Task #1 - Memorandum Answer Template

MEMORANDUM

File No. ARB-5214802-583314-01

Client Neptune Freight Company Inc. (“Neptune”)

Matter Contract with True North Maritime Operations Ltd (“True North”)

Date Today’s date

From Your name

To Jeremy De Klerk, Managing Director of Neptune.

Dear Mr De Klerk,
Executive Summary
This memorandum provides advice on the key elements to be included in the arbitration
agreement between Neptune Freight Company Inc. (hereinafter referred to as Neptune) and
True North Maritime Operations Ltd (hereinafter referred to as True North), in connection
with their shipbuilding contract. Given Neptune’s limited experience with international
arbitration, this advice aims to provide practical clarity and legal assurance on five core
aspects: the applicable arbitration rules, the law governing the arbitration agreement, the
seat of arbitration, the language of proceedings, and the ability to interview potential
arbitrators.
1. Appointment of Sole Arbitrator

Neptune and True North have expressed a shared preference for the appointment of
a sole arbitrator. This approach is supported under the 2016 Northern International
Court of Arbitration Rules, which incorporate the UNCITRAL Arbitration Rules (as
revised in 2010) in full. The Article 7(1) of the UNCITRAL Rules clearly provides if
parties do not agree on the number of arbitrators within 30 days of the respondent
receiving the notice of arbitration, the default is a three-member tribunal. However, if
the parties agree to a sole arbitrator, this choice will prevail. Further Art. 8
undermines the mechanism and procedure laid down for appointment of Sole
Arbitrator,

PROCEDURE FOR APPOINTMENT OF SOLE ARBITRATOR

1. The parties must try to agree on a sole arbitrator within 30 days of receiving
the proposal to appoint one.

1
Task #1 - Memorandum Answer Template

2. If no agreement is reached within this time frame, either party may request the
appointing authority to appoint the sole arbitrator.
3. Procedure laid down under Art. 8(2): Unless the parties agree otherwise, the
appointing authority will follow a “list procedure,” which involves:
a. Sending both parties an identical list of at least three candidate names.
b. Each party may strike names they object to and rank the remaining
names in order of preference.
c. The appointing authority will appoint the arbitrator from among the
mutually approved candidates, considering both parties’ preferences.
d. If the list procedure fails (e.g., no common names remain), the
appointing authority has the discretion to appoint an arbitrator directly.

If no appointing authority is agreed upon by the parties, the Secretary-General of the

Permanent Court of Arbitration (PCA) may be designated to act in that role under
Article 6(2) of the Rules.

This mechanism offers both parties a fair opportunity to influence the appointment
process while ensuring that arbitration can proceed even if mutual agreement is not
reached. It also guarantees neutrality and procedural efficiency in case of
disagreement.

Given Neptune’s interest in simplicity, cost-efficiency, and control, the inclusion of a

sole arbitrator provision is appropriate and legally sound under the applicable rules.

2. Substantive Law Applicable to the Arbitration Agreement

While the main contract may be governed by the substantive law of one jurisdiction,
it is legally permissible and sometimes advisable for the arbitration agreement within
that contract to be governed by a different law. This principle is recognised under
international arbitration jurisprudence and supported by the UNCITRAL Arbitration
Rules, which allow parties autonomy in determining applicable laws (Article 35). The
ability to choose different laws for the contract and the arbitration agreement allows
parties to tailor the legal framework to best suit the specific needs of their dispute
resolution process.

2
Task #1 - Memorandum Answer Template

Selecting a separate governing law for the arbitration agreement (such as the law of
the seat of arbitration) can be beneficial in ensuring consistency with the procedural
framework and enforceability of the agreement. For instance, if the seat is
Northedale, Northistan, choosing Northistan law (which incorporates the UNCITRAL
Model Law 2006) to govern the arbitration clause provides alignment with the lex
arbitri and avoids potential legal uncertainty over the clause’s validity and scope.

However, divergence between the contract’s governing law and the arbitration
agreement’s law could complicate interpretation if not carefully drafted. We therefore
recommend expressly specifying that the arbitration clause be governed by
Northistan law, to enhance clarity, validity, and procedural harmony.

3. Arbitration Seat: Concept and Key Consequences

The Seat of arbitration is the legal home or juridical location of the arbitration, distinct
from the physical venue where hearings may take place. It determines the
procedural framework that governs the arbitration, including matters such as tribunal
powers, court intervention, and the enforceability of the award.

