TWENTY-SIXTH ANNUAL

WILLEM C. VIS INTERNATIONAL COMMERCIAL ARBITRATION MOOT

HONG KONG, 31 MARCH–7 APRIL 2019

UNIVERSITY COLLEGE LONDON

MEMORANDUM FOR RESPONDENT

PHAR LAP ALLEVAMENTO V BLACK BEAUTY EQUESTRIAN

Phar Lap Allevamento v Black Beauty Equestrian

CLAIMANT RESPONDENT
Rue Frankel 1 2 Seabiscuit Drive
Capital City, Mediterraneo Oceanside, Equatoriana

COUNSEL FOR RESPONDENT

ARDA CAN TEKIN • RYAN CHEUNG • MATILDE MASETTI-PLACCI

NEHA PATEL • BRYONT CHIN • QINGYU MAO • JOHANNES HAGMANN

LONDON, UNITED KINGDOM

UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

TABLE OF CONTENTS

TABLE OF CONTENTS ............................................................................................................. II

INDEX OF ABBREVIATIONS AND DEFINITIONS ............................................................ VI
INDEX OF AUTHORITIES ................................................................................................... VIII
INDEX OF CASES .................................................................................................................. XIII
INDEX OF ARBITRAL AWARDS ......................................................................................... XVI
LIST OF CONVENTIONS, RULES, STATUTES, AND CODES ................................... XVIII
STATEMENT OF FACTS ............................................................................................................ 1
ARGUMENT ................................................................................................................................. 3
ISSUE 1: UNDER THE ARBITRATION AGREEMENT, THE TRIBUNAL CANNOT
ADAPT THE CONTRACT. ......................................................................................................... 3
I. THE SEPARABILITY PRINCIPLE APPLIES IN THIS CASE. ..................................................... 4
II. THE SEPARABILITY PRINCIPLE MEANS THAT THE ARBITRATION AGREEMENT CAN BE
GOVERNED BY A DIFFERENT LAW FROM THE REST OF THE CONTRACT.................................... 4

1. International case law supports this interpretation of the separability principle. . 4

2. This interpretation of the separability principle furthers the objectives of
international arbitration. ...................................................................................................... 4
III. THE ARBITRATION AGREEMENT IS GOVERNED BY DANUBIAN LAW. ........................... 5
1. The Parties had never agreed that Mediterranean law should govern the
Arbitration Agreement.......................................................................................................... 5
A. The facts show no such agreement. .......................................................................... 5
B. The Parties could not have agreed to this. ................................................................ 6
2. The law of the seat of arbitration (i.e. Danubia) applies to the Arbitration
Agreement. ............................................................................................................................. 7
IV. UNDER DANUBIAN LAW, THE TRIBUNAL CANNOT ADAPT THE CONTRACT. ................. 8
1. The parol evidence rule applies. .................................................................................. 8
A. The parol evidence rule applies as a substantive rule of law. ................................... 8
B. The CISG does not displace the parol evidence rule in Danubian law. .................... 9
2. In light of the parol evidence rule, the Tribunal is not empowered to adapt the
Contract. ................................................................................................................................. 9
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UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

V. EVEN IF MEDITERRANEAN LAW APPLIES INSTEAD, THE TRIBUNAL STILL CANNOT ADAPT
THE CONTRACT. ........................................................................................................................ 10

1. The requirements for the Tribunal to adapt the Contract have not been satisfied.
10
A. CLAIMANT had not acted in good faith. .................................................................. 10
B. Further, Mr. Shoemaker had no actual or ostensible authority to conduct
renegotiations on RESPONDENT’s behalf. .......................................................................... 11
2. The Parties had not intended that the Tribunal should have the power to adapt
the Contract. ........................................................................................................................ 12
CONCLUSION FOR ISSUE 1 .................................................................................................. 12
ISSUE 2: CLAIMANT IS NOT ENTITLED TO SUBMIT EVIDENCE FROM THE OTHER
ARBITRATION PROCEEDINGS............................................................................................ 13
I. THE PARTIAL INTERIM AWARD SHOULD REMAIN CONFIDENTIAL AND NOT BE ADMITTED
UNDER THE HKIAC RULES OR THE IBA RULES. .................................................................... 13

1. The interest of justice favours confidentiality since the Partial Interim Award is
irrelevant and immaterial to the present proceedings. .................................................... 13
A. The Partial Interim Award is irrelevant. ................................................................. 14
B. The Partial Interim Award is immaterial. ............................................................... 14
2. The Partial Interim Award should not be admitted under IBA Rules. ................. 15
A. The Partial Interim Award falls into the exception for commercial confidentiality.
15
B. The Partial Interim Award is an exception under fairness and equality. ................ 15
II. FURTHER IN THE ALTERNATIVE, THE PARTIAL INTERIM AWARD SHOULD NOT BE
ADMITTED UNDER THE TRANSPARENCY RULES. ..................................................................... 15

1. The Transparency Rules do not apply. ..................................................................... 16

2. Alternatively, the Partial Interim Award does not fall into the exceptions given in
the Transparency Rules. ..................................................................................................... 16
III. IN ANY EVENT, THE PARTIAL INTERIM AWARD SHOULD NOT BE ADMITTED BECAUSE
IT WAS IMPROPERLY OBTAINED. .............................................................................................. 17

1. CLAIMANT erred in defining the legal test for the principle of good faith. ............ 17
2. Admission of the Partial Interim Award contravenes the principles of good faith.
17

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UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

IV. CLAIMANT IS NOT PERMITTED TO SUBMIT THE PARTIAL INTERIM AWARD BY JOINING
THE ADDITIONAL PARTY TO THE PROCEEDINGS. .................................................................... 18

1. The requirements in Art. 27.1 HKIAC Rules are not satisfied. ............................. 18
A. The Additional Party is not bound by the Arbitration Agreement.......................... 18
B. In any event, the Additional Party is not likely to agree to be joined in the future. 19
2. The CLAIMANT has not sent the Request for Joinder and has passed its time limit
to do so under Art. 27.3 HKIAC Rules. ............................................................................. 19
3. In any event, forced joinder is not permitted. .......................................................... 20
CONCLUSION FOR ISSUE 2 .................................................................................................. 20
ISSUE 3: UNDER THE CONTRACT AND OTHERWISE, CLAIMANT IS NOT
ENTITLED TO ANY ADAPTATION OF PRICE.................................................................. 20
I. RESPONDENT HAS NO OBLIGATION TO PAY THE ADDITIONAL TARIFFS. ......................... 20
1. The Parties agreed on a clear allocation of risks. .................................................... 21
2. RESPONDENT has no obligation under Arts. 8, 61, 62 CISG.................................... 21
A. The application of Art. 8 CISG cannot lead to a claim against RESPONDENT. ....... 22
B. RESPONDENT did not fail to perform an obligation under Art. 60 CISG that would
justify any remedies. ......................................................................................................... 26
II. CLAIMANT’S HAVING TO PAY ADDITIONAL TARIFFS DOES NOT
CONSTITUTE HARDSHIP. .................................................................................................. 28
1. Art. 79 CISG is not applicable. .................................................................................. 28
A. Art. 79 CISG is not applicable as Clause 12 constitutes an implicit derogation by
the Parties pursuant to Art. 6 CISG .................................................................................. 28
B. Alternatively, the additional tariffs do not constitute an ‘impediment’ under Art. 79
CISG 28
2. Alternatively, the payment of the additional tariffs does not constitute hardship
under Art. 79(1) CISG ........................................................................................................ 29
A. The risks associated with the tariffs were not beyond CLAIMANT’s control........... 29
B. The tariff increase was not unforeseeable upon conclusion of the Contract .......... 29
C. CLAIMANT could reasonably be expected to have taken the impediment into
account at the time of the conclusion of the contract, or to have avoided or overcome it or
its consequences. ............................................................................................................... 30
D. Paying additional tariffs did not cause CLAIMANT to fail to perform its obligations.
30
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UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

III. UNIDROIT PRINCIPLES DO NOT PROVIDE FOR THE CLAIMED

REMEDIES.............................................................................................................................. 30
1. UNIDROIT Principles are not applicable to the matter at hand ........................... 30
A. The direct application of UNIDROIT Principles was not chosen by the Parties.... 31
B. Alternatively, CLAIMANT cannot rely upon Art. 6.2.2 UNIDROIT to supplement a
gap in the CISG relating to hardship................................................................................. 31
2. Alternatively, application of UNIDROIT Principles does not lead to the remedies
claimed. ................................................................................................................................. 31
A. CLAIMANT does not meet the requirements of Art. 1.8 UNIDROIT Principles ..... 32
B. CLAIMANT does not meet the requirements under Art. 5.1.3 UNIDROIT Principles.
33
IV. THE CLAIMS FOR PAYMENT OF DAMAGES SHOULD NOT BE DECIDED
BY THE TRIBUNAL AS THEY DISREGARD TRIBUNAL’S ORDER.
ALTERNATIVELY, THE REQUIREMENTS FOR DAMAGES UNDER CISG ARE
NOT MET. ............................................................................................................................... 33
A. CLAIMANT’s statements about its claims for damages were not an issue identified in
PO1. 33
B. Alternatively, damages should not be awarded because CLAIMANT’s claims for
damages are based on a misunderstanding of the rationale of CISG. ............................... 33
C. Alternatively, the requirements for awarding damages are not met ....................... 34
CONCLUSION FOR ISSUE 3 .................................................................................................. 35
REQUEST FOR RELIEF .......................................................................................................... 35
CERTIFICATE ........................................................................................................................... 36

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UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

INDEX OF ABBREVIATIONS AND DEFINITIONS

Additional Party The Mediterranean buyer involved in the other set of arbitration pro-
ceedings mentioned in PO2, p. 60 ¶ 39

ANoA RESPONDENT’s Answer to the Notice of Arbitration dated 24 August

2018

Art. / Arts. Article / Articles

Cf. Compare

CLAIMANT Phar Lap Allevamento

CLAIMANT Memo Memorandum for the CLAIMANT

Company The company which provides intelligence on the horseracing indus-

try mentioned in PO2, p. 60 ¶ 41

Contract The Frozen Semen Sales Agreement entered into between Phar Lap
Allevamento and Black Beauty Equestrian dated 6 May 2017, ex-
hibited as Exh. C5, pp 13–14

Counsel Legal counsel

ed. edition

e.g. exempli gratia (for example)

et al. and others

Exh. C CLAIMANT’S Exhibit

Exh. R RESPONDENT’S Exhibit

HKIAC Hong Kong International Arbitration Centre

ICC International Chamber of Commerce

i.e. id est (that is)

Ltd. Limited

Mr. Mister

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UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

Ms. Miss

n. Note

No. Number

NoA CLAIMANT’s Notice of Arbitration dated 31 July 2018

p. / pp. page / pages

¶ / ¶¶ paragraph / paragraphs

Partial Interim Award The “Partial Interim Award” rendered on 29 June 2018 in an arbi-
tration involving RESPONDENT and the Additional Party mentioned
in PO2, ¶ 39

Parties Phar Lap Allevamento and Black Beauty Equestrian collectively

PO1 Procedural Order No. 1 of 5 October 2018

PO2 Procedural Order No. 2 of 2 November 2018

Pte. Private

RESPONDENT Black Beauty Equestrian

§ / §§ section / sections

SIAC Singapore International Arbitration Centre

Tribunal The HKIAC arbitral tribunal convened to hear Case No.

HKIAC/A18128

UN United Nations

UNCITRAL United Nations Commission on International Trade Law

UNIDROIT International Institute for the Unification of Private Law

U.S.A. United States of America

U.K. United Kingdom

v versus (against)

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UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

INDEX OF AUTHORITIES

Cited as Publication Cited in

(para.)

Beharry BEHARRY, Christina L. 70

Objections to Requests for Documents in International Ar-
bitration: Emerging Practices from NAFTA Chapter 11,
27 ICSID Review 33–64 (2012)

Berger BERGER, Klaus B. 34, 40, 47

Power of Arbitrators to Fill Gaps and Revise Contracts to
Make Sense, 17 Arb. Int'l 1–18 (2001)

Bianca/Bonell BIANCA, C. M. & BONELL, M. J. 136, 151

Bianca-Bonell Commentary on the International Sales Law
(1987)

Born BORN, Gary B. 3, 5, 6, 8,

25
International Commercial Arbitration (2nd ed. 2014)

Bowstead & Reynolds BOWSTEAD, William & REYNOLDS, Francis M. B. 45

Bowstead & Reynolds on Agency (21 ed. 2017)

Brunner BRUNNER, Christoph 174

Force Majeure and Hardship under General Contract
Principles (2008)

Burnham BURNHAM, Scott J. 30

The Parol Evidence Rule: Don't Be Afraid of the Dark, 55
Mont. L. Rev. (1994)

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CISG AC Opinion No. SPAGNOLO, Lisa 157

16
CISG-AC Opinion No. 16, Exclusion of the CISG under
Article 6, http://www.cisg.law.pace.edu/cisg/CISG-AC-
op16.html

Corbin CORBIN, Arthur L. 30

Interpretation of Words and the Parol Evidence Rule , 50
Cornell L. Rev. 161 (1965)

Dursun DURSUN, Şeyda 19, 20

A Critical Examination of the Role of Party Autonomy in
International Commercial Arbitration and an Assessment
of its Role and Extent, 1 Yalova Üniversitesi Hukuk
Fakültesi Dergisi 161–29

Epstein EPSTEIN, David G. et al. 30

Extrinsic Evidence, Parol Evidence, and the Parol Evi-
dence Rule: A Call for Courts to Use the Reasoning of the
Restatements Rather than the Rhetoric of Common Law,
44 N. M. L. Rev. 49–87 (2014)

Felemegas FELEMEGAS, John 193

An International Approach to the Interpretation of the
United Nations Convention on Contracts for the Interna-
tional Sale of Goods (1980) as Uniform Sales Law (2007)

Gillette/Walt GILLETTE, Clayton P. & WALT, Steven D. 141

The UN Convention on Contracts for the International
Sale of Goods: Theory and Practice (2 ed. 2016).

