Memorandum for Respondent - Portal · 2020. 2. 7. · Memorandum for Respondent University of Berne - II - 5. RESPONDENT revoked its purchase order, no contract containing an arbitration

Memorandum for Respondent University of Berne

Fifteenth Annual

Willem C. Vis International Commercial Arbitration Moot

14 - 20 March 2008

Memorandum for Respondent

Rechtswissenschaftliche Fakultät der Universität Bern

Faculty of Law of the University of Berne

ON BEHALF OF:

Equatoriana Super Markets S.A.

415 Central Business Centre

Oceanside

Equatoriana

RESPONDENT

AGAINST:

Mediterraneo Wine Cooperative

140 Vineyard Park

Blue Hills

Mediterraneo

CLAIMANT

COUNSEL:

Fabienne Claudon – Christian Dreier – Aylin Erb

Isabelle Ganz – Alain Muster – Leonora Schreier


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Contents

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

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

Materials.........................................................................................................................................................XV

Cases ..........................................................................................................................................................XVI

Awards ..........................................................................................................................................................XIX

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

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

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

Issue 1: The Tribunal should stay the arbitral proceedings........................................................................3

I. The Court is competent to determine the Tribunal’s jurisdiction .............................................................3

1. The Tribunal’s competence-competence is only relative ...................................................................4

2. The Court has direct control over the Tribunal’s jurisdiction in spite of the latter’s

competence-competence .......................................................................................................................4

II. The Tribunal’s jurisdiction is seriously in dispute ....................................................................................5

III. The Tribunal should avoid parallel proceedings .....................................................................................6

1. RESPONDENT at no point intended to delay arbitral proceedings .......................................................6

2. The Tribunal does not have priority in cases of parallel proceedings ................................................6

IV. The arbitral proceedings have not yet moved to an advanced stage......................................................7

V. The Court can order a stay of the arbitral proceedings...........................................................................8

VI. Result of Issue 1 .....................................................................................................................................8

Issue 2: No arbitration agreement was concluded between the Parties ....................................................9

I. The principle of separability does not apply............................................................................................9

1. The application of the principle of separability to the case where the existence of the main

contract is in dispute is rejected by legal authors and case law............................................................10

2. The wording of Art. 16(1) DAL excludes the application of the principle when the existence

of the main contract is in dispute ..........................................................................................................11

3. Art. 17.1 JAMS Rules cannot be relied on to support the application of the principle when

the existence of the main contract is in dispute ....................................................................................12

a) The JAMS Rules cannot be considered as no arbitration agreement was

concluded ........................................................................................................................12

b) In any event, the wording of Art. 17.1 JAMS Rules excludes the application of

the principle of separability when the existence of the main contract is in dispute..............12

4. The wording of the arbitration clause does not support the application of the principle of

separability when the existence of the main contract is in dispute........................................................12


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5. RESPONDENT revoked its purchase order, no contract containing an arbitration clause was

concluded and, therefore, no arbitration agreement was concluded either ..........................................13

II. Even if the principle of separability were found to apply, the Parties did not consent to the

arbitration clause ..................................................................................................................................13

1. The CISG applies to the arbitration agreement ...............................................................................13

2. The offer to conclude an arbitration agreement was revoked..........................................................14

3. The most minimal indication of the parties’ intent to arbitrate does not justify bypassing the

requirement of an existing arbitration agreement .................................................................................15

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

Issue 3: The Tribunal may not order RESPONDENT to stay its proceedings before the

Court...................................................................................................................................................16

I. RESPONDENT did not violate Art. 17(3) JAMS Rules as Art. 8(2) DAL has to be considered a

mandatory provision .............................................................................................................................16

II. The Tribunal has no power to order CLAIMANT to stay its proceedings.................................................17

1. The Tribunal is not competent to order an anti-suit injunction .........................................................17

2. Alternatively, none of the conditions for ordering anti-suit injunctions are met ...............................18

a) As RESPONDENT did not act abusively, it is inappropriate to order an anti-suit

injunction ........................................................................................................................18

b) Conditions for granting interim measures are not met ..............................................19

3. The Tribunal does not have the authority to award costs and expenses .........................................20


Arguments on the substantive law issues ..................................................................................................20

Issue 4: The contract was not effectively concluded.................................................................................20

I. No contract of sale was concluded on 10 June 2006 ...........................................................................21

II. RESPONDENT effectively revoked its offer on 18 June 2006..................................................................22

1. RESPONDENT’s offer was revocable .................................................................................................22

a) RESPONDENT did not state a fixed time frame for acceptance ..................................22

b) CLAIMANT did not act in reliance on the offer being irrevocable ................................23

2. RESPONDENT’s revocation reached CLAIMANT before the acceptance was dispatched ...................24

a) The internal network failure lies within CLAIMANT’s sphere of control .......................24

b) Declarations placed in a business mailbox outside business hours “reach” the

addressee ........................................................................................................................25

c) RESPONDENT’s revocation needs not have been retrieved by CLAIMANT to

become effective .................................................................................................................25



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Issue 5: Blue Hills 2005 is not in conformity with the contract .................................................................27

I. Blue Hills 2005 was not in conformity with the agreed contractual obligations .....................................27

1. The wine was not fit for the particular purpose as the lead of a promotion

(Art. 35(2)(b) CISG) ..............................................................................................................................27

a) CLAIMANT knew of and confirmed the particular purpose the wine was

intended for ........................................................................................................................28

b) The wine offered by CLAIMANT does not fulfil the requirements resulting from

the particular purpose..........................................................................................................28

aa) A promotional wine requires a clean image.....................................................29

bb) A promotional wine must be of high quality for its price bracket ......................29

c) RESPONDENT could rely on CLAIMANT’s judgement ...................................................30

2. The terms of the contract do not support CLAIMANT’s position (Art. 35(1) CISG).............................31

3. Blue Hills 2005 is not fit for the ordinary purpose (Art. 35(2)(a) CISG) ............................................31

4. Blue Hills 2005 does not conform with Art. 35 (2)(c) CISG..............................................................32

a) As Blue Hills 2005 is not fit for the particular and the ordinary

purpose, an examination under Art. 35(2)(c) is superfluous ................................................33

b) Blue Hills 2005 features a hidden defect ..................................................................33

II. There is a fundamental breach of contract and therefore RESPONDENT was entitled to refuse to

take delivery..........................................................................................................................................33

1. Blue Hills 2005 substantially deprives RESPONDENT of what it could expect under the

contract .................................................................................................................................................34

2. This substantial deprivation could have been foreseen by CLAIMANT ..............................................34

III. Result of Issue 5.......................................................................................................................................35

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

Certificate .......................................................................................................................................................XX


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Abbreviations

Abbreviation Full Text

§(§) paragraph(s)

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

Arb. Int. Arbitration International (London/The Hague)

Art. Article

ASoC Amendment of Statement of Claim

BGE Entscheidungen des Schweizerischen Bundesgerichts, amtliche

Sammlung (Decisions of the Swiss Federal Supreme Court)

BGer Bundesgericht (Swiss Federal Supreme Court)

BGH Bundesgerichtshof (German Supreme Court)

CCP-GER German Code of Civil Procedure of 1998

CdA Cour d’appel (French Court of Appeal)

CdC Cour de cassation (French Court of Cassation)

cf. confer

CISG United Nations Convention on Contracts for the International Sale of

Goods of 11 April 1980

Cl.Ex. Claimant’s Exhibit

CLAIMANT Mediterraneo Wine Cooperative

CoA Court of Appeal

Court Commercial Court of Vindobona (Danubia)

DAL Danubian Arbitration Law

E. Erwägung (consideration)

EC-Reg. on Oenology Commission Regulation (EC) No 1622/2000 of 24 July 2000 laying down

certain detailed rules for implementing Regulation (EC) No 1493/1999 on

the common organisation of the market in wine and establishing a

Community code of oenological practices and processes

ECMR Convention for the Protection of Human Rights and Fundamental

Freedoms of 4 November 1950 (Rome)

Ed. Editor

e.g. exempli gratia (for example)

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

FFDCA-USA Federal Food, Drug and cosmetic Act of 2004 (USA)

fn. foot note


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

1996

HC High Court

HG Handelsgericht (Commercial Court)

H.L. House of Lords (GBR)

Hrsg. Herausgeber (Editor)

ICC International Chamber of Commerce

ICC Rules ICC Rules of Arbitration, in force as from 1 January 1998

ICCA International Council for Commercial Arbitration

i.c.w. in connection with

i.e. id est (that is)

IHR Zeitschrift für das Recht des internationalen Warenkaufs und -vertriebs

(Hamburg)

ISBW Internationales Schiedsgericht der Bundeskammer der gewerblichen

Wirtschaft

JAMS Rules JAMS International Arbitration Rules of 2005

J.D.I. Journal du Droit International (Paris)

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

LJ-R Letter JAMS to Respondent on 21 June 2007

LPresArb-J Letter Prof. Dr. Presiding Arbitrator to JAMS on 17 August 2007

LR-J Letter Respondent to JAMS on 17 July 2007

ML-A UNCITRAL Model Law on International Commercial Arbitration as adopted

on 21 June 1985

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

on 7 July 2006

ML-EC UNCITRAL Model Law on Electronic Commerce of 1996

NAI Netherlands Arbitration Institute

NJW Neue juristische Wochenschrift (München)

No. Number

NYC New York Convention on the Enforcement of Foreign Arbitral Awards of

1958

OLG Oberlandesgericht (German Regional Higher Court)

p.(p.) page(s)

PO Procedural Order

Q. Question


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Q.B. Queen’s Bench Divison (GBR)

RESPONDENT Equatoriana Super Markets S.A.

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

SchiedsVZ Die neue Zeitschrift für Schiedsverfahren (München)

SoC Statement of Claim

SoD Statement of Defense

SUI-Reg. on alcoholic beverages Verordnung des EDI über alkoholische Getränke vom 23. November 2005

(Stand am 1. April 2007) (SUI)

TC Tribunal Cantonal (SUI)

UN United Nations

UNCITRAL United Nations Commission on International Trade Law

US$ United States Dollar

USDC United States District Court

v. versus (against)

Vol. Volume

YCA Yearbook Commercial Arbitration (Deventer)

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


- VII -

Authorities

Books and Commentaries:

ACHILLES W., Kommentar zum UN-Kaufrechtsübereinkommen (CISG), Luchterhand, Berlin 2000 (cited as: ACHILLES; in: §144)

AUDIT B., La vente internationale de marchandise – Convention des Nations-Unies du 11 avril 1980, LGDJ, Paris 1990 (cited as: AUDIT; in: §144)

BERGER K. P., International Economic Arbitration, Kluwer Law and Taxation Publishers, Deventer/Boston 1993 (cited as: BERGER, Arbitration; in: §6)

BERNSTEIN H./LOOKOFSKY J., Understanding the CISG in Europe, second Edition, Kluwer Law International, The Hague/London/New York 2003 (cited as: BERNSTEIN/LOOKOFSKY; in: §§61, 93)

BIANCA C. M./BONELL M. J., Commentary on the International Sales Law – The 1980 Vienna Sales Convention, Giuffrè, Milan 1987 (cited as: BIANCA/BONELL, AUTHOR; in: §§102, 106, 135, 141)

BORN G. B., International Commercial Arbitration – Commentary and Materials, Kluwer Law International, The Hague 2001 (cited as: BORN; in: §38)

BROCHES A., Commentary on the UNCITRAL model law on international commercial arbitration, Kluwer Law International, Deventer 1990 (cited as: BROCHES; in: §§18, 49, 80)

BRUNNER C., UN-Kaufrecht-CISG – Kommentar zum Übereinkommen der Vereinten Nationen über Verträge über den internationalen Warenkauf von 1980 – Unter Berücksichtigung der Schnittstellen zum internen Schweizer Recht, Stämpfli Verlag AG, Bern 2004 (cited as: BRUNNER; in: §§95, 109, 135, 144, 153)

CALAVROS C., Das UNCITRAL-Modellgesetz über die internationale Handelsschiedsgerichtsbarkeit, in: Schriften zum deutschen und europäischen Zivil-, Handels- und Prozessrecht, Bd. 116, Verlag Ernst und Werner Gieseking, Bielefeld 1988 (cited as: CALAVROS; in: §49)

ENDERLEIN F./MASKOW D./STROHBACH H., Internationales Kaufrecht – Kaufrechtskonvention – Verjährungskonvention – Vertretungskonvention – Rechtsanwendungskonvention, Rudolf Haufe Verlag, Berlin 1991 (cited as: ENDERLEIN/MASKOW/STROHBACH; in: §92)

FOUCHARD/GAILLARD/GOLDMAN, On International Commercial Arbitration – Commentary and Materials, Kluwer Law International, The Hague 1999 (cited as: FOUCHARD/GAILLARD/GOLDMAN; in: §§5, 69, 86)

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

(cited as: HERBER/CZERWENKA; in: §§142, 144)


- VIII -

HOLTZMANN H. M./NEUHAUS J. E., A Guide to the UNCITRAL Model Law on International Commercial Arbitration, Kluwer Law and Taxation Publishers, Deventer 1989 (cited as: HOLTZMANN/NEUHAUS; in: §§38, 62, 80)

HONNOLD J. O., Uniform Law for International Sales, Third Edition, Kluwer Law International, The Hague 1999 (cited as: HONNOLD; in: §134)

HONSELL H. (ED.), Kommentar zum UN-Kaufrecht, Springer Verlag, Berlin/Heidelberg/New York 1997 (cited as: HONSELL, AUTHOR; in: §§105, 106, 109, 135)

HUBER P./MULLIS A., The CISG – A new Textbook for students and practitioners, Sellier European law publishers, München 2007 (cited as: HUBER/MULLIS, AUTHOR; in: §§149, 155)

HUSSLEIN-STICH G., Das UNCITRAL-Modellgesetz über die internationale Handelsschiedsgerichtsbarkeit, Carl Heymanns Verlag KG, Köln/Berlin/Bonn/München 1990 (cited as: HUSSLEIN-STICH; in: §§15, 49, 60, 80)

KAROLLUS M., UN-Kaufrecht – Eine systematische Darstellung für Studium und Praxis, Springer Verlag, Wien/New York 1991 (cited as: KAROLLUS; in: §§109, 135)

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

(cited as: KAUFMANN-KOHLER/RIGOZZI; in: §86)

KRONKE H./MELIS W./SCHNYDER A. (HRSG.), Handbuch Internationales Wirtschaftsrecht, Verlag Dr. Otto Schmidt, Köln 2005 (cited as: KRONKE/MELIS/SCHNYDER, AUTHOR; in: §107)

LEW J. D. M., Contemporary Problems in International Arbitration, Martinus Nijhoff Publishers, Dordrecht/Boston/Lancaster 1987

(cited as: LEW, Contemporary Problems; in: §38)

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

(cited as: LEW/MISTELIS/KRÖLL; in: §6)

LIONNET K./LIONNET A., Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit, dritte Auflage, Richard Boorberg Verlag, Düsseldorf 2005 (cited as: LIONNET/LIONNET; in: §38)

LÜKE G./WAX P. (ED.), Münchner Kommentar zur Zivilprozeßordnung, Band 3, zweite Auflage, Verlag C.H. Beck, München 2001 (cited as: LÜKE/WAX, AUTHOR; in: §10)

MÖNNIKES R., Die Reform des deutschen Schiedsverfahrensrecht, Verlag Dr. Kovac, Hamburg 2000 (cited as: MÖNNIKES; in: §20)

MUSIELAK H.J. (ED.), Kommentar zur Zivilprozessordnung, vierte Auflage, Verlag Franz Vahlen, München 2005 (cited as: MUSIELAK, AUTHOR; in: §§10, 17)


- IX -

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

(cited as: NEUMAYER/MING; in: §§98, 106)

POUDRET J. F./BESSON S., Comparative Law of International Arbitration, second Edition, Thomson Sweet & Maxwell, London 2002 (cited as: POUDRET/BESSON; in: §§5, 6, 9, 12, 38, 62, 63, 82)

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

(cited as: REDFERN/HUNTER; in: §§2, 33, 60)

SCHLECHTRIEM P., Internationales UN-Kaufrecht, vierte Auflage, Mohr Siebeck, Tübingen 2007 (cited as: SCHLECHTRIEM; in: §§61, 93, 98-100)

