MEMORANDUM FOR CLAIMANT

On Behalf of 

TENTH ANNUAL WILLEM C. VIS 

INTERNATIONAL COMMERCIAL ARBITRATION MOOT 

MEMORANDUM FOR CLAIMANT 

Rheinische Friedrich-Wilhelms-Universität Bonn 

Equafilm Co. 

214 Commercial Ave. 

Oceanside 

Equatoriana 

CLAIMANT 

Counsel 

Nadine Bläser • Dirk Langner • Sabrina Mlynek 

Mathias Neumann • Katrin Ommer • Dimce Sikoski 

Against 

Medipack S.A. 

395 Industrial Place 

Capital City 

Mediterraneo 

RESPONDENT

Table of Contents 


List of Abbreviations VI 

Index of Authorities VIII 

Cases XVII 

Statement of Facts 1 

Arguments 3 

I. The challenge to Dr. Arbitrator is to be rejected 3 

A. Dr. Arbitrator participates in the decision on his challenge 3 

B. The challenge is governed by §§ 15, 18 DIS Rules 3 

C. There are no reasons to doubt Dr. Arbitrator’s impartiality or his 

independence 

a. Dr. Arbitrator’s expectation to become a partner of a law firm that has 

represented CLAIMANT is not sufficient to raise doubts as to his 

impartiality or independence 

b. Dr. Arbitrator has no financial interest in the outcome of the arbitration 6 

c. Dr. Arbitrator’ disclosure underlines his impartiality and independence 6 

3 

3 

II


II. The challenge to the jurisdiction of the Tribunal is to 

be rejected 

A. The Tribunal has authority to decide on its own jurisdiction pursuant to 

Art. 16(1) Model Law 

B. CLAIMANT and RESPONDENT concluded a valid arbitration 

agreement 

a. The parties agreed to refer any dispute arising out of the contract to 

arbitration 

b. This arbitration agreement meets the writing requirement according to Art. 

7(2) Model Law 

C. The parties chose validly the “German Institution of Arbitration” 9 

a. CLAIMANT’s reference to an erroneously designated institution leaves 

the validity of the arbitration clause unaffected 

b. The parties intended to choose the “German Institution of Arbitration” 10 

c. CLAIMANT can rely on the doctrine of ‘effet utile’ 11 

d. Courts incline to give effect even to highly ambiguous arbitration clauses 12 

e. The reference to the „German Arbitration Association“ belongs to the 

category „erroneously designated institutions“ 

D. CLAIMANT and RESPONDENT concluded a valid arbitration 

agreement, irrespective of the validity of the commercial contract 

a. According to the doctrine of separability, the arbitration agreement is not 

affected by the alleged invalidity of the commercial contract 

b. The application of the doctrine of separability is not excluded since the 

commercial contract is not void ab initio 

c. The arbitration agreement itself does not suffer from any defects 15 

7 

7 

8 

8 

8 

10 

13 

13 

13 

14 

III


III. The CISG is the law applicable to the contract and 

its formation 

A. The parties have chosen the commercial law of Equatoriana 16 

B. The CISG is the pertinent part of the commercial law of Equatoriana for 

the contract at issue 

C. Reference to the “commercial law of Equatoriana” does not amount to an 

implied exclusion of the CISG 

IV. A contract of sale was concluded between 

CLAIMANT and RESPONDENT 

A. A contract containing all elements of Art. 14 CISG has been concluded 

during the telephone conversation between Mr. Storck and Mr. Black 

a. Mr. Storck and Mr. Black concluded a contract during their conversation 19 

b. The agreement contained all elements of Art. 14 CISG 20 

B. Irrespective of the fact whether there was an agreement on the discount, a 

contract would still have been validly concluded even if the parties had not 

fixed the discount 

a. Since CLAIMANT and RESPONDENT did not conclude the contract by 

virtue of offer and acceptance, the requirements of Art. 14 CISG were not 

mandatory for the formation of the contract at issue 

b. An agreement on the discount was not necessary in order to conclude a 

valid contract 

c. The domestic law of Equatoriana has no impact on the validity of the 

contract 

15 

16 

16 

19 

19 

20 

21 

21 

23 

IV


V. The contract was concluded including a 4% discount 23 

A. The agreement the parties reached during their telephone conversation 

can only be interpreted as including a discount of 4% from CLAIMANT's 

list price 

a. The agreement has to be interpreted according to Article 8 CISG 24 

b. RESPONDENT could not have been unaware of CLAIMANT's intent to 

grant only a 4% discount 

c. Neither Mr. Storck nor any other reasonable person could have been aware 

of Mr. Black's intent to contract with a discount of 8% from the list price 

B. If the Tribunal finds that the parties' agreement did not fix the price, a 

contract has nevertheless been concluded including a 4% discount 

VI. RESPONDENT was in breach of its obligations under 

the contract 

A. RESPONDENT’s fax of 2 May 2001 was an anticipatory breach of 

contract 

B. RESPONDENT’s fax was an anticipatory repudiation of the contract 

concluded on 3 April 2001 

C. RESPONDENT was not entitled to refuse performance 28 

24 

24 

25 

26 

27 

27 

27 

V


VII. EQUAFILM is entitled to claim damages for lost 

profit in the amount of $ 575,477.98 

A. RESPONDENT’s breach of contract entitles CLAIMANT to claim 

damages 

B. CLAIMANT suffered lost volume damages in the amount of $ 575,477.98 

as a consequence of RESPONDENT’s breach 

a. CLAIMANT is entitled to recover its loss of profit 29 

b. CLAIMANT was in a lost volume situation 30 

c. CLAIMANT’s loss of profit was a consequence of RESPONDENT’s 

breach 

d. CLAIMANT lost profit in the amount of $ 575,477.98 31 

C. The damages were foreseeable to RESPONDENT 31 

D. CLAIMANT did not fail to take measures to mitigate its loss according to 

Art. 77 CISG 

VIII. CLAIMANT is entitled to interest on the damages 32 

A. Art. 78 CISG grants the right to claim interest on damages 32 

B. CLAIMANT is entitled to interest from the date payment was due 33 

Request for relief 34 

28 

29 

29 

30 

32 

VI


List of Abbreviations 

§ / §§ Section / Sections 

1 st Cir. United States Court of Appeal First Circuit 

2d Cir. United States Court of Appeal Second Circuit 

3d Cir. United States Court of Appeal Third Circuit 

7 th Cir. United States Court of Appeal Seventh Circuit 

9 th Cir. United States Court of Appeal Ninth Circuit 

11 th Cir. United States Court of Appeal Eleventh Circuit 

Arb. Int. Arbitration International (Periodical, England) 

Art. / Artt. article / articles 

BG Bezirksgericht (District Court) 

BGH Bundesgerichtshof (supreme court, Germany) 

Ch Switzerland 

CISG United Nations Convention on Contracts for the International Sale 

of Goods of 11 April 1980 

cl. clause 

Co. Company 

Corp. Corporation 

DIS Rules Deutsche Institution für Schiedsgerichtbarkeit e.V. Arbitration 

Rules 

e.g. exempli gratia (for example) 

ed. edition 

et al Et alii / et alia (and other persons) 

F.2d Federal Reporter, Second Series 

F.3d Federal Reporter, Third Series 

F.Supp. Federal Supplement 

Fr France 

FS Festschrift 

GB Great Britain 

HG Handelsgericht (= Commercial Court) 

i.e. id est (that is) 

ICC International Chamber of Commerce 

VII


Inc. Incorporated 

IPrax Praxis des Internationalen Privat- und Verfahrensrechts 

J. Int’l Arb. Journal of International Arbitration 

J. L. & Comm Journal of Law and Commerce 

J.D.I. Journal du droit international 

J. of Int. Com. Law and 

Arb. 

Journal of International Commercial Law and Arbitration 

LG Landgericht (trial court, Germany) 

Lloyd´s Rep. Lloyd´s Reporter 

Ltd. Limited 

Model Law UNCITRAL Model Law on International Commercial Arbitration 

New York Convention United Nations Convention on the Recognition and Enforcement 

of Foreign Arbitral Awards, 1985 

No. number 

OGH Oberster Gerichtshof (Austria) 

OLG Oberlandesgericht (Regional Court of Appeal, Germany) 

p. / pp. page / pages 

Para. / paras. paragraph / paragraphs 

Q.B. High Court of Justice (Queen´s Bench, England) 

RabelsZ Rabels Zeitschrift für ausländisches und internationales 

Privatrecht (Periodical, Germany) 

Rev.Arb. Revue de l´arbitrage 

RIW Recht der Internationalen Wirtschaft 

S.D.N.Y. United States District Court, Southern District of New York 

U.S. United States 

UK United Kingdom 

ULR Uniform Law Review 

v. versus (against) 

Y.B. Yearbook Commercial Arbitration 

VIII

Index of Authorities 


Adami, Francesco Les contrats “open price” dans la Convention des 

Nations Unies sur les Contrats de vente internationale de 

Marchandises 

Revue de droit des affaires internationales 1989, 

cited as: Adami, Revue de droit des affaires 

internationales 1989, 

Amato, Paul U.N. Convention on Contracts for the International Sale 

of Goods -- The Open Price Term and Uniform 

Application: 

An Early Interpretation by the Hungarian Courts 

13 Journal of Law and Commerce (1993) 

cited as: Amato, J. L. & Comm 1993, 

Audit, Bernard La vente internationale de Marchandises, Convention des 

Nations-Unies du 11. Avril 1980 

Paris 1990 

cited as: Audit 

Barker, Steward 

Abercrombie / 

Davis, Mark David 

Bernstein, Ronald / 

Tackaberry, John / 

Marriott, Arthur L. / 

Wood, Derek 

Bianca, Cesare Massimo / 

Bonell, Michael Joachim 

The UNCITRAL Arbitration Rules in Practise • The 

experience of the Iran-United States Tribunal 

Deventer/Bosten 1992 

cited as: Barker/Davis 

Handbook of arbitration practise, 3 rd ed. 

London 1998 

cited as: Bernstein et al 

Commentary on the International Sales Law, 

The 1980 Vienna Sales Convention 

Milano 1987 

cited as: Bianca/Bonell/author 

IX

Bishop, Doak / 

Reed, Lucy 


Practical Guide for Interviewing, Selecting and 

Challenging Party-Appointed Arbitrators in International 

Commercial Arbitration 

Arbitration International Volume 14, No. 4 (1998) 

cited as: Bishop/Reed, Arb.Int. 1998, 

Böckstiegel, Karl-Heiz DIS-Materialien 

The New German Arbitration Act 1998, 

Preface and Introduction 

cited as: Böckstiegel, DIS-Mat III, 1998 

Boisséson, Matthieu de 

Bonell, Michael Joachim / 

Liguori, Fabio 

Le droit français de l’arbitrage interne et international, 

GLN-éditions 

Paris 1990 

cited as: Boisséson 

The U.N. Convention on the International Sale of Goods: 

a Critical Analyses of Current International Case Law 

Uniform Law Review 1997 

cited as: Bonell/Liguori, ULR 1997, 

Born, Gary B. International Commercial Arbitration in the United 

States, Commentary and Materials, 2 nd ed. 

The Hague 2001 

cited as: Born 

Born, Gary B. International Commercial Arbitration in the United 

States, Commentary and Materials, 1 st ed. 

Deventer, Boston 1994 

cited as: Born (1 st ed.) 

Broches, Aron Commentary on the UNCITRAL Model Law on 

International Commercial Arbitration 

The Hague, Deventer, Boston 1990 

cited as: Broches 

Bucher, Eugen Wiener Kaufrecht 

Bern 1991 

cited as: Bucher 

X

Derains, Yves / 

Schwartz, Eric A. 

Drago, Thomas J. / 

Zoccolillo, Alan F. 

Enderlein, Fritz / 

Maskow, Dietrich 

Fouchard, Philippe / 

Gaillard, Emmanuel / 

Goldmann, Berthold 


A guide to the new ICC rules of arbitration, 


cited as: Derains/Schwartz 

Be Explicit: Drafting Choice of Law Clauses in 

International Sale of Goods Contracts 

The Metropolitan Corporate Counsel (May 2002) 

http://www.cisg.law.pace.edu/cisg/biblio/zoccolillo1.htm 

l 

cited as: Drago/Zoccolillo, The Metropolitan Corporate 

Counsel 2002, 

International Sales Law 

New York, London, Rome 1992 

cited as: Enderlein/Maskow 

Traité de l’arbitrage commercial international, 

Litec libraire de la Cour de cassation 

Paris 1996 

cited as: Fouchard et al 

Granzow, Joachim H. Das UNCITRAL Model Gesetz über die internationale 

Handelsgerichtsbarkeit von 1985 

Munich 1988 

cited as: Granzow 

Hof van, Joachim J. Commentray on the UNCITRAL Arbitration Rules 

The Application by the Iran-U.S. Claims Tribunal 

Deventer, Boston 1991 

cited as: van Hof 

Holtzmann, Howard M. / 

Neuhaus, Joseph E. 

A guide to the UNCITRAL Model Law on International 

Commercial 

Commentary 

Arbitration: Legislative History and 

Deventer 1991 

cited as: Holtzmann/Neuhaus 

XI


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

United Nations Convention, 3 rd ed. 


cited as: Honnold et al 

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

United Nations Convention, 1 st ed. 

Deventer et al 1982 

cited as: Honnold et al (1 st ed.) 

Honsell, Heinrich Kommentar zum UN-Kaufrecht 

Berlin, Heidelberg, New York 1997 

cited as: Honsell 

Houtte, Vera van Consent to Arbitration Through Agreement to Printed 

Contracts: The Continental Experience 

Arbitration International Volume 16, No. 1 (2000) 

cited as: Houtte, Arb.Int. 2000, 

Koch, Robert The Concept of Fundamental Breach of Contract under 

the United Nations Convention on Contracts for the 

International Sale of Goods 

Review of the Convention on Contracts for the 

International Sale of Goods (CISG) 1998, 

 

cited as: Koch 

Lookofsky, Joseph 

Lookofsky, Joseph 

Understanding the CISG in Europe: A Compact Guide to 

the 1980 United Nations Convention on Contracts for the 

International Sale of Goods 

The Hague, London, Boston 1995 

cited as: Lookofsky, (CISG in Europe) 

Understanding the CISG in the USA: A Compact Guide 

to the 1980 United Nations Convention on Contracts for 

the International Sale of Goods 


cited as: Lookofsky, (CISG in USA) 

XII


Ludwig, Katharina S. Der Vertragsschluss nach UN-Kaufrecht im Spannungsverhältnis 

von Common Law und Civil Law 

Frankfurt am Main Berlin New York 1994 

cited as: Ludwig 

Magnus, Ulrich Unbestimmter Preis und UN-Kaufrecht 

IPRax 1996 

cited as: Magnus, IPRax1996, 

Neumayer, Karl H. Der Vertragsschluss nach dem Recht des internationalen 

Warenkaufs (Wiener Übereinkommen von 1980) – 

Anwendungsprobleme 

Festschrift für Werner Lorenz zum 70. Geburtstag, 

Tübingen 1991 

cited as: Neumayer, Lorenz-FS 1991, 

Neumayer, Karl Heinz / 

Ming, Catherine 

Convention de Vienne sur les contrats de vente 

internationale de marchandises, Commentaire 

Lausanne 1993 

cited as: Neumayer/Ming 

Nicholas, Barry Certainty of Price 

Comparative and Private International Law, Essays in 

Honor of John Henry Merryman on his Seventieth 

Birthday 

Berlin 1990 

cited as: Nicholas 

Pellonpää, Matti / 

Caron, David D. 

