University of Fribourg
Twenty First Annual
WILLEM C. VIS INTERNATIONAL COMMERCIAL ARBITRATION MOOT Vienna, Austria – 11 to 17 April 2014 _______________________________
MEMORANDUM FOR RESPONDENT
ON BEHALF OF: Hope Hospital 1–3 Hospital Road Oceanside Equatoriana
AGAINST: Innovative Cancer Treatment Ltd. 46 Commerce Road Capital City Mediterraneo
RESPONDENT
CLAIMANT
COUNSEL Simon Demaurex ! Cheryl De-Souza Konrad Staeger ! Benjamin Trachsel ! Noémie Zürcher
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
TABLE OF CONTENTS TABLE OF CONTENTS ............................................................................................................ I! LIST OF ABBREVIATIONS ..................................................................................................... III! INDEX OF AUTHORITIES ..................................................................................................... VI! INDEX OF CASES AND AWARDS...................................................................................... XXIII! STATEMENT OF FACTS ........................................................................................................... 1! ARGUMENT ON THE PROCEDURAL ISSUES .............................................................................2! I. !
THIS TRIBUNAL HAS NO JURISDICTION TO HEAR CLAIMS ARISING OUT OF THE FSA....2!
A. !
THE
1. !
The appeal and review mechanism of Art. 23(4) FSA is an invalid attempt to expand judicial review ..................................................................................................................................... 3!
(i) !
The appeal and review mechanism of Art. 23(4) FSA is an invalid expansion of the grounds for setting aside contained in Art. 34(2) DAL............................................................................... 3!
(a)!
Art. 23(4) FSA does not correspond to the grounds for setting aside stated in Art. 34(2) DAL and thereby constitutes an expansion of judicial review ................................................... 4!
(b)!
The Parties’ expansion of the grounds for setting aside in Art. 23(4) FSA is invalid under the DAL .............................................................................................................................................. 5!
(c)!
In order to safeguard the efficiency of arbitration, the expansion of the grounds for setting aside is to be rejected......................................................................................................................... 6!
(ii)!
In any case, CLAIMANT cannot rely on the German BGH case to hold Art. 23(4) FSA valid as an arbitration clause with conditional finality of the award.................................................... 7!
2. !
The validity of the entire arbitration agreement depends on the validity of Art. 23(4) FSA . 9!
B. !
IN ANY CASE, THE UNILATERAL LITIGATION RIGHT FOR PAYMENT CLAIMS IN FAVOUR OF CLAIMANT PRECLUDES THE VALIDITY OF THE ARBITRATION AGREEMENT ........................... 10!
C.!
IN ANY CASE, THIS TRIBUNAL HAS NO JURISDICTION FOR CLAIMS ARISING OUT OF THE FSA BASED ON THE ARBITRATION CLAUSE IN THE 2000 STANDARD TERMS ................................... 11!
ART. 23(4) FSA RENDERS THE ENTIRE ARBITRATION AGREEMENT INVALID .............................................................................................. 3! APPEAL AND REVIEW MECHANISM OF
II. ! THIS TRIBUNAL HAS NO JURISDICTION TO HEAR CLAIMS ARISING OUT OF THE SLA.. 12! A.!
ART. 23 FSA DOES NOT APPLY TO CLAIMS ARISING OUT OF THE SLA .................................... 12!
1.!
Art. 23 FSA and Art. 23 SLA are mutually exclusive clauses ................................................... 13!
(i)!
The combination of arbitration and litigation clauses is generally invalid .............................. 13!
(ii) ! The general invalidity of hybrid clauses cannot, in the present case, be cured by interpreting the litigation agreement as a conferral of supervisory jurisdiction ........................................... 14! 2.!
Alternatively, an incorporation of the arbitration agreement of Art. 23 FSA into the SLA is contrary to the Parties’ intent......................................................................................................... 15!
B. !
IN ANY CASE, THIS TRIBUNAL DOES NOT HAVE JURISDICTION BASED ON AN ARBITRATION CLAUSE CONTAINED IN THE 2011 STANDARD TERMS ................................................................ 16! I
UNIVERSITY OF FRIBOURG
III. ! HEARING
MEMORANDUM FOR RESPONDENT
FSA AND THE SLA IN ONE SINGLE ARBITRATION WOULD BE INADMISSIBLE ..................................................................... 16! THE CLAIMS ARISING OUT OF THE
A.!
THE PARTIES’ CONSENT TO MULTI-CONTRACT ARBITRATION IS REQUIRED .......................... 17!
1.!
Irrespective of the number of arbitration agreements, the Parties’ consent to multicontract arbitration is required ...................................................................................................... 17!
2. !
In any case, there are two arbitration agreements in the present case..................................... 18!
B. !
RESPONDENT DID NOT CONSENT TO MULTI-CONTRACT ARBITRATION ................................. 18!
ARGUMENT ON THE SUBSTANTIVE ISSUES ........................................................................... 20! IV.! THE SLA DOES NOT QUALIFY AS A CONTRACT ON THE SALE OF GOODS ..................... 20! A.!
THE DEVELOPED SOFTWARE IS NOT A GOOD AND WAS, IN ANY EVENT, NOT SOLD ............ 21!
1.!
The software downloaded by CLAIMANT is not a good under the CISG ............................... 21!
2.!
In any case, the software was not sold to RESPONDENT........................................................... 22!
(i)!
The offset of the price for the software precludes the application of the CISG ................... 22!
(ii)!
RESPONDENT provided a substantial part of the data for the development of the software by CLAIMANT .................................................................................................................................... 23!
(iii)! The customisation of the software precludes the application of the CISG ........................... 24! (iv)! The licensing of CLAIMANT’s software does not amount to a sale .......................................... 25! B.!
THE SERVICE ELEMENT IS PREPONDERANT UNDER THE SLA .................................................. 26!
V.!
THE CHOICE OF LAW CONTAINED IN THE 2011 STANDARD TERMS WAS NOT INCLUDED IN THE SLA................................................................................................................. 27!
A.!
THE 2011 STANDARD TERMS WERE NOT INCLUDED IN THE SLA ............................................ 27!
1.!
CLAIMANT failed to make the 2011 standard terms available to RESPONDENT .................... 28!
(i)!
The mere reference to CLAIMANT’s website is not sufficient to make the 2011 standard terms available to RESPONDENT ................................................................................................... 29!
(ii)!
In any case, RESPONDENT did not have a reasonable opportunity to take knowledge of the 2011 standard terms ........................................................................................................................ 29!
(iii)! RESPONDENT never had access to a version of the 2011 standard terms drafted in a language it could understand.......................................................................................................... 30! 2.!
The 2011 standard terms were not subsequently included into the SLA ............................... 31!
B.!
IN ANY EVENT, THE CHOICE OF LAW CLAUSE CONTAINED IN THE 2011 STANDARD TERMS DID NOT BECOME PART OF THE SLA ............................................................................................ 32!
VI.! THE PARTIES’ CHOICE OF LAW EXCLUDES THE CISG................................................. 33! A.!
THE 2000 STANDARD TERMS APPLY TO THE SLA AND EXCLUDE THE CISG ......................... 33!
B.!
IN ANY CASE, THE PARTIES EXCLUDED THE CISG IN THE 2011 STANDARD TERMS ............. 34!
REQUEST FOR RELIEF .......................................................................................................... 35! II
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
LIST OF ABBREVIATIONS &
and
§(§)
paragraph(s)
%
per cent
AB
Akienbolag (Stock corporation)
Ans
Answer to Request for Arbitration
Art(s).
Article(s)
ASA
Association suisse d’arbitrage (Swiss Arbitration Association)
BetriebskostenV Betriebskostenverordnung (German ordinance on operating costs) BGH
Bundesgerichtshof (German Supreme Court)
BV
Besloten Vennootschap (Private Partnership)
CACNIQ
Canadian Commercial Arbitration Centre
CEPANI
Belgian Centre for Arbitration and Mediation
cf.
confer (see)
CISG
United Nation Convention on Contracts for the International Sale of Goods
CISG-AC
CISG Advisory Council
ClaEx
Claimant’s Exhibit
ClaM
Memorandum for Claimant
CLOUT
Case Law on UNCITRAL Texts
CMR
Convention relative au Contrat de transport international de marchandises par route (Convention on the Contract for the International Carriage of Goods by Road)
Co.
Company
Corp.
Corporation
DAL
Danubian Arbitration Law
Dr.
Doctor
E.D.
Eastern District
e.g.
exemplum gratia (for example)
EGBGB
Einführungsgesetz zum Bürgerlichen Gesetzbuch (Introductory Act to the German Civil Code)
ed(s).
editor(s)
et al.
et alii (and others)
et seq.
et sequens (and the following)
FAA
Federal Arbitration Act
III
UNIVERSITY OF FRIBOURG
FactÜ
MEMORANDUM FOR RESPONDENT
UNIDROIT Übereinkommen über Internationales Factoring (Convention on International Factoring)
FSA
Framework and Sales Agreement
GmbH
Gesellschaft mit beschränkter Haftung (Limited Liability Company)
HeizkostenV
Verordnung über Heizkostenabrechnung (German ordinance on heating costs accounting)
i.e.
id est (that is)
ICC
International Chamber of Commerce
ICCA
International Council for Commercial Arbitration
Inc.
Incorporation
infra
below
JILP
Journal of International Law and Politics
IPRG
Schweizerisches Bundesgesetz über das Internationale Privatrecht (cf. PILA)
LLC
Limited Liability Company
Ltd.
Limited
M.D.
Middle District
MAA
Moot Alumni Association
N
Marginal Number
N.D.
Northern District
No.
Number
NV
Naamloze Vennootschap (Stock Corporation)
Op.
Opinion
p.
page
PICC
UNIDROIT Principles on International Commercial Contracts
PILA
Private International Law Act (Switzerland)
Plc.
Public Limited Company
pp.
pages
ProcOrd
Procedural Order
ReqArb
Request for Arbitration
ResEx
Respondent’s Exhibit
RF CCI
Chamber of Commerce and Industry of the Russian Federation
S.D.
Southern District
SA
Sociedad Anónima or Société anonyme (Stock Corporation)
SAS
Société anonyme simplifiée (Simplified joint-stock Corporation)
IV
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
SE
Societas Europaea (European Company)
SLA
Sales and Licensing Agreement
SMU
Singapore Management University
SpA
Società per Azioni (Stock Corporation)
Srl
Società a Responsabilità Limitata (Limited Liability Company)
supra
above
TermRef
Terms of Reference
U.S.
United States
UCC
U.S. Uniform Commercial Code
UK
United Kingdom
UN
United Nations
UNICTRAL
United Nations Commission on International Trade Law
UNIDROIT
International Institute for the Unification of Private Law
USD
United States Dollar
v.
versus
Vol.
Volume
W.D.
Western District
V
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
INDEX OF AUTHORITIES RULES AND LAWS CEPANI Rules
CEPANI Arbitration Rules 2013, Brussels, 1 January 2013
CISG
United Nations Convention on Contracts for the International Sales of Goods, Vienna, 11 April 1980
ICC Rules
ICC Arbitration Rules, Paris, 1 January 2012
PICC
UNIDROIT Principles of International Commercial Contracts, Rome, 2010
UNCITRAL Model Law on International Commercial Arbitration
UNICTRAL Model Law on International Commercial Arbitration 1985 with amendments as adopted in 2006, Vienna, 21 June 1985
UNCITRAL Model Law on International Commercial Conciliation
UNCITRAL Model Law on International Commercial Conciliation, New York, 24 June 2002
COMMENTARIES ABDULLA, ZINA
The Arbitration Agreement, in: Kaufmann-Kohler/Stucki (eds.), International Arbitration in Switzerland Kluwer Law International, The Hague 2004 Cited: Abdulla In § 11
ACHILLES, WILHELM-ALBRECHT
Kommentar zum UN–Kaufrechtsübereinkommen (CISG) Luchterhand, Neuwied/Kriftel/Berlin 2000 Cited: Achilles In §§ 108, 155
ARCHIYAN, ELENA
Fate of the Unilateral Option Clause Finally Decided in Russia, in: New York University Journal of International Law and Politics, JILP Online Forum 2013 Available at: http://nyujilp.org/fate-of-the-unilateral-option-clause-finallydecided-in-russia/ Cited: Archiyan In § 51
ARROYO, MANUEL
Art. 190 PILA, in: Arroyo (ed.), Arbitration in Switzerland, The Practitioner’s Guide VI
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
Kluwer Law International, The Hague 2013 Cited: Arroyo In § 29 BALDUS, CHRISTIAN
Regelhafte Vertragsauslegung nach Parteirollen im klassischen Römischen Recht und in der modernen Völkerrechtswissenschaft, zur Rezeptionsfähigkeit des römischen Rechtsdenkens Peter Lang, Frankfurt 1999 Cited: Baldus In § 73
BÄRTSCH, PHILIPPE PETTI, ANGELINA M.
The Arbitration Agreement, in: Geisinger/Voser, International Arbitration in Switzerland, A Handbook for Practitioners Kluwer Law International, The Hague 2013 Cited: Bärtsch/Petti In § 10
BERGER, BERNHARD KELLERHALS, FRANZ
International and Domestic Arbitration in Switzerland, 2nd edition Sweet & Maxwell, London 2010 Cited: Berger/Kellerhals In § 11
BERGER, KLAUS-PETER
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BERGER, KLAUS-PETER
Re-examining the Arbitration Agreement: Applicable Law – Consensus or Confusion? in: van den Berg (ed.), International Arbitration 2006: Back to Basics?, ICCA Congress Series, Vol. 13 (2006), pp. 301–334 Cited: Berger, Applicable Law In § 11
BERNARDINI, PIERO
The Arbitration Clause of an International Contract, in: Journal of International Arbitration, Vol. 9 (1992), No. 2, pp. 45–60 Cited: Bernardini In § 65
BOOG, CHRISTOPHER MOSS, BENJAMIN
The Lazy Myth of the Arbitral Tribunal’s Duty to Render an Enforceable Award Available at: http://kluwerarbitrationblog.com/blog/2013/01/28/the-lazyVII
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
myth-of-the-arbitral-tribunals-duty-to-render-an- enforceableaward/ Cited: Boog/Moss In § 39 BORN, GARY B.
International Commercial Arbitration Kluwer Law International, The Hague 2009 Cited: Born In §§ 9, 11, 24, 28, 58, 65, 90
BORN, GARY B.
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BORN, GARY B.
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BORN, GARY B.
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BREKOULAKIS, STAVROS
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BREKOULAKIS, STAVROS SHORE, LAURENCE
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BRUNNER, CHRISTOPH
UN-Kaufrecht – CISG, Kommentar zum Übereinkommen der Vereinten Nationen über Verträge über den internationalen Warenkauf von 1980, Unter Berücksichtigung der Schnittstellen zum internen Schweizer Recht Stämpfli, Bern 2004 Cited: Brunner VIII
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
In § 108 BÜHLER, MICHAEL W, WEBSTER, THOMAS H.
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CHANG, LENG SUN
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CISG ADVISORY COUNCIL
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CISG ADVISORY COUNCIL
CISG-AC Opinion No. 13, Inclusion of Standard Terms under the CISG Available at: http://www.cisg.law.pace.edu/cisg/CISG-AC-op13.html Cited: CISG-AC Op. 13 In §§ 161, 165
COX, TREVOR
Chaos versus Uniformity: The Divergent Views of Software in the International Community, in: Vindobona Journal of International Commercial Law and Arbitration, Vol. 4 (2000), pp. 3–29 Cited: Cox In § 108
DE MEULEMEESTER, DIRK
Multicontract Arbitration Under The CEPANI Arbitration Arbitration (Article 10), Available at: http://kluwerarbitrationblog.com/blog/2013/10/23/multicontr act-arbitration-under-the-cepani-arbitration-rules-article-10/ Cited: De Meulemeester In § 95
DERAINS, YVES SCHWARTZ, ERIC A.
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Cited: Derains/Schwartz In § 10 DIEDRICH, FRANK
Maintaining Uniformity in International Uniform Law Via Autonomous Interpretation: Software Contracts and the CISG, in: Pace International Law Review, Vol. 8 (1996), pp. 303–338 Cited: Diedrich In § 121
DIEDRICH, FRANK
The CISG and computer software revisited, in: The Vindobona Journal of International Commercial Law and Arbitration, Vol. 6 (2002), pp. 55–75 Cited: Diedrich, software In §§ 120, 121
DORNIS, TIM W.
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EISELEN, SIEG
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FEDURKO, ANNA SULAMÄGI, MARII
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FERRARI, FRANCO
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FERRARI, FRANCO
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UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
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FRANC, LAURENCE
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FRIGNANI, ALDO
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FRY, JASON GREENBERG, SIMON MAZZA, FRANCESCA
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FURRER, ANDREAS GIRSBERGER, DANIEL SCHRAMM, DOROTHEE
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GAILLARD, EMMANUEL BANIFATEMI, YAS
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GAILLARD, EMMANUEL SAVAGE, JOHN (EDS.)
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GHARAVI, HAMID G.
