SIXTH ANNUAL INTERNATIONAL

ALTERNATIVE DISPUTE RESOLUTION

MOOTING COMPETITION

5-9 JULY 2016

HONG KONG

In the matter of:

Albas Watchstraps Manufacturing Co. Ltd.

v.

Gamma Celltech Co. Ltd.

MEMORANDUM FOR CLAIMANT

Team No. 115

LIST OF ABBREVIATIONS 4

INDEX OF AUTHORITIES 8

BOOKS AND COMMENTARIES 8

AWARDS AND CASES 11

LEGAL INSTRUMENTS 17

STATEMENT OF FACTS 18

ARGUMENTS ADVANCED 21

I. THE TRIBUNAL HAS JURISDICTION TO DEAL WITH THE PAYMENT CLAIMS RAISED BY THE

CLAIMANTS 21

A. THE TRIBUNAL HAS COMPETENCE TO DETERMINE ITS JURISDICTION 21

B. THE CLAIMS RAISED BY CLAIMANT ARE PAYMENT CLAIMS 22

C. THE ARBITRATION AGREEMENT IS VALID 22

II. THE CISG GOVERNS CLAIMS ARISING UNDER THE SALE AND PURCHASE AGREEMENT NO.1

AND THE SALE AND PURCHASE AGREEMENT NO. 2 24

A. THE CHOICE OF LAW CLAUSE IN THE SALE AND PURCHASE AGREEMENT DIRECTS THIS TRIBUNAL

TO APPLY CISG. 24

B. THERE IS NO “CLEAR INDICATION” BY THE PARTIES TO OPT OUT OF CISG. 25

C. THE SALE AND PURCHASE AGREEMENTS CONSTITUTE A SALES CONTRACT WITHIN THE SCOPE OF

CISG. 26

III. ASSUMING CISG APPLIES, ITS PROVISIONS BEEN INVOKED ON THE ACCOUNT OF: 27

A. LACK OF INSURANCE COVER IN THE FIRST TRANSACTION. 27

B. TIMING OF DELIVERY OF PROTOTYPES: 27

C. NON-CONFORMITY OF GOODS: 27

D. PAYMENT OF MONEY UNDER THE TRANSACTION. 28

2
IV. COUNTERCLAIM COMPENSATION CLAIMED BY THE RESPONDENT STANDS INVALID. 29

A. COUNTERCLAIM (B) BY THE RESPONDENT STANDS INVALID AS THERE IS NO DIRECT CONNECTION

BETWEEN THE WEBSITE DEVELOPMENT COST AND THE PRESENT DISPUTE. 29

B. COUNTERCLAIM (C) BY THE RESPONDENT CLAIMING COMPENSATION FOR LOSS OF PROFITS IS AN

UNNATURAL CLAIM, NOT DIRECTLY CONCERNING THE ARBITRATION DISPUTE. 30

REQUEST FOR RELIEF 31

3
 LIST OF ABBREVIATIONS

$ United States Dollars

& and

A.D. American Decisions

AC Advisory Council

Art. Article

CCI Chambre de Commerce Internationale

CIETAC China International Economic and Trade

Arbitration Commission

CISG Convention on International Sale of

Goods

Cl. Claimant

CLOUT Case Law on UNCITRAL Text

Co. Company

4
Comm. Commission

d. Division

DDP Delivery Duty Paid

E.g. Example

Ex. Exhibit

F.2d. Federal Second Division

F.L.R. Family Law Reporter

Fr. France

Ger. Germany

Hist. History

Hon’ble Honourable

Hung. Hungary

5
ICC International Commercial Arbitration

ICSID International Centre for Settlement of

Investment Disputes

Id. Ibid

Inc. Incorporate

Ins. Insurance

Int’l International

Leg. Legislative

Ltd. Limited

NE North Eastern

No. Number

NSWLR New South Wales Law Reporter

Op. Opinion

6
pp. Pages

Pty Proprietary Company

Rep. Reporter

s. Section

S&P No. 2 Sale and Purchase Agreement No. 2

SGCA Singapore Court of Appeal

SGHC Singapore High Court

St. Saint

U.N. United Nations

U.S. United States of America

UNDROIT International Institute for the Unification

of Private Law

v. Versus

7
 INDEX OF AUTHORITIES

