MEMORANDUM FOR RESPONDENT - Pace Universitycisgw3.law.pace.edu/cisg/moot/respondent21-3.pdf · TWENTY-FIRST ANNUAL WILLEM C. VIS INTERNATIONAL COMMERCIAL ARBITRATION MOOT VIENNA,

TWENTY-FIRST ANNUAL

WILLEM C. VIS INTERNATIONAL COMMERCIAL ARBITRATION

MOOT

VIENNA, 11 - 17 April 2014

MEMORANDUM FOR RESPONDENT

RUPRECHT-KARLS-UNIVERSITÄT HEIDELBERG

ON BEHALF OF: AGAINST:

Hope Hospital Innovative Cancer Treatment Ltd.

1-3 Hospital Road 46 Commerce Road

Oceanside, Equatoriana Capital City, Mediterraneo

Respondent Claimant

NINA BENZ • FREDERIK HÜBL

DOMINIK MOHR • ALEXANDER URHAHN

RUPRECHT-KARLS -UNIVERSITÄT HEIDELBERG

MEMORANDUM FOR RESPONDENT | I

TABLE OF CONTENTS

TABLE OF CONTENTS .................................................................................................................. I

TABLE OF ABBREVIATIONS ..................................................................................................... IV

TABLE OF LITERATURE ......................................................................................................... VII

TABLE OF CASES ................................................................................................................... XIV

TABLE OF ARBITRAL AWARDS ........................................................................................... XXII

TABLE OF OTHER SOURCES .............................................................................................. XXIV

STATEMENT OF FACTS ............................................................................................................... 1

SUMMARY OF ARGUMENT ......................................................................................................... 2

ARGUMENT ................................................................................................................................ 3

PART I: THE ARBITRAL TRIBUNAL LACKS JURISDICTION TO DECIDE ANY DISPUTE

BETWEEN THE PARTIES ............................................................................................................. 3

I. THE ARBITRAL TRIBUNAL HAS NO JURISDICTION BASED ON ART. 23 FSA ............................ 3

A. ART. 23 FSA DOES NOT CONTAIN AN ARBITRATION AGREEMENT ........................................ 3

B. ART. 23(4) FSA RENDERS THE ALLEGED ARBITRATION AGREEMENT INVALID .................... 6

1. Art. 23(4) FSA is invalid under the DAL ......................................................................... 6

2. The invalidity of Art. 23(4) FSA renders the entire alleged arbitration agreement

invalid .............................................................................................................................. 8

C. ART. 23(6) FSA RENDERS THE ALLEGED ARBITRATION AGREEMENT INVALID .................... 9

1. Art. 23(6) FSA is invalid under the DAL ....................................................................... 10

2. Art. 23(6) FSA renders the alleged arbitration agreement entirely invalid .................... 12

D. EVEN IF ART. 23 FSA WAS VALID, IT WOULD NOT EXTEND TO THE SLA ........................... 13

E. A POTENTIAL AWARD BASED ON ART. 23 FSA IS LIKELY TO BE SET ASIDE IN DANUBIA

AND TO BE UNENFORCEABLE IN EQUATORIANA AND MEDITERRANEO ............................... 15

II. THE ARBITRAL TRIBUNAL HAS NO JURISDICTION BASED ON SEC. 21 OF THE 2000

STANDARD TERMS .............................................................................................................. 17

III. THE ARBITRAL TRIBUNAL HAS NO JURISDICTION BASED ON SEC. 21 OF THE 2011

STANDARD TERMS .............................................................................................................. 18


MEMORANDUM FOR RESPONDENT | II

A. CLAIMANT’S MERE REFERENCE IS NOT SUFFICIENT TO INCORPORATE THE 2011

STANDARD TERMS ............................................................................................................ 18

B. CLAIMANT DID NOT MAKE THE 2011 STANDARD TERMS AVAILABLE TO RESPONDENT ..... 19

1. Uploading standard terms on the offeror’s website does not suffice to make them

available when the contract was concluded in paper-based writing ............................... 19

2. Alternatively, the requirements for internet-based incorporation are not fulfilled......... 20

3. In addition, RESPONDENT did not understand and ought not to have understood the

language of the 2011 Standard Terms ............................................................................ 21

C. RESPONDENT DID NOT ACCEPT THE INCORPORATION BY LATER CONDUCT ........................ 22

CONCLUSION TO PART I .......................................................................................................... 22

PART II: THE TWO PRESENT CLAIMS SHOULD BE DECIDED IN TWO ARBITRAL

PROCEEDINGS ........................................................................................................................... 22

I. THE PARTIES DID NOT EXPRESSLY AGREE TO JOIN THE CLAIMS ARISING FROM THE FSA

AND FROM THE SLA ............................................................................................................ 23

II. NO IMPLICIT AGREEMENT CAN BE INFERRED FROM THE PARTIES’ CONDUCT ....................... 23

A. ART. 10(3) CEPANI RULES LEADS TO THE PRESUMPTION THAT THE PARTIES DID NOT

AGREE TO JOIN THE CLAIMS ............................................................................................... 24

B. IN ANY CASE THERE ARE NO INDICATORS OF ANY IMPLIED AGREEMENT ............................ 24

III. A JOINDER OF CLAIMS WOULD BE UNREASONABLE .............................................................. 25

CONCLUSION TO PART II ......................................................................................................... 26

PART III: THE CISG IS NOT APPLICABLE TO THE PAYMENT CLAIM UNDER THE SLA ......... 26

I. THE PARTIES OPTED OUT OF THE CISG ............................................................................... 26

A. SEC. 22 OF THE 2000 STANDARD TERMS EXCLUDES THE APPLICATION OF THE CISG ....... 26

B. THE 2011 STANDARD TERMS DO NOT LEAD TO A DIFFERENT RESULT ................................ 27

1. Sec. 22 of the 2011 Standard Terms does not indicate the Parties’ will to apply the

CISG to the SLA ............................................................................................................ 27

2. Alternatively, Sec. 22 of the 2011 Standard Terms was surprising ............................... 28

II. ALTERNATIVELY, THE SLA DOES NOT FALL WITHIN THE MATERIAL SCOPE OF THE CISG ... 28

A. RESPONDENT’S OBLIGATION IS NOT A BUYER’S OBLIGATION UNDER THE CISG ............... 29


MEMORANDUM FOR RESPONDENT | III

1. The CISG does not provide for a payment other than in money .................................... 29

2. Alternatively, the dominant part of RESPONDENT’s obligation is barter ........................ 30

B. THE PREPONDERANT PART OF CLAIMANT’S OBLIGATIONS IS NOT A SELLER’S

OBLIGATION UNDER THE CISG .......................................................................................... 31

1. CLAIMANT was obligated to grant a licence .................................................................... 32

2. Alternatively, CLAIMANT was obligated to develop individualised software ................. 33

CONCLUSION TO PART III ....................................................................................................... 34

REQUEST FOR RELIEF ............................................................................................................. 35


MEMORANDUM FOR RESPONDENT | IV

TABLE OF ABBREVIATIONS

Abbreviation Explanation

2000

Standard

Terms

Innovative Cancer Treatment Ltd. Standard Terms and Conditions for

Sale (November 2000)

2011

Standard

Terms

Innovative Cancer Treatment Ltd. Standard Terms and Conditions for

Sale (July 2011)

Art. Article

Artt. Articles

BezG Bezirksgericht (District Court Switzerland)

BGH Bundesgerichtshof (Federal Supreme Court of Justice Germany)

CEPANI Belgian Centre for Mediation and Arbitration

CEPANI

Rules

Arbitration Rules of the Belgian Centre for Mediation and Arbitration

in force as from 1 January 2013

Cf. Confer (compare)

C–I CLAIMANT’s Request for Arbitration dated 6 June 2013

C–II Memorandum for CLAIMANT by University of Grenoble dated 12

December 2013

CISG United Nations Convention on Contracts for the International Sale of

Goods, Vienna 1980

CISG-online Internet database on CISG decisions and materials, available at

www.globalsaleslaw.org

CLOUT Case Law on UNCITRAL Texts

Co. Company

E. g. Exempli gratia (for example)

ECHR European Court of Human Rights

Ed. Edition

Et al. Et alii (and others)


MEMORANDUM FOR RESPONDENT | V

Et seq. Et sequentes (and following)

Et seqq. Et sequentes (and following, plural)

Exh. C CLAIMANT’s Exhibit

Exh. R RESPONDENT’s Exhibit

Fn. Footnote

FSA Framework and Sales Agreement concluded between Innovative

Cancer Treatment Ltd. and Hope Hospital on 13 January 2008

HG Handelsgericht (Commercial Court Switzerland)

I. e. Id est (that is)

ICT Innovative Cancer Treatment Ltd.

Inc. Incorporated

KG Kantonsgericht (Cantonal Court Switzerland)

LAV Lei de Arbitragem Voluntária (Portugal)

LG Landgericht (District Court Germany)

Ltd. Limited Company

Model Law UNCITRAL Model Law on International Commercial Arbitration

(1985) with 2006 amendments

NCPC Nouveau Code de Procédure Civile (France)

No. Number

NYC UN Convention on the Recognition and Enforcement of Foreign

Arbitral Awards, New York, 10 June 1958

OG Obergericht (Appellate Court Switzerland)

OGH Oberster Gerichtshof (Supreme Court Austria)

OLG Oberlandesgericht (Court of Appeal Germany/ Court of Appeal

Austria)

P. Page

Para. Paragraph

PO Procedural Order


MEMORANDUM FOR RESPONDENT | VI

R–I RESPONDENT’s Answer to Request for Arbitration dated 5 July 2013

Sec. Section

SLA Sales and Licensing Agreement concluded between Innovative Cancer

Treatment Ltd. and Hope Hospital on 20 July 2011

U.S. United States of America

UK United Kingdom

ULIS Convention Relating to a Uniform Law on the International Sale of

Goods, The Hague, 1 July 1964

UN United Nations

UNCITRAL United Nations Commission on International Trade Law

UNIDROIT International Institute for the Unification of Private Law

UPICC UNIDROIT Principles of International Commercial Contracts 2010

USD United States Dollar

V. Versus

Vol. Volume

WL Westlaw


MEMORANDUM FOR RESPONDENT | VII

TABLE OF LITERATURE

Cited as Citation Cited

in

1 ANCEL/MARION/

WYNAENDTS Ancel, Marie-Elodie/ Marion, Léa/ Wynaendts,

Laurence

Reflections on One-Sided Jurisdiction Clauses in

International Litigation (about the Rothschild Decision,

French Cour de Cassation, 26 September 2012)

Found: http://papers.ssrn.com/sol3/papers.cfm?abstract

_id=2258419 (last access 17 January 2014)

41

2 BINDER Binder, Peter

International Commercial Arbitration and Conciliation

in UNCITRAL Model Law Jurisdictions, 2nd

Ed.

London (2005)

32,

33,

56

3 BORN Born, Gary B.

International Commercial Arbitration, Volume I and II

Alphen aan den Rijn, Austin, Boston, Chicago, New

York (2009)

8,

14,

33,

51

BORN, Law and

Practice Born, Gary B.

International Arbitration: Law and Practice

Alphen aan den Rijn (2012)

12

BRUNNER Brunner, Christoph

UN-Kaufrecht-CISG, Kommentar zum

Übereinkommen der Vereinten Nationen über Verträge

über den internationalen Warenkauf 1980

Bern (2004)

65,

71,

97,

108

4 CUNIBERTI Cuniberti, Gilles

Bulgarian Court Strikes Down One Way Jurisdiction

Clause

13 November 2012

Found: http://conflictoflaws.net/2012/bulgarian-court-

strikes-down-one-way-jurisdiction-clause/ (last access

17 January 2014)

40

5 DIEDRICH Diedrich, Frank

The CISG and Computer Software Revisited

In: Vindobona Journal of International Commercial

Law & Arbitration, Volume 6, Supplement (2002), pp.

55 - 75

119


MEMORANDUM FOR RESPONDENT | VIII

6 DIPLOMATIC

CONFERENCE Ministry of Justice of the Netherlands

Diplomatic Conference on the Unification of Law

Governing the International Sale of Goods, The Hague,

2 - 25 April 1964, Acts and Records of the Conference

(Government Printing Office)

The Hague (1966)

108

7 DRAGUIEV Draguiev, Deyan

Unilateral Jurisdiction Clauses: The Case for Invalidity,

Severability or Enforceability

In: Journal of International Arbitration, Volume 31,

Issue 1 (2014), pp. 19 - 46 (to be published; available

upon request to the author)

40

8 ENDERLEIN/MASKOW Enderlein, Fritz/ Maskow, Dietrich

International Sales Law, United Nations Convention on

Contracts for the International Sale of Goods;

Convention on the Limitation Period in the

International Sale of Goods

New York, London, Rome (1992)

116

FERRARI ET AL./Author Ferrari, Franco/ Kieninger, Eva-Maria/

Mankowski, Peter (ed.)

Internationales Vertragsrecht, Rom I – VO, CISG,

CMR, FactÜ, Kommentar, 2nd

Ed.

Munich (2012)

122

FERRARI, Specific

Topics Ferrari, Franco

Specific Topics of the CISG in the Light of Judicial

Application and Scholarly Writing

In: Journal of Law and Commerce, Volume 15 (1995),

pp. 1 - 126

104

FOUCHARD/GAILLARD/

GOLDMAN Gaillard, Emmanuel/ Savage, John

Fouchard, Gaillard, Goldman on International

Commercial Arbitration

The Hague, Boston, London (1999)

51

GOLDBERG Goldberg, Stephen B./ Sander, Frank E.A./ Rogers,

Nancy H./ Cole, Sarah Rudolph

Dispute Resolution, Negotiation, Mediation, and Other

Processes, 4th

Ed.

New York (2003)

34


MEMORANDUM FOR RESPONDENT | IX

HANOTIAU Hanotiau, Bernard

Complex Arbitrations, Multiparty, Multicontract,

Multi-issue and Class Actions

The Hague (2005)

51

HOLTZMANN/

NEUHAUS Holtzmann, Howard M./ Neuhaus, Joseph E.

A Guide to the UNCITRAL Model Law on

International Arbitration: Legislative History and

Commentary

The Hague (1989)

25,

33

HONSELL/Author Honsell, Heinrich/ Brunner, Christoph (ed.)

Kommentar zum UN-Kaufrecht, Übereinkommen der

Vereinten Nationen über Verträge über den

internationalen Warenkauf (CISG), 2nd

Ed.

Berlin, Heidelberg (2010)

68

KAROLLUS Karollus, Martin

UN-Kaufrecht, eine systematische Darstellung für

Studium und Praxis

Vienna, Heidelberg (1991)

99,

111

KLIUCHKOVSKYI/

MARCHUKOV/VOLKOV Kliuchkovskyi, Markiyan/ Marchukov, Dmytro/

Volkov, Oleksandr

Validity and Enforceability of the Asymmetric Dispute

Resolution Clauses in Ukraine

In: The European, Middle Eastern and African

Arbitration Review 2014

Found: http://globalarbitrationreview.com/reviews/58/

sections/203/chapters/2301/ukraine/ (last access 17

January 2014)

38

LARSON Larson, Marcus G.

