DAV - Memorandum For Respondent

FIRST ANNUAL
HLU COMMERCIAL ARBITRATION MOOT

Hanoi, 6 November 2015 to 1 March 2016
MEMORANDUM FOR RESPONDENT
DIPLOMATIC ACADEMY OF VIETNAM

FACULTY OF INTERNATIONAL LAW
ON BEHALF OF
Rosen Ltd.
123 Victoria Road, Oceania
Alpha
RESPONDENT
AGAINST
Locus Ltd.
88 Longman Road, Leisure
Beta
CLAIMANT
Counsels
Do Duy Hung
Tran Ha Uyen
Do Minh Ngoc
Diplomatic Academy of Vietnam
TABLE OF CONTENT
INDEX OF ABBREVIATIONS................................................................................................. v
INDEX OF AUTHORITIES AND CASES .............................................................................. vi
STATEMENT OF FACTS ......................................................................................................... 1
SUMMARY OF ARGUMENTS ................................................................................................ 3
APPLICABLE LAW .................................................................................................................. 5
ARGUMENTS............................................................................................................................. 6
Jurisdiction issues
A. The Tribunal has no jurisdiction to hear the current dispute ........................................... 6
I.
The precondition to arbitration was not sufficiently fulfilled ........................................... 6

1. The amicable settlement procedure was a mandatory pre-arbitral stage .............. 6
2. Nonetheless the good faith requirement was not met ........................................... 6
a. There was no effort in setting finally and amicably ................................. 7
b. The good faith requirement was not met .................................................. 7
3. Sending the Parties back to dispute settlement would not be futile ...................... 8
II.
Vietnam International Arbitration Centre is not the institution that the Parties intended
to use in the Contract ........................................................................................................ 8
1. Mutual intent is the dispute settlement provision of the contract between
Locus Group and Rosen Ltd ................................................................................. 8
2. The contra proferentem rule cannot be applied in the present case ..................... 9
III.
RESPONDENT did not waive its right to object jurisdiction of the Tribunal ................. 10
IV.
If the Tribunal adjudges that it has jurisdiction and continues with the arbitration, the
award is at risk of being set aside or denied recognition and/or enforcement. ................. 10
Merits
B. The defect suffered by the Phoenix Tulip flowers was caused by Red Dragon, not
faulted quality of seeds ............................................................................................................... 11
ii

I.
Weather conditions in Beta during Red Dragon were unfavorable for Phoenix
Tulips to bloom ................................................................................................................. 11
II.
III.
CLAIMANTs logic behind its argument should be dismissed........................................ 13

It is an extremely low probability that CLAIMANT received such large quantity of
unqualified goods .............................................................................................................. 14
IV.
Lily Ltd. and CLAIMANT were not experiencing Red Dragon to the same extent. ....... 14
C. RESPONDENT fulfilled its obligation to provide instructions ......................................... 15

I.
II.
The General Planting Guidance was a legitimate document ............................................ 15

RESPONDENT did perform its obligation to assist CLAIMANT during the planting
stage .................................................................................................................................. 15
1. Only when CLAIMANT expressed its need for assistance would
RESPONDENT be obliged to offer help .............................................................. 15
a. CLAIMANT needed to speak up first ...................................................... 15
b. Mr. Black readily gave detailed instructions when Mr. White requested . 16
2. There was negligence in the planting process....................................................... 17
D. CLAIMANT unlawfully declared the contract avoided ..................................................... 18

I.
II.
There was no fundamental breach of contract, so Art. 49 CISG is inapplicable .............. 18

CLAIMANT loses the right to rely on the lack of conformity in accordance with Art.
39 CISG ............................................................................................................................ 19
E. RESPONDENT is not entitled to compensating any damages; should the Tribunal

decide otherwise, the amount should be much lower .............................................................. 20
I.
USD 300,000 Loss of profit .............................................................................................. 20
II.
USD 200,000 Loss of reputation ...................................................................................... 20

1. RESPONDENT did not violate the Contract, so it is not supposed pay for
CLAIMANTs loss of reputation .......................................................................... 20
2. CLAIMANT was under the obligation to mitigate damages ................................ 21
a. Loss mitigation is compulsory for the party who relies on a breach ........ 21
b. If RESPONDENT can successfully point out one reasonable measure,
then the amount of damages must be reduced .......................................... 21
iii

3. A substitute purchase from Lincoln Ltd. was an accessible and reasonable
measure to mitigate losses, but CLAIMANT showed no endeavor at all ............ 22
a. A substitute purchase from Lincoln Ltd. would save CLAIMANT USD
160,000+ ................................................................................................... 22
b. Dealing with Lincoln Ltd. is not unreasonable ......................................... 22
PRAY FOR RELIEF .................................................................................................................. 24
iv
INDEX OF ABBREVIATIONS
/
Paragraph / Paragraphs
Art. / Arts.
Article / Articles
e.g.
exempli gratia (for example)
Exh. C
Exhibit from Claimant
Exh. R
Exhibit from Respondent
IAC
International Arbitration Centre
i.e.
id est (that is)
Int.
International
Ltd.
Limited
Memo. C
Memorandum for Claimant
No.
Number
p. / pp.
Page / Pages
Proc. Order
Procedural Order
Re. Arb.
Request for Arbitration
St. Def.
Statement of Defense
Supra
see above, earlier in this writing
The Contract
Contract on the purchase of Phoenix Tulip

Seeds between Locus Ltd.
(Buyer/CLAIMANT) and Rosen Ltd.
(Seller/RESPONDENT)
The Festival
The Annual Flower Festival in Beta, 10-14

February 2015
The Tribunal
The arbitral tribunal in the current dispute
v.
Versus (against)
Vol
Volume
INDEX OF AUTHORITIES AND CASES
Cited in
STATUTES & TREATIES

CISG
United Nations Convention on Contracts for the International

Sale of Goods (Vienna 1980)
UNCITRAL
UNCITRAL Model Law on International Commercial
Model Law
Arbitration 1985, with amendments as adopted in 2006
New York
Convention on the Recognition and Enforcement of Foreign
Convention
Arbitral Awards (New York 1958)
Vienna
Convention
PICC 2010
Vienna Convention on the Law of Treaties (Vienna 1969)

UNIDROIT Principles of International Commercial Contracts
2010
LAW & RULES

VIAC Rules
Vietnam International Arbitration Centre Rules
Law on Commerce of Alpha

Lamia National Arbitration Law
AUTHORITIES
Insights into seed quality management. From the American
ASTA
Seed Trade Association.

http://www.amseed.org/resources/guide-to-seed-qualitymanagement/
Born
Bhler /
Webster
Gary Born, International commercial arbitration, 3rd edition,

Wolters Kluwer Law & Business (2009)
Michael W. Bhler / Thomas H. Webster, Handbook of ICC
37
Arbitration: Commentary, Precedents, Materials, 3rd edition

Sweet & Maxwell: London (2005).
Christian Bhring-Uhle, Arbitration and Mediation in
International Business (2nd edition), Kluwer Law
Bhring-Uhle
37
International, 2006. Part Three: Alternative to Arbitration,

pp.129-244
Available at: www.kluwerarbitration.com
vi
24

Richard Chalk & John Choong, Dispute Settlement Options:
24
An Overview, in Michael J. Moser, Managing Business

Chalk / Choong
Disputes in Today's China: Duelling with Dragons, Kluwer

Law International, 2007.
Available at: http://tinyurl.com/jjoqxaj
Kenneth R. Davis, A Model for Arbitration Law: Autonomy,
Davis
31
Cooperation and Curtailment of State Power, in 26 Fordham

Urban Law Journal 167, (1999), pp. 167-208.
Available at: http://ir.lawnet.fordham.edu/
Larry A. DiMatteo, Lucien Dhooge, Stephanie Greene,
69, 80
Virginia Maurer & Marisa Pagnattaro, The Interpretative Turn

in International Sales Law: An Analysis of Fifteen Years of
DiMatteo
CISG Jurisprudence, Northwestern University School of Law.

