respondent memorandum vis 22
DESCRIPTION
MITSOTRANSCRIPT
Twenty Second Annual
Willem C. Vis International Commercial Arbitration Moot
MEMORANDUM FOR RESPONDENT
On behalf of: Against:
Mediterraneo Mining SOE Vulcan Coltan Ltd Global Minerals Ltd
5-6 Mineral Street 21 Magma Street Excavation Place 5
Capital City,
Mediterraneo Oceanside, Equatoriana Hansetown, Ruritania
as RESPONDENT as CLAIMANT as ADDITIONAL PARTY
International University “MITSO”
Minsk, Republic of Belarus
Artem Azamatov •Daria Andronova •Herman Khomchanka•
Nastassia Kashchyshyna •Aliaksandra Pakhomava• Stahiy Sviridovich
ii
TABLE OF CONTENT
LIST OF ABBREVIATIONS ..................................................................................................................iv
INDEX OF LEGAL SOURCES.............................................................................................................vi
INDEX OF AUTHORITIES .................................................................................................................vii
INDEX OF CASES AND ARBITRAL AWARDS .............................................................................xi
OTHER SOURCES ...............................................................................................................................xviii
Statement of facts.........................................................................................................................................1
Summary of arguments................................................................................................................................3
PROCEDURAL ISSUE I...........................................................................................................................4
I. THE ARBITRAL TRIBUNAL HAS JURISDICTION OVER GLOBAL MINERALS...........4
1. Global Minerals is a party to the contract and the arbitration agreement contains therein..........4
2. The Guarantee provisions justify the extension of arbitration agreement over Global Minerals5
3. The arbitration agreement can be extended over Global Minerals under the Group of
Companies Doctrine....................................................................................................................................6
3.a. The Group of Companies Doctrine is used in international arbitration to justify the extension
of arbitration agreement..............................................................................................................................7
3.b. The requirements under the Group of Companies Doctrine are fulfilled ...................................8
3.b.i. Global Minerals controls CLAIMANT...........................................................................................8
3.b.ii. Global Minerals and CLAIMANT involvement into the Contract constitutes one economic
reality ..............................................................................................................................................................9
3.b.iii. Global Minerals is bound by the arbitration agreement ...........................................................10
4. Good Faith Considerations justify the extension of arbitration agreement over Global Minerals
.......................................................................................................................................................................11
ISSUES ON MERITS...............................................................................................................................12
II: CLAIMANT IS NOT ENTITLED TO RECEIVE 30 METRIC TONS OF COLTAN
UNDER THE CONTRACT...................................................................................................................12
A. RESPONDENT’s avoidance of the contract on 7 july 2014 is legitimate...................................14
1. CLAIMANT has not fulfilled its obligation under the Contract and under Art. 54 CISG........14
1.a. The amount of money stated in the L/C 1 is not in conformity with the Contract.................16
1.b. The quantity of goods stated in the L/C 1 is not in conformity with the Contract .................16
1.с. The Delivery Term contained in the L/C 1 is not in conformity with the Contract................17
2. Inappropriate L/C 1 amounts to fundamental breach under Art. 25 CISG.................................18
2.a. The breach of established L/C 1 serves as a reason of substantial deprivation
RESPONDENT of what it is entitled to expect under the Contract ................................................19
iii
2.b. CLAIMANT could foresee the results of established L/C 1.......................................................19
3. RESPONDENT avoided the Contract on 7 July 2014 abiding by the terms of Art. 72 CISG.19
3.a. The Parties never modify the due date of the performance .........................................................20
3.b. CLAIMANT could foresee the avoidance of Contract as a result of its own violations.........20
3.c. RESPONDENT did not get the adequate assurance of obligation’s performance from
CLAIMANT ...............................................................................................................................................21
B. RESPONDENT rightfully avoided the contract on 9 July 2014...................................................22
1. CLAIMANT committed a fundamental breach of the Contract, by establishing inappropriate
L/C 2............................................................................................................................................................22
1.a. CLAIMANT failed to establish proper Letter of Credit on time................................................23
1.a.i. CLAIMANT had an obligation to notify RESPONDENT about the establishment of L/C
.......................................................................................................................................................................23
1.a.ii. The information upon the establishment of the L/C 2 had reached RESPONDENT’S
office out of business hours for notification..........................................................................................24
1.b. CLAIMANT by inserting a commercial invoice as an additional document in the L/C 2
committed a fundamental breach.............................................................................................................25
2. Late delivery of L/C substantially deprived RESPONDENT from what it expected under the
Contract .......................................................................................................................................................26
PROCEDURAL ISSUE 2 ........................................................................................................................28
III. The order of the Emergency Arbitrator should not be lifted by the arbitral tribunal...............28
1. Under Article 29 (6) b of ICC Rules 2012 the parties did opt out the Emergency Arbitrator
provisions ....................................................................................................................................................28
1. a. The parties can agree to exclusive court jurisdiction to impose interim measures. .................28
1.b. The interpretation of Art. 21 of the Coltan Purchase Contract provides for the exclusive
jurisdiction of courts to grant interim measures....................................................................................29
1.b.i. The rule of literal interpretation must be observed. ....................................................................29
1.b.ii. UNIDROIT Principles 2010 allows interpreting Art. 21 of the Contract against
CLAIMANT ...............................................................................................................................................31
2. The substantive requirements for granting interim measures are not fulfilled. ............................31
2. a. CLAIMANT did not demonstrate urgency ...................................................................................32
2.b. There was no irreparable harm imminent to CLAIMANT..........................................................33
2.c. CLAIMANT has no possibility of success on the merits. ............................................................33
REQUEST FOR RELIEF .......................................................................................................................35
iv
LIST OF ABBREVIATIONS
Answer to Req. for Arb. Answer to Request for Arbitration
Art Article
CISG United Nations Convention on Contracts for
the International Sale of Goods (1980)
Coltan Purchase Contract / contract/Contract COLTAN PURCHASE CONTRACT,
concluded between Mediterraneo Mining SOE
and Vulcan Coltan Ltd on the 28th of March,
2014
Digest of case law
UNCITRAL Digest of case law on the United
Nations Convention on the International Sales of
Goods 2012
Dr. iur. Doctor iuris
EA, Emergency Arbitrator
Emergency Arbitrator, appointed by the
President of the International Court of
Arbitration of the International Chamber of
Commerce on the 12th of July, 2014
Ex. Exhibit
ICC 1998 Rules The Rules of Arbitration of the International
Chamber of Commerce (1998)
ICC Rules 2012 The Rules of Arbitration of the International
Chamber of Commerce (2012)
Id (idem) The same
INCOTERMS 2010 The INCOTERMS Rules 2010
infra Reference to the provision discussed later
L/C Letter of Credit
L/C 1 Letter of Credit of 4th July 2014
L/C 2 Letter of Credit of 8th July 2014
M for Cl. Memorandum for CLAIMANT
para/paras Paragraph/ Paragraphs
p. Page
PO 2 Procedural Oder № 2
Prof. Professor
v
Req. for Arb Request for Arbitration
supra Reference to the previously written provision
UCP 600 The Uniform Customs and Practice for
Documentary Credits ICC Publication no. 600
DAL UNCITRAL Model Law on International
Commercial Arbitration 1985 with
amendments as adopted in 2006
UNIDROIT Principles/ UNIDROIT 2010
UNIDROIT Principles on International
Commercial Contracts 2010
vi
INDEX OF LEGAL SOURCES
United Nations Convention on Contracts for the International Sale of Goods, Vienna
1980
(Cited as: CISG)
[§7, §60, §63, §64, §67, §72, §73, §75, §82, §84, §86,§87, §88, §89, §91, §93, §94, §96, §98,
§102, §103, §105, §111, §113, §117, §118]
CONVENTION ON THE SETTLEMENT OF INVESTMENT DISPUTES BETWEEN
STATES AND NATIONALS OF OTHER STATES
(Cited as: ICSID Convention)
[§ 138]
ICC Uniform Customs and Practice for Documentary Credits
(Cited as: UCP 600)
[§71, §89]
The Rules of Arbitration of the International Chamber of Commerce (2012)
(Cited as: ICC Rules 2012)
[§ 3, 132, 136, 139, 149, 159]
Rules of Arbitration of the International Chamber of Commerce (1998)
(Cited as: ICC 1998 Rules)
[§ 148]
UNCITRAL Model Law on International Commercial Arbitration 1985
With amendments as adopted in 2006
(Cited as: DAL)
[161, 163]
UNIDROIT Principles of International Commercial Contracts 2010
(Cited as: UNIDROIT 2010)
[§85, §113, §118, §144, §154, §155, §156]
vii
INDEX OF AUTHORITIES
Adodo, Ebenezer
Letters of Credit: The Law and Practice of Compliance
Ebenezer Adodo
Product: International Commercial Law [ICML], 2014
(Cited as: Letters of Credit: The Law and Practice of
Compliance)
[§75, §79]
Amerasinghe, Chittharanjan International Arbitral Jurisdiction
International Litigation in Practice, 1933
Chittharanjan F. Amerasinghe
(Cited as: Chittharanjan F. Amerasinghe)
[§50]
Baigel, Baruch
The Emergency Arbitrator Procedure under the 2012
ICC Rules: A Juridical Analysis
Baruch Baigel
(2014) 31 Journal of International Arbitration,
(Cited as: Baigel)
[§162]
Ben-Shahar, Omri "Contracts Without Consent: Exploring a New Basis for
Contractual Liability" (2004)
Omri Ben-Shahar
Law & Economics Working Papers Archive: 2003-2009.Paper
28.
(Cited as: BEN-SHANAR)
[§67, §119]
Bix, Brian Consent in Contract Law (2008)
Brian Bix
THE ETHICS OF CONSENT: THEORY AND
PRACTICE, Edited by Alan Wertheimer, Franklin G.
Miller, eds.,
Oxford University Press, 2010;
Minnesota Legal Studies Research Paper No. 08-36.
viii
Available at SSRN: http://ssrn.com/abstract=1140256
(Cited as: BIX)
[§119]
Borcky, Ron Understanding and Using Letters of Credit, Part II
Ron Borcky
(Cited as: CRF, Ron Borcky Understanding and Using Letters of
Credit, Part II)
[§120]
DERAINS, Yves
GOODMAN-EVERARD, Rosabel
France. In: ICCA International Handbook of Commercial
Arbitration,
Supplement 26, February, 1998
DERAINS, Yves, GOODMAN-EVERARD, Rosabel
(Cited as: DERAINS & GOODMAN-EVERARD)
[§40]
Drahozal, Christopher Party Autonomy and Interim Measures in International
Commercial Arbitration,
Christopher R. Drahozal
University of Kansas School of Law, August 5, 2011
(Cited as: Drahozar )
[§136]
Hanotiau, Bernard
COMPLEX ARBITRATIONS: MULTIPARTY,
MULTICONTRACT, MULTI-ISSUE AND CLASS
ACTIONS
Bernard Hanotiau
Kluwer Law International, 2005
(Cited as: Hanotiau)
[§53]
Kryvoi, Yaraslau
Piercing the Corporate Veil in International Arbitration
Yaraslau Kryvoi
Global Business Law Review1 (2011): p. 177.
(Cited as: Kryvoi Yaraslau)
[§24]
Monteiro, Felicity “The UCP 600 — Developments In Documentary Credit
Law”
ix
Felicity Monteiro
New Zealand Law Journal September 2007
(Cited as: Felicity Monteiro)
[§71]
Müller, Thomas
Extension of arbitration agreements to third parties under
Swiss law
Thomas Müller
(Cited as: Thomas Müller)
[§17]
n/a COMMENTARY ON THE UNIDROIT PRINCIPLES
OF INTERNATIONAL COMMERCIAL CONTRACTS
(PICC)
Edited by Stefan Vogenauer and Jan Kleinheisterkamp,
2009
(Cited as: Commentary on UNIDROIT Principles 2010)
[§110, §157]
n/a UNCITRAL Digest of Case Law on the United Nations
Convention on Contracts for the International Sale of
Goods
UNITED NATIONS COMMISSION ON
INTERNATIONAL TRADE LAW
UNITED NATIONS, New York, 2012
(Cited as: Digest of case law)
[§72, §82, §86, §111, §128]
Schlechtriem, Peter
Schwenzer, Ingeborg
COMMENTARY ON THE UN CONVENTION ON
THE INTERNATIONAL SALE OF GOODS (CISG)
THIRD EDITION
Schlechtriem & Schwenzer
Oxford University Press (2010)
(Cited as: Schlechtriem)
[§66, §68, §86, §101, §127]
Wilske, Stephan Shore, Laurence and Ahrens, Jan-Michael
The group of companies doctrine – where is it heading?