Books and Commentaries

Bonell, Michael Joachim, The U.N. Convention on the International Sale of

& Liguori, Fabio Goods: A Critical Analysis of Current International

Case Law, Bonell, Michael Joachim, & Liguori, Fabio

Part I

1997

Cited as: Bonell/Liguori

Crawford, B. Blair Drafting Considerations under the 1980 United Nations

Convention on Contracts for the International Sale of

Goods, Crawford, B. Blair

1998

Cited as: Crawford

Drago, Thomas J., & Be Explicit: Drafting Choice of Law Clauses in

Zoccolillo, Alan F International Sale of Goods Contracts The

Metropolitan Corporate Counsel, Drago, Thomas J., &

Zoccolillo, Alan F

2002

Cited as: Drago/Zocolillo

Ferrari, Franco Contracts for the International Sale of Goods:

Applicability and Applications of the 1980 United

Nations Sales Convention, Ferrari, Franco

2012

Cited as: Ferrari

8
Fouchard Galiard International Commercial Arbitration, Gaillard and

Goldman Savage

1999

Cited as: Fouchard

Gary B. Born International Commercial Arbitration, Gary B. Born

2nd Edition, 2014

Cited as: Born

Graves, Jack The ABCs of the CISG, Graves, Jack

2013

Cited as: Graves

Huber, Peter & Mullis, The CISG: A New Textbook for Students and

Alastair Practitioners, Huber, Peter & Mullis, Alastair

2007

Cited as: Huber/Mullis

Jan Ramberg ICC guide to Incoterms. Understanding and practical

use

Cited as: Jan Ramberg

Redfern and Hunter Redfern and Hunter on International Arbitration

6th Edition, 2015

Cited as: Redfern

Schlechtriem, Peter Uniform Sales Law, The UN Convention on Contracts

for the International Sale of Goods, Schlechtriem, Peter

1986

Cited as: Schlechtriem

9
Schlechtriem/Schwenzer Ingeborg Schwenzer, Schlechtriem & Schwenzer,

Commentary on the UN Convention on the

International Sale of Goods (CISG)

3rd Ed.

2010

Cited as: Schwenzer

Sir Kim Lewison Sir Kim Lewison, The Interpretation of Contracts

5th Ed.

2012

Cited as: Kim Lewison

Winship, Peter Changing Contract Practices in the Light of the United

Nations Sales Convention: A Guide for Practitioners,

Winship, Peter

1995

Cited as: Winship

10
Awards and Cases

Australia Aiton Australia Pty Ltd. v. Transfield Pty Ltd.,

(1999) 153 F.L.R. 236 at 245.

Cited as: Aiton v. Transfield

Elizabeth Bay Developments Pty Ltd v Boral

Building Services Pty Ltd

(1995) 36 NSWLR 709

Cited as: Elizabeth v. Boral

Austria Spacers for Insulation Glass Case.

Case No. 3 R 57/0F

Cited as: Spacers for Insulation Glass Case

Gasoline and Gas Oil Case

Case No. 1 Ob 77/01g

Cited as: Gasoline and Gas Oil Case

Case No. 8 Ob 22/00v

Cited as: http://www.unilex.info/case.cfm?id=473

Belgium NV Carta Mundi v. Index Syndicate Ltd.

Case No. 2001/AR/551

Cited as: NV Carta Mundi v. Index Syndicate Ltd

(V. v. B.)

Belgium 13 April 2000 Commercial Court

Cited as: Bowling Apparatus

England Paul Smith Ltd. v. H & S International Holding Inc.

