Twenty Fifth Annual

Willem C. Vis International Commercial Arbitration Moot

24 March – 29 March 2018

Vienna Austria

MEMORANDUM FOR CLAIMANT

ON BEHALF OF: AGAINST:

Delicatesy Whole Foods Sp Comestibles Finos Ltd

39 Marie-Antoine Carême 75 Martha Stewart

Avenue Drive

Oceanside Capital City

Equatoriana Mediterraneo

(CLAIMANT) (RESPONDENT)

Leon Brulc • Stefan Danojević • Vivian Mohr • Mihael Pojbič

Barbara Smogavc • Hana Šrot • Petra Zupančič
 MEMORANDUM FOR CLAIMANT

TABLE OF CONTENTS

TABLE OF CONTENTS .......................................................................................................... I

TABLE OF ABBREVIATIONS ............................................................................................. IV

TABLE OF AUTHORITIES ................................................................................................. VII

TABLE OF ARBITRAL AWARDS....................................................................................XXIII

TABLE OF COURT DECISIONS ...................................................................................XXVII

TABLE OF LEGAL SOURCES............................................................................................ XLI

TABLE OF OTHER SOURCES ........................................................................................ XLII

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

SUMMARY OF ARGUMENTS................................................................................................. 2

ISSUE I: TRIBUNAL SHOULD NOT DECIDE ON THE CHALLENGE OF MR.

PRASAD...................................................................................................................................... 3

A. Art. 13(4) of UNCITRAL Arbitration Rules is applicable ..................................................... 4

B. Should Tribunal find that it has competence to decide on Challenge, it should do so in the
presence of Mr. Prasad ............................................................................................................... 6

C. In case of exclusion of Mr. Prasad from decision on Challenge, CLAIMANT should be

allowed to appoint a substitute arbitrator ..................................................................................7

CONCLUSION ON ISSUE I .................................................................................................... 9

ISSUE II: CHALLENGE OF MR. PRASAD IS DEVOID OF ANY MERITS ....................... 9

A. RESPONDENT’s grounds for Challenge were already disclosed by Mr. Prasad and
RESPONDENT made no objections ........................................................................................... 10

B. There is no legal obligation for CLAIMANT to make any disclosure.................................... 11

1. Applicable law does not provide for duty to disclose for Parties ..........................................................................12
2. The IBA Guidelines do not apply.................................................................................................................................13

C. Even if the IBA Guidelines apply, the circumstances of present case do not provide for
grounds for Challenge of Mr. Prasad ....................................................................................... 14

I
 MEMORANDUM FOR CLAIMANT

1. There is no significant relationship between Mr. Prasad and CLAIMANT or its affiliates ................................14
2. Previous appointments of Mr. Prasad are not in conflict with the IBA Guidelines.........................................15

D. Mr. Prasad’s legal opinions cannot constitute grounds for Challenge ............................... 16

CONCLUSION ON ISSUE II................................................................................................. 17

ISSUE III: CLAIMANT’S STANDARD CONDITIONS GOVERN THE CONTRACT .... 18

A. CLAIMANT’s General Conditions have been validly included into the contract .................. 18

1. CLAIMANT’s reply to Invitation to Tender constitutes an offer.............................................................................19

2. If Tribunal were to find that Sales - Offer constitutes a counter-offer, CLAIMANT’s General Conditions
nonetheless govern the contract............................................................................................................................................. 20

3. Pursuant to Art. 8 of the CISG CLAIMANT’s General Conditions govern the contract .................................21

B. RESPONDENT accepted the (counter) offer without objections .......................................... 23

C. Even if RESPONDENT’s General Conditions were part of the contract, they would still not
be applicable ............................................................................................................................. 24

1. Knock-out doctrine applies as RESPONDENT has not excluded its operation...................................................25

2. Provisions of RESPONDENT’s General Conditions that contradict CLAIMANT’s are disregarded under the
knock-out doctrine ................................................................................................................................................................25

CONCLUSION ON ISSUE III ............................................................................................... 26

ISSUE IV: CLAIMANT DELIVERED CONFORMING CAKES ......................................... 26

A. Chocolate cakes are conforming under Art. 35 of the CISG ................................................ 27

1. CLAIMANT delivered goods of the required quantity, quality and description ...................................................27
2. Cakes delivered by CLAIMANT were fit for the ordinary and particular purpose ..............................................28
2.1 CLAIMANT delivered cakes fit for their particular purpose under Art. 35(2)b of the CISG .................... 29
2.2 Delivered cakes were fit for their ordinary purpose under Art. 35(2)a of the CISG .................................. 30

B. CLAIMANT has not breached the contract as it contained merely obligations of best efforts
................................................................................................................................................... 30

1. RESPONDENT’s General Conditions failed to create obligations of result ..........................................................30

2. CLAIMANT would be obliged to use best efforts, even if RESPONDENT’s General Conditions contained
obligations of result ...............................................................................................................................................................32

II
 MEMORANDUM FOR CLAIMANT

CONCLUSION ON ISSUE IV................................................................................................ 34

REQUEST FOR RELIEF ....................................................................................................... 35

CERTIFICATE ................................................................................................................... XLII

III
MEMORANDUM FOR CLAIMANT

TABLE OF ABBREVIATIONS

§/§§ paragraph/paragraphs

AA Arbitration Agreement

AG Aktiengesellschaft

Art. /Arts. Article

CEO Chief Executive Officer

CFO Chief Financial Officer

CGC CLAIMANT’s General Conditions of Sale

Challenge Challenge of Mr. Prasad

CIArb Chartered Institute of Arbitrators

CISG United Nations Convention on Contracts for the

International Sale of Goods

CPR International Institute for Conflict Prevention &

Resolution

DIIA Declaration of Impartiality and Independence and

Availability

e.g. exempli gratia (for example)

Ex. C CLAIMANT’s Exhibit

Ex. R RESPONDENT’s Exhibit

FL1 Letter Fasttrack (30 June 2017), p. 3

FL3 Letter Fasttrack (Refusal to Agree to Removal – 29

September 2017), p. 45
IV
MEMORANDUM FOR CLAIMANT

fn. footnote

IBA International Bar Association

IBA Guidelines IBA Guidelines on Conflicts of Interest in International

Arbitration

ICC International Chamber of Commerce

ICSID International Centre for Settlement of Investment

Disputes

ibid. ibidem (in the same place)

i.e. id est (that is)

infra Bellow

INV RESPONDENT’s Invitation to Tender

LEAD company Global Compact LEAD company

LP Limited Partnership

Ltd. Limited

Model Law UNCITRAL Model Law on International Commercial

Arbitration with amendments as adopted in 2006

Mr/Ms Mister/Miss

NCA Notice of Challenge of Arbitrator

no. number

NY Convention New York Convention on the Recognition and

Enforcement of Foreign Arbitral Awards

V
MEMORANDUM FOR CLAIMANT

Offer Sales – Offer

PL Letter Prasad (Refusal to step Down – 11 September

2017)

PO1 Procedural order No. 1

PO2 Procedural order No. 2

p. /pp. page/pages

RGC RESPONDENT’s General Conditions of Contract

RNA Response to Notice of Arbitration

SUP RESPONDENT’s Code of Conduct for Suppliers

supra above

Tribunal Arbitral Tribunal

UN United Nations

UNCITRAL United Nations Commission on International Trade Law

UNCITRAL Rules UNCITRAL Arbitration Rules

UNEP United Nations Environment Programme

UN GC Principles Ten Principles of the UN Global Compact

UNIDROIT International Institute for the Unification of Private Law

UNIDROIT Principles UNIDROIT Principles of International Commercial

Contracts 2010

USD United States dollar

v. versus

VI
MEMORANDUM FOR CLAIMANT

TABLE OF AUTHORITIES

CITED CITED
AS IN

Achilles Achilles, W. A. § 103

Kommentar zum UN-Kaufrechtsübereinkommen (CISG)
Neuwied, Luchterhand, 2000

AC-CISG Op. 13 CISG Advisory Council § 91

Inclusion of Standard Terms
Opinion No. 13
Available at:
http://www.cisg.law.pace.edu/cisg/CISG-AC-
op13.html
(7. 12. 2017)

Altenkirch/John Alternkirch, M.; John, B. § 49

Should a party be obliged to disclose details about receiving
third party funding in international arbitration?
Global Arbitration News, 2016
Available at:
https://globalarbitrationnews.com/should-a-
party-disclose-details-about-receiving-third-party-
funding-in-international-arbitration20160201/
(7. 12. 2017)

Asprey Asprey, M. M. § 122

Shall Must Go
The Scribes Journal of Legal Writing, Volume 3,
1992
Available at:
https://docs.wixstatic.com/ugd/3eec74f94e36688

VII
MEMORANDUM FOR CLAIMANT

19f4b57a82275e346c5d1e2.pdf
(7. 12. 2017)

Bianca Bianca, C. M.; Bonell, M. J. §§ 110,

Commentary on the International Sales Law, The 1980 115, 118,
Vienna Sales Convention 119
Giuffere, Milan, 1987

Berger Berger, K. P. §§ 89, 92

Die Einbeziehung von AGB in international Kaufverträge
De Gruyter Recht, 2006, pp. 3-20

Bernasconi- Bernasconi-Osterwalder, N.; Johnson, L.; § 20

Osterwalder/Johnson/ Marshall, F.
Marshall Arbitrator Independence and Impartiality: Examining the
dual role of arbitrator and counsel
International Institute for Sustainable Development,
2011
Available at:
http://www.iisd.org/pdf/2011/dci_2010_arbitrator_
independence.pdf
(7. 12. 2017)

Born I Born, G. B. § 26
International Arbitration: Law and practice
Kluwer Law International, 2014

Born II Born, G.B. §§ 55, 69,

International Commercial Arbitration 70, 71
Volume II: Internation arbitral procedures, 2nd edition
Kluwer Law International, 2014

Broches Broches, A. §§ 28, 32

Commentary on the UNCITRAL Model Law on
International Commercial Arbitration

VIII
MEMORANDUM FOR CLAIMANT

Kluwer Law and Taxation Publisher, 1990

Caron/Caplan Caron, D. D.; Caplan, L. M. §§ 19, 20,

The UNCITRAL Arbitration Rules: A Commentary 34, 41, 44
Oxford University Press, 2012

Daele Daele, K. §§ 70, 72

Challenge and Disqualification of Arbitrators in International
Arbitration
Kluwer Law International, 2012

Derains/Schwartz Derains, Y.; Schwartz, E. A. § 66

A Guide to the ICC Rules of Arbitration
Kluwer Law International, 2005

Drasch Drasch, W. § 90
Einbeziehungs- und Inhaltskontrolle vorformulierter
Geschäftsbedingungen im Anwendungsbereich des UN-
Kaufrechts
Schulthess, Zürich, 1999

Eiselen Eiselen, S. § 88
The Requirements for the Inclusion of Standard Terms in
International Sales Contracts
Potchefstroom Electronic Law Journal, Volume 14,
no. 1, August 2011

Eiselen/Bergenthal Eiselen, S.; Bergenthal, S. K. § 96

The battle of forms: a comparative analysis
The Comparative and International Law Journal of
Southern Africa, Volume 39, no. 2, July 2006

Ethical Standards Schwenzer, I. § 119

Ethical standards in CISG contracts
Uniform Law Review, 2017, pp. 122-132

IX
MEMORANDUM FOR CLAIMANT

Available at:
https://docs.wixstatic.com/ugd/00630e_27f2cf9a3b
344ca390e03e6e54bccbf3.pdf
(7. 12. 2017)

Finizio/Wheeler/Preidt Finizio, S. P.; Wheeler, S.; Preidt, H. § 21

Revised UNCITRAL Arbitration Rules
WilmerHale, 2010
Available at:
https://www.wilmerhale.com/uploadedFiles/Wilmer
Hale_Shared_Content/Files/Editorial/Publication/
Revised_UNCITRAL_Arbitration_Rules.pdf
(7. 12. 2017)

Forster Forster, A. § 118

Sustainability: Best Practices in the Food Industry
UW-L Journal of Undergraduate Research, Volume
14, 2013

Fouchard/Gaillard/Goldman Fouchard, P.; Goldamn, B. § 23

Fouchard, Gaillard, Goldman on International Commercial
Arbitration
Kluwer Law International, 1999

Gómez Gómez, M. A. § 71
Developing Expertise to Deal with “Experts” in
International Arbitration
Kluwer Arbitration Blog, 2016
Available at:
http://arbitrationblog.kluwerarbitration.com/2016/1
0/17/developing-expertise-to-deal-with-experts-in-
international-arbitration/
(7. 12. 2017)

X
MEMORANDUM FOR CLAIMANT

Goode Goode, R. § 26
The Role of the Lex Loci Arbitri in International
Commercial Arbitration
Arbitration International, Volume 17, no. 1
LCIA, 2001
Available at:
https://eclass.uoa.gr/modules/document/file.php/L
AW161/goode2001.pdf
(7. 12. 2017)

Gruber Gruber, U. § 92
Münchener Kommentar zum Bürgerlichen Gesetzbuch, 5th ed.
Verlag C. H. Beck, 2008

Hay/Weil Hay, J.; Weil, K. § 27

ICSID Should fix Rules on Who Decides Arbitrator
Challenges
Available at:
https://www.law360.com/articles/898393/icsid-
should-fix-rules-on-who-decides-arbitrator-challenges
(7. 12. 2017)

Henderson Henderson, A. § 26
Lex Arbitri, Procedural Law and the Seat of Arbitration
Singapore Academy of Law Journal, Volume 26,
2014
Available at:
http://journalsonline.academypublishing.org.sg/Jour
nals/Singapore-Academy-of-Law-Journal-Special-
Issue/e-
Archive/ctl/eFirstSALPDFJournalView/mid/513/A
rticleId/335/Citation/JournalsOnlinePDF
(7. 12. 2017)

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MEMORANDUM FOR CLAIMANT

Holtzmann/Neuhaus Holtzmann, H. M.; Neuhaus, J. E. § 32

A Guide to the UNCITRAL Model Law on International
Commercial Arbitration
Kluwer Law and Taxation Publishers, 1989

Honnold Honnold, J. O. §§ 84, 88,

Uniform Law for International Sales under the 1980 96, 124
United Nations Convention, 3rd edition
Kluwer Law International, 1998

Honsell Honsell, H. § 90
Kommentar zum UN-Kaufrecht
Springler, 2010

Huber/Mullis Huber, M.; Mullis, A §§ 98, 114

The CISG: A new textbook for students and practitioners
2007 by Sellier. European law publishers

Hyland Hyland, R. §§ 115,

Conformity of Goods to the Contract under the United States 118
Sales Convention and the Uniform Commercial Code
In: Schlechtriem, Einheitliches Kaufrecht und
nationales Obligationenrecht
Baden-Baden, 1987, pp. 305-341

Karollus Karollus, M. § 92
UN-Kaufrecht
Springer, New York, 1991

Kelso Kelso, J. C. § 96
The United Nations Convention on Contracts for the
International Sale of Goods: Contract Formation and the
Battle of Forms
21 Columbia Journal of Transnational Law, Volume

XII
MEMORANDUM FOR CLAIMANT

83, 1982, pp. 529-556

Available at:
http://www.cisg.law.pace.edu/cisg/biblio/kelso.html
(7. 12. 2017)

Kimble Kimble, J. § 122

Lifting the Fog of Legalese
Carolina Academic Press, 2006

Kimble MMS Kimble, J. § 122

The Many Misuses of Shall
The Scribes Journal of Legal Writing, Volume 3, 1992
Available at:
https://docs.wixstatic.com/ugd/3eec74_55abb14a5a
94410abd2ae025c4850206.pdf
(7. 12. 2017)

Kindler Kindler, P. § 89
Ob Walzfräsmachine oder Schreibtischsessel: keine
Obliegenheit zu AGB-Übersendung beim Vertragsschluss
nach CISG!
Festschrift für Andreas Heldrich
Beck, Munich, 2005

Koller Koller, T. § 90
AGB-Kontrolle und UN-Kaufrecht (CISG) – Probleme aus
schweizerischer Sich
Besonderes Vertragsrecht – aktuelle Probleme,
Festschrift für Heinrich Honsell zum 60. Geburtstag
Schulthess, Zürich, 2002

Lew/Mistelis/Kröll Lew, J. D. M.; Mistelis, L. A.; Kröll, S. M. § 34

Comparative International Commercial Arbitration
Kluwer Law International, 2003

XIII
MEMORANDUM FOR CLAIMANT

Lookofsky Lookofsky, J. § 83
Article 19: Mirror Image and Battle of Forms
Kluwer Law International, Hague, 2000
Available at:
http://cisgw3.law.pace.edu/cisg/biblio/loo19.html
(7. 12. 2017)