Wilske, Stephan, Shore, Laurence Ahrens, Jan-Michael
American Review of International Arbitration, Vol. 17
x
(2006): 74�
(Cited as: Wilske, Stephan, Shore, Laurence Ahrens, Jan-Michael)
[§22]
Winsor, Katrina The Applicability of the CISG to Govern Sales of
Commodity Type Goods
Katrina Winsor
14Vindobona Journal of International Commercial Law and
Arbitration (1/2010) 83-116
Cited as: Katrina Winsor
[§65, §69, §78, §87]
Yesilirmak, Ali Provisional Measures in International Commercial
Arbitration, Ali Yesilirmak (2005)
Kluwer Law International
(Cited as: Yesilirmak)
[§138, §142, §165]
xi
INDEX OF CASES AND ARBITRAL AWARDS
CASES
Australia
Downs Investments v. Perwaja Steel
Australia 17 November 2000 Supreme Court of Queensland (Downs Investments v. Perwaja Steel)
Available at:: http://cisgw3.law.pace.edu/cases/001117a2.html]
Cited as: Down Investments Pty Ltd. v. Perjawa Steel SDN BHD
[§72, §128]
Brazil
Itarumг Participaзхes S.A. v Participaзхes em Complexos Bioenergйticos S.A
Available at: http://kluwerarbitrationblog.com/blog/2012/10/26/brazilian-court-clarifies-
jurisdiction-for-interim-measures/
Cited as: Itarumг Participaзхes S.A. v Participaзхes em Complexos Bioenergйticos S.A
[§151]
Canada
Ahousaht Indian Band V Canada (Fisheries and oceans)
Available at: http://www.blg.com/en/newsandpublications/publication_3800
Cited as: AHOUSAHT INDIAN BAND V. CANADA (FISHERIES AND OCEANS)
[§173]
France
Sociйtй Alcatel Business Systems (ABS), Sociйtй Alcatel Micro Electronics (AME) et Sociйtй AGF v.
Amkor Technology
Cour de cassation, Mar. 27, 2007
Cited as: Société Alcatel Business Systems (ABS), Société Alcatel Micro Electronics (AME) et Société
AGF v. Amkor Technology Case
[§10]
Sociйtй Korsnas Marma v. Sociйtй Durand A Auzias
CA Paris, 30 November 1988
The Practice of Arbitration: Essays in Honour of Hans van Houtte
xii
Cited as: Société Korsnas Marma v. Société Durand A Auzias
[§15]
Sociйtй Ofer Brothers v. The Tokyo Marine and Fire Insurance Co Ltd
CA Paris
The extension of the arbitration clause to non-signatories — the irreconcilable positions of
French and English courts; Pierre Mayer
Cited as: Société Ofer Brothers v. The Tokyo Marine and Fire Insurance Co Ltd
[§15]
Kis France SA v. SA Societe Generale
France, 31 October 1989,Court of Appeal of Paris
Yearbook Commercial Arbitration Vol. XVI (A.J. van den Berg ed. Kluwer Law and Taxation
Publishers, Deventer/Netherlands 1991): 145 – 149
Cited as: Kis France SA v. SA Societe Generale
[§29]
Sponsor AB v. Ferdinand Louis Lestrade
France, Nov. 26, 1986, Court of Appeal of Pau
Yearbook Commercial Arbitration, Vol. XIII (A.J. van den Berg ed., Kluwer Law and Taxation
Publishers, Deventer/Netherlands 1988): 149 – 151
Cited as: Sponsor A.B. v. Lestrade
[§28]
Germany
Broadcasters case
Germany 24 July 2009 Appellate Court Celle (Broadcasters case) [translation available]
Available at: http://cisgw3.law.pace.edu/cases/090724g1.html]
Cited as: Broadcasters case
[§111]
Machinery case
Germany 31 October 2001 Supreme Court (Machinery case)
Available at: http://cisgw3.law.pace.edu/cases/011031g1.html]
xiii
Cited as: Machinery case
[§111]
Pitted sour cherries case
Germany, 3 August 2005 District Court Neubrandenburg
Available at:: http://cisgw3.law.pace.edu/cases/050803g1.html]
Cited as: Pitted sour cherries case
[§111]
Cheese case
Germany, 29 December 1998 Hamburg Arbitration proceeding
Available at: http://cisgw3.law.pace.edu/cases/981229g1.html]
Cited as: Cheese case
[§96]
Italy
Trade usage case
Italy, 21 November 2007, Tribunale [District Court] Rovereto
Takap B.V. v. Europlay S.r.l.
Available at: http://cisgw3.law.pace.edu/cases/071121i3.html]
Cited as: Takap B.V. v. Europlay S.r.l.; Trade usage case
[§111]
Netherlands
Metal ceiling materials case
Netherlands, 25 February 2009
District Court Rotterdam (Fresh-Life International B.V. v. Cobana Fruchtring GmbH & Co., KG)
Available at: http://cisgw3.law.pace.edu/cases/090225n1.html]
Cited as: Metal ceiling materials case
[§111]
Singapore
Win Line (UK) Ltd v Masterpart (Singapore)
The Singaporean High Court
xiv
Pte Ltd [2000] 2 SLR 98
Cited as: The Singaporean High Court, Win Line (UK) Ltd v Masterpart (Singapore)
[§31]
Switzerland
Case No. ATF 129 III 727
Tribunal Federal (2003)
Cited as: ATF 129 III 727
[§55]
United Kingdom
R v Harris (1836) 7 C & P 446 [Cited as: R v Harris] [§ 145] Whitely v Chappell (1968) LR 4 QB [Cited as: Whitely v Chappel] [§ 145]
Stellar Shipping Co LLC v Hudson Shipping Lines
[2010] EWHC 2985 (Comm) (18 November 2010).
Available at: http://uk.practicallaw.com/D-012-2036?source=relatedcontent
Cited as: Stellar Shipping Co LLC v Hudson Shipping Lines
[§19]
United States
American Bureau of Shipping v. TencaraShipyard S.P.A.
170 F.3d 349 (2d Cir. 1999)
Cited as: AmericanBureauofShipping v. TencaraShipyard S.P.A.
[§54]
Grigson v. Creative Artists Agency L.L.C.
2000, U.S. Court of Appeals for the Fifth Circuit
210 F.3d 524
Cited as: Grigson v. Creative Artists Agency L.L.C.
xv
[§53]
In re Kellogg Brown & Root Inc.,
U.S. Court of Appeals for the Fifth Circuit
166 S.W. 3d at 739.
Cited as: In re Kellogg Brown & Root Inc.
[§54]
J.J. Ryan & Sons v. Rhone Poulenc Textile
United States Court of Appeals for the Second Circuit
863 F.2d 315 (4th Cir. 1988) at 320–21
Cited as: J.J. Ryan & Sons
[§42]
Tepper Realty Company v. Mosaic Tile Company
September 20, 1966, U.S. District Court for the Southern District of New York.
Available at: http://law.justia.com/cases/federal/district-courts/FSupp/259/688/2293417/
Cited as: Tepper Realty Company v. Mosaic Tile Company
[§55]
Re Oil Spill By The Amoco Cadiz Off The Coast of France
On March 16, 1978
United States Court of Appeals for the Second Circuit
MDL Docket No. 376 ND Ill. 1984
American Maritime Cases, 2123-2199.
Cited as: Amoco Cadiz case
[§37]
Thomson-CSF, SA v. American Arbitration Association
Aug. 24, 1995, United States Court of Appeals Second Circuit
64 F.3d 773
Cited as: Thomson-CSF, SA v. American Arbitration Association
xvi
[§51]
William Passalacqua Builders, Inc. v. Resnick. Developers South, Inc.
USA, United States Court of Appeals for the Second Circuit933 F.2d 131 (2d Cir.1991)
Available at:
https://apps.americanbar.org/litigation/litigationnews/top_stories/docs/Passalacqua-second-
circuit.pdf
Cited as: Wm. Passalacqua Builders v Resnick Developers
[§31]
YCA 1993
The Federal Court of the Southern District of New York
USA, YCA 1993, pg. 499, US 129
Cited as: YCA 1993, pg. 499, US 129
[§31]
ARBITRAL AWARDS
Arbitration institute of the Stockholm Chamber of Commerce
Award No. 108/1997 (2000)
Stockholm Internation Arbitration Rewiew, 2001 (1)
Cited as: SCC No. 108/1997
[§55]
China International Economic and Trade Arbitration Commission
Hot-dipped galvanized steel coils case
China 16 December 1997 CIETAC Arbitration proceeding
Available at: http://cisgw3.law.pace.edu/cases/971216c1.html
Cited as: CHINA International Economic and Trade Arbitration Commission, People's Republic of China,
16 December 1997
[§96]
Foreign Trade Court of Arbitration attached to the Yugoslav Chamber of Commerce
Aluminum caseSerbia, 9 December 2002
Available at: http://cisgw3.law.pace.edu/cases/021209sb.html]
xvii
Cited as: Aluminum case
[§111]
International Chamber of Commerce
Dow Chemical France et al v. ISOVER Saint Gobain
ICC No. 4131 (1984)
Cited as: ICC Award No. 4131
[§27, §34, §42]
Case No. 11160
Final award (2002) in ICC International Court of Arbitration Bulletin Vol. 16 No 2 (2005): 99
Cited as: ICC Bulletin Award No. 11160
[§30]
ICC Case No. 5103
Journal du Droit International (1988)
Cited as: ICC Case No. 5103
[§40]
ICC cases No. 5721
117 Journal du Droit International 1020 (1990)
Cited as: ICC Case No. 5721
[§46]
ICC Case No. 5730
117 Journal du Droit International (Clunet) 1029 (1990)
Cited as: ICC Case No. 5730
[§46]
ICC Case No. 9762
Cited as: ICC Case No. 9762
[§40]
xviii
OTHER SOURCES
Black’s Law Dictionary Online
Available at:http://thelawdictionary.org/
(Cited as: Black’s Law Dictionary)
[§12]
Business hours law and Legal definition
http://definitions.uslegal.com/b/business-hours/
Cited as: Business hours law
[§114]
For Law Dictionary by John Bouvier:
Trading (commerce). (n.d.) A Law Dictionary, Adapted to the Constitution and Laws of the United States.
By John Bouvier.. (1856). Retrieved January 15 2015 from
Available at: http://legal-dictionary.thefreedictionary.com/Trading+(commerce)
Cited as: A Law Dictionary, Adapted to the Constitution and Laws of the United States. By John Bouvier
[§89]
STATEMENT OF FACTS
CLAIMANT - Vulcan Coltan Ltd. (“Vulcan”) is a broker of rare minerals, in particular coltan,
based in Equatoriana. It is a 100% subsidiary of Global Minerals Ltd (“Global Minerals”), which
brokers rare minerals world-wide and is based in Ruritania.
RESPONDENT- Mediterraneo Mining SOE, is a state-owned enterprise based in
Mediterraneo. It operates all the mines in Mediterraneo including the only coltan mine. In
addition to coltan RESPONDENT extracts copper and gold.
THIRD PARTY- Global Minerals Ltd, brokers rare minerals world-wide and is based in
Ruritania. Global Minerals Ltd has 100% subsidiary company Vulcan Coltan Ltd.
23 March 2014- Mr. Storm, the Chief Operating Officer of Global Minerals, and Mr. Summer,
the Chief Operating Officer of CLAIMANT, approached Mr. Winter, the general sales manager
of RESPONDENT, to enquire about a delivery of 100 metric tons of coltan to CLAIMANT.
27 March 2014 - Mr Storm and Mr Summer who were at the time both in the offices of
CLAIMANT signed the contract and faxed it on 27 March 2014, 15:35 RST to Mr Winter.
28 March 2014- Mediterraneo Mining SOE signed the contract for the delivery of 30 metric tons
of coltan. For the price US dollars 45 per kilogram.
25 June 2014 –RESPONDENT informed CLAIMANT and Global Minerals about free 150
metric tons of coltan.
25 June 2014 - RESPONDENT send a Notice of Transport to CLAIMANT by email.
27 June 2014 at 15:00 RST CLAIMANT and Global Minerals sent a fax to RESPONDENT
asking for the delivery of 100 metric tons, as per the earlier negotiations.
4 July 2014 - Trade Bank faxed a Letter of Credit for 4.500.000 US dollars to RESPONDENT.
7 July 2014 - RESPONDENT sent a letter to CLAIMANT, according to which
RESPONDENT said about avoidance of the contract. The reasons for avoidance were the
following: the Letter of Credit dated 4 July 2014 relates to 100 metric tons of coltan instead of 30
metric tons; the Letter of Credit dated 4 July contains different delivery terms.
8 July 2014 - Trade Bank sent the second Letter of Credit dated 8 July 2014 to RESPONDENT
by courier at 9.00 am RST.
8 July 2014 - The Global Minerals send a copy of the Letter of Credit dated 8 July 2014 issued by
Trade Bank Ltd over US dollars 1,350,000 at 17.42 RST by fax.
8 July 2014 - RESPONDENT received a fax from Global Minerals at 22.42 MST on 8 July 2014.
9 July 2014 – The Letter of Credit was delivered to RESPONDENT at 0.05 MST.
9 July 2014 - RESPONDENT read the fax Letter of Credit in the morning.
2
9 July 2014 - RESPONDENT sent a second letter of avoidance by email and courier. The
reasons for avoidance were the following: the action of the second Letter of Credit has expired
on July 8 2014; the new Letter of Credit now requires as an additional document a commercial
invoice.
11 July 2014 – The Secretariat acknowledges the receipt of CLAIMANT`s Application for
Emergency Measures (“Application”), CLAIMANT`s Request for Arbitration (“Request”).
12 July 2014 - The President of the International Court of Arbitration of the International
Chamber of Commerce appointed Ms. Chin Hu as Emergency Arbitrator.
