THIRTY-SECOND ANNUAL WILLEM C.

VIS
INTERNATIONAL COMMERCIAL ARBITRATION MOOT

MEMORANDUM FOR RESPONDENT

CASE NO. FAI MOOT 100/2024

on behalf of against

Equatoriana RenPower Ltd. GreenHydro Plc

1 Russell Square 1974 Russell Avenue
Oceanside Capital City
Equatoriana Mediterraneo
–RESPONDENT– –CLAIMANT–

Counsel for RESPONDENT

YAN Yingshan | ZHANG Yeye | XUE Yuandi | HE Aidi

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COUNTRY: China

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 MEMORANDUM FOR RESPONDENT

TABLE OF CONTENT

INDEX OF ABBREVIATIONS ........................................................................................................... i

INDEX OF AUTHORITIES ...............................................................................................................iii

INDEX OF COURT DECISIONS ..................................................................................................... xii

INDEX OF ARBITRAL AWARDS .................................................................................................. xxvi

INDEX OF RULES......................................................................................................................... xxxii

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

SUMMARY OF ARGUMENT .............................................................................................................. 3

ISSUE 1: THE ARBITRAL TRIBUNAL SHOULD REJECT THE CLAIM FOR LACK OF
JURISDICTION AND BECAUSE IT IS INADMISSIBLE ................................................................ 4

A. THE CLAIM SHOULD BE REJECTED BECAUSE MEDIATION IS A JURISDICTIONAL CONDITION PRECEDENT

TO ARBITRATION AND IT IS NOT SATISFIED. ............................................................................................................ 4

I. Pre-arbitral mediation is a jurisdictional condition precedent under Equatoriana’s law. ........................... 5

II. The Parties intended to make mediation a jurisdictional condition precedent. ........................................ 5

B. ALTERNATIVELY, THIS CLAIM IS INADMISSIBLE. ................................................................................................. 6

I. The pre-arbitral mediation requirement is mandatory and operable to be a condition precedent for
admissibility. ............................................................................................................................................................... 6

II. There is no exception to mandatory arbitration as contended CLAIMANT and, in any event, mediation
would not be futile. ................................................................................................................................................... 8

III. Non-compliance with the mediation requirement renders the claim inadmissible. .............................. 10

ISSUE 2: THE ARBITRAL TRIBUNAL SHOULD ADMIT EX. R 3 AND ORDER THE
EXCLUSION OF EX. C 7 ....................................................................................................................10

A. THE ARBITRAL TRIBUNAL SHOULD ADMIT EX. R 3. ....................................................................................... 10

I. Ex. R 3 should be admitted since it substantiates RESPONDENT’s claim in applying the theory of
unilateral mistake or fraud. .................................................................................................................................... 11

II. Ex. R 3 is not protected by solicitor-client privilege. ................................................................................... 12

III. Ex. R 3 should not be excluded since there is no affirmative evidence proving it was illegally obtained.
.................................................................................................................................................................................... 13

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 MEMORANDUM FOR RESPONDENT

B. CONVERSELY, THE ARBITRAL TRIBUNAL SHOULD EXCLUDE EXHIBIT C 7. ................................................. 14

I. Exhibit C 7 is irrelevant and immaterial to the claim. ................................................................................... 15

II. Exhibit C 7 can and should be protected by settlement privilege. ............................................................ 15

III. The Parties have a full-fledged confidentiality agreement covering the whole dispute resolution
process. ..................................................................................................................................................................... 17

IV. Exhibit C 7 enjoys settlement privilege despite the Mauritius Convention. ........................................... 17

ISSUE 3: THE PSA IS OUTSIDE THE CISG’S SCOPE AND SPHERE OF APPLICATION .......18

A. THE PSA IS NOT AN INTERNATIONAL AGREEMENT DEFINED BY ART. 1(1) OF THE CISG. ................. 18

I. Equatoriana is a place of business for CLAIMANT. ....................................................................................... 19

II. Equatoriana is the place most closely related to the PSA and its performance. ..................................... 21

B. THE PREPONDERANT PART OF THE PSA IS NOT SALE OF GOODS PURSUANT TO ART 3(2) OF THE CISG.
......................................................................................................................................................................................... 22

I. A turnkey contract is generally excluded from the CISG because its primary obligations involve labour
and service................................................................................................................................................................ 22

II. It is inappropriate to solely rely on the price structure to determine the nature of the PSA. .............. 23

III. The will of the Parties was to make the Plant operational and not to trade in electrolysers .............. 25

C. THE PSA WAS CONCLUDED AS PART OF A REVERSE AUCTION EXCLUDED FROM THE CISG PURSUANT
TO ART. 2(B). ................................................................................................................................................................. 27

I. The CISG does not govern “sales by auction” because they are regulated domestically. ....................... 27

II. Failing to exclude auctions would make the application of the CISG uncertain. ................................... 29

ISSUE 4: THE PARTIES HAVE EXCLUDED THE APPLICATION OF THE CISG ................... 30

A. SUBJECTIVELY, THE PARTIES CLEARLY INTENDED TO EXCLUDE THE APPLICATION OF THE CISG. ..... 30

I. The Parties’ intent must prevail. ....................................................................................................................... 30

II. RESPONDENT clearly conveyed its intent to exclude the application of the CISG................................ 31

III. CLAIMANT knew or could not have been unaware of RESPONDENT’s intent to exclude the application
of the CISG. ............................................................................................................................................................ 32

B. OBJECTIVELY, A REASONABLE PERSON WOULD FIND THE PARTIES CLEARLY EXCLUDED THE
APPLICATION OF THE CISG....................................................................................................................................... 33

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I. A reasonable person would find that CLAIMANT agreed to exclude the application of the CISG by
accepting the modified model contract. .............................................................................................................. 33

II. A reasonable person would find that CLAIMANT agreed to exclude the application of the CISG by the
choice of law clause in the PSA. .......................................................................................................................... 34

PRAYER FOR RELIEF ...................................................................................................................... 36

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INDEX OF ABBREVIATIONS

% percent

& and

§ section

Arbitration Institute Arbitration Institute of the Finland Chamber of Commerce

Arbitration Rules Arbitration Rules of the Finland Chamber of Commerce

ARfA Answer to the Request for Arbitration

Art. Article

CEO Chief Executive Officer

cf. confer

CISG United Nations Convention on Contracts for the International Sale

of Goods (1980)

COO Chief Operating Officer

DRA Dispute Resolution Agreement

e.g., Exempli gratia (for example)

ECHR European Court of Human Rights

emp. added. emphasis added

ENP Equatoriana National Party

EPC engineering, planning, construction

ERenPow Equatoriana RenPower Ltd.

et seq. Et sequens (and the following)

etc. Et cetera (and so on)

EUR Euro

FAI Finland Chamber of Commerce

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 MEMORANDUM FOR RESPONDENT

FAI Mediation Rules Mediation Rules of the Finland Chamber of Commerce (2024)

i.e. Id est (that is to say)

IBA Rules IBA Rules on the Taking of Evidence in International Arbitration

(17 December 2020)

Ibid. Ibidem (in the same place)

ICSID International Centre for Settlement of Investment Disputes

UNICTRAL Model Law on International Commercial

Model Law
Arbitration (with amendments as adopted in 2006)

MW megawatt

Notice of Termination Termination of the Purchase and Service Agreement of 17 July 2023

NYC / New York Convention on the Recognition and Enforcement of Foreign

Convention Arbitral Awards (New York, 1958)

para. / paras. Paragraph/Paragraphs

PEM-electrolysis Electrolysis using a proton exchange membrane

UNIDROIT Principles UNIDROIT principles of international commercial contracts 2016

PO1 Procedural Order No. 1

PO2 Procedural Order No. 2

PSA Purchase and Service Agreement signed on 17 July 2023

RfA Request for Arbitration

RFQ Request for Quotation

supra See above

Mauritius Convention UNCITRAL Rules on Transparency in Treaty-based Investor-State

Arbitration (2014)

VE Volta Electrolyser

Cl. Memo Matched Team’s CLAIMANT Memorandum

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 MEMORANDUM FOR RESPONDENT

INDEX OF AUTHORITIES

AC Opinion 4 CISG Advisory Council

CISG-AC Opinion No. 4 Contracts for the Sale of Goods to Be

Manufactured or Produced and Mixed Contracts (Article 3 CISG)

Cited in paras 91, 95, 97, 102, 103, 104

AC opinion 16 CISG Advisory Council

CISG-AC Opinion No. 16 Exclusion of the CISG under Article 6

Last retrieved: January 20, 2025

https://cisgac.com/opinions/cisgac-opinion-no-16/

Cited in para 133

AC opinion 3 CISG Advisory Council

CISG-AC Opinion No. 3 Parol Evidence Rule, Plain Meaning Rule,

Contractual Merger Clause and the CISG

Last retrieved: January 20, 2025

https://cisgac.com/opinions/cisgac-opinion-no-3/

Cited in para 123

Alexander Alexander, Nadja Marie

International Comparative Mediation: Legal Perspectives (2009)

Kluwer Law International

Cited in para 30

Ashford Ashford, Peter

The IBA Rules on the Taking of Evidence in International

Arbitration: A Guide (2013)

Cambridge University Press

Cited in paras 39, 56

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Benicke Benicke, Christoph

MünchKommHGB (2013)

Cited in para 111

Berger I Berger, Klaus Peter

Private Dispute Resolution in International Business: Negotiation,

Mediation, Arbitration

3rd Edition (2015)

Kluwer Law International

Cited in para 30

Berger II Berger, Klaus Peter

Evidentiary Privileges under the Revised IBA Rules on the Taking of

Evidence in International Arbitration

International Arbitration Law Review (2010)

Cited in paras 39, 56

Berger III Berger, Klaus Peter

Evidentiary Privileges: Best Practice Standards versus/and Arbitral

Discretion

Arbitration International, Vol. 22, No. 4 (2006)

Cited in paras 39, 56

Black’s Law Garner, A. Bryan

Dictionary Black’s Law Dictionary

12th Edition (2024)

Thomson Reuters

Cited in para 18

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Blavi & Vial Blavi, Francisco / Vial, Gonzalo

The Burden of Proof in International Commercial Arbitration: Are

We Allowed to Adjust the Scales

Hastings International and Comparative Law Review, Vol. 39, No. 1 (2016)

Cited in para 46

Brownlie Brownlie, Ian

Principles of Public International Law

7th Edition (2019)

Oxford University Press

Cited in para 69

Brödermann Brödermann, Eckart

UNIDROIT Principles of International Commercial Contracts: An

Article-By-Article Commentary

2nd Edition (2023)

Kluwer Law International

Cited in paras 3, 25, 116

Buhring- Bühring-Uhle, Christian / Kirchhoff, Lars / Scherer, Gabriele

Uhle/Kirchhoff/Sch Arbitration and Mediation in International Business
erer
2nd Edition (2006)

Kluwer Law International

Cited in para 28

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 MEMORANDUM FOR RESPONDENT

Bénabent Bénabent, Alain

Droit des obligations

Librairie générale de droit et de jurisprudence (2023)

20th Edition

Cited in para 46

Böckstiegel Böckstiegel, Karl-Heinz

Applicable Law in Disputes Concerning Economic Sanctions: A

Procedural Framework for Arbitral Tribunals

Arbitration International, Vol. 30, Issue 4 (2014)

Cited in para 34

FAI Annual Reports The Finland Arbitration Institute

from 2017-2023 FAI Statistics 2017-2023

Last retrieved: 17 November 2024

https://arbitration.fi/en/resources/statistics/

Cited in para 28

FAI Website The Finland Arbitration Institute

Information on Mediation

Last retrieved: 17 November 2024

https://arbitration.fi/en/mediation/information-on-mediation/

Cited in para 28

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Guillermo García-Perrote, Guillermo

Admissibility of ‘Hacked Evidence’ in International Arbitration

(2021)

Wolters Kluwer

Cited in para 49

Gupta Gupta, Kartik

ADMISSIBILITY OF UNLAWFULLY OBTAINED EVIDENCE

IN INTERNATIONAL ARBITRATION

NLIU LAW REVIEW, Vol. 6, Issue 2 (2022)

Cited in para 49

Hunter Hunter, M.

The Procedural Powers of Arbitrators Under the English 1996 Act

Arbitration International, Vol.13, Issue 4 (2014)

Cited in para 34

IBA Task Force IBA Arbitration Committee Task Force on Privilege in International
Report Annex 2 Arbitration

IBA Task Force on Privilege in International Arbitration Report on

Uniform Guidelines on Privilege in International Arbitration—Annex
2—Legal Advice Privilege

Last retrieved: 21 October 2024

https://www.ibanet.org/document?id=Privilege-report-Annex-2-Legal-
Advice-Privilege

Cited in para 40

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 MEMORANDUM FOR RESPONDENT

ICC Bulletin International Chamber of Commerce

Bulletin: Procedural Decisions in ICC Arbitration

2014 Supplement, Vol. 25 (2014)

International Chamber of Commerce

Cited in para 54

Khoo Bianca, C. Massimo / Bonell, Michael Joachim

Commentary on the international sales law: the 1980 Vienna sales

convention (1987)

Giuffrè Milan

Cited in para 111

Kröll/Mistelis/ Kröll, Stefan / Mistelis, Loukas / Perales Viscasillas, Pilar

Perales Viscasillas UN Convention on Contracts for the International Sale of Goods
(CISG): A Commentary

2nd Edition (2018)

C. H. Beck/Hart/Nomos

Cited in paras 76, 82, 84, 90, 114, 137

Lima Lima, Matheus Carneiro

Do we need an exclusionary rule in international arbitration?

Revista Brasileira de Arbitragem, Vol. 18, Issue 72 (2021)

Kluwer Law International

Cited in para 49

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Mcilwrath/Savage Mcilwrath, Michael / Savage, John

International Arbitration and Mediation: A Practical Guide (2010)

Kluwer Law International

Cited in para 28

Official Comment UNIDROIT

of UNIDROIT Official Comment of UNIDROIT Principles of International
Principles Commercial Contracts 2016

Last retrieved: 31 December 2024

https://www.unidroit.org/english/principles/contracts/principles2016/pr
inciples2016-e.pdf

Cited in para 25

O’Malley Nathan, O’Malley

The Procedural Rules Governing the Production of Documentary

Evidence in International Arbitration – As Applied in Practice

The Law & Practice of International Courts and Tribunals, Vol. 8, Issue 1

Cited in para 34

Pearson-Wenger Pearson-Wenger, Sabrina

Good Faith in International Commercial Arbitration: Its Application

by Arbitral Tribunals to the Parties’ Contract and the Arbitration
Agreement (2024)

Wolters Kluwer

Cited in para 46

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 MEMORANDUM FOR RESPONDENT

Poljanec Poljanec, Kristijan

Auctions and auctionlike selling mechanisms in international sale of

goods

in EU Private Law and the CISG

1st Edition

Routledge (2021)

Cited in para 111

Schlechtriem/ Schwenzer, Ingeborg / Schroeter, Ulrich G.

