Hokkaido University

Transcription

Hokkaido University

Thirteenth Annual Willem C. Vis (East) International Commercial Arbitration Moot
Hong Kong • 6 - 13 March 2016
MEMORANDUM FOR CLAIMANT
HOKKAIDO UNIVERSITY
Kaihari Waina Ltd v. Vino Veritas Ltd
On behalf of:
Against:
Kaihari Waina Ltd
Vino Veritas Ltd
12 Riesling Street
56 Merlot Rd
Oceanside
St Fundus
Equatoriana
Vuachoua
Mediterraneo
CLAIMANT
RESPONDENT
Takayuki HARADA・Yutaro HATA・Takuya KAKEHI・Wakaba KAWAMURA
Meng LI・Kazuha TSUCHIHASHI・Fumina TOMINAGA・Sayuri WATANABE
HOKKAIDO UNIVERSITY
TABLE OF CONTENTS
Table of Abbreviations .............................................................................................................. V
Table of Authorities .................................................................................................................VII
Table of Cases and Awards .................................................................................................... XIV
Cases.................................................................................................................................. XIV
Arbitral Awards .............................................................................................................. XVIII
Table of Facts ............................................................................................................................. 1
Legal Evaluation ........................................................................................................................ 2
Summary of Arguments.......................................................................................................... 2
Arguments on the Specified Issues ........................................................................................ 3
I.
Respondent is obliged to compensate Claimant for the attorney fees of the application
for interim relief under Art. 74 CISG ........................................................................ 3
A. RESPONDENT breached the contract, therefore CLAIMANT is entitled to damages under
Art. 45(1)(b) CISG ..................................................................................................... 3
B. Litigation costs are recoverable as damages under Art. 74 CISG ............................. 4
1. Recoverability of litigation costs is not exclusively reserved for procedural law 4
2. The recoverability of litigation costs is in line with the principle of full
compensation ........................................................................................................ 5
3. The recoverability of litigation costs under Art. 74 CISG does not violate the
principle of equality between the parties .............................................................. 5
C. The attorney fees incurred by CLAIMANT due to RESPONDENT’S breach fulfill the
requirements of Art. 74 CISG .................................................................................... 6
I
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1. CLAIMANT suffered losses in the amount of his attorney fees as a consequence of
the breach by RESPONDENT ................................................................................... 6
2. CLAIMANT’s loss was foreseeable for Respondent................................................ 7
D. CLAIMANT did not fail to mitigate its losses under Art. 77 CISG .............................. 8
E. Conclusion on the compensation of attorney fees for the application for interim relief
8
II.
Respondent is obliged to compensate Claimant for its attorney fees for defense
against the court litigation proceeding by Respondent .............................................. 9
A. CLAIMANT is entitled to damages for RESPONDENT’S breach of the Arbitration
Agreement according to Art. 45(1)(b) CISG ............................................................. 9
B. CLAIMANT’s attorney fees are recoverable under Art. 74 CISG .............................. 10
C. CLAIMANT’s behavior did not contribute to RESPONDENT’s breach of the Arbitration
Agreement ................................................................................................................ 10
D. Claimant did not fail to mitigate its losses under Art. 77 ........................................ 11
E. Conclusion on the compensation for attorney fees incurred by RESPONDENT’s
wrongful claim in the Mediterranean High Court ................................................... 11
III. Claimant is entitled to damages in the minimum amount of the profits Respondent
made from selling the bottes to SuperWines ........................................................... 12
A. CLAIMANT is entitled to damages under the Art 45(1)(b) CISG .............................. 12
1. RESPONDENT breached the contract by not delivering 5,500 of the bottles it owed
to CLAIMANT ....................................................................................................... 12
2. RESPONDENT cannot apply pro rata allocation .................................................... 13
B. CLAIMANT is entitled to damages as high as the profit RESPONDENT made by selling
II
HOKKAIDO UNIVERSITY
its wine to SuperWines ............................................................................................ 14
1. The tribunal has discretion to determine the amount of damages ....................... 14
2. The Tribunal shall assume that CLAIMANT’s lost profit would have been at least
the same amount of the profit RESPONDENT made by selling its wine to
SuperWines ......................................................................................................... 15
3. CLAIMANT is entitled to damages for a potential cover purchase in the same
amount ................................................................................................................. 17
C. CLAIMANT is entitled under Art. 74 CISG to ask for RESPONDENT’s disgorgement of
the profits gained from its breach of contract .......................................................... 18
1. The good faith principle allows CLAIMANT to demand the gains RESPONDENT
acquired from its breach of contract ................................................................... 18
2. The pacta sunt servanda principle entitles CLAIMANT to strip RESPONDENT of the
proceeds made from breaching the contract ....................................................... 19
D. If Art. 74 CISG does not cover this question, the profits can be claims in analogy to
Art. 84(2)(b) CISG ................................................................................................... 20
1. If the question of gain-based damages is not governed by Art. 74 CISG, it should
be solved in accordance with the general principles of the CISG, according to
Art. 7(2) CISG..................................................................................................... 20
2. Art. 84 CISG represents a general principle on which the CISG is based .......... 21
3. The requirements of analogue application of Art. 84 CISG are met ................... 22
E. Conclusion on the calculation of damages due to Respondents non-delivery of 5.500
bottles of diamond Mata Weltin ............................................................................... 22
IV. The Tribunal should order Respondent to produce the requested documents ......... 22
III
HOKKAIDO UNIVERSITY
A. The Tribunal has the power to order RESPONDENT to produce the documents
requested by CLAIMANT ........................................................................................... 23
1. The Tribunal has the power to order the Parties to submit evidence under
Art. 29(1) VIAC Rules ........................................................................................ 23
2. The Tribunal’s power to order document production is in accordance with
international practice ........................................................................................... 24
B. The Tribunal’s power to order document production was not excluded by the Parties’
agreement ................................................................................................................. 25
1. CLAIMANT never intended the exclusion of limited document production and Mr.
Weinbauer could not have been unaware of this intent....................................... 25
2. Even if Art. 8(1) CISG is not applicable, a reasonable person would have
understood the exclusion not to refer to limited document production under
Art. 8(2) CISG..................................................................................................... 27
C. The Tribunal should grant the order upon CLAIMANT’s request .............................. 29
1. The requirements of Art. 3(3) IBA Rules are satisfied ........................................ 30
2. The Tribunal should not exclude the documents from production for any reasons
under Art. 9(2) IBA Rules ................................................................................... 31
3. Even if the Tribunal finds that the requirements are not met, the Tribunal should
order the production of documents requested by CLAIMANT in order to guarantee
the Parties’ right to be heard ............................................................................... 32
D. Conclusion on the request for disclosure of the requested documents .................... 34
Request for Relief..................................................................................................................... 34
IV
HOKKAIDO UNIVERSITY
TABLE OF ABBREVIATIONS
Abbreviation:
Explanation:
Art. / Arts.
Article / Articles
CISG
United Nations Convention on Contracts for the International Sale of
Goods
CISG-AC Op.
United Nations Convention on Contracts for the International Sale of
Goods Advisory Council Opinion
cmt.
Comment
DAL
Danubian Arbitration Law
Ed.
Edition
e.g.
exempli gratia (for example)
et al.
et alii/ et alae/ et alia (and others)
et seq.
et sequens (and the following/ and the followings)
Ex.
Exhibit
fn.
Footnote
IBA
International Bar Association
IBA Rules
IBA Rules on the Taking of Evidence in International Arbitration
Ibid.
Ibidem (in the same place)
Id.
Idem (the same source)
i.e.
id est (that is)
Ltd.
Limited
MAL
Mediterranean Arbitration Law
V
HOKKAIDO UNIVERSITY
NY Convention
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (New York, 1958)
p. / pp.
page / pages
para. / paras.
paragraph / paragraphs
PICC
UNIDROIT Principles of International Commercial Contracts 2010
PO1
Procedural Order No. 1
PO2
Procedural Order No. 2
Sec.
Section
UNCITRAL
United Nations Commission on International Trade Law
UNCITRAL ML
UNCITRAL Model Law on International Commercial Arbitration
1985 with amendments as adopted in 2006
U.K.
United Kingdom
U.S.
United States of America
USD
United States Dollars
VIAC
Vietnam International Arbitral Centre
VIAC Rules
Vienna International Arbitral Centre Rules Of Arbitration
vs/ v.
versus (against)
VI
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TABLE OF AUTHORITIES
Cited as:
Citation:
ARBITRATION
2012 International Arbitration Survey: Current and
SURVEY 2012
Preferred Practices in the Arbitral Process
Cited in:
93
The School of International Arbitration at Queen Mary
University of London/ White & Case LLP, London, 2012
Available at:
http://www.arbitration.qmul.ac.uk/docs/164483.pdf#search
='2012+International+Arbitration+Survey%3A+Current+a
nd+Preferred+Practices+in+the+Arbitral+Process'
ARBITRATION
2015 International Arbitration Survey: Improvements and
SURVEY 2015
Innovations in International Arbitration
93
The School of International Arbitration at Queen Mary
University of London/ White & Case LLP, London, 2015
Available at:
http://www.arbitration.qmul.ac.uk/docs/164761.pdf
BARNETT
Katy Barnett
75
Accounting for Profit for Breach of Contract: Theory and
Practice
Hart Publishing, Oxford, 2012
BERGER
Klaus Peter Berger
94,112
Private Dispute Resolution in International Business:
Negotiation, Mediation, Arbitration (2nd Ed.)
Kluwer Law International, Netherlands, 2009
VII
HOKKAIDO UNIVERSITY
BORN1
Gary B. Born
93
International Commercial Arbitration (2nd Ed.)
Kluwer Law International, Alpena an den Rijn, 2014
BORN2
Gary B. Born
38, 92
International Arbitration: Law and Practice
Kluwer Law International B.V., Alpena an den Rijn, 2012
CISG DIGEST
UNCITRAL Digest of Case Law on the United Nations
67
Convention on Contracts for the International Sale of Goods
United Nations, 2012 Ed.