SCHLECHTRIEM P./SCHWENZER I. (ED.), Commentary on the UN Convention on the International Sale of Goods (CISG), second (English) Edition, Oxford University Press, Oxford/New York 2005 (cited as: SCHLECHTRIEM/SCHWENZER (E), AUTHOR; in: §§95, 102, 105, 108, 134, 142, 148, 153,158)

SCHLECHTRIEM P./SCHWENZER I. (HRSG.), Kommentar zum Einheitlichen UN-Kaufrecht – CISG, vierte Auflage, Verlag C.H.Beck, München 2004 (cited as: SCHLECHTRIEM/SCHWENZER (D), AUTHOR; in: §§121, 144)

SCHLOSSER P., Das Recht der internationalen privaten Schiedsgerichtsbarkeit, zweite Auflage, J.C.B. Mohr (Paul Siebeck), Tübingen 1989 (cited as: SCHLOSSER, Recht; in: §6)

SCHWAB K.-H./WALTER G., Schiedsgerichtsbarkeit, siebte Auflage, Helbing & Lichtenhahn, Basel 2005 (cited as: SCHWAB/WALTER; in: §13)

SCHWENZER I./FOUNTOULAKIS C., International Sales law, Routledge-Cavendish, Oxon 2007 (cited as: SCHWENZER/FOUNTOULAKIS; in: §98)

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

(cited as: STAUDINGER/MAGNUS; in: §§95, 108, 135, 142, 144, 150, 155, 157, 158)

THOMAS H./PUTZO H. (ED.), Zivilprozessordnung, 28. Auflage, Verlag C.H. Beck, München 2007 (cited as: THOMAS/PUTZO, AUTHOR; in: §20)

WALTER G., Internationales Zivilprozessrecht der Schweiz, vierte Auflage, Haupt Verlag, Bern/Stuttgart/Wien 2007 (cited as: WALTER; in: §83)

WEIGAND F.-B. (ED.), Practitioner’s Handbook on International Arbitration, Verlag C.H. Beck, Bruylant, Manz’sche Verlags- und Universitätsbuchhandlung, Stämpfli Verlag AG, München/Bruxelles/Wien/Bern 2002 (cited as: WEIGAND, AUTHOR; in: §15)

WENGER W., Schiedsvereinbarung und schiedsgerichtliche Zuständigkeit, in: Kellerhals A. (Ed.), Schiedsgerichtsbarkeit, Schulthess Polygraphischer Verlag AG, Zürich 1997, pp. 223-247 (cited as: WENGER; in: §6)


- X -

WITZ W./SALGER H.-C./LORENZ, International Einheitliches Kaufrecht, Verlag Recht und Wirtschaft GmbH, Heidelberg 2000 (cited as: WITZ/SALGER/LORENZ; in: §105)

ZÖLLER R. (ED.), Zivilprozessordnung, 26. Auflage, Verlag Dr. Otto Schmidt, Köln 2007 (cited as: ZÖLLER, AUTHOR; in: §17)


- XI -

Articles

BERGER K. P., The German Arbitration Law of 1998 – First Experiences, in: Briner R./Fortier L.Y./Berger K.P./Bredow J. (Ed.), Law of international business and dispute settlement in the 21st century, Liber Amicorum K. H. Böckstiegel, Carl Heymanns Verlag KG, Köln/Berlin/Bonn/München 2001 (cited as: BERGER, Experiences; in: §10)

BURGARD U., Das Wirksamwerden empfangsbedürftiger Willensäusserungen im Zeitalter moderner Telekommunikation, in: Archiv für civilistische Praxis (AcP), 195. Band, 1995, pp. 74 et seqq. (cited as: BURGARD; in: §§106, 107)

CLAVEL S., Anti-Suit Injunctions et arbitrage, in: Rev. arb. 2001 No. 4, pp. 669-706 (cited as: CLAVEL; in: §§73, 82, 83, 84)

CLEMENS R., Die elektronische Willenserklärung – Chancen und Gefahren, in: Neue Juristische Wochenschrift (NJW) 1985, Heft 34, pp. 1998 et seqq. (cited as: CLEMENS; in: §106)

DE BOISSÉSON M., Anti-Suit Injunctions Issued by National Courts At the Seat of the Arbitration or Elsewhere, in: Gaillard E. (Ed.), IAI Series on International Arbitration No. 2, Anti-Suit Injunctions in International Arbitration, Juris Publishing, Inc. and Staempfli Verlag AG, Berne/New York 2005, pp. 65 et seqq. (cited as: DE BOISSÉSON; in: §31)

DIMOLITSA A., Separability and Kompetenz-Kompetenz, in: ICCA Congress series no. 9 (Paris/1999), pp. 217-256 (cited as: DIMOLITSA; in: §5)

EISELEN S., E-Commerce and the CISG: Formation, Formality and Validity, Vindobona Journal of International Law & Arbitration, Vienna 2002, pp. 305-318 (cited as: EISELEN; in: §112)

FERNANDEZ ROZAS J. C., Anti-suit Injunctions Issued by National Courts – Measures addressed to the Parties or the Arbitrators, in: Gaillard E. (Ed.), IAI Series on International Arbitration No. 2, Anti-Suit Injunctions in International Arbitration, Juris Publishing, Inc. and Staempfli Verlag AG, Berne/New York 2005, pp. 73-85 (cited as: ROZAS; in: §31)

FERRARI F., Wesentliche Vertragsverletzung nach UN-Kaufrecht – 25 CISG, in: Internationales Handelsrecht – International Commercial Law – Zeitschrift für das Recht des internationalen Warenkaufs und -vertriebs (IHR), 2005, available on: http://25.cisg.info.content/publikation.php?id=4 (cited as: FERRARI, IHR 2005; in: §155)

FOUCHARD PH., Les travaux de la C.N.U.D.C.I., Le règlement d’arbitrage, J.D.I. 106 (1979), pp. 816-845 (cited as: FOUCHARD; in: §§38, 62)

GARRO A. M., Reconciliation of Legal Traditions in the U.N. Convention on Contracts for the international Sales of Goods, reproduced with permission from 23 International Lawyer (1989), pp. 443-483, available on: www.cisg.law.edu/cisg/biblio/garrro1.htlm (cited as: GARRO; in: §98)

GAUDEMET-TALLON H., Note – Cour de cassation (1re Ch. civ.) 20 décembre 1993 – Municipalité de Khoms El Mergeb v. société Dalico, in: Rev. arb. 1994 No. 1, pp. 118-125 (cited as: GAUDEMET-TALLON; in: §41)


- XII -

GROSS P., Competence of Competence - An English View, Arb. Int., Vol. 8 No. 2 (1992), pp. 205-214(cited as: GROSS; in: §15)

HOBÉR K., Parallel arbitration proceedings – Duties of the arbitrators, in: Cremades B.M./Lew D.M. (Ed.), Parallel State and Arbitral Procedures in International Arbitration, ICC Publishing, Paris 2005 (cited as: HOBÉR; in: §19)

KAHNEMANN D., Maps of bounded rationality: A perspective on intuitive judgement and choice, Price lecture 8 December 2002, Princeton University, Department of Psychology, Princeton, NJ 08544, USA, available on: http://nobelprize.org/nobel_prizes/economics/laureates/2002/kahnemann-lecture.pdf (cited as: KAHNEMANN; in: §145)

KRÖLL ST., Germany (2007), in: Paulsson J. (Ed.), International Handbook on Commercial Arbitration, Suppl. 48, Kluwer Law International, The Hague February 2007 (cited as: KRÖLL; in: §64)

KOCH R., The Concept of Fundamental Breach of Contract under the United Nations Convention on Contracts for the International Sales of Goods (CISG). Reproduced with permission of Pace ed., Review of the Convention on Contracts for the International Sale of Goods (CISG) 1998, Kluwer Law International (1999), pp. 177-354 (cited as: KOCH; in: §145)

LEW J. D. M., Anti-Suit Injunctions Issued by National Courts to Prevent Arbitration Proceedings, in: Gaillard E. (Ed.), IAI Series on International Arbitration No. 2, Anti-Suit Injunctions in International Arbitration, Juris Publishing, Inc. and Staempfli Verlag AG, Berne/New York 2005, pp. 25 et seqq. (cited as: LEW, Anti-Suit Injunctions; in: §31)

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

(cited as: LÉVY; in: §§86, 87)

LOQUIN E., Note – Cour de cassation (1re Ch. civile) 9 novembre 1993, in: J.D.I. 121 (1994), pp. 692-701 (cited as: LOQUIN; in: §66)

MOITRY J.-H./VERGNE C., Note – Cour d’appel de Paris (1re Ch. suppl.) 26 février 1988; Cour de cassation (1re Ch. Civile) 10 julliet 1990, in: Rev. arb. 1990 No. 4, pp. 851 et seqq. (cited as: MOITRY/VERGNE; in: §41)

MAZZOTTA F., Notes on the United Nations Convention on the use of Electronic Communications in International Contracts and its effects on the United Nations Convention on Contracts for the International Sale of Goods, in: Rutgers Computer & Technology Law Journal, Vol. 33, No. 2, 2007, pp. 252 et seqq.(cited as: MAZZOTTA; in: §§106, 107, 113)

PENGELLEY N., Separability Revisited: Arbitration Clauses and Bribery, Fiona Trust & Holding Corp. v. Privalov, in: Jnl. Int. Arb., Vol. 24 No. 5 (2007), pp. 445-454 (cited as: PENGELLEY; in: §65)

SAMUEL A., Separability of Arbitration Clauses – some awkward questions about the Law on Contracts, Conflict of Laws and the Administration of Justice, in: 9 ADRLJ (2000), p. 36 et seq. (cited as: SAMUEL, Questions; in: §64)


- XIII -

SAMUEL A., Separability in English Law – Should an Arbitration Clause Be Regarded as an Agreement Separate and Collateral to a Contract in Which It Is Contained?, in: Jnl. Int. Arb, Vol. 3 No. 3 (1986), pp. 95-110 (cited as: SAMUEL, Separability; in: §§51, 55)

SCHERER M./GIOVANNI T., Anti-Arbitration and Anti-Suit Injunctions in International Arbitration, in: Stockholm International Arbitration Review, Vol. 1 (2005), pp. 201-218 (cited as: SCHERER/GIOVANNI; in: §§80, 83)

SCHLOSSER P., Arbitral Tribunals or State Court - Who must defer to whom?, in: P. A. Karrer (Ed.), ASA Special Series No.15, Basel 2001, pp. 15 et seqq. (cited as: SCHLOSSER, ASA; in: §10)

SCHLOSSER P., La Nouvelle Législation Allmande sur L’Arbitrage, in: Rev. arb. 1998 No. 2, pp. 291-303 (cited as: SCHLOSSER, Législation; in: §10)

SCHWARTZ E. A., International Court of Arbitration of the International Chamber of Commerce, in: ICCA Congress Series No. 7, Kluwer Law International, The Hague 1996, pp. 207-212 (cited as: SCHWARTZ; in: §10)

SCHWEBEL ST., The Severability of the Arbitration Agreement, in: International Arbitration: Three Salient Problems, Grotius Publications Limited, Cambridge 1987, pp. 1-60 (cited as: SCHWEBEL; in: §§41, 44)

SCHWENZER I./MOHS F., Old Habits Die Hard: Traditional Contract Formation in a Modern World, in: Internationales Handelsrecht – International Commercial Law – Zeitschrift für das Recht des internationalen Warenkaufs und -vertriebs (IHR), 6/2006, pp. 239 et seqq. (cited as: SCHWENZER/MOHS; in: §98)

SCHRÖTER U. G., Der Antrag auf Feststellung der Zulässigkeit eines schiedsrichterlichen Verfahrens gemäß § 1032 Abs. 2 ZPO, in: SchiedsVZ 2004, Heft 6, pp. 288 et seqq. (cited as: SCHRÖTER; in: §10)

SERAGLINI CH., Note – Cour de cassation (1re Ch. civ.), 30 mars 2004, in: Rev. arb. 2005 No. 4, pp. 961-976 (cited as: SERAGLINI; in: §54)

SIEGRIST M., Die Bedeutung von Vertrauen bei der Wahrnehmung und Bewertung von Risiken, Arbeitsbericht, Nr. 197, September 2001 available on: http://elib.uni-stuttgart.de/opus/volltexte/2004/1887/pdf/AB197.pdf (cited as: SIEGRIST; in: §145)

SPAIC A., Approaching Uniformity in International Sales Law: Comparative Analyses of the Concept of Fundamental Breach under the UN Convention on Contracts for the International Sale of Goods (CISG), December 2006, available on: www.cisg.law.pace.edu/cisg/biblio/spaic.html (cited as: SPAIC; in: §§155, 158)

SVERNLÖV C. M., The Evolution of the Doctrine of Separability in England: Now Virtually Complete? The Doctrines of “Separability” of the Arbitration Agreement and “Compétence de la Compétence”, in: Jnl. Int. Arb., Vol. 9 No. 3 (1992), pp. 115-122 (cited as: SVERNLÖV; in: §§41, 55)

SVERNLÖV C. M./CARROLL L., What Isn’t, Ain’t, The Current Status of the Doctrine of Separability, in: Jnl. Int. Arb., Vol. 8 No. 4 (1991), pp. 37-50 (cited as: SVERNLÖV/CARROLL; in: §§41, 44, 46, 64)


- XIV -

VINCZE A., Remarks on whether and the extend to which the UNIDROIT Principles may be used to help interpret Article 16 CISG, available on: www.cisg.law.pace.edu/cisg/principles/uni 16.htlm

(cited as: VINCZE; in: §§98, 99)

WETTER J., The Importance of Having a Connection, Arb. Int., Vol. 3 No. 4 (1987), pp. 329-336(cited as: WETTER; in: §69)

ZIEGEL S./SAMSON C., Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods, available on: www.cisg.law.pace.edu./cisg/wais/db/articles/english2htlm (cited as: ZIEGEL/SAMSON; in: §§93, 144)


- XV -

Materials

New York Times (Special), Tagliabue J., 2 August 1985, Scandal over poisoned wine embitters village in Austria (cited as: New York Times, 2 August 1985; in: §§125, 136)

Commentary on the Draft Convention on Contracts for the International Sale of Goods prepared by the Secretariat; UN DOC. A/CONF. 97/5; available on: www.cisg-online.ch/cisg/materials-commentary.html (cited as: Secretariat Commentary; in: §§135, 141)

Documentation Austrian Wine 2005/2006, October 2005 Edition, available on: www.winesfromaustria.com (cited as: Documentation Austrian Wine; in: §§125, 155)

International Law Association, Conference Report Toronto 2006 (Final Report on lis pendens and Arbitration), available on: www.ila-hq.org/html/layout_committee.htm (cited as: ILA Report; in: §24)

Report of the UNCITRAL on the work of its eighteen session, Vienna, 3-21 June 1985, A/40/17, Discussion on individual articles of the ML-A draft text, UNCITRAL Yearbook, Vol. XVI (1985), United Nations, New York 1988, pp. 7-39

(cited as: UNCITRAL Report on ML-A; in: §21)

Secretariat of UNCITRAL, Seventh Secretariat Note: Analytical Commentary on Draft Text, A/CN.9/264, 25 March 1985 (cited as: Seventh Secretariat Note; in: §§60, 75)

Stuttgarter Zeitung online, Zum Wohl Glykol, 5 September 2007, available on: www.stuttgarter-zeitung.de/stz/page/detail.php/951412/r_article_print (cited as: Stuttgarter Zeitung, 5 September 2007; in: §125)

Verhandlungen des Deutschen Bundestages, BT Drucksache 13/5274 vom 12.07.1996, Entwurf eines Gesetzes zur Neuregelung des Schiedsverfahrensrechts, Bonn 1996 (cited as BUNDESTAG, GER; in: §20)


- XVI -

Cases

Argentina

Juzgado de Primera Instancia en lo Contencioso Administrativo y Tributario Nº 1 de Buenos Aires, 27 September 2004, Entidad Binacional Yacyretá (Argentina - Parguay) v. Eriday UTE, available on: www.diariojudicial.com/nota.asp?IDNoticia=22984

(cited as: Juzgado Admin. y Tribu., ARG, 2004; in: §32)

Austria

Oberster Gerichtshof, 20 March 1997, CISG-online No. 269 (cited as: OGH, AUT, 1997; in: §93)

Oberster Gerichtshof, 9 March 2000, CISG-online No. 573 (cited as: OGH, AUT, 2000; in: §93)

Oberster Gerichtshof, 27 February 2003, CISG-online No. 794, No. 2Ob48/02a (cited as: OGH, AUT, 2003; in: §§148, 151)

France

Cour de cassation (1re Chambre civile),10 July 1990, Société L & B Cassia v. société Pia Investments, Rev. arb. 1990 No. 4, pp. 851 et seqq.