26 July 2014 - Ms. Chin Hu issued the order of the Emergency Arbitrator and sent it by e-mail to
CLAIMANT and RESPONDENT.
8 August 2014 - RESPONDENT sent Answer to Request for Arbitration Counterclaims and
Request for Joinder by Courier.
8 August 2014 - The Secretariat acknowledges receipt of 6 copies of RESPONDENT`s: Answer
to Request for Arbitration, Counterclaims and Request for Joinder and notifies Global Minerals
Ltd. about the Request for Joinder.
8 September 2014 - Reply to the Counterclaim, Answer to Request for Joinder was sent to The
Secretariat of the International Court of Arbitration, International Chamber of Commerce from
Horace Fasttrack, advocate of Vulcan Coltan Ltd and Global Minerals Ltd.
18 September 2014 - The International Court of Arbitration decided that this arbitration will
proceed with respect to the Additional Party; confirmed Dr Arbitrator One as co-arbitrator upon
CLAIMANT`s and the ADDITIONAL PARTY`s joint Nomination; confirmed Ms Dos as co-
arbitrator upon RESPONDENT`s nomination; appointed Mr Henry Haddock as president of
the arbitral tribunal upon the Danubian National Committee's proposal; fixed the advance on
costs at US$ 240 000, subject to later readjustments.
22 October 2014 - The Arbitral Tribunal and the Parties discussed, agreed, and signed the Terms
of Reference and drafted a list of questions that must be considered at the hearing.
3 October 2014 - Letter from the President of the Tribunal Mr. Henry Haddock was sent to
Horace Fasttrack and Joseph Langweiler enclosed Procedural Order No 1.
29 October 2014- Following the Procedural Order No 1 dated 3 October 2014, the Arbitral
Tribunal issued Procedural Order No 2, clarifications and corrections.
3
SUMMARY OF ARGUMENTS
1. RESPONDENT respectfully asks the arbitral tribunal to declare that it has jurisdiction over
Global Minerals (PROCEDURAL ISSUE I). Respondent position is that Global Minerals is a
party to the contract and arbitration agreement contained therein. Moreover, even if the arbitral
tribunal decides that the Global Minerals is not a party to the contract, RESPONDENT asserts
that the Guarantee provisions justify the extension of arbitration agreement over Global
Minerals. Also, RESPONDENT states that the arbitration agreement can be extended over
Global Minerals under the Group of Companies Doctrine. And finally, RESPONDENT submits
that Good Faith Considerations justify the extension of arbitration agreement over Global
Minerals.
2. RESPONDENT’s position is that CLAIMANT is not entitled to receive 30 metric tons of coltan
under the contract (ISSUES ON MERITS). RESPONDENT declares that its avoidance of the
Contract on 7 July is legitimate and CLAIMANT is not entitled to receive 30 metric tons of
coltan under the contract. Namely, CLAIMANT has not fulfilled its obligation to establish
proper L/C in compliance with the terms of the Contract, which constitute the fundamental
breach, and allowed for RESPONDENT to avoid the contract. Moreover, as RESPONDENT
insists CLAIMANT did not provide an adequate assurance of its performance, which allowed to
avoid the contract too before the date for performance of the Contract. And then
RESPONDENT rightfully avoided the contract on 9 July 2014. Namely, the late delivery of L/C
2 and the insertion of an additional document to the L/C 2 (commercial invoice), which
RESPONDENT should present to the bank in order to obtain payment, substantially deprive
RESPONDENT of what it expected under the contract. Both of these deviations constitute a
fundamental breach of the contract, which lead to a legitimate avoidance of the Contract by
RESPONDENT in both cases.
3. RESPONDENT asserts that the order of the Emergency Arbitrator should not be lifted by the
arbitral tribunal (PROCEDURAL ISSUE II). RESPONDENT submits that under Art. 29 (6)b
of ICC Rules 2012 the parties did opt out the Emergency Arbitrator provisions. Moreover,
RESPONDENT states that the substantive requirements for granting interim measures are not
fulfilled.
4
PROCEDURAL ISSUE I
I. THE ARBITRAL TRIBUNAL HAS JURISDICTION OVER GLOBAL MINERALS
4. Contrary to CLAIMANT`s submission [M for Cl., para 27] RESPONDENT respectfully asks the
arbitral tribunal to declare that it has jurisdiction over Global Minerals. Firstly, RESPONDENT
asserts that Global Minerals is a party to the contract and arbitration agreement contained therein
(1). Secondly, RESPONDENT states that the Guarantee provisions justify the extension of
arbitration agreement over Global Minerals (2). Thirdly, RESPONDENT declares that the
arbitration agreement can be extended over Global Minerals under the Group of Companies
Doctrine (3). And finally, RESPONDENT submits that the Good Faith Considerations justify
the extension of arbitration agreement over Global Minerals (4).
1. Global Minerals is a party to the contract and the arbitration agreement contains therein
5. Contrary to CLAIMANT`S statement [M for Cl., paras 29-31] RESPONDENT asserts that
Global Minerals concluded the Coltan Purchase Contract by signing it and performing its
obligation under the contract. Moreover, RESPONDENT respectfully asks the arbitral tribunal
to declare that Global Minerals is a party to arbitration agreement contained in Coltan Purchase
Contract between CLAIMANT and RESPONDENT.
6. It is obvious for RESPONDENT, that Coltan Purchase Contract had originally been concluded
with Global Minerals and then, at the request of Global Minerals “formally” been transferred to
CLAIMANT [Answer toReq. for Arb, Ex. R 1, para 4].
7. Moreover, Global Minerals performed the buyer`s obligations for Coltan Purchase Contract
under provisions of CISG. Under Art. 54 of the CISG “buyer's obligation to pay the price includes taking
such steps and complying with such formalities as may be required under the contract or any laws and regulations
to enable payment to be made”. The position of RESPONDENT is that Global Minerals’ actions on
providing payment securities should be viewed as a performance of the buyer obligations.
8. Under Art. 4 of the Coltan Purchase Contract the Letter of Credit in the amount of US$
1,350,000 shall be established by the Buyer not later than fourteen days after the Buyer received
the Notice of Transport in regard to shipment [Req. for Arb, Ex. C 1, p.7].
9. At the same time, parties agreed that Global Minerals’ bank will issue the Letter of Credit to
secure the deal, and that Global Minerals signed the contract to “endorsed” it [PO 2, para 12; PO
2, para 17].
10. RESPONDENT asserts that while performing the obligations under the Coltan Purchase
Contract Global Minerals became a party to arbitration agreement. This position is supported by
5
the case law, Cour de cassation stated “…[t]he effect of international arbitration clauses extends to the
parties directly involved in the performance of the contract and any disputes that may arise in connection
therewith…” [Société Alcatel Business Systems (ABS), Société Alcatel Micro Electronics (AME) et Société
AGF v. Amkor Technology Case]. As it already mentioned, Global Minerals performed the
obligation under the Contract, and it mean that it becomes a party to arbitration agreement
contained therein.
11. Contrary to the CLAIMANT’S argument [M for Cl., para 32] RESPONDENT states that the fact
that Global Minerals endorsed the contract means that it becomes a party to the Coltan Purchase
Contract.
12. Black’s Law Dictionary defines “endorsement” as “…the signing of a legal document in a legal
capacity…” [Black’s Law Dictionary]. Thus, RESPONDENT declares that Global Minerals signed
the Coltan Purchase Contract by endorsing it.
13. Hence, Global Minerals endorsed the Coltan Purchase Contract to confirm its involvement in
the terms of Coltan Purchase Contract including arbitration clause, and in the present
circumstances Global Minerals is bound by arbitration agreement.
2. The Guarantee provisions justify the extension of arbitration agreement over Global
Minerals
14. Whether the arbitral tribunal decides that Global Minerals is not a party to the contract between
CLAIMANT and RESPONDENT, RESPONDENT declares that contrary to CLAIMANT`S
submission [M for Cl., para 33] Global Minerals is under scope of application of the arbitration
agreement due to its guarantee obligations.
15. RESPONDENT submits that Global Minerals may be bound by the arbitration agreement
contained in a contract which it did not sign. The extension of the arbitration agreement over the
third parties is widely used in case law [Société Korsnas Marma v. Société Durand A Auzias; Société Ofer
Brothers v. The Tokyo Marine and Fire Insurance Co Ltd].
16. RESPONDENT declares that Global Minerals has guarantee obligations in regard to the Coltan
Purchase Contract.
17. In regard to the case mentioned by CLAIMANT [M for Cl., paras 34-35] RESPONDENT
declares that it is not applicable to the present dispute. There should be exceptions when “…the
guarantor has expressed, explicitly or by its conduct, the intention to be bound by the arbitration
clause in the main contract…” [Thomas Müller]. RESPONDENT’s position is that the conduct of
Global Minerals confirms the readiness to be bound by arbitration agreement and such conduct
is observed in subsequent submissions [paras 21-25 infra].
6
18. Because of previous experience with the subsidiaries of Global Minerals, RESPONDENT
insisted that Global Minerals should provide sufficient security for the payment obligations
[Answer to Req. for Arb, para 5]. Moreover, RESPONDENT from the very beginning insisted that
Global Minerals should guarantee the fulfillment of such payment obligations and endorsed the
contract to confirm such security provisions [Answer to Req. for Arb, para 7; Answer to Request for
joinder, para 6].
19. In Stellar Shipping Co LLC v Hudson Shipping Lines, the Commercial Court proclaim, that it has
jurisdiction over the Guarantor to the contract between its subsidiary and another party. Given
the close connection between the contract and the guarantee, and between the parties involved,
one would expect them, as rational businessmen, to agree a common method of dispute
resolution. [Stellar Shipping Co LLC v Hudson Shipping Lines].
20. In conclusion RESPONDENT states that the Guarantee provisions justify the extension of
arbitration agreement over Global Minerals.
3. The arbitration agreement can be extended over Global Minerals under the Group of
Companies Doctrine
21. Contrary to CLAIMANT`s assertion [M for Cl, para38] RESPONDENT submits that Global
Minerals Ltd. is a proper party to the contract and must be bound to arbitrate under the Group
of Companies doctrine.
22. According to the definition given by Wilske under the Group of Companies Doctrine, the
arbitration agreement can be extended to “the parent or other affiliate company” of the signatory
of arbitration agreement “provided that such non-signatory was somehow involved in the
conclusion, performance or termination of the contract in dispute” [Wilske, Stephan, Shore,
Laurence Ahrens, Jan-Michael].
23. In the present case Global Minerals is a party of arbitration agreement because of its signature
under the contract containing the arbitration clause and its participation in the negotiation and
fulfillment of the contract [paras 5-13 supra].
24. It is important to consider that the UNCITRAL Working Group on Arbitration sustained that
the group of companies fact pattern might not require a written arbitration agreement, noting
that this theory had been applied repeatedly by arbitral tribunals and even had been approved by
some courts. [Kryvoi Yaraslau].
25. The arbitral tribunal must find that the arbitration agreement can be extended over Global
Minerals under the Group of Companies Doctrine because the Group of Companies Doctrine is
7
used in international arbitration to justify the extension of arbitration agreement. (3.a.) and the
requirements under the Group of Companies Doctrine are fulfilled (3.b.).
3.a. The Group of Companies Doctrine is used in international arbitration to justify the
extension of arbitration agreement
26. It is RESPONDENT’S submission that, contrary to CLAIMANT’S allegations [M for Cl., para
41] the Group of Companies Doctrine have a solid foundation and is supported by case law. The
doctrine has been widely accepted amongst arbitrators.
27. The application of the Group of Companies Doctrine is most precisely described in Dow
Chemical case, where the arbitral tribunal held that “the arbitration clause expressly accepted by
certain companies of the group should bind the other companies which, by virtue of their role in
the conclusion, performance, or termination of the contracts containing said clauses, and in
accordance with the mutual intention of all parties to the proceedings, appear to have been
parties to these contract so to have been principally concerned by the disputes to which they
may give rise” [ICC Award No. 4131].
28. It is clear that the civil law jurisdictions undoubtedly been the most favorable to the ‘Group of
Companies’ Doctrine. The French Court of Appeals of Pau even went as far as declaring the
doctrine as a legal rule, where it was stated that “a group of companies indeed possesses,
notwithstanding the separate legal personality pertaining to each of them, a unique economic
reality, which the courts have to take into consideration, when extending the arbitration
agreement over third parties within a group” [Sponsor A.B. v. Lestrade].
29. The doctrine was upheld by the French courts, for example in kis France S.A. the Court of
Appeal of Paris considered that the arbitrators fairly decided that there was a common intention
of all the parties within a group of companies to consider the parent company liable for the debts
of its subsidiaries which therefore allow to extend the arbitration clause over them [Kis France SA
v. SA Societe Generale].
30. Following this line, the ICC arbitral tribunal in Venezuela held that the participation of second
respondent in the preparation and execution of the contract in dispute may determine the
intention of the parties and can be inferred as an extension of the contract and arbitration clause
to the second respondent [ICC Bulletin Award No. 11160].