By agreeing on Northedale, Northistan as the seat, the arbitration will be subject to

the Northistan International Arbitration Act 2015, which fully incorporates the
UNCITRAL Model Law (2006). This ensures a modern, neutral, and arbitration-
friendly legal environment. Northistan courts will have supervisory jurisdiction over
the arbitration, including on matters such as the appointment and challenge of
arbitrators, interim measures, and setting aside awards. Importantly, the legal seat
determines the nationality of the arbitral award for enforcement under the New York
Convention, to which Northistan is assumed to be a party. This facilitates
international recognition and enforcement of the award.

We recommend affirming Northedale as the seat in the arbitration clause and

clarifying that arbitration proceedings shall be conducted in accordance with the
arbitration law of Northistan, thus ensuring legal certainty and procedural
predictability.

3
Task #1 - Memorandum Answer Template

4. Language of Arbitration

While the parties have provisionally agreed to leave the choice of language to the
arbitral tribunal, we recommend specifying the language in the arbitration agreement
to avoid uncertainty and potential procedural complications.

Under Article 19 of the UNCITRAL Arbitration Rules (2010), and Article 22 of the
UNCITRAL Model Law (2006), the language of the proceedings is determined by
agreement of the parties or, failing agreement, by the arbitral tribunal after its
constitution. If left undecided, the tribunal has broad discretion, which may result in
the adoption of a language that is less accessible or efficient for one of the parties—
particularly relevant here, given the significant linguistic divergence between
Southland and Northistan. Specifying the language preferably English, as a neutral
and internationally recognized language ensures procedural efficiency, avoids
translation costs, and reduces the risk of misunderstandings or delay.

If the parties do not agree on a language in advance, the tribunal’s later decision
may inadvertently disadvantage one party and complicate the conduct of the
proceedings. Therefore, we strongly recommend designating English as the
language of arbitration in the clause.

5. Interviewing potential arbitrators: Scope and Limitations

It is legally permissible for parties to interview prospective arbitrators prior to

appointment, particularly in ad hoc arbitrations under the UNCITRAL Arbitration
Rules. However, such interviews must respect ethical standards to ensure
impartiality, transparency, and due process.

While the UNCITRAL Model Law (2006) and UNCITRAL Arbitration Rules (2010) do
not explicitly regulate pre-appointment interviews, they require arbitrators to be
independent and impartial (Model Law, Arts. 12-13; UNCITRAL Rules, Arts. 11-13).
Any interview must therefore avoid compromising the arbitrator's perceived
neutrality.

However even though such interviews are legally permissible but there are certain
points that the parties must keep in mind while interviewing the arbitratoors:

4
Task #1 - Memorandum Answer Template

 Parties must not ask questions about the merits of the dispute, legal arguments,
or expected decisions, as this would violate principles of fairness and could lead
to disqualification or award challenge.
 Parties can only ask about Professional background and arbitration experience,
Familiarity with the applicable law or industry, Availability and potential conflicts
of interest (as required under Art. 11 of the UNCITRAL Rules).
 Guidelines is provided in the IBA Guidelines on Conflicts of Interest in
International Arbitration (2014), which, though non-binding, are widely respected.
The guidelines permit limited, structured interviews focused on suitability and
impartiality.

4. Proposed Arbitration Agreement

Any dispute, controversy, or claim arising out of or in connection with this contract, or
the breach, termination or validity thereof, shall be submitted to the Northern
International Court of Arbitration and settled by final and binding arbitration in
accordance with the Northern International Court of Arbitration Rules, which
incorporate the UNCITRAL Arbitration Rules (2010).

A sole arbitrator shall be appointed by agreement of the parties. If the parties have
not agreed on the appointment of a sole arbitrator within 30 days of the respondent’s
receipt of a notice of arbitration, then, at the request of one of the parties, a sole
arbitrator shall be appointed by the Secretary-General of the Permanent Court of
Arbitration at The Hague.

The seat of arbitration shall be Northedale, Northistan. The proceedings shall be

conducted in accordance with the arbitration law of the seat of the arbitration. The
language of the arbitration proceedings shall be English. The arbitration agreement
shall be governed by the Northistan laws.

Best regards
Hemant Fating