Page 1
Annual Willem C. Vis International Commercial Arbitration Moot thTwenty Six
Herat University
Parisa Sekandari • Farida Razaqi • Eqbal Nahzat • Fardin Jamal
Herat, Afghanistan
MEMORANDUM FOR CLAIMANT
On Behalf of:
Phar Lap Allevamento
(Mediterraneo)
CLAIMANT
Against:
Black Beauty Equestrian
(Equatoriana)
RESPONDENT
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Herat University Memorandum for CLAIMANT
II
Table of Contents
Abbreviation……………………………………………………………….…………………..III
Index of Authorities……………………………………………………………………..……..IV
Statements of the Facts………………………………………………..……………………….1
Summary of Arguemts………………………………………………..………………………..3
I. THE ARBITRATION AGREEMENT IS GOVERNED BY THE LAW OF
MEDITERANEO AND THE ARBITRAL TRIBUNAL HAS JURISDICTION
TO ADAPT THE CONTRACT………..…………………………………………..5
A. The parties intended to apply Mediterranean law which permits
adaptation of the contract to govern the arbitration agreement and its
interpretation ………………………………………………..……………..5
B. The principle of party autonomy allows the tribunal to adapt the contract
under its interpretation power……………………………………………..8
C. The parties intended to give the Arbitral Tribunal the Power of adapting
the contract………………………………………………………………….10
D. The Principle of Competence-Competence allows the Arbitral Tribunal to
Rule on its own Jurisdiction……………………………….………………11
II. CLAIMANT is entitled to submit evidence from other arbitral
proceedings……………………………………………..………………………….12
A. Under the HKIAC Rules, CLAIMANT is entitled to submit evidences
from another arbitral proceeding, including those obtained from a
breach of confidentiality to pursue its legal right…………………….13
B. CLAIMANT is entitled to submit evidences from other the arbitration
proceeding to prove contradictory behavior of RESPONDENT……14
C. The parties’ agreement as well as the involved states laws do not
exclude the admissibility of illegally obtained evidences in
arbitration………………………………………………………………15
D. Only the Arbitral tribunal has jurisdiction to determine the
admissibility of evidences……………………………………….………16
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III
III. UNDER CLAUSE 12 OF THE FSSA CLAIMANT IS ENTITLED TO THE
OUTSTANDING AMOUNT OF USD 1,250,000………………………………...17
A. The Parties intentionally modified the usual definition of the DDP price
delivery terms as to the extent that the responsibility for unforeseen tariff
increases remains on the buyer………………………..……………..………..17
B. Even if the contract allocated the obligation to pay import tariffs to the seller,
under clause 12 the seller is not responsible for all of the tariff increase since
it was an unforeseeable event making the contract more onerous….………19
IV. The tribunal should award the CLAIMANT US $ 1,250,000 under the CISG
through the adaption of the contract…………………………...…………...…….21
A. Clause 12 of FSSA does not prevent the application of CISG in order to adapt
the price…………………………………………………………………………21
B. If the Tribunal does not consider art. 79 as being applicable, Adaptation is still
a general principle of the CISG…………………………………..…..……….23
C. Should the Tribunal find that even the general rules from the CISG do not
allow for price adaption, then at least the rules of private international law
do………………...……………………………………………………………...23
Request for Reliefs………….……………………………………………………………….26
Page 4
&
§/ §§
Arb
Art/ Arts
CISG
Cl. Exh.
DDP
Ed.
Et al
Et seq
FSSC
HKIAC
i.e.
IBA
ibid
ICSID
Model Law
Mr./Ms.
No
N.A
Para/ paras
PECL
Pg./pp.
PO. NO.1
PO. NO.2
Res. Exh.
UAR
UNGP
v.
Vol.
ABBREVIATIONS
And
Section / subsection
Arbitration
Article/ Articles
Convention on International Sales of Goods
Claimant Exhibit
Delivered duty paid
Edition
et aliter (and others)
et sequens (and the following one)
Frozen Semen Sales Contract
Hong Kong International Arbitration Center
id est (that is)
International Bar association
ibidem (in the same source)
International Center for settlement of disputes
UNCITRAL Model Law on International Arbitration (2006)
Mister/Miss
Number
Notice of Arbitration
Paragraph/ paragraphs
Principles of European Contract Law
Page/ Pages
Procedural order number one
Procedural order number two
Respondent Exhibit
UNCITRAL Arbitration Rules
United nations Global compact
Versus
Volume
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Herat University Memorandum for CLAIMANT
V
Cited as:
CISG
HKIAC
IBA Guidelines
MODEL LAW
UNCITRAL rules
UNIDROIT
INDEX OF AUTHORITIES
Reference
A. LEGAL INDEX
United Nations Convention on Contracts for the International
Sale of Goods
In paras: 30, 32, 45, 54, 55, 56, 57, 58, 59, 60, 61. 63, 63, 64
Hong Kong International Arbitration Centre (2018)
In paras: 5, 6, 9, 8, 10, 12, 13, 14, 15, 18, 19, 20
IBA guidelines on taking of evidence in international
Arbitration (2010)
In paras: 21, 22
UNCITRAL Model law on International Commercial
Arbitration (2006)
In paras: 23, 43, 50
UNCITRAL Arbitration Rules (as revised in 2010)
In para: 18
International Institute for the Unification of Private Law
In para: 34, 37, 38, 39
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Alfred Escher
Bundes Gerichtshof
Chartered Institute of
Arbitrators
Christoph Brunner 2008
Christophe Brunner
Craig, Laurence, et al
Croft C/ Kee C/
B. BOOKS AND SCHOLARY WORKS
Alfred Escherm, VN-Kaufrecht: stillschweigender
Verzicht aufeinwant einer verspäteten Mängelrüge, Recht
der internationalen Wirtschaft 495, 500 (1999)
In para: 7
26 September 2012, Internationales Handelsrecht 231, 236
(2012)
In para: 10
Chartered Institute of Arbitrators, International Arbitration
Practice Guidelines, Jurisdictional Challenges,London, 2016
In para: 54
Force Majeure and Hardship under General Contract
Principles: Exemption for Non-performance in International
ArbitrationInternational Arbitration Law Library,2008,
Volume 18Cited as: Christoph
In para: 23
Christophe Brunner Force Majeure and Hardship under
General Contract Principles: Exemption for Non-performance
501 [2008], at 495]
In para: 32
Craig, Laurence, et al “International Commercial Arbitration”
Foundation Press New York (1997)
In para: 54
Croft C/ Kee C/ Waincymer J, A Guide to the UNCITRAL
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Waincymer J
Derains Yves, Schwartz,
Eric
Enderlein/Maskow 1992
F. Schwarz & C. Konrad
Fouchard Gaillard
Goldman
G. Born
H.W. Fasching
Horatia Muir Watt
Arbitration Rules, Cambridge University Press (2013)
In para: 61
Derains Yves, Schwartz, Eric, A Guide to the New ICC Rules
of Arbitration, The Hague (1998)
In para: 43
Fritz Enderlein, Dietrich Maskow, International Sales Law, Ed.
Oceana Publications, New York, 1992 Available at
http://www.cisg.law.pace.edu Cited as: Enderlein/Maskow.
In para: 32
The Vienna Rules: A Commentary on International Arbitration
in Austria ¶1-093 (2009)
In para: 55
Fouchard Gaillard Goldman “International Commercial
Arbitration” The Hague: Kluwer Law International (1999)
In para: 9
Gary Born, International Arbitration Cases and Materials,
(Aspen Publishers 2011).
In para: 12
schiedsgricht und schiedsverfarhen im osterreichischen und
internationalen recht ( Vienna, Manz, 1973)
In para: 15
Horatia Muir Watt Pour l'accueil de l'estoppel en droit privé
français, in l'internationalisation du droit - mlanges en
l'honneur de yvon loussouarn 303 (1994)
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International Institute for
the Unification of Private
Law
K. Hober
L. Delvolvé, G-H. Pointon
& J. Rouche
Liebscher Christoph/
Fremuth-Wolf Alice A
Münch, in G. Lüke & P.
Wax
Nadja Hoffmann
OLG München
In para: 43
UNIDROIT Principles of International Commercial Contracts,
Rome 2016. Cited as: UNIDROIT Principles.
