DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
TWENTY THIRD ANNUAL
WILLEM C. VIS INTERNATIONAL COMMERCIAL ARBITRATION MOOT
2015-16
MEMORANDUM FOR CLAIMANT
DR. AMBEDKAR GOVERNMENT LAW COLLEGE, CHENNAI, INDIA
ON BEHALF OF
AGANST
KaihariWaina Ltd
Vino Veritas Ltd
12 Riesling Street
56 Merlot Rd, St Fundus
Oceanside
Vuachoua
Equatoriana
Mediterraneo
- CLAIMANT–
- RESPONDENT -
V. JAI BHARATH | R. PRANAV | S. BALAJI | APARNA SUNDAR B | RAMASWAMY
MEYYAPPAN | R.D. ASHOK KUMAR| RIZWANA FATHIMA N
MEMORANDUM FOR CLAIMANT
Page 1
DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
TABLE OF CONTENTS
INDEXOFAUTHORITIES..........................................................................................................4
INDEX OFCASES.........................................................................................................................6
LIST OF ABBREVIATIONS.....................................................................................................10
CHRONOLGY OF EVENTS....................................................................................................12
LEGAL PLEADINGS……………………………………………………………………..…..14
ISSUE I: THE ARBITRAL TRIBUNAL HAS POWER TO ORDER RESPONDENT TO
PRODUCE THE DOCUMENTS………………………………………………………………..14
I.
Documents requested by CLAIMANT are relevant and material to the outcome of this
arbitration……………………………………………………………………………….14
II.
Parties‘ right to be heard will be infringed and proceedings would not be conducted fair
and equally if no document is produced……………………………………………….16
III.
Exclusion of DISCOVERY in the contract was to cover only extensive discovery
proceedings…………………………………………………………………………….18
ISSUE II: THE CLAIMANT ENTITLED TO DAMAGES FOR NON-DELIVERING THE
5.500 BOTTLES………………………………………………………………………………19
I.
RESPONDENT is obliged to fullfill its obligation and non -performance of obligation as
a pre requeisite for remidies to CLAIMANT…………………………………………20
II.
CLAIMANT claims the RESPONDENT profits as loss of profit made out through
substitute transaction……………………………………………………………….….20
III.
The CLAIMANT is entitled to loss of profit and the damages of non-material interest.22
ISSUE III: THE CLAIMANT IS ENTITLED TO RECOVER THE COSTS INCURRED IN
THE LITIGATION AGAINST RESPONDENT………………………………………………23
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
I.
Legal costs are recoverable under article 74 of cisg…………………………………24
II.
Claimant‘s action was foreseeable by the respondent……………………………….25
III.
The
claim
in
regard
to
costs
for
declaratory
relief
is
tenable
and
justifiable………………………………………………………………………….….26
REQUEST FOR RELIEF………………………………….……………………..………..27
MEMORANDUM FOR CLAIMANT
Page 3
DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
INDEX OF AUTHORITIES
Miles and Schwarz
International Comparative Legal Guide for
International Commercial Arbitration,
p.2
Marc Goldstein
Crossing The Common Law-Civil Law Divide In
International Arbitrator A Primer For The
Perplexed Practitioner,
P.2
W.MilesAndF.T.Schwarz
Taking Of Evidence In International Commercial
Arbitration’ In International Comparative Legal
Guide To International Arbitration 2004
(London, Global Legal Group, 2003).
J.Zekoll And J. Bolt,
Die PflichtZurVorlage Von
UrkundenImZivilprozessAmerikanischeVerhaltnisse In Deutschland’ [2002]
NJW, 3129, 3129;
BGH, 11 June 1990.
Van VechtenVeeder
Evidential Rules in International Commercial
Arbitration: From the Tower of London to the New
1999 IBA Rules, 65 Arbitration 291 (1999);
IBA Working Party, Commentary on the New IBA
Rules of Evidence in International Commercial
Arbitration, 2 Bus. Law Int’l 14 (2000).
MEMORANDUM FOR CLAIMANT
Page 4
DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
MERKIN
Robert Arbitration Law LLP, London/Singapore,
2004.
Girsberger/Voser
N 686-689 and relevant Case Law in Muller
International Arbitration, 269-283.
SchweizerischesBundesgericht
7 January 2004 [2004] 22 ASA Bulletin,
pp.592-604;
11 November 2002 [2003] 21 ASA Bulletin,
pp. 384-390.
