DAHU Claimant Memo

Twenty-Second Annual Willem C. Vis International Commercial Arbitration Moot

Memorandum for Claimant

Dar Al-Hekma University

On behalf of Against

Vulcan Coltan Ltd Mediterraneo Mining SOE

21 Magma Street 5-6 Mineral Street

Oceanside Capital City

Equatoriana Mediterraneo

CLAIMANT RESPONDENT

Nouran AlMekhlafi • Jude Jamjoom • Noha Bangaitah • Ohoud Mously

Maryam AlDabbagh • Dorra Ramadan • Nedaa AlAhmadi

Lamia AlOtaibi • Mohra Ferak • Ayat AlBarakati

Dar Al-Hekma • Saudi Arabia

DAR AL-HEKMA UNIVERSITY

I

TABLE OF CONTENT

INDEX OF ABBREVIATIONS ........................................................................................ V

INDEX OF AUTHORITIES .......................................................................................... VII

INDEX OF CASES ............................................................................................................... X

INDEX OF ARBITRAL AWARDS ........................................................................... XVII

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

SUMMARY OF ARGUMENTS ....................................................................................... 3

ARGUMENTS ....................................................................................................................... 4

ISSUE 1: RESPONDENT DID NOT LAWFULLY AVOID THE CONTRACT, AND

THUS HAS A DUTY TO CARRY OUT ITS CONTRACTUAL OBLIGATIONS FOR

THE DELIVERY OF 30 METRIC TONS OF COLTAN .................................................... 4

A. The First L/C Did Not Constitute A Fundamental Breach, And Thus

RESPONDENT Could Not Lawfully Avoid The Contract By Its First Avoidance .. 4

I. The Contract Was Amended On The 27th

Of June ................................................. 4

II. Even If There Was No Amended Contract, The First L/C Conforms To The

Contract .......................................................................................................................................... 5

1) The Amount Provided Under The First L/C Did Not Constitute A Breach

According To Art. 31 Of The UCP 600 .......................................................................... 5

2) The First L/C Providing For CIP As The Delivery Term Was In

Accordance With RESPONDENT‟s Notice Of Transport ....................................... 6

a) By Virtue Of Art. 29 Of The CISG, CLAIMANT And RESPONDENT

Agreed To Modify The Delivery Terms in The Contract .................................... 6

1. RESPONDENT Offered To Modify The Delivery Terms Specified

Under The Contract From CIF To CIP ................................................................ 6

i. RESPONDENT Intended To Be Bound By An Acceptance .............. 7

ii. RESPONDENT’s Proposal Was Sufficiently Definite ....................... 7

2. CLAIMANT’s Conduct Causing The Issuance Of The First L/C

Constitutes An Acceptance To RESPONDENT’s Offer To Modify The

Contract ........................................................................................................................... 8


II

b) CIP And CIF Do Not Substantially Differ ...................................................... 9

3) RESPONDENT Cannot Rely On The Contention That The First L/C Was

Not In Conformity to The Contract .................................................................................. 9

III. The Alleged Non-Conformity Of The First L/C Could Not Constitute A

Fundamental Breach ................................................................................................................ 10

1) Respondent Could Not Have Incurred Substantial Detriment By The

Alleged Non-Conformity .................................................................................................. 11

2) CLAIMANT Could Not Have Foreseen Any Substantial Detriment To

The RESPONDENT ........................................................................................................... 12

IV. RESPONDENT Did Not Rightfully Avoid The Contract By Its First

Avoidance ................................................................................................................................... 13

1) RESPONDENT‟S First Avoidance Was Not Properly Noticed ................ 14

2) RESPONDENT‟s Primary Remedy Is To Require Performance Which

Shall Precede A Declaration Of Avoidance ............................................................... 15

B. RESPONDENT’s Second Avoidance On 9 July Did Not Constitute A Lawful

Avoidance Of The Contract...................................................................................................... 16

I. RESPONDENT Did Not Lawfully Avoid The Contract On 7 July;

Therefore The Contractual Obligations Between The Parties Still Exist .............. 16

II. The Second L/C Was Provided In Accordance With The Deadline Provided

For Under The Contract ......................................................................................................... 16

III. The Requirement That RESPONDENT Present A Commercial Invoice

Does Not Amount To A Breach Of The Contract ......................................................... 17

CONCLUSION OF THE FIRST ISSUE ..................................................................... 18

ISSUE 2: The Arbitral Tribunal Should Not Lift the Remaining Part of the

Emergency Arbitrator’s Order for Interim Measures ......................................... 18

A. The Emergency Arbitrator Enjoys Full Authority to Issue Interim

Measures Based on the ICC Arbitration Rules, The Contract, and the UNCITRAL

ML 18

I. The EA Order Applies Automatically Under the Parties‟ Agreement and

Art. 29 of the ICC Arbitration Rules ................................................................................. 18

II. Art. 21 Provides for the Exclusive Right of the Specified Courts to Enforce

Interim Measures Issued By the Competent Arbitral Authority ............................... 19


III

III. Art. 21 of The Contract Provides for Concurrent Jurisdiction to Issue

Interim Measures to the Specified Courts and the Emergency Arbitrator ............ 20

1) The Phrase „Exclusive Jurisdiction‟ Does Not Mandate Absolute

Exclusivity ............................................................................................................................. 20

2) Art. 21 Should Be Interpreted in Accordance With the Parties‟ Original

Intentions As Per Art. 8(3) of the CISG ...................................................................... 21

3) Art. 21 cannot be construed to exclude an authority for interim relief that

did not yet exist when it was drafted ............................................................................ 21

4) Art. 21 is a forum selection clause that specifies which national court has

exclusive jurisdiction to issue and enforce interim measures, without

excluding the authority of the competent arbitral tribunal .................................... 22

IV. None of the Exceptions Invalidating the EA Order, Listed In Art. 29(6) of

the ICC Rules, Apply in This Case .................................................................................... 22

B. The EA Order Fulfilled All Substantive Requirements of under Art.17 (A)

of the Danubian Arbitration Law for Issuance of Interim Measures, and Thus

the EA Order shall Be Upheld By the Arbitral Tribunal .............................................. 23

I. The EA Order to Freeze 30 Tons of Coltan Satisfied the Substantive

Requirements for Issuing Interim Measures As Set Out in the UNCITRAL ML

Art. 17(A) .................................................................................................................................... 23

1) CLAIMANT Would Suffer Irreparable Harm That Cannot Be Measured

By an Award of Damages Should The EA Order Be Lifted ................................. 24

a) An Adequate Harm CLAIMANT Would Suffer Towards Its Economic

Standing ............................................................................................................................. 24

b) Lifting the EA Order will influence CLAIMANT‟s reputation ............ 25

2) CLAIMANT Has a Reasonable Possibility To Succeed In Its Claim ..... 25

II. Due to the Necessary Urgency for Issuing Interim Measures, the EA Order

was in Line With The Arbitral Tribunal‟s Authority to Grant Such Measures ... 26

III. RESPONDENT Bears the Burden of Proof to Support Their Claim of

Lifting The EA Order, Which They Have Yet to Produce. ........................................ 27

CONCLUSION OF THE SECOND ISSUE ................................................................ 27


IV

ISSUE 3: GLOBAL MINERALS IS NOT A PARTY TO THE CONTRACT OR THE

ARBITRATION AGREEMENT; THEREFORE, IT SHOULD NOT BE SUBJECT TO

ARBITRATION PROCEEDINGS ..................................................................................... 27

A. Global Minerals is not an Additional Party to The Contract between

CLAIMANT and RESPONDENT .............................................................................................. 27

I. Global Minerals Was Not Expressly Mentioned As A Party in The

Arbitration Clause .................................................................................................................... 27

II. Global Minerals Did Not Consent to Be Involved in The Arbitration

Proceedings ................................................................................................................................ 28

III. Global Minerals‟ Endorsement to The Contract is Not Sufficient to Bind

it to The Arbitration Agreement .......................................................................................... 29

B. The Group of Companies Doctrine Should Not Be Used To Extend The

Arbitration Agreement to Global Minerals....................................................................... 30

I. The Group of Companies Doctrine is Not Widely Accepted .......................... 30

II. The Requirements Of The Group of Companies Doctrine Are Not Fulfilled

By Global Minerals; Therefore, Global Minerals Is Not Bound By Virtue Of

That Doctrine ............................................................................................................................. 31

C. RESPONDENT’s Claim to Join Global Minerals to the Arbitration

Proceedings Pertains to The Doctrine of Piercing the Corporate Veil ................. 32

I. The Elements That Allow The Application Of the „Piercing The Corporate

Veil Doctrine‟ Are Not Met .................................................................................................. 32

1) Claimant is Not Global Minerals‟ Alter Ego. .................................................. 33

2) RESPONDENT Does Not Incur Injustice if Global Minerals Was Not a

Party to the Arbitration ...................................................................................................... 33

D. Good Faith Considerations Do Not Mandate The Joinder Of Global

Minerals As An Additional Party to The Arbitration Agreement............................ 34

CONCLUSION OF THE THIRD ISSUE .................................................................... 35

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

Certificate ....................................................................................................................... XVIII


V

INDEX OF ABBREVIATIONS

Art(s). Article(s)

Art. 21 Article 21 of The 28 March 2014 Contract

BGer Federal Supreme Court (Bundesgericht)

CISG United Nations Convention on the International Sale of

Goods, Vienna, 11 April 1980

CL.EX. Claimant Exhibit

CL Memo Claimant Memorandum

EA Emergency Arbitrator

EX Exhibit

First L/C First Letter of Credit

HG Commercial Court (Handelsgericht)

i.e id est (that means)

ICC International Chamber of Commerce and Industry

ICC Rules ICC Rules of Arbitration, 2012

ICDR International Centre for Dispute Resolution

ICSID International Centre for Settlement of Investment

Disputes

LCIA The London Court of International Arbitration

Ltd. Limited

Mr. Mister

Mr. Storm Chief Operating Officer of Global Minerals

Mr. Summer Chief Operating Officer of Vulcan Cultan

Mr. Winter General Sales Manager of Mediterraneo Mining SOE

Ms. Miss

No. Number(s)

NY Convention United Nations Convention on the Recognition and

Enforcement of Foreign Arbitral Awards, New York, 10

June 1958

OLG German Regional Court of Appeals (Oberlandesgericht)

OGH Supreme Court of Austria (Oberster Gerichtshof)

P. Page(s)

Para. Paragraph


VI

Paris Court D‟appel Court of Appeal of Paris

PECL The Principles of European Contract Law 2002

R Record

RE. EX Respondent Exhibit

Second L/C Second Letter of Credit

SOE Special Operations Executive

USA United States of America

UNCITRAL United Nations Commission on International Trade

Law

UNCITRAL ML UNCITRAL Model Law on International Commercial

Arbitration, 21 June 1985 with the 2006 Amendments

UNIDROIT Principles International Institute for the Unification of Private Law

v. Versus


VII

INDEX OF AUTHORITIES

Babiak, Andrew Defining "Fundamental Breach" Under the United Nations

Convention on Contracts for the International Sale of

Goods

6 Temple International & Comparative Law Journal (1992)

113-143

Cited as: Babiak

in para. 42, 52

Bijl, Maartje Fundamental Breach in Documentary Sales Contracts The

Doctrine of Strict Compliance with the Underlying Sales

Contract

European Journal of Commercial Contract Law (2009)

Cited as: Bijl

in para. 24

Born, Gary B. International Commercial Arbitration,Wolters Kluwer Law

& Business, 2d ed, (2014)

Cited as: Born

in para. 98, 115, 116, 118, 125, 127

Commerzbank AG Commerzbank Internet Service for Documentary Business

Frankfurt, 2008

Find at:

https://www.corporateclients.commerzbank.com/files/news

_archive/top_doc/topdoc_2008_11_en.pdf

Cited as: Commerzbank AG; 2008

in para. 22


VIII

El-Saghir, Hossam CISG Database

Commentary on Article 25 (2000)

Comparison between CISG & PECL

Cited as: El-Saghir

in para. 46, 47, 50

Fouchard, Philippe International Commercial Arbitration,

Gaillard, Emmanuel The Hague (1999)

Goldman, Berthold Cited as: Fouchard

in para. 107

Lew, Julian D. Comparative International Commercial Arbitration,

Mistelis, Loukas The Hague (2003)

Kröll, Stefan Cited as: Lew/Mistelis/Kröll

in para. 88, 116

Ramberg, Jan ICC Guide to Incoterms 2010: Understanding

and Practical Use

Paris (2011)

Cited as: Ramberg

in para. 37, 75

Redfern, Alan Law and Practice of International Commercial Arbitration

Hunter, Martin Sweet and Maxwell, 4th

ed. (2004)

Blackaby, Nigel Cited as: Redfern & Hunter

Partasides, Constantine in para. 79, 124

Schlechtriem, Peter Commentary on the UN Convention on the

Schwenzer, Ingeborg International Sale of Goods (CISG)

Oxford, 3rd ed. (2010)

Cited as: Schlechtriem & Schwenzer

in para. 43, 53, 56, 60, 63, 64, 68, 69, 71, 74


IX

Schwenzer, Ingeborg The Right to Avoid The Contract

Belgrade Law Review, Year LX, 2012, No. 3

Cited as: Schwenzer; P. 212

in para. 72

Graffi, Leonardo Case Law on the Concept of "Fundamental Breach" in

the Vienna Sales Convention

International Business Law Journal (2003) No. 3, 338-

349: Paris

Cited as: Graffi

in para. 45

Hanotiau, B. Complex Arbitrations: Multiparty, Multicontract,

Multi-Issue and Actions. (2006)

Kluwer Law International: London.

