8th LAWASIA International Moot 2013 L2020-C

At Kuala Lumpur Regional Centre for Arbitration

MEMORIAL

FOR

CLAIMANT

Claimant

Jack Small Ltd.

Respondent

Tan Sen Imports

2

Ⅰ.Table of Contents

Ⅰ.Table of Contents .................................................................................................................. 2

Ⅱ. Abbreviations ....................................................................................................................... 4

Ⅲ. Index of Authorities ............................................................................................................. 5

Ⅳ. Statement of Jurisdiction ...................................................................................................... 9

Ⅴ. Questions Presented ........................................................................................................... 10

Ⅵ. Statement of Facts .............................................................................................................. 11

Ⅶ. Summary of Pleadings ....................................................................................................... 13

Ⅷ. Pleadings of Claimant ........................................................................................................ 15

1. The scope of arbitration agreement includes not only damages but also permanent

injunction and penalty because these orders are relating to this dispute. ....................... 15

2. The applicable law to the substantive issue should be the law of Singapore. .................. 17

2.1. Tribunal shall determine the applicable law to the substantive issue according to the

conflict of law rules. ................................................................................................... 17

2.2 The conflict of law rules of Malaysia leading to application of the law of Singapore.

.................................................................................................................................... 17

3. Claimant has the right to demand damages and Tribunal should order the injunction to

Respondent on the basis of Passing Off in Economic Torts. ......................................... 18

3.1.The concept of Economic Torts ................................................................................. 18

3.2. Passing Off ................................................................................................................ 18

4. Tribunal should determine that Respondent is liable in the tort of Negligence for damage

suffered by Claimant. ..................................................................................................... 21

4.1. Duty of Care .............................................................................................................. 22

3

4.2. Breach of Duty .......................................................................................................... 26

4.3. Consequent Damage .................................................................................................. 27

5.Tribunal should award the Permanent Injunction and Penalty. ........................................ 30

5.1. Claimant requests both permanent injunction and penalty because of preventing the

loss of the sales of fur products served by Claimant .................................................. 30

5.2. This Tribunal has the authority to award the permanent injunction with penalty

under Fast Track Rules and MAA. ............................................................................. 32

6. Prayer for Relief ........................................................................................................... 34

4

Ⅱ. Abbreviations

LIST OF ABBREVIATIONS

Art.

CITES

ESA

Article

Convention on International Trade in Endangered

Species

Endangered Species (Import and Export) Act (Singapore)

Fast Track Rules

ICC

Inc.

KLRCA

Ltd

MAA

p.

Para. / ¶

%

UNCITRAL Model Law

Kuala Lumpur Regional Centre for Arbitration Fast Track

Rules

International Chamber of Commerce

Incorporation

Kuala Lumpur Regional Centre for Arbitration

Limited company

Malaysia Arbitration Act 2005

Page

Paragraph/ paragraphs

Percentage

UNCITRAL Model Law on International Commercial

Arbitration of 1985

5

Ⅲ. Index of Authorities

1. RULES AND LAWS

Abbreviation

Citation

Fast Track Rules

MAA

UNCITRAL Model Law

CITES

Para. No.

Passim

Passim

41(p.30)

2. SCHORALY WORKS

Author

Book/ Article

Para. No.

Diane L. Beers [Diane L. Beers]

For The Prevention of Cruelty The History and

Legacy of Animal Rights Activism in the United

States

p.188-192, Ohio University Press, 2006, UK

15(p.20)

B.S.Markesinis &

S.F.Deakin

[Markesinis, Deakin]

Tort Law 4th Edition

p.466, 174, 157 Oxford University Press, 1999,

UK

10(p.18),

20(p.22)

34(p.27)

John Murphy [Murphy]

Street on Torts 12th Edition

p.338-350, 35, 42 Oxford University Press, 2007,

11(p.18),

17(p.21),

20(p.22),

6

UK

25(p.23),

27(p.25)

38(p.28)

Belden Premaraj [Belden Premaraj]

The Choices of Law – Better Safe Than Sorry, The

Malaysian Arbitration Perspective

8(p.17)

Kevin Y.L. Tan [Kevin Tan ]

The Singapore Legal System

p.238, Singapore University Press, 1999,

Singapore

9(p.18)

wikiHow [wikiHow]

How to Tell the Difference Between Real Fur and

Faux Fur

http://www.wikihow.com/Tell-the-Difference-Bet

ween-Real-Fur-and-Faux-Fur/2013.08.29

13(p.20)

3. INDEX OF CASES

Citation Para. No.

