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Transcript of DAHU Claimant Memo
Twenty-Second Annual Willem C. Vis International Commercial Arbitration Moot
Memorandum for Claimant
Dar Al-Hekma University
On behalf of Against
Vulcan Coltan Ltd Mediterraneo Mining SOE
21 Magma Street 5-6 Mineral Street
Oceanside Capital City
Equatoriana Mediterraneo
CLAIMANT RESPONDENT
Nouran AlMekhlafi • Jude Jamjoom • Noha Bangaitah • Ohoud Mously
Maryam AlDabbagh • Dorra Ramadan • Nedaa AlAhmadi
Lamia AlOtaibi • Mohra Ferak • Ayat AlBarakati
Dar Al-Hekma • Saudi Arabia
DAR AL-HEKMA UNIVERSITY
I
TABLE OF CONTENT
INDEX OF ABBREVIATIONS ........................................................................................ V
INDEX OF AUTHORITIES .......................................................................................... VII
INDEX OF CASES ............................................................................................................... X
INDEX OF ARBITRAL AWARDS ........................................................................... XVII
STATEMENT OF FACTS ................................................................................................. 1
SUMMARY OF ARGUMENTS ....................................................................................... 3
ARGUMENTS ....................................................................................................................... 4
ISSUE 1: RESPONDENT DID NOT LAWFULLY AVOID THE CONTRACT, AND
THUS HAS A DUTY TO CARRY OUT ITS CONTRACTUAL OBLIGATIONS FOR
THE DELIVERY OF 30 METRIC TONS OF COLTAN .................................................... 4
A. The First L/C Did Not Constitute A Fundamental Breach, And Thus
RESPONDENT Could Not Lawfully Avoid The Contract By Its First Avoidance .. 4
I. The Contract Was Amended On The 27th
Of June ................................................. 4
II. Even If There Was No Amended Contract, The First L/C Conforms To The
Contract .......................................................................................................................................... 5
1) The Amount Provided Under The First L/C Did Not Constitute A Breach
According To Art. 31 Of The UCP 600 .......................................................................... 5
2) The First L/C Providing For CIP As The Delivery Term Was In
Accordance With RESPONDENT‟s Notice Of Transport ....................................... 6
a) By Virtue Of Art. 29 Of The CISG, CLAIMANT And RESPONDENT
Agreed To Modify The Delivery Terms in The Contract .................................... 6
1. RESPONDENT Offered To Modify The Delivery Terms Specified
Under The Contract From CIF To CIP ................................................................ 6
i. RESPONDENT Intended To Be Bound By An Acceptance .............. 7
ii. RESPONDENT’s Proposal Was Sufficiently Definite ....................... 7
2. CLAIMANT’s Conduct Causing The Issuance Of The First L/C
Constitutes An Acceptance To RESPONDENT’s Offer To Modify The
Contract ........................................................................................................................... 8
DAR AL-HEKMA UNIVERSITY
II
b) CIP And CIF Do Not Substantially Differ ...................................................... 9
3) RESPONDENT Cannot Rely On The Contention That The First L/C Was
Not In Conformity to The Contract .................................................................................. 9
III. The Alleged Non-Conformity Of The First L/C Could Not Constitute A
Fundamental Breach ................................................................................................................ 10
1) Respondent Could Not Have Incurred Substantial Detriment By The
Alleged Non-Conformity .................................................................................................. 11
2) CLAIMANT Could Not Have Foreseen Any Substantial Detriment To
The RESPONDENT ........................................................................................................... 12
IV. RESPONDENT Did Not Rightfully Avoid The Contract By Its First
Avoidance ................................................................................................................................... 13
1) RESPONDENT‟S First Avoidance Was Not Properly Noticed ................ 14
2) RESPONDENT‟s Primary Remedy Is To Require Performance Which
Shall Precede A Declaration Of Avoidance ............................................................... 15
B. RESPONDENT’s Second Avoidance On 9 July Did Not Constitute A Lawful
Avoidance Of The Contract...................................................................................................... 16
I. RESPONDENT Did Not Lawfully Avoid The Contract On 7 July;
Therefore The Contractual Obligations Between The Parties Still Exist .............. 16
II. The Second L/C Was Provided In Accordance With The Deadline Provided
For Under The Contract ......................................................................................................... 16
III. The Requirement That RESPONDENT Present A Commercial Invoice
Does Not Amount To A Breach Of The Contract ......................................................... 17
CONCLUSION OF THE FIRST ISSUE ..................................................................... 18
ISSUE 2: The Arbitral Tribunal Should Not Lift the Remaining Part of the
Emergency Arbitrator’s Order for Interim Measures ......................................... 18
A. The Emergency Arbitrator Enjoys Full Authority to Issue Interim
Measures Based on the ICC Arbitration Rules, The Contract, and the UNCITRAL
ML 18
I. The EA Order Applies Automatically Under the Parties‟ Agreement and
Art. 29 of the ICC Arbitration Rules ................................................................................. 18
II. Art. 21 Provides for the Exclusive Right of the Specified Courts to Enforce
Interim Measures Issued By the Competent Arbitral Authority ............................... 19
DAR AL-HEKMA UNIVERSITY
III
III. Art. 21 of The Contract Provides for Concurrent Jurisdiction to Issue
Interim Measures to the Specified Courts and the Emergency Arbitrator ............ 20
1) The Phrase „Exclusive Jurisdiction‟ Does Not Mandate Absolute
Exclusivity ............................................................................................................................. 20
2) Art. 21 Should Be Interpreted in Accordance With the Parties‟ Original
Intentions As Per Art. 8(3) of the CISG ...................................................................... 21
3) Art. 21 cannot be construed to exclude an authority for interim relief that
did not yet exist when it was drafted ............................................................................ 21
4) Art. 21 is a forum selection clause that specifies which national court has
exclusive jurisdiction to issue and enforce interim measures, without
excluding the authority of the competent arbitral tribunal .................................... 22
IV. None of the Exceptions Invalidating the EA Order, Listed In Art. 29(6) of
the ICC Rules, Apply in This Case .................................................................................... 22
B. The EA Order Fulfilled All Substantive Requirements of under Art.17 (A)
of the Danubian Arbitration Law for Issuance of Interim Measures, and Thus
the EA Order shall Be Upheld By the Arbitral Tribunal .............................................. 23
I. The EA Order to Freeze 30 Tons of Coltan Satisfied the Substantive
Requirements for Issuing Interim Measures As Set Out in the UNCITRAL ML
Art. 17(A) .................................................................................................................................... 23
1) CLAIMANT Would Suffer Irreparable Harm That Cannot Be Measured
By an Award of Damages Should The EA Order Be Lifted ................................. 24
a) An Adequate Harm CLAIMANT Would Suffer Towards Its Economic
Standing ............................................................................................................................. 24
b) Lifting the EA Order will influence CLAIMANT‟s reputation ............ 25
2) CLAIMANT Has a Reasonable Possibility To Succeed In Its Claim ..... 25
II. Due to the Necessary Urgency for Issuing Interim Measures, the EA Order
was in Line With The Arbitral Tribunal‟s Authority to Grant Such Measures ... 26
III. RESPONDENT Bears the Burden of Proof to Support Their Claim of
Lifting The EA Order, Which They Have Yet to Produce. ........................................ 27
CONCLUSION OF THE SECOND ISSUE ................................................................ 27
DAR AL-HEKMA UNIVERSITY
IV
ISSUE 3: GLOBAL MINERALS IS NOT A PARTY TO THE CONTRACT OR THE
ARBITRATION AGREEMENT; THEREFORE, IT SHOULD NOT BE SUBJECT TO
ARBITRATION PROCEEDINGS ..................................................................................... 27
A. Global Minerals is not an Additional Party to The Contract between
CLAIMANT and RESPONDENT .............................................................................................. 27
I. Global Minerals Was Not Expressly Mentioned As A Party in The
Arbitration Clause .................................................................................................................... 27
II. Global Minerals Did Not Consent to Be Involved in The Arbitration
Proceedings ................................................................................................................................ 28
III. Global Minerals‟ Endorsement to The Contract is Not Sufficient to Bind
it to The Arbitration Agreement .......................................................................................... 29
B. The Group of Companies Doctrine Should Not Be Used To Extend The
Arbitration Agreement to Global Minerals....................................................................... 30
I. The Group of Companies Doctrine is Not Widely Accepted .......................... 30
II. The Requirements Of The Group of Companies Doctrine Are Not Fulfilled
By Global Minerals; Therefore, Global Minerals Is Not Bound By Virtue Of
That Doctrine ............................................................................................................................. 31
C. RESPONDENT’s Claim to Join Global Minerals to the Arbitration
Proceedings Pertains to The Doctrine of Piercing the Corporate Veil ................. 32
I. The Elements That Allow The Application Of the „Piercing The Corporate
Veil Doctrine‟ Are Not Met .................................................................................................. 32
1) Claimant is Not Global Minerals‟ Alter Ego. .................................................. 33
2) RESPONDENT Does Not Incur Injustice if Global Minerals Was Not a
Party to the Arbitration ...................................................................................................... 33
D. Good Faith Considerations Do Not Mandate The Joinder Of Global
Minerals As An Additional Party to The Arbitration Agreement............................ 34
CONCLUSION OF THE THIRD ISSUE .................................................................... 35
REQUEST FOR RELIEF ................................................................................................ 35
Certificate ....................................................................................................................... XVIII
DAR AL-HEKMA UNIVERSITY
V
INDEX OF ABBREVIATIONS
Art(s). Article(s)
Art. 21 Article 21 of The 28 March 2014 Contract
BGer Federal Supreme Court (Bundesgericht)
CISG United Nations Convention on the International Sale of
Goods, Vienna, 11 April 1980
CL.EX. Claimant Exhibit
CL Memo Claimant Memorandum
EA Emergency Arbitrator
EX Exhibit
First L/C First Letter of Credit
HG Commercial Court (Handelsgericht)
i.e id est (that means)
ICC International Chamber of Commerce and Industry
ICC Rules ICC Rules of Arbitration, 2012
ICDR International Centre for Dispute Resolution
ICSID International Centre for Settlement of Investment
Disputes
LCIA The London Court of International Arbitration
Ltd. Limited
Mr. Mister
Mr. Storm Chief Operating Officer of Global Minerals
Mr. Summer Chief Operating Officer of Vulcan Cultan
Mr. Winter General Sales Manager of Mediterraneo Mining SOE
Ms. Miss
No. Number(s)
NY Convention United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, New York, 10
June 1958
OLG German Regional Court of Appeals (Oberlandesgericht)
OGH Supreme Court of Austria (Oberster Gerichtshof)
P. Page(s)
Para. Paragraph
DAR AL-HEKMA UNIVERSITY
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Paris Court D‟appel Court of Appeal of Paris
PECL The Principles of European Contract Law 2002
R Record
RE. EX Respondent Exhibit
Second L/C Second Letter of Credit
SOE Special Operations Executive
USA United States of America
UNCITRAL United Nations Commission on International Trade
Law
UNCITRAL ML UNCITRAL Model Law on International Commercial
Arbitration, 21 June 1985 with the 2006 Amendments
UNIDROIT Principles International Institute for the Unification of Private Law
v. Versus
DAR AL-HEKMA UNIVERSITY
VII
INDEX OF AUTHORITIES
Babiak, Andrew Defining "Fundamental Breach" Under the United Nations
Convention on Contracts for the International Sale of
Goods
6 Temple International & Comparative Law Journal (1992)
113-143
Cited as: Babiak
in para. 42, 52
Bijl, Maartje Fundamental Breach in Documentary Sales Contracts The
Doctrine of Strict Compliance with the Underlying Sales
Contract
European Journal of Commercial Contract Law (2009)
Cited as: Bijl
in para. 24
Born, Gary B. International Commercial Arbitration,Wolters Kluwer Law
& Business, 2d ed, (2014)
Cited as: Born
in para. 98, 115, 116, 118, 125, 127
Commerzbank AG Commerzbank Internet Service for Documentary Business
Frankfurt, 2008
Find at:
https://www.corporateclients.commerzbank.com/files/news
_archive/top_doc/topdoc_2008_11_en.pdf
Cited as: Commerzbank AG; 2008
in para. 22
DAR AL-HEKMA UNIVERSITY
VIII
El-Saghir, Hossam CISG Database
Commentary on Article 25 (2000)
Comparison between CISG & PECL
Cited as: El-Saghir
in para. 46, 47, 50
Fouchard, Philippe International Commercial Arbitration,
Gaillard, Emmanuel The Hague (1999)
Goldman, Berthold Cited as: Fouchard
in para. 107
Lew, Julian D. Comparative International Commercial Arbitration,
Mistelis, Loukas The Hague (2003)
Kröll, Stefan Cited as: Lew/Mistelis/Kröll
in para. 88, 116
Ramberg, Jan ICC Guide to Incoterms 2010: Understanding
and Practical Use
Paris (2011)
Cited as: Ramberg
in para. 37, 75
Redfern, Alan Law and Practice of International Commercial Arbitration
Hunter, Martin Sweet and Maxwell, 4th
ed. (2004)
Blackaby, Nigel Cited as: Redfern & Hunter
Partasides, Constantine in para. 79, 124
Schlechtriem, Peter Commentary on the UN Convention on the
Schwenzer, Ingeborg International Sale of Goods (CISG)
Oxford, 3rd ed. (2010)
Cited as: Schlechtriem & Schwenzer
in para. 43, 53, 56, 60, 63, 64, 68, 69, 71, 74
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Schwenzer, Ingeborg The Right to Avoid The Contract
Belgrade Law Review, Year LX, 2012, No. 3
Cited as: Schwenzer; P. 212
in para. 72
Graffi, Leonardo Case Law on the Concept of "Fundamental Breach" in
the Vienna Sales Convention
International Business Law Journal (2003) No. 3, 338-
349: Paris
Cited as: Graffi
in para. 45
Hanotiau, B. Complex Arbitrations: Multiparty, Multicontract,
Multi-Issue and Actions. (2006)
Kluwer Law International: London.
