Emorandum For Espondent: T S A W C. V I C A M

TWENTY SEVENTH ANNUAL WILLEM C.
VIS INTERNATIONAL COMMERCIAL ARBITRATION MOOT
MEMORANDUM FOR RESPONDENT
On Behalf of: Against:
TURBINAENERGIA LTD HYDROEN PLC

LESTER-PELTON-CRESCENT 3 RUE WHITTLE 9
OCEANSIDE CAPITAL CITY
EQUATORIANA MEDITERRANEO
–RESPONDENT– –CLAIMANT–
Counsel for RESPONDENT
RAQUEL COSTOYAS RENDO CLEO NEOMI EGGER PEDRO VICENTE ESTEBAN ORELLANA
SARA GALETTI SILVIA GONZÁLEZ LÓPEZ CRISTINA MORÁN GONZÁLEZ
MARTA OLIVER PERELLÓ
UNIVERSIDAD EUROPEA DE MADRID

MADRID, SPAIN
I. TABLE OF ABREVIATIONS
REFERENCE IN THE
ABBREVIATION RULE MEMORANDUM
(paragraph)
Art. Article(s) Cited throughout
IBA Guidelines / 2014 IBA Guidelines on Conflict of Interest 25, 40, 41
Guidelines in International Arbitration.
ICC International Chamber of Commerce Cited throughout
International Centre for Settlement of Cited throughout

ICSID
Investment Disputes
LCIA (London Court of International 25, 28, 30, 32, 33, 34, 38,
LCIA Rules
Arbitration) Arbitration Rules (2014). 39, 41, 43
United Nations Convention on the 6, 14, 19, 22, 23, 25, 37,
New York Convention Recognition and Enforcement of Foreign 44
/ NYC Arbitral Awards (New York, 10 June 1958).
No. Number Cited throughout

P. / Pp. Page(s) Cited throughout
Para. Paragraph(s) Cited throughout
SCC Stockholm Chamber of Commerce Cited throughout
UNCITRAL/ UNCITRAL Model Law on International 10, 18, 19, 25, 32, 38, 44
UNCITRAL Model Commercial Arbitration (1985), with
Law amendments as adopted in 2006
UNCITRAL Rules of UNCITRAL Rules of Transparency in 25
Transparency / Rules Treaty-based Investor-State Arbitration
of Transparency (2014)
UPICC/ UNIDROIT 2016 UNIDROIT Principles on International 8, 10, 25, 33
Principles Commercial Contracts.
United Nations Convention on Contracts for Cited throughout

CISG
the International Sale of Goods (1980)
I
II. LEGAL SOURCES AND MATERIAL
REFERENCE IN THE
APPLICABLE RULES MEMORANDUM
(paragraph)
LCIA Arbitration Rules (2014) 25, 28, 30, 32, 33, 34, 38, 39,
41, 43
UNCITRAL Model Law on International Commercial 10, 18, 19, 25, 32, 38, 44
Arbitration (2006)
UNIDROIT Principles on International Commercial Contracts 8, 10, 25, 33
(2016)
United Nations Convention on Contracts for the Cited throughout
International Sale of Goods (Vienna, 1980)
United Nations Convention on the Recognition and 6, 14, 19, 22, 23, 25, 37, 44
Enforcement of Foreign Arbitral Awards (New York, 1958)
REFERENCE IN THE
OTHER INSTRUMENTS
MEMORANDUM
IBA Guidelines on Conflict of Interest in International 25, 40, 41
Arbitration (2014)
IBA Rules on the Taking of Evidence in International 25, 28, 29, 30
Arbitration (2010)
II
III. BIBLIOGRAPHY
1. INDEX OF LEGAL AUTHORITIES
REFRERENCE
IN
AUTHOR WORK
MEMORANDU
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IX
2. INDEX OF CASES
REFERENCE IN
STATE COURT CASE
MEMORANDUM
Court of Appeal of the Anzen Limited and 16
British Virgin
Eastern Carribean Others v. Hermes One
Islands
Supreme Court Limited, 2016
Canada Supreme. Court of Moule v. New 117
Canada, Kerwin C.J.C., Brunswick Electric
Cartwright, Martland, Power Commission,
Judson and Ritchie JJ. (1960) 24 DLR (2d) 305
June 24, 1960. (SCC),
Germany Provincial Court of 64
Appeal No. 6 U 87/96, April
1997.
Madan Gopal v. Naval 34

India Supreme Court
Dubey, 1992
Swiss Singapore 6
India High Court of Gujarat Overseas Ltd. v. M/V
African Trader, 2005
Military and 46
International Court of
N/A Paramilitary Activities
Justice
USA v. Nicaragua, 1986
Netherlands ICC (Criminal Court) THE PROSECUTOR v. 59
BOSCO NTAGANDA.
ICC-01/04-02/06-87-
Conf- Exp
Netherlands ICC (Criminal Court) Prosecutor v. Zoran 59

KUPRESKIC. 3
September, 1999
Netherlands ICC (Criminal Court) 59

THE PROSECUTOR v.
BOSCO NTAGANDA,
ICC-01/04-02/06, 6
September, 2013.
International General 33
Puerto Rico Supreme Court
Electric v. Concrete
X
Builders, 1976.
Banco Popular de 33
Puerto Rico Supreme Court Puerto Rico v. Sucn,
2008.
Republic of Labour Court of Mosima v. South 46
South Africa Johannesburg African Police Services
(SAPS) and others, 2011
Arbitrazh Court of the RTK v. Sony Ericsson, 16, 18
Russia
City of Moscow 2012
Judgement of November 8
Spain Supreme Court
20th, 2008
Judgement of November 8
Spain Supreme Court
5th, 2006
Judgement of May 27th, 8
Spain Supreme Court
2007
Camimalaga S.A.U v. 16
Provincial Court of
Spain DAF Vehículos
Madrid
Industriales S.A.U, 2013
Provincial Court of Judgement of November 19
Spain
Barcelona 9th, 2003
Provincial Court of Judgement of November 19
Spain
Barcelona 15th, 2003
Provincial Court of A Judgement of June 6th, 47
Spain
Coruña 2007
Switzerland Commercial Court HG930138. U/HG93, 9 57
September 1993
Supreme Court of New Browser V. Gateway, 11
USA
York 1998
Court of Appeals Ninth Nagrampa v. MailCoups 12
USA
Circuit Inc, 2006
Wisconsin Auto Title 12
Court of Appeals of
USA Loans v. Kenneth M.
Wisconsin
Jones, 2006
USA Supreme Court of Independence County v. 17
XI
Arkansas City of Clarksville, 2012
Cored Panels, Inc. v. 17
Supreme Court of New
USA Meinhard Comm. Corp.,
York
1979
Supreme Court of New Arcata Graphics Corp. 17
USA
York v. Silin, 1977
Supreme Court of Tyson Foods, Inc. v. 17
USA
Arkansas Archer, 2004
3. INDEX OF ARBITRAL AWARDS

REFERENCE IN
TRIBUNAL CASE
MEMORANDUM
Ad hoc Union of India v. Bharat Engineering Corporation 16
Arbitration (ILR 1977 Delhi 57, No. 2009/3257)
Ad hoc 30
Award No. 17 I.L.M. 1 of 1997 (Texaco v. Libya)
Arbitration
Center of 25
Arbitration and
Mediation of the Case No 09113, 2015 (Autoridad Portuaria de Manta
Chamber of v Terminales Internacionales de Ecuador SA)
Commerce of
Quito (CAM)
Centro de 30
Comercio de Award No. 13 of 2001
Costa Rica (CCA)
CLOUT CASE No. 252 Germany, Landgericht Paderborn 25 June 53

1996
CLOUT CASE No. 275, Germany, 1997 64
CLOUT CASE No. 897, Uganda, 2006 95
CLOUT CASE No. 252, Switzerland, 1998 53
CLOUT CASE No. 123, Germany, 1995. 51
XII
CLOUT CASE No. 1203, Netherlands, 2009. 60
CLOUT CASE No. 285, Germany, 1998. 98
CLOUT CASE No. 543, Austria, 2002. 98
Dictrict Court Person of Greece v. Ed Fruit & Vegetables B.V. of 16 60
Utrecht January 2009
Netherlands
ICC Award No. 19127 of 2013 6, 8
ICC Award no. 7453 of 1994 7
ICC Award 4392 of 1983 8
ICC Award No. 9875/1999 of 2001. 25
ICC Award No. 9875 of 2000. 25
ICC Award No. 13009 of 2006. 25
ICC Award No. 14581 of 2012 8
ICC Award No, 12260 of 2005 25
ICC Award No. 10671 of 2001. 33
ICC Award No. 10021 of 2000. 70
ICC No. 8247, 1996 53
ICC No. 6653, 1993 57
Award No. ARB/03/26 of 2006 (Inceysa Vallisoletana, 36
ICSDI
S.L. v. Republic of El Salvador)
ICSID Award No. ARB 03/24 of 2008 18
XIII
ICSID Award of 2002 (Canfor v. USA) 25
Award No. UNCT/15/2 of 2015 (Lone Pine Resources 25
ICSID
Inc v Canada)
Award No. UNCT/14/2 of 2014 (Eli Lilly and 25
ICSID
Company v Canada)
ICSID 2004 (Tembec et al. v USA) 25
ICSID 2004 (Terminal Forest Products Ltd v. USA) 25
Award No. ARB/16/34, 2018 (Bridgestone Licensing 31
ICSID Services, Inc. and Bridgestone Americas, Inc. v.
Republic of Panama)
Award No. ARB/81/1 (Amco Asia Corporation and 36
ICSID
others v. Republic of Indonesia)
International Militarv and Puramilitary Activities in und against 46
Court of Justice Nicaragua (Nicaragua v. United States of America).
Merits, Judgment. I.C.J. Reports 1986, p. 14.
LCIA Award No. 132551 of 2015. 32
Award No. 20105 of 2013 (ECE Projektmanagement v 25
PCA
The Czech Republic)
Award No. 17 of 2012 (Mesa Power Group, LLC v 25
PCA
Canada)
Award No. 22 of 2013 (Windstream Energy LLC v 25
PCA
Canada)
Schiedsgericht Award of 21 March 1996 67
der
Handelskammer,
Arbitral Tribunal
Hamburg
Swiss Chambers' 8
Arbitration Award no. 4A 676 of 2015
Institution (SCAI)
XIV
IV. STATEMENT OF FACTS
DATE FACT REFERENCE

2010 The Council of Greenacre adopts “non-carbon” energy p. 5, para. 4 of
strategy. (Problem)
24th Aug. 2013 RESPONDENT exhibits the new Francis Turbines R27-V RESPONDENT
at the Hydro Power Fair, whereas expert Mr. Tim John is Exhibit R1, p. 30
a guest of honour. (Problem)
Jan. 2014 The Council of Greenacre submits a tender for the p. 5, para. 5
construction of a new hydro pump power plant. (Problem)
22nd May 2014 HydroEn plc and Turbina Energia conclude the Sales CLAIMANT
Agreement. Exhibit C2, p. 11
(Problem)
15th July 2014 HydroEn plc was awarded the contract. HydroEN plc p. 5, para. 5 and p.
commenced the construction immediately and finalized 6, para. 11
within 4 years. (Problem)
Spring 2018 Delivery and instalment of the two Francis Turbines. p. 6, para. 11
(Problem)
19th Sept. 2018 The power plant starts operating after the inspection and p. 6, para. 11
approval from the authorities. (Problem)
29th Sept. 2018 Renewable Daily News reports the fraud case of Trusted CLAIMANT
Quality Steel, one of the core suppliers of TurbinaEnergia Exhibit C3, p. 14
Ltd. (Problem)
1st Dec. 2018 After several emails between the Parties with the p. 7, para. 17
intention to clarify the consequences of the fraud (Problem)
and the offers considered to solve the issue, a
meeting takes place without further success on the
matter.
11th Dec.2018 TurbinaEnergia sends an email to HydroEn offering CLAIMANT
two new Francis Turbines for a preferential rate, to Exhibit C7, p. 20
be delivered in August 2020. (Problem)
31st July 2019 HydroEn plc (CLAIMANT) submits Request for p. 22 (Problem)
Arbitration through the LCIA, and whereas the
LCIA notifies TurbinaEnergia Ltd
(RESPONDENT). CLAIMANT appoints arbitrator
Ms. Burdin.
30th Aug. 2019 RESPONDENT submits Response to Request for p. 25-26 (Problem)
Arbitration and appoints arbitrator Mr. Pravin Derizan.
1
21st Sept. 2019 The arbitrator Ms. Burdin submits a disclosure to the p. 40 (Problem)
LCIA and legal counsels of both Parties.
23rd and 27th CLAIMANT and RESPONDENT emit correspondence p. 41 and 42

