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FIFTEENTHANNUALWILLEM C. VIS (EAST)
INTERNATIONALCOMMERCIALARBITRATIONMOOT
11March – 18March 2018
MEMORANDUM FORCLAIMANT
COUNSELS
CHANG ENNINGGU YUXINLI YANLONG LUO YINGKAILINNALV RUOYI
QIUMINGLIANGWANG JUN XIE YUTONGYAN JINYANG JIALI ZHONG JINGHUI
ON BEHALFOF: AGAINST:
Delicatesy Whole Foods Sp
39 Marie-Antoine Carême Avenue
OCEANSIDE, EQUATORIANA
Comestibles Finos Ltd
75 Martha Stewart Drive
CPAITAL CITY, MEDITERRANEO
CLAIMANT RESPONDENT
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT i
TABLE OFCONTENTS
INDEX OFAUTHORITIES......................................................................................................iv
STATUTESAND RULES................................................................................................. iv
COMMENTARY............................................................................................................... vi
CASES................................................................................................................................ x
ARBITRATIONAWARDS................................................................................................xi
CODE OF CONDUCT..................................................................................................... xii
TABLE OFABBREVIATIONS.............................................................................................. xiii
STATEMENT OF FACTS.......................................................................................................... 1
PART 1: THE ARBITRAL TRIBUNAL HAS NOAUTHORITY OVER THE CHALLENGE;EVEN IF SO, THE DECISION SHOULD BE MADE WITH MR. Prasad’sPARTICIPATION.......................................................................................................................3
I. The Tribunal has no authority over the challenge............................................................3
A. Art. 13(4) of UNCITRAL Rules shall apply.......................................................... 3
B. Arbitral institution and individual can act as appointing authority, which do notbreach the contract or impair RESPONDENT’s confidentiality concern...................4
C. Art. 13 (2) of Model Law is not applicable............................................................4
D. Even if Art.13 (4) of UNCITRAL Rules was excluded, the Tribunal has noauthority over the challenge........................................................................................5
II. In case the Tribunal has authority, the decision should be made with Mr. Prasad’sparticipation........................................................................................................................ 5
A. Clause 20 and Model Law require the challenge to be decided by a full Tribunalincluding Mr. Prasad................................................................................................... 6
B. Fair and efficient settlement requires the challenge to be decided with Mr. Prasad......................................................................................................................................7
PART 2: IN CASE THE ARBITRAL TRIBUNAL HAS AUTHORITY TO DECIDE ONTHE CHALLENGE, MR.PRASAD SHOULD NOT BE REMOVED FROM THEARBITRAL TRIBUNAL............................................................................................................8
I. RESPONDENT has waived its right to challenge against Mr. Prasad for latesubmission of Notice of Challenge.....................................................................................8
II. Even if not, RESPONDENT’s challenge shall be dismissed since Mr. Prasad isindependent and impartial.................................................................................................10
A. IBA Guidelines are not applicable in this present case and cannot be the legalbase of challenge.......................................................................................................11
B. Mr. Prasad has performed his disclosure obligation and CLAIMANT’s
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT ii
non-disclosure is irrelevant.......................................................................................11
C. Mr. Prasad’s previous appointments cannot justify the challenge........................13
D. The business contact between Mr. Prasad’s Law firm and CLAIMANT’s funderis not significant enough to constitute a conflict of interest..................................... 15
E. Mr. Prasad’s previous scholarly writing does not imply bias againstRESPONDENT.........................................................................................................16
PART 3: THE CLAIMANT’S STANDARD CONDITIONS SHALL GOVERN THECONTRACT............................................................................................................................. 17
Ⅰ. The CISG supports that CLAIMANT’s General Conditions of Sale shall govern thecontract after RESPONDENT’s acceptance of Sales Offer from CLAIMANT............... 17
A. The CISG governs as the only applicable law......................................................18
B. Invitation to Tender does not constitute an offer so that the content in TenderDocuments is neither binding nor unchangeable......................................................18
C. Letter of Acknowledgement is nothing but a receipt under the CISG................. 19
D. CLAIMANT made an effective offer...................................................................20
E. CLAIMANT had successfully changed the governing conditions intoCLAIMANT’s General Conditions of Sale including Business Code of Conductand Supplier Code of Conduct through its offer, which was accepted byRESPONDENT.........................................................................................................21
II. Even if CLAIMANT’s standard conditions do not govern the contract, GeneralCompact principles will guide the contract.......................................................................24
A. The parties intended to use the Global Compact principles as standard conditionsall the way up through the negotiation and contract.................................................25
B. A reasonable understanding of the contract suggests the Global Compactprinciple guide the contract.......................................................................................26
PART 4: CLAIMANT HAS NOT BREACHED ITS CONTRACTUAL OBLIGATIONS..... 27
I. CLAIMANT has fulfilled its obligations under principles C and E of RESPONDENT’sCode of Conduct............................................................................................................... 27
A. The exact wording of principle C requires CLAIMANT to merely use its besteffort..........................................................................................................................27
B. Also under principle E, CLAIMANT has fulfilled its obligation.........................28
II. CLAIMANT did not breach Article 35 of CISG..........................................................30
A. RESPONDENT bears the burden of proof on inconformity of goods.................30
B. Article 35.2 CISG is not applicable, because it only serves as default rules whenlacking expressed Article 35.1 agreement.................................................................31
C. Even if article 35.2 applies, the goods delivered by Claimant meet the standards
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT iii
within........................................................................................................................ 31
III. Respondent is not strict with ethical requirements as it claimed................................33
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT iv
INDEX OFAUTHORITIES
STATUTESAND RULES
CITEDAS DETAILS CITED IN
CISG United Nations Convention on the International
Sale of Goods
¶ ¶ 55, 59, 63,
66, 91
GA Resolution United Nations, General Assembly Resolution
40/72 (11 December 1985); General Assembly
Resolution 61/33 (4 December 2006).
¶20
Global
Compact
https://www.unglobalcompact.org/participation/join/c
ommitment ,last access time: 10/24/2017.
¶79
IBA
Guidelines
IBA Guidelines on Conflicts of Interest in
International Arbitration (23 October 2014)
¶ ¶ 41, 45,
46, 47, 50
LCIA Rules London Court of International Arbitration Rules
(2014)
¶29
Model Law UNCITRAL Model Law on International
Commercial Arbitration (1985), with amendments as
adopted in 2006
¶ ¶ 9, 18, 21,
25, 42
NY
Convention
United Nations, Convention on the recognition
and enforcement of foreign arbitral awards (1958)
¶17
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT v
SIAC Rules Singapore International Arbitration Centre Rules
(2013)
¶29
UNIDROIT
Principles
UNIDROIT Principles for International
Commercial Contracts (2010)
¶55
UNCITRAL
Rules
Arbitration Rules of United Nations Commission on
International Trade Law, 2010
¶ ¶ 2, 6, 11,
20, 21, 25,
29, 33, 35,
39, 42
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT vi
COMMENTARY
CITEDAS DETAILS CITED IN
Born Born, Gary, International Commercial Arbitration,
Kluwer Law International (2nd ed. 2014).
¶ ¶ 7, 16, 23,
26, 29, 37,
40, 43, 52
Caplan
Commentary
Caplan, Lee, The UNCITRAL Arbitration Rules
Commentary , Oxford University Press (2nd ed. 2013)
¶22
CISG Advisory
Op.No.3
“CISG-AC Opinion no 3, Parol Evidence Rule, Plain
Meaning Rule, Contractual Merger Clause and the
CISG.” (2004)
¶¶59, 90
CISG Advisory
Op.No.13
CISGAdvisory Council Opinion No. 13
Inclusion of Standard Terms under the CISG
¶¶65, 67
CISG Digest UNCITRAL Digest of Case Law on the United
Nations on Contracts for the International Sale of
Goods, 2016 Edition
¶¶55, 63
Daele Daele, Karel, Challenge and Disqualification of
Arbitrators in International Arbitration, Kluwer Law
International (2012).
¶¶28, 35
DiMatteo International Sales Law- a Global Challenge. Larry
DiMatteo, Cambridge Press (2014)
¶¶64, 68, 95
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT vii
Fouchard et al Fouchard et al, Fouchard, Gaillard, Goldmanon
International Commercial Arbitration, Kluwer Law
International (1999).
¶16
Goeler Goeler, Jonas, Third-Party Funding in International
Arbitration and its Impact on Procedure, Kluwer Law
International (2016).
¶¶29, 37, 48
Guide to
Model Law
Howard M. Holtzmann and Joseph E. Neuhaus, A
Guide to the UNCITRAL Model Law on
International Commercial Arbitration: Legislative
History and Commentary, Kluwer Law
International 1989, pp. 406 – 436.
¶¶18, 23
International
Commerce and
Arbitration
Current Issues in the CISG and Arbitration,
International Commerce and Arbitration, Vol. 15,
International Publishing, edited by Ingeborg
Schwenzer
¶55
Koh Will Sheng Wilson Koh, Think Quality Not Quantity:
Repeat
Appointments and Arbitrator Challenges', in Maxi
Scherer (ed), Journal of International Arbitration, (©
Kluwer Law International; Kluwer Law International
2017, Volume 34 Issue 4)
¶43
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT viii
Lookofsky
2000
Lookofsky, Joseph “The 1980 United Nations
Convention on Contracts for the International Sale of
Goods.” (2000) ¶ 84
¶71
Luttrell Sam Luttrell, “Bias in International Commercial
Arbitration: The Need for a ‘Real Danger’ Test”,
International Arbitration Law Library, Volume 20,
Kluwer Law International 2009.
¶43
Model Law
Digest
UNCITRAL, Digest of Case Law on the Model Law
on International Commercial Arbitration (2012),
¶¶8, 12, 15
Moses Moses, Margaret, The Principles and Practice of
International Commercial Arbitration, Cambridge
University Press (2008).
