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Twenty-First Annual Willem C. Vis International Commercial Arbitration Moot

ALBERT LUDWIG

UNIVERSITY OF FREIBURG

Memorandum for Claimant

On behalf of

Innovative Cancer Treatment

Ltd, Mediterraneo (CLAIMANT)

Against

Hope Hospital, Equatoriana

(RESPONDENT)

TOBIAS GESER • NIKITA GRÄTSCH • LEONID GUGGENBERGER • CAROLIN JANSSEN 00000000000000000000

LEA KUHMANN • STEFANIE LECLERC • VICTORIA OLTMANNS • FRANZISKA SCHAIBLE

Freiburg • Germany

ALBERT LUDWIG UNIVERSITY OF FREIBURG

II

TABLE OF CONTENTS

TABLE OF CONTENTS ....................................................................................................................... II

INDEX OF ABBREVIATIONS ............................................................................................................. VI

INDEX OF AUTHORITIES.............................................................................................................. VIII

INDEX OF CASES ........................................................................................................................ XXVI

INDEX OF ARBITRAL AWARDS ............................................................................................ XXXVIII

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

INTRODUCTION ................................................................................................................................. 3

ARGUMENT ........................................................................................................................................ 4

ISSUE 1: THE ARBITRAL TRIBUNAL HAS JURISDICTION TO DEAL WITH CLAIMANT’S

PAYMENT CLAIMS ............................................................................................................ 4

A. The Arbitral Tribunal Has Jurisdiction to Deal with Claims Arising under the FSA .... 4

I. The Arbitral Tribunal Can Base Its Jurisdiction on Art. 23 FSA .............................. 4

1. Art. 23(4) FSA Is in Line with the Principles of Arbitration .................................. 5

2. Art. 23(6) FSA Does Not Conflict with the Parties‘ Intent

to Agree on Arbitration ........................................................................................... 7

II. Art. 23(4) FSA Does Not Affect the Jurisdiction of the Arbitral Tribunal ............... 7

1. Art. 23(4) FSA Is in Line with the Legal Framework Applicable

to the Arbitration ..................................................................................................... 7

a) Art. 23(4) FSA Is Valid under the Danubian Arbitration Law ......................... 8

b) Art. 23(4) FSA Is Valid under the CEPANI Rules........................................... 9

2. Art. 23(4) FSA Is in Line With the New York Convention .................................. 10

3. In Any Case, the Jurisdiction of the Arbitral Tribunal Is Not Affected by the

Validity of Art. 23(4) FSA .................................................................................... 10

III. Art. 23(6) FSA Does Not Affect the Jurisdiction of the Arbitral Tribunal ............. 12


III

1. Art. 23(6) FSA Is in Line with the Principle of Party Autonomy ......................... 12

2. Art. 23(6) FSA Does Not Conflict with the Limits of Party Autonomy ............... 13

a) Art. 23(6) FSA Is in Line with the Danubian Arbitration Law ...................... 13

b) Art. 23(6) FSA Is in Line with Fundamental Legal Principles ...................... 13

c) Art. 23(6) FSA Is in Line with Recent Case Law .......................................... 14


Validity of Art. 23(6) FSA .................................................................................... 15

B. The Arbitral Tribunal Has Jurisdiction to Deal with Claims out of the SLA............... 16

I. The Parties Had No Intent to Conclude a New Dispute Resolution Clause ............ 16

1. Considering the Parties’ Intent, No New Dispute Resolution Clause

Was Needed ........................................................................................................... 16

2. Considering the Parties’ Subsequent Conduct, Art. 23 FSA Also

Governs the SLA ................................................................................................... 17

II. The Arbitration Agreement in the FSA Remains Applicable Because the SLA

Does Not Contain a New Dispute Resolution Clause ............................................. 17

1. Art. 23(1) SLA Merely Concerns Interim and Provisional Urgent Measures ....... 17

2. Art. 23(2) SLA Merely Provides an Alternative to Arbitration ............................ 18

CONCLUSION OF THE FIRST ISSUE ................................................................................................. 18

ISSUE 2: THE ARBITRAL TRIBUNAL HAS JURISDICTION TO DEAL WITH BOTH CLAIMS

IN ONE ARBITRATION AND SHOULD EXERCISE THIS POWER ....................................... 19

A. The Arbitral Tribunal Has Jurisdiction to Hear Both Claims in One Arbitration ........ 19

I. The Arbitral Tribunal Has Jurisdiction to Consider Both Claims within a

Single Set of Proceedings As They Are Based on One Arbitration Agreement ..... 19

II. Alternatively, the Arbitral Tribunal Would Still Have Jurisdiction to

Consider Both Claims within a Single Set of Proceedings According

to Art. 10(1) CEPANI Rules .................................................................................... 20

1. The Requirements Set Out by Art. 10(1) CEPANI Rules Are Met ...................... 20

a) By Creating the FSA as a Framework Agreement, the Parties Agreed on a

Unified Dispute Resolution Mechanism ........................................................ 20


IV

b) Furthermore, the Matters Are Legally and Factually Related ........................ 21

2. Having a Single Arbitration Would Also Not Pose Any Procedural Problems

As the Arbitration Agreements Are Compatible ................................................... 22

a) The Arbitration Agreements Are Compatible ................................................ 22

b) The Applicable Substantive Law Is Irrelevant ............................................... 22

B. The Arbitral Tribunal Should Exercise the Power to Consider Both Claims

within a Single Arbitration ........................................................................................... 23

I. Art. 10 CEPANI Rules Does Not Provide the Arbitral Tribunal with

Discretion If the Prerequisites of Art. 10 CEPANI Rules Are Met ......................... 23

II. Even If the Tribunal Had Discretion, It Should Exercise It

in Favour of CLAIMANT ........................................................................................... 23

1. Time and Cost Efficiency Militate in Favour of Joint Proceedings ...................... 24

2. One Proceeding Would Reduce the Risk of Conflicting Decisions ...................... 24

3. RESPONDENT’S Nomination of Two Arbitrators Is Not a Reason for

Separate Proceedings ............................................................................................. 25

CONCLUSION OF THE SECOND ISSUE.............................................................................................. 25

ISSUE 3: THE CISG GOVERNS THE CLAIMS ARISING FROM THE SALES AND LICENSING

AGREEMENT OF 20 JULY 2011 ....................................................................................... 26

A. The 2011 Version of the Standard Terms Has Been Validly Included into the SLA .. 26

I. CLAIMANT’S Offer Referred to the Standard Terms 2011 ....................................... 26

1. CLAIMANT Included the Standard Terms 2011 by Putting RESPONDENT

on Notice as to Their Existence ............................................................................. 27

2. Additionally, CLAIMANT Made the Standard Terms 2011

Sufficiently Available ............................................................................................ 28

a) Making the Standard Terms 2011 Available on the Internet

Was Sufficient ................................................................................................ 28

b) Making the Standard Terms 2011 Available in Mediterranean

Was Sufficient ................................................................................................ 29

II. RESPONDENT Accepted CLAIMANT’S Offer ............................................................. 30


V

B. Section 22 of the Standard Terms 2011 Leads to the Application of the CISG ........... 30

I. By Virtue of Section 22 of the Standard Terms 2011, the CISG Is Applicable ...... 31

II. Considering All Circumstances under Art. 8(3) CISG, the CISG

Was Not Excluded ................................................................................................... 31

C. The SLA Constitutes a Sales Contract under the CISG ............................................... 32

I. The Sales and Licensing Agreement Should Be Considered a Sale ........................ 32

II. The SLA Also Constitutes a Contract of Sale of Goods in

Terms of Art. 1(1) CISG .......................................................................................... 33

III. Alternatively, the SLA Would Still Be a Sales Contract Governed by the CISG ... 34

CONCLUSION OF THE THIRD ISSUE ................................................................................................ 34

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

CERTIFICATE ................................................................................................................................ XL


VI

INDEX OF ABBREVIATIONS

Art./Artt. Article/Articles

BGH Bundesgerichtshof (German Federal Court of Justice)

C.App. Cour d'Appel

C.Cass. Cour de Cassation

CEPANI CEPANI – The Belgian Centre for Arbitration and

Mediation

cf. confer

Cir Circuit

CISG United Nations Convention on Contracts for the

International Sale of Goods

CISG-AC Advisory Council Convention on Contracts for the

International Sale of Goods

Civ Chambre civile

Corte di Cass. Corte di Cassazione

Dec December

Dr Doctor

ed. Edition

et seq./et seqq. and the following

EUR Euro

EWHC High Court of England and Wales

Feb February

FSA Framework and Sales Agreement

Ger. German version

HCC Hamburg Chamber of Commerce

HG Handelsgericht (Swiss commercial Court)

HGB Handelsgesetzbuch

ICC International Chamber of Commerce

Inc

Jun

Incorporated

June

LG Landgericht (German Regional Court)

Ltd Limited


VII

Ms Miss

MüKo BGB Münchener Kommentar zum Bürgerlichen Gesetzbuch

(Germany)

MüKo HGB Münchener Kommentar zum Handelsgesetzbuch

(Germany)

No. Number

Nov November

Oct October

OGH Oberster Gerichtshof (Austrian Supreme Court)

OLG Oberlandesgericht (German Regional Court of Appeals)

Ont. C.A. Court of Appeal for Ontario

Op. Opinion

p./pp. page/ pages

para./paras. Paragraph/ paragraphs

RB Rechtbank

SAC RF Supreme Arbitrazh Court of the Russian Federation

SLA Sales and Licensing Agreement

Trib. Comm. Tribunal de Commerce

Trib. di Padova Tribunale di Padova

UNCITRAL United Nations Commision on International Trade Law

UNIDROIT International Institute for the Unification of Private Law

US C.A. United States Court of Appeals

US DC United States District Court

US S.Ct. Supreme Court of United States

USD United States Dollar

v. versus


VIII

INDEX OF AUTHORITIES

1 Achilles, Wilhelm-Albrecht 2 Kommentar zum UN-Kaufrechtsübereinkommen

(CISG),

3 Berlin (2000)

4 cited as: Achilles

5 in para. 105

6 Berger, Klaus Peter

7

8

9

10 Die Einbeziehung von AGB in internationale

Kaufverträge,

11 in: Private and Commercial Law in a European and

Global Context, Berger, Klaus Peter (Ed.), Festschrift

für Norbert Horn, pp. 3-20

12 Berlin (2006)

13 cited as: Berger

14 in para. 110; 115

15 Binder, Peter 16 International Commercial Arbitration and Conciliation

in UNCITRAL Model Law Jurisdictions,

17 3rd ed., London (2010)

18 cited as: Binder

19 in para. 47


IX

20 Born, Gary B.

21

22 International Commercial Arbitration,

23 Alphen aan den Rijn (2009)

24 cited as: Born

25 in para. 14; 23; 41; 100

26 Brekoulakis, Stravos 27 The Notion of the Superiority of Arbitration

Agreements over Jurisdiction Agreements: Time to

Abandon it?,

28 in: Journal International Arbitration Vol. 24 Issue 4

(2007) pp. 341 – 364

29 cited as: Brekoulakis

30 in para. 60

31 Brunner, Christoph 32 UN-Kaufrecht CISG: Kommentar zum Übereinkommen

der Vereinten Nationen über Verträge über den

international Warenkauf von 1980,

33 Bern (2004)

34 cited as: Brunner

35 in para. 105


X

36 Butler, Allison 37 A practical Guide to the CISG: Negotiations through

Litigation,

38 in: Aspen Publishers, Suppl. 2 (2007)

available at:

http://www.cisg.law.pace.edu/cisg/biblio/butler6.html

cited as: Butler

in para: 137

39 Craig, Laurence

40 Park, William

41 Paulsson, Jan

42 International Chamber of Commerce Arbitration,

43 3rd ed., New York (2000)

44 cited as: Craig/Park/Paulsson

45 in para. 10

46 Diedrich, Frank 47 Maintaining Uniformity in International Uniform Law

Via Autonomous Interpretation: Software Contracts and

the CISG,

48 in: Pace International Law. Review Vol. 8 (1996),

pp. 303-338

49 cited as: Diedrich

50 in para. 135

http://www.cisg.law.pace.edu/cisg/biblio/butler6.html


XI

51 Eiselen, Sieg

52

53

54 The Requirements for the Inclusion of Standard Terms

in International Sales Contracts,

55 in: Potchefstroom Electronic Law Journal 2011, Vol. 14,

No. 1, pp. 2 – 31

56 cited as: Eiselen

57 in para. 107

58 Enderlein, Fritz

59 Maskow, Dietrich

60 International Sales Law, Convention on Contracts for

the International Sale of Goods, Convention on the

Limitation Period in the International Sale of Goods,

61 New York, London et al. (1992)

62 cited as: Enderlein/Maskow

63 in para. 132

64 Eiselen, Sieg 65 CISG Advisory Counsel Opinion No. 14, Inclusion of

Standard Terms under the CISG (2013)

66 cited as: Eiselen, in: CISG-AC Op.13

67 in para. 115; 117

68 Fakes, Arthut

69

70 The Application of the UN Convetion on Contracts for

the International Sale of Goods to Computer, Software,

and database transactions,

71 in: Software Law Journal 1989/1990, Vol. 3, pp. 595-

614

72 cited as: Fakes

73 in para. 131


XII

74 Ferrari, Franco (Ed.)

75

76 Internationales Vertragsrecht,

77 München (2007)

78 cited as: Author, in: Ferrari

79 in para. 118

80 Fouchard, Philippe

81 Gaillard, Emmanuel

82 Goldman, Berthold


84 The Hague (1999)

85 cited as: Fouchard

86 in para. 10; 11; 14; 33; 41; 60

87 Green, Sarah

88 Saidov, Djakhongir

89 Software as Goods,

90 in: Journal of Business Law 2007, pp. 161-181

91 cited as: Green/Saidov

92 in para. 134

93 Hanotiau, Bernard

94

95 Complex Arbitrations, Multiparty, Multicontract, Multi-

issue and Class Actions,

96 The Hague (2005)

97 cited as: Hanotiau

98 in para. 93


XIII

99 Herber, Rolf

100 Czerwenka, Beate

101 Internationales Kaufrecht Kommentar zu dem

Übereinkommen der Vereinten Nationen vom 11. April

1980 über Verträge über den internationalen Warenkauf,

102 München (1991)

103 cited as: Herber/Czerwenka

104 in para. 130

105 Hobér, Kaj 106 International Commercial Arbitration in Sweden,

107 New York (2011)

108 cited as: Hobér

109 in para. 9; 28

110 Holtzmann, Howard M.

111 Neuhaus, Joseph E.

112 A guide to the UNCITRAL Model Law on International

Commercial Arbitration: legislative history and

commentary,

113 Deventer (1989)

114 cited as: Holtzmann/Neuhaus

115 in para. 47

116 Honnold, John O.

117 Flechtner, Harry M.

118 Uniform Law for International Sales under the 1980

United Nations Convention,

119 4th ed., Alphen aan den Rijn (2009)

