Thirteenth Annual
Willem C. Vis International Commercial Arbitration Moot March 7 – 13, 2016 Hong Kong Memorandum for Claimant of Ruprecht-Karls-Universität, Heidelberg, Germany
on behalf of
against
Kaihari Waina Ltd
Vino Veritas Ltd
12 Riesling Street
56 Merlot Rd
Oceanside, Equatoriana
St Fundus Vuachoua, Mediterraneo
-Claimant-
-Respondent-
represented by
represented by
Joseph Langweiler, Advocate at the Court 75 Court St, Capital City, Mediterraneo
Horace Fasttrack, Advocate at the Court 14 Capital Boulevard St, Oceanside, Equatoriana
represented by Joseph Langweiler, Advocate at the Court 75 Court St, Capital City, Mediterraneo
Lena Bauer
Paulina Fecht
Louisa Göbes
Leon Theimer
Alexander K. Walker
Tobias Wetlitzky
Heidelberg University- Memorandum for Claimant
Outlined Table of Contents Statement of Facts .................................................................................................................... 1 Jurisdiction and applicable law .............................................................................................. 2 Introduction and Summary of Arguments ............................................................................ 2 Part I: Respondent should be ordered to produce the requested documents ..................... 3 1.
Under the standard of international arbitration practice, the Tribunal has the power to order document production ........................................................................................... 3
2.
Claimant’s request is no “discovery”, but “narrow and specific” .................................... 6
3.
Claimant’s procedural interests outweigh Respondent’s .................................................. 8
Part II: Claimant can claim Respondent’s profits as part of its damages ........................ 12 1.
Claimant suffered a detriment to its profit margins yet to be determined ...................... 13
2.
The assessment of Claimant’s profit margins is at the discretion of the Tribunal.......... 15
3.
In this particular case, the Tribunal can make the discretionary assumption that the detriment to Claimant’s profit margins at least equals Respondent’s profits ................. 17
Part III: The legal fees incurred in the interim relief are recoverable .............................. 21 1.
Generally, pre-judicial legal costs are recoverable under Art 74 CISG ......................... 22
2.
Claimant’s pre-arbitral legal costs are pre-judicial and fall under Art 74 CISG ............ 25
3.
The legal costs were foreseeable to Respondent under Art 74 CISG ............................. 27
4.
The duty to mitigate under Art 77 CISG has been adhered to ........................................ 28
Part IV: The legal fees incurred in the declaratory relief are recoverable ....................... 29 1.
The Tribunal has jurisdiction over Claimant’s request for damages .............................. 29
2.
The CISG applies to breaches of the arbitration agreement ........................................... 31
3.
The legal fees Claimant incurred are recoverable under the CISG ................................ 31
4.
An award of damages for breach of the arbitration agreement is enforceable ............... 35
Request for Relief ................................................................................................................... 35 II
Heidelberg University- Memorandum for Claimant
Detailed Table of Contents Index of Abbreviations ............................................................................................................. VI Index of authorities................................................................................................................... IX Index of Cases ....................................................................................................................... XIV Index of Arbitral Awards ................................................................................................... XXXI Index of rules ................................................................................................................... XXXVI Statement of Facts .................................................................................................................... 1 Jurisdiction and applicable law .............................................................................................. 2 Introduction and Summary of Arguments ............................................................................ 2 Part I: Respondent should be ordered to produce the requested documents ..................... 3 1.
Under the standard of international arbitration practice, the Tribunal has the power to order document production ........................................................................................... 3 1.1. Generally, the Vienna Rules provide for a discretion ............................................. 4 1.2. The discretion incompasses the standard of the international practice ................... 4 1.3. The term “discovery” in Art 20 FA does not restrict this power ............................ 4 1.4. Furthermore, the CISG’s burden of proof is unaffected ......................................... 6
2.
Claimant’s request is no “discovery”, but “narrow and specific” .................................... 6 2.1. Claimant’s request sufficiently specified its subject matter .................................... 7 2.2. Claimant’s request sufficiently specified its time frame ......................................... 7
3.
Claimant’s procedural interests outweigh Respondent’s .................................................. 8 3.1. Claimant’s right to be heard sets a high threshold .................................................. 8 3.2. The principle of efficiency increases this standard ................................................. 9 3.3. Claimant’s material scecrecy interest further enhances the threshold .................... 9 3.4. Against this threshold, Respondent’s secrecy interest is not predominant ........... 10 3.5. There is no violation of the principle of equal treatment ...................................... 11 3.6. No extraordinary expenses are required from Claimant ....................................... 12
III
Heidelberg University- Memorandum for Claimant
Part II: Claimant can claim Respondent’s profits as part of its damages ........................ 12 1.
Claimant suffered a detriment to its profit margins yet to be determined ...................... 13 1.1. Claimant was required to initiate substitute arrangements with Vignobilia ......... 13 1.2. Claimant’s decreased profit margins can exclusively be established under significant difficulties and severe detriments to Claimant’s secrecy interests ...... 13
2.
The assessment of Claimant’s profit margins is at the discretion of the Tribunal.......... 15 2.1. In general, the amount of loss of profit under Art 74 CISG is discretionary ........ 15 2.2. Under the particular circumstances, the discretion under Art 74 CISG permits to refer to the defaulting party’s profits ................................................................. 16
3.
In this particular case, the Tribunal can make the discretionary assumption that the detriment to Claimant’s profit margins at least equals Respondent’s profits ................. 17 3.1. The facts on the Mata Weltin’s quality render the assumption reasonable ........... 17 3.2. Respondent’s intentional non-performance renders the assumption adequate ..... 19 3.3. The possibility for covering purchases renders the assumption efficient ............. 19 3.4. Claimant’s material secrecy interest renders the assumption necessary ............... 20
Part III: The legal fees incurred in the interim relief are recoverable .............................. 21 1.
Generally, pre-judicial legal costs are recoverable under Art 74 CISG ......................... 22 1.1. Pre-judicial legal costs are frequently regarded as recoverable under Art 74 CISG ...................................................................................................................... 23 1.2. Dunning costs are recoverable under Art 74 CISG ............................................... 23 1.3. Debt collection costs are recoverable under Art 74 CISG .................................... 23 1.4. Costs for attorneys are recoverable under Art 74 CISG ........................................ 24 1.5. The Zapata case does not oppose the recoverability of pre-procedural cost ......... 24
2.
Claimant’s pre-arbitral legal costs are pre-judicial and fall under Art 74 CISG ............ 25
3.
The legal costs were foreseeable to Respondent under Art 74 CISG ............................. 27
4.
The duty to mitigate under Art 77 CISG has been adhered to ........................................ 28
Part IV: The legal fees incurred in the declaratory relief are recoverable ....................... 29 1.
The Tribunal has jurisdiction over Claimant’s request for damages .............................. 29 1.1. The Tribunal's power derives from the arbitration agreement in Art 20 FA ......... 29 1.2. The Tribunal’s power leaves the state courts’ authority to review the arbitration agreement unaffected ........................................................................... 30 IV
Heidelberg University- Memorandum for Claimant
1.3. The High Court's cost allocation decision is no res judicata for the Tribunal ...... 30 2.
The CISG applies to breaches of the arbitration agreement ........................................... 31
3.
The legal fees Claimant incurred are recoverable under the CISG ................................ 31 3.1. Respondent breached the arbitration agreement ................................................... 32 3.2. Respondent cannot invoke Art 80 CISG, as Claimant did not cause the breach 32 (i)
A duty to provide legal advice does not exist in international trade ............ 32
(ii)
The duty to clarify did not exist, as the clause was sufficiently clear ......... 33
(iii) In any case, CLAIMANT's inaction did not cause RESPONDENT to litigate .......................................................................................................... 33 3.3. The legal fees were a foreseeable consequence of Respondent's application ....... 34 3.4. Claimant fulfilled its duty to mitigate pursuant to Art 77 CISG ........................... 35 4.
An award of damages for breach of the arbitration agreement is enforceable ............... 35
Request for Relief ................................................................................................................... 35
V
Heidelberg University- Memorandum for Claimant
Index of Abbreviations §
paragraph
AAA
American Arbitration Association
Art
Article(s)
ASoC
Answer to Statement of Claim
AT
Austria
ATCP
Arbitral Tribunal of the City of Panama
AU
Australia
BCCI
Budapest Chamber of Commerce and Industry
BE
Belgium
BY
Belarus
CA
Canada
CAM
Arbitration Center of Mexico
CEO
Chief Executive Officer
COO
Chief Operating Officer
CExh
Claimant’s Exhibit No.
cf
confer
CH
Switzerland
CIETAC
China International Economic and Trade Arbitration Commission
CISG
UN Convention on Contracts for the International Sale of Goods
CISG online
Case number at www.globalsaleslaw.org
DanArbLaw
Danubian Arbitration Law
DanConLaw
Danubian Contract Law
DE
Germany
e.g.
exempli gratia (for example)
ed.
editor(s)
EN
England
et seq
et sequens
EUR
Euro
ES
Spain
FA
Framework Agreement
FI
Finland
found.
founder
VI
Heidelberg University- Memorandum for Claimant
FR
France
FTCA
Foreign Trade Court for Arbitration Attached to Serbian Chamber of Commerce
GR
Greece
HCC
Hamburg Chamber of Commerce
HK
Hong Kong
i.e.
it est (for example)
IBA
International Bar Association
IBA Rules
International Bar Association Rules on the Taking of Evidence in International Arbitration
ibid
ibidem (at the same place)
ICC
International Chamber of Commerce
ICSID
International Centre for Settlement of Investment Disputes
IL
Israel
IT
Italy
IUSCT
Iran-United States Claims Tribunal
LCIA
The London Court of International Arbitration
NAFTA
North American Free Trade Agreement
NL
Netherlands
NYC
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”)
NZ
New Zealand
p(p)
page(s)
PCA
Permanent Court of Arbitration
PCIJ
Permanent Court of International Justice
PICC
Principles of International Commercial Contracts
PL
Poland
PO
Procedural Order No.
RExh
Respondent’s Exhibit No.
RFCCI
Russian Federation Chamber of Commerce and Industry
RU
Russian Federation
SCC
Stockholm Chamber of Commerce
SE
Sweden
SG
Singapore VII
Heidelberg University- Memorandum for Claimant
SIAC
Singapore International Arbitration Centre
SoC
Statement of Claim
UCCT
Ukrainian Chamber Commerce and Trade
UNCITRAL Model
United Nations Commission on International Trade Law Model
Law
Law on International Commercial Arbitration
US
United States of America
USD
US Dollar
VIAC
Vienna International Arbitral Centre
VR
Vienna Arbitration Rules – VIAC Rules
VIII
Heidelberg University- Memorandum for Claimant
Index of authorities Author Blessing, Marc
Title Die LCIA Rules – aus der Sicht des Praktikers, SchiedsVZ 2003, pp 198-205
Cited § 11
cited as: Blessing. Bock, Anne-Florence
Gewinnherausgabeansprüche gemäss CISG, Festschrift für Ingeborg Schwenzer zum 60. Geburtstag (Bern 2011), pp 175-189
49
cited as: Bock. Born, Gary
International Commercial Arbitration: Volume I: International Arbitral Agreements Volume II: International Arbitral Procedures Volume III: International Arbitral Awards 2nd Edition (Alphen aan den Rijn 2014)
10, 13, 24, 31, 80, 82, 93, 94, 100
cited as: Born. Brunner, Christoph (ed.)
UN-Kaufrecht – CISG: Kommentar zum Übereinkommen der Vereinten Nationen über Verträge über den internationalen Warenkauf von 1980 (Bern 2004)
71
cited as: Brunner (2004). Brunner, Christoph (ed.)
UN-Kaufrecht – CISG: Kommentar zum Übereinkommen der Vereinten Nationen über Verträge über den internationalen Warenkauf von 1980, 2nd Edition (Bern 2014)
68
cited as: Brunner/author. Dordevic, Milena
’Mexican Revolution’ in CISG Jurisprudence and Case-Law: Attorney’s Fees as non(recoverable) Loss for Breach of Contract, Private Law Reform in South East Europe: Liber Amicorum Christa Jessel-Holst (Belgrade 2010), pp 199-220
76
cited as: Dordevic.
IX
Heidelberg University- Memorandum for Claimant
Felemegas, John
An Interpretation of Article 74 CISG by the U.S. Circuit Court of Appeals, Pace International Law Review, Volume 1/15, pp 91-147
69
cited as: Felemegas. Flechtner, Harry
Recovering Attorneys' Fees as Damages under the U.N. Sales Convention (CISG): The Role of Case Law in the New International Commercial Practice with Comments on Zapata Hermanos v. Hearthside Baking, Northwestern Journal of International Law & Business, Volume 22, Issue 2 (2002)
67
cited as: Flechtner. Gillette, Clayton
Attorney’s Fees under the CISG: Stemcor Does Not Disagree with Zapata, Internationales Handelsrecht 2/2015, pp 58-59
73
cited as: Gillette. Gotanda, John (rapporteur)
CISG Advisory Counsel Opinion No.6, Calculation of Damages under CISG Article 74
44
cited as: CISG AC Opinion No.6. Holtzmann, Howard Neuhaus, Joseph
A Guide to the UNCITRAL Model Law on International Commercial Arbitration (Deventer 1989)
102
cited as: Holtzmann/Neuhaus. Honsell, Heinrich (ed.)
Kommentar zum UN-Kaufrecht – Übereinkommen der Vereinten Nationen über Verträge über den Internationalen Warenkauf (CISG), Edition (Berlin 2010)
67
cited as: Honsell/author. Huber, Peter Mullis, Alastair
The CISG – A new textbook for students and practicioners (Munich 2007)
68
cited as: Huber/Mullis/author.
X
Heidelberg University- Memorandum for Claimant
Kaufmann-Kohler, Gabri- Globalization of Arbitral Procedure, Vanderelle bilt Journal of Transnational Law, 2003, Vol. 36, pp 1313-1333
11
cited as: Kaufmann-Kohler. Kaufmann-Kohler, Gabri- Arbitrage international, 2nd Edition (Zurich elle 2010) Rigozzi, Antonio cited as: Kaufmann-Kohler/Rigozzi. Kröll, Stefan (ed.) Mistelis, Loukas (ed.) Viscasillas, Pilar Perales (ed.)
UN Convention on Contracts for the International Sale of Goods (CISG) – Commentary (Munich 2011)
80
67, 84
cited as: Kröll/Mistelis/author. Marghitola, Reto
Document Production in International Arbitration (Alphen aan den Rijn 2015)
13
cited as: Marghitola. Matthews, Paul Malek, Hodge M.
Disclosure, 4th Edition (London 2012)
13
cited as: Matthews/Malek. Nhlapo, Ronald Andrews, Neil Ferrand, Frédérique
The American Law Institute: UNIDROT Principles of Transnational Civil Procedure, Unif. L. Rev. 2004-4, pp 758-808
15, 24
cited as: ALI/UNIDROT-PTCP. O’Malley, Nathan
Rules of Evidence in International Arbitration – an annotated Guide (London 2012)
27
cited as: O’Malley. Redfern, Alan Hunter, Martin (found.) Blackaby, Nigel Partasides, Constantine
Redfern and Hunter on International Arbitration, 5th Edition (Oxford 2009)
Säcker, Franz Jürgen (ed.) Rixecker, Roland (ed.) Oetker, Hartmut Limperg, Bettina
Münchener Kommentar zum Bürgerlichen Gesetzbuch, Volume III, 7th Edition (Munich 2016)
11, 94
cited as: Redfern/Hunter. 16
cited as: MunichComm/author.
XI
Heidelberg University- Memorandum for Claimant
Schlechtriem, Peter (found.) Schwenzer, Ingeborg (ed.)
Kommentar zum Einheitlichen UN-Kaufrecht, 6th Edition (Munich 2013) English translation published as:
12, 16, 44, 45, 49, 56, 57, 67, 68, 76, 82, 84, 98
Commentary on the UN Convention on the International Sale of Goods (CISG), 3rd edition, Oxford (2010) cited as: Schlechtriem/Schwenzer/author. Schmidt, Karsten (ed.)
Münchener Kommentar zum Handelsgesetzbuch, Volume V, Kommentar zum UN-Kaufrecht, 3rd Edition (Munich 2013)
45
cited as: MunichCommHGB/author. Schmidt-Ahrendts, Nils
Disgorgement of Profits under the CISG, State of play: the 3rd Annual MAA Schlechtriem CISG conference – 14 April 2011 (Vienna 2011), pp 89-102
68
cited as: Schmidt-Ahrendts. Secretariat to the CISG
Official Commentary on the Draft Convention on Contracts for the International Sale of Goods prepared by the Secretariat, UN DOC. A/CONF. 97/5, available at CISG-Online
44
cited as: Secretariat Commentary. Staudinger, Julius von (found.) Magnus, Magnus (ed.)
Kommentar zum Bürgerlichen Gesetzbuch 16, 45, 84, 98 mit Einführungsgesetz und Nebengesetzen – Wiener UN-Kaufrecht (CISG), 16th Edition (Berlin 2013) cited as: Staudinger/Magnus.
