MEMORANDUM FOR RESPONDENT - Pace University

Eighteenth Annual
Willem C. Vis International Commercial Arbitration Moot
15 April – 21 April 2011
Vienna, Austria
MEMORANDUM FOR RESPONDENT
On Behalf of: Against:
Equatoriana Fishing Ltd. Mediterraneo Trawler Supply S.A.
30 Seaview Terrace 1 Harbour View Street
Oceanside, Equatoriana Capital City, Mediterraneo
Tel. (0) 927-8515 Tel. (0) 148-2010
Fax. (0) 927-8516 Fax. (0) 148-2011
Email: enquiries@fish.eq Email: office@trawler.me
RESPONDENT CLAIMANT
QUEEN’S UNIVERSITY
FACULTY OF LAW
BENJAMIN ADELSON · VANESSA BEAMISH · LARA FITZGERALD-HUSEK · JACK MASLEN

QUEEN’S UNIVERSITY FACULTY OF LAW
TABLE OF CONTENTS
TABLE OF ABBREVIATIONS ....................................................................................... VI!
TABLE OF AUTHORITIES ........................................................................................ VIII!
TABLE OF CASES ........................................................................................................ XIV!
SUMMARY OF ARGUMENT ............................................................................................ 1!
ARGUMENT ...................................................................................................................... 2!
PART ONE: THE TRIBUNAL LACKS JURISDICTION TO HEAR THE PARTIES’
DISPUTE. ........................................................................................................................... 2!
I. THE TRIBUNAL WAS NOT CONSTITUTED ACCORDING TO THE PARTIES’ AGREEMENT. ..... 2!
A.! The Council did not comply with the Parties’ Agreement in denying
confirmation of Mr. Y. ................................................................................................ 3!
1.! Both Parties waived any objection to Mr. Y’s qualified statement of
independence. ............................................................................................ 3!
2.! The Parties’ mutual decision to accept Mr. Y’s appointment as
presiding arbitrator was entitled to deference from the Council. ..... 3!
3.! The Council should have regard for the Parties’ expectations and
should have applied the IBA Guidelines to confirm Mr. Y. .............. 4!
4.! The Council’s decision to deny Mr. Y’s confirmation was
premature. .................................................................................................. 5!
B.! The Council did not comply with the Parties’ Agreement in appointing Mr. Z
as presiding arbitrator. ................................................................................................. 5!
1.! The Council did not have authority to substitute a replacement
arbitrator because there was no replacement arbitrator. .................... 5!
2.! The Council should have invited the party-appointed arbitrators to
make another appointment. .................................................................... 6!
II. RESPONDENT DID NOT WAIVE ITS RIGHT TO OBJECT TO THE JURISDICTION OF THE
TRIBUNAL. ........................................................................................................................................... 6!
A.! Respondent was unaware of the improper constitution of the Tribunal when it
submitted its Statement of Defence. ......................................................................... 7!
B.! The time between the improper constitution and Respondent’s objection does
not amount to undue delay. ........................................................................................ 7!
C.! Respondent’s objection is not disruptive of the arbitral proceedings. ................ 7!
III. IF THE TRIBUNAL AFFIRMS ITS JURISDICTION, AN EVENTUAL AWARD IS AT RISK OF
BEING SET ASIDE OR DENIED RECOGNITION AND ENFORCEMENT. .......................................... 8!
PART TWO: CLAIMANT BREACHED ITS DUTY OF CONFIDENTIALITY. .......... 9!
I. THE 2010 MILAN RULES APPLY TO THE ISSUE OF CONFIDENTIALITY. ................................ 10!
A.! The Tribunal should follow the presumption that the most recent version of
the Milan Rules governs the dispute. ...................................................................... 10!
B.! Even if the 2004 Milan Rules apply to substantive duties, the confidentiality
duty is procedural in character, and so the 2010 Milan Rules apply. ................. 11!
ii

QUEEN’S UNIVERSITY FACULTY OF LAW
C.! Claimant’s statements violated the duty of confidentiality under art. 8(1) 2010
Milan Rules. ................................................................................................................. 11!
1.! Claimant divulged the existence of arbitration and the content and
subject matter of the dispute. ............................................................... 12!
2.! There is no applicable exception to the duty of confidentiality that
would have permitted Claimant’s disclosure. ..................................... 12!
II. IF THE 2004 MILAN RULES APPLY, CLAIMANT IS BOUND BY AN IMPLIED DUTY OF
CONFIDENTIALITY. .......................................................................................................................... 13!
A.! Claimant was bound by an implied duty of confidentiality because of the
nature of international arbitration proceedings. .................................................... 13!
B.! Claimant’s disclosures violated its implied confidentiality obligation. ............... 15!
PART THREE: CLAIMANT’S BREACH OF CONFIDENTIALITY JUSTIFIES AN
INJUNCTIVE ORDER AND DAMAGES. ...................................................................... 15!
I. THE TRIBUNAL SHOULD ISSUE AN ORDER ENFORCING CONFIDENTIALITY. ...................... 15!
A.! Damages are insufficient to protect against future breaches of confidentiality. ..
.............................................................................................................................. 16!
B.! There is a reasonable possibility that Respondent will succeed on the merits of
the dispute. .................................................................................................................. 17!
II. THE TRIBUNAL SHOULD DECLARE THAT CLAIMANT IS LIABLE FOR PROVABLE DAMAGES
ARISING FROM PAST OR FUTURE BREACHES OF CONFIDENTIALITY. ........................................ 17!
PART FOUR: THE SQUID CONFORMED TO THE CONTRACT. ........................... 18!
I. RESPONDENT DELIVERED CONFORMING GOODS UNDER ART. 35(1) CISG. ...................... 18!
A.! Claimant knew, or could not have been unaware, that Respondent intended
the Squid to be unsized. ............................................................................................ 19!
B.! A reasonable person in Claimant’s position would have understood that
Respondent intended to sell unsized squid. ........................................................... 20!
II. THE SQUID WERE FIT FOR THE PURPOSES FOR WHICH GOODS OF THE SAME
DESCRIPTION WOULD ORDINARILY BE USED. .............................................................................. 20!
III. THE SQUID WERE FIT FOR ANY PARTICULAR PURPOSE MADE KNOWN TO RESPONDENT.
............................................................................................................................................................ 21!
A.! Claimant did not expressly or impliedly make known to Respondent at the
conclusion of the Contract that the Squid were to be used as bait for longliners.
............................................................................................................................ 21!
B.! Even if Claimant made known the Squid would be used as bait, it did not
reasonably rely on Respondent’s skill and judgment. ........................................... 22!
IV. RESPONDENT DID NOT BREACH UNDER ART. 35(2)(C) CISG. ........................................... 23!
A.! Claimant knew that Respondent did not intend the Contract to be a sale by
sample. ......................................................................................................................... 23!
B.! A reasonable business person would have understood that Respondent did not
intend the Contract to be a sale by sample. ........................................................... 24!
C.! In the alternative, if the Contract was concluded on the basis of a sample,
Respondent informed Claimant that the bulk goods would deviate from the
sample. ......................................................................................................................... 25!
iii

QUEEN’S UNIVERSITY FACULTY OF LAW
V. EVEN IF THE SQUID DID NOT CONFORM UNDER ART. 35(2), ART. 35(3) CISG EXCLUDES
RESPONDENT’S LIABILITY. ............................................................................................................. 25!
PART FIVE: CLAIMANT CANNOT RELY ON THE ALLEGED NON-
CONFORMITY. ................................................................................................................ 25!
I. CLAIMANT FAILED TO PROVIDE REASONABLE NOTICE OF THE NON-CONFORMITY IN
ACCORDANCE WITH ARTS. 38 AND 39 CISG. ............................................................................... 26!
A.! A reasonable examination of the goods, conducted on or around 1 July 2008,
would have discovered the alleged non-conformity. ............................................ 26!
1.! Claimant failed to take a reasonable sample of the Squid. ............... 27!
a.! Claimant’s sample was unreasonably small. ............. 27!
b.! Claimant did not examine a random sample of the
Squid. ............................................................... 27!
2.! Claimant did not exercise the requisite degree of diligence in its
examination. ............................................................................................ 28!
B.! Claimant did not give notice of the non-conformity until 16 August 2008,
which was not within a reasonable time under art. 39(1) CISG. ........................ 28!
1.! Claimant did not provide notice specifying the lack of conformity
until 16 August 2008. ............................................................................. 29!
a.! Claimant’s 29 July 2008 letter did not convey sufficient
detail for Respondent to know what would be necessary
to cure the non-conformity. .................................... 29!
b.! The 16 August 2008 letter was Claimant’s first
communication that specified the nature of the nonconformity.
......................................................... 30!
2.! By providing notice 45 days after it ought to have discovered the
non-conformity, Claimant’s notice was late. ...................................... 30!
a.! The circumstances required notice be given in less than
45 days. ............................................................ 30!
b.! Notice was not given within the presumptive one month
period. ............................................................... 31!
C.! Even if Claimant’s 29 July 2008 letter specified the nature of the nonconformity,
it was still not given within a reasonable time. ................................ 31!
1.! The circumstances required notice be given within 27 days. ........... 31!
2.! The noble month should be reduced because the Squid were
perishable and seasonal. ......................................................................... 31!
II. RESPONDENT IS NOT PREVENTED FROM RELYING ON ART. 39 CISG BY VIRTUE OF ART.
40 CISG. ............................................................................................................................................ 32!
A.! Claimant cannot prove Respondent was aware of the facts related to the nonconformity,
so art. 40 CISG does not apply. ......................................................... 32!
B.! In the alternative, Respondent disclosed the risk of a non-conformity to
Claimant, so art. 40 CISG does not apply. ............................................................. 33!
PART SIX: CLAIMANT FAILED TO MITIGATE ITS LOSSES. .................................. 33!
I. CLAIMANT FAILED TO MAKE REASONABLE ATTEMPTS TO RESELL THE SQUID TO
ALTERNATIVE BUYERS. .................................................................................................................... 33!
II. CLAIMANT INCURRED UNREASONABLE WAREHOUSE STORAGE COSTS. ............................. 34!
iv

QUEEN’S UNIVERSITY FACULTY OF LAW
III. CLAIMANT FAILED TO MITIGATE ITS LOSS OF PROFIT BY NOT SEEKING A SUBSTITUTE
PURCHASE FOR LONG-LINE BAIT. .................................................................................................. 35!
PRAYER FOR RELIEF .................................................................................................... 35!
v

Abbreviation Explanation
Paragraph
QUEEN’S UNIVERSITY FACULTY OF LAW
TABLE OF ABBREVIATIONS
AG Appellationsgericht [Appeal Court—Switzerland]
Amd. Amended
art./arts. Article / Articles
BGH Bundesgerichthof [Federal Supreme Court—Germany]
BGer Bundesgericht [Federal Supreme Court—Switzerland]
BOL Higher Court of Appeal [Germany]
CISG United Nations Convention on Contracts for the
International Sale of Goods
Cl. Ex. Claimant’s Exhibit
Cl. Memo. Claimant’s Memorandum
Clar. Clarification
ed. Edition
ed. / eds. Editor / Editors
e.g. Exemplum gratii [for example]
et al. Et alii [and others]
etc. Et cetra [and other things]
ft Footnote
g Gram
Gen. Stn. General Standard
HG Handelsgericht [Commercial Court—Switzerland]
IBA International Bar Association
IBA Guidelines International Bar Association Guidelines on Conflict of
Interest in International Arbitration
ICC International Chamber of Commerce
ICC Rules International Chamber of Commerce Rules of Arbitration
2008
ICSID International Centre for the Settlement of Investment
Disputes
Id. Ibidem [in the same source]
vi

i.e. Id est [that is]
kg Kilogram
QUEEN’S UNIVERSITY FACULTY OF LAW
LG Landgericht [District Court—Germany]
Ltd. Limited Company
Ltr. Letter
Milan Rules Rules of Arbitration of the Chamber of Arbitration of Milan
MT Metric Ton
No. Number
NY Convention United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards
OGH Oberster Gerichthof [Supreme Court—Austria]
OLG Oberlandesgericht [Court of Appeal—Germany and Austria]
Para. Paragraph
Passim To be found at various places throughout the text
Pt. Part
Proc. Ord. Procedural Order
Req. for Arb. Request for Arbitration
Resp. Ex. Respondent’s Exhibit
S.A. Société Anonyme [Public Limited Company]
St. of Def. Statement of Defense
UK United Kingdom
UN United Nations
UNCITRAL United Nations Commission on International Trade Law
UNCITRAL Rules UNCITRAL Arbitration Rules
UNIDROIT International Institute for the Unification of Private Law
UNIDROIT Principles UNIDROIT Principles of International Commercial
Contracts of 2004
USA United States of America
Vol. Volume
vii

Andersen,
Camilla B.
QUEEN’S UNIVERSITY FACULTY OF LAW
TABLE OF AUTHORITIES
“Reasonable Time in Article 39(1) of the CISG – Is Article
39(1) Truly a Uniform Provision”
UNIVERSITY OF COPENHAGEN: PACE ESSAY SUBMISSION
September (1998)
cited as: Andersen
Ashford, Peter HANDBOOK ON INTERNATIONAL COMMERCIAL
ARBITRATION
JurisNet, Huntington, NY 2009
cited as: Ashford
Bernstein,
Herbert and
Joseph
Lookofsky
Bianca, Cesare
Massimo and
Michael
Joachim Bonell
(eds.)
UNDERSTANDING THE CISG IN EUROPE, 2nd ed.
Kluwer Law International, New York 2003
cited as: Bernstein/Lookofsky
COMMENTARY ON THE INTERNATIONAL SALES LAW: THE
1980 VIENNA SALES CONVENTION
Giuffrè, Milan 1987
cited as: Author in Bianca/Bonell
Binder, Peter INTERNATIONAL COMMERCIAL ARBITRATION AND
CONCILIATION IN UNCITRAL MODEL LAW
JURISDICTIONS, 3rd ed.
Sweet & Maxwell, London 2010
cited as: Binder
Blackaby, Nigel,
et al.
Böckstiegel,
Karl-Heinz
REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION,
5th ed.
Oxford University Press 2009
cited as: Blackaby et al.
“The Role of Party Autonomy in International Arbitration”
DISPUTE RESOLUTION JOURNAL 52:3 (1997) 24
cited as: Böckstiegel
Born, Gary B. INTERNATIONAL COMMERCIAL ARBITRATION
Kluwer Law International 2009
cited as: Born
viii
102,
105
8
110
64,
86,
111,
115
16,
17,
19,
22, 24
1, 7,
10
8
1, 7,
8, 22,
37,
39,
40,
41,
44,
45,
46,
48,
50, 51

QUEEN’S UNIVERSITY FACULTY OF LAW
Brown, Alexis “Presumption Meets Reality: An exploration of the
Confidentiality Obligation in International Commercial
Arbitration”
AM. U. INTERNATIONAL REVIEW 16 (2001) 969, available at:
http://www.wcl.american.edu/
cited as: Brown
Bühring-Uhle,
Christian et al.
Bühring-Uhle,
Christian et al.
Chamber of
Arbitration of
Milan
Chamber of
Arbitration of
Milan
ARBITRATION AND MEDIATION IN INTERNATIONAL BUSINESS
Kluwer Law International 1996
cited as: Bühring-Uhle et al. 1996
ARBITRATION AND MEDIATION IN INTERNATIONAL BUSINESS
Kluwer Law International 2006
cited as: Bühring-Uhle et al. 2006
RULES OF ARBITRATION OF THE CHAMBER OF ARBITRATION
OF MILAN 2004
cited as: 2004 Milan Rules
RULES OF ARBITRATION OF THE CHAMBER OF ARBITRATION
OF MILAN 2010
cited as: 2010 Milan Rules
CISG United Nations Convention on Contracts for the International
Sales Goods, Vienna, 1980
cited as: CISG
CISG Advisory
Council
Cook, Trevor
and Alejandro
Garcia
Dessemontet,
Francois
DiMatteo, Larry
A. et. al.
Enderlein, Fritz
and Dietrich
Maskow
“CISG-AC Opinion no 2, Examination of the Goods and
Notice of Non-Conformity: Articles 38 and 39”
Rapporteur: Professor Eric E. Bergsten, Emeritus, Pace
University School of Law, New York 2004
cited as: CISG-AC2
• INTERNATIONAL INTELLECTUAL PROPERTY ARBITRATION
Kluwer Law International 2010
• cited as: Cook/Garcia
“Arbitration and Confidentiality”
AMERICAN REVIEW OF INTERNATIONAL ARBITRATION 7:3-
4 (1996) 299
cited as: Dessemontet
“The Interpretative Turn in International Sales Law: An
Analysis of Fifteen Years of CISG Jurisprudence”
NORTHWESTERN JOURNAL OF INTERNATIONAL LAW &
BUSINESS 34 Winter (2004) 299-440
cited as: DiMatteo
INTERNATIONAL SALES LAW
Oceana Publications, New York 1992
cited as: Enderlein/Maskow
ix
51, 55
39
1
passim
passim
passim
100,
104
7, 51,
55
32,
37, 43
93,
95,
99,
110
71,
73,
115