[1991] 2 Lloyd’s Reports 127

11
 Cited as: Paul Smith

France Societe Céramique Culinaire de France v. Musgrave

CLOUT Case No. 206

Cited as: Céramic Culinaire

Germany Marble Slab Case

Case No.- 2 U 1899/89

Cites as: Marble Slab Case

Surface Protective Film Case

Case No.- 1 U 280/96

Cites as: Surface Protective Film Case

Yarn Case

Case No.- 9 U 13/00

Cites as: Yarn Case

LG Oldenburg, 27 march 1996

Case No: 12 O 2541/95

Cited as: Clothes case

Case No. 8 HKO 24667/93

Germany 8 February 1995 District Court München

Cited as: Standard software case

Hungary Waste Container Case

Case No.- Vb 94131

Cited as: Waste Container Case

ICC ICC Case No. 8445 (1996)

Cited as: ICC Case No. 8544

12
 ICC Case No. 17050/GZ

Cited as: ICC Case No. 17050/GZ

ICC Case No. 7565 of 1994

Cited as: Coke Case

ICC Case No. 6653 of 1993

Cites as: Steel Bars Case

ICC Case No. 7531 of 1994

Cites as: Scaffold Fittings Case

ICSID Texas Overseas Petroleum Co. v. Libya

Int’l Arbitral Award, 104 J. Droit Int’l 350 (1977

Cited as: TOPCO v. Libya

SGS Societe Generale De Surveillance S.A. v.

Republic of the Philippines, Decision of the Tribunal

on Objections to Jurisdiction

ICSID Case No. ARB/02/6, 29 January 2004

Cited as: SGS

Niko Resources (Bangladesh) v. People’s Republic of

Bangladesh, Decision of Jurisdiction

ICSID Case No. ARB/10/11

Cited as: Niko

New Zeland Case No. NZCA 324

Cited as: Mona v. Fleming, [2007] NZCA 324 New

Zealand

Singapore P.T. Tri- M.G. Intra Asia Airlines v. Norse Air

Charter Limited

13
 [2009] SGHC 13

Cited as: Norse Air

International Research Corp. PLC v. Lufthansa

Systems Asia Pacific and Damatat,

[2013] SGCA 55

Cited as: Lufthansa

Switzerland Cited as: Inflatable Triumphal Arch Case

United States of America Rochester City School District v. Rochester Teachers

Association

362 NE. 2d. 977

Cited as: Rochester

J.C. Bonnot, d/b/a Bonnot Construction Company v.

Congress of Independent Unions Local

331 F.2d. 355

Cited as: Bonnot

Egol v. Egol

68 N.Y.2d. 893

Cited as: Egol

Eiseman Levine Lehrhaupt & Kakoyiannis v. Torino

Jewelers Ltd

44 A.D. 3d. 581

Cited as: Eiseman

World Business Center, INC. v Euro-American

Lodging Corporation,

14
309 A.D. 2d 166

Cited as: World Business Center

St. Paul Guardian Insurance Company v. Neuromed

Medical Systems & Support et al.

2002 WL 465312

Cited as: St. Paul Guardians Inc.

BP Oil International Inc. v. Empresa Estatal Petroleos

de Ecuador

332 F.3d. 333

Cites as: BP Oil

Cedar Petrochemicals Inc. v Dongbu Hannong

Chemical Co. Ltd.

769 F.Supp.2d 269

Cited as: Cedar Petrochemicals

Asante Technologies Inc. v. PMC-Sierra Inc.

164 F.Supp.2d. 1142

Cited as: Asante

Geneva Pharmaceuticals Technology Corp. v. Barr

Laboratories, Inc.

CLOUT Case 579

Cited as: Geneva Technology v. Barr Inc.

St. Paul Guardian Insurance Company et al. v.

Neuromed Medical Systems & Support

CLOUT case no. 447

Cited as: Gaurdian insurance v. Neuromed

15
Systems

Bratt Enters. v. Noble Int'l Ltd

Case No. 338 F.3d 609, 613

Cited as: Bratt Enters. v. Noble Int'l Ltd

Toltec Fabrics, Inc., v. August Incorporated

Cited as: Toltec Fabrics, Inc., v. August

Incorporated

Twin Disc, Incorporated, v. Big Bud Tractor, Inc

Case No. 84-2246, 05.09.1985

Cited as: Twin Disc, Incorporated, v. Big Bud

Tractor, Inc.