Schwenzer Commentary on the UN Convention on the International Sale of
Goods (CISG)

5th Edition (2022)

Oxford University Press

Cited in paras 72, 76, 82, 84, 111, 114, 117, 123, 131, 133

United Nations United Nations

Conference Record Documents of the Conference and Summary Records of the Plenary
on Contracts for the
Meetings and of the Meetings of the Main Committees
International Sale of
U.N. Doc. A/Conf.97/19 (1991)
Goods
Cited in para 111

Vogenauer Vogenauer, Stefan

Commentary on the UNIDROIT Principles of International

Commercial Contracts (PICC)

2nd Edition (2015)

Oxford University Press

Cited in para 25

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Ziegel Ziegel, Jacob

Report to the Uniform Law Conference of Canada on Convention on

Contracts for the International Sale of Goods

Last retrieved: 27 January 2025

https://iicl.law.pace.edu/sites/default/files/cisg_files/english2.html

Cited in para 111

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 MEMORANDUM FOR RESPONDENT

INDEX OF COURT DECISIONS

Belgium

Orintix v. Fabelta Orintix S.r.l. v. Fabelta Ninove NV

Hof van Beroep Gent (Court of Appeal Ghent)

24 November 2004

1998/AR/2613

Cited in para 103

Canada

Baker v. Canada Baker v. Canada

Supreme Court of Canada

9 July 1999

[1999] 2 SCR 817

Cited in para 141

Capital Cities Capital Cities Communications Inc. v. Canadian Radio-

Communications Inc. v. Television Commission
Canadian Radio-Television
Supreme Court of Canada
Commission
30 November 1977

[1978] 2 SCR 141

Cited in para 141

Kazemi Estate v. Islamic Kazemi Estate v. Islamic Republic of Iran

Republic of Iran Supreme Court of Canada

10 October 2014

[2014] 3 SCR 176

Cited in para 141

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England and Wales

FW Aviation Case FW Aviation (Holdings) 1 Limited v. Vietjet Aviation Joint

Stock Company

England and Wales High Court (Commercial Court)

26 August 2022

CL-2022-000467

Cited in para 57

European Union, First

Chamber

Dalmine Case Dalmine S.P.A. v. Commission of the European Communities

European Union, First Chamber

25 January 2007

No. C-407/04 P, J. 25.01.2007

Cited in para 49

France

Del Gaudio v. Agrenfrut Del Gaudio France S.A. v. Agrenfrut S.L.

Court of Appeal Paris

18 May 2021

20/00977

Cited in para 133

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SAS Camelin v. SHW SAS Camelin v. SHW Automotive GmbH

Automotive
Cour d’appel de Besançon (Court of Appeal Besançon)

26 January 2021

17/00986

Cited in para 104

Germany

Auctioned oil painting case Parties Unknown

Landgericht Karlsruhe (District Court Karlsruhe)

4 January 2005

5 S 161/04

Cited in para 114

Face masks case [Chinese seller] v. [German Agency] (0125/DE/2nd)

Oberlandesgericht [Court of Appeal]

9 January 2025

8 U 46/23

Cited in para 114

Italian clothes case District Court Kassel

15 February 1996

11 O 4187/95

Cited in para 131

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 MEMORANDUM FOR RESPONDENT

Oberlandesgericht Rostock Court of Appeal Rostock

case 10 October 2001

6 U 126/00

Cited in para 140

Potato chips plant case Parties Unknown

Bundesgerichtshof (German Supreme Court)

7 December 2017

VII ZR 101/14

Cited in para 96

Replacement parts for ships German Supreme Court

case 25 March 2015

VIII ZR 125/14

Cited in para 123

Royal feinsprit case Parties Unknown

Court of First Instance Saane

20 February 1997

Case No. T 171/95

Cited in para 76

Sandwich panels case Isocab France S.A. v. E.C.B.S.

Commercial Court Hasselt

2 June 1999

Case No. A.R. 1079/99

Cited in para 76

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Window production plant Parties Unknown

case Oberlandesgericht München (Court of Appeal Munich)

3 December 1999

23 U 4446/99

Cited in para 104

India

PASL Wind Case PASL Wind Solutions Private Limited v. GE Power Conversion

The Supreme Court of India

13 April 2021

No 1647/2021

Cited in para 68

International Court of
Justice

Corfu Channel Case United Kingdom v. Albania

International Court of Justice

4 September 1949

I.C.J GL No 1, J. 09.04.1949

Cited in para 49

Italy

Alfred Dunhill v. Tivoli Alfred Dunhill Ltd. v. Tivoli Group S.r.l.

Group Corte Suprema di Cassazione (Italian Supreme Court)

9 June 1995

6499

Cited in paras 104, 105

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Netherlands

Bilcon v. Canada Bilcon of Delaware et al v. Government of Canada

Permanent Court of Arbitration

11 July 2021

No. 2009-04

Cited in para 46

Chevron Corporation Case Chevron Corporation and Texaco Petroleum Corporation v.

Ecuador (II)

Permanent Court of Arbitration

17 November 2023

No. 2009-23

Cited in para 48

Industrial Solution v. Industrial Solution Partner B.V. v. Randridge International Ltd

Randridge Rechtbank Rotterdam (District Court Rotterdam)

4 December 2024

C/10/666562 / HA ZA 23-865

Cited in para 104

Nederlands Internationaal Rechtbank District Court

Privaatrecht case 29 June 2000

No. 115

Cited in para 142

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Philip Morris Asia Limited Philip Morris Asia Limited v. The Commonwealth of Australia
Case
Permanent Court of Arbitration

8 July 2017

No. 2012-12

Cited in para 48

Sale of horse case Parties Unknown

Rechtbank Oost-Brabant (District Court Oost-Brabant)

31 August 2020

C/01/360225 / KG ZA 20-386

Cited in para 114

Yukos Universal Limited Yukos Universal Limited (Isle of Man) v. The Russian
Case Federation

Permanent Court of Arbitration

22 March 2024

No. 2005-04/AA227

Cited in para 48

New Zealand

Vector v. Bay Vector Gas Ltd. v. Bay of Plenty Energy Ltd.

Supreme Court of New Zealand

10 February 2010

[2010] NZSC 5

Cited in paras 12, 19

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Slovakia

Health care product case Supreme Court of the Slovak Republic

30 April 2008

1 Obdo V 89/2007

Cited in para 137

Spain

Frugima v. Vegamur Frugima, S.A.T vs. Vegamur, S.L.

Audiencia Provincial de Murcia (Sección 1)

8 July 2011

348/2011

Cited in para 116

Switzerland

Clothing and suits case Parties Unknown

Tribunal Cantonal du Valais/Kantonsgericht Wallis (Court of

Appeal Canton Valais)

23 May 2006

C1 06 28

Cited in para 76

FC Metalist Case PJSC “Metalist Football Club” et al. v. Football Federation of

Ukraine

TAS (Court of Arbitration for Sport)

27 March 2014

4A_448/2013

Cited in para 45

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Waste separation machines Parties Unknown

case Commercial Court of the Canton of Zurich

9 July 2002

HG000120/U/zs

Cited in paras 90, 91, 92, 95, 106

Switzerland

Amos Adamu Case Amos Adamu v. Fédération Internationale de Football

Association (FIFA)

CAS (Court of Arbitration for Sport)

3 May 2011

CAS 2011/A/2426

Cited in para 45

United Kingdom

Anzen v. Hermes Anzen Limited v. Hermes One Limited

Judicial Committee of the Privy Council

18 January 2016

[2016] UKPC 1

Cited in para 18

Berkeley Square Case Berkeley Square Holdings Limited & Others v. Lancer Property
Asset Management Limited & Others

English Court of Appeal

15 April 2021

A3/2020/1210

Cited in para 57

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Bradford Case Bradford & Bingley v. Rashid

United Kingdom House of Lords

12 July 2006

[2006] UKHL 37

Cited in para 57

Enka v. Chubb Enka Insaat Ve Sanayi A.S. v. OOO Insurance Company Chubb

The Supreme Court of the United Kingdom

9 October 2020

[2020] UKSC 38

Cited in para 8

Jivraj v Hashwani Jivraj v. Hashwani

The Supreme Court of the United Kingdom

11 August 2010

[2011] UKSC 40

Cited in para 68

NWA v. NVF NVF, RWK and KLB v. NWA and FSY NVF, RWK and KLB
v. NWA and FSY

England and Wales High Court (Commercial Court)

8 October 2021

[2021] EWHC 2666 (Comm)

Cited in para 21

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Sulamérica Case Sulamerica CIA Nacional De Seguros SA and others v. Enesa

Engenharia SA and others

Court of Appeal (Civil Division)

16 May 2012

[2012] EWCA Civ 638

Cited in para 20

UniCredit Bank v. UniCredit Bank GmbH v. RusChemAlliance LLC

RusChemAlliance The Supreme Court of the United Kingdom

18 September 2024

[2024] UKSC 30

Cited in para 8

Unilever Case Unilever Plc v. The Procter & Gamble Co

United Kingdom Royal Courts of Justice

28 October 1999

[2000] 1 WLR 2436

Cited in para 57

United States

American Tobacco American Tobacco Company v. State

Company v. State Florida 4th District Court of Appeals

28 February 1997

697 So.2d 1249

Cited in para 42

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Clark v. United States Clark v. United States

Supreme Court of the United States

13 March 1933

289 U.S. 1

Cited in para 42

First Options Case First Options of Chicago, Inc. v. Kaplan

The Supreme Court of the United States

22 May 1995

514 U.S. 938

Cited in para 68

In re Grand Jury UNITED STATES of America, Plaintiff–Appellee, v. UNDER

Proceedings SEAL, Defendant–Appellant.

United States Court of Appeals, Fourth Circuit

23 December 1996

102 F.3d 748

Cited in para 42

Motorola Case Motorola Solutions Inc and another v. Hytera Communications

Corp Ltd

United States Court of Appeals, Seventh Circuit

5 December 2023

108 F.4th 458

Cited in para 57

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Orthotec v. Eurosurgical Superior Court of the State of California

27 August 2004

BC276958

Cited in para 126

Target Corp. v. JJS Target Corp. v. JJS Developments LTD

Developments LTD U.S. District Court for the District of Minnesota

9 February 2019

16-cv-1184

Cited in paras 75, 77, 78

United States v. Zolin UNITED STATES, Petitioner v. Frank S. ZOLIN et al.

Supreme Court of the United States

21 June 1989

491 U.S. 554

Cited in para 42

VLM Food v. Illinois VLM Food Trading Int’l, Inc v Illinois Trading Co et al.
Trading U.S. District Court for the Northern District of Illinois

12 C 8154

Cited in para 75

Volt Information Sciences Volt Information Sciences, Inc. v. Board of Trustees of Leland
Stanford Junior University

The Supreme Court of the United States

6 March 1989

489 U.S. 468

Cited in para 68

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Zodiac Seats v. Synergy Zodiac Seats US LLC v Synergy Aerospace Corp

Aerospace
U.S. District Court for the Eastern District of Texas

8 April 2020

4:17-cv-00410

Cited in para 84

Zykronic Inc. v. Loxone Zykronic Inc. v. Loxone Electronics GmbH

Electronics GmbH District Court of Colorado

22 March 2019

2016CV34496

Cited in para 142

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INDEX OF ARBITRAL AWARDS

Ad hoc Arbitration

Glamis Gold Ltd. Case Glamis Gold Ltd. v. United States of America

8 June 2009

Cited in para 48

Glamis Gold v United Glamis Gold Ltd. v. United States of America

States of America 17 November 2005

Cited in paras 39, 56

CAM Santiago

Inter Rao UES et al. v. Inter RAO UES v. Empresa Pública Estratégica Corporación
CELEC EP Eléctrica del Ecuador CELEC EP

Arbitration and Mediation Centre of the Santiago Chamber of

Commerce

15 July 2008

Santiago Case No. 3568-18

Cited in paras 112, 127

Hungary

Case No. VB/94131 Parties Unknown

Arbitration Court attached to the Hungarian Chamber of

Commerce and Industry

5 December 1995

Vb/94131

Cited in para 102

xxvi
 MEMORANDUM FOR RESPONDENT

ICC

ICC 7153/1992 Parties Unknown

ICC Court of Arbitration - Paris

1992

7153/1992

Cited in para 107

ICC Case No. 4230 Parties Unknown

International Chamber of Commerce

2001

Cited in para 18

ICC Case No. 6276 & No. Parties Unknown

6277 International Chamber of Commerce

Spring 2003

Cited in para 20

ICC Case No. 8445 Parties Unknown

International Chamber of Commerce

1996

Cited in paras 22, 26

xxvii
 MEMORANDUM FOR RESPONDENT

ICSID

ADF v. USA ADF Group Inc v. United States, ICSID

International Centre for Settlement of Investment Disputes

4 October 2001

ARB(AF)/00/1

Cited in para 34

Bridgestone Licensing v. Bridgestone Licensing Services, Inc. and Bridgestone Americas,

Panama Inc. v. Republic of Panama

International Centre for Settlement of Investment Disputes

14 August 2020

ICSID Case No. ARB/16/34

Cited in para 80

Caratube I Caratube International Oil Company LLP v. Republic of

Kazakhstan (I)

International Centre for Settlement of Investment Disputes

5 June 2012

ARB/08/12

Cited in para 45

Caratube II Caratube International Oil Company LLP and Devincci Salah

Hourani v. Republic of Kazakhstan (II)

International Centre for Settlement of Investment Disputes

27 September 2017

ARB/13/13

Cited in para 45

xxviii
 MEMORANDUM FOR RESPONDENT

Cardno Case Cardno International et al. v. Carlos Diego Fernando Jacome

Merin et al.

International Centre for Settlement of Investment Disputes

26 October 2017

No. 01-15-0003-2132

Cited in para 49

Vattenfall AB Case Vattenfall AB and Οthers v. Federal Republic of Germany (II)

International Centre for Settlement of Investment Disputes

9 November 2021

ARB/12/12

Cited in para 48

Italy

Prada v. Caporicci Prada S.p.A. v. Caporicci USA Corp.