¶31
Practitioner’s
Guide
Camilla Anderson, Francesco Mazzotta, and Bruno
Zeller, A Practitioner’s Guide to the CISG (Juris,
2010), 199.
¶55
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT ix
Redfern and
Hunter
Redfern, Alan; Hunter, Martin et al., Redfern and
Hunter on International Arbitration, Kluwer Law
International (6th ed. 2015)
¶29
Schlechtriem
& Schwenzer
Schlechtriem & Schwenzer: Commentary on the UN
Convention on the International Sale of Goods
(CISG), (3th Ed. 2010)
¶¶65, 67, 78
Vindobona
Journal
Peter Huber, “Standar Terms under the CISG”, 13 13
Vindobona Journal of International Commercial Law
&Arbitration (1/2009) 123, 127
¶65
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT x
CASES
CITEDAS DETAILS CITED IN
CLOUT
Case 1178
CLOUT Case 1178, Denmark: Danish High Court, 21st
Chamber Eastern Division, no. B-1752-08 (27 November
2008)
¶49
CLOUT
case No.
877
CLOUT case No. 877 [Bundesgericht, Switzerland, 22
December 2000]
¶90
Dealer
Computer
Dealer Computer Serv., Inc. v. Michael Motor Co.,
485 F. Appx, 724, 728 (5th Cir. 2012)
¶26
Fabric case 1 Germany 20 April 2006 District Court
Aschaffenburg (Cotton twilled fabric case)
¶99
Germen
Machinery
Case
Germany, October 31, 2001, Supreme Court
(Machinery case)
¶65
Golden Valley
Case
Golden Valley Grape Juice and Wine, LLC v.
Centrisys Corporation et al. (E.D.Cal, No. CV F
09-1424 LJO GSA, Januray 22, 2010 (9th Cir. 2010)
¶68
Lagstein Lagstein v. Certain Underwriters at Lioyd’s, London,
607 F.3d 634, 646 (9th Cir. 2010)
¶28
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT xi
ARBITRATIONAWARDS
CITEDAS DETAILS CITED IN
Alpha
Projektholding
Alpha Projektholding GMBH v. Ukraine, ICSID
Case No. ARB/07/16
¶28
AWG AWG Group v. The Argentine Republic, Decision
on the Proposal for the Disqualification of a
Member of the Arbitral Tribunal (October 22,
2007);
AWG Group Limited v. The Argentine Republic,
Decision on a Second Proposal for the
Disqualification of a Member of the Arbitral
Tribunal (May 12, 2008).
¶16
Gabonese Participaciones Inversiones Portuarias SARL v.
Gabonese Republic, ICSID Case No. ARB/08/17,
Decision on Proposal for Disqualification of an
Arbitrator (12 Nov. 2009).
¶31
Saipem Saipem S.p.A. v. People's Republic of Bangladesh,
ICSID Case No. ARB/05/7, Decision on Jurisdiction
and Recommendation on Provisional Measures
(March 21, 2007).
¶50
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT xii
CODE OF CONDUCT
CITEDAS DETAILS CITED IN
Hershey https://www.thehersheycompany.com/content/dam/c
orporate-us/documents/partners-and-suppliers/suppl
ier-code-of-conduct.pdf
¶97
Mars http://www.mars.com/global/about-us/policies-and-
practices/supplier-code-of-conduct
¶97
Cargill Cargill,
https://www.cargill.com/about/supplier-code-of-con
duct
¶97
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT xiii
TABLE OFABBREVIATIONS
Art. Article
Arb. Arbitration
CISG United Nations Convention on Contracts for the International Sale ofGoods
Cl. Claim(ant)
Ex. Exhibit
ICC International Centre for Settlement of Investment Disputes
Notc. Notice
No(s). Number(s)
Ord. Order
Proc. Procedural
Pres. President
Resp. Respondent
Resps. Response
UNCITRAL United Nations Commission on International Trade Law
UNIDROIT International Institute for the Unification of Private Law
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT1
STATEMENT OF FACTS
1. Delicatesy Whole Foods Sp (“CLAIMANT”) is a medium sized manufacturer of fine
bakery products registered in Equatoriana. Comestibles Finos Ltd (“RESPONDENT”) is
a gourmet supermarket chain in Mediterraneo. In March 2014, CLAIMANT met the
RESPONDENT at the yearly Danubian food fair Cucina where they discussed about
product choices, delivery quantities and their commitment to environmental sustainability
and ethical business conduct.
2. On 10 March 2014 after the food fair, CLAIMANT received from Respondent an
Invitation to Tender for the delivery of chocolate cakes attached with Tender Documents.
Seven days later on 17 March 2014, CLAIMANT sent the requested Letter of
Acknowledgement to Respondent to notice its receipt of Invitation to Tender and
demonstrate its intention to bid.
3. On 27 March 2014, CLAIMANT submitted its tender where CLAIMANT changed the
specifications for the chocolate cakes and the payment conditions. Besides, CLAIMANT
made clear that its offer would be subject to its own General Conditions of Sale set out in
its Code of Conduct rather than RESPONDENT’s General Conditions and made the
documentation of Code of Conduct available to RESPONDENT.
4. Notwithstanding the changes in Sales Offer to the conditions set out in Invitation to
Tender, RESPONDENT explicitly accepted the changed specifications for the chocolate
cakes and the changed payment conditions by letter of 7 April 2014. With respect to the
application of CLAIMANT ’s General Conditions stipulated in CLAIMANT’s Code of
Conduct, RESPONDENT downloaded the documentation and spoke highly of
CLAIMANT’s Code of Conduct without any objection to the inclusion of Claimant’s
standard conditions.
5. In accordance with the contract, the CLAIMANT made its first delivery on 1 May 2014.
There were no problems concerning the deliveries in 2014, 2015 and 2016 until 27
January 2017, all of a sudden, RESPONDENT demanded that CLAIMANT confirmed by
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT2
the next business day that CLAIMANT’s suppliers all strictly adhered to Global Compact
principles and threatened to terminate the contract should such a confirmation not be
forthcoming. In addition, RESPONDENT unilaterally announced to stop further
payments and reject deliveries. Despite great shock with the tone and content of the email
from RESPONDENT, CLAIMANT replied immediately and promised to investigate the
issue further.
6. Unfortunately, during further investigations it turned out that Claimant’s supplier, the
Ruritania Peoples Cocoa mbH had provided CLAIMANT with forged official papers
certifying its production of cocoa is environmentally sustainable while part of the beans
came from farms illegally set up in protected areas.
7. With email of 10 February 2017 CLAIMANT directly informed RESPONDENT of its
discovery. Though CLAIMANT’s own supplier’s fraud was beyond CLAIMANT’s
control and CLAIMANT had exerted its best effort to ensure full application of ethical
standards and comply with the unspecific contractual obligation, as a gesture of good will,
it was willing to take back the cakes delivered and not yet sold and to discuss with
RESPONDENT a financial contribution to possible losses. However, RESPONDENT
flatly rejected such an offer, purportedly terminated the contract and threatened to bring
an action for damages.
8. Confirming the failed negotiations on 30 June 2017, CLAIMANT notified Respondent
that it would initiate arbitration proceedings conducted in Vindobona, Danubia under the
UNCITRAL Arbitration Rules without the involvement of any arbitral institution as
agreed in Clause 20 of the contract to resolve the conflict.
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT3
PART 1: THE ARBITRAL TRIBUNAL HAS NO AUTHORITY OVER THE
CHALLENGE; EVEN IF SO, THE DECISION SHOULD BE MADE WITH MR.
Prasad’s PARTICIPATION.
1. RESPONDENT asserts that the challenge against Mr. Prasad should be decided by the
Tribunal without his participation, which is not the case. First, the Tribunal has no
authority over the challenge (I). Second, in case the Tribunal has authority, the decision
should be made with Mr. Prasad’s participation. (II).
I. The Tribunal has no authority over the challenge.
2. Tribunal’s authority over the challenge stems directly from the parties’ consent and
arbitration rules. However, Clause 20 in the contract and Art.13 (4) of UNCITRAL Rules
authorize appointing authority to decide on the challenge rather than the Tribunal [Art.
13(4), UNCITRAL Rules]. First, Art. 13(4) UNCITRAL Rules shall apply (A). Thus,
arbitral institution and individual can act as appointing authority, which do not breach the
contract or impair RESPONDENT’s confidentiality concern (B). Therefore, Art.13 (2) of
Model Law is not applicable (C).Alternatively, even if Art.13 (4) of UNCITRAL Rules
was excluded,, the Tribunal has no authority over the challenge. (D).
A. Art. 13(4) of UNCITRALRules shall apply.
3. Respondent claims that Art. 13(4) UNCITRAL Rules shall be excluded [Notice of
challenge]. However, parties never excluded the application of Article 13(4) UNCITRAL
Rules either expressly or impliedly.
4. Clause 20 does not exclude the Art. 13(4) of UNCITRAL Rules. The wording in dispute,
“without involvement of any arbitral institution”, is not equal to exclusion of Art.13 (4)
of UNCITRAL Rules. Such statement is only a clarification of the nature of the
Arbitration, i.e. ad hoc arbitration. The claim rests on two facts. First, RESPONDENT’s
intention is to equate “without the involvement of any arbitral institution” with
“excluding institutional arbitration” and RESPONDENT was concerned with problems
relating to the composition of arbitral tribunals [Cl. Ex. 1]. Second, CLAIMANT
confirmed that the provision was only relevant for the appointment of arbitrators [Letter
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT4
Fasttrack]. Therefore, it apparently means the ad hoc arbitration.