Art Shy v. Navistar International Corporation

Case No.11-3215, 11-4143

Cited as: Art Shy v. Navistar International

Corporation

16
Legal Instruments

CIETAC China International Economic Trade

Association Commission Rules

Cited as: CIETAC

Hong Kong Hong Kong Arbitration Ordinance, 2015

Cited as: Hong Kong Arbitration

Ordinance, 2015

ICC International Chamber of Commerce

Rules, 2012

Cited as: ICC Rules

International Institute for Unification of UNIDROIT Principles of International

Private Law Commercial Contracts

Cited as: UNIDROIT Principles

UNCITRAL UNCITRAL Model Law, 1985

Cited as: UNCITRAL

United Nations United Nations Convention on Contracts

for the International Sale of Goods, 2010

Cited as: CISG

The New York Arbitration Convention on

the Recognition of Enforcements of

Foreign Arbitral Award, New York, 1958

Cited as: New York Convention

17
 STATEMENT OF FACTS

The parties to the Contract are Albas Watchstraps Mfg. Co. Ltd. (CLAIMANT) and Gamma

Celltech Co. Ltd. (RESPONDENT).

CLAIMANT is a company based in Yanyu since 1973. It sells its watchstraps to various

importers and watch producers all over the world.

RESPONDENT is a company based in Wulaba, established in 2002. It has been considered to be

one of the fastest growing traders of smart mobile phone accessories.

23.07.2014 Earlier during the year, RESPONDENT approached CLAIMANT

with regards to the purchase of leather watchstraps for the

Cherry Watch, belonging to the Cherry Brand. Subsequently, a

Sale and Purchase agreement was concluded by the Parties.

Note:

It was agreed on by the Parties that due to RESPONDENT’S

inexperience in the field, CLAIMANT offered the DDP Incoterms

and the goods at an increased 50% price and agreed to be

responsible for all related costs.

31.07.2014 RESPONDENT paid a deposit of USD 3 million to CLAIMANT.

18
14.08.2014 As agreed between the parties, CLAIMANT sent an approval

prototype for the RESPONDENT to confirm in order to start

manufacturing – a standard procedure regularly followed by

CLAIMANT. RESPONDENT approved the prototype and

CLAIMANT, thus, invested in the necessary production tools.

10.10.2014 CLAIMANT, as agreed between the parties, arranged for the

watchstraps to be shipped by sea.

28.10.2014 CLAIMANT received a notice from the shipping company stating

that the goods were lost at sea and due to this, CLAIMANT sent a

letter to RESPONDENT informing them about the same so

RESPONDENTS could claim compensation from the insurance

company for the same. However, RESPONDENT informed

CLAIMANT that as per the decided terms of the agreement,

CLAIMANT was responsible for all related costs, including

insurance of the goods.

07.11.2014 Subsequently, CLAIMANT offered a replacement shipment,

provided RESPONDENT agreed to make full payment of the lost

goods. The Parties thus signed a second Sale and Purchase

agreement at a discounted rate this time.

29.12.2014 Upon receiving the balance payment for the initial Sale and

Purchase Agreement and a deposit for the new Sale and

Purchase Agreement, CLAIMANT managed to arrange for the

watchstraps to be shipped at the earliest on the above mentioned

19
 date.

27.02.2015 CLAIMANT received a letter from RESPONDENT refusing to pay

the balance amount as it was not satisfied with the quality of the

watchstraps. Furthermore, RESPONDENT also demanded a refund

on the initial payment as it was a conditional payment for the

right replacement transaction.

18.11.2015 CLAIMANT made an application for arbitration praying for

liquidated damages in the sum of USD 9.6 million before the

China International Economic and Trade Arbitration

Commission.

20
 ARGUMENTS ADVANCED

I. The Tribunal has jurisdiction to deal with the payment claims raised by the

CLAIMANTS.

1. It is respectfully submitted that the Hon’ble Tribunal has jurisdiction as per the

arbitration clause contained in the Sale and Purchase Agreement No. 2 [CL. EX. 6].

