MEMORANDUM FOR RESPONDENTTWENTY-SIXTH ANNUAL WILLEM C. VIS INTERNATIONAL COMMERCIAL ARBITRATION MOOT 13 TO 18 APRIL 2019 MEMORANDUM FOR RESPONDENT LUDWIG-MAXIMILIANS-UNIVERSITÄT MÜNCHEN

TWENTY-SIXTH ANNUAL

WILLEM C. VIS INTERNATIONAL COMMERCIAL ARBITRATION MOOT

13 TO 18 APRIL 2019

MEMORANDUM FOR RESPONDENT

LUDWIG-MAXIMILIANS-UNIVERSITÄT MÜNCHEN

On Behalf of:

Black Beauty Equestrian

2 Seabiscuit Drive

Oceanside

Equatoriana

RESPONDENT

Against:

Phar Lap Allevamento

Rue Frankel 1

Capital City

Mediterraneo

CLAIMANT

COUNSEL:

Vincent Fach ∙ Clemens Ganzert ∙ Katarina Jurišić

Paul Lauster ∙ Lea Patalas ∙ Valerie Pitkowitz


_________________________________________________

II

TABLE OF CONTENTS INDEX OF AUTHORITIES ....................................................................................................... V

INDEX OF CASES ............................................................................................................ XXVI

INDEX OF ARBITRAL AWARDS ............................................................................................. XL

INDEX OF LEGAL SOURCES ............................................................................................ XLVI

LIST OF ABBREVIATIONS ............................................................................................... XLVII

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

SUMMARY OF ARGUMENT ...................................................................................................... 3

ARGUMENT ............................................................................................................................ 4

ISSUE I: THE TRIBUNAL LACKS THE JURISDICTION AND THE POWER TO ADAPT THE

CONTRACT ............................................................................................................................. 4

A. THE TRIBUNAL DOES NOT HAVE THE JURISDICTION UNDER THE LEX ARBITRI

TO ADAPT THE CONTRACT ............................................................................................. 4

B. THE TRIBUNAL LACKS THE POWER UNDER THE ARBITRATION AGREEMENT TO

ADAPT THE CONTRACT ................................................................................................... 5

I. The Tribunal lacks the power to adapt the Contract under the Law of Danubia ...... 5

1. The Law of Danubia governs the Arbitration Agreement ..................................... 5

(a) The Parties impliedly chose to submit the Arbitration Agreement to the

Law of Danubia ............................................................................................................ 6

(i) The choice of law for the substantive contract does not indicate the

Parties’ intention to apply the same law to the Arbitration Agreement ....... 6

(ii) The choice of Danubia as the seat of arbitration indicates the Parties’

intention to apply the Law of Danubia to the Arbitration Agreement ........ 7

(b) In any case, the Arbitration Agreement has its closest connection to the

Law of Danubia ............................................................................................................ 8

2. The Tribunal’s lack of power to adapt the Contract follows from an

interpretation of the Arbitration Agreement under the Law of Danubia .................... 9

II. Even if the Law of Mediterraneo were applicable, the Tribunal would lack the

power to adapt the Contract ..................................................................................................... 10

1. The Parties did not intend to authorize the Tribunal to adapt the Contract .... 11

2. A reasonable business person would conclude that the Tribunal lacks the

power to adapt the Contract ............................................................................................. 12


_________________________________________________

III

ISSUE II: THE EVIDENCE FROM THE OTHER ARBITRATION PROCEEDINGS IS

INADMISSIBLE ...................................................................................................................... 14

A. THE UNLAWFUL OBTAINMENT OF THE PARTIAL AWARD PRECLUDES ITS

ADMISSION .................................................................................................................... 14

B. THE EVIDENCE IS INADMISSIBLE DUE TO ITS IRRELEVANCE AND

IMMATERIALITY ............................................................................................................ 15

I. The Partial Award only reflects an arbitral tribunal’s legal opinion ............................ 16

II. The other HKIAC arbitration is not comparable to the present proceedings ......... 16

III. The Partial Award cannot be used to evidence that RESPONDENT acted in bad

faith ............................................................................................................................................. 17

C. AN ADMISSION WOULD INFRINGE THE PRINCIPLE OF EQUALITY OF ARMS .......... 17

ISSUE III(A): CLAIMANT IS NOT ENTITLED TO PAYMENT OF US$ 1,250,000 UNDER

CLAUSE 12 OF THE CONTRACT............................................................................................. 18

A. THE HARDSHIP REFERENCE DOES NOT APPLY TO THE IMPOSITION

OF TARIFFS .................................................................................................................... 19

I. The Hardship Reference has a narrow scope of application ....................................... 19

1. The Parties intended for the Hardship Reference to only apply to specific

events ................................................................................................................................... 19

2. An objective analysis leads to the conclusion that the Hardship Reference only

applies to specific events ................................................................................................... 21

(a) The terms “health and safety requirements” and “comparable events” do

not cover a wide array of events .............................................................................. 21

(b) The terms “unforeseen” and “more onerous” further restrict the scope of

application ................................................................................................................... 21

II. The prerequisites for an exemption under the Hardship Reference are not fulfilled

in the present case ...................................................................................................................... 22

1. The imposition of tariffs is not an event comparable to health and safety

requirements ....................................................................................................................... 23

2. The imposition of tariffs does not make contract performance.

more onerous ...................................................................................................................... 23

B. IN ANY CASE, THE HARDSHIP REFERENCE DOES NOT ALLOW FOR AN INCREASE

OF THE PURCHASE PRICE BY WAY OF CONTRACT ADAPTATION .................................. 24

I. The Hardship Reference does not provide for contract adaptation as a remedy ..... 24


_________________________________________________

IV

1. The Parties did not have the common intent to have the Contract adapted in

case of hardship .................................................................................................................. 24

2. An objective analysis shows that contract adaptation is not possible under the

Hardship Reference ........................................................................................................... 25

II. In any case, CLAIMANT would not be entitled to a remuneration of US$ 1,250,000

resulting from a contract adaptation ....................................................................................... 26

ISSUE III(B): ALTERNATIVELY, CLAIMANT IS NOT ENTITLED TO PAYMENT OF

US$ 1,250,000 RESULTING FROM A CONTRACT ADAPTATION UNDER THE CISG ................ 27

A. CLAIMANT IS NOT EXEMPTED FROM LIABILITY UNDER ART. 79(1) CISG ........... 27

I. Art. 79 CISG cannot be invoked as it has been derogated from ................................ 28

II. Hardship does not constitute an impediment in the sense of Art. 79(1) CISG ....... 29

III. In any case, the prerequisites for an exemption under Art. 79(1) CISG are

not met ......................................................................................................................................... 30

1. The imposition of tariffs was foreseeable .............................................................. 30

2. CLAIMANT could have avoided the additional costs resulting from

the tariffs ............................................................................................................................. 31

3. The additional costs do not render contract performance

excessively onerous ............................................................................................................ 31

B. IN ANY CASE, THE CISG DOES NOT ALLOW FOR AN INCREASE OF THE PURCHASE

PRICE BY WAY OF CONTRACT ADAPTATION ................................................................. 32

I. A contract adaptation in case of hardship is not possible under the CISG .............. 33

1. Even if there were an internal gap in the CISG, a contract adaptation would

not be possible .................................................................................................................... 33

2. CLAIMANT cannot resort to the Mediterranean Contract Law ............................ 34


resulting from a contract adaptation under the CISG .......................................................... 34

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


_________________________________________________

V

INDEX OF AUTHORITIES

Analytical compilation of comments by Governments

and international organizations on the draft text of a

model law

on international commercial arbitration

Report of the Secretary-General, New York,

3 June – 21 June 1985

Cited as: UN Doc. A/CN.9/263 (1985)

In: § 48

Guide on the Incoterms 2010: ICC rules for the use of

domestic and international trade terms: entry into force

1 January 2011

ICC Publications, Paris 2010

Cited as: Incoterms 2010

In: § 83

UNCITRAL Digest of Case Law on the United Nations

Convention on Contracts for the International Sale of

Goods, 2016 Edition, United Nations

Cited as: UNCITRAL Digest

In: § 158

UNIDROIT Principles of International Commercial

Contracts 2016, Comments on the UPICC, UNIDROIT,

4th ed., Rome 2016

Cited as: Off. Comm. UPICC

In: § 117

World Trade Report 2012, Trade and public policies: A

closer look at non-tariff measures in the 21st century

Geneva 2012

Cited as: WTO Report 2012

In: §§ 91, 99


_________________________________________________

VI

Yearbook of the United Nations Commission on

International Trade (1997/Vol. III)

United Nations Publication, New York 1978

Cited as: UN Doc. A/CN.9/SER.A/1977

In: § 129

AL FARUQUE, Abdullah Possible Role of Arbitration in the Adaptation of

Petroleum Contracts by Third Parties

in: Asian International Arbitration Journal (2006/Vol. 2

No. 2), pp. 151–162

Cited as: AL FARUQUE

In: §§ 34, 48

AL QURASHI, Zeyad A. Renegotiation of International Petroleum Agreements

in: Journal of International Arbitration (2005/Vol. 22

No. 4), pp. 261–300

Cited as: AL QURASHI

In: § 117

AZERDO DA SILVEIRA, Mercédeh Trade Sanctions and International Sales: An Inquiry into

International Arbitration and Commercial Litigation

Kluwer Law International, Alphen aan den Rijn 2014

Cited as: DA SILVEIRA

In: §§ 83, 95, 103, 144, 162

BAMBERGER, Heinz Georg

ROTH, Herbert

HAU, Wolfgang

et al.

Beck’scher Online-Kommentar zum Bürgerlichen

Gesetzbuch

C.H. Beck, 43rd ed., Munich 2015

Cited as: AUTHOR in: Bamberger et al.

In: § 144


_________________________________________________

VII

BARNETT, Peter R. Res Judicata, Estoppel, and Foreign Judgements - The

Preclusive Effects of Foreign Judgements in Private

International Law

Oxford University Press, Oxford 2011

Cited as: BARNETT

In: § 67

BASEDOW, Jürgen The Hague Principles on Choice of Law: their addressees

and impact

Uniform Law Review (2017/Vol. 22), pp. 304-315

Cited as: BASEDOW

In: § 12

BAUR, Jürgen Wirtschaftsklauseln

in: Baur, Jürgen/Hopt, Klaus/Mailänd, Peter (eds.),

Festschrift für Ernst Steindorff zum 70. Geburtstag am

13. März 1990, pp. 509-518

Walter de Gruyter, Berlin/New York 1990

Cited as: BAUR

In: § 95

BEISTEINER, Lisa The Arbitration Agreement and Arbitrability, The

(Perceived) Power of the Arbitrator to Revise a

Contract – The Austrian Perspective

in: Christian Klausegger, Peter Klein et al. (eds), Austrian

Yearbook on International Arbitration (2014/Vol. 2014),

pp. 77-122

Cited as: BEISTEINER

In: § 48


_________________________________________________

VIII

BERGER, Klaus Peter Power of Arbitrators to Fill Gaps and Revise Contracts

to Make Sense

Arbitration International, (2001/Vol. 17 No. 1), pp. 1–18

Cited as: BERGER

In: §§ 1, 4, 34, 48

BERGER, Klaus Peter Private Dispute Resolution in International Business:

Negotiation, Mediation, Arbitration

Kluwer Law International, 3rd ed., Alphen aan den

Rijn 2015

Cited as: BERGER, Dispute Resolution

In: §§ 117, 129

BERNARDINI, Piero The Renegotiation of the Investment Contract

in: ICSID Review – Foreign Investment Law

Journal (1998/Vol. 13 No. 2), pp. 411–425

Cited as: BERNARDINI, Renegotiation

In: §§ 34, 48

BERNARDINI, Piero Stabilization and adaptation in oil and gas investments

Journal of World Energy Law & Business (2008/Vol. 1

No. 1), pp. 98-112

Cited as: BERNARDINI

In: §§ 95, 158

BIANCA, Cesare M.

BONELL, Michael J.

Commentary on the International Sales Law: The 1980

Vienna Sales Convention

Giuffrè, Milan 1987

Cited as: AUTHOR in: Bianca/Bonell

In: § 151


_________________________________________________

IX

BLAIR, Cherie

VIDAK GOJKOVIC, Ema

WikiLeaks and Beyond: Discerning an International

Standard for the Admissibility of Illegally Obtained

Evidence

in: ICSID Review (2018/Vol. 33 No. 1), pp. 235-259

Cited as: BLAIR/VIDAK GOJKOVIC

In: § 71

BORN, Gary B. International Commercial Arbitration, Vol. 1–3

Kluwer Law International, 2nd ed., Alphen aan den

Rijn 2014

Cited as: BORN

In: §§ 18, 29

BRIGGS, Adrian Private International Law in English Courts


Cited as: BRIGGS

In: § 8

BRIGGS, Adrian

DICKINSON, Andrew

JONATHAN, Harris

et al.

Dicey, Morris and Collins on The Conflict of Laws,

Vol. 1

Sweet & Maxwell, 15th ed., London 2012

Cited as: DICEY et al.

In: §§ 18, 29

BRUNNER, Christoph Force Majeure and Hardship under General Contract

Principles: Exemption for Non- performance in

International Arbitration


Cited as: BRUNNER

In: §§ 1, 4, 83, 102, 117, 144


_________________________________________________

X

CAIRNS, David J. A. Oral Advocacy and Time Control in International

Arbitration

in: ICCA Congress Series (2011/Vol. 15), pp. 181-198

Cited as: CAIRNS

In: § 71

CARLSEN, Anja Can the Hardship Provisions in the UNIDROIT

Principles Be Applied When the CISG is the Governing

Law?

Pace Law School Institute of International Commercial

Law, June 1988

Available at: https://www.cisg.law.pace.edu/cisg/biblio/

carlsen.html

Cited as: CARLSEN

In: § 151

CODREA, Codrin Nema potest venire contra factum proprium. The

coherence principle in European contract law

CES Working Papers (2018/Vol. 10 No. 3), pp. 357-370

Cited as: CODREA

In: § 67

COOK, John Factual and Expert Evidence in Arbitration

Asian Dispute Review (2014/Vol. 16), pp. 30-35

Cited as: COOK

In: § 62

CRAIG, Laurence

PARK, William

PAULSSON, Jan

International Chamber of Commerce Arbitration

Oceana Publications, 3rd ed., Dobbs Ferry 2000

Cited as: CRAIG et al.

In: §§ 29, 34, 47

https://www.cisg.law.pace.edu/cisg/biblio/carlsen.html

https://www.cisg.law.pace.edu/cisg/biblio/carlsen.html


_________________________________________________

XI

DAVIES, Martin

SNYDER, David V.

International Transactions in Goods: Global Sales in

Comparative Context

Oxford Scholarship Online, 2014

Cited as: DAVIES/SNYDER

In: §§ 95, 103

DE MELO, Jaime

NICITA, Alessandro

Non-tariff measures and trade facilitation: WTO

disciplines and policy space for development

in: Non-Tariff Measures: Economic Assessment and

Policy Options for Development

UNCTAD/DITC/TAB/2017/2

Cited as: DE MELO/NICITA

In: §§ 91, 99

DOUDKO, Alexei “Force Majeure And Hardship”-Seminar, Paris (France),

8 March 2001, organised by the International Chamber

of Commerce (ICC). Congress & Colloquia

Uniform Law Review (2001/Vol. 6 No. 1), pp. 100-105

Cited as: DOUDKO

In: § 48

DUMBERRY, Patrick State of Confusion: The Doctrine of ‘Clean Hands’

in Investment Arbitration After the Yukos Award

in: The Journal of World Investment

& Trade (2016/Vol. 17), pp. 229-259

Cited as: DUMBERRY

In: § 52


_________________________________________________

XII

EL CHIATI, Ahmed Z. Protection of Investment in the Context of Petroleum

Agreements

in: Recueil des Cours. Collected Courses of The Hague

Academy of international Law (1987/Vol. 4 No. 204),

pp. 19–167

Martinus Nijhoff Publishers, Leiden 1987

Cited as: EL CHIATI

In: § 117

ENDERLEIN, Fritz

MASKOW, Dietrich

International Sales Law. United Nations Convention on

Contracts for the International Sale of Goods.

Convention on the Limitation Period in the International

Sale of Goods

Oceana Publications, 1992

Cited as: ENDERLEIN/MASKOW

In: § 162

FERRARI, Franco

KIENINGER, Eva-Maria

MANKOWSKI, Peter

et al.

Internationales Vertragsrecht, (Commentary on

International Contract Law)

C.H. Beck, 3rd ed., Munich 2018

Cited as: AUTHOR in: Ferrari et al.

In: §§ 124, 156

FERRARIO, Pietro The Adaptation of Long-Term Gas Sale Agreements by

Arbitrators

International Arbitration Law Library (2017/Vol. 41),

pp. 71–166

Cited as: FERRARIO

In: §§ 117, 158


_________________________________________________

XIII

FLAMBOURAS, Dionysios P. The Doctrine of Impossibility of Performance and

Clausula Rebus SIC Stantibus in the 1980 Convention on

Contracts for the International Sale of Goods and the

Principles of European Contract Law. A Comparative

Analysis

Pace International Law Review (2001/Vol. 13),

pp. 262-293

Cited as: FLAMBOURAS

In: § 129

FRAGATA M. DE BARROS,

Octavio

The Principle of Facticity: Outline for a Theory of

Evidence in Arbitration

Journal of Arbitration Studies (Vol. 23 No. 4), pp. 77-96

Cited as: DE BARROS

In: § 53

FRICK, Joachim G. Arbitration and Complex International Contracts: With

Special Emphasis on the Determination of the

Applicable Substantive Law and on the Adaptation of

Contracts to Changed Circumstances

Schulthess, Zurich 2001

Cited as: FRICK

In: § 1

FUCCI, Frederick R. Hardship and Changed Circumstances as Grounds for

Adjustment or Non-Performance of Contracts. Practical

Considerations in International Infrastructure

Investment and Finance

Available at: https://www.cisg.law.pace.edu/cisg/biblio/

fucci.html

Cited as: FUCCI

In: § 114


_________________________________________________

XIV

GAILLARD, Emmanuel

SAVAGE, John

Fouchard, Gaillard, Goldman On International

Commercial Arbitration

Kluwer Law International, The Hague 1999

Cited as: FOUCHARD et al.

