comestibles finos ltd (respondent - cisgmoot.org law school claimant memoran… · harvard law...

FIFTEENTH ANNUAL VIS EAST INTERNATIONAL COMMERCIAL ARBITRATION MOOT

DELICATESY WHOLE FOODS SP (CLAIMANT)

v.

COMESTIBLES FINOS LTD (RESPONDENT)

MEMORANDUM FOR CLAIMANT

Counsel for CLAIMANT

ABHINAYA SWAMINATHAN DANIEL JOHNSON

ZARA DESAI CHLOE DO

VARUNI BALASUBRAMANIAM

HARVARD LAW SCHOOL

CAMBRIDGE, MASSACHUSETTS, USA

HARVARD LAW SCHOOL

TABLE OF CONTENTS

TABLE OF ABBREVIATIONS ............................................................................................................. i

TABLE OF AUTHORITIES ................................................................................................................ iii

STATEMENT OF FACTS ..................................................................................................................... 1

SUMMARY OF ARGUMENTS ............................................................................................................. 3

ARGUMENTS ........................................................................................................................................ 4

I. The Tribunal should not decide on the challenge of Mr. Prasad, but if it does, it should do so with his participation .......................................................................................................................... 4

A. The Tribunal does not have the authority to decide on the challenge of Mr. Prasad ............................ 5

1. The UNCITRAL Rules, which govern this arbitration, do not grant the Tribunal the power to decide on the challenge of Mr. Prasad ............................................................................................................... 5

2. The Parties’ Dispute Resolution Clause did not exclude the Challenge Procedure provided for in the UNCITRAL Rules .......................................................................................................................................... 6

i. The Parties did not expressly derogate from the Challenge Procedure ............................................ 6

ii. Following the Challenge Procedure is consistent with the Parties’ exclusion of arbitral institutions .......................................................................................................................................................... 7

3. The Tribunal should permit the Parties to designate an appointing authority to consider the challenge, in accordance with the UNCITRAL Rules ..................................................................................... 8

B. Even if the Tribunal assumes jurisdiction, it should decide on the challenge of Mr. Prasad with his participation, as required by the Model Law ......................................................................................................... 9

1. The Model Law requires that the entire Tribunal, including Mr. Prasad, decide the challenge .......... 9

2. Excluding Mr. Prasad from the challenge decision would be inefficient and would harm the integrity of the arbitral process ......................................................................................................................... 10

II. The Tribunal should reject RESPONDENT’s challenge to Mr. Prasad ...................................... 11

A. RESPONDENT failed to object in a timely manner or otherwise waived consideration of the circumstances underlying the challenge ............................................................................................................... 11

1. The Rules prohibit consideration of circumstances known 15-days before the initiation of a challenge .............................................................................................................................................................. 11

2. RESPONDENT knew about all the circumstances it cites before the 15-day window ........................ 12

i. RESPONDENT knew of Mr. Prasad’s publication on or before 27 August 2017, meaning this circumstance was raised out of time ........................................................................................................... 13

ii. RESPONDENT knew of Mr. Prasad’s prior appointments by Mr. Fasttrack’s law firm on or before 31 July 2017, meaning these circumstances were raised out of time ........................................ 13

iii. RESPONDENT knew that Mr. Prasad’s partners would continue to accept instructions involving related companies before 31 July 2017 and waived objections to this practice ................. 13

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iv. RESPONDENT knew of a possible connection between Mr. Prasad and Findfunds on or before 27 August 2017 .................................................................................................................................. 14

B. Even if RESPONDENT’s challenge were timely, it should be rejected for lack of merit ..................... 14

1. The Rules supply the exclusive standard by which challenges are determined .................................. 14

i. UNCITRAL Rules Art. 12(1) requires objective doubts as to impartiality and independence .. 14

ii. Contrary to RESPONDENT’s assertion, the standard supplied by the IBA Guidelines is inapplicable and fundamentally incompatible with the Rules ................................................................. 15

2. Mr. Prasad is impartial and independent .................................................................................................. 16

i. Mr. Prasad is impartial ........................................................................................................................... 16

ii. Mr. Prasad is independent .................................................................................................................... 17

a. Mr. Prasad is not dependent on Mr. Fasttrack’s law firm .......................................................... 18

b. Mr. Prasad is not dependent on appointments in Findfunds-related cases ............................. 18

c. Mr. Prasad is not dependent on his partner’s Findfunds-related case ...................................... 19

3. CLAIMANT’s conduct has no bearing on the challenge standard .......................................................... 19

III. CLAIMANT’s standard conditions govern the Contract between the Parties ........................... 20

A. CLAIMANT’s Sales Offer, incorporating CLAIMANT’s standard conditions, constituted the initial offer that RESPONDENT accepted, thus concluding a binding contract ........................................................ 20

1. CLAIMANT’s Sales Offer was a valid initial offer that included CLAIMANT’s standard conditions . 21

2. RESPONDENT’s standard conditions were not part of a valid offer and therefore not incorporated into the Parties’ Contract .................................................................................................................................. 22

3. Ms. Ming’s 7 April 2014 email was an acceptance, thus concluding a binding Contract between the Parties incorporating CLAIMANT’s standard conditions .............................................................................. 23

B. Even if the Invitation to Tender were an offer, CLAIMANT’s standard conditions still govern the Contract .................................................................................................................................................................... 24

1. Even if the Invitation to Tender were an offer, CLAIMANT’s Sales Offer was a counter-offer that RESPONDENT validly accepted ........................................................................................................................ 24

2. Under both the knock-out rule and the last-shot rule, RESPONDENT’s standard conditions do not govern the Contract ........................................................................................................................................... 25

i. Under the last-shot rule, CLAIMANT’s standard conditions govern the Contract ........................ 26

ii. Even applying the knock-out rule, RESPONDENT’s standard conditions do not govern the Contract, where they differ from CLAIMANT’s standard conditions ..................................................... 26

IV. Even if Respondent’s General Conditions apply, CLAIMANT was only required to use best efforts under the UNIDROIT Principles, and in any event, CLAIMANT fulfilled its contractual obligations under CISG Art. 35 ......................................................................................................... 26

A. Under UNIDROIT, CLAIMANT fulfilled its contractual obligations by using its best efforts to ensure compliance by its suppliers ....................................................................................................................... 27

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1. Since the CISG does not speak to the distinction between a duty of specific result and a duty to use best efforts, UNIDROIT applies .............................................................................................................. 27

2. Pursuant to UNIDROIT Art. 5.1.5, CLAIMANT only had a duty to use best efforts to ensure compliance by its suppliers ............................................................................................................................... 28

i. The text of RESPONDENT’s General Conditions and Code of Conduct indicate that CLAIMANT only had a duty to use best efforts .............................................................................................................. 28

ii. The contractual negotiations suggest CLAIMANT’s duty was limited to using best efforts ........ 29

iii. The market price of the cakes indicates that CLAIMANT only had a duty to use best efforts .. 29

iv. Guaranteeing suppliers’ compliance would have entailed too high a risk for CLAIMANT, indicating that CLAIMANT only had a duty to use best efforts ............................................................... 29

3. CLAIMANT fulfilled its duty to use best efforts under UNIDROIT Art. 5.1.4(2) .............................. 30

B. In any event, CLAIMANT fulfilled its contractual obligations under CISG Art. 35 .............................. 30

1. CLAIMANT delivered conforming goods that were of the quantity, quality and description required by the Contract, in accordance with CISG Art. 35(1) .................................................................................. 31

2. Even if the contractual provisions regarding the goods were not sufficiently detailed, CLAIMANT’s goods satisfied the subsidiary requirements of CISG Art. 35(2) ................................................................ 32

i. CLAIMANT’s cakes were not required to be fit for a particular purpose ........................................ 33

ii. The cakes were of the quality represented by CLAIMANT ............................................................... 34

CONCLUSION .................................................................................................................................... 34

REQUEST FOR RELIEF ................................................................................................................... 35

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MEMORANDUM FOR CLAIMANT |i

TABLE OF ABBREVIATIONS

¶/¶¶ Paragraph/Paragraphs

§/§§ Section/Sections

Art./Arts. Article/Articles

Cir. Circuit

CISG United Nations Convention on Contracts for the International Sale of Goods

CISG-AC CISG Advisory Council

Cl. Clause

Cmt. Comment

CoC Code of Conduct

Ex. Exhibit

GC General Conditions

HKIAC Hong Kong International Arbitration Centre

ibid. Ibidem

IBA International Bar Association

ICC International Chamber of Commerce

ICDR International Centre for Dispute Resolution

ICSID International Centre for Settlement of Investment Disputes

LCIA London Court of International Arbitration

n. Note

No. Number

NoA Notice of Arbitration

NoC Notice of Challenge of Arbitrator

p./pp. Page/Pages

PCA Permanent Court of Arbitration

PO1 Procedural Order No. 1

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MEMORANDUM FOR CLAIMANT |ii

PO2 Procedural Order No. 2

R. Record

RNoA Response to Notice of Arbitration

SCC Stockholm Chamber of Commerce

UN United Nations

UNCITRAL United Nations Commission on International Trade Law

UN GCP United Nations Global Compact Principles

UNIDROIT International Institute for the Unification of Private Law

USD United States Dollar

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MEMORANDUM FOR CLAIMANT |iii

TABLE OF AUTHORITIES

PRIMARY SOURCES

Cited as Full Citation Paragraph(s)

A/10017 Report of the United Nations Commission on International Trade Law on the work of its eighth session (Geneva, 1-7 April 1975)

45

A/CN.9/97 Preliminary draft set of arbitration rules for optional use in ad hoc arbitration relating to international trade (UNCITRAL Arbitration Rules) (1975)

45

A/CN.9/246 Report of the Working Group on International Contract Practices on the work of its seventh session (New York, 6-17 February 1984)

20

CISG

United Nations Convention on the International Sale of Goods (1980)

67, 70, 71, 73, 74, 75, 78, 79, 88, 101, 106, 107, 109, 111, 112

CISG-AC Opinion CISG Advisory Council Opinion No. 13, Inclusion of Standard Terms under the CISG (Adopted 20 January 2013); http://www.cisg.law.pace.edu/cisg/CISG-AC-op13.html

75

CISG Secretariat Guide

CISG Secretariat Guide to CISG Article 14; https://www.cisg.law.pace.edu/cisg/text/secomm/secomm-14.html

70

Explanatory Note to the Model Law

Explanatory Note by the UNCITRAL Secretariat on the 1985 Model Law on International Commercial Arbitration as amended in 2006

19

HKIAC Rules as Appointing Authority

Hong Kong International Arbitration Centre Rules as Appointing Authority

16

IBA Guidelines

IBA Guidelines on Conflict of Interest in International Arbitration (2014)

44, 50, 57, 62

ICC Appointing Authority Rules

Rules of ICC as Appointing Authority 15, 16

LCIA Rules London Court of International Arbitration Rules (2014) 29

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MEMORANDUM FOR CLAIMANT |iv

Model Law UNCITRAL Model Law on International Commercial Arbitration with the 2006 amendments.

9, 20, 23, 24

PCA Designation and Appointing Authority Rules

Permanent Court of Arbitration’s Procedures for “Designation of Appointing Authority” and “PCA Sectretary-General as Appointing Authority”

https://pca-cpa.org/en/services/appointing-authority/designation-of-appointing-authority/; https://pca-cpa.org/en/services/appointing-authority/pca-secretary-general-as-appointing-authority/

16

Rules of ICC as Appointing Authority

Rules of ICC as Appointing Authority in UNCITRAL or other Ad Hoc Arbitration Proceedings, International Chamber of Commerce

15

SCC Rules Rules – The Arbitration Institute of the Stockholm Chamber of Commerce

29

Summary Records of 314th UNCITRAL Meeting

Summary Records of the 314th UNCITRAL Meeting, 7 June 1985

20

UNCITRAL Rules

UNCITRAL Arbitration Rules (As revised in 2010)

7, 9, 12, 18, 29, 31, 34, 45, 61

UNIDROIT

UNIDROIT Principles on International Commercial Contracts (2016 edition)

87, 91, 92, 96, 97, 98

CASES


Belgium

Gantry v. Research Consulting Marketing

Nivelles Commercial Court, 19 September 1995, not published, Cash No. R.G. 1707/93

68

Germany

Cloth Case Cloth case, Landgericht Regensburg 6 O 107/98 (24 September 1998)

110

Globes Case Globes case, Landgericht München 5 HK 3936/00 (27 February 2002)

110

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MEMORANDUM FOR CLAIMANT |v

Knitwear Case Knitwear Case, Amtsgericht [Petty Court] [AG] Kehl 3 C 925/93, Oct. 6, 1995 (F.R.G.)

79, 84

Machinery Case Machinery Case, German Federal Supreme Court, 31 October 2001, CISG-online 617, 2002 Internationales Handelsrecht 14

68

New Zealand Mussels Case

New Zealand Mussels Case, Bundesgerichtshof [German Federal Supreme Court] (8 March 1995)

108

Shoes Case Shoes Case, Landgericht Berlin 52 S 247/94 (15 September 1994)

112

Sweden

Korsnäs v. AB Fortum

Swedish Supreme Court: Korsnäs Aktiebolag v. AB Fortum Värme samägt med Stockholms stad, Case No. T-156-09, Decision of 9 June 2010.

53, 56

Switzerland

Decisions of 11 January 2010

Swiss Supreme Court AY v. X and X v. Y (Companion cases), Case T0/2 4A_256/2009 and T0/2 4A_258/2009, Decisions of 11 January 2010

56

United States

Chateau Des Charmes Wines LTD. V. Sabate USA Inc.

Chateau Des Charmes Wines LTD. V. Sabate USA Inc., 328 F.3d 528, 531 (9th Cir. 2003)

76

Norfolk Southern Railway Company v. Power Source Supply, Inc.