Christoph H. Schreuer,
The ICSID Convention: A Commentary 672-73,
970-71 (2001).
Cf.Narayanan/Menon,
Vindobona J Intl. Comm. L. And Arb. 2000.
F. Schaffler
Zulassigkeit Und Zweckmassigkeit Der
AnwendungAngloamerikansicherBeweismethodenI
nDeutschen Und InternationalenSchiedsverfahren
(Munich, Sellier European Law Publisher, 2003).
M McCabe,
Arbitral Discovery And The Iran-United
States Claims Tribunal Experience (1986)
20 Intl Lawyer 499, 502-11.
Harry M. Flechtner,
Reemedies under the New International
Sales Convention: The Perspective from Article 2
of the U.C.C., 8J.L. & COMM. 53, 97, 106 (1988).
MEMORANDUM FOR CLAIMANT
Page 5
DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
INDEX OF CASES
Transp. Workers Union of Phila., AFL-CIO, Local 234 v. Phila. Transp. Co.,
283 F. Supp. 597, 600 (E.D. Pa. 1968).
Thompson v. Gjivoje
896 F.2d 716, 721 (2d Cir.1990);
William C. Atwater & Co. v. Panama R.R. Co.,
246 N.Y. 519, 524, 159 N.E. 418 (1927).
Comriev.Enterasys Networks, Inc.,
837 A.2d 1, 13 (Del. Ch.2003).
Nu Swift PLC v. White Knight I SA,
Mealey‘s International Arbitration Report,
at E-1 (Feb. 1997).
Heyman v. Darwins, Ltd
[1942] A.C. 356 (H.L.), per Viscount Simon.
Delchi Carrier, S.p.A. v. Rotorex Corp.
2d instance U.S. Circuit Court of Appeals (2d Cir.)
6 December 1995
MEMORANDUM FOR CLAIMANT
Page 6
DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
EGYPT CRCICA
Arbitration Cairo
3 October 1995
(Electrical apparatus case)
FINLAND Helsinginhoviokeus
(Helsinki Court of Appeals)
26 October 2000
(Plastic carpets case)
RUSSIA
Tribunal of International Commercial Arbitration at the Russian Federation Chamber of
Commerce and Industry,
Award 406/1998 of 6 June 2000
GERMANY
Oberlandesgericht Hamburg
26 November 1999 (Jeans case)
CLOUT case No. 130
GERMANY
Oberlandesgericht Düsseldorf
14 January 1994
MEMORANDUM FOR CLAIMANT
Page 7
DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
GREECE Court of Appeals of Lamia
2006
docket No. 63/2006
Sunflower seed case
SPAIN
Audiencia Provincial de Valencia
31 March 2005
FrischaffProduktions v. Guillem Export
GERMANY
OberlandesgerichtNaumburg
27 April 1999
AUSTRALIA
Supreme Court of Queensland
17 November 2000
Down Investments Pty Ltd. v. Perjawa Steel SDN BHD
SWITZERLAND
Kantonsgericht Zug
12 December 2002
MEMORANDUM FOR CLAIMANT
Page 8
DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
DENMARK
17 October 2007,
Højesteret [Supreme Court]
ZweiradTechnik v. C. Reinhardt A/S
MEMORANDUM FOR CLAIMANT
Page 9
DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
LIST OF ABBREVIATIONS
Abbreviation
Explanation
Amd.
Amended
art./arts.
Article / Articles
BGH
Bundesgerichthof [Federal Supreme Court—Germany]
BGer
Bundesgericht [Federal Supreme Court—Switzerland]
CISG
United Nations Convention on Contracts for the International Sale
of Goods
Clar.
Clarification
ed.
Edition
ed. / eds.
Editor / Editors
e.g.
Exemplum gratii[for example]
et al.
Etalii[and others]
etc.
Etcetra[and other things]
F.
Facts
ft
Footnote
Gen. Stn.
General Standard
HG
Handelsgericht [Commercial Court—Switzerland]
ICC
International Chamber of Commerce
Id.
Ibidem[in the same source]
i.e.
Id est[that is]
LG
Landgericht [District Court—Germany]
Ltd.
Limited Company
No.
Number
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
NY
Convention United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards
OGH
ObersterGerichthof [Supreme Court—Austria]
OLG
Oberlandesgericht [Court of Appeal—Germany and Austria]
Para.
Paragraph
Passim
To be found at various places throughout the text
Pt.
Part
Proc. Ord.
Procedural Order
Req. for Arb.