In: §§ 1, 34

GARNER, Bryan A. Black’s Law Dictionary

Thomson Reuters, 10th ed., St. Paul 2014

Cited as: BLACK

In: §§ 91, 94, 99

GIRSBERGER, Daniel

COHEN, Neil

Key Features of the Hague Principles on Choice of Law

in International Commercial Contracts

Uniform Law Review (2017/Vol. 22), pp. 316-335

Cited as: GIRSBERGER/COHEN

In: § 12

GREENBERG, Simon

KEE, Christopher

WEERAMANTRY, J. Romesh

International Commercial Arbitration. An Asia-Pacific

Perspective

Cambridge University Press, Cambridge 2011

Cited as: GREENBERG et al.

In: §§ 8, 67

HANOTIAU, Bernard The Law Applicable to Arbitrability

Singapore Academy of Law Journal (2014/Vol. 26),

pp. 874–885

Cited as: HANOTIAU

In: § 8


_________________________________________________

XV

HARRISON, Jeffrey L. A Case for Loss Sharing

Kazmarek/Kraft et al., (eds.), Southern California Law

Review (1983/Vol. 56 No. 2), pp. 573-601

Cited as: HARRISON

In: § 118

HIRSCH, Alain The Place of Arbitration and the Lex Arbitri

Arbitration Journal (1979/Vol. 34 No. 3), pp. 43-48

Cited as: HIRSCH

In: § 1

HORN, Norbert Die Anpassung langfristiger Verträge im internationalen

Wirtschaftsverkehr. Vertragsklauseln und Schiedspraxis

in: Kötz, Hein/Bieberstein, Wolfgang Freiherr Marschall

von (eds.), Die Anpassung langfristiger Verträge,

pp. 9-72

Alfred Metzner Verlag, Frankfurt am Main 1984

Cited as: HORN

In: § 1

KARRER, Pierre A. The Law Applicable to the Arbitration Agreement

Singapore Academy of Law Journal (2014/Vol. 26),

pp. 849–873

Cited as: KARRER

In: § 22

KAUFMANN-KOHLER, Gabriele

BÄRTSCH, Philippe

Discovery in international arbitration: How much is too

much?

in: SchiedsVZ (2004), pp. 13-21

Cited as: KAUFMANN-KOHLER/BÄRTSCH

In: § 58


_________________________________________________

XVI

KRÖLL, Stefan Ergänzung und Anpassung von Verträgen durch

Schiedsgerichte

Carl Heymanns Verlag, Cologne 1998

Cited as: KRÖLL

In: §§ 1, 4

KRÖLL, Stefan

MISTELIS, Loukas

PERALES VISCASILLAS, Pilar

UN-Convention on Contracts for the International Sale

of Goods (CISG)

C.H. Beck, 2nd ed., Munich 2018

Cited as: AUTHOR in: Kröll et al.

In: §§ 38, 124, 136, 140, 144, 156, 157

KRÖLL, Stefan The Renegotiation and Adaptation of Investment

Contracts

in: Horn, Norbert/Kröll, Stefan, Arbitrating Foreign

Investment Disputes: Procedural and Substantive Legal

Aspects, Studies in Transnational Economic Law

(2004/Vol. 19), pp. 425–470

Cited as: KRÖLL, Renegotiation

In: § 95

KRÖLL, Stefan Contractual gap-filling by arbitral tribunals

International Arbitration Law Review (1999/Vol. 2)

pp. 9-16

Cited as: KRÖLL, Gap-filling

In: §§ 34, 48

KRUGMAN, Paul

OBSTFELD, Maurice

MELITZ, Marc

International Economics. Theory and Policy

Pearson, 10th ed., Boston 2015

Cited as: KRUGMAN et al.

In: § 99


_________________________________________________

XVII

LAU, Christopher Do Rules and Guidelines Level the Playing Field and

Properly Regulate Conduct? – An Arbitrator’s

Perspective

in: ICCA Congress Series (2017/Vol. 19), pp. 559–598

Cited as: LAU

In: § 71

LEW, Julian

MISTELIS, Loukas

KRÖLL, Stefan

Comparative International Commercial Arbitration

Kluwer Law International, The Hague 2003

Cited as: LEW et al.

In: § 8

LINDSTROM, Niklas Changed Circumstances and Hardship in the

International Sale of Goods

Nordic Journal of Commercial Law (2006/Issue 1),

pp. 1-29

Cited as: LINDSTROM

In: § 129

LIONNET, Klaus

LIONNET, Annette

Handbuch der internationalen und nationalen

Schiedsgerichtsbarkeit

Richard Boorberg Verlag, 3rd ed., Stuttgart 2005

Cited as: LIONNET

In: § 8

LLAMZON, Aloysius Case Comment. Yukos Universal Limited (Isle of Man) v

The Russian Federation. The State of the ‘Unclean

Hands’ Doctrine in International Investment Law: Yukos

as both Omega and Alpha

in: ICSID Review (2015/Vol. 30 No. 2), pp. 315-325

Cited as: LLAMZON

In: § 53


_________________________________________________

XVIII

LOHMANN, Arnd Parteiautonomie und UN-Kaufrecht

Mohr Siebeck, Tübingen 2005

Cited as: LOHMANN

In: § 124

LOOKOFSKY, Joseph Article 7. Convention Interpretation

In: International Encyclopaedia for Contracts, The 1980

United Nations Conventions on Contracts for the

International Sale of Goods, pp. 48-54

Kluwer Law International, The Hague, 2000

Cited as: LOOKOFSKY

In: § 156

LOVE, Patrick

LATTIMORE, Ralph

International Trade. Free, Fair and Open?

OECD Insights

OECD Publications, Paris 2009

Cited as: LOVE/LATTIMORE

In: §§ 91, 99

LOWENFELD, Andreas International Economic Law

Oxford University Press, 2nd ed., Oxford 2008

Cited as: LOWENFELD

In: § 99

MAGNUS, Ulrich

HABERFELLNER, Lisa

General Principles of UN-Sales Law

in: Rabels Zeitschrift for foreign and international Private

Law (1995/Vol. 59 No.3-4), pp. 468-489

Cited as: MAGNUS/HABERFELLNER

In: §§ 156, 158


_________________________________________________

XIX

MAGNUS, Ulrich J. von Staudingers Kommentar zum Bürgerlichen

Gesetzbuch mit Einführungsgesetz und Nebengesetzen,

Wiener UN-Kaufrecht (CISG)

Sellier – de Gruyter, revised ed., Berlin 2018

Cited as: AUTHOR in: Staudinger

In: §§ 46, 130 ,140

MASKOW, Dietrich Hardship and Force Majeure

The American Journal of Comparative

Law (1992/Vol. 40 No. 3), pp. 657–669

Cited as: MASKOW

In: § 117

MOSES, Margaret L. The Principles and Practice of International Commercial

Arbitration

Cambridge University Press, 3rd ed., Cambridge 2017

Cited as: MOSES

In: § 8

O’MALLEY, Nathan D. Rules of Evidence in International Arbitration: An

Annotated Guide

Informa Law, New York 2012

Cited as: O’MALLEY

In: § 71

OMMESLAGHE, Pierre van Les Clauses de Force Majeure et D’Imprévision

(Hardship) dans les Contrats Internaux

Revue du Droit International et de Droit

Comparé (1980/Vol. 57), pp. 7–59

Cited as: VAN OMMESLAGHE

In: § 95


_________________________________________________

XX

PETER, Wolfgang Arbitration and Renegotiation of International

Investment Agreements: A Study with Particular

Reference to Means of Conflict Avoidance under Natural

Resources Investment Agreements

Springer Netherlands, 1986

Cited as: PETER

In: §§ 34, 47, 48

PICHONNAZ, Pascal Impossibilité et exorbitance. Éditions Universitaires

Fribourg Suisse, 1997

Cited as: PICHONNAZ

In: § 124

PIROZZI, Roberto Developments in the Change of Economic

Circumstances Debate?

Vindobona Journal of International Commercial Law &

Arbitration (2012/Vol. 16), pp. 95-112

Cited as: PIROZZI

In: § 158

RAESCHKE-KESSLER, Hilmar The Production of Documents in International

Arbitration - A Commentary on Article 3 of the New

IBA Rules of Evidence

in: Arbitration International (2012, Vol. 18 No. 4),

pp. 411-430

Cited as: RAESCHKE-KESSLER

In: § 58

REDFERN, Alan

HUNTER, Martin

BLACKABY, Nigel

et al.

Redfern and Hunter on International Arbitration

Oxford University Press, 6th ed., Oxford 2015

Cited as: REDFERN/HUNTER

In: §§ 1, 47


_________________________________________________

XXI

RIMKE, Joern Force majeure and Hardship: Application in international

trade practice with specific regard to the CISG and the

UNIDROIT Principles of International Commercial

Contracts.

in: Pace Review of the Convention on Contracts for the

International Sale of Goods (1999-2000), pp. 197-243


Cited as: RIMKE

In: §§ 114, 129

SÄCKER, Franz Jürgen

RIXECKER, Roland

OETKER, Hartmut

et al.

Münchener Kommentar zum Bürgerlichen Gesetzbuch,

Vol. 3, 7th ed., C.H. Beck, München 2016

Cited as: AUTHOR in: MüKoBGB

In: § 95

SCHLECHTRIEM, Peter

SCHWENZER, Ingeborg

Commentary on the UN Convention on the

International Sale of Goods (CISG)

Oxford University Press, 4th ed., Oxford 2016

Cited as: AUTHOR in: Schlechtriem/Schwenzer

In: §§ 46, 67, 124, 136, 140, 145

SCHLECHTRIEM, Peter Internationales UN-Kaufrecht

Mohr Siebeck, 4. Auflage, Tübingen 2007

Cited as: SCHLECHTRIEM, CISG

In: § 144

SCHLECHTRIEM, Peter Rechtsvereinheitlichung in Europa und

Schuldrechtsreform in Deutschland

Zeitschrift für Europäisches Privatrecht (1993),

pp. 217-246

Cited as: SCHLECHTRIEM

In: § 158


_________________________________________________

XXII

SCHLOSSER, Peter Das Recht der internationalen privaten

Schiedsgerichtsbarkeit

Mohr Siebeck, 2nd ed., Tübingen 1989

Cited as: SCHLOSSER

In: § 25

SCHWENZER, Ingeborg

HACHEM, Pascal,

KEE, Christopher

Global Sales and Contract Law

Oxford University Press, New York 2012

Cited as: SCHWENZER et al.

In: § 151

SCHWENZER, Ingeborg Force Majeure and Hardship in International Sales

Contracts

Victoria University of Wellington Law

Review (2009/Vol. 39), pp. 709–725

Cited as: SCHWENZER, Hardship

In: §§ 95, 103, 133, 144, 145, 156

SECK, Andrew Investing in the Former Soviet Union's Oil Industry: The

Energy Charter Treaty and its Implications for Mitigating

Political Risk

in: Thomas W. Wälde (ed), The Energy Charter Treaty:

An East-West Gateway for Investment and Trade,

pp. 110 - 134

Kluwer Law International, 1996

Cited as: SECK

In: § 102


_________________________________________________

XXIII

SLATER, Scott D. Overcome by Hardship: The Inapplicability of the

UNIDROIT Principles’ Hardship Provisions to the

CISG

Florida Journal of International Law (1998/Vol. 12),

pp. 231-262

Cited as: SLATER

In: § 129

STROHBACH, Heinz Force Majeure and Hardship Clauses in International

Commercial Contracts and Arbitration: The East-

German Approach

Journal of International Arbitration (1984/Vol. 1 No. 1),

pp. 39-52

Cited as: STROHBACH

In: § 114

TUCCI, Alessandra

LORIDAN, Mathieu

Navigating Non-Tariff Measures. Insights from a

Business Survey in the European Union

International Trade Centre and European Commission,

Switzerland 2016

Cited as: TUCCI/LORIDAN

In: §§ 91, 99

VOGENAUER, Stefan

KLEINHEISTERKAMP, Jan

Commentary on the UNIDROIT Principles of

International Commercial Contracts (PICC)

Oxford University Press, 2nd ed., Oxford 2015

Cited as: AUTHOR in: Vogenauer

In: §§ 33, 117

WAINCYMER, Jeffrey Procedure and Evidence in International Arbitration


Cited as: WAINCYMER

In: § 67


_________________________________________________

XXIV

WÄLDE, Thomas W. “Equality of Arms” in Investment Arbitration:

Procedural Challenges


Cited as: WÄLDE

In: §§ 53, 71

WEICK, Günter Rechtsvergleichende Untersuchung und Vorschlag für

eine einheitliche europäische Lösung

Zeitung für Europäisches Privatrecht (2014/No. 2),

pp. 281-312

Cited as: WEICK

In: § 114

ZELLER, Bruno The UNIDROIT Principles of Hardship and the

Application of Article 79 CISG: Are They Compatible?

in: Schwenzer/Spagnolo, State of Play. The 3rd Annual

MMA Schlechtriem CISG Conference (14 April 2011,

Vienna), pp. 113–127

Eleven International Publishing, The Hague 2012

Cited as: ZELLER

In: §§ 129, 130, 151, 156

ZUBERBÜHLER, Tobias

HOFMANN, Dieter

OETIKER, Christian

et al.

IBA Rules of Evidence, Commentary on the IBA Rules

on the Taking of Evidence in International Arbitration

Schulthess Verlag, Zurich 2012

Cited as: ZUBERBÜHLER et al.

In: § 58


_________________________________________________

XXV

ZWEIGERT, Konrad

HOFFMANN, Bernd von

Zur internationalen Joint Venture

in: Glossner, Ottoarndt/Reimers, Walter (eds.),

Festschrift für Martin Luther zum 70. Geburtstag, pp.

203–212

C.H. Beck, Munich 1976

Cited as: ZWEIGERT/VON HOFFMANN

In: § 1


_________________________________________________

XXVI

INDEX OF CASES Austria

Oberster Gerichtshof

2 Ob 58/97m, 20 March 1997

Cited as: OGH, 20 March 1997 (Austria)

In: § 38

Oberlandesgericht Linz

6 R 160/05z, 23 January 2006

Cited as: OLG Linz, 23 January 2006 (Austria)

In: § 124

Belgium

Cour de Cassation

Case No.: C.07.0289.N, 19 June 2009

Available at: http://www.unilex.info/case.cfm?id=1457

Cited as: Cour de Cassation, 19 June 2009 (Belgium)

In: § 162

Rechtsbank van Koophandel Hasselt

A.R. 1849/49, 4205/94, 2 May 1996

Available at: http://www.unilex.info/case.cfm?pid=1&do=case&id=263&step=Abstract

Cited as: RBK Hasselt, 2 May 1995 (Belgium)

In: § 102

Canada

Dell Computer Corporation v. Union des consommateurs

Supreme Court of Canada, 13 July 2007

[2007]2 S.C.R. 801, SCC 34

Cited as: Dell v. Union des consommateurs (Canada)

In: § 8


_________________________________________________

XXVII

England/Wales

Arsanovia Ltd. and others v. Cruz City 1 Mauritius Holdings

High Court of Justice (Commercial Court), 20 December 2012

[2012] EWHC 3702

Cited as: Arsanovia v. Cruz City (England/Wales)

In: § 15

Bangladesh Chemical Industries Corporation v. Henry Stephens Shipping Company Limited

Tex-Dilan Shipping Company Limited

Court of Appeal, 8 April 1981

1981 WL 187858

Cited as: Bangladesh Chem. v. H.S. Shipping (England/Wales)

In: § 25

C v. D

High Court of Justice, 28 June 2007

[2007] EWHC 1541

Cited as: C v. D (England/Wales)

In: §§ 25, 29

Channel Group v. Balfour Beatty Ltd.

House of Lords, 21 January 1993

[1993] 2 W.L.R. 262

Cited as: Channel v. Balfour (England/Wales)

In: § 22

Chimimport PLC v. G D’Alesio SAS

High Court of Justice, 28 April 1994

[1994] C.L.C. 459

Cited as: Chimimport v. D’Alesio (England/Wales)

In: § 8


_________________________________________________

XXVIII

Dallah Real Estate and Tourism Holding Co v. Ministry of Religious Affairs of the

Government of Pakistan

Supreme Court, 3 November 2010

[2011] 1 A.C. 763

Cited as: Dallah RE v. MoRA (England/Wales)

In: § 29

Habas Sinai Ve Tibbi Gazlar Istishal Endustrisi AS v. VSC Steel Co. Ltd.

High Court of Justice (Commercial Court), 19 December 2013

[2013] EWHC 4071

Cited as: Habas Sinai v. VSC Steel (England/Wales)

In: §§ 12, 28, 29

Hollington v. F. Hewthorn & Co. Ltd.

