memorandumfor claimant china university of political... · cisgdigest uncitral digest of case law...

FIFTEENTHANNUALWILLEM C. VIS (EAST)

INTERNATIONALCOMMERCIALARBITRATIONMOOT

11March – 18March 2018

MEMORANDUM FORCLAIMANT

COUNSELS

CHANG ENNINGGU YUXINLI YANLONG LUO YINGKAILINNALV RUOYI

QIUMINGLIANGWANG JUN XIE YUTONGYAN JINYANG JIALI ZHONG JINGHUI

ON BEHALFOF: AGAINST:

Delicatesy Whole Foods Sp

39 Marie-Antoine Carême Avenue

OCEANSIDE, EQUATORIANA

Comestibles Finos Ltd

75 Martha Stewart Drive

CPAITAL CITY, MEDITERRANEO

CLAIMANT RESPONDENT

East China University of Political Science and Law

MEMORANDUM FOR CLAIMANT i

TABLE OFCONTENTS

INDEX OFAUTHORITIES......................................................................................................iv

STATUTESAND RULES................................................................................................. iv

COMMENTARY............................................................................................................... vi

CASES................................................................................................................................ x

ARBITRATIONAWARDS................................................................................................xi

CODE OF CONDUCT..................................................................................................... xii

TABLE OFABBREVIATIONS.............................................................................................. xiii

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

PART 1: THE ARBITRAL TRIBUNAL HAS NOAUTHORITY OVER THE CHALLENGE;EVEN IF SO, THE DECISION SHOULD BE MADE WITH MR. Prasad’sPARTICIPATION.......................................................................................................................3

I. The Tribunal has no authority over the challenge............................................................3

A. Art. 13(4) of UNCITRAL Rules shall apply.......................................................... 3

B. Arbitral institution and individual can act as appointing authority, which do notbreach the contract or impair RESPONDENT’s confidentiality concern...................4

C. Art. 13 (2) of Model Law is not applicable............................................................4

D. Even if Art.13 (4) of UNCITRAL Rules was excluded, the Tribunal has noauthority over the challenge........................................................................................5

II. In case the Tribunal has authority, the decision should be made with Mr. Prasad’sparticipation........................................................................................................................ 5

A. Clause 20 and Model Law require the challenge to be decided by a full Tribunalincluding Mr. Prasad................................................................................................... 6

B. Fair and efficient settlement requires the challenge to be decided with Mr. Prasad......................................................................................................................................7

PART 2: IN CASE THE ARBITRAL TRIBUNAL HAS AUTHORITY TO DECIDE ONTHE CHALLENGE, MR.PRASAD SHOULD NOT BE REMOVED FROM THEARBITRAL TRIBUNAL............................................................................................................8

I. RESPONDENT has waived its right to challenge against Mr. Prasad for latesubmission of Notice of Challenge.....................................................................................8

II. Even if not, RESPONDENT’s challenge shall be dismissed since Mr. Prasad isindependent and impartial.................................................................................................10

A. IBA Guidelines are not applicable in this present case and cannot be the legalbase of challenge.......................................................................................................11

B. Mr. Prasad has performed his disclosure obligation and CLAIMANT’s


MEMORANDUM FOR CLAIMANT ii

non-disclosure is irrelevant.......................................................................................11

C. Mr. Prasad’s previous appointments cannot justify the challenge........................13

D. The business contact between Mr. Prasad’s Law firm and CLAIMANT’s funderis not significant enough to constitute a conflict of interest..................................... 15

E. Mr. Prasad’s previous scholarly writing does not imply bias againstRESPONDENT.........................................................................................................16

PART 3: THE CLAIMANT’S STANDARD CONDITIONS SHALL GOVERN THECONTRACT............................................................................................................................. 17

Ⅰ. The CISG supports that CLAIMANT’s General Conditions of Sale shall govern thecontract after RESPONDENT’s acceptance of Sales Offer from CLAIMANT............... 17

A. The CISG governs as the only applicable law......................................................18

B. Invitation to Tender does not constitute an offer so that the content in TenderDocuments is neither binding nor unchangeable......................................................18

C. Letter of Acknowledgement is nothing but a receipt under the CISG................. 19

D. CLAIMANT made an effective offer...................................................................20

E. CLAIMANT had successfully changed the governing conditions intoCLAIMANT’s General Conditions of Sale including Business Code of Conductand Supplier Code of Conduct through its offer, which was accepted byRESPONDENT.........................................................................................................21

II. Even if CLAIMANT’s standard conditions do not govern the contract, GeneralCompact principles will guide the contract.......................................................................24

A. The parties intended to use the Global Compact principles as standard conditionsall the way up through the negotiation and contract.................................................25

B. A reasonable understanding of the contract suggests the Global Compactprinciple guide the contract.......................................................................................26

PART 4: CLAIMANT HAS NOT BREACHED ITS CONTRACTUAL OBLIGATIONS..... 27

I. CLAIMANT has fulfilled its obligations under principles C and E of RESPONDENT’sCode of Conduct............................................................................................................... 27

A. The exact wording of principle C requires CLAIMANT to merely use its besteffort..........................................................................................................................27

B. Also under principle E, CLAIMANT has fulfilled its obligation.........................28

II. CLAIMANT did not breach Article 35 of CISG..........................................................30

A. RESPONDENT bears the burden of proof on inconformity of goods.................30

B. Article 35.2 CISG is not applicable, because it only serves as default rules whenlacking expressed Article 35.1 agreement.................................................................31

C. Even if article 35.2 applies, the goods delivered by Claimant meet the standards


MEMORANDUM FOR CLAIMANT iii

within........................................................................................................................ 31

III. Respondent is not strict with ethical requirements as it claimed................................33


MEMORANDUM FOR CLAIMANT iv

INDEX OFAUTHORITIES

STATUTESAND RULES

CITEDAS DETAILS CITED IN

CISG United Nations Convention on the International

Sale of Goods

¶ ¶ 55, 59, 63,

66, 91

GA Resolution United Nations, General Assembly Resolution

40/72 (11 December 1985); General Assembly

Resolution 61/33 (4 December 2006).

¶20

Global

Compact

https://www.unglobalcompact.org/participation/join/c

ommitment ,last access time: 10/24/2017.

¶79

IBA

Guidelines

IBA Guidelines on Conflicts of Interest in

International Arbitration (23 October 2014)

¶ ¶ 41, 45,

46, 47, 50

LCIA Rules London Court of International Arbitration Rules

(2014)

¶29

Model Law UNCITRAL Model Law on International

Commercial Arbitration (1985), with amendments as

adopted in 2006

¶ ¶ 9, 18, 21,

25, 42

NY

Convention

United Nations, Convention on the recognition

and enforcement of foreign arbitral awards (1958)

¶17

https://www.unglobalcompact.org/participation/join/commitment

https://www.unglobalcompact.org/participation/join/commitment


MEMORANDUM FOR CLAIMANT v

SIAC Rules Singapore International Arbitration Centre Rules

(2013)

¶29

UNIDROIT

Principles

UNIDROIT Principles for International

Commercial Contracts (2010)

¶55

UNCITRAL

Rules

Arbitration Rules of United Nations Commission on

International Trade Law, 2010

¶ ¶ 2, 6, 11,

20, 21, 25,

29, 33, 35,

39, 42


MEMORANDUM FOR CLAIMANT vi

COMMENTARY


Born Born, Gary, International Commercial Arbitration,

Kluwer Law International (2nd ed. 2014).

¶ ¶ 7, 16, 23,

26, 29, 37,

40, 43, 52

Caplan

Commentary

Caplan, Lee, The UNCITRAL Arbitration Rules

Commentary , Oxford University Press (2nd ed. 2013)

¶22

CISG Advisory

Op.No.3

“CISG-AC Opinion no 3, Parol Evidence Rule, Plain

Meaning Rule, Contractual Merger Clause and the

CISG.” (2004)

¶¶59, 90

CISG Advisory

Op.No.13

CISGAdvisory Council Opinion No. 13

Inclusion of Standard Terms under the CISG

¶¶65, 67

CISG Digest UNCITRAL Digest of Case Law on the United

Nations on Contracts for the International Sale of

Goods, 2016 Edition

¶¶55, 63

Daele Daele, Karel, Challenge and Disqualification of

Arbitrators in International Arbitration, Kluwer Law

International (2012).

¶¶28, 35

DiMatteo International Sales Law- a Global Challenge. Larry

DiMatteo, Cambridge Press (2014)

¶¶64, 68, 95


MEMORANDUM FOR CLAIMANT vii

Fouchard et al Fouchard et al, Fouchard, Gaillard, Goldmanon

International Commercial Arbitration, Kluwer Law


¶16

Goeler Goeler, Jonas, Third-Party Funding in International

Arbitration and its Impact on Procedure, Kluwer Law


¶¶29, 37, 48

Guide to

Model Law

Howard M. Holtzmann and Joseph E. Neuhaus, A

Guide to the UNCITRAL Model Law on

International Commercial Arbitration: Legislative

History and Commentary, Kluwer Law

International 1989, pp. 406 – 436.

¶¶18, 23

International

Commerce and

Arbitration

Current Issues in the CISG and Arbitration,

International Commerce and Arbitration, Vol. 15,

International Publishing, edited by Ingeborg

Schwenzer

¶55

Koh Will Sheng Wilson Koh, Think Quality Not Quantity:

Repeat

Appointments and Arbitrator Challenges', in Maxi

Scherer (ed), Journal of International Arbitration, (©

Kluwer Law International; Kluwer Law International

2017, Volume 34 Issue 4)

¶43


MEMORANDUM FOR CLAIMANT viii

Lookofsky

2000

Lookofsky, Joseph “The 1980 United Nations

Convention on Contracts for the International Sale of

Goods.” (2000) ¶ 84

¶71

Luttrell Sam Luttrell, “Bias in International Commercial

Arbitration: The Need for a ‘Real Danger’ Test”,

International Arbitration Law Library, Volume 20,

Kluwer Law International 2009.

