Moot Memorial for International Moot, Papers of Law

Download Moot Memorial for International Moot and more Papers Law in PDF only on Docsity! TEAM CODE: 35R 5 NLIU-JUSTICE R.K. TANKHA MEMORIAL INTERNATIONAL ARBITRATION MOOT COURT COMPETITION, 2020 Before THE ARBITRAL TRIBUNAL, BARATHEON CITY, STARK PROVINCE ARCEBOR POWER PRIVATE LIMITED CLAIMANT RENVIDORA NATIONAL POWER COMPANY LIMITED CASE CONCERNING The Agreement between Arcebor Power Private Limited and Renvidora National Power Company Limited MEMORIALforRESPONDENT 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 TABLE OF CONTENTS TABLE OF CONTENTS TABLE OF CONTENTS ....ccsscssssssssssssnsseesssessensseesssescsnsnesssnesssnsnessenessensnessesescenssescenescensnesceneseeesees I TABLE OF ABBREVIATIONG.......cccsssscsssesssnsseesssesssncneesssesssnsnessenessensnessnescensnescenescenenesceseseens IV INDEX OF AUTHORITIES. ......ccccssssssssessssesssnsseessnescensneesssessensnessenessensnesceaescensnesctaescensneecenees VIII STATEMENT OF FACTS ISSUES RAISED......ccccssssssssesssncseeseseseensseesssessensnessssessensneesenessensneecenescensneecenescensucsceueseensnenenee XVII SUMMARY OF ARGUMENTS.....c.cccsssscsssesssnsssesssesssnssesssnessensnescenescensneecenesceneneeceneseenseeees XVIII PLEADINGS ......cssssssesssscsessenescencnesscseseencnesseseasensneesesessensnesseseasensneeseneasensnessenescensnesceneacenenescnseseeesee 1 L THE TRIBUNAL DOES NOT HAVE JURISDICTION OVER THE DISPUTE, OWING TO THE ABSENCE OF A VALID ARBITRATION AGREEMENT BETWEEN THE PARTIES «s.sssesesssssessessseeeeecee 1 A. There was no unequivocal consent of the Respondents to refer the disputes to ALDITATION.........cscseesesesseneseeseneseencneescneseensneescnesseneneeseneseenenessenessenenescesesesneneeceneseensnesceneseenseeeee 1 1. On account of the non-existence of arbitral institution mentioned in the clause, the agreement loses VALidity.....c.ccccccesesesssessseseseecsesesesesesesescsesesescseseseeceesesescsesssescaessiesesessseseseass 1 2. The ambiguity of the arbitration clause must be interpreted against the Claimant according to the contra proferentem rule ..c.cccccccsscesesessseseeecseseseseseseseesesesesesescsesesessseseseees 2 B. FOrum Clause ......scscsscsssesssncsessssescensseesenessencneeesesesnsnessenessensnesesescsnsneecenescsnsnescenescenseeeee 2 1. The existence if of a forum selection clause in the Main AgreeMENt........1.s1svveveees 2 2. The general presumption in favour of arbitration must be disregarded .........11000+ 2 II. THE INSOLVENCY PROCEEDINGS UNDERWAY AGAINST THE RESPONDENT IN YEVADU BARS THE JURISDICTION OF THIS TRIBUNAL ....scsssssssssseeccsecsssseeceeecssnsseecessesensseeceesesessceeseseeseesee 3 A. Add heading... cescesssesssessseesseesseesseesseessessessesseesseees Error! Bookmark not defined. 1. Imposition of Moratorium prohibits the continuation of Arbitration proceedings... 4 2. The ongoing Arbitration proceedings can affect the assets of the Respondent. ....... 4 3. It can sabotage the rights of the other creditors of the respondeNnt. ......scscseseveees 5 MEMORIAL for RESPONDENT Page | I 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 TABLE OF ABBREVIATIONS TABLE OF ABBREVIATIONS ABBREVIATION EXPANSION % Percentage §(§) Section(s) 1 Paragraph 1 Paragraphs AC Appeal Case Anr. Another Arb. Arbitration Art. Article BIL Bilateral Investment Treaty Cf. Confer Ch. Chapter Cir. Circuit CISG United Nations Convention on Contracts for the International Sale of Goods (1980) Co. Company Comm. Commentary MEMORIAL for RESPONDENT Page | IV 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 Corp. TABLE OF ABBREVIATIONS Corporation e.g. Exempli gratia (for example) ECJ European Court of Justice ed. Edition etal. Et alii (and others) F. Supplement Federal Supplement Govt. Government Hon’ ble Honourable IBC Insolvency and Bankruptcy Code ibid. Tbidem (in the same place) ICC International Chamber of Commerce ICSID International Center for Settlement of investment diputes Int. International K.B. Kings Bench LR Law review Ltd. Limited MLCBI MEMORIAL for RESPONDENT Model Law on Cross Border Insolvency Page | V 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 TABLE OF ABBREVIATIONS United Nations Convention on the NYC Recognition and Enfrocement of Foerign Arbitral Awards, New York, 1958. Ors. Others p- Page pp. Pages Pvt. Private QB. Queen’s Bench Rep. Reporter SIAC Singapore International Arbitration Centre US. United States of America u/ Under UN United Nations UNCITRAL United Nations Commission on International Trade Law UNIDROIT International Institute for the Unification of Private Law UOIL Union of India USA United States of America Versus MEMORIAL for RESPONDENT Page | VI 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 INDEX OF AUTHORITIES ICC Case 00. 4972 veccccccsecssssssssssesssessscsssescsescsescseecsescsescsescaesuseecsescseecsessaeecsescaeecaeecaeecueesaeesaeesaeesaes 15 ICC Case No. 6519 vcccccscccsssssscssessscssscsssescsescsescsescsescsescsescaessseecsescseecseecaeesaessaeecseecaeesaeesaeesaeesaeesaees 15 ICC CAS€ NO. 6673 veeccceccsssssscssecsesssesssescsescsescsescsescsescseecsesnsescsescsescseecaeecanecsescaeecseesseesueesaeesseesaeesaees 15 ICC Case No. 6697 ....ccccccccscesseecssesesesseecessseecesesssesseeceessesessesssesscsesesecsesecsesesecsesscsesececseesesesescaeeceseane 7 ICC Case No. 7337 o.cccccssesssssssescssesesecseecessseecesssesesseesesesnsesesseseesnseseseseesessesessceesscsesesscaesscseseeacseeseaes 16 ICC Case No. 10818 ...c.ceccccecccseccseeseesceecesseecesesesesseesenesesesessesessssesessseesscsesessseesecseseescsesscseaeescseeseaes 17 ICC Case N0.4727 ic ccccccsecsessssesceseessseecessseecesssesessseseessssesessssesscsesesecsesecsesecscsesscsesecesseescseseescaeeseaeeee 2 Innoventive Industries Ltd. v. ICICI Bank, (2017) S.C.C., 678 5 Ins Con of Hartford v. TIG Ins. Co. 360 3d, 322 (2™ Cir. 2004). K.S. Oils Ltd. v. The State Trade Corp. of India Ltd. & Anr., (2018) S.C.C., 475. L'HamidSaadi v. Huan, CA, 246 (Paris 2000). ........ Power Grid Corporation of India Ltd. v. Jyoti Structures Ltd., (2018) 246 DLT, 485...........08 4 Punjab National Bank v. James Hotels, (2017) S.C.C., 456 ....cececescssesssseseescseeseseseessseeseseseeseseeseseeee 5 TBK vy. Astro Nusantara International BV & Ors., 226 SGCA, 57 (2013)... cecesuesuesessucsueseescesssueeseecesussuesesaussuesesscesusueeseecesussuesesscesesseesesscsueeseecesusueesessceussueeseesssuesueesesueneeseesceseaee 6 Volt Information Sciences v Leland Stanford, U.S., 468 (1989) ...ccccccsecssessseecseeceecseecseecseecseecsees 16 Xv. ¥ & Z, ICC Proc. Order, (2012). ...ececccccssesseesessesseesescsssseesesscsseseesessssesnescesssseeseesssneaeeseaee 12 Yarn Case, App. Ct. Frankfurt, 199 (Ger. 2000.0... .ccssesesssseesssesessesesesseseessseesseseescsessessseescseeeaee 24 CONVENTIONS New York Convention ........cccccccccsseccseeseseseesesseeseessesessesssesscsessesssesscseseescsesscsesecsssesseseseeecseeesesees 16 Dispute Settlement , United Nations Conference on Trade and Development, UNITED NATIONS (Jan 13, 2020, 3PM), https://unctad.org/en/Docs/edmmisc232add39_en.pdf........cccesccesessceeeseeeeeee I Nina Gumzej, Global Development: New York Convention - Reconsidered: Contribution to the 45d' Anniversary of the Convention: Certain Aspects of Public Policy in the Enforcement of Foreign Arbitral Award’, 2003 CROAT. ARB. Y.B.,39 vceececeeseseseseseseseseeseseseseseseseseseseseseseees 5 UNCITRAL Model Law on International Commercial Arbitration (1985) with amendments