Cites as: Hanotiau

in para. 78, 131, 135


X

INDEX OF CASES

AUSTRIA

Oberster Gerichtshof

11 September 1997

Case No. 6 Ob 187/97m

Cited as: OGH; 11 Sep 1997

in para. 57, 66


10 November 1994

Case No. 2 Ob 547/93

Cited as: OGH; 10 Nov 1994

in para. 29, 31


6 February 1996

Case No. 10 Ob 518/95

Cited as: OGH; 6 Feb 1996

in para. 32

Oberlandesgericht Linz

23 March 2005

Case No. 6 R 200/04f

Cited as: OLG; 23 March 2005

in para. 36


XI

CANADA

Ontario Superior Court

Marvin Neil Silver v. Imax Corporation

19 March 2013

Case No. 932

Cited as: Silver v. Imax; 2013

in para. 104

Supreme Court of British Columbia

Round v. MacDonald, Dettwiler and Associates Ltd.

21 October 2011

Case No. 1980

Cited as: Round v. MacDonald; 2011

in para. 104

Supreme Court of British Columbia

G & E Auto Brokers Ltd. v. Toyota Canada Inc.

27 November 1980

Case No. C800509

Cited as: G & E Auto v. Toyota; 1980

in para. 87

ENGLAND

Mid Essex Hospital Services NHS Trust v. Compass Group UK and Ireland Ltd.

15 March 2013

Case No. A2-2012-0883

Cited as: Mid Essex v. Compass Group; 2013

in para. 140


XII

Owners of Cargo Lately Laden on Board Ship or Vessel Eleftheria v. Owners of Ship

or Vessel Eleftheria

1969

Case No. 1 Lloyd‟s Rep 237

Cited as: The Eleftheria (1969)

in para. 87

Peterson Farms Inc. v. C&M Farming Ltd.

2004

Case No. 1 Lloyd‟s Rep 603

Cited as: Peterson Farms; 2004

in para. 124

EUROPEAN COURT OF JUSTICE

Van Uden Maritime v. KG in Firma Deco-Line

1998

Case No. C-391/95

Cited as: Van Uden Maritime v Deco-Line; 1998

in para. 78

FRANCE

Fujitsu Elektronik GmbH Company v. Fauba France Company

4 January 1995

Case No. 92-16.993

Cited as: Fujitsu v. Fauba; 1995

in para. 32


XIII

O.I.A.E.T.I. v. SOFIDIF et O.E.A.I.S.E.R.U, EURODIF et C.E.A.

19 December 1986

Case No. 1987 Rev. arb. 359

Cited as: OIAETI v. Sofidif

in para. 120

GERMANY

Oberlandesgericht

20 April 1994

Case No. 13 U 51/93

Cited as: OLG; 20 April 1994

in para. 61

Oberlandesgericht

9 July 1998

Case No. 7 U 720/98

Cited as: OLG; 9 July 1998

in para. 36

NETHERLANDS

Arens Sondermaschinen GmbH v. Smit Draad / Draad Nijmegen B.V.; 2008

7 October 2008

Case No. LJN BG2086, zaaknummer 104.003.479

Cited as: Arens v. Smit; 2008

in para. 49


XIV

NEW ZEALAND

Court of Appeal of New Zealand

Skids Programme Management Limited & Ors v McNeill & Ors

23 July 2012

Cited as: Skids v McNeill; 2012

in para. 105

SINGAPORE

Singapore Court of Appeal

The “Jian He”

31 December 2000

Case No. CA 55/1999

Cited as: The “Jian He”

in para. 87

SLOVENIA

Višje sodišče v Ljubljani (High Court of Ljubljana) [VSL sodba I Cpg 1100/2005]

13 September 2011

Case No. III Ips 90/2008

Cited as: Ljubljani; 2011

in para. 38, 40

SPAIN

Improgess GmbH v. Canary Islands Car., SL and Autos Cabrera Medina, SL

17 January 2008

Case No. Recurso de Casación No. 81/2001

Cited as: Improgess v. Canary Islands; 2008

in para. 51


XV

SWITZERLAND

Handelsgericht St. Gallen

5 December 1995

Case No. HG 45/1994

Cited as: HG; 5 Dec 1995

in para. 32

Bundesgericht

18 May 2009

Case No. 4A_68/2009

Cited as: BGer; 18 May 2009

in para. 58

UNITED STATES OF AMERICA

Boland v George S. May International Company

Superior Court Department, Middlesex

7 June 2012

Cited as: Boland v George S. May; 2012

in para. 87

Magellan International Corporation v. Salzgitter Handel GmbH

7 December 1999

Case No. 99 C 5153

Cited as: Magellan v. Salzgitter

in para. 34


XVI

Multiponics Inc. et al. v. William W. Herpel

USA Court of Appeals, Fifth Circuit

16 July 1980

Case No. 622 F.2d 709

Cited as: Multiponics v. Herpel; 1980

in para. 131

Sarhank Group, Petitioner, v. Oracle Corporation

14 April 2005

Case No. 02-9383

Cited as: Sarhank Group v. Oracle; 2005

in para. 124

Thomsen Family Trust v. Peterson Family Enterprises inc.

Court of Appeal Arkansas, Division II

19 May 1999

Case No. 98-962

Cited as: Thomsen v. Peterson; 1999

in para. 131


XVII

INDEX OF ARBITRAL AWARDS

ICC

Case No. 7585

1992

Cited as: ICC; 7585/1992

in para. 72

Dow Chemical France et al v. ISOVER Saint Gobain

ICC Case No. 4131 (1982)

110 JDI 899

Cited as: Dow Chemical v. Isover St. Gobain (ICC); 1982

in para. 126

ICSID

Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania

24 July 8008

Case NO. ARB/05/22

Cited as: Biwater Gaff v United Republic of Tanzania; 2006

in para. 107

Tokios Tokel s v. Ukraine

26 July 2007

Case No. ARB/02/18

Cited as: Tokios Tokel s v. Ukraine; 2007

in para. 96

DAR AL HEKMA UNIVERSITY

1

STATEMENT OF FACTS

1. Vulcan Coltan, Ltd [“CLAIMANT”] a broker of rare minerals, Coltan in particular, is a

subsidiary of Global Minerals Ltd (hereafter: Global Minerals) based in Equatoriana.

2. Mediterraneo Mining SOE [“RESPONDENT”] is a state-owned company based in

Mediterraneo that operates all the mines there, including the only Coltan mine.

3. CLAIMANT‟s parent company, Global Minerals, and RESPONDENT have enjoyed a

longstanding mutually beneficial business relationship for the past ten years. On 23

March 2014, expecting to be governed by the same set of terms and practices that had

directed Global Minerals‟ previous dealings with RESPONDENT, CLAIMANT entered

into negotiations with RESPONDENT for the proposed purchase of 100 metric tons of

Coltan.

4. Citing its own prior commitments and mine capacity, the maximum amount of Coltan

RESPONDENT was willing to commit to sell was 30 metric tons. CLAIMANT agreed to

this amount, confident that RESPONDENT would fulfill any contract satisfactorily with

high-quality Coltan. The Contract between the parties, including all provisions regarding

implementation of this business deal, was signed on 28 March 2014 [“The Contract”].

5. On 25 June 2014, RESPONDENT issued a Notice of Transport as agreed for the

transportation of 30 tons of Coltan. In the accompanying e-mail, RESPONDENT

informed CLAIMANT that they would be able to supply the Coltan earlier than

anticipated. Following another client‟s default on a contract, there was a sudden

availability of 100 tons as originally discussed. This surplus RESPONDENT stated it was

“keen to dispose of”, due to its having “limited storage capacity”.

6. Understandably, CLAIMANT took this unequivocal-sounding language as an offer to

amend the contract to increase the amount of Coltan, based on its own initial bid for 100

tons at the start of negotiations. CLAIMANT announced its acceptance of this offer via

fax on 27 June 2014. RESPONDENT did not reply for an entire week, thus CLAIMANT

relied on the prior dealings between Global Minerals and RESPONDENT to commence

action.

7. On 4 July 2014, CLAIMANT instructed the RST Trade Bank [“the Bank”] to issue its

first letter of credit [“First L/C”] for the payment corresponding to 100 tons of Coltan: an

amount of $4,500,000, or $45/ton as stipulated in The Contract. On the same day, news


2

broke out about a new game console being developed, leading to a steep hike in the price

of Coltan.

8. It therefore seemed rather serendipitous on RESPONDENT‟s part for them to reply

around an hour later on the same day, with RESPONDENT‟s sales manager Mr. Winter

leaving a voicemail message for Mr. Summer, CLAIMANT‟s Chief Operating Officer.

The message rejected the First L/C as not conforming to The Contract. On 5 July 2014,

Mr. Storm emailed Mr. Winter to protest that the First L/C was indeed in line with The

Contract as understood by CLAIMANT to have been amended by RESPONDENT, as

well as to try and clarify what must have been a misunderstanding.

9. On 7 July 2014, CLAIMANT was utterly shocked to receive from RESPONDENT a

declaration of avoidance of The Contract [“First Avoidance”]. Attempting to remedy the

situation and in a display of its own goodwill, CLAIMANT issued a second letter of credit

[“Second L/C”] corresponding exactly to the precise details of The Contract: payment for

30 metric tons of Coltan, or $1,350,000. Although CLAIMANT was still holding out for

100 tons, 30 tons was the bare minimum needed to fulfill contracts it had already

conducted with third party clients for the supply of the Coltan. Global Minerals sent the

Second L/C via 24-hour courier on 8 July 2014 in order to ensure it arrived within the

specified deadline, and RESPONDENT‟s manager signed the delivery receipt.

10. Once again, CLAIMANT was utterly taken aback by RESPONDENT‟s apparent

determination to profit from market developments when it issued its second declaration of

avoidance [“Second Avoidance”] on 9 July 2014, claiming that the Second L/C was past

deadline. CLAIMANT was left with no other option but to commence arbitration

procedures with its application for Emergency Measures to the ICC on 11 July 2014.

11. On 26 July 2014, ICC issued the requested emergency order [“EA Order”] for

RESPONDENT to freeze 100 metric tons of Coltan. In riposte, RESPONDENT raised a

counterclaim on 8 August 2014 against CLAIMANT and Global Minerals, requesting the

joinder of the latter as well as rejecting the validity of the EA Order. Global Minerals then

replied to RESPONDENT‟s counterclaim on 8 September 2014, rejecting the tribunal‟s

jurisdiction.

12. On 3 October 2014, the ICC amended its EA Order for RESPONDENT to the freezing of

30 metric tons of Coltan rather than 100 tons. CLAIMANT maintains the validity of the

EA Order, as well as its assertion that both avoidances by RESPONDENT were invalid

and affirms its rejection of any claim of jurisdiction over Global Minerals.


3

SUMMARY OF ARGUMENTS

13. A simple simile describes this case: as CLAIMANT went out into the chilly night to fulfill

all of RESPONDENT‟s demands, RESPONDENT grabbed CLAIMANT‟s coat to leave it

out in the freezing cold.