Sept. 2019 to the Arbitral Tribunal regarding Ms. Burdin’s (Problem)
disclosure.
V. INTRODUCTION
1. Prior to the presentation of both procedural and substantive arguments, the legal
representative of TurbinaEnergia Ltd wishes to formulate a brief analysis of the legal
relationship between the two parties to the present arbitration: HydroEN, as the
“CLAIMANT” in this case, and TurbinaEnergia Ltd as “RESPONDENT” (hereinafter,
collectively, the “Parties”). The relationship between Parties is based on an international
contract for the sale and purchase of two Francis turbines R27V, validly entered into by both
parties on 22nd of May of 2014 (para. 10, p. 6 of the Problem).
2. The origin of the controversy, which is the object of the present arbitration procedure, lies
within said contract, whereas CLAIMANT seeks to compel RESPONDENT into an
illegitimate arbitration proceeding, based on the groundless and speculative claim that the
acquired Francis turbines R27V are defective (para. 15, p. 28 of the Problem), as will be
asserted hereinunder in epigraph 1 and 4 of the present Memoranda. Whilst the present
process is also discrediting RESPONDENT’s business in the process, the counterparty
consistently rejects all offers and proposals without apparent reason, refusing to resolve the
controversy outside the framework of litigation.
VI. ARGUMENTS RELATED TO THE PROCEDURE
1. THE ARBITRAL TRIBUNAL LACKS JURISDICTION ON THE PRESENT CLAIM
3. Firstly, this legal counsel wishes to address the sole legal argument made by CLAIMANT,
whereas it claimed that RESPONDENT is behaving inconsistently (para. 56 Memoranda for
CLAIMANT) by challenging the validity of the arbitration clause, due to the fact that such
clause has been previously “negotiated” (para. 47 Memoranda for CLAIMANT). However,
this legal counsel asserts that such clause is invalid, unconscious and abusive, as
RESPONDENT’s consent was vitiated during negotiations. In addition, the alleged
“inconsistent behaviour” does not render any harm to CLAIMANT. Contrary to
CLAIMANT’s belief and faulty contract interpretation, the liability cap is not exclusively
subjected to arbitration (para. 60 Memoranda for CLAIMANT), but is rather effective before
any authority that resolves their disputes in light of the contract. Furthermore,
2
RESPONDENT already sought to include a litigation clause or, at least, a symmetrical
arbitration clause, which request was unreasonably denied (para. 2 Proc. Order 2).
4. Secondly, CLAIMANT states that the elected fora is fundamental to its business, highlighting
the supposed benefits of arbitration. This legal counsel believes that CLAIMANT has
initiated the present arbitration as a strategy that jeopardizes RESPONDENT’s image, as its
unique purpose to include such ambiguous dispute resolution clause (art. 21 Sales Agreement)
is to pressure its suppliers —by unilaterally deciding whether arbitration or litigation suits its
interests—, to maintain the privacy and confidentiality of a legally baseless claim that could
affect HYDROEN’s credibility, and, lastly, as an instrument to tip the scales to their favour
(Proc. Order 2, para. 2), as the elected arbitrator Ms. Burdin raises justifiable doubts about her
independency and impartiality.
5. In this sense, RESPONDENT wishes to further address the lack of jurisdiction of the present
Arbitral Tribunal, due to the invalidity of the arbitral clause, which agreement is not only
pathological and non-mutual, but also unconscionable.
1.1.The arbitration clause is pathological and unenforceable
6. The validity of the arbitration agreement is a fundamental requirement to verify the Arbitral
Tribunal’s jurisdiction and to assess the legitimacy of the arbitration proceeding,
notwithstanding the principle of Kompetenz-Kompetenz (HANOTIAU, 1999). Even if an
arbitration clause satisfies the formal requirements under applicable substantive law, the
agreement to arbitrate can nevertheless be considered invalid if it lacks substantive validity
(BORN, 2015). In this sense, the present arbitration agreement is unmistakeably pathological,
whereas it is poorly drafted, unclear and contradictory (ICC Award No. 19127 of 2013), and
thus lead to the impossibility to assert the parties’ intent (OTTO and ELWAN, 2010). In light
of the NYC provisions, notwithstanding the principle of presumptive validity of arbitration
agreements, article II (3) states that an agreement can be rendered unenforceable if such
agreement is incapable of being performed (BORN, 2015). Indian case law stipulated that
pathological arbitration clauses can be declared unenforceable under the “null and void,
inoperable or incapable of being performed” provision, if it is “absolutely vague, ambiguous
and self-contradictory” (Swiss Singapore Overseas Ltd. v. M/V African Trader, 7 February
2005, High Court of Gujarat (India); NEWYORKCONVENTION1958.ORG, n.d., para. 112).
7. The consent and submission to arbitrate the Parties’ disputes is ambiguous, unclear and
contradictory: the contract includes two dispute resolution methods, whereas article 21 of the
Sales Agreement contains a litigation clause (Art. 21.1 Sales Agreement) as well as an
agreement to arbitrate (21.2 Sales Agreement). In this sense, the ICC Award no. 7453 of 1994
3
stated that “the consent of each party must be unambiguously demonstrated if any resulting
Award is to be safely enforceable” (ARNALDEZ, DERAINS and HASCHER, 2003, p. 99):
the lack of clear and definitive intent to arbitrate renders the present arbitration agreement
invalid and, therefore, the present Arbitral Tribunal ought to decline its jurisdiction in favour
of the Courts of Mediterraneo.
8. Additionally, according to the ICC Award 4392 of 1983, Arbitral Tribunal ordered that, in
case of doubt regarding the intention of the Parties to the agreement, a restrictive and literal
interpretation must follow (Judgements 20th November 2008, 5th November 2006 and 27th
May 2007 of the Spanish Supreme Court; ICC Award No. 19127 of 2013), whereas “the
judge or arbitrator must always consider all relevant circumstances, including the wording
and history of the clause” (ICC Award No. 14581 of 2012). Considering the literal wording of
the dispute resolution clause, the text states that “the courts in Mediterraneo have exclusive
jurisdiction over any dispute arising out of or in connection with this contract” (Art. 21.1
Sales Agreement). Prima facie, the arbitration agreement lacks a basic constitutive element –
i.e. negative enforcement—, as the Parties failed to express their undoubted will to waive the
state courts’ jurisdiction in favour of a private arbitral tribunal (SCAI Award no. 4A 676 of
2015) and, therefore, does not “preclude judges from resolving the conflicts that the parties
have agreed to submit to arbitration” (UNCTAD, 2005, p. 4). In addition to the referenced
case law, Art. 4.3(a) UPICC lists what has to be understood under the concept of “relevant
circumstances” when interpreting a contract, whereas the Tribunal ought to consider primarily
the preliminary negotiations between the parties. Consequently, considering the history of the
clause, RESPONDENT objected to the inclusion of an arbitration clause while the contract
was being negotiated (para. 2, Proc. Order 2, p. 46 of the Problem) and, thus, expressed their
unwillingness to arbitrate any controversy in light of the contract.
9. Conclusively, RESPONDENT requests the Arbitral Tribunal to decline its jurisdiction in
favour of the Courts of Mediterraneo, as the intent to arbitrate is not definitive nor clear,
becoming a pathological arbitration agreement and, thus, rendering it incapable of being
performed.
1.2.Alternatively, the arbitration clause is null and void: the unconscionability doctrine
10. In conjunction with the aforementioned, this legal counsel asserts that the clause and the
Parties’ conduct not only lacks of definitive intent to arbitrate, but also lacks proper consent
to which the Parties agreed to include such dispute resolution method, whereas, as a result,
the agreement to arbitrate is unenforceable. As PRYLES (2018) states, the agreement is
intrinsically defective […] where the consent of the parties to arbitrate disputes was vitiated
4
by misrepresentation, fraud, duress or undue influence. In this respect, the unconscionability
doctrine “is a well-settled ground for contractual invalidity in all jurisdictions, applied equally
to both commercial contracts and arbitration agreements” (p.86), well-recognized under the
LMU even when not expressively stated (BORN, 2015). Equally, similar doctrines are
recognized under art. 3.2.7 UPICC, whereas it allows a party to “avoid the contract or an
individual term of it if, (…) the contract or term unjustifiably gave the other party an
excessive advantage”. Moreover, there is no clear definition of the doctrine of
unconscionability; howbeit, according to RAU (2015, p. 26) it is a “tool to police excesses
and abuses of contractual power”, whereas it entails “the absence of meaningful choice on the
part of one of the parties, together with contract terms that are unreasonably favorable to the
other” (RAU, 2015, p. 27).
11. According to MARROW (2000), a contract can be unconscionable at two levels:
procedurally, when negotiating the contract, or substantively, when incorporating the terms
into a written agreement. Under the precedent of Browser V. Gateway 2000 Inc. (676
N.Y.S.2d 569 (App. Div. 1998, Supreme Court of New York) and according to SHEPPARD
and HUBER (2012), in order to invoke the doctrine: (i) a contract must be “both procedurally
and substantively unconscionable when made”, and (ii) “there must be “some showing of ‘an
absence of meaningful choice on the part of one of the parties together with contract terms
which are unreasonably favourable to the other party” (BORN, 2001, p. 222).
12. On one hand, procedural unconscionability is evinced during the negotiations of the contract,
whereas RESPONDENT already objected to include an arbitration agreement and sought to
include a litigation clause, which request was unreasonably denied (para. 2 Proc. Order 2). In
addition, RESPONDENT is to be considered an oppressed party towards the present
agreement, as there is “an inequality of bargaining power that results in no real negotiation
and an absence of meaningful choice” (Nagrampa v. MailCoups Inc, 469 F 3d 1257, Court of
Appeals 9th Cir 2006). As opposed to RESPONDENT’s dimension of business, CLAIMANT
is an international market leader in providing hydro pump power plants (para. 1, p. 4 of the
Problem), operating in over 100 countries and has more than 25,000 employees and an annual
turnover of 4.3 billion US$ (para. 1, Proc. Order 2). As a result, CLAIMANT is not only
economically stronger than RESPONDENT, but also legally dominant, due to its experience
with arbitration clauses, whereas such agreements are offered on a “take it or leave it basis” to
all its suppliers (para. 2, Proc. Order 2). On the other hand, arbitration clauses are rendered
substantively unconscionable when they are “broad, one-sided, unfair "save and except”
parenthetical in the arbitration provision” (Wisconsin Auto Title Loans v. Kenneth M. Jones
5
(Court of Appeals, May 25th, 2006, Case No. 2003AP2457, Wisconsin). Undoubtedly, such is
the case in the present controversy, as the agreement imposes a direct restriction and
abusively limits RESPONDENT’s access to justice, who may solely seek legal remedies
within the ordinary courts of Mediterraneo (Art. 21.1 Sales Agreement). Furthermore, not
only is the dispute resolution clause manifestly abusive and unduly oppressive, but it is also
extremely unfair, since CLAIMANT has the exclusive right to choose a fora to its
convenience, whether it seeks publicity or confidentiality, while RESPONDENT is obliged to
assert without action.
13. Lastly, it is worth mentioning that the supposed exchange of contractual provisions –i.e. the
inclusion of an asymmetrical arbitration clause against the inclusion of a limitation of liability
(para. 6, Exh. R2, p. 32 of the Problem)— within negotiations remains equally as unreal as it
is abusive: RESPONDENT’s liability was not limited, as according to art. 19.4 of the Sales
Agreement, CLAIMANT “is entitled to claim and prove higher actual damages” than those
negotiated under previous provisions. Therefore, as evinced hereabove, the alleged
negotiation was rather feigned, since CLAIMANT achieved to include an arbitration clause
under the false pretences of limiting RESPONDENT’s economic liability.
14. Consequently, it is no surprise that RESPONDENT seeks to challenge the present arbitration
clause, as it lacks a valid consent between the parties, due to the fact that the agreement was
negotiated and signed under unequal bargaining power, rendering it procedurally and
substantially unconscious. As a result, the arbitration agreement becomes null and void –in
accordance with art. II (3) NYC—and, consequently, the jurisdiction of the present Arbitral
Tribunal decays.
1.3.Invalidity of non-mutual arbitration clauses: violation of mutuality doctrine and party
equality principle
15. Even if the Arbitral Tribunal —in spite of the aforementioned legal foundations— considered
the principle of utility or pro-arbitration to enforce the pathological arbitration clause, such
agreement is nevertheless invalid due to its asymmetry and non-mutuality, and whereas it
violates the principle of party equality. As mentioned previously, art. 21.2 of the Sales
Agreement includes an asymmetric arbitration clause, which agreement entails that “only one
of the parties withholds the right to opt, given one of the disputes submitted to arbitration
arises, between submitting to controversy to arbitration or state jurisdiction” (DE BENITO,
2010, p. 77-78).
16. The present legal counsel wishes to highlight that, in several arbitral awards and state
judgements, asymmetrical agreements have been ruled invalid, such as the case of Union of
6
India v. Bharat Engineering Corporation (ILR 1977 Delhi 57, No. 2009/3257), Camimalaga
S.A.U v. DAF Vehículos Industriales S.A.U (Provincial Court of Madrid, No. 147/2013) and
Anzen Limited and Others v Hermes One Limited (Court of Appeal of the Eastern Caribbean
Supreme Court, British Virgin Islands, No. 41/2015-2016). More accurately, the Russian
Court determined in RTK v. Sony Ericsson (No. 1831/12 of June 19, 2012, Arbitrazh Court of
the City of Moscow) that:
“a dispute resolution clause, which consists of the right to resolve a dispute through arbitration or litigation
before the national court, is valid when both parties […] have access to both dispute resolution
mechanisms. However, if the dispute resolution clause deprived one of the parties of referring the dispute
to the court [or arbitration], that asymmetry would result in the invalidity of the entire dispute resolution
clause”.
German Courts have reached the same conclusion, whereas it stated that non-mutual
arbitration agreements which are “significantly imbalanced and gave manifest advantage to
only one the parties” ought to be declared invalid (DRAGUIEV, 2014, p. 27).
17. The reasoning behind the invalidity of asymmetrical clauses is related to the lack of mutuality
of consideration, as under such common law doctrines –based on the principle of fairness—,
“either both must be bound, or neither is bound” (DRAHOZAL, 2002). Judgements such as
Independence County v. City of Clarksville (2012, WL 149771, at *7 (Ark.), Cored Panels,
Inc. v. Meinhard Comm. Corp. (420 N.Y.S.2d 731, 731 (N.Y. App. Div. 1979), Arcata
Graphics Corp. v. Silin (399 N.Y.S.2d 738 (N.Y. App. Div. 1977) and Tyson Foods, Inc. v.
