UGM's Memorandum for RESPONDENT

XXII Annual WILLEM C.VIS INTERNATIONAL COMMERCIAL ARBITRATION

MOOT Vienna

27 March - 2 April 2014 MEMORANDUM FOR RESPONDENT

UNIVERSITAS GADJAH MADA

On Behalf Of: Against: Mediterraneo Mining SOE

5-6 Mineral Street Capital City

Mediterraneo

Vulcan Coltan Ltd 21 Magma Street Oceanside

Equatoriana

RESPONDENT CLAIMANT

COUNSELS

Amelia R. Sonang ! M. Eldwin Islamey ! Naila Sjarif Putu Shanti Krisnadevi ! Rizki Karim

Rizky Rachmadina


MEMORANDUM FOR RESPONDENT | i

TABLE OF CONTENTS

INDEX OF ABBREVIATIONS .......................................................................... iv

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

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

ARGUMENTS ....................................................................................................... 3

I. THE EMERGENCY ARBITRATOR’S ORDER SHALL BE LIFTED ......... 3

A. THE EA HAS NO JURISDICTION TO ISSUE THE ORDER ........................... 3

1. The Parties have opted-out from the EA provision ............................................ 3

a. Art. 21 grants exclusive jurisdiction to the courts ........................................ 4

b. In any case, the Parties always intended to opt-out from EA provision .. 5

2. Alternatively, Art. 21 of the Contract should be interpreted against

CLAIMANT ................................................................................................................... 6

B. CLAIMANT HAS NOT FULFILLED ANY SUBSTANTIVE

REQUIREMENTS TO APPLY FOR EA ................................................................ 7

C. MAINTAINING THE ORDER WILL RISK THE ENFORCEABILITY OF

THE AWARD ................................................................................................................. 8

CONCLUSION TO ISSUE I ............................................................................................ 9

II. THIS TRIBUNAL HAS JURISDICTION OVER GM AS AN

ADDITIONAL PARTY .......................................................................................................... 9 A. GM IS A PARTY TO THE ARBITRATION CLAUSE .................................... 10

1. GM explicitly consented to arbitrate .................................................................... 10

2. GM impliedly consented to arbitrate ................................................................... 11

3. In any case, the wording of Art. 20 is not limited to only bind CLAIMANT

and RESPONDENT .............................................................................................. 11

B. GM IS BOUND TO ARBITRATE UNDER GROUP OF COMPANIES

DOCTRINE ................................................................................................................. 13

1. The doctrine is applicable and in accordance with lex arbitri ......................... 13

2. The requirements of the doctrine have been met ............................................. 14

a. GM was directly involved in the formation, performance, and

termination of contract ................................................................................... 14

b. CLAIMANT and GM formed one economic reality ................................ 17


MEMORANDUM FOR RESPONDENT | ii

C. GM IS BOUND TO ARBITRATE BY VIRTUE OF GOOD FAITH

PRINCIPLE ................................................................................................................. 18

1. Consideration of good faith justifies GM’s obligation to arbitrate ............... 18

2. GM gave an impression that it would be bound by the arbitration clause ... 19

3. GM received a direct benefit from the contract .............................................. 20

CONCLUSION TO ISSUE II ......................................................................................... 20

III. RESPONDENT HAS VALIDLY AVOIDED THE CONTRACT ........... 20

A. RESPONDENT IS ENTITLED TO AVOID THE CONTRACT ON 7

JULY ........................................................................................................................... 21

1. RESPONDENT is entitled to avoid the Contract under Art. 64(1)(a) CISG,

as CLAIMANT had committed fundamental breach in issuing the 1st L/C

................................................................................................................................. 21

a. RESPONDENT was substantially deprived of its contractual

expectation due to the issuance of the 1st L/C. ......................................... 22

b. CLAIMANT could have foreseen the breach ............................................ 24

2. CLAIMANT did not act in good faith upon its proposed modification of

Contract ................................................................................................................. 25

3. In any case, RESPONDENT’s avoidance of Contract is justified under Art.

64(1)(b) CISG ........................................................................................................ 26

B. RESPONDENT IS ENTITLED TO AVOID THE CONTRACT ON 9

JULY ............................................................................................................................ 27

1. RESPONDENT is entitled to avoid the Contract under Art. 64(1)(a) CISG,

as CLAIMANT had committed fundamental breach in issuing the 2nd L/C

................................................................................................................................. 28

a. The untimeliness of the issuance of the 2nd L/C substantially deprives

RESPONDENT of its contractual expectation ........................................ 28

i. The issuance of the 2nd L/C was untimely ..................................................... 29

ii. The untimeliness of the issuance of the 2nd LC substantially deprives

RESPONDENT of its contractual expectation .......................................... 29

b. The inclusion of the commercial invoice substantially deprives

RESPONDENT ............................................................................................. 31

c. The breaches were foreseeable ..................................................................... 32


MEMORANDUM FOR RESPONDENT | iii

2. In any case, RESPONDENT is still entitled to avoid the Contract based on

Art. 64(1)(b), as CLAIMANT still failed to perform within the additional

period of time ........................................................................................................ 33

CONCLUSION TO ISSUE III .................................................................................... 35

PRAYER FOR RELIEF ................................................................................................ 35

INDEX OF AUTHORITIES .............................................................................. VI

INDEX OF CASES ........................................................................................... XIX

INDEX OF AWARDS ................................................................................... XXIII

INDEX OF LEGAL SOURCES ..................................................................... XXV


MEMORANDUM FOR RESPONDENT | iv

INDEX OF ABBREVIATIONS

%

&

¶ / ¶¶

Ans. Arb.

App. Em. Measures

Arb.

Apr

Art.

CIF

CIP

Cir

CISG

Cl. Ex.

Cl. Memo

Contract

DAL

EA

et al.

Feb

ICC Rules

L/C

ibid

percent

and

paragraph/paragraphs

Answer to Request for Arbitration

Application for Emergency Measures

Arbitration

April

Article

Cost, Insurance and Freight

Carriage and Insurance Paid To

Circuit

United Nations Convention on Contracts for International Sale

of Goods

Claimant Exhibit

Claimant’s Memorandum

Coltan Purchase Contract

Danubian Arbitration Law

Emergency Arbitrator

Et alia

February

International Chamber of Commerce Rules

Letter of Credit

ibidem


MEMORANDUM FOR RESPONDENT | v

i.e.

MST

No(s).

NoT

NYC

id est

Mediterannean Standard Time

Number(s)

Notice of Transport

United Nations Convention on the Recognition and Enforcement of

Foreign Arbitral Awards

OLG

Ord. Em. Arb

p/pp

Proc. Ord.

Reply to Counterclaim

Res. Ex.

Req. Arb.

RST

S. Crt

Sec.

US C.A

US$

v.

Oberlandesgericht (German Regional Court of Appeal)

Order of the Emergency Arbitrator

page/pages

Procedural Order

Answer to Counterclaim and Joinder

Respondent Exhibit

Request for Arbitration

Ruritanian Standard Time

Supreme Court

Section

United States Court of Appeals

United States Dollars

versus


MEMORANDUM FOR RESPONDENT | 1

STATEMENT OF FACTS

The Parties to the present dispute are Vulcan Coltan Ltd. (“CLAIMANT”), Mediterraneo

Mining SOE (“RESPONDENT”), and Global Minerals (“GM”), as an additional party to

the arbitration.

CLAIMANT is a broker of rare minerals, in particular coltan, based in Equatoriana.

RESPONDENT is a state-owned enterprise based in Mediterraneo that operates all the

mines in Mediterraneo including those that produce coltans.

GM is CLAIMANT’s parent company, based in Ruritania, and has been regularly

purchasing coltans from RESPONDENT for the last 10 years.

23 March 2014 CLAIMANT and GM approached RESPONDENT to inquire

about a transaction of 100 metric tons of coltan. RESPONDENT

subsequently offered a transaction of 100 metric tons of coltan at

the price of US$45 per kg using CIP as the delivery condition.

CLAIMANT and GM rejected this offer.

28 March 2014 Ultimately, a Contract was concluded and signed by the three

parties only for 30 metric tons of coltan, using CIF as the delivery

condition and letter of credit (“L/C”) as method of payment.

25 June 2014 RESPONDENT sent a Notice of Transport (“NoT”) to

CLAIMANT.

27 June 2014

Mr. Storm, GM’s Chief Operating Officer, sent an email to

RESPONDENT proposing an extension of the purchase of the

coltans to 100 metric tons.

1 July 2014 RESPONDENT’s assistant of the General Sales Manager informed

CLAIMANT’s Sales Manager that RESPONDENT does not

accept CLAIMANT’s proposal of extension.

4 July 2014

Nonetheless, CLAIMANT issued the first non-conforming letter of

credit (“1st L/C”) for the purchase of 100 metric tons of coltan.

RESPONDENT sent a voicemail to CLAIMANT requesting for a

conforming L/C.

5 July 2014 GM sent an email to RESPONDENT, maintaining that

CLAIMANT and GM were entitled of receiving 100 metric tons of

coltan.



7 July 2014 RESPONDENT declared an avoidance of Contract.

9 July 2014 RESPONDENT received a new letter of credit, now for the

purchase of 30 metric tons of coltan (“2nd L/C”). However, such

issuance was untimely. As a precautionary measure,

RESPONDENT declared another avoidance of Contract.

11 July 2014 CLAIMANT became desperate for at least 30 metric tons of coltan

due to other contracts with its buyers. Subsequently, CLAIMANT

applied for Emergency Arbitrator (“EA”) to prevent

RESPONDENT from selling all of its coltans to other clients.

8 August 2014 RESPONDENT requested CLAIMANT’s heavily involved parent

company, GM, to be joined in the subsequent arbitration

proceeding.

SUMMARY OF ARGUMENTS

Commerce – if it is about anything, is about certainty. Such certainty is even more essential

and much required in trading of commodities, such as coltan as in the case at hand.

However, CLAIMANT ignored this when it attempted to unilaterally amend the Contract

without RESPONDENT’s consent. CLAIMANT’s hastiness ultimately caused

RESPONDENT to avoid the Contract.

As a desperate attempt though, CLAIMANT requested an interim measure from EA to

forcefully refrain RESPONDENT from selling the disputed coltans. Although

RESPONDENT had since complied with the EA’s order, now it will demonstrate that the

EA’s order should be lifted (Issue I).

Since CLAIMANT is a newly established company with questionable solvency and

uncertain assets, RESPONDENT requests this Tribunal to join GM into this arbitration as

a form of guarantee that RESPONDENT’s counterclaim should not be frustrated in the

event such claim is successful (Issue II).

Finally, RESPONDENT too will demonstrate that its declarations of avoidance of

Contract, done first in 7 July, and another in 9 July as a precautionary measure, were both

valid and justified under the governing law of the Contract, namely CISG (Issue III).



ARGUMENTS

I. THE EMERGENCY ARBITRATOR’S ORDER SHALL BE LIFTED

1. On 11 July 2014, CLAIMANT requested an interim measure from the EA to refrain

RESPONDENT from selling the disputed coltans to other customers [App. Em. Measures,

¶ 22]. Such request was ultimately granted [See Ord. Em. Arb], and RESPONDENT had

since, in good faith, complied with the order made by the EA [Proc. Ord. 2 ¶ 32]. However,

now RESPONDENT will demonstrate why such order was unjustified, hence must be

lifted.

2. Contrary to CLAIMANT’s argument, RESPONDENT respectfully submits that the EA

order must be lifted for three reasons. First, the EA has no jurisdiction to issue the order

due to the inclusion of Art. 21 of the Contract (A). Second, CLAIMANT failed to fulfill

substantive requirements to apply for EA (B). Third, maintaining the EA order will risk the

enforceability of the future award (C.).

A. THE EA HAS NO JURISDICTION TO ISSUE THE ORDER

3. CLAIMANT asserted that the EA had jurisdiction to issue an order on interim measure

based on the Contract [Cl. Memo, ¶ 5]. RESPONDENT argues otherwise, as the inclusion

of Art. 21 in the Contract must clearly be interpreted as an opt-out from the EA provision

(1.). Alternatively, any different views arising from the inclusion of Art. 21 should be

interpreted against CLAIMANT based on contra preferentem rule (2.).

1. The Parties have opted-out from the EA provision

4. Admittedly, the EA provision is automatically applicable for parties who have selected ICC

Rules as the agreed rules in their arbitration agreement, provided that all the requirements

under Art. 29 ICC Rules have been met [Art. 29 ICC; Webster/Buhler, ¶¶ 23-39]. However,

the EA provision will not be applicable if the parties have opted-out from such provision

[Art. 29(6) ICC Rules].

5. In regard to this, RESPONDENT submits that the Parties have implicitly opted out from

the EA provision, since Art. 21 of the Contract grants exclusive jurisdiction to the courts

to grant interim measures (a.). In any case, the Parties were always in the intention to opt-

out from the EA provision (b.).



a. Art. 21 grants exclusive jurisdiction to the courts

6. CLAIMANT had correctly pointed out the Parties have not included any specific wording

to opt-out from the EA provision [Cl. Memo, ¶ 9]. However, CLAIMANT failed to take

into account that ICC allows an implicit opt-out by way of agreeing to another pre-arbitral

procedure [Art. 29(6)(c) ICC]. It is generally accepted that when the Parties have agreed to

another pre-arbitral procedure, they do not want the EA provision to apply as they have

been considered to have impliedly opted-out the EA provision [Webster/Buhler, ¶ 29-142].

7. Art. 21 of the Contract must be construed as an implied agreement by the Parties to opt-

out from the EA provision. ICC Rules indeed recognizes concurrent jurisdiction of EA

and state courts to grant interim measures [Cl. Memo, ¶ 9]. However, in the case at hand,

the Parties have agreed to only settle in for the jurisdiction of the court, as evidenced by

the wording of Art. 21 of the Contract; “The courts at the place of business of the party against

which provisional measures are sought shall have exclusive jurisdiction to grant such measures.”