14. First, CLAIMANT did not fundamentally breach its obligations in the 28 March Contract.

In First L/C, RESPONDENT‟s statements accompanying the Notice of Transport

provided the impression it was making an offer to modify The Contract. Additionally,

providing an amount that exceeded the necessary payment is not a fundamental breach, as

RESPONDENT could not have incurred substantial detriment. CLAIMANT made every

effort to fulfill its obligations, issuing a First L/C that accepted RESPONDENT‟s offer to

modify The Contract. Regarding the Second L/C, contrary to RESPONDENT‟s claims,

the parties‟ contractual obligations still existed. It was sent within the deadline, and

requesting an invoice does not amount to a breach of contract. Therefore, both the

RESPONDENT‟S attempts to avoid The Contract are null; it still has a duty to carry out

its contractual obligations to deliver 30 tons of Coltan. (Issue 1)

15. Furthermore, the Arbitral Tribunal should not lift the remaining part of the rightfully

issued EA Order for interim measures of freezing 30 tons of Coltan. The Emergency

Arbitrator had rightful jurisdiction to issue them in accordance with the ICC Arbitration

Rules. The Contract, which must be interpreted as originally intended, did not explicitly

exclude the Emergency Arbitrator from issuing interim measures. Rather, it allowed for

concurrent jurisdiction with a specified national court. To lift these measures would also

frustrate CLAIMANT‟s case entirely and cause a great deal of harm, which are the

substantive requirements under Danubian Arbitration Law. (Issue 2)

16. Finally, RESPONDENT‟s attempts to subject Global Minerals to the arbitration

proceedings are baseless. The fact that Global Minerals endorsed The Contract does not

justify RESPONDENT‟s claims that it is bound by the arbitration agreement. As Global

Minerals is a separate entity, with no consent given to submit to arbitration and no liability

under the Group of Companies doctrine or good faith considerations, the Arbitral Tribunal

should reject this claim by RESPONDENT. (Issue 3)


4

ARGUMENTS

ISSUE 1: RESPONDENT DID NOT LAWFULLY AVOID

THE CONTRACT, AND THUS HAS A DUTY TO CARRY

OUT ITS CONTRACTUAL OBLIGATIONS FOR THE

DELIVERY OF 30 METRIC TONS OF COLTAN

17. The issuance of the First L/C was in conformity to The Contract. Therefore, the First

Avoidance did not constitute a lawful avoidance of The Contract (A). Furthermore, the

Second Avoidance following the issuance of the Second L/C did not constitute a lawful

avoidance of The Contract (B).

A. The First L/C Did Not Constitute A Fundamental Breach, And Thus

RESPONDENT Could Not Lawfully Avoid The Contract By Its First Avoidance

18. The First L/C does not constitute a breach of The Contract due to the fact that; The

Contract was amended on the 27th

of June (I), even if there was no Amended Contract, the

First L/C conforms to The Contract (II), the alleged non-conformity could not constitute a

fundamental breach (III), and thus RESPONDENT did not lawfully avoid The Contract by

its First Avoidance (IV).

I. The Contract Was Amended On The 27th

Of June

19. On June 25 2014, CLAIMANT received the Notice of Transport from RESPONDENT,

accompanied in an email informing CLAIMANT of the bankruptcy of one of its major

customers, which led to its default on a purchase of Coltan [R. 9, CL. EX. 3]. In the email,

RESPONDENT expressed that it was “keen to dispose of” the extra quantity of Coltan “as

quickly as possible” [R. 9, CL. EX. 3]. Referring to the parties‟ initial negotiations on the

23rd

of March 2014, CLAIMANT reasonably took that to be an offer to sell the 100 metric

tons of Coltan.

20. However, RESPONDENT took advantage of the developed political crisis in Xanadu that

emerged on the 27th

of June 2014 in order to benefit from the increase in the price of

Coltan, and never replied to CLAIMANT‟s acceptance on the 27th

of June [R. 10, CL. EX.

4] to RESPONDENT‟s offer of 100 metric tons of Coltan. CLAIMANT waited for seven

days before ordering the issuance of the First L/C that was in conformity with the

Amended Contract.


5

II. Even If There Was No Amended Contract, The First L/C Conforms To The

Contract

21. RESPONDENT alleged non-conformity of the First L/C on its First Avoidance, relating to

the purchase of 100 metric tons instead of 30. In fact, the First L/C provided for “not less

than 30 metric tons per shipment”, which is conforming to the requirements set out in The

Contract [R. 11, CL. EX. 5]. This was drafted in such a way to satisfy CLAIMANT‟s

obligations under The Contract for the purchase of 30 metric tons of Coltan and the

Amended Contract. Thus, the quantity provided for under the First L/C was in conformity

to The Contract provisions.

1) The Amount Provided Under The First L/C Did Not Constitute A Breach

According To Art. 31 Of The UCP 600

22. The First L/C is subject to the UCP 600 [R. 11, CL. EX. 5], which stipulates as a default

rule the allowance of partial drawings and shipments [UCP 600, Art. 31(a)]. Any

presentation by the seller, which is made for less than the full amount available under the

L/C, is considered as a partial drawing. According to UCP 600 Art. 31(a), partial drawings

or shipments are always allowed, unless parties agreed otherwise in the terms of the L/C

[Commerzbank AG; 2008]. The Contract did not include such exclusion of partial

drawings, and First L/C provided for “any sum of money not to exceed a total of US$

4,500,000” [R. 11, CL. EX. 5]. Any sum of money could have simply been US$ 1,350,000

subject to partial drawing by RESPONDENT. First L/C being subject to such partial

drawing, fulfilled CLAIMANT‟s obligation to establish an L/C under The Contract as per

Art. 4 [R. 7, CL. EX. 1]. Thus, the amount provided under the First L/C does not constitute

a breach The Contract as alleged by RESPONDENT.

23. Even if the First L/C had minor variations from The Contract, such variations are

insignificant to the payment process. Art. 4(a) of the UCP 600, states that a credit by its

nature is a separate transaction from the sale or other contract on which it may be based;

banks are in no way concerned with or bound by such contract, even if any reference

whatsoever to it is included in the letter of credit.

24. The seller will always receive payment from the bank if he submits documents that

comply with the terms and conditions of the letter of credit, regardless of any

developments in the underlying sales agreement [Bijl; 3.1]. Accordingly, CLAIMANT‟s

obligation to pay would have been fulfilled upon presenting the required documents by

RESPONDENT to The Bank; as such variations from The Contract are insignificant


6

regarding the payment mechanism.

2) The First L/C Providing For CIP As The Delivery Term Was In Accordance

With RESPONDENT‟s Notice Of Transport

25. RESPONDENT‟s basis for the First Avoidance [R. 13, CL. EX. 7], regarding the First

L/C‟s lack of conformity to the delivery terms in The Contract, is invalid. As both

CLAIMANT and RESPONDENT have agreed to modify the delivery terms in The

Contract (a), and even if there was no modification, CIP and CIF do not substantially

differ (b).

a) By Virtue Of Art. 29 Of The CISG, CLAIMANT And RESPONDENT

Agreed To Modify The Delivery Terms in The Contract

26. On the 25th

of June 2014, RESPONDENT communicated to the CLAIMANT a Notice of

Transport that deviated from the agreed delivery terms of The Contract [R. 8, CL. EX. 2],

specifying CIP as the mode of transport instead of CIF [R. 7, CL. EX. 1, Art. 5]. Subject

to Art. 29(1) of the CISG, which Danubia is a contracting state thereof [R. 61, Procedural

Order 1, Para. 5(3)], “A contract may be modified… by the mere agreement of the

parties”, this amplifies the freedom-from-form-requirements principle of Art. 11 of the

CISG [CISG Digest; P. 127 Para. 6].

27. Under this principle, the parties are free to modify their contract in any form [CISG

Digest; P. 73, Para. 5], unless a contract requires modifications to be made in writing

[CISG, Art. 29(2)]. In The Contract between CLAIMANT and RESPONDENT, there is

no clause to that effect [R. 65, Procedural Order 2, Para. 15]. Accordingly, the Parties

conduct is sufficient enough to modify The Contract; in which RESPONDENT offered to

modify the contract (1), and CLAIMANT accepted that offer (2).

1. RESPONDENT Offered To Modify The Delivery Terms Specified Under

The Contract From CIF To CIP

28. On the 28th

of March 2014, CLAIMANT and RESPONDENT concluded a sales

agreement specifying “CIF (INCOTERMS 2010), Oceanside, Equatoriana” as the mode

of transport of the goods [R. 7, CL. EX. 1, Art. 5]. Yet, RESPONDENT issued the Notice

of Transport on CIP terms. Art. 23 of the CISG indicates that once a contract is

concluded, subsequent communications may be construed as proposals to modify the

contract, subject to the rules of offer and acceptance [CISG Digest; P. 110, Para. 3].


7

Furthermore, Art. 14 of the CISG requires a proposal to indicate intent to be bound by an

acceptance (i) and that it must be sufficiently definite (ii) to constitute an offer.

i. RESPONDENT Intended To Be Bound By An Acceptance

29. Art. 8 of the CISG governs the interpretation of the parties‟ agreement to modify a

contract [OGH; 10 Nov 1994]. By virtue of Art. 8(3) of the CISG, intent may be

established by all the relevant circumstances, including negotiations and the conduct of

the parties after the alleged conclusion of the contract [CISG Digest; P. 91, Para. 5].

Referring to the initial negotiations prior to The Contract, RESPONDENT had suggested

CIP as the mode of delivery [R. 34, Answer to Request for Arbitration, Para. 8].

RESPONDENT further amplified its reference for CIP, by ticking it under the

“Transport” heading in the Notice of Transport [R. 8, CL. EX. 2], after The Contract had

already been concluded in terms of CIF [R. 7, CL. EX. 1, Art. 5].

30. Appropriately, CLAIMANT reasonably relied on RESPONDENT‟s conduct to be

deemed an offer to modify The Contract. Furthermore, RESPONDENT had sufficient

knowledge of CLAIMANT‟s intention to accept the modification through CLAIMANT‟s

fax on the 27th

of June 2014 [R. 10, CL. EX. 4]. RESPONDENT had seven days to

withdraw its offer regarding the modification prior to CLAIMANT‟s acceptance on the

4th

of July. If the RESPONDENT did not want to be bound by an acceptance, it would

have utilized its right to revoke its proposed modification by virtue of Art. 16(1) of the

CISG. However, RESPONDENT had taken no steps to do so but rather it overlooked this

matter [R. 65, Procedural Order 2, Para. 20]. Hence, RESPONDENT demonstrated the

intention to be bound by CLAIMANT‟s acceptance.

ii. RESPONDENT’s Proposal Was Sufficiently Definite

31. Art. 14(1) of the CISG provides that a proposal is sufficiently definite if it indicates the

goods and expressly or implicitly fixes or makes provision for determining the quantity

and the price. On that basis, specifying Coltan in the Notice of Transport is a sufficient

indication of the goods [OGH; 10 Nov 1994], as there is no need to identify the quality of

the goods [CISG Digest; P. 92, Para. 8].

32. Moreover, the spectral quantity from 30 – 150 metric tons indicated in both the Notice of

Transport [R. 8, CL. EX. 2] and corresponding email [R. 9, CL. EX. 3], amount to an

“adequate” indication of the quantity [OGH; 6 Feb 1996]. Regarding the price, if the

intent to be bound by an acceptance is established, a proposal is sufficiently definite


8

notwithstanding the failure to specify the price [HG; 5 Dec 1995]. It is undisputed that

the RESPONDENT did not intend to ignore the provisions of The Contract through its

proposal to modify the delivery terms; therefore, the price US$45/ KG [R. 7, CL. EX. 1]

shall prevail without requiring its explicit indication [Fujitsu v. Fauba; 1995].

33. RESPONDENT‟s proposal to modify the shipping terms fulfills all three requirements for

being sufficiently definite under the CISG. Moreover, RESPONDENT intended to be

bound by CLAIMANT‟s acceptance [CL Memo; Para. 29, 30]. Accordingly,

RESPONDENT‟s proposal satisfies the requirements for constituting an offer, and thus,

resulting in a valid offer.

2. CLAIMANT‟s Conduct Causing The Issuance Of The First L/C

Constitutes An Acceptance To RESPONDENT‟s Offer To Modify The

Contract

34. Although a letter of credit is deemed to be an independent transaction from The Contract

[CL Memo; Para. 23], its issuance may constitute an acceptance to an offer [Magellan v.

Salzgitter; 1999]. Art. 18 of the CISG apply to acceptances regarding proposals to modify

the contract [OLG; 9 July 1998]. Pursuant to Art. 18(1), an offeree accepts an offer by a

statement or other conduct, indicating assent. Moreover, an indication of assent may be

made by the issuance of a letter of credit [CISG Digest; P. 99, Para. 6].

