MEMORANDUM FOR CLAIMANT

EIGHTEENTH ANNUAL WILLEM C. VIS INTERNATIONAL 

COMMERCIAL ARBITRATION MOOT 

2010-2011 

MEMORANDUM FOR CLAIMANT 

Claimant Respondent 

MEDITERRANEO TRAWLER SUPPLY SA 

1 Harbour View Street 

Capitol City, Mediterraneo 

EQUATORIANA FISHING LTD 

30 Seaview Terrace 

Oceanside, Equatoriana 

UNIVERSIDAD NACIONAL DE ASUNCIÓN 

CÉSAR CAÑETE * FABRIZIO FRANCO * VERÓNICA FRANCO 

SANTIAGO GÓMEZ * LORENA MERSÁN * MARCOS OTAZÚ 

SEBASTIAN QUEVEDO * GUILLERMO SARUBBI * ALEJANDRA TABEL

In accordance with art. 75 of ‗The Rules‘, the UNA team for the 18 th edition of the Willem C. Vis 

International Commercial Arbitration Moot hereby certify that no person other than a student team 

member participated in the writing of this memorandum.

TABLE OF CONTENTS 

TABLE OF ABBREVIATIONS ..................................................................................I 

TABLE OF AUTHORITIES ................................................................................. III 

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

SUMMARY OF ARGUMENT .................................................................................. 3 

JURISDICTIONAL ARGUMENT ............................................................................. 5 

I. THE ARBITRAL TRIBUNAL WAS CONSTITUTED IN ACCORDANCE WITH THE 

ARBITRATION AGREEMENT AND THEREFORE HAS JURISDICTION OVER THE PRESENT 

DISPUTE .............................................................................................................................. 5 

A. The appointment process expressly established by the arbitration agreement was closely 

followed ................................................................................................................................................................. 5 

B. The CAM Rules regulate the arbitration procedure in all issues not specifically stipulated by the 

parties ..................................................................................................................................................................... 6 

i. The rules incorporated by reference in the arbitration agreement constitute the parties‘ real 

intent .................................................................................................................................................................. 6 

ii. The CAM rules have a gap-filling function with respect to aspects of the procedure that 

parties have not explicitly settled .................................................................................................................. 7 

iii. The parties did not expressly exclude the application of any of the provision of the CAM 

Rules .................................................................................................................................................................. 7 

C. The Rules of the Chamber of Arbitration of Milan were strictly complied with ............................. 7 

i. The Arbitral Council did not confirm Mr. Y‘s appointment pursuant to art. 18(4) CAM Rules 

8 

1. The facts disclosed by Mr. Y objectively imply a lack of independence ................................... 8 

2. According to the IBA Guidelines, disclosed facts fall under the scope of conflict of 

interest; however, even if such facts are deemed to be waivable, the IBA Guidelines are not 

binding .......................................................................................................................................................... 9 

3. The Arbitral Council has the authority to decide whether or not the arbitrator shall be 

confirmed ...................................................................................................................................................10 

ii. The same appointing-authority re-affirmed the appointment of Mr. Malcolm Y, who later on, 

was again not confirmed by the Arbitral Council under the same circumstances ..............................11 

iii. Mr. Horace Z was appointed as chairman by the Arbitral Council in the light of the art. 20(3) 

CAM Rules......................................................................................................................................................11

ARGUMENT ON THE MERITS ............................................................................ 12 

II. RESPONDENT FAILED TO DELIVER CONFORMING SQUID IN COMPLIANCE WITH 

ART. 35 CISG ................................................................................................................... 12 

A. RESPONDENT breached the contract in the light of Art. 35(1) CISG ........................................12 

i. The contract provided that each squid be between 100 and 150 g ..............................................12 

1. In the light of Art. 8(1) CISG, the contract required 100-150 g squid ....................................12 

2. In the light of Art. 8(2) CISG, the contract required 100-150 g squid as well .......................13 

3. International trade usages of the fishing industry bound RESPONDENT to deliver squid 

in the 100-150 g range ..............................................................................................................................14 

ii. Other phrases in the Order Form and Sale Confirmation cannot be interpreted as having 

modified said quality requirement ...............................................................................................................14 

1. ‗Certified fit for human consumption‘ .........................................................................................15 

2. ‗2007/2008 Catch‘ ...........................................................................................................................16 

iii. By delivering undersized squid, RESPONDENT failed to supply goods of the quality 

required by the contract ................................................................................................................................17 

B. Alternatively, RESPONDENT failed to abide by Art. 35(2) CISG .................................................17 

i. The delivered squid were unfit for the purposes for which goods of the same description are 

ordinarily used [Art. 35(2)(a) CISG] ...........................................................................................................17 

1. The squid could not be used as bait ..............................................................................................17 

2. RESPONDENT‘s squid could not be resold .............................................................................18 

ii. The squid supplied were unfit for the particular purpose made known to RESPONDENT at 

the time of the conclusion of the contract [Art. 35(2)(b) CISG] ...........................................................19 

1. Particular purpose expressly made known to RESPONDENT .................................................19 

2. Particular purpose impliedly made known to RESPONDENT .................................................19 

3. RESPONDENT cannot be exempted under Art. 35(2)(b) CISG ..........................................19 

iii. The squid did not possess the qualities of the squid RESPONDENT held out to 

CLAIMANT as a sample [Art. 35(2)(c) CISG] .........................................................................................20 

1. The delivered squid lacked a main feature of the squid in the sample ....................................20 

2. RESPONDENT contends that the sample and the supplied squid were unsized ...............20 

a. CLAIMANT ignored and could not have known that the sample it was shown was of 

unsized squid .........................................................................................................................................20 

b. The fact that the sample was of unsized squid is immaterial to the case ...........................21 

III. THE EXAMINATION OF THE SQUID AND THE NOTICE OF NON-CONFORMITY WERE 

CISG COMPLIANT ............................................................................................................. 21 

A. The examination of the squid was made in accordance with Art. 38 CISG ...................................21 

i. CLAIMANT examined the squid in accordance with Art. 38(1) CISG ......................................21 

ii. Alternatively, the Mediterranean long-liners were swift in inspecting the squid after their 

reception under Art. 38(3) CISG ................................................................................................................24

B. CLAIMANT notified RESPONDENT of the nature of the lack of conformity within a 

reasonable time after it was discovered pursuant to Art. 39(1) CISG .......................................................25 

C. If the Tribunal is to deem the examination or notification of non-conformity to have been 

insufficient, RESPONDENT would still be liable for the lack of conformity under Art. 40 CISG ...26 

IV. RESPONDENT’S FAILURE TO DELIVER CONFORMING GOODS AMOUNTED TO A 

FUNDAMENTAL BREACH WHICH ALLOWED CLAIMANT TO AVOID THE CONTRACT 

UNDER ARTS. 25 AND 49 CISG .......................................................................................... 26 

A. RESPONDENT‘s contractual breach was fundamental under Art. 25 CISG ...............................26 

i. The squid supplied were not of the required quality ......................................................................27 

ii. The squid did not serve their ordinary purpose ..............................................................................27 

iii. It was likely for the RESPONDENT to foresee that providing squid below 100-150 g would 

cause a substantial detriment to CLAIMANT ..........................................................................................28 

B. CLAIMANT is entitled to avoid the contract in its entirety according to Art. 51(2) CISG.........28 

C. CLAIMANT complied with the obligations imposed by Art. 82 CISG ..........................................28 

D. CLAIMANT declared the contract avoided according to Art. 26 CISG.........................................29 

E. RESPONDENT cannot be exempted of responsibility under Art. 80 CISG ................................29 

V. CLAIMANT TOOK ALL NECESSARY MEASURES TO MITIGATE LOSSES AND IS 

ENTITLED TO DAMAGES UNDER ART. 45 CISG ................................................................. 30 

A. CLAIMANT took all measures that were reasonable to mitigate the losses ..................................30 

B. In any case, the burden of the proof of lack of mitigation lies on RESPONDENT, who must 

provide detailed facts and supporting evidence ............................................................................................32 

ARGUMENT ON THE MERITS OF THE COUNTERCLAIM ................................... 32 

VI. CLAIMANT IS NOT LIABLE FOR DAMAGES UNDER A CONFIDENTIALITY DUTY ........ 33 

A. There was no confidentiality agreement between the parties ............................................................33 

i. Substantive provisions of the amended CAM Rules 2010 do not apply when they affect the 

parties‘ rights ..................................................................................................................................................33 

ii. Neither was there an implicit confidentiality agreement when the parties agreed to submit to 

arbitration ........................................................................................................................................................33 

B. Alternatively, if the Tribunal considers that there was a confidentiality agreement between the 

parties, CLAIMANT made the proceedings public to protect its own rights..........................................34 

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

UNIVERSIDAD NACIONAL DE ASUNCIÓN • MEMORANDUM FOR CLAIMANT 

TABLE OF ABBREVIATIONS 

¶ / ¶ ¶ Paragraph / Paragraphs 

ADR Alternative Dispute Resolution 

Aff’d affirmed 

Am. to St. of D. Amendment to the Statement of Defence 

Art. / Arts. Article / Articles 

CAM Chamber of Arbitration of Milan 

CAM Code of Ethics Code of Ethics of Milan Arbitration Rules 

CAM Rules Chamber of Arbitration of Milan Arbitration Rules, 2010 

CAM Rules 2004 Chamber of Arbitration of Milan Arbitration Rules, 2004 

Cass. 1e civ Première chambre civile ( First Civil Division of Court of Cassation) 

CEO Chief Executive Officer 

CIETAC China International Economic and Trade Arbitration Commission 

CISG United Nations Convention on Contracts for the International Sales 

of Goods, Vienna, 1980 

Cl. Ex. Claimant‘s Exhibit 

CLAIMANT Mediterraneo Trawler Supply SA 

CLOUT Case Law on UNICTRAL Texts 

Corp. Corporation 

e.g. exemplum gratia (for example) 

ed / eds editor/editors 

ed. Edition 

F. Supp Federal Supplement (District Court Reports) 

GmbH Gesellschaft mit beschränkter Haftung (Company with limited liability) 

i.e. id est (that is) 

IBA International Bar Association 

IBA Guidelines IBA Guidelines on Conflicts of Interest in International Arbitration, 

2004 

I


ICC International Chamber of Commerce 

Inc. Incorporated 

Ltd. Limited 

MAL UNCITRAL Model Law on International Commercial Arbitration 

1985 with amendments as adopted 2006 

NAI Netherlands Arbitration Institute 

No. Number 

NYC New York Convention-Convention on the Recognition and 

Enforcement of Foreign Arbitral Awards 

Obg. Obergericht (Regional Court of Appeals) 

OG Oberster Gerichtshof (Supreme Court) 

OLG Oberlandesgericht (Provincial Court of Appeal) 

p. / pp. page / pages 

PO Procedural Order 

R. for A. Request for Arbitration 

Resp. Ex. Respondent‘s Exhibit 

RESPONDENT Equatoriana Fishing Ltd 

Rev. Arb. Revue de l‘arbitrage, France 

S.p.A. Società per azioni 

sec. section 

St. of D. Statement of Defence 

U.K. United Kingdom 

UN United Nations 

UNCITRAL United Nations Commission on International Trade Law 

UNIDROIT International Institute for the Unification of Private Law 

v. versus (against) 

WIPO World Intellectual Property Organization 

II


TABLE OF AUTHORITIES 

ABBREVIATION FULL CITATION CITED IN 

CONVENTIONS AND LAWS 

CISG United Nations Convention on Contracts for the 

International Sale of Goods, Vienna, 1980 

NY Convention Convention on the Recognition and Enforcement of Foreign Arbitral 

Awards, New York, 1958 

MAL UNCITRAL Model Law on International Commercial Arbitration, 

1985. With amendments adopted in 2006. 

RULES AND GUIDELINES 

CAM Rules 2004 Arbitration Rules of the Chamber of Arbitration of Milan (2004) 170 

Passim 

23 

Passim 

CAM Rules Arbitration Rules of the Chamber of Arbitration of Milan (2010) Passim 

CAM Code of Ethics Code of Ethics of the Chamber of Arbitration of Milan 32 

IBA Guidelines IBA Guidelines on Conflicts of Interest in International Arbitration, 2004 31, 38, 39, 40, 

41 

COMMENTARY 

Babiak Andrew Babiak. Defining ‘Fundamental Breach’ Under the United 

Nations Convention on Contracts for the International Sale of Goods. 6 

Temple International and Comparative Law Journal (1992) 

Bianca Cesare M. Bianca. Article 35 in: Cesare M. Bianca and Michael J. 

Bonell (eds.). Commentary on the International Sales Law: The 1980 

Vienna Sales Convention (1987) Milan, Giuffrè (1987) Available at: 

http://www.cisg.law.pace.edu/cisg/biblio/biancabb35.html 

137,141, 146 

91 

III


Bond Stephen Bond. The Selection of ICC Arbitration and the Requirement of 

Independence in: W. Michael Reisman, W. Laurence Craig, William. 

Park and Jan Paulsson. International Commercial Arbitration. Cases, 

Materials, and Notes on the Resolution of International Business Disputes. 

New York, The Foundation Press Inc. (1997) 

Born Gary Born. International Commercial Arbitration (3 rd ed.). New York, 

Kluwer Law International (2009) 

Bühring-Uhle/ 

Kirchhoff/Scherer 

Christian Bühring-Uhle, Lars Kirchhoff and Matthias Scherer. 

Arbitration and Mediation in International Business. Kluwer Law 

International (2006) 

B’Uhler Michael B'Uhler. Handbook of ICC Arbitration: Commentary, 

Precedents, Materials. ICC Publishing, Inc. (2008) 

CISG - AC Opinion 

No. 2 

CISG-AC Opinion no 2, Examination of the Goods and Notice of Non- 

Conformity: Articles 38 and 39, 7 June 2004. Rapporteur: Professor 

Eric E. Bergsten, Emeritus, Pace University School of Law, New 

York (2004). Available at: 

Coppo Benedetta Coppo. The 2010 Revision of The Arbitration Rules of The 

Chamber of Arbitration Of Milan in: 14 Vindobona Journal of 

International Commercial Law and Arbitration (2010) 

Dinner David Dinner. The Effect of Procedural and Substantive Changes in the 

Law in Ontario Bar Association’s Young Lawyers’ Division Newsletter, 

Volume 14, No. 2 (2006) 

Enderlein/Maskow Fritz Enderlein and Dietrich Maskow. International Sales Law: 

United Nations Convention on Contracts for the International Sale of 

Goods - Convention on the Limitation Period in the International Sale of 

Goods. New York, Oceana Publications (1992) 

Ferrario Pietro Ferrario. Challenge to Arbitrators: Where a Counsel and an 

Arbitrator Share the Same Office - The Italian Perspective in: Michael 

Moser and Dominique Hascher (eds). Journal of International 

Arbitration, Volume 27, Issue 4. Kluwer Law International (2010) 

Flechtner Harry M. Flechtner. Conformity of Goods, Third Party Claims, and 

Buyer's Notice of Breach under the CISG. Working Paper 64. 