Camera Arbitrale Milano (CAM) (Milan Chamber of Arbitration)

30 January 2019

ARB/17/00120

Cited in paras 96, 105

Steel wire case Parties Unknown

Camera Arbitrale Milano (CAM) (Milan Chamber of Arbitration)

28 September 2001

Cited in paras 72, 84

xxix
 MEMORANDUM FOR RESPONDENT

LCIA

NWA v. NVF NVF, RWK and KLB v. NWA and FSY

London Court of International Arbitration

7 September 2020

LCIA Case No. 194292

Cited in para 20

Netherlands

Sylvania v. Iran Sylvania Tech. Sys., Inc. v. Iran

Iran-United States Claims Tribunal

27 June 1985

180-64-1

Cited in para 34

T v. A Parties Unknown

Netherlands Arbitration Institute

28 February 2007

Cited in paras 39, 56

Switzerland

Park Plus v. Sotefin SA Park Plus Inc. v. Sotefin SA

Swiss Arbitration Centre

22 September 2023

24-cv-04735-JXN-LDW

Cited in para 104

xxx
 MEMORANDUM FOR RESPONDENT

Sommer Case SWISS RE CORPORATE SOLUTIONS LTD v. MRS H

SOMMER

Employment Appeal Tribunal

12 April 2012

EA-2022-000045-BA

Cited in para 57

xxxi
 MEMORANDUM FOR RESPONDENT

INDEX OF RULES

The Constitutional Reform Constitutional Reform and Governance Act 2010, part 2
and Governance Act of the Cited in para 141
UK

Treaty-making process of Treaty-making process of Australia, chapter 2

Australia
Cited in para 141

xxxii
 MEMORANDUM FOR RESPONDENT

STATEMENT OF FACTS

The Parties to the present arbitration (hereinafter: Arbitration) are GreenHydro Plc (hereinafter:
CLAIMANT) and Equatoriana RenPower Ltd (hereinafter: RESPONDENT).

CLAIMANT, based in Mediterraneo, is a medium-sized company specialising in producing electrolysers

and connected equipment in the green hydrogen industry.

RESPONDENT, based in Equatoriana, is a fully government-owned entity which plays an important

role in the “Green Energy Strategy” to decarbonize Equatoriana’s large steel and transport industry.

3 Jan 2023 RESPONDENT invited CLAIMANT to participate in a tender for production

facilities for green hydrogen in Equatoriana [Ex. C5, p. 16, para. 6].

Early May 2023 On the basis of CLAIMANT’s local contents, CLAIMANT and RESPONDENT
entered into specific negotiations [RfA, p. 4, para. 10].

29 Jun 2023 Volta Transformer (hereinafter: VT) was offered to be sold to CLAIMANT [RfA,
p. 4, para. 11].

10 Jul 2023 The Head of CLAIMANT’s Legal Department’s sent an internal email to
CLAIMANT’s CEO, Mr. August W. Deiman (hereinafter: Mr. Deiman) and
CLAIMANT’s main negotiator, Mr. Poul Cavendish (hereinafter: Mr. Cavendish),
offering legal advice for CLAIMANT’s negotiations with RESPONDENT [Ex. R 3,
p. 32].

13 Jul 2023 RESPONDENT waived its ability to terminate the contract for convenience based
on CLAIMANT’ representations that its negotiations with P2G were promising
and would increase local content [Ex. C 5, p. 17, para. 10]. The Parties also
agreed on ongoing mutual support for the successful realization of the project
[Ibid.].

17 Jul 2023 CLAIMANT and RESPONDENT entered into the Purchase and Service Agreement
(hereinafter: PSA), committing the parties to building the plant and making it
operational [RfA, p. 5, para. 14].

1
 MEMORANDUM FOR RESPONDENT

Nov 2023 VT was formally acquired by CLAIMANT [Ex. C 8, p.36, para. 2].

29 Feb 2024 RESPONDENT gave notice of termination to CLAIMANT [Ex. C 6, p. 19].

Mr. Cavendish arranged for a personal meeting with RESPONDENT’s CEO, Mr.
Early May 2024
la Cour, but the meeting failed quickly [Ex. C 5, p. 18, para. 15].

12 May 2024 Under RESPONDENT’s allegation, the Equatorianian Police raided Mr. Deiman’s
office, confiscated all his documents, and detained Mr. Deiman for two days in
prison [Ex. C 8, p. 36, para. 5].

25 May 2024 RESPONDENT offered a without-prejudice offer to CLAIMANT and asked for a
price reduction of 15% or at least a two-digit number [Ex. C 7, p. 20].

31 July 2024 CLAIMANT’s Request for Arbitration is received by the FAI [Letter by Langweiler,
p. 21].

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 MEMORANDUM FOR RESPONDENT

SUMMARY OF ARGUMENT

ISSUE 1: The Arbitral Tribunal should reject this claim for lack of jurisdiction and because it
is inadmissible.
First, the valid multi-tiered dispute resolution agreement makes mediation a condition precedent to
both the Tribunal’s jurisdiction and admissibility of this claim. Second , there is no exception for
futility in terms of admissibility and in any event no such exception applies in the present dispute.
Third , since the Parties failed to have mediation, this claim should be rejected for lack of jurisdiction
and admissibility.

ISSUE 2: The Arbitral Tribunal should admit Ex. R 3 and order the exclusion of Ex. C 7.
First, Exhibit R3 should be admitted as evidence. Exhibit R3 is relevant to the final award by resuming
RESPONDENT’s valid right in terminating the whole agreement. It is not protected under solicitor-
client privilege and was not obtained unlawfully. Second, Exhibit C 7 should be excluded by the
Tribunal. Exhibit C 7 lacks relevance and materiality to the current dispute. It is also protected under
the Parties’ comprehensive confidentiality agreement and settlement privilege. Mauritius Convention
does not affect its confidentiality.

ISSUE 3: The PSA is outside the CISG’s scope and sphere of application.
There is no evidence of the CISG being legislated in Equatoriana, a dualistic state. Even if it were
part of the Equatorianian law, the PSA does not constitute an international sale of goods. First,
CLAIMANT has substantially invested in the facilities located in Equatoriana, including the Plant and
Volta Electrolyser, making the PSA a domestic transaction. Second , the PSA is a turnkey contract for
a hydrogen plant, with services and labour as primary obligations. Third , concluded by reverse auction,
applying domestic law to the PSA enhances legal consistency and certainty. Thus, the tribunal should
find the CISG inapplicable to the PSA.

ISSUE 4: The Parties have excluded the application of the CISG.

First, the Parties clearly intended to exclude the application of the CISG because RESPONDENT clearly
conveyed its intent to exclude the application of the CISG and CLAIMANT knew or could not have
been unaware of RESPONDENT’s intent to exclude the application of the CISG. Second , a reasonable
person would find the Parties clearly excluded the application of the CISG by the modified model
contract and choice of law clause in the PSA.

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 MEMORANDUM FOR RESPONDENT

ISSUE 1: THE ARBITRAL TRIBUNAL SHOULD REJECT THE CLAIM FOR LACK OF
JURISDICTION AND BECAUSE IT IS INADMISSIBLE

1. CLAIMANT has relied on Art. 30 of the PSA to assert that this Tribunal has jurisdiction to hear the
admissible claim even if the Parties have not engaged in mediation [Cl. Memo, p. 1, para. 1]. However,
pre-arbitral mediation is a contractual obligation agreed upon by the Parties [Ex. C 2, pp. 12-13]. After
the dispute arose, due to CLAIMANT’s belated delivery of an incomplete plan, it was CLAIMANT who
rejected RESPONDENt’s price-reduction proposal without any counteroffer and then rushed to
arbitration [Ex. C 6, p. 19, para. 3; Ex. C 5, p. 18, para. 16]. This Tribunal should reject the claim due
to CLAIMANT’s non-compliance with the pre-arbitration mediation requirement, which constitutes a
jurisdictional condition precedent [A] and a bar to the claim’s admissibility [B]

A. THE CLAIM SHOULD BE REJECTED BECAUSE MEDIATION IS A JURISDICTIONAL CONDITION

PRECEDENT TO ARBITRATION AND IT IS NOT SATISFIED.

2. The normative framework for the present dispute is as follows. The UNCITRAL Model Law governs
arbitral proceedings. This is because Danubia, the seat of the arbitration, has adopted the UNCITRAL
Model Law [Ex. C 2, p. 13; PO1, p. 51, para. 4]. The FAI Arbitration Rules also apply to the arbitration
[Letter by the Board, p. 39].

3. In addition, UNIDROIT Principles govern the multi-tiered dispute resolution clause because
Danubia’s general contract law is a verbatim adoption of the UNDROIT Principles and Equatorianian
Civil Code can be informed by principles provided by UNIDROIT Principles [PO1, p. 50, para. 4;
Brödermann, §Introuction-4].

4. Finally, the New York Convention governs the recognition and enforcement of the arbitral award of
this claim because Equatoriana, Mediterraneo, and Danubia are all member states of the New York
Convention [PO1, p. 50, para. 4; Art. III New York Convention].

5. Pursuant to Art. 16 of the Model Law and the principle of Kompetenz-Kompetenz, the Tribunal has the
power to decide whether it has jurisdiction over this claim [Art. 16 Model Law]. The arbitration
agreement in the present dispute, Art. 30 of the PSA, contains a multi-tiered dispute resolution clause
[Ex. C 2, pp. 12-13].

6. RESPONDENT agrees with CLAIMANT that the arbitration agreement is valid and putatively operative,
but RESPONDENT disagrees over the nature of the mediation requirement [Cl. Memo, pp. 1-2, paras. 3-
4]. The Tribunal should reject CLAIMANT’s claim because pre-arbitral mediation is a jurisdictional

4
 MEMORANDUM FOR RESPONDENT

condition precedent under Equatoriana’s law [I] and the Parties intended to make mediation a
jurisdictional condition precedent [II].

I. Pre-arbitral mediation is a jurisdictional condition precedent under Equatoriana’s law.

7. CLAIMANT wrongly contends that any condition precedent to arbitration is a matter of admissibility
[Cl. Memo, p. 1, para. 1]. Cases decided by courts in other jurisdictions, such as by courts in Hong Kong
as cited by CLAIMANT, do not bind this tribunal [Cl. Memo, p. 1, para. 3]. Rather, Equatoriana’s law, as
chosen by the Parties, should apply to deciding whether a pre-arbitral step in a multi-tiered dispute
resolution clause is a jurisdictional condition precedent.

8. The governing law should be ascertained by the parties’ express choice or, failing that, implied choice
[Enka v. Chubb; UniCredit Bank v. RusChemAlliance]. For a contract containing an arbitration agreement,
absent a clear statement on the governing law of arbitration agreement, the choice of law governing
the main contract should apply [Ibid.]. The PSA does not include an independent choice of law clause
for Art. 30, which is the multi-tiered dispute resolution clause [Ex. C 2, pp. 10-13]. Nevertheless, Art.
29 of the PSA serves as an implied choice of law clause for the arbitration agreement because it
provides that Equatorianian law governs the main contract [Ex. C 2, p. 12]. Therefore, to decide
whether the mediation condition constitutes a condition precedent in a multi-tiered dispute resolution
mechanism, the law of Equatoriana should apply.

9. Equatoriana courts have adopted consistent case law that if a multi-tier clause provides first for
mediation and then for arbitration under the rules of an institution, mediation is a jurisdictional
condition precedent for arbitration [Ex. R 1 p. 30, para. 9]. This jurisprudence governs the present
dispute because Art. 30 of the PSA provides that for dispute resolution, mediation should be
conducted first and finally arbitration under the rules of the Finland Arbitration Institute [Ex. C. 2,
pp. 12-13].

10. Therefore, pre-arbitral mediation is a jurisdictional condition precedent to arbitration. Since the Parties
have not engaged in mediation, the claim must be rejected for want of jurisdiction [PO2, p. 53, para.
14].

II. The Parties intended to make mediation a jurisdictional condition precedent.

11. In any event, the Parties intended to make mediation a jurisdictional condition precedent to arbitration.

12. Under Art. 4.1 of the UNIDOIRT Principles, the meaning of the arbitration agreement should be

5
 MEMORANDUM FOR RESPONDENT

interpreted pursuant to the parties’ common intention [Art. 4.1 UNIDROIT Principles]. Article 4.2(1)
and Art. 4.3 of the UNIDROIT Principles suggest that the common intention should be interpreted
as aligning with one party’s intention if the other party “knew or could not have been unaware of that
intention,” taking into account the Parties’ views as expressed during the preliminary negotiations [Art.
4.2(1), 4.3 UNIDROIT Principles; Vector v. Bay].

13. During the Parties’ pre-contractual negotiations, RESPONDENT informed Mr. Deiman, CLAIMANT’s
main negotiator, of Equatoriana’s case law that mediation is a condition precedent for the arbitral
tribunal’s jurisdiction [Ex. R 1, p. 30, para. 9]. This not only demonstrates that RESPONDENT intended
to make mediation a jurisdictional condition precedent, but also that CLAIMANT “knew or could not
have been unaware of ” RESPONDENT’s such intention [Art. 4.2(1), 4.3 UNIDROIT Principles].
Consequently, if CLAIMANT and RESPONDENT had divergent intentions on whether mediation should
be a jurisdictional condition precedent, RESPONDENT’s intention should be regarded as the Parties’
common intention under the UNIDROIT Principles [Ibid.]. Hence, the pre-arbitration mediation
requirement should be a jurisdictional condition precedent to arbitration.

14. Since CLAIMANT and RESPONDENT have not engaged in mediation, it is respectfully submitted that
the Tribunal should reject this claim [PO2, p. 53, para. 14].

B. ALTERNATIVELY, THIS CLAIM IS INADMISSIBLE.

15. Alternatively, this claim is inadmissible because the Parties agreed on a mandatory and operable multi-
tiered clause to make mediation a condition precedent to arbitration [I]. The law of international
commercial arbitration recognizes no exception for futility and in any event, no such exception applies
here [II]. Thus, the condition precedent is not satisfied [III].

I. The pre-arbitral mediation requirement is mandatory and operable to be a condition

precedent for admissibility.

16. Pursuant to the interpretative principles provided by UNIDROIT Principles, the Parties have a
common intention to make mediation a condition precedent for the claim’s admissibility [Art. 4.1, 4.2,
4.3(a) UNIDOIRT Principles].

17. First, the Parties intended to create a mandatory obligation to conduct mediation before arbitration.
This is evidenced by both the wording of the multi-tiered dispute resolution clause and the Parties’
negotiation process.