34 Northwestern Journal of International Law and Business
Winter (2004), p. 299-440
http://cisgw3.law.pace.edu/cisg/biblio/dimatteo3.html
Gregory M. Duhl, Conscious Ambiguity: Slaying Cerberus in
Duhl
32
the Interpretation of Contractual Inconsistencies, University

of Pittsburgh Law Review, Vol. 71, (2009), pp. 71-116.
Available at: University of Pittsburgh Law Review
Enderlein /
Maskov
Fritz Enderlein & Dietrich Maskov, Commentary by
80
Enderlein and Maskow on Article 77 CISG.

http://www.cisg.law.pace.edu/cisg/biblio/enderlein.html
Franco Ferrari, Contracts for the International Sale of
69, 70
Goods: Applicability and Applications of the 1980 United

Ferrari
Nations Convention, Martinus Nijhoff Publishers, 2011

Available at Google Books
Dyal Jimnez Figueres, Multi-Tiered Dispute Resolution
Figueres
16
Clauses, in ICC Arbitration, ICC International Court of

Arbitration Bulletin, Vol 14 No 1 (Spring 2003), pp. 71-88.
Honnold
John O. Honnold, Uniform Law for International Sales under

the 1980 United Nations Convention, 3rd edition, Kluwer Law
vii
68, 69

International 1999.
Gnther J. Horvath, The Duty of the Tribunal to Render an
37
Enforceable Award, Journal of International Arbitration, Vol.

Horvath
18 Issue 2, (2001), pp. 135-158

Available at:
kluwerlawonline.com/abstract.php?area=Journals&id=317806
Michael Kirby, Towards a Grand Theory of Interpretation:
Kirby
31
The Case of Statutes and Contracts, 24 Statute Law Review

95, (2003).
http://www.itsunderstood.com/lawyers/HJMKirby.pdf
Victor Knapp, Bianca-Bonell Commentary on the
Knapp
80, 87
International Sales Law, Giuffr: Milan (1987) pp. 559-567.

http://www.cisg.law.pace.edu/cisg/biblio/knapp-bb77.html
Lew
Julian D. M. Lew, The Law Applicable to the Form and
37
Substance of the Arbitration Clause (1999), pp. 114-145.

Joseph M. Lookofsky, Understanding the CISG in the USA: A
20
Compact Guide to the 1980 United Convention on Contracts

Lookofsky
for the International Sale of Goods, Kluwer Law

International, 2004
Available at: http://tinyurl.com/z88droj
Kah Cheong Lye, Agreements to Mediate: The Impact of
20, 23
Cable & Wireless plc v IBM United Kingdom Ltd [2003] BLR
Lye
89, Singapore Academy of Law Journal, Vol 16 (2004), pp.

530-540
Available at http://www.sal.org.sg/
Michael Pryles, Multi-Tiered Dispute Resolution Clauses, in
Pryles
16
Journal of International Arbitration, Vol 18 No 2 (2001), pp.

159-176.
Ramberg
Redfern /
Hunter 2004
Jan Ramberg, International Commercial Transactions, 3rd
32
edition, ICC Publication N691 : Stockholm (2004)

Alan Redfern, David M. Hunter, Nigel Blackaby &
Constantine Parasides, Law and Practice of International
Commercial Arbitration (Fourth edition), Thomson Sweet &
viii
37

Maxwell, London, England (2004)
Redfern /
Redfern and Hunter on International Arbitration, 5th edition,
Hunter 2009
Oxford University Press, December 2009
19
Peter Riznik, Some Aspects of Loss Mitigation in International 80, 82, 85

Riznik
Sale of Goods, 14 Vindobona Journal of International

Commercial Law and Arbitration (Feb 2010), p.267-282
http://www.cisg.law.pace.edu/cisg/biblio/riznik1.pdf
Mauro Rubino-Sammartano, International Arbitration Law
Rubino
and Practice, 2nd edition, Kluwer Law International, The
-Sammartano
Hague (2001)
23
Available at: http://tinyurl.com/hu5cdrd

(Author in)
Schlectriem
Peter Schlectriem, Commentary on the UN Convention on the

International Sale of Goods (CISG), 2nd edition, Oxford
University Press, New York 1998.
Ingeborg Schwenzer, National Preconceptions that Endanger
Schwenzer
68
69
Uniformity, Pace International Law Review Issue 1 Vol 19

(Spring 2007)
Available at Pace.edu
Andrew Sykes, The Contra Proferentem Rule and the
31, 32
Interpretation of International Commercial Arbitration

Sykes
Agreements, in Vindobona Journal of International

Commercial Law & Arbitration, Vol 8 No 1 (2004), pp. 6579.
UNCITRAL
2012 Digest
United Nations Commission on International Trade Law,
36
UNCITRAL 2012 Digest of Case law on the Model Law on

International Commercial Arbitration
CASES
Australia
Aiton v.
Transfield
Supreme Court of New South Wales, NSWSC 996, No

55020/99, 1 October 1999, Aiton Australia Pty Ltd. v.
Transfield Pty Ltd.
ix
16

Austria
Appellate Court Innsbruck Dansk, Blumsterexport A/s
Garden Flowers
(Denmark) v. Frick Blumenhandel (Austria), No. 4 R 161/94,
case
1 July 1994.
65, 67
http://cisgw3.law.pace.edu/cases/940701a3.html
Rolled metal
sheet case
Arbitral Tribunal Vienna, Claimant (Austria) v. Respondent
85
(German), No. SCH-4366, 15 June 1994

http://cisgw3.law.pace.edu/cases/940615a3.html
Belgium
Rechtbank [District Court] van koophandel Kortrijk, NumurNamurKreidverzekering
v. Wesco
70
Kreidverzekering (France) v. Wesco (Belgium), No. A.R.

4328/93, 16 December 1996
http://cisgw3.law.pace.edu/cases/961216b1.html
France
Pressure cooker
Case No. 2002/18702, Cour dAppel de Paris, 4 July 2004
case
Available at: http://cisgw3.law.pace.edu/cases/040604f1.html

Cour dAppel de Grenoble, Caito Roger (Italy) v. Socit
Caito v. Socit
case
66
27, 69
francaise de factoring (France), No. 93/4126, 13 September

1995
http://cisgw3.law.pace.edu/cases/950913f1.html
Germany
CLOUT case
CLOUT case No. 659, Oberlandesgericht Naumburg,
No. 659
Germany, 10 Sch 08/01, 21 February 2002

District Court Kassel, Plantiff (Italy) v. Defendant (Germany),
Clothes case
36
27
No. 11 O 4187/95, 15 February 1996.

http://cisgw3.law.pace.edu/cases/960215g2.html
Appeallate Court (OLG) Saarbrcken, Plantiff (Germany) v.
Flowers case
70
Defendant (Italy), No. 1 U 703/97-143, 3 June 1998

Appellate Court (OLG) Kln, Plaintiff (Germany) v.
Used Car case
Defendant (Italy), No. 22 U 4/96, 21 May 1996

78
Vacuum
Cleaners case
Video
Recorders case
Appellate Court Celle, Plaintiff (Netherlands) v. Defendant
78
(Germany), No. 3 U 246/97, 2 September 1998

District Court Darmstadt, Plantiff (Germany) v. Defendant
77
(Switzerland), No. 10 O 72/00, 9 May 2000

Russia
Tribunal of International Commercial Arbitration at the
CLOUT Case
No. 474
76
Russian Federation Chamber of Commerce and Industry,

Claimant (USA) v. Respondent (Russia), No. 54/1999, 24
January 2000.
http://cisgw3.law.pace.edu/cases/000124r1.html
Switzerland
Appellationsgericht (Appeallate Court) Basel-Stadt, Plaintiff
Packaging
(buyer/Spain) v. Defendant (seller/Switzerland), No.
machine case
16/2007/MEM/chi, 26 September 2008.
27
http://cisgw3.law.pace.edu/cases/080926s1.html
United Kingdom
Scott v. Avery
Cable &
Wireless case
House of Lords, No [1843-1860] All ER Rep 1, 10 July 1856,
16
Scott v Avery (and others).

