HANOI LAW UNIVERSITY

HLU COMMERCIAL ARBITRATION MOOT 2015

November 2015 March 2016

VIETNAM INTERNATIONAL ARBITRATION CENTRE

MEMORANDUM FOR RESPONDENT

[TEAM I AM ME]

ON BEHALF OF
Rosen Ltd.
123 Victoria Road

AGAINST
Locus Ltd.
88 Longman Road

Oceania, Alpha

Leisure, Beta

RESPONDENT

CLAIMANT

COUNSELS
Le Tra Giang Nguyen Cam Tu Nguyen Thi Ngoc Bich

TABLE OF CONTENTS

MEMORANDUM FOR CLAIMANT i

INDEX OF ABBREVIATIONS
AC Op

CISG Advisory Council Opinion

ADR

Alternative Dispute Resolution

Art.

Article

CISG

United Nations Convention on Contracts for the International Sale of

Goods, Vienna, 1980

Cl. Memo.

Claimants Memorandum

cmt.

Comment

e.g.

Exemplum gratia (for example)

et seq.

et sequentes (and following)

Ex.

Exhibit

i.e.

Id est (that is)

Model Law

UNCITRAL Model Law on International Commercial Arbitration

NYC

Convention on the Recognition and Enforcement of Foreign Arbitral

Awards, New York, 1958

p.

Page

pa.

Paragraph

pp.

Pages

PO1

Procedural Order 1

PO2

Procedural Order 2

RFA

Request for Arbitration

SOD

Statement of Defense

Vienna I.A.C.

Vienna International Arbitration Centre

Vietnam I.A.C.

Vietnam International Arbitration Centre

MEMORANDUM FOR CLAIMANT | ii

INDEX OF AUTHORITIES
CITED AS

CITATION

AC Op 5

SCHWENZER, Ingeborg,
CISG Advisory Council Opinion No. 5, The buyers right to avoid the
contract in case of non-conformity of the goods or documents
Available at: http://www.cisg.law.pace.edu/cisg/CISG-AC-op5.html

Babiak

Babiak, Andrew,
Defining "Fundamental Breach" Under the United Nations Convention
on Contracts for the International Sale of Goods
6 Temple Int. and Comparative Law J. (1992) 113-143
Available at: http://www.cisg.law.pace.edu/cisg/biblio/babiak.html

Berger

Klaus Peter Berger,

Law and Practice of Escalation Clauses (2006) 22 Arbitration
International 1-17

Bianca/Bonell

Bianca, Cesare/ Bonell, Michael Joachim (Eds.),

Commentary on the International Law of Sales:
The 1980 Vienna Sales Convention
Guiffre, Milan, 1987

Born

Born, Gary,
International Commercial Arbitration,
3rd ed, Kluwer Law International: Alphen aan den Rijn (2009)

Cremades

Cremades, Bernardo M.,

Multi-tiered Dispute Resolution Clauses
New York: CPR Institute for Dispute Resolution, 2004

Enderlei/ Maskow

Enderlein, Fritz/ Maskow, Dietrich,

International Sales Law United States of America: Oceana Publications,
1992
Available at:
http://www.cisg.law.pace.edu/cisg/biblio/enderlein.html#pref

ERSI

ERSI, Gyula,
General Provisions, in Nina M. Galston & Hans Smit eds., International
Sales: The United Nations Convention on Contracts for the International
Sale of Goods, Matthew Bender (1984) Ch. 2, pp. 1-34

Ferrari

Ferrari, Franco,
Fundamental Breach of Contract Under the UN Sales Convention 25
Years of Article 25 CISG (Spring 2006) 25 J. Law and Commerce
Available at: http://www.cisg.law.pace.edu/cisg/biblio/ferrari14.html

Honnold

Honnold, John,
MEMORANDUM FOR CLAIMANT | iii

Uniform Law for International Sales Under the 1980 United Nations
Convention (3rd ed, Kluwer Law International: 1999)
Available at: http://www.cisg.law.pace.edu/cisg/biblio/honnold.html
Huber/Mullis

Huber, Peter/ Mullis, Alastair,

The CISG: A new text book for students and practitioners
Sellier. European Law Publisher, Munich, 2007

Jolles

Jolles, Alexander,
Consequences of Multi-tier Arbitration Clauses: Issues of Enforcement
(2006) 72 Arbitration 329-338

Keily

Keily, Troy,
Good Faith and the Vienna Convention on Contracts for the International Sale of Goods (CISG), thesis: Deakin (1999) Pace essay submission =
3 Vindobona Journal of International Law and Arbitration, Issue 1
(1999) 15-40
Available at: http://www.cisg.law.pace.edu/cisg/biblio/keily.html

Magnus1

Magnus, Ulrich,
Remarks on Good Faith: The United Nations Convention on Contracts
for the International Sale of Goods and the UNIDROIT Principles of
International Commercial Contracts, Pace International Law Review,
Vol. X (1998) 89-95
Available at:
http://www.cisg.law.pace.edu/cisg/principles/uni7.html#um

Magnus2

Magnus, Ulrich,
The Remedy of Avoidance of Contract under CISG General Remarks
and Special Case (2005-06) 25 J. of Law and Commerce, pp.423-436
Available at: http://www.cisg.law.pace.edu/cisg/biblio/magnus2.html

Model Law Digest

UNCITRAL Digest of Case Law on the Model Law on International

Commercial Arbitration 2012

Oxford

Oxford Dictionay of Law, 5th Ed. (2003)

Saidov

Saidov, Djakhongir,
The Law of Damages in International Sales: the CISG and other International Instruments (Portland, Hart: 2008)

Scanlon

Scanlon, Kathleen,
Country report for US, in Enforcement of Multi-tiered Dispute Resolution Clauses, IBA Newsletter of Committee D (Arbitration and ADR),
Vol.6 No.2, October 2001

Schlechtriem

Schlechtriem, Peter,
Uniform Sales Law: The UN-Convention on Contracts for the International Sale of Goods, Vienna: Manz (1986)

MEMORANDUM FOR CLAIMANT | iv

Schlechtriem/
Schwenzer

Schlechtriem, Peter/ Schwenzer, Ingeborg (Eds.),

Commentary on the UN Convention on the International Sale of Goods
(CISG), 3rd Ed. New York: Oxford University Press, 2010

Ramberg

Ramberg, J.,
International Commercial Transactions,
3rd ed, ICC Publication N691: Stockholm (2004)

UNCITRAL Digest

UNCITRAL Digest of Case Law on the United Nations Convention on

Contracts for the International Sale of Goods 2010 Edition
Available at: https://www.uncitral.org/pdf/english/clout/CISG-digest2012-e.pdf

Zeller

Zeller, Bruno,
The Remedy of Fundamental Breach and the United Nations Convention on the International Sale of Goods (CISG) A Principle Lacking
Certainty, 11 Vindobona Journal of International Commercial Law &
Arbitration (2/2007) pp. 219-236
Available at: http://www.cisg.law.pace.edu/cisg/biblio/zeller15.html

MEMORANDUM FOR CLAIMANT | v

INDEX OF CASES AND ARBITRAL AWARDS

CASES
Australia
Aiton
Elizabeth Bay

England
Paul Smith

Germany
Caf inventory case

Aiton Australia Pty. Ltd. v. Transfield Pty. Ltd. [1999]

NSWSC 996
Elizabeth Bay Developments Pty. Limited v. Boral Building Services Pty. Limited [1995] 36 NSWLR 709

Paul Smith Ltd. v. H & S International Holding Inc. [1991] 2

Lloyds Reports 127

Appellate Court Hamburg, 25 January 2008

Available at:
http://cisgw3.law.pace.edu/cases/080125g1.html

Chemical substance
case

Appellate Court Koblenz, 11 September 1998

Available at: http://cisgw3.law.pace.edu/cases/980911g1.html

Cobalt sulphate case

Federal Supreme Court, 3 April 1996

Available at: http://cisgw3.law.pace.edu/cases/960403g1.html

OLG Namburg 21
February 2002

Oberlandesgericht Naumburg, Germany, 10 Sch 08/01, 21 February 2002

Available at: http://www.dis-arb.de/de/47/datenbanken/rspr/olgnaumburg-az-10-sch-08-01-datum-2002-02-21-id166.