35. Accordingly, the First L/C issued on the 4th

of July 2014 was in compliance with the

Notice of Transport [R. 11, CL. EX. 5], indicating CLAIMANT‟s acceptance of the

modification [United States; 1999]. Consequently, regardless of the assumption that The

Contract had not been amended on the 27th

of June, [R. 60, Procedural Order 1] it is

undisputed that the contract was modified on the 4th

of July when RESPONDENT

received CLAIMANT‟s acceptance by virtue of the First L/C. Therefore, CLAIMANT

could not have breached The Contract as alleged by the RESPONDENT [R. 13, CL. EX.

7].

36. Furthermore, it has been established that “contradictory conduct by a party bars that party

from relying on a different meaning of its former conduct” [OLG; 23 March 2005].

Accordingly, RESPONDENT‟s deviation from CIF to CIP bars it from relying on CIF as

its foundation for CLAIMANT‟s “non-conformity” [R. 13, CL. EX. 7]. Consequently,

RESPONDENT‟s basis for the avoidance on the 7th

of July, regarding the First L/C‟s lack

of conformity to the delivery terms [R. 13, CL. EX. 7] is invalid and unenforceable.


9

b) CIP And CIF Do Not Substantially Differ

37. CIP terms were first introduced in Incoterms 2010 with many similarities to CIF terms. In

both CIP and CIF, the seller has the obligation to pay the cost of freight to the named

place of destination [Ramberg, P. 123]. Additionally, the seller fulfills its delivery

obligation by handing over the goods to the courier for shipment [Ramberg, P. 48].

Moreover, these are the only two terms that stipulate that the insurance cost is the

responsibility of the seller [Ramberg, P. 123]. However, the differences between both

terms are minimal; CIF is used under Sea shipments only [Ramberg, P. 199], and CIP is

used for any mode of transportation [Ramberg, P. 123]. It was uncontroversial between

CLAIMANT and RESPONDENT that the Coltan would be shipped from a port in

Mediterraneo to the port of Oceanside [R. 68 Procedural Order 2, Para. 37]. Therefore,

the minimal difference between CIP and CIF terms shall not affect the performance of

The Contract.

3) RESPONDENT Cannot Rely On The Contention That The First L/C Was Not

In Conformity to The Contract

38. The alleged non-conformity, even if found to be existent, was caused by the actions of the

RESPONDENT. CLAIMANT relied upon the explicit desire of the RESPONDENT to

get rid of the available extra Coltan, expressed by its email on the 25th

of June [R. 9, CL.

EX. 3]. Even if the letters of credit were to be considered as not in conformity with the

contract, the seller cannot rely on this fact; namely, under Art. 80 of the CISG, a party

may not rely on a failure of the other party to perform when the failure was caused by the

first party‟s act or omission [Ljubljani; 2011].

39. CLAIMANT responded in accordance with the email sent by RESPONDENT, and

replied stating its acceptance to order 100 metric tons of Coltan on June 27 2014 [R. 10,

CL. EX. 4]. However, RESPONDENT remained silent for seven days before

CLAIMANT caused the issuance of the First L/C accordingly. Thus, RESPONDENT‟s

failure to reply clarifying its intentions to the CLAIMANT was the cause for such alleged

non-conformity of the First L/C. Accordingly, RESPONDENT cannot rely on such non-

conformity for avoiding The Contract when it is in the first place caused by its act on

June 25 2014 and its omission for one week following CLAIMANT‟s response.

40. The seller should have, if it felt that the letters of credit did not conform to the contract,

sent the buyer the relevant information required to open new letters of credit. Therefore,

the court found that the seller was unable to rely on the buyer‟s failure to properly fulfill


10

its obligations regarding the letters of credit because the seller had caused that failure

[Ljubljani; 2011]. RESPONDENT should have made proper communication with the

CLAIMANT in order to open a new L/C that is conforming to The Contract from the

RESPONDENT‟s point of view.

III. The Alleged Non-Conformity Of The First L/C Does Not Constitute A Fundamental

Breach

41. Seller does not have the right to avoid The Contract unless there was a fundamental

breach committed by the buyer [CISG, Art. 64(a)]. Even if such variations from The

Contract constituted non-conformity of the First L/C, it could not be interpreted as to

constitute a fundamental breach entitling RESPONDENT to avoid The Contract.

42. The determination of whether a fundamental breach has occurred will require the parties

to review their respective contractual obligations as well as their obligations imposed by

the provisions of the CISG [Babiak, Defining Fundamental Breach Under The CISG; P.

126]. CLAIMANT‟s contractual obligations were to be fulfilled by issuing the First L/C,

had it not been rejected by RESPONDENT [R. 7, CL. EX. 1; Art. 4].

43. Subject to the CISG, buyer has an obligation to pay the price for the goods and take

delivery of them as required by the contract and this convention [CISG, Art. 53]. Buyer‟s

obligation to open a letter of credit is only discharged if the seller is granted an

independent claim against the issuing bank [Schlechtriem & Schwenzer; P. 800-801, Para.

18]. Subject to the First L/C, RESPONDENT had an independent claim for any sum of

money not exceeding US $4,500,000, which is in line with the payment provision under

The Contract. CLAIMANT fulfilled one of its two obligations when the First L/C was

issued. RESPONDENT, on the other hand, obstructed performance by rejecting the First

L/C. Thus, CLAIMANT‟s obligation to pay under The Contract was not breached.

44. Art. 25 of the CISG states that for a breach to be fundamental, it must result in such

detriment to the other party as substantially to deprive him of what he is entitled to expect

under the contract, unless the party in breach did not foresee and a reasonable person of

the same kind in the same circumstances would not have foreseen such a result. In

accordance with the said provision, there was no substantial detriment incurred by the

RESPONDENT (1), and CLAIMANT could not have foreseen any substantial detriment

resulting from the First L/C (2).


11

1) Respondent Could Not Have Incurred Substantial Detriment By The Alleged

Non-Conformity

45. The party's special interest in receiving performance is a key element for establishing

whether a breach is substantial [Graffi, Case Law on the Concept of Fundamental Breach

in the Vienna Sales Convention; P. 340]. Under The Contract, RESPONDENT‟s

substantial interest is to receive payment for the delivery of 30 metric tons of Coltan.

CLAIMANT complied with its obligation to pay upon the issuance of the First L/C, as it

was to provide for the payment of the agreed upon price by partial drawing on part of the

RESPONDENT. Such compliance is consistent with the CLAIMANT‟s obligation to pay,

satisfying RESPONDENT‟s substantial interest under The Contract.

46. The alleged non-conformity of the First L/C could not by any means cause such harm or

injury to the RESPONDENT. In light of the Convention‟s legislative history, the word

“detriment” is to be synonymous with injury or harm or consequential harm incurred by

the injured party, and that the determination of a fundamental breach is to be made on a

case-by-case basis [El-Saghir; (a), 2000]. RESPONDENT did not incur any injury upon

receiving the First L/C. As it was established, the First L/C entitled RESPONDENT to

receive payment under The Contract, leaving no room for any substantial detriment to

occur.

47. The interpretation of the First L/C must be in line with the context of The Contract. The

degree of „detriment‟ subject to Art. 25 of the CISG is tied to the expectations of the

injured party under the terms of the existing contract [El-Saghir; (a), 2000]. The alleged

non-conformity did not in fact deprive RESPONDENT from what it was ought to expect

under The Contract, which is to receive payment for the 30 metric tons of Coltan.

48. Furthermore, the First L/C did not impose any further obligations on the RESPONDENT,

which could not be detrimental under the scope of Art. 25 of the CISG. The First L/C was

issued in accordance with Art. 4 of The Contract. RESPONDENT could have accepted the

First L/C as it fulfills the CLAIMANT‟s obligation to pay the price for the purchase of 30

metric tons of Coltan under The Contract and fulfilled RESPONDENT‟s obligation to

accept payment and deliver the 30 metric tons of Coltan.

49. In determining whether a breach of contract amounts to a fundamental breach within the

meaning of Art. 25 CISG, it is also relevant whether the breach of contract can be repaired

within a reasonable time [Arens v. Smit; 2008]. CLAIMANT could have repaired the


12

alleged non-conformity of the First L/C, and it actually did upon issuance of the Second

L/C, which cannot amount to a fundamental breach.

50. It is the responsibility of the injured party to prove that it suffered a detriment that

substantially deprived it from what it was entitled to expect under the contract [El-Saghir;

(a), 2000]. RESPONDENT has the burden to prove that it had incurred a substantial

detriment or such was expected to occur at some time in the future, subject to the First

L/C.

2) CLAIMANT Could Not Have Foreseen Any Substantial Detriment To The

RESPONDENT

51. The second requirement for a fundamental breach to take place is the element of

foreseeability [CISG, Art. 25]. Under the scope of Art. 25 of the CISG, an exception lies

where the breaching party would not have expected such a result, and a reasonable person

in the same situation would not have expected the same result [Improgess v. Canary

Islands; 2008]. Upon issuance of the First L/C, CLAIMANT was under the impression

that The Contract had been amended upon RESPONDENT‟s implicit offer provided on

the 25th

of June [R. 9, CL. EX. 3]. Accordingly, CLAIMANT could not possibly foresee

that the First L/C would have result in detriment to the RESPONDENT, as it did not

breach The Contract to begin with. As a buyer, CLAIMANT did not anticipate that the

RESPONDENT would suddenly have no further commercial interest in the performance

of The Contract by simply receiving what it was entitled to expect under such contract and

what he has opened the door for through its offer on the 25th

of June.

52. The second requirement under Art. 25 that negates the RESPONDENT‟s claim for

fundamental breach is an objective one requiring the breaching party to show that a

reasonable person of the same kind in the same circumstances would not have foreseen the

injuries to the non-breaching party [Babiak, Defining Fundamental Breach Under The

CISG; P. 122]. A reasonable merchant in the CLAIMANT‟s position would not have

foreseen any possible detriment to the RESPONDENT. By issuing the First L/C that was

in line with the obligations set out under The Contract, the obligation to pay the price is to

be deemed fulfilled by the CLAIMANT. Accordingly, no such detriment or injury to the

RESPONDENT would have taken place upon accepting the First L/C.

53. Moreover, CLAIMANT took all necessary steps to fulfill its obligations to pay under The

Contract. Subject to Art. 54 of the CISG, CLAIMANT‟s obligation to pay the price under

The Contract includes taking such steps as may be required to enable payment to be paid.


13

In the case of letters of credit, the buyer is obliged to provide the seller with a credit that

covers the agreed time of shipment as well as the agreed time of payment [Schlechtriem &

Schwenzer; P. 813, Para. 7]. Such steps were taken by the CLAIMANT in order to fulfill

its obligation to pay upon issuance of the First L/C.

54. CLAIMANT also did the same in regards to the voicemail message that was left on Mr.

Summer‟s phone by Mr. Winter, rejecting the First L/C and threatening to terminate The

Contract [R. 4, Request for Arbitration, Para. 12] [R. 36, Answer to Request for

Arbitration, Para. 19]. In response to the voicemail message, Mr. Storm emailed

RESPONDENT immediately on the 5th

of July in order to clear any misunderstanding

between the parties regarding the First L/C [R. 12, CL. EX. 6]. Moreover, on the same

email Mr. Storm expressed CLAIMANT‟s willingness to agree to CIF instead of CIP,

which shows its good intent to carry out its contractual obligations under The Contract.

However, RESPONDENT‟s only response to that email was the First Avoidance two days

later. Therefore, CLAIMANT established its good intentions by taking all necessary steps

to comply with the provisions of The Contract as opposed to the RESPONDENT.

55. Based on the said provisions and the established sequence of facts, First L/C was issued in

conformity to The Contract. Thus, it could not have constituted a fundamental breach

entailing avoidance of The Contract.

IV. RESPONDENT Did Not Rightfully Avoid The Contract By Its First Avoidance

56. The seller must be entitled to avoid the contract, requiring that the buyer has committed a

fundamental breach of the contract [Schlechtriem & Schwenzer; P. 885, Para. 1].

Following what has been established that the First L/C conformed to The Contract, and

thus there was no fundamental breach [CL Memo; Para 41-55], RESPONDENT did not

have the right to declare The Contract avoided, as the CLAIMAT‟s obligation to pay was

not breached [R. 13, CL. EX. 7].