8. It is generally accepted that the parties can agree to exclude all jurisdiction of the

arbitrators to order interim measures, leaving it exclusively to courts to order such

measures [Ehle, p. 166]. The use of the word ‘exclusive’ should be regarded as the Parties’

consent to limit the concurrent jurisdiction between EA and courts. Hence, in this case,

based on such wording, only courts may grant any interim measures. Plain and natural

meaning of the used words should be the first point of reference in interpreting contractual

terms [Farnsworth, ¶ 7.11]. Further, the legitimacy of international arbitration is essentially

rooted on the parties’ freedom to tailor the procedure, as they deem appropriate, including

the involvement of Court [Gaillard, p. 68]. For that reason, this Tribunal is requested to

respect what vindicates the Parties contractual expectation under Art. 21, which grants

exclusive jurisdiction to court in granting interim measures.

9. In addition, CLAIMANT’s reliance on the initial purpose of drafting of the Art. 21 to

argue that the Parties never meant to impliedly opted-out from EA [Cl. Memo, ¶ 14] is

irrational. It may be true that Art. 21 was initially drafted in 2010 to avoid the conflict of

jurisdiction on interim measures between the national courts [Cl. Memo, ¶ 12; Proc. Ord. 2 ¶

13]. However, during that time the only available pre-arbitral relief mechanism was court

and therefore, it was required to design another article with the specific purpose of

regulating court jurisdictions. Subsequently, CLAIMANT’s reasoning cannot be applied for

the present circumstance.

10. In the case at hand, the Parties have agreed to arbitrate under ICC Rules [Art. 20, Cl. Ex.

1] and were well aware about the 2012 amendments of such rules [Proc. Ord. 2 ¶ 14]. The



amendment of the rules in 2012 includes the new applicability of the EA provision [Baigel,

p. 1; Art. 29 ICC Rules]. Consequently, unlike in 2010 where court is the only available pre-

arbitral relief mechanism for Precious Minerals, the Parties are now in the circumstance

where they already have EA provision equipped by the ICC Rules [Proc. Ord. 2 ¶ 14; Art. 29

ICC Rules]. Since in analyzing contractual terms, surrounding circumstance and apparent

purpose that the parties sought to accomplish should be taken into account [Atwater v.

Panama], there was no need for the Parties to include a provision to regulate exclusive

court jurisdiction for granting interim measures, as doing so will only deprive the EA of its

jurisdiction.

11. Consequently, CLAIMANT should have been aware that by inserting Art. 21 to the

Contract, they did not only provide a provision that regulates which court is granted

jurisdiction to grant the interim measures, but they also have impliedly opt-out from the

EA provision.

b. In any case, the Parties always intended to opt-out from the EA provision

12. Should this Tribunal find that the wording of Art. 21 of the Contract is insufficient to opt-

out from the EA provision, RESPONDENT asserts that the Parties were always in the

intention to opt-out from EA provision. When parties have chosen a particular venue to

conduct their arbitration, they must bear the consequence of their decision [Park, p. 805].

13. In the case at hand, Art. 20 of the Contract stipulates that the place of arbitration must be

in Danubia, which makes such place automatically become the place of any emergency

arbitration proceeding [See Art. 20, Cl. Ex. 1; Art. 4 EA Rules]. However, this contradicts

to Art. 21 of the Contract, which is a more specific provision regarding interim measures.

In particular, based on Art. 21, it is not possible for CLAIMANT to seek for measures in

Danubia, as it is only available in the courts of Equatoriana and Mediterraneo [See Art. 21,

Cl. Ex. 1].

14. CLAIMANT contended that Art. 21 do not address the competition between courts and

emergency arbitration [Cl. Memo, ¶ 12]. However, if the Parties have always intended to use

EA provided under their arbitration agreement, they would not make Art. 21 as a separate

provision that regulates specifically about provisional measures. Especially since Art. 20

and Art. 21 contain unequivocal difference on its forum and countries, i.e. Art. 20 with

emergency arbitrator in Danubia, and Art. 21 with court interim measures in Mediterraneo

or Equatoriana. It is astounding that CLAIMANT initially suggested to include Art. 21 to

make sure that interim relief can be immediately obtained without further confusion on



jurisdiction [Cl. Memo, ¶ 12], while at the same time, it also tried to argue that the EA and

court of Equatoriana or Mediterraneo both have the power to grant interim relief.

15. Finally, the Parties’ intent to seek provisional measures exclusively to Courts can be seen

from how they both allow GM to be involved in the contract formation, performance, and

termination [Infra, ¶ 63-72]. By virtue of Art. 29(5) ICC Rules, EA cannot be applied if

there is a third party. Since the Parties are both aware of GM’s active involvement yet still

included Art. 21 to the Contract, the parties have implicitly conveyed its intent to opt out

from EA, as state court is the only institution that can grant provisional measures even if in

the cases where there is a third party [Ehle, p. 168].

16. Hence, the fact that CLAIMANT has suggested another separate provision to govern

provisional measures in a place other than where the emergency arbitration proceeding will

be conducted, clearly demonstrates that the Parties never intended to use EA in the future.

2. Alternatively, Art. 21 of the Contract should be interpreted against CLAIMANT

17. Even if this Tribunal finds that there are two different interpretations of Art. 21 of the

Contract, RESPONDENT submits its interpretation should prevail based on the contra

prefentum rule. Based on this rule, CLAIMANT as the party who suggested the inclusion of

the clause [Proc. Ord. 2 ¶ 13] must bear the risk of any ambiguity arising from such clause

[See Vogenauer in UPICC Commentary Art. 4.6. ¶ 9]. Such rule has been recognized in

international law [Fourchard et al, ¶ 479] and is expressed in Art. 4.6 UNIDROIT Principles,

which is applicable to all types of contracts [DiMatteo, p. 207]. The article stipulates that, “If

contract terms supplied by one party are unclear, an interpretation against that party is preferred” [Art.

4.6 UPICC].

18. In CLAIMANT’s view, the inclusion of Art. 21 on the Contract never meant to grant

exclusive jurisdiction to the court as it is merely intended to avoid the conflict of

jurisdictions on interim measures between national courts [Cl. Memo, ¶12]. Pursuant to

contra preferentem rule, Art. 21 must be interpreted against CLAIMANT, i.e. as granting

exclusive jurisdiction to the court. Contra preferentem rule will help to discover the initial

intent of the parties to arbitrate [Sykes, p. 74], and therefore, this Tribunal should presume

that; should CLAIMANT never intended to grant exclusive jurisdiction to court, they

would have avoided in using such wording for Art. 21 in the first place.

19. Concluding, since the Parties have impliedly opt-out from the EA provision, the EA has

no jurisdiction to issue the order.



B. CLAIMANT HAS NOT FULFILLED ANY SUBSTANTIVE

REQUIREMENTS TO SEEK INTERIM MEASURES FROM THE EA

20. Should this Tribunal find that the Parties have not opted-out from the EA provision,

RESPONDENT maintains that the EA order should be lifted as CLAIMANT had not

fulfilled the substantive requirements to apply for the EA. CLAIMANT contended that it

had fulfilled the requirements as it had an urgency to secure their claims towards

RESPONDENT [Cl. Memo, ¶ 20-21]. This was not the case.

21. In order to apply for EA, parties must demonstrate the existence of urgency to special

degree that cannot wait for the constitution of the tribunal [Art. 29(1) ICC Rules,

Webster/Buhler, ¶ 29-82]. In this case, however, the measures requested by CLAIMANT do

not fall within the ‘urgency that cannot wait for the constitution of the tribunal.’

22. CLAIMANT’s reliance on such urgency lies on its obligation to deliver the coltans to other

customers by May 2015 [Cl. Memo, ¶ 34] and fearing that RESPONDENT will sell the

disputed coltans before this Tribunal render an award [Cl. Memo, ¶ 23]. However, such fear

was only based on CLAIMANT’s allegation since RESPONDENT never confirmed that it

was actually in the verge of concluding a contract with other customers concerning the

disputed coltans [Proc. Ord. 2 ¶ 33].

23. In any case, CLAIMANT’s reasoning that it applied for EA because it cannot wait for the

constitution of this Tribunal [Cl. Memo, ¶ 24] is indefensible. It must be highlighted that

EA is not the only mechanism that can grant interim measure prior to arbitral tribunal

constitution [Boog, p. 205; Ghaffari/Walter, p. 155].

24. Courts also have the power to grant interim relief even when the arbitral tribunal has not

been constituted [Boog, p. 205]. In fact, it was the only provisional measure mechanism that

the parties had, prior to the amendment of ICC Rules in 2012 [Ghaffari/Walter, p. 155].

Hence, the urgency requirement for EA has not been met in this case as CLAIMANT

could have gone to state courts to seek interim measures instead of EA since it was the

mechanism that the Parties agreed [Art. 21, Cl. Ex. 1]. Furthermore, going to state courts

to seek interim measures would be simpler because the decision would be automatically

enforceable, as the courts are the ones to recognize and enforce this Tribunal’s future

award [Haikola, p. 49].

25. Alternatively, even without provisional measures, CLAIMANT do not need to apply for

EA as this Tribunal can solve CLAIMANT’s fear through a normal arbitration, which

would have likely to be fulfilled by March 2015.



26. Since CLAIMANT already submitted the request for Arbitration in 11 July 2014[See Req.

Arb.], it is very illogical to think that this Tribunal would not have been constituted before

May 2015, as arbitration is always known for its relatively fast and speedy procedure

[Sanders, p. 17]. Especially in ICC, if the parties have agreed to use three arbitrators like in

the present case [Art. 20 Cl. Ex. 1], the nomination for arbitrators would have been made

in the request and the answer for arbitration [Art. 12 (4) ICC Rules], hence the constitution

of this Tribunal can be quickly done in 60 days at most [Art. 5(1)(6) ICC Rules].

27. Since this Tribunal was already constituted on 18 September 2014, it would have to render

a decision by 18 March 2015, as the time limit for an arbitral tribunal to render a final

award is within 6 months [Art. 30 ICC Rules]. Meanwhile, CLAIMANT’s alleged urgency

for coltan will still be on May 2015. Thus, since there is no urgency for CLAIMANT to

apply for the EA, their fear to wait for the final award can be simply solved through a

normal arbitration proceeding.

C. MAINTAINING THE ORDER WILL RISK THE ENFORCEABILITY OF

THE AWARD

28. RESPONDENT finally submits that maintaining the order may risk the enforceability of

this Tribunal’s final award. Essentially, while there are many types of measures available for

this Tribunal, their basic purpose must be to facilitate later enforcement of the future

award [Van den Berg, p. 83]. CLAIMANT attempted to elaborate the issue regarding the

enforcement of the award by invoking the Art. 17 of DAL [Cl. Memo, ¶ 28]. However,

using Model Law will not suffice to address the issue of enforcement of interim measures

[Delvolve, p. 21].

29. As CLAIMANT has been aware of, state courts would be the ones to recognize and

enforce the future award [Cl. Memo, ¶ 28; Redfern/Hunter, p. 305]. Therefore, the courts

would be obliged to ensure that the award is in accordance with the procedure agreed by

the parties [Art. III NY Convention]. In the present case, since the Parties had chosen ICC

Rules as the procedural rules of this Arbitration [Art. 20, Cl. Ex. 1], the court will be

obliged to apply ICC Rules to establish that the EA order was issued in accordance with

the agreed procedural [Art. III NY Convention].

30. CLAIMANT correctly pointed out that the requirements of granting interim relief under

Art. 17(A)(1)(b) DAL are identical to the urgency requirements under Art. 29(1) ICC Rules

[Cl. Memo, ¶ 28]. However, CLAIMANT failed to realize that it has not met any of those

requirements.



31. It is RESPONDENT’s contention that the EA order will prejudice the enforcement of the

future award, because contrary to CLAIMANT’s assertions [Cl. Memo, ¶ 28-31], the EA

order was neither issued in accordance with the Parties’ agreement [Supra ¶ 6-11] nor has

fulfilled the substantive requirements under EA provision under ICC Rules [Supra ¶ 20-27].

Pursuant to Art. V (1)(d) of the NY Convention, an award would be unenforceable if the

arbitral procedure was not in accordance with the agreement of the parties. The refusal on

such ground is justified only in case of fundamental deviations from the agreed procedure

[ICC Guide to NYC, p. 98].

32. Consequently, since the EA order in the present case was not issued in accordance with

the Parties’ agreement and ICC Rules, it is deemed as a non-compliance with the

procedural conduct of the arbitration, which represents a fundamental deviance from the

agreed procedure [Born, p. 3578; McLaughlin/Genevro, p. 267]. Hence, by maintaining the EA

order, the future award would be non-enforceable under Art. V(1)(d) NY Convention.

33. Conclusively, RESPONDENT respectfully requests this Tribunal to lift the EA order as it

risks the enforceability of the future award.

Conclusion to Issue I: The EA order made on 26 July 2014 must now be lifted, as the

EA had no jurisdiction to issue such order in the first place due to the inclusion of Art. 21

of the Contract. Alternatively, CLAIMANT has not met the substantive requirements.

Finally, maintaining the order will risk the enforceability of the award.

II. THIS TRIBUNAL HAS JURISDICTION OVER GM AS AN ADDITIONAL

PARTY

34. RESPONDENT respectfully requests this Tribunal to join GM as an additional party to

this arbitration. In contrast to CLAIMANT’s assertions [Cl. Memo, ¶ 32-61],

RESPONDENT submits that the arbitration clause included in the Contract between the

Parties is binding on GM for three reasons.

35. First and foremost, GM is a party to the arbitration clause (A.). Alternatively, even if this

Tribunal found that GM is not a party, GM is nevertheless bound by the arbitration clause

under the Group of Companies doctrine (B.). Lastly, GM is bound to arbitrate by virtue of

consideration of the good faith principle (C.).