Rabel, Ernst 

The UNCITRAL arbitration rules as interpreted and 

applied 

Helsinki 1994 

cited as: Pellonpää/Caron 

Das Recht des Warenkaufs 

Berlin Tübingen 1958 

cited as: Rabel 

XIII

Redfern, Alan / 

Hunter, Martin 

Roth, Wulf-Henning 

Kunz, Christian 


Law and Practice of International Commercial 

Arbitration, 3 rd ed. 

London 1999 

cited as: Redfern/Hunter 

Zur Bestimmbarkeit des Preises im UN-Kaufrecht 

RIW 1997 

cited as: Roth/Kunz, RIW 1997, 

Saidov, Djakhongir Methods of Limiting Damages under the Vienna 

Convention on Contracts for the International Sales of 

Goods (2001) 

http://cisg.law.pace.edu/cisg/biblio/saidov.html 

cited as: Saidov 

Scalbert, Hugues / 

Marville, Laurent 

Schlechtriem, Peter 

Les clauses compromissoires pathologiques, 

Revue de l’arbitrage 1988 

cited as: Scalbert/Marville, Rev.arb 1988, 

Commentary on the United Nation Convention on 

International Sales of Goods (CISG), 2 nd ed 

Munich 1998 

cited as: Schlechtriem (2 nd ed.) et al 

Schlechtriem, Peter Einheitliches 

Obligationenrecht 

Baden-Baden 1987 

Kaufrecht und nationales 

cited as: Schlechtriem/author, Einheitliches Kaufrecht, 

Schlechtriem, Peter Internationales UN-Kaufrecht 

Tübingen 1996 

cited as: Schlechtriem 

Schlechtriem, Peter 

Kommentar zum Einheitlichen UN – Kaufrecht, 3 rd ed. 

Munich 2000 

cited as: Schlechtriem et al 

XIV


Semler, Franz-Jörg German Arbitration Law 

The 1998 Reform and Recent Case Law 

Journal of International Arbitration 18(5) 2001 

cited as: Semler, J.Arb.Int. 2001, 

Soergel, Hans Theodor Kommentar zum Bürgerlichen Gesetzbuch 

Band 13, Übereinkommen der Vereinten Nationen über 

Verträge über den internationalen Warenkauf (CISG) 

Stuttgart, Berlin, Köln, Mainz 2000 

cited as: Soergel et al/author 

Sono, Kazuaki Formation of International Contracts under the Vienna 

Convention: A shift above the Comparative Law 

New York, London, Rome 1986 

cited as: Sono, Dubrovnik Lectures 1986, 

Staudinger, Julius von Kommentar zum Bürgerlichen Gesetzbuch mit 

Einführungsgesetz und Nebengesetzen 

Wiener UN-Kaufrecht (CISG), 14 th ed. 

Berlin 1999 

cited as: Staudinger et al/author 

Stoll, Hans Zur Haftung bei Erfüllungsverweigerung im 

Einheitlichen Kaufrecht 

RabelsZ 1998, 

cited as: Stoll, RabelsZ 1998, 

Sutton, Jeffrey S. Measuring Damages Under the United Nations 

Convention on the International Sale of Goods 

Ohio State Law Journal (1989) 

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

cited as: Sutton, Ohio State Journal 1989, 

Tampirie, Tiziana 

International Arbitration and Impartiality of Arbitrators 

The Italian Perspective 

Journal of International Arbitration 18(5) 2001 

cited as: Tampirie, J.Arb.Int. 2001, 

XV


Thiele, Christian Interest on Damages and Rate of Interest Under Art. 78 

of the U.N. Convention for the International Sale of 

Goods, Vindobona 

Journal of International Commercial Law and 

Arbitration (1998) 

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

cited as: Thiele, J. of Int. Com. Law and Arb., 1998 

UNCITRAL Fifth Working Group Report, A/CN.9/264 

cited as: Fifth Working Group Report, A/CN.9/264 

UNCITRAL Official Records of the United Nations Conference on 

Contracts for the International Sale of Goods, Vienna, 10 

March-11 April 1980 

cited as: Official Records 

UNCITRAL Proposal by Belgium [A/CONF.97/C.1/L.45] 

cited as: A/CONF.97/C.1/L.45 

UNCITRAL Secretariat Commentary 

cited as: Secretariat Commentary 

UNCITRAL Secretariat Study on the N.Y. Convention, A/CN.9/168 

cited as: Secretariat Study on the N.Y. Convention, 

A/CN.9/168 

UNCITRAL Seventh Secretariat Note, A/CN.9/264 

cited as: Seventh Secretariat Note, A/CN.9/264 

UNCITRAL Seventh Secretariat Note, Analytical Commentary on 

Draft Text A/CN.9/264 

cited as: Seventh Secretariat Note, Analytical 

Commentary on Draft Text A/CN.9/264 

UNCITRAL 

UNCITRAL digest of CISG article 6 case law 

 

cited as: UNCITRAL digest of CISG article 6 case law, 

para. 

XVI

Witz, Wolfgang / 

Salger, Hanns Christian / 

Lorenz, Manuel 

Ziegel, Jacob S. / 

Samson, Claude 


Internationales Einheitliches Kaufrecht, Kommentar 

Recht und Wirtschaft 

Heidelberg 2000 

cited as: Witz et al 

Report to the Uniform Law Conference of Canada on 

Convention on Contracts for the International Sale of 

Goods, July 1981 

http://www.cisg.law.pace.edu/cisg/wais/db/articles/engli 

sh2.html 

cited as: Ziegel/Samson 

XVII

Cases 

Argentina 


Enrique C. Wellbers S.A.I.C. A.G. v. Extraktionstechnik Gesellschaft für Anlagenbau 

M.B.M.: S/Ordinario, Y.B. XIX (1994), 254 

cited as: Enrique C. Wellbers S.A.I.C. A.G. v. Extraktionstechnik Gesellschaft für Anlagenbau 

(Argentina) 

Australia 

Downs Investments v. Perwaja Steel, Australia, 17 November 2000, Supreme Court of 

Queensland 

 

cited as: Downs Investments v. Perwaja Steel (Australia) 

Austria 

Arbitral Award 52/97, Schiedsgericht der Börse für landwirtschaftliche Produkte, 

10 December 1997 

Published in „Österreichische Zeitschrift für Rechtsvergleichung“ 1998, p. 211 – 220 

cited as: Arbitral Award 52/97, 10 December1997 (Austria) 

Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft (SCH-4366; 

arbitration proceeding), Vienna, 15 June 1994 

CLOUT case No. 93 

cited as: Int. Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft – Vienna, 

15 June 1994 (Austria) 

Oberster Gerichtshof = Supreme Court (Austria): 2 Ob 547/93 of 10 November 1994 

CLOUT-Case No. 106, Published in „Praxis des Internationalen Privat- und 

Verfahrensrechts“ 1996 p. 137 – 139 

cited as: OGH, 10 November 1994 (Austria) 

Oberster Gerichtshof, 1 OB 292/99 of 28 April 2000 

http://cisgw3.law.pace.edu/cases/000428a3.html 

cited as: OGH, 28 April 2000 (Austria) 

XVIII

Belgium 


Margon Srl v. NV Sadeco, Rechtbank (District Court) von Koophandel, Hasselt, 

A.R.2012/96, 

9 octobre 1996 

http://cisgw3.law.pace.edu/cases/961009b1.html 

cited as: Margon Srl v. VN Sadelco (Belgium) 

Société Van Hopplynus c/ société Coherent Inc., Tribunal de Commerce de Bruxelles 5 

octobre 1994, Revue de l’arbitrage 1995, 311-326 avec note de Bernard Hanotiau 

cited as: Société Van Hopplynus c/ société Coherent Inc. (Belgium) 

Bulgaria 

Court of Arbitration at the Bulgarian Chamber of Commerce and Industry, award of 

3 December 1984, case No. 151/1984, Y.B. XV (1990), 63 

cited as: Bulgaria Court of Arbitration case No. 151/1984 (Bulgaria) 

Canada 

Globe Union Industrial Corp. v. G.A.P. Marketing Corp., 2 Western Weekly Reports (1995), 

696 

cited as: Globe Union Industrial Corp. v. G.A.P. Marketing Corp. (Canada) 

France 

Comité populaire de la Municipalité d’el Mergeb c/ société Dalico contractors, Court 

d’Appel de Paris (1 re Ch.suppl.) 26 March 1991, Revue de l’arbitrage 1991, 456-469 avec 

note d’Hélène Gaudamet-Tallon 

cited as: Comité populaire de la Municipalité d’El Mergeb c/ société Dalico contractors (Fr) 

Cour de Cassation (Supreme Court), Sté Ceramique Culinaire de France v. Sté Musgrave 

Ltd., 17 December 1996 


cited as: Sté Ceramique Culinaire de France v. Sté Musgrave Ltd. (Fr) 

Epoux Convert c/ société Droga, Court de cassation (1 re Ch.civ.) 14 December 1983, Revue 

de l’arbitrage 1984, 483-491 avec note de M. C. Rondeau-Rivier 

cited as: Epoux Convert c/ société Droga (Fr) 

XIX


Gosset C. Soc. Carapelli, Cour de cassation (1 re Ch.civ.) 7 May 1963, Recueil Dalloz 

Chroniques Jurisprudence 1963, 545 

cited as: Gosset C. Soc. Carapelli (Fr) 

Hecht c/ Société Buisman’s, Court de cassation (1 re Ch.civ.) 4 July 1972, Journal du droit 

international 1972, 843 avec note de Bruno Oppetit 

cited as: Hecht c/ Société Buisman’s (Fr) 

ICC Court of Arbitration, award No. 1434 (1975) 

cited as: ICC Court of Arbitration, 1434/1975 (Fr) 
















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XX














Société Asland c/ société European Energy Corporation, Tribunal de grande instance de 

Paris, Revue de l’arbitrage 1990, 521-522 

cited as: Société Asland c/ société European Energy Corp. (Fr) 

Société Bomar Oil NV c/ ETAP, Cour de cassation (1 re Ch.civ.) 9 November 1993, Revue de 

l’arbitrage 1994, 108 avec note de Catherine Kessedijan 

cited as: Société Bomar Oil NV c/ ETAP (Fr) 

Société Deko c/ G. Dingler et société Meva, Cour d’Appel de Paris (1 re Ch.C), 24 March 

1994, Revue de l’arbitrage 1994, 515-524 avec note de Charles Jarrosson 

cited as: Société Deko c/ G. Dingler et société Meva (Fr) 

Société Tuvomon c/ société Amaltex, Cour d’Appel de Paris, 14 February 1985, Revue de 

l’arbitrage 1987, 325 avec note de P.Level 

cited as: Société Tuvomon c/ société Amaltex (Fr) 

Germany 

BGH, VIII ZR 134/96 of 23 July 1997 


cited as: BGH, 23 July 1997 (Germany) 

XXI


BGH, VIII ZR 259/97 of 25 November 1998 


cited as: BGH, 25 November 1998 (Germany) 

German Coffee Association, final award of 28 September 1992, Y.B. XIX (1994), 48 

cited as: German Coffee Association, 28 September 1992 (Germany) 

Hamburg Commodity Exchange Grain Merchants’ Association, Award of 18 March 1994, 

Y.B. XXII (1997), 53 

cited as: Hamburg Award, 18 March 1994 (Germany) 

Landgericht Hamburg (Germany), 5 O 543/88 of 26 September 1990 

CLOUT-Case No. 5, Published in „Praxis des Internationalen Privat- und Verfahrensrechts“ 

1991 p. 400 - 403 

cited as: LG Hamburg, 26 September 1990 (Germany) 

Landgericht Heidelberg, O 42/91, 3 July 1992, Unilex 

cited as: LG Heidelberg, 3 July 1992 (Germany) 

Landgericht Landshut, 54 O 644/94 of 5 April 1995 

< http://www.jura.uni-freiburg.de/ipr1/cisg/urteile/text/193.htm> 

cited as: LG Landshut, 5 Apri1 995 (Germany) 

OLG Düsseldorf, 17 U 146/93 of 10 February 1994 

 

cited as: OLG Düsseldorf, 10 February 1994 (Germany) 

OLG Naumburg: 10 Sch 03/01 of 19 December 2001 

cited as: OLG Naumburg, 19 December 2001 (Germany) 

Schiedsgericht der Handelskammer Hamburg, 21 March 1996 


cited as: Schiedsgericht der Handelskammer Hamburg, 21 March 1996 (Germany) 

Great Britain 

Central Meat Products Company, Ltd. V. J.V. McDaniel, Q.B.D. [1952] 1 Lloyd’s Rep. 562 

cited as: Central Meat Products Company, Ltd. V. J.V. McDaniel, Ltd. (GB) 

XXII


Harbour Assurance Co. (U.K.) Ltd. V. Kansa General International Insurance Co., Ltd., 

Q.B.D. (Com.Ct.) 1992, 1 Lloyd’s Rep., 81 

cited as: Harbour Assurance Co. v. Kansa Gen. Int’l Ins. Co., (GB) 

Mangistaumunaigaz Oil Production Association v. United World Trade Inc., Q.B.D. (1995) 1 

Lloyd’s Law Reports 617 

cited as: Mangistaumunaigaz Oil Production Assoc. v. United World Trade Inc. (GB) 

Star Shipping A.S. v. China National Foreign Trade Transportation Corporation, Court of 

Appeal (1993), 2 Lloyd’s Law Reports, 445 

cited as: Star Shipping A.S. v. China Nat. Foreign Trade Transp. Corp. (GB) 

Hong Kong 

Fung Sang Trading Limited v. Kai Sun Sea Products and Food Company Limited, Y.B. XIX 

(1994), 269 

cited as: Fung Sang Trading, Ltd. V. Kai Sun Sea Products and Food Co., Ltd. (Hongkong) 

Lucky-Goldstar International (H.K.) Limited v. Ng Moo Kee Engineering Limited, 2 Hong 

Kong Law Reports (HKLR), 73 = Y.B. XX (1995), 280 

cited as: Lucky-Goldstar Intern., Ltd. V. Ng Moo Kee Engineering, Ltd. (Hongkong) 

USSR 

All-Union Foreign Trade Association Sojuznefteexport v. JOC OIL Limited, Y.B. XVIII 

(1993), 92 

cited as: All-Union Export-Import Assoc. Sojuznefteexport (Moscow) v. JOC OIL (USSR) 

Switzerland 

Bezirksgericht St. Gallen (District Court Switzerland) 3PZ 97/18: 3 July 1997 


cited as: BG St. Gallen, 3 July 1997(Ch) 

Zürich Chamber of Commerce (arbitration proceeding), Switzerland, 31 May 1996, 

 

cited as: Zürich Chamber of Commerce, 31 May 1996 (Ch) 

XXIII


Kantonsgericht (District Court) Nidwalden, 3 December 1997 


cited as: Kantonsgericht Nidwalden, 3 December 1997 (Ch) 

HG950347, 5 February 1997, Commercial Court = Handelsgericht Zürich 

http://cisgw3.law.pace.edu/cases/970205s1.html 

cited as: Commercial Court Zürich, 5 February 1997 (Ch) 

United States of America 

Assante Technologies, Inc. v. PMC-Sierra, Inc., 164 F.Supp. 2d 1142 (2001) 

cited as: Assante Technologies, Inc. v. PMC-Sierra, Inc. (U.S.) 