57. RESPONDENT unlawfully declared The Contract avoided without setting a deadline to

remedy the performance by the CLAIMANT. An effective avoidance requires among

other things the setting of a deadline, a threat of the avoidance and the declaration of the

avoidance after the ineffective expiration of the set deadline [OGH; 11 Sep 1997].

RESPONDENT threatened to terminate The Contract on its voicemail message on the 4th

of July. However, no further discussions were made to reach an agreement over the

disputed non-conformity of the First L/C. A deadline for amending or modifying

performance of the CLAIMANT was not provided nor suggested by RESPONDENT.


14

58. Avoiding The Contract is supposed to be the last resort for RESPONDENT; First

Avoidance was shockingly declared three days after issuance of the First L/C. A party

should be entitled to have the contract unwound only as a last resort, and if this is

necessary to react to breaches of contract which substantially deprive the creditor of its

interest in performance of the contract [BGer; 18 May 2009].

59. The First Avoidance was declared without any attempt to communicate with CLAIMANT

regarding the alleged non-conformity of the First L/C. Such avoidance is inconsistent with

the alleged breach, which even if existed, would not substantially deprive RESPONDENT

from its interest in performance, and thus could not constitute a fundamental breach.

Therefore, the alleged breach could not be considered as entailing RESPONDENT to

immediately resort to avoiding The Contract.

1) RESPONDENT‟S First Avoidance Was Not Properly Noticed

60. RESPONDENT received the First L/C on the 4th

of July and made its voicemail message

to the CLAIMANT on the same day [R. 36, Answer to Request for Arbitration, Para. 19].

However, RESPONDENT never replied to the CLAIMANT‟s email to clear things up on

the 5th

of July [R. 12, CL. EX. 6]. In fact, while CLAIMANT was waiting for an answer to

the email, RESPONDENT waited for two days before declaring The Contract avoided on

the 7th

of July. It is crucial that there is a time limit within which the right of avoidance

must be exercised [Schlechtriem & Schwenzer; P. 445, Para. 15].

61. Art. 64(2)(b) of the CISG states that the seller may declare the contract avoided after he

knew or ought to have known of the breach. The German civil court of appeal found that a

declaration of avoidance was timely made; the declaration was made within a reasonable

time because it came only one day after the buyer became aware of the breach [OLG; 20

April 1994]. A declaration of avoidance one day after acknowledgment of the breach was

deemed to be reasonable by the court.

62. Time limit regarding the First Avoidance is essential under the relevant circumstances of

the case; The Contract settled a period of time upon which CLAIMANT is ought to issue

the L/C. Art. 4 of The Contract states that the L/C shall be established by the CLAIMANT

14 days after receiving the Notice of Transport in regard to shipment [R. 7, CL. EX. 1].

CLAIMANT received the Notice of Transport on June 25; accordingly, the 14 days period

to issue the L/C shall end on July 9, which is two days after the First Avoidance was

declared.


15

63. Modern international sets of rules all provide for a reasonable time limit within which the

contract must be avoided [Schlechtriem & Schwenzer; P. 445-446, Para. 16]. By waiting

for three days before sending the First Avoidance, RESPONDENT put the CLAIMANT

in a position under which it had no proper length of time to remedy the First L/C as the

period for such issuance was about to end subject to The Contract. RESPONDENT could

have given CLAIMANT an opportunity to change or clarify the disputed points in the

First L/C; and CLAIMANT could have had the time to modify and perform its obligations

accordingly.

2) RESPONDENT‟s Primary Remedy Is To Require Performance Which Shall

Precede A Declaration Of Avoidance

64. Even if there was a breach regarding the First L/C, RESPONDENT should have required

the CLAIMANT to amend its performance within a reasonable period of time. Subject to

Art. 62 of the CISG, RESPONDENT may require the CLAIMANT to pay the price.

According to the concept of the CISG, the primary remedy of the seller for breach of

contract by the buyer is the seller‟s right to require the buyer to perform any of his

obligations [Schlechtriem & Schwenzer; P. 885, Para. 1]. This remedy is recognized in

civil law system; Danubia and Mediterraneo are both civil law countries [R. 69,

Procedural Order 2, Para. 42]. Within the section on the seller‟s remedies, the right to

performance of the buyer‟s obligations is set forth at the beginning of the various

remedies available to the seller [CISG Digest; P. 298, Para, 1].

65. In accordance with the said provisions and the long-standing relationship between

RESPONDENT and the CLAIMANT‟s parent company Global Minerals,

RESPONDENT is fairly expected to resort to such remedy instead of avoiding The

Contract. Such remedy would have been efficient in maintaining parties contractual

obligations under The Contract. However, RESPONDENT rushed into the remedy of last

resort and avoided The Contract in order to be free to get a better deal with another buyer

benefiting from the market increase in the price of Coltan.

66. Furthermore, seller may fix an additional period of time of reasonable length for

performance by the buyer of his obligations [CISG, Art. 63(1)]. The applicable CISG

requires for the avoidance by the seller an additional period of time for performance by

the buyer Art. 63(1), 64(1)(b) CISG) [OGH; 11 Sep 1997]. RESPONDENT could have

granted the CLAIMANT an additional period of time to remedy its performance instead

of immediately resorting to the remedy of last resort.


16

B. RESPONDENT‟s Second Avoidance On 9 July Did Not Constitute A Lawful

Avoidance Of The Contract

67. On the 9th

of July 2014, RESPONDENT declared the Second Avoidance of The Contract,

with regards to the Second L/C [R. 44, RE. EX. 4]. RESPONDENT based its Second

Avoidance on the nonexistence of The Contract, grounded on its alleged First Avoidance.

The RESPONDENT‟s validations for the Second Avoidance are unenforceable because

of the invalidity of the First Avoidance (I), the adherence of the Second L/C to the

deadline (II), and its non-imposition of an additional requirement, that being the

commercial invoice (III).

I. RESPONDENT Did Not Lawfully Avoid The Contract On 7 July; Therefore The

Contractual Obligations Between The Parties Still Exist

68. Art. 81 of the CISG settle the technical aspects of unwinding a contract that has been

avoided. However, it provides for two requirements for the unwinding of a contract to

take place; 1) the existence of a right to avoid and; 2) whether the avoidance has been

properly declared [Schlechtriem & Schwenzer; P. 1095, Para. 2]. As previously

established, RESPONDENT did not have the right to avoid The Contract, and therefore,

First Avoidance was not properly declared [CL Memo; Para. 56-66].

69. Furthermore, according to the doctrine pacta sunt servanda, agreements must be upheld to

the degree that even upon breach of contract by buyer, the CISG remedies available to a

seller present avoidance as the remedy of last resort [Schlechtriem & Schwenzer; P. 894,

Para. 4]. Primary contractual obligations should be maintained even in case of failures by

one of the parties to act in accordance with the contract [Bundesgericht; 2009].

RESPONDENT overlooked the available remedies under the CISG and immediately

avoided The Contract twice, which is the remedy of last resort. Thus, the arbitral tribunal

should comply with the CISG‟s preference to uphold contracts and deem the First and the

Second Avoidance as invalid.

II. The Second L/C Was Provided In Accordance With The Deadline Provided For

Under The Contract

70. RESPONDENT claims that the Second L/C was sent after the deadline and was delivered

outside business hours [R. 37, Answer to Request for Arbitration]. The Second L/C was

issued for US$ 1,350,000 on the 8th of July linking to 30 metric tons of Coltan subject to

The Contract. Mr. Winter signed the receipt of the courier on 8th of July at 19:05 RST [R.


17

15, CL. EX. 9], and on the second day RESPONDENT declared the Second Avoidance

[R. 44, RE. EX. 4].

71. Art. 27 of CISG provides that a delay or error in the transmission of the communication

or its failure to arrive does not deprive that party of the right to rely on the

communication. Art. 27 departs from the basic principle that a communication must reach

the addressee [Schlechtriem & Schwenzer; P. 448, Para. 1]. Subject to such provision,

the Second L/C was issued on July 8 2014 within the deadline provided for under The

Contract. Thus, Second L/C was not belated as opposed to RESPONDENT‟s allegations

in its Second Avoidance.

72. Furthermore, as a rule late performance, late payment of the price does not in itself

constitute a fundamental breach, and cannot be the cause of immediate avoidance of the

contract [ICC; 7585/1992]. Failure to pay the purchase price on the date due will not

amount to a fundamental breach of contract, as the seller‟s interest to receive payment is

not substantially impaired by the delay [Schwenzer; P. 212]. Even if the Second L/C is

deemed to be belated, late payment does not amount to a fundamental breach entailing

avoidance of The Contract.

73. In addition to issuance of the Second L/C on 8th

of July by 24 hours courier, Global

Minerals faxed it to RESPONDENT on the same day to ensure adherence to the deadline.

This constitutes CLAIMANT‟s efforts to ensure compliance to the provided deadline.

Thus, the Second L/C adhered to the deadline, and RESPONDENT‟s grounds for the

Second Avoidance shall be deemed unacceptable.

III. The Requirement That RESPONDENT Present A Commercial Invoice Does Not

Amount To A Breach Of The Contract

74. Contrary to what the RESPONDENT has alleged [R. 44, RE. EX. 4], the commercial

invoice is not considered an additional requirement to The Contract. By virtue of Art.

9(1) of the CISG, the parties are bound by any usage to which they have agreed. In

particular, this provision correspondingly supplements the content of The Contract

[Schlechtriem & Schwenzer; P. 182, Para. 1]. In The Contract, the parties agreed to

incorporate Incoterms 2010, therefore binding them to the usages required under it.

75. Incoterms 2010 provides a general obligation on the seller to issue a commercial invoice

in conformity with the contract. It is also usual practice that the seller, in order to be paid,

has to invoice the buyer. In addition, seller must submit any other evidence stipulated in

the contract itself that the goods conform to that contract [Ramberg, P. 112]. In


18

compliance with Art. 9(1) of the CISG, CLAIMANT and RESPONDENT‟s explicit

inclusion of the Incoterms 2010 in The Contract [R. 7, CL. EX. 1, Art. 5] binds them to its

associated Usages. Therefore, the Second L/C does not impose any additional

requirements on the RESPONDENT, but it is rather deemed a primary obligation

imposed by The Contract itself.

CONCLUSION OF THE FIRST ISSUE

76. As established, RESPONDENT did not rightfully avoid The Contract neither by its First

Avoidance nor its Second Avoidance; as such avoidances were not lawfully grounded

upon a fundamental breach on part of the CLAIMANT. Thus, Arbitral Tribunal is

requested to order RESPONDENT to fulfill its contractual obligations and deliver the 30

metric tons of Coltan.

ISSUE 2: THE ARBITRAL TRIBUNAL SHOULD NOT

LIFT THE REMAINING PART OF THE EMERGENCY

ARBITRATOR‟S ORDER FOR INTERIM MEASURES

A. The Emergency Arbitrator Enjoys Full Authority to Issue Interim Measures Based

on the ICC Arbitration Rules, The Contract, and the UNCITRAL ML

77. The rightful application of both the ICC [Art. 29] and the UNCITRAL ML [Art. 17]

allow for the Emergency Arbitrator‟s authority to issue interim measures on behalf of the

Arbitral Tribunal, as well as the equitable interpretation of Art. 21 of The Contract to

reflect the parties‟ own original intentions.

I. The EA Order Applies Automatically Under the Parties‟ Agreement and Art. 29 of

the ICC Arbitration Rules

78. Contrary to RESPONDENT‟s allegations [R. 39, Answer to Request for Arbitration,

Para. 36-37], the Emergency Arbitrator enjoys rightful jurisdiction to order interim

measures. Interim measures are ordered parallel to arbitration proceedings and are

intended as measures of support [Van Uden Maritime v Deco-Line; 1998]. As a general

rule, the Arbitral Tribunal is within its jurisdiction to prescribe whichever interim

measures it deems necessary and appropriate, and the Emergency Arbitrator‟s authority


19

derives from that of the Arbitral Tribunal [Hanotiau, P. 315; Grierson & Van Hooft, P.

14].

79. In fact, issuing interim measures can be considered the most essential role of an

Emergency Arbitrator; without it, parties would have only the courts to resort to, an

option they have already attempted to avoid [Redfern & Hunter, P. 400; Yesilirmark, P.

115]. Denying it this right would deny it most of its responsibilities and usefulness [Bose

& Meredith, P. 186].

80. In this case, the Emergency Arbitrator‟s authority applies automatically as per the parties‟

agreement in Art. 20 to settle disputes through Arbitration [ICC Rules Art. 29(1)].

