MEMORANDUM FOR CLAIMANT - pittvis · University of Science & Culture Memorandum for Claimant _____...

TWENTY-FORTH ANNUAL

WILLEM C. VIS INTERNATIONAL COMMERCIAL ARBITRATION MOOT

VIENNA, AUSTRIA – 8 TO 11 APRIL, 2017

____________________________________________________________________________

MEMORANDUM FOR CLAIMANT

UNIVERSITY OF SCIENCE & CULTURE

___________________________________________________________________________

ON BEHALF OF:

Wright Ltd.

232 Garrincha Street

Oceanside

Equatoriana

-CLAIMANT-

AGAINST:

SantosD KG.

77 Avenida O Rei

Cafucopa

Mediterraneo

-RESPONDENT-

_____________________________________________________________________________

_____________ Counsel for Claimant: _______________

NAEEMEH SABBAGHI ♦ MOHAMMAD J. NASERINIA ♦ FATEMEH SHABANI

NEWSHA SARAMI♦ BEHNAZ GARSHASBI ♦ ALI ASGARI ♦ TIMA HAJIHOSEYNI

HOUMAN GOLMOHAMMAD ♦ AHMAD NAZERI ♦ NEGAR PASEBANI

SCIENCE & CULTURE LAW SCHOOL, TEHRAN, IRAN

CAM-CCBC Arbitration Case: Nr. 200/2016/SEC7 Wright VS. SantosD KG.

University of Science & Culture Memorandum for Claimant _______________________________________________

I

Table of Contents MEMORANDUM FOR CLAIMANT .................................................................................................................. I

CAM-CCBC Arbitration Case: Nr. 200/2016/SEC7 Wright VS. SantosD KG. .............................................. I

TABLE OF ABBREVIATIONS .......................................................................................................................... III

INDEX OF AUTHORITIES ................................................................................................................................ V

INDEX OF CASES ........................................................................................................................................ XIII

INDEX OF ARBITRAL AWARD ..................................................................................................................... XIX

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

SUMMARY OF ARGUMENTS ......................................................................................................................... 4

I. THE TRIBUNAL DOES NOT HAVE THE POWER TO ORDER CLAIMANT TO PROVIDE SECURITY FOR

RESPONDENT’S COSTS AND SHOULD NOT DO SO ....................................................................................... 5

A. This Tribunal’s Jurisdiction Cannot Be Extended To Issuing Security For Costs ............................... 5

1. The parties did not empower expressly in their arbitration agreement ......................................... 6

2. CAM-CCBC Rule is selected by Parties as the applicable arbitral rules ............................................ 7

3. In accordance with the parties ’right to choose the seat of arbitration, the UNCITRAL is an

applicable law on proceeding .............................................................................................................. 8

B. The Requirements of Granting The Provisional Measures (Security For Costs) According To Art.17A

UNCITRAL Model Law Are Not Available ................................................................................................. 9

1. Irreparable harm is the first requirement under Art.17 A for granting interim measure ............... 9

2. Reasonable possibility for succeed on the merits is the second requirements for granting under

Art.17 A UNCITRAL ............................................................................................................................. 10

3. The specific requirements for granting such order under Art.8 CAM-CCBC rules is that there

should be an urgent matter in granting security for costs ................................................................. 11

4. Even if the requirements of previous conditions are established, there are specific conditions in

respect of granting security for costs which must be provided ......................................................... 12

II. THE CLAIMS ARE ADMISSIBLE AND SUBMITTED WITHIN THE AGREED TIME LIMIT .......................... 15

A. Claimant's Initiation to Arbitration On 31 May 2016 Was Complying With CAM-CCBC Rules .......... 15

1. In the request for arbitration filed on 31 May 2016, all the requirements of article 4.1 CAM-CCBC

rules are met ...................................................................................................................................... 15

2. Failure to pay the full Registration fee does not affect the validity of the request for arbitration

to be valid ........................................................................................................................................... 17


II

B. On 07 June 2016, The Request For Arbitration Was Amended, While The Arbitration Had Been

Already Initiated On 31 May 2016 ......................................................................................................... 17

1. Amendment of the power of attorney was made "for the sake of good order" and did not affect

the validity of the request for arbitration, as it had been already valid ............................................ 18

2. Payment of the registration fee is the provision of ar. 4.2 CAM-CCBC rules and Claimant had the

obligation to comply with it ............................................................................................................... 18

III. CLAIMANT IS ENTITLED TO THE ADDITIONAL PAYMENTS FROM RESPONDENT .................................. 19

A. The Current Exchange Rate Is Applicable to The Main Agreement. .................................................. 19

1. There are two separate contracts. ................................................................................................. 20

2. Even if there is one contract, it is modified in accordance with new added terms ....................... 26

3. The parties have not been under one parent company ................................................................ 26

B. The Bank Charges Shall Be Borne by Respondent ............................................................................. 31

1. Both CISG and the contract put the burden of payment on Respondent ...................................... 31

2. The analogy of art. 35 CISG is not presently applicable ................................................................. 32

3. Respondent must have been aware of ML/2010C provisions ....................................................... 33


III

TABLE OF ABBREVIATIONS

art. Article(s)

CAM-CCBC the Center for Arbitration and Mediation of the Chamber of Commerce Brazil Canada

CISG United Nations Convention on Contracts for the International Sale of Goods

Corp Corporation

Co Company

CL Ex Claimant’s Exhibit

GMP Guarantied Maximum Price

infra. Below

ML Money Laundering

Mr. Mister

Mrs. Mistress

Ms. Miss

no. Number(s)

p. Page(s)

par. Paragraph(s)

PO. no. 1 Procedural Order Number 1


IV

PO. no. 2 Procedural Order Number 2

RE Ex Respondent’s Exhibit

RSC Request for Security for Costs, field on 06 Sep 2016

SOC Notice of Arbitration/Statement of Claim of Claimant, filed on 31 May 2016

SOD Response to the Notice of Arbitration and Statement of Defense of Respondent, filed on 24 Jun 2016

supra Above

ToR Terms of References

UNCITRAL United Nations Commission on International Trade Law

UNIDROIT International Institute for the Unification of Private Law

USD US Dollar

v. against (versus)

i.e. that is (id est)

e.g. for example (exempli gratia)


V

INDEX OF AUTHORITIES

A. Mensah Thomas A. Mensah, Provisional Measures in the International

Tribunal for the law of the Sea (ITLOS)

Cited at: p. 5, 11

Berard/Lewis Marie Berard, Katherina Lewis, Refusal to pay share of costs

deposit does not entitle other party to litigate, Clifford Chance

LLP

Available at:

http://www.lexology.com/library/detail.aspx?g=ef25aee6-

8419-4908-81ea-00a8b5460fc0

Cited at: p. 17

Born (2012) Gary Born, International Commercial Arbitration, Ed. Kluwer

Law International, 2012

Cited at: p. 6, 9, 10, 11

Born (2015) Gary Born, International Arbitration: Law and Practice Ed.

Kluwer Law International, 2nd edition, 2015)

Cited at: p. 10

Cameron John G. Cameron, A Practitioner’s Guide to Construction Law,

Ed. Amer Law Ins, 1st edition, 2000

Cited at: p. 21, 22

http://www.lexology.com/library/detail.aspx?g=ef25aee6-8419-4908-81ea-00a8b5460fc0

http://www.lexology.com/library/detail.aspx?g=ef25aee6-8419-4908-81ea-00a8b5460fc0


VI

Chance Cost-Plus Guaranteed Maximum Price Contracts, Ed. Clifford

Chance LLP

Available at:

https://www.cliffordchance.com/content/dam/cliffordc

hance/PDF/GMP_contracts.pdf

Cited at: p. 22

Epstein/Jemakowicz Barry J. Epstein, Eva K. Jermakowicz, WILEY

Interpreteation and Application of International Financial

Reporting Standards, Ed. Wiley, 7th edition, 2010

Cited at: p. 21

Fellmeth/Horwitz Aaron X. Fellmeth, Maurice Horwitz, Guide to Latin in

International Law, Oxford University Press Pub.

Cited at: p. 22

Ferguson Juanita Ferguson, Pluses And Minuses Cost-Plus Versus Fixed-

Price Contract, Ed. Beankinney, 2010

Available at:

https://www.beankinney.com/publications-articles-

pluses-minuses-cost-plus-contracts.html

Cited at: p. 22

Fouchard/Gaillard

Philippe Fouchard, Emmanuel Gaillard, Berthold Goldman,

On International Commercial Arbitration, Ed. Kluwer Law

International, Hague, 1999

Cited at: p. 5, 8

https://www.cliffordchance.com/content/dam/cliffordchance/PDF/GMP_contracts.pdf

https://www.cliffordchance.com/content/dam/cliffordchance/PDF/GMP_contracts.pdf

https://www.beankinney.com/publications-articles-pluses-minuses-cost-plus-contracts.html

https://www.beankinney.com/publications-articles-pluses-minuses-cost-plus-contracts.html


VII

Gu Weixia Gu, Security for Costs in International Commercial

Arbitration, Ed. Kluwer Law International, Journal of

International Arbitration, p. 167–206, 2005

Cited at: p. 6

Guidline International Arbitration Practice Guidline, Application for

Security for Costs, Charactered Institute of Arbitrators,

London, 30 September 2015

Cited at: p. 11

Handfinger Adam P. Handfinger, Understanding Contractual Pricing

Arrangements –Fixed Price, Cost-Plus, and Guaranteed

Maximum Price, Ed. Peckar & Abramson

Available at:

http://www.pecklaw.com/images/uploads/communicati

ons/Client_Alert-

Understanding_Contractual_Pricing_Arrangements.pdf

Cited at: p. 22

Hofbauer/Sanders Joachim Hofbauer, Greg Sanders, Defense Industrial Initiatives

Current Issues: Cost-Plus Contracts, Ed. CSIS, available at:

https://csis-prod.s3.amazonaws.com/s3fs-

public/legacy_files/files/media/csis/pubs/081016_diig_cos

t_plus.pdf

Cited at: p. 21

http://www.pecklaw.com/images/uploads/communications/Client_Alert-Understanding_Contractual_Pricing_Arrangements.pdf



https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/files/media/csis/pubs/081016_diig_cost_plus.pdf




VIII

Honnold. John O. Honnold, Uniform Law for International Sales Under

the 1980 United Nations Convention, Ed. Kluwer Law

International, 3rd edition, 1999

Cited at: p. 22, 23, 29, 30

Huber/Mullis Peter Huber, Alastair Mullis, The CISG: A new Textbook

for Students and Practitioners,

Sellier European Law Publishers, 2007

Cited at: p. 23

Kerzner Harold Kerzner , Project Management: A Systems Approach to

Planning, Scheduling, and Controlling, Ed. Wiley, 11th edition,

2013

Cited at: p. 21, 22

Lau Victor Lau, Arbitration proceeds despite a failure to pay advance

on costs

Available at:

https://www.claytonutz.com/knowledge/2014/septembe

r/arbitration-proceeds-despite-a-failure-to-pay-advance-

on-costs

Cited at: p. 17

M. Eiseman/Farks Neal M. Eiseman, Brian Farkas, Stiffing the Arbitrators, the

Problem of Nonpayment in Commercial Arbitration, Harvard

Negotiation Law Review

Available at:

http://www.hnlr.org/wp-content/uploads/HNLR-

Eiseman-and-Farkas-.pdf

Cited at: p. 16

https://www.amazon.com/Harold-Kerzner/e/B001H6PLZU/ref=dp_byline_cont_book_1

https://www.claytonutz.com/knowledge/2014/september/arbitration-proceeds-despite-a-failure-to-pay-advance-on-costs



http://www.hnlr.org/wp-content/uploads/HNLR-Eiseman-and-Farkas-.pdf

http://www.hnlr.org/wp-content/uploads/HNLR-Eiseman-and-Farkas-.pdf


IX

Maskow Dietrich Maskow, Bianca-Bonell Commentary on the International

Sales Law, Reproduced with permission of Dott. A Giuffrè

Editore, S.p.A, p. 394-400,

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/maskow-bb54.html

Cited at: p. 29, 30

Mercantil Titular de Derecho Mercantil, El Contrato de Compraventa

Internacional de Mercancias (Convencion de Viena de 1980),

Universidad Carlos III de Madrid

available at:

http://www.cisg.law.pace.edu/cisg/biblio/perales1-08.html

Cited at: p. 19

Meulemeester/Veryser Dirk De Meulemeester, Cederic Veryser, Failing to pay the advance

on costs and the risk of inoperability of the arbitration clause – Remedy?,

Kluwer Arbitration Blog

Available at:

http://kluwerarbitrationblog.com/2014/07/31/failing-to-pay-

the-advance-on-costs-and-the-risk-of-inoperability-of-the-

arbitration-clause-remedy/

Cited at: p. 17

http://www.cisg.law.pace.edu/cisg/biblio/maskow-bb54.html

http://www.cisg.law.pace.edu/cisg/biblio/perales1-08.html

http://kluwerarbitrationblog.com/author/cedericveryser/

http://kluwerarbitrationblog.com/2014/07/31/failing-to-pay-the-advance-on-costs-and-the-risk-of-inoperability-of-the-arbitration-clause-remedy/