120 cited as: Honnold/Flechtner

121 in para. 133


XIV

122 Honsell, Heinrich 123 Kommentar zum UN-Kaufrecht-Übereinkommen der

Vereinten Nationen über Verträge im internationalen

Warenkauf (CISG),

124 2nd ed., Berlin, Heidelberg (2010)

125 cited as: Author, in: Honsell

126 in para. 130

127 Huber, Peter

128 Mullis, Alastair

129 The CISG: A new textbook for students and

practitioners,

130 München (2007)

131 cited as: Author, in: Huber/Mullis

132 in para. 105

133 Hußlein – Strich, Gabriele 134 Das UNCITRAL – Modellgesetz über die international

Handelsschiedsgerichtsbarkeit,

135 Köln, Berlin et al. (1990)

136 cited as: Hußlein-Stich

137 in para. 41

138 Jenkins, Jane

139

140 International Construction Arbitration Law (Arbitration

in Context Series),

141 Alphen an den Rijn (2013)

142 cited as: Jenkins

143 in para. 27


XV

144 Jenkins, Jane

145 Stebbings, Simon

146 International Construction Arbitration Law (Arbitration

in Context Series),

147 Alphen an den Rijn (2006)

148 cited as: Jenkins/Stebbings

149 in para. 46; 96

Karollus, Martin 150 Voraussetzungen für die Einbeziehung von AGB im

internationalen Einheitlichen Kaufrecht,

151 in: Lindenmaier-Möhring Kommentierte BGH-

Rechtsprechungen, pp. 547-551, LM H.3/2002,

CISG Nr. 9

152 cited as : Karollus 2002

153 in para. 115

Karollus, Martin 154 UN-Kaufrecht: Eine systematische Darstellung für

Studium und Praxis,

155 Wien (1991)

156 cited as: Karollus

157 in para. 134


XVI

158 Kindler, Peter

159

160

161 Ob Wälzfräsmaschine oder Schreibtischsessel: Keine

Obliegenheit zur AGB-Übersendung beim

Vertragsschluss nach CISG!,

162 in: Lorenz, Stephan, et al. (Ed.), Festschrift für Andreas

Heldrich zum 70. Geburtstag, München (2005), pp. 225-

234

163 cited as: Kindler, in: FS Heldrich

164 in para. 110

165 Kröll, Stefan

166 Mistelis, Loukas

167 Viscasillas, Pilar Perales

168 UN Convention on Contracts for the International Sale

of Goods (CISG),

169 Baden-Baden (2011)

170 cited as: Kröll/Mistelis/Viscasillas

171 in para. 134

172 Lachmann, Hans-Peter 173 Handbuch für die Schiedsgerichtspraxis,

174 2nd edition, Köln (2002)

175 cited as: Lachmann

176 in para. 9


XVII

177 Larson, Marcus G.

178

179

180 Applying uniform Sales Law to international Software

Transactions: the use of the CISG, its shortcomings, and

a comparative look at how the proposed UCC Article 2b

would remedy them,

181 in: 5 Toulane Journal of International and Comparative

Law (1997), pp. 445-488

182 cited as: Larson

183 in para. 131

184 Leboulanger, Philippe

185

186 Multi-Contract Arbitration,

187 in: Journal of International Arbitration 1996, Vol. 13,

Issue 4, pp. 43–97

188 cited as: Leboulanger

189 in para. 81; 84; 96

190 Lew, Julian D.

191 Mistelis, Loukas

192 Kröll, Stefan

193

194

195 Comparative International Commercial Arbitration,

196 The Hague (2003)

197 cited as: Lew/Mistelis/Kröll

198 in para. 22

199 Lionnet, Klaus

200 Lionnet, Annette

201 Handbuch der internationalen und nationalen

Schiedsgerichtsbarkeit,

202 3rd ed., Stuttgart, München et. al. (2005)

203 cited as: Lionnet/Lionnet

204 in para. 33


XVIII

205 Lookofsky, Joseph 206 The 1980 United Nations Convention on Contracts for

the International Sale of Goods

207 in: International Encyclopaedia of Laws - Contracts,

Suppl. 29 (2000), pp. 1-192

208 cited as: Lookofsky, 2000

209 in para. 134

210 Lookofsky, Joseph 211 Transnational Litigation and Commercial Arbitration,

212 A Comparative Analysis of American European, and

International Law,

213 New York (1992)

214 cited as: Lookofsky

215 in para. 14; 15

216 Magnus, Ulrich

217

218

219

220

221 Incorporation of Standard Contract Terms under the

CISG,

222 in: Andersen, Camilla; Schroeter, Ulrich (Ed.), Sharing

International Commercial Law Across National

Boundaries, Festschrift for Albert Kritzer on occasion of

his eightieth birthday, pp. 303-325,

223 London (2008)

224 cited as: Magnus, in: FS Kritzer

225 in para. 110


XIX

226 McIlwrath, Michael

227 Savage, John

228 International Arbitration and Mediation, a practical

guide,


230 cited as: McIlwrath/Savage

231 in para. 71

232 Morrissey, Joseph F.

233 Graves, Jack M.

234 International Sales Law and Arbitration – Problems,

Cases and Commentary


236 Cited as: Morrisey/Graves

237 in para. 46

238 Moses, Margeret 239 Party Agreements to Expand Judicial Review of Arbitral

Awards,

240 in: Journal of International Arbitration 20(3) (2003),

pp. 315-323

241 cited as: Moses, Judicial Review

242 in para. 14

243 Mowbray, Jaqueline 244 The Application of the United Nations on Contract for

the International Sale of Goods to E-Commerce

Transactions: The Implications for Asia,

245 in: Vindabona Journal of International Commercial Law

& Arbitration (2003), pp. 121-150

246 cited as: Mowbray

247 in para. 111


XX

248 Nesbitt, Simon

249 Quinlan, Henry

250 The Status and Operation of Unilateral or Optional

Arbitration Clauses,

251 in: Arbitration International 2006, Vol. 22, No. 1,

pp. 133-150

252 cited as: Nesbitt/Quinlan

253 in para. 44

254 Piltz, Burghard 255 Internationales Kaufrecht, Das UN-Kaufrecht in

praxisorientierter Darstellung,

256 2nd ed., München (2008)

257 cited as: Piltz

258 in para. 130

259 Pitkowitz, Nikolaus 260 Die Aufhebung von Schiedssprüchen,

261 Wien (2008)

262 cited as: Pitkowitz

263 in para. 14

264 Platt, Rowan

265

266 The Appeal of Appeal Mechanism in International

Arbitration : Fairness over Finality?,

267 in: Journal of International Arbitration Vol. 30 (2013),

pp. 531-560

268 cited as: Platt

269 in para. 15; 27


XXI

270 Platte, Martin

271

272 When Should an Arbitrator Join Cases?,

273 in: Arbitration International 2002, Vol. 18, Issue 1,

pp. 67–82

274 cited as: Platte

275 in para. 82; 83; 93

276 Primak, Scott

277

278

279 Computer Software: Should the UN-Convention on

Contracts for the International Sale of Goods Apply? A

Contextual Approach to the Question,

280 in: Computer/Law Journal 1999, pp. 197-231

281 cited as: Primak

282 in para. 131

283 Redfern, Alan

284 Hunter, Martin

285 International Arbitration,

286 New York (2009)

287 cited as: Redfern/Hunter

288 in para. 10; 14; 22; 35; 51

289 Säcker, Franz Jürgen (Ed.)

290 Rixecker, Roland (Ed.)

291 Münchener Kommentar zum Bürgerlichen Gesetzbuch,

Band 3,

292 6th ed., München (2012)

293 cited as: Author, in: MüKo BGB

294 in para. 130


XXII

295 Schlechtriem, Peter

296 Butler, Petra

297 UN Law on International Sales, The UN Convention on

the International Sale of Goods,

298 Berlin (2009)

299 cited as: Schlechtriem/Butler

300 in para. 124


302 Schwenzer, Ingeborg (Ed.)

303 Commentary on the UN Convention on the International

Sale of Goods (CISG),

304 3rd ed., Oxford (2010)

305 cited as: Author, in: Schlechtriem/Schwenzer

306 in para. 104; 114; 115; 117; 125; 130; 138


308 Schwenzer, Ingeborg (Ed.)

309 Kommentar zum Einheitlichen UN-Kaufrecht,

310 6th ed., München/Basel (2013)

311 cited as: Author, in: Schlechtriem/Schwenzer, (Ger)

312 in para. 135

313 Schmidt-Ahrendts, Nils

314 Schmitt, Moritz

315 Einführung in das Schiedsverfahrensrecht,

316 in: Juristische Ausbildung 2010, pp. 520-527

317 cited as: Schmidt-Ahrendts/Schmitt

318 in para. 23


XXIII

319 Schmidt, Karsten (Ed.)

320

321 Münchener Kommentar zum Handelsgesetzbuch,

322 2nd ed., München (2007)

323 cited as: Author, in: MüKo HGB

324 in para. 115; 136

325 Soergel, Hans Theodor

326

327 Bürgerliches Gesetzbuch mit Einführungsgesetz und

Nebengesetzen, Vol. 13: Schuldrechtliche Nebengesetze

2: CISG,

328 13th ed., Stuttgart (2000)

329 cited as: Author in: Soergel

330 in para. 138

331 Stacey, James

332 Taylor, Angela

333 Unilateral Jurisdiction Clauses in the UK,

334 in: International Financial Law Review 2013,

335 available at:

http://www.iflr.com/Article/3258087/Unilateral-

jurisdiction-clauses-in-the-UK.html

336 cited as: Stacey/Taylor

337 in para. 49

338 Staudinger, Julius von

339

340 J. von Staudingers Kommentar zum Bürgerlichen

Gesetzbuch mit Einführungsgesetz und Nebengesetzen,

Wiener UN-Kaufrecht (CISG),

341 Berlin, Neubearbeitung 2013

342 cited as: Author, in: Staudinger

343 in para. 123

http://www.iflr.com/Article/3258087/Unilateral-jurisdiction-clauses-in-the-UK.html

http://www.iflr.com/Article/3258087/Unilateral-jurisdiction-clauses-in-the-UK.html


XXIV

344 Stiegele, Andreas

345 Halter, Rudolf

346

347 Nochmals: Einbeziehung von Allgemeinen

Geschäftsbedingungen im Rahmen des UN-Kaufrechts,

348 in: Internationales Handelsrecht 2003, p. 169

349 cited as: Stiegele/Halter

350 in para. 115

351 Várady, Tibor

352 Barceló, John J.

353 von Mehren, Arthur T.


355 3rd ed., St. Paul (2006)