Through this agreement, CLAIMANT and RESPONDENT have chosen to subject

themselves to the Arbitral Tribunal‟s authority and by extension the Emergency

Arbitrator‟s, incorporating all that entails: including any measures that may be taken by

the Arbitral Tribunal or the Emergency Arbitrator in its course of work, unless they have

specifically excluded it [ICC Rules Art. 28(1); Grierson & Van Hooft, P. 65, Para. 22].

As shall be specified in our next argument, this exclusion did not occur in The Contract.

II. Art. 21 Provides for the Exclusive Right of the Specified Courts to Enforce Interim

Measures Issued By the Competent Arbitral Authority

81. RESPONDENT asserts that Art. 21 of The Contract restricts the authority to issue a valid

order for interim measures to the specified national courts. Art. 21 reads as follows: “The

courts at the place of business of the party against which provisional measures are sought

shall have exclusive jurisdiction to grant such measures.” [R. 7, CL. EX. 1] Upon a closer

reading of the clause, it becomes clear that the word „grant‟ here is synonymous with

„enforce‟, thus giving the specified courts the right to enforce interim measures, and

limiting the power of other courts to implement them. Arbitral Tribunals have never had

the power to enforce interim measures; enforcement has always been the sole prerogative

of national courts [Tucker, P. 17]. The Arbitral Tribunal has never contested this right;

therefore, Art. 21 excludes it from none of its authority. Art. 21 simply ensures that none

but these particular national courts can enforce these measures, while affirming the

Arbitral Tribunal or the Emergency Arbitrator‟s authority to grant them.

82. Granting exclusive powers of enforcement to these national courts fits in with the

Tribunal‟s authority in cases such as ours, where it is vital that parties have an immediate

recourse to ensure the rapid enforcement of the urgent interim measures ordered by the

Arbitral Tribunal. If Art. 21‟s “grant” referred only to the issuance of measures, the


20

jurisdiction of which court exactly would largely remain irrelevant, whether in reference

to the jurisdiction of the courts of the party against which the measures or the party

demanding them.

83. Instead, interpreting “grant” as “enforce” fits best with the intentions behind the drafting

of Art. 21. This interpretation is based on the logical conclusion that can be drawn from

Art. 21‟s specifying of the courts at the place of business of the party “against which

provisional measures are sought”, which clarifies the role of national courts as an

enforcing authority. These particular courts enjoy primary jurisdiction over all matters

related to the party in question, not least concerning the contested interim measures, and

their enforcement shall always remain undisputed. In particular, they have total authority

over the assets (money or goods) of the party against which the measures are demanded,

and can order their disposal as they see fit. This would prevent complications similar to

those in 2010 from arising once more, proving that it was indeed the parties‟ original

intention in drafting Art. 21.

84. Thus, Art. 21‟s allowance of exclusive jurisdiction to these specific courts for the

enforcement of interim measures complements the Arbitral Tribunal‟s authority perfectly,

granting CLAIMANT‟s requests and reaffirming the validity of the EA Order for interim

measures against the RESPONDENT.

III. Art. 21 of The Contract Provides for Concurrent Jurisdiction to Issue Interim

Measures to the Specified Courts and the Emergency Arbitrator

85. Contrary to RESPONDENT‟s allegations, Art. 21 allows for concurrent jurisdiction for

interim measures between the specified national courts and the Arbitral Tribunal. Firstly,

use of the phrase „exclusive jurisdiction‟ does not indicate the exclusion of the competent

Arbitral Tribunal‟s authority (1). Moreover, Art. 21 should be interpreted in accordance

with the parties‟ original intentions as per CISG Art. 8(3) (2). Additionally, Art. 21

cannot be construed to exclude an authority for interim relief that did not yet exist when it

was drafted (3). Finally, Art. 21 is a forum selection clause that specifies which national

court has exclusive jurisdiction to issue and enforce interim measures, without excluding

the authority of the competent arbitral tribunal (4).

1) The Phrase „Exclusive Jurisdiction‟ Does Not Mandate Absolute Exclusivity

86. Simply including the phrase „exclusive jurisdiction‟ in a contract does not guarantee its

being taken literally. While these clauses are prima facie enforceable, the test established


21

in the case of The Eleftheria (1969) states that they can be deemed overruled as long as

strong cause can be given by the opposing party, whether for forum non conveniens or

other considerations up to the discretion of the judge [Tang, P. 122, Para. 3.2; Tan P.

396, Para. 1]. From Singapore [The Jian He; 2000] to Massachusetts [Boland v George

S. May; 2012] to Canada [G & E Auto v. Toyota; 1980] many court cases have affirmed

this. Without delving too deeply into the principles of private international law

considered in these cases, central throughout was judges‟ prioritizing the parties‟

intentions to bring about a fair outcome [Keyes, P. 160, Para. 2]. Clinging to a literal

meaning of Art. 21 while giving no consideration to the parties‟ intentions will obstruct

this fairness.

2) Art. 21 Should Be Interpreted in Accordance With the Parties‟ Original

Intentions As Per Art. 8(3) of the CISG

87. Considering the parties‟ intentions behind drafting Art. 21 defeats RESPONDENT‟s

insistence that Art. 21 excludes the Emergency Arbitrator‟s right to issue interim

measures. A contract interpretation denoting the parties‟ original intentions should

prevail over a literal interpretation [Lew/Mistelis/Kroll, P. 617, Para. 18-84]; this case

should be no exception.

88. These intentions should be discerned through reasonable examination of the conduct of

each party leading up to The Contract through the negotiations, as well as previously

established practices between CLAIMANT‟s parent company and RESPONDENT [CISG

Art. 8(3)]. We must therefore examine the circumstances under which Art. 21 was

drafted. The fact that Global Minerals first proposed this clause in a 2010 contract [R. 35,

Resp. Reply to Arbitration, Para. 10] indicates two important issues regarding Art. 21‟s

interpretation.

3) Art. 21 cannot be construed to exclude an authority for interim relief that did

not yet exist when it was drafted

89. While the ICC has allowed for one form of emergency relief or another since 1998, the

office of the Emergency Arbitrator as an internal mechanism to deal with such requests

came into force only with the ICC‟s 2012 amendments [Baigel, P. 1, Para. 3; Bose &

Meredith, P. 187, Para. 1]. We therefore ask: how could the parties have intended Art. 21

to exclude the authority of a body that did not even exist yet? This question is of

particular concern while considering the authority of the Emergency Arbitrator, which the


22

parties must specifically agree to exclude if they do not wish it to apply [ICC Rules Art.

29(b)].

4) Art. 21 is a forum selection clause that specifies which national court has

exclusive jurisdiction to issue and enforce interim measures, without excluding

the authority of the competent arbitral tribunal

90. The original intention behind this article was far removed from how RESPONDENT is

attempting to present it today. Having been drafted at a time when interim measures

could only be obtained from courts, its purpose was to clarify a 2010 controversy that had

emerged in relation to a choice of national courts [R. 64, Procedural Order 2, Para. 13].

Therefore, Art. 21 functioned to specify which of the many national courts eligible would

enjoy definitive jurisdiction in issuing interim measures, namely the courts of the place of

business of the party against which provisional measures are sought. It does not function

as an exclusionary article for any other body other than national courts, and thus cannot

serve to reject either the Emergency Arbitrator‟s or the Arbitral Tribunal‟s authority.

91. Thus, Art. 21 provides for concurrent jurisdiction between the arbitral tribunal and the

specified national court in issuing interim measures. As Art. 21 was drafted in entirely

different circumstances than those of the current case, indicating the necessity of looking

beyond its surface to interpret it, and since the interpretation of clauses must remain true

to the original intentions of the parties while maintaining a view of a fundamentally

cohesive whole [Zeller, P. 631], the Emergency Arbitrator was correct in dismissing

RESPONDENT's attempts to reinterpret The Contract. We respectfully request the

Tribunal to do the same.

IV. None of the Exceptions Invalidating the EA Order, Listed In Art. 29(6) of the ICC

Rules, Apply in This Case

92. Certain situations specified in Art. 29(6) of the ICC Rules in which the Emergency

Arbitrator‟s provisions shall not apply: “(a) The arbitration agreement under the Rules

was concluded before the date on which the Rules came into force. (b) The parties have

agreed to opt out of the Emergency Arbitrator Provisions; or (c) The parties have agreed

to another pre-arbitral procedure that provides for the granting of conservatory, interim or

similar measures”.

93. Accordingly, all three of these possibilities for ruling the emergency interim measures are

nullified by virtue of facts of the current case. CLAIMANT and RESPONDENT


23

concluded their contract on the 28 of March 2014, which is after the new ICC Rules came

into force on the 1st of January 2012 [R. 30, EA Order, Para. 9]. CLAIMANT and

RESPONDENT did not explicitly exclude the Emergency Arbitrator‟s Provisions from

their contract, as Article 20 of The Contract did not exclude such a referral for requesting

interim measures [R. 7, CL. EX. 1]. CLAIMANT and RESPONDENT did not agree on

another pre-arbitral procedure to order interim measures. Although they did grant a

specified national court the jurisdiction to render interim measures under Art. 21 of The

Contract, they did not definitively exclude referring the request of such interim measures

to the Emergency Arbitrator [R. 30, EA Order, Para. 9].

94. Therefore, any claims as to the lack of the Emergency Arbitrator‟s authority for granting

these measures under Art. 29(6) are hereby nullified.

B. The EA Order Fulfilled All Substantive Requirements of under Art. 17(A) of the

Danubian Arbitration Law for Issuance of Interim Measures, and Thus the EA

Order shall Be Upheld By the Arbitral Tribunal

95. The Arbitral Tribunal should not lift the EA Order as it was properly issued in compliance

with the substantive test provided under Art. 17(A) of the Danubian Arbitration Law,

which adopts the 2006 version of the UNCITRAL ML [R. 30, EA Order, Para. 11]. Those

substantive requirements are “harm not adequately reparable by an award of damages is

likely to result if the measure is not ordered, beside to a reasonable possibility that the

requesting party will succeed on the merits of the claim.” Parties have an obligation to

refrain from taking any action that may hazard the implementation of any future award

decision [To ios To el s v U raine; 2007].

I. The EA Order to Freeze 30 Tons of Coltan Satisfied the Substantive Requirements

for Issuing Interim Measures As Set Out in the UNCITRAL ML Art. 17(A)

96. Article 17(A)(1) stated those provisions as follows, (a) the requested party may suffer an

irreparable harm that could not be measured by an award of damages as a result of not

ordering such interim measure, (b) the requesting party have a reasonable possibility to

succeed in the claim. In light of that, the EA Order was properly ordered; as the decision

on the merits would be frustrated if the required measures were not ordered and

CLAIMANT has a strong arguable claim proving the merits of its case [R. 30, EA Order,

Para. 11].


24

1) CLAIMANT Would Suffer Irreparable Harm That Cannot Be Measured By an

Award of Damages Should The EA Order Be Lifted

97. As the requesting party for continued enforcement of the interim measures ordered by the

Emergency Arbitrator, CLAIMANT has the wherewithal to demonstrate to the Arbitral

Tribunal that not granting these measures will result in irreparable or serious harm that

cannot be adequately compensated for by an award of damages [Born, P. 1981].

CLAIMANT is indeed sure to suffer Adequate Harm Towards Its Economic Standing (a)

and; Lifting the EA Order will influence CLAIMANT‟s reputation (b) [R. 6, Request for

Arbitration, Para. 21], greater than what would befall RESPONDENT, should the order

be lifted [R. 31, EA Order, Para. 14]. Taking this into consideration, the Arbitral Tribunal

should enforce the interim measures ordered by the Emergency Arbitrator in order to

protect CLAIMANT from the significant damage it would suffer otherwise.

a) An Adequate Harm CLAIMANT Would Suffer Towards Its Economic

Standing

98. CLAIMANT has already conducted contracts with other clients whose fulfillment depends

on RESPONDENT‟s deliverance of the 30 tons of Coltan under dispute [R. 5, Request for

Arbitration, Para. 14]. However, if the EA Order is lifted, RESPONDENT will be left to

dispose of the Coltan at a higher profit as it sees fit, leaving CLAIMANT without the

Coltan it so desperately needs – and cannot easily replace. Coltan is an extremely volatile

commodity whose price is subject to numerous fluctuations on the market [R. 4, Request

for Arbitration, Para. 11]. This is true particularly in light of recent developments, such as

the uncertainty surrounding its supply due to the tumultuous political situation in Xanadu

[R. 6, Request for Arbitration, Para. 21], and the sharp increase in demand for Coltan for

the production of new game consoles [R. 4, Request for Arbitration, Para. 11].

