as the analysis

always results in the application of the CISG.

67 No court in Danubia has yet decided whether it is possible to apply a different law to the arbitration

agreement to that of the main contract (PO2, Q.8). However, it will be shown under §100 that the

CISG is also applicable to the main contract.

b) The Parties consented to the arbitration clause

68 According to Art. 23 CISG, a contract is concluded when an acceptance of an offer becomes

effective. It will be demonstrated that RESPONDENT’s offer to conclude an arbitration agreement was

irrevocable, or, in any event, that the revocation did not reach CLAIMANT before the dispatch of the

acceptance. Even if the Tribunal were to find to the contrary, RESPONDENT’s revocation could not

affect the conclusion of the arbitration agreement.

69 First, as will be shown below with regard to the issue of the conclusion of the main contract, the offer

to conclude an arbitration agreement was irrevocable, and the revocation did not reach CLAIMANT

before the dispatch of the acceptance [cf. §76].

70 Second, the offer to conclude an arbitration agreement was irrevocable for an additional reason. The

wording of the arbitration clause makes it clear that disputes concerning the contract formation shall

be submitted to arbitral proceedings. According to its very purpose, an offer to submit disputes

concerning the contract formation to arbitration may be accepted as long as the offeree can maintain

in good faith that a contract has been concluded. RESPONDENT’s offer regarding the arbitration clause

could therefore not effectively be revoked by RESPONDENT in accordance with Art. 16(2)(a) CISG if it


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is reasonably disputable whether a contract has been concluded. Plainly, this requirement is met [cf.

also §76]. As a result, the offer to conclude an arbitration agreement was also irrevocable for this

reason.

71 Third, even if the Tribunal were to find that the offer was revocable and that the revocation reached

CLAIMANT before the dispatch of the acceptance, CLAIMANT submits that RESPONDENT’s revocation

was limited to the offer to conclude the main contract and did not include the arbitration agreement.

72 Consent to an arbitration agreement lies in the parties’ common intention to submit the disputes

designated in the arbitration clause to an arbitral tribunal (FOUCHARD/GAILLARD/GOLDMAN, §471). As

submitted above [§§53-57], the present arbitration clause expressly includes questions as to the

formation of the contract. The arbitration clause was proposed by RESPONDENT in its purchase offer

of 10 June 2006 (Cl.Ex.No.5). RESPONDENT uses the clause in all of its purchases (PO2, Q.19). It can

therefore be assumed that it was RESPONDENT’s intention to submit all disputes of this kind to

arbitration. The revocation of a purchase offer is a typical situation that can give rise to disputes on

contract formation. It is precisely for this kind of situation that the arbitration clause was formulated. If

a dispute on contract formation is likely and RESPONDENT’s former conduct obviously shows that it

wants to submit such disputes to arbitration, it must be assumed that RESPONDENT did not want to

revoke the offer to conclude an arbitration agreement.

73 If RESPONDENT alleges that its revocation also contained the revocation of the offer to conclude an

arbitration agreement, this conduct would constitute a venire contra factum proprium. This principle

prohibits inconsistent behavior. It is recognized under the CISG (Art. 7(1) CISG i.c.w. Art. 1.8

UNIDROIT Principles of International Commercial Contract, hereinafter “PICC(04)”).

74 Furthermore, the principle of interpretation contra proferentem must be held against RESPONDENT.

According to this principle, an arbitration agreement should be interpreted against the party that

drafted it (FOUCHARD/GAILLARD/GOLDMAN, §479). This principle is also recognized under the CISG

(Art. 7(1) CISG i.c.w. Art. 4.6 PICC(04)). RESPONDENT informed CLAIMANT in an e-mail that it was

withdrawing “the offer to purchase 20,000 cases of Blue Hills 2005” (Cl.Ex.No.9). Hence,

RESPONDENT explicitly specified what the subject of its revocation was, i.e. the offer to conclude a

sales contract. The e-mail, as drafted by RESPONDENT, does not expressly mention a revocation of

the offer to conclude an arbitration agreement. Any person in the position of CLAIMANT would

reasonably assume that the revocation did not affect the arbitration agreement. Thus, RESPONDENT

cannot allege – as it now does – that the revocation had an impact on the arbitration agreement. As

submitted, RESPONDENT’s conduct and the wording of the revocation support the view that it did not


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want to revoke the arbitration clause. This fact, and the language of the arbitration clause as

proposed by RESPONDENT, must be held against it.

75 Conclusion of I.2.: RESPONDENT is precluded from arguing that it revoked the offer to conclude an

arbitration agreement. With its acceptance according to Art. 18(1) CISG on 19 June 2006, CLAIMANT

accepted this offer. As a result, the Parties consented to the present arbitration clause and,

therefore, an arbitration agreement has been validly concluded according to Art. 23 CISG.

II. The arbitration agreement is in existence as part of the concluded sales

contract

76 As pointed out above, the arbitration agreement would exist even if the contract had not been

concluded. However, in the present case, the contract has been validly concluded anyway. It will be

demonstrated in Issue 4 [§§100 et seqq.] that, first, the offer submitted by RESPONDENT was

irrevocable under Art. 16(2) CISG, and second, even if the Tribunal were to find that the offer was

revocable, it was not validly revoked under Art. 16(1) CISG.

III. Result of Issue 2

77 According to Art. 16(1) DAL and the language of the present arbitration clause, the arbitration

agreement has to be treated separately from the main contract. This also applies to the case where

the existence of the contract is disputed. It would therefore not affect the arbitration agreement if the

sales contract was found to be non-existent. The Parties consented to the arbitration agreement,

which was therefore effectively concluded. Furthermore, it will be demonstrated in Issue 4 [§§100 et

seqq.] that the sales contract itself was concluded in the present case. To sum up, the Tribunal has

jurisdiction to consider the dispute.

Issue 3: The Tribunal shall order RESPONDENT to stay its proceedings

before the Court and to pay the resulting costs

78 In the following, CLAIMANT will demonstrate that RESPONDENT violated Art. 17(3) JAMS Rules by

initiating proceedings before the Court [I.]. Therefore, RESPONDENT must bear the consequences, as

the Tribunal has the competence to decide what it considers appropriate [II.]. Thus, CLAIMANT

requests the Tribunal to order RESPONDENT to stay its proceedings before the Court [II.1.] and order

RESPONDENT to pay all costs and expenses incurred by CLAIMANT as a result of these proceedings

[II.2.].


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I. RESPONDENT violated Art. 17(3) JAMS Rules

79 As shown above in Issue 2 [§§35 et seqq.], the arbitration agreement between the Parties has been

validly concluded. Consequently, the Parties have validly agreed to arbitrate disputes under JAMS

Rules (Cl.Ex.No.5). By agreeing to arbitration under the JAMS Rules, the Parties have agreed not to

apply to any court or other judicial authority for any relief regarding the Tribunal’s jurisdiction

(Art. 17(3) JAMS Rules). By initiating proceedings before the Court, RESPONDENT thus clearly

violated Art. 17(3) JAMS Rules.

80 Art. 8(2) DAL provides that, prior to the constitution of the arbitral tribunal, an application may be

made to the court to determine whether arbitration is admissible. As Art. 17(3) JAMS Rules does not

allow the parties to apply to a state court for a relief regarding the arbitral tribunal’s jurisdiction, this

provision contradicts Art. 8(2) DAL. In this case, the Parties opted for Art. 17(3) JAMS Rules and

derogated from Art. 8(2) DAL. According to Art. 1(6) JAMS Rules, JAMS Rules will govern the

conduct of the arbitration except where any of JAMS Rules are in conflict with a mandatory provision

of the applicable arbitration law of the place of the arbitration. In such circumstances, the mandatory

provision of that law will prevail. CLAIMANT submits that derogating from Art. 8(2) DAL is possible

since Art. 8(2) DAL cannot be considered a mandatory provision for the following reasons.