¶43

Model Law

Digest

UNCITRAL, Digest of Case Law on the Model Law

on International Commercial Arbitration (2012),

¶¶8, 12, 15

Moses Moses, Margaret, The Principles and Practice of

International Commercial Arbitration, Cambridge

University Press (2008).

¶31

Practitioner’s

Guide

Camilla Anderson, Francesco Mazzotta, and Bruno

Zeller, A Practitioner’s Guide to the CISG (Juris,

2010), 199.

¶55


MEMORANDUM FOR CLAIMANT ix

Redfern and

Hunter

Redfern, Alan; Hunter, Martin et al., Redfern and

Hunter on International Arbitration, Kluwer Law

International (6th ed. 2015)

¶29

Schlechtriem

& Schwenzer

Schlechtriem & Schwenzer: Commentary on the UN

Convention on the International Sale of Goods

(CISG), (3th Ed. 2010)

¶¶65, 67, 78

Vindobona

Journal

Peter Huber, “Standar Terms under the CISG”, 13 13

Vindobona Journal of International Commercial Law

&Arbitration (1/2009) 123, 127

¶65


MEMORANDUM FOR CLAIMANT x

CASES


CLOUT

Case 1178

CLOUT Case 1178, Denmark: Danish High Court, 21st

Chamber Eastern Division, no. B-1752-08 (27 November

2008)

¶49

CLOUT

case No.

877

CLOUT case No. 877 [Bundesgericht, Switzerland, 22

December 2000]

¶90

Dealer

Computer

Dealer Computer Serv., Inc. v. Michael Motor Co.,

485 F. Appx, 724, 728 (5th Cir. 2012)

¶26

Fabric case 1 Germany 20 April 2006 District Court

Aschaffenburg (Cotton twilled fabric case)

¶99

Germen

Machinery

Case

Germany, October 31, 2001, Supreme Court

(Machinery case)

¶65

Golden Valley

Case

Golden Valley Grape Juice and Wine, LLC v.

Centrisys Corporation et al. (E.D.Cal, No. CV F

09-1424 LJO GSA, Januray 22, 2010 (9th Cir. 2010)

¶68

Lagstein Lagstein v. Certain Underwriters at Lioyd’s, London,

607 F.3d 634, 646 (9th Cir. 2010)

¶28


MEMORANDUM FOR CLAIMANT xi

ARBITRATIONAWARDS


Alpha

Projektholding

Alpha Projektholding GMBH v. Ukraine, ICSID

Case No. ARB/07/16

¶28

AWG AWG Group v. The Argentine Republic, Decision

on the Proposal for the Disqualification of a

Member of the Arbitral Tribunal (October 22,

2007);

AWG Group Limited v. The Argentine Republic,

Decision on a Second Proposal for the

Disqualification of a Member of the Arbitral

Tribunal (May 12, 2008).

¶16

Gabonese Participaciones Inversiones Portuarias SARL v.

Gabonese Republic, ICSID Case No. ARB/08/17,

Decision on Proposal for Disqualification of an

Arbitrator (12 Nov. 2009).

¶31

Saipem Saipem S.p.A. v. People's Republic of Bangladesh,

ICSID Case No. ARB/05/7, Decision on Jurisdiction

and Recommendation on Provisional Measures

(March 21, 2007).

¶50


MEMORANDUM FOR CLAIMANT xii

CODE OF CONDUCT


Hershey https://www.thehersheycompany.com/content/dam/c

orporate-us/documents/partners-and-suppliers/suppl

ier-code-of-conduct.pdf

¶97

Mars http://www.mars.com/global/about-us/policies-and-

practices/supplier-code-of-conduct

¶97

Cargill Cargill,

https://www.cargill.com/about/supplier-code-of-con

duct

¶97


MEMORANDUM FOR CLAIMANT xiii

TABLE OFABBREVIATIONS

Art. Article

Arb. Arbitration

CISG United Nations Convention on Contracts for the International Sale ofGoods

Cl. Claim(ant)

Ex. Exhibit

ICC International Centre for Settlement of Investment Disputes

Notc. Notice

No(s). Number(s)

Ord. Order

Proc. Procedural

Pres. President

Resp. Respondent

Resps. Response

UNCITRAL United Nations Commission on International Trade Law

UNIDROIT International Institute for the Unification of Private Law


MEMORANDUM FOR CLAIMANT1

STATEMENT OF FACTS

1. Delicatesy Whole Foods Sp (“CLAIMANT”) is a medium sized manufacturer of fine

bakery products registered in Equatoriana. Comestibles Finos Ltd (“RESPONDENT”) is

a gourmet supermarket chain in Mediterraneo. In March 2014, CLAIMANT met the

RESPONDENT at the yearly Danubian food fair Cucina where they discussed about

product choices, delivery quantities and their commitment to environmental sustainability

and ethical business conduct.

2. On 10 March 2014 after the food fair, CLAIMANT received from Respondent an

Invitation to Tender for the delivery of chocolate cakes attached with Tender Documents.

Seven days later on 17 March 2014, CLAIMANT sent the requested Letter of

Acknowledgement to Respondent to notice its receipt of Invitation to Tender and

demonstrate its intention to bid.

3. On 27 March 2014, CLAIMANT submitted its tender where CLAIMANT changed the

specifications for the chocolate cakes and the payment conditions. Besides, CLAIMANT

made clear that its offer would be subject to its own General Conditions of Sale set out in

its Code of Conduct rather than RESPONDENT’s General Conditions and made the

documentation of Code of Conduct available to RESPONDENT.

4. Notwithstanding the changes in Sales Offer to the conditions set out in Invitation to

Tender, RESPONDENT explicitly accepted the changed specifications for the chocolate

cakes and the changed payment conditions by letter of 7 April 2014. With respect to the

application of CLAIMANT ’s General Conditions stipulated in CLAIMANT’s Code of

Conduct, RESPONDENT downloaded the documentation and spoke highly of

CLAIMANT’s Code of Conduct without any objection to the inclusion of Claimant’s

standard conditions.

5. In accordance with the contract, the CLAIMANT made its first delivery on 1 May 2014.

There were no problems concerning the deliveries in 2014, 2015 and 2016 until 27

January 2017, all of a sudden, RESPONDENT demanded that CLAIMANT confirmed by



the next business day that CLAIMANT’s suppliers all strictly adhered to Global Compact

principles and threatened to terminate the contract should such a confirmation not be

forthcoming. In addition, RESPONDENT unilaterally announced to stop further

payments and reject deliveries. Despite great shock with the tone and content of the email

from RESPONDENT, CLAIMANT replied immediately and promised to investigate the

issue further.

6. Unfortunately, during further investigations it turned out that Claimant’s supplier, the

Ruritania Peoples Cocoa mbH had provided CLAIMANT with forged official papers

certifying its production of cocoa is environmentally sustainable while part of the beans

came from farms illegally set up in protected areas.

7. With email of 10 February 2017 CLAIMANT directly informed RESPONDENT of its

discovery. Though CLAIMANT’s own supplier’s fraud was beyond CLAIMANT’s

control and CLAIMANT had exerted its best effort to ensure full application of ethical

standards and comply with the unspecific contractual obligation, as a gesture of good will,

it was willing to take back the cakes delivered and not yet sold and to discuss with

RESPONDENT a financial contribution to possible losses. However, RESPONDENT

flatly rejected such an offer, purportedly terminated the contract and threatened to bring

an action for damages.

8. Confirming the failed negotiations on 30 June 2017, CLAIMANT notified Respondent

that it would initiate arbitration proceedings conducted in Vindobona, Danubia under the

UNCITRAL Arbitration Rules without the involvement of any arbitral institution as

agreed in Clause 20 of the contract to resolve the conflict.



PART 1: THE ARBITRAL TRIBUNAL HAS NO AUTHORITY OVER THE

CHALLENGE; EVEN IF SO, THE DECISION SHOULD BE MADE WITH MR.

Prasad’s PARTICIPATION.

1. RESPONDENT asserts that the challenge against Mr. Prasad should be decided by the

Tribunal without his participation, which is not the case. First, the Tribunal has no

authority over the challenge (I). Second, in case the Tribunal has authority, the decision

should be made with Mr. Prasad’s participation. (II).

I. The Tribunal has no authority over the challenge.

2. Tribunal’s authority over the challenge stems directly from the parties’ consent and

arbitration rules. However, Clause 20 in the contract and Art.13 (4) of UNCITRAL Rules

authorize appointing authority to decide on the challenge rather than the Tribunal [Art.

13(4), UNCITRAL Rules]. First, Art. 13(4) UNCITRAL Rules shall apply (A). Thus,

arbitral institution and individual can act as appointing authority, which do not breach the

contract or impair RESPONDENT’s confidentiality concern (B). Therefore, Art.13 (2) of

Model Law is not applicable (C).Alternatively, even if Art.13 (4) of UNCITRAL Rules

was excluded,, the Tribunal has no authority over the challenge. (D).

A. Art. 13(4) of UNCITRALRules shall apply.

3. Respondent claims that Art. 13(4) UNCITRAL Rules shall be excluded [Notice of

challenge]. However, parties never excluded the application of Article 13(4) UNCITRAL

Rules either expressly or impliedly.

4. Clause 20 does not exclude the Art. 13(4) of UNCITRAL Rules. The wording in dispute,

“without involvement of any arbitral institution”, is not equal to exclusion of Art.13 (4)

of UNCITRAL Rules. Such statement is only a clarification of the nature of the

Arbitration, i.e. ad hoc arbitration. The claim rests on two facts. First, RESPONDENT’s

intention is to equate “without the involvement of any arbitral institution” with

“excluding institutional arbitration” and RESPONDENT was concerned with problems

relating to the composition of arbitral tribunals [Cl. Ex. 1]. Second, CLAIMANT

confirmed that the provision was only relevant for the appointment of arbitrators [Letter



Fasttrack]. Therefore, it apparently means the ad hoc arbitration.