X

Morrisey/Graves

Joseph F. Morrisey, Jack M. Graves, International Sales

Law and Arbitration, Problems, Cases and Commentary,

Kluwer Law International, 2008

Cited at: p. 5

Moses Margaret L. Moses, The Principles and Practice of

International Commercial Arbitration,

Cambridge University Press, 2nd edition, 2012

Cited at: p. 6

Murphy John Edward Murphy, Guide to Contract Pricing: Cost and

Price Analysis for Contractors, Subcontractors, and

Governement Agencies, Ed. Management Concepts, 5th

edition, 2009

Cited at: p. 21

Petit/Lakhani/Edge Sherina Petit, Nikhil Lakhani, Marion Edge, Failure to

pay the advance on costs: will the non-defaulting party be entitled

to bring a claim in court instead of arbitration?, Norton Rose

Fulbright LLP,

available at:

http://www.lexology.com/library/detail.aspx?g=2471c

331-a55b-477d-b4c7-ac41baa122d7

Cited at: p. 17

http://www.lexology.com/library/detail.aspx?g=2471c331-a55b-477d-b4c7-ac41baa122d7

http://www.lexology.com/library/detail.aspx?g=2471c331-a55b-477d-b4c7-ac41baa122d7


XI

Redfern/Hunter/

Blackaby/Partasides

Alan Redfern, Martin J. Hunter, Nigel Blackaby,

Constantine Partasides, Law and Practice of International

Commercial Arbitration, Ed. Sweet&Maxwell, London,

4th edition, 2004

Cited at: p. 8

Schlechtriem/Butler Peter Schlechtriem, Peter Butler, UN Law on

International Sales, The UN Convention on the International

Sale of Goods, Ed. Springer, 2009

Cited at: p. 29

Schlechtriem/ Schwenzer

Peter Schlechtriem, Ingeborg Schwenzer,Commentary

on the UN Convention on the International Sale of Goods

(CISG), Ed. Oxford University Press, 3rd edition,

Oxford, 2010

Cited at: p. 23, 24, 26, 30

Schwarz/Konard Franz T. Schwarz and Christian W. Konard, The

Vienna Rules: A Commentary on International Arbitration

in Austria, Ed. Kluwer Law International, Alphen aan

den Rijn, 2009

Cited at: p. 9, 10

Schwenzer/Fountoulakis Ingeborg Schwenzer, Christiana Fountoulakis,

International Sales Law: A Guide to the CISG, Heart

Publishing Ltd, 2nd edition

Cited at: p. 22, 29


XII

Stewart/Wyskida/Johannes Rodney D. Stewart, Richard M. Wyskida, James D.

Johannes, Cost Estimator’s Reference Manual, 2nd edition

Cited at: p. 21

Straube/Finkelstein Fredrico Jose Straube, Claudio Finkelstein, Napoleao

Casado Filho, Commentary on CAM-CCBC Rules, Ed.

Eleven International Publishing, 2016

Cited at: p. 6, 7, 8, 9

Tallon Denis Tallon, International Sales: The United Nations

Convention on Contracts for the International Sale of Goods,

Ed. Galston & Smit

Cited at: p. 30

UNIDROIT Commentary Commentary on the UNIDROIT principles of international

commercial contracts

Cited at: p. 24

Zeitschrift Rabels Zeitschrift, General Principle of UN-Sales Law

Cited at: p.23

Ziegel Jacob S. Ziegel, Report to the Uniform Lae Conference of

Canada on Convention on Contract for the International Sale

of Goods, Ed. University of Toronto

Cited at: p. 30


XIII

INDEX OF CASES

Cited as Full Reference

Australia

Terry Grant v. Prime Property Investment PTY Ltd.

Terry Grant Van Der Velde v. Prime Property

Investment PTY Ltd.

Supreme Court of Queensland, 4 April 2011

Available at: http://www.uncitral.org/docs/clout/AUS/AUS_040411_FTBrisbane.pdf Cited at: p. 7

Austria

Chinchilla Furs Case Case name unavailable]

Oberster Gerichtshof Supreme Court, 10

November 1994

Available at:

http://www.cisg.law.pace.edu/cisg/wais/db/cases2

/941110a3.html

Cited at: p. 27

Canada

Globe Union Industrial Corp. v. G.A.P Marketing Corporation

Globe Union Industrial Corp. v. G.A.P Marketing Corporation, Case no. C943260 Supreme Court of British Columbia, 21 November 1994 Available at: http://interarb.com/clout/clout114.htm Cited at: p. 18

France

http://www.uncitral.org/docs/clout/AUS/AUS_040411_FTBrisbane.pdf

http://www.uncitral.org/docs/clout/AUS/AUS_040411_FTBrisbane.pdf

http://www.cisg.law.pace.edu/cisg/wais/db/cases2/941110a3.html

http://www.cisg.law.pace.edu/cisg/wais/db/cases2/941110a3.html

http://interarb.com/clout/clout114.htm


XIV

Societé Productions v. Roberto

Faggioni

Societé Productions v. Roberto Faggioni

Appeal Court, Paris, 14 January 1998

Available at:


/980114f1.html

Cited at: p. 34

Germany

Chemical Product case [Case name unavailable] Appellate Court of Dresden, 27 December 1999 Available at: http://cisgw3.law.pace.edu/cases/991227g1.html Cited at: p. 27

Loin Ribs Case [Case name unavailable] OLG of Düsseldorf, 23 March 2011 Available at: http://cisgw3.law.pace.edu/cases/110323g1.html Cited at: p. 27

Surface protective film case [Case name unavailable]

Germany Supreme Court, 25 November 1998 Available at: http://cisgw3.law.pace.edu/cases/981125g1.html Cited at: p. 27

Textiles case

Germany 26 September 1990 District Court Hamburg http://cisgw3.law.pace.edu/cases/900926g1.html Cited at: p. 24

http://www.cisg.law.pace.edu/cisg/wais/db/cases2/980114f1.html

http://www.cisg.law.pace.edu/cisg/wais/db/cases2/980114f1.html

http://cisgw3.law.pace.edu/cases/991227g1.html





XV

Mussels Case [Case name unavailable] Bundesgerichtshof Supreme Court, 8 March 1995 Available at: http://www.unilex.info/case.cfm?id=108 Cited at: p. 31

Wine Case [Case name unavailable]

KG Berlin Upper Court, Berlin, 24 January 1994

Available at:


Cited at: p. 31

Machine Case [Case name unavailable]

Oberlandesgerichtm Düsseldorf, 3 July 1993

Available at:

http://www.unilex.info/case.cfm?pid=1&do=case

&id=26&step=Abstract

Cited at: p. 26

Yarn Case [Case name unavailable]

Appellate Court of Frankfurt, 30 August 2000 Available at: http://cisgw3.law.pace.edu/cases/000830g1.html Cited at: p. 29

Used Printing Press Case [Case name unavailable]

Appellate Court of Celle, 24 May 1995

Available at:


Cited at: p. 27

http://www.unilex.info/case.cfm?id=108


http://www.unilex.info/case.cfm?pid=1&do=case&id=26&step=Abstract

http://www.unilex.info/case.cfm?pid=1&do=case&id=26&step=Abstract




XVI

Wood Case

German Seller v. Austrian Buyer

Oberster Gerichtshof, Austria, Mar. 21, 2000,

UNCITRAL CLOUT Case 425; Nanakuli Paving &

Rock Co. v. Shell Oil Co., 664 F.2d 772 (9th Cir.

1981)

Cited at: p. 30 Hong Kong

Louis Dreyfus Trading Ltd. V. Bonarich

International Ltd.

Louis Dreyfus Trading Ltd. V. Bonarich

International Ltd.

High Court of Hong Kong, 24 March 1997

Available at:

http://www.hklii.hk/eng/hk/cases/hkcfi/1997/312.html

Cited at: p. 9

Italy

Pizza boxes case

Italy District Court Padova 31 March 2004 http://cisgw3.law.pace.edu/cases/040331i3.html Cited at: p. 23

Agricultural products case

Italy District Court Padova 25 February 2004 http://cisgw3.law.pace.edu/cases/040225i3.html Cited at: p. 23

New Zealand

Safe Kids in Daily Supervision Limited

v. McNeill

Safe Kids in Daily Supervision Limited v. McNeill High Court of New Zealand, 14 April 2010 Available at: http://www.nzdrc.co.nz/site/commercialdisputes/files/Court%20Decisions/SAFE%20KIDS%20IN%20DAILY%20SUPERVISION%20LTD%20v%20

http://www.hklii.hk/eng/hk/cases/hkcfi/1997/312.html

http://cisgw3.law.pace.edu/cases/040331i3.html


http://www.nzdrc.co.nz/site/commercialdisputes/files/Court%20Decisions/SAFE%20KIDS%20IN%20DAILY%20SUPERVISION%20LTD%20v%20MCNEILL%20HC%20AK%20CIV-2010-404-1696%2014%20April%202010.pdf




XVII

MCNEILL%20HC%20AK%20CIV-2010-404-1696%2014%20April%202010.pdf Cited at: p. 9

Spain

Coffee Case [Case name unavailable]

Spain Supreme Court, 17 March 2011 Available at: http://cisgw3.law.pace.edu/cases/110317s4.html Cited at: p. 27

Switzerland

Sapphir Ltd. v. National Iranian Oil

Company

Sapphir International Petroleums Ltd. V. National

Iranian Oil Company.

Federal Judge, Lausanne, 15 March 1963

Available at:

https://www.trans-lex.org/261600/_/saphire-

award-ilr-1963-at-136-et-seq/#toc_0

Cited at: p. 29

Waste gas cleansing installation case Firma T. S.R.L. v. Firma S. AG

Bundesgericht Federal Supreme Court, 18 January

1996

Available at:


/960118s1.html

Cited at: p. 34

Packaging machine case Switzerland 8 November 2006 Civil Court Basil-Stadt http://cisgw3.law.pace.edu/cases/061108s1.html Cited at: p. 24



http://cisgw3.law.pace.edu/cases/110317s4.html

https://www.trans-lex.org/261600/_/saphire-award-ilr-1963-at-136-et-seq/#toc_0

https://www.trans-lex.org/261600/_/saphire-award-ilr-1963-at-136-et-seq/#toc_0

http://www.cisg.law.pace.edu/cisg/wais/db/cases2/960118s1.html

http://www.cisg.law.pace.edu/cisg/wais/db/cases2/960118s1.html



XVIII

Office furniture case

Switzerland 12 May 2006 Appellate Court Genève http://cisgw3.law.pace.edu/cases/060512s1.html Cited at: p. 24

Building materials case

[Case name unavailable] Canton Appellate Court of Thuragau, 12 December 2006 Available at: http://cisgw3.law.pace.edu/cases/061212s1.html Cited at: p. 27

Machines, devices and replacement parts case

[Case name unavailable] District Court of Schaffhausen, 25 February 2002 Available at: http://cisgw3.law.pace.edu/cases/020225s1.html Cited at: p. 31

UK

TeleMates Pty Ltd. v. Standard SoftTel Solutions Pvt Ltd.

