memorandum for respondent - pace universitycisgw3.law.pace.edu/cisg/moot/respondent21-3.pdf ·...
TRANSCRIPT
TWENTY-FIRST ANNUAL
WILLEM C. VIS INTERNATIONAL COMMERCIAL ARBITRATION
MOOT
VIENNA, 11 - 17 April 2014
MEMORANDUM FOR RESPONDENT
RUPRECHT-KARLS-UNIVERSITÄT HEIDELBERG
ON BEHALF OF: AGAINST:
Hope Hospital Innovative Cancer Treatment Ltd.
1-3 Hospital Road 46 Commerce Road
Oceanside, Equatoriana Capital City, Mediterraneo
Respondent Claimant
NINA BENZ • FREDERIK HÜBL
DOMINIK MOHR • ALEXANDER URHAHN
RUPRECHT-KARLS -UNIVERSITÄT HEIDELBERG
MEMORANDUM FOR RESPONDENT | I
TABLE OF CONTENTS
TABLE OF CONTENTS .................................................................................................................. I
TABLE OF ABBREVIATIONS ..................................................................................................... IV
TABLE OF LITERATURE ......................................................................................................... VII
TABLE OF CASES ................................................................................................................... XIV
TABLE OF ARBITRAL AWARDS ........................................................................................... XXII
TABLE OF OTHER SOURCES .............................................................................................. XXIV
STATEMENT OF FACTS ............................................................................................................... 1
SUMMARY OF ARGUMENT ......................................................................................................... 2
ARGUMENT ................................................................................................................................ 3
PART I: THE ARBITRAL TRIBUNAL LACKS JURISDICTION TO DECIDE ANY DISPUTE
BETWEEN THE PARTIES ............................................................................................................. 3
I. THE ARBITRAL TRIBUNAL HAS NO JURISDICTION BASED ON ART. 23 FSA ............................ 3
A. ART. 23 FSA DOES NOT CONTAIN AN ARBITRATION AGREEMENT ........................................ 3
B. ART. 23(4) FSA RENDERS THE ALLEGED ARBITRATION AGREEMENT INVALID .................... 6
1. Art. 23(4) FSA is invalid under the DAL ......................................................................... 6
2. The invalidity of Art. 23(4) FSA renders the entire alleged arbitration agreement
invalid .............................................................................................................................. 8
C. ART. 23(6) FSA RENDERS THE ALLEGED ARBITRATION AGREEMENT INVALID .................... 9
1. Art. 23(6) FSA is invalid under the DAL ....................................................................... 10
2. Art. 23(6) FSA renders the alleged arbitration agreement entirely invalid .................... 12
D. EVEN IF ART. 23 FSA WAS VALID, IT WOULD NOT EXTEND TO THE SLA ........................... 13
E. A POTENTIAL AWARD BASED ON ART. 23 FSA IS LIKELY TO BE SET ASIDE IN DANUBIA
AND TO BE UNENFORCEABLE IN EQUATORIANA AND MEDITERRANEO ............................... 15
II. THE ARBITRAL TRIBUNAL HAS NO JURISDICTION BASED ON SEC. 21 OF THE 2000
STANDARD TERMS .............................................................................................................. 17
III. THE ARBITRAL TRIBUNAL HAS NO JURISDICTION BASED ON SEC. 21 OF THE 2011
STANDARD TERMS .............................................................................................................. 18
RUPRECHT-KARLS -UNIVERSITÄT HEIDELBERG
MEMORANDUM FOR RESPONDENT | II
A. CLAIMANT’S MERE REFERENCE IS NOT SUFFICIENT TO INCORPORATE THE 2011
STANDARD TERMS ............................................................................................................ 18
B. CLAIMANT DID NOT MAKE THE 2011 STANDARD TERMS AVAILABLE TO RESPONDENT ..... 19
1. Uploading standard terms on the offeror’s website does not suffice to make them
available when the contract was concluded in paper-based writing ............................... 19
2. Alternatively, the requirements for internet-based incorporation are not fulfilled......... 20
3. In addition, RESPONDENT did not understand and ought not to have understood the
language of the 2011 Standard Terms ............................................................................ 21
C. RESPONDENT DID NOT ACCEPT THE INCORPORATION BY LATER CONDUCT ........................ 22
CONCLUSION TO PART I .......................................................................................................... 22
PART II: THE TWO PRESENT CLAIMS SHOULD BE DECIDED IN TWO ARBITRAL
PROCEEDINGS ........................................................................................................................... 22
I. THE PARTIES DID NOT EXPRESSLY AGREE TO JOIN THE CLAIMS ARISING FROM THE FSA
AND FROM THE SLA ............................................................................................................ 23
II. NO IMPLICIT AGREEMENT CAN BE INFERRED FROM THE PARTIES’ CONDUCT ....................... 23
A. ART. 10(3) CEPANI RULES LEADS TO THE PRESUMPTION THAT THE PARTIES DID NOT
AGREE TO JOIN THE CLAIMS ............................................................................................... 24
B. IN ANY CASE THERE ARE NO INDICATORS OF ANY IMPLIED AGREEMENT ............................ 24
III. A JOINDER OF CLAIMS WOULD BE UNREASONABLE .............................................................. 25
CONCLUSION TO PART II ......................................................................................................... 26
PART III: THE CISG IS NOT APPLICABLE TO THE PAYMENT CLAIM UNDER THE SLA ......... 26
I. THE PARTIES OPTED OUT OF THE CISG ............................................................................... 26
A. SEC. 22 OF THE 2000 STANDARD TERMS EXCLUDES THE APPLICATION OF THE CISG ....... 26
B. THE 2011 STANDARD TERMS DO NOT LEAD TO A DIFFERENT RESULT ................................ 27
1. Sec. 22 of the 2011 Standard Terms does not indicate the Parties’ will to apply the
CISG to the SLA ............................................................................................................ 27
2. Alternatively, Sec. 22 of the 2011 Standard Terms was surprising ............................... 28
II. ALTERNATIVELY, THE SLA DOES NOT FALL WITHIN THE MATERIAL SCOPE OF THE CISG ... 28
A. RESPONDENT’S OBLIGATION IS NOT A BUYER’S OBLIGATION UNDER THE CISG ............... 29
RUPRECHT-KARLS -UNIVERSITÄT HEIDELBERG
MEMORANDUM FOR RESPONDENT | III
1. The CISG does not provide for a payment other than in money .................................... 29
2. Alternatively, the dominant part of RESPONDENT’s obligation is barter ........................ 30
B. THE PREPONDERANT PART OF CLAIMANT’S OBLIGATIONS IS NOT A SELLER’S
OBLIGATION UNDER THE CISG .......................................................................................... 31
1. CLAIMANT was obligated to grant a licence .................................................................... 32
2. Alternatively, CLAIMANT was obligated to develop individualised software ................. 33
CONCLUSION TO PART III ....................................................................................................... 34
REQUEST FOR RELIEF ............................................................................................................. 35
RUPRECHT-KARLS -UNIVERSITÄT HEIDELBERG
MEMORANDUM FOR RESPONDENT | IV
TABLE OF ABBREVIATIONS
Abbreviation Explanation
2000
Standard
Terms
Innovative Cancer Treatment Ltd. Standard Terms and Conditions for
Sale (November 2000)
2011
Standard
Terms
Innovative Cancer Treatment Ltd. Standard Terms and Conditions for
Sale (July 2011)
Art. Article
Artt. Articles
BezG Bezirksgericht (District Court Switzerland)
BGH Bundesgerichtshof (Federal Supreme Court of Justice Germany)
CEPANI Belgian Centre for Mediation and Arbitration
CEPANI
Rules
Arbitration Rules of the Belgian Centre for Mediation and Arbitration
in force as from 1 January 2013
Cf. Confer (compare)
C–I CLAIMANT’s Request for Arbitration dated 6 June 2013
C–II Memorandum for CLAIMANT by University of Grenoble dated 12
December 2013
CISG United Nations Convention on Contracts for the International Sale of
Goods, Vienna 1980
CISG-online Internet database on CISG decisions and materials, available at
www.globalsaleslaw.org
CLOUT Case Law on UNCITRAL Texts
Co. Company
E. g. Exempli gratia (for example)
ECHR European Court of Human Rights
Ed. Edition
Et al. Et alii (and others)
RUPRECHT-KARLS -UNIVERSITÄT HEIDELBERG
MEMORANDUM FOR RESPONDENT | V
Et seq. Et sequentes (and following)
Et seqq. Et sequentes (and following, plural)
Exh. C CLAIMANT’s Exhibit
Exh. R RESPONDENT’s Exhibit
Fn. Footnote
FSA Framework and Sales Agreement concluded between Innovative
Cancer Treatment Ltd. and Hope Hospital on 13 January 2008
HG Handelsgericht (Commercial Court Switzerland)
I. e. Id est (that is)
ICT Innovative Cancer Treatment Ltd.
Inc. Incorporated
KG Kantonsgericht (Cantonal Court Switzerland)
LAV Lei de Arbitragem Voluntária (Portugal)
LG Landgericht (District Court Germany)
Ltd. Limited Company
Model Law UNCITRAL Model Law on International Commercial Arbitration
(1985) with 2006 amendments
NCPC Nouveau Code de Procédure Civile (France)
No. Number
NYC UN Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, New York, 10 June 1958
OG Obergericht (Appellate Court Switzerland)
OGH Oberster Gerichtshof (Supreme Court Austria)
OLG Oberlandesgericht (Court of Appeal Germany/ Court of Appeal
Austria)
P. Page
Para. Paragraph
PO Procedural Order
RUPRECHT-KARLS -UNIVERSITÄT HEIDELBERG
MEMORANDUM FOR RESPONDENT | VI
R–I RESPONDENT’s Answer to Request for Arbitration dated 5 July 2013
Sec. Section
SLA Sales and Licensing Agreement concluded between Innovative Cancer
Treatment Ltd. and Hope Hospital on 20 July 2011
U.S. United States of America
UK United Kingdom
ULIS Convention Relating to a Uniform Law on the International Sale of
Goods, The Hague, 1 July 1964
UN United Nations
UNCITRAL United Nations Commission on International Trade Law
UNIDROIT International Institute for the Unification of Private Law
UPICC UNIDROIT Principles of International Commercial Contracts 2010
USD United States Dollar
V. Versus
Vol. Volume
WL Westlaw
RUPRECHT-KARLS -UNIVERSITÄT HEIDELBERG
MEMORANDUM FOR RESPONDENT | VII
TABLE OF LITERATURE
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MEMORANDUM FOR RESPONDENT | VIII
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In: Kluwer Law International (1990), pp. 496 - 497
15
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Tribunale di Forli
(2009)
Tribunale di Forli
16 February 2009
CISG-online 1780
104,
116
Tribunale di Monza
(1993)
Tribunale di Monza
14 January 1993
CISG-online 540
99
Tribunale di Padova
(2005)
Tribunale di Padova
11 January 2005
Found: http://cisgw3.law.pace.edu/cases/050111i3.
html (last access 22 January 2014)
104
Tribunale di Rovereto
(2007)
Tribunale di Rovereto
21 November 2007
CISG-online 1590
65
Netherlands
Hof’s-Hertogenbosch
(2002)
Gerechtshof’s-Hertogenbosch
16 October 2002
CISG-online 816
65
Rechtbank Utrecht
(2009)
Rechtbank Utrecht
21 January 2009
CISG-online 1814
65
New Zealand
Gallaway Cook Allan v.
Carr
Gallaway Cook Allan v. Ewan Robert Carr
Court of Appeal of New Zealand
15 February 2013
Found: http://www.nzlii.org/nz/cases/NZCA/2013/11
.html (last access 19 January 2014)
26
Russian Federation
Supreme Arbitrazh
Court (2012)
Russian Telephone Company CJSC v. Sony Ericsson
Mobile Communications Rus Ltd.
Supreme Arbitrazh Court of the Russian Federation
19 June 2012
Found: http://www.msamoylov.ru/optsionnaya-
ogovorka-v-praktike-vas-rf/ (last access: 17 January
2014)
39
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Switzerland
BezG Weinfelden (1998) Bezirksgericht Weinfelden
23 November 1998
CISG-online 428
99
HG Zurich (2002) Handelsgericht Zürich
9 July 2002
CISG-online 726
105
KG Schaffhausen (2002) Kantonsgericht Schaffhausen
25 February 2002
Found: http://cisgw3.law.pace.edu/cases/020225s1.
html (last access 19 January 2014)
104
KG Waadt (1993) Kantonsgericht Waadt
30 March 1993
In: Association Suisse de l’Arbitrage Bulletin,
Volume 1 (1995), pp. 64 - 67
15
KG Zug (1995) Kantonsgericht Zug
16 March 1995
CISG-online 230
99
KG Zug (1999) Kantonsgericht Zug
21 October 1999
CISG-online 491
108
OG Bern (2008) Obergericht des Kantons Bern
19 May 2008
CISG-online 1738
65
United Kingdom
33 Guangzhou Dockyards
v. ENE Aegiali
Guangzhou Dockyards Co Ltd v. ENE Aegiali I
English and Welsh High Court of Justice, Queen’s
Bench Division (Commercial Court)
5 November 2010
In: Commercial Law Cases, Volume 2 (2010),
pp. 870 - 885
26
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United States
Asante v. PMC Asante Technologies, Inc. v. PMC-Sierra, Inc.