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GIRSBERGER, DANIEL VOSER, NATHALIE
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GOTTWALD, PETER
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GRUBER, URS PETER
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GU, WEIXIA
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HWANG, MICHAEL LAI, AMY
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MEMORANDUM FOR RESPONDENT
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MAGNUS, ULRICH
Art. 1, in: Staudinger (ed.), Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Wiener UN-Kaufrecht (CISG) Sellier-De Gruyter, Berlin 2013 Cited as: Magnus/Staudinger In §§ 115, 126, 141, 150, 161
MAGNUS, ULRICH
Incorporation of Standard Contract Terms under the CISG, in: Andersen/Schroeter (eds.), Sharing International Commercial Law across National Boundaries, Festschrift for Albert H. Kritzer on the occasion of his eightieth birthday, pp. 303–325 Wildy, Simmonds & Hill Publishing, London 2008 Cited: Magnus In §§ 142, 147, 161
MANKOWSKI, PETER
Pre Arts. 14–24, in: Ferrari et al. (eds.), Internationales Vertragsrecht, EGBGB, CISG, CMR, FactÜ, Kommentar C.H. Beck, Munich 2007 Cited: Mankowski
XVI
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In §§ 142, 147, 161 MASKOW, DIEDRICH
Art. 53, in: Bianca/Bonell (eds.), Commentary on the International Sales Law, The 1980 Vienna Sales Convention Giuffrè, Milan 1987 Cited: Maskow In § 115
MEIER, ANDREA
Introduction to Articles 7–10 ICC Rules, in: Arroyo (ed.), Arbitration in Switzerland, The Practitioner’s Guide Kluwer Law International, The Hague 2013 Cited as: Meier In §§ 90, 93
MISTELIS, LOUKAS
Arts. 1, 6 in: Kröll/Mistelis/Perales Viscasillas (eds.), UN Convention on Contracts for the International Sale of Goods (CISG) C.H. Beck, Munich 2011 Cited: Mistelis In §§ 103, 108, 115, 136, 175
MISTELIS, LOUKAS RAYMOND, ANJANETTE
Art. 3, in: Kröll/Mistelis/Perales Viscasillas (eds.), UN Convention on Contracts for the International Sale of Goods (CISG) C.H. Beck, Munich 2011 Cited: Mistelis/Raymond In §§ 121, 136
MOSES, MARGHARETH
Can Parties Tell Court What to Do? Expanded Judicial Review of Arbitral Awards, University of Kansas Law Review, Vol. 52 (2004), pp. 429–465 Cited: Moses In § 31
MOSES, MARGHARETH
Party Agreements to Expand Judicial Review of Arbitral Awards, in: Journal of International Arbitration, Vol. 20 (2003), pp. 315–323 Cited: Moses, Party Agreements In § 31
MOWBRAY, JACQUELINE
The Application of the United Nations Convention on Contracts for the International Sale of Goods to E-Commerce Transactions: The Implications for Asia, in: The Vindobona Journal of International Commercial Law and Arbitration, Vol. 7 (2003), pp. 121–150 XVII
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MEMORANDUM FOR RESPONDENT
Cited: Mowbray In §§ 109, 126 NESBITT, SIMON PUGH, MICHAEL RYMKO, ALEXANDER SCARD, ALEXANDER
Unilateral option clauses: unenforceable in Russia Available at: http://www.hoganlovells.com/unilateral-option clauses-unenforceable-in-russia-09-05-2012/ Cited: Nesbitt/Pugh/Rymko/Scard In § 51
NEWHOUSE, ADAM TANAKA, TSUNEYOSHI
CISG – A Tool for Globalization (1): American and Japanese Perspectives, in: Ritsumeikan Law Review, Vol. 29 (2012), pp. 1–42 Cited: Newhouse/Tanaka In § 131
PARLIAMENT OF AUSTRALIA
International Arbitration Amendment Bill 2010, Revised Explanatory Memorandum, Available at: http://www.austlii.edu.au/au/legis/cth/bill_em/ iaab2010366/memo_2.html Cited as: Parliament of Australia In § 28
PILTZ, BURGHARD
Internationales Kaufrecht, Das UN-Kaufrecht (Wiener Übereinkommen von 1980) in praxisorientierter Darstellung C.H. Beck. Munich 1993 Cited: Piltz In § 155
PILTZ, BURGHARD
Standard Terms in UN-Contracts of Sale, in: Vindobona Journal of International Commercial Law and Arbitration, Vol. 8 (2004), pp. 233–244 Cited: Piltz, standard terms In § 142
POUDRET, JEAN-FRANÇOIS BESSON, SÉBASTIEN
Comparative Law of International Arbitration, 2nd edition Schulthess, Zurich 2007 Cited as: Poudret/Besson In §§ 9, 11, 28, 65
PRIMAK, SCOTT L.
Computer Software: Should the UN Convention on Contracts for the International Sale of Goods Apply? A Contextual Approach to the Question, in: Computer Law Journal, Vol. 11/2 (1997), pp. 197–231 XVIII
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Cited: Primak In § 131 RAGHAVAN, VIKRAM
Heightened Judicial Review of Arbitral Awards: Perspectives from the UNCITRAL Model Law and the English Arbitration Act of 1996 on some US Developments, in: Journal of International Arbitration, Vol. 15 (1998), pp. 103–134 Cited: Raghavan In §§ 20, 28, 41
REDFERN, ALAN HUNTER, MARTIN BLACKBY, NIGEL PARTASIDES CONSTANTINE
Redfern and Hunter on International Arbitration, 5th edition Oxford University Press, Oxford et al. 2009 Cited: Redfern In §§ 11, 20, 24
SAENGER, INGO
Arts. 1, 3 CISG, in: Ferrari et al. (eds.), Internationales Vertragsrecht, EGBGB, CISG, CMR, FactÜ, Kommentar C.H. Beck, Munich 2007 Cited: Saenger In § 115, 126
SCHLECHTRIEM, PETER BUTLER, PETRA
UN Law on International Sales Springler, Heidelberg 2009 Cited: Schlechtriem/Butler In §§ 115, 131, 134
SCHLECHTRIEM, PETER SCHROETER, ULRICH G.
Internationales UN-Kaufrecht, Ein Studien- und Erläuterungsbuch zum Übereinkommen der Vereinten Nationen über Verträge über den internationalen Warenkauf (CISG), 5th edition Mohr Siebeck, Tubingen 2013 Cited: Schlechtriem/Schroeter In § 155
SCHMIDT-KESSEL, MARTIN
Art. 8, in: Schlechtriem/Schwenzer (eds.), Commentray on the UN Convention on the International Sale of Goods, 3rd edition Oxford University Press, New York 2010 Cited: Schmidt-Kessel In §§ 55, 73, 150, 165
SCHROETER, ULRICH G.
Art. 14, in: Schlechtriem/Schwenzer (eds.), Commentary on the UN Convention on the International Sale of Goods, 3rd edition Oxford University Press, New York 2010 Cited: Schroeter In §§ 141, 142, 147, 150, 155, 156, 161 XIX
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SCHROETER, ULRICH G.
Vienna Sales Convention: Applicability to “Mixed Contracts” and Interaction with the 1968 Brussels Convention, in: Vindobona Journal of International Commercial Law and Arbitration, Vol. 5 (2001), pp. 74–86 Cited: Schroeter, Applicability In § 135
SCHWARTZ, ERIC A.
Choosing Between Broad Clauses and Detailed Blueprints, in: van den Berg (ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40 Years of Application of the New York Convention, ICCA Congress Series, Vol. 9 (1998) Kluwer Law International, The Hague 1999 Cited: Schwartz In § 41
SCHWENZER, INGEBORG FOUNTOULAKIS, CHRISTIANA DIMSEY, MARIEL
International Sales Law – A guide to the CISG, 2nd edition Hart Publishing, Oxford 2012 Cited: Schwenzer/Fountoulakis/Dimsey In § 171
SCHWENZER, INGEBORG HACHEM, PASCAL
Arts. 1, 3, 6 in: Schlechtriem/Schwenzer (eds.), Commentary on the UN Convention on the International Sale of Goods, 3rd edition Oxford University Press, New York 2010 Cited: Schwenzer/Hachem In §§ 100, 119, 121, 131, 134, 136, 175
SEXTON, EDGAR J. KOTRLY, MICHAEL
Looking Out and Looking In: Reconciling Domestic and Internationalist Considerations in the Enforcement and Review of Arbitration Awards in Canada, in: Arbitration International, Vol. 27 (2011), No. 2, pp. 211–231 Cited: Sexton/Kotrly In § 24
SIEHR, KURT
Arts. 2, 3, 6, in: Honsell (ed.), Kommentar zum UN Kaufrecht, Übereinkommen der Vereinten Nationen über Verträge über den Internationalen Warenverkauf (CISG), 2nd edition Springer, Berlin/Heidelberg 2010 Cited: Siehr In §§ 134, 171
SMIT, HANS
Contractual Modification of the Scope of Judicial Review of Arbitral Awards, in: American Review of International XX
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
Arbitration, Vol. 8 (1997), pp. 147–153 Cited: Smit In §§ 31, 35 SONO, HIROO
The Applicability and Non-Applicability of the CISG to Software Transaction, in: Andersen/Schroeter (eds.), Sharing International Commercial Law across National Boundaries, Festschrift for Albert H. Kritzer on the occasion of his eightieth birthday, pp. 512–526 Wildy, Simmonds & Hill Publishing, London 2008 Cited: Sono In §§ 108, 109
SPAGNOLO, LISA
Green Eggs and Ham: The CISG, Path Dependence, and the Behavioural Economics of Lawyer’s Choice of Law in International Sales Contracts, in: Journal of Private International Law, Vol. 6 (2010), No. 2, pp. 417–464 Cited: Spagnolo In § 165
TIBORCZ, ATTILA
People’s Republic of China, in: Beale/Lautenschlager/Scotti/ Van den hole (eds.), Dispute resolution clauses in international contracts, A global guide Schulthess, Zurich et al. 2013 Cited: Tiborcz In § 50
TRAIN, FRANÇOIS-XAVIER
Les contrats liés devant l’arbitre du commerce international Librairie Générale de Droit et de Jurisprudence, Paris 2003 Cited: Train In § 96
UNCITRAL WORKING GROUP ON ELECTRONIC COMMERCE
Legal aspects of electronic commerce, Possible future work in the field of electronic contracting: An analysis of the United Nations Convention on Contracts for the International Sale of Goods, Note by the Secretariat for the 38th session of the UNCITRAL Working Group on Electronic Commerce, New York 2001 Cited: UNCITRAL Working Group In § 126
VAIDYANATHAN, RAMESH K. ICHHAPORIA, NAZNEEN R.
India, in: Beale/Lautenschlager/Scotti/Van den hole (eds.), Dispute resolution clauses in international contracts, A global guide, Schulthess, Zurich et al. 2013 XXI
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MEMORANDUM FOR RESPONDENT
Cited: Vaidyanathan/Ichhaporia In § 50 VOGENAUER, STEFAN
Arts. 2.1.20, 4, in: Vogenauer/Kleinheisterkamp (eds.), Commentary on the UNIDROIT Principles of Internation Commercial Contracts (PICC) Oxford University Press, New York 2009 Cited: Vogenauer In §§ 55, 73, 165
WASCO, MARK D.
When Less is More: The International Split Over Expanded Judicial Review in Arbitration, in: Rutgers Law Review, Vol. 62 (2010), No. 2, pp. 599–626 Cited: Wasco In § 31
WEIGAND, FRANK-BERND
Introduction, in: Weigand (ed.), Practitioner’s Handbook on International Arbitration C.H. Beck, Munich 2002 Cited: Weigand In § 65
WELLMANN, GYÖRGY
Hungary, in: Beale/Lautenschlager/Scotti/Van den hole (eds.), Dispute resolution clauses in international contracts, A global guide Schulthess, Zurich et al. 2013 Cited: Wellmann In § 50
WESTERMANN, HARM PETER Arts. 1, 3, in: Krüger/Westermann (eds.), Münchener Kommentar zum Bürgerlichen Gesetzbuch, Band 3, Besonderer Teil, Finanzerungsleasing, HeizkostenV, BetriebskostenV, CISG, 6th edition C.H. Beck, Munich 2012 Cited: Westermann In §§ 103, 108, 115, 126 WILLIAMS, DAVID A.R.
Defining the Role of the Court in Modern International Commercial Arbitration, Herbert Smith Freehills-SMU Asian Arbitration Lecture, 11 October 2012, Available at: http://www.globalarbitrationreview.com/cdn/files/gar/articles/ david_williams_Defining_the_Role_of_the_Court_in_Modern_ Intl_Commercial_Arbitra_pdf Cited as: Williams XXII
UNIVERSITY OF FRIBOURG
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In § 28 WITZ, WOLFGANG
Art. 8, Pre Arts. 14–24, in: Witz/Salger/Lorenz, International Einheitliches Kaufrecht, Praktiker-Kommentar und Vertragsgestaltung zum CISG Verlag Recht und Wirtschaft, Heidelberg 2000 Cited: Witz In §§ 55, 155
WOLFF, REINMAR
Party Autonomy to Agree on Non–Final Arbitration?, in: ASA Bulletin, Vol. 26 (2008), No. 3, pp. 626–641 Cited: Wolff In §§ 16, 28, 31, 35
INDEX OF CASES AND AWARDS AUSTRIA OBERSTER GERICHTSHOF
OBERSTER GERICHTSHOF
BELGIUM HOF VAN BEROEP, GENT
RECHTBANK VAN KOOPHANDEL, KORTRIJK
CANADA FEDERAL COURT OF CANADA
Oberster Gerichtshof, 22 October 2001 CISG-online 614, 1Ob77/01g Cited as: Oil case In § 175 Oberster Gerichtshof, 21 June 2005 CISG-online 1047, 5Ob45/05m Cited as: Module T case In § 126
Hof van Beroep, Gent, 24 November 2004 Orintix Srl v. Fabelta Ninove NV CISG-online 966, 224/2004/PBH Cited as: Computer case In § 126 Rechtbank van Koophandel, Kortrijk, 8 December 2004 Drukkerij Baillien en Maris NV v. C.P.F. Landgraaf CISG-online 1511 Cited as: Printed materials case In § 161
Federal Court of Canada, 7 April 1988 D. Frampton & Co. Ltd. v. Sylvio Thibeault and Navigation Harvey & Frères Inc. XXIII
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CLOUT No. 12 Cited as: Frampton case In § 28 FEDERAL COURT OF CANADA
Federal Court of Canada, 13 January 2004 The Attorney General of Canada v. S. D. Myers, Inc. Available at: http://reports.fja.gc.ca/eng/2004/2004fc38.html Cited as: Myers case In §§ 24, 28
COURT OF APPEAL OF BRITISH COLUMBIA
Court of Appeal of British Columbia, 24 October 1990 Quintette Coal Ltd. v. Nippon Steel Corp. et al. CLOUT No. 16 Cited as: Quintette case In § 24
SUPERIOR COURT OF ONTARIO
Superior Court of Ontario, 22 September 1999 Re Corporacion Transacional de Inversiones SA et al. v. STET International, SpA. et al. CLOUT No. 391 Cited as: Transnacional case In § 24
SUPREME COURT OF ONTARIO
Supreme Court of Ontario, 4 November 1998 Noble China Inc. et al. v. Lei Available at: http://canlii.ca/t/1vvkr Cited as: Noble China case In § 28
CHILE CORTE SUPREMA
ENGLAND AND WALES COURT OF APPEALS
Corte Suprema, 22 September 2008 CISG-online 1787, 1782-2007 Cited as: Leather products case In § 171
Court of Appeals, 24 March 1987 Deutsche Schachtbau- und Tiefbohrgesellschaft mbH v. Ras Al Khaimah National Oil Co., Shell International Petroleum Co. Ltd. Available at: http://www.kluwerarbitration.com/CommonUI/print.asp x?ids=ipn3491 XXIV
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Cited as: Deutsche Schachtbau case In § 24 COURT OF APPEALS
Court of Appeals, 26 July 1996 St. Albans City and District Council v. International Computers Ltd. Available at: http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/1997_3/ white/ Cited: St. Albans case In § 108
HIGH COURT OF JUSTICE
High Court of Justice, 18 February 1991 Paul Smith Ltd. v. H & S International Holding Inc. Available at: http://translex.uni-koeln.de/303000 Cited as: Paul Smith case In § 69
HIGH COURT OF JUSTICE
High Court of Justice, 22 December 1992 Union of India v. McDonnell Douglas Corp. Available at: http://www.kluwerarbitration.com/CommonUI/print.asp x?ids=IPN4855 Cited as: Union of India case In § 11
HIGH COURT OF JUSTICE
High Court of Justice, 22 May 1998 Shell International Petroleum Co. Ltd. v. Coral Oil Co. Ltd. Available at: http://www.simic.net.cn/upload/201005/2010053115214 7929.pdf Cited as: Shell case In § 69
HIGH COURT OF JUSTICE
High Court of Justice, 4 October 2001 Sonatrach Petroleum Co v. Ferrell International Ltd. Available at: http://alrr.oxfordjournals.org/content/2001/1/693.full. pdf Cited as: Sonatrach Petroleum case In § 11
HIGH COURT OF JUSTICE
High Court of Justice, 20 January 2006 Axa Re v. Ace Global Markets Ltd. XXV
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Available at: http://www.bailii.org/ew/cases/EWHC/Comm/2006/21 6.html Cited as: Axa Re case In § 69 HIGH COURT OF JUSTICE
High Court of Justice, 3 October 2006 McConnell Dowell Constructors (Aust) Pty Ltd. v. National Grid Gas Plc. Available at: http://www.bailii.org/ew/cases/EWHC/TCC/2006/2551 .html Cited as: McConnell Dowell case In § 69
HIGH COURT OF JUSTICE
High Court of Justice, 5 November 2010 Guangzhou Dockyards Co. Ltd. v ENE Aegiali I Available at: http://www.bailii.org/ew/cases/EWHC/Comm/2010/28 26.html Cited as: Guangzhou case In § 29
HIGH COURT OF JUSTICE
High Court of Justice, 9 November 2012 Interserve Industrial Services Ltd. v. ZRE Katowice SA Available at: http://www.bailii.org/cgi-bin/markup.cgidoc=/ ew/cases/EWHC/TCC/2012/3205.html Cited as: Interserve case In § 69
HIGH COURT OF JUSTICE
