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21st Annual Willem C. Vis
INTERNATIONAL COMMERCIAL ARBITRATION MOOT
2013 – 2014
MEMORANDUM
FOR
INNOVATIVE CANCER TREATMENT LTD.
- CLAIMANT -
DAVID
BÖCKENFÖRDE
MARTIN
BONGARTZ
LAURA
GAUSCHINSKI
JULIAN
LAFERE
UNIVERSITY OF COLOGNE
UNIVERSITY OF COLOGNE II
Memorandum for CLAIMANT | II
UNIVERSITY OF COLOGNE
CENTER FOR TRANSNATIONAL LAW
(CENTRAL)
TEAM MEMBERS:
DAVID
BÖCKENFÖRDE
MARTIN
BONGARTZ
LAURA
GAUSCHINSKI
JULIAN
LAFERE
21ST ANNUAL
WILLEM C. VIS
INTERNATIONAL
COMMERCIAL ARBITRATION MOOT
2013 – 2014
INSTITUTE OF INTERNATIONAL COMMERCIAL LAW
PACE UNIVERSITY SCHOOL OF LAW
WHITE PLAINS, NEW YORK
U.S.A.
UNIVERSITY OF COLOGNE III
Memorandum for CLAIMANT | III
MOOT CASE NO. 21
LEGAL POSITION
ON BEHALF OF
INNOVATIVE CANCER TREATMENT LTD.
46 COMMERCE ROAD
CAPITAL CITY
MEDITERRANEO (CLAIMANT)
AGAINST
HOPE HOSPITAL
1-3 HOSPITAL ROAD
OCEANSIDE
EQUATORIANA (RESPONDENT)
UNIVERSITY OF COLOGNE IV
Memorandum for CLAIMANT | IV
TABLE OF CONTENTS
TABLE OF AUTHORITIES .............................................................................................. X
INDEX OF COURT CASES ...................................................................................... XXVII
INDEX OF ARBITRAL AWARDS .......................................................................... XXXVII
INDEX OF LEGAL SOURCES ............................................................................ XXXVIII
STATEMENT OF FACTS ................................................................................................... 1
SUMMARY OF ARGUMENT ............................................................................................. 2
FIRST ISSUE: THE ARBITRAL TRIBUNAL HAS JURSIDICTION TO DECIDE
THE DISPUTES .................................................................................................................. 4
A. Art. 23 FASA contains the Parties’ valid agreement on arbitration under the CEPANI Rules .. 4
I. The Parties validly agreed on arbitration under the CEPANI Rules pursuant to
Art. 23(3) FASA ............................................................................................................................... 4
1. Art. 23(4) FASA contains the Parties’ valid agreement on an appeal mechanism ............... 5
a. The appeal and review mechanism is compatible with the CEPANI Rules and the
nature of arbitration ................................................................................................................. 5
aa. The appeal mechanism does not contradict the binding nature of the award ....... 5
bb. The appeal mechanism does not contradict the principle of finality ..................... 7
cc. Party autonomy supports the possibility to include an appeal of arbitral awards . 7
dd. In addition, it is internationally accepted to permit appeal mechanisms ............... 8
b. The Circular No. 265 does not affect RESPONDENT's capacity to validly agree on
arbitration .................................................................................................................................. 9
c. Should the Tribunal consider Art. 23(4) FASA void, this would not affect the validity
of the arbitration agreement in Art. 23(3) FASA ............................................................. 10
2. Art. 23(6) FASA does not violate the principle of equal treatment ..................................... 10
a. Art 23(6) FASA does not lead to unequal treatment of RESPONDENT ...................... 11
b. In any event, Art. 23(6) FASA has become obsolete since CLAIMANT already chose
arbitration ............................................................................................................................... 12
c. The alleged invalidity of Art. 23(6) FASA would not invalidate Art. 23(3) FASA ...... 12
II. Even if Art 23(3) FASA is considered void by the Tribunal, Sec. 21 OST contains a valid
arbitration clause in favor of CEPANI arbitration .................................................................. 13
UNIVERSITY OF COLOGNE V
Memorandum for CLAIMANT | V
1. Sec. 21 OST is applicable if Art. 23 FASA were to be considered void ............................. 13
2. Sec. 21 OST is acceptable to RESPONDENT even without an appeal clause .................. 14
B. The Tribunal has jurisdiction to rule on the dispute arising under the SALA .......................... 14
I. Disputes arising under the SALA are also governed by the arbitration agreement in
Art 23(3) FASA ............................................................................................................................. 14
1. Art. 23(3) FASA applies to the SALA pursuant to Art. 45 FASA ....................................... 14
2. Art. 23 SALA has not replaced Art. 23(3) FASA by virtue of Art. 45 FASA .................... 15
3. Consequently, the arbitration clause in Art. 23(3) FASA also governs the SALA ............ 15
II. Alternatively, the Tribunal has jurisdiction pursuant to Sec. 21 NST .................................. 16
SECOND ISSUE: BOTH CLAIMS SHALL BE HEARD IN A SINGLE
ARBITRATION ................................................................................................................. 16
A. The Parties agreed on single arbitration pursuant to Sec. 1 Art. 10 CEPANI ......................... 17
I. The Parties agreed on arbitration under the CEPANI Rules pursuant to
Sec. 1 Art. 10(1)(a) CEPANI ....................................................................................................... 17
II. The Parties implicitly agreed on a single set of proceedings pursuant to
Sec. 1 Art. 10(1)(b) CEPANI ...................................................................................................... 17
1. The presumption that identical arbitration clauses contain an agreement on single
arbitration applies to the dispute at hand ............................................................................... 18
2. Even if Art. 23(3) FASA is considered void, Sec. 21 OST and Sec. 21 NST are suggested
identical ........................................................................................................................................ 18
III. Since the matters in dispute are related, Sec. 1 Art. 10(3) CEPANI does not apply ........ 19
B. Alternatively, the Arbitral Tribunal shall order single arbitration pursuant to
Sec. 1 Art. 12 CEPANI ..................................................................................................................... 20
I. The Tribunal has jurisdiction to order single arbitration pursuant to
Sec. 1 Art. 12(1) CEPANI ........................................................................................................... 20
II. The Tribunal shall decide in favor of single arbitration according to
Sec. 1 Art. 12 CEPANI ................................................................................................................ 20
C. Alternatively, the Arbitral Tribunal shall request the Appointments Committee or the
President of CEPANI to consolidate the arbitrations pursuant to Sec. 1 Art. 13 CEPANI . 21
I. The Arbitral Tribunal is authorized to request for consolidation pursuant to
Sec. 1 Art. 13(1) CEPANI ........................................................................................................... 22
II. The circumstanes call for consolidation pursuant to Sec. 1 Art. 13(2) CEPANI ............... 22
UNIVERSITY OF COLOGNE VI
Memorandum for CLAIMANT | VI
1. The Parties did not exclude consolidation pursuant to Sec. 1 Art. 13(2)(a) CEPANI ..... 22
2. The claims are compatible and arise from the same legal relationship pursuant to
Sec. 1 Art. 13(2)(c) CEPANI .................................................................................................... 23
D. Any award rendered by the Arbitral Tribunal in a single arbitration is enforceable under the
DAL and the New York Convention ................................................................................................ 23
THIRD ISSUE: THE CISG GOVERNS THE CLAIMS ARISING UNDER THE SALA
....................................................................................................................................................................... 24
A. The CISG is applicable to the SALA, since the latter is a sale of goods contract ...................... 24
I. The SALA’s subject matters are goods in the sense of Art. 1(1) CISG ................................. 24
1. The Active Scanning Technology’s hardware is a good pursuant to Art. 1(1) CISG ....... 24
2. The Active Scanning Technology’s software is a good pursuant to Art. 1(1) CISG ........ 24
a. The CISG applies to all kinds of software, including the Active Scanning
Technology’s software .......................................................................................................... 25
b. Because the Active Scanning Technology’s software is standard software, the CISG
still applies, even if the Tribunal considers a distinction between individual and
standard software .................................................................................................................. 25
II. The SALA is a sales contract with respect to Art. 3(2) CISG ................................................ 26
1. The exception in Art. 3(2) CISG is not applicable, since the SALA’s preponderant part is
not on service or labor so that the SALA is treated as a sales contract ............................. 26
a. The SALA’s price composition indicates that it is a sales contract ................................ 27
b. The Parties’ intention also indicates, that the SALA is a sales contract ........................ 28
2. Even if the SALA is to be considered a licensing agreement, the CISG still applies ....... 28
B. The Parties agreed on the application of the CISG by incorporating the NST into the SALA 29
I. The Parties incorporated the NST into the SALA pursuant to Art. 46 SALA ..................... 29
1. CLAIMANT’s proposal refers to the incorporation of the NST in the sense of Art. 8(2)
CISG ............................................................................................................................................. 29
a. CLAIMANT clarified its intention to incorporate the NST on two occasions ............. 30
b. RESPONDENT had reasonable opportunity to take notice of the NST ...................... 30
2. RESPONDENT agreed on the incorporation of the NST pursuant to Art. 18 CISG .... 32
II. The NST provide for the application of the CISG to the SALA .......................................... 32
III. Even if the NST were not incorporated, the CISG is still applicable to the SALA ......... 33
UNIVERSITY OF COLOGNE VII
Memorandum for CLAIMANT | VII
1. The Parties did not choose a specific law in any other way ............................................ 34
2. Since there is no choice of law in terms of the SALA, the CISG is applicable ............ 34
REQUEST FOR RELIEF .................................................................................................. 35
UNIVERSITY OF COLOGNE VIII
Memorandum for CLAIMANT | VIII
INDEX OF ABBREVIATIONS
& and Art. Article Artt. Articles BGB Bürgerliches Gesetzbuch
(German Civil Code) BGH Bundesgerichtshof
(Federal Supreme Court, Germany) B.V. Besloten Vennootschap met beperkte
Aansprakelijkheid (Dutch company with limited liability)
CEPANI The Belgian Centre for Arbitration and Mediation
cf. confer (compare) CISG United Nations Convention on Contracts for
the International Sale of Goods of 11 April 1980
Cl. Ex. Claimant’s Exhibit
DAL Danubian Arbitration Law (adoption of the UNCITRAL Model Law)
EAL Equatorianean Arbitration Law (adoption of the UNCITRAL Model Law)
ed. Edition etc. et cetera (and so on)
FASA Framework and Sales Agreement fn. Footnote
ibid. ibidem (the same) ICC International Chamber of Commerce Inc. Incorporated
GmbH Gesellschaft mit beschränkter Haftung (German company with limited liability)
LG Landgericht (Regional Court, Germany)
11. Ltd. Limited
UNIVERSITY OF COLOGNE IX
Memorandum for CLAIMANT | IX
MüKo Münchener Kommentar zum Bürgerlichen Gesetzbuch (Commentary on the German Civil Code)
No. Number NST Claimant’s July 2011 Standard Terms and
Conditions for Sale (“New Standard Terms”)
OGH Oberster Gerichtshof (Federal Supreme Court, Austria)
OLG Oberlandesgericht (Court of Appeals, Germany)
OST Claimant’s November 2000 Standard Terms and Conditions for Sale (“Old Standard Terms”)
p. Page para. Paragraph paras. Paragraphs pp. P.O.
Pages Procedural Order
Resp. Ex. Respondent’s Exhibit
SALA Sales and Licensing Agreement Sec. Section sent. Sentence St. of Def. Statement of Defense
(Answer to Request for Arbitration) St. of Claim Statement of Claim
(Request for Arbitration)
UNCITRAL United Nations Commission on International Trade Law
UNIDROIT International Institute for the Unification of Private Law
USD US-Dollar
v. versus (against)
UNIVERSITY OF COLOGNE X
Memorandum for CLAIMANT |
X
TABLE OF AUTHORITIES
BERGER, KLAUS PETER
Die Einbeziehung von AGB in internationale Kaufverträge
In: Festschrift für Norbert Horn zum siebzigsten
Geburtstag, pp. 3-20
Berlin 2006
CITED IN: para. 177
CITED AS: Berger, FS Horn
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CITED IN: paras. 46, 50
CITED AS: www.Trans-Lex.org/
BORN, GARY B. International Arbitration and Forum Selection Agreements:
Drafting and Enforcing, 4th ed.
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CITED IN: paras. 89, 135
CITED AS: Born
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Alphen aan den Rijn 2012
CITED IN: para. 126
CITED AS: Born, Law
International Commercial Arbitration
Alphen aan den Rijn 2009
CITED IN: para. 89
CITED AS: Born, International Commercial Arbitration
UNIVERSITY OF COLOGNE XI
Memorandum for CLAIMANT |
XI
BOURAS, EUGENIA To Appeal or Not to Appeal in International Arbitration
In: The Globetrotter: International Law Section 2012,
Volume 16, No. 2, pp. 1-3
available at:
http://www.oba.org/en/pdf/sec_news_int_jun12_bou_ar
b.pdf
(last visited: December 12th 2013)
CITED IN: para. 30
CITED AS: Bouras
BOYD, STEWART C.
MUSTILL, MICHAEL J.
Commercial Arbitration: 2001 Companion Volume
London 2001
CITED IN: paras. 28, 32
CITED AS: Boyd/Mustill
BROWNE, OLIVER
CLIFFORD, PHILIP
Avoiding Pitfalls in Drafting and Using Unilateral Option
Clauses
In: International Arbitration – News in Brief, July 2013,
pp. 1-3
available at:
http://www.lw.com/thoughtLeadership/IA-News-in-
Brief-Unilateral-Option-Clauses
(last visited: December 12th 2013)
CITED IN: para. 57
CITED AS: Browne/Clifford
UNIVERSITY OF COLOGNE XII
Memorandum for CLAIMANT |
XII
BÜHLER, MICHAEL W.
WEBSTER, THOMAS H.
Handbook of ICC Arbitration: Commentary, Precedents,
Materials, 2nd ed.
London 2008
CITED IN: para. 111
CITED AS: Bühler/Webster
CHIU, JULIE C.
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CITED IN: paras. 104, 126, 129
CITED AS: Chiu
DE MEULEMEESTER, DIRK
VERBIST, HERMAN
Arbitrage in de Praktijk – Op basis van het CEPANI-
Arbitragereglement van 1 januari 2013 en met
verzwijzingen naar deel VI van het Gerechtelijk Wetboek
Brussels 2013
CITED IN: para. 122
CITED AS: De Meulemeester/Verbist
DIEDRICH, FRANK Anwendbarkeit des Wiener Kaufrechts auf
Softwareüberlassungsverträge
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CITED IN: para. 151
CITED AS: Diedrich, Anwendbarkeit
UNIVERSITY OF COLOGNE XIII
Memorandum for CLAIMANT |
XIII
Maintaining Uniformity in International Uniform Law via
Autonomous Interpretation: Software Contracts and the
CISG
In: Pace International Law Review 1996, Volume 8,
pp. 303-338
CITED IN: paras. 152, 168
CITED AS: Diedrich, Maintaining
The CISG and Computer Software Revisited
In: Vindobona Journal of International Commercial Law
and Arbitration 2002, Volume 6, Issue 2 pp. 55-75
CITED IN: para. 154
CITED AS: Diedrich, Revisited
EISELEN, SIEG CISG Advisory Council Opinion No. 13, Inclusion of
Standard Terms under the CISG
Pretoria 2013
available at:
http://www.cisg.law.pace.edu/cisg/CISG-AC-op13.html
(last visited: December 10th 2013)
CITED IN: paras. 177, 184
CITED AS: Eiselen
ERMAN, WALTER
Kommentar zum Bürgerlichen Gesetzbuch 13th ed.,
Volume 1
Cologne 2011
CITED IN: para. 70
CITED AS: author in Erman
UNIVERSITY OF COLOGNE XIV
Memorandum for CLAIMANT |
XIV
FERRARI, FRANCO
KIENINGER, EVA-MARIA
MANKOWSKI, PETER
OTTE, KARSTEN
SAENGER, INGO
SCHULZE, GÖTZ
STAUDINGER, ANSGAR
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Munich 2012
CITED IN: para. 188
CITED AS: author in Ferrari
GAILLARD, EMMANUEL
SAVAGE, JOHN
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Arbitration – Part I
The Hague 1999
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CITED AS: Gaillard/Savage
GREEN, SARAH
SAIDOV, DJAKHONGIR
Software as Goods
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CITED IN: paras. 167, 168
CITED AS: Green/Saidov
HONNOLD, JOHN O.
