Republic of the Philippines

REGIONAL TRIAL COURTBRANCH _____, MANILA

PEOPLE OF THE PHILIPPINES

,XV-07-INQ-12A-00358 Plaintiff,

-versus- CRIM. CASE NO_____

JUAN DELA CRUZ y REYESViolation of SEC.5 and 11,@ JONJONRA 9165 794 HAMABAR ST. TONDO, MANILA(UNDER ARREST)

Accused,

x----------------------------------------------------x

INFORMATION

The Arbitration Tribunal lacks jurisdiction over Global Minerals because of the following reasons:I.The Counterclaim is unconscionable and unreasonable; II.Global Minerals is a non-signatory to the Arbitration Contract;III.The Doctrine of Companies is inapplicable to the case; andIV.There is an absence of fraud and agency. 1.The Counterclaim is unconscionable and unreasonable.The request to join Global Minerals as a party to the Arbitration must fail since there are no grounds to support the counterclaim raised by the Respondent. At the outset, there was never a loss on the part of Global Minerals given that Coltan remains under its ownership and possession. Neither has it deteriorate nor loss it marketability. The alleged entitlement to damages is in contrast to settled elements of a valid claim for loss of profit under New York Law[footnoteRef:1]. First, the indemnities claimed were not caused by the alleged breach of the purchase contract. The loss was due to a lawful order granted by the Arbitral Tribunal whom, as previously discussed, has valid authority to grant the Interim Relief. Second, the claim is also not proven with reasonable certainty as the alleged loss of profit is merely based on the supposed improvement in the marketability of Coltan. Even the effect of the developing situations in Xanadu, which as claimed by Respondent, would result to the decrease of the marketable price of the Coltan is purely speculative and self-serving[footnoteRef:2]. Still Assuming Arguendo to be true, the alleged development in Xanadu is beyond the control and fault of the Claimant, the parent company as well as the Emergency Arbitrator. Lastly, there were no previous stipulations between the parties that damages from loss of profit may be claimed[footnoteRef:3]. [1: International Commercial Arbitration in New York edited by James H. Carter, John Fellas citing Tom Doherty Assocs, Inc. v Saban Enter., 60 F 3.d 27,38 (2d Cir.1995) 306-307] [2: DamageClaim No. 38] [3: Ibid. Page ]

Consequently, the RESPONDENT cannot hold the CLAIMANT or Global Minerals liable for profit which was never realized. The amount asserted is unconscionable, speculative and without basis.Similarly, the joinder against Global Minerals is unnecessary for the reason that Vulcan LTD has sufficient credit to cover the Respondents claim in the event of a successful litigation. Vulcan has a line of credit amounting to USD 5 million with a bank in Equatoriana guaranteed by their parent company[footnoteRef:4]. As defined, credit line is an arrangement between a financial institution, usually a bank, and a customer that establishes a maximum loan balance that the bank will permit the borrower to maintain[footnoteRef:5]. As a result, the borrower, at any time, can draw the line of credit at any time to whatever purpose as long as the debtor does not exceed the maximum set in the agreement[footnoteRef:6]. Thus the joinder is prematurely filed since the insolvency of the CLAIMANT which is sought to be prevented is nonexistent. [4: Proclamation Order No. 2, No 9] [5: http://www.investopedia.com/terms/l/lineofcredit.asp] [6: Ibid]

2.Non-Signatory.As oppose to the Respondents claim, Global Minerals is beyond the jurisdiction of the Arbitral tribunal because it did not gave its consent to the Arbitration Contract between Vulcan LTD and Mediterraneo Mining SOE.Global Minerals is a non-signatory to the Arbitration Contract, perfected on 28.03.2014. The Contract expressly provided for only two parties, as mentioned in Article 1 therein;Article 1: Contracting Parties;

Seller: Mediterraneo Mining SOE, 5-6 Mineral Street, Capital City, MediterraneoBuyer: Vulcan Coltan Ltd, 21 Magma Street, Oceanside , Equatoriana[footnoteRef:7] [7: Exhibit C 1]

The Respondents position runs violative of the settled principle of privity of contracts, which maintains contracts give rights and imposes liabilities on the concerned parties. Only they are given the right to sue each other according to the contract terms[footnoteRef:8]. The truth of the matter is Global Minerals merely signed the purchase contract as an endorser to which it bound itself to guarantee the fulfillment of the Claimants obligation to pay. In fact, if Global Minerals intended to be bound by the contract it would have easily done so.Comment by keilabs: Baka lang maganda na lagay to, to emphasize your point [8: Black Law Dictionary http://thelawdictionary.org/privity-of-contract/]