A. GM IS A PARTY TO THE ARBITRATION CLAUSE

36. CLAIMANT argued that GM could not be considered as a party to the arbitration clause

because GM has not consented to be bound to it [Cl. Memo, ¶ 41]. In contrary to this,

RESPONDENT submits that GM is bound by the arbitration clause because it has

explicitly consented to arbitrate (1.). Alternatively, GM also has impliedly consented to

arbitrate (2.). In any case, the arbitration clause contained in the Contract does not limit

only CLAIMANT and RESPONDENT as the parties to that arbitration clause (3.).

1. GM explicitly consented to arbitrate

37. CLAIMANT asserted that GM is not bound by the arbitration clause because it had only

signed the Contract as an endorser [Cl. Memo, ¶ 36-39]. On contrary to this,

RESPONDENT contends that GM’s endorsement signature should be perceived as an

explicit consent to arbitrate.

38. Although it is true that arbitration is contractual by nature [Moses, p. 5], it does not mean

that the obligation to arbitrate attaches only to party that has personally signed the written

arbitration agreement [Thomson-CSF Case; Redfern/Hunter, ¶ 3-30; Fouchard et al., p. 280-281].

Consent to arbitrate can also be extended to a party who has signed it in a different

capacity [Lew/Mistellis/Kroll, ¶ 7-50]. In this case, notwithstanding that GM is not a formal

party to the Contract; it nevertheless has signed the Contract as an endorser.

39. The signature of GM is in line with NYC and Model Law definition on ‘agreement in

writing’, which is a written arbitration clause signed by the Parties [Art. II (2) NYC; Art.

7(2) Model Law]. Writing requirement is imposed on an arbitration agreement to ensure that

the parties actually agreed to arbitration [Lew/Mistellis/Kroll, ¶ 7-7].

40. Both NYC and Model Law never defined on which parties’ signature is required in an

arbitration agreement, hence not limiting signature requirement only to the named parties

of the contract (“The term “agreement in writing” shall include an arbitral clause…signed by the

parties” [Art. II (2) NYC]; “The arbitration agreement shall be in writing…signed by the parties” [Art.

VII (2) Model Law]). Consequently, having established that GM has met the writing

requirement, RESPONDENT requests this Tribunal to find that GM has explicitly

consented to arbitrate under a valid arbitration clause.



2. GM impliedly consented to arbitrate

41. CLAIMANT asserted that GM never expressed the willingness to become a party to the

arbitration agreement [Cl. Memo, ¶ 46]. However, this assertion should be regarded as

groundless since CLAIMANT cannot provide any factual evidence to support it.

42. The determination of parties to be bound to an arbitration clause can either be shown

expressly or tacitly [Fouchard et al. p. 280; Hanotiau 2006, p. 256]. This notion arises from

general legal principle in which consent can be assumed if a party “does what he would not

have done” [UNCTAD Module, p. 21]. On contrary to CLAIMANT’s assertion, GM had

expressed its willingness to become a party to the arbitration by virtue of a telefax GM had

sent to RESPONDENT [Cl. Ex. 10]. In the telefax, Mr. Storm as GM’s chief operating

officer, explicitly stated, “We are determined enforce our rights in arbitration and ask you to give us

assurance…” Such statement unquestionably demonstrates GM’s implicit consent to be a

party to the arbitration.

43. In arbitration, consent is deemed as an act that deploys legal effects [Steingruber, ¶ 5.20]. In

the present case, as an effect of the statement of consent made by GM in the fax of 8 July,

CLAIMANT submitted the Request of Arbitration on 11 July. It must be noted that even

in the letter of 9 July, CLAIMANT never made any similar statement demonstrating their

intent to “enforce rights in arbitration”. This demonstrates that GM was the first one who

initiated the arbitration.

44. It is astounding that now GM has refused to arbitrate when in fact, they were the first

party that tried to invoke the arbitration clause in the present dispute. If GM never

consented to arbitrate, they would never have tried to invoke the arbitration in the first

place, especially before CLAIMANT, who was the actual formal party in the contract.

3. In any case, the wording of Art. 20 is not limited to only bind CLAIMANT and

RESPONDENT

45. CLAIMANT argued that GM could not be joined to this Arbitration because the latter was

not listed as contracting party [Cl. Memo, ¶ 37]. However, the arbitration clause in the

present case does not limit to only the contracting parties, namely CLAIMANT and

RESPONDENT [Cl. Ex. 1]. Art. 20 of the Contract stipulate that: “All disputes arising out of

or in connection with the present contract shall be finally settled under the Rules of Arbitration…” [Cl.

Ex. 1]. This evidences that Art. 20 only limits the disputes that are arbitrable, which is all

disputes arising from the contract, but does not limit its application only to the contracting

parties.



46. Similar approach was applied in Sourcing Unlimited Inc v. Asimco International Inc.,

where the arbitration clause was deemed as a claimed-focused clause and not a party-

focused clause because the wording stipulates, “Any action [...] arising out of, or relating in any

way to [...] this agreement shall be brought in front of a P.R. China arbitration body”. This means that

the clause addressed the types of claims that were arbitrable, but not which parties that

Jumpsource, as one of the contracting parties, envisioned it would arbitrate against. On

this ground, Asimco, which was a non-signatory but involved in the contract negotiation

and performance, can be joined to the arbitration [Sourcing Unlimited Inc. Case].

47. Equally, if the Parties had intended the arbitration clause to be exclusively binding on the

contracting parties, namely CLAIMANT and RESPONDENT, it could have inserted

other wording such as: “All disputes between the Parties arising out of or in connection with the present

contract shall be finally settled under the Rules of Arbitration…” which allows less possibility for

informal parties such as the endorser to be bound by the clause [ICC Case No. 16016].

48. Consequently, in the case at hand, GM should be joined to this arbitration proceeding

since Art. 20 of the Contract was a claim-focused clause and does not limit the possibility

of GM’s joinder as it has been actively involved in the contract negotiation and

performance [See Cl. Ex. 4; Cl. Ex. 6; Cl. Ex. 10].

49. Furthermore, another decision supports that if allegations against parent company and its

subsidiary are based on the same facts and inherently inseparable, the parent can be

referred to arbitrate even though they are not a formal party to the arbitration agreement

[JJ. Ryan & Sons Case; Burlington Ins Case]. In the present case, the Contract would not come

to existence if GM did not endorse the contract [Ans. Arb. ¶ 27], which makes them

inherently inseparable from any dispute arising from the contract. The dispute in the

present Contract even first arises from the confusion made by GM when they tried to

extend their order, which resulted in the issuance of non-conforming L/C [See Cl. Ex. 4].

Hence, it is clear that GM is inextricably linked to the present dispute.

50. Legal scholar further supports such notion; who opines that counterclaims would not give

rise to any jurisdictional problems so long that the counterclaim is subject to the same

arbitration agreement as the main claim [Steingruber, ¶ 7.25]. Subsequently, since the

joinder of GM is based on the same arbitration agreement used by CLAIMANT, and its

application is not limited only to CLAIMANT and RESPONDENT, the jurisdiction of

this Tribunal to join GM shall not be an issue.

51. Concluding, CLAIMANT’s argument that GM is not bound to arbitrate merely because

they are not listed as a formal party, [Cl. Memo, ¶ 35] must be disregarded.



B. GM IS BOUND TO ARBTIRATE BY VIRTUE OF GROUP OF

COMPANIES DOCTRINE

52. Should this Tribunal find that GM is not a proper party to the arbitration clause,

RESPONDENT maintains that GM is nevertheless bound to the arbitration clause under

the Group of Companies doctrine because it is in accordance with the lex arbitri (1.), and

the requirements of the doctrine have been met in the case at hand (2.).

1. The doctrine is applicable and is in accordance with the l ex arbi tr i

53. This Tribunal should consider the application of Group of Companies doctrine in

assessing the issue of joinder of GM. This is due to Art. 2A (2) of DAL, the lex arbitri,

which allows an interpretation of international accepted principle for matters not explicitly

governed by it [Art. 2A(2) DAL; Explanatory Note by UNCITRAL Secretariat on Model Law,

p. 24].

54. Group of Companies doctrine has been recognized as a general principle of international

commercial arbitration; the doctrine has been widely accepted not only by arbitral tribunals

[ICC Case No. 6519; 11209; 7609; 7610; 9517; 9719; Hanotiau 2007, p. 343-344] but also by

courts from different jurisdictions such as United States, Canada, and Spain [JJ. Ryan &

Sons Case; Burlington Ins Case; Xerox Case; ITS.A v. Satcan & BBV.A Case].

55. For example, the tribunal in ICC Case. No. 6000 explicitly held that the Group of

Companies “is largely admitted […] by virtue of […] international trade” and one court decision

in French even recognized the doctrine as a legal rule [Sponsor v. Lestrade Case].

56. CLAIMANT contended that Group of Companies doctrine is unlikely to be followed by

Danubian Court [Cl. Memo, ¶54]. This argument, however, is ill founded. CLAIMANT

merely based its argument on several authors’ comments, which is in the view that the

Danubian Supreme Court have always emphasized consent as the basis of arbitration [Proc.

Ord. 2 ¶ 46]. Since in this case GM has explicitly and impliedly consented to arbitrate [Supra

¶ 38-45], there is a high possibility that the Danubian Court will apply and enforce the

doctrine. Furthermore, the Danubian Supreme Court never at any point explicitly declared

that it would not follow the Group of Companies doctrine since the doctrine had never

been brought up before [Proc. Ord. 2 ¶ 46].

57. CLAIMANT relied on a Swiss Court decision that declined the application of the Group

of Companies doctrine [Cl. Memo, ¶ 50]. However, CLAIMANT failed to consider that the

Swiss Federal Tribunal never fundamentally opposed to the idea as long as it represents the

common intention of the parties [Meyniel, p. 30]. As a comparison, in Brazil where the



doctrine is not specifically upheld, one case decision suggests that enforcement of such

doctrine would not be opposed to its legal system [Trelleborg Case].

58. CLAIMANT’s reliance on the case law Adams v. Cape Industries should also be disregarded

[Cl. Memo, ¶ 50]. In that case, the reason why the English Court rejected the doctrine rests

more with the goal of “denying indirect damages” rather than on the Group of Companies’

theory itself [Park, p. 581]. It must be noted that the English Court generally would have

no problem on enforcing an award, which applies Group of Companies doctrine provided

that the law applicable to the arbitration agreement recognizes the doctrine [Meyniel, p. 31].

59. Having established that Group of Companies doctrine is a valid international principle in

accordance to Art. 2A(2) DAL, RESPONDENT submits that this Tribunal should apply

this doctrine on the issue of joinder of GM.

2. The requirements of the doctrine have been met

60. Although CLAIMANT correctly pointed out some of the doctrine’s requirements [Cl.

Memo, ¶ 49], they have failed to provide any evidence that can support its statement on

how the requirements of the doctrine are not fulfilled in the present case. RESPONDENT

now will demonstrate that GM had fulfilled all of the requirements.

61. In Sponsor v. Lestrade, the tribunal followed the precedent of Dow Chemical where an

arbitration clause signed by a subsidiary was binding on the parent company, despite the

fact that the latter had not signed it based on the two grounds; the roles played by the

parent company in signing, performing, and terminating the contracts, and the undivided

economic reality [See also Fouchard et al., p. 287; Sponsor v. Lestrade Case].

62. Subsequently, RESPONDENT will specify and prove that the requirements of the

doctrine have been appropriately met because; first, GM was directly involved in the

formation, performance, and termination of the Contract (a.); second, GM formed one

economic reality with CLAIMANT (b.).

a. GM was directly involved in the formation, performance, and termination of

the Contract

63. The Dow Chemical tribunal noted that a non-signatory could be bound to arbitrate when it

“played an essential role in the conclusion, performance, and termination of the contract”

[ICC Case No. 4131]. In the case at hand, GM was directly involved in the conclusion,

performance, and termination of the Contract, as demonstrated below.



64. First, concerning the conclusion of the Contract, it is undisputed in this case that GM was

the pivot of the contractual relationship between the Parties. From the start, it was Mr.

Storm who arranged the meeting so that the Parties can have a Contract negotiation [Res.

Ex. 2, ¶ 2]. RESPONDENT’s willingness to enter into Contract with CLAIMANT was

mostly due to its trust to GM, which has become its regular customer for 10 years [Req.

Arb. ¶ 5]. In particular, without GM’s endorsement and guarantee for the payment of L/C,

RESPONDENT would not have concluded the Contract with CLAIMANT. In other

words, the Contract would not have come to existence without GM’s role on its

conclusion.

65. GM’s role in the conclusion of the Contract can also be evidenced in the inclusion of Art.

21 to the Contract. It has been established that it was GM who initially suggested the

inclusion of Art. 21 in its contract with RESPONDENT on 2010 [Ans. Arb. ¶ 10].

Consequently, since being actively involved in the negotiation of a contract allows for

extension to a non-signatory [ICC Case No. 6519], GM’s heavy involvement in the

negotiation before the conclusion of the Contract means that GM is obliged to arbitrate.

66. Second, concerning direct involvement in the performance of the Contract. CLAIMANT

may argue that GM’s involvement was based on RESPONDENT’s insistence. However, it

should be highlighted that what RESPONDENT insisted was only a security for the

payment obligations [Ans. Arb. ¶ 5]. Whereas in this case, GM has exceeded its limit as a

guarantor and endorser. In precise, GM was the one performing the contractual obligation,

i.e. issuing the L/C that later becomes the main dispute in this case due to its non-

conformity [See Cl. Ex. 5; See Cl. Ex. 8].

67. Aside from that, GM always acted as if they were the real buyer in the Contract in every

correspondence with RESPONDENT. When RESPONDENT informed CLAIMANT

about the readiness of the Notice of Transport (“NoT”), it was GM who replied back and

tried to extend the order [Cl. Ex 4]. This did not only happen once, because as evidenced

by all exhibits provided by the Parties, every time RESPONDENT sent CLAIMANT a

letter [Cl. Ex. 2; Cl. Ex. 3; Cl. Ex. 7; Res. Ex. 4], it was always GM who replied back [Cl.