Guide to the IBA ASHFORD, Peter 85

Rules
The IBA Rules on the Taking of Evidence in International
Arbitration: A Guide (2013)

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HKIAC Model Clause HKIAC 17

Model Clauses, http://www.hkiac.org/arbitration/model-
clauses

Huber HUBER, Peter 140

Some introductory remarks on the CISG, 6 Internationales
Handelsrecht 228–238 (2006)

Huber/Mullis HUBER, Peter & MULLIS, Alastair 168

The CISG: A Textbook for Students and Practitioners
(2007)

Kelly-Slatten KELLY-SLATTEN, Kayla 75

UNCITRAL Transparency: An Examination of the 2014 Ar-
bitration Transparency Rules and their Effect on Investor-
State Environmental Disputes and Economic Fairness,
8 Y.B. Arb. & Mediation 94–109 (2016)

Klasener KLASENER, Amy C. 85

The duty of good faith in the 2010 IBA Rules on the Taking
of Evidence in International Arbitration, 13 Int.
A.L.R.160–164 (2010)

Lise JOHNSON, Lise & BERNASCONI-OSTERWALDER, Nathalie 76

New UNCITRAL Arbitration Rules on Transparency: Ap-
plication, Content and Next Steps, Vale Columbia Center
on Sustainable International Investment, http://ccsi.colum-
bia.edu/files/2014/04/UNCITRAL_Rules_on_Transpar-
ency_commentary_FINAL.pdf

Lookofsky LOOKOFSKY, Joseph 201

Understanding the CISG: A Compact Guide to the 1980
United Nations Convention on Contracts for International
Sale of Goods (4 ed. 2012)

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Moser MOSER, Michael & BAO, Chiann 60, 65, 95,

96, 97,
A Guide to the HKIAC Arbitration Rules (2017)
104, 105

Powers POWERS, Paul J. 144

Defining the Undefinable: Good Faith and the United Na-
tions Convention on Contracts for the International Sale of
Goods, 18 J. L. & Com. 333–335 (1999)

Ramberg RAMBERG, Jan 111

International Commercial Transactions (1998)

Redfern and Hunter BLACKABY, Nigel et al. 47

Redfern and Hunter on International Arbitration (6 ed.
2015)

Rosengren ROSENGREN, Jonas 30

Contract Interpretation in International Arbitration, 1 J.
Int'l Arb. 6 (2013)

Schlechtriem/Butler SCHLECHTRIEM, Peter & BUTLER, Petra 193

UN Law on International Sales (2009)

Schlechtriem/Schwen- SCHWENZER, Ingeborg H. 117, 118,

zer 140, 147,
Commentary on the UN Convention on the International
153, 157,
Sale of Goods (4 ed. 2016)
159, 162,
167, 168,
194, 201

Schlechtriem/Witz SCHLECHTRIEM, Peter & WITZ, Claude 177

Convention de Vienne sur les contrats de vente internatio-
nale de marchandises 2008 (2008)

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Schmidt-Ahrendts SCHMIDT-AHRENDTS, Nils 199

Das Verhältnis von Erfüllung, Schadensersatz und Vertrag-
saufhebung im CISG (2007)

Schwenzer/Fountou- SCHWENZER, Ingeborg H. et al. 118, 140

lakis/Dimsey
International Sales Law: A Guide to the CISG (2 ed. 2012)

SIAC Model Clause SIAC 17

SIAC Model Clause, http://www.siac.org.sg/model-
clauses/siac-model-clause

UNCITRAL 2008 UNCITRAL 200

UNCITRAL 2008 Digest of Case Law on the Model Law
on International Commercial Arbitration (2008)

UNCITRAL 2012 UNCITRAL 116

UNCITRAL 2012 Digest of Case Law on the Model Law
on International Commercial Arbitration (2012)

Viscasillas VISCASILLAS, M. del Pilar Perales 157

El Contrato de Compraventa Internacional de Mercancias
(Convención de Viena de 1980)
https://www.cisg.law.pace.edu/cisg/biblio/perales1-06.html

Vogenauer VOGENAUER, Stefan 164

Commentary on the UNIDROIT Principles of International
Commercial Contracts (PICC) (2 ed. 2015)

Zeller ZELLER, Bruno 139

UN Convention on Contracts for the International Sale of
Goods – a leap forward towards unified international sales
laws, https://www.cisg.law.pace.edu/cisg/bib-
lio/zeller3.html

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INDEX OF CASES

Cited as Reference Cited in

(para.)

BELGIUM

Matermaco Case Brussels Tribunal de Commerce 18

Matermaco SA v PPM Cranes Inc. (2000) XXV
YBCA 673
20 September 1999

GERMANY

OLG München Case Oberlandesgericht München 159

Case No.: 7 U 4969/06
http://www.unilex.info/case.cfm?id=1342
5 March 2008

Machinery Case Bundesgerichtshof 145

http://cisgw3.law.pace.edu/cases/011031g1.html
31 October 2001

Trade Usage Case Appellate Court Köln 145

http://cisgw3.law.pace.edu/cases/051221g1.html
21 December 2005

ITALY

Takap Case Tribunale di Rovereto 116

Takap B.V. v. Europlay S.r.l.
http://cisgw3.law.pace.edu/cases/071121i3.html
21 November 2007

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SINGAPORE

FirstLink Case Singapore High Court 6, 25

FirstLink Investments Corp Ltd v GT Payment Pte
Ltd and others [2014] SGHCR 12
19 June 2014

PT First Media Case Singapore Court of Appeal 96, 105

PT First Media TBK v Astro Nusantara Interna-
tional BV [2014] 1 SLR 372; [2013] SGCA 57
31 October 2013

SWEDEN

Bulgarian Case Swedish Supreme Court 18

Bulgarian Foreign Trade Bank Ltd v Al Trade Fi-
nance Inc.
Case No. T1881–99
27 October 2000

SWITZERLAND

Clout Case No. 215 Commercial Court Zürich 116

HG 930634/O
http://cisgw3.law.pace.edu/cases/981130s1.html
30 November 1998

U.K.

C v D Case England and Wales Court of Appeal 25

C v D [2008] 1 All E.R. (Comm) 1001; [2007]
EWCA Civ 1282
5 December 2007

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Sulamérica England and Wales Court of Appeal 6, 15, 18,

24, 25
Sulamérica CIA Nacional De Seguros SA & Ors v
Enesa Engenharia SA & Ors [2012] 2 All ER
(Comm) 795; [2012] EWCA Civ 638
16 May 2012

Tsakiroglou Case U.K. House of Lords 164

Tsakiroglou & Co Ltd v Noblee & Thorl GmbH
[1961] 2 All ER 179; (1962) AC 93
28 March 1961

U.S.A.

Bible Case U.S.A. District Court for the Southern District of In- 86
diana
Bible v United Student Aid Funds, Inc. 2014 WL
1048807
14 March 2014

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INDEX OF ARBITRAL AWARDS

Cited as Reference Cited in

(para.)
ICC

ICC Case No. Final Award in ICC Case No. 5294 25

5294
XIV Y.B. Comm. Arb. 137, 140–41 (1989)
1988

ICC Case No. Preliminary Award in ICC Case No. 5505 25

5505
XIII Y.B. Comm. Arb. 110, 117 (1988)
1987

ICC Case No. Interim Award in ICC Case No. 6149 25

6149
XX Y.B. Comm. Arb. 41, 44–45 (1995)
1990

ICC Case No. Final Award in ICC Case No. 6162 25

6162
XVII Y.B. Comm. Arb. 153 (1992)
1990

ICC Case No. Industrial Equipment Case 141

8611
http://cisgw3.law.pace.edu/cases/978611i1.html
23 January 1997

ICC Case No. Final Award in ICC Case No. 14046 25

14046
XXXV Y.B. Comm. Arb. 241, 245 (2010)
2010

ICC Case No. Joint Venture (US) v State W, Final Award 180
14108
Case No.: 14108
http://www.unilex.info/case.cfm?id=1662

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INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES

Hourani Case Hourani v Republic of Kazakhstan 86

ICSID Case No. ARB/13/13
15 September 2017

RUSSIAN FEDERATION CHAMBER OF COMMERCE AND INDUSTRY

Russian Award CISG-online 1456 130

Case No: 95/2004
http://www.cisg-online.ch/content/api/cisg/display.cfm?test=1456
27 May 2005

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LIST OF CONVENTIONS, RULES, STATUTES, AND CODES

Cited as Reference

AAA Rules American Arbitration Association International Dispute Resolution

Procedures 2014

Australian IAA Australian International Arbitration Act 1974

CISG United Nations Convention on Contract for the International Sales

of Goods

English AA English Arbitration Act 1996

Hague Principles on The Hague Principles on Choice of Law in International Commer-

Choice of Law cial Contracts

Hague Principles on The Hague Principles on Ethical Standards for Counsel Appearing
Ethical Standards before International Courts and Tribunals

HK Ordinance Hong Kong Arbitration Ordinance (Cap. 609)

HKIAC Rules Hong Kong International Arbitration Centre Administered Arbitra-

tion Rules 2018

IBA Rules International Bar Association Rules on the Taking of Evidence 2010

ICC Hardship Clause ICC Hardship Clause 2003

INCOTERMS 2010 ICC INCOTERMS 2010

Korean AA Korean Arbitration Act

ICC Rules ICC Arbitration Rules 2017

LCIA Rules London Court of International Arbitration Rules 2014

Mexican CC Code of Commerce (Mexico), Title IV, Book V, Commercial Arbi-

tration

Netherlands AA Netherlands Arbitration Act 1986

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UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

Netherlands Arbitration Netherlands Arbitration Institute Arbitration Rules 1986

Rules

New York Convention Convention on the Recognition and Enforcement of Foreign Arbitral
Awards

SIAC Rules Singapore International Arbitration Centre Rules 2013

Swiss Arbitration Rules Swiss Rules of International Arbitration 2012

Swiss PIL Act Switzerland Private International Law Act 1987

UNCITRAL Rules UNCITRAL Arbitration Rules 2013

UNCITRAL Model Law UNCITRAL Model Law on International Commercial Arbitration

1985 (as revised in 2006)

UNIDROIT Principles UNIDROIT Principles of International Commercial Contracts 2016

Transparency Rules UNCITRAL Investor-State Transparency Rules

ZPO German Code of Civil Procedure

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STATEMENT OF FACTS

CLAIMANT is a Mediterranean company running a stud farm with 300 horses and facilities for
research, teaching and demonstration. It covers all areas of equestrian sport. In particular, CLAIM-
ANT’s racehorse section—with its star Nijinsky III—is outstanding.

RESPONDENT, an Equatorianian company that concentrates on broodmares, has recently started to

establish a racehorse stable, and therefore bought ten mares with excellent racehorse pedigree.

There is no systematic imbalance between the Parties. Both Parties feature a certain level of ex-
pertise and professionalism in their respective sectors.

Since CLAIMANT’s exposition of the present case’s facts is distorted, unsupported by evidence, and
in some parts even demonstrably wrong, RESPONDENT feels compelled to rectify these facts for
the Tribunal’s benefit.

Concerning CLAIMANT Memo Statement of Facts, p. 1 ¶ 1

CLAIMANT is wrong—the Contract was not “made” in March 2017. It was concluded on 6 May
2017. In March 2017, the Parties had just started negotiating the Contract [Exh C5, p. 13].

The Contract was not made “conditionally”. Since CLAIMANT has failed to submit any evidence to
support this claim, it is unknown why CLAIMANT has taken this view. There are no references to a
conditional contract in either the pre-Contractual negotiations or the Contract itself.

Furthermore, the Contract does not contain any “prohibition” of resale of the horse semen. The
only provision regulating the use of the horse semen says that the CLAIMANT should be informed
of the mares on which the semen is to be used [Exh C5, p. 13; PO2, p. 57 ¶ 16].

Concerning CLAIMANT Memo Statement of Facts, p. 1 ¶ 2

CLAIMANT is wrong—RESPONDENT did not reply to CLAIMANT’s suggestions from 11 April 2017
[Exh R2, p. 34]. Rather, they were the basis for the face-to-face negotiations between Mr. Antley
and Ms. Napravnik that took place on 12 April 2017 [Exh. R8, p. 17]. This is why Mr. Antley took
notes regarding the topics after his meeting with Ms. Napravnik [Exh. R3, p. 35]. Of course, be-
cause of the car accident, Mr. Antley could not present his own proposal.