Request for Arbitration
St. Of Claim
Statement of Claim
St. of Def.
Statement of Defense
UK
United Kingdom
UN
United Nations
UNCITRAL
United Nations Commission on International Trade Law
UNCITRAL Rules
UNCITRAL Arbitration Rules
UNIDROIT
International Institute for the Unification of Private Law
UNIDROIT Principles
UNIDROIT Principles of International Commercial Contracts of
2004
USA
United States of America
Vol.
Volume
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
CHRONOLGY OF EVENTS
The parties involved in the present arbitration:
CLAIMANT
KaihariWaina Ltd
12 Riesling Street
Oceanside
Equatoriana
RESPONDENT
Vino Veritas Ltd
56 Merlot Rd
St Fundus
Vuachoua
Mediterraneo
22nd April 2009
Framework agreement. Concluded between CLAIMANT
and RESPONDENT
4th November 2014
CLAIMANT ordered for 10,000 wine bottles.
1st December2014
RESPONDENT replied that it will deliver only 4,5005,000 bottles.
3rd November 2014
RESPONDENT announced its customers through fae about
that
extraordinary drop in quantity.
25th November 2014
Meeting with Buharit and Mr.weis banner.
2nd December 2014
Demanded again for 10,000 bottles.
4th December 2014
RESPONDENT replied that no bottle would be delivered
and terminating the relationship.
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
8th December 2014
CLAIMANT sought an interim injunction in the high court
of capital city, Mediterranco prohibiting RESPONDENT
from selling10,000 bottles ordered by CLAIMANT.
14th January 2015
RESPONDENT made another approach to resolve the
dispute or at least clarify the forum.
30th January 2015
RESPONDENT finally started the action in the state courts
of Mediterranco.
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
LEGAL PLEADINGS
ISSUE I: THE ARBITRAL TRIBUNAL HAS POWER TO ORDER RESPONDENT TO
PRODUCE THE DOCUMENTS
I.
Documents requested by CLAIMANT are relevant and material to the outcome of
this arbitration.
1.
The contract document framed between the RESPONDENT and super wines (hereinafter
referred as ―The Documents‖) which would exhibit the amount of bottles sold and the
rate in which it is sold by the RESPONDENT to SuperWines which is hereby requested
by the CLAIMANT are relevant and material to the outcome of this arbitration for the
reason, the dispute arose between the CLAIMANT and RESPONDENT.
2.
That is, the CLAIMANT herein does not deny that the 2014 harvest had yielded less than
the normal quantity has, however, received information that the real reason for the
RESPONDENT‘s breach of contract was not the shortfall in yield; information from
industry sources suggests that the real reason for not delivering the entire 10.000 bottles
has been that the RESPONDENT has contracted with SuperWines, thereby exceeding its
available capacity [Exhibit C 4].
3.
The laws of evidence are the rules that govern the relevance, admissibility and weight of
documentary and oral evidence tendered by a party, including the preparation and
presentation of documents, witnesses of fact, expert witnesses and inspections, and the
actual conduct of evidentiary hearings, in order to support or contest a fact in issue in the
course of legal proceedings. [Miles and Schwarz, p.2] The need for a reasonable approach
to document production is part of the efficient management of arbitration proceedings,
the search for a reasonable solution serves fundamental rule for the arbitrators in
organising the proceedings and in particular in deciding what evidence to accept and how
it is relevant and material to the proceedings [Franz T. Schwarz, 2009].
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
4.
In both countries, the Code of Procedure contains provisions which are in relation to their
content nearly identical to Articles 3, 9 of the IBA Rules on Taking Evidence in
International Arbitration. Therefore hereby under the articles of 3 and 9 of IBA rules, the
discovery of documents can be made by the arbitral tribunal. The IBA rules (International
Bar Association Rules for Taking Evidence in International Commercial Arbitration) is
often said to make such a balance between civil law and common law jurisdictions [Marc
Goldstein, P.2].
5.
Under articles 3(8), 3(9) and 9(2) of Vienna rules of Arbitration, 2013, the relevancy and
materiality of such documents in the arbitration plays a vital role to determine whether
such documents can be produced or not. Similarly, the arbitral tribunal may request party
to produce the necessary requested documents to the arbitral tribunal to the parties, any
document that is believed to be relevant and the material to the outcome of the case‘,
anytime, before the arbitration is concluded [Article 3(10) of IBA rules; W.Miles And F.T.
Schwarz, (London, Global Legal Group, 2003)].
6.
