Twenty Fifth Annual

Willem C. Vis International Commercial Arbitration Moot

24 March – 29 March 2018

Vienna Austria

MEMORANDUM FOR RESPONDENT

ON BEHALF OF: AGAINST:

Comestibles Finos Ltd Delicatesy Whole Foods Sp

75 Martha Stewart Drive 39 Marie-Antoine Carême

Avenue
Capital City
Oceanside
Mediterraneo
Equatoriana
(RESPONDENT)
(CLAIMANT)

Leon Brulc • Stefan Danojević • Vivian Mohr • Mihael Pojbič

Barbara Smogavc • Hana Šrot • Petra Zupančič

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 MEMORANDUM FOR RESPONDENT

TABLE OF CONTENTS
TABLE OF CONTENTS ........................................................................................................................................I

TABLE OF ABBREVIATIONS ...........................................................................................................................III

TABLE OF AUTHORITIES .............................................................................................................................. VI

TABLE OF COURT DECISIONS ................................................................................................................. XXIV

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

SUMMARY OF ARGUMENTS .............................................................................................................................. 2

ISSUE I: THE TRIBUNAL HAS THE POWER TO DECIDE ON CHALLENGE OF MR. PRASAD ................. 3

A. PARTIES HAVE EXCLUDED THE APPLICATION OF ART. 13(4) OF THE UNCITRAL ARBITRATION
RULES…………………………………………………………………………………………………………………...3
1. PARTIES HAVE WAIVED ART. 13(4) OF THE UNCITRAL ARBITRATION RULES IN
ARBITRATION AGREEMENT ........................................................................................................................................ 4

2. ART. 13(4) OF THE UNCITRAL RULES CANNOT BE APPLIED WITHOUT VIOLATING PARTIES’
AGREEMENT .................................................................................................................................................................... 5

2.1 Agreement on appointing authority as a person is unlikely ........................................................................................... 5

2.2 If there is no agreement on appointing authority, involvement of arbitral institution is inevitable .............................................. 6
3. EXCLUDING APPOINTING AUTHORITY WOULD BE REASONABLE ....................................................... 7

B. TRIBUNAL SHOULD DECIDE ON CHALLENGE WITHOUT PARTICIPATION OF MR. PRASAD ........ 8

1. DECISION ON CHALLENGE DOES NOT HAVE TO BE MADE BY ALL THREE ARBITRATORS .......... 8
2. MR. PRASAD CANNOT DECIDE ON HIS OWN CHALLENGE ..................................................................... 9
3. EQUAL TREATMENT OF PARTIES IS NOT BREACHED .............................................................................10

ISSUE II: MR. PRASAD SHOULD BE DISQUALIFIED ..................................................................................... 12

A. IBA GUIDELINES ARE APPLICABLE IN PRESENT CASE ......................................................................... 12

B. THIRD PARTY FUNDING IMPACTS MR. PRASAD’S IMPARTIALITY ACCORDING TO §2.3.6 OF THE
IBA GUIDELINES................................................................................................................................................ 13

1. THERE ARE DOUBTS ARISING ACCORDING TO 2.3.6 OF THE IBA GUIDELINES ...........................13
2. THERE ARE DOUBTS ARISING ACCORDING TO §3.2.1 OF THE IBA GUIDELINES .........................14
3. THE DOUBTS TO MR. PRASAD’S IMPARTIALITY AND INDEPENDENCE ARE JUSTIFIABLE ...........15

C. MR. PRASAD’S PREVIOUS APPOINTMENTS IMPACT HIS IMPARTIALITY AND INDEPENDENCE

ACCORDING TO §3.1.3 OF THE IBA GUIDELINES ......................................................................................... 16

D. MR. PRASAD’S LEGAL OPINION IS RELEVANT WHEN ASSESSING HIS IMPARTIALITY AS IT

PRESENTS A ‘PRIOR COMMITMENT’ ............................................................................................................. 17

I
 MEMORANDUM FOR RESPONDENT

ISSUE III: RESPONDENT’S GENERAL CONDITIONS GOVERN THE CONTRACT ................................... 18

A. RESPONDENT DID NOT ACCEPT CLAIMANT’S OFFER ......................................................................... 19

B. BY BEING ATTACHED TO SALES-OFFER, RESPONDENT’S GENERAL CONDITIONS GOVERN

THE CONTRACT ............................................................................................................................................... 20

1. RESPONDENT’S GENERAL CONDITIONS BECAME NONSTANDARD TERMS OF THE CONTRACT..

………………………………………………………………………………………………...20
2. CLAIMANT WAS AWARE OF THE CHANGE IN NATURE OF RESPONDENT’S GENERAL
CONDITIONS .................................................................................................................................................................21
3. EVEN IF RESPONDENT’S GENERAL CONDITIONS DID NOT BECOME NONSTANDARD TERMS,
CLAIMANT’S GENERAL CONDITIONS OF SALE DO NOT GOVERN THE CONTRACT ..............................22

C. ..... CLAIMANT’S GENERAL CONDITIONS OF SALE WERE NEVER VALIDLY INCLUDED INTO THE
CONTRACT ........................................................................................................................................................ 24

1. CLAIMANT’S GENERAL CONDITIONS OF SALE WERE NOT MADE SUFFICIENTLY AVAILABLE .24
1.1 RESPONDENT could not have been aware of CLAIMANT’s intent to include CLAIMANT’s General Conditions of Sale .......... 25
1.2 CLAIMANT’s General Conditions of Sale were not made sufficiently available by posting CLAIMANT’s website address in the Sales-
Offer............... 26
2. REFERRING TO CLAIMANT’S GENERAL CONDITIONS OF SALE ON CLAIMANT’S INVOICES
WAS INSUFFICIENT FOR THEIR INCORPORATION ................................................................................ 27

ISSUE IV: CLAIMANT DELIVERED NON-CONFORMING GOODS ............................................................. 29

A. DELIVERED CAKES WERE NON-CONFORMING PURSUANT TO ART. 35(1) OF THE CISG .............. 29

1. CLAIMANT BREACHED RESPONDENT’S ‘ZERO TOLERANCE’ POLICY REGARDING UNETHICAL

BUSINESS BEHAVIOUR ................................................................................................................................................29

2. DELIVERED CAKES DID NOT COMPLY WITH WRITTEN CONTRACTUAL OBLIGATIONS ...............30
3. CHOCOLATE CAKES WERE NOT CONFORMING TO THE IMPLICITLY AGREED QUALITY
STANDARDS....................................................................................................................................................................32

B. ...... DELIVERED CAKES WERE UNFIT FOR THEIR PARTICULAR PURPOSE UNDER ART. 35(2)(B) OF
THE CISG ............................................................................................................................................................ 33

REQUEST FOR RELIEF .................................................................................................................................... 35

II
MEMORANDUM FOR RESPONDENT

TABLE OF ABBREVIATIONS

§/§§ paragraph/paragraphs

AA Arbitration Agreement

Art. /Arts. Article

CGC CLAIMANT’s General Conditions of Sale

Challenge Challenge of Mr. Prasad

CISG United Nations Convention on Contracts for the

International Sale of Goods

e.g. exempli gratia (for example)

Ex. C CLAIMANT’s Exhibit

Ex. R RESPONDENT’s Exhibit

FL1 Letter Fasttrack (30 June 2017), p. 3

FL3 Letter Fasttrack (Refusal to Agree to Removal – 29

September 2017), p. 45

fn. Footnote

IBA International Bar Association

IBA Guidelines IBA Guidelines on Conflicts of Interest in International

Arbitration

ICC International Chamber of Commerce

ICSID International Centre for Settlement of Investment Disputes

ibid ibidem (in the same place)

III
MEMORANDUM FOR RESPONDENT

i.e. id est (that is)

infra Bellow

LP Limited Partnership

Ltd. Limited

Model Law UNCITRAL Model Law on International Commercial

Arbitration with amendments as adopted in 2006

Mr./Ms. Mister/Miss

NCA Notice of Challenge of Arbitrator

no. Number

PL Letter Prasad (Refusal to step Down – 11 September 2017)

PO1 Procedural order No. 1

PO2 Procedural order No. 2

p./pp. page/pages

RGC RESPONDENT’s General Conditions of Contract

RNA Response to Notice of Arbitration

SUP RESPONDENT’s Code of Conduct for Suppliers

Supra Above

Tribunal Arbitral Tribunal

UN United Nations

UNCITRAL United Nations Commission on International Trade Law

UNCITRAL Rules UNCITRAL Arbitration Rules

IV
MEMORANDUM FOR RESPONDENT

UNIDROIT International Institute for the Unification of Private Law

UNIDROIT Principles UNIDROIT Principles of International Commercial

Contracts 2010

USD United States dollar

v Versus

V
MEMORANDUM FOR RESPONDENT

TABLE OF AUTHORITIES

CITED CITED
AS IN

AC-CISG Op. 13 CISG Advisory Council §§ 98, 101

Inclusion of Standard Terms
Opinion No. 13
Available at:
http://www.cisg.law.pace.edu/cisg/CISG-AC-
op13.html
(18. 1. 2018)

Andersen Andersen, M; Skjoett-Larsen, T. § 101

Corporate social responsibility in global supply chains
Supply Chain Management: An International
Journal, Issue 2, pp. 75-86
Available at:
http://www.emeraldinsight.com/doi/full/10.110
8/13598540910941948
(18. 1. 2018)

Bianca/Bonell Bianca, C. M. ; Bonell, M. J. §§ 128, 136

Commentary on the International Sales Law, The 1980
Vienna Sales Convention
Giuffere, Milan, 1987

Black Black, H., C. § 68

Black’s Law Dictionary
West Publishing Co., 1979

Blavi Blavi, F. § 73
It’s About Time to Regulate Third Party Funding
Kluwer Arbitration Blog, 2015
Available at:

VI
MEMORANDUM FOR RESPONDENT

http://arbitrationblog.kluwerarbitration.com/201
5/12/17/its-about-time-to-regulate-third-party-
funding/
(18. 1. 2018)

Born Born, G. §§ 68, 77

International Commercial Arbitration, Volume II:
International Arbitral Procedure, 2nd edition
Kluwer Law International BV, 2014

Broches Broches, A. § 42
Commentary on the UNCITRAL Model Law on
International Commercial Arbitration
Kluwer Law and Taxation Publisher, 1990

Cahn/Donald Cahn, A.; Donald, D. C. § 60

Comparative Company Law
Cambridge University Press, 2010

Caron/Caplan Caron, D. D.; Caplan, L. M. §§ 27, 31,

The UNCITRAL Arbitration Rules: A Commentary 35, 41, 45,
Oxford University Press, 2012 51, 67

Celikboya Celikboya, L. O. § 65
Third Party Funders in Arbitration
Erdem & Erdem, 2015
Available at:
http://www.erdem-
erdem.av.tr/publications/lettre-
dinformation/third-party-funders-in-arbitration/
(18. 1. 2018)

Clanchy Clanchy, J. § 73
Navigating the Waters of Third Party Funding in
Arbitration

VII
 MEMORANDUM FOR RESPONDENT

The Interntional Journal of Arbitration, Mediation

and Dispute Management, Vol. 82, No. 3, 2016, pp.
222-232
Available at:
http://arbitrationblog.kluwerarbitration.com/201
5/12/17/its-about-time-to-regulate-third-party-
funding/
(18. 1. 2018)

Enderlein/Maskow/Strohbach Enderlein, F.; Maskow, D.; Strohbach, H. §§ 136, 137

Kaufrechtskonvention der UNO (mit
Verjährungskonvention) – Kommentar
Staatsverlag DDR, Berlin, 1985

Eiselen Eiselen, S. § 106

The Requirements for the Inclusion of Standard Terms in
International Sales Contracts
Potchefstroom Electronic Law Journal, Volume
14, no. 1, August 2011

Erdem Erdem, M. § 56
Soft Law in International Arbitration
Erdem & Erdem, 2016
Available at:
http://www.erdem-
erdem.av.tr/publications/newsletter/soft-law-in-
international-arbitration/#_edn4
(18. 1. 2018)

Giorgetti Giorgetti, C. § 34
Between Legitimacy and Control: Challenges and Recusals
of Judges and Arbitrators in International Courts and
Tribunals
George Washington International Law Review,
Vol. 49, Issue 2, 2016

VIII
MEMORANDUM FOR RESPONDENT

Available at:
http://www.gwilr.org/wordpress/wp-
content/uploads/2017/02/ILR-Vol-49.2_Chiara-
Giorgetti.pdf
(18. 1. 2018)

Gruber Gruber, U. P § 85
Münchener Kommentar zum Bürgerlichen Gesetzbuch,
Beck, Munich, 2015

Herber/Czerwenka Herber, R.; Czerwenka, B §§ 85, 136

Internationales Kaufrecht, Kommentar zu dem
Überinkommen der Vereinten Nationen vom 11. April
1980 über Verträge über den internationalen Warenkauf
Beck, Munich, 1991

Henschel Henschel, R. F. § 126

The Conformity of Goods in International Sales – An
Analysis of Article 35 in the United Nations Convention
on Contracts for the International Sale of Goods (CISG)
Thomas, Copenhagen, 2005

Honnold Honnold, J. O. §§ 104, 123,

Uniform Law for International Sales under the 1980 143
United Nations Convention, 3rd edition
Kluwer Law International, 1998

Honsell Honsell, H. § 110

Kommentar zum UN-Kaufrecht
Springler, 2010

Hopt Hopt, K. J. § 60
Groups of Companies – A Comparative Study on the
Ecnomics, Law and Regulation of Corporate Groups
European Corporate Governance Institute – Law
Working Paper No. 286/2015, 2015

IX
MEMORANDUM FOR RESPONDENT

Available at:
https://papers.ssrn.com/sol3/papers.cfm?abstrac
t_id=2560935
(18. 1. 2018)

Hrnčiříkova Hrnčíříková, M. § 57
The Meaning of Soft Law in International Commercial
Arbitration
International and Comparative Law Review, vol.
16, 2016, pp. 97-109
Available at:
https://www.degruyter.com/downloadpdf/j/iclr.
2016.16.issue-1/iclr-2016-0007/iclr-2016-0007.pdf
(18. 1. 2018)

Huber/Mullis Huber, M.; Mullis, A §§ 117, 126,

The CISG: A new textbook for students and practitioners 143
2007 by Sellier, European law publishers

Hyland Hyland, R. § 140

Conformity of Goods to the Contract under the United
States Sales Convention and the Uniform Commercial Code
In: Schlechtriem, Einheitliches Kaufrecht und
nationales Obligationenrecht
Baden-Baden, 1987, pp. 305-341

Jenkins Jenkins, R. § 101

Corporate Codes of Conduct: Self-Regulation in a Global
Economy
Technology, Business and Society Programme
Paper Number 2
United Nationas Research Institute for Social
Development (UNRISD), Switzerland, 2001

Junge Junge, W. § 106

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MEMORANDUM FOR RESPONDENT

Analysis of CISG Arts. 8, 9

In: Schlechtriem ed., Kommentar zum
Einheitlichen UN-Kaufrecht, Beck, 3rd ed. Beck,
Munich, 2000

Karollus Karollus, M. § 123

UN-Kaufrecht
Springer, New York, 1991

Kaufmann-Kohler Kaufmann-Kohler, G. § 56
Soft Law in International Arbitration: Codification and
Normativity
Journal of International Dispute Settlement, 2010,
pp. 1-17
Available at:
https://lk-k.com/wp-content/uploads/Soft-Law-
in-International-Arbitration-Codification-and-
Normativity.pdf
(18. 1. 2018)

Kelleher Kelleher, T. J. § 96
Smith, Currie and Hancock’s Federal Government
Construction Contracts
John Wiley & Sons, Inc., New Jersey, 2010

Kindler Kindler, P. § 113

Ob Walzfräsmachine oder Schreibtischsessel: keine
Obliegenheit zu AGB-Übersendung beim Vertragsschluss
nach CISG!
Festschrift für Andreas Heldrich
Beck, Munich, 2005

Kocbek Kocbek, M.; Ivanjko, Š.; Prelič, S. § 59

Korporacijsko pravo – pravni položaji gospodarskih
subjektov

XI
MEMORANDUM FOR RESPONDENT

GV Založba, 2009

Kritzer Kritzer, A. H. § 123

ICM-Guide to Practical Applications of the UN
Convention on Contracts for the International Sale of Goods
Deventer, Kluwer, 1994

Kröll Kröll, S. § 126

UN Convention on Contracts for the International Sale of
Goods (CISG) – Commentary
Beck/Hart, 2011

Lookofsky Lookofsky, J. §§ 123, 136

Article 19: Mirror Image and Battle of Forms
Kluwer Law International, Hague, 2000
Available at:
http://cisgw3.law.pace.edu/cisg/biblio/loo19.ht
ml
(18. 1. 2018)

Magnus/Staudingeres Magnus, U. § 109

Wiener UN-Kaufrecht (CISG). Monograph part of J. von
Staudingers Kommentar zum Bürgerlichen Gesetzbuch mit
Einführungsgesetz und Nebengesetzen
Wlter de Gruyter & Co., 1994

Ma Ma, W. J. § 34
Procedure for Challenging Arbitrators: Lessons for and from
Taiwan
Contemporary Asia Arbitration Journal, 2012
Available at:
https://poseidon01.ssrn.com/delivery.php?ID=305
03108302908511709909409803107110903407100001
00270541110690001021051000021090091020990110
58111062051098124016105006100109065025070025
00703700808201707702908609403708005311007102

