PREFACE The Legal Research and Advisory Club (LRAC) exerts great effort in building an environment basing on three primary aspects: Researching – Practicing – Critical thinking through many activities which are suitable for students’ aptitude. To accomplish those objectives, LRAC has been nurturing ambitious projects for students who are passionate about law as a profession. Being students ourselves, we understand what students, especially those majoring in law, want and need. They must hone their research and advocacy skills. For such purposes, “UEL Moot Court Competition” (UEL MCC) and the “Students & the Law UEL MCC Edition” journal were created. UEL MCC is a Moot Court competition at the University of Economics and Law (UEL), Ho Chi Minh city National University. The competition is focused on the United Nations Convention on Contracts for the International Sale of Goods (CISG) and private international law.The “Students & the Law UEL MCC 2018 Edition” is a compilation of materials for the competition. This special edition is published with hope that future mooters and interested students will easily find the relevant information and materials for their further studies and research. Through efforts, we always wish to contribute to motivate students to develop essential skills for legal researching and advising. Notwithstanding, knowledge is limitless while what we know is limited, so the journal may contain errors or mishaps. We are willing to receive your feedback for further better publications. We send special thanks all of the students who have continuously supported UEL MCC, “Students & the Law UEL MCC Edition” journal as well as LRAC. The Legal Research & Advisory Club
Students & the Law
Advisors Trinh Huyen Trang
K15502
Tran Ngoc Phuong Minh K15502
UEL Moot Court Competition 2018 Edition
Table of contents
Editor in chief Phan Thi Thuy Trang
K17502C
1. OVERVIEW What is moot court and why should law students join it ?
Editorial board
1
Le Thi Phuong Thao
K17503
Nguyen Thuy Van
K18501
2. EVENTS AROUND THE UEL MOOT COURT COMPETITION 2018 (EVENTS)
Ho Thi Thanh Tam
K18502
Timeline
Nguyen Trang Anh
K18502C
Do Le Linh Giang
K18502C
Tran Hieu Ngan
K18502C
Sponsors
7
Advisors
8
Design
3
The Mooters
4
The Judges
5
3. ACADEMIC CORNER
Ho Thi Thanh Tam
K18502
Tran Hieu Ngan
K18502C
Moot Problem
11
Best Memoranda • Memorandum for the Claimant
22
• Memorandum for the Respondent
27
4. INTERVIEW Interview the Best Oralist of UEL MCC 2018
34
5. SHARINGS
From Dreams to Victory
36
The Journey to Break Borders
37
OVERVIEW
WHAT IS MOOT COURT AND WHY SHOULD LAW STUDENTS JOIN IT? Nguyen Trang Anh, Student K18502C, University of Economics and Law, Viet Nam National University - HCMC As we all know, ‘moot court’ is not a strange concept for students studying law. You may have heard from your seniors once or twice or read about this concept in your research in law schools. So, have you ever wondered that what is moot court exactly and why should law students take part in it? 1. What is moot court? The word “moot” originates from a scandinavian word meaning simply a meeting. The meetings concerned were assemblies of the members of a community for legislative or judicial purposes. The word was given its present meaning in the English Inns of Court in the sixteenth century where law students would present their legal arguments on a given set of factual circumstances (often resembling real cases) before one or several senior lawyers or judges.1
to protect their opinions about the problem. In the oral argument, judges are free to ask questions at any time and students must respond accordingly. The procedure imitates that followed in real courts: the judge enters, the mooters and the judge bow to each other, the clerk announces the matter, the mooters give their appearances and are then called on in turn to present their submissions, the judge asks questions of the mooters, the court adjourns, and the judge then returns to deliver a brief judgment and some feedback.3
Moot court is said to first appear since the late 1700s. It is one of law school’s activities in which students have the chance to prepare and argue cases in front of judges. The judges are usually law professors and attorneys from the community, but sometimes they’re actually members of the judiciary.2 Usually, students participating in moot court will select the cases and sides beforehand and are given a set amount of time to make a preparation for the eventual trial. A moot court competition is a simulation of a court hearing, in which participants will have to analyse a given problem, research the relevant law, write a memorandum, and present oral argument. Moot problems are typically revolve around unsettled law or areas which have been subject to recent developments. A moot court usually includes two grounds of appeal, one for the Claimant and one for the Respondent. They will argue in front of the judges 1 2 3 4
You may be confused between mooting and other kinds of oral presentation such as public speaking or debating,etc. Although it shares some common elements with these activities, they are not the same. It’s not too much to say that moot court “is a specialised application of the art of persuasive advocacy.”4
European Law Moot Court, ‘History of Moot Court’. ThoughtCo., ‘What is Moot Court?’ University of Oxford, ‘Mooting: What is it and why take part?’ University of Oxford, ‘Mooting: What is it and why take part?
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2. Why should law students join it? From the advantages mentioned above, law students should take part in a moot court at least once. Here are some reasons why: Firstly, moot court enables students to think deeply and improve personal legal skills. By analysing moot problems, researching law, learning how to write a submission and finding a way to persuade the judges, law students will have the chance to enhance their skills in advocacy. Secondly, moot court also gives the students an oppoturnity to make friends and acquire knowledge from their peers. When working with other students who are in the same major with us, we will learn many helpful things and gain experiences for ourselves. Last but not least, students participating in moot court often make a good impression on prospective employers. Because when participating in moot court, you have already spent many hours to perfect the analytical, do research and improve writting skills - this is all what practicing attorneys must have. This means the employers can spend less time training you and give you more time you to practice law. 3. Conclusion Thus, it can be seen that participating in a moot court is an extremely rewarding activity that every law student should attend at least once during his or her study period. Moot brings you not only professional knowledge but also the necessary skills for your future such as a good overview and maturing legal skills.
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References: 1. ThoughtCo., ‘What is moot court?’: https://www.thoughtco.com/what-is-mootcourt-2154874 2. European Law Moot Court, ‘History of Moot Court’: https://www.europeanlawmootcourt.eu/History 3. University of Oxford, ‘Mooting: What is it and why take part?’: https://www.law.ox.ac.uk/current-students/ mooting-oxford/mooting-what-it-and-why-take-part
EVENTS
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SPONSORS LE NGUYEN LAW FIRM Le Nguyen Law Firm (formerly Le Nguyen Law Office) is one of the most prestigious law firms in Vietnam formed by the dedication of Lawyer Le Thanh Kinh and his colleagues. Over 15 years of operation, Le Nguyen has always been a familiar name trusted by customers in the field of providing legal services. Le Nguyen Law Firm is proud to be a place where lawyers and consultants are trained in formal and basic training in domestic and foreign law, fluent in foreign languages, rich in legal consultancy experience. and resolving disputes in Vietnamese and international courts and arbitration. Le Nguyen is one of the leading law firms in Vietnam, advising domestic and foreign investors with a team of skilled and devoted lawyers. The advantage of Le Nguyen is to combine the practical practices of law into the business activities of the customers, focusing on handling professional tasks in a legal domain, comprehensively accessing issues / cases to bring maximum benefits to customers through a cooperative, reliable and effective business culture. Le Nguyen provides the following legal services: - Advice on domestic and foreign commercial, investment and M&A transactions; - Business consultancy work on Commercial Law, Land Law, Labor Law, Intellectual Property Law, Tax Law, Securities, Banking and Insurance; - Dispute resolutiontion work in court and arbitration proceedings. On September 27, 2017, Toplist announced the list of “Top 8 most prestigious law firms in the city. Ho Chi Minh“, including the presence of Le Nguyen Law Firm For a better understanding of Le Nguyen Law Firm, please visit their website: www.lenguyenlawoffice.com UNISEP English Center UNISEP English Center - specializes in TOEIC exam preparation and English Communication courses. With special training programs and teaching methods, UNISEP helps learners to develop English skills the most effectively, creates more confidence in communication, advance Vietnamese people’s English level as useful tool in career and life to make dreams come true.
FACEBOOK: https://www.facebook.com/anhngusep/ WEBSITE : http://unisep.edu.vn/ ADDRESS: 71, D5 Street, Binh Thanh District, HCMC 3, 4 Street, Thu Duc District, HCMC Tel: 088 8467786 The Organizing Committee is very thankful to our sponsors and hopes that the competition shall continue to receive your support. We would like to wish our sponsors will develop and gain more success in the future. Students and the Law (UEL MCC 2018 Edition) | 7
EVENTS
ADVISORS AMERICAN LAW CENTER (ALC) - UNIVERSITY OF ECONOMICS AND LAW 1. General Introduction 1.1. Establishment, location: - Established in 7th December 2016; - Located in the room A.104, University of Economics and Law (UEL), Vietnam National University HCMC. 1.2. Reasons for establishment - Practically supporting for Law researching and teaching in UEL, making a difference in the school’s training method; - Providing advices for companies when they want to access US market; - Strengthening the cooperation between UEL and Law- teaching schools in US; - Calling for sponsoring document sources for the teachers. 1.3. Organizational structure: All activities are run and promoted by the researchers and lectures in UEL, specially with the participation of professors from Robert H.McKinney school, and Ms Pham Huyen, Texas A&M University School of Law. 2. Research orientation: ALC is oriented to operate based on 3 main segments corresponding to 3 development period. - First period: Access and build databases and information about the US legal system; - Second period: Research (carry out projects on research and organization of scientific conferences in Vietnam and abroad); - Third period: Spread ALC’s activities to people outside the school. 3. Summer school ALC is providing high quality service about US Law by opening Summer school courses. 3.1. Objects: People who care about the topics provided by ALC, or students and graduate students in Vietnam and abroad. 3.2. Time of courses: Summer School is expected to be opened in the first two weeks of August every year. 4. Contact: Location: University of Economics and Law, Quarter 3, Linh Xuan Ward, Thu Duc District, Ho Chi Minh city, Vietnam Phone: (028) 37244 514 – Ext: 6525 8 | Practice Makes Perfect
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ADVISORS DELOITTE VIETNAM 1. Overview Deloitte Touche Tohmatsu Limited is well-known as one of the four largest auditing and consulting firms in the world. Established in 1845 in London, England, Deloitte has gone a long way to over 170 years and continues to affirm its position and reputation in the industry with reliable quality of service, creates the reputation as well as the long-term relationship with customers who are the famous corporations in the world. Deloitte Vietnam is a member of Deloitte Touche Tohmatsu, the largest auditing company in Vietnam. With the help and exchange of technology and human resources with other Deloitte members around the world, Deloitte Vietnam always affirms its position as one of the leading companies in Vietnam’s independent audit. Deloitte Vietnam is headquartered in Hanoi and has a branch in Ho Chi Minh City with more than 700 employees. 2. Main services Besides Auditing services, Deloitte also provides their clients with other high quality services such as Tax Consulting; Business Consulting; Financial Advisory; Risk Advisory; Legal Advisory. In Vietnam, Deloitte mainly provides services to joint stock companies and national corporations but is expanding into the FDI sector. 3. Awards and achievements of Deloitte Vietnam - Golden Dragon Award presented by the Vietnam Economic Times and the Foreign Investment Department of the Ministry of Planning and Investment at the “Golden Dragon Enterprise and Strong Brands of Vietnam”. - Top 10 enterprises in sustainable growth in Vietnam - sector of trade and service. - Awarded “HR Asia Best Companies to Work for in Asia 2018” by HR Asia magazine, Asia’s most authoritative publication for HR professionals. 4. Other activities for university students - The annual “Breaking The Limit” recruitment event to select the best students to become part of the Deloitte family. - “One Step Ahead” training program for second and third year students to get closer to those who have passion in accounting and auditing in Hanoi and Ho Chi Minh City. corporate culture, training skills to give you an orientation to the environment and people at Deloitte. - “Deloitte Passport” program is for students from the 2nd to 4th year of economics, finance and banking, accounting, auditing, law; the courses include intensive training sessions, important skill training sessions, and internships designed to meet new standards. By completing the program, students will be offered the opportunity to work at Deloitte Vietnam. Students and the Law (UEL MCC 2018 Edition) | 9
Over the years, Deloitte took the motto “Making an impact” as its core value. With this motto, Deloitte always wants its employees to make an impact on the world through their work, small changes that will make the difference. Through these activities, Deloitte Vietnam wishes to affirm its mission in pioneering the development of new services, providing comprehensive financial solutions with the goal of bringing real value to the community. contributing to the goal of building a sustainable Vietnamese economy. CISGVN CISGVN was formed in 2010, originated from an effort by VCCI’s International Trade Policy Advisory Committee to lobby the Vietnamese government to join CISG in order to promote Vietnam’s integration into international trade law. CISGVN successfully organized a series of seminars on “Interpretation and application of CISG in the international contract for the sales of goods. In 2016, CISGVN published the 101 Q&A on the United Nations Convention on Contracts for the International Sales of Goods (CISG) which immensely help lawyers and businessmen understand the Convention. Right now, CISGVN is focusing on their new project which is compiling and reviewing 101 case law of CISG. The project will surely help with the implementation of CISG in Vietnam.