Norfolk Southern Railway Company v Power Source Supply, Inc., WD Pa, 25 July 2008, CISG-online 1776

83

China International Economic and Trade Arbitration Commission (CIETAC)

Linseed Cake Case Linseed Cake case, CIETAC Arbitration Award, 9 January 1993

104

International Center for Settlement of Investment Disputes (ICSID)

Canfor v. US, ICS Submission

Canfor v. U.S., Undated Decision of March 2003; ICS Submission in Relation to Mr. Stanimir A. Alexandrov, 6 November 2009

50

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MEMORANDUM FOR CLAIMANT |vi

Lemire v. Ukraine Lemire v. Ukraine, ICSID Case No. ARB/06/18, Challenge Decision of 23 September 2008

38

NSPI v. Venezuela Nova Scotia Power Incorporated v. Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/11/1, Challenge Decision of 31 March 2009 in relation to Prof. Sands

17

OPIC v. Venezuela OPIC Karimum Corporation v. The Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/14; Decision on the Proposal to Disqualify Professor Philippe Sands, 5 May 2011

47, 53

SGS v. Pakistan SGS Société Generale de Surveillance SA v. Islamic Republic of Pakistan, ICSID Case No. ARB/01/13, Decision on Claimant’s Proposal to Disqualify Arbitrator of 19 December 2002

50

Tidewater v. Venezuela

Tidewater Inc., Tidewater Investment SRL, Tidewater Caribe, C.A., et al. v. The Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/5; Decision on Claimants’ Proposal to Disqualify Professor Brigitte Stern, 23 December 2010

53

Universal Compression v. Venezuela

Universal Compression International Holdings, S.L.U. v. Bolivian Republic of Venezuela, ICSID Case No. ARB/10/9, Decision on the Proposal to Disqualify Professor Brigitte Stern and Professor Guido Santiago Tawil, Arbitrators, 20 May 2011.

47, 57

International Chamber of Commerce

ICC Case No. 12460 ICC Case No. 12460 (2004) 88



Other International Courts/ Tribunals

Challenge Decision of 11 January 1995

Challenge Decision of 11 January 1995, reprinted in (1997) XXII YCA 227, 234

47

Challenge Decision of 15 April 1993

Challenge Decision of 15 April 1993, Vol. XXII YBCA (1997), 222.

17

Challenge Decision of 25 September 1989

Decision of Appointing Authority of September 25, 1989, 21 Iran-US CTR 396, 398

33, 36

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MEMORANDUM FOR CLAIMANT |vii

Cofley v. Bingham Cofely Ltd v Bingham & Knowles Limited (2016) EWHC 240

53

ICS v. Argentina Inspection and Control Services Limited (United Kingdom) v. The Republic of Argentina, Decision on Challenge to Arbitrator, December 17, 2009

13, 17

Iran-US, Decision on the objections to Mr. N. Mangard

Decision on the objections to Mr. N. Mangard; Iran-US Claims Tribunal

13

National Grid v. Argentina

National Grid v. The Argentine Republic, UNCITRAL; Decision on the Challenge to Mr Judd L. Kessler, 3 December 2007

18

TANESCO v. IPTL Tanzania Electric Supply Company Limited v. Independent Power Tanzania Limited, ICSID Case No. ARB/98/8, Final Award (July 12, 2001).

51

SECONDARY SOURCES


Adams Kenneth A. Adams: A Manual of Style for Contract Drafting American Bar Association, Business Law Section (4th ed. 2017)

92

Binder Dr. Peter Binder, Analytical Commentary to the UNCITRAL Arbitration Rules (2013)

42, 45

BLACK’S Black's Law Dictionary 30

Bonell Micahel Joachim Bonell, The UNIDROIT Principles of International Commercial Contracts and CISG - Alternatives or Complementary Instruments? (1996)

89

Born Gary Born, International Arbitration: Law and Practice (2nd ed. 2014)

Caron David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules: A Commentary (2nd ed. May 2013)

6, 29, 30, 36, 42, 43, 47

Daele Karel Daele, Challenge and Disqualification of Arbitrators in International Arbitration (2012)

18, 52

DiMatteo (2004) Larry A. DiMatteo, Lucien Dhooge, Stephanie Greene, and Virginia Maurer, The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence,

68

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MEMORANDUM FOR CLAIMANT |viii

24 Nw. J. Int'l L. & Bus. 299, 440 (2004)

DiMatteo (2014) Larry A. DiMatteo, International Sales Law: A Global Challenge (2014)

70

El-Kosheri Ahmed S El Kosheri and Karim Y Youssef, "The Independence of International Arbitrators: An Arbitrator's Perspective." ICC Intl. Court of Arb. Bull., ICC Pub. 690 (2008)

46, 53

Fontaine Marcel Fontaine and Filip De Ly: Drafting International Contracts (2009)

86

Gill Judith Gill, The IBA Conflicts Guidelines – Who’s Using Them and How?, Dispute Resolution International Vol 1, June 2007

46

Giorgetti Chiara Giorgetti, The Arbitral Tribunal: Selection and Replacement of Arbitrators, Litigating International Investment Disputes: A Practitioner’s Guide (2014)

52

Goméz Alfonso Gómez-Acebo, Party-Appointed Arbitrators in International Commercial Arbitration (2016)

43

Hartkamp Arthur Hartkamp, The UNIDROIT Principles For International Commercial Contracts and the United Nations Convention on Contracts for the International Sale of Goods, in: Boele-Woelki/ Grosheide/ Hondius/ Steenhoff (eds.), Comparability and Evaluation (1994)

89

Leben Charles Leben, The Advancement of International Law; Bloomsbury Publishing (2010)

39

Perillo J.M. Perillo, UNIDROIT Principles of International Commercial Contracts: The Black Letter Text and a Review, 43 Fordham Law Review (1994)

89

Redfern Redfern and Hunter on International Arbitration, 6th Ed. (2015)

29, 43, 45, 47

Schroeter Art 14 Schlechtriem & Schwenzer: Commentary on the UN Convention on the International Sale of Goods (4th ed.), Schroeter Article 14

68, 71

Schroeter Art. 16 Schlechtriem & Schwenzer: Commentary on the UN Convention on the International Sale of Goods (4th ed.), Schroeter Article 19

80

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MEMORANDUM FOR CLAIMANT |ix


78


79, 83, 84

Schwarz Franz T. Schwarz & Christian W. Konrad, The Vienna Rules: A Commentary on International Arbitration in Austria (2009)

47

Schwenzer 35 Schlechtriem & Schwenzer: Commentary on the UN Convention on the International Sale of Goods (4th ed.), Schwenzer Article 35

103, 105, 107, 108, 109, 111, 112

van den Berg Prof. Albert Jan van den Berg, Report on Challenge Procedure, Reprinted in T. Varady et al., International Commercial Arbitration: A Transnational Perspective (2nd ed. 2003)

30

Viscasillas Pilar Perales Viscasillas, Battle of the Forms under the 1980 United Nations Convention on the International Sale of Goods: A Comparison with Section 2-207 UCC and the UNIDROIT Principles, 10 Pace Int'l L. Rev. 97 (1998)

82

Vogenauer Stefan Vogenauer: Commentary on the UNIDROIT Principles of International Commercial Contracts (2015)

91, 92

Von Goeler Jonas Von Goeler, Third-Party Funding in International Arbitration and its Impact on Procedure (2016)

58

Waincymer Jeffrey Waincymer, Procedure and Evidence in International Arbitration (2012)

2

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MEMORANDUM FOR CLAIMANT |1

STATEMENT OF FACTS

1. Delicatesy Whole Foods Sp (CLAIMANT) is a medium-sized manufacturer of fine bakery

products registered in Equatoriana [NoA ¶1]. Comestibles Finos Ltd (RESPONDENT; jointly, the

“Parties”) is a gourmet supermarket chain in Mediterraneo [ibid. ¶2]. In March 2014, RESPONDENT’s

Head of Purchasing, Ms. Annabelle Ming, and CLAIMANT’s Head of Production, Mr. Kapoor Tsai,

discussed a potential business relationship at the Cucina Food Fair in Danubia [ibid. ¶3].

2. RESPONDENT sent CLAIMANT an Invitation to Tender for the delivery of chocolate cakes

[Ex. C1] with attached Tender Documents, including RESPONDENT’s General Conditions [“GC”]

and Code of Conduct [“CoC”] for Suppliers [Ex. C2]. On 27 March 2014, CLAIMANT submitted its

Sales Offer, noting that the offer was “subject to” the application of its own GC and Supplier CoC

and referring RESPONDENT to these documents on CLAIMANT’s website [Ex. C4]. CLAIMANT

offered to produce the cakes in the size requested by RESPONDENT (3 inches in diameter, 120 grams

in weight), but in a different shape. CLAIMANT also offered different payment terms [ibid.].

3. On 7 April 2014, Ms. Ming emailed Mr. Tsai congratulating CLAIMANT on its successful

Sales Offer [Ex. C5] and the Parties entered into a binding contract [hereinafter, the “Contract”].

Ms. Ming noted that she had read CLAIMANT’s “impressive Codes of Conduct,” that the Parties

“share[d] the same values,” and that CLAIMANT’s standards were a “decisive element” in awarding

CLAIMANT the Contract [Ex. C5]. She also accepted the Sales Offer’s changes to the payment terms

and cakes’ shape [ibid.]. RESPONDENT supplied the Dispute Resolution Clause, which provided for

arbitration under the UNCITRAL Arbitration Rules “without the involvement of arbitral

institutions” [Ex. C2 §20]. CLAIMANT informed RESPONDENT that Claimant’s contract model had

moved towards institutional arbitration, but RESPONDENT, after consulting its lawyers, insisted on

not involving arbitral institutions due to confidentiality concerns [Ex. R5].

4. From 1 May 2014 to 27 January 2017, CLAIMANT delivered 20,000 high-quality cakes daily to

RESPONDENT [Ex. C5; Ex. C6]. For over two years, RESPONDENT sold the cakes with no

complaints [NoA ¶6]. During this time, CLAIMANT maintained a pristine reputation for the

supervision of its supply chain [PO2 ¶34]. CLAIMANT required all its suppliers to sign its

comprehensive Supplier CoC [Ex. C8]. It commissioned Egimus AG, an internationally reputed

firm, to assess its cocoa supplier, Ruritania Peoples Cocoa GmbH [hereinafter, “Peoples Cocoa”], to

determine if the supplier complied with United Nations Global Compact Principles [“UN GCP”] as

per CLAIMANT’s Supplier CoC [Ex. C8; PO2 ¶33]. Egimus AG certified that Peoples Cocoa was

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compliant [Ex. C8]. CLAIMANT also imposed detailed reporting obligations on Peoples Cocoa [ibid.].

5. On 23 January 2017, an Equatorianian newspaper reported that many certifications of

sustainable production methods in Ruritania were forged or obtained by bribery [Ex. C7].

RESPONDENT emailed CLAIMANT on 27 January 2017 withholding payment on cakes that

CLAIMANT had already delivered and threatening to terminate the Contract absent CLAIMANT’s

confirmation that none of CLAIMANT’s suppliers had falsified their certifications [Ex. C6].

CLAIMANT promptly conducted a thorough investigation [Ex. C8] and was shocked to discover that

Peoples Cocoa was involved in the falsification scandal [Ex. C9]. CLAIMANT immediately terminated

its contract with the supplier [ibid.] and informed RESPONDENT of its discovery on 10 February 2017

[ibid.]. Out of good will, CLAIMANT offered to accept the return of unsold cakes and reduced

payment for the 600,000 cakes RESPONDENT had not yet paid for [Ex. C9; NoA ¶16]. However,

without regard to the Parties’ fruitful relationship of over two years, and CLAIMANT's prompt

response to an unforeseeable breach by an external supplier, RESPONDENT unilaterally terminated

the Contract on 12 February 2017 and refused to pay for cakes it had already accepted [Ex. C10].

6. CLAIMANT filed its Notice of Arbitration [“NoA”] on 30 June 2017 and appointed

Mr. Rodrigo Prasad to the Tribunal [ibid. ¶14]. Mr. Prasad disclosed that Mr. Fasttrack’s firm had

previously appointed him twice; neither case involved Mr. Fasttrack and both cases were concluded

at the time of these proceedings [Ex. C11, hereinafter “Prasad First Declaration”]. He further stated

that his law partners would “continue current matters and accept further instructions involving the

parties as well as related companies” [ibid.]. RESPONDENT had no objections [RNoA ¶22].

7. On 27 August 2017, RESPONDENT discovered, through metadata in CLAIMANT’s NoA, that

CLAIMANT was funded by a third party [NoC ¶2; PO2 ¶11]. CLAIMANT disclosed that its third-party

funder was Funding 12 Ltd, whose main shareholder is Findfunds LP [R. at 35]. On 11 September

2017, Mr. Prasad promptly disclosed that he had served as an arbitrator in two cases indirectly

funded by Findfunds [R. at 36, hereinafter “Prasad Second Declaration”]. Both arbitrations

concluded in August 2017 and addressed issues unrelated to the current proceedings [ibid.].

Mr. Prasad also disclosed that his law firm had merged with Slowfood, and that a Slowfood partner

was representing a client in an arbitration funded by Findfunds [ibid.]. Mr. Prasad then assured that

“all necessary precautions have been put in place to avoid any contact with that case” [ibid.].

8. On 14 September 2017, RESPONDENT filed a Notice of Challenge, challenging Mr. Prasad

[NoC]. CLAIMANT, in light of the already severely delayed payment, agreed to appoint an alternate

arbitrator in order to keep the proceedings moving forward [PO1 ¶1].

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SUMMARY OF ARGUMENTS

1. RESPONDENT has raised a dilatory challenge to CLAIMANT’s chosen arbitrator, Mr. Rodrigo

Prasad. The Tribunal should decline to consider the challenge for lack of jurisdiction, in accordance

with the UNCITRAL Rules that govern this arbitration. The Parties did not exclude the challenge

procedure in Art. 13(4) of the UNCITRAL Rules and the Tribunal should direct the Parties to

designate an appointing authority to consider the challenge. Should the Tribunal find that it has

jurisdiction over the challenge, quod non, it should decide the challenge with Mr. Prasad's

participation, as required by the lex arbitri in Danubia, the UNCITRAL Model Law. [I].

2. In the event that the Tribunal considers the challenge, it should deny it for two reasons

under the UNCITRAL Rules, which provide the exclusive standard for deciding challenges. First,

UNCITRAL Rules Art. 13(1) requires that challenges must be brought within 15-days of the

circumstances becoming known to the challenging party. RESPONDENT was aware of all

circumstances it cites more than 15 days before submitting its challenge. Thus, the challenge was

untimely. Second, UNCITRAL Rules Art. 12(1) requires that RESPONDENT must raise justifiable

doubts as to Mr. Prasad’s independence or impartiality. None of the circumstances cited by

RESPONDENT create justifiable doubts. [II].

