I.

THE ARBITRAL TRIBUNAL DOES NOT HAVE THE AUTHORITY TO DECIDE ON THE
CHALLENGE OF MR. PRASAD’S REPLACEMENT, AND EVEN IF IT DOES, MR.
PRASAD SHOULD BE INVOLVED
1. To add to its failure of performing its obligations under the Contract, Respondent tried to
divert the Tribunal’s attention by requesting to replace Claimant’s appointed arbitrator, Mr.
Prasad. Respondent alleged that the past affiliation between Mr. Prasad and Claimant’s
funder’s parent company, Findfunds LP, gave rise to justifiable doubts of his independency
and impartiality.
2. Claimant submits that the Tribunal does not have the authority to decide on the
unsubstantiated challenge brought by Respondent (A), and in the event that the Tribunal
possesses such authority, Mr. Prasad should participate in the challenge (B).

A. The Tribunal does not have the authority to decide on the challenge
3. As the Parties never agreed nor intended to opt-out from Art. 13(4) of UNCITRAL Rules
(i), pursuant to such article, the Tribunal is of no authority to decide on the challenge (ii).
The Parties never intended to opt-out from Article 13(4) of UNCITRAL Rules
4. Contrary to Respondent’s submission, Art. 20 of the Contract cannot be construed as an
opt-out of Article 13(4) of UNCITRAL Rules, as there is no specific exclusion of such
provision. To determine the mutual understanding of the parties of Article 20 of the
Contract, rules of interpretation under Art. 8 CISG applies. Art. 8 CISG applies even to the
arbitration clause, of which the subject matter is not governed under the CISG
[SCHLECHTRIEM/SCHWENZER–SCHMIDT-KESSEL, Art 8 para 5].
5. Firstly, pursuant to Art. 8(1) CISG, the Parties never intended to exclude the application of
Art. 13 (4) by the provision of Art. 20 of the Contract. This can be concluded from the
circumstances in which Respondent introduced Art. 20 of the Contract, wherein
Respondent proposed the clause admitting that there would not be a problem concerning
“the composition of arbitral tribunals” [fact]. Such intent was further fortified when
Claimant replied in the affirmative for “the constitution of arbitral tribunal” [fact]. Thus,
it can be discerned that discussion on Art. 20 covered only the forum selection clause.
6. This interpretation is reassured by the circumstances leading up to Claimant’s approval of
the clause. Claimant agreed to Art. 20 on the basis that it had bad experience with
appointments of presiding arbitrator by state courts [fact]. To this end, UNCITRAL Rules
serves Claimant’s purpose by creating a mechanism to preclude state courts from being the
 default appointing authority [Footnote]. Therefore, this clearly shows that Claimant was in
no way intending to divert from the application of Art. 13(4) UNCITRAL Rules.
7. Secondly, pursuant to Art. 8(2) CISG, the understanding of a third person prevails if there
is no mutual intent between the Parties regarding the exclusion of Art. 13(4) UNCITRAL
Rules. Claimant submits that a reasonable third person would not have understood Art. 20
of the Contract as an opt-out clause.
8. Respondent argues that the wordings “without the involvement of any arbitral institution”
opted-out Art. 13(4) UNCITRAL Rules [fact]. However, a reasonable third person would
interpret such clause as a standard forum selection clause, as such wordings only refer to
the definition of ad hoc arbitration. Even in ad hoc arbitrations, UNCITRAL Rules still
requires the role of appointing authority in deciding the challenge procedure.
9. If Respondent were to opt-out the application of Art. 13(4) UNCITRAL Rules, a clearer
wording would have been required. An adequate example of this is included in the Annex
of UNCITRAL Rules, which provides that a waiver statement to exclude recourse against
the arbitral award with clear wordings such as “The parties hereby waive their right to any
form of recourse against an award”. Respondent could not be unaware of such practice
considering their amendment also includes a waiver clause for the application of
UNCITRAL Rules on Transparency.
10. If Respondent were to propose the opt-out of Art. 13(4) UNCITRAL Rules in the clause, a
clearer wording is expected. A waiver of any sort should include clear wordings of
exclusion in the sentence. An adequate example of this is shown in the Annex of
UNCITRAL Rules providing a waiver statement to exclude recourse against arbitral
awards with clear wordings such as “The parties hereby waive their right to any form of
recourse against an award” [footnote]. Even Respondent is aware of this requirement, as
it did provide an exemplary waiver clause when it proposed to exclude the application of
UNCITRAL Rules on Transparency in the same clause it purported to be the opt-out clause.
11. Lastly, if the Tribunal were to find that it is unclear whether the clause “without the
involvement of any arbitral institution” opted-out Art. 13(4) UNCITRAL Rules, the
wordings must be interpreted according to the principle of contra proferentem. According
to this principle, the party who proposed the clause bears the risk of its ambiguous wordings
[footnote]. Thus, in the case of doubt, the clause has to be interpreted against Respondent’s
understanding.
12. In the present dispute, as Art. 20 of the Contract was proposed by Respondent, the Tribunal
should interpret the clause as in no way opting out from the application of Article 13(4) of
the UNCITRAL Rules.
Subsequently, pursuant to Article 13(4) of UNCITRAL Rules, the Tribunal has no
authority to decide on the challenge
13. Because the UNCITRAL Rules were developed for ad hoc arbitration, they cannot rely on
an internal authority to deal with a challenge procedure. Thus, pursuant to Art. 13(4)
UNCITRAL Rules created a mechanism for designating an ‘appointing authority’.
14. Art. 13(4) UNCITRAL Rules mandates that the challenge on the arbitrators should be
decided by the appointing authority. As the Contract made no indication on the appointing
party agreed by the Parties, Art. 6(2) UNCITRAL Rules applies.
15. Art. 6(2) UNCITRAL Rules outlines that the Secretary-General of the Permanent Court of
Arbitration (PCA) is to be the default designator of an appointing authority. The appointing
authority designated by the Secretary General will be in charge of any challenge against an
arbitrator, even if the panel was not constituted with the help of an appointing authority
[Koch, p. 8].
16. As such, this Tribunal is of no authority to decide on the challenge brought by Respondent.