Archer (147 S.W.3d 681 (Ark. 2004), decided that “a lack of mutuality to arbitrate in an
arbitration clause renders the clause invalid” and, thus, refused its enforcement (BORN,
2014). Therefore, this legal counsel insists that on the fact that agreement to arbitrate is
invalid, and requests the Arbitral Tribunal to declare the agreement unenforceable, as the lack
of mutuality renders it void.
18. Lastly, the principle of party equality is expressively recognized under art. 18 LMU, which
states that the parties shall be treated with equality and each party shall be given a full
opportunity of presenting his case. The aforementioned principle is one of the most prominent
principles within international arbitration, which is founded on the principle of party
autonomy (CONTARINO, 2000, p. 55): conversely, the ICSID Award of 2008 (No. ARB
03/24, 2008), established that such equal treatment not only applied at the time of the sale, but
rather to everything inherent to it. In the context of non-mutual arbitration agreements,
PEREZ CASTILLO (2017) asserted that “asymmetric clauses have been the recurring target
of criticism, since the consent given in these clauses, assigning the power to choose the
discussion forum to only of the parties, could violate the principle of equality that should
guide any judicial process”. In addition to such statement, the aforementioned Russian case
7
law (IBID, RTK v. Sony Ericsson, Judgment of 19 June 2012), stated that, “based on common
principles for the protection of civil rights”, a dispute resolution clause cannot give one party
the right to refer their disputes to one fora, whilst depriving the second party of equal rights
(BORN, 2014): the Court finally decided that “if such clause is entered into, it will be invalid
because it violates the balance of the rights of the parties”. Consequently, and in accordance
with the aforementioned doctrine and jurisprudence, asymmetrical arbitration agreements
contradict a fundamental procedural principle —which also inspires arbitration proceedings—
and thus, are to be considered null and void, since they violate public policy (AIZENSTATD
LEISTENSCHNEIDER, 2007, p. 33).
19. In the present case, the principle of party equality is equivalently protected within the national
laws of Mediterraneo and, therefore, incorporated into its public policy (para. 52 Proc. Order
2). As a result, this legal counsel asserts that asymmetrical arbitration clauses are to be
considered contrary to public policy, as it violates the principle of party equality towards
RESPONDENT and, thus, renders art. 21.2 of the Sale Agreement invalid and unenforceable.
In this regard, all awards that the present Arbitral Tribunal issues without the proper
jurisdiction –i.e. an unenforceable arbitration agreement, as such is the cornerstone of all
legitimate arbitral proceeding—will be subject to recourse either at the seat of arbitration
(under provision and 34.2.b (ii) LMU), or either subject to annulment in the state where the
recognition is sought (under provision V.2 (b) NYC), on the grounds that the arbitral
agreement violates public policy of all three relevant countries (Judgements of 9 and 15 of
November, 2003, of the Provincial Court of Barcelona).
20. Conclusively, this legal counsel wishes to remind the Arbitral Tribunal the ethical and legal
duty assumed when accepting its appointment, to invoke for the issuance of a valid and
enforceable award (ESTAVILLO CASTRO, 2013), and ought to decline its jurisdiction in
favour of the state courts of Mediterraneo, as the keystone to a legitimate arbitral proceeding
(art. 21.2 Sales Agreement) is rendered invalid and unenforceable.
2. REGARDING THE EXCLUSION OF THE EXPERT SUGGESTED BY
RESPONDENT
21. CLAIMANT and RESPONDENT both take part in the New York Convention, whose aim is
to encourage the recognition and enforcement of foreign awards in many cases as possible
(NEW YORK CONVENTION, 1958, Key Provisions). Following this line, RESPONDENT
decided to trust in the Arbitral Tribunal’s impartiality and independence, being well aware
that this vote of confidence is a fundamental step in order to nourish the credibility in the
arbitration (AL-HAWAMDEH, DABBAS and AL-SHARARIRI, 2018). This is why
8
RESPONDENT, entrusting the Arbitral Tribunal’s professionalism, did not opt yet for a
challenge of the arbitrator. Nevertheless, CLAIMANT stated in its request for arbitration
(Para. 94 Memoranda for Claimant) that RESPONDENT is currently –and out of time—
seeking for such a challenge. Thus, this legal counsel sees the necessity to clarify that the
objection has not been timely made –as accused by CLAIMANT— simply because no
objection had been posed at all. Indeed, RESPONDENT, on one side, expressively affirmed
that “… it cannot determine with certainty whether the existing contacts make a challenge of
Ms. Burdin necessary. They definitely justify a close scrutiny of Ms Burdin’s behavior to see
whether she is negatively influenced by the contacts” (Para. 5, p. 42 of the Problem) and, on
the other hand, it only mentioned the publication of two articles without further legal
foundations in terms of challenging Ms. Burdin.
22. In conclusion and until today, RESPONDENT has not sought to challenge Ms. Burdin,
demonstrating its commitment to the very essence of the NYC and, consequently, to the
present arbitration. In fact, before alleging a lack of independence and/or impartiality, this
party sincerely wants to be doubtless about it, as such a decision would assuredly arrest the
arbitral proceedings in order to substitute the arbitrator.
23. On contrary, CLAIMANT is violating the NYC, as the request it posed may only end up in
the annulment of the award: that is exactly what such a Convention was sought to avoid.
Indeed, this legal counsel trusts the Arbitral Tribunal acknowledges that an award cannot be
recognized and enforced –that is, in other words, can be annulled (ZAHARIEV, 2018)—if it
had not been in consonance with: (i) the agreement of the parties, which implies the law they
selected as the applicable one on it (NYC, art. V.II.d), (ii) the law of the seat of arbitration
(NYC, art. V.II.d), (iii) the law of the forum where recognition and enforcement of the award
is sought, which –at this stage of the arbitral proceedings—can equally be CLAIMANT or
RESPONDENT’s country.
24. That said, CLAIMANT posed a request may not be admitted —if Arbitral Tribunal’s
intention is to avoid an annulment of the award— as it is contrary to all the aforementioned
applicable laws.
2.1.Regarding applicable rules to the presumed conflict of interests
25. Following the aforementioned, it is necessary to identify the applicable legal framework,
considering the range of mistakes and omissions made by CLAIMANT in relation to this
issue.
(i) First of all, CLAIMANT is suspiciously omitting fundamental laws whose implementation
had already been agreed by the Parties, being the NYC and the UPICC (p. 46 of the Problem).
9
Nevertheless, considering —as said before— that Claimant is openly violating the NYC, it
makes sense that it did not even mention it. Moreover, in relation to the UPICC, CLAIMANT
is demonstrating its total disregard towards the fact that they are considered a codification of
the lex mercatoria –as supported by the very UPICC (Preamble, third paragraph), by doctrine
(M. JOHNSON, 2015; M. MARTÍNEZ, 2013; C. PÉREZ, 2018; MORALES, 2004) and
finally by the arbitral jurisprudence (ICC, the case No 9875/1999, 2001; ICC, Case No. 9875,
2000; ICC, the Case No. 13009, 2006)—whose application is the generally adopted position
in arbitration (SCC Case 117/1999, ICC Case No. 8502,1999; ICC Case No. 12226 of 2004;
ICC Case No. 12040 of 2003, ICC Case No. 13919 of 2007; ICC Case No. 11195 of 2002;
ICC Case No. 11256 of 2003; BUCUR, 2018). Nevertheless, if RESPONDENT had to object
this internationally accepted standpoint, the lex mercatoria would be used anyway as in this
present case the very legal framework specifically requires it (JO-MEI MA, 2015).
(ii) Secondly, CLAIMANT is asking for the application of laws which simply cannot be used.
Such is the case of (I) the ICSID Convention (para. 73 Memoranda for Claimant), whose
scope of application exclusively involves investment arbitrations and not commercial
arbitrations as the present one; (II) the IBA Guidelines on Party Representation (para. 80
Memoranda for Claimant), which can be used only when Parties have so agreed or the
Arbitral Tribunal considered it proper but always after consulting the Parties, which is not the
case (Guideline 1); and finally (III) the English Arbitration Act (para. 85 Memoranda for
Claimant), which can be applied only when the seat of arbitration is in England and Wales or
Northern Ireland (art. 2.1), whereas in this case is in Danubia.
(iii) CLAIMANT is omitting the application of a law which it mentioned previously, that
is the UNCITRAL Rules of Transparency (the PROBLEM, p. 43). Even so, due to such
ambiguity, it must be clarified that these Rules cannot be implemented since CLAIMANT
and RESPONDENT are engaged into a commercial arbitration, while such rules only apply to
Investor-State arbitration (art. 1.1. of the Rules).
(iv) Finally, this legal counsel agrees with the inclusion of the following laws: (I) the LCIA Rules,
(II) the Danubian Arbitration Law intended as UNCITRAL Model Law for being a verbatim
adoption of the latter, (III) the broadly used IBA Rules on the Taking of Evidence in
International Commercial Arbitration (ICC Case No, 12260, 2005; CAM Case No 09113,
2015; PCA, Case No 20105, 2013; ICSID Case Lone Pine Resources Inc v Canada, 2015;
ICSID Case Eli Lilly and Company v Canada, 2014; PCA Case Mesa Power Group, LLC v
Canada, 2012; PCA Case Windstream Energy LLC v Canada, 2013) as —contrary to the
IBA Guidelines on Party Representation— the Arbitral Tribunal is not required to consult the
10
Parties in order to implement them, and finally, (IV) the IBA Guidelines on Conflicts of
Interest as its use has been broadly accepted (ICSID, the Case Canfor v. USA, 2002; ICSID,
the Case Tembec et al. v USA, 2004; ICSID, the Case Terminal Forest Products Ltd v USA,
2004) and because such Guidelines are considered part of the lex mercatoria (LUTTRELL,
2009).
2.2. Regarding the allegation about the supposed conflict of interests made by the
CLAIMANT
26. CLAIMANT’s petition is extremely confusing, as at the same time it asks for the exclusion of
the expert, the submission of a statement that allows the inclusion of the expert and forbids
the challenge of the arbitrator, and finally, the dismissal of an inexistent petition supposedly
made by RESPONDENT to exclude the arbitrator. Thus, this legal counsel —contrary to
CLAIMANT confounding requests— wishes to be clear and concise in its petition: until now,
RESPONDENT has not requested the challenge of Ms. Burdin, simply because it is too early
to state whether her behaviour is affected or not by a lack of independence and/or impartiality.
Thus, if sadly it had to be so, this arbitrator will be excluded for a range of reasons that will
be explained hereunder. At the same time RESPONDENT does not accept the exclusion of
the expert.
27. In conclusion, (i) the expert cannot be excluded as this would be contrary to every single law
applicable to this case and, (ii) if arbitrator had to lack of independence and impartiality, her
challenge would be necessary as her maintenance in the arbitral proceedings would –once
more—violate the legal framework.
2.2.1. Regarding a breach of the “pacta sent servanda principle”
28. The sole two applicable laws that refer to a party-appointed expert are the LCIA Rules and the
IBA Taking on Evidence. The LCIA Rules’ provisions about experts are contained in the arts.
18.3, 18.4 and 18.5, which can be applied despite dealing with the so called “legal
representative”, as a party-appointed expert can be considered part of this definition
(RUTTINGER and MEADOWS, 2007). Now, from these articles it derives that, the moment
of the proposition of legal representatives is fundamental, as it completely changes the legal
grounds for a possible challenge. Indeed, CLAIMANT implements arts. 18.3 and 18.4 to
support the exclusion of Prof. John, however, he was appointed before the Arbitral Tribunal’s
formation and, thus, does not meet the requirements set by these two articles: in short, Prof.
John cannot be excluded as he is not what could be considered “a change or addition by a
party to its legal representatives”. This takes us to the subsequent argument based on art. 18.6.
11
Nevertheless, neither in this case Prof. John’s exclusion can be admitted, as he has not
violated any of the guidelines contained in the Annex to the LCIA Rules.
29. On the other side, while implementing the provisions of the IBA Rules on Taking on
Evidence, the expert should reject his or her appointment due to a lack of independence when
he or she is a Tribunal-Appointed Expert (art. 6.2) and not a Party-appointed expert, as
CLAIMANT unsuccessfully tries to allege. Indeed, the art. it mentioned –i.e. 5.2.c—does not
mention anything about the independence of the expert.
30. In conclusion, according to the pacta sunt servanda principle, commonly used in commercial
arbitration (ICC Award No. 2321, 1976; the case Texaco v. Libya, 1977; ICC award No.
3493, 1983; CCA Case No.13, 2001), contracts –and also international treaties (W. WÄLDE,
2014)—must be performed exactly as that had been stipulated: hence, the Arbitral Tribunal
ought to strictly follow what the LCIA Rules and IBA Taking on Evidence dispose regarding
the experts’ exclusion, in order comply with the pacta sunt servanda principle and,
consequently, the legal framework.
2.2.2. Regarding a breach of the “irrelevance of nomen iuris principle”
31. According to the abovementioned principle, it is irrelevant the name the parties (or a party)
use to identify an institution, as this will keep being what it really is and not what parties say
it is (MUÑOZ, 2016). Consequently, CLAIMANT’s effort in order to attribute the same
duties to an arbitrator and to an expert may be dismissed, no matter how firmly this party
considers it to be proper. In fact, an arbitrator cannot be considered an expert and vice versa
as confirmed by the case Bridgestone Licensing Services, Inc. and Bridgestone Americas, Inc.
v. Republic of Panama (ICSID Case No. ARB/16/34). Now, it is fundamental to underline
that arbitral awards had been considered part of the lex mercatoria (ZLATANSKA, 2015)
whose application –as stated before— is specifically required in the present case and, thus, a
breach of the aforementioned principle would mean a violation of the legal framework once
again.
2.2.3. Regarding a breach of the “lateness principle”
32. On the 30th of August 2019, RESPONDENT submitted its response (p. 26 of the Problem), on
the 15th September 2019 the Arbitral Tribunal has been officially appointed (p. 35 of the
Problem), on the 21st of September 2019 Ms. Burdin made a disclosure (p. 40 of the Problem)
and, finally, on the 23rd of September 2019 (p. 41 of the Problem) CLAIMANT formulated its
objection against the incorporation of Prof. John. According to the aforementioned evolution
of facts, CLAIMANT –considering that on 23rd September strongly rejected the expert—
stayed in silence before and after the official appointment of the Arbitral Tribunal and,
12
concretely, waited almost a month in order to claim something it firmly wanted (as it can be
appreciated by the email sent on 23rd of September). Hence, it derives that due to its lateness
CLAIMANT lost the right to reject the expert as strictly imposed not only by the legal