3. Notwithstanding the outcome of RESPONDENT’s procedural maneuvers, the Tribunal should

find for CLAIMANT on the merits. Under the CISG, which is the applicable law, CLAIMANT’s

standard conditions govern the Contract. CLAIMANT’s Sales Offer, which was subject to

CLAIMANT’s standard conditions, was the operative offer. RESPONDENT’s acceptance of this offer

bound the Parties to CLAIMANT’s standard conditions. Alternatively, even if CLAIMANT’s Sales Offer

were a counter-offer, RESPONDENT’s standard conditions still do not apply under both the

“last-shot” and “knock-out” rules commonly used to address conflicting standard conditions. [III].

4. Even under RESPONDENT’s standard conditions, CLAIMANT was only required to use best

efforts to ensure its suppliers’ compliance. Since the CISG does not speak to the distinction between

a duty of specific results and a duty to use best efforts, the UNIDROIT Principles apply. Applying

UNIDROIT Art. 5.1.5, the text of RESPONDENT’s standard conditions, the contractual negotiations,

the market price of the cakes, and the high risk to CLAIMANT all indicate that CLAIMANT only had a

duty to exercise best efforts, which it met. In any event, CLAIMANT fulfilled its contractual

obligations under CISG Art. 35. [IV]. Accordingly, CLAIMANT is entitled to the outstanding

purchase price and damages for RESPONDENT’s unjustified termination of the Contract.

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ARGUMENTS

I. THE TRIBUNAL SHOULD NOT DECIDE ON THE CHALLENGE OF MR. PRASAD, BUT IF IT DOES, IT SHOULD DO SO WITH HIS PARTICIPATION

1. In an attempt to further delay payment owed to CLAIMANT, RESPONDENT has raised a

challenge to CLAIMANT’s chosen arbitrator, Mr. Prasad, months after his appointment to this

Tribunal [NoA (appointing Mr. Prasad on 30 June 2017); NoC (filing the challenge on 14 September

2017)]. Both CLAIMANT and Mr. Prasad have thoroughly laid out the compelling reasons why the

appointment should be preserved [Refusal to Step Down, R. at 43; Refusal to Agree to Removal, R. at 45].

However, RESPONDENT persists in challenging Mr. Prasad. Further, RESPONDENT has asked the

Tribunal to consider this challenge in a manner inconsistent with the procedural rules governing this

arbitration. The Tribunal should accordingly decline to consider the challenge for lack of

jurisdiction. Should the Tribunal determine that it has jurisdiction, quod non, it should decide the

challenge with Mr. Prasad’s participation, for the reasons set forth below.

2. The lex arbitri of the Parties’ chosen seat of arbitration, Danubia, is the UNCITRAL Model

Law [hereinafter, the “Model Law”] [PO1 ¶3(4)]. The Model Law “recognizes the freedom of the

parties to determine, by reference to an existing set of arbitration rules or by an ad hoc agreement, the

procedure to be followed, subject to the fundamental requirements of fairness and justice”

[Explanatory Note to the Model Law ¶23]. Party autonomy is the most “fundamental aspect of all

aspects of arbitral procedure” [Waincymer p.31], so the Parties’ choice of procedural rules must be

given supreme importance.

3. The Parties agreed to conduct this arbitration “in accordance with the UNCITRAL

Arbitration Rules without the involvement of any arbitral institution” [RESPONDENT’s GC Cl. 20,

R. at 12] [hereinafter, the “Dispute Resolution Clause”]. The UNCITRAL Arbitration Rules

[hereinafter, the “UNCITRAL Rules”] provide for a challenge procedure in Art. 13(4) [hereinafter,

the “Challenge Procedure”] that requires that arbitrator challenges be submitted to an appointing

authority to be designated by the parties or, absent parties’ agreement, by the Secretary-General of

the PCA. RESPONDENT cannot now insist on an inconsistent procedure based only on the phrase

“without the involvement of any arbitral institution,” which does not indicate derogation from the

Challenge Procedure [NoC ¶8]. Accordingly, the Tribunal does not have the authority to decide the

challenge of Mr. Prasad under the UNCITRAL Rules [A]. In the unlikely event that the Tribunal

finds that the Challenge Procedure does not apply, then the Tribunal must turn to the lex arbitri—

the Model Law—which in turn provides that the Tribunal must decide on the challenge with the

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participation of the challenged arbitrator, Mr. Prasad [B].

A. The Tribunal does not have the authority to decide on the challenge of Mr. Prasad

4. The UNCITRAL Rules do not grant the Tribunal the power to decide on the challenge of

Mr. Prasad [1 ]. Contrary to RESPONDENT’s claims, the Parties did not exclude the Challenge

Procedure, outlined in Art. 13(4) [2 ]. The Tribunal should accordingly permit the Parties to

designate an appointing authority to consider the challenge, or if the Parties cannot agree, refer the

task of designating an authority to the Secretary-General of the PCA, as per UNCITRAL Rules

Art. 6 [3 ].

1. The UNCITRAL Rules , which govern this arbi trat ion, do not grant the Tribunal the power to dec ide on the chal l enge o f Mr. Prasad

5. The Parties consented to arbitration “in accordance with the UNCITRAL Arbitration Rules

without the involvement of any arbitral institution and excluding the application, direct or by

analogy, of the UNCITRAL Rules on Transparency” [Dispute Resolution Clause]. Given the Parties’

express adoption of the Rules and the lack of any stipulations regarding arbitrator challenges, the

Challenge Procedure applies to this arbitration.

6. The UNCITRAL Rules, in Art. 13(4), provide:

If, within 15 days from the date of the notice of challenge, all parties do not agree to the challenge or the challenged arbitrator does not withdraw, the party making the challenge may elect to pursue it. In that case, within 30 days from the date of the notice of challenge, i t shal l seek a dec i s ion on the chal l enge by the appointing authori ty [emphasis added].

This appointing authority is a “third-party” designated for the purpose of assisting with the

constitution of the arbitral tribunal [Caron p.192]. The UNCITRAL Rules therefore explicitly vest the

authority to decide arbitrator challenges in an appointing authority, and not the Tribunal.

7. The UNCITRAL Rules provide for three ways to determine the appropriate appointing

authority: (1) The parties can designate an appointing authority at the time they conclude their

agreement to arbitrate; (2) if the parties have not designated an appointing authority in advance,

either party may at any time propose the names of one or more institutions or persons to serve as an

appointing authority; (3) if parties do not agree on an appointing authority within 30 days after

proposal of names of such institutions or persons, then any party may request the Secretary-General

of the PCA to designate an appointing authority [UNCITRAL Rules Art. 6]. Here, since the Parties

have not yet designated an appointing authority, they should identify a mutually agreeable authority

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to decide RESPONDENT’s challenge.

2. The Part ies ’ Dispute Resolut ion Clause did not exc lude the Chal lenge Procedure provided for in the UNCITRAL Rules

8. RESPONDENT seeks to retroactively read nonexistent provisions into the Parties’ agreement

by claiming that the Parties excluded the Challenge Procedure in UNCITRAL Rules Art. 13(4) [NoC,

p.39, ¶8]. This is plainly not the case. The Parties never discussed any modifications to the Challenge

Procedure and did not expressly exclude it in the Dispute Resolution Clause [i ]. Contrary to

RESPONDENT’s assertion, following the Challenge Procedure is entirely consistent with the Parties’

intent to exclude institutional involvement [i i ].

i. The Parties did not expressly derogate from the Challenge Procedure

9. Both the UNCITRAL Rules and the lex arbitri empower the Parties to choose the procedure

by which arbitrator challenges should be decided. The UNCITRAL Rules provide, in Art. 1(1) that,

parties can agree to arbitrate under these rules, “subject to such modifications as the parties may

agree.” While UNCITRAL Rules Art. 1(3) prohibits modifications that derogate from mandatory

provisions in the relevant lex arbitri, the Model Law, provides that parties are “free to agree on a

procedure for challenging an arbitrator” [Model Law Art. 13(1)]. The Parties thus had the ability to

derogate from the Art. 13(4) Challenge Procedure. They elected not to do so.

10. Crucially, the Parties were aware of their procedural autonomy under the UNCITRAL Rules

and the Model Law. This is evidenced by the fact that the Parties chose to exercise said autonomy in

two ways: first, by excluding the involvement of arbitral institutions and second, by excluding the

application of the UNCITRAL Rules on Transparency [Dispute Resolution Clause]. In fact,

RESPONDENT supplied the exact language of the Dispute Resolution Clause [Ex. C3; Ex. R4].

RESPONDENT, a sophisticated international business entity, specifically consulted its attorneys about

the Dispute Resolution Clause. [Ex. C3; Ex. R4 (noting that RESPONDENT’s representative,

Ms. Ming, contacted RESPONDENT’s legal department to discuss the Dispute Resolution Clause)]. If

RESPONDENT wished to exclude the application of the Challenge Procedure, it had ample

opportunity to do so by modifying the language of the Dispute Resolution Clause drafted and

approved by its own legal department. Yet, RESPONDENT offered no such modification.

11. Further, RESPONDENT cannot claim that the Parties consented to exclude a procedure that

they never discussed. During negotiations, RESPONDENT’s representative noted, “Apparently we

[the RESPONDENT] have never had any problem concerning the composition of arbitral tribunals

and our legal department was confident that the existing arbitration clause would not cause any

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problems” [Ex. C1]. In response, CLAIMANT’s representative noted, “[CLAIMANT] is certain that we

will be able to overcome any problems relating to the constitution of the arbitral tribunal even

without institutional support” [Ex. C3]. This was the full extent of the Parties’ conversation. The

Tribunal should not retroactively read meaning into the Parties’ lack of discussion regarding the

challenge procedure in the manner RESPONDENT suggests. Instead, to preserve party autonomy, this

Tribunal should turn to Parties’ actual expression of consent to the UNCITRAL Rules and use the

Challenge Procedure provided therein.

ii. Following the Challenge Procedure is consistent with the Parties’ exclusion of arbitral institutions

12. RESPONDENT mistakenly claims that the phrase, “without the involvement of any arbitral

institution” in the Dispute Resolution Clause precludes the applicability of the Challenge Procedure

[NoC, p.39, ¶8]. To the contrary, UNCITRAL Rules Art. 6 expressly provides “a party may at any

time propose the name or names of one or more institutions or persons…one of whom would serve

as appointing authority” [emphasis added]. Excluding institutional involvement does not exclude the

involvement of individuals as appointing authorities. The Parties’ exclusion of arbitral institutions

therefore has no bearing on the question of whether the Challenge Procedure applies, since the

Challenge Procedure merely requires that challenges be referred to an appointing authority, without

regard to whether such authority is an institution or individual [UNCITRAL Rules Art. 13(4)].

13. It is well-settled practice to appoint individuals as appointing authorities where the parties so

prefer. Individuals who have decided challenges as the appointing authority pursuant to the

Challenge Procedure include: Judge Pescatore, former judge of the European Court of Justice

[Challenge Decision of 15 April 1993 p.222]; Judge Tomka, judge in the International Court of Justice

[NSPI v. Venezuela]; and Mr. Sekolec, former Secretary-General of UNCITRAL [ICS v. Argentina].

Here, referring the challenge to an appointing authority is compatible with the Parties’ wish to

exclude arbitral institutions.

14. Further, CLAIMANT only agreed to exclude the involvement of arbitral institutions upon

RESPONDENT’s insistence [Ex. C3]. CLAIMANT itself had, in the past, faced difficulties when

conducting an ad hoc arbitration and had moved its contract model away from ad hoc arbitration

towards institutional arbitration [Ex. R4]. Still, CLAIMANT courteously agreed to exclude institutional

involvement upon RESPONDENT’s insistence because RESPONDENT cited a prior unpleasant

experience with an arbitral institution [see Ex. C3; Ex. R5]. Designating an individual to serve as an

appointing authority does not implicate RESPONDENT’s confidentiality concerns with regards to

arbitral institutions. It would be illogical to extend the exclusion of arbitral institutions—undertaken

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solely for RESPONDENT’s benefit and to serve a limited purpose—to the exclusion of individuals

capable of serving as appointing authority as well.

15. In any event, designating an appointing authority for the limited purpose of considering an

arbitrator challenge does not implicate the same confidentiality concerns as selecting an institution

to conduct an entire arbitration. For example, the ICC only requires that the request to serve as

appointing authority be accompanied by “all the information that the requesting party deems

appropriate to allow the Court to make the requested appointment” [Rules of ICC as Appointing

Authority Art. 2(2)]. The Parties can therefore submit only essential information to the appointing

authority in a manner that respects RESPONDENT’s confidentiality concerns.

16. Even if the Parties are not able to agree on an individual to serve as appointing authority,

either Party may refer the matter to the Secretary-General of the PCA in full compliance with the

Dispute Resolution Clause and the UNCITRAL Rules. In case it becomes necessary to refer this

matter to the Secretary-General of the PCA for the narrow purpose of designating an appointing

authority, the PCA would not be an “arbitral institution” for the purposes of the Dispute Resolution

Cluase. Most arbitral institutions, including the PCA, have a separate set of rules governing their

function as appointing authorities, different from the rules governing institutional arbitrations [see,

e.g., LCIA, ICC, HKIAC], demonstrating that the two functions are distinct from one another.

17. Following the Challenge Procedure, all the way up to referring the designation of an

appointing authority to the Secretary-General of the PCA, is therefore perfectly compliant with the

Dispute Resolution Clause.

3. The Tribunal should permit the Part i es to des ignate an appoint ing authori ty to consider the chal l enge , in accordance with the UNCITRAL Rules

18. Anticipating that parties, as in this case, may sometimes fail to designate an appointing

authority in advance, Art. 6(1) of the Rules provides that “a party may at any t ime propose the

name or names of one or more institutions or person [to] serve as appointing authority” [emphasis

added]. In international arbitration practice, parties have the flexibility to choose an appointing

authority after arbitration has commenced. For example, in National Grid v. Argentina, the parties had

initially agreed to refer challenges to the ICC Court, which was the duly designated appointing

authority under the applicable UNCITRAL Rules. However, when Argentina subsequently no

longer wanted to submit an arbitrator challenge to the ICC Court, Argentina, in agreement with

National Grid, submitted the challenge to an LCIA division [Daele p.179, n.32]. Similarly in this case,

the Parties can designate an appointing now that RESPONDENT has initiated a challenge.