Astra Footwear Industry v. Harwyn Intern., Inc., 442 F.Supp. 907 (S.D.N.Y. 1978) 

cited as: Astra Footwear Industry v. Harwyn Intern., Inc. (U.S.) 

Becker Autoradio USA, Inc. v. Becker Autoradiowerk GmbH, 585 F.2d 39 (3rd Cir. 1978) 

cited as: Becker Autoradio USA, Inc. v. Becker Autoradiowerk GmbH (U.S.) 

Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1968) 

cited as: Commonwealth Coatings Corp. v. Continental Casualty (U.S.) 

Delchi Carrier, S.p.A. v. Rotorex Corp., 6 December 1995, 10 F. 3d. 1024 (2nd Cir. 1995) 

cited as: Delchi Carrier SpA v. Rotorex Corporation (U.S.) 

Erving v. Virginia Squires Basketball Club, 468 F.2d 1064 (2d Cir. 1972) 

cited as: Erving v. Virginia Squires Basketball Club (U.S.) 

Euro-Mec Import, Inc. v. Pantrem & C., S.p.A., 1992 WL 350211, (E.D.Pa.) 

cited as: Euro-Mec Import, Inc. v. Pantrem & C., S.p.A. (U.S.) 

Florasynth, Inc. v. Pickholz, 750 F.2d 171(2d Cir. 1984) 

cited as: Florasynth, Inc. v. Pickholz (U.S.) 

Garfield & Co. v. Wiest, 432 F.2d 849 (2d Cir. 1970) 

cited as: Garfield & Co. v. Wies (U.S.) 

Giddens v. Board of education of the city of Chicago 75 NE 2d 286 (1947) 

cited as: Giddens v. Board of education of the city of Chicago (U.S.) 

XXIV


Hunt v. Mobil Oil Corp. 654 F.Supp. 1487 (S.D.N.Y.,1987) 

cited as: Hunt v. Mobil Oil Corp. (U.S.) 

HZI Research Center v. Sun Instruments Japan Co., Inc., 1995 WL 562181, (S.D.N.Y.) 

cited as: HZI Research Center v. Sun Instruments Japan Co., Inc. (U.S.) 

Ilios Shipping & Trading Corp. v. American Anthracite & Bitumius Coal Corp,148 

F.Supp. 698 (S.D.N.Y. 1957) 

cited as: Ilios S. & T. Corp. and American (U.S.) 

Laboratorios Grossman, S.A. v. Forest Laboratories, Inc., 295 N.Y.S.2d 756, (1968) 

cited as: Laboratorios Grossman, S.A. v. Forest Laboratories, Inc. (U.S.) 

Local 814, Intern. Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of 

America v. J & B Systems Installers & Moving, Inc. 878 F.2d 38, (1989) 

cited as: Local 814, Int'l Bhd. of Teamsters v. J & B Installers & Moving, Inc. (U.S.) 

MCC-Marble Ceramic Center, Inc., v. Ceramica Nuova d'Agostino, S.p.A. 

144 F.3d 1384 (11th Circuit Florida) of 29 June 1998. 

cited as: MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova d'Agostino, S.p.A (U.S.) 

Merit Insurance Company v. Leatherby Insurance Company, 714 F.2d 673 (7 th Cir. 1983) 

cited as: Merit Insurance Company v. Leatherby Insurance Company (U.S.) 

Middlesex Mutual Ins. Co. v. Levine, 675 F.2d 1197 (11 th Cir. 1982) 

cited as: Middlesex Mutual Ins. Co. v. Levine (U.S.) 

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Corp., 473 U.S. 614 (1985) 

cited as: Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Corp. (U.S.) 

Morelite Constr. Corp. v. New York City Dist. Council Carpenters’ Benefit Funds, 748 F.2d 

79 (2d Cir. 1984) 

cited as: Morelite Constr. Corp. v. New York City Dist. Council Carpenters Benefit Funds 

(U.S.) 

Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983) 

cited as: Moses H. Cone Memorial Hospital v. Mercury Constr. Corp. (U.S.) 

XXV


National Shipping Co. of Saudi Arabi v. Transamerican Steamship Corp. 1992 U.S. Dist. 

Lexis 18725 (S.D.N.Y. 1992) 

cited as: National Shipping Company of Saudi Arabia, Transamerican Steamship 

Corp. (U.S.) 

Neri v. Retail Marine Corporation, 285 NE 2d 311 (N.Y. 1972) 

cited as: Neri v. Retail Marine Corp., 1972 (U.S.) 

Nicaragua Interocean Shipping Co. v. National Shipping & Trad. Corp., 462 F.2d 673, 1972 

A.M.C. 1687 

cited as: Nicaragua Interocean Shipping Co. v. National Shipping & Trad. Corp. (U.S.) 

Orbisphere Corp. v. United States, 726 F. Supp. 1344 (1989) 

cited as: Orbisphere Corp. v. United States (U.S.) 

Pitta v. Hotel Ass'n of New York City, Inc., 806 F.2d 419 (2d Cir. 1986) 

cited as: Pitta v. Hotel Ass'n, Inc. (U.S.) 

Prima Paint v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) 

cited as: Prima Paint v. Flood & Conklin Mfg. Co. (U.S.) 

Reed & Martin, Inc. v. Westinghouse Electronic Corp., 439 F.2d 1268, (2d Cir. 1971) 

cited as: Reed & Martin, Inc. v. Westinghouse Elec. Corp. (U.S.) 

Republic of Nicaragua v. Standard Fruit Company, 937 F.2d 469 (9 th Cir. 1991) 

cited as: Republic of Nicaragua v. Standard Fruit Co. (U.S.) 

Rosgoscirc on Behalf of SOY/CPI v. Circus Show, Corp., 1993 WL 277333, (S.D.N.Y.) 

cited as: Rosgoscirc, Co. v. Circus Show, Corp. (U.S.) 

Sanford Home for Adults v. Local 6, IFHP, 665 F.Supp. 312 (S.D.N.Y. 1987) 

cited as: Sanford Home for Adults v. Local (U.S.) 

Standard Tankers (Bahamas) Co. v. Motor Tank Vessel, Akti, 438 F2d 153 (E.D.N.C. 1977) 

cited as: Standard Tankers (Bahamas) Co., Ltd. V. Motor Tank Vessel (U.S.) 

XXVI


Sun Refining & Marketing Co. v. Statheros Shipping Corp. of Monrovia, Liberia 761 

F.Supp. 293, (1991) 

cited as: Sun Refining & Marketing Co. v. Statheros Shipping Corp. of Monrovia, Liberia 

(U.S.) 

Tennessee Imports, Inc. v. Pier Paulo Filippi and Prix Italia, 745 F.Supp. (1990), 1314-1331 

cited as: Tennessee Imports, Inc. v. Pier Paulo Filippi and Prix Italia (U.S.) 

Transmarine Seaways Corp. of Monrovia v. Marc Rich & Co. A.G. 480 F.Supp. 352, 

(S.D.N.Y 1979) 

cited as: Transmarine Seaways Corp. of Monrovia v. Marc Rich & Co. A. G. (U.S.) 

U. S. Wrestling Federation v. Wrestling Division of AAU, Inc. 605 F.2d 313 (7 th Cir. 1979) 

cited as: U. S. Wrestling Federation v. Wrestling Division of AAU, Inc. (U.S.) 

XXVII

Statements of Facts 

Rheinische Friedrich-Wilhelms-Universität Bonn Page 1 

On 3 April 2001, CLAIMANT, Equafilm Co. (hereafter referred to as CLAIMANT), 

concluded a contract with Medipack SA (hereafter referred to as RESPONDENT) during a 

telephone conversation. 

After this telephone conversation, Mr. Black, Purchasing Manager of RESPONDENT, faxed 

Mr. Storck, Sales Manager of CLAIMANT a confirmation of this contract. In this fax, he 

confirmed the order of 1350 tons of polypropylene film, to be delivered over a nine-month 

period of time. The conditions of sale were to be the same as in the previous contract 

CLAIMANT and RESPONDENT had concluded on 15 December 2000, with adjustments for 

the dates of shipment and the fact that CLAIMANT’s list prise had risen to $ 1,900 per ton. 

The same day, Mr. Storck also sent a confirmation of RESPONDENT’s order to Mr. Black in 

which the price set forth was $ 2,615,809, i.e. CLAIMANT’s current list price of $ 1,900 per 

ton less 4% discount. All other provisions of the previous contract dated 15 December 2000 

should apply. 

The contract of 15 December 2000 to which both parties referred in their letters of 

confirmation contained an arbitration clause and a choice of law clause. According to this 

arbitration clause, “any dispute arising out of or relating to the contract concluded between 

CLAIMANT and RESPONDENT should be determined by arbitration in accordance with the 

rules of the German Arbitration Association”. The choice of law clause determined that the 

contract was subject to the commercial law of Equatoriana. Equatoriana is a party to the 

CISG. 

In response to Mr. Storck’s letter of confirmation, Mr. Black contested the price indicated by 

Mr. Storck claiming that RESPONDENT was to receive an 8% discount. 

In his letter dated 9 April 2001, Mr. Storck regretted the confusion about the discount rate 

which had arisen although Mr. Storck stated explicitly in his fax of 7 December 2000 that the 

8% discount was only granted as in incentive for the first order. He affirmed that 

RESPONDENT would receive their best price which includes a 4% discount. 

In response, Mr. Black intimated that RESPONDENT would have to consider seriously 

1


returning to Polyfilm GmbH, its former supplier, if CLAIMANT did not offer an 8% discount 

to RESPONDENT. 

On 2 May 2001, RESPONDENT refused definitely to comply with its obligations under the 

contract concluded with CLAIMANT, since RESPONDENT had already placed the order 

with Polyfilm GmbH. 

As a result of this refusal, CLAIMANT suffered a loss of $ 575.477,98 which is the lost profit 

it would have earned on the contract. 

Counsel, prepared this Memorandum for CLAIMANT in compliance with the Arbitral 

Tribunal’s Procedural Order No. 1. 

It is argued that: 

• There is no reason to challenge Dr. Arbitrator 

• The Tribunal has authority to rule the case at issue 

• The CISG is the law applicable to the contract 

• A contract was concluded between CLAIMANT and RESPONDENT during their 

telephone conversation dated 3 April 2001 

• The price included a 4% discount 

• RESPONDENT was in breach of its obligations under the contract 

• CLAIMANT is entitled to claim damages in the amount of $ 575,477.98 caused by 

RESPONDENT’s breach of its obligations 

• CLAIMANT is entitled to claim interest on the damages 

In arguing these propositions, CLAIMANT will demonstrate the legal and factual basis for its 

claim. 

2


Arguments 

I. The challenge to Dr. Arbitrator is to be rejected 

1. Arbitrator will participate in the decision on his own challenge (A.), which is governed by 

§§ 15, 18 DIS Rules (B.). The challenge is to be rejected because there are no reasonable doubts 

as to his impartiality or his independence (C.). 

A. Dr. Arbitrator participates in the decision on his challenge 

2. In accordance with § 18.2 DIS Rules, the arbitral Tribunal itself decides on the challenge. 

Dr. Arbitrator participates in the decision on the challenge as a member of the Tribunal 

[Procedural Order No. 1, para No. 4]. 

B. The challenge is governed by §§ 15, 18 DIS Rules 

3. § 15 DIS Rules calls for „impartial and independent“ arbitrators. § 18.1 DIS Rules provides 

for the challenge of an arbitrator if “circumstances exist that give rise to justifiable doubts as 

to his impartiality or independence“. The terms “impartiality and independence” are not 

defined in the DIS Rules. As the DIS Rules are based upon the Model Law [Böckstiegel, DIS- 

Mat III 1998, p. 5; Semler, J.Arb.Int. 2001, p. 579], case law relating to the Model Law may 

be used as persuasive authority. 