(cited as: CdC, FRA, 1990; in: §42)

Cour de cassation, 23 January 1996, Savocini/Marazza v. Sté les fils de Henri Ramel/Sté Bonfils Georges/Sté Preau et compagnie, CISG-online No. 159, Arrêt n° 173, Pourvoi n°. 93-16.542 (cited as: CdC, FRA, 1996; in: §141)

Cour de cassation, 16 July 1998, CISG-online No. 344 (cited as: CdC, FRA, 1998; in: §§93, 95)

Cour d’appel de Grenoble (Chambre commerciale), 26 April 1995, Marques Roque Joachim v. S.a.r.l. Holding Manin Rivière, CISG-online No. 154, No. 93/4879 (cited as: CdA, FRA, 1995; in: §121)

Germany

Bundesgerichtshof, 11 December 1996, CISG-online No. 225 (cited as: BGH, GER, 1996; in: §99)

Bundesgerichtshof, 25 April 2006, Az.: ZB 20/05, available on: www.ra-kotz.de/fristwahrendertelefaxeingang.htm (cited as: BGH, GER, 2006; in: §§106, 107)

Oberlandesgericht Hamburg, 6 April 1978, in: Schlechtriem/Magnus, Art. 7 EAG No. 2 (cited as: OLG, GER, 1978; in: §95)

Oberlandesgericht Frankfurt am Main, 4 March 1994, CISG-online No. 110 (cited as: OLG, GER, 1994; in: §93)

Oberlandesgericht Düsseldorf, 24 April 1997, Calzaturificio Piceno di Roberto Catinari & Uvaldo Raccosta v. Vivace Mode GmbH, available on: www.unilex.info; No. 6U 87/96

(cited as: OLG, GER, 1997; in: §158)


- XVII -

Landsgericht München, 27 February 2002, CISG-online No. 654, No. 5HK O 3936/00 (cited as: LG, GER, 2002; in: §121)

Hong Kong

Supreme Court of Hong Kong, High Court, 29 October 1991, Fung Sang Trading Ltd. v. Kai Sun Sea Products & Food Co. Ltd., YCA, Vol. XVII (1992), pp. 289-304 (cited as: HC, HKG, 1991; in: §§38, 62)

India

Supreme Court, 16 August 1984, Renusagar Power Co. Ltd. (India) v. General Electric Company (U.S.), YCA, Vol. X (1985), pp. 431-449 (cited as: SC, IND, 1984; in: §42)

Switzerland

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

(cited as: BGer, SUI, 1993; in: §§38, 62)

Bundesgericht, 22 December 2000, Roland Schmidt GmbH v. Textil-Werke Blumenegg AG, CISG-online No. 628, No. 4C.296/2000 (cited as: BGer, SUI, 2000; in: §141)

Bundesgericht, 5 April 2005, I. Zivilabteilung, 4C.474/2004, available on: www.bger.ch (cited as: BGer, SUI, 2005; in: §§93, 95, 99)

Handelsgericht des Kantons Aargau, 11 June 1999, CISG-online No. 494, No. OR 98.00010 (cited as: HG Aargau, SUI, 1999; in: §112)

Handelsgericht des Kantons Zürich, 10 July 1996, CISG-online No. 227 (cited as: HG, SUI, 1996; in: §92)

Tribunale d’appello di Lugano, 29 October 2003, CISG-online No. 912 (cited as: TdA, SUI, 2003; in: §99)

United Kingdom

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

(cited as: CoA, GBR, 1993; in: §42)

House of Lords, 1942, Heyman v. Darwins, Ltd., A. C. 356, 1 All England Reports 337 (cited as: H.L., GBR, 1942; in: §42)

Queen’s Bench Division, 1954, Christopher Brown, Ltd. v. Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe registrierte G.m.b.H., 1 Q.B. 8, 1954 (cited as: Q.B., GBR, 1954; in: §15)

United States of America

United States Court of Appeals, 7th Circuit, 19 May 1982, Evra Corporation v. Swiss Bank Corporation, http://www-personal.umich.edu/~omri/Evra.pdf (cited as: CoA, USA, 1982; in: §§106, 107)


- XVIII -

United States Court of Appeals, 11th Circuit, 1992, Chastain v. Robinson-Humphrey Co., Inc., 957 F.2d 851 et seqq.(cited as: CoA, USA, 1992; in: §43)

United States Court of Appeals, 2nd Circuit, 6 December 1995, Delchi Carrier, SpA v. Rotorex Corp, CISG-online No. 140, No. 95-7182/6 (cited as: CoA, USA, 1995; in: §§157, 158)

United States Court of Appeals, 5th Circuit, 26 November 2003, Will-Drill Resources, Inc. v. Samson Resources Co., No. 02-31185, available on: http://caselaw.findlaw.com/data2/circs/5th/0231185cv0p.pdf(cited as: CoA, USA, 2003; in: §45)

United States District Court (S D New York), 14 April 1992, Filanto S.p.A. v. Chilewich international Corp., CISG-online No. 45 (cited as: USDC, USA, 1992; in: §95)

United States District Court (N D Illinois, Eastern Division), 7 December 1999, Magellan International Corporation v. Salzgitterhandel GmbH, CISG-online No. 439 (cited as: USDC, USA, 1999; in: §95)

United States District Court (S D New York), 10 May 2002, Geneva Pharmaceuticals Tech Corp. v. Barr Labs, Inc., CISG-online No. 653 (cited as: USDC, USA, 5.2002; in: §98)

United States District Court (Rhode Island), 3 September 2002, A.T. Cross Co. v. Royal Selangor(s) PTE, Ltd., YCA, Vol. XXVIII (2003), pp. 1005-1013 (cited as: USDC, USA, 9.2002; in: §31)


- XIX -

Awards

Ad Hoc Preliminary Award of 14 January 1982, Elf Aquitaine Iran v. National Iranian Oil Company, YCA, Vol. XI (1986),

pp. 97-105 (cited as: Ad Hoc Award, 1982; in: §38)

International Chamber of Commerce

ICC Case No. 6610, 1991, Interim Award, YCA, Vol. XIX (1994), pp. 162-166 (cited as: ICC, 1991; in: §3)

ICC Case No. 8887, April 1997, ICC Bull., Vol. 11, No. 1, 2000, p. 91 (cited as: ICC, 1997; in: §87)

ICC Case No. 10596, 2000, Interlocutory Award, YCA, Vol. XXX (2005), pp. 66-76 (cited as: ICC, 2000; in: §86)

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

(cited as: ICC, 2001, in: §§82, 86)

ICC Case No. 10947, June 2002, Interim Award, ASA Bulletin, Vol. 22 No. 2 (2004), Basel, pp. 308-332 (cited as: ICC, 2002; in: §21)

Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft (Vienna)

Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft, 15 June 1994, No. SCH-4366, Wien (Vienna), Austria (cited as: ISBW Vienna, 1994; in: §112)

Netherlands Arbitration Institute

Netherlands Arbitration Institute, 15 October 2002, Case No. 2319, CISG-online No. 780 (cited as: NAI, NLD, 2002; in: §144)


- 1 -

Statement of Facts

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

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

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

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

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

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

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

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

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

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

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

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

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

purchase 20,000 cases at a price of US$68 per case (Cl.Ex.No.4).

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

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

Mr. Cox’s immediate attention on his return (Cl.Ex.No.6).

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

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

18 June 2006 Mr. Wolf writes an e-mail to Mr. Cox in which he informs him that RESPONDENT

withdraws the purchase order of 10 June 2006 due to prominent articles about the

scandal in the production of wine in Mediterraneo in all of the morning’s newspapers

in Equatoriana (Cl.Ex.No.9). CLAIMANT’s server receives the message but does only

deliver it to Mr. Cox’s computer in the afternoon of 19 June 2006 due to a service

failure in the internal network (SoC, §10; PO2, Q.26).

19 June 2006 Mr. Cox signs RESPONDENT’s contract and sends it back by courier (Cl.Ex.No.8).

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

the newspaper articles were completely incorrect and notifies him of the first shipment

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

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

withdrawn its offer (Cl.Ex.No.11).


- 2 -

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

(Cl.Ex.No.12-13). Mr. Cox explains that CLAIMANT is still holding the wine and is

waiting for shipping directions.

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

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

6 July 2007 The Commercial Court of Vindobona (Danubia) informs CLAIMANT that RESPONDENT

has commenced an action requesting the Court to issue a decision stipulating that no

arbitration agreement existed between CLAIMANT and RESPONDENT (ASoC, §2).

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

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

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

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

stay the proceedings until the Commercial Court of Vindobona (Danubia) has ruled on

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

Summary of Argument

The following shall demonstrate in law and fact that:

the Tribunal should exercise its discretionary power and stay the arbitral proceedings [Issue 1];

no arbitration agreement has been validly entered into between the Parties [Issue 2];

RESPONDENT’s action before the Commercial Court of Vindobona (Danubia) is not in violation of

Art. 17(3) JAMS International Arbitration Rules and the Tribunal should not order RESPONDENT to

terminate its litigation in court [Issue 3];

a contract of sale was not validly concluded between the Parties [Issue 4]; and that

the wine offered by CLAIMANT was not in conformity with the contract and RESPONDENT could

therefore refuse to take delivery [Issue 5].


- 3 -

Arguments on the procedural issues

Issue 1: The Tribunal should stay the arbitral proceedings

1 RESPONDENT does not contest the Tribunal’s competence to determine its own jurisdiction, but in

order to avoid parallel proceedings, which would duplicate the costs and increase the risk of

conflicting decisions, RESPONDENT requests the Tribunal to find that it will grant a stay of the arbitral

proceedings while the action is pending before the Commercial Court of Vindobona (Danubia)

(hereinafter “Court”).

2 RESPONDENT accepts that the Danubian Arbitration Law (hereinafter “DAL”) is the so-called lex arbitri

(REDFERN/HUNTER, §2.14) and therefore applies to this arbitration. Danubia has enacted the

UNCITRAL Model Law on International Commercial Arbitration of 1985 (hereinafter “ML-A”) with a

single amendment to Art. 8 ML-A (SoD, §4).

3 According to Art. 8(3) DAL, it is at the arbitrators’ discretion to allow parallel proceedings before the

Court and the Tribunal. A tribunal would ordinarily stay its proceedings “where that appears to be the

just and convenient course to take” (ICC, 1991). CLAIMANT puts forth four arguments why the

Tribunal should not stay the arbitral proceedings. First, CLAIMANT relies on the Tribunal’s

competence-competence (MfC, §§15-17). Second, CLAIMANT alleges that the Parties have formed a

valid arbitration agreement (MfC, §§18-22). Third, it claims that the Tribunal should continue the

proceedings due to the fact that parallel proceedings are allowed (MfC, §§24-27). Fourth, CLAIMANT

asserts that the arbitral proceedings have moved to an advanced stage (MfC, §§28-30).

RESPONDENT rejects these allegations and requests the Tribunal to stay its proceedings. The reasons

for RESPONDENT’s position are as follows: First, the Court is competent to determine the Tribunal’s

jurisdiction in spite of the arbitrators’ competence-competence [I.]. Second, the Tribunal’s jurisdiction

is seriously in dispute [II.]. Third, the Tribunal should avoid inefficient and costly parallel proceedings

before the Tribunal and the Court [III.]. Fourth, the arbitral proceedings have not yet moved to an

advanced stage [IV.]. In addition, the Court can order a stay of the proceedings [V.].

I. The Court is competent to determine the Tribunal’s jurisdiction

4 A stay of the arbitral proceedings should be granted because the Tribunal’s competence-

competence is only relative [I.1]. Moreover, the Court has direct control anyway over the Tribunal’s

jurisdiction in spite of the latter’s competence-competence [I.2.].


- 4 -

1. The Tribunal’s competence-competence is only relative

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

determine their own jurisdiction” (FOUCHARD/GAILLARD/GOLDMAN, §650). This principle is nowadays

widely recognized and stipulated in various legislations in some form (DIMOLITSA, pp.227-240;

FOUCHARD/GAILLARD/GOLDMAN, §650; POUDRET/BESSON, §458). Danubia provides for the principle of

competence-competence in Art. 16(1) DAL as “[t]he arbitral tribunal may rule on its own jurisdiction

including any objections with respect to the existence or validity of the arbitration agreement”.

6 According to the principle of competence-competence, an arbitral tribunal has the power to rule on

its own jurisdiction (LEW/MISTELIS/KRÖLL, §14.13), which is, however, subject to the control of the

courts. The arbitrators’ competence-competence is thus qualified only as provisional or relative

(POUDRET/BESSON, §457; SCHLOSSER, Recht, §546; WENGER p.242), and the courts have the final

competence to determine the arbitrators’ jurisdiction (BERGER, Arbitration, pp.358-360).

7 The courts’ final competence is also provided in DAL. The court specified in Art. 6 DAL may set

aside an arbitral award if the arbitration agreement is not valid and, as a consequence, the arbitral

tribunal lacks jurisdiction to issue an award (Art. 34(2)(a)(i) DAL).

8 The Court is the designated instance according to Art. 6 DAL (PO2, Q.10) and is therefore

competent to make a final decision on the jurisdiction of the Tribunal. As RESPONDENT will show

below [§§9-12], the Court is allowed to determine the Tribunal’s jurisdiction not only after an arbitral

award has been issued, but also at an earlier phase of the arbitral proceedings up until the moment

when the Tribunal has been constituted.

2. The Court has direct control over the Tribunal’s jurisdiction in spite of the latter’s

competence-competence

9 Danubia is among those legislations that allow an arbitral tribunal’s jurisdiction to be directly

controlled by a court. According to Art. 8(2) DAL, a party is allowed to seize a court directly with a

declaratory action concerning the validity of the arbitration agreement and the jurisdiction of an

arbitral tribunal (POUDRET/BESSON, §483).

10 This form of direct control of a tribunal’s jurisdiction is also specified in the German Code of Civil

Procedure of 1998 (hereinafter “CCP-GER”), where the main function of direct control is to determine

the arbitrators’ jurisdiction at an early stage of the proceedings (SCHLOSSER, Législation, p.300;

SCHRÖTER, p.288) by using an accelerated and facilitated court procedure (SCHLOSSER, ASA, p.29).

As Art. 8(2) DAL is consistent with Art. 1032(2) CCP-GER (PO2, Q.2), the interpretation of

Art. 8(2) DAL can be inspired by the German approach. As pointed out by German commentators,

the plaintiffs do not have to show any additional legal interest in a declaratory judgment to support


- 5 -

their claim (LÜKE/WAX, MÜNCH, Art. 1032, §11; MUSIELAK, VOIT, Art. 1032, §12). The only condition is

that the claim must be lodged before the arbitral tribunal has been constituted, i.e. before the

chairperson accepts the nomination by the other arbitrators (BERGER, Experiences, p.45).

11 Prof. Dr. Presiding Arbitrator accepted the nomination as chairperson and the Tribunal was

constituted on 17 August 2007 (LPresArb-J), i.e. more than a month after RESPONDENT filed the

action with the Court on 4 July 2007 (PO2, Q.9). Therefore, the designated instance according to Art.

6 DAL, which is the Court (PO2, Q.10), has the competence to determine the jurisdiction of the

Tribunal according to Art. 8(2) DAL. As RESPONDENT will show below [§§28-29], the arbitral

proceedings are at an advanced stage. Thus, the main function of direct control can still be achieved.

12 In cases of direct control, the arbitration agreement is controlled directly by a court without prior

ruling by the arbitrators (POUDRET/BESSON, §483). Hence, the arbitrators’ competence-competence is

limited in Danubia if, as in the present instance, the Court is seized directly with a declaratory action.

13 Direct control according to Art. 8(2) DAL brings forward the moment at which judicial control over the

arbitrators’ jurisdiction is allowed to the very beginning of arbitral proceedings. If the Tribunal were to

find that a stay should not be granted, and rendered an award on its jurisdiction, this would not

prevent the Court from continuing its proceedings. As long as the Court has not decided on the

arbitrators’ jurisdiction, the arbitral proceedings are under constant threat that the proceedings,

including an award, will be declared null and void if the Court were to find that, in fact, no arbitration

agreement had validly been concluded between the Parties (SCHWAB/WALTER, §17.19).