The Organizing Committee is very thankful to our advisors and hopes that the competition shall continue to receive your support. We would like to wish our advisors will develop and gain more success in the future.
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ACADEMIC CORNER
MOOT PROBLEM ACKNOWLEDGEMENT This Moot Problem is made in reference to the Problem of the 24th Willem C.Vis International Commercial Arbitration Moot (2017).
Taibao v. Solar Spectrum Request for Arbitration Pursuant to Article 7.1 VIAC Arbitration Rules Statement of Facts 1. Taibao Ltd. (“Taibao”), the CLAIMANT, is a manufacturer of solar system equipment specializing in solar panels, incorporated in Chinorina. 2. Solar Spectrum Inc. (“Solar”), the RESPONDENT, is a supplier of solar systems for household, incorporated in Omericano. Until 2014, CLAIMANT and RESPONDENT had a long trading relationship for nearly five years. 3. In 2014, the CLAIMANT developed a new solar panel and shared the data with RESPONDENT who also developed the next generation of solar system SS75. The panel were to be installed into the solar system which converts sunlight into electricity. The improved solar panel, which was call NP10, was supposed to absorb more photons (sunlight) for RESPONDENT’s new SS75 solar system. 4. The solar system was to be developed for use in a developing project of Rumsay Property that provided 1500 units of housing in Verona. Rumsay Property is a major developing company who focused on the eco-environment-friendly housing in all its projects. The contract with Rumsay Property is of importance to RESPONDENT since it was the first time it could supply the solar system to a developing project rather than a household individually. 5. RESPONDENT agreed to buy at least 100,000 of solar panels in the first year. At the time the parties negotiated and entered into the contract, the final development and production cost for the new solar panel were not yet fixed. However, RESPONDENT needed a price to send an offer for the solar system
to Rumsay Property. Therefore, RESPONDENT required CLAIMANT to fix a maximum price to be paid (file note Ms. May Ling, Head of Research and Developement, 23 Jan 2014, Claimant’s Exhibit C 1). The parties agreed on a flexible price structure for the solar panel with the acknowledgment that both parties would generate a profit from the transaction and share the risks, and RESPONDENT was able to negotiate with Rumsay Property by offering a largely fixed price. RESPONDENT also insisted on a price quoted in USD although the manufacturing cost would be incurred in Chinorinian Dollar (CHD). 6. In the Sales Contract of 1 March 2014 (Claimant’s Exhibit C 2), RESPONDENT ordered 10,000 solar panel, model NP10, from CLAIMANT for the price per panel between USD 162.75 to USD 207.05. CLAIMANT estimated the price range in Section 4 of the Sales Contract by adding a certain profit to the possible cost per panel. The profit was to increase with the decrease of the costs. For instances, a production cost of USD 155 per panel will be added with the profit of 5%, but the profit component would be fallen to 0% when the cost per unit was USD 207.05 or higher. USD 207.05 is the highest unit price that RESPONDENT is obliged to pay under ordinary circumstances. CLAIMANT agreed to bear the risk when the manufacturing cost would be higher than the maximum price, subject to the ordinary hardship conditions. 7. CLAIMANT relying on the experience with the previous models of solar panel estimated that the manufacturing cost would be around CHD 1,122 taking into consideration of the exchange rate
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fluctuating between USD 1 = CHD 6.6 and USD 1 = CHD 6.8. 8. At the time of negotiation, RESPONDENT revealed that it might need 2000 grid-tied solar inverters which turned direct current (DC) electricity produced by solar panels into alternating current (AC) and allowed this AC electricity to be sent back to the grid if the energy is produced more than it was used. RESPONDENT tried to purchase the inverters of this kind from other manufacturers. However, after the Sales Contract was concluded, it turned out that those inverters were not compatible with the solar panels. RESPONDENT would have to buy the inverters from CLAIMANT, and an addendum was added into the contract and signed by both parties. The parties agreed that the inverters would be priced on a cost basis, but a fixed exchange rate is determined rather the rule applicable to the price calculation for the solar panels. 9. CLAIMANT delivered the solar panels and inverters on 25 May 2015 to RESPONDENT as per contract and attached invoices for both goods. RESPONDENT took the delivery and after inspection confirmed that the solar panels, model NP10 and the inverters were in conformity with the contract (Claimant’s Exhibit C 3). 10. Unfortunately, the CLAIMANT’s accounting department wrongfully provided for USD 18,525,000 in the invoice instead of USD 20,305,000 which was due under Section 4 of the Sales Contract. It resulted from the fact that Mr. Xi, the person responsible for creating the invoice, had first prepared the invoice for the inverters using the fixed exchange rate and applied this rate to the invoice for the solar systems, overlooking that the price calculation for the solar panels used the current exchange rate (Claimant’s Exhibit C 4). 11. RESPONDENT tried to take advantage of this obvious mistake by immediately paid the amount invoiced and informed the CLAIMANT about the payment. On 26 May 2015, Mr. James Brown, RESPONDENT’s Chief Financial Officer, emailed Ms. Heidi Fang, the COO of CLAIMANT, who was responsible for the project of NP10, that he had effected USD 18,525,000 and USD 1,712,000 to the CLAIMANT’s account at the Chinorina National Bank (Claimant’s Exhibit C 3) for the solar panels and the inverters respectively.
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12. Ms. Fang contacted Mr. Brown right after receiving the email to clarify the mistake and to point out that, on the ground of the formula agreed upon in the contract, the manufacturing cost per panel was USD 180, therefore, the overall purchase price for 100,000 solar panels was USD 20,305,000 (Claimant’s Exhibit C 5). RESPONDENT in verifying the price and making the transfer had applied a wrong exchange rate. It is clear that the manufacturing cost incurred was CHD 1,206 per solar panel. On the basis of the correct exchange rate at athe time of manufacturing, the cost of the solar panels in USD is 201 and not 180 as assumed by RESPONDENT on the basis of the wrong exchange rate used also in CLAIMANT’s invoice. 13. On 10 June 2015, the amount of USD 18,525,000 was credited to the CLAIMANT’s account at the Chinorina National Bank. On 15 June 2015, Ms. Fang notified Mr. Brown by email that CLAIMANT was demanding the outstanding payment of USD 1,780,000 by 10 July 2015 (Claimant’s Exhibit C 6). 14. In the reply of 16 June 2015, Mr. Brown denied to pay the additional purchase price (Claimant’s Exhibit C 7). He restated RESPONDENT’s view that the cost per panel was only USD 180 insisting again on the application of the fixed exchange rate set out in the addendum to the Sales Contract, for converting the cost incurred by CLAIMANT in CHD into USD. Nomination of Arbitrator 15. In accordance with the arbitration clause in the contract and Article 7.2 (e) of the VIAC Arbitration Rules, we appoint Mr. Mike Lee. Legal Evaluation Jurisdiction 16. The Arbitration Tribunal has jurisdiction over the dispute by virtue of the arbitration agreement contained in Section 21 of the contract between CLAIMANT and RESPONDENT (Claimant’s Exhibit C 2). The clause provides as follows: Section 21: Dispute Resolution All disputes arising out or in connection with this Agreement shall be settled amicably and in good faith between the parties. If no agreement can be reached, each party has the right to initiate arbitration proceedings within 60 days after the failure of the negotiation to have the dispute decided by an arbitrator. The arbitration shall be conducted under the Rules of the Vietnam
International Arbitration Center at the Vietnam Chamber of Commerce and Industry (“VIAC”) and in line with international arbitration practice. The Arbitration Tribunal shall consist of three arbitrators, appointed in accordance with the Rules of VIAC. The President of the Arbitration Tribunal shall be appointed by the President of VIAC. The seat of arbitration shall be in Ho Chi Minh City, Vietnam. The arbitration proceedings shall be conducted in English. Merits 17. The CLAIMANT is entitled to the full payment of the purchase price in accordance with Article 62, 53, 54 CISG. 18. The Parties had agreed on a specific method to calculate. The purchase price as set out in Section 4 of the Sales Contract of 1 March 2014 (Claimant’s Exhibit C 2). In the solar system industry, risk sharing is normal. In the present case, however, RESPONDENT insisted on fixing a maximum price at a time when relevant factors for determining the price, particularly the costs incurred for the manufacture per panel could only be estimated. Consequently, the parties agreed on a price calculating formula which fulfilled three objectives. First, it ensured that RESPONDENT – in the absence of unforeseen extraordinary circumstances – would not have to pay more than USD 207.05 per panel. Second, it ensured that below that price, CLAIMANT would at least cover its costs and make some profit. Third, it contained an incentive for the CLAIMANT to keep the cost as low as possible, as its profit would increase with the decreasing of the costs. A comparable provision had
already used by the parties during their earlier cooperation of long trading relationship. 19. To attain the second objective of the price calculation, it is necessary that the actual costs are reimbursed as they are incurred. Thus, if such costs are to be converted into USD, the current must be applied. By contrast, RESPONDENT, trying to take advantage of the obvious calculation mistake in the first invoice, has based its determination of the price on the wrong and not tenable assumption that the Parties has agreed on a fixed exchange rate of USD 1 = CHD 6.7. Such a fixed exchange rate was, however, only agreed for the inverters where the influence of exchange rate was limited due to the much lower amount. It does not apply for the solar panels. CLAIMANT is paying all its employees in CHD and would not have agreed to be burdened with the full exchange rate risk for the full contract. Thus, the fixed exchange rate is limited to the items covered by the addendum. In the meantime, the USD has fallen in comparison to the CHD and the present exchange rate is USD 1 = CHD 6. 20. Article 53, 54 CISG entitle the seller, ie the CLAIMANT, to the full purchase price. The buyer has to bear any costs associated with payment of the purchase price. Statement of Relief sought: On the basis of the above, CLAIMANT requests the Arbitral Tribunal to: 1. Order RESPONDENT to pay the still outstanding purchase price in the amount of USD 1,780,000. 2. Order RESPONDENT to bear the cost of arbitration.