United States District Court for the Northern District
of California
27 July 2001
CISG-online 616
97
Chateau v. Sabaté Chateau des Charmes Wines Ltd. v. Sabaté USA
Inc., Sabaté S.A.
United States Court of Appeals for the 9th
Circuit
5 May 2003
CISG-online 767
77
Crowell v. Downey
Community Hospital
Ronald Crowell v. Downey Community Hospital
Foundation
California Court of Appeal for the 2nd
District
28 January 2002
In: California Appellate Reports, 4th
Series,
Volume 95 (2002), pp. 730 - 748
28
Firedoor Corp. v. R.K.
& A. Jones Inc.
Firedoor Corporation of America, Inc. v. R.K. & A.
Jones, Inc.
Supreme Court of the State of New York, Appellate
Division, First Department
15 April 1975
In: West New York Supplement, 2nd
Ed., Volume
366, pp. 443 - 444
38
Godfrey v. Hartford John A. Godfrey and Gertrud M. Godfrey v. Hartford
Casualty Insurance Company
Supreme Court of Washington
25 January 2001
In: Washington Reports, 2nd
Series,
Volume 142 (2001), pp. 885 - 899
13
Hall Street v. Mattel Hall Street Associates, L.L.C. v. Mattel, Inc.
Supreme Court of the United States
25 March 2008
In: United States Reports, Volume 552 (2008),
pp. 576 – 592
26
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Salt Lake Tribune
Publishing v.
Management Planning
Salt Lake Tribune Publishing Company, LLC v.
Management Planning, Inc., MediaNews Group, Inc.,
Kearns-Tribune, LLC
United States Court of Appeals for the 10th
Circuit
30 November 2004
In: Federal Reporter, 3rd
Series, Volume 390 (2004),
pp. 684 - 695
13
Smith Wilson v. Trading
and Development
Smith Wilson Co. v. Trading and Development
Establishment
United States District Court for the District of
Columbia
31 August 1990
In: Federal Supplement, Volume 744 (1990),
pp. 14 - 19
15
Solae v. Hershey Solae, LLC v. Hershey Canada, Inc.
United States District Court for the District of
Delaware
9 May 2008
CISG-online 1769
77
Three Valleys v. Hutton Three Valleys Municipal Water District v. E. F.
Hutton & Company, Inc.
United States Court of Appeals for the 9th
Circuit
5 February 1991
In: Federal Reporter, 2nd
Series, Volume 925 (1991),
pp. 1136 - 1150
15
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TABLE OF ARBITRAL AWARDS
Cited as Citation Cited
in
Ad hoc Arbitration
34 Streamline v. Albrecht Streamline Building Products Ltd. v. Albrecht
Bouwproducten BV
Ad hoc Tribunal, Florenz
19 April 1994
CISG-online 124
99
International Chamber of Commerce (ICC)
35 ICC Case No. 4392 Buyer (Yugoslavia) v. Seller (Germany)
ICC Case No. 4392 of 1983
In: Journal du Droit International (1983), Vol. 110,
pp. 907 - 908
51
36 ICC Case No. 7453 Agent v. Principal and Managing Director of Principal
Final Award, ICC Case No. 7453 of 1994
In: Kluwer Law International (1997), pp. 107 - 127
15
Netherlands Arbitration Institute (NAI)
37 Machines Case Buyer (Netherlands) v. Seller (Italy)
Partial Award
17 May 2005
CISG-online 1422
99
Chamber of Commerce and Industry of the Russian Federation (TPPRF)
38 TPPRF Case No.
155/2004
Buyer (Russian Federation) v. Seller (Ukraine)
Case No. 155/2004
16 March 2005
CISG-online 1480
99
39 TPPRF Case No.
217/2001
Buyer (Russian Federation) v. Seller (Canada)
Case No. 217/2001
6 September 2002
CISG-online 892
99
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40 TPPRF Case No.
22/2002
Seller (Russian Federation) v. Buyer (Belarus)
Case No. 22/2002
11 October 2002
CISG-online 893
99
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TABLE OF OTHER SOURCES
Cited as Citation Cited
in
A/40/17 Report of the United Nations Commission on
International Trade Law on the Work of its
Eighteenth Season
General Reports
Official Records: Fortieth Session
Supplement No. 17 (A/40/17)
Found: http://daccess-dds-ny.un.org/doc/UNDOC/
GEN/N85/325/11/PDF/N8532511.pdf?OpenElement
(last access 19 January 2014)
25
A/CN.9/263/ADD.2 Analytical Compilation of Comments by
Governments and International Organizations on
the Draft Text of a Model Law on International
Commercial Arbitration
Report of the Secretary-General
Addendum
Found: http://daccess-dds-ny.un.org/doc/UNDOC/
GEN/V85/267/01/PDF/V8526701.pdf?OpenElement
(last access 19 January 2014)
25
CISG-AC No. 4 CISG Advisory Council Opinion No. 4
Contracts for the Sale of Goods to Be Manufactured or
Produced and Mixed Contracts (Article 3 CISG)
Found: http://www.cisg.law.pace.edu/cisg/CISG-AC-
op4.html (last access 17 January 2014)
116,
118
CISG-AC No. 13 CISG Advisory Council Opinion No. 13
Inclusion of Standard Terms under the CISG
Found: http://www.cisgac.com/default.php?ipkCat=
222&ifkCat=213&sid=222 (last access 17 January
2014)
71,
73,
77,
101
Swiss Embassy Schweizerische Eidgenossenschaft
Botschaft betreffend das Wiener Übereinkommen über
Verträge über den internationalen Warenkauf vom 11.
Januar 1989
In: Schweizer Bundesblatt 1989, Band I, pp. 745 - 871
111
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UNCITRAL Digest UNCITRAL
Digest of Case Law on the United Nations Convention
on the International Sale of Goods
Found: http://www.uncitral.org/uncitral/en/case_law/
digests/cisg.html (last access 19 January 2014)
104
41 YONEV VALKOV NENOV Yonev Valkov Nenov – Attorneys at Law
2 December 2011, One-Sided Jurisdiction Clauses not
enforceable in Bulgaria
Found: http://yvn-bg.com/news.php (last access 17
January 2014)
40
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STATEMENT OF FACTS
1 On 13 January 2008, Innovative Cancer Treatment Ltd., CLAIMANT, and Hope Hospital,
RESPONDENT, (the “Parties”) agreed on the purchase of a Proton Therapy Facility with two
treatment rooms in the Framework and Sales Agreement (the “FSA”) [Exh. C–2]. In a pre-
sales cost-benefit analysis CLAIMANT assured RESPONDENT that this Facility would at least
run on zero costs [C–I–6]. Furthermore, in the negotiations of the FSA, during which no
arbitration specialists were consulted [PO–II–10], the dispute resolution clause (Art. 23 FSA)
was a key issue. Art. 23 FSA takes into account special restrictions of RESPONDENT. In
particular, RESPONDENT as a government entity [R–I–5] could only agree to a dispute
resolution clause on the basis of Circular No. 265 [Exh. C–3; PO–II–9] which states that
government entities must not forego the right of review of manifestly erroneous decisions of
courts or tribunals [Exh. R–1]. Accordingly, RESPONDENT insisted on the appeal and review
mechanism laid down in Art. 23(4) FSA. Moreover, RESPONDENT had financial restraints at
the time of the conclusion of the FSA [C–I–10; Exh. C–4; Exh. R–2]. Thus, it was eager to
pay the purchase price in instalments. In return, CLAIMANT inserted Art. 23(6) FSA which
grants CLAIMANT the unilateral right to choose between arbitration and litigation.
2 On 20 July 2011, the Parties concluded a further contract, the Sales and Licensing Agreement
(the “SLA”) [Exh. C–6]. Under the SLA, CLAIMANT is obligated to build a third treatment
room using the newly developed active scanning technology (Art. 2 SLA) while RESPONDENT
is, in turn, obligated to conduct clinical trials and to provide CLAIMANT with medical data
(Art. 10 SLA). During the negotiations, CLAIMANT announced that it had revised its standard
terms. It promised to make its new standard terms available [Exh. C–5] but failed to send the
promised copy of the standard terms in English [Exh. R–2].
3 On 20 May 2012, RESPONDENT had to cease treatment with the active scanning software
purchased under the SLA because the software could not cope with the patients’ respiratory
movements [Exh. C–7]. Additionally, on 10 July 2012, the Auditor-General of Equatoriana
confirmed that as opposed to CLAIMANT’s cost-benefit analysis the Facility purchased under
the FSA had operated only 70 % of its planned capacity in the 2011/2012 financial year
[Exh. C–7]. Therefore, on 15 August 2012, RESPONDENT gave notice that it was withholding
the final instalment of USD 10 million due under the FSA and the outstanding USD 1.5
million purchase price under the SLA [Exh. C-7]. Claiming these payments, CLAIMANT filed a
Request for Arbitration at CEPANI against RESPONDENT on 6 June 2013.
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SUMMARY OF ARGUMENT
PART I: THE ARBITRAL TRIBUNAL LACKS JURISDICTION TO DECIDE ANY DISPUTE BETWEEN
THE PARTIES
4 Blessing or curse, arbitration without a final award is not arbitration. CLAIMANT’s intention to
interpret Art. 23 FSA as an arbitration agreement [C–II–41] cannot succeed since the Parties
excluded finality by inserting Art. 23(4) FSA. In addition, the alleged arbitration agreement in
Art. 23 FSA induces procedural inequality as it grants CLAIMANT the unilateral option to
choose between arbitration and litigation. It follows, the Parties in Art. 23 FSA never validly
agreed to arbitrate any dispute. Equally, none of CLAIMANT’s standard terms contain a valid
arbitration agreement.
PART II: THE TWO CLAIMS ARISING FROM THE FSA AND THE SLA SHOULD NOT BE HEARD
IN A SINGLE SET OF ARBITRAL PROCEEDINGS
5 What does not belong together should not be forced together. The Parties never agreed to join
the claims arising from the FSA and from the SLA. Such procedural detail was never even
mentioned during the contract negotiations. What is more, the two present claims, provided
the Arbitral Tribunal holds that the Parties agreed on arbitration at all, need entirely different
expertise. The claim arising from the FSA needs business-administrative know-how, whereas
the claim arising from the SLA mainly needs technical expertise.
PART III: THE CISG IS NOT APPLICABLE TO THE PAYMENT CLAIM UNDER THE SLA
6 RESPONDENT acted dutifully in all matters. It relied on the promise of its contractual partner to
provide it with a translated version of the 2011 Standard Terms, which CLAIMANT sought to
include into the SLA. CLAIMANT badly disappointed RESPONDENT in its trust in a long term
business partner. It follows that CLAIMANT cannot rely on the exclusion of the CISG which it
wanted to insert into the SLA by the use of its 2011 Standard Terms. Since CLAIMANT
concealed its major changes, RESPONDENT was in no way aware of those changes.
7 It is a common principle of trade that if an object is bought it does not have to be returned.
RESPONDENT has only obtained the right to temporarily use the software. In addition,
CLAIMANT’s main obligation was to develop and customise the active scanning software.
Therefore, the CISG is inapplicable in any case.
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ARGUMENT
PART I: THE ARBITRAL TRIBUNAL LACKS JURISDICTION TO DECIDE ANY DISPUTE BETWEEN
THE PARTIES
8 The Arbitral Tribunal lacks jurisdiction to decide on the payment claims under the FSA and
under the SLA in the combined amount of USD 11.5 million brought by CLAIMANT in its
Request for Arbitration [C–I–26]. CLAIMANT seems to be confused about whether the
CEPANI Tribunal [C–II–12], CEPANI as an institution [C–II–15, 26], the Arbitral Tribunal
[C–II–20] or a not further clarified court [C–II–26] is competent to decide on the Arbitral
Tribunal’s jurisdiction. However, Art. 16(1) DAL and Art. 7(3) CEPANI Rules make clear
that, in accordance with the widely acknowledged principle of competence-competence
[BORN, pp. 851 et seqq.; WAINCYMER, pp. 114 et seq.], the Arbitral Tribunal itself is
competent to determine its jurisdiction. RESPONDENT therefore respectfully requests the
Arbitral Tribunal to render an award declaring that it has no jurisdiction on the claims.
9 For this purpose, RESPONDENT will demonstrate that the Parties never agreed to arbitrate their
disputes. The Arbitral Tribunal’s jurisdiction can neither be based on Art. 23 FSA (I) nor on
Sec. 21 of the 2000 Standard Terms (II) nor on Sec. 21 of the 2011 Standard Terms (III).
I. THE ARBITRAL TRIBUNAL HAS NO JURISDICTION BASED ON ART. 23 FSA
10 Art. 23 FSA does not contain an arbitration agreement and therefore, it cannot be the basis for
the Arbitral Tribunal’s jurisdiction (A). Even if Art. 23 FSA contained an arbitration
agreement, this agreement would be invalid because both the appeal and review mechanism in
Art. 23(4) FSA (B) and CLAIMANT’s unilateral option to choose between arbitration and
litigation in Art. 23(6) FSA (C) violate mandatory provisions of the lex arbitri. Finally, even
if Art. 23 FSA was a valid arbitration agreement, it would at least not extend to the claim
arising from the SLA (D). In any event, any award based on Art. 23 FSA would be set aside
in Danubia and unenforceable in Equatoriana and Mediterraneo (E).