XII
MEMORANDUM FOR RESPONDENT

40770920950270790110720940270311160050770030
00104066105004101013064085&EXT=pdf
(18. 1. 2018)

Mayson Mayson, S. W.; French, D.; Ryan, C. L. §§ 59, 60

Company law, 2006-2007 edition
Oxford University Press, 2007

Moses Moses, M. § 56
The Role of the IBA Guidelines on Conflicts of Interest in
Arbitrator Challenges
Kluwer Arbitration Blog, 2017
Available at:
http://arbitrationblog.kluwerarbitration.com/2017/
11/23/role-iba-guidelines-conflicts-interest-
arbitrator-challenges/
(18. 1. 2018)

Naumann Naumann, H. § 140

Der Regelungsbereich des UN-Kaufrechts im Spanungsfeld
zwischen Einheitsrecht und Kollisionsrecht
Peter Lang, Frankfurt am Main, 2000

Neumayer Neumayer, K. H. § 141

Les contracts d’adhésion dans les pays industrialisés
Droz, Geneve, 1999

Panayiotou/Aravosis Panayiotou, N.; Aravosis, G. K. § 101

Supply Chain Management,
In: Idowu, O. S., Louche C., Theory and Practice of
Corporate Social Responsibility
Springer-Verlag Berlin Heidelberg, 2011
Available at:
http://www.springer.com/us/book/9783642164606
#aboutAuthors

XIII
MEMORANDUM FOR RESPONDENT

(18. 1. 2018)

Piltz Piltz, B. § 128

Neue Entwicklungen im UN-Kaufrecht
Neue Jurustische Wochenschrift, 1996

Poulton/Yates Poulton, E.; Yates, T. § 30

UNCITRAL publishes new arbitration rules
Mealey's International Arbitration Report
Available at:
https://www.lexisnexis.com/legalnewsroom/interna
tional-
law/b/arbitrationcommentary/archive/2010/10/14
/uncitral-publish-new-arbitration-rules.aspx
(18. 1. 2018)

Rajoo I Rajoo, S. § 34
Institutional and Ad hoc Arbitrations: Advantages and
Disadvantages
The Law Review, 2010, pp. 547-558
Available at:
http://sundrarajoo.com/wp-
content/uploads/2016/01/Institutional-and-Ad-
hoc-Arbitrations-Advantages-Disadvantages-by-
Sundra-Rajoo.pdf
(18. 1. 2018)

Rajoo II Rajoo, S. §§ 77, 78

Law, Practice and Procedure of Arbitration, 2nd edition
LexisNexis, 2017

Schlechtriem Schlechtriem, P. § 137

Schuldrecht. Besonderer Teil.
Mohr Lehrbuch, 2003

XIV
MEMORANDUM FOR RESPONDENT

Schlechtriem/Butler Schlechtriem, P.; Butler, P. § 123

UN Law on International Sales, 2nd ed.
Springer, Berlin Heidelberg, 2016

Scherer Scherer, M. § 56
The IBA Guidelines on Conflicts of Interest in International
Arbitration: The First Five Years 2004-2009
Dispute Resolution International, Vol. 4, 2010, pp. 5-
53
Available at:
http://www.lalive.ch/data/publications/The_IBA_g
uidelines_on_conflicts_of_interest_in_international_
arbitration.pdf
(18. 1. 2018)

Schwenzer Schlechtriem, P.; Schwenzer, I. §§ 86, 98,

Commentary on the UN Convention on the International 104, 112,
Sale of Goods (CISG), 3rd ed. 113, 114,
Oxford University Press, Oxford, 2010 116, 117,
118, 119,
123, 126,
128, 134,
136, 137,
141, 142,
143

Schwenzer 2005 Schlechtriem, P.; Schwenzer, I. § 141

Commentary on the UN Convention on the International
Sale of Goods (CISG), 2nd ed.
Oxford University Press, Oxford, 2005

Schwenzer/Mohs Schwenzer, I.; Mohs, F. §§ 86, 113,

Old Habits Die Hard: Traditional Contract Formation in 114
a Modern World

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MEMORANDUM FOR RESPONDENT

Internationales Handelsrecht, Volume 6, 2006, pp.

239-246
Available at:
http://www.cisg.law.pace.edu/cisg/biblio/schwe
nzer-mohs.html
(18. 1. 2018)

Tackaberry Tackaberry, J. § 78
Bernstein’s Handbook of Arbitration and Dispute
Resolution Practice
Sweet & Maxwell, 2003

UN Committee Report United Nations Commission on International § 21

Trade Law
Committee of the Whole (II), Summary Record of
the 1st Meeting
New York, 1976
Available at:
http://www.uncitral.org/pdf/english/travaux/arb
itration/1976Arbitration/C2SR1.pdf
(18. 1. 2018)

UNCITRAL Yearbook United Nations Commission on International § 51

Trade Law
Yearbook of the United Nations Commission on
International Trade Law, Volume VI
New York, 1975
Available at:
http://www.uncitral.org/pdf/english/yearbooks/
yb-1975-e/vol6-p163-180-e.pdf
(18. 1. 2018)

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UNIDROIT Commentary International Institute for the Unification of §§ 91, 99,

Private Law 101, 132
UNIDROIT Principles of International Commercial
Contracts 2010
Rome, 2010
Available at:
http://www.unidroit.org/english/principles/cont
racts/principles2010/integralversionprinciples201
0-e.pdfl
(18. 1. 2018)

Viscasillas Viscasillas, M. § 117

“Battle of Forms” under the 1980 United Nations
Convention on Contracts for the International Sale of
Goods: A Comparison with 2-207 UCC and the
UNIDROIT Principles
Pace International Law Review, Issue 1, vol. 10,
1998

Vogenauer Vogenauer, S. §§ 84, 91

Commentary on the UNIDROIT Principles of
International Commercial Contracts (PICC)
Oxford University Press, Oxford, 2015

Wagner Wagner, A.; Cacciaguidi-Fahy, S. § 133

Legal Language and the Search for Clarity: Practice and
Tools
Peter Lang, Bern, 2006

WGII Report 264 United Nations Commission on International § 35

Trade Law
Report of the Working Group on International Contract
Practices on the Work of its 17th Session, A/CN.9/264
Vienna, 1985

XVII
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Available at:
http://www.uncitral.org/uncitral/en/commission
/working_groups/2Contract_Practices.html
(18. 1. 2018)

WGII Report 665 United Nations Commission on International §§ 24, 52

Trade Law
Report of Working Group II (Arbitration and
Conciliation) on the work of its forty-ninth session
Vienna, 2009
Available at:
https://documents-dds-
ny.un.org/doc/UNDOC/GEN/V08/570/77/P
DF/V0857077.pdf?OpenElement
(18. 1. 2018)

Witz/Salger/Lorenz Witz, W.; Salger, H. C.; Lorenz, M. § 112

International Einheitliches Kaufrecht
Heidelberg: Verlag Recht und Wirtschaft, 2000

Yang Yang, F. § 104

CISG, CIETAC Arbitration and the Rule of Law in the
P. R. of China: A Global Jurisconsultorium Perspective
Available at:
http://www.cisg.law.pace.edu/cisg/biblio/yang3.
html
(18. 1. 2018)

Zahradníková Zahradníková, R. § 24
Challenge Procedure in Institutional and Ad Hoc
Arbitration Under the New Regulations in the Revised
UNCITRAL Arbitration Rules
CYArb – Czech (& Central European) Yearbook
of Arbitration: Independence and Impartiality of
Arbitrators, pp. 267-286

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JurisNet LLC, 2014, Vol. IV

Available at:
https://www.law360.com/articles/898393/icsid-
should-fix-rules-on-who-decides-arbitrator-
challenges
(18. 1. 2018)

Zeller Zeller, B. § 104

Determining the Contractual Intent of Parties under the
CISG and Common Law – A Comparative Analysis
European Journal of Law Reform, Volume 4, no.
4, 2002, pp. 629-643
Available at:
http://www.cisg.law.pace.edu/cisg/biblio/zeller8.
html
(18. 1. 2018)

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TABLE OF ARBITRAL AWARDS

CITED CITED
AS IN

China International Economic & Trade

Arbitration Commission

Australia cotton case Unknown parties § 85

17 September 2003
Case No. CISG/2003/14
Available at:
http://cisgw3.law.pace.edu/cases/030917c1.html
(18. 1. 2018)

International Centre for Settlement of

Investment Disputes

Alpha Projektholding v Alpha Projektholding GMBH v Ukraine § 48

Ukraine
19 March 2010
Case No. ARB/07/16
Available at:
https://www.italaw.com/sites/default/files/case-
documents/ita0025.pdf
(18. 1. 2018)

Joseph Charles Lemire case Joseph Charles Lemire v Ukraine § 132

18 September 2000
Case No. ARB(AF)/98/1
Available at:
https://www.italaw.com/documents/Lemire-
Award.pdf
(18. 1. 2018)

OPIC Karimum case OPIC Karimum Corporation v The Bolivarian § 74

5 May 2011

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Case No. ARB/10/14

Available at:
https://www.italaw.com/sites/default/files/case-
documents/ita0588.pdf
(18. 1. 2018)

Suez v Argentina Suez, Sociedad General de Aguas de Barcelona S.A. et al. v § 48

The Argentine Republic

22 October 2007
Case No. ARB/03/17
Available at:
https://www.italaw.com/sites/default/files/case-
documents/ita0824.pdf
(18. 1. 2018)

Tidewater case Tidewater INC. et al v The Bolivarian Republic of § 74

Venezuela
23 December 2010
Case No. ARB/10/5
Available at:
https://www.italaw.com/sites/default/files/case-
documents/ita0860.pdf
(18. 1. 2018)

Universal Compression case Universal Compression International Holdings, S.L.U. v § 74

The Bolivarian Republic of Venezuela

20 May 2011
Case No. ARB/10/9
Available at:
https://www.italaw.com/sites/default/files/case-
documents/ita0886.pdf
(18. 1. 2018)

International Chamber of Commerce, Court of

Arbitration

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Steel billets case Unknown parties § 137

March 1995
Case No. 8213 of March 1995
Available at:

http://cisgw3.law.pace.edu/cases/958213i1.html
(18. 1. 2018)

Permanent Court of Arbitration

Mauritius v UK The Republic of Mauritius v. The United Kingdom of Great § 41

Britain and Norther Ireland

30 November 2011
Case No. 2011-03
http://www.worldcourts.com/pca/eng/decisions/2
011.11.30_Mauritius_v_United_Kingdom.pdf
(18. 1. 2018)

Perenco Ecuador case Perenco Ecuador Ltd. v. The Republic of Ecuador and § 68

Empresa Estatal Petróleos del Ecuador

8 December 2009
Case No. IR-2009/1
Available at:
https://www.italaw.com/sites/default/files/case-
documents/ita0625.pdf
(18. 1. 2018)

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South America Silver case South American Silver Limited v The Plurinational State of § 73

Bolivia
30 October 2013
Case No. 2013-15
Available at: https://www.italaw.com/cases/2121
(18. 1. 2018)

XXIII
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TABLE OF COURT DECISIONS

CITED
CITED
AS IN

Australia

Roder case Roder v. Rosedown § 110

Federal Court, South Australian
District, Adelaide
28 April 1995
Case No. SG 3076 of 1993; FED No.
275/95
Available at:
http://cisgw3.law.pace.edu/cases/9504
28a2.html
(18. 1. 2018)

Vakauta v Kelly Vakauta v. Kelly § 78

High Court of Australia
5 October 1989
Case No. 167 CLR 569
Available at:
https://jade.io/article/67518
(18. 1. 2018)

Austria

Auto case Unknown parties § 110

Oberlandesgericht [Appelate Court]
Linz
23 January 2006
Case No. 6 R 160/05z

XXIV
 MEMORANDUM FOR RESPONDENT

Available at:
http://cisgw3.law.pace.edu/cases/06012
3a3.html

(18. 1. 2018)

Chinchilla furs case Unknown parties § 104

Oberster Gerichthof
10 November 1994
Case No. 2 Ob 547/93
Available at:
http://cisgw3.law.pace.edu/cases/94111
0a3.html
(18. 1. 2018)

Mountain bikes case Unknown parties §§ 134, 138

Oberster Gerichthof
11 March 1999
Case No. 2 Ob 163/97b
Available at:
http://www.cisg.law.pace.edu/cases/99031
1a3.html
(18. 1. 2018)

Printed goods case Unknown parties § 86

Oberlandesgericht [Appelate Court]
Frankfurt
26 June 2006
Case No. 26 Sch 28/05
Available at:
http://cisgw3.law.pace.edu/cases/060626g
1.html
(18. 1. 2018)

Propane case Unknown parties §§ 104, 106

XXV
 MEMORANDUM FOR RESPONDENT

Oberster Gerichtshof
6 February 1996
Case No. 10 Ob 518/95
Available at:
http://cisgw3.law.pace.edu/cases/960206a
3.html
(18. 1. 2018)

Ski shoes case Unknown parties § 118

Oberlandesgericht Graz
15 June 2000
Case No. 4 R 80/00t
Available at:
https://cisgw3.law.pace.edu/cisg/wais/
db/cases2/000615a3.html
(18. 1. 2018)

Belgium

Gantry case S.A. Gantry v. Société de Droit Suisse, § 106

Research Consulting Marketing
Tribunal [District Court] de commerce
Nivelles
19 September 1995
Case No. R.G. 1707/93
Available at:
http://www.cisg.law.pace.edu/cisg/wais/d
b/cases2/950919b1.html
(18. 1. 2018)

Canada

Chateau des Charmes Wines Ltd Chateau des Charmes Wines Ltd v. Sabaté § 119
USA, Inc. et al.
28 October 2005

XXVI
 MEMORANDUM FOR RESPONDENT

Superior Court of Justice, Ontario

Case No. 03-CV-261424CM3
Available at:
http://cisgw3.law.pace.edu/cases/0510
28c4.html
(18. 1. 2018)

Mansonville Plastics case Mansonville Plastics Ltd. v Kurtz GmbH § 112

Supreme Court, British Columbia
21 August 2003
Case No. C993594
Available at:
http://cisgw3.law.pace.edu/cases/0308
21c4.html
(18. 1. 2018)

France

Cámara Agraria case Société Cámara Agraria Provincial de § 117

Guipuzcoa v. André Margaron
Cour d’appel Gernoble
29 March 1995
Case No. 93/2821
Available at:
http://cisgw3.law.pace.edu/cases/9503
29f1.html
(18. 1. 2018)

Caito Roger case Caito Roger v. Société française de factoring § 137

Cour d’appel Gernoble
13 September 1995
Case No. 93/4126
Available at:
http://cisgw3.law.pace.edu/cases/9509
13f1.html

XXVII
 MEMORANDUM FOR RESPONDENT

(18. 1. 2018)

Les Verreries de Saint Gobain case Société Les Verreries de Saint Gobain, SA v. § 98
Martinswerk GmbH
Cour de Cassation [Supreme Court]
16 July 1998
Case No. J 96-11.984
Available at:
http://cisgw3.law.pace.edu/cases/980716f1
.html
(18. 1. 2018)

Société H. H case Société H. H... GmbH & Co. v. SARL § 118

MG...
Cour d’appel [Appelate Court] Paris
10 September 2003
Case No. 2002/02304
Available at:
http://cisgw3.law.pace.edu/cases/0309
10f1.html
(18. 1. 2018)

Germany

Broadcasters case Unknown parties § 113

Oberlandesgericht [Appelate Court]
Celle
24 July 2009
Case No. 13 W 48/09
Available at:
http://cisgw3.law.pace.edu/cases/0907
24g1.html
(18. 1. 2018)

Cobalt sulphate case Unknown parties § 138

XXVIII
 MEMORANDUM FOR RESPONDENT

Bundesgerichtshof [Federal Supreme

Court]
3 April 1996
Case No. VIII ZR 51/95
Available at:
http://cisgw3.law.pace.edu/cases/9604
03g1.html
(18. 1. 2018)

Concrete slabs case Unknown parties § 112

Oberlandesgericht [Appelate Court]
Koblenz
4 October 2002
Case No. 8 U 1909/01
Available at:
http://cisgw3.law.pace.edu/cases/0210
04g1.html
(18. 1. 2018)

Doors case Unknown parties § 118

Oberlandesgericht [Appelate Court]
Saarbrücken
13 January 1993
Case No. 1 U 69/92
Available at:
https://www.cisg.law.pace.edu/cisg/wais/d
b/cases2/930113g1.html
(18. 1. 2018)

Frozen pork case Unknown parties § 142

Bundesgerichtshof [Federate Supreme Court]
2 March 2005
Case No. VIII ZR 67/04

XXIX
 MEMORANDUM FOR RESPONDENT

Available at:
http://cisgw3.law.pace.edu/cases/050302g1.h
tml
(18. 1. 2018)

Furnishings case Unknown parties § 118

Landgericht [District Court] Bamberg
13 April 2005
Case No. 2 = 340/00
Available at:
https://www.cisg.law.pace.edu/cisg/wais/db/
cases2/050413g1.html
(18. 1. 2018)

Globes case Unknown parties § 137

Landgericht [District Court] München
27 February 2002
Case No. 5 HKO 3936/00
Available at:
http://cisgw3.law.pace.edu/cases/020227g
1.html
(18. 1. 2018)