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UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

Concerning CLAIMANT Memo Statement of Facts, p. 1 ¶ 4

Ms. Espinoza did not abort the Contract on 12 February 2018 or on any other date. A meeting
between Ms. Espinoza and CLAIMANT’s representatives did take place that day, and no agreement
was reached. However, this does not mean that RESPONDENT has agreed to abort the Contract.

Because of the unfortunate inaccuracies in CLAIMANT’s Memorandum, RESPONDENT will offer its
own summary of the facts.

21 March 2017 RESPONDENT enquired about the availability of 100 doses of frozen semen
of Nijinsky III [Exh C1, p. 9] to make use of the temporary lifting of the
transportation ban on artificial insemination for racehorses [NoA, p. 5
¶ 4].

24 March 2017 CLAIMANT offered 100 doses for a price of USD 99,500 per dose “to be
picked up at our premises” [Exh C2, p. 10].

28 March 2017 RESPONDENT asked for delivery on basis of DDP (Delivery Duty Paid)
and made suggestions regarding the applicable law and the governing ju-
risdiction [Exh R3, p. 11].

31 March 2017 CLAIMANT accepted the request for delivery DDP in principle but did not
agree on the proposals regarding jurisdiction [Exh C4, p. 12].

10–11 April 2017 The Parties corresponded by email about the arbitration clause and a pos-
sible hardship clause [Exh R1, p. 33; Exh R2, p. 34].

12 April 2017 Mr. Antley and Ms. Napravnik were injured in a car accident on the way
to a meeting.

6 May 2017 The Parties signed the Contract at an increased price of USD 100,000 per
dose (which, in total, made the Contract USD 50,000 more expensive than
originally agreed). The Parties agreed that delivery would occur over three
shipments [Exh C5, p. 13].

20 January 2018 CLAIMANT sent an email regarding the newly imposed tariffs that would
affect the third shipment [Exh C7, p. 16].

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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

21 January 2018 Mr. Shoemaker called Ms. Napravnik after clarifying the situation with
the local authorities to ask for authorization of the last shipment since RE-
SPONDENT had already initiated payment, and the start of the “breeding
season” was coming up. He made clear that the Parties could only agree
on the price “if the contract provides for an increased price in the case of
such a high additional tariff” and that he did not have the authority to
make such a decision [Exh. C8, p. 17; Exh R4, p. 36].

23 January 2018 The remaining 50 doses were delivered [NoA, p. 6 ¶ 13].

12 February 2018 The Parties met to discuss a requested price adaptation but could not agree
[Exh C8, p. 17].

31 July 2018 CLAIMANT commenced the present arbitration.

2 October 2018 CLAIMANT announced to submit documents from another arbitration

which could only have been obtained by illegal means, and the submission
of which would violate confidentiality obligations [Letter from
Langweiler, p. 50; Letter from Fasttrack, p. 51].

3 October 2018 RESPONDENT objected to the submission of said documents [Letter from
Fasttrack, p. 51].

ARGUMENT

ISSUE 1: UNDER THE ARBITRATION AGREEMENT, THE TRIBUNAL CANNOT

ADAPT THE CONTRACT.

1. The Tribunal cannot adapt the Contract. This is because the separability principle applies in this
case (I). The separability principle means that the Arbitration Agreement can be governed by a
different law from the rest of the Contract (II). This being the case, the Arbitration Agreement is
governed by Danubian law whereas the Contract is governed by Mediterranean law (III). Under
Danubian law, the Tribunal cannot adapt the Contract (IV).
2. However, even if the Tribunal finds that Mediterranean law governs the Arbitration Agreement,
the Tribunal still cannot adapt the Contract (V).

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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

I. THE SEPARABILITY PRINCIPLE APPLIES IN THIS CASE.

3. The separability principle is one of the “conceptual and practical cornerstones” of international
arbitration [Born, § 3.01]. This principle applies to the present case because it is supported by
Danubian and Mediterranean laws [ANoA, p. 31 ¶ 14], international case law, legislation, and ar-
bitral awards [Born, pp. 362–375, 379–383, 390–393], and the UNCITRAL Model Law [Arts. 7,
8, 16 UNCITRAL Model Law].
II. THE SEPARABILITY PRINCIPLE MEANS THAT THE ARBITRATION AGREEMENT CAN BE

GOVERNED BY A DIFFERENT LAW FROM THE REST OF THE CONTRACT.

4. The separability principle clearly applies, but the precise content of the separability principle re-
mains unclear. The UNCITRAL Model Law (1), international case law and arbitral awards (2),
and the objectives of the separability principle (3) make clear that the separability principle means
that the Arbitration Agreement can be governed by a different law from the rest of the Contract.
1. International case law supports this interpretation of the separability principle.
5. Swiss, French, US, English, Singaporean, and Indian case law and legislation recognise that the
separability principle means that an arbitration agreement can be governed by a different law from
the rest of the contract [Born, pp. 480–484].
6. In particular, the English and the Singaporean courts have recognised that if a contract is silent on
which law should govern the arbitration agreement, the law of the seat of arbitration will govern
the arbitration agreement even if it is different from the law governing the main contract [Sulamé-
rica, ¶ 32; FirstLink Case, ¶ 14]. This interpretation of the separability principle is recognised by
not only the courts but arbitral tribunals as well [Born, pp. 486–487].
7. Therefore, courts and arbitral tribunals worldwide agree that it is the law of the seat of arbitration—
not the substantive law governing the main contract—that governs an arbitration agreement. Since
these may be different, different laws can govern an arbitration agreement and the main contract.
2. This interpretation of the separability principle furthers the objectives of interna-
tional arbitration.
8. Allowing an arbitration agreement to be governed from by a different law from the rest of the
contract “insulate[s] international arbitration agreements against challenges to their validity and
legality based on (often idiosyncratic or discriminatory) local law” [Born, p. 466]. This aspect of

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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

the separability principle is crucial and must be upheld since it has “contributed significantly to
the efficacy of international arbitration agreements and the arbitral process” [Born, p. 466].
9. When interpreting the separability principle, the Tribunal should prefer the interpretation that pro-
motes the objectives of international arbitration as a whole. Therefore, it should interpret it to mean
that the Arbitration Agreement can be governed by a different law from the Contract.
III. THE ARBITRATION AGREEMENT IS GOVERNED BY DANUBIAN LAW.
10. The Arbitration Agreement is not governed by Mediterranean law because the Parties had never
agreed to this (1). It is instead governed by Danubian law because Danubia is the seat of arbitra-
tion (2).
1. The Parties had never agreed that Mediterranean law should govern the Arbitration
Agreement.
11. The Tribunal should find that the Parties had never agreed that Mediterranean law should govern
the Arbitration Agreement because the facts show no such agreement (A) and the Parties could not
have agreed to this (B).
A. The facts show no such agreement.
12. Mr. Antley (RESPONDENT’s initial negotiator) had made a note to “clarify” the “applicable law”
after his initial discussions with Ms. Napravnik (CLAIMANT’s initial negotiator) [Exh. R3, p. 35].
Clearly, he had had reservations about CLAIMANT’s proposal that Mediterranean law should apply
to the Arbitration Agreement. In addition, Mr. Krone (RESPONDENT’s subsequent negotiator) has
stated in no uncertain terms that had he known that Mr. Antley’s note was referring to the law
applicable to the Arbitration Agreement, he would have “definitively included an express reference
to the law of Danubia into the arbitration agreement” [Exh. R3, p. 35].
13. In the end, the Parties had never expressly agreed on the law that should govern the Arbitration
Agreement. They had only stipulated that Mediterranean law should govern the main Contract
[Exh. C5, p. 13 ¶ 15].
14. Therefore, RESPONDENT had never agreed that Mediterranean law should govern the Arbitration
Agreement. In fact, when signing the Contract, RESPONDENT had fully intended that Danubian law
should govern the Arbitration Agreement. The evidence does not support CLAIMANT’s argument
that the Parties had implicitly chosen Mediterranean law to govern the Arbitration Agreement
[CLAIMANT Memo, ¶ 22]. Therefore, per Sulamérica, there was no implicit choice of Mediterranean
5
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

law as the governing law of the Arbitration Agreement. The Tribunal should now resist CLAIM-
ANT’s opportunistic attempts to misconstrue the Parties’ conduct.
B. The Parties could not have agreed to this.
15. The Parties would have intended that the law of the seat of arbitration (i.e. Danubia) should govern
the Arbitration Agreement. This is because the Danubian courts would have to hear disputes aris-
ing out of the Arbitration Agreement. It would thus be very unlikely that the Parties had intended
that the Danubian courts should apply Mediterranean law, since the Danubian courts would—
clearly—be best equipped to apply Danubian law.
16. Leading arbitral institutions have responded by recommending in their model arbitration agree-
ments that parties should expressly specify the law that should govern the arbitration agreement
[HKIAC Model Clause; SIAC Model Clause]. However, they are silent on what would happen if
parties fail to do so, which is the case here. In this absence of authority, the Tribunal should take
guidance from the LCIA Rules, which state that in the absence of such an express stipulation, the
law applicable to the arbitration agreement “shall be the law applicable at the seat of the arbitra-
tion” [Art. 16.4 LCIA Rules].
17. The Parties were experienced in contract negotiation and assisted by competent lawyers, and so
must have been aware of the widely recommended practice of expressly stipulating the laws that
should apply to arbitration agreements. In fact, they had initially done so [Exh R1, p. 33]. There-
fore, the Tribunal should now find that the Parties’ choice not to do so in the final Contract means
that they had intended that per the LCIA Rules, the law of the seat of arbitration should apply to
the Arbitration Agreement. In so finding, the Tribunal would be following established English,
Swedish, and Belgian precedent [Sulamérica; Bulgarian Case; Matermaco Case].
18. CLAIMANT has tried to argue that “[i]f there is an explicit choice of law governing the underlying
contract by both parties without any express reference to the governing law of the arbitration
clause”, the law chosen should govern the arbitration clause as well. It has cited Dursun as author-
ity for this proposition [CLAIMANT Memo, ¶ 8].
19. However, CLAIMANT is wrong. Dursun only states that this proposition is “generally” true [Dur-
sun, p. 169]. It is not true in this case; the law of the seat of arbitration (i.e. Danubia) should apply
because of the reasons outlined below [infra ¶¶ 27–29]. In addition, Dursun also states—on the
very same page cited by CLAIMANT—that the separability principle means that an arbitration

6
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

agreement can be governed by different laws from the underlying contract [Dursun, p. 169]. The
Tribunal should decline to follow CLAIMANT’S misreading of authorities.
20. CLAIMANT has also tried to construe the pre-contractual negotiations to argue that the Parties had
implicitly agreed that Mediterranean law should govern the Arbitration Agreement [CLAIMANT
Memo, ¶ 9].
21. CLAIMANT is also wrong on this point. It had sent an email to RESPONDENT on 11 April 2017
stating that the law governing the Contract should be the law of Mediterraneo [Exh R3, p. 34]. Mr.
Antley (for the RESPONDENT) did not reply to this email because he had met with an accident the
following day [NoA, p. 5 ¶ 8]. The CLAIMANT has boldly tried to construe Mr. Antley’s failure to
“reply anything to the matter” [CLAIMANT Memo, ¶ 9] as an agreement that Mediterranean law
should govern the Arbitration Agreement as well as the underlying Contract. This is clearly wrong:
Mr. Antley’s failure to reply was because he was severely injured in the accident, not because he
had agreed to anything. In any case, the CISG clearly states that silence does not amount to ac-
ceptance [Art. 18 CISG]. The CLAIMANT’s misinterpretation of the facts is opportunistic, cruel,
and wrong. The Tribunal should now reject it.
22. If it was not already clear that the Parties had never agreed that Mediterranean law should govern
the Arbitration Agreement, Mr. Krone (for the RESPONDENT) has already made clear that had Mr.
Antley been able to clarify what had been agreed in negotiations, he would have “definitively”
specified that Danubian law should apply to the Arbitration Agreement [Exh R3, p. 35]. The Tri-
bunal should reject CLAIMANT’s assertions since they are not supported by any facts.
2. The law of the seat of arbitration (i.e. Danubia) applies to the Arbitration Agreement.
23. Danubia is the seat of arbitration [Exh. C5, p. 13 ¶ 15]. The law of the seat of arbitration (i.e.
Danubian law) should govern the Arbitration Agreement.
24. Courts and arbitral tribunals around the world have recognised that the law of the seat of arbitration
governs arbitration agreements [Sulamérica, ¶ 32; C v D Case, ¶¶ 22, 26, 28; ICC Case No. 6149;
ICC Case No. 14046; ICC Case No. 6162; ICC Case No. 5505; ICC Case No. 5294]. This is
because of three reasons. First, the arbitration agreement has the “closest and most real connec-
tion” with the law of the seat of arbitration [Sulamérica, ¶ 25]. Second, arbitral tribunals should
apply the law of the seat to arbitration agreements so that the awards they render will be upheld by
the courts of the seat [FirstLink Case, ¶ 14]. Third, if the parties had not expressly chosen the law