5. Further, the negotiation between the Parties did not exhibit an intention to exclude Art.13

(4) of UNCITRAL Rules. Mr. Tsai only told bad experience about the appointment of

presiding arbitrator and never mentioned exclusion of appointing authority in the

challenge procedure. [Resp. Ex. 5]

B. Arbitral institution and individual can act as appointing authority, which do not

breach the contract or impair RESPONDENT’s confidentiality concern.

6. Art.13 (4) of UNCITRAL Rules should be followed, which provides that the challenging

party shall seek a decision by appointing authority [Art.13 (4) of UNCITRAL Rules].

Further, pursuant to Ar.6 of UNCITRAL Rules, party can name Arbitral institution and

individual as appointing authority [Art.6 of UNCITRAL Rules].

7. For arbitral institution, as illustrated above, Clause 20 does not indicate exclusion of

arbitral institutions in the challenge procedure. Therefore, the authorization of arbitral

institution shall not breach the contract. For individual person, it is possible to choose

appointing authorities other than one of the leading arbitral institutions. For example, the

parties can agree on a designated individual or a designated office-holder to act as

appointing authority [Born].

8. Furthermore, RESPONDENT’s requirement of confidentiality will not be impaired.

CLAIMANT proposes two possible choices of appointing authority, the presiding

arbitrator and the Secretary-General of the Permanent Court of Arbitration. First, the

presiding arbitrator has already engaged in the present proceeding and accessed relevant

material therefore the risks of information leakage will not increase. Second, as an

appointing authority, the Secretary-General of the Permanent Court of Arbitration at The

Hague has generally discharged his responsibilities well [Model Law Digest].

C. Art. 13 (2) of Model Law is not applicable.

9. Under Art. 13(2) Model Law, unless the parties had failed to agree on a procedure for

challenging an arbitrator, the arbitral tribunal shall decide on the challenge [Art. 13(2),

Model Law]. But in the present arbitration, the Parties had already agreed on the

application of Art.13 (4) of UNCITRAL Rules which provides a procedure for



challenging an arbitrator. Thus, Art. 13(2) of Model Law is not applicable.

D. Even if Art.13 (4) of UNCITRAL Rules was excluded, the Tribunal has no authority

over the challenge.

10. In terms of the challenge procedure, RESPONDENT insists on exclusion of Art.13 (4)

UNCITRAL Rules for unjust reasons while CLAIMANT requests for the application

with rational cause. The current dilemma will cause unnecessary delay and expense,

which should be avoided.

11. For the sake of the arbitral proceedings, there are two possible choices to deal with this

dilemma: the presiding arbitrator and the national court. The presiding arbitrator may

decide the case of questions of procedure pursuant to Art. 33 (2) UNCITRAL Rules, and

that will be a good choice to settle this challenge and keep the confidentiality [Art.33 (2)

of UNCITRAL Rules].

12. Another option is the national court. The travaux préparatoires show that despite a

suggestion to exclude the intervention of courts or other competent authorities relating to

challenges on the ground that it could open the door to dilatory tactics, it was ultimately

decided that such intervention was necessary to avoid unnecessary waste of time and

delay [Model Law Digest].In other jurisdictions, arbitration legislation generally permits

interlocutory judicial removal of arbitrators sitting in an international arbitration located

within national territory, but only if the parties have not agreed to any institutional (or

other) challenge mechanism [Born].

13. Therefore, in case RESPONDENT intends to derail the proceedings and the parties

cannot agree upon other procedures, the court could be a proper solution which can well

discharge the responsibilities under strict professional ethics and satisfy

RESPONDENT’s requirement of confidentiality.

II. In case the Tribunal has authority, the decision should be made with Mr. Prasad’s

participation.

14. RESPONDENT’s claim that the drafter intention of Art. 13(4) UNCITRAL Rules leaves

the challenge to be decided by Tribunal without Mr. Prasad [Notice of challeng] is



inadmissible since Clause 20 and Model Law require the challenge to be decided by a full

Tribunal including Mr. Prasad (A). Further, fair and equal treatment principle requires the

challenge to be decided with Mr. Prasad (B).

A. Clause 20 and Model Law require the challenge to be decided by a full Tribunal

including Mr. Prasad.

15. Parties’ autonomy is the one of the philosophical cornerstone of Model Law [Model Law

Digest]. Clause 20 requires the challenge to be decided by a three-arbitrator Tribunal (1).

Further, Model Law requires the Mr. Prasad to be included in the challenge decision (2).

(1) Clause 20 requires the challenge to be decided by a three-arbitrator Tribunal.

16. The constitution of the Arbitral Tribunal in ad hoc arbitration is the exclusive domain of

the parties [Fouchard et al]. CLAIMANT and RESPONDENT have agreed in Clause 20

that the number of arbitrator shall be three [Notice of Arbitration]. Since UNCITRAL

Rules do not allow truncated Tribunal to proceed [Born], entrusting the challenge

decision to the remaining two arbitrators requires parties further consent [AWG].

Provided that parties have never agreed on a two-arbitrator Tribunal, the challenge shall

be decided by a three-arbitrator Tribunal as Clause 20 requires.

17. Further, since CLAIMANT and RESPONDENT have their places of business in

Equatoriana and Mediterraneo respectively [Notice of Arbitration], and both states along

with Danubia, the seat of arbitration, are Contracting States of New York Convention [¶

47, PO2]. The challenge decided by a truncated Tribunal without parties’ consent is one

of the reasons for refusal of recognition and enforcement of an award under Art. V (1) (d)

of New York Convention [NY Convention; Bundesgerichtsh].

(2) Art.13 (2) of Model Law requires Mr. Prasad to be included in the challenge

decision.

18. In case the Tribunal decided that Parties fail to agree on a procedure for challenge, Art.13

(2) of Model Law shall apply [Art. 13, Model Law]. The plain reading of Art. 13(2)

Model Law implies that the challenge shall be decided by the full Tribunal including the



challenged arbitrator. Such interpretation is confirmed by Commission Report released by

UNCITRAL, where the drafters expressly require the challenge to be decided by the full

Tribunal including the challenged arbitrator [Guide to Model Law].

19. It is noteworthy that drafters’ intention to include the challenged arbitrator in the decision

remains, since Art. 13 Model Law is not modified in 2006, which indicates that such

value is still appreciated in 2006 version that the challenged arbitrator shall participate in

the decision of his own challenge.

B. Fair and efficient settlement requires the challenge to be decided with Mr. Prasad.

20. Drafters of Model Law and UNCITRAL Rules intend to provide a fair and efficient

dispute settlement [GA Resolution; Art. 17(1), UNCITRAL Rules]. Frist, excluding Mr.

Prasad will prejudice the Parties’ right to procedure fairness (1). Second, for the

efficiency of the arbitral proceedings, Mr. Prasad shall be included (2).

(1) Excluding Mr. Prasad will prejudice the Parties’ right to procedure fairness

21. For CLAIMANT, Art.18 of Model Law provides that parties shall have equal and full

opportunity to present its case [Art.18, Model Law]. Clause 20 and Art.9 (1) of

UNCITRAL Rules entitle each party to have its party-appointed arbitrator present in the

arbitration [Notice of Arbitration; Art.9 (1), UNCITRAL Rules]. Excluding Mr. Prasad

and leaving the challenge decision to the remaining two arbitrators will deprive

CLAIMANT of the right to have its party-appointed arbitrator present in the challenge

procedure, which will further impair CLAIMANT’s right to have full and equal

opportunity to present its case as required under Art. 18 of Model Law.

22. For RESPONDENT, Mr. Prasad’s refusal to resign [Prasad Refusal] shall be interpreted

as self-assurance of his impartiality and independence rather than as any possibility that

he would vote partially in his own challenge. Should Mr. Prasad have any fear that his

participation will impair the integrity of the Tribunal, he would have withdrawn since Art.

13(3) of UNCITRAL Rules can remove any implication of dishonor from his voluntary

withdrawal. [Caplan Commentary]. Moreover, in practice, the participation of the



challenged arbitrator in his own challenge is not problematic as long as an informed

reasonable third person would not conclude that there was a real possibility that the

arbitrator would vote in bias.

(2) For the efficiency of the arbitral proceedings, Mr. Prasad shall be included.

23. Drafters of Model Law adopt the system provided in Art. 13 since “it struck an

appropriate balance between the need for preventing obstruction or dilatory tactics and

the desire of avoiding unnecessary waste of time and money” [Guide to Model Law].

Entrusting the decision to the remaining two arbitrators will impair the efficiency of the

arbitral proceedings. As Scholar Gary B. Born note, “An even number of arbitrators is a

recipe for deadlock and uncertainty” [Born]. Thus if RESPONDENT’s claim of having

two remaining arbitrator to decide the challenge was to be followed, the arbitral

proceeding will be derailed.

PART 2: IN CASE THE ARBITRAL TRIBUNAL HAS AUTHORITY TO DECIDE ON

THE CHALLENGE, MR.PRASAD SHOULD NOT BE REMOVED FROM THE

ARBITRALTRIBUNAL.

24. RESPONDENT’s assertion that Mr. Prasad should be removed from the Tribunal shall be

dismissed for late objection and groundless allegations. First, RESPONDENT has waived

its right to challenge against Mr. Prasad for late submission of Notice of Challenge (I).

Second, even if not, RESPONDENT’s challenge shall be dismissed since Mr. Prasad is

independent and impartial (II).