In this case, the tribunal must deliberate and research a conclusion as to whether the
production of such document falls within the reasonable possibilities of requested party,
CLAIMANT, answer is YES. For instance, the production is possible and not excessively
burdensome [J.ZekollAnd J. Bolt, BGH, 11 June 1990]. These documents claimed by
CLAIMANT is reasonable and for the efficiency in conducting arbitration proceedings
and are relevant.
7.
Articles 3.2 and 3.3 of the 1999 IBA Rules on the Taking of Evidence in International
Commercial Arbitration (hereinafter IBA Rules) expressly permit party-initiated
discovery requests (Requests to Produce). While most institutional arbitration rules make
it clear that ordering the production of written documents is under the control of the
tribunal, the IBA Rules grant parties the right to make discovery requests, broadening the
use of party-initiated discovery [Van VechtenVeeder, 291 (1999); IBA Working Party,
Commentary]
8.
All of the major institutional and ad hoc rules applicable to international arbitration grant
the arbitral tribunal the power to order a party to produce documents to the tribunal and
the opposing party [ICC Arbitration Rules, Art. 20.5; UNCITRAL Arbitration Rules, Art.
24.3. IBA Rules. 3.6, 3.9].
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
9.
Even considering other Institutional rules, despite the differences, in almost every rules of
the international commercial arbitration institutions, the arbitral tribunal is obliged to
determine the relevance, admissibility and weight of the documents of RESPONDENT,
even if such evidence is inadmissible by law, in order to establish the facts as the basis
for ruling. [The Rules of SIAC Art. 16.2].
10.
In the International arbitration the arbitrator has the power to order the production of any
document, sought irrespective of the contract, provided the request meets the usually
applicable criteria [Articles 3 and 9 of Vienna Rules of Arbitration, 2013] In this present
scenario, to come to a conclusion, and to prove the RESPONDENT itself if the
information from industry sources are true or not, and to claim damages for the loss
incurred by the RESPONDENT, it is pertinent here for the RESPONDENT to produce
the said documents which are relevant to the proceedings. Without which neither the
arbitration proceedings can be taken further nor the damages incurred by the
CLAIMANT be calculated.
II.
Parties’ right to be heard will be infringed and proceedings would not be conducted
fair and equally if no document is produced.
11.
While CLAIMANT has to prove its case only through such Documents, the
RESPONDENT is herein responsible to produce such documents. The tribunal if fails to
order for the production of documents would violate the CLAIMANT‘s right to be heard.
The arbitral tribunal shall conduct the arbitration in accordance with the Vienna Rules
and the agreement of the parties but otherwise in the manner it deems appropriate. The
arbitral tribunal shall treat the parties fairly and shall grant the parties the right to be
heard at every stage of the proceedings [Art.28 of Vienna Rules of Arbitration, 2013].
This right encompasses that a party may introduce relevant evidence [MERKIN, Robert
2004].
12.
The parties‘ right to production of documents as a component of right of evidenceenables the parties to prove facts which are not personally known to the jury or the
arbitrator. Document production is a part of process of the search for the truth in this
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
proceeding. If it is not followed, the right of CLAIMANT is infringed [Girsberger/Voser,
N 686-689].
13.
RESPONDENT‘s Documents depicts the negotiations, the amount of bottles sold and the
price in which it is sold by the RESPONDENT to SuperWines. CLAIMANT‘s sole piece
of evidence, i.e) RESPONDENT‘s Documents with SuperWines is crucial for proving
how RESPONDENT had contracted with SuperWines, how such contract with
SuperWines has put down the CLAIMANT with losses. Hence, no reason justifies nondiscovery of RESPONDENT‘s Documents. Doing so amounts to a violation of its right to
be heard [SchweizerischesBundesgericht, 7 January 2004;SchweizerischesBundesgericht,
11 November 2002].
14.
While the
rules
provide the tribunal with enormous discretion over
the arbitral
procedure, including the taking of evidence, they require the tribunal to treat the
parties fairly and equally in the conduct of the proceedings [ See, e.g., ICC Arbitration
Rules, Art. 15.2; UNCITRAL Arbitration Rules, Art. 15. See Christoph H. Schreuer, The
ICSID Convention: A Commentary 672-73, 970-71 (2001)].
15.
However, the rules [Art.28 of Vienna Rules of Arbitration, 2013] give the
tribunal discretion regarding the conduct of the arbitral proceedings so long as the parties
are treated equally and are granted a fair opportunity to be heard and to present their case.