University of Pittsburgh School of Law Working Paper Series 

36, 44 

18, 22, 171 

18, 24 

34 

106, 118 

46, 167 

166 

146 

36 

70 

IV


Folsom/Gordon/ 

Spanogle 

Fouchard/Gaillard/ 

Goldman 

(2007) 

Ralph H. Folsom Michael W. Gordon and John A. Spanogle. 

International Business Transactions: In a Nutshell (3 rd ed.). West 

Group Publishing (1988) 

Emmanuel Gaillard and John Savage (eds.). Fouchard Gaillard, 

Goldman on International Commercial Arbitration. The Hague, Kluwer 

Law International (1999) 

Giovannini/Renna Teresa Giovannini and Valentina Renna. The Italian Experience of 

Arbitration and the Arbitration Rules of the Chamber of Arbitration of 

Milan: a Parallel View in: Vindobona Journal of International 

Commercial Law and Arbitration. Viena (2010) 

Grigera Horacio A. Grigera Naón. Factors to Consider in Choosing an Efficient 

Arbitrator in: Albert Jan van den Berg (ed). Improving the Efficiency 

of Arbitration and Awards: 40 Years of Application of the New York 

Convention. ICCA Congress Series, Volume 9, Paris (1998). 


Henschel Rene Franz Henschel. Conformity of the goods: Interpreting or 

supplementing Article 35 of the CISG by using the UNIDROIT 

Principles of International Commercial Contracts and the Principles of 

European Contract Law in: John Felemegas: An international approach 

to the interpretation of the United Nations Convention on Contracts for the 

International Sale of Goods (1980) as uniform sales law. New York, 

Cambridge University Press (2007) 

Honnold John O. Honnold. Uniform Law for International Sales under the 1980 

United Nations Convention (3 rd ed.). Kluwer Law International 

(1999) 

Huber Peter Huber. Münchener Kommentar zum Bürgerlichen Gesetzbuch, Vol. 

3 Schuldrecht. (4 th ed.). Munich, Verlag C.H. Beck (2004) 

Huber/Mullis Peter Huber and Alastair Mullis. The CISG. A New Textbook for 

Students and Practitioners. Munich, Sellier – European Law 

Publishers (2007) 

IBA Background For the Working Group: Otto L. O. de Witt Wijnen, Nathalie 36 

86 

22, 23, 26, 27, 

44, 169 

24 

35 

82 

120, 122, 140, 

143 

157, 160 

88, 93, 150 

V


Voser and Neomi Rao. Background Information on the IBA Guidelines 

on Conlicts of Interes in International Arbitration. Available at: 

http://www.ibanet.org/Publications/publications_IBA_gui 

des_and_free_materials.aspx 

Illescas/Perales Rafael Illescas and Pilar Perales. Derecho mercantil Internacional. El 

Derecho Uniforme. Madrid, Editorial Centro de Estudios Ramón 

Areces, S.A. (2003) 

Lew/Mitellis/Kröll Julian D. Lew, Loukas A. Mistellis and Stefan M. Kröll. 

Comparative International Commercial Arbitration. The Hague, 


Lookofsky Joseph Lookofsky. The 1980 United Nations Convention on contracts 

for the International Sale of Goods in: J. Herbots and R. Blanpain 

(eds.). International Encyclopaedia of Law - Contracts. The Hague, 

Kluwer Law International (2000) Available at: 

http://www.cisg.law.pace.edu/cisg/biblio/loo35.html 

Luttrell Sam Luttrell. Bias Challenges in International Commercial Arbitration: 

The Need for a ‘Real Danger’ Test. Kluwer Law International (2009) 

MAL Explanatory 

Note 

Explanatory Note by the UNCITRAL Secretariat on the 1985 Model 

Law on International Commercial Arbitration as amended in 2006. 

Available at: 

http://www.uncitral.org/pdf/english/texts/arbitration/mlarb/07-86998_Ebook.pdf 

Maley Kristian Maley. The Limits to the Conformity of Goods in the United 

Nations Convention on Contracts for the International Sale of Goods in: 12 

International Trade & Business Law Review (2009) 

Neumann Thomas Neumann. Features of Article 35 in the Vienna Convention; 

Equivalence, Burden of Proof and Awarenes in: 11 Vindabona Journal of 

International Commercial Law and Arbitration (2007) 

Pascale/Götz/Graf Pascale Gola, Claudia Götz Staehelin and Karin Graf (Eds.). 

Institutional Arbitration: Tasks and Powers of Different Arbitration 

Institutions. Sellier - European Law Publishers GmbH (2009) 

104 

22, 34, 35 

57 

35 

22 

71, 82, 88, 89 

53, 57 

24 

VI


Paulsson Jan Paulsson. The Conduct of Arbitral Proceedings Under the Rules of 

Arbitration Institutions; The WIPO Arbitration Rules in a Comparative 

perspective in The Conference on Rules for Institutional Arbitration and 

Mediation. 20 January 1995, Geneva, Switzerland 

Redfern/Hunter I Alan Redfern and J. Martin H. Hunter. Law and practice of 

international commercial arbitration (4 th ed.) London, Sweet & 

Maxwell (2004) 

Redfern/Hunter II Nigel Blackaby, Constantine Partasides, Alan Redfern and J. 

Martin H. Hunter. Redfern and Hunter on International Arbitration. 

Oxford University Press (2009) 

Sali I Rinaldo Sali. The New Arbitration Rules of the Arbitration Chamber of 

Milan in: Albert Jan van den Berg. Yearbook Commercial Arbitration, 

Volume 29. Kluwer Law International (2004) 

Sali II Rinaldo Sali. Arbitrato Amministrato in: Digesto Delle Discipline 

Privatistiche Sezione Civile, Volumen 1. 

Sali III How to choose the ideal arbitrator: the institutional point of view (CAM). 

Avaliable at: http://www.europeanarbitrators.org/EUROPEANARBITRATORS_FILES/CO 

NTENT/Papers/RS%20How%20to%20choose%20the%2 

0ideal%20arbitrator.pdf 

Schlechtriem Peter Schlechtriem. Commentary on the UN Convention on the 

International Sale of Goods (CISG) (ed.). Munich, Oxford University 

Press (1998) 

St.John Sutton/ 

Gill/Gearing 

David St John Sutton, Judith Gill & Matthew Gearing, Russell on 

Arbitration (23rd ed.). Sweet & Maxwell (2007) 

Tallon Dennis Tallon. Article 80 in: Cesare M. Bianca and Michael J. 


Vienna Sales Convention (1987) Milan, Giuffrè (1987) 

Trakman Leon Trakman. The Impartiality and Independence of Arbitrators 

Reconsidered. University of New South Wales Law Research Paper 

No. 2007-25, International Arbitration Law Review. Sweet & 

Maxwell, Vol. 10, Int.ALR, p. 999 (2007). Available at: 

172 

34 

34 

30, 42, 45 

45 

45 

133, 134 

25 

144 

41 

VII


http://ssrn.com/abstract=981085 

UNCITRAL Digest UNCITRAL Digest of Case Law on the United Nations Convention on 

the International Sale of Goods. (2008) Available at: 

http://www.uncitral.org/uncitral/en/case_law/digests/cisg 

.html 

Will Michael Will. Article 25 in: Cesare M. Bianca and Michael J. 



Zeller Bruno Zeller.The Remedy of Fundamental Breach and the United 

Nations Convention on the International Sale of Goods (CISG) - A 

Principle Lacking Certainty? in: Cesare M. Bianca and Michael J. 



COURTS DECISIONS 

AUSTRALIA 

Esso v. Plowman Esso Australia Resources Ltd. et consorts v. The Honourable 

Sidney James Plowman (The Minister for Energy and Minerals), 

7 April 1995 

AUSTRIA 

Marble slabs case Oberlandesgericht Graz. 6 R 194/95, 9 November 1995 93 

145, 147, 149 

OG 06/02/96 Oberster Gerichtshof, 6 February 1996 150, 160 

Machines Case Oberster Gerichtshof, Ob 100/00w, 13 April 20002 70, 77 

Frozen fish case Oberster Gerichtshof, 2Ob48/02a, 27 February 2003 77 

ENGLAND 

AMS v. TTMI AMS Shipping Ltd. of India v. TTMI Ltd. of England. The High 

Court of England, EWHC 2238, 19 October 2005 

138 

131 

172 

41 

VIII


R v. Sussex Justices R v. Sussex Justices ex parte McCarthy, King‘s Bench Division 9 

(1924) 

FRANCE 

Gas del Estado v. 

Ecofisa 

GERMANY 

OLG Hamm 

22/09/92 

Gas del Estado v. Ecofisa and E.T.P.M., Paris Cour d‘Apel, 11 

February 1988, 1989 REV. ARB. 683, and L. Zollinger's note, 

aff'd, Cass. 1e civ., Dec. 4, 1990, E.T.P.M. and Ecofisa v. Gas del 

Estado, 1991 REV. ARB. 81, and P. Fouchard's note. 

Oberlandesgericht Hamm 22 September 1992, 160 

Mussels case Bundesgerichtshof, VIII ZR 159/94, 8 March 1995 70 

Sport Clothing case Lansgericht Landshut, 54 644/94, 5 April 1995 136 

Spanish paprika case Landesgericht Ellwangen, 1 KfH O 32/95, 21 August 1995 144 

OLG Hamburg 

28/02/97 

Oberlandesgericht Hamburg 28 February 1997 160 

Acrylic blankets case Oberlandesgericht Koblenz, 2 U 31/96, 31 January 1997 147 

OLG Köln 

02/12/1999 

Oberlandesgericht Köln, 440, 22 December 1999 23 

Shoes case I Oberlandesgericht Frankfurt, U 164/90, 17 September 1991 134 

Shoes case II Oberlandesgericht Düsseldorf, 14 January 1994 159 

INDIA 

Indian Oil Corp. v. Raja 

Transport 

Indian Oil Corporation Ltd. & Ors. v. M/s Raja Transport Ltd, 

Supreme Court Of India, Civil Appeal No. 5760, 24 August 2009 

37 

27 

27 

IX

ITALY 


Nigi v. Inter Eltra 

Kommerz 

SINGAPORE 

Cars & Cars v. 

Volkswagen 

Black & Veatch v. 

Jurong 

Navigator Investment v. 

Acclaim Insurance 

SPAIN 

Nigi Agricoltura SRL (Italy) v. Inter Eltra Kommerz und 

Produktion GmbH (Germany), Corte di Appello, Firenze, Case 

No. 17312, 11 March 2004 

Cars & Cars Pte Ltd v. Volkswagen AG, High Court, Case No. 

960/2008,RA 136/2009, 19 October 2009 

Jurong Engineering Ltd. v. Black & Veatch, High Court of 

Singapore, 26 November 2003 

Navigator Investment Services Ltd v. Acclaim Insurance Brokers 

Ltd, Court of Appeal, Case No. 5/2009, 29 September 2009 

Paletas de Cerdo Case Corte de Apelación de Zaragoza, Appeal No. 553/2008, 31 

March 2009 

SWITZERLAND 

Blood infusion devices 

case 

24, 43 

Obergericht Kantons Luzern, 8 January 1997 107, 125 

Clothes case Obergericht Appenzell Ausserhoden, 18 August 2008 125 

UNITED 

KINGDOM 

Bunge v. Kruse Bunge SA v. Kruse (1979) 1 Lloyd‘s Rep 279. 168 

UNITED STATES 

Delchi Carrier v. Rotorex Delchi Carrier, S.p.A. v. Rotorex Corp., U.S. Circuit Court of 

Appeals, Nos. 185, 717, Dockets 95-7182, 95-7186, 6 December 

1995 

167 

158 

174 

82 

93, 135 

X


Mustang v. Plug-in 

Storage 

AWARDS 

Mustang Enterprises, Inc. v. Plug-In Storage Systems, Inc., 874 

F. Supp. 881, United States District Court for the Northern 

District of Illinois (1995) 

NAI No. 2319 NAI Final award on Case No. 2319, 15 October 2002 77 

ICC No. 5713 ICC Final award on Case No. 5713 127 

ICC No. 7585 ICC Final Award on Case No. 7585 159 

ICC No. 11961 ICC Final Award on Case No. 11961 169 

PTA Powder Case CIETAC Final award, 18 April 2008 137 

36 

XI


STATEMENT OF FACTS 

Mediterraneo Trawler Supply SA, hereafter CLAIMANT, is a Mediterranean corporation that 

trades in seafood and that furnishes the fishing fleet in its domestic market with various kinds of 

supplies. Equatoriana Fishing Ltd, hereafter RESPONDENT, is an Equatorianan firm that owns a 

fishing fleet in the Pacific Ocean and that deals in fish products for both human consumption 

and bait. 

On 14 April 2008, CLAIMANT emailed RESPONDENT expressing an interest in 

acquiring squid for resale as bait to long-liners based in Mediterraneo and invited it to make 

offers of appropriate products. 

On 18 April 2008, Mr Weeg, an authorised sales representative for RESPONDENT, 

indicated to CLAIMANT that he could visit CLAIMANT‘s premises and produce a sample of 

the Danubian squid they had supplied to another customer of theirs in Mediterraneo. 

On or around 17 May 2008, Mr Weeg presented CLAIMANT with the sample stating 

that it was representative of the squid on offer. The sample consisted of one frozen carton 

labelled ‗Illex Danubecus 2007‘ weighing 10 kg. After Mr Weeg‘s departure, CLAIMANT 

inspected the sample: the carton was thawed and the individual squid were weighed. Almost all 

pieces fell within the range of 100-150 g. CLAIMANT showed the sample to its customers who 

all found the squid to be suitable to their needs. 

On 29 May 2008, RESPONDENT received a purchase order from CLAIMANT for 200 

tonnes of illex danubecus ‗[a]s per sample inspected‘ and ‗[c]ertified fit for human consumption‘. 