New York, 2012
Available at:
https://www.uncitral.org/pdf/english/clout/CISG-digest2012-e.pdf
CISG-AC OP. 6
John Y. Gotanda (Repporteur)
18, 21,
CISG Advisory Council Opinion No. 6 - Calculation of
58, 60,
Damages under CISG Article 74, 2006
Available at:
http://www.cisgac.com/UserFiles/File/CISG%20Advisory
%20Council%20Opinion%20No%206%20PDF.pdf
EVANS/JOHNSON
David L. Evans/ India Johnson
106
The Top 10 Ways to Make Arbitration Faster and More Cost
Effective
American Arbitration Association, New York, 2015
Available at:
http://www.murphyking.com/tasks/sites/murphyking/assets
/Image/AAA241_TopTenSinglePg_032912.pdf
VIII
HOKKAIDO UNIVERSITY
FOUCHARD/
Emmanuel Gaillard/John Savage (Eds.)
GAILLARD/
Fouchard Gaillard Goldman On International Commercial
GOLDMAN
Arbitration
105
Kluwer Law International, Hague, Netherlands, 1999
AUTHOR IN:
Franco Ferrari/ Eva Kieninger/ Peter Mankowski/ Karsten
F/K/M/ET AL.
Otte/ Ingo Saenger/ Götz Schulze/ Ansgar Staudinger (Eds.)
28
International Vertragsrecht (2nd Ed.)
Verlag C. H. Beck, Munich, 2012
HARTMANN
Felix Hartmann
85
Ersatzherausgabe und Gewinnhaftung beim internationalen
Warenkauf
In: IHR Internationales Handelsrecht, pp. 189-201
Sellier European Law Publishers, Munich, 2009
HOWELL
David Howell
99
Developments in Electronic Disclosure in International
Arbitration
In: Lawrence Schaner (Ed.) - Dispute Resolution
International, Vol. 3, No. 2, pp. 151-168
International Bar Association, London, 2009
Available at:
http://www.ibanet.org/Document/Default.aspx?DocumentU
id=EF1C6193-FFEB-4BA8-9A68-FC034FE5BAC8
HUBER/MULLIS
Peter Huber/ Alastair Mullis
19, 26
The CISG: A New Textbook for Students and Practitioners
European Law Publishers, Munich, 2007
IX
HOKKAIDO UNIVERSITY
KAUFMANN-
Gabrielle Kaufmann-Kohler
KOHLER
Globalization of Arbitral Procedure
100, 128
In: Vanderbilt Journal of Transnational Law, Vol. 36,
pp. 1313-1333
Vanderbilt Law School, Nashville, 2003
AUTHOR IN:
Stefan Kröll/ Loukas Mistelis/ Pilar Perales Viscasillas
K/M/V
(Eds.)
81
UN Convention on Contracts for the International Sale of
Goods (CISG)
Verlag C.H. Beck, Munich, 2011
LEW/MISTELIS/
Julian D. M. Lew/ Loukas A. Mistelis/ Stefan Kröll
KRÖLL
Comparative International Commercial Arbitration
90
Kluwer Law International, The Hague, 2003
MAGNUS
Ulrich Magnus - J. von Staudingers Kommentar zum
Bürgerlichen Gesetzbuch mit Einführungsgesetz und
28, 46,
58
Nebengesetzen, Wiener UN-Kaufrecht (CISG)
Sellier de Gruyter, Berlin, 2013
MOSES
Margaret L. Moses
The Principles and Practice of International Commercial
94, 106,
122
Arbitration (2nd Ed.)
Cambridge University Press, New York, 2012
PILTZ
Burghard Piltz
22
Rechtsverfolgungskosten als Schadensersatz
In: Andrea Büchler, Markus Müller-Chen (Eds.) - Private
Law, national – global- comparative, Festschrift für
Ingeborg Schwenzer
Stämpfli Verlag, Bern, 2011
X
HOKKAIDO UNIVERSITY
SCHERER
Matthias Scherer
38
Damages as Sanction for Commencing Court Proceedings
in breach of an Arbitration Agreement
In: Kluwer Arbitration Blog
Wolters Kluwer, 21 February 2014
Available at:
http://kluwerarbitrationblog.com/2014/02/21/damages-asa-sanction-for-commencing-court-proceedings-in-breachof-an-arbitration-agreement/
SCHLECHTRIEM/
Peter Schlechtriem/ Petra Butler
BUTLER
UN Law on International Sales: The UN Convention on the
84
International Sale of Goods
Springer-Verlag, Berlin, 2009
AUTHOR IN:
Ingeborg Schwenzer
18, 21,
S/S
Schlechtriem & Schwenzer - Commentary on the UN
25, 33,
Convention on the International Sale of Goods (CISG) (3rd
64, 84
Ed.)
Oxford University Press, New York, 2010
SCHMIDT-
Nils Schmidt-Ahrendts
60, 70,
AHRENDTS
Disgorgement of Profits under the CISG
71, 79,
In: Ingeborg Schwenzer/ Lisa Spagnolo - State of Play: The
80
3rd Annual MAA Schlechtriem CISG Conference, 14 April
2011, Vienna
Eleven International Publishing, The Hague, 2012
XI
HOKKAIDO UNIVERSITY
SCHWARTZ
Damon Schwartz
58
The Recovery of Lost Profits under Article 74 of the U.N.
Convention on the International Sale of Goods
In: Nordic Journal of Commercial Law, Issue 2006, Vol. 1
The University of Turku Faculty of Law, Turku, 2006
Available at:
http://njcl.utu.fi/1_2006/article1.pdf
SCHWARZ/
Franz T. Schwarz/ Christian W. Konrad
89, 126
KONRAD
The Vienna Rules: A Commentary on International
Arbitration in Austria
Kluwer Law International, Alphen aan den Rijin, 2009
SCHWENZER/
Ingeborg Schwenzer/ Pascal Hachem
74
HACHEM
The Scope of the CISG Provisions on Damages
In: Djakhongir Saidov/ Ralph Cunnington (Eds.) - Contract
Damages – Domestic and International Perspectives
Hart Publishing, Oxford, 2008
SCHWENZER/
Ingeborg Schwenzer/Benjamin Leisinger
71
LEISINGER
Ethical Values and International Sales Contracts
In: Ross Cranston/Jan Ramberg/ Jacob Ziegel
Commercial Law Challenges in the 21th Century - Jan
Hellner in Memorium, pp. 249-275
Stockholm
Centre
for
Commercial
Law
Jridiska
Institutionen, Stockholm, 2007
UNCITRAL
UNCITRAL
REPORT
Report of the Secretary General on the Analytical
124
Commentary on Draft Text of A Model Law on International
Arbitration
UN Doc. A/CN.1/264
XII
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VIAC HANDBOOK Handbook Vienna Rules - A Practitioner’s Guide2014
VIAC, WKÖ-Service GmbH, Vienna, 2014
89, 90,
116,125,
126
ZELLER
Bruno Zeller - Attorney’s Fees - Last Ditch Stand?
22
In: Villanova Law Review, Vol. 58, No. 4, pp. 761-772
Villanova University School of Law, Villanova, 2013
Available at:
http://lawweb2009.law.villanova.edu/lawreview/wpcontent/uploads/2013/07/VLR416.pdf
XIII
HOKKAIDO UNIVERSITY
TABLE OF CASES AND AWARDS
CASES
Cited as:
Citation:
Cited in:
Austria
Austrian Supreme
Oberster Gerichtshof (Supreme Court)
Court,
Case No.: RS0045094
12 May 1961
Date of Decision: 12 May 1961
126
Belgium
Appellate Court
Hof van Antwerp (Appelate Court Antwerp)
Antwerp,
Vandermaesen Viswaren NV v. Euromar Seafood BV
18 May 1999
Case No. A.R. 3312/96
58
http://cisgw3.law.pace.edu/cases/990518b1.html
District Court
Rechtbank van Koophandel Hasselt
Antwerp,
(District Court Antwerp)
8. October 1996
Vandermaesen Viswaren NV v. Euromar Seafood BV
58
Case No.: A.R. 975/96
Date of Decision: 8 October 1996
Available at:
http://cisgw3.law.pace.edu/cases/961008b1.html
Germany
XIV
HOKKAIDO UNIVERSITY
Appellate Court
Oberlandesgericht Düsseldorf
Düsseldorf,
(Higher Court of Appeal Düsseldorf)
22 July 2004
Case No. 6 U 210/03
19
Date of Decision: 22 July 2004
CISG-online No. 916
Available at:
http://cisgw3.law.pace.edu/cases/040722g1.html
Higher Court of
Oberlandesgericht Hamburg
Appeal Hamburg,
(Higher Court of Appeal Hamburg)
28 February 1997
CISG-online No. 261
70
Date of Decision: 28 February 1997
Available at:
Appellate Court
Landgericht Düsseldorf
Düsseldorf,
(Appellate Court Düsseldorf)
5 March 1996
Case No. 36 O 178/95
58
Date of Decision: 5 March 1996
Available at:
District Court
Landgericht Hamburg (Appellate Court Hamburg)
Hamburg,
Case No. 417 O 165/95
17 June 1996
Date of Decision: 17 June 1996
58
Available at:
XV
HOKKAIDO UNIVERSITY
Israel
Adras v. Harlow
‫( העליו המשפט בית‬Supreme Court)
& Jones (1988)
Adeas Chmorey Binyan v. Harlow & Jones GmbH
71
Case No. 20/82
Date of Decision: 2 November 1988
Available at:
http://cisgw3.law.pace.edu/cases/881102i5.html
Netherlands
District
Appeal Gerechtshof 's-Hertogenbosch
Court's-
(District Appeal Court of 's-Hertogenbosch)
Hertogenbosch,
Case No. 1034/95/BR
2 October 1997
Van Dongen Waalwijk Leder BV v. Conceria Adige
19
S.p.A.
CISG-online No. 550
Available at:
http://cisgw3.law.pace.edu/cases/971002n1.html
United Kingdom
Attorney General v.
House of Lords
Blake (2001)
Attorney General v. Blake
71
XVI
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Case No. UKHL45 AC
Date of Decision: 27 July 2000
United States
Zapata Hermanos
Federal Appellate Court
v. Hearthside
Zapata Hermanos Sucesores, S.A. v. Hearthside
Baking (2002)
Baking Company, Inc. d/b/a Maurice Lenell Cooky
20
Company
Case No. 01-3402, 02-1867, 02-1915
Date of Decision: 19 November 2002
http://cisgw3.law.pace.edu/cases/021119u1.html
Snepp v. U.S.