Subject to these rules, the tribunal may conduct the arbitration in whatever manner it
considers appropriate, provided that the parties are treated with equality and that each
party has the right to be heard and is given a fair opportunity to present its case [Cf.
Narayanan/Menon, Vindobona].
16.
Most modern arbitration laws also expressly require fair and equal treatment of the
parties, and the tribunal‘s violation of this principle may be a basis for non-enforcement
(or annulment) of the award under a multilateral convention [UNCITRAL Model Law,
Art. 18]. Although arbitration hearings are of quasi-judicial nature, the prime virtue of
arbitration is its informality, and it would be inappropriate for courts to mandate rigid
compliance with procedural rules.‖[Transp. Workers Union of Phila., AFL-CIO, Local
234 v. Phila. Transp. Co.]. In the present dispute, if the documents requested by the
CLAIMANT are not produced, then the tribunal would fail to conduct this arbitration
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
proceeding fair and equally as the right of the CLAIMANT being heard would be
infringed.
III.
Exclusion of DISCOVERY in the contract was to cover only extensive discovery
proceedings
17.
While the language of the arbitration clause will be of primary importance when
analysing what the scope of available discovery should be, international arbitration
agreements frequently do not specifically address what the scope of discovery will be in
the event of a dispute. In analyzing contractual text, a court should not have a blind eye to
context. Rather, ―the court should accord contractual language and give due consideration
to ‗the surrounding circumstances and apparent purpose which the parties sought to
accomplish.‖ [Thompson v. Gjivoje; William C. Atwater & Co. v. Panama R.R. Co].
18.
According to the witness statement of Mrs. Kim Lee [Exhibit C.12, P.20, Para. 5], ‗nondiscovery‘ in the document was meant to exclude only very broad US-style discovery
including letter interrogatories and requests for broad groups of documents. It was,
however, not intended to restrict any party from asking for documents in line with the
principles which are common in arbitration as evidenced by the IBA Rules on Taking of
Evidence in International Arbitration. It was clear that they could not restrict the possible
evidence in a way which would affect a party‘s right to be heard. The primary
consideration in interpreting a contract is to ―attempt to fulfill, to the extent possible, the
reasonable shared negotiations of the parties at the time they contracted‖ [Comrie v.
Enterasys Networks,].
19.
Broad interpretation must be made in order to construe the real intention between the
parties. Therefore, not only is rejecting a request for production or failing to order
disclosure of non-vital documents not considered a form of misconduct but, on the
contrary, should be celebrated as representing a proper respect for the parties‘ original
intention [Born, 495; Nu Swift PLC v. White Knight I SA].
20.
The Arbitral Tribunal for this dispute is requested to discern the meaning of the clause by
applying ―general principles of contractual interpretation‖ [Heyman v. Darwins, Ltd]. The
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
cardinal rule of contract interpretation is to ascertain and ‗give effect to the expressed
intentions of the parties‘ [In re Motors Liquidation Co.].
21.
Usually a party‘s obligation to produce documents to the other side or tribunal that are
harmful to its own case, are heavily disputed [F. Schaffler, Zulassigkeit]. The same
scenario presents in the current dispute. The RESPONDENT tries to divert the tribunal‘s
attention to the literal word meaning of the contract but in contrast, the RESPONDENT
does so, as such production of the Documents is harmful to its own case and would be
defeated if the requested Documents are produced.
22.
At any time during the arbitral proceedings, the arbitral tribunal may require the parties to
produce documents, exhibits, or other evidences within such a period of time as the
tribunal shall determine [Article 24, section 3 of UNCITRAL Rules]. Accordingly, an
arbitral tribunal may decide to order for production of documents on complete analysis of
the facts of the case.
23.
If the tribunal is satisfied that the production of specified documents is necessary,
justifiable, warranted, or appropriate, material to claim and defence, it will usually grant
the request [M McCabe, 499, 502-11].
ISSUE II: THE CLAIMANT ENTITLED TO DAMAGES FOR NON-DELIVERING THE
5.500 BOTTLES
24.
RESPONDENT through its refusal to deliver its 10.000 bottles in accordance with the
contract breached the framework agreement and it led CLAIMANT to request for
damages through approaching the arbitral tribunal by virtue of the arbitration agreement
contained in Article 20 of the contract between CLAIMANT and RESPONDENT of 22
April 2009[Exhibit C1]. Under Article 20 of the framework agreement, an arbitral tribunal
has the authority to rule on its own jurisdiction and the award shall be binding and each
party shall comply with the award. This contract is governed by the law of Danubia
including the CISG.