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Accordingly, the Tribunal should direct the Parties to identify a mutually agreeable appointing

authority and, absent mutual agreement, to refer the matter to the Secretary-General of the PCA.

B. Even if the Tribunal assumes jurisdiction, it should decide on the challenge of Mr. Prasad with his participation, as required by the Model Law

19. In the unlikely event the Tribunal finds that the Challenge Procedure does not apply, then

the Tribunal must turn to the lex arbitri, i.e., the Model Law [Model Law Explanatory Note (B)(3]. The

Model Law requires that the entire Tribunal, including the challenged arbitrator, decide the challenge

[1 ]. Further, excluding Mr. Prasad from participating in the challenge decision would be inefficient

and disruptive to the integrity of the arbitral process [2 ].

1. The Model Law requires that the ent ire Tribunal , inc luding Mr. Prasad, dec ide the chal l enge

20. If, contrary to CLAIMANT’s submissions, the Tribunal finds that the Parties excluded the

Challenge Procedure in the Rules, it must then apply the fallback procedure in the Danubia

arbitration law (i.e., the Model Law). The express text of Model Law Art. 13(2) states, “[u]nless the

challenged arbitrator withdraws from his office or the other party agrees to the challenge, the arbitral

tribunal shall decide on the challenge.” The travaux preparatoires of Model Law Art. 13 further show

that Art. 13(2) refers to the ent ire tribunal, including the challenged arbitrator. In its Report of

March 6, 1984, the Working Group agreed that “the decision [entrusted to the arbitral tribunal by

Art. 13(2)] was entrusted to all members of the tribunal, including the challenged arbitrator”

[A/CN.9/246]. Similarly, in the 314th meeting of the UNCITRAL Commission, the Chairman of

the Commission noted that “there was a general feeling that the challenged arbitrator should remain

and thus rule on the challenge” [314th meeting Summary Records (1985) p.436]. The Commission agreed

that the challenged arbitrator should participate in the decision.

21. RESPONDENT offers no concrete support for its contention that the Tribunal should deviate

from the normal procedure of submitting the challenge to the entire tribunal. Curiously,

RESPONDENT urges this Tribunal to exclude the Challenge Procedure in Art. 13(4), and at the same

time, it asks the Tribunal to look to Art. 13(4) to exclude Mr. Prasad from the challenge decision

[NoC ¶8 (where RESPONDENT argues that Mr. Prasad should be excluded because “Article 13 (4)

shows that the drafters of the UNCITRAL Arbitration Rules wanted to avoid that the challenged

arbitrator decides in its own cause.”)]. The Tribunal should not accept RESPONDENT’s contradictory

argument—either the Art. 13(4) Challenge Procedure applies, or it does not. In any event,

RESPONDENT is mistaken to argue that Mr. Prasad should be excluded because otherwise “he would

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be a judge in his own cause” [NoC ¶8]. RESPONDENT ignores the fact that Mr. Prasad is but one

member of a three-member Tribunal. Mr. Prasad’s participation is not dispositive of the decision on

whether he should remain a member of the Tribunal. RESPONDENT should join CLAIMANT in

placing its trust in the integrity of the arbitral tribunal.

2. Excluding Mr. Prasad from the chal l enge dec i s ion would be ine f f i c i ent and would harm the integr i ty o f the arbi tral process

22. Excluding Mr. Prasad would be an inefficient way to decide on the challenge. Without

Mr. Prasad, the Parties would be left with a two member Tribunal, allowing for the possibility of

deadlock, which would further delay proceedings. A deadlock would greatly harm CLAIMANT since

the payment owed to CLAIMANT is already significantly delayed. Further, Mr. Prasad is in the best

position to provide all the necessary information that the other Tribunal members may require. So, it

would be efficient to have the entire Tribunal deliberating the challenge with Mr. Prasad having the

opportunity to offer any necessary clarifications.

23. More importantly, excluding Mr. Prasad upsets the integrity of the arbitral process. The

Model Law, in Art. 18, mandates that “[t]he parties shall be treated with equality and each party shall

be given a full opportunity of presenting his case.” Excluding Mr. Prasad from the challenge

deliberations fundamentally upsets the equality of the parties. RESPONDENT expects that its chosen

arbitrator, Mr. Reitbauer, who “has articulated in an article a very critical view on third-party

funding, advocating inter alia extensive disclosure obligations,” will ensure that its challenge

succeeds [Refusal to Agree to Removal, R. at 46]. RESPONDENT seeks to gain an unfair advantage over

CLAIMANT by urging this Tribunal to deviate from the default Model Law procedure.

24. Finally, if RESPONDENT disagrees with the outcome after the entire three-member Tribunal

has decided on the challenge, RESPONDENT can still “request, within thirty days after having

received notice of the decision rejecting the challenge, the [local court] to decide on the challenge”

[Model Law Art. 13(3)]. RESPONDENT would therefore continue to have recourse to pursue its

challenge even after a decision from the plenary Tribunal. CLAIMANT, on the other hand, would face

irreparable harm if Mr. Prasad is not allowed to participate in the challenge decision.

25. For all these reasons, in the unlikely event that the Tribunal determines it has jurisdiction

over the challenge, it should decide on the challenge with Mr. Prasad’s participation, in accordance

with the lex arbitri and the principles of international commercial arbitration. Should the Tribunal

assume jurisdiction over RESPONDENT’s challenge and decide it in accordance with the Model Law

procedure, it should reject the challenge for the reasons set forth below.

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II. THE TRIBUNAL SHOULD REJECT RESPONDENT’S CHALLENGE TO MR. PRASAD

26. RESPONDENT has raised a meritless challenge accusing Mr. Prasad of partiality and

dependence [NoC ¶1]. These accusations against a highly respected arbitrator should be seen for

what they are—an all-too-common delaying tactic that has increased counsel fees, forced CLAIMANT

to appoint an alternate arbitrator, and further deferred CLAIMANT’s compensation.

27. In accordance with Arts. 12 and 13 of the UNCITRAL Rules, a successful challenge must

satisfy two conditions. First, the challenge must comply with the 15-day rule in Art. 13(1). Second,

under Art. 12(1), a reasonable person considering the circumstances must have justifiable doubts

about the arbitrator’s independence or impartiality. RESPONDENT has failed to satisfy either

necessary condition. RESPONDENT failed to submit its challenge in a timely manner or otherwise

waived its objections [A], and it failed to demonstrate justifiable doubts as to Mr. Prasad’s

impartiality or independence [B].

A. RESPONDENT failed to object in a timely manner or otherwise waived consideration of the circumstances underlying the challenge

28. The UNCITRAL Rules strictly prohibit consideration of circumstances known more than 15

days before the challenge submission [1 ]. All circumstances cited by RESPONDENT were known

before the 15-day window [2 ]. Consequently, the challenge should be rejected for being untimely.

1. The Rules prohibi t considerat ion o f c i r cumstances known 15-days be fore the ini t iat ion o f a chal l enge

29. The UNCITRAL Rules govern this arbitration [supra, Arguments ¶3]. Art. 13(1) of the Rules

requires a party to send notice of a challenge within 15 days after the party has been notified of the

appointment of the challenged arbitrator, or within 15 days after the circumstances giving rise to the

challenge became known to the party [see UNICTRAL Rules Art. 32 (stating that a failure to object

promptly “shall be deemed to be a waiver of the right”)]. The time limit “is applied strictly,” [Redfern

4.115], consistent with the purpose of Art. 13(1) to “ensure that the challenging party acts

expeditiously” [Caron p.243]. This strict timeliness requirement is consistent with international

arbitration practice [see, e.g., SCC Rules Art. 15(2) (failure to challenge within time limit waives right to

challenge); LCIA Rules Art. 32(1) (failure to object promptly waives objection)].

30. The drafting history of the 15-day rule emphasizes its intended strict application. The

preliminary draft of the 1976 UNCITRAL Rules stated that a challenge “should” be made within 15

days; however, the drafters replaced the permissive “should” with the imperative “shall” in the

adopted version [Caron pp.243–244; see BLACK’S, entries for ‘should,’ ‘shall’]. The substitution of the

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more forceful language highlights the importance of a timely challenge. The 15-day rule is essential

because tardy challenges result in damaging delays to the proceedings [Caron p.243]. The uniform

application of UNCITRAL Rules Art. 13(1) ensures arbitrations “take place with due dispatch” and

that delaying tactics “are reduced to a minimum” [van den Berg p.381].

31. In accordance with the implicit waivers in UNCITRAL Rules Arts. 13 and 32, it is widely

accepted that parties may waive their objections. If they do so, they are prohibited from raising

waived objections later in the hearing in accordance with the prohibition on self-contradiction (also

known as “venire contra factum proprium” and “l'interdiction de se contredire”) [see Leben p.39].

32. RESPONDENT did not initiate the challenge to Mr. Prasad within 15 days of his appointment.

To the contrary, RESPONDENT expressly consented to his appointment [RNoA, ¶22, p.26]. Thus,

RESPONDENT’s challenge can only be sustained if RESPONDENT came to know of the circumstances

it cites no more than 15 days prior to the challenge, an effective cutoff date of 30 August 2017.

33. Furthermore, when a party cites multiple circumstances giving rise to the challenge, Art.

13(1) allows consideration of only those circumstances that became known within the 15-day

window; it does not allow the consideration of all circumstances [see, e.g., Challenge Decision of 25

September 1989]. Accordingly, RESPONDENT cannot bootstrap time-barred circumstances to any

evidence that the Tribunal may find timely. To suggest otherwise would be a transparent attempt to

circumvent the clearly established rule.

2. RESPONDENT knew about al l the c i r cumstances i t c i t es be fore the 15-day window

34. Because each party bears the burden of proving the facts necessary for sustaining its claims

[see UNCITRAL Rules Art. 27], RESPONDENT must convince this Tribunal of its prior lack of

knowledge. RESPONDENT cites four circumstances giving rise to the challenge: Mr. Prasad’s

publication, repeat appointments by Mr. Fasttrack’s law firm, involvement of a third-party funder,

and the Slowfood partner’s continued appearance in a Findfunds-supported matter. However,

RESPONDENT knew of Mr. Prasad’s publication on or before 27 August 2017 [i ], knew of repeat

appointments by Mr. Fasttrack’s law firm on 30 June 2017 [i i ], knew of potential connections to a

third-party funder on or before 27 August 2017 [i i i ], and knew of and consented to the Slowfood

partner’s participation in the Findfunds-supported arbitration by 30 June 2017 [iv ]. Because they

arose prior to 30 August 2017, the tribunal should refuse to consider these circumstances and reject

RESPONDENT’s challenge.

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i. RESPONDENT knew of Mr. Prasad’s publication on or before 27 August 2017, meaning this circumstance was raised out of time

35. RESPONDENT expressly conceded positive knowledge of Mr. Prasad’s article prior to the

15-day window. RESPONDENT learned of Mr. Fasttrack’s metadata note on 27 August 2017, 18 days

prior to its challenge [PO2 ¶11]. As admitted by RESPONDENT in the challenge, the metadata refers

to Mr. Prasad’s “article on the irrelevance of [Corporate Social Responsibility] on the question of

conformity of goods” [NoC ¶3]. Thus, RESPONDENT must have known about the article on 27

August 2017, which is outside the 15-day window.

36. Furthermore, prior publication of an article raises sufficient doubts as to whether its

existence “became known” within the 15-day limit [see Caron p.245]. For instance, the Iran-U.S.

Claims Tribunal applied UNCITRAL’s 15-day rule to reject a challenge by Iran based on articles

appearing in India Today two years prior to the challenge. The tribunal concluded Iran knew of the

articles outside the 15-day limit despite a lack of direct evidence of Iran accessing the magazine

[Challenge Decision of 25 September 1989]. Mr. Prasad’s article was published in the year prior to this

present challenge [Ex. R4]. Additionally, the Vindobona Journal of International Commercial Arbitration

and Sales Law is a “leading journal” available “via all leading databases” as well as under the

“Publications” section of Mr. Prasad’s website [PO2 ¶14]. As is common practice in international

arbitration, RESPONDENT should have researched Mr. Prasad upon his appointment. RESPONDENT

cannot complain of its lack of knowledge at this late date.

ii. RESPONDENT knew of Mr. Prasad’s prior appointments by Mr. Fasttrack’s law firm on or before 31 July 2017, meaning these circumstances were raised out of time

37. RESPONDENT, by virtue of UNCITRAL Rules Art. 13(1), also waived consideration of

Mr. Prasad’s repeat appointments. RESPONDENT received Mr. Prasad’s declaration of impartiality

and independence containing a disclosure of the past appointments on 30 June 2017 [Prasad First

Declaration]. RESPONDENT acknowledged this declaration and did not object to the appointment of

Mr. Prasad in its response on 31 July 2017 [RNoA ¶22]. Therefore, RESPONDENT undoubtedly knew

of Mr. Prasad’s prior appointments at least 76 days prior to sending its challenge.

iii. RESPONDENT knew that Mr. Prasad’s partners would continue to accept instructions involving related companies before 31 July 2017 and waived objections to this practice

38. In his Declaration of Impartiality and Independence, Mr. Prasad reserved the right for his

colleagues to “continue current matters” and to “accept further instructions involving the Parties as

well as related companies, provided that these matters are not related to the [present] subject matter”

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[Prasad First Declaration]. On 31 July 2017, RESPONDENT explicitly accepted “the restrictions in [Mr.

Prasad’s] declaration of independence” [RNoA ¶22]. RESPONDENT’s acceptance has two effects.

First, it demonstrates RESPONDENT knew that Mr. Prasad’s partners would continue to accept

instructions in matters involving the Parties and related companies 76 days prior to the challenge.

Consideration of this circumstance would thus violate the 15-day rule. Second, acceptance of the

reservation means that RESPONDENT waived its future objections [see Lemire v. Ukraine (dismissing

ICSID challenge to arbitrator because advanced waiver allowed arbitrator’s law firm to represent an

involved party in an unrelated arbitration)]. The relationship of Mr. Prasad’s partner to Findfunds

falls within the text and intent of the reservation. The partner’s arbitration is unrelated to the present

subject matter [Prasad Second Declaration]; RESPONDENT makes no allegation to the contrary.