A. ART. 23 FSA DOES NOT CONTAIN AN ARBITRATION AGREEMENT
11 The interpretation of Art. 23 FSA in accordance with the Parties’ true intentions shows that by
inserting this article the Parties have never agreed on arbitration. RESPONDENT agrees with
CLAIMANT [C–II–35] that the UPICC, which are the Danubian contract law [PO–II–4],
govern the interpretation and the substantive validity of Art. 23 FSA.
12 As CLAIMANT correctly recognizes [C–II–36], Art. 4.1 UPICC lays down the rule that while
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interpreting a contract, effect should be given to the parties’ common intention, especially in
cases where the true meaning differs “from the literal sense of the language used” (falsa
demonstratio non nocet) [UNIDROIT COMMENTARY, Art. 4.1, para. 1]. Consequently, it is
not the label but only the substance of a dispute resolution agreement which determines the
nature of the chosen mechanism [BORN, Law and Practice, p. 4; cf. OLG Munich (2006)].
Art. 23 FSA cannot be interpreted as containing an agreement to arbitrate because, although
the expression ‘arbitration’ is used, the procedure described by the Parties is irreconcilable
with the very nature of arbitration.
13 First, Art. 23 FSA is not an arbitration agreement because the Parties did not want an arbitral
tribunal to render the final decision on their dispute. A commonly used criterion in order to
scrutinise whether parties agreed on arbitration or on another dispute resolution mechanism is
to ask whether the arbitral tribunal or a state court shall render the final decision on the
merits [OGH (1994); Cour d’appel de Paris (2004); Salt Lake Tribune Publishing v.
Management Planning]. As the Washington Supreme Court put it, “[a]rbitration is intended
to be final; parties agree to waive their right to have their disputes resolved in the court
system and cannot submit a dispute to arbitration […] before invoking the courts'
jurisdiction” [Godfrey v. Hartford]. Similarly, in a case where an ‘arbitration agreement’
foresaw that state courts should exercise a full review on the merits, the German BGH held
that the parties did not want a final decision by the ‘arbitrator’. Despite the denomination as
‘arbitration agreement’ it interpreted the agreement to be on expert
determination [BGH (1981)]. The Arbitral Tribunal should come to a similar conclusion.
Although the Parties call for ‘arbitration’ and an award which ‘shall be final’, a closer look at
Art. 23(4) FSA clearly shows that arbitration is not what the Parties wanted. Art. 23(4) FSA
states that each Party has the right “to refer the case to the applicable state courts if it
considers the award to be obviously wrong in fact or in law. The state court shall then have
jurisdiction to review the case and to decide the issue in accordance with the applicable law”.
Thus, the Parties did not want the Arbitral Tribunal to finally decide their dispute.
14 Second, Art. 23 FSA is not an arbitration agreement because the Parties did not want to
exclude the jurisdiction of the state courts. While arbitration is meant to be a substitute for
litigation resulting in an arbitral award which has judgment-like res judicata
effects [POUDRET/BESSON, para. 11; BORN, pp. 2880 et seqq.], the procedure resulting from
Art. 23 FSA would only be the first instance before litigation. Arbitration, however, is not a
first instance to litigation [MOURRE/RADICATI DI BROZOLO, p. 1; SMIT, Scope of judicial
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review, p. 151]. It is widely acknowledged that “when parties opt for arbitration, the merits of
the decision – not only findings of fact, but also conclusions of law – are final and binding, no
matter how wrong the highest court of appeal might have thought them to be. In short, there
is no appeal” [PAULSSON, The idea of arbitration, emphasis added; cf. REDFERN/HUNTER,
para. 1.02]. Thus, by submitting a dispute to the jurisdiction of an arbitral tribunal, parties
necessarily waive their right to have the same dispute decided by a state court. The right to a
final decision of a state court is, however, precisely what the Parties wanted to preserve when
agreeing that “[t]he state court shall then have jurisdiction to […] decide the issue”.
15 For the above-mentioned reasons, following CLAIMANT’s argument and interpreting
Art. 23 FSA as containing an arbitration agreement would be contrary to the Parties’ true
intention. If, at the very least, the Arbitral Tribunal has doubts as to whether the Parties
indeed agreed on arbitration, a restrictive approach should be applied. As CLAIMANT correctly
asserts, arbitration clauses should be interpreted favouring their validity “subject to the caveat
that parties have evinced intention on their part to submit their disputes to arbitration”
[C–II–27]. Where the very intention to arbitrate is questionable a restrictive interpretation
standard is to be applied and it will be assumed that the parties did not agree to arbitrate [OLG
Munich (2006); Corte d’ Appello di Firenze (1988); KG Waadt (1993); ICC Case No. 7453].
This results from the acknowledged principle that parties cannot be forced to arbitrate where
their intention to do so is not clear [ZELL, p. 966; REDFERN/HUNTER, para. 2.01; Three
Valleys v. Hutton; Smith Wilson v. Trading and Development]. Under this premise an arbitral
tribunal acting under the ICC Rules stated that “the consent of each party must be
unambiguously demonstrable if any resulting Award is to be safely enforceable” and denied
its jurisdiction [ICC Case No. 7453]. The Florence Court of Appeal reasoned that the parties’
intention to arbitrate must be clearly established, “especially since an arbitration clause is a
derogation from the fundamental principle of the jurisdiction of [...] courts” [Corte d’ Appello
di Firenze (1988)]. Similarly, the OLG Munich held that in case of doubt as to whether the
parties agreed on expert determination or on arbitration, expert determination is the preferable
interpretation because its consequences on the guarantee of access to state courts are not as
far-reaching [OLG Munich (2006)].
16 In light of the above, Art. 23 FSA should not be interpreted as containing an arbitration
agreement. It is an inherent and inevitable consequence of arbitration that the parties are
bound by the award even where it results to be manifestly erroneous [REDFERN/HUNTER,
para. 10.61; MOSES, p. 4; cf. POUDRET/BESSON, paras. 828 et seqq.]. Here, there are very
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serious doubts as to the Parties’ intention to arbitrate because they are not willing to accept
this risk but cling to the safeguards of having a state court as last resort. Consequently, the
Parties’ agreement in Art. 23 FSA should be interpreted as an agreement on expert
determination, followed by litigation but not as an agreement to arbitrate.
17 In essence, contracts in general and agreements on dispute resolution in particular have to be
interpreted according to the parties’ true intentions. The Parties had precise perceptions of the
dispute resolution procedure to be employed and RESPONDENT wishes to have them fulfilled,
irrelevant of its label. The Arbitral Tribunal is therefore respectfully requested not to be
misled by the unknowingly misused word ‘arbitration’, but to follow the Parties’ true intent,
which has been clearly expressed in their description of the desired dispute resolution method.
B. ART. 23(4) FSA RENDERS THE ALLEGED ARBITRATION AGREEMENT INVALID
18 Even if Art. 23 FSA were seen as an arbitration agreement, the Arbitral Tribunal should
refrain from basing its jurisdiction thereon. Even though RESPONDENT has contested the
validity of the alleged arbitration agreement in its Answer to Request for Arbitration [R–I–8],
CLAIMANT did not raise any objections. It must thus be assumed that CLAIMANT agrees with
RESPONDENT in that regard. Nevertheless, RESPONDENT will demonstrate that Art. 23(4) FSA
is invalid under the DAL (1). The invalidity of Art. 23(4) FSA affects the whole alleged
arbitration agreement and consequently invalidates it (2).
1. Art. 23(4) FSA is invalid under the DAL
19 Art. 23(4) FSA is not in accordance with the DAL which is the law of the presumable seat of
the arbitral procedure. Art. 23(4) FSA violates Art. 5 DAL as a mandatory provision. It is
stated therein that in matters governed by the DAL, no courts shall intervene except where so
provided by this law. The DAL does not provide for a review on the merits of international
arbitral awards as set forth in Art. 23(4) FSA. In domestic arbitration, Art. 34A DAL allows
the parties to agree on an appeal to the High Court on any question of Danubian law arising
out of an award. However, Art. 23(4) FSA does not fall within the scope of Art. 34A DAL for
the following reasons.
20 First, Art. 23(4) FSA calls for a review on errors “in fact or in law” whereas Art. 34A(1) DAL
only allows a review on questions of Danubian law and Art. 34A(4)(b) DAL explicitly
excludes questions of fact. Consequently, a review of the award on errors of fact and of any
law, in particular the potentially applicable Mediterranean law, is far beyond the scope of
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Art. 34A DAL.
21 Second, Art. 34A DAL is limited to domestic arbitration [PO–II–14]. For international
arbitration, as the case is here, the DAL does not provide the parties with the possibility to
agree on any review of the award on the merits. One cannot draw inferences from the
permissibility of judicial review in domestic arbitration about its permissibility in
international arbitration. Quite to the contrary, the mere fact that the Danubian lawmaker
limited the optional appeal in Art. 34A DAL to domestic arbitration while not including a
similar option for international arbitration makes clear that in the latter no such agreements
shall be allowed. This result corresponds to other legislations. In France, Art. 1489 NCPC
allows parties in domestic arbitration to agree on a full appeal to state courts while in
international arbitration any review apart from the regular – “minimalistic”
[REDFERN/HUNTER, para. 10.67] – grounds for setting aside is forbidden according to
Art. 1518 NCPC [PAULSSON/Derrain/Kiffer: National Report for France, p. 74]. The same is
true in Portugal, where parties in domestic arbitration may opt for an appeal on the merits,
Art. 39(4) LAV, but not in international arbitration, Art. 53 LAV. Thus, the only convincing
interpretation of the DAL is that in international arbitration parties may not agree on a review
of the award for errors of fact and law as in Art. 23(4) FSA.
22 Contrary to CLAIMANT’s allegation [C–II–16 et seqq.], party autonomy does not enable the
Parties themselves to validly create a new form of review previously unknown to the DAL.
The DAL contains a wide range of provisions which are subject to parties’ diverging
agreements but Art. 5 DAL is not one of them.
23 First, this results from the wording of Art. 5 DAL. Whenever the Danubian legislator intended
parties to be allowed to derogate from provisions of the DAL, it made this clear by using
words such as “unless otherwise agreed by the parties” as in Artt. 3(1), 11(1), 17(1), 17B(1),
21, 23(2), 24(1), 25, 26(1), 29, 33(3) DAL or “the parties are free to agree […] failing such
agreement […]” as in Artt. 10(1), 11(2)(3), 13(1)(2), 19(1)(2), 20(1), 22(1) DAL. In contrast,
Art. 5 DAL reads “no court shall intervene except for where so provided in this Law”
[emphasis added]. The words ‘or where so agreed by the parties’ are missing. Thus, Art. 5
DAL may not be subject to deviating agreements by the Parties.
24 Second, the conclusion that Art. 5 DAL is mandatory and conclusive follows from the fact
that, as outlined above [para. 21], the Danubian lawmaker allows parties in domestic
arbitration to agree on an optional appeal while it does not provide a similar option for
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international arbitration.
25 Third, the historical interpretation of the DAL leads to the same result. The DAL, except for
Art. 34A DAL, is a verbatim adoption of the Model Law [PO–II–13]. With regard to Art. 5
Model Law, the UK inquired whether the principle of party autonomy would not demand that
where parties have agreed on certain measures the court should be able to give effect to their
agreement [A/CN.9/263/ADD.2, para. 37]. The commission, however, had doubts whether
parties could be expected to deal with the problem of court intervention [A/40/17, para. 64].
In the end, the commission agreed that this matter should be decided by the legislator instead
of being subject to parties’ diverging agreements and adopted Art. 5 without
changes [HOLTZMANN/NEUHAUS, Art. 5, p. 219]. As feared by the drafters of the Model Law,
Art. 23(4) FSA opens the doors to potentially unbounded review by stating that “applicable
state courts” shall be competent to review the case and eventually decide the issue. There are
several countries to which this arbitration relates – Danubia, Mediterraneo and Equatoriana –
and it is wholly unclear which court(s) will assume jurisdiction when seized by either Party.
This scenario is what Art. 5 DAL is meant to prevent which is why Art. 23(4) FSA is in
violation thereof.
26 Moreover, the limitation of court intervention to an absolute minimum as in Art. 5 DAL
corresponds with the concept of arbitration as prevalent in most jurisdictions. Even beyond
the Model Law, it is widely acknowledged that parties may not amend the grounds for review
available under the applicable law [BORN, p. 2635]. The United States, which have been the
most well-known jurisdiction in some cases allowing for such an expansion, have put an end
to this practice under the FAA in 2008 [Hall Street v. Mattel]. In other jurisdictions, e. g.
England [Guangzhou Dockyards v. ENE Aegiali I], France [Cour d’appel de Paris (1989)]
and New Zealand [Gallaway Cook Allan v. Carr] such agreements are equally considered
invalid.
27 In conclusion, Art. 23(4) FSA is irreconcilable with arbitration in general and with the
mandatory Art. 5 DAL in particular. As a result, the appeal mechanism is invalid.