The lex arbitri governing the arbitration is the Laws of Hong Kong which is also the

seat of the arbitration. [ARTICLE 74, CIETAC RULES]

2. The issue of jurisdiction of this tribunal shall be dealt as under (A) The tribunal has

competence to determine its jurisdiction, (B) the claims raised by CLAIMANT are

payment claims and (C) the arbitration agreement is valid and there was consensus

between the parties to arbitrate.

A. The Tribunal has competence to determine its jurisdiction.

3. According to the principle of Kompetenz-Kompetenz this Tribunal has the power to

determine its jurisdiction, which is also recognised as a general principle of

international law. [FOUCHARD ¶473, REDFERN ¶5.109,G. BORN P.1060, TOPCO V.

LIBYA]. The same has also been codified in Hong Kong laws [S.34, ARBITRATION

ORDINANCE, 2015] as well as in Article 75 CIETAC Rules, which has been adopted as

per Article 19(a) of Sale and Purchase agreement No. 2 [CL. EX. 6]

4. This Tribunal has the first right to determine the validity of the arbitration agreement

and the Courts of State of New York have a mere supervisory jurisdiction over the

same. [FOUCHARD ¶658, PAUL SMITH; NORSE AIR]

5. CLAIMANT further submits that the arbitration is not premature as CLAIMANT is under

no legal obligation to settle disputes amicably on account of lack of certainty and

21
 there being “acrimonious” correspondence between the parties. [AITION V.

TRANSFIELD; ELIZABETH V. BORAL; ICC CASE NO. 8445]

B. The claims raised by CLAIMANT are payment claims.

6. The claim raised by CLAIMANT is for the payment of the balance amount under Sale

and Purchase Agreement No.2 and is thus a payment claim. [SGS; NIKO; ICC CASE NO.

17050/GZ] The parties have agreed to submit all payment related disputes to this

Tribunal which has jurisdiction to deal with the claims raised by CLAIMANT.

[FOUCHARD ¶512] RESPONDENT has failed to make the balance payment of $9.6

million within the prescribed time of 14 days after receiving the goods i.e. within 14

days of 27th February 2015. On RESPONDENTS’ failure to make the payment before the

expiry of the term and refusing to pay therein after, CLAIMANT became entitled to the

remainder. [LUFTHANSA]

C. The arbitration agreement is valid.

7. The arbitration agreement is valid as there is exists a clear consensus to arbitrate. The

mere use of the term “may” does not make the arbitration optional and it is binding.

[ROCHESTER]. The purpose of the “may” language is to give the aggrieved party the

choice between arbitration or abandonment of its claim. [BONNOT; EGOL]. Once

CLAIMANT invokes arbitration, it is deemed to be obligatory for RESPONDENT. This

can also be inferred as the parties intended the award to be final and binding.

8. Furthermore, if the parties had no intention to arbitrate they would have never

inserted an arbitration clause in the agreement. [FOUCHARD ¶490] The clause should

be interpreted by considering that if the parties had not wished to submit their

disputes to arbitration, they would have refrained from mentioning the possibility of

22
 doing so. Thus, the act of insertion of an arbitration clause shows that there exists a

clear intention of the parties to arbitrate.

9. CLAIMANT further submits that there is no conflict between the jurisdiction of the

arbitral tribunal and the Hong Kong courts. Article 19(a) provides for arbitration of

payment disputes and Article 19(b) provides for the jurisdiction of the Hong Kong

courts. Thus the parties wished to only submit payment disputes to arbitration and

disputes not related to payment fall under the jurisdiction of Hong Kong Courts.

Hence, there is no overlapping of jurisdictions [EISEMAN; FOUCHARD ¶490].

10. In a recent case, the Supreme Court of New York upheld an arbitration clause that

was limited to the amount of the purchase price and all other disputes regarding the

sale of the building were to be determined in the Court of Commerce of Paris

according to French law. [WORLD BUSINESS CENTER]

23
II. The CISG governs claims arising under the Sale and Purchase agreement No.1 and

the Sale and Purchase agreement no. 2.

