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24th annual Willem C. Vis International Commercial Arbitration Moot
In the matter of arbitration under
International commercial Arbitration Moot – Hong Kong
Tabesh University
Memorandum for Claimant
Counsel
Fazilah Sadat ● Hameedullah Hamdard ● Parwiz Hammidi ●
Mohammad Aman Akrami ● Faridon Salehi
Kabul - Afghanistan
Claimant Write LTD
232 Garrincha Street
Oceanside
Equatoriana
Respondent Santos DKG
77 Avenida O Rei
Cafucopa
Mediterraneo
vs
Tabesh University Memorandum for Claimant
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TABLE OF CONTENTS Page
LIST OF ABBREVIATIONS ................................................................................................................... IV
INDEX OF AUTHORITIES ........................................................................................................................ VI
INDEX OF COURT CASES ....................................................................................................................... IX
INDEX OF LEGAL ACTS AND RULES ................................................................................................. XII
STATEMENT OF FACTS ......................................................................................................................... 1
SUMMURY OF ARGUMENT .................................................................................................................. 3
ISSUE I: ARBITRAL TRIBUNAL DOES NOT HAVE POWER TO ORDER CLAIMANT TO
GRANT SECURITY FOR RESPONDENT’S COSTS. ...................................................................... 6
A. THE ARBITRAL TRIBUNAL DOES NOT HAVE THE POWER, EVEN IF IT DOSE,
THE ARBITRAL TRIBUNAL SHOULD NOT ORDER CLAIMANT FOR THE SECURITY
OF RESPONDENT’S COST. ............................................................................................................ 6
I. THE ARBITRAL TRIBUNAL LACKS OF POWER TO ORDER CLAIMANT TO
PROVIDE SECURITY FOR COST UNDER THE ART. 8(1) OF CAM-CCBC RULES. .......... 6
ii. CLAIMANT SHOULD NOT BE HELD RESPONSIBLE FOR RESPONDENT’S COSTS
BASED ON THE INTERNATIONAL PRACTICE, THE DSA. ................................................... 7
B. EVEN IF THE TRIBUNAL HAS THE POWER TO ORDER CLAIMANT TO PAY
RESPONDENT’S COSTS, RESPONDENT HAS NOT PROVIDED ANY EVIDENCE TO
SUPPORT ORDERING SECURITY FOR COST. ......................................................................... 9
i. ACCORDING TO ART. 17(E)(1) UNICITRAL RESPONDENT DOES NOT MEET
THE REQUIREMENTS TO REQUEST SECURITY FOR COST DUE TO THE SUBJECT-
MATTER OF THE DISPUTE ......................................................................................................... 10
ii. ART. 23(4) ICC RULES DO NOT ALLOWED THE PARTIES FOR ADDING NEW
CLAIMS AFTER THE TERMS OF REFERENCE HAVE BEEN SIGNED. ............................ 11
ISSUE II: THE ARBITRAL PROCEEDINGS WERE INITIATED ON TIME, WITHIN 60
DAYS AS PER THE DSA, AND THUS CLAIMANT’S CALIMS ARE ADMISSIBLE. .......... 13
A. THE ARBITRAL PROCEEDINGS WERE INITIATED BY CLAIMANT AFTER THE
FAILURE OF NEGOTIATIONS AND IT IS WITHIN 60 DAYS. .............................................. 14
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B. CLAIMANT fulfilled its obligation to commence Arbitral proceedings based on Art 4.3
CAM-CCBC rules. ............................................................................................................................ 15
C. CLAIMANT’S COMMENCEMENT OF ARBITRAL PROCEEDINGS MET ALL
REQUIREMENTS SET UNDER ART 4.1 CAM-CCBC RULES ............................................... 16
D. BASED ON ART. 12.5 CAM-CCBC RULES, THE AMENDMENTS GIVEN BY
CLAIMANT MAY NOT EFFECT ANY FAILURE TO THE COMMENCEMENT OF
ARBITRATION PROCEEDINGS. ................................................................................................. 17
ISSUE III: RESPONDENT IS OBLIGED TO PAY THE OUTSTANDING AMOUNT OF
$2,285,240.00 TO CLAIMANT BASED ON ARTICLES. 53 AND 54 OF THE CISG. ............. 19
A. CLAIMANT IS ENTITLED TO THE REMAINING $2,285,240.00 OF THE CONTRACT
PRICE FROM RESPONDENT, BASED ON THE ARTICLE 53 OF CISG; RESPONDENT IS
IN VIOLATION OF THE DUTY TO PAY THE PRICE IN FULL AS PROVIDED ............... 19
B. THE PARTIES DID NOT INTEND TO APPLY A FIXED EXCHANGE RATE TO THE
PRICE FOR THE BLADES. ........................................................................................................... 21
i. BASED ON ART 8(1) CISG, THE SUBJECTIVE INTENT OF THE PARTIES WAS NOT
TO APPLY A FIX EXCHANGE RATE FOR THE ENTIRE AGREEMENT, BUT TO APPLY
THE FIXED RATE ONLY TO THE CLAMPS. ........................................................................... 21
ii. PURSUANT TO THE ARTICLE 8(2) OF CISG AND UNIDROIT PRINCIPLE 4.1, A
REASONABLE PERSON WOULD UNDERSTAND THE FIXED EXCHANGE RATE
CLAUSE IN THE ADDENDUM TO APPLY TO THE CLAMPS ONLY, AND NOT THE
BLADES............................................................................................................................................. 22
iii. PURSUANT TO ARTICLE 8(3) CISG, THE PARTIES’ INTENT WAS TO ONLY
APPLY THE FIX EXCHANGE RATE TO THE CLAMPS, DEMONSTRATED BY THE
DISCUSSIONS, TRADE USAGES, AND LATER CONDUCT................................................... 23
ISSUE IV: PURSUANT TO THE DSA CLAIMANT IS ENTITLED TO THE BANK FEES
ASSESSED FROM RESPONDENT. .................................................................................................. 24
A. THE PARTIES ESTABLISHED BASED ON CONTRACT THAT RESPONDENT WILL
PAY THE FULL AMOUNT OF THE PURCHASE PRICE TO THE CLAIMANT’S
ACCOUNT AT THE EQUATORIANIAN NATIONAL BANK. ................................................. 25
B. RESPONDENT BREACHED ITS OBLIGATIONS UNDER ARTICLE 54 CISG TO
ENABLE FULL PAYMENT TO BE MADE TO THE CLAIMANT BY FAILING TO PAY
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THE INSPECTION LEVY NECESSARY FOR THE TRANSFER OF THE FULL
PURCHASE PRICE. ........................................................................................................................ 26
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LIST OF ABBREVIATIONS
& And
§ Section
¶/¶¶ Paragraph/paragraphs
Answ. Answer
App. Application
Art. Article
Cl. CLAIMENT
CISG United Nations Convention on Contracts for
the International Sale
COO Chief Operating Officer
DSA Development and Sales Agreement
e.g. (for example)
Ed. Edition
Et seq. Et sequens (and following)
Exh. Exhibit
GER German
ICC International Chamber of Commerce
i.e. In Example
Ltd. Limited
Tabesh University Memorandum for Claimant
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LCIA London Court of International Arbitration
M Million
Memo Memorandum
Mr. Mister
Ms. Miss
No. Number(s)
Ord. Order
P. Page
Proc. Procedural
Rec. Record
Res. RESPONDENT
Req. Request
UML UNCITRAL Model law
UN United Nation
UNCITRAL United Nations Commission on International
Trade Law
UNIDROIT Institute International pour L’Unification du
droit
UPICC UNIDROIT Principles of International
Commercial Contracts
US United States
USD United Sates Dollar
Vol. Volume
Tabesh University Memorandum for Claimant
VI | P a g e
INDEX OF AUTHORITIES
Herbet,
Ludmilla
Farris Partner, Ludmila Herbst, authors an article that
appeared
May 15, 2009 edition of The Lawyers Weekly.