High Court of Justice, 8 February 2013 Hyundai Merchant Marine Co. Ltd. v. Americas Bulk Transport Ltd. Available at: http://www.kluwerarbitration.com/CommonUI/print.asp x?ids=KLI-KA-1321791 Cited as: Hyundai case In § 73
HIGH COURT OF JUSTICE
High Court of Justice, 24 May 2013 Mauritius Commercial Bank Ltd. v. Hestia Holdings Ltd., Sujana Universal Industries Ltd. Available at: http://www.bailii.org/ew/cases/EWHC/Comm/2013/13 XXVI
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28.html Cited as: MCB case In § 51 EUROPEAN COURT OF JUSTICE EUROPEAN COURT OF JUSTICE
FRANCE COUR DE CASSATION
European Court of Justice, 3 July 2012 UsedSoft GmbH v. Oracle International Corp. Case C-128/11 Cited as: Oracle case In § 131
Cour de Cassation, 6 April 1994 Société Buzzichelli Holding v. Hennion Available at: http://www.legifrance.gouv.fr/affichJuriJudi.do?old Action=rechJuriJudi&idTexte=JURITEXT 000007031765&fastReqId=1920004938&fastPos=1 Cited as: Buzzichelli case In § 29
COUR DE CASSATION
Cour de Cassation, 25 October 2005 CISG-online 1098, U 99-12.879 Cited as: Weed killer case In § 171
COUR DE CASSATION
Cour de Cassation, 13 March 2007 Société Chefaro International v. Barrère et al. Available at: http://www.kluwerarbitration.com/CommonUI/print. aspx?ids=ipn28189 Cited as: Chefaro case In § 29
COUR DE CASSATION
Cour de Cassation, 26 September 2012 X. v. Banque privée Edmund de Rothschild Europe Available at: http://www.legifrance.gouv.fr/affichJuriJudi.do?oldActi on=rechJuriJudi&idTexte=JURITEXT000026431679&fast ReqId= Cited as: Rothschild case In § 51
COUR D’APPEL DE CHAMBÉRY
Cour d’appel de Chambéry, 25 May 1993 AMD Electronique v. Rosenberger Siam SpA XXVII
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CISG-online 223 Cited as: Connectors case In § 120 COUR D’APPEL DE COLMAR
Cour d’appel de Colmar, 26 September 1995 Céramique Culinaire de France SA v. Musgrave Ltd. CISG-online 226, 1 B 9400488 Cited as: Dishes case In § 175
COUR D’APPEL DE PARIS
Cour d’appel de Paris, 12 December 1989 Societe Binate Maghreb v. Soc Screg Routes Commented in: Level, Note - Cour d'appel de Paris (1re Ch. suppl.) 12 décembre 1989, Revue de l'Arbitrage, Vol. 4 (1990), pp. 863–874 Cited as: Binate Maghreb case In §§ 29, 41
COUR D’APPEL DE PARIS
Cour d’appel de Paris, 27 October 1994 Société de Diseno v. société Mendes Available at: http://www.kluwerarbitration.com/CommonUI/print.asp x?ids=IPN15107 Cited as: Diseno case In § 41
COUR D’APPEL DE PARIS
Courd d’appel de Paris, 6 November 2001 CISG-online 677, 2000/04607 Cited as: Cables case In § 175
GERMANY BUNDESGERICHTSHOF
Bundesgerichtshof, 31 October 2001 CISG-online 617, VIII ZR 60/01 Cited as: Machinery case In §§ 141, 142
BUNDESGERICHTSHOF
Bundesgerichtshof, 1 March 2007 Available at: http://openjur.de/u/78680.html Cited as: Wiesbaden case In §§ 34, 35
BAYERISCHES OBERSTES LANDESGERICHT
Bayerisches Oberstes Landesgericht, 15 December 1999 CLOUT No. 375 XXVIII
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Cited as: Car door case In § 24 OBERLANDESGERICHT CELLE
Oberlandesgericht Celle, 24 May 1995 CISG-online 152, 20 U 76/94 Cited as: Printing machine case In § 171
OBERLANDESGERICHT CELLE
Oberlandesgericht Celle, 24 July 2009 CISG-online 1906, 13 W 48/09 Cited as: Recorders case In § 147
OBERLANDESGERICHT DÜSSELDORF
Oberlandesgericht Düsseldorf, 21 July 2003 CISG-online 919, I-17 U 22/03 Cited as: Rubber case In § 142
OBERLANDESGERICHT DÜSSELDORF
Oberlandesgericht Düsseldorf, 21 April 2004 CISG-online 915, I-15 U 88/03 Cited as: Car phone case In §§ 141, 156, 165
OBERLANDESGERICHT HAMBURG
Oberlandesgericht Hamburg, 5 October 1998 CISG-online 473, 12 U 62/97 Cited as: Electronic parts case In § 178
OBERLANDESGERICHT HAMM
Oberlandesgericht Hamm, 8 February 1995 CISG-online 141, 11 U 206/93 Cited as: Socks case In § 156
OBERLANDESGERICHT HAMM
Oberlandesgericht Hamm, 6 December 2005 CISG-online 1221, 19 U 120/05 Cited as: Used motor case In § 155
OBERLANDESGERICHT KARLSRUHE
Oberlandesgericht Karlsruhe, 25 June 1997 CISG-online 263, 1 U 280/96 Cited as: Foil case In § 175
OBERLANDESGERICHT KOBLENZ
Oberlandesgericht Koblenz, 16 January 1992 CISG-online 47, 5 U 534/91 XXIX
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Cited as: Motor yacht case In § 155 OBERLANDESGERICHT KOBLENZ
Oberlandesgericht Koblenz, 17 September 1993 CISG-online 91, 2 U 1230/91 Cited as: Chip case In § 127
OBERLANDESGERICHT KÖLN
Oberlandesgericht Köln, 26 August 1994 CISG-online 132, 19 U 282/93 Cited as: Market study case In § 108
OBERLANDESGERICHT KÖLN
Oberlandesgericht Köln, 21 December 2005 CISG-online 1201, 16 U 47/05 Cited as: Trade usage case In § 142
OBERLANDESGERICHT MÜNCHEN
Oberlandesgericht München, 9 July 1997 CISG-online 282, 7 U 2070/97 Cited as: Leather goods case In § 178
OBERLANDESGERICHT MÜNCHEN
Oberlandesgericht München, 3 December 1999 CISG-online 585, 23 U 4446/99 Cited as: Production equipment case In § 119
OBERLANDESGERICHT STUTTGART Oberlandesgericht Stuttgart, 16 July 2002 Available at: http://lrbw.juris.de/cgi-bin/laender_ rechts prechung/document.py?Gericht=bw&nr=726 Cited as: Soccer license case In § 24 OBERLANDESGERICHT STUTTGART Oberlandesgericht Stuttgart, 31 March 2008 CISG-online 1658, 6 U 220/07 Cited as: Automobile case In § 171 LANDESGERICHT LANDSHUT
Landesgericht Landshut, 12 June 2008 CISG-online 1703, 43 O 1748/07 Cited as: Metal slabs case In § 165
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LANDESGERICHT MÜNCHEN
Landesgericht München, 8 February 1995 CISG-online 203, 8 HKO 24667/93 Cited as: Graphiplus case In §§ 108, 126
LANDESGERICHT NEUBRANDENBURG
Landesgericht Neubrandenburg, 3 August 2005 CISG-online 1190, 10 O 74/04 Cited as: Sour cherries case In § 142
AMTSGERICHT KEHL
Amtsgericht Kehl, 6 October 1995 CISG-online 162, 3 C 925/93 Cited as: Knitwear case In § 155
INDIA SUPREME COURT OF INDIA
ITALY TRIBUNALE CIVILE DI MONZA
Supreme Court of India, 9 May 2006 M/S Centrotrade Minerals et al. v. Hindustan Copper Ltd. Available at: http://indiankanoon.org/doc/1597776/ Cited as: Centrotrade case In § 28
Tribunale Civile di Monza, 14 January 1993 CISG-online 540 Nuova Fucinati SpA v. Fondmetal International AB Cited as: Ferrochrome case In § 175
TRIBUNALE DI ROVERETO
Tribunale di Roveeto, 21 November 2007 Takap BV v. Europlay S.r.l. CISG-online 1590, 914/06 Cited as: Mirrors case In § 141
AD HOC ARBITRATION, FLORENCE
Ad Hoc Arbitration, Florence, 19 April 1992 Società X v. Società Y CLOUT No. 92 Cited as: Leather wear case In § 175
NEW ZEALAND COURT OF APPEAL
Court of Appeal, 17 June 2004 Methanex Motunui Ltd. v. Spellman XXXI
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
New Zealand Reports, Vol. 3 (2004), p. 454 et seq. Cited as: Methanex case In § 28 PEOPLE’S REPUBLIC OF CHINA HIGH COURT OF HONG KONG
RUSSIA RUSSIAN SUPREME COURT
TRIBUNAL OF INTERNATIONAL COMMERCIAL ARBITRATION, RF CCI
SINGAPORE SINGAPORE HIGH COURT
SINGAPORE HIGH COURT
High Court of Hong Kong, 17 February 1993 William Co. v. Chu Kong Agency Co. Ltd. CLOUT No. 44 Cited as: Chu Kong case In § 66
Russian Supreme Court, 19 June 2012 Russian Telephone Company (RTC) v. Sony Ericsson Mobile Communications (Sony) Available at: http://www.arbitrations.ru/userfiles/file/Case%20Law/ Enforcement/Sony_Ericsson_Russian_Telephone_Comp any_Supreme_Court%20eng.pdf Cited as: Sony Ericsson case In §§ 50, 51 Tribunal of International Commercial Arbitration, RF CCI, 9 March 2004 CISG-online 1184, 91/2003 Cited as: Barter case In § 115
Singapore High Court, 2 March 1992 The “Dai Yun Shan” Available at: http://www.singaporelaw.sg/sglaw/images/Arbitration Cases/%5B1992%5D_1_SLR%28R%29_0461.pdf Cited as: Dai Yun Shan case In § 66 Singapore High Court, 14 March 2001 John Holland Pty Ltd. v. Toyo Engineering Corp. Available at: http://www.singaporelaw.sg/sglaw/images/Arbitration Cases/[2001]_1_SLR(R)_0443.pdf Cited as: John Holland case In § 24
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SINGAPORE HIGH COURT
Singapore High Court, 8 May 2003 ABC Co. v. XYZ Co. Ltd. Clout Case 566 Cited as: ABC case In § 28
SINGAPORE HIGH COURT
Singapore High Court, 12 January 2009 P.T. Tri-M.G. Intra Asia Airlines v. Norse Air Charter Ltd. Available at: http://www.singaporelaw.sg/sglaw/laws-of-singapore /case-law/free-law/high-court-judgments/13593-p-t-trim-g-intra-asia-airlines-v-norse-air-charter-limited-2009sghc-13 Cited as: Norse Air Charter case In §§ 66, 69
SINGAPORE HIGH COURT
Singapore High Court, 14 August 2012, Quarella SpA v. Scelta Marble Australia Pty Ltd. Available at: http://www.singaporelaw.sg/sglaw/laws-of-singapore/ case-law/free-law/high-court-judgments/14958-quarellaspa-v-scelta-marble-australia-pty-ltd-2012-sghc-166 Cited as: Quarella case In § 28
SPAIN AUDIENCIA PROVINCIAL DE NAVARRA
SWITZERLAND BUNDESGERICHT
BUNDESGERICHT
Audiencia Provincial de Navarra, 27 December 2007 CISG-online 1798 Cited as: Bricks case In § 142
Bundesgericht, 3 October 1989 A v. B, ATF 115 II 288 Available at: http://www.servat.unibe.ch/dfr/bge/c2115288.html Cited as: A. v. B case In § 29 Bundesgericht, 2 September 1993 National Power Corporation v. Westinghouse International Projects Co. et al., ATF 119 II 380 Available at: http://www.polyreg.ch/d/informationen/bgeleitentsche ide/Band_119_1993/BGE_119_II_380.html XXXIII
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
Cited as: Westinghouse case In § 29 BUNDESGERICHT
Bundesgericht, 14 May 2001 Fomento de Construcciones y Contratas SA v. Colon Container Terminal SA, ATF 127 III 279 Available at: http://www.polyreg.ch/d/informationen/bgeleitentsche ide/Band_127_2001/BGE_127_III_279.html Cited as: Fomento case In § 29
BUNDESGERICHT
Bundesgericht, 16 October 2001 X. v. O., ATF 128 III 50 Available at: http://www.polyreg.ch/d/informationen/bgeleitentsche ide/Band_128_2002/BGE_128_III_50.html Cited as: Antishock case In § 29
BUNDESGERICHT
Bundesgericht, 22 January 2008 A.C. SE et al. v. K. SAS, ATF 134 III 186 Available at: http://jumpcgi.bger.ch/cgi-bin/JumpCGI?id=BGE 134-III-186 Cited as: Product development case In § 29
BUNDESGERICHT
Bundesgericht, 4 January 2012 X. v. Z. Available at: http://www.polyreg.ch/d/informationen/bgeunpubliziert/ Jahr_2011/Entscheide_4A_2011/4A.238__2011.html Cited as: X v. Z case In § 29
KANTONSGERICHT ZUG
Kantonsgericht Zug, 16 March 1995 CISG-online 230, A3 1993 20 Cited as: Cobalt case In § 175
KANTONSGERICHT ZUG
Kantonsgericht Zug, 11 December 2003 CISG-online 958, A2 02 93 Cited as: Granulate case In § 161 XXXIV
UNIVERSITY OF FRIBOURG
HANDELSGERICHT ZÜRICH
THE NETHERLANDS GERECHTSHOF ‘S HERTOGENBOSCH
MEMORANDUM FOR RESPONDENT
Handelsgericht Zürich, 17 February 2000 CISG-online 637, HG 980472 Cited as: Software case In § 136
Gerechtshof ‘s Hertogenbosch, 16 October 2002 CISG-online 816, C0100017 Cited as: Plants case In § 142
RECHTBANK ARNHEM
Rechtbank Arnhem, 28 June 2006 Silicon Biomedical Instruments BV v. Erich Jaeger GmbH CISG-online 1265, 82879/HA ZA 02-105 Cited as: Cephalo pro case In § 121
RECHTBANK UTRECHT
Rechtbank Utrecht, 21 January 2009 A. GmbH v. Quote Foodproducts BV CISG-online 1814, 253099/HAZA 08-1624 Cited as: Seeds case In § 141
UNITED STATES U.S. SUPREME COURT
U.S. Supreme Court, 27 November 1979 Linda Miner v. Richard Walden et al. Available at: http://www.leagle.com/decision/1979915101Misc2d814_ 1760.xml/MINER%20v.%20WALD Cited as: Miner case In § 47
U.S. SUPREME COURT
U.S. Supreme Court, 25 March 2008 Hall Street Associates LLC. v. Mattel, Inc. Available at: http://www.supremecourt.gov/opinions/07pdf/06989.pdf Cited as: Hall Street case In § 29
U.S. SUPREME COURT
Brief of Professors and Practioners of Arbitration Law as Amicus Curiae in Support of Petition for a Writ of Certiorari, 16 January 2014, Arun Walia v. Dewan, CPA, P.A. & Kiran Moolchand XXXV
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
Dewan Available at: http://globalarbitrationreview.com/cdn/files/gar/articles/ Walia_Amicus_Brief.pdf Cited as: Amicus brief In § 29 U.S. COURT OF APPEALS, SECOND CIRCUIT
U.S. Court of Appeals, Second Circuit, 30 March 1967 Saxis Steamship Co. v. Multifacs International Traders Inc. Available at: http://www.leagle.com/decision/19679523 75F2d577_1835.xml/SAXIS%20STEAMSHIP%20CO.% 20v.%20MULTIFACS%20INTERNATIONAL%20TRA DERS,%20INC Cited as: Saxis Steamship case In § 31
U.S. COURT OF APPEALS, FOURTH CIRCUIT
U.S. Court of Appeals, Fourth Circuit, 17 August 1992 Richmond, Fredericksburg & Potomac Co. v. Transportation Communications International Union Available at: https://www.casetext.com/case/richmondfredericksburg-potomac-r-co-v-transportation-communi cations-intern-union Cited as: Richmond case In § 31
U.S. COURT OF APPEALS, FOURTH CIRCUIT
U.S. Court of Appeals, Fourth Circuit, 19 August 1994 Remmey v. Painewebber, Inc. Available at: https://www.casetext.com/case/remmey-v-painewebberinc/ Cited as: Remmey case In § 31
U.S. COURT OF APPEALS, FOURTH CIRCUIT
U.S. Court of Appeals, Fourth Circuit, 25 March 1999 Westvaco Corp. v. United Paperworkers International Union Available at: https://www.casetext.com/case/westvaco-corp-v-unitedpaperworkers-intern-union-afl-cio-ex-rel-local-union-676 Cited as: Westvaco case In § 31
U.S. COURT OF APPEALS,
U.S. Court of Appeals, Fourth Circuit, 30 November 1999 XXXVI
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
FOURTH CIRCUIT
United States Postal Service v. American Postal Workers Union Available at: https://www.casetext.com/case/us-postal-serv-v-ampostal-workers-union/ Cited as: Postal Service case In § 31
U.S. COURT OF APPEALS, NINTH CIRCUIT
U.S. Court of Appeals, Ninth Circuit, 9 December 1997 LaPine Technology Corp. v. Kyocera Corp. Available at: http://www.leagle.com/decision/19971014130F3d884_18 96 Cited as: LaPine case In § 29
U.S. COURT OF APPEALS, NINTH CIRCUIT
U.S. Court of Appeals, Ninth Circuit, 27 May 1998 Evolution Online Systems, Inc. v. Koninklijke Ptt Nederland NV et al. CISG-online 768, 97-7466 Cited as: Evolution case In § 127
U.S. COURT OF APPEALS, NINTH CIRCUIT
U.S. Court of Appeals, Ninth Circuit, 5 May 2003 Château des Charmes Ltd. v. Sabate USA Inc., Sabate SA CISG-online 767, 02-15727 Cited as: Wine corks case In § 161
U.S. COURT OFAPPEALS, NINTH CIRCUIT
U.S. Court of Appeals, Ninth Circuit, 29 August 2003 Kyocera v. Prudential Bache Trade Services Available at: http://www.leagle.com/decision/20031328341F3d987_11 223 Cited as: Kyocera case In § 29
U.S. COURT OF APPEALS, ELEVENTH CIRCUIT
U.S. Court of Appeals, Eleventh Circuit, 4 March 1985 Robert E. Hull v. Norcom, Inc. and Norman J. Kauffmann Available at: http://www.leagle.com/decision/19852297750F2d1547_1 2075 Cited as: Hull case In § 50
XXXVII
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
COURT OF APPEALS OF INDIANA, FOURTH DISTRICT
Court of Appeals of Indiana, Fourth District, 28 April 1986 Data Processing Services Inc. v. L.H. Smith Oil Corp. Available at: http://www.leagle.com/decision/1986806492NE2 d314_1778 Cited as: DPS case In § 108
U.S. DISTRICT COURT, CALIFORNIA (E.D.)
U.S. District Court, California (E.D.), 21 January 2010 Golden Valley Grape Juice and Wine, LLC v. Centris Corp. CISG-online 2089, CV F 09-1424 LJO GSA Cited as: Centrifuge case In § 161
U.S. DISTRICT COURT, CALIFORNIA (N.D.)
U.S. District Court, California (N.D.), 27 July 2001 Asante Technologies, Inc. v. PMC-Sierra, Inc. CISG-online 616, C 01-20230 JW Cited as: Asante case In § 171
U.S. DISTRICT COURT, NORTH CAROLINA (W.D.)
U.S. District Court, North Carolina (W.D.), 25 January 2006 Wachovia Securities, LLC v. Tonya M. Blankenship et al. Available at: http://nc.findacase.com/research/wfrmDocViewer.aspx/ xq/fac.20060125_0000132.WNC.htm/qx Cited as: Wachovia case In § 31
U.S. DISTRICT COURT, PENNSYLVANIA (M.D.)