31. As for common law system, the Win Line case establishes that Singapore is prepared to accept
the Group of Companies Doctrine as valid law within the jurisdiction [The Singaporean High Court,
Win Line (UK) Ltd v Masterpart (Singapore)]. U.S. courts inclined to recognize the extension of an
arbitration agreement to non-signatories. The Federal Court of the Southern District of New
York accepted a group of companies plea, in which it held that “since it had itself invoked the
8
arbitration provided for in a chater party of which it was not a signatory, but which it negotiated,
the parent company could not deny being bound by the arbitration clause contained in this
document [YCA 1993, pg. 499, US 129].Also, New York courts have found non-signatories
bound by an agreement to arbitrate where the signatories are their alter egos. [Wm. Passalacqua
Builders v Resnick Developers].
32. Considering Danubian law as lex arbitri contrary to para 49 M for Cl. the arbitral tribunal cannot
exclude the possibility of using the Group of Companies Doctrine only because there have been
no decisions by the Danubian courts on the doctrine so far [PO 2, para 46] as all the
preconditions for application of the Group of Companies Doctrine are met in the present case
[paras 34-48 infra].
33. Hence, The Group of Companies Doctrine has been used for quite some time and in a
considerable amount of awards by arbitral tribunals to justify the extension of an arbitration
agreement to third non-signatory parties.
3.b. The requirements under the Group of Companies Doctrine are fulfilled
34. The Group of Companies Doctrine is a legal theory that enables to enjoin non-signatory parties
to arbitration. It arose out of the Dow Chemical ICC award, where the tribunal held that,
notwithstanding the distinct legal entities of its members, a group of companies constitutes one
and the same economic reality. Moreover, through their involvement in the conclusion,
performance, or termination of the contract, all the parties had consented to the non-signatories’
participation in the arbitration agreement included in the underlying contract [ICC Award No.
4131].
35. Contrary to CLAIMANT assertion [M for Cl., para 51] the RESPONDENT submits that the
arbitral tribunal must find that the requirements under the Group of Companies Doctrine are
fulfilled because Global Minerals controls CLAIMANT (3.b.i.), The Global Minerals and
CLAIMANT`S involvement into the Contract constitutes one economic reality (3.b.ii.) and
Global Minerals is bound by the arbitration agreement (3.b.iii.).
3.b.i. Global Minerals controls CLAIMANT
36. CLAIMANT’S arguments do not prove the absence of control of Global Minerals over
CLAIMANT. Contrary to CLAIMANT's assertion in para 55 M for Cl., first, Global Minerals
«participates in CLAIMANT’S day-to-day operation»: it established a Letter of Credit [Req. for
Arb, Ex. C 5, p.11]. Second, while owning more than 50 percent of the voting stock of another
company ensures control, in our case CLAIMANT is 100 % subsidiary company and has not its
own financial system. The Global Minerals is a parent company and it was clear that all financial
9
operations will be created for the account of Global Minerals [Req. for Arb, Ex. C 5, p.11, Ex. C 8,
p.14]. Also, RESPONDENT send most of its correspondence concerning the contract to both
parties and also on the “buyer’s side” correspondence was regularly conducted not only by
representatives from Vulcan Coltan but by Mr Storm, too [Req. for Arb, Ex. C 4, Ex. C 6]. The
Global Minerals Ltd. acts as a guarantor of fulfillment of obligations under the contract, it was
important for it to take part in negotiations and to control CLAIMANT.
37. In 1978, in the Amoco Cadiz case the Court found that Amoco Transport was merely a nominal
owner of the Amoco Cadiz and that Standard Oil controlled the design, construction, operation
and management of the tanker and treated it as if it belonged to Standard Oil [The Amoco Cadiz].
The Court found Standard Oil liable in tort for its negligent supervision of its subsidiaries.
Additionally, the Court saw little rationale for treating Standard Oil differently from its
subsidiaries, which were treated as mere “instrumentalities”. The negligence of the subsidiaries
was therefore assigned directly to the parent. That what should be done to Global Minerals in the
present dispute.
38. Moreover, contrary to para 56 of the M for Cl., RESPONDENT submits that both Mr. .Summer
and Mr. Storm signed the contract and faxed it on 27 March 2014, 15:35 RST to Mr. Winter who
signed it the next day upon arrival in the office [PO 2, para 11, p.64].
39. Hence, RESPONDENT submits that the arbitral tribunal should regard that Global Minerals has
excessive control over CLAIMANT.
3.b.ii. Global Minerals and CLAIMANT involvement into the Contract constitutes one
economic reality
40. The “one economic reality” theory is applicable to the issue of contractual liability. In ICC Case
5103 the tribunal reasoned that “[t]he security of international commercial relations requires that
account must be taken of these economic realities and that all the companies of the corporate
group must be held jointly and severally liable [where] they have directly or indirectly benefited”
from the contract [ICC Case No. 5103]. In a more recent case, the arbitral tribunal relied in part
on the Group of Companies Doctrine to find that a State entity, which was one of the
respondents in the case, could be held liable for the acts of a second respondent in the case, who
represented a sub-division (i.e. the Ministry of Agriculture) of that State entity [ICC Case No.
9762]. Furthermore, scholars writing on the Group of Companies Doctrine have noted that,
“related companies which share a common interest with regard to a specific contract are
presumed to have a common will” by virtue of which the contract is extended to the non-
signatory company [DERAINS & GOODMAN-EVERARD].
10
41. Global Minerals and CLAIMANT are related members in a group of companies and their
participation in relation to the contract of sale and arbitration agreement is effectively
inseparable.
42. RESPONDENT submits that contrary to CLAIMANT’s contentions [M for Cl., para 61] despite
the some independence of its individual entities, a group of companies constitutes one and the
same economic reality where the circumstances of a contract’s conclusion, performance, and
termination, and the degree of influence amongst members of the group warrants such an
inference [ICC Award No. 4131]. When the claims against the companies are based on the same
facts and are inherently inseparable, a party which has not signed the arbitration agreement
should be considered bound by the agreement, or else the arbitration proceedings would be
rendered meaningless [J.J. Ryan & Sons].
43. In the present case, the involvement of Global Minerals Ltd. in the relationship with
CLAIMANT constitutes “one and the same economic reality” because Global Minerals Ltd. is
not only 100 % parent company of CLAIMANT, but Vulcan Coltan is entirely dependent upon
Global Minerals [paras 36-39 supra]. The parties manifested their intent that Global Minerals be a
party to the contract of sale and arbitration agreement by involving Global Minerals in the
performance of the contract [para 36 supra]. Moreover, the Letter of Credit was provided by
Global Minerals [Req. for Arb, Ex. C 5, p. 11] and CLAIMANT in its correspondence in regard to
the performance of Coltan Purchase Contract never made CLAIMANT separate from Global
Minerals [Req. for Arb, Ex. C 4, p. 10; Ex. C 6, p. 12].
44. Based on the foregoing, the RESPONDENT requests to declare the arbitral tribunal that Global
Minerals and CLAIMANT involvement into the contract constitutes one economic reality.
3.b.iii. Global Minerals is bound by the arbitration agreement
45. RESPONDENT disagrees with CLAIMANT’s statement that Global Minerals never sought
to be a party to the arbitration agreement [M for Cl., para 66] and considers that Global Minerals
is a party to the arbitration clause because of its signature under the contract containing the
clause and its role in the negotiation and fulfillment of the contract [paras 5-13 supra].
46. In ICC cases No. 5721 and 5730 the arbitral tribunal concluded that the arbitration clause that
had been signed by the subsidiary company also was applicable to the parent company [ICC Case
No. 5721; ICC Case No. 5730].
47. Refuting CLAIMANT’s assertion in para 46 M For Cl. RESPONDENT submits that the
arbitral tribunal should consider the application of the Group of Companies Doctrine because
Global Minerals Ltd. is a party to the contract and arbitration agreement.
48. In conclusion, the basic preconditions of the application of the Group of Companies Doctrine,
11
has been established. Accordingly, the Group of Companies Doctrine is applicable to justify the
extension of arbitration agreement over Global Minerals in the present case.
4. Good Faith Considerations justify the extension of arbitration agreement over Global
Minerals
49. Contrary to CLAIMANT assertion [M for Cl., para 75] RESPONDENT states that good faith
consideration has all grounds to draw Global Minerals to the arbitration proceedings.
50. The doctrine of estoppel in broad terms prevents one party from taking advantage of another
when the former by his actions has let the latter to act in the certain manner detrimental to the
latter’s own interests. The principle of good faith is at the root of this doctrine [Chittharanjan F.
Amerasinghe].
51. Courts have recognized estoppel as a basis for permitting a non-signatory to invoke an arbitration
agreement: where a party claims rights as a party under a contract, which contains an arbitration
clause, it may be estopped from denying that it is a party to the arbitration provision [Thomson-
CSF, SA v. American Arbitration Association] (courts are “willing to estop a signatory from avoiding
arbitration with a non signatory when the issues the nonsignatory is seeking to resolve in
arbitration are intertwined with the agreement that the estopped party has signed”).
52. The estoppel wording or approach is used in arbitral awards rendered in Europe, based on the
theory of good faith or the theory of apparent mandate or ostensible authority.
53. The doctrine of estoppel provides two grounds for compelling non-signatories of an arbitration
agreement to arbitrate. The first ground stipulates that a non-signatory is estopped from refusing
to comply with an arbitration clause when it receives a direct benefit from a contract containing
an arbitration clause [Hanotiau]. The second ground states that the application of equitable
estoppel is warranted when the signatory to the contract containing an arbitration clause raises
allegations of substantially interdependent and concerted misconduct by both the non-signatory
and one or more of the signatories to the contract [Grigson v. Creative Artists Agency L.L.C.].
54. Global Minerals became bound and liable by virtue of its conduct during the performance of the
Contract. First, Global Minerals should be estopped from denying it is a party to the arbitration
agreement, as it received a direct benefit from the Contract [Answer to Req. for Arb, Ex. R 1, para
3, p. 40; Answer to Req. for Arb, para 17, p.36; Answer to Req. for Arb, Ex. R 3, p. 43]. Under direct
benefits estoppel, a nonsignatory plaintiff seeking the benefits of a contract is estopped from
simultaneously attempting to avoid the contract's burdens, such as the obligation to arbitrate
disputes [In re Kellogg Brown & Root Inc.].US courts adopted a theory of equitable estoppel and held
12
that a party that receives a direct benefit under a contract is estopped from denying that it is party
to the contract`s arbitration clause [American Bureau of Shipping v. Tencara Shipyard S.P.A].
55. Second, given Global Minerals’s conduct and the facts of the case the arbitral tribunal should
find that Global Minerals assumed the contractual obligations of the Coltan Purchase Contract
and therefore should be held liable. Global Minerals by its behaviour and in particular the
endorsement of the contract created the impression that it would “stand behind the contract,
inducing RESPONDENT to sign it” [Answer to Req. for Arb, para. 28, p. 37-38]. It is therefore
reasonable that both CLAIMANT and Global Minerals be held liable for the failure to comply
with the terms of the Coltan Purchase Contract and bound by the arbitration agreement
contained therein, as illustrated by a recent arbitration case in Sweden. A tribunal proceeding
under the SCC Rules found that a non-signatory party, by virtue of its conduct, could be bound
to a contract, including its arbitral clause, and be held liable for breach of that contract [SCC No.
108/1997]. The Swiss Supreme Court recently confirmed an award rendered against a sole
shareholder for damages due by a company and reasoned that despite not being a signatory to the
contract at issue, the shareholder had played an important role in the execution of the contract,
he was aware of the terms of the agreement, and consequently it would be contrary to the
principle of good faith not to consider him a party to the agreement [ATF 129 III 727].Hence,
where a non-signatory claims or exercises rights as a party under a contract, which contains an
arbitration clause, the non-signatory will typically be estopped from denying that it is a party to
the arbitration clause. As one U.S. court put it: “in short, [plaitiff] cannot have it both ways. it
cannot rely on the contract when it works to its advantage and ignore it when it works to its
disadvantage” [Tepper Realty Company v. Mosaic Tile Company].
56. On the conclusion, all preconditions of the good faith doctrine are met. RESPONDENT asserts
that the arbitral tribunal must find that the good faith considerations justify the extension of
arbitration agreement over Global Minerals.
57. Based on the above RESPONDENT states that the arbitral tribunal has jurisdiction over Global
Minerals.
ISSUES ON MERITS
II: CLAIMANT IS NOT ENTITLED TO RECEIVE 30 METRIC TONS OF COLTAN
UNDER THE CONTRACT
58. In regard to issues on merits, RESPONDENT submits that CLAIMANT is not entitled to
receive 30 metric tons of coltan under the contract. RESPONDENT asserts that it rightfully
13
avoided the Contract both on 7 July 2014 and 9 July 2014. RESPONDENT rightfully avoided
the Contract on 7 July 2014 due to the fact that CLAIMANT has not fulfilled its obligation to
establish proper Letter of Credit (hereinafter – L/C) in compliance with the terms of the contract
and this failure constitutes a fundamental breach. Thus, RESPONDENT rightfully avoided the
contract.
59. RESPONDENT respectfully asks the arbitral tribunal to hold that RESPONDENT rightfully
avoided the contract on 9 July 2014. The late delivery of L/C 2 substantially deprives
RESPONDENT of what it expected under the contract. The same may apply to the insertion of
an additional document to the L/C 2 (commercial invoice), which RESPONDENT should
present to the bank in order to obtain payment. Both of these deviations constitute a
fundamental breach of the contract, and lead to a legitimate avoidance of the contract by
RESPONDENT.