Fernández-
Ballesteros,
M.Á., and David
Arias (eds.)
QUEEN’S UNIVERSITY FACULTY OF LAW
LIBER AMICORUM BERNARDO CREMADES
La Ley 2010
cited as: Author in Fernández-Ballesteros/Arias
Ferrari, Franco INTERNATIONAL SALE OF GOODS: APPLICABILITY AND
APPLICATION OF THE UNITED NATIONS CONVENTION FOR
THE INTERNATIONAL SALE OF GOODS
Helbing & Lichtenhahn, Bruylant 1999
cited as: Ferrari
Finkelstein et al.
“The New Arbitration Rules of the Chamber of Arbitration of
Milan”
ARBITRAGEM INTERNACIONAL: UNIDROIT, CISG E DIREITO
BRASILEIRO (2010) 23
cited as: Coppo in Finkelstein
Fortier, L. Yves “The Occasionally Unwarranted Assumption of
Confidentiality”
ARBITRATION INTERNATIONAL 15 (1999) 131
cited as: Fortier
Gaillard,
Emmanuel and
John Savage
(eds.)
Greenberg,
Simon and
Flavia Mange
Henschel, René
Franz
Honnold, John
O.
Horvath,
Günther J.
FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL
COMMERCIAL ARBITRATION
Kluwer Law International 1999
cited as: Gaillard/Savage
“Institutional and Ad Hoc Perspectives on the Temporal
Conflict of Arbitral Rules”
JOURNAL OF INTERNATIONAL ARBITRATION 27:2 (2010) 199
cited as: Greenberg/Mange
THE CONFORMITY OF GOODS IN INTERNATIONAL SALES:
AN ANALYSIS OF ARTICLE 35 IN THE UNITED NATIONS
CONVENTION ON THE CONTRACTS FOR THE
INTERNATIONAL SALE OF GOODS (CISG)
Thomson/GadJura, Copenhagen 2005
cited as: Henschel 2005
UNIFORM LAW FOR INTERNATIONAL SALES UNDER THE 1980
UNITED NATIONS CONVENTION, 3rd ed.
Kluwer Law International 1999
cited as: Honnold
“The Duty of the Tribunal to Render an Enforceable Award”
JOURNAL OF INTERNATIONAL ARBITRATION 18 (2001) 135
cited as: Horvath
x
10
93,
98,
99,
100
26,
33,
34, 36
32,
40, 44
9, 15,
23
28,
30, 31
68, 75
78,
80,
84,
95,
99
22

Hwang, Michael
and Katie Chung
International
Bar Association
International
Law Association
Klausegger,
Christian, et al.
(eds.)
Kronke,
Herbert, et al.
(eds.)
Lew, Judith M.,
et al.
Lewison, Kim
QUEEN’S UNIVERSITY FACULTY OF LAW
“Defining the Indefinable: Practical Problems of
Confidentiality in Arbitration”
ARBITRATION INTERNATIONAL 26:5 (2009) 609
cited as: Hwang/Chung
IBA GUIDELINES ON CONFLICT OF INTEREST IN
INTERNATIONAL ARBITRATION 2004
cited as: IBA Guidelines
“International Commercial Arbitration: Resolution 1/2010”
from the 74th Conference of the International Law
Association held in the Hague, Netherlands, 15-20 August
2010
cited as: ILA Resolution 1/2010
AUSTRIAN ARBITRATION YEARBOOK 2008
C.H. Beck, Stämpfli & Manz 2008
cited as: Author in Klausegger et al.
RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL
AWARDS: A GLOBAL COMMENTARY ON THE NEW YORK
CONVENTION
Kluwer Law International 2010
cited as: Author in Kronke et al.
COMPARATIVE INTERNATIONAL COMMERCIAL
ARBITRATION
Kluwer Law International 2003
cited as: Lew et al.
“The Interpretation of Contracts”, 3rd ed.
Sweet & Maxwell, London 2004
cited as: Lewison
Luttrell, Sam BIAS CHALLENGES IN INTERNATIONAL COMMERCIAL
ARBITRATION: THE NEED FOR A “REAL DANGER” TEST
Kluwer Law International 2009
cited as: Luttrell
Magnus, Ulrich
and Lisa
Haberfellner
McIlwrath,
Michael and
John Savage
GENERAL PRINCIPLES OF UN-SALES LAW 1995, available at:
http://www.cisg.law.pace.edu/cisg/biblio/magnus.html
cited as: Magnus/Haberfellner
INTERNATIONAL ARBITRATION AND MEDIATION: A
PRACTICAL GUIDE
Kluwer Law International 2010
cited as: McIlwrath/Savage
xi
32, 51
11
32
10
2, 3,
6, 23,
24
1, 6,
7,
9,
15,
21,
22
31
15, 23
75
7, 10,
20, 23

Moses, Margaret
L.
QUEEN’S UNIVERSITY FACULTY OF LAW
THE PRINCIPLES AND PRACTICE OF INTERNATIONAL
COMMERCIAL ARBITRATION
Cambridge University Press, Cambridge 2008
cited as: Moses
Noussia, Kyriaki CONFIDENTIALITY IN INTERNATIONAL COMMERCIAL
ARBITRATION: A COMPARATIVE ANALYSIS OF THE POSITION
UNDER ENGLISH, US, GERMAN AND FRENCH LAW
Springer-Verlag Berlin Heidelberg 2010
cited as: Noussia
New York
Convention
Oxford English
Dictionary
CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF
FOREIGN ARBITRAL AWARDS 1958
cited as: NY Convention
THE OXFORD ENGLISH DICTIONARY, 2nd ed.
Clarendon Press, Oxford, England
cited as: Oxford
Paulsson, Jan “Ethics, Elitism, Eligibility”
JOURNAL OF INTERNATIONAL ARBITRATION 14:4 (1997) 13
cited as: Paulsson
Paulsson, Jan
and Nigel
Rawding
Poudret, Jean-
François and
Sébastien
Besson
Redfern, Allan
and Martin
Hunter
Schlechtriem,
Peter (ed.)
“The Trouble with Confidentiality”
ARBITRATION INTERNATIONAL 11:3 (1995) 303
cited as: Paulsson/Rawding
COMPARATIVE LAW OF INTERNATIONAL ARBITRATION
Sweet & Maxwell, London 2007
cited as: Poudret/Besson
LAW AND PRACTICE OF COMMERCIAL ARBITRATION, 4th ed.
Sweet & Maxwell, London 2004
cited as: Redfern/Hunter
COMMENTARY ON THE UN CONVENTION ON THE
INTERNATIONAL SALE OF GOODS (CISG), 2nd ed.
Oxford University Press, New York 1998
cited as: Author in Schlectriem 1998
xii
7,
11,
15
32,
34,
36,
37,
39,
41,
43,
44,
45,
46,
50, 55
passim
96
7
34
24,
35,
42,
52, 53
8
77,
84,
88,
89, 91

Schlechtriem,
Peter and
Ingeborg
Schwenzer
(eds.)
Schlechtriem,
Peter and
Ingeborg
Schwenzer
(eds.)
Schwenzer,
Ingeborg
QUEEN’S UNIVERSITY FACULTY OF LAW
COMMENTARY ON THE UN CONVENTION ON THE
INTERNATIONAL SALE OF GOODS (CISG), 3rd ed.
Oxford University Press, Oxford 2010
cited as: Schlechtriem/Schwenzer 2010
COMMENTARY ON THE UN CONVENTION ON THE
INTERNATIONAL SALE OF GOODS (CISG), 2nd ed.
Oxford University Press, New York 2005
cited as: Author in Schlechtriem/Schwenzer 2005
“National Preconceptions that Endanger Uniformity”
PACE INTERNATIONAL LAW REVIEW 19:1 (2007) 103
cited as: Schwenzer 2007
UNCITRAL “Secretariat Commentary on the Draft Convention on
Contracts for the International Sale of Goods”
UN DOC. A/CONF. 97/5, 1979
cited as: Sec. Comm.
UNCITRAL
Model Law on
International
Commercial
Arbitration
Waibel, Michael,
et al. (eds.)
Zuberbühler,
Tobias, et al.
(eds.)
UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL
ARBITRATION 1985 with amendments as adopted in 2006
cited as: Model Law
THE BACKLASH AGAINST INVESTMENT ARBITRATION
Kluwer Law International 2010
cited as: Author in Waibel et al.
SWISS RULES OF INTERNATIONAL ARBITRATION:
COMMENTARY
Kluwer Law International 2005
cited as: Zuberbühler et al.
xiii
77,
86,
88,
89,
93,
95,
106,
107,
109,
110,
116
60,
64,
68,
69,
71, 73
99,
102,
105
68,
71, 82
passim
7
6,
9,
19,
20,
22

QUEEN’S UNIVERSITY FACULTY OF LAW
TABLE OF CASES
Australia Esso Australia Resources Ltd. v. Plowman [1995], High Court of
Australia, 128 ALR 391
cited as: Esso v. Plowman (Australia 1995)
Transfield Philippines Inc & Ors v. Pacific Hydro Ltd. & Ors
[2006], Victorian Supreme Court, VSC175
cited as: Transfield v. Pacific Hydro (Australia 2006)
Austria Oberster Gerichtshof [Supreme Court] [27 August 1999]
cited as: OGH Aug 1999
Belgium N.V. Namur-Kreidverzekering v. N.V. Wesco [16 December 1996],
Rechtbanl [District Court]
cited as: Namur-Kreidverzekering v. Wesco (Belgium 1996)
Canada Ghiradosi v. British Columbia (Minister of Highways) [1966],
Supreme Court of Canada, SCR 367
cited as: Ghiradosi v. B.C. (Canada 1966)
Denmark Dr. S. Sergueev Handelsagentur v. DAT-SCHAUB A/S [31 January
2002], So og Handelsretten [Maritime Commercial Court]
cited as: Sergueev v. DAT (Denmark 2002)
Finland Crudex Chemicals Oy v. Landmark Chemicals S.A. [31 May 2004],
Helsinki Court of Appeal
cited as: Crudex v. Landmark (Finland 2004)
EP S.A. v. FP Oy [11 June 1995], Helsinki Court of First Instance,
(95/11481)
cited as: EP v. FP (Finland 1995)
France Aita v. Ojjeh [18 February 1986], Cour d’ Appel de Paris [Appeals
Court]
cited as: Aita v. Ojjeh (France 1986)
Caito Roger v. Société francaise de factoring [13 September 1995],
Cour d’Appel de Grenoble
cited as: Caito v. Société (France 1995)
Société True North et Société FCB Internationale v. Bleustein et al
[22 February 1999], Commercial Court of Paris, overturned on
procedural grounds in TGI and CA Paris [2003], cited in Rev. Arb.
(2003) 189
cited as: True North v. Bleustein (France 1999) cited in Poudret/Besson 316-
317
xiv
43
44
86
100
22
92,
101,
104
88
71
34, 42,
55
60
35, 42,
52, 53

QUEEN’S UNIVERSITY FACULTY OF LAW
Germany Bayerisches Oberstes Landesgericht [Bavarian Supreme Court] [23
September 2004], (4Z Sch 005-04)
cited as: BOL Sept 2004
Bayerisches Oberstes Landesgericht [24 February 1999], (4Z Sch
17/98)
cited as: BOL Feb 1999
Bundesgerichtshof [Federal Supreme Court] [3 November 1999],
(CLOUT case No. 319)
cited as: BGH Nov 1999
Bundesgerichtshof [25 June 1997], (CLOUT case No. 235)
cited as: BGH Jun 1997
Oberlandesgericht Celle [Court of Appeal] [2 September 1998]
cited as: OLG Sept 1998
Oberlandesgericht Frankfurt [29 January 2004]
cited as: OLG Jan 2004
Oberlandesgericht Thüringen [26 May 1998]
cited as: OLG May 1998
Oberlandesgericht Zweibrücken [2 February 2004]
cited as: OLG Feb 2004
Landgericht Coburg [District Court] [12 December 2006]
cited as: LG Dec 2006
Landgericht Darmstadt [9 May 2000]
cited as: LG May 2000
Landgericht Düsseldorf [25 August 1994]
Cited as: LG Aug 1994
Landgericht Erfurt [29 July 1998]
Cited as: LG Jul 1998
Landgericht Kassel [15 February 1996]
cited as: LG Kassel Feb 1996
Landgericht München [27 February 2002]
cited as: LG Feb 2002
xv
24, 25
25
99, 102
115
116
68
105
107
75
71
114
95
60
71

QUEEN’S UNIVERSITY FACULTY OF LAW
Landgericht Oldenburg [28 February 1996]
cited as: LG Feb 1996
Landgericht Stuttgart [31 August 1989]
cited as: LG Aug 1989
Hong Kong Werner A. Bock KG v. The N's Co. Ltd. [1978] Hong Kong Court
of Appeal, HKLR 281
cited as: Werner v. The N’s Co. (Hong Kong 1978)
Italy Rheinland Versicherungen v. Altarex and Allianz Subalpina [12 July
2000], Tribunale di Vigevano [District Court]
cited as: Rheinland v. Altarex (Italy 2000)
Netherlands Fallini Stefano & Co. S.N.C. v. Foodik BV [19 December 1991], Rb
Roermond [District Court]
cited as: Fallini v. Foodik (Netherlands 1991)
Netherlands Arbitration Institute, Case No. 2319, 15 October 2002
cited as: Rijn Blend Case (Netherlands 2002)
New Zealand International Housewares Limited v. SEB [2003], High Court of
Auckland, CP 395 SD 01
cited as: Housewares v. SEB (New Zealand 2003)
Singapore Myanma Young Chi Oo Co v. Win Win Nu [2003] Singapore High
Court, S.L.R. 547
cited as: Myanma v. Win (Singapore 2003)
Spain Kingfisher Seafoods Limited v. Comercial Eloy Rocio Mar SL [12
December 2007], Audiencia Provincial de la Pontevedra [Appellate
Court], sección 1
cited as: Kingfisher v. Comercial (Spain 2007)
Manipulados del Papel y Cartón SA v. Sugem Europa SL [4 February
1997], Audiencia Provincial de Barcelona, sección 16
cited as: Manipulados v. Sugem (Spain 1997)
Pescados J. Gutiérrez, S.I. v. Port Said Export Fish [12 September
2001], Audiencia Provincial de Barcelona, sección 4
cited as: Pescados v. Port Said Export (Spain 2001)
Sweden Beijing Light Automobile Co., Ltd v. Connell Limited Partnership [5
June 1998], Arbitration Institute of the Stockholm Chamber of
Commerce
cited as: Beijing Light v. Connell (Sweden 1998)
xvi
64
90
24, 25
71
89
68, 71
69
44
93,
101,
104
74
101,
104
107