CLAIMANT’s EXHIBIT C1-C7 CLAIMANT’s EXHIBIT C 1 23 Jan 2014 Summary Notes Meeting today with Celia West, Development Manager, Solar Spectrum Inc., to discuss details about the production of our new solar panel NP10 for inclusion into Solar new SS75 solar system. The solar panels need grid-tied solar inverters to turn direct current (DC) electricity produced by solar panels into alternating current (AC) and allowed this AC electricity to be sent back to the grid if the energy is produced
more than it was used. Agreed on the following basic principles for our cooperation: Intellectual Properties rights in final product NP10 remain with us. Both company will regularly meet and transfer necessary data. Once a week meeting via Skype – both production teams. West insists that maximum price (subject to
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adjustment only in extraordinary unforeseeable circumstances) has to be fixed already in contract to allow Solar to make a binding offer including a price for its solar systems to Rumsay Property although the final production costs for the solar panels are not yet known. To make determination of maximum price possible flexible price structure as for the purchase of the NP10 must be agreed on a “cost + basis” with risk sharing elements. Verify whether contractual provisions in one of the previous contracts can be used for our contract. Solar insisted on pricing in USD. Our expenses in CHD will have to be converted but no major risk involved. Exchange rate should be around 6.6 – 6.8 and has been very stable over the last years. CLAIMANT’s EXHIBIT C 2 SALES CONTRACT Whereas the increase use of solar energy and the promotion of eco-environment-friendly energy are generally acknowledged objectives of all solar systems’ producers. Whereas Rumsay Property requires a solar system for a developing project of 1500 units of housing in Verona. Whereas Solar as one of the leading manufacturers of solar system for household has decided to produce the solar system mentioned above and to offer it to Rumsay Property for incorporation into the housing project. Whereas Taibao has recently developed the new solar panel NP10 for solar system, which is presently the most advanced solar panel as far as consumption is concerned. Whereas both parties agree that a grid-tied solar inverters should be incorporated into the new solar system. Whereas both parties have a joint interest in sharing the data for incorporation into the next generation of solar system SS75.
specification set out in Annex I of this contract. Section 1 PARTIES Seller: Taibao Ltd., 175 Haishang Street, Riverside Chinorina, telephone (0) 211-8734, fax (0) 211-6784, email info@taibaoltd.chi, represented by Meng Tingxao, Chief Executive of Taibao Ltd. And Buyer: Solar Spectrum Inc., 45 W Monroe Avenue, Verona, Omericano, telephone (0) 142- 6138, fax (0) 146-5412, email info@solar.spectrum.ome, represented by Henry Allerton, Chief Executive of Solar Spectrum Inc. Collectively “the Parties”. Section 2 BACKGROUND 1. The Parties agree that the Seller new solar panel NP10 shall be included into the Buyer’s new solar system SS75, and the solar system is to be used for the developing project of Rumsay Property that provided 1500 units of housing in Verona. 2.
The SELLER undertakes, as part of its business, the manufacturing and delivery of the newly developed solar panel NP10. 3. The BUYER undertakes to purchase 10,000 solar panels under this Agreement, expressing at the same time the firm intention to purchase 90,000 further units in this first year. Section 3 DELIVERY 1. The SELLER agrees to produce and deliver 10,000 NP10 solar panel by 25 May 2015 [...] Section 4 PURCHASE PRICE 1. The purchase price is calculated on a cost-plus basis according to the following formula: The minimum price per solar panel irrespective of production costs is USD 162.75 while the maximum price to be charged per fan blade is USD 207.05.
Whereas Taibao will then produce the newly developed solar panel and sell it at the agreed price to Solar. Whereas Solar is planning to purchase at least 100,000 of solar panels within the first year in accordance with the provisions below or comparable provisions provided that the NP10 complies with the
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Should the production costs per solar panel exceed
USD 207.05 due to extraordinary unforeseeable circumstances and result in unbearable hardship for the Seller, the Parties will enter into good faith negotiations to determine a price which is financially acceptable to both parties.
Other terms as per main Agreement. The exchange rate for the agreement is fixed to USD 1 = CHD 6.7. CLAIMANT’s EXHIBIT C 3 Solar Spectrum Inc.
2. The price is due upon delivery of the solar panels and payment should be confirmed by the BUYER as soon as possible.
Mon 26/05/2015 09:28 a.m.
3. The BUYER will deposit the purchase price in full into the SELLER’s account at the Chinorina National Bank, River Bank 1, Chinorina, IBAN 1201 3354 6111; SWIFT PQREX2. The bank charges for the transfer of the amount are to be borne by the BUYER.
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[…] Section 20 CHOICE OF LAW This Agreement is governed by the UN Convention on the International Sale of Goods (“CISG”). For issues not dealt with by the CISG the UNIDROIT Principles are applicable. Section 21 DISPUTE RESOLUTION All disputes arising out or in connection with this Agreement shall be settled amicably and in good faith between the parties. If no agreement can be reached, each party has the right to initiate arbitration proceedings within 60 days after the failure of the negotiation to have the dispute decided by an arbitrator. The arbitration shall be conducted under the Rules of the Vietnam International Arbitration Center at the Vietnam Chamber of Commerce and Industry (“VIAC”) and in line with international arbitration practice. The Arbitration Tribunal shall consist of three arbitrators, appointed in accordance with the Rules of VIAC. The President of the Arbitration Tribunal shall be appointed by the President of VIAC. The seat of arbitration shall be in Ho Chi Minh City, Vietnam. The arbitration proceedings shall be conducted in English.
James Brown
To info@taibaoltd.chi From info@solar.spectrum.ome Re Payment NP10 -----Dear Ms. Fang, I here with confirm that yesterday we received the solar panels and the inverters in good order. A first examination revealed no problems. On the basis of the invoices received we have effected the following two payments to Taibao’s bank account, IBAN 1201 3354 6111, at Chinorina National Bank, River Bank 1, Chinorina. - USD 18,525,000 for the solar panels - USD 1,712,000 for the inverters As requested two separate payments have been made. Sincerely, James Brown. Solar Spectrum Inc. 45 W Monroe Avenue Verona Omericano T (0) 142- 6138 F (0) 146-5412
Addendum of 20 March 2014 (handwritten) The Buyer may request the Seller to produce and deliver 2,000 grid-tied solar inverters which turned direct current (DC) electricity produced by solar panels into alternating current (AC) and allowed this AC electricity to be sent back to the grid if the energy is produced more than it was used. The Price for the grid-tied shall be on a cost basis and be paid in USD.
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CLAIMANT’s EXHIBIT C 4 Witness Statement Lee Xi My name is Lee Xi, born 25 August 1989, in Riverside, Chinorina. I have a degree in financial accounting from Wonder Accounting College and have worked since 1 August 2013 in the accounting department of Taibao Ltd. On 15 May 2015 I was asked by Ms Heidi Fang to prepare the two invoices for the solar panels and the inverters to be delivered to Solar. In principle, my colleague Ms Wang was responsible for the financial side of the contract. She had reported in sick on 29 April and in May the date of her return was not yet predictable. Consequently, Ms Fang had asked me to finalize the two invoices before I went for a holiday to visit my parents the same evening. She had given me excel files with the costs incurred per solar panel and per inverter as well as Ms Wang’s binder concerning the solar system project containing all correspondence and the Sales Contract. I was under considerable time pressure. I had no knowledge about the whole transaction and it was the last working day before my holiday. First, I prepared the invoice for the inverters as the order for the inverters and a note that a fixed exchange rate had been agreed for them had been on top of Ms Wang’s binder. I took the costs as reported in the excel file and converted them on the basis of the fixed exchange rate of USD 1 = CHD 6.7 as was stated in the addendum of the contract. When I prepared the invoice for the solar panels, I used the same exchange rate for the calculation of the price for the solar panels, not realizing that the main contract relating to the solar panels did not contain a fixed exchange rate but only the addendum relating to the inverters. On 26 May 2015, my first working day after the period of holidays, Ms Fang informed me about the mistake and asked me to prepare a correct invoice for the fan blades applying the current exchange rate of USD 1 = CHD 6.
CLAIMANT’s EXHIBIT C 5 Taibao Ltd. Mon 26/05/2015 13:04 p.m. Heidi Fang -----To info@solar.spectrum.ome From info@taibaoltd.chi Re Payment NP10 -----Dear Mr. Brown, I refer to your email from earlier today. I have realized that there has been a mix up in our accounting department with the invoice for the solar panels. Unfortunately, the price per solar panel has been calculated on the basis of the fixed exchange rate which we agreed for the inverters in the addendum to the contract of 20 March 2014. As per our contract negotiations and Section 4 of our Sales Contract the contract price is calculated on an actual cost plus profit basis. As you can see from the attached table the costs per solar panel amount to CHD 1,206. Multiplied with the current exchange rate, which is identical to that at the time of production of USD 1 = CHD 6, the costs are USD 201 per solar panel. Consequently, the full purchase price for the 10,000 solar panels amounts to USD 20,305,000. Sincerely, Heidi Fang.
Taibao Ltd. 175 Haishang Street Riverside Chinorina T (0) 211-8734Fax (0) 211-6784
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CLAIMANT’s EXHIBIT C 6
CLAIMANT’s EXHIBIT C 7
Taibao Ltd.
Solar Spectrum Inc.
Mon 15/06/2015 03:18 p.m.
Tue 16/06/2015 17:21 p.m.
Heidi Fang
James Brown
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------
To info@solar.spectrum.ome
To info@taibaoltd.chi
From info@taibaoltd.chi
From info@solar.spectrum.ome
Re Payment NP10
Re Payment NP10
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------
Dear Mr. Brown,
Dear Ms. Fang,
We have not received the outstanding purchase price of USD 1,780,000 from you. We have gotten confirmation from our bank that only USD 18,525,000 was credited to our account. Therefore, we ask that the outstanding USD 1.780,000 is deposited into our bank account by 10 July 2015. We would very much appreciate prompt payment. As you know we are presently in the final development phase of the new line of solar panel TP14 which has put the usual strain on our liquidity. Sincerely, Heidi Fang. Taibao Ltd. 175 Haishang Street Riverside Chinorina T (0) 211-8734 Fax (0) 211-6784
In regard to the purchase price for the solar panel NP10, your original invoice correctly reflected our contractual agreement. In the addendum to the contract we agreed on a fixed exchange rate of USD 1 = CHD 6.7. When we negotiated the addendum the agreement on the fixed exchange rate pertained not only the inverters but the whole contract. Applying that exchange rate to the costs of CHD 1,206 we arrive at a cost in USD per blade of USD 180, as correctly stated in your original invoice sent with the solar panels. By contrast your “allegedly” corrected invoice of 26 May 2015 applies a wrong rate. We would have never agreed on a floating rate applying the current rate to convert your costs into USD. In our view, you had taken over the currency risk. Sincerely, James Brown. Solar Spectrum Inc. 45 W Monroe Avenue Verona Omericano T (0) 142- 6138 F (0) 146-5412
Students and the Law (UEL MCC 2018 Edition) | 17
Taibao v. Solar Spectrum Statement of Defence Pursuant to Article 9.1 VIAC Arbitration Rules Introduction 1. In its Statement of Facts, CLAIMANT gives a great accurate number of the facts. However, their legal conclusions are entirely wrong. 2. The CLAIMANT’s claim in this arbitration is not only unaccepted but also unjustified. RESPONDENT has performed the payment obligations of the full purchase price under the contract. Nomination of Arbitrator and Jurisdiction of Arbitration Tribunal 3. RESPONDENT recognizes the jurisdiction of the Arbitral Tribunal and has no objection to the appointment of Mr. Mike Lee and agrees that the President of the Tribunal is to be appointed directly by VIAC. 4. RESPONDENT nominates as its arbitrator in this case Mr. Dat Nguyen according to Article 9.1 (d) of the VIAC Arbitration Rules. Statement of Facts 5. In November 2013, RESPONDENT has received a notice from Rumsay Property that the company had a new developing project of 1500 units of housing in Verona, asking for quotes for a solar system. Rumsay Property emphasized on the efficiency of the solar system and the policy to pursue sustained development objective in the project. 6. RESPONDENT discovered that its existing solar system did not meet the requirement of Rumsay Property. RESPONDENT contacted CLAIMANT to see whether the new solar panel developed by the CLAIMANT was qualified and compatible with the solar system SS75 that was being developed by the RESPONDENT according to the detailed description of Rumsey Property. 7. At that time, both parties had traded with each other for five years. At the first meeting in January 2014, Ms. Celia West, the Development Manager represented for the RESPONDENT’s side met Ms. May Ling, the CLAIMANT’s Head of Research and Development Department to agree on the basic technique requirements for the solar panel. Ms. West
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insisted that a price should be agreed upon at that stage so that RESPONDENT could offer a price to Rumsay Property. Rumsay Property, who was also negotiating with a second supplier, expected to conclude the contract in September with a fixed price. However, CLAIMANT could not give a fixed price because the development of the new solar system is on-going and the cost of development was uncertain. Consequently, the parties agreed on a range of price relying on different costs and profit elements, and a maximum price for the purpose to calculate the price that REPONDENT could offer Rumsay Property. 8. The parties had applied the same mode of price calculation in the two lattest transactions. The price mechanism was merely copied and the older price and profit margin were replaced by the new ones agreed under the contract. The parties had never explicitly agreed on the exchange rate and the given rate at the time of contracting were used for the conversion of the cost elements. 9. RESPONDENT acknowledged that this should be the common understanding between parties for the present transaction as well. Also, as in a meeting in October 2013 at the premises of International Exhibition of Sustainable Energy, which had been attended by the CLAIMANT’s CEO, it had been pointed out that Solar Spectrum Inc. should be “derisked” to make it more attractive to potential buyers (Respondent’s Exhibit R 1). Therefore, the reduction of currency risk in existing contrasts via the agreement of fixed exchange rates had been explicitly mentioned, although there was no on-going contract at that time. It was clear for the RESPONDENT that the same would be applied for newly conducted contracts. 10. Unfortunately, at the time when the Sales Agreement was concluded, the Parties forgot to add an express provision for the exchange rate. After that, the RESPONDENT insisted on having an exchange rate explicitly regulated in the addendum to the contract (Respondent’s Exhibit R 2).