OLG Stuttgart 16
July 2002

Oberlandesgericht Stuttgart, Germany, 1 Sch 08/02, 16 July 2002

Available at: http://www.dis-arb.de/de/47/datenbanken/rspr/olgstuttgart-az-1-sch-08-02-datum-2002-07-16-id187

Spain
Metallic covers case

Switzerland
Meat case

Appellate Court Barcelona, Spain 28 April 2004

Available at: http://cisgw3.law.pace.edu/cases/040428s4.html

Supreme Court, 28 October 1998

Available at: http://cisgw3.law.pace.edu/cases/981028s1.html

United States of America

Terra Intern
Terra Intern., Inc. v. Mississippi Chemical Corp
U.S. Court of Appeals, 8th Circuit [U.S.], 11 July 1997
Available at Westlaw

ABITRAL AWARDS

MEMORANDUM FOR CLAIMANT | vi

International Chamber of Commerce [ICC]

ICC 10256

ICC International Court of Arbitration Case No. 10256, 1999

MEMORANDUM FOR CLAIMANT | vii

INDEX OF LEGAL SOURCES

New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958
(New York Convention)
Vietnam International Arbitration Centre Rules 2012 (VIAC Vietnam Rules)
UNCITRAL Model Law on International Commercial Arbitration 1985 with 2006 amendments (UNCITRAL Model Law)
UNIDROIT Principles of International Commercial Contracts (PICC 2010)
United Nations Convention on the International Sale of Goods 1980 (CISG 1980)

MEMORANDUM FOR CLAIMANT | viii

STATEMENT OF FACTS
CLAIMANT is a subsidiary of Locus Group and specialized in one of its parent company activities of purchasing rare flower seeds to grow into flowers and supply for events in Beta
(RFA, pa. 1). CLAIMANT, in order to promote its brand name in The Annual Flower Festival
(The Festival), one of the most influential events in the international flower market and
taking place in February 2015 (RFA., pa. 3), has ordered 5,000 seeds of Phoenix Tulips, a rare and extraordinary flower kind from RESPONDENT, a reputable supplier and one of a few
companies capable of developing and cultivating Phoenix Tulips (SOD, pa. 2, 3).
Despite the young relationship of the two parties and former dispute between RESPONDENT
and Locus Group, CLAIMANTs parent company (PO2, pa. 8), RESPONDENT was still
willing to provide CLAIMANT with a large quantity of Phoenix Tulips seeds that had been
hoped to help CLAIMANT in its promotion at the Festival. However, the needs for Phoenix
Tulips seeds have been drastically increasing during recent years, and thus, RESPONDENT
was deficient in available seeds and could only deliver 3,000 ones, as stated during the contractual negotiation of 15 July 2014 (RFA, pa. 6).
The Parties concluded a contract on the sale of 3,000 Phoenix Tulips seeds (The Contract)
on 20 August 2014 (RFA, pa. 8). In The Contract, RESPONDENT was obliged for providing
CLAIMANT with cultivating instructions, yet, was not imposed any obligations to give specific ones (Ex.C2, Art. 4). The goods was delivered to CLAIMANT on 20 October 2014
(RFA, pa. 8), and RESPONDENT has also provided a planting guidance as promised
(Ex.C3). CLAIMANT had checked the quantity of the seeds and claimed to have found no
abnormalities (PO2, pa. 17).
On 20 November 2014, Mr. White, an agricultural engineer of CLAIMANT, made a phone
call to Mr. Black, the head of Seeding Department of RESPONDENT, to ask for the nutritional ingredients of soil and appropriate fertilizers for the Phoenix Tulip seeds (SOD, pa. 5).
Additionally, on 30 November 2014, Mr. Black also met Mr. White in an international scientific conference on rare flowers and was asked about the ideal environmental conditions for
the growth and development of the seeds. During both encounters, Mr. Black has discussed
and given proper answers to the issues Mr. White concerned about. However, Mr. White was
fired from CLAIMANT on 30 November 2014 and RESPONDENT was not made known
neither the reason for this dismissal nor whether Mr. White had told CLAIMANT about the
conversations (Ex. R 3).

MEMORANDUM FOR CLAIMANT | 1

According to CLAIMANT, there were 25% of the seeds that could not bloom and 50% shriveled and faded (RFA, pa 10). RESPONDENT strongly believes that these were due to an extraordinary weather phenomenon called Red Dragon, which happened from late December
2014 to mid-January 2015. This kind of unusually hot weather occurs in Beta once in a while
and is said to have unpredictable frequency (Ex. R 4). Even though CLAIMANT had notified
RESPONDENT about this phenomenon during negotiation, since it has already happened the
previous year and RESPONDENT had not been made known until 4 January 2015 (PO.2,
pa. 23), RESPONDENT was unaware of the effects of the Red Dragon on CLAIMANTs cultivating results.
In the belief that it held no responsibilities for CLAIMANTs defective flowers, RESPONDENT rightfully turned down the refund request from CLAIMANT on 22 January 2015, and
was astonished when receiving the Declaration of Contract Avoidance from CLAIMANT on
25 January 2015 terminating the Contract, without any further negotiations (RFA., pa. 11,
12). CLAIMANT also stated that it would enforce its rights in arbitration (Ex. C 4) and submitted an application to Vietnam International Arbitration Centre on 5 October 2015.