QUEEN’S UNIVERSITY FACULTY OF LAW
Switzerland Bundesgericht [Federal Supreme Court] [18 May 2009]
cited as: BGer May 2009
United
Kingdom
Appellationsgericht [Appeal Court] Basel-Stadt [26 September 2008] 60 58
cited as: AG Sept 2008
Associated Electric & Gas Insurance Services Ltd v. European
Reinsurance Co. of Zurich [2003], Privy Council, 1 All E.R. 253
cited as: AEGIS v. European Reinsurance (UK 2003)
Ali Shipping Corp. v. Shipyard Trogir [1998], English Court of
Appeal, 1 Lloyd’s Rep. 643
cited as: Ali Shipping v. Shipyard (UK 1998)
Department of Economic Policy and Development of the City of
Moscow v. Bankers Trust Co. [2004], English and Wales Court of
Appeal Civil Division, EWCA 314
cited as: Moscow v. Bankers (UK 2004)
Dolling-Baker v. Merrett [1991], English Court of Appeal, 2 All E.R.
890
cited as: Dolling-Baker v. Merrett (UK 1991)
Emmott v. Michael Wilson & Partners Ltd. [2008], English and
Wales Court of Appeal Civil Division, EWCA 184
cited as: Emmott v. Michael Wilson (UK 2008)
Hassneh Insurance Co. of Israel v. Mew [1993], Court of Queen’s
Bench, 2 Lloyd’s Rep. 243
cited as: Hassneh Insurance v. Mew (UK 1993)
Insurance Co v. Lloyd’s Syndicate [1995], Court of Queen’s Bench, 1
Lloyd’s Rep. 272
cited as: Insurance v. Lloyd’s Syndicate (UK 1995)
Bunge v. Kruse [1979], English High Court, 1 Lloyd's Rep. 279
cited as: Bunge v. Kruse (UK 1979)
United States Schmitz-Werke GmbH & Co. v. Rockland Industries Inc. [21 June
2002], United States Court of Appeal 4th Circuit
cited as: Schmitz-Werke v. Rockland (USA 2002)
United States v. Panhandle Eastern Corp et al. [1988], United States
Court of Appeal 3rd Circuit, 118 FRD 346
cited as: US v. Panhandle (USA 1988)
xvii
60
46
36, 40,
41, 46,
53
43
39, 41,
45, 46,
53
39, 41,
46
34, 41,
46
36, 41,
53
31
71, 74
43

QUEEN’S UNIVERSITY FACULTY OF LAW
Compagnie des Bauxites de Guinee v. Hammermills Inc. [29 May
1992], United States District Court, U.S. Dist. Lexis 8046, No. 90-
0169, 1992 WL 122712
cited as: Compagnie v. Hammermills (USA 1992)
Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara [2001], United States District Court, 190 F. Supp. 2d
936
cited as: Karaha v. Perusahaan (USA 2001)
Other Biwater Gauff (Tanzania) Ltd., v. United Republic of Tanzania,
Procedural Order No. 3, ICSID Case No. ARB/05/22
cited as: Biwater Gauff v. Tanzania
Giovanna a Beccara and Others v. The Argentine Republic,
Procedural Order No. 3 (Confidentiality Order), ICSID Case No.
ARB/07/5
cited as: Giovanna a Beccara v. Argentine Republic
ICC Case No. 2671 (1976) unpublished interim award as cited
in Mobil Oil Indonesia v. Asamera Oil [1977] 43 N.Y. 2d 276
cited as: ICC 1976
xviii
25
25
48, 52
32, 52
30

QUEEN’S UNIVERSITY FACULTY OF LAW
SUMMARY OF ARGUMENT
PART ONE: THE TRIBUNAL LACKS JURISDICTION TO HEAR THE PARTIES’
DISPUTE.
The Tribunal was not constituted according to the Parties’ Agreement. The Arbitral Council did
not comply with the Parties’ Agreement in denying confirmation of Mr. Y and in appointing Mr.
Z. Moreover, Respondent did not waive its right to object to the constitution of the Tribunal. If
the Tribunal affirms its jurisdiction, an eventual award is at risk of being set aside or refused
recognition and enforcement
PART TWO: CLAIMANT BREACHED ITS DUTY OF CONFIDENTIALITY.
The Tribunal should find that Claimant was bound by an express duty of confidentiality in art.
8(1) 2010 Milan Rules. If the Tribunal finds that the 2004 Milan Rules are applicable to
confidentiality, then Claimant was bound by an implied duty of confidentiality. Mr. Schwitz’s
statements constituted a breach of both the express confidentiality obligation in the 2010 Rules
and the implied obligation in the 2004 Rules.
PART THREE: CLAIMANT’S BREACH OF CONFIDENTIALITY JUSTIFIES AN
INJUNCTIVE ORDER AND DAMAGES.
The Tribunal should issue an interim order enjoining Claimant from further disclosures. The
Tribunal should declare that Claimant is liable for any quantifiable damages resulting from a
breach of confidentiality. These two measures are not inconsistent; a declaration that damages
will ensue from future violations is a means of ensuring compliance with an injunctive order.
PART FOUR: THE SQUID CONFORMED TO THE CONTRACT.
The Parties agreed that the Squid would be unsized and, accordingly, the Squid conformed to art.
35(1) CISG. The Squid also conformed under art. 35(2) CISG: they were fit for their ordinary
purposes and any particular purpose made known to Respondent. Furthermore, the Contract
was not a sale by sample. Finally, even if the Squid did not conform under art. 35(2), art. 35(3)
CISG excludes Respondent’s liability.
PART FIVE: CLAIMANT CANNOT RELY ON THE ALLEGED NON-
CONFORMITY.
Even if the Squid did not conform, Claimant may not rely on the non-conformity. Claimant
failed to conduct a reasonable examination of the goods, which would have discovered the non-
conformity. Thereafter, Claimant waited 45 days before giving notice on 16 August 2008. This
was beyond a reasonable time. Even if Claimant gave notice on 29 July 2008, this was still not
within a reasonable time.
PART SIX: CLAIMANT FAILED TO MITIGATE ITS LOSSES.
Claimant failed to make reasonable attempts to resell the Squid to alternative buyers, incurred
unreasonable warehouse storage costs and failed to seek a substitute purchase. Accordingly, any
damages awarded should be reduced under art. 77 CISG.
1

QUEEN’S UNIVERSITY FACULTY OF LAW
ARGUMENT
PART ONE: THE TRIBUNAL LACKS JURISDICTION TO HEAR THE PARTIES’
DISPUTE.
1. The Tribunal does not have jurisdiction to hear the Parties’ dispute because the Tribunal was not
constituted according to the Parties’ agreement. As a preliminary matter, Respondent does not
contest that the Parties executed a valid arbitration agreement. Both Parties agree that the
Dispute Settlement clause in the Sale Confirmation constituted an arbitration agreement
(“Agreement”), and provided that Danubia would be the seat of the arbitration [Cl. Ex. 4; Resp.
Ex. 2]. Accordingly, the Parties are bound by Danubia’s national arbitration law, the
UNCITRAL Model Law on International Commercial Arbitration, 2006 Amendments (“Model
Law”) [Req. for Arb. 25; Blackaby et al. 164]. Art. 16 Model Law, which codifies the widely-
accepted principle of competence-competence [Blackaby et al. 346; Born 868; Bühring-Uhle et al.
2006 47; Lew et al. 332], confers on the Tribunal the power to rule on its own jurisdiction. The
Tribunal should invoke its competence to conclude that it was not constituted according to the
Parties’ Agreement [I]. Respondent did not waive its right to raise an objection [II]; and, if the
Tribunal affirms its jurisdiction, an eventual award is at risk of being set aside or refused
recognition and enforcement [III].
I. THE TRIBUNAL WAS NOT CONSTITUTED ACCORDING TO THE PARTIES’ AGREEMENT.
2. By referring to the “Rules of the Chamber of Arbitration of Milan” in the Agreement, the Parties
expressly agreed to be bound by the Milan Rules [Cl. Ex. 4; Resp. Ex. 2; art. 1 2010 Milan Rules;
Nacimiento in Kronke et al. 282]. Both art. 14(1) of those Rules and art. 11(2) Model Law allow
parties to agree on a procedure for constituting a tribunal. The Parties exercised this power to
require that each appoint one arbitrator, and that the two party-appointed arbitrators jointly
appoint the presiding arbitrator [Cl. Ex. 4; Resp. Ex. 2].
3. An arbitral tribunal lacks jurisdiction when it has not been constituted according to the parties’
agreement [art. V(1)(d) NY Convention; Nacimiento in Kronke et al. 281]. Here, contrary to the
Parties’ Agreement, the presiding arbitrator of the Tribunal was chosen by the Arbitral Council
(“Council”)—not by the two party-appointed arbitrators. As a result, the Tribunal lacks
jurisdiction [art. 34(2)(a)(iv) Model Law; art. V(1)(d) NY Convention]. The Council did not comply
with the Parties’ Agreement in denying confirmation of Mr. Y [A], nor in appointing Mr. Z as
the presiding arbitrator [B].
2

QUEEN’S UNIVERSITY FACULTY OF LAW
A. The Council did not comply with the Parties’ Agreement in denying
confirmation of Mr. Y.
4. The Council acted contrary to the Parties’ Agreement by denying confirmation of Mr. Y’s
appointment. The Parties agreed that the appointment of arbitrators would be subject to
confirmation by the Council if the prospective arbitrator submitted a qualified statement of
independence [art. 18(4) 2010 Milan Rules]. Mr. Y did submit a qualified statement of
independence [Ltr. 19 July 2010]; however, the Council’s decision to deny confirmation was
contrary to the Parties’ Agreement because both Parties waived any objection to the qualification
[1] and because the Parties’ choice was entitled to deference from the Council [2]. Moreover,
application of the IBA Guidelines, which the Council indicated would guide its decisions, should
have led the Council to confirm Mr. Y [3]. The Council’s decision to deny Mr. Y’s confirmation
was also premature under the Milan Rules [4].
1. Both Parties waived any objection to Mr. Y’s qualified statement of
independence.
5. The Tribunal should find that the Council’s decision to deny confirmation of Mr. Y’s
appointment was contrary to the Parties’ Agreement because both Parties waived any objection
to Mr. Y. Under art. 18(3) Milan Rules, the Parties were given 10 days to submit comments on a
qualified statement of independence. During this time, both Parties waived any objection to Mr.
Y [Ltrs. 26 and 27 July 2010]. The Parties’ waivers constituted an unequivocal endorsement of Mr.
Y as a suitable presiding arbitrator. They indicate the Parties’ agreement that Mr. Y’s relationship
with one of the Parties did not raise justifiable doubts about his impartiality or independence.
6. Moreover, the Parties’ waivers prevented either party from making a subsequent challenge to Mr.
Y’s independence and impartiality [Lew et al. 314; Nacimiento in Kronke et al. 289; Zuberbühler et al.
51]. As a result, a tribunal chaired by Mr. Y, and any award rendered, could not be challenged on
the basis of Mr. Y’s relationship with Claimant. In contrast, the current Tribunal is vulnerable to
challenge because the appointment of Mr. Z was not according to the Parties’ Agreement.
2. The Parties’ mutual decision to accept Mr. Y’s appointment as presiding
arbitrator was entitled to deference from the Council.
7. Both Parties waived any objections to Mr. Y and the Council should have deferred to their
decision. The ability of parties and party-appointed arbitrators to participate in the constitution
of the arbitral tribunal is a distinctive feature of arbitration and is considered crucial to the
success of arbitral proceedings [Born 1363; Lew et al. 231]. Participation in the selection of
arbitrators ensures confidence in the qualifications of arbitrators hearing the dispute [Blackaby et
al. 252; Park in Waibel et al. 200], increases co-operation between members of the tribunal
3

QUEEN’S UNIVERSITY FACULTY OF LAW
[Cook/Garcia 145; Lew et al. 236; McIlwrath/Savage 257; Moses 125] and improves the efficiency and
legitimacy of the arbitral process as a whole [Paulsson 13].
8. The Parties, and not the Council, are in the best position to determine the suitability of potential
arbitrators [Born 1366, 1382]. Parties to an arbitration have a unique understanding of the
particularities of their dispute and the qualities their arbitrators should possess. For this reason,
administering institutions rarely deny appointments [Born 1407]. Here, the Parties were
unequivocal in their endorsement of Mr. Y [Ltrs. of 26 and 27 July 2010]; thus, the Council should
defer to their agreement. Party autonomy is the basis of international commercial arbitration
[Ashford 81; Redfern/Hunter 315; Böckstiegel 25] and an administering institution should only
overrule the parties’ choice in exceptional circumstances. These circumstances do not exist here.
9. The Council should only exercise its discretion when the appointed arbitrator is so unsuitable
that his or her presence on the tribunal poses a significant danger of rendering an award
unenforceable or bringing the arbitral proceedings into disrepute. An institution’s role in
confirming arbitrators is to ensure a minimum standard of independence and impartiality [Lew et
al. 237; Gaillard/Savage 552], to preserve the reputation of the arbitral institution [Bühring-Uhle et
al. 2006 35] and to ensure efficient administration of the proceedings [Gaillard/Savage 483;
Zuberbühler et al. 48]. Given the primacy of party autonomy in arbitration, an institution should
not step beyond that role. The integrity of the arbitral process is undermined not only by the
appointment of unsuitable arbitrators, but also where the administering institution improperly
overrules the parties’ agreement. Here, the Council should defer to the Parties’ acceptance of a
presiding arbitrator unless an arbitrator is patently unsuitable. Indeed, there is no evidence that
Mr. Y’s relationship with Claimant was so improper that the Parties could not waive it.
3. The Council should have regard for the Parties’ expectations and should have
applied the IBA Guidelines to confirm Mr. Y.
10. The Council should have applied the IBA Guidelines to confirm Mr. Y. The Council referred to
the IBA Guidelines in the letter informing Mr. Y of his appointment [Ltr. 15 July 2010]. This
reference shows the Council intended to rely on, or at least consider, the IBA Guidelines when
determining if Mr. Y would be confirmed. Furthermore, this reference created a reasonable
expectation by the Parties that the IBA Guidelines would be applied. Institutions should respect
not just the letter of the applicable rules, but also the reasonable expectations of the parties
[Leaua in Klausegger et al. 110]. The IBA Guidelines have been widely accepted as the standard for
determining independence and impartiality in international arbitration [Blackaby et al. 270;
McIlwrath/Savage 246; Rozas in Fernández-Ballesteros/Arias 417]. Accordingly, the Council, although
not formally bound by the IBA Guidelines, should have applied them to confirm Mr. Y.
4

QUEEN’S UNIVERSITY FACULTY OF LAW
11. The relationship disclosed by Mr. Y falls under the “waivable red list” as set out in the IBA
Guidelines [IBA Guidelines Pt. 2 (2.3.3)]. Mr. Y indicated that a partner from his firm is advising
Claimant in this dispute [Ltr. 19 July 2010]. Relationships listed on the waivable red list can be
waived if parties are aware of the improper relationship and expressly agree to waive the resulting
conflict of interest [IBA Guidelines Gen. Stn. 2; Moses 133]. In this case, both Parties expressly
waived any objection to Mr. Y’s disclosure and reaffirmed their confidence in his independence
and impartiality [Ltrs. of 26 and 27 July 2010]. Applying the IBA Guidelines, the Council should
have confirmed Mr. Y.
4. The Council’s decision to deny Mr. Y’s confirmation was premature.
12. Under the Milan Rules, the Parties have ten days to object to the independence or impartiality of
an arbitrator [art. 18(3) 2010 Milan Rules]. In its letter of 26 July 2010, the Secretariat informed
the Parties that they had ten days to raise any objections to Mr. Y’s appointment. However, only
four days later, the Council denied Mr. Y’s confirmation [Ltr. 2 August 2010]. This departure
from the Milan Rules may not have resulted in substantial prejudice to the Parties, but it does
indicate the Council’s disregard for the Parties’ Agreement and its own Rules.
B. The Council did not comply with the Parties’ Agreement in appointing Mr. Z
as presiding arbitrator.
13. Even if the Tribunal finds that the Council acted according to the Parties’ Agreement by denying
confirmation of Mr. Y, the Council did not comply with the Parties’ Agreement in appointing
Mr. Z. According to the Parties’ Agreement, if an arbitrator is not confirmed, a new arbitrator
must be appointed by the original appointing authority [art. 20(3) 2010 Milan Rules; art. 15 Model
Law]. The party-appointed arbitrators were the original appointing authority [Cl. Ex. 4]. The
Council acknowledged this when it initially requested that the party-appointed arbitrators make
another appointment after Mr. Y was not confirmed [Ltr. 2 August 2010]. Only if “a replacement
arbitrator must also be substituted”, is the Council then authorized to make the appointment
itself [art. 20(3) 2010 Milan Rules]. Here, the Council’s authority to substitute a replacement
arbitrator was not engaged [1] and the Council should have invited the party-appointed
arbitrators to make another appointment [2].
1. The Council did not have authority to substitute a replacement arbitrator
because there was no replacement arbitrator.
14. Art. 20(3) Milan Rules is limited to situations where a replacement arbitrator must also be
substituted. The Council does not have the authority to appoint an arbitrator except as a
substitute for a “new” arbitrator. Here, when the party-appointed arbitrators were informed that
the Council had denied Mr. Y’s confirmation they did not appoint a new arbitrator. Instead, they
5