framework (UNCITRAL Model Law, art. 4 and LCIA Rules, art. 32.1) but also by the arbitral
jurisprudence (LCIA Award, no. 132551, 22nd July 2015).
2.2.4. Regarding a breach of the “venire contra factum proprium nulli conceditur
principle” or “estoppel principle”
33. Due to the aforementioned lateness in posing an objection toward the expert’s selection,
CLAIMANT undoubtedly built confidence in RESPONDENT that no conflict had arisen in
relation to this issue. Thus, accepting now the exclusion of Prof. John would be a clear
violation of the “venire contra factum proprium nulli conceditur principle”, which would most
likely turn into the annulment of the award for a basic legal foundation: the importance of this
principle is equally supported by the applicable legal framework (Art. 1.8 UPICC and Art.
14.5 LCIA Rules) and by the arbitral and judicial jurisprudence (ICC, Case no. 10671, 2001;
the case International General Electric v. Concrete Builders settled by the Puerto Rico
Supreme Court, 1976; the case Banco Popular de Puerto Rico v. Sucn. settled by the Puerto
Rico Supreme Court, 2008).
2.2.5. Regarding a breach of the “celerity principle”.
34. As CLAIMANT correctly affirmed in its request for arbitration, a party-appointed expert only
performs an auxiliary role (Para. 70 Memoranda for Claimant), which implies that his or her
opinion is not binding at all (JAIN and JAIN, 2018; Madan Gopal v. Naval Dubey, settled by
the Supreme Court of India, 1992). Thus, the admission of Prof. John in the present
arbitration would have a minimal –if not non-existent— impact on the outcome of the
proceedings, as the Arbitral Tribunal has the power to allow, refuse or limit the written and
oral testimony of witnesses (whether witnesses of fact or expert witnesses) (LCIA Rules, art.
20.3). In conclusion, excluding Prof John would force RESPONDENT to find another expert,
which is definitely an unnecessary delay (due to the weight experts’ opinions have in
arbitration) and consequently a violation of the celerity principle contained in the art. 14.4.ii
of the LCIA Rules.
2.2.6. Regarding a breach of the “nemo auditur propiam turpitudinem allegans principle”
35. Whilst RESPONDENT in any moment requested the exclusion of the arbitrator, the other
party is firmly claiming the exclusion of the expert based in a conflict of interests which is not
only uncertain but also unnecessary, as it could have been avoided if CLAIMANT acted with
a good predisposition towards the beginning of arbitration. Indeed, CLAIMANT was
13
perfectly aware before posing the request for arbitration that Ms. Burdin and the expert knew
each other, and that the latter and the expert had a relationship (p. 42 of the Problem).
Notwithstanding and despite disposing of the possibility to appoint any other arbitrator,
CLAIMANT specifically decided in favour of this one. On the other hand, it was clear that
RESPONDENT would have thought about Prof. John in order to support its position, as they
have worked together many times before, since 2004 (para. 14 and para. 17 Proc. Order 2).
36. In conclusion, CLAIMANT may not see its petition admitted as it could have effortlessly
avoided the present situation. Indeed, accepting such a claim would be a clear violation of a
principle generally implemented in arbitration (ICSDI, the case Inceysa Vallisoletana, S.L. v.
Republic of El Salvador, Case No. ARB/03/26, 2006; ICSID Case No. 81/1, 1984), that is the
“nemo auditur propiam turpitudinem allegans”, according to which nobody can benefit from
his own wrong doing (MOLOO and KHACHATURIAN, 2011). CLAIMANT strategically
elected an arbitrator that could serve as legal basis to exclude the expert and, in doing so,
CLAIMANT is intending to benefit from a situation created by itself. That said, this legal
counsel requests the Arbitral Tribunal to rule in accordance with the aforementioned case law,
and disregard the arguments proposed by CLAIMANT in order to unjustly exclude the expert.
2.2.7. Regarding a breach of the “adequate opportunity to present one’s case”
37. Entering in an arbitration leads parties to hold a range of fundamental rights, among which it
cannot be disregarded the existence of the right to an adequate opportunity to present the
case (WAINCYMER, 2010). That said, the exclusion of the expert would clearly violate the
aforementioned right, as RESPONDENT would be deprived by the chance to proper defend
its standpoint. Thus, considering that such a right is recognized by the applicable law (NYC,
art. V.1.b; UNICTRAL Model Law, art. 18), neglecting or obstructing such rights would
signify the annulment of the future award.
2.3. Regarding the maintenance of the arbitrator
2.3.1. Regarding a breach of the pacta sunt servanda principle
38. The grounds for the challenge of an arbitrator are provided by the UNCITRAL Model Law
and the LCIA Rules. According to the first one, an arbitrator may be excluded only if (i) there
are justifiable doubts of his impartiality or independence; and, (ii) if a lack of the arbitration
qualifications agreed to by the parties is appreciated (art 12). Regarding to the last provision,
there is no doubt about her competence: she is not only a lawyer, but also highly experienced
and acquainted with energy disputes in commercial arbitration settings (Proc. Order no. 2,
para. 8, p. 48). Regarding the “justifiable doubts of arbitrator impartiality and independence”,
no definition is contained in the UNCITRAL Model Law.
14
39. The LCIA Rules requires analogous circumstances to challenge an arbitrator, whereas art.
10.1 states that the LCIA Court may revoke an appointment upon a written statement by any
party if: (i) the arbitrator gives a written notice of its resignation, (ii) “that arbitrator falls
seriously ill, refuses or becomes unable or unfit to act” or, (iii) “circumstances exist that give
rise to justifiable doubts as to that arbitrator’s impartiality or independence”. Following this
line, it is undisputable that Ms. Burdin did not submit her resignation on the 21th of
September, nor did she become ill, unfit or unable to perform her duties. Nevertheless, once
again, “justifiable doubts” appears as a legal basis for the challenge of an arbitrator, but
neither this law explains nor interprets the concept.
40. That said, this legal vacuum is fulfilled by a third applicable law, the IBA Guidelines on
Conflicts of Interest which provide a range of specific situations that lead to a lack of
independence and impartiality of the arbitrator.
41. After an accurate analysis of this applicable law, it derives that the arbitrator’s (possible)
challenge would be based on two elements: (i) Ms. Burdin’s husband and the expert are
involved in a lawsuit for a patent which provides Ms. Burdin’s husband US$ 5.000 yearly,
and thus both the arbitrator and her husband have a financial interest in the outcome of the
patent controversy and consequently of the present dispute (IBA Guidelines 1.3 and 2.2.2);
and, (ii) Ms. Burdin published two articles that support CLAIMANT’s position in relation to
turbines defects (IBA Guideline 3.5.2). In conclusion, if at any moment Ms. Burdin should
show prejudiced decisions, RESPONDENT would have the possibility to challenge her, as
independence and impartiality must be kept during the whole arbitral proceedings (LCIA
Rules, art. 5.3). Now, in the remote event the Arbitral Tribunal had to reject or discard such
right, this would imply a breach of the pacta sunt servanda principle for disregarding the
provisions of applicable legal framework: the IBA Guidelines.
2.3.2. Regarding a breach of the “efficiency principle”
42. CLAIMANT seems to disregard that independence and impartiality are not synonyms.
Indeed, independence addresses the relationship between arbitrator and party, while
impartiality is a state of mind (KOCH, 2003). Thus, putting into practice this theory, it derives
that Ms. Burdin may be affected by both: on one side, there could be a lack of independence
because of the relationship existing with the expert and, on the other, a lack of impartiality
could be appreciated for the publication of the aforementioned articles. Nevertheless, the
other party seems to intentionally forget that an arbitrator has two duties, as it suspiciously
does not mention at all such publications.
15
43. As a result, the exclusion of the expert may had appeared as the perfect solution, but it is not.
Indeed, the exclusion of Prof. John would extinguish only the problem linked to the lack of
independence, but not of impartiality that CLAIMANT –unsurprisingly— omitted. In
conclusion, having demonstrated that the exclusion of the expert would not solve at all the
likely conflict of interests, the efficiency principle (LCIA Rules, art. 14.4) would undoubtedly
be breached as no solution would have been provided.
2.3.3. Regarding a breach of the “principle of equality”
44. As previously stated, the exclusion of the expert would exclusively solve the lack of
independence, whereas the lack of impartiality would persist. This would imply not only a
breach of the efficiency principle but also of the principle of equality, which is part of the so
called “due process principle” (ZAHEERUDDIN, 2016). Indeed, in this hypothetical
scenario, RESPONDENT would not only lose its right to appoint an expert witness —i.e. a
violation of the right to present one’s case (Art. V.1.(b)—, but would also encounter itself in a
vitiated proceeding, as the arbitrator’s lack of impartiality –due to the publication of two
articles, whereas the Arbitrator shows a clear prejudiced standpoint to the present subject
matter—would still not resolved. Consequently, this legal counsel asserts that the
maintenance of Ms. Burdin would lead to the violation of the party equality principle and the
right to present’s one’s case, recognized by the applicable law (UNCITRAL Model Law, art.
18; art. V.1.b NYC) and would subsequently lead to the annulment of the award
(ASADINEJAD, 2012).
3. REGARDING THE PROBATIVE VALUE OF THE NEWSPAPER ARTICLES
SUBMITTED BY CLAIMANT
45. Prior to evaluating the substantive arguments of the present case, RESPONDENT wishes to
address the dismissal of the alleged evidence based on press articles, specifically,
CLAIMANT Exhibit C3 (p. 14 of the Problem). Considering such documents were submitted
by CLAIMANT, with the unique forethought of trying to discredit RESPONDENT’s image,
this legal counsel asserts that the newspaper article lacks any legal basis and probative value.
Therefore, this party seeks the inadmissibility of the press articles provided by CLAIMANT
as supposed evidence of the defective Francis Turbines R27V, on the following grounds:
46. First and foremost, the doctrine regards texts and articles of journalistic origin as unreliable
due to their lack of veracity. RESPONDENT seeks to point out that the Arbitral Tribunals is
not obliged to admit evidence based on rumours; moreover, they are frequently inadmissible
in Common Law jurisdictions (WAINCYMER, 2012). Even so, in the unlikely event that the
Arbitral Tribunal decided to evaluate the probative value of these texts, the present legal
16
counsel wishes to highlight the provisions of the International Court of Justice in its ruling
Military and Paramilitary Activities USA v. Nicaragua of 1986, in which it determined that
the testimony that is not known by the person who gives it directly –i.e. hearsay—, but rather
through rumours, has little probative value. Therefore, based on this premise, the newspaper
article submitted by CLAIMANT must be inadmissible as evidence (Mosima v. South African
Police Services (SAPS) and others, Labour Court of South Africa, Johannesburg, No. J
1031/09, 2011).
47. Secondly, as SUÁREZ-CASTILLO (2008, p. 1) states, the information provided by press
articles “do not constitute full proof of the situation it describes, nor does it determine the
legal responsibility of natural and legal persons”. Thus, these being the only evidence
provided by CLAIMANT to support the facts, shows a clear interest of HydroEn to generate a
bad reputation and discrediting RESPONDENT. Lastly, the lack of credibility of these
declarations are supported by the judgment of the Provincial Court of A Coruña (June 6th,
2007 (Third Section), whereas the Court ruled that “journalistic publications do not attest to
the truthfulness and certainty of the information they contain”. As SCHWENZER & TEBEL
(2014) recall, suspicions or mere suspicions do not lead to non-conformity of the goods.
48. In conclusion, this legal counsel requests the Arbitral Tribunal to dismiss any arguments
made by CLAIMANT which rely on the submitted news article (CLAIM. Exh. C3), nor to be
considered as evidence in the present proceeding, as neither the Arbitral Tribunal nor the
Parties can assess the veracity or the truthfulness of the allegations contained in them.
VII. ARGUMENTS RELATED TO THE MERITS
4. REGARDING THE ABSENCE OF A BREACH OF CONTRACT
49. A non-performance action is defined under art. 7.1.1. of UPICC, as “a failure by a party to
perform any of its obligations under the contract, including defective performance or late
performance” (UNIDROIT PRINCIPLES, 2016). This means that the parties of the contract
must respect all the agreement provisions and, if they did not do so, it could be considered as
a breach of contract and/or non-performance.
50. The CISG also regulates the main obligations of the parties who have concluded an
international sales contract. Concretely, article 35 defines the obligations of the seller, which
are to deliver goods of the quantity, quality and description required by the contract and, if the
seller did not fulfil these obligations, it would be considered a breach of contract and
committing a non-performance (UNCISG, 1980).
51. In the case in question, it cannot be said that RESPONDENT did not conform with the
contract under article 35 of the CISG, as it states in paragraph 1, “The seller must deliver
17
goods which are of the quantity, quality and description required by the contract”: an
obligation that RESPONDENT has complied since the turbines have been working properly
since September, when the turbines were submitted to inspection (CLOUT Case Nº 123, 8th of
March 1995, Germany).
52. On the other hand, it is CLAIMANT who based its argument on the impossibility to
corroborate if the turbines delivered to the hydro plant have or have not been affected by the
damaged steel and, therefore, it is not possible to determine that a breach of this point is
occurring as far as the quality of the turbines is concerned (p. 27, para. 6 of the Problem).
53. Moreover, article 35(2)(a) CISG provides that the goods delivered must be "fit for the
purposes for which goods of the same kind are normally intended", a point that
RESPONDENT has already fulfilled since the turbines delivered are in the hydroelectric plant
performing the functions as set out in the contract correctly. As has been seen in various cases
(ICC Award no. 8247, 1996; CLOUT Case 252, 1998, Switzerland), even if the goods were
not in accordance with the specific quality of the contract, but fulfilled the function for which
they were purchased, it should not be considered a breach of contract. Thus, on this case, a
breach on the contract is not applicable.
54. In addition, it should be noted that the object of the agreement was to deliver two Francis
Turbine R-27V of 300 MW (Article 2.1.b Sales Agreement, Claimant Exh. C2). The highest
standards of production of this party relied on certifications, as it would be later explained on
section 6 of the present memorandum. The counterpart did not specify any other quality
standards of specific materials; thus, the steel quality was not the object of the contract and so