Queens Bench Division, No [2003] EWHC 316 (Comm), 27
16
February 2003, Cable & Wireless PLC v IBM United

Kingdom Ltd.
United States of America

U.S. Court of Appeals, 9th Circuit, No 93-15811, 18 Jan
Atwood v.
1995, Richard Atwood v. Newmont Gold Co, Inc.
Newmont
Available at:
30
http://caselaw.findlaw.com/us-9th-circuit/1115756.html
Terra Intern. v.
Mississippi
Chemical
U.S. Court of Appeals, 8th Circuit, No. 96-2140, 11 July

1997, Terra Intern., Inc. v. Mississippi Chemical Corp.
Available at:
http://caselaw.findlaw.com/us-8th-circuit/1188306.html
xi
32
STATEMENT OF FACTS
CLAIMANT, Locus Ltd., a young flower supplier based in Beta is a subsidiary of Locus
Group. Ms. Emily Thorne is the director of CLAIMANT, the head of the negotiating team to
conclude a transaction with RESPONDENT. Mr. Silver White is an agricultural engineer in
Locus Ltd and also a negotiating team member.
RESPONDENT, Rosen Ltd., is a leading worldwide flower and seed supplier headquartering
in Alpha. Mr. Daniel Grayson is the director of RESPONDENT. Mr. William Black is the
head of Seeding Department of RESPONDENT.
20 August 2014
CLAIMANT and RESPONDENT signed the Contract, in which

RESPONDENT agreed to sell 3000 Phoenix Tulip seeds. The
contract value was USD 150,000.
20 October 2014
RESPONDENT provided the General Planting Guidance along

with the seeds to CLAIMANT on time, promised to give necessary
assistance during the planting stage whenever CLAIMANT
needed.
22 October 2014
CLAIMANT started planting the seeds
20 November 2014
Mr. White made a phone call to Mr. Black for 15 minutes
30 November 2014
Mr. White and Mr. Black met at an international scientific

conference. Later in the afternoon, Mr. White was fired from Locus
Ltd. The reason for such dismissal is kept confidential.
Mid-December 2014
Some leaves of around 73 Phoenix Tulip were discovered

shriveling.
29 December 2014 to
People in Beta witnessed an unusual phenomenon - the Red
13 January 2014
Dragon. Estimated rise of the outdoor temperature ranged from 3 to

5 Celsius degrees. RESPONDENT believes its Red Dragron
that caused the defective flowers.
17 - 20 January 2015
CLAIMANT found out that 75% of the flowers were defective.

50% shriveled and their colors were faded; 25% could not bloom at
all.
22 January 2015
CLAIMANT sent an email to RESPONDENT to inform about the

defective seeds and request for refund of the Contract value.
However, RESPONDENT rejected liabilities for such result and
declined reimbursement.
25 January 2015
CLAIMANT sent a Declaration of Contract Avoidance to

RESPONDENT. In addition, CLAIMANT said the dispute would
be submitted to Vietnam International Centre. This email was the
final communication between two Parties.
10-14 February 2015
The Annual Flower Festival took place. CLAIMANT sold out the
remaining 25% of Phoenix Tulip flowers to show at the Festival
and received great accolade, though less than 1000 flowers as
previously planned. Lincoln Ltd., the largest competitor of
CLAIMANT in Betas flower market also sold Phoenix Tulips at
the Festival, USD 220 per one.
CLAIMANT now claims damages upon the fundamental breach of the Contract including the
losses of profit from the failed contract with Mineo Group, and of reputation which amount to
USD 300,000 and USD 200,000 correspondingly.
Explanatory note: This Memorandum responds directly to the CLAIMANTs Memorandum
of the team Chukenper from Hanoi Law University (HLU). Due to the nature of the moot
competition, this writing will also address arguments that may go beyond the content found
in that memorandum.
SUMMARY OF ARGUMENTS
1.
The Tribunal has no jurisdiction to hear the current dispute for several reasons.
2.
First of all, the Parties failed to conform with the compulsory pre-arbitral dispute
settlement clause stipulated in Art. 10 of the Contract. Arbitration should only come last
after desperate effort from both sides without arriving at any mutual agreement. An
amicable settlement conducted in good faith requires CLAIMANT and RESPONDENT
to convene and exchange positions with open minds, which are willing to deliberate
about what can be compromised and what can't. However, CLAIMANT hastily
terminated the Contract merely after few insufficient emails with doubtful allegations. As
not until the prerequisite to arbitration is properly fulfilled does it give rise to the power
and intervention of arbitral tribunal, the Tribunal should rescind CLAIMANT's request
for arbitration, then send the Parties back to bilateral settlement process. Such one final
chance shall bring about lots of advantages, especially maximizing individual interests as
well as preserving business relationship between Locus and Rosen Ltd.
3.
Second, CLAIMANT has filed its request to the wrong address since Vietnam IAC is not
the institution agreed during negotiation process. It should be Vienna IAC in accordance
with the content of the dispute resolution provision from another contract between Rosen
Ltd. and Locus Group. Such sampling had been clearly established as a mutual intent and
practice. As a matter of jurisprudence, if mutual intent and practice render a sufficiently
clear interpretation, then the contra proferentem rule should not be considered at all.
4.
Next, despite its silence for a few months, RESPONDENT hasn't lost the right to object
to jurisdictional issue because its objection was made in time in its Statement of Defense
pursuant to Art. 4 Model Law.
5.
Taking all into consideration, if the Tribunal mistakenly disregards RESPONDENT's

findings then there are grounds that warrant denial to both recognition and enforcement
of the award under New York Convention and Model Law.
6.
Should the Tribunal on the contrary still adjudges that it has jurisdiction over the dispute,
then in the matter of merits all claims to damages from CLAIMANT should be
dismissed. RESPONDENT respectfully insists the Tribunal to find that CLAIMANT has
not rightfully avoided the Contract by Ms. Thorne's declaration on 25 January 2014,
since there was no fundamental breach committed by RESPONDENT at all. Evidently
the weather abnormality Red Dragon caused the defects to 75% of 3000 flowers. It
created very unfavorable conditions for the blooming stage of Phoenix Tulips.
3

7.
Such phenomenon is the only logical explanation. RESPONDENT has been developing
rare flower seeds for years, therefore quality control cannot be an unfamiliar task.
RESPONDENT never possessed any vicious intention to harm CLAIMANT's business,
so it distributed the seeds in a very normal manner. Compared to Lily Ltd.'s successful
result, it is an extremely low probability that CLAIMANT randomly received such large
quantity of unqualified goods.
8.
Further, on each inquiry made by CLAIMANT, RESPONDENT duly fulfilled its

obligation to provide detailed instructions to help CLAIMANT with its planting process.
However with hindsight it can be seen that there were plenty of times in which
CLAIMANT should have asked for instructions, especially to tackle with "Red Dragon"
during its surprising comeback in Beta, but CLAIMANT instead remained silent. Thus it
cannot be excluded that such negligence partly contributed to the deficiency of flowers.
9.
Although aware of the imminent failed contract and loss of reputation with Mineo
Group, CLAIMANT never attempted any mitigating measures in order to lower possible
damages. A substitute contract with Lincoln Ltd. would have been an undeniably
reasonable exit, which not only could have saved significant amount of money but also
future potential customers.
10. All being said, RESPONDENT is certainly not entitled to compensating USD 500,000
losses that CLAIMANT asserts to have suffered. Still, if the Tribunal votes in favor of
CLAIMANT and state that RESPONDENT is (partly) responsible for the defects of
Phoenix Tulips, the Tribunal should also reduce the amount of compensations to rational
degree.
APPLICABLE LAW
11. In terms of procedural applicable law, the Parties have based their submissions on the
assumption that the place of arbitration for this arbitration is in Vinland, Lamia [Proc.
Order 1, p.22].
12. Accordingly, under lex loci arbitri, the arbitration rules in Lamia, which adopts the
UNCITRAL Model Law on International Commercial Arbitration (with amendments in
2006) (hereafter referred to as Model Law), will be applicable in the light of Article 1
of Model Law. Alternatively, the Parties are free to agree on the procedure to be
followed by the Tribunal pursuant to Art 19.1 of Model Law as they had done in Article
10 of the Contract [Exh. C 2, p.6]. However the fact that such arbitration clause itself the Rules of International Arbitration Tribunal (VIAC) is ambiguous causes
difficulty to derive any particular law from. Still since the present dispute is sent to
Vietnam International Arbitration Centre, the Rules of this body are also applicable.
13. In terms of substantive applicable law, Alpha, Beta and Lamia are all Contracting states
of the United Nations Convention on International Sale of Goods (shortly CISG),
which without dispute governs the international sale contracts between states. The
Contract provides a law clause that the Contract is governed by the law of Alpha. The
Law on Commerce of Alpha simply is a verbatim adoption of UNIDROIT Principles of
International Commercial Contracts 2010 (PICC 2010). Moreover, New York
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New
York 1958) and UCP 600 are also applied in this case.
ARGUMENTS
Jurisdiction issues
A. The Tribunal has no jurisdiction to hear the current dispute.
14. With due respect to expertise and shrewdness of the Tribunal, RESPONDENT insists on
the finding that the Tribunal does not have jurisdiction over the present dispute based on
three submissions: the Parties failed to comply with the compulsory amicable dispute
resolution clause in the Contract (I); Vietnam International Arbitration Centre is not the
institution agreed to file the dispute to, instead its Vienna IAC (II); RESPONDENT has
not waived its right to object to jurisdictional issues under Art. 4 Model Law (III). By
these virtues, if the Tribunal unlawfully keeps on affirming its jurisdiction, there are
grounds to challenge both recognition and enforcement of the award (IV).
I.
The precondition to arbitration was not sufficiently fulfilled.
15. Article 10 of the Contract says that before any dispute is decided by arbitration, it shall
be finally settled amicably and in good faith between the parties [Exh. C 2, p.6].
Arbitration would be the last resort to resolve conflicts of interests between parties after
desperate endeavor without reaching mutual agreement. Instead as a matter of fact,
CLAIMANT hastily rushed to terminate the Contract without bilateral acceptance.
RESPONDENT submits that the two Parties did not comply with this compulsory
contractual agreement finally, amicably (1) and in good faith (2). As a result, the present
case is inadmissible. Sending two Parties back to settlement would not be in vain (3).
1. The amicable settlement procedure was a mandatory pre-arbitral stage.
16. The good faith settlement tier must be reflected in the phrasing of the clause to be a
mandatory pre-arbitration requirement [Figueres, pp. 72-73; Pryles, p. 168; Aiton v.
Transfield; Scott v. Avery; Cable & Wireless case]. It is evident that in the Contract the
Parties used the imperative word shall, which indicates a clear obligation, as opposed to
a permissive may. In addition, arbitration cannot begin unless no agreement can be
reached between the Parties. Active discussions with a view to resolving dispute is
beyond any doubt an inherent prerequisite.
2. Nonetheless the good faith requirement was not met.
17. In this case, before the dispute was filed to arbitration, the settlement tier must have been
finally conducted amicably (a) and in good faith (b). But the Parties did not act according
to these elements.