QUEEN’S UNIVERSITY FACULTY OF LAW
reappointed Mr. Y [Ltr. 13 August 2010]. The Milan Rules do not contemplate the reappointment
of an arbitrator previously denied confirmation. Accordingly, Mr. Y’s reappointment did not give
rise to the Council’s authority to appoint a substitute; Mr. Y was not a replacement arbitrator.
The Council acted outside its authority in appointing Mr. Z.
2. The Council should have invited the party-appointed arbitrators to make
another appointment.
15. The reappointment of Mr. Y did not warrant direct intervention by the Council. Instead, the
Council should have invited the party-appointed arbitrators to make a new appointment. The
Council should respect the Parties’ intentions to have the party-appointed arbitrators appoint the
presiding arbitrator. This would facilitate cooperation between members of the Tribunal [Moses
125]. Furthermore, the appointment procedure chosen by the Parties gives the Parties an indirect
influence on the selection of the presiding arbitrator [Lew et al. 250]. The Parties’ mutual
intentions should not be abrogated merely because the Milan Rules do not address the situation
before the Tribunal. None of the other bases that might justify the intervention of the
administering institution were present here. Neither party was attempting to delay or frustrate
the arbitral proceedings [Luttrell 3; Gaillard/Savage 483, 554; Lew et al. 318]. Instead, the party-
appointed arbitrators were exercising their delegated authority to appoint a presiding arbitrator.
Faced with a situation not contemplated by its Rules, the Council should simply have abided by
the Parties’ Agreement and given the party-appointed arbitrators another opportunity to select a
new presiding arbitrator.
II. RESPONDENT DID NOT WAIVE ITS RIGHT TO OBJECT TO THE JURISDICTION OF THE
TRIBUNAL.
16. Claimant may argue that Respondent waived its right to object to the jurisdiction of the Tribunal.
The Tribunal should find that Respondent raised a valid objection; the waiver conditions in the
Parties’ Agreement have not been met. According to the Parties’ Agreement, an objection must
be raised “in the first brief or at the first hearing following the claim to which the objection
relates” [art. 12 2010 Milan Rules] or, under the Model Law, “without undue delay” [art. 4].
Accordingly, to find a valid waiver, a party must know of the non-compliance, proceed to
arbitration and fail to state an objection without undue delay [Binder 55]. These requirements
have not been met. Respondent was unaware of the improper constitution of the Tribunal when
it submitted its Statement of Defence [A]. The time between the improper constitution and
Respondent’s objection does not amount to undue delay [B], and Respondent’s objection is not
disruptive of the proceedings [C]. Respondent acted within its rights to object.
6

QUEEN’S UNIVERSITY FACULTY OF LAW
A. Respondent was unaware of the improper constitution of the Tribunal when it
submitted its Statement of Defence.
17. To invoke art. 4 Model Law, Claimant must first establish that Respondent knew of the non-
compliance with the Parties’ Agreement and still proceeded with the arbitration [Binder 59].
Claimant may argue that Respondent waived the right to object by not objecting as soon as Mr.
Y was denied confirmation [Ltr. 2 August 2010], or at the latest, when Mr. Z was confirmed [Ltr.
10 September 2010]. While art. 11(1) Milan Rules allows the Council to rule on objections before
the constitution of a tribunal, any decision reached by the Council is not binding on the Tribunal
[art. 11(2) 2010 Milan Rules]. Therefore, regardless of the Council’s response, Respondent would
have been required to raise the objection again once the Tribunal was constituted. Respondent’s
decision to wait until the Tribunal was constituted to raise an objection cannot constitute a
waiver of its right to raise that objection.
18. Furthermore, Respondent did not waive its right to challenge the Tribunal’s jurisdiction by
raising the objection after submitting its Statement of Defence. Here, Respondent raised an
objection to the Tribunal’s jurisdiction in an amendment to its Statement of Defence [Amd. St. of
Def. 24 September 2010]. Claimant may argue that a challenge to the jurisdiction of a tribunal is to
be raised “no later than the submission of the statement of defence” [art. 16(2) Model Law].
However, Respondent first became aware of the improper constitution of the Tribunal on 20
September 2010 [Proc. Ord. 2], long after it submitted its Statement of Defence on 24 June 2010.
Art. 23(2) Model Law permits parties to amend their claims during arbitral proceedings.
Accordingly, Respondent did not proceed with the arbitration without stating an objection.
B. The time between the improper constitution and Respondent’s objection does
not amount to undue delay.
19. Respondent raised its objection without undue delay. Respondent raised its objection on 24
September 2010—just four days after it became aware the Tribunal was constituted with Mr. Z
as the presiding arbitrator. Art. 4 Model Law is silent as to what amounts to undue delay [Binder
60]; however, a four-day delay is miniscule in the context of an international arbitration
[Zuberbühler et al. 271]. Furthermore, it is reasonable to allow parties time to adequately prepare
their objections, including time to draft and submit a statement [Zuberbühler et al. 271].
Accordingly, the conditions for waiver of the right to object under art. 12 Milan Rules and art. 4
Model Law have not been met; Respondent raised a timely objection.
C. Respondent’s objection is not disruptive of the arbitral proceedings.
20. An objection to the jurisdiction of the Tribunal at such an early stage in the proceedings is not
disruptive to the resolution of the dispute. Since the objection was raised before the arbitration
7

QUEEN’S UNIVERSITY FACULTY OF LAW
progressed any further, and the Tribunal has not yet considered the substantive merits of the
dispute, none of the proceedings will need to be repeated [McIlwrath/Savage 263; Zuberbühler et al.
271]. Furthermore, both the jurisdiction and merits of the dispute will be heard by the Tribunal
at the same time [Proc. Ord. 2], so there will be no delay in rendering a final award. As a result, the
cost of proceeding with Respondent’s challenge to the Tribunal’s jurisdiction, in terms of time or
money, is negligible.
21. Moreover, the reconstitution of the Tribunal according to the Parties’ Agreement will not result
in protracted delays of the proceedings. If jurisdiction of the Tribunal is denied, the proceedings
will only be suspended to appoint a new presiding arbitrator. There is nothing to suggest that the
reconstitution of the Tribunal would be unduly prolonged—the Milan Rules set out efficient
appointment procedures and both the Parties and party-appointed arbitrators were cooperative
in the constitution of the present Tribunal. On the other hand, if the Tribunal proceeds to issue
an award and that award is set aside or refused enforcement, the entire arbitral process would
have to be repeated. A Tribunal with the full confidence of both Parties is the best means to
ensure voluntary compliance with an eventual award [Lew et al. 236].
III. IF THE TRIBUNAL AFFIRMS ITS JURISDICTION, AN EVENTUAL AWARD IS AT RISK OF
BEING SET ASIDE OR DENIED RECOGNITION AND ENFORCEMENT.
22. A central duty of a tribunal in any arbitral proceeding is to render an enforceable award [Born
2537; Horvath 135; Lew et al. 119]. If the Tribunal finds that it was properly constituted and
renders an award on the merits, this award would likely be set aside or refused recognition and
enforcement. The courts of Danubia, the seat of arbitration, would have jurisdiction over an
application to set aside an award; enforcement can be sought in jurisdictions where parties have
assets [Lew et al. 703]. There are sufficient grounds for a Danubian court to set aside an eventual
award [art. 34(2)(a)(iv) Model Law] or for courts in Equatoriana or Mediterraneo to refuse it
recognition or enforcement [art. V(1)(d) NY Convention]. Respondent preserved its right to
challenge an award by raising an objection to the Tribunal’s constitution during the arbitral
proceedings [Amd. St. of Def. 1; Born 2592; Binder 61; Zuberbühler et al. 272; Ghiradosi v. B.C.
(Canada 1966) 17].
23. Under art. V(1)(d) NY Convention, an award may be challenged where “the composition of the
arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the
parties” [Luttrell 11; Gaillard/Savage 453]. This provision is mirrored in art. 34(2)(a)(iv) Model
Law. Here, all states involved are signatories to the NY Convention [Req. for Arb. 25], and the
national arbitration laws of Equatoriana and Mediterraneo must be at least as favourable to
8

QUEEN’S UNIVERSITY FACULTY OF LAW
recognition and enforcement as art. V NY Convention [Darwazeh in Kronke et al. 333;
McIlwrath/Savage 344].
24. Courts look at the parties’ agreement and the national law of the seat of arbitration to determine
whether a tribunal has been improperly constituted [Nacimiento in Kronke et al. 281]. The types of
defects sufficiently serious to justify setting aside an award, or refusing to enforce it, are not
defined in art. 34(2)(a)(iv) Model Law or art. V(1)(d) NY Convention [Poudret/Besson 840].
Commentators and courts agree that a defect in the composition of a tribunal constitutes
grounds for setting aside an award if the defect potentially affected the award [Binder 382;
Nacimiento in Kronke et al. 297; BOL Sept 2004; Werner v. The N's (Hong Kong 1978)].
25. Claimant may argue that for an award to be set aside or refused enforcement, Respondent must
prove that the defect—the Council’s refusal to confirm Mr. Y and the appointment of Mr. Z—
resulted in “substantial prejudice” to Respondent. A standard of “substantial prejudice” has been
applied by some courts, particularly in the United States [Compagnie v. Hammermills (USA 1992);
Karaha v. Perusahaan (USA 2001)]. However, courts in some Model Law jurisdictions have set
aside awards when the defect is one that “potentially cause[d] an unfavourable outcome” [BOL
Feb 1999; BOL Sept 2004; Werner v. The N's (Hong Kong 1978)]. Applying this standard, an award
rendered by the Highest Arbitral Tribunal of the Bavarian Commodities Trading Association was
set aside by the Bavarian Court of Appeal for deviating from the appointment and challenge
process in the arbitration agreement. Applying national legislation based on the Model Law, the
Court found that the Highest Arbitral Tribunal “might have decided—in a different
composition—differently on the appeal” and that the procedural irregularity “potentially caused
an unfavourable outcome for the claimant” [BOL Feb 1999]. It is unclear which standard a
Danubian court would apply. Accordingly, the Tribunal should proceed with caution. The only
way to ensure that an award issued in this dispute will be enforceable is for the dispute to be
submitted to a properly constituted tribunal.
PART TWO: CLAIMANT BREACHED ITS DUTY OF CONFIDENTIALITY.
26. Four days after Claimant commenced this arbitration, Claimant’s CEO, Mr. Herbert Schwitz,
gave an interview to Commercial Fishing Today, a trade newspaper distributed in 45 countries
[Resp. Ex. 1; St. of Def. 4]. He divulged the subject matter of this dispute, the existence of
arbitration and made inflammatory allegations about Respondent’s conduct [Resp. Ex. 1]. This
interview constituted a breach of confidentiality. Admittedly, the scope of the duty of
confidentiality in international arbitration remains uncertain; the major international arbitration
conventions do not mention the issue at all, and institutional rules and national arbitration laws
vary widely with respect to confidentiality [Coppo in Finkelstein 28]. However, there is no
9

QUEEN’S UNIVERSITY FACULTY OF LAW
uncertainty in this dispute, because the 2010 Milan Rules expressly impose a duty of
confidentiality: “[t]he Chamber of Arbitration, the parties, the Arbitral Tribunal and the expert
witnesses shall keep the proceedings and the arbitral award confidential, except in the case it has
to be used to protect one’s rights” [art. 8(1)].
27. The Tribunal should hold that the duty of confidentiality expressed in art. 8(1) of the 2010 Milan
Rules applies [I]. Even if the Tribunal finds that the 2004 Milan Rules apply, those rules impose
an implied duty of confidentiality on the Parties [II]. Mr. Schwitz’s statements constituted a
breach of both the express confidentiality duty in the 2010 Rules and the implied duty in the
2004 Rules.
I. THE 2010 MILAN RULES APPLY TO THE ISSUE OF CONFIDENTIALITY.
28. Where institutional rules have been amended between the conclusion of an arbitration agreement
and the commencement of arbitral proceedings, the more recent version of the rules is presumed
to govern the dispute unless the parties agree otherwise [Greenberg/Mange 201-204]. The 2004 and
2010 versions of the Milan Rules expressly stipulate that the most recently enacted version of the
rules applies [art. 43(3) 2004 Milan Rules; art. 39(2) 2010 Milan Rules].
29. The Parties did not rebut this presumption by indicating a preference for a specific version of
the Milan Rules in their Agreement [Cl. Ex. 4]. Absent a provision rebutting this presumption,
the Tribunal should apply the most recent version of the Milan Rules [A]. The exception to this
presumption, that older versions of institutional rules apply to substantive aspects of the dispute,
is irrelevant because the duty of confidentiality is procedural in character [B]. Claimant’s
disclosure violated the duty of confidentiality contained in art. 8(1) 2010 Milan Rules [C].
A. The Tribunal should follow the presumption that the most recent version of
the Milan Rules governs the dispute.
30. The Tribunal should apply the 2010 version of the Milan Rules to all aspects of this dispute. Art.
3(2) 2004 Milan Rules indicates that “the rules chosen by the parties in the arbitration
agreement” apply. However, the Parties’ Agreement does not specify any particular version of
the Milan Rules [Cl. Ex. 4]. If Claimant wished to “freeze” the rules existing when the
Agreement was concluded in 2008, it needed to expressly stipulate this in the Agreement
[Greenberg/Mange 208]. Absent an express provision, there is a presumption favouring rules as
they appear at the commencement of arbitration, not as they appeared at the time the agreement
was made [ICC 1976; Greenberg/Mange 201]. Accordingly, the 2010 Milan Rules—which expressly
place the Parties under a duty to maintain confidentiality—govern this issue.
10

QUEEN’S UNIVERSITY FACULTY OF LAW
B. Even if the 2004 Milan Rules apply to substantive duties, the confidentiality
duty is procedural in character, and so the 2010 Milan Rules apply.
31. Confidentiality is a procedural issue, and so the 2010 Milan Rules govern the dispute. When rules
of procedure have been amended between the conclusion of a contract and the commencement
of arbitration, as in this dispute, an “overwhelming consensus” in the case law favours the
application of the most current version of the rules to procedural matters [Greenberg/Mange 204;
Lewison 64; Bunge v. Kruse (UK 1979)]. In Bunge v. Kruse, the English High Court distinguished
between procedural and substantive provisions, holding that rules amended after the arbitration
agreement may not apply to substantive issues [Greenberg/Mange 204].
32. Although some commentators allege there is a substantive character to confidentiality
[Hwang/Chung 611], the majority position is that the confidentiality duty is procedural in
character. First, confidentiality has been categorized as a procedural matter in institutional rules
and by arbitral tribunals and national courts [Giovanna a Beccara v. Argentine Republic 5; Dessemontet
319]. Second, domestic legal systems regulate confidentiality using procedural statutes. For
example, in an arbitration governed by Swiss law, the tribunal applied the Swiss Federal Rules on
Civil Procedure to confidentiality issues [Dessemontet 303]. Third, orders to respect confidentiality
are almost exclusively made in tribunals’ procedural orders rather than in partial awards [ILA
Resolution 1/2010 B2; Giovanna a Beccara v. Argentine Republic]. Finally, many commentators
describe confidentiality as a rule of arbitral procedure [Fortier 130; Noussia 85]. Therefore, even if
the 2004 Milan Rules apply to substantive duties, the confidentiality duty is procedural in
character, and so the 2010 Milan Rules apply.
C. Claimant’s statements violated the duty of confidentiality under art. 8(1) 2010
Milan Rules.
33. Mr. Schwitz’s disclosure to Commercial Fishing Today violated art. 8(1) 2010 Milan Rules. The
duty of confidentiality applies to the “proceedings” and therefore attaches upon their
commencement. As a result, Claimant’s duty was triggered when it filed the Request for
Arbitration [art. 9 2010 Milan Rules]. Art. 8(1) imposes a broad confidentiality duty that includes
“any kind of material, brief, hearings, etc.” related to the arbitration [Coppo in Finkelstein 28]. It
requires the Chamber, Tribunal, witnesses and the Parties to “keep the proceedings and the
arbitral award confidential”. Mr. Schwitz spoke not only about the existence of the arbitration,
but also alleged that Respondent knowingly sold “completely inappropriate” squid [Resp. Ex. 1].
His statements violated confidentiality [1] and Claimant cannot take advantage of any exceptions
in the 2010 Milan Rules [2].
11