6
 MEMORANDUM FOR RESPONDENT

18. The wording of the arbitration agreement manifests the Parties’ decision to make mediation
mandatory. As stated in Art. 30 of the PSA, any disputes “shall first be submitted to mediation” [Ex.
C 2, pp. 12-13]. The word “shall,” as a word used in a mandatory sense imposing obligations, suggests
CLAIMANT’s and RESPONDENT’s intent to be bound by mediation [Black’s Law Dictionary, “shall;” ICC
Case No. 4230; Anzen v. Hermes]. Moreover, the phrase “shall first be submitted to mediation” should
be understood by pairing it with its following text that states any dispute “shall be finally settled by
arbitration” [Ex. C 2, pp. 12-13]. Such wording in the arbitration agreement demonstrates that
mediation is a process that must be first conducted. Arbitration is only a final resort if mediation is
not successful.

19. The preliminary negotiations between the Parties, as an essential indication for interpretation, supports
the contention that they intended to make mediation a necessary precondition [Art. 4.3(a) UNIDROIT
Principles; Vector v. Bay]. The Parties reached a consensus on this point because CLAIMANT proposed a
dispute resolution scheme which included mediation as a first resort and arbitration as the last. That
proposal was a response to RESPONDENT’s strong interest in mediation [Ex. R 1, p. 30, paras. 8-9].
This was later confirmed by CLAIMANT’s main negotiator through his email to RESPONDENT [Ex. R
2, p. 31]. Furthermore, CLAIMANT removed an important sentence from the FAI model mediation
clause [Ex. C 2, pp. 12-13; Ex. R 2, p. 31; Model Mediation Clause, FAI Mediation Rules]. The deleted
sentence suggests that the commencement of mediation should not prevent the commencement of
arbitration, no matter whether mediation has been terminated [Model Mediation Clause, FAI Mediation
Rules]. This deletion indicates that CLAIMANT intended to adopt a contrary approach where an ongoing
mediation would prevent the commencement of arbitration. Otherwise, CLAIMANT could have kept
this sentence in Art. 30 of the PSA [Ex. C 2, pp. 12-13; Model Mediation Clause, FAI Mediation Rules].

20. Second , mediation is an operable condition precedent because Art. 30 of the PSA is sufficiently clear
to guide the parties. For such a pre-arbitral step in a multi-tiered dispute resolution clause to be a
condition precedent, the clause should include detailed procedural guidance [ICC Case No. 6276 & No.
6277; NWA v. NVF; Sulamérica Case]. Here, Art. 30 of the PSA stipulates that the Parties shall follow
the FAI Mediation Rules to conduct mediation [Ex. C 2, pp. 12-13]. The FAI Mediation Rules prescribe
procedural details for how to conduct mediation, such as how to commence mediation, how the
mediator is appointed, and how to keep a timetable for mediation [Art. 2, 5, 8.3 FAI Mediation Rules].

21. Therefore, the multi-tiered dispute resolution clause agreed to by the Parties is operable and makes
mediation a condition precedent to the admissibility of this claim.

7
 MEMORANDUM FOR RESPONDENT

II. There is no exception to mandatory arbitration as contended CLAIMANT and, in any

event, mediation would not be futile.

22. CLAIMANT wrongly relies on ICC Case No. 8445 and investment arbitration cases to allege that there
exists a futility exception to admissibility, permitting deviation from the Parties’ contractual obligation
to mediate [Cl. Memo. pp. 2-3, paras. 10-11]. Those cases do not bind the tribunal. Furthermore,
mediation is not futile as alleged by CLAIMANT [Cl. Memo, p. 2, para. 9]. Rather, it is a promising way
to solve the Parties’ dispute.

23. First, mediation is not prevented by the so-called “hostile context” and “bad faith” alleged by
CLAIMANT [Cl. Memo, p. 4, para. 15; Cl. Memo, p. 6, para. 21]. CLAIMANT contended a “hostile context”
exists without any legal basis [Cl. Memo, pp. 3-4, para. 14-15]. Equatoriana’s change of government is
not insurmountable as contended by CLAIMANT [Cl. Memo, p. 4, para. 15]. Mediation is still possible
because a price reduction would likely lead to government support [Ex. C 5, p. 18, para. 15].

24. Furthermore, CLAIMANT wrongly alleges that RESPONDENT acted with blatant bad faith through its
termination of contract and its request for a reduction in price [Cl. Memo, pp. 4-5, paras. 16-17; Art. 1.7
UNIDROIT Principles].

25. RESPONDENT complied with the good faith standard under Art. 1.7 of the UNIDROIT Principles
because what RESPONDENT did is what a reasonable business entity would do in the same position
and did not reach the “abuse of rights” standard [Brödermann, §1-Art. 1.7-4; Vogenauer, p. 212, 221;
Official Comment of UNIDROIT Principles, p. 19]. RESPONDENT was entitled to terminate the contract
after CLAIMANT breached its contractual obligation and missed a deadline to submit a complete plan
[Ex. C 6, p. 19, para. 3]. It was entirely legitimate and reasonable for RESPONDENT to ask for a price
reduction, either as a cure for CLAIMANT’s breach or to modify the contract price due to CLAIMANT’s
low-quality delivery [Ibid.]. If CLAIMANT disagreed with RESPONDENt’s proposed price reduction,
CLAIMANT could have provided RESPONDENT with what was acceptable for it and engaged in further
negotiations or mediation with RESPONDENT [Ex. C 5, p. 18, para. 16]. Instead, CLAIMANT rushed to
arbitration, breaching its contractual obligation a subsequent time by bypassing mediation.

26. Second , there is broad room for mediation to succeed. CLAIMANT relied on an ICC Case to allege
that parties are not obliged to engage in fruitless negotiations [Cl. Memo, pp. 2-3, para. 10; ICC Case No.
8445] However, mediation is distinct from negotiation because a potential mediation in the present
dispute would be facilitated by a neutral, experienced mediator provided by the Finland Arbitration

8
 MEMORANDUM FOR RESPONDENT

Institute [ICC Case No. 8445; Preamble of FAI Mediation Rules]. The facilitation will enable the Parties
to find opportunities for collaboration beyond the bare text of the PSA.

27. In mediation, Parties can modify their contract. RESPONDENT understands that CLAIMANT has a
strong interest in Equatoriana’s market [Ex. C 5, p. 16, para. 5]. RESPONDENT is willing to collaborate
with CLAIMANT in other ways, such as buying CLAIMANT’s electrolysers and services, as RESPONDENT
cannot guarantee the government’s authorization to continue the PSA [Ex. C 5, p. 18, para. 15].
However, this collaboration cannot be achieved by arbitration. According to Danubia’s arbitration law,
the arbitral tribunal can neither modify the contract, nor decide matters beyond the scope of the PSA
and the Parties’ submissions [Art. 34(2)(a)(iii) Model Law].

28. Third , mediation improves the efficiency of dispute resolution. CLAIMANT itself has an interest in
speedy resolution as it intended to make the reference project operational from the beginning of 2026
[PO2, p. 54, para. 22]. However, the median duration of arbitration administered by FAI is around 9
months [FAI Annual Reports from 2017-2023]. On-site construction will last at least 17 months pursuant
to Art. 3 of the PSA [Ex. C 2, p. 11]. This means that, even if the construction started immediately,
i.e., as soon as the arbitration award was issued, it would take until the end of November 2026 to finish
it (Figure 1) [Ibid.]. In contrast, FAI-administered mediation sessions are usually completed in 1-2 days,
which is much more efficient [FAI Website]. Even if mediation cannot resolve all disputes between the
Parties, it would likely streamline the process, leaving more complex, controversial issues for the
Tribunal to address [Buhring-Uhle/Kirchhoff/Scherer, p. 251; Mcilwrath/Savage, §4-013]. This would save
time and help CLAIMANT adhere to its schedule while it benefits RESPONDENT with higher efficiency.

Figure 1 Timeline of Expected Project Progress

9
 MEMORANDUM FOR RESPONDENT

III. Non-compliance with the mediation requirement renders the claim inadmissible.

29. As mediation was not attempted, let alone completed, the condition precedent was not satisfied.

30. The Parties’ arbitration agreement provides that any dispute “shall first be submitted to mediation in
accordance with the Mediation Rules of the Finland Chamber of Commerce” [Ex. C 2, p. 12]. The
mandatory terms require formal mediation administered by the Finland Arbitration Institute [Ibid.;
Preamble of FAI Mediation Rules]. According to Art. 2.1 of the FAI Mediation Rules, a Request for
Mediation to the FAI is required to commence mediation [Art. 2.1 FAI Mediation Rules]. However,
neither CLAIMANT nor RESPONDENT has filed a request for mediation to the Finland Arbitration
Institute [PO2, p. 53, para. 14]. Irrespective of the scope of institution-administered mediation, the
Parties did not engage in any mediation moderated by a neutral third party [PO2, p. 53, para. 14;
Alexander, p. 25; Berger I, §6-16].

31. To proceed with arbitration, the Parties must satisfy the mediation requirement and the current non-
compliance with such requirement makes the claim inadmissible to the Tribunal.

Conclusion for Issue 1: Pre-arbitral mediation is a valid and mandatory condition precedent to both
the Tribunal’s jurisdiction and admissibility of this claim under the governing law and party autonomy.
The mediation requirement should be complied with because it is mandatory and operable, and
mediation is promising. Since the Parties have not conducted mediation, this claim should be rejected.

ISSUE 2: THE ARBITRAL TRIBUNAL SHOULD ADMIT EX. R 3 AND ORDER THE
EXCLUSION OF EX. C 7

32. RESPONDENT accepts CLAIMANT’s characterization of the relevant legal issues governing the
admission of evidence, including key factors such as relevance, admissibility, and privilege, and the
application of the IBA rules [Art 9 IBA Rules; Art. 19 Model Law, Art. 34.1 Arbitration Rules]. However,
relying on these principles, RESPONDENT disagrees with CLAIMANT as to the admissibility of Exhibit
C 7 and the exclusion of Exhibit R 3 [Cl. Memo, p. 20, para. 87]. To the contrary, RESPONDENT
respectfully requests the Tribunal to admit Exhibit R 3 [A] and exclude Exhibit C 7 [B].

A. THE ARBITRAL TRIBUNAL SHOULD ADMIT EX. R 3.

33. CLAIMANT’s objection to Exhibit R 3 is without merit. Far from demonstrating CLAIMANT’s diligent
efforts to ensure compliance with local content requirements [Cl. Memo, p. 9, para. 40], Exhibit R 3
demonstrates CLAIMANT’s calculated strategy of attempting to avoid a potential legal problem – the

10
 MEMORANDUM FOR RESPONDENT

fact that it could not meet the local content situation – without engaging in fraud [Ex. R 3, p. 32].
Exhibit R 3 should be admitted because of its relevance and materiality to the final award [I].
Moreover, Exhibit R 3 is not protected by solicitor-client privilege [II]. Finally, no evidence
demonstrates that Exhibit R 3 was illegally obtained [III].

I. Ex. R 3 should be admitted since it substantiates RESPONDENT’s claim in applying the

theory of unilateral mistake or fraud.

34. Under Art. 9 IBA Rules, only relevant and material evidence should be considered by the Tribunal
[ADF v. USA; Bühler & Dorgan, pp. 3, 17; Sutton et al., para. 5.136; Zuberbühler et al., Art. 9, para. 36;
Hunter, p. 352; Böckstiegel, p. 8; O’Malley, p. 46; Sylvania v. Iran]. Exhibit R 3 is relevant and material to
the current dispute. It demonstrates that RESPONDENT was improperly induced to give up its right of
termination for convenience.

35. Equatoriana Curial law, which governs the DRA, incorporates a verbatim adoption of the
UNIDROIT Principles [PO1, p. 50, para. 4]. Under the UNIDROIT Principles, Article 3.2.2 allows a
party to avoid a contract if, at the time of conclusion, a mistake made by a party was of such
significance that a reasonable person in the same situation would not have entered into the contract
had they known the true state of affairs.

36. If RESPONDENT had long known the true state of affairs revealed by Exhibit R 3, it would not have
waived termination for convenience. RESPONDENT waived that right only after CLAIMANT purported
to have committed to providing significant local content [RfA, p. 7, para. 29]. CLAIMANT stated that its
negotiation with a potential subcontractor was “promising” [Exhibit R 2, p 31], yet as evidenced by
Exhibit R 3, CLAIMANT had long realised that its negotiation with that subcontractor was never
promising [Exhibit R 3, p. 32]. Therefore, the very promising opportunity for the inclusion of
significant local content, which served as consideration for RESPONDENT’s waiver, never existed.
Applying Article 3.2.2, RESPONDENT could still terminate for convenience.

37. The final award hinges on whether RESPONDENT could validly terminate the contract [RfA, p. 6, para.
34]. For that reason, Exhibit R 3 is probative and should be admitted.

11
 MEMORANDUM FOR RESPONDENT

II. Ex. R 3 is not protected by solicitor-client privilege.

a. Under the law of Danubia, there is no solicitor-client privilege.

38. CLAIMANT’s critical oversight is its overwhelming focus on the benefits of solicitor-client privilege [Cl.
Memo, pp. 12-14, paras. 55-65]. However, solicitor-client cannot be invoked here. While Equatoriana
provides robust protection for solicitor-client privilege, no such privilege exists in Danubia and
Mediterraneo [Ex. R 4, p. 33; PO2, p. 55, para. 29]. The crux of the matter then lies in determining
whether there should be a choice of law that favours the application of solicitor-client privilege.

39. The UNCITRAL Model Law governs the arbitral proceedings. However, no rule for privilege exists
under the UNCITRAL Model Law. Both parties have accepted that the IBA Rules are to be applied
to supplement rules for privilege [Cl. Memo, p. 10, para. 45]. Article 9.4 (c) of IBA Rules suggests that
the tribunal should consider the Parties’ expectations at the time the privilege is said to have arisen
[Khodykin et al., §12.199; Ashford, §2-17; Berger II, p. 172; Berger III, p. 518; T v. A; Glamis Gold v United
States of America]. Article 9.4(e), also cited and relied by CLAIMANT, recommends supplementing the
rules by considering fairness between the Parties [Cl. Memo, p. 13, para. 58].

40. For expectations , CLAIMANT never expected, nor could it reasonably have expected, Exhibit R 3 to
be protected under the laws of Equatoriana. First, CLAIMANT challenges the inclusion of Exhibit R
3 in this tribunal [Letter by Langweiler Objecting to Admittance of Document, p. 34]. Only in the context of
a transnational tribunal could Equatoriana’s rule of privilege possibly be applied. Second , parties’
expectations are always shaped by the rules on privilege that apply in their home jurisdiction
[Commentary on the Revised Text, p. 28]. It is CLAIMANT who claims solicitor-client privilege [Cl. Memo,
pp. 12-14, paras. 55-65]. But Mediterraneo, where CLAIMANT is based, does not have any such privilege
for CLAIMANT to rely on [Ex. R 4, p. 33]. Third, the jurisdiction having “the closest connection” with
a document should inform the reasonable expectation of the Parties [IBA Task Force Report Annex 2,
p. 8-9; The RBS Rights Issue Litigation]. Exhibit R 3 is produced within a business entity in Mediterraneo,
by a legal counsel admitted to the bar in Mediterraneo and was delivered to managers in Mediterraneo
for reference [Exhibit R3, p. 32]. Mediterraneo is the jurisdiction having the closest connection with
Exhibit R 3.