Cites as: Hanotiau
in para. 78, 131, 135
DAR AL-HEKMA UNIVERSITY
X
INDEX OF CASES
AUSTRIA
Oberster Gerichtshof
11 September 1997
Case No. 6 Ob 187/97m
Cited as: OGH; 11 Sep 1997
in para. 57, 66
Oberster Gerichtshof
10 November 1994
Case No. 2 Ob 547/93
Cited as: OGH; 10 Nov 1994
in para. 29, 31
Oberster Gerichtshof
6 February 1996
Case No. 10 Ob 518/95
Cited as: OGH; 6 Feb 1996
in para. 32
Oberlandesgericht Linz
23 March 2005
Case No. 6 R 200/04f
Cited as: OLG; 23 March 2005
in para. 36
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XI
CANADA
Ontario Superior Court
Marvin Neil Silver v. Imax Corporation
19 March 2013
Case No. 932
Cited as: Silver v. Imax; 2013
in para. 104
Supreme Court of British Columbia
Round v. MacDonald, Dettwiler and Associates Ltd.
21 October 2011
Case No. 1980
Cited as: Round v. MacDonald; 2011
in para. 104
Supreme Court of British Columbia
G & E Auto Brokers Ltd. v. Toyota Canada Inc.
27 November 1980
Case No. C800509
Cited as: G & E Auto v. Toyota; 1980
in para. 87
ENGLAND
Mid Essex Hospital Services NHS Trust v. Compass Group UK and Ireland Ltd.
15 March 2013
Case No. A2-2012-0883
Cited as: Mid Essex v. Compass Group; 2013
in para. 140
DAR AL-HEKMA UNIVERSITY
XII
Owners of Cargo Lately Laden on Board Ship or Vessel Eleftheria v. Owners of Ship
or Vessel Eleftheria
1969
Case No. 1 Lloyd‟s Rep 237
Cited as: The Eleftheria (1969)
in para. 87
Peterson Farms Inc. v. C&M Farming Ltd.
2004
Case No. 1 Lloyd‟s Rep 603
Cited as: Peterson Farms; 2004
in para. 124
EUROPEAN COURT OF JUSTICE
Van Uden Maritime v. KG in Firma Deco-Line
1998
Case No. C-391/95
Cited as: Van Uden Maritime v Deco-Line; 1998
in para. 78
FRANCE
Fujitsu Elektronik GmbH Company v. Fauba France Company
4 January 1995
Case No. 92-16.993
Cited as: Fujitsu v. Fauba; 1995
in para. 32
DAR AL-HEKMA UNIVERSITY
XIII
O.I.A.E.T.I. v. SOFIDIF et O.E.A.I.S.E.R.U, EURODIF et C.E.A.
19 December 1986
Case No. 1987 Rev. arb. 359
Cited as: OIAETI v. Sofidif
in para. 120
GERMANY
Oberlandesgericht
20 April 1994
Case No. 13 U 51/93
Cited as: OLG; 20 April 1994
in para. 61
Oberlandesgericht
9 July 1998
Case No. 7 U 720/98
Cited as: OLG; 9 July 1998
in para. 36
NETHERLANDS
Arens Sondermaschinen GmbH v. Smit Draad / Draad Nijmegen B.V.; 2008
7 October 2008
Case No. LJN BG2086, zaaknummer 104.003.479
Cited as: Arens v. Smit; 2008
in para. 49
DAR AL-HEKMA UNIVERSITY
XIV
NEW ZEALAND
Court of Appeal of New Zealand
Skids Programme Management Limited & Ors v McNeill & Ors
23 July 2012
Cited as: Skids v McNeill; 2012
in para. 105
SINGAPORE
Singapore Court of Appeal
The “Jian He”
31 December 2000
Case No. CA 55/1999
Cited as: The “Jian He”
in para. 87
SLOVENIA
Višje sodišče v Ljubljani (High Court of Ljubljana) [VSL sodba I Cpg 1100/2005]
13 September 2011
Case No. III Ips 90/2008
Cited as: Ljubljani; 2011
in para. 38, 40
SPAIN
Improgess GmbH v. Canary Islands Car., SL and Autos Cabrera Medina, SL
17 January 2008
Case No. Recurso de Casación No. 81/2001
Cited as: Improgess v. Canary Islands; 2008
in para. 51
DAR AL-HEKMA UNIVERSITY
XV
SWITZERLAND
Handelsgericht St. Gallen
5 December 1995
Case No. HG 45/1994
Cited as: HG; 5 Dec 1995
in para. 32
Bundesgericht
18 May 2009
Case No. 4A_68/2009
Cited as: BGer; 18 May 2009
in para. 58
UNITED STATES OF AMERICA
Boland v George S. May International Company
Superior Court Department, Middlesex
7 June 2012
Cited as: Boland v George S. May; 2012
in para. 87
Magellan International Corporation v. Salzgitter Handel GmbH
7 December 1999
Case No. 99 C 5153
Cited as: Magellan v. Salzgitter
in para. 34
DAR AL-HEKMA UNIVERSITY
XVI
Multiponics Inc. et al. v. William W. Herpel
USA Court of Appeals, Fifth Circuit
16 July 1980
Case No. 622 F.2d 709
Cited as: Multiponics v. Herpel; 1980
in para. 131
Sarhank Group, Petitioner, v. Oracle Corporation
14 April 2005
Case No. 02-9383
Cited as: Sarhank Group v. Oracle; 2005
in para. 124
Thomsen Family Trust v. Peterson Family Enterprises inc.
Court of Appeal Arkansas, Division II
19 May 1999
Case No. 98-962
Cited as: Thomsen v. Peterson; 1999
in para. 131
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INDEX OF ARBITRAL AWARDS
ICC
Case No. 7585
1992
Cited as: ICC; 7585/1992
in para. 72
Dow Chemical France et al v. ISOVER Saint Gobain
ICC Case No. 4131 (1982)
110 JDI 899
Cited as: Dow Chemical v. Isover St. Gobain (ICC); 1982
in para. 126
ICSID
Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania
24 July 8008
Case NO. ARB/05/22
Cited as: Biwater Gaff v United Republic of Tanzania; 2006
in para. 107
Tokios Tokel s v. Ukraine
26 July 2007
Case No. ARB/02/18
Cited as: Tokios Tokel s v. Ukraine; 2007
in para. 96
DAR AL HEKMA UNIVERSITY
1
STATEMENT OF FACTS
1. Vulcan Coltan, Ltd [“CLAIMANT”] a broker of rare minerals, Coltan in particular, is a
subsidiary of Global Minerals Ltd (hereafter: Global Minerals) based in Equatoriana.
2. Mediterraneo Mining SOE [“RESPONDENT”] is a state-owned company based in
Mediterraneo that operates all the mines there, including the only Coltan mine.
3. CLAIMANT‟s parent company, Global Minerals, and RESPONDENT have enjoyed a
longstanding mutually beneficial business relationship for the past ten years. On 23
March 2014, expecting to be governed by the same set of terms and practices that had
directed Global Minerals‟ previous dealings with RESPONDENT, CLAIMANT entered
into negotiations with RESPONDENT for the proposed purchase of 100 metric tons of
Coltan.
4. Citing its own prior commitments and mine capacity, the maximum amount of Coltan
RESPONDENT was willing to commit to sell was 30 metric tons. CLAIMANT agreed to
this amount, confident that RESPONDENT would fulfill any contract satisfactorily with
high-quality Coltan. The Contract between the parties, including all provisions regarding
implementation of this business deal, was signed on 28 March 2014 [“The Contract”].
5. On 25 June 2014, RESPONDENT issued a Notice of Transport as agreed for the
transportation of 30 tons of Coltan. In the accompanying e-mail, RESPONDENT
informed CLAIMANT that they would be able to supply the Coltan earlier than
anticipated. Following another client‟s default on a contract, there was a sudden
availability of 100 tons as originally discussed. This surplus RESPONDENT stated it was
“keen to dispose of”, due to its having “limited storage capacity”.
6. Understandably, CLAIMANT took this unequivocal-sounding language as an offer to
amend the contract to increase the amount of Coltan, based on its own initial bid for 100
tons at the start of negotiations. CLAIMANT announced its acceptance of this offer via
fax on 27 June 2014. RESPONDENT did not reply for an entire week, thus CLAIMANT
relied on the prior dealings between Global Minerals and RESPONDENT to commence
action.
7. On 4 July 2014, CLAIMANT instructed the RST Trade Bank [“the Bank”] to issue its
first letter of credit [“First L/C”] for the payment corresponding to 100 tons of Coltan: an
amount of $4,500,000, or $45/ton as stipulated in The Contract. On the same day, news
DAR AL HEKMA UNIVERSITY
2
broke out about a new game console being developed, leading to a steep hike in the price
of Coltan.
8. It therefore seemed rather serendipitous on RESPONDENT‟s part for them to reply
around an hour later on the same day, with RESPONDENT‟s sales manager Mr. Winter
leaving a voicemail message for Mr. Summer, CLAIMANT‟s Chief Operating Officer.
The message rejected the First L/C as not conforming to The Contract. On 5 July 2014,
Mr. Storm emailed Mr. Winter to protest that the First L/C was indeed in line with The
Contract as understood by CLAIMANT to have been amended by RESPONDENT, as
well as to try and clarify what must have been a misunderstanding.
9. On 7 July 2014, CLAIMANT was utterly shocked to receive from RESPONDENT a
declaration of avoidance of The Contract [“First Avoidance”]. Attempting to remedy the
situation and in a display of its own goodwill, CLAIMANT issued a second letter of credit
[“Second L/C”] corresponding exactly to the precise details of The Contract: payment for
30 metric tons of Coltan, or $1,350,000. Although CLAIMANT was still holding out for
100 tons, 30 tons was the bare minimum needed to fulfill contracts it had already
conducted with third party clients for the supply of the Coltan. Global Minerals sent the
Second L/C via 24-hour courier on 8 July 2014 in order to ensure it arrived within the
specified deadline, and RESPONDENT‟s manager signed the delivery receipt.
10. Once again, CLAIMANT was utterly taken aback by RESPONDENT‟s apparent
determination to profit from market developments when it issued its second declaration of
avoidance [“Second Avoidance”] on 9 July 2014, claiming that the Second L/C was past
deadline. CLAIMANT was left with no other option but to commence arbitration
procedures with its application for Emergency Measures to the ICC on 11 July 2014.
11. On 26 July 2014, ICC issued the requested emergency order [“EA Order”] for
RESPONDENT to freeze 100 metric tons of Coltan. In riposte, RESPONDENT raised a
counterclaim on 8 August 2014 against CLAIMANT and Global Minerals, requesting the
joinder of the latter as well as rejecting the validity of the EA Order. Global Minerals then
replied to RESPONDENT‟s counterclaim on 8 September 2014, rejecting the tribunal‟s
jurisdiction.
12. On 3 October 2014, the ICC amended its EA Order for RESPONDENT to the freezing of
30 metric tons of Coltan rather than 100 tons. CLAIMANT maintains the validity of the
EA Order, as well as its assertion that both avoidances by RESPONDENT were invalid
and affirms its rejection of any claim of jurisdiction over Global Minerals.