Merits 11. CLAIMANT has no claims for payment against RESPONDENT under the contract, as RESPONDENT has fully performed its payment obligation. 12. Under the Sales Agreement and as stated in the first invoice sent with the solar panels, RESPONDENT had to pay USD 18,525,000 for the solar panels to CLAIMANT’s bank account which RESPONDENT did. 13. Contrary to CLAIMANT’s allegations, RESPONDENT did not try to “take advantage” of an obvious mistake in an invoice but paid the price as required to under the Sales Agreement. The price for the solar panels is determined on the basis of Section 4 of Sales Agreement. CLAIMANT’s manufacturing cost amount to CHD 1,206. Converted according to the
fixed exchange rate governing the whole Agreement, which is specified – or agreed between the Parties – in the Addendum to the Agreement and adding the agreed upon profit that amount to costs of USD 180 per panel. The fixed rate explicitly stipulated in the Addendum was to be applied for the whole Sales Agreement and not only the Addendum as alleged by CLAIMANT (Respondent’s Exhibit R 3 and R 4). In light of this, RESPONDENT requests the Arbitration Tribunal 1. To reject all claims for payment raised by the CLAIMANT. 2. To order CLAIMANT to pay RESPONDENT’s cost incurred in this arbitration.
RESPONDENT’s EXHIBIT R1-R4 RESPONDENT’s EXHIBIT R 1 Solar Spectrum Inc. Tue 23/10/2013 09:23 a.m. Henry Allerton -----To
contract.management@solar.spectrum.ome
From info@solar.spectrum.ome Re De-risking contracts -----Dear Colleagues,
contracts with other companies represented in this meeting, the relevant contract managers should do their best to help Solar Spectrum Inc. and the other main suppliers of solar systems reduce risks, by either agreeing on fixed exchange rates, where the contracts provide for a floating rates, or by finding other hedging strategies which reduces the companies’ exposure to currency risks. Hence, we should act accordingly and try to reduce the risks as much as possible. Could I therefore ask you to identify all contracts with currency risks and report them to me no later than next Friday?
Yesterday, the meeting at the premises of International Exhibition of Sustainable Energy were well attended by representatives and stakeholders of various companies in the solar energy industries. The attendees included me as well as one of our long time trade partners – Taibao Ltd. new CEO Mr. Meng Tingxao.
Sincerely,
One of the main points discussed was the need to “de-risk” Solar Spectrum Inc. and some other main suppliers of solar systems to make the solar systems more attractive for potential buyers. In particular, all currency risks contained in these companies’ contracts should be identified and be reduced. It was agreed that whenever these risks are contained in
Omericano
Henry Allerton. Solar Spectrum Inc. 45 W Monroe Avenue Verona T (0) 142-6138 F (0) 146-5412
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RESPONDENT’s EXHIBIT R 2
RESPONDENT’s EXHIBIT R 3
Solar Spectrum Inc.
Taibao Ltd.
Tue 18/03/2014 12:13 a.m.
Tue 18/03/2014 04:28 p.m.
James Brown
Heidi Fang
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To info@taibaoltd.chi
To info@solar.spectrum.ome
From info@solar.spectrum.ome
From info@taibaoltd.chi
Re Inverters
Re Inverters
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Dear Ms. Fang,
Dear Mr. Brown,
As already discussed we think the easiest way to regulate the purchase of the inverters is to sign an addendum to our Sales Contract and not to enter into a separate contract for the inverters.
Thank you for your email. I think your suggestion to link the agreement in regard to the inverters to the contract in regard to the NP10 is a sensible one.
I would suggest the following terms to be added by hand to the agreement.
The addendum will be ready for you to sign when you visit Taibao Ltd.
“Addendum The Buyer may request the Seller to produce and deliver 2,000 grid-tied solar inverters which turned direct current (DC) electricity produced by solar panels into alternating current (AC) and allowed this AC electricity to be sent back to the grid if the energy is produced more than it was used. The Price for the gridtied shall be on a cost basis and be paid in USD. Other terms as per main Agreement. The exchange rate for the agreement is fixed to USD 1 = CHD 6.7.” If these terms are acceptable to you, I could sign the addendum at my next visit to Taibao Ltd. on 20 March. Sincerely, James Brown. Solar Spectrum Inc. 45 W Monroe Avenue Verona Omericano T (0) 142- 6138 F (0) 146-5412
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I also agree to the fixed exchange rate.
Sincerely, Heidi Fang. Taibao Ltd. 175 Haishang Street Riverside Chinorina T (0) 211-8734 Fax (0) 211-6784
RESPONDENT’s EXHIBIT R 4 Witness Statement Henry Allerton I am the present CEO of Solar Spectrum Inc. and in 2014 was in charge of negotiating the Sales Contract between the Parties, though some of the negotiations were done by the Ms. Celia West – Development Manager of Solar Spectrum Inc. For us it was important that we could, already at that time, make a largely binding price offer for the solar system SS75 to Rumsay Property. At the time Rumsay Propery was negotiating with a second possible supplier and put great emphasis on a binding quote. To give such a quote was only possible if our suppliers, including Taibao Ltd., were already in agreement on a maximum price even if the components still had to be developed. On the basis of the maximum price we then calculated what the solar system would cost. For us it was very important to be the provider for Rumsay Property, which we could then use as a reference and marketing tool for other future projects.
that the exchange rate applied to the complete contract. In principle, the now express solution merely spells out what had already been the understanding of the parties when they entered into the Sales Contract but merely did not mention explicitly. It reflects the practice between the parties during the previous contracts. In calculating the price for the solar panels developed under previous contracts the Parties always applied the exchange rate at the time the contract was concluded.
After the conclusion of the main agreement it became clear that we would also need inverters from CLAIMANT. Furthermore, I had just realized that the price clause which we had used already for our previous contracts did not include an express statement as to the applicable exchange rates. Under the old contracts the lack of an explicitly stated exchange rate had not been a major issue because the exchange rate between the USD and CHD had hardly changed over the last years. The exchange rate could, however, become a major issue as the present disputes shows. The exchange rate has a strong influence on who would bear the currency risk and lack of clarity always entails the risk of opportunistic behavior, of a party subsequently contesting an implicit understanding which has not been made explicit. Therefore, my company insisted on the last sentence of the addendum which in my view could not be clearer. For me it was clear that the exchange rate would apply also to the solar panels. I cannot say whether CLAIMANT’s negotiators had the same view. If not, they should have said so and not let us believe
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ACADEMIC CORNER
BEST MEMORANDA TEAM. 08 MEMORANDUM FOR THE CLAIMANT (SOLAR SPECTRUM INC) LIST OF AUTHORITIES Taibao/Claimant
Taibao Ltd.
Solar/Respondent
Solar Spectrum Inc.
CISG
UN Convention on the International Sale of Goods
VIAC
Vietnam International Arbitration Center
UNIDROIT
UNIDROIT Principles of International Commercial Contracts
STATEMENT OF FACTS 1. Taibao, the Claimant, is a manufacturer of solar system equipment specializing in solar panels, incorporated in Chinorina. 2. Solar, the Respondent, is a supplier of solar systems for household, incorporated in Omericano. 3. Until 2016, Claimant and Respondent had a long trading relationship for nearly five years. 4. Respondent agreed to buy at least 100,000 of solar panels in the first year from Claimant and supplied to Rumsey Property, a major developing company who focused on the eco-environmentfriendly housing in all its projects. 5. At the time the parties negotiated and entered into the contract, the final development and production cost for the new solar panel were not yet fixed. However, Respondent needed a price to send an offer to Rumsay Property. Therefore, after negotiating the parties agreed on a flexible price structure that both parties would generate profit from the transaction and share the risk. 6. Respondent also insisted on price quoted in USD although the manufacturing cost would be incurred in Chinorina Dollar (CHD). 7. Respondent tried to purchase the inverters working with those solar panels from other manufacturers. However, after the Sales contract
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was concluded, it turned out that those inverters were not compatible with the solar panels. Therefore, Respondent would have to buy inverters from Claimant. An addendum was then added into the contract. 8. Claimant delivered the solar panels and inverters on 25 May 2017 to Respondent as per contract and attached invoices for both goods. Respondent took the delivery and after inspection confirmed about the conformity. 9. On 26 May 2017, Respondent paid the amount invoiced. The same day, Claimant informed Respondent about the their mistake in calculation in the invoice due to the wrong application of exchange rate and then asked Respondent to pay the outstanding payment of USD 1,780,000. 10. In the reply of 16 June 2017, Respondent denied to pay the additional price.
JURISDICTION 1. The Arbitration Tribunal has jurisdiction on resolving the the current dispute by virtue of the arbitration agreement contained in the Section 21 about Dispute Resolution of the sale contract between Claimant and Respondent.
FOREWORDS 2. The dispute arising in this situation may root from the different understanding of the contract from
both Claimant and Respondent. Therefore, in this case, interpretation of the contract is an essential key. The CISG, applicable law in this case, provides norms and principles for the interpretation and evidence of international sales transactions. 3. Article 8.3. of CISG stated that: “In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.” Then by all means, the parties’s statements, negotiations and moves as well as all other relevant circumstances shall be taken into account.