356 cited as: Várady/Barceló/v. Mehren

357 in para. 23

358 Waincymer, Jeff 359 Procedure and Evidence in International Arbitration,


361 cited as: Waincymer

362 in para. 15; 25; 50; 96

363 Weigand, Frank-Bernd 364 Practitioner’s Handbook On International Arbitration,

365 München (2002)

366 cited as: Weigand

367 in para. 15; 33


XXV

368 Witz, Wolfgang

369 Salger, Hanns-Christian

370 Lorenz, Manuel

371 International Einheitliches Kaufrecht: Praktiker-

Kommentar und Vertragsgestaltung zum CISG,

372 Heidelberg (2000)

373 cited as: Author, in: Witz/Salger/Lorenz

374 in para. 105


XXVI

INDEX OF CASES

375 Austria

376 Oberster Gerichtshof

377 31 August 2005

378 Case No.: 7 Ob 175/05v

379 CISG-online 1093

380 cited as: OGH, 31 Aug 2005

381 in para. 104; 119

382


384 21 June 2005

385 Case No.: 5 Ob 45/05m


387 cited as: OGH, 21 Jun 2005

388 in para. 130; 134; 135

389


391 17 December 2003

392 Case No.: 7 Ob 275/03x

393 CISG-online 828

394 cited as: OGH, 17 Dec 2003

395 in para. 118; 119

396


XXVII


398 6 February 1996

399 Case No.: 10 Ob 518/95

400 CISG-online 224

401 cited as: OGH, 6 Feb 1996

402 in para. 105; 107

403

404 Oberlandesgericht Innsbruck

405 1 February 2005

406 Case No.: 1 R 253/04x


408 cited as: OLG Innsbruck, 1 Feb 2005

409 in para. 119

410

411 Belgium

412 Tribunal Commercial de Nivelles

413 19 September 1995

414 Case No.: R.G. 1707/93

415 CISG-online 366

416 cited as: Trib. Comm. de Nivelles, 19 Sep 1995

417 in para. 107


XXVIII

418 Canada

419 Canadian National Railway Company v. Lovat Tunnel Equipment Inc.

420 Ontario Court of Appeal

421 8 July 1999

422 174 D.L.R. (4th) 385, 122 O.A.C. 171, 37 C.P.C. (4th) 13, O.J. No. 2498

423 cited as: Canadian National Railway v. Lovat Tunnel, Ont. C.A, 8 Jul 1999

424 in para. 11

425

426 Croatia

427 Bridgestone / Firestone GmbH v. Weimar d.o.o

428 High Commercial Court


430 Case No.: Pž-2047/03-8

431 CLOUT 916

432 cited as: HCC, 19 Dec 2006

433 in para. 130

434

435 France

436 Cour de Cassation, Chambre Civile


438 Case No.: 983

439 cited as: C.Cass., Civ. (1ère), 26 Sep 2012

440 in para. 52

441


XXIX


443 4 December 1990

444 Rev Arb 81 (1991)

445 Case No : 11-26.022

446 cited as: C.Cass., Civ. (1ère), 4 Dec 1990

447 in para. 44; 55

448


450 15 May 1974

451 Bull. 1974 I No. 143, p. 122

452 cited as: C.Cass., Civ (1ère), 15 May 1974

453 in para. 44

454

455 Cour d'Appel de Paris

456 18 October 2011

457 Case No: 11/03572

458 cited as: C.App. Paris, 18 Oct 2011

459 in para. 54

460

461 Cour d’Appel de Paris

462 29 November 1991

463 Revue de l’arbitrage 1993 – No 4

464 cited as: C.App. Paris, 29 Nov 1991

465 in para. 60


XXX

466 Cour d'Appel d'Angers


468 Rev. arb. 1973, 164

469 cited as: C. App Angers., 25 Sep 1972

470 in para. 44

471

472 Germany

473 Bundesgerichtshof

474 31 October 2001

475 Case No.: VIII ZR 60/01

476 CISG-online 617

477 cited as: BGH, 31 Oct 2001

478 in para. 104; 114

479

480 Bundesgerichtshof

481 23 July 1997

482 Case No.: VIII ZR 134/96

483 CISG-online 276

484 cited as: BGH, 23 Jul 1997

485 in para. 124; 125

486


XXXI

487 Oberlandesgericht Düsseldorf

488 21 April 2004

489 Case No.: I-15 U 88/03

490 CISG-online 915

491 cited as: OLG Düsseldorf, 21 Apr 2004

492 in para. 117; 118

493

494 Oberlandesgericht Köln

495 26 August 1994

496 Case-No.: 19 U 282/93

497 CISG-online 132

498 cited as: OLG Köln, 26 Aug 1994

499 in para. 135

500

501 Oberlandesgericht Koblenz


503 Case No.: 2 U 1230/91

504 CISG-online 91

505 cited as: OLG Koblenz, 17 Sep 1991

506 in para. 134

507


XXXII

508 Landgericht Coburg


510 Case No.: 22 O 38/06


512 cited as: LG Coburg, 12 Dec 2006

513 in para. 107

514

515 Landgericht München I

516 16. November 2000

517 Case No.: 12 HKO 3804/00

518 CISG-online 667

519 cited as: LG München, 16 Nov 2000

520 in para. 137

521

522 Landgericht München I

523 8. February 1995

CLOUT No.: 131

524 cited as: LG München, 8 Feb 1995

525 in para. 135

526


XXXIII

527 Italy

528 Corte di Cassazione

529 22 October 1970

530 Judgement No. 2096

531 published Giustizia Civile Mass., 1970, p. 1103

532 cited as: Corte di Cass., 22 Oct 1970

533 in para. 44

534

535 Tribunale di Padova

536 10 January 2006


538 cited as: Trib. di Padova, 10 Jan 2006

539 in para. 133

540

541 Netherlands

542 Rechtbank Utrecht

543 21 January 2009

544 Case No.: 253099 / HAZA 08-1624


546 cited as: RB Utrecht, 21 Jan 2009

547 in para. 105

548


XXXIV

549 Russia

550 Russian Telephone Company v. Sony Ericsson Mobile Communications Russia

551 Russian Supreme Commercial Court

552 19 June 2012

553 Case No: 1831/12

554 cited as: Russian Telephone Company v. Sony Ericsson, SAC RF, 19 Jun 2012

555 in para. 57

556

557 Switzerland

558 Handelsgericht des Kantons Aargau

559 10 March 2010

560 Case No.: HOR.2008.42/rl/tv


562 cited as: HG Aargau, 10 Mar 2010

563 in para. 132

564

565 Handelsgericht des Kantons Zürich

566 17 February 2000

567 Case No.: HG 980472

568 CISG-online 637

569 cited as: HG Zürich, 17 Feb 2000

570 in para. 134

571


XXXV

572 Kantonsgericht Zug

573 25 February 1999

574 CISG-online 490

575 cited as: KG Zug, 25 Feb 1999

576 in para. 138

577

578 United Kingdom

579 Mauritius Commercial Bank Ltd. v. Hestia Holdings Ltd.

580 England and Wales High Court (Commercial Court)

581 24 May 2013

582 Case No: EWHC 1328

583 cited as: Mauritius Commercial Bank v. Hestia Holdings, EWHC, 24 May 2013

584 in para. 55

585

586 Law Debenture Trust Corp. Plc v. Elektrim Finance BV


588 1 July 2005


590 cited as: Law Debenture Trust v. Elektrim Finance, EWHC, 1 Jul 2005

591 in para. 45; 55

592


XXXVI

593 NB Three Shipping Ltd. v. Harebell Shipping Ltd.


595 13 October 2004


597 cited as: NB Three Shipping v. Harebell Shipping, EWHC, 13 Oct 2004

598 in para. 55

599

600 United States

601 Volt Information Sciences, Inc. v. Board of Trustees of the Leland Stanford Junior

University

602 United States Supreme Court

603 6 March 1989

604 489 U.S. 468

605 cited as: Volt v. Board of Trustees, US S.Ct., 6 Mar 1989

in para. 14

606 MCC-Marble Ceramic Center Inc. v. Ceramica Nuova D'Agostino S.p.A.

607 United States Court of Appeals, Eleventh Circuit

608 29 June 1998

609 144 F.3d 1384

610 cited as: MCC v. Ceramica, US C.A. (11th Cir), 29 Jun 1998

611 in para. 109

612


XXXVII

613 Lapine Technology Corp. v. Kyocera Corp.

614 United States Court of Appeals, Ninth Circuit

615 9 December 1997

616 130 F. 3d 884

617 cited as: Lapine Technology v. Kyocera, US C.A. (9th

Cir), 9 Dec 1997

618 in para. 30

619

620 CSS Antenna, Inc. v. Amphenol-Tuchel Electronics, GmbH

621 United States District Court of Maryland

622 8 February 2011

623 Case No.: CCB-09-2008


625 cited as: CSS v. Amphenol, US DC Maryland, 8 Feb 2011

626 in para. 107

627


XXXVIII

INDEX OF ARBITRAL AWARDS

International Chamber of Commerce

ICC Case No. 8324 of 1995

CISG-online 569

cited as: ICC, 8324/1995

in para. 124

ICC Case No. 2321

Solel Boneh (Israel) v. Republic of Uganda

Journal du Droit International 1975, pp. 938 – 944


in para. 10

628 ICC Case No. 1434

629 National Enterprise v. Company (Canada/UK)

630 Journal du Droit International 1976, pp. 978 – 989

631 cited as: ICC, 1434/1975

632 in para. 11


634 Claimant (Germany) v. Defendant (Germany)

635 Journal du Droit International 1984, pp. 946 – 950


636 in para. 7

637


XXXIX


639 Companies (Bahamas, Luxembourg) v. Companies (France)

640 IX Y. B. Com. Arb. (1984), pp. 138 - 141


641 in para. 7

642


644 Supplier (USA) v. Buyer (India)

645 XI Y. B. Com. Arb. XI (1986), pp. 134 - 139

646 cited as: ICC, 4367/1984

647 in para. 7


1

STATEMENT OF FACTS

The parties to this arbitration are Innovative Cancer Treatment, Ltd (hereafter CLAIMANT) and

Hope Hospital (hereafter RESPONDENT).

CLAIMANT is a company based in Mediterraneo. It is a manufacturer of particle therapy

equipment and specialised in proton therapy.

RESPONDENT is a university teaching hospital located in Equatoriana and the national centre

for cancer treatment. CLAIMANT provided RESPONDENT with three new cancer treatment

rooms for a new proton therapy facility.

11 January 2007 CLAIMANT and RESPONDENT (the “Parties”) enter discussions about the

purchase of a proton therapy facility.

13 January 2008 CLAIMANT and RESPONDENT conclude a Framework and Sales

Agreement (“FSA”). This agreement is subject to the Standard Terms

and Conditions for Sale of 2000 (“Standard Terms 2000”). The FSA

provides for the purchase of a two-room proton therapy facility

(“Proton Therapy Facility”) for USD 50 million. It also establishes the

framework for the future cooperation between CLAIMANT and

RESPONDENT. In the course of the negotiations the Parties already

discuss the option of adding a third treatment room.

15 April 2010 The installation of the Proton Therapy Facility is completed.

May 2011 RESPONDENT approaches CLAIMANT to enquire about adding a third

treatment room using a new active scanning technology including the

respective software.

2 June 2011 The Parties hold a meeting with their medical personnel, software

engineers and business teams. CLAIMANT informs RESPONDENT about

the new Standard Terms and Conditions for Sale

(“Standard Terms 2011”).

1–4 July 2011 The Standard Terms 2011 are available in English and Mediterranean

on CLAIMANT’S homepage. After 4 July 2011 they remain accessible in

Mediterranean.


2

5 July 2011 RESPONDENT receives CLAIMANT’S offer regarding the purchase of a

third treatment room. CLAIMANT reiterates the applicability of the

Standard Terms 2011 for all contracts concluded from the beginning of

July 2011 onwards.

20 July 2011 CLAIMANT and RESPONDENT conclude a Sale and Licensing Agreement

(“SLA”) under which CLAIMANT sells RESPONDENT a third treatment

room including the necessary software. CLAIMANT agrees on a heavily

reduced price of USD 3.5 million only charging the hardware in order

to respect RESPONDENT’S budget restraints. The training of the

personnel and development of the necessary software is free of charge

in exchange for RESPONDENT’S contribution to provide the trial data

necessary for the software’s fine-tuning.

21 July 2011 The Standard Terms 2011 are accessible in English on CLAIMANT’S

homepage.

13 January 2012 The third treatment room is completed.

January-June 2013 CLAIMANT sells its active scanning technology to two other proton

therapy facilities. The package is mainly comparable to the one sold to

RESPONDENT and no complaints as to quality arise in both cases.

15 August 2012 RESPONDENT notifies CLAIMANT about both the outstanding final

payment under the FSA and the outstanding payment under the SLA in

the combined amount of USD 11.5 million. RESPONDENT claims that

the Proton Therapy Facility does not operate in the promised way

entitling it to withhold further payments until the alleged failure is

remedied.


3

INTRODUCTION

1 Whereas CLAIMANT thoroughly timbered a roof covering RESPONDENT’S demands,

RESPONDENT snatched the ladder to leave CLAIMANT out in the rain. The starting point to this

contractual framework is evident. RESPONDENT sought to defend its reputation as a leading

cancer treatment hospital. Thus, it picked CLAIMANT to provide it with the equipment needed

to advance its capacities with a Proton Therapy Facility that constituted the most state of the

art treatment available at that time.

2 The contractual framework was carefully drafted taking into account RESPONDENT’S various

concerns. These especially included RESPONDENT’S budget restraints. Thus, a framework

agreement was established allowing RESPONDENT to approach its desired lead in cancer

treatment step by step. Further, CLAIMANT allowed RESPONDENT to pay by instalments,

exposing only CLAIMANT to the economic risk inherent in a USD 50 million-deal. Finally,

CLAIMANT accepted RESPONDENT’S request for an appeal and review mechanism. Now,

RESPONDENT’S new management, which had never been comfortable with the advanced

technology employed in the Proton Therapy Facility, tries to get out of the contract at all

costs.

3 First, RESPONDENT tries to challenge the clear agreement on arbitration relying on the very

same review mechanism which was only introduced on RESPONDENT’S initiative (Issue 1).

4 Furthermore, RESPONDENT intends to have the dispute treated in two separate arbitrations due

to different expertise allegedly required. However, the three treatment rooms form a

functional unit of one Proton Therapy Facility which may not be torn apart. Sufficient

expertise will be granted in one arbitration (Issue 2).

5 Finally, RESPONDENT refuses to accept the purchase of the Proton Therapy Facility as a

whole. Where CLAIMANT provided a full package of required software and training of

personnel to ensure the best use of the Proton Therapy facility, RESPONDENT picks single

items to argue against the character of a sales contract. Further, RESPONDENT challenges the

applicability of the CISG. On multiple occasions, CLAIMANT announced loud and clear that it

had revised its Standard Terms. After RESPONDENT signed the deal, it now alleges to have

been surprised by the choice of law clause which leads to the application of the

CISG (Issue 3).


4

ARGUMENT

ISSUE 1: THE ARBITRAL TRIBUNAL HAS JURISDICTION TO DEALWITH

CLAIMANT’S PAYMENT CLAIMS

6 The Arbitral Tribunal is requested to find that it has jurisdiction to deal with both of

CLAIMANT’S payment claims arising from the FSA and the claims arising from the SLA under

the arbitration clause contained in the Framework and Sales Agreement of 13 January 2008

[Claimant’s Exhibit No. 2, p. 10].

7 The Arbitral Tribunal has authority to decide on its own jurisdiction. In Art. 23(3) FSA,

CLAIMANT and RESPONDENT agreed on the CEPANI Rules for Arbitration (“CEPANI Rules”)

as the applicable arbitration rules [Claimant’s Exhibit No. 2, p. 11]. Pursuant to

Art. 12(1) CEPANI Rules, “the tribunal shall rule on all disputes in connection with Articles

9 to 11, including disputes as to its own jurisdiction”. Under this generally accepted principle

of competence-competence [ICC, 4472/1984; ICC, 4367/1984; ICC, 4402/1983], the Arbitral

Tribunal may decide on matters concerning their own jurisdiction.

8 Under the arbitration agreement contained in Art. 23(3),(4) FSA (“Arbitration Agreement”),

the Arbitral Tribunal has jurisdiction to deal with CLAIMANT’S payment claims arising from

the FSA (A) as well as from the SLA (B).

A. The Arbitral Tribunal Has Jurisdiction to Deal with Claims Arising under the FSA

9 In order for an arbitral tribunal to have jurisdiction, a valid arbitration agreement is required

[Hobér, p. 126, para. 3.128; Lachmann, p. 1, para. 3]. Contrary to RESPONDENT’S allegation

[Answer to Request for Arbitration, p. 31, para. 4], the Parties validly agreed on arbitration in

Art. 23 FSA. First of all, CLAIMANT and RESPONDENT chose arbitration as their dispute

resolution mechanism in Art. 23 FSA, giving the Arbitral Tribunal jurisdiction (I). Moreover,

neither Art. 23(4) FSA (II) nor Art. 23(6) FSA (III) hinder the jurisdiction of the Arbitral

Tribunal.

I. The Arbitral Tribunal Can Base Its Jurisdiction on Art. 23 FSA

10 The primary source of an arbitral tribunal’s jurisdiction is the parties’ agreement

[Fouchard, para. 44; Redfern/Hunter, para. 1.58]. When concluding a contract, containing

an arbitration clause, the parties to that contract are presumed to have agreed on arbitration


5

[ICC Case 2321/1974; Craig/Park/Paulsson, p. 44, para. 5.01; Fouchard, para. 478].

According to Art. 23(3) FSA, all disputes arising from or in connection with that contract:

“shall become subject to arbitration to be finally settled under the CEPANI Rules

of Arbitration before CEPANI – the Belgian Center for Arbitration and

Mediation” [Claimant’s Exhibit No. 2, p. 11].

11 By literally referring to arbitration, Art. 23(3) FSA shows the Parties’ intent to opt for

arbitration instead of litigation. If the wording of a clause unequivocally indicates that the

parties agreed on arbitration, this clause is to be interpreted as an arbitration agreement in

order to enable the clause to be effective [ICC, 1434/1975; Canadian National Railway v.

Lovat Tunnel, Ont. C.A., 8 Jul 1999; Fouchard, para. 478;]. Notwithstanding the clear

wording of Art. 23 FSA, RESPONDENT contests that the Parties agreed on arbitration [Answer

to Request for Arbitration, p. 32, para. 7].

12 In doing so, RESPONDENT relies on the appeal and review mechanism provided in

Art. 23(4) FSA claiming that this mechanism is incompatible with the principles of arbitration

[Answer to Request for Arbitration, p. 32, para. 7]. However, Art. 23(4) FSA is in line with

the principles of arbitration (1). RESPONDENT further alleges that the unilateral jurisdiction

clause in Art. 23(6) FSA renders the Arbitration Agreement invalid [Answer to Request for

Arbitration, p. 32, para. 9]. Yet, Art. 23(6) FSA does not conflict with the Parties’ intent to

choose arbitration as their dispute resolution mechanism (2).