The United Kingdom

7

[Blyth v Birmingham Waterworks Company]

Court of exchequer, 1856/2/6, Blyth v Birmingham Waterworks Company

(1856) 11 Ex Ch 781

[Haley v. London Electricity Board]

House of Loads, 1964/7/28, Haley v. London Electricity Board [1965] AC

77

[Caparo Industries pic v. Dickman]

House of Loads,1990/2/8,Caparo Industries v. Dickman [1990] UKHL 2

[Burton v. Inlington HA]

Royal Courts of Justice,1992/3/18,Dillon LJ Burton v. Ishington HA [1993]

QB 204

[Sutradhar v. Natural Environment Research Council]

House of Loads,2006/7/5,Sutradhar v. Natural Environment Research

Council [2006] UKHL 33

[Network Rail Infrastructure Ltd. v. Conarken Group Ltd.]

Technology and Construction Court , 2010/7/21, Network Rail Infrastructure

Ltd. v. Conarken Group Ltd. [2010] EWHC 1852 (TCC)

33(p.26)

21(p.22)

20(p.21),

21(p.22),

25(p.23),

27(p.24)

19(p.21)

25(p.24)

30(p.25)

8

4. ARITRATION AWARDS

ICC

[p.65/ICC, Final Award in Case 7895]

ICC International Court of Arbitration Bulletin Vol.11/No.1 ‐ spring

2000,1994/8

48(p.33)

9

Ⅳ. Statement of Jurisdiction

Jack Small Ltd, as Claimant, has approached the Kuala Lumpur Regional Centre for

Arbitration, according to the agreement between Claimant and Tan Sen Imports as

Respondent. There is no dispute on the validity and enforceability of the provision of the

agreement.

10

Ⅴ. Questions Presented

1. Whether does the scope of arbitration agreement include discussion about permanent

injunction and penalty?

2. Whether could duty about Respondent’s unlawful act be recognized under the law of torts?

3. Whether does Arbitral Tribunal have authority to award the permanent injunction with

penalty on the basis of Respondent’s real fur products including endanger species?

4. Whether is the compliant which demands the permanent injunction with penalty accepted?

11

Ⅵ. Statement of Facts

The parties

The parties to this dispute are Jack small Ltd, as Claimant, which has been operated by

the small family, and Tan Sen Imports, as Respondent, which imports clothing and other

products primarily from India and China. Both parties sell fur clothing in Singapore.

Those furs are not only real fur but also faux fur. Respondent purchased its products

from China Fur Import & Export Company, which has its headquarters in Tianjin,

Peoples Republic of China. China Fur has no relationship with Tan Sen other than as its

supplier of the fur products involved in this problem.

The problem which occurred between the parties

Because some of the customers of Claimant told that Respondent sold a higher quality

product at a lower price, Claimant suspected that Respondent might sell the real fur

products despite that those are labeled as faux fur products. Therefore, Claimant filed the

complaints to the investigators of the Enforcement Support Office of the CIETS

Secretariat. Then, it examined a number of faux fur products purchased at the Chinese

Emporium run by Respondent. It proved that the fur products were made from real fur

which includes the fur of Asian Golden Cat. In fact, Respondent advertised those

products, which is labeled as faux fur, as “having the touch, feel and smell of real fur”.

Asian Golden Cat

One of the reasons why Asian Golden Cat is threatened is the hunting for its fur and it is

listed on CITES and the IUCN as “Near Threatened”.

Agreement on the arbitration

The parties agreed to submit the dispute to binding arbitration when they were unable to

12

resolve this dispute amicably. The agreement was jointly executed, and the Claimant

submitted the request for arbitration to the KLRCA in accordance with the agreement.

The validity and enforceability of the provisions of the agreement are not disputed.

13

Ⅶ. Summary of Pleadings

1. The scope of arbitration agreement should be interpreted under the parties’ purpose of the

arbitration. In this case, Claimant would like to resolve the dispute to reconstitute the fair

and stable competitive relationship. This purpose needs to prevent Respondent from

selling the fur of endangered species again, so Tribunal can award permanent injunction

and penalty.

2. When Intention of Respondent is accepted, Claimant has the right to demand damages and

Tribunal should order the injunction to Respondent on the basis of Passing Off in

Economic Torts.

3. The wrongfulness of the intention is to be stressed. Respondent made the false slogan and

use it to make customers believe that Respondent’s products are made of faux fur. The

purpose of using this slogan is presumed to suppress the facts intentionally. In addition, it

may cause loss of the faith in faux fur products for the customers who would like to select

animal friendly goods. So, the intention of Respondent is wrongful and this case should be

discussed based on Passing Off.

4. Even if the malicious intention of Respondent is not perfectly proved,

5. Tribunal should conclude that Respondent is liable in the tort of Negligence for the

damages to Claimant. The reasons are as following.