Therefore, the Tribunal should not consider this circumstance in light of RESPONDENT’s waiver.

iv. RESPONDENT knew of a possible connection between Mr. Prasad and Findfunds on or before 27 August 2017

39. The metadata RESPONDENT evaluated on 27 August 2017 [PO2 ¶11] contemplates a

connection between Mr. Prasad and Findfunds [NoC ¶3]. RESPONDENT thus knew of the relevant

circumstance 18 days prior to submitting its challenge and the Tribunal should not consider the

circumstance for being raised out of time.

B. Even if RESPONDENT’s challenge were timely, it should be rejected for lack of merit

40. The Tribunal may only consider those circumstances that became known to RESPONDENT

within fifteen days of the challenge [supra, Arguments ¶¶29–33]. Even if, arguendo, all circumstances

were considered, the Tribunal would find that the challenge lacks merit. The Rules permit removal

of an arbitrator only if the circumstances give rise to justifiable doubts as to the arbitrator’s

impartiality or independence [1 ]. Mr. Prasad’s circumstances do not give rise to such doubts [2 ].

Further, contrary to RESPONDENT’s assertion, CLAIMANT’s conduct does not bear on the evaluation

of Mr. Prasad’s impartiality and independence [3 ].

1. The Rules supply the exc lus ive s tandard by which chal l enges are determined

41. UNCITRAL requires objective doubts as to impartiality or independence [i ]. The standard

supplied by the IBA Guidelines is inapplicable [i i ].

i. UNCITRAL Rules Art. 12(1) requires objective doubts as to impartiality and independence

42. An arbitrator challenge “is an exceptional and serious mechanism” [Caron p.177].

UNICTRAL Rules Art. 12(1) specifies the exclusive grounds for a challenge [ibid. pp.228–30; see also

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Binder §12-005]. Art. 12(1) allows a challenge only “if circumstances exist that give rise to just i f iable

doubts as to the arbitrator’s impart ial i ty or independence” [emphasis added]. Tribunals applying the

Rules uniformly reject other bases for a challenge, characterizing it as “abundantly clear” that a

challenge pursuant to this standard is the “only method by which an arbitrator may be removed

from office” [Iran-US, Decision of 5 March 1982].

43. Only objective and serious grounds can raise the “justifiable doubts” necessary to sustain a

challenge. Commentators note that the inclusion of the word “justifiable” reflects UNCITRAL’s

“clear intention of establishing an objective standard” in arbitrator challenges [Redfern §4.96]. Caron,

Caplan, and Pellonpaa, for instance, write that “[w]hile a party’s subjective concerns about an

arbitrator’s bias may prompt a challenge, it is the objective reasonableness of these concerns that is

ultimately determinative” [Caron p.208]. The appointing authority in the oft-quoted Challenge Decision

of 11 January 1995 emphasized the importance of the objective standard, asking whether a

“reasonably well-informed person” would deem the circumstances “so serious as to warrant

removal.” While facts must be evaluated on a case-by-case basis, the vast majority of arbitrator

challenges are found unsuccessful [see Gómez §§6.43–44 & Figure 6.9], perhaps because a party’s

subjective concerns often result in no objective doubt [see Caron p.214].

ii. Contrary to RESPONDENT’s assertion, the standard supplied by the IBA Guidelines is inapplicable and fundamentally incompatible with the Rules

44. The Parties did not consent to the use of the IBA Guidelines. RESPONDENT cannot

unilaterally impose the IBA’s non-binding recommendations as dispositive rules. The IBA

Guidelines “are not legal provisions and do not override any applicable national law or arbitral rules

chosen by the parties” [IBA Guidelines, Introduction ¶6].

45. Furthermore, the IBA Guidelines are incompatible with the UNCITRAL Rules. The IBA

Guidelines purport to create an exhaustive list of situations in which disclosure should be made

[Redfern §4.85]. The drafters of the UNCITRAL Rules rejected this approach [see Binder §12-003], as

did most major arbitral institutions, including the ICC, ICDR, and LCIA [Redfern §4.85]. Indeed, the

current UNCITRAL Rules Art. 12(1) challenge standard was proposed alongside a sister provision

that specified the kinds of circumstances that would raise justifiable doubts [A/CN.9/97]. The sister

provision faced substantial opposition [see A/10017 ¶71–72]. A main objection was that listing

circumstances could be over inclusive, resulting in the exclusion of well-qualified arbitrators [see

ibid.]. The drafters accordingly chose a case-by-case analysis under the challenge standard, rejecting

the model of listing circumstances that was embraced by the IBA Guidelines. Indeed, even today,

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there is “reticence on behalf of arbitral institutions” to reference the IBA Guidelines [Redfern §4.89].

46. At best, the IBA Guidelines are a “useful compendium of the views of international

practitioners” [Gill p.67] that have come under serious criticism [see, e.g., El-Kosheri]. Nevertheless, for

the sake of argument, the Guidelines are addressed alongside the UNCITRAL challenge standard in

the arguments below.

2. Mr. Prasad is impart ia l and independent

47. The impartiality standard concerns the bias of an arbitrator, either in favor of one of the

parties or in relation to the issues in dispute [Redfern §4.77]. Impartiality is an inquiry into the state of

mind of an arbitrator [Caron p.213]. Independence, on the other hand, is concerned “exclusively with

questions arising out of the relationship between an arbitrator and one of the parties” [Redfern

§4.77]. More specifically, independence “means the absence of a close, substantial, recent and

proven relationship between a party and a prospective arbitrator” [Schwarz §7-094]. The

circumstances cited in a challenge must be evaluated according to this standard carefully and

individually, rather than cumulatively [see, e.g., OPIC v. Venezuela; Universal Compression v. Venezuela

(Although these cases were decided under the ICSID Rules, the ICSID challenge standard is similar

to the UNCITRAL standard, see ICSID Rules Art. 14(1))].

48. Viewed from the position of a reasonable third-party, the circumstances raise no justifiable

doubts as to Mr. Prasad’s impartiality [i ] or independence [i i ]. The challenge should be rejected.

i. Mr. Prasad is impartial

49. RESPONDENT alleges that Mr. Prasad’s article on the conformity of goods under CISG

Art. 35 indicates a lack of impartiality [NoC ¶5]. Contrary to RESPONDENT’s assertion, Mr. Prasad

does not take a definitive stance on any issue in the present case. Mr. Prasad notes that Corporate

Social Responsibility Codes may be sal i ent in various c ir cumstances , such as when the parties “not

only trade in goods but also in emotion,” which RESPONDENT is likely to argue in the present case

[Ex R4, p.40]. A reasonable third-party would interpret Mr. Prasad’s article as an expert analysis

manifesting a willingness to consider all sides.

50. Even if Mr. Prasad had made a more definitive statement, he is still impartial under the

predominant test developed in international arbitration practice. When considering prior

publications under the UNCITRAL standard of impartiality, the central question is whether the

arbitrator addressed the spec i f i c case in dispute [Canfor v. United States; ICS Submission of 6 November

2009; SGS v. Pakistan (ICSID)]. Even if, as RESPONDENT argues, the IBA Guidelines apply, they are

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in agreement with the UNCITRAL test—if an “arbitrator has previously published a general opinion

(such as in a law review...) concerning an issue which also arises in the arbitration,” [IBA Guidelines

Art. 4.1.1] the IBA Guidelines do not even call for disclosure of such a fact, much less a

disqualification [IBA Guidelines, Part II ¶7].

51. A reasonable observer would conclude that Mr. Prasad’s article expresses a general opinion

and makes no reference to the present proceeding. The general nature of Mr. Prasad’s article is

evident when read in comparison with the article in TANESCO v. IPTL. In that case, the article,

approved by the arbitrator and published by his law clerk, contained a detailed description of the

facts and issues of the case, made “anonymous” by using disparaging replacement names for the

parties. Even then, the deciding authority deadlocked on the question of whether this circumstance

constituted grounds for removal. In contrast, Mr. Prasad’s article does not even make a cursory

reference to the present case. Such a reference could not have been possible, seeing as Mr. Prasad’s

article was published the year prior to the current proceedings [Ex. R4]. Therefore, the Tribunal

should find that Mr. Prasad is impartial.

ii. Mr. Prasad is independent

52. RESPONDENT’s allegations of dependence based on Mr. Prasad’s tenuous connections to

Mr. Fasttrack’s law firm and Findfunds are meritless. Commentators widely observe that “the simple

fact of repeat appointment by the same party, without more, [does] not prove a manifest lack of

independence” [Giorgetti p.57]. It is simply a fact that “the pool of international arbitrators is not that

big,” necessitating repeat appointments of qualified arbitrators [Daele §6-157].

53. The test for independence focuses on whether the arbitrator is financially dependent on the

revenue generated from repeat appointments [ibid.; Giorgetti p.57–58]. This approach is illustrated

though the formative cases of Tidewater v. Venezuela and OPIC v. Venezuela, which presented an

influential framework for analyzing appointments [see Giorgetti p.58; Daele §6-158]. In Tidewater, the

deciding arbitrators began their analysis by explaining that whether multiple appointments

implicated independence was “a matter of substance, not of mere mathematical calculation,” and

rejected the IBA Guidelines invoked by the challenging party as “no more than a rule of thumb.”

The tribunal emphasized evaluating whether the arbitrator had developed a dependence on the

appointer, focusing on the resources of the arbitrator and his other activities. OPIC, following

Tidewater, stated that an arbitrator is independent if he has an “independent income source unrelated

to fees derived from his appointments” [see also Cofely v. Bingham; Korsnäs v. Ab Fortum (emphasizing

financial dependence as the key inquiry in an arbitrator challenge)].

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54. The facts of this case show that Mr. Prasad is independent of Mr. Fasttrack’s law firm [a ],

Findfunds [b ], and his partner’s connection to Findfunds [c ].

a. Mr. Prasad is not dependent on Mr. Fasttrack’s law firm

55. Mr. Prasad is the owner of a leading law firm with offices in Danubia and Ruritania [Prasad

Second Declaration] where he oversees 60 associates and works with 20 partners [PO2 ¶8]. Indeed, the

percentage of income Mr. Prasad derives from Mr. Fasttrack’s appointments is miniscule in relation

to his other income and cannot result in any justifiable doubts as to his financial independence. Mr.

Prasad derives less than 40% of his earnings from his work as an arbitrator [PO2 ¶10]. The fees from

the two cases where Mr. Prasad was appointed by Mr. Fasttrack’s firm “were only of minor value”

[ibid.]. Mr. Prasad is clearly financially independent of appointments by Mr. Fasttrack’s firm.

b. Mr. Prasad is not dependent on appointments in Findfunds-related cases

56. Mr. Prasad is similarly independent of Findfunds. As noted above, the question is whether

an arbitrator has been appointed so often as to create financial dependence on the appointing party.

The record indicates that Mr. Prasad has received less than 6.4% of his earnings over the last year

from appointments involving Findfunds [see PO2¶10], clearly a minor proportion of his earnings.

Furthermore, he was only appointed in Findfunds-related arbitrations twice [Prasad Second

Declaration], far lower than commonly accepted thresholds for finding justifiable doubts [see, e.g.,

Korsnäs v. Ab Fortum (rejecting a challenge to an award where an arbitrator had 12 repeat

appointments); Decisions of 11 January 2010 (rejecting challenges to awards where an arbitrator had 10

repeat appointments)].

57. Even if the IBA Guidelines applied, these circumstances fall under IBA Guideline 3.1.3,

which specifies this as an “Orange List” scenario where disclosure is required, but disqualification is

not prescribed [see also IBA General Standard 6(b)]. Indeed, the Guidelines merely state that items on

the orange list “may in the eyes of the parties” give doubts as to independence. However, as

discussed above, UNCITRAL requires objective doubts, not subjective ones. Tribunals confirm that

simply falling on the “Orange List” is insufficient for disqualification. In Universal Compression v.

Venezuela, for instance, the Tribunal held that a mere three appointments does not call an arbitrator’s

independence into question.

58. Furthermore, RESPONDENT misunderstands the practice and business model of Findfunds.

Findfunds has constructed a large and diversified portfolio of claims, always alongside co-investors

[PO2 ¶2], and sometimes as a non-controlling shareholder [ibid.]. This is indicative of a practice of

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passive investing, which is a type of funding arrangement that commentators suggest should be

treated very differently than oft-criticized active funding arrangements [von Goeler pp.60–72]. This

conclusion is bolstered by Findfunds’ practice of leaving the conduct of the arbitration “largely to

the parties involved” and exercising “little influence in the appointment of arbitrators” [PO2 ¶4]. A

reasonable person observing Findfunds’ passive investment model would find no justifiable doubts

as to Mr. Prasad’s independence, especially based on only two prior appointments.

c. Mr. Prasad is not dependent on his partner’s Findfunds-related case

59. Mr. Prasad is even less dependent on his partner’s Findfunds-related case. Prior to the

merger, that case generated approximately 5% of Slowfood’s annual revenue [PO2 ¶6]. Slowfood’s

merger with Prasad and Partners further diluted this share of revenue. Mr. Prasad’s direct interest in

this revenue is minuscule following division of profits among the firm’s 20 partners.

60. Two additional factors make this connection irrelevant to the question of independence.

First, the partner’s arbitration will conclude prior to oral arguments in the present case, if not the

submission of this brief [see Prasad Second Declaration]. Another partner’s concluded arbitration could

hardly give rise to justifiably doubts about Mr. Prasad’s independence in this case. Second,

Findfunds is not a controlling shareholder in the partner’s arbitration, owning only 40% of the

funding vehicle [PO2 ¶6], making Mr. Prasad’s dependence on Findfunds even less believable.

3. CLAIMANT’s conduct has no bearing on the chal l enge s tandard

61. CLAIMANT’s conduct does not impact the challenge to Mr. Prasad, contrary to

RESPONDENT’s unmoored assertion that CLAIMANT’s conduct requires a lower standard for

disqualification [NoC ¶7]. Here RESPONDENT is attempting to manufacture an obligation for

CLAIMANT that does not exist. CLAIMANT had no legal obligation to disclose its third-party funding

under the applicable law. Neither the UNCITRAL Rules nor the Model Law contains any disclosure

requirements for parties appointing an arbitrator. The only disclosure requirements can be found in

the Art. 11 of the Rules, which states that the arbitrator himself must make all disclosures likely to

give rise to justifiable doubts about his impartiality or independence. Mr. Prasad complied with all of

his obligations in this matter and RESPONDENT makes no allegation to the contrary [see Prasad First

Declaration; Prasad Second Declaration; Refusal to Step Down].