U.S. District Court, Pennsylvania (M.D.), 16 August 2005 American Mint LLC v. GOSoftware, Inc. CISG-online 1104, Civ.A. 1:05-CV-650 Cited as: Mint case In § 175
SUPREME COURT OF APPEALS OF WEST VIRGINIA
Supreme Court of West Virginia, 11 December 1998 Orville Arnold and Maxine Arnold Plaintiffs v. United Companies Lending Corp. and Michael T. Searls Available at: http://www.leagle.com/decision/19981365511SE2d854_1 1348 Cited as: Arnold case In § 50
SUPREME COURT OF MINNESOTA
Supreme Court of Minnesota, 11 April 1963 XXXVIII
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
Suad A. Niazi et al. v. St. Paul Mercury Insurance Co. Available at: http://www.leagle.com/decision/1963487265Minn222_14 58.xml/NIAZI-v.-ST.-PAUL-MERCURY-INSURANCECO Cited as: Niazi case In § 58 SUPREME COURT OF NEW MEXICO
Supreme Court of New Mexico, 29 April 2009 Laura A. Cordova v. World Finance Corp. of New Mexico Available at: http://www.leagle.com/decision/In%20NMCO%2020090 430231 Cited as: Cordova case In § 50
SUPREME COURT OF TENNESSEE
Supreme Court of Tennessee, 31 August 2004 Sharon Taylor v. Douglas Butler and City Auto Sales Available at: http://www.leagle.com/decision/2004419142SW3d277_14 18 Cited as: Taylor case In § 50
SUPERIOR COURT OF NEW JERSEY
Superior Court of New Jersey, 1 February 1993 Duerlein v. New Jersey Automobile Full Insurance Underwriting Association Available at: https://www.courtlistener.com/njsuperctappdiv/cBki/due rlein-v-nj-auto-full-ins/ Cited as: Duerlein case In § 58
COURT OF APPEALS OF ARIZONA
Court of Appeals of Arizona, 7 August 1990 Stevens/Leinweber/Sullens, Inc. v. Holm Development and Management, Inc. Available at: http://www.leagle.com/decision/1990190165Ariz25_1186 Holm case In § 50
DISTRICT COURT OF APPEAL OF FLORIDA, FIFTH DISTRICT
District Court of Appeal of Florida, Fifth District, 22 December 1982 R.W. Roberts Construction Co., Inc., v. St. Johns River Water Management XXXIX
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
Available at: http://www.leagle.com/decision/19821053423So2d630_1 867 Cited as: Roberts case In § 50 INTERNATIONAL CHAMBER OF COMMERCE ICC AWARD NO. 2626 ICC Arbitral Award (1977) Case No. 2626 Cited as: ICC Case No. 2626 In § 11 ICC AWARD NO. 6752
ICC Arbitral Award (1991) Case No. 6752 Cited as: ICC Case No. 6752 In § 11
ICC AWARD NO. 6840
ICC Arbitral Award (1991) Case No. 6840 Cited as: ICC Case No. 6840 In § 11
ICC AWARD NO. 8203
ICC Arbitral Award (1996) Case No. 8203 Unpublished, commented in Train Cited as: ICC Case No. 8203 In § 62
ICC AWARD NO. 11256
ICC Arbitral Award (2003) Case No. 11256 Cited as: ICC Case No. 11256 In § 120
XL
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
STATEMENT OF FACTS 1
Hope Hospital (hereinafter RESPONDENT) is an Equatorianean university hospital and the national centre for cancer treatment and research. It treats 90% of the country’s cancer patients.
2
Innovative Cancer Treatment Ltd. (hereinafter CLAIMANT) is a Mediterranean corporation active in the field of cancer treatment devices. It is namely specialised in particle therapy.
3
On 13 January 2008, CLAIMANT and RESPONDENT (hereinafter together the Parties) concluded a Framework and Sales Agreement (hereinafter FSA) [ClaEx 2]. The FSA provided for the delivery of a complete proton therapy facility using passive scattering technology to RESPONDENT by CLAIMANT against payment of a purchase price of USD 50 million. RESPONDENT insisted during the negotiations on an appeal and review mechanism that would allow the review of an arbitral award by a state court. The proton therapy facility was completed on 15 April 2010.
4
On 6 May 2010, RESPONDENT contacted CLAIMANT about the conclusion of a Sales and Licensing Agreement for the joint development of the active scanning software (hereinafter SLA). It namely offered to provide CLAIMANT with medical data for the development of the necessary software and to conduct the clinical trials required to obtain official approval of this technology.
5
On 2 June 2011, during the negotiations, CLAIMANT mentioned that it had revised its standard terms, however, it promised that they would not contain any major change from their previous 2000 version, which governed the FSA, apart from the liability regime [ClaEx 9].
6
On 1 July 2011, an erroneous and unintelligible English translation of CLAIMANT’s 2011 standard terms was uploaded. CLAIMANT promptly removed this translation from its website on 4 July 2011. From then on and until after the conclusion of the SLA, the standard terms were solely available in Mediterranean. In a letter dated 5 July 2011, CLAIMANT’s representative Dr. Vis promised RESPONDENT that it would receive a perfect English translation of the standard terms before the conclusion of the SLA – a promise CLAIMANT failed to keep.
7
On 20 July 2011, the Parties concluded the SLA [ClaEx 6], under which RESPONDENT was required to pay USD 3.5 million instead of USD 9.5 million, given that USD 6 million of the purchase price were offset against the important provision of data by RESPONDENT.
8
On 20 May 2012, RESPONDENT had to stop using the active scanning technology due to severe software dysfunctions. It informed CLAIMANT that it would therefore withhold the final payments for both the FSA and the SLA. On 6 June 2013, CLAIMANT filed a Request for Arbitration at CEPANI, the Belgian Centre for Arbitration and Mediation. It claimed the outstanding parts of the purchase prices under both the FSA and the SLA. Hereafter, the present Arbitral Tribunal (hereinafter Tribunal) was constituted. 1
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
ARGUMENT ON THE PROCEDURAL ISSUES 9
RESPONDENT disputes the jurisdiction of this Tribunal [TermRef N6]. For the purposes of the arguments set out in this submission, the seat of arbitration is assumed to be Vindobona, Danubia [ProcOrd 1, N3(3)]. Given that the law at the seat of the arbitral tribunal, i.e. the lex arbitri, governs the arbitration [Born, p. 306; Poudret/Besson, p. 112], RESPONDENT will base its argument on the Danubian Arbitration Law for International Arbitration (hereinafter DAL). This shall, however, in no way be construed as RESPONDENT’s acceptance of this Tribunal’s jurisdiction.
10
The DAL is a verbatim adoption of the UNCITRAL Model Law on International Commercial Arbitration (hereinafter Model Law) with the 2006 amendments [ProcOrd 1, N3(3)]. According to Art. 16(1) DAL, an arbitral tribunal may rule “on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement,” which reflects the wellestablished principle of competence-competence [Bärtsch/Petti, N3.05; Berger, N20.33; Born, Cases, p. 219; Born, Law, p. 52; Derains/Schwartz, p. 111–112; Girsberger/Voser, N409]. Accordingly, this Tribunal is competent to decide on its own jurisdiction.
11
When ruling on its jurisdiction or absence thereof, a tribunal must decide whether there was a “meeting of the minds” between the parties to conclude an arbitration agreement, which is a question of substantive validity [Berger, Applicable Law, p. 302; cf. Brekoulakis, p. 359; Born, Law, p. 69; Lew/Mistelis/Kröll, N7.34]. The substantive validity of the arbitration clause is to be determined according to the law the parties chose to apply to the arbitration clause [Berger/Kellerhals, N374–375; Born, p. 426]. Absent a specific choice of law for the arbitration clause, the choice of law for the underlying contract extends to the arbitration clause [ICC Case No. 2626; ICC Case No. 6752; ICC Case No. 6840; Sonatrach Petroleum case; Union of India case; Abdulla, p. 17; Born, p. 426; Berger, N20–61; Bühler/Webster, N6.6; Lew, p. 143; Poudret/Besson, N178; Redfern, N3.12].
12
In the present case, the Parties did not expressly choose a specific law to apply to the arbitration clause. Hence, the question of whether the Parties validly agreed to submit disputes to arbitration will be determined according to the specific law chosen for the underlying contract.
13
Contary to CLAIMANT’s submission, the following will establish that this Tribunal lacks jurisdiction to hear claims arising out of the FSA (I) as well as the SLA (II). In any case, it is inadmissible to hear the claims arising out of the FSA and the SLA in a single arbitration (III).
I.
THIS TRIBUNAL HAS NO JURISDICTION TO HEAR CLAIMS ARISING OUT OF THE FSA
14
Art. 23(3) FSA contains an arbitration clause providing for arbitration under the CEPANI Rules with Vindobona, Danubia, as seat of the arbitration [ClaEx 2]. RESPONDENT submits that this 2
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
arbitration clause is void due to both the invalidity of the appeal and review mechanism (A) and CLAIMANT’s unilateral litigation right for payment claims (B). Furthermore, also Section 21 of the 2000 standard terms does not confer jurisdiction upon this Tribunal (C). A.
THE
APPEAL AND REVIEW MECHANISM OF
ART. 23(4) FSA
RENDERS THE ENTIRE
ARBITRATION AGREEMENT INVALID 15
The Parties agreed to subject arbitral awards to an appeal and review mechanism, which they included in Art. 23(4) FSA [ClaEx 2]. Contrary to CLAIMANT’s assertion [ClaM §§3 et seq.], RESPONDENT
submits that the appeal and review mechanism of Art. 23(4) FSA is invalid (1) and
that the entire arbitration agreement depends on the validity of Art. 23(4) FSA (2). 1.
The appeal and review mechanism of Art. 23(4) FSA is an invalid attempt to expand judicial review
16
Agreements allowing for a post-award review by a state court on the merits of a dispute can either be construed as an expansion of the statutory grounds for setting aside or as subjecting the finality of that award to certain conditions agreed on by the parties [Wolff, p. 626]. Both options compromise the finality of the award [Idem].
17
The Parties agreed on the following appeal and review mechanism in Art. 23(4) FSA: “The award shall be final and binding upon the Parties. Each Party has […] the right within three months after it has received the award to refer the case to the applicable state courts if it considers the award to be obviously wrong in fact or in law. The state court shall then have jurisdiction to review the case and to decide the issue in accordance with the applicable law” [ClaEx 2].
18
CLAIMANT argues that the appeal and review mechanism is a modification of the procedure for setting aside the award [ClaM §§3–5]. Alternatively, it could have submitted that Art. 23(4) FSA subjects the finality of the award to the condition that neither of the Parties introduces litigation within three months. It will be shown that the expansion of the grounds for setting aside is invalid (i). Furthermore, the Parties did not subject the finality of the award to a condition (ii). (i)
The appeal and review mechanism of Art. 23(4) FSA is an invalid expansion of the grounds for setting aside contained in Art. 34(2) DAL
19
The following will establish that Art. 23(4) FSA amounts to an expansion of the grounds for setting aside (a), that the expansion of the grounds for setting aside is invalid under the DAL (b), and that such an expansion must be rejected in order to safeguard the efficiency of arbitration (c).
3
UNIVERSITY OF FRIBOURG
(a)
MEMORANDUM FOR RESPONDENT
Art. 23(4) FSA does not correspond to the grounds for setting aside stated in Art. 34(2) DAL and thereby constitutes an expansion of judicial review
20
As CLAIMANT correctly submits, “the finality of an award depends on the law of the seat of arbitration” [ClaM §3]. The lex arbitri at the seat of the arbitration determines on what grounds an award can be challenged [Fouchard, N1194; Kirby, p. 121; Raghavan, p. 122; Redfern, N10.28]. Art. 34 DAL states that recourse against an arbitral award may be made only by an application for setting aside. If one of the parties makes such an application, the potentially competent state court only has jurisdiction to set the award aside if it was made on its territory [Fouchard, N1593; Lew/Mistelis/Kröll, N25.15; Redfern, N10.21]. Pursuant to Art. 1(2) DAL, only a Danubian court can set aside an award made in Danubia. Therefore, only the DAL determines whether an award rendered in this dispute can be set aside.
21
Accordingly, CLAIMANT’S enumeration of other leges arbitri than the DAL that allegedly contain grounds for setting aside allowing for “the possibility to appeal [against] ‘obviously wrong’ arbitral awards” [ClaM §3], are irrelevant when determining the finality of an award rendered in Danubia, as only the DAL is pertinent.
22
With regards to the DAL, the Parties’ agreement that a state court may set an award aside if it is “obviously wrong in fact or in law” [Art. 23(4) FSA, ClaEx 2], i.e. if it contains manifest errors of fact or law, amounts to an expansion of the grounds for setting aside for two reasons.
23
First, the DAL contains no provision that expressly allows the setting aside of arbitral awards on the grounds of manifest errors of fact or law.
24
Second, also beyond their express wording, none of the statutory grounds for setting aside contained in the DAL allows setting aside of an award based on manifest errors of fact and law [Car door case; John Holland case; Myers case; Transnacional case; Lew/Mistelis/Kröll, N25-33; Redfern, N10.68]. In particular, the public policy exception of Art. 34(2)(b)(ii) DAL, which holds that an award may be set aside if it “is in conflict with the public policy of Danubia” cannot be interpreted as providing for a review on the grounds of manifest errors of fact or law. Unanimous case law holds that the grounds for setting aside, in particular the public policy exception are to be “construed narrowly” [Transnacional case; cf. Deutsche Schachtbau case; Myers case; Quintette case; Born, p. 2563; Kröll, p. 179; Sexton/Kotrly, p. 212]. In order to violate public policy, an “award must fundamentally offend the most basic and explicit principles of justice and fairness” in the respective jurisdiction [Sexton/Kotrly, p. 217; cf. Soccer license case]. Only “extremely serious or egregious errors justify a setting aside of the award under the public policy ground” [Hwang/Lai, p. 5, emphasis added]. In the present case, CLAIMANT recognised that the appeal and review mechanism should allow
4
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
for review of an obviously erroneous award [ClaEx 3]. Thereby, the Parties’ intent as to the grounds for setting aside goes beyond the statutory grounds of Art. 34(2) DAL, in particular the public policy exception, which only allow setting aside on extremely narrow grounds. 25
Accordingly, the Parties’ agreement that an award may be set aside if it is “obviously wrong in fact or in law” [Art. 23(4) FSA, ClaEx 2], i.e. contains manifest errors of fact or law, constitutes an attempt to expand the grounds for setting aside. (b)
The Parties’ expansion of the grounds for setting aside in Art. 23(4) FSA is invalid under the DAL
26
CLAIMANT submits that an expansion of the grounds for setting aside is valid by referring to different Model Law jurisdictions as well as other jurisdictions. Art. 2 A DAL states, “in the interpretation of this Law, regard is to be had to its international origin and to the need to promote uniformity in its application”. Accordingly, the fact that Danubian courts have not yet addressed the validity of an expansion of judicial review [ProcOrd 2, N15] is irrelevant.
27
Contrary to CLAIMANT, the following will establish that such an expansion is, first, not valid under the DAL and, second, is – to the extent that non-Model Law jurisdictions can be taken into account – equally invalid.
28
First, Art. 34(2) DAL provides that an arbitral award may be set aside “only if” one of the six specified grounds is held to be fulfilled. Unanimous case law and doctrine related to the Model Law leave no doubt that this list of statutory grounds for setting aside is exhaustive and therefore cannot be expanded by an agreement between the parties [ABC case; Centrotrade case; Frampton case; Methanex case; Myers case; Quarella case; Born, p. 2562; Brekoulakis/Shore, p. 646; Chang, N3.72; Gharavi, p. 31; Gu, p. 487; Kröll, p. 176; Parliament of Australia, N46; Poudret/Besson, p. 788; Raghavan, p. 126; Williams, p. 20]. Not only the exclusionary terms of Art. 34(2) Model Law impose the exhaustive nature of the list of grounds for setting aside [Born, p. 2562], but also Art. 5 Model Law, which states that “[i]n matters governed by this Law, no court shall intervene except where so provided in this Law.” This provision is mandatory and, accordingly, parties may not derogate from it by expanding judicial review [Raghavan, p. 124–125; Williams, p. 8; Wolff, p. 635; cf. Noble China case]. The travaux préparatoires reaffirm this conclusion: “[T]he prevailing view, adopted by the Working Group, was that it was desirable to express the non-mandatory character in all provisions of the final text which were intended to be non-mandatory” [Holtzmann/Neuhaus, p. 1153]. In consequence, given that Art. 34 Model Law does not contain an indication such as “unless otherwise agreed by the parties,” it is a mandatory provision. To sum up, the expansion
5
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
of the grounds for the setting aside by party agreement is invalid under the Model Law pursuant to unanimous case law, doctrine and its drafting history and, accordingly, also under the DAL. 29
Second, this conclusion, contrary to CLAIMANT, is reaffirmed by case law from non-Model Law jurisdictions. CLAIMANT bases its submission on the U.S. LaPine case [ClaM §4]. In this decision, the Ninth Circuit Court of Appeals held that a court may set aside an award not only on the grounds listed in the Federal Arbitration Act (hereinafter FAA), i.e. the lex arbitri, but also on additional grounds if the parties provided so in their arbitration agreement [LaPine case]. However, the very same court, in a case related to the same dispute, came back on its own decision and held that “[p]rivate parties have no power to alter or expand those grounds, and any contractual provision purporting to do so is, accordingly, legally unenforceable” [Kyocera case]. More importantly, the U.S. Supreme Court subsequently ruled that the FAA as lex arbitri states an exhaustive list of grounds for challenging an award, thereby banning the parties from contractually expanding the grounds for setting aside [Hall Street case]. Furthermore, in an amicus brief submitted to the U.S. Supreme Court as recently as 16 January 2014, leading scholars and practitioners emphasised the exhaustive nature of the list of grounds for setting aside [Amicus brief, p. 6]. Not only U.S. courts, but also courts from other major arbitration fora reject the validity of an agreement between the parties expanding the exhaustive list of statutory grounds for setting aside, namely France [Buzzichelli case; Binate Maghreb case; Chefaro case; Franc, p. 218; Knull/Rubins, p. 547], Switzerland [A. v. B case; Antishock case; Fomento case; Product development case; Westinghouse case; X v. Z case; Arroyo, Art. 190 N 14; Furrer/Girsberger/Schramm, Art. 190 N3], China [Gu, p. 492], and the UK [Guangzhou case]. Accordingly, case law from non-Model Law jurisdictions confirms that the parties cannot expand the grounds for setting aside as stated in the lex arbitri.
30
In conclusion, the agreement that a Danubian court may set aside an arbitral award if it is “obviously wrong in fact or in law” [Art. 23(4) FSA, ClaEx 2], i.e. on the expanded grounds of manifest errors of fact and law, is invalid under the DAL. This is reaffirmed by substantial case law from non-Model Law jurisdictions. (c)
In order to safeguard the efficiency of arbitration, the expansion of the grounds for setting aside is to be rejected
31
The invalidity of an expansion of the grounds for setting aside is underlined by cost and time efficiency considerations: A court review of arbitral awards on the grounds of errors of fact and law would destroy “one of the great advantages of arbitration, which is to provide a speedy and efficient process for completing the adjudication of disputes in a single instance” [Moses, Party Agreements, p. 317; cf. Saxis Steamship case; Moses, p. 434; Smit, p. 152; Wasco, p. 615; Wolff, p. 639]. This is confirmed by substantive U.S. case law, submitting that a review of arbitral awards on fact 6
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
and law would compromise their finality and “transform a binding process into a purely advisory one, and ultimately impair the value of arbitration” [Postal Service case; Remmey case; Richmond case; Wachovia case; Westvaco case]. As it is submitted, “[p]arties agreeing on post-award state court review on the merits aim to utilize the traditional advantages of arbitration deriving from the finality of the award while avoiding the risks associated with any final decision. The parties cannot at the same time make use of arbitration and mistrust it” [Wolff, p. 640]. 32
In conclusion, the invalidity of the expansion of the grounds for setting aside does not only follow from the case law and doctrine relating to the Model Law as well as other leges arbitri, but is reaffirmed by the goal to maintain the time and cost efficiency of arbitration. (ii) In any case, CLAIMANT cannot rely on the German BGH case to hold Art. 23(4) FSA valid as an arbitration clause with conditional finality of the award
33
Alternatively to a modification of the procedure for setting aside an arbitral award, CLAIMANT could have submitted that Art. 23(4) FSA subjects an award to a conditional finality: During three months following the notification of the award, each Party could introduce litigation of the dispute. The award would only become final and binding if three months had passed without either of the Parties using its right to “refer the case to the applicable state courts” [Art. 23(4) FSA, ClaEx 2]. If one of the Parties introduced litigation, the award would be disregarded altogether without having to be set aside, and the state court would render a new decision on the dispute.
