MEMORANDUM FOR RESPONDENT - Pace University

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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
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MEMORANDUM FOR RESPONDENT - Pace University

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