6. First, Respondent owed Claimant the duty of care not to affect Claimant’s sale by unfair

business practice. This is because the requirement of foreseeability and proximity is

satisfied. Claimant and the type of damages in issue are foreseeable. Also there was a

proximate relationship between the parties because Respondent had complete control of

and responsibility for the situation which Respondent’s mislabeling could cause the harm

14

to Claimant. Moreover it is fair, just and reasonable to impose liability on Respondent for

his actions and the damages can be of the type recoverable under Negligence.

7. Second, Respondent breached a duty of care by causing the drop in the sales of Claimant.

8. Finally, Respondent caused damage to Claimant because the damages suffered by

Claimant would not have occurred ‘but for’ the conduct of Respondent. Respondent is

responsible for the probable consequences of the conduct of Respondent.

9. From the above, Respondent should be liable in the tort of Negligence for the damages to

Claimant as a result of mislabeling by Respondent.

10. Also, when the fact that Respondent used the fur of endangered species is disclosed to the

public, the reliance on faux fur products in Singapore must be seriously damaged. It may

cause huge loss in the business of Claimant’s faux fur products. Besides, Respondent may

continue to purchase the cheaper fur products containing the fur of endangered species in

order to keep in a better position than Claimant.

11. And, no rule prevents Tribunal from awarding permanent injunction and penalty under

Fast Track Rules and MAA. If anything, Tribunal has the power and is empowered to

award permanent injunction and penalty.

12. Therefore, Tribunal should award permanent injunction and penalty.

15

Ⅷ. Pleadings of Claimant

1. The scope of arbitration agreement includes not only damages but also permanent injunction and penalty because these orders are relating to this dispute.

1. In this case, Respondent purchased the fur products from China Fur at cheap price.

Although Respondent intended to sell them as faux fur products, Respondent ordered the

products made of the cheap pelts of “Asian Cats” [Clarifications p.1 A-2]. Thus,

Respondent was able to sell “a higher quality product at the lower price” [Further

Clarifications p.1 B-4]. Because of that, more consumers bought the false ‘faux-fur –

products’ served by Respondent than the real ‘faux fur products’ served by Claimant. So,

Claimant became to realize that Claimant was losing customers to Respondent [Further

Clarifications p.1 B-4]. As a result, total sales of Claimant have dropped 40%; sales of fur

products have dropped 70% [Clarifications p.2 B-8].

2. Although both parties had no contractual relationship, they mutually agreed to resolve the

dispute by arbitration after the problem became apparent that the parties would not be able

to resolve this matter amicably. Claimant used the phrase of “any dispute, controversy or

claim arising out of or relating to this contract” in arbitration agreement at the time of the

conclusion of arbitration agreement. In this case, both parties intended to the phrase

“arising out of…” to mean “arising out of or relating to this dispute” [Clarifications p.4

H-1]. Furthermore, “this dispute” need not be interpreted too narrow. So, the scope of

arbitration agreement should be interpreted under the parties’ purpose of the arbitration.

16

3. In this case, Claimant justifiably intended to resolve the dispute in order to reconstitute

the fair and stable competitive relationship, so that they can freely trade and make a profit

without illegal interferences by a competitor. Based on this, Claimant requests Tribunal to

award the three orders below to reconstitute this relationship.

4. Firstly, it is necessary to compensate the damages caused by the lost sales of Claimant’s

products, which was caused by Respondent’s unfair business practice. Secondly, there is a

potential risk of destructive impact on the faux-fur-business, which might occur when the

fact that the products made of endangered species were sold as faux far products is

disclosed to the public. This risk must be removed urgently, because Respondent might

continue to sell the fur products made of endangered species because of the advantages for

Respondent. So, permanent injunction prohibiting Respondent to carry, sell and/or

promote the products made of the endangered species is strongly required for Claimant to

avoid the risk. As there is enough possibility that Respondent will not comply with the

permanent injunction, the penalty against the non-observance of it is also necessary.

5. Considering the reasons mentioned above, it is Claimant’s position that damages,

permanent injunction and penalty are essential for the reconstruction of fair and stable

competitive relationship between the parties in their business.

17

2. The applicable law to the substantive issue should be the law of Singapore.

6. In this case, the law of Singapore should be the law of the substance of the dispute,

according to the conflict of law rules of Malaysia. Also, Tribunal shall refer to the

principle and the cases based on the English common law.

2.1. Tribunal shall determine the applicable law to the substantive issue according to

the conflict of law rules.

7. According to the Fast Track Rules Art.6 (1), Tribunal shall apply the law determined by the

conflict of law rules, in case the parties to the disputes have not designated the applicable

law to the substantive issue. In this dispute, there is no agreement on the applicable law to

the substantive issue. Therefore Tribunal shall apply the conflict of law rules to determine

it.

2.2 The conflict of law rules of Malaysia leading to application of the law of

Singapore.