it was relied on common diligent standards of certifications.
4.1. Non- existence of a breach of the Sales Agreement
55. Firstly, CLAIMANT states in its argument that the main reason for concluding the contract
was to increase the time between the inspections of the turbines (para. 106 Memorandum for
Claimant), however, the case and the contract established that the principal purpose of the
turbines in the hydroelectric plant is to ensure that the plant will produce enough renewable
energy to supply the city of Greenacre, without the necessity of buying carbon energy from
Ruritania (Claimant Exh. C1, Sales Agreement). This objective has been achieved and, up
until now, there has been no evidence of a breach. Therefore, the purpose of the contract has
been fulfilled.
56. In addition, the change of the inspection date is proposed as an option by RESPONDENT for
CLAIMANT to verify that the turbines have not been affected and will continue to work well.
It cannot be considered as a breach of contract because CLAIMANT can accept the proposal
18
or deny it, as it did by agreeing with the representatives of the city of Greenacre (Respondent
Exh. R3).
57. On the other hand, in the event that CLAIMANT considers that there is a breach because the
turbines could be affected, it is RESPONDENT’s duty to prove it, as the buyer of the goods
and as contractual party who asserts the existence of such a breach (Judgement Commercial
Court (Handelsgericht) of Zürich, 1993, CLOUT case 103 ICC, 1993). This obligation has not
been carried out by CLAIMANT since, at no time has it exposed real evidence of the
defectiveness of the turbines. It only expresses conclusions that CLAIMANT has taken on the
basis of statements in the media but without being able to provide reliable evidence of this
failure.
58. Moreover, it is CLAIMANT itself who argues throughout the claim that it is impossible to
determine whether or not the turbines are affected by the defective steel which makes it
impossible to prove the existence of such a breach (Claimant Exh. C4; p. 27, para. 6 of the
Problem).
59. In addition, CLAIMANT has based its conclusions on the existence of a non-conformance on
unsubstantiated press reports that have not probative value (ICTY, The Prosecutor v.
Kupreškic, 1993; ICC, The prosecutor v. Bosco Ntaganda, 2013; SUAREZ-CASTILLO,
2008). Moreover, these accusations towards RESPONDENT are an attack on its reputation,
which may mean losses for the company, damages for its image, without having reliably
proved that RESPONDENT has used the damaged steel and using information of media, that
could be consider rumours instead former evidences (RODRIGO BECERRA TORO, 2018;
TINOCO, 2004).
60. Furthermore, according to Article 36.1 CISG, “the seller is liable for any lack of conformity
which exists at the time when the risk passes to the buyer”. There is insufficient evidence that
proves that there was non-conformity at the moment of the installation of the turbines, which
then leads to conclude that until this moment, there is no legal basis for an allegation of non-
conformity of the turbines. Moreover, the turbines passed the acceptance test and, therefore, it
ought to be considered that at the moment, the risk was transferred to the counterpart, as it
accomplished the duty of this party to examine the goods before installation. According to
CLOUT Case Nº 1203 (The Netherlands, 2009): “since the risk passed to the defendant, it
was obliged to examine the goods, which the defendant failed to do. Accordingly, the
reasonable time to give notice of non-conformity started from the moment when this
inspection should have been conducted”.
19
61. Therefore, the counterpart carries the burden of proof that indeed the turbines were non-
conformant at the time of the installation, which has not been done and, therefore, cannot be
concluded a breach of contract based on non-conformity.
4.2. On the absence of a fundamental breach of the contract
62. Even if the tribunal was to accept that a breach had occurred, it could not be considered a
fundamental breach as explained in Article 25 CISG. This article defines a fundamental
breach as one that “substantially deprives the affected party of what it was entitled to expect
under the contract”(UNCISG, 1980).
63. Therefore, in order to be appraised as a fundamental breach, there must be damage that would
actually affect the creation of renewable energy at the plant and that therefore, the city of
Greenacre would not be supplied. In this case, there is no evidence that confirms that the
turbines are damaged, and they are working properly at the hydro plant, thus it cannot be said
that a fundamental breach of contract has occurred.
64. Furthermore, if the Tribunal considers that RESPONDENT has committed a breach of
contract, it must be taken into account that it has been decided that a fundamental breach
requires the deprivation of contractual expectations that are reasonably foreseeable by the
non-performing party during the conclusion of the contract (CLOUT Case 275
[Oberlandesgericht Düsseldorf] 24 April 1997, Germany). This requirement does not apply in
our case since RESPONDENT had no knowledge of the events and possibility that Trusted
Quality Steel could have been using damaged steel before the conclusion of the contract; it
was only after the turbines were built and installed at the hydro plant, when the damage steel
scandal was published (p. 6-7, para. 11-13 of the Problem).
65. Additionally, if the goods can continue to be used even if they do not meet the quality
standards set out in the contract, it could neither be considered a fundamental breach, as the
buyer can still use the goods even if they are of a different quality than agreed, as long as they
can perform their duty (Art. 35.2(a) CISG; CLOUT Case 171, 1996; CLOUT case 248, 1998).
66. Therefore, RESPONDENT denies the existence of a breach of contract as no damage has
been done or proven to CLAIMANT and the turbines continue to function properly.
Furthermore, in the remote event that the Tribunal considers that RESPONDENT has
breached the contract, it could neither be considered as a fundamental breach under article 25
of the CISG, since the necessary requirements of such are not met, and thus, the substitution
of the turbines would not be a possible solution.
20
4.3. Rebus sic stantibus
67. If the Arbitral Tribunal would consider the existence of a breach of the contract, this party
would like to argue its impossibility to abide to the new conditions established by the
counterpart, in accordance with the principle of rebus sic stantibus. This principle is
contemplated by article 6.2.2 UPICC, and it states that “there is hardship where the
occurrence of events fundamentally alters the equilibrium of the contract”. This principle has
also been ratified by the arbitral jurisprudence, such as the ICC Award Nº 7365/FMS of 1997,
9479 of 1999 and 9029 of 1998. The circumstances alleged to have change the equilibrium of
the contract, refers to the inclusion on the 3rd of August of 2014 of the penalty clause on the
original contract awarded by the city of Greenacre to HydroEN (Claimant Exh. C6, p. 18 of
the Problem). In this penalty clause, CLAIMANT compromised to guarantee the availably of
“at least 335 days per year with a production capacity of 500MV […] in cases of breach of
this guarantee HydroEN has to pay a penalty of US$ 20,000.00 per day” (Claimant Exh. C6,
p. 19 of the Problem). The reason why the counterparty is urging to substitute the turbines is
mainly because of this clause. An eventual breakdown of the plant due to corrosion, which
has not been proved, neither evidenced or presented possible indications of this to happen,
will incur on a breach of the contract between HydroEN and Greenacre,, and eventually the
former would have to pay a determinant amount of money. However, firstly, it should be
mentioned that there is no evidence that this might happen, as it will be explained
hereinunder. Secondly, if it should occur, this party should be exonerated of any
responsibility, as stated in article 79 CISG: “a party is not liable for a failure to perform any
of his obligations if he proves that the failure was due to an impediment beyond his control
and that he could not reasonable be expected to have taken the impediment into account”.
This has also been noted in the case of 21 March 1996 of the German Chamber of Commerce,
in which the Arbitral tribunal held that the buyer’s damage was precluded as the difficulties of
the buyer were not within the sphere of the seller’s responsibility.
68. The mentioned penalty clause was concluded by Greenacre and HydroEN without taking into
consideration nor informing RESPONDENT. This clause has altered the equilibrium of the
contract, in the sense that now that the steel scandal has broken the news, CLAIMANT shows
unprecedentedly rush to substitute the turbines without legal, scientific, technical or evidence
background that supports this decision. As it will be argued hereinunder, the most diligent
decision will be indeed to move forward a year the inspection, to prove non-damage of the
turbines. This decision is not accepted by the counterpart, due to its penalty clause and the
21
alleged damages for its company. In that sense, RESPONDENT requests the exemption of
any type of responsibility in relation to the rush and lack of diligence of the practices of the
CLAIMANT, which precipitated itself into such a penalty clause without informing
RESPONDENT.
4.3.1. Regarding the lack of duty to inform and duty to cooperate
69. This penalty clause affected the performance of this part and was not informed on its
inclusion: “I do not know whether Respondent knew of the clause or not. I am however,
certain that the description of the project in the tender documentation mentioned the objective
of the Community of Greenacre to resort to a fully sustainable green energy supply”
(Claimant Exh. C6, p. 19 of the Problem). Firstly, regarding this assumption, it must be said
that it is impossible to have included the information of such clause in the tender documents,
as the clause was included on the 3rd of August of 2014 and the tender was awarded on the
15th of July of 2014, and whereas the Sales Agreement concluded on the 22nd of May.
Therefore, the penalty clause was included after concluding the Sales Agreement with this
party. Secondly, if it would have been included in such documents, the Arbitral Tribunal
ought to consider that according to article 5.1.3. UPICC, “each party shall cooperate with the
other party”. Consequently, if such clause was so relevant and indispensable for the
accomplishment of RESPONDENT’s duties, it should have been notified to this party. The
duty to cooperate is intrinsically connected to the principle of good faith and the duty to
inform (Art. 7 of CISG and Art. 5.3.3. UPICC). The duty to inform has a preventive aim, to
avoid possible conflicts (ORDOQUI CASTILLA, 2011), reason by which the counterpart
should have informed the RESPONDENT about the penalty clause, in order to take necessary
measures regarding the alleged steel scandal. As CLAIMANT failed to do so,
RESPONDENT requests the Arbitral Tribunal to follow its diligence and proposal on dispute
resolution based on good faith.
70. Moreover, it is to be considered that CLAIMANT is pressured by its bilateral agreement with
the Greenacre´s city council (Claimant Exh. C7), committing itself to deliver green energy
with disregard to any technical implications. By understanding this commitment, the only
possible option for CLAIMANT is to change the turbines with complete disregard to whether
these are in good condition or not. In doing so, CLAIMANT only assess its position on the
suspicion of defects –brought upon by Claimant Exh. C3— pressured by an asymmetrical
agreement between them and Greenacre. Furthermore, according to Article 6.2.3 UPICC, “in
case of hardship the disadvantaged party is entitled to request renegotiations”, as it has been
recognized on the arbitral award of the ICC no. 10021 of 2000. In that sense, this party is not
22
asking to withhold its obligations on performance (Art. 6.2.3.2 UPICC), but rather seeking a
reasonable solution that fits both parties as will be presented hereinunder.
5. REGARDING THE SUBSTITUTION OF THE TURBINES
5.1. On the diligence procedure to prove metallurgical damages
71. CLAIMANT has argued that the only possible and feasible solution is to substitute both
turbines. The only possible way to determine if the turbine is non-compliant, is by opening
and performing a metallurgical examination of it (Proc. Order no. 2, para. 35).
72. Due to the nature of this operation, the destruction of the runner is assured and would
necessarily imply rewelding the blades once concluded (Proc. Order no. 2, para. 35). Cutting
and welding are operations that at the same time are only reserved as a last measure option
(DUNCAN, 2000). Incurring in such operations prematurely can potentially decrease the life
of the turbine and affect its well-functioning (RAO, 2000). For these reasons, the best
diligence is to examine and proceed only if damages are visible and evident as proposed by
RESPONDENT.
73. It is sufficient to argue that, the metallurgical examination CLAIMANT proposes, takes a
considerably longer time as opposed to RESPONDENT’s solution. The proposed inspection
one year earlier not only takes less time, but ascertains the turbine status on the spot
(Claimant Exh. C5). Furthermore, auxiliary procedures are likely to be carried while
proceeding with the metallurgical examination and will extend the length of the operation
(CLINE, 1994).
74. CLAIMANT is not able to determine by any technical means whether or not the turbines are
affected by this scandal. Therefore, CLAIMANT supposes that the best option is to change
the turbines with disregard to any expert´s opinion in the field. CLAIMANT formulates that
turbines are non-conformant according to information published by a news feed without any
technical validity.
75. This position is reinforced by using Ms. Burdin’s wide view of non-conformity defects (Proc.
Order no. 2, para. 9) and her very controversial articles regarding the suspicion of defects in a
completely different application, high-pressure gas turbines in a thermo power plant. As
SCHWENZER & TEBEL (2014) state, the first step in determining non-conformity, is a
factual analysis of the goods, which at this stage it has not been carried out.
76. The accusation of breach of contract by RESPONDENT by moving the date one year forward
is feigned. RESPONDENT merely suggested this to assure the status of the turbines
(Claimant Exh. C5). This suggestion was made on the basis of minimizing any risks and to
reinforce trust between CLAIMANT and RESPONDENT on the basis of the good faith of
23
this part (Art. 7.1 UPICC). According to BREKKE (2013), cavitation and fractures are to a
great extent minimized in modern construction due to the adoption of new materials. Among
them, fully fabricated structures of high tensile strength steel in stationary parts and a wide
range of stainless steels in runners. Even if the provided steel would have been affected by the
scandal, the likelihood of the turbines breaking or cavitating in their operating environment is
extremely unlikely (BREKKE, 2013).
77. Moreover, the acceptance test shows (Proc. Order no. 2, para. 3) that extraordinary cavitation
and corrosion can be detected during the test. If the provided steel would have been of such a
nature as CLAIMANT EXHIBIT C3 points out, this test would have showed critical faults
and the turbines would not have been passed as valid.