62. Even if, as RESPONDENT argues, CLAIMANT acted improperly pursuant to IBA General

Standard 7, CLAIMANT’s conduct still has no bearing on the challenge of Mr. Prasad [NoC ¶9]. As

described [supra, Arguments ¶42], the challenge standard in the UNCITRAL Rules provides the so le

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basis for disqualification of an arbitrator. These rules are focused solely on the independence and

impartiality of the arbitrator, not the conduct of the Parties. Thus, any action the parties may have

taken, even if wrongful, does not impact the challenge standard. For these reasons, should the

Tribunal assume jurisdiction, it should reject RESPONDENT’s challenge of Mr. Prasad.

III. CLAIMANT’S STANDARD CONDITIONS GOVERN THE CONTRACT BETWEEN THE PARTIES

63. Regardless of the outcome of RESPONDENT’s procedural maneuvers, the Tribunal should

find for the CLAIMANT on the merits of the dispute. From 1 May 2014 until 27 January 2017,

CLAIMANT delivered 20,000 high-quality chocolate cakes daily to RESPONDENT, who consistently

sold the popular cakes to customers without complaint [Ex. C5; Ex. C6; NoA ¶6]. Now, after having

sold millions of CLAIMANT’s cakes, RESPONDENT alleges that the goods delivered by CLAIMANT

were non-conforming under the Contract because they were produced using cocoa that was, without

CLAIMANT’s knowledge and in spite of its best efforts, not harvested in accordance with the ethical

principles in RESPONDENT’s GC and CoC [RNoA ¶1]. RESPONDENT then unilaterally terminated

the Contract and refused to pay for the 600,000 cakes delivered between 16 December 2016 and 27

January 2017 [Ex. C10]. Contrary to RESPONDENT’s assertions, CLAIMANT met its obligations under

the applicable standard conditions and delivered conforming goods. RESPONDENT has unjustly

withheld payment of USD 1,200,000 for goods it already received and distributed to its customers.

64. It is undisputed between the parties that the CISG governs the Contract [PO1 ¶3(4)]. Where

there is a gap in the CISG, the Tribunal should look to the UNIDROIT Principles on International

Commercial Contracts [hereinafter “UNIDROIT”]. UNIDROIT applies as a gap-filler because the

contract law of all relevant states is a “verbatim adoption” of UNIDROIT [PO1 ¶3(4)].

65. Under the applicable law, CLAIMANT’s standard conditions govern the Contract. The

Contract consists of CLAIMANT’s Sales Offer, which was the initial offer accepted by RESPONDENT’s

representative, Ms. Ming, on 27 March 2014 [A]. Even if RESPONDENT’s Invitation to Tender could

be construed as the initial offer, RESPONDENT’s standard conditions still do not apply under the

applicable law [B]. As a result, CLAIMANT’s standard conditions govern the Contract.

A. CLAIMANT’s Sales Offer, incorporating CLAIMANT’s standard conditions, constituted the initial offer that RESPONDENT accepted, thus concluding a binding contract

66. CLAIMANT’s Sales Offer, incorporating CLAIMANT’s standard conditions, was the initial offer

[1 ], while RESPONDENT’s Invitation to Tender was merely an invitation to make offers, sent to

CLAIMANT and other cake vendors [2 ]. Ms. Annabelle Ming accepted CLAIMANT’s Sales Offer by

email on 27 March 2014, thus concluding a binding contract that incorporated CLAIMANT’s standard

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conditions of business [3 ].

1. CLAIMANT’s Sales Offer was a val id ini t ia l o f f er that inc luded CLAIMANT’s s tandard condi t ions

67. For an offer to be valid, CISG Art. 14 requires that the offer is “addressed to one or more

specific persons,” “is sufficiently definite and indicates the intention of the offeror to be bound in

case of acceptance.” Art. 14 defines a sufficiently definite offer as one that “indicates the goods and

expressly or implicitly fixes or makes provision for determining the quantity and the price.”

CLAIMANT’s Sales Offer is directly addressed to RESPONDENT, specifies that the good is the Queens’

Delight Chocolate Cake, the quantity is 20,000 per day, and the price is USD 2.00 per cake [Ex. C4].

Further, CLAIMANT’s representative, Mr. Tsai’s, emailed RESPONDENT on 27 March 2014 stating

that CLAIMANT hoped RESPONDENT would “find [CLAIMANT’s] offer attractive,” indicating a

willingness to be bound by RESPONDENT’s acceptance of the Sales Offer [Ex. C3].

68. CLAIMANT’s standard conditions were properly incorporated into the offer. In order to be

incorporated into a contract, standard conditions must first be part of the offer, “as interpreted

according to the offeror’s intent as understood by a reasonable addressee” [Schroeter Art 14 ¶43]. “In

general, a party that wishes to incorporate standard conditions must show good faith efforts to

communicate those terms to the other party” [DiMatteo (2004) p.347]. In interpreting “good faith

efforts,” the Belgian Tribunal Commercial de Nivelles in 1995 held that a reference to standard

conditions in the offer is sufficient to incorporate those conditions in a contract governed by the

CISG. The German Federal Supreme court went one step further, requiring that the offeror

intending to rely on standard conditions must either transmit the text of these terms to the offeree

or make the text of the conditions available in another way [Machinery Case]. Commenting on this

case, DiMatteo writes, “[w]hether or not the terms should be incorporated in the contract should

turn on whether a reasonable party was aware or could not have been unaware of the intent to

include such terms” [DiMatteo (2004) p.348, n.267]. CLAIMANT went above and beyond the

requirements identified in these cases.

69. CLAIMANT’s Sales Offer clearly stipulated that the “offer is subject to the General

Conditions of Sale and our Commitment to a Fairer and Better World. Refer to our website

www.DelicatesyWholeFoods.com in regard to our General Condition and our commitments and

expectations set out in our Codes of Conduct” [Ex. C4]. This clause unambiguously refers

RESPONDENT to CLAIMANT’s standard conditions. RESPONDENT was actually aware of CLAIMANT’s

standard conditions and its intent to include such terms. In fact, Ms. Ming indicated in her 7 April

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2012 email that she “downloaded” CLAIMANT’s CoC [Ex. C5]. Ms. Ming noted that the principles

expressed in CLAIMANT’s CoC were a “decisive element” in RESPONDENT’s decision to accept

CLAIMANT’s Sales Offer [ibid.]. RESPONDENT was thus aware of CLAIMANT’s intent to incorporate

its standard conditions into the Contract through the Sales Offer.

2. RESPONDENT’s s tandard condi t ions were not part o f a val id o f f er and there fore not incorporated into the Part ies ’ Contract

70. RESPONDENT’s standard conditions appear as part of RESPONDENT’s Invitation to Tender,

sent to CLAIMANT on 10 March 2014 [Ex. C2]. The Invitation to Tender was not a valid offer

because it did not indicate an “intent to be bound” as required by CISG Art. 14(1). “Since there are

no particular words which must be used to indicate such an intention, it may sometimes require a

careful examination of the “offer” in order to determine whether such an intention existed” [CISG

Secretariat Guide to CISG Art. 14]. Under CISG Article 8(3), such intent is determined with due regard

to all relevant circumstances” [DiMatteo (2014) p.194]. RESPONDENT’s Invitation to Tender clearly

states that the RESPONDENT intends “to complete [its] tender evaluation in such time that the

contract for this work will be awarded by the second week of April 2014” [Ex. C2]. This indicates

that RESPONDENT was soliciting offers for evaluation, rather than making its own offer.

71. CISG Art. 14(2) further states that “proposals to an indefinite group of persons are mere

invitations” to submit offers [Schroeter Art 14 ¶32]. For example, “price lists, circulars, [and]

newspaper advertisements” are mere invitations and not offers [ibid.]. The Invitation to Tender was

sent to five businesses RESPONDENT encountered at the Cucina Food Fair. Further, it was

publicized in multiple industry newsletters [RNoA ¶8]. Clearly, RESPONDENT did not intend to

create a binding contract with any one of the numerous recipients of the Invitation to Tender.

Applying CISG Art. 14, then, RESPONDENT’s Invitation to Tender was not a valid offer.

Accordingly, RESPONDENT’s conditions laid out in RESPONDENT’s Tender Documents could not

have been part of the Contract that was eventually concluded between the Parties.

72. RESPONDENT contends that CLAIMANT’s Letter of Acknowledgement, which states that “its

offer would be made in line with the Tender Documents,” indicates CLAIMANT’s acceptance of

RESPONDENT’s standard conditions [RNoA ¶25]. RESPONDENT is mistaken for two reasons. First,

CLAIMANT referred to its own standard conditions on the front page of the Sales Offer [Ex. C4],

whereas RESPONDENT’s standard conditions were only part of its Invitation to Tender [Ex. C2]. The

binding Contract between the parties was formed pursuant to CLAIMANT’s Sales Offer and not the

Invitation to Tender, which was never an offer to begin with. Second, RESPONDENT’s representative

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read and was “impressed” by CLAIMANT’s standard conditions [Ex. C5]. Ms. Ming specifically stated

that CLAIMANT’s standard conditions showed that CLAIMANT and RESPONDENT “share the same

values” [ibid.]. In fact, RESPONDENT awarded the Contract to CLAIMANT because it believed that

CLAIMANT’s standard conditions were in line with its expectations [ibid.]. Clearly, it was

RESPONDENT who accepted CLAIMANT’s standard conditions, and not vice versa.

3. Ms. Ming’s 7 Apri l 2014 emai l was an acceptance , thus conc luding a binding Contract between the Part i es incorporat ing CLAIMANT’s s tandard condit ions

73. Ms. Ming’s email constituted a valid acceptance of CLAIMANT’s Sales Offer, including

CLAIMANT’s standard conditions. CISG Art. 18 states, “[a] statement made by or other conduct of

the offeree indicating assent to an offer is an acceptance.” In interpreting Ms. Ming’s email, the

Tribunal should turn to CISG Art. 8. Art. 8(1) provides that statements and conduct made by a party

“are to be interpreted according to his intent where the other party knew or could not have been

unaware what that intent was.” If this subjective intent is not identifiable, CISG Art. 8(2) prescribes

a “reasonable person” approach. Finally, Art. 8(3) advises that “due consideration is to be given to

all relevant circumstances of the case.”

74. Ms. Ming’s email shows that RESPONDENT subjectively intended to accept CLAIMANT’s

standard conditions, in accordance with CISG Art. 8(1). Her email declared that CLAIMANT’s offer

was “successful” and that RESPONDENT “looks forward to a fruitful cooperation” [Ex. C5]. This

unqualified acceptance of this Sale Offer manifests a clear intent to incorporate CLAIMANT’s

standard conditions.

75. However, even if the tribunal finds that RESPONDENT’s intent was unclear, a reasonable

person, under CISG Art. 8(2), would conclude that Ms. Ming’s email was an acceptance of

CLAIMANT’s standard conditions. When the written offer contains a clear reference to the

incorporation of the standard conditions and the offeree accepts without any objections, “it would

be objectively reasonable conduct on the part of the offeror to rely on such unqual i f i ed acceptance

and to accept that its standard conditions will apply, provided that the standard conditions were

reasonably available to the other party at the time of the negotiations or conclusion of the contract”

[CISG-AC Opinion No. 13, emphasis added]. Here CLAIMANT’s Sales Offer clearly referenced its own

standard conditions and referred RESPONDENT to its website containing its standard conditions

[Ex. C4]. If RESPONDENT wanted to object to the incorporation of these terms, it should have done

so in Ms. Ming’s email. Because Ms. Ming’s acceptance was unqualified, it was objectively reasonable

for CLAIMANT to conclude that CLAIMANT’s standard conditions will apply to the Contract.

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76. Further, RESPONDENT’s conduct led CLAIMANT to reasonably believe that its standard

conditions were incorporated into the Contract. In applying CISG Art. 8(2), a United States Court

of Appeals in Chateau Des Charmes Wines LTD. v. Sabate USA Inc. refused to uphold a forum selection

clause which was not part of the original agreement, because “[t]here is no indication that Chateau des

Charmes conducted itself in a manner that evidenced any affirmative assent to the [clause] in the

invoices” [328 F.3d 528, 531 (9th Cir. 2003), emphasis added]. In contrast, Ms. Ming evinced

affirmative assent to CLAIMANT’s standard conditions when she stated in her email that “[a] decisive

element for Comestibles Finos’ decision was [CLAIMANT’s] convincing commitment to sustainable

production... well evidenced in [CLAIMANT’s] impressive Codes of Conduct...” [Ex. C5]. This is a

written affirmation that she actually read CLAIMANT’s standard conditions and was satisfied by their

contents. A reasonable person would interpret Ms. Ming’s express approval of CLAIMANT’s standard

conditions as confirmation that they were validly incorporated into the Contract.

B. Even if the Invitation to Tender were an offer, CLAIMANT’s standard conditions still govern the Contract

77. Even if the Invitation to Tender constituted the initial offer, CLAIMANT’s Sales Offer was a

counter-offer. RESPONDENT’s subsequent unqualified acceptance of this counter-offer concluded a

binding contract, which incorporated CLAIMANT’s standard conditions [1 ]. In CISG jurisprudence,

when parties assert conflicting standard conditions, courts have applied either the “last-shot” rule or

the “knock-out” rule to resolve the dispute. Under either rule, RESPONDENT’s standard conditions

still do not govern the Contract [2 ].

1. Even i f the Invi tat ion to Tender were an o f f er , CLAIMANT’s Sales Offer was a counter-o f f er that RESPONDENT val id ly accepted

78. Even if RESPONDENT’s Invitation to Tender constituted the initial offer, CLAIMANT’s

subsequent Sales Offer served as a counter-offer. CISG Art. 19 states that a reply to an offer which

contains material modifications “is a rejection of the offer and constitutes a counter-offer.” Material

modifications are those relating to the “price, payment, quality and quantity of the goods, place and

time of delivery, extent of one party’s liability to the other or the settlement of disputes” [CISG

Art. 19(3)]. As noted in Ms. Ming’s 7 April email, CLAIMANT’s Sales Offer contains “payment terms

and form of the cake” that are “different” from the Invitation to Tender [Ex. C5]. These changes

are material modifications. Thus CLAIMANT’s Sales Offer was a “rejection” of RESPONDENT’s offer

and constituted a counter-offer [CISG Art. 19(1); Schroeter Art 17 ¶2].