8. The conflict of law rules in Malaysia, which is the law of the seat of the arbitration,

provides that the applicable law to the substantive issue is to be the one with which “has

the closest and most real connection with the transaction.”[Belden Premaraj, p.27]. In the

present issue, the place of business of both parties is Singapore, and the place where the

issue happened is also in Singapore. Therefore, Tribunal should apply the law of

Singapore to the substantive issue.

9. Also, Law of Singapore is very similar to England law; there is “continuous reception of

18

English common law in practice” [Kevin Tan p.238]. Thus, Tribunal shall refer to the

principles and the cases based on the English Common law.

3. Claimant has the right to demand damages and Tribunal should order the injunction to Respondent on the basis of Passing Off in Economic Torts.

3.1.The concept of Economic Torts

10. The purpose of Economic Torts is to recover economic loss which occurs from business

or trade. To prove the damages or the possibility of damages is one of necessary

requirements to be satisfied. Also, it should be proved that the respondent intended to

injure other’s economic profits [Markesinis, Deakin, p.466]. In this case, the damages

suffered by Claimant was economic loss. Thus Claimant believes Respondent is liable in

economic torts for damages suffered by Claimant.

3.2. Passing Off

11. In law of tort, there are three forms: malice, intension, and negligence. And intension

seems to be concerned with this case. This is because intension signifies the state of mind

of a person who foresees and desires a particular result. In law of tort concerning intention,

Passing off especially is likely to be applied in this case. Moreover for establishing a

liability based on Passing off, five requirements are to be satisfied:

(1) there exists a misrepresentation; (2) the representation is made by a trader in the

course of trade; (3) the misrepresentation is made to his prospective customers, or to

ultimate consumer of his goods. (4) it is caluculated to injure the business or goodwill of

another trader; (5) it causes actual damage to the business or goodwill of the trader by

whom the action is brought, or will probably do so [Murphy, p.338-350].

19

12. In the present case, the false representations such as advertisements fulfill (1) above,

because Respondent intentionally made false declarations and sold the real fur products as

the faux fur products. Therefore, a misrepresentation by Respondent clearly existed. As to

(2) above, Respondent created the slogan of “the touch, feel and smell of real fur”

[Clarifications p.2 B-6]. And customers mistook real fur as faux fur because of this slogan.

As to (3), Respondent is Claimant’s competitor in the fur business. The sales of

Respondent’s leather products didn’t decrease. From the above, it is difficult to consider

that the decrease in sales result from the change of environment or customers preference.

So it is clearly presumed that Respondent attracted the customers of Claimant by unlawful

means. As to (3) and (4) above, Respondent knew that the product was made of real fur at

least [Clarifications p.1 A-2]. So, it is possible to say that Respondent intended to sell real

fur products as false “faux far” products, which were higher in quality and less expensive

than real “faux fur” sold by Claimant so as to attract the customers of Claimant

intentionally. Further analysis of the details about intention is to be followed. As to (5),

the business or goodwill of Claimant, was damaged, because, in this case, Claimant’s total

sales dropped 40%, and sales of fur products dropped 70% [Clarifications p.2 B-8].Given

the above, it can be recognized that the requirements of Passing off were satisfied.

13. In this case, it is important to stress that the intention of Respondent and the wrongfulness

of the intention were clearly existed. Respondent used the slogan of “the touch, feel and

smell of real fur” created by Respondent itself and sold the real fur goods as made of faux

fur. As a result, Claimant, which was Respondent’s competitor in the business, suffered

great loss because of the sharp drop in sales. Furthermore, there are problems about the

20

contents of this slogan. Feeling the fur is one of the ways to distinguish faux fur from real

fur. Generally, the real fur products feel very soft to touch. On the other hands, the faux

fur products feel rough to touch. So it is not difficult to identify them [wikiHow]. Taking

this point into account, it could be presumed that the purpose of this slogan is to prevent

the detection of the misrepresentation. In this respect, the slogan is wrongful and should

be criticized.

14. Furthermore, Respondent knew that the products were not made of faux fur, and created

the slogan based on the clear intention to make the customers believe that their products

were made of faux fur. So, Respondent sold real fur products as faux fur products. As a

result, it is natural that the customers were attracted to less expensive and higher quality

products. Therefore, Respondent intended to attract Claimant’s customers by unlawful

means.

15. In addition, faux fur is naturally more animal-friendly than real fur. Organizations

established for the purpose of animal welfare such as the Fund for Animals have

recommended faux fur products since faux fur was commercialized in 1950s [Diane L.

Beers, p.188-192]. And now, people who love animals all over the world would like to

buy faux products rather than real fur products. The circumstances were just the same in

Singapore [Problem p.1 ¶2].