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Nations Convention, 4th ed.
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CITED IN: para. 159
CITED AS: Honnold
UNIVERSITY OF COLOGNE XV
Memorandum for CLAIMANT |
XV
HUBER, PETER
MULLIS, ALASTAIR
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Munich 2007
CITED IN: paras. 158, 164, 171
CITED AS: Huber/Mullis
HUBER, PETER Standard Terms under the CISG
In: Vindobona Journal of International Commercial Law &
Arbitration 2009, Volume 13, pp. 123-134
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CITED IN: paras. 172, 178
CITED AS: Huber
KNULL, WILLIAM H.
RUBINS, NOAH D.
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0-0d49-4b80-94c3-edf5e1cadf90/Presentation/Publication
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_INTARB_00_BETTHEFARM.pdf
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CITED IN: para. 30
CITED AS: Knull/Rubins
UNIVERSITY OF COLOGNE XVI
Memorandum for CLAIMANT |
XVI
KRÖLL, STEFAN M.
MISTELIS, LOUKAS
PERALES VISCASILLAS, PILAR
UN Convention on Contracts for the International Sale of
Goods (CISG)
Munich 2011
CITED IN: para. 159
CITED AS: author in Kröll/Mistelis/Perales Viscasillas
LANDOLT, PHILLIP LOUIS Modernised EC Competition Law in International
Arbitration
The Hague 2006
CITED IN: paras. 51, 65
CITED AS: Landolt
LANGE, SOPHIA
SCHERER, MAXI
The French Rothschild Case – A Threat For Unilateral
Dispute Resolution Clauses
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CITED IN: para. 59
CITED AS: Lange/Scherer
UNIVERSITY OF COLOGNE XVII
Memorandum for CLAIMANT |
XVII
LOOKOFSKY, JOSEPH In Dubio pro Conventione? Some Thoughts about Opt-
Outs, Computer Programs and Preemption under the 1980
Vienna Sales Convention (CISG)
In: Duke Journal of Comparative & International
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CITED IN: para. 151
CITED AS: Lookofsky
MAGNUS, ULRICH
Incorporation of Standard Contract Terms under the CISG
In: Festschrift for Albert H. Kritzer on the Occasion of his
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CITED IN: para. 175
CITED AS: Magnus
MISTELIS, LOUKAS A. Concise International Arbitration
Alphen aan den Rijn 2010
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CITED AS: author in Mistelis
UNIVERSITY OF COLOGNE XVIII
Memorandum for CLAIMANT |
XVIII
MOSES, MARGARET L. The Principles and Practice of International Commercial
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CITED AS: Moses
PAIR, LARA M.
FRANKENSTEIN, PAUL
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CITED AS: Pair/Frankenstein
PILTZ, BURGHARD AGB in UN-Kaufverträgen
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UNIVERSITY OF COLOGNE XIX
Memorandum for CLAIMANT |
XIX
POLEBAUM, ELLIOT E. Unilateral Jurisdiction Clauses Undermined in
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CITED AS: Polebaum
PRIMAK, SCOTT Computer Software: Should the U.N. Convention on
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UNIVERSITY OF COLOGNE XX
Memorandum for CLAIMANT |
XX
REDFERN, ALAN
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CITED AS: Redfern/Hunter
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CITED AS: Reifner
RUBINS, NOAH The Enforcement and Annulment of International
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CITED AS: Rubins
SÄCKER, JÜRGEN
RIXECKER, ROLAND
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CITED AS: author in MüKo
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UNIVERSITY OF COLOGNE XXI
Memorandum for CLAIMANT |
XXI
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SCHLECHTRIEM, PETER
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CITED AS: Schöpflin
UNIVERSITY OF COLOGNE XXII
Memorandum for CLAIMANT |
XXII
STACEY, JAMES
TAYLOR, ANGELA
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UNIVERSITY OF COLOGNE XXIII
Memorandum for CLAIMANT |
XXIII
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UNIVERSITY OF COLOGNE XXIV
Memorandum for CLAIMANT |
XXIV
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CITED AS: Yannaca-Small
UNIVERSITY OF COLOGNE XXV
Memorandum for CLAIMANT |
XXV
INDEX OF COURT CASES
AUSTRIA
21.06.2005 Oberster Gerichtshof
5 Ob 45/05m
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CITED AS: OGH, 21.06.2005
31.08.2005 Oberster Gerichtshof
7 Ob 175/05v
available at:
http://cisgw3.law.pace.edu/cases/050831a3.html
(last visited: December 12th 2013)
CITED IN: para. 179
CITED AS: OGH, 31.08.2005
ENGLAND
01.01.1986 Court of Appeal
Pittalis v. Sherefettin
No.1986 1 QB 868
available at:
http://swarb.co.uk/pittalis-v-sherefettin-ca-1986/
(last visited: December 12th 2013)
CITED IN: para. 57
CITED AS: Pittalis v. Sherefettin
UNIVERSITY OF COLOGNE XXVI
Memorandum for CLAIMANT |
XXVI
13.10.2004 High Court of Justice Queen’s Bench Division Commercial
Court
NB Three Shipping Limited v. Harebell Shipping Limited
2004 EWHC 2001
available at:
http://www.nadr.co.uk/articles/published/ArbitLawReports
/NB%20Three%20v%20Hare%202004.pdf
(last visited: December 12th 2013)
CITED IN: para. 57
CITED AS: NB Three Shipping Ltd. v. Harebell Shipping Ltd.
01.07.2005 High Court of Justice Chancery Division
The Law Debenture Trust Corporation PLC v. Elektrim
Finance BV and Others
2005 EWHC 1412
availabe at:
http://www.bailii.org/ew/cases/EWHC/Ch/2005/1412.ht
ml
(last visited: December 12th 2013)
CITED IN: para. 62
CITED AS: The Law Debenture Trust Corporation PLC v.
Elektrim Finance BV and Others
UNIVERSITY OF COLOGNE XXVII
Memorandum for CLAIMANT |
XXVII
07.08.2009 High Court of Justice Queen’s Bench Division Commercial
Court
Shell Egypt West Manzala GmbH and Shell Egypt West
Qantara GmbH v. Dana Gas Egypt Limited
2009 EWHC 2097
availabe at:
http://www.bailii.org/ew/cases/EWHC/Comm/2009/209
7.rtf
(last visited: December 12th 2013)
CITED IN: para. 28
CITED AS: Shell v. Dana Gas
24.05.2013 High Court of Justice Queen’s Bench Division Commercial
Court
Mauritius Commercial Bank Limited v. Hestia Holdings
Limited
2013 EWHC 1328
available at:
http://www.bailii.org/cgi-
bin/markup.cgi?doc=/ew/cases/EWHC/Comm/2013/132
8.html&query=2013+and+EWHC+and+1328&method=bo
olean
(last visited: December 12th 2013)
CITED IN: para. 57
CITED AS: Mauritius Commercial Bank Ltd. v. Hestia
Holdings Ltd.
UNIVERSITY OF COLOGNE XXVIII
Memorandum for CLAIMANT |
XXVIII
FRANCE
26.11.2012 Cour de Cassation
La société Banque privée Edmond de Rothschild Europe v.
Mme X
No. 11-26.022
available at:
http://www.courdecassation.fr/jurisprudence_2/premiere_c
hambre_civile_568/983_26_24187.html#
(last visited: December 12th 2013)
CITED IN: paras. 58, 59, 60
CITED AS: Mme X
GERMANY
26.01.1989 Bundesgerichtshof
X ZR 23/87
available at:
http://www.juris.de/jportal/portal/t/174t/page/jurisw.psml
?pid=Dokumentanzeige&showdoccase=1&js_peid=Trefferli
ste&documentnumber=1&numberofresults=1&fromdoctod
oc=yes&doc.id=KORE301998901&doc.part=L&doc.price=
0.0&doc.hl=1#focuspoint
(last visited: December 12th 2013)
CITED IN: para. 57
CITED AS: BGH, 26.01.1989
UNIVERSITY OF COLOGNE XXIX
Memorandum for CLAIMANT |
XXIX
26.08.1994 Oberlandesgericht Köln
19 U 282/93
available at:
http://www.globalsaleslaw.org/content/api/cisg/urteile/13
2.htm
(last visited: December 12th 2013)
CITED IN: para. 152
CITED AS: OLG Köln, 26.08.1994
08.02.1995 Oberlandesgericht Hamm
11 U 206/93
available at:
http://www.globalsaleslaw.org/content/api/cisg/urteile/14
1.htm
(last visited: December 12th 2013)
CITED IN: para. 182
CITED AS: OLG HAMM, 08.02.1995
08.02.1995 Landgericht München
8 HKO 24667/93
available at:
http://www.globalsaleslaw.com/content/api/cisg/urteile/20
3.htm
(last visited: December 12th 2013)
CITED IN: para. 152
CITED AS: LG München, 08.02.1995
UNIVERSITY OF COLOGNE XXX
Memorandum for CLAIMANT |
XXX
26.11.1998 Landgericht Mainz
12 HK.O 70/97
available at:
http://www.globalsaleslaw.org/content/api/cisg/urteile/56
3.html
(last visited: December 12th 2013)
CITED IN: para. 164
CITED AS: LG Mainz, 26.11.1998
27.12.1999 Oberlandesgericht Dresden
2 U 2723/99
available at:
http://www.unilex.info/case.cfm?pid=1&do=case&id=441
&step=FullText
(last visited: December 12th 2013)
CITED IN: para. 191
CITED AS: OLG Dresden, 27.12.1999
24.09.1998 Bundesgerichtshof
III ZR 133/97
available at:
http://www.juris.de/jportal/portal/t/16l4/page/jurisw.psml
?pid=Dokumentanzeige&showdoccase=1&js_peid=Trefferli
ste&documentnumber=1&numberofresults=1&fromdoctod
oc=yes&doc.id=KORE607289800&doc.part=L&doc.price=
0.0&doc.hl=1#focuspoint
(last visited: December 12th 2013)
CITED IN: para. 57
CITED AS: BGH, 24.09.1998
UNIVERSITY OF COLOGNE XXXI
Memorandum for CLAIMANT |
XXXI
21.04.2004 Oberlandesgericht Düsseldorf
I-15 U 88/03
available at:
http://openjur.de/u/102991.html
(last visited: December 12th 2013)
CITED IN: para. 180
CITED AS: OLG Düsseldorf, 21.04.2004
THE NETHERLANDS
28.06.2006 Arrondissementsrechtbank Arnhem
Silicon Biomedical Instruments B.V. v. Erich Jaeger GmbH
HA ZA 02-105
available at:
http://cisgw3.law.pace.edu/cases/060628n1.html
(last visited: December 12th 2013)
CITED IN: para. 152
CITED AS: Silicon Biomedical Instruments BV v. Erich Jaeger GmbH
SWITZERLAND
14.12.2009 Kantonsgericht Kanton Zug
A2 2001 105
available at:
http://www.globalsaleslaw.com/content/api/cisg/urteile/20
26.pdf
(last visited: December 12th 2013)
CITED IN: para. 164
CITED AS: Kantonsgericht Zug, 14.12.2009
UNIVERSITY OF COLOGNE XXXII
Memorandum for CLAIMANT |
XXXII
21.02.1989 Court of Appeals of the State of New York
Thomas Sablosky v. Edward S. Gordon Company
Incorporated
73 N.Y.2d 133
available at:
http://www.leagle.com/decision/198920673NY2d133_1196
(last visited: December 12th 2013)
CITED IN: para. 57
CITED AS: Sablosky v. Gordon Company Inc.
UNITED STATES OF
AMERICA
12.12.1975 United States Court of Appeals, Second Circuit
Compania Espanola Petróleos S.A. v. Nereus Shipping S.A.
527 F. 2d. 966
available at:
http://openjurist.org/527/f2d/966/compania-espanola-petr
oleos-sa-v-nereus-shipping-sa-hidrocarburos-derivados-ca
(last visited: December 12th 2013)
CITED IN: para. 135
CITED AS: Compania Espanola de Petróleos v. Nereus Shipping
UNIVERSITY OF COLOGNE XXXIII
Memorandum for CLAIMANT |
XXXIII
18.03.1991 United States Court of Appeals, Third Circuit
Advent Systems Limited v. Unisys Corporation
925 F.2d 670
available at:
http://www.leagle.com/decision/19911595925F2d670_1146
2
(last visited: December 12th 2013)
CITED IN: para. 151
CITED AS: Advent Systems Ltd. v. Unisys Corp.
01.06.1999 United States Court of Appeals, Third Circuit
Harris v. Green Tree Financial Corporation
183 F.3d 173
available at:
http://www.leagle.com/decision/1999356183F3d173_1335
(last visited: December 12th2013)
CITED IN: para. 57
CITED AS: Harris v. Green Tree Financial Corp.
27.07.2001 Federal District Court of California
Asante Technologies, Inc. v. PMC-Sierra, Inc.
C 01-20230 JW
available at:
http://www.cisg.law.pace.edu/cases/010727u1.html
(last visited: December 12th 2013)
CITED IN: para. 189
CITED AS: Asante Technologies v. PMC-Sierra
UNIVERSITY OF COLOGNE XXXIV
Memorandum for CLAIMANT |
XXXIV
23.03.2004 United States Court of Appeals, Fifth Circuit
Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara
364 F.3d 274
available at:
https://law.resource.org/pub/us/case/reporter/F3/364/36
4.F3d.274.02-20042.03-20602.html
(last visited: December 12th 2013)
CITED IN: para. 143
CITED AS: Karaha Bodas v. Perusahaan Pertambangan Minyak
UNIVERSITY OF COLOGNE XXXV
Memorandum for CLAIMANT |
XXXV
INDEX OF ARBITRAL AWARDS
DEUTSCHE INSTITUTION FÜR
SCHIEDSGERICHTSBARKEIT
2005
Interim award of DIS-SV-438/04
In: SchiedsVZ 2005, pp. 166-168
CITED IN: para. 88
CITED AS: SchiedsVZ 2005
INTERNATIONAL CHAMBER OF
COMMERCE
1989
Award No. 5989
In: Yearbook Commercial Arbitration 1990, Volume XV,
p. 74
CITED IN: para. 105
CITED AS: ICC No. 5989
1994
Award No. 7184
In: ICC Bulletin, Volume 8, No. 2, p. 63
CITED IN: para. 104
CITED AS: ICC No. 7184
2002
Award No. 11333
available at:
www.unilex.info/case.cfm?id=1163
(last visited: December 12th2013)
CITED IN: para. 188
CITED AS: ICC No. 11333
UNIVERSITY OF COLOGNE XXXVI
Memorandum for CLAIMANT |
XXXVI
INDEX OF LEGAL SOURCES
ARBITRATION RULES OF CEPANI – THE BELGIAN CENTRE FOR ARBITRATION AND MEDIATION
OF JANUARY 1ST 2013
CITED AS: CEPANI
AUSTRALIAN COMMERCIAL ARBITRATION ACT OF AUGUST 212TH2012
CITED AS: ACAA
BELGIAN JUDICIAL CODE OF SEPTEMBER 1ST
2013
CITED AS: BJC
ENGLISH ARBITRATION ACT OF JUNE 17TH
1996
CITED AS: EAA
NEW YORK CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS OF JUNE 7TH 1959
CITED AS: NY CONVENTION
12. UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION OF JULY 7TH
2006
CITED AS: DAL
UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS 2010
CITED AS: UNIDROIT PRINCIPLES
UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS
(CISG) OF APRIL 11TH 1980
CITED AS: CISG
VIENNA CONVENTION ON THE LAW OF TREATIES OF MAY 23RD
1969
CITED AS: VIENNA CONVENTION
UNIVERSITY OF COLOGNE
Memorandum for CLAIMANT |
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1
STATEMENT OF FACTS
1. The Parties to this arbitration are Innovative Cancer Treatment Ltd., Mediterraneo
(hereinafter “CLAIMANT” ) and Hope Hospital, Equatoriana (hereinafter “RESPONDENT” ).