7
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

that should govern the arbitration agreement but had chosen the seat of arbitration, they should be
taken to have implicitly chosen the law of the seat of arbitration to govern the arbitration agreement
[Born, pp. 513–514].
25. In light of this wealth of authority, the Tribunal should now find that Danubian law governs the
Arbitration Agreement.
IV. UNDER DANUBIAN LAW, THE TRIBUNAL CANNOT ADAPT THE CONTRACT.
26. Under Danubian law, the Tribunal cannot adapt the Contract. This is because the parol evidence
rule applies (1), which means that the Tribunal is not empowered to adapt the Contract (2).
1. The parol evidence rule applies.
27. The parol evidence rule applies because it is part of the substantive rules of Danubian law which
the Tribunal is bound to apply (A). The CISG does not displace the parol evidence rule in Danubian
law (B).
A. The parol evidence rule applies as a substantive rule of law.
28. The “four corners” rule as contained in Danubian contract law is analogous to the parol evidence
rule which states that extrinsic evidence cannot be used to supplement contracts [ANoA, p. 32 ¶ 16;
PO2, p. 61 ¶ 45].
29. The parol evidence rule is a substantive (as opposed to a procedural) rule, since any interpretation
of a contract would clearly be affected by the evidence that can be considered in the course of that
interpretation [Rosengren; Epstein, p. 69; Burnham, p. 97; Corbin, p. 189]. Since it has already
been established that Danubian law should apply, all the substantive Danubian rules of law—in-
cluding the parol evidence rule—should apply.
30. CLAIMANT has tried to argue that since the Contract does not contain a “merger clause” as de-
scribed in Art. 2.1.17 UNIDROIT Principles, the parol evidence rule as contained in Danubian law
does not apply [CLAIMANT Memo, ¶ 33].
31. CLAIMANT is wrong. Its argument is based on a misinterpretation of the parol evidence rule as
contained in Danubian law. This version of the rule “has largely the same effects” as a merger
clause under Article 2.1.17 UNIDROIT Principles [PO2, p. 61 ¶ 45]; which is to say, under this
version of the rule, contracts cannot be “contradicted or supplemented by evidence of prior state-
ments or agreements”. It does not mean that a merger clause is required in the Contract for the

8
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

parol evidence rule to apply. Therefore, the Tribunal should still apply the parol evidence rule in
this case.
B. The CISG does not displace the parol evidence rule in Danubian law.
32. It is “consistent jurisprudence” in Danubia that due to the separability principle the CISG does not
apply to arbitration agreements [PO2, p. 60 ¶ 36]. In addition, the CISG “governs only the for-
mation of the contract of sale and the rights and obligations of the seller and the buyer arising
from such a contract” [Art. 4 CISG], not the subsequent interpretation of the contract during which
the parol evidence rule would be applied. Since the CISG is silent in this regard, Danubian law—
and thus the parol evidence rule—would apply.
2. In light of the parol evidence rule, the Tribunal is not empowered to adapt the Con-
tract.
33. Under Danubian law, arbitral tribunals must have “express empowerment” from the parties before
they can adapt contracts [ANoA, p. 31 ¶ 13]. This is trite law: the principle of pacta sunt servanda
and the primacy of party autonomy mean that the parties must first have authorised the arbitral
tribunal to exercise a certain power before the arbitral tribunal can do so [Berger, p. 5]. For the
power to adapt contracts in particular, the international position is that “in addition” to the arbitra-
tion agreement, parties must also have inserted a specific contractual clause expressly authorising
the arbitral tribunal to adapt the contract [Berger, p. 8 n. 47].
34. There is no such express empowerment in the Contract. In addition, since the parol evidence rule
applies, the Tribunal cannot supplement the Contract using evidence of the Parties’ prior state-
ments to find the express empowerment required [Art. 2.1.17 UNIDROIT Principles]. Therefore,
under Danubian law, the Tribunal has no power to adapt the Contract.
35. CLAIMANT has tried to argue that Mr. Antley had “agreed to give up the power [to adapt the Con-
tract] to the arbitrators” [CLAIMANT Memo, ¶ 35].
36. CLAIMANT is wrong. This is for two reasons. First, CLAIMANT’s interpretation of Mr. Antley’s
conduct is unsupported by the facts: Mr. Antley’s oral statement—that it should “probably be the
task of the arbitrators to adapt the [Contract] if the Parties could not agree” is far from an express
agreement that the Tribunal should be able to adapt the Contract, and in any case, was excluded
from the final Contract [Exh. C8, p. 17]. Second, the parol evidence rule means that the Tribunal

9
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

cannot consider Mr. Antley’s statement anyway. Therefore, the Tribunal should disregard CLAIM-
ANT’s submission.
V. EVEN IF MEDITERRANEAN LAW APPLIES INSTEAD, THE TRIBUNAL STILL CANNOT ADAPT
THE CONTRACT.

37. Even if the Tribunal finds that Mediterranean law applies to the Arbitration Agreement instead of
Danubian law, the Tribunal still cannot adapt the Contract. This is because the requirements for
the Tribunal to adapt the Contract have not been satisfied (1), and the Parties had not intended that
the Tribunal should have the power to adapt the Contract (2).
1. The requirements for the Tribunal to adapt the Contract have not been satisfied.
38. Mediterranean contract law is a “verbatim adoption” of the UNIDROIT Principles [PO1, p. 53,
¶ 4], which state that in cases of hardship the disadvantaged party can request renegotiations, and
upon failure to reach agreement “within a reasonable time” either party may resort to arbitration
[Arts. 1.11, 6.2.3 UNIDROIT Principles]. If the arbitral tribunal finds hardship, it may, “if reason-
able”, “adapt the contract with a view to restoring its equilibrium” [Arts. 1.11, 6.2.3 UNIDROIT
Principles].
39. Notably, the UNIDROIT Principles expressly state that “both the request for renegotiations by the
disadvantaged party and the conduct of both parties during the renegotiation process are subject
to the general principle of good faith and fair dealing” [Comment 5 of Art. 6.2.3 UNIROIT Prin-
ciples; Berger, p. 16 n. 90].
40. In this case, the Parties cannot be considered to have conducted a genuine renegotiation of the
Contract in good faith. This is for two reasons. First, Ms. Napravnik had not acted in good faith
by requesting to renegotiate the Contract with Mr. Shoemaker, a person she knew was unqualified
and unauthorised to do so (A). Second, Mr. Shoemaker had no actual or ostensible authority to
conduct renegotiations on RESPONDENT’s behalf (B).
A. CLAIMANT had not acted in good faith.
41. CLAIMANT had not acted in good faith by requesting to renegotiate with Mr. Shoemaker. On the
contrary: this was an attempt to take advantage of a legally uneducated person who was unaware
of the prior negotiations.
42. Ms. Napravnik was CLAIMANT’s initial negotiator but had not concluded the Contract [Exh. C8, p.
17]. Throughout the negotiations she had not dealt with Mr. Shoemaker [Exh. C8, p. 17]. She must
10
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

have known that Mr. Shoemaker was not involved in the pre-contractual negotiations since she
would not have seen him there—Mr. Shoemaker himself states that he had not been involved [Exh.
R4, p. 36]. Since Mr. Shoemaker is responsible only for the development of RESPONDENT’s race-
horse breeding program [PO2, p. 59 ¶ 34], Ms. Napravnik must also have known that Mr. Shoe-
maker would not have the expertise nor the authority to renegotiate the Contract. This is reinforced
by the fact that Mr. Shoemaker had told Ms. Napravnik “several times” that he was not a lawyer
and had not been involved in the negotiations of the Contract, and that because of this, he “first
had to confirm with [his] superiors whether there was an obligation by [CLAIMANT] to deliver at
the conditions agreed upon or not” [Exh. R4, p. 36]. He had always made clear that he would need
to “clarify the legal situation with [CLAIMANT’s] legal department or the drafters of the [Con-
tract]”, and thus had “never committed to any adaptation of the price and would also not have had
the required authority to do so” [Exh. R4, p. 36].
43. Ignoring Mr. Shoemaker’s protests, Ms. Napravnik had insisted on trying to negotiate an adapta-
tion of the Contract with him so that CLAIMANT could later present this as evidence of their at-
tempts to renegotiate the Contract. CLAIMANT cannot be considered to have acted in good faith.
B. Further, Mr. Shoemaker had no actual or ostensible authority to conduct renego-
tiations on RESPONDENT’s behalf.
44. Mr. Shoemaker is responsible only for the development of RESPONDENT’s racehorse breeding pro-
gram and had never been involved in the pre-contractual negotiations [Exh. R4, p. 36]. Clearly,
Mr. Shoemaker had no actual authority to negotiate on RESPONDENT’s behalf. Neither did he have
ostensible authority to do so, since that would require RESPONDENT to have, “by words or conduct,
represent[ed] or permit[ted] it to be represented” that Mr. Shoemaker has authority to act on its
behalf [Bowstead & Reynolds, § 74]. Mr. Shoemaker had made abundantly clear to Ms. Napravnik
that he “had no authority to consent to additional payments outside the [Contract] without speak-
ing to [RESPONDENT’s] management which was not available at the time” [Exh. R4, p. 36].
Throughout both pre- and post-contractual negotiations, neither RESPONDENT nor Mr. Shoemaker
had ever represented or permitted it to be represented that Mr. Shoemaker had authority to act on
RESPONDENT’s behalf [Exh. R4, p. 36].
45. Therefore, the discussions between Ms. Napravnik and Mr. Shoemaker on 20 and 21 January 2018
were neither genuine negotiations nor in good faith. This means that the requirement in Art. 6.2.3

11
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

of the UNIDROIT Principles—that parties have conducted a genuine renegotiation in good faith—
has not been satisfied. Because of this, the Tribunal does not have the power to adapt the Contract.
2. The Parties had not intended that the Tribunal should have the power to adapt the
Contract.
46. The Tribunal’s competence depends on the Parties’ intentions [Redfern and Hunter, p. 307], and
so if the Parties had not intended that the Tribunal should be able to adapt the Contract, it cannot
“overrule the principle of pacta sunt servanda” to do it anyway [Berger, p. 9]. Since the parol
evidence rule does not apply under Mediterranean law, the Parties’ intentions can be inferred from
both the text of the Contract itself and the Parties’ negotiations.
47. Looking to the text of the Contract, the Contract does not contain a provision empowering the
Tribunal to adapt the Contract [Exh. C5, pp. 13–14].
48. Looking to the Parties’ negotiations, in all the draft versions of the Contract, the Parties had never
included any provision allowing the Tribunal to adapt the Contract [Exh. C5, pp. 13–14; Exh. R1,
p. 33; Exh. R2, p. 34]. RESPONDENT’S negotiator that concluded the Contract has stated that he
“would have objected to transfer powers to the Arbitral Tribunal to increase the price upon its
discretion” [Exh. R3, p. 35]. Clearly, the Parties had never intended that the Tribunal should be
able to adapt the Contract.
49. Therefore, it is clear from both the text of the Contract itself and the Parties’ negotiations that the
Parties had never agreed to allow the Tribunal to adapt the Contract. The Tribunal’s jurisdiction
and competence are derived from the Parties’ intentions: since the Parties had not intended that
the Tribunal should be able to adapt the Contract, the Tribunal cannot adapt the Contract.
CONCLUSION FOR ISSUE 1

50. The Tribunal cannot adapt the Contract. This is because under the separability principle, the Arbi-
tration Agreement can be governed by a different law from the rest of the Contract. Therefore,
Danubian law applies to the Arbitration Agreement since it is the law of the seat of arbitration.
Under Danubian law, the Tribunal cannot adapt the Contract since it is not empowered to do so.
Even if the Tribunal finds that Mediterranean law applies instead, it still cannot adapt the Contract
since the requirements for it to do so at Mediterranean law have not been satisfied, and the Parties
had never intended that the Tribunal should be able to do so. Therefore, the Tribunal cannot adapt
the Contract.

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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

ISSUE 2: CLAIMANT IS NOT ENTITLED TO SUBMIT EVIDENCE FROM THE OTHER

ARBITRATION PROCEEDINGS

51. CLAIMANT is not entitled to submit and the Tribunal should not admit evidence from the other set
of arbitration proceedings, specifically the Partial Interim Award. This is for three reasons. First,
the Partial Interim Award, which is confidential under the HKIAC Rules, should remain confiden-
tial, and should therefore not be admitted in the present proceedings (I). Second, the Partial Interim
Award should not be admitted under the Transparency Rules (II). Third, the Partial Interim Award
should not be admitted as it was improperly obtained (III).
52. In addition to this, CLAIMANT has failed to address the possibility that the Partial Interim Award
could be admitted as evidence by joining the Additional Party to the present proceedings; but this
would, in any case, fail (IV). Therefore, the Tribunal should refuse to admit the Partial Interim
Award as evidence in the present proceedings.
I. THE PARTIAL INTERIM AWARD SHOULD REMAIN CONFIDENTIAL AND NOT BE ADMITTED UN-
DER THE HKIAC RULES OR THE IBA RULES.