C. There are no reasons to doubt Dr. Arbitrator’s impartiality or his independence 

a. Dr. Arbitrator’s expectation to become a partner of a law firm that has represented 

CLAIMANT is not sufficient to raise doubts as to his impartiality or independence 

4. Dr. Arbitrator’s expectation of becoming a member of the law firm during a period when 

he is acting as an arbitrator in a matter involving a former client of the firm is not sufficient to 

raise justifiable doubts as to his impartiality or independence 

5. Such justifiable doubts would have to be direct, definite, and capable of demonstration 

rather than remote, uncertain, or speculative [Giddens v. Board of education of the city of 

Chicago (U.S.); Pitta v. Hotel Ass'n, Inc. (U.S.); Florasynth, Inc. v. Pickholz (U.S.); Morelite 

3


Constr. Corp. v. New York City Dist. Council Carpenters Benefit Funds (U.S.); Barker/Davis, 

p. 49]. Personal or business relationships between an arbitrator and one of the parties are 

possible grounds for justifiable doubts as to the impartiality or independence [Middlesex 

Mutual Ins. Co. v. Levine (U.S.); National Shipping Company of Saudi Arabia, 

Transamerican Steamship Corp. (U.S.); Ilios S. & T. Corp. and American (U.S.); 

Bishop/Reed, Arb.Int. 1998, p. 398]. However, just being one out of 75 partners and 216 

associates [Procedural Order No. 2, Clarification No. 22] of a law firm which has represented 

a party to the arbitration before [cf. Standard Tankers (Bahamas) Co., Ltd. v. Motor Tank 

Vessel (U.S.); Erving v. Virginia Squires Basketball Club (U.S.)] cannot be sufficient to raise 

such doubts. Like Dr. Arbitrator, most persons who are qualified to appear as arbitrators in 

international disputes work in international law firms with hundreds of clients. If all these 

arbitrators were deemed to be partial or dependent, merely because another partner or 

associate of the same firm has represented a party to the arbitration before, after a short time 

the pool of skilled arbitrators eligible to be appointed to serve on Tribunals in international 

disputes would be empty. Arbitration without arbitrators willing and able to serve, however, 

cannot work. 

6. In the case at hand, the only circumstance that might effect Dr. Arbitrator’s impartiality or 

independence is his capacity as a partner of Multiland Associates. Dr. Arbitrator expects to 

become one partner of a law firm which has represented a party to the arbitration before. He 

had no business or personal relationship to CLAIMANT himself. The law firm he is 

associated with entered into an agreement to merge with the well-known international law 

firm Multiland Associates effective 1 January 2003 [Dr. Arbitrator in his letter to Mr. Bredow 

dated 22 August 2002]. Only one office of Multiland Associates, located in Faraway City, 

Oceania has represented CLAIMANT in two matters. These matters ended before the 

arbitration started and they were unrelated to the dispute in this arbitration [Dr. Arbitrator in 

his letter to Mr. Bredow dated 22 August 2002; Procedural Order No. 2, Clarification 

No. 18]. Dr. Arbitrator himself has had no contact to CLAIMANT. In addition, there is no 

continuing representation of CLAIMANT by Multiland Associates, and the new office of 

Dr. Arbitrator has no expectation of representing CLAIMANT in the future [Procedural 

Order No. 2, Clarification No. 18; importance of that issue: National Shipping Co. of Saudi 

Arabia, Transamerican Steamship Corp. (U.S.); Hunt v. Mobil Oil Corp. (U.S.); Morelite 

Constr. Corp. v. New York City Dist. Council Carpenters Benefit Funds (U.S.); Sanford Home 

for Adults v. Local (U.S.); Holtzmann/Neuhaus, p. 389; Pellonpää/Caron, p. 162; Tampirie, 

4


J.Arb.Int. 2001, p. 563]. Apart from the arbitration proceedings, Dr. Arbitrator will not have 

any business relationship to CLAIMANT. 

7. Even if he had some kind of business relationship to CLAIMANT, this would not be 

sufficient to consider him partial or dependent. The mere fact that there is some business 

relationship between an arbitrator and one of the parties to the arbitration is not in and of itself 

sufficient to disqualify the arbitrator [Commonwealth Coatings Corp. v. Continental Casualty 

(U.S.); Reed & Martin, Inc. v. Westinghouse Elec. Corp. (U.S.); Ilios S. & T. Corp. and 

American (U.S.); Granzow, p. 110; Bernstein et al, No. 2-179] because arbitration 

proceedings are not in all circumstances comparable to dispute resolution by public courts. 

8. The major advantage of arbitration as a means of dispute resolution is the opportunity to 

have a Tribunal that is more aware of the subject matter of the dispute than a court skilled in 

legal argument but with only limited knowledge of the subject matter [Merit Insurance 

Company v. Leatherby Insurance Company (U.S.); Commonwealth Coatings Corp. v. 

Continental Casualty Co. (U.S.); Garfield & Co. v. Wiest. (U.S.); Born (1 st ed.), p. 600]. 

Arbitration is the resolution of international commercial disputes by experts who have great 

knowledge of international trade law. Being an expert is the result of being engaged in 

occupations in the commercial world before, during and after the arbitral proceedings. 

Working in an international law firm, which has hundreds of clients, offers the best 

opportunity to become such an expert. Dr. Arbitrator is one of those experts with a great 

reputation in his field of business [Procedural Order No. 2, Clarification No. 26], meaning he 

has accumulated considerable knowledge of international trade law, based on previous 

professional experience. The number of such experts is limited and in addition there is a 

growing demand for qualified arbitrators because the popularity of arbitration as a means for 

resolving international commercial disputes has increased significantly over the past decades 

[for example, the world’s leading international arbitration institution – the ICC – handled 

request for 32 arbitrations in 1956, 210 arbitrations in 1976, 337 arbitrations in 1992, 452 

arbitrations in 1997, and 529 arbitrations in 1999]. 

9. As a result, the mere fact that someone is acting as an arbitrator in a matter involving a 

former client of the law firm cannot raise justifiable doubts as to his impartiality or 

independence. 

5


b. Dr. Arbitrator has no financial interest in the outcome of the arbitration 

10. Since the relationship between Dr. Arbitrator and CLAIMANT is not sufficiently close to 

make any reasonable person doubt his impartiality or independence [Commonwealth Coatings 

Corp. v. Continental Casualty Co. (U.S.); Hunt v. Mobil Oil Corp. (U.S.); Local 814, Int'l 

Bhd. of Teamsters v. J & B Installers & Moving, Inc. (U.S.); National Shipping Company of 

Saudi Arabia v. Transamerican Steamship Corp. (U.S.); OLG Naumburg, 19 December 2001 

(Germany); von Hof, p. 80; Y.B. XXII (1997) p. 234], there have to be additional matters to 

justify his challenge. An indication for bias would be given if Dr. Arbitrator had any financial 

interest in the outcome of the arbitration [cf. Middlesex Mutual Ins. Co. v. Levine (U.S.); 

Transmarine Seaways Corp. of Monrovia v. Marc Rich & Co. A.G. (U.S.); Reed & Martin, 

Inc. v. Westinghouse Elec. Corp. (U.S.); National Shipping Company of Saudi Arabia, 

Transamerican Steamship Corp. (U.S.); Sun Refining & Marketing Co. v. Statheros Shipping 

Corp. of Monrovia, Liberia (U.S.); U.S. Wrestling Federation v. Wrestling Division of AAU, 

Inc. (U.S.); Born (1 st ed.), p. 601; Pellonpää/Caron, p. 160]. This would be the case if he had 

a reasonable expectation of increasing his own income unduly favoring CLAIMANT during 

the arbitration proceedings, in order to procure additional business for Multiland Associates. 

11. However, his participation in this law firm is far too unimportant to suggest any direct 

financial interest in the outcome of the arbitration. After the merger of 1 January 2003 there 

will be 75 partners in 15 offices at different locations [Procedural Order No. 2, Clarification 

No. 18]. The income earned by each partner is in large part determined by the profits of the 

particular individual office and only in small part the profits of the entire firm [Procedural 

Order No. 2, Clarification No. 19]. Dr. Arbitrator’s participation in hypothetical fees earned 

in future cases is so negligible that a financial interest in the outcome of the arbitration cannot 

be assumed. 

c. Dr. Arbitrator’s disclosure underlines his impartiality and independence 

12. In addition, Dr. Arbitrator disclosed the merger of the law firms and therefore complied 

exactly with his obligations under § 16.3 DIS Rules. He even met the high requirements set 

by the leading U.S. Supreme Court decision in a domestic case, Commonwealth Coatings 

Corp. v. Continental Casualty Co. (U.S.) [Y.B. XXII (1997) p. 232; Born (1 st ed.), p. 598]. In 

this decision, the Supreme Court held that arbitrators have to disclose any circumstances that 

might impact their impartiality, since the same ethical standards apply to both judges and 

6


arbitrators. This ambition standard was criticized by several other courts finding that 

arbitrators should be held to a lower ethical standard than judges [Pitta v. Hotel Ass'n, Inc. 

(U.S.); Morelite Constr. Corp. v. New York City Dist. Council Carpenters Benefit Funds 

(U.S.); Hunt v. Mobil Oil Corp. (U.S.)]. Nevertheless, Dr. Arbitrator disclosed the relationship 

on 22 August 2002, [Dr. Arbitrator in his letter to Mr. Bredow dated 22 August 2002] merely 

two days after he had received the information about the nature of the representation 

[Procedural Order No. 2, Clarification No. 18]. He behaved in a truly honourable way. 

13. As there is no further indication of circumstances that could justify the challenge of 

Dr. Arbitrator, he cannot reasonably be considered partial or dependent. Therefore, 

CLAIMANT respectfully requests the Arbitral Tribunal to reject the challenge to 

Dr. Arbitrator. 

II. The challenge to the jurisdiction of the Tribunal is to 

be rejected 

14. The Tribunal can rely on the Competence-Competence doctrine embodied in Art. 16(1) 

Model Law and find that it has jurisdiction to decide on the merits of the case at hand (A.). 

CLAIMANT and RESPONDENT concluded a valid arbitration agreement (B.). This 

arbitration agreement is neither invalid because it refers to the arbitration rules of the 

“German Arbitration Association” (C.) nor does the alleged invalidity of the commercial 

contract have any effect on the arbitration agreement (D.). 

A. The Tribunal has authority to decide on its own jurisdiction pursuant to Art. 16(1) 

Model Law 

15. CLAIMANT and RESPONDENT agreed that arbitration proceedings, if necessary, 

should take place in Vindobona, Danubia. Danubia has enacted the UNCITRAL Model Law 

[Rules p. 3]. Therefore, the Model Law applies to the case at issue since the Model Law is the 

lex fori of Danubia. Art. 16(1) Model Law provides that “the arbitral Tribunal may rule on its 

own jurisdiction, including any objections with respect to the existence or validity of the 

arbitration agreement”. Since Art. 16(1) Model Law is mandatory [Holtzmann/Neuhaus, 

p. 480], the DIS Rules cannot deviate from this provision, irrespective of whether they apply 

7


to the instant dispute or not. This is confirmed by Section 24.1 DIS Rules. Therefore, the 

Tribunal has authority to rule on its own jurisdiction. 

B. CLAIMANT and RESPONDENT concluded a valid arbitration agreement 

a. The parties agreed to refer any dispute arising out of the contract to arbitration 

16. During their telephone conversation on 3 April 2001 CLAIMANT and RESPONDENT 

concluded a sales contract in which they referred to the sales conditions they had agreed upon 

in their previous contract dated 15 December 2000 [CLAIMANT’s Exhibit No. 1, 3, 4]. In the 

subsequent correspondence, neither CLAIMANT nor RESPONDENT doubted the validity of 

the arbitration agreement; only the amount of the discount rate was in dispute. 

b. This arbitration agreement meets the writing requirement according to Art. 7(2) Model 

Law 

17. Pursuant to Art. 7(2) Model Law, the arbitration agreement of 3 April 2001 has to be in 

writing in order to be effective. Art. 7(2) Model Law provides that “the writing requirement is 

met by reference in the contract to a document containing an arbitration clause if the contract is 

in writing and the reference is such to make that clause part of the contract”. Although the 

contract dated 3 April 2001 was concluded orally, the formal requirements are satisfied, since 

both CLAIMANT and RESPONDENT agreed in their confirmations of the telephone 

conversation that the provisions of the contract dated 15 December 2000 should apply. This 

contract contained an arbitration clause and both parties signed the contract [CLAIMANT’s 

Exhibit No. 2]. These letters of confirmation constitute a record of the orally concluded contract. 

Since those letters of confirmation represent an exchange of letters pursuant to Art. 7(2)(2) 

Model Law, the contract containing the reference to the arbitration clause is in writing pursuant 

to Art. 7(2)(3) Model Law [Holtzmann/Neuhaus, p. 264; Seventh Secretariat Note, A/CN.9/264, 

Art. 7, para. 8]. 

18. The contract of 3 April 2001 need not reproduce the arbitration clause or make explicit 

reference to it [Holtzmann/Neuhaus, pp. 263-264; Fifth Working Group Report, A/CN.9/264, 

Art. 7, para. 19; Seventh Secretariat Note, A/CN.9/264, Art. 7, para. 8; Houtte, Arb.Int. 2000, 

p. 10; Société Van Hopplynus c/ société Coherent Inc. (Belgium); Becker Autoradio USA, Inc. 

8


v. Becker Autoradiowerk GmbH (U.S.); Central Meat Products Company, Ltd. v. J.V. 

McDaniel, Ltd. (GB); Interocean Shipping Co. v. National Shipping & Trad. Corp. (U.S.); 

Comité populaire de la Municipalité d’El Mergeb c/ société Dalico contractors (Fr)]. What is 

only sought is a written form of assent to arbitration from each party [Holtzmann/Neuhaus, 

p. 263; Secretariat Study on the N.Y. Convention, A/CN.9/168, para. 21]. 

19. Mr. Storck stated in his letter of 7 December 2000 that, since this had been 

RESPONDENT’s first order, he would send them a formal contract [CLAIMANT’s Exhibit 

No. 1]. Both CLAIMANT and RESPONDENT were convinced that they entered into a long 

time contractual relationship, so that RESPONDENT would place all future orders with 

CLAIMANT. For the first order, the parties drafted a formal contract in order to facilitate 

further transactions. The purpose of this formal contract was to enable the parties to refer to it 

and thereby incorporate its terms in subsequent agreements. The reference is perfectly 

sufficient, since the parties agreed to this procedure. This is affirmed by RESPONDENT’s 

statement of defence [statement of defence para. 12]. Since Mr. Black knew that the contract 

dated 15 December 2000 contained an arbitration clause, he accepted the renewal of the 

arbitration clause by referring himself to the sales conditions of the previous contract [cf. 

Fouchard et al, pp. 294-295; Société Bomar Oil NV c/ ETAP (Fr); Houtte, Arb.Int. 2000, 

p. 10]. 

20. Thus, the general reference to the conditions of the contract dated 15 December 2000 

which contained an arbitration agreement in section 13 [CLAIMANT’s Exhibit No. 2] is 

sufficient in order to incorporate this clause in the contract concluded on 3 April 2001 [cf. 

Republic of Nicaragua v. Standard Fruit Company (U.S.); Becker Autoradio USA Inc. v. 