81 First, the right of access to state justice is not diminished if Art. 8(2) DAL is not considered to be

mandatory. According to Art. 8(2) DAL, the court’s authority is limited to merely determining “whether

or not arbitration is admissible”. Whether or not arbitration was admissible can be fully reviewed by a

state court after the Tribunal has rendered a preliminary or final award dealing with its own

jurisdiction (Art. 34(1), (2) DAL). Contrary to Art. 8(2) DAL, Art. 34 DAL, which deals with an

application for setting aside as exclusive recourse against arbitral award, is of a mandatory nature

and cannot be derogated (CALAVROS, p.166). Thus, the postponement of the review of the Tribunal’s

jurisdiction to the moment where the Tribunal has rendered an award does not violate any

fundamental right of the Parties.

82 Second, the rationale of Art. 8(2) DAL does not justify the mandatory character of this provision.

CLAIMANT showed above [Issue 1, §§10 et seqq.] that the purpose of another court having a direct

control is to determine the jurisdiction of an arbitral tribunal at an early phase of the proceedings. In

the present case this is not possible. Hence, as it is not the purpose of Art. 8(2) DAL to hinder arbitral

proceedings, the mandatory character of Art. 8(2) DAL has to be denied.

83 Based on these considerations, Art. 8(2) DAL cannot be considered mandatory in the present case

and does not supersede over the JAMS Rules.


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II. The Tribunal should draw the inferences that it considers appropriate

84 If a party, without showing good cause, fails to comply with any provision of, or requirement under,

these Rules or any direction given by the Tribunal, the Tribunal may draw the inferences that it

considers appropriate (Art. 27(3) JAMS Rules).

85 In the present case, RESPONDENT filed a claim with a state court and failed to comply with

Art. 17 JAMS Rules. CLAIMANT therefore requests the Tribunal to order RESPONDENT to stay its

proceedings before the Court [II.1.] and award all costs and expenses [II.2.].

1. The Tribunal is competent to order RESPONDENT to stay its court proceedings

86 CLAIMANT requests the Tribunal to order RESPONDENT to terminate its litigation in the Court until the

Tribunal has had an opportunity to rule on whether it has jurisdiction. This also has to be considered

as an anti-suit injunction [cf. Issue 1, §26]. In the following, it will be shown that arbitrators are

considered to be acting within the scope of the arbitration agreement by ordering such an anti-suit

injunction. Furthermore, it will be demonstrated that the requirements to order such a stay are

fulfilled in the present case.

87 First, while it is certain that the issuance of anti-suit injunctions requires a clear legal basis

(LÉVY, p.121), the actual nature of that legal basis required by anti-suit injunctions is quite

controversial. Some authors consider anti-suit injunctions to be a specific type of interim measure,

while others disagree but fail to provide an alternative solution to the problem (POUDRET/BESSON,

§1029). In the ICC case No.8307, the arbitrator held that he had the power under the ICC Rules and

Swiss Arbitration Law to issue a provisional measure restraining a party from initiating or continuing

an action in court (ICC, 5.2001). This shows that anti-suit injunctions are indeed perceived to be a

form of interim measure. Authors argue that anti-suit injunctions can have a harmful impact and

should therefore only be used if absolutely necessary (LÉVY, p.123). Hence, it seems logical to

subjugate them to the same set of restrictive conditions that apply to interim measures as well. Anti-

suit injunctions should therefore be considered a specific type of interim measure.

88 The arbitrator’s competence to order interim measures is acknowledged by most modern arbitration

laws (LÉVY, p.121). Therefore, as anti-suit injunctions are a type of interim measure, they fall within

the scope of the arbitrator’s competence. Whereas DAL does not allow the courts to order anti-suit

injunctions, this is not the case for arbitral tribunals, as Art. 17 DAL clearly allows the Tribunal to

grant interim measures and therefore also to issue anti-suit injunctions. More importantly,

Art. 17(2)(b) of the 2006 text of the ML-A (hereinafter “ML-A(2006)”) clearly provides for the

possibility of anti-suit injunctions, and Art. 17 DAL should be interpreted in the light of the recent

amendment of the Model Law. While it is at the Parties discretion to exclude the ability to grant


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interim measures conferred to by the lex arbitri (LÉVY, p.121), no such agreement was made in the

present case. On the contrary, by adopting JAMS Rules, the Parties expressly consented to

Art. 26(1) JAMS, which allows the Tribunal to “take whatever interim measures it deems necessary”.

Furthermore, it has to be noted that no law or convention exists that would prevent arbitrators from

issuing anti-suit injunctions (KAUFMANN-KOHLER/RIGOZZI, p.176). For example, while the Brussels

Regulation EC 44/2001 (hereinafter “BR”) precludes the granting of an injunction by a court in one

contracting state of the EU against another, the English Court of Appeal held that these restrictions

do not apply in the framework of arbitration since arbitration is expressly excluded by Art. 1(2)(d) BR

(CoA, GBR, 2004). In view of these considerations, CLAIMANT submits that the requirement of a

sufficient legal basis for ordering anti-suit injunctions is fulfilled in the present case.

89 Second, by granting an anti-suit injunction, arbitrators must be certain that the measure to be

ordered does not violate a party’s fundamental right to seek relief before national courts, that the

conditions for granting interim measures are satisfied and that the measures envisaged are

appropriate (LÉVY, p.126). CLAIMANT has already shown that RESPONDENT’s right to seek relief before

national courts is not at stake as the Parties validly agreed not to apply to any judicial authority for

any relief regarding the Tribunal’s jurisdiction [§§79 et seqq.]. The conditions for granting interim

measures as well as the criterion of appropriateness will be treated separately.

a) Conditions the Tribunal must consider when granting interim measures are fulfilled

90 First, the Tribunal has to ensure it has prima facie jurisdiction to rule on the merits of the case

(POUDRET/BESSON, §626). As the arbitration agreement is valid, the Tribunal is competent to decide

on the merits of the case.

91 Second, there has to be a reasonable chance of success on the merits, Art. 17 A(1)(b) ML-A(2006)

(KAUFMANN-KOHLER/RIGOZZI, §582). This has to be put into perspective, however, as arbitrators often

refrain from assessing the reasonable chance of success on the merits at an early stage of the

proceedings in order not to be disqualified for lack of impartiality (KAUFMANN-KOHLER/RIGOZZI, §582).

Arbitrators usually content themselves with a demonstration showing that the relief sought is not

totally without chance of success (ICC, 2001; KAUFMANN-KOHLER/RIGOZZI, §582). The present

Memorandum itself is sufficient proof of CLAIMANT’s chance of success. Furthermore, it is appropriate

in the present context to limit the Tribunal’s examination to merely determining whether there is a

reasonable chance that the Tribunal will confirm its jurisdiction, as the interim measure only relates

to the question of jurisdiction. As seen above in Issue 2 [§§35 et seqq.], the Tribunal will most likely

confirm its jurisdiction.