DAR AL HEKMA UNIVERSITY
3
SUMMARY OF ARGUMENTS
13. A simple simile describes this case: as CLAIMANT went out into the chilly night to fulfill
all of RESPONDENT‟s demands, RESPONDENT grabbed CLAIMANT‟s coat to leave it
out in the freezing cold.
14. First, CLAIMANT did not fundamentally breach its obligations in the 28 March Contract.
In First L/C, RESPONDENT‟s statements accompanying the Notice of Transport
provided the impression it was making an offer to modify The Contract. Additionally,
providing an amount that exceeded the necessary payment is not a fundamental breach, as
RESPONDENT could not have incurred substantial detriment. CLAIMANT made every
effort to fulfill its obligations, issuing a First L/C that accepted RESPONDENT‟s offer to
modify The Contract. Regarding the Second L/C, contrary to RESPONDENT‟s claims,
the parties‟ contractual obligations still existed. It was sent within the deadline, and
requesting an invoice does not amount to a breach of contract. Therefore, both the
RESPONDENT‟S attempts to avoid The Contract are null; it still has a duty to carry out
its contractual obligations to deliver 30 tons of Coltan. (Issue 1)
15. Furthermore, the Arbitral Tribunal should not lift the remaining part of the rightfully
issued EA Order for interim measures of freezing 30 tons of Coltan. The Emergency
Arbitrator had rightful jurisdiction to issue them in accordance with the ICC Arbitration
Rules. The Contract, which must be interpreted as originally intended, did not explicitly
exclude the Emergency Arbitrator from issuing interim measures. Rather, it allowed for
concurrent jurisdiction with a specified national court. To lift these measures would also
frustrate CLAIMANT‟s case entirely and cause a great deal of harm, which are the
substantive requirements under Danubian Arbitration Law. (Issue 2)
16. Finally, RESPONDENT‟s attempts to subject Global Minerals to the arbitration
proceedings are baseless. The fact that Global Minerals endorsed The Contract does not
justify RESPONDENT‟s claims that it is bound by the arbitration agreement. As Global
Minerals is a separate entity, with no consent given to submit to arbitration and no liability
under the Group of Companies doctrine or good faith considerations, the Arbitral Tribunal
should reject this claim by RESPONDENT. (Issue 3)
DAR AL HEKMA UNIVERSITY
4
ARGUMENTS
ISSUE 1: RESPONDENT DID NOT LAWFULLY AVOID
THE CONTRACT, AND THUS HAS A DUTY TO CARRY
OUT ITS CONTRACTUAL OBLIGATIONS FOR THE
DELIVERY OF 30 METRIC TONS OF COLTAN
17. The issuance of the First L/C was in conformity to The Contract. Therefore, the First
Avoidance did not constitute a lawful avoidance of The Contract (A). Furthermore, the
Second Avoidance following the issuance of the Second L/C did not constitute a lawful
avoidance of The Contract (B).
A. The First L/C Did Not Constitute A Fundamental Breach, And Thus
RESPONDENT Could Not Lawfully Avoid The Contract By Its First Avoidance
18. The First L/C does not constitute a breach of The Contract due to the fact that; The
Contract was amended on the 27th
of June (I), even if there was no Amended Contract, the
First L/C conforms to The Contract (II), the alleged non-conformity could not constitute a
fundamental breach (III), and thus RESPONDENT did not lawfully avoid The Contract by
its First Avoidance (IV).
I. The Contract Was Amended On The 27th
Of June
19. On June 25 2014, CLAIMANT received the Notice of Transport from RESPONDENT,
accompanied in an email informing CLAIMANT of the bankruptcy of one of its major
customers, which led to its default on a purchase of Coltan [R. 9, CL. EX. 3]. In the email,
RESPONDENT expressed that it was “keen to dispose of” the extra quantity of Coltan “as
quickly as possible” [R. 9, CL. EX. 3]. Referring to the parties‟ initial negotiations on the
23rd
of March 2014, CLAIMANT reasonably took that to be an offer to sell the 100 metric
tons of Coltan.
20. However, RESPONDENT took advantage of the developed political crisis in Xanadu that
emerged on the 27th
of June 2014 in order to benefit from the increase in the price of
Coltan, and never replied to CLAIMANT‟s acceptance on the 27th
of June [R. 10, CL. EX.
4] to RESPONDENT‟s offer of 100 metric tons of Coltan. CLAIMANT waited for seven
days before ordering the issuance of the First L/C that was in conformity with the
Amended Contract.
DAR AL HEKMA UNIVERSITY
5
II. Even If There Was No Amended Contract, The First L/C Conforms To The
Contract
21. RESPONDENT alleged non-conformity of the First L/C on its First Avoidance, relating to
the purchase of 100 metric tons instead of 30. In fact, the First L/C provided for “not less
than 30 metric tons per shipment”, which is conforming to the requirements set out in The
Contract [R. 11, CL. EX. 5]. This was drafted in such a way to satisfy CLAIMANT‟s
obligations under The Contract for the purchase of 30 metric tons of Coltan and the
Amended Contract. Thus, the quantity provided for under the First L/C was in conformity
to The Contract provisions.
1) The Amount Provided Under The First L/C Did Not Constitute A Breach
According To Art. 31 Of The UCP 600
22. The First L/C is subject to the UCP 600 [R. 11, CL. EX. 5], which stipulates as a default
rule the allowance of partial drawings and shipments [UCP 600, Art. 31(a)]. Any
presentation by the seller, which is made for less than the full amount available under the
L/C, is considered as a partial drawing. According to UCP 600 Art. 31(a), partial drawings
or shipments are always allowed, unless parties agreed otherwise in the terms of the L/C
[Commerzbank AG; 2008]. The Contract did not include such exclusion of partial
drawings, and First L/C provided for “any sum of money not to exceed a total of US$
4,500,000” [R. 11, CL. EX. 5]. Any sum of money could have simply been US$ 1,350,000
subject to partial drawing by RESPONDENT. First L/C being subject to such partial
drawing, fulfilled CLAIMANT‟s obligation to establish an L/C under The Contract as per
Art. 4 [R. 7, CL. EX. 1]. Thus, the amount provided under the First L/C does not constitute
a breach The Contract as alleged by RESPONDENT.
23. Even if the First L/C had minor variations from The Contract, such variations are
insignificant to the payment process. Art. 4(a) of the UCP 600, states that a credit by its
nature is a separate transaction from the sale or other contract on which it may be based;
banks are in no way concerned with or bound by such contract, even if any reference
whatsoever to it is included in the letter of credit.
24. The seller will always receive payment from the bank if he submits documents that
comply with the terms and conditions of the letter of credit, regardless of any
developments in the underlying sales agreement [Bijl; 3.1]. Accordingly, CLAIMANT‟s
obligation to pay would have been fulfilled upon presenting the required documents by
RESPONDENT to The Bank; as such variations from The Contract are insignificant
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regarding the payment mechanism.
2) The First L/C Providing For CIP As The Delivery Term Was In Accordance
With RESPONDENT‟s Notice Of Transport
25. RESPONDENT‟s basis for the First Avoidance [R. 13, CL. EX. 7], regarding the First
L/C‟s lack of conformity to the delivery terms in The Contract, is invalid. As both
CLAIMANT and RESPONDENT have agreed to modify the delivery terms in The
Contract (a), and even if there was no modification, CIP and CIF do not substantially
differ (b).
a) By Virtue Of Art. 29 Of The CISG, CLAIMANT And RESPONDENT
Agreed To Modify The Delivery Terms in The Contract
26. On the 25th
of June 2014, RESPONDENT communicated to the CLAIMANT a Notice of
Transport that deviated from the agreed delivery terms of The Contract [R. 8, CL. EX. 2],
specifying CIP as the mode of transport instead of CIF [R. 7, CL. EX. 1, Art. 5]. Subject
to Art. 29(1) of the CISG, which Danubia is a contracting state thereof [R. 61, Procedural
Order 1, Para. 5(3)], “A contract may be modified… by the mere agreement of the
parties”, this amplifies the freedom-from-form-requirements principle of Art. 11 of the
CISG [CISG Digest; P. 127 Para. 6].
27. Under this principle, the parties are free to modify their contract in any form [CISG
Digest; P. 73, Para. 5], unless a contract requires modifications to be made in writing
[CISG, Art. 29(2)]. In The Contract between CLAIMANT and RESPONDENT, there is
no clause to that effect [R. 65, Procedural Order 2, Para. 15]. Accordingly, the Parties
conduct is sufficient enough to modify The Contract; in which RESPONDENT offered to
modify the contract (1), and CLAIMANT accepted that offer (2).
1. RESPONDENT Offered To Modify The Delivery Terms Specified Under
The Contract From CIF To CIP
28. On the 28th
of March 2014, CLAIMANT and RESPONDENT concluded a sales
agreement specifying “CIF (INCOTERMS 2010), Oceanside, Equatoriana” as the mode
of transport of the goods [R. 7, CL. EX. 1, Art. 5]. Yet, RESPONDENT issued the Notice
of Transport on CIP terms. Art. 23 of the CISG indicates that once a contract is
concluded, subsequent communications may be construed as proposals to modify the
contract, subject to the rules of offer and acceptance [CISG Digest; P. 110, Para. 3].
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Furthermore, Art. 14 of the CISG requires a proposal to indicate intent to be bound by an
acceptance (i) and that it must be sufficiently definite (ii) to constitute an offer.
i. RESPONDENT Intended To Be Bound By An Acceptance
29. Art. 8 of the CISG governs the interpretation of the parties‟ agreement to modify a
contract [OGH; 10 Nov 1994]. By virtue of Art. 8(3) of the CISG, intent may be
established by all the relevant circumstances, including negotiations and the conduct of
the parties after the alleged conclusion of the contract [CISG Digest; P. 91, Para. 5].
Referring to the initial negotiations prior to The Contract, RESPONDENT had suggested
CIP as the mode of delivery [R. 34, Answer to Request for Arbitration, Para. 8].
RESPONDENT further amplified its reference for CIP, by ticking it under the
“Transport” heading in the Notice of Transport [R. 8, CL. EX. 2], after The Contract had
already been concluded in terms of CIF [R. 7, CL. EX. 1, Art. 5].
30. Appropriately, CLAIMANT reasonably relied on RESPONDENT‟s conduct to be
deemed an offer to modify The Contract. Furthermore, RESPONDENT had sufficient
knowledge of CLAIMANT‟s intention to accept the modification through CLAIMANT‟s
fax on the 27th
of June 2014 [R. 10, CL. EX. 4]. RESPONDENT had seven days to
withdraw its offer regarding the modification prior to CLAIMANT‟s acceptance on the
4th
of July. If the RESPONDENT did not want to be bound by an acceptance, it would
have utilized its right to revoke its proposed modification by virtue of Art. 16(1) of the
CISG. However, RESPONDENT had taken no steps to do so but rather it overlooked this
matter [R. 65, Procedural Order 2, Para. 20]. Hence, RESPONDENT demonstrated the
intention to be bound by CLAIMANT‟s acceptance.
ii. RESPONDENT’s Proposal Was Sufficiently Definite
31. Art. 14(1) of the CISG provides that a proposal is sufficiently definite if it indicates the
goods and expressly or implicitly fixes or makes provision for determining the quantity
and the price. On that basis, specifying Coltan in the Notice of Transport is a sufficient
indication of the goods [OGH; 10 Nov 1994], as there is no need to identify the quality of
the goods [CISG Digest; P. 92, Para. 8].
32. Moreover, the spectral quantity from 30 – 150 metric tons indicated in both the Notice of
Transport [R. 8, CL. EX. 2] and corresponding email [R. 9, CL. EX. 3], amount to an
“adequate” indication of the quantity [OGH; 6 Feb 1996]. Regarding the price, if the
intent to be bound by an acceptance is established, a proposal is sufficiently definite
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notwithstanding the failure to specify the price [HG; 5 Dec 1995]. It is undisputed that
the RESPONDENT did not intend to ignore the provisions of The Contract through its
proposal to modify the delivery terms; therefore, the price US$45/ KG [R. 7, CL. EX. 1]
shall prevail without requiring its explicit indication [Fujitsu v. Fauba; 1995].
33. RESPONDENT‟s proposal to modify the shipping terms fulfills all three requirements for
being sufficiently definite under the CISG. Moreover, RESPONDENT intended to be
bound by CLAIMANT‟s acceptance [CL Memo; Para. 29, 30]. Accordingly,
RESPONDENT‟s proposal satisfies the requirements for constituting an offer, and thus,
resulting in a valid offer.