Maley Maley, K. § 118

The Limits to the Conformity of Goods in the United Nations
Convention on Contracts for the International Sale of Goods
(CISG)
12 International Trade & Business Law Review,
2009, pp. 82-126
Available at:
http://www.cisg.law.pace.edu/cisg/biblio/maley.ht
ml
(7. 12. 2017)

Magnus Magnus, U. §§ 89, 92

Incorporation of Standard Contract Terms under the CISG
Simmonds & Hill Publishing, 2008, pp. 303-325
Available at:
http://www.cisg.law.pace.edu/cisg/biblio/magnus3
.html
(7. 12. 2017)

Magnus/Staudingres Magnus, U.; Staudingres, J. § 103

Wiener UN-Kaufrecht (CISG). Monograph part of J. von
Staudingres Kommentar zum Bürgerlichen Gesetzbuch mit
Einführungsgesetz und Nebengesetzen
Wlter de Gruyter & Co., 1994

XIV
MEMORANDUM FOR CLAIMANT

Magnus ZEuP Magnus, U. § 92

Das UN-Kaufrecht – aktuelle Entwicklungen und
Rechtsprechungspraxis
In: Zeitschrift für Europäisches Privatrecht, 2002, pp.
523-541

Mayson/French/Ryan Mayson, S. W.; French, D.; Ryan, C. L. § 60

Mayson, French & Ryan on Company Law, 2006-2007
Edition
Oxford University Press, 2006

McLaren Drahozal, C. R.; Neimark, R. W. § 30

Towards a Science of International Arbitration: Collected
Empirical Research, pp. 161-167
Kluwer Law International, 2005

Meiners Meiners, R. E.; Ringleb, A. H.; Edwards F. L. § 71

The Legal Environmonet of Business
Cengage Learning, 2016

Moses Moses, L. M. §§ 50, 55

The Principles and Practice of International Commercial
Arbitration, 2nd edition
Cambridge University Press, 2012

Mosk Mosk, R. M. § 30
The Role of Part-Appointed Arbitrators in International
Arbitration: The Experience of the Iran- United States
Claims Tribunals
Available at:
http://heinonline.org/HOL/LandingPage?handle=h
ein.journals/tranl1&div=17&id=&page
(7. 12. 2017)

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MEMORANDUM FOR CLAIMANT

Newman/Burrows Newman, L. W.; Burrows, M. § 50

Practice of International Litigation, 2nd edition
JurisNet LLC, 2013

Odoe Odoe, L. O. W. § 55
Party Autonomy and Enforceability of Arbitration
Agreements and Awards as the Basis of Arbitration
University of Leicester, 2014
Available at:
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doeLOWphd.pdf
(7. 12. 2017)

Perales-Viscasillas Perales-Viscasillas, M. P. § 19
The role of arbitral institutions under the 2010
UNCITRAL Arbitration Rules
Lima arbitration, no. 6, 2014, pp. 26-76

Redfern/Hunter Redfern, A., Hunter, M. §§ 42, 54

Redfern and Hunter on International Arbitration, 6th edition
Oxford University Press, 2015

Sarcevic Šarčević, P. § 41
Essays on International Commercial Arbitration
Graham&Trotman/Martinus Nijhoff, 1989

Schlechtriem Schlechtriem, P. §§ 101,

Battle of the Forms in International Contract Law 102, 104
Available at:
http://www.cisg.law.pace.edu/cisg/biblio/schlechtri
em5.html
(7. 12. 2017)

XVI
MEMORANDUM FOR CLAIMANT

Schlechtriem/Butler Schlechtriem, P.; Butler, P. §§ 80, 119

UN Law on International Sales
2nd ed.; Springer, Berlin Heidelberg, 2016

Schlechtriem SO Schlechtriem, P. § 115

The Seller’s Obligations under the United Nations Convention
for the International Sale of Goods
Available at:
http://www.cisg.law.pace.edu/cisg/biblio/schlechtri
em10.html
(7. 12. 2017)

Schwenzer Schlechtriem, P.; Schwenzer, I. §§ 77, 80,

Commentary on the UN Convention on the International Sale 84, 85,
of Goods (CISG), 3rd ed Oxford, 2010 86, 91,
92, 94,
96, 98,
103, 113,
114, 115,
116, 118,
119, 122

Schwenzer/Leisinger Schwenzer, I.; Leisinger, B. §§ 116,

Ethical Values and International Sales Contracts 119, 125
Commercial Law Challenges in the 21st Century
Iustus Förlag 2007, pp. 249-275
Available at:
http://www.cisg.law.pace.edu/cisg/biblio/schwenze
r-leisinger. html
(7. 12. 2017)

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MEMORANDUM FOR CLAIMANT

Schwenzer/Mohs Schwenzer, I.; Mohs, F. §§ 83, 86

Old Habits Die Hard: Traditional Contract Formation in a
Modern World
Internationales Handelsrecht, Volume 6, 2006, pp.
239-246
Available at:
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r-mohs. html
(7. 12. 2017)

Sheth/Sethia/Srinivas Sheth, J. N.; Sethia N. K.; Srinivas S. § 118

Mindful Consumption: A Customer-Centric Approach
Journal of the Academy of Marketing Science,
Volume 39, 2011

Shetreet/Forsyth Shetreet, S.; Forsyth, C. § 33

The Culture of Judicial Independence
Martinus Nijhoff Publishers, 2012

Smit Smit, H. § 33
The pernicious institution of the party-appointed arbitrator
Columbia University Academic Commons, 2010
Available at:
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134503
(7. 12. 2017)

Stiegele/Halter Stiegele, A.; Halter, R. §§ 91, 92

Nochmals: Einbeziehung von Allgemeinen
Geschäftsbedingungen im Rahmen des UN-Kaufrechts –
Zugänglichmachung im Internet
IHR 2003

XVIII
MEMORANDUM FOR CLAIMANT

Sykes Sykes, A. § 23
The contra proferentem rule and the interpretation of
international commercial arbitration agreements – the possible
uses and misuses of a tool for solutions to ambiguities
Moot Alumni Association, 2004
Available at:
http://dro.deakin.edu.au/view/DU:30002868
(7. 12. 2017)

Tevendale/Naish/Ambrose Tevendale, C.; Naish, V.; Ambrose, H. § 56

English Court identifies “weaknesses” in the 2014 IBA
Guidelines on conflicts of interest when considering challenge of
an award for apparent bias
Herbert Smith Freehills, 2016
Available at:
https://hsfnotes.com/arbitration/2016/03/03/engli
sh-court-identifies-weaknesses-in-the-2014-iba-
guidelines-on-conflicts-of-interest-when-considering-
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(7. 12. 2017)

UN Report 157 United Nations Commission on International § 52

Trade Law, Working Group II
Fifty-second session, Settlement of commercial disputes:
Revision of the UNCITRAL Arbitration Rules
New York, 2010
Available at:
http://www.uncitral.org/uncitral/en/commission/w
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A/CN.9/WG.II/WP.157
(7. 12. 2017)

XIX
MEMORANDUM FOR CLAIMANT

UN Report 665 United Nations Commission on International § 52

Trade Law, Working Group II
Report of Working Group II (Arbitration and Conciliation)
on the work of its forty-ninth session
New York, 2009
Available at:
http://www.uncitral.org/uncitral/en/commission/w
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(7. 12. 2017)

UNCITRAL Yearbook I United Nations Commission on International § 27

Trade Law
Yearbook of the United Nations Commisssion on
International Trade Law, Volume XV
New York, 1984
Available at:
http://www.uncitral.org/pdf/english/yearbooks/yb-
1984-en/vol15-p189-212-e.pdf
(7. 12. 2017)

UNCITRAL Yearbook II United Nations Commission on International § 28

Trade Law
Yearbook of the United Nations Commission on International
Trade Law, Volume XVI
New York, 1988
Available at:
https://www.uncitral.org/pdf/english/yearbooks/yb
-1985-e/yb_1985_e.pdf
(7. 12. 2017)

UNIDROIT Commentary International Institute for the Unification of §§ 98,

Private Law 100, 127,

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MEMORANDUM FOR CLAIMANT

UNIDROIT Principles of International Commercial 130

Contracts 2010
Rome, 2010
Available at:
http://www.unidroit.org/english/principles/contract
s/principles2010/integralversionprinciples2010-
e.pdfl
(7. 12. 2017)

Uzelac Uzelac, A., Triva, S. § 28

Hrvatsko arbitražno parvo
Komentar Zakona o arbitraži I drugi izvori hrvatskog
arbitražnog prava
Narodne Novine, 2007

Vasani/Palmer Vasani, B. S.; Palmer, S. A. § 44

Challenge and Disqualification of Arbitrators at ICSID: A
New Dawn?
ICSID Review – Foreign Investment Law Journal,
Volume 30, no. 1, 2015, pp. 194-216

Vogenauer Vogenauer, S. § 130

Commentary on the UNIDROIT Principles of International
Commercial Contracts (PICC)
Oxford University Press, 2015

Weigand Weigand, F. B. § 66
Practitioner’s Handbook on International Commercial
Arbitration
Oxford University Press, 2009

Witz/Salger/Lorenz Witz, W.; Salger, H. C.; Lorenz, M. § 89

International Einheitliches Kaufrecht
Heidelberg: Verlag Recht und WIrtschaft, 2000

XXI
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Yang Yang, F. § 88
CISG, CIETAC Arbitration and the Rule of Law in the P.
R. of China: A Global Jurisconsultorium Perspective
Available at:
http://www.cisg.law.pace.edu/cisg/biblio/yang3.ht
ml
(7. 12. 2017)

Zahradníková Zahradníková, R. § 28
Challenge Procedure in Institutional and Ad Hoc Arbitration
Under the New Regulations in the Revised UNCITRAL
Arbitration Rules
CYArb – Czech (& Central European) Yearbook of
Arbitration: Independence and Impartiality of
Arbitrators, pp. 267-286
JurisNet LLC, 2014, Volume IV
Available at:
https://www.law360.com/articles/898393/icsid-
should-fix-rules-on-who-decides-arbitrator-challenges
(7. 12. 2017)

Zeller Zeller, B. § 88
Determining the Contractual Intent of Parties under the
CISG and Common Law – A Comparative Analysis
European Journal of Law Reform, Volume 4, no. 4,
2002, pp. 629-643
Available at:
http://www.cisg.law.pace.edu/cisg/biblio/zeller8.ht
ml
(7. 12. 2017)

XXII
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TABLE OF ARBITRAL AWARDS

CITED CITED
AS IN

China International Economic & Trade

Arbitration Commission

Cysteine case Unknown parties § 124

7 January 2000
Case No. unavailable
Available at:
http://www.cisg.law.pace.edu/cisg/wais/db/cases2
/000107c1.html
(7. 12. 2017)

Peanuts case Unknown parties § 124

23 April 1997
Case No. unavailable
Available at:
http://www.cisg.law.pace.edu/cisg/wais/db/cases2
/970423c1.html
(7. 12. 2017)

International Centre for Settlement of

Investment Disputes

Joseph Charles Lemire case Joseph Charles Lemire v. Ukraine § 127

18 September 2000
Case No. ARB(AF)/98/1
Available at:
https://www.italaw.com/documents/Lemire-
Award.pdf
(7. 12. 2017)

XXIII
MEMORANDUM FOR CLAIMANT

International Chamber of Commerce, Court of

Arbitration

ICC case no. 8261 Unknown parties § 23

27 September 1996
Case No. 8261
Available at:
http://cisgw3.law.pace.edu/cases/978962i1.html
(7. 12. 2017)

Magnesium case Unknown parties § 79

1995
Case No. ICC Case 8324/1995
Available at:
http://cisgw3.law.pace.edu/cases/958324i1.html
(7. 12. 2017)

Radio equipment case Unknown parties § 94

1994
Case No. 7844 of 1994
Available at:
http://cisgw3.law.pace.edu/cases/947844i1.html
(7. 12. 2017)

London Court of International Arbitration

National Grid Plc case National Grid Plc v. The Republic of Argentina § 44
3 November 2008
Case No. UN 7949
Available at:
https://www.italaw.com/sites/default/files/case-
documents/italaw1171.pdf
(7. 12. 2017)

XXIV
MEMORANDUM FOR CLAIMANT

Netherlands Arbitrational Institute

Crude oil mix case Unknown parties § 113

15 October 2002
Case No. 2319
Available at:
http://cisgw3.law.pace.edu/cases/021015n1.html
(7. 12. 2017)

Permanent Court of Arbitration

Blockading Powers v. Germany, Great Britain and Italy v. Venezuela § 20

Venezuela 22 February 1904
Case No. 1903-1
Available at:
https://pcacases.com/web/view/76
(7. 12. 2017)

Gallo v. Canada Vito G. Gallo v. Governement of Canada § 44

14 October 2009
Case No. 2008-2
Available at:
https://www.italaw.com/sites/default/files/case-
documents/italaw1171.pdf
(7. 12. 2017)

Japanese House Tax case Germany, France and Great Britain v. Japan § 20
(protocol)
28 August 1902
Case No. 1902-2
Available at:
https://pcacases.com/web/sendAttach/1253
(7. 12. 2017)

XXV
MEMORANDUM FOR CLAIMANT

Larsen v. Hawaiian Kingdom Lance Paul Larsen v. The Hawaiian Kingdom § 20

5 February 2001
Case No. 1999-1
Available at:
https://pcacases.com/web/sendAttach/123
(7. 12. 2017)

Muscat Dhows France v. Great Britain § 20

8 August 1905
Case No. 1904-1
Available at:
https://www.pcacases.com/web/view/93
(7. 12. 2017)

Norwegian Shipowners’ Norwey v. United States of America § 20

Claims case 13 October 1922
Case No. 1921-1
Available at:
https://pcacases.com/web/sendAttach/642
(7. 12. 2017)

XXVI
MEMORANDUM FOR CLAIMANT

TABLE OF COURT DECISIONS

CITED
CITED IN
AS

Argentina

Visión Satelital case Visión Satelital S.R.L. vs. SKY Argentina SCA § 126
Court of Appeal of Bueno Aires
13 March 2003
Case No. unavailable
Available at:
http://www.unilex.info/case.cfm?id=1587
(7. 12. 2017)

Australia

Hui case William Yab Sui Hui v. Esposito Holdings PTY LTD § 32
et al.
Federal Court of Australia
9 June 2017
Available at:
http://hsfnotes.com/arbitration/wp-
content/uploads/sites/4/2017/08/Hui-v-
Esposito-Holdings-2017-FCA-648-9-June-
2017.pdf
(7. 12. 2017)

John Holland Pty Ltd case John Holland Group Pty Ltd & Anor v. Commissioner of § 26
Taxation
Federal Court
11 June 2015
Case No. 2015 ATC 20-510
Available at:

XXVII
MEMORANDUM FOR CLAIMANT

https://www.ato.gov.au/law/view/document?Do
cID=LIT/ICD/NSD1397/2014/00001
(7. 12. 2017)

Roder case Roder Zelt- und Hallenkonstruktionen GmbH v. § 90

Rosedown Park Pty Ltd et al
Federal Court, South Australian District, Adelaide
28 April 1995
Case No. SG 3076 of 1993; FED No. 275/95
Available at:
http://cisgw3.law.pace.edu/cases/950428a2.html
(7. 12. 2017)

Austria

Auto case Unknown parties § 90

Oberlandesgericht [Appelate Court] Linz
23 January 2006
Case No. 6 R 160/05z
Available at:
http://cisgw3.law.pace.edu/cases/060123a3.html
(7. 12. 2017)

Chinchilla furs case Unknown parties §§ 79, 88

Oberster Gerichthof
10 November 1994
Case No. 2 Ob 547/93
Available at:
http://cisgw3.law.pace.edu/cases/941110a3.html
(7. 12. 2017)

Conveyor band case Unknown parties § 103

Oberlandesgericht Linz
23 March 2005

XXVIII
MEMORANDUM FOR CLAIMANT

Case No. 6 R 200/04f

Available at:
http://cisgw3.law.pace.edu/cases/050323a3.html
(7. 12. 2017)

Printed goods case Unknown parties § 86

Oberlandesgericht Frankfurt
26 June 2006
Case No. 26 Sch 28/05
Available at:
http://cisgw3.law.pace.edu/cases/060626g1.html
(7. 12. 2017)

Propane case Unknown parties § 88

Oberster Gerichtshof
6 February 1996
Case No. 10 Ob 518/95
Available at:
http://cisgw3.law.pace.edu/cases/960206a3.html
(7. 12. 2017)

Steel bars case Unknown parties § 79

Oberlandesgericht Innsbruck
18 December 2007
Case No. 1 R 273/07f
Available at:
http://cisgw3.law.pace.edu/cases/071218a3.html
(7. 12. 2017)

Tantalum case Unknown parties § 77

Oberster Gerichtshof
31 August 2005
Case No. 7 Ob 175/05v
Available at:

XXIX
MEMORANDUM FOR CLAIMANT

http://cisgw3.law.pace.edu/cases/050831a3.html
(7. 12. 2017)

Belgium

Gantry case S.A. Gantry v. Société de Droit Suisse, Research Consulting § 88

Marketing
Tribunal de commerce Nivelles
19 September 1995
Case No. R.G. 1707/93
Available at:
http://www.cisg.law.pace.edu/cisg/wais/db/cases2/
950919b1.html
(7. 12. 2017)

France

Fauba case Fauba France FDIS GC Electronique v. Fujitsu § 83

Mikroelectronik GmbH
Cour de Cassation
4 January 1995
Case No. 92-16.993
Available at:
http://cisgw3.law.pace.edu/cases/950104f1.html
(7. 12. 2017)

Les Verreries de Saint Société Les Verreries de Saint Gobain, SA v. Martinswerk § 98

Gobain case GmbH
Cour de Cassation
16 July 1998
Case No. J 96-11.984
Available at:
http://cisgw3.law.pace.edu/cases/980716f1.html
(7. 12. 2017)

XXX
MEMORANDUM FOR CLAIMANT

Société Harper Robinson case Société Harper Robinson v. Société internationale de § 126
maintenance et de réalisations industrielles
Cour d’appel de Grenoble
24 January 1996
Case No. Unknown
Available at:
http://www.unilex.info/case.cfm?id=633
(7. 12. 2017)

Societe Swiss Oil v Societe Société Swiss Oil v. société Petrogab et République du Gabon § 23
Petrogab Cour d’appel de Paris
16 June 1988
Case no.
Available in:
Revue de l’arbitrage 309 (1989), p. 314

Germany

Automobile case Unknown parties § 124

Oberlandesgericht Stuttgart
31 March 2008
Case No. 6 U 220/07
Available at:
http://cisgw3.law.pace.edu/cases/080331g1.html
(7. 12. 2017)

Cashmere sweaters case Unknown parties § 96

Oberlandesgericht München
11 March 1998
Case No. 7 U 4427/97
Available at:
http://cisgw3.law.pace.edu/cases/980311g1.html
(7. 12. 2017)

XXXI
MEMORANDUM FOR CLAIMANT

Cereal case Unknown parties § 91

Oberlandesgericht Naumburg
13 February 2013
Case No. 12 U 153/12
Available at:
http://cisgw3.law.pace.edu/cases/130213g1.html
(7. 12. 2017)

Concrete slabs case Unknown parties § 96

Oberlandesgericht Koblenz
4 October 2002
Case No. 8 U 1909/01
Available at:
http://cisgw3.law.pace.edu/cases/021004g1.html
(7. 12. 2017)

Doors case Unknown parties § 91

Oberlandesgericht Saarbrücken
13 January 1993
Case No. 1 U 69/92
Available at:
https://www.cisg.law.pace.edu/cisg/wais/db/cases2
/930113g1.html
(7. 12. 2017)

Frozen pork case Unknown parties § 119

Bundesgerichtshof
2 March 2005
Case No. VIII ZR 67/04
Available at:
http://cisgw3.law.pace.edu/cases/050302g1.html
(7. 12. 2017)

XXXII
MEMORANDUM FOR CLAIMANT

Knitwear case Unknown parties § 98

Landgericht Berlin
24 March 1998
Case No. 102 O 59/97
Available at:
http://cisgw3.law.pace.edu/cases/980324g1.html
(7. 12. 2017)

Machinery case Unknown parties §§ 77, 92

Bundesgerichtshof
31 October 2001
Case No. VIII ZR 60/01
Available at:
http://cisgw3.law.pace.edu/cases/011031g1.html
(7. 12. 2017)

New Zealand mussels case Unknown parties § 119

Bundesgerichtshof
8 March 1995
Case No. VIII ZR 154/94
Available at:
http://cisgw3.law.pace.edu/cases/950308g3.html
(7. 12. 2017)

Plants case Unknown parties § 88

Oberlandsgericht Rostock
27 July 1995
Case No. 1 U 247/94
Available at:
https://www.cisg.law.pace.edu/cisg/wais/db/cases2
/950727g1.html
(7. 12. 2017)

XXXIII
MEMORANDUM FOR CLAIMANT

Powdered milk case Unknown parties §§ 98,

Bundesgerichtshof 103
9 January 2002
Case No. VII ZR 304/00
Available at:
http://cisgw3.law.pace.edu/cases/020109g1.html
(7. 12. 2017)

Rubber sealing parts case Unknown parties § 97

Oberlandsgericht Düsseldorf
25 July 2003
Case No. 17 U 22/03
Available at:
http://cisgw3.law.pace.edu/cases/030725g1.html
(7. 12. 2017)

Shock-cushioning seat case Unknown parties § 96

Oberlandsgericht Köln
24 May 2006
Case No. 16 U 25/06
Available at:
http://cisgw3.law.pace.edu/cases/060524g1.html
(7. 12. 2017)

Shoes case Unknown parties § 91

Landgericht Berlin
15 September 1994
Case No. 52 S 247/94
Available at:
http://cisgw3.law.pace.edu/cases/940915g1.html
(7. 12. 2017)

XXXIV
MEMORANDUM FOR CLAIMANT

Spanish paprika case Unknown parties § 119

Landgericht Ellwangen
21 August 1995
Case No. 1 KfH O 32/95
Available at:
http://cisgw3.law.pace.edu/cases/950821g2.html
(7. 12. 2017)

Vine wax case Unknown parties § 115

Bundesgerichtshof
24 March 1999
Case No. VIII ZR 121/98
Available at:
http://www.cisg.law.pace.edu/cases/990324g1.html
(7. 12. 2017)

Hungary

Pratt & Whiyney case United Technologies International Inc. Pratt and Whitney § 79
Commercial Engine Business v. Magyar Légi
Közlekedési Vállalat
Legfelsobb Bíróság
25 September 1992
Case No. Gf. I. 349/1992/9
Available at:
http://cisgw3.law.pace.edu/cases/920925h1.html
(7. 12. 2017)

Netherlands

Corporate Web Solutions Ltd. Corporate Web Solutions Ltd. v. Verdorlink B.V § 88
case Rechtbank Midden-Nederland
25 March 2015
Case No. HA ZA 14-217

XXXV
MEMORANDUM FOR CLAIMANT

Available at:
http://cisgw3.law.pace.edu/cases/150325n1.html
(7. 12. 2017)

New Zealand

International Housewares case International Housewares (NZ) Limited v. SEB S.A. § 119
High Court, Auckland
31 March 2003
Case No. CP 395 SD 01
Available at:
http://cisgw3.law.pace.edu/cases/030331n6.html
(7. 12. 2017)

Smallmon case RJ & AM Smallmon v. Transport Sales Limited and Grant § 88

Alan Miller
Court of Appeal of New Zealand
22 July 2011
Case No. C A545/2010 [2011] NZ C A 340
Available at:
http://cisgw3.law.pace.edu/cases/110722n6.html
(7. 12. 2017)

Singapore

AKN v. ALC AKN et al. v. ALC et al. § 32

Singapore Court of Apeal
31 March 2015
Case No. SGCA 18
Available at:
http://www.singaporelaw.sg/sglaw/laws-of-
singapore/case-law/free-law/court-of-appeal-
judgments/15972-akn-and-another-v-alc-and-others-
and-other-appeals-2015-sgca-18 (7. 12. 2017)

XXXVI
MEMORANDUM FOR CLAIMANT

Coop International Pte Ltd Coop International Pte Ltd v. Ebel SA § 26

case Singapore High Court
4 March 1998
Case No. SGHC 425
Available at:
http://www.singaporelaw.sg/sglaw/images/Arbitrati
onCases/%5b1998%5d_1_SLR(R)_0615.pdf
(7. 12. 2017)

Slovak Republic

Health care products case Unknown parties § 90

Supreme Court of Slovak Republic
19 June 2008
Case No. VIII 6 Obo 15/2008
Available at:
http://cisgw3.law.pace.edu/cases/080619k1.html
(7. 12. 2017)

Switzerland

Case no. 4A-570/2016 Unknown parties § 32

Bundesgericht
7 March 2017
Case No. 4A-570/2016
Available at:
https://uk.practicallaw.thomsonreuters.com/w-007-
1799?originationContext=document&vr=3.0&rs=PL
UK1.0&transitionType=DocumentItem&contextDat
a=(sc.Default)
(7. 12. 2017)

Pipes and cables case Unknown parties § 113

Bundesgericht

XXXVII
MEMORANDUM FOR CLAIMANT

7 July 2004
Case No. 4C.144/2004
Available at:
http://www.globalsaleslaw.org/content/api/cisg/dis
play.cfm?test=848
(7. 12. 2017)

Textile cleaning machine case Unknown parties § 113

Bundesgericht
13 November 2003
Case No. 4C.198/2003
Available at:
http://www.cisgonline.ch/content/api/cisg/display.c
fm?test=840
(7. 12. 2017)

Paraguay

D.G. Belgrano case D.G. Belgrano S.A. v. Procter & Gamble Argentina S.R.L. § 126
Cámara Nacional de Apelaciones en lo Comercial
28 June 2013
Case No. unavailable
Available at:
http://www.unilex.info/case.cfm?id=1986
(7. 12. 2017)

Dirección Nacional de Dirección Nacional de Aduanas v. El Comercio Paraguayo § 126

Aduanas case S.A. de Seguros Generales
Tribunal de Apelación en lo Civil y Comercial de
Asunción
5 August 2013
Case No. 18

XXXVIII
MEMORANDUM FOR CLAIMANT

Available at:
http://www.unilex.info/case.cfm?id=1696
(7. 12. 2017)

United Kingdom

Parker case Parker v. South Eastern Railway § 90

Court of Appeal of England and Wales
25 April 1877
Case No. 2 CPD 416
Available at:
http://www.iclr.co.uk/document/1871000344/caser
eport_30493/html
(7. 12. 2017)

United States of America

Cedar Petrochemicals, Inc. case Cedar Petrochemicals Inc. v. Dongbu Hannong Chemical Ltd § 88
U.S Distric Court, Southern District of New York
28 September 2011
Case No. 06 Civ. 3972 (LTS)(JCF)
Available at:
http://cisgw3.law.pace.edu/cases/110928u1.html
(7. 12. 2017)

Chicago Prime Packers, Inc. Chicago Prime Packers, Inc. v. Northam Food Trading Co § 113
case U.S Court of Appeals, Eastern Division of N. D. Illinois
23 May 2005
Case No. 04-2551
Available at:
http://caselaw.findlaw.com/us-7th-
circuit/1292134.html
(7. 12. 2017).

XXXIX
MEMORANDUM FOR CLAIMANT

CSS case CSS Antenna, Inc. v. Amphenol-Tuchel Electronics, GMBH §§ 86, 88

U.S Distric Court, District of Maryland
8 February 2011
Case No. CCB-09-2008
Available at:
http://cisgw3.law.pace.edu/cases/110208u1.html
(7. 12. 2017)

Mastrobuono v. Shearson Antonio Mastrobuono and Diana G. Mastrobuoni v. § 23

Lehman Hutton Shearson Lehman Hutton, inc., et al.
Supreme Court of the United States
6 March 1995
Case No. 94-18
Available at:
https://www.law.cornell.edu/supct/html/94-
18.ZO.html (7. 12. 2017)

Norfolk Southern Railway Norfolk Southern Railway Company v. Power Source Supply, § 96
case Inc.
U.S Distric Court, Western District of Pennsylvania
25 July 2008
Case No. 07-140-JJf
Available at:
http://cisgw3.law.pace.edu/cases/080725u1.html
(7. 12. 2017)

Roser Technologies, Inc case Roser Technologies, Inc. v. Carl Schreiber GmbH § 88
U.S Distric Court, Western District of Pennsylvania
10 September 2013
Case No. 11cv302 ERIE
Available at:
http://cisgw3.law.pace.edu/cases/130910u1.html
(7. 12. 2017)

XL
MEMORANDUM FOR CLAIMANT

TABLE OF LEGAL SOURCES

CIArb Arbitration Rules CIArb Arbitration Rules, London, 1 December 2015

CISG United Nations Convention on Contracts for the

International Sale of Goods, Vienna, 11 April 1980

CPR Non-Administered 2007 CPR Non-Administered Arbitration Rules, New

Arbitration Rules York, 1 November 2007

IBA Guidelines IBA Guidelines on Conflicts of Interest in

International Arbitration, London, 23 October 2014

NY Convention Convention on the Recognition and Enforcement of

Foreign Arbitral Awards, New York 10 June 1958

UNCITRAL Rules UNCITRAL Arbitration Rules, New York, 2011

UNCITRAL Model Law UNCITRAL Model Law on International

Commercial Arbitration 1985 with amendments as
adopted in 2006, Vienna 21 June 1985

UNIDROIT Principles UNIDROIT Principles of International Commercial

Contracts, Rome, 2010

XLI
MEMORANDUM FOR CLAIMANT

TABLE OF OTHER SOURCES

CITED CITED
AS IN

Hershey’s Hershey’s Supplier Code of Conduct § 123

Available at:
https://www.thehersheycompany.com/content/d
am/corporate-us/documents/partners-and-
suppliers/supplier-code-of-conduct.pdf
(7. 12. 2017)

OED, “expected” Oxford English Dictionary § 130

Available at:
http://en.oxforddictionaries.com/definition/antic
ipate
(7. 12. 2017)

Nestle The Nestle Supplier Code § 123

Available at:
http://www.nestle.com/asset-
library/Documents/Library/Documents/Supplier
s/Supplier-Code-English.pdf
(7. 12. 2017)

Puma Puma Code of Conduct § 123

Available at:
http://about.puma.com/damfiles/default/sustain
ability/standards/code-of-
conduct/CoC_English.pdf-
0715bc8bfadc6d91ba1fa7edc091f00f.pdf
(7. 12. 2017)

XLII
MEMORANDUM FOR CLAIMANT

UN GC Principles The Ten Principles of the UN Global Compact

§§ 116, 126
Available at:
https://www.unglobalcompact.org/what-is-
gc/mission/principles
(7. 12. 2017)

Walmart Walmart Standards for Suppliers § 123

Available at:
http://cdn.corporate.walmart.com/67/fd/5c9b7b
964883b792bce97dd00edf/standards-for-
suppliers-poster_129884072278822736.pdf
(7. 12. 2017)

Whole Foods Whole Foods Market Supplier Guidelines § 123

Available at:
http://assets.wholefoodsmarket.com/www/vend
ors/wholebody/FL/Supplier%20Guidelines%20v
1%202%20EXIGIS.pdf
(7. 12. 2017)

XLIII
MEMORANDUM FOR CLAIMANT

STATEMENT OF FACTS
6 The parties to this arbitration are Delicatesy Whole Foods Sp (hereinafter: CLAIMANT) and
Comestible Finos Ltd (hereinafter: RESPONDENT), collectively “Parties”. CLAIMANT is a
medium sized manufacturer of fine bakery products registered in Equatoriana.
RESPONDENT is a gourmet supermarket chain in Mediterraneo.

7 Parties met at the yearly Danubian food fair Cucina in March 2014 where CLAIMANT was
approached by RESPONDENT’s Head of Purchasing Annabelle Ming. She and Kapoor Tsai,
CLAIMANT’s Head of Production, discussed the possibility of future cooperation.

8 On 10 March 2014, RESPONDENT sent the Invitation to Tender, to which CLAIMANT

replied with Letter of Acknowledgement on 17 March 2014 and with Sales – Offer on 27
March 2014. In Sales – Offer CLAIMANT proposed several changes, including the payment
and description of the cakes.

9 On 7 April 2014, RESPONDENT sent a letter accepting CLAIMANT’s Sales – Offer

notwithstanding the changes suggested by it. RESPONDENT also requested that CLAIMANT
starts its delivery of 20,000 chocolate cakes per day on 1 May 2014. In accordance with the
contract, CLAIMANT made its first delivery on that date. There were no problems concerning
the deliveries in 2014, 2015 and 2016.

10 In 2016, Mr. Prasad published an article in the Vindobona Journal of International

Commercial Arbitration and Sales Law.

11 On 6 January 2017, the United Nations Environment Programme special rapporteur

published a report on the investigation on deforestation in Ruritania. This report was
followed by a documentary, shown on the Equatorian state news channel on 19 January
2017, and an article published on 23 January 2017 in Michelgault.

12 On 27 January 2017, RESPONDENT sent an email seeking clarification whether

CLAIMANT’s suppliers all strictly adhered to the Ten Principles of UN Global Compact.
RESPONDENT also stated that it would refrain from taking any further deliveries and making
any further payments until the issue was resolved. The same day CLAIMANT replied with an
email, stating that it did not believe that the cocoa beans came from unsustainable farms.
CLAIMANT also promised to investigate further and insisted on payment for the cakes
delivered.