2. The invalidity of Art. 23(4) FSA renders the entire alleged arbitration agreement
invalid
28 The invalidity of Art. 23(4) FSA renders the entire arbitration agreement invalid because the
Parties would not have agreed to arbitrate without Art. 23(4) FSA. This result follows from
the legal notion implied in Art. 3.2.13 UPICC, which as Danubian contract law govern this
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issue. Although the UPICC do not contain a provision concerning partial invalidity, the provi-
sion concerning partial avoidance, Art. 3.2.13 UPICC, can be well applied to this question.
Art. 3.2.13 UPICC states that the avoidance of an individual term is limited to this term, ex-
cept for cases where it would be unreasonable to uphold the remaining contract. The ‘test’
necessary to decide this question is to ask whether the parties would have concluded the con-
tract without the relevant provision [UNIDROIT COMMENTARY, Art. 3.2.13]. Many courts
have also applied this ‘test’ when deciding whether to uphold arbitration agreements includ-
ing invalid appeal clauses. By way of example, the Paris Court of Appeal interpreted the par-
ties’ intentions and held that an appeal clause was ‘decisive’ for the whole arbitration agree-
ment [Cour d’appel de Paris (1989)], while German [OLG Munich (2013)] and U.S. [Crowell
v. Downey Community Hospital; ZELL, p. 969] courts have developed a similar approach.
29 Here, when concluding the FSA, RESPONDENT was mistaken in its assumption that Art. 23(4)
FSA could be validly included. As RESPONDENT has already stated in its Answer to Request
for Arbitration [R–I–8], it would not have concluded an arbitration agreement without the
appeal mechanism. This is the only reasonable result with regard to RESPONDENT’s earlier
experience with arbitration. As CLAIMANT knew, RESPONDENT as a state entity is accountable
to tax payers [Exh. C–3] and is expected to follow Circular No. 265 [PO–II–9], which states
that “[g]overnment entities may not forego the right of review of manifestly erroneous
decisions of courts or tribunals” [Exh. R–1]. RESPONDENT cannot be expected to ignore its
obligations. If arbitration is not possible with an appeal as set forth in Art. 23(4) FSA,
RESPONDENT cannot arbitrate.
30 That RESPONDENT would not have agreed to arbitrate under these circumstances becomes
even more evident when considering that in the past, RESPONDENT in one case gave in to its
counterparty’s insistence and agreed on arbitration without any appeal and review
mechanism. After an unfavourable award RESPONDENT was subject to considerable public
uproar [PO–II–9]. RESPONDENT since then is firmly determined not to let that happen again –
a fact which CLAIMANT was well informed of [PO–II–9; Exh. C–3].
31 To sum up, the alleged arbitration agreement is invalid because the Parties would never have
agreed thereon without Art. 23(4) FSA. Revealingly, CLAIMANT has failed to give any reasons
why the alleged arbitration agreement should be preserved without this integral part of it.
C. ART. 23(6) FSA RENDERS THE ALLEGED ARBITRATION AGREEMENT INVALID
32 CLAIMANT is continuously invoking party autonomy as the sole reason to uphold the alleged
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arbitration agreement in Art. 23 FSA [C–II–16 et seqq.]. However, the Parties’ right to
procedural equality contained in Art. 18 DAL limits the principle of party autonomy [BINDER,
para. 5–001]. Pursuant to Art. 23(6) FSA, CLAIMANT alone has the right to bring payment
claims to litigation while RESPONDENT is obligated to bring all claims to arbitration according
to Art. 23(3) FSA. This unilateral option of CLAIMANT renders the alleged arbitration
agreement invalid (1) and leads to the invalidity of the entire alleged arbitration
agreement (2).
1. Art. 23(6) FSA is invalid under the DAL
33 CLAIMANT’s unilateral option is invalid because it contravenes Art. 18 DAL, a mandatory
provision [BINDER, para. 5–001; BORN, p. 116]. According to Art. 18 DAL, the parties to the
proceedings shall be treated with equality. No party shall be given an advantage over the
other [BINDER, para. 5–008]. Art. 18 DAL does not only apply to actions taken by an arbitral
tribunal but also to procedural agreements reached by the contracting
parties [HOLTZMANN/NEUHAUS, Art. 18, p. 550; BINDER, para. 5–006]. The equality of
procedural rights is internationally acknowledged and fundamental to every civil procedure in
state courts as well as in arbitration [see ECHR (2010), paras. 26 et seq.; ECHR (2005),
para. 59; BINDER, para. 5–005, 5–012]. In contrast, Art. 23(6) FSA grants CLAIMANT two
unreasonably favourable advantages over RESPONDENT.
34 First, Art. 23(6) FSA entitles CLAIMANT to unilaterally affect RESPONDENT’s legal position at
the start of the proceedings. It grants CLAIMANT the right to choose the dispute resolution
mechanism for each dispute while RESPONDENT must comply with the chosen procedural
rules. CLAIMANT may freely choose between arbitration and litigation depending on which
dispute resolution best serves its purposes in the circumstances of the particular case. Such
decision embodies multiple factors which can differ: possible expenses, the availability of
pre-trial discovery, provisional remedies, joinder devices, the expertise of the decision
makers, the law likely to be applied, the language of the proceedings in which all submissions
must be made and into which all evidence must be translated, the applicable standards of
proof, the recoverability of legal fees, the availability and affordability of counsel with
experience in arbitration and more factors depending on the circumstances of the case [see
SMIT, p. 394; MOSES, pp. 44 et seqq.; GOLDBERG, pp. 210, 212 et seqq.]. After evaluating all
these factors, the unilateral option grants CLAIMANT the right to commence the proceedings
which best suit its needs and for which RESPONDENT may be unprepared. CLAIMANT
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determines the procedural regime both Parties must comply with. Thus, Art. 23(6) FSA gives
CLAIMANT the possibility of cherry picking to the detriment of RESPONDENT. As a
consequence, the arbitration is biased right from the outset.
35 Second, Art. 23(6) FSA grants CLAIMANT the right to opt for litigation at any time so that
CLAIMANT could overtrump the present arbitration by exercising its option and commencing
litigation in the courts of Mediterraneo. This is because Art. 23(6) FSA does not limit
CLAIMANT’s unilateral option in any way. In particular, it does not set forth that by
commencing arbitration CLAIMANT is assumed to have waived its right to choose litigation.
As the BGH reasoned in 1998, parties which intend to limit a unilateral option between
arbitration and litigation are required to spell out the limit in the clause itself [BGH (1998)].
Accordingly, CLAIMANT could invoke the mere wording of Art. 23(6) FSA and overtrump the
present arbitral proceedings. In this case, all efforts and expenses made with regard to the
arbitration would have been made in vain. Additionally, CLAIMANT is likely to only conduct
the present arbitration until the end if it thinks the Arbitral Tribunal will decide in its favour.
Otherwise, it will probably bring its claims in the courts of Mediterraneo. This power of
CLAIMANT continuously threatens the present arbitration, overbalances the Parties’ procedural
positions to the benefit of CLAIMANT and prevents any due process.
36 Consequently, Art. 23(6) FSA privileges CLAIMANT twice. Before commencing any
proceedings, CLAIMANT could one-sidedly make the important decision between arbitration
and litigation. During the present arbitral proceeding, CLAIMANT can still opt for litigation at
any time and thereby dissipate most of the expenses made for the arbitration. Together, these
advantages considerably disrupt the balance of the Parties’ procedural rights. This is why
Art. 23(6) FSA violates the Parties’ right to procedural equality as it is contained in Art. 18
DAL. Due to the violation of this mandatory provision Art. 23(6) FSA is invalid.
37 The fact that Art. 23(6) FSA was only included in exchange for Art. 3 FSA [Exh. C–3] does
not change this result. Such bargain cannot prevent that Art. 23(6) FSA leads to procedural
unfairness in more than one way and therefore violates Art. 18 DAL which deliberately
restricts the principle of party autonomy.
38 In summation, one can even say that a unilateral option between arbitration and litigation is
“most unreasonable […and] so wholly one-sided and unfair that the courts should feel no
reluctance in finding it unacceptable” [SMIT, pp. 404 et seq.]. Similarly, in a decision dated
1975, the Supreme Court of the State of New York, Appellate Division, First Department
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reasoned that “[i]t is manifestly unfair to allow seller to elect between arbitration and court
action and to deny buyer the same right” [Firedoor Corp. v. R.K. & A. Jones Inc.]. In Poland,
asymmetric dispute resolution clauses are even forbidden by virtue of Art. 1161(2) of the
Polish Code of Civil Procedure [KLIUCHKOVSKYI/MARCHUKOV/VOLKOV]. Art. 23(6) FSA
even intensifies such one-sidedness as it grants CLAIMANT the right to bring payment claims
in Mediterraneo, the country where CLAIMANT has its place of business.
39 Invalidating a unilateral option clause is also consistent with a judgment of the Supreme
Arbitrazh Court of the Russian Federation dating from 2012. The court held an arbitration
agreement to be invalid due to a unilateral option clause. One party, RTC, was obligated to
arbitrate all disputes under the contract while the other party, Sony Ericsson, had the right to
choose between arbitration and litigation. The Supreme Arbitrazh Court held that the clause
violated procedural equality because a unilateral option would entitle its beneficiary to decide
on the counterparty where to bring claims. The counterparty, however, would have no options
to decide on. According to the court, the parties to unilateral option clauses would therefore
be in unequal legal positions, which violates procedural equality [Supreme Arbitrazh
Court (2012), pp. 5 et seq.].
40 In another similar case, the Bulgarian Supreme Court of Cassation also invalidated an
arbitration agreement because of a unilateral option clause. In 2011, the court reasoned that
the arbitration agreement was invalid because the party with the option could unilaterally
affect the legal position of the other party [Bulgarian Supreme Court (2011); DRAGUIEV,
p. 31, fn. 34; CUNIBERTI; YONEV VALKOV NENOV].
41 With a reasoning similar to the one of the Bulgarian court, the French Cour de Cassation
invalidated a unilateral jurisdiction clause in 2012. One party was obligated to bring any
claim to the courts of Luxembourg while the other party was granted the right to bring, at its
sole discretion, claims before any court of competent jurisdiction [Cour de Cassation (2012);
ANCEL/MARION/WYNAENDTS].
42 In conclusion, Art. 23(6) FSA is invalid because it violates the Parties’ right to procedural
equality under Art. 18 DAL.
2. Art. 23(6) FSA renders the alleged arbitration agreement entirely invalid
43 Art. 23(6) FSA leads to the invalidity of the entire alleged arbitration agreement. This is
because solely erasing Art. 23(6) FSA cannot restore the procedural equality between the
Parties. The fact that CLAIMANT once decided between arbitration and litigation cannot be
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undone within the pending proceedings. The present arbitration will always suffer from this
initial unbalance. To settle the balance, the Parties must have equal starting positions. This
can only be achieved by court proceedings as neither Party has prepared for litigation.
Therefore, RESPONDENT respectfully requests the Arbitral Tribunal to entirely invalidate the
alleged arbitration clause in Art. 23 FSA and refer CLAIMANT to bring its claims in court.
44 Furthermore, the Arbitral Tribunal would not have jurisdiction if the Parties had, at the time
of the conclusion of the FSA, known that Art. 23(6) FSA is invalid. This can be inferred from
the Parties’ intentions at the time of the conclusion of the FSA. To determine whether the
invalidity of one clause affects the invalidity of the entire contract, the decisive ‘test’ is to ask
whether the Parties would have concluded the contract without the invalid provision [see
supra, para. 28]. Assumed that the Parties knew of Art. 23(6) FSA being invalid at the time
of its inclusion, they would not have agreed on arbitration with the seat in Danubia but with
the seat in Mediterraneo. CLAIMANT has inserted its unilateral option in Art. 23(6) FSA in
exchange for allowing RESPONDENT to pay the purchase price in instalments according to
Art. 3 FSA [Exh. C–3]. Without Art. 23(6) FSA as one element of this deal, the Parties would
not have entered into the alleged arbitration agreement.
45 Rather, CLAIMANT wanted some sort of compensation for RESPONDENT’s right to pay in
instalments. Self-evidently, CLAIMANT would have implemented Capital City, Mediterraneo
as the seat of the arbitration. CLAIMANT has its place of business in Mediterraneo and it is
foreseen as seat of arbitration in CLAIMANT’s standard arbitration clauses (Sec. 21 of the 2000
Standard Terms, Sec 21 of the 2011 Standard Terms). RESPONDENT would have agreed to this
seat because it was eager to purchase the Proton Therapy Facility but simultaneously
depended on CLAIMANT allowing it to pay in instalments. Thus, if the Parties had known that
Art. 23(6) FSA was invalid, they would have provided for Capital City, Mediterraneo as the
seat of the arbitration. Consequently, the Arbitral Tribunal would not have jurisdiction for the
present arbitration with the seat being in Vindobona, Danubia.
46 In short, the alleged arbitration agreement in Art. 23 FSA is completely invalid because of
CLAIMANT’s unfair unilateral option in Art. 23(6) FSA.