Comment: Applying uniform sales law to international

software transactions: the use of the CISG, its

shortcomings, and a comparative look at how the

proposed UCC Article 2B would remedy them

In: Tulane Journal of International and Comparative

Law, Volume 5 (1997), pp. 445 - 488

119

MAGNUS Magnus, Ulrich

Incorporation of Standard Contract Terms under the

CISG

In: Andersen, Camilla B./ Schroeter, Ulrich G. (ed.),

Sharing International Commercial Law across National

Boundaries: Festschrift for Albert H. Kritzer on the

Occasion of his Eightieth Birthday, pp. 303 - 325

London (2008)

73


MEMORANDUM FOR RESPONDENT | X

MCGUIRE McGuire, Mary-Rose

Die Lizenz – Eine Einordnung in die

Systemzusammenhänge des BGB und des

Zivilprozessrechts

Tübingen (2012)

119

MOSES Moses, Margaret L.

The Principles and Practice of International

Commercial Arbitration, 2nd

Ed.

Cambridge, New York, Melbourne, Madrid, Cape

Town, Singapore, São Paulo, Delhi (2012)

16,

34,

51

MOURRE/RADICATI DI

BROZOLO Mourre, Alexis/ Radicati di Brozolo, Luca G.

Towards Finality of Arbitral Awards: Two Steps

Forward and One Step Back

In: Journal of International Arbitration, Volume 23,

Issue 2 (2006), pp. 171 - 188

14

MÜKOHGB/Author Schmidt, Karsten/ Grunewald, Barbara (ed.)

Münchener Kommentar zum Handelsgesetzbuch,

Band 5, 3rd

Ed.

Munich (2013)

122

PAULSSON Paulsson, Jan

The Idea of Arbitration

Oxford (2013)

14

PAULSSON/Author Paulsson, Jan

International Handbook on Commercial Arbitration:

National Reports and Basic Legal Texts

Alphen aan den Rijn, Austin, Boston, Chicago, New

York (1984)

21

PILTZ Piltz, Burghard

Internationales Kaufrecht, das UN-Kaufrecht in

praxisorientierter Darstellung, 2nd

Ed.

Munich (2008)

111

PILTZ, Business Terms Piltz, Burghard

General business terms in CISG sales contracts

In: International Commercial Law (2004), pp. 133 - 138

65

POUDRET/BESSON Poudret, Jean-François/ Besson Sébastien

Comparative Law of International Arbitration, 2nd

Ed.

London (2007)

14,

16


MEMORANDUM FOR RESPONDENT | XI

9 PRIMAK Primak, L. Scott

Computer Software: Should the U.N. Convention on

Contracts for the International Sale of Goods Apply? A

Contextual Approach to the Question

In: The John Marshall Journal of Information

Technology & Privacy Law (1991), pp. 197 - 231

119

REDFERN/HUNTER Redfern, Alan/ Hunter, Martin/ Blackaby, Nigel/

Partasides, Constantine

Redfern and Hunter on International Arbitration, 5th

Ed.

London (2009)

14,

16,

51

SCHLECHTRIEM/

BUTLER Schlechtriem, Peter/ Butler, Petra

UN Law on International Sales, The UN Convention on

the International Sale of Goods

Berlin, Heidelberg (2009)

108

SCHLECHTRIEM/

SCHROETER Schlechtriem, Peter/ Schroeter, Ulrich G.

Internationales UN-Kaufrecht, ein Studien- und

Erklärungsbuch zum Übereinkommen der Vereinten

Nationen über Verträge über den internationalen

Warenkauf (CISG), 5th

Ed.

Tübingen (2013)

77

SCHLECHTRIEM/

SCHWENZER(German)/

Author

Schlechtriem, Peter/ Schwenzer, Ingeborg (ed.)

Kommentar zum Einheitlichen UN-Kaufrecht (CISG),

6th

German Ed.

Munich, Basel (2013)

65,

68,

71,

77

SCHLECHTRIEM/

SCHWENZER/Author Schlechtriem, Peter/ Schwenzer, Ingeborg (ed.)

Commentary on the UN Convention on the

International Sale of Goods (CISG), 3rd

English Ed.

Munich, Oxford (2010)

73,

77,

101

SCHMIDT-KESSEL/

MEYER Schmidt-Kessel, Martin/ Meyer, Linus

Allgemeine Geschäftsbedingungen und UN-Kaufrecht


73

SCHÜTZE Schütze, Rolf A.

Schiedsgericht und Schiedsverfahren, 5th

Ed.

Munich (2012)

51

SCHWENZER/KEE Schwenzer, Ingeborg/ Kee, Christopher

Countertrade and the CISG


108


MEMORANDUM FOR RESPONDENT | XII

SCHWENZER/MOHS Schwenzer, Ingeborg/ Mohs, Florian

Old Habits Die Hard: Traditional Contract Formation in

a Modern World

In: International Commercial Law (2006),

pp. 239 - 246

68

SMIT Smit, Hans

The Unilateral Arbitration Clause: A Comparative

Analysis

In: American Review of International Arbitration

(2009), pp. 391 - 419

34,

38

SMIT, Scope of Judicial

Review Smit, Hans

Contractual Modification of the Scope of Judicial

Review of Arbitral Awards

In: American Review of International Arbitration

(1997), pp. 147 - 152

14

STAUDINGER/Author Magnus, Ulrich

Julius von Staudingers Kommentar zum Bürgerlichen

Gesetzbuch, Wiener UN-Kaufrecht

Berlin (2013)

68,

116,

122

UNCITRAL/Author Ferrari, Franco/ Flechtner, Harry/ Brand, Ronald

A.

The Draft UNCITRAL Digest and Beyond:

Cases, Analysis and Unresolved Issues in the U.N.

Sales Convention, Papers of the Pittsburgh Conference

Organized by the Center for International Legal

Education (CILE)

London (2004)

65

UNIDROIT

COMMENTARY UNIDROIT

Official Comment to the Principles of International

Commercial Contracts (2010)

Found: http://www.unilex.info/dynasite.cfm?dssid=

2377&dsmid=13637 (last access 17 January 2014)

12,

28,

60,

101

VENTSCH/KLUTH Ventsch, Verena/ Kluth, Peter

The Incorporation of General Business Terms and

Conditions in the Context of the Convention on the

International Sale of Goods (CISG)


65


MEMORANDUM FOR RESPONDENT | XIII

VENTSCH/KLUTH,

Standard Terms Ventsch, Verena/ Kluth, Peter

CISG – No Incorporation of General Business Terms

by the Possibility of Internet Download

In: International Commercial Law (2003),

pp. 224 - 225

68

VOGENAUER/

KLEINHEISTERKAMP/

Author

Vogenauer, Stefan/ Kleinheisterkamp, Jan

Commentary on the UNIDROIT Principles of

International Commercial Contracts (PICC)

New York (2009)

60

WAINCYMER Waincymer, Jeff

Procedure and Evidence in International Arbitration

Alphen aan den Rijn (2012)

8

ZELL Zell, Jeremy L.

Discerning the Validity of Arbitration Agreements

Containing Heightened Judicial Review Clauses After

Hall Street Associates, L.L.C. v. Mattel, Inc

In: Loyola University Chicago Law Journal, Volume 40

(2009), pp. 959 - 993

15,

28


MEMORANDUM FOR RESPONDENT | XIV

TABLE OF CASES


in

Austria

10 OGH (1994) Oberster Gerichtshof

14 December 1994

7 Ob 604/94

Found: http://www.ris.bka.gv.at/Dokumente/Justiz

/JJT_19941214_OGH0002_0070OB00604_9400000

_000/JJT_19941214_OGH0002_0070OB00604_940

0000_000.pdf (last access 22 January 2014)

13


6 February 1996

CISG-online 224

65


4 July 2007

CISG-online 1560

97


2 April 2009

CISG-online 1889

97

14 OLG Innsbruck (2007) Oberlandesgericht Innsbruck

18 December 2007

CISG-online 1735

116

15 OLG Linz (2006) Oberlandesgericht Linz

23 January 2006

CISG-online 1377

97

Bulgaria

16 Bulgarian Supreme

Court (2011)

Supreme Court of Cassation

2 September 2011

17 Judgment No. 71 in commercial case No. 1193/2010

40


MEMORANDUM FOR RESPONDENT | XV

Canada

18 Mansonville v. Kurtz Mansonville Plastics (B.C.) Ltd. v. Kurtz GmbH

Supreme Court of British Columbia

21 August 2003

CISG-online 1017

65

Europe

19 ECHR (2005) Steel and Morris v. the UK

European Court of Human Rights

15 May 2005

Found: http://hudoc.echr.coe.int/sites/eng/pages/

search.aspx?i=001-68224#{%22itemid%22:[%22001

-68224%22]} (last access 17 January 2014)

33

20 ECHR (2010) Suda v. Czech Republic

European Court of Human Rights

28 October 2010

Found: http://hudoc.echr.coe.int/sites/eng/Pages/

search.aspx#{"itemid":["001-101333"]} (last access

17 January 2014)

33

France

21 Cour d’appel de Colmar

(1995)

Sté Ceramique Culinaire de France v. Musgrave Ltd.

Cour d’appel de Colmar

26 September 1995

CISG-online 226

99

22 Cour d’appel de Colmar

(2001)

Société Romay AG v. SARL Behr France

Cour d’appel de Colmar

12 June 2001

CLOUT Case 480

104

23 Cour d’appel de Paris

(1989)

Société Binaate Maghreb v. Société Screg Routes

Cour d’appel de Paris

12 December 1989

In: Revue de l’arbitrage, Volume 1990, Issue 4,

pp. 863 - 866

26,

28


(1995)

Société ISEA Industrie S.p.A. et al. v. SA Lu et al.


13 December 1995

CISG-online 312

77


MEMORANDUM FOR RESPONDENT | XVI


(2004)

Le P et Association Internationale des Concours de

Beauté pour les Pays Francophones v. Société Miss

France


17 June 2004

Available at LexisNexis, JurisData: 2004-247553

13

26 Cour de Cassation

(2012)

Mme ‘X’ v. SA Banque privée Edmond de

Rothschild Europe

Cour de Cassation

26 September 2012

Available at Lexis Nexis, JurisData: 2012-021675

41

Germany

27 BGH (1981) Bundesgerichtshof

4 June 1981

In: Monatsschrift für Deutsches Recht (1982),

pp. 36 - 37

13

28 BGH (1998) Bundesgerichtshof

24 September 1998

In: Betriebs-Berater 1998, p. 2335

35

BGH (2001) Bundesgerichtshof

31 October 2001

CISG-online 617

65,

68

LG Mainz (1998) Landgericht Mainz

26 November 1998

CISG-online 563

116

LG Munich I (1995) Landgericht München I

8 February 1995

CISG-online 203

119

OLG Celle (2009) Oberlandesgericht Celle

24 July 2009

CISG-online 1906

65,

68

OLG Cologne (2005) Oberlandesgericht Köln

21 December 2005

CISG-online 1201

65

OLG Dresden (2007) Oberlandesgericht Dresden

11 June 2007

CISG-online 1720

116


MEMORANDUM FOR RESPONDENT | XVII

OLG Düsseldorf (2003) Oberlandesgericht Düsseldorf

25 July 2003

CISG-online 919

65

OLG Düsseldorf (2004) Oberlandesgericht Düsseldorf

21 April 2004

CISG-online 915

73

OLG Munich (1999) Oberlandesgericht München

3 December 1999

CISG-online 585

116

29 OLG Munich (2006) Oberlandesgericht München

7 August 2006

In: Zeitschrift für Schiedsverfahren 2006,

pp. 286 - 288

12,

15

30 OLG Munich (2013) Oberlandesgericht München

10 September 2013

In: Zeitschrift für Schiedsverfahren 2013,

pp. 287 - 291

28

31 OLG Naumburg (2013) Oberlandesgericht Naumburg

13 February 2013

CISG-online 2455

65

OLG Oldenburg (2007) Oberlandesgericht Oldenburg

20 December 2007

CISG-online 1644

65

OLG Rostock (2001) Oberlandesgericht Rostock

10 October 2001

CISG-online 671

97

OLG Stuttgart (2008) Oberlandesgericht Stuttgart

31 March 2008

CISG-online 1658

97

Italy

32 Corte d’ Appello di

Firenze (1988)

Corte d’ Appello di Firenze

27 January 1988

In: Kluwer Law International (1990), pp. 496 - 497

15


MEMORANDUM FOR RESPONDENT | XVIII

Tribunale di Forli

(2009)

Tribunale di Forli

16 February 2009

CISG-online 1780

104,

116

Tribunale di Monza

(1993)

Tribunale di Monza

14 January 1993

CISG-online 540

99

Tribunale di Padova

(2005)

Tribunale di Padova

11 January 2005

Found: http://cisgw3.law.pace.edu/cases/050111i3.

html (last access 22 January 2014)

104

Tribunale di Rovereto

(2007)

Tribunale di Rovereto

21 November 2007

CISG-online 1590

65

Netherlands

Hof’s-Hertogenbosch

(2002)

Gerechtshof’s-Hertogenbosch

16 October 2002

CISG-online 816

65

Rechtbank Utrecht

(2009)

Rechtbank Utrecht

21 January 2009

CISG-online 1814

65

New Zealand

Gallaway Cook Allan v.

Carr

Gallaway Cook Allan v. Ewan Robert Carr

Court of Appeal of New Zealand

15 February 2013

Found: http://www.nzlii.org/nz/cases/NZCA/2013/11

.html (last access 19 January 2014)

26

Russian Federation

Supreme Arbitrazh

Court (2012)

Russian Telephone Company CJSC v. Sony Ericsson

Mobile Communications Rus Ltd.

Supreme Arbitrazh Court of the Russian Federation

19 June 2012

Found: http://www.msamoylov.ru/optsionnaya-

ogovorka-v-praktike-vas-rf/ (last access: 17 January

2014)

39


MEMORANDUM FOR RESPONDENT | XIX

Switzerland

BezG Weinfelden (1998) Bezirksgericht Weinfelden

23 November 1998

CISG-online 428

99

HG Zurich (2002) Handelsgericht Zürich

9 July 2002

CISG-online 726

105

KG Schaffhausen (2002) Kantonsgericht Schaffhausen

25 February 2002

Found: http://cisgw3.law.pace.edu/cases/020225s1.

html (last access 19 January 2014)

104

KG Waadt (1993) Kantonsgericht Waadt

30 March 1993

In: Association Suisse de l’Arbitrage Bulletin,

Volume 1 (1995), pp. 64 - 67

15

KG Zug (1995) Kantonsgericht Zug

16 March 1995

CISG-online 230

99

KG Zug (1999) Kantonsgericht Zug

21 October 1999

CISG-online 491

108

OG Bern (2008) Obergericht des Kantons Bern

19 May 2008

CISG-online 1738

65

United Kingdom

33 Guangzhou Dockyards

v. ENE Aegiali

Guangzhou Dockyards Co Ltd v. ENE Aegiali I

English and Welsh High Court of Justice, Queen’s

Bench Division (Commercial Court)

5 November 2010

In: Commercial Law Cases, Volume 2 (2010),

pp. 870 - 885

26


MEMORANDUM FOR RESPONDENT | XX

United States

Asante v. PMC Asante Technologies, Inc. v. PMC-Sierra, Inc.

United States District Court for the Northern District

of California

27 July 2001

CISG-online 616

97

Chateau v. Sabaté Chateau des Charmes Wines Ltd. v. Sabaté USA

Inc., Sabaté S.A.