1
MEMORANDUM FOR CLAIMANT

13 In the email of 10 February 2017, CLAIMANT informed RESPONDENT that it cannot

exclude the possibility that some of the cocoa came from unsustainable farms. CLAIMANT
immediately terminated the contract with its supplier and also offered a reduction of 25% for
cakes delivered and not yet paid. RESPONDENT refused CLAIMANT’s offer and terminated
the contract in the email of 12 February 2017.

14 Since Parties unsuccessfully tried to mediate on 30 May 2017, CLAIMANT started arbitration
proceeding by sending Notice of Arbitration on 30 June 2017. RESPONDENT submitted its
Response to Notice of Arbitration on 31 July 2017.

15 On 29 August 2017, RESPONDENT informed both the Arbitral Tribunal and CLAIMANT
about obtaining information on CLAIMANT’s third-party funder. On 7 September 2017,
CLAIMANT disclosed that Funding 12 Ltd, whose main shareholder is Findfunds LP, funded
its claim. On 11 September 2017, in light of the newly emerged information, Mr. Prasad sent
clarification regarding his impartiality.

16 On 14 September 2017, RESPONDENT submitted Notice of Challenge of Arbitrator. On 21

September 2017, Mr. Prasad responded to the challenge and on 29 September 2017,
CLAIMANT refused to agree to removal.

SUMMARY OF ARGUMENTS
17 Firstly, the Arbitral Tribunal should not decide on the Challenge of Mr. Prasad. Instead it
ought to be decided by an appointing authority as per Article 13(4) of the UNCITRAL
Arbitration Rules. If said article is not applicable, Mr. Prasad should participate in deciding on
the Challenge of Arbitrator. In case Mr. Prasad is excluded from decision on the Challenge of
Arbitrator, he should be replaced by CLAIMANT-appointed substitute arbitrator (ISSUE I).

18 Secondly, the Challenge of Mr. Prasad is devoid of any merits. All the facts RESPONDENT
relies upon were already disclosed by Mr. Prasad and RESPONDENT made no objections.
Moreover, under the applicable law there is no legal obligation for CLAIMANT to make any
disclosure. Even if such obligation stems from the IBA Guidelines on Conflict of Interest in
International Arbitration, CLAIMANT has not breached it. Further, Mr. Prasad’s legal opinions
cannot constitute grounds for challenge (ISSUE II).

19 Thirdly, CLAIMANT’s General Conditions govern the contract, as they have been the only set
of standard terms exchanged between Parties since CLAIMANT sent Sales – Offer. Since

2
MEMORANDUM FOR CLAIMANT

CLAIMANT made its General Conditions sufficiently available, a reasonable person would
conclude that they govern the contract. RESPONDENT’s General Conditions cannot govern
the contract pursuant to the knock-out doctrine and the last shot rule (ISSUE III).

20 Finally, CLAIMANT fulfilled its contractual obligations as it delivered conforming chocolate

cakes of the required quantity, quality and description. Additionally, the cakes were
conforming as they were fit for ordinary use and no particular purpose of goods has been
made known to CLAIMANT. Furthermore, due to the use of ambiguous language, uncommon
in business practice, RESPONDENT failed to create obligations of result. Moreover, CLAIMANT
was only obliged to use best efforts as Ten Principles of UN Global Compact prevail over
RESPONDENT’s General Conditions. Ultimately, a reasonable person would consider that
using best efforts is sufficient to fulfil contractual requirements (ISSUE IV).

ISSUE I: TRIBUNAL SHOULD NOT DECIDE ON THE CHALLENGE OF

MR. PRASAD
21 By entering into the Arbitration Agreement (hereinafter: AA), Parties set forth the procedure
for constitution of the Arbitral Tribunal (hereinafter: Tribunal). Accordingly, CLAIMANT
appointed Mr. Prasad to serve as an arbitrator. Mr. Prasad made full disclosure of all the
relevant circumstances of his business and other relationships with regards to these arbitral
proceedings Ex. C11, p. 23. RESPONDENT initially stated that it has no objection to Mr.
Prasad’s appointment RNA, p. 26, §22. After the proceedings have commenced and
Tribunal was fully constituted, RESPONDENT alleged that new circumstances have arisen,
requiring Mr. Prasad’s removal from Tribunal. RESPONDENT further submitted in Notice of
Challenge of Arbitrator (hereinafter: NCA) that Parties mutually agreed on excluding the
applicability of Art. 13(4) of the UNCITRAL Arbitration Rules (hereinafter: UNCITRAL
Rules) and that the Challenge of Mr. Prasad (hereinafter: Challenge) should be decided by the
remaining two arbitrators [NCA, p. 39, §8].

22 Contrary to RESPONDENT’s allegations, CLAIMANT will demonstrate that Challenge should be

decided by an appointing authority as per Art. 13(4) of the UNCITRAL Rules, which is
applicable to this arbitration (A). Alternatively, should Tribunal find that it has the authority
to decide on Challenge, it should do so in its full constitution, i.e. with participation of Mr.
Prasad (B). Lastly, if Tribunal decides that Mr. Prasad’s exclusion from deciding on Challenge
is necessary, Challenge should be reviewed in presence of a substitute arbitrator (C).

3
MEMORANDUM FOR CLAIMANT

A. Art. 13(4) of UNCITRAL Arbitration Rules is applicable

23 In AA, Parties agreed that any arbitral proceeding between them should be settled “without any
involvement of any arbitral institution” Ex. C2, p. 12. The wording was added to the UNCITRAL
Model Arbitration Clause that Parties used PO2, p. 52, §22. RESPONDENT asserts that this
addition should be read as excluding the applicability of Art. 13(4) of the UNCITRAL Rules
[NCA, p. 39, §8]. However, CLAIMANT contends that RESPONDENT’s interpretation of AA is
overreaching and that there was no such mutual understanding between Parties. Instead,
RESPONDENT should have opted for a clearer wording if it wanted to deviate from the
procedure in Art. 13(4) of the UNCITRAL Rules.

24 To begin with, UNCITRAL Rules in Art. 6(1) uniquely define the term appointing authority
[Perales-Viscasillas, p. 47]. While it is true that an arbitral institution may be chosen to act as an
appointing authority, it is by no means mandatory. Instead, parties may choose to opt for an
individual person [UNCITRAL Rules, Art. 6(1)]. It is for this reason that Parties’ agreement
that no arbitral institution should be involved in these proceedings cannot be interpreted in a
way to encompass the appointing authority. The two terms cannot be considered synonyms
since appointing authority is a broader term than arbitral institution, encompassing
institutions as well as individuals [Caron/Caplan, p. 150]. Consequently, even if Tribunal finds
that Parties have excluded institutions from these proceedings completely, reasonable person
could not conclude that it means that Art. 13(4) of the UNCITRAL Rules should not apply.

25 Aforementioned article merely states that in circumstances akin to those in present case,
appointing authority should make the decision on the challenge of the arbitrator [Bernasconi-
Osterwalder/Johnson/Marshall, p. 9; UNCITRAL Rules, Art. 13(4)]. Designating a person instead
of an arbitral institution is not uncommon, especially renown jurists tend to be a favourable
solution [Caron/Caplan, p. 159]. Selection of a person of great esteem to act as appointing
authority has been in fact utilised since the very beginning of modern international arbitration.
For instance, in 1904 PCA case His Majesty the Emperor of Russia acted as appointing authority
[Blockading Powers v. Venezuela]. Similar situation was present in 1905 PCA case where King of
Italy, Victor Emmanuel III was made appointing authority [Muscat Dhows case]. There are various
other instances where respectable persons served as appointing authority [Japanese House Tax case;
Larsen v. Hawaiian Kingdom; Norwegian Shipowners’ Claims case], Therefore, practice of appointing
authority as a person is a concept well established throughout history.

4
MEMORANDUM FOR CLAIMANT

26 The possibility of an arbitral institution being involved comes to life solely in instance when
parties do not agree on the choice of appointing authority [UNCITRAL Rules, Art. 6(1);
Finizio/Wheeler/Preidt, p. 2]. By stating that following Art. 13(4) of the UNCITRAL Rules
would lead to involvement of an institution NCA, p. 39, §8, RESPONDENT rejects the
possibility of an agreement between Parties at the outset. This can only be attributed to
RESPONDENT’s bad faith. By excluding the possibility of agreement on the appointing
authority, RESPONDENT is attempting to manipulate AA in order to shape the procedure to
its liking. As elaborated below, if RESPONDENT’s line of argumentation is followed, Tribunal
would consist of two members. One of those members would be Ms. Reitbauer - arbitrator
appointed by RESPONDENT. Taking her views on third-party funding into consideration
RESPONDENT is likely to achieve at least a deadlock on Challenge in such a constitution of
Tribunal [see infra §39]. Therefore, RESPONDENT’s motives for misinterpreting AA are
apparent and Tribunal should not allow RESPONDENT to benefit on account of its bad faith.

27 RESPONDENT has been unwilling to cooperate on several occasions. While acknowledging

CLAIMANT’s reservations regarding ad-hoc arbitration, RESPONDENT made no effort to
compromise with CLAIMANT on formulation of AA [Ex. C1, p. 8, §5]. Further, RESPONDENT
refused CLAIMANT’s attempts to resolve the issue and terminated the contract without any
attempt to settle the differences amicably [Ex. C10, p. 22]. It has done so despite CLAIMANT’s
offers for price reductions on withstanding payment [Ex. C9, p. 21, §4]. Parties even
attempted to resolve the dispute by means of mediation, however CLAIMANT was met by a
flat refusal of RESPONDENT’s CFO and the Head of Legal to make any payments whatsoever
[FL1, p. 3, §2]. This demonstrates RESPONDENT’s general stance in this arbitration as un-
cooperative. Accordingly, as the chosen rules lay down the procedure for the challenge in line
with AA, there is no reason to deviate from it.

28 Moreover, Tribunal should not follow RESPONDENT’s interpretation of AA as RESPONDENT

was the one who drafted it. Under the kompetenz-kompetenz principle, an arbitral tribunal has
jurisdiction to interpret the arbitration agreement by using one of the established principles of
interpretation Fouchard/Gaillard/Goldman, §§773-776. The principle of contra proferentem is
applicable to the interpretation of arbitration agreements and it provides that an unclear
agreement should be interpreted against the party which drafted such agreement
UNIDROIT Principles, Art. 4. 6; Societe Swiss Oil v. Societe Petrogab. The exclusion of Art. 13(4)
of the UNCITRAL Rules was not addressed by RESPONDENT neither in AA nor in its letter
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MEMORANDUM FOR CLAIMANT

to CLAIMANT in which RESPONDENT proposed the use of their standard arbitration clause
Ex. C1, p. 8, §5. Therefore, even if RESPONDENT indeed intended to exclude the role of
appointing authority in deciding on challenge of arbitrator, CLAIMANT could not have been
aware of its intent. Instead, it was RESPONDENT’s duty to use clearer and unambiguous
wording. The vague language should be seen in opposition of the interest of the party that
created it Sykes, p. 66; Mastrobuono v. Shearson Lehman Hutton; ICC case no. 8261. Consequently,
any ambiguity in the present case should be interpreted against RESPONDENT.

29 To conclude, if RESPONDENT wanted to alter the procedure of challenge of arbitrator, it

should have opted for a clearer and unambiguous wording. Instead, RESPONDENT is
manipulating the interpretation of AA to its own liking and attempting to delay the
proceedings with Challenge that lacks any merits see infra Issue II. Consequently, Tribunal
should find that there was in fact no agreement between Parties to exclude the application of
Art. 13(4) of the UNCITRAL Rules. Therefore, Tribunal should designate an appointing
authority to decide on Challenge.

B. Should Tribunal find that it has competence to decide on Challenge, it should do so

in the presence of Mr. Prasad

30 As elaborated above, RESPONDENT’s main objective for filing Challenge is to prolong arbitral
proceedings. This is evident from RESPONDENT’s contradictory argumentation. On the one
hand, RESPONDENT claims that Art. 13(4) of the UNCITRAL Rules is not applicable, on the
other, RESPONDENT’s argument for not allowing Mr. Prasad to decide on Challenge is based
on the very same article [NCA, p. 39, §8].

31 Since UNCITRAL Rules do not provide an answer concerning the inclusion of Mr. Prasad,
the question of applicability of other procedural rules comes into perspective. It is established
both in theory and in practice that the procedural rules are a combination of both the rules
that the parties have chosen and mandatory provisions of lex arbitri [Born I, p. 147; Coop
International Pte Ltd case; John Holland Pty Ltd case]. As a result of the choice of the arbitral seat,
Model Law is applicable albeit with a supplementary role [Goode, p. 31; Henderson, p. 898]. For
that reason, if Art. 13(4) of the UNCITRAL Rules is not applicable, the relevant procedural
rules should be sought after in Model Law.

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MEMORANDUM FOR CLAIMANT

32 Art. 13(2) of the Model Law states that the arbitral tribunal should decide on the challenge. The
UNCITRAL Working Group II agreed that the decision entrusted to the tribunal in Art. 13(2) of
the Model Law has to be made by all members of the tribunal, including the challenged arbitrator
[UNCITRAL Yearbook I, p. 194]. Furthermore, rules of arbitral procedures, which bestow the
authority to rule on the challenge to the non-challenged arbitrators, for instance the ICSID, are
considered flawed [Hay/Weil, §5]. One of the main arguments in negating such an approach is the
possibility of a deadlock and the subsequent delays in proceedings.

33 Admittedly, a decision made by an arbitrator concerning his own matter makes such an
arbitrator in fact an iudex in causa sua. However, the goal of disabling dilatory tactics and
unnecessary suspensions of the procedure until the challenge was either sustained or rejected,
outweighs such a concern. Said view is accepted by the UNCITRAL Working Group II that
drafted Model Law [UNCITRAL Yearbook II, p. 433] and is recognized as such in theory
[Uzelac, p. 103, §28; Broches p. 65; Zahradníková p. 279, §§14.30-14.31].

34 Ultimately, such a composition of Tribunal would coincide with AA, the will of Parties – if
Art. 13(4) of the UNCITRAL Rules is in fact excluded – and the legal framework of the
arbitral proceedings. Therefore, Tribunal should allow Mr. Prasad to decide on Challenge.

C. In case of exclusion of Mr. Prasad from decision on Challenge, CLAIMANT should

be allowed to appoint a substitute arbitrator

35 If Tribunal determines that it is empowered to decide on Challenge and at the same time
exclude Mr. Prasad from assessing it, substitute arbitrator – appointed by CLAIMANT – should
be involved in evaluation of Challenge. Party-appointed arbitrators bear paramount
importance, especially when number of arbitrators is set to three. They are able to ensure that
party’s arguments are heard and not misunderstood [Mosk, p. 253; McLaren, p. 162].

36 Primarily, it must be pointed out that Parties have determined the number of arbitrators to
decide on this dispute to be three [Ex. C1, p. 12]. New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (hereinafter: NY Convention) is applicable in the
present case as both Parties’ countries of origin and the country of the seat of arbitration are
contracting states of the NY Convention [PO2, p. 55, §47]. Art. V(d) of the NY Convention states
that if “composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of
the parties”, it constitutes grounds for refusal of the enforcement of arbitral award [NY Convention,

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MEMORANDUM FOR CLAIMANT

Art. V]. Consequently, Tribunal should not make any decisions in a composition differing from
the one provided by AA to avoid any possibility of unenforceable award.

37 Furthermore, it must be emphasized that Parties must be treated equally throughout the
proceedings. Said principle has such importance that it holds primacy even in relation to the
most fundamental principle in arbitration – party autonomy [Holtzmann/Neuhaus, p. 583;
Broches, p. 95]. Aforementioned is reflected in various articles of UNCITRAL Rules
[UNCITRAL Rules, Art. 6(5), 17(1), 43(1)] and clearly prescribed in Model Law in Art. 18,
entitled “Equal treatment of the parties”. Failure to secure equal treatment of the parties in
practice leads to setting aside of the award [Hui case; Case no. 4A-570/2016; AKN v. ALC].

38 CLAIMANT does not raise doubts to impartiality of RESPONDENT-appointed arbitrator, Ms.

Reitbauer. However, party-appointed arbitrators – conscientiously or sub-conscientiously –
tend to become party advocates at least to a certain extent [Smit, p. 1, §3]. Ms. Reitbauer’s
article on third-party funding must also be taken into the account. It attests to the fact that
her position favours RESPONDENT profoundly [FL3, p. 46, §10]. What is more, appointing
arbitrators by each party is considered to be a balance of powers of the parties
[Shetreet/Forsyth, p. 245]. Therefore, precluding CLAIMANT of its right to appoint an arbitrator
– regardless of decision being made – would be contradictory to Art. 17(1) of the
UNCITRAL Rules, which states that although tribunal may exercise discretion in how they
manage the proceedings, parties must be treated equally.