In the accompanying email, CLAIMANT underscored that it was pleased that virtually all squid 

in the sample weighed between 100 and 150 g and pointed out that this is the weight range that 

gives its customers the best results. On the same date, RESPONDENT confirmed the order. 

RESPONDENT‘s Sale Confirmation included an arbitration agreement and provided that the 

squid would be from the 2007 and 2008 catches. Later in the day, CLAIMANT acknowledged 

receipt of the sale confirmation. 

The order was delivered on 1 July 2008 in twelve containers that arrived at 

CLAIMANT‘s headquarters in several instalments during the day. CLAIMANT inspected a 

random selection of 20 cartons from the two containers that arrived first. All cartons weighed the 

required 10 kg and five were defrosted for visual inspection. CLAIMANT found that the squid 

were of the expected quality and weight. 

On 29 July 2008, RESPONDENT was informed that two of the vessels that had 

acquired the Danubian squid reported that it was hardly usable as bait. Shortly afterwards, 

RESPONDENT instructed CLAIMANT to have the squid inspected by a testing agency. 

1


On 16 August 2008, CLAIMANT notified RESPONDENT that the squid were not in 

conformity with the contract. The enclosed report by TGT Laboratories showed that a great 

proportion of the squid did not fall within the 100-150 g bracket. CLAIMANT declared the 

contract avoided and urged RESPONDENT to instruct it what to do with the goods. On 18 

August 2008, RESPONDENT denied all responsibility alleging that nothing in the negotiations 

provided that the squid would be exclusively used as bait and that the squid conformed with the 

contract. 

All of the five vessels CLAIMANT had sold RESPONDENT‘s Danubian squid to 

returned practically their entire purchases and had to be reimbursed. CLAIMANT made multiple 

attempts to sell the squid for RESPONDENT‘s account both in Mediterraneo and abroad to no 

avail. After several and persistent appeals to reason asking RESPONDENT to take responsibility 

for its contractual breach, CLAIMANT was forced to dispose of the squid as they were reaching 

a point where one could no longer be assured that they had not gone off. 

On 20 May 2010, CLAIMANT lodged a request for arbitration with the Chamber of 

Arbitration of Milan (hereafter CAM) pursuant to the arbitration agreement contained in the sale 

confirmation and appointed Ms. Arbitrator 1 to the arbitral tribunal. 

On 24 May 2010, Commercial Fishing Today, a specialised periodical, published an interview 

in which CLAIMANT‘s CEO discussed the arbitration proceedings his firm had commenced 

against RESPONDENT. 

On 27 May 2010, RESPONDENT received CLAIMANT‘s request for arbitration and 

filed its statement of defence on 24 June 2010 appointing Prof. Arbitrator 2 to the tribunal. 

On 15 July 2010 the CAM and the parties were notified of the co-arbitrators‘ 

determination to appoint Mr. Malcolm Y to the chair of the arbitral tribunal, in accordance with 

the procedure agreed on in the arbitration agreement. 

On 19 July 2010, Mr. Malcolm Y accepted his appointment and submitted his statement 

of independence. Over 26-27 July 2010, both parties explicitly waived their right to object to Mr. 

Malcolm Y‘s appointment. On 2 August 2010, the CAM Secretariat disclosed that the Arbitral 

Council of the CAM rejected Mr. Y‘s appointment. The co-arbitrators were invited to appoint a 

substitute chairperson. 

On 13 August 2010, the CAM Secretariat is informed of the co-arbitrators‘ decision to 

reaffirm Mr. Y‘s appointment as president. On 23 August 2010, the Arbitral Council of the CAM 

rejects Mr. Y‘s second appointment and appoints Mr. Horace Z to the tribunal. This news was 

broken to the parties and co-arbitrators on 26 August 2010. 

2


On 10 September 2010, the CAM Secretariat‘s confirmation of Mr. Horace Z‘s 

appointment was relayed to the parties and co-arbitrators. On 24 September 2010, 

RESPONDENT lodged an amendment to its statement of defence contesting the jurisdiction of 

the Tribunal on the grounds that the arbitration agreement provided that the party-appointed 

arbitrators shall appoint the presiding arbitrator. 

SUMMARY OF ARGUMENT 



DISPUTE 

1. The parties established the appointment process in the arbitration agreement in accordance 

with the principle of party autonomy. This process was strictly followed since both parties 

appointed the co-arbitrators and subsequently the co-arbitrators appointed Mr. Y as 

chairman. 

2. All other issues not specifically stipulated by the parties are covered by the CAM Rules as the 

objective intention of the parties was that it so be. Moreover, the CAM Rules are intended to 

cover all the procedural issues not expressly stipulated by the parties and none of its 

provisions were excluded, neither expressly nor impliedly. 

3. The CAM Rules were strictly complied with since, pursuant to Art. 18(4) CAM Rules, the 

Arbitral Council did not confirm Mr. Y‘s appointment in relation to the submission of a 

qualified statement of independence and again did not confirm him for a second time after he 

was re-appointment by the co-arbitrators since there were no changes since the last non- 

confirmation. Therefore and in the light of art. 20(3), the Arbitral Council appointed Mr. Z as 

chairman. 


ART. 35 CISG 

4. In not delivering squid of the quality required by the contract, RESPONDENT failed in its 

obligation to supply conforming goods under Art. 35(1) CISG. In view of all relevant 

circumstances, either subjectively or objectively [Art. 8 CISG], the contract demanded that 

each squid weigh 100-150 g. Trade usages of the fishing industry imposed the same duty on 

RESPONDENT [Art. 9(2) CISG]. Neither the phrase ‗[c]ertified fit for human consumption‘ 

nor ‗2007/2008 Catch‘ modified the contract in this respect. 

5. Alternatively, RESPONDENT fell short of the standards set in sec. (2) of Art. 35 CISG. The 

delivery of squid unfit for use as bait and thus unsaleable constituted a breach of lit.(a). The 

supply of goods inadequate for the particular purpose made known to RESPONDENT 

3


amounted to a transgression of lit. (b) of which RESPONDENT cannot be exempted. 

Finally, in delivering squid lacking the main feature of the squid in the sample, 

RESPONDENT violated lit. (c). 


CISG COMPLIANT 

6. As the squid were carefully examined the minute they arrived, CLAIMANT inspected the 

goods within as short a period as was practicable in the circumstances. After the successful 

initial examination, CLAIMANT had no reason to proceed with the inspection. Alternatively, 

as the goods were redispatched, the examination could be deferred until the sub-purchasers 

reached the fishing grounds. 

7. RESPONDENT was informed of the nature of the lack of conformity eighteen days after it 

was discovered. This was a reasonable time under the circumstances. 

8. Even if the examination and notification are deemed to have been untimely, CLAIMANT 

would still be able to rely on the lack of conformity under Art. 40 CISG, as RESPONDENT 

could not have ignored the facts that resulted in the lack of conformity and these facts were 

not disclosed to CLAIMANT. 



UNDER ARTS. 25 AND 49 CISG 

9. RESPONDENT‘s contractual breach was fundamental. By lacking the requisite qualities the 

squid could not serve their purpose and thus substantially deprived CLAIMANT of what it 

was entitled to expect under the contract. Consequently, CLAIMANT was allowed to avoid 

the contract under to Arts. 49 and 51(2) CISG. 

10. CLAIMANT preserved the right to declare the contract avoided because it took all measures 

to return the squid in compliance with the obligations imposed by Art. 82 CISG. 

11. CLAIMANT duly notified the avoidance of the contract to RESPONDENT on 18 August 

2008 fulfilling its obligation to do so under Art. 26 CISG. 

12. CLAIMANT is entitled to rely on RESPONDENT's failure to perform, because said failure 

was not caused by an act or omission of CLAIMANT‘s regarding Art. 80. 


ENTITLED TO DAMAGES UNDER ART. 45 CISG 

13. Despite the rejection of all Danubian squid by the long-liners of Mediterraneo and the lack of 

a local market in which to sell the squid as seafood, by properly storing and conserving the 

squid at RESPONDENT‘s disposition and furthermore striving to sell the squid at any 

4


means and concretely achieving a sale of 10% of the lot, CLAIMANT acted in good faith and 

took all reasonable actions at its reach to mitigate losses. CLAIMANT is therefore entitled to 

damages under art. 45 (1) lit. (b) CISG. 

14. In any case, the burden of the proof of the lack of mitigation lies on RESPONDENT who 

must forward detailed facts and supporting evidence that the duty to mitigate was in fact 

infringed. 

VI. CLAIMANT NEITHER VIOLATED THE CAM RULES NOR OWED A DUTY OF 

CONFIDENTIALITY AND IS THUS IS NOT LIABLE FOR DAMAGES 

15. The parties did not owe to each other a duty of confidentiality, since the substantive 

provisions of the new CAM Rules enacted in 2010 do not govern the parties‘ relation. 

Moreover, it is widely accepted that there is no implicit confidentiality duty in arbitration. 

16. Notwithstanding, if the Tribunal finds that there was a duty of confidentiality, CLAIMANT 

is not liable because it made the proceedings public to legitimately protect its own rights. 

JURISDICTIONAL ARGUMENT 



DISPUTE 

17. RESPONDENT argues that the tribunal has not been constituted in accordance with the 

arbitration agreement and therefore that the tribunal has no jurisdiction to resolve the present 

dispute [Am. to St. of D.]. CLAIMANT rejects this contention and will demonstrate that the 

tribunal was constituted in accordance with the arbitration agreement and therefore has 

jurisdiction over the present dispute on the grounds that: the appointment process expressly 

established by the arbitration agreement was closely followed [A.]; the CAM Rules regulate 

the arbitration procedure in all other issues not specifically stipulated by the parties [B.] and 

the CAM Rules were strictly complied with [C.]. 

A. The appointment process expressly established by the arbitration 

agreement was closely followed 

18. According to the arbitral clause contained in the Sale Confirmation: ‗[T]he dispute shall be 

settled [...] by three arbitrators. Each party shall appoint one arbitrator and the two arbitrators 

shall appoint the presiding arbitrator.‘ [Cl. Ex. 4]. This procedure was established in 

accordance with the widely accepted principle that the parties can freely agree the procedure 

of appointing the arbitrators [Art. 11(2) MAL; Art. 14(1) CAM Rules; Born 1363; Bühring- 

Uhle/Kirchhoff/Scherer p. 70]. 

5


19. The aforementioned appointment procedure was initiated and duly complied with as 

CLAIMANT and RESPONDENT respectively appointed Ms. Arbitrator 1 [R. for A. ¶28] 

and Prof. Arbitrator 2 [S. of D. ¶23] as co-arbitrators. Afterwards, both co-arbitrators 

appointed Mr. Malcolm Y to serve as chairman of the arbitral tribunal [Case file p. 39]. 

20. Any other procedural issue, e.g. confirmation or replacement of an arbitrator, falls within the 

scope of the CAM Rules. 

B. The CAM Rules regulate the arbitration procedure in all issues not 

specifically stipulated by the parties 

21. The parties stipulated in the arbitration agreement that ‗[a]ll disputes arising out of or related 

to the contract shall be settled by arbitration under the [CAM Rules]‘ [Cl. Ex. 4]. 

RESPONDENT‘s assertion that the arbitral tribunal was not constituted in accordance with 

the arbitration agreement altogether ignores the application of the procedural rules expressly 

incorporated by the parties in the arbitration agreement. The CAM Rules are directly 

applicable on the grounds that the rules incorporated by reference in the arbitration 

agreement constitute the parties‘ real intention [i.]; the CAM Rules have a gap-filling function 

with respect to aspects of the procedure that the parties have not explicitly settled [ii.]; and 

finally, the parties did not expressly exclude the application of any of the provisions of the 

CAM Rules [iii.]. 

i. The rules incorporated by reference in the arbitration agreement 

constitute the parties’ real intent 

22. The rules incorporated by reference in the arbitration agreement constitute the parties‘ real 

intent in accordance with the principle of party autonomy, one of the mainstays of arbitration 

[Art. 19 (1) MAL]. Moreover, the MAL recognises the freedom of the parties to determine, 

by reference to an existing set of arbitration rules or by an ad hoc agreement, the procedure 

to be followed [MAL Explanatory Notes ¶23; Born p. 1380; Lew/Mitellis/Kröll p. 237]. In 

consonance with this principle, the parties incorporated the CAM Rules, and by doing so, 

they have included procedural mechanisms and substantive standards governing the selection, 

challenge and replacement of arbitrators [Art. 1(1) CAM Rules; Born p. 1364; 

Fouchard/Gaillard/Goldman ¶359]. Hence, the CAM Rules are applicable as a simple 

consequence of the intent of the parties [Fouchard/Gaillard/Goldman ¶753]. 

23. In cases such as his, the courts ensure that the intent of the parties is observed and would 

normally not set aside an award if the constitution of the arbitral tribunal complies with the 

parties‘ agreement and with the chosen arbitration rules included therein [Art. I(2) NY 

Convention; Art. 34(2) MAL; Fouchard/Gaillard/Goldman ¶781, OLG Köln 22/12/1999]. 

6


ii. The CAM rules have a gap-filling function with respect to aspects of 

the procedure that parties have not explicitly settled 

24. Institutional rules incorporated to the arbitration agreement have a gap-filling function 

complementing the will of the parties with respect to several aspects of the proceedings that 

parties have not explicitly governed [Bühring-Uhle/Kirchhoff/Scherer p. 35; Giovannini/Renna p. 

304; Nigi v. Inter Eltra Kommerz]. In this case, the parties‘ approach in the arbitration clause 

was minimal, providing solely for the appointment of arbitrators while remaining silent in 

regard to all other aspects of the procedure [Cl. Ex. 4]. By incorporating the CAM Rules, not 

only did the parties give themselves a set of procedural rules, at the same time, they 

empowered the CAM to administer the arbitration with significant leeway [Pascale/Götz/Graf 

p. 3]. 

25. Therefore, the CAM Rules shall apply, filling the loopholes and issues the parties have not 

explicitly settled, such as the procedure for confirmation and replacement of arbitrators [St. 

John Sutton/Gill/Gearing ¶3-052]. 

iii. The parties did not expressly exclude the application of any of the 

provision of the CAM Rules 

26. In interpreting the arbitration clause one must consider the consequences the parties‘ could 

have reasonably and legitimately envisaged at the time the arbitration agreement was 

concluded [Fouchard/Gaillard/Goldman ¶477]. The question that may arise is whether the 

parties did actually exclude further procedures provided for the CAM Rules, implying a 

derogatory connotation within the arbitration clause. 