United States Supreme Court
(1980)
Snepp v. United States, 444 U.S. 507
71
Case No. 78-1871
Date of Decision:19 Feburuary 1980
Available at:
https://supreme.justia.com/cases/federal/us/444/507/
case.htm
Switzerland
Commercial Court
Handelsgericht Aargau (Commercial Court Aargau)
Aargau,
Case No. OR.96.0-0013
26 September 1997
Date of Decisions: 26 September 1997
58
http://cisgw3.law.pace.edu/cases/970926s1.html
XVII
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Higher Cantonal
Tribunal Cantonal Valais
Court Valais,
(Higher Cantonal Court Valais)
23 May 2006
Case No. C1 06 28
19
CISG-online No. 1532
Available at:
http://cisgw3.law.pace.edu/cases/060523s1.html
ARBITRAL AWARDS
Cited as:
Citation:
Cited in:
The International Centre for Settlement of Investment Disputes (ICSID)
Glamis Gold v.
Case No. – not assigned -
U.S.
Date of Decision: 8 Jun 2009
93
Available at:
http://www.italaw.com/sites/default/files/casedocuments/ita0378.pdf
Railroad v. Rep. of
Case No. ARB/07/23
Guatemala
93
Available at:
Nobel Ventures v.
Case No. ARB/01/11
Romania
93
XVIII
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Available at:
XIX
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TABLE OF FACTS
1
Kaihari Waina Ltd. [hereinafter “CLAIMANT”], is a wine merchant specialized in top quality
wine for high end markets and only sells Mata Weltin wines of diamond quality from the
Vuachoua region. CLAIMANT has a reputation of being a particular reliable source.
2
Vino Veritas Ltd. [hereinafter “RESPONDENT”], is a vineyard in the Vuachoua region that has
recently gained a lot of reputation for its diamond Mata Weltin wine.
3
On 22 April 2009, CLAIMANT and RESPONDENT concluded a Framework Agreement in which
RESPONDENT guaranteed to deliver up to 10,000 bottles every year to Claimant. The Agreement
contained an Arbitration Clause.
4
On 4 November 2014, CLAIMANT ordered the 10,000 bottles that were promised under the
Framework Agreement, and made clear, it was willing to buy more.
5
On 1 December 2014, CLAIMANT received a letter from RESPONDENT, stating that it would
only deliver 4,500-5,000 bottles of the ordered wine, due to a shortage of production.
6
On 4 December 2014, Mr. Weinbauer, then CEO of RESPONDENT, sent an email in an attempt
to unrightfully terminate the contract and refuse to delivery any bottles to CLAIMANT.
7
On 8 December 2014, CLAIMANT sought an interim injunction in the High Court of Capital
City, Mediterraneo. And the interim injunction was granted on 12 December 2014 and
RESPONDENT refrained from challenging the order.
8
On 30 January 2015, RESPONDENT started the action in the state courts of Mediterraneo
seeking a declaration of non-liability. And on 23 April 2015, the court denied the request.
9
On 11 July 2015, CLAIMANT submitted its request for arbitration and its application for
“discovery” pursuant to Article 28 Vienna Rules.
1
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LEGAL EVALUATION
SUMMARY OF ARGUMENTS
10
Despite the fact that RESPONDENT promised to deliver annually up to 10.000 bottles of Mata
Weltin wine, RESPONDENT refused to comply with its obligations and unrightfully declared to
terminate the contract and refused to deliver any bottles of wine, when it found, it could increase
its profit by selling to other costumers. This constituted a breach of contract. As CLAIMANT had
already received a considerable number of orders, it had no other choice but to go to court in
order to seek interim relief. CLAIMANT thus requests the Tribunal to find that it is entitled to
claim the attorney fees for its application for interim relief as damages under Art. 74 CISG [I.].
11
Subsequently RESPONDENT initiated court proceedings. The Parties had agreed under their
Framework Agreement to settle any disputes by arbitration. RESPONDENT breached this
agreement by initiating the court litigation. CLAIMANT asks the Tribunal to find that it is also
entitled to litigation costs for its defense in the proceedings unlawfully initiated by RESPONDENT
[II.].
12
In spite of its contractual obligation to deliver 10,000 bottles to CLAIMANT, RESPONDENT
managed to deliver only 4,500 bottles to Claimant. Had the remained 5,500 bottles been
delivered, CLAIMANT could have made at least the same amount of the profit RESPONDENT made
by selling its wine to SuperWines. Alternatively, since no one should benefit from its breach,
the profit which RESPONDENT made by breaching the contract should not be kept by
RESPONDENT [III.].
13
The Tribunal should order RESPONDENT to produce the documents requested by CLAIMANT.
The Tribunal is allowed to order the Parties to submit evidence under the VIAC Rules in
accordance with international practice which the Parties agreed upon. Although the Parties also
2
HOKKAIDO UNIVERSITY
agreed that US style discover should not be allowed, the Parties did not excluded limited
document production, such as document production requested by CLAIMANT. Accordingly, the
Tribunal should order document production requested by CLAIMANT [IV.].
ARGUMENTS ON THE SPECIFIED ISSUES
I.
RESPONDENT IS OBLIGED TO COMPENSATE CLAIMANT FOR THE ATTORNEY FEES
OF THE APPLICATION FOR INTERIM RELIEF UNDER ART.
14
74 CISG
CLAIMANT requests the Tribunal to find that it is entitled to compensation for the attorney fees
it incurred for its application for interim relief as damages under Art. 74 CISG. By refusing to
deliver any bottles of wine to CLAIMANT and unrightfully attempting to terminate the contract,
RESPONDENT committed to a breach of the contract, thereby entitling CLAIMANT is entitled to
damages under Art. 45(1)(b) CISG [A.]. With regard to the amount of damages, litigation costs
are recoverable damages under Art. 74 CISG [B.], and the attorney fees incurred by CLAIMANT
due to RESPONDENT’s breach fulfill all requirements of Art. 74 CISG [C.]. Furthermore,
CLAIMANT did not fail to mitigate its losses according to Art. 74 CISG [D.].
A. RESPONDENT breached the contract, therefore CLAIMANT is entitled to damages under
Art. 45(1)(b) CISG
15
In the first place, the Parties agreed in Art. 20 of the Framework Agreement that is governed by
the CISG [Ex. C1, p. 9, para. 6]. Pursuant to Art. 45(1)(b) CISG, CLAIMANT is entitled to
damages since RESPONDENT breached the contract by refusing to deliver any bottles of wine to
CLAIMANT and unrightfully terminating the contract.
16
It is undisputed between CLAIMANT and RESPONDENT [Statement of Claim, p. 4, para. 5;
Answer to Statement of Claim, p. 26, para. 11] that the Parties concluded a contract on the
delivery of 10,000 bottles of Mata Weltin wine 2014 by the conclusion of a Framework
3
HOKKAIDO UNIVERSITY
Agreement on 22 April 2009 [Ex. C1, p. 9], and CLAIMANT’s order on 4 November 2014
[Ex. C2, p. 10]. Although RESPONDENT was obliged to deliver 10,000 bottles of diamond Mata
Weltin to CLAIMANT, it declared their ‘relationship’ terminated and, by its e-mail of 4 December
2014, refused to deliver any wine to CLAIMANT [Ex. C7, p. 15]. RESPONDENT’s termination of
the contract and its refusal to deliver the 10,000 bottles of wine constituted a breach of contract,
which is also not in dispute between the Parties [PO1, p. 50, para. 4]. Consequently, CLAIMANT
can claim damages under Art. 45(1)(b) CISG.
B. Litigation costs are recoverable as damages under Art. 74 CISG
17
Litigation costs are recoverable as damages under Art. 74 CISG. Since the recoverability of
litigation costs is not exclusively reserved for procedural law the CISG governs the issue of
recoverability of litigation costs [1.]. As Art. 74 CISG does not explicitly address litigation
costs, their recoverability as damages has to be defined in accordance with the principles
underlying this provision. The recoverability of litigation costs is in line with these principles
[2.]. Contrary to what RESPONDENT might argue, the recoverability of litigation costs does not
violate the principle of equality between the parties [3.].
1.
18
Recoverability of litigation costs is not exclusively reserved for procedural law
RESPONDENT argues that the recoverability of litigation costs is regulated not under the CISG
but in the procedural laws [Answer to Statement of Claim, p. 29, para. 32]. However, this
question cannot be resolved through a substance or procedural distinction. Against the
distinction from several authors “Relying upon such a distinction in this text is 'outdated and
unproductive.” [CISG-AC Op 6, cmt. 5.2; Schwenzer in: S/S, Art. 74, para. 28]. Accordingly,
the recoverability of litigation costs is not exclusively reserved for procedural law.
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2.
The recoverability of litigation costs is in line with the principle of full
compensation
19
The recoverability of litigation costs is in line with the principle of full compensation underlying
Art. 74 CISG. The full compensation principle requires that all types of losses are compensable
[Huber/Mullis, p. 268]. In this regard, recoverable losses should also include legal fees.
Otherwise, the aggrieved party would not be compensated for its loss. Courts in Germany
[Appellate Court Düsseldorf 11 July 1996; Appellate Court Düsseldorf 22 July 2004], the
Netherlands [District Appeal Court's-Hertogenbosch 2 October 1997], and Switzerland
[Higher Cantonal Court Valais 23 May 2006], have held that litigation costs can be recovered
under Art. 74 CISG. Accordingly, the principle of full compensation requires the inclusion of
litigation costs into the group of losses recoverable as damages under Art. 74 CISG.
20
Even if the Tribunal finds that litigation costs are not generally recoverable under Art. 74 CISG,
the legal fees with regard to interim relief are recoverable as pre-litigation costs under
Art. 74 CISG. Even those court that are reluctant to award litigation costs have agreed that prelitigation attorney fees are recoverable under Art. 74 CISG [Zapata Hermanos v. Hearthside
Baking (2002)]. Accordingly, the litigation costs are at least recoverable as pre-litigation costs
under Art. 74 CISG.
3.