11. According Article 20 of the Sale and Purchase agreements [Cl. Ex. 2 & 6], the

national law of Wulaba is to be applied. However the Tribunal should apply CISG

to the claims arising out of the Sale and Purchase agreements furthermore, the Sale

and Purchase agreements fall within the scope of CISG.

A. The choice of law clause in the Sale and Purchase agreement directs this Tribunal

to apply CISG.

12. Article 20 of the Sale and Purchase agreement [Cl. Ex. 2 & 6], must direct the

Tribunal to apply CISG. Both Yanyu and Wulaba are signatories to the convention

and CISG has been integrated into the Wulaban legal order to apply to

international sales contracts [RF CCI 105/2005; ST. PAUL GUARDIAN INS. CO. V.

NEUROMED (U.S.)]. Parties need not “opt in” to CISG through an explicit reference

in the choice of law clause [GRAVES, P. 7].

13. The Sale and Purchase agreements deal with “sale of goods” as envisaged under

CISG [Arts. 1 & 3 CISG] and CLAIMANT and RESPONDENT have their places of

business in different States, Yanyu and Wulaba, which are both Contracting States

to the CISG. Therefore, to stipulate that the law of Wulaba governs the Sale and

Purchase agreements is, in these circumstances, to ensure that CISG governs the

contract [COKE CASE (ICC); MARBLE SLAB CASE (GER.); CÉRAMIQUE CULINAIRE

(FR.); STEEL BARS CASE (ICC); SURFACE PROTECTIVE FILM CASE (GER.)].

24
B. There is no “clear indication” by the parties to opt out of CISG.

14. In various Countries, courts have held that parties must clearly opt out of CISG

[E.G. BP OIL (U.S.); CEDAR PETROCHEMICALS (U.S.); SPACERS FOR INSULATION

GLASS CASE (AUSTRIA); SPORT CLOTHING CASE (GER.); ST. PAUL GUARDIAN INS.

(U.S.)]. Art. 6 CISG also provides that “parties may exclude its application”

[BOILER CASE (AUSTRIA); JEWELRY CASE (AUSTRIA); HUBER/MULLIS, P. 60]. They

specifically emphasize that the contract should contain “clear language” conveying

the parties’ intention to exclude the application of CISG to their contract [ASANTE

(U.S.), P. 1150]. Clear and unambiguous language stating that CISG would not be

applicable is necessary to prevent its application in situations where it would

otherwise apply [GASOLINE AND GAS OIL CASE (AUSTRIA); WASTE CONTAINER CASE

(HUNG.)]. Merely specifying the general law of a contracting state is not sufficient

to exclude CISG [ASANTE (U.S.), P. 1150; YARN CASE (GER.); BONELL/LIGUORI, P.

391; DRAGO/ZOCCOLILLO, P. 9; FERRARI, P. 165; HUBER/MULLIS, PP. 63-64].

15. This position is supported by the legislative history of CISG [CISG Leg. Hist., Rep.

1st Comm. 1980]. During the drafting process, amendments to Art. 6 suggesting

otherwise were rejected, with a majority of delegates favoring the French position

that “the parties” choice of a national law means that CISG applies if that state has

adopted CISG” [SCHLECHTRIEM 1986, P. 35]. Commentator Ferrari states that

tribunals must find that the parties showed a “clear indication” that they intended

to exclude CISG [FERRARI, P. 161]. Other commentators have suggested examples

of how CISG can be excluded in practice [MCMAHON; CRAWFORD, PP. 192-93;

WINSHIP]. For example, choice of law provisions can read “the law of France

excluding CISG,” or “the laws of Pennsylvania not including the 1980 U.N. CISG”

[Id.].

25
16. In the Sale and Purchase agreements [Cl. Ex. 2 & 6], Article 20 only mentions that

the “The contract shall be governed by the national law of Wulaba” and followed

by an ambiguous statement, “All other applicable laws are excluded”. No “clear

indication” to opt out of CISG can be inferred from this ambiguous statement as

there is no express mention of opting out of CISG as examples followed by the

commentators above. Article 20 of the Sale and Purchase Agreement [Cl. Ex. 2 &

6] is incorporated to exclude all other applicable laws but CISG cannot be

excluded as it forms an integral part of the Wulaban legal order especially with

regard to international sale contracts.