PLEADINGS ISSUE 01: SOLAR SHALL PAY THE STILL OUTSTANDING PURCHASE PRICE IN THE AMOUNT OF USD 1.780.000 1. The exchange rate USD 1 = CHD 6.7 stated in the Addendum was only applied to the inverters, NOT the solar panels 1.1. Though the sales agreements of solar panels and inverters were drafted in “the same contract”, these were two separating and independent contract 4. For ease of presentation, we would label the sales agreement of solar panels as Contract No.01 and the one of inverters as Contract No.02. 1.1.1. The negotiation of Contract No.01 had come to the end and was absolutely concluded in March 01st 2016 5. After the meeting at the premises of International Exhibition of Sustainable Energy on October 22nd 2015 and the meeting with the Development Manager of Respondent on January 25th 2016, a Summary notes was noted by the Head Research and Development of Claimant (Claimant’s Exhibit C1). 6. Through the time of negotiation, both parties have reached many same provisions and come into the signing of a contract - Contract No.01. In this contract, the intention was to at first purchase 10,000 solar panels, model NP10, and continue to purchase the other 90,000 ones in the first year (Section 2 Background). Moreover, parties has reached agreement on a flexible purchase price structure where both parties would generate profits and share risk while the final development and production cost still has not yet been fixed.
7. The two parties signed the Contract No.01 on March 1st, 2016. Pursuant to Article 23 of CISG, “a contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention.” and also Article 24, “For the purposes of this Part of the Convention, an offer, declaration of acceptance or any other indication of intention “reaches” the addressee when it is made orally to him or delivered by any other means to him personally, to his place of business or mailing address or, if he does not have a place of business or mailing address, to his habitual residence”, the act of signing the Contract No.01 should prove that it was totally concluded despite the lack of not having provision on exchange rate. 1.1.2. Contract No.02 shall be considered as a separated contract from the Contract No.01 8. Accompanying with the solar panels, Respondent might also need 2,000 grid-tied solar inverters (inverters) which turned direct current (DC) electricity produced by the solar panels into alternating current (AC) and allowed this AC electricity to be sent to the grid if the energy is produced more than it was used. Original intention of Respondent was to purchase inverters from other manufacturer, not Claimant. However, after the Contract No.01 was concluded, it turned out that their chosen inverters were not compatible with the solar panels purchased from Claimant in Contract No.01. Therefore, Respondent would have to purchase the inverters from Claimant. Take into account this situation, it was clear that after the event of inverters, Respondent had another intention on purchasing inverters from Claimant. 9. In the email sent to Claimant negotiating about the inverters on March 18th 2016, Respondent wrote that: “As already discussed we think the easiest way to regulate the purchase of the inverters is to sign an addendum to our Sales contract - Contract No.01 - and not enter into a separate contract for the inverters.” And a suggested addendum was also noted in that email. It is essential to consider that the phrase “to regulate the purchase of the inverters” was clear enough to conclude that the intention of Respondent in that email and also the noted addendum was to only focus and regulate the inverters. Agreed with this intention, in replied email right after, Claimant expressed their understanding as “I think your suggestion to link the agreement in regard to the inverters to the contract in regard to the NP10 is a sensible one.” With these words, it was clear that
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Claimant admitted the agreement in regard to the inverters (Contract No.02) and the contract in regard to the NP10 (Contract No.01) were two separated and independent ones. 10. As a very terse addendum, its provisions regulated the inverters was not enough efficiency. Therefore, the phrase “Other terms as per main agreement” played a role of fulfilling the gaps. This “main agreement” now played a supporting role as a sub-contract of the Addendum. 11. In other words, though the agreement of inverters was added into to Contract No.01 as an addendum, it should be absolutely considered as a separate and independent contract (Contract No.02). 1.2. Claimant agrees to apply the USD 1 = CHD 6.7 only to the inverters 12. As proved above, the addendum should be considered a separate contract from the Contract No.01 in regard to the solar panels. Therefore, the provisions stated in which contract would only be applied to that contract. 13. In this case, since the sentence “The exchange rate for the agreement is fixed to USD 1 = CHD 6,7” was stated in the addendum, it would be only applied to the Contract No.02. Take consideration the fact that there was no provision governed the exchange rate of the solar panels in the Contract No.01, Claimant submits that the exchange rate USD 1 = CHD 6,7 shall only be applied to the inverters. 2. The current exchange rate USD 1 = CHD 6 shall be applied to the solar panels due to no conclusion on exchange rate 14. As mentioned above, there was no provision governed the exchange rate applied in the Contract No.01. In case of an international good purchase, unless parties use the same currency or be able to have the same voice in exchange rate, exchange rate plays an essential roll. In this case, parties has agreed to pay on USD though Claimant, manufacturer, bears their manufacturing cost in CHD. Beside that, there was also a flexible purchase price structure built and agreed by both parties. However, due to the lack of specified exchange rate and the changes of exchange rate, after all the price seemed to not yet be concluded.
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15. About this situation, Article 55 seems to be the only provision of CISG which should be considered. Pursuant to this Article, the condition to apply this Article should be “a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining the price”. It is clear that the Contract No.01 is validly concluded. However, the phrase “does not expressly or implicitly fix or make provision for determining the price” seems to be not satisfied in this case. 16. As mentioned in previous paragraph, there was a flexible purchase price structure in the contract used for determining the price based on the production cost. However, in reality, the production cost was born by Claimant in CHD and a specific exchange rate has not yet been concluded. Therefore, there was provision for determining the price, but it was not clear and effective enough to govern the price. As a result, Article 55 of CISG shall not be applied. 17. Since there are not else effective article of CISG that could dealt this case, another Article of UNIDROIT should be considered. 18. Article 5.1.7 of UNIDROIT stated that “Where the price is to be fixed by reference to factors which do not exist or have ceased to exist or to be accessible, the nearest equivalent factor shall be treated as a substitute.” In paragraph 7 of the Statement of facts of Claimant: “Claimant relying on the experience with the previous models of solar panel estimated that the manufacturing cost would be around 1,122 CHD taking into consideration of the exchange rate fluctuating between USD 1 = CHD 6,6 and USD 1 = CHD 6,8.” Comparing with Article 5.1.7, there are two simultaneous factors influenced the fixed cost specified in the flexible purchase price structure: (1) Claimant’s experience with the previous models of solar panel, and (2) the old exchange rate. It is clear that the old exchange rate, due to constantly changing, shall be considered as the factors, which has ceased to exist or to be accessible. 19. As a result, the nearest equivalent factor shall be treated as a substitute. That should mean the nearest equivalent factor, the current exchange rate, shall be treated as substitute. Therefore, the current exchange rate USD 1 = CHD 6 should be applied.
3. Respondent, the buyer has liability to fulfil its payment due to CISG 20. Claimant admits that there was their mistake when sending invoice with wrong calculation on price due to wrong exchange rate applied. However, only one day right after the accident, Claimant had informed Respondent about the mistake and asked Respondent to fulfil its obligation.While the wrong number was $18,525,000, the right one should be $20,305,000. 3.1. Respondent has liability on payment under the Article 53, 54 of CISG 21. Pursuant to Article 54 of CISG: “The buyer’s obligation to pay the price includes taking such steps and complying with such formalities as may be required under the contract or any laws and regulations to enable payment to be made.” As specified in Section 4.3 of the Contract No.01, “The Buyer will deposit the purchase price in full into the Seller’s account at the Chinorina National Bank, River Bank 1, Chinorina, IBAN 1201 3354 6111; SWIFT PQREX2. The bank charges for the transfer of the amount are to be born by the buyer.” Claimant recognized that Respondent has completed and follow the provision about steps and complied with the formalities. However, the total amount of price was not fulfilled. 22. Pursuant to Article 53 of CISG, “The buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention.” Therefore, instead of $18,525,000, Respondent shall have to pay the full cost of $20,305,000. That should mean, Respondent shall have to pay the still outstanding amount of $1,780,000 to Claimant. 3.2. Claimant has right to require Respondent for payment 23. Pursuant to Article 62 of CISG, “The seller may require the buyer to pay the price, take delivery or perform his other obligations, unless the seller has resorted to a remedy which is inconsistent with this requirement.” Since Claimant had realized their mistake on calculation, Claimant actively contacted to Respondent to explained about the mistake (Claimant Exhibit 4) and reminded for full payment through email (Claimant Exhibit 5,6). These moves are consistent and suitable with the situation.
24. Since Respondent had not yet fulfilled it obligation, Claimant should have right to require for still outstanding payment. ISSUE 2: SOLAR SHALL BEAR THE COST OF ARBITRATION 25. Since Claimant submitted the statement of facts to the Arbitration, the procedure of Arbitration had started. As a result, the cost of Arbitration would arise pursuant to Article 34 of the VIAC Rules of Arbitration. Claimant submits that Respondent shall have to bear the cost of Arbitration. 1. It was Respondent’s fault when the dispute could not be peacefully resolved in spite of Claimant’s good faith. 26. As discussed early in the first issue, Claimant had admitted that there was our mistake in the total cost calculation invoice sent to Respondent on May 25th 2017. With a very friendly and timely behaviour, Claimant immediately informed about the mistake and fixed it in only one day after that accident. However, respondent seemed to try to take advantage from that accident, when they tried to ignored our notification and had a rapidly move in cost delivery. 27. After that, Claimant has re-informed and reminded about the mistake and asked Respondent to fulfil their responsibility on cost delivery, the outstanding amount of $1.780.000. Despite any Claimant efforts, Respondent only tried to be immovable and to ignore their not yet fulfilling responsibility. 28. Once again, we submits that the problem of the outstanding amount of $1.780.000 is rooted by our mistake. However, there could be no place for Respondent to hide from fulfilling their delivering responsibility. 29. Almost a month waiting and expecting to receive responses from Respondent, Claimant still had earned nothing. This should prove the hopelessness of Claimant in a peaceful resolving method. As a result, Claimant decided to start the procedure of Arbitration in VIAC, which was specified in the contract. 30. Totally, Claimant had shown our good faith while Respondent always seemed to hide and ignore.With above consideration, Claimant allegates Respondent to cause faults and failed peaceful dispute resolving.
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2. Pursuant to Article 74 of CISG, cost of Arbitration should be considered as damages, and Respondent shall have to recover it
2.2. Respondent has all knowledge about the damage as a possible consequence of the breach of contract when they entered into the contract
31. Pursuant to Article 74 of CISG, there are two elements relating to damages that should be considered. First is “damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach.” And second is “such damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract, in the light of the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of contract.”
34. Dispute resolution agreed in the contract between Claimant and Respondent was negotiation in good faith and then Arbitration. Since there was no good faith from Respondent as proved, Arbitration was the only agreed dispute resolution.
2.1. Cost of arbitration is the loss suffered by Claimant as a consequence of the breach of contract 32. Pursuant to Article 35.1. of VIAC Rules of Arbitration, “Upon submission of the Request for Arbitration, the Claimant shall pay the expenses in full as provided in paragraphs 1 and 2 of Article 34 of these Rules pursuant to the Schedule of Costs of Arbitration of the Centre in force at the time of submission of the Request for Arbitration.” As proved in Issue 1, Respondent has breached the contract when they did not fulfil their obligation of payment. Through negotiations by email, there was no claim gained and Respondent still denied to fulfil their obligation, which was clearly specified in the contract. As a result, Claimant started the Arbitration procedure and presuffered its Arbitration cost as governed by Article 35.1 of VIAC Rules of Arbitration. 33. Moreover, the UNITRIAL also governed this problem through the principle of full compensation. Article 7.4.2 of UNITRIAL stated that: “The aggrieved party is entitled to full compensation for harm sustained as a result of the non-performance. Such harm includes both any loss which it suffered and any gain of which it was deprived, taking into account any gain to the aggrieved party resulting from its avoidance of cost or harm.” In this case, Claimant suffered not only damages of the still outstanding amount of $1,780,000, but also the cost of arbitration. As stated in Section 21 of the contract, Arbitration is a Dispute resolution. And if Respondent has fulfilled its obligation, Claimant would not lose their cost of arbitration.