41. For fairness, during prior negotiations, RESPONDENT accepted CLAIMANT’s proposal to select
Danubia, instead of Equatoriana, as a third country for arbitration in ensuring neutrality [Ex. R 1, p.

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 MEMORANDUM FOR RESPONDENT

30, para. 8]. The standards of Mediterraneo and Danubia, instead of Equatoriana, should thus be
applied. Yet there is no solicitor-client privilege in Mediterraneo and Danubia [Ex. R 4, p. 33].

b. Alternatively, Ex. R 3 could not enjoy solicitor-client privilege under Equatoriana Law.

42. A well-established exception to solicitor-client privilege exists when legal counsel is sought for the
purpose of facilitating a criminal act or perpetrating fraud [American Tobacco Company v. State; Clark v.
United States; In re Grand Jury Proceedings; United States v. Zolin]. The disclosure of Exhibit R 3 provides
evidence of fraudulent conduct from CLAIMANT.

43. Ms. Smith’s assertion that CLAIMANT could avoid allegations of misrepresentation was likely made
with the expectation that Exhibit R 3 would remain undisclosed [Exhibit R 3, p. 32]. CLAIMANT’s
concealment of its unfavourable negotiations with P2G approaches the threshold of “fraud” as
defined in the UNIDROIT Principles. According to Art. 3.2.5, fraud can be established through the
“non-disclosure of circumstances which, according to reasonable commercial standards of fair dealing,
the latter party should have disclosed.” CLAIMANT’s actions in this matter appear to contravene these
standards of fair dealing and the whole contract could thereby be avoided.

44. Therefore, even if the rules governing privilege from Equatoriana are applied, CLAIMANT’s fraudulent
behaviour removed Exhibit R 3 from any of its protection.

III. Ex. R 3 should not be excluded since there is no affirmative evidence proving it was
illegally obtained.

a. CLAIMANT fails to prove that Exhibit R 3 was obtained through illicit measures.

45. Evidence that is illegally obtained may be inadmissible [Art. 9.3 IBA Rules; Amos Adamu Case; Caratube
I; Caratube II; FC Metalist Case]. CLAIMANT asserts that Exhibit R 3 was illegally obtained and should
thus be excluded [Cl. Memo, p. 14, para 62-64].

46. Under the principle “actori incumbit probatio,” it is widely accepted that the burden of proof falls upon
the party affirmatively making an allegation or assertion, rather than the party merely denying a factual
claim [Bilcon v. Canada (Procedural Order No. 13), para. 25; Stocker et al., p. 61; Blavi & Vial, p. 27]. The
burden of proof lies on CLAIMANT to prove illegality [Pearson-Wenger, p. 138; Bénabent, p. 256, para. 301;
Stocker et al., pp. 61-62].

47. CLAIMANT has failed to discharge its burden of proof. It instead relies on unverified facts to speculate
that the document was acquired illicitly [Exhibit C 8, p. 36, para. 7]. The claim is manifestly self-serving

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 MEMORANDUM FOR RESPONDENT

and is unpersuasive. The day before the meeting with RESPONDENT, it was discovered that the former
legal counsel for CLAIMANT, Mr. Law, had leaked important information to one of CLAIMANT’s
competitors [PO2, p. 53, para. 11]. It is highly possible that Exhibit R 3 was leaked by a disgruntled
former employee rather than obtained by RESPONDENT through illicit means.

48. In any event, should CLAIMANT wish to identify the source of Exhibit R 3, it should complete a
Redfern schedule to apply for disclosure, instead of basing its assertions on mere speculations [Chevron
Corporation Case; Glamis Gold Ltd. Case; Philip Morris Asia Limited Case; Vattenfall AB Case; Yukos Universal
Limited Case]. Lacking sufficient proof, the Tribunal should not draw the conclusion that Exhibit R 3
was illegally obtained.

b. The Tribunal is not bound by any rules to exclude evidence accused of illegality.

49. In the alternative, even if the evidence was obtained illegally, the Tribunal is not required to exclude
Exhibit R 3. Under IBA Rules, Article 9.3, the Tribunal “may exclude” instead of “must exclude”
illegally obtained evidence [Commentary on the Revised Text, p. 30; Gupta, p. 69; Guillermo]. Evidence that
is of substantial probative value, including because it serves the public interest, will generally be
admitted [Lima, p 83; Cardno Case; Corfu Channel Case; Dalmine Case].

50. Exhibit R 3 is material to the case. The admission of Exhibit R 3 would potentially save Equatoriana
millions in budgetary allocations. By halting an unreliable project, the government demonstrated
prudent stewardship over public funds, effectively preserving both the taxpayers’ hard-earned money
and their collective efforts. Therefore, even if there is illegality involved, the benefits of admitting
Exhibit R 3 outweigh any potential prejudice.

B. CONVERSELY, THE ARBITRAL TRIBUNAL SHOULD EXCLUDE EXHIBIT C 7.

51. Exhibit C 7 is the without-prejudice offer from RESPONDENT to CLAIMANT attempting to renegotiate
the price [Ex. C 7, p. 20]. CLAIMANT’s assertion that RESPONDENT exploited CLAIMANT’s financial
difficulties is baseless [Cl. Memo, p. 16, para. 73]. Instead, RESPONDENT addressed CLAIMANT’s desire
to proceed with the contract after CLAIMANT’s breach by trying to reach an amicable settlement [Cl.
Memo, p. 15-18].

52. Exhibit C 7 should be excluded because: first, Exhibit C 7 is irrelevant and immaterial to the arbitration
[I]; second, a without-prejudice offer is protected under settlement privilege [II]; third, the full-
fledged confidentiality agreement between the Parties prevents it from disclosure [III]; and finally,
the Mauritius Convention does not require Exhibit C 7 to be disclosed [IV].

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 MEMORANDUM FOR RESPONDENT

I. Exhibit C 7 is irrelevant and immaterial to the claim.

53. Exhibit C 7 could not affect the Tribunal’s deliberations on any of the current issues. For the
jurisdictional issue , Exhibit C 7 lacks relevance to the arbitration agreement, offering no basis to
determine the question of jurisdiction. For the application of the CISG, Exhibit C 7 bears no
connection to the CISG and provides no insights into whether it applies. For the final award , the
document does not address whether the CLAIMANT’s belated delivery constitutes a fundamental
breach. The document fails to substantiate any key legal points necessary for resolving the dispute.

54. Instead, admitting Exhibit C 7 would be an inefficient use of the Tribunal’s resources, wasting the
Parties’ time and money, serious concerns in arbitral proceedings [ICC Bulletin, p. 43, para. 68].

II. Exhibit C 7 can and should be protected by settlement privilege.

55. Exhibit C 7, labelled as a “without-prejudice” offer, can and should be protected under settlement
privilege. In determining the existence of privilege, the Tribunal should consider the Parties’
expectations [a]. Settlement privilege should be applied since RESPONDENT entered into a genuine
attempt to settle the dispute [b]. Contrary to CLAIMANT’s assertion, there was no “unambiguous
impropriety” exerted by RESPONDENT [c].

a. Settlement privilege can be applied to Exhibit C 7.

56. The Tribunal should take the Parties’ reasonable expectations into consideration [Khodykin et al.,
§12.199; Ashford, §2-17; Berger II, p. 172; Berger III, p. 518; Glamis Gold v United States of America; T v. A].
The Parties’ expectations should be revealed when both Parties have consented to applying IBA rules
[Cl. Memo, p. 10, para. 45]. IBA rules have provided provisions for settlement privilege under Art. 9.2
(b). RESPONDENT has also titled Exhibit C 7 as “without-prejudice”, which could show that an
expectation has already existed when the document was produced by RESPONDENT and received by
CLAIMANT.

b. Settlement privilege should be applied to Exhibit C 7.

57. Where an offer is titled “without-prejudice,” the default rule is that it shall not be included in arbitral
proceedings [FW Aviation Case, Sommer Case; Berkeley Square Case]. CLAIMANT asserted that settlement
privilege can only be applied when the party has a genuine attempt to settle the dispute [Cl. Memo, p.
17, para. 74; Bradford Case; Unilever Case; Motorola Case]. Even under the standard proposed by

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 MEMORANDUM FOR RESPONDENT

CLAIMANT, Exhibit C 7 should enjoy settlement privilege as there was a genuine attempt to reach an
agreement.

58. First, RESPONDENT was exercising its inherent right as a buyer to renegotiate the price when the
performance of the contract was delayed. CLAIMANT breached the contract by delaying its delivery of
a very important module plan for 28 days [RfA, p. 5, para. 19]. The belated delivery took place after
RESPONDENT repeatedly emphasised strict compliance with timeliness [AfRA, p. 26, para. 9].

59. Second, CLAIMANT gains much more than 15% if the project proceeds. While CLAIMANT has
emphasised its reluctance to bear the project costs by citing its current deficit [Cl. Memo, p. 17, para.
71-75], it intentionally omits the substantial potential profits this project could generate. CLAIMANT
has previously projected a surge in hydrogen demand by 2026 [RfA, p. 4, para. 9]. Moreover, if
successfully executed, this project could serve as a valuable reference, given its design to position
Equatoriana as a leader in green energy production [Exhibit C 3, p. 14]. The benefits accrued from this
project would likely far exceed 15%. In essence, RESPONDENT is offering CLAIMANT an opportunity
for substantial gains rather than exploiting CLAIMANT’s financial difficulties [Cl. Memo, p. 16, para. 73].

60. Third , settling the dispute would save CLAIMANT considerable time that would otherwise be
consumed by arbitration proceedings. The Tribunal has estimated that the arbitration process could
extend up to nine months [Letters by FAI Concerning the Appointment of Presiding Arbitrator, p. 46]. Even
if CLAIMANT were to prevail in the arbitration and promptly resume construction, the project would
not be completed until November 2026 [Exhibit C 1, p 8, schedule; Figure 1, supra p. 9]. This delay could
cause CLAIMANT to miss the anticipated surge in the hydrogen market at the beginning of 2026,
potentially resulting in lost opportunities and market influence far exceeding the proposed 15%
reduction. By agreeing to settle, RESPONDENT is exhibiting a good faith effort to resolve the dispute
efficiently and allow both parties to move forward with the project in a timely manner.

61. As RESPONDENT exhibited a genuine attempt to settle the dispute, the settlement privilege can and
should be applied to Ex C 7.

c. There is no “unambiguous impropriety” exerted by RESPONDENT.

62. With respect to the “unambiguous impropriety” asserted by CLAIMANT [Cl. Memo, p. 15, para. 70], in
Motorola Solutions Inc and another v Hytera Communications Corp Ltd, the Court confirmed that the
applicably of the “unambiguous impropriety” exception to settlement privilege was not whether there
was a “good arguable case” of impropriety, but whether the evidence shows nothing less than

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impropriety and it truly unambiguous. The requirement for unambiguous proof is a high threshold.
The principle applies only in the clearest of cases of abuse of settlement privilege.

63. RESPONDENT has the right to resume its termination for convenience. RESPONDENT also genuinely
sought to settle the dispute, neither exploiting CLAIMANT’s financial difficulties nor abusing “without
prejudice negotiations.” Given that CLAIMANT’s allegations lack an evidentiary foundation, this is not
the clearest of cases of abuse of settlement privilege.

III. The Parties have a full-fledged confidentiality agreement covering the whole dispute
resolution process.

64. What CLAIMANT failed to mention is the existence of a full-fledged confidentiality agreement between
the Parties. That agreement requires the exclusion of Exhibit C 7.

65. The UNIDROIT Principles govern Article 30 [PO1-III, p. 50, para. 4]. Under Article 4.2(1) of the
PICC, the intention of the parties is to be ascertained based on one party’s knowledge of the other
party’s true intent. By informing CLAIMANT that “given the political climate and the existing
opposition to the new energy strategy, we wanted to keep any potential dispute within the project out
of the press,” RESPONDENT communicated to CLAIMANT its intention for a full-fledged
confidentiality agreement [Ex. R 1, p. 30, para. 10]. A without-prejudice offer was made to settle
disputes, thereby within the range of the required confidentiality.

66. By addressing “Article 15 of the Mediation Rules and Article 51 and 52 of the Arbitration Rules…be
sufficient to address your concerns as they ensure the needed confidentiality,” CLAIMANT’s response
indicates its awareness of RESPONDENT’s true intention [Ex. R 2, p. 31]. Therefore, Article 15 of the
Mediation Rules and Article 51 and 52 of the Arbitration Rules shall thus be interpreted in light of
the Parties’ intent as covering the whole dispute resolution process. By incorporating FAI Mediation
Rules and FAI Arbitration Rules in Article 30, PSA, there is a full-fledged confidentiality agreement
between the Parties [Ex. C 2, p. 12, Art. 30].

IV. Exhibit C 7 enjoys settlement privilege despite the Mauritius Convention.

67. CLAIMANT emphasised the potential broader application of the Mauritius Convention, supporting its
argument by relying on RESPONDENT’s purported advocacy for transparency [Cl. Memo, p. 18-20; paras.
78-87]. However, the Mauritius Convention has no relevance to this case. Article 1(9) limits its
application to treaty-based investor-State arbitrations.

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 MEMORANDUM FOR RESPONDENT

68. Party autonomy requires manifestations of intent from both parties [First Options Case; Jivraj v Hashwani;
PASL Wind Case; Volt Information Sciences]. Taking CLAIMANT’s claim at its highest, the application of
the Mauritius Convention to commercial arbitration would still require consent from both Parties. Yet
such consent is absent in casu, and therefore, there is no room for Mauritius Convention to be applied.

Conclusion for Issue 2: Exhibit R 3 should be admitted as evidence. It is relevant to the final award
by supporting the theory of mistake, is not protected under the solicitor-client privilege, and was not
obtained unlawfully. Conversely, Exhibit C 7 should be excluded. It lacks relevance and materiality to
the current dispute and is protected under the Parties’ comprehensive confidentiality agreement and
the settlement privilege. Mauritius Convention does not affect the confidentiality of Exhibit C 7.