Tercier, Pierre Bersheda, Tetiana
Ughi, Giovanni Bagner, Hans Beechey, John et al
Document Production in Arbitration: A Civil Law Viewpoint, The Search for “Truth” in Arbitration – ASA Special Series No.35, pp 77102 cited as: Tercier/Bersheda. Commentary on the revised text of the 2010 IBA Rules on the Taking of Evidence in International Arbitration
11, 24
11, 15, 33
cited as: IBA Commentary.
XII
Heidelberg University- Memorandum for Claimant
UNCITRAL
UNCITRAL Digest of Case Law on the United Nations Convention on Contracts for the International Sale of Goods, 2012 Edition
36
cited as: UNCITRAL Case Digest. VIAC (ed.)
Handbook Vienna Rules, A Practitioner’s Guide (Vienna 2014)
10, 23, 24
cited as: Handbook Vienna Rules/author. Voser, Nathalie
Harmonization by Promulgating Rules of Best International Arbitration, SchiedsVZ 2005, pp 113-118
11
cited as: Voser. Zuberbühler, Tobias (ed.) Hofmann, Dieter (ed.) Oetiker, Christian (ed.) Rohner, Thomas (ed.)
IBA Rules of Evidence – Commentary on the IBA Rules on the Taking of Evidence in International Arbitration (Zurich 2012)
10, 28, 61
cited as: Zuberbühler/Hofmann.
XIII
Heidelberg University- Memorandum for Claimant
Index of Cases Country
Date
Court
26/07/1927 Permanent Court of International Justice
Case Germany v Poland, Publications of the PCIJ Series A.No. 9
Cited § 94
cited as: “Chorzów Factory“ PCIJ (1927). Australia
17/11/2000 Supreme Court of Queensland
Downs Investments v Perwaja Steel, CISG-online 587
84
cited as: “Downs Investments” Supreme Court Queensland (AU 2000). Austria
06/02/1996 Supreme Court
Case No. 10Ob518/95, CISG online 224
84,87,98
cited as: Supreme Court (AT 1996). 14/01/2002 Supreme Court
Case No. 7Ob301/01t, CISG online 643
63,84
cited as: Supreme Court (AT 2002). 30/06/2010 Supreme Court
Case No. 7 Ob 2011/10i, Zak 2010/551, p319.
24
cited Supreme Court (AT 2010). 15/01/2013 Supreme Court
Case No. 4Ob208/12k, CISG online 2398
84
cited as: Supreme Court (AT 2013). Belarus
20/05/2003 Supreme Court
Case No. 8-5/2003, CISG online 1352
46
cited as: Supreme Court (BY 2003).
XIV
Heidelberg University- Memorandum for Claimant
Belgium
10/05/2004 Court of Appeal Gent
Case No. 2003/AR/2026, CISG online 991
61
cited as: Court of Appeal Gent (BE 2004). 24/04/2006 Court of Appeal Antwerp
Case No. 2002/AR/2087, CISG online 1258
87
cited as: Court of Appeal Antwerp (BE 2006). Canada
1988
Court of Queen’s Bench of Manitoba
Blake v. Hudsons’s Bay Co, [1988] 1 W.W. 176
30
cited as: “Blake” Court of Queen’s Bench Manitoba (CA 1988). 10/03/1992 Court of Appeal of British Columbia
Gulf Canada Resources Ltd. v. Arochem International Ltd., 66 British Columbia Law Reports (2d), pp 113121
100
cited as: “Gulf Canada” Court of Appeal British Columbia (CA 1992). 27/05/1992 Supreme Court of British Columbia
Ladner v. Ladner, Ladner, L1 Holdings Ltd., Secret Resources Inc, [1992] B.C.J. No. 1153 (QL)
30
cited as: “Ladner” Supreme Court British Columbia (CA 1992). 30/09/1992 Federal Court
Miramichi Pulp and Paper Inc. v. Canadian Pacific Bulk Ship Services Ltd., Yearbook Commercial Arbitration 1994, Volume XIX pp 266
97
cited as: “ Miramichi” Federal Court (CA 1992).
XV
Heidelberg University- Memorandum for Claimant
18/12/1998 Court of Queen’s Bench of Alberta
Aetna Insurance Co. of Canada v. Mason and Co, [1998] A.J. No. 1374
30
cited as: “Aetna Insurance” Court of Queen’s Bench Alberta (CA 1998). 19/07/2005 Court of Queen’s Bench of Alberta
Jardine Lloyd Thompson Canada Inc. v. Western Oil Sands Inc., Case No. 050104413, [2005] A.J. No. 943
10,30
cited as: “Jardine Lloyd” Court of Queen’s Bench Alberta (CA 2005). 07/01/2015 Superior Court of Justice of Ontario
Nordion Inc v. Life Technologies Inc. and Applied Biosystems LLC, Case No. CV11-00436281-0000
94
cited as: “Nordion Inc” Superior Court of Justice Ontario (CA 2015). England
1966
Court of Appeal
Tritonia Shipping Inc v South Nelson Forest Products Corporation, [1996] 1 Lloyd’s Report 114
91
cited as: “Tritonia Shipping Inc” Court of Appeal (EN 1966). 02/12/1982 House of Lords
Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal (The Hannah Blumenthal), [1983] 1 All ER 34
100
cited as: “Paal Wilson & Co” (EN 1982).
XVI
Heidelberg University- Memorandum for Claimant
26/01/1989 Court of Appeal
Rich (Marc) & Co. AG v Societa Italiana Impianti SpA, 1989 WL 649890
102
cited as: "Rich & Co AG" Court of Appeal (EN 1989). 15/07/1993 High Court of Justice (Chancery Division)
Panayiotou & Others v Sony Music Entertainment, [1994] CH 142
13
cited as: “Panayiotou“ Chancery Div (EN 1993). 16/04/1997 Court of Appeal
Schiffahrtsgesellschaft Detlef Von Appen GmbH v Wiener Allianz Versicherungs AG, [1997] C.L.C. 993
93
cited as: “Schiffahrtsgesellschaft” Court of Appeal (EN 1997). 19/05/1999 High Court of Justice (Queen's Bench Division - Commercial Court)
Thomas Dobbie Thomson Walkinshaw & Ors. v Pedro Paulo Diniz, Case No. 1999 WL 33105608
91
cited as: “Walkinshaw” Commercial Court (EN 1999). 27/07/2000 House of Lords
Attorney General v Blake (Jonathan Cape Ltd Third Party), [2001] 1 AC, pp 268299
48, 56
cited as: “Blake” House of Lords (EN 2000). 15/04/2003 High Court of Justice (Queen’s Bench Divison - Commercial Court)
Maersk Sealand v Ali Hussein Akar and others , [2003] EWHC 797 (Comm)
93
cited as: “Maersk Sealand” Commercial Court (EN 2003).
XVII
Heidelberg University- Memorandum for Claimant
28/11/2003 High Court of Justice (Queen’s Bench Divison - Commercial Court)
BNP Paribas & Others v Deloitte & Touche LLP, Case No. 2003/946
13
cited as: “BNP Paribas” Commercial Court (EN 2003). 14/11/2008 High Court of Justice (Queen’s Bench Divison - Commercial Court)
CMA CGM SA v Hyundai Mipo Dockyard Co Ltd, [2008] APP.L.R. 11/14
91, 93
cited as: “CMA CGM SA” Commercial Court (EN 2008). 08/02/2013 High Court of Justice (Queen’s Bench Divison - Commercial Court)
Hyundai Merchant Marine Co Ltd v Americas Bulk Transport Ltd, [2013] EWHC 470 (Comm)
25
cited as: „Hyundai Merchant“ High Court (EN 2013). 12/06/2013 Supreme Court of the United Kingdom
Ust-Kamenogorsk Hydropower Plant JSC v AES UstKamenogorsk Hydropower Plant LLP, [2013] UKSC 35
97
cited as: “Hydropower“ Supreme Court (EN 2013). Finland
12/04/2002 Court of Appeal Turku
Case No. S 00/855, CISG online 660
69
cited as: Court of Appeal Turku (FI 2002). France
12/02/1987 Supreme Court (1st Chamber)
Case No. 85-12074, Civ. 1re, Bull.Civ I, n 49
48
cited as: Supreme Court (FR 1987). 27/05/2008 Court of Appeal Rennes
Case No. 07/03098, CISG online 1746
59
cited as: Court of Appeal Rennes (FR 2008).
XVIII
Heidelberg University- Memorandum for Claimant
Germany
24/02/1961 Federal Supreme Court
Case No. I ZR 83/59, NJW 1961, pp 1017-1018
48
cited as: Federal Supreme Court (DE 1961). 16/09/1991 District Court Frankfurt
28/04/1993 District Court Krefeld
Case No. 3/11 O 3/91, CISG online 26 cited as: District Court Frankfurt (DE 1991). Case No. 11 O 210/92, CISG online 101
70
72
cited as: District Court Krefeld (DE 1993). 14/01/1994 Higher Regional Court Düsseldorf
Case No. 17 U 146/93, CISG online 119
72
cited as: Higher Regional Court Düsseldorf (DE 1994). 12/05/1995 Local Court Alsfeld
Case No. 31 C 534/94, CISG online 170
70
cited as: Local Court Alsfeld (DE 1995). 29/01/1996 Local Court Augsburg
Case No. 11 C 4004/95, CISG online 172
69
cited as: Local Court Augsburg (DE 1996). 11/07/1996 Higher Regional Court Düsseldorf
Case No. 6 U 152/95, CISG online 201
70
cited as: Higher Regional Court Düsseldorf (DE 1996). 28/02/1997 Higher Regional Court Hamburg
Case No. 1 U 167/95, CISG online 261
57
cited as: Higher Regional Court Hamburg (DE 1997).
XIX
Heidelberg University- Memorandum for Claimant
13/03/1997 Lower Court BerlinTiergarten
Case No. 2 C 22/97, CISG online 412
69
cited as: Lower Court BerlinTiergarten (DE 1997). 09/07/1997 Higher Regional Court Munich
Case No. 7 U 2070/97, CISG online 282
98
cited as: Higher Regional Court Munich (DE 1997). 02/11/2000 Federal Supreme Court
Case No. I ZR 246/98, NJW 2001, pp 2173-2176
48
cited as: Federal Supreme Court (DE 2000). 12/11/2001 Higher Regional Court Hamm
Case No. 13 U 102/01, CISG online 1430
69
cited as: Higher Regional Court Hamm (DE 2001). 11/04/2002 Local Court Viechtach Case No. 1 C 419/01, CISG online 755
72
cited as: Local Court Viechtach (DE 2002). 21/03/2003 District Court Berlin
Case No. 103 O 213/02, CISG online 785
72
cited as: District Court Berlin (DE 2003). 15/09/2004 Higher Regional Court Munich
Case No. 7 U 2959/04, CISG online 1013
57
cited as: Higher Regional Court Munich (DE 2004). 20/06/2005 Higher Regional Court Oldenburg
Case No. 9 SchH 2/05, SchiedsVZ 2006, pp 223-224
99
cited as: Higher Regional Court Oldenburg (DE 2005).
XX
Heidelberg University- Memorandum for Claimant
06/10/2005 Federal Supreme Court
Case No. I ZR 322/02, NJWRR 2006, pp 834-836
48
cited as: Federal Supreme Court (DE 2005). 21/06/2006 Local Court Landsberg am Lech
Case No. 1 C 1025/05, CISG online 1493
69
cited as: Local Court Landsberg (DE 2006). 24/10/2006 Higher Regional Court Frankfurt
Case No. 26 Sch 6/06, SchiedsVZ 2007, pp 217-218
100
cited as: Higher Regional Court Frankfurt (DE 2006). 12/12/2006 District Court Coburg
Case No. 22 O 38/06, CISG online 1447
69
cited as: District Court Coburg (DE 2006). 06/07/2007 Local Court Freiburg
Case No. 4 C 4003/06, CISG online 1596
71
cited as: Local Court Freiburg (DE 2007). 05/03/2008 Higher Regional Court Munich
Case No. 7 U 4969/06, CISG online 1686 cited as: Higher Regional Court Munich (DE 2008).
69
07/04/2009 District Court Potsdam
Case No. 6 O 171/08, CISG online 2164
69
cited as: District Court Potsdam (DE 2009). 18/05/2009 District Court Munich I
Case No. 28 O 20906/06, CISG online 1998
69
cited as: District Court Munich I (DE 2009).
XXI
Heidelberg University- Memorandum for Claimant
17/02/2011 Higher Regional Court Frankfurt
Case No. 26 Sch 13/10, SchiedsVZ 2013, pp 49-62
61
cited as: Higher Regional Court Frankfurt (DE 2011). 24/02/2011 Higher Regional Court Coblenz
Case No. 6 U 555/07, CISG online 2301
98
cited as: Higher Regional Court Coblenz (DE 2011). Greece
2006
Court of Appeal Lamia
Case No. 63/2006, URL: http://cisgw3.law.pace.edu/ca ses/060001gr.html
87
cited as: Court of Appeal Lamia (GR 2006). 01/01/2009 District Court Athens
Case No. 4505/2009, CISG online 2228
84
cited as: District Court Athens (GR 2009). Hong Kong
29/10/1991 Supreme Court
Fung Sang Trading Ltd. v Kai Sun Sea Products & Food Co. Ltd., Case No. 2674/1991, URL: http://www.translex.org/304400
100
cited as: “Fung Sang” Supreme Court (HK 1991). 05/05/1993 Supreme Court
Lucky-Goldstar International Ltd v NG Moo Kee Engineering Ltd, Case No. 94/1993, [1993] 1 HKC 404
100, 101
cited as: “Lucky-Goldstar” Supreme Court (HK 1993). Israel
02/11/1988 Supreme Court
Adras Chmorey Binyan v. Harlow & Jones GmbH, Case No. 20/82, URL: http://cisgw3.law.pace.edu/ca ses/881102i5.html
49
cited as: “Adras” Supreme Court (IL 1988).
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Heidelberg University- Memorandum for Claimant
Italy
21/11/1983 Supreme Court
X Y.B. Comm. Arb. 478 (1985)
101
cited as: Supreme Court (IT 1983). 25/02/2004 District Court Padova
Case No. 40552, CISG online 819
63
cited as: District Court Padova (IT 2004). 16/01/2009 District Court Breda
Case No. 197586/KG ZA 08659, CISG online 1789
71
cited as: District Court Breda (NL 2009). 11/05/2011 District Court Graven- Case No. 324781, URL: hage http://www.unilex.info/case.c fm?id=1592
46
cited as: District Court Gravenhage (NL 2011). New Zealand
27/11/2000 Court of Appeal of New Zealand
Hideo Yoshimoto v Canterbury Golf International Ltd, Case No. 2000 NZCA 350, CISG online 1080
46
cited as: Court of Appeal (NZ 2000). Poland
27/01/2006 Supreme Court
Case No. III CSK 103/05, CISG online 1399
57
cited as: Supreme Court (PL 2006). 10/02/1995 Local Court Moscow Russian Federation
CLOUT Case No. 148
102
cited as: Local Court Moscow (RU 1995). Singapore
09/05/2007 Court of Appeal
Soh Beng Tee & Co Prop Ltd v Fairmount Development Pte Ltd, [2007] 3 SLR 86
24, 31
cited as: “Soh Beng Tee” Court of Appeal (SG 2007).
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Heidelberg University- Memorandum for Claimant
Spain
28.01.2000 Supreme Court
Case No. 454/2000, CISG online 503
87
cited as: Supreme Court (ES 2000). Sweden
27/10/2000 Supreme Court
Case No. T 1881-99
61
cited A: Supreme Court (SE 2000). Switzerland
10/05/1982 Supreme Court
DFT 108 Ia 197, 201
100
cited as: Supreme Court (CH 1982). 23/06/1992 Supreme Court
01/09/1994 District Court Zug
“Fincantieri-Cantieri Navali Italiani SpA v. Oto Melara SpA and others cited as: Supreme Court (CH 1992). Case No. A 3 1993 84, CISG online 231
24
70
cited as: District Court Zug (CH 1994). 20/02/1997 District Court Saane
Case No. T 171/95, CISG online 426
45
cited as: District Court Saane (CH 1997). 19/12/1997 Commercial Court Aargau
Case No. OR.97.00056, CISG online 418
69
cited as: Commercial Court Aargau (CH 1997). 29/02/2000 Supreme Court
BGE 126 III, pp 209-218
48
cited as: Supreme Court (CH 2000/1). 15/09/2000 Supreme Court
Case No. 4C.105/2000, CISG online 769
87
cited as: Supreme Court (CH 2000/2).
XXIV
Heidelberg University- Memorandum for Claimant
3/10/2000
Supreme Court
Case No. 4P.60/2000
91
cited as: Supreme Court (CH 2000/3). 23/05/2006 Higher Cantonal Court Valais
Case No. C1 06 28, CISG online 1532
71
cited as: Higher Cantonal Court Valais (CH 2006). 07/12/2006 Supreme Court
Case No. 5C.66/2006, BGE 133 III, pp 153-167
48
cited as: Supreme Court (CH 2006). 03/03/2008 Supreme Court
Case No. 4A_305/2007, BGE 134 III, pp 306-313
48
cited as: Supreme Court (CH 2008). 11/02/2010 Supreme Court
Case No. 4A_444/2009
93
cited as: Supreme Court (CH 2010). 17/04/2013 Supreme Court
Case No. 4A_669/2012
24, 93
cited as: Supreme Court (CH 2013/1). 23/04/2013 Supreme Court
Case No. 4A_672/20121
31, 94
cited as: Supreme Court (CH 2013/2). 27/05/2014 Supreme Court
Case No. 4A_508/2013
94
cited as: Supreme Court (CH 2014).