Knitwear case Unknown parties § 98

Landgericht [Districtl Court] Berlin
24 March 1998
Case No. 102 O 59/97
Available at:
http://cisgw3.law.pace.edu/cases/980324g
1.html
(18. 1. 2018)

New Zealand mussels case Unknown parties § 142

Bundesgerichtshof [Federal Supreme
Court]

XXX
 MEMORANDUM FOR RESPONDENT

8 March 1995
Case No. VIII ZR 154/94
Available at:
http://cisgw3.law.pace.edu/cases/9503
08g3.html
(18. 1. 2018)

Phtalic anhydride case Unknown parties § 118

Landgericht Hamburg
26 November 2003
Case No. 411 O 199/02
Available at:
http://cisgw3.law.pace.edu/cases/0311
26g1.html
(18. 1. 2018)

Plants case Unknown parties §§ 106,

Oberlandsgericht [Provincial Court of 112
Appeal] Rostock
27 July 1995
Case No. 1 U 247/94
Available at:
https://www.cisg.law.pace.edu/cisg/wais/
db/cases2/950727g1.html
(18. 1. 2018)

Plastic window elements case Unknown parties § 112

Landgericht Trier
8 January 2004
Case No. 7 HK.O 134/03
Available at:
http://www.globalsaleslaw.com/conte
nt/api/cisg/display.cfm?test=910
(18. 1. 2018)

XXXI
 MEMORANDUM FOR RESPONDENT

Powdered milk case Unknown parties § 98

Bundesgerichtshof [Federal Supreme
Court]
9 January 2002
Case No. VII ZR 304/00
Available at:
http://cisgw3.law.pace.edu/cases/020
109g1.html
(18. 1. 2018)

Rare hard wood case Unknown parties § 117

Oberlandsgericht [Provincial Appellate
Court] Köln
22 February 1994
Case No. 22 U 202/93
Available at:
http://cisgw3.law.pace.edu/cases/940
222g1.html
(18. 1. 2018)

Rubber sealing parts case Unknown parties § 110

Oberlandsgericht [Provincial Appellate
Court] Düsseldorf
25 July 2003
Case No. 17 U 22/03
Available at:
http://cisgw3.law.pace.edu/cases/030
725g1.html
(18. 1. 2018)

Spanish paprika case Unknown parties § 142

Landgericht [District Court]
Ellwangen
21 August 1995

XXXII
 MEMORANDUM FOR RESPONDENT

Case No. 1 KfH O 32/95

Available at:
http://cisgw3.law.pace.edu/cases/950
821g2.html
(18. 1. 2018)

Textiles case Unknown parties § 106

Landgericht Hamburg
26 September 1990
Case No. 5 O 543/88
Available at:
http://cisgw3.law.pace.edu/cases/900926g
1.html
(18. 1. 2018)

Yarn case Unknown parties § 118

Oberlandsgericht [Provincial Appellate
Court] Frankfurt
Case No. 9 U 13/00
Available at:
https://www.cisg.law.pace.edu/cisg/wa
is/db/cases2/000830g1.html
(18. 1. 2018)

Italy

Euroflash case Euroflash Impression S.a.s. v. Arconvert § 112

S.p.A.
Tribunale [District Court] di Rovereto
24 August 2006
Case No. 1537/05
Available at:
http://www.cisg.law.pace.edu/cisg/wais/d
b/cases2/060824i3.html
(18. 1. 2018)

XXXIII
 MEMORANDUM FOR RESPONDENT

Takap V. B. case Takap B.V. v. Europlay S.r.l. § 112

Tribunale [District Court] di Rovereto
21 November 2007
Case No. 914/06
Available at:
http://cisgw3.law.pace.edu/cases/071121i3
.html
(18. 1. 2018)

Mexico

Kolmar Petrochemicals case Kolmar Petrochemicals Americas, Inc. v. Idesa § 85

Petroquímica S.A. de C.V.
Primer Tribunal Colegiado en Materia Civil
del Primer Circuito [Appellate Court]
10 March 2005
Case No. 127/2005
Available at:
http://www.cisg.law.pace.edu/cases/0503
10m1.html
(18. 1. 2018)

Netherlands

25 February 2003 case Unknown parties § 85

Hof’s-Hertogenbosch [District Appellate
Court]
25 February 2003
Case No. C0200320 / HE
Available at:
https://uitspraken.rechtspraak.nl/inziendo
cument?id=ECLI:NL:GHSHE:2003:AF567
4&showbutton=true&keyword=C0200320
+%2f+HE
(18. 1. 2018)

XXXIV
 MEMORANDUM FOR RESPONDENT

Corporate Web Solutions Ltd. case Corporate Web Solutions Ltd. v. Verdorlink § 106

B.V
Rechtbank Midden-Nederland
25 March 2015
Case No. HA ZA 14-217
Available at:
http://cisgw3.law.pace.edu/cases/150325n1.ht
ml
(18. 1. 2018)

Hibro Compensatoren B.V. case Hibro Compensatoren B.V. v. Trelleborg Industri § 118

Aktiebolag
Rechtbank Arnhem
17 January 2007
Case No. 146453 / HA ZA 06-1789
Available at:
http://cisgw3.law.pace.edu/cases/070117n
1.html
(18. 1. 2018)

Isocab France S.A. Isocab France S.A. v. Indus Projektbouw B.V. § 119

Hoge Raad [Supreme Court]

4 February 2005
Case No. LJN: AR6187; CO/007HR
Available at:
http://cisgw3.law.pace.edu/cases/050204n
1.html
(18. 1. 2018)

Sesame seed case Unknown party v. Quote Foodproducts B.V. § 119

Arrondissementsrechtbank [District Court]

Utrecht
21 January 2009

XXXV
 MEMORANDUM FOR RESPONDENT

Case No. LJN BH0723; 253099 / HA ZA

08-1624
Available at:
http://cisgw3.law.pace.edu/cases/090121n
1.html
(18. 1. 2018)

Sheepskin case Unknown parties § 119

Arrondissementsrechtbank [District Court]

Rotterdam
14 October 1999
Case No. HA ZA 98-1405
Available at:
http://cisgw3.law.pace.edu/cases/991014n
1.html

(18. 1. 2018)

New Zealand

Smallmon case RJ & AM Smallmon v. Transport Sales Limited and § 104

Grant Alan Miller

Court of Appeal of New Zealand
22 July 2011
Case No. C A545/2010 [2011] NZ C A 340
Available at:
http://cisgw3.law.pace.edu/cases/110722n6.ht
ml
(18. 1. 2018)

Slovak Republic

Health care products case Unknown parties § 110

Supreme Court of Slovak Republic

19 June 2008
Case No. VIII 6 Obo 15/2008

XXXVI
 MEMORANDUM FOR RESPONDENT

Available at:
http://cisgw3.law.pace.edu/cases/080619k1.ht
ml
(18. 1. 2018)

Switzerland

Chemical products case Unknown parties §§ 85,

Bundesgericht [Supreme Court] 118

5 April 2005
Case No. 4C.474/2004
Available at:
http://cisgw3.law.pace.edu/cases/050405s1.ht
ml
(18. 1. 2018)

Plastic chips case Unknown parties § 118

Handelsgericht [Commercial Court]

10 July 1996
Case No. HG 940513
Available at:
http://cisgw3.law.pace.edu/cases/960710s
1.html
(18. 1. 2018)

Roland Schmidt GmbH case Roland Schmidt GmbH v. Textil-Werke § 136

Blumenegg AG
Bundesgericht [Supreme Court]
22 December 2000
Case No. 4C.296/2000/rnd
Available at:
http://cisgw3.law.pace.edu/cases/001222s1.ht
ml
(18. 1. 2018)

XXXVII
 MEMORANDUM FOR RESPONDENT

Summer cloth collection case Unknown parties § 117

Obergericht [Canton Appellate Court]

Basel
5 October 1999
Case No. 40-99160 (A15)
Available at:
http://cisgw3.law.pace.edu/cases/991005s1.ht
ml
(18. 1. 2018)

United States of America

American Bell International case American Bell International INC. v The Islamic § 41
Republic of Iran et al.

US District Court for the Southern District

of New York
4 August 1979
Case No. Civ. 3804 (RO)
As cited in Caron/Caplan, Article 6
Commentary

Cedar Petrochemicals, Inc. case Cedar Petrochemicals Inc. v. Dongbu Hannong § 104
Chemical Ltd
U.S District Court, Southern District of New
York
28 September 2011
Case No. 06 Civ. 3972 (LTS)(JCF)
Available at:
http://cisgw3.law.pace.edu/cases/110928u1.
html
(18. 1. 2018)

CSS case CSS Antenna, Inc. v. Amphenol-Tuchel Electronics, §§ 86,

GMBH 106

XXXVIII
 MEMORANDUM FOR RESPONDENT

U.S Distric Court, District of Maryland

8 February 2011
Case No. CCB-09-2008
Available at:
http://cisgw3.law.pace.edu/cases/110208u1.ht
ml
(18. 1. 2018)

Filanto case Filanto S.p.A. v. Chilewich International Corp. § 138

U.S Distric Court, Southern District of

New York
14 April 1992
Case No. 92 Civ. 3253 (CLB)
Available at:
http://www.cisg.law.pace.edu/cases/920414u
1.html
(18. 1. 2018)

Magellan International case Magellan International v. Salzgitter Handel § 117

U.S Distric Court, District of Illinois,

Eastern Division
7 December 1999
Case No. 99 C 5153
Available at:
http://www.cisg.law.pace.edu/cases/991207u
1.html
(18. 1. 2018)

MCC-Marble Ceramic Center case MCC-Marble Ceramic Center, Inc. v. Ceramica § 138

Nuova D'Agostino S.p.A.

29 June 1998
Case No. 97-4250
Available at:
http://www.cisg.law.pace.edu/cases/980629u
1.html

XXXIX
 MEMORANDUM FOR RESPONDENT

(18. 1. 2018)
Roser Technologies, Inc case Roser Technologies, Inc. v. Carl Schreiber GmbH § 106

U.S Distric Court, Western District of

Pennsylvania
10 September 2013
Case No. 11cv302 ERIE
Available at:
http://cisgw3.law.pace.edu/cases/130910u1.ht
ml
(18. 1. 2018)

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MEMORANDUM FOR RESPONDENT

TABLE OF LEGAL SOURCES

CIETAC AR China International Economic and Trade Arbitration

Commission CIETAC Arbitration Rules, Beijing, 4
November 2014

CISG United Nations Convention on Contracts for the

International Sale of Goods, Vienna, 11 April 1980

HKIAC AR Hong Kong International Arbitration Centre

Administered Arbitration Rules, Hong Kong, 2013.

IBA Guidelines IBA Guidelines on Conflicts of Interest in

International Arbitration, 2014

ICC AR Rules of Arbitration of the International Chamber of

Commerce, Paris, 2012

ICDR AR International Dispute Resolution Procedures of the

International Centre for Dispute Resolution, New
York, 1 June 2014.

ICSID AR ICSID Rules of Procedure for the Institution of

Conciliation and Arbitration Proceedings (Institution
Rules), Washington D.C., 1 January 2013

LCIA AR London Court of International Arbitration,

Arbitration Rules, London, 2014

SCC AR Arbitration Rules of the Arbitration institute of the

Stockholm Chamber of Commerce, Stockholm, 1
January 2010.

XLI
MEMORANDUM FOR RESPONDENT

UNCITRAL Arbitration UNCITRAL Arbitration Rules, New York, 2011

Rules

Model Law UNCITRAL Model Law on International Commercial

Arbitration, 2006

UNIDROIT Principles UNIDROIT Principles of International Commercial

Contracts, Rome, 2010

VIAC AR Rules of Arbitration of the Vienna International

Arbitral Centre (VIAC), Vienna 1 July, 2013.

XLII
MEMORANDUM FOR RESPONDENT

TABLE OF OTHER SOURCES

CITED CITED
AS IN

Hershey’s Hershey’s Supplier Code of Conduct § 133

Available at:
https://www.thehersheycompany.com/content/d
am/corporate-us/documents/partners-and-
suppliers/supplier-code-of-conduct.pdf
(18. 1. 2018)

AHDI, ‘make sure’ The American Heritage Dictionary of Idioms § 132

Available at:
https://www.ahdictionary.com/
(18. 1. 2018)

PCA, Designation of Permanent Court of Arbitration § 30

Appointing Authority Designation of Appointing Authority
Available at:
https://pca-cpa.org/en/services/appointing-
authority/designation-of-appointing-authority/
(18. 1. 2018)

UN GC Principles The Ten Principles of the UN Global Compact § 127

Available at:
https://www.unglobalcompact.org/what-is-
gc/mission/principles
(18. 1. 2018)

Whole Foods Whole Food Market Supplier Guidelines § 133

Available at:
http://assets.wholefoodsmarket.com/www/vend
ors/wholebody/FL/Supplier%20Guidelines%20v
1%202%20EXIGIS.pdf (18. 1. 2018)

XLIII
 STATEMENT OF FACTS
1 The parties to this arbitration are Delicatesy Whole Foods Sp (hereinafter: CLAIMANT) and
Comestibles Finos Ltd (hereinafter: RESPONDENT), collectively “Parties”. CLAIMANT is a
manufacturer of fine bakery products registered in Equatoriana. RESPONDENT is a gourmet
supermarket chain in Mediterraneo.

2 Parties met at the yearly Danubian food fair Cucina in March 2014 where RESPONDENT’s Head
of Purchasing Annabelle Ming approached CLAIMANT. She and Kapoor Tsai, CLAIMANT’s Head
of Production, discussed the possibility of future cooperation.

3 On 10 March 2014, RESPONDENT sent the Invitation to Tender, to which CLAIMANT replied
with Letter of Acknowledgement on 17 March 2014 and with its offer on 27 March 2014. In Sales-
Offer CLAIMANT proposed several changes, including the payment and description of the cakes.

4 On 7 April 2014, RESPONDENT sent a letter following CLAIMANT’s offer. RESPONDENT also
requested that CLAIMANT started its delivery of 20,000 chocolate cakes per day on 1 May 2014. In
accordance with the contract, CLAIMANT made its first delivery on that date. There were no
problems concerning the deliveries in 2014, 2015 and 2016.

5 In 2016, Mr. Prasad published an article in the Vindobona Journal of International Commercial
Arbitration and Sales Law.

6 On 6 January 2017, the United Nations Environment Programme special rapporteur published a
report on the investigation on deforestation in Ruritania. This report was followed by a
documentary, shown on the Equatorian state news channel on 19 January 2017, and an article
published on 23 January 2017 in Michelgault.

7 On 27 January 2017, RESPONDENT sent an email seeking clarification whether CLAIMANT’s

suppliers all strictly adhered to the Ten Principles of UN Global Compact. RESPONDENT also
stated that it would refrain from taking any further delivery and making any further payment until
the issue was resolved. On the same day CLAIMANT replied with an email, stating that it did not
believe that the cocoa beans came from unsustainable farms. CLAIMANT also promised to
investigate further and insisted on payment for the cakes delivered.

8 In the email of 10 February 2017, CLAIMANT informed RESPONDENT that it cannot exclude the
possibility that some of the cocoa came from unsustainable farms. RESPONDENT terminated the
contract in the email of 12 February 2017.

1
MEMORANDUM FOR RESPONDENT

9 Following unsuccessful mediation on 30 May 2017, CLAIMANT initiated arbitration proceeding by

sending Notice of Arbitration on 30 June 2017. RESPONDENT submitted Response to Notice of
Arbitration on 31 July 2017.

10 On 29 August 2017, RESPONDENT informed both Tribunal and CLAIMANT about obtaining
information on CLAIMANT’s third-party funder. On 7 September 2017, CLAIMANT disclosed that
Funding 12 Ltd, whose main shareholder is Findfunds LP, funded its claim. On 11 September
2017, in light of the newly emerged information, Mr. Prasad sent clarification regarding his
impartiality.

11 On 14 September 2017, RESPONDENT submitted Notice of Challenge of Arbitrator. On 21

September 2017, Mr. Prasad responded to the challenge and on 29 September 2017, CLAIMANT
refused to agree to removal.

SUMMARY OF ARGUMENTS
12 Firstly, Parties have excluded application of Art. 13(4) of the UNCITRAL Arbitration Rules in their
arbitration agreement. Therefore, appointing authority cannot decide on challenge of Mr. Prasad
as it should not be designated in the first place. Further, arbitral tribunal should recognize their
power and make the decision on challenge of Mr. Prasad. The decision should be made without
Mr. Prasad’s vote (ISSUE I).

13 Secondly, Mr. Prasad should be disqualified from Tribunal due to justifiable doubts to his
impartiality and independence. Since UNCITRAL Arbitration Rules do not provide concrete
criteria for disqualification of arbitrators, arbitral tribunal should advise IBA Guidelines on Conflict
of Interest in International Arbitration 2014. Tribunal should consider Mr. Prasad’s connection to
CLAIMANT’s third-party funder, his previous appointments by parties connected to CLAIMANT and
review his position on conformity of goods. Said circumstances raise doubts regarding Mr. Prasad’s
impartiality and independence (ISSUE II).