14 Conclusion of I.: The Tribunal’s competence-competence is only relative since the Court has the

final competence to determine the arbitrators’ jurisdiction. Furthermore, the Tribunal’s jurisdiction is

under direct control of the Court. The Tribunal should therefore await a final decision of the Court.

II. The Tribunal’s jurisdiction is seriously in dispute

15 The Tribunal should stay the arbitral proceedings if it has serious concerns about the validity of the

arbitration agreement (HUSSLEIN-STICH, p.50) or “serious doubts as to its jurisdiction” (WEIGAND,

ROTH, p.1202). An English court held that if the arbitrators had “obviously […] no jurisdiction as, for

example, it would be if the submission [were not] properly executed, or something of that sort, then

they might [not be] going to go on with the hearing at all” (Q.B., GBR, 1954; GROSS, p.207).

16 RESPONDENT validly revoked its purchase order and no arbitration agreement was indeed ever validly

concluded between the Parties [Issue 2, §§62-68]. Therefore, RESPONDENT takes the position that

the Tribunal has no jurisdiction. The Tribunal itself discussed during the conference call on 1 October

2007 whether it should automatically stay the proceedings and it holds the view that it is not clear

whether an arbitration agreement is in existence or not (PO1, §7).


- 6 -

17 The Court will in all likelihood not affirm the jurisdiction of the Tribunal. The Court’s judgment would

prevail over an arbitral award and render the latter null and void (MUSIELAK, VOIT, Art. 1032, §14;

ZÖLLER, GEIMER, Art. 1032, §16).

18 In cases where the arbitration agreement itself is in dispute, and therefore, the Tribunal were in

doubt about its own jurisdiction, the Tribunal should exercise the discretion which Art. 8(3) DAL

allows it and “await the decision of the court before proceeding with the arbitration, in order to save

expense for the Parties if the court later ruled that the agreement was invalid” (BROCHES, Art. 8, §26).

III. The Tribunal should avoid parallel proceedings

19 Simultaneous proceedings bear the risk of unnecessarily duplicating costs and of arriving at

conflicting decisions (HOBÉR, p.243). The Tribunal should stay the arbitral proceedings until the Court

has had the possibility to rule on the arbitrators’ jurisdiction. Granting a stay, would allow the Tribunal

to avoid parallel proceedings before both the Court and the Tribunal on the latter’s jurisdiction.

20 As parallel proceedings are unwanted, an arbitral tribunal should, as a general rule, stay the arbitral

proceedings if an action according to Art. 8(2) DAL is pending before the competent court

(BUNDESTAG, GER, p.38; MÖNNIKES, p.48; THOMAS/PUTZO, REICHOLD, Art. 1032, §6). Parallel

proceedings may only be justified to avoid dilatory tactics, which in the present case clearly does not

apply [III.1.]. Furthermore, the Tribunal does not have priority to decide its jurisdiction in cases of

parallel proceedings even when arbitral proceedings are initiated first [III.2.].

1. RESPONDENT at no point intended to delay arbitral proceedings

21 The main function of Art. 8(3) DAL allowing parallel proceedings is to reduce the effects of dilatory

tactics (UNCITRAL Report on ML-A, §93). If no dilatory tactics are being used, a tribunal should

consider this to weigh in favour of a stay being granted (ICC, 2002, §47).

22 RESPONDENT’s intention was never to delay arbitral proceedings. RESPONDENT submitted its

Statement of Defense on 17 July 2007 and thus within the timeframe of 30 days (Art. 4 JAMS Rules)

and appointed an arbitrator (SoD, §20). By filing an action before the Court, RESPONDENT acted

within the legal scope of Art. 8(2) DAL.

23 Therefore, parallel proceedings are not justified and the Tribunal should suspend its proceedings.

2. The Tribunal does not have priority in cases of parallel proceedings

24 Two principles help to avoid parallel proceedings: lis pendens has a first-in-time rule and gives

priority to the court or tribunal first seized (ILA Report, §2.16), and forum non conveniens states that

the order in which proceedings were commenced is one of several factors to consider (ILA Report,


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§1.5). Parallel proceedings are unwanted as they entail the risk of conflicting decisions and involve a

duplication of costs.

25 Arbitral proceedings commenced with the request for arbitration being received by RESPONDENT

(Art. 21 DAL) on 22 June 2007, after the request was sent by JAMS to RESPONDENT on

21 June 2007 (LJ-R), i.e. prior to the action being filed with the Court on 4 July 2007 (PO2, Q.9).

Nevertheless, Art. 8(2) DAL explicitly allows the Parties to seize a court directly with a declaratory

action until the arbitral tribunal has been constituted [cf. §§10-11]. Even if Art. 8(2) DAL opens up the

possibility for parallel proceedings, they remain undesired and are only justified in exceptional cases.

It is therefore reasonable in such a case for either the Court or the Tribunal to suspend the

proceedings. As the relevant time until when a declaratory action is admissible is not the initiation of

the arbitral or judicial proceedings, but the moment of the constitution of the arbitral tribunal, Art. 8(2)

DAL contains a deviation from the first-in-time principles lis pendens and forum non conveniens. A

tribunal that has not yet been constituted should therefore stay its proceedings if a court is seized

with such an action.

26 Since the Court was seized prior to the constitution of the Tribunal, the Tribunal has no priority to

decide its own jurisdiction and should therefore stay its proceedings.

27 Conclusion of III.: RESPONDENT is allowed to obtain a declaratory judgment on the arbitrators’

jurisdiction by the Court as it at no point intended to delay arbitral proceedings. Parallel proceedings

before the Court and the Tribunal are therefore not justified. Moreover, the Tribunal does not have

any priority since court proceedings were initiated before the constitution of the Tribunal.

IV. The arbitral proceedings have not yet moved to an advanced stage

28 If the Tribunal were to stay its proceedings, this would not be inequitable or impractical since,

contrary to what CLAIMANT alleges (MfC, §§28-30), arbitral proceedings are not at an advanced

stage. Arbitral proceedings are considered to have reached an advanced stage if, e.g., the parties

have fully briefed their claims (SCHWARTZ, p.211).

29 The arbitral proceedings until now have only moved to the initial stage of written arguments and no

expensive or irreversible measures have been taken. If a stay were to be granted, arbitral

proceedings would halt at that point (PO1, §8) and oral hearings on the merits would, if at all, be held

later on. Moreover, neither the remedies put forth by CLAIMANT or the allocation of costs are yet

subject of discussion (PO2, scope of issues to be argued). Therefore, these proceedings cannot be

considered to have reached an advanced stage.


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V. The Court can order a stay of the arbitral proceedings

30 RESPONDENT requested the Court to order CLAIMANT, as an interim measure, not to pursue arbitration

pending the decision of the Court on the admissibility of arbitration (LR-J).

31 In the context of arbitration, so-called anti-suit injunctions can be requested to prevent the jurisdiction

of an arbitral tribunal (ROZAS, p.83). A court at the seat of arbitration can order the plaintiff in

arbitration to stay its arbitral proceedings (USDC, USA, 9.2002, §20; DE BOISSÉSON, p.65). According

to a general rule, a court is competent to order such injunction whenever it is “justified and

convenient to do so” (LEW, Anti-Suit Injunctions, p.27).

32 In an arbitration under the ICC Arbitration Rules of 1998 (hereinafter “ICC Rules”) with its seat in

Buenos Aires (Argentina), a court at the seat of arbitration has been seized to approve the terms of

reference (Art. 18 ICC Rules) and to order the suspension of arbitral proceedings until a decision is

reached in the former action. The judge approved the plaintiffs’ request to order a stay on the

grounds that the terms of reference are the “verdadera piedra basal de todo el proceso arbitral” - the

very foundation stone of the arbitral proceedings - and thus qualified its order as justified and

convenient (Juzgado Admin. y Trib., ARG, 2004, §9).

33 The arbitration agreement is also considered as ”the foundation stone of modern international

commercial arbitration” (REDFERN/HUNTER, §1.08), and it is therefore justified and convenient to

suspend the arbitral proceedings until the Court finally determines the Tribunal’s jurisdiction.

VI. Result of Issue 1

34 In order to avoid a duplication of costs and the risk of conflicting decisions, the arbitral proceedings

should be stayed. CLAIMANT relies on the Tribunal’s competence-competence. In doing so, it ignores

the fact that the Court has the final competence to determine the jurisdiction of the arbitrators at an

early phase of arbitral proceedings. RESPONDENT vigorously contests the existence of an arbitration

agreement and maintains that where the jurisdiction of the arbitration agreement is seriously in

dispute, the Tribunal should suspend its proceedings. Moreover, the Tribunal does not have any

priority in cases of parallel proceedings, which are not justified anyway since RESPONDENT never

intended to delay arbitral proceedings. Furthermore, these proceedings are not yet at an advanced

stage, contrary to CLAIMANT’s allegations. It should also be recalled that the Court is able to issue an

order preventing CLAIMANT from continuing with the arbitral proceedings.

35 Finally, the question of whether or not arbitration is admissible will be answered by the Court

anyway, since RESPONDENT would challenge an award on the ground that no arbitration agreement

had been effectively concluded. It would save time and money for the Tribunal to stay since the

question can already be answered during an early phase of the arbitral proceedings.


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Issue 2: No arbitration agreement was concluded between the Parties

36 The Tribunal is requested to find that no arbitration agreement was concluded between the Parties

and that, consequently, the Tribunal has no jurisdiction to consider the dispute (SoD, §19).

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

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

arbitration agreement. In the present case, the arbitration clause was contained in a purchase offer

that was, as will be shown in Issue 4 [§§89-117], revoked by RESPONDENT. Hence, no sales contract

containing an arbitration clause was concluded. As the principle of separability does not apply in the

present case, an arbitration agreement was not concluded either [I.]. Even if the principle of

separability were found to apply, the Parties did not consent to the arbitration clause [II.].

I. The principle of separability does not apply

38 According to the principle of severability or separability, an arbitration agreement has to be treated

separately from the main contract in which it is contained. It is therefore not affected by a defect in

the main contract as long as that defect does not affect the arbitration agreement itself (BGer, SUI,

1993, E.4.a; HC, HKG, 1991, §27; FOUCHARD, p.837; HOLTZMANN/NEUHAUS, p.480; POUDRET/BESSON,

§§163 et seq.). The application of the principle is widely recognized for cases where the validity of

the main contract is in dispute (Ad Hoc Award, 1982, §18; BORN, pp.67-68; LEW, Contemporary

Problems, p.77; LIONNET/LIONNET, p.181).

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

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

the principle of separability should also apply in this case (MfC, §19).

40 To begin with, it will be shown that the application of the principle of separability to the case where

the existence of the main contract is disputed is rejected by legal authors and case law [I.1.].

Second, the wording of Art. 16(1) DAL also excludes the application of the principle when the

existence is in dispute [I.2.]. Third, Art. 17.1 JAMS Rules cannot be relied upon to support the

application of the principle when the existence is in dispute [I.3.]. Fourth, the wording of the

arbitration clause does not support the application of the principle of separability either [I.4.]. Fifth, as

RESPONDENT revoked its purchase order, no contract containing an arbitration clause was concluded,

and, therefore, no arbitration agreement was concluded either [I.5.].


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1. The application of the principle of separability to the case where the existence of the

main contract is in dispute is rejected by legal authors and case law

41 Many authors have submitted that if the main contract has not even been concluded, the principle of

separability should not be applied, and that, therefore, the arbitration clause necessarily has no

effect (e.g. GAUDEMET-TALLON, p.121; MOITRY/VERGNE, pp.851 et seqq.; SCHWEBEL, p.11). For

example, the traditional view of English law holds disputes as to whether a contract containing an

arbitration clause was ever concluded to fall outside the scope of the arbitration clause regardless of

its wording (SVERNLÖV, p.116). In the United States, federal law has also not embraced the

separability of the arbitration agreement as to agreements alleged never to have been entered into

(SVERNLÖV/CARROLL, p.44).

42 The French Cour de cassation held that the autonomy of an arbitration clause finds its limit in the

existence of the main contract that contains the clause (CdC, FRA, 1990). The English judge

Hoffman, L.J., held that there “will obviously be cases in which a claim that no contract came into

existence necessarily entails a denial that there was any agreement to arbitrate. Cases of non est

factum or denial that there was a concluded agreement [...]” e.g. (CoA, GBR, 1993). With this

approach, he follows Lord Macmillan who held: “if there has never been a contract at all, there has

never been as part of it an agreement to arbitrate. The greater includes the less.” (H.L., GBR, 1942,

p.371; cf. also SC, IND, 1984, p.434).

43 To underline its argumentation, CLAIMANT cites the Prima Paint case (USA) which states that

arbitration clauses are severable from the contracts they are embedded in, regardless of claims that

the contract was defective (MfC, §19). CLAIMANT does not consider, however, that if a contract is

defective, its validity (as opposed to its formation or existence) is in dispute. The application of the

principle of separability to this case is not disputed. However, “Prima Paint has never been extended

to require arbitrators to adjudicate a party’s contention, supported by substantial evidence, that a

contract never existed at all.” (CoA, USA, 1992).

44 If the principle of separability were also to apply in cases where the existence of the main contract is

disputed, it would prescribe arbitration even if two parties had never met, but one of them alleged

there was a contract containing an arbitration clause or even if someone legally incompetent entered

into an agreement containing such a clause (SVERNLÖV/CARROLL, p.49). On the other hand, if the

principle does not apply, this does not mean that a party can obstruct arbitral proceedings. If there

clearly was a concluded contract, the other party can present prima facie evidence showing that the

contract was entered into, in which case the obstructing party would have to try to prove the contrary

(SCHWEBEL, p.11).


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45 CLAIMANT submits that it is difficult to distinguish between a contract that is void and one which never

came into existence (MfC, §19). However, the distinction is clear. If there was never a meeting of the

minds between the parties to conclude a contract, then it never came into existence. On the other

hand, if there was a consent, but the contract suffered from another defect, then this contract would

be void or voidable. The US Court of Appeals for the 5th Circuit made it very clear that this distinction

is important when determining the jurisdiction of an arbitral tribunal: “Even if the arbitrator concludes

that the agreement was void, [...], the agreement existed long enough to give the arbitrator the power

to decide the dispute. In contrast, where the very existence of an agreement is challenged, ordering

arbitration could result in an arbitrator deciding that no agreement was ever formed. Such an

outcome would be a statement that the arbitrator never had any authority to decide the issue.” (CoA,

USA, 2003, p.15). On these grounds the court rejected to apply the principle of separability when the

existence of the main contract is disputed. It stated that this is consistent with the US Supreme

Court’s pronouncements (CoA, USA, 2003, p.11).

46 To sum up, the doctrine of separability as to agreements alleged never to have been entered into is

not generally accepted in international arbitration (SVERNLÖV/CARROLL, p.49) and should indeed not

be accepted by the Tribunal in the present proceedings.

2. The wording of Art. 16(1) DAL excludes the application of the principle when the

existence of the main contract is in dispute

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

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

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

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

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

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

invalidity of the arbitration clause.”

48 The first sentence concerns the principle of competence-competence. The second and third

sentences concern the principle of separability. According to the latter two sentences, only a decision

that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. The

decision that the contract never came into existence is not mentioned. Therefore, the provision does

clearly exclude the application of the principle of separability to this case.

49 As BROCHES notes in his commentary on the ML-A, there is no record of any discussion in the

Commission of the precise meaning of separability in the context of Art. 16(1) ML-A (BROCHES, Art.

16, §14). According to BROCHES, it is common ground that the situation where the main contract has


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never come into being is an exception to the principle of separability (BROCHES, Art. 16, §15). Other

authors have also interpreted the provision as only meaning that the principle of separability applies

when the contract is invalid or has been terminated (CALAVROS, p.44; HUSSLEIN-STICH, p.38).

