ADR MOOT PROBLEM, 2019

1. Cooper and Hofstader (C&H) Architecture and Engineering Services Ltd. is an established
and highly profitable partnership firm based in the Republic of Narnia which specialises in
providing architecture services along with being a consultancy firm for home and office
spaces décor. It is a small firm comprising of merely two partners due to which it
undertakes only one project at a time provides assistance, on a fixed-price contract basis.
2. Koothrappali and Wolowitz (K&W) Foods Ltd. is one of the biggest food chains based in
Zindia and is internationally recognized as one of the best food chains. The State of Zindia
is a majority shareholder and K&W is building a new restaurant for which it approached
C&H along with two other firms in relation to providing advice and hands-on assistance
regarding the layout of the new restaurant.
3. K&Wrequested for a proposal from all the three firms regarding the architecture and
engineering services. When C&H submitted their proposal, it was going through the
second, out of 5 stages, of a tender process to provide services to Datsun Inc in connection
with a new automobile plant that it was building in Zindia. C&H was a regular service
supplier to Datsun for its various plants in different countries. The Datsun project would
have taken approximately one year, and C&H expected to earn Rs. 500 million of revenue
and generate approximately Rs. 100 million of profit. However, having received the
request for proposal from K&W in connection with the Zindia project, C&H withdrew its
offer to Datsun.
4. On 15 September 2018, K&W and C&H entered into an agreement pursuant to
whichC&H undertook to provide consultancy services to K&W in accordance with certain
stages specified in the Agreement, wherein the price was a fixed sum of Rs. 150 million to
be paid over two years. In addition, K&W was to pay C&H a guarantee amount of Rs. 5
lakh within two weeks of entering into the Agreement.C&H expected to generate profits
of around Rs. 50-60 million on the Agreement, with most of the profit expected to be
generated in the second year of the project.
5. Stage 1 of the Agreement scheduled on 30th November 2018, involved the delivery of an
area plan and budget for which required intense cooperation between representatives of
both the firms on-site as well as off-site which was priced at Rs. 10, 00,000. The
preparation of area plan involved various site visits by representatives of both the firms
and it became apparent to C&H that K&W had a number of requirements that which were
not anticipated at the time of entering into the Agreement.

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 6. On 20th October 2018, C&H sent an email to K&W along with a report on the progress of
the area plan and the Budget, wherein it was mentioned that keeping in the number of
requirements on K&W, there was a need to reassess the parameters for the Budget and the
site visit would be interrupted in the meantime.
7. On 26th October 2018, C&H again sent an email to K&W to indicate that the revised
parameters demanded a significant increase in the Budget, for which they requested for a
meeting in early November wherein they could chalk down the new schedule of dates
along with the Budget. To this, there was no reply from the side of K&W.
8. On 30th October 2018, a general vote ballot was organized in the State of Zindia on the
question whether the State should remain a member of the MERCOSUR, a Regional
Union of neighbouring states with reciprocal agreements regarding preferential measures
on trade and investment along with favoured treatment for certain goods and services.
9. The media, which was continually covering the said ballot, was of the opinion that the
conclusion would be in favour of Zindia continuing to be a member given the various
trade benefits that the Union bears, most importantly the establishment of foreign MNCs
leading to economic growth and development. There was another group in Zindia which
was continuously criticizing the Zindian media due to its loyalty to the government, which
was expressed on online platforms.
10. The result of the ballot, to the surprise of the majority, favoured Zindia moving out of the
Union which led to the current Government stepping down. This led to a change in
leadership in the State of Zindia and an acting Government was appointed to manage the
said transition. This led to massive protests from the side supporting the past Government
which paralysed the working of the capital for 72 hours.
11. This change in the Government and opting out from the MERCOSUR led to a change in
the managing board of K&W as well wherein a new management was appointed to look
into various projects. There was a new representative who was appointed to look after the
undergoing new projects, Mr. Holmes who decided that a uniform email be sent to all the
firms which was dealing with K&W stating, “Thank you for your message. Please bear
with us as the new team gets acquainted with K&W's new and ongoing projects. We will
revert shortly.”
12. The change in the management K&W had a huge impact on the services provided by it
along with various firms backing out in their dealings with K&W, which led to it running
into losses. On the other side, since there was no communication to C&H, they continued
to work on their only project with K&W, pursuant to which they had to bear additional