as Adopted i 2006 ....cescccececeeccceececesseecseseescseessseesssssssesesssessssesessssessssesecscsesscseseessseeseseseescseeseseeeeseee 9 BOOKS MEMORIAL for RESPONDENT Page | IX 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 INDEX OF AUTHORITIES 14 BERNARD HANOTIAU, COMPLEX ARBITRATIONS: MULTIPRTY, MULTICONTRACT, MULTI- ISSUE AND CLASS ACTIONS 49 (2006) ....c.ceccesesssessesesesesescsesesesesescsescsescsesesesesescsesssesssesssessseesies 17 37 STAVROS BREKOULAKIS, THE EVOLUTION AND FUTURE OF INTERNATIONAL ARBITRATION 119. Julian David & Mathew Lew eds. (2016) 7 GEORGIOS PETROCHILOS, MULTIPARTY ARBITRATION 119 (Bernard Hanotiau & Eric Schwartz CdS.) (2010) esseessscssesscsssseccssseccessusesssssessssssessssssecsssssesessuussssssuecssssseesssssscessuuesssssueessssseecsssneesssseee 17 ALAN REDFERN et al., LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 71 BERNARD HANOTIAU, INTERNATIONAL ARBITRATION 2006: BACK TO BASICS? (Albert Jan Van Den Berg ed.) 341 (2007... .cceccceeccseesesesseseseesessseesessesssseecsssssessesceesecsesessssesscsesececseescsaeecaees 17 BLACKABY et al., REDFERN AND HUNTER ON INTERNTIONAL ARBITRATION 202 (6" ed. 2015). 5, 6 EMMANUEL GAILLARD & JOHN SAVAGE, FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION 734 (1999). FOUCHARD PHILIPPE ET AL., FOUCHARD, GAILLARD, GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION. KLUWER LAW INTERNATIONAL, 1280 (1999)......ccessssessseseseseeseeseseseseeeseeseenee 10 FRANCOIS POUDRET & SEBASTIEN BESSON, COMPARATIVE LAW OF INTERNATIONAL ARBITRATION 281 (2007) cesssesessessseecsssssecssssescssssvssssssecssssvecesssuscssssuvsssssuecsssssecssssusesssuuvsssssueessssseessnseeessauevsessveesss 6 GABRIELLE KAUFMANN- KOHLER & ANTONIO RIGOZZI, INTERNATIONAL ARBITRATION: LAW AND PRACTICE IN SWITZERLAND 160 (3% @d. 2015). ceccesscsssessssssssssessssssessecssesseessessecsssetsesesstsseesnesseese 4 Gary B. BORN & MATTEO ANGELINI, FINANCES IN INTERNATIONAL ABITRATION 43 (Sherlin Tung & Fabricio Fortese eds.) (2019).....ccccscsessssesesscseessseseessseeessseescseeseseseessseeseseseescseeseseeeeeeee 1 Gary B. BORN & PETER B. RUTLEDGE, INTERNATIONAL CIVIL LITIGATION IN UNITED STATES COURTS 199 (5! ed. 2011) ..ecesesssesssesssesseesnessnecescesecesceescesscssscsnecanssnessuesuessnesseceseeeseeescesceeseeanenanens 6 Gary B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION 567 (2 ed. 2014) ...sescsssssseseeseee 4,5 ICC Case No. 4132 weccceccecceecseecseecseecsesesescsescsescsescsescsescseecsescsesesesesescsesesesesescsesssesssesssescseseseaeseaes 8 INGEBORG SCHLECHTRIEM AND PETER SCHWENZER, COMMENTARY ON THE UN CONVENTION ON THE INTERNTIONSL SALE OF GooDs 175 (Ingeborg Schwenzer ed.) (4th ed. 2016)............ 19, 20 Jean Rouche et al., French Arbitration Law and Practice: A dynamic Civil Law approach to International Arbitration 37 (24 ed. 2009). .esccsssseeesssscssssccssesssseessssssssecssseseseecsusesssussssecesseceseesse 1 JEffREY WAINCYMER, PROCEDURE AND EVIDENCE IN INTERNATIONAL ARBITRATION 644 (2012)11, 15 MEMORIAL for RESPONDENT Page |X 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 INDEX OF AUTHORITIES JONAS VON GOELER, THIRD PARTY FUNDING IN INTERNATIONAL ARBITRATION AND ITS IMPACT ON PROCEDURE 298 (2016....c.cccscesssesssesssesesescoescsescsescsescsescsescsescseeceescsescsescsescuesesesssesssesssessseseses 10 JULIAN D.M. LEw et al., COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION 188 (2003) sussesevessucuescsesesesesesesesessuescuessucaesesescsescsescsesessuessucssscssssssscasusesusaeseseuessuessucssseasucasucssueasueasuceaneesueatee 5,6 JULIAN DAVID MATHEW LEW & LOUKAS A. MISTELIS, COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION 187 (2003).5 ..cccsescesssssecsesceeescsesceeceesscseceesceesacsecaeseeeeaeneceeseeeeaenesee 6,7 Julian David Mathew Lew et al., Comparative International Commercial Arbitration 687 (2003) 1 MESTRE, OFFICIAL COMMENTARY ON THE UNIDROIT CONVENTION ON SUBSTANTIVE RULES FOR INTERMEDIATED SECURITIES 121 (2019).. NIGEL BLACKABY et al., REDFERN AND HUNTER ON INTERNTIONAL ARBITRATION 361 (6" ed. SIMON VORURGER, INTERNATIONAL ARBITRATION AND CROSS BORDER INSOLVENCY: COMPARATIVE PERSPECTIVES 299 (2014). ..ccccessseseseseseesescseecsescsescsescsesesescsescseseseseseseseseseseseees 4 STEFAN KROLL et al, UN CONVENTION ON CONTRACTS FoR INTERNATIONAL SALE OF GOODS (CISG) 1057 (2011). cesccsscssssecccssssvsssssesessssessssssecsssssccsssusssssssvecssssseessssuseessuuvsssssueessssseeessseeeessneee 26 STEFAN MICHEALKROLL, PERVASIVE PROBLEMS IN INTERNATIONAL ARBITRATION 359 (Loukas A. Mistelis& Julian David Mathew Lew eds.) (2006).......ccceccesessescsesceeeteeecseseeeeseeecaeeeeeeeee 3,5,6 STEFAN VOGENAUER, COMMENTARY ON THE UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS 20 (24 €d.2015) vesscsssesssssssesssssssssssessesssessecsuesseessesseesseseseesssesssesnesseese 2 VAN DEN BERG, NEW YORK CONVENTION GUIDE 1958 oo... ceccesesssscsescesesceecseeceeeseeecaeseeeseneceeseeeeeee 7 VESNA LAZIC, CROSS-BORDER INSOLVENCY AND ARBITRATION 338 (S. Kroll et al. eds.) (2011).3, 6 YVES DERAINS& ERIC A. SCHWARTZ, A GUIDE TO THE ICC RULES OF ARBITRATION 385 (2"4 ed. JOURNAL 33 Nadia Darwazeh & AdrenLeleu, Disclosure and Security for costs or how to address Imbalances Created by Third-PatyFunding, 143 JOURNAL OF INT. ARB........cscesssseseeseseeeeseseeee 10 Andrew Tweeddale& Keren Tweeddale, Arbitration of Commercial Disputes: International & English Law & Practice OXFORD UNIVERSITY PRESS, 350 (2007). ..cceccsescssscescseecseecseecseecseee 10 MEMORIAL for RESPONDENT Page | XI 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 STATEMENT OF FACTS STATEMENT OF FACTS PARTIES 1. Arcebor Power Pvt. Ltd. [hereinafter Claimant) — A company incorporated under the laws of Xanier, having a legal personality and can also, bring actions in its own name. It is also the “Market energy leader’ in Xanier. Renvidora National Power co. Ltd. [hereinafter Respondent] - A company incorporated in Yevadu and wholly owned by the Yevadu Government. The company has ownership over thermal power plants established in remote areas of Yevadu and operates the same. The company also provides for electricity in the remote and hilly terrains of Tullyland, Lanniport and Asshai in the state of Yevadu. THE PART-SUPPLY AGREEMENT On 14 January 2015, the Respondent entered into an agreement [Part Supply Agreement] with the Claimant for the supply of parts and components required for the regular repair and maintenance of the turbines of the Tullyland Power Plant. Under the agreement, the claimant was required to send a designated official to carry out an Annual inspection of the Power Plant at the commencement of each year. Upon inspection, the claimant along with the site officials were to finalize a list [Requisition list] of parts required to be supplied. The parts were to be delivered in instalments by the Claimants to the Respondents at the end of each quarter. The obligations of the parties with respect to the agreement were laid down in Clause 3.0 of the Part Supply Agreement. THE DISPUTE RESOLUTION MECHANISM . The Part Supply Agreement contained a Dispute Resolution clause [Clause 11.0], which conferred jurisdiction to the courts of Yevadu and Xanier to resolve the disputes arising out of the Part-Supply agreement. The Claimant, citing ambiguity in clause, proposed to amend the dispute resolution clause. MEMORIAL for RESPONDENT Page | XIV 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 STATEMENT OF FACTS The Respondent concurred with