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Heidelberg University- Memorandum for Claimant
USA
31/10/1955 District Court for the Southern District of New York
Technical Tape Corporation v. Minnesota Mining and Manufacturing Company, 135 F. Supp. 505 (1955)
27
cited as: “Technical Tape Corporation” District Court SD New York (US 1955). 22/01/1962 District Court for the Southern District of California
Federal Communications Commission v. Taft B. Schreiber and Mca Inc., Case No. 1258-61
27
cited as: “Federal Communications Commission” District Court SD California (US 1962). 11/04/1963 Supreme Court of the State of Minnesota
Suad A. Niazi and another v. St. Paul Mercury Insurance Company, No. 39,016, 121 N.W. (2d) 349
100
cited as: “Suad A. Niazi” Supreme Court Minnesota (US 1963). 17/02/1964 Court of Appeals for the 9th Circuit
Federal Communications Commission v. Taft B. Schreiber and Mca Inc., 329 F.2d 517
27
cited as: “Federal Communications Commission” Court of Appeals 9th Circ (US 1964). 19/12/1968 Supreme Court of the State of New York
Laboratorios Grossman, S.A. v. Forest Laboratories, Inc., 31 A.D.2d 628
101
cited as: “Laboratories Grossman” Supreme Court New York (US 1968).
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Heidelberg University- Memorandum for Claimant
02/07/1969 Court of Appeals New Bauer Int'l Corp. v. EtablisseYork ments Soules & Cie, 303 N.Y.S.2d 884 (N.Y. 1969)
101
cited as: “Bauer Int'l Corp” Court of Appeals New York (US 1969). 22/11/1982 Court of Appeals for the 9th Circuit
Playboy Enterprises, Inc. v. Baccarat Clothing Co., Inc., Meier Caspi and Tchia Caspi, 692 F.2d 1272
48
cited as: “Playboy” Court of Appeals 9th Circ (US 1982). 15/01/1991 Court of Appeals for the 2nd Circuit
26/03/1993 Court of Appeals for the 2nd Circuit
David L. Threlkeld & Co. v. Metallgesellschaft Limited, 923 F.2d 245 cited as: “Threlkeld” Court of Appeals 2nd Circ (US 1991). Folkways Music Publishers, Inc. v. Weiss, 989 F.2d 108
25
25
cited as: “Folkways Music” Court of Appeals 2nd Circ (US 1993). 22/06/1993 District Court for the Southern District of New York
Warnes SA v. Harvic Int'l Ltd, 1993 WL 228028 (S.D.N.Y.)
101
cited as: “Warnes SA“ District Court SD New York (US 1993). 27/09/1993 Court of Appeals for the 9th Circuit
Intel Corporation v. Terabyte International, Inc., 8 F.3d 27
48
cited as: “Intel” Court of Appeals 9th Circ (US 1993).
06/12/1995 Court of Appeals for 2nd Circuit
Delchi Carrier S.p.A. v. Rotorex Corporation, CISG online 140
44,45,63
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Heidelberg University- Memorandum for Claimant
cited as: “Delchi Carrier” Court of Appeals 2nd Circ (US 1995). 18/11/2002 Federal District Court Czarina, LLC v. W.F. Poe for the Middle District Syndicate, 254 F. Supp. 2d of Florida 1229
91
cited as: “Czarina LLC” District Court MD Florida (US 2002). 19/11/2002 Court of Appeals for the 7th Circuit
Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Company, Inc., d.b.a. Maurice Lenell Cooky Company, CISG online 684
75,75,83
cited as: “Zapata” Court of Appeals 7th Circ (US 2002). 29/01/2003 Federal District Court for the Northern District of Illinois
Ajax Tool Works, Inc. v. Can-Eng Manufacturing Ltd., CISG online 772
67
cited as: “Ajax Tool Works” District Court ND Illinois (US 2003). 05/05/2003 Court of Appeals for the 9th Circuit
Chateau des Charmes Wines Ltd. v. Sabaté USA Inc., Sabaté S.A., CISG online 767
101
cited as: “Chateau des Charmes Wines” Court of Appeals 9th Circ (US 2003). 21/05/2004 Federal District Court for the Northern District of Illinois
Chicago Prime Packers, Inc. v. Northam Food Trading Co., et al, CISG online 851
67
cited as: “Chicago Prime Packers” District Court ND Illinois (US 2004). 23/08/2006 Federal District Court for the Southern District of New York
TeeVee Tunes, Inc. et al v. Gerhard Schubert GmbH, CISG online 1272
44
XXVIII
Heidelberg University- Memorandum for Claimant
cited as: “TeeVee Tunes” District Court SD New York (US 2006). 05/09/2006 Federal District Court for the Southern District of Indiana
Ball v. Versar, Inc., 454 F.Supp.2d 783 (2006)
102
cited as: "Ball" District Court SD Indiana (US 2006).
12/09/2006 Court of Appeals of the 11th Circuit
Treibacher Industrie, A.G. v. Allegheny Technologies, Inc., CISG online 1278
87
cited as: “Treibacher Industrie“ Court of Appeals 11th Circ (US 2006). 25/07/2008 Federal District Court for the Western District of Pennsylvania
Norfolk Southern Railway Company v. Power Source Supply, Inc., CISG online 1776
67
cited as: “Norfolk Southern Railway” District Court WD Pennsylvania (US 2008). 15/04/2009 Federal District Court San Lucio, S.r.l and San Lufor the District of New cio USA v. Import & Storage Jersey Services, LLC, Battaglia & Co., Inc., Cisalpino, Inc., Fernando Miguez, Inc., Packing Products Co., Inc., Vorace, Inc., Sanitti LLC, and Robert Quattrone, CISG online 1836
67
cited as: “San Lucio” District Court New Jersey (US 2009).
25/03/2011 Federal District Court for the District of Kansas
In Re Application by Rhodianyl SAS & Rhodia Opérations SAS,
13
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Heidelberg University- Memorandum for Claimant
cited as: “Re Rhodianyl SAS” District Court Kansas (US 2011). 10/08/2012 Court of Appeals for the 11th Circuit
Plaintiffs' Shareholders Corporation v. Southern Farm Bureau Life Insurance Company
102
cited as: "Shareholders" Court of Appeals 11th Circ (US 2012). 01/03/2013 Federal District Court for the Northern District of California
Apple, Inc. v. Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Samsung Telecommunications America, LLC, Case No. 15-2088
48
cited as: “Apple” District Court ND California (US 2013). 30/09/2014 Federal District Court for the Southern District of New York
Stemcor USA, Inc v. Miracero, S.A. de C.V., CISG online 2659
73
cited as: “Stemcor USA” District Court SD New York (US 2014).
XXX
Heidelberg University- Memorandum for Claimant
Index of Arbitral Awards Institution
Date
Case
13/09/2001 Partial Award, Ad-hoc Arbitration proceeding Stockholm, CME Czech Republic B.V. v. The Netherlands
Cited § 18
cited as: Ad-hoc Case (2001). AAA
23/10/2007 Macromex Srl. v. Globex International Inc., American Arbitration Association International Centre for Dispute Resolution, CISG online 1645
84
cited as: AAA Case (2007). ATCP
24/02/2001 Arbitral Tribunal of the City of Panama, URL: http://www.unilex.info/case.cfm?id=677
46
cited as: ATCP Case (2001). BCCI
25/05/1999 Arbitration Court of the BCCI, Case No. VB 97142, CISG online 500
87
cited as: BCCI Case (1999). CAM
30/11/2006 Arbitration Center of Mexico, URL: http://www.unilex.info/case.cfm?id=1149
46
cited as: CAM Case (2006). CIETAC
04/06/1999 China International Economic & Trade Arbitration Commission, CISG online 1806
59
cited as: CIETAC Case (1999). CIETAC
29/09/2004 China International Economic & Trade Arbitration Commission, CISG online 1600
59
cited as: CIETAC Case (2004).
FTCA
30/10/2006 Foreign Trade Court attached to the Serbian Chamber of Commerce (Trolleybus case), CISG online 2081
84
cited as: FTCA Case (2006). FTCA
01/10/2007 Foreign Trade Court attached to the Serbian Chamber of Commerce (Timber case), CISG online 1793
84
cited as: FTCA Case (2007).
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Heidelberg University- Memorandum for Claimant
FTCA
15/06/2010 Foreign Trade Court attached to the Serbian Chamber of Commerce (Euro diesel case), CISG online 2261
84
cited as: FTCA Case (2010). HCC
21/06/1996 Arbitral Tribunal of Hamburg Chamber of Commerce (Chinese goods case), CISG online 465
84
cited as: HCC Case (1996). ICC
1987
International Chamber of Commerce Court of Arbitration No. 5542
19
cited as: ICC Case 5542 (1987). ICC
1990
International Chamber of Commerce Court of Arbitration No. 5946, URL: http://www.trans-lex.org/205946
93
cited as: ICC Case 5946 (1990). ICC
1992
International Chamber of Commerce Court of Arbitration No. 7585, CISG online 105
85
cited as: ICC Case 7585 (1992). ICC
1995
International Chamber of Commerce Court of Arbitration No. 8128, CISG online 526
59
cited as: ICC Case 8128 (1995). ICC
1996
International Chamber of Commerce Court of Arbitration No. 8486, URL: http://www.trans-lex.org/208486
100
cited as: ICC Case 8486 (1996). ICC
ICC
06/1996
06/1999
International Chamber of Commerce Court of Arbitration No. 5835, URL: http://www.unilex.info/case.cfm?id=654 cited as: ICC Case 5835 (1996). International Chamber of Commerce Court of Arbitration No. 9187, CISG online 705
46
84
cited as: ICC Case 9187 (1999). ICC
10/2001
International Chamber of Commerce Court of Arbitration No. 9078, URL: http://www.unilex.info/case.cfm?id=1059
24
cited as: ICC Case 9078 (2001).
XXXII
Heidelberg University- Memorandum for Claimant
ICC
2004
International Chamber of Commerce Court of Arbitration No. 12460, URL: http://www.unilex.info/case.cfm?id=1411
46
cited as: ICC Case 12460 (2004). ICC
2004
Procedural Order, International Chamber of Commerce Court of Arbitration No. 12296, Decisions on ICC Arbitration Procedure: A Selection of Procedural Orders Issued by Arbitral Tribunals Acting Under ICC Rules of Arbitration (2003-2004)
10
cited as: ICC Case 12296 (2004). ICC
2004
Procedural Order, International Chamber of Commerce Court of Arbitration No. 12761, Decisions on ICC Arbitration Procedure: A Selection of Procedural Orders Issued by Arbitral Tribunals Acting Under ICC Rules of Arbitration (2003-2004)
10
cited as: ICC Case 12761 (2004).
ICC
2004
Procedural Order, International Chamber of Commerce Court of Arbitration No. 13225, Decisions on ICC Arbitration Procedure: A Selection of Procedural Orders Issued by Arbitral Tribunals Acting Under ICC Rules of Arbitration (2003-2004)
10
cited as: ICC Case 13225 (2004). ICC
2009
International Chamber of Commerce Court of Arbitration No. 11961, Yearbook XXXIV (2009), p 32
61
cited as: ICC Case 11961 (2009). ICSID
15/10/2008 Railroad Development Corporation v. Republic of Guatemala, Case No. ARB/07/23
11
cited as: “Railroad Development” ICSID Case (2008). ICSID
26/04/2010 Procedural Order No. 2, Caratube International Oil Company LLP v. Republic of Kazakhstan, Case No. ARB/08/12
11
cited as: “Caratube” ICSID Case (2010). ICSID
29/03/2011 Procedural Order No. 1, Tidewater Inc., Tidewater Investment SRL, Tidewater Caribe, C.A. et al. v. The Bolivarian Republic of Venezuela, Case No. ARB/10/5
19, 20
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Heidelberg University- Memorandum for Claimant
cited as: “Tidewater” ICSID Case (2011). ICSID
25/08/2014 Apotex Holdings Inc. and Apotex Inc. v United States of America, International Centre for Settlement of Investment Disputes, Case No. ARB(AF)/12/1
94
cited as: “Apotex” ICSID Case (2014). IUSCT
15/09/1983 Procedural Order, Iran-United State Claims Tribunal, Case No. 37&231
31
cited as: IUSCT Case 37&231 (1983). LCIA
unpublished
Procedural Order No. 1, London Court of International Arbitration, Case No. 5699
11
cited as: LCIA Case 5699. NAFTA
31/07/2003 Procedural Order No. 2, International Thunderbird Gaming Corporation v Mexico, NAFTA Investor-State Arbitration
18
cited as: “Thunderbird” NAFTA (2003). NAFTA
08/06/2009 Glamis Gold, Ltd. v. United States of America, NAFTA Investor-State Arbitration
11
cited as: “Glamis Gold” NAFTA (2009). PCA
22/11/2002 Dr. Horst Reineccius, First Eagle SoGen Funds, Inc. and others v. Bank for International Settlements, Permanent Court of Arbitration, Case No. 2000-03
18
cited as: PCA Case 2000-03 (2002). RFCCI
06/06/2000 Tribunal of International Commercial Arbitration at the RFCCI, CISG online 1249
84
cited as: RFCCI Case (2000). RFCCI
28/05/2004 Tribunal of International Commercial Arbitration at the RFCCI, CISG online 1513
87
cited as: RFCCI Case (2004). SCC
1998
Arbitration Institute of the Stockholm Chamber of Commerce Arbitration, CISG online 1301
84
cited as: SCC Case (1998).
XXXIV
Heidelberg University- Memorandum for Claimant
SCC
05/04/2007 Arbitration Institute of the Stockholm Chamber of Commerce Arbitration, CISG online 1521
49, 56
cited as: SCC Case (2007). UCCT
2005
Tribunal of International Commercial Arbitration of the UCCT, CISG online 1372
87
cited as: UCCT Case (2005).
XXXV
Heidelberg University- Memorandum for Claimant
Index of rules CIETAC Rules
CIETAC Arbitration Rules
CISG
United Nations Convention on Contracts for the International Sale of Goods
Hague Evidence Convention
Convention on the Taking of Evidence Abroad in Civil or Commercial Matters
ICC Rules
ICC Rules of Arbitration
LCIA Rules
LCIA Arbitration Rules (2014)
NYC
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
SCC Rules
SCC Arbitration Rules (2010)
SIAC Rules
2013 SIAC Rules
UNCITRAL Model Law
UNCITRAL Model Law on International Commercial Arbitration, with amendments as adopted in 2006
VR
Rules of Arbitration – Vienna Rules
XXXVI
Heidelberg University- Memorandum for Claimant
Statement of Facts 1
Kaihari Waina Ltd (hereafter CLAIMANT) is a wine marchant based in Equatoriana. It is specialized in top quality wines for collector’s and high end gastronomy markets. Vino Veritas Ltd (hereafter RESPONDENT) is one of the top vineyards in Mediterraneo and producer of the awardwinning “Mata Weltin”. SuperWines is an Equatorianian wine wholesaler, which has recently started to expand into the market of high end wines. In particular, it follows a business model regarding the collector’s market close to that of CLAIMANT. 22/04/2009
CLAIMANT and RESPONDENT conclude the Framework Agreement (hereafter FA) containing an arbitration clause. This contract provides for the purchase of a minimum of 7,500 and a maximum of 10,000 bottles of diamond quality wine to be ordered no later than December 20 each year.
04/11/2014
CLAIMANT orders the maximum guaranteed number of 10,000 bottles, because of an increase in pre-orders it had already received. It even asks for the opportunity to purchase another 2,000 bottles if possible.
01/12/2014
RESPONDENT replies that, due to poor harvests, it could only deliver 4,500 – 5,000 bottles of Mata Weltin 2014. At the same day, RESPONDENT offers CLAIMANT’s
biggest competitor SuperWines 4,500 bottles of this very wine. Subse-
quently, another 1,000 bottles are sold to SuperWines. 04/12/2014
After CLAIMANT has einforced its order and pointed out obligations under the contract, RESPONDENT’S CEO, Mr. Weinbauer, terminates the contract and refuses to deliver any bottles.
05/12/2014
After contacting a total of three law firms in Mediterraneo, CLAIMANT agrees to be represtented by LawFix based on a contingent fee.
12/12/2014
The High Court of Mediterraneo grants an interim injunction sought by CLAIMANT: RESPONDENT is
prohibited from selling the 10,000 bottles to other custom-
ers. 14/01/2015
RESPONDENT asks CLAIMANT for clarification of the arbitration agreement as it considers the clause void for uncertainty.
30/01/2015
RESPONDENT initiates court proceedings before the High Court of Mediterraneo seeking a declaration of non-liability.