QUEEN’S UNIVERSITY FACULTY OF LAW
1. Claimant divulged the existence of arbitration and the content and subject
matter of the dispute.
34. Even if Claimant had merely divulged the existence of this arbitration, that alone would have
constituted a breach of art. 8(1) 2010 Milan Rules, which restrict disclosure not only of the
“award”, but also of the “proceedings”. This language was adopted to give an expansive scope to
the duty of confidentiality [Coppo in Finkelstein 28]. In international arbitrations, “the mere fact
that an arbitration is pending may be viewed as a secret” [Noussia 129; Hassneh Insurance v. Mew
(UK 1993) 247]. For example, in Aita v. Ojjeh, the Paris Court of Appeal found that Aita
challenged the arbitration in a court that it knew lacked jurisdiction for the sole purpose of
publicizing the dispute [(France 1986)]. The Court found Aita breached confidentiality by causing
“a public debate of facts which should remain confidential” [Paulsson/Rawding 312; Noussia 121].
Here, Mr. Schwitz told Commerical Fishing Today that it had “started arbitration proceedings”
against Respondent [Resp. Ex. 1]; this disclosure on its own constituted a breach of art. 8(1).
35. However, Claimant not only disclosed the existence of the arbitration, but also revealed its
subject matter and allegations made in the Request for Arbitration [Resp. Ex. 1]. Art. 8(1)
stipulates that parties must keep the proceedings confidential, which Claimant violated in its
interview with Commercial Fishing Today. The Paris Commercial Court held that a party
breached confidentiality when it released a statement divulging the existence of the dispute, the
existence of the arbitration, and the amount of the claim [True North v. Bleustein (France 1999) cited
in Poudret/Besson 316-317]. Claimant’s disclosure mirrors that in True North: it divulged the
existence of the dispute, the existence of the arbitration and facts and arguments pertaining to
the merits of the dispute. Mr. Schwitz stated that Respondent had supplied “completely
inappropriate” squid to Claimant and “they knew it” [Resp. Ex. 1].
2. There is no applicable exception to the duty of confidentiality that would
have permitted Claimant’s disclosure.
36. Claimant may argue that its breach of confidentiality was permissible. Art. 8(1) 2010 Milan Rules
provides that a party may breach confidentiality to the extent required to protect its rights. This
provision protects legal rights, such as “the right to enforce or challenge the award”, but does
not extend to commercial rights [Coppo in Finkelstein 28-29]. Any disclosure must be “reasonably
necessary” to establish the party’s legal rights against a third party [Noussia 31, 110; Insurance v.
Lloyd’s Syndicate (UK 1995); Ali Shipping v. Shipyard (UK 1998)]. Art. 8(1) also permits breaches of
confidentiality where parties have a legal duty to disclose [Coppo in Finkelstein 29; Noussia 29].
However, Claimant did not owe any legal duty to disclose this arbitration, nor was Claimant
enforcing or protecting a legal right [Clar. 15].
12

QUEEN’S UNIVERSITY FACULTY OF LAW
37. Moreover, confidentiality only applies to material that is objectively secret; the obligation cannot
extend to matters that are public knowledge [Dessemontet 314; Noussia 26]. Claimant’s disclosure
revealed facts that were not public knowledge. Although Commercial Fishing Today had
previously reported on the existence of a dispute, those reports contained no prejudicial
comments, nor any mention of the means by which the dispute might be resolved or the content
of either Party’s claims [Clar. 17]. By contrast, Claimant not only revealed the existence of the
proceedings, but also asserted that Respondent was liable for Claimant’s losses [Resp. Ex. 1].
Claimant was attempting to conduct a “trial by press release” and its conduct cannot be
condoned [Born 2282]. The only other exception to confidentiality in art. 8 2010 Milan Rules
pertains to the Chamber and not to the parties [art. 8(2)], so Claimant’s disclosure is not saved by
any exceptions to its duty of confidentiality.
II. IF THE 2004 MILAN RULES APPLY, CLAIMANT IS BOUND BY AN IMPLIED DUTY OF
CONFIDENTIALITY.
38. The 2004 Milan Rules do not contain an express duty of confidentiality. However, if the
Tribunal finds that the 2004 Milan Rules govern this issue, a duty of confidentiality is implied.
The prevailing conception of confidentiality affirms the existence of an implied duty
encompassing the proceedings [A], and Claimant violated this duty by divulging the existence
and subject matter of the arbitration proceedings [B].
A. Claimant was bound by an implied duty of confidentiality because of the
nature of international arbitration proceedings.
39. All parties to international arbitrations are presumed to owe an implied duty of confidentiality
[Born 2282; Dolling-Baker v. Merrett (UK 1991); Emmott v. Michael Wilson (UK 2008)]. This implied
duty is one of the most important considerations for parties choosing to arbitrate their disputes
[Bühring-Uhle et al. 1996; Noussia 125]. The objectives of arbitration—neutral, efficient, and
binding dispute resolution—compel the imposition of confidentiality obligations on parties. This
duty focuses the parties’ efforts toward dispute resolution, rather than on “trial by press release”
and restrains “the aggravation of the parties’ disputes, rather than extending them to additional,
more public forums” [Born 2282]. Arbitration preserves privacy and confidentiality “to the
greatest extent possible” [Noussia 22].
40. The privacy of arbitration proceedings would be meaningless without implied confidentiality
obligations [Fortier 131]. Privacy requirements exclude third parties from attendance and
participation in proceedings and are present in “virtually all national arbitration statutes and
institutional rules” [Born 2251]. Confidentiality is an “essential corollary of the privacy of
13

QUEEN’S UNIVERSITY FACULTY OF LAW
arbitration proceedings” [Ali Shipping v. Shipyard (UK 1998)]. The Tribunal should recognize that
by its very nature, arbitration requires implied confidentiality obligations.
41. This implied duty prohibits disclosure of any evidence, communication, or information about
arbitration proceedings [Noussia 40; Born 2252]. English courts have long implied an obligation of
confidentiality arising from the parties’ arbitration agreement [Born 2259; Noussia 79; Dolling-Baker
v. Merrett (UK 1991); Hassneh Insurance v. Mew (UK 1993); Insurance v. Lloyd’s Syndicate (UK 1995);
Ali Shipping v. Shipyard (UK 1998)]. The English Court of Appeal recently affirmed that implied
confidentiality obligations prohibit the disclosure of any documents or evidence related to
arbitral proceedings [Emmott v. Michael Wilson (UK 2008) 495].
42. Similarly, the Paris Court of Appeal found that a party breached implied confidentiality
obligations by initiating court proceedings it knew to be fruitless that publicized the arbitration
[Aita v. Ojjeh (France 1986)]. More recently, the Commercial Court of Paris recognized that even
where there is no express confidentiality obligation, parties must avoid any publicity relating to
the dispute [True North v. Bleustein (France 1999) cited in Poudret/Besson 316-317]. The Tribunal
should find Claimant was bound by a similar implied duty of confidentiality.
43. Cases in which courts have permitted parties to breach confidentiality are distinguishable from
the facts here. For example, in Esso v. Plowman, the Australian High Court permitted disclosure of
arbitration documents because public interests and an express duty of disclosure overrode the
confidentiality obligation [(Australia 1995); Dessemontet 316, 321]. The public interest has been
held to override confidentiality only where public figures or public agencies are involved [Esso v.
Plowman (Australia 1995); Moscow v. Bankers (UK 2004); Noussia 27]. This is inapplicable to the
current dispute because both Parties are privately held companies and have no disclosure
obligations [Clar. 15]. In US v. Panhandle, an American trial court held that no implied
confidentiality existed under the ICC Rules [(USA 1988)]. However, this statement was an obiter
dictum and was expressly restricted to the ICC Rules [Dessemontet 321], which are inapplicable
here.
44. The Esso and Panhandle judgments have been criticized as “ill-considered” for international
arbitration, since they focus on domestic concerns and overlook underlying privacy requirements
in international arbitration [Born 2282-3]. Another tribunal applying the ICC Rules after the
Panhandle decision, found that international arbitrations are confidential even if the applicable
rules do not expressly mention confidentiality [Unidentified ICC Case, cited in Fortier 132-133]. More
recent case law suggests that Esso is the exception, rather than the rule, for confidentiality
obligations [Noussia 82; Transfield v. Pacific Hydro (Australia 2006); Myanma v. Win (Singapore 2003)].
14

QUEEN’S UNIVERSITY FACULTY OF LAW
B. Claimant’s disclosures violated its implied confidentiality obligation.
45. Under the implied duty of confidentiality that pertains to the 2004 Milan Rules, Claimant was
obliged to keep confidential the existence of the arbitration and any documents prepared for or
disclosed in the arbitral proceedings [Noussia 40; Born 2252; Dolling-Baker v. Merrett (UK 1991)]. In
his interview with Commercial Fishing Today, Mr. Schwitz exposed the existence and subject
matter of the arbitral proceedings and divulged the contents of Claimant’s Request for
Arbitration, in breach of its implied confidentiality obligations. Mr. Schwitz stated that
Respondent had supplied “completely inappropriate” squid to Claimant and “they knew it” [Resp.
Ex. 1]. In the Request for Arbitration, Claimant alleged Respondent “knew at all times” what the
squid was to be used for, but supplied squid not fit for that purpose [Req. for Arb. 27].
Accordingly, Claimant’s interview divulged not only the existence of the arbitration, but also the
content of documents prepared for arbitration proceedings.
46. While confidentiality obligations are not absolute, none of the generally recognized exceptions
applies here. Several exceptions to the duty have been recognized, such as protection of third
parties’ rights, compelling public interest, or application for setting aside or enforcing an award
[Born 2280; Noussia 27; Dolling-Baker v. Merrett (UK 1991); Hassneh Insurance v. Mew (UK 1993); Ali
Shipping v. Shipyard (UK 1998); AEGIS v. European Reinsurance (UK 2003); Emmott v. Michael Wilson
UK 2008)]. Claimant owed no duty of disclosure, the public interest was not implicated in this
dispute, and Claimant was not protecting its legal rights in its interview with Commercial Fishing
Today [see supra 36, 43]. Claimant’s disclosure revealed information confidential to the
arbitration, and is not saved by any exception to confidentiality. The Tribunal should find that
Claimant has breached its implied obligation and should issue an appropriate order to sanction
the violation.
PART THREE: CLAIMANT’S BREACH OF CONFIDENTIALITY JUSTIFIES AN
INJUNCTIVE ORDER AND DAMAGES.
47. Consequences should ensue from Claimant’s breach of confidentiality. The Tribunal should issue
an interim order enjoining Claimant from further disclosures, which is not inconsistent with an
order for damages [I]. The Tribunal should also declare that Claimant is liable for any
quantifiable damages resulting from a breach of confidentiality [II].
I. THE TRIBUNAL SHOULD ISSUE AN ORDER ENFORCING CONFIDENTIALITY.
48. Respondent requests that the Tribunal issue an injunctive order requiring Claimant to maintain
confidentiality [St. of Def. 8]. The Tribunal is empowered to issue “urgent and provisional
measures of protection” if it deems them necessary [art. 22(2) 2010 Milan Rules]. Claimant’s
disclosure has threatened the integrity of the arbitration proceedings, and threatens to turn them
15

QUEEN’S UNIVERSITY FACULTY OF LAW
into a “trial by press release” [Born 2282]. The Tribunal is entitled to take steps to protect the
integrity of the arbitration [Biwater Gauff v. Tanzania 135], and should do so by issuing an
injunctive order.
49. The circumstances of the current dispute meet the conditions for granting an interim measure
under art. 17A of the Model Law. First, harm “not adequately reparable by an award of damages
is likely” if the Tribunal does not grant the desired relief; this does not conflict with an order for
damages [A] Second, Respondent has a reasonable prospect of success on the claim’s merits [B].
A. Damages are insufficient to protect against future breaches of confidentiality.
50. The Tribunal should issue an injunctive order protecting confidentiality to preserve the status quo
and prevent harm from future disclosures. The Tribunal is empowered by art. 17(2)(a) to issue
measures preserving the status quo, including orders prohibiting public statements that breach
confidentiality [Born 1999]. Article 17A(1)(a) Model Law stipulates that Respondent would have
to show that harm not adequately reparable by damages would result if a protective measure was
not ordered. Claimant may argue that it is contradictory for Respondent to ask for both an
interim measure and damages, but that assertion mischaracterizes the remedies. The two
remedies work together with respect to future breaches of confidentiality: a declaration that
damages will ensue from future violations is a way of ensuring compliance with an injunctive
order. An injunctive order protects Respondent against future disclosures in breach of the
confidentiality obligation. Damages, on the other hand, redress past disclosures [Noussia 169].
Hence, although each remedy relates to confidentiality, the two are not mutually exclusive.
51. Damages are often considered to be an inadequate or unsatisfactory remedy for breaches of
confidentiality. For this reason, it is “appropriate, and generally necessary, for tribunals to issue
provisional measures ordering compliance with confidentiality obligations” [Born 2008;
Cook/Garcia ft 121]. By definition, damages can only be sought after harm from a breach of
confidentiality has already occurred [Hwang/Chung 640; Brown 1016]. An injunctive order, on the
other hand, protects against future breaches of confidentiality.
52. Respondent could suffer economic loss as a result of Claimant’s disclosures. In True North v.
Bleustein, True North’s disclosure of the existence of the dispute and the arbitration proceedings
resulted in negative economic consequences for the other party, specifically a drop in share value
[(France 1999); Poudret/Besson 316]. The Commercial Court of Paris enjoined True North from
making any further disclosures about the arbitration. Claimant’s past disclosure and any future
disclosures may result in similar negative consequences for Respondent. The threat of negative
publicity has been held to be sufficient basis to issue an injunctive order, so long as there is not a
countervailing public interest in disclosure [Biwater Gauff v. Tanzania; Giovanna a Beccara v. Argentine
16

QUEEN’S UNIVERSITY FACULTY OF LAW
Republic]. This case involves only private commercial actors, and there is no public interest that
might outweigh the negative consequences of disclosure [Clar. 15].
53. Claimant may argue that there is no evidence that it will commit future breaches of
confidentiality. Nevertheless, it has been found that parties who have breached confidentiality
should be enjoined from making future disclosures [Dolling-Baker v. Merrett (UK 1991); Insurance v.
Lloyd’s Syndicate (UK 1995); Ali Shipping v. Shipyard (UK 1998); True North v. Bleustein (France 1999)
cited in Poudret/Besson 317]. Moreover, the fact that future disclosures may be unlikely does not
justify refusing to issue an injunctive order. If Claimant does not make future disclosures, the
order will do no harm.!On the other hand, the order will reassure both Parties that neither will
breach confidentiality in the future.
B. There is a reasonable possibility that Respondent will succeed on the merits
of the dispute.
54. The Tribunal should also find that Respondent has a reasonable prospect of success on the
merits of the dispute, as required by art. 17A(1)(b) Model Law. Respondent delivered squid
which conformed to the Contract. In particular, Respondent’s delivery conformed with the
terms of the Sale Confirmation, the final communication between the Parties at the time of the
conclusion of the Contract. Therefore, there is a reasonable possibility that the goods
conformed. In addition, even if Respondent’s squid did not conform, Claimant lost its right to
rely on the breach by failing to give Respondent reasonable notice. The squid delivered were
perishable and seasonal goods, yet Claimant waited 45 days from the time of its examination to
give notice. Accordingly, there is a reasonable possibility that the Tribunal will find Claimant’s
claim to be barred. Harm not adequately reparable by damages is likely to ensue from future
breaches of confidentiality, and Respondent has a reasonable possibility to succeed on the merits
of its claim. Therefore, an interim order should be made.
II. THE TRIBUNAL SHOULD DECLARE THAT CLAIMANT IS LIABLE FOR PROVABLE DAMAGES
ARISING FROM PAST OR FUTURE BREACHES OF CONFIDENTIALITY.
55. The Tribunal should declare Claimant is liable for provable damages arising from breaches of
confidentiality. If the Tribunal finds that Claimant has breached its duty of confidentiality, now
or in the future, Respondent need only quantify its resulting monetary losses to justify an award
of damages [Brown 1016; Cook/Garcia 269]. At this point, Respondent merely seeks a declaration
that Claimant must pay damages in the event that such losses can be quantified [St. of Def. 9].
Breaches of confidentiality have been sanctioned through the award of damages in the past. For
example, in Aita v. Ojjeh, the Paris Court of Appeal assessed damages against Aita for challenging
17