In the case of Amalgamated Clothing Workers of America v. Ironall Factories Co. it was stated that Arbitration is a matter of contract and, in spite of the strong policy in its favor, a party cannot be compelled to arbitrate any dispute which he has not agreed to submit.[footnoteRef:9] [9: Amalgamated Clothing Workers of America v. Ironall Factories Co. (C.A. 6, 1967), 386 F.2d 586,]

Hence, the cornerstone of the arbitration process[footnoteRef:10] lies on the mutual consent of the parties therein who stipulated such agreement. Consequently the Arbitration agreement cannot be extended to the parties of the principal contract who did not gave their consent to be bound by the arbitration. [10: VARADY TIBOR ET AL., INTERNATIONAL COMMERCIAL ARBITRATION: A TRANSNATIONAL PERSPECTIVE, (Thomson/West 2006)]

Consistent with this is the Principle of Separability which denotes that Arbitration clauses included in a contract are to be treated as independent or separate contracts[footnoteRef:11]. [11: UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration]

According to the UNCITRAL Model Law on International Commercial Arbitration;Article 16. Competence of arbitral tribunal to rule on its jurisdiction(1)The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause[footnoteRef:12]. [12: Official Records of the General Assembly, Fortieth Session, Supplement No. 17 (A/40/17), annex I; United Nations publication, Sales No. E.95.V.18]

According to Blacks Law dictionary a contract of guarantee means o undertake collaterally to answer for the payment of another's debtor the performance of another's duty, liability, or obligation. It is an independent contract to the Arbitration Agreement[footnoteRef:13]. In Hanseat OLG Hamburg, the court ruled that An arbitration agreement is effective only between the parties and their successors, however, does not bind a guarantor debt transferee and guarantors, as their guilt is independently beside the principal debt and private legal fate has [footnoteRef:14]. Same ruling was applied in Grundstad v. Ritt, in which that a non-signatory guarantor to an agreement containing the arbitration provision is not bound by that provision[footnoteRef:15]. [13: http://thelawdictionary.org/guaranty/] [14: Hanseatisches Oberlandesgericht Hamburg, Germany, 6 Sch 04/01, 8 November 2001, available on the Internet at HYPERLINK "http://www.dis-arb.de/de/47/datenbanken/rspr/hanseat-olg-hamburg-az-6-sch-04-01-datum-2001-11-08-id145" http://www.dis-arb.de/de/47/datenbanken/rspr/hanseat-olg-hamburg-az-6-sch-04-01-datum-2001-11-08-id145. Zller / Geimer, Code of Civil Procedure, 22 ed., 1029 para. 60] [15: Grundstad v. Ritt, 106 F.3d 201 (7th Cir. 1997)]

As in this case, Global Minerals only intended to be a mere guarantor and not a party to the case. It was established, that even from the negotiations, Global Minerals was consistent in insisting that Vulcan would become the sole party to the contract[footnoteRef:16]. Nonetheless, as the parent company, Global Minerals undertook to facilitate the accomplishment of the Respondents demands. Accordingly, Global Minerals opted to secure the Claimants payment by arranging a letter of credit with its standard bank, the RST Trade Bank Ltd[footnoteRef:17] as response to the Respondents request that Global Minerals guarantee the fulfillment of the payment obligations [footnoteRef:18] .The RESPONDENT was well aware that Global Minerals, from its deeds and express declarations, only elected to act as a mere endorser or guarantor. [16: Proclamation Order No. 2, No 7] [17: Proclamation Order No. 2, No 17] [18: Stament of Facts, Respondent, No 7]

Conversely, Global Minerals cannot be deemed to be directly involved in the negotiations and performance of the contract. From the details of the case it was shown that as the parent company, Global Minerals merely introduced the Claimant to the market. Global Minerals assisted the negotiations but did not engage itself as a direct party. This can be inferred from the separate and distinct obligations which were tasked to the Subsidiary and Parent Company- Vulcan, to pay the obligation and Global to secure its line of credit. In light of the newness of CLAIMANT to the market, it is near impossible to enter into a contract without additional securities[footnoteRef:20]. There is also no indication that the parent company is a third party beneficiary since the Claimant enjoys its autonomy in its dealings. [20: Reply to Counterclaim, Statement of Facts, No 5.]