FOURTEENTH ANNUAL

WILLEM C. VIS INTERNATIONAL COMMERCIAL ARBITRATION MOOT

MEMORANDUM FOR CLAIMANT

On Behalf of: Against:

Equatoriana Office Space Ltd. Mediterraneo Electrodynamics S.A.

415 Central Business Centre 23 Sparkling Lane

Oceanside Capitol City
Equatoriana Mediterraneo

CLAIMANT RESPONDENT

COLUMBIA UNIVERSITY SCHOOL OF LAW

ZUZANA BLAZEK · TANNER JONES · GARY LI

MEYGHAN MCCREA · SHAWN OAKLEY · NINA YADAVA
 TABLE OF CONTENTS

LIST OF ABBREVIATIONS ................................................................................................ IV

INDEX OF AUTHORITIES ................................................................................................ VI

INDEX OF CASES ............................................................................................................... XV

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

SUMMARY OF ARGUMENT .................................................................................................3

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

PART ONE. THE TRIBUNAL HAS JURISDICTION. ........................................................4

I. THE TRIBUNAL IS COMPETENT TO DETERMINE ITS OWN JURISDICTION. .................................4

II. THE TRIBUNAL SHOULD FIND THAT THE PARTIES CONCLUDED A VALID ARBITRATION
AGREEMENT. ........................................................................................................................................5
A. The arbitration agreement is within the scope of Article II of the New York Convention. ........... 5
B. The parties agreed to submit their dispute to arbitration. ..................................................................... 5
C. The arbitration agreement is valid. ............................................................................................................ 6
1. The arbitration agreement is not null and void. ................................................................................................ 6
2. The arbitration agreement is not inoperative..................................................................................................... 6
3. The arbitration agreement is not incapable of being performed.................................................................... 6

III. PARAGRAPH 34 OF THE CONTRACT CALLS FOR ARBITRATION UNDER THE ARBITRATION
RULES OF THE COURT OF INTERNATIONAL COMMERCIAL ARBITRATION ATTACHED TO THE
CHAMBER OF COMMERCE & INDUSTRY OF ROMANIA. ..................................................................8
A. The parties agreed to institutional arbitration.......................................................................................... 9
B. The parties agreed to institutional arbitration under the Romanian Rules. ...................................... 10
C. The parties agreed to institutional arbitration administered by the Court of International
Commercial Arbitration attached to the Chamber of Commerce & Industry of Romania. .......... 11

IV. THE PARTIES’ DISPUTE FALLS WITHIN THE SCOPE OF THE ARBITRATION AGREEMENT AND
IS ARBITRABLE. ...................................................................................................................................12
A. The dispute is within the scope of the arbitration agreement............................................................. 12
B. The Claim is arbitrable............................................................................................................................... 12

PART TWO. RESPONDENT BREACHED THE CONTRACT AND IS LIABLE TO

CLAIMANT....................................................................................................................... 13

I. RESPONDENT BREACHED THE CONTRACT BY DELIVERING NON-CONFORMING GOODS. ..13

i
 A. The Boards were not of the quality and description required by the Contract................................ 13
1. Respondent was bound by the notes on the Drawings. ................................................................................14
a. Respondent knew or could not have been unaware of Claimant’s intent to incorporate the notes on the Drawings....14
b. A reasonable person in Respondent’s position would have understood Claimant’s intent. ........................................15
2. Respondent failed to deliver Fuse Boards containing Chat JP fuses...........................................................16
a. The Contract did not require fuses directly from the maker Chat............................................................................16
b. Respondent should have been aware that the distinction between JP and JS fuses was important. ............................17
3. Respondent failed to deliver fuse boards lockable to Equalec requirements.............................................18
a. The Contract required fuse boards lockable to Equalec requirements. .....................................................................18
b. The Contract incorporated Equalec’s connection requirements to the extent that they were pre-requisites for locking the
Fuse Boards. .....................................................................................................................................................19

B. The Fuse Boards were not fit for a particular purpose made known to Respondent..................... 20
1. Claimant made known the particular purpose of connecting to Equalec’s grid........................................20
2. Claimant relied on Respondent’s skill and judgment. ....................................................................................21
3. Claimant’s reliance was reasonable. ...................................................................................................................21

II. THE CONTRACT WAS NOT MODIFIED TO PERMIT DELIVERY OF JS FUSES. ............................22
A. The 14 July 2005 phone call did not modify the Contract. ................................................................. 22
B. Respondent did not reasonably rely on the 14 July 2005 phone call. ................................................ 23
1. Hart did not have actual authority to modify the Contract...........................................................................23
2. Respondent could not reasonably have believed Hart to have the authority to modify the Contract. .24