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79. Commentator Schroeter notes, “in the (less frequent) cases in which the standard forms are

part of the parties’ declaration of offer and acceptance proper, it is furthermore necessary to evaluate

if the parties have derogated from [CISG Art. 19] (which, according to its wording, seems to prevent

a contract conclusion)” [Schroeter Art 19 ¶41]. In the Knitwear case, the seller responded to the buyer’s

order, which contained standard conditions of purchase, with its own standard terms. The

Amtsgericht Kehl found that the reply amounted to a counter-offer under CISG Art. 19 and that a

contract had been concluded “on the basis of the [background] rules of the CISG” because the

parties had proceeded to perform [Van Alstine p.92]. This is consistent with the general principle that

“parties’ interest in forming a contract is usually stronger than their interest in enforcing their own

standard terms at the expense of the transaction going through” [Schroeter Art 19 ¶41].

80. The commencement of performance may be, among other acts, “the start of the production

of goods” and the “resale of the goods” [Schroeter Art 16 ¶11]. In this case, CLAIMANT and

RESPONDENT performed on their Contract for over two years. CLAIMANT daily delivered 20,000

cakes to RESPONDENT from 1 May 2014 to 27 January 2017 [Ex. C6]. RESPONDENT did not object

to any of the deliveries in 2014, 2015, and 2016 and consistently paid CLAIMANT for cakes delivered

until 16 December 2016 [NoA ¶¶6–7]. The Parties’ consistent performance of the Contract for over

two years indicates that they had a strong interest in establishing the contractual relationship that

overrides any interest in enforcing their own standard conditions.

81. Accordingly, RESPONDENT’s acceptance on 7 April 2014 created a binding contract based on

the Sales Offer, incorporating CLAIMANT’s standard conditions [see also supra ¶¶74–77].

2. Under both the knock-out rule and the last -shot rule , RESPONDENT’s s tandard condit ions do not govern the Contract

82. If the Tribunal considers that CLAIMANT and RESPONDENT submitted competing standard

conditions during contract negotiations, it should apply the last shot rule because it provides

“certainty,” “legal security,” “adequate protection to the parties in the majority of cases,” and

“permits enterprises to more accurately plan their standardized transactions” [Viscasillas p.148].

Under the last-shot rule, since CLAIMANT’s standard conditions were the last terms to be sent to the

other party, without any subsequent objection, they govern the Contract [i ]. However, even if the

Tribunal applied the alternate knock-out rule, RESPONDENT’s standard conditions still do not

govern the Contract. Under the knock-out rule, conflicting standard additions do not apply, so

CLAIMANT is not obligated to comply with RESPONDENT’s standard conditions, to the extent that

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they differ from CLAIMANT’s standard conditions [i i ].

i. Under the last-shot rule, CLAIMANT’s standard conditions govern the Contract

83. The Tribunal should apply the last shot rule, i.e., the ‘theory of the last word’, “which favours

the party who last referred to its standard conditions without these being subsequently objected to”

[Schroeter Art 19 ¶35]. Whether or not the Tribunal interprets RESPONDENT’s Invitation to Tender as

a valid offer, CLAIMANT’s standard conditions remain the last terms that were sent to the other party

without being “subsequently objected to.” In Norfolk Southern Railway Company v. Power Source Supply,

Inc. (2008), a United States District Court upheld the validity of the disclaimer included in Plaintiff’s

bills of sale, which were the “last documents to be executed in the Parties’ transaction.” Similarly,

CLAIMANT’s standard conditions were the last terms exchanged by the Parties, and

RESPONDENT’s representative did not subsequently object to them. Therefore, under the

last-shot rule, CLAIMANT’s standard conditions properly govern the Contract.

ii. Even applying the knock-out rule, RESPONDENT’s standard conditions do not govern the Contract, where they differ from CLAIMANT’s standard conditions

84. Some scholars have favored the knock-out rule, in which conflicting terms are excluded

from the Contract, leaving the Parties bound to only those terms on which they agree [Schroeter Art

19 ¶36]. The knock-out rule was applied, for instance, in the Knitwear Case, where the German buyer

based its order on its standard conditions, and the Italian seller accepted the order based on its own

standard conditions. The Amtsgericht Kehl held that, “based on the realization of the contract, both

parties were in agreement about the essentialia negotii, and it must be assumed that they waived the

validity of their conflicting [standard conditions]” [Knitwear Case, 1995]. Applying the knock-out rule

to the present case, where the parties have agreed upon the essential terms, including price, quantity,

and delivery, the conflicting standard conditions are “knocked-out.” Therefore any conflicting

sustainability requirements in the Parties’ competing standard conditions are excluded.

85. Accordingly, CLAIMANT’s Sales Offer constituted either the initial offer or the counter offer

pursuant to which the Parties agreed to a binding contract. CLAIMANT’s standard conditions, which

were part of the Sales Offer, govern the Contract.

IV. EVEN IF RESPONDENT’S GENERAL CONDITIONS APPLY, CLAIMANT WAS ONLY REQUIRED TO USE BEST EFFORTS UNDER THE UNIDROIT PRINCIPLES, AND IN ANY EVENT, CLAIMANT FULFILLED ITS CONTRACTUAL OBLIGATIONS UNDER CISG ART. 35

86. Even if RESPONDENT’s GC apply, under both UNIDROIT and the CISG, which are the

applicable law, CLAIMANT met its contractual obligations. International commercial practice

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distinguishes between an obligation of best efforts (“obligation de moyens”) and an obligation of

specific results (“obligation de résultat”) [Fontaine p.221]. RESPONDENT erroneously argues that

CLAIMANT had an obligation to guarantee a specific result [RNoA ¶26]. However, since the CISG

does not speak to the aforementioned distinction, UNIDROIT applies and, under UNIDROIT,

CLAIMANT was merely required to use best efforts [A]. In any event, CLAIMANT delivered

conforming goods pursuant to CISG Art. 35 [B].

A. Under UNIDROIT, CLAIMANT fulfilled its contractual obligations by using its best efforts to ensure compliance by its suppliers

87. According to RESPONDENT’s GC Cl. 19, UNIDROIT applies to issues not dealt with by the

CISG [R. at 12]. Since the CISG does not speak to the distinction between a duty of specific result

and a duty of best efforts, UNIDROIT applies. [1 ]. RESPONDENT argues CLAIMANT had a duty to

guarantee a specific result, i.e., absolute compliance by CLAIMANT’s suppliers to the sustainability

principles in RESPONDENT’s GC and CoC. Contrary to what RESPONDENT avers, CLAIMANT only

had a duty to use best efforts to ensure compliance by its suppliers under UNIDROIT Art. 5.1.5 [2 ],

which it fulfilled [3 ].

1. Since the CISG does not speak to the dis t inc t ion between a duty o f spec i f i c resul t and a duty to use best e f for ts , UNIDROIT appl ies

88. The choice of law provision in the RESPONDENT’s GC states “[t]his Agreement is governed

by the UN Convention on the International Sale of Goods (“CISG”)” and “[f]or issues not dealt

with by the CISG the UNIDROIT Principles are applicable” [RESPONDENT’s GC, Cl. 19, R. at 12].

This is a common way for parties to incorporate UNIDROIT into their Contract [Bonell p.38]. CISG

Art. 7(2) allows the use of UNIDROIT in this manner providing that, “[q]uestions concerning

matters governed by [the CISG] which are not expressly settled in it are to be settled…in conformity

with the law applicable by virtue of the rules of private international law.” Tribunals have, under

CISG Art. 7(2), applied UNIDROIT both to matters not expressly settled by the CISG and matters

outside of the scope of the CISG [ICC Case No. 12460; ICC Case No. 12097; ICC Case No. 11638].

89. Further, commentators have acknowledged that, compared to the CISG, UNIDROIT’s

scope is much wider as it is “able to deal with additional matters not covered by CISG” [Bonell p.30]

and is “a better, more mature document” [Perillo p.283]. Thus, due the more comprehensive nature

of UNIDROIT, it should be used to “fill veritable gaps found in CISG” [Bonell p.38]. Bonell cites

examples of UNIDROIT provisions that take into account problems not addressed by the CISG

including “the distinction between a duty to achieve a specific result and the duty of best efforts and

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the criteria for determining the kind of duty involved in a given” [Bonell p.33; Hartkamp p.91].

90. As the CISG does not establish a distinction between of a duty of specific results and a duty

to use best efforts, the Tribunal should apply UNIDROIT in order to assess the scope and content

of CLAIMANT’s duty to ensure compliance by its suppliers.

2. Pursuant to UNIDROIT Art. 5.1.5, CLAIMANT only had a duty to use best e f for ts to ensure compliance by i t s suppl i ers

91. UNIDROIT Art. 5.1.5 provides a non-exhaustive list of criteria for determining the scope of

a party’s contractual duty [Vogenauer p.628]. In order to determine the scope of CLAIMANT’s duty, the

Tribunal should look at the way the obligation is expressed in the contract [i ], the contractual

negotiations [i i ], the contractual price [i i i ], and the degree of risk normally involved in achieving the

expected result [iv ] [UNIDROIT Art. 5.1.5; Vogenauer p.630]. All factors show CLAIMANT’s

obligation was to use best efforts, not achieve specific results.

i. The text of RESPONDENT’s General Conditions and Code of Conduct indicate that CLAIMANT only had a duty to use best efforts

92. RESPONDENT’s GC references its CoC for Suppliers [RESPONDENT’s GC, Preamble, R. at 12].

RESPONDENT’s CoC outlines CLAIMANT’s duties with regards to sustainability principles. The

Tribunal must first look at the text of RESPONDENT’s CoC to determine the scope of CLAIMANT’s

duty [UNIDROIT Art. 5.1.5, Cmt. 2; Vogenauer p.630]. RESPONDENT’s CoC clearly distinguishes

between CLAIMANT’s absolute obligations by using the mandatory language of shall and CLAIMANT’s

best efforts obligations by using the non-mandatory language of will. According to regular

commercial practice, shall is used to express obligations, whereas will “primarily expresses future time

rather than obligations” and carries “the sense of volition” [Adams pp.58–59, 61].

93. RESPONDENT’s CoC uses the word “shall” when it refers to CLAIMANT’s obligations

regarding CLAIMANT’s own business practices and conduct. For instance, the chapeau of Principle C

states that CLAIMANT “shall provide a safe and healthy workspace for all [its] employees and shall

conduct [its] business in an environmentally sustainable way” [RESPONDENT’s CoC, R. at 13].

Conversely, RESPONDENT’s CoC uses the word “will” when referring to CLAIMANT’s suppliers’

conduct. For instance, the last sub-provision of Principle C states that CLAIMANT “will ensure that

[its] own suppliers comply with the above requirements” [ibid., R. at 14]. Unlike the mandatory

language used in the chapeau of Principle C, this sub-provision frames CLAIMANT’s duty of ensuring

third-party suppliers’ compliance in non-mandatory language, i.e., using the word “will.”

94. Like the sub-provision in Principle C, Principle E requires that CLAIMANT “will select [its]

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own tier one suppliers […] based on them agreeing to adhere to standards comparable to those set

forth [in RESPONDENT’s CoC]” and “will make sure that [its suppliers] comply with the standards

agreed upon.” CLAIMANT therefore only had an obligation of best efforts, not an obligation of

specific results, to ensure CLAIMANT’s suppliers complied with RESPONDENT’s CoC.

ii. The contractual negotiations suggest CLAIMANT’s duty was limited to using best efforts

95. At the Cucina Food Fair, CLAIMANT’s Mr. Tsai told RESPONDENT’s Ms. Ming that

CLAIMANT’s reporting and auditing requirements under its CoC enabled them to “large ly guarantee”

its suppliers’ compliance with sustainable production practices [Ex. R5, emphasis added]. This is not

a representation of an absolute guarantee. Mr. Tsai reiterated this belief in CLAIMANT’s offer dated

27 March 2014 following RESPONDENT’s invitation to tender. In his letter, Mr. Tsai stated that

CLAIMANT would “do everything poss ib le to guarantee that the ingredients sourced from outside

suppliers comply” with ethical practices [Ex. C3, emphasis added]. A reasonable person in the same

circumstances as CLAIMANT would have understood that only best efforts were needed to monitor

its suppliers’ compliance with ethical principles.

iii. The market price of the cakes indicates that CLAIMANT only had a duty to use best efforts

96. The Tribunal should also consider the contractual price of the chocolate cakes in

determining the scope of CLAIMANT’s obligations regarding its suppliers’ conduct. The official

comment to UNIDROIT Art. 5.1.5 states, “a mere duty of best efforts would normally be

assumed,” unless an “unusually high price” or “another particular non-monetary reciprocal

obligation” indicates a duty to achieve a specific result [Cmt. 3]. Contractual clauses linking payment

of the price for the goods to the successful outcome of the transaction can also indicate a duty to

guarantee specific result [ibid.]. The price agreed upon by the Parties, USD 2.00 [Ex. C4], was not

extraordinary in the context of the relevant market [PO2 ¶40]. The Contract also did not contain any

clauses that linked payment for the goods to the successful outcome of the transaction. Given that

the Parties agreed on the standard market price and there were no penalty contractual clauses,

CLAIMANT only had a duty to use best efforts.

iv. Guaranteeing suppliers’ compliance would have entailed too high a risk for CLAIMANT, indicating that CLAIMANT only had a duty to use best efforts

97. The Tribunal should evaluate the degree of risk in the performance of CLAIMANT’s

obligations to determine their scope. A high degree of risk implies that a party did not intend to

guarantee a result and that the other party did not expect such a guarantee [UNIDROIT Art. 5.1.5,

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Cmt. 4]. The degree of risk will be considered high when a party encounters special difficulty in

yielding the desired result [ibid.]. It would present a special difficulty for CLAIMANT to fully control

or monitor every action of a third-party supplier located overseas. First, Peoples Cocoa is merely one

supplier for one of CLAIMANT’s many products [NoA ¶1]. It would be unreasonable for CLAIMANT

to assume the risk of breach by each one of its numerous suppliers. There is also a high degree of

risk in monitoring a supplier that conducts its activities in a different country under different laws.