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35. As a parties of the contract, both Respondent and Claimant have all knowledge and have responsibility to have all knowledge about the dispute resolution and its conditions and procedure stated in VIAC Rules of Arbitration. Cost of Arbitration is indispensable part of procedure when Claimant has to first bear the cost as governed in Article 35.1. In the other hand, Respondent has all knowledge about the fact if they don’t fulfilled their obligations in payment and not agreement could be reached, Claimant would start the arbitration procedure. 36. Therefore, it could be concluded that Respondent ought to have foreseen at the time of the conclusion of the contract, in the light of the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of contract.
CONCLUSION 37. With respect to all elements and considerations mentioned above, Claimant respectfully submits that: 38. First, Respondent shall pay the still outstanding purchase price in the amount of USD 1.780.000 since (1) The exchange rate USD 1 = CHD 6.7 stated in the Addendum was only applied to the inverters, not the solar panels; (2) The current exchange rate USD 1 = CHD 6 shall be applied to the solar panels due to no conclusion on exchange rate; and (3) Respondent, the buyer has liability to fulfil its payment due to CISG. 39. Second, Respondent shall bear the cost of arbitration since (1) It was Respondent’s fault when the dispute could not be peacefully resolved in spite of Claimant’s good faith; (2) Pursuant to Article 74 of CISG, cost of Arbitration should be considered as damages, and Respondent shall have to recover it.
ACADEMIC CORNER
BEST MEMORANDA TEAM. 05 MEMORANDUM FOR THE RESPONDENT (TAIBAO LTD.) STATEMENT OF JURISDICTION The parties, Taibao Ltd. (hereinafter “CLAIMANT”) and Solar Spectrum Inc. (hereinafter “RESPONDENT”) have agreed to submit the dispute to arbitration in Ho Chi Minh City, Vietnam. The arbitration shall be conducted under the Rules of the Vietnam International Arbitration Center at the Vietnam Chamber of Commerce and Industry (“VIAC”) and in line with international arbitration practice. INDEX OF AUTHORITIES STATUTES, TREATIES AND LEGAL SOURCE CASES AND ARBITRAL AWARDS CCB P4
Civil Court of Basel 3 Dec. 1997, P4 1996/00448
OKBL (A15)
Obergerichts des Kantons Basel-Landschaft 5 Oct. 1999, 40-99160 (A15)
CRSC 32 Odo
Czech Republic 29 March 2006 Supreme Court, 32 Odo 725/2004
CCDR 2007
The Commercial Court of Donetsk Region [44/69] 13 Apr. 2007
FDCS 2006
France 22 December 2006 District Court Strasbourg, 04/00925
ICSID ARB/06/18
International Centre for Settlement of Investment Disputes (ICSID), 14.01.2010, No ARB/06/18
ICC ICA
ICC International Court of Arbitration, Paris 14108, 00 Aug. 2008, 14108
JOURNAL AND ARTICLES Alastair
Lex arbitri, procedural law and the seat of the arbitration, Singapore
Henderson
Academy of Law Journal
Cited as: Alastair Henderson
Vorobey CISG and Arbitration Clauses: Issues of Intent and Validity Journal of Law & Commerce
Cited as: Dmytro V Vorobey
Bonell
Rapporteur on chapter 1, 2 and 4 in UNIDROIT International Institute for the Unification
of Private Law, 2010
Cited as: Michael Joachim Bonell.
Bruno Zeller
Determining the Contractual Intent of Parties under the CISG and Common Law - Comparative Analysis European Journal of Law Reform.
Cited as: Bruno Zeller
Gyula Eörsi
International Sales: The United Nations Convention on Contracts for the International
Sale of Goods in Galston & Smit (ed.), Juris Publishing, 1984
Cited as: Gyula Eörsi
Students and the Law (UEL MCC 2018 Edition) | 27
Paul Finn
Rapporteur on article 1.8 in UNIDROIT International Institute for the Unification of
Private Law, 2010
Cited as: Paul Finn
Leif Sevón
Obligations of the Buyer under the UN Convention on Contracts for the International
Sale of Goods in Petar Sarcevic & Paul Voken (eds.)
Cited as: Leif Sevón
Dubrovnik
International Sale of Goods: Dubrovnik Lectures Oceana 1986
Lectures
Cited as: Dubrovnik
OTHER SOURCES ICC CTCA
ICC Commission Report, Controlling Time and Costs in Arbitration
ICC DCA
ICC Commission Report Decisions on costs in international arbitration
STATEMENT OF FACTS Solar Spectrum Inc. (“RESPONDENT”) is a supplier of solar system for household, incorporated in Omericano. Taibao Ltd. (“CLAIMANT”) is a manufacturer of solar system equipment specializing in solar panels, incorporated in Chinorina. On 25 January 2016, RESPONDENT and CLAIMANT went into negotiations to purchase CLAIMANT’s new solar panel called NP10 in order to develop RESPONDENT’s new SS75 sr system and then offer them to Rumsay Property – the company had a new developing project of 1500 units of housing in Verona. However, CLAIMANT could not give a fixed price due to the cost of development was uncertain. Therefore, the parties agreed on a range of price relying on different costs and profit elements, and a maximum price for the purpose to calculate the price that RESPONDENT could offer Rumsay Property. On 1 March 2016, the parties signed the Sales Contract of the sales of 10,000 solar panels. However, RESPONDENT needed 2,000 suitable grid – tied solar inverters for the solar panels. RESPONDENT suggested adding the addendum into the original contract and CLAIMANT accepted. On 25 March 2016, the addendum was signed with a fixed exchange rate for the contract to USD 1 = CHD 6.7. On 25 May 2017, CLAIMANT delivered the solar panels and the grid – tied solar inverters to RESPONDENT. RESPONDENT paid the price based on the fixed rate in the addendum, which was USD 18,525,000. On 10 June 2017, the amount of USD 18,525,000
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was credited to CLAIMANT’s account at the Chinorina National Bank. However, CLAIMANT denied the application of the fixed rate and demanded payment USD 20,305,000 based on the exchange rate at the time of manufacturing. On 15 June 2017, CLAIMANT notified RESPONDENT by email that CLAIMANT was demanding the outstanding payment of USD 1,780,000 by 10 July 2017. On 16 June 2017, RESPONDENT denied to pay the additional purchase price and insisted on the price of USD 180 with the fixed rate set out in the addendum to the Sales Contract, for converting the cost incurred by CLAIMANT in CHD into USD. SUMMARY OF PLEADINGS I. RESPONDENT REQUESTS THE ARBITRATION TRIBUNAL TO REJECT ALL CLAIMS FOR PAYMENT RAISED BY CLAIMANT The fixed exchange rate is applied to the Sales Contract by both Parties. As can be seen through the exchanged views between two parties, RESPONDENT has enough grounds to believe that the fixed exchange rate was applied not only to the addendum, but also to the whole contract. Furthermore, RESPONDENT fully performed its obligation under the Contract since it received the goods, examined the goods, paid for the goods and took the delivery as required under the Contract and the CISG. As a result of this, CLAIMANT is not entitled to order RESPONDENT to pay the still outstanding purchase in the amount of
USD 1,780,000. In addition, CLAIMANT did not do anything to clarify the confusion of the exchange rate in spite of having had many opportunities to clarify it. Generally, claims for payment raised by claimant shall be all rejected. II. CLAIMANT SHALL PAY RESPONDENT’S COST INCURRED IN THIS ARBITRATION The law applicable to this arbitration is the VLCA and the VIAC Rules.1 Pursuant to Article 34(3) of VLCA and Article 36(1) of VIAC Rules, it can’t be denied that unless otherwise agreed by the parties, the Arbitral Tribunal shall have the power to allocate the costs of arbitration. Hence, the request of RESPONDENT to order CLAIMANT to pay the cost incurred in this arbitration is reasonable. RESPONDENT’s cost incurred in this arbitration includes the costs of arbitration that defined under Article 34 VIAC’s Rule of Arbitration, legal fees, disbursements, expert witnesses, and in attending and giving evidence. As the cost incurred in this arbitration of RESPONDENT is reasonable and proportional, the Tribunal should order CLAIMANT to pay RESPONDENT’s cost that is incurred in this arbitration after considering CLAIMANT’s behavior as well as all necessary factors that help the Tribunal make a sound decision on cost allocation. PLEADINGS ISSUE 1: RESPONDENT REQUESTS THE ARBITRATION TRIBUNAL TO REJECT ALL CLAIMS FOR PAYMENT RAISED BY CLAIMANT. 1. RESPONDENT is not obliged to pay the outstanding purchase price in the amount of USD 1,780,000 under the CISG and UNIDROIT Principle. 2. CLAIMANT is not entitled to order RESPONDENT to pay the still outstanding purchase in the amount of USD 1,780,000 as RESPONDENT fully performed its obligation under the Contract (I). Moreover, the Parties agreed on the fixed exchange rate in the Contract (II). Otherwise, through the previous negotiations and the performance between the Parties, CLAIMANT cannot rely on their inconsistent conduct (III).
I. The fixed exchange rate is applied to the Sales Contract by both Parties a. CLAIMANT cannot order RESPONDENT to pay the outstanding purchase price as due to the subjective test of Article 8(1) of the CISG and Article 4.1(1) of the UNIDROIT 3. Article 8(1) of the CISG provided that statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.2 Plus, Article 4.1(1) of the UNIDROIT also stated that a contract shall be interpreted according to the common intention of the parties.3 4. CLAIMANT has learned of the exchange rate and expected to apply the fixed exchange rate to solar panels and the inverters. 5. At first, CLAIMANT must have known of the application of the exchange rate as on 25 Jan 2016, they wrote in the Summary Notes that “our expenses in CHD will have to be converted but no major risk involved”.4 They even relied on the experience with the previous models of solar panel to estimate that the manufacturing cost would be around CHD 1,122 taking into consideration of the exchange rate fluctuating between USD 1 = CHD 6.6 and USD 1 = CHD 6.8.5 Therefore, they emphasized that the exchange rate should be around 6.6 – 6.8 and has been very stable over the last years.6 6. Secondly, in the meeting between Mr. Henry Allerton - CEO of Solar Spectrum Inc. and Mr. Meng Tingxao – new CEO of Taibao Ltd., one of the main points discussed was the need to “de-risk” Solar Spectrum Inc. and some other main suppliers of solar systems to make the solar systems more attractive for potential buyers.7 Therefore, CLAIMANT must have known that RESPONDENT shall apply the fixed exchange rate to attract more potential buyers. 7. Thirdly, CLAIMANT also agreed with RESPONDENT to apply the exchange rate for the Contract in the addendum.8 8. Hence, CLAIMANT must have known of RESPONDENT’s intention9 to apply the fixed exchange rate not only to the addendum, but the whole contract.