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92 Third, and most importantly, there has to be a risk of substantial harm in the absence of protection,

Art. 17 A(1)(a) ML-A(2006) (KAUFMANN-KOHLER/RIGOZZI, §582). The prejudice has to be substantial,

but not necessarily irreparable as known in common law doctrine. In the ICC case No.10596, the

arbitral tribunal held that it would be unreasonable to refuse an interim measure on the grounds that

CLAIMANT would be able to recover the monetary loss in the form of damages (ICC, 2000). The ICC

tribunal considered it to be “foolish” to wait for a foreseeable loss to occur, “to then provide for its

compensation in the form of damages […], rather than to prevent the loss from occurring in the first

place” (ICC, 2000). In the present case, any costs arising from the pending proceedings before the

Court could be saved, since the Tribunal can be expected to issue its award prior to any ruling by the

Court. There is no doubt that the unnecessary costs inflicted by parallel proceedings represent a

substantial damage that can be prevented by issuing an anti-suit injunction. Furthermore, the

damage incurred substantially outweighs the harm that is likely to result to RESPONDENT if the

measure is granted (Art. 17 A(1)(a) ML-A(2006)), as RESPONDENT could still challenge the award in

setting aside proceedings under Art. 34 DAL.

93 Fourth, it has to be shown that the matter is urgent (KAUFMANN-KOHLER/RIGOZZI, §582). This means

that the measure cannot wait until an award has been rendered, and that it therefore must be

handled immediately (KAUFMANN-KOHLER/RIGOZZI, §582). As litigation costs will needlessly increase

as long as the proceedings before the Court continue, the matter is urgent and cannot wait until an

award is rendered by the Tribunal. Furthermore, as the court ruling is to be expected after the arbitral

award, the Tribunal would not be able to fully assess the damage incurred to CLAIMANT at the time it

renders its award.

b) It is appropriate to issue an anti-suit injunction in the present case

94 LÉVY insists that arbitrators refrain from issuing anti-suit injunctions where such measures do not

appear to be appropriate to protect the arbitral proceedings (LÉVY, p.123). CLAIMANT will show that it

is appropriate to order an anti-suit injunction in the present case, as there is no other measure that

might prevent RESPONDENT from continuing its state court proceedings, and that the measure is

justified as RESPONDENT engaged in abusive behavior by initiating state court proceedings.

95 First, there is no other measure suitable to prevent RESPONDENT from pursuing its actions before the

Court. As a matter of fact, the Tribunal may only enjoin the Parties to stay the proceedings, but may

not address a third party or decide on the jurisdiction of a court (LÉVY, p.117). Therefore, to order

RESPONDENT to stay the proceedings before the Court is the only measure that can be ordered by

the Tribunal in this case.


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96 Second, RESPONDENT is not put to a disproportionate harm by the order to stay its proceedings

(Art. 17 A(1)(a) ML-A(2006)). On the contrary, RESPONDENT may still have the case reviewed and

could reasonably be expected to do so. Furthermore, RESPONDENT agreed not to apply to any court

and even suggested the application of JAMS Rules (Cl.Ex.No.5). RESPONDENT therefore engaged in

an abusive behavior by attempting to undermine the Tribunal’s jurisdiction when it initiated

oppressive litigation in court and petitioned the Court to stay the arbitration proceedings. CLAIMANT,

on the other hand, would be caused considerable harm, as it is wasteful of resources for two

proceedings relating to the same matter to unfold separately while the jurisdiction of one Tribunal

awaits determination (cf. ICSID, 2002). It is thus evident that the criterion of appropriateness is

fulfilled in the present situation.

2. The Tribunal shall award costs and expenses

97 CLAIMANT requests the Tribunal to award all costs and expenses incurred to CLAIMANT by the

proceedings initiated contrary to the arbitration agreement.

98 As shown above [§93], considerable damage is being caused by the proceedings initiated by

RESPONDENT. Therefore, CLAIMANT submits that the Tribunal has the competence to order

RESPONDENT to pay for the unnecessary costs generated by these proceedings.

Art. 27(3) JAMS Rules states that “the Tribunal may draw the inferences that it considers

appropriate” if a party fails to comply with any provision of the JAMS Rules or any direction given by

the Tribunal. The clause is thus sufficiently comprehensive to cover compensation for the costs

incurred by the state court proceedings (LÉVY, p.117). The same was held in the ICC case No.8887,

where one party referred the matter to the Turkish courts notwithstanding the fact the arbitrators had

enjoined it from doing so (ICC, 1997). The arbitral tribunal ordered the party that violated the anti-suit

injunction to compensate the other party for the prejudice suffered, which was held to correspond to

the fees paid by the aggrieved party to its lawyer. CLAIMANT therefore requests the Tribunal to apply

the same reasoning by analogy and order RESPONDENT to pay for the costs CLAIMANT incurred.


99 By agreeing to arbitration under JAMS Rules RESPONDENT agreed not to apply to any court for any

relief regarding the Tribunal’s jurisdiction. RESPONDENT thus violated Art. 17(3) JAMS Rules by

initiating proceedings before the Court. The Tribunal should thus order RESPONDENT to stay its court

proceedings by means of an anti-suit injunction, as the Tribunal has the power to do so in the

present case. Furthermore, according to Art. 27(3) JAMS Rules, the Tribunal has the competence to

order RESPONDENT to pay for the unnecessary costs generated by these proceedings.


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Arguments on the substantive law issues

Issue 4: The contract was effectively concluded

100 The substantive law issues involved in the present case are governed by the CISG, which remains

undisputed between the Parties (SoD, §2).

101 Contrary to RESPONDENT’s allegations (SoC, §6), a sales contract was concluded, since

RESPONDENT’s purported revocation of 18 June 2006 (Cl.Ex.No.9) did not have any legal effect due

to the fact that, pursuant to Art. 16(2) CISG, the offer was irrevocable [I.].

102 Alternatively, CLAIMANT submits that even in case that the offer was considered to be revocable, at

no point in time the revocation became effective. First, CLAIMANT never agreed to receive electronic

communication of that type in that format at the address used [II.1.]. Second, the revocation could

not have any effect, pursuant to Art. 16(1) CISG, since it reached CLAIMANT only after CLAIMANT had

dispatched the acceptance [II.2.-4.].

I. RESPONDENT’s offer was irrevocable

103 In RESPONDENT’s submission, no contract of sale was concluded pursuant to Art. 16 CISG because

the “withdrawal” of the offer by RESPONDENT was received by CLAIMANT before CLAIMANT’s

acceptance was sent (SoD, §19). However, CLAIMANT will demonstrate that RESPONDENT’s offer of

10 June 2006 contained a fixed time frame for acceptance pursuant to Art. 16(2)(a) CISG and could

therefore not be revoked.

104 The CISG distinguishes “withdrawal”, which occurs before the offer reaches the offeree

(Art. 15 CISG), from “revocation”, which occurs after the offer has reached the offeree (Art. 16

CISG). Clearly, RESPONDENT’s purported “withdrawal” (e.g. Cl.Ex.No.11) of 18 June 2006

(Cl.Ex.No.9) is no withdrawal within the meaning of Art. 15 CISG. The purchase order was sent to

CLAIMANT on 10 June 2006 by e-mail attachment and courier (Cl.Ex.No.4-5) and thus arrived at

CLAIMANT’s place of business the same day (SoC, §8). At this point of time the offer had long

become effective and could no longer be withdrawn. Yet RESPONDENT could not revoke its offer of 10

June 2006 either.