1
Heidelberg University- Memorandum for Claimant
23/04/2015
The Court dismisses the case, because it lacks jurisdiction due to the arbitration agreement in Art 20 FA.
25/05/2015
CLAIMANT receives the invoice for its legal fees from LawFix, the law firm it hired. They amount to US$ 33,125 in its application for interim relief and US$ 16.350 in its defense against the declaration on non-liability.
14/07/2015
The Secretariat of VIAC receives CLAIMANT’S Statement of Claim; the Arbitration proceeding commences.
Jurisdiction and applicable law 2
In Art 20 FA, the Parties formed a valid arbitration agreement. The seat of the arbitration is Vindobona, Danubia. RESPONDENT stated that it “does not challenge the jurisdiction of this Arbitral Tribunal but that RESPONDENT explicitly consented […] that this Arbitral Tribunal established on the basis of the VIAC Rules has jurisdiction to hear the dispute”. [ ] With regard to the applicable law, “the Parties are in agreement that the contract, as well as the arbitration clause included in it, are governed in principle by the CISG” [PO1-§5(3)-p51].
Introduction and Summary of Arguments 3
This dispute is about a party who suffered a breach of contract and undertook all steps possible to mitigate the defaulting party’s liability, because it wants to preserve the very business relationship. In this respect, CLAIMANT abstains from further focusing on a breach of contract, as for the subsequent hearings, it is “assumed that RESPONDENT’S termination of the contract and the refusal to deliver any wine was a breach of contract” [PO1-§4-p50]. Rather, CLAIMANT respectfully raises the question as to how much can be demanded of a party when it exercises its rights resulting from a breach of contract.
4
Turning to the preliminary procedural question, it is CLAIMANT’S contention that it undertook every possible step in specifying the documents requested. Therefore, the request constitutes no “discovery”, but is “narrow and specific” under the decisive Art 3.3 (a)(ii) IBA Rules. Thus, if the request is rejected, CLAIMANT would be deprived of its right to be heard (Part I).
5
The very reason why CLAIMANT brought the amicable business relationship before the Tribunal is that RESPONDENT’S non-performance caused loss of profit for CLAIMANT. However, CLAIMANT
would like to prevent the disclosure of its profit calculations. Therefore, it proposes the
assumption that RESPONDENT’S profits indicate CLAIMANT’S loss of profit. This assumption is well-founded in the facts and conforms to Art 74 CISG (Part II).
2
Heidelberg University- Memorandum for Claimant
6
Concerning the substantive requests respectfully brought before the Tribunal, the request of reimbursement for the legal fees incurred in the interim relief concerns a measure CLAIMANT undertook in order to prevent accomplished facts. In addition, the amount of legal fees was inevitable for CLAIMANT. Hence, the fees are reimbursable under Art 74 CISG (Part III).
7
Finally, the declaratory relief which caused further legal fees was not even initiated by CLAIMANT.
Instead, they were necessary for the defense against a request brought by RESPONDENT.
Thereby, RESPONDENT breached the Arbitration Agreement under which the Parties mutually agreed to prevent such court fees. Hence, they are recoverable (Part IV).
Part I: Respondent should be ordered to produce the requested documents 8
CLAIMANT respectfully requests the Tribunal to order RESPONDENT to produce all documents related to the sale to SuperWines as specified in SoC-§27-p7. These documents are indispensable for the substantiation of CLAIMANT’S damages quota, further elaborated on in Part II of this memorandum [infra §35]. In this regard, CLAIMANT submits that the Tribunal has the power to grant requests for document production, if they conform to the standard of international arbitration practice. In particular, the Arbitration Agreement in Art 20 FA does not exclude evidence requests as long as they conform to this very standard (1.). Applying the international arbitration standard, CLAIMANT’S request is admissible. Hence, it is at the discretion of the Tribunal to grant the request (2.). For the exercise of this discretionary power, it is CLAIMANT’S contention that its procedural interest outweighs RESPONDENT’S. Therefore, under the facts as well as under the law, CLAIMANT’S request should be granted (3.). 1.
Under the standard of international arbitration practice, the Tribunal has the power to order document production
9
CLAIMANT submits that, generally, the Tribunal has the power to order document production, if it conforms to the standard of international arbitration practice. The source of this power is the very source of arbitration: party autonomy. Precisely, CLAIMANT submits that the Parties’ arbitration clause provides for this power, as it incorporates the Vienna Rules comprising a general discretion (1.1). The Parties specified this discretion in their arbitration agreement as comprising “international practice” (1.2) and the exclusion of “discovery” does not concern this international practice (1.3). As a final remark, the burden of proof under the party-chosen CISG remains unaffected (1.4).
3
Heidelberg University- Memorandum for Claimant
1.1. Generally, the Vienna Rules provide for a discretion 10
The starting point for adhering to the Parties’ arbitration agreement is the Vienna Rules incorporated therein. Art 28 VR provides that the Tribunal may conduct the arbitration “in the manner it deems appropriate”, if exercised in accordance with the Parties’ agreement. Thereby, the Tribunal is afforded a broad discretion allowing it to deal with a party’s request for document production [Handbook Vienna Rules/Haugeneder/Netal p173; Born p2326; Zuberbühler/Hofmann p34; cf “Jardine Lloyd” Court of Queen’s Bench Alberta (CA 2005)]. This conforms to the corresponding concept of leading institutional rules such as the ICC, the LCIA, CIETAC, SIAC and the SCC [cf Art 22 (2) ICC Rules; Art 14 (5) LCIA Rules; Art 33 (1) CIETAC Rules; Rule 16 (1) SIAC Rules; Art 19 (1) SCC Rules; ICC Case 13225 (2004), ICC Case 12761 (2004), ICC Case 12296 (2004)]. 1.2. The discretion incompasses the standard of the international practice
11
CLAIMANT respectfully invites the Tribunal to apply its discretion in conformity with the standard of international arbitration practice. In particular, the Parties’ Arbitration Agreement provides: “[T]he dispute shall be decided by arbitration […] in accordance with international practice.” In this regard, CLAIMANT submits that the 2010 IBA Rules on the Taking of Evidence are of paramount importance for the international arbitration practice. Some authors regard them as “default rules” [Voser p116], others even as a communis opinio [Blessing p200; Redfern/Hunter §6.95]. Arbitral tribunals consider them frequently [“Railroad Development” ICSID Case (2008); LCIA Case 5699; “Glamis Gold” NAFTA (2009); “Caratube” ICSID Case (2010); Kaufmann-Kohler p1324]. Foremost, the IBA Rules have been developed to bridge the gap between Common Law and Civil Law practice [Preamble IBA Rules; Kaufmann-Kohler p1327; Tercier/Bersheda p85]. Bearing in mind that CLAIMANT comes from a Common and RESPONDENT from a Civil Law country [PO2-§68-p62], the IBA Rules best account for their national differences. Therefore, CLAIMANT will frequently refer to both, the IBA Rules themselves and the Official Commentary of the 2010 IBA Rules Working Party which contain the “principles” the Working Party was “guided” by concerning document production [IBA Commentary p7]. 1.3. The term “discovery” in Art 20 FA does not restrict this power
12
CLAIMANT furthermore submits that the Tribunal’s discretion under international practice is not restricted by the passage in Art 20 FA pursuant to which “no discovery shall be allowed”
4
Heidelberg University- Memorandum for Claimant
[CExh1-§6-p9]. However, CLAIMANT proposes a thorough construction of the word “discovery” on the one hand and illustrates the distinctions under the IBA Rules on the other hand. These distinctions will show that the exclusion in Art 20 FA does not restrict the international standard proposed. Concerning the construction of “discovery”, CLAIMANT proposes the applicable [supra §2] Art 8 (1), (3) CISG, i.e. the Parties’ “intent” as the standard for construing the phrase at issue. The leading CISG commentary points out: “The primary starting-point […] must […] be the wording of the statement.” [Schlechtriem/Schwenzer/Schmidt-Kessel Art 8 §13]. 13
It is CLAIMANT’S contention that the term “discovery” is not “merely another word for document production” [cf ASoC-§27-p28]. Instead, it is generally understood as a label given to a specific regime customary in Common Law countries. In discovery “the applicant is seeking production of documents with a view to ascertaining whether they may be useful rather than with a view to adducing them in evidence as proof of some fact” [“Panayiotou” Chancery Div (EN 1993)]. In other words, the object of discovery is to build a claim and not to obtain specified information in order to prove an already established claim. [cf “BNP Paribas” Commercial Court (EN 2003); “Re Rhodianyl SAS” District Court Kansas (US 2011); Marghitola p12]. This argument is further supported by the 1998 replacement of the term “discovery” with “disclosure” in English courts to denote standard document production [Born p2322; Matthews/Malek §1.30-1.32].
14
The Parties’ motivation for the exclusion of “discovery” indicates no different construction under Art 8 (1) CISG: The clause excluding discovery was suggested by CLAIMANT’S then COO whose brother’s company “had been involved in a court case with extensive pre-trial discovery in the United States recently” [CExh12-§3-p20]. RESPONDENT’S CEO was content with this proposal, because he had faced an “extensive” request for documents in a law suit [RExh1-§§5-7-p31]. Therefore, he “understood the clause to exclude [merely those] types of requests for documents which go beyond requests for particular documents” [RExh1-§8-p31]. Thus, the motivation of the Parties was to exclude broad and unspecific “fishing” requests.
15
It is precisely the Parties’ intention that the IBA Rules’ international standard serve most adequately. Particularly, the IBA Working Party “designed [these Rules] to prevent broad fishing expeditions” [IBA Commentary p8]. Instead, the core provision, Art 3.3 IBA Rules requires a “narrow and specific” request. It becomes evident, both from the wording as well as the Working Party’s elaborations, that “discovery” shall be prevented: Principle No 1 underlying this rule states: “Expansive […] discovery is generally inappropriate.” Principle No 2 states: “It was believed, that some level of document production is appropriate in international arbitration. […] 5
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This includes […] documents […].” This rationale conforms to other international regulations of civil procedure for document production, albeit excluding extensive discovery [Hague Evidence Convention; ALI/UNIDROIT-PTCP Art 16]. For these reasons, the IBA Rules as the cornerstone of the Tribunal’s power are not excluded by the Parties’ Arbitration Agreement. Rather, the IBA Rules are the very counterdraft to “discovery”. 1.4. Furthermore, the CISG’s burden of proof is unaffected 16
CLAIMANT contends that ordering document production is necessary as the CISG does not govern the issue of furnishing evidence. Contrary to RESPONDENT’S submission, ordering document production does not “disturb the balance” of the burden of proof [cf ASoC-§31-p28]. Whereas the allocation of the burden of proof is governed by the CISG, “the way in which evidence may be furnished […] is determined by procedural rules of the lex fori“ [Schlechtriem/Schwenzer/Schwenzer Art 74 §66; cf Supreme Court (DE 2002); CISG-AC Op 6 §2.1; MunichComm/Huber, Art 74 §58; Staudinger/Magnus Art 74 §61]. 2.
17
Claimant’s request is no “discovery”, but “narrow and specific”
Contemplating that the distinction between “discovery” and international practice is crucial for the Tribunal’s power to order document production, CLAIMANT submits that its request for document production conforms to the IBA Rules and thus constitutes no request for discovery. The documents are indispensable for CLAIMANT’S loss of profit calculation and thus material to the case’s outcome as required under Art 3.3 (b) IBA Rules. Further, the requested documents are in RESPONDENT's possession and CLAIMANT cannot obtain them in another way under Art 3.3 (c) IBA Rules. This leads to the core of the request’s evaluation, namely Art 3.3 (a)(ii) IBA Rules: “A Request to Produce shall contain […] a description in sufficient detail […] of a narrow and specific requested category of Documents that are reasonably believed to exist.”
18
Before CLAIMANT proposes the subsequent thorough analysis of the request, it would like to set the threshold the request has to meet. In its commentary, the IBA Working Party specifies both the rationale as well as the requirements of this provision [p9]: “[I]t was understood that some documents would be relevant and material […], but that they may not be capable of specific identification. Indeed, all members of the Working Party and of the Subcommittee, from common law and civil law countries alike, recognised that arbitrators would generally accept such requests if [...] [t]he requesting party [...] can identify [...] the nature of the documents sought and the
6
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general time frame in which they would have been prepared [...] under Art 3.3 (a)(ii).” This threshold has been applied analogously by tribunals [PCA Case 2000-03 (2002); Ad-hoc Case (2001); “Thunderbird” NAFTA (2003)]. CLAIMANT submits that its request meets this threshold, as subject matter (2.1) and time frame (2.2) are as restricted as possible. 2.1. Claimant’s request sufficiently specified its subject matter 19
CLAIMANT’S request exclusively addresses the documents indispensable for the proceedings and is thus reasonably limited in its subject matter. In contrast to “fishing”-like discoveries, CLAIMANT does not intent to exploit RESPONDENT's business records in search for possible claims. Quite the contrary, CLAIMANT exclusively focuses on the profit RESPONDENT realized through the transaction with SuperWines. Moreover, other tribunals have granted requests under a guideline analogous to Art 3.3 (a)(ii) ordering the production of “all documents passing between the Defendant and the Engineer relating to or in any way referring to […] an extension of time" [ICC Case 5542 (1987)], and “all documents related to meetings […] at which the Investment Law was discussed” [“Tidewater” ICSID Case (2011)].