I. RESPONDENT has waived its right to challenge against Mr. Prasad for late

submission of Notice of Challenge.

25. Art. 13(1) of UNCITRAL Rules provides that the challenging party shall sent the notice

of challenge within 15 days after knowing the circumstances giving rise to justifiable

doubts as to arbitrator’s independence and impartiality [Art. 13(1), UNCITRAL Rules].

However, RESPONDENT sent its Notice of challenge on 14 September 2017 when the

15-day limit has expired [Notice of Arbitrator]. Thus pursuant to Art. 4 of Model Law,



RESPONDENT shall be deemed to have waived its right to object since it knows

non-compliance “yet proceeds with the arbitration without stating its objection…or, if a

time-limit is provided thereof, within such a period” [Art.4, Model Law].

26. First, Mr. Prasad’s relationship with CLAIMANT and the funder is barred to be invoked.

For challenge based on circumstances that became known to the challenging party after

the appointment of the challenged arbitrator, the starting point is when the challenging

party becomes aware of the constructive knowledge, without the requirement of actual

knowledge or proof of a certainty or likelihood of partiality and dependence [Born]. As

adopted in Dealer Computer, US 5th Circuit Court held that “a waiver of objections to an

arbitrator’s independence and impartiality will occur where a party had only constructive

knowledge” [Dealer Computer]. REESPONDENT knew the annotation on 27 August

2017[ ¶ 11, PO2]. In other words, RESPONDENT became aware of the constructive

knowledge about the relationship on 27 August 2017 but failed to raise objection within

15 days. Therefore, RESPONDENT shall not raise the challenge based on the

relationship.

27. Second, two appointments by Mr. Fasttrack’s law firm and commercial relationship are

barred to invoke. Mr. Prasad made the reservation about his colleague’s future business

matter with the Parties to the arbitration or related companies and two appointments by

Mr. Fasttrack’s law firm in his declaration [Prasad’s Declaration]. For these two factors,

RESPONDENT stated that it “has no objection to the appointment of Mr. Rodrigo Prasad

despite the restrictions in his declaration of independence” [Response to the Notice].

Therefore, RESPONDENT shall not raise the challenge based on the two appointments

and commercial relationship.

28. Third, Mr. Prasad’s previous publication of previous academic views is barred to be

invoked. In Lagstein, New York Court of Appeals held that the party may not later claim

bias based upon the failure to investigate, which can result in wavier of the right to object

and declined “to create a rule that encourages losing parties to challenge arbitrations

awards on the basis of preexisting, publicly available background information on the

arbitrators that has nothing to do with the parties to the arbitration” [Lagstein]. Similar, in



Alpha, the deciding co-arbitrator found the challenge based on already publicized

information belated, “it is standard practice to perform some investigation into the

background and connections of an opposing party and its counsel in the early stages of an

international arbitration.” [Alpha Projektholding]. However, before submitting its

Response, RESPONDENT visited Mr. Prasad’s website where the article was available

but did not look at the publications [¶14, PO2]. Due to the failure to perform reasonable

inquiry, the information which should have been discovered earlier cannot be a ground of

challenge with undue delay [Daele]. Therefore, RESPONDENT shall not raise the

challenge based on Mr. Prasad’s previous academic views.

II. Even if not, RESPONDENT’s challenge shall be dismissed since Mr. Prasad is

independent and impartial

29. It is stipulated in UNCITRAL Rules [Art. 12.1, UNCITRAL Rules] and other numerous

arbitral rules [Art. 13, SIAC Rules; Art. 10(3) LCIA Rules] that an arbitrator may be

disqualified when circumstances exist that give rise to justifiable doubts as to the

arbitrator’s impartiality or independence. Independence means that there are no

unacceptable external relationships between arbitrators and parties, while independence

means that arbitrator is subjectively unbiased and not predisposed towards one party

[Born; Goeler; Redfern and Hunter].

30. The challenge against Mr. Prasad is not tenable under UNCITRAL Rules. In this present

case, RESPONDENT’s request for Mr. Prasad’s removal is based on four grounds:

non-disclosure of the funding relationship between CLAMANT and Funding 12, the

repeated appointments of Mr. Prasad made by Mr. Fasttrack’s law firm and the funder’s

subsidiary, the significant commercial relationship between Mr. Prasad’s law firm and the

CLAIMANT and Mr. Prasad’s previous article. However, these grounds are not tenable.

First, the IBA Guidelines used by the RESPONDENT are not applicable in this present

case and cannot be the legal base of challenge (A). Second, Mr. Prasad has performed his

disclosure obligation and CLAIMANT’s non-disclosure is irrelevant (B).Third, Mr.

Prasad’s previous appointments cannot justify the challenge (C). Fourth, the business



contact between Mr. Prasad’s Law firm and CLAIMANT’s funder is not significant

enough to constitute a conflict of interest (D). Finally, Mr. Prasad’s previous scholarly

writing does not imply bias against RESPONDENT (E).

A. IBA Guidelines are not applicable in this present case and cannot be the legal base of

challenge.

31. First, IBA Rules shall not apply due to absence of agreement in the choice of rule in the

Arbitration Agreement. The choice of the arbitration rules represents the agreement of the

parties as to how the proceedings should be conducted [Moses] and in present case, the

only chosen arbitration rule is UNCITRAL Rules. Besides, tribunals in several cases

decided that IBA Guidelines cannot be the legal basis on which the decision is based

[Urbaser], pointing out that IBA Guidelines are not law and have indicative value only

[Gabonese; SLU] and the tribunal must ultimately apply the legal standard laid down in

the chosen rules [Tidewater]. The IBA Rules thus cannot empower the Tribunal to

disqualify Mr. Prasad.

B. Mr. Prasad has performed his disclosure obligation and CLAIMANT’s non-disclosure

is irrelevant.

32. RESPONDANT holds that Mr. Prasad and CLAIMANT non-performance of disclosure

obligation constitute a ground for Mr. Prasad’s disqualification. However, Mr. Prasad has

disclosed all the required information properly (1) and CLAIMANT’s conduct of

nondisclosure shall not be taken into account in deciding Mr. Prasad’s recusal (2).

(1) Mr. Prasad has disclosed all the required information properly.

33. Art.11 of UNCITRAL Rules has outlined the standard of disclosure obligation of an

arbitrator. First, a pre-arbitrator “shall disclose any circumstances likely to give rise to

justifiable doubts as to his or her impartiality or independence”. Second, an arbitrator

should ‘disclose any such circumstances’ during the whole arbitral proceedings [Art.11,

UNCITRAL Rules]. In this case, Mr. Prasad has fulfilled his disclosure obligation before

his appointment and throughout the whole proceeding (a). Moreover, Mr. Prasad does not



bear the duty of investigating the allegedly problematic circumstances (b).

(a) Mr. Prasad has fulfilled his disclosure obligation before the appointment and

throughout the whole proceeding.

34.Upon being approached in connection with his possible appointment, Mr. Prasad

disclosed circumstances giving rise to justifiable doubts based on information available to

him at that time in the Declaration of Independence and Impartiality, inter alia, two

previous appointments by Mr. Fasttrack’s law firm and reservation about his colleague’s

future instructions from the Parties and related companies.

35. As for disclosure throughout the proceeding, it requires “past and present professional,

business and other relationships with the parties” and “any other relevant circumstances”

as required [Annex, UNCITRAL Rules]. However, Mr. Prasad acquired the identity of the

funder only on 7 September 2017, which led to “other relationships with the parties”.

Based on this newly-acquired knowledge, Mr. Prasad disclosed his connections with the

funder on 11 September despite these circumstances cannot establish justifiable doubts.

Although UNCITRAL Rules and Model Law are silent on the time limit to disclose, the

4-day gap should be considered as reasonable. This argument can be sustained by Daele’s

research, ‘in all the cases that the author has reviewed, the arbitrator's disclosure was

made within one or two weeks after being appointed’ [Daele].

(b) Mr. Prasad does not bear the duty of investigating the allegedly problematic

circumstances.

36. The reason for non-disclosure of other allegedly problematic circumstances, inter alia,

two appointments by Findfunds LP’s other subsidiaries and commercial relationship with

Funding 8, is that Mr. Prasad did not know the existence of third-party funder until

CLAIMANT disclosed. RESPONDENT also understood “Mr. Prasad had no involvement

in this plot and was probably unaware that CLAIMANT had received funding from a

third-party” [Notice of Challenge].

37.Further, neither UNCITRAL Rules nor Model Law requires an arbitrator to investigate or



inquire potential conflicts of interests. According to Scholar Born, “these provisions are

limited to the arbitrators’ obligations of independence and impartiality, disclosure and

procedural fairness during the course of the arbitration” [Born]. And as Jonas von Goeler

notes, “Whether arbitrators can be reproached for not having investigated ties with

third-party funders should remain a fact-specific decision made on a case by case basis”

[Goeler].

(2) CLAIMANT’s non-disclosure shall not be taken into account in deciding Mr.

Prasad’s recusal.

38. RESPONDENT bases the challenge on CLAIMANT’s failure to disclose the third-party

funder, but such ground is not tenable. CLAIMANT has no mandatory disclosure

obligation (a). Even if so, the failure to disclose does not automatically lead to Mr.

Prasad’s disqualification (b).

(a) CLAIMANT has no mandatory disclosure obligation.

39. First, Art.11 of UNCITRAL Rules only stipulates arbitrator’s disclosure obligation [Art.11,

UNCITRAL Rules]. Second, as illustrated in paragraph 31, the IBA Guidelines shall not

apply due to absence of agreement. Therefore, CLAIMANT has no mandatory disclosure

obligation under UNCITRAL Rules and IBA Guidelines.

(b) Even if so, the failure to disclose does not automatically lead to Mr. Prasad’s

disqualification.