39 Moreover, the issue with the composition of Tribunal as proposed by RESPONDENT [NCA,
p. 39, §8] is not only problematic for its lack of impartiality. Said composition presents a
technical issue as number of arbitrators to decide would be two. Even-numbered tribunals are
rare. Particularly as they are flawed since they open a possibility of a deadlock. For that reason,
even-numbered tribunals are prohibited in certain jurisdictions [Lew/Mistelis/Kröll, §§10.24-10.25].
In case of a deadlock, proceedings would be needlessly prolonged. Permitting such a possibility
once again does not conform with the Art. 17(1) of the UNCITRAL Rules, since arbitrators’
discretion is limited in a manner to favour efficiency of the procedure [Caron/Caplan, p. 34].

40 In addition, as CLAIMANT has already appointed Ms. Ducasse as a potential replacement

arbitrator [PO1, p. 48, §1.3] she would be a favourable solution as a substitute arbitrator
deciding on Challenge. Ms. Ducasse is allowed to participate at an oral hearing [PO1, p. 48,
§1.5]. Therefore, there would be no delay in proceedings as she would be able to step into a

8
MEMORANDUM FOR CLAIMANT

substitute position, if necessary. Most importantly, this solution with a substitute arbitrator
would be in accordance with Art. 17(1) of the UNCITRAL Rules.

41 In conclusion, if Tribunal decides that it may deliberate on Challenge and that it will do so in
absence of Mr. Prasad, Ms. Ducasse should be the third arbitrator, substituting Mr. Prasad in
Challenge procedure. In this fashion Tribunal would insure that Parties’ agreement is respected,
international law followed, and procedure conducted according to relevant rules. However, if
Tribunal decides to follow RESPONDENT’s approach [NCA, p. 39, §8], it would make not only
one but two viable grounds for setting the award aside, as it would breach equal treatment of
Parties and award would be unenforceable pursuant to Art. V of NY Convention.

CONCLUSION ON ISSUE I
42 Parties have not explicitly excluded Art. 13(4) of the UNCITRAL Rules. AA merely states
that no arbitral institution shall participate in the proceedings, which does not result in
derogation from said article. Therefore, Tribunal has no power to rule on Challenge, as it
should be decided by an appointing authority pursuant to Art. 13(4) of the UNCITRAL
Rules. Even if Tribunal has the power there are no grounds in the applicable rules to prevent
Mr. Prasad from taking part in decision on Challenge. In case Mr. Prasad is nevertheless
excluded, Tribunal should make sure that CLAIMANT-appointed substitute arbitrator is
involved, pursuant to principle of equal treatment of the parties.

ISSUE II: CHALLENGE OF MR. PRASAD IS DEVOID OF ANY MERITS

43 CLAIMANT urges Tribunal to dismiss Challenge as it has no merits. It is merely an attempt to
delay the arbitration at hand in order to postpone the payment owed to CLAIMANT [see infra
Issue III and IV]. In Challenge, RESPONDENT lists several facts that supposedly raise justifiable
doubts as to Mr. Prasad’s impartiality and independence. RESPONDENT relies on CLAIMANT’s
alleged failure to meet its obligation of disclosure of third-party funding as well as Mr. Prasad’s
article in the Vindobona Journal of International Commercial Arbitration NCA, p. 38, §§4-6

44 CLAIMANT denies all of RESPONDENT’s allegations and asserts that they do not create
justifiable doubts as to Mr. Prasad’s appointment since they are either inadmissible or
irrelevant to the case at hand. Firstly, all of the facts RESPONDENT is relying on were already
disclosed by Mr. Prasad and RESPONDENT made no objections to them (A). Secondly,
according to the applicable law, there is no legal obligation for CLAIMANT to make any

9
MEMORANDUM FOR CLAIMANT

disclosure (B). Thirdly, even if the IBA Guidelines on Conflict of Interest in International
Arbitration (hereinafter: IBA Guidelines) do apply, CLAIMANT has not breached the duty to
disclose (C). Finally, Mr. Prasad’s legal opinions cannot constitute grounds for Challenge (D).

A. RESPONDENT’s grounds for Challenge were already disclosed by Mr. Prasad and
RESPONDENT made no objections

45 By submitting Declaration of Impartiality and Independence and Availability (hereinafter:

DIIA), Mr. Prasad has disclosed all the relevant circumstances that could give rise to
challenge of arbitrator. RESPONDENT made no objections to it in RNA. However, in NCA
RESPONDENT is attempting to present all the facts as new and unrelated information, which
is deceptive, as RESPONDENT must be aware it cannot base Challenge on the facts already
disclosed in DIIA.

46 Firstly, arbitrator’s duty to disclose is reflected in Art. 11 of the UNCITRAL Rules

[Caron/Caplan, p. 194]. Duty to disclose bears importance in regard to estoppel. Acceptance
after the party becomes aware of the circumstances likely to give rise to justifiable doubts to
arbitrator’s impartiality create grounds for possible estoppel should said party base its
challenge on disclosed circumstances [Sarcevic, p. 80; Caron/Caplan, p. 195]. Mr. Prasad fulfilled
his obligation to disclose by submitting DIIA. He disclosed that he has been appointed as an
arbitrator by Fasttrack & Partners on previous occasions and has also made reservation that
colleagues from his law firm may accept instructions either from parties themselves or related
companies [DIIA, p. 23, §§3,5].

47 Secondly, if a party does not make any objections to the disclosure, “any subsequent challenge
during or after the proceedings should be unsuccessful” [Redfern/Hunter, §4-61]. Therefore, it is of
paramount importance to point out that in RNA RESPONDENT stated that it has no
objections to Mr. Prasad’s appointment “…despite the restrictions in his declaration…” [RNA, p.
26, §22]. The cited extract from RNA is essential as RESPONDENT acknowledges the
possibilities and facts pointed out by Mr. Prasad. Thus, in failing to object RESPONDENT
forfeited its right to a challenge arising from circumstances disclosed in DIIA.

48 Thirdly, the grounds Challenge is based upon, do not differ from circumstances already
disclosed by Mr. Prasad. In the beginning of NCA, RESPONDENT declares that Mr. Prasad’s
connections to the third-party funder raise doubts to his impartiality [NCA, p. 38, §1]. This
alludes to the fact that one of Mr. Prasad’s partners is acting for a client funded by Funding 8

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MEMORANDUM FOR CLAIMANT

Ltd [PO2, p. 50, §§6-7]. However, in DIIA Mr. Prasad had made express reservation that his
partners may act upon instructions of companies related to Parties [DIIA, p. 23, §5]. Further,
RESPONDENT states that repeat appointments by party/law firm is problematic [NCA, p. 39,
§10]. Yet, RESPONDENT was informed in DIIA of previous appointment by Fasttrack & Partners.
Although true, that Findfunds LP was indirectly involved in two cases where Mr. Prasad acted as
arbitrator as well, repeated appointment was nevertheless established in DIIA [DIIA, p. 23, §3].

49 Fourthly, CLAIMANT’s alleged unethical behaviour and its supposed efforts to conceal
relevant connections is supposedly “giving rise to reasonable doubts” to Mr. Prasad’s impartiality
[NCA, p. 38, §§1,6]. Burden of proof lies with the party making affirmative claim
[Caron/Caplan, p. 258; Vasani/Palmer, p. 200; National Grid Plc case; Gallo v. Canada]. In the
present case burden of proof therefore falls upon RESPONDENT. However, RESPONDENT
fails to make any explanation whatsoever as to how CLAIMANT’s conduct could, by itself,
affect arbitrator’s impartiality and independence. What is more, Mr. Prasad became aware of
third-party funding only after CLAIMANT provided the name upon RESPONDENT’s request
[PL, p. 43, §2; PO2, p. 51, §13].

50 Additionally, RESPONDENT itself states that it does not believe Mr. Prasad had any prior
knowledge regarding CLAIMANT’s third-party funding [NCA, p. 38, §6]. Therefore,
RESPONDENT knowingly caused circumstances that allegedly raise doubts to Mr. Prasad’s
impartiality. It is unclear what RESPONDENT’s motives for such cause of action were.

51 In conclusion, Mr. Prasad has met his duty to disclose in listing all the relevant facts and
circumstances. RESPONDENT failed to provide any additional facts that do not coincide with
those provided in DIIA. As RESPONDENT has made no objections it has waived its rights to
Challenge arising from Mr. Prasad’s disclosure. For those reasons Tribunal should dismiss
Challenge as RESPONDENT’s arguments are precluded.

B. There is no legal obligation for CLAIMANT to make any disclosure

52 CLAIMANT was not under duty to make any disclosure under the applicable arbitration law or
arbitration rules. Seemingly aware of that, RESPONDENT attempted to further devise such
legal obligation from the IBA Guidelines. RESPONDENT stated that CLAIMANT should have
disclosed information about third-party funding and that failure to do so must affect the
standard applied for the challenge procedure NCA, p. 39, §9.

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MEMORANDUM FOR CLAIMANT

53 CLAIMANT strongly contests RESPONDENT’s allegations as they are unfounded and irrelevant
to Challenge. Whether CLAIMANT disclosed that it has procured third-party funding should
not bear any importance. Tribunal should rather consider only the fulfilment of Mr. Prasad’s
obligations as that is against whom Challenge is directed. Therefore, in response to
RESPONDENT’s statements, CLAIMANT will establish that it was under no legal obligation of
disclosure in accordance with the applicable law (1) and that the IBA Guidelines do not apply
to the case at hand (2).

1. Applicable law does not provide for duty to disclose for parties

54 As previously established see supra §31, the only applicable rules in these proceedings are
Model Law and UNCITRAL Rules. Therefore, when assessing RESPONDENT’s allegations of
CLAIMANT’s breach of duty to disclose NCA, p. 39, §9, these are the only rules that Tribunal
should base its decision on. Neither the Model Law nor the UNCITRAL Rules include
provisions that impose the duty to disclose third-party funding on the parties. In fact, none of the
institutional arbitration rules necessitate parties to make such disclosure Altenkirch/John, §18.

55 To begin with, Parties have not stipulated for the use of international practice in AA [Ex. C2,
p. 12]. When parties agree to arbitration rules, said rules should prevail, unless the procedural
requirements of lex arbitri are mandatory [Moses, p. 69]. Issues only arise when such rules are
vague and unspecific [Newman/Burrows, p. 177]. CLAIMANT will establish that UNCITRAL
Rules are specific in regard to disclosure [UNCITRAL Rules, Arts. 11-13].

56 Furthermore, it is of paramount importance to examine the relevant articles closely. Duty to

disclose is definitively defined in Art. 11 of the UNCITRAL Rules. It is worth noting that
UNCITRAL Rules – the only relevant rules – restrict the duty to disclose only to arbitrators.
Drafters could have included the parties’ duty to disclose yet that is not the case. This seems to be
standard practice as none of the institutional rules have such type of provisions. What is more,
said practice extends to the rules created for purposes of ad-hoc arbitration [CIArb Arbitration
Rules; CPR Non-Administered Arbitration Rules]. Therefore, considering the fact that UNCITRAL
Rules do not extend duty to disclose to parties, such duty does not exist.

57 Upon analysis of Arts. 11-13 of the UNCITRAL Rules it becomes apparent that drafter of
the UNCITRAL Rules considered duty to disclose thoroughly [UN Report 157; UN Report
665, pp. 15-18]. Applicable rules even provide the model statements of independence

12
MEMORANDUM FOR CLAIMANT

pursuant to Art. 11 of the UNCITRAL Rules [UNCITRAL Rules, annex]. Therefore, it cannot
be argued that drafter left a void.

58 For reasons stated above, it is irrelevant whether CLAIMANT chose to disclose its funding or
not, since that was not its obligation and should not bear importance in Challenge. Therefore,
RESPONDENT’s accusations of CLAIMANT’s unethical behaviour NCA, p. 39, §9, could
equally be directed at RESPONDENT, since it is attempting to ignore the previously agreed
upon terms of arbitral proceedings and fabricating new obligations for CLAIMANT.

2. The IBA Guidelines do not apply

59 Party autonomy is a fundamental principle of international commercial arbitration

proceedings Redfern/Hunter, p. 315, set forth in both Art. 19(1) of the Model Law and Art.
35(1) of the UNCITRAL Rules. Therefore, by agreeing to the ad-hoc arbitration and
specifically, to AA, Parties determined the legal framework of the proceedings to be followed
in order to respect the core principle of party autonomy. Since AA makes no mention of the
IBA Guidelines or the international arbitration practice in general, they should not be applied
by Tribunal in the course of this arbitration.

60 Furthermore, RESPONDENT refers to the IBA Guidelines as the best practice in regard to
Challenge. However, this is merely RESPONDENT’s estimation, which comes without any type
of suitable justification. The IBA Guidelines are not legally binding and do not override
arbitral rules, chosen by the parties, nor do they override national law Born II, p. 1839; Moses,
p. 383. Whilst the question of subsidiary use may come into question, adopting these
Guidelines would be impossible without overriding the fundamental principle of party
autonomy Odoe, p. 78. Since Parties did not include the IBA Guidelines when forming the
legal framework for this arbitration, they should not be applied, regardless of whether they
present best practice or not.

61 To conclude, Tribunal is not bound by the IBA Guidelines and should not apply them.
Although they may in some cases provide useful solutions the blunt application of such rules
is not welcome Tevendale/Naish/Ambrose, §15. In the present case, considering that the
relevant law does not constrain Parties to disclose facts pertaining to third party funding and
that Parties did not agree on application of the IBA Guidelines either explicitly or implicitly,
Tribunal should find that CLAIMANT was under no legal obligation to make any disclosure.

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MEMORANDUM FOR CLAIMANT

C. Even if the IBA Guidelines apply, the circumstances of present case do not provide
for grounds for Challenge of Mr. Prasad

62 Should Tribunal find that, contrary to CLAIMANT’s argumentation, the IBA Guidelines apply,
grounds for the disqualification of Mr. Prasad are still not met. RESPONDENT’s allegations
and conclusions are farfetched and its use of the IBA Guidelines selective.

63 In NCA, RESPONDENT claims there is compromising connection between Mr. Prasad’s law firm
and CLAIMANT’s third-party funder [NCA, pp. 38-39]. CLAIMANT will demonstrate that there is
no ‘significant commercial relationship’ between them (1). Further, it will be established that Mr.
Prasad’s previous appointments are not in conflict with the IBA Guidelines (2).

1. There is no significant relationship between Mr. Prasad and CLAIMANT or its affiliates

64 Mr. Prasad has reserved the possibility of his colleagues being involved with Parties and
related companies [DIIA, p. 23, §5]. As RESPONDENT made no objections to said reservation
it cannot base Challenge on it. However, even if RESPONDENT was allowed to use the
connection between Mr. Prasad and Findfunds LP, this does not constitute a ‘significant
commercial relationship’ under §2.3.6 of the IBA Guidelines. Consequently, it is rendered
irrelevant in regard to Challenge.

65 Firstly, RESPONDENT claims that arbitration where one of Mr. Prasad’s partners is acting for
a client is funded by Findfunds LP [NCA, p. 39, §11]. However, that is not the case.
Aforementioned arbitration is funded by Funding 8 Ltd, where Findfunds LP is a 40%
shareholder [PO2, p. 50, §§3,6]. Furthermore, it is common practice for Findfunds LP to have
a participation quota in its subsidiaries at 60% with one co-investor at 40% [PO2, p. 50, §2]. It
is safe to assume that the same allocation was present regarding Funding 8 Ltd. Only
difference being the reversal of the roles, where Findfunds LP holds 40% and the other party
holds the majority i.e. 60% of the shares. Company is considered a subsidiary of another, if
the latter has controlling influence [Mayson/French/Ryan, p. 495]. In present case Findfunds
LP does not have controlling influence and consequently Funding 8 Ltd is not its subsidiary.

66 Moreover, it is important to point out that the IBA Guidelines specify that it is problematic if
arbitrator’ law firm has ‘significant commercial relationship’ with one of the parties or their
affiliates. The IBA Guidelines define the term affiliate for the purpose of the text and it is
referring to ‘all companies in a group of companies including the parent company’ [IBA

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MEMORANDUM FOR CLAIMANT

Guidelines, §2.3.6; IBA Guidelines, fn. 4]. However, Funding 8 Ltd is not the subsidiary of
Findfunds LP and therefore is not a part of the same group of companies as Findfunds LP.
This ultimately means that Funding 8 Ltd and Findfunds LP are not affiliates, thus there
cannot be a ‘significant commercial relationship’ in reference to §2.3.6 of the IBA Guidelines.