Becker Autoradiowerk GmbH (U.S.); Hamburg Award, 18 March 1994 (Germany)]. 

21. An arbitration agreement between CLAIMANT and RESPONDENT has been concluded 

and the writing requirement pursuant to Art. 7(2) Model Law is met. 

C. The parties chose validly the “German Institution of Arbitration” 

22. The arbitration agreement is effective even though it refers to the arbitration rules of the 

“German Arbitration Association” instead of the “German Institution of Arbitration”. 

9


a. CLAIMANT’s reference to an erroneously designated institution leaves the validity of 

the arbitration clause unaffected 

23. In cases in which the arbitration clause does not refer in an unambiguous way to an 

existing arbitration institution, it is essential to differentiate between the reference to a nonexistent 

and to an erroneously designated institution [Boisséson, p. 480; Derains/Schwartz, 

p. 91]. If CLAIMANT and RESPONDENT had chosen a non-existent institution, the 

arbitration clause might be invalid [Fouchard et al, pp. 283-286; Scalbert/Marville, Rev.arb. 

1988, p. 119; Born, p. 189], whereas the designation of an arbitral institution existing in 

reality, but referred to under a false name will leave the validity of the arbitration clause 

unaffected if the actually meant institution can be clearly determined by interpreting the 

parties’ agreement [Fouchard et al, p. 284; Boisséson, p. 481]. 

24. In fact, the designation “German Arbitration Association” is simply an erroneous 

translation of the official German name “Deutsche Institution für Schiedsgerichtsbarkeit 

e.V.”. CLAIMANT and RESPONDENT both meant the “German Institution of Arbitration”, 

as is evidenced by the interpretation of the arbitration agreement contained in the contract 

dated 15 December 2000. 

b. The parties intended to choose the “German Institution of Arbitration” 

25. In first instance, full respect has to be given to the real intent of the parties rather than the 

wording of the agreement [Laboratorios Grossman, S.A. v. Forest Laboratories, Inc. (U.S.); 

Mangistaumunaigaz Oil Production Assoc. v. United World Trade Inc. (GB); ICC Court of 

Arbitration, 6709/1991 (Fr); 1434/1975 (Fr)]. 

26. The arbitration clause contained in the contract dated 15 December 2000 clearly indicates 

that CLAIMANT chose the German Institution of Arbitration for conducting any dispute 

arising out of the contractual relationship with RESPONDENT. RESPONDENT accepted this 

arbitration clause by signing the contract. Since there is no other arbitration institution in 

Germany that conducts international commercial arbitrations [Procedural Order No. 2, 

Clarification No. 32], it is obvious that only the “German Institution of Arbitration” could be 

meant. The designation “German Arbitration Association” does not deviate so much from the 

correct name “German Institution of Arbitration” that RESPONDENT could have been 

mistaken as to which arbitration institution the arbitration clause refers [cf. ICC Court of 

10


Arbitration, 2626/1977 (Fr)]. This being so, there is no danger that the objectively chosen 

arbitration institution would be confounded with an institution not covered by the will of the 

parties [société Tuvomon c/ société Amaltex (Fr); cf. ICC Court of Arbitration, 5103/1988 

(Fr)]. 

27. Furthermore, if the parties involved come from different countries with no connection to 

the place specified in the arbitration clause or to the arbitration rules of an institution, it can be 

assumed that it must have been their wish to refer their dispute to an institution primarily used 

for international rather than for domestic arbitration [Derains/Schwartz, p. 90; ICC Court of 

Arbitration, 3460/1980 (Fr); 6709/1991 (Fr); Rosgoscirc v. Circus Show, Corp. (U.S.)]. 

CLAIMANT has its seat in Equatoriana, RESPONDENT in Mediterraneo. There is no 

indication that either party had any connections to Germany or Danubia [Procedural Order 

No. 2, Clarification No. 31]. Accordingly, it can be assumed that they chose Danubia and the 

“German Institution of Arbitration” as a neutral basis for any disputes. 

c. CLAIMANT can rely on the doctrine of ‘effet utile’ 

28. Furthermore, CLAIMANT can also rely on the doctrine of ‘effet utile’, generally applied 

in arbitration proceedings. According to this doctrine, arbitration clauses which are not 

exactly clear have to be interpreted in a way that gives reasonable sense to them, rather than 

rendering those clauses ineffective [Fouchard et al, pp. 279-280; ICC Court of Arbitration, 

1434/1975 (Fr); 3380/1980 (Fr); 4145/1984 (Fr); 5103/1988 (Fr); Star Shipping A.S. v. 

China Nat. Foreign Trade Transp. Corp. (GB)]. Arbitration agreements in which the chosen 

arbitration institution is named wrongly [ICC Court of Arbitration, 6709/1991 (Fr); 

5103/1988 (Fr); 3460/1980 (Fr); 4472/1984 (Fr); Société Asland c/ société European Energy 

Corp. (Fr); société Tuvomon c/ société Amaltex (Fr); Epoux Convert c/ société Droga, 

14 December 1983 (Fr); Republic Nicaragua v. Standard Fruit Co. (U.S.); Lucky-Goldstar 

Intern., Ltd. V. Ng Moo Kee Engineering, Ltd (Hongkong); Laboratorios Grossman, S.A. v. 

Forest Laboratories, Inc. (U.S.); Astra Footwear Industry v. Harwyn Intern., Inc. (U.S.); HZI 

Research Center v. Sun Instruments Japan Co, Inc. (U.S.)] or that are ambiguous in any other 

way appear quite often in arbitral proceedings [Star Shipping A.S. v. China Nat. Foreign 

Trade Transp. Corp. (GB); Mangistaumunaigaz Oil Production Assoc. v. United World Trade 

Inc. (GB); Tennessee Imports, Inc. v. Pier Paulo Filippi and Prix Italia (U.S.); Bulgaria 

Court of Arbitration case No. 151/1984 (Bulgaria); German Coffee Association, 

11


28 September 1992 (Germany)]. Nevertheless, both arbitral Tribunals and courts give full 

effect to the arbitration clause if the parties intended to choose a particular organization and if 

no other arbitration institution exists which could have been alternatively meant [ICC Court 

of Arbitration, 2626/1977 (Fr); 5103/1988 (Fr); observation de la ICC Court of Arbitration, 

6709/1991 (Fr); note de la sentence Epoux Convert c/ société Droga (Fr); Laboratorios 

Grossman, S.A. v. Forest Laboratories, Inc. (U.S.)]. In the case at hand, the interpretation of 

the arbitration clause according to the parties’ intent clearly leads to the conclusion that they 

intended to choose the “German Institution of Arbitration” 

29. Thus, pursuant to the doctrine of ‘effet utile’, full effect has to be given to the arbitration 

clause including the choice of the “German Institution of Arbitration”, especially since the 

parties’ decision in favor of arbitration has to be respected in any circumstances [Moses H. 

Cone Memorial Hospital v. Mercury Constr. Corp. (U.S.); Mitsubishi Motors Corp. v. Soler 

Chrysler-Plymouth Corp. (U.S.); Republic of Nicaragua v. Standard Fruit Co. (U.S.); 

Laboratorios Grossman, S.A. v. Forest Laboratories, Inc. (U.S.)]. 

d. Courts are inclined to give effect even to highly ambiguous arbitration clauses 

30. Even if the interpretation of the arbitration agreement did not lead to an unequivocal 

conclusion with regard to the meaning of the agreement, that would not necessarily render the 

arbitration clause invalid. [Lucky-Goldstar Intern., Ltd v. Ng Moo Kee Engineering. Ltd 

(Hongkong); Astra Footwear Industry v. Harwyn Intern., Inc. (U.S.); Euro-Mec Import, Inc. 

v. Pantrem & C., S.p.A (U.S.); HZI Research Center v. Sun Instruments Japan Co., Inc. 

(U.S.)]. In Astra Footwear Industry v. Harwyn International, Inc. (U.S.), the parties agreed to 

arbitrate any disputes before the New York Chamber of Commerce, but this institution had 

ceased to arbitrate disputes when it merged to become the New York Chamber of Commerce 

& Industry. Nevertheless, the United States District Court of New York referred the case to 

arbitration, although the parties had chosen an arbitration institution which did not exist any 

more. In Laboratorios Grossman, S.A. v. Forest Laboratories, Inc. (U.S.), the parties chose 

the rules and procedures of the “Pan-American Arbitration Association”, an organization 

which had never existed. The Court decided that “if it should be found that the parties really 

intended to arbitrate pursuant to the rules of the Inter-American Commercial Arbitration 

Commission, an organization created by the Pan American Union, then arbitration before that 

Tribunal should be directed, and nothing further need be determined”. Those examples 

12


illustrate the courts’ attitude towards arbitration: they are inclined to give effect even to highly 

ambiguous arbitration clauses to respect the parties’ intent to refer a dispute to arbitration [cf. 

Redfern/Hunter, p. 172 including further references]. 

e. The reference to the „German Arbitration Association“ belongs to the category 

„erroneously designated institutions“ 

31. Since the interpretation of the arbitration agreement between CLAIMANT and RESPON- 

DENT clearly leads to the conclusion that the “German Institution of Arbitration” was meant, 

there can be no doubt that the case at hand belongs to the category “erroneously designated 

institutions” and not to the category “non-existent institutions”. Consequently, the choice of 

the “German Institution of Arbitration”, including its procedural rules, is valid. 

D. CLAIMANT and RESPONDENT concluded a valid arbitration agreement, irrespective 

of the validity of the commercial contract 

32. The validity of the arbitration agreement between CLAIMANT and RESPONDENT is not 

affected by the fate of the commercial contract dated 3 April 2001. RESPONDENT claims 

that the arbitration agreement did not come into existence because no sales contract was 

concluded between the parties. That is not correct for several reasons. In first instance, 

CLAIMANT and RESPONDENT concluded a valid sales contract [cf. paras. 51 et seq.] 

a. According to the doctrine of separability, the arbitration agreement is not affected by 

the alleged invalidity of the commercial contract 

33. Assuming, but not conceding, that no sales contract was concluded between CLAIMANT 

and RESPONDENT, the validity of the arbitration agreement stands unimpaired. 

34. The arbitration agreement constitutes a contract separate from the commercial contract 

[Prima Paint v. Flood & Conklin Mfg. Co. (U.S.); observations de la cited as: ICC Court of 

Arbitration, 2694/1977 (Fr); note de la sentence Epoux Convert c/ société Droga (Fr); 

Comité populaire de la Municipalité d’el Mergeb c/ société Dalico contractors (Fr)]. In this 

regard, it is of no relevance whether the arbitration clause is included in the principal contract 

or whether it physically constitutes a separate agreement; in either case the arbitration agree- 

ment is independent from the principal contract [Gosset C. Soc. Carapelli (Fr); Born, p. 56]. 

13


35. According to the separability-doctrine, which the rules of procedure in Danubia [Art. 

16(2) Model Law] and also Art. II(3) New York Convention have adopted, the arbitral 

agreement “survives any birth defect or acquired disability of the principal agreement” 

[Varady/Barcelor/Mehren, p. 125; Holtzmann/Neuhaus, p. 480; Redfern/Hunter, p. 175, 

Prima Paint v. Flood & Conklin Mfg. Co. (U.S.); Republic of Nicaragua v. Standard Fruit 

Co. (U.S.); Interocean Shipping Co. v. National Shipping & Trad. Corp. (U.S.); Globe Union 

Industrial Corp. v. G.A.P. Marketing Corp. (U.S.); Enrique C. Wellbers S.A.I.C. A.G. v. 

Extraktionstechnik Gesellschaft für Anlagenbau (Argentina); Fung Sang Trading, Ltd. V. Kai 

Sun Sea Products and Food Co., Ltd. (Hongkong); Gosset C. Soc. Carapelli (Fr); Hecht c/ 

Société Buisman’s (Fr); société Deko c/ G. Dingler et société Meva (Fr); Epoux Convert c/ 

société Droga (Fr)]. 

36. The main purpose of the separability doctrine is to maintain the competence of a validly 

appointed arbitral Tribunal, irrespective of the fate of the principal contract [Broches, p. 75; 

Fouchard et al, p. 216; cf. Holtzmann/Neuhaus, p. 259]. With regard to this pursued object, it 

would frustrate the intent of an arbitration clause if a party could prevent an arbitration 

agreement from coming into force by claiming that the commercial contract had not been 

validly concluded or was terminated either by performance or by some intervening event 

[Redfern/Hunter, p. 176; Fouchard et al, pp. 226-227; Harbour Assurance Co. v. Kansa Gen. 

Int’l Ins. Co., (GB)]. Besides, it often it cannot be decided easily if the objections raised by 

RESPONDENT are justified. That is why it is essential that an independent Tribunal decides 

on these objections. 

b. The application of the doctrine of separability is not excluded since the commercial 

contract is not void ab initio 

37. The application of the doctrine of separability is not excluded by RESPONDENT’s 

allegation that no contract was concluded. Although it is true that some authorities exclude 

the application of the doctrine of separability in cases in which the principal contract is void 

ab initio [Varady/Barcelo/Mehren, pp. 126, 138; Broches, p. 78], however, this exception 

does not apply to this case. Those authorities only refer to situations in which there had never 

been a contract between the parties. In the case at hand, both parties were convinced that they 

had concluded a contract during the telephone conversation, which is proved by their letters 

of confirmation dated 3 April 2001 [CLAIMANT’ s Exhibit No. 3,4]. This is sufficient prima 

14


facie evidence that a contract between CLAIMANT and RESPONDENT has been concluded 

[Varady/Barcelo/Mehren, p. 126; Interocean Shipping Co. v. National Shipping & Trad. 

Corp. (U.S.)]. Special regard has to be paid to the Legislative History of Art. 16 Model Law 

which explicitly states that Art. 16(1) Model Law (as part of the procedural law of Danubia) 

applies regardless of whether there are initial defects or later grounds for nullity of the 

arbitration agreement [Seventh Secretariat Note, Analytical Commentary on Draft Text 

A/CN.9./264, Art. 16, para. 2]. Therefore the doctrine of separability governs the case at issue. 

c. The arbitration agreement itself does not suffer from any defects 

38. Since the arbitration agreement constitutes a contract independent from the commercial 

contract pursuant to the doctrine of separability, the arbitration clause can only be recognized 

as invalid if it itself suffers from any defects in will (e.g. mistake, fraud) [All-Union Export- 

Import Assoc. Sojuznefteexport (Moscow) v. JOC OIL (USSR); Euro-Mec Import, Inc. v. 