105 Art. 16 CISG is based upon the principle that an offer is revocable (VINCZE, 2.g; NEUMAYER/MING,

Art. 16, §1). In this respect the Convention complies with the Anglo-American approach

(SCHWENZER/FOUNTOULAKIS, Art. 16, p.145). This principle is, however, counterbalanced by two

important exceptions. First, in a civil law approach, an offer cannot be revoked if it indicates that it is

irrevocable by either stating a fixed time for acceptance or otherwise that it is irrevocable according

to Art. 16(2)(a) CISG (VINCZE, 3.l.-r.; KRONKE/MELIS/SCHNYDER, §204). The second exception


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(Art. 16(2)(b) CISG) corresponds to the common law notion of promissory estoppel

(SCHWENZER/MOHS, p.242; VINCZE, 3./s.-t.; NEUMAYER/MING, Art. 16, §5b).

106 The first exception mentioned regarding the irrevocability is applicable in the present case. By

declaring that the closure of the contract must have taken place at least by 21 June 2006

(Cl.Ex.No.4), RESPONDENT stated a fix time frame for acceptance and was thus bound by its offer.

107 It lies within the offeror’s responsibility to make its offer irrevocable. A sufficient intention to be bound

must not necessarily be expressed explicitly. It might also result out of circumstances extraneous to

the offer, the preliminary negotiations, the parties’ habits or the practices which the parties have

established (HUBER/MULLIS, MULLIS, §4, pp.80 et seqq.; NEUMAYER/MING, Art. 16, §5a;

SCHLECHTRIEM/SCHWENZER (E), SCHLECHTRIEM, Art. 16, §§8 et seqq.). An intention to be bound may

be expressed implicitly and simply inferred from statements by, or the conduct of, the offeror

(SOERGEL, LÜDERITZ/FEUGE, Art. 16, §5; Official Commentary PICC(94), §283).

108 In deciding whether an offer containing a time frame for acceptance is deemed to be irrevocable or

not, the meaning of RESPONDENT’s e-mail of 10 June 2006 (Cl.Ex.No.4) has to be taken into account.

The most appropriate way to determine the meaning of the e-mail is to consider how a reasonable

person similar the other party would in the same circumstances understand the messages pursuant

to Art. 8(2) CISG.

109 A reasonable understanding of RESPONDENT’s request “we would have to turn to an other quality

wine as the featured item in our promotion if the contract conclusion were to be delayed beyond

21 June” (Cl.Ex.No.4) provides that RESPONDENT determined a period of time for the acceptance

pursuant to Art. 16(2)(a) CISG. The party that determined a period for acceptance, and therefore

created the impression of irrevocability, can only destroy this by making a clear declaration to the

contract (NEUMAYER/MING, Art. 16, §5a).

110 In the present case, RESPONDENT created the impression that only after the mentioned time limit had

expired, would it look for another promotion wine. This means e contrario that, until 21 June 2006,

CLAIMANT was the only potential contracting party. Thus the offer was exclusively valid until

21 June 2006 and therefore binding.

111 This conclusion is further supported by the fact that Blue Hills 2005 was chosen as the featuring item

for RESPONDENT’s promotion in October. Taking into account that RESPONDENT is operating within a

narrow time frame (Cl.Ex.No.4) and that the selection of another product for the promotion would

have been too time-consuming, a reasonable person could only understand RESPONDENT’s conduct

as the unambiguous intention to be bound to exactly this offer.


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112 This is further supported by RESPONDENT’s statement in the e-mail of 11 June 2006 (Cl.Ex.No.7):

“Please be sure to have Mr. Cox act on our purchase order immediately on his return…”, which

RESPONDENT knew to be 19 June 2006. Hence Mr. Wolf wanted to ensure CLAIMANT closed the deal

within the given time frame, i.e. by 21 June 2006. The statement quoted is rather informal - all

important information were sent by courier or by e-mail and courier [§117] - and cannot be

understood as being meant to shorten the given period. Instead it emphasizes the importance of

concluding of this particular deal, which reinforces the offer’s irrevocability.

113 Conclusion of II.: RESPONDENT was bound to its offer until 21 June 2006 due to the fix time frame

stipulated in the contract form. Consequently, it was not allowed to revoke its offer until that time limit

had expired.

II. Alternatively the offer was not effectively revoked

114 If the Tribunal were to find that RESPONDENT’s offer was revocable, CLAIMANT submits alternatively

that the alleged revocation was at no point of time effective. CLAIMANT had never consented, either

explicitly or implicitly, to receiving electronic communication of that type, in that format and at that

address [II.1.]. Furthermore, the revocation was not sent to the designated information system.

Consequently, the revocation was not received in time because it was impossible for CLAIMANT to

retrieve the revocation prior to the dispatch of its acceptance [II.2.,3.]. Alternatively, if the Tribunal

were to find that the message was sent to the designated information system or that no information

system was designated, the revocation still did not reach CLAIMANT in time due to the lack of

opportunity to gain awareness prior to the moment of dispatch of CLAIMANT’s acceptance [III.4.].

1. CLAIMANT has not consented to receiving electronic communications of that type, in that

format, at that specific address

115 A revocation must be made by a declaratory act that reaches the addressee. Art. 24 CISG defines

the time when a declaration “reaches” the addressee and distinguishes between declarations made

orally and declarations made by other means (HONSELL, SCHNYDER/STRAUB, Art. 24, §9;

SCHLECHTRIEM/SCHWENZER (E), SCHLECHTRIEM, Art. 24, §4; WITZ/SALGER/LORENTZ, WITZ, Art. 24, §§8

et seqq.). RESPONDENT sent the controversial revocation by e-mail. Electronic communication falls

within the scope of “other means” (SCHLECHTRIEM/SCHWENZER (E), SCHLECHTRIEM, Art. 24, §§9 et

seqq.; WITZ/SALGER/LORENTZ, WITZ, Art. 24, §10) and occupies a functional position between the

traditional letter and the face-to-face communication.

116 The validity of using e-mail communication in business is in general not denied (CLEMENS, p.2001,

2003; GRAF VON BERNSTORFF, pp.19 et seqq.; HILBERG (1), pp.14-15), but a basic prerequisite is that


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the offeree has consented explicitly or implicitly to receiving electronic communications of that type,

in that format and at the address used (CISG-Advisory council, p.4, 10; SCHWENZER/FOUNTOULAKIS,

Art. 24, p.182).

117 In the present case, the Parties communicated at first only by postal letter since correspondence was

initiated by Mr. Cox with an ordinary letter sent by courier on 14 May 2006 (Cl.Ex.No.1). Likewise,

later exchanges between the Parties occurred in the form of normal letters (Cl.Ex.No.2, 3). The first

e-mail message regarding the purchase offer (Cl.Ex.No.4) was sent by RESPONDENT, but it was, at

the same time, also delivered by courier (Cl.Ex.No.4). This shows that all important messages were

either sent only by letter or by e-mail with an additional letter sent by courier. Prior to the alleged

revocation (Cl.Ex.No.9), only two informal messages had been exchanged by the Parties solely in

the form of ordinary e-mails. The first was Ms. Kringle’s notification that CLAIMANT had received the

purchase order, and the second was Mr. Wolf’s note highlighting the importance of the prospective

contract (Cl.Ex.No.6-7). These facts make it clear that CLAIMANT at no point in time consented either

explicitly nor implicitly to receiving ordinary e-mails for essential information. Mr. Cox himself never

sent a communication to RESPONDENT by e-mail.