D. EVEN IF ART. 23 FSA WAS VALID, IT WOULD NOT EXTEND TO THE SLA
47 As demonstrated above [paras. 8 et seqq.], it is RESPONDENT’s unalterable submission that
Art. 23 FSA does not contain a valid arbitration agreement. Thus, Art. 23 FSA can be no basis
for the Arbitral Tribunal to decide on any dispute, no matter whether such dispute arises under
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the FSA or under the SLA. Nevertheless, even if the arbitration clause in Art. 23 FSA was
valid, it would not extend to the SLA. In contrast, Art. 23 SLA would substitute Art. 23 FSA
because Art. 23 SLA is a specific provision to the contrary of Art. 23 FSA in the sense of
Art. 45 FSA.
48 According to Art. 45 FSA, a provision of the FSA can only govern a future contract between
the Parties where such contract does not contain a specific provision to the contrary. Art. 45
FSA has the purpose of making the drafting of future contracts as efficient as possible, which
corresponds to the general purpose of any framework contract. Efficient drafting is achieved
only when employing clear criteria to determine which provision shall be substituted.
Substituting only parts or selected sentences of an article while leaving other parts in place
would be contrary to that objective. In contrast, substituting the provisions of the framework
contract on an article by article basis ensures that each Party can unmistakably identify which
content is to be substituted. In short, the Parties intended to substitute every article of the FSA
which is again contained in the SLA The mere fact that the Parties are in dispute about
whether Art. 23 SLA substitutes Art. 23 FSA entirely or only in parts already illustrates the
need for clearness in order to provide efficiency.
49 Accordingly, Art 23 SLA is, corresponding to Art. 23 FSA, titled “Dispute Resolution”. This
evidences the Parties’ intention to establish a new dispute resolution mechanism contrary to
Art. 23 FSA. If the Parties had, inversely, intended Art. 23 SLA to only replace
Art. 23(5) and (6) FSA, they would have expressed this intention in Art. 23 SLA. For
instance, they could have inserted an explicit reference to Art. 23(5) and (6) FSA, which they
did not.
50 In addition, even without the context of Art. 23 FSA, Art. 23 SLA makes perfect sense as a
jurisdiction clause. Art. 23(1) SLA deals with interim measures before the courts of
Mediterraneo and Equatoriana. Art. 23(2) SLA contains a choice of forum clause in favour of
the Mediterranean and Equatorianean courts. In particular, Art. 23(1) SLA is not deprived of
its effect by Art. 23(2) SLA. This is because regardless of the court in which a potential claim
under the SLA is brought, Art. 23(1) SLA makes clear that the Parties retain the right to make
application for interim measures in the courts of both Mediterraneo and Equatoriana.
51 What is more, the Arbitral Tribunal should refrain from extending Art. 23 FSA because the
Parties’ will to do so is not stated with sufficient clearness. Arbitral tribunals are
recommended to apply a restrictive approach when ascertaining whether the Parties submitted
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a dispute to arbitration [see supra, para. 15] because by submitting to arbitration parties
waive their legal guarantee of access to public courts [FOUCHARD/GAILLARD/GOLDMAN,
paras. 661 et seqq.; MOSES, p. 18; SCHÜTZE, para. 6; REDFERN/HUNTER, para. 1.45]. Such
guarantee is a fundamental, substantial right in almost every developed jurisdiction, e. g.
acknowledged in Art. 6 of the European Convention for the Protection of Human Rights
[BORN, p. 576]. It follows that regarding their scope of application, arbitration agreements
must expressly and unequivocally evidence the parties’ will to submit to arbitration. This
view has been taken by an arbitral tribunal in ICC Case No. 4392 where only one of two
contracts concluded between the same parties contained an arbitration agreement. The arbitral
tribunal rejected the claimant’s request to base its jurisdiction for both contracts on the one
arbitration agreement even though the two contracts were concluded with regard to the same
context [ICC Case No. 4392; see HANOUTIAU, para. 333].
52 Accordingly, even if Art. 23 FSA constituted a valid arbitration agreement, it would only
extend to other contracts by virtue of Art. 45 FSA in case the Parties’ will to do so was
undoubtedly clear. However, the Parties indicated to replace Art. 23 FSA by only providing
for litigation in Art. 23 SLA [see supra, para. 50]. Thus, the Parties did not state their
intention to extend Art. 23 FSA with sufficient clearness.
53 In a nutshell, Art. 23 SLA as a specific provision to the contrary overturns Art. 23 FSA,
which is why, by virtue of Art. 45 FSA, Art. 23 FSA is not applicable to the SLA.
Additionally, the Parties’ will to extend Art. 23 FSA must be doubted in general.
Consequently, the Arbitral Tribunal is respectfully requested not to extend Art. 23 FSA to the
SLA.
E. A POTENTIAL AWARD BASED ON ART. 23 FSA IS LIKELY TO BE SET ASIDE IN DANUBIA
AND TO BE UNENFORCEABLE IN EQUATORIANA AND MEDITERRANEO
54 An arbitral award based on the alleged arbitration agreement in Art. 23 FSA is likely to be set
aside in Danubia according to Art. 34(2) DAL and, as a result, to be unenforceable in
Equatoriana and Mediterraneo which are both parties to the NYC [PO–II–12]. If RESPONDENT
prevails on the merits it will try to enforce the award on the reimbursement of its legal and
other costs in Mediterraneo, where CLAIMANT has its place of business. In the unlikely event
of an award in CLAIMANT’s favour, it will probably try to enforce the award in Equatoriana,
where RESPONDENT has its place of business. There are three objections because of which the
courts in Danubia will set aside and the courts in Mediterraneo and Equatoriana respectively
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will refuse to enforce an award based on Art. 23 FSA.
55 First, upon RESPONDENT’s application Danubian courts will most likely set aside the award
according to Art. 34(2)(i) DAL. This provision sets forth that an arbitral award may be set
aside if there is no valid arbitration agreement under the applicable law – here the DAL. It is
highly questionable whether Art. 23 FSA constitutes an agreement to arbitrate in the first
place [see supra, paras. 11 et seqq.]. At least, the alleged arbitration agreement is invalid
because Art. 23(4) FSA violates Art. 5 DAL [see supra, para. 26], which is a mandatory
provision [see supra, paras. 22 et seqq.]. Additionally, Equatorianean or Mediterranean courts
can refuse the enforcement of the potential award according to Art. V(1)(a) NYC, which
mirrors Art. 34(2)(i) DAL. Consequently, the award is also likely to be unenforceable.
56 Second, Danubian courts will most likely set aside the award according to Art. 34(2)(iv) DAL
which provides that an arbitral award may be set aside if the arbitral procedure was in conflict
with a provision of the DAL from which the parties cannot derogate. The parties’ right to
procedural equality in Art. 18 DAL is such a provision [BINDER, para. 5-010]. As it can be
inferred from several court judgments [see supra, paras. 39 et seqq.], CLAIMANT’s unilateral
option in Art. 23(6) FSA stands in violation thereof [see supra, paras. 33 et seqq.]. Most
likely, enforcement in Equatoriana or Mediterraneo will not be granted, either. This is because
the principle of procedural equality is a right of fundamental importance in almost every
developed jurisdiction [see supra, para. 33] so that a violation thereof is a violation of public
policy according to Art. V(2)(b) NYC.
57 Third, Danubian courts are likely to set aside the award according to Art. 34(2)(a)(iii) DAL
which states that in case of a decision on matters beyond the scope of the submission to
arbitration, at least the part concerning the matters not covered may be set aside. The alleged
arbitration agreement in Art. 23 FSA does not extend to claims arising from the SLA [see
supra, paras. 47 et seqq.]. Therefore, Danubian courts will most likely set aside at least that
part of an award which concerns the claim under the SLA. Likewise, Mediterranean or
Equatorianean courts may refuse enforcement according to Art. V(1)(c) NYC, which is
equivalent to Art. 34(2)(a)(iii) DAL.
58 As each of these grounds alone suffices, it is almost inevitable that the potential award will be
set aside. Apart from the fact that it is not even clear whether the Parties in fact wanted to
arbitrate, the alleged arbitration clause consists of four provisions (Art. 23(3) through (6)
FSA), two of which are invalid. Contravening the very nature of arbitration and violating
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fundamental procedural rights is not a slight pathology, but a serious obstacle. It is even more
likely that the award will be unenforceable because under Art. V(1)(e) NYC enforcement may
be refused for the sole reason that the award has been set aside in Danubia.
59 With respect to these scenarios and in light of the Arbitral Tribunal’s duty under Art. 38
CEPANI Rules to make every reasonable effort to ensure that the award is enforceable at law,
RESPONDENT respectfully requests the Arbitral Tribunal not to assume jurisdiction based on
Art. 23 FSA.
II. THE ARBITRAL TRIBUNAL HAS NO JURISDICTION BASED ON SEC. 21 OF THE 2000
STANDARD TERMS
60 The Arbitral Tribunal cannot base its jurisdiction to decide on the alleged payment claims
arising from the FSA and the SLA on the arbitration clause in Sec. 21 of the 2000 Standard
Terms. On the basis of CLAIMANT’s submission that Art. 23 FSA is considered a valid
arbitration agreement [C–I–20], it would supersede Sec. 21 of the 2000 Standard Terms. In
case of conflict between an individual agreement and a standard term, the individual term
prevails according to Art. 2.1.21 UPICC. This is because specifically discussed and agreed on
provisions are more likely to reflect the true intention of the contracting parties [UNIDROIT
COMMENTARY, Art. 2.1.21, para. 1]. This is a general principle in international trade
acknowledged in numerous legal systems [VOGENAUER/KLEINHEISTERKAMP/Naudé,
Art. 2.1.21, para. 1, fn. 120]. As an individual agreement Art. 23 FSA would thus supersede
Sec. 21 of the 2000 Standard Terms so that CLAIMANT cannot rely on the latter.
61 The fact that Art. 23 FSA is not a valid arbitration agreement [see supra, paras. 8 et seqq.]
does not lead to a different result because Sec. 21 of the 2000 Standard Terms has never been
included into the FSA. Thus, it cannot serve to fill a potential gap left by the invalidity of
Art. 23 FSA. The only reason why the Parties intensively discussed and individually agreed
on Art. 23 FSA [Exh. C–3] is to use this clause in order to resolve their disputes without
relying on Sec. 21 of the 2000 Standard Terms. This can also be seen by the facts that Art. 23
FSA is more elaborate than Sec. 21 of the 2000 Standard Terms and that it reflects the Parties’
expectation of a longer-lasting business cooperation between them [C–I–9; Exh. R–2].
Already at the time of the conclusion of the FSA the Parties expressed their intention not to
implement Sec. 21 of the 2000 Standard Terms. Accordingly, the arbitration clause in the
2000 Standard Terms is not a fall-back provision in case Art. 23 FSA is invalid.
62 In addition, Sec. 21 of the 2000 Standard Terms cannot be a fall-back provision because it
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explicitly excludes any right to appeal an arbitral award. However, the appeal and review
mechanism in Art. 23(4) FSA was of utmost importance during the drafting of the FSA and
RESPONDENT would never have agreed on any arbitration agreement without such an appeal
and review mechanism [see supra, paras. 28 et seqq.; R–I–8]. This intention has remained
unchanged to the present day.
63 In conclusion, applying Sec. 21 of the 2000 Standard Terms instead of Art. 23 FSA would
contradict the Parties’ concurrent intention not to include this clause. Consequently, Sec. 21
of the 2000 Standard Terms does not give the Arbitral Tribunal jurisdiction to decide on the
alleged claims under the FSA and the SLA.
III. THE ARBITRAL TRIBUNAL HAS NO JURISDICTION BASED ON SEC. 21 OF THE 2011
STANDARD TERMS
64 The Arbitral Tribunal cannot base its jurisdiction to decide on the payment claim arising from
the SLA on Sec. 21 of the 2011 Standard Terms because the 2011 Standard Terms are not
included into the SLA. RESPONDENT agrees with CLAIMANT’s statement insofar that the
inclusion of standard terms is subject to the provisions regarding the conclusion of contracts
set forth in Artt. 14, 18 CISG. In light of these provisions, CLAIMANT’s conclusion that the
2011 Standard Terms have been incorporated into the SLA is unsustainable. This is because
RESPONDENT has never accepted their incorporation. CLAIMANT’s mere reference to the 2011
Standard Terms is not sufficient to incorporate them (A). Moreover, CLAIMANT did not make
the 2011 Standard Terms available to RESPONDENT (B) and RESPONDENT did not accept the
incorporation by later conduct (C).
A. CLAIMANT’S MERE REFERENCE IS NOT SUFFICIENT TO INCORPORATE THE 2011
STANDARD TERMS
65 CLAIMANT’s mere reference in Art. 46 SLA is not sufficient to incorporate the 2011 Standard
Terms. Its assertion that a mere reference to the standard terms is sufficient to fulfil the
prerequisites of Artt. 18 and 8(1) CISG in order to include them into a contract [C–II–
108, 109] stands in contrast to the by far prevailing view, shared by both commentators
[SCHLECHTRIEM/SCHWENZER/Schroeter(German), Art. 14, para. 40; BRUNNER, Art. 4,
para. 41; PILTZ, Business Terms p. 134; VENTSCH/KLUTH, p. 62] and courts in Germany
[BGH (2001); OLG Celle (2009); OLG Cologne (2005); OLG Düsseldorf (2003); OLG
Oldenburg (2007)], the Netherlands [Hof’s-Hertogenbosch (2002); Rechtbank
Utrecht (2009)], Austria [OGH (1996)], Italy [Tribunale di Rovereto (2007)], Canada
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[Mansonville v. Kurtz] and Switzerland [OG Bern (2008)]. They all agree that the user of
standard terms is required to present the terms to the other party at the time of the conclusion
of the contract in order to incorporate them into the contract. CLAIMANT even misconstrues
the decisions of the BGH and the OLG Naumburg [C–II–105], since both courts obligate the
offeror to send the terms to the offeree and therefore represent the prevailing view
[BGH (2001); OLG Naumburg (2013)]. This view is also supported by the CISG itself. It
follows from Artt. 15(1), 18(2) and 24 CISG that for an offer to become part of the contract it
must reach the other party [UNCITRAL/Perales Viscasillas, p. 269].