In para: 12
K. Hober, International Commercial Arbitration in Sweden 102
(2011)
In para: 23
L. Delvolvé, G-H. Pointon & J. Rouche, French Arbitration
Law and Practice: A Dynamic Civil Law Approach to
International Arbitration (2d ed. 2009)
In para: 42
Liebscher, Christoph/ Fremuth-Wolf, Alice A. Arbitration Law
and Practice in Central and Eastern Europe, Huntington (NY)
(2011)
In para: 52
Münch, in G. Lüke & P. Wax (eds.), Münchener Kommentar
zur Zivilprozessordnung, (3d ed. 2008)
In para: 5
Nadja Hoffmann Die Koordination des Vertrags- und
Deliktsrechts in Europa: eine rechtsvergleich Untersuchung
zum Kollisionsrecht, Sachrecht und zum UN-Kaufrecht 287
(Mohr: Tübingen 2006)
In para: 32
15 September 2004, Internationales Handelsrecht 70 (2005)
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Philippe Blondel
Peter Schlechtriem
SCHMIDT- KESSEL
Martin
Schwenzer et al 2012
Seung, Wha Chang
Stefan Kröll
In para: 32
Philippe Blondel, Les "principes généraux" dann la
jurisprudence de cassation - Rapport de synthèse, JCP, Ed. E.,
Suppl. 5-1989, at 16 (1989)
In para: 45
Uniform Sales Law- the UN Convention on Contracts for the
International Sale of Goods Manz 1986 At:
https://www.cisg.law.pace.edu/cisg/biblio/schlechtriem.html
(last reached: 5.12.2017)
In para: 4
SCHMIDT- KESSEL Martin, Commentaries on the UN
Convention on Contracts for the International Sale of Goods
(CISG), Oxford University Press, 2010
In para: 54
Ingeborg Schwenzer, Pascal Hachem, Christopher Kee Global
Sales and Contract Law Oxford University Press New York
2012
In para: 33
Seung, Wha Chang “Inherent Power of the Arbitral Tribunal to
Investigate Its Own Jurisdiction” Journal of International
Arbitration (2012)
In para: 24
Stefan Kröll Contractual Gap-filing by Arbitration Tribunals, 1
Int. Arb. L. Rev. 10 [1999] AT 54-5]
In para: 50
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Stewart Abercrombie
Baker/ Mark David
T. Rüede & R. Hadenfeldt
Wenger, in S. Berti et al
William W. Park
Yasutoshi Ishida 2018
Stewart Abercrombie Baker/ Mark David, The UNCITRAL
Arbitration Rules in Practice: The experience of the Iran -
United States Claims Tribunal, Kluwer Law and Taxation
Publishers (1992)
In para: 17
T. Rüede & R. Hadenfeldt, Schweizerisches
Schiedsgerichtsrecht 74 (2d ed. 1993)
In para: 16
(eds.), International Arbitration in Switzerland Art. 178, para
49 (2000
In para: 19
William W. Park Arbitration International Special Edition on
Arbitrator Challenges, Kluwer Law International (2011)
In para: 50
asutoshi Ishida, CISG Article 79: Exemption of Performance,
and Adaptation of Contract Through Interpretation of
Reasonableness-Full of Sound And Fury, but Signifying
Something, 30 Pace Int'l L. Rev. 331 (2018) Available at:
https://digitalcommons.pace.edu/pilr/vol30/iss2/3
In para: 21
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AAY v AAZ
AEK Athens and SK
Slavia Prague v. UEFA
Austrian Oberster
Gerichtsh
Cave v. Mills (1862)
CISG ADVISORY
OPINION
CLOUT case No. 237
CLOUT case No. 425
CLOUT case No. 83
C. CASES AND AWARDS
AAY v AAZ (2011) 1 SLR 1093. Singapore High Court
In para: 14
CAS 98/200, in Digest of CAS AwardsII, op. cit., pp. 38 and
seq
In para: 34
Judgment 30 March 2009, XXXV Y.B. Comm. Arb. 325, 327
(2010) (Austrian Oberster Gerichtshof)
In para: 19
Cave v. Mills, (1862) 7 H. and N. 913, 158 E
In para: 32
CISG ADVISORY OPINION CISG Advisory Council
Opinion No. 7
In para: 51
CLOUT case No. 237 [Arbitration Institute of the Stockholm
Chamber of Commerce, Sweden, 5 June 1998], also available
on the Internet at www.cisg.law.pace.edu
In para: 21
CLOUT case No. 425 [Oberster Gerichtshof, Austria, 21
March 2000]
In para: 56
CLOUT case No. 83(Oberlandesgericht München, Germany,
2 March 1994)
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CLOUT case No. 945
CLOUT case No.961
Doshi v. Pendse
EEOC v. Frank’s
Nursery & Crafts
F. Schwarz & C. Konrad
German
Bundesgerichtshof
GmbH v. Guangzhou
In para: 61
CLOUT case No. 945 [District Court in Galanta, Slovakia, 15
December 2006
In para: 63
CLOUT case No.961(Economic Court of the City of Minsk,
Belarus, 10 April 2008)
In para: 50
Bombay High Court,17 April 2000,Case No. 2001(1) Arb.LR
87
In para: 9
Inc., 177 F.3d 448, 460 (6th Cir. 1999) Exemption of Liability
for Damages Under Article 79 of the CISG Available at:
https://tinyurl.com/ycs5evjq (link shortened) Last access: 07
December 2017 Cited as: CISG-AC Opinion No. 7
In para: 23
Fleetwood Enters. Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th
Cir. 2002)
In para: 34
Judgment of 13 January 2009, 2009 SchiedsVZ 122 (German
Bundesgerichtshof)
In para: 54
WS Inventin Trade GmbH v. Guangzhou Glomarket Trading
Co. Ltd People’s Court, People’s Republic of China 20
October 2014
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Haviland v. Goldman
ICC CASE NO. 1512
ICC Case no. 8873
ICC case No. 9117
ICC Interim award
John A. MITCHELL v.
Mary Jane Mc INTEE
Kuklachev v. Gelfman
In para: 32
Haviland v. Goldman, Sachs & Co., 736 F.Supp. 507, 509
(S.D.N.Y. 1990)
https://www.trans-lex.org/205721/_/icc-award-no-5721-
clunet-1990-at-1019-et-seq/
In para: 12
CC Second Preliminary Award Made In Case No. 1512, YCA
1980, 170, 174 et seq. (also published in: ASA Bull. 1992, at
505 et seq
In para: 54
ICC International Court of Arbitration Paris 8873, 1997
In para: 27
ICC Arbitration Case No. 9117 On march 1998 Cited as : IIC
case No:9117
In para: 18
7929 Interim Award in ICC Case No. 7929, XXV Y.B.
Comm. Arb. 312, 317 (2000)
In para: 19
Personal Representative of the Estate of Avis Mitchell,
Appellant. Argued and Submitted Oct. 5, 1973. Decided Oct.
22, 1973
In para: 13
Kuklachev v. Gelfman, 600 F.Supp.2d 437, 460 (E.D.N.Y.
2009)
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L. Delvolvé, G-H.
Pointon & J. Rouche
Louis Dreyfus Negoco SA
v. Blystad Shipping &
Trading
Mastrobuono v. Shearson
Lehman Hutton
Oberlandesgericht
Frankfurt
Oger Bern
Olympus
Superstructures vs.
Meena Vijay Khaitan
Parakoi Shipping v
Jinbui Shipping and
Transportation
In para: 45
L. Delvolvé, G-H. Pointon & J. Rouche, French Arbitration
Law and Practice: A Dynamic Civil Law Approach to
International Arbitration ¶ 111 (2d ed. 2009)
In para: 4
Louis Dreyfus Negoco SA v. Blystad Shipping & Trading
inc., 252 F.3d 218. 224, US court of Appeals ( 2d Cir. 2001)
In para: 16
Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52,
62 (U.S. S.Ct. (1995)
In para: 27
Judgment of 24 September 1985, 1986 NJW 2202, 2203
(Oberlandesgericht Frankfurt)
In para: 30
Obergericht des Kantons Bern 19 May 2008 Case No.: HG 06
36/SCA CISG-online 1738
In para: 21
Olympus Superstructures vs.Meena Vijay Khaitan (1999)5
SCC 651
In para: 20
Parakoi Shipping v Jinbui Shipping and Transportation LTD
(2010) HCAJ. 184/2009
In para: 34
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Potipora Alimentos S.L
S. v. FINA
Shah v. Santander
Sunkyong Ltd. v.
Interagra Ipitrade
International
Supreme Court of
Louisiana
Sweet Dreams Unlimited,
Inc. v. Dial-A-Mattress
Swiss Federal Tribunal
1962
Swiss Federal Tribunal
2003
Potipora Alimentos S.L. v. District Court Rotterdam
Netherlands 17 March 2010 Available at:
http://cisgw3.law.pace.edu/cases/100317n1.html
In para: 26
CAS 2000/A/274, section 37, in Digest of CAS Awards II, op.
cit.
In para: 23
Shah v. Santander Consumer USA, Inc., 2011 WL 5570791,
at (D. Conn.)
In para: 19
CA Paris, Feb. 13, 1990, Sunkyong Ltd. v. Interagra Ipitrade
International, Dalloz, Jur. 593 (1990)
In para: 29
American bank and trust company v. Trinity universal
insurance company et al No. 48613. Dec. 11, 1967
In para: 35
Sweet Dreams Unlimited, Inc. v. Dial-A-Mattress, Int’l, Ltd.