14 Thirdly, RESPONDENT’s General Conditions govern the contract, as they are the only set of
standard terms validly included into the contract. RESPONDENT’s counter-offer is governed solely
by its standard terms. Moreover, RESPONDENT’s General Conditions lost the nature of standard
terms by being attached to CLAIMANT’s offer. Even if RESPONDENT’s General Conditions did not
become negotiated terms, the contract is not governed by CLAIMANT’s General Conditions of Sale
due to order of precedence, knock-out doctrine, and their surprising nature. Moreover,
RESPONDENT was neither aware of CLAIMANT’s intent to incorporate CLAIMANT’s General

2
MEMORANDUM FOR RESPONDENT

Conditions of Sale nor were the terms made sufficiently available to RESPONDENT. CLAIMANT’s
references to its general conditions on invoices are irrelevant (ISSUE III).

15 Fourthly, since the sustainability requirements were included into the contract, CLAIMANT
breached its obligations under Art. 35(1) of the CISG by delivering cakes produced from
unethically sourced cocoa. Moreover, the cake presented at the Cucina Food Fair cannot be a
model under Art. 35(2)(c) of the CISG. Ultimately, Parties agree that RESPONDENT’s particular
purpose was selling sustainably produced cakes. Since CLAIMANT delivered cakes that were
non-conforming with contractual requirements and the particular purpose, RESPONDENT
rightfully terminated the contract (ISSUE IV).

ISSUE I: THE TRIBUNAL HAS THE POWER TO DECIDE ON

CHALLENGE OF MR. PRASAD
16 At the time of conclusion of the contract, RESPONDENT explicitly pointed out to CLAIMANT the
importance of confidentiality in any potential arbitration Ex. R5, p. 41. CLAIMANT acknowledged
said reservations and agreed to ad hoc arbitration as per RESPONDENT’s proposed Arbitration
Agreement (hereinafter: AA). In AA, Parties decided on the usage of the UNCITRAL Arbitration
Rules (hereinafter: UNCITRAL Rules). However, in the same sentence, a clause excluding the
involvement of any arbitral institution in the arbitral proceedings was added. Thus, UNCITRAL
Rules were not agreed on by Parties in their entirety but only with a modification.

17 CLAIMANT states that the procedure for the challenge of an arbitrator provided by UNCITRAL Rules
should be followed and that Tribunal does not have the power to decide on Challenge MfC, pp. 3-6,
§§2-11. However, proposed procedure cannot be observed without breaching Parties’ AA. The
procedure contained in UNCITRAL Rules foresees the involvement of the Permanent Court of
Arbitration (hereinafter: PCA), an arbitral institution, as well as involvement of an appointing
authority. Thus, RESPONDENT asserts that Tribunal does have the power to decide on Challenge
since Parties have excluded the application of Art. 13(4) of the UNCITRAL Rules (A). Consequently,
Tribunal should exercise its power and should do so without participation of Mr. Prasad (B).

A. Parties have excluded the application of Art. 13(4) of the UNCITRAL Arbitration Rules

18 CLAIMANT argues that UNCITRAL Rules apply in their entirety and that application of Art. 13(4)
of the UNCITRAL Rules was not waived by Parties MfC, p. 3, §5. However, such reasoning
cannot be interpreted without opposing the will of Parties enshrined in AA. RESPONDENT was
clear in its reasons for ad hoc arbitration and CLAIMANT expressly agreed to the exclusion of any

3
MEMORANDUM FOR RESPONDENT

arbitral institution during the proceedings Ex. C3, p. 15, §5. This mutual agreement between
Parties would be breached by application of Art. 13(4) of the UNCITRAL Rules.

19 Therefore, appointing authority should not participate in Challenge procedure and Tribunal should
find that it is within its powers to decide on Challenge instead. Firstly, this is due to the fact that
Parties have waived Art. 13(4) of the UNCITRAL Rules in their AA (1). Secondly, RESPONDENT
will demonstrate that Art. 13(4) of the UNCITRAL Rules cannot be applied without violating
Parties’ agreement (2). Thirdly, contrary to CLAIMANT’s allegations, excluding appointing authority
would be reasonable (3).

1. Parties have waived Art. 13(4) of the UNCITRAL Arbitration Rules in arbitration
agreement

20 CLAIMANT asserts that Parties have not excluded the application of Art. 13(4) of the UNCITRAL
Rules [MfC, p. 3, §4]. However, that is incorrect. Parties have excluded involvement of arbitral
institutions [Ex. C2, p. 11], which results in exclusion of Art. 13(4) of the UNCITRAL Rules.

21 Firstly, contrary to CLAIMANT’s allegations [MfC, pp. 3-4, §5], arbitration rules do not have to be
modified by explicit exclusion of certain articles. There are no provisions prescribing explicit
modification in the agreed upon arbitration rules or the lex arbitri. What is more, drafters of
UNCITRAL Rules agreed that exclusion of articles does not have to be explicit, as it would be in
conflict with international commercial practice [UN Committee Report, pp. 7-8, §§49, 53]. Legal theory
does not provide basis for explicit exclusion either. It is telling that CLAIMANT fails to support its
argument with any authorities [MfC, pp. 3-4, §5].

22 Secondly, CLAIMANT observes that Art. 13(4) of the UNCITRAL Rules cannot be excluded by oral
agreement [MfC, p. 4, §6]. However, RESPONDENT has never claimed that said article was excluded
orally. Art. 13(4) of the UNCITRAL Rules was excluded in written form through AA [NCA, p. 39, §8].

23 Thirdly, contrary to CLAIMANT’s assertions [MfC, p. 4, §7], Parties have excluded Art. 13(4) of the
UNCITRAL Rules implicitly. It is of paramount importance to analyse the composition of AA
thoroughly. Clause 20 of the contract contains two distinct features. First, there is an addition
excluding any involvement of arbitral institution and use of the UNCITRAL Rules on
Transparency. Second, there is no agreement on appointing authority [Ex. C2, p. 11]. Aside from
aforementioned features, dispute resolution clause is a verbatim adoption of the UNCITRAL
model arbitration clause [UNCITRAL Rules, annex].

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MEMORANDUM FOR RESPONDENT

24 Both alterations bear considerable significance. Firstly, it must be pointed out that UNCITRAL
Rules make reference to institution only in regard to appointing authority [UNCITRAL Rules, Art.
6(1), annex]. As model arbitration clause was created specifically for ad hoc arbitration under
UNCITRAL Rules [Zahradníková, §14.8.], express exclusion of arbitral institution can only be
understood in relation to appointing authority. Secondly, AA does not contain the agreement on
appointing authority. It should be noted that in UNCITRAL model arbitration clause agreement
on appointing authority is listed first, prior to agreements on number of arbitrators, seat of
arbitration, and language of the proceedings [UNCITRAL Rules, annex]. One must draw the
conclusion that its placement in the UNCITRAL model arbitration clause signifies the importance it
bears. This argument is further fortified by drafters’ decision to change the wording of UNCITRAL
model arbitration clause. Reasoning for said decision was to emphasize importance for
aforementioned agreements to be included into the prospective arbitration agreements [WGII Report
665, §21]. In light of arguments made above, it is obvious that agreement on appointing authority
was intentionally omitted from AA to ensure that arbitral tribunal should resolve the dispute.

25 To conclude, AA mirrors the UNCITRAL model arbitration clause in every word except for
addition regarding the exclusion of involvement of arbitral intuitions. Further, considering the fact
that agreement on appointing authority was not included in AA, Tribunal should recognise that
will of Parties was to exclude the involvement of appointing authority from these proceedings.

2. Art. 13(4) of the UNCITRAL Rules cannot be applied without violating Parties’
agreement

26 The provision in AA regarding the exclusion of any arbitral institution cannot be upheld if Art.
13(4) of the UNCITRAL Rules is to be applied. This is due to the procedure provided in said
article, which presupposes involvement of an arbitral institution in absence of an agreement
between parties. Accordingly, RESPONDENT will demonstrate that an agreement on appointing
authority as a person in unlikely between Parties (2.1). As per Art. 13(4) of the UNCITRAL Rules,
if such agreement cannot be reached, involvement of an arbitral institution is inevitable (2.2).

2.1 Agreement on appointing authority as a person is unlikely

27 CLAIMANT states that that RESPONDENT’s reservation about the involvement of an arbitral
institution does not exclude participation of an appointing authority since it is possible that an
appointing authority can also be only one person MfC, p. 4, §7. While RESPONDENT does not
object this, it must be pointed out that an individual acting as an appointing authority is only
guaranteed if there is such consensus between Parties. Admittedly, Art. 6(1) of the UNCITRAL

5
MEMORANDUM FOR RESPONDENT

Rules places no limitation on which person or institution parties designate as the appointing
authority Caron/Caplan, p. 716. However, for this possibility to be brought to life, Parties would
have to reach a consensus on a person serving as an appointing authority.

28 In the case at hand, agreement regarding the appointing authority is unlikely between Parties. This
is due to prior indications and evidence of failed attempts to resolve their disputes amicably. To
begin with, Parties were unable to settle the dispute amicably through mediation FL1, p. 3.
Moreover, CLAIMANT failed to deliver the goods in compliance with the contract between Parties
and it nevertheless insisted on payments to be made Ex. C8, p. 20; Ex. C9, p. 21. Finally, Parties
were thus far unable to agree on several procedural issues, namely the appointment of Mr. Prasad
and the interpretation of AA regarding exclusion of appointing authority.

29 Consequently, Tribunal should deem the mere possibility of not reaching an agreement on the
appointing authority as precluding the application of the procedure in Art. 13(4) of UNCITRAL
Rules. Due to Parties’ previous inability to reach compromises, it is highly unlikely that an
agreement will be made on this matter. As discussed below, failure to reach an agreement on an
appointing authority leads directly to an involvement of an arbitral institution, which is
incompatible with AA.

2.2 If there is no agreement on appointing authority, involvement of arbitral institution

is inevitable

30 Provisions of Art. 6 of the UNCITRAL Rules are aimed at encouraging parties to agree on an
appointing authority as soon as possible during the arbitration Poulton/Yates, §3.2. Although this
ensures a time-efficient arbitration, it also enables one party to request the PCA Secretary-General
to designate an appointing authority in 30 days after no agreement between parties can be reached
Art. 6(2) UNCITRAL Rules. Thus, in the event that Parties cannot agree on an individual to serve
as an appointing authority, CLAIMANT could go against RESPONDENT and request the PCA to
make the appointment. Such action on its own would violate Parties’ agreement as the PCA is an
arbitral institution. Involvement of any arbitral institution was excluded in AA, which is not
disputed by CLAIMANT MfC, p. 4, §5. When acting as a designating authority, PCA familiarizes
itself with the case file and other details of the dispute PCA, Designation of Appointing Authority,
which is precisely what RESPONDENT wanted to avoid.

31 Additionally, CLAIMANT states that under Art. 6(5) of the UNCITRAL Rules an appointing
authority “only concerns itself with the necessary information for the decision on the challenge” MfC, p. 5, §7.

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MEMORANDUM FOR RESPONDENT

However, this is a grave misuse of the UNCITRAL Rules as well as the legal sources CLAIMANT is
citing. Art. 6(5) of the UNCITRAL Rules provides that both the appointing authority and PCA
can require from any party to disclose any additional information they deem necessary. Although
the appointing authority is not allowed to address the merits of the dispute, it is nevertheless
empowered to request any information from the parties or the arbitrators Caron/Caplan, p. 725-
726. Said article provides no limitations on appointing authorities’ right to order disclosure. Thus,
it is unclear how CLAIMANT reached its conclusion and how the appointing authority could only
familiarize itself with information regarding Challenge without becoming aware of the
circumstances of the case.

32 To conclude, Tribunal is respectfully requested to find that the only way to ensure compliance with
Parties’ AA is to decide that Art. 13(4) of the UNCITRAL Rules cannot be applied. The procedure
set forth in the UNCITRAL Rules for cases where parties cannot agree on the appointing authority
presupposes the involvement of an arbitral institution, i.e. PCA.

3. Excluding appointing authority would be reasonable

33 Application of Art. 13(4) of the UNCITRAL Rules has been excluded. CLAIMANT alleges that
waiving appointing authority would be unreasonable [MfC, p. 5, §9]. Said conclusion has no basis
as CLAIMANT’s arguments on this issue are either contradictory within the issue, contradictory to
CLAIMANT’s other submissions or a misrepresentation of legal sources.

34 Firstly, CLAIMANT begins the submission that appointing authority is a neutral third party and further
portrays remaining two members of Tribunal as partial due to supposed relationship to Mr. Prasad
[ibid]. CLAIMANT, however, fails to corroborate that this issue arises in cases where permanent judicial
or arbitral institutions are involved [Giorgetti, p. 243; Ma, p. 299]. It must be stressed that proceedings
at hand are held before ad hoc arbitration. Ad hoc arbitrations are tailored to each dispute separately
and therefore temporary by nature [Rajoo I, p. 548]. For that reason, close relationships as discussed
above cannot be equated to relationships of arbitrators in present case. Thus, arguments implying
that arbitrators may be partial in light of their relationships are devoid of any merit.

35 Secondly, as Parties have excluded Art. 13(4) of the UNCITRAL Rules, they have not set
appointing authority in AA [Ex. C2, p. 12]A. Thus, if agreement regarding designation of
appointing authority must be reached during proceedings, it would lead to unnecessary delays
[Caron/Caplan, Art. 6 commentary]. UNCITRAL Working Group II observed that advantage of
remaining members of tribunal deciding on the challenge is to save time [WGII Report 264, p. 32].
As CLAIMANT’s counsel states that RESPONDENT’s primary goal is to delay the proceedings [FL 3,

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MEMORANDUM FOR RESPONDENT

p. 46], it can be assumed CLAIMANT is keen on expediting this arbitration. Therefore,

RESPONDENT’s proposal for Tribunal to decide on Challenge should be a favourable solution for
CLAIMANT.

36 Ultimately, CLAIMANT fails to establish any clear advantage of appointing authority deciding on
Challenge. What is more, involving appointing authority at this point of arbitration, even if it was
possible, would only unnecessarily prolong the proceedings. Tribunal should acknowledge that
concluding this arbitration in a time-efficient manner is one of the rare areas where Parties do agree.
For that reason, Tribunal should decide on Challenge.

B. Tribunal should decide on Challenge without participation of Mr. Prasad

37 Contrary to CLAIMANT’s allegations [MfC, p. 3, §2], Tribunal does have the power do decide on
Challenge. To avoid any unnecessary delay, decision should be made by other two members of
Tribunal, Ms. Reitbauer and Ms. Rizzo.

38 In contrast to CLAIMANT’s position [MfC, pp. 6-7, §13], decision on Challenge does not have to be
made by all three arbitrators (1). Due to the fact that Challenge is directed against Mr. Prasad, he
cannot participate in decision-making (2). If the remaining two arbitrators decide on Challenge,
principle of equal treatment of the parties would not be breached (3).

1. Decision on Challenge does not have to be made by all three arbitrators

39 CLAIMANT asserts that Tribunal should make decisions only if it consists of three arbitrators [MfC,
pp. 6-7, §13]. However, RESPONDENT has not requested the exclusion of Mr. Prasad before decision
on Challenge is rendered. Constitution of Tribunal would remain the same since RESPONDENT has
merely requested that Mr. Prasad is not involved in decision-making process regarding Challenge
[NCA, p. 39, §8]. Therefore, request of that nature does not go against AA, provisions of
UNCITRAL Rules or Danubian Arbitration Law, which is verbatim adoption of the UNCITRAL
Model Law on International Commercial Arbitration (hereinafter: Model Law).

40 CLAIMANT is correct in its assertion that Tribunal should consist of three arbitrators. Nonetheless,
contrary to CLAIMANT’s position [MfC, pp. 6-7, §13], the decision itself does not have to be made
by all three arbitrators. In fact, UNCITRAL Rules and Model Law as lex arbitri provide that any
decision shall be made by majority of members of the tribunal [UNCITRAL Rules, Art. 33; Model
Law, Art. 29]. AA only stipulates that Tribunal shall consist of three members and not that all three
must participate in decision-making [Ex. C2, p. 12]. According to Art. 17(1) of the UNCITRAL
Rules, Tribunal may conduct the proceedings in a manner it considers appropriate. Thus, distancing

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MEMORANDUM FOR RESPONDENT

Mr. Prasad from decision on Challenge while he remains a member of Tribunal would be in
accordance with UNCITRAL Rules.

41 CLAIMANT further states that decision itself must be made by an uneven number of arbitrators as
there is a possibility of a procedural stalemate [MfC, p. 7, §14]. However, deadlock situations are
not as grave as CLAIMANT attempts to portray. Cases where said situations do occur can be solved
simply by granting the presiding arbitrator the decisive vote [Dore, p. 170; Mauritius v UK]. For this
reason, UNCITRAL Rules empower the president of the tribunal to decide where procedural
stalemates occur [UNCITRAL Rules, Art. 33(2); Caron/Caplan, p. 708; American Bell International case].
Therefore, the mechanisms for resolving a potential deadlock swiftly and efficiently are in place.

42 Moreover, CLAIMANT states that certain jurisdictions prohibit even numbered tribunals [MfC, p. 7,
§14]. CLAIMANT’s observation is irrelevant for two reasons. First, according to Art. 10 of the Model
Law there is no limitation as to number of arbitrators [Broches, p. 53]. Second, as demonstrated
above, Tribunal remains in constitution of three arbitrators. Only regarding Challenge, Mr. Prasad
is to refrain from decision-making, while remaining a member of Tribunal.