Available at:
http://www.farris.com/images/uploads/LBH_-
_The_Lawyers_Weekly.pdf==
Referred to in: ¶ 19
of the memorandum
(cited as: Ludmilla
Herbet)
ClArB Application for Security for Cost Guideline
Chartered Institute of Arbitration
2015
Referred to in: ¶ 22
of the memorandum
(cited as: Art. 4.1
ClArB)
W. Newman,
Lawrence
Litigating International Commercial Disputes
1996 Edition
Referred to in: ¶ 25
of the memorandum
(Cited as:
Lawrence)
Roth &
Geistlinger
Yearbook on International Arbitration 166, VIII, A
Available at:
www.kluwerarbitration.com/book-
toc.aspx?book=TOC_AYIA_2013
Referred to in: ¶ 30
of the memorandum
(Cited as: Roth &
Geistlinger)
Firmminho,
Paolo
Yearbook on International Arbitration 166, VIII, B
Available at:
Referred to in: ¶ 33
of the memorandum
(Cited as: Paolo)
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https://www.walderwyss.com/publications/1769.pdf
Ono, Eduardo.
Villar,Rafael
Adicione uma descrição a este tópico.
Available at:
http://www.jusbrasil.com.br/topicos/96367867/rafael-
villar-gagliardi-eduardo-ono-terashima
Referred to in: ¶ 33
of the memorandum
(Cited as: Eduardo
Ono, Rafael Villar
Art 4.21 CAM-
CCBC)
Att. Ezgi Babur
/ Erdem Erdem
Law Office Istanbul / Erdem Erdem
Available at:
http://www.erdem-erdem.av.tr/publications/law-
post/enforcement-of-interim-and-conservatory-
measures-ordered-by-arbitrators/
Referred to in: ¶ 42
of the memorandum
(Cited as:
ErdemErdem / Law
Office Istanbul)
Julian D. M.
Lew
CAM-CCBC Commentary, Comparative
International Commercial Arbitration, Lew, Mistelis,
et al. (2003)
Available at:
http://www.kluwerarbitration.com/CommonUI/book-
toc.aspx?book=TOC_Lew_2003_V05_V06IBA
Referred to in: ¶ 50
of the memorandum
(Cited as: Julian M.
D. Lew, Loukas A.
Mistelis and Stefan
M. Kroll, op. cites.,
pp. 506-514)
Schlechtriem,
Peter
Uniform Sales Law - The UN-Convention on
Contracts for the International Sale of Goods
Available at:
Referred to in: ¶ 36
of the memorandum
(Cited as: Uniform
Sales Law, Peter
Tabesh University Memorandum for Claimant
VIII | P a g e
http://www.cisg.law.pace.edu/cisg/biblio/schlechtrie
m.html
Schlechtriem, Sec. 1,
Para 1)
Bradley R.
Coppedge
GPSolo Magazine - September 2005 and
International Law News, winter 2005
Available at:
http://www.americanbar.org/content/newsletter/publi
cations/gp_solo_magazine_home/gp_solo_magazine
_index/2005_sep_index.html
Referred to in: ¶ 49
of the memorandum
(Cited as: Bradley
R. Coppedge)
Farnsworth, E.
Allan
Bianca-Bonell Commentary on the International
Sales Law, Giuffrè: Milan (1987) 95-102.
Reproduced with permission of Dott. A Giuffrè
Editore, S.p.A.
Available at:
http://www.cisg.law.pace.edu/cisg/biblio/farnsworth-
bb8.html
Referred to in: ¶ 44
of the memorandum
(Cited as: CISG
commentary Art.
8(2). p 96)
Beisteiner, Lisa Conduct of Arbitration Proceedings
CAM-CCBC, § 549
Referred to in: ¶ 26
of the memorandum
(Cited as: Lisa
Beisteiner, § 549,
conduct of
Arbitration
Proceedings)
Tabesh University Memorandum for Claimant
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INDEX OF COURT CASES
US Ramot Gill Development Corporation vs. Precision
Homes Corporation Inc.
[1979] O.J. No. 4485 (Div. Ct.)
Referred to in: ¶ 20
of the memorandum
(Cited as: O.J. No
4485 Case)
US KEARY DEVELOPMENTS Vs. TARMAC
CONSTRUCTIONS
House of Lords, Bailii, CA 1995
Referred to in: ¶ 32
of the memorandum
(Cited as: House of
Lords, Bailii, CA
1995)
England Yorkshire Regional Health Authority -vs- Fairclough
Building Ltd
Referred to in: ¶ 44
of the memorandum
(Cited as: Cmnd
6923 &1977)
Russia &
Turkey
Russian Federation (Claimant) and Turkey
(Respondent) NO, 478 ruled in 1998 by
“Tribunal of International Commercial
Arbitration at the Russian Federation
Chamber of Commerce and Industry)
Referred to in: ¶ 35
of the memorandum
(Cited as: CLOUT
Case No. 478)
Belarus Supreme Economic Court of the Republic of
Belarus between Belparquet LLC (Seller) and
Belarusian Company (Buyer)
Available at:
https://www.google.co.uk/url?sa=t&rct=j&q=
&esrc=s&source=web&cd=1&cad=rja&uact=
8&ved=0ahUKEwjBx7ywp8TQAhXMDiwK
Referred to in: ¶ 36
of the memorandum
(Cited as: CLOUT
Case No. 498)
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HYZwAL4QFgggMAA&url=https%3A%2F
%2Fwww.uncitral.org%2Fpdf%2Fenglish%2
Fclout%2F08-
51939_Ebook.pdf&usg=AFQjCNEjvo1sWO
MrOwZtnR8ZA4-
5RRBr7g&bvm=bv.139782543,d.bGg
CISG, Digest Journal of law and Commerce
UNCITRAL Digest of case law on CISG,
Volume 30, para, 30, p.58
Referred to in: ¶ 50
of the memorandum
(Cited as: Journal of
law and commerce,
UNCITRAL Digest
of case law on CISG,
Volume 30, para, 30,
p.58)
Germany
Amtsgericht (lower court) Freiburg)
Shoe Case
(6 July 2007)
Available at:
http://cisgw3.law.pace.edu/cases/070706g1.ht
ml
Referred to in: ¶ 60
of the memorandum
(Cited as: shoe case,
4 C 4003/06)
Germany Sprau in Palandt
Verlag C.H. Beck München 2011
Available at:
https://www.google.co.uk/url?sa=t&rct=j&q=
&esrc=s&source=web&cd=2&cad=rja&uact=
Referred to in: ¶ 61
of the memorandum
(Cited as:
Commentary on
Tabesh University Memorandum for Claimant
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8&ved=0ahUKEwiR5NrypcTQAhWElSwKH
fCvACMQFggpMAE&url=http%3A%2F%2
Fwww.beck-
shop.de%2Ffachbuch%2Finhaltsverzeichnis%
2FPalandt-Buergerliches-Gesetzbuch-BGB-
9783406610004_0305201206152968_ihv.pdf
&usg=AFQjCNF4F0boYbaVa8vnTt7QBSb
WbDZkbA&bvm=bv.139782543,d.bGg
BGB, 66 ed, § 714 n.
24)
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INDEX OF LEGAL ACTS AND RULES
CAM-CCBC Center For Arbitration And Mediation Of The
Chamber Of Commerce Brazil-Canada
CISG Convention on contract for International sales of
goods Vienna 1980
ICC International Chamber of Commerce Rules of
Arbitration
ICDR International Center for Dispute Resolution
LCIA London Court of International Arbitration Rules,
effective 1 October 2014
NYC Convention on the Recognition and Enforcement
of Foreign Arbitral Awards, New York 197
UNCITRAL Model Law UNCITRAL Model Law on International
Commercial Arbitration 1985, with amendments
adopted in 2006.
ULIS Uniform Law on the Formation of Contract for the
International Sales of Goods
PICC UNIDROIT Principles on International
Commercial Contracts, 200
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STATEMENT OF FACTS
1. Wright Ltd (“Cl …”) is one of the best producers of fan-blades for jet engines located in
Equatoriana.
2. Santos D KG (“Resp …”) is a medium sized company in Meditrraneo that produce jet
engines.
3. Until 2010, both parties (RESPONDENT and CLAIMANT) were the subsidiaries of
Engineering International SA, a multinational company based in Oceana and active in
various fields of aircraft engineering. In 2010, due to the financial problems of Engineering
International SA, CLAIMANT was sold to the CLAIMANT’S present parent company,
Wright Holding PLC. One month later, RESPONDENT was sold to Speed Run, a private
Equity Fund.
4. In 2010, CLAIMANT and RESPONDENT began discussion regarding an agreement
where in CLAIMANT would provide version TRF 192-I swept fan blades for
RESPONDANT’S new version of the JE/76TL, 14b engine. The objective of the new
engine was to reduce the noise emitted by 3db, and for use in the newest version of the
signature executive line 100 jet of Earhart SP, a world-wide company of aircraft
manufacturer for medium size passenger and business jets.