3. Art. 17.1 JAMS Rules cannot be relied on to support the application of the principle

when the existence of the main contract is in dispute

50 It will be shown that the JAMS Rules cannot be considered as no arbitration agreement was

concluded [II.3.a)]. In any event, Art. 17.1 excludes the application of the principle [II.3.b)].

a) The JAMS Rules cannot be considered as no arbitration agreement was concluded

51 RESPONDENT has proposed the application of the JAMS Rules for the case of arbitral proceedings in

the arbitration clause (Cl.Ex.No.5, §13). It will be shown that RESPONDENT has revoked the offer to

conclude an arbitration agreement [§§62-68]. Hence, the JAMS Rules do not apply. It is a circuitous

argument to evaluate the existence of an arbitration agreement by means of Rules that are proposed

in the very arbitration clause whose existence is in dispute (cf. also SAMUEL, Separability, p.101).

b) In any event, the wording of Art. 17.1 JAMS Rules excludes the application of the

principle of separability when the existence of the main contract is in dispute

52 The wording of Art. 17.1 JAMS Rules is similar to that of Art. 16(3) DAL. As submitted above [§§47-

49], it follows from the wording of the third sentence that the principle of separability only applies

when the main contract is claimed to be null and void, but not when it is claimed to be non-existent.

Hence, Art. 17.1 JAMS Rules also does not provide for the application of the principle to this case.

4. The wording of the arbitration clause does not support the application of the principle

of separability when the existence of the main contract is in dispute

53 CLAIMANT alleges that the claim that no arbitration agreement was concluded by the Parties is

contemplated by the arbitration clause’s reference to “formation” and “interpretation” (MfC, §13). With

such an argumentation, CLAIMANT uses the wording of the arbitration clause to support its view that

this very clause is in existence. This is again a circuitous argument that cannot be followed.

54 No element of a void contract can be used to heal the voidness of the whole contract as this element

is void on its own. It follows from general laws of logic that nothing can follow from nothing. An

arbitration agreement cannot derive its validity from itself (SERAGLINI, p.964). Therefore, the wording

of an arbitration clause cannot be argued to render the clause existent.

55 Furthermore, no arbitration clause, regardless of its wording, should have the power to prevent a

court from exercising jurisdiction to determine whether a contract has ever been concluded (SAMUEL,

Separability, p.96; SVERNLÖV, p.119).


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5. RESPONDENT revoked its purchase order, no contract containing an arbitration clause

was concluded and, therefore, no arbitration agreement was concluded either

56 CLAIMANT alleges that it accepted RESPONDENT’s purchase order of 10 June 2006 with its letter of

19 June 2006 and that this suffices to create a valid arbitration agreement (MfC, §7).

57 CLAIMANT does not consider RESPONDENT to have revoked its offer with the e-mail of 18 June 2006

(Cl.Ex.No.9). It will be demonstrated under Issue 4 that RESPONDENT’s offer of 10 June 2006 was

revocable and that the revocation reached CLAIMANT before it had dispatched its acceptance [Issue

4, §§89-117].

58 Conclusion of I.: It was demonstrated that the principle of separability shall not apply to the present

case. As no contract containing an arbitration clause was concluded between the Parties, no

arbitration agreement can be said to exist either. It follows from the laws of logic that nothing can

follow from nothing. RESPONDENT’s revocation deprived its offer of every effect. In the absence of an

offer, CLAIMANT cannot argue to have accepted any arbitration clause. Therefore, no arbitration

agreement was concluded between the Parties.

II. Even if the principle of separability were found to apply, the Parties did not

consent to the arbitration clause

59 If the Tribunal were to find that the principle of separability should apply in the present case, it would

have to determine separately the existence of an arbitration agreement. It will be demonstrated that

first, the CISG applies to the arbitration agreement [II.1.]. Second, the offer to conclude an arbitration

agreement was revoked [II.2.]. Third, the most minimal indication of the parties’ intent to arbitrate

does not justify bypassing the requirement of an existing arbitration agreement [II.3.].

1. The CISG applies to the arbitration agreement

60 Danubia has adopted the ML-A with a single amendment to Art. 8 (SoD, §4). The ML-A does not

contain a provision that instructs an arbitral tribunal as what law to apply in determining the validity of

the arbitration agreement. In the absence of a choice of law by the parties, an arbitral tribunal should

apply the law of the place of arbitration (Seventh Secretariat Note, Art. 16, A.3.; HUSSLEIN-STICH,

p.86; REDFERN/HUNTER, §§2.92 et seqq.). This interpretation is consistent with Art. V(1)(a) NYC,

which stipulates that the law of the country where the award was made has to be applied.

61 In the present case, the Parties did not specify any law to apply to their arbitration agreement (cf.

SoC, §15). Therefore, the law of Danubia as the place of arbitration applies. In contracts involving

one or more foreign parties, the courts in Danubia seek to apply the substantive law of the most

appropriate country for the formation of contracts (PO2, Q.7). In the present case, either the law of


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Mediterraneo, i.e. the seller’s country, or the law of Equatoriana, i.e. the buyer’s country, may be

applied. Both countries are party to the CISG (cf. SoC, §15). The CISG is implemented in the law of

a country that has ratified the Convention. Hence, the CISG applies if parties choose the law of a

state that is party to the Convention (BERNSTEIN/LOOKOFSKY, p.13; SCHLECHTRIEM, §20). It does

therefore not matter which country’s law applies as the analysis always results in the application of

the CISG.

2. The offer to conclude an arbitration agreement was revoked

62 As noted above [§37], RESPONDENT has revoked the purchase order containing the arbitration

clause. It was also noted above [§38] that, according to the principle of separability, an arbitration

agreement is not affected by a defect in the main contract as long as that defect does not affect the

arbitration agreement itself (BGer, SUI, 1993, E.4.a; HC, HKG, 1991, §27; FOUCHARD, p.837;

HOLTZMANN/NEUHAUS, p.480; POUDRET/BESSON, §§163 et seq.).

63 The principle of separability only means that the arbitration clause has to be examined as such, but

does not preclude the application of the general rules of contract formation to the arbitration

agreement (POUDRET/BESSON, §303). An arbitration agreement might therefore also be affected by a

material irregularity.

64 In the present case, RESPONDENT submits that, since the offer was effectively revoked, no aspect of

the offer could have been accepted by CLAIMANT, including the arbitration clause (SoD, §7).

Therefore, the defect of the main contract, which is that it never came into existence, also affects the

arbitration agreement itself as the arbitration clause was also revoked according to Art. 16(1) CISG.

If the parties have never agreed on the main contract, the arbitration clause will almost invariably

have suffered the same fate (KRÖLL, II.4.; SAMUEL, Questions, p.10; SVERNLÖV/CARROLL, p.38).

65 If a party clearly cannot be said to have consented to the arbitration agreement any more than to the

contract, then a court should deal with the matter (PENGELLEY, pp.449-450). RESPONDENT clearly

wanted to revoke every aspect of its offer, thus also to revoke the arbitration clause contained in the

offer. If RESPONDENT had not wished to include the arbitration clause in its revocation, it would have

declared so. Such a declaration was not made. Therefore, CLAIMANT could not accept the offer to

conclude an arbitration agreement with its letter of 19 June 2006 (Cl.Ex.No.8).

66 Consent requires a meeting of the parties’ minds. To be able to agree upon a fact, one first has to

have knowledge of it (cf. LOQUIN, p.695). Mr. Cox only learned about the offer and the arbitration

clause on 19 June 2006 (cf. Cl.Ex.No.6). He could not, therefore, agree on the arbitration clause

before that date. On 19 June 2006, however, RESPONDENT had already revoked its offer and did not


- 15 -

want to conclude an arbitral agreement anymore. Therefore, there was no meeting of the Parties’

minds at any time.

67 CLAIMANT alleges that, by filing a claim with the court stating that a contract was not concluded,

RESPONDENT used delaying tactics (MfC, §20). RESPONDENT strongly rejects this allegation. It has

always made its position clear that a contract was never concluded (Cl.Ex.No.11, 14). Therefore, the

filing of a claim with the court is not the result of delaying tactics but of being consistent.

68 To sum up, the offer to conclude an arbitration agreement was revoked and the Parties did not

consent to the arbitration clause at any time.

3. The most minimal indication of the parties’ intent to arbitrate does not justify bypassing

the requirement of an existing arbitration agreement

69 CLAIMANT argues that “the most minimal indication of the parties’ intent to arbitrate must be given full

effect, especially in the international context” (MfC, §8). RESPONDENT strongly rejects this argument.

The arbitration clause is the basis of all arbitral proceedings (WETTER, p.333; FOUCHARD/GAILLARD/

GOLDMAN, §44). CLAIMANT itself states that the agreement of the parties is the only source from which

the jurisdiction of the arbitral tribunal can come (MfC, §11). If the parties have not consented to an

arbitration clause and have therefore not concluded an arbitration agreement, then the court has

jurisdiction to consider the dispute. Alleging that a most minimal indication of the parties’ intent to

arbitrate is sufficient to oust the jurisdiction of state courts would be contrary to the most important

principles of arbitration. The requirements to oust this jurisdiction should not be set too low as the

right to have a court deciding on a dispute is nowadays granted as a general principle (cf. e.g.

Art. 6(1) ECMR). No party should be forced to participate in arbitral proceedings which it did not

consent to and be deprived of the possibility to file a claim with a state court. It is therefore irrelevant

when CLAIMANT refers to the JAMS Rules and the wording of the model clause (MfC, §9-10). The

only way to opt for arbitral proceedings is for the parties to consent to an arbitration agreement. If

such an agreement does not exist, then the tribunal has no jurisdiction to consider the dispute.

III. Result of Issue 2

70 RESPONDENT revoked its purchase order with its e-mail of 18 June 2006 (Cl.Ex.No.9). Therefore,

CLAIMANT could not have accepted the order and a contract does not exist. As the principle of

separability does not apply when the existence of the main contract is disputed, its non-existence

entails ipso jure the non-existence of the arbitration agreement. Even if the Tribunal were to find that

the principle of separability should apply in the present case, the offer to conclude an arbitration

agreement would also be revoked. Thus, no such agreement was concluded between the Parties.


- 16 -

The minimal indication of the parties’ intent to arbitrate does not suffice to submit a dispute to arbitral

proceedings. Therefore, the Tribunal has no jurisdiction to consider the dispute.

Issue 3: The Tribunal may not order RESPONDENT to stay its

proceedings before the Court

71 CLAIMANT submits that RESPONDENT has breached its agreement to abide by the JAMS Rules by

bringing an action before the courts of Danubia (MfC, §35). CLAIMANT requests the Tribunal to order

RESPONDENT to terminate its litigation in the Court (MfC, §37). RESPONDENT cannot accept

CLAIMANT‘s allegation: As Art. 8(2) DAL is of a mandatory character, RESPONDENT did not violate

Art. 7(3) JAMS Rules by filing a claim with the Court [I.]. Even if the Tribunal considers that

RESPONDENT acted abusively and violated Art. 17(3) JAMS Rules, the Tribunal does not have the

power to order RESPONDENT to stay its court proceedings [II.].

I. RESPONDENT did not violate Art. 17(3) JAMS Rules as Art. 8(2) DAL has to be

considered a mandatory provision

72 CLAIMANT maintains that Art. 8(2) DAL, which is in conflict with Art. 17(3) JAMS Rules, is non-

mandatory and could therefore be derogated by the Parties. RESPONDENT rejects this proposition and

submits that Art. 8(2) DAL is mandatory for the following reasons:

73 Only by affirming the mandatory character of Art. 8(2) DAL may the additional legal protection

granted by the DAL be achieved. While the principle of competence-competence allows arbitrators to

decide on their own competence and evaluate the validity of the arbitration agreement [cf. Issue 1,

§3], the principle does not exclude a state court verification of the arbitration agreement after a

tribunal has ruled on its own jurisdiction (CLAVEL, II.B.). Danubia, however, deliberately opted for a

different solution: the fact that Danubia explicitly departed from the ML-A by providing for an

additional state court intervention contained in Art. 8(2) DAL [cf. Issue 1, §§9-13] clearly shows that it

preferred to provide parties with additional legal protection from unjustified proceedings before

arbitral tribunals. In order to guarantee the applicability of Art. 8(2) DAL and the efficiency of that

additional legal protection by Danubia, Art. 8(2) DAL must be deemed to be mandatory.

74 Moreover, RESPONDENT should be entitled to have the Court decide on the jurisdiction at the very

beginning of the proceedings, since setting aside proceedings does not represent an equivalent

solution to RESPONDENT. Even if the award may be reviewed by the Court at a later stage, setting

aside proceedings only double the cost. Such proceedings appear superfluous in view of a direct

control such as that contained in Art. 8(2) DAL that would allow the question of the Tribunal’s


- 17 -

jurisdiction to be settled once and for all at the beginning of the dispute. An early denial of the

Tribunal’s jurisdiction obliges the Tribunal to stop its proceedings and would therefore save more

time and cost than setting aside proceedings. RESPONDENT should thus be entitled to have the Court

decide on the jurisdiction of the Tribunal at the very beginning of the proceedings.

75 It is CLAIMANT‘s position that Art. 8(2) DAL is not mandatory (MfC, §35), as it is not contained in the

list of mandatory provisions given by the UNCITRAL Secretariat (Seventh Secretariat Note p.45).

However, the official materials to the ML-A are irrelevant in the present case, as Art. 8(2) DAL was

added by Danubia and is not contained in the ML-A. It is thus inappropriate to apply the ML-A in

order to reach an interpretation of Art. 8(2) DAL.

76 These arguments show that Art. 8(2) DAL is mandatory. According to Art. 1(5) JAMS Rules, “the

Rules will govern the conduct of the arbitration except that where any of the Rules is in conflict with a

mandatory provision of applicable arbitration law of the place of the arbitration, that provision of law

will prevail”. As Art. 8(2) DAL is a mandatory provision of applicable arbitration law of the place of the

arbitration, this provision will prevail over the JAMS Rules and especially over Art. 17(3) thereof.

Thus, RESPONDENT did not violate Art. 17(3) JAMS Rules by initiating proceedings before the Court.

II. The Tribunal has no power to order CLAIMANT to stay its proceedings

77 Even if the Tribunal considers that RESPONDENT violated Art. 17(3) JAMS Rules, it is nonetheless not

empowered to order RESPONDENT to stay the proceedings before the Court. First, the arbitration

agreement and the DAL do not allow for anti-suit injunctions to be issued by arbitral tribunals [II.1.].

Alternatively, none of the conditions for ordering anti-suit injunctions are met in the present

case [II.2.]. Finally, the Tribunal does not have the authority to award costs and expenses [II.3.].

1. The Tribunal is not competent to order an anti-suit injunction

78 According to CLAIMANT, the Tribunal acts within the scope of the arbitration agreement by issuing an

order preventing RESPONDENT from court proceedings (MfC, §37), which is also a so-called anti-suit

injunction. However, CLAIMANT fails to mention the requirements for issuing an anti-suit injunction.

RESPONDENT will demonstrate that unlike the Court [cf. Issue 1, §§30-33], the Tribunal is not

empowered to issue such an injunction for the following reasons:

79 First, neither the JAMS Rules nor any agreement between the Parties allow for anti-suit injunctions

to be issued. Art. 27(3) JAMS Rules speaks of “inferences” the Tribunal may draw in certain

circumstances, but does not refer to anti-suit injunctions as an explicit means to assert such

“inferences”. Hence, there is no sufficient contractual basis for issuing anti-suit injunctions.

80 Second, while the 2006 text of the ML-A (hereinafter “ML-A(2006)”) might provide for anti-suit

injunctions to be issued in order to protect the arbitral proceedings in Art. 17(2)(b) ML-A(2006), there


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is absolutely no reason why Danubia’s current law should be interpreted in the light of a yet-to-be-

adopted model law, which is nothing more than soft law reflecting a “desirable development in the

law” (PO2, Q.1). Considering the fact that Danubia has not yet adopted the ML-A(2006), it appears

clear that Danubia consciously chooses not to vest arbitral tribunals with the power to issue anti-suit

injunctions. Art. 17 DAL only allows for arbitral tribunals to issue interim measures “in respect of the

subject matter of the dispute”, excluding those measures pertaining to the protection of the

arbitration proceedings itself (HUSSLEIN-STICH, p.101). Thus, the focus of Art. 17(3) DAL is clearly on

the preservation of goods and not on the issuance of anti-suit injunctions (HOLTZMANN, p.531, p.537;

HUSSLEIN-STICH, p.10; BROCHES, p.80). Some courts held that anti-suit injunctions were granted on

the basis of the exclusive jurisdiction of the arbitrator (SCHERER/GIOVANNINI, p.216). In this case,

however, Art. 8(2) DAL provides for the possibility of direct control by state courts. Hence,

Art. 8(2) DAL eliminates an exclusive jurisdiction of the Tribunal [cf. Issue 1, §§9-13]. As anti-suit

injunctions can only be granted on the basis of an exclusive jurisdiction of the Tribunal, the

competence of state courts to review an arbitral tribunal’s jurisdiction prior to the arbitral proceedings

according to Art. 8(2) DAL leaves no room for anti-suit injunctions to be directed against such state

courts. The Tribunal therefore has no power to order RESPONDENT to stay its court proceedings.