C. The Sale and Purchase agreements constitute a sales contract within the scope of

CISG.

17. The Sale and Purchase agreements [Cl. Ex. 2 & 6], envisages the sale and purchase

of various types of leather watchstraps [Id.]. This constitutes a sale of goods within

the scope of CISG [Art. 3 CISG; Art. 1(1) CISG; SCAFFOLD FITTINGS CASE (ICC)]

for two reasons. Firstly, the predominant obligations of CLAIMANT under the Sale

and Purchase agreements concern the sale of goods (hardware & software) and not

services (installation & personal training), which under Article 3(2) brings the Sale

and Purchase agreements within the scope of CISG. Second, CLAIMANT has

provided all the manufacturing materials under Article 3(1). By applying Article 3

there is a “pro convention principle”. The burden of proof is on RESPONDENT to

displace the prima facie application of CISG, which is presumed [CISG-AC Op. 4,

¶ 2.10, ¶ 4.4].

26
III. Assuming CISG applies, its provisions been invoked on the account of:

A. Lack of insurance cover in the first transaction.

18. The parties are bound by usage and practice of the parties or industries that are impliedly

incorporated into the agreement unless otherwise agreed [GENEVA TECHNOLOGY V. BARR

INC.]. Pursuant to Article 9 (2) of the CISG, INCOTERMS definitions shall apply by its

incorporation into the contract. [GAURDIAN INSURANCE V. NEUROMED SYSTEMS].

19. The claimant has agreed to bear the cost related to transport as per incoterm DDP, and

DDP does not impose any obligation on CLAIMANT to purchase insurance, thus the

CLAIMANT isn’t liable for any lack of purchase of insurance [JAN RAMBERG].

B. Timing of delivery of prototypes.

20. It’s respectfully submitted that the payment was made on 31st July to CLAIMANT’S bank and

the prototypes were dispatched by 14th August, which was received by RESPONDENT on 15th

August. RESPONDENT claims that it amounts to a breach as it was delayed by one day.

CLAIMANT disputes this claim as the date of delivery of receipt is unknown and more the

term used is ‘provide’ and not ‘deliver’ and hence the Claimant isn’t liable as he provided

by dispatching the prototypes on the 14th day.

21. Assuming but not conceding that there is a delay, it wouldn’t amount to a fundamental

breach as envisaged under Article 25 of CISG as it is not detrimental to deprive the

respondent of what he is to expect under the contract as RESPONDENT only planned to

introduce the goods during Christmas sale and that such delay of one day wouldn’t deprive

him of any sale. [CLOTHES CASE].

C. Non-conformity of goods.

22. CLAIMANT cant be held liable for goods delivered provided that the goods conform with

samples held out to RESPONDENT [ARTICLE 35(2) (C) CISG] and the buyer knew or couldn’t

27
 be unaware of lack of conformity [ARTICLE 35 (3) CISG]. CLAIMANT was obliged to deliver

according to the size as prescribed in the prototype and there is proof that the size of final

goods matches the prototype. [STANDARD SOFTWARE CASE]

23. The buyer loses the right to claim for lack on conformity if he fails to give a notice

[ARTICLE 39 CISG] and it’s the duty of RESPONDENT to give a complete picture of lack of

conformity in the notice. [NV CARTA MUNDI V. INDEX SYNDICATE LTD.]

24. However with regards to the quality goods, in leather industry it’s a standard usage

that the leather isn’t always consistent and moreover the manufacturing process was

discussed about during the negotiations and it’s reasonable the final goods might not

be as soft as its only a minor defect [SCHWENZER].