5. Further, the negotiation between the Parties did not exhibit an intention to exclude Art.13
(4) of UNCITRAL Rules. Mr. Tsai only told bad experience about the appointment of
presiding arbitrator and never mentioned exclusion of appointing authority in the
challenge procedure. [Resp. Ex. 5]
B. Arbitral institution and individual can act as appointing authority, which do not
breach the contract or impair RESPONDENT’s confidentiality concern.
6. Art.13 (4) of UNCITRAL Rules should be followed, which provides that the challenging
party shall seek a decision by appointing authority [Art.13 (4) of UNCITRAL Rules].
Further, pursuant to Ar.6 of UNCITRAL Rules, party can name Arbitral institution and
individual as appointing authority [Art.6 of UNCITRAL Rules].
7. For arbitral institution, as illustrated above, Clause 20 does not indicate exclusion of
arbitral institutions in the challenge procedure. Therefore, the authorization of arbitral
institution shall not breach the contract. For individual person, it is possible to choose
appointing authorities other than one of the leading arbitral institutions. For example, the
parties can agree on a designated individual or a designated office-holder to act as
appointing authority [Born].
8. Furthermore, RESPONDENT’s requirement of confidentiality will not be impaired.
CLAIMANT proposes two possible choices of appointing authority, the presiding
arbitrator and the Secretary-General of the Permanent Court of Arbitration. First, the
presiding arbitrator has already engaged in the present proceeding and accessed relevant
material therefore the risks of information leakage will not increase. Second, as an
appointing authority, the Secretary-General of the Permanent Court of Arbitration at The
Hague has generally discharged his responsibilities well [Model Law Digest].
C. Art. 13 (2) of Model Law is not applicable.
9. Under Art. 13(2) Model Law, unless the parties had failed to agree on a procedure for
challenging an arbitrator, the arbitral tribunal shall decide on the challenge [Art. 13(2),
Model Law]. But in the present arbitration, the Parties had already agreed on the
application of Art.13 (4) of UNCITRAL Rules which provides a procedure for
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT5
challenging an arbitrator. Thus, Art. 13(2) of Model Law is not applicable.
D. Even if Art.13 (4) of UNCITRAL Rules was excluded, the Tribunal has no authority
over the challenge.
10. In terms of the challenge procedure, RESPONDENT insists on exclusion of Art.13 (4)
UNCITRAL Rules for unjust reasons while CLAIMANT requests for the application
with rational cause. The current dilemma will cause unnecessary delay and expense,
which should be avoided.
11. For the sake of the arbitral proceedings, there are two possible choices to deal with this
dilemma: the presiding arbitrator and the national court. The presiding arbitrator may
decide the case of questions of procedure pursuant to Art. 33 (2) UNCITRAL Rules, and
that will be a good choice to settle this challenge and keep the confidentiality [Art.33 (2)
of UNCITRAL Rules].
12. Another option is the national court. The travaux préparatoires show that despite a
suggestion to exclude the intervention of courts or other competent authorities relating to
challenges on the ground that it could open the door to dilatory tactics, it was ultimately
decided that such intervention was necessary to avoid unnecessary waste of time and
delay [Model Law Digest].In other jurisdictions, arbitration legislation generally permits
interlocutory judicial removal of arbitrators sitting in an international arbitration located
within national territory, but only if the parties have not agreed to any institutional (or
other) challenge mechanism [Born].
13. Therefore, in case RESPONDENT intends to derail the proceedings and the parties
cannot agree upon other procedures, the court could be a proper solution which can well
discharge the responsibilities under strict professional ethics and satisfy
RESPONDENT’s requirement of confidentiality.
II. In case the Tribunal has authority, the decision should be made with Mr. Prasad’s
participation.
14. RESPONDENT’s claim that the drafter intention of Art. 13(4) UNCITRAL Rules leaves
the challenge to be decided by Tribunal without Mr. Prasad [Notice of challeng] is
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT6
inadmissible since Clause 20 and Model Law require the challenge to be decided by a full
Tribunal including Mr. Prasad (A). Further, fair and equal treatment principle requires the
challenge to be decided with Mr. Prasad (B).
A. Clause 20 and Model Law require the challenge to be decided by a full Tribunal
including Mr. Prasad.
15. Parties’ autonomy is the one of the philosophical cornerstone of Model Law [Model Law
Digest]. Clause 20 requires the challenge to be decided by a three-arbitrator Tribunal (1).
Further, Model Law requires the Mr. Prasad to be included in the challenge decision (2).
(1) Clause 20 requires the challenge to be decided by a three-arbitrator Tribunal.
16. The constitution of the Arbitral Tribunal in ad hoc arbitration is the exclusive domain of
the parties [Fouchard et al]. CLAIMANT and RESPONDENT have agreed in Clause 20
that the number of arbitrator shall be three [Notice of Arbitration]. Since UNCITRAL
Rules do not allow truncated Tribunal to proceed [Born], entrusting the challenge
decision to the remaining two arbitrators requires parties further consent [AWG].
Provided that parties have never agreed on a two-arbitrator Tribunal, the challenge shall
be decided by a three-arbitrator Tribunal as Clause 20 requires.
17. Further, since CLAIMANT and RESPONDENT have their places of business in
Equatoriana and Mediterraneo respectively [Notice of Arbitration], and both states along
with Danubia, the seat of arbitration, are Contracting States of New York Convention [¶
47, PO2]. The challenge decided by a truncated Tribunal without parties’ consent is one
of the reasons for refusal of recognition and enforcement of an award under Art. V (1) (d)
of New York Convention [NY Convention; Bundesgerichtsh].
(2) Art.13 (2) of Model Law requires Mr. Prasad to be included in the challenge
decision.
18. In case the Tribunal decided that Parties fail to agree on a procedure for challenge, Art.13
(2) of Model Law shall apply [Art. 13, Model Law]. The plain reading of Art. 13(2)
Model Law implies that the challenge shall be decided by the full Tribunal including the
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT7
challenged arbitrator. Such interpretation is confirmed by Commission Report released by
UNCITRAL, where the drafters expressly require the challenge to be decided by the full
Tribunal including the challenged arbitrator [Guide to Model Law].
19. It is noteworthy that drafters’ intention to include the challenged arbitrator in the decision
remains, since Art. 13 Model Law is not modified in 2006, which indicates that such
value is still appreciated in 2006 version that the challenged arbitrator shall participate in
the decision of his own challenge.
B. Fair and efficient settlement requires the challenge to be decided with Mr. Prasad.
20. Drafters of Model Law and UNCITRAL Rules intend to provide a fair and efficient
dispute settlement [GA Resolution; Art. 17(1), UNCITRAL Rules]. Frist, excluding Mr.
Prasad will prejudice the Parties’ right to procedure fairness (1). Second, for the
efficiency of the arbitral proceedings, Mr. Prasad shall be included (2).
(1) Excluding Mr. Prasad will prejudice the Parties’ right to procedure fairness
21. For CLAIMANT, Art.18 of Model Law provides that parties shall have equal and full
opportunity to present its case [Art.18, Model Law]. Clause 20 and Art.9 (1) of
UNCITRAL Rules entitle each party to have its party-appointed arbitrator present in the
arbitration [Notice of Arbitration; Art.9 (1), UNCITRAL Rules]. Excluding Mr. Prasad
and leaving the challenge decision to the remaining two arbitrators will deprive
CLAIMANT of the right to have its party-appointed arbitrator present in the challenge
procedure, which will further impair CLAIMANT’s right to have full and equal
opportunity to present its case as required under Art. 18 of Model Law.
22. For RESPONDENT, Mr. Prasad’s refusal to resign [Prasad Refusal] shall be interpreted
as self-assurance of his impartiality and independence rather than as any possibility that
he would vote partially in his own challenge. Should Mr. Prasad have any fear that his
participation will impair the integrity of the Tribunal, he would have withdrawn since Art.
13(3) of UNCITRAL Rules can remove any implication of dishonor from his voluntary
withdrawal. [Caplan Commentary]. Moreover, in practice, the participation of the
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT8
challenged arbitrator in his own challenge is not problematic as long as an informed
reasonable third person would not conclude that there was a real possibility that the
arbitrator would vote in bias.
(2) For the efficiency of the arbitral proceedings, Mr. Prasad shall be included.
23. Drafters of Model Law adopt the system provided in Art. 13 since “it struck an
appropriate balance between the need for preventing obstruction or dilatory tactics and
the desire of avoiding unnecessary waste of time and money” [Guide to Model Law].
Entrusting the decision to the remaining two arbitrators will impair the efficiency of the
arbitral proceedings. As Scholar Gary B. Born note, “An even number of arbitrators is a
recipe for deadlock and uncertainty” [Born]. Thus if RESPONDENT’s claim of having
two remaining arbitrator to decide the challenge was to be followed, the arbitral
proceeding will be derailed.
PART 2: IN CASE THE ARBITRAL TRIBUNAL HAS AUTHORITY TO DECIDE ON
THE CHALLENGE, MR.PRASAD SHOULD NOT BE REMOVED FROM THE
ARBITRALTRIBUNAL.
24. RESPONDENT’s assertion that Mr. Prasad should be removed from the Tribunal shall be
dismissed for late objection and groundless allegations. First, RESPONDENT has waived
its right to challenge against Mr. Prasad for late submission of Notice of Challenge (I).
Second, even if not, RESPONDENT’s challenge shall be dismissed since Mr. Prasad is
independent and impartial (II).
I. RESPONDENT has waived its right to challenge against Mr. Prasad for late
submission of Notice of Challenge.
25. Art. 13(1) of UNCITRAL Rules provides that the challenging party shall sent the notice
of challenge within 15 days after knowing the circumstances giving rise to justifiable
doubts as to arbitrator’s independence and impartiality [Art. 13(1), UNCITRAL Rules].