27. In any case, the parties must either expressly or impliedly derogate the CAM Rules by clearly 

stating their intent to do so in the arbitration agreement; or, at the very least, including a 

provision which directly contradicts the procedure laid down in said institutional rules 

[Fouchard/Gaillard/Goldman ¶782; Gas del Estado v. Ecofisa; Indian Oil Corp. v. Raja Transport]. 

None of these derogatory mechanisms were provided for by the parties. 

28. Considering that the parties did not exclude the application of any of the provision of the 

CAM Rules in the arbitration agreement, an objective interpretation of the parties‘ intent 

stands for the application of the proceedings as provided by the CAM. 

C. The Rules of the Chamber of Arbitration of Milan were strictly complied 

with 

29. The procedure provided by the CAM Rules was strictly complied with, since the Arbitral 

Council did not confirm Mr. Y‘s appointment pursuant to Art. 18(4) CAM Rules, [i.] the 

same appointing-authority re-affirmed the appointment of Mr. Malcolm Y and consequently, 

7


he was not confirmed by the Arbitral Council under the same circumstances and [ii.] finally, 

Mr. Horace Z was appointed as chairman by the Arbitral Council in the light of art. 20(3) 

CAM Rules [iii.]. 

i. The Arbitral Council did not confirm Mr. Y’s appointment pursuant 

to art. 18(4) CAM Rules 

30. In order to confirm an arbitrator, the CAM Rules impose two requirements, i.e. the 

submission of an unqualified Statement of Independence and that none of the parties files 

any comments thereon. If one of these requirements is not met, the Arbitral Council has the 

power to decide whether or not confirm the appointed arbitrator [Art. 18(4) CAM Rules; Sali 

I p.351]. 

31. Accordingly, Mr. Y submitted his statement of independence with a disclosure of facts and 

none of the parties filed any comments. In addition, both parties filed a letter waiving their 

right to object to Mr. Y‘s appointment [Case File p. 47]. Hence, the question is whether Mr. 

Y‘s Statement of Independence was qualified. The answer is affirmative and Mr. Y was not 

confirmed by the Arbitral Council‘s decision No. 1697/1 dated 30 July, 2010 [Case File p. 49] 

on the grounds that: the facts disclosed by Mr. Y objectively implied a lack of independence 

[1.] and also, according with the IBA Guidelines, the disclosed facts fall under the scope of a 

conflict of interest, however even if such facts are deemed to be waivable, the IBA 

Guidelines are not binding [2.]. Finally, whenever an arbitrator submits a qualified statement 

of independence, the Arbitral Council has the authority to decide whether or not he shall be 

confirmed [3.]. 

1. The facts disclosed by Mr. Y objectively imply a lack of 

independence 

32. An unqualified statement of independence implies an arbitrator who is impartial and 

independent of the parties [Art. 18(1)(2) CAM Rules; Arts. 5-7 CAM Code of Ethics]. 

33. Mr. Y‘s Statement of Independence brought to the attention the fact that he is a partner in 

the firm of Wise, Strong & Clever. The firm has approximately 150 lawyers in its six offices and 

Mr. Samuel Z, a partner in the firm‘s office in Capital City, Mediterraneo, advises 

CLAIMANT in this matter. The Statement of Independence also declares that Mr. Y had no 

contact with Mr. Z about the case and knew nothing about it until he was notified that he 

was under consideration for the chair of the tribunal [Case File p. 46]. 

34. It is a fundamental and universally accepted principle of international arbitration that 

arbitrators have to be impartial and independent of the parties and must remain so during the 

proceedings, as well as after the award is filed [Lew/Mitellis/Kröll p.256; Redfern/Hunter II 

8


p.266, Redfern/Hunter I ¶4-52]. Independence and impartiality are not interchangeable.While 

the existence of independence is established on an objective criterion (i.e. whether there is a 

relationship between the arbitrator and the parties); impartiality is the state of mind of being 

unbiased or disinterested and is thus put to a subjective test. [Redfern/Hunter II pp. 267-268; 

B’Uhler p.119]. The present situation is clearly a matter of determining whether Mr. Y was 

independent or not requiring an objective exam of the facts. 

35. Independence involves no indirect financial or economic interests in the outcome of the 

dispute and no access to exclusive information that could affect the arbitrator‘s judgement, 

which might lead him to favour one of the parties [Grigera Naón p.303; Lew/Mitellis/Kröll p. 

263; Luttrell p. 23]. The revealed situation could clearly involve a conflict of interests. The 

outcome of the arbitration will necessarily affect Mr. Y‘s firm‘s financial interests and 

reputation, which could encourage Mr. Y to tip the balance in favour of one side for the 

wrong reasons. 

36. Moreover, independence requires that there be no actual or past dependent relationship 

between the parties or with one of the parties‘ counsel that may, or at least may appear to, 

affect the arbitrator's freedom of judgment as it is unanimously accepted in different 

jurisdictions.[Ferrario pp. 421-426; IBA Backgrounds 2(1)]. Likewise, the fact that Mr. Y is 

currently a partner in the same law firm as the counsel of one of the parties, objectively 

involves an actual circumstance which represents an impediment for a fair and independent 

assessment of the facts subjected to arbitration [Bond p.563; Mustang v. Plug-in Storage]. 

37. Therefore, in the light of an objective analysis, the facts disclosed by Mr. Y could imply a 

conflict of interest for lack of independence and the existence of ‗real danger of bias‘ in 

consonance with the principle that not only must Justice be done; it also must be seen to be 

done [Berkley v. Automobile ;R v. Sussex Justices] . Consequently, the statement of independence 

is deemed to have been qualified. 

2. According to the IBA Guidelines, disclosed facts fall under 

the scope of conflict of interest; however, even if such facts 

are deemed to be waivable, the IBA Guidelines are not 

binding 

38. The CAM also takes into consideration the IBA Guidelines on Conflicts of interest in International 

Arbitration (hereafter IBA Guidelines) when examining the impartiality and independence of 

the arbitrators [Case File p.42] 

39. The IBA Guidelines include the fact that ‗[t]he arbitrator is a lawyer in the same law firm as 

the counsel to one of the parties‘ as one of the conflictive relationships within the ‗Waivable 

9


Red List‘. Furthermore, the IBA Guidelines establish that facts alone do not automatically 

constitute a source for a conflict of interest. Instead, the particular circumstances should 

reasonably be considered in each individual case and a challenge should be successful only if 

an objective test is met. 

40. According to these guidelines, the Waivable Red List sets forth situations that are deemed to 

be waivable ‗[o]nly if and when the parties, being aware of the conflict of interest situation, 

nevertheless expressly state their willingness to have such a person act as arbitrator despite 

the conflict of interest‘ [IBA Guidelines Part 1 (4)(c)]. Therefore, the IBA Guidelines leave the 

exam of the facts to the parties, allowing them to judge whether or not they agree with the 

evaluation of the arbitrator and, if they so wish, to explore the situation further and as 

another option, to waive their right to object to such circumstances. 

41. Nevertheless, the CAM emphasises that the IBA Guidelines are not binding and as it is 

implied in their name, their purpose is to provide guidance to arbitrators, parties and national 

courts in identifying, responding to and resolving conflicts by both codifying existing arbitral 

practice and filling gaps in the law to arrive at the most suitable international arbitral practice 

[Landolt p.410; Trakman p.9]. For that reason, any provision stated therein can only be deemed 

to be a guidance in order to facilitate and help a decision of the Arbitral Council [AMS v. 

TTMI]. Hence, the Arbitral Institution has the final judgment on the exam of independence 

as will be demonstrated in the following section [3.] 

3. The Arbitral Council has the authority to decide whether or 

not the arbitrator shall be confirmed 

42. According to the CAM, the Secretariat confirms directly party-appointed arbitrators if a 

statement of independence is filed without remarks and in the absence of comments thereto 

from the parties [CAM Rules Art. 18(4); Sali I p.351]. Contrario sensu, when these two 

requirements are not met, i.e. an unqualified statement of independence and the absence of 

comments by the parties; confirmation depends exclusively on the Arbitral Council [CAM 

Rules Art. 18(4]. 

43. The Arbitral Council simply carried out one of its typical tasks as an arbitral institution by not 

confirming Mr. Y as the presiding arbitrator, and thereby overcoming possible obstacles in 

the constitution of the arbitral tribunal [St. John Sutton/Gill/Gearing ¶3-052; Nigi v. Inter Eltra 

Kommerz]. 

44. Additionally, the parties‘ views are not necessarily decisive [Bond p. 563]. They are limited in 

some respects by the requirements of the proper administration of justice 

[Fouchard/Gaillard/Goldman ¶783]. These principles include, in particular, the parties‘ right to a 

10


fair trial and to equal treatment. Blatant violations of the parties‘ rights to equal treatment and 

fair hearing would imply a serious risk which can involve that any award issued under these 

doubtful circumstances may be revoked by the courts within areas where judicial revision is 

acceptable [Coppo 290, Fouchard/Gaillard/Goldman ¶787; Avax v. Tecnimont]. 

45. If there are doubts about one of the arbitrator‘s independence, the Arbitral Council has the 

power to rule in order to ensure that said principles are being respected and taking into 

consideration the amount of refused appointments for lack of independence within the last 5 

years, i.e. 7 %, the CAM cannot be deemed to have been severe [Sali III p.5-6]. In accordance 

with this, the CAM seeks a minimal intervention in the appointment of arbitrators but a 

maximal control of their independence [Sali I pp.349-350; Sali II p.10]. 

ii. The same appointing-authority re-affirmed the appointment of Mr. 

Malcolm Y, who later on, was again not confirmed by the Arbitral 

Council under the same circumstances 

46. The CAM Rules establish that an arbitrator shall be replaced by another arbitrator when the 

arbitrator is not confirmed [Art. 20(1)(b) CAM Rules]. Furthermore, said rules provide that the 

new arbitrator shall be appointed by the same authority that appointed the substituted 

arbitrator [Art. 20 (3) CAM Rules]. In accordance with these provisions, the CAM invited the 

co-arbitrators to make a substitute appointment as for the chairman [Case File p.49]. As a 

result, the co-arbitrators re-affirmed their appointment of Mr. Malcolm Y and requested the 

Arbitral Council to confirm him [Case File pp.50-51]. 

47. The Arbitral Council, by its decision no. 1608/1 [Case File p. 57], for a second time, did not 

confirm Mr. Malcolm Y. In view that the situation had not changed since, the Arbitral 

Councils‘ decision was based on the same reasons that encouraged the first non confirmation 

[supra ¶43]. 

iii. Mr. Horace Z was appointed as chairman by the Arbitral Council in 

the light of the art. 20(3) CAM Rules 

48. In the event that the replacement arbitrator must also be substituted, according to the CAM 

Rules, the new arbitrator shall be appointed by the Arbitral Council [Art. 20(3) CAM Rules]. 

Accordingly, the Arbitral Council appointed Mr. Horace Z as President of the Arbitral 

Tribunal[Case File p.57], and given that Mr. Horace Z filed an unqualified statement of 

independence, and that parties filed no comments thereon, the Secretariat of the Chamber of 

Arbitration confirmed him as chairman [Case File p.61]. 

11


49. CONCLUSION ON ISSUE I: The arbitral tribunal has jurisdiction to understand in this 

matter since it has been constituted in accordance with the arbitration agreement, the 

appointment- process agreed by the parties and the CAM rules incorporated thereby. 

ARGUMENT ON THE MERITS 

50. CLAIMANT‘s and RESPONDENT‘s places of business are respectively located in 

Mediterraneo and Equatoriana, both of which are signatories without reservations to the 

CISG. In the absence of a choice of law clause, the present dispute is governed by the CISG 

pursuant to Art. 1(a) CISG [R. for A. ¶¶1, 3, 24; PO 3 ¶1]. 


ART. 35 CISG 

51. RESPONDENT breached the contract in the light of Art. 35(1) CISG [A.] or, alternatively, 

RESPONDENT failed to abide by Art. 35(2) CISG [B.]. 

A. RESPONDENT breached the contract in the light of Art. 35(1) CISG 

52. Article 35(1) CISG imposed on RESPONDENT the duty to deliver squid of the quality 

required by the contract. According to both a subjective and objective reading of the 

contract, each squid had to be between 100 and 150 g [i.]. Other phrases in the Order Form 

and Sale Confirmation cannot be interpreted as having modified said quality requirement 

[ii.]. By delivering undersized squid, RESPONDENT failed to supply goods of the quality 

required by the contract [iii.]. 

i. The contract provided that each squid be between 100 and 150 g 

53. Even though neither the Order Form [Cl. Ex. 3] nor the Sale Confirmation [Cl. Ex. 4] 

contains an express reference to weight, the contract required that every individual squid fall 

within the 100-150 g bracket. The application of Art. 8 CISG leads to both express and 

implied requirements constituting duties of the seller under Art. 35(1) CISG [Neumann ¶¶4, 

5]. By putting the contract to either the subjective [Art. 8(1) CISG] [1.] or objective [Art. 8(2) 

CISG] tests [2.] one concludes that it stipulated that the squid weigh 100-150 g each. 

RESPONDENT was also bound to deliver squid in the 100-150 g range by international 

trade usages of the fishing industry under Art. 9(2) CISG [3.]. 

1. In the light of Art. 8(1) CISG, the contract required 100-150 g 

squid 

54. Article 8(1) CISG mandates that a party‘s statements and conduct be construed in accordance 

with that party‘s intent whenever ‗the other party knew or could not have been unaware [of] 

what that intent was‘. To establish a party‘s intent, all relevant circumstances of the case must 

be taken into account, including the negotiations [Art. 8(3) CISG]. 

12


55. CLAIMANT intended to acquire squid for resale as bait. To be used as bait, squid need 

weigh 100-150 g. This intent was unequivocally conveyed to RESPONDENT during the 

contract negotiation phase. RESPONDENT‘s conduct indicates that it had understood 

CLAIMANT‘s intent. 

56. CLAIMANT‘s specifically stated that it intended to purchase squid for resale to the long-liner 

fishing fleet based in Mediterraneo ‗to be used as bait‘ and invited RESPONDENT to make 

offers of ‗appropriate product‘ [Cl. Ex. 1]. In reply, RESPONDENT‘s proxy presented 

CLAIMANT with a sample of squid representative of the squid on offer [R. for A. ¶13]. 