United States Court of Appeals for the 9th

Circuit

5 May 2003

CISG-online 767

77

Crowell v. Downey

Community Hospital

Ronald Crowell v. Downey Community Hospital

Foundation

California Court of Appeal for the 2nd

District

28 January 2002

In: California Appellate Reports, 4th

Series,

Volume 95 (2002), pp. 730 - 748

28

Firedoor Corp. v. R.K.

& A. Jones Inc.

Firedoor Corporation of America, Inc. v. R.K. & A.

Jones, Inc.

Supreme Court of the State of New York, Appellate

Division, First Department

15 April 1975

In: West New York Supplement, 2nd

Ed., Volume

366, pp. 443 - 444

38

Godfrey v. Hartford John A. Godfrey and Gertrud M. Godfrey v. Hartford

Casualty Insurance Company

Supreme Court of Washington

25 January 2001

In: Washington Reports, 2nd

Series,

Volume 142 (2001), pp. 885 - 899

13

Hall Street v. Mattel Hall Street Associates, L.L.C. v. Mattel, Inc.

Supreme Court of the United States

25 March 2008

In: United States Reports, Volume 552 (2008),

pp. 576 – 592

26


MEMORANDUM FOR RESPONDENT | XXI

Salt Lake Tribune

Publishing v.

Management Planning

Salt Lake Tribune Publishing Company, LLC v.

Management Planning, Inc., MediaNews Group, Inc.,

Kearns-Tribune, LLC


Circuit

30 November 2004

In: Federal Reporter, 3rd

Series, Volume 390 (2004),

pp. 684 - 695

13

Smith Wilson v. Trading

and Development

Smith Wilson Co. v. Trading and Development

Establishment

United States District Court for the District of

Columbia

31 August 1990

In: Federal Supplement, Volume 744 (1990),

pp. 14 - 19

15

Solae v. Hershey Solae, LLC v. Hershey Canada, Inc.

United States District Court for the District of

Delaware

9 May 2008

CISG-online 1769

77

Three Valleys v. Hutton Three Valleys Municipal Water District v. E. F.

Hutton & Company, Inc.


Circuit

5 February 1991

In: Federal Reporter, 2nd

Series, Volume 925 (1991),

pp. 1136 - 1150

15


MEMORANDUM FOR RESPONDENT | XXII

TABLE OF ARBITRAL AWARDS


in

Ad hoc Arbitration

34 Streamline v. Albrecht Streamline Building Products Ltd. v. Albrecht

Bouwproducten BV

Ad hoc Tribunal, Florenz

19 April 1994

CISG-online 124

99

International Chamber of Commerce (ICC)

35 ICC Case No. 4392 Buyer (Yugoslavia) v. Seller (Germany)

ICC Case No. 4392 of 1983

In: Journal du Droit International (1983), Vol. 110,

pp. 907 - 908

51

36 ICC Case No. 7453 Agent v. Principal and Managing Director of Principal

Final Award, ICC Case No. 7453 of 1994

In: Kluwer Law International (1997), pp. 107 - 127

15

Netherlands Arbitration Institute (NAI)

37 Machines Case Buyer (Netherlands) v. Seller (Italy)

Partial Award

17 May 2005

CISG-online 1422

99

Chamber of Commerce and Industry of the Russian Federation (TPPRF)

38 TPPRF Case No.

155/2004

Buyer (Russian Federation) v. Seller (Ukraine)

Case No. 155/2004

16 March 2005

CISG-online 1480

99

39 TPPRF Case No.

217/2001

Buyer (Russian Federation) v. Seller (Canada)

Case No. 217/2001

6 September 2002

CISG-online 892

99


MEMORANDUM FOR RESPONDENT | XXIII

40 TPPRF Case No.

22/2002

Seller (Russian Federation) v. Buyer (Belarus)

Case No. 22/2002

11 October 2002

CISG-online 893

99


MEMORANDUM FOR RESPONDENT | XXIV

TABLE OF OTHER SOURCES


in

A/40/17 Report of the United Nations Commission on

International Trade Law on the Work of its

Eighteenth Season

General Reports

Official Records: Fortieth Session

Supplement No. 17 (A/40/17)

Found: http://daccess-dds-ny.un.org/doc/UNDOC/

GEN/N85/325/11/PDF/N8532511.pdf?OpenElement

(last access 19 January 2014)

25

A/CN.9/263/ADD.2 Analytical Compilation of Comments by

Governments and International Organizations on

the Draft Text of a Model Law on International

Commercial Arbitration

Report of the Secretary-General

Addendum

Found: http://daccess-dds-ny.un.org/doc/UNDOC/

GEN/V85/267/01/PDF/V8526701.pdf?OpenElement

(last access 19 January 2014)

25

CISG-AC No. 4 CISG Advisory Council Opinion No. 4

Contracts for the Sale of Goods to Be Manufactured or

Produced and Mixed Contracts (Article 3 CISG)

Found: http://www.cisg.law.pace.edu/cisg/CISG-AC-

op4.html (last access 17 January 2014)

116,

118

CISG-AC No. 13 CISG Advisory Council Opinion No. 13

Inclusion of Standard Terms under the CISG

Found: http://www.cisgac.com/default.php?ipkCat=

222&ifkCat=213&sid=222 (last access 17 January

2014)

71,

73,

77,

101

Swiss Embassy Schweizerische Eidgenossenschaft

Botschaft betreffend das Wiener Übereinkommen über

Verträge über den internationalen Warenkauf vom 11.

Januar 1989

In: Schweizer Bundesblatt 1989, Band I, pp. 745 - 871

111


MEMORANDUM FOR RESPONDENT | XXV

UNCITRAL Digest UNCITRAL

Digest of Case Law on the United Nations Convention

on the International Sale of Goods

Found: http://www.uncitral.org/uncitral/en/case_law/

digests/cisg.html (last access 19 January 2014)

104

41 YONEV VALKOV NENOV Yonev Valkov Nenov – Attorneys at Law

2 December 2011, One-Sided Jurisdiction Clauses not

enforceable in Bulgaria

Found: http://yvn-bg.com/news.php (last access 17

January 2014)

40


MEMORANDUM FOR RESPONDENT | 1

STATEMENT OF FACTS

1 On 13 January 2008, Innovative Cancer Treatment Ltd., CLAIMANT, and Hope Hospital,

RESPONDENT, (the “Parties”) agreed on the purchase of a Proton Therapy Facility with two

treatment rooms in the Framework and Sales Agreement (the “FSA”) [Exh. C–2]. In a pre-

sales cost-benefit analysis CLAIMANT assured RESPONDENT that this Facility would at least

run on zero costs [C–I–6]. Furthermore, in the negotiations of the FSA, during which no

arbitration specialists were consulted [PO–II–10], the dispute resolution clause (Art. 23 FSA)

was a key issue. Art. 23 FSA takes into account special restrictions of RESPONDENT. In

particular, RESPONDENT as a government entity [R–I–5] could only agree to a dispute

resolution clause on the basis of Circular No. 265 [Exh. C–3; PO–II–9] which states that

government entities must not forego the right of review of manifestly erroneous decisions of

courts or tribunals [Exh. R–1]. Accordingly, RESPONDENT insisted on the appeal and review

mechanism laid down in Art. 23(4) FSA. Moreover, RESPONDENT had financial restraints at

the time of the conclusion of the FSA [C–I–10; Exh. C–4; Exh. R–2]. Thus, it was eager to

pay the purchase price in instalments. In return, CLAIMANT inserted Art. 23(6) FSA which

grants CLAIMANT the unilateral right to choose between arbitration and litigation.

2 On 20 July 2011, the Parties concluded a further contract, the Sales and Licensing Agreement

(the “SLA”) [Exh. C–6]. Under the SLA, CLAIMANT is obligated to build a third treatment

room using the newly developed active scanning technology (Art. 2 SLA) while RESPONDENT

is, in turn, obligated to conduct clinical trials and to provide CLAIMANT with medical data

(Art. 10 SLA). During the negotiations, CLAIMANT announced that it had revised its standard

terms. It promised to make its new standard terms available [Exh. C–5] but failed to send the

promised copy of the standard terms in English [Exh. R–2].

3 On 20 May 2012, RESPONDENT had to cease treatment with the active scanning software

purchased under the SLA because the software could not cope with the patients’ respiratory

movements [Exh. C–7]. Additionally, on 10 July 2012, the Auditor-General of Equatoriana

confirmed that as opposed to CLAIMANT’s cost-benefit analysis the Facility purchased under

the FSA had operated only 70 % of its planned capacity in the 2011/2012 financial year

[Exh. C–7]. Therefore, on 15 August 2012, RESPONDENT gave notice that it was withholding

the final instalment of USD 10 million due under the FSA and the outstanding USD 1.5

million purchase price under the SLA [Exh. C-7]. Claiming these payments, CLAIMANT filed a

Request for Arbitration at CEPANI against RESPONDENT on 6 June 2013.



SUMMARY OF ARGUMENT

PART I: THE ARBITRAL TRIBUNAL LACKS JURISDICTION TO DECIDE ANY DISPUTE BETWEEN

THE PARTIES

4 Blessing or curse, arbitration without a final award is not arbitration. CLAIMANT’s intention to

interpret Art. 23 FSA as an arbitration agreement [C–II–41] cannot succeed since the Parties

excluded finality by inserting Art. 23(4) FSA. In addition, the alleged arbitration agreement in

Art. 23 FSA induces procedural inequality as it grants CLAIMANT the unilateral option to

choose between arbitration and litigation. It follows, the Parties in Art. 23 FSA never validly

agreed to arbitrate any dispute. Equally, none of CLAIMANT’s standard terms contain a valid

arbitration agreement.

PART II: THE TWO CLAIMS ARISING FROM THE FSA AND THE SLA SHOULD NOT BE HEARD

IN A SINGLE SET OF ARBITRAL PROCEEDINGS

5 What does not belong together should not be forced together. The Parties never agreed to join

the claims arising from the FSA and from the SLA. Such procedural detail was never even

mentioned during the contract negotiations. What is more, the two present claims, provided

the Arbitral Tribunal holds that the Parties agreed on arbitration at all, need entirely different

expertise. The claim arising from the FSA needs business-administrative know-how, whereas

the claim arising from the SLA mainly needs technical expertise.

PART III: THE CISG IS NOT APPLICABLE TO THE PAYMENT CLAIM UNDER THE SLA

6 RESPONDENT acted dutifully in all matters. It relied on the promise of its contractual partner to

provide it with a translated version of the 2011 Standard Terms, which CLAIMANT sought to

include into the SLA. CLAIMANT badly disappointed RESPONDENT in its trust in a long term

business partner. It follows that CLAIMANT cannot rely on the exclusion of the CISG which it

wanted to insert into the SLA by the use of its 2011 Standard Terms. Since CLAIMANT

concealed its major changes, RESPONDENT was in no way aware of those changes.

7 It is a common principle of trade that if an object is bought it does not have to be returned.

RESPONDENT has only obtained the right to temporarily use the software. In addition,

CLAIMANT’s main obligation was to develop and customise the active scanning software.

Therefore, the CISG is inapplicable in any case.



ARGUMENT

PART I: THE ARBITRAL TRIBUNAL LACKS JURISDICTION TO DECIDE ANY DISPUTE BETWEEN

THE PARTIES

8 The Arbitral Tribunal lacks jurisdiction to decide on the payment claims under the FSA and

under the SLA in the combined amount of USD 11.5 million brought by CLAIMANT in its

Request for Arbitration [C–I–26]. CLAIMANT seems to be confused about whether the

CEPANI Tribunal [C–II–12], CEPANI as an institution [C–II–15, 26], the Arbitral Tribunal

[C–II–20] or a not further clarified court [C–II–26] is competent to decide on the Arbitral

Tribunal’s jurisdiction. However, Art. 16(1) DAL and Art. 7(3) CEPANI Rules make clear

that, in accordance with the widely acknowledged principle of competence-competence

[BORN, pp. 851 et seqq.; WAINCYMER, pp. 114 et seq.], the Arbitral Tribunal itself is

competent to determine its jurisdiction. RESPONDENT therefore respectfully requests the

Arbitral Tribunal to render an award declaring that it has no jurisdiction on the claims.

9 For this purpose, RESPONDENT will demonstrate that the Parties never agreed to arbitrate their

disputes. The Arbitral Tribunal’s jurisdiction can neither be based on Art. 23 FSA (I) nor on

Sec. 21 of the 2000 Standard Terms (II) nor on Sec. 21 of the 2011 Standard Terms (III).

I. THE ARBITRAL TRIBUNAL HAS NO JURISDICTION BASED ON ART. 23 FSA

10 Art. 23 FSA does not contain an arbitration agreement and therefore, it cannot be the basis for

the Arbitral Tribunal’s jurisdiction (A). Even if Art. 23 FSA contained an arbitration

agreement, this agreement would be invalid because both the appeal and review mechanism in

Art. 23(4) FSA (B) and CLAIMANT’s unilateral option to choose between arbitration and

litigation in Art. 23(6) FSA (C) violate mandatory provisions of the lex arbitri. Finally, even

if Art. 23 FSA was a valid arbitration agreement, it would at least not extend to the claim

arising from the SLA (D). In any event, any award based on Art. 23 FSA would be set aside

in Danubia and unenforceable in Equatoriana and Mediterraneo (E).

A. ART. 23 FSA DOES NOT CONTAIN AN ARBITRATION AGREEMENT

11 The interpretation of Art. 23 FSA in accordance with the Parties’ true intentions shows that by

inserting this article the Parties have never agreed on arbitration. RESPONDENT agrees with

CLAIMANT [C–II–35] that the UPICC, which are the Danubian contract law [PO–II–4],

govern the interpretation and the substantive validity of Art. 23 FSA.

12 As CLAIMANT correctly recognizes [C–II–36], Art. 4.1 UPICC lays down the rule that while



interpreting a contract, effect should be given to the parties’ common intention, especially in

cases where the true meaning differs “from the literal sense of the language used” (falsa

demonstratio non nocet) [UNIDROIT COMMENTARY, Art. 4.1, para. 1]. Consequently, it is

not the label but only the substance of a dispute resolution agreement which determines the

nature of the chosen mechanism [BORN, Law and Practice, p. 4; cf. OLG Munich (2006)].

Art. 23 FSA cannot be interpreted as containing an agreement to arbitrate because, although

the expression ‘arbitration’ is used, the procedure described by the Parties is irreconcilable

with the very nature of arbitration.

13 First, Art. 23 FSA is not an arbitration agreement because the Parties did not want an arbitral

tribunal to render the final decision on their dispute. A commonly used criterion in order to

scrutinise whether parties agreed on arbitration or on another dispute resolution mechanism is

to ask whether the arbitral tribunal or a state court shall render the final decision on the

merits [OGH (1994); Cour d’appel de Paris (2004); Salt Lake Tribune Publishing v.

Management Planning]. As the Washington Supreme Court put it, “[a]rbitration is intended

to be final; parties agree to waive their right to have their disputes resolved in the court

system and cannot submit a dispute to arbitration […] before invoking the courts'

jurisdiction” [Godfrey v. Hartford]. Similarly, in a case where an ‘arbitration agreement’

foresaw that state courts should exercise a full review on the merits, the German BGH held

that the parties did not want a final decision by the ‘arbitrator’. Despite the denomination as

‘arbitration agreement’ it interpreted the agreement to be on expert

determination [BGH (1981)]. The Arbitral Tribunal should come to a similar conclusion.