40.Nondisclosure cannot by itself make an arbitrator partial or dependent but only when the

facts or circumstances that he or she failed to disclose show an objective likelihood the

arbitrator might be biased due to such factors will the arbitrator be removed [Born].

However, Mr. Prasad is not biased in the cases herein.

C. Mr. Prasad’s previous appointments cannot justify the challenge.

41. RESPONDANT submits that the appointments made by Mr. Fasttrack’s law firm and

funder’s subsidiary are solid grounds for challenge under IBA Guidelines [Paras. 3.1.3

and 3.3.8, IBA Guidelines]. However, these appointments cannot justify a challenge since



repeated appointments themselves are not proof of partiality which can raise justifiable

doubts as to Mr. Prasad’s independence and impartiality (1) and even if IBA Guidelines

were applicable, these appointments do not fall into the orange list (2).

(1) Repeated appointments themselves are not proof of partiality which can raise

justifiable doubts as to Mr. Prasad’s independence and impartiality.

42. Both UNCITRAL Rules [Art.12 (1), UNCITRAL Rules] and Model Law [Art.12 (2),

Model Law] have required a justifiable doubt standard for challenge. Under UNICITRAL

Rules, doubts are justifiable if they give rise to an apprehension of bias that is, to the

objective observer, reasonable [Vito Gallo]. Whether repeated appointments may impugn

the arbitrator’s qualification is a matter of substance rather than mathematical calculation

on the number of appointments. Therefore, merely challenging Mr. Prasad on the basis of

number of appointments is not tenable, and sound evidence of likelihood of bias to a

reasonable third person resulting from these appointments shall be raised.

43. However, RESPONDENT challenged Mr. Prasad using only the numerical limit

stipulated by IBA Guidelines and failed to raise evidence of likelihood of bias. In addition

to its inapplicability in this case, IBA Guidelines’ approach to repeated appointments is

widely criticized by the international community for being too mechanical, since

recurrent appointments may result from many factors such as the good reputation of the

arbitrator and the size of his or her law firm [Born; Koh]. Besides, it is supported by

cases [Tidewater] and scholars to take on a qualitative approach to assess case by case if

the repeated appointments will actually bring about partiality [Born; Koh; Luttrell]. In

the present case, there is hardly any likelihood that Mr. Prasad would be partial due to

these appointments, since only a little part of Mr. Prasad’s income came from these

appointments [¶10, PO2] and Mr. Prasad did not show bias in his previous decisions [¶

15, PO2]. Thus, RESPONDENT’s failure in raising evidence of likelihood of bias has

caused the challenge to be groundless under UNICITRAL Rules.

(2) Even if IBA Guidelines were applicable, these appointments do not fall into the

orange list.



44. Even if the numerical standard of appointments under IBA Guidelines is applicable, the

appointments will not cause conflict of interest since Mr. Prasad was not appointed three

times by Mr. Fasttrack’s law firm (a) or two times by CLAIMANT or its affiliate prior to

the Arbitration (b).

(a) Mr. Prasad was not appointed three times by Mr. Fasttrack’s law firm prior to the

Arbitration.

45. Under IBA Guidelines [para. 3.3.7, IBA Guidelines], three or more appointments made

by the same counsel or law firm fall into the orange list. However, Mr. Fasttrack’s law

firm only appointed Mr. Prasad twice, which does not exceed the limit of IBA Guidelines.

Additionally, these cases were completed and Mr. Fasttrack himself has not been

involved [Prasad’s Refusal; ¶9, PO2]. Thus the appointments can hardly raise doubts in a

reasonable third person’s eye.

(b) Mr. Prasad was not appointed two times by CLAIMANT or its affiliate prior to the

Arbitration.

46. Being appointed for two or more times made by Parties or its affiliate within three years

is categorized as an orange list situation under IBA Guidelines [para. 3.1.3, IBA

Guidelines]. While in the case herein, the appointments were not made by CLAIMANT

or its affiliate. First, the party who had appointed Mr. Prasad was a subsidiary of

Findfunds LP and CLAIMANT’s funder is Funding 12, which are two separate entities.

Second, CLAIMANT’s funder shall not be deemed as CLAIMANT’s affiliate since

Findfunds LP is known as having little influence on appointment of arbitrators [¶4, PO2].

D. The business contact between Mr. Prasad’s Law firm and CLAIMANT’s funder is

not significant enough to constitute a conflict of interest.

47. RESPONDANT assumes that Mr. Prasad’s partner, Mr. Slowfood is acting for a client in

an arbitration funded by Findfunds LP’s subsidiary, which is against a waivable red list

item under IBA Guidelines that avoids “significant commercial relationship” between

arbitrator’s law firm and the parties or its affiliate [para. 2.3.6, IBA Guidelines]. However,



even if IBA Guidelines were applicable, which is not the case; the business relationship in

this case was not significant therefore does not lead to a disqualification. Under the

objective justifiable doubt standard required by UNCITRAL Rules, the business

relationship between the funder and Mr. Prasad’s law firm is too remote to justify a doubt.

48. Several factors [Suez], namely the proximity, intensity, dependence and materiality

provide specific assessment for the significance of such alleged connection and its effect

on Mr. Prasad's independence. First, the relation is not close enough since the connection

was built out of a merger of law firm only after the appointment of Mr. Prasad. Second,

the intensity [Rogers] of the connection does not suffice because Mr. Prasad’s partner is

only acting in one case. Third, the relationship is not material [Goeler] since Mr.

Slowfood’s client is funded by Funding 8, which is a subsidiary that Findfunds LP only

owns 40% of its share [ ¶ 6, PO2] and cannot be deemed as CLAIMANT’s affiliate.

Finally, only 300,000 US$ will become due from the case after the merger of the two law

firms, which only takes up about 1% of the annual income of Slowfood’s law firm and

the number will get even smaller after the merger. Therefore, it is impossible that Mr.

Prasad could be dependent on such income and the business connection would not

influence his decision.

E. Mr. Prasad’s previous scholarly writing does not imply bias against RESPONDENT.

49. The first factor is the date of publication. A court decides that ‘arbitrator cannot be

disqualified because of their writings or statements on legal issues that have occurred at a

time that precedes the case.’ [CLOUT Case 1178]. In the case herein, the article in

dispute was publicized in 2016, long before the appointment of Mr. Prasad; therefore Mr.

Prasad should not be removed.

50. The second factor is the content of the article. In the present case, the academic opinion

expressed by Mr. Prasad is general [Letter Prasad]. Such general legal view falls into the

scope of Green List of IBA Guidelines, which does not constitute a conflict of interest

[Para.4.1.1, IBA Guidelines]. In Saipem, the panel found that ‘an arbitrator's doctrinal

opinions expressed in the abstract without reference to any particular case do not affect



that arbitrator's impartiality and independence, even though the issue on which the

opinion is expressed may arise in the arbitration’[Saipem].

51. Even if the Tribunal decides Mr. Prasad’s academic view to be specific, it still does not

impair Mr. Prasad’s independence and impartiality. In ST-AD, the court holds ‘that a

judge has expressed a certain legal view on a particular legal question in several

proceeding, and possibly also publicly, such as in publications, does not affect his [or her]

impartiality with respect to the concrete case to be decided – even if this particular legal

view is crucial to the result’ [ST-AD GmbH]. Therefore, Mr. Prasad should be disqualified

even if he expressed legal opinion specific to the present arbitration.

52. Last factor is the common act of arbitrator to publish legal opinion. As scholar Born notes,

“It is desirable that the tribunal include individuals who are experienced in the matters in

dispute, which necessarily involves the formulation of thoughts and positions” [Born].

Similarly, in Urbaser, the tribunal found that if academic views could constitute

justifiable doubts, there would be negative consequence that ‘no potential arbitrator of an

ICSID Tribunal would ever express views on any such matter, whether it may be

procedural, jurisdictional, or touching upon the substantive rights deriving from BITs’

[Urbaser]. Therefore, it cannot be inferred from the article that Mr. Prasad has a tendency

to make a decision in favor of CLAIMANT.

PART 3: THE CLAIMANT’S STANDARD CONDITIONS SHALL GOVERN THE

CONTRACT.

53. Notwithstanding the changes in Sales Offer compared with Tender Documents, the

RESPONDENT explicitly accepted Sales offer. One of the changes is that the offer is

subject to the CLAIMANT’s General Conditions of Sale. Thus, a contract has been

concluded between the CLAIMANT and the RESPONDENT, which is governed by

CLAIMANT’s General Condition of Sale (I). Even if CLAIMANT’s standard conditions

do not govern the contract, there is no ground to apply RESPONDENT’s standard

conditions (II).

Ⅰ. The CISG supports that CLAIMANT’s General Conditions of Sale shall govern the



contract after RESPONDENT’s acceptance of Sales Offer from CLAIMANT.

54. The CISG governs disputes related to the contract, including the incorporation of standard

conditions (A). As governed by Articles 14, Invitation to Tender combined with Tender

Documents does not amount to an offer (B). Considering the facts and circumstances, the

Letter of Acknowledgement is nothing but a receipt under the CISG (C). On the other

hand, CLAIMANT made an effective offer (D). Besides, CLAIMANT had successfully

changed the governing conditions into CLAIMANT’s General Conditions of Sale

including Business Code of Conduct and Supplier Code of Conduct through its offer,

which was accepted by RESPONDENT (E).