MEMORANDUM FOR CLAIMANT | 2

ARGUMENTS
I. THE TRIBUNAL HAS NO JURISDICTION OVER THE DISPUTE
1. RESPONDENT respectfully asserts that the Tribunal does not have the jurisdiction to hear the
merits of the dispute.
2. RESPONDENT does not dispute that Art. 10 of the Contract is a valid arbitration agreement
governed by the UNCITRAL Model Law on International Commercial Arbitration with
amendments adopted in 2006 (Model Law). Also, RESPONDENT does not challenge the
Tribunals authority to determine its own jurisdiction under the competence-competence principle [Cl. Memo., pa.15].
3. CLAIMANT contended that the arbitration agreement is valid, the parties chose arbitration as
a mean of dispute settlement and Ms. Thornes letter forms an arbitration agreement which is
valid and incorporated in the Contract [Cl. Memo., pa.16-21]. However, RESPONDENT did
not attack the existence and validity of the arbitration agreement but objected to the jurisdiction of the Tribunal to hear the merits of the dispute on two grounds: CLAIMANTs Request
for Arbitration is inadmissible since the first tier of the dispute resolution proceeding was not
fulfilled (A.); and the parties common intention of choosing the arbitration institution was
Vienna I.A.C. instead of Vietnam I.A.C as CLAIMANT alleged (B.).
A. CLAIMANTS CLAIM IS INADMISSIBLE SINCE CLAIMANT FAILED TO
COMPLY WITH AMICABLE SETLLEMENT
4. CLAIMANT may argue that the email dated 22 Jan 2015 itself was a good faith act whereas
RESPONDENT refusal was a clear manifestation of the amicable settlement failure, rendering CLAIMANT resort to arbitration. However, it will be shown that CLAIMANTs claim is
inadmissible on the following grounds: amicable settlement is a mandatory condition precedent to arbitration (1); the Tribunal should consider CLAIMANTs Request for Arbitration
inadmissible (2); RESPONDENTs objection was made without undue delay (3); the Tribunal
should close or alternatively stay the proceeding (4).
1. Amicable settlement is an enforceable and binding precondition to arbitration
5. Amicable settlement under Art. 10 of the Contract is a compulsory precondition to arbitration.
It is not merely a vague agreement to agree [Elizabeth Bay; Paul Smith]. CLAIMANT
could argue that amicable settlement is only enforceable if it is a sufficiently clear and mandatory obligation [Born, p.847; Cremades, p.5-9; Berger, p.4-5]. That certainty can be proven
on the grounds of the wording of Art. 10 of the Contract (a), and the certainty of Good faith
term (b)
MEMORANDUM FOR CLAIMANT | 3

a. The wording of Art.10 of the Contract explicitly sets forth that the first tier of the dispute resolution proceeding is binding and enforceable
6. The clause stipulates that disputes shall be finally settled amicably and in good faith [Ex.
C2]. The term finally explicitly requires that amicable settlement is conditio sine qua non of
the dispute resolution proceeding.
7. Instead of the permissive may, the mandatory term shall was used, suggesting that
amicable settlement is binding [Cremades, pp.7, 9]. When such soft language like may is
used, it is obvious that parties do not intend to impose any obligation, it rather gives a party
right to use this contractual tool upon its own consideration [Berger, p.1; ICC 10256].
8. Amicable settlement was a clear precondition to arbitration if no agreement can be reached
[by amicable and in good faith settlement] the dispute shall be decided by arbitration
[Ex.C2]. If and shall together establish unequivocally a binding prerequisite to arbitration
[Berger, p.5]. This wording shows the escalation sequence of a multi-tiered dispute resolution
clause, which means that if the parties do not comply with the first level of the escalation
there is no chance for it to move forward to the second one.
b. Good faith does not make the first tier unenforceable
9. CLAIMANT could challenge the enforceability of the first tier settlement for the ascertainability of good faith. It used to be the stand of the courts that the good faith element in
agreements to mediate or conciliation was fatal to their enforceability, as courts could not tell
if the element was satisfied. This was successfully challenged by Einstein J in the Supreme
Court of New South Wales in Aiton case.
10. The courts should strive to give effect to the expressed agreements and expectations of those
engaged in business, notwithstanding that there are areas of uncertainty and notwithstanding
that particular terms have been omitted or not fully worked out [Vroon BV v Fosters Brewing
Group Ltd]. The court or arbitration hence cannot be too ready in striking down a contractual
clause as void if it is possible to attribute a meaning to an apparently vague term that corresponds with the parties intentions [Lye/Lee, p.200; Aiton case].
11. amicably and in good faith here shall be interpreted the good faith obligation which serves
to compel one to participate in a negotiating process, which may or may not achieve a satisfactory outcome in the end. The concept is therefore determinable, It was also ruled that an
obligation to act in good faith was distinct from an obligation to negotiate in good faith to
achieve a satisfactory outcome. The good faith obligation in the former instance only serves to
compel one to participate in a negotiating process, which may or may not achieve a satisfactory outcome in the end.
MEMORANDUM FOR CLAIMANT | 4

2. Accordingly, CLAIMANTs claim should be considered inadmissible due to the failure to comply with the first tier of the dispute resolution proceeding
12. A tribunal should consider a request for arbitration inadmissible if the parties agreed in a
binding and unequivocal manner to first engage in other steps to resolve their dispute (negotiation, mediation, etc.). It must be clear from the wording of the agreement that this is not
merely a permissive or non-mandatory provision. The dispute resolution clause in the case at
hand satisfies this condition [supra pa.7-9].
13. Case law affirms the inadmissibility of any claim filed before court or arbitration in the
disputes where the first tier in a multi-tiered dispute resolution clause is not complied with. In
a decision concerning a clause under which the parties had agreed to attempt to resolve disputes by settlement negotiations before commencing court proceedings [German Federal Supreme Court (Bundesgerichtshof) of 1998], the court held that any claim brought against one
of the parties by the other before the courts would be inadmissible if the settlement negotiations had not been commenced and completed. The court confirmed that, if the parties agreed
on a mandatory settlement clause, both parties were obliged to co-operate in carrying out the
settlement negotiations. An action brought before the courts prior to completion of an agreed
settlement procedure was inadmissible.
14. This decision was in line with an earlier decision of the same court, in which the parties had
agreed that in case of dispute the parties would first present their controversy to their local
professional organization for conciliation prior litigation. The claimant failed to do so and argued that in the circumstances conciliation was a futile exercise, given that the respondent had
shown no willingness to settle the matter in earlier negotiations. The court held that such prelitigation conciliation clauses are valid and must be respected by the parties and the courts.
Thus, as long as a party invoking the pre-trial conciliation clause had a legitimate interest in
conciliation, the courts had to treat an action filed prior to the agreed conciliation as inadmissible
3. RESPONDENTs objection was made without undue delay
15. RESPONDENT did not waive its right to object. Under Art.4 Model Law, waiver exists when
REPSONDENT proceeded with arbitration knowing of the non-compliance without objecting
without undue delay. This term has been interpreted that a party must state its objection either at the next scheduled oral hearing or, if no such hearing is scheduled, in an immediate
written submission [OLG Namburg 21 February 2002] or at the latest with the closing plea
[OLG Stuttgart 16 July 2002]. In the case at hand, upon receiving CLAIMANTs Request for

MEMORANDUM FOR CLAIMANT | 5

Arbitration filed on 5 Oct. 2015, RESPONDENTs Statement of Defense was a proper challenge of CLAIMANTs arbitration on 22 Oct. 2015.
4. The Tribunal ought to close or alternatively stay the proceedings
16. As amicable settlement is a binding first-tier commitment as a condition precedent to arbitration, the Tribunal ought to require CLAIMANT to settle amicably prior to commencing a new
arbitration [Born, p.847]. The preferable consequence would be to close the proceedings since
maintaining a Tribunal on the expectation that amicable settlement will fail adds unwelcome
pressure in first-tier settlement [Jolles, p.337].
17. Alternatively, the Tribunal may stay the proceedings pending the first-tier amicable settlement. As the order may prescribe conditions and deadlines for the amicable settlement, there
is no risk of the parties being indefinitely precluded from arbitration [Jolles, p.337; Lye/Lee,
p.11]. The Tribunal should not permit the two tiers to occur in parallel. That would result in
unnecessary costs, contradicting the parties interest in saving-cost settlement [Ex.R2; PO2,
pa.6], and frustrate any chance of the parties maintaining amicably and non-adversarial positions.
18. To conclude, amicable settlement was binding and enforceable but not complied with, rendering CLAIMANTs claim inadmissible.