Although the Parties call for ‘arbitration’ and an award which ‘shall be final’, a closer look at

Art. 23(4) FSA clearly shows that arbitration is not what the Parties wanted. Art. 23(4) FSA

states that each Party has the right “to refer the case to the applicable state courts if it

considers the award to be obviously wrong in fact or in law. The state court shall then have

jurisdiction to review the case and to decide the issue in accordance with the applicable law”.

Thus, the Parties did not want the Arbitral Tribunal to finally decide their dispute.

14 Second, Art. 23 FSA is not an arbitration agreement because the Parties did not want to

exclude the jurisdiction of the state courts. While arbitration is meant to be a substitute for

litigation resulting in an arbitral award which has judgment-like res judicata

effects [POUDRET/BESSON, para. 11; BORN, pp. 2880 et seqq.], the procedure resulting from

Art. 23 FSA would only be the first instance before litigation. Arbitration, however, is not a

first instance to litigation [MOURRE/RADICATI DI BROZOLO, p. 1; SMIT, Scope of judicial



review, p. 151]. It is widely acknowledged that “when parties opt for arbitration, the merits of

the decision – not only findings of fact, but also conclusions of law – are final and binding, no

matter how wrong the highest court of appeal might have thought them to be. In short, there

is no appeal” [PAULSSON, The idea of arbitration, emphasis added; cf. REDFERN/HUNTER,

para. 1.02]. Thus, by submitting a dispute to the jurisdiction of an arbitral tribunal, parties

necessarily waive their right to have the same dispute decided by a state court. The right to a

final decision of a state court is, however, precisely what the Parties wanted to preserve when

agreeing that “[t]he state court shall then have jurisdiction to […] decide the issue”.

15 For the above-mentioned reasons, following CLAIMANT’s argument and interpreting

Art. 23 FSA as containing an arbitration agreement would be contrary to the Parties’ true

intention. If, at the very least, the Arbitral Tribunal has doubts as to whether the Parties

indeed agreed on arbitration, a restrictive approach should be applied. As CLAIMANT correctly

asserts, arbitration clauses should be interpreted favouring their validity “subject to the caveat

that parties have evinced intention on their part to submit their disputes to arbitration”

[C–II–27]. Where the very intention to arbitrate is questionable a restrictive interpretation

standard is to be applied and it will be assumed that the parties did not agree to arbitrate [OLG

Munich (2006); Corte d’ Appello di Firenze (1988); KG Waadt (1993); ICC Case No. 7453].

This results from the acknowledged principle that parties cannot be forced to arbitrate where

their intention to do so is not clear [ZELL, p. 966; REDFERN/HUNTER, para. 2.01; Three

Valleys v. Hutton; Smith Wilson v. Trading and Development]. Under this premise an arbitral

tribunal acting under the ICC Rules stated that “the consent of each party must be

unambiguously demonstrable if any resulting Award is to be safely enforceable” and denied

its jurisdiction [ICC Case No. 7453]. The Florence Court of Appeal reasoned that the parties’

intention to arbitrate must be clearly established, “especially since an arbitration clause is a

derogation from the fundamental principle of the jurisdiction of [...] courts” [Corte d’ Appello

di Firenze (1988)]. Similarly, the OLG Munich held that in case of doubt as to whether the

parties agreed on expert determination or on arbitration, expert determination is the preferable

interpretation because its consequences on the guarantee of access to state courts are not as

far-reaching [OLG Munich (2006)].

16 In light of the above, Art. 23 FSA should not be interpreted as containing an arbitration

agreement. It is an inherent and inevitable consequence of arbitration that the parties are

bound by the award even where it results to be manifestly erroneous [REDFERN/HUNTER,

para. 10.61; MOSES, p. 4; cf. POUDRET/BESSON, paras. 828 et seqq.]. Here, there are very



serious doubts as to the Parties’ intention to arbitrate because they are not willing to accept

this risk but cling to the safeguards of having a state court as last resort. Consequently, the

Parties’ agreement in Art. 23 FSA should be interpreted as an agreement on expert

determination, followed by litigation but not as an agreement to arbitrate.

17 In essence, contracts in general and agreements on dispute resolution in particular have to be

interpreted according to the parties’ true intentions. The Parties had precise perceptions of the

dispute resolution procedure to be employed and RESPONDENT wishes to have them fulfilled,

irrelevant of its label. The Arbitral Tribunal is therefore respectfully requested not to be

misled by the unknowingly misused word ‘arbitration’, but to follow the Parties’ true intent,

which has been clearly expressed in their description of the desired dispute resolution method.

B. ART. 23(4) FSA RENDERS THE ALLEGED ARBITRATION AGREEMENT INVALID

18 Even if Art. 23 FSA were seen as an arbitration agreement, the Arbitral Tribunal should

refrain from basing its jurisdiction thereon. Even though RESPONDENT has contested the

validity of the alleged arbitration agreement in its Answer to Request for Arbitration [R–I–8],

CLAIMANT did not raise any objections. It must thus be assumed that CLAIMANT agrees with

RESPONDENT in that regard. Nevertheless, RESPONDENT will demonstrate that Art. 23(4) FSA

is invalid under the DAL (1). The invalidity of Art. 23(4) FSA affects the whole alleged

arbitration agreement and consequently invalidates it (2).

1. Art. 23(4) FSA is invalid under the DAL

19 Art. 23(4) FSA is not in accordance with the DAL which is the law of the presumable seat of

the arbitral procedure. Art. 23(4) FSA violates Art. 5 DAL as a mandatory provision. It is

stated therein that in matters governed by the DAL, no courts shall intervene except where so

provided by this law. The DAL does not provide for a review on the merits of international

arbitral awards as set forth in Art. 23(4) FSA. In domestic arbitration, Art. 34A DAL allows

the parties to agree on an appeal to the High Court on any question of Danubian law arising

out of an award. However, Art. 23(4) FSA does not fall within the scope of Art. 34A DAL for

the following reasons.

20 First, Art. 23(4) FSA calls for a review on errors “in fact or in law” whereas Art. 34A(1) DAL

only allows a review on questions of Danubian law and Art. 34A(4)(b) DAL explicitly

excludes questions of fact. Consequently, a review of the award on errors of fact and of any

law, in particular the potentially applicable Mediterranean law, is far beyond the scope of



Art. 34A DAL.

21 Second, Art. 34A DAL is limited to domestic arbitration [PO–II–14]. For international

arbitration, as the case is here, the DAL does not provide the parties with the possibility to

agree on any review of the award on the merits. One cannot draw inferences from the

permissibility of judicial review in domestic arbitration about its permissibility in

international arbitration. Quite to the contrary, the mere fact that the Danubian lawmaker

limited the optional appeal in Art. 34A DAL to domestic arbitration while not including a

similar option for international arbitration makes clear that in the latter no such agreements

shall be allowed. This result corresponds to other legislations. In France, Art. 1489 NCPC

allows parties in domestic arbitration to agree on a full appeal to state courts while in

international arbitration any review apart from the regular – “minimalistic”

[REDFERN/HUNTER, para. 10.67] – grounds for setting aside is forbidden according to

Art. 1518 NCPC [PAULSSON/Derrain/Kiffer: National Report for France, p. 74]. The same is

true in Portugal, where parties in domestic arbitration may opt for an appeal on the merits,

Art. 39(4) LAV, but not in international arbitration, Art. 53 LAV. Thus, the only convincing

interpretation of the DAL is that in international arbitration parties may not agree on a review

of the award for errors of fact and law as in Art. 23(4) FSA.

22 Contrary to CLAIMANT’s allegation [C–II–16 et seqq.], party autonomy does not enable the

Parties themselves to validly create a new form of review previously unknown to the DAL.

The DAL contains a wide range of provisions which are subject to parties’ diverging

agreements but Art. 5 DAL is not one of them.

23 First, this results from the wording of Art. 5 DAL. Whenever the Danubian legislator intended

parties to be allowed to derogate from provisions of the DAL, it made this clear by using

words such as “unless otherwise agreed by the parties” as in Artt. 3(1), 11(1), 17(1), 17B(1),

21, 23(2), 24(1), 25, 26(1), 29, 33(3) DAL or “the parties are free to agree […] failing such

agreement […]” as in Artt. 10(1), 11(2)(3), 13(1)(2), 19(1)(2), 20(1), 22(1) DAL. In contrast,

Art. 5 DAL reads “no court shall intervene except for where so provided in this Law”

[emphasis added]. The words ‘or where so agreed by the parties’ are missing. Thus, Art. 5

DAL may not be subject to deviating agreements by the Parties.

24 Second, the conclusion that Art. 5 DAL is mandatory and conclusive follows from the fact

that, as outlined above [para. 21], the Danubian lawmaker allows parties in domestic

arbitration to agree on an optional appeal while it does not provide a similar option for



international arbitration.

25 Third, the historical interpretation of the DAL leads to the same result. The DAL, except for

Art. 34A DAL, is a verbatim adoption of the Model Law [PO–II–13]. With regard to Art. 5

Model Law, the UK inquired whether the principle of party autonomy would not demand that

where parties have agreed on certain measures the court should be able to give effect to their

agreement [A/CN.9/263/ADD.2, para. 37]. The commission, however, had doubts whether

parties could be expected to deal with the problem of court intervention [A/40/17, para. 64].

In the end, the commission agreed that this matter should be decided by the legislator instead

of being subject to parties’ diverging agreements and adopted Art. 5 without

changes [HOLTZMANN/NEUHAUS, Art. 5, p. 219]. As feared by the drafters of the Model Law,

Art. 23(4) FSA opens the doors to potentially unbounded review by stating that “applicable

state courts” shall be competent to review the case and eventually decide the issue. There are

several countries to which this arbitration relates – Danubia, Mediterraneo and Equatoriana –

and it is wholly unclear which court(s) will assume jurisdiction when seized by either Party.

This scenario is what Art. 5 DAL is meant to prevent which is why Art. 23(4) FSA is in

violation thereof.

26 Moreover, the limitation of court intervention to an absolute minimum as in Art. 5 DAL

corresponds with the concept of arbitration as prevalent in most jurisdictions. Even beyond

the Model Law, it is widely acknowledged that parties may not amend the grounds for review

available under the applicable law [BORN, p. 2635]. The United States, which have been the

most well-known jurisdiction in some cases allowing for such an expansion, have put an end

to this practice under the FAA in 2008 [Hall Street v. Mattel]. In other jurisdictions, e. g.

England [Guangzhou Dockyards v. ENE Aegiali I], France [Cour d’appel de Paris (1989)]

and New Zealand [Gallaway Cook Allan v. Carr] such agreements are equally considered

invalid.

27 In conclusion, Art. 23(4) FSA is irreconcilable with arbitration in general and with the

mandatory Art. 5 DAL in particular. As a result, the appeal mechanism is invalid.

2. The invalidity of Art. 23(4) FSA renders the entire alleged arbitration agreement

invalid

28 The invalidity of Art. 23(4) FSA renders the entire arbitration agreement invalid because the

Parties would not have agreed to arbitrate without Art. 23(4) FSA. This result follows from

the legal notion implied in Art. 3.2.13 UPICC, which as Danubian contract law govern this



issue. Although the UPICC do not contain a provision concerning partial invalidity, the provi-

sion concerning partial avoidance, Art. 3.2.13 UPICC, can be well applied to this question.

Art. 3.2.13 UPICC states that the avoidance of an individual term is limited to this term, ex-

cept for cases where it would be unreasonable to uphold the remaining contract. The ‘test’

necessary to decide this question is to ask whether the parties would have concluded the con-

tract without the relevant provision [UNIDROIT COMMENTARY, Art. 3.2.13]. Many courts

have also applied this ‘test’ when deciding whether to uphold arbitration agreements includ-

ing invalid appeal clauses. By way of example, the Paris Court of Appeal interpreted the par-

ties’ intentions and held that an appeal clause was ‘decisive’ for the whole arbitration agree-

ment [Cour d’appel de Paris (1989)], while German [OLG Munich (2013)] and U.S. [Crowell

v. Downey Community Hospital; ZELL, p. 969] courts have developed a similar approach.

29 Here, when concluding the FSA, RESPONDENT was mistaken in its assumption that Art. 23(4)

FSA could be validly included. As RESPONDENT has already stated in its Answer to Request

for Arbitration [R–I–8], it would not have concluded an arbitration agreement without the

appeal mechanism. This is the only reasonable result with regard to RESPONDENT’s earlier

experience with arbitration. As CLAIMANT knew, RESPONDENT as a state entity is accountable

to tax payers [Exh. C–3] and is expected to follow Circular No. 265 [PO–II–9], which states

that “[g]overnment entities may not forego the right of review of manifestly erroneous

decisions of courts or tribunals” [Exh. R–1]. RESPONDENT cannot be expected to ignore its

obligations. If arbitration is not possible with an appeal as set forth in Art. 23(4) FSA,

RESPONDENT cannot arbitrate.

30 That RESPONDENT would not have agreed to arbitrate under these circumstances becomes

even more evident when considering that in the past, RESPONDENT in one case gave in to its

counterparty’s insistence and agreed on arbitration without any appeal and review

mechanism. After an unfavourable award RESPONDENT was subject to considerable public

uproar [PO–II–9]. RESPONDENT since then is firmly determined not to let that happen again –

a fact which CLAIMANT was well informed of [PO–II–9; Exh. C–3].

31 To sum up, the alleged arbitration agreement is invalid because the Parties would never have

agreed thereon without Art. 23(4) FSA. Revealingly, CLAIMANT has failed to give any reasons

why the alleged arbitration agreement should be preserved without this integral part of it.

C. ART. 23(6) FSA RENDERS THE ALLEGED ARBITRATION AGREEMENT INVALID

32 CLAIMANT is continuously invoking party autonomy as the sole reason to uphold the alleged



arbitration agreement in Art. 23 FSA [C–II–16 et seqq.]. However, the Parties’ right to

procedural equality contained in Art. 18 DAL limits the principle of party autonomy [BINDER,

para. 5–001]. Pursuant to Art. 23(6) FSA, CLAIMANT alone has the right to bring payment

claims to litigation while RESPONDENT is obligated to bring all claims to arbitration according

to Art. 23(3) FSA. This unilateral option of CLAIMANT renders the alleged arbitration

agreement invalid (1) and leads to the invalidity of the entire alleged arbitration

agreement (2).

1. Art. 23(6) FSA is invalid under the DAL

33 CLAIMANT’s unilateral option is invalid because it contravenes Art. 18 DAL, a mandatory

provision [BINDER, para. 5–001; BORN, p. 116]. According to Art. 18 DAL, the parties to the

proceedings shall be treated with equality. No party shall be given an advantage over the

other [BINDER, para. 5–008]. Art. 18 DAL does not only apply to actions taken by an arbitral

tribunal but also to procedural agreements reached by the contracting

parties [HOLTZMANN/NEUHAUS, Art. 18, p. 550; BINDER, para. 5–006]. The equality of

procedural rights is internationally acknowledged and fundamental to every civil procedure in

state courts as well as in arbitration [see ECHR (2010), paras. 26 et seq.; ECHR (2005),

para. 59; BINDER, para. 5–005, 5–012]. In contrast, Art. 23(6) FSA grants CLAIMANT two

unreasonably favourable advantages over RESPONDENT.