2. CLAIMANT‟s Conduct Causing The Issuance Of The First L/C
Constitutes An Acceptance To RESPONDENT‟s Offer To Modify The
Contract
34. Although a letter of credit is deemed to be an independent transaction from The Contract
[CL Memo; Para. 23], its issuance may constitute an acceptance to an offer [Magellan v.
Salzgitter; 1999]. Art. 18 of the CISG apply to acceptances regarding proposals to modify
the contract [OLG; 9 July 1998]. Pursuant to Art. 18(1), an offeree accepts an offer by a
statement or other conduct, indicating assent. Moreover, an indication of assent may be
made by the issuance of a letter of credit [CISG Digest; P. 99, Para. 6].
35. Accordingly, the First L/C issued on the 4th
of July 2014 was in compliance with the
Notice of Transport [R. 11, CL. EX. 5], indicating CLAIMANT‟s acceptance of the
modification [United States; 1999]. Consequently, regardless of the assumption that The
Contract had not been amended on the 27th
of June, [R. 60, Procedural Order 1] it is
undisputed that the contract was modified on the 4th
of July when RESPONDENT
received CLAIMANT‟s acceptance by virtue of the First L/C. Therefore, CLAIMANT
could not have breached The Contract as alleged by the RESPONDENT [R. 13, CL. EX.
7].
36. Furthermore, it has been established that “contradictory conduct by a party bars that party
from relying on a different meaning of its former conduct” [OLG; 23 March 2005].
Accordingly, RESPONDENT‟s deviation from CIF to CIP bars it from relying on CIF as
its foundation for CLAIMANT‟s “non-conformity” [R. 13, CL. EX. 7]. Consequently,
RESPONDENT‟s basis for the avoidance on the 7th
of July, regarding the First L/C‟s lack
of conformity to the delivery terms [R. 13, CL. EX. 7] is invalid and unenforceable.
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b) CIP And CIF Do Not Substantially Differ
37. CIP terms were first introduced in Incoterms 2010 with many similarities to CIF terms. In
both CIP and CIF, the seller has the obligation to pay the cost of freight to the named
place of destination [Ramberg, P. 123]. Additionally, the seller fulfills its delivery
obligation by handing over the goods to the courier for shipment [Ramberg, P. 48].
Moreover, these are the only two terms that stipulate that the insurance cost is the
responsibility of the seller [Ramberg, P. 123]. However, the differences between both
terms are minimal; CIF is used under Sea shipments only [Ramberg, P. 199], and CIP is
used for any mode of transportation [Ramberg, P. 123]. It was uncontroversial between
CLAIMANT and RESPONDENT that the Coltan would be shipped from a port in
Mediterraneo to the port of Oceanside [R. 68 Procedural Order 2, Para. 37]. Therefore,
the minimal difference between CIP and CIF terms shall not affect the performance of
The Contract.
3) RESPONDENT Cannot Rely On The Contention That The First L/C Was Not
In Conformity to The Contract
38. The alleged non-conformity, even if found to be existent, was caused by the actions of the
RESPONDENT. CLAIMANT relied upon the explicit desire of the RESPONDENT to
get rid of the available extra Coltan, expressed by its email on the 25th
of June [R. 9, CL.
EX. 3]. Even if the letters of credit were to be considered as not in conformity with the
contract, the seller cannot rely on this fact; namely, under Art. 80 of the CISG, a party
may not rely on a failure of the other party to perform when the failure was caused by the
first party‟s act or omission [Ljubljani; 2011].
39. CLAIMANT responded in accordance with the email sent by RESPONDENT, and
replied stating its acceptance to order 100 metric tons of Coltan on June 27 2014 [R. 10,
CL. EX. 4]. However, RESPONDENT remained silent for seven days before
CLAIMANT caused the issuance of the First L/C accordingly. Thus, RESPONDENT‟s
failure to reply clarifying its intentions to the CLAIMANT was the cause for such alleged
non-conformity of the First L/C. Accordingly, RESPONDENT cannot rely on such non-
conformity for avoiding The Contract when it is in the first place caused by its act on
June 25 2014 and its omission for one week following CLAIMANT‟s response.
40. The seller should have, if it felt that the letters of credit did not conform to the contract,
sent the buyer the relevant information required to open new letters of credit. Therefore,
the court found that the seller was unable to rely on the buyer‟s failure to properly fulfill
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its obligations regarding the letters of credit because the seller had caused that failure
[Ljubljani; 2011]. RESPONDENT should have made proper communication with the
CLAIMANT in order to open a new L/C that is conforming to The Contract from the
RESPONDENT‟s point of view.
III. The Alleged Non-Conformity Of The First L/C Does Not Constitute A Fundamental
Breach
41. Seller does not have the right to avoid The Contract unless there was a fundamental
breach committed by the buyer [CISG, Art. 64(a)]. Even if such variations from The
Contract constituted non-conformity of the First L/C, it could not be interpreted as to
constitute a fundamental breach entitling RESPONDENT to avoid The Contract.
42. The determination of whether a fundamental breach has occurred will require the parties
to review their respective contractual obligations as well as their obligations imposed by
the provisions of the CISG [Babiak, Defining Fundamental Breach Under The CISG; P.
126]. CLAIMANT‟s contractual obligations were to be fulfilled by issuing the First L/C,
had it not been rejected by RESPONDENT [R. 7, CL. EX. 1; Art. 4].
43. Subject to the CISG, buyer has an obligation to pay the price for the goods and take
delivery of them as required by the contract and this convention [CISG, Art. 53]. Buyer‟s
obligation to open a letter of credit is only discharged if the seller is granted an
independent claim against the issuing bank [Schlechtriem & Schwenzer; P. 800-801, Para.
18]. Subject to the First L/C, RESPONDENT had an independent claim for any sum of
money not exceeding US $4,500,000, which is in line with the payment provision under
The Contract. CLAIMANT fulfilled one of its two obligations when the First L/C was
issued. RESPONDENT, on the other hand, obstructed performance by rejecting the First
L/C. Thus, CLAIMANT‟s obligation to pay under The Contract was not breached.
44. Art. 25 of the CISG states that for a breach to be fundamental, it must result in such
detriment to the other party as substantially to deprive him of what he is entitled to expect
under the contract, unless the party in breach did not foresee and a reasonable person of
the same kind in the same circumstances would not have foreseen such a result. In
accordance with the said provision, there was no substantial detriment incurred by the
RESPONDENT (1), and CLAIMANT could not have foreseen any substantial detriment
resulting from the First L/C (2).
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1) Respondent Could Not Have Incurred Substantial Detriment By The Alleged
Non-Conformity
45. The party's special interest in receiving performance is a key element for establishing
whether a breach is substantial [Graffi, Case Law on the Concept of Fundamental Breach
in the Vienna Sales Convention; P. 340]. Under The Contract, RESPONDENT‟s
substantial interest is to receive payment for the delivery of 30 metric tons of Coltan.
CLAIMANT complied with its obligation to pay upon the issuance of the First L/C, as it
was to provide for the payment of the agreed upon price by partial drawing on part of the
RESPONDENT. Such compliance is consistent with the CLAIMANT‟s obligation to pay,
satisfying RESPONDENT‟s substantial interest under The Contract.
46. The alleged non-conformity of the First L/C could not by any means cause such harm or
injury to the RESPONDENT. In light of the Convention‟s legislative history, the word
“detriment” is to be synonymous with injury or harm or consequential harm incurred by
the injured party, and that the determination of a fundamental breach is to be made on a
case-by-case basis [El-Saghir; (a), 2000]. RESPONDENT did not incur any injury upon
receiving the First L/C. As it was established, the First L/C entitled RESPONDENT to
receive payment under The Contract, leaving no room for any substantial detriment to
occur.
47. The interpretation of the First L/C must be in line with the context of The Contract. The
degree of „detriment‟ subject to Art. 25 of the CISG is tied to the expectations of the
injured party under the terms of the existing contract [El-Saghir; (a), 2000]. The alleged
non-conformity did not in fact deprive RESPONDENT from what it was ought to expect
under The Contract, which is to receive payment for the 30 metric tons of Coltan.
48. Furthermore, the First L/C did not impose any further obligations on the RESPONDENT,
which could not be detrimental under the scope of Art. 25 of the CISG. The First L/C was
issued in accordance with Art. 4 of The Contract. RESPONDENT could have accepted the
First L/C as it fulfills the CLAIMANT‟s obligation to pay the price for the purchase of 30
metric tons of Coltan under The Contract and fulfilled RESPONDENT‟s obligation to
accept payment and deliver the 30 metric tons of Coltan.
49. In determining whether a breach of contract amounts to a fundamental breach within the
meaning of Art. 25 CISG, it is also relevant whether the breach of contract can be repaired
within a reasonable time [Arens v. Smit; 2008]. CLAIMANT could have repaired the
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alleged non-conformity of the First L/C, and it actually did upon issuance of the Second
L/C, which cannot amount to a fundamental breach.
50. It is the responsibility of the injured party to prove that it suffered a detriment that
substantially deprived it from what it was entitled to expect under the contract [El-Saghir;
(a), 2000]. RESPONDENT has the burden to prove that it had incurred a substantial
detriment or such was expected to occur at some time in the future, subject to the First
L/C.
2) CLAIMANT Could Not Have Foreseen Any Substantial Detriment To The
RESPONDENT
51. The second requirement for a fundamental breach to take place is the element of
foreseeability [CISG, Art. 25]. Under the scope of Art. 25 of the CISG, an exception lies
where the breaching party would not have expected such a result, and a reasonable person
in the same situation would not have expected the same result [Improgess v. Canary
Islands; 2008]. Upon issuance of the First L/C, CLAIMANT was under the impression
that The Contract had been amended upon RESPONDENT‟s implicit offer provided on
the 25th
of June [R. 9, CL. EX. 3]. Accordingly, CLAIMANT could not possibly foresee
that the First L/C would have result in detriment to the RESPONDENT, as it did not
breach The Contract to begin with. As a buyer, CLAIMANT did not anticipate that the
RESPONDENT would suddenly have no further commercial interest in the performance
of The Contract by simply receiving what it was entitled to expect under such contract and
what he has opened the door for through its offer on the 25th
of June.
52. The second requirement under Art. 25 that negates the RESPONDENT‟s claim for
fundamental breach is an objective one requiring the breaching party to show that a
reasonable person of the same kind in the same circumstances would not have foreseen the
injuries to the non-breaching party [Babiak, Defining Fundamental Breach Under The
CISG; P. 122]. A reasonable merchant in the CLAIMANT‟s position would not have
foreseen any possible detriment to the RESPONDENT. By issuing the First L/C that was
in line with the obligations set out under The Contract, the obligation to pay the price is to
be deemed fulfilled by the CLAIMANT. Accordingly, no such detriment or injury to the
RESPONDENT would have taken place upon accepting the First L/C.
53. Moreover, CLAIMANT took all necessary steps to fulfill its obligations to pay under The
Contract. Subject to Art. 54 of the CISG, CLAIMANT‟s obligation to pay the price under
The Contract includes taking such steps as may be required to enable payment to be paid.
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In the case of letters of credit, the buyer is obliged to provide the seller with a credit that
covers the agreed time of shipment as well as the agreed time of payment [Schlechtriem &
Schwenzer; P. 813, Para. 7]. Such steps were taken by the CLAIMANT in order to fulfill
its obligation to pay upon issuance of the First L/C.
54. CLAIMANT also did the same in regards to the voicemail message that was left on Mr.
Summer‟s phone by Mr. Winter, rejecting the First L/C and threatening to terminate The
Contract [R. 4, Request for Arbitration, Para. 12] [R. 36, Answer to Request for
Arbitration, Para. 19]. In response to the voicemail message, Mr. Storm emailed
RESPONDENT immediately on the 5th
of July in order to clear any misunderstanding
between the parties regarding the First L/C [R. 12, CL. EX. 6]. Moreover, on the same
email Mr. Storm expressed CLAIMANT‟s willingness to agree to CIF instead of CIP,
which shows its good intent to carry out its contractual obligations under The Contract.
However, RESPONDENT‟s only response to that email was the First Avoidance two days
later. Therefore, CLAIMANT established its good intentions by taking all necessary steps
to comply with the provisions of The Contract as opposed to the RESPONDENT.
55. Based on the said provisions and the established sequence of facts, First L/C was issued in
conformity to The Contract. Thus, it could not have constituted a fundamental breach
entailing avoidance of The Contract.