5. On 1 July 2010, both parties entered in to a Development and Sales Agreement (Exhibit
C 1). The Agreement includes flexible price structure for fan blades, for the purpose of
allowing the parties to share the risk of exchange rate fluctuation. RESPONDENT insisted
to set in US dollars, despite the CLAIMANT is incurring production cost in Equatoriana
Dinar.
6. On 1 August 2010, RESPNDENT ordered 2,000 swept fan blades moder TRF192-I, from
CLAIMANT, with a price per balder of between US 9,975$ to US 13,125$ (Exhibit C2).
The price was determined based on the price structure of the Development and Sales
Agreement between the parties.
7. RESPONDENT planned to buy clamps to attach the blades from the other company, but
the clamps from other companies were unsuitable. Thus, RESPONDENT decided to buy
clamps from CLAIMANT. The parties executed an addendum to the contract for the sale
of the clamps and RESPONDENT insisted on a fixed exchange rate for the price of the
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clamps. Therefore, CLAIMANT agreed to a fixed exchange rate with regards to the
clamps.
8. On 14 January 2015, CLAIMANT delivered the fan blades and clamps to the
RESPONDENT, with invoices attached. (Exhibit C3).
9. On 14 January 2015, Ms. Beinhorn asked from Mr. Lee the person who was not familiar
in the contract between two parties, to make invoices for the both goods, because the
responsible person for making the invoice was sick and due to the lack of experience and
not having knowledge Mr. Lee had made a mistake that instead of applying the current
exchange rate for the blades he applied the fixed exchange rate of the clamps for the
blades.
10. On 15 January 2015, RESPONDENT’s Chief Financial Officer Mr. Cyril Lindbergh
immediately paid the amount of the invoice to the bank account of CLAIMANT and sent
a confirmation of the amount US$ 20,438,560 for fan-blades and US$ 183,343.28 for the
clamps. (Exhibit C3).
11. On 15 January 2015, Ms. Beinhorn mailed to Mr. Lindbergh to indicate the mix up in
accounting department with the invoice of fan blades. She apologized for the mistake and
cleared that the exchange rate for the fan blades which is identical at the time of
production for US$ = EQD 1.79 which the full purchase price for 2000 fan blades
amounts to US $22,723,800 (Exhibit C5).
12. On 9 February 2015, CLAIMANT confirmed the amount of US$ 20,336,367.20 was
credited to the Bank account. Furthermore, the amount of US$ 2,387,432.80 was
deposited
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SUMMURY OF ARGUMENT
13. First, the tribunal should not order CLAIMANT for providing of security cost because
RESPONDENT has not provided any facts which would justify the requested order of
the RESPONDENT. International Arbitration security for cost is normally approved in
exceptional circumstances. When both parties entered in to contract, the CLAIMANT’s
financial situation has not unpredictably deteriorated. And also RESPONDENT didn’t
provide any facts that showed which CLAIMANT is in bad financial situation. Thus
RESPONDENT is the party who has financial problem because of non-payment of the
price due under the Development and Sales Agreement. (FIRST ISSUE).
14. Second, RESP has to bear the costs of the Arbitration because RESP denied paying the
outstanding amount of US$ (2,285,240) from the blades and also amount of US$
(102,192.80) related to bank charges which was incurred by Claimant. Then
CLAIMANT was forced to initiate the Arbitration proceedings as the parties had agreed
at section 21 of the Development and Sales Agreement that if no agreement can be
reached, each party has the right to initiate arbitration proceedings within 60 days after
the failure of the negotiation (CLAIMANT’s Exhibit C 2). So in line with this Agreement
first CLAIMANT requested amicably way to show their good faith trough their
commitments in the DSA that they had. Which First made a second invoice to
RESPONDENT by sent the correct amount of the 2000 blades and also by the good faith
by accepting of the mistakes from CLAIMANT’s accounting department which is done
by Mr. Lee (CLAIMANT’s Exhibit C 4). In contrast RESPONDENT didn’t agree to pay
the mentioned amount so CLAIMANT was forced to initiate Arbitration Proceedings.
Consequently, Claimant did its obligations and informed RESP at 1st April 2016 for
initiating Arbitral Proceedings. There for Claimant requested for arbitration at 31st May
2016 within 60 days. In addition, the initiation of Arbitration was due to RESPONDENT
non-compliance performance of its obligations. (SECOND ISSUE)
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15. Third, After the both parties signed the DSA RESPONDENT planned to buy clamps
from CLAIMANT and so Paul Romario from RESPONDENT’s side emailed Ms.
Beinhorn to purchase clamps from claimant and as Paul Romario said to Ms. Beinhorn
in his email the easiest way to regulate the purchase of clamps is to sign an addendum to
our Development and Sales Agreement it means that all issues in addendum is belong to
clamps and not to the blades thus the fixed exchange rate is only for clamps not for blades
and so CLAIMANT is entitled for the outstanding amount of (2,285,240) US$ because
the production cost per blade was charged (19,586) EQD to CLAIMANT (Stf, para,12
p, 5) and multiplied with the current exchange rate, which is identical to that at the time
of production of 1US$ = 1.79 EQD. The purchase price is US$ (10,944.90) per blade and
according to section 4 of development and sales agreement claimant made an invoice of
(22,723,800US$) for 2000 blades to RESPONDENT in 15th January 2015 (R. 14, Cl.
Exh. 5, para. 1). But RESPONDENT denied the paying of outstanding amount of
(2,285,240) US$ to CLAIMANT. Instead RESPONDENT got benefits from this obvious
mistake of CLAIMANT which was done by Mario Lee (L. 13, Cl. Ex. No. 4, para. 3)
which made a wrong invoice. Instead of providing the amount of US$ (22,723,800)
which was due under the section 4 of the Development and sales contract, the invoice
was mistakenly made only for US$ (20,438,560). And RESPONDENT directly paid the
amount invoiced and informed CLAIMANT about the payments made. (L. 12, Cl. Ex.
No. 3, Para. 1). RESPONDENT insisted on fixed exchange rate for the blades which was
the parties made for the clamps in an addendum in the contract as Ms. Beinhorn had
asked Iliena Jaschin the chief financial officer of the Claimant that Whether they could
agree for the clamps to a fixed exchange rate before of signing the addendum. {R. 50,
Cl. Exh, 9para 5}. By this fact it is to be clear that the Claimant intend was apparent that
the fixed exchange rate was fit only regarding to the Clamps not blades beside this
Claimant never showed their willingness or agrees with then fixed exchange rate related
to the entire of DSA.Thus the both parties focus according to addendum was to make a
fixed exchange rate for the clamps and not for whole contract. (THIRD ISSUE)
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16. Fourth, RESPONDENT is supposed to pay the bank charge in the amount of US$
(102,192.80) to the Equatoriana Central bank which is under section 11 regulation
ML/2010C if the payment exceeds US$ 2 million the financial investigation unit
investigated the payment in regard to money laundering. Under section 11 Regulation
ML/2010C the financial investigation unit subtracts 0.5% levy from every sum of money
investigated (R. 17, Cl. Ex. No. 8, para. 2). Because both CLAIMANT and
RESPONDENT agreed that the bank charges for the transfer of the amount are to be
borne by the BUYER under the section 4 part 3 of the Development and Sales Agreement
(R. 10, Cl. Exh, 2, para. 3). Consequently, both parties agreed on bank charges to be
borne by the BUYER (RESPONDENT) so the amount of US$ (102,192.80) is direct the
bank charges of Equatoriana Central Bank so in line with this fact RESPONDENT is
obliged to pay the mentioned charges amount of Equatoriana Central Bank to
CLAIMANT (FOURTH ISSUE).
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ISSUE I: ARBITRAL TRIBUNAL DOES NOT HAVE POWER TO
ORDER CLAIMANT TO GRANT SECURITY FOR RESPONDENT’S
COSTS.
17. Claimant is not obliged to provide security for respondent’s cost and also the Arbitral
tribunal jurisdiction lacks of power to order CLAIMANT for granting the security for
cost in the present case. The arbitral tribunal does not have the power, even if, the arbitral
tribunal has the power it should not order for the security of Respondent’s cost (A). Even
if the tribunal has the power to order Claimant to pay Respondent’s costs, Respondent
has not provided any evidence to support ordering security for costs (B).