2. CLAIMANT is one of the few manufacturers of particle therapy equipment. It specializes in proton
therapy and is the market leader for facilities using a passive beam scattering technique. It has
developed a cancer treatment method called Active Scanning Technology.
3. RESPONDENT is a university teaching hospital. It is extensively state funded and the national center
for cancer research and treatment in Equatoriana.
4. On January 13th 2008, the Parties concluded a Framework and Sales Agreement (hereinafter “FASA” ).
Its subject matter is the sale of the Proton Therapy Facility to RESPONDENT for a price of
USD 50 million. At the same time the FASA provides the legal framework for any further extension
of the Proton Therapy Facility according to Art. 45 FASA. Pursuant to the choice of law clause in the
Old Standard Terms (hereinafter “OST” ), the national law of Mediterraneo is applicable to all claims
arising under this agreement.
5. On March 6th 2011, RESPONDENT approached CLAIMANT signaling interest in purchasing
CLAIMANT’s newly developed Active Scanning Technology. The Active Scanning Technology
consists of a third treatment room and the necessary hard- and software.
6. Concurrently, CLAIMANT revised its Standard Terms and informed RESPONDENT in this regard on
two occasions. First, on June 2nd 2011, during their final meeting of the negotiation of the SALA and
second, in Dr. Vis’ Letter of July 5th 2011. The New Standard Terms (hereinafter “NST” ) are applicable
to all contracts concluded after July 1st 2011.
7. CLAIMANT’s NST were available on its servers in Mediterranean from July 5th 2011 , the latest,
onwards. RESPONDENT’s assistant is able to understand this language. An English version of the
NST was online from July 1st to 4th 2011 and was then shortly removed from their servers for
maintenance.
8. On July 20th 2011, the Parties concluded the Sales and Licensing Agreement (hereinafter “SALA” ).
8. Since the purchase price had been a concern for RESPONDENT during the negotiations, CLAIMANT
agreed to grant a price reduction of USD 6 million in exchange for RESPONDENT’s cooperation in
the development and approval of the Active Scanning Technology. The final purchase price was
USD 3.5 million.
9. On August 15th 2012, RESPONDENT, after having paid all other installments, informed CLAIMANT
that it would not pay the outstanding USD 11.5 million.
UNIVERSITY OF COLOGNE
Memorandum for CLAIMANT |
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2
10. On June 6th 2013, CLAIMANT submitted a request for arbitration to the Belgian Centre for
Arbitration and Mediation (hereinafter “CEPANI” ) based on the arbitration clause in Art. 23(3) FASA
and to have the case decided in a single arbitration.
ISSUES
1. The Arbitral Tribunal has jurisdiction to decide the case. [FIRST ISSUE]
2. The case is to be decided in a single arbitration. [SECOND ISSUE]
3. The SALA constitutes a sales contract in the sense of the CISG and CLAIMANT’s NST have been incorporated into this contract. As a result, the CISG applies to it. [THIRD ISSUE]
No further questions going to the merits of the claims should be addressed at this point of the
proceedings. [P.O. No. 1, para. 3.1; P.O. No. 2, para. 1 ].
SUMMARY OF ARGUMENT
11. I. The Arbitral Tribunal has jurisdiction to decide the disputes. The Tribunal has jurisdiction over
the disputes arising out of the FASA and the SALA. RESPONDENT has no grounds to challenge the
jurisdiction of the Arbitral Tribunal. The appeal and review mechanism of Art. 23(4) FASA does not
invalidate the Parties’ agreement to CEPANI arbitration. RESPONDENT’s allegations that the appeal
mechanism is contrary to the nature of arbitration are without merits. By drafting the arbitration
agreement, the Parties exercised their party autonomy, which is one of the most important principles of
international arbitration.Further, the unilateral jurisdiction clause in Art. 23(6) FASA does not violate the
principle of equal treatment. Art. 23(6) FASA has become obsolete after the CLAIMANT already chose
arbitration, as litigation pursuant to Art. 23(6) FASA and arbitration pursuant to Art. 23(3) FASA are
mutually exclusive options. The Tribunal also has jurisdiction to rule on the disputes arising under the
SALA pursuant to Art. 23(3) FASA, since Art. 23 SALA does not constitute a “provision to the
contrary” by virtue of Art. 45 FASA and, therefore, has not replaced Art. 23 FASA in its entirety. This
legal relationship is illustrated by the following diagram (FIRST ISSUE).
UNIVERSITY OF COLOGNE
Memorandum for CLAIMANT |
3
3
12. II. Both claims shall be heard in a single arbitration. The Arbitral Tribunal shall decide that it has
jurisdiction to hear both claims in a single arbitration. Art. 23(3) FASA is used as a Master Dispute
Resolution Clause which has been incorporated into Art. 23 SALA by the reference of Art. 45 FASA [cf.
diagram above ]. Thereby, the Parties implicitly agreed on a single set of proceedings pursuant to Sec. 1
Art. 10 CEPANI. Even if the Tribunal were to find that the Parties did not agree on single arbitration it
is authorized to determine its own jurisdiction pursuant to Sec. 1 Art. 12 CEPANI and order single
arbitration. Alternatively, if the Tribunal still has doubts whether to hear both disputes in a single
arbitration, the Arbitral Tribunal shall request the Appointments Committee or the President of
CEPANI to consolidate the proceedings pursuant to Sec. 1 Art. 13 CEPANI. The circumstance call for
consolidation, as the claims arising under the FASA and the SALA are compatible and arise from the
same legal relationship. Thus, single arbitration is the desirable and flexible remedy to decide the
disputes without the need of a, time and cost intensive, second procedure (SECOND ISSUE).
13. III. The CISG governs the claims arising under the SALA. The SALA constitutes a sale of goods
contract. Its subject matter is the Active Scanning Technology, which consists of hardware (third
treatment room, magnets, etc.) and the standard software necessary to operate the hardware [cf. diagram
above]. Both are goods in the sense of the CISG. If the SALA were to be seen as a licensing agreement,
the SALA would still be an economic equivalent of sales and the CISG would still govern the SALA.
UNIVERSITY OF COLOGNE
Memorandum for CLAIMANT |
4
4
Further, the Parties agreed on the application of the CISG in Sec. 22 NST through Art. 46 SALA. The
NST were incorporated, as CLAIMANT referred to the NST in its proposal. RESPONDENT had
sufficient opportunity to obtain knowledge and agreed on the incorporation of the NST. The choice of
law clause in Sec. 22 NST includes the CISG, contrary to Sec. 22 OST with regard to the FASA. Even if
the NST were not incorporated into the SALA, the OST cannot be taken into account in order to
determine the Parties’ choice of law. Therefore, the claims arisng under the SALA would still be
governed by the CISG (THIRD ISSUE).
FIRST ISSUE: THE ARBITRAL TRIBUNAL HAS JURISDICTION TO DECIDE THE
DISPUTES
15. The Tribunal has jurisdiction to decide the disputes between the Parties under the Arbitration Rules of
CEPANI pursuant to Art. 23(3) FASA which is the arbitration agreement contained in the dispute
resolution clause Art. 23 FASA. As the seat of arbitration is Danubia, and Danubia has adopted the
UNCITRAL Model Law on International Commercial Arbitration with the 2006 amendments
(Danubian Law on International Commercial Arbitration, hereinafter “DAL” ) [P.O. No. 2, para. 13 ], the
DAL is the lex arbitri applicable to these proceedings [cf. Redfern/Hunter, para. 1.07 ]. According to
Art. 16(1) DAL and the widely accepted principle of “competence-competence”, an arbitral tribunal has the
authority to rule on its own jurisdiction [Redfern/Hunter, para. 5.99 ]. Thus, the Tribunal is competent to
determine whether the Parties validly agreed on arbitration under the CEPANI Rules.
16. CLAIMANT requests the Tribunal to confirm its jurisdiction under the CEPANI Rules. In the
following, CLAIMANT will demonstrate that, contrary to RESPONDENT’s assertions, Art. 23(3) FASA
contains a valid arbitration clause in favor of CEPANI arbitration (A.) and that pursuant to Art. 45
FASA, disputes arising under the SALA are also governed by the arbitration agreement made in
Art. 23(3) FASA (B.).
A. Art. 23(3) FASA contains the Parties’ valid agreement on arbitration under the CEPANI
Rules
17. Contrary to RESPONDENT’s submissions [St. of Def., paras. 5-11 ], CLAIMANT will show that the
Parties validly agreed on arbitration under the CEPANI Rules in Art. 23(3) FASA (I.). Even if
Art. 23 FASA should be considered void due to unequal treatment of RESPONDENT, the Tribunal still
has jurisdiction under the CEPANI Rules pursuant to Art. 21 OST (II.).
I. The Parties validly agreed on arbitration under the CEPANI Rules pursuant to Art. 23(3)
FASA
18. CLAIMANT and RESPONDENT have validly concluded an arbitration agreement. The arbitration
clause in Art. 23(3) FASA states:
UNIVERSITY OF COLOGNE
Memorandum for CLAIMANT |
5
5
“If the matter in dispute is not resolved through such mediation […] such dispute
shall become subject to arbitration, to be finally settled under the CEPANI Rules of
Arbitration before CEPANI […].
The arbitration shall be conducted before three arbitrators, in the English language
and shall be held in Vindobona, Danubia.”
19. Contrary to RESPONDENT’s submission, the Parties validly agreed on arbitration subject to appeal
pursuant to Art. 23(4) FASA (1.) and the Parties are treated equally despite of Art. 23(6) FASA (2.).
1. Art. 23(4) FASA contains the Parties’ valid agreement on an appeal mechanism
20. RESPONDENT is of the view that the appeal mechanism in Art. 23(4) FASA would contradict the
characteristic feature of arbitration, which is the binding and final nature of the award, and would render
the entire arbitration agreement void [St. of Def., paras. 7, 8 ].
21. This is an assertion without substance. The appeal and review mechanism in Art. 23(4) FASA does not
render the arbitration clause in Art. 23(3) FASA void.
22. Art. 23(4) FASA states:
“The award shall be final and binding upon the Parties. Each Party has, however, the
right within three months after it has received the award to refer the case to the
applicable state courts if it considers the award to be obviously wrong in fact or in
law. The state courts shall then have jurisdiction to review the case and to decide the
issue in accordance with the applicable law.”
23. CLAIMANT requests the Tribunal to find firstly, that the agreed appeal and review mechanism does not
invalidate the arbitration agreement (a.), secondly, that the Circular No. 265 does not affect
RESPONDENT’s ability to agree on arbitration, with or without an appeal (b.), and, thirdly, that even if
the Tribunal should find that Art. 23(4) FASA is void, this does not affect the validity of the arbitration
agreement contained in Art. 23(3) FASA (c.).
a. The appeal and review mechanism is compatible with the CEPANI Rules and the nature of
arbitration
24. RESPONDENT argues that Art. 23(4) FASA contradicts the nature of arbitration [St. of. Def., para. 7 ].
CLAIMANT rejects this notion since the appeal mechanism is entirely in line with the nature of
arbitration. CLAIMANT will demonstrate, that the appeal and review mechanism in Art. 23(4) FASA
neither contradicts the binding (aa.), nor the final nature of the award (bb.). To the contrary, the
principle of party autonomy supports the inclusion of an appeal (cc.) and appeals against arbitral awards
are internationally permitted (dd.).
aa. The appeal mechanism does not contradict the binding nature of the award
25. The appeal and review mechanism in Art. 23(4) FASA does not violate the binding nature of any future
UNIVERSITY OF COLOGNE
Memorandum for CLAIMANT |
6
6
award.
26. A comparison between court decisions and arbitral awards shows that an appeal mechanism is
compatible with the binding nature of the award. Even though appeals against court decisions are
universally accepted, nobody would question the binding nature of a court decision on that basis. Since
it is internationally recognized that an arbitral award has the same legal effect as a court decision in the
relationship between the parties [cf. Art. 1713 § 9 Belgian Judicial Code; Sec. 66(1) English Arbitration Act of
1996; § 1055 German Code of Civil Procedure ], appeals against arbitral awards do also not contradict their
binding nature.
27. Even within most arbitration rules it is acknowledged that an award may be, at least partially, reviewed
without questioning the binding nature of that award. This review takes place when a request is filed to
set an award aside. The grounds to have an award set aside are strictly limited and the award may only
be set aside if one party files a request within three months after it has received the award
[cf. Art. 34(3) DAL; Art. 1717 § 4 Belgian Judical Code ]. The appeal mechanism in Art. 23(4) FASA is
comparable, since it only applies if the award is considered to be “obviously wrong in fact or law” and
the Parties may only make use of the appeal within three months after they have received the award.
Art. 23(4) FASA is, therefore, just as strictly limited as the procedure to have an award set aside. Thus, if
the possibility to have an award set aside does not affect the binding nature of an award, neither can the
strictly limited appeal mechanism in Art. 23(4) FASA.
28. This reasoning is further demonstrated in the Shell v. Dana Gas Case. Here the High Court upheld its
jurisdiction to hear the appeal against the arbitral award, even though the arbitration agreement stated
that the award “[…]shall be final, conclusive and binding on the parties, […]” [emphasis added ]. The court
held that “ 'final and binding', in the context of arbitration, and arbitration agreements, has long been used
to state the well-recognised rule in relation to arbitration, namely that an award is final and binding in
the traditional sense and creates a res judicata between the parties” [emphasis added ] and that those terms
do not suffice to exclude an appeal. Res judicata means that the award is not a mere expression by the
arbitrator of his view as to the referred dispute, which a party is at liberty to disregard [Boyd/Mustill, p.
413 ].
29. If the terms final and binding do not suffice to exclude an appeal, such an appeal cannot contradict the
binding nature of the award. Consequently, the fact “[t]hat the award is 'final and binding' merely
restates the established principle that an award rendered by an international tribunal is res judicata […]”
[Caron/Caplan/Pellonpää, p. 797 ]. It does not, however, mean that an appeal mechanism is incompatible
with the binding nature of the award, let alone the nature of arbitration. Hence, the binding force of the
award in the present case will set in, just like in any other arbitration, when the last arbitrator signs the
award [cf. Schlosser, p. 573 ].