IV. RESPONDENT Did Not Rightfully Avoid The Contract By Its First Avoidance
56. The seller must be entitled to avoid the contract, requiring that the buyer has committed a
fundamental breach of the contract [Schlechtriem & Schwenzer; P. 885, Para. 1].
Following what has been established that the First L/C conformed to The Contract, and
thus there was no fundamental breach [CL Memo; Para 41-55], RESPONDENT did not
have the right to declare The Contract avoided, as the CLAIMAT‟s obligation to pay was
not breached [R. 13, CL. EX. 7].
57. RESPONDENT unlawfully declared The Contract avoided without setting a deadline to
remedy the performance by the CLAIMANT. An effective avoidance requires among
other things the setting of a deadline, a threat of the avoidance and the declaration of the
avoidance after the ineffective expiration of the set deadline [OGH; 11 Sep 1997].
RESPONDENT threatened to terminate The Contract on its voicemail message on the 4th
of July. However, no further discussions were made to reach an agreement over the
disputed non-conformity of the First L/C. A deadline for amending or modifying
performance of the CLAIMANT was not provided nor suggested by RESPONDENT.
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58. Avoiding The Contract is supposed to be the last resort for RESPONDENT; First
Avoidance was shockingly declared three days after issuance of the First L/C. A party
should be entitled to have the contract unwound only as a last resort, and if this is
necessary to react to breaches of contract which substantially deprive the creditor of its
interest in performance of the contract [BGer; 18 May 2009].
59. The First Avoidance was declared without any attempt to communicate with CLAIMANT
regarding the alleged non-conformity of the First L/C. Such avoidance is inconsistent with
the alleged breach, which even if existed, would not substantially deprive RESPONDENT
from its interest in performance, and thus could not constitute a fundamental breach.
Therefore, the alleged breach could not be considered as entailing RESPONDENT to
immediately resort to avoiding The Contract.
1) RESPONDENT‟S First Avoidance Was Not Properly Noticed
60. RESPONDENT received the First L/C on the 4th
of July and made its voicemail message
to the CLAIMANT on the same day [R. 36, Answer to Request for Arbitration, Para. 19].
However, RESPONDENT never replied to the CLAIMANT‟s email to clear things up on
the 5th
of July [R. 12, CL. EX. 6]. In fact, while CLAIMANT was waiting for an answer to
the email, RESPONDENT waited for two days before declaring The Contract avoided on
the 7th
of July. It is crucial that there is a time limit within which the right of avoidance
must be exercised [Schlechtriem & Schwenzer; P. 445, Para. 15].
61. Art. 64(2)(b) of the CISG states that the seller may declare the contract avoided after he
knew or ought to have known of the breach. The German civil court of appeal found that a
declaration of avoidance was timely made; the declaration was made within a reasonable
time because it came only one day after the buyer became aware of the breach [OLG; 20
April 1994]. A declaration of avoidance one day after acknowledgment of the breach was
deemed to be reasonable by the court.
62. Time limit regarding the First Avoidance is essential under the relevant circumstances of
the case; The Contract settled a period of time upon which CLAIMANT is ought to issue
the L/C. Art. 4 of The Contract states that the L/C shall be established by the CLAIMANT
14 days after receiving the Notice of Transport in regard to shipment [R. 7, CL. EX. 1].
CLAIMANT received the Notice of Transport on June 25; accordingly, the 14 days period
to issue the L/C shall end on July 9, which is two days after the First Avoidance was
declared.
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63. Modern international sets of rules all provide for a reasonable time limit within which the
contract must be avoided [Schlechtriem & Schwenzer; P. 445-446, Para. 16]. By waiting
for three days before sending the First Avoidance, RESPONDENT put the CLAIMANT
in a position under which it had no proper length of time to remedy the First L/C as the
period for such issuance was about to end subject to The Contract. RESPONDENT could
have given CLAIMANT an opportunity to change or clarify the disputed points in the
First L/C; and CLAIMANT could have had the time to modify and perform its obligations
accordingly.
2) RESPONDENT‟s Primary Remedy Is To Require Performance Which Shall
Precede A Declaration Of Avoidance
64. Even if there was a breach regarding the First L/C, RESPONDENT should have required
the CLAIMANT to amend its performance within a reasonable period of time. Subject to
Art. 62 of the CISG, RESPONDENT may require the CLAIMANT to pay the price.
According to the concept of the CISG, the primary remedy of the seller for breach of
contract by the buyer is the seller‟s right to require the buyer to perform any of his
obligations [Schlechtriem & Schwenzer; P. 885, Para. 1]. This remedy is recognized in
civil law system; Danubia and Mediterraneo are both civil law countries [R. 69,
Procedural Order 2, Para. 42]. Within the section on the seller‟s remedies, the right to
performance of the buyer‟s obligations is set forth at the beginning of the various
remedies available to the seller [CISG Digest; P. 298, Para, 1].
65. In accordance with the said provisions and the long-standing relationship between
RESPONDENT and the CLAIMANT‟s parent company Global Minerals,
RESPONDENT is fairly expected to resort to such remedy instead of avoiding The
Contract. Such remedy would have been efficient in maintaining parties contractual
obligations under The Contract. However, RESPONDENT rushed into the remedy of last
resort and avoided The Contract in order to be free to get a better deal with another buyer
benefiting from the market increase in the price of Coltan.
66. Furthermore, seller may fix an additional period of time of reasonable length for
performance by the buyer of his obligations [CISG, Art. 63(1)]. The applicable CISG
requires for the avoidance by the seller an additional period of time for performance by
the buyer Art. 63(1), 64(1)(b) CISG) [OGH; 11 Sep 1997]. RESPONDENT could have
granted the CLAIMANT an additional period of time to remedy its performance instead
of immediately resorting to the remedy of last resort.
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B. RESPONDENT‟s Second Avoidance On 9 July Did Not Constitute A Lawful
Avoidance Of The Contract
67. On the 9th
of July 2014, RESPONDENT declared the Second Avoidance of The Contract,
with regards to the Second L/C [R. 44, RE. EX. 4]. RESPONDENT based its Second
Avoidance on the nonexistence of The Contract, grounded on its alleged First Avoidance.
The RESPONDENT‟s validations for the Second Avoidance are unenforceable because
of the invalidity of the First Avoidance (I), the adherence of the Second L/C to the
deadline (II), and its non-imposition of an additional requirement, that being the
commercial invoice (III).
I. RESPONDENT Did Not Lawfully Avoid The Contract On 7 July; Therefore The
Contractual Obligations Between The Parties Still Exist
68. Art. 81 of the CISG settle the technical aspects of unwinding a contract that has been
avoided. However, it provides for two requirements for the unwinding of a contract to
take place; 1) the existence of a right to avoid and; 2) whether the avoidance has been
properly declared [Schlechtriem & Schwenzer; P. 1095, Para. 2]. As previously
established, RESPONDENT did not have the right to avoid The Contract, and therefore,
First Avoidance was not properly declared [CL Memo; Para. 56-66].
69. Furthermore, according to the doctrine pacta sunt servanda, agreements must be upheld to
the degree that even upon breach of contract by buyer, the CISG remedies available to a
seller present avoidance as the remedy of last resort [Schlechtriem & Schwenzer; P. 894,
Para. 4]. Primary contractual obligations should be maintained even in case of failures by
one of the parties to act in accordance with the contract [Bundesgericht; 2009].
RESPONDENT overlooked the available remedies under the CISG and immediately
avoided The Contract twice, which is the remedy of last resort. Thus, the arbitral tribunal
should comply with the CISG‟s preference to uphold contracts and deem the First and the
Second Avoidance as invalid.
II. The Second L/C Was Provided In Accordance With The Deadline Provided For
Under The Contract
70. RESPONDENT claims that the Second L/C was sent after the deadline and was delivered
outside business hours [R. 37, Answer to Request for Arbitration]. The Second L/C was
issued for US$ 1,350,000 on the 8th of July linking to 30 metric tons of Coltan subject to
The Contract. Mr. Winter signed the receipt of the courier on 8th of July at 19:05 RST [R.
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15, CL. EX. 9], and on the second day RESPONDENT declared the Second Avoidance
[R. 44, RE. EX. 4].
71. Art. 27 of CISG provides that a delay or error in the transmission of the communication
or its failure to arrive does not deprive that party of the right to rely on the
communication. Art. 27 departs from the basic principle that a communication must reach
the addressee [Schlechtriem & Schwenzer; P. 448, Para. 1]. Subject to such provision,
the Second L/C was issued on July 8 2014 within the deadline provided for under The
Contract. Thus, Second L/C was not belated as opposed to RESPONDENT‟s allegations
in its Second Avoidance.
72. Furthermore, as a rule late performance, late payment of the price does not in itself
constitute a fundamental breach, and cannot be the cause of immediate avoidance of the
contract [ICC; 7585/1992]. Failure to pay the purchase price on the date due will not
amount to a fundamental breach of contract, as the seller‟s interest to receive payment is
not substantially impaired by the delay [Schwenzer; P. 212]. Even if the Second L/C is
deemed to be belated, late payment does not amount to a fundamental breach entailing
avoidance of The Contract.
73. In addition to issuance of the Second L/C on 8th
of July by 24 hours courier, Global
Minerals faxed it to RESPONDENT on the same day to ensure adherence to the deadline.
This constitutes CLAIMANT‟s efforts to ensure compliance to the provided deadline.
Thus, the Second L/C adhered to the deadline, and RESPONDENT‟s grounds for the
Second Avoidance shall be deemed unacceptable.
III. The Requirement That RESPONDENT Present A Commercial Invoice Does Not
Amount To A Breach Of The Contract
74. Contrary to what the RESPONDENT has alleged [R. 44, RE. EX. 4], the commercial
invoice is not considered an additional requirement to The Contract. By virtue of Art.
9(1) of the CISG, the parties are bound by any usage to which they have agreed. In
particular, this provision correspondingly supplements the content of The Contract
[Schlechtriem & Schwenzer; P. 182, Para. 1]. In The Contract, the parties agreed to
incorporate Incoterms 2010, therefore binding them to the usages required under it.
75. Incoterms 2010 provides a general obligation on the seller to issue a commercial invoice
in conformity with the contract. It is also usual practice that the seller, in order to be paid,
has to invoice the buyer. In addition, seller must submit any other evidence stipulated in
the contract itself that the goods conform to that contract [Ramberg, P. 112]. In
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compliance with Art. 9(1) of the CISG, CLAIMANT and RESPONDENT‟s explicit
inclusion of the Incoterms 2010 in The Contract [R. 7, CL. EX. 1, Art. 5] binds them to its
associated Usages. Therefore, the Second L/C does not impose any additional
requirements on the RESPONDENT, but it is rather deemed a primary obligation
imposed by The Contract itself.
CONCLUSION OF THE FIRST ISSUE
76. As established, RESPONDENT did not rightfully avoid The Contract neither by its First
Avoidance nor its Second Avoidance; as such avoidances were not lawfully grounded
upon a fundamental breach on part of the CLAIMANT. Thus, Arbitral Tribunal is
requested to order RESPONDENT to fulfill its contractual obligations and deliver the 30
metric tons of Coltan.
ISSUE 2: THE ARBITRAL TRIBUNAL SHOULD NOT
LIFT THE REMAINING PART OF THE EMERGENCY
ARBITRATOR‟S ORDER FOR INTERIM MEASURES
A. The Emergency Arbitrator Enjoys Full Authority to Issue Interim Measures Based
on the ICC Arbitration Rules, The Contract, and the UNCITRAL ML
77. The rightful application of both the ICC [Art. 29] and the UNCITRAL ML [Art. 17]
allow for the Emergency Arbitrator‟s authority to issue interim measures on behalf of the
Arbitral Tribunal, as well as the equitable interpretation of Art. 21 of The Contract to
reflect the parties‟ own original intentions.
I. The EA Order Applies Automatically Under the Parties‟ Agreement and Art. 29 of
the ICC Arbitration Rules
78. Contrary to RESPONDENT‟s allegations [R. 39, Answer to Request for Arbitration,
Para. 36-37], the Emergency Arbitrator enjoys rightful jurisdiction to order interim
measures. Interim measures are ordered parallel to arbitration proceedings and are
intended as measures of support [Van Uden Maritime v Deco-Line; 1998]. As a general
rule, the Arbitral Tribunal is within its jurisdiction to prescribe whichever interim
measures it deems necessary and appropriate, and the Emergency Arbitrator‟s authority
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derives from that of the Arbitral Tribunal [Hanotiau, P. 315; Grierson & Van Hooft, P.
14].
79. In fact, issuing interim measures can be considered the most essential role of an
Emergency Arbitrator; without it, parties would have only the courts to resort to, an
option they have already attempted to avoid [Redfern & Hunter, P. 400; Yesilirmark, P.