Ex. 4; Cl. Ex. 6; Cl. Ex. 10].

68. CLAIMANT’s allegation that Mr. Storm always underlined that CLAIMANT is the only

party to the present Contract [Cl. Memo, ¶ 52] is groundless. Such occurrence only happens

on another contract that GM has concluded with suppliers and customers for the

Equatorianan market [Proc. Ord. 2 ¶ 7]. Meanwhile, on the Contract concluded with

RESPONDENT, Mr. Storm never underlined about CLAIMANT being the only party.



Instead, GM always addressed itself and CLAIMANT as “We” in the exchange of

communication [Cl. Ex. 4 (“...we extend the order of our subsidiary…”); Cl. Ex. 6 (“we are looking

forward to receiving…”); Cl. Ex. 10 (“we are determined to enforce our rights in arbitration”)]. Hence,

RESPONDENT was under the impression that GM was as much involved in the contract

as CLAIMANT. Conclusively, not only is it clear that GM was directly involved –but in

fact, it was actually the one who performed the contractual obligations.

69. In case where a party has not signed an arbitration agreement, tribunals will consider the

conduct of the party in the negotiation and performance, and will infer consent to be

bound where there was significant involvement by the party [Hanotiau 2005, p. 271;

Zuberbühler, p. 23; X S.A.L Case]. This matter was affirmed in Sponsor v. Lestrade, in which

the judges allows extension of arbitration agreement over the parent company because it

participated in the performance of the contract, and masterminding the whole deal [Sponsor

v. Lestrade Case]. In short, when a non-signatory has performed obligation under the

contract, they are deemed to have given their implied consent to be bound by it [Moses,

p.38; Lamm/Aqua, p. 88; Rodler, p. 43].

70. The principle of separability invoked by CLAIMANT should be disregarded [Cl. Memo, ¶

45]. Notwithstanding that intention to be bound to the Contract requires different analysis

with intention to be bound to arbitration clause, courts and tribunals found that “a party’s

performance obligation under a contract can bind it not just to the contract generally, but also to the

arbitration clause” [Moses, p. 38; Dallah Case].

71. Lastly, concerning the termination of the Contract, GM too played a significant role in the

RESPONDENT’s termination of the Contract [Cl. Ex. 7; Res. Ex. 4]. As has been

previously established, the involvement in termination of contract can also lead to

extension of arbitration agreement to non-signatory [ICC Case No. 4131]. In this case, it

was GM who issued the non-conforming L/C, which led into the termination of the

Contract and subsequently the starting point of the whole the dispute before this Tribunal

[Cl. Ex. 7; Res. Ex. 4].

72. Concluding, based on the level of involvement GM had demonstrated in respect to the

conclusion, performance, and termination of the Contract, RESPONDENT requests this

Tribunal to find that GM is bound to the arbitration clause.

b. CLAIMANT and GM formed one economic reality

73. Non-signatories to an arbitration agreement could nonetheless be obliged to arbitrate

under the agreement where all of the companies involved constituted one and the same



economic reality [ICC Case No. 4131]. Entities constitute one economic reality when one of

them exercises control over the other and their conduct demonstrates an abandonment of

separateness [ICC Case No. 4131; ICC Case No. 8385; ICC Case No. 5721; Fouchard et al, ¶

285]. In the case at hand, such circumstance can be seen from the following facts, as

shown below.

74. First, CLAIMANT is a 100% subsidiary of GM, meaning its capital is completely provided

by GM [Req. Arb. ¶ 1]. This signifies that CLAIMANT has no assets [Res. Ex. 1, ¶ 2].

Therefore, without GM’s network and financial support, CLAIMANT would not be able

to function as a company. CLAIMANT even admitted that they were merely created by

GM to enter the difficult market in Equatoriana [Req. Arb. ¶ 1]. This indicates that

CLAIMANT and GM have the same purpose of business and the only thing that

differentiates them is their geographical market area as has been mentioned by

CLAIMANT [Ibid]. The Swiss Federal Supreme Court upheld the tribunal’s decision in

China National Case stating that when two corporations have uniform purpose and their

separation of task was merely geographical; they become mutually connected [Swiss S. Crt,

11 Feb 1993; China National Case; Zuberbuhler, p. 21]. Equally, GM and CLAIMANT should

be found mutually connected, hence forming one economic reality.

75. Second, GM exercises day-to-day and intrusive control over CLAIMANT. This is

evidenced by almost every circumstances leading to the present dispute, i.e., its

correspondences with RESPONDENT to reply each of RESPONDENT’s letter to

CLAIMANT [Cl. Ex. 4; Cl. Ex. 6; Cl. Ex. 10]; its decision to unilaterally extend the order

of coltan via fax [Cl. Ex. 4]; and in particular, its statement in fax dated 8 July 2014 about

enforcing rights in arbitration [Cl. Ex. 10], which left RESPONDENT the impression that

it was actually GM who made CLAIMANT filed for request of arbitration in 11 July 2014.

76. An arbitral tribunal once found the fact that “correspondence was addressed indistinctively to mother

companies and to subsidiaries” pointed to the existence of a Group of Companies [Holiday Inns

Case]. In this case, this Tribunal should infer that the intermingled communications also

establishes a group relationship between GM and CLAIMANT as indistinctive.

77. Concluding, the factual analysis of this case affirms that GM and CLAIMANT form one

economic reality because their conduct demonstrates undivided economic reality and it is

evident that GM has control over CLAIMANT. Concluding, the arbitration clause should

be extended to GM.



C. GM IS BOUND TO THE ARBITRATION CLAUSE BY VIRTUE OF GOOD

FAITH PRINCIPLE

78. CLAIMANT relied on the ‘piercing corporate veil’ and ‘alter ego’ doctrine in determining

the joinder of GM by virtue of good faith principle [Cl. Memo, ¶ 55-58]. However, since the

Parties have agreed not to raise any other arguments than the Group of Companies

doctrine and the good faith principle [Proc. Ord. 2 ¶ 38], such reliance should be deemed as

irrelevant and inapplicable to the present case.

79. GM argued that good faith considerations could not justify GM’s obligation to arbitrate

[Rep. to Counterclaim, ¶ 8]. RESPONDENT argues otherwise (1.). Moreover, GM is

estopped from denying its obligation to arbitrate because it gave an impression that it

would be bound by the arbitration clause (2.) and it received a direct benefit from the

Contract (3.).

1. Consideration of good faith justifies GM’s obligation to arbitrate

80. CLAIMANT argued that joinder of GM based on good faith principle is impossible

because it is only recognized in the statutory provision of Ruritania, the state where GM is

located [Cl. Memo, ¶ 58]. This argument, however, is flawed.

81. As a matter of fact, parties’ obligation to act in good faith is a mandatory rule, which

cannot be contractually limited or excluded [UPICC, p. 22]. The governing law of the

Contract at hand, namely CISG, [Req. Arb. ¶ 18; Proc. Ord. 1 ¶ 5(3)] further justifies this by

virtue of the Art. 7, upholding the ‘observance of good faith in international trade’ [See Art.

7 CISG].

82. In the context of arbitration agreement, good faith too has been recognized as “the first and

most widely accepted principle of interpretation” [Fouchard et al, ¶ 477]. Even the courts in the

other concerned jurisdiction in the present case affirm this notion, as they too have relied

on good faith arguments in some occasion notwithstanding the absence of any statutory

provision [Proc. Ord. 2 ¶ 47].

83. Finally, CLAIMANT’s argument stating that this Tribunal should consider principle of

party autonomy instead of good faith principle in determining the joinder of GM [Rep.

Counterclaim, ¶ 8] is indefensible. Without undermining the concept of party autonomy,

such concept is not absolute, as it must bend to the principle of good faith in order to

allow non-signatory to arbitrate should be required by justice [Thomas, ¶ 981].

84. Consequently, good faith considerations should be taken into account to justify GM’s

obligation to arbitrate in the current dispute.



2. GM gave an impression that it would be bound by the arbitration clause

85. CLAIMANT’s criteria to indicate whether a party acts in good faith [Cl. Memo, ¶ 56] are

irrelevant in this case. Such criteria, i.e. participating and attending all the meetings at

reasonable time, are meant only for the practice in performing a contract [Tetley, ¶ 561]. In

this case, the application of good faith principle is used to interpret a party’s consent to

arbitrate, which includes examining the text and context of a parent company involvement

in the performance of contract and/or whether or not it has a received a direct benefit

from the Contract [Thomas, p. 962, 967].

86. Since the beginning, GM has insisted that CLAIMANT should get the same payment

condition as them [Req. Arb. ¶ 6; Res. Ex. 1]. RESPONDENT rejected the idea, but in the

spirit of maintaining the long-standing business relationship, RESPONDENT agreed to

give a price reduction for the 30 metrics of coltan [Res. Ex. 1, ¶ 7]. This comes with one

condition that GM, in return, must ensure the issuance of the L/C, and to endorse the

Contract [Ibid.]. GM agreed to this as they finally signed the contract as an endorser [Cl.

Ex. 1]. By virtue of good faith, the consequence that the parties reasonably and legitimately

envisaged must be taken into account [Fouchard et al, ¶ 477; Amco case]. Hence, it is

absolutely rational for RESPONDENT to expect that GM would be bound by the

contract merely as an endorser.

87. In fact, GM’s consecutive action after the conclusion of the Contract has lived up to that

expectation, i.e. issuing the L/C using GM’s own account instead of CLAIMANT’s. [See

Cl. Ex. 5; Cl. Ex. 8]. RESPONDENT did not expect that ‘payment guarantee’ will turn

out to be GM’s performance of CLAIMANT’s payment obligation. Any reasonable person

would understand that GM’s action was exceeding a mere payment guarantee. The purpose

of a guarantee is only aimed to ensure that a party to a contract has recourse to more

creditworthy company than the contracting party [Aubin/Longeaux/Vechiatto; p. 4]. In

particular, they provide comforts to any defects that may arise [Jenkins/Stebbings, p. 49].

88. RESPONDENT has made it clear that they only needed GM to ensure the payment in

case where CLAIMANT was unable to do so [See Ans. Arb. ¶ 26; Res. Ex. 1, ¶ 7; Proc. Ord.

2 ¶ 12]. Therefore, GM was not expected to actually issue the L/C using their account so

long that CLAIMANT was still able to do so. In this regard, the attitude of the parties after

the signature of the contract and up until the dispute arose should also be taken into

account in determining their actual intention under good faith [Fouchard et al, ¶ 477].

89. In this circumstance, any argument that GM cannot be held liable merely because it was

not a party to the Contract would disregard the reality of GM’s extensive involvement in



the implementation of the Contract. Under good faith considerations, parties to a contract

are under the obligation to secure and take into account the other party’s expectation

under the contract [Eximin Case; DiMatteo, p. 56]. Hence, due to its conduct, GM cannot

prejudice RESPONDENT’s expectation that GM will be bound to the contract, including

to the arbitration clause contained therein.

3. GM received a direct benefit from the Contract

90. Finally, a party is estopped from denying its obligation to arbitrate when it receives a direct

benefit from a contract containing an arbitration clause [Deloitte Case]. This is because a

party cannot enjoy benefits of a contract yet at the same time avoids the obligation to

arbitrate [US C. A (3rd Cir), 15 Oct 2001; MacHarg/Bates, p. 19]. In determining whether a

party receives a direct benefit or not, courts tend to examine the intentions of the parties at

the time of concluding a contract [US C.A (1st Cir), 25 Apr 2005].

91. In the case at hand, GM received significant direct benefits from the Contract because

beside the fact that it is the sole shareholder of CLAIMANT, GM’s original purpose of

creating CLAIMANT was to expand its market (emphasize added) in Equatoriana [Req. Arb,

¶ 1].

92. Moreover, GM’s intention in benefiting the Contract concluded between CLAIMANT and

RESPONDENT is evident when RESPONDENT received a phone call from Mr. Storm,

where he announced a “closer cooperation for the benefit of all parties involved” as their interest to

purchase more coltans for Equatorianian market [Res. Ex. 1, ¶ 3]. Given that, CLAIMANT

is estopped from denying that GM is actually bound by the arbitration clause contained in

the Contract, since GM received direct benefit from it.

Conclusion to Issue II: This Tribunal has jurisdiction over GM since GM has given its

consent to be bound to the arbitration clause. Alternatively, GM is bound to arbitrate by

virtue of Group of Companies doctrine as well as good faith considerations.

III. RESPONDENT HAS VALIDLY AVOIDED THE CONTRACT

93. RESPONDENT respectfully requests this Tribunal to find that CLAIMANT is not

entitled to receive 30 metric tons of coltan from RESPONDENT because

RESPONDENT had validly avoided the Contract. Under CISG, RESPONDENT, as a



seller, may avoid the contract if the buyer had committed fundamental breach of contract

or if the buyer fails to perform its obligation within a fixed additional time [Art. 64(1)

CISG].

94. Moreover, it is to be noted first and foremost that the transaction at hand involves coltan,

a commodity with a highly volatile price [Proc. Ord. 2 ¶ 18]. Commodities contracts are

generally known to be strict and must be interpreted literally and commodity sales involve

a hair trigger right of termination in order to promote certainty [Zeller, p. 632].

Subsequently, in the present case RESPONDENT submits that its declarations of

avoidance of Contract on 7 July (A.) and 9 July (B.) 2014 were both justified under Art. 64

CISG.