43 In conclusion, decision on Challenge by remaining two arbitrators does not contradict Parties’
agreement or the relevant rules. Number of arbitrators constituting Tribunal is three and remaining
two may make a decision on Challenge to accommodate all the binding and agreed upon provisions.

2. Mr. Prasad cannot decide on his own challenge

44 Contrary to CLAIMANT’s assertions [MfC, p. 7, § 15], Mr. Prasad cannot decide on the Challenge as
he would be a judge in his own cause. This situation is to be avoided especially as Mr. Prasad has
already voiced his position and refused to step down as CLAIMANT-appointed arbitrator [PL, p. 44].

45 Firstly, CLAIMANT refers to Art. 29 of the Model Law and states that all the decisions have to be
made by majority of arbitrators. CLAIMANT further states that said provision results in mandatory
participation of challenged arbitrators in decision on challenge [MfC, p. 7 §15]. However, majority
does not mean all of the arbitrators. Majority means more than half [Caron/Caplan, Art. 33
commentary]. In case at hand, majority is two or more arbitrators. Thus, decision on the Challenge
by remaining two arbitrators would be in accordance with lex arbitri. More importantly it would be
in accordance with Art. 33(1) of the UNCITRAL Rules.

46 Secondly, CLAIMANT states Mr. Prasad was not terminated from his position as an arbitrator [MfC,
pp. 7-8, §§16-17]. RESPONDENT has never claimed otherwise nor has it requested termination of Mr.
Prasad’s mandate before decision on Challenge. As it is obvious from NCA, RESPONDENT merely

9
MEMORANDUM FOR RESPONDENT

requested that decision is done without Mr. Prasad’ [NCA, p. 39, §8]. RESPONDENT has not at any
point demanded exclusion of Mr. Prasad from his other duties before decision on Challenge is made.

47 Thirdly, CLAIMANT states that since Mr. Prasad’s mandate has not been terminated, he must be
involved in the decision-making. Otherwise it would mean prejudgement on his partiality [MfC, p.
8, §18]. CLAIMANT’s conclusion is incorrect. There are two separate types of partiality involved.
Challenge has been raised against Mr. Prasad for serious and justifiable doubts to his partiality
towards CLAIMANT [NCA, p.38, §1]. Conversely, RESPONDENT’s request that Mr. Prasad does not
participate in decision-making, stems from an undeniable fact that Mr. Prasad is partial towards
decisions involving himself [NCA, p. 39, §8]. There is a fundamental difference. While every
person, consciously or sub-consciously, would make a favourable decision in their own favour,
there is no correlation to partiality towards a third party. Thus, distancing Mr. Prasad from decision
on Challenge would not mean prejudgement on his impartiality.

48 Fourthly, world’s leading arbitral institutions have recognized the issue of arbitrators deciding on
their own challenge. Widely recognized arbitration rules do not even empower the tribunal to
decide on challenge, indirectly excluding the challenged arbitrator [ICC AR, Art. 14(3); SCC AR,
Art. 20; VIAC AR, Art. 20(3); LCIA AR, Art. 10(6); ICDR AR, Art. 14(3); CIETAC AR, Art.
32(6); HKIAC AR 11(9)]. The only significant arbitration rules, ICSID Arbitration Rules, which
explicitly empower the tribunal to decide on challenge, provide that challenged arbitrator cannot
participate in said decision [ICSID AR, Rule 9(4); Alpha Projektholding v Ukraine; Suez v Argentina].
Furthermore, it is obvious from the wording of Art. 13(4) of the UNCITRAL Rules that drafters
wanted to avoid said possibility as well [NCA, p. 39, §8]. While RESPONDENT does not claim that
Art. 13(4) of the UNCITRAL Rules is applicable, it nevertheless demonstrates intent of the drafters
and spirit of the rules. All aforementioned rules may be considered international practice []. And it
is not in line with international practice or with the spirit of UNCITRAL Rules for challenged
arbitrator to decide on their own challenge.

49 In conclusion, to avoid undesirable situation where Mr. Prasad would be a judge in his own cause,
Tribunal should decide on Challenge with remaining two members. As elaborated above, decision
made by majority of Tribunal is in accordance with AA, UNCITRAL Rules and Model Law.

3. Equal treatment of Parties is not breached

50 CLAIMANT alleges that Mr. Prasad’s exclusion would violate CLAIMANT’s right to equal treatment since
each party has the right to appoint one arbitrator MfC, p. 9, §20. It further states that excluding Mr.
Prasad would deprive CLAIMANT of its influence on the composition of Tribunal ibid. If one were to

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MEMORANDUM FOR RESPONDENT

follow CLAIMANT’s reasoning, it would have to be concluded that an arbitrator can never be challenged
and excluded, which is unreasonable and against the relevant law. If the possibility of challenging an
arbitrator was perceived as incompatible with the principle of equal treatment, they would not have
been encompassed in the same set of arbitration rules see Art. 12 and Art. 17 UNCITRAL Rules.

51 RESPONDENT does not deny the importance of the principle of equal treatment and the respect it
should be given. However, RESPONDENT’s intention is not to preclude CLAIMANT from appointing
an arbitrator altogether, but merely to exclude an arbitrator to whose impartiality and independence
exist justifiable doubts. Art. 14 of the UNCITRAL Rules sets forth the procedure for the
replacement of an arbitrator and its wording provides that a party’s right of appointment is revived
in full upon re-appointment Caron/Caplan, p. 1229. The preservation of a party’s right of
appointment was acknowledged by the drafters of the UNCITRAL Rules. This is why the relevant
provisions are worded in a way to ensure that the substitute arbitrator will be appointed in the same
way as his predecessor UNCITRAL Yearbook, p. 172. Thus, excluding Mr. Prasad from these
proceedings would not violate CLAIMANT’s right to an equal treatment, as it would still have the
right to appoint a new, substitute arbitrator.

52 Moreover, it must be pointed out that Art. 14(2) of the UNCITRAL Rules foresees a situation
where a party may be deprived of its right to appoint a substitute arbitrator. Nevertheless, the
drafters of the UNCITRAL Rules still deemed this option, exercisable in extreme circumstances,
as compatible with the principle of equal treatment WGII Report 665, p. 20, §105. Since
RESPONDENT is not requesting such a drastic measure, Mr. Prasad’s exclusion from decision-
making on Challenge shall be deemed by Tribunal as in accordance with the principle of equal
treatment of Parties.

___________________________________________________________________________

CONCLUSION ON ISSUE I

53 Tribunal has the power to decide on Challenge. Any decision to the contrary would violate Parties’
agreement as they excluded involvement of any arbitral institution in this arbitration and thus the
application of Art. 13(4) of the UNCITRAL Rules. Tribunal should make its decision on Challenge
without participation of Mr. Prasad, who cannot be a judge in his own case. This would not breach
the principle of equal treatment of the parties or the relevant law, which does not require all
arbitrators to participate in the decision-making.

___________________________________________________________________________

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MEMORANDUM FOR RESPONDENT

ISSUE II: MR. PRASAD SHOULD BE DISQUALIFIED

54 Since Tribunal has the power to decide on Challenge, it should exercise this power and disqualify
Mr. Prasad from current proceedings. RESPONDENT submitted Challenge due to the fact that
justifiable doubts exist to Mr. Prasad’s impartiality and independence as per Art. 12(1) of the
UNCITRAL Rules. CLAIMANT asserts that the non-disclosure of its third-party funder does not
affect the standard of Challenge MfC, p. 18, §52. However, CLAIMANT’s delayed disclosure creates
new relevant circumstances and puts the existing ones into a different perspective. Thus,
RESPONDENT’s initial agreement with Mr. Prasad’s appointment should not be deemed as
precluding RESPONDENT from submitting Challenge.

55 Accordingly, Tribunal should consider all of the relevant factors surrounding Challenge and decide that
Mr. Prasad is to be excluded due to lack of impartiality and independence. The evaluation of the relevant
factors should be made in accordance with IBA Guidelines, which are applicable in present case (A).
Mr. Prasad’s impartiality and independence are affected by CLAIMANT’s third-party funding (B) as well
as Mr. Prasad’s previous appointments by parties connected to CLAIMANT (C). Additionally, Mr.
Prasad’s legal opinion further indicates his lack of impartiality in the case at hand (D).

A. IBA Guidelines are applicable in present case

56 Although both the UNCITRAL Rules and Model Law provide for a possibility for challenge of an
arbitrator, they do not specify which circumstances Tribunal should take into account. Therefore,
international practice should be observed, specifically the IBA Guidelines on Conflict of Interest
in International Arbitration 2014 (hereinafter: IBA Guidelines). The IBA Guidelines are widely
recognized and relied upon by arbitral tribunals when deciding on the independence and
impartiality of an arbitrator PO2, p. 51, §18; Moses, §§2-3; Scherer, p. 6. Even when parties do not
refer to them, arbitral tribunals routinely advise them as they provide useful guidance in contrast to
arbitration laws, which are often very general and vague Kaufmann-Kohler, p. 14; Erdem, §10.

57 Thus, when deciding on Challenge, Tribunal should refer to the IBA Guidelines as they present
the best practice in this matter. Even CLAIMANT does not oppose the usage of the IBA Guidelines
but rather provides convincing arguments in favour of their application MfC, p. 10, §23. Referring
to the IBA Guidelines would be in line with the discretionary power of arbitral tribunals to conduct
proceedings in a manner they deem appropriate Art. 17(1) of the UNCITRAL Rules, Hrnčiříková, p.
104. Additionally, applying the IBA Guidelines would not go against the AA, since, as CLAIMANT
puts it, Parties “did not exclude their application by virtue of the party agreement” MfC, p. 10, §23.

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MEMORANDUM FOR RESPONDENT

B. Third party funding impacts Mr. Prasad’s impartiality according to §2.3.6 of the IBA
Guidelines

58 Prasad & Slowfood is rendering services for client who is being funded by Funding 8, a subsidiary
of Findfunds LP. At the same time, Claimant is being funded by Funding 12, also a subsidiary of
Findfunds LP. Consequently, Tribunal should consider that there are doubts regarding Mr. Prasad’s
impartiality and independence according to §2.3.6 of the IBA Guidelines (1). Further, there are
doubts arising according to §3.2.1 of the IBA Guidelines (2). Finally, doubts regarding Mr. Prasad’s
impartiality and independence are justifiable (3).

1. There are doubts arising according to 2.3.6 of the IBA Guidelines

59 Firstly, CLAIMANT’s assertion that Findfunds LP lacks controlling influence over CLAIMANT [MfC,
p. 13, §33] bears no argumentative weight as RESPONDENT never alleged such a relationship.
CLAIMANT’s attempts to demonstrate that there is no affiliation is misleading. Beyond that,
Findfunds LP in fact bears, according to General Standard 6(b) of the IBA Guidelines, an identity
of a party by having a direct economic interest in the award. CLAIMANT denies such a relationship
by stating that an awarded sum would not be immediately and in its entirety obtained by Findfunds
LP [MfC, p. 13, §33]. Such a statement is a misinterpretation of the IBA Guidelines, as it asserts that
a ‘direct economic interest’ and ‘directly obtaining money’ are synonyms. Such an equalization
would mean that an entity wishing to obtain economic interest, without being an equivalent to a
party in a dispute, would merely have to distance itself enough not to ‘immediately’ receive payment
or to concede a part of that payment to another entity. In the given case, Findfunds LP in fact does
have, as a shareholder, an economic interest in obtaining payment as it would receive it either in
dividends or as a jump in their share value in Funding 12. Moreover, due to the fact that Findfunds
LP holds the majority of shares in Funding 12 [PO2, p. 50, §2] it holds the controlling influence
[PO2, p. 50, §2; Mayson, p. 316; Kocbek p. 974].

60 Secondly, contrary to CLAIMANT’s assertions [MfC, p. 14, §35], a parent company is not necessarily
a company which holds a majority of shares. Company may hold a controlling influence without
holding the majority of shares [Mayson pp. 316 – 317; Cahn/Donald, p. 679]. Such a conclusion is
significant, as it diminishes a prima facie negation of lacking a controlling influence when the
proportion of owned shares is less than a majority. Furthermore, it is possible and likely when
considering the economic interest that control of one company over another can be achieved with
much less than 50% of the shares [Hopt, p. 3]. Findfunds LP establishes a separate legal entity for
one or more related cases which it intends to fund [PO2, p. 50, §3]. Bearing that in mind and

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MEMORANDUM FOR RESPONDENT

considering that Funding 8 has the same name as Funding 12, save for the number, it is safe to
assume that Funding 8 was established and effectively controlled by Findfunds LP. For that reason,
Funding 8, Funding 12 and Findfunds LP form a group of companies, in which the latter presides
over as the parent company.

61 Thirdly, CLAIMANT states that because there is no direct contract between Funding 8 and Prasad
& Slowfood [MfC, p. 14, §37] a commercial relationship does not exist. At the same time,
CLAIMANT ignores that without Funding 8 the client represented by Mr. Prasad’s partner would
not be able to fund its case [PO2, p. 50, §6]. Funding 8 is in fact a third party funder [PO2, p. 50, §6]
and bears the identity of the funded party [IBA Guidelines, Explanation to general standard 6 (b)]. Since
Slowfood, and by extension Prasad & Slowfood, have charged USD 1.5 million from a client that
is wholly dependent on third party funding [PO2, p. 50, §6], a commercial relationship exists.

62 Fourthly, contrary to CLAIMANT’s assertions [MfC, p. 14, §38], commercial relationship between
Prasad & Slowfood and Funding 8 is significant. In arbitration funded by Funding 8, Slowfood
charged USD 1.5 million which represented 5% of Slowfood’s annual turn in each of last two years.
Prasad & Slowfood will receive additional USD 300,000 which would amount to 2% of Slowfood’s
average annual turn. It must be stressed that without Funding 8 said arbitration would not be even
possible [PO2, p. 50, §6]. For that reason, it would be in Prasad & Slowfood’s best interest to
maintain good business relations with Funding 8 and especially its parent company Findfunds LP
as they provide complete arbitration funding in high-yielding cases.

63 Further, when considering significant commercial relationship, Tribunal should bear in mind two
previous appointments of Mr. Prasad by parties funded by Findfunds LP subsidiaries. These two
arbitrations were among the five highest yielding in terms of fees [PO2, p. 51, §10]. The interest of
Prasad & Slowfood to stay in good graces with Findfunds LP, for the sake of their economic
interest, is therefore apparent.

64 In conclusion, since Funding 8 and Funding 12 are subsidiaries of Findfunds LP, they should be
considered affiliates pursuant to IBA Guidelines [IBA Guidelines, footnote 4]. Additionally, there is a
significant commercial relationship between Prasad & Slowfood and CLAIMANT’s affiliates.
Therefore, doubts to Mr. Prasad’s impartiality arise pursuant to §2.3.6 of the IBA Guidelines.

2. There are doubts arising according to §3.2.1 of the IBA Guidelines

65 Firstly, CLAIMANT states that while Funding 8 is in fact a third party funder, the only connection
which should be relevant to the present arbitration is that of the client funded by Funding 8 [MfC,

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MEMORANDUM FOR RESPONDENT

p. 15, §40]. Funding 8 is in fact a third party funder [PO2, p. 50, §6] and bears, per General Standard 6(b)
of the IBA Guidelines the identity of the funded party [Celikboya, § 15]. For that reason, the identity of
the funded party is doubled by both the funded client and Funding 8. Since Prasad & Slowfood is
rendering services to the funded client, it is by extension rendering services to Funding 8.

66 Contrary to CLAIMANT’s statement [MfC, p. 15, §41] and as demonstrated above [see supra §60]
Funding 8 is an affiliate to Findfunds LP, which is a party to these arbitral proceedings. For that
reason, by rendering services to Funding 8, Prasad & Slowfood is at the same time rendering
services to a Findfunds LP affiliate.

3. The doubts to Mr. Prasad’s impartiality and independence are justifiable

67 CLAIMANT stipulates that if the connection between Mr. Prasad and CLAIMANT was given, it would
not give rise to justifiable doubts regarding Mr. Prasad’s impartiality and independence [MfC, p. 15,
§42]. However, this assessment is incorrect, as justifiable doubt standard merely suggests that it
should be applied so that a challenge is weighed on an objective basis [Caron/Caplan, p. 208]. Since
IBA Guidelines provide an objective test it is reasonable to use the standard of justifiable doubt as
regarded in IBA Guidelines.

68 Firstly, General Standard 2(c) of the IBA Guidelines provides that “doubts are justifiable if a reasonable third
person, would reach the conclusion that there is a likelihood that the arbitrator may be influenced by factors other than the
merits of the case.” CLAIMANT equivocates the standard of ‘likelihood’ and ‘high probability’ [MfC, p. 15,
§41]. ‘Likelihood’ and ‘probability’ are in itself synonyms [Black, p. 834]. By prefixing ‘probable’ and by
extension ‘likely’ with ‘high’, CLAIMANT without any justification elevates likelihood outside of the
standard set forth in General Standard 2(c) of the IBA Guidelines. The distinction between meanings
of these standards is of the utmost importance since the test set forth in IBA Guidelines, asserts not
only actual partiality, but rather an appearance of partiality [Born, p. 1785, Perenco Ecuador case].