115]. Denying it this right would deny it most of its responsibilities and usefulness [Bose
& Meredith, P. 186].
80. In this case, the Emergency Arbitrator‟s authority applies automatically as per the parties‟
agreement in Art. 20 to settle disputes through Arbitration [ICC Rules Art. 29(1)].
Through this agreement, CLAIMANT and RESPONDENT have chosen to subject
themselves to the Arbitral Tribunal‟s authority and by extension the Emergency
Arbitrator‟s, incorporating all that entails: including any measures that may be taken by
the Arbitral Tribunal or the Emergency Arbitrator in its course of work, unless they have
specifically excluded it [ICC Rules Art. 28(1); Grierson & Van Hooft, P. 65, Para. 22].
As shall be specified in our next argument, this exclusion did not occur in The Contract.
II. Art. 21 Provides for the Exclusive Right of the Specified Courts to Enforce Interim
Measures Issued By the Competent Arbitral Authority
81. RESPONDENT asserts that Art. 21 of The Contract restricts the authority to issue a valid
order for interim measures to the specified national courts. Art. 21 reads as follows: “The
courts at the place of business of the party against which provisional measures are sought
shall have exclusive jurisdiction to grant such measures.” [R. 7, CL. EX. 1] Upon a closer
reading of the clause, it becomes clear that the word „grant‟ here is synonymous with
„enforce‟, thus giving the specified courts the right to enforce interim measures, and
limiting the power of other courts to implement them. Arbitral Tribunals have never had
the power to enforce interim measures; enforcement has always been the sole prerogative
of national courts [Tucker, P. 17]. The Arbitral Tribunal has never contested this right;
therefore, Art. 21 excludes it from none of its authority. Art. 21 simply ensures that none
but these particular national courts can enforce these measures, while affirming the
Arbitral Tribunal or the Emergency Arbitrator‟s authority to grant them.
82. Granting exclusive powers of enforcement to these national courts fits in with the
Tribunal‟s authority in cases such as ours, where it is vital that parties have an immediate
recourse to ensure the rapid enforcement of the urgent interim measures ordered by the
Arbitral Tribunal. If Art. 21‟s “grant” referred only to the issuance of measures, the
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jurisdiction of which court exactly would largely remain irrelevant, whether in reference
to the jurisdiction of the courts of the party against which the measures or the party
demanding them.
83. Instead, interpreting “grant” as “enforce” fits best with the intentions behind the drafting
of Art. 21. This interpretation is based on the logical conclusion that can be drawn from
Art. 21‟s specifying of the courts at the place of business of the party “against which
provisional measures are sought”, which clarifies the role of national courts as an
enforcing authority. These particular courts enjoy primary jurisdiction over all matters
related to the party in question, not least concerning the contested interim measures, and
their enforcement shall always remain undisputed. In particular, they have total authority
over the assets (money or goods) of the party against which the measures are demanded,
and can order their disposal as they see fit. This would prevent complications similar to
those in 2010 from arising once more, proving that it was indeed the parties‟ original
intention in drafting Art. 21.
84. Thus, Art. 21‟s allowance of exclusive jurisdiction to these specific courts for the
enforcement of interim measures complements the Arbitral Tribunal‟s authority perfectly,
granting CLAIMANT‟s requests and reaffirming the validity of the EA Order for interim
measures against the RESPONDENT.
III. Art. 21 of The Contract Provides for Concurrent Jurisdiction to Issue Interim
Measures to the Specified Courts and the Emergency Arbitrator
85. Contrary to RESPONDENT‟s allegations, Art. 21 allows for concurrent jurisdiction for
interim measures between the specified national courts and the Arbitral Tribunal. Firstly,
use of the phrase „exclusive jurisdiction‟ does not indicate the exclusion of the competent
Arbitral Tribunal‟s authority (1). Moreover, Art. 21 should be interpreted in accordance
with the parties‟ original intentions as per CISG Art. 8(3) (2). Additionally, Art. 21
cannot be construed to exclude an authority for interim relief that did not yet exist when it
was drafted (3). Finally, Art. 21 is a forum selection clause that specifies which national
court has exclusive jurisdiction to issue and enforce interim measures, without excluding
the authority of the competent arbitral tribunal (4).
1) The Phrase „Exclusive Jurisdiction‟ Does Not Mandate Absolute Exclusivity
86. Simply including the phrase „exclusive jurisdiction‟ in a contract does not guarantee its
being taken literally. While these clauses are prima facie enforceable, the test established
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in the case of The Eleftheria (1969) states that they can be deemed overruled as long as
strong cause can be given by the opposing party, whether for forum non conveniens or
other considerations up to the discretion of the judge [Tang, P. 122, Para. 3.2; Tan P.
396, Para. 1]. From Singapore [The Jian He; 2000] to Massachusetts [Boland v George
S. May; 2012] to Canada [G & E Auto v. Toyota; 1980] many court cases have affirmed
this. Without delving too deeply into the principles of private international law
considered in these cases, central throughout was judges‟ prioritizing the parties‟
intentions to bring about a fair outcome [Keyes, P. 160, Para. 2]. Clinging to a literal
meaning of Art. 21 while giving no consideration to the parties‟ intentions will obstruct
this fairness.
2) Art. 21 Should Be Interpreted in Accordance With the Parties‟ Original
Intentions As Per Art. 8(3) of the CISG
87. Considering the parties‟ intentions behind drafting Art. 21 defeats RESPONDENT‟s
insistence that Art. 21 excludes the Emergency Arbitrator‟s right to issue interim
measures. A contract interpretation denoting the parties‟ original intentions should
prevail over a literal interpretation [Lew/Mistelis/Kroll, P. 617, Para. 18-84]; this case
should be no exception.
88. These intentions should be discerned through reasonable examination of the conduct of
each party leading up to The Contract through the negotiations, as well as previously
established practices between CLAIMANT‟s parent company and RESPONDENT [CISG
Art. 8(3)]. We must therefore examine the circumstances under which Art. 21 was
drafted. The fact that Global Minerals first proposed this clause in a 2010 contract [R. 35,
Resp. Reply to Arbitration, Para. 10] indicates two important issues regarding Art. 21‟s
interpretation.
3) Art. 21 cannot be construed to exclude an authority for interim relief that did
not yet exist when it was drafted
89. While the ICC has allowed for one form of emergency relief or another since 1998, the
office of the Emergency Arbitrator as an internal mechanism to deal with such requests
came into force only with the ICC‟s 2012 amendments [Baigel, P. 1, Para. 3; Bose &
Meredith, P. 187, Para. 1]. We therefore ask: how could the parties have intended Art. 21
to exclude the authority of a body that did not even exist yet? This question is of
particular concern while considering the authority of the Emergency Arbitrator, which the
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parties must specifically agree to exclude if they do not wish it to apply [ICC Rules Art.
29(b)].
4) Art. 21 is a forum selection clause that specifies which national court has
exclusive jurisdiction to issue and enforce interim measures, without excluding
the authority of the competent arbitral tribunal
90. The original intention behind this article was far removed from how RESPONDENT is
attempting to present it today. Having been drafted at a time when interim measures
could only be obtained from courts, its purpose was to clarify a 2010 controversy that had
emerged in relation to a choice of national courts [R. 64, Procedural Order 2, Para. 13].
Therefore, Art. 21 functioned to specify which of the many national courts eligible would
enjoy definitive jurisdiction in issuing interim measures, namely the courts of the place of
business of the party against which provisional measures are sought. It does not function
as an exclusionary article for any other body other than national courts, and thus cannot
serve to reject either the Emergency Arbitrator‟s or the Arbitral Tribunal‟s authority.
91. Thus, Art. 21 provides for concurrent jurisdiction between the arbitral tribunal and the
specified national court in issuing interim measures. As Art. 21 was drafted in entirely
different circumstances than those of the current case, indicating the necessity of looking
beyond its surface to interpret it, and since the interpretation of clauses must remain true
to the original intentions of the parties while maintaining a view of a fundamentally
cohesive whole [Zeller, P. 631], the Emergency Arbitrator was correct in dismissing
RESPONDENT's attempts to reinterpret The Contract. We respectfully request the
Tribunal to do the same.
IV. None of the Exceptions Invalidating the EA Order, Listed In Art. 29(6) of the ICC
Rules, Apply in This Case
92. Certain situations specified in Art. 29(6) of the ICC Rules in which the Emergency
Arbitrator‟s provisions shall not apply: “(a) The arbitration agreement under the Rules
was concluded before the date on which the Rules came into force. (b) The parties have
agreed to opt out of the Emergency Arbitrator Provisions; or (c) The parties have agreed
to another pre-arbitral procedure that provides for the granting of conservatory, interim or
similar measures”.
93. Accordingly, all three of these possibilities for ruling the emergency interim measures are
nullified by virtue of facts of the current case. CLAIMANT and RESPONDENT
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concluded their contract on the 28 of March 2014, which is after the new ICC Rules came
into force on the 1st of January 2012 [R. 30, EA Order, Para. 9]. CLAIMANT and
RESPONDENT did not explicitly exclude the Emergency Arbitrator‟s Provisions from
their contract, as Article 20 of The Contract did not exclude such a referral for requesting
interim measures [R. 7, CL. EX. 1]. CLAIMANT and RESPONDENT did not agree on
another pre-arbitral procedure to order interim measures. Although they did grant a
specified national court the jurisdiction to render interim measures under Art. 21 of The
Contract, they did not definitively exclude referring the request of such interim measures
to the Emergency Arbitrator [R. 30, EA Order, Para. 9].
94. Therefore, any claims as to the lack of the Emergency Arbitrator‟s authority for granting
these measures under Art. 29(6) are hereby nullified.
B. The EA Order Fulfilled All Substantive Requirements of under Art. 17(A) of the
Danubian Arbitration Law for Issuance of Interim Measures, and Thus the EA
Order shall Be Upheld By the Arbitral Tribunal
95. The Arbitral Tribunal should not lift the EA Order as it was properly issued in compliance
with the substantive test provided under Art. 17(A) of the Danubian Arbitration Law,
which adopts the 2006 version of the UNCITRAL ML [R. 30, EA Order, Para. 11]. Those
substantive requirements are “harm not adequately reparable by an award of damages is
likely to result if the measure is not ordered, beside to a reasonable possibility that the
requesting party will succeed on the merits of the claim.” Parties have an obligation to
refrain from taking any action that may hazard the implementation of any future award
decision [To ios To el s v U raine; 2007].
I. The EA Order to Freeze 30 Tons of Coltan Satisfied the Substantive Requirements
for Issuing Interim Measures As Set Out in the UNCITRAL ML Art. 17(A)
96. Article 17(A)(1) stated those provisions as follows, (a) the requested party may suffer an
irreparable harm that could not be measured by an award of damages as a result of not
ordering such interim measure, (b) the requesting party have a reasonable possibility to
succeed in the claim. In light of that, the EA Order was properly ordered; as the decision
on the merits would be frustrated if the required measures were not ordered and
CLAIMANT has a strong arguable claim proving the merits of its case [R. 30, EA Order,
Para. 11].
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1) CLAIMANT Would Suffer Irreparable Harm That Cannot Be Measured By an
Award of Damages Should The EA Order Be Lifted
97. As the requesting party for continued enforcement of the interim measures ordered by the
Emergency Arbitrator, CLAIMANT has the wherewithal to demonstrate to the Arbitral
Tribunal that not granting these measures will result in irreparable or serious harm that
cannot be adequately compensated for by an award of damages [Born, P. 1981].
CLAIMANT is indeed sure to suffer Adequate Harm Towards Its Economic Standing (a)
and; Lifting the EA Order will influence CLAIMANT‟s reputation (b) [R. 6, Request for
Arbitration, Para. 21], greater than what would befall RESPONDENT, should the order
be lifted [R. 31, EA Order, Para. 14]. Taking this into consideration, the Arbitral Tribunal
should enforce the interim measures ordered by the Emergency Arbitrator in order to
protect CLAIMANT from the significant damage it would suffer otherwise.
a) An Adequate Harm CLAIMANT Would Suffer Towards Its Economic
Standing
98. CLAIMANT has already conducted contracts with other clients whose fulfillment depends
on RESPONDENT‟s deliverance of the 30 tons of Coltan under dispute [R. 5, Request for
Arbitration, Para. 14]. However, if the EA Order is lifted, RESPONDENT will be left to
dispose of the Coltan at a higher profit as it sees fit, leaving CLAIMANT without the
Coltan it so desperately needs – and cannot easily replace. Coltan is an extremely volatile
commodity whose price is subject to numerous fluctuations on the market [R. 4, Request
for Arbitration, Para. 11]. This is true particularly in light of recent developments, such as
the uncertainty surrounding its supply due to the tumultuous political situation in Xanadu
[R. 6, Request for Arbitration, Para. 21], and the sharp increase in demand for Coltan for
the production of new game consoles [R. 4, Request for Arbitration, Para. 11].