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 expenses. On 18th November 2018, C&H informed K&W that the keeping in mind the
change in circumstances, there shall be a delay in submitting the Budget. On a telephonic
conversation with representatives of C&H, K&W agreed to defer the date of Stage 1.
13. On 20th December 2018, C&H sent the Area plan report and a tentative Budget to K&W
wherein they also incorporated the additional expenses borne by them due the revised
requirements of K&W. C&H also tendered an invoice for the work completed to date of
Rs. 50,00,000.
14. On 25th January 2019, Mr. Holmes sent an email to C&H stating “Thank you for your
message. We are reviewing it and will get back to you.” All this while, C&H carried on
working as much as it pursuant to which C&H sent several emails in February and March
2019, all of which remained unanswered.
15. Finally, being aggrieved by this behaviour and non-payment on K&W’s side, C&H sent a
notice to K&W on 15th April, 2019 declaring the termination Agreement terminated and
claiming payment of the invoice of Rs. 50, 00, 000 along with the payment of additional
costs of Rs. 2,00,000 incurred by C&H between October 2018 to April 2019. Furthermore,
they also demanded damages Rs. 30 Million for the failure of K&W to perform its
contractual obligations in relation to Stage 1 and loss of profits.
16. The Agreement had the following provision:
“Article 15: Governing Law and Dispute Resolution: In the event of any dispute
arising under or in relation to this Agreement the Parties will use their best efforts to
negotiate an amicable result, the outcome of which shall be approved by the Zindian
Ministry of Food and Agriculture.
Should negotiations not prove fruitful, any Party may refer the dispute to arbitration
under the UNCITRAL Arbitration Rules. The Arbitral Tribunal shall decide the case
applying the principles of lex mercatoria and good faith in contractual relations.
Any dispute relating to the interpretation of the Agreement shall be decided by the
courts of Narnia."
17. On 10th June 2019, not having heard from K&W, C&H couriered a Notice of Arbitration
to its latest known address which was received and signed for on 15th June 2016. In its
Notice of Arbitration, C&H requested the Director of Narnia International Centre for
Arbitration (NICA) to act as Appointing Authority and appoint a sole arbitrator along with
determining the place of arbitration.
18. In its Notice of Arbitration, C&H requested the Arbitral Tribunal to:
a) Declare the Agreement terminated;

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 b) Order K&W to pay to C&H Rs. 50, 00, 000 pursuant to its invoice of 20th
December 2018;
c) Order K&W to pay Rs. 2, 00,000 of incremental costs incurred by C&H due to
K&W's failure to perform its obligations under the Agreement;
d) Order K&W to pay to C&H Rs. 30 million in lost profits that C&H undoubtedly
would have earned had it pursued the contract with Datsun instead of entering into
a contract with K&W; and
19. On 20th June 2019, the NICA acknowledged receipt of the Notice of Arbitration and
invited comments from K&W as to the designation of the Appointing Authority. On 5th
July, 2019, having not heard from K&W nor received indication that emails had bounced
back, the NICA appointed Ms. Amy Farrah Fowler as the Sole Arbitrator. Ms. Amy
Farrah Fowler is a well-respected arbitrator who lectures frequently at arbitration
conferences. On 15th July, 2019, Ms. Fowler wrote to the Parties to ask (1) whether C&H
wished for its Notice of Arbitration to serve as its Statement of Claim; (2) whether K&W
intended to participate in the proceedings; and (3) whether the Parties had comments on
the place of arbitration.
20. On 30th July, 2019, counsel for C&H replied that the Notice of Arbitration would serve as
its Statement of Claim and that the place of arbitration should be Narnia on the basis the
Arbitration Agreement. Counsel for C&H also requested that the dispute be decided
without a hearing on the basis of the pleadings given K&W’s lack of participation in the
proceedings, in order to save costs.
21. On 5th August, 2019, having received no reply from K&W or indication that emails were
not being received, Ms. Fowler issued a Procedural Order, to the effect that:
a) The Notice of Arbitration served as Statement of Claim;
b) The place of arbitration was Narnia; and
c) The dispute would be decided on the basis of the pleadings and without a hearing.
She also declared the pleadings closed and that she would proceed to render an
Award.
22. On 15h August, 2019, Baker Mckenzie, a Law Firm came on record on behalf of K&W
stating:
a) The Arbitral Tribunal had no jurisdiction to decide the dispute in the absence of
prior good faith negotiations;

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 b) C&H had breached the Agreement by failing to deliver the Area Plan and the
Budget and K&W’s silence was a clear sign that it considered the Agreement had
come to an end in light of changed circumstances;
c) In any event, K&W was a State entity immune from liability in matters to do with
projects of national significance such as the current project;
d) No further sums were due pursuant to the Agreement or at all;
e) No profits were lost given that there had been no progress; and
23. On 19th August, 2019, counsel for C&H wrote in protest, requesting the Arbitral Tribunal
to stand by her Procedural Order, on the basis that Baker Mckenzie’s intervention was out
of time and calculated to subvert the arbitration proceedings in bad faith.
24. In light of the above, a conference call between the Parties’ representatives and Ms.
Fowler was scheduled wherein the Parties agreed that jurisdiction and merits issues should
be dealt with in a single hearing on 1st September, 2019. In the Written Submissions and at
the Oral Hearings in Narnia, the Parties are required to address the following issues:
1. Whether the Arbitrator has the jurisdiction to hear the dispute;
2. Whether any Party is in breach of its obligations under the Agreement;
3. Whether there are any sums/damages due under the Agreement;
4. Whether there be a risk of enforcement if the Award was delivered in favour of the
Claimant.

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