118 E-mail communication is often prone to failure, so CLAIMANT’s fear that problems might result from

using e-mail communication was justified. As the present case shows, the decision to send all

important information by letter is reasonable.

119 Conclusion of 1.: CLAIMANT has never, either explicitly nor implicitly consented to receiving e-mails

of the type, format and at the address RESPONDENT used for the disputed revocation.

2. CLAIMANT’s e-mail address was not the unilaterally designated information system

120 There are widely accepted international principles regarding electronic communication which support

the above conclusion. Several international principles provide important means for the interpretation

of matters not expressly settled in the CISG (EISELEN, p.1; GRAF VON BERNSTORFF, p.1).

121 The use of electronic communication under the CISG must be interpreted autonomously in

conformity with the general principles underlying the Convention (HG Aargau, SUI, 1999, E.II.2.a;

ISBW Vienna, 1994, II.2.; OLG Düsseldorf, GER, 1993) by taking into account both its international

character and the uniformity of application (FERRARI, pp.453, 459 et seqq.; HILBERG (1), p.20;

KAROLLUS, p.16; SCHLECHTRIEM, CISG-Auslegung, pp.9, 11; SCHWENZER/FOUNTOULAKIS, Art. 7, pp.71

et seqq.). In the present case, certain well-known and established international sources must be

taken into consideration when interpreting contract formation, in particular the United Nations

Convention on the use of Electronic Communication in International Contracts 2005 (hereinafter “C-

EC”), the ICC eTerms 2004 (HILBERG (1), pp.14, 19, 22, 23; HILBERG (2), pp.57, 59) and the


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UNCITRAL Model Law on Electronic Commerce 1996 (hereinafter “ML-EC”). The latter is of

particular relevance as it is identical with the domestic laws in Equatoriana and Mediterraneo (SoC,

§15; PO2, Q.4).

122 Concerning the time of receipt of a data message, Art. 15 ML-EC, Art. 2 ICC eTerms, and

Art. 10 C-EC distinguish between unilaterally designated specific information systems and non

designated information systems (MAZZOTTA, 3.(6.) fn.149). Whether an information system is

designated or not has a direct impact on the legal consequences. If the addressee has designated

an information system for the purpose of receiving data messages, receipt occurs at the time when

the message enters the designated information system (Art. 15(2)(a)(i) ML-EC; Art. 10(2) sent.1

C-EC; Art. 2.1(b) ICC eTerms). By contrast, if the data message is sent to an information system of

the addressee that is not the designated information system, receipt occurs at the time when the

data message is retrieved by the addressee, Art. 15(2)(a)(ii) ML-EC, Art. 10(2) sent.2 C-EC,

Art. 2.2 ICC eTerms (Guide to ML-EC, §102; MAZZOTTA, 3.(6.) fn.150; SCHWENZER/MOHS, p.241).

This modification of previous reception theory results in a different risk allocation under Art. 24 CISG.

It is only reasonable that the party that uses e-mail communication without having made an

agreement with its negotiating partner bears any risks connected with this choice.

123 If no information system is designated, receipt occurs when the data message enters an information

system of the addressee, Art. 15(2)(b) ML-EC (MAZZOTTA, 3.(6.) fn.151; SCHWENZER/MOHS, p.241).

However, in the present case, the ordinary post-box was implicitly designated as the particular

information system. Thus, receipt of RESPONDENT’s purported revocation only occurred when the

message was retrieved by CLAIMANT (MAZZOTTA, 3.(6.) fn.117,152).

124 An information system is deemed to be designated when a party specifies the address to which the

information must be sent to become effective. The mere indication of an e-mail or telecopy address

on a letterhead or other document is not regarded as a designation of an information system (Guide

to ML-EC, p.55). In the present case, it is undisputed that CLAIMANT and RESPONDENT had

exchanged business cards (SoC, §5) that included their postal and their e-mail addresses at the

Durhan Wine Fair. However, it cannot be disputed that an information system is not deemed as

being unilaterally specifically designated if it is simply mentioned on a business card. The fact that

Mr. Cox’ initiating message was sent by letter (Cl.Ex.No.1), that CLAIMANT and RESPONDENT prior to

the formation of the contract only corresponded by letter and that all important messages were sent

by letter [§117] indicates that CLAIMANT’s choice of communication by no means was a mere

coincidence. Indeed, CLAIMANT chose to use letters to avoid the various risks inherent in e-mail

communication.


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125 On Sunday 18 June 2006, Mr. Wolf decided to revoke the purchase order. The e-mail containing the

revocation was sent from his home using his e-mail account at Super Markets (Cl.Ex.No.28). In the

present case the revocation sent only by e-mail did not reach the addressee prior to the moment

when CLAIMANT dispatched its letter of acceptance. As explained above [§124], it was not Super

Markets’ Server but its ordinary post-box that was the designated information system. At the time of

accepting the offer on 19 June 2006 (Cl.Ex.No.8), CLAIMANT had not yet retrieved the e-mail and

could therefore not be aware of its content. This means that, in the present case, only if CLAIMANT

had real knowledge of the revocation the conditions of the term “reach” would have been fulfilled.

126 Conclusion of 2.: CLAIMANT’s ordinary post-box was the designated information system.

RESPONDENT did not send the revocation to the designated information system, so to become

effective, Mr. Cox must have retrieved it, prior to dispatching the acceptance.

3. Claimant’s server failure has no consequences

127 CLAIMANT had a software problem on 18 June 2006. The server had been able to receive messages

from outside, but could not communicate with the various computers in the internal network (PO2,

Q.26). This server problem was only corrected after an external service company had repaired it on

the afternoon of 19 June 2006 (PO2, Q.27; SoC, §10). It is not disputed that the error lies within

CLAIMANT’s sphere of control (BGH, GER, 2006, 2.b)aa); BURGARD, pp.94-96; CLEMENS, p.2001;

KRONKE/MELIS/SCHNYDER, BENICKE, §199). But in the present case, this fact is without any

consequences because Art. 15(2)(a)(ii) ML-EC and Art. 2.2 ICC eTerms as well as Art. 10(2) C-EC

clearly state that if a specific information system is designated and the message is sent to an

information system that is not the designated one, the addressee must also have retrieved the

message in addition to only having received it (Guide to ML-EC, §102; MAZZOTTA, 3.(6.) fn.150;

SCHWENZER/MOHS, p.241). Mr. Cox returned from his business trip on 19 June 2006 in the morning.

At this point in time, all messages addressed to CLAIMANT were jammed in its server. Therefore, it

was impossible for Mr. Cox to retrieve or become aware of RESPONDENT’s revocation.

128 Conclusion of 3.: The server problem of 18 and 19 June 2006 has no negative consequences for

CLAIMANT due to the risk allocation described above [§122]. Consequently, CLAIMANT had dispatched

its acceptance prior to the moment the revocation was retrieved by Mr. Cox. Since the revocation

was not sent to the designated information system, it was sent too late and therefore has no legal

effect.


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4. Even if the information was sent to the designated information system or no information

system was designated, RESPONDENT’s revocation did not become effective prior to the

dispatch of CLAIMANT’s acceptance.

129 If the Tribunal were to find that CLAIMANT’s e-mail address was the designated information system,

that the revocation was correctly sent to the designated information system (Art. 15(2)(a)(i) ML-EC)

or that no information system was designated (Art. 15(2)(b) ML-EC), RESPONDENT’s revocation still

did not reach CLAIMANT prior to the moment when CLAIMANT dispatched its acceptance pursuant to

Art. 16(1) CISG.