B. In the event the Arbitral Tribunal does have the authority to decide, it should
involve the participation of Mr. Prasad
17. Respondent argues that Mr. Prasad should be excluded from deciding on the challenge, as
it will entail that Mr. Prasad be a judge in its own cause [fact]. Claimant submits that in the
event that Art. 13(4) UNCITRAL Rules’ applicability was indeed excluded, and the
Tribunal is of the authority to decide on the challenge, Mr. Prasad should participate in the
decision, as it is in line with Danubian law (i), and the principle of nemo iudex in causa sua
(ii).
Mr. Prasad’s involvement is in line with Danubian law
18. In the event that Art. 13(4) of UNCITRAL Rules is excluded of its applicability, the Parties
are in a situation of vacuum on the challenge mechanism. This entails that the Parties would
have to refer the challenge to the national courts in accordance with lex arbitri of the place
of arbitration [footnote], which is Danubia [footnote].
19. The lex arbitri of Danubia is based on the UNCITRAL Model Law. Under Art. 13(2) of
the Model Law, the arbitral tribunal, in its full composition, decides the challenge
 [footnote]. In the case of a three-member tribunal, all three arbitrators take part in the
decision, if it is a sole arbitrator that person decides alone.
20. The mechanism to exclude the challenged arbitrator proposed by Respondent can only be
found under The International Centre for Settlement of Investment Disputes (ICSID) Rules.
Accordingly, only if the challenge is directed at one (or at a minority) of the arbitrators will
it be decided by the majority of all other arbitrators in the absence of the arbitrator
concerned [footnote]. Such mechanism only applies to investor-State dispute, and certainly
does not apply to the case at hand.
21. As such, Mr. Prasad as the member of the Tribunal shall be included in deciding the
challenge.
Mr. Prasad’s involvement is in line with the principle of nemo iudex in causa sua
22. The involvement of Mr. Prasad in challenge procedure would not contradict with the notion
nemo iudex in causa sua. The purpose of such principle is to shield the Parties from biased
arbitrator, which is still perfectly in line with the aim of challenge procedure under
UNCITRAL Model Law.
23. Instead, by excluding the challenged arbitrator, the fairness of the procedure might be
compromised. This is so because the ones who get to decide the challenge other than
presiding arbitrator is Respondent’s appointed arbitrator.
24. The compromise to the fairness of this challenge is more so prejudiced by the fact that
Respondent’s appointed arbitrator, Ms. Reitbauer, is against the notion of third-party
funding, a mechanism adopted by Claimant [fact].
25. For these reasons, the Tribunal, in its full composition, shall decide on the challenge,
without excluding Mr. Prasad.