34 First, Art. 23(6) FSA entitles CLAIMANT to unilaterally affect RESPONDENT’s legal position at

the start of the proceedings. It grants CLAIMANT the right to choose the dispute resolution

mechanism for each dispute while RESPONDENT must comply with the chosen procedural

rules. CLAIMANT may freely choose between arbitration and litigation depending on which

dispute resolution best serves its purposes in the circumstances of the particular case. Such

decision embodies multiple factors which can differ: possible expenses, the availability of

pre-trial discovery, provisional remedies, joinder devices, the expertise of the decision

makers, the law likely to be applied, the language of the proceedings in which all submissions

must be made and into which all evidence must be translated, the applicable standards of

proof, the recoverability of legal fees, the availability and affordability of counsel with

experience in arbitration and more factors depending on the circumstances of the case [see

SMIT, p. 394; MOSES, pp. 44 et seqq.; GOLDBERG, pp. 210, 212 et seqq.]. After evaluating all

these factors, the unilateral option grants CLAIMANT the right to commence the proceedings

which best suit its needs and for which RESPONDENT may be unprepared. CLAIMANT



determines the procedural regime both Parties must comply with. Thus, Art. 23(6) FSA gives

CLAIMANT the possibility of cherry picking to the detriment of RESPONDENT. As a

consequence, the arbitration is biased right from the outset.

35 Second, Art. 23(6) FSA grants CLAIMANT the right to opt for litigation at any time so that

CLAIMANT could overtrump the present arbitration by exercising its option and commencing

litigation in the courts of Mediterraneo. This is because Art. 23(6) FSA does not limit

CLAIMANT’s unilateral option in any way. In particular, it does not set forth that by

commencing arbitration CLAIMANT is assumed to have waived its right to choose litigation.

As the BGH reasoned in 1998, parties which intend to limit a unilateral option between

arbitration and litigation are required to spell out the limit in the clause itself [BGH (1998)].

Accordingly, CLAIMANT could invoke the mere wording of Art. 23(6) FSA and overtrump the

present arbitral proceedings. In this case, all efforts and expenses made with regard to the

arbitration would have been made in vain. Additionally, CLAIMANT is likely to only conduct

the present arbitration until the end if it thinks the Arbitral Tribunal will decide in its favour.

Otherwise, it will probably bring its claims in the courts of Mediterraneo. This power of

CLAIMANT continuously threatens the present arbitration, overbalances the Parties’ procedural

positions to the benefit of CLAIMANT and prevents any due process.

36 Consequently, Art. 23(6) FSA privileges CLAIMANT twice. Before commencing any

proceedings, CLAIMANT could one-sidedly make the important decision between arbitration

and litigation. During the present arbitral proceeding, CLAIMANT can still opt for litigation at

any time and thereby dissipate most of the expenses made for the arbitration. Together, these

advantages considerably disrupt the balance of the Parties’ procedural rights. This is why

Art. 23(6) FSA violates the Parties’ right to procedural equality as it is contained in Art. 18

DAL. Due to the violation of this mandatory provision Art. 23(6) FSA is invalid.

37 The fact that Art. 23(6) FSA was only included in exchange for Art. 3 FSA [Exh. C–3] does

not change this result. Such bargain cannot prevent that Art. 23(6) FSA leads to procedural

unfairness in more than one way and therefore violates Art. 18 DAL which deliberately

restricts the principle of party autonomy.

38 In summation, one can even say that a unilateral option between arbitration and litigation is

“most unreasonable […and] so wholly one-sided and unfair that the courts should feel no

reluctance in finding it unacceptable” [SMIT, pp. 404 et seq.]. Similarly, in a decision dated

1975, the Supreme Court of the State of New York, Appellate Division, First Department



reasoned that “[i]t is manifestly unfair to allow seller to elect between arbitration and court

action and to deny buyer the same right” [Firedoor Corp. v. R.K. & A. Jones Inc.]. In Poland,

asymmetric dispute resolution clauses are even forbidden by virtue of Art. 1161(2) of the

Polish Code of Civil Procedure [KLIUCHKOVSKYI/MARCHUKOV/VOLKOV]. Art. 23(6) FSA

even intensifies such one-sidedness as it grants CLAIMANT the right to bring payment claims

in Mediterraneo, the country where CLAIMANT has its place of business.

39 Invalidating a unilateral option clause is also consistent with a judgment of the Supreme

Arbitrazh Court of the Russian Federation dating from 2012. The court held an arbitration

agreement to be invalid due to a unilateral option clause. One party, RTC, was obligated to

arbitrate all disputes under the contract while the other party, Sony Ericsson, had the right to

choose between arbitration and litigation. The Supreme Arbitrazh Court held that the clause

violated procedural equality because a unilateral option would entitle its beneficiary to decide

on the counterparty where to bring claims. The counterparty, however, would have no options

to decide on. According to the court, the parties to unilateral option clauses would therefore

be in unequal legal positions, which violates procedural equality [Supreme Arbitrazh

Court (2012), pp. 5 et seq.].

40 In another similar case, the Bulgarian Supreme Court of Cassation also invalidated an

arbitration agreement because of a unilateral option clause. In 2011, the court reasoned that

the arbitration agreement was invalid because the party with the option could unilaterally

affect the legal position of the other party [Bulgarian Supreme Court (2011); DRAGUIEV,

p. 31, fn. 34; CUNIBERTI; YONEV VALKOV NENOV].

41 With a reasoning similar to the one of the Bulgarian court, the French Cour de Cassation

invalidated a unilateral jurisdiction clause in 2012. One party was obligated to bring any

claim to the courts of Luxembourg while the other party was granted the right to bring, at its

sole discretion, claims before any court of competent jurisdiction [Cour de Cassation (2012);

ANCEL/MARION/WYNAENDTS].

42 In conclusion, Art. 23(6) FSA is invalid because it violates the Parties’ right to procedural

equality under Art. 18 DAL.

2. Art. 23(6) FSA renders the alleged arbitration agreement entirely invalid

43 Art. 23(6) FSA leads to the invalidity of the entire alleged arbitration agreement. This is

because solely erasing Art. 23(6) FSA cannot restore the procedural equality between the

Parties. The fact that CLAIMANT once decided between arbitration and litigation cannot be



undone within the pending proceedings. The present arbitration will always suffer from this

initial unbalance. To settle the balance, the Parties must have equal starting positions. This

can only be achieved by court proceedings as neither Party has prepared for litigation.

Therefore, RESPONDENT respectfully requests the Arbitral Tribunal to entirely invalidate the

alleged arbitration clause in Art. 23 FSA and refer CLAIMANT to bring its claims in court.

44 Furthermore, the Arbitral Tribunal would not have jurisdiction if the Parties had, at the time

of the conclusion of the FSA, known that Art. 23(6) FSA is invalid. This can be inferred from

the Parties’ intentions at the time of the conclusion of the FSA. To determine whether the

invalidity of one clause affects the invalidity of the entire contract, the decisive ‘test’ is to ask

whether the Parties would have concluded the contract without the invalid provision [see

supra, para. 28]. Assumed that the Parties knew of Art. 23(6) FSA being invalid at the time

of its inclusion, they would not have agreed on arbitration with the seat in Danubia but with

the seat in Mediterraneo. CLAIMANT has inserted its unilateral option in Art. 23(6) FSA in

exchange for allowing RESPONDENT to pay the purchase price in instalments according to

Art. 3 FSA [Exh. C–3]. Without Art. 23(6) FSA as one element of this deal, the Parties would

not have entered into the alleged arbitration agreement.

45 Rather, CLAIMANT wanted some sort of compensation for RESPONDENT’s right to pay in

instalments. Self-evidently, CLAIMANT would have implemented Capital City, Mediterraneo

as the seat of the arbitration. CLAIMANT has its place of business in Mediterraneo and it is

foreseen as seat of arbitration in CLAIMANT’s standard arbitration clauses (Sec. 21 of the 2000

Standard Terms, Sec 21 of the 2011 Standard Terms). RESPONDENT would have agreed to this

seat because it was eager to purchase the Proton Therapy Facility but simultaneously

depended on CLAIMANT allowing it to pay in instalments. Thus, if the Parties had known that

Art. 23(6) FSA was invalid, they would have provided for Capital City, Mediterraneo as the

seat of the arbitration. Consequently, the Arbitral Tribunal would not have jurisdiction for the

present arbitration with the seat being in Vindobona, Danubia.

46 In short, the alleged arbitration agreement in Art. 23 FSA is completely invalid because of

CLAIMANT’s unfair unilateral option in Art. 23(6) FSA.

D. EVEN IF ART. 23 FSA WAS VALID, IT WOULD NOT EXTEND TO THE SLA

47 As demonstrated above [paras. 8 et seqq.], it is RESPONDENT’s unalterable submission that

Art. 23 FSA does not contain a valid arbitration agreement. Thus, Art. 23 FSA can be no basis

for the Arbitral Tribunal to decide on any dispute, no matter whether such dispute arises under



the FSA or under the SLA. Nevertheless, even if the arbitration clause in Art. 23 FSA was

valid, it would not extend to the SLA. In contrast, Art. 23 SLA would substitute Art. 23 FSA

because Art. 23 SLA is a specific provision to the contrary of Art. 23 FSA in the sense of

Art. 45 FSA.

48 According to Art. 45 FSA, a provision of the FSA can only govern a future contract between

the Parties where such contract does not contain a specific provision to the contrary. Art. 45

FSA has the purpose of making the drafting of future contracts as efficient as possible, which

corresponds to the general purpose of any framework contract. Efficient drafting is achieved

only when employing clear criteria to determine which provision shall be substituted.

Substituting only parts or selected sentences of an article while leaving other parts in place

would be contrary to that objective. In contrast, substituting the provisions of the framework

contract on an article by article basis ensures that each Party can unmistakably identify which

content is to be substituted. In short, the Parties intended to substitute every article of the FSA

which is again contained in the SLA The mere fact that the Parties are in dispute about

whether Art. 23 SLA substitutes Art. 23 FSA entirely or only in parts already illustrates the

need for clearness in order to provide efficiency.

49 Accordingly, Art 23 SLA is, corresponding to Art. 23 FSA, titled “Dispute Resolution”. This

evidences the Parties’ intention to establish a new dispute resolution mechanism contrary to

Art. 23 FSA. If the Parties had, inversely, intended Art. 23 SLA to only replace

Art. 23(5) and (6) FSA, they would have expressed this intention in Art. 23 SLA. For

instance, they could have inserted an explicit reference to Art. 23(5) and (6) FSA, which they

did not.

50 In addition, even without the context of Art. 23 FSA, Art. 23 SLA makes perfect sense as a

jurisdiction clause. Art. 23(1) SLA deals with interim measures before the courts of

Mediterraneo and Equatoriana. Art. 23(2) SLA contains a choice of forum clause in favour of

the Mediterranean and Equatorianean courts. In particular, Art. 23(1) SLA is not deprived of

its effect by Art. 23(2) SLA. This is because regardless of the court in which a potential claim

under the SLA is brought, Art. 23(1) SLA makes clear that the Parties retain the right to make

application for interim measures in the courts of both Mediterraneo and Equatoriana.

51 What is more, the Arbitral Tribunal should refrain from extending Art. 23 FSA because the

Parties’ will to do so is not stated with sufficient clearness. Arbitral tribunals are

recommended to apply a restrictive approach when ascertaining whether the Parties submitted



a dispute to arbitration [see supra, para. 15] because by submitting to arbitration parties

waive their legal guarantee of access to public courts [FOUCHARD/GAILLARD/GOLDMAN,

paras. 661 et seqq.; MOSES, p. 18; SCHÜTZE, para. 6; REDFERN/HUNTER, para. 1.45]. Such

guarantee is a fundamental, substantial right in almost every developed jurisdiction, e. g.

acknowledged in Art. 6 of the European Convention for the Protection of Human Rights

[BORN, p. 576]. It follows that regarding their scope of application, arbitration agreements

must expressly and unequivocally evidence the parties’ will to submit to arbitration. This

view has been taken by an arbitral tribunal in ICC Case No. 4392 where only one of two

contracts concluded between the same parties contained an arbitration agreement. The arbitral

tribunal rejected the claimant’s request to base its jurisdiction for both contracts on the one

arbitration agreement even though the two contracts were concluded with regard to the same

context [ICC Case No. 4392; see HANOUTIAU, para. 333].

52 Accordingly, even if Art. 23 FSA constituted a valid arbitration agreement, it would only

extend to other contracts by virtue of Art. 45 FSA in case the Parties’ will to do so was

undoubtedly clear. However, the Parties indicated to replace Art. 23 FSA by only providing

for litigation in Art. 23 SLA [see supra, para. 50]. Thus, the Parties did not state their

intention to extend Art. 23 FSA with sufficient clearness.

53 In a nutshell, Art. 23 SLA as a specific provision to the contrary overturns Art. 23 FSA,

which is why, by virtue of Art. 45 FSA, Art. 23 FSA is not applicable to the SLA.

Additionally, the Parties’ will to extend Art. 23 FSA must be doubted in general.

Consequently, the Arbitral Tribunal is respectfully requested not to extend Art. 23 FSA to the

SLA.

E. A POTENTIAL AWARD BASED ON ART. 23 FSA IS LIKELY TO BE SET ASIDE IN DANUBIA

AND TO BE UNENFORCEABLE IN EQUATORIANA AND MEDITERRANEO

54 An arbitral award based on the alleged arbitration agreement in Art. 23 FSA is likely to be set

aside in Danubia according to Art. 34(2) DAL and, as a result, to be unenforceable in

Equatoriana and Mediterraneo which are both parties to the NYC [PO–II–12]. If RESPONDENT

prevails on the merits it will try to enforce the award on the reimbursement of its legal and

other costs in Mediterraneo, where CLAIMANT has its place of business. In the unlikely event

of an award in CLAIMANT’s favour, it will probably try to enforce the award in Equatoriana,

where RESPONDENT has its place of business. There are three objections because of which the

courts in Danubia will set aside and the courts in Mediterraneo and Equatoriana respectively



will refuse to enforce an award based on Art. 23 FSA.

55 First, upon RESPONDENT’s application Danubian courts will most likely set aside the award

according to Art. 34(2)(i) DAL. This provision sets forth that an arbitral award may be set

aside if there is no valid arbitration agreement under the applicable law – here the DAL. It is

highly questionable whether Art. 23 FSA constitutes an agreement to arbitrate in the first

place [see supra, paras. 11 et seqq.]. At least, the alleged arbitration agreement is invalid

because Art. 23(4) FSA violates Art. 5 DAL [see supra, para. 26], which is a mandatory

provision [see supra, paras. 22 et seqq.]. Additionally, Equatorianean or Mediterranean courts

can refuse the enforcement of the potential award according to Art. V(1)(a) NYC, which

mirrors Art. 34(2)(i) DAL. Consequently, the award is also likely to be unenforceable.

56 Second, Danubian courts will most likely set aside the award according to Art. 34(2)(iv) DAL

which provides that an arbitral award may be set aside if the arbitral procedure was in conflict

with a provision of the DAL from which the parties cannot derogate. The parties’ right to

procedural equality in Art. 18 DAL is such a provision [BINDER, para. 5-010]. As it can be

inferred from several court judgments [see supra, paras. 39 et seqq.], CLAIMANT’s unilateral

option in Art. 23(6) FSA stands in violation thereof [see supra, paras. 33 et seqq.]. Most

likely, enforcement in Equatoriana or Mediterraneo will not be granted, either. This is because

the principle of procedural equality is a right of fundamental importance in almost every

developed jurisdiction [see supra, para. 33] so that a violation thereof is a violation of public

policy according to Art. V(2)(b) NYC.