2. Alternatively, none of the conditions for ordering anti-suit injunctions are met

81 Should the Tribunal consider itself to be competent to order anti-suit injunctions, it should come to

the conclusion that none of the conditions commonly acknowledged for granting anti-suit injunctions

are met in the present case: RESPONDENT did not act abusively by initiating Court proceedings and it

is therefore not appropriate to order an anti-suit injunction in the present case [II.2.a)]. Furthermore,

it will be shown that the conditions for granting interim measures are not met [II.2.b)].

a) As RESPONDENT did not act abusively, it is inappropriate to order an anti-suit injunction

82 While the legal nature of anti-suit injunctions may be disputed, there is no doubt that the most

important characteristic of an anti-suit injunction is its remedial effect against abusive behavior

(POUDRET/BESSON, §1019). This was acknowledged for example in an arbitration under the ICC

Rules (ICC, 2001). The same principle is also known in common law systems under the “equitable

wrong” theory dealing with “oppressive and vexatious” behavior (CLAVEL, I.A.1.a).

83 In most instances, the party requesting the injunction would have to show that the proceedings it

seeks to restrain are abusive and that the enjoined proceedings have been initiated by a party in

violation of its obligations under the arbitration agreement (CLAVEL, I.A.1). It is conceivable that a

parallel action initiated after the inception of the arbitration is inconsistent with the obligation to act in

good faith even if it does not encroach on the arbitral tribunal’s jurisdiction (SCHERER/GIOVANNINI,


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p.217). It has already been shown above [§§72-76] that RESPONDENT did not breach its obligations

under the arbitration agreement, as Art. 8(2) DAL is mandatory and derogating from it therefore not

possible. Moreover, RESPONDENT consented to arbitration provided that the arbitration clause is

existent. As the existence of the contract and the arbitration agreement is disputed and since

Art. 8(2) DAL specifically entitles RESPONDENT to resort to the Court, RESPONDENT cannot reasonably

be expected to refrain from doing so. On the contrary, RESPONDENT would have acted abusively if it

had not contributed to the constitution of the Tribunal after initiating court proceedings, as in such a

case the intervention of a juge d’appui is usually required, implying a summary verification of the

arbitration agreement (so for example under Swiss Law, cf. WALTER, p.546). RESPONDENT therefore

did not act abusively or in violation of its contractual obligations by resorting to the Court.

84 According to the common law doctrine applied in the context of anti-suit injunctions, an action

brought before another court is usually “vexatious and oppressive” when it is initiated only with the

goal of depriving the other party of its rights by shifting its center of interest to another, usually

foreign court (CLAVEL, I.A.1.a). RESPONDENT‘s behavior is hardly vexatious and oppressive. Not only

is RESPONDENT legally entitled to resort to the Court according to Art. 8(2) DAL [cf. Issue 1, §§9-10],

but it also did so before the same court that is entitled to review the award in the same country where

the arbitral proceedings are taking place. As RESPONDENT‘s action is taking place before the Court,

i.e. the “natural forum” upholding the closest ties with the dispute (CLAVEL, I.A.1.a), it does not take

place outside CLAIMANT‘s center of interest, and can therefore not be called vexatious or oppressive.

85 Hence, RESPONDENT neither acted abusively nor was its action brought before the Court vexatious

and oppressive. Hence, it would be inappropriate to issue an anti-suit injunction in the present case.

b) Conditions for granting interim measures are not met

86 Should the Tribunal consider RESPONDENT to have acted abusively, it shall be shown that, in this

case, anti-suit injunctions still cannot be issued all the same. Anti-suit injunctions are generally

perceived to be a type of interim measure (ICC, 2001; LÉVY, p.121), and thus subject to the same

conditions. However, with regard to the different criteria usually mentioned in the context of interim

measures, there is one that is particularly important in the present case: according to legal doctrine,

the presence of a risk of substantial and irreparable harm in the absence of protection needs to be

obvious in order for a judicial authority to issue an interim measure (KAUFMANN-KOHLER/RIGOZZI,

§582; FOUCHARD/GAILLARD/GOLDMAN, p.721). The same is stated in Art. 17 A(1)(a) ML-A(2006),

which might be seen as reflecting current customary law and should be paid attention to, regardless

of the fact that Danubia has not yet adopted the ML-A(2006). In the present situation, however, the

presence of a substantial and irreparable harm cannot be confirmed. As RESPONDENT has the right to


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initiate state court proceedings according to Art. 8(2) DAL, the costs resulting from these

proceedings cannot constitute a damage. But even if they did, they would very easily be reparable at

a later stage. The present situation is entirely different from the ICC Case 10596, for example, which

was related to a material harm and did not imply any anti-suit injunctions. There is no “loss” to occur

which would have “to be prevented in the first place”, but a legal remedy offered by the DAL which

RESPONDENT is entitled to make use of (ICC, 2000). In any event, the cost of the court proceedings

would have to be compared to the costs resulting from the setting aside proceedings, which makes it

clear that the harm that would result to RESPONDENT is not substantially outweighed by the potential

harm incurred to CLAIMANT. Hence, the potential harm is not substantial and does not justify the use

of an anti-suit injunction.

3. The Tribunal does not have the authority to award costs and expenses

87 It was held in an arbitration under the ICC Rules that failure to comply with an anti-suit injunction

may cause a prejudice to the other party for which the arbitrators can order compensation (ICC,

1997; LÉVY, p.127). In the present case, however, the Tribunal does not have the authority to award

costs resulting from RESPONDENT‘s proceedings, as it is already lacking the authority to issue an anti-

suit injunction (LÉVY, p.127). Furthermore, as RESPONDENT acted in good faith and has the right to

resort to the Court, the costs resulting from these proceedings are not “unnecessary” and therefore

do not need to be compensated (LÉVY, p.127).


88 RESPONDENT did not violate the arbitration agreement as Art. 17(3) JAMS Rules is in conflict with the

mandatory provision Art. 8(2) DAL. Furthermore, the Tribunal may not order RESPONDENT to stay its

court proceedings, as the Tribunal is not empowered to do so in the present case. In any event, the

conditions for granting an anti-suit injunction are not fulfilled in the present case. Finally, the Tribunal

does not have the authority to award costs resulting from the court proceedings.

Arguments on the substantive law issues

Issue 4: The contract was not effectively concluded

89 It is undisputed between the Parties that the substantive law issues involved in the present case are

governed by the CISG (SoD, §2; MfC, §38).

90 Contrary to CLAIMANT’s allegations (MfC, §§4, 38 et seqq.), no sales contract was concluded on

10 June 2006. RESPONDENT submits that its letter of 10 June 2006 cannot be considered as an

assent to CLAIMANT’s alleged offer since it contains material modifications and therefore represents a


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counter offer [I]. Furthermore, RESPONDENT validly revoked its offer of 10 June 2006 on 18 June

2006 as the offer was revocable [II.1.] and the revocation reached CLAIMANT before it dispatched its

acceptance [II.2.]. Consequently, the sales contract was not effectively concluded on 19 June 2006.

I. No contract of sale was concluded on 10 June 2006

91 According to CLAIMANT’s submission, a valid contract of sales between the parties was already

concluded on 10 June 2006 on the basis that CLAIMANT’s letter of 1 June 2006 (Cl.Ex.No.3)

constituted an offer and therefore RESPONDENT’s letter of 10 June 2006 (Cl.Ex.No.4) would have

qualified as an acceptance (MfC, §§40-47). However, RESPONDENT will show that CLAIMANt’s

interpretation of the underlying facts cannot be followed.

92 Contrary to CLAIMANT’s allegation (MfC, §§44-47), no contract conclusion occurred on 10 June 2006

due to the modifications made by RESPONDENT in its purchase order of 10 June 2006 (Cl.Ex.No.5).

RESPONDENT’s modifications were of material character according to Art. 19(3) CISG. As a

consequence, Art. 19(2) CISG does not apply (HG, SUI, 1996, 3.a; ENDERLEIN/MASKOW/STROHBACH,

Art. 19, note 8).

93 To be effective, an acceptance must correspond to the offer which it purports to accept. This

traditional “mirror-image-rule” is embodied in Art. 19(1) CISG (OLG, GER, 1994;

BERNSTEIN/LOOKOFSKY, §§3-8, p.58; SCHLECHTRIEM, §91). An acceptance that does not mirror the

offer is no longer regarded as such and is deemed to be a counter offer (CdC, FRA, 1998; OGH,

AUT, 1997; OGH, AUT, 2000; BGer, SUI, 2005, E.2.2; ZIEGEL/SAMSON, Art. 19(2)).

94 Art. 19(3) CISG states that “additional or different terms relating to the price, payment, quality and

quantity of the goods, place and time of delivery […] or the settlement of disputes […] are considered

to alter the term of the offer materially”. In the present case two important modifications were made:

The first amendment concerned the quantity and price; the second involves the inclusion of an

arbitration clause (Cl.Ex.No.5, §13).

95 CLAIMANT’s offer of 1 June 2006 stipulated a 10% discount for an order of 10,000 cases (net price

US$ 72.00 per case) and a 15% discount for an offer of 20,000 cases (net price US$ 68.00 per case;

Cl.Ex.No.3). In its counter offer of 10 June 2006, RESPONDENT offered to purchase 20,000 cases of

Blue Hills 2005 at a price of US$68.00 per case to be delivered in four shipments whereof the fourth

shipment would be contingent upon a minimum of 12,000 cases having been resold by

25 September 2006 (Cl.Ex.No.5, §2). As a result, only 17,500 cases should be sold definitively, the

remaining 2,500 cases would only be sold if sales during the promotion went well. Such a variation in

reference to the quantity, to price conditions (USDC, USA, 1999; BGer, SUI, 2005, E.2.2; BRUNNER,

Art. 19, §3) and to the conditions of delivery (OLG, GER, 1978; SCHLECHTRIEM/SCHWENZER (E),


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SCHLECHTRIEM, Art. 19, §8) is qualified as material pursuant to Art. 19(3) CISG. In addition, by

introducing an arbitration clause, RESPONDENT made another modification regarding the settlement of

disputes, which by itself alters the terms materially (USDC, USA, 1992; CdC, FRA, 1998; BRUNNER,

Art. 19, §3; STAUDINGER/MAGNUS, MAGNUS, Art. 19, §16,). Finally, the Parties’ conduct in the further

course of the events after 10 June 2006 demonstrates that clearly neither CLAIMANT nor RESPONDENT

believed that at this moment a valid contract had been concluded. For example on 11 June 2006 Ms.

Kringle, assistant to Mr. Cox, informed Mr. Wolf by e-mail that “the purchase order will receive [Mr.

Cox’s] immediate intention on his return” (Cl.Ex.No.6).

96 Conclusion of I.: RESPONDENT’s letter of 1 June 2006 was not an acceptance but a counter-offer as

it contained modifications which altered the terms of the 1 June 2006 “offer” (Cl.Ex.No.3) materially.

II. RESPONDENT effectively revoked its offer on 18 June 2006

97 RESPONDENT will show that, contrary to CLAIMANT’s allegation, the offer of 10 June 2006 (Cl.Ex.No.4-

5) was effectively revoked on 18 June 2006 as it was revocable [II.1.] and the revocation reached

CLAIMANT before it had dispatched its acceptance [II.2.].

1. RESPONDENT’s offer was revocable

98 Art. 16 CISG is based on the principle that an offer is revocable (SCHLECHTRIEM, §80; VINCZE, 2.g;

NEUMAYER/MING, Art. 16, §1). In this respect the Convention corresponds with the Anglo-American

approach (SCHWENZER/FOUNTOULAKIS, Art. 16, p.145), which is counterbalanced by two exceptions

(GARRO, pp.5 et seqq.). First, an offer cannot be revoked if it indicates either by stating a fixed time

for acceptance or by other means that it is irrevocable according to Art. 16(2)(a) CISG

(SCHLECHTRIEM, §80; VINCZE, 3.l.-r.). The second exception (Art. 16(2)(b) CISG) corresponds in

general to the common law notion of promissory estoppel (USDC, USA, 5.2002, VI.B.;

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

a) RESPONDENT did not state a fixed time frame for acceptance

99 Contrary to CLAIMANT’s allegation (MfC, §§53-59), the first exception to the principle of revocability

does not apply in the present case. If – as in the present case (PO2, Q.7) – the parties are from

countries with different legal systems, the exact circumstances of the particular case must be taken

into account (Art. 8(2) CISG) in light of their dealing and usage (Art. 8(3) CISG), as well as the

understanding of a reasonable person, in order to determine the status of RESPONDENT’s offer (BGer,

SUI, 2005, E.3.3, 3.5; TdA, SUI, 2003; BGH, GER, 1996, II.1.b)aa); GARRO, p.6; SCHLECHTRIEM, §80;

VINCZE, 3.n.).


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100 CLAIMANT qualifies RESPONDENT’s statement “we would have to turn to another quality wine as the

featured item in our promotion if the contract conclusion were to be delayed beyond 21 June 2006”

(Cl.Ex.No.4) in connection with RESPONDENT’s tight schedule (Cl.Ex.No.4, 7) as an indication of a

fixed time frame for acceptance (MfC, §56). RESPONDENT strongly rejects this reasoning. When

referring to RESPONDENT’s tight schedule, Mr. Wolf simply made it clear that further delay would

cause some difficulties (SoD, §17). This however, cannot lead to the conclusion that there was an

intention on RESPONDENT’s part to make the offer irrevocable (SCHLECHTRIEM, §80). This is further

confirmed by the fact that the date (21 June 2006) of the e-mail containing the purchase order

(Cl.Ex.No.4) does not match the date (19 June 2006) when Mr. Wolf expected Mr. Cox to act upon

the offer (Cl.Ex.No.6) after he had exchanged e-mails with Ms. Kringle (Cl.Ex.No.6-7). The dates

mentioned in the correspondence between the Parties were not to be understood as indicating a

fixed time frame for acceptance. Their only purpose was to point out the urgency of the deal.

Therefore, it is clear that the offer was not irrevocable pursuant to Art. 16(2)(a) CISG.

101 In the e-mail of 10 June 2006 RESPONDENT does not create the impression that it would look for

another promotion wine only if the time limit expired. Thus, CLAIMANT cannot draw the e contrario

conclusion, that CLAIMANT would be RESPONDENT’s only potential contracting party should it only

accept RESPONDENT’s counter offer in time. The offer is therefore not deemed to be exclusively valid

until 21 June 2006. Furthermore, the date (i.e. 21 June 2006) was not mentioned in the contract form

itself (Cl.Ex.No.5). The wording concerning irrevocability was not sufficiently clear, but the different

indications concerning the dates only showed until which point in time RESPONDENT’s offer was to

remain effective. In the present case, the purchase order (Cl.Ex.No.5) constitutes a revocable offer

that remained effective, if it was not revoked before, until 21 June 2006.

b) CLAIMANT did not act in reliance on the offer being irrevocable

102 An act performed in reliance on the irrevocability of an offer might be indicated by a positive act, but

also by a failure to act (SCHLECHTRIEM/SCHWENZER (E), SCHLECHTRIEM, Art. 16, §11). An act

performed in reliance on the irrevocability of the offer may be indicated by: “commencing production,

undertaking of costly calculations, buying or hiring materials or equipment, concluding contracts for

that purpose, […], and a failure to act may be indicated; e.g. by a demonstrable failure to solicit

further offers” (BIANCA/BONELL, EÖRSI, Art. 16, 2.2.2). None of these examples apply in the present

case.