In para: 52
Judgment of 7 July 1962, DFT 88 I 100 (Swiss Federal
Tribunal)
In para: 17
Judgment of 21 November 2003, DFT 130 III 66 (Swiss
Federal Tribunal)
In para: 33
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Swiss Federal Tribunal
2008
Swiss Federal Tribunal
2010
T. Rüede & R.
Hadenfeldt
Walter Rau Neusser Oel
und Fett AG v. Cross
Pac. Trading Ltd
Wenger, in S. Berti et al
Zimbabwe High Court
“105”
Judgment of 22 January 2008, 26 ASA Bull. 549, 555 (Swiss
Federal Tribunal)
In para: 40
Judgment of 25 October 2010, DFT 4A_279/2010 (Swiss
Federal Tribunal)
In para: 50
T. Rüede & R. Hadenfeldt, Schweizerisches
Schiedsgerichtsrecht 74 (2d ed. 1993)
In para: 33
Walter Rau Neusser Oel und Fett AG v. Cross Pac. Trading
Ltd, XXXI Y.B. Comm. Arb. 559, 564 (Australian Fed. Ct.
2005) (2006)
In para: 31
Wenger, in S. Berti et al. (eds.), International Arbitration in
Switzerland Art. 178, ¶ 49 (2000)
In para: 28
Judgments of 24 May 2000 and 31 May 2000, CLOUT Case
370, U.N. Doc. A/CN.9/SER.C/ABSTRACTS/33, 8
(Zimbabwe High Ct “105”)
In para: 14
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STATEMENT OF FACTS
A. Phar Lap Allevameneto (Claimant), a company registered and located in Capital City, of
Mediterraneo. It operates Mediterraneo’s oldest and most renowned stud farm. By the other hand,
Black Beauty Equestrian (Respondent), in Oceanside, Equatoriana, is famous for its broodmare
lines that have resulted in a number of world champion show jumpers and international dressage
champions.
B. Due to an illness which affected animals in Equatoriana, the government of Equatoriana
imposed a serious restriction for animal transaction. Black Beauty intended to meet its stable’s
breeding needs through artificial insemination. Since Phar Lap was very successful in its mare
stallion depot, and owned the most known racehorse pedigree such as Nijinsky III, winner of many
races.
C. Therefore, on 21 March 2017 Black Beauty contacted to Phar Lap demanding Nijinsky III for
its breeding program. On 24 March 2017 Phar Lap offered Black Beauty 100 doses of Nijinsky III
frozen semen according to the Mediterraneo Guidelines for Semen Production and Quality
Standards. Black Beauty had no problem with the choice of law and the forum selection clause
and insisted on a DDP delivery.
D. Phar Lap accepts DDP delivery against a moderate price increase. But that time Phar Lap put
a limitation for the Black Beauty that it shouldn’t sell the frozen semen for the third party without
the consent of Phar Lap and also said that we would like to be informed about the use of every
does. The price per does was 99.55$. The Black Beauty accepts the general applicability of the
general terms and conditions of the Phar Lap.
E. The Black Beauty insists for the contract on a delivery on the basis of DDP and also it
considered that the law of Mediterraneo is not acceptable for us if so, we could accept the
application of the law of Mediterraneo if the courts of Equatoriana have jurisdiction. And then
Black Beauty suggests more negotiations.
F. Phar Lap after internal discussions, accepted DDP delivery to increase of price by 100$ per
dose. It suggested the hardship clause to the contract and also the Phar Lap said to the Black Beauty
that if you cannot agree on jurisdiction Mediterraneo courts, would be to opt for arbitration in
Mediterraneo. The Phar Lap for discussing the above issues suggests a personal meeting in
Vindobona in the second week of April or the Black Beauty could attend to the annual colt auction
in Danubia on 12 April or it suggests discussing over the phone.
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G. On 6 May 2017 the frozen semen sales agreement was signed between two companies in
price of 100$ per dose. They put their own terms and conditions in the agreement. The claimant
sent the first shipment of 25 doses on 20 May 2017; the second shipment of 25 doses on 3 October
2017 and before the last shipment carry the Mediterraneo Government put 25% tariffs on
agriculture product form Equatoriana. Similarly, the Equatoriana Government put 30% tariffs on
Mediterraneo selected products.
H. On 20 January 2018 both parties started negotiations for an acceptable price of frozen semen
due to the tariffs that both companies government imposed on the animal productions especially
on the frozen semen. Phar Lap on 22 January 2018 supposed to deliver the last shipment. Finally,
they accepted that every problem comes out of this contract, the problem will be solved according
to the HKIAC rules. Place of arbitration should be Danubia the arbitrators should be three and the
language of be English.
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Summary of Arguments
ISSUE A: The Arbitral tribunal has the jurisdiction and/ or the powers under agreement to
adapt the contract, and the arbitration law of Mediterraneo governs the arbitration
agreement. According to the interpretation of the arbitration agreement by taking in to
consideration the intent of parties they selected the law of Meditterrneo to govern the arbitration
agreement. Arbitration law of Mediterraneo provides a broad interpretation of the arbitration
agreement that permits the arbitral tribunal to adapt the contract. Language of the arbitration
agreement and negotiations of the parties indicate that a broad interpretation of the contract
consistent with Mediterranean law is intended. It is permitted to the tribunal to adapt the contract
under its interpretation power based of Party autonomy. Meanwhile, the tribunal has jurisdiction
to adapt the contract under the Principle of Competence-Competence and in the same time the
parties intended to give this power to the Tribunal as well.
ISSUE 2: Claimant is entitled to submit evidence from the other arbitration proceedings
even if it had obtained either through a breach of a confidentiality agreement or an illegal
hack of RESPONDENT’s computers. Relying to HKIAC rules CLAIMANT is allowed to
submit evidences from other arbitral proceedings for supporting its legal right even if that breaches
confidentiality. Beside that, neither the parties excluded admissibility of illegal obtained evidences
in their agreement and nor the law of involved states in this case exclude such evidences. Thus it’s
the Arbitral tribunal that has jurisdiction to decide on admissibility and relevance of evidences
based on their own discretion and they are not bound to exclude and do not take into account illegal
obtained evidences in favor of RESPONDENT. Additionally, in other to prove contradictory
behavior of RESPONDENT, CLAIMANT is entitled to submit evidences from other arbitral
proceedings.
ISSUE 3: CLAIMANT entitled to the payment of US$ 1,250,000 or any other amount
resulting from an adaptation of the price under clause 12 of the contract or under the CISG,
under clause 12 of the FSSA claimant is entitled to the outstanding amount of USD 1,250,000
since The Parties intentionally modified the usual definition of the DDP price delivery terms as to
the extent that the responsibility for unforeseen tariff increases remains on the buyer and Even if
the contract allocated the obligation to pay import tariffs to the seller, under clause 12 the seller is
not responsible for all of the tariff increase since it was an unforeseeable event making the contract
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more onerous. Furthermore, CLAIMANT is entitled to the outstanding amount of USD 1,250,000
under CISG since Clause 12 of FSSA does not prevent the application of Article 79 CISG in order
to adapt the price .If the Tribunal does not consider art. 79 as being applicable, Adaptation is still
a general principle of the CISG. and Should the Tribunal find that even the general rules from the
CISG do not allow for price adaptation, then at least the rules of private international law do.
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ARGUMENTS
I. THE ARBITRATION AGREEMENT IS GOVERNED BY THE LAW OF
MEDITERANEO AND THE ARBITRAL TRIBUNAL HAS JURISDICTION TO ADAPT
THE CONTRACT.
1. In the present case, after arising of disputes between the parties on payment of additional costs
caused by tariffs on frozen semen, arbitration proceeding commenced by claimant under HKAIC
administrated rules [Record, P. 4]. Claimant believes that the arbitration agreement is governed by
Law of Mediterranoe which allows the adaptation of the contract in specific conditions, thus
tribunal is competent to adapt the contract However respondent counter this claim. In the following
argument we would prove that Parties intended to apply Mediterranean Law which permits
adaptation of the contract (A), Arbitration Agreement between the parties allows the tribunal to
adapt the contract (B), Parties intended to give adaptation power to the tribunal (C) and finally
under Competence- Competence Principle Tribunal can rule on its jurisdiction and determine
whether they have the power to adapt the contract (D).
A. The parties intended to apply Mediterranean law which permits adaptation of the
contract to govern the arbitration agreement and its interpretation
2. The parties to this arbitration intended that the law of Mediterraneo applies to the interpretation of
the arbitration agreement. RESPONDENT has alleged that the law of Danubia governs the
arbitration agreement, but based on the Intent of parties, it is clear that Mediterraneo law shall
govern any interpretation of the arbitration agreement. Mediterranean law provides a broad
interpretation of arbitration agreements and gives jurisdiction to the arbitrators to adapt the
contract. [Notice of arbitration, Pg. 7]. According to holding of Australian federal court arbitration
clauses are contractual provisions and when interpreting arbitration clauses, courts must rely on
the rules of contractual interpretation which provides that the intents of the parties in arbitration
agreements should be considered. [Walter Rau Neusser Oel und Fett AG v. Cross Pac. Trading
Ltd, (2005)]. This approach has been adopted by many jurisdictions and authorities, demonstrated
by various commentaries about the proper interpretation of arbitration agreements. [L. Delvolvé,
G-H. Pointon & J. Rouche, Para. 111; K. Hober (2011), Pg. 102 ; Münch, in G. Lüke & P. Wax
(eds.), §1029, ¶105; F. Schwarz & C. Konrad, T ¶1-093; Wenger, in S. Berti et al. (eds.), Art. 178,
¶49 (2000)]. when applying the rules of interpretation of contracts on arbitration agreements,
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formal wording and intention of the parties have to be taken into consideration. [H.W. Fasching,
P.31].
