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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
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 2
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).
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 3
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.).
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 4
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 5
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 6
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 7
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 8
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 9
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.).
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 10
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 11
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 12
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 13
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 14
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 15
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 16
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 17
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 18
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 19
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 20
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 21
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 22
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,
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 23
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].
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 24
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 25
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 26
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 27
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 28
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 29
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 30
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 31
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 32
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.
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 33
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 34
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT | 35
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.
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT |II
International Commercial Arbitration: Second
Edition
Kluwer Law International 2014
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
Kluwer Law International
2009
Cited in ¶ 17, 90
UNIVERSITAS GADJAH MADA
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
International Sale of Goods
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
UNIVERSITAS GADJAH MADA
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
Kluwer Law International 2014
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,
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT |V
Multi-issue and Class Actions.
Kluwer Law International, The Hague, 2005
Cited in ¶ 70
Hanotiau 2006 Bernard Hanotiau
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
Hanotiau 2007 Bernard Hanotiau
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT |VI
Cited in ¶ 31
Jenkins/Stebbings Jane Jenkins, Simon Stebbings
International Construction Arbitration Law
Kluwer Law International
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
UNIVERSITAS GADJAH MADA
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
Kluwer Law International
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,
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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.
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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
UNIVERSITAS GADJAH MADA
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)
UNIVERSITAS GADJAH MADA
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
(Cited as: ICC Case No. 16016, in ¶ 48)
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
(Cited as: ICC Case No. 6000, in ¶ 56)
ICC Case No. 6519
(Cited as: ICC Case No. 6519, in ¶ 55, 66)
ICC Case No. 11209
(Cited as: ICC Case No. 11209, in ¶ 55)
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT |XIX
ICC Case No. 7531
Scaffold Fittings Case
(Cited as: ICC Case No. 7531, ¶ 101)
ICC Case No. 7609
(Cited as: ICC Case No. 7609, in ¶ 55)
ICC Case No. 7610
(Cited as: ICC Case No. 7610, in ¶ 55)
ICC Case No. 9517
(Cited as: ICC Case No. 9517, in ¶ 55)
ICC Case No. 9719
(Cited as: ICC Case No. 9719, in ¶ 55)
U.S. Company v. Belgian Company
ICC Award No. 8385 (1995)
124 J.D.I 1061 (1997)
(Cited as: ICC Case No. 8385, in ¶ 74)
Company (Europe) v. Company (USA), Company, branch of the First
Defendant (Egypt), Physical person Z, manager of First Defendant
Case No. 5721 (1990)
(Cited as: ICC Case No. 5721, in ¶ 74)
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
UNIVERSITAS GADJAH MADA
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
International Sale of Goods
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
UNIVERSITAS GADJAH MADA
MEMORANDUM FOR RESPONDENT |XXI
UPICC UNIDROIT Principles of International
Commercial Contracts 2010