34
A singular decision rendered by the German BGH hints at the validity of arbitration clauses subjecting the finality of award to the non-introduction of litigation during a limited period of time [Wiesbaden case]. In this case, the arbitration clause provided that “[t]he parties could accept the decision as final and binding. A party unsatisfied with the outcome of these proceedings was entitled to bring a suit before the state courts within one month after the award has been rendered. In case of failure to observe this time limit, the award was deemed to be final and binding between the parties” [Wolff, p. 628]. Thereby, the finality of the award as such is agreed from the outset in the arbitration agreement, however, each party can opt out at its discretion and the clause provides “for a de novo review on the merits and thus establishes a second ‘first instance’ before the state courts” [Wolff, p. 627].
35
The court upheld the validity of the arbitration clause and the award [Wiesbaden case] – a decision which was subsequently criticised as “legally erroneous” [Wolff, p. 628], given that parties cannot use conditions to modify mandatory aspects of arbitration such as the finality of the award while still retaining the framework of arbitration [Wolff, p. 632; Smit, p. 150]. The decision is equally questionable in light of the trend within international commercial arbitration to “draw a clear
7
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MEMORANDUM FOR RESPONDENT
distinction between conciliation and arbitration” [Fouchard, N20], given that it creates a dispute resolution mechanism in between arbitration and conciliation [Wolff, p. 634]: An arbitration agreement with conditional finality of the award is closer to conciliation since the parties in fact agree (or disagree) with the proposed solution after the award is rendered [Idem]. 36
Even if assumed to be of relevance as to the interpretation of the DAL, the Wiesbaden decision cannot create validity of the appeal and review mechanism of Art. 23(4) FSA, as it cannot be applied to the facts of the present case. It will be shown that the Parties intended for the award to be unconditionally final and binding, unless set aside by the competent state court.
37
The clause in Wiesbaden provided that “[t]he arbitral award can be recognised by both Parties as ultimate, final and binding upon both Parties [unofficial translation, emphasis added],” whereas Art. 23(4) FSA states that “[t]he award shall be final and binding” [ClaEx 2, emphasis added]. Accordingly, the Parties provided for the award to become immediately binding, rather than stating that it merely could do so after a certain period of time. This is confirmed by the fact that the clause in Wiesbaden explicitly stated that “as of the expiration of this time limit, the award is considered final and binding upon the Parties” [unofficial translation], whereas Art. 23(4) FSA does not contain such a provision.
38
Furthermore, an interpretation of Art. 23(4) FSA as establishing a conditional finality of the award is contrary to the Parties’ intent. Multi-tier dispute resolution clauses are intended to precede the binding arbitration step with a non-binding mechanism of alternative dispute resolution, in order to promote a settlement between the parties [Born, Agreements, p. 100; cf. Berger, Escalation Clauses, p. 1]. Given that the Parties agreed on mediation in Art. 23(2) FSA [ClaEx 2] – mediation and conciliation being used as synonym terms pursuant to Art. 1(3) UNCITRAL Model Law on International Commercial Conciliation – they had already included a non-binding conciliation step in their multi-tier dispute resolution clause. It would have been contrary to the Parties’ interest in an efficient resolution of their disputes to add an additional non-binding step following negation [Art. 23(1) FSA] and conciliation [Art. 23(2) FSA].
39
Consequently, the Parties’ intent can only be construed as providing for the award to be final and binding from the outset. In any case, it is highly unlikely that a Danubian court would follow the German BGH in its controversial holding. Given that it is any arbitral tribunal’s aim to render an enforceable award [Boog/Moss; Lew, p. 145], this Tribunal is respectfully requested to abstain from validating Art. 23(4) FSA as a clause establishing a conditional finality of the award.
8
UNIVERSITY OF FRIBOURG
2.
MEMORANDUM FOR RESPONDENT
The validity of the entire arbitration agreement depends on the validity of Art. 23(4) FSA
40
CLAIMANT alleges that “[the a]rbitration clause remains in force even if the [appeal and] review mechanism is invalid” [ClaM §9]. Whilst RESPONDENT does not contest that, in general, invalid provisions may be severed from an arbitration agreement if this corresponds to the parties’ intent [ClaM §10], this condition is not fulfilled in the present case: RESPONDENT submits that it would not have agreed to arbitration at all without the appeal and review mechanism of Art. 23(4) FSA, thereby asserting a so-called conditio sine qua non.
41
Consistent case law holds that if the parties expand judicial review in their arbitration agreement, said entire agreement is invalid if the expansion of review constituted an essential element of the clause and the parties’ agreement to it, i.e. a conditio sine qua non [Diseno case; Binate Maghreb case; Schwartz, p. 110; Fouchard, N1596 et seq.]. The same applies under the Model Law, under which an arbitration agreement providing for an expansion of judicial review is entirely void if one of the parties agreed to arbitrate only under the condition of expanded review and such intent was expressed very clearly, i.e. formed the “bed rock” of the agreement to arbitrate [Raghavan, p. 123].
42
Whether or not and under which conditions the parties concluded an arbitration agreement is a question of substantive validity, which is to be determined according to the choice of law for the underlying contract [supra §11]. It is common ground between the Parties that, pursuant to Section 22 of the 2000 standard terms, the FSA is governed by the Mediterraneo Sale of Goods Act [ProcOrd 2, N20]. Given that the Mediterranean contract law corresponds to the UNIDROIT Principles of International Commercial Contracts (hereinafter PICC) [ProcOrd 2, N4], the PICC determines the substantive validity of the arbitration agreement concluded under the FSA [supra §11]. Pursuant to Art. 4.3(a) PICC, contracts, statements and other conduct made by a party are to be interpreted with regard to the preliminary negotiations between the parties.
43
In the present case, CLAIMANT, in a letter during the contract negotiations, referred to Art. 23 FSA as “taking account of [RESPONDENT’s] concern that as a public hospital it is accountable to Equatoriana’s tax payers” and recognised that RESPONDENT did not want to agree to “a dispute resolution clause according to which it could be bound by a decision of an arbitral tribunal that may be considered to be obviously wrong without having the opportunity to appeal against it” [ClaEx 3]. Thereby, CLAIMANT expressly acknowledged RESPONDENT’s conditio sine qua non, according to which it could only agree to arbitration with the possibility of requesting arbitral awards to be set aside on grounds of manifest errors of fact and law.
9
UNIVERSITY OF FRIBOURG
44
MEMORANDUM FOR RESPONDENT
This is not altered by the fact that RESPONDENT, “on a purely legal analysis, [was] not required by law to do so” [ProcOrd 2, N9]. RESPONDENT’s accountability to the Equatorianean taxpayers determined its voluntary intent to abide by the government circular that prohibits government entities from foregoing the right of appeal against manifestly wrong awards [ResEx 1].
45
In conclusion, RESPONDENT would not have agreed to arbitration without the possibility of challenging an award containing manifest errors of fact and law, which formed the “bed rock” of its agreement to arbitrate. The statutory grounds for setting aside of Art. 34(2) DAL do not provide for such a challenge [supra §20–25]. In light of the aforementioned, the invalid expansion of grounds for setting aside [supra §30] renders the entire arbitration agreement void. B.
IN ANY CASE, THE UNILATERAL LITIGATION RIGHT FOR PAYMENT CLAIMS IN FAVOUR OF CLAIMANT PRECLUDES THE VALIDITY OF THE ARBITRATION AGREEMENT
46
According to Art. 23(6) FSA, CLAIMANT “has the right to bring any and all claims relating to payments in the courts of Mediterraneo” [ClaEx 2]. RESPONDENT submits that this unilateral litigation right vitiates the arbitration clause of Art. 23(3) FSA.
47
If a unilateral litigation right is restricted to a limited category of claims, such as payment claims, it has to be considered a full unilateral litigation right. This is namely the case if the unilateral optional litigation right covers all possible claims of its beneficiary under the contract, e.g. if the beneficiary is only entitled to payment under the contract [Miner case].
48
In the case at hand, under the FSA RESPONDENT solely owes CLAIMANT the payment of the purchase price according to Art. 3 FSA [ClaEx 2]. Therefore, the unilateral litigation right for payment claims amounts to a full unilateral litigation right in favour of CLAIMANT.
49
CLAIMANT submits that its unilateral litigation right for payment claims is valid, since its invalidation “would manifestly interfere with the principle of party autonomy” [ClaM §16].
50
However, the principle of party autonomy is not absolute, but limited by other fundamental procedural principles of arbitration such as party equality [Kawharu, p. 498–499; cf. Lew/Mistelis/Kröll, N25.33]. Accordingly, dispute resolution clauses giving only one party the right to chose between either arbitration or litigation have been held invalid and therefore unenforceable due to their violation of party equality both by substantive case law [Arnold case; Cordova case; Holm case; Hull case; Roberts case; Sony Ericsson case; Taylor case] and doctrine [Fedurko/Sulamägi, p. 175; Izzo/Viscomi, p. 361; Kanae, p. 379; Kocon, p. 455; Tiborcz, p. 137; Vaidyanathan/Ichhaporia, p. 321–322; Wellmann, p. 299].
51
Namely, in a recent leading case, the Russian Supreme Court declared invalid a dispute resolution clause providing for arbitration and giving one of the parties the right to choose between arbitra10
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MEMORANDUM FOR RESPONDENT
tion and litigation [Sony Ericsson case; c.f. Archiyan; Nesbitt/Pugh/Rymko/Scard]. The court argued that “dispute resolution clause[s] cannot give the right to refer to a competent state court to only one party (the seller) under the Contract and deprive the second party (the purchaser) of equal rights” and that, “if such a clause is entered into, [it] will be invalid because it violates the balancing of the rights of the parties” [Sony Ericsson case; cf. Rothschild case; MCB case]. 52
CLAIMANT’s additional argument that the “unilateral jurisdictional clause is a result of arm’s length negotiations between the Parties“ [ClaM §17] is irrelevant, given that it merely implies that RESPONDENT was aware of the unilateral clause when concluding the FSA. As results from the above-referenced case law, the invalidity of such clauses stems from the resulting inequality between the parties, irrespective the Parties’ awareness thereof.
53
Art. 23(6) FSA creates a unilateral litigation right for payment claims in favour of CLAIMANT, in addition to the arbitration clause in Art. 23(3) FSA [ClaEx 2]. Due to a violation of party equality, the unilateral litigation right precludes the validity of the arbitration agreement. C.
IN ANY CASE, THIS TRIBUNAL HAS NO JURISDICTION FOR CLAIMS ARISING OUT OF THE FSA BASED ON THE ARBITRATION CLAUSE IN THE 2000 STANDARD TERMS
54
Given that the arbitration clause contained in Art. 23(3) FSA is void, CLAIMANT could have submitted that Section 21 of the 2000 standard terms would revive and that this Tribunal could have jurisdiction based on this clause.
55
Individually negotiated clauses prevail over contradicting provisions in standard terms [SchmidtKessel, Art. 8 N30, N64; Witz, N14; Vogenauer, Art. 4.2 N6]. Accordingly, if the individually negotiated clause is void, it could be argued that the contradicting standard terms clause revives, as there is no individually negotiated clause prevailing over it any longer.
56
Whether the parties concluded an arbitration agreement is a question of substantive validity and, in case of the FSA, must be determined according to the PICC [supra §42]. The parties’ intent must namely be determined by taking into account the pre-contractual negotiations [Art. 4.3(a) PICC].
57
During the negotiations of the FSA, RESPONDENT stated clearly that Section 21 of the 2000 standard terms was “not acceptable to it” [Ans N10]. Accordingly, the Parties included the appeal and review mechanism of Art. 23(4) in the FSA, without which RESPONDENT would not have agreed to arbitrate, as acknowledged by CLAIMANT [ClaEx 3; supra §45]. Even in the event that Art. 23(4) FSA would be invalid, RESPONDENT’s initial intent logically excludes the revival of Section 21 of the 2000 standard terms as this cause provides for arbitration without a possibility for challenging the award. 11
UNIVERSITY OF FRIBOURG
58
MEMORANDUM FOR RESPONDENT
In addition, for an arbitral tribunal to have jurisdiction over a dispute, it must be competent according to the arbitration agreement [Fouchard, N46]. If the parties determined a seat of the arbitral proceeding, the parties are bound to arbitrate according to the terms of their agreement [Duerlein case; Niazi case; Born, pp. 1004–1005], in particular at the agreed upon seat of arbitration [Born, pp. 1008–1009]. This implies that an arbitral tribunal seated in another state than the one chosen by the parties cannot have jurisdiction over the disputes.
59
As Section 21 of CLAIMANT’s 2000 version of the standard terms provides for arbitration in Mediterraneo [ClaEx 2], the current Tribunal seated in Danubia [TermRef N4] would, in any case, not have jurisdiction over the dispute. CONCLUSION: The invalidity of the review and appeal mechanism of Art. 23(4) FSA as well as the Claimant’s unilateral litigation right of Art. 23(6) FSA render the arbitration agreement of Art. 23(3) FSA void. Furthermore, also the arbitration clause in the 2000 standard terms does not create jurisdiction of this Tribunal for claims arising out of the FSA.
II. THIS TRIBUNAL HAS NO JURISDICTION TO HEAR CLAIMS ARISING OUT OF THE SLA 60
According to the preambles of both the FSA and the SLA as well as Art. 45 FSA, certain provisions of the FSA may also apply to the SLA [ClaEx 2; ClaEx 6]. RESPONDENT does not dispute that the Parties’ agreed on an incorporation of provisions of the FSA into the SLA, unless the SLA contains a “specific provision [...] contrary” to a corresponding clause of the FSA [Art. 45 FSA; ClaM §§19–20]. With regards to claims arising out of the SLA, CLAIMANT alleges that the Parties validly agreed on an alternative right to choose between litigation and arbitration, i.e. a socalled hybrid clause [ClaM §21].
61
CLAIMANT errs since Art. 23 FSA (the arbitration clause) and Art. 23 SLA (the litigation agreement) cannot be combined and accordingly, Art. 23 SLA is a specific provision contrary to Art. 23 FSA. Therefore, Art. 23 FSA does not apply to claims arising out of the SLA (A). Furthermore, given the invalidity of the arbitration clause of Art. 23 FSA [supra I.1.A. & B.], CLAIMANT
cannot rely on the arbitration clause of its 2011 standard terms, should they have been in-
cluded in the SLA, to create jurisdiction of this Tribunal for claims arising out of the SLA (B). A. 62
ART. 23 FSA DOES NOT APPLY TO CLAIMS ARISING OUT OF THE SLA
CLAIMANT submits that the arbitration clause contained in Art. 23 FSA applies to the SLA despite the litigation agreement of Art. 23 SLA [ClaM §22]. It argues on the basis of the ICC Case No. 8203 that Art. 23 SLA is not a specific provision contrary to Art. 23 FSA [ClaM §21]. How12
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MEMORANDUM FOR RESPONDENT
ever, CLAIMANT overlooks that the ICC Case No 8203 does not address the issue of combined arbitration and litigation clauses, i.e. hybrid clauses. In fact, the ICC Case No 8203 merely addresses the extension of an arbitration agreement to contracts that do not contain any dispute resolution clause, and accordingly, it is not pertinent to the present dispute. 63
In the following, RESPONDENT will establish that Art. 23 SLA and Art. 23 FSA are mutually exclusive clauses (1). RESPONDENT will further establish that, in any case, it was the Parties’ intent to submit disputes arising out of the SLA to litigation instead of arbitration (2). 1.
64
Art. 23 FSA and Art. 23 SLA are mutually exclusive clauses
It will be established that Art. 23 SLA is a “specific provision to the contrary” of Art. 23 FSA, thereby excluding its application on claims arising out of the FSA, for two reasons: First, the combination of arbitration and litigation clauses is generally invalid (i). Second, this general invalidity cannot be cured by an interpretation of the litigation agreement as a mere determination of the instance responsible for potentially required court intervention in an ongoing arbitration, i.e. supervisory jurisdiction (ii). (i)
65
The combination of arbitration and litigation clauses is generally invalid
If the parties conclude a valid arbitration agreement, its positive effect is to confer exclusive jurisdiction to an arbitral tribunal for all disputes arising out of a determined legal relationship [Born, p. 1005; Fouchard, N627; Frignani, p. 564]. This entails as a negative effect to exclude any state court’s jurisdiction over the disputes that might arise out of said legal relationship that it governs [Bernardini, p. 46; Born, p. 1020; Frignani, p. 564; Fouchard, N661; Gaillard/Banifatemi, p. 257; Gottwald, p. 33; Poudret/Besson, N367; Weigand, N44]. Accordingly, dispute resolution clauses granting both parties a choice between arbitration and litigation are necessarily pathological [Fouchard, N488, FN133; Frignani, p. 564].
66
The principle that hybrid clauses are invalid was only abandoned by state courts in singular cases relating to rare circumstances in which the dispute resolution clause clearly provided for an alternative choice between litigation and arbitration [Chu Kong case; Dai Yun Shan case]. As resorts from the analysis of these cases reflected in the Norse Air Charter case, only a “clear and unequivocal” language used by the parties can cure the inherent invalidity of a hybrid clause. Namely, the dispute resolution clause in Chu Kong provided that “all disputes arising under or in connection with this bill of lading shall, in accordance with Chinese law, be resolved in the courts of the People’s Republic of China or be arbitrated in the People’s Republic of China [emphasis added]”. In addition, both the litigation and the arbitration agreement were contained in the same clause within the same contract [Chu Kong case; Dai Yun Shan case].
13
UNIVERSITY OF FRIBOURG
67
MEMORANDUM FOR RESPONDENT
In the present case, Art. 23(3) FSA states that all disputes arising out of the FSA “shall become subject to arbitration, to be finally settled under the CEPANI Rules,” whilst Art. 23 SLA confers jurisdiction to the state courts of Mediterraneo and Equatoriana for “any and all claims”. The clauses do not refer to one another, let alone clarify the relationship between the litigation and the arbitration agreement. Moreover, they are neither contained in the same clause nor in the same contract. In fact, 3.5 years elapsed between the conclusion of the FSA and the SLA [ClaEx 2; ClaEx 6]. Therefore, the circumstances of the above-cited case law differ diametrically from the case at hand and accordingly, cannot create an exceptional validity of a hybrid clause.