A. THE ARBITRAL TRIBUNAL DOES NOT HAVE THE POWER, EVEN IF IT
DOSE, THE ARBITRAL TRIBUNAL SHOULD NOT ORDER CLAIMANT
FOR THE SECURITY OF RESPONDENT’S COST.
18. Even though the tribunal has the power to order for RESP security cost, the tribunal
cannot order in this case because the circumstances are different. (i)The Arbitral Tribunal
lacks of power to order Claimant to provide security for cost under the Art. 8 (1) of CAM-
CCBC rules. (ii), Claimant should not be held responsible for respondent’s costs based
on the international practice, and DSA
I. THE ARBITRAL TRIBUNAL LACKS OF POWER TO ORDER
CLAIMANT TO PROVIDE SECURITY FOR COST UNDER THE ART. 8(1) OF
CAM-CCBC RULES.
19. The Arbitral Tribunal lacks the power to order security for cost based on the CAM-CCBC
rules. Even if the Arbitral Tribunal has the authority to order Claimant to provide Security
Costs for Respondent, it should consider that both parties did not agree on such a clause
in the contract or in the Terms of Reference signed after the arbitration proceeding. The
Arbitral Tribunal can grant provisional measure to the requesting party subject to the
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rulings under Article 8.1 CAM-CCBC. Article 8.1 CAM-CCBC states, “…the arbitral
tribunal can grant provisional measures, both injunctive and anticipatory, that can, at
the discretion of the arbitral tribunal, be subject to the provision of guarantees by the
requesting party.” (Art 8.1 CAM-CCBC) This article sets the standards for requesting
security costs showing that an interim injunction is often sought where the other party, if
unrestrained, might cause irreparable or immeasurable damage by continuing the conduct
which has led to the dispute. Respondent does not suffer irreparable harm or
immeasurable damage whether or not the security costs are given. Due to the fact
RESPONDENT requested security for cost from Arbitral proceedings on 6th September
2016 because respondent thinks that it will be the winner of this dispute in the Arbitral
proceedings, so RESPONDENT wants from tribunal to order CLAIMANT for providing
of security for RESPONDENT’s cost. [R, PP, ¶ 45 46, 1,} however stated by
{LudmillaHerbst} “Arbitrators have long been recognized as lacking inherent power to
order security for costs...”.
20. As in the case of (Ramot Gill Development Corporation vs. Precision Homes
Corporation Inc., [1979] O.J. No. 4485 (Div Ct.) stated that Arbitral jurisdiction
derives from the agreement between the parties and the statue applicable to their
arbitration. Correspondingly, arbitrators have long been recognized as lacking inherent
power to order security for costs or stay an arbitration pending the posting of such
security. Consequently, from the mentioned facts and comments and also the case which
was expressed in the above it becomes clear that the request for the security for cost by
the RESPONDENT is unreasonable and illegitimate. [O.J. No 4485 Case]
21. At hence CLAIMANT respectfully request from honorable tribunal to reject the request
for the security of cost
ii. CLAIMANT SHOULD NOT BE HELD RESPONSIBLE FOR
RESPONDENT’S COSTS BASED ON THE INTERNATIONAL PRACTICE,
THE DSA.
22. The authority of Arbitral Tribunal for granting requests for security of costs relies upon
the surrounding circumstances of the case. Respondent’s argument for requesting
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security costs does not meet any of the requirements set in Article 4(1) of Chartered
Institute of Arbitrators Guideline on Application of Security Costs (CIArB). Article 4(1)
CIArB states “…in light of all of the surrounding circumstances, it would be fair to
make an order”. (Art. 4(1) CIArB)
23. Arbitrators should consider whether an application has been made at an appropriate time
taking in consideration the circumstances of the case. The circumstances of the case do
not show that Respondent will win the case that shall require Claimant to pay the
arbitration costs. Because claimant’s revenue will greatly improve once the sale of newly
developed fan blades start liquid means are built up again (Rec, P 50, ¶ 2).
24. On 22 of August 2016 both parties and the Arbitral Tribunal signed the Terms of
Reference [Rec, P.41] although, Respondent made the request for Security of Costs on 6
September 2016 [Rec, P.46]. Normally parties are not allowed to change, modify or
amend the claims once the Terms of Reference is signed and for support of above claim
(Art. 4.21 of CAM-CCBC) states that “the parties can only change, modify or amend
the claims and causes of action until the date the Terms of Reference are signed”. (Art.
4.21 CAM- CCBC commentary)
25. That is clear that Respondent’s claims violate this article and should not be granted by
the Arbitral Tribunal. However as stated by (Lawrence W. Newman) before proceeding
to make such an order, they should consider the conduct of the party applying for security
both before and during the course of the arbitration to date and all of the surrounding
circumstances in order to determine whether it would be fair to require security.
[Lawrence]
26. In addition, before making an order requiring a party to provide security for costs,
arbitrators should consider When deciding whether to make an order for security for
costs, however the Respondent did not meet even a sole requirement. The Arbitrators
may consider these followings:
27. (1) The prospects of success of the claims and defenses. (Art. 2, CIArB)
Due to the fact respondent will not be the winner of this arbitral proceeding because the
proceedings are not come to the end yet although this prediction unreasonable howevre
it is respondent which failed of performance of its obligations under the DSA (Rec, p.10
§4 DSA) not the claimant and also respondent has not provided any strong evidence
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which entitle respondent for security for cost that should be provided by claimant. (Rec,
p.46 req, DAF, for sec. cost ¶¶ 2&3)
28. (2) The claimant’s ability to satisfy an adverse costs award and the availability of the
claimant’s assets for enforcement of an adverse costs award. (Art. 3, CIArB) Financial
health of the CLAIMANT is good and it can provide any amount of the security for cost
because due to the fact totally CLAIMANT has 61.800.000.00. [PO.2, Rec. P,59
Turnover]
29. (3) Whether it is fair in all of the circumstances to require one party to provide security
for the other party’s costs, (Art. 4, CIArB) based on the circumstances the tribunal can
order for the security for costs but from the circumstances it becomes clear that the
requests of the RESPONDENT for the security for cost was late and it was not included
in the terms of the reference and RESPONDENT requested for the security for cost on
6th September of 2016 [Rec. 46, ¶ 1] and the terms of reference was signed by both
parties on 22 August of 2016 [Rec. 43&44]. In the light of the facts and documents
mentioned in the above it is clear that the request of the RESPONDENT for security for
cost is not reasonable and fair.
At hence CLAIMANT respectfully request from the honorable tribunal to reject the
request for the security cost which is raised by the RESPONDENT.
B. EVEN IF THE TRIBUNAL HAS THE POWER TO ORDER CLAIMANT TO
PAY RESPONDENT’S COSTS, RESPONDENT HAS NOT PROVIDED ANY
EVIDENCE TO SUPPORT ORDERING SECURITY FOR COST.
30. Respondent has not met the burden of demonstration and there is no fact which would
justify the requested order, let alone proven the need for such an order. (Rec, P.49, SFC)
as per [Roth & Geistlinger] stated, which test the request for security of costs there
was no jurisdiction involve when respondent dealing with claimant (Yearbook on
International Arbitration 166, VIII, A) although the financial situation of the claimant
is the most obvious and most often applied criterion by the tribunal to determine whether
to make an order for security. [Roth & Geistlinger]
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31. The tribunal may grant the order only where there is a clear risk that a defeated claimant
will not comply with his obligation to pay the respondent’s costs. In this instance it is
important for the respondent to bring to light credible evidence about the claimant’s
poor liquidity (such as statutory returns, audited annual accounts, low valuation of
operating assets or previous history of entering into voluntary arrangements,
receivership or liquidation). If the respondent can show that the claimant lacks the means
to pay up it may simultaneously be able to support its argument that an eventual award
of costs is likely to go unpaid thereby winning the tribunal’s favor to order a security
for costs award.