Pantrem & C., S.p.A. (U.S.); Tennessee Imports, Inc. v. Pier Paulo Filippi and Prix Italia 

(U.S.)]. Neither of these defects is alleged with regard to the arbitration agreement concluded 

between CLAIMANT and RESPONDENT. 

39. The parties have agreed upon the arbitration clause including the choice of the “German 

Institution of Arbitration”. CLAIMANT and RESPONDENT concluded a valid and binding 

arbitration agreement, notwithstanding the validity or invalidity of the commercial contract. 

III. The CISG is the law applicable to the contract and its 

formation 

40. Since the provisions concerning the formation of contracts under the domestic law of 

Equatoriana significantly differ from those of the CISG, it is essential to identify the CISG as 

the law applicable to the contract [cf. Procedural Order No. 1, para. No. 8; Procedural Order 

No. 2, Clarification No. 35]. CLAIMANT and RESPONDENT have subjected their 

contracted to the commercial law of Equatoriana (A.). The choice of law clause at issue 

cannot be interpreted as implied exclusion of the CISG (C.). It rather means that the CISG as 

the pertinent part of the Equatorian law (B.) is applicable to the contract. 

15


A. The parties have chosen the commercial law of Equatoriana 

41. CLAIMANT and RESPONDENT agree that by virtue of reference to their contract of 

15 December 2000 [CLAIMANT’s Exhibit No. 2] the choice of law clause contained therein 

also applies to the contract at issue [Statement of Claim, paras. 5, 12; Statement of Defence, 

para. 14, 15]. According to this clause, the contract is to be “subject to the commercial law of 

Equatoriana” [CLAIMANT’s Exhibit No. 2]. Both Section 23.1 DIS Rules and Art. 28(1) 

Model Law provide that “the arbitral Tribunal shall decide the dispute in accordance with 

such rules of law as are chosen by the parties as applicable to the substance of the dispute”. 

B. The CISG is the pertinent part of the commercial law of Equatoriana for the contract 

at issue 

42. Equatoriana is a party to the CISG [Statement of Claim, para. 13]. Thus, the CISG has 

become part of the commercial law of Equatoriana and confers rights and obligations upon 

the parties [Procedural Order No. 2, Clarification No. 5]. CLAIMANT and RESPONDENT 

have their places of business in different states, and the contract at issue is one for the sale of 

goods for the purposes of the CISG, Art. 1(1). Accordingly, the transaction falls within the 

scope of the CISG. Since the CISG covers only the international sale of goods whereas the 

domestic law of Equatoriana applies to all (other) contracts of sale, the CISG is the lex 

specialis and excludes application of the law governing domestic transactions [cf. Procedural 

Order No. 2, Clarification No. 5]. Thus, under the commercial law of Equatoriana the CISG is 

the law governing contracts like the one between CLAIMANT and RESPONDENT. 

C. Reference to the “commercial law of Equatoriana” does not amount to an implied 

exclusion of the CISG 

43. The choice of law clause making the contract subject to the commercial law of 

Equatoriana does not amount to an implied exclusion of the CISG because the clause does not 

indicate the parties’ actual intent to exclude the CISG. While a few decisions even deny the 

possibility of an implied exclusion [Orbisphere Corp. v. United States (U.S.); LG Landshut, 

5 May 1995 (Germany)], the majority opinion accepts it as possible to exclude the CISG 

according to Art. 6 CISG implicitly as long as there is an adequate indication of the parties’ 

actual intent to do so [Assante Technologies, Inc. v. PMC-Sierra, Inc. (U.S.); Staudinger et 

16


al/Magnus, Art. 6, note 20; Schlechtriem et al, Art. 6 note 13]. The parties have to indicate 

their intention in an objectively recognizable way [Schlechtriem et al, Art. 6 note 16]. A 

choice of law clause in an international sale of goods contract that selects the law of a 

Contracting State means that the CISG applies to the contract and not the domestic law of the 

Contracting State unless the domestic law is referred to in particular in the clause. This is the 

rule supported and applied by the overwhelming majority of national courts, arbitral Tribunals 

and scholars around the world [BGH, 25 November 1998 (Germany); BGH, 23 July 1997 

(Germany); Kantonsgericht Nidwalden, 3 December 1997 (Ch); Assante Technologies, Inc. v. 

PMC-Sierra, Inc. (U.S.); Sté Ceramique Culinaire de France v. Sté Musgrave Ltd. (Fr); ICC 

Court of Arbitration, 8324/1995; 7844/1994; 7656/1994; 6653/1993 (Fr); Schiedsgericht der 

Handelskammer Hamburg, 21 March 1996 (Germany); Int. Schiedsgericht der 

Bundeskammer der gewerblichen Wirtschaft – Vienna, 15 June 1994 (Austria); for further 

reference cf. UNCITRAL digest of CISG article 6 case law, para. 8; Honnold et al, Art. 77 

note 1; Staudinger et al/Magnus, Art. 6, note 24 et seq.; Schlechtriem et al, Art. 6 note 16; 

Bonell/Liguori, ULR 1997, p. 392; Drago/Zoccolillo, The Metropolitan Corporate Counsel 

2002, p. 9]. 

44. The rule is also supported by legislative history. It corresponds to the intention of the 

majority of delegations at the Vienna Conference. During the Conference, a large number of 

delegations rejected proposals by Canada and Belgium [A/CONF.97/C.1/L.45] suggesting that 

the domestic sales law, and not the Convention, would have to be applied whenever the 

parties chose the law of a Contracting State for their contract [Official Records, p. 250]. 

Therefore, it is generally agreed that the CISG applies if the parties simply chose the law of a 

Contracting State. 

45. According to these requirements, reference to the “commercial law of Equatoriana” in 

general was not sufficient to exclude the application of the CISG. One generally accepted way 

of an implied exclusion of the CISG is making reference to a certain (domestic) codification, 

such as the U.C.C. or any other national commercial code [Assante Technologies, Inc. v. 

PMC-Sierra, Inc. (U.S.); Staudinger et al/Magnus, Art. 6, note 30; Schlechtriem (2 nd ed.) et 

al, Art. 6 note 14]. However, since there is no formal field of commercial law in Equatoriana 

[Procedural Order No. 2, Clarification No. 35] reference simply to the “commercial law of 

Equatoriana” is by no means comparable to cases where the parties refer to a certain 

commercial code. 

17


46. Furthermore, interpretation of the choice of law clause pursuant to Art. 8 CISG shows that 

it cannot reasonably be understood as an exclusion of the CISG. The “commercial law” of 

Equatoriana covers various kinds of transactions [Procedural Order No. 2, Clarification 

No. 35; cf. Art. 1 Model Law, note 2: “the term ‘commercial’ should be given a wide 

interpretation so as to cover matters arising from all relationships of a commercial nature”]. 

Accordingly, applying the standards for interpretation as set forth in Art. 8(2) CISG, one has 

to consider that a reasonable person would understand “commercial law of Equatoriana” in a 

very broad sense. This understanding of the term “commercial law” in Equatoriana is 

significant as well as the fact that the CISG is the part of the commercial law of Equatoriana 

governing international sale of goods [cf. para. 42]. Especially in the context of an 

international sale of goods contract, a reasonable person could only understand the reference 

to the “commercial law of Equatoriana” as including the CISG. Since the choice of law clause 

was not a negotiated term [Procedural Order No. 2, Clarification No. 30], there is no 

indication of a different understanding of the clause by either of the parties. Thus, 

interpretation according to Art. 8 CISG confirms that the choice of law clause does not 

amount to an implied exclusion of the CISG. 

47. Further supporting this conclusion, recent case law shows that strong requirements have to 

be met with respect to a clear indication in the choice of law clause that the parties intended to 

opt out of the CISG. In Assante Technologies, Inc. v. PMC-Sierra, Inc. [U.S.], the court held 

that even the choice of the law of one region of a Contracting State (“the laws of the State of 

California”) does not suffice to presume the exclusion of the CISG. It stated that in the 

absence of clear language indicating that both contracting parties intended to opt out of the 

CISG the contention that the choice of law of a Contracting State precludes the applicability 

of the CISG has to be rejected. This decision manifests the tendency to resolve any doubts in 

favor of the applicability of the CISG. This tendency corresponds to the ratio of Art. 6 CISG, 

which was intended to discourage exclusion of the CISG by implication [Secretariat 

Commentary, p. 44; Ziegel/Samson, Art. 6]. 

48. Finally, one cannot draw a different conclusion from the fact that the law of Equatoriana 

(and thus the CISG) would have to be applied even without the choice of law clause. In 

practice, contracts often contain clauses of pure declaratory nature. Especially if there is a 

constellation that could give rise to doubts as to the applicable law, parties may wish to clarify 

which law applies. In the case at hand where buyer and seller have their places of business in 

18


two different states and even choose a third state as the place of arbitration, determining the 

applicable law appears to be a complex issue. It cannot be assumed that the parties had 

knowledge of the relevant rules of conflict of laws, and thus it made perfect sense for them to 

choose the law of Equatoriana. 

49. Furthermore, the application of the CISG does not render the choice of law clause 

meaningless. It still has the important effect of determining the law applicable to all those 

issues that are not governed by the CISG [cf. Art. 4 CISG], thus avoiding the necessity to 

invoke conflict of laws rules to solve such issues. 

50. After all, the requirements for an implied exclusion of the CISG have not been met. 

Reference merely to the “commercial law” is not sufficiently particular reference to the 

domestic law of Equatoriana to indicate clearly the intention of the parties to exclude the 

application of the CISG. Thus, CLAIMANT and RESPONDENT have not excluded the CISG 

by virtue of the choice of law clause. The CISG is the law applicable to the contract. 

IV. A contract of sale was concluded between CLAIMANT 

and RESPONDENT 

51. The parties reached an agreement that was sufficiently definite (A.). If the Tribunal finds 

that the parties did not agree on the discount, a valid contract of sale has still been concluded 

(B.). 

A. A contract containing all elements of Art. 14 CISG has been concluded during the 

telephone conversation between Mr. Storck and Mr. Black 

a. Mr. Storck and Mr. Black concluded a contract during their conversation 

52. According to Art. 11 CISG, a contract can be concluded orally. Mr. Storck explicitly 

declared that the written form of the contract dated 15 December 2000 was necessary only 

because it was the first order RESPONDENT was placing with CLAIMANT [CLAIMANT’s 

Exhibit No. 1]. Neither Mr. Storck nor Mr. Black showed any intention for a requirement as to 

a written form for future contracts. 

19


53. In the fax of 3 April 2001, Mr. Black, purchasing manager of RESPONDENT, declared 

that he considered himself to have concluded a contract of sale during the telephone 

conversation he and Mr. Storck had held the same day [CLAIMANT’s Exhibit No. 3]. The 

responding fax shows the same was true for Mr. Storck [CLAIMANT’s Exhibit No. 4]. 

Therefore, there is no doubt that both parties were in agreement that they had concluded a 

contract and intended to be bound. A contract has thus been concluded. 

b. The agreement contained all elements of Art. 14 CISG 

54. As the agreement indicates the goods, fixes the quantity and determines the price, it is 

sufficiently definite to culminate in the formation of a contract according to Art. 14 CISG. 

During their conversation, Mr. Storck and Mr. Black agreed that RESPONDENT would 

purchase 1350 tons of polypropylene film. Payment, shipping and similar terms were to be the 

same as in the written contract of 15 December 2000 [CLAIMANT’s Exhibit No. 3, No. 4]. 

Several adjustments were made for the dates of shipment and the price RESPONDENT had to 

pay, since the list price had risen to $ 1,900 per ton [CLAIMANT’s Exhibit No. 3]. According 

to the commitments Mr. Storck made in his letter of 7 December 2000, he agreed that 

RESPONDENT would receive a discounted price [CLAIMANT’s Exhibit No.4]. They hereby 

fixed the exact price for the goods, although they did not expressly mention the percentage of 

the discount RESPONDENT was to receive [cf. paras. 64 et seq.]. Therefore, a valid contract 

of sale was concluded during the telephone conversation between Mr. Storck and Mr. Black 

on 3 April 2001, containing all elements of an offer set by Art. 14 CISG. 

B. Irrespective of the fact whether there was an agreement on the discount, a contract 

would still have been validly concluded even if the parties had not fixed the discount 

55. The requirements Art. 14 CISG stipulates for an offer need not be met as to the formation 

of the contract between CLAIMANT and RESPONDENT, since they did not follow the offeracceptance 

pattern of Part II of the CISG (a.). An agreement on the discount was not 

necessary on order to conclude a valid contract of sale (b.). The domestic law of Equatoriana 

has no impact on the present contract (c.). 

20


a. Since CLAIMANT and RESPONDENT did not conclude the contract by virtue of 

offer and acceptance, the requirements of Art. 14 CISG were not mandatory for the 

formation of the contract at issue 

56. If a contract is not concluded by means of an exchange of “offer” and “acceptance”, the 

requirements of Art. 14 CISG are not mandatory. Although most of the provisions of Part II 

of the CISG are only concerned with the formation of a contract by the exchange of two 

corresponding declarations, the CISG does by no means contain a mandatory requirement that 

a contract must be concluded by exchanging an identifiable “offer” and “acceptance” 

[Schlechtriem/Lüderitz, Einheitliches Kaufrecht, p. 188; Honnold et al, before Art. 14 note 

132.1]. This point of view is confirmed by Artt. 18(3) and 29(2) CISG. According to these 

rules, a contract may be concluded simply by “performing an act” (Art. 18(3) CISG) or with 

an agreement that did not arise out of an exchange of declarations, but out of a document 

which is signed by both parties (Art. 29(2) CISG) [Honnold et al, Art. 14 note 137.5; 

Roth/Kunz, RIW 1997, p. 19]. Art. 14 CISG only applies if there is nothing else than a 

proposal that may (or may not) constitute an “offer” or an “invitation to make offers” 

[Neumayer/Ming, Art. 14 note 11; Honnold et al, before Art. 14 note 132.1; Neumayer, FS- 

Lorenz, p. 751]. CLAIMANT and RESPONDENT did not agree upon the purchase by 

exchanging isolated declarations of “offer” and “acceptance”. Instead, they had a telephone 

conversation that matured into the present contract of sale. Since they did not follow the offeracceptance 

pattern of Part II of the CISG, the requirements of Art. 14 CISG were not 

mandatory for the present contract [Honnold et al, Art. 14 note 137.5; Neumayer, FS-Lorenz, 

p. 751; Enderlein/Maskow, Art. 55 note 2; Staudinger et al/Magnus, Art. 55 note 5]. 

b. An agreement on the discount was not necessary in order to conclude a valid contract 

57. It was not necessary to determine the discount RESPONDENT was to receive during the 

telephone conversation. RESPONDENT claims that the price was not determined and 

therefore no contract of sale could have been concluded under Article 14 CISG [Statement of 

Defence No. 18]. Assuming that there was no agreement on the discount, due regard has to be 

paid to the wording of Art. 14 CISG. This provision states that the issue is whether a proposal 

is sufficiently definite to constitute an offer [cf. Neumayer/Ming, Art. 14 note 11; Honnold et 

al, Art. 14 note 137.5]. It does not, however, constitute minimum requirements for contracts 

[Staudinger et al/Magnus, Art. 55 note 5; Bucher, p. 66]. 