103 An act relying on the irrevocability of an offer must occur within the period between when the offer

reached the addressee and when the addressee is deemed to accept it, in casu between

10 June 2006 and 21 June 2006. CLAIMANT bases its argumentation concerning its acting in reliance


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solely on the fact that 3,000 cases, in addition to the 20,000 cases which “belonged” to RESPONDENT,

were still unsold on 18 June 2007 (MfC, §66; SoC, §14). Yet this does not support CLAIMANT’s

position, because an act of reliance would have had to have occurred one year earlier, during the

time period between 10 June 2006 and 21 June 2006. There is no evidence that CLAIMANT did act in

reliance on the offer or failed to solicit further offers during this time period.

104 Conclusion of 1.: RESPONDENT neither stated a fixed time frame for acceptance which would have

indicated the irrevocability of the offer, nor did CLAIMANT act in reliance upon the offer’s purported

irrevocability (Art. 16(2)(a)-(b) CISG). Consequently, RESPONDENT’s offer was not irrevocable and

could therefore be revoked according to Art. 16(1) CISG.

2. RESPONDENT’s revocation reached CLAIMANT before the acceptance was dispatched

105 Pursuant to Art. 16(1) CISG, an offer may be revoked by a declaratory act that reaches the

addressee before he has dispatched the acceptance. Art. 24 CISG defines the time when a

declaration “reaches” the addressee and distinguishes between declarations made orally and

declarations made by other means (HONSELL, SCHNYDER/STRAUB, Art. 24, §9; WITZ/SALGER/LORENTZ,

WITZ, Art. 24, §§8 et seqq.). RESPONDENT sent its revocation by e-mail. Electronic communication

falls within the scope of “other means” (SCHLECHTRIEM/SCHWENZER (E), SCHLECHTRIEM, Art. 24, §§9

et seqq.; WITZ/SALGER/LORENTZ, WITZ, Art. 24, §10).

a) The internal network failure lies within CLAIMANT’s sphere of control

106 Art. 24 CISG implements the receipt rule (prevailing view; see e.g. Guide to UNCITRAL Model Law

on Electronic Commerce 1996 §103 (hereinafter “Guide to ML-EC”); BIANCA/BONELL, FARNSWORTH,

Art. 24, p.202; NEUMAYER/MING, Art. 24, p.199). A paper jam in a fax machine or the defect in a

printer does not prevent a message from “reaching” the addressee (CoA, USA, 1982; HONSELL,

SCHNYDER/STRAUB, Art. 24, §26). These kinds of problems belong to the addressee’s sphere of

control (BGH, GER, 2006, (2./b)/aa)); BURGARD, p.83/84; MAZZOTTA, 3./(9.)/fn.212 et seqq.; HONSELL,

SCHNYDER/STRAUB, Art. 24, §26).

107 In the present case CLAIMANT had a software problem on 18 June 2006. The server was able to

receive messages from outside, but could not communicate with the various computers in the

internal network (PO2, Q.26; MfC, §50). This software problem was only corrected after an external

service company had repaired it in the afternoon of 19 June 2006 (PO2, Q.27; SoC, §10). A break

down in a company’s internal network is similar to the above mentioned problems concerning a

defect in the receiving apparatus. Such problems belong exclusively to the company’s sphere of

control (CoA, USA, 1982; BURGARD, p.83/84; CLEMENS, p.2001; MAZZOTTA, 3./(9.)/fn.212 et seqq.).

The operator of an internal network is responsible for its operability, especially when it has an


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employee who is a specialist in information technology (PO2, Q.27). Therefore the risk allocation is

clear; the error and responsibility lie within CLAIMANT’s sphere of control (BGH, GER, 2006, 2.b)aa);

BURGARD, pp.94-96; KRONKE/MELIS/SCHNYDER, BENICKE, §199). Hence, CLAIMANT’s assertion that

because of the server problem, RESPONDENT’s revocation reached CLAIMANT only after the

acceptance was dispatched (MfC, §52) is not correct.

b) Declarations placed in a business mailbox outside business hours “reach” the

addressee

108 Concerning the prevailing doctrine, the receipt rule embodied in Art. 24 CISG also applies if

communications are delivered outside of business hours (SCHLECHTRIEM/SCHWENZER (E),

SCHLECHTRIEM, Art.24, §14; STAUDINGER/MAGNUS, MAGNUS, Art. 24, §18).

109 This provision is specific to international business relationships, because the contracting parties may

have their seats in different time zones. As a consequence, the business hours in the seller’s country

may not match the business hours in the buyer’s country. If in international relationships the

business hours were of relevance, it would complicate the determination of the time of receipt of a

message sent to the contracting partner. But applying the receipt rule also to communications

delivered outside business hours makes it clear when the information is deemed to reach the

addressee. The rule is that if a message is received by a receiving apparatus’ outside of business

hours, it is deemed to have reached the addressee at the point in time it enters the receiving

apparatus belonging to the addressee (KAROLLUS, p.59, BRUNNER, Art. 24, §2; HONSELL,

SCHNYDER/STRAUB, Art. 24, §28).

110 In the present case, Mr. Wolf revoked RESPONDENT’s offer on a Sunday and sent the e-mail from his

home using his e-mail account at Super Markets (PO2, Q.28). The revocation of the offer

(Cl.Ex.No.9) was received by the server, i.e. a receiving apparatus, of CLAIMANT on Sunday 18 June

2006. Yet the contract was only signed and dispatched when Mr. Cox returned to his office in the

morning of 19 June 2006. Thus RESPONDENT had met the requirements of Art. 16(1) CISG, as the

revocation had reached CLAIMANT before the acceptance was dispatched.

c) RESPONDENT’s revocation needs not have been retrieved by CLAIMANT to become

effective

111 Even though CLAIMANT does not raise this point, RESPONDENT will demonstrate that the rule stated in

Art. 15 UNCITRAL Model Law on Electronic Commerce 1996 (hereinafter “ML-EC”), whereupon

receipt occurs only at the time when the data message is retrieved by the addressee if it is sent to an

information system, which does not correspond to the designated information system (hereinafter

“retrieve rule”), does not apply and is not to be taken into consideration in the present case.


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112 Questions concerning matters governed by but not expressly settled in the CISG must be interpreted

autonomously (HG, SUI, 1999, II.2.a; ISBW Vienna, 1994, 5.2.2). The question whether and when a

revocation made by e-mail reaches the offeree is governed by Art. 24 CISG but not expressly settled

in it (EISELEN, 2.2). Although the ML-EC has become domestic law in Equatoriana and Mediterraneo

(SoC, §15; PO2, Q.4), a recourse to it as a tool for interpretation or by virtue of the rules of private

international law (Art. 7(2) CISG) is not appropriate. Matters of interpretation of electronic

communications are to be settled in conformity with the general principles on which the CISG is

based (Art. 7(2) CISG). Such general principles are available, as demonstrated above [§§105-110].

113 Art. 15 ML-EC distinguishes between unilaterally designated specific information systems and non-

designated information systems (MAZZOTTA, 3.(6.) fn.149). The “retrieve-rule” only applies if a

specific information system is designated and the message in dispute is sent to a system other than

the designated information system (Art. 15(2)(a)(i)-(ii) ML-EC). In casu this could only be the case if

CLAIMANT’s post-box was the only designated information system, which it was not.

114 First, the ML-EC defines the term “information system” in Art. 2(f) ML-EC. Only the entire range of

technical means used for transmitting, receiving and storing information falls in the scope of

application of Art 2(f) ML-EC (Guide to ML-EC, §40). The ordinary post box is no technical means in

a common sense because it is destined neither for transmitting nor for storing information. As a

consequence, it cannot be viewed as an information system according to Art. 2(f) ML-EC. Therefore,

the ML-EC is not appropriate as a guideline for interpretation in the present case.

115 Second, an information system is deemed to be designated when a party specifies explicitly the

address to which the information must be sent to become effective. The mere indication of an e-mail-

or telecopy-address on a letterhead is not regarded as a designation of an information system

(Guide to ML-EC, p.55). In the present case, CLAIMANT and RESPONDENT had exchanged business

cards (PO2, Q.24) at the Durhan Wine Fair which included their e-mail addresses and their post

addresses. In the course of their pre-contractual communications, the Parties used e-mail

(Cl.Ex.No.4, 6) as well as letters to transmit information (Cl.Ex.No.1-3). The use of ordinary letters

was no more important for the Parties than the use of e-mails. Furthermore, it was CLAIMANT that first

sent a message by e-mail without an additional copy sent by courier (Cl.Ex.No.6). Such behavior

shows clearly that CLAIMANT did not unilaterally designate the post box as the applicable information

system. It follows that Art. 15 ML-EC cannot be taken into account which means the revocation

became effective on 18 June 2006 [§§105-110] prior to the dispatch of CLAIMANT’s acceptance.

116 Conclusion of 2.: RESPONDENT’s revocation reached CLAIMANT before it had dispatched its

acceptance. This conclusion is supported by the fact that the internal network problem lies within


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CLAIMANT’s sphere of control and that declarations placed in a business mailbox outside business

hours “reach” the addressee. The “retrieve-rule“ stated in Art. 15 ML-EC does not apply.


117 CLAIMANT and RESPONDENT did not effectively conclude a purchase contract since RESPONDENT’s

offer of 10 June 2006 was revocable. Irrevocability was neither induced by stating a fixed time frame

for acceptance (Art. 16(2)(a) CISG) nor did CLAIMANT act in reasonable reliance on the offer’s

irrevocability (Art. 16 (2)(b) CISG. Consequently, RESPONDENT was not excluded from the right to

revoke its offer. By sending the e-mail containing the revocation to CLAIMANT’s place of business on

18 June 2006, the requirements of Art. 16(1) CISG were met and the revocation reached CLAIMANT

before it dispatched its acceptance on 19 June 2006.

Issue 5: Blue Hills 2005 is not in conformity with the contract

118 As RESPONDENT has shown in Issue 4 [§§89-117], a contract has not effectively been concluded. If

the Tribunal comes to the contrary conclusion, RESPONDENT will demonstrate that Blue Hills 2005

was not in conformity with the contract [I.] and that this breach of contract is fundamental, which is

why RESPONDENT was allowed to avoid the contract and refuse to take delivery [II.].

I. Blue Hills 2005 was not in conformity with the agreed contractual

obligations

119 RESPONDENT submits that Blue Hills 2005 was not in conformity with the contract under Art. 35 CISG.

It will be shown that Blue Hills 2005 was not fit for the particular purpose as the lead of a promotion

for a supermarket (Art. 35(2)(b) CISG) [I.1.]. Contrary to CLAIMANT’s allegations, the terms of the

contract do not support CLAIMANT’s position (Art. 35(1) CISG) [I.2.]. Furthermore, Blue Hills 2005

would not have been fit for the purposes for which goods of the same description would ordinarily be

used (Art. 35(2)(a) CISG) [I.3.]. Moreover, as the wine had a hidden defect, CLAIMANT cannot put

forth Art. 35(2)(c) CISG (sale by sample) [I.4.].

1. The wine was not fit for the particular purpose as the lead of a promotion

(Art. 35(2)(b) CISG)

120 It will be shown that the Parties agreed upon a particular purpose [I.1.a)] and that CLAIMANT did not

fulfil its obligations arising out of this particular purpose [I.1.b)]. Additionally, RESPONDENT could also

rely on CLAIMANT’s skill and judgment that a wine containing chemicals such as those in Blue Hills

2005 would not be “an outstanding choice for a promotion of quality wines” (Cl.Ex.No.1) [I.1.c)].


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a) CLAIMANT knew of and confirmed the particular purpose the wine was intended for

121 Pursuant to Art. 35(2)(b) CISG, CLAIMANT is responsible for the fitness of the goods for the intended

purpose (CdA, FRA, 1995; LG, GER, 2002; SCHLECHTRIEM/SCHWENZER(D), SCHWENZER, Art. 35,

§18).

122 RESPONDENT intended to use “Blue Hills 2005” in a promotion of quality wines for their supermarkets.

RESPONDENT already stated this early on when the Durhan wine fair took place. In its first letter to

RESPONDENT, CLAIMANT itself states the following: “You indicated a particular interest in Blue Hills

2005 for the wine promotion you are planning.” (Cl.Ex.No.1) and it continues by stating: “You are

making a wise choice in choosing Blue Hills 2005 as the lead wine in your wine promotion.”

(Cl.Ex.No.3). These two citations alone prove that CLAIMANT recognised and accepted the intended

use of the wine for a promotion as a particular purpose. It is obvious that not every good is suitable

for use as a lead product in a supermarket’s promotion. In order to make a promotion worthwhile it

must incorporate certain outstanding attributes. CLAIMANT describes Blue Hills 2005 as “an

outstandingly fine wine in its price category” and “an outstanding choice for a promotion of quality

wines” (Cl.Ex.No.1). In its second letter to RESPONDENT, CLAIMANT reinforces its statement by saying

that Blue Hills 2005 “is an exceptionally fine wine” (Cl.Ex.No.3).

123 Additionally, a promotion is intended to advertise not only for the product in question, but also the

supermarkets in general. Promotions are a means of raising customers’ interests in the shops and

encouraging them to buy other products while trying the promoted good. Therefore, it is of special

concern for the promoter that the product should be flawless.

b) The wine offered by CLAIMANT does not fulfil the requirements resulting from the

particular purpose

124 Blue Hills 2005 is not suitable for its particular purpose because the wine had neither a clean image

[b)aa)] nor sufficient quality [b)bb)].

125 Contrary to CLAIMANT’s argumentation (MfC, §78), Blue Hills 2005 was not suitable for its particular

purpose because CLAIMANT could reasonably be expected to anticipate market prejudice and could

therefore foresee a future image harm to the wine. Further on CLAIMANT states that the buyer bears

the risk of all market changes (MfC, §78). However, in the present case there are no market

changes. The market for wine is still the same, the only difference is that the wine from Mediterraneo

is no longer saleable. The non-conformity of the product and its consequences for the demand were

clearly caused by CLAIMANT. This is why CLAIMANT could predict a scandal occurring and harming the

image of the wine, and this having consequences for the wine’s demand. The events in Austria in the

1980’s when the demand for Austrian wine completely collapsed (Documentation Austrian Wine,


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p.93), would lead one to expect the market in Equatoriana to react in the same way (The New York

Times, 2 August 1985; Stuttgarter Zeitung, 5 September 2007).

aa) A promotional wine requires a clean image

126 Contrary to CLAIMANT’s argumentation (MfC, §78), Blue Hills 2005 can be characterized as non-

conforming because of its damaged reputation.

127 As mentioned above [§121], promoted goods do not promote their own image, but also the image of

the supermarkets promoting it. A promotion includes presenting the product in an eye-catching way,

which means it will be examined attentively by potential customers. If the image of a promotion

product is not “clean”, this will usually cause more harm than if it were the image of a product offered

in the usual way. Therefore, having a clean image is an essential condition for fitness of a promotion

product, in this case the wine with the particular purpose of being used as a promotion wine.

128 Furthermore, the aim of a promotion is not only to present the promoter in an advantageous way, but

also the product itself and, in the present case, its country of origin. CLAIMANT states in its offer:

“…this is the first time our wine from Mediterraneo will be marketed in Equatoriana. I am pleased that

you are the launch customer” (Cl.Ex.No.8). So RESPONDENT’s promotion is at the same time a

promotion for Mediterraneo as a wine-producing country. It is incomprehensible to RESPONDENT why

CLAIMANT would even want to deliver a wine which does not have a completely clean image.

bb) A promotional wine must be of high quality for its price bracket

129 CLAIMANT’s argument that selling wine in a promotion is nothing else than using wine for its usual

purpose (MfC, §77) is not convincing. As shown above [§§125, 127], a promotion requires a product

to possess special attributes. This means that the leading wine for a promotion must be of higher

quality than the average quality needed for a usual sale.

130 Contrary to CLAIMANT’s allegation, it can make no difference whether RESPONDENT is a supermarket

chain or a highly specialized customer (MfC, §78). The agreement upon particular purpose has

nothing at all to do with the sector RESPONDENT operates in. If the reputation of a wine is damaged in

the public market this will affect not only the sales of highly specialized wine retailers, but also of

supermarket chains with wine departments.

131 Moreover, CLAIMANT itself qualifies Blue Hills 2005 as “an outstandingly fine wine in its price

category”, which makes it “an outstanding choice for a promotion of quality wines” (Cl.Ex.No.1, 3).

RESPONDENT could therefore expect the wine to be at the top in its price bracket and could also be

marketed under this title. CLAIMANT cannot be followed as far as it states that RESPONDENT’s

expectations of superior wine are not legitimate. RESPONDENT never expected a superior wine as

such, but only a superior one in its price category.