32. In the similar case of [KEARY DEVELOPMENTS Vs. TARMAC CONSTRUCTIONS]
stated that “The court will properly be concerned not to allow the power to order
security for cost to be used as an instrument of oppression such as by stifling a
genuine claim by an indigent company against a more prosperous company. But it
will also be concerned not to be so reluctant to order security that it becomes a weapon
whereby the impecunious company can use its inability to pay costs as a means of
putting unfair pressure on the more prosperous company” [House of Lords, Bailii,
CA 1995]
33. However, as stated by Paolo Firmminho where the claimant has sufficient assets to
satisfy any costs award, it has been held that in such situations an order for security for
costs should not be made. (Yearbook on International Arbitration 166, VIII, B), so in
conclusion CLAIMANT has sufficient assets to satisfy any costs award and respondent
does not submit enough evidence to request for security for costs. [Paolo]
i. ACCORDING TO ART. 17(E)(1) UNICITRAL RESPONDENT DOES
NOT MEET THE REQUIREMENTS TO REQUEST SECURITY FOR COST
DUE TO THE SUBJECT-MATTER OF THE DISPUTE
34. RESPONDENT did not meet the measure which is stated in the Art. (17) (E)(1) of
UNICITRAL because the it is reciprocal, so RESPONDENT cannot request for the
security for cost. Pursuant to Art. 17 (E) (1) states: The arbitral Tribunal may require
the party requesting an interim measure to provide appropriate security in connection
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11 | P a g e
with the measure [Art 17 (E)(1)] Nevertheless, RESPONDENT requested security for
cost from Arbitral proceedings on 6th September 2016 [Rec.45&46, RSC] because
respondent believes that it will be the winner of dispute in the Arbitral proceedings, so
RESPONDENT asks from tribunal to order CLAIMANT for providing of security for
RESPONDENT’s cost however this request is inappropriate and unreasonable.
35. Inline to Art.17 (E)(1) of the UNICITRAL RESPONDENT did not meet the measures
which are mentioned in this Article. In Article mentioned the amount which is requested
by the RESPONDENT from CLAIMANT the same amount should be provided from
the RESPONDENT side because the Article is reciprocal. however, RESPONDENT did
not meet that specific measure.
36. In light of the fact and applicable laws in this case which is raised by both sides
RESPONDENT and CLAIMANT it becomes clear that Claimant is not the only party
who incurred this cost.
37. So finally CLAIMANT respectively asks from the Arbitral tribunal to reject the request
for the security cost by the RESPONDENT and understands RESPONDENT that its
clam is false and unreasonable.
ii. ART. 23(4) ICC RULES DO NOT ALLOWED THE PARTIES FOR
ADDING NEW CLAIMS AFTER THE TERMS OF REFERENCE HAVE
BEEN SIGNED.
38. The parties do not have the allowance to add something new after signing the terms of
reference according to the ICC rules.
39. Based on the Art. 23 (4) of the ICC which states: After the Terms of Reference have
been signed or approved by the Court, no party shall make new claims which fall
outside the limits of the Terms of Reference unless it has been authorized to do so by
the arbitral tribunal, which shall consider the nature of such new claims, the stage of
the arbitration and other relevant circumstances. [ICC Art. 23 (4)]
40. It means that no party has the admission of adding any other claim after the signing of
the terms of the reference because all of the matters are mentioned in the terms of the
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reference and it would be signed by the satisfaction of the two sides after their
assessment and evaluation of the subject matters of the terms of the reference, so the
signing of the terms of reference can be binding and final.
41. As stated by (Eduardo Ono Tershima and Rafael Villar Gagliardi) that, once parties
and arbitrators sign the terms of reference they will be bound by the scope and limits
of that specific arbitration this means that the parties will not be able to add new
claims or modify their claim. [Eduardo Ono, Rafael Villar Art 4.21 CAM-CCBC]
42. In addition, the main purposes of the Terms of reference are to fix the subject matter of
the arbitration, to specify the claims of the parties but in contrary the Respondent try to
add the new claims and furthermore (Att. EzgiBabur / ErdemErdem) stated that in ICC
arbitrations, the terms of reference play an important rule. One of the purposes of the
terms of reference is to establish the parties claim. If the parties make claims that fall
outside of the signing of the terms of reference, the provisions to be applied to these new
claims shall be invalid [ErdemErdem / Law Office Istanbul].
43. Nevertheless, In ICC arbitration, Art. 23(4) of the rules sets forth under which conditions
new claims may be advanced in ICC arbitration. Pursuant to this provision, after the
terms reference have been signed or approved by the court, no party shall make new
claims that fall outside the limits of the terms of reference. (Art. 23(4) ICC RULES)
44. In the case of (Yorkshire Regional Health Authority -vs- Fairclough Building Ltd)
The 1980 Act was enacted in order to implement the recommendations of the Twenty-
First Report of the Law Reform Committee (Final Report on Limitation of Actions)
[Cmnd 6923 &1977]. “The committee recommended that no change was required in
the rules which enabled a new cause of action to be added out of time and also
amendments after the expiry of the limitation period, nor were they intended to cover
amendments which, though made after the expiry of the limitation period, were not
statute-barred. It would have been completely outside the committee's terms of
reference to make any recommendation of the latter kind” (Final Report on Limitation
of Actions) (Cmnd 6923) (1977)
45. Due to the fact On 22 of August 2016 both parties and the Arbitral Tribunal signed the
Terms of Reference [Rec, P.41] although, Respondent made the request for Security of
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13 | P a g e
Costs on 6 September 2016 [Rec. P.46]. Normally parties are not allowed to change,
modify or amend the claims once the Terms of Reference is signed.
46. Consequently, from the above statements and commentaries and also the case which
mentioned it becomes clear that the request for the security for cost is outside of the
terms of reference and it is rejected through the 23(4) of the ICC rules.
47. At the hence, the CLAIMANT respectfully ask from the honorable tribunal to reject the
claims of RESPONDENT regarding the security for cost.
● ● ●
48. From the above mentions and provided documents based on the evidence by the
different laws, commentaries, cases law, international practices and facts which were
provided for the first issue, it becomes clear that the request for the security of cost
which is raised by the REPONDENT is not reasonable and legitimate. So the
CLAIMANT respectfully asks from the honorable tribunal to reject the request for the
security of cost and understands it regarding its unfair and incorrect request.
ISSUE II: THE ARBITRAL PROCEEDINGS WERE INITIATED ON TIME,
WITHIN 60 DAYS AS PER THE DSA, AND THUS CLAIMANT’S CALIMS
ARE ADMISSIBLE.
All disputes arising between the parties have to be settled in a good faith and amicably.
If no agreement reached between the parties, after the failure of negotiations, each party
has the right to initiate arbitral proceedings within 60 days. CLAIMANT to this
arbitration, through sending an email to RESPONDENT on 1 April 2015, have indicated
that the outcome of meeting shows it is not possible to find an amicable solution.
CLAIMANT informed RESPONDENT for initiating arbitral proceedings. However,
CLAIMANT did not hope to take such a step, but RESPONDENST’S insist of not
making any further payments of outstanding amount leaved CLAIMANT no other
options. Therefore, CLAIMANT submitted its request for arbitration and initiated
arbitral proceedings on time which is according to DSA (A). In addition, CLAIMANT
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14 | P a g e
met all the requirements for Arbitral proceedings set under CAM-CCBC rules and
UNCITRAL model law principles to empower admissibility of Claims (B). Claimant’s
commencement of Arbitral proceedings met all requirements set under Art 4.1 CAM-
CCBC rules (C). Based on Art. 12.5 CAM-CCBC Rules, the amendments given by
CLAIMANT may not affect any failure to the commencement of Arbitration
Proceedings. (D)
A. THE ARBITRAL PROCEEDINGS WERE INITIATED BY CLAIMANT
AFTER THE FAILURE OF NEGOTIATIONS AND IT IS WITHIN 60 DAYS.
49. After the failure of negotiations between both parties, CLALIMANT sent an email on 1
April 2016 to inform RESPONENT for commencement of arbitral proceedings. Even
CLAIMANT remained open for any meaningful negotiations, but RESPONDENT
insisted of not making further payment which leaved CLAIMANT no other option.
Furthermore, CAM-CCBC president confirmed the receipt of request for Arbitration
which means it was on time and acceptable. [EXH R3 & R 22].
50. To initiate Arbitration Proceedings, according to Art. 4.1 of CAM-CCBC Rules “The
party desiring to commence an arbitration will notify the CAM/CCBC, through its
President, in person or by registered mail, providing sufficient copies for all the parties,
arbitrators and the Secretariat of the CAM/CCBC to receive a copy, enclosing: …” As
stated by Julian D. M. Lew, when problems regarding the validity of the request for
arbitration arises, the time limit issues may be relevant. For example, the CLAIMAT sent
a notice requesting the commencement of an Arbitration Proceedings without the copy
of arbitration agreement. It is the last day before the claim barred by a limitation period.