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
I.
RESPONDENT is obliged to fullfill its obligation and non -performance of
obligation as a pre requeisite for remidies to CLAIMANT
25.
Under Article 2 of the framework agreement the seller has the obligation to sell annually
to the buyer up to 10.000 bottles of its wine of diamond quality at a price to be agreed
between parties in accordance with the following provisions. The seller agrees to support
the buyer in its marketing activities wherever possible without disruption to its ordinary
course of business.
26.
But on behalf of RESPONDENT, MrWeinbauer completely overreacted to the reasonable
request for contractual performance and purported to terminate the contract, threatening
that no delivery would be made at all[Exhibit C7]. On accordance with the
RESPONDENT action, it made clear that the RESPONDENT had committed the
fundamental breach of contract under Article 45 of the CISG conventions.
27.
The availability of any remedy to the buyer presupposes that the seller has failed to
perform an obligation deriving either from the contract, from trade usages, from practices
between the parties or from the Convention. Even if an additional duty not specifically
addressed in the Convention -- for instance, the duty to extend a bank guaranty in favor of
the buyer [EGYPT CRCICA Electrical apparatus case] has been breached, the buyer is
entitled to the remedies available under the Convention. Whereas in this case it has been
clearly pictured out that the act of threatening that no delivery of Mata Weltin wines
would be made at all empowers the CLAIMANT to pre requisite for remedies for the nonperformance the duty which is obliged by the RESPONDENT.
II.
CLAIMANT claims the RESPONDENT profits as loss of profit made out through
substitute transaction.
28.
Article 75 provides that CLAIMANT may recover damages measured by the difference
between contract price and the price in a substitute transaction if the original contract that
is the framework contract concluded on 22 April 2009[Exhibit C1] has been breached or
avoided and if the substitute transaction was concluded in a reasonable manner and within
a reasonable time after breach or avoidance [article 45 (1) (b) and 61(1) (b) of the CISG
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
convention] provide that an aggrieved buyer and an aggrieved seller, respectively, may
recover damages as provided in articles 74 to 77 if the other party fails to perform as
required by the contract or the convention].
29.
One decision found that an aggrieved seller who resold only some of the contract goods to
a third party may recover damages as to the resold goods under article 75 and damages as
to
the
unsold
goods
under
article
76
[CLOUT
case
No.
130]
[GERMANY Oberlandesgericht 14 January 1994]. See also [Arbitral award No. 8740]
(aggrieved buyer who was unable to establish the market price is not entitled to recover
under article 76, and entitled to recover under article 75 only to the extent it had made
substitute transaction) the above decision and also the above said provision made clear
that the CLAIMANT may recover damages under article 75 as the RESPONDENT
breached the framework contract[Exhibit C1] and made a substitute transaction by selling
the CLAIMANT‘S contractual goods of 5.500bottles to the SuperWines.
30.
There are certain conditions for applications of article 75:
A. Avoidance Of Contract
31.
MrWeinbauer purported to terminate the contract, threatening that no delivery of Mata
Weltin Wines would be made at all which is evidenced as Exhibit C7, crystal clearly
shows that RESPONDENT purported to avoid the contract which substantiated with
certain decisions under article 75 as follows, Recovery of damages under article 75 is
available only if the contract has been effectively avoided [docket No. 63/2006 (Sunflower
seed case)]; [FrischaffProduktions v. Guillem Export];.by the aggrieved party [case No.
362] (a seller who resold goods after the aggrieved buyer had declared the contract
avoided was not entitled to recover damages under article 75)]
B. Substitute Transaction
32.
An aggrieved party seeking damages calculated under article 75 must conclude a
substitute transaction. If the seller is the aggrieved party, the substitute transaction
involves the sale to some other buyer of the goods identified to the avoided contract. In
this case the RESPONDENT sold CLAIMANT‘s 5.500bottles to SuperWines comprises
the substitute transaction. [Down Investments Pty Ltd. v. Perjawa Steel SDN BHD];
[Canned oranges case)]An aggrieved buyer concludes a substitute transaction when it
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
buys goods to replace those promised in the avoided contract [UNITED STATES U.S.
District Court].
C. Substitute Transaction – Reasonable Manner
33.