the concern of the Claimant, however, due to procedural and time constraints, suggested concluding a separate agreement at a later stage. However, the in-house legal advisor of the claimant drafted an Addendum containing an arbitration clause, which envisaged submitting the disputes to arbitration under the jurisdiction of Singapore Arbitration Centre (SAC). The addendum was signed by both the parties on January 14, 2015, along with the Part Supply Agreement. FINANCIAL HARDSHIP OF THE CLAIMANTS AND ATTEMPTS AT RENEGOTIATION 1. Around the beginning of the year 2018, Xanier imposed high tariffs on raw materials sourced from Zorastra on the allegation of Zorastra’s indulgence in unfair trade practices. Since Zorastra was the major source of raw materials for the Claimants, the trade war between Xanier and Zorastra impacted the business operations of the Claimant, and resulted in huge losses. Due to its financial hardships, the Claimant requested renegotiation of the Part-Supply Agreement, claiming that the performance of its obligations under the present part supply agreement became commercially unviable for the Claimant. In this regard, claimant requested to renegotiate the terms and conditions of the Part supply agreement with the senior management of the respondent. The Respondent believed that the pricing of the agreement was in line with the market practice. On December 14, 2018, the respondent declined the proposition to negotiate vide a letter, and directed the timely delivery of parts due on 31“ December. The claimant was informed that the failure to deliver the instalment on time, the Respondent would be constrained to take an action under the Agreement. TERMINATION OF CONTRACT 1. 2. The claimants effected the delivery of parts for the last quarter of 2019 in the second week of January, after a delay of two weeks. Moreover, an additional claim of USD 100,000 was also made. The respondent refused to accept the delivery of the consignment, alleging that the Claimant had failed to perform its obligations wsithin the stipulated timeline. MEMORIAL for RESPONDENT Page | XV 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 STATEMENT OF FACTS 3. On January 20, 2019, the Claimant was served with a termination notice from the respondent. Aggrieved by the termination of the Agreement, the Claimant filed a notice of arbitration. MEMORIAL for RESPONDENT Page | XVI 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 SUMMARY OF ARGUMENTS The Power Ministry should not be joined to the present arbitration proceedings since it is not prima facie bound by the arbitration agreement. The respondent is a separate legal entity and has entered the agreement in its individual capacity. There is no privity of contract between the claimant and the Power Ministry. Moreover, the involvement of the Power Ministry in the performance and execution of the contract is insufficient for the purposes of joinder. In addition to this, the parties did not consent to the joinder of Power Ministry to the arbitration agreement at any point. There is no common intent of the parties to join the Power Ministry to the Arbitration. Additionally there wasn’t any implied consent to bind the Ministry to the Arbitration Agreement. iv. THE CLAIMANT SHOULD BE MADE TO DISCLOSE THIRD PARTY FUNDER AND ISSUE SECURITY OF COSTS. The Claimant ought to disclose before the tribunal whether it is being funded by a third party under SIAC Rule 27(c) as the Respondent came to know about the funder through a news report. Further if the Tribunal has jurisdiction to hear the claim then it must order the Claimant to furnish security of legal costs incurred by the Respondent in defending these arbitration proceedings pursuant to Rule 27(j). v. THE CLAIMANT BREACHED THE AGREEMENT AND THE RESPONDENT WAS JUSTIFIED IN TERMINATION The Respondent contends that the termination of the Agreement was based on the fundamental breaches of the Agreement committed by the Claimant. The claimant did not supply the fourth quarterly instalment as a result of which the Respondent suffered Substantial detriment and Fulfilled all the essentials of avoidance under article 49 .Further the Claimant cannot be exempted under article 79 of CISG since the Respondent is will within its right to avoid the Agreement. The Respondent is not obliged to renegotiate the terms of the Agreement. MEMORIAL for RESPONDENT Page | XIX 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS PLEADINGS I. THE TRIBUNAL DOES NOT HAVE JURISDICTION OVER THE DISPUTE, OWING TO THE ABSENCE OF A VALID ARBITRATION AGREEMENT BETWEEN THE PARTIES ql. It is submitted that this tribunal does not have jurisdiction over the concerned dispute as there was no unequivocal consent of the Respondents to refer the disputes to arbitration (A); Forum Clause. (B) A. THE ARBITRATION AGREEMENT CONCLUDED BETWEEN THE PARTIES WAS INVALID It is submitted that the arbitration agreement concluded between the parties seek to resolve the disputes arising out of the agreement under an institution which does not exist arbitration institution mentioned in the arbitration clause does not exist 1. On account of the non-existence of arbitral institution mentioned in the clause, the agreement loses validity. 2. It is submitted that the institution must be unequivocally mentioned in the clause in order to consider an agreement valid.'Enforcement has been refused where the arbitration agreement was ambiguous,”In order to be valid and effective, an agreement to arbitrate requires theunequivocal consentof each party to it, failing which the relevant dispute must be adjudicated by national courts.? Jurisdiction is a matter of public order and in light of the unavailability of the arbitration center provided for in the arbitration agreement, the disputes in relation to the [agreement shall be resolved before the courts.’”“In the instant case, the designation of the institution was at best ambiguous, which renders the agreement invalid. ! Dispute Settlement ,United Nations Conference on Trade and Development, UNITED NATIONS (Jan 13, 2020, 3PM), https://unctad.org/en/Docs/edmmisc232add39_en.pdf. ? Julian David Mathew Lew et al., Comparative International Commercial Arbitration 687 (2003). 3 Jean Rouche et al., French Arbitration Law and Practice: A dynamic Civil Law approach to International Arbitration 37 (2™ ed. 2009). * Corp. LSR C.A. v. Jesus Ramon Rodriguez, Expte. 1181, 9 (Venezuela S.Ct. 2016); GARY B. BORN & MATTEO ANGELINI, FINANCES IN INTERNATIONAL ABITRATION 43 (Sherlin Tung & Fabricio Fortese eds.) (2019). MEMORIAL for RESPONDENT Page | 1 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS 2. The ambiguity of the arbitration clause must be interpreted against the Claimant according to the contra proferentem rule 43. The rule of contra proferentem is a rule for interpretation which states that the party introducing a particular wording into an agreement has to bear the risk of the ambiguity and accept an interpretation in its disfavour.>.It is submitted that the Claimant had drafted the arbitration clause without any consultation with the Respondent company. The wording of the clause is ambiguous and it fails to unequivocally designate any valid institution for arbitration. Hence, the Claimant, as the drafter, should bear the risk of this ambiguity. B. THE EXISTENCE OF A FORUM CLAUSE INDICATES THAT THERE WAS NO UNEQUIVOCAL CONSENT TO ARBITRATION UNDER THE SIAC RULES 1. The existence if of a forum selection clause in the main agreement q/4.In a well-known decision, the French Supreme Court asserted that where two contradicting forum selection clauses are contained in a single contract, each cancelled the other out, leaving the dispute to be governed by the default procedural rules of territorial jurisdiction.