B. PARTIES CHOSE VIENNA INTERNATIONAL ABITRATION CENTRE

The intention of choosing Vienna I.A.C. shall prevail on the following grounds: the principle
of Estoppel does not suffice to interpret that the institution chosen was Vietnam I.A.C. (1);
RESPONDENTs intention shall prevail under the principle of interpretation in good faith (2);
contra proferentem principle is not applied in this case; if the Tribunal made an award in accordance with CLAIMANTs intention, the award may be set aside or refused enforcement
(4).
1. The principle of Estoppel does not suffice to interpret that the institution chosen was
Vietnam I.A.C.
19. Estoppel occurs when a party reasonably relies on the act, statement or promise of another
party, and because of the reliance is injured or damaged. CLAIMANT alleged the defense that
Vietnam I.A.C. does not have the jurisdiction over the dispute is an inconsistent behavior,
contradicting RESPONDENTs previous silence and inactivity, i.e. no reply to CLAIMANTs
letter of 25 Jan 2015 in which Vietnam I.A.C. was mentioned [Cl. Memo. pa.17]. However,
silence or inactivity does not itself amount to agreement. Silence is not an abandonment of
MEMORANDUM FOR CLAIMANT | 6

rights merely because RESPONDENTs efforts could have been more energetic [White v.
Kampner]. That RESPONDENTs silence means consent is just a groundless presumption of
CLAIMANT.
20. Besides, estoppel is also based on good faith principle. CLAIMANT only counted on the
silence to a statement by CLAIMANT but made no effort to obtain RESPONDENTs consent
after sending the Termination of Contract. This explicitly shows that CLAIMANT did not
reasonably rely in good faith on RESPONDENTs silence to its detriment [Amco; Cable &
Wireless p.1328].
21. Also, that RESPONDENT challenged the issue of jurisdiction in the Statement of Defense on
22 Oct 2015 is not a late objection under Art.16 (2) Model Law, i.e. a plea that the arbitral
tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defense.
2. Under the Principle of Interpretation in Good Faith, CLAIMANTs intention of
choosing Vietnam I.A.C shall not prevail
22. The arbitration agreement must be interpreted with the consequences that the parties reasonably and legitimately envisaged [Amco; Fouchard/Gaillard/Goldman, pa.477]. An arbitration
agreement shall be interpreted in accordance with the general principles governing international commercial contracts, first and foremost with the principle of interpretation in good
faith [Fouchard/Gaillard/Goldman, pa.476; ICC Award No. 2291]. Under this principle, the
tribunal must look for the parties' actual intention, rather than simply restrict to examining the
literal meaning of the terms used [Fouchard/Gaillard/Goldman, pa. 477; ICSID Case No.
ARB/81/1]. Thus, although the standard term in the former dispute stated the name of arbitration institution the Tribunal of Vienna International Arbitration Centre and it is controversial that the arbitration agreement in the present contract only stated the abbreviation VIAC,
RESPONDENTs intention of choosing Vietnam International Arbitration Centre shall prevail.
23. Applying this principle, attitude of the parties after the signature of the contract and up until
the time when the dispute arose should also be taken into account, as that attitude will indicate
how the parties themselves actually perceived the agreements in dispute [Fouchard/Gaillard/Goldman, pa.477]. This rule is sometimes referred to as practical and quasiauthentic interpretation or contemporary practical interpretation and is commonly applied
in arbitral case law [Saudi Arabia v. Aramco]. No objection to CLAIMANTs statement (in
the Declaration of Avoidance) that Vietnam I.A.C. was chosen as agreed in the Contract but
MEMORANDUM FOR CLAIMANT | 7

subsequently challenged that intention of CLAIMANT not only contradicts the Estoppel doctrine [supra pa. ] but also violates good faith interpretation.
24. It was an attitude revealing how CLAIMANT actually perceive the arbitration institution in
the arbitration agreement, i.e. it chose Vienna I.A.C initially, not Vietnam I.A.C.
25. Neither party had any questions or discussions about the content of the arbitration clause
during the negotiations or after the contract conclusion while it is reasonable to rely that
CLAIMANT cannot have been unaware of the dispute between its parent company and RESPONDENT since the representatives of the parties had a short conversation about it during
their first negotiation [Ex.R2]
26. Arbitration agreements have to be interpreted according to the common intent of the parties
and also the understanding of reasonable third persons of the same kind [Fouchard/Gaillard/Goldman, pa.477; PICC Art.4.1]. CLAIMANT invoked the longstanding relationship between Locus Group and RESPONDENT and their dispute resolved by arbitration
in the past as a fact in the Request for Arbitration [RFA, pa.5]. Therefore, even if the parties
had not discussed about the former dispute in their negotiation, the possibility that CLAIMANT did not know about the arbitration institution chosen to resolve that dispute Vienna
I.A.C. would have been excluded.
27. It is reasonable to interpret that Vienna I.A.C. was the common intention of the parties in lieu
of Vietnam I.A.C.. There is no relation between CLAIMANT and Vietnam I.A.C whereas it
was not CLAIMANT cannot have been unexposed to the information about Vienna I.A.C. in
the former dispute [supra pa. ]. Hence, it is unreasonable that Vietnam I.A.C. was chosen by
CLAIMANT.
28. With respect to RESPONDENT and Vienna I.A.C., RESPONDENT was the winning party in
the dispute with Locus Group, the mother company of CLAIMANT [Ex.R2; PO2, pa.8], resolved by the Tribunal of the Vienna I.A.C. RESPONDENT is in favor of Vienna I.A.C. and
has never intended to choose any other arbitration institutions for dispute resolution [Ex.R2].
Henceforth, the relation between RESPONDENT and Vienna is clear.
29. Regarding RESPONDENT with Vietnam I.A.C., it once was merely a third party having
interest involved voluntarily joined in the arbitral proceedings before arbitral tribunal of Vietnam I.A.C. [PO2, pa.7]. The relation between RESPONDENT and Vienna I.A.C. definitely
outweighs the one between it and Vietnam I.A.C.
3. The fact that RESPONDENT supplied the dispute resolution clause does not call for
an interpretation against RESPONDENT