99. Weighing these factors, it appears to be highly unlikely that CLAIMANT would be able to
source Coltan at a similar price from other suppliers, particularly on such short notice.
Obtaining required amount of Coltan to fulfill CLAIMANT‟s obligations for other clients
would thus be either practically impossible due to simple lack of stock, or prohibitively
expensive. Attempting to fulfill the contracts by procuring the required amount of Coltan
at a significantly higher price than what was originally agreed upon would then be
financially unfeasible, and would result in significant loss on the part of CLAIMANT.
100. Alternatively, as a result of this essential impracticality, CLAIMANT would have to pay
damages to its clients in order to compensate for its default on contractual obligations.
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This would lead to an even greater monetary quagmire deepening these financial issues
even further. The economic harm it would suffer would be substantial.
b) Lifting the EA Order will influence CLAIMANT‟s reputation
101. Further, CLAIMANT‟s inability to fulfill these contractual obligations towards its
customers would have a hugely negative effect upon its reputation [R. 31, EA Order, Para.
13]. Like any company, CLAIMANT depends upon its well repute to keep the business of
its clients and attain new ones. Due to its recent emergence on the market, however,
maintaining its still-delicate reputation is even more vital to the continuation of its
existence. Avoidance of such a number of contracts at such an early stage in its
development would doubtlessly be a significant blow to CLAIMANT‟s reputation. It
could very well be fatal to much of its prospective future dealings, which would lead to an
even greater future loss and quite possibly the end of the company entirely.
102. In contrast, any loss suffered by RESPONDENT would only result from the fact that it
cannot enter into additional, better-remunerated contracts [R. 31, EA Order, Para 14].
This loss could be well remedied by the payment of damages, if deemed fit by the
Tribunal. CLAIMANT has never wished to cause RESPONDENT undue loss; it desires
only to remain on good standing with its own clients and not renege on outstanding
contractual obligations. Thus, the Arbitral Tribunal‟s upholding of the Emergency
Arbitrator‟s interim measures is crucial to prevent irreparable harm to CLAIMANT.
2) CLAIMANT Has a Reasonable Possibility To Succeed In Its Claim
103. A party may request the arbitral tribunal to order an interim relief where it has a
reasonable possibility of succeeding in the claim. Plaintiff must demonstrate evidence of
reasonable possibility that the merits would be resolved in its favor [Round v. MacDonald;
2011]. “The word „reasonable‟ means that there must be something more than a de
minimis possibility or chance for the plaintiff to succeed at the trial. The court also must
consider whether plaintiff has a reasonable possibility to succeed at the merits based on a
reasoned consideration of the evidence.” [Silver v. Imax; 2013].
104. Drawing upon the invalidity of RESPONDENT‟s claim to avoidance of The Contract,
CLAIMANT has a reasonable possibility of succeeding in the case and proving the
validity of The Contract for the delivery of 30 metric tons of Coltan [R. 30, EA Order,
Para. 12]. CLAIMANT has demonstrated several grounds in insisting that
RESPONDENT did not lawfully avoid The Contract neither by its First or Second
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Avoidance leading to a duty to carry out its contractual obligations. Thus, REPONDENT
unlawful avoidance of The Contract gave rise to a reasonable possibility of the existence
of a valid contact [Skids v McNeill; 2012]. Therefore, CLAIMANT‟s strong arguable case
for the invalidity of RESPONDENT‟s avoidance would be completely frustrated if the
order of freezing the 30 metric tons of Coltan was lifted.
105. In light of the above considerations, the EA Order has met the substantive equipments
stated at Art. 17(A) of the UNCITRAL ML, as CLAIMANT would suffer an irreparable
harm in the absence of the interim measure beside the strong arguable case CLAIMANT
has in its claim [R. 30, EA Order, Para. 11].
II. Due to the Necessary Urgency for Issuing Interim Measures, the EA Order was in
Line With The Arbitral Tribunal‟s Authority to Grant Such Measures
106. A party that needs urgent interim measures that cannot await the constitution of an
arbitral tribunal, may make an application for such measures pursuant to the Emergency
Arbitrator Rules, as stated in ICC Rules Art. 29(1) Appendix V. Plaintiff can ask The
Emergency Arbitrator to grant an interim measure of protection against respondent‟s
harmful acts where the need of such interim is urgent and necessary [Biwater Gaff v
United Republic of Tanzania; 2006]. The procedural power to grant provisional measures
reflects a general principle of law, which is based on the need to prevent actions of the
parties from prejudicing or frustrating the judgment of the court. A party may need
“necessary urgent measures to be taken to prevent irreparable harm or to maintain in a
situation, even with the existence of the arbitration agreement or while the arbitration
proceeding is in progress” [Fouchard; Para. 1327], which applies to the case in hand,
CLAIMANT is in urgent need for the continued maintenance of the order that would
prevent RESPONDENT from taking any action that may frustrate the decision of the
Arbitral Tribunal. Thus, the EA Order was granted properly in accordance with the
relevant provisions stated in Art. 29(6) of the ICC Rules, without prejudice to Art. 21 of
The Contract. Therefore, the Arbitral Tribunal is requested not to lift The Order, as it is
essential to the continuance of this proceeding.
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III. RESPONDENT Bears the Burden of Proof to Support Their Claim of Lifting The
EA Order, Which They Have Yet to Produce.
107. The facts mentioned above are contrary to RESPONDENT‟s allegations [R. 39, Answer
to Request for Arbitration, Para. 37]. RESPONDENT has the fundamental burden of
demonstrating that the EA Order should be lifted in accordance to the doctrine of proof.
Rather than it being CLAIMANT‟s impetus to set forth arguments proving the legitimacy
of the EA Order, RESPONDENT as being the opposing party has yet to back up
allegations with any semblance of proof discrediting the substantive or procedural
elements of the EA Order [Burden of Proof, 2013].
CONCLUSION OF THE SECOND ISSUE
108. In conclusion, the Emergency Arbitrator has full authority to grant the requested interim
measures and to order RESPONDENT to freeze 30 metric tons of Coltan, and the Arbitral
Tribunal should enforce the EA Order for the duration of the proceedings.
ISSUE 3: GLOBAL MINERALS IS NOT A PARTY TO
THE CONTRACT OR THE ARBITRATION
AGREEMENT; THEREFORE, IT SHOULD NOT BE
SUBJECT TO ARBITRATION PROCEEDINGS
A. Global Minerals is not an Additional Party to The Contract between
CLAIMANT and RESPONDENT
I. Global Minerals Was Not Expressly Mentioned As A Party in The Arbitration
Clause
109. Contrary to RESPONDENT‟s allegation that Global Minerals is a party to The Contract,
the Latter never became a party to The Contract. Privity of contract, as a common element
in all jurisdictions around the world, indicates that a contract imposes obligations only on
the parties of a contract. Third parties can never be subject to obligations of a contract that
they have not entered into [McKendrick; P. 1168]. Contrary to RESPONDENT‟s
allegation that Global Minerals is a party to The Contract, the Latter in fact was never
expressed as a Contracting Party [R.7, CL. EX. 1, Art. 1]. The parties to this dispute are
only Vulcan Coltan Ltd and Mediterraneo Mining SOE [R.7, CL. EX. 1, Art. 1].
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110. There is no mention of an additional party in the arbitration clause in The Contract [R. 7,
CL. EX. 1, Art. 20]. Nothing in the clause indicates, directly or indirectly, that an
additional party is involved. Global Minerals did not become a party to The Contract; in
fact, it only made an endorsement to The Contract in order to fulfill the purpose of
avoiding an expensive outside guarantee of the CLAIMANT, especially after the
RESPONDENT‟s insistence on financial securities. It never communicated any intent to
become a party to The Contract.
111. Because the CLAIMANT is new to the market, it is expected that counterparties would
ask for additional securities to ensure their rights. In such a situation, Global Minerals, as a
parent company of the CLAIMANT, consented to only provide financial securities
without being involved as a party, neither in the contract nor in the arbitration agreement.
During negotiations, the RESPONDENT suggested adding Global Minerals as an
additional buyer in the list, but the Latter explicitly rejected that suggestion [R. 50, Reply
to the Counterclaim, Para. 6]. This demonstrates that Global Minerals was not intending,
by any means, to become a party to The Contract.
112. Accordingly, Global Minerals is not a party to The Contract, and thus with respect to the
principle of privity of contract, the arbitral tribunal should refuse to involve Global
Minerals as a party to The Contract.
II. Global Minerals Did Not Consent to Be Involved in The Arbitration Proceedings
113. RESPONDENT requests to join Global Minerals to the arbitration as an Additional Party
[R. 37, Answer to Request for Arbitration, Para. 25]. However, despite RESPONDENT‟s
allegations, nothing in The Contract provides that Global Minerals consented to be
involved in arbitration proceedings, as it only signed The Contract as an endorser.
114. Arbitration is fundamentally built upon the principle of consent, meaning that only parties
to such an agreement are bound by it. It is a recognized principle in both civil and
common law jurisdictions that the rights and obligations of an arbitration agreement only
apply to agreeing parties (i.e. signatory parties) [Born; P. 1133]. This consensual nature of
an arbitration agreement and its lack of effects on third parties are also referred to in
French Law [Born; P. 1134]. Arbitration law is based on consent; therefore, it does not
allow extending to additional parties who are foreign to the contract, and prohibits any
forced intervention to the dispute [Born; P. 1135].
115. Art. 1(1) of the UNCITRAL Arbitration Rules provides that the Rules apply “where the
parties to a contract have agreed in writing that disputes in relation to that contract shall be
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referred to arbitration.” This is similar to other leading arbitration rules such as the rules of
the ICC, the ICDR and the LCIA [Born; P. 1136]. Equally, Art. II of the NY Convention
states that arbitration agreements should be recognized in writing. This is also the case in
the new German and Dutch laws, which traditionally allowed for oral agreements
[Lew/Mistelis/Kroll; P. 94]. Global Minerals was not stated as a contracting party, and this
means that they did not agree to be joined to the arbitration. Global Minerals never
expressly agreed to be part of the arbitral proceedings in writing; therefore, the
RESPONDENT cannot demonstrate that Global Minerals ever consented to be bound by
arbitration.
116. Moreover, based on Art. 7(1) of the ICC Rules, an additional party may not be joined to
the arbitration except where all parties, including the additional party, agree otherwise.
The facts of the case state that Global Minerals explicitly rejected the RESPONDENT‟s
suggestion to add it in The Contract as an additional buyer [R. 50, Reply to the
Counterclaim, Para. 5]. Therefore, Global Minerals should not be joined as an Additional
Party to the arbitral proceedings.
117. In most cases, parties to an arbitration agreement are only those who formally execute and
expressly agree to be parties to the contract containing the arbitration clause. To sum up,
the nature of arbitration is voluntary, and since Global Minerals is a third party that did not
show consent, it should be excluded from arbitration, as this would undoubtedly contradict
the consensual nature of international arbitration agreements [Born; P. 1135].
III. Global Minerals‟ Endorsement to The Contract is Not Sufficient to Bind it to The
Arbitration Agreement
118. In principle, a party guaranteeing an obligation arising from a contract containing an
arbitration clause will not be bound by that clause, unless it can be established from other
circumstances that the parties' true intentions in drawing up the guarantee were that the
guarantor–often the parent company–would be party to the arbitration [Goldman; P. 225].
It is true that Global Minerals endorsed the contract [R. 7, CL. EX. 1]. However, there is
no indication that the parties intended that Global Minerals would be involved as a party
in the arbitration because it never agreed to that [R. 7, CL. EX. 1, Art. 20].
119. The question whether to involve a non-signatory party to an arbitration agreement can be
decided on a case-by-case basis. As in the case of OIAETI v. Sofidif (1986) the law of
arbitration does not allow the arbitration clause to extend to third parties who are not
involved in the contract, and bans the contracting parties from forcing an additional party
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to be included in an arbitration agreement. Additionally, it must be noted that arbitration
depends on party autonomy [Kazutake; P. 2]. Accordingly, forcing a non-signatory to
arbitration without persuasive evidence of its consent contradicts the principle of party
autonomy.