The recoverability of litigation costs under Art. 74 CISG does not violate the
principle of equality between the parties
21
Contrary to what RESPONDENT might argue, the recoverability of litigation costs does not
violate the principle of equality between buyers and sellers. Some authors claim that the
recoverability of litigation costs is contrary to the principle of equality incorporated into
Arts. 45 and 61 CISG. The rationale of this argument is that only a plaintiff / claimant who
initiated legal proceedings as a consequence of a breach of contract would be able to recover
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its litigation costs. However, a defendant / respondent successfully defending itself against an
alleged breach of contract could not invoke Art. 74 CISG since it could not link its cost to a
breach of sales contract [CISG-AC Op. 6, cmt. 5.4; Schwenzer in: S/S, Art. 74, para. 29].
22
However, the issue of recoverability of litigation costs as damages is not a question of equality
but one of breach of contract. Although Arts. 45 and 61 CISG provide for symmetric remedies
to buyers and sellers, the important perspective of both provisions is that the remedies are
directly related to a breach of contract. In the first place, where the issue of the recoverability
of litigation costs arises, if there is a breach of contract, the CISG applies. If there is no breach
of contract, the CISG does not apply, but the applicable domestic law applies [Piltz, p. 1375;
Zeller, pp. 765-766]. Consequently, the recovery of litigation costs does not violate the principle
of equality between the parties.
23
In conclusion, litigation costs are recoverable as damages under Art. 74 CISG.
C. The attorney fees incurred by CLAIMANT due to RESPONDENT’S breach fulfill the
requirements of Art. 74 CISG
24
The attorney fees incurred by CLAIMANT due to RESPONDENT’s breach fulfill all requirements
of Art. 74 CISG since they were a consequence of RESPONDENT’s breach [1.] and a foreseeable
consequence of the breach [2.].
1.
CLAIMANT suffered losses in the amount of his attorney fees as a consequence of
the breach by RESPONDENT
25
CLAIMANT suffered losses in the amount of his attorney fees as a consequence of RESPONDENT’s
breach of contract. The causation requirement under Art. 74 CISG is understood widely as a
condition sine qua non [Schwenzer in: S/S, Art. 74, para. 40]. Had RESPONDENT not breached
the contract, CLAIMANT had not go to the Court.
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2.
26
CLAIMANT’s loss was foreseeable for Respondent
The legal fees were a foreseeable consequence of RESPONDENT’s breach of contract. According
to Art. 74 CISG damages may not exceed the loss that was foreseeable at the time of the
conclusion of the contract. This means that not the occurrence of the breach itself, but the
consequences of the breach as a possible result thereof had to be foreseeable to the party in
breach [Huber/Mullis, p. 272].
27
It was foreseeable for RESPONDENT that CLAIMANT could seek interim measures to secure its
rights in court, as well as it was foreseeable that CLAIMANT might seek legal advice on a
contingency fee basis.
28
It is generally believed to be foreseeable that a party, which is deprived of a right, will pursue
its right in court [Magnus, Art. 74, para. 51; Saenger in: F/K/M/et al., Art. 74, para. 15].
According to Art. 17 J Mediterranean Arbitration Law, which is a verbatim adoption of the
UNCITRAL Model Law on International Commercial Arbitration (UNCITRAL ML) [PO2,
p. 61, para. 58], allows that a court shall have the power of issuing an interim measure in
relation to arbitration proceedings.
29
When RESPONDENT refused to deliver any wine, it knew from Claimant’s letter of
4 November 2014 [Ex. C2, p. 10] about that CLAIMANT had already received pre-orders for
6,500 bottles of RESPONDENT’s Mata Weltin wine 2014 [PO2, p. 53, para. 7]. It was expected
that RESPONDENT’s other customers would place their binding orders in December or January.
CLAIMANT therefore had to prevent RESPONDENT from selling 10,000 bottles to other customer
immediately [PO2, p. 59, para. 48].
30
In addition, although RESPONDENT argues that there was no imminent threat of distributing the
wine to any other customer within the next six months, RESPONDENT was in a position of being
able to sell it even immediately. Moreover, RESPONDENT was originally inclined to deliver no
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bottles to CLAIMANT and to immediately terminate the contract with CLAIMANT. Therefore,
RESPONDENT could have foreseen that attempting to terminate the contract and refusing
delivery would cause CLAIMANT to seek interim relief.
31
Moreover, it was foreseeable for RESPONDENT that CLAIMANT might seek legal advice in
Mediterraneo on a contingency fee basis. Mediterranean lawyer often bill on this type of fee
basis [PO2, p. 58, para.40]. RESPONDENT was familiar with the basis that it had tried to agree
upon itself [PO2, p.59, para. 42].
32
Therefore, CLAIMANT’s legal fees were a foreseeable consequence of RESPONDENT’s breach of
contract.
D. CLAIMANT did not fail to mitigate its losses under Art. 77 CISG
33
RESPONDENT might argue that CLAIMANT failed to mitigate its losses according to the burden
of proof for such failure lying with the RESPONDENT under Art. 77 CISG [Schwenzer in: S/S,
Art. 77, para. 13]. However, CLAIMANT did not mitigate its losses which are the attorney fees
incurred by RESPONDENT’s breach under Art. 74 CISG.
34
The attorney fees were reasonable. Contingent fee basis was a reasonable measure under
Art. 77 CISG, because CLAIMANT did not need to pay large monthly bills from lawyers, while
CLAIMANT’s claim makes its way through the courts and in Mediterraneo contingency fees are
fairly common [PO2, p. 58, para. 40]. RESPONDENT was also familiar with contingency fees
[PO2, p.59, para. 42]. Accordingly, the attorney fees under contingent fee basis with Lawfix
are reasonable price [PO2, p. 59, para. 39]. Consequently, CLAIMANT did not fail to mitigate
its losses under Art. 77 CISG.
E. Conclusion on the compensation of attorney fees for the application for interim relief
35
Accordingly, RESPONDENT shall be held liable for the costs CLAIMANT incurred, caused by
8
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RESPONDENT’s arbitrary behavior and Mr. Weinbauer’s attempts to deprive CLAIMANT of what
it was entitled to, under the contract. These costs were a direct consequence of RESPONDENT’s
wrongful behavior. The Tribunal should therefore find, that RESPONDENT breached the contract,
and that CLAIMANT has to be compensated for the attorney fees it had to pay as a consequence
of this breach.
II. RESPONDENT IS OBLIGED TO COMPENSATE CLAIMANT FOR ITS ATTORNEY FEES
FOR DEFENSE AGAINST THE COURT LITIGATION PROCEEDING BY RESPONDENT
36
RESPONDENT is obliged to compensate CLAIMANT for its attorney fees for defense against the
proceeding before the High Court of Capital City. CLAIMANT is entitled to damages for
RESPONDENT’s breach of the Arbitration Agreement according to Art. 45(1)(b) CISG [A.]. The
attorney fees are recoverable losses under Art. 74 CISG [B.]. Furthermore, CLAIMANT’s
behavior did not contribute to RESPONDENT’s breach of the Arbitration Agreement [C.], and
Claimant did not fail to mitigate its losses under Art. 77 CISG [D.].
A. CLAIMANT is entitled to damages for RESPONDENT’S breach of the Arbitration Agreement
according to Art. 45(1)(b) CISG
37
The Parties are in agreement that all disputes about the Arbitration Agreement not regulated in
DAL are governed by the CISG [PO2, p. 61, para. 63].
38
Pursuant to Art. 45(1)(b) CISG, if the breaching party has a contractual obligation and
dishonors the obligation, the aggrieved party is entitled to damages. In the Arbitration
Agreement the Parties undertook the obligation to settle their disputes related to the Framework
Agreement by arbitration. “A valid arbitration agreement produces important legal effects for
its parties. These effects are both positive and negative. The positive effects include the parties’
obligation to participate in good faith in the arbitration to settle disputes, while the negative
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effects include the parties’ obligation not to pursue litigation in national courts” [Born2, p. 58].
“One of the fundamental purposes of international arbitration agreements is to centralize the
parties’ disputes in a single forum for final resolution” [Born2, p. 63]. Several arbitral tribunals
have held that commencing court proceedings that are incompatible with the arbitration
agreement amounts to a breach of the agreement [Scherer, para. 3]. Therefore, one party’s
commencement of litigation claims, subject to an arbitration agreement, is a breach of that
agreement.
39
By going to the High Court of Capital City instead of initiating arbitration [Statement of Claim,
p. 5, para. 12], RESPONDENT failed to observe the obligation and breached the Arbitration
Clause, thereby entitling CLAIMANT to damages under Art. 45(1)(b) CISG
B. CLAIMANT’s attorney fees are recoverable under Art. 74 CISG
40
CLAIMANT’s attorney fees are recoverable loss under Art. 74 CISG, because the fees are a direct
consequence of RESPONDENT’s breach [see above, I.B.].
41
Also, CLAIMANT‘s costs were foreseeable for RESPONDENT. A party against whom a legal action
is brought in state courts can generally be expected to seek legal advice. Moreover, the
agreement on a contingency fee was foreseeable for RESPONDENT [see above, I.C.].
42
Accordingly, Claimant’s attorney fees were a foreseeable consequence for RESPONDENT.
C. CLAIMANT’s behavior did not contribute to RESPONDENT’s breach of the Arbitration
Agreement
43
RESPONDENT argues that CLAIMANT contributed to RESPONDENT’s breach of the Arbitration
Clause by not illuminating RESPONDENT’s confusing regarding the Arbitration Agreement
[Answer to Statement of Claim, p. 27, para. 20], and therefore, cannot fully rely on
Respondent’s breach of the Arbitration Clause according to Art. 80 CISG. However,
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CLAIMANT’s silence following RESPONDENT’s letter of 14 January 2015 [Ex. R2, p. 33], did not
cause RESPONDENT’s breach. There was no need for CLAIMANT to respond to RESPONDENT’s
letter of 14 January 2015.
44
The Arbitration Clause is clear. It declares that “all dispute” shall be settled by arbitration in
Vindabona [Ex. C1, p. 9]. It leaves no doubt, that the parties want to arbitrate their disputes.
Furthermore, RESPONDENT is “one of the top vineyards in Mediterraneo”, which accesses the
global markets. Such merchant must have known that the only institution treating international
commercial arbitration in Vindobona is the VIAC [cf. PO2, p. 60, para. 55]. Therefore,
according to Art. 8(2) CISG a reasonable person operating such business would have
understood that the dispute shall be settled by arbitration.