66 Here, as CLAIMANT accurately points out [C–II–122], a copy of the 2011 Standard Terms was
never sent [Exh. R–2]. Thus, the prerequisites of Artt. 18, 8(1) CISG are not fulfilled and the
2011 Standard Terms did not become part of the SLA.
B. CLAIMANT DID NOT MAKE THE 2011 STANDARD TERMS AVAILABLE TO RESPONDENT
67 CLAIMANT did not make the 2011 Standard Terms available to RESPONDENT in another way,
either. Uploading standard terms on the offeror’s website does not suffice to make them
available in cases where the contract was concluded in paper-based writing (1). Even if it
sufficed to make them available on the offeror’s website, CLAIMANT’s link did not fulfil the
requirements for such incorporation (2). Alternatively, RESPONDENT did not understand and
ought not to have understood the language in which the 2011 Standard Terms were
available (3).
1. Uploading standard terms on the offeror’s website does not suffice to make them
available when the contract was concluded in paper-based writing
68 CLAIMANT is wrong in assuming that uploading the 2011 Standard Terms to its website was
sufficient to make them available to RESPONDENT [C–II–122]. According to the BGH’s
decision cited by CLAIMANT it suffices to “make the standard terms available in another way”
[BGH (2001)]. CLAIMANT already refers to electronic communications [C–II–111], which
illustrates the key issue in the present case. Making the standard terms available for download
via a hyperlink on the offeror’s website can be sufficient if the contract itself is concluded
over the internet or by e-mail, where the hyperlink can be opened by a simple mouse click
[STAUDINGER/Magnus, Art. 14, para. 41a]. In contrast, placing a hyperlink does not suffice in
cases in which the contract is not being concluded over the internet but by other means of
communication, e. g. in paper-based writing [SCHWENZER/MOHS, p. 240; HONSELL/Dornis,
Intro to Artt. 14 – 24, para. 12; OLG Celle (2009)]. This is because otherwise the offeree
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would be burdened with the task to actively find and retrieve from different platforms the
standard terms which the offeror is trying to include into the contract. This is the very result
the ‘making available’ test has been designed to prevent [SCHLECHTRIEM/SCHWENZER/
Schroeter (German), Art. 14, para. 50; VENTSCH/KLUTH, Standard Terms, pp. 224 et seq.].
69 In the case at hand the SLA was negotiated face-to-face by the negotiating teams of both
Parties and was eventually concluded in paper-based writing [Exh. C–6]. During the
negotiations CLAIMANT placed its link to the 2011 Standard Terms in the footnote of one of
its paper-based letters to RESPONDENT [Exh. C–7]. Electronic communication, however, did
not play any role in the negotiation and conclusion of the SLA. Consequently, CLAIMANT did
not make the 2011 Standard Terms available to RESPONDENT in another way.
2. Alternatively, the requirements for internet-based incorporation are not fulfilled
70 Even if the Arbitral Tribunal should find that in principle the uploading of standard terms
suffices to make them available in cases where the contract was concluded in paper-based
writing, the specific prerequisites for internet-based incorporation are not fulfilled in the
present case.
71 A reference to terms which are available on the internet is only sufficient if two prerequisites
are fulfilled. First, the offer must allude to the exact internet-address where the applicable set
of standard terms is available. Second, the offeror must be sure that the offeree has access to
this set of standard terms [CISG–AC No. 13, para. 3.4; BRUNNER, Art. 4, para. 42].
CLAIMANT did not bring forward any arguments on this test although the burden of proof for
the accessibility lies with the party relying on the standard terms’ incorporation into the
contract [SCHLECHTRIEM/SCHWENZER/Schroeter(German), Art. 14, para. 49]. This may be
due to the fact that the requirements of the test are not met.
72 CLAIMANT’s reference in its letter to the 2011 Standard Terms did not contain a direct link to
the 2011 Standard Terms but rather a general link to the homepage of ICT [Exh. C–5]. There,
one would have to search for the applicable standard terms. This would be equivalent to an
inquiry about the whereabouts of standard terms which should not be incumbent on the
offeree [see supra, para. 68]. In fact, RESPONDENT never previously used the internet as a
means of communication and information towards CLAIMANT.
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3. In addition, RESPONDENT did not understand and ought not to have understood the
language of the 2011 Standard Terms
73 Moreover, RESPONDENT did not understand and ought not to have understood the language of
the 2011 Standard Terms. As CLAIMANT correctly states [C–II–120], standard terms must be
drafted in a language comprehensible to the offeree or its agent responsible for the contract in
order to be made available in a reasonable way, Art. 8 CISG [CISG–AC No. 13, para. 6.2;
MAGNUS, p. 324; SCHLECHTRIEM/SCHWENZER/Schroeter, Art. 14, para. 61; SCHMIDT-
KESSEL/MEYER, p. 179; OLG Düsseldorf (2004)].
74 CLAIMANT correctly exposes that at the time of contract conclusion the terms were available
on the website only in Mediterranean [C–II–113]. However, CLAIMANT wrongly argues that
RESPONDENT understood Mediterranean because a person from its negotiating team was
allegedly familiar with that language [C–II–122]. The truth is that no one of RESPONDENT’s
negotiation team was able to understand Mediterranean [Exh. R–2]. In particular, the only
person at Hope Hospital who speaks Mediterranean was not available from the time Dr Vis
first referred to the 2011 Standard Terms in Mediterranean on 4 July 2011 until the
conclusion of the contract on 20 July 2011 [Exh. R–2]. Hence, RESPONDENT did not
understand Mediterranean.
75 RESPONDENT ought not to have understood Mediterranean, either. This is because first, the
2011 Standard Terms were drafted in a language other than the language of the contract and
the contract negotiations. Second, Mediterranean is not commonly used in international
business [PO–II–36]. At last, the young doctor who was able to understand Mediterranean
was not one of RESPONDENT’s agents responsible for the contract. He was only involved at
some earlier meetings when the teams of both Parties were discussing the usability of the
proton therapy facility to his field of research [Exh. R–2]. He did not participate in any form
in the negotiations or the forming of the contract. Thus, RESPONDENT ought not to have
understood Mediterranean.
76 In essence, CLAIMANT did not make the 2011 Standard Terms available to RESPONDENT in
another way since uploading does not suffice when the contract was concluded in paper-based
writing. Even if it did, the requirements therefor are not fulfilled. In addition, RESPONDENT
neither understood nor ought to have understood the language in which the 2011 Standard
Terms were available.
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C. RESPONDENT DID NOT ACCEPT THE INCORPORATION BY LATER CONDUCT
77 CLAIMANT correctly points out that “Standard Terms cannot be validly incorporated in the
contract after the formation of the contract” [C–II–115]. To anticipate possible future
arguments taking a different view on this legal question, RESPONDENT will demonstrate that it
did not accept the 2011 Standard Terms by later conduct. Remaining silent or performing
one’s own obligations under the contract does not qualify as an acceptance of an offer to
modify the original contract [CISG–AC No. 13, paras. 4.1 et seqq.;
SCHLECHTRIEM/SCHROETER, para. 299; SCHLECHTRIEM/SCHWENZER/Schroeter(German),
Art. 14, para. 59; Chateau v. Sabaté; Cour d’appel de Paris (1995); Solae v. Hershey]. Here,
RESPONDENT merely performed its contractual obligation, i. e. paying the price as set forth in
Art. 3 SLA. Therefore, RESPONDENT’s conduct after the conclusion of the SLA gives no
indication of any assent to the 2011 Standard Terms pursuant to Art. 18(3) CISG. Thus,
RESPONDENT did not accept the incorporation of the 2011 Standard Terms by later conduct.
CONCLUSION TO PART I
78 CLAIMANT cannot force RESPONDENT to arbitrate as the Parties have not consented to this
form of dispute resolution. There is no contractual provision which contains the Parties’ valid
agreement to arbitrate the disputes arising out of the FSA and/or the SLA. In fact, Art. 23
FSA contains many methods of alternative dispute resolution, but not arbitration. This is
because the Parties deliberately excluded the finality of the potential award as the most
inherent feature of arbitration. Sec. 21 of the 2000 Standard Terms and Sec. 21 of the 2011
Standard Terms have both never been part of the Parties’ contracts. Without any basis for
arbitration, the Arbitral Tribunal is respectfully requested to dismiss CLAIMANT’s claims in its
entirety for a lack of jurisdiction.
PART II: THE TWO PRESENT CLAIMS SHOULD BE DECIDED IN TWO ARBITRAL PROCEEDINGS
79 If the Arbitral Tribunal, against RESPONDENT’s firm expectation, were to find that it has
jurisdiction over the claim arising out of the FSA and the claim arising out of the SLA, these
claims should not be heard in a single proceeding because the Parties never agreed thereon.
80 To clarify, CLAIMANT’s remarks on Art. 13 CEPANI Rules [C–II–69 et seq.] can be
disregarded because this provision is not applicable. Art. 13 CEPANI Rules states the
conditions under which the Appointments Committee or the President of CEPANI may
approve the consolidation of several arbitrations pending at CEPANI. Here, the question is
whether the two claims give rise to two arbitration proceedings at all. Art. 10 CEPANI Rules
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deals with precisely this question but not Art. 13 CEPANI Rules. According to Art. 12
CEPANI Rules, the Arbitral Tribunal alone is competent to decide on all disputes in
connection with Artt. 9 through 11 CEPANI Rules.
81 CLAIMANT asserts that the alleged legal and factual connection of the FSA and the SLA is
sufficient to hear both claims jointly in a single arbitration [C–II–65 et seqq.]. Yet it fails to
prove why the alleged legal and factual connection of the FSA and the SLA should be of any
relevance when deciding on a joinder under Art. 10 CEPANI Rules [C–II–65 et seqq.]. The
first sentence of Art. 10 CEPANI Rules, which CLAIMANT cites in this regard [C–II–65], does
not support its submission either.
82 Art. 10 CEPANI Rules merely states that claims arising out of or in connection with various
contracts may be made in a single arbitration, but only under the conditions set forth in
Art. 10(1)(a), (b) CEPANI Rules. These conditions, which CLAIMANT fails to mention, are:
First, the parties must have agreed to have recourse to arbitration under the CEPANI Rules,
Art. 10(1)(a) CEPANI Rules. Under the assumption that the Arbitral Tribunal has jurisdiction,
this is true for the case at hand. Second, the parties must have agreed to have their claims
decided in a single set of proceedings, Art. 10(1)(b) CEPANI Rules. Here, there is no such
agreement because the Parties did not expressly agree to jointly hear claims arising from the
FSA and from the SLA (I). Neither can an implied agreement be inferred from the conduct of
the Parties (II). Finally, in order to conduct efficient proceedings, such a joinder of claims
would also be unreasonable (III).
I. THE PARTIES DID NOT EXPRESSLY AGREE TO JOIN THE CLAIMS ARISING FROM THE FSA
AND FROM THE SLA
83 Neither in the FSA nor in the SLA nor in any of the alleged arbitration agreements an
agreement to join multiple claims arising from the two contracts can be found. The question
was not even mentioned in any of the correspondence between the Parties. CLAIMANT’s only
attempt to reach an agreement on joining the two claims can be seen in its Request for
Arbitration [C–I–22]. This request was clearly denied by RESPONDENT [R–I–12]. Thus, the
Parties have never agreed on joining the claims.
II. NO IMPLICIT AGREEMENT CAN BE INFERRED FROM THE PARTIES’ CONDUCT
84 No agreement to join the claims arising from the FSA and from the SLA can be inferred from
the conduct of the Parties. This is because Art. 10(3) CEPANI Rules leads to the presumption
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that the Parties did not agree to join the claims (A). Even without that presumption there are
no indicators of any implied agreement in that regard (B).
A. ART. 10(3) CEPANI RULES LEADS TO THE PRESUMPTION THAT THE PARTIES DID NOT
AGREE TO JOIN THE CLAIMS
85 Following the presumption in Art. 10(3) CEPANI Rules it must be assumed that the Parties
did not agree to join the two claims. Art. 10(3) CEPANI Rules stipulates that “[a]rbitration
agreements concerning matters that are not related to one another give rise to the
presumption that the parties have not agreed to have their claims decided in a single set of
proceedings.” CLAIMANT wrongly alleges [C–II–61 et seqq.] that only because the SLA is an
implementation contract to the FSA their matters must be related. In particular, CLAIMANT’s
allegation that only because the Parties allegedly wanted arbitration for both contracts they
wanted any and all claims to be resolved in a single arbitration [C–II–62 et seq.] is futile in
this regard.