60. Art. 53 of CISG stipulates that buyer’s obligations are to pay the price for the goods and take the
delivery of goods. Moreover, under Art. 54 of CISG, buyer's obligation to pay the price includes
taking such steps and complying with such formalities as may be required under the contract or
any laws and regulations to enable payment to be made. CLAIMANT failed its obligations under
the contract and CISG, by failing to establish a proper L/C that had to be in a compliance with
the terms of the contract.
61. Under Art. 64(1)(а) CISG, seller may declare the contract avoided if buyer fails to perform, and
this failure amounts a fundamental breach.
62. RESPONDENT agrees with the position of CLAIMANT in paras 88-89M for Cl. in part of
contractual obligations between the parties, namely about amount of coltan which was
established in Art. 4 of Contract [Req. for Arb, Ex C 1, p. 7]. But, notwithstanding to that,
RESPONDENT does not agree with the position of CLAIMANT on the rightfulness of the
avoidance of the contract as:
1) CLAIMANT has not fulfilled its obligations to establish proper L/C, as L/C 1 were established
with several deviations as different sum of money, different quantity of Coltan and different
delivery terms [Req. for Arb, Ex. C. 5, p. 11];
2) CLAIMANT failed to notify RESPONDENT about the establishment of L/C 2 during the term,
stipulated in the contract [Req. for Arb, Ex. C. 1, Art. 4, p. 7];
3) CLAIMANT unilaterally changed the provisions of L/C 2, in particular, added an additional
document - commercial invoice [Req. for Arb, Ex. C. 8, p. 14]. Unilateral insertion of additional
document to the text of L/C 2 should be considered as a fundamental breach of contractual
14
relationships among the market of trade commodities and breach of principle of mutual assent.
These breaches lead to the right to avoid the contract.
A. RESPONDENT’s avoidance of the contract on 7 july 2014 is legitimate
63. CLAIMANT in para 90 stated that RESPONDENT’s avoidance of contract on 7 July 2014 is
invalid [M for Cl., para 90]. Contrary to the CLAIMANT’s position RESPONDENT calls the
arbitral tribunal to recognize the avoidance of the Contract on 7 July valid, as CLAIMANT has
not fulfilled its obligation under the contract and under Art. 54 CISG (1), the establishment of
inappropriate L/C 1 by CLAIMANT constitutes a fundamental breach of contract in the sense
of Art. 25 CISG (2). Moreover all requirements under Art. 72 CISG for avoidance were fulfilled
by RESPONDENT, namely the offering of the reasonable period for providing adequate
assurance of CLAIMANT’s performance (3).
1. CLAIMANT has not fulfilled its obligation under the Contract and under Art. 54 CISG
64. CLAIMANT in para 91 asserts that the L/C was established in conformity with the contract and
in line with its obligation under the CISG [M for CL. para 91]. RESPONDENT alleges that
CLAIMANT had no right to change the terms of Letter of Credit of 4th July 2014 (hereinafter –
L/C 1), because such changes inconsistent with Art. 54 CISG.
65. The market of coltan is characterized by high volatility and instability, supply and demand are
highly volatile [Req for Arb, para 4, p. 3], and therefore the principle of strict compliance must
be observed by parties for normal work of this market and for regulation of risk, connected with
instability. In the commodities market strict standards are of particular importance [Katrina
Winsor, para 4.3.2].
66. RESPONDENT submits that CLAIMANT violates the principle of strict compliance, which is
required within the highly volatile market. As Prof. Dr.Ulrich G. Schroeter writes the principle of
strict compliance requires the tendered documents (L/C) to precisely conform to the
contractual specifications [Schlechtriem, p. 432, Art. 25, para 63]. In their contract parties
established clean cut provision that a L/C in the amount of US$ 1,350,000 shall be established
[Req. for Arb, Ex. C 1, p. 7, Art. 4]. Moreover, the exact amount of coltan is agreed between the
parties in Art. 3 of the contract. CLAIMANT did disobey the provisions of contract, changing
the conditions in established L/C 1 in unilateral order and did not take into account that it was
not entitled to make unilateral changes.
67. Under Art. 29 CISG the contract between the parties may be modified by the mere agreement of
the parties. The principle of mutual assent prohibits to change provisions on a unilateral basis
[BEN-SHANAR, p. 1829], as CLAIMANT made by changing the provisions of L/C 1.
15
68. Pr. Dr. Florian Mohs notes that duty of both parties is to cooperate and inform [Schlechtriem, p.
812, Art. 54, para 4], but CLAIMANT strove to its interests to get the 100 metric tons of coltan,
as it assented during preliminary negotiations [Req for Arb, p. 3, para 6].
69. Moreover in traditional CIF contract, deviations from the prescribed standard in documentary
performance are prohibited and the ability to cure any defects in the documentation does not
extend to commodities markets [Katrina Winsor, para 4.3.2].
70. In this regard CLAIMANT broke the provisions of contract and established the L/C 1 which
contradicts to contract provisions, therefore CLAIMANT has not fulfilled its obligation under
the contract.
71. As CLAIMANT submitted in para 92-93 M for Cl., the UCP 600 is applicable for contractual
obligations as it is established in Art. 4 of the Contract [Req. for Arb, Ex. C 1, p. 7, Art. 4]. But the
Art. 14(d) of UCP 600 regulates similarity of the documents under Letter of Credit with
international standard banking [Felicity Monteiro], but not with the contract as CLAIMANT
submits in para 93 of M for Cl.
72. Art. 54 CISG fixes that Letter of Credit must be considered as preparation for payment of the
price under the contract [Digest of case law, Art. 54, para 1]. And if party violates these preparative
actions the sufferer could resort to the remedies in Art. 61 CISG, namely Art. 64 CISG of
avoidance [Digest of case law, Art. 54, para 3]. The position that Letter of Credit might be identical
with contract’s provisions for fulfilling its main obligations is supported by Supreme Court of
Queensland in Downs Investments Pty Ltd. v. Perwaja Steel SDN BHD case.The Court found that
“the failure to establish a letter of credit was a failure by the buyer to meet its "obligation to pay
the price of the goods in the meaning of Art. 54 CISG, which in fact states that the buyer's
obligation to pay the price includes taking such steps and complying with such formalities as may
be required under the contract or any laws and regulations to enable payment to be made”
[Down Investments Pty Ltd. v. Perjawa Steel SDN BHD)].
73. Summarizing all mentioned above, RESPONDENT calls the arbitral tribunal to decide that
changes in the L/C 1 made by CLAIMANT contradict to the principle of strict compliance in
commodity trade which is of essence. The deviations in L/C 1, namely the amount of money
stated in the L/C 1 (1.a.),the quantity of goods stated in the L/C 1 (1.b.),the Delivery Term
contained in the L/C 1 (1.c.)constitute the failure to perform obligations under the Contract and
break the provisions of Art. 54 CISG. Therefore inappropriate L/C 1 amounts to a fundamental
breach and gives right to RESPONDENT for contract avoidance.
16
1.a. The amount of money stated in the L/C 1 is not in conformity with the Contract
74. CLAIMANT asserts, that the amount of money stated in L/C 1 is in accordance with the
contract provisions [M for Cl., para 94]. In contrast RESPONDENT alleges that the amount of
money, stated in that L/C 1 is not in conformity with the contract for following reasons.
75. Parties entered into contractual obligations, where Art. 4 of the Contract stated that the Letter of
Credit in the amount of US$ 1,350,000 would be established by Buyer [Req. for Arb,Ex. C. 1, p. 7,
Art. 4].Under Art. 54 of CISG, the buyer's obligation to pay the price includes taking such steps
and complying with such formalities as may be required under the contract or any laws and
regulations to enable payment to be made [CISG, Art. 54]. Moreover, in a case of using of Letter
of Credit, if the beneficiary does, however, notice a significant divergence (for example, as to the
mode of availability of the credit, period of its validity, its description of the requisite documents,
the latest time for negotiation, the deliverable quantity of the merchandise, date of shipment, the
sum on the credit and the currency of account), the buyer-applicant will ordinarily be in
repudiatory breach of his obligation to open the bargained Letter of Credit [Letters of Credit: The
Law and Practice of Compliance, Part I, p. 130].
76. In present case, CLAIMANT established L/C 1 that stated larger amount of money, namely US$
4,500,000 [Req. for Arb, Ex. C. 5, p. 11]. A larger sum of money stated in L/C 1, is definitely a
breach of the contract, as buyer failed to comply with the terms of the contract and failed to take
such steps to enable payment to be made. Both of this failure leads to a fundamental breach of
the contract.
1.b. The quantity of goods stated in the L/C 1 is not in conformity with the Contract
77. Contrary to CLAIMANT’s assertion that L/C 1 where the larger quantity of coltan is stated does
not in conflict with the amount agreed between the parties in the contract [M for Cl., para 96],
RESPONDENT submits that the quantity of coltan, stated in L/C 1 breaks the contract
provisions.
78. Parties entered into the contract, where Art. 3 stipulates, that the exact quantity of coltan will be
30 metric tons [Req. for Arb, Ex. C 1, p. 3, Art. 3]. But CLAIMANT established L/C 1, which
determines that RESPONDENT, in order to obtain payment, should present a packing list,
which should state “Coltan - not less than 30 metric tons” [Req. for Arb, Ex. C 5, p. 11]. Such
provision in the L/C 1 does not allow to identify the exact quantity of coltan and breaks the
principle of strict documentary compliance which is of essence in trade commodity [supra para
77]. Moreover, in conjunction with higher amount of price stated in L/C 1 undetermined
17
quantity of coltan could lead to manipulative behaviour of CLAIMANT in the future, what is
inappropriate, especially on the market of trade commodities [Katrina Winsor, para 4.3.2].
79. As was also stated before, in practice of using of Letter of Credit as a method of payment, if the
beneficiary does, however, notice a significant divergence (for example, the deliverable quantity
of the merchandise) the buyer-applicant will ordinarily be in repudiatory breach of his obligation
to open the bargained Letter of Credit [Letters of Credit: The Law and Practice of Compliance; para 78].
80. This is RESPONDENT’s position that a significant divergence in a quantity of deliverable
merchandise, made by CLAIMANT in established L/C 1, in addition to wrong sum of credit
leads to a fundamental breach of contract.
1.с. The Delivery Term contained in the L/C 1 is not in conformity with the Contract
81. Contrary to CLAIMANT’s position in paras 100-103 M for Cl. RESPONDENT insists that
parties have never changed the Delivery Term (and RESPONDENT has never expressed the
intention to change the contract provisions), and therefore CLAIMANT was obliged to establish
the L/C 1 with CIF delivery term, but not with CIP, as it did [Req. for Arb,Ex. C 5, p. 11; M for
CL., paras 100-103].
82. CLAIMANT in para 100 submits that the modification took place by the mere agreement of the
parties [M for CL., para 100]. But RESPONDENT asserts that it has never agreed to change the
delivery term. The Notice of Transport was not an offer to modify the delivery term, it was a
mistake of employee [PO2, para 20, p. 66]. And this slip could not be considered by reasonable
person as change of delivery term. Art. 8 CISG should be used to interpret the statements and
other conduct ofthe parties [Digest of case law, Art. 8, para 1]. First of all, Art. 8(1) CISG should be
applicable. In accordance with this provision for the purposes of the CISG statements made by
and other conduct of 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 [CISG, Art. 8(1)]. Under Art. 8(3)
CISG in determining the intent of a party due consideration is to be given to all relevant
circumstances of the case. In accordance with abovementioned provisions it was reasonable to
suppose that ticking the CIP box in the Notice of Transport [Req. for Arb, Ex. C 2, p.8] is just a
slip because: 1) other provisions of Notice of Transport (for example, choice of ship as a method
of transport, the only available for CIF delivery term, not for CIP), 2) the Contract in Art 5 [Req.
for Arb, Ex. C 1, p. 7] provides the CIF as delivery term 3) after conclusion of contract
RESPONDENT neither has expressed its intention to modify the delivery term nor illustrated
such intention in subsequent conduct.
83. Hence, the ticking CIP box in the Notice of Transport could not be considered as offer to
modify the Contract. These lead to the conclusion, that there was no mere agreement between
18
the parties to change the delivery term and CLAIMANT unilaterally changed it, consequently the
delivery term contained in the L/C 1 is not in conformity with the contract.
2. Inappropriate L/C 1 amounts to fundamental breach under Art. 25 CISG
84. RESPONDENT asserts that failure of CLAIMANT to fulfill its obligations under the contract
must be considered by the arbitral tribunal as fundamental breach of contract in the sense of Art.
25 CISG providing legal grounds for RESPONDENT to avoid the contract.
85. Under UNIDROIT principles the non-performance of contract also includes defective
performance [UNIDROIT 2010, Art. 7.1.1]. In present case incorrect letter of credit should be
considered as defective performance of the Contract.