1. Art. 23(4) FSA Is in Line with the Principles of Arbitration

13 During their negotiations on 4 November 2007, the Parties agreed to include an appeal and

review mechanism [Claimant's Exhibit No. 3, p. 14]. Since RESPONDENT had concerns about

agreeing to an arbitration agreement without the possibility to appeal [Claimant's Exhibit

No. 3, pp. 14 et seq.], the Parties included Art. 23(4) FSA which provides that “each Party

has [...] the right […] to refer the case to the applicable state courts if it considers the award

to be obviously wrong in fact or in law. The state court shall then have jurisdiction to review

the case and to decide the issue in accordance with the applicable law” [Claimant's Exhibit

No. 2, p. 11]. This appeal and review mechanism is in line with the principles of arbitration.

14 Firstly, international commercial arbitration is based on the core principle of party autonomy.

Under said principle, arbitration is based on consent: It evolves from a private agreement and

develops by way of private proceedings [Redfern/Hunter, para. 1.84; Pitkowitz, p. 5, para. 5;


6

Lookofsky, p. 562]. Influencing all stages of the arbitral process, party autonomy constitutes

the cornerstone of international commercial arbitration providing the parties with major

procedural flexibility [Born, p. 82; Fouchard, para. 51]. The Parties were hence free to agree

on arbitration accompanied by subsequent appeal and review [cf. Volt v. Board of Trustees,

US S.Ct., 6 Mar 1989]. In fact, the inclusion of Art. 23(4) FSA is a textbook example of the

principle of party autonomy: RESPONDENT had concerns about agreeing to an arbitration

agreement which did not provide for the possibility to appeal. Corresponding to

RESPONDENT’S demands, CLAIMANT adjusted the Arbitration Agreement by including

Art. 23(4) FSA. Thus, it was the Parties’ consent to expand judicial review by means of

Art. 23(4) FSA. It is therefore entitled to be acknowledged as part of the Parties’ agreement to

arbitrate [Moses, Judicial Review, p. 318; Redfern/Hunter, para. 506].

15 Secondly, Art. 23(4) FSA does not conflict with the arbitral characteristics of speed,

efficiency and finality. Usually, judicial review of arbitral awards is limited to a strict setting

aside procedure on the presumption that parties prefer a quick resolution of their dispute and

wish to avoid any undue interaction with state courts [Waincymer, p. 21; cf. Lookofsky,

p. 559, Weigand, p. 8, para. 12]. Yet, if both parties prefer to sacrifice the default of swift

procedure to increase the legal accuracy of the outcome, they are free to agree on an expanded

judicial review procedure [Platt, p. 560]. Thus, speed, efficiency and finality in the sense of

one-stop adjudication are no mandatory features of arbitration.

16 In any case, Art. 23(4) FSA does not necessarily slow down the usual procedure of an

international arbitration. In a typical setting aside proceeding, the case is submitted to a state

court to be set aside and will then be remitted to the initial tribunal for reconsideration

[Moses, p. 200]. It is even possible to then commence another set-aside-procedure. At hand,

the state court would not have to remit the case to the Arbitral Tribunal but could decide the

case itself. Therefore, the mechanism of Art. 23(4) FSA might in fact be more time efficient.

17 Further, an appeal can only be made if one of the Parties considers the award to be “obviously

wrong” [Claimant's Exhibit No. 2, p. 11], setting a high threshold for an appeal.

Consequently, the Parties’ agreement first and foremost constitutes a standard arbitration

clause: CLAIMANT and RESPONDENT agreed on arbitration as dispute resolution mechanism

leading to an award that will be “final and binding upon the Parties” [Claimant's Exhibit

No. 2, p. 11]. Only in exceptional cases, the Parties are allowed to appeal.

18 Thus, Art. 23(4) FSA is in line with the nature of arbitration.


7

2. Art. 23(6) FSA Does Not Conflict with the Parties’ Intent to Agree on Arbitration

19 RESPONDENT may not argue that Art. 23(6) FSA opposes the Parties' general intent to agree

on arbitration as their dispute resolution mechanism. Art. 23(6) FSA states that “in addition

[to arbitration], the seller has the right to bring any and all claims relating to payments in the

courts of Mediterraneo” [Claimant’s Exhibit No. 2, p. 12] This option to choose between

arbitration and litigation was only included in order to give CLAIMANT an additional

safeguard in case RESPONDENT did not comply with its payment obligation [Claimant’s

Exhibit No. 3, p. 14]. However, this provision does not alter the fact that the Parties agreed on

arbitration as the predominant dispute resolution mechanism. Once CLAIMANT initiated

arbitration concerning all outstanding payment claims, Art. 23(6) FSA became irrelevant to

this dispute. Thus, Art. 23(6) FSA has no impact on the Parties’ agreement to arbitrate.

20 In conclusion, the Arbitral Tribunal can base its jurisdiction on Art. 23 FSA.

II. Art. 23(4) FSA Does Not Affect the Jurisdiction of the Arbitral Tribunal

21 RESPONDENT asserts that Art. 23(4) FSA is invalid, leading to invalidity of the entire

Arbitration Agreement [Answer to Request for Arbitration, p. 32, para. 8] and hence to a lack

of jurisdiction. This allegation is ill-founded for two reasons: Firstly, Art. 23(4) FSA is valid

as the provision is in line with the applicable legal framework (1) and the New York

Convention (2). Secondly, the jurisdiction of the Arbitral Tribunal does not depend on the

validity of Art. 23(4) FSA (3).

1. Art. 23(4) FSA Is in Line with the Legal Framework Applicable to the Arbitration

22 Party autonomy finds its limits in the mandatory rules of the applicable legal framework

[Lew/Mistelis/Kröll, para. 2.44; Luttrell, p. 9; Redfern/Hunter, para. 3.128]. RESPONDENT

might allege that Art. 23(4) FSA is in conflict with mandatory rules of the legal framework.

However, quite the opposite holds true.

23 An arbitration’s legal framework is built up of the lex loci arbitri and the arbitration rules

chosen by the parties [Várady/Barceló/v. Mehren, p. 452; Schmidt-Ahrendts/Schmitt, p. 523;

Born, p. 1246]. The Parties chose the CEPANI Rules as applicable arbitration rules

[see supra para. 7]. Danubia, the chosen seat of arbitration [Claimant’s Exhibit No. 2, p. 11]

has adopted the UNCITRAL Model Law on International Commercial Arbitration

(“UNCITRAL Model Law”) in its Danubian Arbitration Law [Procedural Order No. 2,


8

p. 59]. Thus, the Danubian Arbitration Law applies as the lex loci arbitri. Consequently, the

applicable legal framework consists of the Danubian Arbitration Law and the CEPANI Rules.

24 RESPONDENT might argue that Art. 34 Danubian Arbitration Law allows for recourse against

an arbitral award only to be made by means of set-aside-procedures. However, the Parties are

free to dispose of this default limitation and to agree on expanded judicial review because

Art. 34 Danubian Arbitration Law does not constitute a mandatory provision (a). Further, the

Parties' agreement to expand judicial review is valid under the CEPANI Rules (b).

a) Art. 23(4) FSA Is Valid under the Danubian Arbitration Law

25 According to Art. 34 Danubian Arbitration Law, recourse to a court against an arbitral award

may only be made on limited grounds by an application for setting aside. However,

Art. 34 Danubian Arbitration law does not constitute a mandatory provision. A provision is

mandatory if the relevant legislator wishes the norm to apply regardless of the parties'

intentions [Waincymer, p. 182]. At hand, this is not the case for the following reasons:

26 To begin with, there is no public policy of the relevant Danubian law leading to the

conclusion that Art. 34 Danubian Arbitration Law is a mandatory provision. To the contrary,

under the distinct Danubian Arbitration Law for domestic arbitration, the legislator has passed

a provision giving any party the right to appeal to the High Court on any question of

Danubian law arising out of an award despite the limitations in Art. 34 Danubian Arbitration

Law [Procedural Order No. 2, pp. 59 et seq., paras. 13 and 14]. The High Court may then

confirm, vary or set aside the award. The Danubian Domestic Arbitration Law thereby reveals

that there is no fundamental policy of law in Danubia that opposes to the possibility for

parties to derogate from Art. 34 Danubian Arbitration Law.

27 This reasoning can be transferred to international arbitration despite the fact that the legislator

did not provide a similar provision in international arbitration. Differences between domestic

and international arbitration law usually derive from the country’s interest to be regarded as

an attractive seat for arbitration [Jenkins, p. 289]. In order to meet the expected desire for

finality, legislatures tend to apply a less interventionist approach in the laws governing

international arbitration [Platt, p. 558]. Thus, the Danubian legislator must be understood as

aiming to meet international expectations rather than restricting party autonomy.

28 Further, states regularly at least provide for a minimum of judicial review of arbitral awards in

order to overrule awards which are in conflict with the essential values of that state [Hobér,


9

para. 8.01]. However, this only constitutes the mandatory minimum of review. Thus, if

parties want to increase this mandatory degree of control, they are free to do so.

29 Moreover, RESPONDENT may not argue that the mere existence of Art. 34A Danubian

Arbitration Law for domestic arbitration shows that without explicit legislative provisions,

parties cannot choose to extend judicial review. Art. 34A Danubian Arbitration Law for

domestic arbitration provides not only for a review following a party agreement, but more

importantly also for a review without such agreement but “with the leave of the High Court”

[Procedural Order No. 2, p. 59, para. 13]. In order for the latter to be possible, an explicit

provision was indeed necessary. However, if it is the Parties’ mutual choice to extend judicial

review, they are free to do so solely by agreement.

30 RESPONDENT may also not argue that Art. 34 Danubian Arbitration Law is mandatory because

the legislator sought to reduce the state courts’ work load. Parties who want to agree on

arbitration with the possibility to appeal might, in the case that an appeal mechanism was not

allowed, choose litigation instead. The courts would then have to decide all aspects of the

dispute, whereas otherwise they would only need to review the arbitrators’ findings. Thus,

allowing the parties to agree on expanded judicial review leads to a “far less reaching and

time-consuming inquiry” [Lapine Technology v. Kyocera, US C.A. (9th

Cir), 9 Dec 1997].

31 Further, there is no international policy that allows the assumption that Art. 34 Danubian

Arbitration Law is mandatory. The Equatorianean Arbitration Law, which is also based on the

UNCITRAL Model Law, contains the same appeal mechanism as Art. 34A Danubian

Arbitration Law for domestic arbitration [Procedural Order No. 2, p. 59, para. 13]. Thus,

limitation of recourse against arbitral awards does not seem to be part of international policy.

32 Consequently, Art. 34 Danubian Arbitration Law is not mandatory. Therefore, the Parties

were free to deviate from it and to agree on extended judicial review in Art. 23(4) FSA.

b) Art. 23(4) FSA Is Valid under the CEPANI Rules

33 RESPONDENT might refer to Art. 32(1) CEPANI Rules, which states that all awards settled are

final and not subject to appeal. However, the adoption of arbitration rules is a mere matter of

party agreement. Hence, parties can depart from the provisions of the arbitration rules they

adopted [Fouchard, para. 393]. Thus, the Parties were free to deviate from

Art. 32(1) CEPANI Rules and to provide for an individually tailored provision instead.

However, if the arbitral institution considers the deviations to be too burdensome or


10

impractical to execute, it can refuse to administer the arbitration [Weigand, p. 210, para. 4;

Lionnet/Lionnet, p. 198]. At hand, the CEPANI Centre for Arbitration and Mediation in truth

already accepted the request for arbitration [Letter by CEPANI to Claimant, p. 25].

34 Concluding, Art. 23(4) FSA is in line with the legal framework applicable to the arbitration,

as it is valid under the Danubian Arbitration Law and in line with the CEPANI Rules.

2. Art. 23(4) FSA Is in Line with the New York Convention

35 The eventual result of every arbitration should be an enforceable award [Redfern/Hunter,

para. 9.10]. Since all countries related to this dispute have adopted the New York Convention

[Procedural Order No. 2, p. 59, para. 12], it is likely that it will be applicable to the

enforcement. According to Art. V(1)(e) New York Convention, the enforcement of an arbitral

award may be refused if the arbitral award has not yet become binding on the parties.

However, any award possibly presented to state courts for enforcement will be binding.

36 Firstly, it is clear that Art. 23(4) FSA might only affect the enforceability if a Party actually

appeals. However, this will seldom be the case since Art. 23(4) FSA sets a high threshold for

the possibility to appeal [see supra, para. 17].With no appeal, the award will become final

and binding on the Parties after three months [Claimant’s Exhibit No. 2, p. 11].

37 Secondly, if an appeal is actually made, this will also not affect the enforceability under the

New York Convention. If the applicable state court to which the case has been referred

confirms the award, it will become final and binding. In the event that an appeal is successful

and the competent state court overrules the award, there will no longer be an arbitral award

but a state judgement instead. Consequently, the New York Convention would no longer be

applicable to the enforcement of that judgement.

38 Thus, Art. 23(4) FSA has no impact on the enforceability under the New York Convention.


Validity of Art. 23(4) FSA

39 Even if Art. 23(4) FSA was invalid, the validity of the Arbitration Agreement would not be

affected. Any law applicable to the validity of the Arbitration Agreement will always be the

UNIDROIT Principles. This is because in both Parties’ countries of origin, in the country of

the seat of arbitration and in the country of which the law was chosen by the Parties, the

national contract law is a verbatim adoption of the UNIDROIT Principles [Procedural Order


11

No. 2, p. 57, para. 4]. According to Art. 3.2.13 UNIDROIT Principles, the avoidance of a

single term of the contract does not affect the validity of the remaining contract, unless the

parties’ intent seen from the perspective of a reasonable third person would lead to complete

nullity of their agreement. RESPONDENT may not argue that it would have never agreed on

arbitration without the appeal and review mechanism [Answer to Request for Arbitration,

p. 32, para. 8]. From an objective point of view the Parties would still have agreed on

arbitration without the appeal and review mechanism in Art. 23(4) FSA.

40 An appeal and review mechanism is not required by Circular No. 265 of the Auditor General.

According to this provision, a government entity “must not forego the right of review of

manifestly erroneous decisions of courts or tribunals“ [Respondent’s Exhibit No. 1,

p. 36, para. 45]. As Hope Hospital is not a government entity, Circular No. 265 does not

apply directly to Hope Hospital [Procedural Order No. 2, p. 58, para. 9]. Additionally,

RESPONDENT was allowed to deviate from Circular No. 265 in case of “good grounds”

[Procedural Order No. 2, p. 58, para. 10]. The new proton therapy has much higher target

conformity than the conventional radiotherapy [Request for Arbitration, p. 3, 4, para. 3].