MEMORANDUM FOR CLAIMANT | 8

30. CLAIMANT could further argue that the contra proferentem rule requires interpretation
against RESPONDENT since it was RESPONDENT that supplied the arbitration agreement
from the former contract into the current Contract. Under this rule, if contract terms drafted or
supplied by one party are unclear, an interpretation against that party shall be adopted [Fouchard/Gaillard/Goldman, pa.479; PICC Art.4.6].
31. The rule applies if a possible lack of clarity of the formulation is attributable to one of the
parties only [Sykes, p.68; Ramberg, p.34]. The reasoning behind the rule is that the party
drafting or supplying the ambiguous term is in a better position to write clear language or
know more about the term. Hence, the rule should not be applied where both parties have
relatively equal bargaining power or are experienced businesspersons, since both parties have
the opportunity to review the agreement to prevent ambiguity [Duhl, p. 96-97; Lord, pa.
32:12; Terra Intern., Inc. v. Mississippi Chemical Corp.]. Accordingly, in the current case, in
respect of the information about the former dispute in which RESPONDENT was a party,
both parties were in an equal position [supra pa. ].
32. Besides, even though it was RESPONDENT that provided the standard term, CLAIMANTs
role during the negotiation was not passive. As a receiver, CLAIMANT though had none
questions concerning the arbitration clause [Ex. R2]. Moreover, CLAIMANT cannot assert
that during about 5 months, i.e. from the contract conclusion (20 Aug 2014) to the Declaration
of Avoidance (25 Jan 2015), it has not directed its attention to Art.10 of the Contract. Thus,
CLAIMANT must be deemed in part responsible for the existence of the ambiguity of the arbitration clause.
33. In the light of the above, it does not suffice to apply the contra proferentem rule to interpret
Art.10 against RESPONDENT.
4. If the Tribunal made an award in accordance with CLAIMANTs intention, the
award may be set aside or refused enforcement
34. Once an award has been made, the courts take care to ensure that the intentions of the parties
are observed. They will not set aside an award if the constitution of the arbitral tribunal complies with the parties' agreement or with the chosen arbitration rules.
35. In contrast, the courts will not hesitate to set aside or refuse enforcement of an award made by
an arbitral tribunal which was not constituted in accordance with the parties' agreement. That
will be the case where the agreement of the parties is not complied with and where nothing in
the subsequent attitude of the parties can be construed as a waiver of such non-compliance
[Fouchard/Gaillard/Goldman pa 781, 782].
MEMORANDUM FOR CLAIMANT | 9

36. To conclude, the jurisdiction of the Arbitral Tribunal shall be based on an interpretation of the
common intent of the parties as an agreement on the Vienna I.A.C.
CONCLUSION: CLAIMANTs claim is inadmissible due to the failure to comply with amicable settlement. Also, the common intention of the parties is choosing Vienna I.A.C instead
of Vietnam I.A.C. Therefore, the Tribunal does not have jurisdiction to hear the merits of the
dispute.
II. CLAIMANT WRONGFULLY AVOIDED THE CONTRACT
37. RESPONDENT did not breach its obligations under the contract (A.). RESPONDENT did not
commit a fundamental breach within the meaning of Art.25 CISG (B.). CLAIMANT did not
duly inform RESPONDENT of the lack of conformity and declared the Contract avoided (C.).
A. RESPONDENT did not breach its obligations under the Contract
38. CLAIMANT alleged that RESPONDENT has committed two breaches: delivered the goods
not conforming to the Contract and not provided CLAIMANT with specific instructions for
the flower planting under the environmental conditions of Beta [RFA, pa.16]. However, it will
be demonstrated in the following that: RESPONDENT deliver the seeds in conformity with
the Contract and the defects caused to the flowers were not RESPONDENTs fault but due to
Red Dragon (1); also, RESPONDENT fulfilled its obligation to provide instructions (2)
1. The seeds delivered by RESPONDENT conformed to the Contract
39. CLAIMANT could have argued that RESPONDENT delivered the seeds not fit for its particular purpose of purchasing 3,000 seeds RESPONDENT knew before the contract conclusion and it was reasonable for CLAIMANT to rely RESPONDENTs skill and judgment,
which renders RESPONDENT liable for delivering non-conformity goods under Art.35(2)(b)
CISG. RESPONDENT denies this allegation. In the following it will be shown that the goods
to a certain extent still fit for the particular purpose that RESPONDENT was made known to
at the time of contract conclusion (a). Besides, it was not reasonable for CLAIMANT to rely
on RESPONDENTs skill and judgment (b).
a. RESPONDENT was under no obligation via Art.35(2)(b) CISG to deliver the seeds of
the
40. Under the CISG, the conformity of goods is to be assessed primarily on the basis of the
parties agreement [Honnold, pa.224]. In this current case, the Contract did not expressly
stipulate the description or quality but only the name and quantity of the goods, namely 3,000
Phoenix Tulip flowers [Ex.C2]. Also, there was no negotiation, no further or supplemented
agreement about the quality of the seeds [PO2, pa.10]. Though CLAIMANT informed REMEMORANDUM FOR CLAIMANT | 10

SPONDENT of its purposes relating to the Festival and the sale to Mineo Group in the Order
[Ex.C1], CLAIMANT never informed RESPONDENT of any precise requirement of the
seeds. Analogously, in Metallic covers case, the seller was not made known to any specifications that had to be met and the sellers certified high quality standard did not suffice that it
ought to have been aware of the buyers specific needs. Hence, there was no express or implicit agreement on what extent of the standard of the seed quality that RESPONDENT was
obliged to satisfy to fit for CLAIMANTs purposes.
41. Besides, the particular purpose must be made known sufficiently clearly so that RESPONDENT has an opportunity to decide whether or not it wishes to take on the responsibility of selecting goods appropriate for the purpose for which CLAIMANT intends to use them [Huber/Mullis, p.138]. Such general wording like promotion, gain access to the international
flower market or expand business activities as given in the Order [Ex.C1] is common purposes of businessmen in most international commercial transactions. Accordingly, the promise to help CLAIMANT to compete in the international flower market is not sufficient to be
construed as an implied agreement on delivering the Phoenix Tulip seeds of the higheststandard quality, i.e., special scent, blood-red flares or flames vividly streaked on a white
ground [RFA, pa.4]. It only shall be interpreted as an act of good faith showing the eager to
cooperate in a deal.
42. Also, RESPONDENT respectfully requires the Tribunal should consider that even if the 75%
of the seeds was truly lacked conformity with the Contract, CLAIMANTs purpose was still
satisfied to some extent. 25% of the flowers blooming beautifully were displayed at the Festival, appraised and sold out [PO2, pa.32]. The first purpose of CLAIMANT relating to the
Festival thus in fact was achieved, rendering CLAIMANT get its further purpose, i.e. for
promotion, enhance CLAIMANTS images; and expand its business activities throughout the
world [RFA, pa. 3].
b. CLAIMANT unreasonably relied on RESPONDENTs skill and judgment
43. At any rate, the circumstances show that CLAIMANT unreasonably counted on RESPONDENTs skill and judgment to ensure that the seeds were fit for its particular purposes. A buyer
is not deemed to have relied on the seller's skill and judgment where the buyer possessed skill
concerning and knowledge of the goods equal to or greater than that of the seller [UNCITRAL
Digest, Art.35 pa.12; Chemical substance case]. While RESPONDENT is truly a highly experienced and reputable supplier of Phoenix Tulip seeds [SOD, pa.2], CLAIMANT fails to
note that it also specializes in purchasing rare flower seeds to grow into flowers and then sell
the flowers to customers [RFA, pa.1]. Therefore, it is not sufficient to conclude that REMEMORANDUM FOR CLAIMANT | 11