A. RESPONDENT IS ENTITLED TO AVOID THE CONTRACT ON 7

JULY

95. On 28 March 2014, the Parties concluded a Contract for the purchase of 30 metric tons of

coltan at the price of US$ 1,350,000 [Art. 3, Cl. Ex. 1]. The Parties also agreed to use CIF

as the delivery term for shipment [Art. 4, Cl. Ex. 1]. However, on 4 July, CLAIMANT

instead issued the 1st L/C for 100 metric tons of coltan at the price of US$ 4,500,000 and

using CIP as the delivery term [See Cl. Ex. 5].

96. Since this arbitration shall be based on the assumption that the Contract was never

amended on 27 June [Proc. Ord. 1 ¶ 2(1)], the issuance of the 1st L/C was clearly non-

conforming to what had been stipulated in the Contract.

97. Having established that there had been a breach, RESPONDENT submits such breach

amounts to fundamental breach, hence entitling RESPONDENT to avoid the Contract

based on Art. 64(1)(a) CISG (1.). Further, contrary to CLAIMANT’s assertion,

CLAIMANT did not act in good faith as there had been no valid modification of the

Contract (2.). In any case, RESPONDENT is entitled to avoid the Contract under Art.

64(1)(b), as CLAIMANT had declared that it would not perform within the additional time

given (3.).

1. RESPONDENT is entitled to avoid the Contract under Art. 64(1)(a) CISG, as

CLAIMANT had committed fundamental breach in issuing the 1st L/C

98. Under Art. 64(1)(a), a seller such as RESPONDENT may avoid the Contract based on a

fundamental breach committed by the buyer. A fundamental breach occurs when a party



had been substantially deprived of its contractual expectation, and such result of the breach

was not foreseeable by the party in breach [Art. 25 CISG].

99. Moreover, since the Contract is concerning commodities transaction [Supra ¶ 94], special

standards have to be applied in determining whether there is fundamental breach

[Schwenzer, p. 441]. It is generally accepted that fundamental breach allowing avoidance

under CISG will more readily occur in commodity trade than in other trade [Winsor, p.

101].

100. In the case at hand, there are two non-conformities that can be found in the issuance of

the 1st L/C; first, concerning the amount payable, and second, concerning the change in

the delivery terms [See Supra ¶ 95]. In this regard, the two issuances are to be regarded as

fundamental breach as they substantially deprived RESPONDENT of its contractual

expectation (a.) and they were foreseeable by CLAIMANT (b.).

a. RESPONDENT was substantially deprived of its contractual expectation

due to the issuance of the 1st L/C.

101. As a buyer, CLAIMANT was obliged to pay the price while taking such steps and

complying with such formalities as required under the contract or any laws and regulations

to enable payment to be made [Art. 54 CISG]. This includes the duty to provide a

conforming L/C [Honnold, ¶ 354]. CLAIMANT failed to comply with such obligation as it

had issued the non-conforming 1st L/C [Supra ¶ 95-97].

102. It has been widely established that party in the contract must adhere to the terms of the

contract as agreed upon by the parties [Société Romay AG v. SARL Behr France]. This is

further clarified by the Contract, as the L/C should be consistent with terms of the

Contract [Art. 4, Cl. Ex. 1]. Ergo, irrespective of CLAIMANT’s allegations, the 1st L/C

should have been for US$ 1,350,000 and using CIF as delivery terms, as stipulated by the

Contract [Cl. Ex. 1]. CLAIMANT’s failure in complying strictly with the Contract’s

provision in issuing the 1st L/C had consequently substantially deprived RESPONDENT

of its contractual expectation for several reasons, as discussed below.

103. First, RESPONDENT will most likely experience economic loss should it comply with the

1st L/C. Under Art. 25 CISG, economic loss is one of the relevant elements in justifying

avoidance of contract [Commentary on CISG Art. 25], and such loss can be in form of the

actual loss already suffered by the party, or the estimated cost that the party will have to

suffer due to the breach [Graffi, p. 343; ICC Case No. 7531]. In the case at hand,



RESPONDENT will suffer economic loss in two ways; first due to the amount payable,

and second, due to the change in delivery terms.

104. Concerning the amount payable, RESPONDENT admits that during the negotiation

RESPONDENT had offered CLAIMANT a transaction of 100 metric tons of coltan for a

price of US$ 45/kg [Proc. Ord. 2 ¶ 10]. However, CLAIMANT had rejected this offer [Ans.

Arb. ¶ 8]. Now, CLAIMANT could not merely perceives such offer would be

automatically acceptable 2 months after conclusion of the Contract, as the shipping cost

too have increased by a number of US$ 1,000 since then [Res. Ex. 1, ¶ 8]. By 25 June

2014, RESPONDENT was only ready to ship 30 metric tons of coltan as shown in its

NoT [Cl. Ex. 2]. Subsequently, delivering more than 30 metric tons of coltan would

require RESPONDENT to conduct more than one shipment. Thus, should

RESPONDENT comply with CLAIMANT’s request, RESPONDENT needs to exert

more effort and delivery cost amounting to even more than US$ 1,000.

105. Concerning the change in the delivery terms, RESPONDENT will also suffer economic

loss since the 1st L/C opts to the CIP as a delivery terms instead of CIF, which had been

stipulated under the Contract. CLAIMANT had erroneously asserted that CIP is more

favorable for RESPONDENT as a seller [Cl. Memo, ¶ 73, p. 53]. Under Incoterms 2010 in

which the Parties had agreed to be bound upon [Art. 5, Cl. Ex. 1], the usage of CIF is

clearly more favorable for the seller rather than CIP, as the seller is only obliged to deliver

the products to the port rather than to the buyer’s premise [See CIF Incoterms 2010]. It is

evident that RESPONDENT needs at least to exert an additional US$ 800-1000 should it

be obliged to use CIP [Proc. Ord. 2 ¶ 36]. Moreover, the use of CIP would obliged

RESPODENT to provide an insurance contract, which should cover at least the price

provided in the contract, plus ten percent in the currency of the Contract [Art. A3 CIP

Incoterms 2010]. Subsequently, RESPONDENT would have to suffer even more economic

loss.

106. Second, RESPONDENT has lost interest in the performance of the Contract due to the

issuance of the 1st L/C [Cl. Ex. 7]. Under CISG, economic loss is not the only decisive

element for establishing a fundamental breach [Graffi, p. 339], as a breach can also be

considered fundamental when the risk of non-conformity is considered so substantial that

it causes a party’s loss interest in the performance of the contract [Schlechtriem, p. 177; Liu on

Fundamental Breach, Sec. 2.2; Graffi, p. 340]. Such interest is generally derived from the

agreement between parties and in light of circumstances of the case [Liu on Fundamental

Breach, Sec. 2.2.c].



107. Pursuant to the Contract on 28 March, CLAIMANT was supposed to issue an L/C for

US$ 1,350,000 for exchange of 30 metric tons of coltan, using CIF as delivery terms [See

Cl. Ex. 1]. CLAIMANT had failed to comply with all of these provisions in issuing the 1st

L/C [See Supra ¶ 93; Cl. Ex. 5]. In commodities transaction, there is no debate that strict

standards do apply, hence the handling over of clean documents, such as L/C, is always of

the essence of the contract [Zeller on Commodities Sales, p. 632]. Subsequently, a failure to

present the documents required by a commodity contract must be regarded as fundamental

breach [Takahashi, p. 127].

108. Concluding, CLAIMANT’s issuance of the non-conforming 1st L/C must be regarded as a

fundamental breach under Art. 25 CISG, as it causes RESPONDENT to lose interest of

the Contract, as well as suffering economic loss.

b. CLAIMANT could have foreseen the breach

109. Under Art. 25 CISG, a breach cannot be considered as fundamental if the breaching party

and a reasonable person of the same kind in the same circumstances would not have

foreseen such result of the breach [See Art. 25 CISG]. CLAIMANT attempted to argue that

the breach it committed when issuing the non-conforming 1st L/C could not be regarded

as fundamental because CLAIMANT had not foreseen it [Cl. Memo, ¶ 74-76].

RESPONDENT now will demonstrate otherwise, in two ways.

110. First, the Parties had made it clear it in the Contract as to what obligation were to be the

essence of the Contract. When a contract expressly states that performance of an

obligation is of the essence, there will be little room for proving that a breach caused an

unforeseeable detriment [Liu on Fundamental Breach, Sec. 2.3.c].

111. In the case at hand, the Contract clearly stipulates that CLAIMANT shall establish an L/C

amounting to US$ 1,350,000, and shall be consistent with terms of the Contract [Art. 4, Cl.

Ex. 1], for an exchange of 30 metric tons of coltan [Art. 3, Cl. Ex. 1], and using CIF as a

delivery terms for shipment [Art. 5, Cl. Ex. 1]. It is then astounding that CLAIMANT

argued that it could not have foreseen that issuance of 1st L/C, which did not comply to all

of the aforementioned provisions as stipulated in the Contract, would not be considered as

fundamental breach.

112. Second, CLAIMANT correctly raised a point stating that in assessing an element of

foreseeability; all circumstances must be regarded, including pre-contractual and current

events [Cl. Memo, ¶ 74; Koch, p. 229; Honnold, p. 116]. CLAIMANT however, merely relied

on the circumstance occurring in 25 June [Cl. Memo, ¶ 76], reasoning the issuance of 1st



L/C was caused by RESPONDENT’s notification [Cl. Ex. 3]. This is unacceptable. On 1

July 2014, Ms. Masrov, RESPONDENT’s assistant of General sales Manager, had

informed Mr. Ruthli, CLAIMANT’s sales manager that CLAIMANT’s offer per 27 June

was “clearly unacceptable” [Res. Ex. 2]. Yet, CLAIMANT still persists on its proposal and

subsequently issued the non-conforming 1st L/C on 4 July [Cl. Ex. 5].

113. Concluding, there is no room for CLAIMANT to argue that it could not have foreseen the

result of the breach in the issuance of 1st L/C, as the Contract had clearly stipulate the

obligations in which CLAIMANT must comply, and RESPONDENT too had given

warning to CLAIMANT about the possibility of a breach that may arise should

CLAIMANT still persists to issue the 1st L/C as it was.

2. CLAIMANT did not act in good faith upon its proposed modification of

Contract

114. Under CISG, all parties are expected to observe the principle of good faith [See Art. 7

CISG]. CLAIMANT attempted to justify its breach by arguing that it had acted in good

faith in the contractual relationship with RESPONDENT by requesting negotiation of the

Contract per 27 June 2014 [Cl. Memo, ¶ 77-80]. RESPONDENT does not deny, as

CLAIMANT had argued, that CLAIMANT had the right to request to renegotiate the

Contract [Cl. Memo, ¶ 77]. However, under the principle of good faith, parties are obliged

to make the best effort to make the contract effective [Petrochemicals v. Idesa Petroquimica

Case]. In other words, parties are expected to follow the contract as it is.

115. During the negotiation, RESPONDENT had offered CLAIMANT to purchase 100 metric

tons of coltan, for a price of US$ 45 per kilogram, which was ultimately rejected by

CLAIMANT as CLAIMANT requested for reduction of price [Ans. Arb. ¶ 8]. Only when

Xanadu crisis arises, in which CLAIMANT had been made aware of since morning of 27

June [Res. Ex. 3; Ans. Arb. ¶ 16; Res. Ex. 1, ¶ 9], CLAIMANT then realized that they

would not be able to obtain any cheaper offer from other sources, subsequently willing to

purchase 100 metric tons for US$ 45 kilogram as shown in their offer per 27 June evening

[Cl. Ex. 4].

116. CLAIMANT, as a subsidiary of GM who had been world-wide known broker of

commodities [Req. Arb. ¶ 1], should have been aware that commodities market is a ‘highly

speculative market’ with unpredictable nature and constantly changing prices caused by

external factors such as climatic changes and political climate [Winsor, p. 91]. Subsequently,

parties in commodity trade often conclude future contracts, meaning that such contract



involves the sale of a certain quality of commodities for a fixed price to be delivered at a

time in the future [Ibid].

117. The Parties have concluded such contract as certain amount of 30 metric tons of coltan for

an exchange price of US$ 1,350,000 had been agreed by 28 March although the actual

would only be delivered by around September [See Cl. Ex. 1]. Nevertheless, parties to

commodity trading are expected to comply strictly with contract to future-proof the

relationship between the buyer and seller [Winsor, p. 91]. This is in line with good faith

principle that functions as mechanism to provide legal framework that will facilitate

personalized contractual relationship to prevent inconsistent conduct of a party [Zeller on

Good Faith, p. 253].

118. Lord Hoffman supported this notion, opining that legally reasoned decisions with an

incantation of personal values leading to inconsistent decision-making must be abandoned

[Investors Compensation Scheme Ltd. v. West Bromwich Building Society Case]. Equally,

CLAIMANT’s inconsistency that was demonstrated in its initial rejection of

RESPONDENT’s offer during negotiation yet now willing to accept such offer after the

Xanadu crisis [Supra ¶ 113] must be regarded as a deviation of good faith. CLAIMANT

should have been aware of the consequence of concluding a commodity contract and

should have complied with the Contract provisions in spite of the circumstances of

Xanadu’s crisis.

119. CLAIMANT relied on Scafom International v. Lorraine Tubes Case to argue that a party is

entitled to renegotiate a contract in case of dramatic change of price of a commodity

product [Cl. Memo, ¶ 78]. Such case law has no application in the present case. In the case

at hand, CLAIMANT had made an offer to renegotiate the Contract but was firmly

rejected by RESPONDENT [Res. Ex. 2; See Supra ¶ 110, 113]. It is to be noted that any

indication of intention, including a rejection to an offer reaches the addressee when it is

delivered by any other means to him personally [Art. 24 CISG]. Subsequently, the

communication conducted between Ms. Masrov and Mr. Ruthli must be considered as

effective.

120. Concluding, CLAIMANT’s attempt to justify its breach based on good faith principle [Cl.

Memo, ¶ 77-80] must be found indefensible.