Since Hope Hospital treats 90% of all Equatorianean cancer patients, increasing tumour

control rates and reducing side affects [Claimant’s Exhibit No. 1, p. 9] constitute a major

improvement of the public health of Equatoriana. Therefore, the purchase of the Cancer

Treatment Facility constitutes a “good ground” to deviate from Circular No. 265. In fact,

RESPONDENT had already deviated from Circular No. 265 in the past by agreeing to arbitration

without an appeal and review mechanism [Procedural Order No. 2, p. 58, para. 10]. In

addition, there are no restrictions under Equatorianean law on Hope Hospital concerning

arbitration agreements [Procedural Order No. 2, p. 58, para. 9]. If including an appeal and

review mechanism had been of crucial importance to RESPONDENT, a reasonable third person

would expect RESPONDENT to communicate Circular No. 265 to CLAIMANT. However,

RESPONDENT has not mentioned Circular No. 265 at any time time.

41 Finally, RESPONDENT’S wish for a possibility to appeal was already fulfilled by the Danubian

Arbitration Law. Art. 34(2)(b)(ii) Danubian Arbitration Law grants RESPONDENT the

opportunity to set aside awards which are in conflict with public policy. A violation of public

policy can be seen in an award conflicting the basic principles and values of the national law

[Hußlein-Stich, p. 187; Born, p. 2829; Fouchard, para. 1711]. Consequently, the Parties

already had a right to recourse to a state court for manifestly erroneous decisions as required

by Circular No. 265 in any case. Considering that the clause was agreed on without lawyers


12

present, and considering that none of the involved lawyers in reviewing the clause was an

arbitration specialist [Procedural Order No. 2, p. 58, para. 10], it is understandable that the

Parties did not recognise that RESPONDENT was already given the opportunity to appeal.

Hence, since including Art. 23(4) FSA was after all not necessary to take care of

RESPONDENT’S concerns, it may reasonably be assumed that RESPONDENT would have agreed

to a contract without an additional appeal and review mechanism.

42 In consequence, even if the appeal and review mechanism in Art. 23(4) FSA was invalid, the

validity of the whole Arbitration Agreement would not be affected.

III. Art. 23(6) FSA Does Not Affect the Jurisdiction of the Arbitral Tribunal

43 Contrary to RESPONDENT'S allegation [Answer to Request for Arbitration, p. 32, para. 9],

Art. 23(6) FSA has no effect on the Arbitral Tribunal’s jurisdiction. Even though CLAIMANT’S

option in Art. 23(6) FSA to choose litigation alternatively to arbitration constitutes a

unilateral right, this does not affect the validity of the Arbitration Agreement. It will be

demonstrated that Art. 23(6) FSA is in line with the principle of party autonomy (1) as it does

not exceed the limits of party autonomy (2). In any case, the Arbitral Tribunal’s jurisdiction is

not dependent on the validity of Art. 23(6) FSA (3).

1. Art. 23(6) FSA Is in Line With the Principle of Party Autonomy

44 Parties to an arbitration agreement are generally free to design their dispute resolution

mechanism. Therefore, they are also free to agree on unilateral dispute clauses giving only

one party the right to choose between litigation and arbitration [Corte di Cass., 22 Oct 1970;

C.Cass., Civ (1ère), 4 Dec 1990]. The mere fact that one party is granted an additional

advantage cannot render the clause invalid as many contractual provisions confer advantages

to only one of the parties [Law Debenture Trust v. Elektrim Finance, EWHC, 1 Jul 2005;

C. App Angers., 25 Sep 1972; C.Cass., Civ (1ère), 15 May 1974]. Consequently, when it is

sufficiently clear that it was the parties’ mutual intent to agree on a unilateral option clause,

such agreements must be accepted [Nesbitt/Quinlan, p. 148].

45 The Parties negotiated a detailed dispute resolution clause in order to comply with all their

individual concerns and needs [cf. Claimant's Exhibit No. 3, pp. 14 et seq]. The mutual intent

was to grant CLAIMANT the right to choose between litigation and arbitration concerning

payment claims. As Art. 23(6) FSA is in line with the principle of party autonomy, rendering

the provision invalid would frustrate the Parties’ mutual intent.


13

2. Art. 23(6) FSA Does Not Conflict with the Limits of Party Autonomy

46 Party autonomy is limited by mandatory rules of the lex loci arbitri or by fundamental legal

principles [Morrissey/Graves, p. 344; Jenkins/Stebbings, p. 165]. However, including a

unilateral option clause such as Art. 23(6) FSA neither conflicts with any mandatory

provisions of the Danubian Arbitration Law (a) nor with fundamental legal principles (b).

Moreover, Art. 23(6) FSA is in line with recent case law (c).

a) Art. 23(6) FSA Is in Line With the Danubian Arbitration Law

47 One of the mandatory principles contained in the Danubian Arbitration Law is the equal

treatment of the parties [cf. Binder, p. 182]. This principle is laid down in

Art. 18 Danubian Arbitration Law according to which “the parties shall be treated with

equality and each party shall be given a full opportunity of presenting his case”.

Art. 18 Danubian Arbitration Law is applicable to the entire arbitral proceedings

[cf. Holtzmann/Neuhaus, Art. 18, p. 552]. However, Art. 23(6) FSA has no effect on the

arbitral proceedings as such, but does only apply to a prearbitral stage. As soon as the arbitral

proceedings have started, Art. 23 FSA provides both Parties with the same procedural rights,

thereby establishing procedural fairness between the Parties. Thus, Art. 23(6) FSA is in line

with the mandatory provisions of the Danubian Arbitration Law.

b) Art. 23(6) FSA Is in Line with Fundamental Legal Principles

48 RESPONDENT might argue that Art. 23(6) FSA conflicts with fundamental legal principles.

Yet, there is no policy of law conflicting with a unilateral option clause as set out in

Art. 23(6) FSA.

49 Firstly, Art. 23(6) FSA is in line with the principle of fairness. Unilateral jurisdiction clauses

constitute an adequate counterbalance for a party which bears the financial risk of the

transaction [Stacey/Taylor]. At hand, CLAIMANT was exposed to a financial risk of

USD 50 million which justified the unilateral jurisdiction clause as a fair counterbalance. By

accepting RESPONDENT’S wish to pay by instalments, CLAIMANT agreed to a payment

schedule that would only lead to a full payment of the purchase price almost three years after

CLAIMANT itself had already fulfilled all its obligations under the contract [cf. Claimant's

Exhibit No. 2, p. 11]. If CLAIMANT had not accepted the wish to pay by instalments, it would

already have received the purchase price by today. Consequently, there would have been no

need for CLAIMANT to initiate proceedings against RESPONDENT in order to demand the


14

outstanding payments. Thus, the payment by instalments burdened CLAIMANT with the risks

of proceedings and enforcement, making the unilateral choice a fair counterbalance.

50 Secondly, Art. 23(6) FSA is in line with the principle of legal certainty. Regarding the legal

certainty of procedural determinations, it is generally demanded that these are sufficiently

predictable [Waincymer, p. 18]. Due to the clear wording of the provision, RESPONDENT must

have been aware that CLAIMANT’S payment claims might either be brought before an arbitral

tribunal or before the courts of Mediterraneo. Since Mediterraneo even adopted the same

contract law as Danubia [Procedural Order No. 2, p. 57, para. 4], RESPONDENT would not be

confronted with an undue legal uncertainty. Thus, Art. 23(6) FSA is in line with the principle

of legal certainty.

51 Balancing the respective risks, Art. 23(6) FSA is in line with fundamental legal principles.

c) Art. 23(6) FSA Is in Line with Recent Case Law

52 In a judgement of the French Cour de Cassation in the case of Banque Privée Edmond de

Rothschild Europe against Ms. X (“Rothschild Case”) [C.Cass., Civ. (1ère), 26 Sep 2012], the

court invalidated a unilateral jurisdiction clause. However, the Rothschild Case must be

distinguished from the case at hand for the following reasons:

53 Firstly, the unilateral jurisdiction clause in the Rothschild Case was incorporated via the

standard terms of the party which the unilateral jurisdiction clause was in favour of. Thus, the

clause was drafted by the party which was privileged by the provision and imposed on the

other party by means of standard terms. To the contrary, in the case at hand, Art. 23(6) FSA

was drafted by both Parties and included in the contract as a mutual agreement

[Claimant’s Exhibit No. 3, p. 14].

54 Secondly, the unilateral option clause contained in the Rothschild Case gave the favoured

party the right to bring its case to any court competent of jurisdiction. Consequently, the

favoured party had major discretion to select whatever jurisdiction it wished for

[cf. C.App. Paris, 18 Oct 2011] making it unpredictable for the other party where the case

would be decided. In contrast, Art. 23(6) FSA gives CLAIMANT only the right to choose

between arbitration as agreed by the Parties or to refer the case to the courts of Mediterraneo.

Thus, Art. 23(6) FSA does not provide CLAIMANT with unduly broad discretion.

55 Consequently, Art. 23(6) FSA is not comparable with the unilateral option clause of the

Rothschild Case. The Arbitral Tribunal is therefore respectfully requested to refrain from


15

following the decision of the Rothschild Case. Instead it should decide in line with

international case law upholding the validity of unilateral option clauses [cf. C.Cass,

Civ. (1ère), 4 Dec 1990; Mauritius Commercial Bank v. Hestia Holdings, EWHC,

24 May 2013; NB Three Shipping v. Harebell Shipping, EWHC, 13 Oct 2004;

Law Debenture Trust v. Elektrim Finance, EWHC, 1 July 2005] and find Art. 23(6) FSA

valid.


Validity of Art. 23(6) FSA

56 Even if the Arbitral Tribunal was to find that the unilateral option clause in Art. 23(6) FSA

was invalid, the Arbitration Agreement in Art. 23(3),(4) FSA would still remain valid.

57 Firstly, in order to comply with the Parties’ intent to arbitrate, the Arbitral Tribunal has the

opportunity to convert the unilateral option clause into a bilateral option clause

[Russian Telephone Company v. Sony Ericsson, SAC RF, 19 Jun 2012]. This would lead to a

balance of the Parties’ rights. Further, this could give each Party the opportunity to file claims

before a state court and at the same time protect the Parties’ initial intention to submit to

arbitration. Hence, the Arbitration Agreement would stay valid while only the option clause in

Art. 23(6) FSA would be modified.

58 Secondly, even if the Arbitral Tribunal decided not to change Art. 23(6) FSA into a bilateral

option clause but to invalidate Art. 23(6) FSA, the Arbitration Agreement would still be valid

when applying the standard of a reasonable third person in terms of Art. 3.2.13 UNIDROIT.

In the case at hand, the Parties’ main interest lies in the dispute resolution by arbitration and

not the unilateral option clause. RESPONDENT’S as well as CLAIMANT’S intention to submit to

arbitration did not depend on the inclusion of a unilateral option clause. Art. 23(6) FSA only

provides an additional, but not an indispensable right for CLAIMANT. A reasonable third

person would be aware of the fact that agreeing on arbitration was CLAIMANT’S primary

intention since this intention was referred to in its standard terms [Claimant’s

Exhibit No. 2, p. 13], the Parties’ negotiations [Claimant’s Exhibit No. 3, pp. 14 et seq.] and

the contract [Art. 23(3),(4) FSA, Claimant’s Exhibit No. 2, p. 11]. Therefore, the invalidity of

Art. 23(6) FSA would not affect the Parties’ agreement on arbitration.

59 Hence, the Arbitration Agreement is valid regardless of the validity of Art. 23(6) FSA. Thus,

the Arbitral Tribunal has jurisdiction to deal with the payment claims arising out of the FSA.


16

B. The Arbitral Tribunal Has Jurisdiction to Deal with Claims out of the SLA

60 The Arbitral Tribunal also has jurisdiction to deal with claims arising from the SLA.

RESPONDENT alleges that a new jurisdiction clause in Art. 23 SLA gives jurisdiction to state

courts [cf. Answer to Request for Arbitration, p. 32, para. 11]. Yet, an arbitration agreement

contained in a framework agreement extends to all interrelated contracts with the same

economic or operational purpose [Brekoulakis, p. 351; Fouchard, para. 518; C.App. Paris,

29 Nov 1991]. In cases of conflict between arbitration and state jurisdiction clauses, the

arbitration clause will prevail [C.App. Paris, 29 Nov 1991].

61 The FSA constitutes a framework agreement to the SLA. According to Art. 45 FSA, the

provisions of the FSA “shall also govern all future contracts concluded by the Parties in

relation to the Proton Therapy Facility […] where such contracts do not contain a specific

provision to the contrary” [Claimant’s Exhibit No. 2, p. 12]. In addition, pursuant to the

preamble of the SLA, “the general relationship between the Seller and the Buyer is governed

by a Framework and Sales Agreement providing also the framework for the present contract”

[Claimant’s Exhibit No. 2, p. 18]. Consequently, the Arbitration Agreement in the FSA also

governs the SLA superseding any alleged choice of state jurisdiction in the SLA.

62 In any case, the SLA does not even contain a new exhaustive dispute resolution clause. The

Parties had no intent to conclude a new dispute resolution clause (I). Accordingly,

Art. 23 SLA would not be a fully operable dispute resolution clause without the FSA (II).

I. The Parties Had No Intent to Conclude a New Dispute Resolution Clause

63 In their first contract, CLAIMANT and RESPONDENT agreed on a detailed dispute resolution

clause [Art. 23 FSA, Claimant’s Exhibit No. 2, p. 11], taking into account the particular

interests of both Parties. This clause provided for all disputes to be settled by arbitration.

64 The Parties’ interests (1) as well as their subsequent conduct (2) reveal their intent to uphold

the Arbitration Agreement of the FSA also with regard to the SLA.

1. Considering the Parties’ Intent, No New Dispute Resolution Clause Was Needed

65 Seeing that the Parties’ intent to arbitrate had not changed, a reasonable person would

conclude that the SLA was not supposed to introduce a new dispute resolution clause.

Art. 23 FSA was the result of detailed negotiations between CLAIMANT and RESPONDENT

[Request for Arbitration, p. 5, para. 4]. The new mechanism of Art. 23 SLA takes account of


17

the fact that now, not only CLAIMANT but also RESPONDENT had obligations beyond settling

the invoice. According to Art. 10 SLA, RESPONDENT now “is responsible for providing the

Seller with the necessary medical data” [Claimant’s Exhibit No. 6, p. 19].

66 In consequence, the Parties turned the unilateral choice of jurisdiction clause in

Art. 23(6) FSA into a bilateral one and also allowed for interim measures before the courts of

RESPONDENT’S country of origin in Art. 23(1) SLA. However, this does not provide any

reason to deviate from the general decision in favour of arbitration, which the Parties reached

in the FSA. Therefore, the circumstances at the time of conclusion indicate that the Parties did

not intend to establish a new dispute resolution clause in the SLA.

2. Considering the Parties’ Subsequent Conduct, Art. 23 FSA Also Governs the SLA

67 The Parties complied with the prerequisites of an amicable dispute resolution as set up in

Art. 23(1),(2) FSA for claims under the SLA [cf. Procedural Order No. 2, p. 58, para. 11]. If

RESPONDENT had not expected Art. 23 FSA to govern the SLA, it would not have fulfilled the

pre-arbitral requirements of Art. 23 FSA for disputes under the SLA. Thus, the Parties’

subsequent conduct shows that Art. 23 FSA also applies to the SLA.