a. There was no effort in setting finally and amicably.
18. Both emails CLAIMANT sent to RESPONDENT on 22 January 2015 and 25 January
2015 only served to report the defective seeds as well as an impulsive demand for refund
and later avoidance of the Contract; there was no mention about amicable dispute
resolutions before arbitration. With reference to initial requirements for dispute-settling
procedure, CLAIMANT failed to provide serious offers in order for RESPONDENT to
understand its severe circumstances and effort to dissolve impediments. The word
finally reinforces this view as it is defined as in such a way as to put an end to doubt
and dispute [Oxford Dictionaries, Oxford University Press, n.d. Web. 20 January 2016].
Never did the Parties dialogue with each other finally enough: at the time Ms. Thorne
avoided the Contract, both Parties were overwhelmingly doubtful over the real underlying
cause of defects.
19. Art. 10 purports to seek mutual understanding between the parties, either directly by
discussing themselves or indirectly with assistance of a third-party through non-binding
procedures such as negotiation, mediation, conciliation, mini-trial, expert evaluation and
dispute board [Redfern/Hunter 2009, pp. 9-10, 2.83]. It refers to Alternative Disputes
Settlement (hereinafter ADS) to settle the dispute amicably without the interference of
judicial organs, wherein both Parties have to make efforts in dealing with a dispute by
exchanging extensive information. However CLAIMANTs Memorandum mostly
highlights the unilateral participation of CLAIMANT without noticing that views must be
exchanged from both sides.
b. The good faith requirement was not met.
20. The general duty of good faith includes a duty to take reasonable measures to contemplate
the other partys interests and attend settlement with an open mind [Lookofsky, p. 138,
footnote 320; Lye, p.538]. The principle of good faith plays an integral role in
international commerce that influences parties commercial behaviors. Unfortunately,
RESPONDENTs interest was not considered when CLAIMANT unilaterally terminated
the Contract without genuine, legitimate grounds.
21. From RESPONDENTs viewpoint, CLAIMANT was not earnest to generate
opportunities for both parties to exchange views and achieve mutual visions. On the
contrary CLAIMANT was clearly hasty to terminate the contract and jump to arbitration
phase. That sequence of precipitate acts left RESPONDENT in a passive, confused
position.

22. RESPONDENT is known as a renowned leading worldwide flower and seed supplier that
has never received complaints about the quality of its Phoenix Tulip seeds. [St. Def., 2,
p.10]. CLAIMANTs complaint has been the very first; the serious extent of blight and
abrupt accusation that the seeds themselves were not competent came as a complete
shock to RESPONDENT. As a result, with regard to CLAIMANTs request for refund of
the contract price, the rejective response of RESPONDENT was comprehensible,
especially when Ms. Thornes allegation seemed to originate from a merely visceral
belief with no logical explanation to back up. It was disappointed for RESPOENDENT
when CLAIMANT refused to exchange positions to compromise for mutual benefits.
3. Sending the Parties back to dispute settlement would not be futile.
23. Until the procedural conditions precedent to arbitration are fulfilled, the commencement
of arbitration is considered as premature, and so the Tribunal lacks jurisdiction to decide
the case [Lye, p. 538; Rubino-Sammartano, p. 254].
24. The main purpose of multi-tiered dispute settlement clauses is to facilitate dispute
resolution as rapidly and cost-efficiently as possible. Clearly this purpose suits both
parties intention. It also enables dialogue with a plethora of viable consensual solutions
while individual interests can still be maximized [Chalk/Choong pp. 8-15; Bhring-Uhle
- Part Three: Alternatives to Arbitration, pp. 129-244]. The information exchange is very
dynamic. The opportunity to preserve business relationships is better.
25. In this case, two parties has neither attempted properly ADRs amicably and in good
faith nor indicated that no agreement is reached at all. As much, the parties should be
sent back to pre-arbitral phase and be given a final chance to reach agreement.
II.
Vietnam International Arbitration Centre is not the institution that the

Parties intended to use in the Contract.
26. Ms. Thornes interpretation of VIAC in her email has no value because it cannot defeat
prior agreement that the provision in the contract between Locus Group and Rosen Ltd.
would be used (1). Also, the Tribunal should recourse to the contra proferentem principle
to call for interpretation against RESPONDENT (2).
1. Mutual intent is the dispute settlement provision of the contract between
Locus Group and Rosen Ltd.
27. It is both mutual intent and established practice that the arbitration clause would be
adopted verbatim from another contract between Rosen Ltd. and Locus Group. Mr.
Grayson did notice Ms. Thorne about such usage. The precise content of the sample

agreement reads International Arbitration Tribunal of Vienna International Arbitration
Centre (VIAC) [Exh. R 2, p. 13]. Not only in PICC 2010 but also Art. 9 CISG 1980 state
that the parties are bound by any usage to which they have agreed and by any practices
which they have established between themselves. If during negotiations, one party
clearly expresses its intent and the other party does not object, an agreement will be
presumed [Packaging machine case; Clothes case; Caito v. Socit case].
28. A decisive point is that the Parties subjective knowledge or belief about the actual
content of the sample provision does not affect its independent and objective existence.
Its application hence cannot be impeded.
29. During negotiation process, Mr. Grayson and Ms. Thorne even had a prompt discussion
about a past dispute resolved at Vienna IAC between RESPODENT and CLAIMANTs
parent company, Locus Group. As arbitration institution is a key information concerning
any dispute, Ms. Thorne could not mistake the letter V in VIAC for Vietnam, unless
she did so on negative purpose.
2. The contra proferentem rule cannot be applied in the present case.
30. CLAIMANT asserts that Art. 10 in the Contract should be interpreted against
RESPONDENT according to the contra proferentem rule, which is codified in Art. 4.6
PICC 2010 [Memo. C, 18-21, p.4]. However, it should be noted that this principle
does not apply to terms that are merely vague or indefinite [Atwood v. Newmont].
31. First of all the contra proferentem rule is a rule of last resort that should only be applied
when an ambiguity cannot be resolved by other means of interpretation [Sykes, p. 68;
Davis, footnote 203, p. 206; Kirby, p. 105]. Albeit Chapter 4 on Interpretation in PICC
2010 does not provide a hierarchy to indicate which rule should be applied in which
order, the fact that intentions of the parties or practices established between the
parties always appear first does suggest the last resort characteristic of contra
proferentem. As shown above, mutual agreement and practice between CLAIMANT and
RESPONDENT both point directly to the sample agreement, which as a result, the
Tribunal has solid grounds to interpret in favor of.
32. Secondly, contra proferentem applies only if the possible lack of clarity of the
formulation is attributed entirely to one of the parties [Sykes, p. 68; Ramberg, p. 34].
Otherwise where both parties have reasonably equal bargaining power or opportunity to
review the contractual agreement to prevent vagueness, the rule is not applicable [Duhl,
pp. 96-97; Terra Intern. v. Mississippi Chemical].