Court of Appeals, 28 May 1943

[1943] K.B. 587

Cited as: Hollington v. Hewthorn (England/Wales)

In: § 62

Land Securities Plc. v Westminster City Council

High Court of Justice (Chancery Division), 29 July 1992

[1993] 1 W.L.R 286

Cited as: Land Securities v. Westminster (England/Wales)

In: § 62

Nova (Jersey) Knit Ltd. v. Kammgarn Spinnerei GmbH

House of Lords, 16 February 1977

[1977] 1 W.L.R. 713

Cited as: Nova v. Kammgarn (England/Wales)

In: § 8


_________________________________________________

XXIX

Premium Nafta Products Limited and others v. Fili Shipping Company Limited and others

House of Lords, 17 October 2007

[2007] WL 2944855/ UKHL 40

Cited as: Premium Nafta v. Fili Shipping (England/Wales)

In: § 47

Proforce Recruit Ltd. v. The Rugby Group Ltd.

Court of Appeal (Civil Division), 17 February 2006

No.: 2006 EWCA Civ 69, CISG-online No. 1424

Available at: http://cisgw3.law.pace.edu/cases/060217uk.html

Cited as: Proforce v. Rugby (England/Wales)

In: § 38

Sonatrach Petroleum Corporation v. Ferrell International Ltd.

High Court of Justice, 4 October 2001

[2001] ArbLR 56

Cited as: Sonatrach v. Ferrell (England/Wales)

In: §§ 12, 18, 28

Sulamérica Cia Nacional De Seguros S.A. and Others v. Enesa Engenharia S.A. and Others

Court of Appeal (Civil Division), 16 May 2012

No: A3/2012/0249

Cited as: Sulamérica v. Enesa (England/Wales)

In: §§ 12, 15, 18, 22, 25, 28, 29

The Queen v. Hui Chi Ming

Court of Appeal, 30 December 1988

[1988] HKEC 1076

Cited as: The Queen v. Hui Chi Ming (England/Wales)

In: § 62


_________________________________________________

XXX

Teekay Tankers v. STX

High Court of Justice, 12 February 2017

[2017] EWHC 253 (Comm)

Cited as: Teekay Tankers v. STX (England/Wales)

In: § 59

Westacre Investments Inc. v. Jugoimport-SDRP Holding Company Ltd.

Court of Appeal (Civil Division), 12 May 1999

No: APP.LR. 05/12

Cited as: Westacre v. Jugoimport (England/Wales)

In: § 28

XL Insurance Limited v. Owens Corning

High Court of Justice (Commercial Court), 28 July 2000

[2001] C.P. Rep. 22

Cited as: XL Insurance v. Owens (England/Wales)

In: §§ 18, 25

Yisroel Meir Halpern, Shmuel Halpern v. Nochum Mordechai Halpern, David Moshe Halpern,

Bezalel Yaacov Halpern, Akiva Aaron Halpern, Esther Vaisfiche

High Court of Justice, Queen’s Bench Division (Commercial Court), 24 March 2006

[2006] EWHC 603 (Comm), overruled on other grounds [2007] EWCA Civ 291

Cited as: Halpern v. Halpern (England/Wales)

In: § 25

France

Cour de Cassation (Chambre civile 1)

Case No.: 91-16828, 20 December 1993

Cited as: Cour de Cassation, 20 December 1993 (France)

In: § 15


_________________________________________________

XXXI

Cour d’Appel de Colmar

Case No.: 1 A 199800359, 12 June 2001

Available at: http://cisgw3.law.pace.edu/cases/010612f1.html

Cited as: CA Colmar, 12 June 2001 (France)

In: § 145

Germany

Bundesfinanzhof

VII B 223/11, 30 April 2012

Available at: BeckRS 2012, 95576

Cited as: BFH, 30 April 2012 (Germany)

In: § 83

Bundesgerichtshof

VIII ZR 38/73, 13 May 1974

Cited as: BGH, 13 May 1974 (Germany)

In: § 117

Bundesgerichtshof

V ZR 93/73, 5 November 1976

BGH NJW 1977, 763

Cited as: BGH, 5 November 1976 (Germany)

In: § 136

Bundesgerichtshof

VIII ZR 254/82, 8 February 1984

Cited as: BGH, 8 February 1984 (Germany)

In: §§ 117, 118


_________________________________________________

XXXII

Bundesgerichtshof

III ZR 206/82, 10 May 1984

NJW 1984, 2763

Cited as: BGH, 10 May 1984 (Germany)

In: § 25

LG Hamburg

5 O 543/88, 26 September 1990

CISG-online No.: 21

Cited as: LG Hamburg, 26 September 1990 (Germany)

In: § 43

Oberlandesgericht Hamburg

1 U 167/95, 28 February 1997

Available at: http://cisgw3.law.pace.edu/cases/970228g1.html

Cited as: OLG Hamburg, 28 February 1997 (Germany)

In: § 133, 144, 145

Oberlandesgericht Dresden

3 U 1827/99, 27 December 1999

CISG-online No.: 991227

Cited as: OLG Dresden, 27 December 1999 (Germany)

In: § 38, 46

Oberlandesgericht Düsseldorf

I-15 U 18/10, 23 March 2011

JurionRS 2011, 40825

Cited as: OLG Düsseldorf, 23 March 2011 (Germany)

In: § 38


_________________________________________________

XXXIII

Greece

Efetio Lamias

Decision 63 of 2006

Available at: http://cisgw3.law.pace.edu/cases/060001gr.html

Cited as: Efetio Lamias, Decision 63/2006 (Greece)

In: § 145

India

Aastha Broadcasting Network v. Thaicom Public Company

High Court of Delhi, 3 August 2011

O.M.P. 528/2011 & I.A. No. 11308/2011

Cited as: Aastha v. Thaicom (India)

In: § 18

National Thermal Power Corporation v. The Singer Company and Others

Supreme Court of India, 7 May 1992

Yearbook Commercial Arbitration 1993, Vol. 18, 403

Cited as: NTPC v. Singer (India)

In: §§ 12, 15, 18, 22, 28

Italy

Corte di Appello Genoa

3 February 1990

Yearbook Commercial Arbitration (1992/Vol. 17), pp. 542-544

Cited as: CdA Genoa, 3 February 1990 (Italy)

In: § 28

Tribunale di Monza

R.G. 4267/88, 14 January 1993

Available at: http://cisgw3.law.pace.edu/cases/930114i3.html

Cited as: Tribunale di Monza, 14 January 1993 (Italy)

In: § 129


_________________________________________________

XXXIV

Tribunale di Lodi

13 February 1991


Cited as: Tribunale di Lodi, 13 February 1991 (Italy)

In: § 29

Japan

Koto Saibansho (High Court) Tokyo (東京高等裁判所)

30 May 1994


Cited as: Kosai Tokyo, 30 May 1994 (Japan)

In: § 25

Malaysia

Thai-Lao Lignite Co. Ltd. and Hongsa Lignite Co. Ltd. v. Government of the Lao People’s

Democratic Republic

The Federal Court of Malaysia, 17 August 2017

[2017] 6 AMR 219

Cited as: Thai-Lao v. Gov. of Laos (Malaysia)

In: § 29

Netherlands

Arrondissementsrechtsbank Rotterdam

28 September 1995


Cited as: ARB Rotterdam, 28 September 1995 (Netherlands)

In: § 25

Gerechtshof The Hague

4 August 1993

Yearbook Commercial Arbitration 1994, Vol. 19, pp. 703–707

Cited as: GH The Hague, 4 August 1993 (Netherlands)

In: §§ 12, 28, 29


_________________________________________________

XXXV

Scotland

Hamlyn & Co. v. Talisker Distillery and Others

House of Lords, 10 May 1894

[1894] A.C. 202

Cited as: Hamlyn v. Talisker (Scotland)

In: §§ 22, 25

Singapore

BCY v. BCZ

High Court of the Republic of Singapore, 9 November 2016

[2016] SGHC 249

Cited as: BCY v. BCZ (Singapore)

In: §§ 12, 15, 18, 28

FirstLink Investments v. GT Payment

High Court of the Republic of Singapore, 19 June 2014

[2014] SGHCR 12

Cited as: FirstLink v. GT Payment (Singapore)

In: §§ 12, 25, 29

Piallo GmbH v. Yafriro International Pte Ltd.

High Court of the Republic of Singapore, 26 November 2013

[2013] SGHC 260

Cited as: Piallo v. Yafriro (Singapore)

In: §§ 8, 22

Switzerland

Bundesgericht

BGE 104 II 314, 28 November 1978

Cited as: BG, 28 November 1978 (Switzerland)

In: § 117


_________________________________________________

XXXVI

Bundesgericht

21 March 1995


Cited as: BG, 21 March 1995 (Switzerland)

In: § 29

Bundesgericht

4P.60/2000, 3 October 2000

Cited as: BG, 3 October 2000 (Switzerland)

In: § 8

Bundesgericht

BGE 130 III 35, 30 September 2003

Cited as: BG, 30 September 2003 (Switzerland)

In: § 59

Bundesgericht

4C.474/2004 /lma, 5 April 2005

Available at: http://cisgw3.law.pace.edu/cases/050405s1.html

Cited as: BG, 5 April 2005 (Switzerland)

In: § 38

Bezirksgericht Affoltern am Albis

26 May 1994


Cited as: BezG Affoltern, 26 May 1994 (Switzerland)

In: § 29

Handelsgericht Kanton Zürich

No. HG010395/U/zs, 24 October 2003

English Translation available at http://cisgw3.law.pace.edu/cases/031024s1.html

Cited as: HG Zürich, 24 October 2003 (Switzerland)

In: § 88


_________________________________________________

XXXVII

Obergericht des Kantons Zug

OG 2010 8, 8 November 2011

CISG-online No.: 2425

Cited as: OG Kanton Zug, 8 November 2011 (Switzerland)

In: § 38

United States of America

Rex Charles Peck v. Ford Motor Company

United States Court of Appeals (7th Circuit), 18 July 1979

603 F.2d 1240

Cited as: Peck v. Ford (USA)

In: § 136

Tracer Research Corp. v. National Environmental Services Company

United States Court of Appeals (9th Circuit), 16 November 1994

42 F.3d 1292

Cited as: Tracer v. NESC (USA)

In: § 47

Texaco, Inc. v. American Trading Transportation Company, Inc.

United States Court of Appeals (5th Circuit), 14 May 1981

644 F.2d 1292

Cited as: Texaco v. American Trading (USA)

In: § 47

State of Conneticut v. Leonard Talton

Appellate Court of Conneticut, 19 June 2001

63 Conn.App. 851

Cited as: State v. Talton (USA)

In: § 59


_________________________________________________

XXXVIII

Tobi Davis v. Life Insurance Company of North America

United States Court of Appeals (5th Circuit), 26 May 2010

379 Fed.Appx. 393

Cited as: Davis v. Life (USA)

In: § 136

Bryana Bible v. United Students Aid Funds Inc.

United States District Court of Indiana, 14 March 2014

2014 WL 1048807

Cited as: Bible v. United Student Aid (USA)

In: § 54

Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (USA)

United States Court of Appeals (5th Circuit), 23 March 2004

364 F.3d 274

Cited as: Karaha v. Perusahaan (USA)

In: § 59

F. David Mathews, Secretary of Health, Education, and Welfare, v. George H. Eldridge

United States Supreme Court, 24 February 1974

424 U.S. 319

Cited as: Mathews v. Eldridge (USA)

In: § 59

International

European Court of Human Rights (ECHR)

Europese Gemeenschap v. Otis NV and Others

Case C-199/11, 6 November 2012

ECLI:EU:C:2012:684

Cited as: ECHR, 6 November 2012

In: § 71


_________________________________________________

XXXIX

Dombo Beheer B.V. v. The Netherlands

Application no. 14448/88, 27 October 1993

Cited as: ECHR, 27 October 1993

In: § 71

Special Tribunal for Lebanon (STL)

The Prosecutor v. Salim Jamil Ayyash

21 May 2015

Case No.: STL-11-01/T/TC

Cited as: Tribunal for Lebanon, 21 May 2015 (UN)

In: § 72


_________________________________________________

XL

INDEX OF ARBITRAL AWARDS Bulgarian Chamber of Commerce and Industry (BTTP)

Case No. 11/1996

12 February 1998

Available at: http://cisgw3.law.pace.edu/cases/980212bu.html

Cited as: BTTP Case No. 11/1996 (1998)

In: § 102

Court for Arbitration for Sport (CAS)

Case No. 2002/O/410

7 October 2003

Cited as: CAS Case No. 2002/O/410 (2003)

In: § 67

International Chamber of Commerce (ICC)

ICC Case No. 1512 of 1971


Cited as: ICC Case No. 1512 (1971)

In: § 48




In: §§ 102, 145

ICC Case No. 18981 (unpublished)


Cited as: ICC Case No. 18981 (date unpublished)

In: §§ 133, 144


_________________________________________________

XLI


Available at: http://cisgw3.law.pace.edu/cases/978786i1.html


In: § 67


Yearbook Commercial Arbitration (2014/Vol. 39), pp. 169 – 215


In: § 117


Journal du Droit International (1976), pp. 995-997


In: § 48


Journal du Droit International (1977), pp. 943-947


In: § 48


Interim Award



In: § 18




In § 25


_________________________________________________

XLII




In: § 29




In: § 18


Available at: http://www.unilex.info/case.cfm?id=466


In: § 88




In: § 29




In: § 28

ICC Case No. 16655/EC/ND of 2011

International Journal of Arab Arbitration (2012/Vol. 4), pp. 125-215

Cited as: ICC Case No. 16655(2011)

In: § 18


_________________________________________________

XLIII




In: § 38

International Centre for Settlement of Investment Disputes [ICSID]

Caratube International Oil Company LLP and Mr. Devincci Salah Hourani v. Republic of

Kazakhstan

ICSID Case No. ARB/13/13

27 September 2017

Cited as: Caratube v. Kazakhstan (2017)

In: § 54

ConocoPhillips Petrozuata B.V., ConocoPhillips Hamaca B.V. and ConocoPhillips Gulf of

Paria B.V. v. Bolivarian Republic of Venezuela


3 September 2013

Cited as: Conoco Phillips Petrozuata v. Venezuela (2013)

In: § 53

EDF (Services) Ltd. v. Romania

Procedural Order No. 3


29 August 2008

Cited as: EDF v. Romania (2005)

In: §§ 53, 71, 72

Giovanni Alemanni and Others v. The Argentine Republic


17 November 2014

Cited as: Giovanni Alemanni v. Argentina (2014)

In: § 71


_________________________________________________

XLIV

Libananco Holdings Co. Ltd. v. Republic of Turkey

Decision on Preliminary Issues


23 June 2008

Cited as: Libananco v. Turkey (2008)

In: § 53

Tribunal of International Commercial Arbitration at the Russian Federation Chamber of

Commerce and Industry (MKAS)

Case No. 302/1996

27 July 1999

Available at: http://cisgw3.law.pace.edu/cases/990727r1.html

Cited as: ICAC Case No. 302/1996 (1999)

In: § 67

Ad hoc

Hungarian State Enterprise v. Jugoslavenski Naftovod (Yugoslav Crude Oil Pipeline)

Final Award, 6 July 1983


Cited as: HSE v. Naftovod (1983)

In: § 118

The Government of the State of Kuwait v. The American Independent Oil Company

(AMINOIL)

Final Award, 24 March 1982

International Legal Materials (1982/Vol. 21), pp. 976-1053

Cited as: Kuwait v. AMINOIL (1982)

In: §§ 34, 48


_________________________________________________

XLV

Methanex Corporation v. United States of America

Final Award of the Tribunal on Jurisdiction and Merits

3 August 2005

Cited as: Methanex v. USA (2005)

In: §§ 53, 71


_________________________________________________

XLVI

INDEX OF LEGAL SOURCES

• Convention relating to a Uniform Law on the International Sale of Goods, 1964 (ULIS)

• Danubian Arbitration Law (DAL)

• Danubian Contract Law (DCL)

• HKIAC Administered Arbitration Rules 2013 (HKIAC 2013 Rules)

• HKIAC Administered Arbitration Rules 2018 (HKIAC Rules)

• International Commercial Terms 2010 (Incoterms 2010)

• Mediterranean Contract Law

• New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards,

1985 (NYC)

• UNCITRAL Conciliation Rules, 1980

• UNCITRAL Model Law on International Commercial Arbitration, 1985 (Model Law)

• UNIDROIT Principles of International Commercial Contracts, 2010 (UPICC)

• United Nations Convention on Contracts for the International Sale of Goods,

1980 (CISG)

• The Hague Principles on Choice of Law in International Commercial Contracts, 2015

(Hague Principles on Choice of Law)


_________________________________________________

XLVII

LIST OF ABBREVIATIONS

% per cent

§(§) Paragraph(s)

Art(t). Article(s)

cf. confer

Cl. CLAIMANT

Corp. Corporation

CEO Chief Executive Officer

DAL Danubian Arbitration Law

DCL Danubian Contract Law

DDP Delivered Duty Paid (Incoterms 2010)

ed. Editor

et al. et alia/et aliae/et alii

et seq(q). et sequentia/et sequentes

EU European Union

Exh. Exhibit

fn. footnote

HKIAC Hong Kong International Arbitration Centre

i.e. id est

ibid. ibidem

ICC International Chamber of Commerce

ICC Hardship Clause International Chamber of Commerce

Hardship Clause 2003

Inc. Incorporation

Ltd. Limited

Memo. Memorandum

Mr. Mister


_________________________________________________

XLVIII

Ms. Miss/Misses

No(s). Number(s)

NoA Notice of Arbitration

p(p). Page(s)

PO Procedural Order

Resp. RESPONDENT

Sec. Section

UN United Nations

UNCITRAL United Nations Commission on International

Trade Law

UNCTAD United Nations Conference on Trade and

Development

UNIDROIT International Institute for the Unification of

Private Law

US$ United States Dollar

USA United States of America

v. versus

Vol. Volume

WTO World Trade Organization


_________________________________________________

1

STATEMENT OF FACTS Phar Lap Allevamento (hereinafter “CLAIMANT”) is a company operating in all areas of the

equestrian sport. In particular, it is renowned for its breeding of racehorses. Black Beauty

Equestrian (hereinafter “RESPONDENT”) is a breeder based in Equatoriana, which has recently

built up a racehorse stable.