69 Secondly, CLAIMANT states that an arbitrator’s lack of knowledge of the circumstances cannot bring
about a successful challenge [MfC, p. 15, §42]. However, Mr. Prasad became aware of CLAIMANT’s
third-party funding on 7 September 2017 [PL1, p. 36]. In this perspective, Mr. Prasad’s appearance
of impartiality was poisoned in exact moment when he became aware of the connection to
Findfunds LP, notwithstanding previous connections. Because of these reasons, it is apparent that
there is a likelihood that Mr. Prasad may be influenced by a desire to keep the relationship between
himself and Findfunds LP untarnished. This in itself provides a factor other than the merit of the
case and presents a justifiable doubt as set forth in General Standard 2(c) of the IBA Guidelines.

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MEMORANDUM FOR RESPONDENT

70 Thirdly, contrary to CLAIMANT’s assertion [MfC, p. 16, §43], RESPONDENT never claimed that Mr.
Prasad’s partner would financially benefit from outcome of present case. Further, RESPONDENT
never claimed that Mr. Prasad would influence outcome of his partner’s arbitration. To the
contrary, a reasonable third person would conclude that Mr. Prasad may be influenced by Prasad
& Slowfood’s relationship with Findfunds LP through Funding 8.

71 To conclude, Mr. Prasad’s connection to Findfunds LP would give rise to justifiable doubts to his
independence and impartiality. Therefore, Tribunal should recognise that justifiable doubts exist
and subsequently disqualify Mr. Prasad from his position.

C. Mr. Prasad’s previous appointments impact his impartiality and independence

according to §3.1.3 of the IBA Guidelines

72 As acknowledged by CLAIMANT, Mr. Prasad has been appointed as an arbitrator on two previous
occasions by Findfunds LP subsidiaries [MfC, p. 17, §47]. Tribunal should bear in mind that
according to IBA Guidelines third-party funder “may be considered to be the equivalent of the party” [IBA
Guidelines, Explanation to General Standard 6]. Present arbitration is the third, within last three years,
where Mr. Prasad is appointed as an arbitrator by Findfunds LP or its affiliates. For that reason,
contrary to CLAIMANT’s position [MfC, p. 17, §47], previous appointments raise doubts §3.1.3 of
the IBA Guidelines.

73 Firstly, CLAIMANT states that §3.1.3 of the IBA Guidelines is not applicable. In its view third-party
funder cannot be equated to CLAIMANT [ibid]. However, according to IBA Guidelines third-party
funders should be treated as equivalent of the party [Blavi, §5; Clanchy, p. 231; South America Silver
case]. CLAIMANT has not denied the previous appointments by Findfunds LP subsidiaries [MfC, p.
17, §47]. As there have undeniably been two or more appointments, they raise doubts according to
IBA Guidelines [IBA Guidelines, §3.1.3].

74 Admittedly, §3.1.3 of the IBA Guidelines is placed on the Orange List, which means other factors
should be examined as well [Universal Compression case; Tidewater case]. For this reason, Tribunal should
consider Mr. Prasad’s two previous appointments by Mr. Fasttrack’s law firm. It was observed that
multiple appointments indicate that parties consider repeatedly appointed arbitrators to be more
likely to decide in parties’ favour [OPIC Karimum case]. Said observation is quite relevant for present
case. Especially considering the fact that Mr. Prasad has ruled in favour of every party that
appointed him in aforementioned arbitrations [PO2, p. 50, §15].

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MEMORANDUM FOR RESPONDENT

75 Moreover, CLAIMANT asserts that income from appointments funded by Findfunds LP subsidiaries
are comparatively small considering his total income, stating they amounted to 3,2% of Mr. Prasad’s
annual earnings [MfC, p. 17, §48]. CLAIMANT’s conclusions are both incorrect and deceptive. It is
clear that said appointments represented 20% of all arbitration related income. That would amount
to 8% of Mr. Prasad’s earnings in total in a span of three years [PO2, p. 51, §10]. Therefore,
aforementioned two cases generated 24% and not 3,2% of Mr. Prasad’s average yearly income. It
is thus evident that previous engagements by Findfunds LP represent significant amount of Mr.
Prasad’s income. Tribunal should note that numbers presented above do not even include
arbitrations where Mr. Prasad was appointed by Mr. Fasttrack’s law firm.

76 Finally, Tribunal should consider all the above-mentioned appointments. There is a pattern where
Mr. Prasad is repetitively appointed by a party that emerges victorious in arbitration. Thus, Tribunal
should recognise that there are justifiable doubts to Mr. Prasad’s impartiality and independence.

D. Mr. Prasad’s legal opinion is relevant when assessing his impartiality as it presents a
‘prior commitment’

77 At the outset, an external circumstance e.g. publishing an article, may only be an indicator of
partiality if the act itself shows subjective preference to one party [Born, p. 1777]. By that, a legal
opinion alone does not affect the impartiality of an arbitrator [MfC, p. 11, §25], while the content
and the circumstances might. Admittedly, a blanket proscription of legal writing would lead to an
absurd situation in which legal research would be discouraged [MfC, p. 11, §25]. However,
RESPONDENT has never advocated such a solution. Mr. Prasad’s article should be evaluated
through its meaning in relation to facts of present case. Said article shows his own partiality
regarding one of the main issues of the present dispute. While it is true that a legal opinion by itself
does not in principle indicate an arbitrator’s partiality, the circumstances and the context of an
arbitrator’s action must necessarily be evaluated [Rajoo II, pp. 326-327]. Additionally, since Mr.
Prasad’s legal opinion was in fact the reason why he was chosen as an arbitrator. Therefore,
Tribunal should consider the fact that even CLAIMANT anticipated what Mr. Prasad’s decision
would be, in light of his legal writing [NCA, p. 38, §3].

78 CLAIMANT seeks to alleviate Mr. Prasad’s direct rejection of ethical standards in relation to Art. 35
of the CISG by pointing out that he emphasizes a “thorough case-by case review” [MfC, p. 11, §26].
Such a statement is not present in any form or meaning in Mr. Prasad’s article. According to Mr.
Prasad’s article ethical standards can be included only “where the contractual provision explicitly makes the
production process part of the description of goods” [PL 2, p. 44]. The distinction between the two is, for the

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MEMORANDUM FOR RESPONDENT

purpose of these arbitral proceedings, fundamental. CLAIMANT’s misinterpretation leads to the

conclusion that Mr. Prasad is lenient to the application of ethical standards vis-à-vis Art. 35 of the
CISG. Conversely, Mr. Prasad’s opinion is extremely narrow when it comes to inclusion of ethical
standards in contracts. An article may raise justifiable doubts to arbitrator’s impartiality if it
represents a ‘prior commitment’ to a particular point of view as an expert [Rajoo II, p. 327; Tackaberry,
§2-278; Vakauta v Kelly]. With his article, Mr. Prasad made a ‘prior commitment’ to one of the main
issues of the present dispute. Mr. Prasad’s biased decision is even more likely considering the fact
that it is questionable whether or not explicit contractual provisions exist [see infra §§123-139].

79 In conclusion, even though arbitrator’s legal opinion is placed on the Green List of the IBA
Guidelines, it might still indicate their impartiality. It must be stressed that Mr. Prasad’s legal opinion
is one of the main reasons why CLAIMANT decided to appoint him as an arbitrator. Tribunal should
also bear in mind Mr. Prasad’s narrow opinion on relevant issue of substance while considering
other circumstances that provide grounds for Challenge.

___________________________________________________________________________

CONCLUSION ON ISSUE II

80 Tribunal should find that justifiable doubts exist to Mr. Prasad’s impartiality and independence and
disqualify him from the proceedings. Mr. Prasad’s connection to CLAIMANT’s third-party funder
raise justifiable doubts according to §2.3.6 and §3.2.1 of the IBA Guidelines. Additionally, previous
appointments of Mr. Prasad by parties connected to CLAIMANT raise doubts as per §3.1.3 of the
IBA Guidelines. Therefore, Challenge should be upheld and Mr. Prasad disqualified.

___________________________________________________________________________

ISSUE III: RESPONDENT’S GENERAL CONDITIONS GOVERN THE

CONTRACT
81 To broaden its cake offerings, RESPONDENT publicized Invitation to Tender regarding chocolate cakes
from sustainably produced cocoa. After a thorough evaluation, RESPONDENT decided that CLAIMANT’s
tender is the most suitable for its needs [PO2, p. 52, §23]. RESPONDENT received the first delivery of
chocolate cakes on 1 May 2014. There were no issues with the deliveries received before 27 January
2017 [NoA, p. 5, §6]. On that day, RESPONDENT sent an email questioning the origin of the cocoa used
in production of chocolate cakes [Ex. C6, p. 18]. In Ruritania, the home country of CLAIMANT’s main
supplier of cocoa beans, a sustainability certification scheme had been discovered [Ex. C7, p. 19; RNA,

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p. 26, §14]. Upon learning about the scheme, RESPONDENT expressed its concerns regarding
CLAIMANT’s inclusion in the affair and sought clarifications [Ex. C6, p. 18].

82 CLAIMANT investigated the matter and concluded that its supplier had indeed obtained falsified
sustainability certificates. Although CLAIMANT offered 25% price reduction for the cakes delivered,
but not yet paid [Ex. C9, p. 21], the continuation of business relationship was impossible. For this
reason, RESPONDENT rejected the offer and terminated the contract pursuant to Clause 4(3) of the
General Conditions of Contract (hereinafter: RGC) in conjunction with its Code of Conduct for
Suppliers (hereinafter: SUP) [Ex. C10, p. 22].

83 CLAIMANT erroneously contends that it did not fundamentally breach the contract and denies
RESPONDENT’s entitlement for immediate termination of the contract under Clause 4(3) of the
RGC [MfC, p. 29, §103]. CLAIMANT asserts that RGC have never been validly incorporated into the
contract and that solely CLAIMANT’s General Conditions of Sale (hereinafter: CGC) should be
applicable [MfC, p. 24, §79]. However, RESPONDENT will demonstrate that it did not accept
CLAIMANT’s offer, since its letter could not constitute an acceptance, but rather a counter offer (A).
Secondly, RGC govern the contract since CLAIMANT attached Tender Documents to Sales-Offer
(B). Thirdly, CGC were never validly included into CLAIMANT’s offer (C).

A. RESPONDENT did not accept CLAIMANT’s offer

84 Contrary to CLAIMANT’s assertion [MfC, pp. 21-22, §§63-66], RESPONDENT’s letter of 7 April 2017
[Ex. C5, p. 17] did not constitute an acceptance but rather a counter offer. In written
communications, an acceptance that indicates assent by repetition of the material terms, though it
remains silent on non-material terms, also amounts to an acceptance. Consequentially, a reply,
which assents to non-material terms, yet ignores material modifications, does not constitute an
acceptance [Vogenauer, p. 286]. In the case at hand, RESPONDENT accepted different payment terms
and a new shape of cakes. While these changes represent non-material modifications,
RESPONDENT remained silent regarding material modifications, i.e. incorporation of CGC.

85 Material modifications, which cover the most important aspects of a contract, are listed in Art.
19(3) of the CISG. Material modifications are, among other things, additional or different terms
relating to the price, payment, quality and quantity of the goods, extent of one party’s liability and
dispute settlement [Art. 19 CISG; Kolmar Petrochemicals case; Chemical products case; Australia cotton case].
However, altering the payment terms just in regard to the time for payment of the price does not
constitute a material modification [25 February 2003 case]. Thus, by changing the time for payment
from 60 to 30 days, CLAIMANT did not materially modify the contract. Moreover, whether details

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concerning the goods’ design or finish, e.g. their colour or shape, amounts to a material
modification, depends on the nature of the goods concerned [Gruber, Art. 19, §8]. If a modification
does not influence the quality of the goods, e.g. changing the colour of the machine, it is not
considered material [Herber/Czerwenka, Art. 19, §12]. In the case at hand, altering the shape of cakes
does not influence their quality. Therefore, the change represents a non-material modification.

86 Admittedly, authorities’ opinions vary whether a reference to different standard terms is also
regarded as a material alteration [Schwenzer, p. 338]. However, it is undisputed that when the content
of standard terms relates to the matters listed in Art. 19(3) of the CISG, this amounts to a material
modification [Schwenzer/Mohs, p. 244; CSS case; Printed goods case]. In CSS case, where CISG was the
applicable law, German seller has materially altered American buyer’s offer by referring to its
standard terms, which included terms related to the settlement of disputes. Similarly, CGC also
contain a provision related to the dispute settlement - the model ICC Arbitration Clause fixing the
place of arbitration in Equatoriana and declaring Equatorianian law applicable [PO2, p. 53, §29].
Additionally, CGC changed the extent of CLAIMANT’s liability for actions of its suppliers [see infra
§130], which is also considered a material modification under Art. 19(3) of the CISG.

87 To conclude, in the letter of 7 April 2014, RESPONDENT listed two non-material modifications,
while remaining silent regarding one material modification [Ex. C5, p. 17]. It can be easily discerned
that RESPONDENT accepted different time of payment and new shape of cakes, since it agreed to
these changes. However, RESPONDENT remained silent on incorporation of CGC [ibid]. Therefore,
it has rejected CLAIMANT’s offer by not accepting the proposed modification and rather made a
counter-offer, which is governed solely by RGC.

B. By being attached to Sales-Offer, RESPONDENT’s General Conditions govern the

contract

88 Even if Tribunal were to find that the letter of 7 April 2014 [Ex. C5, p. 17] constitutes an acceptance,
RGC would nonetheless govern the contract. In light of that, RESPONDENT will establish that RGC
became nonstandard terms of the contract (1), and that CLAIMANT was aware of said change (2).
Additionally, even if RGC did not become nonstandard terms, CGC should not be applied because
of the order of precedence, the knock-out doctrine and due to their surprising nature (3).

1. RESPONDENT’s General Conditions became nonstandard terms of the contract

89 Following Invitation to Tender, CLAIMANT sent RESPONDENT its offer, which consisted of Sales-
Offer and the full set of Tender Documents [PO2, pp. 52-53, §27]. CLAIMANT also subjected Sales-

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MEMORANDUM FOR RESPONDENT

Offer to CGC [Ex. C4, p. 16], which are not applicable due to their insufficient incorporation [see
infra §§112-115]. CLAIMANT’s intention to include Tender Documents in its offer can be
determined from its references to them in Sales-Offer. CLAIMANT specified place of delivery “as
per Tender Documents.” A similar reference was made regarding the quantity of cakes to be delivered
per day [Ex. C4, p. 16]. By perceiving Tender Documents as part of the offer, RGC lost the nature
of standard terms.

90 Since CISG does not regulate inclusion of standard terms in a contract, the matter should be dealt
with under UNIDROIT Principles of International Commercial Contracts (hereinafter:
UNIDROIT Principles). The issues not dealt with in the CISG are governed by said principles,
which are verbatim adopted in the general contract law of Equatoriana, Mediterraneo, Ruritania
and Danubia [PO1, p. 49, §3].

91 Art. 2.1.19 of the UNIDROIT Principles defines standard terms as provisions, prepared in advance
for general and repeated use by one party and actually used without negotiation with the other party
[UNIDROIT Commentary, p. 66; Vogenauer, p. 384]. When one party sends another party’s standard
terms with its offer, they lose the nature of standard terms, as they are not prepared for the repeated
use of the party sending them. Since CLAIMANT incorporated the Tender Documents, including
RGC, in its offer, their content became part of negotiations. When RESPONDENT included RGC
in the Tender Documents, they were deemed as standard terms pursuant to said article. However,
when CLAIMANT sent them as a part of its offer, they lost the nature of standard terms and became
nonstandard terms of contract. As such, they prevail over standard terms in case of conflict
[UNIDROIT Principles, Art. 2.1.21].

92 For these reasons, CGC cannot be applicable to the issue at hand, whether they were validly
included into the contract or not, since they contradict nonstandard terms of the contract. The
same reasoning is to be used even if Tribunal were to find that Tender Documents constituted an
offer. RGC would nonetheless lose the nature of standard terms and prevail over CGC.

2. CLAIMANT was aware of the change in nature of RESPONDENT’s General Conditions

93 CLAIMANT asserts that Parties have included into the contract the arbitration clause proposed by
RESPONDENT. CLAIMANT’s statement is followed by citing said contractual term, which is labelled
as Clause 20 [NoA, p. 6, §13]. The identical provision is contained in RGC, once more titled ‘Clause
20’ [Ex. C2, p. 12]. CLAIMANT refers to RGC Clause as a contractual term, acknowledging that it
was validly included into the contract. Since it is common practice that contractual clauses are
labelled in numerical order, it is reasonable to assume that clauses of RGC preceding Clause 20

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MEMORANDUM FOR RESPONDENT

were also part of the contract. Thus, RGC Clauses 1 to 21 are negotiated terms and prevail over
CGC [see supra §§ 89-92]. Furthermore, by including Clause 4(3) of the RGC in the contract, Parties
have agreed on a definition of a fundamental breach, which deviates from Art. 25 of the CISG.
Therefore, any breach of some relevance of SUP constitutes a fundamental breach and permits
RESPONDENT to terminate the contract, regardless of applicability of CGC.