53. RESPONDENT submits that the Partial Interim Award, which is an award made under the HKIAC
Rules [PO2, ¶ 39], is and shall remain confidential by virtue of the HKIAC Rules, which provide
that no party shall disclose an award unless otherwise agreed [Arts. 45.1(a)–(b) HKIAC Rules].
54. CLAIMANT argued that the Partial Interim Award falls under the exception(s) to Art. 45.1 and
should be disclosed for the purposes of the present proceedings. It relies first on the HKIAC Rules
[CLAIMANT Memo, ¶¶ 40, 79–81] and second on the IBA Rules to circumvent the Partial Interim
Award’s confidentiality.
55. RESPONDENT disagrees, and submits that the Partial Interim Award should not be admitted under
either the HKIAC Rules (1) or the IBA Rules (2).
1. The interest of justice favours confidentiality since the Partial Interim Award is irrel-
evant and immaterial to the present proceedings.
56. CLAIMANT relied on Arts. 22.2 and 22.3 of the HKIAC Rules to argue that since the Partial Interim
Award is relevant and material evidence for the present proceedings, the Tribunal should be em-
powered to admit the Partial Interim Award. This would allow CLAIMANT to compel the other

13
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

arbitral tribunal to publish the Partial Interim Award to protect its legal interest [Art. 45.3(a)(i)
HKIAC Rules; CLAIMANT Memo, ¶ 40].
57. RESPONDENT submits that these are untenable submissions as the Partial Interim award is irrelevant
(A) and immaterial (B).
A. The Partial Interim Award is irrelevant.
58. The test for relevance is that the evidence must be useful for establishing the truth of a factual
allegation on which legal conclusions are being based [Moser, § 9.161 citing Raeschke-Kessler].
59. RESPONDENT submits that the Partial Interim Award is irrelevant because, in coming to the legal
conclusion of whether the Tribunal should adapt the Contract, the Partial Interim Award is not
needed. The facts are entirely distinguishable. This is for three reasons.
60. First, the parties in the two sets of proceedings are different, and hence, where parties’ intents in
contractual disputes are concerned, the Parties in the present proceedings must have different goals
in mind than the parties in the other proceedings as their interests may vary.
61. Second, the hardship clauses are different. The impugned hardship clause in the present proceed-
ings is not the same as the “ICC Hardship Clause 2003” involved in the other set of proceedings
[PO2, p. 60 ¶ 39]. Naturally, therefore, the interpretation of such a clause will be wholly different,
as each tribunal must adjudicate on a case by case basis.
62. Third, the body of laws used in interpreting the contracts may be different. This is due to the fact
that the “ICC Hardship Clause 2003” may have different jurisprudence than the present Arbitra-
tion Agreement; hence, in any event, the Partial Interim Award is not instrumental in the interpre-
tation of the present Arbitration Agreement.
B. The Partial Interim Award is immaterial.
63. The test for materiality is that the evidence must be deemed necessary for the complete consider-
ation of the truth of a factual allegation [Moser, § 9.161 citing Raeschke-Kessler].
64. RESPONDENT submits that the Partial Interim Award is not necessary for the Tribunal to consider
the truth of the factual allegation that RESPONDENT made contradictory submissions. First, whether
the submissions are contradictory or not is irrelevant, each case must be viewed on its own inde-
pendent merits. Second, the Tribunal should be able to make a complete consideration of the sub-
stantive merits of this case with the facts already given, and would not need to upset fairness and
equality by contravening the confidentiality of the other proceedings [Art. 13.5 HKIAC Rules].
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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

2. The Partial Interim Award should not be admitted under IBA Rules.
65. CLAIMANT argued that the IBA Rules apply to complement the HKIAC Rules; to this extent, RE-
SPONDENT agrees [CLAIMANT Memo, ¶¶ 41–43]. However, RESPONDENT disagrees that the IBA
Rules should be relied upon to admit the Partial Interim Award for reasons such as “fairness and
equality”.
66. The starting point is that all evidence deemed relevant and material by the tribunal may be admitted
as evidence [Art. 9.1 IBA Rules].
67. As mentioned above, RESPONDENT submits that the Partial Interim Award is irrelevant and imma-
terial. Should the Tribunal find otherwise, RESPONDENT submits that the Partial Interim Award
falls within the exceptions for commercial confidentiality (A) and fairness and equality (B)
[Arts. 9.2(e), (g) IBA Rules].
A. The Partial Interim Award falls into the exception for commercial confidentiality.
68. Under Art 9.2(e) of the IBA Rules, confidential documents include financial and commercial in-
formation that is not in the public domain [Beharry, p.53].
69. The Partial Interim Award contains key commercial details such as internally decided prices, con-
tact details, counsels’ arguments and other confidential information which are not in the public
domain. These are essential for the survival of the RESPONDENT in countries where horseracing is
a key and important industry, such as Mediterraneo and Equatoriana.
B. The Partial Interim Award is an exception under fairness and equality.
70. It would have been well within CLAIMANT’s contemplation that the other proceedings are being
conducted under HKIAC Rules and are hence veiled with confidentiality. Purchasing the Partial
Interim Award, therefore, is a direct breach of procedural fairness and respect for confidentiality
on CLAIMANT’s part.
II. FURTHER IN THE ALTERNATIVE, THE PARTIAL INTERIM AWARD SHOULD NOT BE ADMIT-
TED UNDER THE TRANSPARENCY RULES.

71. CLAIMANT seeks to rely on the Transparency Rules to circumvent the confidentiality of the Partial
Interim Award. It argues that not only do these Rules apply, they take priority over the HKIAC
Rules; and hence, the Partial Interim Award should be disclosed under the Transparency Rules
[CLAIMANT Memo, ¶¶ 47–59].

15
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

72. RESPONDENT wholly disagrees, and submits that the Transparency Rules do not apply (1); even if
they do, the Partial Interim Award does not fall into the exceptions provided for in the Transpar-
ency Rules (2).
1. The Transparency Rules do not apply.
73. The Transparency Rules themselves make it exceedingly apparent that they apply only to treaty-
based investor-state arbitrations. This is given, inter alia, in the title of the Rules, which states that
the Rules are treaty-based and relates to investor states. In particular, it has been unequivocally
noted that the Rules only apply to investor-state treaties, more commonly known as bilateral or
multilateral international treaties [Kelly-Slatten, p. 95].
74. CLAIMANT erred in relying on Lise to suggest that the Transparency Rules can be applied in com-
mercial arbitration between private parties. Ironically, the same author had in fact confirmed that
the Transparency Rules apply exhaustively to treaty-based investor states only [Lise, p. 10].
2. Alternatively, the Partial Interim Award does not fall into the exceptions given in the
Transparency Rules.
75. RESPONDENT submits that even in the unlikely event that the Transparency Rules apply, the Partial
Interim Award should remain undisclosed.
76. The Transparency Rules provide that, inter alia, if a document consists of confidential business
information, or information protected against being made available to the public under the appli-
cable law, the document shall not be published. [Arts. 3(1), 7(2)(a), 7(2)(c) Transparency Rules].
77. In the present proceedings, it is clear that the Partial Interim Award falls under the category of
confidential business information as well as information protected by law, contrary to CLAIMANT’s
contention [CLAIMANT Memo, ¶¶ 55, 56, 57]. This is for two reasons.
78. First, the Partial Interim Award contains key commercial details such as prices, contact details,
counsel arguments and other confidential information. The publication of such flagrantly goes
against the proportionate transparency that the Transparency Rules enshrine.
79. Second, it is undisputed that the other proceedings are under HKIAC Rules and therefore confi-
dential. For these reasons, the Partial Interim Award is confidential business information.

16
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

III. IN ANY EVENT, THE PARTIAL INTERIM AWARD SHOULD NOT BE ADMITTED BECAUSE IT
WAS IMPROPERLY OBTAINED.

80. CLAIMANT seeks to rely on the principle of good faith provided for in the IBA Rules [Preamble 3,
Art. 9.7 IBA Rules] to argue for the admission of the Partial Interim Award regardless of the dubi-
ous methods involved in obtaining it [CLAIMANT Memo, ¶¶ 62–68].
81. RESPONDENT submits that, indeed, a principle of good faith exists and should be adhered to by the
parties. However, it submits that CLAIMANT has erred in the legal test of good faith (1) and subse-
quently misapplied the law to the facts (2).
1. CLAIMANT erred in defining the legal test for the principle of good faith.
82. CLAIMANT seemed to submit that the test for good faith is a balancing act between relevance and
materiality and the illegality of how the evidence was obtained [CLAIMANT Memo, ¶¶ 62–63].
83. The IBA Rules are deliberately silent in the precise definition of “good faith” and this is to max-
imize the discretion that the tribunal enjoys. However, a general test has been laid out to suggest
that to conduct the taking of evidence in good faith is to “prohibit any bad faith acts that undermine
the system and purpose of the IBA Rules” [Guide to the IBA Rules, p. 16]. Bad faith acts include
the disclosure of otherwise confidential materials to pressure another participant in the arbitration
[Art. 3.13 IBA Rules; Klasener, p. 162]. Good faith includes fairness and equality, and has been
argued to militate against “the submission of evidence knowingly obtained by improper means”
[Art. 9.2(g) IBA Rules; Klasener, p. 162].
84. CLAIMANT submits that illegally obtained information which is in the public domain and non-
privileged is admissible. However, that is an ill-conceived reading of the authorities. The prevail-
ing rule is that where basic procedural fairness, respect for confidentiality, legal privilege, and the
rights of parties to advance their cases freely are affected in the process of obtaining evidence, then
the evidence must not be admitted. [Hourani Case citing Art. 9 IBA Rules; Bible Case].
85. RESPONDENT therefore submits that these should be the legal rules that are applied to the present
facts.
2. Admission of the Partial Interim Award contravenes the principles of good faith.
86. CLAIMANT has erred in applying the relevant legal rules to the facts [CLAIMANT Memo, ¶¶ 64–78].
87. First, it would have been well within CLAIMANT’s contemplation that the other proceedings are
being conducted under HKIAC Rules and are hence veiled with confidentiality. It does not matter
17
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

whether it has heard of this information indirectly [cf. CLAIMANT Memo, ¶ 65]. Purchasing the
Partial Interim Award, therefore, is a direct breach of procedural fairness and respect for confiden-
tiality on CLAIMANT’s part.
88. Second and in a similar vein, CLAIMANT knows full well that witnesses involved in the other arbi-
tration must remain confidential as to what they have given testament to or what they have heard
in the proceedings. The fact that CLAIMANT accepted Mr. Velazquez’s offer is testament to the fact
that it had not acted in accordance with the principles good faith in taking evidence [PO2, p. 60
¶ 40].
89. Therefore, CLAIMANT has failed to act in good faith.
IV. CLAIMANT IS NOT PERMITTED TO SUBMIT THE PARTIAL INTERIM AWARD BY JOINING

THE ADDITIONAL PARTY TO THE PROCEEDINGS.

90. It is unfortunate that CLAIMANT has failed to address a crucial submission mentioned by its own
Counsel [Letter by Langweiler, p. 50]; namely, that CLAIMANT wishes to submit the Partial Interim
Award by joining the Additional Party to the proceedings. Notwithstanding CLAIMANT’s omission,
RESPONDENT submits that such a joinder of the Additional Party is not permitted for four reasons.
91. First, the requirements in Art. 27.1 HKIAC Rules are not satisfied (1). Second, the CLAIMANT has
not sent the Request for Joinder and is out of time to do so under Art. 27.3 HKIAC Rules (2).
Third, forcing the Additional Party to join is contrary to the HKIAC Rules (3).
1. The requirements in Art. 27.1 HKIAC Rules are not satisfied.
92. Joining the Additional Party to the proceedings is contrary to Art. 27.1(a) HKIAC Rules as the
Additional Party is not bound by the Arbitration Agreement (A). In any event, the Additional Party
is not likely to agree to be joined (B).
A. The Additional Party is not bound by the Arbitration Agreement.
93. Art. 27.1(a) HKIAC Rules states that an additional party must be bound by an arbitration agree-
ment to be joined to the proceedings. This is an essential prerequisite of Art. 27 HKIAC Rules and
unless this condition is satisfied, a tribunal has no power to order joinder [Moser, pp. 210, 212].
94. For the Additional Party to be bound by the Arbitration Agreement, the Additional Party must
have consented to the present arbitration [Moser, ¶¶ 10.18, 10.25]. The importance of this require-
ment has been affirmed by the Singapore Court of Appeal which was interpreting a similarly
worded provision in Art. 24.1 of the SIAC Rules [PT First Media Case].
18
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