130 In the present case, the purported revocation was sent by e-mail on Sunday evening 18 June 2006

(Cl.Ex.No.9). Mr. Cox was deemed to return from his business trip on 19 June 2006 (Cl.Ex.No.6).

Due to this situation it was not possible for him or for any other employee of CLAIMANT to become

aware of the revocation under normal circumstances before Monday morning, i.e. prior to the start of

normal business hours (NEUMAYER, p.104; HERBER/CZERWENKA, Art. 24, §4).

131 If a message enters outside of business hours, it must be denied (BAMBERGER/ROTH, SAENGER,

Art. 24, §4; SOERGEL, LÜDERITZ/FENGE, Art. 24, §5). No compromise settlement was reached at the

Hague Conference in 1964 on the question whether a message can reach the addressee outside

business hours or not, so this issue is still unsolved under the CISG (NEUMAYER, p.104). The most

appropriate procedure to find an adequate solution is to handle such questions on a case-by-case

basis, and to assume good faith in business relationship (Art. 7 CISG). When dealing with messages

delivered outside business hours, the opportunity to become aware of their contents under normal

circumstances must be taken into consideration (NEUMAYER, p.104; SCHLECHTRIEM, p.95;

HERBER/CZERWENKA, Art. 24, §6).

132 Furthermore, RESPONDENT insisted several times on the importance of a quick reaction of CLAIMANT

to the offer (Cl.Ex.No.4, 7). It seems, therefore, highly reasonable that Mr. Cox should have paid

immediate attention on Monday morning to the purchase offer, giving it top priority. So his reaction to

RESPONDENTS’ offer was naturally to send acceptance immediately in the morning of 19 June 2006

(Cl.Ex.No.8) and he can be said to have acted in good faith. As a consequence, CLAIMANT was

unable to become aware of the e-mail containing the revocation prior to the moment when he

dispatched the acceptance.

133 Conclusion of 4.: CLAIMANT had no opportunity to become aware of the revocation before it dealt

with the offer and RESPONDENT’s revocation thereof did not become effective prior to the dispatch of

the acceptance.


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134 A contract was effectively concluded between CLAIMANT and RESPONDENT. Due to the fixed time

frame stipulated in the contract form, the offer of 10 June 2006 was irrevocable pursuant to Art.

16(2)(a) CISG. Consequently, RESPONDENT was bound by the offer until the time limit had expired.

Alternatively, the offer was not effectively revoked. CLAIMANT never consented either explicitly or

implicitly to receiving electronic communications of the type, the format and at the specific address

RESPONDENT used. Furthermore, while an information system was designated, the revocation of

18 June 2006 was not sent to the designated information system (i.e. the ordinary post-box) but to

CLAIMANT’s e-mail address, and therefore did not reach the addressee before the acceptance had

been dispatched. Alternatively, if the Tribunal were to find that the revocation was sent to the

designated information system or that no information system had been designated, CLAIMANT had no

opportunity to become aware of the e-mail of 18 June 2006, which contained the revocation, before it

had dealt with the offer and dispatched the acceptance. The purported revocation did not, therefore,

at any point in time, become effective.

Issue 5: “Blue Hills 2005” was in conformity with the contract

135 As CLAIMANT showed in Issue 4 [§§100 et seqq.], a contract was effectively concluded on 21 June

2006. It will be demonstrated that the wine offered by CLAIMANT was in conformity with the contract

concluded between the Parties [I.]. Should the Tribunal come to the conclusion that the wine was not

in conformity with the contract, it should conclude that this breach was not a fundamental one and

RESPONDENT could therefore not avoid the contract and not refuse to take delivery [II.].

I. Blue Hills 2005 was in conformity with the agreed contractual obligations

136 CLAIMANT submits that Blue Hills 2005 was in conformity with the contract under Art. 35 CISG. It will

first be shown that Blue Hills 2005 was in conformity with the contract under Art. 35(2)(c) CISG (sale

by sample) because it was presented at a fair where it was tasted and accepted by RESPONDENT

[I.1.]. Second and alternatively, it will be demonstrated that Blue Hills 2005 was fit for the particular

purpose as a promotion wine (Art. 35(2)(b) CISG) [I.2.]. In this context, it will also be seen that the

wine was of merchantable quality, i.e. that it was fit for the purposes for which goods of the same

description would ordinarily be used (Art. 35(2)(a) CISG).

1. RESPONDENT purchased Blue Hills 2005 by sample

137 CLAIMANT will prove that a sale by sample took place because RESPONDENT wanted to buy the wine it

had tasted at the Durhan Wine Fair and that this wine was what was to be delivered [I.1.a)]. The fact


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that the wine contained additives could have been detected in a reasonable examination and can

therefore not constitute a hidden defect [I.1.b)]. As a sample was agreed upon by the Parties, any

particular purpose not inherent to it is not constitutive for the conformity of the contract [I.1.c)].

a) RESPONDENT made its offer based on the wine tasted at the Durhan Wine Fair

138 CLAIMANT presented the Blue Hills 2005 at the Durhan Wine Fair. The submission of a sample to a

potential buyer is seen as a factual description of the product in question and, therefore, as a

contractual way to determine the kind and quality of the goods the buyer is entitled to

(BIANCA/BONELL, BIANCA, Art. 35, §2.6.1.). This is the conclusion which has to be made given the fact

that the buyer had the opportunity to test the product independently and decide whether it would be

adequate for its requirements or not before concluding a contract.

139 RESPONDENT was represented by its purchasers at the Fair (PO2, Q.15). They chose just Blue Hills

2005 out of all the wines presented at the Fair and did not make this decision under the caveat of

any further conditions [§144]. Therefore, the present case can undoubtedly be qualified as a sale by

sample according to Art. 35(2)(c) CISG.

b) RESPONDENT has not made a reasonable examination

140 The buyer who purchases goods based on a sample cannot refer to a breach of Art. 35(2)(c) CISG if

the alleged unconformities were inherent to the presented sample and would have been apparent on

a reasonable examination (TC Valais, SUI, 1997; HUBER/MULLIS, MULLIS, pp.139 et seq.;

BIANCA/BONELL, BIANCA, Art. 35, §§2.8.1 et seq.; NEUMAYER/MING, pp.283 et seq.).

141 RESPONDENT, represented by its wine-purchasing team at the Fair, tasted bottles of Blue Hills 2005,

which came from the same production line as all the rest of the wine sold under that label (PO2,

Q.15). Besides tasting the wine, they also had the opportunity to obtain more information about the

wine and its ingredients. If this was so important for RESPONDENT, it is not clear why it did not make

use of this opportunity. Apparently, RESPONDENT based its selection of Blue Hills 2005 solely on the

fact that it had won a prize and did not inquire about its composition.

142 CLAIMANT never tried in any way to hide the fact that it had used additives in the production of said

wine. Neither the buyer’s nor the seller’s country requires the label on wine bottles to show its

ingredients (PO2, Q.12). This means it is up to RESPONDENT to require and ask for further

information. It can therefore be said that RESPONDENT failed to reasonably examine the wine and

ensure that it did not contain additives.