® It was also observed that since the clauses followed one after the other in the contract, it was not possible to apply the rule of contractual interpretation favouring special conditions over general conditions’Applying the interpretation to the instant case, the mere existence of an arbitration clause would not be sufficient to establish unequivocal consent to arbitrate. 2. The general presumption in favour of arbitration must be disregarded 4/5. The argument for the presumption in favour of arbitration agreements has often been based on the premise that the latter carry a “greater volitional intensity.” However, it is submitted that the argument for greater volitional intensity should be disregarded.® 5 [Bowling alleys case, Fed. SC,( Ger. 2014); ICC Case No.4727; STEFAN VOGENAUER, COMMENTARY ON THE UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS 20 (2% ed.2015); Sykes, The Contra Proferentem Rule and the Interpretation of International Commercial Arbitration Agreements: The Possible Uses and Misuses of A Tool for Solutions to Ambiguities, 8 Vindobona J. Int’1 Comm. L. & Arb., 33 (2004). ® Demarigny v. Caizabank Monaco, Cass. Civ., 82 (1995) ; MESTRE, OFFICIAL COMMENTARY ON THE UNIDROIT CONVENTION ON SUBSTANTIVE RULES FOR INTERMEDIATED SECURITIES 121 (2019). 7 L'HamidSaadi v. Huan, CA, 246 (Paris 2000). MEMORIAL for RESPONDENT Page | 2 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS likely that an insolvency representative would not voluntarily comply with an arbitral award against the insolvent.” As such the recognition and enforcement provisions of the New York Convention come into place where the successful party to arbitration wishes to enforce its award against the insolvent.>The reason to do so is to safeguard the interests of the parties and render an enforceable award, given the risk of handing down an award that may contravene public policy of lex concursus. 3. It can sabotage the rights of the other creditors of the respondent. qi3. As Born points out, those matters which are non-arbitrable are those which ‘so pervasively involve public rights, or interests of third parties, which are the subjects of uniquely governmental authority, that agreements to resolve such disputes by "private" arbitration should not be given effect!.”°The general principle adopted by most states is that matters which involve public policy issues should be resolved by state courts and not by arbitration.” q4. Recently the Hon'ble Supreme Court in its recent judgment passed by a division bench in the case held that institution or continuation of a proceeding after declaring moratorium under the Insolvency and Bankruptcy Code is non-est in law i.e. does not exist at all. This opinion has been observed and reiterated by the courts in several cases.’ Legislative Guide on Insolvency, UNCITRAL (Jan.14, 2020, 11AM),https://uncitral.un.org/en/texts/insolvency legislative guides/insolvency_law; Central Bank of India v. Elmot Engineering Co., (1994) 4S.C.C., 159. 5Nina Gumzej, Global Development: New York Convention - Reconsidered: Contribution to the 45d' Anniversary of the Convention: Certain Aspects of Public Policy in the Enforcement of Foreign Arbitral Award’, 2003 CROAT. ARB. Y.B.,39. GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION 767 (2014). 27JULIAN D.M. LEW et al., COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION 188 (2003); BLACKABY et al., REDFERN AND HUNTER ON INTERNTIONAL ARBITRATION 202 (6'" ed. 2015). ?8 Bank of Baroda v. Rotomac Global Pvt. Ltd., (2018) S.C.C., 485; K.S. Oils Ltd. v. The State Trade Corp. of India Ltd. & Anr., (2018) S.C.C., 475; Innoventive Industries Ltd. v. ICICI Bank, (2017) S.C.C., 678; Punjab National Bank v. James Hotels, (2017) S.C.C., 456; Alchemist Asset Reconstruction Co. Ltd. v. M/s. Hotel Gaudavan Pvt. Ltd. & Ors., (2018) 16 S.C.C., 94; ICC Case No. 7205. MEMORIAL for RESPONDENT Page | 5 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS qs. The provisions of insolvency law, if applicable in a given case, may affect the jurisdiction of an arbitral tribunal.”Such provisions may render the arbitration agreement invalid, may limit the capacity of the insolvency and its representative to be party to the arbitration agreement and the proceedings,*® or may exclude the arbitrability of the dispute in question.?! qo. The concept of arbitrability refers to whether a dispute between the parties is capableof settlement by arbitration2? The aim of the non-arbitrability doctrine is therefore to keep those matters which are considered to be of a public interest in the public domain of the national courts. B. NON-ENFORCEABILITY OF AN AWARD PRECLUDES THE ARBITRAL TRIBUNAL’S JURISDICTION.EE qi7. Limitations on arbitrability established by national laws are meant to protect the respective state’s public policy.** An effective protection of each state’s public policy requires that the arbitrability of a dispute is determined according to the laws of those states whose public policies would be affected by arbitral proceedings due to their close connection to the dispute. ** 29 STEFAN MICHEAL KROLL, PERVASISIVE PROBLEMS IN INTERNATIONAL ARBITRATION 400 (Loukas A. Mistelis & Julian David Mathew eds.) (2006).e *°Vivendi SA et al. v. Deutsche Telekom AG et al. &Elekrim SA et al,Swiss Fed. SC, 428 (2009). 3! STEFAN MICHEAL KROLL, PERVASISIVE PROBLEMS IN INTERNATIONAL ARBITRATION 361 (Loukas A. Mistelis & Julian David Mathew eds.) (2006). >? BLACKABY et al., REDFERN AND HUNTER ON INTERNTIONAL ARBITRATION 123 (6" ed. 2015); GARY B. BORN & PETER B. RUTLEDGE, INTERNATIONAL CIVIL LITIGATION IN UNITED STATES CourTS 199 (5" ed. 2011).3 JULIAN DAVID MATHEW LEW & LOUKAS A. MISTELIS, COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION 187 (2003).;FRANCOIS POUDRET & SEBASTIEN BESSON, COMPARATIVE LAW OF INTERNATIONAL ARBITRATION 281 (2007). 33NIGEL BLACKABY et al., REDFERN AND HUNTER ON INTERNTIONAL ARBITRATION 261 (6 ed. 2015); EMMANUEL. GAILLARD & JOHN SAVAGE, FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION 734 (1999); JULIAN D.M. LEW et al., COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION 201 (2003); GABRIELLE KAUFMANN- KOHLER & ANTONIO RIGOZZI, INTERNATIONAL ARBITRATION: LAW AND PRACTICE IN SWITZERLAND 191 (3" ed. 2015); VESNA LAZIC, CROSS-BORDER INSOLVENCY AND ARBITRATION 52 (S. Kroll et al. eds.) (2011). 4 BLACKABY et al., REDFERN AND HUNTER ON INTERNTIONAL ARBITRATION 123 (6™ ed. 2015); OKEZIECHUKWUMERUJE, CHOICE OF LAW IN INTERNATIONAL COMMERCIAL ARBITRATION 55 (1994). MEMORIAL for RESPONDENT Page | 6 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS 1. If.an arbitral tribunal is not able to render an enforceable award it is obliged to decline its jurisdiction. qs. The arbitral tribunal has to decline its jurisdiction if it cannot ensure that the award will be enforceable in Yevadu. Due to the lack of enforceability the parties’ interest in an effective award would be frustrated by the arbitral proceedings. The award cannot be effectively enforced against the Respondent as the assets which belong to the Respondent will be utilised in repaying the financial creditors. * ql9. It isin the parties’ interest that an arbitral tribunal declines its jurisdiction if it cannot ensure the enforceability of its award.