SPONDENT prevails in respect of skills and knowledge of Phoenix Tulip seeds, rendering the
ground for CLAIMANTs reliance is not with sufficient clarity.
2. In any case, any non-conformity is due to Red Dragon an exemption under Art.79
CISG, RESPONDENT thus is excused from liability
44. RESPONDENT maintains that it did not breach the Contract. The cause of the defects of the
flowers is the defective seeds but the extraordinarily hot weather Red Dragon occurring in
Beta. RESPONDENT is excused from liability as all preconditions set forth in Art.79 CISG
are fulfilled. Red Dragon is an impediment beyond RESPONDENTs control (a). RESPONDENT could not reasonably be expected to have taken Red Dragon into account at the
time of contract conclusion (b). Also, RESPONDENT made every effort to support CLAIMANT to avoid and overcome the consequences of Red Dragon (c).
a. RESPONDENT could not reasonably have foreseen the occurrence of Red Dragon
45. CLAIMANT could have argued that Red Dragon was foreseeable at the contract conclusion
because during the negotiations, RESPONDENT was made known of Red Dragon which
had occurred several times in Beta [PO2, pa.23]. However, Red Dragon is hard to be predicted due to its unstable frequency, i.e. 2-4 years [PO2, pa.21; Ex.R4]. Also, while Beta went
through a warmer and wetter winter last year, this phenomenon has come back this year
[Ex.R4]. Thus, it was unreasonable for RESPONDENT to foresee the occurrence of Red
Dragon.
b. RESPONDENT could not reasonably be expected to avoid or overcome the consequences of Red Dragon
46. CLAIMANT could argue that the deviation between the temperature and humidity of Red
Dragon (17-27 Celsius degree, 75-85%) and the ideal ones for the growth and development
of the seeds (18-24 Celsius degree, 70-80%) is not substantial, only a few degrees or percents.
However, based on the research done by RESPONDENTs engineers, the further the conditions go from the ideal ones, the worse the flowers get [PO2, pa.15], especially with such a
sensitive species like Phoenix Tulip [PO2, pa.14], it is comprehensible that only a small
change of environmental condition could create a huge difference in the blooming.
47. Red Dragon was from 29 Dec 2014 to 13 Jan 2015 [PO2, pa.20], lying within the last 03
weeks of the planting process the most important time to form the flowers beauty [PO2,
pa.16].
48. RESPONDENT even though could not have reasonably foreseen the occurrence of Red
Dragon, RESPONDENT made sufficient efforts to support CLAIMANT to avoid or overcome its consequences. Mr. Black from RESPONDENT gave Mr. White from CLAIMANT
MEMORANDUM FOR CLAIMANT | 12

the important information concerning the ideal environment conditions for the blooming of
the flowers and emphasized that they are the most important factors for the blooming stage
[Ex.R3]. On the basis of such information, CLAIMANT could have adjusted the planting process to make sure that the ideal conditions were always maintained despite any weather
change.
49. CLAIMANT could insist on the defects of the seeds on the ground that it followed all the
instructions from RESPONDENT but the flowers still bloomed defectively. Nonetheless, it
should be noted that even though CLAIMANT complied with the General Guidance [RFA,
pa.10; PO2, pa.26], it is not evident that CLAIMANT also strictly followed any other instruction given by RESPONDENT. If CLAIMANT was made known of such information, there is
no fact or evidence showing that CLAIMANT adjusted the planting stage to avoid or overcome Red Dragon. Accordingly, it is not sufficient to conclude that the seeds are defective
instead of
50. If CLAIMANT did not know about such information, RESPONDENT still fulfilled its
obligation to provide instruction and CLAIMANT cannot invoke that RESPONDENT did not
make any effort to support CLAIMANT to avoid or overcome the consequences of Red
Dragon.
c. RESPONDENT does not lose its right to invoke the Red Dragon as the cause of the
defective flowers
51. CLAIMANT' alleged that weather did not prevent the seeds from growing merely on the
ground that the temperature at which the Phoenix Tulips stop growing or die does not lie
within the temperature of Red Dragon, [Cl. Memo., pa.23]. However, CLAIMANT fails to
note that the defective manifestations of the flowers are shriveling, fade color and seeds not
blooming, not stopping growing or dying. The possibility that Red Dragon caused the flowers to be defective thus is not excluded.
52. Therefore, RESPONDENT is entitled to invoke Red Dragon to not be liable for the defective of the flowers.
3. RESPONDENT was not obligated to provide specific instructions under the Contract
and even if it was, it fulfilled such obligation
53. CLAIMANT asserted that RESPONDENT only provided a General Planting Guidance and
requested for specific instructions for the flower planting under the environmental conditions
of Beta [RFA, pa.16]. RESPONDENT denies this allegation on the following grounds: RESPONDENT was under no obligation to provide specific planting instructions (a); in the al-

MEMORANDUM FOR CLAIMANT | 13

ternative, RESPONDENT supplied CLAIMANT with specific instructions in accordance with

good faith (b).
a. RESPONDENT was not obliged to provide specific planting instructions under the
Contract
54. Art. 4 of the Contract explicitly sets forth that RESPONDENT is obligated to give instructions to CLAIMANT for the cultivation of the seeds and the instructions shall be provided at
all time during the planting stage [Ex.C2]. There is no wording in the Contract or any agreement imposing the obligation to supply CLAIMANT with specific instructions for the flower
planting under the environmental conditions of Beta. Also, there were no specific requirements agreed by the parties about the form of giving instructions [PO2, pa.11]. Delivering the
General Guidance ipso facto was a fulfillment of the obligation to provide instructions under
the Contract. Therefore, the obligation to provide specific obligations is not binding on RESPONDENT under the Contract.
55. Accordingly, RESPONDENT was under the obligation to actively ask whether CLAIMANT
was encountering any problem in the whole planting process and then support relevant information for CLAIMANT. Besides, the letter of Art.4 requires RESPONDENT to give notice to
CLAIMANT about any factor that might affect the growth and development of the seeds.
b. Even if such obligation was binding on RESPONDENT, RESPONDENT fulfilled it in
good faith
56. CLAIMANT could rely on good faith principle under Art.7 CISG, Art.7.1 PICC or as a
general legal principle to require RESPONDENT to give specific instructions. It will be
shown in the following that it was unreasonable for RESPONDENT to be obliged to such obligation (i); in fact RESPONDENT acted in accordance with good faith and provided specific
information for CLAIMANT (ii)
i. It was unreasonable for RESPONDENT to be obliged to provide specific instructions
57. It does not suffice to oblige RESPONDENT to provide specific instructions, especially for the
planting under the environmental conditions of Beta, merely on the basis of good faith. It is
not easy to ascertain the requirement of good faith, and it is too ambiguous, a "protein phrase"
meaning "different things to different people in different moods at different times and in different places [Bridge, p.407].
58. CLAIMANT could contend that the maxim of good faith requires the parties to cooperate
with each other [PICC Art.5.1.3] and the obligation to provide specific instructions to be an
implied contractual obligation [PICC Art.5.1.2]. Nonetheless, pursuant to Art.5.1.3 PICC,
each party shall cooperate with the other party when such co-operation may reasonably be
MEMORANDUM FOR CLAIMANT | 14