33. In the current case, even though CLAIMANT only started business in 2013, it was ready
to purchase 5000 Phoenix Tulip seeds at first proposal (yet due to limited storage
RESPODENT could only allocate 3000). Moreover, Ms. Emily Thorne had been
introduced to the content of arbitration agreement before it was attached to the Contract
[Proc. Order 2, 6, p. 25]. The fact that she did not discuss or raise any question well
amounts to tacit consent after review. All in all, Art. 10 of the Contract cannot be
interpreted against RESPONDENT based on the contra proferentem rule.
III.
RESPONDENT did not waive its right to object jurisdiction of the Tribunal
34. CLAIMANT argues in its Memorandum that during some 9 months after the final
communication between two Parties, i.e. Ms. Thornes email dated 25 January 2015,
RESPONDENT showed no concern or objection to CLAIMANTs intent to arbitrate at
Vietnam IAC, so the Tribunal should interpret in favor of that intent based on the socalled reasonable test [Memo. C, 16, pp. 3-4]. RESPODENT would like to discredit
such thinking because the right to challenge arbitrability has still been preserved.
35. The arbitration agreement embodied in the Contract or Ms. Emily Thornes email do not
establish any timeline for the commencement of arbitration. If there had been a deadline,
RESPONDENT would have been obliged to raise a dissenting opinion within that time
limit. However the absence of such information should lead to the application of rules
which governs the arbitration proceeding, in particular Art. 4 Model Law:
Any party who knows that any requirement under the arbitration agreement has
not been complied with yet proceeds with the arbitration without stating his objection
to such non-compliance without undue delay shall be deemed to have waived its
right. (Emphasis added)
36. The phrase without undue delay means a party must state its objection either at the next
scheduled oral hearing or in an immediate written submission [UNCITRAL 2012 Digest
of Case law on the Model Law, Art. 4, p. 18; CLOUT case No. 659]. Indisputably
RESPONDENT was vocal about the flaws of both amicable settlement and interpretation
of VIAC in its Statement of Defense, the very first written document submitted to the
Tribunal. Such timely objection retains RESPODENTs right in case at hand.
IV.
If the Tribunal adjudges that it has jurisdiction and continues with the
arbitration, the award is at risk of being set aside or denied recognition and/or
enforcement.
10

37. To arrive at an enforceable award constructed on accurate application of legal rules is the
ultimate goals for all arbitration proceedings [Lew, p. 119; Born, p. 2192; Horvath, p.
135; Bhler/Webster, p. 155]. Nevertheless in the present case if the Tribunal disregards
RESPONDENTs arguments and insists on its jurisdiction, RESPONDENT has
possibility to challenge the award made by the Tribunal before competent courts under
the grounds provided in Model Law and New York Convention [Redfern/Hunter 2004,
9.02, 9.18].
38. According to Art. V.1(c) New York Convention, Art. 34.2(a)(iii) and Art. 36.1(a)(iii)
Model Law, a ground for refusing recognition and enforcement is that the award deals
with a difference not falling yet within the scope of the submission to arbitration. It has
been argued above that not until the pre-arbitral procedure is complied with properly, the
arbitration is premature and the tribunal lacks jurisdiction to decide the case [supra 23].
By continuing proceedings, the Tribunal would thus exceed its power as stipulated by
Art. 10 in the Contract. The subsequent award may so be refused.
Merits
B. The defect suffered by the Phoenix Tulip flowers was caused by Red
Dragon, not faulted quality of seeds.
39. RESPONDENT strongly believes Red Dragon was the dominant element that caused
flowers damaged. Analysis into weather statistics illustrates that weather conditions in
Beta during Red Dragon were not favorable for the blooming stage of Phoenix Tulips
(I). On the contrary CLAIMANT has argued that if weather was to blame, then 100% of
the flowers should have been defective, not 75%. Such assertion is illogical (II).
Furthermore, it is unfathomable that suddenly CLAIMANT received such large quantity
of unqualified goods when RESPONDENT had never been complained about. (III).
Finally, Lily Ltd. and Locus Ltd. suffered from Red Dragon to different extent, which
justified opposite outcomes each company arrived at (IV).
Weather conditions in Beta during Red Dragon were unfavorable for Phoenix
I.
Tulips to bloom.
40. The following table provides in detail all environmental information submitted before the
Tribunal.
11

Temperature (oC)
Humidity (%)
Ideal for blooming
18 24
70 80
Stop growing
t < 12 OR t > 30
Die
t 39
Betas average
15 22
73 82
Beta in Red Dragon
17 27
75 85
Maximum variation
41. As the Tribunal observes, the weather conditions in Beta, whether on annual average
basis or in Red Dragon, at some moments go beyond the ideal zone, either in terms of
temperature or humidity. Phoenix Tulips are without doubt much more sensitive to
environmental variation than other species of tulips [Proc. Order 2, 14, p. 26]. The
comeback of Red Dragon happened all too sudden: out of the blue on 29 December
2014 outdoor temperature rose by 3 to 5oC [Exh. R 4, p.15]. Furthermore, the last three
weeks of the planting process is the most important and decisive phase to formulate
flowers beauty. Yet Red Dragon lasted in Beta from 29 December 2014 to 13 January
2015, the penultimate two weeks before harvest [Proc. Order 2, 16+20, p.26]. It is so
likely such influence was the factor that rendered the flowers badly devastated. The
trauma that happened to 75% of 3000 flowers corresponds exactly with Mr. Blacks
words: Lacking ideal environment, the seeds cannot bloom or obtain its vivid appearance.
[Exh. R 3, p.14].
42. CLAIMANT may rely on one record which has shown that when temperature turned
under 12 or above 30oC, Phoenix Tulips stopped growing. [Proc. Order 2, 15, p. 26].
Indeed the range of temperature in Beta was never beyond tolerable limits; however it is
critical to acknowledge that the humidity level was not mentioned such record. Those two
weather conditions are indispensable to each other in determining flower development,
and understandably when both diverge from the ideal zone it will create a more harmful
situation. Due to the lack of humidity information, that record is thus not credible enough.
Plus stop growing does not necessarily imply wilting or fading in colors of flower
pedals.
12

CLAIMANTs logic behind its argument should be dismissed.
II.
43. It is argued that if environment was to blame then 100% of flowers should have suffered
from deficiency, not only 75% [Memo. C, 28, pp. 6-7]. But such is an illogical
assertion.
Quantity
50%
25%
25%
Quality (Adaptability)
Minimum standard
44. It would be absurd to say that each and every single seed resembles the others precisely in
all aspects: innate quality, fertilizers received, irrigation, sunlight, etc. Even the position
of each flower in the garden makes a difference. Regarding conformity of goods, it is
common knowledge that there is always variation in quality, but most importantly there is
a minimum standard too. RESPONDENT has developed and planted Phoenix Tulips for
several years an accomplishment that only a few companies are capable of [St. Def.,
2, p. 10]. Seed quality control thus is in no way an unfamiliar task. If Rosen Ltd. did not
impose strict regulations on purity of materials, then it would not have enjoyed all credits
as it does now.
45. As delineated on the graph, acceptable variation in quality can lead to variation in
adaptability to challenging external conditions. The parabola-shaped correlation is
conspicuous and common in nature: the majority should have medium adaptability, while
the others should either possess slightly lesser or higher. In short, the varying symptoms
seen on 3000 flowers are normal.
13