16. If the fact that real fur products were sold as faux far products is once made public, the

organizations promoting animal welfare will strongly criticize the faux fur products sold

on Singapore. And wider customers will have negative image for faux fur products

21

generally. So, Claimant’s products may also suffer a lot and lose the credibility, and it is

very easy to foresee this result. So, the malicious nature of Respondent’s conducts can

never be over emphasized. So, it is worthy that this case is discussed on the basis of

Passing Off.

17. From the above, Claimant can demand damages from Respondent according to the rules

of Passing Off. The purpose of compensation for damages in Passing Off is to recover the

loss of goodwill. Therefore, Tribunal should recognize that compensation for damages

resulting not only from the lost customers because of Claimant’s misrepresentation.

Tribunal should also take into account some expanded damage to be caused to its business

reputation or dilution [Murphy, p.349].

.

18. In addition, we will mention later about injunction. Furthermore even if the intention of

Respondent isn’t recognized, it could be recognized that Respondent neglect the duty of

care. So this case could be discussed on the basis of Negligence.

4. Tribunal should determine that Respondent is liable in the tort of Negligence for damage suffered by Claimant.

19. In the present case, Claimant would like to argue that Respondent is liable in the tort of

Negligence for the damages suffered by Claimant. A leading case made clear that three

elements are requited for constituting Negligence: Duty of care (4.1); Breach of that duty

(4.2); and Consequent damage (4.3) [Dillon LJ in Burton v. Islington HA] Therefore,

Claimant invites Tribunal to examine these three requirements more closely.

22

4.1. Duty of Care

20. Claimant believes that Respondent owed Claimant a duty of care not to affect Claimant’s

sale by unfair business practice. In order to determine whether there is a duty of care, most

of the recent cases rely on the basic test established by the judgment of Caparo Industries

pic v. Dickman [Murphy p.33]. According to the judgment of Caparo, a duty of care may

now be imposed on, if three requirements are satisfied [Murphy p.33]. Thus, we would

like to discuss them in order. Claimant, bearing in mind the kind of harm involved, must

be able to foresee the damages (4.1.1). There must be a Relationship of Proximately

between the parties (4.1.2). It must be Fair, Just and Reasonable in the circumstances for a

duty of case to be imposed on Respondent (4.1.3). Furthermore, many cases concerning

economic loss have been reluctant to give rise to a duty of care. This is because the duty

of care might be vast, if courts accepted claims concerning economic loss unduly

[Markesinis, Deakin p.174]. So, the damages suffered by Claimant can be recoverable

under Negligence so that Respondent owed Claimant a duty of care (4.1.4).

4.1.1. Respondent, bearing in mind the kind of harm involved, must be able to foresee

the damage.

21. First requirement is satisfied if it must be reasonably foreseeable for Respondent to occur

the damage on Claimant. There are two points to consider whether Respondent must be

able to foresee, bearing the kind of harm involved. For establishing the reasonable

foreseeability, two elements are to be satisfied: (1) Respondent must foresee that the

damage is to be caused to a particular Claimant rather than just to people in general. In

other words, Respondent must foresee that Claimant is part of a category of people who

23

might be affected by the conducts of Respondent [Haley v. London Electricity Board].

(2)The duty must relate to a particular kind of harm which Respondent could reasonably

foresee as arising from its actions [Caparo Industries pic v. Dickman].

22. In the present case, although Respondent intended to sell the imported products as the

faux fur products, Respondent ordered the products made from the cheaper pelts of “Asian

Cats” [Clarifications p.1 A-2]. Thus, Respondent was able to sell “a higher quality product

at a lower price” [Further Clarifications p.1 B-4]. Moreover, Respondent sold its real fur

products at cheaper price than the faux fur products served by Claimant. This meant that

Respondent sold more attractive products for customers than the products sold by

Claimant. As a natural result, customers bought more attractive products for themselves.

Thus, more customers bought the faux fur products served by Respondent than those

served by Claimant.

23. In this case, the products served by Respondent were in direct competition with

Claimant’s synthetic fur product [Clarification p.2 B-3]. Moreover, some of customers

told Claimant that Respondent sold a higher quality product at a lower price [Further

Clarification p.1 B-4]. So, this competitive relationship between Claimant and Respondent

was of common knowledge even though Respondent denies it.

24. From the foregoing reasons, Respondent clearly satisfied the two elements: As to (1)

above, the duty of Respondent related to a particular kind of harm, namely, drop in its

competitor’s sales of fur products. As to (2) above, Claimant was part of a category of

people who might be affected by the conducts of Respondent. In other words, Claimant

was a direct competitor of Respondent in the fur business.