78. Having known of this incident before, RESPONDENT would have been the first one
interested in taking direct action against Trusted Quality Steel. As the turbine manufacturer’s,
RESPONDENT feels outraged by this incident as it affects our corporation earlier than any
other stakeholder in the supply chain. Nonetheless, VERDAND DER
AUTOMOBILINDUSTRIE (2011) states that, this series of events in no case can be taken as
an excuse to attribute responsibilities of others in an outsourced process of the supply chain.
79. CLAIMANT feels empowered by the unilateral resolution clause in the sales agreement
(Claimant Exh. C2) to declare the two Francis R21V turbines delivered by RESPONDENT
non-conformant. This is based on allegations that are non-factual (SCHWENZER & TEBEL,
2014), hence putting in question RESPONDENT’s diligence as a turbine manufacturer.
80. Additionally, Proc. Order no. 2, para. 2 evidences the lack of content in the sales contract
regarding the remedies available. Because the turbines cannot be demonstrated to be non-
conformant as CLAIMANT insists on its demand, RESPONDENT sees no breach on the
contract and consequently, no remedy has to be provided.
5.2. On the diligence to move the inspection forward one year
81. RESPONDENT is an active producer of hydro turbines internationally recognize. Our
company produces the R27V Francis Turbine known to be extremely high-efficient in
comparison with our competition (Respondent Exh. R1). Our diligence has been already
proven with the Riverhead Tidal incident.
5.2.1. Due diligence evidences
82. The principle of good faith is evidenced on a diligent praxis of the business people
(MAZEAUD, MAZEAUD AND MAZEAUD, 1959). This means to behave in a reasonable
manner in certain business circumstances, which has been corroborated by the BITARTU
Award 9/2010 of 2012. In that sense, the case related with Riverhead Tidal Power proved the
24
good faith and due diligence of this part because, as soon as the RESPONDENT evidenced,
verified and proved the indeed existence of excessive corrosion, it changed its behaviour and
replaced the turbines. The turbines at the Riverhead Tidal Power Plant required a specific set
up to the salty conditions, implying the steel charge had to be a completely different one
(Claimant Exh. C5). Regardless of such and the scandal, RESPONDENT decided that the
best diligence to minimize downtimes, operability and possible damage to the plant was to
replace them.
83. The Riverhead Tidal Power Plant incident was assessed on a very different scenario (p. 6-7,
para. 12,17 and 18 of the Problem). As it was the case, the two turbines were replaced due to
excessive corrosion and cavitation damage that was evidenced and assessable as the situation
had already taken place. The quantity of the damage in the turbines (RAO, 2000), the integrity
of the plant was at stake being this the main reason why both turbines were replaced.
84. The origin of the damages in the Riverhead Tidal Power Plant had to deal exclusively with
the composition of its waters. These are exposed to salt water (Claimant Exh. C5), being this
the main reason of the causation of cavitation and corrosion (XIANGYU HOU, 2018). The
risk of cavitation and corrosion in Greenacre is not the same due to a different composition of
the water in the waterhead (BREKKE, 2013). For this reason and considering the steel
scandal has not yet been proven factually, we conclude that the risk of turbine damage in
Greenacre is minimum to non-existent (DAHLHAUG, 2015).
85. This previous experience shows the diligent behaviour of this part. In addition, it shows that,
if the unfortunate time comes that it is technically proved that the turbines are damaged,
which so far has not been the case, this party will indeed take care and substitute the turbines.
Past evidences behaviour of this part should be taken into consideration in order to analyse its
diligent behaviour. The arbitral tribunal should take into account this consideration in order to
trust the RESPONDENT on its proposal for dispute resolution.
5.2.2. On the most suitable solution
86. In the Greenacre Plant differences are evident. As opposed to the Riverhead Tidal Plant (p.
28, para. 16 of the Problem), where the turbines were clearly affected by the damages created
by corrosion and cavitation, the Greenacre plant continues to work at the same efficiency rate
as when they were installed. No damages related to cavitation or corrosion have been
acknowledged and there is no supporting evidence to think there will be any. The only
support gathered so far by CLAIMANT is the scandal report as seen on (Claimant Exh. C3)
which lacks technical proof and just refers to gather a series of news without any legal
25
relevance and which cannot be considered as evidence of noncompliance, as has been
addressed on section 3 of the present memorandum.
87. Having this into consideration, this party came with the proposal of bringing the inspection
one year forward to the agreed schedule. This was done merely to ascertain and discard any
failures related to corrosion and cavitation, which can be detected visually (SAEED &
GALYBIN, 2013), as soon as possible giving credit to the scandal scalability. As it is stated
in the demand, CLAIMANT did not accept RESPONDENT´s proposal obfuscated on pushing
the replacement option over all alternatives.
88. On the basis of the results conveyed by this analysis and following a scientific approach, the
next step would consider an opening of the turbines providing the visual test would have
detected any discrepancies to when these same turbines came out of the factory (DUNCAN,
2000). Being this the case, this party would promptly attempt to schedule a date to carry on
with the needed repairs so to bring the turbines back to its original specifications as it was
done with the aforementioned case of Riverhead Tidal Power Plant, which proves the
diligence of the RESPONDENT.
89. RESPONDENT encourages CLAIMANT to wait for the turbines to be examined so to make
an informed decision in light of a technical analysis. Scientific methods are consolidated in
this field (DUNCAN, 2000) and allow enough room for manoeuvring, as there is no implicit
risk with the ongoing situation. Changing the turbines would not only disrupt
RESPONDENT’s manufacturing capacity but its commitments with third parties. Our
diligence in this sense is cautionary, for that reason RESPONDENT proposed to CLAIMANT
the option to bring forward the inspection and ensure that the turbines are not affected and
could perform their function correctly as it had done to date (para. 11-13 of the Problem).
90. The remedy suggested by CLAIMANT does not form part of the sales contract and it does not
consider any technical diligence whatsoever. Moreover, RESPONDENT is not obliged to
provide a remedy of any kind (Proc. Order no. 2, para. 2). If anything, RESPONDENT would
agree to repair them at the costs specified in APPENDIX I at CLAIMANT´s expense after the
decline, irrespective of the outcome in its first proposal (Respondent Exh. R2, para. 7). This
does nothing but reinforce RESPONDENT’s position of good faith in terms of preserving the
relation and duration of the contract between both parties and execute the contract properly
(JARAMILLO, 2019). With this action RESPONDENT is fully respecting article 1.7 UPICC,
which establish that “each party must act in accordance with good faith and fair dealing in
international trade”.
26
91. RESPONDENT has already shown its diligence in the Riverhead Tidal plant and reiterates its
commitment to find a reasonable solution following a scientific approach, not mere suspicions
on defects, and also considering that both cases are completely different because the turbines
are completely different with different manufacturing process and also steel from a different
charge (p. 28, parr.16 of the Problem; Claimant Exh. C5).
5.3. Lack of diligence of the counterpart
92. If the reasons stated above are not sufficient for the Arbitral Tribunal to consider the dispute
resolution proposal presented by this party, RESPONDENT would like to highlight the lack
of diligence on the power plant design done by CLAIMANT, which only sets up more
difficulties for this party to comply with the unjustified requests of CLAIMANT.
CLAIMANT did not choose to follow RESPONDENT’s advice on how to maximize
efficiency in the power plant (Respondent Exh. R2). CLAIMANT explicitly asked to
RESPONDENT´s CEO –Mr. Fourneyron— for advice on how to avoid downtimes while
performing repairs and maintenance (Claimant Exh. C2). Mr. Fourneyron kindly provided
two options that would allow the plant to work with one turbine while the remaining one
could undergo service. On allegations of non-conformity, the arbitral tribunals have requested
high levels of ordinary diligence to the buyers, as was stated on ICC Award No. 8247, 1996.
93. CLAIMANT was the first one interested in minimizing downtimes. This was due to their
agreement with Greenacre (Proc. Order no. 2, para. 26), to avoid running on imported carbon
energy from Ruritania. CLAIMANT should have been the first one interested in fabricating a
power plant if not following RESPONDENT’s advice, at least having the same specifications
in terms of operability.
94. Greenacre’s Sustainability Bill of Rights (p. 5, para. 4 of the Problem) clearly specifies the
intention to switch to renewable energy. To do so, Greenacre would be running a hybrid
power grid with wind, solar and hydro power. This strategy is undermined the moment in
which CLAIMANT decides to build a plant in which in an event of maintenance and repairs
both turbines have to be shut down. This leaves the grid at the mercy of wind and solar power
an unknown period of time the maintenance and repairs have to account for. If the length of
such operations is of a few hours, two battery stacks can provide electricity (p. 5, para. 7 of
the Problem). If on the other hand, these repairs and maintenance is prolonged, the grid has to
be feed by Ruritania’s imported carbon energy.
95. According to Respondent Exh. R2, even the simplest inspection accounts for about 2-3 weeks
per turbine providing no repairs are needed. Medium inspections take on average 16 weeks
and major revisions take between three and six months. It is to be highlighted that, because of
27
the construction of the plant carried on by CLAIMANT, all these periods account for a
complete halt of the plant. On CLOUT case no. 897, it was noted that the parties had to act in
a diligent and prudent manner, which the counterpart failed to accomplish.
96. Additionally, CLAIMANT knew of RESPONDENT’s inability to perform any major repairs
on site, due to the conversations held asking for advice on how to build the plant. Because
CLAIMANT finally decided to build the plant with disregard to the guidelines provided
(Respondent Exh. R2); in an event of major repairs, these would require transporting said
turbines to RESPONDENT facilities. Only this operation requires two weeks of
transportation time per turbine.
97. All advantages in RESPONDENT’s turbines in terms of prolonged inspections and
maintenance are undermined by CLAIMANT’s diligence on the construction of the site.
Having a consolidated expertise (Proc. Order No. 2, para. 1) in more than 100 countries
building power plants, CLAIMANT decided not to follow our advice coming with a different
design. This plant ended up costing $2 million less, but did not allow operability of one
turbine while another one was undertaking repairs. RESPONDENT would like to highlight
that in an infrastructure project, $2 million does not pose a great difference considering later
costs derived from maintenance. In the words of Mr. Fourneyron (Respondent Exh. R2, para.
6), “the estimates sounded high but not completely unreasonable”.
98. CLAIMANT is a comparably larger company operating in over 100 countries and with
consolidated experience in the field (Proc. Order No. 2, para. 1). It cannot be understood how
they refused to build a power plant so to maximize efficiency and lead times when repairing
or under maintenance. This is exactly what they were advocating for when they entered the
tender process with Greenacre, and precisely what the latter was making emphasis on
indirectly. On CLOUT case no. 285 and CLOUT case no. 542, which assert the buyer’s
expectations to act with “the diligence subjectively expected by it according to the
circumstances”.
99. In conclusion, due to the evidence of diligence shown by RESPONDENT and the persistent
lack of diligence of the counterpart, the Arbitral Tribunal should consider the solution
proposed by the RESPONDENT as the most suitable one.
6. LACK OF RESPONSIBILITY DUE TO FRAUD CERTIFICATE
6.1. On good faith
100. CLAIMANT insist that this party has responsibility and hence, this party must replace the
turbines which this party produced, despite not having generated any problems. However, this
28
party must insist that such responsibility does not exist and that CLAIMANT’s arguments are
abounding in error for several reasons.
101.RESPONDENT has no responsibility as there is no proof whatsoever that the steel used
could be of a deficient quality, there is no proof that the turbines could be of a deficient
quality, and there is no proof that an error can occur in said turbines due to the steel used.
Therefore, as there have been no problems in so far with the turbines provided,
RESPONDENT cannot be responsible for something which has, allegedly, yet to happen.
102.Considering the doctrine of GONZALEZ HERNÁNDEZ (2012, p. 185), for liability to exist
there are certain factors which must be completed including: (i) “a behaviour must take place;
(ii) the action or omission must have caused damage; (iii) existence of a causal link between
behaviour and the damage, and (iv) the criteria for imputation of responsibility, which is
normally that of guilt”.
103.In this case, there was no damage, hereby there cannot be liability for RESPONDENT’s
behaviour, since such was diligent and followed the general principle of good faith.
PLANIOL (1917) is faithful to the idea of not judging the success or inaccuracy of the norm
and of the valuations that she encloses, in her majority she affirms that of such norm it can be
detached that “the parties must, in compliance with the conventions behave honestly,
loyally”; and for this it is necessary “not to stick only to the letter of the agreement”, but to
execute the conventions “conforms to the intention of the parties and the purposes in view of
which she called” (PLANIOL, 1917, p. 499).
104.This party must argue that this parties’ objective, and the reason for which this party was
hired by the counterparty was to produce turbines, and not to produce steel (p. 5 of the
Problem). This parties’ competitive advantage is within the field of manufacturing turbines,
not the steel (p. 4 of the Problem). For CLAIMANT to mention that this party is responsible
for the steel used, must mean that they believe this party the ones who produced it, when it is
not the case.
105.In this sense, good faith compotes an ideal model of social behaviour, which implies an act
honest, loyal, proven, correct, exempt from subterfuge and malice, is in good the scrupulous
spirit with which the obligations must be fulfilled and the rights (PLANIOL, 1920).
106.The Tribunal must take into account art. 1.7 UPICC about Good Faith and Fair Dealing. This
article states the following: “(1) Each party must act in accordance with good faith and fair
dealing in international trade. (2) The parties may not exclude or limit this duty”.
107.The steel used in this parties’ turbines come from several suppliers, one of which is Trusted