45
Accordingly, CLAIMANT was under no duty to answer Respondent’s letter of 14 January 2015.
D. Claimant did not fail to mitigate its losses under Art. 77
46
RESPONDENT argues, that CLAIMANT failed to mitigate its losses by entering into a contingency
fee agreement [Answer to Statement of Claim, p. 29, para. 35]. The burden of proof lies with
the RESPONDENT [Magnus, Art. 77, para 22]. However, Claimant did not fail to mitigate its loss
[see above, I.D.].
E. Conclusion on the compensation for attorney fees incurred by RESPONDENT’s wrongful
claim in the Mediterranean High Court
47
Accordingly, the Tribunal should find that RESPONDENT should bear the consequences of its
wrongful claim, which it brought in the courts of Mediterraneo, even though the Parties had
clearly agreed to arbitrate any disputes. It should find that RESPONDENT has to compensate
CLAIMANT also for the legal fees it incurred to defend against RESPONDENT‘s unjustified court
proceedings.
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III. CLAIMANT IS ENTITLED TO DAMAGES IN THE MINIMUM AMOUNT OF THE PROFITS
RESPONDENT MADE FROM SELLING THE BOTTES TO SUPERWINES
48
CLAIMANT is entitled to damages in the minimum amount of the profits RESPONDENT made
from selling the bottes to SuperWines. CLAIMANT is entitled to damages under the Art. 45(1)(b)
CISG [A.]. The amount of damages under Art. 74 CISG has to be calculated according to
CLAIMANT’s lost profits which are at least as high as the profit RESPONDENT made from selling
its wine to SuperWines [B.]. Furthermore, CLAIMANT is entitled under Art. 74 CISG to a claim
for disgorgement of the profits made by RESPONDENT [C.]. If Art. 74 CISG does not cover this
question, the profits can be claim in analogy to Art. 84(2)(b) CISG [D.]. If the matter is not
governed by the CISG, CLAIMANT is entitled to damages in the minimum amount of the profits
RESPONDENT made from selling the bottles to SuperWines under Danubian Contract law [E.].
A. CLAIMANT is entitled to damages under the Art 45(1)(b) CISG
49
CLAIMANT is entitled to damages under the Art. 45(1)(b) CISG. RESPONDENT breached the
contract by not delivering 5,500 of the bottles it owed to CLAIMANT [1.]. In addition,
RESPONDENT cannot apply pro rata allocation [2.].
1.
RESPONDENT breached the contract by not delivering 5,500 of the bottles it owed
to CLAIMANT
50
RESPONDENT breached the contract by refusing to deliver 5,500 of the bottles it owed to
CLAIMANT. On 4 November 2014, CLAIMANT ordered from RESPONDENT the maximum amount
of guaranteed bottles under the contract [Ex. C2, p. 10]. Because of its order, RESPONDENT had
contractual obligation to deliver 5,500 bottles of diamond Mata Weltin. In spite of these facts,
Respondent did not deliver 5,500 bottles of diamond Mata Weltin [Ex. C3, p. 11].
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2.
51
RESPONDENT cannot apply pro rata allocation
RESPONDENT might argue that it was allowed to deliver on pro rata basis to its customers,
because it is industry practice. However, CLAIMANT argues that under Art. 9 CISG that industry
practice does not bind the parties. [a.]. Even if the industry practice is applicable, pro rata
allocation is not allowed in the present case [b.].
a.
Pro rata allocation as industry practice is precluded under the Framework
Agreement
52
According to Art. 4 of the Framework Agreement, the Parties agreed that CLAIMANT will each
year no later than 20 December place its orders. Also, the exact amount will be determined
every year by CLAIMANT normally before negotiations with other customers [Statement of
Claim, p. 4, para. 3]. Furthermore, the main purpose of the pre-orders is to allow CLAIMANT to
better calculate the needs of its customers before negotiations with other buyers [PO2, p. 53,
para. 6].
53
From the above, the Parties have agreed in the Framework Agreement that R ESPONDENT
commits itself that it will deliver up to 10,000 bottles of wine according to the order placed by
CLAIMANT. Therefore, the parties have precluded the customary practice in the wine industry
that seller freely determines every year the number of bottles it can allocate to a particular buyer
[Ex. R1, p. 31] or a pro rata allocation of bottles in case of bad harvest [PO2, p. 57, para. 31].
54
Therefore, there is no agreement between the parties to be bound by such usages that satisfies
Art. 9(1) CISG. Even if the parties knew or ought to have known such practice and if such
practice is widely known to and regularly observed in international trades, the parties have
reached an agreement that is contrary to the usage and thus requirements of Art. 9(2) CISG are
not fulfilled. Consequently, pro rata allocation as industry practice is precluded under the
Framework Agreement.
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b.
Even if industry practice is not precluded by the Framework Agreement, pro
rata allocation is not allowed to the present case
55
If pro rata allocation is allowed, it is only in situation of bad harvest [PO2, p. 57, para. 31] and
when RESPONDENT cannot fulfill all of its existing commitments. It had no other commitments
on 3 November 2014 when it became aware of the extraordinary drop in quantity of the bad
harvest [Answer to Statement of Claim, p. 26, para. 10]. Other customers normally only place
their binding orders in December or January [Statement of Claim, p. 4, para. 8].
56
If RESPONDENT is allowed to freely add customers to whom it can deliver on a pro rata basis
after it became aware of the bad harvest, that would be against the idea of pacta sunt servanda.
Consequently, pro rata allocation constituted a breach.
B. CLAIMANT is entitled to damages as high as the profit RESPONDENT made by selling its
wine to SuperWines
57
CLAIMANT’s damages as calculated under Art. 74 CISG amount to the difference between the
contract price and the price paid by SuperWines. Because RESPONDENT did not honor its
obligation to deliver 5,500 bottles of diamond Mata Weltin, CLAIMANT suffered lost profits.
Art. 74 CISG is based on the principle of full compensation including compensation for lost
profit. The Tribunal has discretion to determine the amount of damages [1.], the Tribunal shall
assume that CLAIMANT’s lost profit would have been at least the same amount of the profit
RESPONDENT made by selling its wine to SuperWines [2.], alternatively, CLAIMANT is entitled
to damages for a potential cover purchase in the same amount [3.].
1.
58
The tribunal has discretion to determine the amount of damages
The tribunal has discretion to determine the amount of damages. In order to recover damages
for breach of contract, “the aggrieved party bears the burden of proving with reasonable
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certainty such party has suffered a loss as a result of the breach” [CISG-AC Op. 6, para. 2.6].
The “Degree of reasonable certainty” should not be too strict and even has to be lower where a
party has to prove lost profit instead of suffered damage. [Magnus, Art. 74, para. 61].
Meanwhile, “from a policy perspective, the breaching party should not be able to escape
liability because the breaching party’s wrongful act caused the difficulty in proving damages
with absolute certainty” [CISG-AC Op. 6, para. 2.7]. In addition, many courts use their
discretionary power to award an estimated amount according to their appraisal [Schwartz,
para. 11; Appellate Court Antwerp, 18 May 1999; District Court Antwerp, 8 October. 1996;
Commercial Court Aargau, 26 September 1997; Appellate Court Düsseldorf, 5 March 1996;
District Court Hamburg, 17 June 1996].
59
Therefore, the breaching party should not be able to escape from the liability, and the tribunal
has the discretionary power to estimate the amount of damages.
2.
The Tribunal shall assume that CLAIMANT’s lost profit would have been at least
the same amount of the profit RESPONDENT made by selling its wine to
SuperWines
60
The Tribunal shall assume that CLAIMANT’s profit would have been at least as high as the
amount of the profit which RESPONDENT made by selling its wine to SuperWines. According to
CISG-AC Op. 6, the aggrieved party is entitled to non-performance damages, which are
typically measured by the market value of the benefit of which the aggrieved party has been
deprived through the breach [CISG-AC Op. 6, para. 3]. Another author further explains that,
CLAIMANT’s lost profit under Art. 74 CISG, “requires the buyer to show and prove what it
would have done with the goods. […] However, when determining what the buyer could have
done with goods, it is justifiable to look at what the seller was able to do with them. In other
words, the profits realized by the seller should be accepted as evidence of the value of the goods
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at the hypothetical time of delivery. This view entitles the buyer to benefit from a general
presumption that, had it received the goods, it then could (not necessarily would) have used
them as profitably as the seller did” [Schmidt-Ahrendts, p. 99, paras. 2 and 3]. Had the bottles
of wine been delivered by RESPONDENT, CLAIMANT could have sold either to SuperWines or to
any other customer for the same price SuperWines paid to RESPONDENT.
61
RESPONDENT might argue that its contract with SuperWines represented a unique selling
opportunity, since SuperWines paid the premium as “market entry fee” and to secure delivery
of the same amount of bottles in the next two years [PO2, p. 56, para. 24]. However, had
RESPONDENT honored its contract with CLAIMANT, CLAIMANT had been able to offer market
entry and supply of a large number of bottles over the next two years as well.
62
In addition, Claimant could have also sold to other customers for the same price. Because of
the bad harvest, a much smaller quantity of diamond Mata Weltin wines than usual was on the
market” [Answer to Statement of Claim, p. 26, para. 9], when at the same time, the wine has
won several prices and received enthusiastic report” leading to an increased demand [Answer
to Statement to Claim, p. 26, para. 8]. SuperWines was willing to buy additional 9,500 bottles
for the same price it had paid to RESPONDENT [PO2, p. 56, paras. 22 and 24]. It is therefore
reasonable to assume that no bottles would have been traded on the wholesales market for any
price lower than this price. Therefore, it can be assumed that CLAIMANT could have sold the
bottles for the same price to other customers and What RESPONDENT had was not a unique
market opportunity.
63
Therefore, the Tribunal shall assume that CLAIMANT’s profit would have been at least as high
as the profits RESPONDENT made from breaching the contract and selling to SuperWines.
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3.
CLAIMANT is entitled to damages for a potential cover purchase in the same
amount
64
The Tribunal shall assume that CLAIMANT is entitled to damages for a potential cover purchase
in the same amount. Alternative to a concrete calculation of damages, Art. 74 CISG also allows
for damages to be calculated abstractly [Schwenzer in: S/S, Art. 74, para. 41]. In cases where
the seller refused to deliver, such damages can be calculated as the difference between the
contract price and the market price, similar to Art. 76 CISG [Id., Art. 76, para. 3].