UNIVERSITY OF COLOGNE
Memorandum for CLAIMANT |
7
7
bb. The appeal mechanism does not contradict the principle of finality
30. Further, the fact that the Parties included an appeal mechanism does not contradict the principle of
finality of the award. CLAIMANT acknowledges that the finality of the award, which leads to speedy
and efficient proceedings, is a principle inherent in every arbitration. In the context of international
commercial disputes, however, finality takes a backseat to the parties’ interest in diligent adjudication
[Ten Cate, p. 1133 ]. Although manifest errors of law and inconsistent decisions are not common,
arbitrators, just like judges, are human and not always errorless [Bouras, p. 3 ]. Therefore, the parties have
a strong interest in an avenue for recourse, if they believe that the award contains errors, as faults can be
expensive [van Ginkel, p. 194 ]. Finality is a desirable advantage of arbitration, but only if due process
rights are not being sacrificed [Knull/Rubins, p. 563 ].
31. The fact that Art. 23(4) FASA is compatible with the principle of finality is also demonstrated by the
legislative history of Art. 58 English Arbitration Act of 1996. This article states:
“(1) Unless otherwise agreed by the parties, an award made by the tribunal pursuant
to an arbitration agreement is final and binding both on the parties and on any
persons claiming through or under them.
(2) This does not affect the right of a person to challenge the award by any available arbitral
process of appeal or review or in accordance with the provisions of this Part. ”
[emphasis added ]
32. Art. 58(2) English Arbitration Act of 1996 “was inserted because the reference to finality in section 16 of
the Arbitration Act 1950 was sometimes assumed 'wrongly' to exclude the possibility of challenging an
award“ [emphasis added ] [Boyd/Mustill, p. 342 ].
33. In conclusion, the appeal mechanism in Art. 23(4) FASA is compatible with the principle of finality.
cc. Party autonomy supports the possibility to include an appeal of arbitral awards
34. Moreover, the principle of party autonomy supports the idea that the parties ought to be empowered to
choose whether or not to opt for an appeal against the award made by their chosen arbitrators. Party
autonomy is the guiding principle in determining the procedure to be followed in an international
arbitration. The principle is endorsed in national laws, by international arbitral institutions worldwide
and by international instruments such as the New Yorkv Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (1958) ( hereinafter “NY Convention”) and the Model Law
[Redfern/Hunter, para. 6.08 ]. Thus, when RESPONDENT mentions “principles of arbitration”, it also has
to acknowledge party autonomy as one of the most important principles in international arbitration,
which allows the parties to determine their own procedure. In the present case, the Parties exercised
their party autonomy by including Art. 23(4) FASA.
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35. Although appeals are compatible with the principle of finality of the award, RESPONDENT might
argue that in CEPANI arbitration the autonomy of the parties to include an appeal mechanism is
restricted by Sec. 1 Art. 32 CEPANI, which states that “[…] [t]he Award is final and not subject to
appeal.[…]”.
36. However, under the CEPANI Rules recourse against the award is not only recognized, but the parties
are free to choose whether they want to opt for an appeal or not. This is demonstrated in the Model
Clause Section [CEPANI Rules, p. 9 ] which states:
“If the parties wish to exclude recourse against the arbitral award that may be available
under the applicable law, they may add a provision to that effect [...]”.
37. In the present case, the Parties did not add a provision to that effect, but rather chose to allow recourse
against the arbitral award by including the appeal mechanism in Art. 23(4) FASA. If, pursuant to the
Model Clause Section, the right to recourse is only excluded if the parties explicitly waive this right, the
explicit choice of the parties to include such recourse has to be respected. Sec. 1 Art. 32 CEPANI can
only apply if the parties explicitly waive their right to any form of recourse. Consequently, the Parties
were free to deviate from Sec. 1 Art. 32 CEPANI by including Art. 23(4) FASA.
38. RESPONDENT’s submission, that Art. 23(3) FASA should be considered void, even though it did not
only agree to the appeal clause in Art. 23(4) FASA but demanded its inclusion, is just an attempt to
avoid its contractual obligation to engage in the arbitration. This conduct should not be rewarded by the
Tribunal.
39. Since Sec. 1 Art. 32 CEPANI is not mandatory, the fact that the Parties deviated from it cannot
invalidate the arbitration agreement in Art. 23(3) FASA.
dd. In addition, it is internationally accepted to permit appeal mechanisms
40. Additionally, provisions in the arbitration laws of many jurisdictions show that it is common to permit
an appeal mechanism without affecting the validity of the arbitration agreement. CLAIMANT is aware
that these provisions are not applicable to the case at hand and that the Tribunal is not bound by them.
They should, however, be taken into consideration as they represent the existing legal practice. The
arbitration laws of Mediterraneo, Equatoriana and Danubia for domestic arbitration contain a provision
concerning appeal on the merits. They are nearly identical and only differ in the questions of law, which
may be appealed [P.O. No. 2, para. 14 ]. This shows that an appeal does not contradict the nature of
arbitration, which is also true for the seat of arbitration, Danubia.
41. Furthermore, a number of other jurisdictions across the globe permit appeals against arbitral awards.
The extent of court intervention permitted by different states may be viewed as a spectrum
[Redfern/Hunter, para. 10.65 ]. On the one end of this spectrum are states like France, which exercise a
minimum control over international arbitral awards [ibid., para. 10.67 ], and Switzerland, which allows
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non-domestic parties to contract entirely out of court control [ibid., para. 10.71 ]. In between are a few
states that have adopted, either in full or with some modifications, the grounds of recourse laid down in
the Model Law [ibid., para. 10.65 ]. On the other end of the spectrum are countries like England and
Australia, which operate a range of controls, including a limited right of appeal on questions of law.
Section 69 of the English Arbitration Act of 1996, allows for an appeal. It is only available on questions
of English law, when the decision of the tribunal is “obviously wrong” and the parties did not waive the
right to appeal [ibid., para. 10.68 ]. A similar provision, which allows a limited appeal can be found in
Art. 34(A) of the Australian Commercial Arbitration Act.
42. Art. 23(4) FASA provides for such a limited appeal, since it only applies if one Party “considers the
award to be obviously wrong in fact or in law”. Furthermore, the Party who wants to appeal has to
request for the appeal within a limited period of three months. This ensures that the appeal is not
misused to delay the enforcement of the award.
43. In light of the above, CLAIMANT requests the Tribunal to find that the appeal mechanism is valid and
that it, therefore, has jurisdiction to decide the dispute arising under the FASA.
b. The Circular No. 265 does not affect RESPONDENT’s capacity to validly agree on
arbitration
44. RESPONDENT may allege that Circular No. 265 restricts its capacity to agree on arbitration. It is
CLAIMANT’s submission ,that RESPONDENT was able to enter into an arbitration agreement with or
without the appeal mechanism, because the Circular No. 265 does not affect RESPONDENT’s
capability to enter into an arbitration agreement.
45. The Circular No. 265 is an internal administrative guideline for governmental entitities and not directly
applicable to RESPONDENT [P.O. No. 2, para. 9 ]. RESPONDENT was not legally banned from
entering into an arbitration without an appeal and review mechanism. This is confirmed by
RESPONDENT’s conduct. It had already deviated from the Circular No. 265 in another case by
agreeing on arbitration without any appeal and review mechanism [P.O. No. 2, para. 9 ]. CLAIMANT was
not aware of this fact during the negotiations [ibid. ]. In the present case, RESPONDENT merely wanted
to avoid another unfavorable award [ibid. ] and, therefore insisted on the inclusion of Art. 23(4) FASA.
46. RESPONDENT sets itself in contradiction to its previous conduct, by now insisting that the agreed
appeal and review mechanism invalidates the arbitration agreement. RESPONDENT thereby violates
the principle of venire contra factum proprium [cf. http://www.trans-lex.org/907000 ].
47. During the contract negotiations, RESPONDENT demanded the inclusion of an appeal mechanism.
CLAIMANT respected this demand [Cl. Ex. No. 3 ]. At the time of the conclusion of the contract,
CLAIMANT wrongly assumed that RESPONDENT is a government entity and would, therefore, only
be able to enter into an arbitration by including such mechanism pursuant to the Circular No. 265
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[Resp. Ex. No. 1 ]. CLAIMANT acted in RESPONDENT’s interest, as CLAIMANT was eager to
cooperate with RESPONDENT. CLAIMANT did everything in its power to satisfy RESPONDENT’s
needs and even deviated from Sec. 21 OST, which excluded the right to appeal [Annex 4 to FASA ].
48. In conclusion, the Ciruclar No. 265 does not affect RESPONDENT’s capacity to arbitrate, as
RESPONDENT is also able to agree on arbitration without the inclusion of an appeal and review
mechanism.
c. Should the Tribunal consider Art. 23(4) FASA void, this would not affect the validity of the
arbitration agreement in Art. 23(3) FASA
49. Even if the Tribunal should find that Art. 23(4) FASA is void, Art 23(3) FASA remains valid, since the
invalidity of the appeal and review mechanism would not affect the arbitration agreement. This is due to
the fact that the appeal and review mechanism is drafted as a self-contained and independent agreement
in Art. 23(4) FASA. The wording of paragraph 4 has no special context and reference to the remaining
paragraphs. It could, therefore, be excluded without affecting the validity of the arbitration agreement in
Art. 23(3) FASA.
50. According to the generally acknowledged principle of “in favorem validitatis”, which must be applied to the
interpretation of an international arbitration agreement [http://www.trans-lex.org/968902 ], an arbitration
agreement should be interpreted in favor of arbitration. In light of this principle,CLAIMANT requests
the Arbitral Tribunal to uphold the validity of Art. 23(3) FASA, even if it should consider the appeal
mechanism in Art. 23(4) FASA void.
51. Even if the tribunal were to find that Art. 23(4) FASA is not a self-contained agreement, the validity of
Art. 23(3) FASA has to be upheld pursuant to the socalled “blue pencil“ test [cf. Landolt, para. 10.26],
because one can delete Art. 23(4) FASA without causing the necessity to rewrite Art. 23(3) FASA.
2. Art. 23(6) FASA does not violate the principle of equal treatment
52. RESPONDENT argues that Art. 23(6) FASA violates the principle of equal treatment, by giving
CLAIMANT a unilateral choice between arbitration and litigation [St. of Def., para. 9 ]. The principle that
the parties shall be treated with equality and given full opportunity to present their case is laid down in
Art. 18 DAL. The provision is a reflection of international due process [cf. Brekoulakis/Shore in Mistelis, p.
623 ] and sets out the only limitations of procedural party autonomy. Art. 18 DAL protects a party from
egregious and injudicious conduct by an arbitral tribunal and not from its own failures or strategic
choices [ibid. ].
53. CLAIMANT will demonstrate that Art. 23(6) FASA does not lead to unequal treatment of
RESPONDENT (a.) and even if the Arbitral Tribunal should find that RESPONDENT is not treated
equally, Art. 23(6) FASA has become obsolete with regard to these proceedings, since CLAIMANT
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already chose arbitration (b.). Alternatively, the invalidity of Art. 23(6) FASA would not affect
Art. 23(3) FASA (c.).
a. Art. 23(6) FASA does not lead to unequal treatment of the RESPONDENT
54. Art. 23(6) FASA is a unilateral jurisdiction clause, which by definition is a dispute resolution clause that
gives one party a jurisdictional option that the other party does not have [cf. Polebaum, p. 1 ]. CLAIMANT
will demonstrate that the principle of party equality is not violated, since unilateral jurisdiction clauses
are internationally recognized as flexible remedies.
55. Art. 23(6) FASA states:
“In addition, the Seller has the right to bring any and all claims relating to payments
in the courts of Mediterraneo. The Buyer herewith submits to the jurisdiction of
the courts of Mediterraneo.”
56. When reaching its decision, the Tribunal should bear in mind that in international financing agreements
unilateral clauses are commonly used, where the lenders wish to have flexibility to select the dispute
resolution method most appropriate to the case at hand [cf. Polebaum, p. 1 ]. This situation is comparable
to the transaction in the case at hand. CLAIMANT wanted to minimize the risk in case RESPONDENT
refused to pay the purchase price. By drafting Art. 23(6) FASA, CLAIMANT only wanted flexibility to
select the dispute resolution method most appropriate in the event that RESPONDENT would not
pay.Thus, Art. 23(6) FASA merely gives CLAIMANT more flexibility in regard to payment claims.
It does not treat RESPONDENT unequally with regard to the arbitral procedure. To the contrary,
by not paying the owed amount RESPONDENT is in violation of its contractual obligation.
Which shows that CLAIMANT’s concerns were justified.
57. Furthermore, unilateral jurisdiction clauses are very common and recognized as valid in many
jurisdictions across the globe. Courts in common and civil law jurisdictions have upheld their validity
[BGH, 24.09.1998; BGH, 26.01.1989; Sablosky v. Gordon Company Inc., p. 646; Harris v. Green Tree Financial
Corp.; Pittalis v. Sherefettin; NB Three Shipping Ltd. v. Harebell Shipping Ltd.; Mauritius Commercial Bank Ltd. v.
Hestia Holdings Ltd.; Stacey/Taylor, p. 1; Browne/Clifford, p. 3 ]. CLAIMANT is aware that the Arbitral
Tribunal is not bound by these decisions, but they should be taken into account as they reflect existing
international practice.
58. Even in the Mme X Case where the court applied a strict standard and ruled that in this case that
particular unilateral jurisdiction clause was invalid, should not be taken into account here, because the
factual scenario is not comparable to the case at hand.
59. The court in the Mme X Case acknowledged that unilateral clauses are in principle valid. It ruled that
only such unilateral clauses are invalid where the party benefiting from the option has an unlimited
choice of fori [Stacey/Taylor, p. 2 ]. Unilateral clauses arguably remain valid if the unilateral choice is
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restricted to a limited number of precisely defined jurisdictions [Lange/Scherer, p. 1 ]. Art. 23(6) FASA
designates “the courts of Mediterraneo”, which limits CLAIMANT’s options solely to the courts of
Mediterraneo.
60. The court in the Mme X Case further based its ruling, that the particular clause was void, on the fact that
the clause was conditional on an event, which the party benefiting from the clause had full control of
[Stacey/Taylor, p. 2 ]. In the present case, however, Art. 23(6) FASA only regards payment claims. The
clause is conditional on the refusal of RESPONDENT to pay the purchase price and not on an event
which CLAIMANT is in control of. Hence, the unilateral jurisdiction clause in Art. 23(6) FASA is valid,
even by the standards set in the Mme X Case.
61. Consequently, the Tribunal should find that the unilateral jurisdiction clause in Art. 23(6) FASA is valid,
because unilateral jurisdiction clauses are internationally recognized as flexible remedies.
b. In any event, Art. 23(6) FASA has become obsolete since CLAIMANT already chose
arbitration
62. After CLAIMANT initiated the arbitration proceedings, Art. 23(6) FASA is not releveant anymore. The
options of choosing arbitration or litigation pursuant to Art. 23(6) FASA are mutually exclusive. In the
ongoing arbitration proceedings CLAIMANT can, therefore, no longer exercise its option to choose
litigation and, thus, cannot act contrary to the principle of equal treatment. In other words, CLAIMANT
waived its right to opt for litigation, by requesting for arbitration
[cf. The Law Debenture Trust Corporation PLC v. Elektrim Finance BV and Others ].
c. The alleged invalidity of Art. 23(6) FASA would not invalidate Art. 23(3) FASA
63. Furthermore, Art. 23(6) FASA could be struck out entirely, if the Tribunal were to consider it void,
without affecting the validity of Art. 23(3) FASA.