TeleMates Pty Ltd. v. Standard SoftTel Solutions Pvt Ltd. New South Wales Supreme Court, 11 November 2011 Available at: https://www.uncitral.org/clout/clout/data/aus/clout_case_1175_leg-2947.html Cited at: p. 11

BDMS Ltd v Rafael Advanced Defence Systems

BDMS Ltd v Rafael Advanced Defence Systems Queen's Bench Division, Commercial Court, 26 February 2014 Available at: https://www.i-law.com/ilaw/doc/view.htm?id=333954 Cited at: p. 18




https://www.uncitral.org/clout/clout/data/aus/clout_case_1175_leg-2947.html

https://www.uncitral.org/clout/clout/data/aus/clout_case_1175_leg-2947.html

https://www.i-law.com/ilaw/doc/view.htm?id=333954

https://www.i-law.com/ilaw/doc/view.htm?id=333954


XIX

INDEX OF ARBITRAL AWARD

ICC Case no. 7645 Crude metal case ICC Case no. 7645, March 1995 Available at: http://cisgw3.law.pace.edu/cases/957645i1.html Cited at: p. 10

ICC Case no. 8324

[Case name unavailable] ICC Case no. 8324, 1995 Available at: http://cisgw3.law.pace.edu/cases/958324i1.html Cited at: p. 13

ICC Case no. 7047 [Case name unavailable] ICC Case no. 7047 Available at: https://www.trans-lex.org/207047/_/icc-award-no-7047-asa-bull-1995-at-301-et-seq/ Cited at: p. 31

ICSID Case no. ARB/10/6 Rachel S. Grynberg, Stephen M. Grynberg, Meriam Z. Grynberg, and RSM Production Corporation v. Government of Grenada ICSID Case no. ARB/10/6, 14 October 2010 Cited at: p. 13

ICSID Case no. ARB/14/22 BSG Resources Ltd. v. The Republic of Guinea ICSID Case no. ARB/14/22, 21 August 2015 Cited at: p. 17



https://www.trans-lex.org/207047/_/icc-award-no-7047-asa-bull-1995-at-301-et-seq/

https://www.trans-lex.org/207047/_/icc-award-no-7047-asa-bull-1995-at-301-et-seq/


XX

ICSID Case no. ARB/11/18 Burimi S.R.L. and Eagle Games SH.A. v. Republic of Albania ICSID Case no. ARB/11/18, 3 May 2012 Cited at: p. 14

ICSID Case no. ARB/06/8 Libananco Holding Co. Ltd. v. Republic of Turkey ICSID Case no. ARB/06/8, 23 June 2008 Cited at: p. 10

ICSID Case no. ARB/09/17 Commerce Group Corp. & San Sebastian Gold Mines, Inc. v. Republic of El Salvador ICSID Case no. ARB/09/17, 20 September 2012 Cited at: p. 12

PCA Case no. 2011-17 Guaracachi America, Inc. v. The Plurinational State of Bolivia 11 march 2013 Available at: https://www.pcacases.com/web/sendAttach/554

Cited at: p. 10

Biwater Gauff (Tanzania) Ltd. v. United

Repub. of Tanzania

Biwater Gauff (Tanzania) Ltd. v. United Repub. of

Tanzania

ICSID Case No.: ARB/05/22, 31 March 2006

Cited at: p. 11

The Procter & Gamble Company v Svenska Cellulosa Aktiebolaget SCA & Anor

The Procter & Gamble Company v Svenska Cellulosa Aktiebolaget SCA & Anor 2012 EWHC 1257 Ch 14 May 2012

http://www.bailii.org/ew/cases/EWHC/Ch/2012/1257.html Cited at: p. 25

https://www.pcacases.com/web/sendAttach/554

http://www.bailii.org/ew/cases/EWHC/Ch/2012/1257.html

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XXI

ICC Case no 8324

Japanese iron metallurgy industries v. Australian and south-African mining industries available at: http://www.unilex.info/case.cfm?id=240 Cited at: p. 19

Roland Schmidt GmbH v. Textil-Werke Blumenegg

Roland Schmidt GmbH v. Textil-Werke Blumenegg AG Switzerland Federal Supreme Court 22 December 2000 Cited at: p. 19

http://www.unilex.info/case.cfm?id=240


1

STATEMENT OF FACTS

Until 2010 Both Wright Ltd (hereinafter Claimant) and SantosD KG (hereinafter

Respondent) were subsidiaries of Engineering International SA.

On 27 Jul 2010 Claimant was sold to its current parent company Wright Holding PLC.

On 1 Aug 2010 Claimant and Respondent concluded a contract for fan blades. [CL Ex. no. 2] the

purchase price has not been fixed, since the fan blades, specifically TRF 192-I, were

unique productions and there was no previous production of the same kind in the

market, thereto the real production price was uncertain at the time of conclusion

of the contract. [SOC, p. 4, par. 5]. Considering the parties’ earlier contractual

relationships, in respect of bank charges provision, Respondent had drafted this

provision in the previous contracts and also it is included again in the current

contract. [PO no. 2, no. 6]

On 3 Aug 2010 Respondent was sold to Speed Run. [PO no. 2, no. 1]

Since 25 Oct 2010 The exchange rate was at US$1 = 2.01 EQD. The exchange rate stayed fairly stable

in the corridor until 2 Jan 2012.

On 26 Oct 2010 Respondent concluded the second agreement on the purchase of 2,000 clamps

from Claimant. The parties agreed on a fixed exchange rate for the second

agreement. [CL Ex. no. 2 & RE Ex. no. 2]. In the second agreement, Respondent

fixed an exchange rate of US$ 1=2.01 EQD. The exchange rate had not been

changed for the last three years. The parties did not agree on the exchange rate for

the first agreement, because they used to leave this term silent in their previous co-

operations. [SOC, p. 24, par. 8, & RE Ex. no. 5]

On 14 Jan 2014 Simultaneously, after the goods were delivered, the invoices were dispatched to

Respondent. Both the goods were in conformity with the contracts [CL Ex. no. 3].

From 1 May 2014

onwards.

The fan blades were being produced.[PO no. 2, no. 12]


2

On 9 Jan 2015 Mr. Lee an accountant to Claimant prepared the invoices [CL Ex. no. 4]. When he

was calculating the price for the fan blades, he wrongly applied the fixed exchange

rate of the second agreement to the subject matter of the main agreement which is

the fan blades. Consequently, the purchase price of the fan blades was calculated

to be US$ 20,438.560. As a matter of fact, the correct price was 22,723.800 US$

based on contract and its cost-plus basis nature.

On 14 Jan 2015 The exchange rate was US$ 1= 1.79 EQD. The same time of delivery of the blades.

[PO no. 2, no. 12].

Respondent paid the price of the invoices in two different transfers, one instantly

after another including US$ 20,438,560 for the fan blades and US$ 183,343.28 for

the clamp, to Claimant's account at Equatoriana National Bank. [Ex. Cl. no. 3]

On 15 Jan 2015 Mr. Cyril Lindbergh, Respondent's CFO, sent an email to Ms. Amelia Beinhorn,

the CO of Claimant, informing her that the payments were effected. Promptly Ms.

Beinhorn notified Mr. Lindbergh that the fixed exchange rate is only applicable to

the addendum and not to the main Contract. Furthermore, he stated that the

correct exchange rate applicable to the fan blades is the exchange rate of the time

of production and the actual cost per fan blades is 10,941.90 US$.

Mr. Cyril Lindbergh, Respondent's CFO, sent an email to Ms. Amelia Beinhorn,

the CO of Claimant, informing her that the payments were effected. Promptly after

that Ms. Beinhorn notified Mr. Lindbergh that the invoices were wrongly

calculated.

On 29 Jan 2015 US$ 20,438,560 was credited to Claimant`s account [CL Ex. no. 8].

On 29 Jan 2015, US$ 20,438,560 was credited to Claimant`s account [CL Ex. no.

8].

On 9 Feb 2015 Ms. Beinhorn notified Mr. Lindbergh by email that Claimant was demanding the

outstanding payment of US$ 2,387,432.80 [CL Ex. no. 6] by 4 Mar 2015.

On 10 Feb 2015 Respondent expressly denied the demand fee by Claimant and insisted on applying

the fixed exchange rate of the addendum to the whole contract.


3

Respondent expressly denied the demand fee by Claimant and insisted on applying

the fixed exchange rate of the addendum to the whole contract.

31 May 2016 Claimant dispatched its request for arbitration.

Follow to the meeting to settle the parties’ dispute amicably, Claimant was willing

to discuss a rebate in conjunction with the future order of the fan blades. [PO no.

2 , no. 23]

On 7 Jun 2016 There were some document problems; therefore, the request for arbitration was

amended.

24 Jun 2016 Despite within 15 days, the request for arbitration must be answered by

Respondent answered to it.

22 Aug 2016 Parties and the arbitrators signed the Terms of Reference.

6 Sep 2016 Respondent requested for its costs of arbitration.


4

SUMMARY OF ARGUMENTS

ISSUE I: The Tribunal should consider that provisional measures are intended not only to

preserve the rights of the party requesting provisional measures, but “the respective rights of

the parties to the dispute”. In respect of the Tribunal’s power to grant security for costs, the

parties’ autonomy principle should be considered. At first, the parties never empower such

authority to this Tribunal expressly in their arbitration agreement including arbitration clause

and Terms of Reference. In addition, as an implied empower, according to the parties’ right to

choose the seat of arbitration, the UNCITRAL is an applicable law on proceeding and choose

CAM-BBC Rules as an applicable procedural rule, neither state provisions which the tribunal

has this power elementary. Second, there should be requirements for granting security for costs

according art.17A UNCITRAL Model law including “irreparable harm and reasonable

possibility for succeed on the merits” and according with art.8 CAM-CCBC Rules, “urgent

matter”, which they are not met. As the last provisions for granting security for Respondent’s costs,

in accordance with Guideline for Granting Security for Costs, special conditions including an

unexpected financial situation for counterparty, accepted business risks, available means for

refunding must be exist which they are not exist . In addition, the Claimant’s lack of funds to

pay a costs award has been caused by the conduct of the Respondent that it failed to pay the

correct purchase price, so it is not fair to require security in those circumstances. Even, the

precise amount of the security, required should be specified in the order which in this case is

not specified. Consequently, neither Tribunal‘s jurisdiction nor adequate reasons for granting

security for Respondent‘s costs exist.

ISSUE II: The claims are admissible and not submitted out of time. Claimant initiated to

arbitration within the agreed time limit. In its request for arbitration, all the requirements of art.

4.1 CAM-CCBC Rules have been complied with. Despite Respondent’s allegation, Mr. Horace

Fasttrack had power of attorney when he requests for arbitration on behalf of Claimant on 31

May 2016, and it was amended for the sake of the good order. Paying the registration fee is not

a requirement for initiation to arbitration, as it is not provided in art. 4.1 CAM-CCBC Rules.


5

Although Claimant paid it in full on 07 Jun 2016, by the order of the President of the CAM-

CCBC Rules.

ISSUE III: At first, Claimant is entitled to receive the still outstanding amount of USD 2.285.240

that it incurred producing the fan blades because the expended sum at the time of production

was more than the cost calculated by Respondent. Thus, deprived Claimant of what it was truly

entitled to under art. 53 CISG which states that ‘The buyer must pay the price for the goods’ and

also under the nature of the contract which is full compensation of the cost incurred. Soundly,

the payment charges shall be borne by Respondent.

Respondent has the obligation to pay the price. Therefore, according to art. 54 CISG the buyer

has to comply with the formalities of payment. Furthermore, in the view of the fact that in the

section 4.3 of the contract, parties mentioned that the bank charges are to be borne by buyer.

Thus, Respondent must have been aware of payment provisions of the seller's place of business

and provisions of ML/2010C

I. THE TRIBUNAL DOES NOT HAVE THE POWER TO ORDER CLAIMANT TO

PROVIDE SECURITY FOR RESPONDENT’S COSTS AND SHOULD NOT DO SO

1 In 6 Sep 2016 Respondent requested the Tribunal to order Claimant to provide security for costs,

but Claimant argued that Tribunal’s jurisdiction cannot be extended to making such an order

because of the parties’ autonomy principle and governing rules and law.