65
If CLAIMANT would have made a cover purchase of diamond Mata Weltin, CLAIMANT would
have had to pay a price at least as high as the one SuperWines paid.
66
RESPONDENT may argue that CLAIMANT concluded a cover purchase and its lost profit shall be
calculated according to the difference between the price paid in CLAIMANT’s substitute
transaction and the sales contract. However, there was no substitute transaction.
67
The wine from RESPONDENT and the one from Vignobilia are different. Due to a considerable
increase in pre-orders from its customers, CLAIMANT was willing to buy about 12,000 bottles
from Respondent [Ex. C2, p. 10, para. 2]. Furthermore, CLAIMANT had long been trying to get
into contact with the three other top end wind producers from Mediterraneo to enlarge its
supplier base and reduce its dependence on RESPONDENT [PO2, p. 54, para. 11]. CLAIMANT has
the capacity and market to sell similar goods to its customers. Without Respondent’s breach
of contract, CLAIMANT would have been able to make two sales. A court states that under the
circumstances where an aggrieved seller who resells the goods suffers the loss of a sale when
he has the capacity and market to sell similar goods to other persons, the seller was entitled to
recover the lost profit from the first sale [CISG Digest, p. 349, para. 32]. In the particular case,
CLAIMANT could have been able to make two sales, CLAIMANT is entitled to recover the lost
profit of 5,500 bottles.
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68
Therefore, under Art. 74 Claimant is entitled to damages at least as high as the difference
between SuperWines’s purchase price and the contract price.
C. CLAIMANT is entitled under Art. 74 CISG to ask for RESPONDENT’s disgorgement of the
profits gained from its breach of contract
69
The Tribunal should find that under Art. 74 CISG RESPONDENT is obliged to disgorge the profits
from its breach of contract. Art. 74 CISG is based upon several fundamental principles,
including the good faith and pacta sunt servanda principles. The good faith principle permits
CLAIMANT to demand the gains RESPONDENT acquired from its breach of contract [1.].
Moreover, the pacta sunt servanda principle entitles CLAIMANT to strip RESPONDENT of the
proceeds from breaching the contract [2.].
1.
The good faith principle allows CLAIMANT to demand the gains RESPONDENT
acquired from its breach of contract
70
Under the good faith principle Claimant is entitled to ask Respondent to surrender any financial
gains made by breaching the contract. The good faith principle which is stipulated in Art. 7(1)
CISG requires that a party breaching its contractual obligations should not profit from its
wrongdoings. Commentators acknowledge that Art. 74 CISG “should give regard to” the good
faith principle [Schmidt-Ahrendts, p. 94]. Even courts recognize that the good faith principle is
a general principle of the CISG that is to be applied even beyond the realm of gap filling [High
Court of Appeal Hamburg, 28 February 1997].
71
Contract damages do not always have to be strictly limited compensation. In many legal
systems, the law of damages is regarded as a means for preventing the commission of acts in
bad faith and not only for compensation [Schwenzer/Leisinger, p. 271]. Allowing claims for
disgorgement damages supports such purpose, “since it sets an incentive for parties to respect
their contractual obligations and to refrain from breaching the contract” [Schmidt-Ahrendts,
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p. 94]. Moreover, in most national legal systems, disgorgement damages tend to be
acknowledged as general remedy [Hondius/Janssen, p. 471 et seq.; Snepp v. U.S.(1980);
Attorney General v. Blake (2001); Adras v. Harlow & Jones (1988); Sec. 285 BGB Sec. 6:104
Dutch Civil Code].
72
In the present case, RESPONDENT breached the contract and enjoyed the benefits from the breach
of contract [see above, III.A.]. Pursuant to the good faith principle underlying Art. 74 CISG,
Respondent should not profit from its breach of contract. Therefore, Claimant is allowed to
demand the profits Respondent made by its breach of contract.
2.
The pacta sunt servanda principle entitles CLAIMANT to strip RESPONDENT of the
proceeds made from breaching the contract
73
CLAIMANT is allowed to demand the profits realized by RESPONDENT by virtue of its breach of
contract under the pacta sunt servanda principle. The CISG is based upon this principle. The
principle finds particular reflections in Arts. 46(1) and 62 CISG which grant to the buyer and
seller the right to claim specific performance [Müller-Chen in: S/S, Art. 46, para. 1]. The
aggrieved party has a right not only to compensation for breach of contract, but also to specific
performance. Under the pacta sunt servanda principle, the parties must respect their contractual
obligations.
74
The disgorgement of the profits has the effect deterring wrongdoings. This “mechanisms of
deterrence” are discussed compared with “pure” compensation of economic loss “in order to
strengthen the principle of pacta sunt servanda” [Schwenzer/Hachem, p. 100 et seq.].
Accordingly, the pacta sunt servanda principle requires that the gains the breaching party
obtained as a result of its breach of contract should be disgorged [Ibid.].
75
RESPONDENT may based its argument upon the theory of “efficient breach” that it should be
able to breach its contract and enter into a more profitable contract with a third party. However,
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this theory is not in line with the pacta sunt servanda principle, because the aggrieved party’s
right to specific performance would be violated by such a breach of contract. Moreover, the
theory itself does not rule out disgorgement damages for breach of contract [Barnett, p. 87 et
seq.].
76
Hence, the pacta sunt servanda principle entitles CLAIMANT to strip RESPONDENT of the
proceeds it acquired by virtue of its breach of contract.
D. If Art. 74 CISG does not cover this question, the profits can be claims in analogy to
Art. 84(2)(b) CISG
77
If the Tribunal should follow the view that the CISG does not govern the question if gain-based
profits are allowed in Art. 74 CISG, this matter should be solved in accordance with the general
principles on which the CISG is based, in accordance with Art. 7(2) CISG [1.]. Art. 84 CISG
represents such a general principle by allowing for the the disgorgement of profits [2.] and the
requirements of Art. 84 CISG are fulfilled [3.].
1.
If the question of gain-based damages is not governed by Art. 74 CISG, it should
be solved in accordance with the general principles of the CISG, according to
Art. 7(2) CISG
78
Should the Tribunal take the view that Art 74 CISG does not deal with the question of
disgorgement of profits, this question falls within the matters generally governed by the CISG
and should therefore be solved in accordance with the general principles on which it is based,
in accordance with Art. 7(2) CISG.
79
Reviewing the provisions of the CISG, the only article which potentially provides the aggrieved
party with a claim for disgorgement is Art. 74 CISG [Schmidt-Ahrendts, p. 91]. If the Tribunal
finds that the Art. 74 CISG does not govern the disgorgement of profits RESPONDENT obtained
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from SuperWines, this particular issue is not addressed specifically in the CISG.
80
However, the disgorgement of profits resulting from a failure of one party to perform the
contract falls within the matters governed by the CISG, so that there would be an ‘internal gap’
in the CISG. “The CISG […] governs the formation of the contract as well as the rights and
obligations of the seller and the buyer arising from such contract (Article 4 CISG). This includes
the remedies available to a party in case the other party breaches its obligations under the
contract or the CISG” [Schmidt-Ahrendts, p. 89].
81
“Once a gap is detected, the following hierarchy of solutions applies, first, specific provisions
of the CISG are applied directly by way of analogical technique created by scholars and case
law, if the gap still cannot be filled, resort is to be had to the general principles on which the
CISG is based (internal principles) or in their absence to other external principles and finally to
the applicable domestic law” [Viscasillas in: K/M/V, Art. 7, para. 53].
82
Since no specific provision other than Art. 74 CISG would be directly applicable to the issue,
the general principles underlying the CISG have to be applied for the gap-filling.
2.
83
Art. 84 CISG represents a general principle on which the CISG is based
Art. 84 CISG represents a general principle stating, that a party has to account for the benefits
it gains form goods it owes to another party. “The application of Art. 84 is not explicitly
stipulated for avoidance of the contract by the seller, but it is even more justified in those cases”
[Fountoulakis in: S/S, Art. 84, para. 6]. Generally, one party must account for benefits of the
goods no matter who caused the breach of contract.
84
Numerous authors have recognized, that Art. 84 CISG contains a general principle underlying
the CISG in the meaning of Art. 7(2) CISG, stating that one party should not be entitled to keep
profit it made from what rightfully belonged to the other party [Hartmann, p. 192;
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Schlechtriem/Butler, p. 226, para. 322].
3.
85
The requirements of analogue application of Art. 84 CISG are met
As stated above, Art. 84 CISG represents a general principle stating that one party should not
be entitled to keep profits it made from what is rightfully attributed to the other party.
Mr. Weinbauer’s son-in-law, had originally preserved 10,000 bottles to be able to fulfill the
interim injunction [PO2, p. 60, para. 49]. Accordingly, the 10,000 bottles are specified to the
contract, and are attributed to CLAIMANT even if they have not been delivered. However,
RESPONDENT disregarded the injunction and delivered the 5,500 bottles to SuperWines for a
higher price. Therefore, the profit RESPONDENT gained by breaching the contract and selling
the bottles that are attributed to CLAIMANT shall not be kept by RESPONDENT.
E. Conclusion on the calculation of damages due to Respondents non-delivery of 5.500 bottles
of diamond Mata Weltin
86
In conclusion, the Tribunal should compensate Claimant for the profits it would most likely
have made, had Respondent delivered the bottles it contractually promised. At the same time,
it should not allow Respondent to benefit from its intentional breach of contract and award
Claimant damages in the amount of the difference between the price Claimant had to pay under
the contract and the price SuperWines later paid for the bottles.
IV. THE TRIBUNAL SHOULD ORDER RESPONDENT TO PRODUCE THE REQUESTED
DOCUMENTS
87
The Tribunal should order RESPONDENT to produce the documents requested by CLAIMANT.
First, the Tribunal has the power to order RESPONDENT to produce the documents requested by
CLAIMANT [A.]. Second, the Tribunal’s power to order document production was not excluded
by the Art. 20 of the Framework Agreement [B.]. Finally, the Tribunal should grant CLAIMANT’s
22
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request, since all preconditions for such order are fulfilled [C.].