Alastair Henderson, page 890, para. 12. Vorobey, Vol. 31 (2012-2013). 3 Bonell. 4 Claimant’s Exhibit C 1. 5 Request for Arbitration, para. 7. 6 Claimant’s Exhibit C 1. 7 Respondent’s Exhibit R 1. 8 Respondent’s Exhibit R 2, Respondent’s Exhibit R 3. 9 Bruno Zeller, Vol. 4, No. 4 (2002). 1 2
Students and the Law (UEL MCC 2018 Edition) | 29
b. Even if the subjective test is not applicable, the objective test in Article 8(2) of the CISG and Article 4.1(2) of the UNIDROIT shall be applied
c. A reasonable person in the same kind as the other party would have had understood the exchange rate was applied to the whole Contract
9. Article 8(2) of the CISG provided that if the preceding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances”. Furthermore, Article 4.1(2) of the UNIDROIT also stated that if such an intention cannot be established, the contract shall be interpreted according to the meaning that reasonable persons of the same kind as the parties would give to it in the same circumstances.
14. Mr. Lee Xi – CLAIMANT’s accountant and Mr. James Brown – Chief Financial Officer of RESPONDENT are reasonable persons. They both have the linguistic knowledge, technical skills, or business experience14.
10. At first, the formula to calculate the purchase price is based on a cost-plus basis, which is the bracket of the production cost pluses the percentage of the production cost itself, formulized in Section 4.10 However, the exchange rate is only applicable to the production cost. 11. Secondly, the production cost is CHD 1206 per solar panel. If applying the exchange rate, the production cost shall be USD 180. As a result, RESPONDENT would pay USD 18,525,000. This price is more than the minimum price per solar panel in Section 4 of CLAIMANT’s Exhibit C 2, which is still acceptable. 12. Thirdly, following the Farnsworth case, the seller mistakenly offers the price of the goods as “68,000 francs”. However, the price he intended to sell is “86,000 francs”. Nevertheless, the exchange rate is still applicable since there is no mistake in the invoice. 13. Accordingly, RESPONDENT did ask CLAIMANT whether the terms of the addendum were acceptable.11If CLAIMANT found that there was any ambiguity, they should have said and not let them believe that the exchange rate applied to the whole contract.12 However, CLAIMANT did not. They even acknowledged RESPONDENT’s suggestion to link the agreement in regard to the inverters to the contract was a sensible one.13
10 11 12 13 14 15 16
Claimant’s Exhibit C 2. Respondent’s Exhibit R 2. Respondent’s Exhibit R 4. Respondent’s Exhibit R 3. COMMENTARY, Comment 2, Article 4.1.2 of the UNIDROIT. Respondent’s Exhibit R 3. Respondent’s Exhibit R 4.
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15. First, Mr. Lee Xi had a degree in financial accounting from Wonder Accounting College and had worked for about 4 years in the accounting department of Taibao Ltd. For that reason, he must have had experience in accounting and got used to the accounting procedure. On 18 May 2017, he was given the excel files with the costs incurred per solar panel and per inverter as well as Ms. Wang’s binder concerning the solar system project containing all correspondence and the Sales Contract. Therefore, such action of applying the fixed exchange rate of USD 1 = CHD 6.7 had shown CLAIMANT’s intention to apply the fixed exchange rate for the whole Contract although there was a considerable time pressure. 16. Even if CLAIMANT argued that Mr. Lee Xi had no knowledge about the whole transaction between the Parties and it was on the last day working before holiday, Mr. Lee Xi still had reason to apply the fixed exchange rate since the note of the exchange rate had been agreed by the Parties was on top of Ms. Wang’s binder, which demonstrated CLAIMANT’s intention. 17. Secondly, Mr. James Brown and Ms. Heidi – COO of CLAIMANT have discussed about the application of the exchange rate in the addendum. Ms. Heidi agreed with the suggestion of the exchange rate.15 Furthermore, the last sentence of the addendum could not be clearer.16 As a result, the exchange rate shall be applied to the whole Contract. d. All the relevant circumstances shall be considered to determine the Parties’ intention to apply the fixed exchange rate 18. Article 8(3) of the CISG provided that all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves and any subsequent conduct of
the parties shall be considered.17 Besides, Article 4.3 of the UNIDROIT also stated in applying Article 4(1) and 4(2) regard shall be had to all the circumstances. 19. CLAIMANT could not invoke Article 9 of the CISG18 since there was no usage about the fixed exchange rate had been established between the Parties. Furthermore, there was a requirement of the standard and reiteration to demonstrate a usage and such action of fixing exchange rate was the first time conduct between the Parties19 although they had a long trading relationship for nearly five years.20 20. Pursuing to Respondent’s Exhibit R 4, in calculating the price for the solar panels developed under previous contracts, the Parties always applied the exchange rate at the time the contract was concluded, which is CHD 6.7, not the present exchange rate (CHD 6). 21. Thus, all the relevant circumstances indicated that the Parties intended to apply the fixed exchange rate to the whole Contract. e. The addendum also clarified the application of the exchange rate 22. At first, the words in the addendum cannot be any clearer.21 Hence, the Parties must have learned of that intention. Secondly, the Parties both agreed with the addendum concerning the exchange rate governing the whole Contract. Therefore, the fixed exchange rate shall be applied to the Sales Contract. 23. CLAIMANT may argue that the fixed exchange rate was only applied to the addendum and the current exchange rate was applied to the Sales Contract since it was written: Other terms per main Agreement.22 However, those terms could not be considered as the current exchange rate since the Contract did not mention anything about this. Therefore, the fixed exchange rate shall be interpreted as an application not only to the addendum, but the whole Contract because terms and expressions used by one or both parties are clearly not intended to operate in isolation
but have to be seen as an integral part of their general context.23 II. RESPONDENT fully performed its obligation under the Contract 24. Since the Parties had agreed on the terms of the exchange rate for the whole Contract and RESPONDENT had sent USD 18,525,000 to CLAIMANT’s account following the invoice, RESPONDENT had fulfilled its obligation in accordance with Article 53, 54 of the CISG and the Sales Contract. 25. According to Article 53 of the CISG, the buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention. Otherwise, Article 54 also stated the buyer’s obligation to pay the price includes taking such steps and complying with such formalities as may be required under the contract or any laws and regulations to enable payment to be made. 26. RESPONDENT received the goods24, examined the goods25, paid for the goods26 and took the delivery as required under the Contract and the CISG.27Therefore, RESPONDENT fully performed its obligations.28 III. CLAIMANT cannot rely on its inconsistent behavior 27. As being proved above, RESPONDENT totally relied on the previous negotiations, any practices which the parties have established between themselves and any subsequent conduct of the parties29. 28. Article 1.7 of the UNIDROIT provided that party cannot act inconsistently with an understanding it has caused the other party to have and upon which that party reasonably has acted in reliance to its detriment. This Article meant to clarify an error or misunderstanding when a party expect the other to ask to correct this mistake, which it relied upon.30
COMMENTARY, Comment 23, Article 8(3) of the CISG. Gyula Eörsi. 19 CCB P4. 20 Request for Arbitration, para. 2. 21 OKBL (A15). 22 Claimant’s Exhibit C 2, Respondent’s Exhibit R 2. 23 COMMENTARY, Comment 1, Article 4.4 of the UNIDROIT. 24 Claimant’s Exhibit C 3; CRSC 32 Odo. 25 Claimant’s Exhibit C 3, Article 38 of the CISG. 26 Claimant’s Exhibit C 3; CCDR 2007; FDCS 2006. 27 Article 53,54 ,62 of the CISG. 28 Leif Sevón; Dubrovnik Lectures (1986), Chapter 6, p. 208. 29 ICSID ARB/06/18. 30 Bonell, page 13. 17 18
Students and the Law (UEL MCC 2018 Edition) | 31
29. CLAIMANT did not do anything to clarify the confusion of the exchange rate. They could have had asked for the clarification or disagreed with the terms of the addendum about the fixed exchange rate or added an addendum which contented the price for the goods. However, they did not.31 They even took advantage from RESPONDENT by claiming to take the current exchange rate.
34. There is no agreement between CLAIMANT and RESPONDENT on whom to pay the cost of the arbitration. Therefore, the Tribunal has power to order one party to pay the arbitration cost. Hence, the request of RESPONDENT to order CLAIMANT to pay the cost incurred in this arbitration is reasonable.
30. Consequently, CLAIMANT had many opportunities to clarify the ambiguity. Nevertheless, they only ask for the additional payment after RESPONDENT’s performance. Such action was inconsistent behavior and CLAIMANT is not entitled to order the additional payment from RESPONDENT.32
35. Article 34 VIAC Rules claims that: “Costs of arbitration include: 1. The expenses for remuneration of Arbitrators; 2. The Centre’s administrative expenses; 3. The expenses for travelling, accommodation and other relevant expenses of the Arbitrators as stipulated in the written Guidelines of the Centre in force at the time of preparing the estimate for the expenses; and the expenses for other assistance at the request of the Arbitral Tribunal; 4. The expenses for inspection and valuation of assets, the expenses for seeking expert advice”.
ISSUE 2: CLAIMANT SHALL PAY RESPONDENT’S COST INCURRED IN THIS ARBITRATION I. The Tribunal has power to order CLAIMANT to bear the cost of arbitration 31. Under Article 20 (1) UML, the Parties are free to agree on the place of arbitration. Hence, the Parties have agreed on the dispute resolution in the Sales Agreement: “The arbitration shall beconduct under the Rules of the Vietnam International Arbitration Center at the Vietnam Chamber of Commerce and Industry (“VIAC”) and in line with international arbitration practice…The seat of arbitration shall be in Ho Chi Minh City, Vietnam”33 32. Pursuant to Article 1(2) UML: “The provisions of this Law,… apply only if the place of arbitration is in the territory of this State.” Therefore, the law applicable to each arbitration (the lex arbitri – the law of the arbitration) will be the law of the place where the arbitration takes place (the lex loci arbitri – the law of the seat of the arbitration). In this case, Vietnam is selected at the seat of the arbitration, it follows automatically that the VLCA and the VIAC Rules.34 33. Article 34(3) of VLCA provides that: “the party which loses the cases must pay the arbitration costs, unless otherwise agreed by or stipulated by the procedural rules of the arbitration centre, or unless the arbitration tribunal makes some other allocation of fees.” Also, under Article 36(1) of VIAC Rules states that: “unless otherwise agreed by the parties, the Arbitral Tribunal shall allocate the costs of arbitration.” ICC ICA. Paul Finn. 33 CLAIMANT’s Exhibit C2. 34 Alastair Henderson, page 890, para. 12. 35 ICC DCA. 31 32
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II. The cost in this arbitration of RESPONDNET is reasonable and proportional
36. RESPONDENT’s cost incurred in this arbitration also includes legal fees and disbursements, expert witnesses, and in attending and giving evidence. 37. Therefore, the cost incurred in this arbitration of RESPONDENT is reasonable and proportional and the Tribunal should take account into various factors to determine the cost is reasonable. 38. The factors to determine the costs are depending on the circumstances of the case, including but not limited to the following: (i) the reasonableness of the rates and number and level of fee-earners when evaluating whether the amount of work charged was reasonable; (ii) the reasonableness of the level of specialist knowledge and responsibility retained for the dispute, including the legal qualification of representatives, involvement of specialist teams or team members and level of seniority; (iii) the reasonableness of the amount of time spent, at various levels and rates, on the various phases of the arbitration; and (iv) any disparity between the costs incurred by the parties as a general indicator of reasonableness as opposed to a separate factor in itself.35 39. As the cost is reasonable, the Tribunal should order CLAIMANT to pay RESPONDENT’s cost that is incurred in this arbitration.