24

4.1.2. There was a proximate relationship between the parties.

25. Second requirement of Caparo test is the existence of proximate relationship between the

parties. In many cases, proximity and foreseeability are treated as coextensive and even

interdependent [Murphy p.35]. Thus, when Respondent must be able to foresee the

damage suffered by Claimant, the proximity is very likely to be satisfied. In addition,

proximity means “a measure of control over and responsibility for the potentially

dangerous situation” [Sutradhar v. Natural Environment Research Council].

26. In this case, Claimant’s sales of fur products were adversely affected by the mislabeling

goods sold by Respondent. Claimant belonged to a category of people who might

foreseeably be affected. So, Claimant and Respondent had sufficient proximity.

Furthermore, except for Respondent’s negligence, there is no reason why the damages

were suffered by Claimant. Respondent dared to sell real fur products. It is natural that

Respondent decided the products sold by them. So, Respondent had complete control of

and responsibility for the situation which could clearly result in harm to Claimant because

of the mislabeling. Thus, in the present case, there was a proximately relationship between

the parties.

4.1.3. It is fair, just and reasonable to impose liability on Respondent for its careless

actions.

27. Third requirement of Caparo test is that it was fair, just, and reasonable that Respondent

owed a duty of care. However, this requirement usually overlaps with the previous two.

Thus, this requirement is to be examined only when the public order might prevent

25

Respondent from owing a duty of care [Murphy p.42].

28. In this case, Respondent would reasonably be able to foresee the damage suffered by

Claimant. So, Respondent could have tried to prevent the damages. However, Respondent

intended to sell the real fur products as faux fur products. Respondent intended to cause

damages suffered by Claimant. Moreover, fur products were important for the business of

Claimant [Clarification p.2 B-7]. Thus, drop in the sales of fur products had a great

influence on Claimant. Moreover, it was likely that Respondent knew this influence on

Claimant. The reason was that Respondent competed with Claimant in the sales of faux

fur products. So, the conduct of Respondent was vicious one. Therefore, in the present

case, it is fair, just, and reasonable that Respondent was imposed a duty of care and

Tribunal need not consider public order.

4.1.4. The damages suffered by Claimant can be of the type recoverable under

Negligence.

29. The forth sub-requirement is that the damage suffered by Claimant can be recoverable. In

this case, the harm suffered by Claimant was the drop in faux fur sales. In other words, the

damage was the loss of profit that Claimant could have gained. Pure economic loss, such

as loss of profit, has not been able to be recovered under Negligence for long time

[Spartan Steel v. Martin]. This is because Defendant’s burden is too heavy, if it has to

compensate the damages for economic loss.

30. However, in these days, some of cases accepted claims seeking for the compensation of

economic loss. In one of these cases, loss of profit can be recoverable under Negligence

because there is no reason to avoid the claim to compensate loss of profit. If courts

26

determine that it is not too wide for Defendant to pay money, Defendant is liable under

Negligence for loss of profit suffered by Claimant [Network Rail Infrastructure Ltd. v.

Conarken Group Ltd.].

31. In this case, the damages claimed by Claimant derived from the drop in fur sales of

Claimant, which was caused by Respondent’s conduct. Moreover, Claimant did not claim

the loss that might be caused by future customer’s choices. So, Respondent’s burden is not

widely spread, even if we admit the recovery of economic loss. It is clear that the damages

are limited to a certain amount of money. In this circumstance, there is no reason to be

reluctance to admit the compensation of loss of profit. Therefore, Respondent is liable in

negligence although the damages suffered by Claimant was loss of profit. Thus,

Respondent owed the duty of care to Claimant.

4.2. Breach of Duty

32. In this case, Claimant believes that Respondent breached a duty of care which Respondent

owed to Claimant by causing the drop in the sales of Claimant.

33. It was established that Respondent did not satisfy the necessary standard of care. This

standard requires that Respondent should reach the standard of an ordinary person, not a

careful person [Blyth v. Birmingham Waterworks Company]. In this case, Respondent

knew that their products were made of real fur [Clarifications p.1 A-2]. Thus, Respondent

sold real fur products by Respondent’s decision. So, even though Respondent had no

knowledge of difference between real fur and high quality faux fur [Moot problem p.4 ¶1],

Respondent could have avoided the sale of real fur products as faux far products. In other

word, Respondent intended to cause damages to Claimant which an ordinary person

27

should have avoided. Respondent did not satisfy the standard of not only careful person

but also an ordinary person. Therefore, Respondent breached a duty of care which it owed

to Claimant.

4.3. Consequent Damage

34. In this case, Claimant believes that the conduct of Respondent caused damages to

Claimant. For making Respondent liable, it must be shown that the particular acts of

Respondent constituted the cause of the damages suffered by Claimant. We would like to

establish the two requirements for satisfying the existence of causation. Firstly, the

conduct of Respondent was the cause in fact. Secondly, Respondent is responsible for the

probable consequence [Markesinis and Deakin p.174].