Virtually all squid in the sample fell within the 100-150 g range [R. for A. ¶14]. 

RESPONDENT obtained the sample from a lot of squid it had sold to another customer in 

Mediterraneo who deals in squid exclusively for bait [PO 3 ¶24]. By offering to CLAIMANT 

this specific type of squid, RESPONDENT‘s conduct clearly indicates that it ‗knew‘ that 

CLAIMANT‘s intent was to contract for squid to be used as bait and that thus every 

specimen had to weigh 100-150 g. 

57. CLAIMANT made its intent abundantly clear to RESPONDENT in the email that 

accompanied the Order Form [Cl. Ex. 2]. CLAIMANT stated that it was particularly pleased 

that the squid in the sample ‗fell almost exclusively in the range of 100/150 g‘ and 

emphasised that that is the size range that gives its customers the best results. Consequently, 

RESPONDENT cannot claim to have been unaware that the contract provided for 100-150 

g squid [Neumann ¶44; Lookofsky p.90]. 

2. In the light of Art. 8(2) CISG, the contract required 100-150 g 

squid as well 

58. If the Tribunal deems Art. 8(1) CISG to be inapplicable, the contract is to be interpreted 

according to the standard set in Art. 8(2) CISG. The application of either section of Art. 8 

CISG leads to the same conclusion. 

59. Under Art. 8(2) CISG the statements and conduct of CLAIMANT must be interpreted 

according to the understanding that a reasonable person of the same kind as 

RESPONDENT would have had in the same circumstances [Honnold ¶107]. This begs the 

question as to what kind of person RESPONDENT is. 

60. RESPONDENT is a prominent privately owned Equatorianan fishing corporation [St. of D. 

¶1; R. Ex. 1; PO 3 ¶15, 17]. RESPONDENT owns a fishing fleet in the Pacific Ocean and 

trades in fish products [St of D. ¶2]. In regard to squid, RESPONDENT catches, purchases 

and sells exclusively Danubian squid [St. of D. ¶2]. RESPONDENT‘s presence in the 

13


Mediterranean market has been constant for a long time. Around 95% of all the squid 

RESPONDENT has ever sold in Mediterraneo was intended for use as bait [PO 3 ¶12]. 

61. How then would a reasonable and prominent fishing corporation that is an acknowledged 

expert in Danubian squid and who is acutely aware of the idiosyncrasies of the Mediterranean 

market due to its long experience in selling squid for bait to Mediterranean purchasers have 

understood CLAIMANT‘s statements and conduct? 

62. A reasonable person with RESPONDENT‘s expertise in Danubian squid would have 

grasped that, when it comes to squid to be used for bait, size is of utmost importance [PO 3 

¶26]. A reasonable person with RESPONDENT‘s experience in the fishing trade would not 

have ignored the well-known fact in the industry that the size range of squid used as bait that 

optimises long-liners‘ catch is 100-150 g per piece [R. for A. ¶14]. A reasonable person with 

RESPONDENT‘s experience in selling squid for bait in Mediterraneo cannot have ignored 

that Mediterranean long-liners demand 100-150 g squid [R. for A. ¶10, Cl. Ex. 10 ¶¶4, 5]. A 

reasonable person in RESPONDENT‘s position would not have failed to understand from 

CLAIMANT‘s unambiguous statements that the contract provided for 100-150 g squid. As a 

matter of fact, RESPONDENT‘s choice of showing CLAIMANT a sample in which 

practically each and every squid weighed between 100-150 g conclusively demonstrates that 

that is exactly what RESPONDENT understood CLAIMANT would require. 

3. International trade usages of the fishing industry bound 

RESPONDENT to deliver squid in the 100-150 g range 

63. CLAIMANT and RESPONDENT are impliedly bound by usages widely known and 

regularly observed by parties to international contracts for the supply of fish products 

according to Art. 9(2) CISG. 

64. A matter well-known in the trade is that the size range of squid that leads to acceptable 

catches is 100-150 g [R. for A. ¶¶10, 14, 18; Cl. Ex. 2, 5, 7]. RESPONDENT was perfectly 

aware of this usage [PO 3 ¶26; Cl. Ex. 9]. As the parties entered into a contract for the supply 

of squid for bait, this trade usage—to which the parties have not expressly agreed not to be 

bound by—required that RESPONDENT deliver 100-150 g squid [Art. 9(2) CISG]. Hence, 

the delivery of undersized squid constituted a failure on the side of RESPONDENT to 

observe an international usage it was under the obligation to follow. 

ii. Other phrases in the Order Form and Sale Confirmation cannot be 

interpreted as having modified said quality requirement 

65. RESPONDENT asserts that CLAIMANT‘s inclusion in the Order Form of the phrase 

‗[c]ertified fit for human consumption‘ [Cl. Ex. 3] [1.] and that its own addition in the Sale 

14


Confirmation of the phrase ‗2007/2008 Catch‘ [Cl. Ex. 4] [2.] allowed RESPONDENT to 

supply undersized squid. This is an untenable position. 

1. ‘Certified fit for human consumption’ 

66. CLAIMANT included the provision ‗[c]ertified fit for human consumption‘ in its Order 

Form [Cl. Ex. 3]; by doing so, CLAIMANT intended that the squid it would be supplied with 

were in compliance with a Mediterranean health regulation. RESPONDENT affirms to have 

interpreted this phrase as meaning that part of the consignment of squid would be resold as 

human foodstuff and that thus the size of the individual squid would be inconsequential 

allowing it to provide undersized squid [Cl. Ex. 9; St. of D. ¶18 ]. 

67. According to a regulation in place in Mediterraneo, all fish products stored in the same cool 

house have to be certified as fit for human consumption if any are to be sold for human 

consumption. As in multiple other countries, this ubiquitous health regulation is also law in 

RESPONDENT‘s country, Equatoriana [R. for A. ¶15; PO 3 ¶22]. 

68. CLAIMANT trades in both fish products for bait and human consumption [R. for A ¶2]. 

CLAIMANT stores its stocks for bait and human consumption in the same location. 

CLAIMANT‘s intent in including the phrase ‗[c]ertified fit for human consumption‘ in the 

Order Form was to receive squid apt for use as bait and compliant with the abovementioned 

health regulation. CLAIMANT did not intend to contract for a lot of squid in which some 

were to be sold as bait and the rest as human foodstuff. 

69. RESPONDENT could not have been unaware of CLAIMANT‘s intent [Art. 8(1) CISG]. 

RESPONDENT was plainly alerted to the fact that the squid would be resold for use as bait 

[Cl. Ex. 1]. Furthermore, in an email to RESPONDENT, CLAIMANT made a reference to 

the final consumers of the squid, the Mediterranean long-liners. When CLAIMANT 

expressed that it had found the sample to its pleasure because the weight range of the squid 

corresponded to the one that gives its customers the best results, CLAIMANT was self- 

evidently referring to long-liners and not to outlets of human foodstuff as the size of the 

squid is only relevant when they are used as bait [Cl. Ex. 2; Cl. Ex. 10 ¶4]. RESPONDENT, 

as an experienced firm in the fish trade, was perfectly aware of this difference [PO 3 ¶26]. 

Consequently, RESPONDENT failed to give due consideration to all relevant circumstances 

and interpret the phrase ‗[c]ertified fit for human consumption‘ in conjunction with the email 

to which it was attached as mandated by Art. 8(3) CISG. 

70. RESPONDENT is expected to be familiar with the relevant health regulation as 

RESPONDENT‘s own jurisdiction imposes the same standard and because of the special 

circumstance that RESPONDENT regularly exports squid for use as bait to CLAIMANT‘s 

15


country [Fletchner p. 6; Mussels case; Machines case]. A reasonable Equatorianan fishing trader 

with RESPONDENT‘s long history of dealing in squid in Mediterraneo would not have 

attributed to the disputed phrase the meaning RESPONDENT did [Art. 8(2) CISG]. A 

sensible Equatorianan fishing trader with RESPONDENT‘s knowledge of and experience in 

Mediterraneo would have imagined, in the light of the negotiations, that CLAIMANT‘s intent 

was to store the squid for bait along with its stock of fish products for human consumption. 

71. In any event, a reasonable business person in RESPONDENT‘s position would not so rashly 

have jumped from an isolated phrase to a conclusion that so fundamentally alters the contract 

with every other visible sign pointing to the polar opposite direction. In this case, the 

principle of reasonableness would have required that RESPONDENT confirm its 

interpretation of the contract with CLAIMANT before deviating so significantly from the 

negotiations [Art. 8(1) CISG; Maley p. 109]; especially when the requirements ‗[c]ertified fit for 

human consumption‘ and of appropriate size for bait are not mutually exclusive. 

2. ‘2007/2008 Catch’ 

72. In its Sale Confirmation, RESPONDENT included the line ‗Catch: 2007/2008 Catch‘. 

RESPONDENT purports to have made this inclusion in order to convey to CLAIMANT its 

intent of delivering a significant proportion of undersized squid [Cl. Ex. 8, 9; St. of D. ¶¶ 13, 

14]. CLAIMANT understood said inclusion as meaning that the order would be completed 

with a small proportion of squid of appropriate size caught in the year 2008. 

73. CLAIMANT did not know that RESPONDENT‘s intent was to deliver squid unsuitable for 

use as bait [Art. 8(1) CISG]. RESPONDENT never said so. CLAIMANT could not have 

been aware of RESPONDENT‘s intent either, as nothing indicated that the 2008 squid 

would not conform or that they would represent a high proportion of the lot [Art. 8(1) 

CISG]. 

74. RESPONDENT asserts that CLAIMANT should have presumed that the 2008 squid would 

be undersized as the contract was concluded at the beginning of the fishing season of 

Danubian squid and that thus their size would still be small [St. of D. ¶14]. As an expert in the 

trade, CLAIMANT is conscious of the harvesting seasons of the different species of squid 

and of the pace of their development [PO 3 ¶26]. It was precisely because of this expertise, 

that CLAIMANT knew that, at that time of the year, a by no means negligible proportion of 

the squid would fall within the 100-150 g range. In fact, of the 2008 squid delivered by 

RESPODENT, 13% were between 100 and 115 g and 32% of those below 100 g had 90-100 

g [Cl. Ex. 8]. Besides, it would not have been objectionable if a small portion of the squid 

were below 100 g [Cl. Ex. 10 ¶5]. 

16


75. The understanding of an expert squid merchant in CLAIMANT‘s position would have been 

the same as CLAIMANT‘s [Art. 8(2) CISG]. In view of all pertinent circumstances [Art. 8(3) 

CISG], a reasonable person in CLAIMANT‘s shoes would have interpreted 

RESPONDENT‘s inclusion in good faith and arrive at the conclusion that the 2008 squid 

would be above 100 g and that those that were below would only constitute a marginal 

portion of the consignment. 

iii. By delivering undersized squid, RESPONDENT failed to supply 

goods of the quality required by the contract 

76. The parties entered into a contract for the supply of squid solely for use as bait. Neither the 

phrase ‗[c]ertified fit for human consumption‘ nor the inclusion of the line ‗Catch: 2007/2008 

Catch‘ resulted in a modification of the contract. A quality requirement for squid to be used 

as bait is that they be 100-150 g in weight. By delivering undersized squid, RESPONDENT 

failed to supply goods of the quality required by the contract under Art. 35(1) CISG and 

international trade usages of the fishing industry [Art. 9(2) CISG]. 

B. Alternatively, RESPONDENT failed to abide by Art. 35(2) CISG 

77. If the Tribunal opines that the terms of the contract entered into by the parties did not 

include the 100-150 g quality requirement, RESPONDENT has, nevertheless, failed to meet 

the obligations Art. 35(2) CISG imposes. RESPONDENT did not deliver squid fit for the 

purposes for which squid are ordinarily used [Machines case; NAI No. 2319; Frozen fish case] [i.]. 

Alternatively, the delivered squid were unfit for the particular purpose expressly or impliedly 

made known to RESPONDENT at the time of the conclusion of the contract [ii.]. Finally, 

the squid RESPONDENT supplied lacked the qualities of the squid RESPONDENT held 

out to CLAIMANT as a sample [iii.]. 

i. The delivered squid were unfit for the purposes for which goods of 

the same description are ordinarily used [Art. 35(2)(a) CISG] 

78. Squid are ordinarily used as bait. A great proportion of the squid RESPONDENT supplied 

could not be used as bait [1.]. Additionally, traders in fish products self-evidently acquire 

squid with the purpose of reselling them; however, RESPONDENT‘s squid could not be 

resold [2.]. 

1. The squid could not be used as bait 

79. Under Art. 35(2)(a) CISG, the goods do not conform with the contract unless they are fit for 

the purposes for which goods of the same description would ordinarily be used. All of the 

five long-liners that were supplied with the squid RESPONDENT delivered found them to 

be of inadequate quality for bait and returned their purchases [R. for A. ¶18]. 

17


80. Only once in they had reached the fishing grounds did the five sub-purchasers discover that 

the squid were inadequate. Due to the sub-standard weight of the squid, the long-liners 

caught less fish than what they might have otherwise caught [Cl. Ex. 10 ¶12]. Two of the 

long-liners had no option but to return to port to re-stock with new bait [R. for A. ¶18]; this 

detour resulted in a significant loss of sea-time [Cl. Ex. 5] which one can safely assume 

ensued in an even poorer overall catch. The three other fishing vessels remained at sea [R. for 

A. ¶18]. Of these three, two had sufficient other bait to enable them to return with a normal 

catch [Cl. Ex. 10 ¶12]. 

81. An ordinary use to which squid are put is to utilise them for bait [R. for A. ¶7]. All five 

customers to which the delivered squid were sold could not economically use them for bait. 

Hence, the delivered squid were unfit for a purpose for which squid are ordinarily used. 

2. RESPONDENT’s squid could not be resold 

82. A trader in squid acquires them with the sole and express purpose of reselling them [Maley p. 

113; Henschel; Paletas de Cerdo Case]; but the supplied squid could neither be sold for bait nor 

human consumption, not in Mediterraneo or abroad. 

83. As already described in, all five long-liners returned the squid and CLAIMANT was forced to 

reimburse them [Cl. Ex. 10 ¶12]. Even though a small portion of the squid could have been 

used for bait, the other long-liners in Mediterraneo absolutely declined to acquire the 

Danubian squid. All of CLAIMANT‘s gentle attempts to coax them into reconsidering that 

decision failed. In their view, not even a discount in the sales price outweighed the risk of 

putting out to sea with poor quality squid [Cl. Ex. 10 ¶14]. They undoubtedly adopted this 

risk-averse and headstrong position because of the other long-liners‘ calamitous results with 

RESPONDENT‘s squid [R. for A. ¶19; Cl. Ex. 10 ¶14]. 