A. The CISG governs as the only applicable law.

55. Choice of Law Clause is different in RESPODENT’s and CLAIMANT’s standard

conditions. The former one declares CISG to be applicable while UNIDROIT Principles

to be default rules [Cl. Ex. 2 Sec. V Clause 19]; the latter one refers to the application of

Equatorianian Law [Proc. Ord. No.2, 29]. Since both parties are from contracting states

of CISG [Proc. Ord. No.1, 3 (3)] and parties failed to exclude the application of CISG

[Art. 6 CISG], CISG should govern the contract according to Article 1.1.(a) with no

doubt. However, UNIDROIT Principles has no grounds to apply. The first version of

UNIDROIT Principles was only launched in 1994, that is, 14 years after Vienna

Conference. The drafters of CISG certainly did not have UNDROIT Principles in mind as

an instrument for interpretation and gap-filling [International Commerce and Arbitration,

117]. What’s more, both issues concerning incorporation of standard conditions and

breach of contract could be well settled according to CISG [Practitioner’s Guide,

119][CISG Digest 80 ¶11].

B. Invitation to Tender does not constitute an offer so that the content in Tender

Documents is neither binding nor unchangeable.

56. To constitute an offer, a proposal must be sufficiently definite and shows the intention of

the offeror to be bound in case of acceptance [Art.14.1 CISG]. To be sufficiently definite,

a proposal must expressly or implicitly fix or make provision for determining not only the

quantity but also the price [Id.]. In Invitation to Tender, the price per chocolate cake is to



be filled in by tenderer, which is not determined [Cl. Ex. 2 Sec. IV].

57. RESPONDENT, when sending Invitation to Tender, had no intention to be legally bound

in case of the acceptance from CLAIMANT. RESPONDENT initiated the tender

procedure, publicized the tender in the industry newsletters, sent tender documents to 5

companies including CLAIMANT [Resps. To Notc. ¶7]. During this procedure,

RESPONDENT showed no intention to be bound by possible tender from any of

invitation receivers.

58. Thus, Invitation to Tender does not constitute an offer so that the content in Tender

Documents is neither binding nor unchangeable.

C. Letter of Acknowledgement is nothing but a receipt under the CISG.

59. Although the CISG does not directly deal with the legal status of letter of

acknowledgement or letter of confirmation, the guideline in Article 8 must be followed to

determine this question. The underlying principle of Article 8 is the determination of the

“true intent” of the parties, arrived at through consideration of all the facts and

circumstances surrounding the case [CISG Advisory Op.No.3¶2.8]. When determining

the intent of parties, due consideration is to be given to all relevant circumstances

including negotiations, any subsequent conduct of parties [Art. 8.3 CISG].

60. The Letter of Acknowledgement is a documentation which was initially sent from the

RESPONDENT [Cl.Ex.1]. In Invitation to Tender, all the tenderers were requested to

return Letter of Acknowledgement 11 days before the Tender date [Id]. If the ultimate

tender shall be strictly in accordance of the requirements, there is no need for the

RESPONDENT to give tenderers another eleven days to rethink before the final Tender

Date.

61. Further, although Letter of Acknowledgement states that “we will tender in accordance of

the specified requirements” [Re.Ex.1], the RESPONDENT still accepted the Sales Offer

from the CLAIMANT when the CLAIMANT did not tender in accordance of the

specified requirements. Provided that the content in Letter of Acknowledgement was

binding and mandatory, the RESPONDENT should not have accepted the Sales Offer

within several changes compared with specified documents. As a result, it can be



confirmed that the RESPONDENT did not demonstrate the intent that Letter of

Acknowledgement is binding and unchangeable, which means there is still space for the

CLAIMANT to alter the specified requirements then to submit the tender including the

alternations.

62. Given that the Invitation to Tender is merely an invitation to negotiate, the CLAIMANT is

entitled to tender in line with its own interests and make appropriate changes when

necessary. Moreover, considering the fact that the RESPONDENT gave tenderers another

eleven days to rethink before the final Tender Date, it is reasonable for the CLAIMANT

to regard the Letter of Acknowledgement as only a notice of receipt and an indication to

bid, which enables the RESPONDENT to know about the attractiveness of their

invitation to tender in advance.

D. CLAIMANT made an effective offer.

63. According to CISG, a contract is concluded at the moment when an acceptance of an offer

becomes effective in accordance with the provisions of this Convention. [Art.23 CISG].

This article requires not only an effective offer, but also a capable acceptance to

constitute a concluded contract showing the consensus of both parties. CLAIMANT’s

offer is composed of three parts: Covering letter [Cl. Ex. 3], RESPONDENT’s Tender

Documents as an attachment and Sales Offer [Cl. Ex. 4] which replaced RESPONDENT

General Conditions of Contract with CLAIMANT’s General Conditions of Sale. All the

above documents were sent to RESPONDENT through mail on 27 March 2014 [Cl. Ex.

3]. Informality is a general principle of CISG [CISG Digest, 44 ¶22], which is evidenced

by Article 11. With no reservation through Article 96 by either Equatoriana or

Mediterraneo, there is no special requirement on formality concerning the formation of

contracts between CLAIMANT and RESPONDENT. Thus, any statement, document or

conduct, disregarding its title or formality, can constitute an effective offer or acceptance

as long as it fulfills the requirement of Article 14 or 18. CLAIMANT’s Sales Offer,

together with Covering letter and Tender Documents, has fulfilled the requirement of

being sufficiently definite and showing intention to be bound in case of an acceptance by

RESPONDENT [CISG Art.14]. Thus, the three documents constituted an effective offer.



E. CLAIMANT had successfully changed the governing conditions into CLAIMANT’s

General Conditions of Sale including Business Code of Conduct and Supplier Code of

Conduct through its offer, which was accepted by RESPONDENT.

64. CLAIMANT never tried to equate the current tender with an ordinary battle of form

situation as what RESPONDENT alleged [Resps. To Notc, ¶25]. The issue of the battle of

forms is in effect restricted to situations where there is an exchange of different sets of

standard terms, creating several counteroffers [Dimatteo, 209]. As established above,

RESPONDENT never made an effective offer. There was no ground for CLAIMANT’s

offer to be deemed as a counteroffer under CISG Article 19. Thus, neither “last shot rule”

nor “knock-out rule” can be applied in this case.

65. The current issue is whether CLAIMANT had successfully incorporated and replaced the

original General Conditions of Contract in Tender Documents with its own General

Conditions of Sale. Although CISG does not explicitly cope with the issue on

incorporation of standard terms , it is strongly held that this matter should still be

governed by CISG under Article 14 in connection with Article 8 [Schlechtriem &

Schwenzer, 224 ¶5]. A famous case on this issue is Germen Machinery Case, through

which CISG Advisory Council had summarized that, “where there is a clear reference to

the incorporation of standard terms in the offer (1) and where they were reasonably

available at the time of the negotiations or conclusion of the contract (2), if the other

party starts performing without objecting to the inclusion of the standard terms (3), then

the conduct of the offeree shall objectively be interpreted as implied acceptance of the

inclusion of standard terms.” [CISG Advisory Op.No.13 2.13] Peter Huber also drew the

similar conclusion of the required elements on this issue [Vindobona Journal, 123, 127].

In fact, CLAIMANT had fulfilled all these requirements.

(1) There is a clear reference to the incorporation of standard terms in the offer.

66. CLAIMANT stated clearly in its Sales Offer that “The above offer is subject to the

General Conditions of Sale …” [Cl. Ex. 4] Such stipulation showed the intention of

CLAIMANT to use its own General Conditions of Sale other than what RESPONDENT



provided in Tender Documents. CLAIMANT also gave a hint to RESPONDENT about

this change in Covering letter by stating “we have to make some minor amendments to

the documents received by the invitation to submit a tender offer.” “These changes relate

primarily to the goods and the mode of payment.” “We hope that you find our offer

attractive despite the necessary minor amendments” “If you have any further questions, in

particular concerning our applicable sustainability strategy, please do not hesitate to

contact me” [Cl. Ex. C3]. A reasonable businessman as RESPONDENT [Art.8.2 CISG]

was at the point receiving such an offer would notice the CLAIMANT’s intention to

replace the General Conditions of Contract in Tender Documents with CLAIMANT’s

General Conditions of Sale by thoroughly reading CLAIMANT’s offer. CLAIMANT

admits that CLAIMANT did not inform RESPONDENT of the change on general

conditions as expressly as the change on form of cakes and the payment mode, because

CLAIMANT considered that conditions from both parties share the same value on

sustainable product and both post a “best effort” obligation on CLAIMANT. This

position will be further discussed in the next submission. Besides, RESPONDENT as a

leading gourmet supermarket chain in Mediterraneo [Resps. To Notc, ¶4] was reasonably

expected to overread the offer received. What’s more, RESPONDENT did notice this

“subject to” term following CLAIMANT’s tender even if out of curiosity [Cl. Ex.5].

Thus, CLAIMANT asserts that the reference to the incorporation and governing position

of CLAIMANT’s General Conditions of Sale did arouse RESPODENT’s attention and

was sufficiently clear.

(2) CLAIMANT’s General Conditions of Sale were reasonable available to

RESPONDENT at the time of conclusion of contract.

67. Other than providing the whole version of General Conditions of Sale as an attachment,

CLAIMANT provided a URL of landing page following the “subject to” term. On this

landing page, all CLAIMANT’s standard documents including General Conditions of

Sale, Business Code of Conduct, Supplier Code of Conduct are directly accessible [Proc.

Ord. 28]. The dispute might be solved easier if CLAIMANT submitted its tender through



electronic communications, for CISG Advisory Council firmly agrees that providing a

hyper-link is a proper way to make standard conditions available to the other party via

E-mail [CISG Advisory Op.No.13¶3.3]. Although in this case CLAIMANT submitted its

tender via ordinary mail, CLAIMANT’s General Conditions of Sales has also passed the

“making available to” test. The rationale behind “making available to” test is that, in

terms of incorporating standard conditions, Offeree has to aware of the text of standard

terms, which is a de facto matter. A mere reference in offer is sufficient to make the

standard terms part of the offer in cases in which the offeree already has actual and

positive knowledge of the standard terms’ content at the moment he receives the offer

[Schlechtriem & Schwenzer, 279 ¶ 39]. If lack such actual awareness, offeror has to

perform certain obligation to ensure offeree’s awareness, which is the “making available

to test” [Schlechtriem & Schwenzer, 279 ¶ 40]. In this case, RESPONDENT not only had

noticed the “subject to” term stipulated in CLAIMANT’s offer, but also seen the whole

version of Business Code of Conduct and Supplier Code of Conduct following tender at

the point of awarding the contract [Cl. Ex. C5]. Furthermore, it is reasonable to estimated

that RESPONDENT had seen the whole version of General Conditions of Sale as well.