The CLAIMANT must conclude the substitute transaction in a reasonable manner. To
enter into a "reasonable" substitute transaction, an arbitral tribunal has held, an aggrieved
buyer must act as a prudent and careful businessperson who buys goods of the same kind
and quality, ignoring unimportant small differences in quality. [Arbitral award No. 8128].
As per the above said decision the RESPONDENT has sold 5.500bottles of same kind and
quality to SuperWines which comprises substitute transaction in reasonable manner.
D. Substitute Transaction – Reasonable Time
34.
An aggrieved party must conclude the substitute transaction within a reasonable time after
avoidance of the breached contract. [SWITZERLAND Kantonsgericht Zug] What time is
reasonable will depend on the nature of the goods and the circumstances [ZweiradTechnik
v. C. Reinhardt A/S]
E. Calculation of Damages
35.
If the conditions for application of article 75 are satisfied, the aggrieved party may recover
"the difference between the contract price and the price in the substitute transaction". This
amount may be adjusted by adding further damages recoverable under article 74,
including loss of profit. [CLOUT case No. 980 (Chrome plating production line equipment
case)] (loss of profit). Several decisions have awarded additional damages under article 74
to compensate for incidental damages arising from the breach. [CLOUT case No. 539
Timber case].
III.
The CLAIMANT is entitled to loss of profit and the damages of non-material
interest.
36.
[Delchi Carrier, S.p.A. v. Rotorex Corp.] case the court held that the [seller] breached the
contract and granted the [buyer] damages to cover the [buyer's] lost profits resulting from
a diminished volume of sales, in respect of which the [buyer] was able to provide, in
conformity with common law and the law of New York, "sufficient evidence [for the
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
court] to estimate the amount of damages with reasonable certainty". As per the said
decision the CLAIMANT is entitled to loss of profit.
37.
Article 74 of CISG expressly states that damages for losses include lost profits. Many
decisions
have
awarded
the
aggrieved
party
lost
profits.
.
[FINLAND HelsinginhoviokeusPlastic carpets case)]; [RUSSIA Award 406/1998 of 6
June 2000 (Goods case)]; [GERMANY OberlandesgerichtJeans case)] (aggrieved buyer
entitled to recover difference between value that contract would have had if seller had
performed and the costs saved by buyer). Referring to these cases the CLAIMANT is also
entitled to recover for loss of profit for 5.500 bottles.
38.
Article 74 of CISG does not exclude losses arising from damage to non-material interests,
such as the loss of an aggrieved party's (CLAIMANT) reputation because of the other
party's (RESPONDENT) breach. Some decisions have implicitly recognized the right to
recover damages for loss of reputation or good will [FINLAND Plastic carpets case)]
(recovery of good will calculated in accordance with national rules of civil procedure);
[SWITZERLANDHandelsgerichtArt books case)] (stating that article 74 includes
recovery for loss of goodwill but aggrieved party did not substantiate claim).
ISSUE III: THE CLAIMANT IS ENTITLED TO RECOVER THE COSTS INCURRED
IN THE LITIGATION AGAINST RESPONDENT.
39. The CLAIMANT‘s claim for the recovery of legal costs incurred in the litigation against
the RESPONDENT is maintainable in law. A perusal of the correspondence between the
parties (Exhibit C7) manifests that the RESPONDENT had breached the framework
agreement and furthermore, in addition to that, denied performance of the same despite
knowing that such denial would prevent the CLAIMANT from performing its contractual
obligations towards others thereby affecting its business.
40. It was also foreseeable by the RESPONDENT that the CLAIMANT would move the
Court of law seeking for interim injunction to prevent it from selling the bottles that were,
as per the contract, to be sold to CLAIMANT but denied by RESPONDENT. In the light
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
of aforesaid facts, it is clear as crystal that the CLAIMANT is entitled to the litigation
costs incurred by it under Art. 74 of CISG.
I.
40.
Legal costs are recoverable under article 74 of cisg.
Article 74 of CISG permits an aggrieved party to recover damages “equal to the loss
including loss of profit suffered as a consequence of breach,” provided that the loss is
one that ―the party in breach foresaw or ought to have foreseen at the time of the
conclusion of the contract as a possible consequence of the breach of contract.‖ The
damages provided for in Article 74 include, inter alia, what U.S. law would label
consequential damages. [Harry M. Flechtner, (1988)].
41.
In many cases, several arbitral tribunals have awarded recovery of attorney‘s fees citing
Article 74 of the CISG [CLOUT case No. 166]. It was stated that, in principle, legal costs
could be recovered, although the Court denied them in particular case [CLOUT case No.