86. Art. 25 CISG defines the terms and nature of fundamental breach. This article also establishes
that not only rude violation but and “the breach of a collateral duty can give rise to a
fundamental breach” [Digest of case law, Art. 25, para 2]. Moreover, the breach must therefore
nullify or essentially depreciate the aggrieved party’s justified contract expectations [Digest of case
law, Art. 25, para3]. This “expectations” must depend on the specific contract and the risk
allocation envisaged by the contract provisions, on customary usages. And using information
above incorrect L/C 1 leads to non-payment, that should be interpreted as depreciation of the
aggrieved party’s justified contract expectations, which regarded fundamental breach and allow to
avoid the contract by RESPONDENT. This position is supported by Dr. Florian Mohs, he
mentions that steps by buyer include and opening of a workable letter of credit, and obligation
to open of a workable L/C is identical with obligation of buyer to pay the price [Schlechtriem, p.
812-813, Art. 54, para 6]. As far as payment of contractual price is principal obligation of the
buyer [Digest of case law, Art. 53, para 1] the violation of this obligation should be considered by
the arbitral tribunal as fundamental breach.
87. Taking into account the fact that while interpreting the CISG regard is to be had to its
international character and the need to promote uniformity in its application [CISG, Art.7(1)] and
the fact that some jurisdictions, for example like English law, takes a strict view of documentary
performance with regard to trade commodities, the arbitral tribunal should find the non-strict
view in documentary compliance as an essential breach of obligations to be in international
sales contract [Katrina Winsor, para 4.3.2].
88. The case of L/C 1 includes several obligations in breach: 1) inconsistencies of L/C’s provisions
with provisions of contract (different amount of money, amount of coltan, and delivery terms)
[Req. for Arb,Ex. C 7 p. 13; Ex C 5 p.11; Ex C 1 p. 7] and 2) as consequence is non-payment
under the contract in the future when RESPONDENT could not get the payment from bank via
lack of conformity of documents that it would represent to a bank in payment. In this regard the
19
inconsistency of L/C 1 with contract provisions amounts to fundamental breach under Art. 25
CISG. The breach of established L/C 1 serves as a reason of substantial deprivation
RESPONDENT of what it is entitled to expect under the Contract (2.a.). CLAIMANT could
foresee the results of established L/C 1 (2.b.).
2.a. The breach of established L/C 1 serves as a reason of substantial deprivation
RESPONDENT of what it is entitled to expect under the Contract
89. RESPONDENT asserts that the breach of established L/C 1 serves as a reason of substantial
deprivation RESPONDENT of what it is entitled to expect under the contract. The main goal of
trade is to exchange one thing for another, which includes money for goods, goods for goods,
and favors for goods or money [A Law Dictionary, Adapted to the Constitution and Laws of the United
States. By John Bouvier], and therefore the sense of commerce is get the profit, hence non-receipt of
profit must be considered as fundamental depriving what it is entitled to expect under the
contract. This means that RESPONDENT only expects from CLAIMANT the payment of
price, which was established in the contract. Hence, if RESPONDENT does not get the money
for delivering goods, it will be deprived of what it is entitled to expect under the contract. When
L/C is inconsistent with contractual provisions, RESPONDENT could not get its money, as
RESPONDENT’s documents and their content are differ from those, which appointed by
CLAIMANT in the L/C for payment. This divergence of documents is a balk for payment, as
the bank may refuse to honor [UCP 600, Art. 16(a)]. In this respect CLAIMANT could not fulfill
its obligations to pay the price, because the steps under the Art. 54 CISG will be incorrect and
will not lead to fulfillment of the main obligation of buyer to make the payment of price under
the contract what would result to RESPONDENT in losing the main benefit of, and its interest
in, the contract.
2.b. CLAIMANT could foresee the results of established L/C 1
90. RESPONDENT supposes that argument of CLAIMANT in para 113 M for Cl. should be
admitted by arbitral tribunal as inconsistent, because CLAIMANT issued L/C 1 after the
conclusion of contract, consequently it is CLAIMANT’s responsibility to provide appropriate
L/C, which would confirm the provisions of contract. CLAIMANT definitely could foresee that
defective L/C may lead to detriments for RESPONDENT.
3. RESPONDENT avoided the Contract on 7 July 2014 abiding by the terms of Art. 72 CISG
91. RESPONDENT submits that the avoidance of contract on 7 July 2014 is in conformity with
rules and terms of Art. 72 CISG. RESPONDENT agrees that Art. 72 CISG could be used in this
case, as the avoidance of contract took place before the date of performance of contract (not
20
later than fourteen days after the Buyer received the notice of transport from Seller [Req. for
Arb,Ex. C 1, p.7; Ex. C 7, p. 13]). But RESPONDENT insists that the avoidance of contract on
7 July 2014 were legal and did not break the rules of CISG.
92. In this situation, what became the case of avoidance, CLAIMANT:
a) should admit that Parties never modify the due date of the performance (3.a.).
b) should foresee that the non-performance of its obligations under the contract could lead to the
avoidance of contract. Hence, CLAIMANT, consciously changed the terms of L/C 1, should
itself bear responsibility for all future consequences (3.b.).
c) had not provided adequate assurance of performance of contractual obligations for
RESPONDENT in the text of email on 5 July 2014 [Req. for Arb,Ex. C 6, p. 12] (3.c.).
93. These actions, and all mentioned above, allow RESPONDENT to avoid the contract under Art.
72 CISG.
3.a. The Parties never modify the due date of the performance
94. The argument of CLAIMANT in para 116-118 M for Cl. should be admitted by the arbitral
tribunal as inconsistent, because the disputes about modification of the due date of the contract’s
performance between Parties has never arisen. The contract was avoided by RESPONDENT,
because CLAIMANT could not provide the adequate assurance of its performance for
RESPONDENT under Art. 72(2) CISG, but not because the due date of the performance
expired.
3.b. CLAIMANT could foresee the avoidance of Contract as a result of its own violations
95. RESPONDENT insists that CLAIMANT should foresee avoidance of contract as a result of
establishment of L/C 1 which contradicts to the contract provisions.
96. When CLAIMANT established L/C 1, it had known about provisions of contract (namely, Art.
3, 4, 5 of Contract) [Req. for Arb,Ex. C 1, p. 7]. Moreover, the same terms (except CIF) were
indicated in the Notice of Transport by RESPONDENT [Req. for Arb,Ex. C 2, p. 8]. But in spite
of this CLAIMANT established the L/C as it saw fit, derogating from the Contract. If
CLAIMANT did something that was not agreed by both parties, it must take responsibility for all
the consequences. Schiedsgericht Hamburger Freundschaftliche Arbitrage decided that conditioning some
action on new demands beyond those agreed upon is an anticipatory repudiation of the contract
[Cheese case]. And therefore CLAIMANT actions must be identified as foreseeable for
CLAIMANT and as preconditions for avoidance under Art. 72 CISG. Moreover, China
International Economic & Trade Arbitration Commission (CIETAC) adjudged that failure to open a
21
conforming letter of credit by buyer is preconditions for avoidance [CHINA International
Economic and Trade Arbitration Commission, People's Republic of China, 16 December 1997].
97. In the line of arguments above, CLAIMANT had to foresee the results of establishment
ofnonconforming L/C and ought to be responsible for this. RESPONDENT has never agreed
on other terms besides those contained in the contract between the parties. Hence, all terms
about L/C and about goods, which both parties agreed on their contract must be used in
contractual relationships between the parties.
98. RESPONDENT would like to mention again that under Art. 53 CISG payment of price under
the contract is the main obligation of buyer, in default which could allow to seller to avoid the
contract. The incorrect L/C deprives RESPONDENT of getting its money by L/C using
documents which it has, because there would be the lack of conformity between documents,
which RESPONDENT has, and those, which would be declared in L/C. Therefore
RESPONDENT could avoid the contract under Art. 72 CISG.
3.c. RESPONDENT did not get the adequate assurance of obligation’s performance from
CLAIMANT
99. RESPONDENT insist that it did not get the adequate assurance of obligation’s performance
from CLAIMANT.
100. The email by Mr. Storm on 5 July 2014 [Req. for Arb,Ex. C 6, p. 12] is interpreted as assurance to
perform obligations of CLAIMANT. This assurance did not certify the RESPONDENT, as it
included only different and incorrect amount of coltan (100 metric tons), unneeded information
about CLAIMANT’s supplier, and the agreement to CIF. These all illustrates that CLAIMANT
had no intention to settle the various disputes amicably [Req for Arb, para 20, p. 36] and still insists
on different provisions about amount of coltan, which does not conform to the contract.
101. In order to accept the assurance RESPONDENT should be confident that provided assurance is
adequate. As was mentioned by Pr. Christiana Fountoulakis, adequacy of assurance must assure the
creditor (seller), that if there really is a fundamental breach in the future, the detriment caused by
the fundamental breach will be financially absorbed [Schlechtriem, Art. 72, para 28, p.978]. And only
when the provided assurance is adequate from an objective point of view, the creditor must
accept it [Schlechtriem, Art. 72, para 29], but in this situation RESPONDENT, from an objective
point of view, did not accept this assurance.
102. RESPONDENT observed the terms after which it could rightfully avoid the contract without
any violations. First of all, RESPONDENT, as it exacts in Art. 72(2) CISG, gave period of time
within notice (voice-mail) to the CLAIMANT for providing adequate assurance of
CLAIMANT’s performance [Req for Arb, para 19, p. 36]. And then, RESPONDENT got the
22
email from CLAIMANT [Req for Arb, Ex. C 6, p. 12], which should presumably be considered as
an assurance, but, unfortunately, it did not assure RESPONDENT that CLAIMANT would
perform its obligations under the contract. And after these actions, RESPONDENT declared the
contract avoidance on 7 July 2014 in written form and sent it to CLAIMANT by Courier [Req for
Arb, Ex. C 7, p. 13]. And this avoidance was done before the date of performance. Consequently
RESPONDENT had the right to avoid the contract, as the assurance was weak and could not
assure the RESPONDENT that CLAIMANT will do its obligations under the contract in future.
103. In accordance with all abovementioned RESPONDENT was entitled to avoid the contract on 7th
July 2014 due to a fundamental breach under Art. 25 CISG as far as in traditional CIF contract,
deviations from the prescribed standard in documentary performance are prohibited and the
ability to cure any defects in the documentation does not extend to commodities markets.
B. RESPONDENT rightfully avoided the contract on 9 July 2014
104. RESPONDENT submits that it rightfully terminated the contract by declaration on 7 July 2014
due to a fundamental breach of contract by CLAIMANT. RESPONDENT was no longer
intended to continue the contract with CLAIMANT. But even if the arbitral tribunal would
decide that RESPONDENT had no right to avoid the contract by its declaration on 7 July 2014
RESPONDENT claims the arbitral tribunal to decide that RESPONDENT’s declaration of
contract avoidance on 9 July 2014 was made rightfully. That is true because deviations in Letter
of Credit of 08 July 2014 (hereinafter – L/C 2) issued by CLAIMANT constitute, firstly, the
fundamental breach of contract (1) where late delivery of L/C 2 substantially deprived
RESPONDENT from what It expected to receive under the contract (2). These grounds give
right to RESPONDENT to avoid the contract.
1. CLAIMANT committed a fundamental breach of the Contract, by establishing inappropriate
L/C 2
105. The establishment of the L/C 2 by CLAIMANT constitutes a fundamental breach of contract on
the grounds of Art. 53 and 54 of CISG. Firstly, CLAIMANT failed to deliver the L/C to
RESPONDENT’s office on time, before the terms for establishing of the L/C has expired [Req
for Arb, Ex. C 9 p. 15; Answer to Req for Arb, Ex. R 4. p. 44](1.a.). Secondly, the L/C contained an
additional document - commercial invoice [Req for Arb, Ex. C 8, p. 14](1.b.). Both of these
deviations should be considered as a fundamental breach of the contract, which give
RESPONDENT right to avoid the contract.
23
1.a. CLAIMANT failed to establish proper Letter of Credit on time
106. CLAIMANT asserts that it established L/C 2 in accordance with Art.4 of the Contract [M for Cl.,
para 127]. In contrast, RESPONDENT insists that CLAIMANT failed to establish proper L/C
on time, before the term for establishing has expired.
107. Parties have agreed that the term for establishing of the L/C will be regulated by the Art. 4 of the
contract [Req for Arb, Ex. C 1, p.7]. The article stipulates that “the Letter of Credit shall be
established by the buyer not later than fourteen days after the buyer received the notice of
transport” [Req for Arb, Ex. C 1, p. 7, Art. 4]. RESPONDENT sent the Notice of Transport on
25 June 2014, and by simple calculation, the term for establishing of the L/C should end on 8
July 2014. Both parties operate in different time zones [PO2, para 23]. Moreover, there is a
difference in calculating the time limits in Equatoriana and Mediterraneo [PO2, para 44]. Also,
parties was aware about each other business hours [PO2, para 23]. Thus, CLAIMANT made a
mistake in calculating the deadline for establishing of the L/C, asserting that the deadline for
establishing was on 9 July 2014 [M for Cl., para 128]
108. Both parties are citizens of different states, and there are different methods of calculating the
period before the deadline. As CLAIMANT mentioned, in Equatoriana, the period of calculation
starts to run the day after the notification is received, whereas in Mediterraneo, the period of
calculation includes the day in which the notification is received [PO 2, p.69, para. 44; M for CL.,
para 128].