67 Secondly, even if Funding 8 Ltd was encompassed in the term affiliate, there is no ‘significant
commercial relationship’ in terms of §2.3.6 of the IBA Guidelines. By the end of the
arbitration where Mr. Prasad’s partner is involved, they expect to earn additional USD
300,000. This represents around 1% of Slowfood’s annual turn [PO2, p. 50, §6]. It must be
pointed out that Slowfood later merged with Prasad & Partners [LP, p. 36]. Taking that into
account, the profit from arbitration funded by Funding 8 Ltd would be significantly lower in
relation to Prasad & Slowfood’s annual turn. Accordingly, such negligible amount can hardly
constitute ‘significant commercial relationship’.

68 In conclusion, involved persons do not fall within the scope of §2.3.6 of the IBA Guidelines
as they cannot be connected to Mr. Prasad’s law firm as affiliates of CLAIMANT. In any case,
there is no ‘significant commercial relationship’ between involved persons. Therefore,
RESPONDENT cannot base Challenge on §2.3.6 of the IBA Guidelines.

2. Previous appointments of Mr. Prasad are not in conflict with the IBA Guidelines

69 RESPONDENT argues that previous appointments of Mr. Prasad constitute a breach of the IBA
Guidelines and raise justifiable doubts as to Mr. Prasad’s impartiality and independence NCA, p.
39, §19. However, CLAIMANT asserts that full disclosure was made by Mr. Prasad as well as
CLAIMANT and that all the circumstances of Mr. Prasad’s previous appointments do not constitute
grounds for Mr. Prasad’s disqualification as they are not in conflict with the IBA Guidelines.

70 Firstly, §3.1.3 of the IBA Guidelines pertains to the situations where the arbitrator has, within
the past three years, been appointed as arbitrator on at least two occasions by one of the
parties or its affiliate. Admittedly, Findfunds LP was involved in previous two arbitrations
where Mr. Prasad was appointed as an arbitrator. However, it was an indirect involvement
through its subsidiaries. Additionally, in one of these previous appointments, the funding
agreement was signed only after Mr. Prasad was already appointed Prasad’s RNCA, p. 43.
Findfunds LP is known in the industry to take little influence on the actual conduct of the
arbitration, as was already pointed out by Mr. Prasad [PO2, p. 50, §4; Prasad’s RNCA, p. 43].

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MEMORANDUM FOR CLAIMANT

Therefore, CLAIMANT asserts that even if §3.1.3 of the IBA Guidelines is applicable, all the
relevant information was disclosed by Mr. Prasad and CLAIMANT. Tribunal should take into
account that Mr. Prasad was not even appointed by the same subsidiary as in the present case,
meaning there is no direct connection between these third-party funders.

71 Secondly, §3.3.8 of the IBA Guidelines addresses the situation where the arbitrator has,
within the past three years, been appointed on more than three occasions by the same
counsel, or the same law firm. As stated by RESPONDENT itself, Mr. Fasttrack’s law firm has
only appointed Mr. Prasad on two previous occasions NCA, p. 39, §10. Normal previous
business contacts between an arbitrator and a party’s counsel should not be considered as
actually detrimental Weigand, p. 91, §1246; Derains/Schwartz, p. 116. Thus, §3.3.8 of the IBA
Guidelines was not binding on Mr. Prasad or CLAIMANT and Tribunal should consider
previous appointments by Mr. Fasttrack’s law firm as normal business contact, which does
not justify Mr. Prasad’s removal from Tribunal.

72 Finally, both §§3.1.3 and 3.3.8 of the IBA Guidelines are listed in the Orange List, which merely
describes situations that can result in the arbitrator’s duty to disclose such information. However,
such disclosure does not imply the existence of a conflict of interest and should not automatically
result in a disqualification of the arbitrator IBA Guidelines, p. 18. Additionally, RESPONDENT
claims that all previous appointments should be added together, but fails to substantiate such
conclusion, which cannot be drawn from any of the provisions of the IBA Guidelines. Therefore,
Tribunal should observe the fact that full disclosure was made of all the relevant circumstances as
soon as possible and that RESPONDENT made no objections to it prior to submission of
Challenge, although it had a chance to do so.

D. Mr. Prasad’s legal opinions cannot constitute grounds for Challenge

73 Mr. Prasad’s views expressed in his article [Ex. R4, p. 40] concerning the relation between Art. 35 of
the CISG vis-à-vis Corporate Social Responsibility Codes are irrelevant in regard to his impartiality as
it presents a professional legal opinion, and is as such not a relevant basis for this Challenge.

74 Firstly, the fundamental purpose of impartiality is to ensure that the arbitrator is unbiased and
fair-minded. The requirement that an arbitrator be subjectively impartial is virtually always
established only through inquiry into external, objective facts and circumstances [Born II, p. 1777].

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75 Secondly, it is inevitable that every arbitrator will hold a wide range of predispositions on
numerous issues bearing on the parties’ dispute [Born II, p. 1782]. An external circumstance e.g.
publishing an article, may only be an indicator of impartiality if the act itself shows subjective
preference to one party. If such a predisposition exhibits a reasonable and well-founded
approach to a specific subject and is a product of extensive research, experience and academic
study, it should not be taken as an indication of an arbitrator’s partiality [Daele, p. 404].

76 Furthermore, an arbitrator’s obligation to resolve a parties’ dispute in an adjudicatory manner

necessitates an arbitrator to try arbitral proceedings with appropriate care, skill and professional
integrity [Born II, p. 1992]. Therefore, if an arbitrator is ill-suited by reason of lack of skill or
knowledge, then the obligation to decline an appointment becomes apparent [ibid.; Meiners, p.
67; Gómez, §4]. For this reason, an adjudicator is not and should not be, when concerning their
legal knowledge, a tabula rasa. If a precedent of not allowing legal thought to be expressed
would be set, it would bring about an ad absurdum situation in which legal professionals would
be discouraged from legal writing and not furthering their own legal knowledge.

77 In conclusion, it is rather disconcerting that on the one hand RESPONDENT cherry-picks the
IBA Guidelines to its perceived liking, when referring to General Standard 7(a) of the IBA
Guidelines [NCA, p. 39, §9]. On the other, RESPONDENT fails to recognize their applicability
when they do not suit it. RESPONDENT did so when ignoring §4.1.1 of the IBA Guidelines’
Green list, which expressly states that previously held legal opinions which concern an issue
in the arbitration do not impede on an arbitrator’s impartiality. For that reason, it is prudent
to pre-emptively point out, that it is undisputable that previously expressed legal opinions of
an arbitrator, concerning an issue that arises in the arbitration, do not present an arbitrator’s
partiality [IBA Guidelines, §4.1.1; Daele p. 406].

CONCLUSION ON ISSUE II
78 If Tribunal finds that it has the power to decide on Challenge, it should consider that
RESPONDENT has not presented any new circumstances that were not already disclosed by
Mr. Prasad. RESPONDENT made no objections to DIIA and accepted Mr. Prasad’s
appointment. Furthermore, applicable procedural law does not impose duty to disclose upon
Parties. Even if the IBA Guidelines were applicable, circumstances of the present case, along
with Mr. Prasad’s legal opinion, cannot constitute grounds for Challenge. Therefore, Tribunal
should dismiss Challenge as it is devoid of any merits.

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ISSUE III: CLAIMANT’S STANDARD CONDITIONS GOVERN THE

CONTRACT
79 Parties concluded the contract on 7 April 2014, when RESPONDENT accepted CLAIMANT’s
tender with all proposed modifications [Ex. C5, p. 17]. RESPONDENT received the first
delivery of chocolate cakes on 1 May 2014, afterwards the deliveries have uninterruptedly
continued until 27 January 2017 [NOA, p. 5, §6]. That is when CLAIMANT received an email
containing RESPONDENT’s complaints regarding the cocoa used in production of chocolate
cakes [Ex. C6, p. 18]. In Ruritania, the home country of CLAIMANT’s main supplier of cocoa
beans, a sustainability certification scheme had been discovered [Ex. C7, p. 19]. After this
discovery, RESPONDENT expressed its concerns regarding CLAIMANT’s inclusion in the affair
and threatened to terminate the contract [Ex. C6, p. 18].

80 CLAIMANT immediately investigated the matter and concluded that its supplier had indeed
obtained falsified sustainability certificates. Although CLAIMANT had been deceived itself, it
offered RESPONDENT 25% price reduction for the cakes delivered and not yet paid. Despite
the absence of any breach of the contract from its side, CLAIMANT wished to show its
appreciation of their business relationship [Ex. C9, p. 21]. However, RESPONDENT has
rejected the offer and terminated the contract pursuant to Clause 4(3) of General Conditions
of Contract (hereinafter: RGC) in conjunction with its Code of Conduct for Suppliers
(hereinafter: SUP) [Ex. C10, p. 22].

81 RESPONDENT erroneously contends that CLAIMANT fundamentally breached the contract and
claims its entitlement to immediately terminate the contract under Clause 4(3) RGC. It denies
that RGC have never been validly incorporated into the contract and that solely CLAIMANT’s
General Conditions of Sale (hereinafter: CGC) should be applicable. On the contrary,
CLAIMANT will demonstrate that CGC were validly included into CLAIMANT’s offer (A),
which was then accepted by RESPONDENT without any objections (B). Additionally, even if
RGC were part of the contract, they would still not be applicable (C).

A. CLAIMANT’s General Conditions have been validly included into the contract

82 Standard terms are incorporated into the contract only insofar as they are part of the offer,
which is accepted by the other party pursuant to Art. 18 of the CISG [Schwenzer, p. 277;
Tantalum case; Machinery case]. Since CISG, which governs Parties’ contract [PO1, p. 49, §4],
does not contain any particular rules for inclusion of standard terms, the question is therefore

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dealt with under the provisions on interpretation and contract formation [CISG, Arts. 8 and
14-24]. Following RESPONDENT’s Invitation to Tender (hereinafter: INV), CLAIMANT
suggested its own modifications, including CGC [Ex. C3, p. 15; Ex. C4, p. 16]. RGC that have
only been mentioned in Tender Documents never became part of the contract.

83 Firstly, CLAIMANT will establish that its reply to INV constitutes an offer (1). Secondly, even
if Tribunal were to find that CLAIMANT’s reply constitutes a counter-offer, CGC govern the
contract (2). Thirdly, pursuant to Art. 8 of the CISG, CGC govern the contract (3).

1. CLAIMANT’s reply to Invitation to Tender constitutes an offer

84 According to Art. 14 of the CISG a proposal for concluding a contract has to be addressed to
one or more specific persons, sufficiently definite and indicate the intention of the offeror to
be bound in the case of acceptance [Chinchilla furs case; Magnesium case; Pratt & Whitney case; Steel
bars case]. CLAIMANT will not deny that RESPONDENT’s INV was sufficiently definite in regard
to indicating the goods and fixing the quantity. However, just by setting the upper limit of USD
2.50 per unit [Ex. C2, p. 11], price of chocolate cakes has neither been adequately determined
nor has it been made determinable. Moreover, RESPONDENT has not addressed INV to specific
persons and neither did it have intention to be bound by received responses.

85 If the intention to be bound is absent from a statement it can mean that the other party is
invited to make an offer. An invitatio ad offerendum is generally assumed if the ‘offer’ is directed
towards an unspecified number of people, for example, posted on a website or in a
newspaper [Schlechtriem/Butler, p. 69; Schwenzer, p. 272]. In INV, RESPONDENT clearly indicated
that it would evaluate received tenders and award the contract [Ex. C2, p. 10]. After six
companies submitted bids [PO2, p. 52, §23], RESPONDENT decided to award a contract to just
one of the bidders, CLAIMANT [Ex. C5, p. 17]. It was never RESPONDENT’s intention to be
bound to form a contract with all tenderers. Correspondingly, INV was publicized in the
pertinent industry newsletters, thus being addressed to the public and not to specific persons
[RNA, p. 25, §7]. Therefore, INV does not constitute an offer. Standard terms need to be a
part of an offer in order to be incorporated in the contract [Schwenzer, p. 277]. Consequently,
it is irrelevant, whether INV mentioned RGC or not. RGC were never incorporated in the
contract as they were not mentioned in the offer, which was accepted by RESPONDENT.

86 Since CLAIMANT’s Sales – Offer (hereinafter: Offer) determines goods, quantity and price it
constitutes an offer pursuant to Art. 14 of the CISG. The only standard terms that were part

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of this offer were CGC [Ex. C4, p. 16]. RESPONDENT alleged that by signing the Letter of
Acknowledgement, CLAIMANT agreed to tender in accordance with the specified requirements
in Tender Documents. RESPONDENT also claims that tenderers were not permitted to make any
changes to received documents [RNA, p. 25, §10]. However, RESPONDENT accepted CLAIMANT’s
modifications regarding the payment conditions and the shape of cakes [Ex. C5, p. 17]. Therefore,
it cannot contend that CLAIMANT was not allowed to change standard terms governing the
contract. Since CLAIMANT’s reply to INV constitutes an offer and CLAIMANT was not prohibited
to include its own standard terms, CGC govern the contract.

87 Additionally, RESPONDENT may argue that RGC became part of the contract when
CLAIMANT attached the full set of Tender Documents to its letter with Offer. However, even
if Tribunal were to find that RGC were included in Offer their provisions are to be excluded
under knock-out doctrine [see infra §§105-110].

2. If Tribunal were to find that Sales - Offer constitutes a counter-offer, CLAIMANT’s

General Conditions nonetheless govern the contract

88 Art. 19(1) of the CISG reflects that a traditional acceptance must match the offer i.e. be its
mirror image. Conversely, a reply that purports to be an acceptance but actually reflect the
terms of an offer and contains modifications, does not constitute an acceptance. Instead, it
constitutes a rejection and a counter-offer [Schwenzer/Mohs, p. 234, Lookofsky, p. 57; Fauba
case]. After receiving INV, CLAIMANT proposed changes regarding the payment, the shape of
the cakes and the general terms. In its letter to RESPONDENT, CLAIMANT indicated its
unwillingness to form a contract insofar as its modifications are not respected by stating that
the originally proposed payment terms were unacceptable [Ex. C3, p. 15].

89 Firstly, a reply to an offer constitutes a counter-offer only if it materially modifies the offer
[CISG, Art. 19; Honnold, p. 187; Schwenzer, p. 343]. Modifications, which are considered to be
material, are listed in Art. 19(3) of the CISG and cover the most important aspects of a
contract. As a result, most replies containing modifications do not constitute an acceptance,
but a refusal and a counter-offer [Honnold, p. 187]. As CLAIMANT modified the terms relating
to the payment, the modification is considered material under Art. 19 of the CISG.

90 Secondly, any changes to the goods’ design or finish, e.g. changing the color or the shape, are
generally considered to be material modifications, even if they do not significantly alter the

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goods’ value or quality [Schwenzer, p. 341]. Due to problems with the production and packing,
CLAIMANT offered differently shaped cakes [Ex. C3, p. 15]. Thus, by changing the proposed
design of cakes, CLAIMANT made a second material modification to the received INV.

91 Admittedly authorities’ opinions vary whether a reference to different standard terms is also
regarded as a material alteration [Schwenzer, p. 338]. However, it is undisputed that when the
content of standard terms relates to the matters listed in Art. 19(3) of the CISG, this amounts
to a material modification [Schwenzer/Mohs, p. 244; CSS case; Printed goods case]. In CSS case,
German seller has materially altered American buyer’s offer by referring to its standard terms,
which included terms related to the settlement of disputes. Similarly, CGC also contain a
provision related to dispute settlement. Additionally, CGC changed the extent of CLAIMANT’s
liability for actions of its suppliers [see infra §§134-136], which is considered a material
modification under Art. 19(3) of the CISG.

92 All things considered, by including CGC to govern the contract and changing the payment
and shape of the cakes, CLAIMANT proposed three material modifications of INV [Ex. C3, p.
15]. Offer thus constitutes a rejection and a valid counter-offer.

3. Pursuant to Art. 8 of the CISG CLAIMANT’s General Conditions govern the contract

93 Tribunal should also take into account Art. 8 of the CISG to determine which Party’s
standard terms govern the contract. The provisions of Art. 8 of the CISG are relevant to
interpretation of statements and conduct of parties [Honnold, p. 116; Smallmon case; Propane
case]. The underlying principle of said article is the determination of ‘true intent’ of the parties,
arrived at through consideration of all the facts and circumstances surrounding the case
[Zeller, p. 638; Yang, p. 618; Cedar Petrochemicals inc. case; Chinchilla furs case]. Under Art. 8(1) of
the CISG statements and other conducts of a party are to be interpreted according to its
intent where the other party knew or could not have been unaware of other party’s intent
[Roser Technologies, Inc. case; Propane case; Corporate Web Solutions Ltd. case]. To incorporate
standard terms, the offeror has to refer to the terms so that the other party could not have
been unaware of the intent to include them into the contract according to Art. 8 of the CISG
[Eiselen, p. 234; CSS case; Plants case; Propane case; Gantry case].