ISSUE 3: THE PSA IS OUTSIDE THE CISG’S SCOPE AND SPHERE OF APPLICATION

69. CLAIMANT attempts to compel RESPONDENT to comply with an international treaty, i.e., the CISG,
even though the Convention is not applicable to the Parties [Cl. Memo, p. 20, para. 88]. The governing
law of the PSA is the law of a dualistic state, Equatoriana, where treaties must be legislated, so that
they can form part of its legal system [PO. 2, p. 55, para. 34; Ex. C 2, p. 12, para. 29; Brownlie, p. 45].

70. However, there is nothing in the facts to prove that Equatoriana has such legislation, thus the CISG
has not been part of Equatorianian national law yet. This alone should be sufficient to prevent the
application of the CISG.

71. Alternatively, RESPONDENT respectfully requests the Tribunal to find that the PSA falls outside the
CISG’s sphere and scope of application. First, the PSA is not an international agreement as both
parties’ places of business are Equatoriana[A]. Second , the preponderant part of the PSA is not the
sale of goods, but of planning and engineering work [B]. Third , the PSA was concluded as part of a
reverse auction which should be excluded by the CISG [C].

A. THE PSA IS NOT AN INTERNATIONAL AGREEMENT DEFINED BY ART. 1(1) OF THE CISG.

72. An international sale of goods contract requires diversity of place of business, according to Art. 1(1)
of the CISG. When a party has more than one place of business, pursuant to Art. 10(a) of the CISG,
the place of business for the specific transaction shall be where “has the closest relationship to the
contract and its performance” [Schlechtriem/Schwenzer, p. 230, para. 5; Steel wire case, p. 10, para. 3.5]. Here,
Equatoriana is CLAIMANT’s place of business [I], and Equatoriana is the place most closely associated
to the PSA and its performance [II].

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 MEMORANDUM FOR RESPONDENT

I. Equatoriana is a place of business for CLAIMANT.

73. RESPONDENT respectfully submits that CLAIMANT provides no legal source to support its “majority
interpretation” of the “place of business” test under the CISG [Cl. Memo, p. 22, para. 100].

74. CLAIMANT confuses the standard for establishing a “place of business” under the CISG [Cl. Memo, p.
22, para. 101] with the standard under the law of business association. It draws an analogy between
Equatoriana and Ruritania, attempting to conclude that the place of business is not where “a business
activity is de facto carried out,” otherwise CLAIMANT could readily set such a place in all countries where
it operates [Cl. Memo, p. 22, para. 101]. It also argues that, because Equatoriana has no local entity to
realize a large magnitude of green hydrogen infrastructure, CLAIMANT has no place of business there.

75. However, in the spirit of the CISG, a party can have multiple places of business so long as each is a
stable business extension [Art. 10, CISG]. It is not unreasonable for an international company, such
as CLAIMANT, to enter into domestic contracts with a counterparty from the same state [VLM Food v.
Illinois Trading; Target Corp. v. JJS Developments LTD].

76. RESPONDENT submits that there is a clear legal test established in both the case law and academic
commentary that defines the “place of business” as where the company has a business extension with
a degree of duration, stability, and independence [Kröll/Mistelis/Perales Viscasillas, p. 184, para. 13;
Schlechtriem/Schwenzer, p. 219, para. 3; Clothing and suits case]. This is incorrect. The place of business is
not simply where business activities take place. It is also not limited to where the company is
incorporated [Sandwich panels case; Royal feinsprit case; Cl. Memo, p. 22, para. 101].

77. Instead, when a foreign party establishes a facility for the contract performance in the same country
as the other party and carries out operations such as transportation, inspection, repair, repackaging,
disassembly, and recycling over that facility, that location can be considered as the place of business
which is also most connected to the contract’s performance [Target Corp. v. JJS Developments LTD].

78. CLAIMANT is in the same situation as the winning bidder in the Target Corp case. There, the seller
issued a request for quotes for the sale of certain assets for recycling or disposition. The buyer
responded to the call and was awarded the contract. In its tender offer, the seller advised potential
bidders that there existed the potential for “substantial volume growth” in the number of assets to be
recycled. The buyer thought that partnering with the seller was a major opportunity. To accommodate
the seller’s increased product volume, the buyer opened a facility in the same state as the seller and
invested in substantial infrastructure for transport, inspection, repair, and repacking, disassembly, and

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recycling, rerouting and disposal of electronic products. Eventually, relying on these factors, the court
in that case found the buyer’s place of business was the facility located in the same state as the seller
[Target Corp. v. JJS Developments LTD].

79. The Plant in Equatoriana is such a facility, permitting CLAIMANT to maintain an ongoing partnership
with RESPONDENT. CLAIMANT substantially invested in an Equatorianian producer in order to
construct the Plant and facilitate future business selling PEM-electrolysers [PO. 2, p. 52, para. 6]. Most
of the contractual obligations are to be performed in Equatoriana, including the electrolyser’s assembly,
inspection, and maintenance [Ex. C 2, p. 11].

80. Applying the test from Target Corp, first, CLAIMANT has licensed its intellectual property rights to
Volta Electrolyser, an Equatorianian enterprise, to produce PEM-electrolysers for the Plant [RfA, p. 4,
para. 11]. CLAIMANT can fulfil the local-content requirement imposed by Request for Quotation by
buying back Volta Electrolyser’s products [Ex. C 5, p. 17, para. 11]. Intellectual property becomes an
investment once it is exploited in production [Bridgestone Licensing v. Panama]. CLAIMANT invested in
Volta Electrolyser for a continuing period, allowing it to produce electrolysers under CLAIMANT’s IP
not only for the Plant, but for third parties [PO. 2, p. 52, para. 6]. Therefore, a stable business relation
between CLAIMANT and Equatoriana can be established.

81. Second , Volta Transformer, the parent company of Volta Electrolyser also located in Equatoriana,
provides an already existing transformer capable of meeting CLAIMANT’s needs [RfA, p. 3, para. 8].
Without it, CLAIMANT would be less likely to deliver the turnkey project in the tight two-and-half-year
timeline [Ex. C 3, p.14, para. 3]. The transformer costs another EUR 40 million, separate from Volta
Electrolyser’s products. The assembly of electrolysers and transformers as well as other equipment
will happen in the Plant built in Equatoriana according to the agreed milestones [Ex. C 2, p. 10].

82. CLAIMANT’s business extension in Equatoriana is based on its plant-related business. This relation can
be enhanced by CLAIMANT’s close, long-term business cooperation with Volta Transformer and Volta
Electrolyser [RfA, p. 3, para. 8; Cl. Memo, p. 23, para. 104]. Even though Volta Transformer was a
separate legal personality from CLAIMANT when the PSA was concluded, Equatoriana still has become
CLAIMANT’s principal place of business because it displays the requisite degree of duration, stability,
and independence [Schlechtriem/Schwenzer, p. 219, para. 3]. Besides, as cases and scholars have
acknowledged, legal entities that are not part of a group of companies can be a place of business of
a company, because commercial reality matters [Kröll/Mistelis/Perales Viscasillas, p. 186, para. 21].

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 MEMORANDUM FOR RESPONDENT

83. Therefore, because the delivery of most electrolysers, the transformer, and services is in the Plant in
Equatoriana, which constitutes a stable, autonomous business extension of CLAIMANT, the Tribunal
shall conclude that Equatoriana is a place of business of CLAIMANT.

II. Equatoriana is the place most closely related to the PSA and its performance.

84. As CLAIMANT has more than one place of business, the CISG selects the one for the present
transaction “which has the closest relationship to the contract and its performance” [Steel wire case, p.
10, para. 3.5; CISG Art. 10(a)]. That is where the company can be best positioned to fulfil the specific
contractual obligations, thus much emphasis shall be given to where the PSA was concluded and will
be performed [Kröll/Mistelis/Perales Viscasillas, p. 181; Zodiac Seats v. Synergy Aerospace]. The evaluation
considers both the Parties’ reasonable subjective expectations, as well as the objective circumstances
regarding the PSA [Schlechtriem/Schwenzer, p. 219, para. 3].

85. Subjectively, the PSA is a contract for constructing an energy plant on a site in Equatoriana, using a
minimum of 25% local content [Ex. C 2, p. 10; Ex. C 5, p. 16, para. 6; Ex. R 3, p. 32]. The contract is
to be performed in Equatoriana with a significant percentage of Equatorianian-sourced products [Ex.
C 5, para. 10]. The items sourced from Volta Transformer, including the 400 MW transformer, 40%
electrolysers stacks, related electronic equipment as well as service of packing, form “the basis for
the guaranteed part of local content in [the PSA]” [Ex. C 4, p. 15, para. 2]. CLAIMANT attempted to
satisfy RESPONDENT’s requirements in order to increase the chance it would be awarded the contract
through the bidding process by emphasising the crucial material and service providers from
Equatoriana, reflecting that the Parties expect the PSA to be performed in the bidder’s place of
business in Equatoriana.

86. Objectively, the PSA was concluded in Equatoriana, as noted by the text of the PSA, where the
signature lines appear below the designation: “Equatoriana, 17 July 2023” [Ex. C 2, p. 13]. The Parties
have agreed that Equatoriana is the primary location of contract performance also because all goods
and services will exercise their intended value when the Plant there is completely assembled [Ex. C 2,
p. 10].

87. CLAIMANT incorrectly alleges that international arbitration only deals with international contracts [Cl.
Memo, p. 23, paras. 105-107]. That is manifestly incorrect. Article 1(3)(b)(i) of the UNCITRAL Model
Law provides that, even though the parties have their places of business in the same state, as long as

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 MEMORANDUM FOR RESPONDENT

the seat is outside the state, the arbitration is international. The seat of arbitration is irrelevant to the
domestic nature of the PSA.

88. As the PSA was executed in Equatoriana and CLAIMANT shall perform its obligation in Equatoriana,
Equatoriana should be deemed CLAIMANT’s place of business with the closest connection to the PSA
at hand and its performance.

B. THE PREPONDERANT PART OF THE PSA IS NOT SALE OF GOODS PURSUANT TO ART 3(2) OF
THE CISG.

89. Contrary to CLAIMANT’s submissions, the preponderant part of the PSA is not the sale of goods, but
the requisite planning and engineering work [Cl. Memo, p. 30, para. 141]. The nature of the PSA makes
the CISG inapplicable. First, the PSA is a turnkey contract containing reciprocal obligations instead
of a sales contract [I]. Second , the “economic value test” is not the correct test, particularly as the
ultimate price of the PSA is unknown and uncertain by adding two options [II]. Third , the Tribunal
should instead examine the essential nature of the contract and find that the PSA is a contract
governing the provision of services [III].

I. A turnkey contract is generally excluded from the CISG because its primary obligations
involve labour and service.

90. The CISG does not govern turnkey contracts because they do not so much provide for the exchange
of goods against payment, but rather for a network of mutual duties to collaborate with and assist the
other party [Kröll/Mistelis/Perales Viscasillas, p. 57; CISG Digest, p. 21, para. 5; Waste separation machines
case, p. 4]. The PSA is such a contract. As the Request for Quotation stated, “[t]his request is for a
quotation for the engineering, planning, construction and delivery of a plant (turnkey) …” [Ex. C 1,
p. 8; Ex. C 5, p. 16; Ex. R 3, p. 32].

91. Contrary to a sales contract, a turnkey contract has the supply of labour in its foreground [AC Opinion
4, para. 3.5]. Consequently, the production and not the delivery of the goods is of primary importance
in the turnkey contract. The delivery of goods is secondary to the success of the promised work [Waste
separation machines case, p. 4].

92. The present arbitration is similar to the Waste separation machines case, in which the relevant contract
covered the planning, delivery, assembly, and putting into operation of a complete plant for breaking
down aluminium-plastics-combines [Waste separation machines case, p. 1]. The court decided that the
CISG does not apply to turnkey contracts, reasoning that they constitute “a mesh of reciprocal

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obligations of participation and assistance rather than a relationship involving the exchange of goods
against money” [Waste separation machines case, p. 4].

93. The PSA was also about planning, delivery, assembly and putting into operation of a complete plant
for producing green energy [RfA, p. 3, para. 4; Ex. C 2, p. 10; Ex. C 5, p. 16, para. 9]. It is a turnkey
contract centring on the success of work undertaken as part of reciprocal endeavours; the Parties
used the wording “jointly … make [the plant] operational” in the preamble of the PSA [Ex. C 2, p.
10]. Other services specified under Art. 2 “Scope of supplies and services and other contractor
obligations / Scope of services” of the PSA are also about “grant[ing]” the operability of the two
options and “to provide maintenance and training services as agreed…” [Ex. C 2, pp. 10-11]. The
contract is organised such that it includes four sections governing labour and services. The materials,
such as electrolysers and transformers, are never mentioned in the PSA [Ex. C 2, pp. 10-11].

94. Therefore, the sale of goods is of minor significance in the PSA. As a turnkey contract, it does not
fall within the scope of the application of CISG.

II. It is inappropriate to solely rely on the price structure to determine the nature of the
PSA.

95. The CISG is applicable to contracts for work and materials, as stated in Article 3(1) of the CISG.
Nevertheless, the CISG does not extend to contracts where the primary obligation of the party
providing the goods is to supply labour or other services, as clarified in Article 3(2) of the CISG.
Consequently, if the preponderant part of the contractual obligations involves the supply of labour,
such as assembly, adaptation, instruction, and similar tasks, then the CISG does not govern that
contract [Waste separation machines case, p. 4; AC Opinion 4, p. 1].

96. CLAIMANT proposes a test which compares the economic value of the sales obligation with other
obligations in the PSA, and states that the CISG applies if the delivery of goods is worth over 50%
of the obligations [Cl. Memo, p. 26, para. 121]. However, the “economic value test,” which solely
calculates the price of each obligation in the contract, is inapplicable in the present case [Prada v.
Caporicci; Potato chips plant case].

97. The price structure of the PSA was always variant, subject to RESPONDENT’s future decisions. The
PSA contains two extension options which, if exercised, obligate CLAIMANT to provide additional
work and materials [Ex. C 2, p. 11]. As RESPONDENT had not decided to exercise the options at the

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time when the PSA was concluded or at any point to date, the total cost of goods remains unknown
[Ex. C 5, pp. 16-17, para. 9; PO. 2, p. 54, para. 18; AC Opinion 4, para. 3.3].

98. RESPONDENT is entitled to exercise the hydrogen extension option and eAmmonia option entirely,
partially, or not to exercise them at all [Ex. C 5, pp. 16-18, para. 9]. If the options were not fully
exercised, CLAIMANT would give a proportional reduction of the price respectively from EUR 60
million and from EUR 100 million [RfA, p. 3, para. 4; Ex. C 5, pp. 16-18, para. 9]. Meanwhile,
RESPONDENT will pay a handling fee to cover CLAIMANT’s additional costs resulting from the reduced
scope [PO. 2, p. 54, para. 18]. If RESPONDENT chooses not to exercise either of the options, it will
have to spend money on items which are not goods. Thus, the price structure of the PSA cannot be
fixed until RESPONDENT eventually exercises the options at a finalised proportion.