20
Furthermore, it has to be considered that RESPONDENT and SuperWines signed no official sales contract [PO2-§23-p56]. This makes it impossible for CLAIMANT to name a particular document in which the price and the premium were recorded. However, as the IBA Commentary illustrated, this is not necessary. As the tribunal in Tidewater pointed out: "Some lack of specificity is clearly contemplated by these [i.e. the IBA] Rules, because a party will always be limited in its ability to specifically identify documents of which it only believes to exist" [“Tidewater” ICSID Case (2011)]. Consequently, the subject matter of CLAIMANT’S request is sufficiently limited. 2.2. Claimant’s request sufficiently specified its time frame
21
With regard to the time frame, CLAIMANT restricted its request to the period in which the information sought could have been plausibly established, namely January 1, 2014 to July 14, 2015 [SoC-§27-p7]. Jean Barolo took over SuperWines in January 2014 and met with Mr. Weinreich in this very month [PO2-§20-p55]. Consequently, the time frame requested commences with the month the “friend” of RESPONDENT’S CEO took office. Further discussions took place in
7
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June and July 2014 and Mr. Barolo accepted Mr. Weinbauer’s offer for 4,500 bottles on December 2, 2014 [PO2-§21-p56]. Yet, RESPONDENT eventually sold a total of 5,500 bottles to SuperWines [PO2-§24-p56]. It is “unknown” when the Parties agreed on the final price for this quantity. Although Mr. Barolo stated in an interview in May 2015 that SuperWines paid a “market entry fee” to RESPONDENT [ibid], it is questionable whether this statement holds true. In view of the flexible pricing in the wine industry [cf PO2-§61-p61; Art 4 FA], further payments or repayments might have been made until the delivery of the bottles in May 2015, or even thereafter. Under these circumstances, the time frame set is sufficiently limited. 22
In conclusion, CLAIMANT’S request is sufficiently specified with regard to subject matter and time under the facts, the wording, the rationale and the jurisprudence on Art 3.3 (a)(ii) IBA Rules. Therefore, it should not be deemed as “discovery”, but as in conformity with international arbitration practice. Hence, the Tribunal has the discretion to grant the request for document production. Claimant’s procedural interests outweigh Respondent’s
3. 23
CLAIMANT submits that under Art 28 (1) VR the Tribunal has the discretion to decide over a request for document production which conforms to the international standard. It is CLAIMANT’S contention that the
exercise of this discretion should adhere to a balancing of the Parties’
procedural interests as well as arbitration principles concerned [cf “Caratube” ICSID Case (2010)]. In particular, the official Handbook to the Vienna Rules points out that procedural rules such as the principles of fair treatment, procedural efficiency and the Parties' right to
be
heard
decisively
influence
a
tribunal’s
discretion
[Handbook
Vienna
Rules/Haugeneder/Netal p166]. In the course of the subsequent balancing of interest, CLAIMANT proposes a thorough analysis of the principles and individual interests involved. As CLAIMANT’S
request is generally admissible, its procedural interests, i.e. the right to be heard (3.1),
efficiency (3.2) as well as secrecy (3.3) shall be the point of departure for determining the threshold, a rejection of the request has to meet. In fact, it is CLAIMANT’S humble contention that RESPONDENT secrecy interest does not meet this threshold (3.4). Furthermore, RESPONDENT’S
right to equal treatment is not even concerned (3.5). Since the document production
causes no extraordinary expenses (3.6), CLAIMANT’S interests are thus prevailing. 3.1. Claimant’s right to be heard sets a high threshold 24
Art 28 (1) VR guarantees CLAIMANT’s “right to be heard at every stage of the proceedings”. “Parties to arbitration have, in general, a right to be heard effectively on every issue” ["Soh
8
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Beng Tee" Court of Appeal (SG 2007)]. This right is a core principle of “virtually all legal systems” [Born p2175; cf ALI/UNIDROIT-PTCP Art 5.5; "Wena Hotels" ICSID (2002); Handbook Vienna Rules/Haugeneder/Netal p168]. It comprises the right to present evidence for one's claims, including their amount [Supreme Court (CH 1992); ICC Case 9078 (2001); Tercier/Bersheda p82; cf Supreme Court (AT 2010); Supreme Court (CH 2013/1)]. Most importantly, Art V (1)(b) NYC stipulates that any arbitral award violating a party’s right to be heard, is unenforceable. Under Art 34 (2)(a)(ii) DanArbLaw it might even be set aside. In particular, the Higher Regional Court of Frankfurt, notably in an UNCITRAL Model Law jurisdiction, held in its 2011 decision: A denial of document production might violate the right to be heard, if the facts intended to be proven are not merely incidental [ibid §88]. RESPONDENT’S profits are not incidental, but indispensable for CLAIMANT’S claim. Accordingly, CLAIMANT’S right to be heard is of paramount importance. 3.2. The principle of efficiency increases this standard 25
The threshold of CLAIMANT’S right to be heard is even further raised by efficiency considerations. The Arbitration Agreement itself comprises a “fast and cost efficient” arbitration. This concept was further reiterated in the Parties’ and the Tribunal’s telephone conference resulting in PO1-§1 where they elaborated a “fast and cost efficient” agenda. Furthermore, efficiency is an immanent arbitration principle [cf “Threlkeld” Court of Appeals 2nd Circ (US 1991); "Folkways Music" Court of Appeals 2nd Circ (US 1993)]. There are two efficiency considerations relevant in the instant case. Both focus on the hypothetical consequences of the request’s rejection: First, potential alternatives to the document production such as witness statements or expert opinions would fall short of the document’s certainty [cf “Hyundai Merchant” Commercial Court (EN 2013); “Waguih Elie” ICSID Case (2009)]. Second, potential alternatives to CLAIMANT for proving its loss of profit are “extremely difficult” to establish [PO2-§13-p54]. Hence, referring to RESPONDENT’S profits is the most efficient way of establishing the facts of the case. 3.3. Claimant’s material scecrecy interest further enhances the threshold
26
As a final aspect on its procedural interests, CLAIMANT raises what will be at the core of its substantive submission [infra PartII]: If CLAIMANT is unsuccessful in claiming RESPONDENT’S profits, it will have to bring a claim for loss of profit disclosing its own profit calculations. Therefore, it is not exclusively RESPONDENT who raises a secrecy concern. Rather, CLAIMANT submits that the disclosure of RESPONDENT’S communication with one customer concerning
9
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one transaction is necessary to relief CLAIMANT from disclosing its entire customer base, its internal expenses as well as its profit margins. 3.4. Against this threshold, Respondent’s secrecy interest is not predominant 27
Contrary to RESPONDENT’S contention [cf ASoC-§1-p25], CLAIMANT submits that RESPONDENT’S secrecy
interest does not meet the threshold for a rejection of CLAIMANT’S request. Pur-
suant to Art 9.2 (e) IBA Rules, the Tribunal shall “exclude from evidence or production any document for grounds of commercial confidentiality that the arbitral tribunal determines to be compelling”. As jurisprudence demonstrates, RESPONDENT needs to determine the business secrets it deems compelling [cf “Federal Communications Commission” Court of Appeals 9th Circ (US 1964); “Technical Tape Corporation” District Court SD New York (US 1955)]. In addition, a party must offer a clear explanation of the negative repercussions it fears from disclosing their secret [O’Malley p302; “Federal Communications Commission” District Court SD California (US 1962)]. 28
In the instant case, the confidentiality of the communications with SuperWines are not “compelling”. As RESPONDENT did not specify any contained business secret, it has to be assumed that the documents merely contain information concerning SuperWines. Providing the Tribunal with the full picture, pricing policy has been labeled a secret of the wine retail industry [PO2§61-p61] and can be protected under Art 9.2 (e) IBA Rules [cf Zuberbühler/Hofmann p180]. However, in the instant case, it does not suffice to impede the production. It is impossible to draw general conclusions about RESPONDENT's pricing policy from the price one business partner paid for one particular vintage. Above all, SuperWines paid a premium and is administered by a friend of RESPONDENT’S CEO. Hence, the price is most likely insufficient to pattern of RESPONDENT’S pricing. Furthermore, the factors of RESPONDENT's pricing policy – such as “personal loyalty” and “long term strategies for positioning on a new market” – and the fact that SuperWines paid a premium are already publicly known [PO2-§24-p56; PO2-§61-p61]. Thus, the negative repercussions of the production will be minimal. Consequently, RESPONDENT's legitimate interest for the documents at hand to remain confidential is particularly low.
29
Ultimately, protection of the requested documents appears even less compelling when compared to the possible alternatives. If CLAIMANT were to calculate its damages based on its own documents, it would have to disclose large parts of its customer base, internal expenses and profit margins to RESPONDENT. It will be shown below that this would unreasonably obstacle the proceedings. It is unreasonable to put this burden on CLAIMANT as it has always adhered to
10
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its contractual obligations. As the Tribunal can obviously not uphold both secrecy interests, CLAIMANT will additionally show in Part IV that its secrecy interest prevails. 30
RESPONDENT might argue that the request also affects SuperWines’ interest in business secrecy. However, Art 9.2 (e) IBA Rules only protects business secrets of third parties which are subject to a confidentiality agreement. Hence, when considering third-party rights, it must be analyzed whether the disclosing party could become liable to the third party [cf “Blake” Court of Queen’s Bench Manitoba (CA 1988); “Ladner” Supreme Court British Columbia (CA 1992); “Jardine Lloyd” Court of Queen’s Bench Alberta (CA 2005); “Aetna Insurance” Court of Queen’s Bench Alberta (CA 1998)]. SuperWines did not enter into a confidentiality agreement with RESPONDENT [PO2-§25-p56]. Therefore, the Tribunal need not consider SuperWines' confidentiality interest. 3.5. There is no violation of the principle of equal treatment
31
RESPONDENT argues that CLAIMANT’s request would violate its right to equal treatment [ASoC§30-p28]. The Parties’ right to equal treatment derives from Art 18 DanArbLaw, Art 9.2 (g) IBA Rules and Art 28 (1) VR [cf “Soh Beng Tee” Court of Appeal (SG 2007)]. Under this “fundamental principle of justice” [IUSCT Case 37&231 (1983)], the parties “must be subject to the same procedural rules and afforded the same procedural rights and opportunities” [Born p2173; cf Supreme Court (CH 2013/2)]. RESPONDENT's argument is built on a hypothetical document production request to CLAIMANT. Supposedly, CLAIMANT would not have to comply with such request, resulting in unequal treatment of the Parties. However, this conclusion is untenable.
32
First, RESPONDENT raises CLAIMANT’s document retention policy [PO2-§60-p61]. It argues that this policy would prevent CLAIMANT from having to submit any documents [ASoC-§30p28]. However, it is a matter of fact that CLAIMANT’s documents are accessible up to 2010, so all potentially relevant documents still exist [PO2-§60-p61]. Second, RESPONDENT alleges a “sophisticated scheme of privileges and exceptions developed by Equatorianian law”. Supposedly, this would free CLAIMANT “from any obligation to present documents which could be relevant in this arbitration” [ASoC-§ 30-p28]. In CLAIMANT’S humble opinion, this argument is unconvincing. Under Art 9. 2 (b) the Tribunal can decide such an issue under the law it determines applicable. It is precisely CLAIMANT’S contention that the applicable law should be the international standard, not any national law. Therefore, the standard is identical for both Parties.
11
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3.6. No extraordinary expenses are required from Claimant 33
RESPONDENT might argue that the production of the documents should be excluded pursuant to Art 9.2 (c) IBA Rules. This provision concerns financial burdens [IBA Commentary p26]. In the 2003 ICC Case 11258 the Tribunal weighed the financial burden against the potential use of the documents. However, in the instant case, the burden imposed on RESPONDENT is inferior. There are no indications in the record whatsoever that RESPONDENT would encounter factual difficulties in providing CLAIMANT with the documents.
34
As a conclusion of this balancing of interest, CLAIMANT submits that its procedural interests, in particular its right to be heard outweigh RESPONDENT’S. Therefore and in conclusion on Part I, the Tribunal is respectfully requested to exercise its discretionary power and grant CLAIMANT’S request which is in accordance with international practice.
Part II: Claimant can claim Respondent’s profits as part of its damages 35
CLAIMANT respectfully submits that it can claim RESPONDENT’S profits as part of its damages under Art 45(1)(b), 74 CISG. This claim “covers the delta between the price CLAIMANT would have paid RESPONDENT […] and the price paid by SuperWines”, i.e. the premium [PO2-§66p62]. As the Tribunal proposed, the subsequent submissions are based on the “assumption” that RESPONDENT’S delivery of merely 4,500 out of the 10,000 bottles agreed upon constituted a “breach of contract” [PO1-§4-p50]. Regardless of a breach, however, CLAIMANT reiterates that it abstains from claiming specific performance under Art 46, 28 CISG, because it does “not want to destroy the relationship with RESPONDENT beyond repair” [PO2-§12-p54]. As a further sign of its commitment to an amicable dispute resolution, CLAIMANT is not even seeking reimbursement for all of the losses suffered. Instead, CLAIMANT contents itself with a reimbursement for its losses to the extent of the premium RESPONDENT received.
36
In this regard, CLAIMANT concurs with RESPONDENT’S submission that “Art 74 CISG exists to compensate a party for actual [losses]” [ASoC-§39-p30]. Hence, RESPONDENT incorrectly anticipated CLAIMANT’S upcoming argument when it stated that CLAIMANT would propose a general disgorgement of profits within the CISG [cf ibid]. CLAIMANT is not going to propose such a remedy. Instead, it is CLAIMANT’S contention that it can claim RESPONDENT’S premium as a compensation for CLAIMANT’S loss of profit. Under the CISG, “loss of profit” is a head of damages explicitly stipulated within Art 74 CISG and “many decisions have awarded the aggrieved party lost profits” [UNCITRAL Case Digest Art 74 §28 citing 18 decisions].
12
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37
The core submission on Art 74 CISG is that the Tribunal should assess the amount of CLAIMANT’S
loss of profit on a discretionary basis. Otherwise, CLAIMANT runs the risk of disclosing
its entire profit calculations. In this respect, RESPONDENT rejected the request for document production, because it alleged that the communications with one customer concerning one transaction were “business secrets” [ASoC-§1-p25]. By way of contrast, if the Tribunal requires CLAIMANT to prove its loss of profit with absolute scientific certainty, CLAIMANT’S entire customer base, its internal expenses as well as its pricing policy are concerned. Particularly, CLAIMANT
seeks reimbursement for the loss of profit that occurred, because it had to resell Vigno-
bilia’s Mata Weltin 2014, instead of RESPONDENT’S (1.). The profit margin, decisive for the existence as well as for the amount of damages should be at the discretion of the Tribunal (2.). While CLAIMANT abstains from claiming more loss of profit potentially justified, the particular facts of the instant case reasonably establish the discretionary assumption that the detriment to CLAIMANT’S profit margin at least equals RESPONDENT’S premium (3.). 1.
Claimant suffered a detriment to its profit margins yet to be determined
1.1. Claimant was required to initiate substitute arrangements with Vignobilia 38
CLAIMANT submits that it can claim damages for loss of profit, because CLAIMANT had to resell the Mata Weltin 2014 from Vignobilia instead of the 5,500 bottles initially promised by RESPONDENT. This substitute arrangement was necessary, as in December 2014, CLAIMANT had already received 6,500 pre-orders [PO2-§7-p53]. In its “Collector’s Club”, CLAIMANT even guaranteed “delivery of at least 70%” [PO2-§6-p53]. Eventually, RESPONDENT refused delivery [CExh7-p15]. Hence, CLAIMANT had to face a decision. In the end, it decided not to rely on the interim injunction obtained, but to contract with Vignobilia. It was blind luck that CLAIMANT was offered this opportunity, as “during CLAIMANT’S visit to Vignobilia […], one of the latter’s customers announced that it would file for insolvency the next day” [PO2-§11-p54]. Following RESPONDENT’S choice of non-delivery, CLAIMANT adhered to an approach that would meet everyone’s best interests. By contracting with Vignobilia, CLAIMANT managed the seemingly impossible: not to “destroy the relationship with RESPONDENT beyond repair” [PO2-§12-p54] and to accommodate its customers at the same time [PO2-§10-p54]. 1.2. Claimant’s decreased profit margins can exclusively be established under significant difficulties and severe detriments to Claimant’s secrecy interests
39
This considerate action has made it strenuous for CLAIMANT to prove its loss of profit, seeing as it widely depends on its profit margins. Precisely, CLAIMANT can exclusively claim loss of
13
Heidelberg University- Memorandum for Claimant
profit if it establishes that its profit margin for the resale of Vignobilia’s wine falls short of the potential profit margin for RESPONDENT’S. However, it “would be extremely difficult […] to calculate the actual loss/profit made by CLAIMANT by not having received the 5,500 bottles of RESPONDENT’S Mata Weltin 2014 but instead […] the Mata Weltin from Vignobilia. […] [I]t cannot be stated with any certainty whether some of CLAIMANT’S customers […] would have bought the same amount they finally bought” [PO2-§13-p54]. 40
The reason for this entire submission concerning RESPONDENT’S profit is that CLAIMANT has not merely significant difficulties in establishing the decrease of its profit margins. A disclosure which provides full certainty of CLAIMANT’S loss of profit, i.e. a disclosure of CLAIMANT’s profit calculation, would also constitute a severe detriment to its secrecy interest. In particular, CLAIMANT would like to prevent the disclosure of its entire customer base, internal expenses and profit margins. RESPONDENT itself repeatedly substantiates a secrecy interest for such aspects when objecting to the document production. In the words of RESPONDENT’S own CEO, any request “to disclose business secrets” can be “seriously disruptive to […] business” [RExh1-p31]. Particularly, the wine-trading business involves an “individual pricing for each customer” [PO2-§61-p61]. This is due to the fact that “factors such as personal loyalty or long term strategies for positioning on a new market […] play an important role” [ibid]. In short, being in the high-end wine trading industry is comparable to playing poker. In both cases, information and estimation constitute the key to winning the game.
41
Consequently, the secrecy interests of CLAIMANT and RESPONDENT are two sides of the very same medal. It is impossible to uphold both. If CLAIMANT cannot disclose and claim RESPONDENT’S
profits, it would be required to disclose its own profit calculation. However, there are
several significant differences which render CLAIMANT’S secrecy interest even more important. First, it is RESPONDENT who rejected the contractual performance. Second, whereas RESPONDENT attempts to keep the communications with one customer considering one transaction secret,
CLAIMANT protects the information concerning its entire “Collector’s Club”, numerous invoices and its whole internal calculations. Third, the main information RESPONDENT sought protection for, the premium, is already subject to public newspaper reports [CExh4-p12]. Even the amount of the premium is estimated in public [PO2-§24-p56]. CLAIMANT’S “Collector’s Club”, in contrast, remains confidential. 42
In conclusion, it is not merely extremely difficult to establish CLAIMANT’S profit margins. More importantly, their potential disclosure concerns CLAIMANT’S material secrecy interest. Therefore, CLAIMANT subsequently proposes an alternative assessment for its loss of profit.