3. Similarly, this approach is implemented in common law and civil law jurisdictions such as the
Swiss federal tribunal and the United states court of appeals, which both have stated that the
analysis of an international arbitration agreement starts by applying the rules of contract
interpretation, including consideration of the intent of parties. [Mastrobuono v. Shearson Lehman
Hutton, (1995); Fleetwood Enters. Inc. v. Gaskamp, (5th Cir. 2002); EEOC v. Frank’s Nursery &
Crafts, (6th Cir. 1999); Haviland v. Goldman, (S.D.N.Y. 1990); Swiss Federal Tribunal, (25
October 2010); Swiss Federal Tribunal (27 January); Swiss Federal Tribunal, (22 January 2008);
Swiss Federal Tribunal, (21 November 2003); German Bundesgerichtshof, (13 January 2009);
Austrian Oberster Gerichtsh, (30 March 2009)]. Similarly, as stated in ICC case 7929, the intent
of the parties is considered to be a general principle of interpretation of contracts [ICC Interim
Award, (2000)].
4. According to the arbitration clause in this case, the parties intended to select the law of
Mediterraneo to govern the arbitration agreement. CLAIMANT shall demonstrate that based on
the following: First, the language of the arbitration clause as signed by both parties indicates that
the parties agreed on the arbitration law of Mediterraneo to govern the arbitration agreement (1);
and the intention of the parties, as demonstrated from their negotiations, indicates that the parties
agreed that the arbitration law of Mediterraneo is the governing law of the arbitration agreement
(2).
1. The language of the arbitration clause proves that a broad interpretation of the contract,
consistent with the law of Mediterraneo, was intended.
5. The arbitration law of Mediterraneo provides for a broad interpretation of arbitration agreements
that permits adaption of the contract [Notice of arbitration, Pg. 7] This is consistent with the
intention of the parties based on the wording of the arbitration clause, which is in favor of a broad
construction.
6. The arbitration clause as agreed between parties, states that “Any dispute arising out of this
contract, including the existence, validity, interpretation, performance, breach or termination
thereof shall be referred to and finally resolved by arbitration…” [CLAIMANT’s Exhibit C 5, Pg.
14]. The use of the phrase “any disputes” has been interpreted by the Zimbabwe high court as
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being as broad, such that it could be extended to all disputes which have any admissible legal
relation to the agreement of parties [Zimbabwe High Ct “105”, (24 May 2000 and 31 May 2000)].
The term “arising out of” similar requires a broad interpretation of the arbitration agreement. The
term “arising out of” is a broad formulation [Louis Dreyfus Negoco SA v. Blystad Shipping &
Trading; Sweet Dreams Unlimited, Inc. v. Dial-A-Mattress, Int’l, Ltd; Shah v. Santander
Consumer, (2011); Kuklachev v. Gelfman, (E.D.N.Y. 2009)]. “Arising out of” is also interpreted
broadly by German authorities [Oberlandesgericht Frankfurt, (24 September 1985)] and Swiss
courts as well [Swiss Federal Tribunal (7 July 1962); T. Rüede & R. Hadenfeldt (1993), Pg. 74].
Thus the terms used in this arbitration clause reflect the intent of the parties to provide a broad
interpretation of the arbitration argument.
7. Accordingly, relying on the wording of the arbitration clause the parties intended that a broad
interpretation would apply, which is consistent with the law of Mediterraneo and gives the
arbitrators jurisdiction to adapt the contracts.
2. Negotiations between the parties indicate that they did not object to Arbitration law of
Mediterraneo to govern the arbitration agreement
8. Whereas RESPONDENT claims that interpretation of arbitration agreement is governed by law of
Danubia [Answer to Notice of arbitration, Pg. 31] the parties never agreed to Danubian law as
governing law of the arbitration agreement. According to the negotiations the parties agreed that
the law of Mediterraneo would govern the arbitration agreement.
9. In response to CLAIMANT’s offer on 28th march 2017 RESPONDENT did not object to
Mediterranean law as the governing law, and expressed that it was willing to allow Mediterranean
law to govern in a situation where the courts in Equatoriana would have jurisdiction [CLAIMANT
Exhibit C 3, Pg. 11]. Thereinafter CLAIMANT by considering RESPONDENT’s concern about
jurisdiction of courts of Mediterraneo indicated that they would be willing to agree to the
arbitration clause without any modification on governing law [CLAIMANT exhibit C 4, Pg. 12].
Eventually in the final draft of the dispute resolution clause as offered by CLAIMANT it is stated
“To avoid any further futile discussion on the issue I would like to inform you that Phar Lap has
an internal policy according to which consent to a contract submitted to a foreign law or providing
for dispute resolution in the country of the counterparty requires special approval by the creditors’
committee…” [RESPONDENT Exhibit R 2, Pg. 34]. Accordingly, CLAIMANT imposed
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modification of RESPONDENT’s offered arbitration clause in order to avoid submitting to
arbitration in Equatoriana the counter party’s state and also to avoid submitting to a foreign law.
Even as RESPONDENT claims, it cannot be derived from the note of Mr. Antley on 12 April 2017
that states “Clarify in arbitration clause that neutral venue and applicable law” That
RESPONDENT objected to the law of Mediterraneo but it reflects that RESPONDENT intended
to explicitly indicate the applicable law in arbitration clause [RESPONDENT Exhibit R 3, Pg. 35]
thereinafter being informed about CLAIMANT’s internal policy that caused to bring modification
on arbitration clause.
10. In conclusion, the negotiations between the parties indicate that CLAIMANT intended to select
the arbitration law of Mediterraneo as the governing law to the arbitration agreement.
RESPONDENT was informed about that intention and did not object to it. Accordingly, in this
case it is Mediterranean arbitration law which the parties intended to apply to their arbitration
agreement.
B. The principle of party autonomy allows the tribunal to adapt the contract under its
interpretation power
11. The arbitration agreement between the parties states: "Any dispute arising out of this contract,
including the existence, validity, interpretation, performance, breach or termination thereof shall
be referred to and finally resolved by arbitration administered by the Hong Kong International
Arbitration Centre [HKIAC] under the HKIAC Administered Arbitration Rules in force when the
Notice of Arbitration is submitted. [Cl. Ex. C 5, p: 14].
12. Additionally UNIDROIT Principles of International Commercial Contracts which are applicable
between the parties [PO. No.2, para. 45; PO. No.1, III. 4] provides that courts and tribunals have
the power to adapt the contract. Article 6.2.3 of the UNIDROIT Principles sets out the effects of
“hardship”. It stipulates that, failing mutual agreement between the parties on the renegotiation
and adaptation of their contract, the disadvantaged party may turn to “the court”, which may then
either terminate or “adapt the contract with a view to restoring its equilibrium [Article 6.2.3 para.
4]. Article 11.1 clarifies that the reference to “court” also includes arbitral tribunals. The
UNIDROIT Principles also authorize judges and arbitrators to “adapt the contract or an individual
term” under Article 3.2.7. Para. 2.
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13. When preparing the revised UNIDROIT Principles, the working group emphasized that
“curial intervention”, in the form of a judgment or arbitral award would be “mandatory in
order for revision [adaptation of a contract] to be binding on both parties”; it explicitly
speaks of “judicial adaptation. [UN Doc. UNIDROIT 2009 Study L]
14. Similarly, this principle is accepted by many countries through their national Law. For instance
the Principles of European Contract Law stipulate, in their Article 6:111 para. 3 on “Change of
Circumstances” that, if the parties fail to reach an agreement, the court may terminate or “adapt
the contract in order to distribute between the parties in a just and equitable manner the losses and
gains resulting from the change of circumstances”. Again, the “court” also includes an arbitral
tribunal [Article 1:301 para. 2 PECL]. It has been demonstrated that since state court judges enjoy
the power to adapt contracts, arbitrators too have such power. It has also become apparent,
however, that the scope and contents of the adaptation power of state courts is not without
controversy. Hence, it seems desirable to go one step further: It is submitted that even if and when
the state court's powers to revise a contract would and do end, an arbitral tribunal may validly
revise the contract. The proposition is that an arbitrator's powers and an arbitrator's power to revise
contracts, may go beyond that of a state court judge. [Stefan Kröll, Contractual Gap-filing by
Arbitration Tribunals, P. 54-5]
15. Furthermore, the use of supplementary interpretation to “develop” contracts and explain that the
“modification of a contract to changed circumstances” would be one application of supplementary
interpretation. The arbitral adaptation power thus comprises both functional “contract adaptation”
by way of supplementary interpretation, as well as conceptual contract adaptation – e.g. in case of
change of foundation or enforcing contractual adaptation clauses. [Christophe Brunner, Force
Majeure and Hardship under General Contract Principles: Exemption for Non-performance, p.