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c) Any particular purpose not inherent to the sample is not of importance with respect to the

conformity of the contract

143 CLAIMANT submits that a sale by sample proceeds over any particular purpose agreed upon by the

Parties (BIANCA/BONELL, BIANCA, Art. 35, §2.6.1; SCHLECHTRIEM/SCHWENZER (E), SCHWENZER, Art. 35,

§25; STAUDINGER/MAGNUS, Art. 35, §38). As CLAIMANT made no assurances that no additives,

especially diethylene glycol, had been used, there can be no exemption from this rule

(SCHLECHTRIEM/SCHWENZER (D), SCHWENZER, Art. 35, §36; STAUDINGER/MAGNUS, Art. 35, §38).

144 If RESPONDENT really believes it is a particular purpose that a promotion wine should not contain

sweetening agents, this factually is not inherent to the sample the sale was based on. As CLAIMANT

did not guarantee anything besides the quality of the wine shown at the Fair, any additional

unspoken expectations of RESPONDENT cannot be taken into consideration when determining the

conformity of the wine. Hence, there were no warranties made by CLAIMANT which could have

become part of the contract.

145 Conclusion of 1.: A sale by sample was concluded between the Parties at the Durhan Wine Fair.

The wine to be delivered was in conformity with the sample and did not have any hidden defects

which could have constituted a breach of contract. Any alleged particular purpose not inherent to the

sample cannot be decisive for the conformity of the contract and therefore cannot be used as a basis

for RESPONDENT’s refusal to take delivery of conforming goods.

2. The wine was fit for the particular purpose in any event

146 If the Tribunal comes to the conclusion that the present case is not a case of sale by sample

according to Art. 35(2)(c) CISG, CLAIMANT requests the Tribunal to find that Blue Hills 2005 was still

fit for the particular purpose of being a promotion wine.

147 The only requirements for the alleged particular purpose are that the wine has to have special

attributes which make its promotion worthwhile. CLAIMANT will show that expressing the intention to

use a product for a promotion does not presuppose a quality requirement [I.2.a)], that the Blue Hills

2005 was perfect for a promotion as it is a prize-winning wine [I.2.b)], that it presents absolutely no

risk to anyone’s health [I.2.c)], that it fulfils any expectations RESPONDENT might have had for a wine

in its price bracket [I.2.d)] and that Blue Hills 2005 was merchantable in accordance with

Art. 35(2)(a) CISG [I.2.e)].

a) Promotion is not a specific quality requirement

148 The intended use of specific goods for a promotion does not automatically define any quality

requirements of the goods to be delivered. Under the present circumstances, the intended use of

Blue Hills 2005 for a promotion did not require any other quality than that needed in the case of a


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normal sale. Thus if RESPONDENT had wished to purchase a wine of a special quality, it would have

been obliged to define this in the contract.

149 In a case decided by the German Supreme Court concerning a contract on cobalt sulphate, the

intended use – technical quality instead of feeding quality – could be ascertained from the contract.

The court held that if two possible usages of the same chemical require different qualities, the

required quality must be defined in the contract (BGH, GER, 1996).

150 Following the cited case, RESPONDENT definitely should have defined the quality of the goods it

wanted in the contract, i.e. wine without additives, if it had really required a different quality from that

considered fit for a normal sale.

b) Blue Hills 2005 is a prize-winning wine

151 It is in the responsibility of the purchasers of a supermarket to decide whether a good is suitable for a

promotion. Generally speaking, products that are specially promoted do, in most cases, have

exceptional attributes which make their promotion worthwhile.

152 In the present case, the wine selected for a promotion won a prize at the Durhan Wine Fair and had

never been offered for sale in Equatoriana before. The wine has an exceptionally good taste and is

very inexpensive. These are the attributes that make this wine appropriate for a promotion in a

supermarket and thus worthwhile purchasing.

c) Consumption of Blue Hills 2005 causes no health problems

153 Contrary to RESPONDENT’s assumption, Blue Hills 2005 does not cause any health problems

(Cl.Ex.No.14). Diethylene glycol has a very low toxicity (BOHNET, p.603). For it to have any adverse

effects on health, it would be necessary to consume such an enormous amount of Blue Hills 2005

that the alcohol in the wine would induce toxic effects prior to the diethylene glycol (Cl.Ex.No.13).

Moreover, the added amount of diethylene glycol was absolutely within the legal limit permitted in

both the seller’s country and the buyer’s country (PO2, Q.11).

154 The argument brought by RESPONDENT that the wine poses a health risk is therefore unfounded.

d) Blue Hills 2005 fulfils all legitimate expectations

155 As it was not legitimate for RESPONDENT to expect a high quality wine without additives, the adding of

diethylene glycol cannot constitute a defect. Given the price of the wine [I.2.d)aa)] and the bad

weather during the growing season [I.2.d)bb)], RESPONDENT could not expect any other quality than

that which it received.


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aa) Given its price, RESPONDENT could not expect a wine of high quality

156 The specialists chose Blue Hills 2005 not only because of its excellent taste but also because the

wine was, in RESPONDENT’s opinion, among the best in its price bracket (Cl.Ex.No.2). In their contract

the Parties agreed to the purchase of 20,000 cases Blue Hills 2005 at a price of US$ 68.00 per case

(Cl.Ex.No.5). Since one case contains 12 bottles of wine (Cl.Ex.No.2), one bottle costs just US$

5.65. As RESPONDENT stated, Blue Hills 2005 “is an outstandingly fine wine in its price category”

(Cl.Ex.No.1). Hence, for this price, RESPONDENT could not have expected to buy a wine produced in

a time-consuming and expensive process.

157 Another aspect often used to classify wine is its age, and also how it is stored. Both the length and

the manner of storing have an impact on the later price of the wine (ROBINSON, pp.91-93). The wine

in question, as its name makes clear, was grown in 2005. The Durhan Wine Fair, where Blue Hills

2005 was presented to be tasted, took place in May 2006 (SoC, §5). Therefore it follows that this

wine cannot have been stored for very long.

158 The wine offered by CLAIMANT could not have been reasonably understood to be anything other than

what it actually is, a very good wine for its price range, which is why it even won a prize (Cl.Ex.No.1).

bb)The meteorological conditions in 2005 were not ideal for grape growing

159 For growing good grapes to produce fine wine, the weather during the growth period is extremely

important (SILFVEN). A certain number of sunny days are needed for the sugar production of the

grapes. As the growing season in 2005 was unusually cold and wet, the grapes could not produce

sufficient sugar to reach the level needed for fermentation (Cl.Ex.No.13). This is why CLAIMANT

added diethylene glycol to the wine.

160 RESPONDENT and its purchasing team could be reasonably expected to be aware of the fact that the

year 2005 had been a bad one for the wine growing industry and sweetening agents would have had

to be used to reach the right sugar level. Therefore, RESPONDENT could not reasonably expect to

have bought a wine without artificial sweeteners.

e) Blue Hills 2005 was merchantable

161 Selecting a product for a promotion does not necessarily require any special quality as such [§§148

et seqq.], and Blue Hills 2005 primarily had to be merchantable. Art. 35(2)(a) CISG requires that the

purchased goods are “honestly resalable in the ordinary course of business” (Secretariat

Commentary, Art. 35, §5). As a consequence of the newspaper articles about the addition of

diethylene glycol, sales of Blue Hills 2005 were somewhat slower than would otherwise have been.

There was not, however, a radical drop in sales (PO2, Q.21). Furthermore, there were neither

adverse health effects to fear [§153], nor was there any breach of public law standards (PO2, Q.11).


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162 The objective possibility to resell the product has to be distinguished from its effective

merchantability, which includes the risk of general market fluctuations and occurrences that influence

sales.