III.
It is an extremely low probability that CLAIMANT received such large quantity

of unqualified goods.
46. CLAIMANT was not the only customer that RESPONDENT sold Phoenix Tulip seeds to.
Lily Ltd. was another. The contract between RESPONDENT and Lily Ltd. was
concluded on 15 August 2014 [Exh. R 1, p.12], which was merely 5 days earlier than the
contract between CLAIMANT and RESPONDENT. When CLAIMANT sent its initial
offer to buy 5000 seeds, RESPONDENT had to turn down on account of limited storage,
difficulties in collecting and other customers reservation. There are grounds to say that
the seeds provided for these 2 companies (Lily and Locus Ltd.) were of the same batch.
47. Therefore, if CLAIMANT said the faulted quality of seeds was the reason why the
planting did not render expected results, then in contrast why in reality did all 2000 seeds
Lily received give birth to fabulously gorgeous flowers? [Exh. R 1, p. 12] Furthermore
in its history of business, RESPONDENT has never received any complaints from
customers. It is unfathomable that suddenly CLAIMANT is allocated with approximately
2250 faulted seeds. RESPONDENT had no vile intention to harm CLAIMANT; instead
regardless of the young relationship between two Parties, RESPONDENT always wanted
to help its customer to achieve great success [St. Def., 1, p.9]. At receipt of the goods,
CLAIMANT performed examination and found no abnormalities from their surface
[Proc. Order 2, 17, p.26]. The odds would be too minute if over 2000 seeds were
deemed to be faulted.
IV.
Lily Ltd. and CLAIMANT were not experiencing Red Dragon to the same extent
CLAIMANT
planting
Leaves of 73
Tulips discovered
shriveling
RED DRAGON in Beta
22 Oct 2014
Mid-Dec 2014
29 Dec 201413 Jan 2015
started
75% of flowers
discovered
defective
17-20 Jan 2015
Early Nov 2014
12 20 Jan 2015
Lily Ltd. started

planting
RED DRAGON
in Crostia
14

48. It must be emphasized that although Beta and Crostia have analogous weather conditions,
Red Dragon phenomenon occurred in Crostia for over a week while in Beta for 16
days. So in CLAIMANTs case, the phenomenon befell for more than two-thirds of the
last paramount three weeks in the period of three-month planting process. In addition, the
intensity of impact differs unpredictably in each geographic area [Proc. Order 2, 21, p.
26]. How Red Dragon affected Crostia may not be as severely as Beta. The opposite
outcome at which Lily and Locus Ltd. arrived is justifiable.
C. RESPONDENT fulfilled its obligation to provide instructions.

I.
The General Planting Guidance was a legitimate document.
49. RESPONDENT was obliged to give instructions to CLAIMANT to support the planting
period, and the General Planting Guidance is a concrete evidence. During negotiations
precedent to the contract conclusion, CLAIMANT was familiar with such Guidance and
agreed that this document would be attached to 3000 seeds at delivery [Proc. Order 2,
12, p. 25]. 6 steps in the General Planting Guidance satisfactorily enabled CLAIMANT
to cultivate flowers at normal weather condition. It would have been very difficult and
unnecessary to depict and incorporate into this document specific instructions which
aligns with natural environment in Beta because covering all possibilities of weather
conditions was excessively burdensome, and the Parties could always contact each other
immediately. All in all, general planting guidance was absolutely legitimate.
II.
RESPONDENT did perform its obligation to assist CLAIMANT during the

planting stage.
50. The Contract bound RESPONDENT to provide instructions at all time during planting
stage. The phrase at all time should be understood as at every occasion when
CLAIMANT expressed its need; certainly RESPONDENT duly fulfilled such obligation
(1). On the other hand, a number of events proved that CLAIMANT overlooked major
hurdles during planting process, which likely contributed to its flowers deficiency (2).
1.
Only when CLAIMANT expressed its need for assistance would

RESPONDENT be obliged to offer help.
51. Generally speaking, a person in need has to speak up in order for others to know what
deeds they can do to assist. This too applies with CLAIMANT (a). And when
CLAIMANT made a request, RESPONDENT always give careful instructions as
required in Art. 4 of the Contract (b).
a. CLAIMANT needed to speak up first.
15

52. According to Article 4 of the contract between CLAIMANT and RESPONDENT, the
instruction shall be provided at all time during the planting stage [Exh. C 2, p. 6]. The
term all the time here purports to the obligation and promise of RESPONDENT to
provide assistance whenever CLAIMANT needed support [Proc. Order 2, 12, p.
26]. In other words, CLAIMANT would itself waiver its rights if it does not raise its
voice when in need of help. RESPONDENT was not obliged to actively keep track of
every phrase of CLAIMANTs planting process. Rosen Ltd., as a large worldwide
flower and seed supplier, was also having many customers from different countries all
over the world apart from Locus Ltd. CLAIMANT and RESPONDENT in particular are
situated in two separate nations, Beta and Alpha. Therefore, it is irrational for
RESPONDENT to be bound to acquire per se knowledge of specific planting conditions
and weather variations that happened in a foreign country. Had the Contract expressly
demanded a regular supervision from Rosen Ltd., it would have been different. In sum,
when CLAIMANT did not exercise its right, there gave rise to no related obligation of
RESPONDENT.
b. Mr. Black readily gave detailed instructions when Mr. White requested.
53. Having received the General Planting Guidance, CLAIMANT twice sought for further
guidance from RESPONDENT. The first time was via telephone for 15 minutes wherein
Mr. William Black discussed about the nutritional ingredients of soil and appropriate
fertilizers until Mr. Silver White satisfied [Exh. R 3, p. 14]. The second (also more
pivotal) was in person at an international conference on rare flowers; Mr. Black then
talked about key factors for the blooming stage of Phoenix Tulips - ideal temperature and
humidity, along with possible consequences if such conditions were not met.
54. The Parties did not stipulate any requirements about the form of giving instructions;
hence as long as communication was effective, conversations whether via telephone or
outside workplace was totally acceptable.
55. In response to inquiry, Mr. Black as a RESPONDENTs representative willingly gave
CLAIMANT essential instructions for the planting, and as a consequence, Mr. Black
accomplished duly his assigned obligations. How CLAIMANT applied that information
in its own circumstances was of volition. Additionally, Mr. Black was not entitled to give
extra information when CLAIMANTs leading agricultural engineer only addressed such
specific topics. In reality, it was impossible for Mr. Black to cover all scenarios
CLAIMANT might encounter when cultivating flowers in Beta.
16

2. There was negligence in the planting process.
56. There were several occasions which CLAIMANT should have reached out to
RESPONDENT but it instead chose silence.
57. First of all was Mr. Silver Whites dismissal from Locus Ltd. As the former leader of the
team accountable for taking care of 3000 Phoenix Tulips, Mr. White more than anyone
played a vital role in managing this project. For whatever reason, firing such valuable
employee with eminent expertise and experience (twice best employee of the year) was
a major change in personnel. This incident ought to oblige CLAIMANT to exploit
information from Mr. White before he left.
58. Firing Mr. White, who was also a part of the team in charge of receiving instructions, was
entirely CLAIMANTs internal affair, so in case any previous information provided by
RESPONDENT did not reach CLAIMANT, it was not RESPONDENTs fault. Mr. Black
had fulfilled obligation to give required instructions to a qualified employee since the
conversation at the international conference occurred before Mr. White was fired, so by
then Mr. White had still held his work title at Locus Ltd. and acted on behalf of his
company.
59. RESPONDENT was not entitled to supplying repeated information when CLAIMANT
dismissed any employees and did not make further contact. There were also many other
people in CLAIMANTs negotiating team which was in charge of receiving instructions,
especially Ms. Thorne as the leader. So if it seemed that the information were not enough
then they always could have conducted their right to ask then RESPONDENT would
fulfill their obligation. It was CLAIMANTs (and especially Ms. Thornes) mistake to
keep silent, to decline asking.
60. Second, there was no contact or report recorded between CLAIMANT and
RESPONDENT relating to wrinkling leaves of around 73 Phoenix Tulips at the middle
of December 2014 [Proc. Order 2, 26, p. 27].
61. Finally, CLAIMANT never informed about Red Dragon. CLAIMANT cannot
disavow not having known about this phenomenon since its commencement (29
December 2014) because there were daily weather records in Beta. Not until 4 January
2015 (a week later) was RESPONDENT aware of its existence indirectly through a
weather forecast news [Proc. Order 2, 19-23, pp. 26-27].
62. Despite reference to Red Dragon during contract negotiation [Proc. Order, 23,
p.27], this weather abnormality still came as an absolute surprise for citizens and even
17

experienced forecasters in Beta. Previously it was believed to happen once every 2 to 4
years, plus in winter 2013-2014 it already did [Exh. R 4, p. 15]. Perhaps that was what
both Parties at time of contract conclusion relied on; therefore CLAIMANT did not
request for specific guidance to confront this phenomenon at contract conclusion date.
However when Red Dragon actually happened, CLAIMANT never sought for advice
or help from RESPONDENT at all. Such silence made RESPONDENT reasonably
believe its customer was capable of handling the situation; therefore CLAIMANT is
estopped from relying on the contention that RESPONDENT did not send adequate
instructions [Comment 2, Art. 1.8 PICC 2010, Art. 80 CISG].
63. With such high expectation for perfect quality of flowers, CLAIMANT should have
informed RESPONDENT of any abnormalities in order to make appropriate timely
adjustment. It was the first time CLAIMANT had ever planted Phoenix Tulips, so the
possibility that CLAIMANT itself did not give the plants optimal treatment due to
insufficient experience cannot be excluded. Its silence about abnormal weather changes
or flowers symptoms categorically indicated CLAIMANTs recklessness.
64. In sum, it was not RESPONDENTs fault causing the defects of the flowers. Of all the
reasons for the defects of the flowers was the negligence of CLAIMANT.
D. CLAIMANT unlawfully declared the contract avoided.