D. Payment of money under the transaction.

25. CLAIMANT further submits that the 2nd contract was concluded on the sole condition that

RESPONDENT makes the balance payment of the first transaction. This was a condition to

be met before any new sale purchase agreement was agreed. Its a condition precedent for

agreement No. 2 and must be fulfilled before any binding obligations can be created [KIM

LEWISON; MONA V. FLEMING] and its clear that agreement No. 2 came into existence upon

the respondent fulfilling the condition precedent.

26. The alleged non-conformity if any as the claim states is only a minor non-conformity to

which the respondent is still required to pay for the contract, despite the non-conformity

[HTTP://WWW.UNILEX.INFO/CASE.CFM?ID=473]. This was further clarified that a minor non-

conformity would not justify withholding the amount due under the contract [BOWLING

APPARATUS; INFLATABLE TRIUMPHAL ARCH CASE].

28
IV. Counterclaim compensation claimed by the Respondent stands invalid.

27. It is respectfully submitted before this Tribunal that counter claim (b) and (c) weigh no

substance for their legitimacy to be claimed against CLAIMANT as the arbitration

agreement provides for payment disputes and not for expenses incurred by

RESPONDENT for the purpose of marketing.

A. Counterclaim (b) by the Respondent stands invalid as there is no direct

connection between the website development cost and the present dispute.

28. The CLAIMANT submits that RESPONDENT’S claim is for the costs incurred in the

development of the website for the purpose of marketing and the same has no direct

connection with the present dispute.

29. CLAIMANT further submits that CIETAC rules provide that RESPONDENT must attach

the facts and grounds for the counterclaim and must pay the required arbitration fees in

accordance with the rules. RESPONDENT has not set out any grounds for the

counterclaim nor have they deposited the requisite arbitration fee. Thus, the

counterclaim is in violation of the CIETAC Rules and is liable be dismissed on

grounds of non-compliance with the procedures. [ARTICLE 16(2) AND 16(3), CIETAC

RULES]

30. The parties have agreed to submit only payment disputes to arbitration and this

Tribunal can only arbitrate a dispute if it falls under the ambit of payment disputes.

The counterclaim raised by RESPONDENT is related to a cost incurred by RESPONDENT

and the same has no direct relation to the present payment dispute. [ART SHY V.

NAVISTAR INTERNATIONAL CORPORATION]

31. CLAIMANT firmly contends that the cost claimed by RESPONDENT for the development

of the website is not in direct relation with the present dispute. If there is any

29
 ambiguity then it must be resolved in the favour of arbitration even when an arbitration

clause is limited in scope. CLAIMANT submits that the present arbitration is limited to

the costs directly mentioned in the agreement. Claim for the cost of website

development is clear direction of the external costs being added by RESPONDENT.

[BRATT ENTERS. V. NOBLE INT'L LTD.]

B. Counterclaim (c) by the RESPONDENT claiming compensation for loss of profits is

an unnatural claim, not directly concerning the arbitration dispute.

32. CLAIMANT humbly submits before this Tribunal that the counterclaim made by

RESPONDENT for compensation of loss of profits is abnormal as there can’t be any

stipulation of a yet to be launched products’ success rate and in turn the success rate

of the accessories for the same. RESPONDENT does not have any experience in the

watchstraps market, hence no goodwill or tangible loss was suffered by RESPONDENT.

[TOLTEC FABRICS, INC., V. AUGUST INCORPORATED]

33. CLAIMANT contends that in the present dispute there is no breach of contract with

regard to future loss in the contract nor is there any reasonable measure to see the

certainty of the incurred amount of future loss. The claim by RESPONDENT is

superficial and abnormal. [TWIN DISC, INCORPORATED, V. BIG BUD TRACTOR, INC]

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 REQUEST FOR RELIEF

In light of the arguments advanced, CLAIMANT respectfully requests the Tribunal to find that:

1. This Tribunal has jurisdiction to deal with the payment claims raised by the

CLAIMANT;

2. CISG governs the claims arising under Sale and Purchase agreement No.1 and Sale

and Purchase agreement No. 2;

3. RESPONDENT is liable to pay CLAIMANT $9.6 million as liquidated damages;

4. Counterclaims raised by RESPONDENT are invalid.

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