99. It was foreseeable for the Parties that, because of the expensive “hydro-hype,” the two options would
not be fully exercised due to its fiscal pressure [RfA, p. 4, para. 9; Ex. C 3, p. 14; PO. 2, p. 54, para. 18].
CLAIMANT is aware of the uncertainty; thus, it does not charge RESPONDENT on the options, but only
on the Plant and relevant maintenance and services to avoid risks [Ex. C 5, p. 17, p. 11].

100. If RESPONDENT decides not to exercise the two options at all and CLAIMANT asks for at least 50%
of the options’ sales value as a handling fee, the goods-related contractual obligations would even
become a minority component of the PSA’s total value. According to the internal calculation chart
which only mentions the first (the turnkey Plant) and the last obligation (maintenance and training
services) in the PSA, the supply of service is worth EUR 110 million when the contract price is EUR
300 million [Ex. C 5, p. 17, p. 11]. Should RESPONDENT determine that the options are no longer
financially viable, and CLAIMANT imposes a EUR 80 million handling fee to cover investments in
subcontractor sourcing and electrolyser preparation, the non-goods expenditure would total EUR 190
million (110 + 80) out of a EUR 380 million (300 + 80) total contract value. In this situation, the
Tribunal would likely find a pure economic value test ineffective, as the PSA would lack a predominant
sales obligation. The goods-related and non-goods-related obligations would each constitute
approximately half of the contract’s value.

101. CLAIMANT only offers the tribunal an ambiguous calculation, ignoring other possibilities [Cl. Memo,
pp. 27-28, paras. 126-133; Ex. C 2, pp. 10-11; Ex. C 5, p. 17, p. 11]. Indeed, with a simple glance at the
internal calculation chart, the supply of goods would amount to EUR 190 million out of EUR 300

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million (63.3%) [Ex. C 5, p. 17, p. 11]. However, the two options, which are not included in the chart,
remain part of the contract and cannot be neglected [Ex. C 2, p. 10].

102. CLAIMANT incorrectly relies on Case No. VB/94131. However, that case does not discuss the issues
at bar [Cl. Memo, p. 27, para. 124]. It only involves the interpretation of Articles 7(2), 39(1) and 49(1),
rather than the question of mixed contracts [Case no. VB/94131]. To the extent it discusses Art. 3(1),
it focuses only on the question of when the buyer, instead of the seller, provides a substantial part of
the materials to be manufactured [AC Opinion 4, Footnote 10]. The current arbitration is merely related
to Art. 3(2) which discusses the nature of the major contractual obligation.

103. More importantly, the intention of the parties as expressed in the documents and the formation of
the contract must be considered as well [AC Opinion 4, para. 3.4]. Even if the price of goods is higher
than the price of service, once the will of the parties is to “make [a system] operational,” the
preponderant part of the contract obligations will still be the supply of labour and services, which
excludes the CISG [Orintix v. Fabelta].

III. The will of the Parties was to make the Plant operational and not to trade in
electrolysers

104. Recent arbitral awards choose to adopt a more comprehensive analysis to define the legal nature of a
contract than the mere “economic value test.” Tribunals tend to interpret the will of the parties based
on (1) the name and the content of the contract and (2) the weight given by the parties to the various
obligations under the contract [AC Opinion 4, para. 3.4; Industrial Solution v. Randridge; Park Plus v. Sotefin
SA; SAS Camelin v. SHW Automotive]. This corresponds to the alternative to the “economic value test,”
the “essential criterion test,” attaching importance to the crucial, predominant aim of the contract
[AC Opinion 4, para. 3.5; Window production plant case; Alfred Dunhill v. Tivoli Group].

105. CLAIMANT uses the case Alfred Dunhill v. Tivoli to interpret what the Parties intend to achieve under
the PSA [Cl. Memo, p. 28, para. 134]. Unfortunately, this case never drew any conclusion with respect
to the application of Art. 3(2) of the CISG: “However, the Court must refrain from addressing the
issue of the legal qualification of the contract as a sale or as a contract for services, since the
conclusions do not change in terms of jurisdiction” [Alfred Dunhill v. Tivoli Group]. Moreover, a
subsequent case, Prada v. Caporicci, which cites Alfred Dunhill, concluded that the economic value test
was inappropriate, finding that on the facts of that case, the CISG was excluded. There, the seller was
obligated to incubate and hatch alligators for at least 12 months and eventually sell them. The court

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found that services constituted the preponderant part of obligations because the breeding process
was the essential object of the contract [Prada v. Caporicci, p. 6, paras. 20-23].

106. The essential purpose of the PSA is clearly for the Plant to be operational. First, the name of the
contract and the content of the contract include and emphasize the role to be played by services. The
contract is titled “Purchase and Service Agreement” [Ex. C 2, p. 10]. CLAIMANT is labelled a
“Contractor” and RESPONDENT is referred to as “Customer,” instead of “Seller” and “Buyer”
(respectively) [Ex. C 2, pp. 10-12]. The CISG only defines the obligations of the Seller and the Buyer,
and it does not ever mention the issues concerning Contractors and Customers [CISG, Part III, Chapter
II & Chapter III]. A seller in a sales contract is obliged to hand over the subject of the sale and transfer
the title, while a contractor for works owes the customer the supply of labour connected with a certain
work success [Waste separation machines case, p. 4].

107. Contrary to cases which have concluded that the CISG is applicable because the provision of services
was secondary to any sale, the present case highlights the importance of providing quality services
[ICC 7153/1992]. The preamble of the PSA manifests the Parties’ expectation to make the plant
“operational” when the project is finished [Ex. C 2, p. 10]. Article 18 of the PSA, “Performance and
Acceptance Test,” is a milestone which requires CLAIMANT to pass the Test to ensure the Plant has a
successful completion [Ex. C 2, pp. 11-12]. Otherwise, the work required under the PSA would not be
concluded [Ex. C 2, p. 12]. Therefore, apart from the name of the PSA which clearly includes the
service, the content of the PSA gives primacy to the supply of work and services. The execution of
the PSA relied on the successful operation of the Plant, instead of the sale of goods [Cl. Memo, p. 29,
para. 139].

108. Second, the service obligations form a larger part of the contract than the obligation of the delivery
of the goods. Art. 31 shows that the PSA is based on the “Model Contract for the Purchase of Goods
and Services by Equatorianian State Entities” and is interpreted in light of the Request for Quotation
[Ex. C 2, p. 13; Ex. R 1, p. 29, para. 7]. Its Art. 9 requires CLAIMANT to provide “[a]t least 25% of the
materials and works for the plant as well as 25% of the material used for the Electrolyser-part of the
Plant” should be local [Ex. C 1, p. 9]. It is not the case that, as CLAIMANT wrongly claims, 25% of
pure materials for the entire plant should come from Equatoriana [Cl. Memo, p. 29, para. 136]. In
addition, RESPONDENT’s local content requirements include works. RESPONDENT expects to purchase
services from CLAIMANT. Local content rules, which can be satisfied by providing a combination of

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services as well as goods, remain an important aspect of the contract for RESPONDENT and influence
its choice of winning bidder [ARfA, p. 26, para. 6; Cl. Memo, p. 29, para. 137].

109. As to the dispute over the fundamental breach, RESPONDENT explicitly stated in its Termination of
the Purchase and Service Agreement of 17 July 2023 that it is due to CLAIMANT’s “belated delivery
of the detailed plans for the plant” and “lacking plans for the eAmmonia module” instead of the
delivery of electrolysers and transformers [Ex. C 6, p. 19]. CLAIMANT’s failure to perform service
obligations triggered the termination clause in the PSA. It manifests the core role of the services
instead of goods [Cl. Memo, p. 29, para. 138].

110. In conclusion, the PSA is a turnkey contract in which the timely service obligation is essential to fulfil
the Parties’ goal to make the Plant successfully operational. The CISG is excluded from the application
to this case, pursuant to Art. 3(2).

C. THE PSA WAS CONCLUDED AS PART OF A REVERSE AUCTION EXCLUDED FROM THE CISG
PURSUANT TO ART. 2(B).

111. The PSA was concluded by a reverse auction, excluding it from the sphere of application of the CISG
under Art. 2(b). The CISG serves international trade, and adopts uniform rules to harmonize different
social, economic, and legal systems which would otherwise contribute to legal barriers [Preamble of the
CISG, p. 1]. Contracts formed by auction do not necessarily concern international trade. For that
reason, they are governed by special non-harmonised national law [Ziegel, para. 3; United Nations
Conference Record on Contracts for the International Sale of Goods; Poljanec, p. 143; Schlechtriem/Schwenzer, p. 68,
para. 21] [I]. An additional issue when considering the application of the CISG to such contracts is
the potential for legal uncertainty. As auctions necessarily involve a competitive bidding process, the
applicable law would remain unknown until the successful bidder is identified, particularly if the CISG
could be selected as the governing law [Honnold, p. 48; Khoo, Art. 2, para. 2.3; Benicke, Art. 2, para. 9]
[II].

I. The CISG does not govern “sales by auction” because they are regulated domestically.

112. The PSA was concluded through a reverse bid auction [Ex. C 1, p. 8]. RESPONDENT had already
adopted the Public Procurement Law of Equatoriana, which is a special domestic law, to govern the
bidding process and the award of the PSA [Ex. C 1, p. 9]. RESPONDENT chose this domestic lex specialis
because it can better regulate auctions. Normally, the rules of the auction are formulated by the
institution that holds such an auction, instead of the state; so that the auction sales cannot be made

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uniform [Enderlein & Maskow, p. 34]. When the Parties refer to domestic special rules of public
procurement, they exclude the application of the CISG [Inter Rao UES et al. v. CELEC EP].

113. Contrary to CLAIMANT’s allegation that the PSA was concluded solely through negotiation,
RESPONDENT argues that the whole procedure to award the PSA to CLAIMANT is a reverse auction
which includes the essential characteristics that Art. 2(b) of the CISG aims to exclude [Cl. Memo, p. 24,
para. 110]. The subsequent negotiations did not alter the outcome.

114. An auction is a public sale, announced in advance, and is awarded to the best bidder
[Kröll/Mistelis/Perales Viscasillas, Art. 2, para. 23; Schlechtriem/Schwenzer, p. 68, para. 21]. The process
involves an open invitation to bid which permits multiple suppliers to compete. Then, the contract is
awarded to the supplier with the best acceptable bid [Auctioned oil painting case; Sale of horse case].
Therefore, if a bidding process is included aiming to find an optimal price through competition, it is
an auction. A very recent case from 2025 confirms that CISG Art. 2(b) excludes competitive bidding
which does not equally award the contract to all bidders [Face masks case].

115. The formation of the PSA conforms to such essential characteristics. RESPONDENT announced the
Request for Quotation for the PSA on 3 January 2023, and openly invited bidders [Ex. C 1, pp. 8-9].
The bidding process included a phase to select the lowest bidders, consistent with auctions aiming to
have the best price [Ex. C 5, p. 16, para. 9].

116. According to Art. 2.1.2 of the Equatorianian Civil Code, the terms of the PSA have been finalised
with enough preciseness and definiteness in the Request for Quotation because only “exact technical
details” and prices thereof will be fixed later [Ex. C 1, p. 9]. Once CLAIMANT is selected to be one of
the final bidders, it accepts the offer from the reverse auction. Those terms and conditions will be
reflected in the PSA [Ex. C 1, pp. 8-9]. The final contractual negotiations do not change this in any
meaningful way. Pursuant to Art. 5.1.7 of the Equatorianian Civil Code, a fixed contract price is not
necessary when a contract is formed [Frugima v. Vegamur]. The technical details were already specified
when the bidders submitted their proposals [Ex. C 1, p. 8]. Even though the exact technical details
might be modified during the negotiations, they do not amount to material alterations to the terms of
the offer under Art. 2.1.12 of the Equatorianian Civil Code [Ex. C 1, pp. 8-9; Brödermann, §2-Art.
2.1.12].

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II. Failing to exclude auctions would make the application of the CISG uncertain.

117. In excluding auctions, it was considered desirable for the parties to remain subject to domestic law.
Even if the potential bidders may come from different states, the nature of auctions makes it hard to
tell if a sale is international until the bid is accepted [Schlechtriem/Schwenzer, Article 2, para. 21].

118. CLAIMANT argues that RESPONDENT negotiated with CLAIMANT starting from May 2023 [Cl. Memo,
p. 25, para. 113]. This cannot negate the uncertainty that occurs under the overall process of awarding
the PSA. RESPONDENT did not know the identities of the bidders until the reverse auction process
ended and could not change the governing law once the Request for Quotation was released [Ex. C
1, pp. 8-9]. The tender is technology-open, meaning that RESPONDENT merely knew the overall
efficiency in relation to the price ahead, although the identities of the sellers were kept anonymous
[PO. 2, p. 52, para. 9]. Even though no local entity in Equatoriana could realize a 100 MW hydrogen
Plant, and companies from other States might be necessary for the success of the project, there was
no reason for CLAIMANT to conclude that the CISG would apply [Cl. Memo, p. 25, para. 113]. Bidders
may come from non-signatory states where no rules can lead to the application of the law of a
Contracting State [Article 1(1) CISG].

119. Therefore, to avoid such unpredictability during application, the CISG should not be applied even to
a reverse auction.

Conclusion for Issue 3: No evidence can prove that the CISG has ever been legislated in Equatoriana,
a dualistic state. Even if the CISG were part of the Equatorianian law, the PSA does not constitute
an international sale of goods. First, the obligations under the PSA are closely tied to CLAIMANT’s
place of business in Equatoriana, making the contract a domestic transaction rather than an
international one. Second, it is a turnkey contract for the planning, engineering, and construction of
a hydrogen plant, and the Parties intend to make the service and labour to be the primary obligation.
Third, the PSA is concluded through a reverse auction and applying the domestic law can enhance
legal consistency and certainty. This Tribunal should find the CISG cannot be autonomously
applicable to the PSA.