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132 The price alone is not the decisive factor to answer the question of quality. It cannot be followed from

a well-priced wine that it is of bad quality. Different criteria need to be taken into consideration to

calculate the price, e.g. the length of storage, the law of supply and demand, cost of production, etc.

Moreover, US$ 5.65 is just the purchase price and not the retail-price for the customers. In the light

of the above, RESPONDENT was entitled to expect a high quality wine for the price paid.

c) RESPONDENT could rely on CLAIMANT’s judgement

133 Contrary to CLAIMANT’s argumentation (MfC, §79), RESPONDENT could rely on CLAIMANT’s judgement

according to Art. 35(2)(b) CISG.

134 Although RESPONDENT sent its specialists to the Durhan Fair, RESPONDENT could rely on CLAIMANT’s

judgement that Blue Hills 2005 would be fit for a promotion (Cl.Ex.No.1, 3). As a rule, there will be

such reliance if the seller is an expert in the production of goods for the particular purpose intended

by the buyer, or presents himself to the buyer as such. The fact that the buyer is knowledgeable in

the particular area does not nullify its reliance (HG, SUI, 2002; SCHLECHTRIEM/SCHWENZER (E.),

SCHWENZER, Art. 35, §23). In any case, the seller has the burden to prove that it was unreasonable

for the buyer to rely on the seller’s skill and judgement (HONNOLD, Art. 35, §226).

135 Undisputedly CLAIMANT had more knowledge than RESPONDENT and RESPONDENT could not be aware

of the production process and had no reason for suspicion. If the seller knows that the goods ordered

by the buyer will not be satisfactory for the particular purpose for which they are intended, the seller

has to disclose this fact to the buyer. This already follows from the principle of good faith according

to Art. 7(1) CISG (Secretariat Commentary, Art. 33, §9; BRUNNER, Art. 35, §15; HONSELL, MAGNUS,

Art. 35, §23; KAROLLUS, p.117; STAUDINGER/MAGNUS, Art. 35, §35) and the principle of fairness

(BIANCA/BONELL, BIANCA, Art. 35, p.274).

136 CLAIMANT, as an experienced wine producer, must know of the scandal caused by the use of

diethylene glycol in wine in Austria in 1985. The New York Times wrote at that time: “Millions of

gallons of Austrian wine suspected of being laced with diethylene glycol, […], have been removed

from stores in Austria and countries around the world. […] the scandal it caused has cast a long

shadow over Austrian winegrowing towns.” (New York Times, 2 August 1985). He could therefore

not be unaware of the fact that, if made public, the use of diethylene glycol in the production of Blue

Hills 2005 would turn into a big scandal. In addition, CLAIMANT should have informed RESPONDENT of

the fact that diethylene glycol was added to Blue Hills 2005.

137 Given the above, it has to be assumed that CLAIMANT knew that Blue Hills 2005 is not at all suitable

for a promotion. The apparent risk of a fatal image loss for RESPONDENT if, as seems most likely, it

had emerged that diethylene glycol was used, could not be ignored by CLAIMANT. It is simple


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common sense that a wine containing additives such as diethylene glycol will not be proper a hit in a

promotion after it has received such bad publicity.

138 Conclusion of 1.: According to the above said, CLAIMANT was aware of the particular purpose

intended by RESPONDENT. Blue Hills 2005, with its bad image, does not fulfil this purpose.

2. The terms of the contract do not support CLAIMANT’s position (Art. 35(1) CISG)

139 Contrary to CLAIMANT’s allegations (MfC, §68), the present case cannot be subsumed under

Art. 35(1) CISG. The terms of the contract do not include any terms which could support CLAIMANT’s

position that the wine would be in conformity with the contract. The contract had no explicit quality

definitions, but that does not mean that there are no quality requirements at all. From the beginning

of their business relationship (Cl.Ex.No.1, 3), RESPONDENT made known to CLAIMANT that Blue Hills

2005, the object of the contract, was needed for a promotion. Therefore this promotion is a special

purpose which was made expressly known to CLAIMANT and has to be subsumed under

Art. 35(2)(b) CISG. CLAIMANT would not have stressed the outstanding attributes of the wine by

saying that Blue Hills 2005 was a wise choice as a lead wine in RESPONDENT’s promotion of quality

wines if it did not know and accept that promotion requires a special quality.

3. Blue Hills 2005 is not fit for the ordinary purpose (Art. 35(2)(a) CISG)

140 Should the Tribunal come to the conclusion that a promotion is not a particular purpose, i.e. does not

require a certain quality, RESPONDENT will demonstrate that Blue Hills 2005 was not even fit for the

ordinary purpose under Art. 35(2)(a) CISG.

141 Delivered goods are fit for ordinary use as long as they have normal qualities, i.e. the characteristics

normally required for such goods as described by the contract, and are free from defects not

normally expected in such goods (CdC, FRA, 1996; BGer, SUI, 2000; Secretariat Commentary,

Art. 33, §5, BIANCA/BONELL, BIANCA, Art. 35, §2.5.1.).

142 CLAIMANT alleges that the ordinary purpose of wine is that it can be consumed (MfC, §75). However,

in the present case, this aspect is of no relevance because RESPONDENT is not the end-customer but

an intermediary. This is why Blue Hills 2005 must primarily be fit for its commercial purpose, what

first of all means that it must be possible to resell the goods to the end-customers. Consumer goods

must demonstrate such quality and performance as is usual in goods of the same nature and which

the consumer could reasonably expect (SCHLECHTRIEM/SCHWENZER (E), SCHWENZER, Art. 35, §14).

This is all the more important as we are talking about wine as a semi-luxury product. Furthermore, it

is not sufficient that the goods are merchantable in a general way, they have to be honestly

resaleable (HERBER/CZERWENKA, Art. 35, §4; STAUDINGER/MAGNUS, Art. 35, §19).


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143 Despite CLAIMANT’s opinion (MfC, §75), it is not only compliance with public law standards, which is

undisputed, that is relevant, but many further aspects have to be taken in consideration as well.

144 Fitness for resale means that generic goods must be of average quality (SCHLECHTRIEM/SCHWENZER

(D), SCHWENZER, Art. 35, §15; HERBER/CZERWENKA, Art. 35, §4). The Netherlands Arbitration Institute

decided that average quality has to be defined under the aspect of the reasonable expectations of

the buyer (NAI, NLD, 2002; ACHILLES, Art. 35 §6; AUDIT, p.95; see also: BRUNNER, Art. 35, §8;

STAUDINGER/MAGNUS, Art. 35, §18). To test merchantability, it has to be judged whether a reasonable

buyer, knowing the defects, would have bought the goods without a price reduction (ZIEGEL, Art. 35,

2(3)).

145 In Mediterraneo there was only a slight drop in sales after the scandal (PO2, Q.21). But the market of

Mediterraneo cannot be compared with that in Equatoriana. In Mediterraneo Blue Hills 2005 is a

well-known wine, but in Equatoriana it is wholly unknown. In fact, RESPONDENT would have been the

first dealer to sell it (Cl.Ex.No.8). It is generally known that customers also take emotions into

consideration when it comes to purchasing decisions (KAHNEMANN, p.462). The average reader of a

newspaper does at first not question the presented facts and people in general are more sensitive

towards negative news (SIEGRIST, p.14). Anyway, there was no reason to question the articles on

Mediterranean wine because the content of the articles was in fact true. Mr. Ericson’s Report does

not change this fact (Cl.Ex.No.13). Anyway customers are not really interested in the not undisputed

(Cl.Ex.No.14) fact presented by CLAIMANT that Blue Hills 2005 poses no health risk (Cl.Ex.No.13).

For customers the most relevant fact is that an unusual substance, which can be used as antifreezer

was added to the wine. It is this that makes them hesitate to buy the wine.

146 Blue Hills 2005 as a wine is an unascertained good. Customers do not depend on this particular

wine. As there is such a huge variety of wines, they will simply choose another one. Nobody wants to

drink a wine to which such a chemical substance as diethylene glycol has been added. The reaction

of much of the world to the scandal in Austria is that many countries regulated which additives to

wine are legal, and diethylene glycol is not one of them (among others: EC-Reg. on Oenology,

Annex IV; SUI-Reg. on alcoholic beverages, Annex I; FFDCA-USA, Sec. 402 lit. a).

4. Blue Hills 2005 does not conform with Art. 35 (2)(c) CISG

147 RESPONDENT submits that the examination of the present case under Art. 35(2)(c) CISG is

superfluous [4.a)], and in any event that it featured a hidden defect [4.b)].


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a) As Blue Hills 2005 is not fit for the particular and the ordinary purpose, an examination

under Art. 35(2)(c) is superfluous

148 If the goods, i.e. a sample, are not fit for the ordinary purpose, the seller cannot argue that the goods

possess all the qualities of the sample (OGH, AUT, 2003; LG, GER, 1994; SCHLECHTRIEM/

SCHWENZER (E), SCHWENZER, Art. 35, §25). Additionally, if the seller confirms that the goods are fit

for a particular purpose and the buyer is unable to check this by reference to the sample, Art.

35(2)(b) CISG must take priority (SCHLECHTRIEM/SCHWENZER (E), SCHWENZER, Art. 35, §25).

149 As shown above [§§120-145], Blue Hills 2005 is not fit for the particular purpose, let alone for the

ordinary purpose. As the Parties explicitly agreed on a particular purpose and did not consent to a

below average quality, it is evident that an examination under the sale by sample would be

superfluous (HUBER/MULLIS, MULLIS, p.141).

b) Blue Hills 2005 features a hidden defect

150 If there is a hidden defect inherent in the sample, even goods conforming to the sample cannot meet

the requirements of Art. 35(2)(a) CISG (STAUDINGER/MAGNUS, Art. 35, §37).

151 The fact that the wine contained diethylene glycol could not have been detected by RESPONDENT

during the wine fair because diethylene is only detectable in an elaborate laboratory process

(Cl.Ex.No.13). Diethylene glycol, as an ingredient in wine, is not detectable in a reasonable

examination and therefore constitutes a hidden defect (OGH, AUT, 2003).

152 Conclusion of I.: Blue Hills 2005 did not fulfil the requirements specified in Art. 35 CISG. It is neither

fit for the particular purpose as a promotion wine, nor would it be suitable for usual sale in a

supermarket. Due to the non-conformity of the goods with the ordinary purpose (Art. 35(2)(a) CISG),

CLAIMANT cannot argue a sale by sample (Art. 35(2)(c) CISG). Even if Art. 35(2)(c) CISG were

applicable, there would be a breach of this provision because diethylene glycol constitutes a hidden

defect.

II. There is a fundamental breach of contract and therefore RESPONDENT was

entitled to refuse to take delivery

153 In the following, RESPONDENT will demonstrate that the breach of contract is a fundamental one (Art.

25 CISG). As a consequence, RESPONDENT was entitled to refuse delivery. A fundamental breach is

given as soon as a party suffers from substantial deprivation [II.1.]. In cases where the breach

cannot be based on any explicit contractual obligation (Art. 35(1) CISG), it must have been

foreseeable for the seller at the time of the contract conclusion (BRUNNER, Art. 25, §§9 et seq.;

SCHLECHTRIEM/SCHWENZER (E), SCHWENZER, Art. 25, §11) [II.2.].


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1. Blue Hills 2005 substantially deprives RESPONDENT of what it could expect under the

contract

154 CLAIMANT states that RESPONDENT never alleged a substantial deprivation and that in any event the

breach of contract can therefore not be fundamental (MfC, §82). This allegation cannot be followed.

RESPONDENT would not have revoked the offer if the offered wine had not substantially deprived

RESPONDENT of what it could expect under the contract.

155 To determine whether a party has suffered substantial deprivation, the focus is on whether or not the

purpose of the contract has been frustrated by the breach (FERRARI, IHR 2005, p.3). If goods do not

possess the features necessary for the purpose specified in the contract or deduced by

interpretation, and the sale of the goods is thus not possible, a fundamental breach has been

committed (KOCH, p.219; SPAIC, fn.296; HUBER/MULLIS, HUBER, p.214). It is sufficient that this

substantial deprivation is impending (STAUDINGER/MAGNUS, Art. 25, §11). CLAIMANT must be aware of

what happened in Austria where, as in the present case, diethylene glycol had been added to wine. It

took several years until wine from that region could be exported again (Documentation Austrian

Wine, p.93). In the present case, one can reasonably expect a similar development, and CLAIMANT

does not present any facts implying anything else.

156 For the above reasons, RESPONDENT would suffer substantial deprivation if it was forced to take

delivery of the wine, as it would not be able to sell it as a promotional wine in Equatoriana.

2. This substantial deprivation could have been foreseen by CLAIMANT

157 A breach of contract which substantially deprives the party of what it could expect under the contract

will be qualified as a fundamental one if the substantial deprivation was objectively foreseeable for

the seller (CoA, USA, 1995; STAUDINGER/MAGNUS, Art. 25, §14).

158 Pursuant to Art. 25 CISG, the time of the conclusion of the contract is relevant for the determination

of foreseeability. It has to be judged from the point of view of a person of the same kind in the same

circumstances (OLG, GER, 1997; CoA, USA, 1995; SPAIC, fn.194, 252 et seq.;

SCHLECHTRIEM/SCHWENZER (E), SCHWENZER, Art. 25, §15; STAUDINGER/MAGNUS, Art. 25, §§16, 19).

In the present case, this would be any wine producer in Mediterraneo.

159 As a person acting in a certain field, one certainly is (or should be) informed about international

developments in that business. CLAIMANT can therefore not allege that it could not foresee that

demand for wine from Mediterraneo would decline if it is produced in the region where wine had

been chemically sweetened. This is first a normal, foreseeable reaction. Second, the same thing has

happened before in another country and the consequences are widely known. After the scandal in

Austria, no reasonable wine producer would ever again use this additive.


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160 This leads RESPONDENT to the assumption that CLAIMANT must have known what had happened in

Austria. CLAIMANT used a chemical with no own smell and kept it a secret because, in fact, CLAIMANT

probably did know what would happen if its practices were made known to the public.

161 Conclusion of II.: CLAIMANT’s breach of contract was substantial since taking delivery of Blue Hills

2005 would have caused RESPONDENT substantial detriment, and this was foreseeable for CLAIMANT.

Therefore, RESPONDENT was entitled to refuse to take delivery according to Art. 49(1)(a) i.c.w. Art. 25

and Art. 81 CISG.


162 RESPONDENT has shown that Blue Hills 2005 was not in conformity with its contractual obligations.

Blue Hills 2005 is fit for neither the particular purpose nor the ordinary purpose. The examination of

Art. 35(2)(c) CISG can be omitted and in any event, sale by sample is not applicable due to the

inherent hidden defect in Blue Hills 2005. Furthermore, it follows from the fundamental breach of

contract by CLAIMANT that RESPONDENT was entitled to refuse to take delivery.

Relief sought

163 In the light of the above submissions, RESPONDENT respectfully requests the Tribunal:

to grant a stay of the arbitral proceedings [Issue 1];

to dismiss the claim brought by CLAIMANT on the ground that no arbitration agreement had been

validly concluded between the Parties and, therefore, the Tribunal has no jurisdiction to hear the

dispute if it should find to continue the arbitral proceedings [Issue 2];

to find that RESPONDENT is not in violation of its obligations towards CLAIMANT and towards the

Tribunal by commencing litigation in the Court if the Tribunal should find that an arbitration

agreement was validly entered between the Parties [Issue 3];

to find that the contract of sale has not been effectively concluded [Issue 4]; and

to find that Blue Hills 2005 was not in conformity with the contract, or, in the case of an opposite

conclusion, that there is a fundamental breach of the contract if the Tribunal should find that a

contract of sale was validly entered between the Parties [Issue 5].


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Certificate

Berne, 17 January 2008

We herby confirm that this Memorandum was written only by the persons whose names are listed

below and who signed this certificate. We also confirm that we did not receive any assistance during

the writing process from any person that is not a member of this team.

____________________ ____________________Fabienne Claudon Christian Dreier

____________________ ____________________Aylin Erb Isabelle Ganz

____________________ ____________________Alain Muster Leonora Schreier

Documents

Memorandum for Respondent - Portal · 2020. 2. 7. · Memorandum for Respondent University of Berne - II - 5. RESPONDENT revoked its purchase order, no contract containing an arbitration