All these documents are on the same landing page, listed one by one. It is a common

commercial sense that Code of Conduct is an important part of a company’s general

condition, which can be evidenced by the structure of RESPONDENT’s Tender

Documents as well [Cl. Ex. C2]. There is no proper reason for RESPONDENT, as a

leading company in supermarket chain and a prudent business company, to skip General

Conditions of Sale and to directly look into Code of Conduct. To sum up, for

RESPONDENT did have the actual knowledge of CLAIMANT’s General Conditions of

Sale and Code of Conduct, “making available test” is not necessary when examining

whether CLAIMANT had performed due obligations to make the standard terms

available to RESPONDENT.

(3) RESPONDENT accepted CLAIMANT’s General Conditions of Sale which

substitutes the General Conditions of Contract in Tender Documents.



68. According to ACOP No.13, if the other party starts performing without objecting to the

inclusion of the standard terms，it can be deemed as an implied acceptance. This opinion

is identical to CISG Article 18. A court also confirms that, “pursuant to the CISG,

acceptance does not require a signature or formalistic adoption of the offered terms. The

offeree may indicate assent by performing an act, such as one relating to the dispatch of

the goods or payment of the price, without notice to the offeror, the acceptance is

effective at the moment the act is performed.” [Golden Valley Case]; another court also

held that the best solution is one that recognizes performance as tantamount to acceptance

[Knitware Case, see from DiMatteo 209]. In this case, RESPONDENT awarded

CLAIMANT the contract on 7 April 2014 [Cl. Ex. C5]. From then on, both CLAIMANT

and RESPONDENT started to perform the contract. Even though REPONDENT did not

expressly accept the change of standard conditions as they did towards payment mode

and form of cakes, subsequent performance could be regarded as an effective acceptance.

CLAIMANT never alleges that silence does in itself amount to acceptance which may

undermine CISG Article 18.1. Nevertheless, by considering all elements established

above, RESPONDANT had made an effective acceptance to CLAIMANT’s offer, which

includes the change of governing standard conditions.

II. Even if CLAIMANT’s standard conditions do not govern the contract, General

Compact principles will guide the contract.

69. RESPONDENT argues that in the acknowledge letter CLAIMANT agreed to adhere to

RESPONDENT’s General Conditions of contract and its Code of Conduct. These,

however, are not adequate grounds to show that CLAIMANT consents to comply with

two conducts when entering into the final contract. Even if CLAIMANT’s standard

conditions do not govern the contract, both parties did not reach a consensus on applying

the RESPONDENT’s standard conditions. The facts and circumstances of the case dictate

that the Global Compact principles should govern the contract at a minimum.

70. Under Article 8.1, attention must be placed on the parties’ actual intent, “where the other

party knew or could not have been unaware of what the intent was”. In terms of the facts

and circumstances of the case, the Global Compact principles must receive due



consideration (A). Beyond this, when the subjective intentions of the parties cannot be

discerned, the objective understanding of the contract by a reasonable person can be

considered through Article 8.2 (B).

A. The parties intended to use the Global Compact principles as standard conditions all

the way up through the negotiation and contract.

71. This subjective test considers the actual meaning the parties gave the Agreement as well

as their intentions during contract formation [Lookofsky 2000 ¶84]. Through the

negotiation and contract, many documents and e-mails indicate that CLAIMANT and

RESPONDENT use the Global Compact principle as a guild line. The Tribunal should

attach importance on that Global Compact should serve as standard conditions at a

minimum when neither of standard conditions has been acknowledged as an exact one.

72. As both parties are the UN Global Compact members, they should aim to mobilize a

global movement of sustainable companies and stakeholders. To achieve the goal, the UN

Global Compact supports companies to do business responsibly by aligning their

strategies and operations with Ten Principles on human rights, labor, environment and

anti-corruption; and take strategic actions to advance broader societal goals, such as the

UN Sustainable Development Goals, with an emphasis on collaboration and innovation.

Furthermore, the RESPONDENT wants have the title of Global Compact LEAD

Company by 2018 [Cl. Ex. 1]. The philosophy of Global Compact points to be a rotten

corporate culture in both parties.

73. First, CLAIMANT has become a very interesting supplier for RESPONDENT at the

Danubian Food Fair because of its Global Compact membership and its strict adherence

to the principle of ethical and sustainable production [Cl. Ex. 1]. CLAIMANT could

know its selling point as it had a general discussion about the cost versus the benefits of

ethical and environmentally sustainable production and respective experiences.

74. Second, RESPONDENT underlined its Global Compact member committed to high

standards of integrity and sustainability in its tender giving to the CLAIMANT.

CLAIMANT also showed the philosophy in its Code of Conduct that it will adopt

practices that deliver benefits to its own operations and supply chains, and improve



sustainable performances over time [Cl. Ex. 2; Resp. Ex. 2]. Both parties demonstrate

their ideas adhering to Global Compact in their standard conditions.

75. Third, when RESPONDENT required CLAIMANT to clarify whether its suppliers

adhered to the standard, RESPONDENT “demanded that CLAIMANT confirmed by the

next business day that CLAIMANT’s suppliers all strictly adhered to Global Compact

principles” [Cl. Ex. 6]. The RESPONDENT first used Global Compact principle as a

checking guild line which indicated that Global Compact principle at a minimum

standard was RESPONDENT request.

76. Fourth, CLAIMANT itself had complied with all its obligations under the contract

including using its best efforts to ensure that its suppliers complied with the Global

Compact principle which had been certified annually [Cl. Ex. 8]. The conduct indicates

that CLAIMANT actually ensures the suppliers complied with the Global Compact

principle.

B. A reasonable understanding of the contract suggests the Global Compact principle

guide the contract.

77. The Tribunal should evaluate the statute of Global Compact principle to contract through

the understanding of a reasonable person (1). The core of standard conditions of both

parties is basically adhering to philosophy in Global Compact principles, but neither

includes the clear obligation to ensure the sustainability. Instead, the Global Compact

includes an explicit mechanism to promote greater environmental responsibility (2).

(1) The Tribunal should evaluate the statute of Global Compact principle to

contract through the understanding of a reasonable person

78. Commentators explain that “where the other party was unaware or could not have been

aware that the subjective intention was different from the objective meaning, then the

statement is to be interpreted according to the understanding that a reasonable person ‘of

the same kind’ as the addressee would have had in the same circumstances (Article 8(2)).”

[Schlechtriem & Schwenzer 271 ¶26]. Both parties underline the Global Compact in their

standard conditions which a reasonable person can come to the conclusion that Global



Compact principle can govern the contract at a minimum.

(2) Global Compact includes an explicit mechanism to promote greater

environmental responsibility

79. The core of standard conditions of both parties is basically adhering to philosophy in

Global Compact principles, but neither includes the clear obligation to ensure the

sustainability. Unlike both parties’ standard conditions, UN global Compact principles

show explicitly that “all participants to produce an annual Communication on Progress

that outlines your efforts to operate responsibly and support society. This could be part of

your sustainability or annual report, or another public document.” [Global Compact].

Even if standard conditions of either party are applied, the Tribunal should also consider

the Global Compact principles as a guild line to CLAIMANT’s conduct let alone the

situation neither party’s standard conditions is applied.

PART 4: CLAIMANT HAS NOT BREACHED ITS CONTRACTUALOBLIGATIONS.

80. CLAIMANT has fulfilled its obligations under principles C and E of RESPONDENT’s

Code of Conduct for suppliers (I) and Art.35 CISG (II). What’s more, RESPONDENT is

not strict with ethical requirements as it claimed (III).

I. CLAIMANT has fulfilled its obligations under principles C and E of RESPONDENT’s

Code of Conduct.

81. The reason why RESPONDENT insisted on its own Code of Conduct for Suppliers is

obvious: principle C and E in this Code of Conduct, they considered, requires

CLAIMANT to ensure CLAIMANT’s own suppliers conduct their own business in an

environmentally sustainable way. Contrary to RESPONDENT’s allegation that the Code

of Conduct requires an obligation of results [Resps. to Notc. ¶26], the exact wording of

principle C requires CLAIMANT to merely use its best effort (A) the reasonable

understanding of principle E in light of the whole contract is the requirement of

CLAIMANT’s best effort instead of guarantee of results (B).

A. The exact wording of principle C requires CLAIMANT to merely use its best effort

82. Principle C requires as such: ‘You shall provide a safe and healthy workplace for all of



your employees and shall conduct your business in an environmentally sustainable way’.

It does not require a compliance of CLAIMANT’s suppliers but only CLAIMANT.

83. It then provides three specifications on what CLAIMANT should do for environmentally

sustainable management, including appointment of a competent person for such matter,

appropriate organizational structure for such management, and proper training for

workers. At last it writes that CLAIMANT should ‘ensure that your own suppliers

comply with the above requirements’. It is clear this is where RESPONDENT relied on to

justify that CLAIMANT was required to ensure CLAIMANT’s own suppliers used

sustainable farming methods in their own productions.