84. The demand for squid for human consumption in Mediterraneo is extremely low. 

Furthermore, this niche market is held hostage by its regular suppliers [Cl. Ex. 10 ¶14]. 

Despite aggressively marketing the goods to outlets of squid for human consumption, 

CLAIMANT was unable to sell any. The huge discounts with which CLAIMANT tried to 

entice customers into buying them were not sufficient to break into the already saturated 

market [Cl. Ex. 10 ¶15]. As it became evident that the squid could not be sold locally, 

CLAIMANT diligently turned to Reliable Trading House as a last resort and instructed it to 

offer the squid in foreign markets [Cl. Ex. 10 ¶15]. 

85. In spite of having spared no effort, only 10% of the consignment could finally be sold [Cl. 

Ex. 10 ¶15]. 

18


ii. The squid supplied were unfit for the particular purpose made 

known to RESPONDENT at the time of the conclusion of the 

contract [Art. 35(2)(b) CISG] 

86. If the Tribunal arrives at the conclusion that the use of squid as bait is extraordinary, this 

particular purpose was expressly [1.] or, at the very least, impliedly [2.] made known to 

RESPONDENT at the time of the conclusion of the contract [Folsom/Gordon/Spanogle p. 

88]]. Additionally, RESPONDENT cannot be exempted under Art. 35(2)(b) CISG [3.]. 

1. Particular purpose expressly made known to 

RESPONDENT 

87. In its email of 14 April 2008, CLAIMANT explicitly informed RESPONDENT that the 

squid to be acquired were to be used as bait; CLAIMANT‘s exact words were ‗Mediterraneo 

Trawler Supply is interested in purchasing squid for resale to the long-liner fishing fleet based 

in Mediterraneo to be used as bait‘‘ (emphasis added) [Cl. Ex. 1]. CLAIMANT could 

hardly have chosen a more explicit way of making RESPONDENT aware of the use to 

which the squid would be put. 

2. Particular purpose impliedly made known to 

RESPONDENT 

88. The email that accompanied the order form strongly suggested that the squid were purchased 

for use as bait [Cl. Ex. 2]. The phrase ‗that is the [size] range [of squid] that gives our 

customers the best results‘ could only have been referring to long-liners that use squid for 

fishing. The size range of the squid becomes only relevant when they are utilised as bait (see 

also ¶69). When alleging that a particular purpose has been impliedly made known, it is 

enough that a reasonable person in the position of the seller would have recognised the 

purpose for which the buyer intended to use the goods [Huber/Mullis p. 138]. One must 

reiterate that it would have been impossible for a reasonable person like RESPONDENT in 

these circumstances to have missed to understand CLAIMANT‘s implied intent [Maley p. 

118] (see also ¶69). 

3. RESPONDENT cannot be exempted under Art. 35(2)(b) 

CISG 

89. RESPONDENT would be ill-advised to seek to be exempted under Art. 35(2)(b) CISG by 

maintaining that CLAIMANT did not rely or that it was unreasonable of CLAIMANT to rely 

on RESPONDENT‘s skill and judgement. CLAIMANT heavily relied on RESPONDENT‘s 

19


advice and it was utterly reasonable of CLAIMANT to do so as everything indicated that it 

was safe to rely on RESPONDENT‘s judgement [Maley p. 119] (see also ¶¶61,62). 

90. RESPONDENT has consequently also failed against the benchmark of Art. 35(2)(b) CISG. 

iii. The squid did not possess the qualities of the squid 

RESPONDENT held out to CLAIMANT as a sample [Art. 35(2)(c) 

CISG] 

91. Apart from being an indisputable contractual provision RESPONDENT was absolutely 

bound to observe under Art. 35(1) CISG [Bianca p. 276]—as the Order Form and Sale 

Conformation [Cl. Ex. 3, 4] tallied exactly with each other in this respect [arts. 18(1), 19(2) 

CISG]—, Art. 35(2)(c) imposed on RESPONDENT the obligation to deliver squid whose 

qualities precisely correspond to those of the squid in the sample it held out to CLAIMANT. 

Nevertheless, the supplied squid lacked a main feature of the squid RESPONDENT showed 

CLAIMANT as way of a sample [1.]. RESPONDENT contends that the sample was of 

unsized squid just like the squid it delivered [2.]. 

1. The delivered squid lacked a main feature of the squid in the 

sample 

92. On the one hand, the vast majority of the squid in the sample RESPONDENT lured 

CLAIMANT into the contract with fell within the 100-150 g range [R. for A. ¶14]; on the 

other, a substantial portion of the squid delivered did not [R. for A. ¶18, Cl. Ex. 8]. 

93. The weight was one of the key features and the most conspicuous property of the squid 

found in the sample. By failing to deliver squid with a quality inherent in the sample that 

would have been apparent on a reasonable examination, RESPONDENT breached Art. 

35(2)(c) [Huber/Mullis p.139; Delchi Carrier v. Rotorex ; Marble slabs case]. 

2. RESPONDENT contends that the sample and the supplied 

squid were unsized 

94. RESPONDENT maintains that the sample was of unsized squid. Unsized squid are squid 

that were not grouped according to their weight and that are sold in bulk. RESPONDENT 

affirms that, at that early stage of the harvesting season, CLAIMANT should have expected 

that unsized 2008 squid would tend to be small (see also ¶74). However, CLAIMANT ignored 

and could not have known that the sample was of unsized squid [a.]; either way, the fact that 

the sample was of unsized squid is immaterial to the case [b.]. 

a. CLAIMANT ignored and could not have known that 

the sample it was shown was of unsized squid 

20


95. CLAIMANT did not know that the sample of squid was unsized and neither could 

CLAIMANT have been aware of this fact [Art. 8(1) CISG]. RESPONDENT never pointed 

out to CLAIMANT that the sample was of unsized squid. All that the sample‘s label, ‗illex 

danubecus 2007‘ [PO 3 ¶32], indicated was that the sample consisted of Danubian squid 

caught in the year 2007; nothing in this short legend suggested that the sample was unsized. A 

reasonable person in CLAIMANT‘s position and in view of the circumstances would not 

even have suspected that the sample was of unsized squid [Art. 8(2)(3) CISG]. 

b. The fact that the sample was of unsized squid is 

immaterial to the case 

96. On any account, the fact that the sample was of unsized squid has no bearing whatsoever on 

RESPONDENT‘s obligation to deliver squid mostly within the 100-150 g bracket. 

97. Just like not all of the squid in the sample weighed 100-150 g, under the contractual provision 

‗[a]s per sample already received‘ [Cl. Ex. 4] and Art. 35(2)(c) CISG all RESPONDENT was 

obliged to deliver was a lot in which the proportion of squid within and without the 100-150 

g bracket corresponded to that of the sample. RESPONDENT would have achieved this by 

striking the correct balance in the consignment between unsized squid from the late and early 

stages of the 2007 and 2008 harvesting seasons. By choosing to deliver 60% of undersized 

2008 squid, RESPONDENT patently disregarded this obligation [Cl. Ex. 8]. 

98. CONCLUSION ON ISSUE II: RESPONDENT failed to deliver squid of the size 

required by the contract. Hence, RESPONDENT did not comply with Art. 9(2) CISG; and, 

either Art. 35(1) CISG or Art. 35(2) CISG. 


CISG COMPLIANT 

99. The examination of the squid was made in accordance with Art. 38 CISG [A.]. CLAIMANT 

notified RESPONDENT pursuant to Art. 39(1) CISG of the nature of the lack of 

conformity within a reasonable time after it was discovered [B.]. Notwithstanding, if the 

examination or notification of non-conformity are found to have been insufficient, 

RESPONDENT would still be liable for the lack of conformity under Art. 40 CISG [C.]. 

A. The examination of the squid was made in accordance with Art. 38 CISG 

100. CLAIMANT examined the squid in accordance with Art. 38(1) CISG [i.]. Alternatively, if 

CLAIMANT‘s examination is found wanting, the Mediterranean long-liners were swift in 

inspecting the squid after their reception [ii.]. 

i. CLAIMANT examined the squid in accordance with Art. 38(1) 

CISG 

21


101. CLAIMANT performed a careful examination of the squid within as short a period as was 

practicable under the circumstances [Art. 38(1) CISG]. The fact that the non-conformity of 

the goods only became apparent time after CLAIMANT examined the lot was not the result 

of a superficial inspection. 

102. The order was delivered on 1 July 2008 in twelve containers that arrived at CLAIMANT‘s 

headquarters in several instalments during the day [R. for A. ¶17]. Immediately after receiving 

the first two containers, CLAIMANT proceeded to examine the consignment. 

103. CLAIMANT randomly selected a by no means negligible sample of 20 cartons for 

inspection. All 20 boxes weighed the required 10 kg. Five cartons were thawed to perform a 

visual inspection of the individual squid. CLAIMANT rigorously checked, one by one, the 

condition and weight of the squid. All were found to be in excellent condition. The 

proportion of squid within the 100-150 g bracket corresponded, in each and every inspected 

carton, exactly to that of the sample RESPONDENT had shown CLAIMANT. At that time, 

CLAIMANT‘s satisfaction with the consignment could not have been greater. [Cl. Ex. 10 

¶10]. 

104. By diligently inspecting the squid the very minute after they had arrived at its premises, 

CLAIMANT not only complied with but exceeded the obligation art. 38(1) CISG imposes of 

examining the goods within as short a period as is practicable in the circumstances 

[Illescas/Perales p. 188]. 

105. The facts that CLAIMANT did not draw a sample for inspection from every container and 

that none of the cartons that were examined were from the catch of 2008 should not be 

taken to mean that CLAIMANT‘s examination was superficial. 

106. After the successful initial examination, CLAIMANT regarded the continuation of the 

examination as a pointless exercise. Besides, it made no sense from a commercial viewpoint; 

as the Advisory Council puts it: ‗‗Whether and when it is practicable, and not just possible, to 

examine the goods depends on all the circumstances of the case.‘ [CISG - AC Opinion No. 2]. 

Under these circumstances, CLAIMANT had no reason whatsoever to proceed with the 

inspection. It is often commercially practicable to examine the goods immediately upon 

receipt. 

107. The initial examination revealed that all inspected squid fully conformed to the contract. 

Therefore, CLAIMANT had every reason to believe that the whole lot would likewise 

conform. When the delivery involves a large quantity of goods, the buyer need not examine 

the entire load, but only test samples [Blood Infusion Devices case]. 

22


108. To have drawn further samples from the containers that arrived later in the day would have 

rendered more cartons unsaleable. In order to examine the squid, CLAIMANT had no 

alternative but to defrost them [PO 3 ¶33]. Defrosting the squid entailed making the goods 

totally worthless [Cl. Ex. 10 ¶10]. Thus, Continuing with the examination would have 

substantially deprived CLAIMANT of what it was entitled to expect under the contract, i.e. 

to make a profit from the sale of the squid. 

109. All of the 20 cartons CLAIMANT inspected were labelled ‗illex danubecus 2007‘ [PO 3 ¶32]. 

This means that all of the examined squid were caught in the year 2007. Even though the 

contract also provided for squid from the catch of 2008, in view of all relevant 

circumstances, CLAIMANT was under no obligation to specifically target squid from that 

year for examination. 

110. Squid increase in size as the season progresses. The harvesting season of Danubian squid 

goes from April to September. At the beginning of the season, the squid run between 70 and 

90 g; by the end, they run between 140 and 180 g [St. of D. ¶13]. 

111. The contract was concluded on 29 May 2008 [Re. Ex. 2] and the consignment of squid was 

delivered on 1 July 2008 [R. for A. ¶17]. The contract stipulated that the squid would be from 

the 2007 and 2008 catches [Cl. Ex. 4]. Therefore, any squid in the lot from the 2008 catch 

would have been caught during the first half of the harvesting season and would have tended 

to be rather small. 

112. Squid are sold either sized or unsized. When squid are ‗sized‘, they are classified in boxes 

according to their weight. Unsized squid have not been subjected to a classification and are 

simply the ‗run of the catch‘ [St. of D. ¶12]. 

113. By stipulating that the squid be ‗[a]s per sample already received‘ [Cl. Ex. 4], the contract 

demanded that the consignment of squid have the same proportion of squid within and 

without the 100-150 g bracket as the sample CLAIMANT had been shown. To achieve this 

RESPONDENT had two options. The first option was to deliver sized squid ensuring that 

every carton replicates the proportion of 100-150 g in the sample. The second option was to 

supply unsized squid taking care to balance the number of cartons with heavier (late 2007 

catch) and lighter squid (early 2008 catch) to replicate in the entire lot the proportion of 100- 

150 g squid in the sample. 

114. CLAIMANT did not know which option RESPONDENT had chosen. It was none of 

CLAIMANT‘s business. All that CLAIMANT knew was that RESPONDENT was at liberty 

to choose between two paths that would lead to conforming goods and so imagined that 

23


RESPONDENT would take either. All of this suggests the question: was CLAIMANT‘s 

failure to examine cartons with 2008 squid appropriate for both alternatives? 

115. If RESPONDENT had supplied sized squid, every carton would have presented the same 

proportion of squid within the 100-150 g size bracket. Not being the ‗run of the catch‘, the 

year in which the squid were caught would not have affected the size of the squid in the 

cartons. The 2008 cartons would not have raised doubts in CLAIMANT‘s mind as it would 

have been possible to supply contract-conforming 2008 squid at that time of the year. After 

all, 13% of all the unsized 2008 squid RESPONDENT actually delivered fell within the 

lower end of the 100-150 g spectrum [Cl. Ex. 8]. If the proportion of 100-150 g squid in the 

2007 boxes was right, a reasonable person would have assumed that the ratio in the 2008 

cartons would also be correct. Hence, under this option, CLAIMANT would have gained 

nothing from specifically targeting boxes with squid caught in 2008. 