A. This Tribunal’s Jurisdiction Cannot Be Extended to Issue Security for Costs

2 The general rules and principles which are applicable to grant provisional measures, state that the

tribunal has the power to prescribe any provisional measures which it considers appropriate under

the circumstances to preserve the respective rights of the parties to the dispute.

3 The use of the expression “which it considers appropriate” underlines the fact that the decision

to grant or refuse a request for provisional measures is one for the judicial discretion of the

tribunal. The words “appropriate under the circumstances” which we see in many provisions,

stress the need for the tribunal to take account of the particular circumstances of each case before

determining what, if any, provisional measures are appropriate. Finally, the tribunal should


6

consider that provisional measures are intended not only to preserve the rights of the party

requesting provisional measures, but “the respective rights of the parties to the dispute”. [A.

Mensah, p. 44]

4 Regarding to the parties’ autonomy, they never empower such authority to this Tribunal. We can

find the instance of parties’ autonomy principle, in respect of such Tribunal’s jurisdiction, in set

of series as follows:

1) Did not empower expressly in their arbitration agreement including arbitration clause and

Terms of Reference.

2) CAM-CCBC Rules is selected by the parties as the applicable arbitral rules.

3) In accordance with the parties’ right to choose the seat of arbitration, the UNCITRAL Model

law is an applicable law on proceeding.

1. The parties did not empower expressly in their arbitration agreement

5 As the consensus, the principle of parties’ autonomy gives the party a power to choose their own

arbitration proceeding such as choosing the seat of arbitration and rules. [Born (2012), p. 82-84,

See also; Fouchard/Gaillard, p. 31, par. 46; Mosses, p. 55].

6 As the first instance, the uppermost source for such power is that it is expressly provided by the

parties in their arbitration agreements. We have to find an agreement between the parties to

conferment a jurisdiction to Tribunal [Gu, p. 171]. There is no such agreement within the

documents and negotiations to empower the Tribunal to order security for costs.

7 First, the parties did not agree on Tribunal’s authority to order interim measure, since in their

arbitration clause, just they agreed on arbitration as a dispute resolution. [CL Ex. no. 2, Sec. 21]

8 Second, Terms of Reference is the last agreement that the parties consented on it and its purpose

is to set out the procedural rules governing the arbitral proceeding and create a proper framework

for the arbitral proceedings that limited authority for the Tribunal. [Fouchard/Gaillard, p. 665-668,

par. 1228-1233]. Considering that it offers the opportunity to the parties to fill in possible legal

gaps, which may not be expressly addressed in the applicable law or in the CAM-CCBC Rules.

[Straube/Finkelstein, p. 99] The parties insisted on granting no authority to the Tribunal to order

such interim measures. Therefore, Terms of Reference deprived the tribunal of solving the


7

disputes untrammeled. [Morrisey/Graves, par. 83]. As distinct, in other word, the Tribunal should

decide on the grounds which the parties granted jurisdiction to the Tribunal.

2. CAM-CCBC Rules is selected by the parties as the applicable arbitral rules

9 As the second instance, parties choose the CAM-CCBC institution for their dispute resolution

[CL Ex. no. 2, sec. 21] and consequently Rules governed on their proceedings. Art. 8 CAM-CCBC

Rules provides that the provisional measures should be granted just in form of injunctive and

anticipatory measures. Since there are not any provisions in Rules that predicted measure for

security for costs and the parties selected this Rules consciously, is concluded that they insisted

the tribunal has no power to grant such order, impliedly.

a. There is not any specific provision for granting such order in CAM-CCBC Rules

10 Security for costs is different from another provisional measure such as injunctive and

anticipatory which is mentioned in art. 8(1) CAM-CCBC Rules [Gu, p. 167], therefore art. 8 CAM-

CCBC Rules is not covering request for security for costs; But we can find out the specific

requirement for granting provisional measures in this article.

11 At the first of art. 8(1) CAM-CCBC Rules is stated an important provision for empowering this

Tribunal for granting interim measures “Unless the parties have otherwise agreed […]”

Therefore, Claimant contends that there is an implicit agreement for this subject-matter which

parties did not want to empower this Tribunal to granting an interim measure [see supra par. 9].

12 Secondly, art. 8 (2) CAM-CCBC Rules provides the conditions which Tribunal can grant interim

measures in urgent matter outside the time limitation which is stated in the CAM-CCBC Rules.

[see infra par. 20-24], but as mentioned in the following, requesting party is not in the urgent

situation [ see infra par. 28-31]

13 Consequently, unlike the national legal system which empower the court from the judicature

power, in the arbitral proceeding, tribunal is empowered by the parties and takes its jurisdiction

from parties’ consent [Straube/Finkelstein, p. 144]. Also, the arbitral tribunal in contrast with the

judicial proceedings, is not bound by case precedent and has a totally flexible jurisdiction which

factors to take into consideration for a security for costs order. The CAM-CCBC Rules is


8

organized with these principles. Therefore, where there is an agreement on the subject matter,

this Tribunal should follow it.

14 When the parties chose the CAM-CCBC Rules as the applicable rule on arbitral proceeding in

the arbitration clause [CL Ex. no. 2, sec. 21], this means that they knew or ought to have known

this Rules [Graves, p. 322, 330] and this decision shows us their implied agreement which they did

not want to empower the Tribunal to such jurisdiction for granting Security for costs.

b. Respondent’ RSC is after signing the Terms of Reference

15 Even if the specific provisions for granting interim measure in Rules to be exist, the time of the

RSC was passed. In the present case, the parties did not discuss on the Tribunal’s power to

order such measure. [ToR, p.41] In addition, art. 4.21 CAM-CCBC Rules states: “The parties can

change, modify or amend the claims and causes of action until the date when Terms of Reference

are signed”. Parties denoted their claims and counterclaims in the Terms of Reference [ToR, sec.

V, par. 5.1] and after that they limited their right to submit new claims to the Tribunal at a later

stage [Straube/Finkelstein, p. 111; see also: Fouchard, p. 668 par. 1233]. The time of the Respondent’s

RSC is after the date of Terms of Reference. Therefore, Respondent’s request is invalid. [Louis

Dreyfus Trading Ltd. V. Bonarich International Ltd].

3. In accordance with the parties ’right to choose the seat of arbitration, the UNCITRAL

is an applicable law on proceeding

16 After seeking empowering of parties’ autonomy, we should be find the tribunal's jurisdiction

from governing law that is applicable when they choose the seat of the arbitration. According to

the parties’ opinion, the seat of the arbitration shall be Danubia [SOC, p. 6, par. 19] which has

adopted the UNCITRAL Model Law. [PO no. 1, no. 53].

17 As the third instance, art. 17 UNCITRAL Model Law empowering the Tribunal to granting

interim measure. In art. 17A UNCITRAL Model Law has predicted the requirements for granting

interim measure. In this article a party who is seeking the interim measure must satisfy this

Tribunal that specified conditions exist as irreparable harm, outweighing possible injury to other

parties; reasonable prospect of success on merits.


9

18 As regards to the art. 8(1) CAM-CCBC Rules that do not contain meaningful standards for the

grant of provisional measures, these formulations merely confirm the tribunal’s broad authority

to grant provisional measure. As we will say, these requirements which provided in art. 17A

UNCITRAL Model Law are not exist. Therefore, Tribunal should not order security for costs.

B.. The Requirements of Granting Provisional Measures (Security for Costs) According

To Art.17A UNCITRAL Model Law Are Not Available

19 Danubia, the seat of the arbitration, has adopted the UNCITRAL Model Law [PO no. 1, no. 5(4)].

Therefore, art. 17A UNCITRAL Model Law states the requirements for granting interim

measures. The overriding criteria of granting interim measures to be;

(a) A risk of serious or irreparable harm if the measure is not taken; (b) reasonable possibility for

succeeding on the merits; (c) no prejudging of the merits [Redfern et Hunter, par. 7-29]

1. Irreparable harm is the first requirement under Art. 17A UNCITRAL Model Law for

granting interim measure

20 Art. 17A (1)(a) UNCITRAL Model Law states: “Harm not adequately reparable by an award of

damages […]” the first provision for granting interim measures is that the harm must be exist

and then this harm is not reparable by an award of damages. As the Respondent’s RSC, because

for the payment order, “[…] the non-compliance with the payment order raises serious doubts

as to the Claimant’s financial situation […]” [RSC, par. 3]. In the case of New Zealand, court did

not grant interim measure, so order the counterparty to repair the harm in the award of damages

[Safe Kids in Daily Supervision Limited v. McNeill]

21 Tribunal frequently requires that a party seeking provisional measures demonstrate that it may

suffer either “irreparable” or “serious” injury unless the provisional relief is granted. “[Born, 2012,

p.229]

22 As we see in this case, the arbitration costs are not irreparable injury for Respondent. Since,

according to art. 10(4)(1) CAM-CCBC Rules, in respect of the costs of arbitration, if the parties

did not agree on the allocation of costs, it is hardly predictable to define a general principle

concerning the party who shall bear the arbitration costs and in what proportion.

[Straube/Finkelstein, p.179]


10

23 As the Tribunal in a leading ICSID award observed, “provisional measure is necessary when the

actions of a party are capable of causing or of threatening irreparable prejudice to the rights

invoked.” Upon this provision, the requirement of provisional measure is not satisfied, since

upon the CAM-CCBC Rules, the cost of arbitration will due according to three approaches.

24 One of the applicable approach in regarding to this matter is that each party bears its own costs.

[Schwarz/Konard, p.371] So, there is not any persuasive reason which if the security for costs is not

granted, Respondent incurred irreparable harm, because it is accepted practice in the arbitration

that each party shall bear its own costs, and Respondent must prove that the unusual expenses is

incurred to it.

2. Reasonable possibility for succeed on the merits is the second requirements for

granting under art. 17A UNCITRAL

25 Existing a reasonable possibility for succeed on the merits is the second provision that

UNCITRAL Model Law provides in art. 17A (1)(b). As formulated by one award, this Tribunal

should undertake an appreciation, although on a provisional basis, of the respective arguments

of the parties [Schwarz/Konard, p. 45-60]. As will explain, Claimant argues in this memorandum that

it has the right on the merits of the claim [ICC Case no. 7645; ICSID Case no. ARB/06/8].

26 “Although the party seeking provisional measures almost always bears the burden of proof, the

standards of proof that tribunals require often varies, depending on the character of the relief

sought.” [Born, (2012), p.232] In addition, as is stated in art. 17A (1) (b) UNCITRAL Model Law,

Tribunal shall not prejudge if grant such an order and this decision affect the discretion of the

Tribunal. [TeleMates Pty Ltd. v. Standard SoftTel Solutions Pvt Ltd.; PCA Case no. 2011-17]

27 As provided in art. 17A (1)(b) UNCITRAL Model Law: “The determination on this possibility

shall not affect the discretion of the arbitral tribunal in making any subsequent determination”

tells that the granting provisional measure often effect on Tribunal’s determination.

“It is often said that provisional measures must not “prejudge the merits” of the underlying

dispute. As a practical matter, tribunals do not adopt any uniform approach to this requirement,

although some awards hold that it precludes issuance of interim relief in the same terms as the

final relief sought by a party” [Born (2015), p. 209 – 226]


11

3. The specific requirements for granting such order under art. 8 CAM-CCBC Rules is

that there should be an urgent matter in granting security for costs

28 One of the irreparable harm will emerge when there is an urgency situation. As mentioned before,

there is not any urgent matter on present case [see supra, par. 12]

29 There is not an urgent matter in this circumstance. As one award explained, a measure is urgent

where action prejudicial to the rights of either party is likely to be taken before such final decision

is taken.” [Finland v. Denmark] to establish the urgency of this order, Respondent at least should

not requesting minimum amount for security. “The Arbitral Tribunal may only order provisional

measures, if the requesting party has substantiated the threat of a not easily prejudice.”

30 Related to the requirement of irreparable harm is some degree of urgency, which many arbitral

awards and commentators state an interim relief requirement [Born (2012), P. 2473; Biwater Gauff

(Tanzania) Ltd. v. United Repub. of Tanzania].