86 In fact, the FSA and the SLA concern unrelated matters. The FSA provides for the building of
an entire new facility for proton therapy including a proton accelerator and two treatment
rooms using the passive-beam scattering technique [C–I–4], whereas the SLA mainly
establishes a development cooperation between CLAIMANT and RESPONDENT for the further
development of the active scanning software [Exh. C–6]. Pursuant to Art. 10(3) CEPANI
Rules it must be assumed that the Parties did not agree to have both claims heard in a single
arbitration.
B. IN ANY CASE THERE ARE NO INDICATORS OF ANY IMPLIED AGREEMENT
87 Even if the Arbitral Tribunal were not to follow the presumption under Art. 10(3) CEPANI
Rules, no reverse argument in favour of CLAIMANT can be drawn from this provision. This is
because Art. 10(3) CEPANI Rules does not contain the reverse presumption that arbitration
agreements concerning matters that are related give rise to a presumption that the parties have
agreed to have their claims decided in one arbitration. The negative wording makes clear that
Art. 10(3) CEPANI Rules only functions in one direction. Hence, there is no presumption in
CLAIMANT’s favour which is why it still needs to prove that the Parties at least impliedly
agreed to join the claims.
88 CLAIMANT will not be able to furnish this proof because there is no conduct of CLAIMANT
which could be interpreted as an implied offer to join the claims arising from the FSA and
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from the SLA. Accordingly, there is no conduct of RESPONDENT which from the perspective
of a reasonable third person could be interpreted as an offer or an acceptance to join the two
claims. Such agreement, in fact, does simply not exist.
III. A JOINDER OF CLAIMS WOULD BE UNREASONABLE
89 In addition to the fact that a joinder is excluded for the lack of an agreement thereon it would
be unreasonable under an efficiency point of view to hear the claims in a single arbitration.
This is because the matters in dispute are not in any way related.
90 The claim under the FSA concerns the cost-benefit analysis which CLAIMANT provided to
RESPONDENT and which was the basis for the conclusion of the FSA. The analysis predicted
that the facility would run on zero costs [R–I–21]. Yet, it was wrong because various factors
such as energy, maintenance and staff costs were not taken into account properly [Exh. C–7].
Consequently, an arbitrator with a business-administration background can deal with the
claim most efficiently and most likely without requiring costly statements from external
experts. This is not changed by the fact that unforeseen faults such as the breakdown of the
imaging software occurred after the facility was already running. The decisive factor is that
from the outset the analysis was based on far too optimistic assumptions regarding inter alia
capacity utilisation making it impossible for RESPONDENT to reach the predicted profitability
[R–I–22]. Therefore, RESPONDENT nominated Prof. Bianca Tintin, a lawyer and accountant, as
co-arbitrator for the claim under the FSA [PO–II–19].
91 In contrast, the claim under the SLA requires technical expertise. The main issue to be
determined is whether the active scanning software suffers from a technical defect; namely
the software could not be calibrated to cope with the patients’ respiratory movements
[Exh. C–7]. Consequently, an arbitrator with an adequate technical understanding or even an
engineering background is most suitable to accurately assess the claim under the SLA within
a short time. Thus, RESPONDENT appointed Christina Arrango, an engineer, to act as co-
arbitrator in the arbitration concerning the claim arising from the SLA.
92 Additionally, it is more time-efficient to conduct two separate arbitrations with two separate
arbitral tribunals as they could be conducted parallel to each other. Contrarily, in a single
arbitration the claims could only be dealt with one after the other. Time-saving effects are not
to be expected because the issues to be determined are not based on each other. Thus, joining
the claims into one proceeding is likely to take up about twice as much time until a final
decision on both claims is rendered. For the Parties in order to eventually resume their
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relationship it is, however, essential to have legal certainty about their rights and obligations
under both contracts as soon as possible.
CONCLUSION TO PART II
93 In conclusion, the claims arising from the FSA and from the SLA should not be dealt with in
a single arbitration because the essential condition for such joinder – a respective agreement
of the Parties – is clearly lacking.
PART III: THE CISG IS NOT APPLICABLE TO THE PAYMENT CLAIM UNDER THE SLA
94 The CISG is not applicable to the payment claim under the SLA because the Parties opted out
of the CISG (I). In any case, the SLA does not fall within the material scope of the CISG (II).
I. THE PARTIES OPTED OUT OF THE CISG
95 Contrary to CLAIMANT’s allegations [C–II–133] the Parties opted out of the CISG, Art. 6
CISG, because Sec. 22 of the 2000 Standard Terms, which is applicable to the SLA, favours
the national law of Mediterraneo, excluding the CISG (A). Even if the 2011 Standard Terms
were incorporated, Sec. 22 of the 2000 Standard Terms would remain applicable (B).
A. SEC. 22 OF THE 2000 STANDARD TERMS EXCLUDES THE APPLICATION OF THE CISG
96 Sec. 22 of the 2000 Standard Terms became part of the SLA – other than the arbitration
clause in Sec. 21 of the 2000 Standard Terms [see supra, paras. 60 et seqq.] – and contains an
explicit agreement of the Parties to exclude the application of the CISG. Art. 45 FSA provides
for the application of the provisions of the FSA to all future and further contracts in relation to
the Proton Therapy Facility where these contracts do not contain special provisions to the
contrary. The SLA constitutes such a future contract and neither the 2011 Standard Terms –
which were not included [see supra, paras. 64 et seqq.] – nor any other provision in the SLA
is a provision to the contrary in the sense of Art. 45 FSA. As a consequence, Sec. 22 of the
2000 Standard Terms also applies to the SLA.
97 Sec. 22 of the 2000 Standard Terms contains a choice of law agreement in favour of the
national law of Mediterraneo. Selecting the national law of a contracting state to the CISG is a
clear evidence that the parties wanted to exclude the CISG [BRUNNER, Art. 6, para. 3; Asante
v. PMC; OGH (2009); OGH (2007); OLG Linz (2006); OLG Rostock (2001); OLG Stuttgart
(2008)]. Here, by agreeing on the “national law of Mediterraneo as set out in the statutes of
Mediterraneo and developed by its courts” the Parties explicitly refer only to the non-unified
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law of Mediterraneo. Short and simple: in Sec. 22 of the 2000 Standard Terms in combination
with Art. 45 FSA the Parties chose the national law of Mediterraneo as the law applicable to
the SLA and thereby excluded the application of the CISG.
B. THE 2011 STANDARD TERMS DO NOT LEAD TO A DIFFERENT RESULT
98 Even if the 2011 Standard Terms were in general incorporated into the SLA, the CISG would
not be applicable. Sec. 22 of the 2011 Standard Terms is not a provision to the contrary of
Sec. 22 of the 2000 Standard Terms as defined by Art. 45 FSA because it does not indicate
the Parties’ will to apply the CISG to the SLA (1). Even if it did, the provision would not be
incorporated due to its surprising character (2).
1. Sec. 22 of the 2011 Standard Terms does not indicate the Parties’ will to apply the
CISG to the SLA
99 Sec. 22 of the 2011 Standard Terms does not indicate the Parties’ will to apply the CISG to
the SLA. Contrary to CLAIMANT’s submission [C–II–128], the Parties never directly referred
to the CISG as the applicable law but made a reference to the “law of Mediterraneo”
[Exh. C-9]. Selecting the law of a contracting state does not necessarily show the parties’
intention to apply the CISG to their contract [KAROLLUS, p. 38; BezG Weinfelden (1998);
Cour d’appel de Colmar (1995); KG Zug (1995); Machines Case; Streamline v. Albrecht;
Tribunale di Monza (1993)]. Specifically in opposition to the case of the Tribunal of
International Commercial Arbitration at the Russian Chamber of Commerce and Industry
(TPPRF) cited by CLAIMANT [C–II–143], many other tribunals sitting under the rules of the
TPPRF follow the aforementioned opposing view [TPPRF Cases No. 155/2004; 62/2002;
217/2001].
100 In case of doubt, preference should be given to the interpretation that the choice of the “law of
Mediterraneo” excludes the CISG. Art. 4.6 UPICC states that if a contract term supplied by
one party is unclear, an interpretation against that party is preferred. Only CLAIMANT is
responsible for the wording of its standard terms which were not further discussed between
the Parties [Exh. C-5]. Since they contain no reference to the CISG one must interpret the
unclear wording in the way that “law of Mediterraneo” means the national law of
Mediterraneo, excluding the CISG. Hence, Sec. 22 of the 2011 Standard Terms is no
provision to the contrary of Sec. 22 of the 2000 Standard Terms. As a result, Sec. 22 of the
2000 Standard Terms, which favours the application of the national law of Mediterraneo,
remains applicable by virtue of Art. 45 FSA [see supra, paras. 96 et seq.].
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2. Alternatively, Sec. 22 of the 2011 Standard Terms was surprising
101 Even if the Tribunal were to follow CLAIMANT’s line of argumentation that Sec. 22 of the
2011 Standard Terms favoured the CISG, this provision would not have been incorporated
since it constitutes a surprising clause. CLAIMANT itself correctly indicates that a party cannot
be bound by clauses which are surprising [C–II–105]. Under the CISG and the UPICC,
clauses are considered surprising if they are “of such a nature that the other party could not
reasonably have expected them” [CISG–AC No. 13, para. 7.2]. As a consequence, they do not
form part of the consensus between the parties. In determining the surprising character, regard
shall be had to the individual negotiations between the parties [SCHLECHTRIEM/
SCHWENZER/Schmidt-Kessel, Art. 8, para. 63; UNIDROIT COMMENTARY, Art. 2.1.20].
102 RESPONDENT relied on Dr Vis’ statement that there would be no major change in the
relationship between the Parties [R–I–18; Exh. R–2]. CLAIMANT wrongly alleges that the
changes in the 2011 Standard Terms were minor and did not affect the Parties’ relationship
[C–II–122]. Changing the applicable law is indeed a major change. Since that major change
was in no way indicated by CLAIMANT during the negotiations, the choice of law clause was
clearly surprising. One could even say that CLAIMANT concealed the new choice of law clause
by assuring RESPONDENT that there were no major changes. Thus, Sec. 22 of the 2011
Standard Terms is surprising and was for that reason never incorporated into the SLA.
103 As a result, Sec. 22 of the 2011 Standard Terms never became part of the SLA. Thus, Sec. 22
of the 2000 Standard Terms, which endorses the application of the national law of
Mediterraneo, remains applicable because of Art. 45 FSA [see supra, paras. 96 et seq.].
II. ALTERNATIVELY, THE SLA DOES NOT FALL WITHIN THE MATERIAL SCOPE OF THE CISG
104 Even if the Parties did not opt out of the CISG, the CISG is still not applicable to the claim
arising out of the SLA. This is because the CISG applies only “to contracts of sale of goods”,
Art. 1(1). While the CISG does not expressly define the term ‘contract of sale’, a definition
can be inferred from the parties’ different rights and obligations set forth in
Artt. 30 et seqq. CISG and Artt. 53 et seqq. CISG [UNCITRAL Digest, Art. 1, No. 3;
FERRARI, Specific Topics, pp. 50 et seq.; Tribunale di Forli (2009)]. Pursuant to these
provisions a contract of sale requires on the seller’s side the obligation to deliver the goods
and documents and to transfer the property [Tribunale di Padova (2005)]. In return, the
buyer’s obligation is the payment of the price and the acceptance of the delivery [KG
Schaffhausen (2002); Cour d’appel de Colmar (2001)].
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105 The Parties’ mutual obligations under the SLA do not correspond to that simple scheme. The
SLA concerns a complex project: the conception and setting up of a new treatment room
using the active scanning technology as well as the further development of this technology.
CLAIMANT had to supply labour for the building of the room [Exh. C–6], the installation of the
facility [PO–II–22], the instruction of RESPONDENT’s personnel [Exh. R–3] and the putting
into operation of the equipment [PO–II–22]. More importantly, CLAIMANT and RESPONDENT
were obligated to co-operate in the further development of the active scanning software with
the aim of obtaining the approval of the Medical Certification Authority after the treatment
room was in operation. This extensive development cooperation under Art. 10 SLA provides
mutual duties for both CLAIMANT and RESPONDENT in conducting the necessary clinical trials,
adapting, improving, fine-tuning and testing the active scanning software [PO–II–26; Exh.
C–4]. In a similar case concerning a contract for the planning, delivery, assembly and putting
into operation of a plant for the separation of packaging the Commercial Court Zurich held
that the CISG was not applicable since the contract did “not so much provide for an exchange
of goods against payment, but rather for a network of mutual duties to collaborate with and
assist the other party” [HG Zurich (2002)].
106 Equally in the case at hand, the CISG is not applicable because neither RESPONDENT’s (A) nor
CLAIMANT’s (B) obligation is a sales obligation under the CISG.
A. RESPONDENT’S OBLIGATION IS NOT A BUYER’S OBLIGATION UNDER THE CISG
107 RESPONDENT’s obligation does not correspond to Artt. 53 et seqq. CISG. Those provisions
require the buyer to pay the purchase price. RESPONDENT, however, never paid a ‘price’ in the
sense of Art. 53 CISG since only part of the obligation was a payment in money (1). Even if
payments which are not entirely made in money were covered by the CISG, the dominant part
of RESPONDENT’s obligation would be barter (2).