116. If the squid were unsized, the cartons labelled ‗illex danubecus 2007‘ would have far 

outnumbered those labelled ‗illex danubecus 2008‘. This overrepresentation of 2007 squid 

would have been necessary to offset the proportion of squid without the 100-150 g range 

that would have predominated amongst the smaller 2008 squid. Under these circumstances, 

it would not have come as a surprise that in a sample of 20 cartons none was from the year 

2008. Their frequency would have been expected to be extremely low. An attempt to search 

for a carton labelled ‗illex danubecus 2008‘ would have been like looking for a needle in a 

haystack and could have entailed breaking up a great number of pallets. Apart from 

needlessly rendering more squid unsaleable, this persistence would have resulted in an even 

greater detriment to CLAIMANT, as the squid are always transported in pallets to the docks 

where they are loaded onto the long-liners [Cl. Ex. 10 ¶9]. Consequently, far from gaining, 

under this option, CLAIMANT would have stood to lose a lot from persisting with the 

inspection. 

117. To sum up, CLAIMANT did not see the need to specifically examine cartons labelled ‗illex 

danubecus 2008‘ because it supposed that they would either represent a very small 

proportion of the consignment or have the same content as those cartons with 2007 squid. 

ii. Alternatively, the Mediterranean long-liners were swift in inspecting 

the squid after their reception under Art. 38(3) CISG 

118. If the Tribunal finds that CLAIMANT‘s initial examination fell short of Art. 38(1) CISG, as 

is often the case when goods are resold [CISG - AC Opinion No. 2], the sub-purchasers 

conducted a swift and adequate inspection of the squid according to Art. 38(1)(3) CISG. 

24


119. Since a substantial part of the lot was redispatched by CLAIMANT within the next week of 

their arrival [Cl. Ex. 10 ¶11], CLAIMANT was entitled to defer the inspection of the squid to 

the Mediterranean long-liners under Art. 38(3) CISG. At the time of the conclusion of the 

contract, RESPONDENT was aware of the possibility of redispatch [Cl. Ex. 1]. 

120. As all of Art. 38 CISG is subject to the standard set in its sec. (1) [Honnold ¶252], the question 

of whether the long-liners examined the squid within as short a period as was practicable in 

the circumstances must be addressed. 

121. As soon as the sub-purchasers arrived at the fishing grounds and were ready to fish, the 

squid were inspected and their non-conformity became evident [Cl. Ex. 10 ¶12]. 

CLAIMANT was promptly informed of the lack of conformity on 29 July 2008 and the news 

was broken to RESPONDENT on the very same day [Cl. Ex. 5]. 

122. Given the circumstances, it was entirely reasonable of the long-liners to wait until reaching 

the fishing grounds to perform the inspection. Since once defrosted the squid could only be 

used as fishmeal [R. for A. ¶17], one had to first reach the fishing grounds to have been able 

to put the inspected goods to use [Honnold ¶252]. To have examined the squid beforehand 

would have ensued in an unreasonable wastage of resources. 

B. CLAIMANT notified RESPONDENT of the nature of the lack of 

conformity within a reasonable time after it was discovered pursuant to Art. 

39(1) CISG 

123. CLAIMANT has not lost the right to rely on the non-conformity of the squid as it specified 

the nature of the contractual breach to RESPONDENT within a reasonable time after its 

discovery [Art. 39(1) CISG]. 

124. CLAIMANT was informed by its customers of the lack of conformity on 29 May 2008 [Cl. 

Ex. 5]. On the same day, CLAIMANT sent RESPONDENT an email relaying the news. A 

fortnight later (16 August 2008), RESPONDENT was emailed a report by a certified testing 

agency (TGT Laboratories) in which the nature of the lack of conformity was specified in 

fine detail. 

125. During the brief time that elapsed between the discovery of the lack of conformity and the 

notification of its nature, the goods made the journey from the fishing grounds far out at sea 

back to CLAIMANT‘s cool stores, a testing agency had to be engaged at RESPONDENT‘s 

request [Cl. Ex. 6], an inspection of the goods was performed and a report of the 

examination was drafted. Eighteen days seem an extremely short and reasonable time span 

for all this intense activity. In comparison, it has been held that a ‗rough average‘ of one 

25


month was appropriate for the notice of the lack of conformity [Blood Infusion Devices case; 

Clothes case]. 

C. If the Tribunal is to deem the examination or notification of non- 

conformity to have been insufficient, RESPONDENT would still be liable 

for the lack of conformity under Art. 40 CISG 

126. In any case, whether the examination of the goods and the notification of the lack of 

conformity were timely or not is irrelevant, as RESPONDENT is not entitled to rely on the 

arts. 38 and 39 CISG which impose these duties on CLAIMANT according to art. 40 CISG. 

127. RESPONDENT cannot claim to have ignored the nature of the lack of conformity. The 

goods were non-conforming because a large percentage of the squid RESPONDENT 

delivered were undersized. In asserting that it was unaware of the proportion of undersized 

squid, RESPONDENT would be implying that it treated the order carelessly [ICC No. 5713] 

and so, by extension, it would be conceding that the breach was the result of its own reckless 

behaviour. RESPONDENT never disclosed that it intended to deliver undersized squid to 

CLAIMANT. 

128. As RESPONDENT ought to have known of the facts related to the lack of conformity and 

as CLAIMANT ignored these same facts, the pre-requisites to apply Art. 40 CISG are 

fulfilled. RESPONDENT must thus be deprived of the right to rely on Arts. 38 and 39 

CISG. 

129. CONCLUSION ON ISSUE III: CLAIMANT‘s and the long-liners‘ examination of the 

squid were timely and adequate. The nature of the lack of conformity was relayed to 

RESPONDENT in due time. Nevertheless, had the examination or notification not been 

opportune, CLAIMANT would still be able to rely on the lack of conformity under Art. 40 

CISG. 



UNDER ARTS. 25 AND 49 CISG 

130. RESPONDENT‘s contractual breach was fundamental under Art. 25 CISG [A.]. 

CLAIMANT is entitled to avoid the contract in its entirety according to Art. 51(2) CISG 

[B.]. CLAIMANT complied with the obligations imposed by Art. 82 CISG [C.]. 

CLAIMANT declared the contract avoided according to Art. 26 CISG [D.]. 

RESPONDENT cannot be exempted of responsibility under Art. 80 CISG [E.]. 

A. RESPONDENT’s contractual breach was fundamental under Art. 25 CISG 

26


131. ‗To determine whether a fundamental breach occurred a dual test must be applied. The 

elements of this dual test are: ―substantial detriment‖ and ―unforeseeability‖‘ [Zeller p. 225]. 

132. RESPONDENT did not deliver squid ‗[a]s per sample already received‘ as the contract 

required [Cl. Ex. 4]. This substantially deprived CLAIMANT ‗of what [it was] entitled to 

expect under the contract‘ [Art. 25 CISG] for the following two reasons: first, the squid 

supplied were not of the required quality [i.]; and second, the squid did not serve for its 

ordinary purpose[ii.]. Furthermore, it was likely for RESPONDENT to foresee that 

providing squid below 100-150 g would cause a substantial detriment to CLAIMANT [iii.]. 

i. The squid supplied were not of the required quality 

133. The ‗detriment‘ referred to in Art. 25 CISG is primarily measured by the ‗importance of the 

interest which the contract [...] create[s] for the promise‘ [Schlechtriem 1998 p. 177]. 

134. CLAIMANT had not in the past purchased squid from Danubia because its quality did not 

reach the desired level. Due to the soaring prices of squid from the Oceanian Islands, 

CLAIMANT was forced to seek alternatives. Consequently, CLAIMANT contacted 

providers of Danubian squid. CLAIMANT‘s interest in buying squid from RESPONDENT 

was exclusively based on the quality and price offered. CLAIMANT expressly conveyed to 

RESPONDENT that the 100-150 g size bracket was of particular importance [Cl. Ex. 2]. 

Since RESPONDENT failed to deliver squid within the requested weight range, 

CLAIMANT‘s interest in the fulfilment of the contract ceased to exist as a consequence of 

the breach of the contract [Schlechtriem p. 59; Shoes case I]. 

ii. The squid did not serve their ordinary purpose 

135. CLAIMANT‘s expectations were that the squid bought from RESPONDENT be in the 

range of 100-150 g and that their customers be satisfied with it. None of these expectations 

were met: a large percentage of the delivered squid had not the requisite weight and thus 

CLAIMANT‘s customers were far from pleased. The sold squid were returned because they 

did not serve for their ordinary purpose; the squid were too small to function properly as 

bait, moreover this ended in CLAIMANT having to reimburse its customers [Delchi Carrier, v. 

Rotorex]. 

136. This situation provoked great harm to CLAIMANT‘s business. CLAIMANT‘s customers 

endured all sorts of losses, both monetary and non-monetary, due to CLAIMANT‘s failure 

to provide adequate squid. Furthermore, other fishing vessels from Mediterraneo did not 

want to take the risk of buying squid from CLAIMANT due to its tarnished reputation [Sport 

Clothing Case]. 

27


137. It is also necessary for the non-breaching party to behave in such a manner that would not 

affect the breaching party‘s performance throughout the execution of the contract, i.e. 

providing crucial and sufficient information so that the intentions of the parties are 

understood [Andrew Babiak p. 122]. Claimant has diligently complied with its obligation by 

informing that the squid would be used as bait and that the size needed was 100-150 g [Cl. 

Ex. 1, 2] [PTA Powder Case]. 

iii. It was likely for the RESPONDENT to foresee that providing squid 

below 100-150 g would cause a substantial detriment to 

CLAIMANT 

138. Finally, a reasonable person of the same kind in the same circumstances as RESPONDENT 

[Art. 25 CISG] would have been able to foresee that a delivery of squid not fulfilling the 

required characteristics would not fit for the purpose expressly and impliedly made known to 

RESPONDENT. A reasonable person with RESPONDENT‘s vast experience in 

Mediterraneo and knowledge of the fishing industry would have known that the size of the 

squid would be important to the Mediterranean long-liners [Will p. 217]. 

139. Therefore, since it is patent that there has been a fundamental breach, CLAIMANT was 

entitled to avoid the contract according to Art. 49 CISG. 

B. CLAIMANT is entitled to avoid the contract in its entirety according to 

Art. 51(2) CISG 

140. Avoidance of the entire contract may ‗only‘ be based on fundamental breach [Honnold p.345]. 

A fundamental breach is a condition for the immediate avoidance of the contract in the case 

of non-fulfilment of an obligation [Enderlein / Maskow, p. 111]. As demonstrated above, 

RESPONDENT‘s failure to deliver conforming goods amounted to a fundamental breach, 

depriving CLAIMANT of the main benefit of the contract ‗as a whole‘; consequently, 

CLAIMANT was entitled to avoid the contract according to Art. 51(2) CISG. 

C. CLAIMANT complied with the obligations imposed by Art. 82 CISG 

141. Article 82 CISG deals with the effect of an aggrieved buyer‘s inability to make restitution of 

goods substantially in the condition in which they were delivered. CLAIMANT preserves its 

right to declare the contract avoided, as long as the reason for the impossibility or inability to 

return the goods in substantially the same condition are not due to CLAIMANT‘S negligence 

or deliberate actions [Babiak p. 136]. CLAIMANT has complied with the obligations set by 

the mentioned article, in as far as CLAIMANT could have given back what had been 

‗supplied under the contract‘ in the same condition it was delivered. 

28


142. On 16 August 2008, CLAIMANT contacted RESPONDENT in order to receive 

instructions as to the disposition of the squid. CLAIMANT specified that they would be able 

to store the non-conforming goods for a limited period of time because CLAIMANT was to 

receive new stock by the end of November and afterwards an additional warehouse would be 

needed at RESPONDENT‘s expense [Cl. Ex. 7]. 

143. CLAIMANT acted in accordance with what is expected of a good merchant. Merchants 

ordinarily do not think in terms of avoiding a contract; they think about what they may do with 

particular goods [Honnold p. 34]. The only impediment to returning the goods was due to 

RESPONDENT‘s rejection in taking back the squid, denying all responsibility [Cl. Ex. 9]. 

144. Nevertheless, CLAIMANT retained the right to declare the contract avoided because the 

conditions in Art. 82(2)(a) were met [Spanish Paprika case] since the impossibility to return the 

goods was not due ‗to his act or omission‘ [Tallon], but only to the RESPONDENT‘s refusal 

to accept them at the time CLAIMANT offered. 

D. CLAIMANT declared the contract avoided according to Art. 26 CISG 

145. On 16 August 2008, CLAIMANT notified RESPONDENT that the squid were not in 

conformity to the contract, enclosing the TGT Laboratories report, which showed that a 

great proportion of the squid did not fall within the 100-150 g range [Cl. Ex. 7]. With this 

letter CLAIMANT effectively made notice to RESPONDENT that the contract was 

avoided, urging RESPONDENT to instruct them what actions to take regarding the goods. 

In a similar case, one court found that the buyer effectively gave notice by declaring that it 

could not use the defective goods and that it placed them at the disposal of the seller 

[UNCITRAL Digest, Art. 26]. 

146. The party that declares the contract avoided has to make notice that there has been a 

fundamental breach or the expiry of a Nachfrist without performance [Enderlein/Maskow, p. 

117]. There are no other specifics or examples that should include the notice, however, it is 

recommended, that the notice includes the reason for the declaration of the breach and that 

the declaration be made in writing [Andrew Babiak, p.135]. CLAIMANT communicated to 

RESPONDENT the motive of the breach, which was that the delivered squid were not 

within the range of 100-150 g and made such declaration made in writing [Cl. Ex. 7]. 

E. RESPONDENT cannot be exempted of responsibility under Art. 80 CISG 

147. RESPONDENT is neither allowed to claim exemption nor any liability reduction under Art. 

80 CISG. The non-conformity of the squid cannot be attributed to CLAIMANT‘s acts or 

omissions, considering that CLAIMAINT did not cause RESPONDENT‘S failure to 

perform by its own conduct [Acrylic blankets case]. In the first place, RESPONDENT had the 

29


sole obligation to deliver squid as required by the contract (i.e. as per sample and in the 100- 

150 g range). There were no acts or omissions from CLAIMANT that could have caused 

RESPONDENT‘s failure to perform [UNCITRAL Digest Art. 80]. Secondly, CLAIMANT 

did not contribute to RESPONDENT‘s failure to deliver the non-conforming squid. 

CLAIMANT‘S specifications regarding the quality of the squid were clear and precise, in 

such a manner that said specifications could not in any way have led to RESPONDENT‘S 

failure. Given this situation, RESPONDENT‘s breach of the contract is not exempted by 

Art. 80 CISG. 