94 Additionally, CLAIMANT alleges that its reference to the arbitration clause in Notice of Arbitration,
which is the same as the one proposed by RESPONDENT, does not imply an acceptance of RGC
due to the doctrine of separability [MfC, p. 25, §83]. However, RESPONDENT cannot overlook the
reasons for CLAIMANT’s insistence to use RESPONDENT’s arbitration clause, while contending that
CGC solely govern the contract. At the time of the conclusion of the contract, CLAIMANT agreed
to all contractual provisions, including RGC. CLAIMANT is apparently cherry-picking the clauses of
RGC, which suit its interest, while denying the applicability of other less favourable provisions.
Such arbitrary behaviour can only be attributed to CLAIMANT’s bad faith.

95 In conclusion, if CLAIMANT thought that Clause 20 was the only applicable provision of RGC, it
would not refer to it as Clause 20 but rather as an arbitration agreement. By referring to a provision
of RGC as part of the contract [NoA, p. 6, §13], CLAIMANT confirms that RGC constitute text of
the contract and their provisions are negotiated terms. Therefore, CLAIMANT delivered
nonconforming goods by breaching the contractual clauses containing sustainability requirements.

3. Even if RESPONDENT’s General Conditions did not become nonstandard terms,

CLAIMANT’s General Conditions of Sale do not govern the contract

96 Even if Tribunal were to find that RGC did not become negotiated terms, they take precedence
over CGC. When two or more conflicting provisions cannot be harmonized, the conflict may be
resolved by application of ‘order of precedence’ clause, expressly stating which provisions take
precedence over the rest of the contract [Kelleher, p. 230]. As elaborated above [see supra §§89-92],
Special Conditions of Contract constitute part of CLAIMANT’s offer. Since Sales-Offer does not
contain any provisions regarding the order of precedence of contract documents, Art. 5 of the
Special Conditions of Contract should be applied in case of ambiguity or divergences [Ex. C2, p.
11; Ex. C4, p. 16]. According to said article, the contract is made up of the following documents:
Special Conditions of Contracts, RGC and Tender Documents [Ex. C2, p. 11].

97 If CLAIMANT wished to modify the order of precedence and include CGC on a higher level than
RGC, it should have done so in its Specific Terms and Conditions clause of Sales-Offer. As a rule,
when CLAIMANT wants to make its offer subject to any special conditions, it states so in ‘Specific

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MEMORANDUM FOR RESPONDENT

terms and conditions’ section of its offer [PO2, p. 53, §28]. As per Art. 5 of the Special Conditions
of Contract in case of ambiguity or divergences, the documents should be read in hierarchic order.
Since RGC are on a higher level than CGC, their provisions should prevail over CGC.

98 Furthermore, if the battle of forms arose, it should be resolved under the knock-out doctrine and
not the last shot rule as alleged by CLAIMANT [MfC, p. 24, §§78-82]. While CLAIMANT contends that
the knock-out doctrine is out of line with the wording of Art. 19 of the CISG [MfC, p. 24, §81], it
is actually included in the black letter rules of the CISG Advisory Council and UNIDROIT
Principles [AC-CISG Op. 13; UNIDROIT Principles, Art. 2.1.22]. It is also favoured by case law
[Schwenzer, p. 349; Powdered milk case; Les Verreries de Saint Gobain case; Knitwear case].

99 Under Art. 2.1.22 of the UNIDROIT Principles, the knock-out doctrine stipulates that a contract is
concluded on the negotiated terms and any standard terms, which are common in substance
[UNIDROIT commentary, p. 72]. A party, which does not intend to be bound by a contract that is not
based on its own standard terms, may exclude the operation of the knock-out doctrine, if it clearly
indicates that it does not intend to be bound by such a contract [UNIDROIT Principles, Art. 2.1.22;
AC-CIGS Op. 13, §10.8]. To fulfill the standard of a ‘clear’ indication, the party concerned has to
make a specific declaration in its offer or acceptance [UNIDROIT commentary, p. 73]. In case at hand,
neither of Parties made such a declaration, therefore, the knock-out doctrine should be applied.

100 All of the provisions of SUP, which regulate CLAIMANT’s liability for behaviour of its own suppliers,
are applicable to the contract. CGC and CLAIMANT’s Supplier Code of Conduct contain provisions
with the same substance as RGC and SUP [Ex. C2, pp. 12-14; Ex. R3, pp. 30-31]. Both Parties are
committed to the same ethical principles and consider the non-compliance with those standards as
a fundamental breach of the contract [Ex. C2, p. 12; Ex. R3, pp. 30-31]. Therefore, terms of RGC
and SUP, breached by CLAIMANT, are not disregarded under the knock-out doctrine and thus
govern the contract.

101 Even if Tribunal were to find that provisions of SUP and CLAIMANT’s Codes of Conduct are not
common in substance, as they establish different level of liability for sub-suppliers, CGC would not
govern the contract due to their surprising nature. Under Art. 2.1.20 of the UNIDROIT Principles
any standard term, which could not have been reasonably expected by the other party, is without
affect. An identical provision can be found in the black letter rules of the CISG Advisory Council
[AC-CISG Op. 13]. A standard term is considered surprising when it is inconsistent with business
practice or the way in which parties conduct negotiations [UNIDROIT Commentary, p. 68].
RESPONDENT has emphasised throughout the negotiations that it is important that CLAIMANT’s

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suppliers also conduct their business in a sustainable and ethical manner [Ex. C1, p. 8]. What is
more, it is common business practice that companies are also responsible for behaviour of their
suppliers [Andersen, p. 77; Jenkins, p. 3; Panayiotou/Aravosis, p. 58]. Therefore, due to their surprising
nature, CGC cannot govern the contract.

102 To conclude, even if Tribunal were to find that RGC did not become negotiated terms, the contract
is not governed by CGC. Due to order of precedence, RGC are applied prior to CGC and therefore
their provisions prevail. Additionally, the provisions regulating liability for behaviour of suppliers
are common in substance both in SUP and in CLAIMANT’s Supplier Code of Conduct. Since said
provisions do not contradict each other, they govern the contract under the knock-out doctrine.
Ultimately, if said provisions contradicted each other, CGC could not govern the contract due to
their surprising nature.

C. CLAIMANT’s General Conditions of Sale were never validly included into the contract

103 CLAIMANT alleges that CGC were validly included into the contract, since Ms. Annabelle Ming,
RESPONDENT’s Head of Purchasing, read CLAIMANT’s Codes of Conduct [MfC, p. 21, §64]. To the
contrary, RESPONDENT will establish that CGC were not made sufficiently available and Ms. Ming
did not acknowledge the valid incorporation of CGC (1). Additionally, CGC were not sufficiently
incorporated by CLAIMANT’s references in invoices (2).

1. CLAIMANT’s General Conditions of Sale were not made sufficiently available

104 Standard terms are validly incorporated into an offer when a reasonable person could interpret that
it was offeror’s intent to include them into the contract and when they are made sufficiently
available [Schwenzer, p. 277]. Therefore, Tribunal should take into account Art. 8 of the CISG to
determine whether CGC were validly included into the offer. The provisions of said article are
relevant for interpretation of statements and conduct of the parties [Honnold, p. 116; Smallmon case;
Propane case]. The underlying principle of said article is the determination of ‘true intent’ of the
parties, arrived at through consideration of all the facts and circumstances surrounding the case
[Zeller, p. 638; Yang, p. 618; Cedar Petrochemicals Inc. case; Chinchilla furs case].

105 CLAIMANT asserts that it validly incorporated CGC in the contract since Ms. Ming acknowledged
and read them [MfC, p. 21, §64]. However, RESPONDENT will demonstrate that Ms. Ming was not
aware of CLAIMANT’s intent to incorporate CGC (1.1). Furthermore, CGC were not made
sufficiently available by posting CLAIMANT’s website address in the Sales-Offer (1.2).

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MEMORANDUM FOR RESPONDENT

1.1 RESPONDENT could not have been aware of CLAIMANT’s intent to include
CLAIMANT’s General Conditions of Sale

106 Under Art. 8(1) of the CISG statements and other conducts of a party are to be interpreted
according to its intent where the other party knew or could not have been unaware of other party’s
intent [Roser Technologies Inc. case; Propane case; Corporate Web Solutions Ltd. case]. Tribunal should bear
in mind that under Article 8(1) of the CISG the standard is always subjective [Junge, Art. 8, §5;
Textiles case]. To incorporate standard terms a party has to refer to them so that the other party
could not have been unaware of the intent to include them into the contract according to Art. 8(1)
of the CISG [Eiselen, p. 234; CSS case; Plants case; Propane case; Gantry case].

107 Contrary to CLAIMANT submission [MfC, p. 21, §64], RESPONDENT could not have been aware of
CLAIMANT’s intent for the contract being governed by CGC. In the letter of 7 April 2017, Ms. Ming
claimed that she downloaded CLAIMANT’s Codes of Conduct “out of curiosity” [Ex. C5, p. 17]. Since
Ms. Ming is an experienced businesswoman, employed by RESPONDENT for 15 years and its Head
of Purchasing since 2012 [Ex. R5, p. 41], it is all more evident that she was not aware of CLAIMANT’S
intent for CGC to govern the contract. Someone with her business experience would know that
one is expected to read standard terms before accepting the offer. Consequently, if Ms. Ming were
aware of CLAIMANT’s intent to include CGC, she would not read them “out of curiosity” but rather
as a duty [Ex. C5, p. 17].

108 CLAIMANT further alleges that CGC were validly included into the contract since Ms. Ming
downloaded and acknowledged CLAIMANT’s Codes of Conduct [MfC, p. 21, §64]. However, it
must be stressed that CLAIMANT’s Codes of Conduct are not a part of CGC. CGC only consist
of a general statement regarding CLAIMANT’s business philosophy, and an arbitration clause
[PO2, p. 53, §29]. Therefore, it is not evident whether Ms. Ming read CGC, which invalidates
their inclusion in the contract.

109 In order to incorporate standard terms the intent has to be easily discerned [Magnus/Staudinger, Art.
8, §12]. Firstly, CLAIMANT signed Letter of Acknowledgment, in which it agreed to tender in
accordance with the specified requirements, including RGC [Ex. R1, p. 28]. Secondly, CLAIMANT
has attached a full set of Tender Documents to Sales-Offer [PO2, pp. 52-53, §27]. By receiving
unmodified Tender Documents accompanying Sales-Offer, RESPONDENT could not have
anticipated CLAIMANT’s intention to govern the contract with CGC instead of RGC. Thirdly,
CLAIMANT has failed to refer RESPONDENT directly to the document containing the standard terms

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MEMORANDUM FOR RESPONDENT

[PO2, p. 53, §28]. Additionally, while listing the proposed modifications in the letter of 27 March 2017,
CLAIMANT refrained from mentioning its intent to govern the contract by CGC [Ex. C3, p. 15].

110 Moreover, under Art. 8(2) of the CISG statements are to be interpreted according to the
understanding that a reasonable person of the same kind as the other party would have had [Rubber
sealing parts case; Roder case; Health care products case]. A reasonable person would consider all the
relevant circumstances of declaration and would therefore be objective [Honsell, Art. 18, §§28-29;
Auto case]. RESPONDENT made clear from the outset of negotiations that it is of paramount
importance that the contract is governed by RGC [Ex. C1, p. 8; RNA, p. 25, §8]. In the letter of 10
March 2014, RESPONDENT highlighted the significance of being “sure that also yours [CLAIMANT’s]
suppliers adhere to Comestibles Finos’ Philosophy and our [RESPONDENT’s] Code of Conduct for Suppliers” [Ex.
C1, p. 8]. RESPONDENT’s intent to govern the contract in accordance with RGC has been made
clear to CLAIMANT on multiple occasions [Ex. C2, pp. 9-14; Ex. C5, p. 17; Ex. R1, p. 28].

111 To conclude, CGC cannot govern the contract, since RESPONDENT was not aware of CLAIMANT’s
intent to incorporate them. Additionally, under the objective test according to Art. 8(2) of the
CISG, a reasonable person of the same kind as RESPONDENT would be unaware of CLAIMANT’s
wish to govern the contract by CGC.

1.2 CLAIMANT’s General Conditions of Sale were not made sufficiently available by
posting CLAIMANT’s website address in the Sales-Offer

112 CLAIMANT could also argue that CGC were validly included into the contract, since their text was
made available to RESPONDENT. However, RESPONDENT will establish the contrary. An offeror,
who is trying to incorporate its standard terms into a contract, is required to ensure that the offeree
is aware of the standard terms’ text [Witz/Salger/Lorenz, Arts. 14-24, §12; Concrete slabs case;
Mansonnville Plastic case; Plants case; Plastic window elements case]. According to the ‘making-available-test’,
the user of standard terms is required to send their text or make it otherwise available to the offeree
[Schwenzer, p. 279; Euroflash case; Sesame seed case; Takap V. B. case]. In the case at hand, it is
undisputable that CLAIMANT has not sent the text of CGC to RESPONDENT at any occasion since
the beginning of the negotiations. Moreover, RESPONDENT contends that CLAIMANT failed to
make CGC otherwise available and thus they were never validly incorporated into the Sales-Offer.

113 When the contract is not being concluded over the internet or via e-mails, the availability of
standard terms on the internet is not sufficient to make their text ‘otherwise available’ to the other
party [Schwenzer/Mohs, p. 239; Berger, p. 18; Kindler, p. 234; Broadcasters case]. Said rule is applicable even
if the other party lists its own email on the stationary [Schwenzer, p. 284]. Since the contract between

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Parties has been concluded via letters, i.e. in paper-based writing, posting CGC on CLAIMANT’s
website has not made their text sufficiently available to RESPONDENT.

114 Moreover, if standard terms are referred to via internet link, this link has to lead directly to the text
of standard terms [Schwenzer, p. 283]. The offeree is not obliged to search for the standard terms of
the offeror [Schwenzer/Mohs, p. 241]. In the Sales-Offer, CLAIMANT has cited a website address,
which did not directly lead to CGC. Additionally, CLAIMANT has referred RESPONDENT to the
document titled ‘General Condition’, which does not even exist [PO2, p. 53, §28]. Since
RESPONDENT is not obliged to conduct an in-depth search for standard terms, CLAIMANT’s
inaccurate reference cannot fulfil the requirement for incorporation of CGC.

115 In conclusion, CGC were not made sufficiently available to RESPONDENT. CLAIMANT never physically
sent them to the other party and ignored that posting a website address is insufficient in paper-based
correspondence. Therefore, CGC cannot govern the contract and solely RGC are applicable.

2. Referring to CLAIMANT’s General Conditions of Sale on CLAIMANT’s invoices was

insufficient for their incorporation

116 CLAIMANT alleges that even if Tribunal were to find that RGC govern the contract, Parties have
subsequently modified the contract pursuant to Art. 29 of the CISG by incorporating CGC through
invoices [MfC, p. 23, §73]. However, after the conclusion of the contract, standard terms can be
incorporated into the contract only in two ways. Firstly, where there is an on-going business
relationship between the parties, transmitted invoices may produce effects for later contracts
[Schwenzer, pp. 175-176]. This situation is not applicable to the case at hand since this contract
manifests the first business relationship between Parties. Secondly, standard terms can be
incorporated by subsequently transmitted invoices, if the parties intended to change the contract
under Art. 29 of the CISG [ibid].

117 Under Art. 29 of the CISG a contract may be modified by the agreement of the parties [Viscasillas,
p. 169; Huber/Mullis, p. 102; Rare hard wood case; Cámara Agraria case; Summer cloth collection case].
Proposal of the modification is governed by Arts. 14-17 of the CISG [Schwenzer, p. 472]. Therefore,
standard terms are validly included in a proposal of the modification, if they fulfil the same
requirements as for their inclusion in the offer. CLAIMANT failed to validly include CGC in the offer
[see supra, §§103-115] and it has referred to CGC in the exact same manner on the invoices. Thus,
CLAIMANT has not modified the contract at all.

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118 Moreover, RESPONDENT did not accept the alleged modification. Acceptance of a proposal of a
modification is governed by Art. 18 of the CISG [Schwenzer, p. 472; Furnishings case; Phtalic anhydride
case; Ski shoes case]. Under said article, silence or inactivity does not in itself amount to acceptance
[ibid; Hibro Compensatoren B.V. case]. Admittedly, an offeree may indicate assent by performing an
act, by virtue of the offer, as a result of practices of which the parties have established between
themselves, or of international usage [Yarn case; Doors case; Plastic chips case; Magellan International case;
Chemical products case; Société H. H case]. However, none of the listed criteria was fulfilled in the case
at hand. Therefore, even if CLAIMANT proposed the modification of the contract pursuant to Art.
29 of the CISG, RESPONDENT did not accept this modification.

119 Furthermore, CLAIMANT alleges that an invoice proposing modification alters a contract at
least after repeated transmission [MfC, p. 23, §75]. To support its allegation, CLAIMANT refers
to Chateau Des Charmes Wines Ltd case, which establishes the exact opposite. The court has
determined that the subsequent transmission of invoices does not lead to incorporation, which
is a view supported both in theory and practice [Schwenzer, p. 175; Chateau Des Charmes Wines
Ltd case; S.A. Isocab France case; Sheepskin case].

120 To conclude, CLAIMANT could not incorporate CGC just by persistently referring to them on the
invoices. Since RGC are the only set of standard terms validly included into the contract, they
should be applied.