4.3.1. Cause in Fact: the damages suffered by Claimant would not have occurred ‘but

for’ the conduct of Respondent.

35. First requirement is that the conduct of Respondent was a necessary condition of damages

suffered by Claimant. In this case, “total sales of Claimant have dropped 40%.” Moreover,

“sales of Claimant’s fur products have dropped 70%” [Clarifications p.2 B-8(former)]. It

is difficult to consider that the conduct of Claimant caused it such a large loss of profit.

36. Furthermore, in general, Singapore is known as a collection center of fur products in the

world. So, only by the impact of the faux fur products sold by Respondent, the total

amount of consumption was not likely to decrease as a whole. Thus, it is difficult to

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consider that the drop in sales Claimant suffered was caused by the general decrease of

consumption.

37. Respondent agreed to solve this dispute by arbitration in order to avoid potentially

harmful publicity by Respondent’s mislabeling [Moot problem p.3¶3]. This meant that

Respondent knew that Respondent would suffer loss of credibility by the disclosure of his

mislabeling to the public. Despite these risk of mislabeling, Respondent mislabeled

intentionally. This was because mislabeling would lead to increase its amount of sales.

Moreover, it is likely that Respondent could increase the sales of fur products. Also, from

the foregoing stream of facts, it is reasonable to assume that the rise in Respondent’s sales

corresponded to the drop in Claimant’s sales. Therefore, except for the conduct of

Respondent, there seems to be no reason why the drop in sales of Claimant occurred. It is

highly probable that Claimant’s loss would not have occurred but for the conduct of

Respondent.

4.3.2. Probable Consequence: Respondent is responsible for the probable

consequences of the conduct of Respondent.

38. Second requirement is that the conduct of Respondent was the main cause of the damage

suffered by Claimant. In this case, there was the conduct of customers between the

misconduct of Respondent and the damages suffered by Claimant. When there was an

intervening act of a third party, it is difficult to judge whether the conduct of Respondent

caused the damages suffered by Claimant. Thus, if such an occasion arises, it is to

consider whether Respondent is responsible in law for the damages suffered by Claimant

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[Murphy p.157].

39. Here, Claimant would like to assert that Respondent should be imposed of liability even

though there was intervening act of customers. In this case, Respondent intended that

more customers bought the faux fur products served by Respondent than the faux fur

products served by Claimant. As a result, Respondent achieved the result he intended. In

addition, the rise in Respondent’s sales caused Claimant the drop in faux fur sales (point

1). Moreover both parties have their principal places of business in Singapore and have no

store or outlet in any other country [Clarifications p.1 B-2]. Thus, it is likely that both

parties had many regular customers living in Singapore or surrounding countries (point2).

Furthermore, Claimant became aware that Claimant was losing customers to Respondent,

some of whom told Claimant as to Respondent’s products [Further Clarifications p.1 B-4].

Thus, it is presumable that Claimant and Respondent shared the same layer of customers

(point 3). From these three points, it is probable enough that substantial number of

customers were regular customers of both Claimant and Respondent. As a result, it is

possible enough that the loss of sales by Claimant was caused by the fact that Respondent

won the customers to Claimant. Therefore, Respondent should be liable although there

was intervening act of customers.

40. Conclusion: Thus, Respondent should be liable in the tort of Negligence for damage

suffered by Claimant because of mislabeling by Respondent.

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5.Tribunal should award the Permanent Injunction and Penalty.

5.1. Claimant requests both permanent injunction and penalty because of preventing

the loss of the sales of fur products served by Claimant

5.1.1. Permanent Injunction is required to prevent Respondent from keep selling the

fur products made of the fur of endangered species.

41. Respondent sold the fur products made of the Asian Golden Cats. Asian Golden Cat is

listed on CITES under Appendix I. According to Art.4, ESA, in Singapore, it is prohibited

that any person imports, exports, sells and advertises the products made of any

endangered species. As provided under Art.7 of ESA, some people who wish to import or

export have to apply to the Director-General for permit. However, in the present case,

Respondent did not have the permit to import [Clarifications p.3 D-2]. Therefore,

Respondent violated the Art.4 ESA by importing and selling the products containing the

fur of Asian Golden Cats.

42. Fur factories in China has been labeling their exports, particularly coats and jackets as

"synthetic" when they are actually made with real fur - dog fur, rabbit fur, or the fur from

local wild cats [Problem p.1 ¶4 ]. Moreover, it seems difficult to think that the

management system of a Chinese factory is good enough to check that the fur products do

not contain the fur of endangered species. So, there was enough possibility that the fur

products from China Fur contained the fur of endangered species. In fact, the fur of Asian

Golden Cat was included in the clothing from China Fur. Therefore, Respondent had to

check the quality of the imported products when it imports the products from such country

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as China. However, Respondent failed to do so. Thus, Respondent has legal responsibility

for the fact that it sold the clothing made with the fur of endangered.