21 – 24 March 2017 RESPONDENT enquires about the purchase of 100 doses of frozen

semen of CLAIMANT’s stallion Nijinsky III. CLAIMANT offers to

sell the requested amount for a price of US$ 99,500 per dose.

28 March 2017 RESPONDENT requests a DDP delivery. It further accepts the

application of the Law of Mediterraneo while proposing

jurisdiction of the courts of Equatoriana.

31 March 2017 CLAIMANT replies that a DDP delivery would result in an increase

of the price by US$ 1,000 per dose. It proposes to incorporate a

hardship clause in order to address subsequent changes related to

health and safety requirements and to opt for arbitration in

Mediterraneo.

10 April 2017 RESPONDENT suggests a narrowed down version of the HKIAC

Model Clause as the arbitration agreement. The draft provides for

Equatoriana as the seat of arbitration and accordingly the Law of

Equatoriana to be the law applicable to the arbitration agreement.

11 April 2017 CLAIMANT largely accepts the RESPONDENT’s proposal of the

arbitration agreement. It only suggests the place of arbitration to

be in Danubia due to its neutrality.

12 April 2017 The Parties’ negotiators, Ms. Napravnik and Mr. Antley, meet at

the annual colt auction in Danubia. They discuss the proposed

arbitration agreement as well as the incorporation of a hardship

provision. Subsequently, they get severely injured in a car accident.


_________________________________________________

2

April/May 2017 Mr. Ferguson and Mr. Krone take their place and use the outcome

of the negotiations to that date as the basis for their discussions.

5 May 2017 Shortly after his election, Mediterraneo’s President Bouckaert

appoints an ardent critic of free trade as his minister for

agriculture, trade, and economics.

6 May 2017 The Parties sign the Frozen Semen Sales Agreement, providing

for the sale of 100 doses of Nijinsky III’s frozen semen in three

instalments. The purchase price is US$ 100,000 per dose.

19 December 2017 The Government of Equatoriana announces the imposition of

30% tariffs upon agricultural goods from Mediterraneo, including

frozen semen.

15 January 2018 The tariffs come into effect.

20 January 2018 As CLAIMANT prepares the third shipment it is informed by the

custom authorities that the tariffs also apply to frozen semen.

CLAIMANT subsequently contacts RESPONDENT.

21 January 2018 RESPONDENT’s Mr. Shoemaker states that a solution would be

found if the contract provides for a price increase.

22 January 2018 CLAIMANT ships the third instalment of frozen semen.

31 July 2018 CLAIMANT submits its Notice of Arbitration and requests an

adaptation of the contract.

24 August 2018 RESPONDENT submits its Answer to the Notice of Arbitration.

2 October 2018 CLAIMANT requests to submit a Partial Interim Award issued in

another HKIAC arbitration into evidence.

3 October 2018 RESPONDENT objects to the submission of the Partial Interim

Award from the other HKIAC arbitration.


_________________________________________________

3

SUMMARY OF ARGUMENT Ever since their first encounter at the Equestrian World 2016, it was inevitable for RESPONDENT

and CLAIMANT to become business partners. RESPONDENT was striving to establish one of the

world’s leading racehorse breeding programs. CLAIMANT had an excellent reputation in the

equestrian industry and owns one of the most sought-after stallions, Nijinsky III. With a view to

fostering a prosperous business relationship, the Parties agreed on the sale of 100 doses of

Nijinsky III’s frozen semen. The delivery of the first two instalments of frozen semen went

according to plan, whereas the third instalment was affected by an imposition of tariffs.

Nonetheless, the Parties cleared the hurdle and complied with their contractual obligations.

RESPONDENT paid the purchase price in advance and CLAIMANT delivered the frozen semen to

Equatoriana. While RESPONDENT was looking forward to placing further offers, it was

astonished that CLAIMANT subsequently demanded an additional payment not provided for in the

contractual terms.

CLAIMANT’s request for contract adaptation does not have any legal basis. The lex arbitri does not

grant the Tribunal jurisdiction to adapt the Contract. Furthermore, the Parties did not intend to

confer such creative powers on the Tribunal. This follows from an interpretation of the

arbitration agreement under both the applicable Law of Danubia and, alternatively, the Law of

Mediterraneo (Issue I).

In order to substantiate its request, CLAIMANT seeks to submit evidence from another HKIAC

arbitration. However, the evidence is inadmissible as it has been obtained unlawfully and lacks

both relevance and materiality. In any case, an admission would violate the principle of equality

of arms (Issue II).

Moreover, CLAIMANT is not entitled to a remuneration of US$ 1,250,000 resulting from an

adaptation of the Contract. Clause 12 of the Contract neither covers the imposition of the tariffs

nor provides for the requested remedy. In any case, CLAIMANT shall not be granted the

demanded remuneration (Issue III(A)). Alternatively, the Contract cannot be adapted under the

CISG. CLAIMANT is not exempted from liability under Art. 79(1) CISG. In any case, the CISG

does not allow for an increase of the purchase price by way of contract adaptation. Furthermore,

the purchase price shall not be increased in the requested amount (Issue III(B)).


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4

ARGUMENT

ISSUE I: THE TRIBUNAL LACKS THE JURISDICTION AND THE POWER TO ADAPT

THE CONTRACT 1 The Tribunal is respectfully requested to find that it has neither the jurisdiction nor the

power to adapt the Contract. While CLAIMANT solely relies on an interpretation of the arbitration

agreement under the Law of Mediterraneo (Cl. Memo. §§ 5-30), it disregards that the Tribunal’s

authorization derives from two sources of law: First, the tribunal must have the jurisdiction

under the lex arbitri to adapt the contract (BERGER, pp. 10 et seq.; BRUNNER, p. 493;

REDFERN/HUNTER, § 5.14; FRICK, pp. 190 et seqq.; KRÖLL, pp. 18 et seqq.; HIRSCH, pp. 44 et seq.;

ZWEIGERT/VON HOFFMANN, p. 211; HORN, p. 58). Second, the arbitration agreement must

confer the power to adapt the contract on the tribunal (BRUNNER, p. 493; BERGER, pp. 7 et seqq.;

FOUCHARD et al., § 41; KRÖLL, pp. 18 et seqq.; HORN, p. 58).

2 In the case at hand, the Tribunal does not have the jurisdiction to adapt the Contract under

the lex arbitri (A.). Furthermore, the arbitration agreement does not provide for the Tribunal’s

power to adapt the Contract (B.).

A. THE TRIBUNAL DOES NOT HAVE THE JURISDICTION UNDER THE

LEX ARBITRI TO ADAPT THE CONTRACT 3 The lex arbitri does not grant jurisdiction to the Tribunal to adapt the Contract.

4 If a tribunal adapts a contract without any basis in the lex arbitri, it acts outside of its arbitral

realm (BERGER, p. 11; KRÖLL, p. 19; BRUNNER, p. 493). Consequently, an award providing for

contract adaptation could be challenged and set aside under the lex arbitri and may not be

enforceable under the NYC (Art. 34(2)(iii) Model Law; Art. V(1)(c), (e) NYC; BRUNNER, p. 493).

5 The Danubian Arbitration Law (hereinafter “DAL”), which is a largely verbatim adoption of

the Model Law, is the lex arbitri in the present case (PO1 § III No. 4; PO2 No. 14). There is

consistent jurisprudence in Danubia that Art. 28(3) DAL contains a general standard to be

applied to the conferral of exceptional powers to the arbitral tribunal (PO2 No. 36). Thus, an

express conferral of powers is required in order to authorize an arbitral tribunal to adapt a

contract (ibid.). While the Parties entrusted the Tribunal with the resolution of certain disputes in

the arbitration agreement contained in Clause 15 of the Contract (hereinafter “Arbitration

Agreement”), they did not expressly empower it to adapt the Contract (Cl. Exh. C5, § 15).

Clause 12 of the Contract does not contain such a conferral of powers, either (Cl. Exh. C5, § 12).


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5

In fact, CLAIMANT’s negotiator, Ms. Napravnik, stated that “the contract [does] not include such

an express reference either in the arbitration agreement or the hardship clause” (Cl. Exh. C8).

Thus, the general standard contained in Art. 28(3) DAL is not met.

6 In conclusion, the Tribunal lacks the jurisdiction to adapt the Contract under the lex arbitri.

B. THE TRIBUNAL LACKS THE POWER UNDER THE ARBITRATION

AGREEMENT TO ADAPT THE CONTRACT 7 Contrary to CLAIMANT’s submission (Cl. Memo. §§ 7 et seq.), the Tribunal does not have the

power to adapt the Contract. This follows from an interpretation of the Arbitration Agreement.

8 A tribunal derives its powers from the parties’ arbitration agreement (Dell v. Union des

consommateurs (Canada); BG, 3 October 2000 (Switzerland); MOSES, p. 2; LIONNET, p. 54; LEW et al.,

§ 8-1; GREENBERG et al., §§ 4.1 et seq.; BRIGGS, § 14.36). In order to ascertain the scope of such

agreement, it has to be interpreted under the applicable law (Piallo v. Yafriro (Singapore); Nova v.

Kammgarn (England/Wales); Chimimport v. D’Alesio (England/Wales); HANOTIAU, p. 880).

9 In the case at hand, an interpretation under the applicable Law of Danubia leads to the

conclusion that the Tribunal does not have the power to adapt the Contract (I.). Even if the Law

of Mediterraneo were applicable, the Tribunal would lack the power to adapt (II.).

I. The Tribunal lacks the power to adapt the Contract under the Law of Danubia

10 The law applicable to the Arbitration Agreement is the Law of Danubia (1.). An

interpretation under this law shows the Tribunal’s lack of power to adapt the Contract (2.).

1. The Law of Danubia governs the Arbitration Agreement

11 Contrary to CLAIMANT’s assertion (Cl. Memo. §§ 8 et seqq.), the Arbitration Agreement is

governed by the Law of Danubia.

12 CLAIMANT refers to the Hague Principles on Choice of Law in order to determine the law

applicable to the Arbitration Agreement (Cl. Memo. § 9). However, pursuant to Art. 1(3)(b) of the

Hague Principles on Choice of Law, they do not address the law governing arbitration

agreements (BASEDOW, pp. 312 et seq.; GIRSBERGER/COHEN, p. 320). Thus, the Tribunal is

respectfully requested to consider international practice. Courts from various jurisdictions

adopted a three-stage enquiry in order to determine the law applicable to arbitration

agreements (Sulamérica v. Enesa (England/Wales); BCY v. BCZ (Singapore); Habas Sinai v. VSC

Steel (England/Wales); Sonatrach v. Ferrell (England/Wales); NTPC v. Singer (India); FirstLink v. GT


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6

Payment (Singapore); GH The Hague, 4 August 1993 (Netherlands)). At the first stage, it is assessed

whether the parties made an express choice of law (ibid.). If an express choice of law cannot be

established, it needs to be determined at the second stage whether the parties made an implied

choice of law (ibid.). In the absence of such, the law with the closest connection to the arbitration

agreement is applied at the third stage (ibid.).

13 In the present case, the Parties did not include an express reference to the law governing the

Arbitration Agreement. Hence, there is no express choice of law (first stage). They did, however,

make an implied choice of law (second stage) for the Law of Danubia (a). In any case, as the seat

of arbitration is in Danubia, the Arbitration Agreement has its closest connection (third stage) to

the Law of Danubia (b).

(a) The Parties impliedly chose to submit the Arbitration Agreement to the Law of

Danubia

14 The Parties impliedly chose to apply the Law of Danubia to the Arbitration Agreement.

15 The intention of the parties is decisive when establishing an implied choice of law (NTPC v.

Singer (India); BCY v. BCZ (Singapore); Sulamérica v. Enesa (England/Wales); Arsanovia v. Cruz

City (England/Wales); Cour de Cassation, 20 December 1993 (France)).

16 CLAIMANT bases its argument on the presumption that the choice of law for the substantive

contract manifests the parties’ intention to have the same law govern the arbitration

agreement (Cl. Memo. §§ 12 et seqq.). However, this line of argument cannot be upheld when

considering the circumstances of the case (i). Rather, the Parties intended to apply the Law of

Danubia to the Arbitration Agreement (ii).

(i) The choice of law for the substantive contract does not indicate the Parties’ intention to apply the same law to

the Arbitration Agreement

17 Contrary to CLAIMANT’s submission (Cl. Memo. §§ 12 et seqq.), the express choice of the Law

of Mediterraneo for the substantive contract does not encompass an implied choice of the law

governing the Arbitration Agreement.

18 The presumption CLAIMANT relies on is rebuttable as “other factors may point clearly to

another system of law” (Sulamérica v. Enesa (England/Wales); cf. BCY v. BCZ (Singapore); Sonatrach v.

Ferrell (England/Wales); Aastha v. Thaicom (India)). This is underlined by the doctrine of separability

which requires the parties’ choice of law for the arbitration agreement and the substantive

contract to be considered separately (Art. 19(2) HKIAC Rules; Art. 16(1) DAL; ICC Case


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7

No. 7453 (1994); DICEY et al., § 16–012; BORN, p. 476). CLAIMANT itself admits that an arbitration

agreement is separable from the substantive contract (Cl. Memo. § 15). Thus, the choice of law in

the substantive contract does not automatically extend to the arbitration agreement (XL Insurance

v. Owens (England/Wales); ICC Case No. 16655 (2011); ICC Case No. 4131 (1982)).

19 In the case at hand, the choice of law clause for the substantive contract specifically

stipulates that “this Sales Agreement shall be governed by the Law of Mediterraneo” (Cl. Exh. C5,

§ 14, emphasis added). In contrast thereto, the sections referring to the Contract as a whole are

more generally worded: Both the introductory and the concluding sentence of the Contract refer

to “this Agreement” (Cl. Exh. C5). Moreover, the Arbitration Agreement, which extends to all

contractual clauses, refers to “this contract” (Cl. Exh. C5, § 15). This shows that the choice of law

clause exclusively refers to the sales part of the Contract, i.e. the substantive contract.

Furthermore, a systematic analysis of the Contract supports this conclusion. The choice of law

clause concludes the substantive contract contained in Clauses 1 through 13 of the

Contract (Cl. Exh. C5). The Arbitration Agreement, however, follows in Clause 15 of the

Contract and is therefore not subject to the choice of law.

20 In conclusion, the presumption CLAIMANT relies on is rebutted as there are specific factors

indicating that the choice of law clause does not extend to the Arbitration Agreement.

(ii) The choice of Danubia as the seat of arbitration indicates the Parties’ intention to apply the Law of Danubia

to the Arbitration Agreement

21 By providing for Vindobona, Danubia to be the seat of arbitration, the Parties impliedly

chose the Law of Danubia to govern the Arbitration Agreement.

22 In order to determine the parties’ intention, one has to consider all surrounding

circumstances as well as commercial common sense (Sulamérica v. Enesa (England/Wales); Hamlyn v.

Talisker (Scotland); cf. NTPC v. Singer (India); Channel v. Balfour (England/Wales); Piallo v.

Yafriro (Singapore); KARRER, pp. 869 et seq.).

23 CLAIMANT contends that the Parties deleted the initial express choice of law in the

Arbitration Agreement as “such a provision was no longer necessary because Clause 14 of the

Contract […] was to govern both the Arbitration Agreement and the substantive

[c]ontract” (Cl. Memo. § 13). This is neither factually correct nor is it supported by commercial

common sense.

24 First, RESPONDENT initially proposed an arbitration agreement, which stipulated a choice of

the Law of Equatoriana and provided for the seat of arbitration to be in


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8

Equatoriana (Resp. Exh. R1). It thus intended the law of the Arbitration Agreement to follow the

law of the seat. CLAIMANT stated that it would “largely accept” RESPONDENT’s proposal but

requested the seat of arbitration to be in Danubia due to its neutrality (Resp. Exh. R2). Moreover,

the “relevant part” of the amended clause did not include a choice of law for the Arbitration

Agreement (ibid.). Such express reference was not necessary as the law applicable to the

Arbitration Agreement was supposed to follow the law of the seat. This is further underlined by

the fact that CLAIMANT only demanded “that the law applicable to the Sales Agreement remains the

Law of Mediterraneo” (Resp. Exh. R2, emphasis added). CLAIMANT therefore referred to the

substantive contract (see supra § 19). In this context, the word “remains” illustrates that CLAIMANT

acknowledged that its proposal of Vindobona, Danubia as the seat of arbitration entailed a

change of the law applicable to the Arbitration Agreement.

25 Second, the Parties’ intention to have the law of the Arbitration Agreement follow the law

of the seat is in line with commercial common sense: The law of the seat has a strong impact on

the arbitration proceedings with regards to the jurisdiction of the arbitral tribunal, the

enforceability and validity as well as the respective powers of the supervisory court (C v.

D (England/Wales); XL Insurance v. Owens (England/Wales); Sulamérica v. Enesa (England/Wales)). It

would be legally and commercially unsound for parties to choose several systems of law to

regulate different aspects of the arbitration proceedings (FirstLink v. GT Payment (Singapore); C v.