495]
16. In the present case, as mentioned above, the arbitration agreement between the parties authorize
the tribunal to interpret the contract whenever there arises a dispute between the parties related to
the interpretation of the contract [Cl. Ex. C5, p: 14] since the interpretation also includes an
adaptation power.
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C. The parties intended to give the Arbitral Tribunal the Power of adapting the contract
17. Pursuant to the prevailing opinion in legal theory, the adaption power of the tribunal can be
derived from the interpretation of the Art. 8 CISG, which provides for the interpretation of parties’
statements and conduct [Bianca et al., Commentary on the International Sales Law pp. 95-98].
According to Art. 8 [1] CISG, parties’ 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 [Schwenzer et al. 1, Commentary On The UN Convention On The
International Sale Of Goods p. 152]. Further Art. 8 [2] CISG prescribes that 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 [schwenzer et al. 1, Commentary on The UN Convention On
The International Sale Of Goods, p. 154].
18. Additionally determination of 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 [schwenzer et al. 1, Commentary On The Un Convention On
The International Sale Of Goods p. 155; Schmidt-Kessel, Commentaries on the UN Convention
on Contracts for the International Sale of Goods (CISG), 155]. This means that for the
interpretation of the intent of the parties, first the subjective test should be applied, and
alternatively, the objective test of the parties’ intent [Schwenzer Et Al. 1, Commentary on The UN
Convention on The International Sale of Goods, p. 155]. In general, if the parties’ intent cannot be
clearly interpreted, their relationship should be interpreted objectively, according to the
understanding of a reasonable third person
19. In the present case, RESPONDENT was well aware of CLAIMANT’s intention to give adaptation
power to the arbitral tribunal where Mr. Anthely, RESPONDENT’s counsel, clearly stated that it
should be the task of the arbitrators to adapt the contract if the Parties could not agree. [Cl. Ex.
C8]. Additionally RESPONDENT may allege that final drafter, Mr. Julian krone were not aware
of discussed issues between wo initial negotiators, However Mr. Krone in his statement expresses
that “the draft of the contract had already a provision in favor of arbitration in Danubia as a neutral
country and also a choice of law clause in favor of the law of Mediterraneo” [RES. EX. R.3] which
as proved before, Mediterranean Law allows for the interpretation of the contract. Furthermore
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RESPONDENT never rejected the transfer of power to the tribunal to adapt the contract during
negotiations as Mr. Krone accepted the offer. [Res. Ex. R.3]. Additionally, at different occasions
CLAIMANT declared to RESPONDENT that it will not bear the risks of the agreed terms of
delivery. This point is well evident from article 12 of the Frozen Semen Contract by stipulating
that Seller shall not be responsible for … hardship, caused by additional health and safety
requirements or comparable unforeseen events making the contract more onerous” and different
emails in which RESPONDENT never expressed any objections.[Cl. Ex. C4]. The final drafters
also had access to the email chain between CLAIMANT and RESPONDENT. [PO. No. 2, para.5].
Therefore in accordance with the negotiations and conduct of the parties, they intended to give the
power of adaptation to the arbitrators. This conclusion can be driven from negotiations, conducts
and statements of the parties as present above. Even if this conclusion cannot be clear from a
subjective interpretation, a reasonable person in the same situation and same kind would come to
this result because there is no objection from RESPONDENT‘s part to the adaptation power of the
arbitrators during negotiations to finalize the contract. Consequently these negotiations, coupled
with the new circumstances that resulted in hardship, requires the adaption of the contract by the
tribunal
D. The Principle of Competence-Competence allows the Arbitral Tribunal to Rule on its
own Jurisdiction
20. Competence-Competence is a fundamental principle of international arbitration [UNCITRAL
Secr. Expl. Note]. The Principle holds that the arbitral tribunal has the competence to decide
procedural issues that arise under the arbitral proceedings, such as whether the tribunal has
jurisdiction over the claims. [Croft/Kee/Waincymer, A Guide to the UNCITRAL Arbitration Rules
p. 147; Craig, International Commercial Arbitration, p. 694; Seung, Inherent Power of the Arbitral
Tribunal to Investigate Its Own Jurisdiction]. It also entitles arbitral tribunals to decide questions
concerning their own competence. [Park, Arbitration International Special Edition on Arbitrator
Challenges p. 136]. Its function is to enable arbitrators not only to decide on a substantive issue
but also on their jurisdiction [Baker & Mckenzi, The UNCITRAL Arbitration Rules in Practice:
The experience of the Iran - United States Claims Tribunal p. 274]. This principle has been adopted
into the UNCITRAL Rules and Model Law. [UNCITRAL Art. 23; UNCITRAL ML 16[1]].
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21. Arbitrators have the power to rule on their own competence [Fouchard et al., International
Commercial Arbitration, pp.395-397]. In modern international arbitration, the arbitrators’
fundamental power to decide on their own competence is universally accepted [Doshi v. Pendse;
Chartered Institute of Arbitration, p 2; Fremuth-Wolf, in: Liebscher/Fremuth-Wolf, HUN-30, and
SLOVAK-1].
22. The current dispute deals about whether the arbitral tribunal is competent to adapt the contract
since RESPONDENT objects to the jurisdiction of the tribunal. Therefore it requires determination
of the tribunal’s jurisdiction which according to the mentioned rules and cases the arbitrators are
allowed to determine their competence in a case under the Competence- Competence
Principle.[Olympus Superstructures vs. Meena Vijay Khaitan (1999)].
Conclusion of the First Issue
23. In conclusion, claimant submits that the governing law of the arbitration agreement is the law of
Mediterranoe which allows the adaptation of the contract due to the change of circumstances.
Additionally, under the party autonomy Tribunal enjoys the power of adaptation of the contract,
beside this from negotiations and statements of the parties it can be concluded that parties intended
to give such power to the arbitrators and finally Tribunal under competence- competence principle
is allowed to rule on its own jurisdiction which also includes this question that whether tribunal is
competent to adapt the contract.
II. CLAIMANT is entitled to submit evidence from other arbitral proceedings
24. In Annual Breeder Conference, claimant becomes aware of another arbitration proceeding of
RESPONENT with one its customers under the same circumstances with the current arbitration
which in that proceeding respondent asked for adaptation of the contract while in here rejects the
need for adaptation of the contract [Record, p. 51]. When claimant disclosed these facts to the
arbitral tribunal respondent alleged that the information obtained through a breach of
confidentiality obligation or through an illegal hack of respondent computer system [Record, p.
52]. However we would prove that claimant is entitled to submit evidences from other arbitration
proceeding to support its legal rights (A) and to demonstrate the contradictory behaviors of
respondent (B), Additionally the parties’ agreement and the involved states laws do not exclude
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admissibility of illegal obtained evidences in arbitration (C) and finally, Only Arbitral tribunal has
jurisdictions to determine admissibility of evidences (D).
A. Under the HKIAC Rules, CLAIMANT is entitled to submit evidences from another
arbitral proceeding, including those obtained from a breach of confidentiality to pursue its
legal right
25. The parties agreed on a proceeding of arbitration under HKIAC administered rules. [Cl. Ex. 4].
Therefore, HKIAC provisions should govern the arbitration. RESPONDENT alleges that bringing
evidence from other arbitration proceedings by CLAIMANT breaches the confidentiality of the
arbitration; however under the HKIAC article 45(i) the duty of confidentiality related to arbitral
proceedings or awards is not absolute. This article provides that the duty of confidentiality does
not prevent the publication, disclosure or communication of information by a party “(i) to protect
or pursue a legal right or interest of the party; or (ii) to enforce or challenge the award referred to
in Article 45.1 in a legal proceedings before a court or other judicial authority…” [HKIAC
Administrated Rule 2018, art: 45]. For example, a party may wish to disclose the confidential
information in an arbitral award if it wishes to refer to awards and orders which were rendered in
the same or a similar situation. [Parakoi Shipping v Jinbui Shipping and Transportation LTD
2010].
26. Exceptions of confidentiality aim to maintain the balance between protecting confidentiality in
arbitration and the need for disclosure of information in certain exceptional cases, which is
incorporated in the HKIAC rules. [AAY v AAZ (2011)]. In the present case, CLAIMANT received
reliable information at the annual breeder conference about another arbitration under the HKIAC-
Rules which RESPONDENT had with one of its customers concerning the sale of a promising
mare to Mediterraneo. [Record, p. 51]. That sale had been affected by an unforeseen tariff of 25%
imposed by the president of Mediterraneo. [Record, p. 51]. In that arbitration, RESPONDENT,
who is here vigorously denying any need to adapt the contract to a change of circumstance, had
itself asked for an adaptation of the price invoking an unforeseeable change of circumstances.