I.
There was no fundamental breach of contract, so Art. 49 CISG is inapplicable.
65. Since Ms. Thornes email to terminate the Contract, CLAIMANT has overlooked that a
defect does not exclusively result from inferior quality of seeds. If the undesirable
appearance of flowers was caused by wrong treatment on the part of CLAIMANT itself,
which cannot be excluded according to the logic stated above, it does not constitute a lack
of conformity of the goods. CLAIMANT bears the burden of proof for non-conformity of
goods as a prerequisite for contract avoidance under Art. 49.1(a) CISG [Garden Flowers
case]. However, both proofs CLAIMANT presented at 27-28 in its Memorandum are
weak and have been contested in supra Section B.
66. Still, RESPONDENT still feels the urge to address one point vulnerable to being
challenged by CLAIMANT: the shriveling leaves of 73 flowers at mid-December 2014.
This symptom was discovered roughly two weeks before Red Dragon befell. So if there
existed any intrinsic lack of conformity within seeds at all, it could only have existed
among the said 73 plants. In no way 73 out of 3000 (2.43%) can amount to a fundamental
18

breach, as CLAIMANT has asserted itself that the substantial number should be at least
one-third of the total sale [Memo. C, 44, p. 9; Pressure cooker case].
67. It is therefore irrelevant whether CLAIMANT declared contract cancellation in a
sufficiently clear manner or not [Memo. C, 58-61, Garden Flowers Case]
II.
CLAIMANT loses the right to rely on the lack of conformity in accordance with
Art. 39 CISG.
68. Art. 39.1 CISG requires the buyer to inform the seller of a non-conformity within a
reasonable time after it knew or ought to have known of the non-conformity. When a
buyer fails to notify within a reasonable time, it loses its right to all remedies claimed out
of the non-conformity [Honnold, p. 259; Schwenzer in Schlectriem 1998 p. 319].
69. There are two approaches to determine the length of a reasonable time. The most
popular is a flexible analysis with regard to the circumstances of each case [Ferrari
p.223; DiMatteo p. 365; Honnold p.280]. Still some courts, specifically in Germany,
apply a presumptive notice period of one month [Schwenzer; Caito v. Socit case], as
CLAIMANT has also discussed [Memo. C, 54, p.10]. However a weakness lies within
that same paragraph 54: Perishable or seasonal goods is a factor to consider.
70. The flexible calculation must base on the nature of the goods, the nature of the defect,
the situation of the parties and relevant trade usages. A reasonable time for perishable or
seasonal goods is shorter than for durable goods, e.g. T-shirts [Ferrari p.228]. Similarly,
a reasonable time is shorter (even immediate) if the nature of the defect is easy to
identify [Namur-Kreidverzekering v. Wesco; Flowers case]. Flower is both perishable
and seasonal. Plus, the defect of flower quality could be easily spotted through visual
inspection. One month then appears too comfortable an interpretation.
71. Mid-December 2014 when some leaves of 73 flowers were found shriveling marked the
starting date of notice period. Notwithstanding not till over a month later, on 22 January
2015, did Ms. Emily Thorne send the first email specifying the nature of defects.
CLAIMANT has created a wrong impression that the clock started to tick only when
CLAIMANT fully discovered the defects [Memo. C, 55, p.11]. Such impression
even contradicts directly with its earlier arguments that the buyer needed to inform at
the moment the buyer discovered the defects [Memo. C, 52, p.10].
72. In conclusion, by virtue of late notice and non-existence of a fundamental breach, Art. 39
along with Art. 49 CISG bar CLAIMANT from relying on non-conformity of goods to
declare the Contract avoided.
19
E. RESPONDENT is not entitled to compensating any damages; should

the Tribunal decide otherwise, the amount should be much lower.
73. Both the loss of profit and loss of reputation CLAIMANT asserted based only on the
failed contract with Mineo Group for the sale of 2000 Phoenix Tulips. Hence the
relationship between CLAIMANT and Mineo Group will play a vital role in determining
the extent of damages. These two types of losses shall be viewed separately.
I.
USD 300,000 Loss of profit
74. As aforementioned, it was not RESPONDENTs fault that caused the defects in 75% of
the flowers; RESPONDENT did not violate fundamentally any obligations so it was
unreasonable for RESPONDENT to take responsibility for CLAIMANTs USD 300,000
profit loss. The only likelihood RESPONDENT admits is unhealthy development of 73
Phoenix Tulip plants as described in previous sections. Accordingly, RESPONDENT
might only be bound to pay 150 73 = 10950 (USD). The remnant USD 289,050
basically falls out of the scope of Art. 74 CISG.
75. Furthermore, the loss of profit pointed out by CLAIMANT was unforeseeable. From the
beginning although it referred to its distribution plan, CLAIMANT never revealed the
exact price at which they would sell the flowers to Mineo Group [Exh. C 1, p.5]. By such
virtue, RESPONDENT had no knowledge about USD 300,000 of profit which would
result from the resale to Mineo Group.
II.
USD 200,000 Loss of reputation

1. RESPONDENT did not violate the Contract, so it is not supposed pay for
CLAIMANTs loss of reputation.
76. Pursuant to Art. 74 CISG, if loss of reputation existed, it should belong to damages that
the aggrieved party was assumed to suffer from as a consequence of the breach of
contract caused by the party in breach. However, once again RESPONDENT reiterates
that it duly complied with the Contract and guaranteed the quality of Phoenix Tulip seeds;
CLAIMANT has no right to claim compensation of its loss of reputation. [CLOUT Case
No. 474: Russia v. United States].
77. Loss of reputation should be of legal significance only when it leads to loss of future
profit as a result of sale decrease [Video Recorders case]. In fact, CLAIMANT did not
supply adequate evidence about real sales quotas harmed by damaged reputation.
20

78. The failed contract with Mineo Group was not concrete enough to perform significant
degradation in sales of goods because that was the very first transaction between
CLAIMANT and its potential customer. Additionally, the fact that CLAIMANT failed to
provide statistically-detailed damages calculation makes the amount of USD 200,000
appear really arbitrary, as well as putting CLAIMANT on the verge of losing the right to
claim damages under Art. 74 CISG [Vacuum cleaners case]. In view of this matter, the
foreseeability of the damages could be rejected if the damages would have to be
considered as so exceptionally high that RESPONDENT did not have to reckon it. [Used
Car case].
79. Consequently the basis of USD 200,000 claim for loss of reputation is frailly founded.
2. CLAIMANT was under the obligation to mitigate damages.
a. Loss mitigation is compulsory for the party who relies on a breach
80. The aggrieved party who relies on a breach (fundamental or not) of contract by the other
party cannot wait passively for the loss to incur and accumulate, then sue for damages and
expect to be entitled to recover what could have been avoided. Instead it must become
active so as to minimize the loss or to prevent it wholly [Riznik, p. 268; Knapp, pp. 595560; DiMatteo p. 442; Commentary by Enderlein and Maskow on Article 77 CISG]. In
other terms, when aware of threatening damages, CLAIMANT was immediately under
obligation to make reasonable steps to prevent subsequent losses or mitigate damages.
These normative duties served to protect commercial benefits of aggrieved party and be
used for compensation mechanism before judicial organs.
b. If RESPONDENT can successfully point out one reasonable measure,
then the amount of damages must be reduced.
81. RESPONDENT was not in a position to help CLAIMANT to come up with an idea to
avert its damages, especially when CLAIMANT abruptly avoided the Contract. Still, as
long as the idea proposed was rational and CLAIMANT was capable of foreseeing such
measure, then the compensable amount of damage must be reduced to whichever number
the loss should have been mitigated by.
82. With scrutiny into the way of vocabulary choice in Art. 77 of CISG rules, Article 77
may require the aggrieved party to conclude a substitute transaction, especially in a
situation where a substitute transaction would avoid consequential losses following the
non-performance or defective performance of the contract [Riznik, p. 273].
21