148. CONCLUSION ON ISSUE IV: RESPONDENT‘s contractual breach was fundamental 

enabling CLAIMANT to avoid the contract under Arts. 49 and 51(2) CISG. CLAIMANT 

preserved the squid in accordance with Art. 82 CISG and has thus not lost the right to 

declare the contract avoided. CLAIMANT‘s notice of avoidance was CISG compliant. 

CLAIMANT is entitled to rely on RESPONDENT's failure to perform, because said failure 

was not caused by an act or omission of CLAIMANT‘s regarding Art. 80. 


ENTITLED TO DAMAGES UNDER ART. 45 CISG 

149. In accordance with Art. 77 CISG, CLAIMANT must take the steps that a reasonable 

creditor acting in good faith would have taken under the same circumstances [UNCITRAL 

Digest] so as to mitigate the losses caused by the failure of RESPONDENT to comply with 

the contract. In compliance with this principle CLAIMANT took all measures that were 

reasonable to mitigate the losses [A.]. In any case, the burden of the proof of lack of 

mitigation lies on RESPONDENT, who must provide detailed facts and supporting 

evidence [B.]. 

A. CLAIMANT took all measures that were reasonable to mitigate the losses 

150. Article 77 CISG requires that a party relying on breach of contract take measures as are 

reasonable in the circumstances to mitigate the loss. This criterion of reasonableness has been 

said to be that of a prudent person in the position of the party claiming damages 

[Huber/Mullis p. 290], or, in other words the bona fides (good faith) conduct that could have 

been expected from a reasonable person in the position of the claimant under the same 

circumstances [OG 06/02/96]. 

151. This raises the question: What kind of business person is CLAIMANT? CLAIMANT is a 

company whose line of business includes the sale of supplies to fishing fleets operating in 

Mediterraneo, including the supply of bait to the long-line fisheries and the production of 

pelagic, wet salted and dry fish for human consumption [R. for A. ¶2]. In regard to the bait, 

30


the Mediterraneo long-liners use both mackerel and squid [R. for A. ¶2]. The sale of squid for 

human consumption (as seafood) is not part of CLAIMANT‘s line of business. 

152. We must recall that the major portion of squid delivered by RESPONDENT was unfit for 

bait and the lesser portion that resulted adequate for this purpose could not however be sold 

even at a discount price. The long-liners had in fact outweighed the sales price to the risk of 

purchasing undersized bait that would give poor results and that in the long run, despite a 

discount price, could result more costly. 

153. In this situation, a reasonable person like CLAIMANT to mitigate the losses had only two 

options, conserve the squid and await RESPONDENT‘s instructions and, bearing in mind 

that the entire stock was suitable for human consumption [Cl. Ex. 9], it could attempt to sell 

some of the lot as human foodstuff. 

154. In this respect, upon receiving TGT‘s Report [Cl. Ex. 8], in an act of good faith 

CLAIMANT immediately informed RESPONDENT by email that it would store the squid 

delivered in its warehouse until November, and that at that point it would have to rent out 

additional warehouse space at its expense while awaiting instructions in regard to the 

disposition of the squid. CLAIMANT also mentioned that it would seek to sell the squid on 

RESPONDENT‘s account [Cl. Ex. 8]. 

155. However, CLAIMANT did not sell squid as seafood in its line of business as it lacked a local 

or international market in which to place the delivered goods; the local market of squid for 

human consumption was already saturated [R. for A. ¶20], and demand was small, especially 

because restaurants are accustomed to buying squid by the kilo and not by the tonne [Cl. Ex. 

10 ¶15], thus placing 20 tonnes of squid in the seafood market for someone like 

CLAIMANT was utterly unachievable. Consequently, despite CLAIMANT‘s efforts it did 

not achieve to sell any of the squid in the local market [R. for A. ¶20; Cl. Ex. 10 ¶15]. 

156. In spite of this, CLAIMANT did not rest inactive, exceeding the standards of its duty to 

mitigate losses, it did what was at the point the only reasonable alternative for someone in its 

position, it turned to a third party with proper contacts outside of Mediterraneo (Reliable 

Trading House) and requested that they sell as much of the squid as they possibly could in any 

foreign market [Cl. Ex. 10 ¶15], through this alternative it succeeded in selling 20 tonnes of 

squid, the equivalent to 10% of the lot delivered [Cl. Ex. 10 ¶15; St. of D. ¶18]. 

157. Though the amount sold is but a small portion of the entire delivery, for the claim of 

damages under Art. 45(1)(b) CISG to be awarded it is only necessary that the buyer 

undertakes all reasonable measures, even if these measures have been 

unsuccessful[Huber¶12]. 

31


158. In any case, the ultimate destruction of 90% of the squid lot, was not a result of inadequate 

measures taken by CLAIMANT, but rather from RESPONDENTS reluctance to recognise 

its breach of contract. CLAIMANT properly stored and conserved the squid at 

RESPONDENT‘s disposition, but the latter preferred to remain reticent, and with the 

understanding that ‗land frozen squid‘ stays fit for human consumption only for a limited 

period of time, and that as time goes by it becomes harder to sell [PO 3 ¶29], it allowed the 

squid to become unfit for the sole purpose the undersized squid could be used, i.e. human 

consumption [PO 3 ¶30], and thus through its inaction caused its ultimate destruction. 

159. CLAIMANT, by properly storing the squid in its warehouses, additionally renting out extra 

warehouse space while awaiting RESPONDENT‘s instructions [ICC N° 7585] and 

furthermore selling 10% of the squid lot through Reliable Trading House [Shoes case II], had in 

fact, done all that was reasonably at its reach to mitigate losses. 

B. In any case, the burden of the proof of lack of mitigation lies on 

RESPONDENT, who must provide detailed facts and supporting 

evidence 

160. The courts have repeatedly established that the burden of the proof of lack of mitigation lies 

on the party that is liable for damages and that consequently invokes the reduction of the 

damages under Art. 77 CISG. Furthermore the claim of breach of duty is an exception that 

leads to the exoneration [or reduction] of the damages owed by the liable party, with this 

reasoning it has been submitted that the seller must put forward detailed facts and supporting 

evidence showing why the buyer has breached its duty to mitigate damages, the possibilities 

of alternative conduct and which part of the damages would have been prevented by this 

alternative conduct [Huber¶16; OG 06/02/96, OLG Hamm 22/09/92, OLG Hamburg 

28/02/97]. 

161. Consequently, even though it has been proved that CLAIMANT took all possible and 

reasonable measures to mitigate losses, the burden of proof of lack of mitigation lies on 

RESPONDENT who must forward detailed facts and supporting evidence, the sole claim of the 

breach of duty to mitigate should otherwise be revoked. 

162. CONCLUSION ON ISSUE V: CLAIMANT took all measures that where reasonable and 

at its reach to mitigate losses and is thus entitled to damages under art. 45 (1) lit. (b) CISG. In 

any case, the burden of the proof of the lack of mitigation lies on RESPONDENT who 

must forward detailed facts and supporting evidence that the duty to mitigate was in fact 

infringed. 

ARGUMENT ON THE MERITS OF THE COUNTERCLAIM 

32


VI. CLAIMANT IS NOT LIABLE FOR DAMAGES UNDER A CONFIDENTIALITY DUTY 

163. RESPONDENT argues that CLAIMANT is liable for damages ‗[r]esulting from its breach 

of the confidentiality of the proceedings‘ [S. of D. ¶24]. CLAIMANT will prove that it has 

not violated the CAM Rules on the basis that: there was no confidentiality agreement 

between the parties [A.] and, alternatively, if the Tribunal considers that there was a 

confidentiality agreement between the parties, CLAIMANT is not liable because it made the 

proceedings public to protect its own rights [B.]. 

A. There was no confidentiality agreement between the parties 

164. CLAIMANT and RESPONDENT did not agreed on the confidentiality of the arbitral 

proceedings for two core reasons: substantive provisions of the amended CAM Rules 2010 

do not apply when they affect the parties‘ substantive rights [i.] and, neither was there an 

implicit confidentiality agreement when the parties agreed to submit to arbitration [ii.]. 

i. Substantive provisions of the amended CAM Rules 2010 do not 

apply when they affect the parties’ rights 

165. As to 29 May 2008, when the parties incorporated the arbitration clause to their contract [Cl. 

Ex. 4; Resp. Ex.2], the CAM Rules enacted in 2004 were in force. 

166. By the commencement of the proceedings, the new CAM Rules, enacted on 1 January 2010, 

were in force, and therefore, said rules are applicable to the case unless otherwise agreed by 

the parties [Art. 39 CAM Rules]. This provision is in consonance with the principle that the 

application of procedural rules is an exception to the presumption against retroactivity. Said 

procedural rules are therefore ordinarily intended to have an immediate effect [Dinner]. 

167. However, a fundamental modification of the Rules concerning confidentiality was enacted 

providing that ‗[t]he parties shall keep the proceedings and the arbitral award confidential‘ 

[Art. 8 CAM Rules; Coppo p. 287]. In any case, confidentiality is not a procedural feature; it is 

in fact, deemed to be in its very nature, a substantial obligation imposed on the parties. The 

confidentiality duty does not affect the proceedings themselves, it affects substantial rights of 

the parties, which they did not have in mind when incorporating the CAM Rules. 

168. Accordingly, even if said body of procedural rules were to be applicable to the case, a 

substantive provision, affecting the rights and interfering with a substantive right or liability 

of the parties should not be applicable [Bunge v. Kruse; Cars & Cars Pte v. Volkswagen; Black & 

Veatch v. Jurong]. 

ii. Neither was there an implicit confidentiality agreement when the 

parties agreed to submit to arbitration 

33


169. It is well-known that the principle of confidentiality related to the parties in arbitration is not 

universally accepted [Fouchard/Gaillard/Goldman ¶384]. Moreover, it is not accepted, as a 

matter of principle, that confidentiality is inherent to international commercial arbitration 

[ICC No. 11961]. 

170. Although arbitration is often a chosen ADR method for its confidential nature, the nature of 

this relation only imposes the duty of confidentiality on arbitrators and administrative bodies. 

In this sense, the 2004 CAM Rules refer to the confidential nature of arbitration; concerning 

solely the work of the arbitrators and the CAM itself [Art 8 CAM Rules 2004]. 

171. On the other hand, even if some jurisdictions stand for an implicit duty of confidentiality in 

arbitration (albeit not an absolute), e.g. England, France, Singapore; other jurisdictions 

overtly deny this approach, such as Australia, the United States and Sweden. In any event, 

the MAL, i.e. Danubia‘s national law, does not address the subject of confidentiality, neither 

to impose general duties of confidentiality nor to negate or override them, leaving to the 

parties the authority to settle this matter in accordance with their will [Born p.2254]. 

172. Likewise, when there is not an express contractual agreement concerning confidentiality, the 

existence of the arbitration and its content are not confidential. Esso v. Plowman, a landmark 

decision, ruled that the fact that a party enters into an arbitration agreement, does not imply 

that all documents produced and information disclosed in the arbitration must be kept 

strictly confidential. In addition, when the parties do not provide for an obligation of 

confidentiality in the agreement itself, it should be the responsibility of the arbitral 

institutions, with some limitations, as a part of arbitration, to make stipulations to that effect 

in their rules [Paulsson]. 

173. Consequently, an obligation to confidentiality must arise from an express contractual 

provision [BulBank v. AI]. Such provision was neither established by the parties in the 

arbitration agreement nor by the rules thereby incorporated. For that reason, no 

confidentiality duty is enforceable between the parties. 

B. Alternatively, if the Tribunal considers that there was a confidentiality 

agreement between the parties, CLAIMANT made the proceedings public 

to protect its own rights 

174. Even in the case that this Tribunal finds that there was a duty of confidentiality, this principle 

is by no means absolute [Navigator Investment v. Acclaim Insurance]. According to the CAM 

Rules, in the event of a breach of the confidentially duty, said duty is not enforceable when it 

is necessary to protect one‘s right [Art. 8 CAM Rules]. Moreover, disclosures are acceptable 

when they are reasonably necessary for the protection of a party legitimate interests [Emmott 

34


v. Michael Wilson]. In the present case, RESPONDENT‘s breach of the contract caused 

CLAIMANT to lose its impeccable reputation among its long-liners customers. At least three 

of them shifted to other suppliers [Cl. Ex. 1 ¶18 ]. This fact was remarked by CLAIMANT‘s 

CEO in an interview published on 24 May 2010 [Resp. Ex. 1], expressing the reasons for 

which they were not able to satisfy its customers, in order to protect future business with 

these and other long-liners in Mediterraneo and abroad. Hence, the disclosure of information 

falls under the scope of protection of legitimate interests and rights, considering that 

RESPONDENT‘s failure to respect the contract caused a deficient performance of 

CLAIMANT in its obligations as supplier of squid, causing a direct impact on CLAIMANT‘s 

reputation among its customers and the potential business attached thereto. It has therefore 

been proved, that CALIMANT‘s CEO statements were directed to protect CLAIMANT‘s 

financial interests and recover its loyal customers, i.e. the protection of a legitimate right, a 

universally accepted legitimate exception to the confidentiality duty. 

175. CONLUSION ON ISSUE VI: The parties did not owe to each other a duty of 

confidentiality. This duty was neither implicitly nor explicitly agreed on. However, if the 

Tribunal finds that there was a duty of confidentiality; CLAIMANT‘s disclosure was 

legitimate since it was made to protect its rights and interests. 

REQUEST FOR RELIEF 

CLAIMANT respectfully requests the Arbitral Tribunal to find that: 

I. It has jurisdiction to understand in the present dispute as the arbitration agreement was 

duly followed; 

II. RESPONDENT infringed Art. 35(1) CISG by delivering undersized squid; 

III. RESPONDENT, alternatively, failed to deliver saleable squid fit for use as bait in breach 

of Art. 35(2)(a)(b) CISG; 

IV. RESPONDENT failed to deliver sample compliant squid as mandated by Art. 35(2)(c) 

CISG; 

V. RESPONDENT‘S contractual breach is fundamental under Art. 25 CISG; 

VI. CLAIMANT correctly avoided the contract according to Arts. 49, 51(2), 26 CISG; 

VII. CLAIMANT dutifully mitigated losses pursuant to Art.77 CISG ; 

VIII. CLAIMANT is thus entitled to recover the purchase price and damages under Art. 74 

CISG; 

IX. CLAIMANT is not liable for damages for the alleged breach of a duty of confidentiality. 

35

MEMORANDUM FOR CLAIMANT

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?