120. From the previously mentioned facts, it follows that Global Minerals never became a party
to The Contract or its arbitration agreement; therefore, the Arbitral Tribunal has no
jurisdiction over Global Minerals. Because RESPONDENT cannot demonstrate that
Global Minerals ever consented to be a part of the arbitration, Global Minerals should not
be joined as an Additional Party in the arbitral proceedings.
B. The Group of Companies Doctrine Should Not Be Used To Extend The Arbitration
Agreement to Global Minerals
121. RESPONDENT is requesting the application of the Group of Companies doctrine to bind
Global Minerals to the arbitration proceedings [R. 37, Answer to Request for Arbitration,
Para. 27]. Conversely, CLAIMANT maintains that the Group of Companies doctrine
gives no legal basis to an attempted joinder of Global Minerals to the arbitration
proceedings [R. 50, Reply to the Counterclaim, Para.7].
I. The Group of Companies Doctrine is Not Widely Accepted
122. The Group of Companies doctrine is highly controversial, and is not widely accepted
[ ller eil ann P. 118]. It has no place in the applicable ICC arbitration rules, nor is it
recognized in the Law of Danubia as derived from the UNCITRAL ML, which is the law
of the seat of arbitration (lex arbitri), or the law that governs the contract (lex causae). [R.
50, Reply to the Counterclaim, Para. 7]. Additionally, several legal commentaries have
concluded from Dow Chemical that “Danubian courts will most likely not follow the
doctrine” [R. 69, Procedural Order 2, Para. 46]
123. CLAIMANT acknowledges that the tribunal may, in certain cases, apply a doctrine that is
not explicitly incorporated into the applicable law; however, it should at least be generally
accepted amongst international legal systems. This is not the case with the Group of
Companies doctrine, which has only been applied by French courts. In contrast, Sweden,
Italy, Germany and Colombia do not recognize this doctrine [Redfern & Hunter, Para 3-
32]. English courts have clarified that the doctrine “forms no part of the English law”
[Peterson Farms; 2004], and the existence of a Group of Companies is insufficient to
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extend arbitration agreements to non-signatories under USA law [Sarhank Group v.
Oracle; 2005].
124. In addition, under most formulations, it is clear that the Group of Companies doctrine
must be applied with caution. It requires showing more than a non-signatory‟s
membership in a Group of Companies [Born; P. 1170]. It is also frequently observed that
the Group of Companies doctrine relies mainly on the intentions of the parties [Born; P.
1172]. Both of these conditions were unfulfilled in the current case. Hence, the Arbitral
Tribunal should not use this rarely applicable doctrine to join Global Minerals to the
arbitral proceedings.
II. The Requirements Of The Group of Companies Doctrine Are Not Fulfilled By
Global Minerals; Therefore, Global Minerals Is Not Bound By Virtue Of That
Doctrine
125. It is acknowledged that, under certain circumstances, some courts have extended
arbitration agreements to non-signatories based on the Group of Companies doctrine, as
first introduced in the Dow Chemical case [Dow Chemical v. Isover St. Gobain (ICC);
1982]. The tribunal in that case allowed Dow Chemical‟s wholly owned subsidiaries to
arbitrate claims resulting from a contract containing an arbitration clause concluded by the
parent company.
126. The preconditions employed by the tribunal in Dow Chemical were that Dow Chemical
and its subsidiaries over which Dow Chemical had absolute control constituted “one and
the same economic reality” and that all non-signatories were directly involved in the
“conclusion, performance and termination of the contract” [Born; P.1168]. Moreover, the
tribunal emphasized that extending the arbitration agreement was complying with the
parties‟ intentions [Born; P.1169].
127. In the present case, Global Minerals and CLAIMANT do not constitute one and the same
economic reality. In fact, CLAIMANT had an independent legal and economic existence
from Global Minerals. CLAIMANT was set up as a separate legal entity, and it has its
own assets and personnel [R. 63, Procedural Order 2, Para. 7]. It is true that Global
Minerals was involved in the conclusion, performance and termination of the contract, but
not to a degree that would justify an extension of the arbitration agreement under the
Group of Companies doctrine. Global Minerals‟ involvement in issuing letters of credit to
the RESPONDENT still does not justify extending the arbitration agreement; it only
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endorsed The Contract to provide the necessary financial securities as the RESPONDENT
insisted [R. 50, Reply to the Counterclaim, Para. 6].
128. Even if CLAIMANT and RESPONDENT had the intention to involve Global Minerals,
this would still not amount to the mutual consent of “all” parties. Consequently, there is no
legal basis to apply the Group of Companies doctrine, as none of the requirements set out
in the Group of Companies case law is satisfied. Therefore, the Group of Companies
doctrine is inapplicable and does not per se justify extending the arbitration clause to
Global Minerals.
C. RESPONDENT‟s Claim to Join Global Minerals to the Arbitration
Proceedings Pertains to The Doctrine of Piercing the Corporate Veil
129. The doctrine of „Piercing the Corporate Veil‟ is a fundamental principle of corporate law,
which the RESPONDENT aims to apply in order to join Global Minerals as an additional
party to the arbitration agreement. However, the facts of the present case do not warrant its
application, as the doctrine‟s preconditions are not met and none of its elements apply.
130. CLAIMANT acknowledges that courts, in certain cases, apply the doctrine of „Piercing
the Corporate Veil‟ and thereby extend liability. However, this doctrine is unquestionably
exceptional [Multiponics v. Herpel; 1980]. Therefore, it may only be applied in
exceptional cases, “under special circumstances”, and with “great caution” [Thomsen v.
Peterson; 1999]. In fact, the only element of the doctrine that is in compliance with
RESPONDENT‟s requirements is that the effect of the arbitration clause should be
directly attributed to the parent company [Hanotiau, P. 48]. However, this is not enough to
apply an entire doctrine, and the facts of the case in hand do not allow qualifying it as one
of these rare instances.
I. The Elements That Allow The Application Of the „Piercing The Corporate Veil
Doctrine‟ Are Not Met
131. In the case of Dow Chemical, the approach followed in the Group of Companies doctrine
is to join the subsidiaries to the parent company. On the other hand, RESPONDENT is
suggesting the opposite, which is to ascend the corporate ladder by applying the doctrine
of „Piercing the Corporate Veil‟. Two conditions must be present to apply the doctrine: the
CLAIMANT must be Global Minerals‟ alter ego, and injustice must be suffered by
RESPONDENT if Global Minerals is not added to the arbitration. Neither condition
applies to this case.
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1) Claimant is Not Global Minerals‟ Alter Ego.
132. The doctrine of Piercing the Corporate Veil is hard to apply. Even if the tribunal decides
that this doctrine is to be taken into consideration, its requirements are not fulfilled. In
fact, the question of piercing the veil is contextual [Thompson, P. 1039]. In order for the
doctrine to apply, it must first be established that the subsidiary lacks an independent
existence, which the facts of this case disprove. Global Minerals is a totally separate legal
entity from CLAIMANT; the Latter, in fact, has its own separate assets from Global
Minerals, beginning with a capital of USD 20.000 [R. 64, Procedural Order 2, Para.9].
Therefore, CLAIMANT‟s assets are completely separate from Global Minerals‟, and thus
it should not be subject to arbitration proceedings [R. 63, Procedural Order 2, Para.7].
133. Even if the RESPONDENT claims that the Alter Ego principle is applicable, its
requirements are not fulfilled. To apply the Alter Ego principle, RESPONDENT would
have to prove that Global Minerals exercises total dominion over its subsidiary, meaning
not only control of finances, but also control of policy and business practice in all the
subsidiary‟s transactions [Kuney; P. 135]. Yet in fact, Global Minerals only endorsed The
Contract to guarantee payment obligations [R. 50, Reply to the Counterclaim, Para. 5].
Additionally, there had been an internal decision that all business in Equatoriana should be
carried out by CLAIMANT [R. 50, Reply to the Counterclaim, Para. 5]. Therefore, the
Alter Ego rule cannot be applied because its requirements are not fulfilled.
2) RESPONDENT Does Not Incur Injustice if Global Minerals Was Not a Party to
the Arbitration
134. Secondly, RESPONDENT must show that injustice would result if the veil was not
pierced. To establish that, RESPONDENT would have to demonstrate that an inequitable
result would occur if the alter ego were allowed to escape liability [Hanotiau, P. 48]. In
fact, no injustice would result because CLAIMANT is willing to pay the agreed-upon
amount to receive the Coltan as specified in The Contract. Excluding Global Minerals
from the arbitration would not result in injustice. Therefore, the RESPONDENT has no
legal basis to pierce the corporate veil, and the Tribunal should deem Global Minerals as a
separate legal entity from the CLAIMANT.
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D. Good Faith Considerations Do Not Mandate The Joinder Of Global Minerals
As An Additional Party to The Arbitration Agreement
135. RESPONDENT further refers to the principle of good faith, claiming that Global Minerals
is prevented by good faith considerations to object to the Arbitral Tribunal‟s jurisdiction
[R. 37, Answer to Request for Arbitration, Para.28]. This principle cannot justify Global
Minerals‟ joinder to the arbitration proceedings [R. 51, Reply to the Counterclaim, Para.8]
because none of the involved jurisdictions have a developed doctrine of good faith that
would justify the finding [R. 50, Reply to the Counterclaim, Para.8].
136. The principle of good faith requires parties to refrain from any act that would prevent or
hinder performance of the contract. Even though this principle is recognized by most
states, it remains controversial. In addition, some courts have limited the principle of good
faith, as it creates too much uncertainty [Mahoney; P. 849].
137. The Principles of European Contract Law [PECL, Part 1, 1995] as well as the UNIDROIT
Principles [Art. 1.7] obligate the parties to act in good faith and fulfill all their duties under
the contract. Good faith depends on the parties‟ situation and the neutrality of the contract,
and each factor must be taken into consideration to reach a reasonable judgment [PECL,
Art. 1.108].
138. Even if good faith considerations are to be taken into account, the facts of the case indicate
that Global Minerals acted in good faith at every turn to assure RESPONDENT that
CLAIMANT will fulfill all of its contractual obligations. Global Minerals acted in good
faith by issuing a second letter of credit to ensure that CLAIMANT‟s payment obligation
is fulfilled towards RESPONDENT, as agreed under The Contract. It sent a second Letter
of Credit by fax to ensure that RESPONDENT received it, and that it adhered to the
deadline [R. 16, CL. EX. 10]. This reflects Global Minerals‟ goodwill to guarantee
payment obligations. Thus, the principle of good faith does not bind Global Minerals as an
additional party to the arbitration agreement.
139. Overall, while the principle of good faith does exist in the CISG, it does not reach the
status of a general obligation. Rather, it is restricted to a principle for interpreting a
provision of the Convention [Mid Essex v. Compass Group; 2013]. Therefore, even if
RESPONDENT alleges that CLAIMANT should be involved in the arbitration agreement
by virtue of good faith, it is not considered a general obligation and does not indicate any
necessity for the proposed joinder of Global Minerals
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CONCLUSION OF THE THIRD ISSUE
140. Thus, joining Global Minerals as an additional party to the arbitration agreement cannot be
justified: neither by considerations of good faith, nor under the Group of Companies
doctrine, nor under the doctrine of Piercing the Corporate Veil. The Tribunal is thus
respectfully requested to deny RESPONDENT‟s application for this joinder and affirm its
lack of jurisdiction over Global Minerals.
REQUEST FOR RELIEF
In light of the above arguments and pleadings, CLAIMANT respectfully requests the
Arbitral Tribunal, rejecting the RESPONDENT‟s submissions, to:
(1) Reject RESPONDENT‟S counterclaim;
(2) Find that RESPONDENT was never entitled to avoidance, either the first or second
time, as CLAIMANT never fundamentally breached the Contract of 28 March 2014;
(3) Uphold the Emergency Arbitrator‟s lawful Order for interim measures against
RESPONDENT to freeze 30 tons of Coltan;
(4) Declare that it has no jurisdiction over Global Minerals, which was never a party to the
Contract and is thus not subject to the arbitration proceedings.
The CLAIMANT reserves the right to amend this request for relief as may become
necessary.
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Certificate
We hereby confirm that only the persons whose names are listed below and who signed this
certificate wrote this Memorandum.
Jeddah, December 11 2014
Nouran AlMekhlafi Jude Jamjoom
(signed) (signed)
Noha Bangaitah Ohoud Mously
(signed) (signed)
Maryam AlDabbagh Dorra Ramadan
(signed) (signed)
Nedaa AlAhmadi Lamia AlOtaibi
(signed) (signed)
Mohra Ferak Ayat AlBarakati
(signed) (signed)