95. RESPONDENT submits that the requirement of consent is not satisfied because the Additional Party
has not consented and will not consent to be bound by the Arbitration Agreement [Exh C5, p. 13].
In addition, even though a party’s consent can also be inferred from its conduct [Moser, § 10.25]
or in an oral agreement that is evidenced in writing [Moser, § 10.25; Art. 4.3(c) HKIAC Rules; Art.
27.4 HKIAC Rules; Art. 24(b) SIAC Rules; Art. 22.1(viii) LCIA Rules], there is no evidence of
such in this case.
B. In any event, the Additional Party is not likely to agree to be joined in the future.
96. The Additional Party is not likely to consent to be bound by the Arbitration Agreement for two
reasons.
97. First, RESPONDENT is authorised by the Additional Party to state that CLAIMANT’s Counsel’s alle-
gations made to support his suggestion of joinder are untrue [Letter by Fasttrack, p. 51].
98. Second, the Additional Party has waived its rights to any form of defence to set aside the Partial
Interim Award as it is final and binding under the HKIAC Rules [Art. 35.2 HKIAC Rules]. As a
result, neither the outcome of the other proceedings or the Partial Interim Award will change if the
Additional Party joins the present arbitration. Thus, the Additional Party has no incentive to join
the current proceedings.
99. Therefore, if CLAIMANT tries to argue that there is a common intention shared by all the parties,
this would be flawed since the Additional Party is not likely to agree to be joined.
2. The CLAIMANT has not sent the Request for Joinder and has passed its time limit to
do so under Art. 27.3 HKIAC Rules.
100. The HKIAC Rules state that a Request for Joinder may be raised no later than in the Statement of
Defence, except under exceptional circumstances [Art. 27.3 HKIAC Rules]. RESPONDENT submits
that CLAIMANT has not fulfilled this for two reasons.
101. First, the Statement of Defence is usually contained in the Answer to the Notice of Arbitration
[Art. 17.1 HKIAC Rules]. In this case, the date of the ANoA was 24 August 2018. RESPONDENT
submits that since it has not received a Request for Joinder before or on 24 August 2018, CLAIM-
ANT has passed the time limit to submit it.
102. Second, the “exceptional circumstance” discretion under Art. 27.3 HKIAC Rules is rarely exer-
cised by tribunals in practice [Moser, § 10.31]. RESPONDENT argues that since the fundamental
requirements in Art. 27.1 HKIAC Rules are not satisfied [supra ¶¶ 97–104], the CLAIMANT has
19
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

taken no further procedural steps for joinder, and the CLAIMANT has failed to submit reasons for
joinder in its Memorandum, utilising this discretion will be counter-productive to the requirement
for a “fair and efficient” conduct of arbitration [Art. 13.5 HKIAC Rules].
3. In any event, forced joinder is not permitted.
103. Were CLAIMANT to argue that consent of one or more party is not required for joinder, RESPOND-
ENT submits that CLAIMANT cannot force the Additional Party to join as this is contrary to the
HKIAC Rules [Art. 27.1 HKIAC Rules; Moser, § 10.19]. The Singapore Court of Appeal has held
in a similar vein [PT First Media Case, ¶¶ 195–198; Art. 24.1 SIAC Rules].
104. Therefore, RESPONDENT submits that if the Tribunal orders joinder without the consent of the Ad-
ditional Party, it would be stepping outside the powers conferred to it by the HKIAC Rules.

CONCLUSION FOR ISSUE 2

105. CLAIMANT is not entitled to submit the Partial Interim Award because, first, this would not satisfy
the principle of equal treatment; second, CLAIMANT did not act in good faith and cannot rely on
the principle of good faith to submit the Partial Interim Award as evidence; and third, the Partial
Interim Award should remain confidential and should therefore not be admitted in the present
proceedings. Neither can CLAIMANT do so by joining the Additional Party to the proceedings.
Therefore, CLAIMANT cannot submit the Partial Interim Award.

ISSUE 3: UNDER THE CONTRACT AND OTHERWISE, CLAIMANT IS NOT ENTI-

TLED TO ANY ADAPTATION OF PRICE

106. The Tribunal should not award additional payment by adapting the Contract, or otherwise. This is
because RESPONDENT has no obligation to pay the additional tariffs (I). Additionally, CLAIMANT’s
obligation to pay the additional tariffs does not constitute hardship (II). Additionally, the
UNDROIT Principles are not applicable, and alternatively, do not provide for a remedy (III).
Lastly, the claims for damages should not be decided by the Tribunal; alternatively, the require-
ments for damages under the CISG are not met (IV).
I. RESPONDENT HAS NO OBLIGATION TO PAY THE ADDITIONAL TARIFFS.
107. RESPONDENT does not have an obligation to bear additional payments since the Parties have clearly
agreed on an allocation of risks (1). Furthermore, CLAIMANT’s attempt to establish additional ob-
ligations under Arts. 8, 61, and 62 CISG cannot be justified (2).
20
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

1. The Parties agreed on a clear allocation of risks.

108. Contrary to CLAIMANT’s allegation [CLAIMANT Memo, ¶ 86] RESPONDENT did not fail to perform
any obligation under the Contract.
109. While RESPONDENT accepts that the import tariffs were not expected by either of the Parties at the
moment of the Contract’s conclusion, the Parties had agreed on an allocation of risk for such cases.
In Clause 8 of the Contract the shipment is agreed to be delivered “DDP” (Delivery Duty Paid).
This expression is abstracted from INCOTERMS 2010. It represents the seller’s maximum obli-
gation when the goods are to be delivered to buyer’s premises [Ramberg, p. 108] and obliges the
seller to “obtain, at its own risk and expense, any export and import license and other official
authorization and carry out all customs formalities necessary for the export of goods (…)” [IN-
COTERMS 2010, p. 70].
110. It is clear, therefore, that CLAIMANT should bear the risk of raised import tariffs. However, CLAIM-
ANT tries to escape this obligation by overstretching the mutually agreed amendments the Parties
made to the DDP agreement in the subsequent Clauses 9 to 13 of the Contract.
111. Under INCOTERMS 2010, there are numerous other rules from which the Parties could have cho-
sen. However, every delivery condition is matched to certain price conditions, with higher risks
commanding higher prices. Therefore, CLAIMANT asked for an increased price for DDP, [Exh. C4,
p. 12].It would be inequitable for the Tribunal to allow CLAIMANT to reap the benefit of the higher
price offered to it, while absolving CLAIMANT of the risks associated with that price.
112. Furthermore, both Parties undertook certain business risks by entering into the Contract. RESPOND-
ENT took on the risk that the Equatorianian government could resume the prohibition on artificial
insemination before RESPONDENT could benefit from the frozen horse semen it procured from
CLAIMANT [Exh. C1, p. 9]. This would mean a full loss of the purchase price of USD 10,000,000
for RESPONDENT. Therefore, both CLAIMANT and RESPONDENT took on significant business risks
and it just so happened that CLAIMANT’s risks materialised.
2. RESPONDENT has no obligation under Arts. 8, 61, 62 CISG.
113. RESPONDENT cannot be burdened with additional payments through an application of Art. 8 CISG
(A). Neither did RESPONDENT fail to perform an obligation under Art. 60 CISG that can justify any
remedies (B).

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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

A. The application of Art. 8 CISG cannot lead to a claim against RESPONDENT.

114. CLAIMANT’s argument in paragraph 87.-94 is difficult to follow. The fact that paragraph 89 cites
a decision that does not deal with the mentioned provision [Art. 7 CISG; Clout Case No. 215], one
that is not unambiguously assignable [Takap Case] and links to a document other than the one
stated [UNCITRAL 2012] does not facilitate the comprehensibility of the claim.
115. Furthermore, CLAIMANT does not identify which section of Art. 8 CISG should finally be applied
for an interpretation of the facts, so that the alleged consequences should already be rejected for
this reason. The different paragraphs of the provision are tied to different criteria (Art. 8(1) CISG:
“subjectively”; Art. 8(2) CISG: “reasonableness”), [Schlechtriem/Fountoulakis/Dimsey, p. 60],
thus it has to be clear which of these contrasting [Schlechtriem/Schwenzer, p. 153] approaches is
applied.
1. Art. 8 (1) CISG does not lead to an adaptation of the purchase price [CLAIM-
ANT Memo, ¶ 90].
1. CLAIMANT does not show what RESPONDENT should have understood according
to Art. 8(1) CISG.
116. The purpose of Art. 8(1) CISG is to interpret statements of which the counterparty knew or was
imputably unaware of their actual meaning [Schlechtriem/Schwenzer, p. 151]. The fact of positive
knowledge or imputable unawareness must be proven by the statement-maker [Schwen-
zer/Fountoulakis/Dimsey, p. 60].
117. Yet, it does not become clear from which exact statements and conducts CLAIMANT concludes its
outcome and what these outcomes precisely are. This would be necessary in order to assess if these
statements actually were clear enough to lead to an unambiguous interpretation by RESPONDENT.
118. CLAIMANT does not manage to present clearly what was meant when it refers to “such burden”
and “typical risks” [CLAIMANT Memo, ¶ 90].
2. The statement in the email from 31 March 2017 does not exclude CLAIMANT
from its responsibility.
119. CLAIMANT’s correspondence reveals its specific intention to exclude certain kinds of liability.
CLAIMANT refers to the excerpt from CLAIMANT’s email [Exh. C4, p. 12] from which the unwill-
ingness to take over further risks should be interpreted. However, CLAIMANT failed to include the
subsequent statement that clarifies the kinds of risk CLAIMANT was actually referring to: “As we
22
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

both know from past experiences unforeseeable additional health and safety requirements may
make higher expenses necessary (…)” [Exh. C4, p. 12].
120. It is thus clear that the specific risk CLAIMANT was trying to avoid were those arising from unfore-
seeable health and safety requirements. Clause 12 of the Contract mirrors its intent and exactly
excludes these mentioned risks.
121. Moreover, considering that CLAIMANT accepted DDP and expressly named certain risks in the
Contract that it wanted to be excluded, the interpretation that the Seller did not want to bear any
additional risks [CLAIMANT Memo, ¶ 90], is very ambitious. Thus, CLAIMANT cannot assume that
RESPONDENT could not have been unaware that CLAIMANT wanted to impose potential future im-
port tariffs on RESPONDENT.
3. RESPONDENT made clear that extensive liability exclusion is not acceptable.
122. Furthermore, RESPONDENT’s statements have to be considered under Art. 8(1) CISG as well. When
restarting the negotiation, Mr. Krone told Mr. Ferguson the broad hardship clause was not accepta-
ble for RESPONDENT and the objective of applying a narrowly worded pursued in the following
process [PO2, ¶ 12]. Therefore, CLAIMANT knew or could not have been unaware of RESPOND-
ENT’s intention to apply a hardship clause which only governs hardship caused by additional health

and safety requirements.

2. The interpretation of Parties’ statements, conducts and the Contract pursuant
to Art. 8(2) CISG equally allocates the risk of increased tariffs to CLAIMANT.
123. Neither can such conclusion be drawn under Art. 8(2) CISG [CLAIMANT Memo, ¶¶ 91, 110].
124. The relevant criterion is how a reasonable person of the same kind as the other party would have
understood the statement or conduct which is to be assessed by taking all relevant circumstances
into account [Art. 8(3) CISG]. This includes the negotiations before and subsequent to the Con-
tract’s conclusion. For determining the hypothetical “reasonable person” one has to be aware that
the communication took place between two experienced lawyers that are expected to be conscious
about the concrete meaning of their—particularly, written—statements.
1. Behaviour during contract negotiations justifies no divergent appraisal.
125. Applying Art. 8(2) CISG on the email from 31 March 2017 does not lead to a divergent outcome.
126. In that email Ms. Napravnik accepted DDP delivery. As she wrote these lines “after longer internal
discussions” the Tribunal can assume that she was very well aware of what this means, and that
23
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

she considered her answer in detail. This is particularly true when looking at the whole email:
while the suggestion for DDP delivery is accepted, the proposal for choosing the courts of Equa-
toriana as relevant jurisdiction was rejected.
127. Therefore, a reasonable comparable person would not have understood that import tariffs shall be
excluded from the DDP delivery agreement.
2. Interpretation of the Contract does not lead to claim for further payments.
128. The interpretation of clause 12 of the Contract does not lead to RESPONDENT’s liability. The CISG
demands that the contract be interpreted as a whole [Russian Award]. Here, Clause 12 must be
interpreted in light of Clause 8 and Parties’ negotiations prior to the formation of the Contract.
129. A reasonable person in either Party’s position would interpret CLAIMANT’s obligation of paying
additional tariffs due to its acceptance of DDP and interpret clause 12 to be the product of CLAIM-
ANT’s unfortunate prior experiences.
130. Therefore, it excludes CLAIMANT’s liability solely in such circumstances: CLAIMANT referred to
its experience of having to pay for additional tests and quarantine requirements imposed by the
Danubian government in response to a public health crisis in 2014 [PO2, p. 58 ¶ 21]. The use of
the precise term “additional health and safety requirements” clearly indicates that the Parties in-
tended for the Clause to cover hardship only in relation to such costs as it had previously encoun-
tered and situations that are comparable to such.
131. RESPONDENT submits that the nature of the additional tariffs constitutes an event that falls outside
the ambit of this narrowly worded clause, and therefore cannot fall under the phrase “comparable
unforeseen events” [Exh. C5, p. 14]. The difference between politically-motivated protectionist
tariffs and restrictions resulting from public health concerns derives from their objectives. The
imposition of the additional tariff is a trade measure adopted by Equatoriana in response to the
25% tariff announced by Mediterraneo [Exh. C6, p. 15]. Therefore, it is inherently different from
what CLAIMANT suffered in 2014, as the loss was due to the long quarantine time [Exh. C6, p. 15]
and from the risks provided for in Clause 12 of the Contract.
3. Behaviour during subsequent negotiations justifies no divergent appraisal.
132. CLAIMANT refers to a “promise” made by Mr. Shoemaker and claims that the word “solution” in
the phone call from 21 January 2018 should contain detailed knowledge about CLAIMANT’s fi-
nancial situation and be understood in light of this. Both assertions are incorrect.
24
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