However, RESPONDENT sent its Notice of challenge on 14 September 2017 when the
15-day limit has expired [Notice of Arbitrator]. Thus pursuant to Art. 4 of Model Law,
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT9
RESPONDENT shall be deemed to have waived its right to object since it knows
non-compliance “yet proceeds with the arbitration without stating its objection…or, if a
time-limit is provided thereof, within such a period” [Art.4, Model Law].
26. First, Mr. Prasad’s relationship with CLAIMANT and the funder is barred to be invoked.
For challenge based on circumstances that became known to the challenging party after
the appointment of the challenged arbitrator, the starting point is when the challenging
party becomes aware of the constructive knowledge, without the requirement of actual
knowledge or proof of a certainty or likelihood of partiality and dependence [Born]. As
adopted in Dealer Computer, US 5th Circuit Court held that “a waiver of objections to an
arbitrator’s independence and impartiality will occur where a party had only constructive
knowledge” [Dealer Computer]. REESPONDENT knew the annotation on 27 August
2017[ ¶ 11, PO2]. In other words, RESPONDENT became aware of the constructive
knowledge about the relationship on 27 August 2017 but failed to raise objection within
15 days. Therefore, RESPONDENT shall not raise the challenge based on the
relationship.
27. Second, two appointments by Mr. Fasttrack’s law firm and commercial relationship are
barred to invoke. Mr. Prasad made the reservation about his colleague’s future business
matter with the Parties to the arbitration or related companies and two appointments by
Mr. Fasttrack’s law firm in his declaration [Prasad’s Declaration]. For these two factors,
RESPONDENT stated that it “has no objection to the appointment of Mr. Rodrigo Prasad
despite the restrictions in his declaration of independence” [Response to the Notice].
Therefore, RESPONDENT shall not raise the challenge based on the two appointments
and commercial relationship.
28. Third, Mr. Prasad’s previous publication of previous academic views is barred to be
invoked. In Lagstein, New York Court of Appeals held that the party may not later claim
bias based upon the failure to investigate, which can result in wavier of the right to object
and declined “to create a rule that encourages losing parties to challenge arbitrations
awards on the basis of preexisting, publicly available background information on the
arbitrators that has nothing to do with the parties to the arbitration” [Lagstein]. Similar, in
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT10
Alpha, the deciding co-arbitrator found the challenge based on already publicized
information belated, “it is standard practice to perform some investigation into the
background and connections of an opposing party and its counsel in the early stages of an
international arbitration.” [Alpha Projektholding]. However, before submitting its
Response, RESPONDENT visited Mr. Prasad’s website where the article was available
but did not look at the publications [¶14, PO2]. Due to the failure to perform reasonable
inquiry, the information which should have been discovered earlier cannot be a ground of
challenge with undue delay [Daele]. Therefore, RESPONDENT shall not raise the
challenge based on Mr. Prasad’s previous academic views.
II. Even if not, RESPONDENT’s challenge shall be dismissed since Mr. Prasad is
independent and impartial
29. It is stipulated in UNCITRAL Rules [Art. 12.1, UNCITRAL Rules] and other numerous
arbitral rules [Art. 13, SIAC Rules; Art. 10(3) LCIA Rules] that an arbitrator may be
disqualified when circumstances exist that give rise to justifiable doubts as to the
arbitrator’s impartiality or independence. Independence means that there are no
unacceptable external relationships between arbitrators and parties, while independence
means that arbitrator is subjectively unbiased and not predisposed towards one party
[Born; Goeler; Redfern and Hunter].
30. The challenge against Mr. Prasad is not tenable under UNCITRAL Rules. In this present
case, RESPONDENT’s request for Mr. Prasad’s removal is based on four grounds:
non-disclosure of the funding relationship between CLAMANT and Funding 12, the
repeated appointments of Mr. Prasad made by Mr. Fasttrack’s law firm and the funder’s
subsidiary, the significant commercial relationship between Mr. Prasad’s law firm and the
CLAIMANT and Mr. Prasad’s previous article. However, these grounds are not tenable.
First, the IBA Guidelines used by the RESPONDENT are not applicable in this present
case and cannot be the legal base of challenge (A). Second, Mr. Prasad has performed his
disclosure obligation and CLAIMANT’s non-disclosure is irrelevant (B).Third, Mr.
Prasad’s previous appointments cannot justify the challenge (C). Fourth, the business
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT11
contact between Mr. Prasad’s Law firm and CLAIMANT’s funder is not significant
enough to constitute a conflict of interest (D). Finally, Mr. Prasad’s previous scholarly
writing does not imply bias against RESPONDENT (E).
A. IBA Guidelines are not applicable in this present case and cannot be the legal base of
challenge.
31. First, IBA Rules shall not apply due to absence of agreement in the choice of rule in the
Arbitration Agreement. The choice of the arbitration rules represents the agreement of the
parties as to how the proceedings should be conducted [Moses] and in present case, the
only chosen arbitration rule is UNCITRAL Rules. Besides, tribunals in several cases
decided that IBA Guidelines cannot be the legal basis on which the decision is based
[Urbaser], pointing out that IBA Guidelines are not law and have indicative value only
[Gabonese; SLU] and the tribunal must ultimately apply the legal standard laid down in
the chosen rules [Tidewater]. The IBA Rules thus cannot empower the Tribunal to
disqualify Mr. Prasad.
B. Mr. Prasad has performed his disclosure obligation and CLAIMANT’s non-disclosure
is irrelevant.
32. RESPONDANT holds that Mr. Prasad and CLAIMANT non-performance of disclosure
obligation constitute a ground for Mr. Prasad’s disqualification. However, Mr. Prasad has
disclosed all the required information properly (1) and CLAIMANT’s conduct of
nondisclosure shall not be taken into account in deciding Mr. Prasad’s recusal (2).
(1) Mr. Prasad has disclosed all the required information properly.
33. Art.11 of UNCITRAL Rules has outlined the standard of disclosure obligation of an
arbitrator. First, a pre-arbitrator “shall disclose any circumstances likely to give rise to
justifiable doubts as to his or her impartiality or independence”. Second, an arbitrator
should ‘disclose any such circumstances’ during the whole arbitral proceedings [Art.11,
UNCITRAL Rules]. In this case, Mr. Prasad has fulfilled his disclosure obligation before
his appointment and throughout the whole proceeding (a). Moreover, Mr. Prasad does not
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT12
bear the duty of investigating the allegedly problematic circumstances (b).
(a) Mr. Prasad has fulfilled his disclosure obligation before the appointment and
throughout the whole proceeding.
34.Upon being approached in connection with his possible appointment, Mr. Prasad
disclosed circumstances giving rise to justifiable doubts based on information available to
him at that time in the Declaration of Independence and Impartiality, inter alia, two
previous appointments by Mr. Fasttrack’s law firm and reservation about his colleague’s
future instructions from the Parties and related companies.
35. As for disclosure throughout the proceeding, it requires “past and present professional,
business and other relationships with the parties” and “any other relevant circumstances”
as required [Annex, UNCITRAL Rules]. However, Mr. Prasad acquired the identity of the
funder only on 7 September 2017, which led to “other relationships with the parties”.
Based on this newly-acquired knowledge, Mr. Prasad disclosed his connections with the
funder on 11 September despite these circumstances cannot establish justifiable doubts.
Although UNCITRAL Rules and Model Law are silent on the time limit to disclose, the
4-day gap should be considered as reasonable. This argument can be sustained by Daele’s
research, ‘in all the cases that the author has reviewed, the arbitrator's disclosure was
made within one or two weeks after being appointed’ [Daele].
(b) Mr. Prasad does not bear the duty of investigating the allegedly problematic
circumstances.
36. The reason for non-disclosure of other allegedly problematic circumstances, inter alia,
two appointments by Findfunds LP’s other subsidiaries and commercial relationship with
Funding 8, is that Mr. Prasad did not know the existence of third-party funder until
CLAIMANT disclosed. RESPONDENT also understood “Mr. Prasad had no involvement
in this plot and was probably unaware that CLAIMANT had received funding from a
third-party” [Notice of Challenge].
37.Further, neither UNCITRAL Rules nor Model Law requires an arbitrator to investigate or
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT13
inquire potential conflicts of interests. According to Scholar Born, “these provisions are
limited to the arbitrators’ obligations of independence and impartiality, disclosure and
procedural fairness during the course of the arbitration” [Born]. And as Jonas von Goeler
notes, “Whether arbitrators can be reproached for not having investigated ties with
third-party funders should remain a fact-specific decision made on a case by case basis”
[Goeler].
(2) CLAIMANT’s non-disclosure shall not be taken into account in deciding Mr.
Prasad’s recusal.
38. RESPONDENT bases the challenge on CLAIMANT’s failure to disclose the third-party
funder, but such ground is not tenable. CLAIMANT has no mandatory disclosure
obligation (a). Even if so, the failure to disclose does not automatically lead to Mr.
Prasad’s disqualification (b).
(a) CLAIMANT has no mandatory disclosure obligation.
39. First, Art.11 of UNCITRAL Rules only stipulates arbitrator’s disclosure obligation [Art.11,
UNCITRAL Rules]. Second, as illustrated in paragraph 31, the IBA Guidelines shall not
apply due to absence of agreement. Therefore, CLAIMANT has no mandatory disclosure
obligation under UNCITRAL Rules and IBA Guidelines.
(b) Even if so, the failure to disclose does not automatically lead to Mr. Prasad’s
disqualification.
40.Nondisclosure cannot by itself make an arbitrator partial or dependent but only when the
facts or circumstances that he or she failed to disclose show an objective likelihood the
arbitrator might be biased due to such factors will the arbitrator be removed [Born].
However, Mr. Prasad is not biased in the cases herein.