*© Arbitration and in particular international commercial arbitration obliges the parties to pay significant fees and expenses of the respective arbitration institution*’. Furthermore, arbitral proceedings can continue for lengthy periods*®. In exchange, the parties expect a legally binding decision of the arbitral tribunal as otherwise time and money would be spent in vain. An enforceable award is the raison d’étre of international arbitration®’and no duty of an arbitrator “is more important than the duty to render an enforceable award. Hence, it would contravene the parties’ legitimate interest if time- consuming and costly arbitration proceedings were initiated although they cannot lead to an enforceable award. Even if the Tribunal were to find that the Yevadu law does not affect its jurisdiction, it would have to decline its jurisdiction as an arbitral award will lack enforceability. If an arbitral tribunal is not able to render an enforceable award it is obliged to decline its jurisdiction. 35 Mauricio PestillaFabbri, Inapplicability of the arbitration agreement due to the impecuniousity of the party 94 REV. BRASIL. DE ARBITRAGEM (Joao Bosco Lee & Daniel de Andrade Levy eds.) 2018; Denice Forstén, Parallel Proceedings and the Doctrine of Lis Pendens in International Commercial Arbitration OATD (Jan 31, 2020, PM) https://oatd.org/oatd/record?record=0ai %5C% 3A DiV A.org %5C%3 Auu-253169; Bernardo M. Cremades and Ignacio Madalena, Parallel Proceedings in International Arbitration 24(4) Arb. Int. 507 (2008). 36 ICC Case No. 6697; ICC Case No. 5996. *7et al., REDFERN AND HUNTER ON INTERNTIONAL ARBITRATION 123 (6 ed. 2015);JULIAN DAVID MATHEW LEW & LOUKAS A. MISTELIS, COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION 155 (2003). *8 JULIAN DAVID MATHEW LEW & LOUKAS A. MISTELIS, COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION 155 (2003). 3°Y VES DERAINS& ERIC A. SCHWARTZ, A GUIDE TO THE ICC RULES OF ARBITRATION 385 (2! ed. 2005). MEMORIAL for RESPONDENT Page |7 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS 1. Disclosure of the Source of funding should be made to avoid conflict of interest. 27. A requirement of an impartial and independent arbitral tribunal is one of the fundamental principles of international commercial arbitration and can be found in virtually all arbitration rules. 28. It is contended that third-party funding has the potential to create material economic relationships and connections which might affect arbitrator’s impartiality and independence,“*resulting is setting aside of awards. If the conflict of interest is discovered after a final award has been rendered, it might be unenforceable or unrecognizable under article V(2) of the New York Convention.*” 29. The argument that a third party funding is a private matter does not hold much ground since it can affect the interests of the non-funded party. 2. Confidentiality of the Arbitration Proceedings will be breached due to the existence of a third-party funder. 30. Confidentiality is a keystone of international commercial arbitration. Materials and information obtained during the arbitral process are confidential and therefore not to be disclosed.** A claim holder submitting its case to a potential funder, puts confidentiality at risk, which might result in its violation.” q3. Prior to funding, a skilled team within the third-party funder routinely performs a due diligence ofthe case in order to decide whether to finance it or not.*° Afunder is considered a non-signatory party in the arbitration, and therefore not bound by confidentiality. 45 Art. 12, UNCITRAL Model Law on International Commercial Arbitration (1985) with amendments as adopted in 2006. 46 Francisco Blavi, It’s About Time to Regulate Third-Party Funding KLUWERARBITRATION (2015). “Burcu Osmanoglu, Third-Party Funding in International Commercial Arbitration and Arbitrator Conflict of Interest 32 JOURNAL OF INT. ARB., 332 (2015). 48 Andrew Tweeddale& Keren Tweeddale, Arbitration of Commercial Disputes: International & English Law & Practice OXFORD UNIVERSITY PRESS, 350 (2007). “JONAS VON GOELER, THIRD PARTY FUNDING IN INTERNATIONAL ARBITRATION AND ITS IMPACT ON PROCEDURE 298 (2016). °° Georges Affaki, Third Party Funding in International Arbitration ICCWBO, 234 (2013). MEMORIAL for RESPONDENT Page | 10 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS 32. One of the main advantages of international commercial arbitration is its confidentiality.>'It is understood as a responsibility of the stakeholders of an arbitration proceedingsto not reveal any information about the arbitral proceedings to non-parties.* 33. However, the participation of a third-party funder may result in a breach of confidentiality by a funded party towards the opposing party since the funder may require the funded party to provide information about the given case.> 3. Disclosure should be made in order to support security of Costs. 34. Third-party funding should in itself be a reason for ordering security against the funded partyin order to preserve the defendant’s rights.>* q35. Security must be awardedwhere the claimant’s arbitration fees and expenses are being covered by any entity or individual who stands to gain if the claimant wins, but would not be liable to meet any award of costs that might be made against the claimant ieef it lost.**It is submitted that in the present case, a disclosure would be desirable in order to prevent the Claimant from avoiding its obligation to furnish security of costs. B. THE TRIBUNAL SHOULD ORDER SECURITY FOR LEGAL COsTs. 436. Singapore International Arbitration Centre (SIAC) Rules expressly provide powers to award security for Legal Costs. According to Rule 27(j)-“The tribunal shall have the power to order any party to provide security for legal or other costs in any manner the tribunal thinks fit.” The tribunal must take into account several factors while considering whether to exercise its discretion to order security for costs.*°When a party lacks assets to satisfy a final cost award, but is pursuing claims in an arbitration with the support of a third 5! FOUCHARD PHILIPPE ET AL., FOUCHARD, GAILLARD, GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION. KLUWER LAW INTERNATIONAL, 1280 (1999). 52 GOELER, Disadvantages of Third Party Funding, 293 (2015). 3 BARRINGTON, Third Party Claims an Arbitration, 432 (2017). *4 33 Nadia Darwazeh &AdrenLeleu, Disclosure and Security for costs or how to address Imbalances Created by Third-PatyFunding, 143 JOURNAL OF INT. ARB. (2016). ee® Jean Kalicki, Security for Costs in International Arbitration, Transnational Dispute Mgt., 1 (2006). °° Creative Elegance (M) Sdn Bhd v. Puay Kim Seng &Anr., 4 SGCA, 13 (1999). MEMORIAL for RESPONDENT Page | 11 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS party funder, then a strong prima facie case for security for costs exists.°"It is contended that since the Claimant is under severe financial distress** and is getting funded by a third party, the security for legal costs should be ordered. 1. The tribunal hasa discretion under SIAC Rule 27(j) to order claimant to order security for costs. 