3. In any case, RESPONDENT is entitled to avoid the Contract under Art. 64(1)(b)

CISG, as CLAIMANT declared it will not perform its obligation within the

additional time fixed by RESPONDENT



121. Art. 64 (1)(b) provides that the seller is entitled to avoid the contract if the buyer does not

perform its obligation within the additional time given, or if it declares that it will not do so

within the period so fixed. In regard to this, RESPONDENT submits that within the

additional time given, CLAIMANT had declared that it still would not perform its

contractual obligation conformingly.

122. After the issuance of the non-conforming 1st L/C on 4 July [Cl. Ex. 5], RESPONDENT

requested CLAIMANT to issue a new conforming L/C by the latest of morning of 8 July

[Proc. Ord. 2 ¶ 21]. Such request must be considered as an additional period of time fixed

by RESPONDENT for CLAIMANT to perform its obligation under the sphere of Art. 63

CISG.

123. An additional period of time can be set before there is a delay, such as when the buyer

shows signs of difficulties of performing [Enderlein/Maskow, p. 237]. Similarly, as soon as

CLAIMANT issued the non-conforming 1st L/C, RESPONDENT had the right to fix an

additional time regardless of the fact the deadline to issue the L/C is still on 8 July [Art. 4,

Cl. Ex. 1]. This is affirmed by UNIDROIT Principle as parties may, either unilaterally or

by agreement, fix a period of time which certain acts must be done [See Comments on Art.

1.12 UPICC]. The relevant factor of notice of fixing an additional period of time is that

such notice had been well received by the buyer and the buyer had responded immediately

[CISG Ad. Co. Op. No. 1]. This is demonstrated in the case at hand as RESPONDENT

received an email from CLAIMANT and GM in 5 July, one day after RESPONDENT’s

notice.

124. However, instead of giving assurance that the non-conformity in the 1st L/C shall be fixed,

CLAIMANT explicitly declared that it still maintains to receive the 100 metric tons of

coltan from RESPONDENT [Cl. Ex. 6]. Such declaration should be considered by this

Tribunal as CLAIMANT’s intention to not perform its obligation within the additional

time given. It is already problematic when a seller must not exercise other rights ensuing

from a breach, such as right to avoid the contract, let alone having to wait and see whether

the buyer performs within the additional time [Enderlein/Maskow, p. 238].

125. Consequently, the fact that CLAIMANT already showed indication that it still persists to

receive 100 metric tons of coltan instead of giving assurance to issue a conforming L/C for

30 metric tons of coltan as stipulated by the Contract on 5 July allowed RESPONDENT

to avoid the Contract on 7 July on the grounds of Art. 64(1)(b) CISG.



B. RESPONDENT IS ENTITLED TO AVOID THE CONTRACT ON 9

JULY

126. In spite of RESPONDENT’s declaration of avoidance of Contract on 7 July 2014,

CLAIMANT still persists that it is entitled to receive coltans from RESPONDENT by

issuing the 2nd L/C [Cl. Ex. 8]. In response, RESPONDENT declared yet another

avoidance of Contract on 9 July [Res. Ex. 4].

127. RESPONDENT submits such avoidance is justified under CISG, as the issuance of the 2nd

L/C in itself amounts to fundamental breach hence entitling RESPONDENT to avoid the

Contract based on Art. 64(1)(a) (1.). In any case, RESPONDENT is entitled to avoid the

Contract based on Art. 64(1)(b), as CLAIMANT failed to fix the breach within the

additional time given by RESPONDENT (2.)

1. RESPONDENT is entitled to avoid the Contract under Art. 64(1)(a) CISG, as

CLAIMANT had committed fundamental breach in issuing the 2nd L/C

128. Without in any way conceding that RESPONDENT’s avoidance of Contract on 7 July was

unjustified, RESPONDENT submits that the deviations contained in the issuance of 2nd

L/C issued in 9 July by CLAIMANT in itself amounts to fundamental breach under Art.

25, hence entitling RESPONDENT to avoid the Contract. There are two deviations in

respect to the issuance of the 2nd L/C: the untimeliness of the issuance and the inclusion of

commercial invoice [Ans. Arb. ¶ 34-35; Res. Ex. 4].

129. RESPONDENT submits such untimeliness (a.) and inclusion of the commercial invoice

(b.) both form fundamental breach and both results of the breaches were foreseeable (c.).

a. The untimeliness of the issuance of the 2nd L/C amounts to fundamental

breach

130. As had been discussed earlier, there are no debates that in the commodities market strict

standards do apply, hence special standards have to be applied in determining whether

there is a fundamental breach [See Supra ¶ 92, 97, 105; Schwenzer, p. 441]. It had been

generally accepted that timely delivery of documents is always of the essence of the

contracts involving commodities [Winsor, p. 101; Zeller on Commodities Sales, p. 639]

Subsequently, RESPONDENT submits that the issuance of the 2nd L/C was untimely (i.)

and such untimeliness had deprived RESPONDENT of its contractual expectation (ii.)

i. The issuance of the 2nd L/C was untimely



131. The Parties have agreed that payment must be done through the issuance of L/C by latest

14 days after RESPONDENT’s receipt of NoT. Since CLAIMANT received the NoT on

25 June [Cl. Ex. 2], RESPONDENT expects CLAIMANT to issue the 2nd L/C on 8 July

at the latest. However, CLAIMANT instead only issued the 2nd L/C on 9 July, at 00.05

[Ans. Arb ¶ 34; Res. Ex. 1, ¶ 10].

132. There is no dispute concerning whether the deadline falls on 8 July or 9 July. CLAIMANT

may suggest that the deadline actually falls on 9 July, due to CLAIMANT’s different

method of calculating the deadline [Proc Ord. 2, ¶ 39]. However, it must be noted that

RESPONDENT has made it clear to CLAIMANT that the deadline of issuing an L/C is

on 8 July by sending a voicemail to CLAIMANT stating that the 2nd L/C must be

established by 8 July [Proc. Ord. 2 ¶ 21]. Parties may, even unilaterally, fix a period of time

within which certain act must be done [See Comment on Art. 1.12 UPICC]. Consequently,

the 2nd L/C that only arrived in RESPONDENT’s premise at 9 July 00.005 Mediterraneo

Standard Time (“MST”) must be regarded as untimely and well outside the deadline.

133. There is no debate that RESPONDENT’s relevant time zone, MST, should be applicable.

CLAIMANT correctly pointed out the relevant time zone is that of the place of business

of the party setting the time [Cl. Memo, ¶ 97; Art. 1.12 (3) UPICC]. In the case at hand,

RESPONDENT’s voicemail stating that performance should be done by 8 July morning

[Proc. Ord. 2 ¶ 21] serves as an indication that RESPONDENT was the one setting the

time. Ergo, the relevant time zone is MST.

134. Further, CLAIMANT may later argue that the 2nd L/C was actually established in 8 July as

it had faxed a copy of the 2nd L/C to RESPONDENT’s premise at 22.42 of 8 July [Ans.

Arb. ¶ 34]. Such argument is indefensible because the fax only reached RESPONDENT

well outside the business hours. In the context where the concept of business hours is

relevant, L/C that reaches the recipient outside of those hours will only deemed acceptable

when the next period of business hours open [Macdonald, Sec. 2.17]. Equally,

RESPONDENT only discovered the fax of copy of the 2nd L/C on 9 July [Ans. Arb. ¶ 34].

Under CISG, any indication of intention only “reaches” the addressee when it is delivered

by any other means to the addressee personally or the addressee’s place of business [Art.

24 CISG]. Consequently, the fax of 2nd L/C must be nonetheless regarded as only had been

established on 9 July.

135. Concluding, the 2nd L/C was issued only on 9 July whereas it should have been issued by 8

July.



ii. The untimeliness of the issuance of the 2nd L/C substantially deprives RESPONDENT of its

contractual expectation

136. Under Art. 25, a breach of contract is fundamental when it results in such detriment to the

other party that substantially deprives him of what he is entitled to expect under the

contract. In this regard, violations of obligations of essence would constitute a

fundamental breach [Liu on Fundamental Breach, Sec. 3.1]. The nature of contractual

obligation for which strict performance should be prioritized can also be found in

UNIDROIT Principles [UPICC Art. 7.3.1(2)(a); Liu on Fundamental Breach, Sec. 3.2].

137. In the case at hand, time is definitely of the essence. It does not matter that the Contract in

the case at hand does not stipulate that time is of the essence [See Cl. Ex. 1]. In the rapidly

changing commodity transactions, timely delivery of handing over documents is always the

essence of the contract [Winsor, p. 107]. Even if the parties to commodities contracts do

not stipulate this important explicitly, such as what the Parties had done in the present

case, the nature that time is of the essence can be derived from the interpretation of the

contract based on the circumstances pursuant to Art. 8(2) and (3) CISG [Ibid, p. 104; Proc.

Ord. 2 ¶ 18]. Subsequently, in the case where time is of the essence, a seller is entitled to

terminate a contract if a credit is not opened by the date as stated in the contract [Botosh, p.

367].

138. Moreover, the fact that the current Contract is a CIF Contract [See Art. 5, Cl. Ex. 1]

strengthens the notion that time is of the essence. In CIF contracts, timely performance of

obligations are always of the essence and deviations from the prescribed standard in

documentary performance are prohibited and may give rise to termination rights [OLG

(Hamburg), 28 Feb 1997; Koch on Fundamental Breach; Winsor, p. 101, 103]. This is because the

incoterm “CIF” by definition determines the contract to be a transaction for delivery by a

fixed time [OLG (Hamburg), 28 Feb 1997].

139. Consequently, the fact that CLAIMANT had only issued the 2nd L/C on 9 July, albeit only

late for one day, must still be considered as violation of an essential obligation.

CLAIMANT argued that the untimeliness of the issuance of 2nd L/C did not in any way

caused any significant harm to RESPONDENT hence cannot be a basis for

RESPONDENT to avoid the Contract [Cl. Memo, ¶ 103-104]. However, it had been

accepted that where goods with rapidly fluctuating prices on volatile markets, such as

coltans in the present case, even a short delay may entitle a party to declare the contract

avoided [Magnus on Avoidance, p. 435]. This is justified since a buyer is allowed to open the



L/C within a specified time, then the seller such as RESPONDENT must equally hold a

right to end the contract when the buyer fails to do so [Raymond, p. 46].

140. In Italdecor v. Yiu’s Industries, the court held that a fundamental breach occurs in a CIF

contract when of one the party committed an untimely performance albeit knowing that

that timeliness was a fundamental term [Ita C. A. (Milan), 20 Mar 1998]. Equally, having

established that time is of the essence and yet CLAIMANT still failed to perform its

obligation to pay in a timely manner, such untimeliness must be construed as fundamental

breach under Art. 25 CISG.

b. The inclusion of the commercial invoice substantially deprives

RESPONDENT

141. Aside from the untimeliness of the issuance of the 2nd L/C, CLAIMANT now also

requires an additional document for RESPONDENT to prepare in order to liquidize the

2nd L/C, namely the commercial invoice [Ans. Arb. ¶ 35]. CLAIMANT asserts that based

on the applicable law and developed business usage between the Parties, nothing could

preclude the inclusion of commercial invoice in the list of required documents [Cl. Memo, ¶

102]. RESPONDENT argues otherwise.

142. The Parties have chosen L/C as the method of payment [Art. 4, Cl. Ex. 1]. This means

that the Parties have agreed on the application on strict compliance on the documents

under the Contract, since it is the main principle governing the delivery of documents [Bijl,

p. 25]. Generally, laws under trading commodities desire strict compliance in documentary

obligation, as it is generally consistent with the requirement of strict compliance under L/C

[Bijl, p. 27].

143. In the case at hand, the Parties never agreed to include commercial invoice as one of the

required document to be presented [Proc. Ord. 2 ¶ 16]. CLAIMANT may not later argue

that the Parties are bound to any established practice concerning the inclusion of

commercial invoice, as there had been occurrences whereas contracts concluded by

RESPONDENT and GM’s companies did not expressively require commercial invoice

[Ibid].

144. To determine fundamental breach, case-by-case circumstances must be taken into account

[Graffi, p. 340; Liu on Fundamental Breach, Sec. 5.1]. Subsequently, it must be noted that the

2nd L/C was only issued to fix the non-conformity of the 1st L/C [Cl. Ex. 10]. In the 1st

L/C issued on 4 July, RESPONDENT is in the perception that commercial invoice is not

listed as one of the required document [Ans. Arb. ¶ 35; See Cl. Ex. 5]. Consequently, the



inclusion of commercial invoice in the 2nd L/C is unreasonable due to the limited time to

prepare such documents.

145. As a buyer, CLAIMANT cannot require RESPONDENT to provide a document that is

incapable of being presented [Art. 14(b) UCP 600; Bijl, p. 20]. Since RESPONDENT will

be obligated to provide all documents as listed under the L/C when RESPONDENT

wishes to liquidate money, CLAIMANT’s decision to suddenly include commercial invoice

as a required document may prove to be detrimental to RESPONDENT’s contractual

expectation.

146. RESPONDENT is in the risk of not being able to liquidate the 2nd L/C, as the documents

required under L/C needs to be in conformity, or else the bank will inevitably refuse to pay

[Bijl, p. 26]. The doctrine of strict compliance demands that bank’s verification of the

documents upon the presentation is both literal and exact [Bijl, p. 21]. Thus, any failure to

strictly conform to the contractual specification, even if that discrepancy is of little practical

significance leads to a fundamental breach [Schwenzer, p. 806; Art. 14(a) UCP 600].

147. Concluding, CLAIMANT’s breaches of Contract in form of its untimeliness and inclusion

of additional document in the issuance of the 2nd L/C must be regarded as fundamental

breach.

c. The breaches were foreseeable

148. Pursuant to Art. 25 CISG, a party in breach can be excused from being declared from

committing a fundamental breach if the party in breach can prove that such breach was not

foreseeable to him, or to a person with same kind or same circumstances as him [See

Commentary on Art. 25 CISG]. CLAIMANT attempted to use such notion by arguing that it

could not foresee RESPONDENT’s incurred losses from the CLAIMANT’s breaches,

namely the untimeliness and inclusion of commercial invoice [Cl. Memo, ¶ 106]. Contrary

to this, RESPONDENT submits both breaches were foreseeable by CLAIMANT.