C. Mr. Prasad’s previous appointments cannot justify the challenge.
41. RESPONDANT submits that the appointments made by Mr. Fasttrack’s law firm and
funder’s subsidiary are solid grounds for challenge under IBA Guidelines [Paras. 3.1.3
and 3.3.8, IBA Guidelines]. However, these appointments cannot justify a challenge since
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT14
repeated appointments themselves are not proof of partiality which can raise justifiable
doubts as to Mr. Prasad’s independence and impartiality (1) and even if IBA Guidelines
were applicable, these appointments do not fall into the orange list (2).
(1) Repeated appointments themselves are not proof of partiality which can raise
justifiable doubts as to Mr. Prasad’s independence and impartiality.
42. Both UNCITRAL Rules [Art.12 (1), UNCITRAL Rules] and Model Law [Art.12 (2),
Model Law] have required a justifiable doubt standard for challenge. Under UNICITRAL
Rules, doubts are justifiable if they give rise to an apprehension of bias that is, to the
objective observer, reasonable [Vito Gallo]. Whether repeated appointments may impugn
the arbitrator’s qualification is a matter of substance rather than mathematical calculation
on the number of appointments. Therefore, merely challenging Mr. Prasad on the basis of
number of appointments is not tenable, and sound evidence of likelihood of bias to a
reasonable third person resulting from these appointments shall be raised.
43. However, RESPONDENT challenged Mr. Prasad using only the numerical limit
stipulated by IBA Guidelines and failed to raise evidence of likelihood of bias. In addition
to its inapplicability in this case, IBA Guidelines’ approach to repeated appointments is
widely criticized by the international community for being too mechanical, since
recurrent appointments may result from many factors such as the good reputation of the
arbitrator and the size of his or her law firm [Born; Koh]. Besides, it is supported by
cases [Tidewater] and scholars to take on a qualitative approach to assess case by case if
the repeated appointments will actually bring about partiality [Born; Koh; Luttrell]. In
the present case, there is hardly any likelihood that Mr. Prasad would be partial due to
these appointments, since only a little part of Mr. Prasad’s income came from these
appointments [¶10, PO2] and Mr. Prasad did not show bias in his previous decisions [¶
15, PO2]. Thus, RESPONDENT’s failure in raising evidence of likelihood of bias has
caused the challenge to be groundless under UNICITRAL Rules.
(2) Even if IBA Guidelines were applicable, these appointments do not fall into the
orange list.
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT15
44. Even if the numerical standard of appointments under IBA Guidelines is applicable, the
appointments will not cause conflict of interest since Mr. Prasad was not appointed three
times by Mr. Fasttrack’s law firm (a) or two times by CLAIMANT or its affiliate prior to
the Arbitration (b).
(a) Mr. Prasad was not appointed three times by Mr. Fasttrack’s law firm prior to the
Arbitration.
45. Under IBA Guidelines [para. 3.3.7, IBA Guidelines], three or more appointments made
by the same counsel or law firm fall into the orange list. However, Mr. Fasttrack’s law
firm only appointed Mr. Prasad twice, which does not exceed the limit of IBA Guidelines.
Additionally, these cases were completed and Mr. Fasttrack himself has not been
involved [Prasad’s Refusal; ¶9, PO2]. Thus the appointments can hardly raise doubts in a
reasonable third person’s eye.
(b) Mr. Prasad was not appointed two times by CLAIMANT or its affiliate prior to the
Arbitration.
46. Being appointed for two or more times made by Parties or its affiliate within three years
is categorized as an orange list situation under IBA Guidelines [para. 3.1.3, IBA
Guidelines]. While in the case herein, the appointments were not made by CLAIMANT
or its affiliate. First, the party who had appointed Mr. Prasad was a subsidiary of
Findfunds LP and CLAIMANT’s funder is Funding 12, which are two separate entities.
Second, CLAIMANT’s funder shall not be deemed as CLAIMANT’s affiliate since
Findfunds LP is known as having little influence on appointment of arbitrators [¶4, PO2].
D. The business contact between Mr. Prasad’s Law firm and CLAIMANT’s funder is
not significant enough to constitute a conflict of interest.
47. RESPONDANT assumes that Mr. Prasad’s partner, Mr. Slowfood is acting for a client in
an arbitration funded by Findfunds LP’s subsidiary, which is against a waivable red list
item under IBA Guidelines that avoids “significant commercial relationship” between
arbitrator’s law firm and the parties or its affiliate [para. 2.3.6, IBA Guidelines]. However,
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT16
even if IBA Guidelines were applicable, which is not the case; the business relationship in
this case was not significant therefore does not lead to a disqualification. Under the
objective justifiable doubt standard required by UNCITRAL Rules, the business
relationship between the funder and Mr. Prasad’s law firm is too remote to justify a doubt.
48. Several factors [Suez], namely the proximity, intensity, dependence and materiality
provide specific assessment for the significance of such alleged connection and its effect
on Mr. Prasad's independence. First, the relation is not close enough since the connection
was built out of a merger of law firm only after the appointment of Mr. Prasad. Second,
the intensity [Rogers] of the connection does not suffice because Mr. Prasad’s partner is
only acting in one case. Third, the relationship is not material [Goeler] since Mr.
Slowfood’s client is funded by Funding 8, which is a subsidiary that Findfunds LP only
owns 40% of its share [ ¶ 6, PO2] and cannot be deemed as CLAIMANT’s affiliate.
Finally, only 300,000 US$ will become due from the case after the merger of the two law
firms, which only takes up about 1% of the annual income of Slowfood’s law firm and
the number will get even smaller after the merger. Therefore, it is impossible that Mr.
Prasad could be dependent on such income and the business connection would not
influence his decision.
E. Mr. Prasad’s previous scholarly writing does not imply bias against RESPONDENT.
49. The first factor is the date of publication. A court decides that ‘arbitrator cannot be
disqualified because of their writings or statements on legal issues that have occurred at a
time that precedes the case.’ [CLOUT Case 1178]. In the case herein, the article in
dispute was publicized in 2016, long before the appointment of Mr. Prasad; therefore Mr.
Prasad should not be removed.
50. The second factor is the content of the article. In the present case, the academic opinion
expressed by Mr. Prasad is general [Letter Prasad]. Such general legal view falls into the
scope of Green List of IBA Guidelines, which does not constitute a conflict of interest
[Para.4.1.1, IBA Guidelines]. In Saipem, the panel found that ‘an arbitrator's doctrinal
opinions expressed in the abstract without reference to any particular case do not affect
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MEMORANDUM FOR CLAIMANT17
that arbitrator's impartiality and independence, even though the issue on which the
opinion is expressed may arise in the arbitration’[Saipem].
51. Even if the Tribunal decides Mr. Prasad’s academic view to be specific, it still does not
impair Mr. Prasad’s independence and impartiality. In ST-AD, the court holds ‘that a
judge has expressed a certain legal view on a particular legal question in several
proceeding, and possibly also publicly, such as in publications, does not affect his [or her]
impartiality with respect to the concrete case to be decided – even if this particular legal
view is crucial to the result’ [ST-AD GmbH]. Therefore, Mr. Prasad should be disqualified
even if he expressed legal opinion specific to the present arbitration.
52. Last factor is the common act of arbitrator to publish legal opinion. As scholar Born notes,
“It is desirable that the tribunal include individuals who are experienced in the matters in
dispute, which necessarily involves the formulation of thoughts and positions” [Born].
Similarly, in Urbaser, the tribunal found that if academic views could constitute
justifiable doubts, there would be negative consequence that ‘no potential arbitrator of an
ICSID Tribunal would ever express views on any such matter, whether it may be
procedural, jurisdictional, or touching upon the substantive rights deriving from BITs’
[Urbaser]. Therefore, it cannot be inferred from the article that Mr. Prasad has a tendency
to make a decision in favor of CLAIMANT.
PART 3: THE CLAIMANT’S STANDARD CONDITIONS SHALL GOVERN THE
CONTRACT.
53. Notwithstanding the changes in Sales Offer compared with Tender Documents, the
RESPONDENT explicitly accepted Sales offer. One of the changes is that the offer is
subject to the CLAIMANT’s General Conditions of Sale. Thus, a contract has been
concluded between the CLAIMANT and the RESPONDENT, which is governed by
CLAIMANT’s General Condition of Sale (I). Even if CLAIMANT’s standard conditions
do not govern the contract, there is no ground to apply RESPONDENT’s standard
conditions (II).
Ⅰ. The CISG supports that CLAIMANT’s General Conditions of Sale shall govern the
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT18
contract after RESPONDENT’s acceptance of Sales Offer from CLAIMANT.
54. The CISG governs disputes related to the contract, including the incorporation of standard
conditions (A). As governed by Articles 14, Invitation to Tender combined with Tender
Documents does not amount to an offer (B). Considering the facts and circumstances, the
Letter of Acknowledgement is nothing but a receipt under the CISG (C). On the other
hand, CLAIMANT made an effective offer (D). Besides, CLAIMANT had successfully
changed the governing conditions into CLAIMANT’s General Conditions of Sale
including Business Code of Conduct and Supplier Code of Conduct through its offer,
which was accepted by RESPONDENT (E).
A. The CISG governs as the only applicable law.
55. Choice of Law Clause is different in RESPODENT’s and CLAIMANT’s standard
conditions. The former one declares CISG to be applicable while UNIDROIT Principles
to be default rules [Cl. Ex. 2 Sec. V Clause 19]; the latter one refers to the application of
Equatorianian Law [Proc. Ord. No.2, 29]. Since both parties are from contracting states
of CISG [Proc. Ord. No.1, 3 (3)] and parties failed to exclude the application of CISG
[Art. 6 CISG], CISG should govern the contract according to Article 1.1.(a) with no
doubt. However, UNIDROIT Principles has no grounds to apply. The first version of
UNIDROIT Principles was only launched in 1994, that is, 14 years after Vienna
Conference. The drafters of CISG certainly did not have UNDROIT Principles in mind as
an instrument for interpretation and gap-filling [International Commerce and Arbitration,
117]. What’s more, both issues concerning incorporation of standard conditions and
breach of contract could be well settled according to CISG [Practitioner’s Guide,
119][CISG Digest 80 ¶11].