II. The Arbitration Agreement in the FSA Remains Applicable Because the SLA Does

Not Contain a New Dispute Resolution Clause

68 Contrary to RESPONDENT’S allegation [Answer to Request for Arbitration, p. 32, para. 11], the

SLA does not contain a dispute resolution clause replacing the Arbitration Agreement.

Art. 23 SLA does not constitute a fully operable dispute resolution clause since

Art. 23(1) SLA only concerns interim and provisional urgent measures (1) and

Art. 23(2) SLA only provides an optional alternative to arbitration (2).

1. Art. 23(1) SLA Merely Concerns Interim and Provisional Urgent Measures

69 In Art. 23(1) SLA, the Parties agreed “that for interim and provisional urgent measures

application may be made to the courts of Mediterraneo or Equatoriana (…)” [Claimant’s

Exhibit No. 6, p. 19]. Agreeing on a choice of jurisdiction clause which only concerns interim

and provisional urgent measures is only reasonable if in general arbitration should settle the

dispute. Otherwise, state courts would in any case handle interim and provisional measures.

70 In addition, Art. 23(1) SLA solely adds the four words “or Equatoriana as applicable”

[Claimant’s Exhibit No. 6, p. 19] to the existing clause of Art 23(5) FSA. The mere difference


18

is that now application may not only be made to the courts of Mediterraneo but also to the

courts of Equatoriana. By mirroring its wording, Art. 23(1) SLA shows that it only modifies

Art. 23(5) FSA while the Arbitration Agreement in Art. 23(3),(4) FSA remains untouched.

71 Furthermore, a dispute resolution clause must aim to resolve any disputes arising in

connection with the contract [cf. McIlwrath/Savage, para. 1.196; Redfern/Hunter,

para. 2.69]. However, Art 23(1) SLA only addresses interim and provisional urgent measures

and not all disputes. Therefore, Art. 23 SLA is not an independent dispute resolution clause.

2. Art. 23(2) SLA Merely Provides an Alternative to Arbitration

72 In Art. 23(2) SLA, the Parties agreed that “in addition, both Parties shall have the right to

bring any and all claims in the courts of Mediterraneo or Equatoriana to the jurisdiction of

which they hereby submit” [Claimant’s Exhibit No. 6, p. 19]. Giving the Parties an additional

right to bring claims in their state courts only makes sense if there already exists an

exhaustive dispute resolution clause other than state jurisdiction. The words “in addition” at

hand hint at the existing Arbitration Agreement in Art. 23(3),(4) FSA.

73 Further, by mirroring its wording, Art. 23(2) SLA shows that it only modifies Art. 23(6) FSA.

The fact that both contracts were drafted by the same lawyers [Procedural Order No. 2, p. 58,

para. 10] makes it likely that they took the wording of the FSA as a starting point.

74 Finally, both Art. 23(1),(2) SLA only modify Art. 23(5),(6) FSA and do not affect the

Arbitration Agreement. The Arbitral Tribunal may therefore derive its jurisdiction concerning

claims arising out of the SLA from Art. 23(3),(4) FSA.

CONCLUSION OF THE FIRST ISSUE

75 The Arbitral Tribunal has jurisdiction to deal with the payment claims arising from the FSA

as well as from the SLA. By including Art. 23(3),(4) into the FSA, the Parties validly agreed

to resolve any dispute arising from or in connection with the FSA by arbitration. Neither

Art. 23(4) FSA nor Art. 23(6) FSA contradict the validity of the Arbitration Agreement. Thus,

the Arbitral Tribunal has jurisdiction to deal with the payment claims arising from the FSA.

As the SLA is governed by the FSA and does not contain a provision overruling the FSA's

Arbitration Agreement, the Arbitral Tribunal also has jurisdiction to deal with the payment

claims arising from the SLA by virtue of Artt. 23(3),(4) and 45 FSA.


19

ISSUE 2: THE ARBITRAL TRIBUNAL HAS JURISDICTION TO DEAL WITH

BOTH CLAIMS IN ONE ARBITRATION AND SHOULD EXERCISE THIS POWER

76 CLAIMANT has two payment claims against RESPONDENT in the combined amount of

USD 11.5 million [see supra, Statement of Facts, 15 Aug 2012, p. 2]. Despite the fact that the

relationship between CLAIMANT and RESPONDENT is governed by the FSA [see supra,

para. 61], RESPONDENT now wants to separate the disputes arising from the FSA and the SLA

into two proceedings [Answer to Request for Arbitration, p. 32, para. 12]. Under the CEPANI

Rules, however, the Arbitral Tribunal has the power to consider both claims within a single

set of proceedings (A) and should also exercise this power (B).

A. The Arbitral Tribunal Has Jurisdiction to Hear Both Claims in One Arbitration

77 The Arbitral Tribunal has jurisdiction to consider both claims within a single set of

proceedings since they are based on one arbitration agreement (I). Even if the claims were

based on different arbitration agreements, the Arbitral Tribunal would still have jurisdiction to

consider both claims within a single set of proceedings (II).

I. The Arbitral Tribunal Has Jurisdiction to Consider Both Claims within a Single Set

of Proceedings As They Are Based on One Arbitration Agreement

78 Art. 12 CEPANI Rules provides the Arbitral Tribunal with jurisdiction to decide over

disputes in connection with Art. 10 CEPANI Rules [see supra, p. 4, para. 7]. Art. 10 CEPANI

Rules reads that claims may be heard in a single arbitration when said claims “are made

pursuant to various arbitration agreements” if certain requirements are met. Thereby,

Art. 10 CEPANI Rules sets forth requirements for one set of proceedings when there are

various arbitration agreements. However, in the case at hand a single arbitration agreement

governs both claims. As the FSA governs the SLA, both claims fall under the Arbitration

Agreement in Art. 23(3),(4) FSA [see supra, Issue 1]. As Art. 10 CEPANI Rules does not set

any requirements for the case where there is only one arbitration agreement, no further

requirements have to be met in order to hear both claims together. Thus, the Arbitral Tribunal

has jurisdiction to hear both claims in one arbitration as they are based on one arbitration

agreement.


20

II. Alternatively, the Arbitral Tribunal Would Still Have Jurisdiction to Consider Both

Claims Within a Single Set of Proceedings According to Art. 10(1) CEPANI Rules

79 Even if the Arbitral Tribunal came to the conclusion that the Arbitration Agreement in

Art. 23(3),(4) FSA itself and the altered version of Art. 23 FSA as modified by Art. 23 SLA

were to be seen as two different arbitration agreements, it would still have jurisdiction to

consider them in a single set of proceedings as the requirements set out by

Art. 10(1) CEPANI Rules are met (1). Moreover, having a single arbitration would also not

pose any procedural problems, as the arbitration agreements are in any case compatible with

regard to Art. 10(2) CEPANI Rules (2).

1. The Requirements Set Out by Art. 10(1) CEPANI Rules Are Met

80 Art. 10(1) CEPANI Rules allows for a single set of proceedings where the parties have agreed

so. Since the parties normally do not give thought to the number of possible arbitrations

before any disputes factually arise, there will hardly ever be an express agreement. However,

in the present case, the Parties impliedly agreed on a single arbitration. With regard to

Art. 10(1)(a) CEPANI Rules, both CLAIMANT and RESPONDENT agreed to have recourse

to arbitration under the CEPANI Rules [Claimant’s Exhibit No. 2, p. 11]. Also, the

requirements of Art. 10(1)(b) CEPANI Rules are fulfilled. By creating the FSA as a master

agreement, the Parties impliedly agreed on a unified dispute resolution (a). Furthermore, the

two matters in dispute are factually and legally related with regard to Art. 10(3) CEPANI

Rules (b).

a) By Creating the FSA as a Framework Agreement, the Parties Agreed on a Unified

Dispute Resolution Mechanism

81 Art. 45 FSA sets forth the framework for the entire cancer treatment facility [see supra,

para. 61] and therefore constitutes a master agreement governing both contracts. Such master

agreement is always an indication for the parties’ intent to have the transaction, despite being

executed via several contracts, treated as a whole, as a unit [cf. Leboulanger, pp. 79 et seq.].

In fact, Art. 45 FSA as well as the preamble of the FSA show that the Parties wanted a unified

legal treatment of all contracts in relation to the Proton Therapy Facility such as the SLA

[Claimant’s Exhibit No. 2, pp. 10 et seq]. By expressing their intent to have their contractual

relation treated as a whole, the Parties thus impliedly agreed to have future claims decided in

one arbitration.


21

b) Furthermore, the Matters Are Legally and Factually Related

82 RESPONDENT alleges that the claims “are legally and factually largely separate” [Answer to

Request for Arbitration, p. 32, para. 12]. Art. 10(3) CEPANI Rules states that “arbitration

agreements concerning matters that are not related to one another give rise to a presumption

that the parties have not agreed to have their claims decided in a single set of proceedings”.

To the contrary, arbitration agreements that are related to one another do give rise to a

presumption that the parties agreed to have their claims decided in a single set of proceedings

[cf. Platte II(b)(i)]. At hand, the claims are closely related.

83 To begin with, the claims are legally related. Claims are legally related whenever they have a

common basis [cf. Platte II(b)(i)]. Since Art. 45 FSA connects both contracts under one

master agreement, the matters have the FSA as their basis and are therefore legally related.

84 Moreover, the claims are factually related. Claims are factually related whenever they have a

common economic and operational unit [cf. Leboulanger p. 45, para. 12]. While the FSA

furnished RESPONDENT with the first two treatment rooms, the SLA added a third treatment

room. Together, both contracts enable RESPONDENT to offer advanced cancer treatment.

Without the Proton Therapy Facility delivered under the FSA, the newly developed active

scanning technology delivered under the SLA would, according to RESPONDENT’S own

words, be useless [Answer to Request for Arbitration, p. 34, para. 23].

85 Further, the purchase of a third treatment room was the Parties’ intent from the beginning of

their cooperation. In its letter from 15 November 2007, CLAIMANT stated that “the whole

facility will be designed and constructed in a way that allows for the addition of up to two

more treatment rooms in the future” [Claimant’s Exhibit No. 3, p. 14]. Hence, adding further

treatment rooms had been planned from the beginning.

86 Moreover, RESPONDENT’S conduct shows that it considered the contracts to be related. On

15 August 2012 RESPONDENT notified CLAIMANT about withholding both outstanding

payments under the contracts [Claimant’s Exhibit No. 7, p. 21]. However, RESPONDENT had

already denoted a loss resulting from the FSA in the financial year of 2011/2012, which was

confirmed by the Auditor General on 10 July 2012 [Claimant’s Exhibit No. 7, p. 21]. The

third treatment room was already abandoned on 20 May 2012 [Claimant’s Exhibit No. 7,

p. 21]. Since RESPONDENT decided to wait and then raise both claims at the same point in

time, it must be assumed that even RESPONDENT itself considered them connected.

Consequently, RESPONDENT may not argue now that the claims are not related to one another.


22

87 In conclusion, not only Art. 45 FSA but also the fact that the claims are legally and factually

related reveals that the Parties impliedly agreed to have their claims decided in one

arbitration.

2. Having a Single Arbitration Would Also Not Pose Any Procedural Problems As the

Arbitration Agreements Are Compatible

88 Since the arbitration agreements are compatible, there would not be any procedural difficulty

when settling both disputes in a single arbitration. Art. 10(2) CEPANI Rules affirms this,

stating “differences concerning the applicable rules of law or the language of the proceedings

do not give rise to any presumption as to the incompatibility of the arbitration agreements”.

At hand, however, the agreements are compatible as the general requirements for

compatibility are fulfilled (a). Meanwhile, the applicable substantive law is irrelevant (b).

a) The Arbitration Agreements Are Compatible

89 Even if one were to consider the arbitration agreements under the FSA and the SLA as

different agreements, they are in any case compatible. The applicable arbitration rules are

compatible since Art. 23 SLA does not change any aspect of the Arbitration Agreement as set

out by Art. 23(3),(4) FSA [see supra, Issue 1.B]. Therefore, both contracts provide for

disputes to be decided under the CEPANI Rules and the proceedings to be held before three

arbitrators in English with the place of arbitration being Vindobona, Danubia [Claimant’s

Exhibit No. 2, p. 11]. Thus, the general requirements for compatibility are fulfilled.

b) The Applicable Substantive Law Is Irrelevant

90 While it is undisputed between the Parties that the FSA is governed by the Mediterranean

Sale of Goods Act 2005 [Procedural Order No. 2, p. 60, para. 20], it is CLAIMANT’S

submission that the SLA is governed by the CISG. RESPONDENT alleges that different laws

being applicable prevents a single arbitration [cf. Answer to Request for Arbitration p. 32,

para. 12]. However, pursuant to Art. 10(2) CEPANI Rules, differences concerning the

applicable rules of law “do not give rise to any presumption as to the incompatibility of the

arbitration agreements”. Hence, the applicable substantive law is irrelevant. Thus, having a

single arbitration would also not pose any procedural problems, as the arbitration agreements

are compatible.


23

91 In conclusion, the Arbitral Tribunal has jurisdiction to hear both claims in a single arbitration

according to Art. 10(1) CEPANI Rules.

B. The Arbitral Tribunal Should Exercise Its Power to Consider Both Claims within a

Single Arbitration

92 The Arbitral Tribunal does not only have jurisdiction to but should also exercise its power to

consider both claims within a single set of proceedings. Firstly, Art. 10 CEPANI Rules does

not provide the Arbitral Tribunal with discretion when the prerequisites of Art. 10 CEPANI

Rules are met (I). Yet, even if the Arbitral Tribunal had discretion, it should exercise it in

favour of CLAIMANT (II).

I. Art. 10 CEPANI Rules Does Not Provide the Arbitral Tribunal with Discretion If

the Prerequisites of Art. 10 CEPANI Rules Are Met

93 When the prerequisites of Art. 10 CEPANI Rules are met, it is CLAIMANT’S choice whether it

wants to have the claims decided in one arbitration as arbitration is based on the free will of

the parties [cf. Platte p. 67 II(b); Hanotiau, para. 229]. A comparison to other provisions

shows that whenever the CEPANI Rules want to give an arbitral tribunal discretion, this is

stated explicitly. For example, Art. 11(1) CEPANI Rules provides that “a third party may

request to intervene” and then an intervention “may be allowed”. Correspondingly,

Art. 13(1) CEPANI Rules states that “the President may order (…) consolidation”. In

contrast, Art. 10 CEPANI Rules merely states that “claims (…) may be made in a single

arbitration”. However, CLAIMANT rather than the Arbitral Tribunal makes the claims. Thus,

Art. 10 CEPANI Rules does not provide the Arbitral Tribunal with discretion since

CLAIMANT made use of its discretion when it initiated one set of proceedings.