31 Many authorities declare that interim relief requires a showing of “urgency”. That is, the tribunal

must be persuaded that immediate or (at least prompt) action is necessary in order to prevent

serious damage to Claimant. This requirement has been formulated as follows: the arbitral

tribunal agrees that the criterion of urgency is satisfied when a question cannot await the outcome

of the award on the merits.” [Born (2012), p.229] a court or tribunal may order provisional

measures only in the cases where there is a reasonable risk that rights of one or other of the

parties are in danger of serious and irreversible prejudice (irreparable damage), and the urgency

of the situation is such that the risk cannot be averted otherwise than by ordering provisional

measures. [A. Mensah, p.44]

32 Considered more closely, and as detailed below, most arbitral tribunals also look to the nature of

the provisional measures that are requested, and the relative injury to be suffered by each party,

in deciding whether to grant such measures. In particular, some provisional measures (e.g.,

preserving the status quo or ordering performance of a contract or other legal obligation) will

typically require strong showings of serious injury, urgency and a prima facie case, while other

provisional measures (e.g., preservation of evidence, enforcement of confidentiality obligations,

security for costs) are unlikely to demand the same showings.


12

4. Even if the requirements of previous conditions are established, there are specific

conditions in respect of granting security for costs which must be provided

33 According to the provisions in respect of security for costs specifically, there are not these

requirements in present circumstances [Terry Grant v. Prime Property Investment PTY Ltd]..

34 As noted before, Claimant will be able to the Respondent’s cost, if the latter succeeds. When

Claimant fronted to liquidity problems, its parent company, Wright Holding PLC, granted loan

of US$ 3,000,000 to Claimant. [PO no. 2, no. 29] “If it appears that Claimant will have the necessary

means and such means will be readily available for the satisfaction of any costs award, arbitrators

should refrain from ordering security as a protection against a possible change in the Claimant’s

finance.” [Guideline, art. 3, p. 7]

35 If the requesting party being in a long financial relationship with the other party, then conclude

the contract, it accepts the business risk, since it aware of the actual situation. “If a party contracts

with a shell company without obtaining some kind of financial guarantee, arbitrators may

consider that its inability to pay was known, or ought to have been reasonably known, at the

inception of the relationship and was an accepted consequence of doing business with it.” [ICC,

Case No.7047]

36 “In this case, Tribunal rejected the application for security for costs stating that the reason cited

by the Respondent in support of their application were already known to them before signing the

contract.” [Guideline, p.22, par.19] Respondent and Claimant had previous co-operations, and

Respondent was knowing that when Claimant produces new goods, has financial issues on

liquidity inherently [ICSID Case no. ARB/09/17].

37 Contrary to Respondent’s claim on the ambiguity of Claimant’s finances, Claimant states that

there is no unexpected financial situation for it. [RSC, par. 3] Therefore, Respondent knew all of

the circumstances; consequently, there are no special conditions for granting order of security for

costs; in addition, Claimant’s financial situation has not occurred unexpectedly [Answer to RSC on

16 Sep 2016] and Respondent had known its situation, and with awareness of this problem decide

to conclude the contract of TRF 192-I with Claimant.

38 If Respondent was really insecure of its arbitration’s costs refund, it should state a clause or

guarantee at the time of the conclusion of the arbitration agreement or at the time of the


13

conclusion of Terms of Reference, which sure that its arbitral expenses will not without

compensation. This Respondent’s omission means that it implicitly does withdrawal of its right.

39 According to art. 4 Guideline for Granting Security for Costs, “arbitrators should consider and

be satisfied that, in light of all of the surrounding circumstances, it would be fair to make an order

requiring one party to provide security for the costs of the other party.” “If the Claimant’s lack

of funds to pay a costs award has been caused or contributed to by the conduct of the opposing

party, such as delay in payment of sums due, or failing to perform its contractual obligations, the

arbitrators may conclude that it would not be fair to require security in those circumstances.

[Guideline, p. 10, art. 4] A portion of recent Claimant’s financial situation is due to non-payment

of correct purchase price under Development and Sales Agreement by Respondent.

40 In regarding to all the provisional orders including security for costs are prompt measures which

grant at the first stages of proceeding, Respondent should RSC beforehand, for example with its

submission of Answer to Request for Arbitration. [ICSID Case no. ARB/10/6]

41 “Application for security for costs should be made promptly, that is, as soon as the risk or facts

giving rise to the application are known or ought to have known, if the application is made after

significant expense has been incurred, they may consider that this unfairly disadvantages the other

party and refuse the application unless there is a good reason for the delay.” [Guideline, p.11, art.

4(2)]

42 “The precise amount of the security, required should be specified in the order. If a party asks

for an order for its costs in respect of the application for security to be paid by the losing party,

arbitrators should consider whether it is appropriate to include an order for payment of those

costs in the order requiring security or alternatively whether they should reserve consideration

of this issue until making a decision on liability.” [Guideline, art. 5(2)] So, Respondent should

state the accurate amount and date of security for costs in its request, not just state that the

minimum of the cost. [ICC Case no. 8324]. This unspecified amount means that Respondent

does not have serious intention for giving interim measure.

43 In addition to its final award on the merits, the arbitral tribunal is responsible for fixing or

determining the cost of the arbitration. These costs include the arbitrator’s fees and expenses, the

costs and expenses of any experts appointed by the tribunal, any institutional fees and expenses,

and any other expenses reasonably incurred in the conduct of the arbitration. Such costs also

typically include the reasonable costs of legal representation incurred by the prevailing party. As


14

a default rule in international commercial arbitration, unless otherwise agreed, the losing party

will generally be liable for the other party’s attorney fees. [ Graves, p. 454]

44 If the parties want to ensure that costs, including attorney fees, will be divided in any particular

way, this may be best addressed in the arbitration agreement itself. Also, in the present case, the

parties have agreed in the ToR which the “arbitral award shall establish the responsibility related

to the payment of administrative costs and fees, arbitrators’ fees and Tribunal-appointed experts’

fees, attorneys’ fees, as well as the reasonable expenses incurred by the parties in their defense

process. [ToR, p. 43, par. 12.3] “The arbitrators’ determination simply serves as a final accounting

and division of liability for those costs, as between the parties themselves.” [Graves, p. 455]

45 In present case, the parties agreed that “the Arbitral award shall establish the responsibility related

to the payment of administrative costs and fees, arbitrators’ fees and Tribunal-appointed experts’

fees, attorneys’ fees, as well as the reasonable expenses incurred by the parties in their defense

process. [ToR, p. 43, par. 12.3] So, the parties did not agree on any specific approach to calculate

the cost of arbitration between themselves. In such situation that there is no agreement between

the parties, for resolving this ambiguity, the principle will be applied.

46 “In principle, the losing party typically must bear the entire costs of the arbitration.” [Graves, p.

454] But, the American rule which is accepted as a default rule in international commercial

arbitration, state that “each party bears its own cost of legal representation.” [Graves, p. 454,

footnote. 82] Consider to the second principle, in any way, each parties must pay their own costs

of arbitration. Consequently, there is no reason for Respondent to request the security for costs

as an interim measure [ICSID Case no. ARB/11/18]. Since, Claimant and Respondent must bear

their own costs, finally.

47 Since the financial statements of Claimant were publicly available, the Respondent could not have

been unaware from Claimant’s financial situation. [PO no. 2, no. 28] Respondent ought to have

known that this is high risks business. There is no capital investment, and Respondent accepted

this business risk.

CONCLUSION OF THE FIRST ISSUE

48 The arbitral Tribunal does not have jurisdiction to grant security for Respondent’s costs. Since

the parties empower Tribunal for granting such order neither expressly by state in their arbitration

clause and in Terms of Reference, nor impliedly by choosing CAM-CCBC Rules and

UNCITRAL Model Law. In addition, In addition, urgency and irreparable harm which are the


15

essential requirements for granting such order are not present. Furthermore, specific

requirements to order security for costs should be met; that one of the most important instance

is existence of unexpected financial situation while this is accepted by Respondent. Consequently,

Tribunal does not have power to order security for costs.

II. THE CLAIMS ARE ADMISSIBLE AND SUBMITTED WITHIN THE AGREED

TIME LIMIT

49 The admissibility of Claimant's claim is contested by Respondent based on two presumptions:

First, since Claimant did not pay the registration fee in full and Mr. Fasttrack’s power of attorney

was granted by Wright holding instead of Wright Ltd., the request for arbitration filed by Claimant

on 31 May 2016 was not complying with the requirements of art. 4.1 CAM-CCBC Rules. Second,

Claimant's initiation to the arbitration has occurred six days after the expiration of the agreed

sixty-day time limit, as according to the arbitration clause, the last day parties could initiate to

arbitration was 31 May 2016, and the request for arbitration was amended on 07 Jun 2016. [Born

(2009), p. 740]

50 Contrary to Respondent's assertion, the dispute is admissible and not time-barred, because

Claimant's initiation to arbitration on 31 May 2016 was complying with CAM-CCBC Rules. (A),

and on 07 Jun 2016, the request for arbitration was amended, while the arbitration had been

already initiated on 31 May 2016. (B)

A. Claimant's Initiation to Arbitration on 31 May 2016 Was Complying With CAM--CCBC

Rules

51 Respondent alleges that on 31 May 2016, when Claimant's request for arbitration was filed, the

request did not comply with the requirements of CAM-CCBC Rules. Because Mr. Horace

Fasttrack who filed the request on behalf of it, did not have the power of attorney. In addition,

the registration fee was not paid in full. Thus, Claimant's initiation to arbitration was null and

void, as if Claimant has not taken any action and waived its right to initiate to arbitration. These

allegations have no ground because in the request for arbitration filed on 31 May 2016, all the

requirements of art. 4.1 CAM-CCBC Rules are met (1), and Failure to pay the full Registration

fee is not a condition to request for arbitration to be valid (2).


16

1. In the request for arbitration filed on 31 May 2016, all the requirements of Art. 4.1 CAM-

CCBC Rules are met

52 Art. 4.1 CAM-CCBC Rules provides the required enclosures of a request for arbitration.

Respondent asserts that in Claimant's request for arbitration, art. 4.1(b) of the CAM-CCBC Rules

is not met. Because while Mr. Horace Fasttrack filed it on behalf of Wright Ltd, his power of

attorney is granted by Wright PLC holding. Claimant establishes that Mr. Horace Fasttrack had

the power of attorney on behalf of Claimant when he filed the request for arbitration on 31 May

2016 (a) As Wright holding PLC is the owner of Claimant and the decider of its important issues,

the power it grants to its attorney to initiate to arbitration on behalf of its subsidiary is valid (b).

a. According to the power of attorney granted on 05 Jun 2016, Mr. Horace Fasttrack had

power of attorney when he filed the request for arbitration on 31 May 2016

52 On 05 Jun 2016, by granting a power of attorney, Claimant approves any actions already

undertaken by Mr. Horace Fasttrack. One of those actions was initiating to arbitration on behalf

of it on 31 May 2016. Therefore, this approval transfers to the initiation to arbitration on 31 May

2016. In other words, it proves that on the mentioned day, Mr. Horace Fasttrack was empowered

to initiate to arbitration on behalf of Claimant. This fact is clear and incontrovertible.

b. As Wright holding PLC is the owner of Claimant and the decider of its important

issues, the power it grants to its attorney to initiate to arbitration on behalf of its

subsidiary is valid

53 Wright holding PLC is Claimant's parent company and holds 88% of the shares in it. As

mentioned in Mr. Horace Fasttrack's letter to the President of CAM--CCBC on 07 Jun 2016, all

important decisions are taken at the level of the Holding. Therefore, as the initiation of arbitration

is an important issue, the Holding asked Mr. Horace Fasttrack to prepare the claim in the

arbitration and granted the power of attorney to him. One of the requirements of a request for

arbitration is enclosing the power of attorney, in order to assure that Claimant confirms the

person who has requested for arbitration as its representative. Thus, when both Claimant and its

owner admit Mr. Horace Fasttrack's power to request for arbitration on 31 May 2016, the

objective of this provision is met.