109. RESPONDENT asserts that CLAIMANT has failed to perform its obligations, as CLAIMANT
had an obligation to notify RESPONDENT about the establishment of L/C(1.a.i.), and
furthermore the information upon the establishment of the Letter of Credit had reached
RESPONDENTS office out of the time-work’s frame for notification(1.a.ii.).
1.a.i. CLAIMANT had an obligation to notify RESPONDENT about the establishment
of L/C
110. CLAIMANT asserts, that the contract regulates only the time of establishment of the L/C, not
the time required for the L/C to reach RESPONDENT [M for Cl., para 130]. In its turn,
RESPONDENT insists that the contract include an implied obligation of CLAIMANT to notify
RESPONDENT about the establishment of L/C. The Art. 5.1.1 of UNIDROIT Principles
regulates that the contractual obligations of the parties may be expressed or implied. Moreover,
it restates the widely acceptable principle according to which the obligations of the parties are not
necessary limited to that which had been expressly stipulated by the contract [Commentary on
UNIDROIT Principles 2010, Art. 5.1.1]. Furthermore, under the Art. 5.1.2 of UNIDROIT Principles,
implied obligation step from:
24
a) the nature and purpose of the contract;
b) practices established between the parties and usages;
c) good faith and fair dealing;
d) reasonableness.
111. CISG does not regulate the buyer’s obligation to notify seller about buyer’s own performance.
But, under the Art. 7(2) CISG questions concerning matters governed by the CISG which are not
expressly settled in it are to be settled in conformity with the general principles on which it is
based [CISG, Art. 7(2)]. Good faith has been recognized as a general principle of the CISG. This
position is widely supported by courts decisions [Digest of case law, Art. 7, para 13; Broadcasters case;
Metal ceiling materials case]. Moreover, in several cases, courts stated that the general principle of
good faith requires the parties to cooperate with each other and to exchange information relevant
for the performance of their respective obligations [Digest of case law, Art. 7, para 14;Takap B.V. v.
Europlay S.r.l.; Trade usage case; Pitted sour cherries case; Aluminum case; Machinery case]. In this regard
due to the principle of good faith and duty to cooperate, taking into account express and implied
obligations of parties under the contract, CLAIMANT had an implicit obligation under the
contract to notify RESPONDENT about the establishment of L/C. CLAIMANT failed to notify
RESPONDENT about the establishment of L/C.
1.a.ii. The information upon the establishment of the L/C 2 had reached
RESPONDENT’S office out of business hours for notification
112. CLAIMANT in para 137 stated, that parties had counted the deadline using calendar days—
where non-business days are included in calculating the period [M for CL., para 137]. Contrary to
CLAIMANT position, RESPONDENT alleges that parties should use business days as a method
of calculating the period of time for establishing of L/C. RESPONDENT asserts to the fact, that
L/C 2 arrived to RESPONDENT’s office out of RESPONDENT’s ordinary business hours,
and as consequence CLAIMANT failed to perform its obligations.
113. Under Art. 4 of the contract, parties does not stipulate any provision about the time of delivery
of L/C to the RESPONDENT’s office, except provisions that L/C shall be established by the
Buyer not later than fourteen days after the Buyer received the notice of transport in regard to
shipment [Req for Arb, Ex. C 1., p.7]. Art. 54 of CISG stipulates, that buyer's obligation to pay the
price includes taking such steps and complying with such formalities as may be required under
the contract or any laws and regulations to enable payment to be made [Art. 54, CISG]. Art. 5.1.1
of UNIDROIT Principles stipulates, that the contractual obligations of the parties may be expressed
or implied [UNIDROIT 2010, Art. 5.1.1]. Therefore, Art. 5.1.2 of UNIDROIT 2010 distinguishes
several ways how implied obligations step from:
25
a) the nature and purpose of the contract;
b) practices established between the parties and usages;
c) good faith and fair dealing;
d) reasonableness [UNIDROIT 2010, Art. 5.1.2].
114. Both of the parties are legal entities [Req. for Arb, para 1-2, p. 2], it would be reasonable to
consider that they have schedule of “open” and “closed” hours. It is commonly known, that this
schedule is called “Business day” [Business hours law]. In this case, it would be unreasonable to use
calendar days, as a method of measuring of time, as both parties are legal entities [supra para 113],
they have entered into the contract of the sales of goods [Req for Arb, Ex. C 1, p. 7], and
definitely, they both was aware that they operate in a different time zones [PO2, para 23].
115. Therefore, CLAIMANT had to notify RESPONDENT, not later than the end of 14th
RESPONDENT’s business day. Hence, CLAIMANT failed to notify RESPONDENT as the
information about the establishment of L/C has reached RESPONDENT out of time frame for
notification about establishment of L/C.
1.b. CLAIMANT by inserting a commercial invoice as an additional document in the L/C 2
committed a fundamental breach
116. CLAIMANT in para 138 stated, that itcould not have committed a breach of contract upon
something that is not regulated within the contract [M for CL., para 138]. Contrary to that,
RESPONDENT asserts, that CLAIMANT by inserting a commercial invoice as an additional
document in the L/C 2 committed a fundamental breach.
117. CLAIMANT should not insert an additional document in establishing of L/C, because parties
have never agreed on the documents that must be presented with the L/C in order to obtain
payment. In Art. 4 of the contract, parties have forgot to agreed on the documents that must be
presented with the L/C [PO2, para 16, p. 65]. Art. 25 CISG states that a breach of a contract is
fundamental if it results in such detriment to the other party as substantially to deprive him of
what he is entitled to expect under the contract [CISG, Art. 25]. Also, there is one more
condition, that should be presented in order to consider a breach as fundamental. A reasonable
person of the same kindin the same circumstances would not have foreseen such a result [CISG,
Art. 25].
118. Art. 29 CISG stipulates, that the contract can be modified only by mere agreement of the
parties. [CISG, Art. 29]. Moreover, the same provisions are contained in Art. 3.2 of UNIDROIT
Principles [UNIDROIT 2010, Art. 3.2]. But, in terms of the contract, there is no any stipulations
on the question which documents should be presented along with the L/C [Req. for Arb, Ex. C 1,
p.7], hence there were no reached agreement between parties on the issue.
26
119. One of the major principles of the contractual law is a consent [BIX p. 251]. And it also known,
that one of the pillars of the law of contract formation is the principle of mutual assent.
According to this principle, a contract forms only when the positions of the two parties meet
[BEN-SHANAR, p. 1829].
120. Moreover, there is an international trade practice, which implies an obligation on buyer, to be
prepared to amend or re-negotiate terms of the letter of credit with the seller. And, more
important, is that all parties must agree to amend the document [CRF, Ron Borcky Understanding
and Using Letters of Credit, Part II]
121. In present case, CLAIMANT, by inserting an additional document in the L/C, have not only
breached the contract, but also its actions constitute a breach of a contractual principles, as
CLAIMANT never informed RESPONDENT about the documents, which would be necessary
in order to obtain payment. Thus, parties have not met an agreement on the documents that
must be presented with the L/C in order to obtain payment. Therefore, there is no mutual assent
between parties on this question.
122. Moreover, as there is no consent between parties, RESPONDENT substantially deprived from
what he expect under the contract, and it would be unreasonable for CLAIMANT to argue, that
it has not foreseen that insertion of an additional document, would substantially deprive
RESPONDENT.
123. Furthermore, RESPONDENT never argues that commercial invoice is a core supporting
document for the sales of goods [M for Cl., para 140]. But, RESPONDENT is against of insertion
of an additional document, as it breaches the principles of a contractual law. [supra para 121] In an
absence of an mutual assent between parties on the documents, that should be presented along
with the L/C, in order to obtain payment, it is unfair for CLAIMANT to decide which
documents RESPONDENT should present in order to obtain payment without any consent
between parties. Following this logic, CLAIMANT could insert as many documents as it wish.
124. And therefore, by inserting an additional document to the L/C, CLAIMANT committed a
fundamental breach of the contract.
2. Late delivery of L/C substantially deprived RESPONDENT from what it expected under
the Contract
125. CLAIMANT has asserted that RESPONDENT was not substantially deprived by the late
delivery of L/C 2 [M for Cl., para 146]. In contradiction to this, RESPONDENT asserts that the
late delivery of L/C substantially deprived it.
126. RESPONDENT does not argue on the fact that the parties did not stipulate in their contract
that “time is of the essence” [PO2, para 18, p. 65]. But, RESPONDENT insists, that as coltan is a
27
mineral with a highly volatile price and most transactions are heavily document based and involve
payment via L/C generally, a strict compliance with the contractual provisions is required [PO2,
para 18, p. 65]. Due to the fact, that CLAIMANT delivered L/C after then when the term for
delivery has expired, RESPONDENT was substantially deprived of was it expect under the
contract - payment.
127. Prof. Dr.Ulrich G. Schroeter asserts, that a delay in obtaining the required letter of credit by itself
be a fundamental breach of the contract [Schlechtriem, Art. 25, para 66, p. 434]. Also, he adds that,
the same true for cases in which the buyer refuses to provide an agreed letter of credit in time,
although the very purpose of this contractual obligation - as often in cases where documentary
payment terms are used - is to protect the seller from having to ship the goods without the
payment being secured, since this makes him vulnerable to attempts by the buyer to ‘renegotiate’
the price [Schlechtriem, Art. 25, para 66. p. 435].
128. This position is supported by court decisions, as they consider that the refusal to establish a
timely letter of credit was clearly a fundamental breach [Digest of case law, Art. 25, para 6;Downs
Investments v. Perwaja Steel SDN BHD].
129. In present case, RESPONDENT was substantially deprived of what it expected under the
contract - payment, as CLAIMANT presented invalid L/C twice [Req. for Arb,Ex. C 5, p. 11; Ex.
C 8, p. 14]. This invalid establishment, due to the coltan market conditions [Req. for Arb, para 4. p.
3], makes RESPONDENT vulnerable to attempts by CLAIMANT to ‘renegotiate’ the price.
130. Hence, RESPONDENT insists to consider the late delivery of L/C is as a fundamental breach
of the Contract.
131. In summary of all abovementioned arguments on merit issues, RESPONDENT asserts that it
had the right to avoid the contract of 28 March 2014. Firstly, there was a fundamental breach of
contract committed by CLAIMANT that gave right to RESPONDENT to avoid the contract.
The L/C 1 is not in conformity with the terms of the contract, due to the fact, that is stated a
larger sum of money, different quantity of goods to deliver and different delivery terms. Such
deviations should be considered as a breach of a strict compliance principle, committed by
CLAIMANT. Secondly, CLAIMANT failed to notify RESPONDENT about the establishment
of a proper L/C during the contractual term. The notification was dispatched to
RESPONDENT’s office out of ordinary business hours of RESPONDENT. Moreover,
CLAIMANT unilaterally added an additional document to the L/C 2 (commercial invoice).
Unilateral insertion of an additional document should be considered as breach of the contractual
principle of mutual assent, which lead to a right for legitimate avoidance of the contract.
Consequently, RESPONDENT rightfully declared the contract’s avoidance by both declarations.
28
PROCEDURAL ISSUE 2
III. The order of the Emergency Arbitrator should not be lifted by the arbitral tribunal
132. RESPONDENT agrees with CLAIMANT that ICC Rules2012 provides that Emergency
Arbitrator Provisions must apply to any arbitration under ICC brought pursuant to an agreement
concluded after 1 January 2012 [M for Cl., paras 4-5].
133. Contrary to CLAIMANT’s submission [M for Cl., para 6] RESPONDENT states that parties did
opt out the Emergency Arbitrator provisions and the Coltan Purchase Contract provides
exclusive jurisdiction for granting interim measures to national courts (1). Moreover the
substantive requirements for granting interim measures were not fulfilled (2).
1. Under Article 29 (6) b of ICC Rules 2012 the parties did opt out the Emergency Arbitrator
provisions
134. RESPONDENT states that the parties agree to exclusive court jurisdiction to impose interim
measures (1.a.) and the interpretation of Art. 21 of the Coltan Purchase Contract provides for
the exclusive jurisdiction of courts to grant interim measures. (1.b.).
1. a. The parties can agree to exclusive court jurisdiction to impose interim measures.
135. It is worth noting, that the parties had an opportunity to assign to the national court
responsibility for granting of interim measures in order to avoid misunderstandings that might
arise and have arisen as a consequence.
136. Of course, the additions to the mandatory provisions of ICC Rules 2012 concerning Emergency
Arbitrator (Art 29: Emergency Arbitrator) designed to enhance the ability of the parties that
cannot wait for constitution of the tribunal to request interim measures, however, a clear
understanding of the expression of will, the ability to read an exception pursuit "between the
lines" are important interpretation conditions under the contract. [Drahozar].
137. The principle of parties autonomy directly allow the parties to grant the power to impose interim
measures to national courts.
138. Only ICSID Convention provides exclusive jurisdiction to arbitrators to grant provisional
measures. Thus, in the case of ICSID Rules, the parties must expressly agree for judicial authority
in the area of interim measures of protection. In contrast, there is no national law that empowers
arbitrators` exclusive jurisdiction to grant provisional measures. Parties may, however, oust the
courts' jurisdiction in regard of interim protection of rights to the extent permitted by national
law [Yesilirmak, page 61].