expected for the performance of that partys obligations. The reasonable expectation is a certain limit that the duty of cooperation must be confined within so as not to upset the allocation
of duties in the performance of the contract [PICC Art.5.1.3 cmt.]. Good faith requires fair
and reasonable behavior [Huber/Mullis, p.8], not an obligation to act altruistically [Keily].
CLAIMANTs request for specific instructions for the flower planting under the environmental conditions of Beta was unreasonable, rendering the disproportion in the scale of obligations of the parties.
ii. Alternatively, RESPONDENT acted in accordance with good faith and provided specific instructions for CLAIMANT
59. Even if RESPONDENT was obligated to provide specific information, RESPONDENT
fulfilled this obligation in good faith. Good faith can be defined as Honesty [Oxford,
p.221], which stresses on the obligations of the parties to honestly respect either the mutual
benefits or the individual benefits of each other and henceforth, adjust their own activities accordingly. RESPONDENT performed the contract within the scope of good faith principle.
60. Good faith requires that the parties conduct themselves according to the standard of the
reasonable person [Schlechtriem, p. 39; Ersi, pp.2-9]. Other than providing the General
Planting Guidance, RESPONDENT also promised to give CLAIMANT necessary assistance
in planting process whenever CLAIMANT needed support, which was explicitly a reasonable
behavior showing RESPONDENTs good faith.
61. In fact, RESPONDENT fulfilled the duty to cooperate and exchange specific information with
CLAIMANT. RESPONDENT kept its promise and was eager to provide any information
CLAIMANT needed. When asked by Mr. White form CLAIMANT, Mr. Black from RESPONDENT gave the information about the nutritional ingredients of soil and appropriate
fertilizers needed for developing the seeds [SOD pa.5; Ex. R3] and about the ideal conditions
for the growth and development of the seeds [Ex. R3].
62. Besides, cooperation is mutual, requiring CLAIMANT to exchange information by actively
asking RESPONDENT. Moreover, RESPONDENT emphasized that RESPONDENT would
assist CLAIMANT whenever CLAIMANT needed support. However, CLAIMANT did not
informing RESPONDENT of the weather change.
63. To conclude, RESPONDENT did not commit any breach under the Contract. The defects of
the flowers were caused by Red Dragon, not by the defective seeds. RESPONDENT was
also under no obligation to provide specific instructions and even if it was, such obligation
was fulfilled.

MEMORANDUM FOR CLAIMANT | 15

B. Even if there was a breach of contract, it did not amount to a fundamental breach
under Art.25 CISG
64. Assuming RESPONDENT breached the Contract, CLAIMANT must further demonstrate that
this breach amounted to a fundamental breach within the meaning of Art.25 CISG before it is
entitled to avoid the Contract under Art.49 CISG.
65. CLAIMANT has alleged that RESPONDENT breached the contract under Art.35 CISG. In
response, RESPONDENT submits that even if CLAIMANT succeeds in establishing the alleged breach, it did not amount to a fundamental breach since CLAIMANT did not suffer
substantial deprivation of its expectations under the Contract (1). In the alternative, RESPONDENT did not foresee and a reasonable person in RESPONDENTs position would not
have foreseen the consequences of the alleged breach (2). In any case, the Tribunal should not
confirm a fundamental breach since avoidance of the contract is only a last resort remedy (3).
1. CLAIMANT was not substantially deprived of what it was entitled to expect under
the Contract
66. CLAIMANT only established the fundamental breach on the ground that it the delivered
goods were not fit for the purpose for which they were purchased [Cl. Memo., pa.25-28].
Nonetheless, CLAIMANTs allegation is insufficient to prove the existence of a fundamental
breach. RESPONDENT submits that CLAIMANT cannot claim fundamental breach since
CLAIMANTs expectation was not what it was entitled to expect under the Contract (a), the
purpose of the contract was not frustrated by the breach (b), CLAIMANT could still have reasonable used or resold the goods (c).
a. CLAIMANTs expectation was not what it was entitled to expect under the Contract
67. Under Art.25 CISG, to determine a fundamental breach, CLAIMANT first must suffer such
detriment as to substantially deprive it of what it was entitled to expect under the contract.
The breach must therefore nullify or essentially depreciate CLAIMANT's justified contract
expectations [UNCITRAL Digest, Art.25 pa.3]. A partys expectations under a contract are to
be discerned from the terms of the contract and other circumstances preceding the contract,
such as contractual negotiations [Enderlein/Maskow, p.112; Ferrari, p.497]. It is also crucial
to objectively establish what the parties themselves have made important in their contract
[Magnus2, p.426].
68. In this case, the terms of the Contract itself and the facts about the negotiations strongly
suggest that delivering the seeds of highest quality, i.e. having special scent, unique and vividly blood-red color like flares or flames [RFA, pa.4] was not expected of RESPONDENT. The
promise to help CLAIMANT to compete in the international flower market [PO2, pa. 10] was
MEMORANDUM FOR CLAIMANT | 16

just fit for CLAIMANTs purpose of purchasing the goods. It does not suffice as a guarantee
for the highest quality of the goods [see supra pa.

]. To sum up, this expectation of

CLAIMANT was not reasonable under the Contract.

b. CLAIMANTs purpose or main benefit of concluding the contract was not frustrated
69. CLAIMANT asserted that there was deprivation of the main benefit of, or interest in, the
Contract [Cl. Memo., pa.25]. A fundamental breach will be determined by the factor, inter
alia, whether the purpose of the contract is frustrated by the breach [Huber/Mullis p. 214;
Koch p.302]. In the case at hand, CLAIMANTs main benefit, or purpose of contracting with
RESPONDENT was generally to promote and compete in the international flower market.
Even if 75% of the seeds were defective, by displaying and selling the remaining 25% of the
flowers, CLAIMATN to a certain extent still achieved its purposes. Thus, CLAIMANTs purpose or main benefit of entering into the Contract in fact was not much frustrated.

c. It was reasonable that CLAIMANT could reasonably be expected to use or

resell the defective flowers
70. A non-conformity concerning quality remains a mere non-fundamental breach of contract as
long as the buyer can use or resell the goods even at a discount without unreasonable inconvenience (e.g.: in the buyers ordinary course of business) [UNCITRAL Digest Art.25 pa.8;
Cobalt sulphate case; Meat case]. If the defective flowers are totally [Schlechtriem/Schwenzer, p.427] or practically [Caf inventory case] useless, it fails to rise to the
level of a fundamental breach. Nevertheless, there is no evidence showing any of CLAIMANTs effort to resell 1,500 flowers that shrivel and are faded in color.
71. Besides, whether the buyer can reasonably be expected to sell or use the defective goods, a
decisive factor is whether the buyer is a professional reseller (trader), dealer, producer or ultimate buyer of the goods. Usually, the usability or retailability of sub-standard goods will
have to be denied for producers or ultimate buyers who do not deal in such goods. It is not
within the context of this case where CLAIMANT is a supplier specializing in planting rare
flower seeds and then selling the flowers to customers [RFA, pa.1]. Therefore, it was reasonable to expect that CLAIMANT could resell the defective flowers.
2. Alternatively, the consequences of the alleged breach were not foreseeable
72. Pursuant to Art.25 CISG, there was no fundamental breach of contract as it was unreasonable
for RESPONDENT to have foreseen the consequences of the alleged breach. Foreseeability
has to be determined in light of the facts and matters known at the time of the contract conclusion [UNCITRAL Digest, Art.25 pa.4]. Also, the question of whether RESPONDENT actually
MEMORANDUM FOR CLAIMANT | 17

foresaw the consequences of the breach must be evaluated by reference to RESPONDENTs