17

2. Failure to pay the full Registration fee does not affect the validity of the request for

arbitration

54 Respondent assumes that since Claimant's payment of registration fee was incomplete on 31 May

2016, its initiation to arbitration is null and void. Contrary to its presumption, Payment of the

registration fee is not among the requirements of art 4.1(a) CAM-CCBC Rules. Provision of art.

12.10 CAM-CCBC Rules proves that failure to pay the arbitration expenses does not nullify an

initiation to arbitration. (b).

a. Payment of the registration fee is not among the requirements of art. 4.1 CAM-CCBC

Rules

55 Art. 4.1 CAM-CCBC Rules provide the requirements of the request for arbitration. Among those

requirements, payment of the registration fee does not exist. Instead, it is provided in art. 4.2 and

there is no explicit provision that if the registration fee is not paid in full, the commencement of

the arbitration will not take place. [BDMS Ltd v. Rafael advanced defence systems] Notwithstanding,

Claimant rectified its mistake and paid the full registration fee within the ten-day term CAM-

CCBC gave it to amend its request for arbitration under art. 4.3 CAM-CCBC Rules.

b. Provision of art. 12.10 CAM-CCBC Rules proves that failure to pay the arbitration

expenses does not nullify an initiation to arbitration

56 Art. 12.10 provides that any arbitration expense might be paid by a party for another's account.

The mentioned arbitration expenses include registration fee. [M. Eiseman/Farks] the approach of

the art. 12.10 CAM-CCBC Rules well proves that failure to pay the registration fee does not

nullify an initiated arbitration. [Berard/Lewis; see also, Lau, par. 4 Meulemeester/Veryser, par. 1-10,

Petit/Lakhani/Edge]

B. On 07 Jun 2016, the Request for Arbitration Was Amended, While The Arbitration Had

Been Already Initiated On 31 May 2016

57 Respondent might likely argue that if the initiation of arbitration has been in accordance with the

requirements of the CAM-CCBC Rules, there is no ground for the amendment of the request for


18

arbitration by Claimant. In response, Claimant will establish that amendment of the power of

attorney was made "for the sake of good order" and did not affect the validity of the request for

arbitration, as it had been already valid [Globe Union Industrial Corp. v. G.A.P Marketing Corporation].

(1). Payment of the registration fee is the provision of art. 4.2 of the CAM-CCBC Rules and

Claimant should comply with it (2) [ICSID Case no. ARB/14/22]

1. Amendment of the power of attorney was made "for the sake of good order" and did

not affect the validity of the request for arbitration, as it had been already valid

58 As On 01 Jun 2016, the President of the CAM-CCBC ordered Claimant to amend its request for

arbitration and provide evidence that all the requirements of art. 4.1 CAM-CCBC Rules have

been complied with. To provide such evidence, Claimant amended Mr. Horace Fasttrack’s power

of attorney. But this amendment was accomplished for the sake of good order as it is stated in

Mr. Horace Fasttrack's letter to the President of the CAM-CCBC on 07 Jun 2016. Thus, it should

be noted that amending the power of attorney does not mean that Mr. Horace Fasttrack did not

have the power to initiate to arbitration on behalf of Claimant when he did so.

59 Instead, as explained above, this amendment admits and confirms that Mr. Fasttrack's power of

attorney on 31 May 2016 was established. Consequently, regarding Mr. Horace Fasttrack’s power

of attorney a basis for declare Claimant’s request for arbitration null and void in order to allege

the claims barred by statute, is substantially wrong.

2. Payment of the registration fee is the provision of art. 4.2 CAM-CCBC Rules and

Claimant had the obligation to comply with it

60 On 01 Jun 2016, the President of the CAM-CCBC sent a letter to Claimant, and ordered it to

amend its request for arbitration. By paying due attention to the mentioned letter admits it, it

becomes clear that the paying the registration fee is not a requirement of request for arbitration

to be valid, and two significations in the mentioned letter admits it. First, at the top of the letter,

it is stated that “the Secretariat, upon analyzing the content of the request for arbitration in order

to certify the fulfillment of the requirements set forth in art. 4.1 CAM-CCBC Rules [...]”. by this

signification, clearly proves that the registration fee is not a requirement of initiation of

arbitration.


19

61 Because it is provided in art. 4.2 CAM-CCBC Rules which is obviously out of the scope of art.

4.1 CAM-CCBC Rules. The second signification is set forth in the last sentence of the letter, by

which the President of the CAM-CCBC orders Claimant to provide evidence that all the

requirements of the art. 4.1 CAM-CCBC have been complied with.

62 Therefore, Claimant is not ordered to provide evidence for the payment of the registration fee

even in the amended request for arbitration, as it is not a requirement of art. 4.1. Notwithstanding,

Claimant enclosed the proof of payment of the full registration fee to its amended request for

arbitration on 07 Jun 2016, as the lower amount it paid on 31 May 2016 was due to a mistake and

not intentional. Furthermore, it well proves that Claimant is bound to its obligations provided

by the governing rules determined in the parties’ arbitration clause, even if those provisions will

not endanger any of its rights in this arbitration.

CONCLUSION OF THE SECOND ISSUE

63 Claimant's submission for arbitration has been within the agreed time. Claimant initiated the

arbitral proceeding on 31 May 2016 which is in compliance with art. 4.1 CAM-CCBC Rules. Mr.

Horace Fasttrack who failed the request for arbitration on 31 May 2016, has had the power of

attorney has power on behalf of Wright holding PLC which is the owner of Claimant and decider

of its important issues. In addition, based on art. 12.10 CAM-CCBC Rules and the president’s

order of CAM-CCBC to Claimant, all the requirements of the art. 4.1 CAM-CCBC have been

complied with. Therefore failure to pay the arbitration expenses completely does not affect the

validity of request for the arbitration.

III. CLAIMANT IS ENTITLED TO THE ADDITIONAL PAYMENTS FROM

RESPONDENT

64 According to the application of current exchange rate to the main Agreement, Respondent must

pay the outstanding of purchase price for fan blades (A). The payment charges shall be borne by

Respondent (B).

A. The Current Exchange Rate Is Applicable to The Main Agreement.

65 Regarding art. 8 CISG, there are two separate contracts (1). Even if there is one contract, it is

modified in accordance with new added terms (2). The parties have been under one parent


20

company and they are presently separated (3). Based on the Art. 8(3) CISG, the floating exchange

rate is applicable (4). Claimant is entitled to receive the price according the updated invoice (5).

1. There are two separate contracts.

66 Since, there are two separate contracts, Claimant is entitled to the amount of US$ 2.285.240 [CL

Ex, no. 5]. According to art. 8(1) CISG, these contracts are concluded separately (a). In respect

of the nature, these contracts are of two different types (b). Respondent must have drafted the

addendum with more precision(c).

a. According to art. 8 (1), these contracts are concluded separately; based on the real

intent of the parties

67 According to art. 8(1) CISG, the contract shall be interpreted by means of subjective intent and

the fix exchange rate should be applied only to the addendum. The Convention devotes in its

text a provision, art. 8, to define how to interpret the manifestations of the intention of the parties

to a sales contract. [Mercantil] Art. 8(1) CISG explains that statements and conducts of the parties

should be interpreted according to that party’s subjective intent—making the subjective intent

paramount [ICC Case no 8324/1995].

68 Art. 8(1) CISG is a tool to crave the subjective intent of the parties when they have a “different

understanding of the meaning of the contract’’ [Roland Schmidt GmbH v. Textil-Werke Blumenegg

AG;]. Accordingly, the parties were aware of the nature of the contract. The parties’ intention

should be assessed by applying art. 8 CISG.

69 Applying the fixed exchange rate to the main contract is against the real parties’ mutual intent.

The reason behind this allegation is that in the past, there were no minimum and maximum price

in the contract, but in this case, including a maximum and a minimum means that it is a risk

sharing contract, and Respondent’s belief that Claimant should bear the risk, is wrong based on

the look of a reasonable merchant.

70 The parties agreed to share the risk through a contract of joint development of a fan blade. This

way of contracting is usual in the aircraft industry [SOC, par. 22]. This is why the parties agreed

to a variable price depending on the actual cost of developing a fan blade.


21

71 Their past experience is no longer a resort for neither of the parties. One clear fact in regard to

the conclusion of two separate contracts, is that the word, agreement in the addendum has been

compiled in two different ways. The addendum is suggested by Respondent to be added to the

main contract and it is accepted by both parties. The word “agreement” in this addendum is first

written with capital letter “A”. While underneath the first phrase, the agreement is written with

small letter “a”. This fact can prove that the first word has been intended to be a reference to the

main contract. The second-word agreement is written with a small “a” and has been intended to

be a reference to the addendum as a separate contract from main Agreement. [CL Ex. no. 2]

b. In respect of the nature, these contracts are of two different types

72 In respect of the nature, these contracts are of two different types, the first contract which is on

fan blades is cost-plus contract, and the second contract which is on clamps is fixed price

contract. The purpose, nature and conditions of the main contract could not permeate the

addendum, under which it was understood that there are two types of contract which their legal

consequences are totally different. Based on the nature of the negotiations between Claimant and

Respondent and parties’ agreement could ascertain two types of contract [CL Ex. no.2 & RE Ex.

no. 2].

73 The type of main Agreement, which the parties concluded between themselves is cost-plus

contract. One of the purposes of cost-plus contract is to develop certain kind of goods, not

specifying exact price at the time of conclusion and estimation all factual cost at the time of

completion of goods production. Eventually, there is an uncertain situation to determine actual

cost. The parties had knowledge that they have been concluding a contract that its nature

necessitates them to set a flexible price and include floating exchange rate system

[Stewart/Wyskida/Johannes, p. 673; see also; Cameron, p. 8-73, par. 2; Epstein/Jemakowicz]

74 Accordingly, when the nature of two agreements are of two different types, they cannot be

considered one, and despite the parties’ written acknowledgment [RE Ex. no. 2], there are two

separate contracts.

75 Despite Respondent and Claimant were subsidiaries of a parent company, Respondent could not

have been unaware that Claimant incurs production costs in EQD due to the fact that


22

Respondent has not reimbursed Claimant’s costs by paying the purchase price. Consequently,

Respondent must respect reimbursement contract and pay all actual cost [Hofbauer/Sanders].

76 The parties concluded a cost-plus contract to reimburse all incurred factual costs which are

allowable for producing fan blades. [Murphy]

77 The vital obligation for Claimant is to keep all the costs as down as possible and not to make

overrun cost [Kerzner]. Claimant strived reduce risk of massive overruns cost and did not go

beyond the agreed guaranteed maximum price (GMP). Concluded cost-plus contract to place

flexible price additionally define purchase price by agreed rules of price calculation that contain

minimum and maximum purchase price with incentive fee for claimant the vital obligation for

the seller was to keep all the cost as down as possible ,not to go beyond guaranteed maximum

price, GMP method in main contract and not to make overrun cost [Kerzner] The exact price

leave out at the time of entering into the contract and will pay at the time of completion on the

basis of the actual cost incurred [K. Jermakowicz, p. 293, par. 5]. Thereby, Respondent undertook

the obligation under the principle of pacta sunt servanda to pay actual cost. [Magnesium case; see also,

Ferguson, p. 16; Handfinger; Chance]

78 Respondent must be able to reimburse all incurred production costs. It is undisputed that at the

time of fan blades production, the exchange rate was 1.79 EQD per 1 USD. [PO no. 2, no. 12]

Respondent has not challenged this exchange rate. [PO no. 1. no. 3] Claimant produced 2,000 unit

of fan blades with the cost incurred of EQD 19,586 per each:

By Claimant’s way of calculation:

19,586 / 1.79 = 10,941 x 2,000 (number of fan blades) = 21,882,000 (the actual cost borne by

the Claimant) + 875,280 (4% as profit) = 22,757,280

By Respondent way of calculation

19,586 / 2.01 (the rate alleged by the respondent to be applied to the whole contract) = 9,744 x

2,000 (number of fan blades) = 19,488,000 + 974,400 (%5 of profit) = 20,462,400.