Steel Quality. There is never any sort of mention that their suppliers are not to be trusted, on
29
the contrary, they are described as ‘‘one of the leading producers of all types of high-quality
steels in various industries’’ (p. 14 of the Problem).
108.Hence, RESPONDENT had no reason to believe that the steel supplied by a leading
company was of a deficient quality, and yet, respecting the principles set above of good faith,
this party only purchased steel which had certifications of its quality.
6.2. On the certifications
109.It is important to clarify that this party is not certified to assess steel quality, nor has
RESPONDENT ever mentioned that it was. This party has neither the capacity nor skills to
assess the quality of steel, thus this party trusted one of the biggest and most well-known steel
suppliers, Trusted Quality Steel to assess the quality of their steel (p. 14 of the Problem).
110.However, this party was wrongly led to believe that this responsibility was met by using
certifications from well-known certifier, as is described in Claimant Exh. C3, Techproof,
which were supposed to assure the quality of said steel, when in fact these certifications were
falsified or the examinations were never carried out as is described in Claimant Exh. C3.
111.In this sense, this party must mention that UNIDROIT principles state “a duty of best efforts
in the performance of an activity, that party is bound to make such efforts as would be made
by a reasonable person of the same kind in the same circumstances” (Article 5.1.4 UPICC).
Moreover, the Uniform Commercial Code (UCC) expresses both subjective standards
(“honesty in fact”) and objective standards (“observance of reasonable commercial standards
of fair dealing”) as independent requirements for judging a party’s good faith.
112.The UCC recognizes that observing “reasonable commercial standards of fair dealing” is a
part, in which there is recognition of both the application of commercial standards embedded
in a full, contextual understanding of the parties’ contract and a necessity of evaluating the
fairness of those standards by harmonizing with broader social norms (FEINMAN, 2013). In
that same sense the case Ryan v. Victoria (City), [1999] 1 SCR 201) established that one of
the ways to determine reasonableness was to “look to external indicators of reasonable
conduct, such as custom, industry practice, and statutory or regulatory standards” (PEERANI,
2017).
113.Thus, “efforts made by a reasonable person” would mean that, in order for this party to bear
responsibility, this party would have had to behave in a manner that is unusual in this industry
in regard to the certifications provided by Techproof.
114.However, this party complied with such principle since the use of these certifications is
widely spread among turbine producers as well as for other businesses. For instance, the
computer production giant company, HP, relies on these quality certifications to assess the
30
quality of their goods as it is established in their Supply Chain Responsibility document (HP,
2016).
115.Moreover, certifications are well known for their advantages, and they are recommended as a
way to assure quality of the products produced. In fact, certifications are recommended in the
ISO guide, as “third-party certification –when an independent certification body audits your
practices against the requirements of the standard– is a way of signalling to your buyers,
customers, suppliers and other stakeholders that you have implemented the standard properly”
(ISO, 2019, p. 6). Likewise, the UN establishes that certifications are a way to guarantee
traceability of raw products, such as steel, and recognizes their labour as a way to guarantee
the traceability of such goods (UN, 2019). Additionally, MARIMON VIADIU, FREDERIC et
al (2015), have carried out a study examining different types of certifications, for instance, the
Social Accountability International (SAI) designed to certify that human rights are respected
in the production and supply chain of products.
116.Hence, certifications are normal, not only, in this type of industry, but in all others, and they
are even recommended in order to guarantee quality or any kind of standards. Thus, the
certifications this party received provided by Techproof are not different from the ones any
other company in this sector, or any other, uses. These certifications are designed to assure the
products’ quality, which in turn, assures us these materials which are certified are of the best
possible quality.
117.Thereby, RESPONDENT had no other way of knowing the materials used in its products,
and this party trusted the expeditors of such certifications as this party believed, that they
complied with the general principle of good faith, as it is a custom to do so in commercial
contracts of this nature (PEERANI, 2017). Henceworth, a reasonable person, complying with
the principle of good faith carefully, avoids creating a foreseeable risk of injury to others, as
noted in Moule v. New Brunswick Electric Power Commission, (1960) 24 DLR (2d) 305
(SCC).
118.Thus, RESPONDENT expected the certifications received to express the expected quality of
our products and the materials used to manufacture them, as this party had no doubts and no
reasons to believe that it would not be faithful to quality expectations.
119.Additionally, RESPONDENT had no reason to believe that these certifications were false,
since there was never any mention that Techproof incurred in such acts until the very date
there were known. Moreover, upon verification that such illicit acts were taken place, this
party terminated all contracts with them, thus acting in a diligent manner as to avoid possible
problems in the future as a consequence of these companies’ behaviour, of which this party is
31
victims of. Consequently, when it became apparent that RESPONDENT probably had been
defrauded by Trusted Quality Steel, RESPONDENT took immediate actions to clarify the
situation (p. 27 of the Problem). Hence, this party complied with the principle of good faith as
it took action, such as terminating all contracts (PEERANI, 2017).
120.Finally, this incident with Techproof and hence Trusted Quality Steel has affected more
parties than just RESPONDENT (Claimant Exh. C3). It is to be taken into consideration that
the ones who should be ultimately prosecuted for the avoidance of duties and responsibilities
are these two companies.
121.The Tribunal must consider that the following facts which have been proven: This party was
diligent and complied with article 1.7 UPICC, since this party bought steel from a well-
known supplier such as Trusted Quality Steel, who has never been known to produce
anything else that perfect quality steel (p. 14 of the Problem). Thus, this party had no reason
to foresee that there would be any problems with the steel purchased in order to produce said
turbines.
122.In conclusion, these parties’ turbines are well known due to their excellent quality and
results. The counterparty cannot argue that this has not been the case in so far with the
turbines produced for them. In addition, this party has been working in the production of
turbines for many years and this party has never had any problems with our suppliers nor with
the certifications expedited. It is, thus, impossible for this party to even imagine that such a
thing could have happened, and hence, this party could have not foreseen that two well-
known companies were going to defraud this party. Hereby, RESPONDENT cannot be
responsible for the illicit acts of these third parties since this party behaved in the most
diligent possible way.
7. REGARDING THE CONFLICT OVER THE NOT ALLEGED DOCUMENTATION
123.According to Claimant’s Exhibit C4, CLAIMANT wishes to know if the two Francis
Turbines R-27V are produced with steel from Trusted Quality Steel affected by the alleged
fraud: in other words, CLAIMANT is requesting the documentation inherent to the Turbines’
steel quality. Thus, it is fundamental to concrete what can be defined as “requested
documentation” and what not.
124.In this sense, the acceptance test was initiated on the 12th of September of 2018 (para. 20
Proc. Order no. 2) and, on the 3rd of October 2018, CLAIMANT informed RESPONDENT
that the Turbines successfully passed the test (p. 15 of the Problem): consequently, the end of
the acceptance test may be set on the 20th of September 2018. In conclusion, all the requested
information (relating the two Turbines’ steel quality) must be intended to have been
32
consolidated in such a time lapse –that is from the 12th of September of 2018 and the 20th of
September 2018— as it was exactly during this week that the examinations had been carried
out.
125.Having identified the real object of CLAIMANT’s petition, any other misleadingly
mentioned document should be immediately excluded: ergo, this is the case of the back-up
files for the years 2015-2017 erased by a RESPONDENT’s employee in 2017. Indeed, as
previously mentioned, the Arbitral Tribunal may only rule over CLAIMANT’s exact petition
and that is the documentation elaborated in 2018 and not those within the time frame of 2015-
2017. That said, this legal counsel will further clarify why RESPONDENT cannot be held
liable or responsible in relation to said loss of documents.
7.1. Force majeure
126.Clarification no. 20 reveals what occurred with the 2015-2017 files and states as follows:
“…Subsequently, RESPONDENT’s IT system including its internal product management had
been hacked and most of the data had been frozen and could not be retrieved from a back-
up”. Considering that the 2015-2017 files had been lost in 2017, this legal counsel logically
understands that the subsequent year is 2018: thus, the reason behind the loss of such a
requested documentation must be found in the hack suffered by RESPONDENT’s in its IT
system.
127.Nevertheless, contrary to CLAIMANT’s standpoint, no responsibility can be attributed to
RESPONDENT in accordance with the applicable legal framework: indeed, the art. 7.1.7.1 of
the UPICC expressively states that a party’s non-performance of an obligation –as must be
intended providing information (art. 2.1.a Sales Agreement)— is excused if that party proves
that the non-performance was due to a force majeure cause, as may be perfectly considered an
hack in a company’s internal system (KIRILL, 2018).
7.2. Lack of Causal Connection
128.Secondly, RESPONDENT cannot be held accountable as no relationship can be appreciated
between its omission –i.e. not having provided the requested documents—, and the result –
that is, the impossibility to confirm the quality of steel—. Conversely, this relationship –
legally referred to as the “causal connection”— solely appears when the impugned conduct
actually caused the loss complained of. In conclusion, causation is an essential element in
order to attribute legal liability, as it would be highly unjust to require a person to compensate
another for an injury he or she did not cause, as confirmed both by the doctrine (DAVID,
MCCAGUE and YANISZEWSKI, 2005; BILLINGS, 1968) and by the state case law (the
33
cases Maharias v. Weathers Brothers Moving & Storage Company, 1962 and Phelps v. City
of Winston-Salem, 1967 settled by The Supreme Court of North Carolina).
129.That said, CLAIMANT’s injury is not RESPONDENT’s responsibility: indeed, even in the
case RESPONDENT had not lost the 2018 reports, it cannot be disregarded that these had
been forged by Trusted Quality Steel. Hence, it cannot be excluded that even with such a
documentation, it would still not be possible to determine which charge of steel, examined or
not, had been used for the Turbines (para. 25, Proc. Order no. 2).
130.In conclusion, it is clear that the real responsible for current CLAIMANT’s injury is Trusted
Quality Steel and not RESPONDENT, as the present situation - the impossibility to discover
whether steel had been examined or not - would have occurred even without the latter’s
omission. In other words, even if RESPONDENT had been in possession of the documents,
CLAIMANT’s problem would still exist.
7.3. Venire contra Factum Propium prohibition
131.The Arbitral Tribunal cannot disregard that CLAIMANT itself confirmed the passage of the
acceptance test (p. 15 of the Problem): hence, it derives that CLAIMANT possesses
documentation inherent to the Turbines. Nevertheless, logically such a document is
insufficient to estimate whether or not the steel had been examined or not. On the other side,
RESPONDENT may have owned more data than CLAIMANT –if the IT system had not been
hacked—, but neither these ones would be useful, as Trusted Quality Steel is the only “party”
that can assure it.
132.In conclusion, CLAIMANT is using this patent impossibility exclusively in its favour, while
it is alleging RESPONDENT’s liability for doing exactly the same, that is, being unable to
determine what only Trusted Quality Steel acknowledges: this may be considered by the
Arbitral Tribunal as a clear inconsistent behaviour or a breach of the Venire contra Factum
Propium prohibition, in accordance with the applicable laws (UPICC, art. 1.8). Indeed,
CLAIMANT adopted a specific behaviour declaring being unable to provide a series of
documents but later objected RESPONDENT’s identical reaction: thus, it is clear that
CLAIMANT is acting in contrast with its own actions.
VIII. REQUEST FOR RELIEF
133.The legal counsel of RESPONDENT respectfully requests the Arbitral Tribunal:
1. To declare that the Arbitral Tribunal lacks of jurisdiction to rule over the present claim, as
the arbitration clause contained in art. 21.1 of the Sales Agreement is rendered
unenforceable –due to its pathological nature–and whereas its asymmetry violates the
principle of party equality.
34
2. To declare that the exclusion of Prof. John as an expert witness is legally unfounded and
unreasonable, as his removal would not solve the conflict of interest alleged by
CLAIMANT. Consequently, the lack of impartiality of the arbitrator Ms. Burdin would
equally persist, which would result in a violation of the efficiency principle, due process
and the inability to present RESPONDENT’s claim under applicable law.
3. To declare that the news articles –specifically, Claimant Exh. C3—proposed as evidence
by CLAIMANT are inadmissible in the present proceeding, as neither the Arbitral
Tribunal nor the Parties can assess the veracity of the statements contained therein and,
therefore, lack of probative value. As a result, any argument formulated by CLAIMANT
based on said articles ought to be dismissed.
4. To declare the lack of non-performance action by RESPONDENT based on the article 35
of CISG, as the turbines are working properly and there is not any evidence to declare an
inconformity with the quality of the turbines.
5. To declare the lack of a Sales Agreement breach by the RESPONDENT as the turbines
are working and the accusations made by CLAIMANT are only based in unsubstantial
news, without probatory value and there is no any technical evidence to affirm that the
turbines are affected by the damaged steel.
6. To declare that the substitution of the turbines cannot be considered as a possible solution,
because it would be an extreme measure without the necessary evidence to prove that the
turbines are damaged, and declare that the best alternative is advance one year the first
inspection.
7. To declare the lack of responsibility by the RESPONDENT in relation with the fraud
certificates, as RESPONDENT’s behaviour was diligent and based on the good faith
principle, being another victim of the fraud rather than a responsible part.
35