D (England/Wales); Sulamérica v. Enesa (England/Wales); cf. SCHLOSSER, § 254). This is reflected in

various decisions and awards where an express choice of the seat was considered to be an implied

choice of the law of the seat as the law applicable to the arbitration agreement (Bangladesh Chem. v.

H.S. Shipping (England/Wales); Halpern v. Halpern (England/Wales); Hamlyn v. Talisker (Scotland); Kosai

Tokyo, 30 May 1994 (Japan); BGH, 10 May 1984 (Germany); ARB Rotterdam, 28 September

1995 (Netherlands); cf. ICC Case No. 5505 (1987)).

26 In conclusion, the Parties intended for the law of the Arbitration Agreement to follow the

law of the seat. As they agreed on Vindobona, Danubia to be the seat of arbitration, they made

an implied choice for the Law of Danubia to govern the Arbitration Agreement.

(b) In any case, the Arbitration Agreement has its closest connection to the Law of

Danubia

27 Even if an implied choice could not be established, the Arbitration Agreement would

nevertheless be governed by the Law of Danubia. This is because it has its closest connection to

this law.


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9

28 RESPONDENT would like to draw attention to the closest connection test, which CLAIMANT

disregards entirely (cf. Cl. Memo. §§ 9 et seqq.). It is an internationally acknowledged criterion for

determining the applicable law (Sulamérica v. Enesa (England/Wales); BCY v. BCZ (Singapore);

Sonatrach v. Ferrell (England/Wales); Habas Sinai v. VSC Steel (England/Wales); NTPC v. Singer (India);

Westacre v. Jugoimport (England/Wales); GH The Hague, 4 August 1993 (Netherlands); ICC Case

No. 11869 (2011)). According to this test, the disputed agreement is to be governed by the legal

system to which it has the closest connection (ibid.).

29 While various factors may be considered when determining the closest connection, the seat

of arbitration is the prevailing criterion (FirstLink v. GT Payment (Singapore); CdA Genoa, 3 February

1990 (Italy); Habas Sinai v. VSC Steel (England/Wales); C v. D (England/Wales); Sulamérica v.

Enesa (England/Wales); Thai-Lao v. Gov. of Laos (Malaysia); GH The Hague, 4 August

1993 (Netherlands)). This is supported by Art. V(1)(a) NYC, pursuant to which the law of the seat

shall be applied when there is no indication as to the parties’ intent. Courts and tribunals

commonly refer to the rationale contained therein (Dallah RE v. MoRA (England/Wales); Tribunale

di Lodi, 13 February 1991 (Italy); BG, 21 March 1995 (Switzerland); BezG Affoltern, 26 May

1994 (Switzerland); ICC Case No. 6149 (1990); ICC Case No. 14046 (2010); BORN, p. 499; DICEY

et al., § 16-014; CRAIG et al., pp. 53 et seq.).

30 In the present case, the Parties agreed on Vindobona, Danubia as the seat of arbitration.

Thus, the Arbitration Agreement has its closest connection to the Law of Danubia. In conclusion,

it is subject to the Law of Danubia.

2. The Tribunal’s lack of power to adapt the Contract follows from an interpretation of

the Arbitration Agreement under the Law of Danubia

31 An interpretation of the Arbitration Agreement under the Law of Danubia leads to the

conclusion that the Tribunal lacks the power to adapt the Contract.

32 Contrary to CLAIMANT’s allegation (Cl. Memo. § 26), there is consistent jurisprudence in

Danubia that the CISG does not apply to arbitration agreements (PO2 No. 36). The Arbitration

Agreement is therefore to be interpreted under Danubian Contract Law (hereinafter “DCL”),

which is a largely verbatim adoption of the UPICC (PO2 No. 45). The DCL deviates from the

UPICC in Art. 6.2.3(4)(b), granting the power to “adapt the contract” to the court only “if

authorized” (ibid.). Pursuant to Art. 1.11 DCL, the term “court” includes arbitral tribunals. For

this reason alone, CLAIMANT’s assertion that arbitral tribunals are not bound by


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10

Art. 6.2.3(4)(b) DCL (Cl. Memo. § 29) cannot be upheld. Furthermore, if one were to follow

CLAIMANT’s line of argument, there would be no legal basis to adapt the Contract.

33 Under the DCL, arbitration agreements are to be interpreted narrowly (PO1 § II). Moreover,

the “four corners rule” applies to the interpretation of contractual agreements, replacing

Art. 4.3 UPICC (PO1 § II; PO2 No. 45). It requires the exclusion of all extraneous evidence such

as prior statements or agreements that would contradict or supplement the contractual

terms (Cl. Memo. § 28; PO1 § II; PO2 No. 45; VOGENAUER in: Vogenauer, Art. 2.1.17 § 4 et seq.). In

light of this, the Parties agreed that the Arbitration Agreement would with high likelihood not be

interpreted as authorizing the Tribunal to adapt the Contract (PO1 § II).

34 CLAIMANT now contradicts the initial understanding by alleging that the Tribunal is

authorized to adapt the Contract (Cl. Memo. §§ 27 et seqq.). However, such authorization has to

expressly and precisely indicate the scope and extent to which adaptation is permitted (see infra

§ 48; Kuwait v. AMINOIL (1982); BERGER, p. 8; CRAIG et al., p. 115; KRÖLL, Gap-filling, p. 16;

BERNARDINI, Renegotiation, p. 421; cf. PETER, p. 252; AL FARUQUE, p. 153 et seqq.; FOUCHARD et al.,

§ 36). In the present case, the wording of the Arbitration Agreement does not stipulate the

Tribunal’s authorization to adapt the Contract (cf. Cl. Exh. C5, § 15).

35 In conclusion, the Tribunal is not authorized and therefore lacks the power to adapt the

Contract under Art. 6.2.3(4)(b) DCL.

II. Even if the Law of Mediterraneo were applicable, the Tribunal would lack the power

to adapt the Contract

36 Contrary to CLAIMANT’s submission (Cl. Memo. §§ 5-17), an interpretation under the Law of

Mediterraneo would equally lead to the Tribunal’s lack of power to adapt the Contract.

37 There is consistent jurisprudence in Mediterraneo that in sales contracts governed by the

CISG, the latter also applies to the conclusion and interpretation of the arbitration agreement

contained in such contracts (PO1 § III No. 4). Thus, there is no room to, alternatively, interpret

the Arbitration Agreement under the Mediterranean Contract Law (cf. Cl. Memo. §§ 23 et seq.).

Consequently, the interpretation of the Arbitration Agreement is governed by Art. 8 CISG.

38 Pursuant to Art. 8(1) CISG, the common intent of the parties is the primary criterion for the

interpretation of a contract (ICC Case No. 18489 (2013); BG, 5 April 2005 (Switzerland)). If none

can be determined, the hypothetical understanding of a reasonable business person is

decisive (Art. 8(2) CISG; ZUPPI in: Kröll et al., Art. 8 § 3; OG Kanton Zug, 8 November

2011 (Switzerland); OLG Düsseldorf, 23 March 2011 (Germany); OGH, 20 March 1997 (Austria)). In


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11

either case, all relevant circumstances have to be considered (Art. 8(3) CISG; Proforce v.

Rugby (England/Wales); OLG Dresden, 27 December 1999 (Germany)).

39 When interpreting pursuant to Art. 8(1) CISG, no common intent regarding the Tribunal’s

power to adapt the Contract can be established (1.). An interpretation in line with Art. 8(2) CISG

shows the Tribunal’s lack of power to adapt the Contract (2.).

1. The Parties did not intend to authorize the Tribunal to adapt the Contract

40 The Parties did not have the common intent to empower the Tribunal to adapt the Contract.

41 When interpreting pursuant to Art. 8(1), (3) CISG, all relevant circumstances such as the

negotiations between the parties have to be taken into account (see supra § 38).

42 Contrary to CLAIMANT’s submission (Cl. Memo. § 21), the Parties did not agree on the

Tribunal’s power to adapt the Contract. According to Ms. Napravnik’s witness statement,

Mr. Antley stated that “it should probably be the task of the arbitrators to adapt the

contract” (Cl. Exh. C8, emphasis added). Subsequently, Ms. Napravnik suggested to “clarify that

issue” (ibid.), to which Mr. Antley responded that he “would come back with a proposal the next

morning” (ibid.). Moreover, he noted in his negotiation file: “Connection of hardship clause with

arbitration clause” under the heading “List of issues for further negotiations […]” (Resp. Exh. R3).

This demonstrates that Mr. Antley had not come to a decision, but still considered the issue to be

open. As both negotiators were severely injured in a car accident the same day (Cl. Exh. C8;

Resp. Exh. R3), a final agreement was not reached. Therefore, the discussion regarding a tribunal’s

power to adapt the Contract never left the stage of preliminary negotiations.

43 Furthermore, Mr. Ferguson and Mr. Krone did not consider the issue again after they had

taken over negotiations (Resp. Exh. R3; cf. PO2 No. 7). In fact, Mr. Krone states that he “would

have objected to transfer powers to the Arbitral Tribunal to increase the price upon its

discretion” (Resp. Exh. R3). CLAIMANT states that Mr. Krone’s intent was “pure[ly] internal and

secret” and thereby relies on a decision from the District Court Hamburg (Cl. Memo. § 21; cf. LG

Hamburg, 26 September 1990 (Germany)). However, CLAIMANT neglects that the buyer in said

decision made a clear and binding declaration and later invoked a different intent (LG Hamburg,

26 September 1990 (Germany)). In stark contrast, RESPONDENT never made such declaration with

regard to a tribunal’s power to adapt the Contract (see supra § 42).

44 In conclusion, the Parties did not have the common intent to empower the Tribunal to adapt

the Contract.


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12

2. A reasonable business person would conclude that the Tribunal lacks the power to

adapt the Contract

45 Contrary to CLAIMANT’s assertion (Cl. Memo. § 22), an interpretation pursuant to

Art. 8(2) CISG shows that the Tribunal lacks the power to adapt the Contract.

46 When interpreting under Art. 8(2), (3) CISG, all relevant circumstances and the wording of

the contractual terms have to be considered (OLG Dresden, 27 December 1999 (Germany); SCHMIDT-

KESSEL in: Schlechtriem/Schwenzer, Art. 8 § 21; MAGNUS in: Staudinger, Art. 8 § 24).

47 CLAIMANT bases its argument on the presumption that parties intend to submit all of their

disputes to arbitration unless it is likely that they intended only some of the questions arising out

of their relationship to be submitted to arbitration (Cl. Memo. § 28; cf. Premium Nafta v. Fili

Shipping (England/Wales)). In the present case, however, this presumption cannot be upheld as the

Parties restricted the scope of the Arbitration Agreement. RESPONDENT narrowed down the

broad wording of the HKIAC Model Clause (Resp. Exh. R1). The following synopsis illustrates

the modifications made by RESPONDENT:

HKIAC Model Clause Arbitration Agreement

Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted.

Any dispute arising out of this contract, including the existence, validity, interpretation, performance, breach or termination thereof shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted.

CLAIMANT accepted this narrow version (Resp. Exh. R2). Where parties alter a broad standard

arbitration agreement so that it only refers to disputes “arising out of”, they are considered to

manifest their intent to narrow its scope (Tracer v. NESC (USA); Texaco v. American Trading (USA);

REDFERN/HUNTER, §§ 9.64, 9.69; PETER, p. 279; CRAIG et al., pp. 88 et seq.). Thus, the Parties did

not want to refer all questions to arbitration.

48 Moreover, contract adaptation gives the arbitral tribunal a more creative power which

deviates from the common understanding of dispute settlement (BERNARDINI, Renegotiation,

p. 421; BERGER, p. 8; BEISTEINER, p. 85; cf. AL FARUQUE, p. 153; KRÖLL, Gap-filling, p. 12).


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13

Consequently, such power generally has to be conferred expressly (ICC Case 2291 (1975); Kuwait v.

AMINOIL (1982); UN Doc. A/CN.9/263 (1985), Sec. C § 15; BERGER, p. 5; cf. KRÖLL, Gap-filling,

p. 12). In the absence of an express authorization, tribunals are extremely reluctant in finding that

they are empowered to adapt contracts (ICC Case No. 2404 (1975); ICC Case No. 2708 (1976); ICC

Case No. 1512 (1971); Kuwait v. AMINOIL (1982); cf. BERGER, p. 9; PETER, p. 231; DOUDKO,

p. 104). While the Parties enumerated specific disputes to be resolved by arbitration, they did not

include an express reference to contract adaptation. Hence, a reasonable business person would

come to the conclusion that the Tribunal does not have the power to adapt the Contract.

49 This conclusion is not altered by CLAIMANT’s interpretation of the Arbitration Agreement in

conjunction with Clause 12 of the Contract (Cl. Memo. § 22). It alleges that Clause 12 of the

Contract would be a “hollow provision” if the Tribunal had no power to adapt the

Contract (ibid.). However, just like Clauses 9 and 10 of the Contract, Clause 12 allocates

responsibilities, specifically excusing CLAIMANT from performance under certain

circumstances (see infra §§ 78 et seqq.). The mere fact that the remedy CLAIMANT desires is not

available does not render Clause 12 of the Contract hollow.

50 Thus, the Tribunal lacks the power to adapt the Contract under the Law of Mediterraneo.

Conclusion to Issue I

The Tribunal does not have the jurisdiction to adapt the Contract under the lex arbitri. The

Arbitration Agreement is governed by the Law of Danubia. An interpretation of the Arbitration

Agreement under the Law of Danubia shows the Tribunal’s lack of power to adapt the Contract.

Even if the Law of Mediterraneo were applicable, the Tribunal would not be authorized to adapt

the Contract.


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14

ISSUE II: THE EVIDENCE FROM THE OTHER ARBITRATION PROCEEDINGS IS

INADMISSIBLE 51 On 2 October 2018, RESPONDENT received CLAIMANT’s request to submit the “Partial

Interim Award” (hereinafter “Partial Award”) from another HKIAC arbitration as evidence in

the present proceedings. Contrary to CLAIMANT’s submission (Cl. Memo. §§ 31-60), the evidence

is inadmissible. RESPONDENT respectfully requests the Tribunal to find that the unlawful

obtainment of the Partial Award hinders an admission (A.). Moreover, it is inadmissible as it is

irrelevant to the case and immaterial to its outcome (B.). Lastly, an admission would undermine

the principle of equality of arms (C.).

A. THE UNLAWFUL OBTAINMENT OF THE PARTIAL AWARD PRECLUDES ITS

ADMISSION 52 The Tribunal is respectfully requested to deny the admission of the Partial Award as

evidence into the present proceedings due to its unlawful obtainment.

53 The Partial Award was obtained unlawfully – either through an illegal hack of

RESPONDENT’s computer system or a breach of a confidentiality agreement (PO1 § III No. 1(b);

PO2 No. 41). It is common arbitral practice that unlawfully obtained evidence shall not be

admitted (Methanex v. USA (2005); Libananco v. Turkey (2008); Conoco Phillips Petrozuata v.

Venezuela (2013); EDF v. Romania (2005) WÄLDE, p. 184; DE BARROS, pp. 89 et seq.). This is based

on the “clean hands” doctrine, which originates from the parties’ general duty to conduct

themselves in good faith during the arbitration proceedings (DUMBERRY, p. 230; LLAMZON,

p. 325; cf. Methanex v. USA (2005); Libananco v. Turkey (2008)).

54 CLAIMANT relies on the tribunal’s award in Caratube v. Kazakhstan, allowing evidence initially

obtained in an unlawful manner to be admitted because it had already been publicly

available (Cl. Memo. § 52; cf. Caratube v. Kazakhstan (2017)). However, CLAIMANT omits that the

Tribunal only admitted said evidence as it had been “leaked on a publicly available

website” (Caratube v. Kazakhstan (2017)). This is because the requesting party did not need to

make considerable efforts in the obtainment of the documents and has, thus, not breached its

duty to act in good faith (Caratube v. Kazakhstan (2017); cf. Bible v. United Student Aid (USA)).

55 In the present case, CLAIMANT only heard about the other arbitration proceedings from

Mr. Velazquez, a former employee of the Mediterranean buyer in the other proceedings (PO2

No. 40). Given his former position, he was able to provide CLAIMANT with insider information

about the main issues in dispute (ibid.). Now being the CEO of one of CLAIMANT’s regular


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15

customers (ibid.), it can be assumed that he disclosed the information solely to CLAIMANT but did

not “openly discuss” (Cl. Memo. § 54) the issue at the annual breeder conference. As

Mr. Velazquez was not able to organize a copy of the Partial Award, CLAIMANT made the effort

to arrange an opportunity to acquire it from a company with a “doubtful reputation” (PO2

No. 41). CLAIMANT is even willing to pay US$ 1,000 in order to obtain the Partial Award (ibid.).

56 In light of this, CLAIMANT’s assertion (Cl. Memo. §§ 54 et seqq.) is not convincing, as the

information was never publicly available on the internet. Instead, CLAIMANT undertook extensive

efforts in order to purchase confidential information and thereby demonstrated its bad faith. As

CLAIMANT would not obtain the Partial Award with clean hands, it is inadmissible.

B. THE EVIDENCE IS INADMISSIBLE DUE TO ITS IRRELEVANCE AND

IMMATERIALITY 57 Contrary to CLAIMANT’s submission (Cl. Memo. §§ 33-42, 57 et seqq.), the Partial Award is

neither relevant to the case nor material to its outcome. The Tribunal’s refusal to admit the

Partial Award into evidence would therefore not violate its right to be heard.