There was no way for CLAIMANT, an Equatorianian company, to know about the misconduct of

Ruritanian government officials leading to a breach by its supplier [Ex. C7]. Even a specialized

investigative firm such as Egimus AG failed to identify problems with Peoples Cocoa’s compliance

[Ex. C8]. Since CLAIMANT’s performance of its obligations with respect to its suppliers’ compliance

involved a high degree of risk due to special difficulties, it was only expected to employ best efforts.

3. CLAIMANT ful f i l l ed i t s duty to use best e f for ts under UNIDROIT Art. 5.1.4(2)

98. Under UNIDROIT Art. 5.1.4(2), CLAIMANT fulfilled its duty to use best efforts if it

undertook efforts that a reasonable person would under the same circumstances. CLAIMANT

exceeded this standard by taking the following meticulous steps to ensure compliance by its

suppliers.

99. First, CLAIMANT required its suppliers, including Peoples Cocoa, to sign its comprehensive

Supplier CoC [Ex. C8]. Second, CLAIMANT commissioned Egimus AG to assess Peoples Cocoa on

site [Ex. C8; PO2 ¶33]. Third, CLAIMANT supplemented Egimus AG’s investigations with detailed

reporting obligations and sent questionnaires to Peoples Cocoa [PO2 ¶32]. CLAIMANT has

maintained a pristine reputation in the baking industry for the supervision of its supply chain [PO2

¶34]. There have been no UN GCP violations either by CLAIMANT or its suppliers in the last five

years apart from the unforeseeable problem with Peoples Cocoa [ibid.].

100. CLAIMANT clearly undertook all measures that a reasonable person would to ensure

compliance by its suppliers. CLAIMANT therefore met its contractual obligations since it only had a

duty to use best efforts under UNIDROIT Art. 5.1.5.

B. In any event, CLAIMANT fulfilled its contractual obligations under CISG Art. 35

101. In any event, CLAIMANT fulfilled its contractual obligations by supplying conforming goods

under CISG Art. 35. CLAIMANT satisfied all the criteria under CISG Art. 35(1) by delivering cakes

that were of the quantity, quality, and description required by the Contract [1 ]. Even if the Tribunal

finds that the contractual provisions regarding the cakes were not sufficiently detailed for Art. 35(1)

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to apply, CLAIMANT’s goods satisfied the subsidiary requirements in CISG Art. 35(2) [2 ].

1. CLAIMANT del ivered conforming goods that were o f the quanti ty , qual i ty and descr ipt ion required by the Contract , in accordance with CISG Art. 35(1)

102. CISG Art. 35(1) states that goods are conforming if they are of the “quantity, quality and

description required by the contract.” RESPONDENT does not dispute that CLAIMANT delivered the

correct quantity of cakes [RNoA ¶1]. Contrary to RESPONDENT’s assertions, CLAIMANT delivered

cakes of the correct quality and description required by the RESPONDENT’s GC.

103. CISG Art. 35(1) provides that when assessing the quality of a good, “regard must initially be

had to the requirements of the contract” [Schwenzer Art 35 ¶5]. RESPONDENT’s GC only required

CLAIMANT to deliver “high quality cakes,” 3 inches in diameter and 120 grams in weight [Specifications

of the Goods and Delivery Terms Cl. 1]. While Cl. 1(5) of Specifications of the Goods and Delivery

Terms also stated “ingredients have to be sourced in accordance with the stipulations under Section

IV,” Section IV does not stipulate any further obligations about the sourcing of ingredients or

external supplier activity [Special Conditions of Contract Art. 5; RESPONDENT’s GC Cl. 4]. Therefore,

CLAIMANT met all of its contractual obligations.

104. Tribunals have previously concluded that a buyer should clearly describe the quality

standards in the contract in light of specific concerns, and have refused to find non-conformity

according to a standard that has not been stipulated in the contract. For example, in the Linseed Cake

case, the buyer claimed that the seller’s goods were non-conforming because they contained a high

level of erucic acid. However, the tribunal ruled that the seller’s goods were conforming under CISG

Art. 35(1) because the contract did not stipulate the appropriate level of erucic acid content.

Similarly, in the present case, the Contract did not stipulate specific requirements about the sourcing

of ingredients and ensuring external suppliers’ compliance. Thus, the Tribunal should find that

CLAIMANT’s goods were conforming under CISG Art. 35(1).

105. Further, CISG Art. 8 assists with the interpretation of the contractual requirements

[Schwenzer Art 35 ¶7]. CISG Art. 8(1) requires that the contract be “interpreted according to [a

party’s] intent where the other party knew” or “could not have been unaware what that intent was.”

To the extent that RESPONDENT wished for CLAIMANT to absolutely guarantee the conduct of each

of its suppliers, CLAIMANT did not know and could not have been aware of that intent. CLAIMANT’s

representative, Mr. Tsai, articulated CLAIMANT’s understanding of its obligations to RESPONDENT’s

representative, Ms. Ming, at the Cucina Food Fair [Ex. R5]. Mr. Tsai stated to Ms. Ming that

CLAIMANT was able to monitor the activities of its suppliers in such a way as to “large ly guarantee”

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compliance with ethical principles [ibid., emphasis added]. CLAIMANT reiterated this sentiment in the

Sales Offer following RESPONDENT’s Invitation to Tender by stating that it would “do everything

poss ib le” to guarantee supplier compliance [Ex. C3, emphasis added]. These statements show that

CLAIMANT did not view its obligation as one of absolute guarantee. RESPONDENT did not object to

these statements, even after CLAIMANT offered to clarify its sustainability strategy [Ex. C3].

Therefore, CLAIMANT was not aware and could not have been aware of RESPONDENT’s alleged

intent to require CLAIMANT to absolutely guarantee that each of its numerous suppliers used

sustainable methods.

106. Since the Parties had no common intent, the reasonable person standard of CISG Art. 8(2)

applies. As discussed above, CLAIMANT mentioned during negotiations that it would do “everything

poss ib le” and “large ly guarantee” supplier compliance [supra ¶106]. Further, it would have been an

enormous risk for CLAIMANT to assume the risk of breach by each one of its numerous suppliers [see

supra ¶98]. A reasonable person would find that CLAIMANT did not assume such an extraordinary

obligation. Therefore, CLAIMANT met the quality and description specifications of RESPONDENT’s

GC, and the Tribunal should find that CLAIMANT delivered conforming goods pursuant to

CISG Art. 35(1).

2. Even i f the contractual provis ions regarding the goods were not suf f i c i ent ly detai l ed , CLAIMANT’s goods sat is f i ed the subsidiary requirements o f CISG Art. 35(2)

107. If a contract contains insufficient details of the conformity requirements of CISG Art. 35(1),

the objective criteria under CISG Art. 35(2) are used to determine the conformity of the goods

[Schwenzer Art 35 ¶13]. CISG Art. 35(2) establishes that in order for the goods to be conforming,

they must (a) be fit for the purposes for which the goods would ordinarily be used, (b) be fit for any

particular purpose, (c) possess the qualities of goods that the seller held out as a sample or model,

and (d) be packaged in a manner usual or adequate.

108. The purpose of food products is consumption [Schwenzer p.601; New Zealand Mussels Case].

There is no dispute between the Parties that the cakes CLAIMANT delivered were fit for

consumption, and the Tribunal’s inquiry need go no further on Art. 35(2)(a). RESPONDENT also

does not contest that the cakes were unusually or inadequately packaged pursuant to Art. 35(2)(d).

RESPONDENT may allege that CLAIMANT goods were not fit for their particular purpose (b) or that

the cakes were not of the quality represented by CLAIMANT (c). However, for the reasons set forth

below, Claimant complied with both Art. 35(2)(b) [i ] and Art. 35(2)(c) [i i ].

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i. CLAIMANT’s cakes were not required to be fit for a particular purpose

109. Under CISG Art. 35(2)(b), the seller is only responsible for the fitness of the goods for a

purpose other than the purpose for which they would ordinarily be used if that purpose: (i) has been

expressly or impliedly made known to him, (ii) the buyer relied on the seller’s skill and judgment,

and (iii) it was reasonable for him to do so. RESPONDENT may assert that the particular purpose of

the cakes was to preserve RESPONDENT’s brand as an ethical company [RNoA ¶2 (arguing that the

cakes were non-conforming under CISG Art. 35 because they posed a reputational risk to

RESPONDENT)].

110. However, RESPONDENT’s argument fails because RESPONDENT did not communicate, with

sufficient clarity, the specific requirements necessary to fulfill such a particular purpose. In the Cloth

Case, the buyer had claimed that the fabrics supplied by the seller were non-conforming because they

were of an unsuitable quality and size to be cut in economical manner. The Landgericht Regensburg

held that, since the buyer had not clearly indicated the requirements of their “economical use”

standard, the seller could not have understood what quality or size of fabric would be economical

and appropriate [Cloth Case]. Conversely, in another case, the Landgericht München applied CISG

Art. 35(2) and found that the seller owed a particular purpose duty because the requirements to meet

that purpose were made known to it in sufficient detail. Under the contract, the buyer required from

the seller rotating video screen mounts for permanent and ongoing promotional displays. However,

the seller manufactured and supplied screen mounts that were suitable for short and temporary

advertising campaigns. The court found that, as the buyer had explained in a “crystal clear and

recognizable” way that the particular purpose of the screen mounts was for ongoing and permanent

promotions, the seller had delivered non-conforming goods [Globes Case]. RESPONDENT mentioned

that it wanted to maintain a good public image and avoid negative press, which was why it was

important that CLAIMANT’s suppliers adhere to sustainability standards [Ex. C1]. However,

RESPONDENT did not communicate any specific requirements about how the monitoring must be

carried out. CLAIMANT communicated that it understood its obligations to be one of best efforts to

ensure sustainable production, and RESPONDENT did not object [see supra ¶106]. RESPONDENT

cannot now assert that it wished for CLAIMANT to absolutely guarantee that there would be no

reputational risk because of each one of CLAIMANT’s numerous suppliers.

111. Further, it was unreasonable, under the third prong of CISG Art. 35(2)(b), for RESPONDENT

to rely on CLAIMANT to guarantee that there would be no harm to RESPONDENT’s reputation

through the sale of CLAIMANT’s cakes. According to CISG Art. 35(2)(b), the buyer can only

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reasonably rely on what can be expected from the skills and the knowledge of the seller [Schwenzer

Art 35 ¶25]. CLAIMANT’s skill and expertise lies in conceiving the ultimate product by creating a

uniquely designed recipe, taste, and packaging [PO2 ¶39]. RESPONDENT cannot rely on the

CLAIMANT’s knowledge to guarantee that Peoples Cocoa obtained its certifications properly. In fact,

even an expert in investigating supplier compliance, Egimus AG, found no problems with Peoples

Cocoa [Ex. C8]. If RESPONDENT relied on CLAIMANT’s skill and knowledge to absolutely guarantee

that each of CLAIMANT’s numerous suppliers was in compliance, as it now claims to have done, such

reliance was unreasonable. Therefore, there was no contractual requirement that CLAIMANT’s cakes

be fit for the particular purpose of protecting RESPONDENT’s reputation.

ii. The cakes were of the quality represented by CLAIMANT

112. RESPONDENT may argue that CLAIMANT’s cakes were not of the quality represented in a

sample it exhibited at the Cucina Food Fair, and therefore did not comply with CISG Art. 35(2)(c).

Under CISG Art. 35(2)(c), where the seller has provided a sample, it warrants that the goods possess

all the qualities of that sample [Schwenzer Art 35 ¶26]. The good provided as a sample or model

thereby becomes the standard for the substance of the contract [ibid.]. Furthermore, “a sample only

had binding effect where the parties actually agreed so” [Shoes Case]. CLAIMANT did not provide a

sample of the cake to RESPONDENT, and thus did not make additional representations about the

quality of its cakes aside from the contractual specifications. The cake made available at the Cucina

Food Fair was not a sample for the purposes of the Contract as it was a completely different

product: King’s Delight Vanilla-Chocolate Cake [Ex. R2]. The Parties agreed to contract for

Queen’s Delight Chocolate Cake [Ex. C3; Ex. C4], a sample of which was neither requested nor

provided. Therefore, King’s Delight Vanilla-Chocolate Cake, which used sustainably sourced cocoa

beans, did not become the standard for the substance of the Contract for Queen’s Delight

Chocolate Cake. Therefore, CLAIMANT conformed to all the requirements of CISG Art. 35(2).

113. Accordingly, CLAIMANT met its obligations under both the UNIDROIT Principles and the

CISG by employing its best efforts to ensure supplier compliance.

CONCLUSION

114. RESPONDENT has frustrated CLAIMANT’s contractual rights at every turn. It unilaterally

terminated the Contract regardless of the Parties’ successful relationship for over two years and the

fact that CLAIMANT itself was unaware of Peoples Cocoa’s breach. RESPONDENT then refused to

pay the contractual price for the 600,000 cakes already delivered. When CLAIMANT chose to arbitrate

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pursuant to RESPONDENT’s refusal to even pay a discounted price, RESPONDENT raised a dilatory

and meritless challenge to CLAIMANT’s chosen arbitrator. The Tribunal should refer RESPONDENT’s

challenge of Mr. Prasad to an appointing authority for lack of jurisdiction, or alternatively, decide the

challenge with Mr. Prasad’ participation and find that his appointment should be preserved.

Notwithstanding the outcome of RESPONDENT’s challenge, the Tribunal should find should find

that the CLAIMANT met its contractual obligations under both the CISG and the UNIDROIT.

****

REQUEST FOR RELIEF On the basis of the foregoing submissions, CLAIMANT respectfully requests that the Tribunal:

I. Refer RESPONDENT’s challenge of Mr. Prasad to an appointing authority for lack of jurisdiction or, alternatively, decide the challenge with the participation of Mr. Prasad;

II. Reject RESPONDENT’s challenge to Mr. Prasad, in case the Tribunal decides the challenge;

III. Find that CLAIMANT’s standard conditions govern the Contract;

IV. Find that CLAIMANT met its contractual obligations by using best efforts to ensure

compliance by its suppliers.

Vindobona, Danubia

7 December 2017

Respectfully submitted,

Abhinaya Swaminathan Daniel Johnson Zara Desai

Chloe Do

Varuni Balasubramaniam