II. Even If the Tribunal Had Discretion, It Should Exercise It in Favour of CLAIMANT

94 Alternatively, the Arbitral Tribunal should exercise its discretion in favour of CLAIMANT.

Hearing several claims in a single set of proceedings has several advantages over hearing the

claims in two sets of proceedings. Firstly, time and cost efficiency militate in favour of joint

proceedings (1). Moreover, joint proceedings would reduce the risk of conflicting

decisions (2). Finally, RESPONDENT’S nomination of two different arbitrators is not a reason

for separate proceedings (3).


24

1. Time and Cost Efficiency Militate in Favour of Joint Proceedings

95 Art. 23(1) CEPANI Rules states that “the Arbitral Tribunal and the parties shall act in a

timely manner and in good faith”, establishing the principle of efficiency which militates in

favour of one arbitration. According to Art. 4(1) CEPANI Rules, the Parties need to appoint a

Tribunal for each set of proceeding. Pursuant to Art. 22 CEPANI Rules, they also need to

establish a procedural timetable as well as terms of reference, which takes the Parties

additional two months [The Secretary–General, p. 44, para. 2]. By combining both claims,

having to appoint another arbitral tribunal as well as establishing a timetable and terms of

reference can be avoided. Moreover, according to Art. 1(1) of Schedule 1 CEPANI, having

one arbitration would cost 226,374 EUR [The Secretary General, p. 44] whereas two

arbitrations would cost between 229,680 EUR and 289,080 EUR [cf. Art. 1(1), 2, 5 of

Schedule I CEPANI]. Thus, time and cost efficiency militate in favour of joint proceedings.

2. One Proceeding Would Reduce the Risk of Conflicting Decisions

96 In case of related issues, separate proceedings might lead to inconsistent awards. This may be

avoided by hearing the claims in one arbitration [cf. Waincymer, pp. 495 et seq.; Leboulanger,

p. 53; Jenkins/Stebbings, p. 154]. RESPONDENT alleges that it may avoid the FSA [Answer to

Request for Arbitration, p. 32, para. 6]. RESPONDENT further submits that since the software

from the FSA was the basis for the SLA, it was also entitled to avoid the SLA for the reason

that CLAIMANT allegedly did not properly perform the FSA [Answer to Request for

Arbitration, p. 34, para. 23].

97 If two proceedings were initiated, the tribunal deciding over the claim under the FSA could

come to the conclusion that the FSA was rightfully avoided and that RESPONDENT would not

have to pay the outstanding amount of USD 10 million, but instead would have to return the

first two cancer treatment rooms and the included software. The tribunal deciding over the

second claim under the SLA could meanwhile come to the conclusion that the SLA could not

be avoided and that RESPONDENT would thus have to pay the outstanding USD 1.5 million for

the third treatment room and could keep this prostate cancer treatment room. In that case,

RESPONDENT would be stuck with the third treatment room alone, which according to

RESPONDENT’S own words would be “completely useless” without the proton therapy facility

delivered under the FSA [Answer to Request for Arbitration, p. 34, para. 23]. Hence, joint

proceedings would prevent such conflicting decisions.


25

3. RESPONDENT’S Nomination of Two Arbitrators Is Not a Reason for Separate

Proceedings

98 RESPONDENT nominated two different arbitrators for the two sets of proceedings it wishes to

have as allegedly, different fields of expertise are required [Answer to Request for Arbitration,

p. 33, para. 13]. However, this is not a reason for separate proceedings since there is no right

guaranteeing as many arbitrators as fields of expertise are touched.

99 In any case, in order to obtain a full understanding of the case, Art. 23(2) CEPANI Rules

provides that RESPONDENT can appoint experts and ensure additional specialised knowledge.

Hence, with regard to the required expertise, all relevant information can be likewise made

available in one arbitration.

100 Moreover, RESPONDENT may not argue that this would constitute a violation of its right to

freely choose arbitrators. This right only allows filling the available spots for arbitrators with

impartial arbitrators [cf. Born, p. 1363]. It does not include the right to choose the number of

arbitrators itself. If RESPONDENT had wanted to select different arbitrators, it should have

stated so in the Arbitration Agreement. However, as it never expressed this demand to

CLAIMANT during the negotiations, it may not argue that it only agreed to arbitration because

of the possibility to select arbitrators on the basis of the required expertise [cf. Answer to

Request for Arbitration, p. 33, para. 14] which at hand is granted. Thus, RESPONDENT’S right

to freely choose arbitrators is guaranteed and the nomination of two arbitrators is not a reason

for separate proceedings. Hence, the Arbitral Tribunal should hear both claims in a single

arbitration.

CONCLUSION OF THE SECOND ISSUE

101 In conclusion, the Arbitral Tribunal has jurisdiction to deal with both claims in a single

arbitration as the claims are based on one Arbitration Agreement. Even if the Arbitral

Tribunal was to find that the claims were based on two arbitration clauses, they should still be

heard in a single arbitration as the requirements set out by Art. 10 CEPANI Rules are met.

Finally, if considered to have the respective discretion, the Arbitral Tribunal should exercise

this power in favour of CLAIMANT.


26

ISSUE 3: THE CISG GOVERNS THE CLAIMS ARISING FROM THE SALES AND

LICENSING AGREEMENT OF 20 JULY 2011

102 The CISG governs the claims arising from the SLA. According to Art. 28(1) Danubian

Arbitration Law, “the arbitral tribunal shall decide the dispute in accordance with such rules

of law as are chosen by the parties as applicable to the substance of the dispute”. Section 22

of CLAIMANT’S standard terms in their version of July 2011 provides that “the contract is

governed by the law of Mediterraneo” [Claimant’s Exhibit No. 9, p. 24]. These

Standard Terms 2011 have been validly included into the SLA (A) and therefore the CISG is

applicable as part of Mediterranean law (B). Moreover, the SLA constitutes a sales contract in

terms of Art. 1(1) CISG (C).

A. The 2011 Version of the Standard Terms Has Been Validly Included into the SLA

103 The SLA is subject to the Standard Terms 2011. Following the second Procedural Order

issued by this Arbitral Tribunal, it is to be assumed that the CISG is in principle applicable to

the contract [Procedural Order No. 2, p. 57, para. 2]. In consequence, the CISG is applicable

to the question whether standard terms have been validly included.

104 According to Art. 14(1) CISG, standard terms must be part of the offer, which must be

accepted by the other party according to Art. 18 CISG [OGH, 31 Aug 2005; BGH,

31 Oct 2001; Schroeter, in: Schlechtriem/Schwenzer, Art. 14, para. 32 et seq.]. At hand,

CLAIMANT’S offer referred to the Standard Terms 2011 (I) and RESPONDENT accepted it (II).

I. CLAIMANT’S Offer Referred to the Standard Terms 2011

105 An interpretation under Art. 8 CISG reveals that CLAIMANT’S offer referred to the Standard

Terms 2011. Pursuant to Art. 8(2) CISG, the understanding of a reasonable person of the

same kind as the addressee is relevant for determining the intent to include the standard terms

[OGH, 6 Feb 1996; RB Utrecht, 21 Jan 2009; Witz, in: Witz/Salger/Lorenz, Art. 8 para. 14;

Achilles, Art. 8, para. 3; Huber, in: Huber/Mullis, p. 31; Brunner, Art. 8, para. 9].

106 The Standard Terms 2011 were included into the SLA since CLAIMANT put RESPONDENT on

notice as to the existence of the Standard Terms 2011 (1). Even if the Arbitral Tribunal should

consider putting RESPONDENT on notice of the Standard Terms 2011 to be insufficient, they

were still included since CLAIMANT also made the Standard Terms 2011 sufficiently

available (2).


27

1. CLAIMANT Included the Standard Terms 2011 by Putting RESPONDENT on Notice As

to Their Existence

107 In order to incorporate standard terms, the offeror has to refer to the terms so that the other

party could not have been unaware of the intent to include them into the contract according to

Art. 8(2) CISG [OGH, 6 Feb 1996; Trib. Comm. de Nivelles, 19 Sep 1995; CSS v. Amphenol,

US DC Maryland, 8 Feb 2011; LG Coburg, 12 Dec 2006; Eiselen, pp. 12 et seq.].

108 CLAIMANT sufficiently referred to the Standard Terms 2011. Art. 46 SLA expressly provides

that “the agreement is subject to the seller’s standard terms” [Claimant’s Exhibit No. 6,

p. 20]. RESPONDENT alleges that this reference was directed to CLAIMANT’S

Standard Terms 2000 [Answer to Request for Arbitration, p. 33, para. 17] which had

governed the FSA in 2008. However, CLAIMANT had revised its Standard Terms. The 2011

version applies to all contracts concluded from the beginning of July 2011 onwards

[Claimant’s Exhibit No. 5, p. 17, para. 3]. The SLA was concluded on 20 July 2011 [Request

for Arbitration, p. 6, para. 13]. CLAIMANT duly informed RESPONDENT about the overhaul of

the Standard Terms at a meeting in June 2011 [Claimant’s Exhibit No. 5, p. 17, para. 3].

Further, in both its following letters from 5 July 2011 and 18 July 2011, CLAIMANT reminded

RESPONDENT that the 2011 version of the Standard Terms would apply to all contracts

concluded from the beginning of July [Claimant’s Exhibit No. 5, p. 17, para. 3; Respondent’s

Exhibit No. 3, p. 40]. Consequently, when RESPONDENT signed the SLA on 20 July 2011, it

had to be aware that Art. 46 SLA referred to the Standard Terms 2011.

109 Thus, RESPONDENT is bound by the Standard Terms 2011 because it agreed to them,

regardless of whether it actually read them. A commercial party experienced in international

trade cannot expect not to be bound by terms it previously signed, simply because it did not

comprehend the terms [MCC v. Ceramica, US Ct App (11th Cir), 29 Jun 1998]. RESPONDENT

is a hospital which is known worldwide and experienced in business transactions

[cf. Claimant’s Exhibit No. 1, p. 9, para. 1]. Consequently, RESPONDENT could have expected

the application of the signed set of rules. Thus, CLAIMANT’S Standard Terms 2011 became

part of its offer.

110 Even if RESPONDENT could only be bound by the terms if it knew the content, it was then

RESPONDENT’S responsibility to enquire the content of the Standard Terms 2011. Where a

party was aware of the offeror’s intent to include standard terms into a contract, it cannot

claim to be surprised if they apply. To the contrary, it is the party’s responsibility to enquire

the content of the standard terms [Kindler, p. 229; Magnus, p. 320; Berger, p. 17, para. 2].


28

111 RESPONDENT alleges that it was on CLAIMANT to inform RESPONDENT because of a promise

given by Dr Vis to send the Standard Terms 2011 [Answer to Request for Arbitration,

p. 33, para. 17]. However, shortly after his promise, Dr Vis suffered a stroke [Procedural

Order No. 2, p. 63, para. 34]. RESPONDENT brings forward that Ms Meier who replaced

Dr Vis should have sent the Standard Terms 2011 [Answer to Request for Arbitration,

p. 33, para. 17]. However, Ms Meier did not know about the promise [Procedural Order

No. 2, p. 63, para. 33]. In fact, taking into account the sudden hit and the severe impact of a

stroke, it can be deemed impossible for Dr Vis to communicate current affairs to Ms Meier.

112 RESPONDENT on the other side was aware of the change in CLAIMANT’S negotiation team

[Respondent’s Exhibit No. 2, p. 38]. During the subsequent negotiations, RESPONDENT could

be expected to ask for the text. Enquiring the text was also reasonable since CLAIMANT’S

website provided all information necessary. A banner showed a telephone number for

questions concerning standard terms [Procedural Order No. 2, p. 63, para. 32]. Nevertheless,

RESPONDENT never contacted CLAIMANT [Procedural Order No. 2, p. 63, para. 33].

113 In consequence, CLAIMANT put RESPONDENT on notice as to the existence of the Standard

Terms 2011, making the Standard Terms 2011 part of CLAIMANT’S offer.

2. Additionally, CLAIMANT Made the Standard Terms 2011 Sufficiently Available

114 Even if a higher standard had to be met in order to include the Standard Terms 2011,

CLAIMANT would have fulfilled it. According to the “making-available-test”, finding mere

notice insufficient, it is also not necessary to physically send the standard terms to the other

party. Instead, it is sufficient to make them otherwise available [BGH, 31 Oct 2001;

Schroeter, in: Schlechtriem/Schwenzer, Art. 14, para. 49]. In its letter to RESPONDENT of

5 July 2011, CLAIMANT referred to its homepage, where the Standard Terms 2011 could be

found [Claimant’s Exhibit No. 5, p. 17, para. 3]. The Standard Terms 2011 were available on

CLAIMANT’S website in Mediterranean from 5 July 2011 at least until the conclusion of the

SLA on 20 July 2011 [Claimant’s Exhibit No. 5, p. 17, para. 3]. Making the Standard Terms

2011 available on the internet was sufficient for their inclusion into CLAIMANT’S offer (a).

Moreover, making the Standard Terms 2011 available in Mediterranean was sufficient (b).

a) Making the Standard Terms 2011 Available on the Internet Was Sufficient

115 A way of making standard terms available is presenting them on the internet [Schroeter, in:

Schlechtriem/Schwenzer, Art. 14, para. 49]. Considering the importance of the internet in


29

everyday trade, it is sufficient to display the link where the standard terms can be downloaded

if the other party has internet access [Eiselen, in: CISG-AC Op. 13, para. 3.5; Gruber, in:

MüKo HGB, Art. 14, para. 32; Stiegele/Halter, p. 169; Karollus 2002, p. 551; Berger, p. 18].

116 CLAIMANT sent RESPONDENT a letter referring to the new Standard Terms available on its

website including the respective link [Claimant’s Exhibit No. 5, p. 17]. The fact that

RESPONDENT already obtained information from the Standard Terms 2011 on CLAIMANT’S

homepage [Procedural Order No. 2, p. 63, para. 33] shows that enquiry of the content

through the internet was manageable for RESPONDENT. Consequently, via presentation on the

internet, CLAIMANT made the Standard Terms 2011 sufficiently available.

b) Making the Standard Terms 2011 Available in Mediterranean Was Sufficient

117 Moreover, the Standard Terms 2011 were made available in a proper language. A party is

made adequately aware of standard terms if they are written in any language sufficiently

known to it [OLG Düsseldorf, 21 Apr 2004; Schroeter, in: Schlechtriem/Schwenzer,

Art. 14, para. 62; Eiselen, in: CISG-AC Op. 13, para. 6.5].

118 Firstly, RESPONDENT is bound by the Standard Terms 2011 because it communicated to

CLAIMANT that it understood Mediterranean. If an assistant signalises knowledge of a certain

language, this knowledge will be ascribed to the parties [OGH, 17 Dec 2003;

OLG Düsseldorf, 21 Apr 2004; Mankowski, in: Ferrari, introduction to Art. 14, para. 42].