3. A substitute purchase from Lincoln Ltd. was an accessible and reasonable
measure to mitigate losses, but CLAIMANT showed no endeavor at all.
83. Though aware of the prospect of failed contract with Mineo Group, CLAIMANT never
attempted to perform transaction with Lincoln Ltd., who also appeared at the Festival
with 5000 available flowers for sale. The Festival took place from 10-14 February 2015,
over 3 weeks after CLAIMANT discovered that it could not supply enough flowers, so
there must have been plenty of time for CLAIMANT to reserve flowers from Lincoln.
CLAIMANTs inactivity yet proved no effort to take countermeasures.
a. A substitute purchase from Lincoln Ltd. would save CLAIMANT USD
160,000+
84. At the Festival, Lincoln Ltd. sold Phoenix Tulips at USD 220 per one.
Payment for Lincoln Ltd.:
440,000
Payment from Mineo Group:
400,000
Total loss:
40,000
85. When a party undertakes measures to mitigate the loss it will likely suffer additional
costs [Riznik, p. 279]. Though the price per flower offered by Lincoln Ltd. was USD 20
higher than that offered by CLAIMANT in the contract with Mineo Group, it should be
considered additional cost as a loss suffered as a consequence of the breach of contract
pursuant to Art. 74 CISG [Rolled metal sheets case].
86. Moreover, the price gap, in fact, should not be seen as unreasonably wide if reputation of
CLAIMANT was under threat of being ruined in the eyes of its big potential customer,
Mineo Group. Had CLAIMANT made the substitute purchase, it would suffer from zero
dollar loss of reputation now; instead it would have had to give up only USD 40,000.
USD 160,000 reduction is decisively significant. More than that, future revenues could
even increase thanks to enhanced brand image and possibly greater business deal with
Mineo Group.
b. Dealing with Lincoln Ltd. is not unreasonable.
87. Practically, CLAIMANT could have taken preventive approach by concluding a cover
contract with Lincoln Ltd. as the last resort. If the injured party was in a position to take
more effective measures and could be reasonably expected to do so in the circumstances,
he will be subject to the sanction of the second sentence of Article 77 [Knapp, p. 560,
2.4].
22

88. There is a close connection between the purpose of transaction in issue and the obligation
of mitigation. CLAIMANT asserts that a purchase from Lincoln Ltd. its biggest rival in
the flower market of Beta - is irrational [Memo. C, 77, p. 15]. However, the Tribunal
should take two observations into account.
89. First of all, in spite of having less than 1000 flowers, CLAIMANT already succeeded
greatly at the Festival after having received much accolade and sold out all available
Phoenix Tulips. Thus to certain extent, CLAIMANT satisfied its motive when
participating in the Festival to compete with Lincoln in the flower market of Beta.
[Proc. Order 2, 32, pp. 27-28].
90. Now in terms of the contract with Mineo Group, among 3 intentions CLAIMANT made
known in its Request for Arbitration, gaining access to international flower market and
expanding its business activities unquestionably overweighed competing with Lincoln.
Nationality of Mineo Group is unidentified; however whether this business entity is in
Beta or not, the transaction with Lincoln Ltd. would still not have deprived CLAIMANT
of any market share or blocked its way to a broader market. If Mineo Group is in Beta,
CLAIMANT would have got a huge advantage, i.e. a big potential partner, over Lincoln
Ltd - a competitor in the flower market of Beta. If Mineo Group is not in Beta, then the
Tribunal should bear in mind the distinction between international market and domestic
market. Furthermore, CLAIMANT definitely could have made an incognito purchase if it
wanted to protect its brand name from other companies badmouthing.
91. In conclusion, pursuant to Art. 77 of CISG rules, it was CLAIMANTs duty to take
reasonable measures to mitigate its loss of reputation, which could have been reduced to
merely USD 40,000 if a cover contract with Lincoln Ltd., a prompt and necessary exit
under the circumstances, had been concluded.
23
PRAY FOR RELIEF

RESPONDENT respectfully requests the Tribunal:
1. To rule that the Arbitral Tribunal has no authority over the dispute and thus
incapability to proceed to substantive issues.
In case the Tribunal rules that it has such authority:
2. To reject the right to declare the contract avoided of CLAIMANT as RESPONDENT
did not fundamentally violate the Contract;
3. To reject the claim for damages of CLAIMANT which is USD 500,000 or to reduce
its damages to reasonable extent, which can be divided into three scenarios:
Scenario 1: RESPONDENT is completely innocent - USD 0 loss of profit; USD 0

loss of reputation.
Scenario 2: RESPONDENT is responsible for only 73 flowers USD 10,950 loss

of profit; 0 loss of reputation.
Scenario 3: RESPONDENT is found to have committed a fundamental breach

USD 300,000 loss of profit; 40,000 loss of reputation.
DO DUY HUNG
TRAN HA UYEN
DO MINH NGOC
24

DAV - Memorandum For Respondent

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FIRST ANNUAL

HLU COMMERCIAL ARBITRATION MOOT

MEMORANDUM FOR RESPONDENT

DIPLOMATIC ACADEMY OF VIETNAM

Diplomatic Academy of Vietnam

The precondition to arbitration was not sufficiently fulfilled ........................................... 6

Diplomatic Academy of Vietnam

CLAIMANTs logic behind its argument should be dismissed........................................ 13

C. RESPONDENT fulfilled its obligation to provide instructions ......................................... 15

The General Planting Guidance was a legitimate document ............................................ 15

D. CLAIMANT unlawfully declared the contract avoided ..................................................... 18

There was no fundamental breach of contract, so Art. 49 CISG is inapplicable .............. 18

E. RESPONDENT is not entitled to compensating any damages; should the Tribunal

USD 300,000 Loss of profit .............................................................................................. 20

USD 200,000 Loss of reputation ...................................................................................... 20

then the amount of damages must be reduced .......................................... 21

Diplomatic Academy of Vietnam

PRAY FOR RELIEF .................................................................................................................. 24

Diplomatic Academy of Vietnam

exempli gratia (for example)

Exhibit from Claimant

Exhibit from Respondent

International Arbitration Centre

id est (that is)

Memorandum for Claimant

Request for Arbitration

see above, earlier in this writing

Contract on the purchase of Phoenix Tulip

The Annual Flower Festival in Beta, 10-14

The arbitral tribunal in the current dispute

Diplomatic Academy of Vietnam

INDEX OF AUTHORITIES AND CASES

STATUTES & TREATIES

United Nations Convention on Contracts for the International

UNCITRAL Model Law on International Commercial

Arbitration 1985, with amendments as adopted in 2006

Convention on the Recognition and Enforcement of Foreign

Arbitral Awards (New York 1958)

Vienna Convention on the Law of Treaties (Vienna 1969)

LAW & RULES

Vietnam International Arbitration Centre Rules

Law on Commerce of Alpha

Seed Trade Association.

Gary Born, International commercial arbitration, 3rd edition,

Arbitration: Commentary, Precedents, Materials, 3rd edition

International, 2006. Part Three: Alternative to Arbitration,

Diplomatic Academy of Vietnam

An Overview, in Michael J. Moser, Managing Business

Disputes in Today's China: Duelling with Dragons, Kluwer

Cooperation and Curtailment of State Power, in 26 Fordham

Virginia Maurer & Marisa Pagnattaro, The Interpretative Turn

CISG Jurisprudence, Northwestern University School of Law.

the Interpretation of Contractual Inconsistencies, University

Fritz Enderlein & Dietrich Maskov, Commentary by

Enderlein and Maskow on Article 77 CISG.

Goods: Applicability and Applications of the 1980 United

Nations Convention, Martinus Nijhoff Publishers, 2011

Clauses, in ICC Arbitration, ICC International Court of

John O. Honnold, Uniform Law for International Sales under

Diplomatic Academy of Vietnam

Enforceable Award, Journal of International Arbitration, Vol.

18 Issue 2, (2001), pp. 135-158