84. This is a clear distortion of the true meaning of principle C.

85. While RESPONDENT urged CLAIMANT to ensure the sustainability of its own

production, the three specifications gave clearer instructions on which relevant business

conducts are required. It at most requires CLAIMANT to ensure its own suppliers

fulfilling these three specifications, which Ruritania Peoples Cocoa mbH (hereby referred

to as Ruritania Cocoa) did. This is upon the findings of this Tribunal at Procedure Order

No.2 under Question 32: Ruritania Cocoa had a good reputation in the market. It had two

model farms which showed how its cocoa was produced in a sustainable way; it also

provides training and education to other farmers from which it bought cocoa beans. These

are robust adoptions of RESPONDENT’s specifications. It is clear that RESPONDENT

at best requires CLAIMANT to ensure its own supplier perform as such, which Ruritania

Cocoa did. Although these specifications did not stop Ruritania Cocoa’s involvement in a

country-wide certificate falsification on sustainable farming, it met RESPONDENT’s

requirements under principle C due to CLAIMANT’s supervision.

B. Also under principle E, CLAIMANT has fulfilled its obligation.

86. Principle E requires CLAIMANT to procure goods and service in a responsible manner.

87. In the two following specifications, it first requires CLAIMANT to select tier one

suppliers “based on them agreeing to adhere to standards comparable to those set forth in

this Comestibles Finos’ Code of Conduct for Suppliers”. CLAIMANT did as such. It

required Ruritania Cocoa to adhere to CLAIMANT’s own Supplier Code of Conduct.



This Supplier Code of Conduct was acknowledged by RESPONDENT to be ‘sharing the

same value’ [Cl. Ex. 5 ¶2].

88. It then requires CLAIMANT to ‘make sure that they’, in this case CLAIMANT’s own

suppliers, ‘comply the standards agreed upon’. If ‘make sure’ means that absolute

guarantee of the result of compliance, it requires CLAIMANT to ensure there would

never be a breach of contract between CLAIMANT and its own suppliers.

89. This is beyond a reasonable person’s understanding, and obviously not the understanding

of RESPONDENT at the conclusion of the contract. In the witness statement of

RESPONDENT’s head of purchase Annabelle Ming, she was aware that CLAIMANT

could at best ‘largely guarantee compliance with the Code by their suppliers’ [Resp. Ex. 5

¶3]. It is clear that Annabelle Ming representing RESPONDENT understood clearly that

CLAIMANT could not ensure 100 per cent of its own suppliers’ compliance. Therefore,

at the conclusion of the contract, RESPONDENT’s understanding of CLAIMANT’s

obligation was also ‘best effort’ instead of ‘absolute guarantee’ despite its present denial

in front of this tribunal.

90. RESPONDENT cannot rely on the plain meaning of ‘make sure’ and interpret it into

absolute guarantee of result. Plain Meaning Rule does not apply under the CISG [CISG

Advisory Op.No.3 ¶3]. Statement or conducts are still to be interpreted according to Art. 8

CISG [CLOUT case No. 877].

91. Had RESPONDENT’s true intent with its Code of Conduct for Suppliers is for

CLAIMANT to ensure the result and not to use best effort, the burden of proof lies on

RESPONDENT that CLAIMANT was aware and could not have been unaware of such

intent [Art. 8.1 CISG]. Otherwise the reasonable interpretation of these two principles has

been established to be ‘using best effort’.

92. CLAIMANT’s understanding of best effort is well evidenced by its offer mail where it

promised to ‘do everything possible’. This is a promise of action and not result.

93. It is worth noting that even in the current chocolate industry, lead companies which are

experts in selecting coca resource cannot ensure the result of 100 per cent sustainable

production. Ruritania Cocoa’s violation of sustainable production involvement in a



governmental scheme is beyond CLAIMANT’s sphere of control. Both parties entered

into this contract with a common belief in high standards in business ethics, but ensuring

the result of CLAIMANT’s supplier’s compliance one Mission Impossible: Ruritania

Peoples Coca was the counterparty of a contract with which CLAIMANT has entered

into, not an affiliate or party of interest that CLAIMANT was capable to impose absolute

control. What could be expected of CLAIMANT at the conclusion of the contract are

actively supervising its supplier’s performance. Ironically the specific methods of

supervision was not instructed by RESPONDENT but by CLAIMANT voluntarily when

it hired a third party audit company. CLAIMANT immediately terminated the contract

with its supplier as correction of mistakes voluntarily, which fulfill the stipulation under

principle F of RESPONDENT’s Code of Conduct for Suppliers [Cl. Ex. 2].

II. CLAIMANT did not breach Article 35 of CISG.

94. Article 35 CISG stipulates both expressed obligations according to the specific contract

and implied obligations in its second paragraph. While the burden of proof for any

non-conformity lies on RESPONDENT, the goods CLAIMANT delivered conform with

the specifications in the contract according to article 35.1 CISG (A); in the appearance of

expressly article 35.1 agreement, article 35.2 is silent (B); even if article 35.2 applies,

CLAIMANT has delivered goods that satisfy the standards within (C).

A. RESPONDENT bears the burden of proof on inconformity of goods.

95. ‘The burden of proving conformity or lack of conformity shifts from the seller to the

buyer in conjunction with the delivery of goods. In general, a buyer who has taken

delivery of the goods without any complaints or reservation as to their conformity has to

prove that the goods were non-conforming at the time the risk passed.’ [DiMatteo].

RESPONDENT has taken delivery of the cakes for three years, therefore the burden of

proof was successfully shifted to RESPONDENT.

96. A reasonable interpretation of CLAIMANT’s obligation should take into account the

context of the entire business environment. Even the experts in using and selecting cocoa

beans, namely the big chocolate companies, either requires best efforts for their suppliers,

or use ‘must’ to indicate an obligation of ensuring result.



97. Hershey states "At a minimum, suppliers must fully comply with all local environmental

laws and regulations and should strive to conduct their operations in a way that conserves

natural resources" [Hershey].; Mars states "The Mars Supplier Code of Conduct captures

the principles that we expect our suppliers to uphold. " [Mars]; Cargill stipulates "Our

Supplier Code of Conduct explains how we expect farmers, producers, manufacturers,

and others to work with us to fulfill that purpose—ethically and in compliance with

applicable laws."[Cargill].

98. These supports the view that principle C and E, presuming to be part of the contract,

impose merely the obligation of best effort on CLAIMANT.

B. Article 35.2 CISG is not applicable, because it only serves as default rules when

lacking expressed Article 35.1 agreement.

99. Despite what is RESPONDENT’s burden of proof, CLAIMANT has delivered goods

which are of the quantity, quality and description required by the contract and which are

contained or packaged in the manner required by the contract. If RESPONDENT insisted

on an expressed contractual obligation for CLAIMANT concerning quality of goods

under Article 35.1, it cannot invoke the implied obligations set in Article 35.2 [Fabric

case].

C. Even if article 35.2 applies, the goods delivered by Claimant meet the standards

within.

100.Even if Article 35.2 is applicable, while it is still RESPONDENT burden to establish

CLAIMANT’s non-compliance with Article 35.2 CISG, the chocolate cakes CLAIMANT

provided were fit for the ordinary purpose of goods of the same description (1); The

cakes were fit for all particular purposes made known to CLAIMANT at the time of the

conclusion of the contract (2); according to Article 35.2.c and 35.2.d, the cakes are clearly

conforming (3).

(1) The chocolate cakes CLAIMANT provided were fit for the ordinary purpose of goods of the

same description

101.The chocolate cakes CLAIMANT provide are fit for the ordinary purpose of goods of the



same description. The Article 35.2.a ‘must be used objectively to assess what a

reasonable business person in the same situation would expect of the goods’. It is

undisputable that chocolate cakes delivered by CLAIMANT over the last three years

clearly met the ordinary purpose of such good until it was called off by RESPONDENT

illegitimately, or else the RESPONDENT’s retailing would not have been going on

smoothly during this period of time. The quality of the cake clearly meets the requirement

what a reasonable business person expects.

(2) The cakes are fit for all particular purposes expressly or impliedly to CLAIMANT at the

time of the conclusion of the contract.

102.If RESPONDENT submit that its particular purpose is 100 per cent sustainable

production, that would be a clear misuse of Art.35.

103.If RESPONDENT argues that it wants to be a Global Compact LEAD company and that

is the particular purpose made known to CLAIMANT at the conclusion of the contract,

there is no clear evidence that this particular purpose cannot be fulfilled. Global Compact

stipulated as such:

Principle 7: support a precautionary approach to environmental challenges;

Principle 8: undertake initiatives to promote environmental responsibility; and

Principle 9: encourage the development and diffusion of environmentally friendly

technologies.

104.Both parties have conducted business in line with these principles despite the third party

violation. The unsustainable production cannot be attributed to either CLAIMANT or

RESPONDENT. CLAIMANT has followed the minimum ethical standard in Global

Compact and so did RESPONDENT.

105.RESPONDENT requires full discretion from CLAIMANT to its own supplier’s

compliance, which CLAIMANT has used its best effort to comply with. RESPONDENT

was satisfied with the specifications that CLAIMANT made until problems occurred due

to reasons which could not be attributed to CLAIMANT. And it is again

RESPONDENT’s obligation to proof the non-compliance to whichever particular purpose



it is going to allege.

(3) The cakes conform with Article 35.2.c and 25.2.d.

106.It is rather obvious that CLAIMANT’s products cannot be found in non-conformity under

c and d of Article 35.2 since there was no disagreement on the conformity of physical

quality.

III. Respondent is not strict with ethical requirements as it claimed.

107.Claimant offered take back all the cakes not sold yet. The sole purpose of this friendly

suggestion is to maintain the business relationship between two parties. Respondent

rejected such a request, and made the cakes made part of their special marketing

campaign for the opening of three new shops even when they have doubts on whether

there were any unsustainable production involved [Procedural Order No 2 ¶38]. It

amounted to hypocrisy when RESPONDENT accuses CLAIMANT for failing to

supervise the supplying chain, while benefiting from the same supplying.