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2. 43
The assessment of Claimant’s profit margins is at the discretion of the Tribunal
CLAIMANT submits that the assessment of its loss of profit is at the discretion of the Tribunal. This constitutes the adequate alternative to requiring a full disclosure of CLAIMANT’S entire profit calculations. Generally, under Art 74 CISG, profit calculations, decisive for the amount of loss of profit, are at the discretion of tribunals (A). Under specific circumstances, this discretion permits precisely that very loss calculation which constitutes the exclusive alternative to a disclosure of CLAIMANT’S profit calculations: the reference to RESPONDENT’S profits (B). 2.1. In general, the amount of loss of profit under Art 74 CISG is discretionary
44
CLAIMANT contends that Art 74 CISG permits arbitral tribunals to assess the amount of loss of profit in general and profit margins in particular on a reasonable case-by-case basis. This discretion originates from the very nature of the head of damages. Defining the term “loss of profit” in Art 74 CISG, the US Court of Appeals for the 2nd Circuit held in the 1995 Delchi Carrier case: “[L]ost profits are determined by calculating the hypothetical revenues to be derived from unmade sales” [“Delchi Carrier” Court of Appeals 2nd Circ (US 1995)]. In other words, a tribunal has to assess the “prevented increase in assets” [Schlechtriem/Schwenzer/Schwenzer Art 74 §36; cf Secretariat Commentary Art 70 §5]. Such an assessment of hypothetical increase cannot occur with scientific certainty. Some cases might concern “extreme difficulties”, such as in the instant case [cf PO2-§13-p54]. Therefore, “reasonable inferences” are admissible [“TeeVee Tunes” District Court SD New York (US 2006)]. As The CISG Advisory Council Opinion No 6 elaborates: “Determining lost profits is not an exact science […]. [P]recise calculation of such damages may not be possible.” [§3.13]
45
From a conflict of laws point of view, there are three possibilities to determine the standard of proof for calculating damages. Each of them provides for the discretion: First, several authors propose to apply an autonomous “standard of reasonableness” under Art 74 CISG [Schlechtriem/Schwenzer/Schwenzer Art 74 §65; Kröll/Gotanda Art 74 §28; Staudinger/Magnus Art 74 §61]. Second, several state courts and other authors characterize the standard of proof as a procedural issue [District Court Saane (CH 1997); “Delchi Carrier” Court of Appeals 2nd Circ (US 1995); MunichCommHGB/Mankowski Art 74 §47]. In the instant case, the procedural law does not address the calculation of damages explicitly, neither the DanArbLaw nor the VR. However, in its recent decision of August 31, 2015, the Higher Regional Court Munich, notably in an UNCITRAL Model Law jurisdiction, faced the similar problem: It upheld a discretionary calculation of losses by a tribunal, because it was more reasonable than an 15
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assessment ex aequo et bono [§47]. Hence, the court regarded the equivalent of Art 27 (3) VR, Art 28 (3) DanArbLaw as the discretion’s threshold. 46
Third, the Tribunal could apply Art 7 (2) CISG and regard the calculation of loss of profit as a “matter governed by this Convention which [is] not expressly settled in it”. This leads to the PICC. Either the PICC are “general principles” under part 1 of Art 7 (2) [cf ICC Case 12460 (2004); Supreme Court (BY 2003); “Hideo” Court of Appeal (NZ 2000)]. Alternatively, the verbatim adoption of the PICC in the DanConLaw applies under part 2 of Art 7 (2), as the Parties chose Danubian law in Art 20 FA. In any of the two cases, the wording of Art 7.4.3 PICC is decisive. It is applied in its literal sense [District Court Gravenhage (NL 2011); CAM Case (2006); ATCP Case (2001); ICC Case 10422 (2001); ICC Case 5835 (1996); Ad-hoc Arbitration Rome (1996)]. It states: “Where the amount of damages cannot be established with a sufficient degree of certainty, the assessment is at the discretion of the court”. 2.2. Under the particular circumstances, the discretion under Art 74 CISG permits to refer to the defaulting party’s profits
47
CLAIMANT furthermore submits that a discretionary assessment of the amount of loss of profit under the CISG can generally take the profits of the party breaching the contract into account. Anticipating a potential argument in RESPONDENT’S upcoming memorandum, CLAIMANT states with honesty that calculating damages by referring to the defaulting party’s profits is uncommon in most national jurisdictions. Nevertheless, what appears to be a counter-argument at first sight, in fact even promotes CLAIMANT’S submission on the calculation of loss of profit. National jurisdictions do account for the practical necessity to disgorge profits under particular circumstances. They even offer distinct remedies:
48
To give only a few examples of how national jurisdictions allow creditors to refer to a debtor’s profits: In England, the equity-concept of fiduciary duties allows a disgorgement of profits [“Blake” House of Lords (EN 2000)]. In the US, the award of damages in trademark and patent infringement cases includes the defendant’s profits in order “to take all the economic incentives out of [IP] infringement” [“Intel” Court of Appeals 9th Circ (US 1993); similar: “Apple” District Court ND California (US 2013); “Playboy” Court of Appeals 9th Circ (US 1982)]. In Germany, France and Switzerland, profits are disgorged when property rights, competition law or personal privacy have been infringed [Supreme Court (CH 2008); Supreme Court (CH 2006); Supreme Court (DE 2005); Supreme Court (DE 2000); Supreme Court (DE 1961); Supreme Court (CH 2000/1); Supreme Court (FR 1987)].
16
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49
The CISG, its drafting history, the Secretariat Commentary and the Advisory Council Opinions, however, remain silent on this issue. Some authors promote disgorgement of profits [Schlechtriem/Schwenzer/Schwenzer Art 74 §43; Bock p189; Schmidt-Ahrens p102]. In the 1988 Adras case, the Supreme Court of Isreal proposed another solution with an identical result. It ruled that the Hague Convention – the CISG’s predecessor – did not prohibit a recourse to national law for a disgorgement of profits, as this issue was a lacuna [“Adras” Superme Court (IL 1988)]. Providing the Tribunal with the full picture, CLAIMANT acknowledges that both proposals are critized amongst other authors: An independent remedy might undermine the CISG’s principle of full compensation. A recourse to national law might impair uniformity. However, the proposals as well as the comparative law analysis demonstrate a practical need for referring to the defaulting party’s profits in certain exceptional circumstances. Therefore, adhering to this practical need while upholding the CISG’s principles at the same time, CLAIMANT raises a proposal which shall be practically illustrated by the analogous reasoning in the CISG Pressure Sensors Case: The buyer breached confidentiality provisions by using an acquired source code. The sole arbitrator regarded the buyer’s monthly average profit for a certain period as the seller’s loss of profit under Art 74 CISG [SCC Case (2007)]. Transferring this rationale, a discretionary assessment of the loss of profits can refer to the debtor’s profits, if a certain threshold of particular circumstances is met. 3.
In this particular case, the Tribunal can make the discretionary assumption that the detriment to Claimant’s profit margins at least equals Respondent’s profits
50
CLAIMANT submits that this case’s particular circumstances meet the threshold that allows a reference to RESPONDENT’S profit when calculating CLAIMANT’S loss of profit. For the sake of the business relationship, a possible discretionary holding that the losses even exceed RESPONDENT’S profits, is not requested [cf PO2-§12-p54]. Foremost, the facts provide a reasonable basis
for the assumption requested (A). RESPONDENT’S intentional non-performance renders the assumption proposed also adequate (B). Furthermore, this discretionary assumption is efficient, because CLAIMANT’S possibility for covering purchases could have created higher costs for RESPONDENT (C). Finally, the underlying reason for this entire submission, CLAIMANT’S secrecy interest in its profit calculations, renders the assumption even necessary (D). 3.1. The facts on the Mata Weltin’s quality render the assumption reasonable 51
CLAIMANT can reasonably establish that the detriment which the substitute arrangement with Vignobilia caused for its profit margins at least equals the premium RESPONDENT received. As
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a first step, the threshold CLAIMANT’S detriment has to equal, i.e. RESPONDENT’S premium is estimated at “EUR 15-20 per bottle” [PO2-§24-p56]. As a second step, CLAIMANT’S profit margin would have exceeded this range by far, if it had received RESPONDENT’S Mata Weltin 2014. Whereas CLAIMANT would have bought a bottle for EUR 41.50, they are now resold “at prices between EUR 90-100” per bottle [PO2-§14-p55]. This is more than twice the wholesale price, a difference of EUR 48.50-58.50 which the estimated premium falls short of. Therefore, RESPONDENT cannot substantiate its argument that “[t]he mark-up paid by SuperWines relates to other factors” [ASoC-§39-p30]. Rather, it is undisputed that CLAIMANT’S profits would “most likely have been higher than the premium” [PO2-§17-p55]. 52
As a third step, the decreased profit margin in fact realized with Vignobilia’s Mata Weltin, is not established. The facts of the case provide but few information on the quality of this wine. Those available indicate an inferior profit margin: Merely “a considerable number of CLAIMANT’S customers”
were willing to accept Vignobilia’s wine [PO2-§10-p54]. Hence, it appears
reasonable that other customers required a reduced price. Furthermore, Vignobilia required CLAIMANT to pay “EUR 42.20 per bottle” [PO2-§11-p54], whereas the contract price with RESPONDENT would
53
have been lower, at EUR 41.50 per bottle [CExh3-p3].
More importantly, it can be assumed that the resale price is considerably higher for RESPONDENT’S wine than
it is for Vignobilia’s. Already RESPONDENT’S reputation is unique. It runs “the
only vineyard in the Vuachoua region that has won the Mediterranean gold medal […] in each of the last five years” [SoC-§2-p3]. Moreover, RESPONDENT’S 2014 Mata Weltin harvest has an outstanding “extraordinary quality” [PO2-§14-p55]: It “had won several awards at the beginning of 2014” [PO2-§8-p54]. As a consequence, the demand was extraordinary: “[T]he number of pre-orders had been nearly 20% higher than in 2013” [PO2-§8-p54]. “CLAIMANT had pre-orders for 6,500 bottles”, some of them valid “even if the price would be up to 50% higher than in the previous year” [PO2-§7-p53]. “CLAIMANT’S customers were afraid that […] the demand for the 2014 vintage might be much higher than the number of bottles available” [PO2-§8-p54], because there are “very few bottles available on the market” [PO2-§14-p55]. For all these factual reasons, the Tribunal has reasonable ground to assume that CLAIMANT’S profit margin suffered a significant detriment, when CLAIMANT had to make the substitute arrangement with SuperWines. Given that CLAIMANT’S margins outweigh RESPONDENT’S estimated premium, this detriment has likely exceeded it.
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3.2. Respondent’s intentional non-performance renders the assumption adequate 54
In addition to the factual reasonability, CLAIMANT would humbly like to propose that it is adequate for RESPONDENT to return the profits realized to the detriment of CLAIMANT. At this point, CLAIMANT neither wants to infringe the business relationship with RESPONDENT nor misconceive that the Tribunal assumes a breach of contract merely for the sake of the first hearings [PO1-§4-p50]. CLAIMANT also acknowledges RESPONDENT’S elaborations on the rain-caused decrease in the grape harvest of 2014, which might require an eventual ruling under Art 79 CISG [cf ASoC-§9-p26]. Regardless of all these aspects, it is undisputed that RESPONDENT at
55
least intentionally decided against a full delivery to CLAIMANT.
RESPONDENT received SuperWines’ offer on November 25, 2014 and accepted it on December 1, 2014 [PO2-§22-p56]. At that point in time, RESPONDENT was already fully aware of the extraordinary drop in quantity. In fact, by October, RESPONDENT had already realized that half of its grapes were rotten [ASoC-§§9,10-p26]. Therefore, when RESPONDENT accepted SuperWines offer for precisely the amount which CLAIMANT was eventually deprived of, RESPONDENT
intentionally decided against upholding its end of the bargain with CLAIMANT. In other
words, it chose a premium over its long-term business partner. 56
In such situations of intentional non-performance, Professor Schwenzer states: “[T]he performance principle demands that the profits the promiser has obtained as a result of his breach of contract be disgorged. […] Breach of contract must not pay.” [Schlechtriem/Schwenzer Art 74 §43]. In addition, the House of Lords held that the non-performing party should not profit from its actions if the aggrieved party has “a legitimate interest in preventing the defendant’s profit-making activity and, hence, in depriving him of his profit” [“Blake” (EN 2000)]. Furthermore, the arbitrator in the Pressure Sensors Case referred to the buyer’s profit, because of its intentional breach of confidentiality, although it did not even concern a main obligation [SCC Case (2007)]. These rationales should be transferred: The Tribunal should set an incentive not to choose premiums over long-term business partners. 3.3. The possibility for covering purchases renders the assumption efficient
57
CLAIMANT furthermore submits that the Tribunal can establish another incentive to promote efficiency, as CLAIMANT intentionally decided against a severe detriment to RESPONDENT. Instead of contenting itself with Vignobilia’s substitute, CLAIMANT could have undertaken a proper covering purchase. It could have purchased precisely RESPONDENT’S outstanding Mata Weltin 2014 elsewhere and eventually claim the additional costs. After all, RESPONDENT had
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declared the crucial requirement for a covering purchase under Art 75 CISG, a “final and definite refusal to perform” [Schlechtriem/Schwenzer/Schwenzer Art 75 §5; Supreme Court (PL 2006); Higher Regional Courts Munich (DE 2004) and Hamburg (DE 1997)]. 58
Hence, CLAIMANT had several opportunities, detrimental for RESPONDENT: First, it could have offered SuperWines a sufficiently high price in order to compensate for the market entry fee. Second, it could have approached Vinexzell [cf PO2-§21-p56]. They might well have requested an even higher price. After all, “RESPONDENT is known to engage in an individual pricing for each customer” [PO2-§61-p61]. Third, CLAIMANT could have purchased the wine from the “few specialized retailers […] at prices between EUR 90-100” [PO2-§14-p55].
59
In any of those scenarios, CLAIMANT could have eventually claimed the higher costs from RESPONDENT,
because the covering purchases would have been undertaken “in a reasonable man-
ner” under Art 75 CISG. Since the buyer has a legitimate interest in the goods, even prices exceeding the initial contract price are admissible [cf Court of Appeal Rennes (FR 2008); CIETAC Case (2004); CIETAC Case (1999)]. E.g., in ICC Case 8128 of 1995, the tribunal ruled that cover purchases made at prices higher than set forth in the contract could be justified, because there was “no requirement that the aggrieved party exhaustively research the market and terms before entering a substitute transaction” [ICC Case 8128 (1995)]. In any case, since “CLAIMANT did not want to destroy the relationship with RESPONDENT beyond repair”, CLAIMANT
refrained from such purchases [cf PO2-§12-p54]. Thereby, CLAIMANT limited RESPOND-
ENT’S liability.
It is submitted that it would constitute an incentive for such decisions to at least
award CLAIMANT its lost profits to the extent of RESPONDENT’S profits. 3.4. Claimant’s material secrecy interest renders the assumption necessary 60
The final aspect of CLAIMANT’S submission returns to its secrecy interest: CLAIMANT has provided all information it was able to. If the Tribunal rejects a reference to RESPONDENT’S profits, although it has the discretion, although the facts indicate an even higher loss of profit, although RESPONDENT intentionally rejected performance and although CLAIMANT could have initiated more expensive covering arrangements, there remains the risk for CLAIMANT of disclosing its profit calculations, its customer base, its pricing policy as well as its internal expenses. Precisely, for CLAIMANT it would be entirely uncertain whether merely a fraction of these documents would be sufficient to establish its loss of profit.
61
Examining CLAIMANT’S secrecy interest from a legal point of view, RESPONDENT might raise two objections in its upcoming memorandum. Both shall be anticipated: First, the confidentiality principle is no sufficient protection for CLAIMANT. The extent of confidentiality duties is
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subject to extensive arguments [cf ICC Case 11961 (2009); Supreme Court (SE 2000)]. Moreover, in contrast to other institutional rules, the VR contain no confidentiality provision. Hence, CLAIMANT does not even want to risk a dispute about a potential breach of confidentiality. Second, a neutral appraiser would bear the risk of rendering the dispute resolution inefficient. As cases demonstrate, judicial appraisers are frequently over-ruled [cf Higher Regional Court Frankfurt (DE 2011): Court of Appeal Gent (BE 2004)]. Notwithstanding CLAIMANT’S burden of proof under the CISG, the procedural standard even further strengthens the fact that CLAIMANT’S secrecy interest
is more important than RESPONDENT’S. CLAIMANT’S profit margins con-
cern almost all of the aspects which are worth secrecy under Art 9 (2)(e) IBA Rules: development information, price calculations, sources of supply, distribution channels and agreements with customers [cf Zuberbühler/Hofmann Art 9 §43]. 62
This brings the submission back to its foundation: The connection with the request for document production illustrates that RESPONDENT’S non-performance necessitates one party to disclose. The Tribunal cannot uphold both secrecy interests. Either RESPONDENT maintains the premium or CLAIMANT has to disclose its calculation. It is CLAIMANT’S contention that the decision should be in its favor, because it has always adhered to its contractual obligations and its secrets are more important than RESPONDENT’S. Therefore and in conclusion, CLAIMANT should be relieved from the burden to disclose its profit calculations and be allowed to claim RESPONDENT’S profits
as part of its damages for loss of profit under Art 45 (1)(b), 74 CISG.
Part III: The legal fees incurred in the interim relief are recoverable 63
CLAIMANT respectfully requests the Tribunal to hold RESPONDENT liable for its losses incurred in its application for interim relief in the amount of USD 33,125. Pursuant to Art 45 (1)(b) CISG an aggrieved party is entitled to a full compensation damage claim [Supreme Court (AT 2002); District Court Padova (IT 2004); “Delchi Carrier” Court of Appeals 2nd Circ (US 1995)] as provided for in Art 74-77 CISG, if “the seller fails to perform any of his obligations under the contract”.
64
On April 22, 2009 CLAIMANT and RESPONDENT concluded a Framework Agreement for the annual delivery of diamond quality Mata Weltin wines upon CLAIMANT’S request. Howevern, in 2014 RESPONDENT stated in its letter of December 4 [CExh7-p15] that “there will be no delivery of any bottle of the 2014 harvest to [CLAIMANT] even if [RESPONDENT has] to drink them [itself]” [CExh7-p15]. The Parties agreed later on in a telephone conference leading up to PO1 of the Tribunal that for the course of this memorandum RESPONDENT’S actions are assumed
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to be a breach of contract [PO1-§4-p50]. Facing RESPONDENT’S assumed default, CLAIMANT was forced to seek immediate legal protection. It therefore filed for an interim injunction in order to restrain RESPONDENT “from selling or committing for sale any number of bottles of the [RESPONDENT]’S diamond Mata Weltin 2014 that would prevent it from supplying a total of 10,000 bottles to [CLAIMANT]” [CExh8-16]. 65
CLAIMANT submits that under a precise analysis of international case law, pre-judicial legal costs, e.g. costs for dunning, debt collection and attorney communications, constitute recoverable loss under Art 74 CISG (1.). In the instant case, CLAIMANT’S pre-arbitral costs for interim relief are essentially pre-judicial costs and therefore “loss” under Art 74 CISG (2.). Further, these losses were foreseeable to RESPONDENT pursuant to Art 74 CISG (3.). Finally, CLAIMANT also fulfilled its duty to mitigate pursuant to Art 77 CISG (4.). 1.