68
In conclusion, Art. 23 FSA and Art. 23 SLA cannot coexist, because hybrid clauses are generally invalid and given that the specific circumstances exceptionally allowing for hybrid clauses are not fulfilled in the present case. (ii)
The general invalidity of hybrid clauses cannot, in the present case, be cured by interpreting the litigation agreement as a conferral of supervisory jurisdiction
69
State courts have attempted to salvage invalid hybrid clauses by reducing the litigation clause to a mere conferral of supervisory jurisdiction to the state courts at the seat of the arbitration [Axa Re case; Interserve case; McConnell Dowell case; Norse Air Charter case; Paul Smith case; Shell case]: In these cases, the courts upheld the validity of the agreement to arbitrate, since the selected litigation forum was identical with the selected seat of arbitration. The respective state courts agreed that the reduction of the litigation clause to an attribution of supervisory jurisdiction was only possible due to the identity between the seat of the arbitration and litigation forum [Idem].
70
In the present case, if the arbitration clause of Art. 23(3) FSA were valid, it would provide for arbitration in Danubia. The litigation agreement of Art. 23 SLA confers jurisdiction to the Mediterranean and Equatorianean state courts. Given that the seat of arbitration is not identical with the chosen litigation fora, the litigation agreement of Art. 23 SLA cannot be interpreted as a conferral of supervisory jurisdiction over the arbitral proceedings to the Mediterranean and Equatorianean state courts.
71
Given that hybrid clauses are generally not possible [supra §65] and given that the arbitration clause of Art. 23(3) FSA and the litigation agreement of Art. 23 SLA cannot be combined by a reduction of the litigation agreement to a conferral of supervisory jurisdiction to state courts, Art. 23 SLA is a “specific provision to the contrary” of Art. 23 FSA. Accordingly, Art. 23 FSA cannot apply to claims arising out of the SLA.
14
UNIVERSITY OF FRIBOURG
2.
MEMORANDUM FOR RESPONDENT
Alternatively, an incorporation of the arbitration agreement of Art. 23 FSA into the SLA is contrary to the Parties’ intent
72
If the Tribunal were to hold that Art. 23 FSA and Art. 23 SLA are not mutually exclusive, RESPONDENT will establish that a combination of the two clauses in a hybrid clause is contrary to the Parties’ intent of submitting claims arising out of the SLA exclusively to litigation.
73
A choice between arbitration and litigation for claims arising out of a contract – if assumed to be valid – may only be admitted if the parties expressed an intent to that effect [Fouchard, N484; Frignani, p. 565]. The determination of the parties’ intent is a question of substantive validity and thereby determined by the parties’ choice of law for the underlying contract [supra §11]. Following RESPONDENT’s submission [Ans N15–19] and as will be established further below [infra IV– VI], the SLA is governed by the PICC, which govern the substantive validity of an arbitration clause. Pursuant to Art. 4.2(2) PICC, statements and other conduct made by a party are to be interpreted according to the understanding of a reasonable person in the shoes of the other party [Vogenauer, Art. 4.2 N6]. Additionally, it is internationally acknowledged that unclear contract terms shall be interpreted against the party who drafted them, i.e. contra proferentem [Hyundai case; Baldus, p. 118; Fouchard, N479; Lewison, N7.08; Schmidt-Kessel, Art. 8 N49; Vogenauer, Art. 4.6 N1 et seq.]. This principle applies to individually negotiated contract provisions, if only one of the parties drafted them [Fouchard, N479].
74
Art. 23 SLA as well as Art. 23 FSA contain a complete dispute resolution clause, meaning that they cover the entirety of disputes arising out of the respective contracts. Likewise, both clauses are identically entitled and numbered with “Art. 23 Dispute Resolution” [ClaEx 2; ClaEx 6]. Given that Art. 23 FSA is a complete clause in itself, it would not have been necessary to introduce a new, complete dispute resolution clause into the SLA. Accordingly, RESPONDENT and any reasonable person in its shoes could only have understood Art. 23 SLA as “a specific provision […] contrary” to Art. 23 FSA, thereby excluding the latter from incorporation into the SLA.
75
This conclusion is not altered by the fact that CLAIMANT asserts for the first time in its Request for Arbitration that it only introduced the litigation clause of Art. 23 SLA to honour RESPONDENT’s
contribution to the development of active scanning technology [Req N21]: Only the time
of the conclusion of the SLA rather than subsequent assertions is decisive the Parties’ intent. 76
Moreover, since CLAIMANT’s legal team drafted the SLA [ProcOrd 2, N10], Art. 23 SLA must be interpreted against CLAIMANT, i.e. contra proferentem, and thus excludes arbitration under the SLA.
77
Accordingly, an incorporation of the arbitration clause of Art. 23 FSA into the SLA is contrary to the Parties’ intent to submit disputes under the SLA to litigation instead of arbitration.
15
UNIVERSITY OF FRIBOURG
B.
IN
ANY CASE, THIS
MEMORANDUM FOR RESPONDENT
TRIBUNAL
DOES NOT HAVE JURISDICTION BASED ON AN
ARBITRATION CLAUSE CONTAINED IN THE 2011 STANDARD TERMS 78
CLAIMANT seems to argue that this Tribunal would, in any case, have jurisdiction, by submitting that “[s]hould the Tribunal find that it does not have jurisdiction under the arbitration clause contained in Art. 23 of the [FSA], the agreement to arbitrate is still validly incorporated in the SLA by reference to the 2011 version of the Standard Terms” [ClaM §18]. RESPONDENT will establish further below that the 2011 standard terms were not included into the SLA [infra V.A.], thereby also excluding the arbitration clause contained therein. Even if the Tribunal were to follow CLAIMANT’s submission that Section 21 of its 2011 standard terms were incorporated into the SLA, the Tribunal nonetheless lacks jurisdiction for claims arising out of the SLA.
79
An arbitral tribunal at another seat than the one chosen by the parties cannot have jurisdiction over the dispute, given that the parties must arbitrate according to the terms of their agreement, namely at the chosen seat of the arbitration [supra §58].
80
In the present case, if Art. 23 FSA were not to apply to the SLA, there would be no individually negotiated arbitration clause that would entitle the Parties to request arbitration. Accordingly, CLAIMANT attempts to create jurisdiction for this Tribunal by arguing that Art. 23 SLA could be combined with the arbitration clause contained in the 2011 standard terms [ClaM §24–28].
81
Given that the 2011 standard terms provide for arbitration in Mediterraneo [ClaEx 9], and given that this Tribunal is seated in Danubia in accordance with Art. 23(3) FSA [TermRef N4], this Tribunal would, in any case, lack jurisdiction over claims arising out of the SLA. CONCLUSION: Art. 23 SLA is a specific provision contrary to Art. 23 FSA and therefore excludes this Tribunal’s jurisdiction for claims arising out of the SLA. Additionally, even if the 2011 standard terms were included into the SLA, the arbitration clause contained therein does not confer jurisdiction upon this Tribunal.
III. HEARING
THE CLAIMS ARISING OUT OF THE
FSA
AND THE
SLA
IN ONE
SINGLE ARBITRATION WOULD BE INADMISSIBLE 82
CLAIMANT submits that the claims should be heard in a single arbitration, given that they arise out of allegedly related contracts [ClaM §36] and that “nothing in the [FSA] and the SLA suggests that the parties had prejudice against a single set of proceedings” [ClaM §40].
83
As a preliminary matter, RESPONDENT emphasises that its submission on the issue of admissibility of multi-contract arbitration shall in no way be construed as an acceptance of the validity of any arbitration agreement. 16
UNIVERSITY OF FRIBOURG
84
MEMORANDUM FOR RESPONDENT
Contrary to CLAIMANT’s submission, establishing an effective consensus is a requirement for multi-contract proceedings to be admissible (A). This requirement is not met in the present case and accordingly, both claims cannot be heard in a single arbitration (B). A.
85
THE PARTIES’ CONSENT TO MULTI-CONTRACT ARBITRATION IS REQUIRED
Art. 10(1) CEPANI Rules states the following: “Claims arising out of various contracts or in connection with same may be made in a single arbitration. This is the case when the said claims are made pursuant to various arbitration agreements: a)
if the parties have agreed to have recourse to arbitration under the CEPANI Rules and [first requirement; emphasis added]
b)
if all the parties to the arbitration have agreed to have their claims decided within a single set of proceedings [second requirement; emphasis added].”
86
Whilst RESPONDENT disputes the validity of the arbitration clause of Art. 23(3) FSA [supra I.1.A. & B] as well as its extension to the SLA [supra II.A.], it does not contest that, irrespective of whether the clause and its incorporation by reference in the SLA are considered as one or two arbitration agreements, it provides for arbitration under the CEPANI Rules. Thus, RESPONDENT does not dispute that the first requirement of Art. 10(1)(a) CEPANI Rules is met.
87
With regards to the second requirement, the following will show that consent to multi-contract arbitration needs to be established, irrespective of the number of arbitration agreements (1). Also in the alternative, consent is required in the present case, given that an incorporation by reference is considered two arbitration agreements (2). 1.
Irrespective of the number of arbitration agreements, the Parties’ consent to multi-contract arbitration is required
88
CLAIMANT could have argued that the requirements for multi-contract arbitration of Art. 10(1)(a) and (b) only apply “when [the] claims are made pursuant to various arbitration agreements,” as stated in Art. 10(1) CEPANI Rules. Accordingly, it could have submitted that no particular requirements have to be fulfilled if various contracts are governed by one sole arbitration agreement instead of various arbitration agreements. RESPONDENT will establish that consent is required even if there would be only one arbitration agreement governing the FSA and the SLA.
89
First, this understanding corresponds to the precise wording of Art. 9 ICC Rules, requiring consent to multi-contract arbitration “irrespective of whether such claims are made under one or more than one arbitration agreement”. Given that the Belgian ICC Committee orchestrated the
17
UNIVERSITY OF FRIBOURG
MEMORANDUM FOR RESPONDENT
drafting of the new CEPANI Rules, the 2013 CEPANI Rules were based on the model of the 2012 ICC Rules [Verbist, p. 607]. Accordingly, the ICC Rules may serve as a background for interpretation of the provision on multi-contract proceedings under the CEPANI Rules. 90
Second, the number of arbitration agreements governing multiple contracts cannot be decisive as to whether consent is required or not. What is in turn important is the parties’ consent due to the contractual nature of arbitration [Born, p. 2104; Fry/Greenberg/Mazza, N3.343; Meier, N10]. Therefore, absent any effective consent and regardless of the number of arbitration agreements, an arbitral tribunal cannot join proceedings without having regard to the parties’ intent.
91
Thus, irrespective of the number of arbitration agreements, an effective consent of the parties is required under Art. 10(1) of the CEPANI Rules. 2.
92
In any case, there are two arbitration agreements in the present case
If this Tribunal were to decide, contrary to the aforementioned, that – if there were only one arbitration agreement – it has the discretion to hear the claims arising out of the FSA and the SLA in one proceeding, RESPONDENT submits that that there are two arbitration agreements in the present case. Thus, this Tribunal still has to establish the Parties’ consent to multi-contract arbitration.
93
If an arbitration agreement is incorporated into a contract by reference to another contract, the contracts are considered to contain each their own arbitration agreement [Meier, N11]. Accordingly, if the arbitration clause in Art. 23(3) FSA were valid and if it were to apply to the SLA, the FSA and the SLA would each contain an arbitration clause, thereby requiring consent of both Parties in order for multi-contract arbitration to be admissible. B.
94
RESPONDENT DID NOT CONSENT TO MULTI-CONTRACT ARBITRATION
In the present case, there is no indication whatsoever, neither in the FSA and the SLA nor in the negotiations between the Parties, as to consent to multi-contract arbitration. Thus, the Parties did not conclude an explicit agreement on the admissibility of multi-contract arbitration. Accordingly, the Tribunal would need to establish the Parties’ implied consent to multi-contract arbitration in order to hear both claims in one proceeding.
95
In the absence of an explicit agreement in the contract, the CEPANI Rules contain a so-called “red-flag” presumption in Art. 10(3), which provides that “[a]rbitration agreements concerning matters that are not related to one another give rise to a presumption that the parties have not agreed to have their claims decided in a single set of proceedings” [De Meulemeester]. The notion of “matters that are not related” signifies that the various contracts do not constitute a single economic transaction [Idem]. 18
UNIVERSITY OF FRIBOURG
96
MEMORANDUM FOR RESPONDENT
In order for different contracts to be qualified as constituting a single economic transaction, they must be interrelated [Leboulanger, p. 46; Train, N18]. Specifically, Leboulanger requires that the different contracts form an “indivisible transaction [...] that actually amounts to one fundamental single relationship” [Leboulanger, p. 46; cf. Hanotiau, N355]. An example is the sale of a piece of real estate between two parties comprised of a sales contract, a financing agreement and a mortgage agreement [Idem]. The obligations are interrelated since they arise out of one overall synallagmatic agreement, meaning that one obligation arising out of one contract is performed in exchange for the performance of an obligation out of another contract [Hanotiau, N355; Leboulanger, p. 47]. When successive contracts simply are of the same nature and concluded between the same parties, this does not suffice to consider them as linked [Hanotiau, N219; Train, N20].
97
Moreover, when determining whether the contracts constitute a single economic transaction, the time difference between the contracts must be taken into account: If the contracts were concluded at the same time and relate to the same purpose, a single economic transaction between the contracts is likely [Fry/Greenberg/Mazza, N3-249]. However, where the dates of the conclusion of the contracts are far apart, an interrelation between the contracts in the sense of a single economic transaction cannot be easily assumed [Idem].
98
In the case at hand, the FSA was concluded on 13 January 2008 [ClaEx 2] and, according to CLAIMANT’s letter, covered the sale of “a complete proton therapy facility” [ClaEx 3, emphasis added] – thereby confirming that the FSA did not depend on the conclusion of an eventual future contract. The SLA was concluded on 20 July 2011 and provided for the sale of the active scanning technology as well as the construction of an additional treatment room [ClaEx 6]. Accordingly, a time difference of 3.5 years, i.e. 42 months, seperates the conclusion of the two contracts, which were not synallagmatic, as no obligation under the FSA was performed in exchange with the performance of an obligation under the SLA or vice-versa. Therefore, the FSA and the SLA are non-related contracts in the sense of Art. 10(3) CEPANI Rules, thus giving rise to the presumption that it was the Parties’ intent, when the SLA was concluded, not to consent to multi-contract arbitration. In line with this presumption, RESPONDENT disagreed to multi-contract arbitration from the very outset of the dispute [Ans N12 et seq.].
99
Considering that, first, there is no explicit agreement between the Parties to submit disputes arising out of the FSA and the SLA to a multi-contract arbitration, and that, second, the Parties are, pursuant to Art. 10(3) CEPANI Rules, presumed not to have wanted their claims arising out of both contracts heard in a single proceeding. Claimant failing to rebut this legal presumption, there is no consent to multi-contract arbitration.
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CONCLUSION: Given that the Parties neither explicitly nor implicitly consented to hearing the claims arising out of the FSA and the SLA in one proceeding, the second requirement of Art. 10(1)(b) CEPANI Rules is not fulfilled, and this Tribunal is requested to deny the admissibility of multi-contract arbitration in the present case.
ARGUMENT ON THE SUBSTANTIVE ISSUES 100
In the present case, it is common ground between the Parties that the FSA is governed by the Mediterraneo Sale of Goods Act [ProcOrd 2, N20]. In turn, the law applicable to the SLA is disputed. Whilst CLAIMANT alleges that the CISG applies to the SLA [ClaM §44], RESPONDENT will establish that the CISG does not apply to the SLA on several grounds. Pursuant to Procedural Order No. 2, RESPONDENT will not address the claims on the merits at this point of the proceedings [ProcOrd 2, N1].
101
First, the SLA does not qualify as a contract on the sale of goods in the sense of the CISG (IV). Furthermore, the choice of law clause contained in the 2011 standard terms was not included in the SLA (V) and the Parties chose Mediterranean domestic sales law to apply to the SLA (VI).
IV. THE SLA DOES NOT QUALIFY AS A CONTRACT ON THE SALE OF GOODS 102
The SLA provided for CLAIMANT to deliver an additional treatment room with active scanning technology [ClaEx 6]. This included the delivery of the magnets for the use of the active scanning technology, construction work and construction materials for the additional treatment room and the training of RESPONDENT’s staff [ClaEx 6; ResEx 3]. However, the SLA was mainly concerned with the development of the necessary software by CLAIMANT, which also had to provide further services, namely installation support, testing and fine-tuning [ResEx 3; ProcOrd 2 N29].
103
A sales contract is defined as the delivery of goods against payment of the purchase price [Mistelis, Art. 1 N25; Westermann, Art. 1 N6].
104
CLAIMANT erroneously contends that the SLA qualifies as a contract on the sale of goods in the sense of Art. 1(1) CISG and that software qualifies as a good [ClaM §45]. Furthermore, it alleges that the SLA was only concerned with the sale of tangible hardware and, in any case, was not predominantly concerned with the provision of services by CLAIMANT [Idem].
105
The following will establish that the software is not a good, which was, in any case, not sold (A). Further, given that the central element of the SLA, namely the development of the software, qualifies as a service, the SLA is predominantly concerned with the provision of services (B).
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A. 106
MEMORANDUM FOR RESPONDENT
THE DEVELOPED SOFTWARE IS NOT A GOOD AND WAS, IN ANY EVENT, NOT SOLD
RESPONDENT will establish that, contrary to CLAIMANT’s submission [ClaM §52], the software for the use of the active scanning technology is not a good in the sense of the CISG (1). Should this Tribunal rule otherwise, RESPONDENT respectfully requests that it finds that the software was not subject to a sale (2), thus precluding the application of the CISG to the development of the software. 1.
107
The software downloaded by CLAIMANT is not a good under the CISG
CLAIMANT alleges that the software it delivered, which was partly installed on the hardware but mostly downloaded by its engineers, qualifies as a good in the sense of the CISG [ClaM §§53–63].
108
It is established that principally only movable, tangible objects qualify as “goods” in the sense of Art. 1 CISG, thereby excluding intangibles [Market study case; Mistelis, Art. 1 N37 et seq.; Schwenzer/Hachem, Art. 1 N16]. Computer software in itself is intangible, because it consists of a certain arrangement of information that manages and controls hardware [St. Albans case]. In this respect, software can be compared to the information contained in an operating manual [Idem]. Although the information itself is not a good, the fact that it is contained in the book, i.e. its tangible support, allows for the application of sales law [Idem]. Thus, computer software can only be regarded as a good if it has a tangible support [DPS case; Graphiplus case; Achilles, Art. 1 N4; Brunner, Art. 2 N4; Cox, NII.A; Ferrari, Applicabilité, p. 95 et seq.; Ferrari/Schlechtriem, Art. 1 N38; Sono, p. 520 et seq.; Westermann, Art. 1 N6].