knowledge of the facts surrounding the transaction [Babiak, p.120]. At the time of contract
conclusion, RESPONDENT only knew the purposes of purchasing 3,000 seeds were for the
Festival in February 2015 and for the contract with Mineo. Regarding the contract with
Mineo, RESPONDENT was not aware of any other specific information such as the expected
delivery date. Hence, it was not possible for RESPONDENT to have foreseen that the nonconforming goods (even if the seeds delivered were defective) could have led to CLAIMANTs loss in its deal with the third party. Besides, CLAIMANTs expectation about the
goods of highest quality cannot be reasonably expected by RESPONDENT. Based on the
above, CLAIMANTs assertion of fundamental breach must fail as a result of unreasonable
foreseeability.
3. In any case, the Tribunal should not confirm a fundamental breach since avoidance is
only a last resort remedy
73. CLAIMANT could contend that a fundamental breach should be confirmed as avoidance is
the only remedy that fully compensates CLAIMANTs detriment. However, the threshold for
establishing a fundamental breach is a high one since avoidance is a remedy of last resort under the CISG [Zeller, p.; Magnus2, p.423]. This remedy should only be granted to the buyer if
his legitimate interests cannot be satisfied by any other means [Huber/Mullis, p.209; AC Op 5,
pa.3.2]. However, it was strongly proven otherwise [supra pa. ],
74. In the alternative, CLAIMANT could have exercised other relevant remedies (e.g.: price
reduction under Art.50 CISG) that could compensate CLAIMANTs detriment to a certain
extent.
75. To conclude, all elements of a fundamental breach were not satisfied.
C. CLAIMANT did not duly notify RESPONDENT of the lack of conformity and declared the Contract avoided
76. Even if the seeds delivered were defective as CLAIMANT argued, under Art. 39(1) CISG,
CLAIMANT lost the right to rely on non-conforming goods since the notice specifying the
nature of the lack of conformity was not given to RESPONDENT within a reasonable time
after CLAIMANT ought to have discovered it.
77. CLAIMANT may allege that the email of 22 Jan 2015 informing about the defective seeds
was a justifying notice of the lack of conformity as it was sent to CLAIMANT only a few
days after 75% of the flowers was discovered defective (17-20 Jan 2015) [PO2, pa.26]. However, RESPONDENT challenged this allegation. CLAIMANT should have discovered the
non-conformity manifestation and notified RESPONDENT when it took notice of some
MEMORANDUM FOR CLAIMANT | 18

leaves of around 73 Phoenix Tulip flowers shriveling from the middle of December 2014
[PO2, pa.26].
78. Also, CLAIMANT inspected the seeds after receiving them from the carrier and found no
abnormalities from their surface [PO2, pa.17]. CLAIMANT may note that quality defects
such as blooming possibility are hidden and latent defects, CLAIMANT thus cannot have discovered the lack of conformity at the time of examination. Nonetheless, considering the fact
that CLAIMANT specializes in purchasing and growing rare flower seeds [RFA, pa.1], it was
not groundless to require that CLAIMANT ought to have found out the defects when undertaking inspection.
79. Accordingly, in any case, CLAIMANT lost its right to declare the Contract avoided as
CLAIMANT failed to do it within a reasonable time after he knew of the breach under Art.49
(2) CISG.
CONCLUSION: CLAIMANT did not rightfully avoid the Contract.

III. RESPONDENT IS NOT LIABLE FOR ALL CLAIMED DAMAGES

80. As a direct consequence of RESPONDENTs breach, CLAIMANT has no bases to claim for
damages (A.).
A. CLAIMANT has no bases to claim for damages under Art.74 CISG
81. Under Art.74 CISG, Art.7.4.2 (1) PICC, CLAIMANT is entitled to full compensation for the
harm it has sustained as a result of the non-performance of the contract. However, as submitted above, there is no breach of the Contract at all. The damages CLAIMANT claimed did
not have a reasonable degree of certainty (1). RESPONDENT cannot have reasonably foreseen the losses (2).
1. The damages CLAIMANT claimed does not have a reasonable degree of certainty and
falls out of the core scope of Art.74 CISG
2. RESPONDENT cannot have reasonably foreseen the losses
B. CLAIMANT failed to mitigate the losses
82. CLAIMANT alleged that it was not in a reasonable situation to duly mitigate the losses [Cl.
Memo., pa.40]. This allegation is unjustified since even if purchasing substitute flowers from
Lincoln Ltd. was unreasonable, CLAIMANT could and should have found other ways of mitigating damages. Instead, CLAIMANT did not make reasonable effort. Under Art.77 CISG,
CLAIMANT is obliged to take reasonable measures to mitigate the loss resulting from any
alleged non-conformity of the goods. Otherwise, RESPONDENT can claim a reduction in
damages.
MEMORANDUM FOR CLAIMANT | 19

83. Cover purchases are a reasonable and typical measure of mitigation [Saidov, p.133].
CLAIMANT should have entered into a cover purchase to save the contract with Mineo
Group. As a prudent businessperson, CLAIMANT should have been more vigilant and started
to search for alternative goods on the market to fulfill its contractual obligation to Mineo
Group. Other than RESPONDENT, there are some other suppliers that develop and plant
Phoenix Tulips [SOD, pa.2]. From the time at which 75% of the flowers were discovered defective (17-20 Jan 2015) [PO2, pa.26] to the expected date of delivering 2,000 flowers to
Mineo Group (28 Feb 2015) [RFA, pa.9] was about 01 month, which was not impossible for
CLAIMANT to make an effort to look for another supplier. CLAIMANT could allege that the
planting process of Phoenix Tulip seeds normally takes 03 months [PO2, pa.16], CLAIMANT thus still did not have the flowers for Mineo Group even if it bought substitute goods.
However, CLAIMANT could purchase the substitute flowers instead of seeds to have the
goods for due delivery.
84. Overall, instead of taking reasonable mitigation measures under Art.77 CISG, CLAIMANT
chose to remain passive.
CONCLUSION: The prerequisites of Art. 74 CISG are not met. Also, in light of all the facts
of the case, CLAIMANT violated the mitigation principle under Art. 77 CISG. Thus,
CLAIMANTs claim must be rejected or at least reduced.

MEMORANDUM FOR CLAIMANT | 20

REQUEST FOR RELIEF

In the light of the above submissions, RESPONDENT respectfully requests the Tribunal to
find that:
1. The Tribunal has no jurisdiction over the dispute:
a. CLAIMANTs Request for Arbitration is inadmissible since the amicable dispute
settlement was not complied with under Art. 10 of the Contract.
b. The Parties agreed to choose Vienna International Arbitration Centre, not Vietnam
International Arbitration Centre, for resolving the dispute.
2. CLAIMANT did not rightfully avoid the Contract:
a. RESPONDENT did not breach its obligation under the Contract
b. Even if it did, the breaches did not amount to a fundamental breach
c. Alternatively, CLAIMANT did not duly notify RESPONDENT of the lack of conformity and declared the Contract avoided
3. RESPONDENT is not liable to damages claimed by CLAIMANT or the damages
shall be reduced:
a. CLAIMANT had no bases to claim damages under Art.74 CISG
b. The mitigation duty was not complied with under Art.77 CISG

MEMORANDUM FOR CLAIMANT | 21