B. Invitation to Tender does not constitute an offer so that the content in Tender
Documents is neither binding nor unchangeable.
56. To constitute an offer, a proposal must be sufficiently definite and shows the intention of
the offeror to be bound in case of acceptance [Art.14.1 CISG]. To be sufficiently definite,
a proposal must expressly or implicitly fix or make provision for determining not only the
quantity but also the price [Id.]. In Invitation to Tender, the price per chocolate cake is to
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT19
be filled in by tenderer, which is not determined [Cl. Ex. 2 Sec. IV].
57. RESPONDENT, when sending Invitation to Tender, had no intention to be legally bound
in case of the acceptance from CLAIMANT. RESPONDENT initiated the tender
procedure, publicized the tender in the industry newsletters, sent tender documents to 5
companies including CLAIMANT [Resps. To Notc. ¶7]. During this procedure,
RESPONDENT showed no intention to be bound by possible tender from any of
invitation receivers.
58. Thus, Invitation to Tender does not constitute an offer so that the content in Tender
Documents is neither binding nor unchangeable.
C. Letter of Acknowledgement is nothing but a receipt under the CISG.
59. Although the CISG does not directly deal with the legal status of letter of
acknowledgement or letter of confirmation, the guideline in Article 8 must be followed to
determine this question. The underlying principle of Article 8 is the determination of the
“true intent” of the parties, arrived at through consideration of all the facts and
circumstances surrounding the case [CISG Advisory Op.No.3¶2.8]. When determining
the intent of parties, due consideration is to be given to all relevant circumstances
including negotiations, any subsequent conduct of parties [Art. 8.3 CISG].
60. The Letter of Acknowledgement is a documentation which was initially sent from the
RESPONDENT [Cl.Ex.1]. In Invitation to Tender, all the tenderers were requested to
return Letter of Acknowledgement 11 days before the Tender date [Id]. If the ultimate
tender shall be strictly in accordance of the requirements, there is no need for the
RESPONDENT to give tenderers another eleven days to rethink before the final Tender
Date.
61. Further, although Letter of Acknowledgement states that “we will tender in accordance of
the specified requirements” [Re.Ex.1], the RESPONDENT still accepted the Sales Offer
from the CLAIMANT when the CLAIMANT did not tender in accordance of the
specified requirements. Provided that the content in Letter of Acknowledgement was
binding and mandatory, the RESPONDENT should not have accepted the Sales Offer
within several changes compared with specified documents. As a result, it can be
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT20
confirmed that the RESPONDENT did not demonstrate the intent that Letter of
Acknowledgement is binding and unchangeable, which means there is still space for the
CLAIMANT to alter the specified requirements then to submit the tender including the
alternations.
62. Given that the Invitation to Tender is merely an invitation to negotiate, the CLAIMANT is
entitled to tender in line with its own interests and make appropriate changes when
necessary. Moreover, considering the fact that the RESPONDENT gave tenderers another
eleven days to rethink before the final Tender Date, it is reasonable for the CLAIMANT
to regard the Letter of Acknowledgement as only a notice of receipt and an indication to
bid, which enables the RESPONDENT to know about the attractiveness of their
invitation to tender in advance.
D. CLAIMANT made an effective offer.
63. According to CISG, a contract is concluded at the moment when an acceptance of an offer
becomes effective in accordance with the provisions of this Convention. [Art.23 CISG].
This article requires not only an effective offer, but also a capable acceptance to
constitute a concluded contract showing the consensus of both parties. CLAIMANT’s
offer is composed of three parts: Covering letter [Cl. Ex. 3], RESPONDENT’s Tender
Documents as an attachment and Sales Offer [Cl. Ex. 4] which replaced RESPONDENT
General Conditions of Contract with CLAIMANT’s General Conditions of Sale. All the
above documents were sent to RESPONDENT through mail on 27 March 2014 [Cl. Ex.
3]. Informality is a general principle of CISG [CISG Digest, 44 ¶22], which is evidenced
by Article 11. With no reservation through Article 96 by either Equatoriana or
Mediterraneo, there is no special requirement on formality concerning the formation of
contracts between CLAIMANT and RESPONDENT. Thus, any statement, document or
conduct, disregarding its title or formality, can constitute an effective offer or acceptance
as long as it fulfills the requirement of Article 14 or 18. CLAIMANT’s Sales Offer,
together with Covering letter and Tender Documents, has fulfilled the requirement of
being sufficiently definite and showing intention to be bound in case of an acceptance by
RESPONDENT [CISG Art.14]. Thus, the three documents constituted an effective offer.
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT21
E. CLAIMANT had successfully changed the governing conditions into CLAIMANT’s
General Conditions of Sale including Business Code of Conduct and Supplier Code of
Conduct through its offer, which was accepted by RESPONDENT.
64. CLAIMANT never tried to equate the current tender with an ordinary battle of form
situation as what RESPONDENT alleged [Resps. To Notc, ¶25]. The issue of the battle of
forms is in effect restricted to situations where there is an exchange of different sets of
standard terms, creating several counteroffers [Dimatteo, 209]. As established above,
RESPONDENT never made an effective offer. There was no ground for CLAIMANT’s
offer to be deemed as a counteroffer under CISG Article 19. Thus, neither “last shot rule”
nor “knock-out rule” can be applied in this case.
65. The current issue is whether CLAIMANT had successfully incorporated and replaced the
original General Conditions of Contract in Tender Documents with its own General
Conditions of Sale. Although CISG does not explicitly cope with the issue on
incorporation of standard terms , it is strongly held that this matter should still be
governed by CISG under Article 14 in connection with Article 8 [Schlechtriem &
Schwenzer, 224 ¶5]. A famous case on this issue is Germen Machinery Case, through
which CISG Advisory Council had summarized that, “where there is a clear reference to
the incorporation of standard terms in the offer (1) and where they were reasonably
available at the time of the negotiations or conclusion of the contract (2), if the other
party starts performing without objecting to the inclusion of the standard terms (3), then
the conduct of the offeree shall objectively be interpreted as implied acceptance of the
inclusion of standard terms.” [CISG Advisory Op.No.13 2.13] Peter Huber also drew the
similar conclusion of the required elements on this issue [Vindobona Journal, 123, 127].
In fact, CLAIMANT had fulfilled all these requirements.
(1) There is a clear reference to the incorporation of standard terms in the offer.
66. CLAIMANT stated clearly in its Sales Offer that “The above offer is subject to the
General Conditions of Sale …” [Cl. Ex. 4] Such stipulation showed the intention of
CLAIMANT to use its own General Conditions of Sale other than what RESPONDENT
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT22
provided in Tender Documents. CLAIMANT also gave a hint to RESPONDENT about
this change in Covering letter by stating “we have to make some minor amendments to
the documents received by the invitation to submit a tender offer.” “These changes relate
primarily to the goods and the mode of payment.” “We hope that you find our offer
attractive despite the necessary minor amendments” “If you have any further questions, in
particular concerning our applicable sustainability strategy, please do not hesitate to
contact me” [Cl. Ex. C3]. A reasonable businessman as RESPONDENT [Art.8.2 CISG]
was at the point receiving such an offer would notice the CLAIMANT’s intention to
replace the General Conditions of Contract in Tender Documents with CLAIMANT’s
General Conditions of Sale by thoroughly reading CLAIMANT’s offer. CLAIMANT
admits that CLAIMANT did not inform RESPONDENT of the change on general
conditions as expressly as the change on form of cakes and the payment mode, because
CLAIMANT considered that conditions from both parties share the same value on
sustainable product and both post a “best effort” obligation on CLAIMANT. This
position will be further discussed in the next submission. Besides, RESPONDENT as a
leading gourmet supermarket chain in Mediterraneo [Resps. To Notc, ¶4] was reasonably
expected to overread the offer received. What’s more, RESPONDENT did notice this
“subject to” term following CLAIMANT’s tender even if out of curiosity [Cl. Ex.5].
Thus, CLAIMANT asserts that the reference to the incorporation and governing position
of CLAIMANT’s General Conditions of Sale did arouse RESPODENT’s attention and
was sufficiently clear.
(2) CLAIMANT’s General Conditions of Sale were reasonable available to
RESPONDENT at the time of conclusion of contract.
67. Other than providing the whole version of General Conditions of Sale as an attachment,
CLAIMANT provided a URL of landing page following the “subject to” term. On this
landing page, all CLAIMANT’s standard documents including General Conditions of
Sale, Business Code of Conduct, Supplier Code of Conduct are directly accessible [Proc.
Ord. 28]. The dispute might be solved easier if CLAIMANT submitted its tender through
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT23
electronic communications, for CISG Advisory Council firmly agrees that providing a
hyper-link is a proper way to make standard conditions available to the other party via
E-mail [CISG Advisory Op.No.13¶3.3]. Although in this case CLAIMANT submitted its
tender via ordinary mail, CLAIMANT’s General Conditions of Sales has also passed the
“making available to” test. The rationale behind “making available to” test is that, in
terms of incorporating standard conditions, Offeree has to aware of the text of standard
terms, which is a de facto matter. A mere reference in offer is sufficient to make the
standard terms part of the offer in cases in which the offeree already has actual and
positive knowledge of the standard terms’ content at the moment he receives the offer
[Schlechtriem & Schwenzer, 279 ¶ 39]. If lack such actual awareness, offeror has to
perform certain obligation to ensure offeree’s awareness, which is the “making available
to test” [Schlechtriem & Schwenzer, 279 ¶ 40]. In this case, RESPONDENT not only had
noticed the “subject to” term stipulated in CLAIMANT’s offer, but also seen the whole
version of Business Code of Conduct and Supplier Code of Conduct following tender at
the point of awarding the contract [Cl. Ex. C5]. Furthermore, it is reasonable to estimated
that RESPONDENT had seen the whole version of General Conditions of Sale as well.