57 Third, Danubian courts are likely to set aside the award according to Art. 34(2)(a)(iii) DAL

which states that in case of a decision on matters beyond the scope of the submission to

arbitration, at least the part concerning the matters not covered may be set aside. The alleged

arbitration agreement in Art. 23 FSA does not extend to claims arising from the SLA [see

supra, paras. 47 et seqq.]. Therefore, Danubian courts will most likely set aside at least that

part of an award which concerns the claim under the SLA. Likewise, Mediterranean or

Equatorianean courts may refuse enforcement according to Art. V(1)(c) NYC, which is

equivalent to Art. 34(2)(a)(iii) DAL.

58 As each of these grounds alone suffices, it is almost inevitable that the potential award will be

set aside. Apart from the fact that it is not even clear whether the Parties in fact wanted to

arbitrate, the alleged arbitration clause consists of four provisions (Art. 23(3) through (6)

FSA), two of which are invalid. Contravening the very nature of arbitration and violating



fundamental procedural rights is not a slight pathology, but a serious obstacle. It is even more

likely that the award will be unenforceable because under Art. V(1)(e) NYC enforcement may

be refused for the sole reason that the award has been set aside in Danubia.

59 With respect to these scenarios and in light of the Arbitral Tribunal’s duty under Art. 38

CEPANI Rules to make every reasonable effort to ensure that the award is enforceable at law,

RESPONDENT respectfully requests the Arbitral Tribunal not to assume jurisdiction based on

Art. 23 FSA.

II. THE ARBITRAL TRIBUNAL HAS NO JURISDICTION BASED ON SEC. 21 OF THE 2000

STANDARD TERMS

60 The Arbitral Tribunal cannot base its jurisdiction to decide on the alleged payment claims

arising from the FSA and the SLA on the arbitration clause in Sec. 21 of the 2000 Standard

Terms. On the basis of CLAIMANT’s submission that Art. 23 FSA is considered a valid

arbitration agreement [C–I–20], it would supersede Sec. 21 of the 2000 Standard Terms. In

case of conflict between an individual agreement and a standard term, the individual term

prevails according to Art. 2.1.21 UPICC. This is because specifically discussed and agreed on

provisions are more likely to reflect the true intention of the contracting parties [UNIDROIT

COMMENTARY, Art. 2.1.21, para. 1]. This is a general principle in international trade

acknowledged in numerous legal systems [VOGENAUER/KLEINHEISTERKAMP/Naudé,

Art. 2.1.21, para. 1, fn. 120]. As an individual agreement Art. 23 FSA would thus supersede

Sec. 21 of the 2000 Standard Terms so that CLAIMANT cannot rely on the latter.

61 The fact that Art. 23 FSA is not a valid arbitration agreement [see supra, paras. 8 et seqq.]

does not lead to a different result because Sec. 21 of the 2000 Standard Terms has never been

included into the FSA. Thus, it cannot serve to fill a potential gap left by the invalidity of

Art. 23 FSA. The only reason why the Parties intensively discussed and individually agreed

on Art. 23 FSA [Exh. C–3] is to use this clause in order to resolve their disputes without

relying on Sec. 21 of the 2000 Standard Terms. This can also be seen by the facts that Art. 23

FSA is more elaborate than Sec. 21 of the 2000 Standard Terms and that it reflects the Parties’

expectation of a longer-lasting business cooperation between them [C–I–9; Exh. R–2].

Already at the time of the conclusion of the FSA the Parties expressed their intention not to

implement Sec. 21 of the 2000 Standard Terms. Accordingly, the arbitration clause in the

2000 Standard Terms is not a fall-back provision in case Art. 23 FSA is invalid.

62 In addition, Sec. 21 of the 2000 Standard Terms cannot be a fall-back provision because it



explicitly excludes any right to appeal an arbitral award. However, the appeal and review

mechanism in Art. 23(4) FSA was of utmost importance during the drafting of the FSA and

RESPONDENT would never have agreed on any arbitration agreement without such an appeal

and review mechanism [see supra, paras. 28 et seqq.; R–I–8]. This intention has remained

unchanged to the present day.

63 In conclusion, applying Sec. 21 of the 2000 Standard Terms instead of Art. 23 FSA would

contradict the Parties’ concurrent intention not to include this clause. Consequently, Sec. 21

of the 2000 Standard Terms does not give the Arbitral Tribunal jurisdiction to decide on the

alleged claims under the FSA and the SLA.

III. THE ARBITRAL TRIBUNAL HAS NO JURISDICTION BASED ON SEC. 21 OF THE 2011

STANDARD TERMS

64 The Arbitral Tribunal cannot base its jurisdiction to decide on the payment claim arising from

the SLA on Sec. 21 of the 2011 Standard Terms because the 2011 Standard Terms are not

included into the SLA. RESPONDENT agrees with CLAIMANT’s statement insofar that the

inclusion of standard terms is subject to the provisions regarding the conclusion of contracts

set forth in Artt. 14, 18 CISG. In light of these provisions, CLAIMANT’s conclusion that the

2011 Standard Terms have been incorporated into the SLA is unsustainable. This is because

RESPONDENT has never accepted their incorporation. CLAIMANT’s mere reference to the 2011

Standard Terms is not sufficient to incorporate them (A). Moreover, CLAIMANT did not make

the 2011 Standard Terms available to RESPONDENT (B) and RESPONDENT did not accept the

incorporation by later conduct (C).

A. CLAIMANT’S MERE REFERENCE IS NOT SUFFICIENT TO INCORPORATE THE 2011

STANDARD TERMS

65 CLAIMANT’s mere reference in Art. 46 SLA is not sufficient to incorporate the 2011 Standard

Terms. Its assertion that a mere reference to the standard terms is sufficient to fulfil the

prerequisites of Artt. 18 and 8(1) CISG in order to include them into a contract [C–II–

108, 109] stands in contrast to the by far prevailing view, shared by both commentators

[SCHLECHTRIEM/SCHWENZER/Schroeter(German), Art. 14, para. 40; BRUNNER, Art. 4,

para. 41; PILTZ, Business Terms p. 134; VENTSCH/KLUTH, p. 62] and courts in Germany

[BGH (2001); OLG Celle (2009); OLG Cologne (2005); OLG Düsseldorf (2003); OLG

Oldenburg (2007)], the Netherlands [Hof’s-Hertogenbosch (2002); Rechtbank

Utrecht (2009)], Austria [OGH (1996)], Italy [Tribunale di Rovereto (2007)], Canada



[Mansonville v. Kurtz] and Switzerland [OG Bern (2008)]. They all agree that the user of

standard terms is required to present the terms to the other party at the time of the conclusion

of the contract in order to incorporate them into the contract. CLAIMANT even misconstrues

the decisions of the BGH and the OLG Naumburg [C–II–105], since both courts obligate the

offeror to send the terms to the offeree and therefore represent the prevailing view

[BGH (2001); OLG Naumburg (2013)]. This view is also supported by the CISG itself. It

follows from Artt. 15(1), 18(2) and 24 CISG that for an offer to become part of the contract it

must reach the other party [UNCITRAL/Perales Viscasillas, p. 269].

66 Here, as CLAIMANT accurately points out [C–II–122], a copy of the 2011 Standard Terms was

never sent [Exh. R–2]. Thus, the prerequisites of Artt. 18, 8(1) CISG are not fulfilled and the

2011 Standard Terms did not become part of the SLA.

B. CLAIMANT DID NOT MAKE THE 2011 STANDARD TERMS AVAILABLE TO RESPONDENT

67 CLAIMANT did not make the 2011 Standard Terms available to RESPONDENT in another way,

either. Uploading standard terms on the offeror’s website does not suffice to make them

available in cases where the contract was concluded in paper-based writing (1). Even if it

sufficed to make them available on the offeror’s website, CLAIMANT’s link did not fulfil the

requirements for such incorporation (2). Alternatively, RESPONDENT did not understand and

ought not to have understood the language in which the 2011 Standard Terms were

available (3).

1. Uploading standard terms on the offeror’s website does not suffice to make them

available when the contract was concluded in paper-based writing

68 CLAIMANT is wrong in assuming that uploading the 2011 Standard Terms to its website was

sufficient to make them available to RESPONDENT [C–II–122]. According to the BGH’s

decision cited by CLAIMANT it suffices to “make the standard terms available in another way”

[BGH (2001)]. CLAIMANT already refers to electronic communications [C–II–111], which

illustrates the key issue in the present case. Making the standard terms available for download

via a hyperlink on the offeror’s website can be sufficient if the contract itself is concluded

over the internet or by e-mail, where the hyperlink can be opened by a simple mouse click

[STAUDINGER/Magnus, Art. 14, para. 41a]. In contrast, placing a hyperlink does not suffice in

cases in which the contract is not being concluded over the internet but by other means of

communication, e. g. in paper-based writing [SCHWENZER/MOHS, p. 240; HONSELL/Dornis,

Intro to Artt. 14 – 24, para. 12; OLG Celle (2009)]. This is because otherwise the offeree



would be burdened with the task to actively find and retrieve from different platforms the

standard terms which the offeror is trying to include into the contract. This is the very result

the ‘making available’ test has been designed to prevent [SCHLECHTRIEM/SCHWENZER/

Schroeter (German), Art. 14, para. 50; VENTSCH/KLUTH, Standard Terms, pp. 224 et seq.].

69 In the case at hand the SLA was negotiated face-to-face by the negotiating teams of both

Parties and was eventually concluded in paper-based writing [Exh. C–6]. During the

negotiations CLAIMANT placed its link to the 2011 Standard Terms in the footnote of one of

its paper-based letters to RESPONDENT [Exh. C–7]. Electronic communication, however, did

not play any role in the negotiation and conclusion of the SLA. Consequently, CLAIMANT did

not make the 2011 Standard Terms available to RESPONDENT in another way.

2. Alternatively, the requirements for internet-based incorporation are not fulfilled

70 Even if the Arbitral Tribunal should find that in principle the uploading of standard terms

suffices to make them available in cases where the contract was concluded in paper-based

writing, the specific prerequisites for internet-based incorporation are not fulfilled in the

present case.

71 A reference to terms which are available on the internet is only sufficient if two prerequisites

are fulfilled. First, the offer must allude to the exact internet-address where the applicable set

of standard terms is available. Second, the offeror must be sure that the offeree has access to

this set of standard terms [CISG–AC No. 13, para. 3.4; BRUNNER, Art. 4, para. 42].

CLAIMANT did not bring forward any arguments on this test although the burden of proof for

the accessibility lies with the party relying on the standard terms’ incorporation into the

contract [SCHLECHTRIEM/SCHWENZER/Schroeter(German), Art. 14, para. 49]. This may be

due to the fact that the requirements of the test are not met.

72 CLAIMANT’s reference in its letter to the 2011 Standard Terms did not contain a direct link to

the 2011 Standard Terms but rather a general link to the homepage of ICT [Exh. C–5]. There,

one would have to search for the applicable standard terms. This would be equivalent to an

inquiry about the whereabouts of standard terms which should not be incumbent on the

offeree [see supra, para. 68]. In fact, RESPONDENT never previously used the internet as a

means of communication and information towards CLAIMANT.



3. In addition, RESPONDENT did not understand and ought not to have understood the

language of the 2011 Standard Terms

73 Moreover, RESPONDENT did not understand and ought not to have understood the language of

the 2011 Standard Terms. As CLAIMANT correctly states [C–II–120], standard terms must be

drafted in a language comprehensible to the offeree or its agent responsible for the contract in

order to be made available in a reasonable way, Art. 8 CISG [CISG–AC No. 13, para. 6.2;

MAGNUS, p. 324; SCHLECHTRIEM/SCHWENZER/Schroeter, Art. 14, para. 61; SCHMIDT-

KESSEL/MEYER, p. 179; OLG Düsseldorf (2004)].

74 CLAIMANT correctly exposes that at the time of contract conclusion the terms were available

on the website only in Mediterranean [C–II–113]. However, CLAIMANT wrongly argues that

RESPONDENT understood Mediterranean because a person from its negotiating team was

allegedly familiar with that language [C–II–122]. The truth is that no one of RESPONDENT’s

negotiation team was able to understand Mediterranean [Exh. R–2]. In particular, the only

person at Hope Hospital who speaks Mediterranean was not available from the time Dr Vis

first referred to the 2011 Standard Terms in Mediterranean on 4 July 2011 until the

conclusion of the contract on 20 July 2011 [Exh. R–2]. Hence, RESPONDENT did not

understand Mediterranean.

75 RESPONDENT ought not to have understood Mediterranean, either. This is because first, the

2011 Standard Terms were drafted in a language other than the language of the contract and

the contract negotiations. Second, Mediterranean is not commonly used in international

business [PO–II–36]. At last, the young doctor who was able to understand Mediterranean

was not one of RESPONDENT’s agents responsible for the contract. He was only involved at

some earlier meetings when the teams of both Parties were discussing the usability of the

proton therapy facility to his field of research [Exh. R–2]. He did not participate in any form

in the negotiations or the forming of the contract. Thus, RESPONDENT ought not to have

understood Mediterranean.

76 In essence, CLAIMANT did not make the 2011 Standard Terms available to RESPONDENT in

another way since uploading does not suffice when the contract was concluded in paper-based

writing. Even if it did, the requirements therefor are not fulfilled. In addition, RESPONDENT

neither understood nor ought to have understood the language in which the 2011 Standard

Terms were available.



C. RESPONDENT DID NOT ACCEPT THE INCORPORATION BY LATER CONDUCT

77 CLAIMANT correctly points out that “Standard Terms cannot be validly incorporated in the

contract after the formation of the contract” [C–II–115]. To anticipate possible future

arguments taking a different view on this legal question, RESPONDENT will demonstrate that it

did not accept the 2011 Standard Terms by later conduct. Remaining silent or performing

one’s own obligations under the contract does not qualify as an acceptance of an offer to

modify the original contract [CISG–AC No. 13, paras. 4.1 et seqq.;

SCHLECHTRIEM/SCHROETER, para. 299; SCHLECHTRIEM/SCHWENZER/Schroeter(German),

Art. 14, para. 59; Chateau v. Sabaté; Cour d’appel de Paris (1995); Solae v. Hershey]. Here,

RESPONDENT merely performed its contractual obligation, i. e. paying the price as set forth in

Art. 3 SLA. Therefore, RESPONDENT’s conduct after the conclusion of the SLA gives no

indication of any assent to the 2011 Standard Terms pursuant to Art. 18(3) CISG. Thus,

RESPONDENT did not accept the incorporation of the 2011 Standard Terms by later conduct.

CONCLUSION TO PART I

78 CLAIMANT cannot force RESPONDENT to arbitrate as the Parties have not consented to this

form of dispute resolution. There is no contractual provision which contains the Parties’ valid

agreement to arbitrate the disputes arising out of the FSA and/or the SLA. In fact, Art. 23

FSA contains many methods of alternative dispute resolution, but not arbitration. This is

because the Parties deliberately excluded the finality of the potential award as the most

inherent feature of arbitration. Sec. 21 of the 2000 Standard Terms and Sec. 21 of the 2011

Standard Terms have both never been part of the Parties’ contracts. Without any basis for

arbitration, the Arbitral Tribunal is respectfully requested to dismiss CLAIMANT’s claims in its

entirety for a lack of jurisdiction.