43. In this case, Claimant sells faux fur products. Faux fur clothing has been promoted as

animal-friendly alternative to real fur clothing and has become increasingly popular in

many countries. Hence, when the fact that Respondent sold the real fur goods as faux far

is disclosed to the public, the reliance on the faux fur products in Singapore must be

seriously damaged. What was even worse, the real fur goods included the fur of

endangered species prohibited to sell in ESA. So, the damage to the faux fur market in

Singapore must become destructive and can never be recoverable. Consequently, it will

cause huge loss in the business of Claimant’s faux fur products. Therefore, Respondent’s

sale of clothing containing the fur of endangered species constitutes a potential pressing

risk that will cause devastating impact on Claimant’s business.

5.1.2. Tribunal should award the penalty so as to prevent Respondent from

disobeying the permanent injunction.

44. In this case, if Tribunal awards only permanent injunction, Respondent might not comply

with it. This is because there is no effective sanction against Respondent in case of

no-observation. As a result, Respondent might keep getting the obvious merits by

purchasing the cheaper fur products containing the fur of endangered species as the faux

fur products. These products will attract the betrayed customers because of the high

quality and lower price. Therefore, Tribunal should award the penalty to prevent

Respondent from keeping on violating permanent injunction

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5.2. This Tribunal has the authority to award the permanent injunction with penalty

under Fast Track Rules and MAA.

5.2.1. No rule prevents Tribunal from awarding permanent injunction and penalty.

45. There is no rule to forbid awarding the permanent injunction in Fast Track Rules. On the

other hand, interim measures, which include something like preliminary injunction of

injunction, are prohibited under Art.12 (1) Fast Track Rules. This article provides that

“due to the overriding interest of an expeditious determination of the dispute(s) in the

reference as a whole, the parties agree that they shall not apply for an interim award under

these Rules.”

46. Precisely the parties agree to apply Fast Track Rules in order to save money and time.

Therefore, Art.12 (1) Fast Track Rules should be provided on the purpose of

“expeditiousness.” Against this purpose, interim measures need legal processes during the

arbitral proceeding. This is the reason why interim measures are forbidden.

47. In this case, however, the permanent injunction is awarded in the “final award”, so it does

not harm the expeditiousness of the determination. Therefore, even though interim

measures are forbidden in Fast Track Rules, the permanent injunction may not be

forbidden. Malaysia Arbitration Act also does not provide for the permanent injunction.

48. Furthermore, there is no provision about penalty under Fast Track Rules and MAA.

5.2.2. Tribunal has the power to grant permanent injunction with penalty.

49. In ICC Final Award 7589 of August 1994 in France, there was no provision either for the

permanent injunction and the penalty in ICC Rules. Tribunal decided that “under the ICC

Rules, and given the absence of (i) an agreement of the parties to the contrary and (ii) a

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mandatory provision of French procedural law (which was the law of the seat of the

arbitration) requiring otherwise, Tribunal has the power to grant an injunction coupled

with a fine in this Arbitration” [p.65/ICC, Final Award in Case 7895]. Tribunal decided

whether it granted the power to these remedies by itself or not.

50. In the present case, there is also no article to provide the permanent injunction and penalty

under Fast Track Rules. So, Claimant requests that Tribunal may award the permanent

injunction and the penalty when there is the absence of two points as mentioned in ICC

case.

51. In this case, firstly, there is no agreement in which the both parties forbidden Tribunal to

grant permanent injunction with penalty. Secondly, MAA, which is the arbitration law of

the seat of arbitration, does not provide the mandatory rule about the permanent injunction

and penalty. Therefore, it is natural to regard that Tribunal has the power to award

permanent injunction with penalty in the present case.

5.2.3. Tribunal is also empowered to award permanent injunction and penalty.

52. Pursuant to Art.6 (5) (a) Fast Track Rules, “the Arbitral Tribunal shall have the powers

permitted by law and under the Act to ensure the just, expeditious, economical and final

determination of the dispute(s) in the reference. In this regard, the Arbitral Tribunal shall

conduct the arbitration in such manner as the Arbitral Tribunal considers appropriate”

53. Claimants argues that, in this case, it is necessary that Tribunal award the permanent

injunction and penalty in the paragraph 43 of this Memorandum. So, if Tribunal admits

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Claimant’s argument about permanent injunction and penalty is appropriate, Tribunal

shall have the power to award these orders.

6. Prayer for Relief

For the reasons stated above, Claimant respectfully requests that Tribunal should:

(1)Award Claimant full compensation for damages caused by Torts.

(2)Award the Permanent Injunction and Penalty.