133. Since the wording of Mr. Shoemaker’s statement is documented [Exh. R4, p. 36] it can be clearly
demonstrated that the assumption of a “promise” is weak. Mr. Shoemaker did at no time make a
“promise” of a price adaptation but made clear that these questions had to be clarified with the
legal department first. His acceptance of potential further negotiations is under the condition that
“the contract provides for an increased price”—which is not the case.
134. The claim that Mr. Shoemaker should have had all the information about CLAIMANT’s financial
problems in mind that emerged in the meantime, cannot be maintained for logical reasons. Art. 8
CISG considers the situation at the moment a statement by a party was made [Bianca/Bonell, p.98].
Since all that Mr. Shoemaker could have known at the moment of the phone call were unspecific
rumours about CLAIMANT’s financial difficulties [PO2, p. 58 ¶ 22] he could not have incorporated
any of the said information (profit margin, bank credit lines) in his statements. Regardless, such
knowledge would not have changed the interpretation of his statement under Art. 8(2) CISG.
135. During the whole conversation it was clear that Mr. Shoemaker did not have the authority to decide
an adaptation of contract but that he would first have to clarify the legal situation [Exh. C4 p. 36].
3. Contrary to its submissions, CLAIMANT cannot rely on good faith.
136. The reasoning with the principles of good faith [CLAIMANT Memo, ¶ 92] is not able to change the
outcome of the interpretation pursuant to Art. 8(2) CISG. First, because Art. 7(1) CISG cannot
function as a basis for claim. Second, because Art. 7 CISG is not applicable in the context of Art.
8 CISG but limited on the interpretation of the Convention. Alternatively, because even if good
faith principles were applied, they would not lead to the result that CLAIMANT alleged.
1. Art. 7(1) CISG and Art. 8 CISG do not function as basis of claim.
137. It does not become clear under which basis of claim the requested payment [CLAIMANT Memo,
¶ 92] should be awarded. Neither Art. 8 CISG nor Art. 7(1) CISG function as basis for claims. Art.
7 CISG deals with the uniform interpretation of the Convention and gap filling. No direct penalties
or remedies can flow from the principle of good faith as mentioned in Art. 7 CISG [Zeller, p.79
et. seq]. The function of Art. 8 CISG is limited to the interpretation of parties’ statements and
conduct.
2. Good faith principles are not applicable.
138. Furthermore, the principle of good faith mentioned in Art. 7(1) CISG only relates to the interpre-
tation of the Convention itself and does not constitute an interpretation principle under Art. 8 CISG
25
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

[Schwenzer/Fountoulakis/Dimsey, p. 59]. The principles of good faith cannot be used to interpret

the Contract or Parties’ statements [Schlechtriem/Schwenzer, p. 158] or be used as a “super-tool”
to override the rules and policies of the CISG whenever one regards the solution to a particular
case as inadequate [Huber, p. 228].
139. This can also be understood when looking at the language of Art. 7(1) CISG that only refers to
“this Convention” [Gillette/Walt, p. 1329]. Indeed, an ICC tribunal supported this position by not-
ing that Art 7(1) CISG cannot be used as “collateral obligation derived from the ‘promotion of
good faith’” as this would go beyond its purpose [ICC Case No. 8611].
3. Alternatively, the application of good faith cannot lead to the alleged outcome
140. Even if good faith considerations would be applicable, they could not justify a claim for payment
as CLAIMANT presents it.
141. It is not relevant to the obligations under the contract whether one party is financially endangered
or not. Following CLAIMANT’s reasoning, obligations to help out endangered business partners or
guarantee them certain profit margins could be justified under good faith principles, which is
clearly not the consensus.
142. When assessing whether “expectations and obligations to act honestly and fairly in the perfor-
mance of one’s contractual duties” [Powers, p. 335], including the kind of obligations suggested
by the CLAIMANT, one realises very fast that this would result in an intervention into the business
life and party autonomy that cannot be justified.
143. In the cases in which courts relied upon the principles of good faith under CISG, it was used for
matters like the exchange of terms and conditions [Machinery Case; Trade Usage Case]. This
manifestation is far from what CLAIMANT asks the Tribunal to do: a complete departure from pacta
sunt servanda because of one party’s financial problems.
B. RESPONDENT did not fail to perform an obligation under Art. 60 CISG that would
justify any remedies.
144. CLAIMANT attempted to interpret Art. 60 CISG in such a way that it provides for an adaptation of
the agreed price. However, this is neither the purpose of this provision (i) nor would it be appro-
priate in the case at hand (ii). CLAIMANT’s intent to present Art. 62 CISG as basis for a price
adaptation is not persuasive (iii).

26
 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

1. CLAIMANT misconstrued Art. 60 CISG.

145. Art. 60 CISG specifies buyer’s obligation to take delivery. Besides paying the price, this is his
fundamental obligation, pursuant to Art. 53 CISG. The taking over of the good is fulfilled with the
physical possession of it [Schlechtriem/Schwenzer, p. 891].
146. Moreover, the provision assures the seller that the buyer does everything that can reasonably be
expected to “enable the seller to make delivery”.
147. In the present case the application of Art. 60 CISG is rather abstruse. There is no doubt regarding
the delivery of the goods and that RESPONDENT took them over, i.e. fulfilled the duty of Art. 60
CISG.
2. Even if Art. 60 CISG would be applicable there would be no further duties
upon RESPONDENT.
148. Even if Art. 60 CISG were not fulfilled, no additional duties would arise from Art. 60 CISG.
149. CLAIMANT’s assertion in paragraph 94 that “custom duties and taxes are included in buyer’s obli-
gations” demonstrates an erroneous interpretation of the cited source. It is stated there that only
“where the taking over by the buyer is dependent on his paying custom duties and taxes (…) these
payments become part of the obligation” [Bianca/Bonell, p.440]. Obviously, this was not the case
since RESPONDENT’s act of taking over the delivery was clearly not dependent on any further ac-
tions.
3. CLAIMANT’s reference to Art. 62 CISG is incorrect.
150. When CLAIMANT intents to use Art. 62 CISG as basis for an adaptation of the price [CLAIMANT
Memo, ¶ 94] this only proves a misunderstanding of the internal logic of CISG’s provisions re-
garding remedies.
151. Art. 62 CISG mirrors buyer’s obligations from Art. 53 CISG on the remedies side
[Schlechtriem/Schwenzer, p.906] in the case the buyer does not perform.
152. However, RESPONDENT did pay the price agreed under clause 6 of the Contract and took over the
delivery. Thus, there is no room for remedies according to Art. 62 CISG.

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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

II. CLAIMANT’S HAVING TO PAY ADDITIONAL TARIFFS DOES NOT CONSTI-

TUTE HARDSHIP.
153. CLAIMANT’s having to pay additional tariffs does not constitute hardship under the CISG for two
reasons. First, Art. 79 CISG is not applicable to the present dispute (1). Alternatively, the payment
of the additional tariffs nevertheless does not constitute hardship under Art. 79(1) CISG (2).
1. Art. 79 CISG is not applicable.
154. The Tribunal should not apply Art. 79 in order to determine whether CLAIMANT’s payment of the
additional tariffs falls within the ambit of the Article, as clause 12 constitutes an implicit deroga-
tion pursuant to Art. 6 CISG (A). Should the Tribunal find that recourse is to be had to Art. 79
CISG, it is RESPONDENT’s position that the additional tariffs do not constitute an “impediment”,
and therefore do not fall within its scope (B).
A. Art. 79 CISG is not applicable as Clause 12 constitutes an implicit derogation by
the Parties pursuant to Art. 6 CISG
155. Art. 6 CISG expresses “the principle of freedom of contract” whereby “any contractual agree-
ments (…) take priority over the default provisions dealing with the same subject matter”
[Schlechtriem/Schwenzer, p. 105]. A derogation from any of the provisions of the CISG may be
either explicit or tacit [Viscasillas, p. 133], and may be determined through the application of the
interpretative rules outlined in Art. 8 CISG [CISG AC Opinion No. 16]. An application of Art. 8
CISG shows that the parties clearly intended to cover all instances of exclusion of Seller’s liability
through the narrowly worded clause 12 [supra I(2)(i)].
156. Both Art. 79 CISG and Clause 12 deal with Seller’s non-liability for non-performance of contrac-
tual obligations under certain circumstances, and hence deal with the same subject matter. This
constitutes a derogation from Art. 79 CISG pursuant to Art. 6 CISG.
B. Alternatively, the additional tariffs do not constitute an ‘impediment’ under Art.
79 CISG
157. Should the Tribunal find Art. 79(1) CISG applicable, it is RESPONDENT’s position that the impo-
sition of the additional tariffs does not constitute an ‘impediment’. The term “impediment” refers
to “external circumstances” [Schlechtriem/Schwenzer, p. 1133] which lie outside of Seller’s ordi-
nary contractual obligations. The imposition of the additional tariffs is only problematic due to

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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

CLAIMANT’s previous financial difficulties which are mere personal circumstances that do not fall
within the ambit of the external ‘impediment’ referred to in Art. 79 CISG [OLG München Case].
2. Alternatively, the payment of the additional tariffs does not constitute hardship under
Art. 79(1) CISG
158. Should the Tribunal find that Art. 79 CISG is applicable, it is nevertheless RESPONDENT’s position
that the payment of the additional tariffs does not fall within the ambit of the Article.
159. Art. 79(1) CISG contains four requirements. First, that the impediment in question be beyond the
party’s control (A). Second, this impediment could not have been reasonably foreseen by the party
at the conclusion of the contract (B). Third, the impediment must have been unavoidable and im-
possible for CLAIMANT to overcome (C). Fourth, the impediment must be the cause for the party’s
non-performance (D). The tariff increase does not meet these requirements.
A. The risks associated with the tariffs were not beyond CLAIMANT’s control.
160. The determination of whether an impediment is beyond a party’s control is to be decided on a
“case by case basis” [Schlechtriem/Schwenzer, p. 1134]. In the issue at hand, the risks associated
with the imposition of additional tariffs are adverse business conditions whose consequences could
have been controlled by CLAIMANT prior to conclusion of the contract.
161. In a Bulgarian arbitral award [Case No. 11/96], the buyer’s argument that the seller stop shipments
of the goods due to negative market fluctuations was not accepted as grounds upon which to ter-
minate performance of a party. Similarly, the consequence of the additional tariffs were mere ad-
verse business conditions that CLAIMANT could have mitigated [infra II(C)].
B. The tariff increase was not unforeseeable upon conclusion of the Contract
162. Government actions have historically been regarded by tribunals as factors parties must take into
account before entering into a contract [Vogenauer, p. 713; Tsakiroglou Case].
163. On 5 May 2017, President Bouckaert appointed an outspoken critic of free trade, Ms. Cecil
Frankel, as “superminister” for agriculture, trade, and economics [PO2, p. 58 ¶ 23]. As this was
before the Contract was formed and finalized between the parties [Exh. C5, p. 13], it is therefore
reasonable for CLAIMANT to have anticipated potential fluctuations in the tariffs on animal prod-
ucts upon conclusion of the Contract.
164. Furthermore, the President was elected on a campaign openly proposing protectionist policies
since January 2017 [Exh. C6, p. 15]. As it is customarily accepted that due diligence should take
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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

place prior to entrance into a contractual relationship, CLAIMANT’s failure to properly inform itself
as to Mediterraneo’s political climate should not exclude it from a voluntarily assumed obligation
under the DDP arrangement, and all the risks that came with it.
C. CLAIMANT could reasonably be expected to have taken the impediment into ac-
count at the time of the conclusion of the contract, or to have avoided or overcome
it or its consequences.
165. Art. 79(1) CISG requires that the impediment be unavoidable, and impossible to overcome. This
is irrespective of whether the imposition of the tariffs was foreseeable or not
[Schlechtriem/Schwenzer, p. 1135].
166. The Tribunal should pay regard to the contractual allocation of risks, in order to determine to what
extent CLAIMANT should have exerted effort so as to overcome the tariffs [Huber/Mullis, p. 262;
Schlechtriem/Schwenzer, p. 1135]. CLAIMANT should not be excluded from liability for a risk that
it had voluntarily undertaken.
167. Alternatively, CLAIMANT could have avoided having to pay for the additional tariffs by taking on
insurance. The direct additional costs associated with transportation and DDP delivery was only
USD 20,000, whereas RESPONDENT paid CLAIMANT two and a half times that [PO2, p. 56 ¶ 8].
The additional funds of USD 30,000 would have been ample for CLAIMANT to take on insurance
for the risks it took on, and would have allowed it to avoid having to pay for the additional tariff.
It was within CLAIMANT’s prerogative to take this affirmative step.
D. Paying additional tariffs did not cause CLAIMANT to fail to perform its obligations.
168. As CLAIMANT ultimately did perform its contractual obligations by authorizing the final shipment
[Exh. C8, p. 18], the payment of the additional tariffs therefore did not cause CLAIMANT to fail
performance.
169. Therefore, CLAIMANT cannot rely upon Art. 79 CISG.
III. UNIDROIT PRINCIPLES DO NOT PROVIDE FOR THE CLAIMED REMEDIES.
170. UNIDROIT Principles are not applicable to the matter at hand (1). Alternatively, application of
UNIDROIT Principles does not lead to the claimed remedies (2).
1. UNIDROIT Principles are not applicable to the matter at hand
171. As CLAIMANT relies upon UNIDROIT Principles to request an adaptation of price, it must demon-
strate why they apply. First, CLAIMANT fails to show why UNIDROIT Principles apply directly
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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