PART II: THE TWO PRESENT CLAIMS SHOULD BE DECIDED IN TWO ARBITRAL PROCEEDINGS

79 If the Arbitral Tribunal, against RESPONDENT’s firm expectation, were to find that it has

jurisdiction over the claim arising out of the FSA and the claim arising out of the SLA, these

claims should not be heard in a single proceeding because the Parties never agreed thereon.

80 To clarify, CLAIMANT’s remarks on Art. 13 CEPANI Rules [C–II–69 et seq.] can be

disregarded because this provision is not applicable. Art. 13 CEPANI Rules states the

conditions under which the Appointments Committee or the President of CEPANI may

approve the consolidation of several arbitrations pending at CEPANI. Here, the question is

whether the two claims give rise to two arbitration proceedings at all. Art. 10 CEPANI Rules



deals with precisely this question but not Art. 13 CEPANI Rules. According to Art. 12

CEPANI Rules, the Arbitral Tribunal alone is competent to decide on all disputes in

connection with Artt. 9 through 11 CEPANI Rules.

81 CLAIMANT asserts that the alleged legal and factual connection of the FSA and the SLA is

sufficient to hear both claims jointly in a single arbitration [C–II–65 et seqq.]. Yet it fails to

prove why the alleged legal and factual connection of the FSA and the SLA should be of any

relevance when deciding on a joinder under Art. 10 CEPANI Rules [C–II–65 et seqq.]. The

first sentence of Art. 10 CEPANI Rules, which CLAIMANT cites in this regard [C–II–65], does

not support its submission either.

82 Art. 10 CEPANI Rules merely states that claims arising out of or in connection with various

contracts may be made in a single arbitration, but only under the conditions set forth in

Art. 10(1)(a), (b) CEPANI Rules. These conditions, which CLAIMANT fails to mention, are:

First, the parties must have agreed to have recourse to arbitration under the CEPANI Rules,

Art. 10(1)(a) CEPANI Rules. Under the assumption that the Arbitral Tribunal has jurisdiction,

this is true for the case at hand. Second, the parties must have agreed to have their claims

decided in a single set of proceedings, Art. 10(1)(b) CEPANI Rules. Here, there is no such

agreement because the Parties did not expressly agree to jointly hear claims arising from the

FSA and from the SLA (I). Neither can an implied agreement be inferred from the conduct of

the Parties (II). Finally, in order to conduct efficient proceedings, such a joinder of claims

would also be unreasonable (III).

I. THE PARTIES DID NOT EXPRESSLY AGREE TO JOIN THE CLAIMS ARISING FROM THE FSA

AND FROM THE SLA

83 Neither in the FSA nor in the SLA nor in any of the alleged arbitration agreements an

agreement to join multiple claims arising from the two contracts can be found. The question

was not even mentioned in any of the correspondence between the Parties. CLAIMANT’s only

attempt to reach an agreement on joining the two claims can be seen in its Request for

Arbitration [C–I–22]. This request was clearly denied by RESPONDENT [R–I–12]. Thus, the

Parties have never agreed on joining the claims.

II. NO IMPLICIT AGREEMENT CAN BE INFERRED FROM THE PARTIES’ CONDUCT

84 No agreement to join the claims arising from the FSA and from the SLA can be inferred from

the conduct of the Parties. This is because Art. 10(3) CEPANI Rules leads to the presumption



that the Parties did not agree to join the claims (A). Even without that presumption there are

no indicators of any implied agreement in that regard (B).

A. ART. 10(3) CEPANI RULES LEADS TO THE PRESUMPTION THAT THE PARTIES DID NOT

AGREE TO JOIN THE CLAIMS

85 Following the presumption in Art. 10(3) CEPANI Rules it must be assumed that the Parties

did not agree to join the two claims. Art. 10(3) CEPANI Rules stipulates that “[a]rbitration

agreements concerning matters that are not related to one another give rise to the

presumption that the parties have not agreed to have their claims decided in a single set of

proceedings.” CLAIMANT wrongly alleges [C–II–61 et seqq.] that only because the SLA is an

implementation contract to the FSA their matters must be related. In particular, CLAIMANT’s

allegation that only because the Parties allegedly wanted arbitration for both contracts they

wanted any and all claims to be resolved in a single arbitration [C–II–62 et seq.] is futile in

this regard.

86 In fact, the FSA and the SLA concern unrelated matters. The FSA provides for the building of

an entire new facility for proton therapy including a proton accelerator and two treatment

rooms using the passive-beam scattering technique [C–I–4], whereas the SLA mainly

establishes a development cooperation between CLAIMANT and RESPONDENT for the further

development of the active scanning software [Exh. C–6]. Pursuant to Art. 10(3) CEPANI

Rules it must be assumed that the Parties did not agree to have both claims heard in a single

arbitration.

B. IN ANY CASE THERE ARE NO INDICATORS OF ANY IMPLIED AGREEMENT

87 Even if the Arbitral Tribunal were not to follow the presumption under Art. 10(3) CEPANI

Rules, no reverse argument in favour of CLAIMANT can be drawn from this provision. This is

because Art. 10(3) CEPANI Rules does not contain the reverse presumption that arbitration

agreements concerning matters that are related give rise to a presumption that the parties have

agreed to have their claims decided in one arbitration. The negative wording makes clear that

Art. 10(3) CEPANI Rules only functions in one direction. Hence, there is no presumption in

CLAIMANT’s favour which is why it still needs to prove that the Parties at least impliedly

agreed to join the claims.

88 CLAIMANT will not be able to furnish this proof because there is no conduct of CLAIMANT

which could be interpreted as an implied offer to join the claims arising from the FSA and



from the SLA. Accordingly, there is no conduct of RESPONDENT which from the perspective

of a reasonable third person could be interpreted as an offer or an acceptance to join the two

claims. Such agreement, in fact, does simply not exist.

III. A JOINDER OF CLAIMS WOULD BE UNREASONABLE

89 In addition to the fact that a joinder is excluded for the lack of an agreement thereon it would

be unreasonable under an efficiency point of view to hear the claims in a single arbitration.

This is because the matters in dispute are not in any way related.

90 The claim under the FSA concerns the cost-benefit analysis which CLAIMANT provided to

RESPONDENT and which was the basis for the conclusion of the FSA. The analysis predicted

that the facility would run on zero costs [R–I–21]. Yet, it was wrong because various factors

such as energy, maintenance and staff costs were not taken into account properly [Exh. C–7].

Consequently, an arbitrator with a business-administration background can deal with the

claim most efficiently and most likely without requiring costly statements from external

experts. This is not changed by the fact that unforeseen faults such as the breakdown of the

imaging software occurred after the facility was already running. The decisive factor is that

from the outset the analysis was based on far too optimistic assumptions regarding inter alia

capacity utilisation making it impossible for RESPONDENT to reach the predicted profitability

[R–I–22]. Therefore, RESPONDENT nominated Prof. Bianca Tintin, a lawyer and accountant, as

co-arbitrator for the claim under the FSA [PO–II–19].

91 In contrast, the claim under the SLA requires technical expertise. The main issue to be

determined is whether the active scanning software suffers from a technical defect; namely

the software could not be calibrated to cope with the patients’ respiratory movements

[Exh. C–7]. Consequently, an arbitrator with an adequate technical understanding or even an

engineering background is most suitable to accurately assess the claim under the SLA within

a short time. Thus, RESPONDENT appointed Christina Arrango, an engineer, to act as co-

arbitrator in the arbitration concerning the claim arising from the SLA.

92 Additionally, it is more time-efficient to conduct two separate arbitrations with two separate

arbitral tribunals as they could be conducted parallel to each other. Contrarily, in a single

arbitration the claims could only be dealt with one after the other. Time-saving effects are not

to be expected because the issues to be determined are not based on each other. Thus, joining

the claims into one proceeding is likely to take up about twice as much time until a final

decision on both claims is rendered. For the Parties in order to eventually resume their



relationship it is, however, essential to have legal certainty about their rights and obligations

under both contracts as soon as possible.

CONCLUSION TO PART II

93 In conclusion, the claims arising from the FSA and from the SLA should not be dealt with in

a single arbitration because the essential condition for such joinder – a respective agreement

of the Parties – is clearly lacking.

PART III: THE CISG IS NOT APPLICABLE TO THE PAYMENT CLAIM UNDER THE SLA

94 The CISG is not applicable to the payment claim under the SLA because the Parties opted out

of the CISG (I). In any case, the SLA does not fall within the material scope of the CISG (II).

I. THE PARTIES OPTED OUT OF THE CISG

95 Contrary to CLAIMANT’s allegations [C–II–133] the Parties opted out of the CISG, Art. 6

CISG, because Sec. 22 of the 2000 Standard Terms, which is applicable to the SLA, favours

the national law of Mediterraneo, excluding the CISG (A). Even if the 2011 Standard Terms

were incorporated, Sec. 22 of the 2000 Standard Terms would remain applicable (B).

A. SEC. 22 OF THE 2000 STANDARD TERMS EXCLUDES THE APPLICATION OF THE CISG

96 Sec. 22 of the 2000 Standard Terms became part of the SLA – other than the arbitration

clause in Sec. 21 of the 2000 Standard Terms [see supra, paras. 60 et seqq.] – and contains an

explicit agreement of the Parties to exclude the application of the CISG. Art. 45 FSA provides

for the application of the provisions of the FSA to all future and further contracts in relation to

the Proton Therapy Facility where these contracts do not contain special provisions to the

contrary. The SLA constitutes such a future contract and neither the 2011 Standard Terms –

which were not included [see supra, paras. 64 et seqq.] – nor any other provision in the SLA

is a provision to the contrary in the sense of Art. 45 FSA. As a consequence, Sec. 22 of the

2000 Standard Terms also applies to the SLA.

97 Sec. 22 of the 2000 Standard Terms contains a choice of law agreement in favour of the

national law of Mediterraneo. Selecting the national law of a contracting state to the CISG is a

clear evidence that the parties wanted to exclude the CISG [BRUNNER, Art. 6, para. 3; Asante

v. PMC; OGH (2009); OGH (2007); OLG Linz (2006); OLG Rostock (2001); OLG Stuttgart

(2008)]. Here, by agreeing on the “national law of Mediterraneo as set out in the statutes of

Mediterraneo and developed by its courts” the Parties explicitly refer only to the non-unified



law of Mediterraneo. Short and simple: in Sec. 22 of the 2000 Standard Terms in combination

with Art. 45 FSA the Parties chose the national law of Mediterraneo as the law applicable to

the SLA and thereby excluded the application of the CISG.

B. THE 2011 STANDARD TERMS DO NOT LEAD TO A DIFFERENT RESULT

98 Even if the 2011 Standard Terms were in general incorporated into the SLA, the CISG would

not be applicable. Sec. 22 of the 2011 Standard Terms is not a provision to the contrary of

Sec. 22 of the 2000 Standard Terms as defined by Art. 45 FSA because it does not indicate

the Parties’ will to apply the CISG to the SLA (1). Even if it did, the provision would not be

incorporated due to its surprising character (2).

1. Sec. 22 of the 2011 Standard Terms does not indicate the Parties’ will to apply the

CISG to the SLA

99 Sec. 22 of the 2011 Standard Terms does not indicate the Parties’ will to apply the CISG to

the SLA. Contrary to CLAIMANT’s submission [C–II–128], the Parties never directly referred

to the CISG as the applicable law but made a reference to the “law of Mediterraneo”

[Exh. C-9]. Selecting the law of a contracting state does not necessarily show the parties’

intention to apply the CISG to their contract [KAROLLUS, p. 38; BezG Weinfelden (1998);

Cour d’appel de Colmar (1995); KG Zug (1995); Machines Case; Streamline v. Albrecht;

Tribunale di Monza (1993)]. Specifically in opposition to the case of the Tribunal of

International Commercial Arbitration at the Russian Chamber of Commerce and Industry

(TPPRF) cited by CLAIMANT [C–II–143], many other tribunals sitting under the rules of the

TPPRF follow the aforementioned opposing view [TPPRF Cases No. 155/2004; 62/2002;

217/2001].

100 In case of doubt, preference should be given to the interpretation that the choice of the “law of

Mediterraneo” excludes the CISG. Art. 4.6 UPICC states that if a contract term supplied by

one party is unclear, an interpretation against that party is preferred. Only CLAIMANT is

responsible for the wording of its standard terms which were not further discussed between

the Parties [Exh. C-5]. Since they contain no reference to the CISG one must interpret the

unclear wording in the way that “law of Mediterraneo” means the national law of

Mediterraneo, excluding the CISG. Hence, Sec. 22 of the 2011 Standard Terms is no

provision to the contrary of Sec. 22 of the 2000 Standard Terms. As a result, Sec. 22 of the

2000 Standard Terms, which favours the application of the national law of Mediterraneo,

remains applicable by virtue of Art. 45 FSA [see supra, paras. 96 et seq.].



2. Alternatively, Sec. 22 of the 2011 Standard Terms was surprising

101 Even if the Tribunal were to follow CLAIMANT’s line of argumentation that Sec. 22 of the

2011 Standard Terms favoured the CISG, this provision would not have been incorporated

since it constitutes a surprising clause. CLAIMANT itself correctly indicates that a party cannot

be bound by clauses which are surprising [C–II–105]. Under the CISG and the UPICC,

clauses are considered surprising if they are “of such a nature that the other party could not

reasonably have expected them” [CISG–AC No. 13, para. 7.2]. As a consequence, they do not

form part of the consensus between the parties. In determining the surprising character, regard

shall be had to the individual negotiations between the parties [SCHLECHTRIEM/

SCHWENZER/Schmidt-Kessel, Art. 8, para. 63; UNIDROIT COMMENTARY, Art. 2.1.20].

102 RESPONDENT relied on Dr Vis’ statement that there would be no major change in the

relationship between the Parties [R–I–18; Exh. R–2]. CLAIMANT wrongly alleges that the

changes in the 2011 Standard Terms were minor and did not affect the Parties’ relationship

[C–II–122]. Changing the applicable law is indeed a major change. Since that major change

was in no way indicated by CLAIMANT during the negotiations, the choice of law clause was

clearly surprising. One could even say that CLAIMANT concealed the new choice of law clause

by assuring RESPONDENT that there were no major changes. Thus, Sec. 22 of the 2011

Standard Terms is surprising and was for that reason never incorporated into the SLA.

103 As a result, Sec. 22 of the 2011 Standard Terms never became part of the SLA. Thus, Sec. 22

of the 2000 Standard Terms, which endorses the application of the national law of

Mediterraneo, remains applicable because of Art. 45 FSA [see supra, paras. 96 et seq.].

II. ALTERNATIVELY, THE SLA DOES NOT FALL WITHIN THE MATERIAL SCOPE OF THE CISG

104 Even if the Parties did not opt out of the CISG, the CISG is still not applicable to the claim

arising out of the SLA. This is because the CISG applies only “to contracts of sale of goods”,

Art. 1(1). While the CISG does not expressly define the term ‘contract of sale’, a definition

can be inferred from the parties’ different rights and obligations set forth in

Artt. 30 et seqq. CISG and Artt. 53 et seqq. CISG [UNCITRAL Digest, Art. 1, No. 3;

FERRARI, Specific Topics, pp. 50 et seq.; Tribunale di Forli (2009)]. Pursuant to these

provisions a contract of sale requires on the seller’s side the obligation to deliver the goods

and documents and to transfer the property [Tribunale di Padova (2005)]. In return, the

buyer’s obligation is the payment of the price and the acceptance of the delivery [KG

Schaffhausen (2002); Cour d’appel de Colmar (2001)].