[Record, p. 51]. CLAIMANT should be entitled to bring evidence from the other arbitration
proceeding in order to protect its own legal interest, and demonstrate that RESPONDENT
recognizes CLAIMANT’s legal rights in this instance. RESPONDENT has taken two different
positions in the same situations, and this fact should be considered by the arbitral tribunal.
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B. CLAIMANT is entitled to submit evidences from other the arbitration proceeding to
prove contradictory behavior of RESPONDENT
27. The principle of Prohibition of inconsistent behavior is a wide accepted Principle in international
commercial law and provides that a party cannot contradict itself to the detriment of another or in
another word a party shall not be allowed to blow hot and cold ― to affirm at one time and to deny
at another. [ICC Second Preliminary Award Made In Case No. 1512, YCA 1980, at 505].
28. Article 1.8 UNIDROIT Principles prohibits inconsistent behavior by stipulating that “A party
cannot act inconsistently with an understanding it has caused the other party to have and upon
which that other party reasonably has acted in reliance to its detriment”.[John A. MITCHELL v.
Mary Jane Mc INTEE, 1973; American Bank and Trust Company v Trinity Universal Insurance
Company et al. 1967]
29. This principle has its basis in common sense and common justice, and courts of law have in modern
times most usefully adopted[ Cave v. Mills (1862), p. 927.]. This principle is known as non
concedit venire contra factum proprium [Sunkyong Ltd. v. Interagra Ipitrade International, Dalloz,
Jur. (1990); Philippe Blondel, Les "principes généraux" dann la jurisprudence de cassation -
Rapport de synthèse; Horatia Muir Watt, Pour l'accueil de l'estoppel en droit privé français,
in l'internationalisation du droit - mlanges en l'honneur de yvon loussouarn
30. Both courts [Bundes gerichtshof, Internationales Handelsrecht 2012; OLG München,
Internationales Handelsrecht (2005); Tribunale di Padova, Internationales Handelsrecht (2005);
Tribunale di Padova, Internationales Handelsrecht (2005); Paul Bowden, L'interdiction de se
contredire au détriment d'autrui as a Substantive Transnational Rule in International Commercial
Arbitration, in Transnational Rules In International Commercial Arbitration; Fouchard Gaillard
Goldman on International Commercial Arbitration] and commentators [Alfred Escher, VN-
Kaufrecht: stillschweigender Verzicht auf Einwand einer verspäteten Mängelrüge, Recht der
internationalen Wirtschaft, pp. 495, 500 (1999); Nadja Hoffmann, Die Koordination des Vertrags-
und Deliktsrechts in Europa., p 287] emphasized on the prohibition of venire contra factum
proprium, which can be derived from specific provisions of the CISG, such as Artt. 16(2) and
29(2) [AEK Athens and SK Slavia Prague vs. UEF App. 38 and seq.; S. vs. FINA, p. 400 (2000);
Swiss Civil Code, Art. 2].
31. In the present Case, CLAIMANT finds reliable information at the annual breeder conference about
another arbitration under the HKIAC-Rules which RESPONDENT had with one of its customers
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concerning the sale of a promising mare to Mediterraneo. That sale had been affected by the
unforeseen tariff of 25% imposed by the president of Mediterraneo. In that arbitration,
RESPONDENT who is here vigorously denying any need to adapt the contract to a change of
circumstance had itself asked for an adaptation of the price invoking an unforeseeable change of
circumstances. [Record, Page 51, para.2]. The situation in the current dispute and the other dispute
is the same but RESPONDENT has contradictory and inconsistent behavior in them. [Record,
Page 51] which is a breach of non concedit venire contra factum proprium. Additionally
RESPONDENT was represented in the other arbitration by the same counsel [PO. No.2, Para.38]
therefore individuals involved in the current case on behalf of RESPONDENT were well aware of
previous actions and intentions of their represented party. The only difference to the current case
is that RESPONDENT in the other arbitration was the one asking for the adaption of the contract
and recognized the jurisdiction of the arbitral tribunal to adapt the price. [Record, page, 51; PO.
NO. 2. P.39]. Apparently RESPONDENT intends to change the direction of the tribunal for its
benefit and detriment of CLAIMANT by hiding the truth and evidences of other the arbitration
proceeding. Therefore CLAIMANT is entitled to submit evidences from the other arbitral
proceeding to demonstrate RESPONDENT’ contradictory behavior and real intention.
C. The parties’ agreement as well as the involved states laws do not exclude the admissibility
of illegally obtained evidences in arbitration
32. RESPONDENT claims that illegally obtained evidences should not be admissible in arbitration
[letter of Fasttrack, Pg. 51] whereas the parties never agreed on such an exclusion within their
arbitration agreement. Additionally, there is no legal rule within the lex arbitri excluding evidences
from an arbitration agreement obtained from a breach of confidentiality.
33. In a situation where the parties do not specify the rules on evidence taking in arbitration, the taking
of evidence will be analyzed according to the parties’ arbitration agreement, any applicable
institutional rules, the lex arbitri; and the discretion of the arbitrator. [G. Born, Pg. 769]. In the
arbitration agreement at hand, the parties did not agree on any rule related to evidence taking in
arbitration. Also, the the arbitration law of Equatoriana, Mediterraneo and Danubia as the states
involved do not contain any specific rule as the evidence taking, in particularly to determine how
to deal with evidences obtained through a breach of contractual obligations on confidentiality
[Procedural order 2, Pg. 51].
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34. Accordingly, the arbitration agreement along with the national laws of Equatoriana, Mediterraneo
and Danubia do not exclude any certain kind of evidence, not even the illegally obtained evidences
from another arbitration proceeding. Therefore, the arbitral tribunal should declare the evidences
in question as admissible.
D. Only the Arbitral tribunal has jurisdiction to determine the admissibility of evidences
35. At the annual breeder conference claimant was informed avout another contractual relationship of
respondent where respondent actted as seller and was then was affected but the 25% tariff imposed
by the president of Mediterraneo. RESPONDENT contrary to the present, in its first proceeding,
RESPONDENT argued for the adaption of the contract. [letter of Langweiler, Pg. 50]. In light of
this contradictory behavior, it is of utmost importance to submit this information as evidence to
the current arbitral tribunal. RESPONDENT is indeed aware of its own contradiction and therefore
tries to hinder the publication by alleging that the information was illegally obtained. However,
RESPONDENT thereby disregards the fact, that the Arbitral Tribunal can even consider illegally
obtained information as admissible and relevant.
36. The parties mention in their arbitration agreement that disputes arising from their contract shall be
referred to and finally resolved by arbitration administered by the Hong Kong International
Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the
Notice of Arbitration is submitted [RESPONDENT’s Exhibit 1, Pg. 52] which in article 22.2 state
that “The arbitral tribunal shall determine the admissibility, relevance, materiality and weight of
the evidence, including whether to apply strict rules of evidence” [HKIAC rules 2018, Art. 22.2].
In addition to the HKIAC rule, the UNCITRAL Arbitration rules in article 27
(4) as well as the IBA uidelines on taking of evidence in international commercial arbitrations in
their article 9.1 use the exact same language about an arbitral tribunal’s jurisdiction to decide on
the admissibility of evidences. Hence, the arbitral tribunal is not required by any specific or general
law to exclude illegally obtained evidences.
37. In conclusion it’s the arbitral tribunal that has jurisdiction to decide on the admissibility of
evidences in this case under HKIAC rules 2018 regardless of whether the evidences were obtained
illegally or not.
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Conclusion of the Second Issue
38. In Conclusion, Claimant is entitled to submit evidences from other arbitration proceeding
including those obtained from a breach of confidentiality to pursue its legal right uunder the
HKIAC Rules and to demonstrate the inconsistent behavior of respondent. Additionally the
parties’ agreement and the involved states laws do not exclude admissibility of illegal obtained
evidences in arbitration, furthermore only Arbitral tribunal has jurisdictions to determine
admissibility of evidences.
III. UNDER CLAUSE 12 OF THE FSSA CLAIMANT IS ENTITLED TO THE
OUTSTANDING AMOUNT OF USD 1,250,000
39. In the present case, the parties agreed on a fixed purchase price as they did not foresee any
imposition of tariffs. However, before the last shipment was performed by CLAIMANT, the
government of Equatoriana imposed a tariff of 30 per cent upon all agricultural goods from
Mediterraneo, including animal semen. Now, RESPONDENT wants to burden CLAIMANT by
unlawfully forcing it to bear the additional costs. Not only is CLAIMANT not obliged to bear the
additional costs, it would also put CLAIMANT’s financial position at enormous risk. CLAIMANT
had liquidity strains for two years and is now trying to balance its situation. With a calculated
profit margin of 5 % CLAIMANT was willing to contract with RESPONDENT. Now that the 30
% tariff is affecting the parties, CLAIMANT would be making a loss of 25 % which it could not
endure. For this reason, CLAIMANT would actually sacrifice its profit of 5 % and only asks not
be burdened with a loss of 25 %. All CLAIMANT wants to do, is CLAIMANT to cover its
expenses.