99. Weighing these factors, it appears to be highly unlikely that CLAIMANT would be able to

source Coltan at a similar price from other suppliers, particularly on such short notice.

Obtaining required amount of Coltan to fulfill CLAIMANT‟s obligations for other clients

would thus be either practically impossible due to simple lack of stock, or prohibitively

expensive. Attempting to fulfill the contracts by procuring the required amount of Coltan

at a significantly higher price than what was originally agreed upon would then be

financially unfeasible, and would result in significant loss on the part of CLAIMANT.

100. Alternatively, as a result of this essential impracticality, CLAIMANT would have to pay

damages to its clients in order to compensate for its default on contractual obligations.


25

This would lead to an even greater monetary quagmire deepening these financial issues

even further. The economic harm it would suffer would be substantial.

b) Lifting the EA Order will influence CLAIMANT‟s reputation

101. Further, CLAIMANT‟s inability to fulfill these contractual obligations towards its

customers would have a hugely negative effect upon its reputation [R. 31, EA Order, Para.

13]. Like any company, CLAIMANT depends upon its well repute to keep the business of

its clients and attain new ones. Due to its recent emergence on the market, however,

maintaining its still-delicate reputation is even more vital to the continuation of its

existence. Avoidance of such a number of contracts at such an early stage in its

development would doubtlessly be a significant blow to CLAIMANT‟s reputation. It

could very well be fatal to much of its prospective future dealings, which would lead to an

even greater future loss and quite possibly the end of the company entirely.

102. In contrast, any loss suffered by RESPONDENT would only result from the fact that it

cannot enter into additional, better-remunerated contracts [R. 31, EA Order, Para 14].

This loss could be well remedied by the payment of damages, if deemed fit by the

Tribunal. CLAIMANT has never wished to cause RESPONDENT undue loss; it desires

only to remain on good standing with its own clients and not renege on outstanding

contractual obligations. Thus, the Arbitral Tribunal‟s upholding of the Emergency

Arbitrator‟s interim measures is crucial to prevent irreparable harm to CLAIMANT.

2) CLAIMANT Has a Reasonable Possibility To Succeed In Its Claim

103. A party may request the arbitral tribunal to order an interim relief where it has a

reasonable possibility of succeeding in the claim. Plaintiff must demonstrate evidence of

reasonable possibility that the merits would be resolved in its favor [Round v. MacDonald;

2011]. “The word „reasonable‟ means that there must be something more than a de

minimis possibility or chance for the plaintiff to succeed at the trial. The court also must

consider whether plaintiff has a reasonable possibility to succeed at the merits based on a

reasoned consideration of the evidence.” [Silver v. Imax; 2013].

104. Drawing upon the invalidity of RESPONDENT‟s claim to avoidance of The Contract,

CLAIMANT has a reasonable possibility of succeeding in the case and proving the

validity of The Contract for the delivery of 30 metric tons of Coltan [R. 30, EA Order,

Para. 12]. CLAIMANT has demonstrated several grounds in insisting that

RESPONDENT did not lawfully avoid The Contract neither by its First or Second


26

Avoidance leading to a duty to carry out its contractual obligations. Thus, REPONDENT

unlawful avoidance of The Contract gave rise to a reasonable possibility of the existence

of a valid contact [Skids v McNeill; 2012]. Therefore, CLAIMANT‟s strong arguable case

for the invalidity of RESPONDENT‟s avoidance would be completely frustrated if the

order of freezing the 30 metric tons of Coltan was lifted.

105. In light of the above considerations, the EA Order has met the substantive equipments

stated at Art. 17(A) of the UNCITRAL ML, as CLAIMANT would suffer an irreparable

harm in the absence of the interim measure beside the strong arguable case CLAIMANT

has in its claim [R. 30, EA Order, Para. 11].

II. Due to the Necessary Urgency for Issuing Interim Measures, the EA Order was in

Line With The Arbitral Tribunal‟s Authority to Grant Such Measures

106. A party that needs urgent interim measures that cannot await the constitution of an

arbitral tribunal, may make an application for such measures pursuant to the Emergency

Arbitrator Rules, as stated in ICC Rules Art. 29(1) Appendix V. Plaintiff can ask The

Emergency Arbitrator to grant an interim measure of protection against respondent‟s

harmful acts where the need of such interim is urgent and necessary [Biwater Gaff v

United Republic of Tanzania; 2006]. The procedural power to grant provisional measures

reflects a general principle of law, which is based on the need to prevent actions of the

parties from prejudicing or frustrating the judgment of the court. A party may need

“necessary urgent measures to be taken to prevent irreparable harm or to maintain in a

situation, even with the existence of the arbitration agreement or while the arbitration

proceeding is in progress” [Fouchard; Para. 1327], which applies to the case in hand,

CLAIMANT is in urgent need for the continued maintenance of the order that would

prevent RESPONDENT from taking any action that may frustrate the decision of the

Arbitral Tribunal. Thus, the EA Order was granted properly in accordance with the

relevant provisions stated in Art. 29(6) of the ICC Rules, without prejudice to Art. 21 of

The Contract. Therefore, the Arbitral Tribunal is requested not to lift The Order, as it is

essential to the continuance of this proceeding.


27

III. RESPONDENT Bears the Burden of Proof to Support Their Claim of Lifting The

EA Order, Which They Have Yet to Produce.

107. The facts mentioned above are contrary to RESPONDENT‟s allegations [R. 39, Answer

to Request for Arbitration, Para. 37]. RESPONDENT has the fundamental burden of

demonstrating that the EA Order should be lifted in accordance to the doctrine of proof.

Rather than it being CLAIMANT‟s impetus to set forth arguments proving the legitimacy

of the EA Order, RESPONDENT as being the opposing party has yet to back up

allegations with any semblance of proof discrediting the substantive or procedural

elements of the EA Order [Burden of Proof, 2013].

CONCLUSION OF THE SECOND ISSUE

108. In conclusion, the Emergency Arbitrator has full authority to grant the requested interim

measures and to order RESPONDENT to freeze 30 metric tons of Coltan, and the Arbitral

Tribunal should enforce the EA Order for the duration of the proceedings.

ISSUE 3: GLOBAL MINERALS IS NOT A PARTY TO

THE CONTRACT OR THE ARBITRATION

AGREEMENT; THEREFORE, IT SHOULD NOT BE

SUBJECT TO ARBITRATION PROCEEDINGS

A. Global Minerals is not an Additional Party to The Contract between

CLAIMANT and RESPONDENT

I. Global Minerals Was Not Expressly Mentioned As A Party in The Arbitration

Clause

109. Contrary to RESPONDENT‟s allegation that Global Minerals is a party to The Contract,

the Latter never became a party to The Contract. Privity of contract, as a common element

in all jurisdictions around the world, indicates that a contract imposes obligations only on

the parties of a contract. Third parties can never be subject to obligations of a contract that

they have not entered into [McKendrick; P. 1168]. Contrary to RESPONDENT‟s

allegation that Global Minerals is a party to The Contract, the Latter in fact was never

expressed as a Contracting Party [R.7, CL. EX. 1, Art. 1]. The parties to this dispute are

only Vulcan Coltan Ltd and Mediterraneo Mining SOE [R.7, CL. EX. 1, Art. 1].


28

110. There is no mention of an additional party in the arbitration clause in The Contract [R. 7,

CL. EX. 1, Art. 20]. Nothing in the clause indicates, directly or indirectly, that an

additional party is involved. Global Minerals did not become a party to The Contract; in

fact, it only made an endorsement to The Contract in order to fulfill the purpose of

avoiding an expensive outside guarantee of the CLAIMANT, especially after the

RESPONDENT‟s insistence on financial securities. It never communicated any intent to

become a party to The Contract.

111. Because the CLAIMANT is new to the market, it is expected that counterparties would

ask for additional securities to ensure their rights. In such a situation, Global Minerals, as a

parent company of the CLAIMANT, consented to only provide financial securities

without being involved as a party, neither in the contract nor in the arbitration agreement.

During negotiations, the RESPONDENT suggested adding Global Minerals as an

additional buyer in the list, but the Latter explicitly rejected that suggestion [R. 50, Reply

to the Counterclaim, Para. 6]. This demonstrates that Global Minerals was not intending,

by any means, to become a party to The Contract.

112. Accordingly, Global Minerals is not a party to The Contract, and thus with respect to the

principle of privity of contract, the arbitral tribunal should refuse to involve Global

Minerals as a party to The Contract.

II. Global Minerals Did Not Consent to Be Involved in The Arbitration Proceedings

113. RESPONDENT requests to join Global Minerals to the arbitration as an Additional Party

[R. 37, Answer to Request for Arbitration, Para. 25]. However, despite RESPONDENT‟s

allegations, nothing in The Contract provides that Global Minerals consented to be

involved in arbitration proceedings, as it only signed The Contract as an endorser.

114. Arbitration is fundamentally built upon the principle of consent, meaning that only parties

to such an agreement are bound by it. It is a recognized principle in both civil and

common law jurisdictions that the rights and obligations of an arbitration agreement only

apply to agreeing parties (i.e. signatory parties) [Born; P. 1133]. This consensual nature of

an arbitration agreement and its lack of effects on third parties are also referred to in

French Law [Born; P. 1134]. Arbitration law is based on consent; therefore, it does not

allow extending to additional parties who are foreign to the contract, and prohibits any

forced intervention to the dispute [Born; P. 1135].

115. Art. 1(1) of the UNCITRAL Arbitration Rules provides that the Rules apply “where the

parties to a contract have agreed in writing that disputes in relation to that contract shall be


29

referred to arbitration.” This is similar to other leading arbitration rules such as the rules of

the ICC, the ICDR and the LCIA [Born; P. 1136]. Equally, Art. II of the NY Convention

states that arbitration agreements should be recognized in writing. This is also the case in

the new German and Dutch laws, which traditionally allowed for oral agreements

[Lew/Mistelis/Kroll; P. 94]. Global Minerals was not stated as a contracting party, and this

means that they did not agree to be joined to the arbitration. Global Minerals never

expressly agreed to be part of the arbitral proceedings in writing; therefore, the

RESPONDENT cannot demonstrate that Global Minerals ever consented to be bound by

arbitration.

116. Moreover, based on Art. 7(1) of the ICC Rules, an additional party may not be joined to

the arbitration except where all parties, including the additional party, agree otherwise.

The facts of the case state that Global Minerals explicitly rejected the RESPONDENT‟s

suggestion to add it in The Contract as an additional buyer [R. 50, Reply to the

Counterclaim, Para. 5]. Therefore, Global Minerals should not be joined as an Additional

Party to the arbitral proceedings.

117. In most cases, parties to an arbitration agreement are only those who formally execute and

expressly agree to be parties to the contract containing the arbitration clause. To sum up,

the nature of arbitration is voluntary, and since Global Minerals is a third party that did not

show consent, it should be excluded from arbitration, as this would undoubtedly contradict

the consensual nature of international arbitration agreements [Born; P. 1135].

III. Global Minerals‟ Endorsement to The Contract is Not Sufficient to Bind it to The

Arbitration Agreement

118. In principle, a party guaranteeing an obligation arising from a contract containing an

arbitration clause will not be bound by that clause, unless it can be established from other

circumstances that the parties' true intentions in drawing up the guarantee were that the

guarantor–often the parent company–would be party to the arbitration [Goldman; P. 225].

It is true that Global Minerals endorsed the contract [R. 7, CL. EX. 1]. However, there is

no indication that the parties intended that Global Minerals would be involved as a party

in the arbitration because it never agreed to that [R. 7, CL. EX. 1, Art. 20].

119. The question whether to involve a non-signatory party to an arbitration agreement can be

decided on a case-by-case basis. As in the case of OIAETI v. Sofidif (1986) the law of

arbitration does not allow the arbitration clause to extend to third parties who are not

involved in the contract, and bans the contracting parties from forcing an additional party


30

to be included in an arbitration agreement. Additionally, it must be noted that arbitration

depends on party autonomy [Kazutake; P. 2]. Accordingly, forcing a non-signatory to

arbitration without persuasive evidence of its consent contradicts the principle of party

autonomy.

120. From the previously mentioned facts, it follows that Global Minerals never became a party

to The Contract or its arbitration agreement; therefore, the Arbitral Tribunal has no

jurisdiction over Global Minerals. Because RESPONDENT cannot demonstrate that

Global Minerals ever consented to be a part of the arbitration, Global Minerals should not

be joined as an Additional Party in the arbitral proceedings.