___________________________________________________________________________

CONCLUSION ON ISSUE III

121 RGC govern the contract as they are the only set of standard terms validly included into the
contract. RESPONDENT has rejected CLAIMANT’s offer and rather made a counter-offer, which is
governed solely by RGC. Moreover, when CLAIMANT attached Tender Documents to its offer,
RGC lost the nature of standard terms and thus prevail over CGC. This statement is further
fortified by CLAIMANT’s use of term Clause 20 in the Notice of Arbitration. Even if Tribunal were
to find that RGC did not become negotiated terms, the contract is not governed by CGC due to
order of precedence, knock-out doctrine and their surprising nature. Moreover, RESPONDENT was
neither aware of CLAIMANT’s intent to incorporate CGC nor were the terms made sufficiently
available to RESPONDENT. CLAIMANT’s references to CGC on invoices are irrelevant.

___________________________________________________________________________

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MEMORANDUM FOR RESPONDENT

ISSUE IV: CLAIMANT DELIVERED NON-CONFORMING GOODS

122 CLAIMANT alleges that the delivered cakes were conforming according to Art. 35 of the CISG,
since the compliance with the ethical standards was not part of the conformity [MfC, p. 25, §85].
To the contrary, RESPONDENT contends that the ethical and sustainable production is of
paramount importance for conformity assessment and the termination of the contract was justified.
Firstly, due to the unethical production the delivered cakes were not complying with Art. 35(1) of
the CISG (A). Additionally, according to Art. 35(2)(b) of the CISG cakes were not fit for their
particular purpose (B).

A. Delivered cakes were non-conforming pursuant to Art. 35(1) of the CISG

123 By delivering unethically produced cakes, CLAIMANT breached its obligations under Art. 35(1) of
the CISG. Under said provision a seller is required to deliver goods of the quantity, quality and
description required by the contract [Honnold, p. 253; Lookofsky, p. 87]. The agreement between the
parties is the primary source for assessing conformity [Karollus, p. 116; Kritzer, p. 282; Schwenzer, p.
571; Schlechtriem/Butler, p. 133]. Since the sustainability requirements were included into the contract
in the case at hand, the cakes that do not fulfil it cannot be conforming in accordance with Art.
35(1) of the CISG.

124 RESPONDENT will establish that delivered cakes breached its ‘zero tolerance’ policy regarding the
unethical business behaviour (1) and that they did not comply with written contractual obligations (2).
Additionally, chocolate cakes were not conforming to the implicitly agreed quality standards (3).

1. CLAIMANT breached RESPONDENT’s ‘zero tolerance’ policy regarding unethical

business behaviour

125 CLAIMANT alleges that it delivered conforming goods pursuant to Art. 35 of the CISG, as
sustainability requirements were not fixed in Sections III and IV of the contract [MfC, p. 26, §§87-
89]. RESPONDENT will refute CLAIMANT’s allegation and establish that CLAIMANT wilfully ignored
‘zero tolerance’ policy contained in Section IV [Ex. C2, p. 11], which sufficiently determines
sustainability requirements.

126 Quality also includes non-physical attributes like the circumstances of the production [Huber/Mullis,
p. 132; Kröll, Art. 35 §25]. These attributes must be determined by the parties’ agreement and may
include the observance of ethical principles [Henschel, p. 162; Schwenzer, p. 572]. Since RESPONDENT
specified that the ingredients have to be sourced in accordance with the stipulations under Section
IV [Ex. C2, p. 10], any ethical principles included in said section are to be observed. They are non-

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physical quality attributes of ordered cakes and part of the conformity requirements under Art.
35(1) of the CISG.

127 Both Parties have emphasized throughout the negotiations that they are committed to The Ten
Principles of UN Global Compact [Ex. C3, p. 15; Ex. C5, p. 17; Ex. C9, p. 21; RNA, pp. 24-25, §§
4-5]. It is safe to assume that they understood the term ‘unethical business behaviour’ in light of the
joined initiative – as corruption, bribery and extortion [UN GC Principles]. At least two of Ruritania
Peoples Cocoa GmbH’s managers have already admitted the fraud and their involvement in the
bribery and certification scheme [PO2, p. 54, §37]. Thus, it is undisputable that the cocoa, used in
the production of cakes, was not sourced according to the standard of ethical business behaviour.

128 In conclusion, delivered cakes were not conforming to the description stipulated in the Section III
of the contract and the non-physical quality attributes contained in the Section IV. Any deviation
from the contractual description constitutes a lack of conformity, irrespective of the importance of
the defect [Bianca/Bonell, Art. 35, §1.3; Schwenzer, pp. 572-573, §9; Piltz, p. 2771]. Therefore, by
delivering cakes from unethically sourced cocoa, CLAIMANT breached its obligations under Art.
35(1) of the CISG.

2. Delivered cakes did not comply with written contractual obligations

129 Pursuant to Art. 2 of the Special Conditions of Contract, found in Section IV of the contract,
CLAIMANT agreed “to deliver to sell to the buyer the following product complying with all the obligations arising
from this contract.” The term ‘all the obligations’ includes all the Sections of contract including Section
V – RGC and Section XXVI – SUP. Thus, CLAIMANT was required to comply with all ethical
standards in RGC and SUP in order to deliver conforming goods.

130 RESPONDENT terminated the contract due to CLAIMANT’s delivery of cakes, not conforming to
ethical principles C and E of SUP [Ex. C10, p. 22]. Principle C, titled ‘Health, safety and
environmental management’, provides that CLAIMANT shall conduct its business in an
environmentally sustainable way. Additionally, CLAIMANT had to ensure that its own suppliers
comply with the environmental sustainability requirements [Ex. C2, pp. 13-14]. RESPONDENT’s
expectations regarding CLAIMANT’s suppliers are further defined in principle E, titled ‘Procurement
by suppliers’. Under said principle, CLAIMANT has to make sure that its suppliers comply with the
standards set forth in SUP [ibid].

131 CLAIMANT’s main cocoa supplier, Ruritania Peoples Cocoa GmbH, was involved in the
sustainability certification scheme and has falsified zoning plans, certificates of origin and carbon

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emission statements [Ex. C6, p. 18; Ex. C8, p. 20]. Mentioned actions are not in line with either
RGC or SUP. As CLAIMANT’s cocoa supplier has indisputably breached RESPONDENT’s
sustainability requirements contained in SUP, cakes delivered by CLAIMANT are non-conforming
pursuant to Art. 35(1) of the CISG.

132 While CLAIMANT admits that it was obliged to ensure sustainable sourcing and production, it alleges
that its obligations did not require achievement of result [MfC, p. 31, §110]. According to
CLAIMANT, a reasonable person would understand ‘make sure’ only as obligation of best efforts.
CLAIMANT is merely grasping at straws. ‘Make sure’ is a frequently used idiom with the same
meaning as ‘ensure’ – it means “make certain, establish something without doubt” [AHDI, ‘make sure’]. If a
party guarantees the achievement of result, it is bound to achieve this specific result [UNIDROIT
commentary, Art. 5.1.4, p. 151; Joseph Charles Lemire case]. Thus, a reasonable person would interpret
‘make sure’ as an obligation of result.

133 Additionally, if RESPONDENT intended to include obligations of best efforts it would refrain from
using such strong language. It could use a variety of milder expressions, e.g. ‘try’ or ‘strive’. However,
when drafting SUP RESPONDENT used forceful terms to impose a binding obligation on a
suppliers. “Must” is used by the major players in the food vendor industry [Whole Foods; Hershey’s]
and declarative “shall” in legal English entails an obligation [Wagner, p. 246]. Yet again, it is evident
that a reasonable person of the same kind as CLAIMANT would understand obligations contained
in SUP as obligations of result.

134 CLAIMANT also alleges that cake presented at the Cucina Food Fair represents a model regarding
the shape of Queen’s Delight [MfC, pp. 27-28, §§92-96]. However, since a model is supplied to the
buyer for his examination [Schwenzer, p. 583; Mountain bikes case], the cake presented at the fair cannot
be a model. Therefore, the quality of delivered cakes cannot be determined regarding cakes’
similarity to the model under Art. 35(2)(c) of the CISG. Instead, the quality of cakes should be
interpreted under Art. 35(1) and Art. 35(2)(b) of the CISG.

135 In conclusion, contrary to CLAIMANT’s allegations, a reasonable person would understand that
forceful language, used in RGC and SUP, imposes obligations of result. Since the cake presented
at the Cucina Food Fair does not represent a model, Art. 35(2)(c) of the CISG is not applicable to
the present case. Instead, CLAIMANT was required to comply with all contractually agreed ethical
standards in order to deliver conforming goods pursuant to Art. 35(1) of the CISG.

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3. Chocolate cakes were not conforming to the implicitly agreed quality standards

136 Even if Tribunal were to find that non-physical quality requirements cannot be expressly
determined, RESPONDENT will establish that they were implicitly included into the contract. The
contract’s description of the goods to be delivered is only the starting point to determine the parties’
intent. Art. 8 of the CISG governs the interpretation of contracts; it directs Tribunal to look to all the
statements made and conduct exhibited by the parties [Bianca/Bonell p. 271; Lookofsky p. 54; Schwenzer,
p. 413]. The contractual requirements can be agreed upon either expressly or implicitly
[Enderlein/Maskow/Strohbach, Art. 35 §1; Herber/Czerwenka, Art. 35, §3; Schwenzer, p. 571]. In both cases
they are determined by reference to Art. 8 of the CISG [Schwenzer, p. 571; Roland Schmidt GmbH case].

137 When interpreting the statements and conduct of the parties under Art. 8(1) of the CISG, the
known or identifiable will of a party is to be taken into account [Caito Roger case]. Specific
requirements can also be deduced from the purpose and the circumstances of the contract, even if
there is no direct agreement [Globes case; Steel billets case]. It is sufficient if a reasonable seller could
discern the purpose of goods from all the relevant circumstances [Schwenzer, p. 580;
Enderlein/Maskow/Strohbach, Art. 35, §11]. Moreover, the agreement is usually implied when it comes
to particular industry standards or manufacturing practices [Schwenzer, p. 571; Schlechtriem, §38]. In the
case at hand, Parties agreed that CLAIMANT would adhere to “high standards of integrity and sustainability”
and the same applied to its suppliers [Ex. C2, pp. 11-14]. Sustainability requirements can also be
deduced from the nature of RESPONDENT’s business. It is the leading gourmet supermarket chain
advertising and selling products, which are produced locally, organically or in accordance with the
fair-trade standard [RNA, pp. 24-25, §§4-5]. Thus, a reasonable seller of the same kind as CLAIMANT
should conclude that sustainable production is an implied contractual requirement.

138 Additionally, pre-contractual negotiations are relevant especially when interpreting the parties’
intent pursuant to Art. 8(3) of the CISG [Cobalt sulphate case; Mountain bikes case; MCC-Marble Ceramic
Center case; Filanto case]. Throughout the negotiations, RESPONDENT has highlighted the extreme
importance of sustainable and ethical farming for its products [Ex. C1, p. 8]. RESPONDENT directly
stated that not only CLAIMANT, even its suppliers were to adhere to Comestibles Finos’ Business
Philosophy and SUP [Ex. C1, p. 8]. Therefore, RESPONDENT stressed the importance of sustainable
ingredients and incorporated the sustainability requirements in the contract at least implicitly.

139 In conclusion, a reasonable seller of the same kind as CLAIMANT would perceive sustainable
production as an implied contractual requirement. Therefore, delivered cakes were non-

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conforming pursuant to Art. 35(1) of the CISG, as a sustainable ingredients requirement constitutes
a part of the contract.

B. Delivered cakes were unfit for their particular purpose under Art. 35(2)(b) of the CISG

140 RESPONDENT agrees with CLAIMANT’s assessment that the particular purpose of the goods was
made known to CLAIMANT [MfC, p. 28, §98]. What is more, the parties do not need to expressly
agree on particular purpose, it is sufficient if the particular purpose is made known to the seller
[Hyland, p. 320; Naumann, p. 84]. In the case at hand, particular purpose was made known to
CLAIMANT throughout Parties’ communication, RESPONDENT’s reputation and emphasized
sustainability requirements [MfC, p. 28, §98; RNA, p. 24, §4; Ex. C1, p. 8; Ex. C2, pp. 9-14; Ex. C5,
p. 17]. Therefore, CLAIMANT knew that RESPONDENT’s particular purpose was to sell cakes that
are sustainably produced.

141 However, CLAIMANT alleges that delivered goods fulfilled particular purpose, since CLAIMANT was
only obliged to use its best efforts [MfC, pp. 28-29, §§99-101]. This line of argumentation cannot be
followed. If particular purpose is made known to the seller, he is responsible for the fitness of the
goods for that purpose [Schwenzer, p. 580]. Since CLAIMANT knew that RESPONDENT’s particular
purpose was to sell cakes as sustainably produced [MfC, p. 28, §98], it was obliged to deliver
sustainably produced cakes. By delivering unsustainably produced cakes, CLAIMANT breached the
contract. Furthermore, it is irrelevant whether CLAIMANT or its suppliers are responsible for non-
conformity. CLAIMANT argues that the contractual obligations in RGC were worded with phrases
such as ‘make sure’. Such wording allegedly indicates that CLAIMANT’s obligations entail only use
of best efforts and not achievement of a specific result [MfC, pp. 28-29, §§99-101]. Firstly, since
CLAIMANT did not object to the particular purpose, it is bound by the particular purpose regardless
of the language contained in the written contract [Neumayer, pp. 278-9, Schwenzer 2005, p. 421].
Secondly, RESPONDENT has already established that a reasonable person of the same kind as
CLAIMANT would interpret obligations in RGC as obligations of result [see supra §§132-133]. Cakes
delivered by CLAIMANT are not fit for the particular purpose and are therefore non-conforming.
CLAIMANT’s assertion that it has cured the non-compliance by performing corrective actions [MfC,
pp. 33-34, §119-120] is irrelevant to the current stage of arbitration [PO1, p. 48, §3].

142 Moreover, CLAIMANT states that RESPONDENT confirmed cakes’ particular purpose by making use
of them [MfC, p. 32, §§113-114]. While it is undisputed that RESPONDENT used unsustainable cakes
in a marketing campaign, gifting them for free, this merely proves that cakes were fit for ordinary
use. If goods are a type of food, they have to be edible [Schwenzer, p. 567; New Zealand mussels case;

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Spanish paprika case; Frozen pork case]. RESPONDENT’s conduct of gifting cakes has to be interpreted
as to only confirm goods’ ordinary purpose. Since RESPONDENT was unable to sell cakes as
sustainable, their particular purpose could not be confirmed.

143 An additional requirement for fitness of goods for particular purpose is that the buyer relied on the
seller’s skill and judgement, and that it was reasonable of him to do so [Schwenzer, p. 581]. It falls
upon the seller to prove that it was unreasonable of buyer to rely on the skill and judgement of the
seller [Schwenzer, p. 594; Huber/Mullis, p. 139; Honnold, Art. 35, §226]. However, CLAIMANT did not
satisfy the burden of proof. Even if CLAIMANT argued that it was unreasonable for RESPONDENT
to rely on CLAIMANT’s skill and judgement, RESPONDENT would establish that its reliance was
reasonable. CLAIMANT is a manufacturer of fine bakery products [NoA, p. 4, §1]. At least one of its
products, the cake King’s Delight, is produced from sustainably farmed cocoa [Ex. R2, p. 29]. It is
therefore evident that CLAIMANT is qualified for producing sustainable chocolate cakes and it was
reasonable for RESPONDENT to rely on CLAIMANT’s skill and judgement.

144 In conclusion, CLAIMANT admits that it was aware that RESPONDENT’s particular purpose was
selling sustainably produced cakes and it was not unreasonable for RESPONDENT to rely on
CLAIMANT’s skill and judgement. Thus, CLAIMANT was obliged to deliver cakes, which were
conforming to their particular purpose. Since CLAIMANT has failed to do so, RESPONDENT
rightfully terminated the contract.

____________________________________________________________________________

CONCLUSION ON ISSUE IV

145 Since the sustainability requirements were included into the contract, CLAIMANT breached its
obligations under Art. 35(1) of the CISG by delivering cakes from unethically sourced cocoa.
Delivered cakes breached RESPONDENT’s ‘zero tolerance’ policy regarding the unethical business
behaviour and they did not comply with written contractual obligations. Additionally, chocolate
cakes were not conforming to the implicitly agreed quality standards. Contrary to CLAIMANT’s
assertion, the cake presented at the fair cannot be a model under Art. 35(2)(c) of the CISG.
Ultimately, Parties agree that RESPONDENT’s particular purpose was selling sustainably produced
cakes and it was reasonable for RESPONDENT to rely on CLAIMANT’s skill and judgement. Since
CLAIMANT delivered cakes that were non-conforming with their particular purpose, RESPONDENT
rightfully terminated the contract.

___________________________________________________________________________

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MEMORANDUM FOR RESPONDENT

REQUEST FOR RELIEF

In light of the submissions made above, Counsel for CLAIMANT respectfully requests the Arbitral
Tribunal:

1. to disqualify Mr. Prasad from his position as CLAIMANT-appointed arbitrator;

2. to reject all claims for payment raised by CLAIMANT;
3. to order CLAIMANT to pay RESPONDENT’s costs incurred in this arbitration.

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MEMORANDUM FOR RESPONDENT

CERTIFICATE

Maribor, 18 January 2018

We hereby confirm that this Memorandum was written only by the persons whose names are listed
below and who signed this certificate.

XLII