37. A security for costs request is a provisional measure that exists in international arbitration. In requesting security for costs, a party is asking the Tribunal to force the Claimant to provide the money neces ary to cover a possible award of legal fees. Rule 27(j) SIAC Rules 2016 expressly permits the Tribunal to order either party to provide security for legal or other costs. Respondent contends that if the Tribunal grants security for its legal costs, this would go against the "costs follow the event" principle, which is intended to discourage frivolous claims. Respondent has not counterclaimed, so only Claimant could be making a frivolous claim. If Respondent wins and Claimant cannot pay any costs awarded, Respondent would lose the entire amount of its legal costs. Security for costs is thus the most appropriate way to preserve the advantages of the costs following the event rule and to protect Respondent against a frivolous claim. 2. Claimant’s financial situation raises concerns about its ability to cover respondent’s legal costs. 38. The financial situation of Claimant is such that Respondent will be unable to recover an award of costs unless the Tribunal enters an order for security for costs. Security of cost is essential since its an unmeritorious claim, Arbitral proceedings are extremely expensive and the Respondent doesn’t want to waste its funds unless its sure there will be security of costs, since Respondent is sure about the merits of its case and that it will win .Given the present situation it is highly unfair for arbitration to proceed without the assurance of financial compensation given by an order for security. 57GARY BORN, INTERNATIONAL COMMERCIAL ARBITRATION 2496 (2014); JEAREY WAINCYMER, PROCEDURE AND EVIDENCE IN INTERNATIONAL ARBITRATION 644 (2012). *8 Case record MEMORIAL for RESPONDENT Page | 12 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS sovereign should normally be treated as such.“In a popular English case, the Court of Appeal held that where the state organisation enjoys separate legal personality and the government is not named as a party to the agreement and has not signed it in the capacity of a party, it would be difficult to reach any other conclusion.” 47. Usually, the courts have adopted thethree-pronged test for disregarding the separate entity of a corporation:°i. Complete domination of finances, policy and business practice such that the corporate entity had no separate mind, will or existence of its own, ii. Such control must have been used by the defendant to commit fraud or a dishonest and unjust act, or breach of a positive legal duty iii. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of. 4s. It is submitted the Ministry exercised complete independence in its decision making and day to day activities and hence, any wrong caused as a result of the such control of the Ministry over the Respondent is out of question. Therefore, the separate identity of the Respondent cannot be disregarded. ii. The involvement of the Power Ministry in the performance and execution of the contract is insufficient for the purposes of joinder. 49. The scope of an arbitration clause may be extended to non-signatory companies with separate legal existence only if they played an active role in the negotiations leading to the clause, or if they are directly implicated in the agreement.” q50. Again, negotiation or involvement in performance of only isolated aspects of a contract is less likely to constitute consent to the arbitration clause®” First National City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S., 611 (1983). Svenska Petroleum Exploration AB v. Lithuania, EWCA Civ., 755(2006). ©Fisser v. Int. Bank., 282 F.2d, 231 (1960). ICC Case No. 6519; ICC case no. 6673; ICC Case No. 6519; ICC Case no. 4972; Air line Pilots Ass’n Int. v. U.S.Airways group Inc., 609 F.3, 347 (4" Cir.2010); Dallah Real Estate & Tourism Hiding Co. v. Ministry of Religious affairs, Govt. of Pakistan, UKSC, 46 (2010); Ins Con of Hartford v. TIG Ins. Co. 360 3d, 322 (2™ Cir. 2004). ®7GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION 1485 (2"™ ed.2014). MEMORIAL for RESPONDENT Page | 15 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS qs1. Gary B Born goes to the extent of stating that ‘it is important to apply the various legal bases for binding non-signatories specifically to the agreement to arbitrate, as distinguished from the underlying contract. q52. In the seminal Dow Chemical award it was held that the involvement of the non-signatory party is required in all the phases of the contract. In the instant matter, the Power Ministry has no such involvement, either in the performance of the contract, or in the negotiation of the arbitration clause. The only role of the Ministry is with regards to the satisfaction of procedural aspects of the agreement.”° The signatory resisting joinder of the third party never agreed to arbitrate with the particular affiliate. 2. The parties did not consent to the joinder of Power Ministry to the arbitration agreement at any point. q53. Consent is the essence of arbitration. all arbitration is based on consent. Hence any justifiable theory of multi-party scenarios must be consistent with the evidence of consent in concerned instant case.’!Third parties may only be joined as parties to the arbitration if all the parties have expressly or impliedly consented to the joinder. Forced joinder of non-parties is a major ederogation from the principle of party autonomy.” It is submitted that the parties did not consent to the joinder of the Power Ministry because first, there is no existence of a common intent of the parties to join the Power Ministry to the arbitration [2.1], second,No implicit or implied consent to bind the Ministry to the arbitration agreement can be made out. [2.2] There is no privity of contract between the Power Ministry and the Claimant Arbitration is a matter of consent, not coercion” In the case of PT First Media case”4, , the Singapore Court of Appeal stated that “arbitral award binds the parties to the arbitration because the parties have consented to be bound by the consequences of agreeing to arbitrate their dispute. ®8GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION 1500(2™ ed.2014). ®°GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION 1460 (2 ed.2014). 7° Case record 7\JEFFREY MAURICE WAINCYMER, PROCEDURE AND EVIDENCE IN INTERANATIONAL ARBITRATION 495 (2012). 7 Bernard Hanotiau, Non-signatoires, Groups of Companies and Groups of Contracts in Seleceted Asian Countries: ‘A case Law Analysis, 32 JOURNAL OF INT. ARB., 571 (2015). 73 Volt Information Sciences v Leland Stanford, U.S., 468 (1989). ™ TBK v. Astro Nusantara International BV & Ors., 226 SGCA, 57 (2013). MEMORIAL for RESPONDENT Page | 16 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS Their consent is evinced in the arbitration agreement.” The privity of contract principle, which observes the instrumentality of consent in arbitration, implies that only parties to the contract are allowed to participate in arbitral proceedings.”° This rule is also recognized in article II of the New York Convention. The New York convention does not recognize an arbitral award which is based on an extended arbitration agreement due to the lack of an agreement in writing binding all parties.”° In ICC Case no. 10818”7and Case no. 983941 extension of arbitration was strictly refused based on the absence of “intent” to join the third party and the impossibility of being bound through assumed performance. It is submitted that the arbitral tribunal has power only relating to the parties of arbitration.’