(A). Alternatively, CLAIMANT cannot rely upon an indirect application of UNIDROIT Principles
to fill a gap in CISG (B). In any case, CLAIMANT applied them in contravention of their nature and
purpose as an interpretative tool.
A. The direct application of UNIDROIT Principles was not chosen by the Parties.
172. The direct application of CISG was expressly agreed on in clause 14 of the Contract [Exh. C5,
p. 14]. As tribunals should look to the contract first wherever possible [Brunner, p. 118], the Tri-
bunal should prioritise an application of CISG above that of UNIDROIT Principles, and only refer
to them indirectly as a last resort. CLAIMANT has completely omitted to justify why the Tribunal
should directly apply UNIDROIT Principles.
173. UNIDROIT Principles are by nature not to be directly applied unless expressly provided for by
the parties to the contract or in the absence of any choice of law by the parties [UNIDROIT Prin-
ciples, Preamble, Commentary, ¶¶ 4(a), (c)]. Since the Parties agreed on the application of CISG,
there is no recourse to UNIDROIT Principles.
B. Alternatively, CLAIMANT cannot rely upon Art. 6.2.2 UNIDROIT to supplement a
gap in the CISG relating to hardship
174. It is RESPONDENT’s position that CISG contains no substantive gap in relation to the provision of
remedies for hardship, and therefore does not require further referral to the UNIDROIT Principles.
175. One of the aims of UNIDROIT Principles is to “interpret or supplement international uniform law
instruments”, including CISG [UNIDROIT Principles, Preamble, Commentary, ¶ 5]. Particularly,
the application of Art. 6.2.2 UNIDROIT Principles in place of Art. 79 CISG receives harsh criti-
cism [Schwenzer, p.713; Schlechtriem/Witz].
2. Alternatively, application of UNIDROIT Principles does not lead to the remedies
claimed.
176. It is RESPONDENT’s position that the application of UNIDROIT Principles does not lead to the
remedies claimed, because the allegation that RESPONDENT acted in contravention of Arts. 1.8 and
5.1.3 UNIDROIT Principles is unsubstantiated.
177. CLAIMANT refers to Art. 1.8 and 5.1.3 of UNIDROIT Principles [CLAIMANT Memo, ¶ 105] as the
basis upon which it alleges RESPONDENT has acted inconsistently. The Articles invoked by CLAIM-
ANT do not substantively relate to the matter at hand. Moreover, neither article grants CLAIMANT

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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

a basis upon which to argue for potential remedies, as CLAIMANT meets the requirements neither
for Art. 1.8 (A) nor for Art. 5.1.3 UNIDROIT Principles (B).
A. CLAIMANT does not meet the requirements of Art. 1.8 UNIDROIT Principles
178. Art. 1.8 UNIDROIT Principles, relating to the inconsistent behaviour of a party, merely prevents
a party “from acting towards the other party in a manner which would be contrary to its previous
behaviour because, in doing so, the other party's understanding of the relationships, on which it
relied, would be modified.” [ICC Case No. 14108]. CLAIMANT alleges that RESPONDENT has acted
inconsistently as to the long-term nature of the parties’ relationship.
179. There are two elements that CLAIMANT must prove in order meet the requirements of Art. 1.8
UNIDROIT Principles. First, CLAIMANT must prove that it relied upon a reasonable understanding
of RESPONDENT’s behaviour. Second, this must have caused detriment to CLAIMANT.
180. It is inaccurate for CLAIMANT to assume that RESPONDENT made a misrepresentation as to its intent
to form and pursue a long-term business relationship with CLAIMANT [CLAIMANT Memo, ¶ 106–
107]. Indeed, RESPONDENT repeatedly pointed to this effect in several of its correspondences with
CLAIMANT [Exh. C3, p. 11; Exh. C8, p. 17].
181. The prospect of a long-term relationship was first put under question by CLAIMANT’s baseless
demand for additional payments [Exh. C8, p. 18]. RESPONDENT therefore did not make a misrep-
resentation of its intentions, and indeed only changed its intentions under circumstances which
rendered this wholly reasonable [Art. 1.8 UNIDROIT Principles, Commentary, ¶ 3]. Therefore,
CLAIMANT did not rely upon any unreasonably inconsistent behaviour by RESPONDENT.
182. The second requirement for inconsistent behaviour contrary to Art. 1.8 UNIDROIT is that of cau-
sality between the supposed inconsistent conduct, and the detriment suffered by CLAIMANT.
183. CLAIMANT merely suffered from unfavourable market conditions which nevertheless do not entitle
it to impose an obligation upon RESPONDENT. It is unreasonable for CLAIMANT to therefore claim
it suffered a loss when performing a contractual obligation. CLAIMANT was fulfilling its contractual
obligation and therefore its reliance was not on the prospect of a potential long-term relationship
when making the additional tariffs.
184. Thus, CLAIMANT does not meet the criteria under Art. 1.8 UNIDROIT Principles.

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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

B. CLAIMANT does not meet the requirements under Art. 5.1.3 UNIDROIT Princi-
ples.
185. The UNIDROIT Principles relates to the duty of cooperation whereas the only substantive obliga-
tion is to “take affirmative steps to enable the other party’s performance”, which is limited to “co-
operation [that] may reasonably be expected to enable the other party to perform, without upset-
ting the allocation of duties in the contract” [Art. 5.1.3 UNIDROIT Principles, Commentary, ¶ 1].
186. RESPONDENT fulfilled its obligation to take affirmative steps to enable CLAIMANT to pay the tariffs
when accepting to pay additional USD 50,000 so as to cover the “additional costs” [Exh. C4,
p. 12]. Therefore, RESPONDENT cannot be reasonably expected to bear the costs of the tariff where
it had already given consideration for CLAIMANT’s undertaking of these particular risks.
IV. THE CLAIMS FOR PAYMENT OF DAMAGES SHOULD NOT BE DECIDED BY
THE TRIBUNAL AS THEY DISREGARD TRIBUNAL’S ORDER. ALTERNA-
TIVELY, THE REQUIREMENTS FOR DAMAGES UNDER CISG ARE NOT MET.
187. CLAIMANT’s statement concerning the claims for damages should not be decided since it is not an
issue identified in PO1 (A). It also ignores the internal logic inherent in the CISG (B). In any case,
it is unsubstantiated (C). Yet, it fits into the contorted image CLAIMANT tries to draw of the case
when presenting itself as “victim” [CLAIMANT Memo, ¶ 97], and tries to imply that the payment of
the claimed amount would only be a burden for the CLAIMANT [CLAIMANT Memo, ¶ 100].Request
for damages should not be allowed in the proceedings.
A. CLAIMANT’s statements about its claims for damages were not an issue identified
in PO1.
188. In its PO1, the Tribunal made no mention of damages to be addressed by the parties. The only
issue that needs to be raised is the price adaptation and the RESPONDENT has done so [PO1 p. 53].
189. The claims at hand (III.2., [CLAIMANT Memo, ¶ 102 et. seq.] and IV [CLAIMANT Memo, ¶ 126 et.
seq]) ignore this order completely and should therefore not be considered by the Tribunal. Further-
more, any possible claim for damages should be heard in a separate set of proceedings.
B. Alternatively, damages should not be awarded because CLAIMANT’s claims for
damages are based on a misunderstanding of the rationale of CISG.
190. Damages should not be awarded since CLAIMANT presents a claim that is not compatible with the
internal logic of CISG.
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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

191. CLAIMANT rushes to conclusions about Art. 74 and 77 CISG without demonstrating the causes for
such consequence. The purpose of Art. 74 to 77 CISG is only to govern the extent of available
damages [Schlechtriem/Butler, p.199] without demonstrating the requirements of Art. 61(1)(b)
CISG. CLAIMANT tries to state how damages should be calculated by citing a single source that
includes 56 pages and eleven different articles from seven different authors. Yet, this source does
not mention the calculation of damages [Felemegas; CLAIMANT Memo, ¶ 96].
192. Claimant tries to state that its understanding of Art. 74 CISG from the Australian Case [CLAIMANT
Memo, ¶ 97] (which – like the other “Australian” case in ¶ 129 - was decided by the OGH in
Vienna) might be correct, the provision cannot be applied without a prior claim for damages pur-
suant to Art. 61 CISG [Schlechtriem/Schwenzer, p. 1061]. Since no failure of seller’s obligations
is demonstrated in this context, no damages should be awarded.
C. Alternatively, the requirements for awarding damages are not met
1. There is no breach of the Contract.
193. RESPONDENT fulfilled all the obligations so that claims for damages pursuant to Art. 61 and 74
CISG have no basis.
1. RESPONDENT completed all of its payment obligations.
194. RESPONDENT fulfilled the obligation of payment under clause 6 of the Contract. It is uncontested
that CLAIMANT received the agreed USD 10,000,000 completely and on the agreed dates.
2. There was no breach of Contract by reselling semen.
195. It remains unclear how CLAIMANT wants to construct an agreed duty of not reselling the semen out
of the Contract. As CLAIMANT notes correctly, there is an agreement that RESPONDENT shall inform
CLAIMANT before the semen is used for other mares than specified in the Contract [CLAIMANT
Memo, ¶ 128]. Yet, this does not mean a ban of resale for the unused doses.
196. Therewith, CLAIMANT has not proved an obligation nor is CLAIMANT able to prove any breach.
2. Even if the Tribunal would assume a breach of an obligation, there is neither
causation nor a loss on the facts
1. The paid import tariff cannot be seen as a “loss” pursuant to Art. 74 CISG.
197. Since it was CLAIMANT’s duty to pay any tariffs (supra. III(I)(1)) the payment cannot be defined
as a loss: it is not more than one of CLAIMANT’s obligations which derives from the DDP

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 UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

agreement. Furthermore, one requirement of classifying a paid sum as a “loss” is that the sacrifice
of assets happens involuntarily [Schmidt-Ahrendts, p. 94]. In the present case CLAIMANT paid the
tariff deliberately and voluntarily to the authorities. Therefore, CLAIMANT did not suffer a “loss”
under the provisions of CISG.
2. CLAIMANT suffered no loss from RESPONDENT reselling semen.
198. The fact that RESPONDENT resold the goods with a profit cannot be interpreted as a “loss” for
CLAIMANT. Even the authority cited by CLAIMANT (UNCITRAL 2008, 227 [sic]) requires that the
aggrieved party has a “market” upon which it can sell the goods. Since this transaction was the
first time when CLAIMANT sold race horse semen [PO2, p. 57, ¶ 15] the assumption of a “market”
for CLAIMANT as a seller is weak.
199. Moreover, it is an acknowledged principle that there has to be a causal connection between an
alleged breach and an alleged loss [Schlechtriem/Schwenzer, p. 1074; Lookofsky, p. 175]. It is
hardly possible to imagine such causation between the fact that RESPONDENT had not informed
CLAIMANT about the use of the doses yet and the alleged loss that should be seen in lost profits.
200. Thus, the claim for damages should be dismissed.

CONCLUSION FOR ISSUE 3

201. RESPONDENT has no further obligations beyond the Contract. The Contract should not be adapted,
neither under the CISG, nor the UNIDROIT Principles, nor otherwise. The claim for damages
should be dismissed.

REQUEST FOR RELIEF

For the above reasons, Counsel for RESPONDENT respectfully requests the Tribunal to find that:

(1) The Tribunal does not the jurisdiction and the power to adapt the Contract;

(2) RESPONDENT should not be entitled to admit the Partial Interim Award as evidence;

(3) RESPONDENT does not need to disclose the Partial Interim Award;

(4) RESPONDENT does not need to pay to CLAIMANT an additional amount of US$ 1,250,000
which is 25% of the price for the third delivery of semen; and

(5) CLAIMANT should bear the cost of the Arbitration.

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UNIVERSITY COLLEGE LONDON – MEMORANDUM FOR RESPONDENT

CERTIFICATE

We hereby certify that this Memorandum was written only by the persons whose names are listed
below and who signed this certificate:
London, 24 January 2019,

Arda Can TEKIN Ryan CHEUNG Matilde MASETTI-PLACCI Neha PATEL

Bryont CHIN Qingyu MAO Johannes HAGMANN

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