149. First and foremost, as had been discussed earlier [Supra ¶ 108], when a contract expressly

states that performance of an obligation is of the essence, there will be little room proving

that a breach caused an unforeseeable detriment [Liu on Fundamental Breach, Sec. 2.3.c].

Subsequently, as timeliness and strict compliance to the Contract had been established as

of the essence of the Contract [See Supra ¶ 128, 135], CLAIMANT cannot argue that it

could not foresee that violations upon those obligations would not deprive

RESPONDENT’s of its contractual expectation.



150. In any case, CLAIMANT could have foreseen both the breaches as demonstrated by the

circumstances of the cases. Regards should be given to all circumstances of the case,

including the current events before the actual breach [Koch, p. 229; Honnold, p. 116,

Enderlein/Maskow, p. 116; Will in Bianca/Bonell, p. 205-221].

151. Concerning the breach of untimeliness, CLAIMANT cannot argue it could not foresee

that the issuance of the 2nd L/C on 9 July 00.05 would be untimely. CLAIMANT argued

that it could not foresee that ‘five minutes’ delay would cause any harm to

RESPONDENT [Cl. Memo, ¶ 105]. However, it has been established that the courier of

the 2nd L/C actually had arrived 30 minutes faster than anticipated and there had been no

unforeseen delay in the delivery [Proc. Ord. 2 ¶ 17]. Since CLAIMANT was aware of

RESPONDENT’s business hours as well as time difference [Proc. Ord. 2 ¶ 23],

CLAIMANT should have been able to foreseen that such delivery would be untimely.

152. Concerning the breach of inclusion of commercial invoice, CLAIMANT argued that such

inclusion of commercial invoice is to be regarded as business usage between the Parties

[Cl. Memo, ¶ 106]. This is clearly mistaken. It has been established that there had been

occurrences where some contracts did not require commercial invoice [Proc. Ord. 2 ¶ 16]

and even CLAIMANT did not include such commercial invoice in the 1st L/C [See Cl. Ex.

5].

153. Concluding, CLAIMANT as subsidiary of GM who had a world-wide reputation in

commodities trading could have easily foreseen that violation of timeliness and strict

compliance of documents would immediately cause a fundamental breach of Contract,

ergo entitling RESPONDENT to avoid the Contract based on Art. 64(1)(a).

2. In any case, RESPONDENT is entitled to avoid the Contract based on Art.

64(1)(b), as CLAIMANT still does not perform within the additional period of

time

154. Aside from fundamental breach, CISG allows a seller to avoid a contract in the case the

buyer still fails to perform its obligation within the additional period of time fixed by the

seller [See Art. 64(1)(b) CISG]. In the case at hand, should this Tribunal disagree with the

above analysis that CLAIMANT had committed fundamental breach, RESPONDENT

submits that it is still entitled to avoid the Contract, as CLAIMANT failed to issue the 2nd

L/C within the additional period of time.

155. On 4 July, soon after CLAIMANT’s issuance of the non-conforming 1st L/C,

RESPONDENT left CLAIMANT a voicemail to fix an additional period of time to issue a



conforming L/C by latest on the morning of 8 July [Proc. Ord. 2 ¶ 21]. However,

CLAIMANT only issued the 2nd L/C on 9 July at 00.05 [Ans. Arb. ¶ 34; Res. Ex. 1, ¶ 10].

Even if this Tribunal were to accept that CLAIMANT had issued the 2nd L/C on 8 July at

22.42 based on fax CLAIMANT had sent [Cl. Ex. 10], such issuance was still outside the

additional time fixed by RESPONDENT, which is morning of 8 July [Proc. Ord. 2 ¶ 21].

156. Based on this fact alone, RESPONDENT is entitled to avoid the Contract based on Art.

64(1)(b) CISG. However, CLAIMANT still argued that it is not bound by the additional

time fixed by RESPONDENT, reasoning that such additional time was neither sufficient

nor reasonable [Cl. Memo, ¶ 84]. This reasoning is invalid.

157. To begin with, the CISG does not regulate how long the period of time a seller should

give; the only condition is for it to be ‘reasonable’ [Art. 63 (1) CISG]. In any event, the

vague term of unreasonableness leaves some room to act at one’s own discretion, which

entitles the innocent party facing the breach to set the additional period of time

[Enderlein/Maskow, p. 159]. However, reasonableness of length of the additional period

should be assessed in light of the circumstances at the case at hand [Koch, Sec. 2.b]. It must

not make it impossible for the breaching party to perform its obligation within the period

[Liu on Nachfrist, Sec 4.2].

158. CLAIMANT was right in pointing out that the issuance of L/C requires a chain of actions

[Cl. Memo, ¶ 87]. However, even CLAIMANT ironically had realized that such process

would only take up to 24 hours, or basically a single day [Cl. Memo, ¶ 87]. Subsequently,

four days would have been more than sufficient for CLAIMANT to issue a new

conforming L/C.

159. Additionally, CLAIMANT may not assert that RESPONDENT acted in bad faith when

giving the additional period of time for its performance [Cl. Memo, ¶ 80]. The concept of

fixing additional time under Art. 63(1) is considered as the seller’s right rather than an

obligation [Knapp, p. 460]. In fact, the possibility of cure after the due date is generally not

extended to commodity sales, as the timely delivery of documents in the rapidly changing

market conditions is always of the essence [Winsor, p. 107]. Thus, unlike what had been

contended by CLAIMANT, RESPONDENT acted in line with the principle of good faith

for being considerate enough to even give such extension for CLAIMANT to cure the

non-conformity [Cl. Memo, ¶ 91].

160. Concluding, considering the circumstances of the case and trading commodity, the length

of four days given by RESPONDENT should be sufficient enough for CLAIMANT to



open a new conforming L/C, and CLAIMANT’s failure to do so entitled RESPONDENT

to avoid the Contract based on Art. 64(1)(b).

Conclusion to Issue III: Both of RESPONDENT’s avoidances of Contract on 7 and 9

July 2014 were justified under CISG, since both CLAIMANT’s issuances of the 1st and 2nd

L/C respectively amount to fundamental breach. Alternatively, CLAIMANT too had failed

to comply with additional time fixed by RESPONDENT to perform its obligation.

PRAYER FOR RELIEF

In light of the preceding submissions, RESPONDENT respectfully requests this Arbitral

Tribunal to find that –

1) The EA order made on 26 July should be lifted;

2) This Tribunal has jurisdiction over GM as additional party to this arbitration;

3) CLAIMANT is not entitled to receive 30 metric tons of coltan as RESPONDENT had

validly avoided the Contract.


MEMORANDUM FOR RESPONDENT |I

INDEX OF AUTHORITIES

Aubin/Longeuz/Vechiatto Yann Aubin, Louis de Longeux, Jean-Calude

Vechiatto

International Bank and Other Guarantees

Handbook: Middle East and Africa Volume

Kluwer Law International

2011

Cited in ¶ 88

Baigel Baruch Baigel

The Emergency Arbitrator Procedure under the

2012 ICC Rules: A Juridical Analysis

Kluwer Law International 2014, Vol. 31 Issue 1

Cited in ¶ 10

Bijl Bijl Maartje

Fundamental Breach in Documentary Sales

Contracts: The Doctrine of Strict Compliance with

the Underlying Sales Contract

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/bijl.ht

ml#15

Cited in ¶ 140, 143, 144

Boog Christopher Boog

Chapter 4, Part II: Commentary on the ICC Rules,

Article 29 [Emergency Arbitrator] in Manual

Arroyo

Kluwer Law International 2014

Cited in ¶ 23, 24

Born Gary Born


MEMORANDUM FOR RESPONDENT |II

International Commercial Arbitration: Second

Edition


Cited in ¶ 32

Botosh Husam M. S. Botosh

Striking the Balance Between the Considerations

of Certainty and Fairness in the Law Governing

Letters of Credit

Available at:

http://etheses.whiterose.ac.uk/3063/2/340209_V

OL1.pdf

Cited in ¶ 135

CISG Ad. Co. Op No. 1 Electronic Communications under CISG, Article

18(2), 15 August 2003. Rapporteur: Professor

Christina Ramberg, Gothenburg, Sweden.

Cited in ¶ 124

Commentary on Art. 25 CISG U.N Secretariat

Commentary on the Draft Convention on

Contracts for the International Sale of Goods

(Article 23 of the 1978 Draft)

Available at:

http://www.cisg.law.pace.edu/cisg/text/secomm

/secomm-25.html

Cited in ¶ 101

DiMatteo Larry A. DiMatteo

Law of International Contracting


2009

Cited in ¶ 17, 90


MEMORANDUM FOR RESPONDENT |III

Delvolve Jean- Louis Delvolve

Interim Measures and International Arbitration in:

LCIA Newsletter, Vol. 8 Issue 2, 2003

Cited in ¶ 28

Ehle Bernd D. Ehle

Concurrent Jurisdiction: Arbitral Tribunals and

Courts Granting Interim Relief

Cited in ¶ 8, 15

Enderlein/Maskow Fritz Enderlein and Dietrich Maskow

International Sales Law

United Nations Convention on Contracts for the

International Sale of Goods

Convention on the Limitation Period on the


Oceana Publications [1992]

Available at:

http://cisgw3.law.pace.edu/cisg/biblio/enderlein.

html

Cited in ¶ 121, 122, 148, 155

Explanatory Note by UNCITRAL

Secretariat on Model Law

Explanatory Note by the UNCITRAL Secretariat

on The Model law on International Commercial

Arbitration

United Nations Publication Sales No. E.08.V.4

ISBN 978-92-1-133773-0

Cited in ¶ 54

Farnsworth Allan Farnswoth

Contracts, 2nd Edition

New York (1998)

Cited in ¶ 8


MEMORANDUM FOR RESPONDENT |IV

Fourchard et al Phillippe Fouchard, Emmanuel Gaillard, &

Berthold

Goldman

International Commercial Arbitration

Kluwer Law International, The Hague, 1999

Cited in ¶ 17, 39, 43, 62, 74, 83, 87, 89

Gaillard Emmanuel Gaillard

Legal Theory of International Arbitration

Martinus Nijhoff Publishers, 2014

Cited in ¶ 8

Ghaffari/Walter Amir Ghaffari, Emmylou Walters

The Emergency Arbitrator: The Dawn of a New

Age?

Vol. 30, Issue 1


Cited in ¶ 23, 24

Graffi Leonardo Graffi

Case Law on the Concept of Fundamental Breach

in the Vienna Sales Convention

Available at:

http://cisgw3.law.pace.edu/cisg/biblio/graffi.htm

l

Cited in ¶ 101, 104, 142

Haikola

Elina Haikola

Arbitral Tribunals and National Courts – Constant

Battle or Efficient Co-operation?

Cited in ¶ 24

Hanotiau 2005 Bernard Hanotiau

Complex Arbitrations: Multiparty, Multicontract,


MEMORANDUM FOR RESPONDENT |V

Multi-issue and Class Actions.

Kluwer Law International, The Hague, 2005

Cited in ¶ 70


Groups of Companies in

International Arbitration in Loukas A. Mistelis and

Julian D.M. Lew (eds), Pervasive Problems in

International Arbitration

Kluwer Law International, 2006

Cited in ¶ 43


Non-Signatories in International Arbitration:

Lesson from

Thirty Years of Case, in: International Arbitration

2006:

Back to Basics?

Kluwer Law International Law, The Hague, 2007

Cited in ¶ 55

Honnold John O. Honnold

Uniform Law for International Sales under the

1980 United Nations Conventions

Kluwer Law international 3rd edition (1999)

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/honnol

d.html

Cited in: ¶ 99, 110, 148

ICC Guide to NYC ICCA’s Guide to the Interpretation of the 1958

New York Convention

International Council for Commercial Arbitration

2011


MEMORANDUM FOR RESPONDENT |VI

Cited in ¶ 31

Jenkins/Stebbings Jane Jenkins, Simon Stebbings

International Construction Arbitration Law


2006

Cited in ¶ 88

Knapp Victor Knapp

Commentary on the International Sales Law: The

1980 Vienna Sale Convention

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/knapp-

bb63.html

Cited in¶ 157

Koch Robert Koch

Commentary on Whether the UNIDROIT

Principles of International Commercial Contracts

May be Used to interpret or Supplement Articles

47 and 49 of CISG

December 2004

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/koch2.

html

Cited in ¶ 110, 147, 155

Koch on Fundamental Breach Robert Koch

The Concept of Fundamental Breach under the

United Nations Conventions on Contract for the

International Sale of Goods (CISG)

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/koch.ht


MEMORANDUM FOR RESPONDENT |VII

ml

Cited in ¶ 136

Lamm/Aqua Carolyn Lamm, Jocelyn Aqua

Defining the Party: Who is a Proper Party in an

Institutional Arbitration before the AAA and

Other International Institutions

34 George Washington International Law Review

711 (2003)

Cited in ¶ 70

Lew/Mistellis/Kroll Julian D.M. Lew, Loukas A. Mistellis, Steffan

Kroll

Comparative International Arbitration


January 1, 2003

Cited in ¶ 39, 40

Liu on Fundamental Breach Chengwei Liu

The Concept of Fundamental Breach: Perspectives

from the CISG, UNIDROIT Principles and

PECL, and Case Law

May 2005

Cited in ¶ 104, 108, 134, 142, 147

Liu on Nachfrist Chengwei Liu

Additional Period (Nachfrist) for Late

Performance: Perspectives from the CISG,

UNIDROIT Principles, PECL and Case Law

March 2005

Cited in ¶ 155

Macdonald Macdonald, Elizabeth

Dispatching the Dispatch Rule? The Postal Rule,


MEMORANDUM FOR RESPONDENT |VIII

E-mail, Revocation, and Implied Terms

Available at:

http://webjcli.org/article/view/239/337

Cited in ¶ 132

MacHarg/Bates Jeffrey MacHard, Albert Bates

Non-Signatories and International Arbitration:

Understanding the Paradox

Comparative Law Yearbook of International

Business 29

(2007)

Cited in ¶ 91

McLaughlin/Genevro Joseph T. McLaughlin, Laurie Genevro

Enforcement of Arbitral Awards under the New

York

Convention

Berkeley Journal of International Law Vol. 3 Issue

2, Article 2

Winter 1986

Cited in ¶ 32

Magnus on Avoidance Ulrich Magnus

The Remedy of Avoidance of Contract Under

CISG – General Remarks and Special Cases

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/magnu

s2.html

Cited in ¶ 137

Meyniel Alexandre Meyniel

That Which Must Not Be Named: Rationalizing

the Denial of US Courts With Respect to the

Group of Companies Doctrine


MEMORANDUM FOR RESPONDENT |IX

The Arbitration Brief 3, no. 1(2013)

Cited in ¶ 58, 59

Moses Margaret L. Moses

The Principles and Practice of International

Commercial

Arbitration

Cambridge University Press, Cambridge

2nd Edition, 2012

Cited in ¶ 70, 71

Park William Park

Non-Signatories and International Contract: An

Arbitrator’s

Dilemma

Multiple Parties in International Arbitration

Oxford, 2009

Cited in ¶ 12, 59

Raymond Jack Raymond

Documentary Credits, 28 February 2009

Totel Publishing

Cited in ¶ 137

Redfern/Hunter Alan Redfern & Martin Hunter

Law and Practice of International Commercial

Arbitration

Sweet & Maxwell, London, 4th Ed.