A. The Parties intentionally modified the usual definition of the DDP price delivery terms
as to the extent that the responsibility for unforeseen tariff increases remains on the buyer
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40. DDP is one of the Incoterms rules developed by the International Chamber of Commerce and is
quite widely used within international trade. DDP stands for “Delivered Duty Paid” which means
that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared
for import on the arriving means of transport, and ready for unloading at the named place of
delivery (Icc Incoterms 2010). But the DDP incoterms expressly allow the parties to adjust the
normal allocation of responsibility/obligations. An interpretation under Art. 8 CISG reveals that
the parties made use of that allowance since they never intended to shift the risks for unforeseen
tariff increases to CLAIMANT(1) Should the Arbitral Tribunal find that the Parties’ intent was
not sufficiently determined through the interpretation under Art. 8 (1), this tribunal should apply
the objective interpretation of Art. 8(2) CISG (2).
1. Despite the inclusion of a DDP price term, under article 8 of CISG, the original intent of
the parties was that the RESPONDENT would be responsible for all import tariff costs,
and that intent never changed
41. According to 8(1) CISG “[f]or 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. Article 8 (1) allows for a substantial inquiry into the
parties’ “subjective” and “real” intent, “even if the parties did not engage in any objectively
ascertainable means of registering this intent”. Furthermore, in accordance with Art. 8 (3) CISG
in determining the intent of the parties, “due consideration is to be given to all relevant
circumstances of the case including the negotiations […] usages and any subsequent conduct of
the parties”. (Art. 8 (3) CISG)
42. In the present case the negotiations between the parties indicate that the parties’ intention behind
choosing DDP delivery was not to burden CLAIMANT with all types of risks associated with the
DDP delivery but to profit from CLAIMANT’s experience in the transportation of frozen semen.
That way the parties could ensure better transportation terms and a swifter delivery. CLAIMANT
therefore in its email of 31st March 2017 accepted the DDP delivery but expressly and only on the
condition be relieved from all risks associated with such a delivery or at least to be protected
against the risks by a hardship clause (CLAIMANT’s Exhibit 4). RESPONDENT accepted the
request of CLAIMANT. Thereby insisting on the urgency of the delivery. CLAIMANT
Therefore, notwithstanding the inclusion of a DDP price term, based on article 8 (1), (3) CISG the
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original intent of the parties was that RESPONDENT would be responsible for all import tariff
costs.
2. Should the Arbitral Tribunal find that the Parties’ intent was not sufficiently determined
through the interpretation under Art. 8 (1), this tribunal should apply the objective
interpretation of Art. 8(2) CISG
43. Pursuant to Art. 8(2) CISG, the understanding of a person with the same knowledge and
background in the same circumstances as the addressee is relevant to determine the intent of the
parties [Ferrari et al. p. 180; Peter Schlechtriem, Ingeborg Schwenzer,)
44. In the case at the hand, at the time of contracting no one expected such increase in the size of the
tariffs. Such measure came as a big surprise even to informed circles. Equatoriana has always been
one of the biggest supporters of the existing system of free trade.(Claimant’s Exhibit 6) Previous
restrictions imposed by other countries never resulted in direct retaliatory measures and
Equatorianian government, has always been an ardent supporter of free trade and the Equatorianian
government had always tried to resolve trade disputes amicably and had not relied on retaliatory
measures against trade restrictions by other countries (Claimant’s Exhibit 6). Therefore a
reasonable person with the same knowledge and in the same circumstances of claimant would not
expected such increase in the size of the tariffs
B. Even if the contract allocated the obligation to pay import tariffs to the seller, under clause
12 the seller is not responsible for all of the tariff increase since it was an unforeseeable event
making the contract more onerous
45. Even if the contract allocated the obligation to pay import tariffs to the seller, the CLAIMANT is
not responsible under clause 12 since the thirty percent tariff was an unforeseen event (1)and
CLAIMANT is not responsible for increased tariffs as an unforeseen event (2).
1. The thirty percent tariff was an unforeseen event
46. There is unforseebability whenever an event is so unlikely to occur that reasonable parties see no
need to explicitly allocate the risk of its occurrence. (Joseph M. Perillo , P. 7.)An unforeseeable
event is considered an extraordinary event. (Richard Backhaus,P.8). A natural disaster or
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government intervention would generally be considered an extraordinary event. Such events are
the traditional forms of hardship.
47. In the present case the decision of the Government of Equatoriana to impose a tariff of 30 per cent
upon all agricultural goods from Mediterraneo came as a big surprise, even to informed circles
(CLAIMANT’s EXHIBIT 6). Previous restrictions imposed by other countries affecting imports
from Equatoriana have never resulted in such a measure. (id) The fact that such tariffs were not
explicitly included had to do with the fact that at the time of contracting no one expected such
measures and the Government of Equatoriana had always been an ardent supporter of free trade.
(CLAIMANT’s EXHIBIT 6) Thus, the imposition of 30 percent tariffs by the Government of
Equatoriana is to be considered an unforeseen event making the contract extremely onerous
CLAIMANT
2. Constituting an unforeseeable event, the increase in tariff is covered by Clause 12
48. According to clause 12 of the FSSA “the Seller shall not be responsible for lost semen shipments
or delays in delivery not within the control of the Seller such as, acts of God neither for hardship,
caused by additional health and safety requirements or comparable unforeseen events making the
contract more onerous”. (CLAIMANT’s EXHIBIT C 5) Considering the aforementioned, the
imposition of the thirty percent tariff, is an unforeseeable event. It is also comparable to additional
health and safety requirements since the reason for the initial imposition of tariffs by the
Mediterranean government was to protect the agricultural business which in turn can include not
only economical aspects but also safety requirements. Therefore, CLAIMANT the change of
circumstances at hand is covered by Clause 12 FSSA exempting CLAIMANT from liability. The
Tribunal should award CLAIMANT1,250,000 USD Under the CISG through the adaptation of
price
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IV. The tribunal should award the CLAIMANT US $ 1,250,000 under the CISG through the
adaption of the contract
49. CLAIMANT is entitled to the outstanding amount of USD 1,250,000 under CISG since Clause 12
of FSSA does not prevent the application of Article 79 CISG in order to adapt the price (A) If the
Tribunal does not consider art. 79 as being applicable, Adaptation is still a general principle of the
CISG (B) and Should the Tribunal find that even the general rules from the CISG do not allow for
price adaptation, then at least the rules of private international law do(C).
A. Clause 12 of FSSA does not prevent the application of CISG in order to adapt the price
50. Clause 12 of FSSA does not prevent the application of CISG since Clause 12 of FSSA does not
constitute any derogation from a provision of the CISG (1) The FSSA requires an interpretation in
line with art. 7 (2) of the CISG (2) and Article 79 allows for adaptation of the price (3).
1. Clause 12 of FSSA does not constitute a derogation from any provision of the CISG
51. The fact that the parties incorporated a hardship clause into their agreement does not constitute an
implicit exclusion of the Convention. According to article 6 of the Convention, the parties may
exclude the Convention’s application totally or partially or derogate from its provisions which
requires a clear, [Digest,] unequivocal (CLOUT case No. 945) and affirmative agreement of the
parties. (GmbH v. Guangzhou), The Convention can be excluded if the parties agree on terms that
are incompatible with the Convention. (CLOUT case No. 83) and It does not affect the
applicability of the Convention in general. (ICC Case no. 8817, 1997). Issues that Article 79 CISG
governs but does not settle entirely, could be addressed by the parties in the contract through the
inclusion of a hardship clause as a supplementary clause, (CLOUT case No. 83)
52. In the present case there is no such clear, unequivocal and affirmative agreement of the parties
which excluded the CISG’s application. In fact, existing clause 12 of FSSA only serves as a
supplementary clause and therefore does not constitute a derogation from provisions of the CISG
in general. [CLAIMANT’s EXHIBIT C 5]
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2. The FSSA requires an interpretation in line with art. 7 (2) of the CISG
53. Under article 7 (2) of CISG, [CISG, art. 7(2)] questions the Convention governs but for which it
does not expressly provide answers are filled, in conformity with the Convention’s general
principles, so as to ensure uniformity in the application of the Convention. (ICC Case no. 8817,
1997). Only where no such general principles can be identified does article 7 (2) permit reference
to the applicable national law to solve those questions, (CLOUT case No.961) Thus, solutions first
have to be sought within the Convention system itself [Digest, p 43]. Matters the Convention does
not govern at all, [Digest, p 43] are resolved on the basis of the domestic law applicable pursuant
to the rules of private international law of the forum.( CLOUT case No. 945)
3. Article 79 allows for adaptation of the price
54. Taking recourse to the Convention system itself first, CLAIMANT invokes Art. 79 CISG. Article
79 CISG governs impossibility of performance and the majority of academic opinion supports that
a disturbance which does not fully exclude performance, but makes it considerably more difficult
/ onerous, hardship, economic impossibility, commercial impracticability can be considered as an
impediment as well. [Christoph p 13]The most influential view in support of hardship being part
of art 79 of the CISG can be seen in the CISG Advisory Council Opinion No 7.470 [CISG-AC
Opinion No. 7]This opinion provides inter alia in paragraphs 3.1.: a change of circumstances that
could not reasonably be expected to have been taken into account, rendering performance
excessively onerous, may qualify as an "impediment" under Art 79(1) [CISG-AC Opinion No. 7,
p 3]. The Advisory Council Opinion No 7 also indicates the possibility of adaptation of contract
under Article 79. [AC Opinion, p. 40] when the parties deal with an unexpected price increase.