Thus, the Tribunal can extend the time for noticing RESPONDENT in order to receive
further information to solve any doubt arises. [Julian M. D. Lew, Loukas A. Mistelis and
Stefan M. Kroll, op. cites., pp. 506-514]
51. Furthermore, pursuant to Art. 4.2 of ICC rules, “the date on which the request is received
by the secretariat shall, for all purposes, be deemed to be the date of the commencement
of arbitration.” To do so, CLAIMANT requested arbitral proceedings on time which
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informed RESPNDENT on 1 April 2016 and initiated Arbitration on 31 May 2016 which
is within 60 days.
52. At the case in hand, the order of Arbitration proceedings indicates that CLAIMANT
initiated arbitral proceedings on 31 May 2016, have to amend the power of attorney to
Write LTD and fix the mistake of registration fees (R19 ¶ 2). For the sake of good order,
CLAIMANT procured power of attorney to Write LTD and paid remainder amount of
registration fees which covered the mistake. Furthermore, CLAIMANT fulfilled its
obligation under the Art. 12 of CAM-CCBC which paid to the table of expenses on the
date of request for commencement of arbitration [R 20 ¶2 & PO2 ¶32].
53. In addition, based on Art. 1.4 LCIA International Arbitration Rules “The date of receipt
by the Registrar of the Request shall be treated as the date upon which the arbitration
has commenced for all purposes (the “Commencement Date”), subject to the LCIA’s
actual receipt of the registration fee.” Effective to this rule, the commencement date for
Arbitration Proceedings is the date which CLAIMANT requested for Arbitration.
54. Based on Art. 2.2 ICDR Rules “The arbitration shall be deemed to commence on the
date on which the Administrator receives the Notice of Arbitration.” Which indicate
the commencement of Arbitration is the date of Notice received by Secretariat of CAM-
CCBC.
55. Hence, given CAM-CCBC, LCIA & ICC rules, this Tribunal should not hesitate to
consider commencement of Arbitration on time based on DSA. Therefore, CLAIMANT
initiated Arbitral Proceedings on time based on DSA.
B. CLAIMANT fulfilled its obligation to commence Arbitral proceedings based
on Art 4.3 CAM-CCBC rules.
21. In general, an arbitral tribunal must conduct the arbitration in accordance with the
procedure agreed by the parties in agreement. To initiate arbitral proceedings, based on
DSA, each party shall solve disputes amicably and in good faith. If the parties did not
reach any settlement, each party has the right to initiate arbitral proceedings after the
failure of negotiation. CAM-CCBC demanded amendment and never asked for a second
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16 | P a g e
request after the amendment, therefore the request was accepted on 31 May, 2016. [R 19
¶ 1].
22. Pursuant to Art 2.6 (f) CAM-CCBC rules the duties of the president of CAM-CCBC are
to “issue complementary rules to resolve doubts and provide guidance for the
application of these rules, including in cases gaps.” In the light of this article, president
of CAM-CCBC requested through its secretariat to resolve doubts in the power of
attorney which provide guidance to CLAIMANT for the good order of claim.
23. According to Art. 4.3 CAM-CCBC rules “The Secretariat of the CAM-CCBC will send
a copy of the notice and respective documents that support it to the other party,
requesting that, within fifteen (15) days, it describe in brief any matter that may be the
subject of its claim and the respective amount, as well as comments regarding the seat
of arbitration, language, law or rules of law applicable to the arbitration under the
contract.”
24. As stated by Lisa Beisteiner, “to conduct Arbitral Proceedings in which each party have
the right to be represented or advised by persons of their choosing”. In doing so,
CLAIMANT discussed the issue with its parent company which the power of attorney
was prepared in the matter of Write Holding PLC and was amended later by
CLAIMANT. Thus the amendment cannot fail the commencement of Arbitration [Lisa
Beisteiner, § 549, conduct of Arbitration Proceedings].
25. As per given evidence and facts with their respective rules, it is clear that CLAIMANT
is entitled for commencement of Arbitral Proceedings in which both parties agreed to
initiate the Arbitral Proceedings after failure of negotiations within 60 days. In light of
above explanations, CLAIMANT did its obligation based on DSA.
C. CLAIMANT’S COMMENCEMENT OF ARBITRAL PROCEEDINGS MET
ALL REQUIREMENTS SET UNDER ART 4.1 CAM-CCBC RULES
26. CLAIMANT toke the necessary steps to initiate Arbitral Proceedings which met all the
requirements set under Art. 4.1 CAM-CCBC rules. Art. 4.1 indicates that “The party
desiring to commence an arbitration will notify the CAM/CCBC, through its
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17 | P a g e
President, in person or by registered mail, providing sufficient copies for all the
parties, arbitrators and the Secretariat of the CAM/CCBC to receive a copy”.
27. Assuming an arbitration agreement signed by both parties, whenever a dispute arises out
of such contractual relationship, the damaged party should notify CAM-CCBC’s
president, requesting a commencement of arbitration. Such a notification shall contain
all the information and documents listed in Art. 4.1 of CAM-CCBC rules.
28. Naturally, under the provision set forth by Art. 4.1 (C) CAM-CCBC rules, the
CLAIMANT may determine all scope of dispute at his own in which CLAIMANT have
to provide necessary documents to ensure the validity of the notification. Thus
CLAIMANT requested for Arbitration in time and sent the necessary documents, the
only comment which CLAIMANT received from tribunal was to change the subject
matter from Wright Holding PLC to Wright LTD. CLAIMANT sent an official letter to
Arbitral Tribunal stating that the original power of attorney had been signed on behalf
of CLAIMANT’S parent company that all important decisions are taken at the level of
the Holding, for the sake of good order CLAIMANT approached the power of attorney
from Wright Ltd.
29. CLAIMANT provided sufficient documents to initiate arbitral proceedings. The
document which needed amendment was the power of attorney and the registration fee.
Notwithstanding, Write Holding PLC has 88% of shares and CLAIMANT discusses all
the important decisions which go beyond day to day business, to initiate arbitral
proceedings, CLAIMANT submitted the power of attorney in the matter of Write
Holding PLC (PO2, ¶2).
D. BASED ON ART. 12.5 CAM-CCBC RULES, THE AMENDMENTS GIVEN
BY CLAIMANT MAY NOT EFFECT ANY FAILURE TO THE
COMMENCEMENT OF ARBITRATION PROCEEDINGS.
30. Art. 12.5 Indicated that “At the time of presentation of the notice for commencement
of arbitration, the claimant must pay to the CAM/CCBC the Registration Fee, in the
amount stated in the Table of Expenses, which cannot be set off or reimbursed.” In
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18 | P a g e
order of initiating Arbitral Proceedings, CLAIMANT submitted necessary documents
along with Registration Fee. CLAIMANT received a notice from President of
Arbitration on 1 June, 2016 which noticed for solving doubts in request for Arbitration
that the President has the authority at his discretion based on Art. 2.6 (f) to order
complementary issues. CLAIMANT, at first, mistakenly paid 400 Brazilian Reais
instead of 4000 Brazilian Reais in which paid the remained amount after receiving notice
from Arbitral Tribunal and has apologized for (R 20 ¶ 3).
31. Furthermore, based on Art 6.4 CAM-CCBC rules “the time periods provided in these
rules can be extended, at the description of Arbitral Tribunal.” In the light of Art. 4.3
CAM-CCBC rules, the secretariat of CAM-CCBC will send a copy of notice and
respective documents that within 15 days it describes its brief any matter may be the
subject of claim, respective amount, seat of arbitration, language, laws or rules of laws
applicable to the arbitration under the contract. In doing so, CAM-CCBC president
extended the time of sending notice to RESPONDET while the commencement of
arbitration is 31 May, 2016 in which Arbitral Tribunal ordered CLAIMANT to resolve
doubts and amend the power of attorney. Coupled with, Arbitral Tribunal sent the notice
for commencement of Arbitration Proceedings on 08 June, 2016.
32. The supplement which President of CAM-CCBC requested from CLAIMANT clarified
uncertainty, CAM-CCBC gave the opportunity to CLAIMANT in order to present
amendments to the request for Arbitration, not any second request. Therefore,
amendment cannot cause the failure of commencement as per the president ordered to
solve any doubts arising from CLAIMANT’S request.