64. Paragraph 6 of Art. 23 FASA does not depend on the rest of Art. 23 FASA. It is a self-contained
provision relating only to payment claims. This is also underlined by the wording of the paragraph, as it
states “in addition”. It signifies that paragraph 6 is related to paragraph 5. It does not signify “in addition
to arbitration” and, therefore, is not connected to the arbitration agreement in Art. 23(3) FASA.
65. Even if the tribunal were to find that Art. 23(6) FASA is not a self-contained agreement, the validity of
Art. 23(3) FASA has to be upheld pursuant to the so called “blue pencil“ test [cf. Landolt, para. 10.26 ],
because one can delete Art. 23(6) FASA without causing the necessity to rewrite Art. 23(3) FASA.
66. Hence, the invalidity of Art. 23(6) FASA would not affect Art. 23(3) FASA, and the Tribunal would
have jurisdiction to decide the case.
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II. Even if Art. 23(3) FASA is considered void by the Tribunal, Sec. 21 OST contains a valid
arbitration clause in favor of CEPANI arbitration
67. Should the Tribunal find that Art. 23(3) FASA is void due to unequal treatment of the Parties, there is
no doubt that the Parties agreed to arbitrate under the CEPANI Rules, as Sec. 21 OST fills the gap in
favor of CEPANI arbitration.
68. CLAIMANT will show that the arbitration clause in Sec. 21 OST would still apply and would not have
been replaced (1.) and that Sec. 21 OST was acceptable to RESPONDENT even without an appeal
mechanism (2.).
1. Sec. 21 OST is applicable if Art. 23(3) FASA were to be considered void
69. Contrary to RESPONDENT’s submission [St. of Def., para. 10 ], Sec. 21 OST has not been replaced by
Art. 23(3) FASA if Art. 23(3) FASA were considered to be void.
70. Pursuant to Art. 2.1.21 Mediterranean Contract Law, which is the applicable contract law to the FASA,
the non-standard term takes precedence over the standard term if there is a conflict between them.
There must, however, be one important exception to this rule. It cannot apply where the individually
negotiated term is void. This is due to the fact that the non-standard term only takes precedence over
the standard term in the case of a conflict between them. Such conflict does not arise if the non-
standard term is invalid [cf. Ulmer/Schäfer in Ulmer/Brandner/Hensen § 305b BGB, para. 11;
Basedow in MüKo § 305b BGB, para. 5; Roloff in Erman §305b BGB, para. 5 ].
71. The dispute resolution clause in Sec. 21 OST provides for CEPANI arbitration. It states:
“(1) Any dispute arising out of or in connection with this Agreement shall be finally
settled under the Arbitration Rules of CEPANI –The Belgian Centre for
Arbitration and Mediation by one or more arbitrators appointed in accordance
with the said Rules.
(2) The place of the arbitration shall be Capital City, Mediterraneo.
(3) The arbitration shall be conducted in English.
(4) Any right of appeal shall be excluded.“
72. Assuming, but not conceding, that Art. 23(3) FASA is considered void, it could not take precedence
over Sec. 21 OST. Therefore, Sec. 21 OST has not been replaced and still applies, as the OST have
undisputedly been incorporated into the FASA.
73. Sec. 21 OST has not been replaced and provides for CEPANI arbitration, the Tribunal has jurisdiction,
even if it were to consider Art. 23(3) FASA void.
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2. Sec. 21 OST is acceptable to RESPONDENT even without an appeal clause
74. As laid out above [supra, para. 41 ], RESPONDENT was not bound by the Circular No. 265 and could,
therefore, have agreed on arbitration without appeal. Hence, Sec. 21 OST was acceptable to
RESPONDENT even without an appeal mechanism.
75. In conclusion, when assuming, but not conceding, that Art. 23(3) FASA is considered void due to
unequal treatment, the Parties still agreed on CEPANI arbitration pursuant to Sec. 21 OST.
B. The Tribunal has jurisdiction to rule on the dispute arising under the SALA
76. CLAIMANT requests the Tribunal to find that it has jurisdiction to rule on the disputes arising under the
SALA.
77. The Tribunal’s jurisdiction to rule on the claims arising out of the SALA follows from Art. 23(3) FASA,
which also governs the SALA (I.). Alternatively, if the Tribunal were to consider Art. 23(3) FASA void
due to unequal treatment, the Parties still agreed on CEPANI arbitration pursuant to Art. 21 NST (II.).
I. Disputes arising under the SALA are governed by the arbitration agreement in Art. 23(3)
FASA
78. The arbitration clause in Art. 23(3) FASA also governs the claims arising under the SALA and grants
the Tribunal jurisdiction to rule on the dispute arising under the SALA.
79. CLAIMANT will show, firstly, that Art. 23(3) FASA applies to the SALA (1.), secondly, that Art. 23(3)
FASA has not been replaced by Art. 23 SALA, as the latter does not constitute “a specific provision to
the contray” by virtue of Art. 45 FASA (2.), and, finally, that the SALA is also governed by the
arbitration clause in Art. 23(3) FASA (3.).
1. Art. 23(3) FASA applies to the SALA pursuant to Art. 45 FASA
80. The arbitration clause also applies to the SALA pursuant to Art. 45 FASA.
81. Art. 45 FASA expresses the clear intention of the Parties to extend the application of the FASA to
future contracts such as the SALA, as it states that:
“The provisions of this Agreement shall also govern all further and future contracts
between the Parties in relation to the Proton Therapy Facility purchased where such
contracts do not contain a specific provision to the contrary.”
82. The SALA is “in relation to the Proton Therapy Facility” because Art. 2 SALA obliges CLAIMANT to
add a third treatment room to the Proton Therapy Facility.
83. Thus, the Parties agreed that the provisions in the FASA would apply to the SALA, as long as the
SALA does not contain “a specific provision to the contrary”.
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2. Art. 23 SALA has not replaced Art. 23(3) FASA, by virtue of Art. 45 FASA
84. In contrast to RESPONDENT’s submission [St. of Def., para. 11 ], Art. 23 SALA does not constitute
such “a specific provision to the contrary”, since it only replaces Art. 23(5), (6) FASA and does not
affect the arbitration agreement in Art. 23(3) FASA. Art. 23 SALA states:
“(1) The Parties hereby agree that for interim and provisional urgent measures
application may be made to the courts of Mediterraneo or Equatoriania as
applicable.
(2) In addition, both Parties shall have the right to bring any and all claims in the
courts of Mediterraneo or Equatoriania to the jurisdiction of which they hereby
submit.”
85. Both Art. 23(1), (2) SALA and Art. 23(5), (6) FASA regard additional rights such as interim and
provisional measures and possible litigation. Art. 23(5), (6) FASA are merely modified by Art. 23 SALA
in a way that benefits RESPONDENT. Art. 23(1) SALA extends the national courts’ jurisdiction
regarding provisional and urgent measures to the courts of Equatoriana. Art. 23(2) SALA is a sign of
CLAIMANT’s good will towards RESPONDENT. It modifies the unilateral jurisdiction clause in Art.
23(6) FASA, by also granting RESPONDENT the option to opt for litigation.
86. Art. 23 SALA neither provides a dispute resolution clause in favor of arbitration, nor is arbitration
explicitly excluded. This provision is silent on arbitration. If the Parties had wanted to exclude
arbitration, they should have included an explicit provision to this effect, as required by Art. 45 FASA.
87. It follows, that the Parties did not draft Art. 23 SALA to replace Art. 23 FASA entirely. They merely
modified the provisions in Art 23(5), (6) FASA as an indication of CLAIMANT’s good will. The
arbitration agreement in Art. 23(3) FASA is not affected at all by Art. 23 SALA. Therefore, Art. 23
SALA cannot be viewed as “a specific provision to the contrary” pursuant to Art. 45 SALA.
3. Consequently, the arbitration clause in Art. 23(3) FASA also governs the SALA
88. The clear wording of Art. 45 FASA in combination with the generally accepted rule that arbitration
clauses, especially those contained in framework agreements, should be interpreted broadly [SchiedsVZ
2005, p. 166; Weigand, p. 481, para. 7.16 ], leaves no doubt that the Parties extended the application of the
arbitration clause in Art. 23(3) FASA to the SALA.
89. Art. 23(3) FASA is used as a Master Dispute Resolution Clause which applies to the SALA pursuant to
Art. 45 FASA. Such clauses are frequently used remedies to provide a single dispute resolution
mechanism where multiple contracts exist [cf. Born, p. 108 ]. Since the Parties incorporated Art. 23(3)
FASA as a Master Dispute Resolution Clause, there is no reason why Art. 23(3) FASA cannot
encompass disputes arising under the SALA [cf. Born, International Commercial Arbitration, p. 1110 ].
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90. Furthermore, Art. 23(3) FASA is valid regarding the jurisdiction over the SALA, even if the Tribunal
considers Art. 23(3) FASA void due to unequal treatment. As already demonstrated [supra, para. 85 ],
Art. 23(6) FASA, which according to RESPONDENT’s submission violates the principle of equal
treatment, has been replaced by Art. 23(2) SALA. Art. 23(2) SALA also allows RESPONDENT to bring
claims to the state courts of Mediterraneo and Equatoriana. Consequently, there is not even the
possibility of breaching the principle of equal treatment.
91. In conclusion, the Tribunal also has jurisdiction to decide the disputes arising under the SALA pursuant
to Art. 23(3) FASA.
II. Alternatively, the Tribunal has jurisdiction pursuant to Sec. 21 NST
92. Even if the Tribunal were to find that Art. 23(3) FASA is not applicable to the SALA, the Tribunal still
has jurisdiction to rule on the disputes arising under the SALA pursuant to Sec. 21 NST.
93. As will be shown in the following, the NST were incorporated into the SALA [Issue III B].
94. Art. 23 SALA has not replaced Sec. 21 NST, since it is silent on arbitration. Consequently, it cannot be
viewed as a conflicting individually negotiated clause and cannot take precedence over Sec. 21 NST.
94. Which states:
“Any dispute arising out of or in connection with this Agreement shall be finally
settled under the CEPANI Rules of Arbitration by one or more arbitrators
appointed in accordance with the said Rules.
The place of the arbitration shall be Capital City, Mediterraneo.
The arbitration shall be conducted in English.”
95. Hence, the Tribunal has jurisdiction to decide the dispute arising under the SALA pursuant to Sec. 21
NST, if the Tribunal were to find that Art. 23(3) FASA is void due to unequal treatment.
* * * *
96. In conclusion, the Arbitral Tribunal has jurisdiction to decide the disputes arising under both the SALA
and the FASA pursuant to the Master Dispute Resolution Clause in Art. 23(3) FASA. Alternatively, if
the Tribunal were to consider Art. 23(3) FASA void, it would still have jurisdiction with regard to the
FASA pursuant to Sec. 21 OST and with regard to the SALA according to Sec. 21 NST.
SECOND ISSUE: BOTH CLAIMS SHALL BE HEARD IN A SINGLE ARBITRATION
97. Contrary to RESPONDENT’s submission, the Arbitral Tribunal has jurisdiction to hear the disputes
arising under the FASA and the SALA in a single arbitration.
98. CLAIMANT requests the Arbitral Tribunal to hear both claims in a single arbitration pursuant to
Sec. 1 Art. 10 CEPANI (A.). Even if the Tribunal found that the Parties did not agree on a single
arbitration, CLAIMANT will demonstrate that the Arbitral Tribunal has jurisdiction to order single
arbitration according Sec. 1 Art. 12(1) CEPANI and that the Tribunal shall decide in favor of single
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arbitration (B.). Alternatively, if the Tribunal still has doubts to hear both claims in a single arbitration,
the Arbitral Tribunal shall request the Appointments Committee or the President of CEPANI for
consolidation pursuant to Sec. 1 Art. 13 CEPANI (C.). Moreover, any award rendered by the Arbitral
Tribunal in a single arbitration is enforceable under the DAL and the New York Convention (D.).
A. The Parties agreed on single arbitration pursuant to Sec. 1 Art. 10 CEPANI
99. Pursuant to Sec. 1 Art. 10 CEPANI, the disputes can be heard in a single arbitration. The Arbitral
Tribunal shall hear the disputes in a single arbitration, since the prerequisities of Sec. 1 Art. 10 CEPANI
are met. The Parties have agreed on arbitration under the CEPANI Rules pursuant to
Sec. 1 Art. 10(1)(a) CEPANI (I.) and the Parties have implicitly agreed on a single set of proceedings
pursuant to Sec. 1 Art. 10(1)(b) CEPANI (II.). Finally, the matters of both claims are related to one
another pursuant to Sec. 1 Art. 10(3) CEPANI (III.).
I. The Parties agreed on arbitration under the CEPANI Rules pursuant to
Sec. 1 Art. 10(1)(a) CEPANI
100. Sec. 1 Art. 10(1)(a) CEPANI requires that the parties have agreed to have recourse to arbitration under
the CEPANI Rules when the claims are made pursuant to various arbitration agreements. Consistent
with CLAIMANT’s submissions and the assumption raised by P.O. No. 1, para. 3(1)(b) both contracts
contain a valid CEPANI arbitration clause.
101. Since Art. 23(3) FASA is used as a Master Dispute Resolution Clause and also applies to the SALA
[supra, para. ], the Parties agreed to have recourse to arbitraton under the CEPANI Rules.
II. The Parties implicitly agreed on a single set of proceedings pursuant to
Sec. 1 Art. 10(1)(b) CEPANI
102. Pursuant to Sec. 1 Art. 10(1)(b) CEPANI, claims arising out of various contracts can be decided within
a single arbitration if the parties have agreed to do so. The present situation falls within the scope of
Sec. 1 Art. 10(1)(b) CEPANI, because it is legitimate to presume that parties implicitly agreed on single
arbitration by including one arbitration clause into different contracts.
103. The presumption that identical arbitration clauses contain an agreement on a single arbitration,
particularly applies to the present case, as the arbitration agreement for the FASA and the SALA,
contained in Art. 23(3) FASA, is identical (1.). Even if Art. 23(3) FASA was considered void,
Sec. 21 OST and Sec. 21 NST are sufficiently identical to justify the presumption in favor of single
arbitration (2.).
1. The presumption that identical arbitration clauses contain an agreement on a single
arbitration applies to the dispute at hand
104. It has been established, in commentary and in arbitral case law, that it is legitimate to presume that the
parties implicitly agreed on a single arbitration at the conclusion of various contracts if they chose
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identical arbitration clauses [cf. Gaillard/Savage, para. 521; Pair/Frankenstein, p. 1076; ICC No. 7184 ]. This
is due to the fact that the arbitration clauses represent the parties’ intentions [cf. Moses, p. 18; Chiu,
pp. 56, 57 ].
105. In the Contractor v. Employer A&B Case [ICC No. 5989 ], the Contractor (claimant) brought forth claims
arising out of a series of contracts which were, just like in the case at hand, all governed by a Basic
(framework) Agreement. The tribunal based its decision, to have the claims decided in a single
arbitration, on the aforementioned presumption, even though Employer A&B (respondent) explicitly
requested the claims to be decided in separate proceedings.