58 The Tribunal may decide on the admissibility of evidence at its discretion (cf. Cl. Memo. § 31).

Pursuant to Art. 22(2), (3) HKIAC Rules, the arbitral tribunal shall determine the admissibility of

evidence on the basis of its relevance and materiality. A document is relevant to the case if it

proves a fact from which legal conclusions can be drawn (ZUBERBÜHLER et al., Art. 3 §§ 136

et seqq.; KAUFMANN-KOHLER/BÄRTSCH, p. 18). It is material to its outcome if it is required for “a

complete consideration of the legal issues presented to the tribunal” (ZUBERBÜHLER et al., Art. 3

§§ 136; cf. RAESCHKE-KESSLER, p. 427).

59 CLAIMANT is correct in stating that each party shall be given the full opportunity to

heard (Cl. Memo. § 58; cf. Artt. 13(1), 31(1) HKIAC Rules, Art. 18 DAL). However, this principle

does not extend to evidence that is irrelevant and immaterial to the outcome of the case (cf. BG,

30 September 2003 (Switzerland); Karaha v. Perusahaan (USA); Mathews v. Eldridge (USA); State v.

Talton (USA); Teekay Tankers v. STX (England/Wales)).

60 The Partial Award is inadmissible as it is neither relevant to the case nor material to its

outcome: It merely reflects an arbitral tribunal’s legal opinion (I.). The other HKIAC arbitration

is not comparable to the present proceedings (II.). Furthermore, the Partial Award cannot be

used to prove that RESPONDENT breached its duty to act in good faith (III.).


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I. The Partial Award only reflects an arbitral tribunal’s legal opinion

61 The Partial Award is irrelevant to the case and immaterial to its outcome as it only depicts

the arbitral tribunal’s legal reasoning in the other proceedings.

62 CLAIMANT contends that the Partial Award from the other arbitration are evidence of

RESPONDENT’s understanding of the meaning of “hardship” (Cl. Memo. §§ 34 et seqq.). However,

in the Partial Award, the tribunal solely confirmed its power to adapt the contract under the

unique circumstances of that case (PO2 No. 39). It is commonly acknowledged that an award is

“not admissible evidence to prove a fact” in another proceeding with different parties (Land

Securities v. Westminster (England/Wales); cf. COOK, p. 30; The Queen v. Hui Chi Ming (England/Wales);

Hollington v. Hewthorn (England/Wales)). This is because it merely represents “an arbitrator’s

opinion” under the applicable law (Land Securities v. Westminster (England/Wales)). Hence, the

Partial Award is inadequate to prove RESPONDENT’s understanding with regards to hardship.

II. The other HKIAC arbitration is not comparable to the present proceedings

63 The irrelevance and immateriality are supported by the fact that the other HKIAC

arbitration is – contrary to CLAIMANT’s submission (Cl. Memo. § 36) – not comparable to the

present proceedings.

64 This is due to the following reasons: First, the parties in the other arbitration agreed on the

broadly worded ICC-Hardship Clause (PO2 No. 39). In contrast thereto, the Parties to the

present proceedings rejected the ICC-Hardship Clause and solely included a narrow hardship

reference in Clause 12 of the Contract (PO2 No. 12; Resp. Exh. R2; Resp. Exh. R3). Second, the

parties in the other arbitration included the HKIAC Model Clause (PO2 No. 39). In the present

proceedings, however, the Parties significantly restricted the initially broad scope of the

Arbitration Agreement (see supra §§ 47 et seq.). Third, the parties to the other arbitration chose

Mediterraneo as their arbitral seat (PO2 No. 39), which encompasses the choice of Mediterranean

Arbitration Law as the lex arbitri. It differs from the DAL insofar as there is no indication that an

express conferral of powers is required for contract adaptation (cf. supra § 5). Fourth, the other

arbitration agreement is governed by the Law of Mediterraneo (PO2 No. 39). In stark contrast,

the Arbitration Agreement in the present proceedings is subject to the Law of Danubia, which

contains the “four corners rule” and requires a narrow interpretation (see supra §§ 32 et seq.). Given

the differences between the two proceedings, RESPONDENT’s understanding of the meaning of

hardship in the other HKIAC arbitration cannot be transferred to the present proceedings.

65 Therefore, the Partial Award is irrelevant to the case and immaterial to its outcome.


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17

III. The Partial Award cannot be used to evidence that RESPONDENT acted in bad faith

66 Contrary to what CLAIMANT submits (Cl. Memo. §§ 39 et seqq.), the Partial Award is irrelevant

and immaterial as it cannot be used to demonstrate RESPONDENT’s alleged breach of its duty to

act in good faith.

67 CLAIMANT asserts that RESPONDENT breached its duty to act in good faith by relying on

“diametrically opposed reasoning” in the two proceedings (Cl. Memo. § 41). While the CISG does

not stipulate an explicit provision on inconsistent behavior, it contains the general principle of

venire contra factum proprium (ICC Case No. 8786 (1997); SCHWENZER/HACHEM in:

Schlechtriem/Schwenzer, Art. 7 § 32). According to this principle, a party must not act in

contradiction to its own previous conduct if it is to the detriment of the other party (ICAC Case

No. 302/1996 (1999); GREENBERG et al., §§ 4.75 et seqq.; cf. CAS Case No. 2002/O/410 (2003)).

However, this principle only applies within the confines of one contractual

relationship (WAINCYMER, pp. 687, 789; cf. CODREA, p. 361; BARNETT, § 5.01).

68 RESPONDENT did not behave inconsistently. The other HKIAC arbitration arises out of a

contractual relationship with another party. The circumstances underlying the disputes are not

comparable (see supra §§ 63 et seqq.). Thus, RESPONDENT may have a different legal position with

regard to the respective disputes. The fact that CLAIMANT dug out an award which only seems to

contain legally relevant similarities cannot be construed to RESPONDENT’s detriment. The Partial

Award can therefore not be used to prove that RESPONDENT acted in bad faith.

69 In conclusion, the Partial Award is irrelevant to the case and immaterial to its outcome.

Consequently, a denial of the submission of the Partial Award into evidence does not violate

CLAIMANT’s right to be heard. As CLAIMANT therefore has no legitimate interest to submit the

Partial Award, there is no reason to admit it and later weigh its evidential value (cf. Cl. Memo. § 59).

The Partial Award is inadmissible.

C. AN ADMISSION WOULD INFRINGE THE PRINCIPLE OF EQUALITY OF ARMS 70 Admitting the Partial Award into evidence would violate the principle of equality of arms.

71 Pursuant to Art. 13(1) HKIAC Rules and Art. 18 DAL, a tribunal shall treat the parties fairly

and equally. In particular, maintaining and restoring the principle of equality of arms is of

paramount importance when determining the admissibility of evidence (BLAIR/VIDAK GOJKOVIC,

p. 258; WÄLDE, pp. 187 et seqq.; cf. Giovanni Alemanni v. Argentina (2014); Methanex v. USA (2005);

EDF v. Romania (2005)). This principle ensures that the parties enjoy substantially equal

opportunities to present their case and neither of them be disadvantaged in the preparation of


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18

their response (ECHR, 27 October 1993; LAU, pp. 560 et seq.; O’MALLEY, § 9.116). Consequently,

the balance between the parties is only guaranteed when each party is able to examine and

challenge any submitted document (ECHR, 6 November 2012; CAIRNS, p. 188).

72 CLAIMANT correctly points out that it is not a party to the other HKIAC arbitration and

therefore not subject to any confidentiality obligations (Cl. Memo. §§ 44 et seqq.). However,

pursuant to Art. 42 HKIAC 2013 Rules, RESPONDENT is obliged to keep the proceedings

confidential. Hence, it would not be able to substantiate a defense against CLAIMANT’s assertions

without breaching its confidentiality obligations. This holds especially true as the authenticity of

the copy of the Partial Award cannot be ensured given the circumstances of its obtainment from

a questionable source (cf. PO2 No. 41; EDF v. Romania (2005); Tribunal for Lebanon, 21 May

2015 (UN)). In fact, the opponent in the other arbitration affirms that CLAIMANT’s allegations

“do not reflect reality and are taken out of context” (Resp. Mail. of 3 Oct. 2018). RESPONDENT

could thus not challenge such misrepresentation of the other proceedings.

73 In conclusion, admitting the Partial Award would infringe the principle of equality of arms.

Conclusion to Issue II

The unlawful obtainment of the Partial Award hinders its submission into evidence. Moreover,

the Partial Award is neither relevant to the case nor material to its outcome. The principle of

equality of arms would be violated by an admission. Therefore, the Tribunal is respectfully

requested to reject the submission of the Partial Award as evidence into the proceedings.

ISSUE III(A): CLAIMANT IS NOT ENTITLED TO PAYMENT OF US$ 1,250,000

UNDER CLAUSE 12 OF THE CONTRACT 74 The Tribunal is respectfully requested to find that CLAIMANT is not entitled to a

remuneration of US$ 1,250,000 by way of contract adaptation under Clause 12 of the Contract.

75 On 19 December 2017, the Equatorianian Government announced retaliatory tariffs on

agricultural goods including racehorse semen (PO2 Nos. 25 et seq.; Cl. Exh. C6; Cl. Exh. C7). This

marked the peak of a trade war between Mediterraneo and Equatoriana which had been

unfolding for the past months (PO2 No. 23; Cl. Exh. C6). Nonetheless, on 23 January 2018,

CLAIMANT delivered the third and last instalment of frozen semen in compliance with its

contractual obligations (cf. Cl. Exh. C5; Cl. Exh. C7). RESPONDENT equally fulfilled its contractual

obligations by paying the second instalment of the purchase price (cf. Resp. Exh. R4; Cl. Exh. C5).


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19

Despite this, CLAIMANT now requests a contract adaptation under the hardship reference

contained in Clause 12 of the Contract (hereinafter “Hardship Reference”). Contrary to what

CLAIMANT submits (Cl. Memo. §§ 61-93), the Hardship Reference neither applies to the present

impediment (A.) nor provides for contract adaptation as a remedy (B.).

A. THE HARDSHIP REFERENCE DOES NOT APPLY TO THE IMPOSITION OF

TARIFFS 76 Contrary to CLAIMANT’s submission (Cl. Memo. §§ 62-84), the imposition of tariffs does not

fall within the scope of the Hardship Reference.

77 The Hardship Reference stipulates that “Seller shall not be responsible […] for hardship,

caused by additional health and safety requirements or comparable unforeseen events making the

contract more onerous” (Cl. Exh. C5; § 12). An interpretation of the Hardship Reference reveals

its narrow scope of application (I.). On the basis of this interpretation, the prerequisites are not

met in the present case (II.).

I. The Hardship Reference has a narrow scope of application

78 The circumstances leading to an exemption from responsibility under the Hardship

Reference are restricted. This follows from an interpretation pursuant to Art. 8 CISG.

79 Art. 8(1) CISG necessitates a subjective test. Where the common intent of the parties cannot

be established, Art. 8(2) CISG stipulates an objective test according to the understanding of a

reasonable business person (see supra § 38).

80 The Parties only intended for a limited number of specific events to be covered by the scope

of the Hardship Reference (1.). In any case, a reasonable business person would come to the

same conclusion (2.).

1. The Parties intended for the Hardship Reference to only apply to specific events

81 Contrary to CLAIMANT’s assertion (Cl. Memo. §§ 65 et seq., 71, 79 et seqq.), the Parties’

negotiations show their common intent to have the Hardship Reference cover only a limited

number of specific events.

82 When interpreting in line with Art. 8(1), (3) CISG, the negotiations have to be considered in

order to determine the parties’ common intent (see supra § 38).

83 During the contractual negotiations, RESPONDENT requested a DDP delivery (Cl. Exh. C3).

DDP means that all risks associated with the delivery, including duties, taxes, customs, and


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20

import clearances, are assumed by the seller (cf. BFH, 30 April 2012 (Germany); Incoterms 2010,

pp. 69 et. seqq.; BRUNNER, p. 131; DA SILVEIRA, fn. 872). It constitutes the “maximum obligation

for the seller” (Incoterms 2010, p. 69). CLAIMANT agreed to this change in delivery terms under the

condition that it be relieved from certain risks associated with changes in customs regulation or

import restrictions (Cl. Exh. C4). In this context, it explicitly referred to “health and safety

requirements” (ibid.). CLAIMANT knew from past experiences that such can lead to additional

tests and quarantines and may result in additional costs of 40% of the purchase price (PO2 No. 21;

Cl. Exh. C4). RESPONDENT, on the other hand, was unwilling to exempt CLAIMANT from

responsibility for all risks related to customs and import restrictions since this would, in effect,

have undermined the use of DDP. CLAIMANT is correct in stating that it proposed the inclusion

of a hardship clause with the intent to mitigate some of the risks assumed in connection with the

DDP delivery (Cl. Memo. § 66). However, both of RESPONDENT’s negotiators, Mr. Antley and

Mr. Krone, considered the ICC-Hardship Clause proposed by CLAIMANT too broad for “the

purposes of [the] contract and the objectives pursued” (PO2 No. 12; cf. Resp. Exh. R2;

Resp. Exh. R3). Subsequently, the Parties agreed on the narrowly worded Hardship Reference

which was added to the force majeure clause (PO2 No. 12; Resp. Exh. R3; cf. Cl. Exh. C5, § 12).

Thus, it was the Parties’ intent to relieve CLAIMANT only from hardship caused by customs and

import restrictions as long as they are closely related to health and safety requirements.

84 The Parties intent to provide for a narrow scope of the Hardship Reference is further

evidenced by the fact that it requires contract performance to become “more

onerous” (Cl. Exh. C5, § 12). From the past experiences CLAIMANT had mentioned (Cl. Exh. C4),

both Parties considered additional costs amounting to 40% of the purchase price sufficient to

make the Contract more onerous. The Parties therefore had a clear threshold in mind for

determining whether contract performance becomes “more onerous”. Hence, by including the

narrow Hardship Reference into the Contract, the Parties intended to exempt CLAIMANT from

responsibility only in such grave circumstances.

85 Consequently, CLAIMANT assumed all other risks associated with the DDP delivery and not

covered by Clause 12 of the Contract. This is emphasized by the fact that the Parties agreed on

RESPONDENT paying an extra US$ 500 per dose of frozen semen (PO2 No. 8). US$ 200 thereof

were direct additional costs associated with transportation and DDP delivery (ibid.). In order to

compensate the risk assumption, CLAIMANT was awarded a premium of US$ 300 per

dose (cf. PO2 No. 8; Cl. Exh. C4).

86 To conclude, the Parties intended to narrow the Hardship Reference’s scope of application.


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2. An objective analysis leads to the conclusion that the Hardship Reference only

applies to specific events

87 Even if the Parties’ common intent could not be established, a reasonable business person

would find that the Hardship Reference only covers specific events.

88 When interpreting pursuant to Art. 8(2), (3) CISG, special weight is given to the usual

meaning of the terms used by the parties (ICC Case No. 9187 (1999); HG Zürich, 24 October

2003 (Switzerland)).

89 Both the phrase “health and safety requirements and comparable […] events” (a) and the

terms “unforeseen” as well as “more onerous” (b) evidence that the Hardship Reference has a

narrow scope of application.

(a) The terms “health and safety requirements” and “comparable events” do not cover a

wide array of events

90 Contrary to CLAIMANT’s assertion (Cl. Memo. § 68), a reasonable business person would not

understand the phrase “health and safety requirements and comparable […] events” to

encompass a wide array of events.

91 Health and safety requirements are public policy instruments specifically aimed at protecting

the health, well-being and life of humans, animals or plants (cf. WTO Report 2012, pp. 6, 34;

TUCCI/LORIDAN, p. 30; DE MELO/NICITA, pp. 5, 18). The term “comparable events” implies that

only effects resulting from laws and regulations pursuing the same objective should be covered

by the scope of the hardship provision (cf. BLACK, p. 340; cf. DE MELO/NICITA, p. 23). Examples

of comparable events are environmental standards imposed by authorities or product-specific

quality and identification requirements (cf. LOVE/LATTIMORE, pp. 62, 64; WTO Report 2012,

pp. 38 et seq.; DE MELO/NICITA, p. 21). Health and safety requirements and comparable events

have in common that they are “put in place for non-economic reasons” and may only indirectly

affect trade (LOVE/LATTIMORE, p. 64; cf. WTO Report 2012, p. 46; DE MELO/NICITA, p. 18).

92 Thus, the terms “health and safety requirements” and “comparable events” are limited to

specific events.

(b) The terms “unforeseen” and “more onerous” further restrict the scope of application

93 A reasonable business person would understand the terms “unforeseen” and “more

onerous” to further limit the number of events covered by the Hardship Reference.


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94 For an exemption from responsibility, the Hardship Reference further requires the event to

have been “unforeseen” (Cl. Exh. C5, § 12). An event is unforeseen if the parties did not expect it

to occur at the time of contract conclusion (cf. BLACK, p. 1761).