● ● ●
33. In case the Tribunal, for given reasons, may order admissibility of CLAIMANT’S claims
for commencement of Arbitration based on section 21 of DSA which initiated Arbitral
Proceedings on time. The supplementary of request for Arbitration cannot cause the
failure of commencement, because the CAM-CCBC did not order CLAIMANT to
provide another request, but ordered CLAIMANT to amend doubts and questions rises.
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Therefore, respected Tribunal should kindly order RESPONDENT that CLAIMANT’S
claims are admissible and initiated Arbitral Proceedings on time.
ISSUE III: RESPONDENT IS OBLIGED TO PAY THE OUTSTANDING
AMOUNT OF $2,285,240.00 TO CLAIMANT BASED ON ARTICLES. 53 AND
54 OF THE CISG.
34. The Parties are in agreement that the contract is governed by the CISG [R. 53, P. O. No.
1, para. 4]. Art 53, 54 grants the right to recover the additional amount $2,285,240.00
based on DSA. Claimant Is Entitled to The Remaining $2,285,240.00 Of The Contract
Price From Respondent, Based On The Article 53 Of CISG; Respondent Is In Violation
Of The Duty To Pay The Price In Full As Provided (A). The parties did not intend to
apply a fixed exchange rate to the price for the blades (B).
A. CLAIMANT IS ENTITLED TO THE REMAINING $2,285,240.00 OF THE
CONTRACT PRICE FROM RESPONDENT, BASED ON THE ARTICLE 53
OF CISG; RESPONDENT IS IN VIOLATION OF THE DUTY TO PAY THE
PRICE IN FULL AS PROVIDED
35. According to Article 53 “The buyer must pay the price for the goods and take delivery
of them as required by the contract and this convention”. [CISG, Art. 53]. Additionally,
Article 54 CISG states that “The buyer’s obligation to pay the price includes taking such
steps and complying with such formalities as may be required under the Contract or any
laws and regulations to enable payments to be made.” [CISG, Art. 54] Also in case
number 478 between Russian Federation (Claimant) and Turkey (Respondent) ruled in
1998 by “Tribunal of International Commercial Arbitration at the Russian Federation
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20 | P a g e
Chamber of Commerce and Industry”, the tribunal awarded that “Consequently,
according to Articles 53 and 54 of the CISG the [buyer] is obliged to pay the price for
the delivered and taken goods. Based on the above reasoning, the Tribunal concluded
that the [buyer] must pay the outstanding debt to the [seller].” [CLOUT Case No. 478]
Another case ruled by Supreme Economic Court of the Republic of Belarus between
Belparquet LLC (Seller) and Belarusian Company (Buyer), concluded on 14 and 21
May 2001 two contracts for the sale of parquet with STEMAU Srl (the buyer), an Italian
company.
36. The goods were delivered to the buyer. However, the buyer paid only part of the total
agreed price of DM 105,753.6. The seller sued the buyer to recover the outstanding
sum of 9,006.68 Euros. The defendant did not appear in court. The court also stated
that, according to article 53 CISG, the buyer has an obligation to pay the price of the
goods. Since the buyer had failed to pay in full the price of the goods, the court entered
a judgment against the buyer for the full amount of 9,006.68 Euros requested by the
seller. [CLOUT Case No. 498]. Moreover, Peter Schlechtriem states that “The buyer
must pay the price either as fixed in the contract or as determined according to
contractual terms” [Uniform Sales Law, Peter Schlechtriem, Sec. 1, Para 1]
37. Due to the facts, under section four of the “DSA” the price due for the blades is
$22,723,800, however respondent only fulfilled part of its obligation to pay the price by
crediting $20,336,367.20 to claimant’s account. That leaves the remainder of
$2,285,240.00 as an outstanding amount rendering respondent’s obligation unfulfilled,
and that is supported further by the identical ruling of Supreme Economic Court of the
Republic of Belarus where it deemed an incomplete payment as insufficient to fulfill the
abovementioned obligation.
38. Hence taking into consideration, the rules, cases, and commentary presented above, the
buyer (RESPONDENT) did not fulfill its obligation to pay the price according to the
DSA.
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21 | P a g e
B. THE PARTIES DID NOT INTEND TO APPLY A FIXED EXCHANGE
RATE TO THE PRICE FOR THE BLADES.
39. Based on Art 8(1) CISG, the subjective intent of the parties was not to apply a fix
exchange rate for the entire Agreement, but to apply the fixed rate only to the clamps
(i). Second, Pursuant to the Article 8(2) of CISG and UNIDROIT Principle 4.1, a
reasonable person would understand the fixed exchange rate clause in the addendum to
apply to the clamps only, and not the blades (ii). Third; Pursuant to Article 8(3) CISG,
the parties’ intent was to only apply the fix exchange rate to the clamps, demonstrated
by the discussions, trade usages, and later conduct (iii).
i. BASED ON ART 8(1) CISG, THE SUBJECTIVE INTENT OF THE PARTIES
WAS NOT TO APPLY A FIX EXCHANGE RATE FOR THE ENTIRE
AGREEMENT, BUT TO APPLY THE FIXED RATE ONLY TO THE CLAMPS.
40. The addendum framed only For provisioning of the clamps, therefore, addendum has
added to the Development and Sales Agreement [St f. CL. Para 8, p. 5], does not means
that parties agreed on fixed exchange rate for the whole transaction, this could be
understood from Claimant’s Exhibit 4 of the Claimant which provides that the invoiced
were prepared under abnormal condition and it was understood that then addendum
contained exchange rat i.e. is applicable to the whole transaction, while it was entirely
opposite [Exh.C4, Pg.13], the conducts and the parties past conducts and relevant
circumstances demonstrate that they did not intend to apply a fixed exchange rate to the
price for the blades.
41. The intent of a party in a commercial transaction could be understood from the parties
which is elaborated in the CISG, the parties have agreed upon the CISG to govern their
contract [Exh.C2, Pg.10] and according to Article 8(1) CISG, Claimants conducts and
statement should be interpreted according to its intended, and Claimant did not intended
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22 | P a g e
to apply the exchange rate in the addendum to the price for the blades. Article 8(1) states
as: (for the purposes of this Convention statements made by and other conduct of a party
are to be interpreted according to his intent where the other party knew or could not have
been unaware what that intent was)
42. Courts and arbitral tribunals have taken into account while interpreting the conducts and
statements of a party. In a similar case the appeal court of Spain decided to take into
account one party’s intent based on Article 8 of the CISG that the contract price was
based on the bales of rubber roles rather than meters [Rolls of rubber case]
At hence the should consider all the claims of claimant regarding to the intentions so
claimant respectively ask from Tribunal to order Respondent to pay the outstanding
amount.
ii. PURSUANT TO THE ARTICLE 8(2) OF CISG AND UNIDROIT
PRINCIPLE 4.1, A REASONABLE PERSON WOULD UNDERSTAND THE
FIXED EXCHANGE RATE CLAUSE IN THE ADDENDUM TO APPLY TO
THE CLAMPS ONLY, AND NOT THE BLADES.
43. If the preceding paragraph is not applicable, statements made by and other conduct of a
party are to be interpreted according to the understanding that a reasonable person of the
same kind as the other party would have had in the same circumstances. Based on the
facts and actions of both parties it can be clearly seen that both parties had no intention
of applying the exchange rate in the addendum to the price for the blades at all. Both
parties had only contracted for the blades but when respondent found out that the clamps
it was going to get from the other party was not suitable then decided to buy the clamps
from the claimant as well (R. p.5, para. 8) therefore, and addendum was added in order
to add the clamps in the contract as well. It clearly shows that there was no intention of
applying the exchange rate in the addendum for the price for the blades whatsoever and
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23 | P a g e
it was all about the clamps. There is no way that respondent was unaware of the fact that
the addendum was only added for the clamps and not the blades.
44. However as stated by [E.Allan Farnsworth]: Art 8(2) is based on Art, 3(3) of ULIS
which provided “ if neither of the preceding paragraph is applicable, the statements by
and the acts of the parties shall be interpreted according to the intend that reasonable
person would have had in the same situation as the parties” [CISG commentary Art.
8(2). p 96]
45. Conduct of the parties that would demonstrate that they did not fix the exchange rate for
the blades’ price and it only agreed for clamps [CL. St F, Para 22, p.9] as established.