66
Generally, pre-judicial legal costs are recoverable under Art 74 CISG
Art 74 CISG states the universal rule for the recovery of damages: “Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach.”
67
The wording of Art 74 CISG does not explicitly refer to procedural legal costs as “loss”. It is generally accepted in case law and by notable academic scholars that legal costs arising after the commencement of proceedings are not recoverable under Art 74 CISG [“Ajax Tool Works” District Court ND Illinois (US 2003); “Chicago Prime Packers” District Court ND Illinois (US 2004); “Norfolk Southern Railway” District Court WD Pennsylvania (US 2008); “San Lucio” District Court New Jersey (US 2009); Schlechtriem/Schwenzer/Schwenzer Art 74 §28; Kröll/Mistelis/Gotanda Art 74 §72 et seq.; Honsell/Schönle/Th. Koller Art 74 §32; Flechtner p155].
68
However, legal costs arising after initiation of proceedings have to be separated from “extrajudicial costs of asserting legal rights” occurred before the commencement of proceedings [Schlechtriem/Schwenzer/Schwenzer Art 74 §28; equally comparable: Brunner/SchmidtAhrendts/Czarnecki Art 74 §31; Huber/Mullis/Huber p279]. CLAIMANT submits that these prejudicial legal costs, having arisen before the commencement of proceedings, fall under Art 74 CISG. A precise analysis of court decisions from both civil and common law jurisdictions demonstrates that pre-judicial legal costs are recoverable under Art 74 CISG. First, courts have generally accepted that pre-judicial legal costs are recoverable (A). Moreover, courts have ruled that specific categories of pre-judicial costs for dunning (1.1), debt collection (1.2) and
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attorney communication (1.3) are covered by Art 74 CISG. Although these decisions do not directly bind this Tribunal, CLAIMANT respectfully invites it to consider these as useful guidance regarding pre-judicial costs under Art 74 CISG. Finally, the legal findings in the infamous Zapata case do not oppose this interpretation (1.4). 1.1. Pre-judicial legal costs are frequently regarded as recoverable under Art 74 CISG 69
As a starting point, courts considered “pre-procedural legal costs [as] part of recoverable damages” under Art 74 CISG [Commercial Court Aargau (CH 1997); cf Higher Regional Court Munich (DE 2008); Local Court Augsburg (DE 1996); Local Court Landsberg (DE 2006); discussing further cases: Felemegas p104-113]. Moreover, courts have affirmed “[the] reimbursement of […] attorney’s fees that were incurred before the trial” under Art 74 CISG [District Court Potsdam (DE 2009); cf Higher Regional Court Hamm (DE 2001); District Court Coburg (DE 2006); District Court Munich I (DE 2009); Lower Court Berlin-Tiergarten (DE 1997); Court of Appeal Turku (FI 2002)]. In light of this rationale of general recoverability of pre-judicial legal costs under Art 74 CISG, courts have furthermore reached the same conclusion regarding several categories of specific pre-judicial costs. 1.2. Dunning costs are recoverable under Art 74 CISG
70
In a number of court decisions, damages for pre-trial dunning by an attorney have been awarded under Art 74 CISG. In the notable lawn mowers case, a German court held in a decision that was later on not challenged in the Supreme Court: “Namely pre-judicial costs for pursuing one’s rights can be considered as damages [under the CISG]. […] These [damages] particularly include attorney’s fees for dunning” [Higher Regional Court Düsseldorf (DE 1996); similar findings were reached in District Court Frankfurt (DE 1991); Local Court Alsfeld (DE 1995); District Court Zug (CH 1994)]. In light of these legal findings, pre-judicial dunning costs are recoverable under Art 74 CISG. 1.3. Debt collection costs are recoverable under Art 74 CISG
71
Moreover, several courts awarded pre-judicial legal costs that arose from debt collection. One court specifically awarded “the reimbursement of the collection expenses accrued by out-ofcourt legal representation” [Local Court Freiburg (DE 2007)]. Other courts support this legal rationale by granting the recovery of “extrajudicial lawyer’s fees, as long as those expenses are made in direct relation to the recovery of debt” [Higher Cantonal Court Valais (CH 2006); cf
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District Court Breda (NL 2009)]. In an obiter dictum, the Swiss court even held that the entire legal costs for pre-judicial debt collection are recoverable under Art 74 CISG [Higher Cantonal Court Valais (CH 2006); Brunner (2004) p429]. 1.4. Costs for attorneys are recoverable under Art 74 CISG 72
Finally, several courts awarded pre-judicial attorney’s costs under Art 74 CISG. One court awarded a consultation fee caused by “telephone conversations between [Respondent’s] attorney and [Claimant’s]” [Local Court Viechtach (DE 2002)]. Other courts granted damages for payment requests [District Court Berlin (DE 2003)] or for the notification of possible contract avoidance [Higher Regional Court Düsseldorf (DE 1994); District Court Krefeld (DE 1993)].
73
In addition, special emphasis has to be placed on the recent Stemcor decision by the US District Court of the Southern District of New York [“Stemcor USA” District Court SD New York (US 2014); cf Gillette p58 et seq]. The court dismissed an annulment request of an award that granted damages for pre-trial attorney’s fees under Art 74 CISG. In this case, Miracero, a Mexican steel importer, incurred substantial legal costs by opposing additional tax assessments, as Stemcor breached the contract by refusing to cooperate with the Mexican tax authorities. In the decisive part of the judgment, the court upheld the arbitration tribunal’s finding that legal costs occurred before the initiation of proceedings are recoverable under Art 74 CISG. It stated: “Art 74 CISG does not unambiguously bar recovery of fees and costs”. The decision is specifically remarkable considering that each party bears its own costs in proceedings according to the US “American rule”. Thus, even a court in the traditionally more restrictive US jurisdiction held that pre-judicial attorney’s fees are recoverable under Art 74 CISG. 1.5. The Zapata case does not oppose the recoverability of pre-procedural cost
74
Finally, RESPONDENT might base its counter-argument regarding the applicability of Art 74 CISG on the frequently cited decision of Zapata, allegedly rejecting the recovery for all types of legal costs under the CISG. A substantial number of other US-Courts later grounded its decisions on the ruling in Zapata, thus rendering similar decisions that dismiss Art 74 CISG [cf above para 67].
75
However, CLAIMANT submits that the ruling in Zapata does not interfere with the core rationale of the above-cited cases that allow for the recovery of pre-judicial legal costs under Art 74 CISG. Quite to the contrary, Zapata even favors CLAIMANT’S position. In Zapata, a Mexican seller of cookie tins initially sued Hearthside, an American buyer, for the failure to pay the purchase price and claimed losses regarding attorney’s fees. Whilst the District Court
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granted the recovery of legal costs, the Court of Appeals held that “‘loss’ does not include attorney’s fees” under Art 74 CISG [“Zapata” Court of Appeals 7th Circ (US 2002)]. 76
CLAIMANT submits that this decision was often misperceived by courts and literature as to preclude the recovery of all legal costs, regardless of the time of materialization. The fact that the Court of Appeals distinguished by way of obiter dictum between pre-judicial costs and costs of the current proceedings remained unnoticed. The court held that “certain pre-litigation legal expenditures, for example expenditures designed to mitigate the plaintiff's damages, would probably be covered [under Art 74 CISG]” [“Zapata” Court of Appeals 7th Circ (US 2002); also supporting the distinction Schlechtriem/Schwenzer/Schwenzer Art 74 §30; Dordevic p206].
77
Thus, even the predominating case from the US, purportedly rejecting the recovery of attorney’s fees on the surface, does not oppose CLAIMANT’S line of argument. Thus, pre-judicial legal costs are recoverable under Art 74 CISG. In conclusion, CLAIMANT submits that the instant costs’ recoverability under Art 74 CISG has to be decided against the following crucial legal standard: While legal costs incurred in the instant litigation/arbitration do not fall under Art 74 CISG, pre-judicial costs asserting legal rights before the instant litigation/arbitration do fall under Art 74 CISG. 2.
78
Claimant’s pre-arbitral legal costs are pre-judicial and fall under Art 74 CISG
Applying the legal standard for legal fees under the CISG, CLAIMANT submits that the prearbitral legal costs incurred in its application for interim relief are comparable to pre-judicial legal costs. Therefore, they are recoverable as “loss” under Art 74 CISG. Providing the Tribunal with the full picture, CLAIMANT contends that the assessment of legal costs for interim relief has not yet been settled in any published judgment or award. Accordingly, CLAIMANT respectfully invites the Tribunal to assess the classification of interim-relief costs. In this respect, CLAIMANT proposes a key question, the Tribunal is respectfully invited to ask: Are interimrelief costs comparable to costs for dunning and debt collection before the arbitration or rather comparable to the costs arising within the arbitration?
79
First, as a matter of fact, CLAIMANT incurred the costs for interim relief before it applied for arbitration under Art 7 (1) VR. The Contingent Agreement between CLAIMANT and LawFix was signed on December 5, 2014 and the application for interim relief was filed on December 8, 2014 [CExh10-p18].
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80
Second, continuing with the factual interests of the Parties: CLAIMANT reiterates that the legal costs of this arbitration do not fall under Art 74 CISG. However, the significance of this arbitration is that it provides a final and binding arbitral dispute resolution. By way of contrast, interim relief is no final settlement, but merely a provisional measure undertaken before a final settlement [Born p2561]. Moreover, exclusively the final award and not any interim relief can constitute res judicata [Kaufmann-Kohler/Rigozzi p369].
81
Third, another crucial interest of the Parties is adhered to when these costs for legal fees are recoverable under the CISG: A uniform, transnational law mutually agreed upon, would govern their standard. In contrast, if the CISG is held inapplicable to interim-relief costs, procedural state law would govern their recoverability. This procedural law, however, is not determined mutually, but unilaterally by the party applying for the interim relief.
82
Fourth, the core rationale for the recoverability of pre-judicial costs such as dunning and debt collection promotes that interim-relief costs should be treated similarly. Professor Schwenzer explains this rationale in the predominant CISG Commentary Schlechtriem/Schwenzer: “The justification of the general recoverability of pre-judicial costs is based on the difficulties in separating them from the costs of mitigating damages.” [Art 74 §30] It is CLAIMANT’S contention that if dunning costs already mitigate damages, interim relief mitigates damages a fortiori. After all, the very purpose of interim relief is to prevent accomplished facts, which frequently increase a party’s recoverable loss [cf Born p2426].
83
The purpose of interim relief, i.e. mitigating a party’s damages leads to the fifth argument for its recoverability: a recourse to the CISG Zapata case. The purpose of mitigation serves as the adequate fact distinguishing CLAIMANT’S instant request for legal costs from those sought in Zapata. In fact, Judge Posner of the US Federal Court of Appeals for the 7th Circuit explicitly stated: “[I]t seems apparent that "loss" does not include attorneys' fees incurred in the litigation of a suit […], though certain pre-litigation legal expenditures […] designed to mitigate the plaintiff's damages, would probably be covered […].” For these reasons, CLAIMANT submits that the recoverability of its interim-relief costs would conform to Art 74 CISG’s rationale, the Parties’ interests as well as the reasoning in Zapata.
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3. 84
The legal costs were foreseeable to Respondent under Art 74 CISG
CLAIMANT submits that RESPONDENT “ought to have foreseen CLAIMANT’S loss” pursuant to Art 74 CISG. Under this provision, losses are only recoverable if they were foreseeable from “the perspective of the party in breach of the contract” [cf Schlechtriem/Schwenzer/Schwenzer Art 74 §47; FTCA Case (2006); FTCA Case (2010); HCC Case (1996); RFCCI Case (2000); District Court Athens (GR 2009); Supreme Court (AT 1996); “Downs Investments” Supreme Court Queensland (AU 2000); Kröll/Mistelis/Gotanda Art 74 §47]. The relevant moment in time for determining foreseeability under Art 74 CISG is “the time of the conclusion of the contract” [AAA Case (2007); FTCA Case (2007); SCC Case (1998); Supreme Court (AT 2002)]. Moreover, it is sufficient that the type and extent of the loss, but no details of the losses were foreseeable [cf Supreme Court (AT 2013); Supreme Court (AT 2002); ICC Case 9187 (1999); Staudinger/Magnus Art 74 §34].
85
CLAIMANT contends that RESPONDENT ought to have foreseen that CLAIMANT would apply for interim measures before a state court in case of RESPONDENT’S default. By agreeing on the VR to govern all disputes [CExh1-p9], RESPONDENT ought to have foreseen the application for interim relief before state courts, seeing as Art 33 (5) VR explicitly provides that a party can apply “to any competent State authority for interim or conservatory measures”. Moreover, legal costs arise as a mandatory consequence of court proceedings and thus ought to have been foreseen [cf ICC Case 7585 (1992)]. This holds especially true in regard to RESPONDENT, since its CEO just recently before the conclusion of the FA had been involved in legal proceedings that included legal fees [RExh1-p31; PO2-§42-p59].
86
Finally, CLAIMANT submits that the general extent of the loss was foreseeable to RESPONDENT. As the contingency fee amounts to 90 per cent of the total legal fees incurred in the application for interim relief, the foreseeability should mainly focus on this element of loss. The contingency fee ought to have been foreseen by RESPONDENT as it “is familiar with these types of fee agreements” [PO2-§42-p59] and they are “fairly common” in Mediterraneo [PO2-§40-p58]. RESPONDENT itself even tried “to agree upon a contingency fee” in previous proceedings [PO2§42-p59]. It is the very nature of a contingency fee that the involved commercial risks for attorneys lead to a potentially higher amount of legal fees than a fee schedule solely based on hourly rates. Therefore, the general extent of the loss ought to have been foreseen by RESPONDENT.
For the reasons above, CLAIMANT’S losses were foreseeable under Art 74 CISG.
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4. 87
The duty to mitigate under Art 77 CISG has been adhered to
CLAIMANT submits that it fulfilled its duty to mitigate pursuant to Art 77 CISG and therefore no reduction of its damages applies. Pursuant to Art 77 CISG the aggrieved party “must take such measures as are reasonable in the circumstances to mitigate the loss” [cf BCCI Case (1999); UCCT Case (2005); Supreme Court (ES 2000); Court of Appeal Antwerp (BE 2006); Court of Appeal Lamia (GR 2006); Supreme Court (AT 1996)]. RESPONDENT alleged that CLAIMANT failed to reasonably mitigate its loss under Art 77 CISG since “CLAIMANT promised its lawyers a higher fee than normal” [ASoC-§35-p29] and that in hindsight “less time than anticipated was spent on the case” [PO2-§39-p58]. CLAIMANT submits that the concerns raised are not substantiated by the facts. Thus, RESPONDENT fails to establish its burden of proof [cf RFCCI Case (2004); Supreme Court (CH 2000/2); “Treibacher Industrie“Court of Appeals 11th Circ (US 2006)].
88
As a starting point, “representation by a local lawyer is mandatory” in Mediterraneo [PO2-§39p58]. Since CLAIMANT “is a medium sized Equatorianian business that does not have sufficient liquid capital to pay Mediterranean legal fees”, it depdended on a contingency agreement in order to obtain any legal representation [SoC-p5-§13]. As all other law firms contacted by CLAIMANT “were not willing to work on a contingency fee basis or to agree to the type of remuneration agreed with LawFix”, CLAIMANT had no further choice, but to choose LawFix as legal representation [PO2-§39-p58]. Even though CLAIMANT was in a tight spot, it still managed to negotiate a contingency fee “that [was] reasonable in ordinary circumstances” at the time of conclusion of the Contingent Agreement [PO2-§39-p58]. The fact that only in hindsight it turned out that “less time than anticipated was spent on the case” since “RESPONDENT did not challenge the ex parte interim injunction” [PO2-§39-p58] cannot lead to the assumption that CLAIMANT failed to reasonably mitigate. At this point in time, the originally reasonable Contingent Agreement had already been concluded and CLAIMANT had no further power to subsequently mitigate any of its expenses. Therefore, the facts of the case do not indicate any measures CLAIMANT could have reasonably undertaken to further mitigate its loss. Therefore, RESPONDENT failed to fulfil its burden of proof. In conclusion, in light of the particular facts of the case, as well as the reasonability standard set forth under the CISG, CLAIMANT fulfilled its duty to mitigate under Art 77 CISG.