95 The Hardship Reference also stipulates that the event must make the Contract “more

onerous” (Cl. Exh. C5, § 12). Contract performance is generally considered to become more

onerous when a dramatic change in circumstances fundamentally alters the contractual

equilibrium (BERNARDINI, p. 99; DA SILVEIRA, p. 323; BAUR, p. 512 et seqq.; VAN OMMESLAGHE,

p. 10). CLAIMANT is correct in stating that the threshold set by the Hardship Reference is lower

than the standard of “excessive onerousness” required by the ICC-Hardship Clause that was

initially considered (Cl. Memo. § 82). However, it fails to substantiate how the term “more

onerous” is to be understood. Lowering the threshold cannot mean that every cost increase shall

fall under the scope of the Hardship Reference (cf. Cl. Memo. § 82). Otherwise, if a moderate cost

increase sufficed to exempt a party from responsibility, the opposing party could not rely on the

obligor to fulfill its contractual obligations (cf. KRÖLL, Renegotiation, p. 466; FINKENAUER in:

MüKoBGB, Sec. 313 § 58 et seqq.; DA SILVEIRA, p. 347; SCHWENZER, Hardship, p. 716). After all,

“legal certainty calls for some benchmark” (DAVIES/SNYDER, p. 334). It is therefore reasonable

to adhere to the general understanding of the term “more onerous”. Thus, the contractual

equilibrium must be fundamentally altered in order to exceed the Hardship Reference’s threshold.

96 Under consideration of all these circumstances, a reasonable business person would

conclude that the Hardship Reference has a narrow scope of application.

II. The prerequisites for an exemption under the Hardship Reference are not fulfilled in

the present case

97 Contrary to CLAIMANT’s assertion (Cl. Memo. §§ 63 et seqq.), the 30% tariffs imposed by the

Equatorianian Government do not meet the prerequisites for an exemption under the Hardship

Reference. CLAIMANT is correct in stating that the tariffs were unforeseen by the

Parties (Cl. Memo. §§ 70 et seqq.). However, the other prerequisites set out in the Hardship

Reference are not met. To begin with, the imposition of the 30% tariffs is not covered by the

phrase “health and safety requirements and comparable […] events” (1.). In any case, the

additional costs do not make contract performance “more onerous” (2.).


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1. The imposition of tariffs is not an event comparable to health and safety requirements

98 Contrary to CLAIMANT’s assertion (Cl. Memo. §§ 67 et seq.), the imposition of tariffs is not an

event comparable to health or safety requirements.

99 Health and safety requirements are public policy instruments pursuing a non-economic

objective (see supra §§ 90 et seqq.). Tariffs, by contrast, serve a solely economic purpose, namely to

protect and foster the national economy by impeding foreign competition (KRUGMAN et al.,

p. 239; LOWENFELD, p. 31; cf. BLACK, p. 1684; LOVE/LATTIMORE, p. 57). In fact, the WTO, the

UNCTAD, and the EU differentiate between tariffs and non-tariff measures such as technical,

health or environmental policies (cf. WTO Report 2012, p. 1; TUCCI/LORIDAN, p. 1; DE

MELO/NICITA, p. 1). On these grounds, tariffs are inherently different from and cannot be

compared to health and safety requirements.

100 For this reason alone, CLAIMANT cannot invoke hardship under the Hardship Reference.

2. The imposition of tariffs does not make contract performance more onerous

101 In any case, the additional costs do not render contract performance more onerous for

CLAIMANT.

102 CLAIMANT submits that the tariffs resulted in additional costs amounting to 30% of the

purchase price (Cl. Memo. § 83). However, it disregards that the 30% tariffs affected only the third

shipment valued at US$ 5,000,000 (Cl. Exh. C7; Cl. Exh. C8). The additional costs therefore

amount to merely 15% of the total purchase price, i.e. US$ 1,500,000 (cf. Cl. Exh. C5). This only

constitutes a moderate rise in costs. Moreover, CLAIMANT expected to make a 5% profit from

the sale of the frozen semen (PO2 No. 31). Thus, its net loss is in fact US$ 1,000,000 or 10% of

the total purchase price. Incurring unexpected losses is one of the common risks of being in

business itself (SECK, p. 113; BRUNNER, p. 436; cf. ICC Case No. 6281 (1989); BTTP Case

No. 11/1996 (1998), RBK Hasselt, 2 May 1995 (Belgium)). Therefore, the contractual equilibrium is

not fundamentally altered. This is underlined by the fact that the additional costs by far do not

reach the 40% cost increase CLAIMANT mentioned during the negotiations (see supra §§ 83 et seq.).

103 Contrary to CLAIMANT’s assertion (Cl. Memo. § 83), its financial situation does not suffice to

lower the threshold to assume hardship. This is only possible when financial ruin of the

disadvantaged party is imminent (SCHWENZER, Hardship, p. 716; DA SILVEIRA, p. 347;

DAVIES/SNYDER, p. 334). Bearing the additional costs would mean that CLAIMANT might not be

able to meet its profit target for 2018 (PO2 No. 29). This would merely affect the automatic

prolongation of its credit line (ibid.). However, the possibility to undergo further restructuring


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24

measures and negotiate a new credit line remains unaffected (ibid.). Moreover, Nijinsky III is “one

of the most sought-after stallions for breeding” (§ 3 NoA) and had been fully booked for natural

coverings for the breeding season 2017 (PO2 No. 11). For these bookings, CLAIMANT has a profit

margin of 15% which is above market average (PO2 No. 19). It will therefore be able to generate

substantial profits in the future. Thus, CLAIMANT’s financial ruin is not imminent. The threshold

to assume hardship is not to be lowered any further.

104 In conclusion, the contractual equilibrium has not been fundamentally altered. The

prerequisites stipulated in the Hardship Reference are not met. Hence, the imposition of tariffs

does not trigger an exemption from responsibility under the Hardship Reference.

B. IN ANY CASE, THE HARDSHIP REFERENCE DOES NOT ALLOW FOR AN

INCREASE OF THE PURCHASE PRICE BY WAY OF CONTRACT ADAPTATION 105 In any case, the purchase price cannot be increased under the Hardship Reference. Contrary

to CLAIMANT’s assertion (Cl. Memo. §§ 85-92), the Hardship Reference does not provide for a

contract adaptation as its remedial consequence (I.). Even if it did, CLAIMANT would not be

entitled to an additional remuneration of US$ 1,250,000 (II.).

I. The Hardship Reference does not provide for contract adaptation as a remedy

106 The Tribunal is respectfully requested to find that a contract adaptation is not possible under

the Hardship Reference. This follows from an interpretation pursuant to Art. 8 CISG. The

Parties did not have the common intent to provide for a contract adaptation in case of

hardship (1.). A reasonable business person would not understand the Hardship Reference to

provide for a contract adaptation, either (2.).

1. The Parties did not have the common intent to have the Contract adapted in case of

hardship

107 Contrary to CLAIMANT’s assertion (Cl. Memo. § 86 et seq.), the Parties did not intend the

Hardship Reference to provide for a contract adaptation.

108 All relevant circumstances, including the negotiations and subsequent conduct are to be

considered when interpreting in line with Art. 8(1), (3) CISG.

109 During the negotiations, CLAIMANT proposed to include the ICC-Hardship Clause into the

Contract (Resp. Exh. R2). This clause does not provide for contract adaptation as a remedy but

only entitles the aggrieved party to terminate the contract (§ 3 ICC Hardship Clause). The notion


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of contract adaptation was only discussed during the meeting between Ms. Napravnik and

Mr. Antley (cf. Cl. Exh. C8). However, contrary to CLAIMANT’s assertion (Cl. Memo. § 87), the

negotiations never left the preliminary stage and the Parties did not come to an agreement (see

supra § 42). Their successors, Mr. Ferguson and Mr. Krone, did not consider the issue of contract

adaptation (cf. Resp. Exh. R3). Mr. Krone only suggested the wording of the Hardship Reference

which was eventually added to the force majeure clause (PO2 No. 12). This clause stipulates that

“Seller shall not be responsible” as the only legal consequence (Cl. Exh. C5, § 12). This part

already existed in the standard contract form initially proposed by CLAIMANT (PO2 Nos. 3 et seq.;

Cl. Exh. C2). Had it been CLAIMANT’s intent to have the contract adapted in case of hardship, it

could have proposed a modification of the wording. Thus, there is no indication that the Parties

had a common intent to provide for a contract adaptation.

110 Furthermore, it cannot be inferred from the Parties’ subsequent conduct that they had a

shared understanding to adapt the Contract in case of hardship (cf. Cl. Memo. § 87). CLAIMANT

informed RESPONDENT that the tariffs applied to the last shipment and requested negotiations to

find a solution regarding the additional costs (Cl. Exh. C7). In his response, Mr. Shoemaker

merely stated that the Parties would find a solution “if the contract provides for an increased

price” (Resp. Exh. R4, emphasis added). This does not imply that the Parties had the initial intent to

have the Contract adapted in case of hardship. Moreover, he made clear that he was not

authorized to agree to an increase of the purchase price (Cl. Exh. C8; Resp. Exh. R3).

111 In conclusion, the Parties did not have the common intent to provide for contract

adaptation as a remedy under the Hardship Reference.

2. An objective analysis shows that contract adaptation is not possible under the

Hardship Reference

112 Contrary to CLAIMANT’s assertion (Cl. Memo. §§ 88 et seqq.), an interpretation according to

the understanding of a reasonable business person shows that contract adaptation is not a remedy

available under the Hardship Reference.

113 The usual meaning of the terms used by the parties is of high significance when interpreting

pursuant to Art. 8(2), (3) CISG (see supra § 88).

114 Clause 12 of the Contract expressly stipulates that “Seller shall not be responsible” for

certain cases of hardship (Cl. Exh. C5). Contrary to CLAIMANT’s submission (Cl. Memo. §§ 90, 92),

this does not mean that responsibility is shifted to RESPONDENT. To begin with, shifting the

responsibility would undermine the systematics of the Contract. Cases where “Buyer is


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26

responsible” are explicitly stipulated in Clauses 9, 10 and 13 of the Contract (Cl. Exh. C5).

Furthermore, the Parties merely added the Hardship Reference into the force majeure clause of

the Contract without providing for a specific remedy (cf. PO2 No. 12; Cl. Exh. C5, § 12). In

general, force majeure clauses exempt the affected party from responsibility for non-performance

in case of a drastic change in circumstances (RIMKE, pp. 199, 201; WEICK, p. 300; STROHBACH,

p. 40). As a consequence, the parties are usually entitled to terminate the contract (ibid.). Such a

remedy is not foreign to hardship provisions, either (cf. § 3 ICC Hardship Clause;

Art. 6.2.3(a) UPICC; FUCCI, II. E.). Hence, a reasonable business person would conclude that the

Parties wanted to provide for the same remedy in case of hardship. This is underlined by the

Parties initial consideration of the ICC Hardship Clause which provides for contract termination

as its remedy (§ 3 ICC Hardship Clause; PO2 No. 12; Cl. Exh. C4). It is thus reasonable to assume

that if CLAIMANT suffered hardship, it would be exempted from responsibility for non-

performance and might terminate the Contract. However, if it decided to perform nonetheless, it

would not be entitled to a contract adaptation, shifting the additional costs to RESPONDENT.

115 To conclude, contract adaptation is not an available remedy under the Hardship Reference.


resulting from a contract adaptation

116 Even if the imposition of the 30% tariffs fell under the scope of the Hardship Reference and

even if contract adaptation were an available remedy, CLAIMANT would not be entitled to a

remuneration of US$ 1,250,000.

117 An arbitral tribunal generally has a wide discretion regarding the adaptation of

contracts (FERRARIO, p. 159; MCKENDRICK in: Vogenauer, Art. 6.2.3 § 7; cf. ICC Case

No. 16369 (2011)). When exercising its discretion, certain factors have to be taken into account.

First, an adaptation serves the purpose of restoring the contractual equilibrium (FERRARIO, p. 73;

BERGER, Dispute Resolution, p. 539; MASKOW, pp. 657, 662; AL QURASHI, p. 261; cf. EL CHIATI,

p. 99; Art. 6.2.3(4)(b) UPICC; Art. 7(2) UNCITRAL Conciliation Rules). Second, the risk allocation

between the parties must be considered in order to adapt the contract in a fair manner (BGH,

8 February 1984 (Germany); BRUNNER, p. 499; cf. Off. Comm. UPICC, Art. 6.2.3 § 7; Art. 7(2)

UNCITRAL Conciliation Rules). The contract should at least be adjusted to a level which is

bearable for the aggrieved party (BRUNNER, pp. 499 et seq.; MCKENDRICK in: Vogenauer, Art. 6.2.3

§ 7; cf. BG, 28 November 1978 (Switzerland); BGH, 13 May 1974 (Germany)).


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27

118 The contractual equilibrium is – contrary to CLAIMANT’s submission (Cl. Memo. § 92) – not

restored through an increase of the purchase price by US$ 1,250,000. To begin with, CLAIMANT

only incurred a net loss of US$ 1,000,000 (see supra § 102). Furthermore, it assumed considerable

risks when agreeing to a DDP delivery (see supra §§ 83 et seqq.). In addition, CLAIMANT did not

substantiate why only an increase of the purchase price in the full requested amount would make

the Contract bearable. Moreover, an adjustment of the purchase price by the requested amount

would only consider CLAIMANT’s interests and ignore those of RESPONDENT entirely. In order to

restore the contractual equilibrium and balance the additional costs, at the most, an equal

distribution of CLAIMANT’s net loss is appropriate (cf. BGH, 8 February 1984 (Germany); HSE v.

Naftovod (1983); HARRISON, pp. 592 et seqq.; BRUNNER, pp. 500 et seq.).

119 In conclusion, CLAIMANT is not entitled to a remuneration of US$ 1,250,000 resulting from

a contract adaptation under the Hardship Reference.

Conclusion to Issue III(A)

The Tribunal is respectfully requested to find that the Hardship Reference does not cover the

imposition of tariffs. Even if the 30% tariffs fell under the scope of the Hardship Reference,

contract adaptation is not an available remedy. In any case, CLAIMANT is not entitled to a

remuneration of US$ 1,250,000.

ISSUE III(B): ALTERNATIVELY, CLAIMANT IS NOT ENTITLED TO PAYMENT OF

US$ 1,250,000 RESULTING FROM A CONTRACT ADAPTATION UNDER THE CISG 120 Alternatively, the Tribunal is respectfully requested to find that CLAIMANT is not entitled to a

remuneration of US$ 1,250,000 resulting from an adaptation of the Contract under the CISG.

Contrary to CLAIMANT’s assertion (Cl. Memo §§ 94-129), the CISG does not exempt CLAIMANT

from liability for the present change in circumstances (A.). In any case, it would not provide for a

contract adaptation as its remedy (B.).

A. CLAIMANT IS NOT EXEMPTED FROM LIABILITY UNDER ART. 79(1) CISG 121 Contrary to CLAIMANT’s submission (Cl. Memo. §§ 95 et seqq.), Art. 79(1) CISG does not

exempt it from liability for the additional costs resulting from the imposition of the tariffs.

122 In the case at hand, the Parties derogated from the default risk allocation stipulated in

Art. 79 CISG (I.). Even if they did not, CLAIMANT could not invoke Art. 79(1) CISG as hardship


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does not constitute an impediment under this provision (II.). In any case, the present change in

circumstances does not meet the prerequisites for an exemption under Art. 79(1) CISG (III.).

I. Art. 79 CISG cannot be invoked as it has been derogated from

123 The Tribunal is respectfully requested to find that CLAIMANT cannot invoke Art. 79 CISG as

the Parties impliedly derogated from this provision.

124 Art. 6 CISG enables the parties to derogate from or modify the effect of any of the CISG’s

provisions. They may do so expressly or impliedly (MISTELIS in: Kröll et al., Art. 6 § 14;

SCHWENZER/HACHEM in: Schlechtriem/Schwenzer, Art. 6 § 3). Whether there had been an implied

derogation follows from an interpretation of the parties’ intent pursuant to

Art. 8 CISG (OLG Linz, 23 January 2006 (Austria); CISG-AC Opinion No. 16 § 3; LOHMANN,

pp. 250 et seq.). The parties’ intent to derogate from the default rule on risk allocation stipulated in

Art. 79 CISG is indicated by the incorporation of a specific risk allocation into the

contract (ATAMER in: Kröll et al., Art. 79 § 89; cf. SAENGER in: Ferrari et al., Art. 79 § 1;

SCHWENZER in: Schlechtriem/Schwenzer, Art. 79 § 58). This holds particularly true when the parties

included a hardship or force majeure clause (BRUNNER, pp. 117 et seq.; SAENGER in: Ferrari et al.,

Art. 79 § 1; PICHONNAZ, § 1587). Only in the absence of such a specific risk allocation can

Art. 79 CISG be invoked (BRUNNER, pp. 118, 157; ATAMER in: Kröll et al., Art. 79 § 89).

125 Contrary to CLAIMANT’s submission (Cl. Memo. §§ 105 et seqq.), the Parties, by virtue of

Clause 12 of the Contract, did not intend to only modify some of the conditions contained in

Art. 79 CISG, but to derogate from this provision in total. When interpreting pursuant to

Art. 8(1), (3) CISG a common intent cannot be established. The Parties never discussed to what

extent they intended to modify or derogate from Art. 79 CISG. An objective analysis pursuant to

Art. 8(2), (3) CISG, however, leads to the conclusion that the Parties provided for a

comprehensive allocation of the risks associated with the sale of the frozen semen. On the one

hand, the agreement on a DDP delivery generally allocates the responsibility for the delivery and

any risks related thereto to CLAIMANT (see supra §§ 83 et seqq.). On the other hand, CLAIMANT’s

responsibility is reduced by means of Clause 12 of the Contract. Not only does this clause

exempt CLAIMANT from responsibility for force majeure, but also for certain cases of

hardship (Cl. Exh. C5, § 12). When viewed jointly, it becomes evident that the agreement on a

DDP delivery and Clause 12 of the Contract provide for an exhaustive risk allocation.

Consequently, there is no room for the application of Art. 79 CISG. Any case of a change in

circumstances must be dealt with under Clause 12 of the Contract.