105 The Parties’ mutual obligations under the SLA do not correspond to that simple scheme. The

SLA concerns a complex project: the conception and setting up of a new treatment room

using the active scanning technology as well as the further development of this technology.

CLAIMANT had to supply labour for the building of the room [Exh. C–6], the installation of the

facility [PO–II–22], the instruction of RESPONDENT’s personnel [Exh. R–3] and the putting

into operation of the equipment [PO–II–22]. More importantly, CLAIMANT and RESPONDENT

were obligated to co-operate in the further development of the active scanning software with

the aim of obtaining the approval of the Medical Certification Authority after the treatment

room was in operation. This extensive development cooperation under Art. 10 SLA provides

mutual duties for both CLAIMANT and RESPONDENT in conducting the necessary clinical trials,

adapting, improving, fine-tuning and testing the active scanning software [PO–II–26; Exh.

C–4]. In a similar case concerning a contract for the planning, delivery, assembly and putting

into operation of a plant for the separation of packaging the Commercial Court Zurich held

that the CISG was not applicable since the contract did “not so much provide for an exchange

of goods against payment, but rather for a network of mutual duties to collaborate with and

assist the other party” [HG Zurich (2002)].

106 Equally in the case at hand, the CISG is not applicable because neither RESPONDENT’s (A) nor

CLAIMANT’s (B) obligation is a sales obligation under the CISG.

A. RESPONDENT’S OBLIGATION IS NOT A BUYER’S OBLIGATION UNDER THE CISG

107 RESPONDENT’s obligation does not correspond to Artt. 53 et seqq. CISG. Those provisions

require the buyer to pay the purchase price. RESPONDENT, however, never paid a ‘price’ in the

sense of Art. 53 CISG since only part of the obligation was a payment in money (1). Even if

payments which are not entirely made in money were covered by the CISG, the dominant part

of RESPONDENT’s obligation would be barter (2).

1. The CISG does not provide for a payment other than in money

108 In a contract of sale under the CISG, the performance of the buyer is nothing but to pay the

purchase price as set forth in Artt. 53 et seqq. CISG. Therefore, the CISG is only applicable to

legal transactions where goods are exchanged exclusively for money [BRUNNER, Art. 2, para.

9; SCHLECHTRIEM/BUTLER, para. 24; KG Zug (1999)]. The ULIS, the predecessor of the

CISG, covered mixed obligations which provide for both monetary payment and goods, if the

monetary part prevailed [SCHWENZER/KEE, p. 231; DIPLOMATIC CONFERENCE, Vol I: Records,

p. 32, Vol II: Documents, p. 266]. Contrary to the ULIS, the CISG does not cover mixed



obligations. This is evidenced by the clear wording of Art. 53 CISG which obligates the buyer

to “pay the price”. Obviously, the provision does not state to ‘pay the price and deliver

something else in exchange’. Additionally, Art. 3 CISG which approves mixed obligations is

merely applicable to the seller’s obligation. This, in turn leads to the result that the CISG is

not intended to govern mixed obligations on the buyer’s side.

109 It is undisputed between the Parties that CLAIMANT’s performance was worth USD 9.5

million. It is further undisputed that RESPONDENT only ‘paid’ USD 3.5 million in money.

Remarkably, Art. 3 SLA evidences the Parties’ intention to allocate the remaining value of

USD 6 million to the medical data provided by RESPONDENT. Art. 3(1) SLA reads “[t]he

purchase price for the goods and services listed in Annex 1 is USD 3.5 million. It takes into

account the Buyer’s contribution in developing and testing the active scanning technology

including the necessary software with a value of USD 6 million” [emphasis added].

Accordingly, Art. 10(1) SLA obligates RESPONDENT “to provide CLAIMANT with the necessary

data for the fine-tuning of the active scanning technology and for testing that technology”.

110 As a consequence, RESPONDENT merely paid USD 3.5 million in money while the other USD

6 million of the price are to be paid through the delivery of medical data. To provide medical

data is clearly not ‘to pay the price’ and therefore not covered by the CISG.

2. Alternatively, the dominant part of RESPONDENT’s obligation is barter

111 Even if the CISG applied to mixed obligations on the buyer’s side, the SLA would still not

fall under the scope of the CISG. This is because the CISG is not applicable if the barter part

of the obligation dominates [KAROLLUS, p. 25; PILTZ, para. 2.25; Swiss Embassy, p. 763].

112 RESPONDENT’s supply of medical data dominates under the SLA. It was clear from the

beginning that the Parties wanted to develop the active scanning software together [Exh.

C–2]. The development cooperation was the main idea behind the SLA. Economically

spoken, CLAIMANT needed the necessary data to make the software marketable and

RESPONDENT wanted to be the first hospital with the new technology. Particularly for that

purpose, the Parties included Art. 10 SLA, the “Development Cooperation”. This result is

corroborated by the value of RESPONDENT’s obligations. In compliance with the figures

recorded in Art. 3(1) SLA, the part corresponding to medical data represents 64 % of

RESPONDENT’s obligation whereas the part corresponding to monetary payment makes up

only 36 % of RESPONDENT’s obligation.

113 Contrary to CLAIMANT’s submission [C–II–86], the market value is not relevant for the



determination of the preponderant part of an obligation. The determination depends on the

individual contract price the parties agreed upon. This is true for two reasons. First, the

relevant price should be determined in accordance with party autonomy. The parties

themselves stipulate which price is appropriate under the circumstances. Second, the value

defined by the parties reflects the objective value. This follows from the fact that demand and

supply dictate the price in a market. The Parties agreed to the price of USD 6 million [Exh.

R–3; PO–II–27] because CLAIMANT wanted to acquire RESPONDENT’s data under all

circumstances [PO–II–27]. Without the data CLAIMANT would not have been able to finalise

the development of the software which was still in its infancy [PO–II–28].

114 To sum up, RESPONDENT’s mixed obligation, consisting of monetary payment and delivery of

medical data, renders the CISG inapplicable because the CISG does not provide for a

payment other than in money. Even if it did, the CISG would still not be applicable since

RESPONDENT’s supply of medical data outweighs its monetary payment.

B. THE PREPONDERANT PART OF CLAIMANT’S OBLIGATIONS IS NOT A SELLER’S

OBLIGATION UNDER THE CISG

115 Alternatively, the CISG is not applicable to the SLA because the preponderant part of

CLAIMANT’s obligations does not correspond to Artt. 30 et seqq. CISG. According to these

provisions, the seller must deliver the goods, hand over any documents relating to them and

transfer the property in the goods.

116 However, the CISG does not apply to contracts in which the preponderant part of the

obligations of the party who furnishes the goods consists in the supply of labour or other

services, Art. 3(2) CISG. While the CISG does not define the term ‘preponderant’, it is the

prevailing view that the test should consider economic values based on a comparison of the

parties’ obligations in light of the entire agreement [ENDERLEIN/MASKOW, Art. 3, para. 3, 5;

STAUDINGER/Magnus, Art. 3, para. 21; OLG Innsbruck (2007); OLG Munich (1999)].

Regardless of the use of percentages, the economic value factor should be supplemented by

consideration of the parties’ intentions as expressed in the contract and surrounding

circumstances [CISG–AC No. 4, para. 3.4; LG Mainz (1998); OLG Dresden (2007); OLG

Innsbruck (2007)]. When a percentage is used, it is widely acknowledged that the percentage

must amount to more than 50 % [SCHLECHTRIEM/SCHWENZER/Hachem, Art. 3, para. 20;

Tribunale di Forli (2009)]. An analysis of these factors leads to the result that the

preponderant part of CLAIMANT’s obligations is not the sale of goods.



117 As a starting point for the analysis, the Arbitral Tribunal is invited not to base its evaluation

on CLAIMANT’s misleading calculation. CLAIMANT alleges that “the price for the hardware,

building and magnets […] is estimated at about USD 2 million” and that the price for the

licence of the software had been estimated at USD 6 million but was reduced to USD 1.5

million [C–II–86; C–II–92]. To prove this allegation, CLAIMANT refers to Art. 13(1) SLA,

which is not available in the case file [Exh. C–6]. CLAIMANT’s calculation stands in stark

contrast to the facts. CLAIMANT’s letter from 18 July 2011 reads: “[…] the services rendered

and the material delivered are worth around USD 9.5 million on the free market. Out of this,

approximately 40 % [USD 3.8 million] represents materials used, in particular the magnets,

50 % [USD 4.75 million] the development, testing and installation of the software, and the

remaining 10 % [USD 0.95 million] training personnel” [Exh. R–3]. This clearly shows that

the numbers CLAIMANT uses must be replaced by the exact price structure which CLAIMANT

itself provided to RESPONDENT during the negotiations.

118 With the correct numbers in mind, the preponderant part of CLAIMANT’s obligations does not

correspond to a sales contract under the CISG. This is because USD 5.7 million or 60 % of

the contract value reflect obligations that have no relation to a sales contract. To begin with,

the training of the personnel constitutes a service under Art. 3(2) CISG. Training of the

buyer’s staff to operate the sold equipment constitutes services in the sense of Art. 3(2) CISG

[CISG–AC No. 4, para. 3.1]. Here, the training of RESPONDENT’s employees makes up USD

950.000 or 10 % of the contract value [Exh. R–3; PO–II–2]. More importantly, the remaining

USD 4.75 million or 50 % are also not about the delivery of goods and transfer of property as

required by Art. 30 CISG. The reason for that is that CLAIMANT was obligated to grant a

licence (1). Alternatively, CLAIMANT was obligated to develop and provide to RESPONDENT

individualised software (2).

1. CLAIMANT was obligated to grant a licence

119 CLAIMANT was obligated to provide RESPONDENT with a licence for the active scanning

technology. As shown above [see supra, para. 115] one of the seller’s obligations must be to

transfer the property in the goods. A contract concerning a software transaction merely fulfils

this prerequisite if the buyer pays a one-time licencing fee – in contrast to the payment of

royalties – and acquires the perpetual use of the program in return [LARSON, p. 465;

MCGUIRE, p. 626; PRIMAK, p. 221; LG Munich I (1995)]. To determine the character of the

contract, an autonomous interpretation of the parties’ intentions according to Artt. 8,9 CISG



must be applied supplementary [DIEDRICH, pp. 69 et seqq.].

120 In the case at hand, no perpetual licence is granted for a one-time fee. Art. 2 SLA states that

“[n]o royalties are payable […] for the life cycle of the Proton Therapy Facility,

approximately 30 years”. It follows that the relief of royalties for RESPONDENT is limited to

the life cycle of the facility, i. e. 30 years. Afterwards, or in case RESPONDENT intends to use

the software independently, it would be obligated to pay royalties for the use of the software.

This limitation, however, is the very nature of a licencing contract.

121 In addition, the intention of the Parties corroborates this outcome. Even CLAIMANT recognizes

the Parties’ intention to conclude a licencing contract as it clarifies that RESPONDENT should

acquire the license of the software [C–II–86]. Also in the pre-contractual correspondence

CLAIMANT demonstrates that RESPONDENT should be provided with “the third treatment room

using active scanning technology, including the licence for the necessary software” [Exh. C–

5, emphasis added]. In a final step, the Parties named the contract “Sales and Licensing

Agreement” [Exh. C–6, emphasis added]. While the sales part can only be associated with the

magnets, the software must occupy the licencing part. Hence, the Parties’ intention to

conclude a licencing contract is firmly anchored in the documents.

2. Alternatively, CLAIMANT was obligated to develop individualised software

122 Even if the Arbitral Tribunal were not to qualify the SLA as a licensing contract, the CISG

would not be applicable because CLAIMANT was obligated to develop individualised software.

Contracts for individualised software do not fall within the scope of the CISG [FERRARI ET

AL./Saenger, Art. 1, para. 7; MüKoHGB/Benicke, Art. 1, para. 18]. This is because the main

obligation is not the mere transfer but the development and customization of software which

qualifies them as contracts for work and services rather than contracts for sale. [FERRARI ET

AL./Saenger, Art. 1, para. 7; STAUDINGER/Magnus, Art. 1, para. 44].

123 Here, CLAIMANT itself admits that it was obligated to develop and install individualised

software [C–II–91]. The correspondence also proves this result as CLAIMANT in its letter

states that the software will be “developed particularly for your [Respondent’s] needs” [Exh.

C–5, emphasis added]. As it is therefore undisputed between the Parties that no standard

software was sold, no further argument is necessary in that regard.

124 As a matter of precaution, it should be added that this result corresponds to Art. 10(1) SLA,

which reads: “The Seller is responsible for the development of the active scanning technology

(additional parts and software)” [emphasis added]. In fact, no working version of the



software was available at the time of contract conclusion [PO–II–24]. That is why CLAIMANT

modified, improved and fine-tuned the software for the needs of RESPONDENT after the

software was installed on the equipment [PO–II–25].

125 CLAIMANT’s argument that when a contract involves customised software “with a transfer of

physical copies to the buyer, the CISG must apply to the contract” [C–II–88] should be

disregarded. The decision of the BGH on which CLAIMANT relies does not support its

position. The case concerned payment claims in relation to a “computerized printing system

including software” [BGH (1996)]. The BGH in paragraph (2) lit. (a) merely stated that in the

particular case it could “be left open, whether the contract concluded between [seller] and the

[buyer] is a pure sales contract or a contract for the supply of goods to be manufactured or

produced.” It is the predominant opinion that only the question whether the software is

standardised or customised is relevant to determine whether the CISG is applicable

[SCHLECHTRIEM/SCHWENZER/HACHEM, Art. 1, para. 18; MüKoHGB/Benicke,

Art. 1, para. 18]. The modality of the transmission, on the other hand, can be disregarded as

to that question [MüKoHGB/Benicke, Art. 1, para. 18; SCHLECHTRIEM/SCHWENZER/HACHEM,

Art. 1, para. 18; STAUDINGER/Magnus, Art. 1, para. 44].

CONCLUSION TO PART III

126 The Arbitral Tribunal is respectfully requested to find that the SLA is not governed by the

CISG but by the national law of Mediterraneo. Contrary to its initial intentions, CLAIMANT

did not make a translated version of the 2011 Standard Terms available. RESPONDENT

therefore had every reason to rely on the 2000 Standard Terms. They are applicable to the

SLA and exclude the applicability of the CISG.

127 Moreover, the SLA does not qualify as a contract for the sale of goods under the CISG.

RESPONDENT’s primary obligation is the provision of medical data – not the payment of a

purchase price. CLAIMANT’s primary obligation is the development of individualised software

and the granting of a license thereof – not the transfer of property in goods. Consequently, the

CISG is not applicable to the SLA.



REQUEST FOR RELIEF

RESPONDENT respectfully requests the Arbitral Tribunal:

1) To dismiss CLAIMANT’s claims in their entirety for a lack of jurisdiction;

2) Alternatively, to dismiss CLAIMANT’s claims in their entirety for being unmeritorious;

3) To order CLAIMANT to pay the costs of this arbitration.

Heidelberg, 23 January 2014

Counsel for RESPONDENT

Nina Benz Frederik Hübl

Dominik Mohr Alexander Urhahn