All these documents are on the same landing page, listed one by one. It is a common
commercial sense that Code of Conduct is an important part of a company’s general
condition, which can be evidenced by the structure of RESPONDENT’s Tender
Documents as well [Cl. Ex. C2]. There is no proper reason for RESPONDENT, as a
leading company in supermarket chain and a prudent business company, to skip General
Conditions of Sale and to directly look into Code of Conduct. To sum up, for
RESPONDENT did have the actual knowledge of CLAIMANT’s General Conditions of
Sale and Code of Conduct, “making available test” is not necessary when examining
whether CLAIMANT had performed due obligations to make the standard terms
available to RESPONDENT.
(3) RESPONDENT accepted CLAIMANT’s General Conditions of Sale which
substitutes the General Conditions of Contract in Tender Documents.
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT24
68. According to ACOP No.13, if the other party starts performing without objecting to the
inclusion of the standard terms,it can be deemed as an implied acceptance. This opinion
is identical to CISG Article 18. A court also confirms that, “pursuant to the CISG,
acceptance does not require a signature or formalistic adoption of the offered terms. The
offeree may indicate assent by performing an act, such as one relating to the dispatch of
the goods or payment of the price, without notice to the offeror, the acceptance is
effective at the moment the act is performed.” [Golden Valley Case]; another court also
held that the best solution is one that recognizes performance as tantamount to acceptance
[Knitware Case, see from DiMatteo 209]. In this case, RESPONDENT awarded
CLAIMANT the contract on 7 April 2014 [Cl. Ex. C5]. From then on, both CLAIMANT
and RESPONDENT started to perform the contract. Even though REPONDENT did not
expressly accept the change of standard conditions as they did towards payment mode
and form of cakes, subsequent performance could be regarded as an effective acceptance.
CLAIMANT never alleges that silence does in itself amount to acceptance which may
undermine CISG Article 18.1. Nevertheless, by considering all elements established
above, RESPONDANT had made an effective acceptance to CLAIMANT’s offer, which
includes the change of governing standard conditions.
II. Even if CLAIMANT’s standard conditions do not govern the contract, General
Compact principles will guide the contract.
69. RESPONDENT argues that in the acknowledge letter CLAIMANT agreed to adhere to
RESPONDENT’s General Conditions of contract and its Code of Conduct. These,
however, are not adequate grounds to show that CLAIMANT consents to comply with
two conducts when entering into the final contract. Even if CLAIMANT’s standard
conditions do not govern the contract, both parties did not reach a consensus on applying
the RESPONDENT’s standard conditions. The facts and circumstances of the case dictate
that the Global Compact principles should govern the contract at a minimum.
70. Under Article 8.1, attention must be placed on the parties’ actual intent, “where the other
party knew or could not have been unaware of what the intent was”. In terms of the facts
and circumstances of the case, the Global Compact principles must receive due
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT25
consideration (A). Beyond this, when the subjective intentions of the parties cannot be
discerned, the objective understanding of the contract by a reasonable person can be
considered through Article 8.2 (B).
A. The parties intended to use the Global Compact principles as standard conditions all
the way up through the negotiation and contract.
71. This subjective test considers the actual meaning the parties gave the Agreement as well
as their intentions during contract formation [Lookofsky 2000 ¶84]. Through the
negotiation and contract, many documents and e-mails indicate that CLAIMANT and
RESPONDENT use the Global Compact principle as a guild line. The Tribunal should
attach importance on that Global Compact should serve as standard conditions at a
minimum when neither of standard conditions has been acknowledged as an exact one.
72. As both parties are the UN Global Compact members, they should aim to mobilize a
global movement of sustainable companies and stakeholders. To achieve the goal, the UN
Global Compact supports companies to do business responsibly by aligning their
strategies and operations with Ten Principles on human rights, labor, environment and
anti-corruption; and take strategic actions to advance broader societal goals, such as the
UN Sustainable Development Goals, with an emphasis on collaboration and innovation.
Furthermore, the RESPONDENT wants have the title of Global Compact LEAD
Company by 2018 [Cl. Ex. 1]. The philosophy of Global Compact points to be a rotten
corporate culture in both parties.
73. First, CLAIMANT has become a very interesting supplier for RESPONDENT at the
Danubian Food Fair because of its Global Compact membership and its strict adherence
to the principle of ethical and sustainable production [Cl. Ex. 1]. CLAIMANT could
know its selling point as it had a general discussion about the cost versus the benefits of
ethical and environmentally sustainable production and respective experiences.
74. Second, RESPONDENT underlined its Global Compact member committed to high
standards of integrity and sustainability in its tender giving to the CLAIMANT.
CLAIMANT also showed the philosophy in its Code of Conduct that it will adopt
practices that deliver benefits to its own operations and supply chains, and improve
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT26
sustainable performances over time [Cl. Ex. 2; Resp. Ex. 2]. Both parties demonstrate
their ideas adhering to Global Compact in their standard conditions.
75. Third, when RESPONDENT required CLAIMANT to clarify whether its suppliers
adhered to the standard, RESPONDENT “demanded that CLAIMANT confirmed by the
next business day that CLAIMANT’s suppliers all strictly adhered to Global Compact
principles” [Cl. Ex. 6]. The RESPONDENT first used Global Compact principle as a
checking guild line which indicated that Global Compact principle at a minimum
standard was RESPONDENT request.
76. Fourth, CLAIMANT itself had complied with all its obligations under the contract
including using its best efforts to ensure that its suppliers complied with the Global
Compact principle which had been certified annually [Cl. Ex. 8]. The conduct indicates
that CLAIMANT actually ensures the suppliers complied with the Global Compact
principle.
B. A reasonable understanding of the contract suggests the Global Compact principle
guide the contract.
77. The Tribunal should evaluate the statute of Global Compact principle to contract through
the understanding of a reasonable person (1). The core of standard conditions of both
parties is basically adhering to philosophy in Global Compact principles, but neither
includes the clear obligation to ensure the sustainability. Instead, the Global Compact
includes an explicit mechanism to promote greater environmental responsibility (2).
(1) The Tribunal should evaluate the statute of Global Compact principle to
contract through the understanding of a reasonable person
78. Commentators explain that “where the other party was unaware or could not have been
aware that the subjective intention was different from the objective meaning, then the
statement is to be interpreted according to the understanding that a reasonable person ‘of
the same kind’ as the addressee would have had in the same circumstances (Article 8(2)).”
[Schlechtriem & Schwenzer 271 ¶26]. Both parties underline the Global Compact in their
standard conditions which a reasonable person can come to the conclusion that Global
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT27
Compact principle can govern the contract at a minimum.
(2) Global Compact includes an explicit mechanism to promote greater
environmental responsibility
79. The core of standard conditions of both parties is basically adhering to philosophy in
Global Compact principles, but neither includes the clear obligation to ensure the
sustainability. Unlike both parties’ standard conditions, UN global Compact principles
show explicitly that “all participants to produce an annual Communication on Progress
that outlines your efforts to operate responsibly and support society. This could be part of
your sustainability or annual report, or another public document.” [Global Compact].
Even if standard conditions of either party are applied, the Tribunal should also consider
the Global Compact principles as a guild line to CLAIMANT’s conduct let alone the
situation neither party’s standard conditions is applied.
PART 4: CLAIMANT HAS NOT BREACHED ITS CONTRACTUALOBLIGATIONS.
80. CLAIMANT has fulfilled its obligations under principles C and E of RESPONDENT’s
Code of Conduct for suppliers (I) and Art.35 CISG (II). What’s more, RESPONDENT is
not strict with ethical requirements as it claimed (III).
I. CLAIMANT has fulfilled its obligations under principles C and E of RESPONDENT’s
Code of Conduct.
81. The reason why RESPONDENT insisted on its own Code of Conduct for Suppliers is
obvious: principle C and E in this Code of Conduct, they considered, requires
CLAIMANT to ensure CLAIMANT’s own suppliers conduct their own business in an
environmentally sustainable way. Contrary to RESPONDENT’s allegation that the Code
of Conduct requires an obligation of results [Resps. to Notc. ¶26], the exact wording of
principle C requires CLAIMANT to merely use its best effort (A) the reasonable
understanding of principle E in light of the whole contract is the requirement of
CLAIMANT’s best effort instead of guarantee of results (B).
A. The exact wording of principle C requires CLAIMANT to merely use its best effort
82. Principle C requires as such: ‘You shall provide a safe and healthy workplace for all of
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT28
your employees and shall conduct your business in an environmentally sustainable way’.
It does not require a compliance of CLAIMANT’s suppliers but only CLAIMANT.
83. It then provides three specifications on what CLAIMANT should do for environmentally
sustainable management, including appointment of a competent person for such matter,
appropriate organizational structure for such management, and proper training for
workers. At last it writes that CLAIMANT should ‘ensure that your own suppliers
comply with the above requirements’. It is clear this is where RESPONDENT relied on to
justify that CLAIMANT was required to ensure CLAIMANT’s own suppliers used
sustainable farming methods in their own productions.