QUEEN’S UNIVERSITY FACULTY OF LAW
an award from a London arbitration in a Paris court, since doing so publicized previously
confidential matters [(France 1986); Noussia 121].
56. Claimant may argue that there is no harm stemming from past disclosures, since the existence of
the dispute had already been revealed. This assertion is inaccurate. Commercial Fishing Today’s
previous publications did not mention this arbitration and revealed no information that
prejudiced Respondent’s position [Clar. 17]. Mr. Schwitz’s statement, on the other hand, revealed
the existence and substance of this arbitration. He insinuated that Respondent was at fault in the
dispute, claiming, “the only way to get them to live up to their responsibilities is to force them to
do so” [Resp. Ex. 1]. Claimant’s disclosure included allegations about Respondent’s integrity and
business practices. Those accusations could harm Respondent financially, by damaging
Respondent’s credibility or driving away future customers. It is foreseeable that Claimant’s
allegations will result in quantifiable and compensable monetary harm to Respondent, which
should be sanctioned through an order for damages.
PART FOUR: THE SQUID CONFORMED TO THE CONTRACT.
57. Respondent delivered squid to Claimant on 1 July 2008 (the “Squid”). The Squid were of the
quantity, quality, and description required by the Contract, as required by art. 35(1) CISG [I]. The
Squid were fit for the purposes for which goods of the same description are ordinarily used, as
required by art. 35(2)(a) CISG [II]. In addition, art. 35(2)(b) CISG does not apply because
Claimant did not make known any particular purpose to Respondent [III]. Furthermore, the
Contract was not a sale by sample under art. 35(2)(c) CISG [IV]. Finally, even if the Squid did
not conform under art. 35(2) CISG, Respondent’s liability is excluded by art. 35(3) CISG [V].
I. RESPONDENT DELIVERED CONFORMING GOODS UNDER ART. 35(1) CISG.
58. Art. 35(1) CISG requires that the seller deliver goods of the quantity, quality and description
required by the contract. Here, the Contract expressly required that the Squid be: fit for human
consumption, of the species illex danubecus, landfrozen, Grade A, blast frozen, and packaged in
poly-line blocks [Cl. Ex. 3; Cl. Ex. 4]. It is not disputed that the Squid conformed to all these
characteristics. Claimant alleges that the Contract required squid weighing 100-150 g; however,
the Contract instead called for delivery of unsized squid. This is evident from both a subjective
interpretation of the Parties’ intentions [A], and an objective interpretation according to the
understanding of a reasonable person [B]. In both cases, according to art. 8(3) CISG, the
Tribunal should consider all relevant circumstances, including the Parties’ negotiations.
18

QUEEN’S UNIVERSITY FACULTY OF LAW
A. Claimant knew, or could not have been unaware, that Respondent intended
the Squid to be unsized.
59. Claimant contends that the Squid had to be of a certain size [Cl. Memo. 30]; however, the
Contract actually called for unsized squid. Art. 8(1) CISG gives priority to the subjective intent
of a party where the other party knew or could not have been unaware of that intent.
Respondent’s intent was to sell unsized squid to Claimant. Claimant knew or could not have
been unaware of that intent, and is therefore bound by it according to art. 8(1) CISG.
60. Respondent’s intent was made clear in the course of the Parties’ negotiations. If, in the course of
negotiations, one party clearly expresses its intent and the other party does not object, the
Tribunal will presume agreement [AG Sept 2008; LG Kassel Feb 1996; Caito v. Société (France 1995);
Schmidt-Kessel in Schlechtriem/Schwenzer 2005 118-9]. For example, in a case concerning machinery
for producing glass vials, the seller did not object to the buyer’s request for a machine capable of
producing 180 vials per minute. A Swiss Court of Appeal held that the seller knew the buyer’s
intent and so, under art. 8(1) CISG, the contract required delivery of a machine matching those
requirements [AG Sept 2008 aff’d in BGer May 2009].
61. Throughout the Parties’ negotiations, Respondent repeatedly expressed its intent to sell unsized
squid. On 17 May 2008, Respondent brought Claimant squid from the 2007 catch [St. of Def.
12]. The squid were not sized, nor was any size indicated on the packaging [St. of Def. 10, 12].
Respondent was not present when the squid was weighed [Req. for Arb. 14; Cl. Ex. 10 7; St. of
Def. 10]. These squid had been caught late in the growing season, between mid-June and mid-
August, and had an average weight of 130 g [Cl. Ex. 10 7; St. of Def. 13]. However, this weight
was a mere coincidence; there is no evidence the size of this squid was ever promised by—or
even known to—Respondent.
62. Claimant was no doubt pleased that this lot of discounted, “run of the catch” squid weighed an
average of 130 g and could be used as bait [St. of Def. 12]. Claimant was no doubt hopeful that
the discounted, unsized squid delivered in July would also weigh 130 g. But Claimant never
expressed these hopes, nor did Respondent say or do anything that would lead Claimant to
reasonably expect delivery of sized squid.
63. Respondent’s only other communication with Claimant before the dispute arose, the Sale
Confirmation, similarly expressed Respondent’s intention to deliver unsized Squid. The Sale
Confirmation, received by Claimant on 29 May 2008, indicated the Squid would come from the
“2007/2008 Catch” [Cl. Ex. 4]. When the Contract was formed in May 2008, Claimant knew it
was still early in the season for harvesting illex danubecus [Clar. 27]. Since delivery of the Squid
would occur mid-way through the 2008 season, Claimant knew or could not have been unaware
that squid from the 2008 catch would be younger and weigh less than 100 g [St. of Def. 13]. As a
19

QUEEN’S UNIVERSITY FACULTY OF LAW
result, Claimant knew or could not have been unaware that the Contract did not contain a size
requirement. Claimant declined to object to this description of the goods. Consequently,
Claimant became bound by Respondent’s intent that the squid be unsized.
B. A reasonable person in Claimant’s position would have understood that
Respondent intended to sell unsized squid.
64. Should the Tribunal find that Claimant was not aware of Respondent’s intention to deliver
unsized squid, an objective interpretation of the Contract under art. 8(2) CISG yields the same
result. Respondent’s intention should prevail if it would have been understood by a reasonable
business person in the same industry and position as Claimant [Farnsworth in Bianca/Bonell 98;
Schmidt-Kessel in Schlechtriem/Schwenzer 2005 119-121; LG Feb 1996].
65. A reasonable interpretation of the Parties’ negotiations indicates agreement that the Squid were
to be unsized. In its 29 May 2008 Sale Confirmation, Respondent indicated that the Squid would
come from the “2007/2008 Catch” [Cl. Ex. 4]. As indicated above [see supra 63], this meant that
the catch would include younger, smaller squid caught early in the 2008 season. Claimant is an
experienced participant in the fisheries trade [St. of Def. 16; Clar. 27]. In the face of
Respondent’s stated intent to supply squid caught early in the 2008 season, a reasonable business
person in Claimant’s position would understand that the Contract was for unsized squid.
66. Furthermore, there are no weight requirements in either the Order Form or Sale Confirmation
[Cl. Ex. 3; Cl. Ex. 4]. The CISG does not preclude extrinsic information from becoming a term
of the Contract; however, a reasonable and experienced purchaser in the fishing industry would
indicate the basic requirements of the fish it wanted in its order—including size. It is
unreasonable to bind the Parties to a requirement that is not found in either the Order Form or
the Sale Confirmation. Accordingly, the Tribunal should find that a reasonable business person
in Claimant’s position would understand the Contract was for unsized squid.
II. THE SQUID WERE FIT FOR THE PURPOSES FOR WHICH GOODS OF THE SAME
DESCRIPTION WOULD ORDINARILY BE USED.
67. Claimant alleges that the Squid could not be used as bait and therefore were not “fit for the
purposes for which [squid] of the same description would ordinarily be used” [Cl. Memo. 37; art.
35(2)(a) CISG]. This argument must fail. The ordinary use for squid as described in the Contract
is human consumption [Cl. Ex. 3; Cl. Ex. 4], and the squid were fit for this purpose [Cl. Ex. 8].
68. The goods must meet the reasonable expectations in the industry for goods of that description
[Schwenzer in Schlechtriem/Schwenzer 2005 417; Rijn Blend Case (Netherlands 2002)]. While the goods
must be fit for all purposes for which goods of the same description are ordinarily used [Henschel
2005 194; Sec. Comm. art. 35], the scope of the ordinary purposes is limited by the description of
20

QUEEN’S UNIVERSITY FACULTY OF LAW
the goods in the agreement [Henschel 2005 194]. In other words, the goods need to be suitable for
all uses that are implied by their description—not all possible uses. Here, both Claimant and
Respondent describe the Squid as “fit for human consumption” [Cl. Ex. 3; Cl. Ex. 4]. This
implies that the Squid will be used as food. To be fit for this ordinary purpose, they must be fit
to eat [OLG Jan 2004]. The TGT Laboratory Report found the Squid were fit for human
consumption [Cl. Ex. 8]; thus, the Squid were fit to eat. Claimant argues that the only reason the
Squid were described as fit for human consumption was to comply with food regulations in
Mediterraneo [Cl. Ex. 10 8]. However, Claimant never communicated this to Respondent. As a
result, Respondent understood that the goods were for human consumption and ensured that
the Squid were fit for the ordinary purposes that goods of this description are normally used.
69. Furthermore, art. 35(2)(a) CISG is primarily concerned with the commercial salability of the
goods, namely that they are capable of being re-sold without significant price abatement
[Schwenzer in Schlechtriem/Schwenzer 2005 416; Housewares v. SEB (New Zealand 2003)]. Claimant re-
sold 20 MT of the Squid through Reliable Trading House; however, there is no evidence
Claimant needed to reduce the price [Cl. Ex. 10 15]. Therefore, the Squid were fit for all the
purposes for which goods of that description would ordinarily be used.
III. THE SQUID WERE FIT FOR ANY PARTICULAR PURPOSE MADE KNOWN TO RESPONDENT.
70. Claimant alleges that the Contract required squid fit to be used as bait [Cl. Memo. 41]; this claim
is unfounded. Under art. 35(2)(b) CISG, Claimant must demonstrate that it expressly or
impliedly made the particular purpose—that the Squid were to be used as bait for long-liners—
known to Respondent at the time of the conclusion of the Contract [A], and that Claimant
reasonably relied on Respondent’s skill and judgment [B]. Neither criterion is satisfied here.
A. Claimant did not expressly or impliedly make known to Respondent at the
conclusion of the Contract that the Squid were to be used as bait for longliners.
71. If the buyer communicates to the seller a particular purpose for the goods, and the seller does
not object, the seller must deliver goods fit for that purpose [Rheinland v. Altarex (Italy 2000); Sec.
Comm. art. 35; Schwenzer in Schlechtriem/Schwenzer 2005 421]. A buyer must communicate the
particular purpose in a “crystal clear and recognizable” way, particularly where the goods have
multiple uses [Rijn Blend Case (Netherlands 2002); LG Feb 2002; LG May 2000]. This requirement
gives a seller the opportunity to decline the contract and avoid liability if it cannot deliver suitable
goods [LG May 2000; Schmitz-Werke v. Rockland (USA 2002); EP v. FP (Finland 1995);
Enderlein/Maskow 144].
21

QUEEN’S UNIVERSITY FACULTY OF LAW
72. Here, the only particular purpose Claimant made known to Respondent was that the Squid be fit
for human consumption, which it was [Cl. Ex. 3; Cl. Ex. 8]. Claimant argues that it made known
to Respondent that the Squid would be used as bait [Cl. Memo. 41]. However, Claimant did not
make this purpose known in a “crystal clear and recognizable” way. Claimant mentioned “bait”
to Respondent only once—in a standard circular delivered to several fish suppliers [Cl. Ex. 1;
Req. for Arb. 11]. Throughout the negotiations, including at a face-to-face meeting, Claimant
never mentioned bait to Respondent [Cl. Ex. 10 6; St. of Def. 10]. In fact, the next time
Claimant used the term “bait” was 29 July 2008, 61 days after the conclusion of the Contract,
and only after it had trouble re-selling the Squid [Cl. Ex. 5]. This sole, fleeting mention of “bait”
does not meet the standard set out in art. 35(2)(b) CISG.
B. Even if Claimant made known the Squid would be used as bait, it did not
reasonably rely on Respondent’s skill and judgment.
73. Even if Claimant made known that the Squid would be used as bait, it never relied on
Respondent’s skill and judgment to select appropriate goods. There is no reliance when the
buyer participates in the selection or inspection of the goods prior to purchase [Enderlein/Maskow
146; Schwenzer in Schlechtriem/Schwenzer 2005 422]. Here, Claimant not only participated in the
selection process, but also inspected the goods prior to the conclusion of the Contract. On 17
May 2008 Respondent’s sales agent, Mr. Weeg, brought squid to Claimant labelled “illex danubecus
2007” [Clar. 32]. After independently examining the squid, Claimant placed its order and asked
for illex danubecus by name [Cl. Ex. 3]. Evidently, Claimant was satisfied that this species would
be suitable for its purpose.
74. Where the seller recommends specific goods in response to a clearly communicated purpose,
reliance on the seller is presumed [Manipulados v. Sugem (Spain 1997); Schmitz-Werke v. Rockland
(USA 2002)]. However, when Respondent brought illex danubecus to Claimant on 17 May 2008,
Respondent never recommended the squid would be suitable for anything, let alone bait [Clar.
25]. Similarly, there is no evidence Respondent made a recommendation at any other time. Since
Respondent made no recommendation to Claimant, there can be no presumption of reliance.
75. Even if the Tribunal finds that Claimant relied on Respondent, the reliance was unreasonable.
The standard for reasonableness is the conduct expected of a reasonably prudent person in the
same position as Claimant [Magnus/Haberfellner; Henschel 2005 236]. Moreover, a seller can only be
relied upon if it is more skilled than the buyer in relevant area of expertise [LG Dec 2006]. Here,
Claimant had at least as much expertise as Respondent. Claimant is a specialist; it has been
supplying bait to long-liners in Mediterraneo for over 20 years [Req. for Arb. 6]. In contrast,
Respondent is a generalist; it supplies squid for both bait and human consumption both in
22

QUEEN’S UNIVERSITY FACULTY OF LAW
Equatoriana and internationally [St. of Def. 2; St. of Def. 7]. As a result, Claimant had at least as
much expertise as Respondent in selling squid for bait to long-liners in Mediterraneo.
Accordingly, any reliance on Respondent was unreasonable.
76. In sum, Claimant did not rely on Respondent and even if it did, its reliance was unreasonable. As
a result, art. 35(2)(b) CISG does not apply.
IV. RESPONDENT DID NOT BREACH UNDER ART. 35(2)(C) CISG.
77. Art. 35(2)(c) CISG creates an implied warranty that when a seller “holds out” goods as a sample
to a buyer; the goods must possess “the qualities” of the sample [Schwenzer in
Schlechtriem/Schwenzer 2010 582]. However, this provision does not apply “where the parties have
agreed otherwise” [art. 35(2) CISG; Schwenzer in Schlechtriem 1998 278]. On 17 May 2008,
Respondent showed Claimant squid it was providing to other buyers in Mediterraneo [St. of Def.
10]. This did not create an implied warranty because the Parties “agreed otherwise”. Claimant
knew Respondent did not intend the Contract to be a sale by sample [A], and a reasonable
business person would have understood the same [B]. In the alternative, if the Contract was
concluded on the basis of a sample, Respondent informed Claimant that the bulk of the Squid
would deviate from the qualities of the sample [C].
A. Claimant knew that Respondent did not intend the Contract to be a sale by
sample.
78. Although squid was shown to Claimant on 17 May 2008 [St. of Def. 10], prior to the conclusion
of the Contract, this did not transform the Parties’ agreement into a sale by sample. Art. 8(1)
CISG instructs tribunals to interpret contracts based on the subjective intention of a party, where
the other party knew or could not have been unaware of that intention [Honnold 118]. Here,
Respondent’s Sale Confirmation indicated that it did not intend to be bound by any qualities of
the squid shown to Claimant on 17 May 2008.
79. On 29 May 2008, Respondent sent Claimant the Sale Confirmation. It described the Squid as
coming from the “2007/2008 Catch” [Cl. Ex. 4]. This demonstrated Respondent’s intention to
deliver squid from both the 2007 and 2008 seasons. In contrast, the squid shown to Claimant on
17 May 2008 were exclusively from the 2007 season [Clar. 32]. The Sale Confirmation also
indicated that the quality of the Squid would be “Grade A” [Cl. Ex. 4]. Although the squid
shown to Claimant may have exhibited some of the attributes of Grade A squid, they were never
certified as such [Cl. Ex. 10 10]. On the same day that Respondent sent the Sale Confirmation,
Claimant sent Respondent a letter demonstrating it had thoroughly read the Sale Confirmation
and did not object to its contents (i.e., Claimant noted the presence of the arbitration clause)
[Resp. Ex. 2]. Accordingly, on 29 May 2008, Claimant knew that Respondent did not intend to be
23