29
139. Under ICC Rules 2010, the procedure of granting interim measures defined clearly enough. Under
Art. 28(1) of ICC Rules 2012unless the parties have otherwise agreed, as soon as the file has been
transmitted to it, the arbitral tribunal may, at the request of a party, order any interim or
conservatory measure it deems appropriate. The arbitral tribunal may make the granting of any
such measure subject to appropriate security being furnished by the requesting party.
140. Based on the conditions determined in Coltan Purchase Contract [Req. for Arb, Ex. C 1, p. 7], the
parties have agreed “otherwise” that in its meaning, excludes the possibility of the arbitral
tribunal to impose provisional measures.
141. The national court has a great strength in the imposition of provisional and conservatory
measures. Due to the fact that the legal nature of the contract is consensual, arbitration will not
be able to bind third parties (banks, agencies, local authorities) to the execute its orders that in its
turn, can fully do national court.
142. Arbitrators have no jurisdiction over third parties to arbitration agreement due to contractual
(consensual) nature of arbitration. In international arbitrations, involvement of such third parties
as banks (as issuers of letters of credit or bank guarantees) and persons (who, e.g. may legally
hold goods in dispute; subcontractors) is sometimes unavoidable. However, since arbitrators'
power derives from arbitration agreement, no arbitral power could be exercised over legal rights
of third parties to arbitration. [Yesilirmak, p. 87]
143. Thus, the parties were able to properly determine the appropriate way to securing the claim in the
Coltan Purchase Contract, however, CLAIMANT has now not only refused formed positions,
but also seeks to challenge existing legal fact.
1.b. The interpretation of Art. 21 of the Coltan Purchase Contract provides for the exclusive
jurisdiction of courts to grant interim measures
144. RESPONDENT reminds the rule of literal interpretation which must be observed (1.b.i.) as well
as application of the UNIDROIT Principles allows RESPONDENT to interpret Art. 21 of the
Coltan Purchase Contract against CLAIMANT (1.b.ii.)
1.b.i. The rule of literal interpretation must be observed.
145. RESPONDENT requests to pay attention on the literal interpretation rule, which provides that
the words of the statute or contract are given their natural or ordinary meaning and applied
without the judge seeking to put a gloss on the words or seek to make sense of the statute or
contract. [R v Harris, Whitely v Chappel]
146. Literal interpretation of the Art 21 of the Coltan Purchase Contract leads to the understanding
that the article is not only establishes the exclusive jurisdiction of the national courts for interim
30
measures, but also limits the ability of the Emergency Arbitrator because it never talks about
his\her competence.
147. Under Art 21 of the Coltan Purchase Contract the courts at the place of business of the party
against which provisional measures are sought shall have exclusive jurisdiction to grant such
measures.
148. Article 21 of the Contract was included when the ICC Rules did not contain the Art. 29. Under
Art. 23 of ICC 1998 Rules unless the parties have otherwise agreed, as soon as the file has been
transmitted to it, the arbitral tribunal may, at the request of a party, order any interim or
conservatory measure it deems appropriate. As it can be mentioned from the article – the power
for granting interim measures belongs only to the arbitral tribunal excluding any Emergency
Arbitrator provisions.
149. Moreover, the parties were aware of the changes, made in ICC Rules 2012 [PO2, para 14]. The
actual purpose of inclusion of Art 21 in the Coltan Purchase Contract was to ensure that efficient
interim relief can be obtained without any discussion about the jurisdiction of the courts. [PO 2,
para 13]. It means that CLAIMANT was not seeking for Emergency Arbitrators support, but
trying to shield themselves from the disputes between national court decisions.
150. Moreover, there are court decisions on such issues associated with controversial moments of the
court determination, having the right of imposing an interim measure if there is a problem with
the interpretation of the contract.
151. Thus, the national court of Brazil in the similar case ruled for the first time, on the issue of the
concurrent jurisdiction of national courts and arbitral tribunals with respect to the making of
interim measures by the last and decided that interim measures imposed by courts will prevail
[Itarumã Participações S.A. v Participações em Complexos Bioenergéticos S.A.]
152. In addition, RESPONDENT has always understood the inclusion of Art 21 as a way to limit
interference with arbitration from outside, like sudden intervention of Emergency Arbitrator. A
clear position on this matter is expressed in Req. for Arb, para 10 where stated that
RESPONDENT always understood it to be intended to limit all types of interim relief to that
available from the courts at the respective parties' place of business. These courts are the only
instance which can grant efficient interim relief.
153. Based on the above said, RESPONDENT insists that the Emergency Arbitrator had no
jurisdiction to impose provisional measures, as the contract clearly established national courts
exclusive jurisdiction to grant interim measures.
31
1.b.ii. UNIDROIT Principles 2010 allows interpreting Art. 21 of the Contract against
CLAIMANT
154. Contrary to CLAIMANT`S assertion [M for Cl., para 6] RESPONDENT submit that the lack of
clarity with Art 21 of the Coltan Purchase Contract can be interpreted against CLAIMANT in
the thresholds with UNIDROIT Principles.
155. Application of UNIDROIT Principles to the dispute may be interpreted as follows. According to
Art 21 of the Coltan Purchase Contract the substantive law of the contract - the law of Danubia
[Req. for Arb, Ex C 1, p.7], in its turn, Danubia, adopted the UNIDROIT Principles [PO 2, para
42] which allows RESPONDENT to indicate the appropriateness of using those Principles.
156. According to Art. 4.6 of UNIDROIT Principles (Contra proferentem rule) if contract terms
supplied by one party are unclear, an interpretation against that party is preferred. That means
that misunderstanding appeared with Art. 21 of the Coltan Purchase Contract can be interpreted
against CLAIMANT, namely, Art. 21 of the Coltan Purchase Contract by its meaning exclude the
power of Emergency Arbitrator.
157. Inter alia, responsibility for using of unclear terms will lie on the CLAIMANT, due to feature of
interpretation this Principle. A party may be responsible for the formulation of a particular
contract term, either because that party has drafted it or otherwise supplied it, for example, by
using standard terms prepared by others.[Commentary on UNIDROIT Principles 2010].
158. From this provision it is clear that Art 21 of the Coltan Purchase Contract cannot be interpreted
in favor of CLAIMANT referring to the principle Contra proferentem rule.
2. The substantive requirements for granting interim measures are not fulfilled.
159. Art 29(1) of the ICC Rules 2012 provides that a party that needs urgent interim or conservatory
measures that cannot await the constitution of an arbitral tribunal may make an application for
such measures.
160. Contrary to CLAIMANT`S submission [M for Cl., paras 18-19] RESPONDENT states that the
substantive requirements for granting interim measures under Danubian Law were not fulfilled,
CLAIMANT did not demonstrate urgency (2.a) and there was no irreparable harm imminent to
CLAIMANT (2.b). Moreover CLAIMANT has no possibility of success on the merits(2.c).
161. Contrary to CLAIMANT`s assertion [M for Cl., para 18] the application of Art 17A of DAL is
impossible because of the nature of the measures imposed by arbitral tribunal and emergency
measures. Those two components of arbitration must be separated from each other due to the
following: the emergency measures are pre-arbitral by its nature, what separates them from the
real arbitration.
32
162. An application for Emergency Measures can only be accepted if it is received by the Secretariat
prior to the transmission of the file to the arbitral tribunal. This provision demonstrates that the
EA procedure is pre-arbitral in nature. The fact that the EA procedure is designed to support a
future arbitration procedure does not mean that it is itself anarbitration procedure. [Bagiel 4.2[a]].
163. For this reason RESPONDENT argues, that drawing parallels between the arbitral tribunal and
Emergency Arbitrator made by CLAIMANT is wrong and Art. 17A of DAL cannot be
applicable for demonstration of fulfillment of all conditions provided by it.
2. a. CLAIMANT did not demonstrate urgency
164. The concept of “urgency” in the arbitration proceedings shall be interpreted broadly, however,
there are several criteria, through using which, it would be quite logical to understand the actual
meaning of urgency and necessity, separating it from the adjacent, unwanted concepts.
165. Urgency is certainly one of the most important requirements for granting provisional measures.
Urgency should be considered along with the requirement of serious or irreparable harm, there
are situations where no urgency exists at all. That means no harm will, in principle, be done for
the period up to the final award if the measure requested is not granted. In such cases, interim
protection is not appropriate at all. [Yesilirmak, page 95].
166. It has been established by CLAIMANT in its submission [M for Cl., para 21] that
RESPONDENT is in the process of negotiating with other customers. As one of the customers,
who is heavily dependent on delivery from Xanadu is looking for a delivery at the beginning of
August, it is very likely that the delivery would have taken place before the Arbitral Tribunal is
established and has had time to deal with the matter. [Order of EA, para 10]
167. CLAIMANT refers only to its own conjectures about the negotiations contesting that the
urgency of the interim measures must be taken [M for Cl. para 21]. The links, provided at the
position of CLAIMANT are incorrect.
168. Participation of RESPONDENT in business negotiations is treated by CLAIMNAT as real
contractual obligations, which, not only in accordance with the law, but also with common sense
is not true. At present, RESPONDENT has not concluded any actual contract for the supply of
coltan, which may belong to CLAIMANT. Moreover, there was a rumour that due to the use of
the innovative technique the increase in the demand for coltan would be much smaller than
originally anticipated. [PO 2, para 30]. RESPONDENT did not deny that it is in negotiations with
buyers [PO 2, para 33], however this cannot be regarded as a real threat or alleged harm.
169. The order made by the Emergency Arbitrator prevents RESPONDENT from disposing of the
coltan presently stocked at its warehouse. Since the order was rendered the price has risen
33
considerably and there have been numerous requests by long term customers of
RESPONDENT for additional quantities of coltan. RESPONDENT could, however, not accept
a single one due to the order made by the Emergency Arbitrator. It is highly probable that
because of positive developments in Xanadu, RESPONDENT will only be able to sell the coltan
at a lower price in the future. [Answer to Req. for Arb, para 38].
170. However, the actual contracts that can confirm the presence of the need to adopt interim
measures do not exist, which means that negotiations can not be construed against
RESPONDENT.
171. Based on the abovementioned RESPONDENT insists on fact that the necessity and urgency of
taking emergency measures has not been demonstrated by CLAIMANT.
2.b. There was no irreparable harm imminent to CLAIMANT
172. RESPONDENT argues that the concept of "imminent harm" was not used appropriately by
CLAIMANT. Assumptions, made by CLAIMANT regarding the "urgency" of application for
interim measures [M for Cl., paras 21-22] are closely related to the distorted perception of the
RESPONDENT in negotiations with other representatives of the world market.
173. Also worth noting is that in case AHOUSAHT INDIAN BAND V. CANADA (FISHERIES
AND OCEANS), attempt to bring RESPONDENT of the negotiations has been interpreted by
the court against CLAIMANT.
174. Attempts to output RESPONDENT from negotiations with other market players could cause
both: the actual and reputation harm, which can cause counterclaims. That means that the
RESPONDENT’s right for negotiations cannot be violated through the CLAIMANT’s
conjectures and reasoning.
175. Summarizing, RESPONDENT asserts that CLAIMANT did not demonstrate urgency as well as
there was no irreparable harm imminent.
2.c. CLAIMANT has no possibility of success on the merits.
176. In regard to issues on merits, RESPONDENT submits that CLAIMANT is not entitled to
receive 30 metric tons of coltan under the Coltan Purchase Contract. RESPONDENT asserts
that it rightfully avoided the Coltan Purchase Contract both on 7 July 2014 and 9 July 2014.
RESPONDENT rightfully avoided the Coltan Purchase Contract on 7 July 2014 due to the fact
that CLAIMANT has not fulfilled its obligations under the Coltan Purchase Contract and its
actions constitute the fundamental breach of the Coltan Purchase Contract. Thus,
RESPONDENT rightfully avoided the Coltan Purchase Contract. RESPONDENT rightfully
34
avoided the Coltan Purchase Contract on 9 July 2014. The late delivery of L/C 2 substantially
deprives RESPONDENT of what it expected under the Coltan Purchase Contract. The same
may apply to the insertion of an additional document to the L/C 2 - the commercial invoice,
which RESPONDENT should present to the bank in order to obtain payment. Both of these
deviations constitute a fundamental breach of the Coltan Purchase Contract, which lead to a
legitimate avoidance of the Coltan Purchase Contract by RESPONDENT [supra part II].
177. Hence, the substantive requirements for granting interim measures are not fulfilled.
178. Therefore, the order of the Emergency Arbitrator should not be lifted by the arbitral tribunal.
35
REQUEST FOR RELIEF
In light of the above submissions, RESPONDENT respectfully requests this Tribunal:
a. To reject all claims raised by CLAIMANT;
b. To find that the arbitral tribunal has jurisdiction over Global Minerals Ltd.;
c. To lift the remaining part of the order made by Emergency Arbitrator against Respondent on
26 July 2014.
Respectfully submitted on January 2015 by
______/s/___________ ______/s/___________
Artem Azamatov Daria Andronova
______/s/___________ ______/s/___________
Nastassia Kashchyshyna Herman Khomchanka
______/s/___________ ______/s/___________
Stahiy Sviridovich Aliaksandra Pakhomava