B. The Group of Companies Doctrine Should Not Be Used To Extend The Arbitration

Agreement to Global Minerals

121. RESPONDENT is requesting the application of the Group of Companies doctrine to bind

Global Minerals to the arbitration proceedings [R. 37, Answer to Request for Arbitration,

Para. 27]. Conversely, CLAIMANT maintains that the Group of Companies doctrine

gives no legal basis to an attempted joinder of Global Minerals to the arbitration

proceedings [R. 50, Reply to the Counterclaim, Para.7].

I. The Group of Companies Doctrine is Not Widely Accepted

122. The Group of Companies doctrine is highly controversial, and is not widely accepted

[ ller eil ann P. 118]. It has no place in the applicable ICC arbitration rules, nor is it

recognized in the Law of Danubia as derived from the UNCITRAL ML, which is the law

of the seat of arbitration (lex arbitri), or the law that governs the contract (lex causae). [R.

50, Reply to the Counterclaim, Para. 7]. Additionally, several legal commentaries have

concluded from Dow Chemical that “Danubian courts will most likely not follow the

doctrine” [R. 69, Procedural Order 2, Para. 46]

123. CLAIMANT acknowledges that the tribunal may, in certain cases, apply a doctrine that is

not explicitly incorporated into the applicable law; however, it should at least be generally

accepted amongst international legal systems. This is not the case with the Group of

Companies doctrine, which has only been applied by French courts. In contrast, Sweden,

Italy, Germany and Colombia do not recognize this doctrine [Redfern & Hunter, Para 3-

32]. English courts have clarified that the doctrine “forms no part of the English law”

[Peterson Farms; 2004], and the existence of a Group of Companies is insufficient to


31

extend arbitration agreements to non-signatories under USA law [Sarhank Group v.

Oracle; 2005].

124. In addition, under most formulations, it is clear that the Group of Companies doctrine

must be applied with caution. It requires showing more than a non-signatory‟s

membership in a Group of Companies [Born; P. 1170]. It is also frequently observed that

the Group of Companies doctrine relies mainly on the intentions of the parties [Born; P.

1172]. Both of these conditions were unfulfilled in the current case. Hence, the Arbitral

Tribunal should not use this rarely applicable doctrine to join Global Minerals to the

arbitral proceedings.

II. The Requirements Of The Group of Companies Doctrine Are Not Fulfilled By

Global Minerals; Therefore, Global Minerals Is Not Bound By Virtue Of That

Doctrine

125. It is acknowledged that, under certain circumstances, some courts have extended

arbitration agreements to non-signatories based on the Group of Companies doctrine, as

first introduced in the Dow Chemical case [Dow Chemical v. Isover St. Gobain (ICC);

1982]. The tribunal in that case allowed Dow Chemical‟s wholly owned subsidiaries to

arbitrate claims resulting from a contract containing an arbitration clause concluded by the

parent company.

126. The preconditions employed by the tribunal in Dow Chemical were that Dow Chemical

and its subsidiaries over which Dow Chemical had absolute control constituted “one and

the same economic reality” and that all non-signatories were directly involved in the

“conclusion, performance and termination of the contract” [Born; P.1168]. Moreover, the

tribunal emphasized that extending the arbitration agreement was complying with the

parties‟ intentions [Born; P.1169].

127. In the present case, Global Minerals and CLAIMANT do not constitute one and the same

economic reality. In fact, CLAIMANT had an independent legal and economic existence

from Global Minerals. CLAIMANT was set up as a separate legal entity, and it has its

own assets and personnel [R. 63, Procedural Order 2, Para. 7]. It is true that Global

Minerals was involved in the conclusion, performance and termination of the contract, but

not to a degree that would justify an extension of the arbitration agreement under the

Group of Companies doctrine. Global Minerals‟ involvement in issuing letters of credit to

the RESPONDENT still does not justify extending the arbitration agreement; it only


32

endorsed The Contract to provide the necessary financial securities as the RESPONDENT

insisted [R. 50, Reply to the Counterclaim, Para. 6].

128. Even if CLAIMANT and RESPONDENT had the intention to involve Global Minerals,

this would still not amount to the mutual consent of “all” parties. Consequently, there is no

legal basis to apply the Group of Companies doctrine, as none of the requirements set out

in the Group of Companies case law is satisfied. Therefore, the Group of Companies

doctrine is inapplicable and does not per se justify extending the arbitration clause to

Global Minerals.

C. RESPONDENT‟s Claim to Join Global Minerals to the Arbitration

Proceedings Pertains to The Doctrine of Piercing the Corporate Veil

129. The doctrine of „Piercing the Corporate Veil‟ is a fundamental principle of corporate law,

which the RESPONDENT aims to apply in order to join Global Minerals as an additional

party to the arbitration agreement. However, the facts of the present case do not warrant its

application, as the doctrine‟s preconditions are not met and none of its elements apply.

130. CLAIMANT acknowledges that courts, in certain cases, apply the doctrine of „Piercing

the Corporate Veil‟ and thereby extend liability. However, this doctrine is unquestionably

exceptional [Multiponics v. Herpel; 1980]. Therefore, it may only be applied in

exceptional cases, “under special circumstances”, and with “great caution” [Thomsen v.

Peterson; 1999]. In fact, the only element of the doctrine that is in compliance with

RESPONDENT‟s requirements is that the effect of the arbitration clause should be

directly attributed to the parent company [Hanotiau, P. 48]. However, this is not enough to

apply an entire doctrine, and the facts of the case in hand do not allow qualifying it as one

of these rare instances.

I. The Elements That Allow The Application Of the „Piercing The Corporate Veil

Doctrine‟ Are Not Met

131. In the case of Dow Chemical, the approach followed in the Group of Companies doctrine

is to join the subsidiaries to the parent company. On the other hand, RESPONDENT is

suggesting the opposite, which is to ascend the corporate ladder by applying the doctrine

of „Piercing the Corporate Veil‟. Two conditions must be present to apply the doctrine: the

CLAIMANT must be Global Minerals‟ alter ego, and injustice must be suffered by

RESPONDENT if Global Minerals is not added to the arbitration. Neither condition

applies to this case.


33

1) Claimant is Not Global Minerals‟ Alter Ego.

132. The doctrine of Piercing the Corporate Veil is hard to apply. Even if the tribunal decides

that this doctrine is to be taken into consideration, its requirements are not fulfilled. In

fact, the question of piercing the veil is contextual [Thompson, P. 1039]. In order for the

doctrine to apply, it must first be established that the subsidiary lacks an independent

existence, which the facts of this case disprove. Global Minerals is a totally separate legal

entity from CLAIMANT; the Latter, in fact, has its own separate assets from Global

Minerals, beginning with a capital of USD 20.000 [R. 64, Procedural Order 2, Para.9].

Therefore, CLAIMANT‟s assets are completely separate from Global Minerals‟, and thus

it should not be subject to arbitration proceedings [R. 63, Procedural Order 2, Para.7].

133. Even if the RESPONDENT claims that the Alter Ego principle is applicable, its

requirements are not fulfilled. To apply the Alter Ego principle, RESPONDENT would

have to prove that Global Minerals exercises total dominion over its subsidiary, meaning

not only control of finances, but also control of policy and business practice in all the

subsidiary‟s transactions [Kuney; P. 135]. Yet in fact, Global Minerals only endorsed The

Contract to guarantee payment obligations [R. 50, Reply to the Counterclaim, Para. 5].

Additionally, there had been an internal decision that all business in Equatoriana should be

carried out by CLAIMANT [R. 50, Reply to the Counterclaim, Para. 5]. Therefore, the

Alter Ego rule cannot be applied because its requirements are not fulfilled.

2) RESPONDENT Does Not Incur Injustice if Global Minerals Was Not a Party to

the Arbitration

134. Secondly, RESPONDENT must show that injustice would result if the veil was not

pierced. To establish that, RESPONDENT would have to demonstrate that an inequitable

result would occur if the alter ego were allowed to escape liability [Hanotiau, P. 48]. In

fact, no injustice would result because CLAIMANT is willing to pay the agreed-upon

amount to receive the Coltan as specified in The Contract. Excluding Global Minerals

from the arbitration would not result in injustice. Therefore, the RESPONDENT has no

legal basis to pierce the corporate veil, and the Tribunal should deem Global Minerals as a

separate legal entity from the CLAIMANT.


34

D. Good Faith Considerations Do Not Mandate The Joinder Of Global Minerals

As An Additional Party to The Arbitration Agreement

135. RESPONDENT further refers to the principle of good faith, claiming that Global Minerals

is prevented by good faith considerations to object to the Arbitral Tribunal‟s jurisdiction

[R. 37, Answer to Request for Arbitration, Para.28]. This principle cannot justify Global

Minerals‟ joinder to the arbitration proceedings [R. 51, Reply to the Counterclaim, Para.8]

because none of the involved jurisdictions have a developed doctrine of good faith that

would justify the finding [R. 50, Reply to the Counterclaim, Para.8].

136. The principle of good faith requires parties to refrain from any act that would prevent or

hinder performance of the contract. Even though this principle is recognized by most

states, it remains controversial. In addition, some courts have limited the principle of good

faith, as it creates too much uncertainty [Mahoney; P. 849].

137. The Principles of European Contract Law [PECL, Part 1, 1995] as well as the UNIDROIT

Principles [Art. 1.7] obligate the parties to act in good faith and fulfill all their duties under

the contract. Good faith depends on the parties‟ situation and the neutrality of the contract,

and each factor must be taken into consideration to reach a reasonable judgment [PECL,

Art. 1.108].

138. Even if good faith considerations are to be taken into account, the facts of the case indicate

that Global Minerals acted in good faith at every turn to assure RESPONDENT that

CLAIMANT will fulfill all of its contractual obligations. Global Minerals acted in good

faith by issuing a second letter of credit to ensure that CLAIMANT‟s payment obligation

is fulfilled towards RESPONDENT, as agreed under The Contract. It sent a second Letter

of Credit by fax to ensure that RESPONDENT received it, and that it adhered to the

deadline [R. 16, CL. EX. 10]. This reflects Global Minerals‟ goodwill to guarantee

payment obligations. Thus, the principle of good faith does not bind Global Minerals as an

additional party to the arbitration agreement.

139. Overall, while the principle of good faith does exist in the CISG, it does not reach the

status of a general obligation. Rather, it is restricted to a principle for interpreting a

provision of the Convention [Mid Essex v. Compass Group; 2013]. Therefore, even if

RESPONDENT alleges that CLAIMANT should be involved in the arbitration agreement

by virtue of good faith, it is not considered a general obligation and does not indicate any

necessity for the proposed joinder of Global Minerals


35

CONCLUSION OF THE THIRD ISSUE

140. Thus, joining Global Minerals as an additional party to the arbitration agreement cannot be

justified: neither by considerations of good faith, nor under the Group of Companies

doctrine, nor under the doctrine of Piercing the Corporate Veil. The Tribunal is thus

respectfully requested to deny RESPONDENT‟s application for this joinder and affirm its

lack of jurisdiction over Global Minerals.

REQUEST FOR RELIEF

In light of the above arguments and pleadings, CLAIMANT respectfully requests the

Arbitral Tribunal, rejecting the RESPONDENT‟s submissions, to:

(1) Reject RESPONDENT‟S counterclaim;

(2) Find that RESPONDENT was never entitled to avoidance, either the first or second

time, as CLAIMANT never fundamentally breached the Contract of 28 March 2014;

(3) Uphold the Emergency Arbitrator‟s lawful Order for interim measures against

RESPONDENT to freeze 30 tons of Coltan;

(4) Declare that it has no jurisdiction over Global Minerals, which was never a party to the

Contract and is thus not subject to the arbitration proceedings.

The CLAIMANT reserves the right to amend this request for relief as may become

necessary.


XVIII

Certificate

We hereby confirm that only the persons whose names are listed below and who signed this

certificate wrote this Memorandum.

Jeddah, December 11 2014

Nouran AlMekhlafi Jude Jamjoom

(signed) (signed)

Noha Bangaitah Ohoud Mously

(signed) (signed)

Maryam AlDabbagh Dorra Ramadan

(signed) (signed)

Nedaa AlAhmadi Lamia AlOtaibi

(signed) (signed)

Mohra Ferak Ayat AlBarakati

(signed) (signed)

Documents

DAHU Claimant Memo