79 The purpose of the contract could not be achieved by Respondent way of calculating, because

the price Respondent wants to pay is not even covering Claimant’s costs. However, as it can be

inferred from the way the contract was written, only if Claimant’s cost would surpass 13, 125 $

per fan blade, only then it would undergo the risk and will not gain any profits. In this case,

however, Claimant succeeded to develop the fan blade with a cost of only 10,941 USD and still

suffer losses. There is an unknown situation in cost-plus contracts to estimate all factual costs at


23

the time of conclusion of the contract. [Cameron, p. 8-73]. The Implicit consent of the parties and

the nature and purpose of the contract are that finally Respondent must reimburse Claimant's

actual costs.

In the present case, the Respondent could not have been unaware that the cost-plus contract is

not exist, and the parties agreed on conclusion of this type of contract. [CL Ex. no. 2, section. 4]

80 Therefore, Respondent must respect reimbursement contract and pay all actual costs. In the

present case, the Respondent could not have been unaware that the cost-plus contract is not

exist, and the parties agreed on conclusion of this type of contract. [CL Ex. no. 2, section. 4]

81 Considering to the nature of the cost-plus contract, there would be an uncertain situation to

estimate all factual costs at the time of conclusion. Nonetheless all incurred actual costs will

determine at the time of production. Moreover, the actual costs and its exchange rate will be

specified at the time of completion of production due to the fact that conclusion of cost-plus

contract depends on flexible price agreed by the parties.

82 Consequently, the parties agreed on the conclusion of the cost-plus contract, since the production

of TRF 192-I is a new generation of fan blade. The requirement of the type of contract, is that

the subject -matter of contract does not have any previous production, and not have previous

marketing price. In addition, expressly we could ascertain the parties real intent by art. 8(1) CISG

and art. 8(2) is another criterion to infer true intent of the parties by means of reasonable person’s

perspective. Accordingly, in respect of the nature of the subject matter of contract and flexible

price for fan blades, applying the fixed exchange rate to the whole contract is against the spirit of

the cost-plus contract.

83 There are two different subjects of contract, clamps and fan blades. The subject of first contract

is fan blades that is development of new model of TRF 192. The new generation of fan blades is

consisted of special features that previous models have not had. For instance, uncertainty on

actual cost and the features necessitated the parties to conclude cost-plus contract and left exact

price for the time of conclusion.

84 In the contrary, subject of addendum is clamps that the parties could estimate the specific price

at the time of conclusion. In addition, clamps have market price that guides the parties to calculate

and reach actual price. Thereby, in respect of two distinctive subjects of contracts, there are two

separate contracts.


24

85 Two payments of invoices occurred. Despite the fact that the payments made on 15 Jan 2015.

However, two times these payments occurred at the same time. The presumption of payment,

there are two separate contracts. Accordingly, there are two separate contracts and Claimant is

entitled to the amount of US$ 2.285.240.

c. Respondent must have drafted the addendum with more precision and care

86 Art. 8(2) CISG, contains a completely objective standard. This provision indicates that statements

and conducts of a party should be interpreted the way “a reasonable person of the same kind as

the other party” would have interpreted them. [Schwenzer/Fountoulakis p. 80], and Respondent is

supposed to modify the addendum, to prevent contrastive interpretation. Furthermore, it should

observe the addendum through form of writing and this Tribunal should apply the contra

proferentem.

87 Art. 8(2) CISG places the burden on who prepares a communication or who drafts a contract to

communicate clearly to a reasonable person in the same position as the other party. This

provision has roots in the classic rule that doubts are to be resolved against the drafter contra

proferentem, but the application of this principle has special significance in international sales

[Honnold, par. 107(1)]. This principle can be discussed in two different ways. First, Respondent

had the obligation to clarify its intent of the addendum in a way that the other party, as a

reasonable person, could understand its position by the provision (i). Second, by applying this

rule, the provision shall be interpreted against Respondent as it was the party who provided the

provision (ii).

i. Respondent had the obligation to clarify its intent of the addendum

88 Going against one’s own previous conduct venire contra factum proprium is a maxim of

customary international law meaning that one may not set one’s self in contradiction to

one’s own previous conduct [Fellmeth/Maurice]. This principle represents a special application

of the general principle of good faith and the estoppel [Schwenzer/Schlechtrim par. 47.16; see

also; Pizza boxes; Agricultural products case; Italian tannery vs. German manufacture]. It can be

understood from the principle that if one party’s instruction caused an understanding to the

other party and upon which that other party reasonably has acted in reliance the first party is


25

responsible for his own omission. This principle of reliance also can be found under many

of the CISG articles. [Zeitschrift, par. 5] this principle is also manifested identically in art. 1(8)

UNIDROIT. [The Procter & Gamble Company v Svenska Cellulosa Aktiebolaget SCA & Anor ]

89 As it can be seen in the case in dispute, Respondent has been trying to develop a term, which is

written by hand in the addendum to main agreement, while the main Agreement is far beyond

from the second in respect of monetary obligations. This rate is reasonable only for the clamps

where the influence of the exchange rate was limited due to the much lower amount. Claimant

reasonably assumed that this exchange rate is only applicable to the addendum.

90 If Respondent wanted to expand the scope of the term to the main agreement, it should have

done it with more precision and care. The Respondent should have acted with due diligence and

reasonable care when drafting the contract. Consequently, this lack of duty of care made the

challenge between the parties. This risk shall be borne by Respondent because it was the

consequence of its own act.

91 The alleged intent of Respondent should have been manifested in some fashion if it was

reasonable for the other party to think other way [Textiles case; Packaging machine case; Office furniture

case]

ii. If the real intention of the parties cannot be understood, this Tribunal should apply

the contra proferentem

92 The contra proferentem applies to the CISG in virtue of art. 8(2) [Honnold, par. 107(1);

Huber/Mullis, p. 15; Schlechtriem/Schwenzer p. 170].

93 The contra proferentem is a well-known principle that is also found in art 4.6 UNIDROIT.

[(1991) PC—Misc 15, pp 38–39, 40]. The context for this rule to be applied is the fact that it is

possible to give the contract term in question at least two different meanings and that one of

these ‘interpretative hypotheses’ militates in favor of the outcome favoured by the supplier of the

term, whilst the other one benefits the other party. [Schlechtriem/Schwenzer, p. 170; UNIDROIT

Commentary, p. 606].

94 According to art. 8(2) CISG and Art 4.6 UNIDROIT, if the contract terms supplied by one party

are unclear, an interpretation against that party is preferred. [Schlechtriem/Schwenzer p. 170]

95 The addendum and all the provisions included in it are supplied and suggested by Mr. Paul

Romario [Re Ex. no. 2] and has been accepted with no further negotiations from Claimant’s part.


26

If there is an interpretation or an understanding that should prevail in the present case, it should

be the one provided by Claimant. As Respondent drafted the clause, according to the contra

preferment, Respondent should be the one who bears the risk of its own ambiguity [UNIDROIT

Commentary, p. 604].

2. Even if there is one contract, it is modified in accordance with new added terms

96 In accordance with art. 29 CISG, the addendum is a modification of the main agreement just in

respect of the payment mechanism for calculating the price for clamps. Accordingly, the fix

exchange rate is applicable only to the addendum.

97 The addendum, which is added to the main contract, is a modification. A modification shall be

treated as a new contract; therefore, its offer should be attached to an acceptance

[schlechtriem/schwenzer, p. 472]. Respondent offered the addendum by an email subjected with

clamps [Re Ex. no. 2] also Claimant accepted this modification with the same email subject [RE

Ex. no. 4]. Therefore, the content of the emails which include the addendum is exclusively

referred to the Clamps and not the fan blades. Indeed, Claimant had no intention or could not

have otherwise intended to change the main contract-terms when accepting the email with the

subject of clamps.

98 The fact that the two agreements payment calculation method are divided can be seen from the

two different transfers for payment made by Respondent [CL Ex. no.3]. If Respondent would

have thought that the addendum is a modification of the first agreement, it should have paid the

total sum in one transfer, applying the same formula for the two contracts at the same time and

making the whole payment in one transfer. It did not do so, because it finds two agreements

incompatible.

3. The parties have not been under one parent company

99 Working with each other as group-mates in a group of companies, necessitates considering the

benefit of the whole group and not only the benefit of one of the companies. Working with each

other, the parties could have taken the whole risk of a contract or de-risk one company, but after

they are separated, the issues are totally different.


27

100 At the time of the conclusion of the addendum, de-risk is no longer effective (a). Claimant could

not reasonably have intended to bear the whole risk of the contracts (b).

101 Respondent’s pretext on mentioning their past intention of making the Respondent's company

de-risked is futile because the two companies are now divided and are not under the umbrella of

their former parent company, the International SA. From this fact it can be understood that both

companies entered into the contract not relying on their past usages but with the intention of the

international aircraft industry practices.

a. At the time of the conclusion of the addendum, the de-risk has no longer been effective

102 Claimant submits that de-risk method has no longer existed. One of the points discussed between

the parties was the need to “de-risk” SantosD and Drake Ltd to make them more attractive for

potential buyers. In particular, all currency risks contained in our contracts should be identified

and be reduced. [RE Ex, no. 1]. While, Respondent and Claimant no longer have financial

relationship to apply the previous de-risk strategy despite by Respondents allegation, the

exchange rate was fixed as a tool to de-risk the SantosD [RE Ex. no. 1; SOD par. 9; CL Ex. no.

7]. To prove this fact, Respondent resort the meeting and the order gave to the other subsidiaries

to help the Respondent company to be de-risked through the hedging strategies like fixing the

exchange rate [RE Ex no.1].

103 International SA was in a financial crisis at the time and wanted to divest itself of several of its

previously held subsidiaries to reduce its debts and to concentrate on its core business [SOC, par.

2] and the purpose of this grand plan was for the Respondent’s company to be more attractive

for the potential buyers to buy the company.

104 The main contract was concluded in 1 Aug 2010 and the addendum was added to the main

contract on 24 Oct 2010 [REC Ex. no.4], the exchange rate is only fixed in the addendum. The

Respondent allegation on the fixed exchange rate to be applied to the whole contract is false

because of two reasons. First, the Claimant was not a subsidiary at the time of the conclusion of

the contract. Actually, the Claimant’s company was sold in 30 Jun 2010 [PO no. 2 no. 1]. It was

held that the subsidiaries of the International SA had the obligation of helping the Respondent

company to be de-risked, considering that Claimant company was no longer subsidiary of the

International SA at the time when the addendum was put into the contract. Accordingly, it had


28

no obligation to help the Respondent to be de-risked. Second, the sale of Respondent to

SpeedRun took place on 3 Aug 2010 [PO no. 2 no. 1].

105 Respondent was sold to another company when the addendum was added to the contract so the

purpose of de-risking. Respondent was fulfilled at the time and there was no need for Claimant

to help it to be de-risked. It can be seen from this timeline that the Claimant could not have

reasonably intended to apply the fixed exchange rate to the whole contract. This risk shall be

borne by the Claimant in the situation hand, if the production cost for per fan blade were to be

under US$9,500 the Respondent should have paid the lowest amount agreed on the contract

which is 9,750, this is the Respondent’s risk. Claimant is encouraged to cut the expenses making

the fan blades, the task in which the Claimant done perfectly. Despite this, Claimant is now in

loss. The fact is that Respondent is trying not only to make any losses but also making more

profit by merely not accepting any risks.

b. Claimant Could Not Reasonably Intended to Bear the Whole Risk of The Contract

106 If the intention of the parties cannot be understood by use of a subjective test, the next step shall

be applying the objective test, subject to the art. 8(2), 8(3) CISG [coffee case; Surface protective film

case; Chemical products case; Yarn case; Used printing press case] Therefore, this Tribunal needs to assess

how a reasonable person under the same circumstances would have understood the term included

in the addendum.[lion Ribs case]. In present case, Claimant could not reasonably intend to bear the

whole risk of the contract.

107 The Convention requires that the interpretation take account of the contract as a whole

[Schlechtriem/Schwenzer p. 147]. Individual clauses must be considered as an integral part of the

contract and are to be interpreted in their context rather than in isolation [Chinchilla furs case]

108 In this respect, also the interests of the parties have to be given due consideration. Furthermore,

the negotiations and the particular settings of the formation of the contract must be considered

[Schlechtriem / Schwenzer, supra, art. 8 CISG note 29 et seq. Building materials case].