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ISSUE 4: THE PARTIES HAVE EXCLUDED THE APPLICATION OF THE CISG

120. Even if the CISG can be applied according to Art.1-3 of the CISG, RESPONDENT respectfully
requests the Tribunal to find the Parties excluded the application of the CISG through the draft of
the PSA. CLAIMANT incorrectly submits that the Parties neither explicitly nor implicitly excluded the
application of the CISG [Cl. Memo, p. 30, para. 143]. RESPONDENT acknowledges that the Parties did
not use specific language such as “to the exclusion of the CISG” to exclude the CISG. However, such
language is not mandatory nor the only way to exclude the CISG. Subjectively, the Parties clearly
intended to exclude the application of the CISG [A]. On the alternative, a reasonable person would
find the Parties clearly excluded the application of the CISG [B].

A. SUBJECTIVELY, THE PARTIES CLEARLY INTENDED TO EXCLUDE THE APPLICATION OF THE

CISG.

121. RESPONDENT submits that the Parties clearly intended to exclude the application of the CISG. First,
the Parties’ intent must prevail [I]. Second , RESPONDENT clearly conveyed its intent to exclude the
application of the CISG [II]. Third , CLAIMANT knew or could not have been unaware of
RESPONDENT’s intent to exclude the application of the CISG [III].

I. The Parties’ intent must prevail.

122. CLAIMANT mainly relies on the formal wording of the written contract to argue the Parties did not
intend to exclude the CISG [Cl. Memo, p. 31, para. 148]. However, this is misconceived and is not the
proper method of contractual interpretation. According to CISG Advisory Council Opinion No 16,
the CISG governs the manner of exclusion under which the Parties’ intent shall be ascertained first.
Besides, all relevant circumstances shall be taken into account, not just the wording of the contract.

123. Article 8 requires two steps in contract interpretation: (1) contracts shall be first interpreted according
to the parties’ subjective intent; (2) when the inquiry into subjective intent proves impossible,
statements and conduct are to be interpreted from the objective point of view of a reasonable person
of the same kind as the other party would have had in the same circumstances [Art. 8 CISG]. Moreover,
according to Art. 8(3) of the CISG, interpretations shall consider all relevant circumstances including
the negotiations, any practices which the parties have established between themselves, usages, and any
subsequent conduct of the parties [Ibid.]. Further, the list of the relevant circumstances is not exclusive
as consideration shall be given to all relevant circumstances [Replacement parts for ships case; AC opinion

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3, p. 2; Schlechtriem/Schwenzer, p. 168, para. 14].

124. Therefore, it is clear that the Parties’ intent prevails over the formalist approach to interpreting
contractual terms proposed by CLAIMANT. Only when this Tribunal finds it impossible to determine
the Parties’ subjective intent after considering all the relevant circumstances can it resort to the
objective meaning of the contractual terms.

II. RESPONDENT clearly conveyed its intent to exclude the application of the CISG.

125. CLAIMANT alleges that RESPONDENT did not intend to exclude the application of the CISG [Cl. Memo,
p. 31, para. 151]. However, RESPONDENT clearly manifested its intention to exclude the CISG.

126. First, the modification of the Model Contract clearly excludes the application of the CISG. A change
to contract wording means a change of intent [Orthotec v. Eurosurgical]. Here, CLAIMANT admits the
choice of law clause in the PSA was based on the modified Model Contract [Cl. Memo, p. 32, para. 155].
Hence, to determine whether the Parties intended to exclude the CISG, it is helpful for the Tribunal
to consider the changes between the older and newer versions of the Model Contract. The older
version of the Model Contract explicitly stated that “the Agreement is governed by the CISG and for
all issues not regulated by the CISG the law of Equatoriana shall apply” [PO2, p. 53, para. 10]. By
contrast, the newer version of the Model Contract completely removes the phrase “the agreement is
governed by the CISG” [Ibid.]. All issues are governed by the law of Equatoriana. It is clear that the
law of Equatoriana is distinguishable from the CISG, and when the Parties refer to the law of
Equatoriana, they refer to the domestic law of Equatoriana, which clearly excludes the CISG.
Additionally, the official press release made in relation to the amended Model Contract explicitly
mentioned that changes were made to the choice of law clause “to strengthen the role of
Equatorianian Law” [Ibid.]. It conveyed a clear and unequivocal intent, namely applying the domestic
law of Equatoriana by default, excluding international conventions such as the CISG.

127. Second , referring to the domestic law of Equatoriana in the call for tender and PSA clearly manifests
a desire to exclude the application of the CISG. According to Art. 31 of the PSA, this document
should be interpreted in light of the Request for Quotation (RFQ) 1/2023 [Ex. C 2, p. 13]. The
Request for Quotation (RFQ) explicitly states that the Bidding Process is “governed by the Public
Procurement Law of Equatoriana,” which governs the entire bidding process and the award of the
contract [Ex. C 1, p. 9]. In a case on point, the tribunal in Inter Rao UES et al. v. CELEC EP viewed

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the referencing domestic public procurement law and domestic special rules of public procurement
as an implied exclusion of the CISG [Inter Rao UES et al. v. CELEC EP]. Similarly, in the present
arbitration, the Public Procurement Law of Equatoriana is explicitly mentioned, making it very clear
that RESPONDENT intended to apply the domestic law of Equatoriana instead of the CISG.

128. Therefore, RESPONDENT clearly conveyed its intent to exclude the application of the CISG.

III. CLAIMANT knew or could not have been unaware of RESPONDENT’s intent to exclude
the application of the CISG.

129. Even if this Tribunal finds the intent to exclude the CISG is unclear, CLAIMANT knew or could not
have been unaware of RESPONDENT’s intent to exclude the application of the CISG.

130. CLAIMANT agrees on the inclusion of the standard choice of law clause from the Model Contract and
admits it was aware of the modification of the Model Contract [Cl. Memo, p. 34, para. 161]. However,
CLAIMANT incorrectly asserts that it was unaware of RESPONDENT’s intent to exclude the application
of the CISG [Cl. Memo, p. 34, para. 162]. Contrary to what it submits, CLAIMANT knew or could not
have been unaware of RESPONDENT’s intent to exclude the application of the CISG.

131. Under Art. 8(1) of the CISG, the interpretation standard of CLAIMANT’s knowledge or imputable
unawareness is that if RESPONDENT’s intent was easy to discern, even if CLAIMANT carelessly did not
notice it, the statements or conduct of RESPONDENT shall be interpreted according to the intent of
RESPONDENT [Italian clothes case, Schlechtriem/Schwenzer, Art. 8, para. 18]. Here, such a standard is met.

132. First, the interpretation CLAIMANT’s legal representatives indicates that CLAIMANT knew or could not
have been unaware of RESPONDENT’s intent. Ms. Smith, the head of CLAIMANT’s legal department,
interpreted the choice of law clause in the Model Contract as referring to the non-harmonised law of
Equatoriana [PO2, p. 53, para. 11]. Moreover, she also conducted an examination of assurances and
misrepresentations, which are governed by Equatorianian domestic law rather than the CISG [Ex. R
3, p. 32]. If the governing law of the PSA were the CISG, as CLAIMANT argues, CLAIMANT would not
have to worry about assurances and misrepresentations. Since the CISG is a harmonised international
convention and Ms. Smith’s knowledge is attributed to CLAIMANT, it clearly shows that CLAIMANT
knew or could not have been unaware that RESPONDENT intended to exclude the CISG.

133. Second , the waiver of termination for convenience indicates that CLAIMANT knew or could not have

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been unaware of RESPONDENT’s intent. Article 28(2) of the PSA explicitly excludes termination for
convenience, a concept rooted in Equatorianian domestic law (Article 7.3.8 of the Equatorianian Civil
Code) rather than the CISG [PO2, p. 55, para. 33]. Conversely, the CISG does not cover termination
for convenience, as it only allows termination for fundamental breaches under Art. 49 of the CISG.
If CLAIMANT was unaware of RESPONDENT’s intent to exclude the CISG and apply Equatorianian
domestic law, it would not have had to negotiate so many times with RESPONDENT to waive a right
that does not exist in the CISG but in Equatorianian domestic law [Ex. C 5, p. 17, para. 10]. Many
cases and scholars support that when parties place themselves under domestic law, they demonstrate
an intent to exclude the CISG [Del Gaudio v. Agrenfrut, AC opinion 16, p. 4; Schlechtriem/Schwenzer, Art.
6, para. 24]. Hence, the deliberate exclusion of a domestic termination right clearly shows CLAIMANT
knew or could not have been unaware of RESPONDENT’s intent to exclude the CISG and apply
Equatorianian domestic law.

134. In toto, CLAIMANT knew or could not have been unaware of RESPONDENT’s intent to exclude the
application of the CISG.

B. OBJECTIVELY, A REASONABLE PERSON WOULD FIND THE PARTIES CLEARLY EXCLUDED THE
APPLICATION OF THE CISG.

135. Article 8(2) of the CISG instructs the Tribunal to apply the reasonable person standard when it is
impossible to inquire into the parties’ subjective intent. If this Tribunal is unable to determine the
Parties’ subjective intent, a reasonable person would find that CLAIMANT clearly agreed to exclude the
application of the CISG. First, a reasonable person would find that CLAIMANT agreed to exclude the
application of the CISG by accepting the modified model contract [I]. Second , a reasonable person
would find that CLAIMANT agreed to exclude the application of the CISG by the choice of law clause
in the PSA [II].

I. A reasonable person would find that CLAIMANT agreed to exclude the application of the
CISG by accepting the modified model contract.

136. CLAIMANT asserts that although it agreed on the modified Model Contract, it did not exclude the
CISG [Cl. Memo, p. 34, para. 162]. CLAIMANT further reasons that Ms. Smith’s interpretations were
unreliable as she was an in-house labour lawyer unfamiliar with international contracts [Ibid.]. However,
this is misconceived. RESPONDENT submits that a reasonable person would find that the Model

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Contract had been modified to exclude the CISG and that, if the other party agreed on the modified
Model Contract, it clearly shows the mutual agreement to exclude the application of the CISG.

137. Article 8(2) of the CISG requires the tribunal to hypothesize a reasonable person of the same kind as
the other party would have had in the same circumstances [Art. 8 CISG; Health care product case;
Kröll/Mistelis/Perales Viscasillas, Art. 8, para. 23]. In the present arbitration, a reasonable person with
the same professional knowledge as CLAIMANT’s Chief Legal Officer, Mr. Law or Ms. Smith, and in
the same situation as at the time, would have been expected to exercise due diligence in reviewing
every clause of the contract and analysing the differences between the two versions of the Model
Contract. It is also reasonable for such a legal officer to notice the Equatorianian official press which
explicitly states “the model contract was modified to strengthen the role of Equatorianian Law” [PO2,
p. 53, para. 10]. Thus, a reasonable legal officer would conclude that the domestic law of Equatoriana
rather than the CISG would be applied. Moreover, a reasonable person who signed the PSA and did
not object to the modified Model Contract, just like CLAIMANT, will be deemed to have accepted the
exclusion of the CISG.

138. Therefore, a reasonable person would find that CLAIMANT agreed to exclude the application of the
CISG by accepting the modified model contract.

II. A reasonable person would find that CLAIMANT agreed to exclude the application of
the CISG by the choice of law clause in the PSA.

139. According to Art. 29 of the PSA, the agreement is governed by “the law of Equatoriana to the
exclusion of its conflict of laws principles.” CLAIMANT incorrectly alleges that selecting the law of a
contracting state without expressly referencing to the CISG cannot be viewed as an exclusion of the
CISG [Cl. Memo, p. 32, para. 153].

140. RESPONDENT admits that Equatoriana is a contracting state of the CISG. However, CLAIMANT
disregards the reasoning behind the decisions of those cases. For example, CLAIMANT cited the
Oberlandesgericht Rostock case, in which the court concluded that the choice of German contractual law
could not exclude the CISG because the CISG had formed part of the German contractual law since
its entry into force in Germany on 1 September 1991, following its ratification on 26 May 1981. It is
clear that the prerequisite of the decision is that the CISG has formed part of the chosen law of the
contracting state.

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141. However, in the present arbitration, CLAIMANT ignores a key fact that Equatoriana is a dualist country
[PO2, p. 55, para. 34]. For a dualist country, treaties must be incorporated in order to form part of the
legal system. For example, Canada, the UK, and Australia are all dualist legal systems. Treaties, which
may be entered into by the executive, shall be enacted by parliament before they become part of the
law of the state [Capital Cities Communications Inc. v. Canadian Radio-Television Commission; Baker v. Canada;
Kazemi Estate v. Islamic Republic of Iran; The Constitutional Reform and Governance Act of the UK, part 2;
Treaty-making process of Australia, chapter 2, p. 2]. Hence, since the record does not show that Equatoriana
has incorporated the CISG [PO2, p. 55, para. 34], CLAIMANT cannot argue that the CISG was not
excluded by reasoning that the CISG forms part of the law of Equatoriana. Moreover, a reasonable
person, knowing this, would not have taken the choice of law clause to include the CISG.

142. By contrast, a considerable number of courts have consistently found that selecting the law of a
Contracting State without expressly referencing the CISG can constitute an implied exclusion of the
CISG. In Zykronic Inc. v. Loxone Electronics GmbH, the parties (Austrian and American) had stipulated
in their choice of law provision that “the laws of Colorado” would apply to the dispute. The court
interpreted it as an exclusion of the CISG. In Nederlands Internationaal Privaatrecht case, the court similarly
concluded that the parties excluded the CISG by choosing the Dutch law and only Dutch national law
applied to the sales contract. As in those cases, Art. 29 of the PSA clearly states that “the agreement
is governed by the law of Equatoriana [Ex. C 2, p. 12].” The contractual language unequivocally directs
the Tribunal to apply Equatorianian internal law exclusively. This approach mirrors precedents where
the choice of a Contracting State’s law without referencing the CISG has been interpreted as an
implicit exclusion.

143. Therefore, a reasonable person would find that CLAIMANT agreed to exclude the application of the
CISG by choosing the law of Equatoriana in the PSA.

Conclusion for Issue 4: CLAIMANT’s submission that the CISG was not excluded by the Parities is
merely the attempt of a strategy to get more remedies. However, this is not convincing. The Parties
excluded the CISG by agreeing on the modified version of the Model Contract and referring to
Equatorianian domestic law in the call for tender and PSA. Accordingly, this Tribunal should find that
the Parties validly excluded the application of the CISG.

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 MEMORANDUM FOR RESPONDENT

PRAYER FOR RELIEF

In light of the submissions above, RESPONDENT respectfully requests the Tribunal:

1) To declare that the Tribunal does not have jurisdiction over the dispute which is also
inadmissible;

2) To order the inclusion of Ex. R 3 and the exclusion of Ex. C 7;

3) To declare that the CISG does not apply to the Agreement; and,

4) To find that the Parties have excluded the application of the CISG.

Respectfully submitted on 30 January 2025 by

We hereby confirm that only the persons whose names are listed above have written this memorandum.

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