QUEEN’S UNIVERSITY FACULTY OF LAW
bound by any qualities that the squid shown on 17 May 2008 happened to possess. Instead,
Claimant knew Respondent intended to contract based on its description of the Squid in the Sale
Confirmation. Since the Parties formed a mutual intention that the Squid would possess different
characteristics from the squid previously shown to Claimant, no warranty can be implied under
art. 35(2)(c) on the basis of the squid shown to Claimant on 17 May 2008.
B. A reasonable business person would have understood that Respondent did not
intend the Contract to be a sale by sample.
80. A reasonable business person would understand that Respondent did not intend to contract on
the basis of a sample. Where doubt exists concerning a party’s intention, or the other party’s
awareness of that intention, statements should be interpreted according to the understanding of
a reasonable person in the circumstances [art. 8(2) CISG; Honnold 118]. On 17 May 2008, Mr.
Weeg, Respondent’s representative, delivered squid to Claimant [St. of Def. 10]. During Mr.
Weeg’s visit, there was “little time for discussion” between the Parties [Clar. 25]. Moreover, Mr.
Weeg departed before Claimant defrosted or examined the carton of squid [St. of Def. 10]. In
contrast, the Sale Confirmation provided to Claimant on 29 May 2008, included a
comprehensive description of the squid to be delivered [Cl. Ex. 4]. It described their quantity,
price, quality and catch season, among other characteristics [Cl. Ex. 4]. A reasonable person
presented with the description in the Sale Confirmation would know that Respondent did not
intend to be bound by squid haphazardly shown weeks earlier.
81. A reasonable person would also understand Respondent did not intend a sale by sample because
of the term “2007/2008 Catch” in the Sale Confirmation [Cl. Ex. 4]. The only reasonable
interpretation of this term is that some of the squid delivered would be caught in 2007 and some
in 2008. Experienced fishing firms know that squid grow throughout the catching season, and
that illex danubecus increase in size between April and September [Clar. 27; St. of Def 16]. Indeed,
Claimant was aware of these facts [Clar. 27]. A reasonable person in Claimant’s position would
have known that a delivery of squid from the 2008 catch in the middle of the 2008 growing
season would contain young squid, unlikely to weigh at least 100 g. In contrast, the squid shown
to Claimant weighed on average 130 g [Cl. Ex. 10 7]. Thus, a reasonable person presented with
the Sale Confirmation would know Respondent did not intend to contract on the basis of the
squid shown 17 May 2008 and so art. 35(2)(c) CISG does not apply.
24

QUEEN’S UNIVERSITY FACULTY OF LAW
C. In the alternative, if the Contract was concluded on the basis of a sample,
Respondent informed Claimant that the bulk goods would deviate from the
sample.
82. Even if the Contract constituted a sale by sample, concluded on the basis of the squid shown to
Claimant by Mr. Weeg, Respondent informed Claimant the goods would deviate from the
sample. Where a contract is negotiated on the basis of a sample but the seller indicates that the
qualities of the goods will deviate in certain respects, the seller is only bound to the qualities
indicated [Sec. Comm. art. 35 11]. Here, the squid provided on 17 May 2008 were “illex danubecus
2007”, meaning squid caught in 2007 [Clar. 32]. The squid also happened to weigh 100-150 g [Cl.
Ex. 10 7]. However, the Sale Confirmation indicated the Squid would come from both the 2007
and 2008 catches [Cl. Ex. 4]. Thus, the Sale Confirmation notified Claimant that the qualities of
the bulk of the Squid would deviate from those in the sample: some would come from 2008.
Squid from the bulk that were caught in 2007 did in fact match the characteristics of the sample;
only those caught in 2008 weighed less than 100 g [Cl. Ex. 8]. Accordingly, only squid caught in
2008 deviated from the Sample, just as Respondent indicated prior to the conclusion of the
Contract. Therefore, Respondent is not liable under art. 35(2)(c) CISG.
V. EVEN IF THE SQUID DID NOT CONFORM UNDER ART. 35(2), ART. 35(3) CISG EXCLUDES
RESPONDENT’S LIABILITY.
83. Even if the Tribunal finds that the Squid did not conform to the Contract under any or all of the
subsections of art. 35(2) CISG, Respondent is not liable. A seller is not liable for non-
conformities under any provision of art. 35(2) “if at the time of conclusion of the contract the
buyer knew or could not have been unaware of such lack of conformity” [art. 35(3) CISG].
Claimant could not have been unaware that the Squid would be unfit for use as bait.
Respondent’s Sale Confirmation indicated that a portion of the Squid would come from the 2008
catch [Cl. Ex. 4]. Claimant must have known that squid caught early in the 2008 season would
weigh less than 100 g. Moreover, Claimant understood that the Squid would be delivered as soon
as possible after the Contract was concluded [Cl. Ex. 10 10]. Accordingly, Claimant could not
have been unaware the 2008 squid would be weigh less than 100 g. Therefore, even if the weight
of the Squid rendered them non-conforming under art. 35(2) CISG, Claimant could not have
been unaware that Respondent planned to deliver non-conforming squid. For these reasons, art.
35(3) CISG excluded Respondent’s liability.
PART FIVE: CLAIMANT CANNOT RELY ON THE ALLEGED NON-
CONFORMITY.
84. Art. 39(1) CISG requires the buyer to notify the seller of a non-conformity within a “reasonable
time” after it “knew or ought to have known” of the non-conformity. A buyer who fails to notify
25

QUEEN’S UNIVERSITY FACULTY OF LAW
within a reasonable time loses its right to all remedies relating to the non-conformity [Honnold
259; Schwenzer in Schlectriem 1998 319]. Even if the Squid did not conform to the Contract,
Claimant failed to notify Respondent within a reasonable time and thus forfeited its right to rely
on any alleged non-conformity [I]. In addition, Respondent was unaware of facts related to the
non-conformity at the time of delivery and, therefore, is not prevented by art. 40 CISG from
relying on art. 39 [II].
I. CLAIMANT FAILED TO PROVIDE REASONABLE NOTICE OF THE NON-CONFORMITY IN
ACCORDANCE WITH ARTS. 38 AND 39 CISG.
85. Claimant notified Respondent of the alleged non-conformity on 16 August 2008 [Cl. Ex. 8; Cl.
Ex. 9], after the expiry of the notice period under the CISG. The time when a buyer “ought to
have discovered” a lack of conformity is determined by art. 38(1) CISG. This provision requires
a buyer to reasonably examine the goods “within as short a period as is practicable” [art. 38(1)
CISG]. Here, Claimant failed to perform a reasonable examination within as short a period as is
practicable after taking delivery and, accordingly, failed to discover the alleged non-conformity
when it ought to have done so [A]. By notifying Respondent on 16 August 2008, 45 days after it
ought to have discovered the non-conformity, it failed to provide notice in accordance with art.
39(1) CISG [B]. Even if Claimant gave notice of the non-conformity on 29 July 2008, this was
still not within a reasonable time [C].
A. A reasonable examination of the goods, conducted on or around 1 July 2008,
would have discovered the alleged non-conformity.
86. Claimant examined the goods shortly after taking delivery on 1 July 2008. However, this
examination unreasonably failed to discover the non-conformity. The reasonableness of a
buyer’s examination of goods is determined according to the circumstances [Schwenzer in
Schlechtriem/Schwenzer 2010 612; Bianca in Bianca/Bonell 298]. It need not be a “complex
technological analysis” [Bianca in Bianca/Bonell 297], but must be “thorough and professional”
[OGH Aug 1999], according to prevailing industry standards.
87. Respondent packed the Squid into approximately 20,000 cartons and labelled the cartons by
catch season [Cl. Ex. 4; Clar. 32]. Respondent organized the cartons into pallets and placed the
pallets into 12 shipping containers [Cl. Ex. 10 9]. When the Squid arrived, Claimant opened
only two of the 12 containers. From those, Claimant selected just 20 cartons for weighing—all of
which were labelled “illex danubecus 2007” [Cl. Ex. 10 10; Clar. 32]. Of these 20, Claimant
defrosted only five [Cl. Ex. 10 9-10]. This level of scrutiny was unreasonable in the
circumstances. Had Claimant reasonably examined the Squid, it would have easily identified the
26

QUEEN’S UNIVERSITY FACULTY OF LAW
alleged non-conformity. Here, Claimant failed to take a reasonable sample of the Squid [1].
Moreover, Claimant failed to exercise the requisite degree of diligence in its examination [2].
1. Claimant failed to take a reasonable sample of the Squid.
88. Claimant failed to conduct a reasonable sampling and thus did not conduct a reasonable
examination [art. 38(1) CISG]. Where large quantities of goods are delivered, it is reasonable for
buyers to examine a sample of the goods. However, the sample must be random and statistically
representative of the bulk of the goods [Schwenzer in Schlechtriem 1998 304; Schwenzer in
Schlechtriem/Schwenzer 2010 613; Crudex v. Landmark (Finland 2004)]. Here, Claimant did examine
the goods by inspecting a sample of the Squid on 1 July 2008. However, this sample was
unreasonable because it was too small [a] and not randomly selected [b]. A reasonable sampling
would have identified the alleged non-conformity on 1 July 2008.
a. Claimant’s sample was unreasonably small.
89. Claimant failed to examine a sufficiently large sample of squid. To be statistically representative,
the number of goods sampled should be at least “a few…per thousand” [Schwenzer in Schlechtriem
1998 304]. Claimant weighed 20 of the 20,000 cartons delivered, but defrosted a sample of only
five—just 0.025% of the Squid. Since defrosting is a necessary part of sampling frozen
perishables [Clar. 33; Schwenzer in Schlechtriem/Schwenzer 2010 613; Fallini v. Foodik (Netherlands
1991)], defrosting less than “a few per thousand” was unreasonable.
90. Even if Claimant had defrosted all 20 cartons, the sample would still have been too small to
constitute a thorough and professional examination. TGT Laboratories, a firm that specializes in
scientific reports of this kind, examined a sample of 120 cartons [Cl. Ex. 8]. Its sampling
discovered the alleged non-conformity [Cl. Ex. 9]. Had Claimant selected a statistically
representative sample, similar to TGT Laboratories’, it would have discovered the non-
conformity [Cl. Ex. 8]. By defrosting a sample representing only 0.025% of the Squid, Claimant
failed to perform a reasonable sampling.
b. Claimant did not examine a random sample of the Squid.
91. Claimant did not randomly select the cartons to be examined and thus its examination was
unreasonable. A buyer who relies on sampling must ensure the sample is selected randomly
[Schwenzer in Schlechtriem 1998 304]. The cartons Claimant defrosted and weighed were selected
from just two of the 12 containers [Cl. Ex. 10 10]. Since Claimant unpacked all of the
containers [Cl. Ex. 10 9], there was no commercial explanation for not broadening the sample
and examining cartons from other containers.
92. In addition, Claimant acted unreasonably by sampling only cartons labelled “illex danubecus
2007”—instead of cartons labelled 2007 and 2008. A case concerning the delivery of frozen
27

QUEEN’S UNIVERSITY FACULTY OF LAW
mackerel found an examination nearly identical to Claimant’s to be unreasonable. Mackerel, like
squid, is a “predominant” bait for long-liners in Mediterraneo [Req. for Arb. 7]. Frozen mackerel
were delivered from multiple catch seasons but the buyer only sampled boxes from one season.
The court found the buyer should have examined boxes from all seasons [Sergueev v. DAT
(Denmark 2002)]. Similarly, Claimant should have examined cartons from both 2007 and 2008
seasons. Had it done so, Claimant would have discovered the non-conformity. By failing to
examine a random or sufficiently large sample of the Squid, Claimant failed to discharge its duty
under art. 38(1) CISG and discover the non-conformity on 1 July 2008.
2. Claimant did not exercise the requisite degree of diligence in its examination.
93. Claimant failed to reasonably examine the Squid by not exercising the degree of diligence
required in the circumstances. The adequacy of an examination under art. 38(1) CISG depends
on the circumstances of the case [DiMatteo 362]. Here, two circumstances compelled a rigorous
examination. First, where a buyer has previously purchased non-conforming goods from a seller,
subsequent purchases require a more diligent examination [Ferrari 192; LG Aug 1989]. Although
the Contract was the first transaction between the Parties, Claimant knew that Danubian squid
were “not consistent in quality” [Req. for Arb. 11-12; Cl. Ex. 10 4]. Given that knowledge,
Claimant was required to perform an especially diligent examination. Second, perishable goods
for human consumption have been held to require rigorous examination [Schwenzer in
Schlechtriem/Schwenzer 2010 613; Kingfisher v. Comercial (Spain 2007)]. Here, the Contract required
the Squid be “fit for human consumption” [Cl. Ex. 4], a requirement on which Claimant insisted.
However, far from being especially diligent, Claimant examined only squid from the 2007 catch,
and defrosted only 0.025%, or USD 80 worth of squid, from a delivery worth USD 320,000 [Cl.
Ex. 4]. This examination cannot be considered diligent. By failing to examine a reasonable
sample or exercise the requisite degree of diligence, Claimant failed to discover the non-
conformity when it ought to have done so.
B. Claimant did not give notice of the non-conformity until 16 August 2008,
which was not within a reasonable time under art. 39(1) CISG.
94. Claimant alleges that it gave notice of the non-conformity on 29 July 2008 [Cl. Memo. 70].
However, Claimant did not provide notice sufficient to satisfy art. 39(1) CISG until 16 August
2008, after the reasonable notice period had expired. Art. 39(1) CISG requires the buyer to
provide the seller notice, specifying “the nature of the lack of conformity” within a “reasonable
time” after the non-conformity was or ought to have been discovered. Claimant did not give
notice specifying the nature of the non-conformity until 16 August 2008 [1]. Notice 45 days after
28

QUEEN’S UNIVERSITY FACULTY OF LAW
the non-conformity was discoverable constitutes unreasonable delay [2]. Consequently, Claimant
has lost its right to rely on the alleged breach.
1. Claimant did not provide notice specifying the lack of conformity until 16
August 2008.
95. Claimant did not properly communicate the nature of the alleged non-conformity to Respondent
until 16 August 2008. To constitute notice “specifying the nature of the non-conformity” [art.
39(1) CISG], the notice must contain sufficient detail for the seller to know what would be
necessary to cure the deficiency [Honnold 279; DiMatteo 368; Schwenzer in Schlechtriem/Schwenzer
2010 609]. Notice merely stating the goods are of “defective quality” does not suffice [Schwenzer
in Schlechtriem/Schwenzer 2010 626; LG Jul 1998]. Claimant argues that its 29 July 2008 letter
constituted proper notice [Cl. Mem. 70]. In that letter, Claimant stated that “the squid was hardly
useable as bait” [Cl. Ex. 5]. This fails to meet the required degree of detail [a]. Claimant’s notice
came only in its 16 August 2008 letter, which described the Squid’s size range and TGT
Laboratories’ inspection results [b].
a. Claimant’s 29 July 2008 letter did not convey sufficient detail for
Respondent to know what would be necessary to cure the nonconformity.
96. The 29 July 2008 letter described the Squid only as “hardly useable as bait” [Cl. Ex. 5]. This
statement did not convey sufficient detail for Respondent to know what steps were necessary to
cure the alleged lack of conformity. First, “hardly” is a vague word capable of several meanings.
Its definitions include: “barely, only just; almost not; not quite...” [Oxford 1112]. Squid which is
“barely, only just” or “almost not” useable implies a less degree of non-conformity than Squid
which is “not quite” useable. Squid which is “almost not” useable implies that the Squid could be
used as intended, albeit with difficulty. Without further clarification, Respondent cannot
reasonably be expected to have understood the nature of the non-conformity, or the appropriate
cure—if one was even required.
97. Even if “hardly” means completely unusable, squid can be unusable as bait for a variety of
reasons, most of them unrelated to the alleged non-conformity. For example, long-line bait can
be too large or show signs of decay [Cl. Ex. 7 4-7]. Accordingly, based only on “hardly useable
as bait”, Respondent could not know whether curing the non-conformity would require re-
shipping squid from earlier in the season, re-shipping squid from later in the season, or re-
shipping squid using different freezing and packing methods. Moreover, “hardly usable as bait”
could also mean that the fish Mediterraneo long-liners target are not attracted to illex danubecus, in
which case a completely different species would be required. In these proceedings, Claimant
argues the Squid did not conform because “it was too small” [Req. for Arb. 18]. However,
29