*In the present case, the agreement was signed only by the Claimants and the Respondents. Since there is no privity of contract between the Claimant and the Power Ministry, the arbitration cannot be extended to the Power Ministry.” Thus, the joinder in the instant case would be ineffective in accordance with the New York Convention. iii. There is no existence of a common intent of the parties to join the Power Ministry to the arbitration 44. The parties’ intent and consent to arbitrate is the essential basis of international commercial arbitration, which depends on the party agreement for its very existence.*° At face value, the decision of a party not to be included as a signatory to a contract should be accepted as a conscious decision not to be bound by that contract. At least, it should set a strong presumption that both the signatory and the non-signatory did not intend to arbitrate.*! 75 Arjun Gupta et al., An Introduction to Joinder and Consolidation in Institutional Arbitration 4 IAL, 134 (2015). 76 Art. 4(1)(b), New York Convention. 7 ICC Bull. XVI, 94-98 (2001). 78 ICC Case No. 7337; B Hanotiau, Problems Raised byComplex Arbitrations Involving Multiple Contracts-Parties- Issues — An Analysis, 18 JOURNAL OF INT. L. ARB., 253 (2001); Ileana M., The Scope of the duty to maintain confidentiality, 22 KLUWER LAW INTERNATIONAL, 27 (2011). ”° Mohamed Abdulmohsen al-Kharafi & Sons Co. v. The Govt. of Libya & Ors. INT.JAL, 250 (2014). 80 AT & T Techs. v. Communications Workers of America, 475 U.S., 643 (1986). 81 ICC Case No. 10758; ICC Case No. 10818. MEMORIAL for RESPONDENT Page | 17 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS A. —CLAIMANT’S CONDUCT LEAD TO FUNDAMENTAL BREACH OF THE AGREEMENT. q6l. In determining what qualifies as a fundamental breach, the expectation of the party which acted in accordance with the contract is considered to be decisive.?° The Claimant was justified in termination of the Agreement as (1) Respondent suffered a substantial deprivation of what he was entitled to expect under the Agreement. (2) Time was of the essence of the Agreement. (3) The Claimant committed multiple breaches. (4) Anticipatory repudiation of Agreement by the Claimant. 1. Respondent suffered a substantial deprivation of what he was entitled to expect under the contract. q62. Article 25 of the CISG provides, a fundamental breach of contract exists when the seller seriously and definitely declares prior to or after the passage of delivery date, that he is no longer willing or able to make the delivery under the terms agreed to in the contract. 63. The term ‘detriment’ must be interpreted broadly, covering any harmful consequence.” ’It is not to be defined by reference to the damage suffered, but by reference to the importance of the interests created by the contract.°*Whether the aggrieved party failed to receive the essence of what could have been expected according to the contract is determinative for fundamental breach Claimant had been deprived of his expectation interests under the contract. Claimant’s expectation interest derives from both express and implied contractual terms, and established practices and usages within the car trading industry.°°In actual practice, the Claimant failed to supply two consecutive instalments within the stipulated time. Moreover, the Claimant breached its obligation by outrightly denying to supply the fourth instalment under the stipulated conditions of the contract. !°° °5 CISG-ONLINE NO. 1047. °6 CISG-online 817. °7C.M. Bianca, M.J. Bonnell, Commentary on the International Sales Law — The 1980 Vienna Sales Convention, 211 (2015). °SINGEBORG SCHLECHTRIEM AND PETER SCHWENZER, COMMENTARY ON THE UN CONVENTION ON THE INTERNTIONSL SALE OF Goobs 175 (Ingeborg Schwenzer ed.) (4th ed. 2016). °° INGEBORG SCHLECHTRIEM AND PETER SCHWENZER, COMMENTARY ON THE UN CONVENTION ON THE INTERNTIONSL SALE OF GOODS 633 (Ingeborg Schwenzer ed.) (4th ed. 2016). 100 Exhibit C16 pg 28 MEMORIAL for RESPONDENT Page | 20 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS 2. Time was of the essence of the contract. 64. There was a delay in delivery of the 3rd Quarterly Instalment and during the 4th instalment not only was it late but had an additional claim from the Claimant’s side. .It is a fundamental breach if it is apparent from the contract or from circumstances that the buyer has a special interest in compliance with the delivery date.'°'It is submitted that the time is of essence of the parts supply Agreement and therefore if there is a delay in performing the obligation than it will amount to a Fundamental Breach. '° q65. The Respondent further submits that the Claimant had knowledge that time is of the essence of the contract at the time of the conclusion of the contract since it is a party to the same agreement .The Respondent clearly mentioned during negotiations of the strategic importance of the power plant and stressed on the need for ensuring that delivery of parts is made on time!.Once the importance of an obligation is established, the Claimant cannot argue that it did not or should not have foreseen the breach of this obligation.In the instant case time was of the essence of the contract and therefore if there is delay in performance such breach can be foreseen by a Claimant and any reasonable person in the same circumstances. 66. According to article 8(3) if an obligation is discussed during negotiations without making a stipulation in the contract then also it is considered an essential obligation to adhere to.! 3. The Claimant committed multiple breaches throughout the span of the contract. (67. The threshold of fundamental breach of a contract must not necessarily be reached through one single breach of contractual obligation. If more than one breach is being committed under the same contract, those multiple breaches together can amount to '01 OLG Dusseldorf, 21 April 2004, CISG-online 915 102 CISG-online 943; Robert Koch, The concept of fundamental breach of contract under the United Nations Convention on Contracts for International Sale of Good, REVIEW OF THE CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (CISG) 1998. 103 Response to Notice of Arbitration and Statement of Defence 104 TCC Ct Arb, 8128; ICC Ct. Arb. 1995. MEMORIAL for RESPONDENT Page | 21 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS fundamental breach of a contract.'In determining what is a fundamental breach, the expectation of the party which acted in accordance with the contract is decisive.'°° The Claimant made multiple breaches in violation of Clause 3.0 of the Part Supply Agreement.'”’ The first in the series of breaches in failure to send a designated delivery official for the Annual Inspection,2018. After which there was a deal delay with respect to two consecutive quarterly instalments. This amounts to multiple breaches which are inexcusable. 4. there has been anticipatory repudiation of the agreement by the claimant. (68. Under article 72(3) of CISG , there can be disguised anticipatory repudiation wherein there is a demand of unjustified price increase, or some other modification to a contract.!°* All of these claims constitute a refusal to perform, as long as they make it clear that the debtor will not be able to fulfil its duties.!°° This gives the aggrieved party a reason to believe that the claimant will not be able to perform his obligation and provides him the right to avoid a contract. 