106. The Tribunal can therefore legimately presume that the Parties agreed to have their disputes decided in
a single set of proceedings. The Parties choice of a legal frame that contains the arbitration clause for the
contracts in question justifies this result. This presumption even applies where one party explicitly
objects to a single arbitration afterwards.
107. In the dispute at hand, Art. 23(3) FASA stipulates that the arbitration is to be settled under the
CEPANI Rules. It further lays down that the “arbitration shall be conducted before three arbitrators, in
the English language and shall be held in Vindobona, Danubia”. Considering the fact that Art.
23(3) FASA is used as a Master Dispute Resolution Clause, Art. 23(3) FASA applies to the SALA.
108. Since Art. 23(3) FASA is the arbitration agreement of the FASA and the SALA, both arbitration clauses
contain the application of the same Arbitration Rules, the same procedural language, the same number
of arbitrators and the same seat of arbitration. Thus, there is a specified symmetry concerning major
points between the arbitration clauses in the FASA and in the SALA. The fact that, contrary to
RESPONDENT’s submission, the CISG is applicable to the SALA [as will be shown in Issue III ], does
not interfere with CLAIMANT’s request for single arbitration. Pursuant to Sec. 1 Art. 10(2) CEPANI, a
difference in the applicable law does not give rise to a presumption regarding the incompatibility of the
arbitration agreements.
109. Consequently, it can be assumed that the Parties implicitly agreed to have their disputes decided within a
single arbitration according to Sec. 1 Art. 10(1)(b) CEPANI and the Tribunal shall rule in this regard.
2. Even if Art. 23(3) FASA is considered void, Sec. 21 OST and Sec. 21 NST are sufficiently
identical
110. Assuming, but not conceding, that the Arbitral Tribunal considers Art. 23(3) FASA void, the Parties still
agreed on a single arbitration, because the arbitration clauses of Sec. 21 OST regarding the FASA and
Sec. 21 NST regarding the SALA, which would establish the jurisdiction of the Tribunal in this case, are
sufficiently identical.
111. It is not necessary that the arbitration clauses are identical in the sense that they contain identical
invariant wording. They must not, however, be significantly different [cf. Bühler/Webster, p. 63 ]. The
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clauses are not significantly different if they exhibit a specified symmetry concerning major points, such
as the seat of arbitration, the appointment mechanism, the language and procedural rules [Yannaca-Small,
p. 228 ].
112. Both Standard Terms exhibit the required specified symmetry concerning major points for the
presumption to apply. This is due to the fact that both clauses provide for the same Arbitration Rules,
the same procedural language, the same number of arbitrators and the same seat of arbitration.
113. Further, the similarity of both clauses follows from their wording and location in the relevant standard
terms. Both clauses are located in Sec. 21 of the respective Standard Terms and are called “Dispute
Resolution”. Since both clauses use the same structure and choice of words, their regulatory content is
also equivalent. In other words, both contracts contain identically worded arbitration clauses. The only
difference is that paragraph 4 of Sec. 21 OST is not included in Sec. 21 NST.
114. It can, therefore, be concluded that Sec. 21 OST and Sec. 21 NST are sufficiently identical. Thus, the
Arbitral Tribunal shall find that the Parties agreed on a single set of proceedings pursuant to
Sec. 1 Art. 10(1)(b) CEPANI.
II. Since the matters in dispute are related, Sec. 1 Art. 10(3) CEPANI does not apply
115. Sec. Art. 10(3) CEPANI does not change the Parties’ agreement on a single arbitration. Contrary to
Sec. 1 Art. 10(3) CEPANI, which states that “the parties have not agreed to have their claims decided in
a single set of proceedings if the matters in dispute are not related”. In the present case the matters in
dispute are related, since the FASA constitutes the framework for the SALA according to
Art. 45 FASA.
116. It is undisputed between the Parties that both claims concern the Proton Therapy Facility delivered by
CLAIMANT. On the one hand, the Proton Therapy Facility using Passive Scattering Technique and, on
the other hand, the Proton Therapy Facility using Active Scanning Technology. The core elements of
both disputes are closely related, as there is only a difference regarding the technology used.
117. Moreover, both disputes are based on the same contract. Pursuant to Art. 45 FASA, “the FASA shall
govern all further and future contracts concluded by the Parties in relation to the Proton Therapy
Facility purchased where such contracts do not contain a specific provision to the contrary”. Since the
SALA also deals with the purchase of a Proton Therapy Facility and does not contain a provision to the
contrary, the FASA governs the SALA.
118. Hence, the matters of both cases are related and Sec. 1 Art. 10(3) CEPANI does not apply.
Consequently, the Arbitral Tribunal shall hear the claims arising out of FASA and SALA in a single
arbitration, since the Parties agreed on single arbitration according to Sec. 1 Art. 10 CEPANI.
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B. Alternatively, the Arbitral Tribunal shall order single arbitration pursuant to
Sec. 1 Art. 12 CEPANI
119. Even if the Tribunal were to find that the Parties did not agree on a single arbitration under
Sec. 1 Art. 10 CEPANI, it has jurisdiction to order a single arbitration pursuant to
Sec. 1 Art. 12 CEPANI and should proceed accordingly.
120. In the absence of a party agreement, the Arbitral Tribunal’s competence to order a single arbitration
follows from Sec. 1 Art. 12(1) CEPANI (I.). The Tribunal shall make use of its competence in the
present case, and order that both claims be heard in a single set of proceedings (II.).
I. The Tribunal has jurisdiction to order single arbitration pursuant to
Sec. 1 Art. 12(1) CEPANI
121. The Tribunal’s jurisdiction to rule on all issues arising out of Sec. 1 Artt. 9-11 CEPANI is based on the
wording and underlying policy of Sec. 1 Art. 12 CEPANI.
122. Sec. 1 Artt. 9-11 CEPANI, which deal with multiparty constellations in CEPANI arbitration, are all
based on the premise of an underlying party agreement. They do not, however, include provisions in
case such an agreement does not exist or is disputed. To the contrary, the jurisdiction to decide all
multiparty/multicontract issues arising out of Sec. 1 Artt. 9-11 CEPANI is centralized in
Sec. 1 Art. 12 CEPANI. Sec. 1 Art. 12 CEPANI reflects the principle of “competence-competence”, as the
Arbitral Tribunal rules on its own jurisdiction if disputes arise out of Sec. 1 Artt. 9-11 CEPANI
[cf. De Meulemeester/Verbist, para. 243 ]. This follows also from the wording of
Sec. 1 Art. 12(1), (2) CEPANI. Sec. 1 Art. 12(1) CEPANI states:
“The Arbitral Tribunal shall rule on all disputes in connection with Articles 9 to 11 of
the Rules, including disputes as to its own jurisdiction.” [emphasis added ]
123. This power to determine jurisdiction is stressed and repeated in Sec. 1 Art. 12(2) CEPANI:
“[…] the above stated power to determine jurisdiction.”
124. Hence, the Arbitral Tribunal has discretionary power to rule on all disputes in the absence of party
agreements, since Sec. 1 Art. 12 CEPANI centralizes the jurisdiction regarding all issues arising out of
Sec. 1 Artt. 9-11 CEPANI.
II. The Tribunal shall decide in favor of single arbitration according to Sec. 1 Art. 12 CEPANI
125. The Arbitral Tribunal shall make use of its jurisdiction and order that both claims be heard in a single
arbitration pursuant to Sec. 1 Art. 12 CEPANI, because the circumstances call for this result.
126. A decision for a single arbitration generally results in a significant saving of time and money, when the
disputes arise from the same set of facts and, therefore, are connected [cf. Chiu, p. 55 ]. In the present
case, the contract and the claims are closesly related [supra, paras. 116, 117]. Furthermore, the claims are
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both based on RESPONDENT’s refusal to pay the respective purchase price regarding the sale of similar
cancer treatment technologies. By hearing both disputes in a single arbitration, the Arbitral Tribunal
reaches a more complete picture of the facts, which decreases the potential for parallel or overlapping
arbitrations as well as the risk of factual errors. Since the disputes are based on a common set of facts, a
hearing in two separate proceedings would be time consuming, costly and redundant [cf. Born, Law,
p. 221 ].
127. Such a decision of the Tribunal does not violate the principle of party equality with respect to the
selection of arbitrators. Contrary to RESPONDENT’s submission [St. of Def., para. 14 ], the selection of
own arbitrators on the basis of the expertise required for the case can only be found in multiparty
arbitration [cf. Yannaca-Small, p. 236 ]. In contrast, the case at hand is a multicontract case. The Parties to
the single arbitration are each entitled to appoint one arbitrator. Since RESPONDENT nominated Prof.
Bianca Tintin and CLAIMANT nominated Dr. Arbitrator One as co-arbitrators [St. of Def., para. 2;
Fasttrack to CEPANI ], both Parties made use of their appointment right.
128. The fact that both claims concern the Proton Therapy Facility delivered by CLAIMANT [St. of Def.,
para. 12 ] further shows that there is no requirement to nominate two different arbitrators. To
accomodate with RESPONDENT’s submission, CLAIMANT suggests to hear Christina Arrango,
RESPONDENT’s candidate for an arbitrator in a second arbitration [St. of Def., para. 3 ], before the
Tribunal as an expert witness. This would allow RESPONDENT to have recourse to its claimed
expertise without having to bear the cost of two arbitrations.
129. Additionally, RESPONDENT may try to argue that a decision in favor of single arbitration would violate
the freedom of contract, because the Parties did not explicitly agree on single arbitration in their initial
agreement. However, the argument that single arbitration would violate the Parties’ freedom to contract
is inadequate. Single arbitration can be understood as a judicial modification of contracts that did not
include all of the necessary procedural provisions. In light of the Parties’ interest to reach a speedy and
fair resolution of their disputes, the decision in favor of single arbitration is the desirable and flexible
remedy even without an explicit agreement of the Parties [cf. Chiu, p. 56, 57 ].
130. Hence, the Arbitral Tribunal shall decide in favor of single arbitration, as the disputes are closely related,
the contracts are connected and advantages of a single arbitration outweigh RESPONDENT’s
submissions for separate proceedings.
C. Alternatively, the Arbitral Tribunal shall request the Appointments Committee or the
President of CEPANI to consolidate the arbitrations pursuant to Sec. 1 Art. 13 CEPANI
131. If the Tribunal still has doubts whether boths claims shall be heard in a single arbitration, CLAIMANT
respectfully suggests that the Tribunal requests the Appointments Committee or the President of
CEPANI to order consolidation pursuant to Sec. 1 Art. 13 CEPANI. The Tribunal is empowered to
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file such a request pursuant to Sec. 1 Art. 13(1) CEPANI (I.) and the requirements pursuant to
Sec. 1 Art. 13(2) CEPANI are met (II.).
I. The Arbitral Tribunal is authorized to request for consolidation pursuant to
Sec. 1 Art. 13(1) CEPANI
132. Pursuant to Sec. 1 Art. 13(1) CEPANI, the decision to order consolidation is taken either at the request
of the most diligent party or at the request of the Arbitral Tribunal. Thus, the Tribunal is explicitly
authorized to request consolidation.
II. The circumstances call for consolidation pursuant to Sec. 1 Art. 13(2) CEPANI
133. Further, the consolidation of the disputes is appropriate. Sec. 1 Art. 13(2) CEPANI lists a number of
requirements which are to be considered when determining whether the consolidation of disputes is
appropriate or not. In light of the Parties interest, the most appropriate way to solve the disputes is
consolidation.
134. CLAIMANT will demonstrate that these requirements are met in the present case. The Parties have not
excluded consolidation pursuant to Sec. 1 Art. 13(2)(a) CEPANI (1.), the claims are compatible and the
disputes arise from the same legal relationship pursuant to Sec. 1 Art. 13(2)(c) CEPANI (2.).
1. The Parties did not exclude consolidation pursuant to Sec. 1 Art. 13(2)(a) CEPANI
135. RESPONDENT may try to argue that consolidation may be ordered only when the parties’ agreement
explicitly provides for consolidation. Even if the arbitration agreements neither expressly preclude nor
expressly authorize consolidation, there is no reason that an agreement on consolidation cannot be
implied. An implied agreement to consolidation, where the parties’ contract is silent, can be derived
from contractual provisions and structure, as well as from considerations of efficiency [cf. Born, p. 225 ].
In the interest of procedural efficiency and to prevent inconsistent awards, the Arbitral Tribunal shall
therefore follow the above stated rule that consolidation shall be ordered when common questions of
law and fact exist and request the Appointments Committee or the President of CEPANI for
consolidation [cf. Compania Espanola de Petróleos v. Nereus Shipping, para. 6 ].
136. The fact that the Parties did not explicitly exclude consolidation pursuant to
Sec. 1 Art. 13 (2)(a) CEPANI also demonstrates that the Parties wanted to have all options to decide for
the most appropriate way to solve possible future disputes. If RESPONDENT wanted to exclude
consolidation, it should have done so explicitly by requesting the exclusion. Nevertheless,
RESPONDENT did not come up with this suggestion. In accordance with
Sec. 1 Art. 13(2)(a) CEPANI, RESPONDENT should have insisted on an exclusion in the dispute
resolution clause. Any objections raised at this point of the proceedings should not be considered by the
Arbitral Tribunal.
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2. The claims are compatible and arise from the same legal relationship pursuant to
Sec. 1 Art. 13(2)(c) CEPANI
137. Finally, the Arbitral Tribunal should request for consolidation, because the claims are compatible and
arise from the same legal relationship.
138. Pursuant to Sec. 1 Art. 13(2)(c) CEPANI, one of the main indicators to be considered when deciding
on consolidation is the question whether the claims that have been made pursuant to more than one
arbitration agreement are compatible and the disputes arise from the same legal relationship.
139. Compatibility exists where the arbitration agreements are concurring or identical. Since the clauses are
identical [supra, para.], consolidation is appropriate.
140. Moreover, the fact that RESPONDENT requested the appointment of a second arbitrator to decide the
claims under the SALA does not hinder consolidation. A different selection of arbitrators, once the
arbitrations have commenced, does not give rise to a presumption of incompatibility under
Sec. 1 Art. 13(2)(c) CEPANI [cf. Pair/Frankenstein, p. 1077 ].
141. Hence, the two arbitration agreements are compatible and the disputes arise from the same legal
relationship pursuant to Sec. 1 Art. 13(2)(c) CEPANI. The Arbitral Tribunal shall, therefore,
adopt CLAIMANT’s suggestion to request the Appointments Committee or the President of
CEPANI for consolidation of the two disputes.
D. Any award rendered by the Arbitral Tribunal in a single arbitration is enforceable under the
DAL and the New York Convention
142. Under Art. 34(2)(a)(iv) DAL and Art. V(1)(d) of the New York Convention, a court may refuse to
enforce an arbitration award if “[t]he composition of the arbitral authority or the arbitral procedure was
not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance
with the law of the country where the arbitration took place.”
143. RESPONDENT may try to argue that the Tribunal improperly consolidated the disputes in one arbitral
proceeding leading to problems of enforcement according to Art. 34(2)(a)(iv) DAL and
Art. V(1)(d) NY Convention. However, as has been established [supra, para. ], the Tribunal shall not
have concerns that two contracts were integrated such that the Parties contemplated a single arbitration
[cf. Karaha Bodas Company v. Perusahaan Pertambangan ]. This holds, even if the decision of the Arbitral
Tribunal overrides the express choice of the Parties, because Sec. 1 Art. 13(2) sent. 2 CEPANI does not
require the consent of all parties to the dispute [cf. Redfern/Hunter, Law, para. 3-85 ]. The fact that
RESPONDENT objects consolidation now, therefore, does not constitute a threat to the enforcement
of the arbitral award.