QUEEN’S UNIVERSITY FACULTY OF LAW
“hardly usable as bait” has a much broader meaning than “too small”. Since the 29 July 2008
letter did not specify the nature of the non-conformity, it did not constitute notice under art.
39(1) CISG.
b. The 16 August 2008 letter was Claimant’s first communication
that specified the nature of the non-conformity.
98. Claimant’s 16 August 2008 letter adequately described Claimant’s complaint—that the Squid did
not weigh 100-150 g [Cl. Ex. 7]. After Claimant’s ambiguous 29 July 2008 letter, Respondent
requested the Squid be examined by a certified testing agency to resolve the confusion [Cl. Ex.
6]. Claimant complied with this request, and reported the results of the test on 16 August 2008.
This letter was the first time Claimant described the Squid as not weighing 100-150 g [Cl. Ex. 7],
a description that enabled Respondent to understand how to cure the non-conformity [Ferrari
198]. Therefore, Claimant first gave notice to Respondent on 16 August 2008, 45 days after 1
July 2008, when it ought to have discovered the non-conformity.
2. By providing notice 45 days after it ought to have discovered the nonconformity,
Claimant’s notice was late.
99. Forty-five days passed from the date Claimant ought to have discovered the non-conformity to
the date it notified Respondent. This was beyond a reasonable time. There are two approaches to
determine the length of a “reasonable time” under art. 39(1) CISG. The most widely used is a
“flexible” analysis with “regard to the circumstances of the case” [Ferrari 193; DiMatteo 365;
Honnold 280]. However, some courts, particularly in Germany, apply a presumptive notice period
of one month [Schwenzer 2007; BGH Nov 1999]. Under either the flexible approach [a], or the
presumptive approach [b], Claimant failed to provide notice within a reasonable time.
a. The circumstances required notice be given in less than 45 days.
100. In the circumstances, notice given after 45 days was not within a reasonable time. The “flexible”
approach to a reasonable time calculates the notice period based on “the nature of the goods, the
nature of the defect, the situation of the parties and relevant trade usages” [CISG-AC2 39(3)]. A
reasonable time for perishable or seasonal goods is shorter than for durable goods [Ferrari 195].
Similarly, a reasonable time is shorter if the nature of the defect is easily identifiable [Namur-
Kreidverzekering v. Wesco (Belgium 1996)]. The Squid are a frozen perishable and seasonal good [St.
of Def. 13]. Moreover, the defect in the Squid could be easily discovered through defrosting and
a visual inspection [Cl. Ex. 10 10]. These circumstances compel a short reasonable time period.
101. In cases concerning sales of similar frozen commodities, courts have found a reasonable time to
range from a few days to two weeks. In a dispute concerning frozen mackerel, the court held that
notice would have been reasonable were it given “within a few days” [Sergueev v. DAT (Denmark
30

QUEEN’S UNIVERSITY FACULTY OF LAW
2002)]. Similarly, in a case concerning frozen crab, the court found notice after a “few weeks”
was unreasonable [Kingfisher v. Comercial (Spain 2007)]. Finally, in a case involving frozen cuttlefish,
11 days was found to be a reasonable time [Pescados v. Port Said Export (Spain 2001)]. Thus, cases
involving similar commodities indicate a reasonable time to be two weeks at most. At 45 days,
Respondent’s notice was three times longer—late by any standard.
b. Notice was not given within the presumptive one month period.
102. If the Tribunal were to adopt the presumptive approach, Claimant still has not provided timely
notice. Under this approach, tribunals presume a reasonable time to be one month from the date
the non-conformity ought to have been discovered (the “noble month”) [Schwenzer 2007; BGH
Nov 1999]. Tribunals then adjust this period based on the circumstances—for example, where
goods are seasonal or perishable, the month is reduced [Andersen VI.2]. Only in “rare
circumstances” should the presumptive period be extended [Andersen VI.2]. Here, Claimant gave
notice after the one month presumptive period, a period ending on 1 August 2008. In any event,
the noble month should be reduced because of the seasonal and perishable character of the
Squid [St. of Def. 13]. By giving notice on 16 August 2008, Claimant failed to give notice within a
reasonable time under either the flexible or presumptive approach.
C. Even if Claimant’s 29 July 2008 letter specified the nature of the nonconformity,
it was still not given within a reasonable time.
103. Even if Claimant’s 29 July 2008 letter adequately specified the nature of the non-conformity and
thus constitutes notice, it was still late [Cl. Ex. 5; art. 39(1) CISG]. Claimant’s 29 July 2008 letter
was sent 28 days after Claimant ought to have discovered the non-conformity. A flexible analysis
shows that notice after 27 days was late [1]. Similarly, notice after 27 days failed to be within the
noble month properly reduced for the circumstances [2].
1. The circumstances required notice be given within 27 days.
104. Notice given after 27 days was not within a reasonable time according to the flexible approach.
The flexible approach determines reasonable time based on the nature of the goods [CISG-AC2
39(3)]. Cases concerning the sales of similar frozen seafood interpret a reasonable time to be at
most two weeks [Sergueev v. DAT (Denmark 2002); Kingfisher v. Comercial (Spain 2007); Pescados v.
Port Said Export (Spain 2001)]. Accordingly, even if notice had been given on 29 July 2008, it was
not within two weeks and therefore was late.
2. The noble month should be reduced because the Squid were perishable and
seasonal.
105. Even if the noble month was applied to notice given on 29 July 2008, it was not timely. The
noble month should be modified according to the circumstances [Schwenzer 2007; Andersen VI.2].
31

QUEEN’S UNIVERSITY FACULTY OF LAW
Perishable and seasonal goods compel the noble month to be reduced [Andersen VI.2]. In a case
concerning the sale of live fish, a German Court of Appeal considered the noble month, but
nonetheless found the circumstances required a reasonable time period of eight days [OLG May
1998]. Similarly, here the noble month should be reduced. Since Claimant’s notice took 28 days,
it was barely within a month, and when the noble month is adjusted downward in accordance
with the circumstances, Claimant’s notice was late. By failing to provide notice within a
reasonable time, Claimant has lost its right to rely on the non-conformity.
II. RESPONDENT IS NOT PREVENTED FROM RELYING ON ART. 39 CISG BY VIRTUE OF ART.
40 CISG.
106. Claimant argues that Respondent was not entitled to reasonable notice by operation of art. 40
CISG [Cl. Memo. 74]. This argument must fail. Art. 40 CISG prevents a seller from relying on
arts. 38 and 39 CISG if it “knew or could not have been unaware” of facts related to the non-
conformity, but did not disclose them. Claimant has the burden of proving Respondent “knew
or could not have been unaware” [Schwenzer in Schlechtriem/Schwenzer 2010 647]. Here, Claimant
cannot prove Respondent possessed the awareness required for art. 40 CISG [A]. In the
alternative, Respondent disclosed the risk of non-conformity to Claimant [B].
A. Claimant cannot prove Respondent was aware of the facts related to the nonconformity,
so art. 40 CISG does not apply.
107. Respondent was not aware of the facts related to the non-conformity. Art. 40 CISG requires the
seller to have displayed an “obvious” knowledge of the facts related to the non-conformity
[Schwenzer in Schlechtriem/Schwenzer 2010 644]. A German Court of Appeal held that the seller
must have knowledge akin to bad faith or fraud for the provision to apply [OLG Feb 2004].
Another arbitral tribunal held that the seller’s awareness must “amount to at least a conscious
disregard” of the facts related to the non-conformity [Beijing Light v. Connell (Sweden 1998)].
Claimant cannot meet this high standard.
108. Claimant alleges the Squid failed to conform because it did not weigh 100-150 g. Accordingly, it
must prove Respondent was aware the Squid would weigh less than 100 g. Admittedly,
Respondent knew illex danubecus caught earlier in the harvesting season “tend to be small” [St. of
Def. 13]. However, Respondent never weighed the Squid, nor is there any evidence Respondent
knew—or ever even considered—their actual weight. Accordingly, Respondent did not
“obviously” know the Squid weighed less than 100 g. Nor did Respondent hide its knowledge so
as to deceive or defraud Claimant. Finally, there is no evidence that Respondent closed its mind
to, or consciously disregarded, the fact that the Squid weighed less than 100 g. Ultimately,
Respondent’s general awareness of the harvesting season of illex danubecus cannot rise to the
32

QUEEN’S UNIVERSITY FACULTY OF LAW
standard imposed by art. 40 CISG. For this reason, Respondent was entitled to reasonable notice
under art. 39(1) CISG.
B. In the alternative, Respondent disclosed the risk of a non-conformity to
Claimant, so art. 40 CISG does not apply.
109. Even if Claimant meets the high standard set out in art. 40 CISG, Respondent disclosed the risk
of a non-conformity to Claimant and therefore art. 40 CISG does not apply. Where a seller
discloses “the risk of a defect”, the buyer remains bound to give notice, regardless of the seller’s
knowledge [Schwenzer in Schlechtriem/Schwenzer 2010 646; art. 40 CISG]. Here, Claimant knew there
was a risk the Squid would weigh less than 100 g. Claimant “knew ... the squid grew larger as the
season progressed” [Clar. 27], and Respondent informed Claimant in the Sale Confirmation that
the delivery would consist partly of 2008 catch squid [Cl. Ex. 4]. Given that the Squid would be
delivered at the mid-point of the 2008 growing season, Claimant must have known there was a
risk the 2008 squid would be small. Therefore, Respondent’s Sale Confirmation disclosed the
risk of a non-conformity and Claimant remains bound to provide reasonable notice. By failing to
provide reasonable notice, Claimant has lost its right to rely on any non-conformity.
PART SIX: CLAIMANT FAILED TO MITIGATE ITS LOSSES.
110. Even if the Tribunal finds Claimant is entitled to damages, the damages should be almost entirely
reduced because Claimant failed to mitigate its losses under art. 77 CISG. An injured party is
required to take measures that are reasonable under the circumstances to mitigate its losses
[Schwenzer in Schlechtriem/Schwenzer 2010 1045; DiMatteo 422]. The injured party’s “ingenuity,
experience, and financial resources” determine what measures are reasonable [Bernstein/Lookofsky
103]. Here, Claimant acted unreasonably. Claimant failed to make reasonable efforts to resell the
Squid [I], incurred unreasonable storage costs [II], and failed to seek a substitute purchase [III].
I. CLAIMANT FAILED TO MAKE REASONABLE ATTEMPTS TO RESELL THE SQUID TO
ALTERNATIVE BUYERS.
111. Claimant failed to exercise its experience and ingenuity in its attempts to resell the Squid [Req. for
Arb. 30]. Mitigation often includes the profitable resale of goods [Knapp in Bianca/Bonell 559].
Here, Claimant failed to take reasonable measures to resell the Squid.
112. First, Claimant made only half-hearted attempts to resell the Squid at a discount to long-liners in
Mediterraneo. Although Claimant argues there was a “general reluctance” to purchase the Squid
at a discount [Cl. Ex. 10 14; Req. for Arb. 19-20], it has adduced no evidence showing it actually
solicited offers or attempted negotiations. An experienced long-line supplier, such as Claimant,
ought to be aware of discount schemes capable of selling some of the Squid to long-liners
despite “reluctance”.
33

QUEEN’S UNIVERSITY FACULTY OF LAW
113. Second, Claimant failed to make reasonable attempts to resell the Squid for human consumption.
Claimant describes itself as being in the business of selling “supplies to fishing fleets operating
out of Mediterraneo ... [and] fish for human consumption” [Req. for Arb. 2]. Accordingly,
Claimant must possess significant expertise and understanding of the human consumption
market. The Squid were fit for human consumption [Cl. Ex. 8], but Claimant made no attempts
to resell it, claiming only that the market for human consumption in Mediterraneo was
“saturated” [Cl. Ex. 10 15]. Even when a market is “saturated”, a reasonable person with
expertise and experience in the industry would make some attempt to negotiate sales. There is no
evidence Claimant did so.
114. Finally, Claimant acted unreasonably by relying entirely on Reliable Trading House (“RTH”) to
resell the Squid outside Mediterraneo [Cl. Ex. 10 15]. Relying entirely on an agent to perform
mitigation measures is reasonable only where the agent possesses greater expertise than the
injured party [LG Aug 1994]. Here, Claimant hired RTH to perform all of its reselling outside
Mediterraneo, but has adduced no evidence that RTH possessed greater expertise than Claimant
[Cl. Ex. 10 15]. In fact, Claimant has expertise in foreign markets because it imports its squid
[Cl. Ex. 10 3]. Had Claimant sold the Squid itself, it would have received all of the proceeds. At
the very least, Claimant also ought to have pursued its own attempts to resell the squid outside
Mediterraneo. By failing to conclude any alternative sales in Mediterraneo and relying entirely on
RTH for foreign sales, Claimant acted unreasonably.
II. CLAIMANT INCURRED UNREASONABLE WAREHOUSE STORAGE COSTS.
115. Claimant failed to reasonably mitigate its losses by storing the Squid for months after it no longer
intended to resell it. An injured party cannot claim compensation for expenses incurred in the
course of mitigation when those expenses are unreasonable [Knapp in Bianca/Bonell 560;
Enderlien/Maskow 308]. A reasonable expense is one that prevents or reduces a greater loss [BGH
Jun 1997]. From August 2008 through May 2009, Claimant incurred extraordinary warehouse
costs for storing the Squid [Req. for Arb. 21-23]. However, it appears Claimant ceased any
attempts to resell the Squid in autumn 2008 [Req. for Arb. 21-23]. If Claimant did not intend to
resell the Squid after that time, it was unreasonable to store it at significant cost. In addition,
since Claimant never intended to avoid the Contract, it should have destroyed the Squid as soon
as it ceased all attempts to make a substitute sale [Req. for Arb. 30]. Accordingly, these
extraordinary warehouse expenses had no prospect of preventing or reducing Claimant’s loss;
instead, it increased it by USD 44,750 [Req. for Arb. 30]. For this reason, Claimant should not
be awarded damages for extraordinary storage costs.
34

QUEEN’S UNIVERSITY FACULTY OF LAW
III. CLAIMANT FAILED TO MITIGATE ITS LOSS OF PROFIT BY NOT SEEKING A SUBSTITUTE
PURCHASE FOR LONG-LINE BAIT.
116. Claimant is not entitled to damages for loss of profit on the unsold squid because it did not seek
a substitute purchase. An injured party has an obligation to carry out a substitute transaction if
doing so would reduce a loss of profit [Schwenzer in Schlechtriem/Schwenzer 2010 1046]. If a
substitute transaction is too expensive or unavailable, the injured party must show the tribunal
the offers it solicited [OLG Sept 1998]. Here, Claimant made no attempt to secure a substitute
purchase; this was unreasonable. Regardless of the market for substitute bait, Claimant must at
least show the Tribunal the offers it solicited. Claimant presented no offers. Therefore, if the
Tribunal finds Claimant is entitled to damages, the damages should be almost entirely reduced
because Claimant failed to mitigate its losses.
PRAYER FOR RELIEF
In light of the above submissions, Counsel respectfully requests that the Tribunal:
• Find it does not have jurisdiction to hear the Parties’ dispute;
• Find that Claimant breached confidentiality;
• Order Claimant to respect the confidentiality of the proceedings;
• Find that Claimant is liable for any damages resulting from its breach of confidentiality;
• Find Respondent delivered goods in conformity with the Contract;
• Find Claimant failed to give Respondent notice within a reasonable time; and
• Find Claimant failed to take reasonable measures to mitigate its losses.
(signed)
______________ ______________
Benjamin Adelson Vanessa Beamish
______________ ______________
Lara Fitzgerald-Husek Jack Maslen
20 January 2011
35