69. The requirement is that the debtor’s refusal has to be in relation to an obligation which is so fundamental that its non-performance would amount to a fundamental breach. q70. Each communication in writing, including electronic messages, and every orally made declaration that there will be no performance of the contract is declaration of refusal to perform. Refusal to perform its obligations arguably the purest form of contractual breach. q7i. In present case, the claimant sent a mail requesting the respondent to reconsider the proposal for revision of pricing and mentioned that if the same is not done they will be unable to supply the parts for the final instalment.!!° 105 ibid 1068 oftware Case, SC, 343 (Austria, 2005). 107 Exhibit c18 '08INGEBORG SCHLECHTRIEM AND PETER SCHWENZER, COMMENTARY ON THE UN CONVENTION ON THE INTERNTIONSL SALE OF GOODS 633 (Ingeborg Schwenzer ed.) (4th ed. 2016). 109 INGEBORG SCHLECHTRIEM AND PETER SCHWENZER, COMMENTARY ON THE UN CONVENTION ON THE INTERNTIONSL SALE OF GOODS 643 (Ingeborg Schwenzer ed.) (4th ed. 2016). 110 Exhibit C16 MEMORIAL for RESPONDENT Page | 22 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS Agreement as (1) The Respondent fulfilled the conditions of giving notice. (2) Pursuant to Article 73,Claimant is entitled to avoid future instalments. (3) The Claimant cannot invoke article 79 to exempt the breach. (4) The Respondent is not obliged to renegotiate the Agreement. 1. The respondent fulfilled the conditions of giving notice. 83. Clause 9 of the Agreement mandated that the parties give notice prior to termination of a contract 15 days prior to termination.The respondent made it clear that upon non delivery of goods on the stipulated date , it was a conditional declaration that the contract will be avoided if the seller does not perform within the time period.1 18 Where the subjective intent of a party as to a particular point of fact is not manifested in some fashion,119 one must resort to Article 8(2) to interpret the statement. 120Under this clause, statements of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances. 121 A reasonable person would see the Clause as merely requiring the party invoking termination to inform the other party well in advance; specifically, it must do so at least 15 days in advance. (84. All legally relevant conduct is to be interpreted as per Article 8 itself. Therefore, the Respondent’s letter must also be interpreted under Article 8 by the standard of reasonable person. The Respondent had already informed the Claimant of its intent to terminate the Agreement in case of non-compliance on December 14, 2018.122 Therefore, Claimant was duly notified of the Respondent’s intent to terminate the Agreement. 118 CISG -Online 1285. '9 Office furniture case, App. Ct. Genve, 118 (Switzerland, 2006); Hanwha Corp. v. Cedar Petrochemicals, Inc., Fed. D. Ct. NY, 623 (U.S. 2011). !?0varn Case, App. Ct. Frankfurt, 199 (Ger. 2000); Mcc Marble Ceramic Center, Inc., Plaintiff-counterdefendant - appellant, v. Ceramica Nuova D’agostino, S| 1998). a., defendant -counter-claimant-appellee, 144 F.3d 1384 (11" Cir. lart.8, CISG; Fabrics Case, D. Ct. S. Gallen, 201 (1997). "22 Exhibit C17, pg 29 MEMORIAL for RESPONDENT Page | 25 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS 2. Pursuant to Art. 73 of the CISG, Claimant is entitled to avoid future instalments of an instalment contract. qs. Pursuant to Art. 73(2) of the CISG, Claimant is entitled to avoid future instalments of an instalment contract, where Claimant has grounds to conclude that a fundamental breach of contract will occur with respect to future instalments, provided this Article 73(2) of the is done within a reasonable time.With regard to instalment contrac CISGrequire that the right of anticipatory avoidance of contract be preceded by an actual breach . Article 73(3) CISG sets out that in case of an instalment contract the creditor may declare the contract avoided if the creditor has grounds to conclude that a fundamental breach of future instalments will occur.'?*The rule should be that the creditor has to notify the debtor of his or her intention to avoid the contract within a reasonable time after it has become obvious that the other party will commit a fundamental breach of contract or after the creditor received notification that the debtor unequivocally refused to perform the contract. Article 73(3) CISG stipulates the requirements which have to be met to avoid the entire contract in respect of past and future instalments because the debtor fundamentally breached the contract in regard to one instalment.Claimant’s failure to deliver goods on time in two consecutive instalments constituted fundamental breach. Pursuant to Art. 73(2) of the CISG, Claimant is entitled to avoid future instalments of an instalment contract, where Claimant has grounds to conclude that a fundamental breach of contract will occur with respect to future instalments, provided this is done within a reasonable time. q86. Pursuant to Art. 73(2) of the CISG, Claimant is entitled to avoid future instalments of an instalment contract, where Claimant has grounds to conclude that a fundamental breach of contract will occur with respect to future instalments, provided this is done within a reasonable time.With regard to instalment contracts Pursuant to Art. 73(2) of the CISG, Claimant is entitled to avoid future instalments of an instalment contract, where Claimant has grounds to conclude that a fundamental breach of contract will occur with respect to future instalments, provided this is done within a reasonable time. Art. 73(3), CISG. MEMORIAL for RESPONDENT Page | 26 5™ NLIU-JusTICE R.K. TANKHA INTERNATIONAL MOOT COURT COMPETITION 2020 PLEADINGS 487. An instalment contract is one that provides for deliv- ery of goods in separate lots.!24 488. Paragraph (2) of article 73 entitles an aggrieved party to avoid the contract as to future instalments if the party has good grounds to conclude that the other party will commit a fundamental breach of contract (see article 25) with respect to the future instalments. !?° 989. where seller’s late delivery of three instalments caused disruption of buyer’s production 3. The claimant cannot invoke article 79 to exempt the breach. q90. Price fluctuations are not a valid ground to suspend one’s obligations under article 79. Article 79(5) provides that nothing in article 79 prevents either party from exercising any right other than to claim damages under this convention. The buyer has right to avoid the contract under article 49 of the CISG. This means that, in case of successfully invoked changed circumstances by the promisor, the promisee is still left with his right to avoid the contract, provided that the promisor’s non- performance amounted to a fundamental breach of contract.'°Therefore the right of avoidance is not affected by invocation of Article 79:'77Avoidance of contact was the first and foremost remedy available to the respondent in order to safeguard it’s interests and it rightfully exercised the same. Apart from that CISG does not strongly support the defence of impediment.Thus, claimant cannot seek exemption under article 79 for not being able to fulfil their obligations. 4. The Respondent is not obliged to renegotiate the Agreement. qol. There was no adaptation clause in the Part Supply Agreement and the parties did not agree to any price adaptation in the future under any circumstance. Further under CISG the Respondent is entitled to not entertain attempts at renegotiation.Even an !24 Arbitral award No. 9887; CLOUT case No. 251; CLOUT Case No. 293. 125 Poultry Feed Case, ICC Case No. 10274. !6art.49(1) (a), CISG. !27 STEFAN KROLL et al, UN CONVENTION ON CONTRACTS FOR INTERNATIONAL SALE OF Goops (CISG) 1057 (2011). MEMORIAL for RESPONDENT Page | 27