1. The CISG does not provide for a payment other than in money
108 In a contract of sale under the CISG, the performance of the buyer is nothing but to pay the
purchase price as set forth in Artt. 53 et seqq. CISG. Therefore, the CISG is only applicable to
legal transactions where goods are exchanged exclusively for money [BRUNNER, Art. 2, para.
9; SCHLECHTRIEM/BUTLER, para. 24; KG Zug (1999)]. The ULIS, the predecessor of the
CISG, covered mixed obligations which provide for both monetary payment and goods, if the
monetary part prevailed [SCHWENZER/KEE, p. 231; DIPLOMATIC CONFERENCE, Vol I: Records,
p. 32, Vol II: Documents, p. 266]. Contrary to the ULIS, the CISG does not cover mixed
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obligations. This is evidenced by the clear wording of Art. 53 CISG which obligates the buyer
to “pay the price”. Obviously, the provision does not state to ‘pay the price and deliver
something else in exchange’. Additionally, Art. 3 CISG which approves mixed obligations is
merely applicable to the seller’s obligation. This, in turn leads to the result that the CISG is
not intended to govern mixed obligations on the buyer’s side.
109 It is undisputed between the Parties that CLAIMANT’s performance was worth USD 9.5
million. It is further undisputed that RESPONDENT only ‘paid’ USD 3.5 million in money.
Remarkably, Art. 3 SLA evidences the Parties’ intention to allocate the remaining value of
USD 6 million to the medical data provided by RESPONDENT. Art. 3(1) SLA reads “[t]he
purchase price for the goods and services listed in Annex 1 is USD 3.5 million. It takes into
account the Buyer’s contribution in developing and testing the active scanning technology
including the necessary software with a value of USD 6 million” [emphasis added].
Accordingly, Art. 10(1) SLA obligates RESPONDENT “to provide CLAIMANT with the necessary
data for the fine-tuning of the active scanning technology and for testing that technology”.
110 As a consequence, RESPONDENT merely paid USD 3.5 million in money while the other USD
6 million of the price are to be paid through the delivery of medical data. To provide medical
data is clearly not ‘to pay the price’ and therefore not covered by the CISG.
2. Alternatively, the dominant part of RESPONDENT’s obligation is barter
111 Even if the CISG applied to mixed obligations on the buyer’s side, the SLA would still not
fall under the scope of the CISG. This is because the CISG is not applicable if the barter part
of the obligation dominates [KAROLLUS, p. 25; PILTZ, para. 2.25; Swiss Embassy, p. 763].
112 RESPONDENT’s supply of medical data dominates under the SLA. It was clear from the
beginning that the Parties wanted to develop the active scanning software together [Exh.
C–2]. The development cooperation was the main idea behind the SLA. Economically
spoken, CLAIMANT needed the necessary data to make the software marketable and
RESPONDENT wanted to be the first hospital with the new technology. Particularly for that
purpose, the Parties included Art. 10 SLA, the “Development Cooperation”. This result is
corroborated by the value of RESPONDENT’s obligations. In compliance with the figures
recorded in Art. 3(1) SLA, the part corresponding to medical data represents 64 % of
RESPONDENT’s obligation whereas the part corresponding to monetary payment makes up
only 36 % of RESPONDENT’s obligation.
113 Contrary to CLAIMANT’s submission [C–II–86], the market value is not relevant for the
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determination of the preponderant part of an obligation. The determination depends on the
individual contract price the parties agreed upon. This is true for two reasons. First, the
relevant price should be determined in accordance with party autonomy. The parties
themselves stipulate which price is appropriate under the circumstances. Second, the value
defined by the parties reflects the objective value. This follows from the fact that demand and
supply dictate the price in a market. The Parties agreed to the price of USD 6 million [Exh.
R–3; PO–II–27] because CLAIMANT wanted to acquire RESPONDENT’s data under all
circumstances [PO–II–27]. Without the data CLAIMANT would not have been able to finalise
the development of the software which was still in its infancy [PO–II–28].
114 To sum up, RESPONDENT’s mixed obligation, consisting of monetary payment and delivery of
medical data, renders the CISG inapplicable because the CISG does not provide for a
payment other than in money. Even if it did, the CISG would still not be applicable since
RESPONDENT’s supply of medical data outweighs its monetary payment.
B. THE PREPONDERANT PART OF CLAIMANT’S OBLIGATIONS IS NOT A SELLER’S
OBLIGATION UNDER THE CISG
115 Alternatively, the CISG is not applicable to the SLA because the preponderant part of
CLAIMANT’s obligations does not correspond to Artt. 30 et seqq. CISG. According to these
provisions, the seller must deliver the goods, hand over any documents relating to them and
transfer the property in the goods.
116 However, the CISG does not apply to contracts in which the preponderant part of the
obligations of the party who furnishes the goods consists in the supply of labour or other
services, Art. 3(2) CISG. While the CISG does not define the term ‘preponderant’, it is the
prevailing view that the test should consider economic values based on a comparison of the
parties’ obligations in light of the entire agreement [ENDERLEIN/MASKOW, Art. 3, para. 3, 5;
STAUDINGER/Magnus, Art. 3, para. 21; OLG Innsbruck (2007); OLG Munich (1999)].
Regardless of the use of percentages, the economic value factor should be supplemented by
consideration of the parties’ intentions as expressed in the contract and surrounding
circumstances [CISG–AC No. 4, para. 3.4; LG Mainz (1998); OLG Dresden (2007); OLG
Innsbruck (2007)]. When a percentage is used, it is widely acknowledged that the percentage
must amount to more than 50 % [SCHLECHTRIEM/SCHWENZER/Hachem, Art. 3, para. 20;
Tribunale di Forli (2009)]. An analysis of these factors leads to the result that the
preponderant part of CLAIMANT’s obligations is not the sale of goods.
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117 As a starting point for the analysis, the Arbitral Tribunal is invited not to base its evaluation
on CLAIMANT’s misleading calculation. CLAIMANT alleges that “the price for the hardware,
building and magnets […] is estimated at about USD 2 million” and that the price for the
licence of the software had been estimated at USD 6 million but was reduced to USD 1.5
million [C–II–86; C–II–92]. To prove this allegation, CLAIMANT refers to Art. 13(1) SLA,
which is not available in the case file [Exh. C–6]. CLAIMANT’s calculation stands in stark
contrast to the facts. CLAIMANT’s letter from 18 July 2011 reads: “[…] the services rendered
and the material delivered are worth around USD 9.5 million on the free market. Out of this,
approximately 40 % [USD 3.8 million] represents materials used, in particular the magnets,
50 % [USD 4.75 million] the development, testing and installation of the software, and the
remaining 10 % [USD 0.95 million] training personnel” [Exh. R–3]. This clearly shows that
the numbers CLAIMANT uses must be replaced by the exact price structure which CLAIMANT
itself provided to RESPONDENT during the negotiations.
118 With the correct numbers in mind, the preponderant part of CLAIMANT’s obligations does not
correspond to a sales contract under the CISG. This is because USD 5.7 million or 60 % of
the contract value reflect obligations that have no relation to a sales contract. To begin with,
the training of the personnel constitutes a service under Art. 3(2) CISG. Training of the
buyer’s staff to operate the sold equipment constitutes services in the sense of Art. 3(2) CISG
[CISG–AC No. 4, para. 3.1]. Here, the training of RESPONDENT’s employees makes up USD
950.000 or 10 % of the contract value [Exh. R–3; PO–II–2]. More importantly, the remaining
USD 4.75 million or 50 % are also not about the delivery of goods and transfer of property as
required by Art. 30 CISG. The reason for that is that CLAIMANT was obligated to grant a
licence (1). Alternatively, CLAIMANT was obligated to develop and provide to RESPONDENT
individualised software (2).
1. CLAIMANT was obligated to grant a licence
119 CLAIMANT was obligated to provide RESPONDENT with a licence for the active scanning
technology. As shown above [see supra, para. 115] one of the seller’s obligations must be to
transfer the property in the goods. A contract concerning a software transaction merely fulfils
this prerequisite if the buyer pays a one-time licencing fee – in contrast to the payment of
royalties – and acquires the perpetual use of the program in return [LARSON, p. 465;
MCGUIRE, p. 626; PRIMAK, p. 221; LG Munich I (1995)]. To determine the character of the
contract, an autonomous interpretation of the parties’ intentions according to Artt. 8,9 CISG
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must be applied supplementary [DIEDRICH, pp. 69 et seqq.].
120 In the case at hand, no perpetual licence is granted for a one-time fee. Art. 2 SLA states that
“[n]o royalties are payable […] for the life cycle of the Proton Therapy Facility,
approximately 30 years”. It follows that the relief of royalties for RESPONDENT is limited to
the life cycle of the facility, i. e. 30 years. Afterwards, or in case RESPONDENT intends to use
the software independently, it would be obligated to pay royalties for the use of the software.
This limitation, however, is the very nature of a licencing contract.
121 In addition, the intention of the Parties corroborates this outcome. Even CLAIMANT recognizes
the Parties’ intention to conclude a licencing contract as it clarifies that RESPONDENT should
acquire the license of the software [C–II–86]. Also in the pre-contractual correspondence
CLAIMANT demonstrates that RESPONDENT should be provided with “the third treatment room
using active scanning technology, including the licence for the necessary software” [Exh. C–
5, emphasis added]. In a final step, the Parties named the contract “Sales and Licensing
Agreement” [Exh. C–6, emphasis added]. While the sales part can only be associated with the
magnets, the software must occupy the licencing part. Hence, the Parties’ intention to
conclude a licencing contract is firmly anchored in the documents.
2. Alternatively, CLAIMANT was obligated to develop individualised software
122 Even if the Arbitral Tribunal were not to qualify the SLA as a licensing contract, the CISG
would not be applicable because CLAIMANT was obligated to develop individualised software.
Contracts for individualised software do not fall within the scope of the CISG [FERRARI ET
AL./Saenger, Art. 1, para. 7; MüKoHGB/Benicke, Art. 1, para. 18]. This is because the main
obligation is not the mere transfer but the development and customization of software which
qualifies them as contracts for work and services rather than contracts for sale. [FERRARI ET
AL./Saenger, Art. 1, para. 7; STAUDINGER/Magnus, Art. 1, para. 44].
123 Here, CLAIMANT itself admits that it was obligated to develop and install individualised
software [C–II–91]. The correspondence also proves this result as CLAIMANT in its letter
states that the software will be “developed particularly for your [Respondent’s] needs” [Exh.
C–5, emphasis added]. As it is therefore undisputed between the Parties that no standard
software was sold, no further argument is necessary in that regard.
124 As a matter of precaution, it should be added that this result corresponds to Art. 10(1) SLA,
which reads: “The Seller is responsible for the development of the active scanning technology
(additional parts and software)” [emphasis added]. In fact, no working version of the
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software was available at the time of contract conclusion [PO–II–24]. That is why CLAIMANT
modified, improved and fine-tuned the software for the needs of RESPONDENT after the
software was installed on the equipment [PO–II–25].
125 CLAIMANT’s argument that when a contract involves customised software “with a transfer of
physical copies to the buyer, the CISG must apply to the contract” [C–II–88] should be
disregarded. The decision of the BGH on which CLAIMANT relies does not support its
position. The case concerned payment claims in relation to a “computerized printing system
including software” [BGH (1996)]. The BGH in paragraph (2) lit. (a) merely stated that in the
particular case it could “be left open, whether the contract concluded between [seller] and the
[buyer] is a pure sales contract or a contract for the supply of goods to be manufactured or
produced.” It is the predominant opinion that only the question whether the software is
standardised or customised is relevant to determine whether the CISG is applicable
[SCHLECHTRIEM/SCHWENZER/HACHEM, Art. 1, para. 18; MüKoHGB/Benicke,
Art. 1, para. 18]. The modality of the transmission, on the other hand, can be disregarded as
to that question [MüKoHGB/Benicke, Art. 1, para. 18; SCHLECHTRIEM/SCHWENZER/HACHEM,
Art. 1, para. 18; STAUDINGER/Magnus, Art. 1, para. 44].
CONCLUSION TO PART III
126 The Arbitral Tribunal is respectfully requested to find that the SLA is not governed by the
CISG but by the national law of Mediterraneo. Contrary to its initial intentions, CLAIMANT
did not make a translated version of the 2011 Standard Terms available. RESPONDENT
therefore had every reason to rely on the 2000 Standard Terms. They are applicable to the
SLA and exclude the applicability of the CISG.
127 Moreover, the SLA does not qualify as a contract for the sale of goods under the CISG.
RESPONDENT’s primary obligation is the provision of medical data – not the payment of a
purchase price. CLAIMANT’s primary obligation is the development of individualised software
and the granting of a license thereof – not the transfer of property in goods. Consequently, the
CISG is not applicable to the SLA.
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REQUEST FOR RELIEF
RESPONDENT respectfully requests the Arbitral Tribunal:
1) To dismiss CLAIMANT’s claims in their entirety for a lack of jurisdiction;
2) Alternatively, to dismiss CLAIMANT’s claims in their entirety for being unmeritorious;
3) To order CLAIMANT to pay the costs of this arbitration.
Heidelberg, 23 January 2014
Counsel for RESPONDENT
Nina Benz Frederik Hübl
Dominik Mohr Alexander Urhahn