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Part IV: The legal fees incurred in the declaratory relief are recoverable 89
CLAIMANT respectfully requests the Tribunal to hold RESPONDENT liable for damages in the amount of USD 16,530 pursuant to Art 45 (1)(b), 74 CISG for the breach of the arbitration agreement in Art 20 FA. Under Art 45 (1)(b) CISG CLAIMANT is entitled to damages as provided for in Art 74 to 77 CISG if RESPONDENT fails to perform any of its contractual obligations. RESPONDENT breached the arbitration agreement in Art 20 FA by applying for declaratory relief in the High Court of Mediterraneo. Consequently, CLAIMANT is entitled to damages in the amount of its thereby inflicted loss under Art 74 CISG. This loss consists of CLAIMANT’S legal fees amounting to USD 16,530 [CExh11-p19]. In the following, CLAIMANT will show that the Tribunal is competent to award damages for breach of the arbitration agreement (1.). Further, the CISG is the law applicable to the request as it governs the arbitration agreement (2.). CLAIMANT’S legal fees are fully reimbursable under the damages regime of the CISG (3.). Ultimately, the Tribunal’s subsequent decision to award damages will be fully enforceable (4.). 1.
90
The Tribunal has jurisdiction over Claimant’s request for damages
It is CLAIMANT’S contention that the Tribunal has the power to award damages for the breach of the arbitration agreement. The Tribunal’s power derives directly from the very arbitration agreement breached. Art 20 FA stipulates that “all disputes” between the Parties shall be resolved by way of arbitration [CExh1-§6-p9]. Consequently, breaches of the arbitration agreement itself fall under this scope (1.1). Whilst the Parties’ agreement therefore establishes the Tribunal’s jurisdiction, the applicable arbitration law upholds it. In particular, the Tribunal’s power to award damages for the breach of the arbitration agreement is compatible with the Danubian courts’ final competence to assess the arbitration agreement’s validity (1.2). Furthermore, the High Court’s decision concerning the allocation of costs poses no res judicata for the Tribunal (1.3). 1.1. The Tribunal's power derives from the arbitration agreement in Art 20 FA
91
The Tribunal’s competence derives directly from the Parties’ Arbitration Agreement [cf “Czarina LLC” District Court MD Florida (US 2002); “Walkinshaw” Commercial Court (EN 1999); Supreme Court (CH 2000/3)]. This agreement naturally encompasses disputes that result from or are in relation to the arbitration agreement itself. In particular, the Parties included a valid arbitration agreement in Art 20 FA [PO2-§65-p62]. It stipulates that “all disputes […] shall be decided by Arbitration in Vindobona” [CExh1-§6-p9]. Similarly, the court in CMA CGM SA held that even an arbitration agreement referring to “any dispute [which] should arise
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in connection with the interpretation and fulfillment of this contract” to arbitration applies to disputes concerning damages for the breach of the arbitration agreement [“CMA CGM SA” Commercial Court (EN 2008); cf “Tritonia Shipping Inc” Court of Appeal (EN 1966)]. In the instant case, the arbitration agreement is broader than the one in CMA CGM SA submitting “all disputes” to arbitration. Consequently, it comprises the power to award damages for its breach a fortiori. 92
In addition, the application for interim relief to the High Court of Mediterraneo constitutes no waiver of the arbitration agreement. Art 33 (5) VR states that “a request to a state authority to order [interim] measures […] shall not constitute […] a waiver of the arbitration agreement”. 1.2. The Tribunal’s power leaves the state courts’ authority to review the arbitration agreement unaffected
93
In accordance with Art II (3), V (1) NYC, Art 8, 34, 36 DanArbLaw, state courts have the conclusive competence to judge on the arbitration clause's validity [Born pp858, 865]. RESPONDENT might argue that by awarding the damages claimed and thus implicitly rendering a decision
on the validity of the arbitration agreement, the Tribunal would wrongfully impropriate the state courts’ power. However, an award for the breach of the arbitration agreement does not infringe the effective judicial review of said agreement. Art 34 (2)(a)(i) DanArbLaw empowers a Danubian court to set aside an arbitral award if the underlying arbitration agreement is invalid. Likewise, a foreign court may refuse recognition of the award for the same reason under Art V (1)(a), (d) NYC. Hence, if the Tribunal awards damages for the breach of the arbitration agreement, the recognition of this award will still depend on a state court's decision regarding the agreement's validity. Consequently, the courts are not deprived of their power to conclusively assess the validity of the arbitration clause. This view is endorsed by several court decisions affirming the competence of arbitral tribunals to award damages for the breach of an arbitration agreement [“Schifffahrtsgesellschaft” Court of Appeal (EN 1997); ICC Case 5946 (1990); “Maersk Sealand” Commercial Court (EN 2003); ”CMA CGM SA” Commerical Court (EN 2008); Supreme Court (CH 2010); Supreme Court (CH 2013)]. 1.3. The High Court's cost allocation decision is no res judicata for the Tribunal 94
RESPONDENT might argue that the Mediterranean High Court's decision concerning cost allocation poses res judicata for the Tribunal, thus prohibiting a new ruling on the issue. However, it is generally accepted that a legal judgment only has a preclusive effect on further proceedings
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if the subject matter is identical [cf ILA Interim Report on Res Judicata and Arbitration; Supreme Court (CH 2014); “Nordion Inc.” Superior Court of Justice Ontario (CA 2015)]. This is the case if the same parties submitted the same claims based on the same facts in both proceedings [Supreme Court (CH 2014); “Apotex” ICSID Case (2014); “Charzow Factory” PCIJ (1927); Redfern/Hunter §9.178; Born p3777]. The High Court allocated costs for the dismissed action of declaratory relief under Mediterranean Procedural Law. In contrast, the Tribunal is presented with a claim for damages under the CISG. Hence, the claims dealt with in the proceedings are not identical [cf Supreme Court (CH 2013/1)]. Moreover, in its decision of May 27, 2014, the Swiss Supreme Court held that the subject matter was not identical in a dispute that was dealt with in both state and arbitral proceedings. The court further decided decided that a court decision posed no res judicata for an arbitral tribunal, even though it dealt with the same claim. In the respective matter the state court had a much more limited scope of review regarding the underlying facts. In the instant case the Tribunal has a completely different scope of legal review and a broader competence concerning factual review. A fortiori, the High Court's cost allocation decision is no res judicata for the Tribunal. 2. 95
The CISG applies to breaches of the arbitration agreement
The Parties agreed that “the contract as well as the arbitration clause [...] are governed in principle by the CISG, if no special procedural rules apply to the arbitration clause” [PO1-§3-p51]. Therefore, any discussion as to whether the CISG governs the arbitration clause separable from the underlying contract is obsolete. Applying this clause, the Danubian Arbitration Law and the Vienna Rules constituting the applicable procedural codes do not address the issue of damages in case of breach of an arbitration agreement. Hence, as no special procedural rules apply to this claim for damages, it is governed by the CISG. 3.
96
The legal fees Claimant incurred are recoverable under the CISG
CLAIMANT submits that RESPONDENT breached its obligations under the arbitration agreement by applying for declaratory relief in the High Court of Mediterraneo. Pursuant to Art 45 (1)(b) CISG, CLAIMANT is therefore entitled to damages under Art 74 CISG (2.1). All of RESPONDENT's attempts to escape liability for its breach are insufficient: In particular, CLAIMANT did
not cause RESPONDENT's failure to perform pursuant to Art 80 CISG (2.2). In addition,
the claim for damages fulfills all further requirements of the CISG. In particular, the legal costs
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incurred by CLAIMANT's defense were a foreseeable consequence of RESPONDENT's breach under Art 74 CISG (2.3) and CLAIMANT fulfilled its duty to mitigate its losses pursuant to Art 77 CISG (2.4). 3.1. Respondent breached the arbitration agreement 97
Pursuant to Art 45 (1)(b) CISG, a party is entitled to claim damages under Art 74-77 CISG if the other party fails to perform any of its contractual obligations. In the instant case, the undisputedly valid arbitration agreement in Art 20 FA [PO2-§65-p62] obligated the Parties to refrain from bringing “any dispute” before a state court [cf “Hydropower” Supreme Court (EN 2013); “Miramichi” Federal Court (CA 1992)]. RESPONDENT failed to perform this obligation by submitting the dispute to the High Court. Hence, CLAIMANT is entitled to damages under Art 74 CISG. 3.2. Respondent cannot invoke Art 80 CISG, as Claimant did not cause the breach
98
RESPONDENT argues that it only applied to the High Court because CLAIMANT did not respond to the request for clarification in time [RExh2-p33]. Pursuant to Art 80 CISG, “a party may not rely on a failure of the other party to perform, to the extent that such failure was caused by the first party's act or omission”. However, an omission can only be qualified as the cause of a contractual breach if an obligation existed requiring action from the creditor [Higher Regional Court Coblenz (DE 2011); Supreme Court (AT 1996); Higher Regional Court Munich (DE 1997); Schlechtriem/Schwenzer/Schwenzer Art 80 §3; Staudinger/Magnus Art 80 §10]. In general, a duty to provide legal advice to one's contractual partner does not exist in international commerce (i). Moreover, the clause was already sufficiently clear (ii). In any case, CLAIMANT’s inaction did not cause RESPONDENT to apply to the High Court (iii). (i)
99
A duty to provide legal advice does not exist in international trade
CLAIMANT submits that there is no duty in international commerce to provide legal advice to another party with regard to contract performance. For RESPONDENT, being an internationally active merchant [ASoC-§6-p25], it is reasonable and necessary to seek legal advice in order to determine the requirements of the contract on its own. If RESPONDENT enters into the contract without having dutifully reviewed it in advance, it is not its business partners' responsibility to resolve the resulting inconvenience. The same reasoning was applied by a German appellate court, which held that an internationally active merchant is responsible for finding a solution to legal uncertainties on its own. Hence, clarifying an arbitration agreement by responding to a
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request in order to later invoke the agreement is not required by good faith [Higher Regional Court Oldenburg (DE 2005)]. In particular, such a duty cannot arise within a narrow timeframe of two weeks. CLAIMANT had to obtain legal advice on how to react to RESPONDENT's announcement concerning the choice of forum, constituting a fundamental issue. Furthermore, “CLAIMANT was
very busy negotiating [...] to find solutions for the situation created by RESPONDENT’s
threat to cease delivery” [PO2-§57-p.61]. In any case, a response to the fundamental issue of jurisdiction cannot be expected within a period of merely two weeks. (ii) 100
The duty to clarify did not exist, as the clause was sufficiently clear
CLAIMANT further submits that the fundamental idea of good faith rendered any clarification of the arbitration clause obsolete, as it was already sufficiently unambiguous. By agreeing to arbitrate in “good faith” [Art 20 FA], the Parties were obligated to omit any action countering arbitration. In general, parties should avoid any conduct that might "delay […] the normal conduct of the arbitral proceedings" [Supreme Court (CH 1982); cf ICC Case 8486 (1996); “Paal Wilson & Co” House of Lords (EN 1982)]. However, CLAIMANT's response was not needed to facilitate arbitration. This was proven when RESPONDENT itself suggested that the contract was meant to refer to the Vienna International Arbitral Centre [RExh2-p33]. Likewise, Respondent did not provide any alternative understanding of the clause it supposedly had at the time of the contract’s conclusion. A German appellate court found that the party invoking an uncertainty also has to make clear that its own understanding actually differed from the one of its contractual partner [Higher Regional Court Frankfurt (DE 2006); cf “Lucky-Goldstar” Supreme Court (HK 1993)]. Even if RESPONDENT was actually unaware of the understanding of the clause, it could have recognized that the clause was meant to refer the Parties to Vienna Arbitration Centre, being the only international arbitral institution situated in Vindobona [PO2-§55-p60]. Furthermore, the Tribunal itself has the primary competence to assess the validity of the arbitration agreement and to determine its competence pursuant to Art 16 DanArbLaw [“Gulf Canada” Court of Appeal British Columbia (CA 1992); “Fung Sang” Supreme Court (HK 1992); Born p1060]. Consequently, RESPONDENT did not need to consult CLAIMANT before filing for arbitration. Hence, clarification from CLAIMANT was not needed to "accomplish the object of the arbitration agreement" [“Suad A. Niazi” Supreme Court Minnesota (US 1963)]. (iii) In any case, CLAIMANT's inaction did not cause RESPONDENT to litigate
101
Even if RESPONDENT’S concern over the correct arbitral institution was genuine, it would still have been obliged to resort to arbitration. RESPONDENT ought to have known that the arbitration
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agreement commands adherence, even if an arbitral institution is not mentioned, as long as the real intention of the parties to resort to arbitration is carried into effect [“Laboratories Grossman” Supreme Court New York (US 1968); “Warnes SA“ District Court SD New York (US 1993)]. Art 20 FA unambiguously expresses this intention and refers to a suitable place of arbitration. These elements are sufficient in order to render the arbitration agreement effective [cf “Bauer Int'l Corp” Court of Appeals New York (US 1969); Supreme Court (IT 1983); “LuckyGoldstar” Supreme Court (HK 1993); cf Art 8 DanArbLaw]. RESPONDENT might nevertheless argue that it understood CLAIMANT's passivity to allow the application before the High Court. However, pursuant to Art 9, 29 (1) CISG, only the mutual agreement to modify the original contract can derogate the initial commitment to arbitrate disputes. CLAIMANT made its objective to avoid litigation absolutely clear [CExh12-p20; RExh2-p33]. RESPONDENT could not assume that CLAIMANT had changed its mind only because it did not react within two weeks. Hence, applying to the state court was the option most incompatible with the party agreement. In Chateau des Charmes Wines, the court held that a lack of objection to a proposed forum selection clause did not suffice to derogate the prior agreement [“Chateau des Charmes Wines” Court of Appeals 9th Circ (US 2003)]. Hence, RESPONDENT could not have concluded that CLAIMANT's omission to respond permitted the initiation of state court proceedings. As a result, the breach was not a consequence of CLAIMANT's conduct, but of RESPONDENT's own decision. 3.3. The legal fees were a foreseeable consequence of Respondent's application 102
At the time of the conclusion of the contract, it was foreseeable for RESPONDENT that CLAIMANT would incur legal costs if RESPONDENT initiated litigation in breach of Art 20 FA. Pursuant to Art 8 (1) DanArbLaw and Art II (3) NYC, a party must immediately invoke an arbitration agreement to stop the proceedings, if litigation is initiated in spite of such an agreement. Failure to do so is considered a waiver of the right to arbitrate [“Rich & Co AG” Court of Appeal (EN 1989); “Shareholders” Court of Appeals 11th Circ (US 2012); Local Court Moscow (RU 1995)]. Thus, any action before a state court would force CLAIMANT to immediately defend itself in order to enforce the mutual agreement to arbitrate, thus avoiding costly litigation. Attorney's fees are necessarily incurred during such legal countermeasures, especially since “representation by a local lawyer is mandatory in Mediterraneo” [PO2-§39-p58]. Hence, it was foreseeable at the time of conclusion of the arbitration agreement “that a breach […] may require the expenditure of attorney fees […] to enforce it by securing the dismissal or transfer of a lawsuit or other proceeding” [“Ball” District Court SD Indiana (US 2006)].
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3.4. Claimant fulfilled its duty to mitigate pursuant to Art 77 CISG 103
CLAIMANT submits that it fulfilled its duty to mitigate pursuant to Art 77 CISG and therefore no reduction of its damages applies. RESPONDENT essentially alleges the same objections as with regard to the legal costs for interim relief [supra §59-60]. Quite comparable, the fact that “less time than anticipated was spent on the case” also emerged only after the conclusion of the Contingent Agreement when “the High Court Immediately denied jurisdiction” [PO2-§39p58]. Since “representation by a local lawyer is mandatory” in Mediterraneo [PO2-§39-p58], CLAIMANT would have faced the risk of a default judgment in RESPONDENT’S favor if it had not immediately contracted with LawFix and thus its choices were even more restricted. Therefore, given the immediate pressure CLAIMANT faced with regard to the High Court proceedings, CLAIMANT undertook all reasonable actions to mitigate its losses. In conclusion, CLAIMANT fulfilled its duty to mitigate under Art 77 CISG. 4.
104
An award of damages for breach of the arbitration agreement is enforceable
RESPONDENT might argue that the award would not be enforceable in Mediterraneo under Art V (2)(b) NYC for public policy reasons, but rather sanction RESPONDENT for seeking judicial protection. In contrast, Mediterranean law acknowledges the Parties' possibility to exercise their right to judicial process by opting for arbitration in Art 5, 8, 34 of its lex arbitri and in Art II NYC. The Parties made use of this option in their arbitration agreement. The legally binding nature of the Parties' forum selection is accepted and was even confirmed by Mediterranean judiciary through the High Court's deferral to arbitration [CExh9-p17]. Therefore, the award of damages for the breach of the arbitration agreement will not collide with Mediterraneo’s public policy and is fully enforceable under the New York Convention.
Request for Relief 105
The Tribunal is respectfully invited to 1. hold that RESPONDET should produce the documents specified in page 7 §28 of the record 2. hold that CLAIMANT can claim the profits RESPONDENT made by selling the bottles to SuperWines as part of its damages, even if that includes further profits 3. award damages for the litigation costs of USD 50,280 incurred partly (i) in its application for interim relief and (ii) its successful defence against the declaratory relief.
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Certificate
We hereby confirm that this memorandum was written exclusively by the persons whose names are listed below and who signed this certificate.
Heidelberg, Germany December 10, 2015
Lena Bauer
Leon Theimer
Paulina Fecht
Louisa Goebes
Alexander K. Walker
Tobias Wetlitzky
XLI