109 It is well known the fact that for joint developments in the aircraft industry, joint sharing of risks

is normal, which has never been objected by Respondent. At the time, both the parties entered

into the contract, Claimant was sold to SkyMover in 30 Jun 2010 [PO no. 2] and the contract was


29

concluded in 1 Aug 2010 [CL Ex. no. 2]. Two companies had no same goal or mutual benefit at

the time they concluded the contract. [Sapphir Ltd. v. National Iranian Oil Company]

110 It is not reasonable for two separate Companies to enter into a contract on which, only one of

them shall bear all the risks. This is against contractual balance incorporated in CISG. [Opinion

no. 12; CISG preamble] The main goal for every reasonable merchant is to make benefit from the

contract [homo economicus]. Accordingly, Respondent’s allegations that Claimant has accepted to

bear all the risks are not reasonable.

111 In addition, bearing in mind that both the parties entered into a risk-sharing agreement, they shall

at least suffer a hardship in one scenario. This risk shall be borne by Claimant in the situation in

which the production cost surpassed US$13,125. On the other hand, if the production cost for

per fan blade were to be under US$9,500 Respondent should have paid the lowest amount agreed

on the contract which is 9,750, this is the Respondent’s risk. Claimant is encouraged to cut the

expenses making the fan blades, the task in which Claimant done perfectly. Despite this, Claimant

is now in loss. Respondent is trying not only to make any losses but also making more profit by

merely not accepting any risks.

4. Based on The art. 8(3) CISG, the current exchange rate is applicable

112 According to art. 8 (3) CISG, the parties implicitly applied a floating exchange rate in their

contract which can be presumed as they have not negotiated nor made a decision for it.

113 As both the parties were subsidiaries of Engineering International SA, they had already

incorporated a specific usage during their two earlier co-operations in sale of fan blades [CL SoF,

par. 21]. The parties did not discuss about the exchange rate during the negotiations of their two

earlier co-operations [PO no. 2]. Indeed, leaving the exchange rate provisions unspoken, were a

usual conduct between the parties. Therefore, unlike what Respondent deemed, the exchange

rate that parties used for the conversion of the cost elements were not the rate of the time when

the contract was concluded. [SOD par. 8].

114 They have continued to the usage by their conduct and indicated the usage to have a predominant

role on their contract. Art. 8(3) CISG states that if nothing is stated against the party’s usage, that

specific usage of the parties has to be applied in understanding their intent [Ferrari, p. 192; springer

p. 60 par. 62].


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115 During their negotiation and contract concluding process, they did not expressly discuss anything

in opposition of their prior usages and there are no elements that show that their subjective intent

was vice versa of their common usage, consequently they are bound doing the same habitual way

of trading. [Wood Case]. Accordingly, the floating exchange rate had been their habitual intention.

It was usual between the parties in an earlier business relationship for both of them.

116 Their silence about the exchange rate, when they went along with concluding the contract of fan

blades none of them did not raise any objection. It can be viewed as acceptance therefore, the

current exchange rate is applicable.

5. Claimant Is Entitled to Receive the Price According the Updated Invoice

117 According to art. 34 CISG, the seller has an obligation to handover the documents related to the

goods, at the time, place and in the form, required by the contract. This obligation might either

be based on the explicit agreement of the party, or the usage of the place of business or the

particular usage of parties' trade, in accordance with art. 9 CISG.

118 In the absence of these kind of usages, the buyer has the obligation to hand over the documents

to the seller in compliance with good faith principle provided in art. 8 CISG.

In this case, there is no agreement on the time that seller must deliver the mentioned documents.

Consequently, the seller must transfer the documents to the buyer at the time of the delivery of

the goods, based on the trade usage. [Mussels Case]

119 Claimant has sent the first invoice on 14 Jan 2015 and amended it on the next day in compliance

with art. 48(1) CISG without any unreasonable delay. [CL Ex no. 5&3] Claimant has endured the

cure expenses, without any uncertainty of the reimbursement in accordance with art. 48(1) CISG.

[CL Ex no. 5]

120 It has been stated that the delay and unreasonable costs are the instances for the inconvenience

provided in art. 48(1) CISG. This inconvenience has not occurred in the cure by Claimant.

Claimant sent the notice and the request of the cure on 15 January in compliance with art. 48(2)

CISG. Respondent did not reply until 10(2) February. An approximately one month of non-

replying, is an unreasonable time regarding Claimant's particular trade. Consequently, Claimant

cured in accordance with art. 48 (2), (3) CISG. In sum, Claimant had no inconvenience in curing

the invoice. [Wine Case].


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B. The Bank Charges Shall Be Borne by Respondent

121 Respondent has the obligation to make the payment. Both CISG and the contract put the burden

of payment on Respondent (1). Respondent is trying to deviate from its own responsibilities by

alleging that it was not aware of the levy provisions. Furthermore, it is putting the obligation on

the Claimants ground by making a wrong analogy (2). Respondent must have been aware of

payment provisions of the seller's place of business (3).

1. Both CISG and the contract put the burden of payment on Respondent

122 It is clearly stated in the section 4.3 of the contract that “The bank charges for the transfer of the

amount are to be borne by the buyer.’’ Moreover, it is stated in the art. 54 CISG that ‘’The buyer’s

obligation to pay the price includes taking such steps and complying with such formalities as may

be required under the contract or any laws and regulations to enable payment to be made.’’ This

obligation can be ascertained in the roots of the CISG as principal of Costs of one’s own

obligations [Machines, devices and replacement parts case]. In requiring the buyer to comply «with the

formalities as may be required under any laws and regulations», art. 54 CISG mainly refers to

possible governmental regulations concerning payment. [Maskow par. 2(5); shleckhtriem/butler

p.157; Honnold, par. 323; Schwenzer/Fountoulakis, p. 413]

123 Under art. 54 CISG the buyer has to comply with the formalities. It has to conduct in accordance

with the rules of the country, from which payment is to be made. Since CISG is silent about any

applicable law in this regard, any other laws and regulations that might have any effect on the

payment by the buyer need to be up there by him. [Maskow par. 2.5; Shleckhtriem/Schwenzer, p. 812,

par. 3] generally, art. 54 is here to let the seller actually and effectively enjoy from the payment; in

other words, enable the payment to be made. [ICC Case no. 7047]

124 According to art. 59, buyer must pay the price and seller has no obligation to request for the

payment or to compliance with any formality. [Tallon, p. 14-15; Ziegel, Honnold, par. 340]

125 The Rules of ML/2010C has been put into force since 1 Jan 2010 [PO no. 2 no.7] it means even

before the parties start the phase of negotiating for the contract [CL Ex no.1]. Accordingly,

Respondent must have been aware of ML regulations and there has not been any obligation on

Claimant to inform him. Therefore, the burden of all obligations regarding payment is on

Respondent.


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2. The analogy of Art. 35 CISG is not presently applicable

126 Under CISG art. 35, a seller is generally not obliged to supply goods that conform to public laws

and regulations enforced at the buyer's place of business. This general rule carries with it

exceptions in three limited circumstances; (1) If the public laws and regulations of the buyer's

state are identical to those enforced in the seller's state; (2) If the buyer informed the seller about

those regulations; (3) If due to "special circumstances," such as the existence of a seller's branch

office in the buyer's state, the seller knew or should have known about the regulations at issue

[Graves, p. 282]

127 According to the art. 35(2) CISG Respondent states that the same consideration which let the

seller to be not expected to know all the domestic regulations of the buyer's place of business

must be applied to the obligation of payment [SOD par. 19]. Thus art. 35 is based on "lack of

conformity of the goods" not "lack of payment" [Schlechtriem/Schwenzer p. 570, par. 4]

128 The interpretation of art. 35(2) CISG is not analogous with the buyer's obligation to payment

[Honnold, p. 142]. The exception, of the art. 35(2) CISG is only includes the non-conformity of

the goods and the seller not expected to know all domestic laws and regulations of buyer's place

of business unless in the exceptionally circumstances. Such a consideration is only excepting the

seller’s obligation to deliver goods with conformance. Indeed, this consideration does not clearly

apply to payment obligation

129 Furthermore, despite to extend consideration of art. 35 CISG about relieve of obligation of being

aware of the public laws and regulations of the counterparty's place of business does not apply

to the case at hand [Ferrari, p. 222] the parties were in a long standing business relationship

Whereas Claimant and Respondent had two earlier co-operations between themselves; In two

earlier contracts of claimant with its partners, Claimant paid levy as a result of some special

circumstances which do not exist in the case at hand. JumboFly was Claimant’s largest customer

and the contract did not contain any rule as to which party had to bear the bank charges. Indeed,

Claimant paid the levy in view of the emergency situation and for its reputation [PO no. 2, no. 8,9].

130 The analogy of art. 35 CISG does not help the Respondent to relieve from its certain liability to

pay the bank charges [Medical Marketing International, Inc. v. Internazionale Medico Scientifica S.r.l.].


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3. Respondent must have been aware of payment provisions of the seller's place of

business.

131 ML/2010C entered into force on 1 Jan 2010. It is based on the UN‐Model Provisions on ML,

Terrorist Financing, Preventive Measures and Proceeds of Crime. The ML/2010C is in the scope

of the international standards and usages. Indeed, Respondent ought to have known the

provisions of ML/2010C. [International Recommendations, Introduction, P. 7]

132 Money laundering rules is a part of international usages which buyer must have been aware of

them. Indeed, Respondent must have been aware of Equatoriana’s ML provisions. According to

ML/2010C banks are obliged to investigate the over 2 million dollars’ contract to prevent ML.

Cost of investigations counts as a part of bank charges.

133 In addition according to art. 57(1) CISG, “if the buyer is not bound to pay the price at any other

particular place, he must pay it to the seller. (a) at the seller’s place of business; or (b) if the

payment is to be made against the handing over of the goods or of documents, at the place where

the handing over takes place.” The place of the handing over the goods and documents takes is

for the transactions which the delivery and payment occurs at the same time. [Waste gas cleansing

installation case]

Furthermore, the buyer must pay the price to the seller’s place of business in transactions which

the delivery of good occurs before the payment. [Societé Productions v. Roberto Faggioni]


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134 In view of the fact that in this case buyer has to pay the price after the seller take delivery of the

goods [CL Ex no. 2], subparagraph (a) of art. 57 CISG applies. Indeed, Respondent must have

been aware of payment provisions of the seller's place of business.

CONCLUSION OF THE THIRD ISSUE

135 Claimant is entitled to additional payments from Respondent for both fan blades in the amount

of USD 2, 285, 240, 00 and for the fees deducted by the Central Bank in the amount of USD

102,192.80. With regard to art. 8(1) CISG, the parties concluded two separate contracts of two

different types. The contract on fan blades is a cost-plus contract that, according to its nature,

the costs must be calculated upon the exchange rate of the time of conclusion of the contract.

Hereupon, Respondent must reimburse all incurred production costs, to which the exchange rate

has been EQD 1.79 per USD 1. Additionally, Claimant could not reasonably bear the whole risk

of the contract. In accordance with art.8 (2) CISG, the addendum and its term on fixed exchange

rate should be drafted in a way that the other party, as a reasonable person, could understand its

position; otherwise, the provision shall be interpreted against Respondent based on the contra

proferentem. In respect of the amount of USD 102, 192. 80 which was deducted for bank charges

by Central Bank, in accordance with section 4.3 Development and Sales Agreement and art. 54

CISG, Respondent has the obligation to comply with such formalities to enable the payment to

be made. Furthermore, ML regulation has been put into force since 1 Jan 2010, and Respondent

ought to have known such regulation. Considering art. 57 CISG, Respondent could not have

been unaware of provision of the Claimant’s place of business

REQUEST FOR RELEIF

Claimant respectfully requests this Tribunal to:

1. Refuse Respondent’s request for Claimant to maintain a security for cost

2. Recognize that the claims are admissible and submitted within the agreed time limit

3. Order the outstanding sum of US$ 2.285.240 and the bank charge in the amount of US$

102,192.80

4. Order Respondent to bear the costs of the arbitration


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On Behalf of Wright, Ltd.

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