46. Moreover, according to the plain meaning rule the statement in the addendum was so
simple and clear that the price of the exchange rate only applies to the clamps only, and
plainly states fixing of price exchange to the clamps without indicating anything to the
blades [P. 12, article 21. R]. According to Article 8(2) of the CISG as well as Article 4.1
of UNDRIOT, a reasonable person would interpret the fixed exchange rate clause in
addendum not to be applied to the price of the blade.
47. Therefore, it should be considered that the intention of the parties not intended to include
the exchange rate in the addendum to the price for blades.
iii. PURSUANT TO ARTICLE 8(3) CISG, THE PARTIES’ INTENT WAS TO
ONLY APPLY THE FIX EXCHANGE RATE TO THE CLAMPS,
DEMONSTRATED BY THE DISCUSSIONS, TRADE USAGES, AND LATER
CONDUCT.
48. As per Article 8(3) of CISG which states that “in determining the intent of a party or the
understanding a reasonable person would have had, due consideration is to be given to
all relevant circumstances of the case including the negotiations, any practices which
the parties have established between themselves, usages and any subsequent conduct of
the parties” so if we look at the parties’ previous negotiations and practices, one can
easily understand what the actions of the parties meant. The negotiations of the parties
both were only decided for the blades and not the clamps. Consecutively, it was the
Tabesh University Memorandum for Claimant
24 | P a g e
respondent’s insistence that Claimant accepted the fixed exchange rate for the clamps
which was exceptional in their contract. (R. p.5, Para 8.)
49. In addition, the parties never intended to not fix the exchange rate for the blades and any
interpretation [GPSolo Magazine - September 2005/ page 1 of International Law News,
winter 2005 (34:1)] by the Respondent on inclusion of the statement in the addendum is
against the contract formation. [Bradley R. Coppedge]
50. CLAIMANT explains what he meant to do not fix the price for the blades [CL. St F,
para 12, p. 21, 22]. As provided in the Journal of law and Commerce: the wording of
this provision can also be understood in a way that contradictory conduct by a party bars
that party relying on a different meaning of its former conduct [Journal of law and
commerce, UNCITRAL Digest of case law on CISG, Volume 30, para, 30, p.58],
considering that, the Respondent is a contradictory statement where already agreed for
non- fixing of exchange rate price for the blades in Development and Sales contract
2010 and also the addendum.
51. Therefore, they never intended to apply the exchange rate agreed in the addendum to
the price of the blades.
● ● ●
52. At the case at hand, RESPONDENT have to pay the outstanding amount of 2,285,240
which is requested from CLAIMANT for the 2000 blades as the parties agreed on the
DSA, because the production cost per blade is 19,586 EQD and when claimant multiply
this amount to current rate which is US$ 1= 1.79 it became 10,941 and according to
section 4 of DSA the full amount of 2000 blades became 22,723,800 which
RESPONDENT was fail to pay the certain amount to CLAIMANT’s account.
ISSUE IV: PURSUANT TO THE DSA CLAIMANT IS ENTITLED TO
THE BANK FEES ASSESSED FROM RESPONDENT.
Tabesh University Memorandum for Claimant
25 | P a g e
53. Due to the fact (R. 10 section 4(3) DSA) both parties accepted that the bank charges for
the transfer of the amount are to be borne by the buyer and the buyer will deposit the
purchase price in full in to seller’s account at the Equatorianian National Bank, and
according to rules of this bank, levy is a part of the bank charges.
54. Nevertheless, this bank is not only a national bank of CLAIMANT what that Respondent
said. In contrary this bank the most reputable bank among six countries worldwide
bank in world that the private parties had to pay a fee for such type of investigation and
clearness. (R. 55 PO 2 para 7) But RESPONDENT denied paying the full amount of
bank charges. The parties established based on contract that respondent will pay the full
amount of the purchase price to the CLAIMANT’s account at the Equatorianian
National Bank(A). RESPONDENT breached its obligations under Article 54 CISG to
enable full payment to be made to the CLAIMANT by failing to pay the inspection levy
necessary for the transfer of the full purchase price (B).
A. THE PARTIES ESTABLISHED BASED ON CONTRACT THAT
RESPONDENT WILL PAY THE FULL AMOUNT OF THE PURCHASE
PRICE TO THE CLAIMANT’S ACCOUNT AT THE EQUATORIANIAN
NATIONAL BANK.
55. In present case CLAIMANT was the party whom proposed the bank charges provision
in the DSA {R. 55 para 6 PO 2} due to the fact in previous course of dealing of claimant
with their customers in particular with Jumbo Fly to their contract, both parties did not
contain any rules and regulations on that time that which party had to bear the bank
charges, so CLAIMANT decided not to claim the levy deducted from the amount
transferred and credited to CLAIMANT’s account. {PO 2 R. 56 para 9}.
56. But in this case circumstance are something different because Claimant at the very first
steps obstruct the bank charges issue in the DSA (R,10. Sec. 4, Para 3) as mentioned
above CLAIMANT has predicted earlier that the parties will never face such this
problem again, therefor CLAIMANT suggested this rule to DSA, and CLAIMANT’s
intend was that the levy should be pay by respondent as a bank charges as well as it
accepted by RESPONDENT
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26 | P a g e
57. But RESPONDENT denied of paying the bank charges to mention bank and so claimant
request from this Arbitral tribunal to order respondent for paying the full payment of
bank charges.
B. RESPONDENT BREACHED ITS OBLIGATIONS UNDER ARTICLE 54
CISG TO ENABLE FULL PAYMENT TO BE MADE TO THE CLAIMANT BY
FAILING TO PAY THE INSPECTION LEVY NECESSARY FOR THE
TRANSFER OF THE FULL PURCHASE PRICE.
58. RESPONDENT was obliged to pay the full amount price of the goods to under the
contract but RESPONDENT was failed to perform its obligation.
According to the Art 54 CISG “|The buyer’s obligation to pay the price includes taking
such steps and complying with such formalities as may be required under the contract
or any laws and regulations to enable payment to be made
59. Due to the fact Claimant made an invoice for full amount of 2000 blades on 15 January
2015 under the DSA, and according to DSA RESPONDENT was obliged to pay the full
amount price of goods to CLAIMANT’s account (R. 10 DSA sec 4 para 3).
60. In similar case of (shoe case) “RESPONDENT fail to pay the full amount price of
forty-one pairs of shoes to CLAIMANT. The Seller (CLAIMANT) sought to have the
court order the (Buyer) to Pay the full amount of the goods to CLAIMANT. The
ordered the (Buyer) to pay the full amount of the price which has made by
CLAIMANT (Amtsgericht (lower court) Freiburg) [shoe case, 4 C 4003/06].
61. However, The Claimant’s action is also justified. Pursuant to Art 54 CISG, As a stated
by (Sprau in Palandt), Respondent is obligated to pay the remaining sales price as
specified in the claim. (Commentary on BGB, 66 ed, § 714 n. 24)
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27 | P a g e
62. At hence claimant is entitled for the full amount of price which RESPONDENT failed
to perform its obligation under the DSA and Art 54 CISG. Thus Claimant request from
Arbitral Tribunal to order RESPONDENT to pay the full amount of price from the
goods.
● ● ●
63. RESPONDENT must to pay the outstanding amount of 2,285,240 which is requested
from CLAIMANT for the 2000 blades as the parties agreed on the DSA, because the
production cost per blade is 19,586 EQD and when claimant multiply this amount to
current rate which is US$ 1= 1.79 it became 10,941 and according to section 4 of DSA
the full amount of 2000 blades became 22,723,800 which RESPONDENT was fail to
pay the certain amount to CLAIMANT’s account.
Tabesh University Memorandum for Claimant
28 | P a g e
REQUEST FOR RELIEF
On the basis of the above mentioned facts, Rules and Cases, CLAIMANT requests the
Arbitral Tribunal to:
1. Order RESPONDENT to pay the still outstanding purchase price in the amount of US$
2,285,240 and the bank charges in the amount of US$ 102, 192, and 80.
2. Order RESPONDENT to bear the cost of the arbitration.
Kabul, Afghanistan, November 25, 2016
On behalf of Write Ltd.
XFazilah Sadat
XHameedullah Hamdard
XParwiz Hammiddi
XMohammad Aman Akrami
XFaridon Salehi