21


58. Art. 14 CISG provides that an offer is sufficiently definite if it determines the price or 

makes provision to do so. According to this rule, such an offer is always deemed to be 

effective. The offeree of such a declaration is free to conclude a contract by way of an 

acceptance according to Art. 18 CISG. However, it may not be argued e contrario that a CISG 

contract which does not fix or make provision for determining the price is not sufficiently 

definite and thus not binding, as the CISG itself proves the contrary: According to Art. 55 

CISG there can be a “validly concluded” contract without a predetermined price 

[Bianca/Bonell/Eörsi, Art. 55 note 2.2; Lookofsky, (CISG in USA) p. 28; Schlechtriem, note 

212]. 

59. With regard to Artt. 6 and 8(1) CISG it becomes evident that under CISG rules the most 

important element of a contract is the intention of the parties to be bound by their agreement 

[Honnold et al, (1 st edition) Art. 14 note 134 “The Ultimate Criterion: Indication of Intent to 

be Bound”; Sono, p. 121; Enderlein/Maskow, Art. 14 note 5, 11; Soergel et 

al/Lüderitz/Fenge, before Art. 14 note 1; Karollus, p. 62; Roth/Kunz, RIW 1997, p. 19]. A 

contract that the parties intended to conclude must be respected [Adami, Revue de droit des 

affaires internationales 1989, p. 107; Honnold et al, Art. 14 note 137.8; Ludwig, p. 297]. A 

missing provision for the determination of the price cannot hinder the conclusion of the 

contract, since it would run contrary to this general principle of the CISG [cf. Adami, Revue 

de droit des affaires internationales 1989, p. 110; Karollus, p. 62]. The result would be that 

the parties’ willingness to be bound would be disregarded. 

60. Additionally, the necessity for contracts without a predetermined price must not be 

ignored. These contracts facilitate international commercial relationships and have already 

been very common in the life of commerce for a long time [cf. Rabel, p. 7]. The mechanism 

for the determination of the price provided by the CISG in Art. 55 CISG responds to this need 

of trade and corresponds to the purpose of the CISG to facilitate and promote trade [Adami, 

Revue de droit des affaires internationales 1989, p. 120]. If a predetermined price was a 

mandatory requirement of a contract, this mechanism would be useless. [Bianca/Bonell/Eörsi, 

Art. 55 note 2.2.4]. 

61. Furthermore, it has to be considered that Art. 14 CISG is only concerned with problems 

regarding offers, while Art. 55 CISG deals with the issue of contracts [Bianca/Bonell/Eörsi, 

Art. 55 note 2.2.4; Neumayer, FS-Lorenz, p. 750]. Therefore, it is no longer appropriate to 

concentrate on the issue whether there was a determined discount in the offer after it became 

22


evident that CLAIMANT and RESPONDENT intended to be bound by contract 

[Bianca/Bonell/Eörsi, Art. 55 note 2.2.4; Bucher, p. 58]. Instead, the offer becomes irrelevant 

and the contract in itself proves that it is sufficiently definite, irrespective of whether the offer 

contained a provision for the determination of the exact rate of the discount [cf. Ludwig, 

p. 297; Bianca/Bonell/Eörsi, Art. 55 note 2.2.4]. As Art. 55 CISG provides, the question is 

not “Was there a contract?” but rather “What were its terms?” [cf. Honnold et al, Art. 55 note 

325.1]. The answer under CISG rules is that the parties are considered to have impliedly made 

reference to the price generally charged at the time of the conclusion of the contract for such 

goods sold under comparable circumstances in the trade concerned [Art. 55 CISG]. For this 

reason, it was not necessary for CLAIMANT and RESPONDENT to determine the discount 

RESPONDENT was to receive during their conversation. 

62. In conclusion, even if the Tribunal finds that there was no agreement on the discount, the 

parties have nevertheless concluded a valid contract. The discount is then to be determined 

according to Art. 55 CISG. 

c. The domestic law of Equatoriana has no impact on the validity of the contract 

63. The domestic law of Equatoriana does not affect the validity of the contract between 

CLAIMANT and RESPONDENT. Art. 4 CISG states that the Convention is not concerned 

with the validity of a contract “except as otherwise expressly provided” in the CISG. As Artt. 

55 and 14 CISG explicitly deal with price determination, the “validly concluded” contract in 

Art. 55 CISG refers to reasons for invalidity under national laws other than invalidity for an 

open price [Nicholas, p. 255; Staudinger et al/Magnus, Art. 14 note 34]. Therefore, these 

rules prevail over the Equatorian law [Schlechtriem/Lüderitz, Einheitliches Kaufrecht, p. 189; 

Magnus, IPRax 1996, p. 146]. 

V. The contract was concluded including a 4% discount 

64. The parties agreed on a discount of 4% (A.). Even if the Tribunal finds that the parties did 

not agree on a discount, the contract has been concluded including a 4% discount (B.). 

23


A. The agreement the parties reached during their telephone conversation can only be 

interpreted as including a discount of 4% from CLAIMANT's list price 

a. The agreement has to be interpreted according to Article 8 CISG 

65. During their telephone conversation Mr. Black and Mr. Storck agreed to apply 

CLAIMANT's conditions of sale as stated in the contract dated 15 December 2000 

[cf. CLAIMANT’s Exhibits No. 3 and No. 4]. RESPONDENT claims that this agreement leads 

to an 8% discount, similar to the discount given for the last order. However, it can be clearly 

shown that a 4% discount was agreed upon and that the 8% discount was an incentive offer 

only applying to the previous order. To determine the meaning of the agreement, it has to be 

interpreted according to Art. 8 CISG. This article applies to any kind of declaration and also 

to statements about the price made during a telephone conversation. [cf. OGH, 10 November 

1994 (Austria); MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova d'Agostino, S.p.A 

(U.S.); Honnold et al, Art. 8 p. 116; Amato, J. L. & Comm 1993, p. 6; Secretariat 

Commentary to Art. 12, para. 7] 

66. Pursuant to Art. 8(1) CISG, the agreement reached is to be interpreted according to the 

intent of each party "where the other party … could not have been unaware what that intent 

was". Due consideration has to be given to all relevant circumstances of the case 

[Art. 8(3) CISG]. 

b. RESPONDENT could not have been unaware of CLAIMANT's intent to grant only a 

4% discount 

67. When Mr. Storck agreed on 3 April 2001 to sell polypropylene film to RESPONDENT, 

he intended to grant a discount of 4%. The 8% discount granted in the previous contract was 

an incentive one time offer applying to the previous contract only. 

68. CLAIMANT drafted the written contract of 15 December 2000 because RESPONDENT 

placed an order with CLAIMANT for the first time [cf. CLAIMANT’s Exhibit No. 1]. By 

stating to draft a formal contract only for this first time order, CLAIMANT expressed the 

intention of being able to refer to that contract in future agreements. When Mr. Storck did so 

during the telephone conversation, Mr. Black could not have been unaware that only those 

explicit provisions or implicit arrangements are referred to, that were drafted to serve as 

24


samples for future contracts. The letter sent to Mr. Black on 7 December 2000 announcing the 

first agreement between CLAIMANT and RESPONDENT points out that the discount of 8% 

is the highest discount ever given by CLAIMANT to any customer for any purchase. It is 

dealt with in a section separated from the announcement of the prospect of a long term 

relationship [cf. CLAIMANT’s Exhibit No. 1]. Therefore, Mr. Black could not have been 

unaware that the price stated in the written contract reflecting the 8% discount was an 

incentive offer only and not meant to govern all subsequent contracts to be concluded by the 

parties. 

69. Since RESPONDENT knew that the 8% discount was unusually high and the list price 

already low [cf. CLAIMANT’s Exhibit No. 1], RESPONDENT could not have been unaware 

of its incentive nature. Also, as sales manager of a large international company, Mr. Black 

could not have been unaware that special discounts are given in the polypropylene market for 

special reasons such as first time orders [cf. Procedural Order No. 2, Clarification No. 40]. 

70. In his letter of 7 December 2000 Mr. Storck pointed out that CLAIMANT’s discount to 

favored customers is 4%. In the same letter he promised that RESPONDENT would always 

receive CLAIMANT's best price, since a long term business relationship was expected 

[CLAIMANT’s Exhibit No. 1]. When Mr. Black subsequently called Mr. Storck to place an 

order with CLAIMANT, they moved along the expected line of a long term 

relationship. Thus, Mr. Black could expect Mr. Storck to keep his promise and receive the 

best price. A best price is received as long as no other customer is given a better price. 

CLAIMANT never granted a discount higher than 4% to any customer except on first orders 

as incentive offers [cf. Procedural Order No. 2, Clarification No. 38, Procedural Order 

No. 3, Clarification No. 5]. Therefore, a 4% discount was CLAIMANT’s best price and by 

granting 4% to RESPONDENT Mr. Storck kept his promise. Since RESPONDENT knew that 

CLAIMANT grants a 4% discount to favored customers, RESPONDENT could not have 

been unaware that a 4% discount reflected CLAIMANT’s best price. Consequently, 

Mr. Black could not have been unaware of Mr. Storck's intent to grant a 4% discount. 

c. Neither Mr. Storck nor any other reasonable person could have been aware of 

Mr. Black's intent to contract with a discount of 8% from the list price 

71. Mr. Storck had no reason to believe that Mr. Black was only willing to contract with 

CLAIMANT in the event that an 8% discount was accepted. Mr. Black first revealed his 

25


intention as late as in his letter of 10 April 2001 [cf. CLAIMANT’s Exhibit No. 7]. 

72. Furthermore, the written contract of 15 December 2000 does not mention the discount 

given. When Mr. Black referred to that written contract during their telephone conversation, 

Mr. Storck could not know that this reference meant to introduce an 8% discount as a 

requirement to contract [cf. CLAIMANT’s Exhibit No. 3]. 

73. Consequently, Mr. Storck could not have been aware of Mr. Black's intent to conclude a 

contract with a discount of 8% while on the other hand Mr. Black could not have been 

unaware of Mr. Storck's intent to sell with an 4% discount. Thus, the agreement of the parties 

must be understood as including a 4% discount. 

74. For the reasons given above [paras. 67 - 72], the agreement also includes a 4% discount if 

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

RESPONDENT [Art. 8(2) CISG; cf. LG Hamburg, 26 September 1990 (Germany)] 

B. If the Tribunal finds that the parties' agreement did not fix the price, a contract has 

nevertheless been concluded including a 4% discount 

75. In this event the price has to be determined according to Art. 55 CISG [cf. paras. 55 et 

seq.]. Pursuant to this provision, the parties are considered to have made reference to the price 

generally charged for such goods sold under comparable circumstances in the trade concerned 

[Art. 55 CISG]. The dispute between CLAIMANT and RESPONDENT did not arise with 

regard to the list price of the polypropylene film but with regard to the discount on that price. 

Nevertheless, there is no doubt that Art. 55 CISG is applicable not only to list prices but also 

to discounts as the award of discounts is a "comparable circumstance" for the purpose of 

Art. 55 [cf. Schlechtriem/Hager, Art. 55 note 8; Enderlein/Maskow, Art. 55 note 10]. Since 

CLAIMANT’s discount practice of granting a 4% discount to favored customers is much like 

the practice in the industry [cf. Procedural Order No. 2 Clarification No. 40], it is the practice 

"under comparable circumstances in the trade concerned" [cf. ICC Court of Arbitration, 

8324/1995 (Fr); BG St. Gallen, 3 July 1997 (Ch); Witz et al, Art. 55 note 3]. Therefore, even 

if assuming the parties had not reached an agreement that includes a 4% discount, the contract 

between CLAIMANT and RESPONDENT would have been concluded including a 4% 

discount. 

26


VI. RESPONDENT was in breach of its obligations under 

the contract 

76. As shown above, on 3 April 2001 CLAIMANT and RESPONDENT concluded a contract 

of sale for 1350 tons of polypropylene film, the price being $ 1,900 per ton with a 4% 

discount. RESPONDENT’s obligations under this contract were to pay the price and to take 

delivery of the goods, Artt. 53 et seq. CISG. RESPONDENTS’s fax of 2 May 2001 was an 

anticipatory breach according to Art. 72(1) CISG (A.) This fax was a repudiation of the 

contract (B.), and RESPONDENT was not entitled to refuse performance (C.). 

A. RESPONDENT’s fax of 2 May 2001 was an anticipatory breach of contract 

77. With its fax of 2 May 2001 RESPONDENT repudiated and thereby breached the contract 

between the parties according to Art. 72(1) CISG. This article refers to a situation where “it is 

clear that one of the parties will commit a fundamental breach”. Such a future fundamental 

breach may be clear because of the words or actions of the party which constitute a 

repudiation of the contract [Secretariat Commentary on 1978 Draft Con. Art. 63, para. 2]. 

Accordingly, one party’s express and definite refusal to perform its obligations constitutes a 

fundamental breach of contract, except where the party is entitled to refuse performance 

[Zürich Chamber of Commerce, 31 May 1996 (Ch); OLG Düsseldorf, 10 February 1994 

(Germany); Schlechtriem et al, Art. 25, note 17, 22; Stoll, RabelsZ 1998, pp. 624 et seq.; 

Koch, p. 256]. 

B. RESPONDENT’s fax was an anticipatory repudiation of the contract concluded on 

3 April 2001 

78. Like every statement or conduct of the parties relevant under the CISG, the fax has to be 

interpreted with regard to the guidelines of Art. 8 CISG. RESPONDENT stated in the fax that 

it had “. . . placed an order with Polyfilm GmbH for the polypropylene film that (it) had 

expected to purchase from (CLAIMANT)” [CLAIMANT’s Exhibit No. 10]. This statement 

unequivocally proves RESPONDENT’s intent not to perform any obligations under its 

contract with CLAIMANT. Moreover, the fact that RESPONDENT had entered into another 

contract for the supply of the same goods it was to receive from CLAIMANT makes clear that 

27


the refusal was meant to be definite. Thus, the statement RESPONDENT made in its fax of 

2 May 2001 can reasonably be interpreted only as an express and definite refusal to perform 

any obligation under the contract. 