144. Additionally, RESPONDENT has to prove that it will suffer a prejudicial loss of contract rights as a
result of the consolidation [cf. Rubins, p. 379, fn. 118 ]. In this regard, CLAIMANT does not have doubts
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that the Tribunal will not fail to distinguish between the claims arising under the SALA and the FASA.
Therefore, any award rendered within a single arbitration is enforceable under the DAL and the NY
Convention.
* * * *
145. In conclusion, the Parties agreed on single arbitration by including the same arbitration clause in both
contracts. If the Arbitral Tribunal should not find that the Parties agreed on single arbitraton, it has the
jurisdiction to hear both claims in a single arbitration pursuant to Sec. 1 Art. 12 CEPANI, since both
claims are closely related to one another in the sense of Sec. 1 Art. 10 CEPANI. If the Arbitral Tribunal
is reluctant to hear both claims in a single arbitration, the Arbitral Tribunal shall follow CLAIMANT’s
suggestion to request for consolidation pursuant to Sec. 1 Art. 13 CEPANI, because there is no threat
regarding the enforceability of an award.
THIRD ISSUE: THE CISG GOVERNS THE CLAIMS ARISING UNDER THE SALA
146. CLAIMANT requests the Arbitral Tribunal to rule that the CISG governs the claims arising under the
SALA. The CISG applies to the SALA, since the SALA constitutes a sale of goods contract (A.) and the
Parties validly agreed on the incorporation of the NST into the SALA. It follows from Sec. 22 NST,
that the CISG is applicable to the SALA (B.).
A. The CISG is applicable to the SALA, since it is a sale of goods contract
147. Pursuant to Art. 1(1) CISG, the CISG applies to sale of goods contracts. As required in
Art. 1(1)(a) CISG, the Parties have their respective place of business in different Contracting States
[St. of Claim; P.O. No. 12 ]. Both the hardware and the software sold under the SALA are goods in terms
of the CISG (I.) and the SALA constitutes a sales contract with respect to Art. 3(2) CISG (II.).
I. The SALA’s subject matters are goods in the sense of Art. 1(1) CISG
148. The Active Scanning Technology, which is the SALA’s subject matter, consists of both the hardware
and software necessary for the treatment of cancer as defined in Art. 1 SALA. Not only the Active
Scanning Technology’s hardware (1.), but also its software (2.) are goods in terms of Art. 1(1) CISG.
1. The Active Scanning Technology’s hardware is a good pursuant to Art. 1(1) CISG
149. Although there is no definition of the term “goods” within the CISG, it is generally acknowledged, that
moveable objects are goods [Diedrich, Anwendbarkeit, p. 451; Schwenzer/Hachem in
Schlechtriem/Schwenzer, Art. 1 para. 16 ]. The Active Scanning Technology’s hardware is moveable and,
therefore, a good in the sense of Art. 1(1) CISG.
2. The Active Scanning Technology’s software is a good pursuant to Art. 1(1) CISG
150. Moreover, the Active Scanning Technology’s software is a good in the sense of Art. 1(1) CISG (a.).
Should the Arbitral Tribunal find that a distinction between standard and individual software is
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necessary to determine whether software is a good in terms of the CISG, the Active Scanning
Technology’s software is still a good, because it is standard software (b.).
a. The CISG applies to all kinds of software, including the Active Scanning Technology’s
software
151. The software of the Active Scanning Technology is a good in the sense of the CISG. Although, the
term “goods” generally refers to tangible objects, intangible objects such as software are not per se
excluded from the CISG [Lookofsky, p. 274 ]. It is generally accepted that software, if saved on disc or
other medium, is moveable and, therefore, a good in the sense of the CISG [Diedrich, Anwendbarkeit, p.
452; Advent Systems Ltd. v. Unisys Corp.; Primak, p. 215; cf. OGH, 21.06.2005 ]. The Active Scanning
Technology’s software was installed on the delivered hardware [P.O. No. 2, para. 23 ]. Consequently, the
software is a tangible object.
152. Further, the CISG applies to all kinds of software. It is not necessary to distinguish between standard
and individual software. The distinction is only prominent in Germany [OLG Köln, 26.08.1994;
LG München, 08.02.1995 ], because, contrary to the CISG, German law distinguishes between
manufacture and sales contracts [Diedrich, Maintaining, p. 334 ]. In light of an autonomous interpretation
under the CISG, a distinction between “goods to be manufactured” (individual software) and “finished
goods” (standard software) is inappropriate [cf. Silicon Biomedical Instruments BV v. Erich Jaeger GmbH ].
Refraining from the jurisdiction of German courts, both individual and standard software, are goods in
terms of the CISG.
153. Hence, the software of the Active Scanning Technology is a good pursuant to Art. 1(1) CISG.
b. Because the Active Scanning Technology’s software is standard software, the CISG still
applies, even if the Tribunal considers a distinction between individual and standard
software
154. In case that the Arbitral Tribunal follows the opinion that only standard software would be a good in
the sense of the CISG, the latter still applies, because the Active Scanning Technology’s software is
standard software. Standard software is characterized as being able to be bought off the shelf
[Diedrich, Revisited, p. 64 ]. CLAIMANT planned to sell the same software worldwide
[St. of Claim, para. 12 ]. CLAIMANT has already concluded contracts regarding the Active Scanning
Technology [P.O. No. 2, paras. 38, 39 ]. Without additional contracts, the heavily reduced price would
not have been economically reasonable. In order to be economically reasonable, the price for individual
software would have been considerably higher. This is the case, since individual software is tailored to
one specific customer, excluding other customers’ needs, which leads to high development expenses.
These expenses have to be transferred to this particular customer, whereas standard software’s expenses
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are transferred to all customers [cf. Primak, p. 218 ]. If development costs are born by a single customer,
such software is much more expensive than standard software.
155. Due to the phrase “particular for your needs” used by CLAIMANT in its letter from 5th July 2011
[Cl. Ex. No. 5 ], RESPONDENT might argue that the Active Scanning Technology’s software is
individual software. CLAIMANT rejects this opinion, as the phrase has to be viewed in its context. The
software of the Active Scanning Technology is not individual. Software is only individual when it is
developed specifically for the needs of the customer [Magnus in Staudinger, Art. 1, para. 44 ]. Though
RESPONDENT is a well-respected hospital in the field of cancer treatment, its patients and their needs
do not differ from other cancer patients. RESPONDENT wants to primarily treat prostate cancer
patients in the third treatment room [P.O. No. 2, para. 8 ]. For this purpose, RESPONDENT benefits
from CLAIMANT’s Active Scanning Technology. This Technology is not restricted to the treatment of
prostate cancer. It is also utilized to treat other types of cancer [P.O. No. 2, para. 8 ]. There is no
specialisation particular to RESPONDENT’s needs, but rather to the particular needs of any cancer
treatment center.
156. To conclude, the software of the Active Scanning Technology is standard software, which is a good in
the sense of Art. 1(1) CISG.
II. The SALA is a sales contract with respect to Art. 3(2) CISG
157. Furthermore, the CISG requires the SALA to be a sales contract in the sense of Art. 1(1) CISG. The
SALA is not solely a sales contract but a mixed contract, containing goods and services. Conversely to
Art. 3(2) CISG, the SALA as a mixed contract is treated like a sales contract, because the service and
labor part is not preponderant (1.). Furthermore, RESPONDENT might argue that the SALA is rather a
licensing agreement, and, therefore, does not constitute a sales contract. CLAIMANT will show that,
even if the Arbitral Tribunal were to find that the SALA is a licensing agreement, the CISG still
applies (2.).
1. The exception in Art. 3(2) CISG is not applicable, since the SALA’s preponderant part is not
on service or labor
158. As a mixed contract the SALA is to be distinguished from contracts, which have their preponderant
part in labor and services offered pursuant to Art. 3(2) CISG. This provision seeks to exclude contracts
from the scope of application of the CISG, which are more akin to contracts supplying services or labor
rather than sales. In order to determine the SALA’s main character its price composition (a.) and the
Parties’ intentions are to be considered (b.) [cf. Schlechtriem/Schroeter, para. 70; Huber/Mullis, para. 47; RRX
Industries, Inc. v. Lab-Con, Inc. ].
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a. The SALA’s price composition indicates that it is a sales contract
159. The CISG does not define the term “preponderant”. To determine the scope of application, at least
mixed contracts are excluded from the CISG, if more than 50% of the purchase price relates to labor
and service [Schöpflin, p. 77; Mistelis/Raymond in Kröll/Mistelis/Perales Viscasillas, Art. 3 para. 18;
Schwenzer/Hachem in Schlechtriem/Schwenzer, Art. 3 para. 20; Honnold, para. 60.1 ]. Thus, a comparison is
necessary to determine the ratio between the SALA’s value of services and labor, as well as the SALA’s
value of goods.
160. The market value of the Active Scanning Technology is USD 9.5 million [Resp. Ex. No. 3 ]. The
software’s development, testing and installation as well as the training of personnel are worth
USD 6 million, approximately 60% of the market value [ibid. ]. The remaining USD 3.5 million
constitute the necessary materials, in particular the magnets and the software itself, making up
approximately 40% of the market value. The left circle in the diagram above illustrates this.
161. The right circle demonstrates the effect of the agreement of the Parties. The Parties agreed in
Art. 10(1) SALA, that RESPONDENT was obliged to provide CLAIMANT with the necessary medical
data for the fine-tuning of the Active Scanning Technology and for testing this technology. CLAIMANT
allocated a value of USD 6 million to this contribution [Resp. Ex. No. 3 ]. This amount represents
approximately 60% of the market value of the SALA. The Parties set this amount off only against
CLAIMANT’s testing, development and installation of the software. The price of the materials, including
the magnets and the software itself, remained unchanged, which were allocated to an amount of
USD 3.5 million [ibid.; P.O. No. 2, para. 27 ]. This represents the final purchase price.
162. The software development, testing, and installation do not contribute to the SALA’s purchase price. In
addition, the Parties did not attribute a separate value to the personnel training [P.O. No. 2, para. 27 ], so
that this service, though part of the SALA’s market value, neither contributes to the above-
demonstrated offset, nor to the SALA’s final purchase price.
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163. The price allocation serves as an indication for determining the character of the SALA
[cf. Schlechtriem/Schroeter, para. 70 ]. The materials make up 100% of the SALA’s purchase price. Thus, the
preponderant, or rather exclusive part of the obligations under the SALA lies on sales and not on its
labor and services.
b. The Parties’ intention also indicates, that the SALA is a sales contract
164. Additionally the Tribunal shall regard the intention of the Parties [cf. Huber/Mullis, p. 47;
Kantonsgericht Zug, 14.12.2009 ]. It was the Parties’ intention to conclude a sales contract. That way, even
a predominant service part of a contract may still be rendered irrelevant if the parties’ intention clearly
was to conclude a sale of goods [Huber/Mullis, p. 47 ]. To determine the parties’ intention, the text of the
contract is to be taken into account [LG Mainz, 26.11.1998 ]. The title of the SALA starts with “Sales”.
This suggests the Parties’ intention to see the SALA as a sale of goods contract. Moreover, the wording
used in the SALA refers to sales. The Parties are defined as “Buyer” and “Seller” [Preamble SALA ]. The
“Buyer” “purchases” and the “Seller” “sells” [Art. 2 SALA ]. The word “licensing” in the title does not
interfere with the rest of the wording. It follows, that the Parties’ intention was to conclude a sale of
goods contract.
165. In accordance with the comparison of the value of the goods and the Parties’ intention, the SALA
constitutes a sales contract in the sense of Art. 1(1) CISG.
2. Even if the SALA is to be considered a licensing agreement, the CISG still applies
166. RESPONDENT might argue that the SALA is a licensing agreement. This, however, does not
contradict CLAIMANT’s submissions concerning the applicability of the CISG.
167. A licensing agreement can be an economic equivalent of a sales contract and thus, still be treated as sale
of goods contracts [Green/Saidov, p. 176 ]. If the license is granted perpetually for a one-off fee, such a
transaction is to be seen as an “economic equivalent” of sales, if there is no realistic chance of returning
the software [ibid.; Primak, p. 221 ]. RESPONDENT bought the Active Scanning Technology without
having to pay royalties in regard to its software [Art. 2 SALA ]. No further payments are required.
Therefore, the SALA’s purchase price is a one-off fee. Moreover, the license is granted perpetually,
because it is granted for the life cycle of the whole Proton Therapy Facility [ibid. ]. Consequently, there is
no chance of returning the software, so that the transaction of the Active Scanning Technology’s
software is perpetual. Hence, even if the SALA were to be seen as a licensing agreement, it would still
be treated as a sales contract in the sense of the CISG.
168. This does not contradict the prerequisites of Art. 30 CISG, which in principle require the seller to
transfer all rights to the object to the buyer [Diedrich, Maintaining, p. 335 ]. A seller of software usually
restricts the copyright to the software to the extent that the buyer has the right to use the software but
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not to sell the intellectual property right [ibid. ]. Such restriction does not necessarily preclude a
transaction of software from being treated as sales [Green/Saidov, p. 176 ]. The Parties to the SALA
agreed upon such a copyright clause in Art. 11 SALA. However, RESPONDENT is able to freely
proceed with its own copy as it wishes [cf. Art. 11 SALA ]. The intellectual property right to the
software remains with CLAIMANT. There are no further restrictions; this is an economic equivalent of
sales. Thus, the property restriction in Art. 11 SALA does not hinder the SALA from being treated as a
sales contract.
B. The Parties agreed on the application of the CISG by incorporating the NST into the SALA
169. The Tribunal is requested to find that the Parties validly incorporated CLAIMANT’s July 2011 Standard
Terms (hereinafter “NST” ) pursuant to Art. 46 SALA into the SALA (I.). CLAIMANT submits that,
pursuant to Sec. 22 NST, the CISG applies to the SALA (II.). Should the Arbitral Tribunal find that the
NST were not included, the CISG is still applicable to the SALA (III.).
I. The Parties incorporated the NST into the SALA pursuant to Art. 46 SALA
170. The Parties concluded the SALA, which includes Art. 46 SALA. Art. 46 SALA provides for the
application of CLAIMANT’s Standard Terms by stating:
“This Agreement is subject to the Seller’s Standard Terms and Conditions for Sale.”
171. Two versions of CLAIMANT’s Standard Terms exist: First, the November 2000 Standard Terms
(hereinafter “OST” ), which were included into the FASA pursuant to Art. 46 FASA
[St. of Claim, para. 23; St. of Def., para. 16 ], and second, the NST which apply to the SALA. The wording
in Art. 46 SALA “Standard Terms and Conditions for Sale” refers to those standard terms, which were
incorporated into the SALA. The CISG itself does not postulate explicit requirements for the
incorporation of standard terms [Schmidt-Kessel, p. 3445 ]. These requirements have to be derived from
the CISG’s general provisions on the formation of contracts [Schlechtriem/Schroeter in
Schlechtriem/Schwenzer (German), Art. 14, paras. 33, 34 ]. The incorporation of standard terms, therefore,
requires an explicit and clear reference to the incorporation of the standard terms by the offeror
[Schlechtriem/Schroeter in Schlechtriem/Schwenzer, Art. 8, para. 52] and the recipient’s consent on it
[Huber/Mullis, p. 31 ]. CLAIMANT’s reference to the NST was explicit and clear in accordance with Art.