[Yasutoshi Ishida ,P 12] According to this Advisory Council Opinion, CISG Article 79(5) open
up the possibility for a court or arbitral tribunal to adapt the terms of the contract to the changed
circumstances. Other than the payment of damages. [Schlechtriem, P 34].
55. In the case at the hand, there was significant rise in the price, increased tariffs made the shipment
30% more expensive than anticipated, not only destroying our profit margin of 5% but resulting
in considerable hardship( CLAIMANT’s EXHIBIT C 8)which is rendering the contract extremely
onerous that is why Art. 79 is applicable.
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B. If the Tribunal does not consider art. 79 as being applicable, Adaptation is still a general
principle of the CISG
56. Even if the Tribunal does not consider art. 79 as being applicable, Adaptation is still a general
principle of the CISG since Art 50 allows for price adjustment and it still demonstrates that the
convention is not at all against price adaptation in general (1) and Adaption is a trade usage (2).
1. Art 50 allows for price adjustment
57. Article 50 provides for the remedy of price reduction when the seller has delivered goods that do
not conform with the contract.. (CLOUT case No. 83). Price reduction applies whether the non-
conformity constitutes a fundamental or a simple breach of contract, whether or not the seller acted
negligently, and whether or not the seller was exempted from liability under article 79. Thus even
where damages are excluded because of article 79. (Joseph, P 34), Even if this is a different
situation than the case at hand, it still demonstrates that the convention is not at all against price
adaptation in general.
2. Adaption is a trade usage
58. The hardship rules of UPICC or PECL represent international trade usage(Schwenzer et al, P
12).The PECL art 6:111 provides similar rules as UPICC arts 6.2.1 and 6.2.3 for adaptation of
contract on hardship when the occurrence of events fundamentally alters the equilibrium of the
contract or,, performance of the contract becomes excessively onerous because of a change of
circumstances.( Anja,p 18)These principles play an important role in the interpretation and gap
filling of the Article 79 CISG(Martina,p 43), it gives the tribunal an authority to adapt the contract
with a view to restoring its equilibrium through a party refusing to negotiate or breaking off
negotiations contrary to good faith and fair dealing[UNIDROIT 6.2.3]
C. Should the Tribunal find that even the general rules from the CISG do not allow for
price adaption, then at least the rules of private international law do
59. Even if the general rules from the CISG do not allow for price adaption, then at least the rules of
private international law do, since CLAIMANT has satisfied the requirements of hardship
provisions under Article 6.2.2 Meditrinaia law (1) and The Arbitral Tribunal shall adapt the price
according to article 6.2.3§1 Mediterranean law as a consequence of the Hardship. (2)
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1. CLAIMANT has met the requirements of hardship provisions under Article 6.2.2
Mediterranean law
60. CLAIMANT has met the requirements of Article 6.2.2 Meditrinaia law which are a verbatim
adoption of the UNIDROIT Principles and read: There is hardship where the occurrence of events
fundamentally alters the equilibrium of the contract either because the cost of a party’s
performance has increased or because the value of the performance a party receives has
diminished, and (a) the events occur or become known to the disadvantaged party after the
conclusion of the contract; (b) the events could not reasonably have been taken into account by the
disadvantaged party at the time of the conclusion of the contract;(c) the events are beyond the
control of the disadvantaged party; and (d) the risk of the events was not assumed by the
disadvantaged party. [Med law, art. 6.2.2]
61. In the case at hand, CLAIMANT has satisfied all the requirements of a hardship situation. On 19th
December 2017 the Government of Equatoriana imposed a tariff of 30 per cent upon all
agricultural goods from Mediterraneo after the conclusion of FSSA (a). (CLAIMANT’s EXHIBIT
6). the events could not reasonably have been taken into account by CLAIMANT since
Equatoriana has always been one of the biggest supporters of the existing system of free trade( b).
(CLAIMANT’s EXHIBIT 6) the tariffs were imposed by the Government of Equatoriana, whereas
, CLAIMANT is based in Mediterraneo and thus had no knowledge about the political activities
in Equatoriana that were anyways beyond the control of CLAIMANT (c). (CLAIMANT’s
EXHIBIT 7) In fact that at the time of contracting no one expected such measures (d).
2. The Arbitral Tribunal shall adapt the price according to article 6.2.3 Mediterranean law
as a consequence of the Hardship
62. In bona fide cases of hardship, Article 6.2.3(1) of the Mediterranean Law, state an obligation to
renegotiate Article 6.2.3(Proc. Ord. No. 39 ¶) entitles the disadvantaged party to request the other
party to enter into renegotiation of the original terms of the contract with a view to adapting them
to the changed circumstances. (Article 6.2.3(1) of the Med law). This duty to renegotiate is seen
to be based on a general duty to act in good faith which is common to many civil law systems as
the Italian and the Dutch Code provisions on hardship. (Christoph, p 12). The request for
negotiation must be submitted timely right after the occurrence of the event and must be motivated.
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Having entered the renegotiations, the parties must intend to reach an agreement, must observe the
principle of good faith. (Bonell,p 12). If parties fail to reach an agreement within a reasonable
time, either party may resort to the Tribunal. If the Tribunal approves a hardship, it may, adapt the
contract with a view to restoring its equilibrium. (Joseph,p. 188)
63. In the case at hand, CLAIMANT and RESPONDENT immediately started negotiations regarding
a price adjustment for the frozen semen. (CLAIMANT’s Exhibit 7) RESPONDENT had made
clear already during the contract negotiation that for its planning timely delivery was extremely
important. At the same time RESPONDENT appeared to generally accept the need for a price
increase. (CLAIMANT’s Exhibit 8)
64. In light of the above facts and taking into account that RESPONDENT had created the impression
of accepting the general need for a price adaptation, CLAIMANT complied with its delivery
obligation in confidence thereof and delivered the remaining 50 doses on 23 January 2018 before
an agreement on the new price had been reached. (CLAIMANT’s Exhibit) to CLAIMANT’s
disbelief RESPONDENT stopped negotiations in bad faith and refused to pay any additional
amount for the tariffs. RESPONDENT planned from the beginning to re-sell a considerable
amount of the 100 doses at an increased price to other breeders to whom CLAIMANT might not
have sold directly. (CLAIMANT’s Exhibit 8) Thus, parties failed to reach an agreement within a
reasonable time and the Arbitral Tribunal has the authority to adapt the price of contact to restore
its equilibrium and CLAIMANT is entitled to the outstanding purchase price.
Conclusion of the third Issue
65. CLAIMANT entitled to the payment of US$ 1,250,000 or any other amount resulting from an
adaptation of the price under clause 12 of the contract or under the CISG since Despite the
inclusion of a DDP price term, under article 8 of CISG, the original intent of the parties was that
the RESPONDENT would be responsible for all import tariff costs, and that intent never changed
and Even if the contract allocated the obligation to pay import tariffs to the seller, under clause 12
the seller is not responsible for all of the tariff increase since it was an unforeseeable event making
the contract more onerous. Furthermore CLAIMANT is entitled to the outstanding amount of USD
1,250,000 under CISG since Clause 12 of FSSA does not prevent the application of Article 79
CISG in order to adapt the price If the Tribunal does not consider art. 79 as being applicable,
Adaptation is still a general principle of the CISG and Should the Tribunal find that even the
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general rules from the CISG do not allow for price adaptation, then at least the rules of private
international law do.
Request for Relief
In response to the tribunal’s procedural orders, claimant respectfully asks for the following
requests for relief.
1. The tribunal has the jurisdiction under the arbitration agreement to adapt the contract and
the arbitration law of Mediterraneo governs the arbitration agreement and its
interpretation.
2. CLAIMANT is entitled to submit evidence from the other arbitration proceedings even
though it was obtained either through a breach of confidentiality or through an illegal
hack of REPONDENT’S computers.
3. CLAIMANT is entitled to the outstanding purchase price of USD 1,250,000.00 under
clause 12 of the contract and the CISG.
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Respectfully submitted by:
Fardin Jamal
[email protected]
Parisa Sekandari
[email protected]
Eqbal Nahzat
[email protected]
Farida Razaqi
[email protected]
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