C. RESPONDENT was not entitled to refuse performance 

79. Since the contract concluded on 3 April 2001 contained a 4% discount, RESPONDENT 

had no right to make its performance dependent on an 8% discount. Furthermore, 

CLAIMANT had complied with all of its own obligations under the contract until receiving 

RESPONDENT’s fax of 2 May 2001. There can be no doubt that CLAIMANT was ready, 

willing and able to perform its obligations, and that it would have done so absent 

RESPONDENT’s anticipatory repudiation. CLAIMANT had already booked space for 

shipment of the first installment [CLAIMANT’s Exhibits No. 6, No. 9]. Thus, there was neither 

breach of contract nor any other misconduct on behalf of CLAIMANT that could have given 

RESPONDENT a right to avoid the contract according to Art. 49 CISG. Likewise, 

RESPONDENT had no right to claim that the contract was invalid for any reason under the 

domestic law of Equatoriana, which applies to the contract as far as its validity is concerned, 

Art. 4(a) CISG. In particular, the domestic law of Equatoriana does not provide for invalidity 

of the contract under theories of mistake or otherwise [Procedural Order No. 2, Clarification 

No. 36]. Consequently, RESPONDENT had no right to repudiate the contract or to refuse 

performance of its obligations respectively. Thus, its fax of 2 May 2001 constituted a breach 

of contract. 

VII. EQUAFILM is entitled to claim damages for lost 

profit in the amount of $ 575,477.98 

80. As a consequence of RESPONDENT’s breach, CLAIMANT is entitled to claim damages 

(A.). Since the damages have to be calculated according to Art. 74 CISG, CLAIMANT has 

the right to recover its loss of profit, i.e. $ 575,477.98 (B.). RESPONDENT could foresee that 

it would cause such damages by its repudiation of the contract (C.). Since CLAIMANT was 

in a lost volume situation, it did not fail to take measures to mitigate its loss (D.). Thus, 

CLAIMANT is entitled to claim damages in the amount of $ 575,477.98. 

28


A. RESPONDENT’s breach of contract entitles CLAIMANT to claim damages 

81. RESPONDENT repudiated and thereby breached the contract pursuant to Art. 72 CISG 

and subsequently failed to perform its obligations as set forth in Artt. 53 et seq. CISG. Both 

the repudiation [Art. 72 CISG] and the subsequent failure to perform any obligations 

[Art. 61(1)(b)] give CLAIMANT the right to claim damages. Though Art. 72 CISG does not 

explicitly provide a right to claim damages, it is clear that in case of an anticipatory 

repudiation the aggrieved party is entitled to recover against the other party damages it 

suffered as a consequence of the other party’s repudiation [Downs Investments v. Perwaja 

Steel (Australia)]. Since it is a basic principle of the CISG that damages are payable in respect 

of any breach of contract, it was decided at an early stage of the drafting of the CISG that no 

express provision would be necessary [Schlechtriem et al, Art. 72 note 25, 35 with reference 

to the legislative history]. 

82. In any event, CLAIMANT is entitled to claim damages as a consequence of 

RESPONDENT’s anticipatory breach. 

B. CLAIMANT suffered lost volume damages in the amount of $ 575,477.98 as a 

consequence of RESPONDENT’s breach 

83. As provided in Art. 74 CISG, CLAIMANT is entitled to recover its lost profit (a.). 

CLAIMANT has to be given this loss of profit as compensation for its lost volume damages 

(b.). These damages were a consequence of RESPONDENT’s breach (c.). The profit 

CLAIMANT lost is 22% of the contract price, i.e. $ 575,477.98 (d.). 

a. CLAIMANT is entitled to recover its loss of profit 

84. CLAIMANT’s damages have to be calculated according to Art. 74 CISG. This article 

provides the basic rule for the calculation of damages for losses suffered by one party as a 

result of the other party’s breach [Schlechtriem et al, Art. 74 note 2]. The rule seeks to place 

the injured party in the same economic position it would have been in had the other party 

properly performed its contractual obligations [Secretariat Commentary on Art. 70 of the 

1978 Draft Convention; Delchi Carrier SpA v. Rotorex Corporation (U.S.); Honnold et al, 

Art. 74 note 503]. In other words, CLAIMANT has to be given the benefit of its bargain, 

29


which consists inter alia of the expectation interest [cf. Sutton, Ohio State Journal 1989, 

III.B.1.]. As explicitly stated in Art. 74 CISG, this includes CLAIMANT’s loss of profit. 

b. CLAIMANT was in a lost volume situation 

85. RESPONDENT’s breach of contract diminished the total volume of sales CLAIMANT 

could have carried out by one, namely the sale to RESPONDENT. Therefore, it put 

CLAIMANT in a lost volume situation [cf. OGH, 28 April 2000 (Austria); Honnold et al, 

Art. 74 note 503, Saidov, I.2.(c)]. Due to RESPONDENT’s breach, CLAIMANT suffered lost 

volume damages because it lost the (additional) profit it would have earned from the contract 

with RESPONDENT. 

86. CLAIMANT has to be compensated for its lost volume damages since any subsequent 

sale of polypropylene film to other customers cannot be regarded as a replacement for the 

contract between CLAIMANT and RESPONDENT [cf. OGH, 28 April 2000 (Austria); Neri 

v. Retail Marine Corp. (U.S.); Saidov, I 2. (c)]. The polypropylene film is a standard product 

that CLAIMANT would not have manufactured specifically for RESPONDENT [Procedural 

Order 2, Clarification No. 53]. CLAIMANT had the manufacturing capacity to produce the 

1350 tons for RESPONDENT in addition to any quantity to be produced for other customers 

[Procedural Order 2, Clarification No. 54]. Thus, CLAIMANT had the capacity to supply 

any quantity to other customers independently from its contract with RESPONDENT. For this 

reason, there is no causal connection between RESPONDENT’s breach and any subsequent 

transaction. CLAIMANT would have made other sales in any event. Accordingly, in order to 

put CLAIMANT in the position it would have been in had the contract with RESPONDENT 

been performed, it has to be awarded the additional profit it would have earned from the 

contract with RESPONDENT. 

c. CLAIMANT’s loss of profit was a consequence of RESPONDENT’s breach 

87. RESPONDENT’s breach directly caused CLAIMANT’s lost volume damages. 

CLAIMANT would not have suffered a loss of profit but for RESPONDENT’s repudiation of 

the contract. 

30


d. CLAIMANT lost profit in the amount of $ 575,477.98 

88. The amount of CLAIMANT’s lost profit can be determined according to CLAIMANT’s 

profit margin and the contract price. If RESPONDENT had performed its obligations under 

the contract, CLAIMANT would have received $ 2,615,809, the price RESPONDENT was to 

pay [cf. CLAIMANT’s Exhibit No. 4]. This price reflected the 4% discount CLAIMANT 

granted [cf. paras. 51 et seq.]. CLAIMANT’s profit margin would have been 22% of this sum 

[cf. Statement of Claim, para. 11]. The CISG does not explicitly present a method for 

calculating the lost profit. However, it is generally agreed that the loss can be calculated using 

the seller`s profit margin [OGH, 28 April 2000 (Austria); Delchi Carrier SpA v. Rotorex 

Corporation (U.S.); Schlechtriem et al, Art. 74 note 23]. Thus, CLAIMANT’s lost profit was 

22% of the contract price, i.e. $ 575,477.98. 

89. After all, CLAIMANT suffered lost volume damages as a consequence of 

RESPONDENT’s breach. These damages can be measured by CLAIMANT’s loss of profit, 

which amounts to $ 575,477.98. 

C. The damages were foreseeable to RESPONDENT 

90. CLAIMANT’s lost volume damages in the amount of $ 575,477.98 were foreseeable loss 

for the purposes of Art. 74 CISG. The pertinent standard for the foreseeability of loss is what 

a reasonable person ought to have foreseen at the time of the conclusion of the contract [ICC 

Court of Arbitration, 8324/1995 (Fr); Downs Investment v. Perjawa Steel (Australia); 

Schlechtriem et al, Art. 74 note 12; Audit, note 172; Bianca/Bonell/Knapp, Art. 74, note 26]. 

Since CLAIMANT is a merchant and not a non-profit organization, it is obvious to any 

reasonable person entering into a contract with CLAIMANT that the latter intends to make 

profit from this contract. 

91. The actual amount of the damages need not be foreseen [Schlechtriem et al, Art. 74 note 

37; Staudinger et al/Magnus, Art. 74 note 31]. However, CLAIMANT’s gross margin of 22% 

was foreseeable since it is a percentage that is in line with what can be expected in the 

industry [Procedural Order 2, Clarification No. 55]. 

31


D. CLAIMANT did not fail to take measures to mitigate its loss according to Art. 77 

CISG 

92. Since RESPONDENT bears the burden of proof if it wants to invoke Art. 77 CISG 

[Schlechtriem et al, Art. 77 note 12], unless RESPONDENT raises this issue, it need not be 

discussed in detail. However, it is obvious that due to the lost volume situation CLAIMANT 

did not fail to mitigate its loss as stipulated in Art. 77 CISG. There were no mitigation 

measures that were “reasonable in the circumstances to mitigate the loss", Art. 77 CISG [cf. 

Saidov, II.4.(d)]. The only mitigation measure one could think of would have been finding a 

substitute buyer and reselling the polypropylene film originally reserved for RESPONDENT. 

However, as shown above [cf. paras. 85, 86], no sale following RESPONDENT’s breach can 

be regarded as a resale because each and every subsequent sale would have been made even if 

RESPONDENT had not breached the contract with CLAIMANT. Accordingly, no subsequent 

transaction could help to avoid CLAIMANT’s loss. Accordingly, CLAIMANT did not fail to 

mitigate the damages. Thus, it is entitled to recover the entire lost profit. 

93. After all, CLAIMANT is entitled to claim damages in the amount of $ 575,477.98. 

VIII. CLAIMANT is entitled to interest on the damages 

94. Art. 78 CISG grants the right to claim interest on damages (A.). The period of time during 

which interest has to be charged begins with the date when the damages occurred and ends 

with payment (B.). 

A. Art. 78 CISG grants the right to claim interest on damages 

95. Art. 78 CISG grants the right to interest on any “sum that is in arrears”. This wording 

includes damages that are due even though such damages are not explicitly mentioned in Art. 

78 CISG [Schlechtriem et al, Art. 78 note 15]. Accordingly, it is not a requirement for the 

right to claim interest that there is a claim liquidated or established by judgment [Delchi 

Carrier SpA v. Rotorex Corporation (U.S.); Margon Srl v. VN Sadelco (Belgium); 

Commercial Court Zürich, 5 February 1997 (Ch); Arbitral Award 52/97, 10 December 1997 

(Austria)]. 

32


96. Art. 7 CISG supports this conclusion. Since there is no explicit reference to interest on 

damages in Art. 78 CISG, it has to be interpreted according to Art. 7(1) CISG. In doing so, 

particular regard is to be had to the purpose of the provision. The intended purpose is to 

prevent the debtor’s unjust enrichment and to protect the creditor [Thiele, J. of Int. Com. Law 

and Arb. 1998, III.B.5.]. To serve this purpose in cases of breach of contract, the party that 

has suffered a loss has to be granted interest on this loss from the time of the breach. 

Likewise, gap-filling according to Art. 7(2) CISG would lead to the application of the general 

principle of full compensation as expressed in Art. 74 CISG and, thus, to the same conclusion 

[Lookofsky, (CISG in Europe) p. 106, note 165]. After all, CLAIMANT is entitled to interest 

on its loss of profit. 

B. CLAIMANT is entitled to interest from the date payment was due 

97. The duty to pay pre-award interest begins when the payment of the sum becomes due 

[Honsell, Art. 78 note 8; Staudinger et al/Magnus, Art. 78 note 9]. Payment of damages 

becomes due when the damage occurs [Schlechtriem et al, Art. 78 note 15; Staudinger et 

al/Magnus, Art. 78 note 10; LG Heidelberg, 3 July 1992 (Germany)]. In the case at hand, the 

damages occurred when RESPONDENT failed to pay the price for the goods though payment 

was due. 

98. The time payment was due has to be determined separately for each of the nine 

installments. Each payment was due 30 days after the date CLAIMANT had to deliver an 

installment under the contract with RESPONDENT [CLAIMANT’s Exhibit No. 2]. The dates 

agreed on for CLAIMANT’s deliveries were the 10 th of each month from May 2001 through 

January 2002 [CLAIMANT’s Exhibit No. 3]. 

99. Every time a certain amount was to pay and RESPONDENT failed to do so, the damages 

CLAIMANT has suffered increased by the loss of the profit CLAIMANT would have 

generated from the pertinent installment. Consequently, CLAIMANT is entitled to interest on 

each fraction amount of damages from the time each installment was due, i.e. 30 days from 

the 10 th day of each month from May 2001 through January 2002. 

100. If the Tribunal considers it not appropriate to award interest corresponding to the dates 

specified above, interest should be awarded from the beginning of the arbitration proceedings. 

With commencement of the arbitration against RESPONDENT, CLAIMANT has taken an 

33


appropriate measure to secure payment of the damages. In any case, interest should be 

awarded from the date of the award. 

101. The period of time during which interest should be awarded ends with RESPONDENT’s 

payment of the entire amount of damages towards CLAIMANT. 

102. As a result, CLAIMANT is entitled to interest on each fraction amount of its loss of 

profit from the time each installment by RESPONDENT was due, i.e. 30 days from the 10 th 

day of each month from May 2001 through January 2002, until payment of the damages. 

Request for relief 

In the light of the submissions above, Counsel respectfully requests the Tribunal 

• to reject the challenge to Dr. Arbitrator 

• to find that the Tribunal has jurisdiction to decide on the case at issue 

• to declare that the CISG is the law applicable to the contract 

• to find that CLAIMANT and RESPONDENT concluded a contract including a 4% 

discount 

• to declare that RESPONDENT breached the contract by refusing to comply with its 

contractual obligations 

• to award damages for breach of contract in the amount of $ 575,477.98 

• to award interest on the said sum from the day payment was due, i.e. 30 days from the 

10 th of each named month, up to payment of the damages 

(signed)_____________________________________________________________________ 

12 December 2002 

34

MEMORANDUM FOR CLAIMANT

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