A. The Tribunal has the power to order RESPONDENT to produce the documents requested
by CLAIMANT
88
The Tribunal has the power to order RESPONDENT to produce the documents requested by
CLAIMANT. The Tribunal has the power to order the Parties to submit evidence under Art. 29(1)
VIAC Rules [1.]. Moreover, the tribunal has the power to order the production of documents in
accordance with international practice [2.].
1.
The Tribunal has the power to order the Parties to submit evidence under
Art. 29(1) VIAC Rules
89
The Tribunal has the authority to order the Parties to submit evidence under Art. 29(1) VIAC
Rules. In Art. 20 of the Framework Agreement the Parties agreed on setting their disputes by
arbitration under the VIAC Rules [Ex. C1, p. 9]. Pursuant to Art. 29(1) VIAC Rules, arbitral
tribunals may request parties to submit evidence. Accordingly, arbitral tribunals are allowed to
order one party to submit specific evidence requested by the other party [Schwarz/Konrad,
Art. 20, para. 20-183]. Although the party-initiated document production is not explicitly
stipulated under Art. 29(1) VIAC Rules [Answer to Statement of Claim, p. 28, para. 27], arbitral
tribunals may conduct the proceedings at their discretion [VIAC Handbook 2014, Art. 28,
para. 10], including determining the rules related to evidence [Lew/Mistelis/Kröll, p. 558,
para. 22-16].
90
The Tribunal should apply the IBA Rules on the Taking of Evidence in International Arbitration
(hereinafter, “the IBA Rules”) because they offer helpful guidance for it concerning the
procedural rules on taking evidence [VIAC Handbook 2014, Art. 29, para. 5]. Moreover, an
arbitral tribunal should conduct the predictable proceedings for the parties [Id., Art. 28,
para. 10]. As the IBA Rules are commonly used in international arbitration, it is easy for the
23
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Parties to predict the application.
91
Pursuant to Art. 3(7) IBA Rules, the arbitral tribunal is empowered to grant the order to produce
the documents upon CLAIMANT’s request. Accordingly, the VIAC Rules and the IBA Rules
authorize the Tribunal to order to submit evidence upon CLAIMANT’s request.
2.
The Tribunal’s power to order document production is in accordance with
international practice
92
The Tribunal’s power to order document production is acknowledged under international
practice. In Art. 20 of the Framework Agreement the Parties agreed on setting their dispute by
arbitration conducted “in accordance with international practice” [Ex. C1, p. 9]. In international
arbitration, “arbitrators typically require only production of reasonably well-identified
documents or categories of documents that are material to disputed issues” [Born2, p. 186].
Such a “limited document production” is fully reflected in the IBA Rules. Thus the Tribunal is
required to apply the IBA Rules as international practice. Although the Parties did not explicitly
stated in the Framework Agreement on the applicability of the IBA Rules [Answer to Statement
of Claim, p. 28, para. 28], there are several reasons why the Tribunal should employ the IBA
Rules as international practice.
93
First of all, the Tribunal should apply the IBA Rules because they reflect international practice
and allow for limited document production. The IBA Rules are universally recognized as the
international standard for the taking of evidence [Blackaby/Partasides, p. 393, para. 6.107;
Born1, p. 2321; Moses, p. 7]. Moreover, in international arbitration, arbitral tribunals regularly
pay particular attention to the IBA Rules [Nobel Ventures v. Romania; Railroad v. Guatemala;
Glamis Gold v. U.S.]. Surveys of international arbitration practice in 2012 and 2015 show that
the IBA Rules was the most widely known and the most frequently used. 77% of participants
in these surveys have seen it used in practice and 85% of them considered the adoption of the
24
HOKKAIDO UNIVERSITY
IBA Rules useful [Arbitration Survey 2012; Arbitration Survey 2015].
94
Second, because of the purpose of the IBA Rules the Tribunal should employ them as
international practice. In arbitral practice, the parties and arbitrators tend to take a pragmatic
and “hybrid” approach to the conduct of the taking of evidence [Berger, p. 582, para. 26-3].
The IBA rules reflect such a hybrid approach, seeking to bridge the gaps between different legal
traditions [Preamble of the IBA Rules]. As CLAIMANT is from a common law jurisdiction
whereas RESPONDENT is from a civil law jurisdiction [PO2, p. 62, para. 68], it makes a perfect
sense for the Tribunal to apply the IBA Rules as international practice.
95
In conclusion, the Tribunal should apply the IBA Rules in this case. The Tribunal has the power
to order document production requested by CLAIMANT pursuant to Art. 3(7) IBA Rules.
B. The Tribunal’s power to order document production was not excluded by the Parties’
agreement
96
The Parties did not agree on the exclusion of limited document production. This follows on
interpretation of the contract under Art. 8(1) CISG, since CLAIMANT never intended such
exclusion and Mr. Weinbauer could not have been unaware of this intent [1.]. Even if Mr.
Weinbauer did not know of Claimant's intent, a responsible third person would have understood
the exclusion not to refer to limited document production under Art. 8(2) CISG [2.].
1.
CLAIMANT never intended the exclusion of limited document production and Mr.
Weinbauer could not have been unaware of this intent
97
When RESPONDENT must know and could not have been unaware that CLAIMANT did not intend
the exclusion of any type of document production, but only the exclusion of extensive discovery,
the Claimant's intent shall be the interpretation of the Parties agreement.
98
Firstly, the reason why Claimant inserted the exclusion of discovery in the arbitration clause
25
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was to implement a document retention policy and to order their systematic destruction after 5
years [Ex. C12, p. 20]. In common law jurisdiction such as the U.S., discovery is granted
extensively, so that a lot of disputes arise. Consequently, then COO of Claimant, Mr.
Friendensreich decided to follow the advice by his brother, who had been involved in a great
amount of court cases with broad discovery, to exclude such broad discovery in the arbitration
proceedings [Ex. C12, p. 20]. Moreover, the document retention policy enables to reduce the
burdens of giving broad electronic discovery, in those cases in which such issues may arise
[Howell, p. 164]. Implementation of the systematic destruction after 5 years leads to more
limited document production and, therefore, effectuates the parties' agreement of fast and cost
efficient proceedings, too.
99
Also, RESPONDENT could not have been unaware of this intent because the term of the contract
“discovery” is an important terminology in making an arbitration clause for international trade.
“Discovery is broad, encompassing any document which may lead to admissible evidence, even
if it does not constitute evidence in and of itself” [Kaufmann-Kohler, p. 5]. Common law
process
of
document
request
is
often
referred
to
as
document
discovery
[Greenburg/Kee/Weeramantry, p. 320].
100 Furthermore, Mr. Weinbauer could not understand the agreement to be inconsistent with
international practice. The parties also agreed under Art. 20 of their Framework Agreement that
the proceedings shall be “in accordance with international practice” [Ex. C1, p. 9]. It is a well
established practice in international arbitration that limited document production is allowed [see
above, A.2].
101 In consequence, the meaning of the agreement that “no discovery shall be allowed” [Framework
Agreement, Art. 20, p. 9] cannot be interpreted as anything but the exclusion of broad discovery,
but not to refer to limited document production.
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HOKKAIDO UNIVERSITY
2.
Even if Art. 8(1) CISG is not applicable, a reasonable person would have
understood the exclusion not to refer to limited document production under
Art. 8(2) CISG
102 If the Tribunal concludes that RESPONDENT could not have been aware of CLAIMANT's intent, a
reasonable person of the same kind would have understood CLAIMANT's intent pursuant to
Art. 8(2) CISG.
103 A reasonable person in shoes of Mr. Weinbauer had not understood the Parties' agreement to be
inconsistent with international practice [a.], would have understood that limited document
production is a helpful international practice to facilitate arbitral proceedings [b.], and would
have understood the distinction between limited document production and broad “discovery”
[c.].
a.
A reasonable person in the position of Mr. Weinbauer would have understood
that limited document production is a helpful international practice to
facilitate arbitral proceedings
104 Firstly, limited document production is granted under international practice because it often
allowed by arbitrators and this particular case shall be applicable to the IBA Rules [see above,
].
105 Moreover, if any type of document production is excluded as RESPONDENT argues, the parties
would be harmfully prevented from making a sufficient defense in the case. Non-document
production is harmful because the other way of taking evidence like hearsay evidence and
expert’s opinion can be weak evidence. First, oral-testimony is questionable whether the
content is true [Moses, p. 176]. Second, the expert’s opinion, binds neither the parties nor the
court [Fouchard/Gaillard/Goldman, p. 18, para. 25]. Therefore, a reasonable person would
understand that non-document production shall be reasonably avoided in arbitration.
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HOKKAIDO UNIVERSITY
106 Furthermore, to limit broad discovery is often in international arbitration because the original
discovery can be costly. Particularly, in the case where the parties exclude broad discovery for
a fast and cost efficient way [see, b.], to limit broad discovery more makes sense
[Evans/Johnson, p. 4].
b.
A reasonable person in shoes of Mr. Weinbauer had not understood the
exclusion of broad discovery to be inconsistent with a fast and cost efficient
way
107 The Parties agreed on the exclusion of broad discovery and a fast and cost efficient way
[Framework Agreement, Art. 20]. A reasonable person would not have understood the parties
would construe any statements made in the contract inconsistent with each other agreement.
108 Firstly, limited document production, such as CLAIMANT’s requested production, corresponds
with a fast and cost efficient procedure. As mentioned above, in arbitral practice, the parties and
arbitrators desire limited document production. This is because the parties hope that their
disputes will be solved quickly and reasonably.
109 Moreover, CLAIMANT will be forced to search for other ways of finding the evidence when
RESPONDENT does not submit the documents. CLAIMANT would waste time and would have to
pay unnecessary costs if no production were permitted. Usually, the price and volume of
contracted goods are known only by the parties to the contract, especially when the goods have
not been delivered, because this information is generally kept as trade secret. Accordingly, the
only parties who have such information are RESPONDENT and SuperWines [PO2, p. 56,
para. 24; PO2, p. 58, para. 36]. In case RESPONDENT refuses the CLAIMANT’s request,
CLAIMANT will have to find, for example, witness of fact or expert's opinion. These unnecessary
procedures have the risk the entire arbitral proceedings would delay and become more
expensive. This would result in the breach of Art. 20 of the Framework Agreement.