2004

Cited in ¶ 29, 39

Rodler Irmgard Anna Rodler

When Are Non-Signatories Bound by the

Arbitration Agreement in International


MEMORANDUM FOR RESPONDENT |X

Commercial Arbitration?

Cited in ¶ 70

Sanders Pieter Sanders

Quo vadis Arbitration? Sixty Years of Arbitration

Practice – A Comparative Study

Kluwer Law International, 1 January 1999

Cited in ¶ 26

Schlechtriem Peter Schlechtriem

Uniform Sales Law - The UN-Convention on

Contracts for the International Sale of Goods;

Manz, Vienna: 1986

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/schl

echtriem-25.html

Cited in ¶ 104

Schwenzer Ingeborg Schwenzer

The Right to Avoid The Contract

Annals FLM – Belgrade Law Review, Year LX,

2012, No. 3

Cited in ¶ 97, 128, 144

Steingruber Andrea M. Steingruber

Consent in International Arbitration, Oxford

International Arbitration Series

2012

Cited in ¶ 44, 51

Sykes Andrew Sykes

The Contra Proferentem Rule and the

Interpretation of International Commercial

Arbitration Agreements – the Possible Uses and


MEMORANDUM FOR RESPONDENT |XI

Misuses of a Tool for Solutions to Ambiguities

Vindobona Journal of Commercial Law &

Arbitration 2004

Cited in ¶ 18

Takahashi Koji Takahashi

Right to Terminate (Avoid) International Sales of

Commodities,

Journal of Business Law (J.B.L. March 2003) 102-

130, (c) Sweet & Maxwell and the author

http://cisgw3.law.pace.edu/cisg/biblio/takahashi.

html

Cited in ¶ 105

Tetley William Tetley

Good Faith in Contract: Particularly in the

Contracts of

Arbitration and Chartering

Journal of Maritime Law and Commerce, Vol. 35,

No. 4

October 2004

Cited in ¶ 86

Thomas Aubrey L. Thomas

Nonsignatories in Arbitration: A Good Faith

Analysis

2010, Lewis & Clark Law Review [Vol. 14:3]

Cited in ¶ 84, 86

Van den Berg Donald Francis Donovan, The Allocation of

Authority

Between Courts and Arbitral Tribunal in A. J. van

den Berg

New Horizons in International


MEMORANDUM FOR RESPONDENT |XII

Commercial Arbitration and Beyond

Cited in ¶ 28

Vogenauer in UPIC Commentary Art.

4.6

Stefan Vogenauer

Commentary on the UNIDROIT Principles of

International Commercial Contracts

Oxford University Press, 2009

Cited in ¶ 17

Webster/Buhler Thomas H. Webster, Dr Michael Buhler

Handbook of ICC Arbitration: Commentary,

Precedents, Materials

Sweet & Maxwell , 2014

Cited in ¶ 4, 6, 21

Will in Bianca/Bonell Michael Will

Bianca-Bonell on Commentary on the

International Sales Law

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/will-

bb25.html

Cited in: ¶ 148

Winsor Katrina Winsor

The Applicability of the CISG to Govern Sales of

Commodity Type Goods

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/winsor.

html#24

Cited in: ¶ 97, 114, 115, 128, 135, 136, 157

Zeller on Good Faith Bruno Zeller

"Good Faith - Is it a Contractual Obligation?,"

Bond Law Review: Vol. 15: Iss. 2, Article 13.


MEMORANDUM FOR RESPONDENT |XIII

Available at:

http://epublications.bond.edu.au/blr/vol15/iss2/

13

Cited in ¶ 115

Zeller on Commodities Sales Bruno Zeller

Commodity Sales and the CISG

[2008] Sharing International Commercial Law

Across

National Boundaries 627-639

Cited in ¶ 105, 128

Zuberbuhler Tobias Zuberbuhler

Non-Signatories and the Consensus to Arbitrate.

ASA Bulletin, Vol 26 No. 1 (2008)

Cited in ¶ 70, 75


MEMORANDUM FOR RESPONDENT |XIV

INDEX OF CASES

Belgium

Scafom International BV v. Lorraine Tubes S.A.S.

Belgium 19 June 2009 Court of Cassation [Supreme Court]

Available at:

http://cisgw3.law.pace.edu/cases/090619b1.html

(Cited as: Scafom International BV v. Lorraine Tubes S.A.S, in ¶ 117)

Brazil

Trelleborg v. Anel

Court of Appeals of the State of São Paulo

Appeal no. 267.450.4/6-00

2006

(Cited as: Trelleborg Case, in ¶ 58)

Canada

Xerox Canada Ltd. v. MPI Technologies Inc.

2006 OJ ,4895 153 A.C.W.S. (3d) 1029.

(Cited as: Xerox Case, in ¶ 55)

France

Société Romay AG v. SARL Behr France

Supreme Court of France 30 June 2004.

(Cited as: Société Romay AG v. SARL Behr France, in ¶ 100)

Société Sponsor A.B. v. Lestrade

Court of Appeal of Pau

1986

(Cited as: Sponsor v. Lestrade, in ¶ 56, 62, 70)

Germany


MEMORANDUM FOR RESPONDENT |XV

OLG Hamburg, Germany Provincial Court of Appeal

28 February 2997

Case No. 1 U 167/95

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

(Cited as: OLG (Hamburg), 28 Feb 1997, in ¶ 136)

Israel

Eximin v. Textile and Footwear

Supreme Court of Israel

1993

Available at: http://cisgw3.law.pace.edu/cases/930822i5.html

(Cited as: Eximin Case, in ¶ 90)

Mexico

Kolmar Petrochemicals Americas, Inc. v. Idesa Petroquímica S.A. de C.V. Mexico

Primer Tribunal Colegiado en Materia Civil del Primer Circuito [Appellate Court]

10 March 2005

(Cited as: Petrochemicals Americas, Inc. v. Idesa Petroquímica, in ¶ 112)

Milan

Italdecor s.a.s. v. Yiu Industries (H.K) Limited

Appellate Court Milan

20 March 1998

Available at: http://cisgw3.law.pace.edu/cases/980320i3.html

(Cited as: Ita C. A. (Milan), 20 Mar 1998, in ¶ 138)

Spain

ITSA v. Satcan & BBVA

Spanish Supreme Court 26 May 2005

(Cited as: ITSA v. Satcon & BBVA, in ¶ 55)

Switzerland


MEMORANDUM FOR RESPONDENT |XVI

X S.A.L., Y S.A.L. et A v. Z

SARL et Tribunal Arbitral

CCI, BGE 129 III 727

(Cited as: X S.A.L Case, in ¶ 70)

China National Metal Products Import/Export Company v. Loerbersdorfer

Maschinenfabrik AG

Swiss Federal Supreme Court

11 February 1993

Case No. 188 (1991)

(Cited as: Swiss S. Crt, 11 Feb 1993 , in ¶ 75)

United States of America

J.J. Ryan & Sons v. Rhone Poulenc Textile

United States Court of Appeals

863 F.2d 315 (4th Cir. 1988)

(Cited as: J.J. Ryan & Sons, in ¶ 50, 55)

Burlington Ins. Co. v. Trygg-Hansa Insurance Co.,

United States District Court Middle District of North Carolina

No. 06-2082 (4th Cir. 2008)

(Cited as: Burlington Ins Case, in ¶ 50, 55)

Thompson-CFS, S.A. v. American Arbitration Association and Evans & Sutherland

Computer

Corporation

Court of Appeals for the Second Circuit, August 24th 1995

Published in: 64 F. 3d 773

(Cited as: Thomson-CSF Case, in ¶ 39)

Deloitte Noraudit A/S v. Deloitte Haskins & Sells

United States Court of Appeals (2nd Circuit)

22 November 1993


MEMORANDUM FOR RESPONDENT |XVII

9 F.3d 1060, 1064 (2d Cir) 1993

(Cited as: Deloitte Case, in ¶ 91)

Sourcing Unlimited Inc v. ASIMCO International Inc

United States Court of Appeals (1st Circuit)

22 May 2008 (526 F. 3d 38, 41)

(Cited as: Sourcing Unlimited Inc Case, in ¶ 47)

E. I Dupont De Nemours & Co. v. Rhodia Fiber & Resin Intermediates

United States Court of Appeals (3rd Cir)

No. 00-350

(Cited as: US C.A (3rd Cir), 15 Oct 2001, in ¶ 91)

Atwater Co. v Panama R.R. Co

Court of Appeals of the State of New York

2.5.5. N.Y. 456 (1931)

(Cited as: Atwater v. Panama, in ¶ 10)

Re Kellogg Brown & Root, Inc.

United States Court of Appeals (Texas)

166 SW.3d 732

25 April 2005

(Cited as: US C. A (1st Cir) 25 Apr 2005, ¶ 57, 92)

United Kingdom

Investors Compensation Scheme Limited v West Bromwich Building Society

Court of Appeal England and Wales

[1998]1 WLR 896

(Cited as: Investors Compensation Scheme Limited v West Bromwich Building Society, in ¶ 116)

Adams v. Cape Industries plc

English Court of Appeal

[1990] 2 W.L.R 657 (C.A)

(Cited as: Adams v. Cape Industries, in ¶ 59)


MEMORANDUM FOR RESPONDENT |XVIII

Dallah Real Estate and Tourism Holding Company v. The Ministry of Religious Affairs,

Government of Pakistan

UK Supreme Court 46

3 November 2010

(Cited as: Dallah Case, in ¶ 71)

INDEX OF AWARDS

International Chamber of Commerce

U.S. Company v. Belgian Company

124 J.D.I. 1061

1995

(Cited as: ICC Case No. 8385, in ¶ 74)

Chemical Works of Gedeon Richter PLC (Hungary) v. Genefar BV (Netherlands), Mr.

Jerzy

Starak (Poland)

ICC Case. No. 16016/JHN


Dow Chemical v. Isover Gobain

Case No. 4131 (1982), JDI (1983)

(Cited as: ICC Case No. 4131, in ¶ 64, 72, 74)

ICC Interim Award in Case no. 6000 of 1988


ICC Case No. 6519

(Cited as: ICC Case No. 6519, in ¶ 55, 66)

ICC Case No. 11209



MEMORANDUM FOR RESPONDENT |XIX

ICC Case No. 7531

Scaffold Fittings Case

(Cited as: ICC Case No. 7531, ¶ 101)

ICC Case No. 7609


ICC Case No. 7610


ICC Case No. 9517


ICC Case No. 9719


U.S. Company v. Belgian Company

ICC Award No. 8385 (1995)

124 J.D.I 1061 (1997)


Company (Europe) v. Company (USA), Company, branch of the First

Defendant (Egypt), Physical person Z, manager of First Defendant

Case No. 5721 (1990)


International Centre for Settlement of Investment Disputes

Amco v. Republic Indonesia

1983

(Cited as: Amco Case, in ¶ 87)

Holiday Inns S.A., Occidental Petroleum v. Government of Morocco

No. ARB/72/1


MEMORANDUM FOR RESPONDENT |XX

(Cited as: Holiday Inns Case, ¶ 77)

Zurich Chamber of Commerce

China National Machinery & Equipment Import & Export Corporation v. Loebersdorfer

Maschinenfabrik AG (Austria)

11 Febuary 1993,

Case No. 188 (1991)

(Cited as: China National Case, ¶ 75)

INDEX OF LEGAL SOURCES

CISG United Nations Convention on Contract for the


UNCITRAL Model Law United Nations Commission on International

Trade Law (UNCITRAL) Model Law on

International Commercial Arbitration 1985 With

amendments as adopted in 2006

ICC Rules International Chamber of Commerce Rules 2010

Incoterms 2010 Incoterms 2010: ICC Official Rules for The

Interpretation of Trade Terms

New York Convention United Nations Conference on International

Commercial Arbitration: Convention on The

Recognition and Enforcement of Foreign Arbitral

Awards

UCP 600 ICC Uniform Customs and Practice for

Documentary Credits


MEMORANDUM FOR RESPONDENT |XXI

UPICC UNIDROIT Principles of International

Commercial Contracts 2010

Documents

UGM's Memorandum for RESPONDENT