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126 To conclude, CLAIMANT cannot invoke Art. 79 CISG as the Parties impliedly derogated

from this provision.

II. Hardship does not constitute an impediment in the sense of Art. 79(1) CISG

127 Even if CLAIMANT could invoke Art. 79 CISG, hardship would not fall under the scope of

Art. 79(1) CISG. Contrary to CLAIMANT’s assertion (Cl. Memo. §§ 97 et seqq.), Art. 79(1) CISG

does not apply to cases of economic hardship. This follows from an interpretation in line with

Art. 7(1) CISG.

128 Pursuant to Art. 7(1) CISG, the CISG needs to be interpreted with view to its international

character, the need to promote uniformity in its application, and the observance of good faith in

international trade.

129 CLAIMANT submits that the term “impediment” is narrower than a “circumstance” in the

sense of Art. 74(1) ULIS but nonetheless covers events of economic hardship (Cl. Memo. § 99).

However, it omits that Art. 74(1) ULIS was the immediate predecessor of Art. 79 CISG (RIMKE,

p. 222; SLATER, p. 259; LINDSTROM, p. 4). When drafting the CISG, the UNCITRAL Working

Group II considered the grounds for an exemption from liability for non-performance under

Art. 74(1) ULIS to be too broad (SLATER, p. 259; CISG-AC Opinion No. 7, fn. 33; cf. ZELLER,

p. 122). Instead, it adopted the term “impediment” which it associated with “wars, storms, fires,

government embargoes and the closing of international waterways” (SLATER, p. 259; LINDSTROM,

p. 6; FLAMBOURAS, p. 265). In fact, the Committee of the Whole I explicitly rejected a “proposed

article on hardship”, which would have allowed for an amendment of the contract in case a party

faced excessive difficulties (UN Doc. A/CN.9/SER.A/1977, § 458; RIMKE, p. 222). The term

“impediment” therefore sets strict requirements for an exemption from liability and only excuses

a party if performance is rendered impossible (CISG-AC Opinion No. 7, fn. 33; cf. Tribunale di

Monza, 14 January 1993 (Italy); BERGER, Dispute Resolution, p. 534).

130 Against this background, CLAIMANT’s alternative assertion that a rule of hardship can be

based on the principles underlying the CISG (Cl. Memo §§ 101 et seqq.) cannot be upheld. Having

recourse to general principles pursuant to Art. 7(2) CISG is only possible when there is a gap in

the CISG (Art. 7(2) CISG; ZELLER, pp. 126 et seq., MAGNUS in: Staudinger, Art. 79 § 38). However,

the CISG’s drafting history evidences that economic hardship shall not lead to an exemption

from responsibility for non-performance (see supra § 129). Therefore, the gap-filling mechanisms

of Art. 7(2) CISG are not available.

131 To conclude, hardship is not an impediment in the sense of Art. 79(1) CISG.


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III. In any case, the prerequisites for an exemption under Art. 79(1) CISG are not met

132 In any case, the imposition of the 30% tariffs does not meet the prerequisites set forth in

Art. 79(1) CISG.

133 This provision stipulates the following prerequisites for an exemption from performance:

First, the disadvantaged party must not have been able to exercise any control over the event in

question. Second, it must not have been able to foresee the event at the time of contract

conclusion. Third, the party must prove that it would not have been able to avoid the

impediment or its consequences. Fourth, the event must make performance impossible or – in

the event of hardship – excessively onerous (ICC Case No. 18981 (date unpublished); OLG Hamburg,

28 February 1997 (Germany); CISG-AC Opinion No. 7, § 38; ATAMER in Kröll, Art. 79 §§ 81 et seq.;

BRUNNER, pp. 213 et seq.; SCHWENZER, Hardship, pp. 714 et seq.). The obligation to give due notice

pursuant to Art. 79(4) CISG, which CLAIMANT additionally refers to (Cl. Memo. § 118), however,

is not a prerequisite for an exemption under Art. 79(1) CISG.

134 While CLAIMANT is correct in stating that the imposition of the tariffs was beyond its

control (Cl. Memo. § 113), the remaining prerequisites of Art. 79(1) CISG are not fulfilled:

CLAIMANT could have foreseen the imposition of the retaliatory tariffs (1.). Furthermore, it could

have avoided the additional costs resulting from the tariffs (2.). Lastly, the imposition of the

tariffs does not render performance excessively onerous (3.).

1. The imposition of tariffs was foreseeable

135 Contrary to what CLAIMANT submits (Cl. Memo. §§ 73 et seqq., 114 et seqq.), it could have

foreseen the imposition of retaliatory tariffs by the Equatorianian Government.

136 In contrast to the term “unforeseen”, as used by the Parties in the Hardship Reference, the

term “unforeseeable” extends to events which the parties could not have anticipated at the time

of contract conclusion (cf. BGH, 5 November 1976 (Germany), Davis v. Life (USA); Peck v.

Ford (USA); SCHWENZER in: Schlechtriem/Schwenzer, Art. 79 § 14). In this regard, “[a]nything which

falls within the ordinary range of commercial probability is also foreseeable” (ATAMER in: Kröll

et al., Art. 79 § 51).

137 During the race for presidency of Mediterraneo, Mr. Bouckaert emerged as an advocate for

protectionist measures (cf. Cl. Exh. C6). In January 2017, he announced a particular preference

for a more protectionist approach regarding international trade (Cl. Exh. C6). He was elected on

25 April 2017 (PO2 No. 23). Shortly after, on 5 May 2017, he appointed Ms. Frankel as his

“superminister” for agriculture, trade, and economics (ibid.). She had been an outspoken


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31

protectionist for years and “one of the most ardent critics of free trade” (ibid.). In particular, she

advocated limiting the access of foreign agricultural products to the Mediterranean market (ibid.).

The contract conclusion therefore took place at a time of uncertainty for international trade.

Thus, the possibility of a trade war involving the imposition of tariffs and retaliatory measures

could not be excluded.

138 To conclude, the imposition of retaliatory tariffs was foreseeable.

2. CLAIMANT could have avoided the additional costs resulting from the tariffs

139 Furthermore, CLAIMANT could have avoided the additional costs by delivering on an earlier

date. It fails to argue why the costs resulting from the imposition of tariffs were inevitable.

140 Once the occurrence of an event becomes clear, the obligor must take the necessary

preventive measures at the right time (ATAMER in: Kröll et al., Art. 79 § 54; SCHWENZER in:

Schlechtriem/Schwenzer, Art. 79 § 15; MAGNUS in: Staudinger, Art. 79 § 34). The obligor needs to act

before the event takes place and “cannot just wait for the event to happen like a casual

bystander” (ATAMER in: Kröll et al., Art. 79 § 54). This holds particularly true when the event was

announced beforehand (ATAMER in: Kröll et al., Art. 79 § 54).

141 In the case at hand, the tariffs were announced on 19 December 2017 (PO2 No. 25). They

were scheduled to come into effect on 15 January 2018 – almost a month later (ibid.). As the third

shipment was scheduled for 22 January 2018 (Cl. Exh. C7), CLAIMANT still had enough time to

take preventive measures. In particular, CLAIMANT could have preponed the delivery in order to

avoid the tariffs. There is no indication that CLAIMANT would not have been able to perform at

an earlier date (cf. PO2 No. 11). Even though CLAIMANT was aware of the imposition of

tariffs (PO2 No. 26; cf. Cl. Exh. C6), it did not attempt to verify whether they applied to the

delivery of frozen semen. Rather, custom authorities informed CLAIMANT shortly before the

shipment was scheduled to go out (Cl. Exh. C7).

142 To conclude, CLAIMANT could have avoided that the last shipment be affected by the tariffs.

3. The additional costs do not render contract performance excessively onerous

143 Contrary to CLAIMANT’s submission (Cl. Memo. §§ 110 et seqq.), the additional costs resulting

from the imposition of tariffs do not render contract performance excessively onerous.

144 A case of hardship can only be assumed if the circumstances are so extreme that the ultimate

limit of sacrifice is reached (CISG-AC Opinion No. 7, §§ 32, 37 et seq.; SAENGER in: Bamberger et al.,

Art. 79 § 7; SCHLECHTRIEM, CISG, § 291; DA SILVEIRA, p. 345). There must thus be a state of


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32

“excessive onerousness”, in which a party cannot reasonably be expected to perform

anymore (OLG Hamburg, 28 February 1997 (Germany); ICC Case No. 18981 (date unpublished); CISG-

AC Opinion No. 7, § 38; SCHWENZER, Hardship, pp. 714 et seq.; SAENGER in: Bamberger et al., Art. 79

§ 7; ATAMER in: Kröll, Art. 79 §§ 81 et seq.; BRUNNER, pp. 213 et seq.). Moreover, the threshold is

to be raised if the aggrieved party assumed the relevant risks in the contract (BRUNNER, p. 432;

SCHWENZER, Hardship, p. 715; DA SILVEIRA, p. 323; ATAMER in: Kröll et al., Art. 79 § 81).

145 CLAIMANT acknowledges that “cost increase alone is not always sufficient to demonstrate an

altered equilibrium” (Cl. Memo. § 111). It further states that a high threshold has only been

assumed in cases where the contracts contained long-term obligations or were inherently

risky (ibid.). However, CLAIMANT fails to present any case in which a cost increase lower than

50% sufficed to assume hardship. A thorough analysis of the case law available shows that,

generally, only cost increases of at least 100% may render contract performance excessively

onerous (cf. OLG Hamburg, 28 February 1997 (Germany); CA Colmar, 12 June 2001 (France); Efetio

Lamias, Decision 63/2006 (Greece); ICC Case No. 6281 (1989); SCHWENZER, Hardship, p. 716 fn. 44;

BRUNNER, pp. 431 et seqq.; SCHWENZER in: Schlechtriem/Schwenzer, Art. 79 § 31).

146 In the present case, the 15% cost increase is far from the standard threshold set by courts

and tribunals. In addition, CLAIMANT assumed the risks associated with the DDP delivery (see

supra §§ 83et seqq.). Moreover, the additional costs do not even render contract performance

“more onerous” (see supra §§ 101 et seqq.).

147 Therefore, the threshold of “excessive onerousness” is not met. The prerequisites of

Art. 79(1) CISG are not fulfilled. In conclusion, CLAIMANT is not exempted from liability

under Art. 79(1) CISG.

B. IN ANY CASE, THE CISG DOES NOT ALLOW FOR AN INCREASE OF THE

PURCHASE PRICE BY WAY OF CONTRACT ADAPTATION 148 Even if the imposition of tariffs triggered an exemption from liability for non-performance

under Art. 79(1) CISG, a contract adaptation would not be possible.

149 In any case, the purchase price cannot be increased under the CISG. Contrary to

CLAIMANT’s assertion (Cl. Memo. §§ 119-128), the CISG does not allow for a contract adaptation

in case of hardship (I.). Even if it did, CLAIMANT would not be entitled to an additional

remuneration of US$ 1,250,000 (II.).


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I. A contract adaptation in case of hardship is not possible under the CISG

150 Contrary to CLAIMANT’s submission (Cl. Memo. §§ 120 et seqq.), the CISG does not provide

for a contract adaptation in situations of hardship.

151 The only available relief under Art. 79 CISG is the obligor’s excuse from performance and

exemption from claims for damages (ZELLER, pp. 126 et seq.; cf. Art. 79(1), (5) CISG; SCHWENZER

et al., §§ 45.112, 45.115; CARLSEN, IV.D.2.; TALLON in: Bianca/Bonell, Art. 79 §§ 2.10, 3.1). This

provision therefore deals exhaustively with cases of hardship.

152 Even if there were an internal gap in the CISG with regards to remedies available for

hardship, an adaptation of the Contract could not be based on the general principles underlying

the CISG (1.). Furthermore, recourse cannot be had to the Law of Mediterraneo (2.).

1. Even if there were an internal gap in the CISG, a contract adaptation would not be

possible

153 Even if the CISG had an internal gap regarding the remedial consequences of hardship, the

general principles underlying the CISG would not provide for a contract adaptation.

154 Pursuant to Art. 7(2) CISG, matters governed by the CISG but not expressly settled in it

need to be settled in conformity with the general principles underlying the CISG.

155 CLAIMANT contends that a combination of the principle of good faith, the duty to mitigate,

the principle of contract preservation and Art. 50 CISG require a contract adaptation in case of

hardship (Cl. Memo. §§ 121 et seq.). However, a thorough analysis of said principles shows that

contract adaptation is not a possible remedy under the CISG in case of hardship.

156 First, the principle of good faith serves as a means of interpreting the CISG and its

provisions (cf. Art. 7(1) CISG). It is considered a moral or ethical standard to be followed by

business persons in international trade (PERALES VISCASILLAS in: Kröll et al., Art. 7 § 23;

LOOKOFSKY, p. 50; MAGNUS/HABERFELLNER, § 5(3); SAENGER in: Ferrari et al., Art. 7 § 6).

However, it cannot be construed as burdening the parties with a duty to adapt the

contract (ATAMER in: Kröll et al., Art. 79 § 84, SCHWENZER, Hardship, p. 723; cf. ZELLER, p. 126).

157 Second, CLAIMANT contends that a refusal to accept a modified price might constitute a

fundamental breach of the buyer’s duty to mitigate (Cl. Memo. § 122). However, the duty to

mitigate loss only applies to the party relying on a breach of contract (Art. 77 CISG). It can

therefore not be transferred to a case of hardship in which both parties might act against their

duties by not agreeing to a fair distribution of the additional costs (ATAMER in: Kröll et al., Art. 79

§ 84). Thus, the duty to mitigate exclusively applies to claims for damages.


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34

158 Third, the principle of contract preservation aims to bind the parties to their contractual

relationship instead of excusing them too readily (UNCITRAL Digest, Art. 7 § 32;

MAGNUS/HABERFELLNER, § 5(9)). Therefore, it rather supports adherence to the existing

contractual terms than their amendment. This is in line with the principle of pacta sunt servanda. It

requires that the parties remain bound by their original agreement even when the contractual

equilibrium has been distorted (FERRARIO, p. 138; PIROZZI, pp. 98 et seq.; SCHLECHTRIEM, p. 243).

Moreover, the principle of party autonomy would be undermined if one party were forced to pay

an amount higher than it initially agreed to (cf. BERNARDINI, pp. 99 et seq.).

159 Lastly, Art. 50 CISG only stipulates a price adjustment in the form of a reduction. Under no

circumstances, however, can a party be coerced to pay an increased price. Consequently, the

principles underlying the CISG do not allow for a contract adaptation in case of hardship.

2. CLAIMANT cannot resort to the Mediterranean Contract Law

160 Contrary to CLAIMANT’s submission (Cl. Memo. §§ 124 et seqq.) no recourse can be had to the

Mediterranean Contract Law.

161 Only in the absence of general principles underlying the CISG providing for a settlement of

the matter in question, gaps can be filled by having recourse to the applicable domestic

law (Art. 7(2) CISG).

162 In the present case, the principles underlying the CISG preclude a contract adaptation in

case of hardship (see supra §§ 153 et seqq.). The CISG has developed an individual concept in

regard to impediments independent from any national law (ENDERLEIN/MASKOW, Art. 79 § 1.2;

DA SILVEIRA, pp. 202 et seq.): The obligor’s excuse from performance and exemption from claims

for damages is the only available relief under Art. 79 CISG (see supra § 151). Thus, searching for

an alternative solution for hardship in domestic law would undermine the CISG’s aim for

uniformity and its international character (cf. Cour de Cassation, 19 June 2009 (Belgium);

ENDERLEIN/MASKOW, Art. 79 § 1.2).

163 In conclusion, contract adaptation is not provided for under the CISG in case of hardship.


resulting from a contract adaptation under the CISG

164 Even if the imposition of the 30% tariffs exempted CLAIMANT from liability under

Art. 79(1) CISG and even if contract adaptation were an available remedy under the CISG,

CLAIMANT would not be entitled to a remuneration of US$ 1,250,000.


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35

165 CLAIMANT only incurred a net loss of US$ 1,000,000 and assumed considerable risks when

agreeing to a DDP delivery (see supra §§ 102, 118). In order to restore the contractual equilibrium,

it is necessary to consider the interests of both Parties (ibid.).

166 Thus, CLAIMANT is not entitled to a remuneration of US$ 1,250,000 resulting from a

contract adaptation under the CISG.

Conclusion to Issue III(B)

The Tribunal is respectfully requested to find that CLAIMANT is not exempted from liability

under Art. 79(1) CISG. Even if it were, contract adaptation is not an available remedy for

hardship under the CISG. In any case, CLAIMANT is not entitled to a remuneration of

US$ 1,250,000.

REQUEST FOR RELIEF In light of the above submissions, RESPONDENT respectfully requests the Tribunal to find that:

I. The Tribunal does not have the jurisdiction and the power under the Arbitration

Agreement to adapt the Contract;

II. CLAIMANT is not entitled to submit the Partial Award from the other HKIAC arbitration;

III(A). CLAIMANT is not entitled to payment of US$ 1,250,000 resulting from an adaptation of

the Contract under Clause 12 of the Contract;

III(B). CLAIMANT is not entitled to payment of US$ 1,250,000 resulting from an adaptation of

the Contract under the CISG.

LUD W IG-MA XIMILIA N S-UN IVERS IT Ä T MÜN CH EN

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We hereby confirm that this Memorandum was written only by the persons who signed below.

We also confirm that we did not receive any assistance during the writing process from any

person who is not a member of this team.

Vincent Fach

Clemens Ganzert

Katarina Jurišić

Paul Lauster

Lea Patalas

Valerie Pitkowitz