130 Oberlandesgericht, Germany].
42.
Although the decisions are split as to whether attorney‘s fees for litigation may be
awarded as damages under Article 74 of the CISG, many arbitral tribunals have awarded
recovery of the same. However, the only condition precedent, as also stated in all those
awards, is that the adverse party should have foreseen the legal costs incurred by the
party making the claim. Therefore, in the present matter, the legal costs borne by the
CLAIMANT in both the lawsuits can be recovered as damages from the RESPONDENT.
43.
In the instant matter, the CLAIMANT in order to protect its interests had recourse to the
High Court of Mediterraneo to restrain the RESPONDENT from selling the 5,500 bottles
of the Mata Weltin Wines that were promised to be sold to the CLAIMANT. The
CLAIMANT‘s measure to move the Court for interim relief was in accordance with
Article 9 of the UNCITRAL Model Law and therefore cannot be attributed to a breach of
arbitration agreement.
II.
Claimant’s action was foreseeable by the respondent.
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
44. CLAIMANT‘s action to seek interim relief under Article 9 of the UNCITRAL Model
Law to restrain RESPONDENT from selling of its existing lower quantity of bottles was
foreseen by the RESPONDENT. Article 74 of CISG limits recovery of damages to those
losses that the breaching party foresaw or could have foreseen at the time the contract
was concluded as a possible consequence of its breach.
45.
It could be inferred, in the instant case, that the RESPONDENT could have foreseen the
action of the CLAIMANT since the CLAIMANT or any other business entity, for that
matter, would certainly have filed an injunction in the court to restrain the
RESPONDENT from selling the agreed quantity of the aforementioned wine to other
customers, lest such action should result in causing damage to CLAIMANT‘s business.
46.
Furthermore, CLAIMANT being a medium sized business entity could not afford the
ordinary rates of Mediterranean lawyers and so agreed for contingency fees. It could not
be said that the RESPONDENT could not have foreseen the same. Therefore, it is clear
that RESPONDENT had foreseen or could have foreseen CLAIMANT moving the Court
for interim relief and engaging a law firm on the basis of contingent fees.
II.
The claim in regard to costs for declaratory relief is tenable and justifiable
47.
It is submitted that the costs incurred by CLAIMANT in defending RESPONDENT‘S
application in the High Court of Mediterraneo for declaratory relief is recoverable. It
should be borne in mind at the very outset that it was the RESPONDENT who breached
the arbitration agreement by filing a suit for declaratory relief in the High Court of
Mediterraneo rather than settling the matter amicably as agreed between the parties.
Consequently, the CLAIMANT had to defend the suit before the aforementioned Court
by retaining the service of a law firm and the outcome of the case was in favour of the
CLAIMANT.
48.
Since it was the RESPONDENT who instituted the legal proceedings in a Court of law
by violating the arbitration agreement, it could be inferred that RESPONDENT had
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
foreseen that CLAIMANT would obviously defend the matter and thereby incur
expenses. As far as the fees are concerned, as stated in the foregoing submission, the
CLAIMANT being a medium sized business entity cannot afford the lawyers in
mediterraneo and therefore agreed for contingent fees. The RESPONDENT could have
foreseen this since it had knowledge of the same. Therefore, this tribunal must order the
RESPONDENT to reimburse CLAIMANT the amount of US$ 50,280,00 which was the
legal cost under Article 74 of CISG as damages.
MEMORANDUM FOR CLAIMANT
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DR. AMBEDKAR GOVT. LAW COLLEGE, CHENNAI,
REQUEST FOR RELIEF
In response to the Tribunal‗s Procedural Orders, Counsel makes the above submissions on behalf
of CLAIMANT. For the reasons stated in this Memorandum, Counsel respectfully requests the
Honorable Tribunal to declare that:

This Hon'ble Tribunal has power to order RESPONDENT to produce the documents
requested by CLAIMANT;

CLAIMANT is entitled to damages claimed for the litigation costs for both interim and
defence proceedings in the High Court of capital city; and

CLAIMANT can claim the profits RESPONDENT made by selling the bottles to Super
Wines as part of its damages, even if that includes further profits.
Respectfully signed and submitted by counsel,
RIZWANA FATHIMA N | V. JAI BHARATH | R. PRANAV | S. BALAJI | APARNA
SUNDAR B | RAMASWAMY MEYYAPPAN | R.D. ASHOK KUMAR
MEMORANDUM FOR CLAIMANT
Page 27