During three business meetings leading to the conclusion of the FSA and SLA, an assistant

doctor of Hope Hospital, who spoke and understood Mediterranean, had been present and

communicated with CLAIMANT’S technicians in Mediterranean [Procedural Order No. 2,

p. 63, para. 35]. Thus, CLAIMANT perceived that a person speaking Mediterranean was part of

RESPONDENT’S team for the proton therapy facility deal. CLAIMANT could not foresee that

said assistant would be absent during the period before the conclusion of the SLA. In any

case, it would now rest with RESPONDENT to inform CLAIMANT about the absence of the

person speaking Mediterranean. Consequently, CLAIMANT could reasonably expect

RESPONDENT to sufficiently understand the content of the Standard Terms 2011.

119 Secondly, even if RESPONDENT did not understand Mediterranean, the standard terms were

sufficiently available. In a longstanding and important business relationship it can be expected

from either party to translate the respective standard terms [OGH, 17 Dec 2003; OGH,

31 Aug 2005; OLG Innsbruck, 1 Feb 2005]. A case decided by the Austrian Supreme Court in

2003 may serve as persuasive authority for such obligation [OGH, 17 Dec 2003]. In that case,


30

the Austrian seller wanted to include its German standard terms. The standard terms were

transmitted to the buyer from Hong Kong who was unable to understand German. However,

the court decided that the buyer had a reasonable opportunity to translate the standard terms.

Although there was a person speaking German in the buyer’s negotiation team, the court

based the obligation to translate the standard terms on the important business relationship

between the parties for several years. The court supported its finding by the financial volume

of the parties’ contractual obligations of USD 7 million [OGH, 17 Dec 2003].

120 The facts can be compared to the case at hand. When the Parties concluded the SLA in 2011

they had already been in a contractual relationship for three years. Moreover, the value of the

contractual obligation even adds up to USD 9.5 million [Respondent’s Exhibit No. 3, p. 39].

Further, the third treatment room under the SLA was crucial to optimise RESPONDENT’S cancer

treatment options [Claimant’s Exhibit No. 5, p. 17]. Hence, the contractual relationship

between the Parties and the contract at hand had a considerable economic weight. Thus, the

Arbitral Tribunal is invited to follow the persuasive authority of the Austrian Supreme Court

to find that RESPONDENT could be expected to translate the text of the Standard Terms 2011.

II. RESPONDENT Accepted CLAIMANT’S Offer

121 By signing the SLA, RESPONDENT accepted CLAIMANT’S offer under Art. 18 CISG.

Consequently, the Parties agreed to include the Standard Terms 2011 into the SLA.

B. Section 22 of the Standard Terms 2011 Leads to the Application of the CISG

122 In Section 22, the Standard Terms 2011 provide for a new choice of law. While the old

version provided that “the contract shall be governed by the national law of Mediterraneo as

set out in the statutes of Mediterraneo and developed by its courts” [Claimant’s Exhibit

No. 2, p. 13], the 2011 version merely refers to “the law of Mediterraneo” [Claimant’s

Exhibit No. 9, p. 24]. The Parties agree that the 2000 version excluded the CISG [Answer to

Request for Arbitration, p. 33, para. 16]. RESPONDENT now alleges that despite the changed

clause, the CISG was still excluded [Answer to Request for Arbitration, p. 33, para. 18].

123 However, by virtue of Section 22 of the Standard Terms 2011, Mediterranean law including

the CISG was chosen (I). Further, the circumstances under Art. 8(3) CISG show that the

CISG was not excluded by the Parties (II).


31

I. By Virtue of Section 22 of the Standard Terms 2011, the CISG Is Applicable

124 Unless the parties expressly refer to the domestic sales law of a state, the reference to the law

of a member state generally includes the CISG [BGH, 23 Jul 1997; ICC, 8324/1995;

Schlechtriem/Butler, p. 15, para. 15; Magnus, in: Staudinger, Art. 1, para. 104].

125 Section 22 of the Standard Terms 2011 states that “the contract is governed by the law of

Mediterraneo” [Claimant’s Exhibit No. 9, p. 24]. As Mediterraneo is a member state of the

CISG [Procedural Order No. 1, p. 54, para. 3], the convention is part of its national law. In

fact, even parties choosing the CISG often do so by referring to national law in general [BGH,

23 Jul 1997; Schwenzer/Hachem, in: Schlechtriem/Schwenzer, Art. 6, para. 14].

126 Furthermore, a comparison of the Standard Terms 2000 and 2011 reveals that the CISG was

chosen. The removal of the phrases “national” and “as set out in the statutes of Mediterraneo

and developed by its courts” [Claimant’s Exhibit No. 2, p. 13] indicates that the Parties did no

longer only refer to the domestic sales law of Mediterraneo but to the entire law of this state,

including the CISG. Thus, the CISG is generally applicable to the SLA by virtue of

Art. 1(1)(a) CISG since the Parties have their places of business in Mediterraneo and

Equatoriana, both member states of the CISG.

II. Considering All Circumstances under Art. 8(3) CISG, the CISG Was Not Excluded

127 In particular, RESPONDENT may not argue that Dr Vis’ statements indicated an exclusion of

the CISG. At a meeting on 2 June 2011, RESPONDENT’S negotiation team asked Dr Vis about

the changes in the Standard Terms 2011. He replied that “according to what he understood

the major change was a limitation of the liability” [Procedural Order No. 2, p. 62, para. 31]

and that the changes regarding the new version of the Standard Terms were of minor nature

[Claimant’s Exhibit No. 5, p. 17, para. 3]. However, Dr Vis at the same time made clear that

this was only “according to what he understood” and that he was not a lawyer [Procedural

Order No. 2, p. 61, para. 31], indicating that he was not competent to assess complex changes

in the Standard Terms 2011.

128 Furthermore, the changes neither affected specifications as to performance or price nor to any

other regulations directly concerning the business relation. Hence, as Dr Vis indicated, the

changes indeed hardly affected any relevant matters at that time, especially considering that

the choice of law had not been an object of negotiations beforehand. Therefore, considering

all circumstances under Art. 8(3), the CISG was not excluded by the Parties.


32

C. The SLA Constitutes a Sales Contract under the CISG

129 In the SLA, the Parties agreed on adding a third treatment room to the Proton Therapy

Facility. CLAIMANT was to provide materials and software for the treatment room and train

RESPONDENT’S personnel. The Parties also agreed to cooperate in developing the software

delivered by CLAIMANT [Claimant’s Exhibit No. 6, p. 18]. RESPONDENT alleges that named

obligations qualify as “other services” under Art. 3(2) CISG leading to inapplicability of the

CISG. RESPONDENT further alleges that the purchase of the software rather resembles the

granting of a licence [Procedural Order No. 1, p. 34, para. 19]. However, the SLA should be

considered a sale (I) and is also a contract of sale of goods in terms of Art. 1(1) CISG (II). In

any case, the SLA as a whole would still be a sales contract governed by the CISG (III).

I. The Sales and Licensing Agreement Should Be Considered a Sale

130 Sales contracts in terms of the CISG are contracts directed at exchanging goods against

money [OGH, 21 Jun 2005; HCC, 19 Dec 2006; Schwenzer/Hachem, in:

Schlechtriem/Schwenzer, Art. 1, para. 8; Siehr, in: Honsell, Art. 2, para. 1; Piltz, para. 2.20;

Westermann, in: MüKo BGB, Art. 1, para. 6; Herber/Czerwenka, Art. 1, para. 3]. The

purchase of the equipment undoubtfully constitutes a sale in terms of the CISG.

131 Moreover, a licencing agreement can also classify as a sales contract [cf. Mowbray, p. 122].

Although the manufacturer retains title to the goods, the transaction shall be regarded as a

sales contract if all other aspects resemble a sale [Mowbray, p. 123; Primak, p. 221; Fakes,

p. 580; Larson, p. 465]. In Artt. 41, 42 CISG, a contract in which a buyer purchases software

pursuant to a licence agreement is acknowledged as a sales contract even though the seller

retains some property rights [Mowbray, pp. 122 et seq.; Larson, p. 468].

132 The SLA granted RESPONDENT the right to the permanent use of the software [Claimant’s

Exhibit No. 6, p. 18]. Furthermore, the SLA ensured that no royalties would have to be paid

for the lifetime of the third treatment room of approximately 30 years [Claimant’s Exhibit

No. 6, p. 18]. Thus, the SLA provided for a right to use the software for an indefinite time

against a one-off payment. Moreover, there is no indication in the files that RESPONDENT was

restricted in the use of the software during the lifetime of the third treatment room

[cf. Claimant’s Exhibit No. 6, p. 18]. Thus, the transfer of the software at hand closely

resembles a sale and should be treated accordingly. Therefore, the licence of the software

should be regarded a sales contract under the CISG. Consequently, the SLA as a whole is a

sales contract in terms of the CISG.


33

II. The SLA Also Constitutes a Contract of Sale of Goods in Terms of Art. 1(1) CISG

133 “Goods” in terms of Art. 1(1) CISG cover all moveable objects which form the subject-

matter of commercial sales contracts [Trib. di Padova, 10 Jan 2006; HG Aargau,

10 Mar 2010; Honnold/Flechtner, p. 55; Enderlein/Maskow, Art. 1, para. 2]. The materials

including the magnets delivered by CLAIMANT undisputedly constitute such movable objects.

134 RESPONDENT alleges that providing the software constitutes a service in terms of

Art. 3(2) CISG [Procedural Order No. 1, p. 34, para. 19]. However, all mobile and corporal

objects of a commercial sales contract are considered goods, including computer software

[OGH, 21 Jun 2005; HG Zürich, 17 Feb 2000; OLG Koblenz, 17 Sep 1991; Karollus, p. 21;

cf. Mistelis/Anjanette, in: Kröll/Mistelis/Viscasillas, Art. 3, paras. 23 et seqq.]. Whereas

hardware is commonly seen as goods, there is no legally relevant distinction to be made

between hardware and software [Green/Saidov, p. 165; Lookofsky, 2000, p. 36]. It is built to

process words or bill customers and therefore comparable to a machine. Although invisible

and untouchable, software is physically stored on a tangible medium [Green/Saidov, p. 166].

Thus, all software, including the software necessary to control the treatment room, should be

considered as goods in terms of Art. 1(1) CISG.

135 Even if the Arbitral Tribunal were to assume that not all software is to be considered as

goods, RESPONDENT’S software still classifies as goods because it is standard software.

Software created for the market in general may form the object of a sales contract under the

CISG, since the sale of a mass-produced software does not differ from the sale of tangible

movables [OGH, 21 Jun 2005; OLG Köln, 26 Aug 1994; LG München, 8 Feb 1995; Ferrari,

in: Schlechtriem/Schwenzer (Ger.), Art. 1, para. 38; Diedrich, p. 322].

136 As CLAIMANT needed medical expertise to develop the appropriate software, the first version

of the basic software was developed with regard to RESPONDENT’S needs [Procedural Order

No. 2, p. 61, para. 24]. However, RESPONDENT provided a model for other cancer treatment

centres. CLAIMANT could have received the data and the support from any other cancer

research clinic and had already started developing the software before it cooperated with

RESPONDENT [Procedural Order No. 2, p. 62, para. 28]. Therefore, CLAIMANT did not

develop the software particularly for RESPONDENT but for future customers which is why

Art. 11 SLA was included into the contract [Procedural Order No. 2, p. 61, para. 24]. In fact,

the active scanning technique has been sold within a package largely comparable to two other

proton therapy facilities [Request for Arbitration, p. 7, para. 17]. Hence, the sale of the

control software is to be considered a sale of goods under the CISG.


34

III. Alternatively, the SLA Would Still Be a Sales Contract Governed by the CISG

137 Even if software were not to be considered as goods in the sense of the CISG, the SLA would

still constitute a sales contract governed by the CISG. Pursuant to Art. 3(2) CISG, the

Convention “does not apply to contracts in which the preponderant part consists in the

supply of labour or other services”. In order to determine what “preponderant” means,

regard is to be given to the parties’ intent and the economic value of the contract

[LG München, 16 Nov 2000; Butler, § 2.07; Benicke, in: MüKo HGB, Art. 3, para. 8].

138 Concerning the economic value, it is usually an indication that the CISG is not applicable

under Art. 3(2) CISG if the value of the services significantly exceeds 50% [KG Zug,

25 Feb 1999; Schwenzer/Hachem, in: Schlechtriem/Schwenzer, Art. 3, para. 20; Lüderitz-

Fenge, in: Soergel, Art. 3, para. 4]. However, an economic analysis of the SLA proves to be

unreliable. The value of the service obligations, consisting of 50% software and 10%

personnel, does not represent reliable numbers since they involve considerable guesswork

[cf. Procedural Order No. 2, p. 62, para. 29]. Thus, the Arbitral Tribunal should not only rely

on the economic terms of the SLA. Instead, one must all the more look to the Parties’ intent.

139 Considering the Parties’ intent, the software was not the preponderant part. RESPONDENT

stated that the third treatment room had been purchased to extend the treatment options

[Claimant’s Exhibit No. 4, p. 16, para. 2]. This shows that the SLA was about new

machinery, necessarily run by new software. Considering Art. 2 SLA, the Parties emphasised

that their focus was on the treatment facility. Art. 2 SLA starts with the obligation to sell a

treatment room while the other obligations were only set out as the scope of delivery

[Claimant’s Exhibit No. 6, p. 18]. The feeless use of the software was linked to the lifetime of

the facility [Claimant’s Exhibit No. 6, p. 18] which shows that the software is only a

necessary feature. In result, the Parties’ intent leads to the conclusion that the software was

not the preponderant part. Thus, even if the Arbitral Tribunal were to find that software is not

to be considered as goods, the SLA would still be a contract of sale.

CONCLUSION OF THE THIRD ISSUE

140 The Standard Terms 2011 have been validly included into the SLA because they were part of

the offer RESPONDENT accepted. The choice of law clause in Section 22 of the Standard

Terms 2011 leads to the application of the CISG. Moreover, pursuant to Art. 1(1)(a) CISG,

the CISG is applicable to the SLA as it constitutes a contract of sale of goods.


35

REQUEST FOR RELIEF

For the above reasons, Counsel for CLAIMANT respectfully requests the Arbitral Tribunal to

find that

(1) the Arbitral Tribunal has jurisdiction to deal with the payment claims raised by

CLAIMANT under the FSA and the SLA;

(2) the Arbitral Tribunal has jurisdiction to hear both claims in a single arbitration and

that both claims shall be heard in a single arbitration;

(3) the CISG governs the claims arising under the SLA.


XL

CERTIFICATE

Freiburg im Breisgau, 12 December 2013

We hereby confirm that this Memorandum was written only by the persons whose names are

listed below and who signed this certificate.

(signed)

Tobias Geser

(signed)

Nikita Grätsch

(signed)

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Victoria Oltmanns

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Franziska Schaible

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