94 Moreover, Art. 8(1) of the CISG introduces the standard for imputable knowledge “could not
have been unaware”. This standard is generally understood to require a greater degree of

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carelessness [Witz/Salger/Lorenz, Art. 8 §5]. The issue at hand is a result of RESPONDENT’s

gross negligence, since CLAIMANT’s intent to include CGC was easily discerned. In Offer,
CLAIMANT referred to its website, where the standard terms are posted [Ex. C4, p. 16]. In
order to ensure RESPONDENT’s awareness, CLAIMANT has used different font for citing the
internet address and has referred RESPONDENT to the exact document, containing the
standard terms [PO2, p. 53, §28]. RESPONDENT had a reasonable opportunity to take notice of
CGC. Furthermore, RESPONDENT’s Head of Purchasing downloaded and even read
CLAIMANT’s Codes of Conduct [Ex. C5, p. 17]. Thus, RESPONDENT could not have been
unaware of CLAIMANT’s intent to govern the contract with CGC instead of RGC. Since
RESPONDENT was aware of CLAIMANT’s intent to include CGC into the contract, it cannot
claim to be surprised if they apply. Moreover, it is the party’s responsibility to enquire about
the content of the standard terms [Kindler, p. 229; Magnus, p. 320; Berger, p. 17, §2].

95 Under Art. 8(2) of the CISG statements are to be interpreted according to the understanding
that a reasonable person of the same kind as the other party would have had [Rubber sealing parts
case; Roder case; Health care products case]. A reasonable person would consider all the relevant
circumstances of declaration and would therefore be objective [Honsell, Art. 18, §§28-29; Auto
case]. A commercial party experienced in international trade cannot expect not to be bound by
terms it previously signed, simply because it did not read them [Drasch, p. 8; Eiseln p. 234; Koller,
p. 238; Parker case]. In case at hand, a reasonable person of the same kind as RESPONDENT
would not accept the offer without knowing the content of CGC. Therefore, RESPONDENT is
bound by CGC because it agreed to them, regardless of whether it actually read them.

96 Furthermore, offeror has to give offeree an option to request or to get introduced to standard
terms [Cereal case]. Even a reference to standard terms printed on the reverse side of the
contract is considered sufficient for their incorporation [Schwenzer, p. 176; Doors case; Shoes
case]. Moreover, standard terms are also considered sufficiently available when posted on a
party’s website and referred to in a (counter) offer [Stiegele/Halter, p. 169; AC-CISG Op. 13].

97 According to the “making-available-test”, it is not necessary to physically send the standard

terms to the other party. Instead, it is sufficient to make them otherwise available [Schwenzer,
p. 283; Machinery case]. A way of making standard terms available is presenting them on the
internet [Schwenzer, p. 283]. Access to the standard terms on the internet must be arranged in a
way that a reasonable person could easily find and download them [Schwenzer, p. 279]. What is
more, considering the importance of the internet in everyday trade, it is even considered
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sufficient to only display the link where the standard terms can be downloaded if the other
party has internet access [Gruber, Art. 14 §32; Magnus, pp. 318-320; Stiegele/Halter, p. 169;
Karollus, p. 551; Berger, p. 18 Magnus ZEuP, p. 523]. In Offer, CLAIMANT referred to its
homepage [Ex. C4, p. 16], where CGC are publicly available [PO2, p. 53, §28]. Therefore, by
explicitly stating, “the above offer is subject to the General Conditions of Sale” [Ex. C4, p. 16],
displaying the link and making CGC available on the internet, was sufficient for their
inclusion into CLAIMANT’s (counter) offer.

B. RESPONDENT accepted the (counter) offer without objections

98 Since Offer constitutes a (counter) offer, RESPONDENT had two options; either it proposed a
new offer or accepted CLAIMANT’s (counter) offer. As can be seen from its letter following
CLAIMANT’s (counter) offer, it had clearly chosen the latter [Ex. C5, p. 17].

99 Firstly, RESPONDENT accepted the (counter) offer and did not refer to its RGC. A binding
contract is formed once a buyer or offeree accepts an offer [Schwenzer, p. 316]. If the buyer
makes material alterations that amount to counter-offer, they have to be accepted by original
offeror in accordance with Art. 18 of the CISG [Schwenzer, p. 343]. If the offeror has fixed a
time, then the acceptance must reach him within the time fixed [Schwenzer, p. 326; Radio
equipment case]. CLAIMANT declared that its offer remained open until 11 April 2014 [Ex. C4, p.
16]. CLAIMANT received RESPONDENT’s acceptance of all proposed modifications on 7 April
2014 [Ex. C5, p. 17]. RESPONDENT not only accepted the changed specification for the
chocolate cakes and the changed payment terms, it also did not object to the inclusion of
CLAIMANT’s General Conditions [ibid.]. Therefore, RESPONDENT fully accepted CLAIMANT’s
(counter) offer in due time since the acceptance reached CLAIMANT before the closing date.

100 Secondly, RESPONDENT had a reasonable opportunity to include RGC in the contract by
referring to them in its acceptance letter [Ex. C5, p. 17] and yet decided not to do so. This
can be discerned from the wording that “tender was successful notwithstanding the changes”
suggested by CLAIMANT. Moreover, RESPONDENT instructed CLAIMANT to start with
deliveries from 1 May 2014 onwards [Ex. C5, p. 17]. Therefore, Tribunal should consider that
RESPONDENT accepted the (counter) offer without any modifications.

101 Thirdly, under the last shot rule, the party, which last referred to its standard terms without
these being subsequently objected to, sets the standard terms that govern the contract
[Schwenzer, p. 349; Honnold, p. 191; Kelso, p. 554; Norfolk Southern Railway case; Concrete slabs case;

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Cashmere sweaters case; Shock-cushioning seat case]. Applying the last-shot rule to the case at hand
CGC govern the contract. CLAIMANT’s counter-offer is subject to its CGC and its
Commitment to a Fairer and Better World [Ex. C4, p. 16]. CGC are the only set of standard
terms exchanged between Parties after the constitution of the (counter) offer and the last set
exchanged since the beginning of the negotiation [Ex. C4, p. 16; Ex. C5, p. 17]. Based on the
mirror image rule it is required that acceptance mirrors the offer exactly [Eiselen/Bergenthal, pp.
217-218]. Since CLAIMANT did not accept RESPONDENT’s offer but proposed a (counter)
offer with different standard terms, last shot rule is to be applied.

102 Furthermore, even if Tribunal were to find that RESPONDENT successfully referred to RGC
in its acceptance [Ex. C5, p. 17], CGC were still applicable under the last shot rule. In the
invoices sent to RESPONDENT, CLAIMANT has sufficiently referred to CGC, as they were
mentioned in the same form as in Offer [see supra §§84-87; Ex. C5, p. 17; PO2, p. 52, §24]. In
any case, CGC were the last set of standard terms exchanged between Parties, and therefore
they govern the contract.

C. Even if RESPONDENT’s General Conditions were part of the contract, they would
still not be applicable

103 Situations where both parties refer to and rely on their own set of standard terms are called a
‘battle of forms’ [Huber/Mullis, p. 91, Schwenzer, p. 347]. While CISG does not contain a special
rule on solving the ‘battle of forms’ situations, UNIDROIT Principles and case law favour
the knock-out doctrine [UNIDROIT Principles, Art. 2.1.22; Schwenzer, p. 349; Powdered milk case;
Les Verreries de saint Gobain case; Knitwear case]. UNIDROIT Principles are verbatim adopted in
the general contract law of Equatoriana, Mediterraneo, Ruritania and Danubia, govern the
issues not dealt by with CISG [PO1, p. 49, §3]. Under Art. 2.1.22 of the UNIDROIT Principles,
the knock out doctrine stipulates that a contract is concluded on the negotiated terms and any
standard terms, which are common in substance [UNIDROIT commentary, p. 72].

104 CLAIMANT will demonstrate that even if Tribunal were to find that RGC were incorporated
into the contract, they would not govern it for two reasons. Firstly, knock-out doctrine
should be applied to the case at hand, as neither of Parties has excluded its operation (1).
Secondly, all the terms of RGC that contradict the negotiated terms, CISG or CGC, are to be
disregarded under the knock-out doctrine (2).

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1. Knock-out doctrine applies as RESPONDENT has not excluded its operation

105 A party, which does not intend to be bound by a contract that is not based on its own
standard terms, may exclude the operation of the knock-out doctrine, if it clearly indicates
that it does not intend to be bound by such a contract [UNIDROIT Principles, Art. 2.1.22; AC-
CIGS Op. 13, §10.8]. To fulfill the standard of a ‘clear’ indication, the party concerned has to
make a specific declaration in its offer or acceptance [UNIDROIT commentary, p. 73]. In case
at hand, none of Parties made such a declaration.

106 Moreover, a clear indication cannot be given just by a respective standard term in party’s
general terms or by its interpretation [ibid.; Schlechtriem, p. 23]. Hence, Art. 5 of the Special
Conditions of Contract, regarding the order of precedence of contract documents, is not
sufficient for exclusion of knock-out doctrine [Ex. C2, p. 11]. If RESPONDENT intended that
RGC prevail over CGC in case of ambiguity or divergences, it should indicate its intention in
a clearer and more specific manner.

107 Usually, a notice of incorporation of one’s own terms and absolute rejection of any other
standard terms is a special declaration, attached to the party’s acceptance of the contract
[Schlechtriem, p. 25]. If RESPONDENT intended to prevent the operation of the knock-out
doctrine and exclude CGC from the contract, it should have followed the above mentioned
business practice and make a special declaration of its intent. Yet, there is no such declaration
even in RESPONDENT’s acceptance letter [Ex. C5, p. 17]. Furthermore, RGC have not been
referred to at all. Therefore, the knock-out doctrine has not been excluded under Art. 2.1.22
of the UNIDROIT Principles and should apply.

2. Provisions of RESPONDENT’s General Conditions that contradict CLAIMANT’s are

disregarded under the knock-out doctrine

108 Partly diverging standard terms can govern the contract only insofar as they do not contradict
each other [Achilles, Art. 19 §5; Magnus/Staudingres, Art. 19 §23; Powdered milk case]. When the
standard terms of one party deal with a matter on which the standard terms of another party
are silent, there is a contradiction, unless the content of standard terms is the same as the
rules of the CISG [Schwenzer, p. 355; Conveyor band case]. Thus, RESPONDENT’s standard terms
could govern the contract only insofar as they have the same content as CLAIMANT’s or
merely repeat the rules of the CISG.

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 MEMORANDUM FOR CLAIMANT

109 RESPONDENT contended that CLAIMANT breached the Clause 4(3) RGC, which stipulates
that any breach of some relevance of SUP constitutes a fundamental breach [Ex. C2, p. 12].
No similar clause can be found in CGC. It is assumed that a party, which did not regulate a
certain question in its standard terms, declared that the question is regulated under CISG
[Schlechtriem, p. 49]. Therefore, CLAIMANT intended to regulate the issue of a fundamental
breach pursuant to Art. 25 of the CISG. Since Clause 4(3) RGC does not match the
substance of CGC or CISG, it should be disregarded under the knock-out doctrine.

110 Likewise, all of the provisions of SUP, which regulate CLAIMANT’s liability for behaviour of its
own suppliers, are to be disregarded. Such a strict obligation cannot be found in CISG and alike
term has not been included in CGC. Therefore, terms of RGC, which CLAIMANT allegedly
breached, are not applicable under the knock-out doctrine and thus cannot govern the contract.

CONCLUSION ON ISSUE III

111 CGC govern the contract, as they have been the only set of standard terms exchanged
between Parties following Offer. As RGC were only included in Tender Documents, which
form an invitation to make an offer and not an actual offer, they cannot govern the contract.
Moreover, even if Tribunal were to find that Tender Documents constitute an offer, CGC
would nonetheless govern the contract. Offer has materially modified the payment and the
shape of chocolate cakes and thus constitutes a (counter) offer. Furthermore, RESPONDENT
accepted Offer without referring to RGC. Since CGC were sufficiently available and
CLAIMANT’s intent regarding their inclusion was easily discerned, a reasonable person would
not accept Offer without agreeing to be bound by CGC. Additionally, since CGC were the last
set of standard terms exchanged since the beginning of the negotiations, they govern the
contract under the last shot rule. Ultimately, even if RGC were part of the contract, they would
still not be applicable since they are to be disregarded pursuant to the knock-out doctrine.

ISSUE IV: CLAIMANT DELIVERED CONFORMING CAKES

112 RESPONDENT has terminated the contract as CLAIMANT has allegedly committed “a breach of
some relevance” when delivering cakes produced from presumably unsustainable cocoa [Ex. C2,
p. 12; Ex. C6, p. 18]. CLAIMANT urges Tribunal to consider the unlawfulness of this
termination, as RESPONDENT’s drastic actions, motivated by commercial reasons, deprived
CLAIMANT of what he was entitled to expect under the contract.

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113 CLAIMANT will establish that it has never breached the contract, as the delivered cakes were
conforming under Art. 35 of the CISG (A). Additionally, CLAIMANT was merely obliged to
use its best efforts regarding sustainability (B).

A. Chocolate cakes are conforming under Art. 35 of the CISG

114 CLAIMANT will demonstrate that RESPONDENT’s allegations regarding the non-conformity of
chocolate cakes are misguided. Goods delivered by CLAIMANT are conforming under Art. 35
of the CISG since they were of the quantity, quality and description required by the contract
(1). In addition, CLAIMANT delivered goods fit for ordinary and particular purpose (2).

1. CLAIMANT delivered goods of the required quantity, quality and description

115 The description of goods is the usual way through which parties determine the content of
their obligations. Therefore, the description of goods made by the seller in its offer is binding
[Bianca, p. 273]. In case at hand, RESPONDENT has requested offerors to deliver 20,000 cakes
per day, to which CLAIMANT agreed in Offer [Ex. C2, p. 11, Ex. C4, p. 16]. It is evident that
CLAIMANT fulfilled its obligation to deliver the required number of cakes every day [NOA, p.
5, §6; RNA, p. 25, §13]. In Tender Documents, RESPONDENT also made some requirements
regarding the shape of cakes [Ex. C2, p. 10]. As the proposed shape was difficult to produce,
CLAIMANT suggested a modification, which was accepted by RESPONDENT [Ex. C5, p. 17].

116 In Section III of Tender Documents, RESPONDENT requested that the cakes were 3 inches in
diameter and produced from ingredients, sourced in accordance with the stipulations under
Section IV of Tender Documents [Ex. C2, p. 11]. In Section IV, there are no specifications
regarding the sourcing of the goods and all the additional details regarding the description of
the cakes were left blank to be filled in by CLAIMANT [Ex. C2, p. 12]. In its letter following
INV, CLAIMANT has proposed slight changes in the shape of cakes, which would be similar
to the form of cakes presented to RESPONDENT at the Cucina Food Fair [Ex. C3, p. 15]. It is
evident from that same letter that CLAIMANT has only referred to the similarities in the shape.
It did not compare any other features of the cakes [ibid]. Moreover, in Offer CLAIMANT has
provided the description of the goods as chocolate cakes named Queen’s Delight [Ex. C4, p.
16]. By stating the product’s name, CLAIMANT has further asserted that offered cake is not
the same as the cake King’s Delight, which was presented at the fair.

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117 The allegations in RNA [RNA, p. 25, §11] suggest that RESPONDENT was under wrongful
impression that the object of the contract is King’s Delight. King’s Delight is a part of the
CLAIMANT’s premium product line, it has won Cucina’s best cake award for the last five years
and it has been marketed by CLAIMANT as produced from sustainably sourced cocoa [ibid.;
Ex. R2, p. 29]. On the other hand, none of these features applies to Queen’s Delight, which
was offered by CLAIMANT [Ex. C3, p. 15; Ex. C4, p. 16]. Therefore, CLAIMANT has never
guaranteed that Queen’s Delight is produced from sustainably sourced ingredients. The
delivered cakes were of description and quality required by the contract and thus conforming
under Art. 35(1) of the CISG.

118 Even if Tribunal were to find that chocolate cakes should be produced from sustainable
ingredients, it is up to RESPONDENT to prove that CLAIMANT actually used unsustainable
cocoa in the production of delivered cakes. Once the buyer has physically taken over the
goods, he has to prove their non-conformity pursuant to the principle of proximity of the
proof [Schwenzer, p. 592; Pipes and cables case; Textile cleaning machine case; Crude oil mix case; Chicago
Prime Packers, Inc. case]. At most only part of the cocoa came from farms illegally set in the
protected areas [PO2, p. 54, §41; Ex. C9, p. 21]. While the possibility that some of the cocoa
beans might have been unsustainable cannot be excluded, the exact origin of ingredients has
not been proved with a reasonable degree of certainty. Since all allegedly non-conforming
cakes were properly delivered to RESPONDENT and thus the risk passed, it is its duty to prove
whether the cocoa used in production of Queen’s Delight came from unsustainable farms.