III. CLAIMANT’s behavior should be taken into account by the Tribunal when making decision on the Arbitration cost 40. Pursuant to Article 41(1) UAR: “The fees and expenses of the arbitrators shall be reasonable in amount, taking into account the amount in dispute, the complexity of the subject matter, the time spent by the arbitrators and any other relevant circumstances of the case.” It is expressly stated that, in making its decisions on costs, the tribunal may take into consideration the extent to which each party has conducted the arbitration in an expeditious and costeffective manner.36 41. Unreasonable behavior could include: excessive document requests, excessive legal argument, excessive cross-examination, dilatory tactics, exaggerated claims, failure to comply with procedural orders, unjustified applications for interim relief, and unjustified failure to comply with the procedural timetable.37
45. The wrong accusation of CLAIMANT may affect directly not only to the operation but also to the reputation of RESPONDENT while RESPONDENT is a contract with a major partner. CLAIMANT’s refusal to pay the cost of the arbitration has led the strained liquidity of RESPONDENT become serious. PRAYER OF RELIEF In light of the above considerations, RESPONDENT respectfully requests the Arbitral Tribunal to: I. Reject all claims for payment raised by CLAIMANT. II. Order CLAIMANT to pay RESPONDENT’ cost incurred in this arbitration. Respectfully submitted, Solar Spectrum Inc., THE RESPONDENT
42. CLAIMANT’s false accusation of RESPONDENT trying to “take advantage” of an obvious mistake in an invoice should be granted by the Tribunal. RESPONDENT paid the price as required under the Sales Agreement according to the fixed rate which is specified – or agreed between Parties – in the Addendum to the Agreement and adding the agreed upon the profit that amount to costs of USD 180 per panel.38 43. CLAIMANT also gives a great accurate number of facts. However, the legal conclusion of CLAIMANT is entirely wrong, unaccepted and unjustified. This has caused time – consuming and affected to the finance and operation of not only RESPONDENT but also CLAIMANT. 44. In addition, RESPONDENT is a supplier of solar system for household, incorporated in Omericano. RESPONDENT is also in the important contract with Rumsay Property – a major developing that provided 1500 units of housing in Verona. The contract is important to RESPONDENT since it was the first time we could supply the solar system to a developing project rather than a household individually.39
36 37 38 39
ICC CTCA. ICC CTCA. Statement of Defence of RESPONDENT. Request for Arbitration of CLAIMANT.
Students and the Law (UEL MCC 2018 Edition) | 33
INTERVIEW
INTERVIEW THE BEST ORALIST OF UEL MOOT COURT COMPETITION 2018 Ho Thi Thanh Tam (K18502) & Nguyen Thuy Van (K18501), University of Economics and Law, Viet Nam National University - HCMC One day at the beginning of 2019, we have had a chance to meet Nguyen Huynh Tho, an excellent girl who won Best Oralist Prize in UEL Moot Court Competition 2018 (UEL MCC 2018). Although the conversation between us was short, she has shared warmly beautiful memories she had with her team and also some valuable experiences derived from this competition. Moreover, especially with any student who wants to know more about moot or having an intention to take part in moot court competition in future, these techniques shared by her below may be so helpful and worth learning for sooner preparation. Good morning Huynh Tho, Congratulations to you on becoming the best oralist of UEL MCC 2018. It is certain that you have many thoughts and feelings to share with everyone. So how do you feel after achieving this prize? After achieving this prize, I was so happy and speechless. Until now, I couldn’t believe that I have won this prize because I am just a second-year student and what I expected was to qualify to the semi-final round. Therefore, becoming the best oralist of UEL MCC 2018 was incredible and beyond my expectation. As a result, I would like to send my deepest gratitude to Legal Research and Advisory Club, the judges in this competition and all my teammates for supporting me to win “the best oralist” prize of UEL MCC 2018. Have you ever participated in any moot court competition before UEL MCC 2018? And why did you decide to participate in this competition? Before applying to UEL MCC 2018, I have participated in the Moot Tryout Competition in Ho Chi Minh City University of Law. The reason for me to join in this competition is having a chance to gain more experience in researching, writing and debating in law.
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Nguyen Huynh Tho, Major in Administration and Law, University of Law in HCMC
When you took part in the competition, teamwork played an important role in success. Could you share with us your journey to find cooperative and bonding teammates? As you have said, teamwork played an important role in our success. My story began when I saw the post of UEL MCC 2018 on its fanpage and decided to challenge myself. Then, I asked my friend, Anh Thu, to join with me. At that time, she was very busy. But finally, she agreed to become my teammate and prepared her best to enter into the competition, About the other member in my team, Phuong Doanh, I feel so lucky because she could set her schedule for participating in this competition and accepted my request. Did you have any memorable memories during the competition? Of course, during our process of writing the memorials and practicing to debate for the final round, we discussed and argued a lot to prepare arguments which are as strong and reasonable as possible. Although each of us had our own opinions, we finally
managed to deal with and unify them. These memories were so fun and exciting that I never can forget. During two months you participated in this competition, what were obstacles you have to deal with? And how did you overcome these difficulties? During two months we participated in this competition, we had to face with many difficulties, especially with our different ideas on the same issues. We also faced up to the lack of solution to solve the problem happened. Therefore, we tried our best to find the basis through the CISG database and some documents on the Internet to complete our arguments. Your presentation on oral hearing was evaluated very high with lots of praises from the judges, so what were your studying methods to have an excellent performance like that? Thank you for giving such high praise on my presentation. Before the Oral rounds, I watched the Moot debating videos on Youtube and learned how to present efficiently in a Moot Court competition. Besides, I also search for some skills on the Internet to fill my lack of experiences. Moreover, I would like to thank the UEL Moot Court Organization Committee for posting some useful oral tips on your fanpage. These tips were very supportive for me to bring my best to the oral hearing in the final round. What’s your opinion about Moot Problem in this competition? Can you tell us your team’s process of writing Memoranda? In consideration of moot problem, its content was very interesting and challenging for our team. About the process of writing the Memoranda, we have some difficulties in struggling to learn how to write a qualified Memorandum. We often dealt with many obstacles like which word would be appropriate in these circumstances, or how to arrange the contents logically. However, thank to this process, we have so many memorable memories borne in our mind. Your team was very excellent to have a good oral presentation in the Final round with confident English speaking skills. So would you mind sharing with all students some useful tips to learn English in general and Legal English in details? Thank you so much for your praise. To learn Legal English in general, I have read much legal documents to learn new words. I also watch some movies relating to legal lawsuit, which was very helpful for my major. Especially thanks to attending Moot Competition, I have a motivation to learn new legal English words through reading and searching for the documents.
In addition to legal knowledge you have, how can you improve your style in performance and debating fluently? What are your keys to be a confident oralist in hearing? For performance and debating fluently, we drafted scripts for debating based on our Memoranda before hearing. Then, we spent time rehearsing with each other. I also practiced my speeches in front of a mirror to control expressions on my face. This process helped me gain more confidence. Why do you try your best in achieving goals on moot court? I tried my best in achieving goals on moot court because practicing law is one of my favorite activities in Mooting session. I always tell myself before joining any activity that I have to bring my best, no matter what, to achieve the goal I set for myself. Would you kindly share with us your plan in the future? In near future, I would love to participate in more Moot competitions to gain more skills for myself and make new friendships with others. I’d very appreciate it if you could share your feedback about UEL MCC 2018 so that we can improve better in the next competition? UEL MCC 2018 was organized professionally and carefully. My only concern is some typing errors in the Moot Problem. However, the Organization Committee managed to correct them very quickly. I really appreciated that. Could you give your own advice and experience on studying law and moot court for students? Studying law is a long process. When you look at it first, you might find it boring and difficult to achieve the goal. However, when you get into it and have to face with challenges, you would find it really interesting and enjoyable. Of course, at the beginning, it would be very hard to look for an appropriate answer, but when you finally solve out the problem, the feeling will be great and give you a passion to keep studying and intend to join in Moot activities. So that’s what I got in UEL MCC 2018. Thank you so much, Ms. Nguyen Huynh Tho. Your sharing is actually exciting and helpful. Once again, congratulate on your success at UEL Moot Court Competition 2018 and we hope you will always keep your beautiful memories regarding this competition. Wish you all the best for new year in your life and your career.
Students and the Law (UEL MCC 2018 Edition) | 35
SHARINGS
FROM DREAMS TO VICTORY
The Champion of UEL MCC 2018, from University of Law in HCMC Ngo Thi Anh Thu, Administration and Law Tong Ngoc Phuong Doanh, Administration and Law Nguyen Huynh Tho, Administration and Law (From left to right)
Each of us has something that we want to try at least once in our life. The dream of participating in Moot Court Competition is among the things that all of us have in common, but it is also our anxiety since we are still sophomores. However, we have gathered all of our courage to register to participate in UEL Moot Court Competition. Now, we can strongly say that our decision to take part in this Competition is the right decision that we made together. UEL MCC 2018 has brought us many unforgettable memories. UEL MCC 2018 was a good chance for us to enrich our knowledge, especially in the field of law and English. It helped us gain knowledge on legal English, as well as advance English skills included reading, writing, speaking and listening. In addition, UEL MCC 2018 made us become closer to each other when working in team. We have realized the important role of teamwork in the workplace as well as in our life. Moreover, UEL MCC 2018 had also given us a chance to represent our views in front of the Court like real lawyers. For all of those great things that UEL MCC 2018 has brought us, we would like to express our gratitude to the organizers for being friendly, helpful and for giving us encouragement. We hope that UEL Moot Court Competition will be held successfully in the next years and always be the interesting place where the students can gain high valuable experience for themselves.
36 | Practice Makes Perfect
SHARINGS
THE JOURNEY TO BREAK BORDERS
The Runner-up of UEL MCC 2018, from University of Economics and Law Nguyen Tra My, Finance and Banking Law Le Thi Ngoc Hiep, Finance and Banking Law Tran Truong Huong Binh, Finance and Banking Law Le Xuan Tien, Finance and Banking Law (From left to right)
We were audiences sitting off the stage, watching contestants performed their great knowledge and skills at UEL Moot Court Competition 2017 and admiring them. A tutor said to us that you went out there, learned more, challenged yourself and then got better. These two things had given us motivation and will to come to UEL Moot Court Competition 2018. It really was a journey of will and motivation. The moment we received “Moot problem�, we were scared and anxious due to its length. It was half of the time of the Memorandum-round that was used only for researching the case. Honestly, there were moments that we were so bored and struggling. However, when we thought about why we began, we knew that anyway we would have to move on. Law on contract is one of our main subjects, however, CISG was quite new to most of us. Through UEL Moot Court Competition 2018, we found love with this branch of law. CISG is interesting and subtle far beyond our imaginations. It was explicit that UEL Moot Court Competition 2018 has brought us together. The Competition not only gifted us knowledge and experience, but also great advice and suggestions from venerable judges. All of the pressure, mistakes and experience were so true and unforgettable. After all, if we had a chance to get back to the start, we would never be shy to said that it was the right thing to do! Finally, we would like to express our gratitude to Legal Research and Advisory Club (LRAC) for organizing a great and valuable competition.
Students and the Law (UEL MCC 2018 Edition) | 37
The Legal Research & Advisory Club (LRAC) operates under the jurisdiction of the Ho Chi Minh Communist Youth Union of the Faculty of Economic Law, University of Economics and Law, Vietnam National University, Ho Chi Minh City. Objective: LRAC exerts great effort in building an environment basing on three primary aspects: Researching – Practicing – Critical thinking through many activities which are suitable for students’ aptitude. Mission: Motivate students to develop essential skills for legal researching and advising by creating an effective and professional practice space, whereas students are not only the recipients but also the ones maintaining and strengthening these motivations. Contact: Website: http://www.lracuel.org/ Fanpage: http://www.facebook.com/fplracuel Email: lracuel@gmail.com