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TWENTY SEVENTH ANNUAL WILLEM C.

VIS INTERNATIONAL COMMERCIAL ARBITRATION MOOT

MEMORANDUM FOR RESPONDENT

On Behalf of: Against:

TURBINAENERGIA LTD HYDROEN PLC

Counsel for RESPONDENT

UNIVERSIDAD EUROPEA DE MADRID

ICC International Chamber of Commerce Cited throughout

International Centre for Settlement of Cited throughout

No. Number Cited throughout

SCC Stockholm Chamber of Commerce Cited throughout

United Nations Convention on Contracts for Cited throughout

DRAGUIEV, (2014) “Unilateral Jurisdiction Clauses: The Case for 16

GONZÁLEZ (2012). ‘‘La responsabilidad civil por daños al medio 102

HANOTIAU, (2006) “Problems Raised by Complex Arbitrations 6

MORALES, (2004): “La lex mercatoria y los principios 25

MUÑOZ, Pablo (2016): “Algunas consideraciones sobre 31

SAEED, R, (2013) FE-analysis of stresses in a Francis turbine 87

SUAREZ (2008) “El valor probatorio de las publicaciones 59

WÄLDE, Thomas (2014): The “Umbrella” (or Sanctity of Contract/Pacta 30

ZAHARIEV, (2018) "Correlation between setting aside and 23

ZAHEERUDDIN, (2016): “Due Process of Law in International 44

Madan Gopal v. Naval 34

Netherlands ICC (Criminal Court) Prosecutor v. Zoran 59

Netherlands ICC (Criminal Court) 59

3. INDEX OF ARBITRAL AWARDS

CLOUT CASE No. 252 Germany, Landgericht Paderborn 25 June 53

DATE FACT REFERENCE

23rd and 27th CLAIMANT and RESPONDENT emit correspondence p. 41 and 42

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