8(2) CISG (1.) and RESPONDENT agreed on the incorporation of the NST pursuant to Art. 18 CISG
(2.).
1. CLAIMANT’s proposal refers to the incorporation of the NST in the sense of Art. 8(2) CISG
172. A clear and explicit reference to incorporate standard terms requires that the terms are part of the
proposal [cf. Schlechtriem/Schroeter in Schlechtriem/Schwenzer, Art.14, para. 36; Piltz, p. 134 ]. The SALA
includes Art. 46 SALA, which was drafted by CLAIMANT [Cl. Ex. No. 5 ]. By drafting Art. 46 SALA,
CLAIMANT wanted to incorporate the NST into the SALA. Therefore, the NST were part of the
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SALA’s proposal. Standard terms become part of a proposal pursuant to Art. 8(2) CISG, if
“a reasonable person of the same kind in the same circumstances as the other party”, would have
understood that the terms were supposed to be part of the proposal [Huber, para. 3.1 ]. CLAIMANT’s
intention to incorporate the NST was apparent on two occasions (a.), and RESPONDENT had
reasonable opportunity to take notice of the NST (b.).
a. CLAIMANT clarified its intention to incorporate the NST on two occasions
173. CLAIMANT clarified its intention to incorporate the NST into the SALA to RESPONDENT on two
occasions: First, during their final negotiation meeting, in which Dr. Vis drew attention to the NST
[Resp. Ex. No.2 ]. Second, in Dr. Vis’ letter, in which he explicitly stated that the NST were already
available on CLAIMANT’s website [Cl. Ex. No.5 ]. CLAIMANT printed the website’s address at the
bottom of the letter and included the advice to note the NST. For enhanced emphasis, the reference
“new” was underlined and in italics. Moreover, Dr. Vis pointed out, that the NST would apply from the
beginning of July 2011 onwards. Since the SALA was concluded after the reference on July 5th 2011, the
NST apply.
174. As a result, the NST were part of the SALA’s proposal.
b. RESPONDENT had reasonable opportunity to take notice of the NST
175. The incorporation of standard terms does not require the recipient’s factual knowledge of the terms’
content [Magnus, p. 317]. On the contrary, a reasonable opportunity for the recipient to take notice of
the standard terms is sufficient in order to incorporate standard terms [ibid.]. CLAIMANT made the
NST available for RESPONDENT in such a way, that RESPONDENT could take notice of the NST in
a reasonable manner. Contrary to RESPONDENT’s submission [St. of Def., para. 17 ], RESPONDENT
had the obligation to obtain knowledge about the NST. The risk of taking notice of standard terms is
on the recipient’s side, if the offeror’s reference to these terms is apparent in the sense of Art. 8(2) CISG
and the recipient had reasonable opportunity to take notice of the standard terms [cf. Berger, FS Horn, pp.
17, 18 ].
176. RESPONDENT had the opportunity to take notice of the NST, as CLAIMANT provided these Terms
on its website in Mediterranean and English [Cl. Ex. No. 5; Resp. Ex. No. 2 ].
177. By providing the NST on its website, CLAIMANT performed its duty to make the NST available to
RESPONDENT. The offeror’s duty to make standard terms available does not require a general duty of
transmission. The duty to provide notice rather requires that the offeror makes its terms “otherwise
available” [Schlechtriem/Schroeter in Schlechtriem/Schwenzer (German), Art. 14, para. 43 ]. A reference to the
offeror’s website is a sufficient way to make the standard terms available
[Berger, FS Horn, p. 18; Eiselen, para. 2.5 ]. This is appropriate as nowadays it is common between
contracting international parties to provide their standard terms on their websites [Eiselen, para. 3.4 ]. As
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RESPONDENT and CLAIMANT are contracting international parties, the Tribunal should find that
CLAIMANT fulfilled its duty to make the NST available by providing them on its website.
178. Further, the incorporation of standard terms requires the terms to be available in a language, which the
recipient understands or is at least in the given circumstances required to understand the language used
[Piltz, p. 135; Huber, para. 3.3 ]. CLAIMANT provided a Mediterranean and an English version of the
NST on its website [Cl. Ex. No. 5; Resp. Ex. No. 2 ].
179. RESPONDENT’s assistant speaks Mediterranean [Resp. Ex. No. 3 ]. CLAIMANT was aware of this fact,
as its assistant had communicated with CLAIMANT’s employees in Mediterranean during their meetings
[P.O. No. 2, para. 35 ]. The availability of standard terms in a language, which an assistant of the other
party commands, is sufficient to incorporate standard terms [cf. OGH, 31.08.2005; OLG Düsseldorf,
21.04.2004 ]. RESPONDENT’s assistant was in command of the Mediterranean language and, even
more, participated in the contract negotiations of the SALA [Resp. Ex. No. 2 ]. The assistant’s absence
from July 5th to July 20th 2011 does not affect the incorporation of the NST [Resp. Ex. No. 2 ], because
the non-attendance of RESPONDENT’s employee is to be attributed to RESPONDENT. CLAIMANT
was rather entitled to rely on the assistant’s involvement, since RESPONDENT failed to inform
CLAIMANT about the circumstance that the assistant had been on holiday. The assistant returned to
work on July 20th 2011. On this day, the Parties concluded the SALA [Resp. Ex. No. 2 ]. At least on this
day, the assistant was able to explain the Mediterranean NST to RESPONDENT. Hence,
RESPONDENT had reasonable opportunity to take notice of the NST.
180. Furthermore, CLAIMANT went beyond its obligation to make the terms available by providing also an
English version of the NST. This version was online on CLAIMANT’s website from July 1st to 4th 2011.
RESPONDENT was aware of this fact [Resp. Ex. No. 2 ] and, therefore, the period, in which the English
version was online, does not hinder the incorporation of the NST. Admittedly, the English version was
partially misleading or at least difficult to understand. However, incomprehensible standard terms
cannot be equated with cases, in which the offeror fails to make standard terms available
[OLG Düsseldorf, 21.04.2004 ]. CLAIMANT did provide the English version on its website and,
furthermore, referred to this website. Additionally, CLAIMANT supplied a phone number on its website
from July 5th to July 21st 2011 during the period in which the English version was not online [P.O. No.
2, para. 32 ]. By providing its phone number, CLAIMANT stressed its willingness to answer any
questions regarding the NST. Consequently, RESPONDENT had a multitude of opportunities to fulfill
its duty to obtain knowledge about the NST.
181. It follows that RESPONDENT had the opportunity to take notice of the NST. RESPONDENT was
aware of its duty. In particular, CLAIMANT explicity requested RESPONDENT to note the new Terms
at the bottom of Dr. Vis letter [Cl. Ex. No. 5 ]. This request states:
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“Please note our new Standard terms and Conditions of Sale on www.ictproton.com“
[emphasis added]
182. CLAIMANT requests the Tribunal to confirm, RESPONDENT’s duty to contact CLAIMANT in order
to ask about the English NST’s content, or to state that it could not understand the Mediterranean
version [cf. Schmidt-Kessel in Schlechtriem/Schwenzer, Art. 8 para. 53; OLG Hamm, 08.02.1995 ].
RESPONDENT failed to comply with its duty [P.O. No. 2, para. 33 ]. This cannot be held against
CLAIMANT, as such request would also have been reasonable. RESPONDENT had more than enough
time to contact CLAIMANT in order to challenge the NST’s availability. CLAIMANT referred to its
NST before the contract was concluded on July 20th 2011 [Cl. Ex. No. 5; Cl. Ex No. 6; Resp. Ex. No. 2 ].
RESPONDENT, therefore, had more than six weeks from the first reference and still two weeks from
the second reference onwards to make itself familiar with the NST and to inquire about the NST.
183. It cannot be held, that RESPONDENT was not aware of the NST and their scope of application. Thus,
Art. 46 SALA refers to the application of the NST to the SALA.
2. RESPONDENT agreed on the incorporation of the NST pursuant to Art. 18 CISG
184. By signing the SALA, RESPONDENT agreed on the incorporation of the NST. CLAIMANT’s
intention to incorporate the NST was understandable and clear for RESPONDENT [supra, paras. 173].
In order to avoid the incorporation of standard terms, it is the recipient’s duty to explicitly object to the
incorporation [cf. Eiselen, para. 2.13 ]. RESPONDENT did not challenge the incorporation of the NST
[P.O. No. 2, para. 31 ]. Instead, it concluded the SALA with CLAIMANT and, thereby, agreed to the
inclusion of the NST by means of Art. 46 SALA.
185. In light of the above, the Tribunal shall find that the Parties agreed on the incorporation of the NST
into the SALA and RESPONDENT had reasonable opportunity to take notice of the NST. As a result,
Art. 46 SALA refers to the application of the NST.
II. The NST provide for the application of the CISG to the SALA
186. Since the Parties incorporated the NST into the SALA, Sec. 22 NST is relevant to determine the Parties’
choice of law in regard to diputes arising under the SALA.
Sec. 22 NST constitutes a choice of law clause by stating:
“The contract is governed by the law of Mediterraneo.” [emphasis added]
187. Sec. 22 NST provides for the application of the CISG. This follows from a comparison with Sec. 22
OST, in which the Parties excluded the application of the CISG with regard to disputes arising under
the FASA. Sec. 22 OST states:
“The contract shall be governed by the national law of Mediterraneo as set out in the
statutes of Mediterraneo and developed by its courts.” [emphasis added]
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188. By including Sec. 22 OST into the FASA, the Parties excluded the CISG with regard to disputes arising
under the FASA. Concerning this matter, the Parties agree that the Mediterranean Sale of Goods Act
applies to the FASA [St. of Claim, para. 24; St. of Def., para. 16; P.O. No. 2, para. 20 ]. This complies with
Sec. 22 OST’s wording, since it refers only to “the national law of Mediterraneo”. A reference to “non-
unified” states law is sufficient in order to exclude the CISG [ICC No. 11333, Ferrari in
Schlechtriem/Schwenzer, Art. 6, para. 21 ]. Hence, the Parties excluded the application of the CISG in Sec.
22 OST with regard to disputes arising under the FASA.
189. Rather than adopting this conclusion to Sec. 22 NST, CLAIMANT requests the Tribunal to look at the
specific content of this clause. Compared to the OST’s choice of law clause, the choice of law clause in
the NST refers to Mediterranean law in general, rather than to non-unified (“national” ) Mediterranean
law, as it states: “the law of Mediterraneo”. The wording used is not sufficient to exclude the
applicability of the CISG, as it does not refer specifically to non-unified law
[cf. Asante Technologies v. PMC-Sierra ]. Instead, the choice of law clause referring to the law of a state
generally leads to the applicability of the CISG, if the state is a member state of the CISG [Reifner, p. 56;
Ferrari in Schlechtriem/Schwenzer, Art. 6, para. 22; Drago/Zoccolillo, p. 17 ]. Thus, the Parties did not exclude
the application of the CISG in Sec. 22 NST.
190. Contrary to RESPONDENT’s submission [St. of Def., para. 18 ], Dr. Vis’ statement [Resp. Ex. No. 2 ]
does not impede the conclusion that Sec. 22 NST provides for the application of the CISG. Dr. Vis
expressly stated that he was not a lawyer before he answered RESPONDENT’s questions on the
changes of the OST and the NST [P.O. No. 2, para. 31 ]. As demonstrated, the difference between the
choice of law clauses in Sec. 22 OST and Sec. 22 NST arises from their wording [supra, para. 189 ]. This
is a small but significant difference. Since Dr. Vis, unlike the members of the Arbitral Tribunal, is not a
legal expert, he could not recognize the difference between Sec. 22 OST and Sec. 22 NST. For this
reason, he was not able to inform RESPONDENT about the change in the choice of law clauses. Dr.
Vis’ effort to answer RESPONDENT’s questions does not lead to CLAIMANT being in a less favorable
position, because Dr. Vis’ statement on the Standard Terms’ has no legal consequences. Accordingly,
his statements do not hinder the application of the CISG in terms of the disputes arising under the
SALA.
191. The CISG holds precedence over other national law, as long as the affected state has ratified the CISG
[cf. OLG Dresden, 27.12.1999 ]. Mediterraneo, as a member state of the CISG, has transformed the CISG
into its state law [P.O. No. 2, para. 12 ]. Thus, the CISG applies to the SALA.
III. Even if the NST were not incorporated, the CISG is still applicable to the SALA
192. If the Tribunal were to find that the NST have not been included into the SALA, the CISG still applies.
The Parties did not agree on a choice of law in any other way (1.). Particularly, the OST cannot be taken
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into account to determine the Parties’ choice of law concerning the SALA. In the absence of any
provision to the contrary, the CISG still is applicable to the SALA (2.).
1. The Parties did not choose a specific law in any other way
193. Should the Arbitral Tribunal find, that the NST have not been incorporated into the SALA, the OST
cannot be taken into account in order to determine the Parties’ choice of law.
194. In order to include standard terms into a contract, the parties’ mutual consent is necessary
[supra, para. 163 ]. By referring to the NST, CLAIMANT revealed its intention to incorporate only the
NST into the SALA. Moreover, CLAIMANT referred to the date of effect of the NST [Cl. Ex. No. 5;
Resp. Ex. No. 2 ], indicating that the OST apply only to contracts concluded until June 30th 2011. Since
the SALA was concluded on July 20th 2011 [Cl. Ex. No. 6 ], the OST are no longer applicable to the
SALA. Consequently, the Parties did not intend to incorporate the OST into the SALA with the result
that the OST have no bearing on this contract. As a result, there would be no choice of law clause.
2. In case there is no choice of law concerning disputes arising under the SALA, the CISG is
applicable
195. Lacking a choice of law by the Parties, the CISG is applicable to the SALA. This is due to the fact that
first, the Parties have not excluded the application of the CISG and that second, the Parties have their
place of business in different Contracting States pursuant to Art. 1(1) lit.a) CISG [supra, para. 147].
* * * *
196. In conclusion, CLAIMANT requests the Tribunal to find that the Active Scanning Technology’s hard-
and software are goods and the SALA is a sales contract in the sense of Art. 1(1) CISG with the
consequence that the CISG applies to the SALA. Furthermore, that the Parties incorporated the NST
into the SALA pursuant to Art. 46 SALA. The NST contain the Parties’ choice of law in Sec. 22 NST.
This clause provides for the application of the CISG. Therefore, the Parties agreed to apply the CISG to
the SALA. Finally, the Tribunal shall conclude that the CISG still governs the SALA, even if the NST
were not incorporated into the SALA.
REQUEST FOR RELIEF
In light of the above submissions, counsel for CLAIMANT, respectfully requests the Arbitral Tribunal
to find that
(1) the Arbitral Tribunal has jurisdiction to deal with the payment claims raised by CLAIMANT;
(2) the Arbitral Tribunal shall hear both claims in a single arbitration;
(3) as the SALA constitutes a sales contract in the sense of the CISG and the Parties validly
included the NST into the contract, the CISG governs the disputes arising under the CISG.
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For Mediterraneo
signed __________________________, December 12th 2013
ATTORNEYS
______________________ ______________________
(David Böckenförde) (Martin Bongartz)
_____________________ _____________________
(Laura Gauschinski) (Julian Lafere)
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