28
HOKKAIDO UNIVERSITY
110 Consequently, a reasonable person in shoes of Mr. Weinbauer would avoid unnecessary delay
and costs caused by unjust allegation of non-disclosure.
c.
A reasonable person would have understood that "discovery" is a terminology
which mention broad discovery and not open to interpretation
111 A reasonable person in the field of international trade would understood “discovery” represents
the extended document production as construed in the US because “discovery” is a terminology
in international arbitration [see above, B. 1.]
112 If Mr. Weinbauer could not have been unaware of that, a reasonable person in his position would
have understood. This is because there is “a broad and strong consensus” amongst parties using
arbitration from both civil and common law jurisdictions that broad discovery shall be excluded
in international arbitration [Berger, p. 592, para. 26-27].
113 In conclusion, Mr. Weinbauer as a reasonable person would have understood that the exclusion
of discovery did not be inconsistent with the agreement of a fast and cost efficient way, but did
mean to just limit broad discovery to go through the procedure in a fast and cost efficient way.
C. The Tribunal should grant the order upon CLAIMANT’s request
114 The Tribunal should order to produce the documents requested by CLAIMANT under Art. 29(1)
VIAC Rules in accordance with international practice because the requirements imposed by the
concerned provisions are met. Pursuant to Art. 3(7) IBA Rules, there are two requirements:
firstly, the requirements of Art. 3(3) IBA Rules are satisfied [1.]; secondly, none of the reasons
for objection set forth in Art. 9(2) IBA Rules applies [2.]. Even if the Tribunal finds that the
requirements are not met, the Tribunal’s refusal to grant the order the production of documents
requested by CLAIMANT will violate the Parties’ right to be heard [3.].
29
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1.
The requirements of Art. 3(3) IBA Rules are satisfied
115 The Tribunal should find that CLAIMANT’s request satisfies the requirement of Art. 3(3) IBA
Rules. Art. 3(3) IBA Rules requires that the requested documents are described in sufficient
details and they are in RESPONDENT’s possession. Also, Art. 3(3) IBA Rules requires that the
issue Claimant requests to prove by the requested documents is relevant to the case and material
to its outcome. First, the documents requested by CLAIMANT are described in sufficient details.
CLAIMANT requests all the documents from the period of 1 January 2014 – 14 July 2015
pertaining to communications between RESPONDENT and SuperWines [Statement of Claim, p. 7,
para. 27]. Accordingly, the requested documents are fully specified.
116 Moreover, the Tribunal should find that the documents are in RESPONDENT’s possession and
not in CLAIMANT’s. It is undisputed that CLAIMANT does not have those documents. The actual
price of the premium is not known to anyone except of RESPONDENT and SuperWines [PO2,
p. 56, para. 24]. On the other hand, the documents are in RESPONDENT’s possession.
RESPONDENT and SuperWines exchanged several emails. Furthermore, RESPONDENT had
created several internal memoranda and minutes [PO2, p. 56, para. 24].
117 Finally, the issue CLAIMANT requests to prove by the requested documents is relevant to the
case and material to its outcome. CLAIMANT is required to prove the amount of loss
RESPONDENT gained by selling 5,500 bottles of Diamond Mata Weltin 2014 wine to SuperWines.
First, this issue is relevant to the case because CLAIMANT is not able to calculate the claimed
damages without obtaining information from the requested documents. Moreover, the issue is
material to its outcome. Document production is material to the outcome of the proceedings
when the documents which are in the possession of only one party are relevant to the case [VIAC
Handbook 2014, Art. 29, para. 13]. In the present case, the documents which are only in
RESPONDENT’s possession are relevant to the case. Accordingly, the issues that CLAIMANT
30
HOKKAIDO UNIVERSITY
requests to prove by the documents are relevant to the case and material to its outcome.
118 Therefore the requirements under Art. 3(3) IBA Rules are met in the present case.
2.
The Tribunal should not exclude the documents from production for any reasons
under Art. 9(2) IBA Rules
119 The Tribunal should not exclude the documents from production for any reasons under Art. 9(2)
IBA Rules. Firstly, the documents are not excluded for grounds of compelling commercial
confidentiality [a.]. Secondly, the documents are not excluded for by reasons of equal treatment
of the Parties [b.].
a.
The documents are not excluded for grounds of compelling commercial
confidentiality
120 The documents requested by CLAIMANT are not excluded for grounds of compelling
commercial confidentiality under Art. 9(2)(e) IBA Rules. According to Art. 3(13) IBA Rules,
documents produced by one party generally have to be kept confidential. Also the Tribunal has
the power to issue orders to set forth the terms of this confidentiality.
121 If the Tribunal finds that the documents are subject to confidentiality, it should order
RESPONDENT to submit them under necessary arrangements pursuant to Art. 9(4) IBA Rules.
Therefore, even if the content of the requested documents was commercially confidential,
Respondent would not have to disclose them in the public [Moses, p. 54].
b.
The documents are not excluded for the equality of the Parties
122 The granting of CLAIMANT’s request for document production will not violate the Parties’ right
to equal treatment. First, RESPONDENT’s right to equal treatment will not be violated because
CLAIMANT is not prevented from being obliged to disclose certain documents. The documents
which are necessary to prove the issues are not in CLAIMANT’s possession. Second, the
31
HOKKAIDO UNIVERSITY
application of the IBA Rules does not violate RESPONDENT’s right to equal treatment, because
the Parties are treated equally under the IBA Rules which reflect a hybrid approach of different
legal traditions [see above, A.2.].
123 In conclusion, the Tribunal should grant CLAIMANT’s request for document production because
all the requirements imposed by Art. 29(1) Vienna Rules and Art. 3(7) IBA Rules are met.
3.
Even if the Tribunal finds that the requirements are not met, the Tribunal should
order the production of documents requested by CLAIMANT in order to guarantee
the Parties’ right to be heard
124 The Tribunal should exercise its authority to order document production requested by
CLAIMANT since its refusal will violate the Parties’ right to be heard. The Parties’ right to be
heard is a fundamental principle of international arbitration and not to subject to party autonomy
[a.]. Moreover, if no document production is granted, the Parties’ right to be heard will be
violated [b.].
a.
The Parties’ right to be heard is a fundamental principle of international
arbitration and not to subject to party autonomy
125 The Parties’ right to be heard is a fundamental principle of international arbitration and not
subject to party autonomy. The parties’ right to be heard is guaranteed by the NY Convention,
which provides in Art. V(1)(b) that an award may not be recognized if a party was “unable to
present [its] case.” Consistent with the NY Convention, the DAL requires in Art. 18 that “each
party shall be given a full opportunity of presenting his case.” This provision is sometimes
refered to as the “Magna Carta of arbitral procedure” [UNCITRAL Report, Art. 19, para. 1]. In
addition, pursuant to Art. 28(1) VIAC Rules, the Tribunal is obliged to grant the Parties the
right to be heard.
32
HOKKAIDO UNIVERSITY
126 The fundamental procedural guarantee of the right to be heard is a mandatory requirement of
procedural fairness [VIAC Handbook 2014, Art. 28, para. 8; Lew/Mistelis/Kröll, p. 558,
para. 22-18]. Accordingly, the Parties did not have the procedural autonomy to prevent any of
them from exercising its right to be heard.
b.
If no document production is granted, the Parties’ right to be heard will be
violated
127 The Tribunal’s refusal to order the production of the documents would violate the Parties’ right
to be heard. The parties must be given the opportunity “to present their case” by making factual
assertions, and offering evidence [Austrian Supreme Court, 12 May 1961]. As a result, the
parties must be permitted to participate in the taking of evidence by arbitrators
[Schwarz/Konrad, Art. 20, para. 20-040; VIAC Handbook 2014, Art. 28, para. 17]. One of
commentators argue that “[i]f a party lacks documents necessary to establish relevant facts for
which it bears the burden of proof and such documents are demonstrably within the control of
its opponent, one could reasonably argue that a refusal to grant a production request may
deprive the party seeking discovery from its opportunity to be heard” [Kaufmann-Kohler,
p. 1327, fn. 66].
128 In the present case, all the above-mentioned requirements are met. The Tribunal can find that
the documents requested by CLAIMANT are relevant to its claim, because Art. 74 CISG places
the burden of proof on CLAIMANT with regard to the calculation of claimed damages [see above,
III.1.]. Moreover, RESPONDENT possesses the documents which are essential for substantiating
CLAIMANT’S claim for damages [see above, III.2.]. Therefore, the Tribunal’s refusal to grant
the order for document production would prevent CLAIMANT, demanding document production,
from exercising its right to be heard.
129 In conclusion, CLAIMANT’s right to be heard would be infringed if no document production was
33
HOKKAIDO UNIVERSITY
granted. Accordingly, the Tribunal should order the production of the documents requested by
CLAIMANT in order to protect the Parties’ right to be heard.
D. Conclusion on the request for disclosure of the requested documents
In order to be able to fairly assess the factual background of the case the Tribunal shall order
Respondent to produce the documents relating to its dealings with SuperWines. Such limited
document production is in in accordance with international practice in arbitration and is even
more justified under the circumstances of the present case where the parties expressly agreed
on arbitration in accordance with such practice and where the request is related to a limited
number of specific documents, which are the only source to reveal the scope of Respondents
wrongdoings.
REQUEST FOR RELIEF
130 In light of the foregoing, CLAIMANT respectfully requests the Arbitral Tribunal to
1) grant Claimants Procedural Request of 11 July 2015 [Statement of Claim, p. 7,
para. 27],
131 and to find that
2) Respondent has to Reimburse Claimant legal costs in the amount of USD 50.280,
3) Respondent has to pay to Claimant damages in the amount of the difference
between the price Claimant had paid to respondent for the 5.500 bottles of
diamond Mata Weltin 2014 and the price SuperWines paid to Respondent for the
same amount of bottles, and
4) RESPONDENT should bear the costs of this arbitration.
34
HOKKAIDO UNIVERSITY
CERTIFICATE
We hereby confirm that this Memorandum was written only by the persons whose names are
listed below and who signed this certificate.
Sapporo, Japan
10 December 2015
Counsel for CLAIMANT
Takayuki Harada
Yutaro Hata
Takuya Kakehi
Wakaba Kawamura
Meng Li
Fumina Tominaga
Kazuha Tsuchihashi
Sayuri Watanabe
35

Hokkaido University

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