109
When software is downloaded, no tangible support is passed, but only the information is transferred from one computer to the other [Mowbray, p. 129 et seq.; Sono, p. 521]. Given that information is moved from the provider to the receiver without supporting hardware, software lacks a tangible support at the time of the transfer via download. This is contrary to the approach followed by the CISG, which “clearly contemplates the transfer of tangible goods from one party to the other” [Mowbray, p. 129 et seq.]. Therefore, software transferred online cannot be regarded as a good providing for the application of the CISG [Sono, p. 521].
110
In the present case, CLAIMANT did not provide the main part of the software on a tangible support, but only a small part of the software was pre-installed on the hardware delivered to RESPONDENT
[ProcOrd 2, N23]. Thus, the major part of the software had to be installed and down-
loaded by CLAIMANT’s engineers, partly from CLAIMANT’s server and partly from the engineers’ computers before the active scanning technology became operable [Idem]. 111
As a consequence, the downloaded software is not a good in the sense of the CISG, which does therefore not apply to the software delivered by CLAIMANT. 21
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2. 112
MEMORANDUM FOR RESPONDENT
In any case, the software was not sold to RESPONDENT
Should the Tribunal find that the software developed by CLAIMANT qualifies as a good in the sense of the CISG, the application of the CISG is nonetheless excluded given that the transaction regarding the software is not a sale for several reasons.
113
First, the offset of the price for the software with RESPONDENT’s contribution precludes the application of the CISG (i). Second, RESPONDENT provided a substantial part of the materials necessary for the development of the software (ii) and third, given that the software was customised, the CISG does not apply (iii). Fourth and last, the particular license granted to RESPONDENT
(i) 114
excludes the application of the Convention (iv). The offset of the price for the software precludes the application of the CISG
RESPONDENT submits that the Parties’ agreement regarding the payment of the price for the development of the software precludes the application of the CISG.
115
A sales contract in the sense of the CISG implies the monetary payment of the purchase price, as results from Art. 53 CISG [Barter case; Ferrari/Schlechtriem, Art. 1 N30; Mistelis, Art. 1 N25; Westermann, Art. 1 N6]. Thus, the delivery of goods against a non-monetary counter-performance is not a sales agreement encompassed by the CISG. Therefore, the Convention does not apply to a contract in which the seller accepts that the value of the goods delivered is to be offset, wholly or partially, in return for a counter-delivery by the buyer, i.e. a compensation agreement [Ferrari/Schlechtriem, Art. 1 N30; Magnus/Staudinger, Art. 1 N30; Maskow, Art. 53 N2.5; Saenger, Art. 1 N4]. Similarly, the CISG does also not apply to barter agreements and gifts [Magnus/Staudinger, Art. 1 N29–32; Saenger, Art. 1 N4; Schlechtriem/Butler, N24; Westermann, Art. 1 N6].
116
It is common ground between the Parties that the market value of the goods and services provided by CLAIMANT under the SLA amounted to USD 9.5 million [ResEx 3]. The Parties agreed that, since RESPONDENT’s provision of data was crucial for the development of the software, CLAIMANT would charge RESPONDENT only for the materials [ResEx 3; ProcOrd 2, N27]. The latter’s contribution to the development of the software was therefore attributed a value of USD 6 million and offset against a part of the original purchase price of USD 9.5 million, thus resulting in a final purchase price of USD 3.5 million to be paid by RESPONDENT [Idem]. The main obligation under the SLA, i.e. the development and provision of the active scanning software, has not been countered with monetary payment.
117
Therefore, the Parties’ agreement regarding RESPONDENT’s obligation in return for the delivery of the software entails that the SLA is a compensation agreement. Since the development of the software was paid by the offset of RESPONDENT’s contribution of data, the CISG does not apply. 22
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(ii)
MEMORANDUM FOR RESPONDENT
RESPONDENT provided a substantial part of the data for the development of the software by CLAIMANT
118
RESPONDENT submits that, since it provided CLAIMANT with data that was crucial to the development of the software, the CISG does not apply in the case at hand.
119
Pursuant to Art. 3(1) CISG, “[c]ontracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production.” Whether the buyer’s contribution qualifies as substantial has to be examined on a case-by-case analysis: the economic value as well as the importance of the buyer’s contribution for the end product must be taken into account [Production equipment case; Ferrari/Schlechtriem, Art. 3 N8; Huber/Mullis, p. 44 et seq.; Schwenzer/Hachem, Art. 3 N7].
120
When comparing the economic value of the buyer’s contribution to the price of the end product, authors acknowledge that, if the contribution amounts to 40% and even 15% of the economic value of the product, it has to be regarded as substantial [Honnold, N59; Lorenz, Art. 3 N3; Westermann, Art. 3 N4]. Further, the “essentiality” of the buyer’s contribution for the final product must also be taken into account, as is reflected in the French text of Art. 3(1) CISG, that refers to a “part essentielle” [Ferrari/Schlechtriem, Art. 3 N8]. For example, in the ICC Case No. 11256, the buyer’s contribution, namely the provision of motors for the production of vehicles, was considered essential, i.e. substantial, given that the vehicle is useless without the motor. Equally, immaterial contributions, such as design specifications, can be regarded as “materials” used for the production of the goods according to Art. 3(1) CISG [Connectors case; Diedrich, software, p. 65].
121
If the Tribunal were to hold that software is a good, its development has to be regarded as the production of said good in the sense of Art. 3(1) CISG [Cephalo pro case; Diedrich, p. 336 et seq.; Green/Saidov, p. 171 et seq.]. In order to develop software, data and intellectual work of a designer are required [Mistelis/Raymond, Art. 3 N23; Schwenzer/Hachem, Art. 1 N18]. If the buyer supplies the seller with data in order to produce software, it must be examined whether this contribution is substantial in order to establish the applicability of the CISG [Diedrich, software, p. 65].
122
In the case at hand, RESPONDENT provided CLAIMANT with medical data for a total value of USD 6 million, despite its market value of USD 1.5 million [ProcOrd 2, N27]. The relevant value is the actual price paid by CLAIMANT, which best reflects the “economic value” of the contribution to the Parties. The overall economic value of the development of the software amounted to USD 3.5 million [ProcOrd 2, N29(a)]. Hence, when considering RESPONDENT’s contribution in terms of mere economic value, the data provided was worth almost twice the value of the develop-
23
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MEMORANDUM FOR RESPONDENT
ment of the software, i.e. 171%, and thus excludes the application of the CISG pursuant to Art. 3(1) CISG. Even considering the market value of RESPONDENT’s contribution of USD 1.5 million, it still amounted to 43% of the development costs, thus meeting the threshold of 40%. 123
Furthermore, without the data provided by RESPONDENT, CLAIMANT would not have been able to develop functioning software [ProcOrd 2, N28]. RESPONDENT’s contribution was thus essential, i.e. substantial, for the development of the software by CLAIMANT. RESPONDENT’s contribution is all the more important for the development of the software, given that already during the negotiations of the FSA CLAIMANT considered obtaining RESPONDENT’s expertise and data for the development of the active scanning technology [ReqArb N9; ClaEx 4]. Before concluding the SLA, CLAIMANT did apparently not find a different hospital that could provide it with the necessary data in order to complete its software.
124
Consequently, RESPONDENT’s contribution to the development of the software has to be considered substantial, both considering its economic value and its essentiality for the end product. Therefore, Art. 3(1) CISG precludes the application of the Convention to the development of the software by CLAIMANT. (iii) The customisation of the software precludes the application of the CISG
125
CLAIMANT alleges that it created standard software, thus providing for the application of the CISG [ClaM §§64–65]. Furthermore, although not submitted by CLAIMANT, it could have argued that no distinction between standard and customised software is to be made. RESPONDENT submits that the software was customised, which precludes the applicability of the CISG.
126
Custom-made software, as opposed to standard software, is generally defined as software developed for the particular needs of a specific buyer [Green/Saidov, p. 171; Mowbray, p. 127]. In case of custom-made software, the main obligation of the party providing the software is the supply of services, given that it has to provide intellectual work in order to develop software adapted to the very needs of his client, contrary to the mere delivery of a good in case of standard software [Ferrari, Applicabilité, p. 95 et seq.; Ferrari/Schlechtriem, Art. 1 N38; Lorenz, Art. 1 N6; Magnus/Staudinger, Art. 1 N44; Saenger, Art. 1 N7; Westermann, Art. 1 N6]. Accordingly, the contract is a contract of service rather than a sales contract. This corresponds to the position taken by the UNCITRAL Working Group on Electronic Commerce, according to which the CISG does not apply to the sale of custom-made software [UNCITRAL Working Group, N25]. Substantive case law calls for the application of the CISG to standard software only and excludes its application to customised software [Chip case; Computer case; Evolution case; Graphiplus case; Module T case].
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127
MEMORANDUM FOR RESPONDENT
In the case at hand, the software delivered to RESPONDENT must be distinguished from the one sold to the two other hospitals [ReqArb N17]. The software sold to RESPONDENT was the first developed by CLAIMANT for the use of the active scanning technology [ProcOrd 2, N24]. The main objective of this prototype software was to obtain the approval of the Medical Certification Authority through the “joint efforts” of the Parties [ClaEx 5; cf. ClaEx 4; Art. 10(2) SLA, ClaEx 6]. The modelling software developed by CLAIMANT was therefore “developed particularly for [RESPONDENT’s] needs,” as admitted by CLAIMANT itself [ClaEx 5; ProcOrd 2, N24]. This is all the more the case, given that the software was developed with data provided by RESPONDENT and specifically developed to interact with the software controlling RESPONDENT’s proton accelerator [ProcOrd 2, N22, 24].
128
The fact that the software was subsequently delivered to two other customers does not imply that it is standard software. Although the two software packages were “largely comparable to that sold to RESPONDENT” [ReqArb N17], the difference lies in the fact that the software provided to RESPONDENT
was the very first software of its type developed by CLAIMANT and would serve as
precursor for the one it would subsequently put on the market, for which then no designing was needed anymore [ReqArb N9; ClaEx 4; ClaEx 5]. 129
Consequently, CLAIMANT developed customised software for the use of the active scanning technology for RESPONDENT’s specific needs. Thus, the development of the software consisted in the provision of services rather than in the delivery of a good. Since the CISG does not apply to contracts in which the main obligation consists in the provision of services, the development of customised software by CLAIMANT precludes the application of the CISG. (iv) The licensing of CLAIMANT’s software does not amount to a sale
130
Although not raised by CLAIMANT, it could have argued that the licensing of the software amounts to a sale. RESPONDENT submits that, in the present case, the software was merely licensed and not sold.
131
It is established that a licensing agreement constitutes a sale under certain conditions: First, the right to use the software must be permanently transferred, and second, the licensee must make a single payment, i.e. pay a one-off fee [Larson, p. 466 et seq.; Newhouse/Tanaka, p. 12; Primak, p. 221; Schlechtriem/Butler, N32b; Schwenzer/Hachem, Art. 1 N18]. With regards to the purchase price, the ECJ ruled in the Oracle case that a licensing agreement only amounts to a sale if the price paid by the acquirer of the copy of computer software consists in “a remuneration corresponding to the economic value of the copy of the work of which [the licensor] is the proprietor” [Oracle case]. It follows that the licensing agreement concluded by the parties cannot be regarded as a sale
25
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MEMORANDUM FOR RESPONDENT
when the purchase price does not correspond to the economic value of the copy of the software, even if the two above-mentioned conditions are met [Idem]. 132
In the present case, as explicitly stated in Art. 2 SLA, RESPONDENT acquired the right to use the software developed by CLAIMANT, whereas the latter retained all intellectual property rights over the software and could sell it under its own name, pursuant to Art. 11 SLA [ClaEx 6].
133
In order to reach an affordable price for RESPONDENT, the Parties agreed to reduce the purchase price of the SLA from its actual economic value of USD 9.5 million to USD 3.5 million [ResEx 3]. The economic value for the development of the software, its installation, fine-tuning and testing amounted to a total market value, i.e. economic value, of USD 4.75 million [ProcOrd 2, N29]. Accordingly, the purchase price of USD 3.5 million paid by RESPONDENT does not only cover the purchase of the software, whose value alone is higher than this purchase price, but also the hardware, the staff training and the construction work [ResEx 3]. Consequently, the purchase price of USD 3.5 million under the SLA does not reflect the actual economic value of the copy of the software acquired by RESPONDENT. Pursuant to the Oracle decision, such a licensing agreement does not amount to a sale, thus precluding the application of the CISG. B.
134
THE SERVICE ELEMENT IS PREPONDERANT UNDER THE SLA
According to Art. 3(2) CISG, the Convention does not apply to mixed contracts in which the seller’s obligation consists predominantly in the provision of labour or other services [Schlechtriem/Butler, N27a; Siehr, Art. 3 N7]. A contract is predominantly concerned with the provision of services when the economic value of said services amounts to more than 50% of the contract’s entire economic value [CISG-AC Op. 4, N3.3 et seq.; Ferrari/Schlechtriem, Art. 3 N13, 15; Schroeter, Applicability, p. 77; Schwenzer/Hachem, Art. 3 N20].
135
CLAIMANT alleges that the CISG applies to the SLA, since it is predominantly concerned with the sale of goods [ClaM §51]. In its view, the only service element is the training of RESPONDENT’s staff for the use of active scanning technology, which only amounts to 10% of the contract’s whole economic value [Idem]. In the following, RESPONDENT will establish that, contrary to CLAIMANT’s submission, the SLA is predominantly concerned with the provision of services, thus precluding the application of the CISG.
136
The delivery of construction materials can only be considered a sale of goods if the materials are movable at the time of delivery [Ferrari/Schlechtriem, Art. 1 N35]. The construction of fixtures, e.g. buildings, therefore represents a service and is not encompassed by the CISG [Herber, Art. 1 N23; Mistelis, Art. 1 N39; Schwenzer/Hachem, Art. 1 N17]. As previously demonstrated, the development and licensing of customised software with data provided by the ordering party does not consti-
26
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MEMORANDUM FOR RESPONDENT
tute a sale of goods [supra IV.A.]. Furthermore, it is admitted that, if the delivering party additionally provides installation support, staff training and undertakes to fine-tune the software, these elements represent services [Software case; Mistelis/Raymond, Art. 3 N24]. 137
In the case at hand, it is common ground between the Parties that the SLA’s overall economic value was of USD 9.5 million [Art. 3 SLA, ClaEx 6; ResEx 3]. Contrary to CLAIMANT’s submission [ClaM §§46–48], its scope of delivery did not only include the magnets, but also the development, installation, testing and fine-tuning of the software, the training of RESPONDENT’s staff as well as construction materials and work [Art. 2 SLA, ClaEx 6]. The only eventual sales element under the SLA is the provision of the tangible goods by CLAIMANT, i.e. the magnets [Art. 2 SLA, ClaEx 6; ResEx 3]. Said magnets only represented 20% of the overall economic value of the SLA [Ans N19; ResEx 3].
138
On the other hand, the service elements under the SLA include the development, installation, testing and fine-tuning of the software by CLAIMANT, the construction of the additional treatment room and the training of RESPONDENT’s staff [ResEx 3]. These elements combined represent 80% of the SLA’s overall economic value, i.e. USD 7.6 million.
139
Consequently, the service element under the SLA largely exceeds 50% of the contract’s entire economic value, meaning that the service elements are predominant under the SLA. As a consequence, the CISG does not apply to the latter. CONCLUSION: Given that the development, licensing and download of customised software by CLAIMANT do not represent a sale of a good in the sense of the CISG, the SLA is predominantly concerned with the provision of services, thus precluding the application of the CISG.
V.
THE CHOICE OF LAW CONTAINED IN THE 2011 STANDARD TERMS WAS NOT INCLUDED IN THE SLA
140
It will be established that, contrary to CLAIMANT’s submission [ClaM §67], Section 22 of CLAIMANT’s
2011 standard terms was never included in the SLA. RESPONDENT submits that the 2011
standard terms never became part of the SLA (A). In the alternative, it contends that the choice of law clause contained therein is a surprising clause, and thus not binding for RESPONDENT (B). A. 141
THE 2011 STANDARD TERMS WERE NOT INCLUDED IN THE SLA
CLAIMANT acknowledges that standard terms are incorporated under the CISG if the following conditions are met [ClaM §66]: First, the offeror must clearly express his intent to incorporate the standard terms into the contract and, second, he must transmit them or make them available in another way to the offeree during the negotiations [Car phone case; Machinery case; Mirrors case; Seeds 27
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MEMORANDUM FOR RESPONDENT
case; Ferrari, Art. 14 N40; Kruisinga, p. 350 et seq.; Magnus/Staudinger, Art. 14 N41a; Schroeter, Art. 14 N40 et seq.]. In the Machinery case, the German BGH ruled that, due to the differences between the many legal systems worldwide, standard terms vary considerably from one country to another. These legal differences justify that stricter requirements are to be met in international trade than in domestic law in order for standard terms to become part of a contract [Gruber, Art. 14 N29; Huber/Mullis, p. 30 et seq.; Lookofsky, p. 156]. 142
Furthermore, it is much easier for the offeror to transmit his standard terms, which generally favour him, to the other party than it is for the latter to inquire about them [Machinery case; Schroeter, Art. 14 N41]. It would be contrary to the principle of good faith in international trade as well as to the general obligations of cooperation and information of the parties, if the addressee were to be bound by standard terms whose content he could not be aware of when concluding the contract [Machinery case; Plants case]. For this reason, the offeror has to make his standard terms available before the conclusion of the contract [Schroeter, Art. 14 N59]. Contrary to CLAIMANT’s submission [ClaM §89], the offeree has no duty to actively inquire about the offeror’s standard terms [Bricks case; Machinery case; Plants case; Rubber case; Sour cherries case; Trade usage case; Magnus, p. 319 et seq.; Mankowski, Pre Art. 14 N30; Piltz, standard terms, p. 235].
143
In the present case, RESPONDENT does not dispute that it knew that CLAIMANT intended to include its 2011 standard terms in the SLA, since the issue was mentioned at the Parties’ final meeting of 2 June 2011 [ClaEx 5; ProcOrd 2, N31]. However, the 2011 standard terms were shortly online on CLAIMANT’s website in poor English from 1 to 4 July 2011 [ResEx 2; ProcOrd 2, N32]. After their removal by CLAIMANT, only a Mediterranean version of the 2011 standard terms was published on its website [Idem]. A good English translation was only uploaded after the conclusion of the SLA on 20 July 2011, namely on 21 July 2011 [Idem].
144
In the following, RESPONDENT will establish that CLAIMANT failed to make the 2011 standard terms available to it (1). Additionally, RESPONDENT contends that the standard terms were not subsequently incorporated into the SLA (2). 1.
145
CLAIMANT failed to make the 2011 standard terms available to RESPONDENT
According to CLAIMANT, the fact that RESPONDENT had the opportunity to access a poor English translation of the 2011 standard terms on CLAIMANT’s website from 1 to 4 July 2011 leads to their incorporation into the SLA [ClaM §70].