2. Cakes delivered by CLAIMANT were fit for the ordinary and particular purpose

119 If Tribunal were to find that stating the type of the cake and its name is not a sufficient
description of the goods in order to determine conformity under Art. 35(1) of the CISG, the
latter should be evaluated according to Art. 35(2) of the CISG. Objective criteria for
determining the conformity set in said article apply only if quantity, quality or description of
the goods are not sufficiently detailed [Huber/Mullis, p. 134; Schwenzer, p. 571]. Delivered
chocolate cakes are conforming under Art. 35(2)b, as RESPONDENT did not make any
particular purpose of goods known to CLAIMANT (2.1). Since RESPONDENT did not intend to
use cakes for any particular purpose, they are conforming as they are fit for ordinary use (2.2).

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2.1 C LAIMANT delivered cakes fit for their particular purpose under Art . 35(2)b
of the CISG

120 A seller is only responsible for the fitness of the goods for their particular purpose, if buyer
makes such a purpose known to the seller [Hyland 321; Schwenzer, p. 580; Vine wax case].
Furthermore, it is also required that the buyer relied on the seller’s skill and judgement
[Bianca, p. 275; Schlechtriem SO, p. 21].

121 Firstly, RESPONDENT never expressly stated that it intended to use the chocolate cakes for
any particular purpose. A particular purpose exists, for example, if the buyer of machines
intends to use them in unusual climatic conditions. The need for the goods to comply with
public law regulations in the state of use may also amount to a particular purpose [Schwenzer,
p. 580]. A particular purpose may also exist if a buyer is operating in a market with a special
emphasis on fair trade and the observance of ethical principles [ibid.; Schwenzer/Leisinger, p.
249]. In these situations, goods can be directly used to reach the desired result – they are used
in further production or sold to a specific market. RESPONDENT’s wish to become a Global
Compact LEAD Company by 2018 [Ex. C1, p. 8] thus cannot be regarded as a particular
purpose under Art. 35(2)b of the CISG. One cannot become a LEAD company by selling or
producing chocolate cakes, either in a sustainable or unsustainable manner. To become a
LEAD company one has to inspire other businesses to conduct their operations in a
responsible manner [UN GC Principles]. This is not only RESPONDENT’s principle but also
CLAIMANT’s when conducting its business [Ex. R3, p. 31], yet it cannot be regarded as a
particular purpose under Art. 35(2)b of the CISG.

122 Secondly, RESPONDENT’s particular purpose could not be selling the chocolate cakes in a
market especially concerned with fair trade. RESPONDENT has decided to distribute the
remaining chocolate cakes at the opening of three new shops [PO2, p. 54, §38]. Since
RESPONDENT already had negative experience in the past [Ex. C1, p. 8], it is highly unlikely
that it would risk negative press again by even gifting the chocolate cakes to its customers.

123 Thirdly, expressly stating the particular purpose is not sufficient where the circumstances
show that the buyer did not rely or it was unreasonable for him to rely on seller’s skill and
judgement [Bianca, p. 275]. The buyer cannot rely on the seller when it has more experience in
a particular area [Schwenzer, p. 582; Hyland, p. 321; Maley, p. 119]. In general, it is unreasonable
for the buyer to rely on a skill or judgement capacity that is not common in the seller’s trade

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branch [ibid.]. Sustainable products represent a small percentage of market share, and the
organic foods industry resembles this completely, with sustainable produced food accounting
for less than 3% of all food sales [Sheth/Sethia/Srinivas, p. 26; Forster p. 5]. Requiring
environmental, ethical or sustainable production is uncommon in bakery industry [PO2, p. 54,
§35]. Therefore, delivered goods are conforming under Art. 35(2)b of the CISG, since
RESPONDENT did not make its particular purpose known to CLAIMANT and it was
unreasonable of RESPONDENT to rely on CLAIMANT’s skill and judgement.

2.2 Delivered cakes were fit for their ordinary purpose under Art . 35(2)a of the
CISG

124 Under Art. 35(2)a of the CISG goods are conforming if they are fit for the purpose for which
they would ordinarily be used [Schlechtriem/Butler, pp. 115-116; Schwenzer, p. 575]. If the goods
can be used for commercial purposes, there are usually fit for ordinary purpose [Ethical
Standards, p. 126; Bianca, p. 274; International Housewares case]. In the resale business that means
that goods can be sold [ibid.]. It is sufficient that goods can be sold at least at some markets
[Schwenzer/Leisinger 267; Ethical Standards, p. 126]. Moreover, if goods are type of food, they
have to be edible [Schwenzer, p. 567; New Zealand mussels case; Spanish paprika case; Frozen pork
case]. For the past two years, RESPONDENT has been selling the chocolate cakes without
receiving any complaints from its customers [PO2, p. 54, §38]. RESPONDENT has distributed
the unsold cakes as a part of the marketing campaign [ibid]. Therefore, the cakes were not
only fit to be eaten, they could also be sold.

B. CLAIMANT has not breached the contract as it contained merely obligations of best
efforts

125 CLAIMANT has already established that the delivered cakes were conforming under Art. 35 of
the CISG. Additionally, it will exhibit that it did not breach the contract whatsoever, as RGC
failed to create obligations of result (1). Furthermore, CLAIMANT would be obliged to use best
efforts, even if Tribunal were to find that RGC contained obligations of result (2).

1. RESPONDENT’s General Conditions failed to create obligations of result

126 RESPONDENT terminated the contract because CLAIMANT allegedly breached principles C and
E of SUP [Ex. C10, p. 22]. Despite not knowing that RGC govern the contract, CLAIMANT
still used its best efforts to fulfil these obligations, since CGC contain similar obligations.

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Principle C ‘Health, safety and environmental management’ stipulates that CLAIMANT shall
conduct its business in an environmentally sustainable way [Ex. C2, p. 13]. Pursuant to CGC,
CLAIMANT has clearly used its best efforts to ensure compliance with the relevant provisions
[NOA, p. 7, §22; Ex. R3, pp. 30-31]. RESPONDENT’s expectations regarding CLAIMANT’s
suppliers are further defined in principle E ‘Procurement by suppliers’ [Ex. C2, p. 13]. Since it
is its philosophy that only the best ingredients are just good enough for its products,
CLAIMANT selected its own tier one suppliers, which agreed to adhere to standards
comparable to SUP [NOA, pp. 4-5, §§1,9; PO2, p. 53, §32; Ex. R3, p. 31]. Furthermore,
CLAIMANT used its best efforts to ensure that its suppliers comply with those standards [ibid].
CLAIMANT even outsourced the auditing services to Egimus AG, specialized in providing an
expert opinion on compliance with Ten Principles of UN Global Compact (hereinafter: UN
GC Principles) [Ex. C8, p. 20; PO2, pp. 53-54, §33].

127 Pursuant to Art. 8(2) of the CISG, contractual terms must be given an interpretation based
on what a reasonable person of the same kind would have understood [Schwenzer, p. 155]. In
the principles C and E of SUP, RESPONDENT formulated obligations using words ‘shall’ and
‘will’. The word ‘must’ that is normally used to impose an obligation or a duty [Asprey, p. 79]
was used just once. CLAIMANT was required to procure goods and services in a responsible
manner and it has fulfilled this obligation. The word ‘shall’ is to be avoided when drafting
legal documents, as it can mean ‘may’, ‘will’, ‘is’, ‘should’ or ‘must’ [Kimble, p. 160]. The world
is hardly ever used outside legal community and it is the most misused word in a legal
dictionary [Kimble MMS, p. 61; Asprey, pp. 79-80]. Consequently, it is suggested that a careful
drafter defines the modal verbs in advance [Kimble MMS, p. 67]. In contracts only ‘must’
should mean ‘is required to’, while ‘shall’ or ‘will’ means ‘promises to’ [ibid.]. Therefore, a
reasonable person would not interpret obligations contained in SUP as contractual
requirements, but merely as promises.

128 Additionally, it is well-established business practice that companies seeking to impose a

binding obligation on a contracting party would use more forceful and explicit language than
that used in SUP. Since the parties are considered to apply any internationally known trade
practices to their contract [CISG, Art. 9(2)], RESPONDENT ought to have known to draft SUP
in a more precise language. There is a preponderance of contractual terms stringently and
unambiguously providing that companies “will not tolerate” [Walmart; Puma] or “strictly prohibit”
[Nestle] unethical business conduct by their suppliers. Even the mildest of contractual terms

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used by the major players in the food vendor industry provide that suppliers “must meet the
ingredient standard” [Whole Foods] or “must comply fully with all local environment laws and regulations”
[Hershey’s]. Language that falls short of such unequivocally binding stipulations is insufficient
to impose a binding obligation on a supplier. SUP uses phrases such as “shall provide”, “will
select”, “will make sure”, which are not ordinarily used in business practice to create obligations
of result. While RESPONDENT has referred to its ‘zero tolerance’ policy in RGC, it has been
limited to unethical business behaviour, such as bribery and corruption [Ex. C2, p. 12]. Since
principles C and E, which CLAIMANT has allegedly breached, do not govern business ethics
[Ex. C2, p. 12], ‘zero tolerance’ policy does not apply to them. Thus, even if CLAIMANT were
to presume that RGC govern the contract, it would interpret that using best efforts is
sufficient to fulfil the rest of contractual requirements.

129 Ultimately, according to the contra proferentem rule, the risk of the ambiguity in standard terms
must be borne by the party responsible for the formulation of the term and ‘an interpretation
against that party is preferred’ [CISG, Art. 8; UNIDROIT Principles, Art. 4.6; Honnold, p. 189;
Automobile case; Peanuts case; Cysteine case]. To conclude, RESPONDENT should have used more
precise language when formulating obligations in RGC. Since it failed to do so, any
ambiguities should be interpreted against it.

2. CLAIMANT would be obliged to use best efforts, even if RESPONDENT’s General

Conditions contained obligations of result

130 Even if Tribunal were to conclude that provisions of RGC were specific enough to create
obligations of result, CLAIMANT has not breached the contract as it delivered conforming
goods. Throughout the negotiations, both Parties have emphasized that they are committed
to UN GC Principles [Ex. C3, p. 15; Ex. C5, p. 17; Ex. C9, p. 21; RNA, pp. 24-25, §§4-5].
When both parties have individually agreed on certain usages, e.g. participating in the private
initiatives such as UN GC Principles, those usages become part of the contract under Art.
9(1) of the CISG [Schwenzer/Leisinger, p. 265]. Therefore, Parties have agreed to include UN
GC Principles in their contract.

131 RGC regulate the same matters as UN GC Principles yet impose stricter obligations on
CLAIMANT. In case of conflict between a standard term and a term, which is not a standard
term, latter prevails [UNIDROIT Principles, Art. 2.1.21; Société Harper Robinson case; Visión
Satelital case; Dirección Nacional de Aduanas case; D. G. Belgrano case]. On one hand, UN GC

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Principles expect companies to use their best efforts to conduct their business in
environmentally responsible way [UN GC Principles]. On the other, RGC impose obligations
of result and thus diverge form UN GC Principles.

132 Art. 5.1.4 of the UNIDROIT Principles differentiates between duty to achieve a specific
result and duty of best efforts. If a party is bound to achieve a specific result, it guarantees the
achievement of said result [UNIDROIT commentary, p. 151; Joseph Charles Lemire case]. However,
when a party is only bound by duty of best efforts it must exert efforts that a reasonable
person of the same kind would in the same circumstances [ibid.]. In the case at hand,
CLAIMANT never guaranteed that its suppliers would adhere to RESPONDENT’s business
philosophy and its SUP. It merely assured RESPONDENT to do everything possible to
guarantee the ingredients sourced from outside suppliers would comply with Parties’ joint
commitment to UN GC Principles [Ex. C3, p. 15; Ex. C8, p. 20; Ex. C9, p. 21].

133 In addition, CLAIMANT selected its tier-one suppliers with good reputation on the market
[PO2, p. 53, §32]. Its suppliers signed Supplier Code of Conduct, committing to conduct their
business responsibly, ethically and sustainably [Ex. R3, p. 31]. Moreover, CLAIMANT even
outsourced the auditing services to Egimus AG, specialized in providing an expert opinion
on compliance with UN GC Principles [Ex. C8, p. 20; PO2, pp. 53-54, §33]. It is therefore
evident that CLAIMANT used best efforts to ensure conformity of cakes and its suppliers’
adherence to environmentally sustainable business practice.

134 Furthermore, CLAIMANT reasonably expected that RGC contained only obligations of best
efforts. RESPONDENT has acknowledged that SUP and CLAIMANT’s Supplier Code of
Conduct share the same values and that both companies are committed to ensure that the
goods are produced according to the highest standard of sustainability [Ex. C5, p. 17]. What
is more, RESPONDENT was even impressed by CLAIMANT’s Supplier Code of Conduct,
implying that it is at least equivalent in capturing the spirit of UN GC Principles to SUP. In
determining whether an obligation requires a duty of best efforts or a specific result, regard
should be had, among other factors, to the way in which the obligation is expressed, the
contractual price and the degree of risk involved [UNIDROIT Principles, Art. 5.1.5].

135 When formulating obligations CLAIMANT has used the word ‘expected’, which means that the
compliance with its Supplier Code of Conduct was only ‘anticipated’ [OED, “expected”; Ex.
R3, p. 31]. Moreover, CLAIMANT emphasized that the goal of its Code of Conduct is to

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positively influence the supply chain by enabling and supporting suppliers to improve the
sustainability of their business operations [Ex. R3, p. 31]. This wording indicated that
CLAIMANT merely required its suppliers and their sub-suppliers to follow their expectations
by exerting their best efforts. Furthermore, an unusually high price may indicate the duty of
specific result [UNIDROIT commentary, p. 153; Vogenauer, pp. 630-631]. The price of chocolate
cakes was above average [PO2, p. 54, §40], yet it was not as extraordinary as to change the nature
of the obligation. Ultimately, when a party’s performance of an obligation involves a high degree
of risk, it is not generally expected to guarantee a specific result but merely to use its best efforts
[UNIDROIT commentary, p. 15; Vogenauer, pp. 630-631]. Since it would be highly risky for supplier
to guarantee that all of its sub-suppliers will adhere to the Code of Conduct signed by it, a
reasonable person would conclude that the other party does not expect such a guarantee.

136 As RESPONDENT declared that CLAIMANT is equally committed to ensure sustainable

production, a reasonable person would assume that SUP, which is written in similarly vague
and imprecise terms, also contains obligations of best efforts. Even if SUP is applicable
CLAIMANT had the duty to use its best efforts, since UN GC Principles initiative is voluntary
and imposes no sanctions, if its members fail to comply with the standards
[Schwenzer/Laisinger, p. 259]. Moreover, a reasonable person would expect that SUP imposes
only obligations of best efforts. Therefore, CLAIMANT delivered conforming cakes.

CONCLUSION ON ISSUE IV
137 CLAIMANT fulfilled its contractual obligations as it delivered conforming cakes of the required
quantity, quality and description. CLAIMANT never guaranteed that Queen’s Delight is
produced from sustainably sourced ingredients. RESPONDENT’s apparent wrongful impression
that the subject of the contract is the cake King’s Delight, does not affect conformity.
Additionally, cakes would be conforming as they were fit for the ordinary and particular use.
Furthermore, RESPONDENT formulated the obligations in imprecise language, which is not
ordinarily used in business. Therefore, a reasonable person would conclude that using the best
efforts is sufficient to fulfil the contractual requirements. Since UN GC Principles were
included into the contract by agreement of both Parties, in case of conflict they prevail over
RGC and CLAIMANT had a duty to use best efforts pursuant to UN GC Principles. Finally,
RESPONDENT has compared Parties’ commitment to sustainable business operations and even
expressed admiration for CLAIMANT’s Supplier Code of Conduct. Thus, a reasonable person
would assume that SUP imposes obligations of best result, which are also contained in CGC.
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MEMORANDUM FOR CLAIMANT

REQUEST FOR RELIEF

In light of the submissions made above, Counsel for CLAIMANT respectfully requests the Arbitral
Tribunal:

1. to dismiss RESPONDENT’s Challenge of Mr. Rodrigo Prasad;

2. to order RESPONDENT to pay the outstanding price in the amount of USD 1,200,000;
3. to declare that contractual relationship between CLAIMANT and RESPONDENT is
governed by CLAIMANT’s General Conditions of the Sale;
4. to order RESPONDENT to pay damages in amount of at least USD 2,500,000;
5. to order RESPONDENT to bear the costs of the arbitration.

Respectfully signed and submitted by counsels on 7 December 2017.

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CERTIFICATE

Maribor, 7 December 2017

We hereby confirm that this Memorandum was written only by the persons whose names are
listed below and who signed this certificate.

XLII