163 It is generally the buyer who has to bear the risk that it can use the purchased goods as intended

and it also bears the merchandising risk (BRUNNER, Art. 66, §12, Art. 79, §§19, 25). If the reason why

the buyer cannot use the goods as intended is not a (hidden) defect in the goods, it is for the buyer

to assume the risk and its consequences. Thus, the impact of a newspaper article that overstates or

misrepresents certain facts, as is the case here [cf. §176], would be for the buyer to bear.

164 Conclusion of 2: Blue Hills 2005 is a prize-winning merchantable wine, which causes no health

problems and completely fulfils any expectations RESPONDENT could have had. There is no reason at

all which would preclude using the wine as the lead in a supermarket promotion. CLAIMANT therefore

concludes that Blue Hills 2005 was perfectly fit for the particular purpose RESPONDENT implies.

II. There was no fundamental breach of contract

165 If the Tribunal disagrees with CLAIMANT’s argumentation that Blue Hills 2005 was in conformity with

the contract, CLAIMANT will alternatively demonstrate that the alleged non-conformity was not a

fundamental breach of contract and thus RESPONDENT has no right to avoid the contract, Art. 45

i.c.w. Art. 49(2) CISG (SCHLECHTRIEM/SCHWENZER (E), SCHLECHTRIEM, Art. 25, §4).

166 For a breach of a contract to be fundamental, the breach must not only make the party suffer

substantial detriment [II.1.], but in cases where the alleged breach cannot have been based on any

explicit contractual obligation, it must also be foreseeable for the seller at the time of contract

conclusion [II.2.] (BRUNNER, Art. 25, §§9 et seq.; SCHLECHTRIEM/SCHWENZER (E), SCHWENZER,

Art. 25, §11).

1. There is no substantial deprivation

167 RESPONDENT claims that it could not sell Blue Hills 2005 after it had received such bad press and that

it thus had the right to avoid the contract.

168 To determine whether a party has suffered substantial deprivation, the focus is on whether or not the

purpose of the contract has been frustrated by the breach. Only if the goods do not possess the

features necessary for the purpose specified in the contract and the sale of the goods is thus not

possible, can it be said that a fundamental breach has been committed (KOCH, p.219; SPAIC, fn.296;

HUBER/MULLIS, HUBER, p.214).

169 As long as the goods intended for resale are of merchantable quality, there cannot be a substantial

deprivation (NAI, NLD, 2002; AUDIT, p.95; BIANCA/BONELL, BIANCA, Art. 35, §2.5.1.; HONNOLD,


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Documentary History, p.422; NEUMAYER/MING, p.277; Art. 2(2)(d) of Directive 1999/44/EEC of the

European Parliament and the Council of 25th May).

170 After the newspaper articles, the sale of Blue Hills 2005 was only somewhat slower than expected

(PO2, Q.21). There was not at any point in time a radical drop in sales. This leads us to the

conclusion that Blue Hills 2005 was definitively merchantable. Otherwise the sale would have been

interrupted immediately on all markets. For this reason, RESPONDENT could not be said to have

suffered substantial deprivation in the present case.

171 Moreover, we would like to draw the Tribunal’s attention to the fact that RESPONDENT carries the

burden of proving its substantial deprivation. This can be deduced from the general rules: First, the

party which invokes a rule in its favour has to prove the required facts. Second, the party has to

prove the facts which are in its field of responsibility (STAUDINGER/MAGNUS, Art. 4, §§67-69).

2. CLAIMANT could not foresee any deprivation caused by its practices

172 Pursuant to Art. 25 CISG, the time of the conclusion of the contract is relevant for the determination

of foreseeability. It has to be judged from the point of view of a person of the same kind in the same

circumstances (OLG Düsseldorf, GER, 1997; SPAIC, fn.194, 252 et seq.; HUBER/MULLIS, HUBER,

pp.215 et seq.; SCHLECHTRIEM/SCHWENZER (E), SCHWENZER, Art. 25, §15; STAUDINGER/MAGNUS,

Art. 25, §§16, 19). In the present case, this would be any wine producer in Mediterraneo.

173 The practice of sweetening wine with diethylene glycol is wholly legal (PO2, Q.11) and does not

constitute an unusual action in wine production. Diethylene glycol has no smell of its own and does

not change the taste of the wine. It is soluble in water and alcohol (BOHNET, p.593). Its attribute is to

sweeten the product to which it is added. To this extent it does not differ from other sweetening

substances, which are without any doubts frequently added to wine without receiving critical

attention. For example, French Bordeaux, which is considered a very high quality wine, regularly

contains added cane sugar (CHORNIAK). Consequently, there was no reason for the producers of

Blue Hills 2005 to believe they were doing anything unusual, let alone illegal. CLAIMANT therefore had

nothing to hide and had thus not to foresee such coincidences.

174 There is no restriction requiring a wine to list its ingredients on its label in either of the involved

countries (PO2, Q.12). If even the legislator of a country does not give weight to this and does not

standardize it, the producers of Blue Hills 2005 can assume they are not doing anything wrong.

CLAIMANT hence had no obligation to mention the ingredients of the wine unless requested to do so.

175 It is self-evident that CLAIMANT wanted to sell its wine not just to RESPONDENT, but also to others in

the future and would never have done anything that might be expected to harm its image. As

statistics show, it was reasonable not to expect sales to be bad as a result of adding diethylene


- 35 -

glycol to the wine. The image of the wine in Mediterraneo is so established that it still sold despite

the bad media coverage (PO2, Q.21).

176 Conclusion of II: Because RESPONDENT suffered no substantial detriment and it was not foreseeable

for CLAIMANT that a wholly legal and legitimate action would cause such turbulence that it influenced

sales of the wine, there is no legal basis for RESPONDENT to refuse delivery of the wine it ordered.


177 RESPONDENT did not make known to CLAIMANT either explicitly or implicitly that it was important for it

to purchase goods without any additives. Buying a wine at a fair is a sale by sample and therefore

RESPONDENT has to accept the purchased wine as is. In any event, Blue Hills 2005 is adequate for

the particular purpose as a promotion wine. If the Tribunal came to a different conclusion, CLAIMANT

caused no foreseeable substantial deprivation, thus there was no fundamental breach. According to

Art. 53 CISG, RESPONDENT must take delivery and pay for the goods.

Relief sought

178 In the light of the above submissions, CLAIMANT respectfully requests the Tribunal to find that:

a stay of the arbitral proceedings should not be granted [Issue 1];

an arbitration agreement has been validly concluded between the Parties [Issue 2];

RESPONDENT is in violation of its obligations towards CLAIMANT and towards the Tribunal by

commencing litigation in the Court [Issue 3];

the contract of sale has been effectively concluded [Issue 4]; and that

Blue Hills 2005 was in conformity with the contract, or if the Tribunal should come to the opposite

conclusion, that this breach was not fundamental [Issue 5].

179 Consequently, CLAIMANT requests the Tribunal to order RESPONDENT:

to terminate its litigation in the Court;

to pay the full costs of the litigation in the Court

to pay the purchase price of US$ 1,360,000.


- XVII -

Certificate

Berne, 6 December 2007

We herby confirm that this Memorandum was written only by the persons whose names are listed

below and who signed this certificate. We also confirm that we did not receive any assistance during

the writing process from any person that is not a member of this team.

____________________ ____________________Fabienne Claudon Christian Dreier

____________________ ____________________Aylin Erb Isabelle Ganz

____________________ ____________________Alain Muster Leonora Schreier

Documents

Memorandum for Claimant - Zivilistisches Seminar