146
In the following, RESPONDENT will establish that the 2011 standard terms were never made available to it, since CLAIMANT only provided a link to its website (i). In any case, should the Tribunal find that the link directing to the poorly translated English version of the 2011 standard
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MEMORANDUM FOR RESPONDENT
terms was sufficient, a publication of four days on the internet cannot be considered a reasonable opportunity to gain knowledge of the standard terms (ii). Furthermore, the terms were, prior to the conclusion of the SLA, never published in a language RESPONDENT could understand (iii). (i)
The mere reference to CLAIMANT’s website is not sufficient to make the 2011 standard terms available to RESPONDENT
147
It is admitted that in case a contract is not concluded electronically, i.e. via email or on a website, a mere reference to the offeror’s website on which the standard terms are published is not sufficient in order to make them available to the addressee [Recorders case; Ferrari, Art. 14 N40; Kruisinga, Incorporation, p. 76; Magnus, p. 320; Mankowski, Pre Arts. 14 N32 et seq.]. Even the indication of an exact internet address does not suffice in that case: otherwise, the offeree would have the duty to actively search the website for the standard terms that the other party seeks to include into the contract [Dornis, Art. 14 N12; Ferrari, Art. 14 N40; Schroeter, Art. 14 N50].
148
In the case at hand, the only possibility to access the 2011 standard terms RESPONDENT had was a reference to CLAIMANT’s website in the footer of CLAIMANT’s letters [ClaEx 5; ResEx 3]. As demonstrated above, such a reference to an internet website cannot be considered sufficient to make the 2011 standard terms available to RESPONDENT. (ii)
In any case, RESPONDENT did not have a reasonable opportunity to take knowledge of the 2011 standard terms
149
Even if the Tribunal should find that the link to CLAIMANT’s website was sufficient to make the 2011 standard terms available to RESPONDENT, it did not have a reasonable opportunity to gain knowledge of them due to their short period of publication.
150
When standard terms are published on the internet, they must be accessible in a way that makes it “easy for a reasonable person of the same kind as the other party in the same circumstances (Article 8(2) CISG) to find and download them” [Schroeter, Art. 14 N49]. The risk that the website becomes temporarily inaccessible has to be borne by the offeror [Kruisinga, Incorporation, p. 77]. In order to determine whether the addressee had a reasonable opportunity to gain knowledge of the standard terms, the hypothetical understanding of a reasonable person in the same conditions as the addressee is decisive [Magnus/Staudinger, Art. 8 N17; Schmidt-Kessel, Art. 8 N20].
151
In the case at hand, CLAIMANT assumes that RESPONDENT accessed the poor English translation on CLAIMANT’s website during its publication. However, this statement is not supported by any evidence: Dr. Excell merely mentioned in his witness statement that “it seems that the English version of the standard terms had been online on CLAIMANT’s website for a short period from 1 July to 4 July 2011” [ResEx 2]. His knowledge of the publication of the standard terms on 29
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CLAIMANT’s website can be explained by Dr. Vis’ letter of 5 July 2011, which stated that “[a]t the moment, the standard terms are available […] only in Mediterranean” and that there had been a first English translation which had been retrieved because of its bad quality [ClaEx 5; ResEx 2]. 152
On the contrary, RESPONDENT did not know when the 2011 standard terms were to be published on CLAIMANT’s website: CLAIMANT only mentioned at the Parties’ meeting of 2 June 2011 that it had revised its standard terms and “was in the process of having them translated into English” [ResEx 2]. CLAIMANT merely mentioned in its letter of 5 July 2011, i.e. after the 2011 standard terms were removed from its website, that currently only the Mediterranean version was available online [ClaEx 5]. Prior to 5 July 2011, RESPONDENT could not and did not know when and whether the English version of the 2011 standard terms was online.
153
Since the 2011 standard terms were available on CLAIMANT’s website for onlyi four days, RESPONDENT
did not have a reasonable opportunity to gain knowledge of them. It cannot be rea-
sonably expected of RESPONDENT to visit CLAIMANT’s website on a daily basis without any information as to the exact date of their publication. CLAIMANT has to bear the consequences of the unavailability of its 2011 standard terms after 4 July 2011. Accordingly, the poorly translated English version of the 2011 standard terms was not included into the SLA. (iii) RESPONDENT never had access to a version of the 2011 standard terms drafted in a language it could understand 154
Should the Tribunal find that the link to CLAIMANT’s website was sufficient in order for RESPONDENT ANT,
to gain knowledge of the 2011 standard terms, RESPONDENT submits that CLAIM-
before concluding the SLA, did not make them available to RESPONDENT in a language it
could understand. 155
It is established that both the reference to the standard terms and the terms themselves have to be written in a language the addressee can understand [Motor yacht case; Achilles, Art. 24 N8; Dornis, Pre Arts. 14–24 N14; Schroeter, Art. 14 N61]. Such a language can be the language of the contract, respectively of the negotiations or the native language of the addressee [Knitwear case; Used motor case; Piltz, §3 N79; Schlechtriem/Schroeter, N257; Witz, Pre Art. 14–24 N13].
156
It has also been acknowledged that when “the [addressee’s] staff members responsible for the very sales contract concerned have sufficient knowledge of the language the standard terms are written in” [Schroeter, Art. 14 N64, emphasis added], the addressee is expected to understand that language [Car phone case]. In particular, the addressee does not have a general duty to translate if the standard terms are written in a language unknown to him [Socks case; Dornis, Pre Arts. 14–24 N14; Gruber, Art. 24 N20].
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157
MEMORANDUM FOR RESPONDENT
In the case at hand, the English translation available from 1 to 4 July on CLAIMANT’s website was erroneous and difficult to understand [ProcOrd 2, N32]. In fact, the translation was of such poor quality that CLAIMANT promptly removed it from its website [ClaEx 5]. CLAIMANT thus errs when asserting that it made the 2011 standard terms available to RESPONDENT by uploading an English translation that contained mistakes and was objectively unintelligible.
158
Furthermore, RESPONDENT could not be expected to understand the Mediterranean version of the 2011 standard terms. The only member of its staff who spoke this language was a young assistant doctor [ResEx 2]. He merely took part in two meetings, where he spoke with some of CLAIMANT’s technicians [ProcOrd 2, N35]. It resorts that this young doctor did not have any responsibilities regarding the negotiation and conclusion of the SLA. CLAIMANT was thus neither entitled to assume that RESPONDENT could understand the 2011 standard terms redacted in Mediterranean nor that RESPONDENT would translate them itself. Furthermore, CLAIMANT promised RESPONDENT to provide it with a correct English translation [ClaEx 5].
159
Consequently, given the poor quality of the English translation that was only online temporarily and the fact that RESPONDENT did not have to understand the Mediterranean version, CLAIMANT
did not make the 2011 standard terms available to RESPONDENT by uploading a Mediterra-
nean version on its website. 2. 160
The 2011 standard terms were not subsequently included into the SLA
CLAIMANT submits that RESPONDENT expressed its acceptance to the incorporation of the 2011 standard terms by its subsequent conduct, namely its silence and the payment of the purchase price [ClaM §77].
161
The subsequent incorporation of standard terms consists in a modification of the contract, for which an offer and an acceptance are required [Wine corks case; Magnus, p. 324]. In this case, the fact that the offeree performs his obligations under the contract does not lead to the inclusion of the standard terms by modification of the contract [Centrifuge case; Granulate case; Printed materials case; Magnus/Staudinger, Art. 14 N42; Mankowski, Pre Art. 14 N27; Schroeter, Art. 14 N60]. Likewise, the silence of the offeree does not constitute an acceptance to a modification of the contract, pursuant to Art. 18 CISG [CISG-AC Op. 13, N4.3; Magnus/Staudinger, Art. 14 N42; Schroeter, Art. 14 N60]. On the contrary, if the parties subsequently fulfil their obligations under the contract, this reflects their intent to uphold the contract as it was concluded, i.e. without the standard terms [Lautenschlager, p. 279 et seq.].
162
In the case at hand, CLAIMANT only published an understandable English version of the 2011 standard terms on its website on 21 July 2011, i.e. one day after the conclusion of the SLA [Proc-
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Ord 2, N33]. CLAIMANT finished building the additional treatment room on 13 January 2012 and RESPONDENT made the initial payment of USD 2 million on 2 February 2012 [TermRef N10]. 163
RESPONDENT’s silence and performance of its obligation under the SLA cannot be regarded as an acceptance to include the 2011 standard terms subsequent to the conclusion of the SLA. The fact that RESPONDENT signed the contract and that the Parties performed their respective obligations, despite CLAIMANT not providing the 2011 standard terms, means that the Parties concluded a contract that is not governed by CLAIMANT’s 2011 standard terms. B.
IN
ANY EVENT, THE CHOICE OF LAW CLAUSE CONTAINED IN THE
2011
STANDARD
TERMS DID NOT BECOME PART OF THE SLA 164
CLAIMANT erroneously submits that the choice of law clause contained in Section 22 of its 2011 standard terms does not represent a surprising clause under Art. 2.1.20 PICC [ClaM §87]. Should the Tribunal find that the 2011 standard terms were included into the SLA and that the choice of law clause contained therein provided for the application of the CISG, RESPONDENT submits that it is not bound by the choice of law clause contained in Section 22 of the 2011 standard terms. Whilst disputing the applicability of the CISG [infra IV.–VI.], RESPONDENT will base its argument on the assumption that the CISG is applicable to the SLA [ProcOrd 2, N2].
165
The question of whether surprising or unusual clauses contained in standard terms form part of a contract is a matter of incorporation rather than validity, and is thus governed by the CISG [Car phone case; Metal slabs case; CISG-AC Op. 13, N7.2; Eiselen, p. 8]. In the Metal slabs case, the court ruled: “[a]ccording to Art. 8 CISG in conjunction with the principle of good faith, it has to be considered in this respect, whether the clause differs from the expectation of the contractual partner to such an extent that the latter cannot reasonably be expected to have anticipated that such a clause might be included” [Metal slabs case; cf. Schmidt-Kessel, Art. 8 N63]. Good faith in international trade requires a party to inform the other party of the surprising content of his standard terms [Eiselen, p. 8]. Accordingly, terms that are inconsistent with the negotiations are considered surprising and are therefore not binding for the other party – an approach that is also followed by the PICC, which reflect the Mediterranean domestic law [ProcOrd 2, N4; cf. Car phone case; CISG-AC Op. 13, N7.2; Vogenauer, Art. 2.1.20 N7]. Furthermore, considering the onward trend in international trade to exclude the CISG, a choice of law clause providing for its application must be considered surprising [Lohmann, p. 226 et seq.; Spagnolo, p. 418 et seq.].
166
In the present case, CLAIMANT’s Dr. Vis repeatedly promised RESPONDENT during the negotiations that there would be no major change in the revised standard terms apart from the liability regime [ClaEx 5; ResEx 2; ProcOrd 2, N31]. Ever since CLAIMANT had revised its standard
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MEMORANDUM FOR RESPONDENT
terms, it never mentioned the choice of law clause, in particular the fact that it planned to apply a different set of rules to the SLA as to the FSA. CLAIMANT’s choice of law, if providing for the application of the CISG, is inconsistent with what the Parties agreed upon during the negotiations and could therefore not be reasonably expected by RESPONDENT. Furthermore, given that the CISG is generally excluded in international commercial contracts, its application to the SLA would be all the more surprising for RESPONDENT. 167
Should Section 22 of CLAIMANT’s 2011 standard terms provide for the application of the CISG, it has not been incorporated into the SLA since RESPONDENT could not reasonably expect such a choice of law. CONCLUSION: The 2011 standard terms did not become part of the SLA, since CLAIMANT did not make them available to RESPONDENT and the Parties did not subsequently included them into the SLA. In any case, Section 22 of said standard terms was surprising and thus not included.
VI. THE PARTIES’ CHOICE OF LAW EXCLUDES THE CISG 168
As previously established, the choice of law clause contained in the 2011 standard terms does not form part of the SLA. Therefore, as results from the framework structure chosen by the Parties, the 2000 standard terms govern the SLA and provide for the exclusion of the CISG (A). In case the Tribunal were to find that the 2011 standard terms were included into the SLA, RESPONDENT
contends that the choice of law clause contained in their Section 22 excluded the CISG, as
agreed upon by the Parties (B). A. 169
THE 2000 STANDARD TERMS APPLY TO THE SLA AND EXCLUDE THE CISG
RESPONDENT submits that the SLA is subject to the 2000 standard terms contained in the FSA, thus providing for the exclusion of the CISG. As RESPONDENT previously demonstrated, the choice of law clause contained in the 2011 standard terms did not become part of the SLA [supra V.]. According to Art. 45 FSA, “[t]he provisions of [the FSA] shall also govern all further and future contracts concluded by the Parties in relation to the Proton Therapy Facility purchased where such contracts do not contain a specific provision to the contrary” [ClaEx 2]. The SLA is concerned with the delivery of an additional treatment room for the proton therapy facility and therefore represents a contract that falls under the scope of Art. 45 FSA [ReqArb N11].
170
Since the SLA does not contain a “specific provision to the contrary,” in the sense of Art. 45 FSA, the standard terms contained in the FSA, namely the 2000 standard terms, apply to the SLA as results from the framework structure established by the Parties [ClaEx 2].
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171
MEMORANDUM FOR RESPONDENT
Furthermore, if the parties did not specify otherwise, the choice of law contained in the framework contract extends to the contracts subsequently concluded [Lohmann, p. 300]. An exclusion of the CISG can be assumed when the parties refer to the specific domestic law of a contracting state to the CISG [Asante case; Automobile case; Printing machine case; Schwenzer/Fountoulakis/Dimsey, p. 40 et seq.]. In addition, if the parties base their claims on domestic sales law during the court proceedings, although they are both aware of the potential application of the Convention, the CISG is impliedly excluded [Leather products case; Weed killer case; Siehr, Art. 6 N6].
172
In the present case, as results from the framework structure chosen by the Parties, Section 22 of CLAIMANT’s 2000 standard terms also governs the SLA, since the 2011 standard terms have not become part of the agreement. This provision states: “The contract shall be governed by the national law of Mediterraneo as set out in the statutes of Mediterraneo and developed by its courts” [ClaEx 2]. This clause clearly refers to Mediterranean domestic law, as it refers to this country’s case law and specific statutes. This is all the more the case since neither CLAIMANT nor RESPONDENT
dispute that Section 22 of CLAIMANT’s 2000 standard terms provides for the exclu-
sion of the CISG, as both Parties base their claims arising out of the FSA on Mediterranean sales law, although they are aware that the CISG could potentially apply [ProcOrd 2, N20]. 173
In conclusion, the 2000 standard terms, providing for the exclusion of the CISG, govern the SLA. B.
174
IN ANY CASE, THE PARTIES EXCLUDED THE CISG IN THE 2011 STANDARD TERMS
Should the Tribunal find that the 2011 standard terms, including its choice of law clause, were included into the SLA, RESPONDENT submits that, contrary to CLAIMANT’s allegation [ClaM §90], this choice of law clause implicitly excludes the applicability of the CISG.
175
It is generally accepted that a reference to the law of a contracting state to the CISG without further specifications does per se not suffice to establish the parties’ clear intent to exclude the CISG [Oil case; Mistelis, Art. 6 N18; Schwenzer/Hachem, Art. 6 N14]. If, however, the clear intent of the parties to exclude the CISG can be determined, the designation of the law of a contracting state excludes the applicability of the CISG [Foil case; Leather wear case; Ferrari/Schlechtriem, Art. 6 N22; Honnold, N77.1]. When establishing this intent, pursuant to Art. 8(3) CISG, all relevant circumstances of the case are to be taken into consideration, namely the statements and conduct of the parties during the negotiations [Cables case; Cobalt case; Dishes case; Ferrochrome case; Mint case; Lindbach, p. 216, 256; Lohmann, p. 258].
176
In the present case, at the Parties’ final meeting of 2 June 2011, CLAIMANT’s Dr. Vis promised RESPONDENT that the 2011 standard terms would not contain any major change, apart from the
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liability regime [ProcOrd 2, N31]. In his letter of 5 July 2011, he repeated his promise that “the changes are [...] of a minor nature and will hardly affect [the Parties’] relationship” [ClaEx 5]. 177
It is true that Dr. Vis, who represented CLAIMANT during most of the Parties’ contractual relationship, mentioned, at the meeting of 2 June 2011, that he was not a lawyer [ProcOrd 2, N31]. It is, however, equally true that CLAIMANT is an experienced business partner supported by a legal team involved in the conclusion of both the FSA and the SLA [ProcOrd 2, N10]. Therefore, RESPONDENT could reasonably rely on CLAIMANT’s promise that the revised standard terms would not bring any major change. Furhtermore, Dr. Vis not only repeated this promise one month later on 5 July 2011, but did so in a formal letter accompanied by a draft of the SLA [ClaEx 5 et seq.], thereby creating the impression that he was fully aware of the content and consequences of the changes in the standard terms. Due to the previous exclusion of the CISG under the FSA [ProcOrd 2, N20], RESPONDENT could reasonably trust that the new choice of law clause still provided for the application of Mediterranean domestic law.
178
In addition, under the circumstance that the parties established a framework structure, their choice of law in the framework contract best reflects their intent as to the law applicable to the implementation contract [Electronic parts case; Leather goods case; Lohmann, p. 300].
179
In the present case, the choice of law contained in the framework contract, namely the FSA, provided for Mediterranean sales law [supra §172], thus indicating the Parties’ intent to have Mediterranean domestic law applicable to their implementation contract, i.e. the SLA [ClaEx 6].
180
In conclusion, contrary to CLAIMANT’s submission, the Parties implicitly excluded the CISG in the 2011 standard terms, considering CLAIMANT’s statements and conduct during the negotiations as well as the choice of law contained in the FSA. CONCLUSION: Since the 2011 standard terms did not become part of the SLA, the choice of law from the FSA governs the SLA, thus providing for the application of Mediterranean sales law. In the alternative, the Parties implicitly excluded the CISG in Section 22 of the 2011 standard terms.
REQUEST FOR RELIEF In light of the above submissions, RESPONDENT respectfully requests this Tribunal to find that: –
it does not have jurisdiction over the claims arising out of both the FSA and the SLA;
–
in any case, it is inadmissible to hear the claims arising out of the FSA and the SLA in a single set of proceedings;
–
both contracts are governed by the Mediterraneo Sale of Goods Act, excluding the CISG.
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MEMORANDUM FOR RESPONDENT
We hereby confirm that this Memorandum was written only by the persons whose names are listed below and who signed this certificate. Fribourg, 23 January 2014, /s/ Simon Demaurex /s/ Konrad Staeger
/s/ Cheryl De-Souza
/s/ Benjamin Trachsel
/s/ Noémie Zürcher
XLI