84. This is a clear distortion of the true meaning of principle C.
85. While RESPONDENT urged CLAIMANT to ensure the sustainability of its own
production, the three specifications gave clearer instructions on which relevant business
conducts are required. It at most requires CLAIMANT to ensure its own suppliers
fulfilling these three specifications, which Ruritania Peoples Cocoa mbH (hereby referred
to as Ruritania Cocoa) did. This is upon the findings of this Tribunal at Procedure Order
No.2 under Question 32: Ruritania Cocoa had a good reputation in the market. It had two
model farms which showed how its cocoa was produced in a sustainable way; it also
provides training and education to other farmers from which it bought cocoa beans. These
are robust adoptions of RESPONDENT’s specifications. It is clear that RESPONDENT
at best requires CLAIMANT to ensure its own supplier perform as such, which Ruritania
Cocoa did. Although these specifications did not stop Ruritania Cocoa’s involvement in a
country-wide certificate falsification on sustainable farming, it met RESPONDENT’s
requirements under principle C due to CLAIMANT’s supervision.
B. Also under principle E, CLAIMANT has fulfilled its obligation.
86. Principle E requires CLAIMANT to procure goods and service in a responsible manner.
87. In the two following specifications, it first requires CLAIMANT to select tier one
suppliers “based on them agreeing to adhere to standards comparable to those set forth in
this Comestibles Finos’ Code of Conduct for Suppliers”. CLAIMANT did as such. It
required Ruritania Cocoa to adhere to CLAIMANT’s own Supplier Code of Conduct.
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT29
This Supplier Code of Conduct was acknowledged by RESPONDENT to be ‘sharing the
same value’ [Cl. Ex. 5 ¶2].
88. It then requires CLAIMANT to ‘make sure that they’, in this case CLAIMANT’s own
suppliers, ‘comply the standards agreed upon’. If ‘make sure’ means that absolute
guarantee of the result of compliance, it requires CLAIMANT to ensure there would
never be a breach of contract between CLAIMANT and its own suppliers.
89. This is beyond a reasonable person’s understanding, and obviously not the understanding
of RESPONDENT at the conclusion of the contract. In the witness statement of
RESPONDENT’s head of purchase Annabelle Ming, she was aware that CLAIMANT
could at best ‘largely guarantee compliance with the Code by their suppliers’ [Resp. Ex. 5
¶3]. It is clear that Annabelle Ming representing RESPONDENT understood clearly that
CLAIMANT could not ensure 100 per cent of its own suppliers’ compliance. Therefore,
at the conclusion of the contract, RESPONDENT’s understanding of CLAIMANT’s
obligation was also ‘best effort’ instead of ‘absolute guarantee’ despite its present denial
in front of this tribunal.
90. RESPONDENT cannot rely on the plain meaning of ‘make sure’ and interpret it into
absolute guarantee of result. Plain Meaning Rule does not apply under the CISG [CISG
Advisory Op.No.3 ¶3]. Statement or conducts are still to be interpreted according to Art. 8
CISG [CLOUT case No. 877].
91. Had RESPONDENT’s true intent with its Code of Conduct for Suppliers is for
CLAIMANT to ensure the result and not to use best effort, the burden of proof lies on
RESPONDENT that CLAIMANT was aware and could not have been unaware of such
intent [Art. 8.1 CISG]. Otherwise the reasonable interpretation of these two principles has
been established to be ‘using best effort’.
92. CLAIMANT’s understanding of best effort is well evidenced by its offer mail where it
promised to ‘do everything possible’. This is a promise of action and not result.
93. It is worth noting that even in the current chocolate industry, lead companies which are
experts in selecting coca resource cannot ensure the result of 100 per cent sustainable
production. Ruritania Cocoa’s violation of sustainable production involvement in a
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MEMORANDUM FOR CLAIMANT30
governmental scheme is beyond CLAIMANT’s sphere of control. Both parties entered
into this contract with a common belief in high standards in business ethics, but ensuring
the result of CLAIMANT’s supplier’s compliance one Mission Impossible: Ruritania
Peoples Coca was the counterparty of a contract with which CLAIMANT has entered
into, not an affiliate or party of interest that CLAIMANT was capable to impose absolute
control. What could be expected of CLAIMANT at the conclusion of the contract are
actively supervising its supplier’s performance. Ironically the specific methods of
supervision was not instructed by RESPONDENT but by CLAIMANT voluntarily when
it hired a third party audit company. CLAIMANT immediately terminated the contract
with its supplier as correction of mistakes voluntarily, which fulfill the stipulation under
principle F of RESPONDENT’s Code of Conduct for Suppliers [Cl. Ex. 2].
II. CLAIMANT did not breach Article 35 of CISG.
94. Article 35 CISG stipulates both expressed obligations according to the specific contract
and implied obligations in its second paragraph. While the burden of proof for any
non-conformity lies on RESPONDENT, the goods CLAIMANT delivered conform with
the specifications in the contract according to article 35.1 CISG (A); in the appearance of
expressly article 35.1 agreement, article 35.2 is silent (B); even if article 35.2 applies,
CLAIMANT has delivered goods that satisfy the standards within (C).
A. RESPONDENT bears the burden of proof on inconformity of goods.
95. ‘The burden of proving conformity or lack of conformity shifts from the seller to the
buyer in conjunction with the delivery of goods. In general, a buyer who has taken
delivery of the goods without any complaints or reservation as to their conformity has to
prove that the goods were non-conforming at the time the risk passed.’ [DiMatteo].
RESPONDENT has taken delivery of the cakes for three years, therefore the burden of
proof was successfully shifted to RESPONDENT.
96. A reasonable interpretation of CLAIMANT’s obligation should take into account the
context of the entire business environment. Even the experts in using and selecting cocoa
beans, namely the big chocolate companies, either requires best efforts for their suppliers,
or use ‘must’ to indicate an obligation of ensuring result.
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT31
97. Hershey states "At a minimum, suppliers must fully comply with all local environmental
laws and regulations and should strive to conduct their operations in a way that conserves
natural resources" [Hershey].; Mars states "The Mars Supplier Code of Conduct captures
the principles that we expect our suppliers to uphold. " [Mars]; Cargill stipulates "Our
Supplier Code of Conduct explains how we expect farmers, producers, manufacturers,
and others to work with us to fulfill that purpose—ethically and in compliance with
applicable laws."[Cargill].
98. These supports the view that principle C and E, presuming to be part of the contract,
impose merely the obligation of best effort on CLAIMANT.
B. Article 35.2 CISG is not applicable, because it only serves as default rules when
lacking expressed Article 35.1 agreement.
99. Despite what is RESPONDENT’s burden of proof, CLAIMANT has delivered goods
which are of the quantity, quality and description required by the contract and which are
contained or packaged in the manner required by the contract. If RESPONDENT insisted
on an expressed contractual obligation for CLAIMANT concerning quality of goods
under Article 35.1, it cannot invoke the implied obligations set in Article 35.2 [Fabric
case].
C. Even if article 35.2 applies, the goods delivered by Claimant meet the standards
within.
100.Even if Article 35.2 is applicable, while it is still RESPONDENT burden to establish
CLAIMANT’s non-compliance with Article 35.2 CISG, the chocolate cakes CLAIMANT
provided were fit for the ordinary purpose of goods of the same description (1); The
cakes were fit for all particular purposes made known to CLAIMANT at the time of the
conclusion of the contract (2); according to Article 35.2.c and 35.2.d, the cakes are clearly
conforming (3).
(1) The chocolate cakes CLAIMANT provided were fit for the ordinary purpose of goods of the
same description
101.The chocolate cakes CLAIMANT provide are fit for the ordinary purpose of goods of the
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT32
same description. The Article 35.2.a ‘must be used objectively to assess what a
reasonable business person in the same situation would expect of the goods’. It is
undisputable that chocolate cakes delivered by CLAIMANT over the last three years
clearly met the ordinary purpose of such good until it was called off by RESPONDENT
illegitimately, or else the RESPONDENT’s retailing would not have been going on
smoothly during this period of time. The quality of the cake clearly meets the requirement
what a reasonable business person expects.
(2) The cakes are fit for all particular purposes expressly or impliedly to CLAIMANT at the
time of the conclusion of the contract.
102.If RESPONDENT submit that its particular purpose is 100 per cent sustainable
production, that would be a clear misuse of Art.35.
103.If RESPONDENT argues that it wants to be a Global Compact LEAD company and that
is the particular purpose made known to CLAIMANT at the conclusion of the contract,
there is no clear evidence that this particular purpose cannot be fulfilled. Global Compact
stipulated as such:
Principle 7: support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly
technologies.
104.Both parties have conducted business in line with these principles despite the third party
violation. The unsustainable production cannot be attributed to either CLAIMANT or
RESPONDENT. CLAIMANT has followed the minimum ethical standard in Global
Compact and so did RESPONDENT.
105.RESPONDENT requires full discretion from CLAIMANT to its own supplier’s
compliance, which CLAIMANT has used its best effort to comply with. RESPONDENT
was satisfied with the specifications that CLAIMANT made until problems occurred due
to reasons which could not be attributed to CLAIMANT. And it is again
RESPONDENT’s obligation to proof the non-compliance to whichever particular purpose
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT33
it is going to allege.
(3) The cakes conform with Article 35.2.c and 25.2.d.
106.It is rather obvious that CLAIMANT’s products cannot be found in non-conformity under
c and d of Article 35.2 since there was no disagreement on the conformity of physical
quality.
III. Respondent is not strict with ethical requirements as it claimed.
107.Claimant offered take back all the cakes not sold yet. The sole purpose of this friendly
suggestion is to maintain the business relationship between two parties. Respondent
rejected such a request, and made the cakes made part of their special marketing
campaign for the opening of three new shops even when they have doubts on whether
there were any unsustainable production involved [Procedural Order No 2 ¶38]. It
amounted to hypocrisy when RESPONDENT accuses CLAIMANT for failing to
supervise the supplying chain, while benefiting from the same supplying.
East China University of Political Science and Law
MEMORANDUM FOR CLAIMANT34