PART THREE. RESPONDENT IS NOT EXCUSED FROM LIABILITY. ......................25

I. RESPONDENT’S LIABILITY IS NOT EXCUSED UNDER ART. 79 CISG.........................................25

A. No part of Respondent’s failure to perform was due to the lack of complaint............................... 26
1. Respondent’s failure to deliver Chat JP fuses was not due to the lack of complaint. ..............................26
2. Respondent’s failure to meet Equalec’s requirements was not due to the lack of complaint.................26
a. Respondent was required to meet Equalec’s requirements regardless of their validity under Equatoriana law. .........26
b. There is no reasonable basis to believe the Fuse Policy is invalid. ............................................................................27
3. Respondent’s failure to deliver Fuse Boards that could be connected to Equalec’s electrical grid was
not due to the lack of complaint. .......................................................................................................................27

B. Respondent could reasonably be expected to have taken the lack of complaint into account
beforehand................................................................................................................................................... 28
1. The parties did not explicitly agree to exonerate Respondent’s failure.......................................................29
2. The parties implicitly understood performance would be required despite an impediment...................29
3. Respondent could reasonably have anticipated the fuse policy beforehand. .............................................29

C. Respondent could reasonably be expected to have overcome Claimant’s lack of complaint or its

ii
 consequences............................................................................................................................................... 30
1. Respondent itself could reasonably have complained to the Commission. ...............................................30
2. Respondent could reasonably have provided timely substitute goods........................................................30

D. Respondent is fully liable for its failure to give timely notice under Art. 79(4) CISG. ................... 31
1. Respondent was obliged to give specific and timely notice of any impediment to its ability to perform
from Claimant’s lack of complaint.....................................................................................................................31
2. Respondent failed to give specific or timely notice of impediment.............................................................32

E. The scope of Art. 79 CISG precludes the application of external hardship principles. ................. 32

II. RESPONDENT IS NOT EXCUSED UNDER ART. 80 CISG BECAUSE NO PART OF ITS FAILURE
WAS CAUSED BY CLAIMANT. ............................................................................................................33
III. COMPLAINT TO THE COMMISSION WAS NOT REQUIRED AS A MITIGATION MEASURE UNDER
ART. 77 CISG. ....................................................................................................................................34

PRAYER FOR RELIEF .........................................................................................................35

iii
 LIST OF ABBREVIATIONS

AG Amtsgericht [Petty District Court—Germany]

amp/amps ampere/amperes
Austl. Australia
Austr. Austria
Arb. Arbitration
Arg. Argentina
Art. / Arts. Article / Articles
Assoc. Association
Belg. Belgium
BGH Bundesgerichthof [Federal Supreme Court—Germany]
Bulg. Bulgaria
Can. Canada
CCI Chamber of Commerce and Industry
Cir. Circuit
CISG United Nations Convention on Contracts for the International Sale of Goods
of 11 April 1980
Cl. Ex. Claimant’s Exhibit
Clar. Q. Clarifications given by the President of the Tribunal in Procedural Order No. 2
of 30 October 2004
Co. Company
Convention on Convention on Agency in the International Sale of Goods 17 February 1983
Agency
cf. compare favorably
Corp. Corporation
Ct. Court
Dist. District
Ed. Edition
ed. / eds. Editor / Editors
e.g. exemplum gratii [for example]
ESRA Equatoriana Electric Service Regulatory Act
F.Supp. Federal Supplement [United States Federal District Court reporter]
Fed. Federal
Fin. Finland
FN Footnote
Fr. France
Ger. Germany
H.K. Hong Kong
ICC International Chamber of Commerce
ICC Rules Rules of Arbitration of the International Chamber of Commerce
id. idem [the same]
i.e. id est [that is]
LCIA London Court of International Arbitration
LG Landgericht [District Court—Germany]
Ltd. Limited

iv
Mfg. Manufacturing
Neth. Netherlands
No. Number
NY Convention United Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards of 7 June 1959
OGH Oberster Gerichthof [Supreme Court—Austria]
OLG Oberlandesgericht [Court of Appeal—Germany and Austria]
¶ / ¶¶ paragraph / paragraphs
Para. paragraph
PRC People’s Republic of China
Pty. Ltd. Proprietary Limited
Re. Respondent
RCCP Romanian Code of Civil Procedure
Rep. Report
Romanian Rules Rules of Arbitration of the Court of International Commercial Arbitration
attached to the Chamber of Commerce of Romania
Rus. Russia
§ Section
SBGH Schweizerisches Bundesgericht [Federal Supreme Court—Switzerland]
S.A. Société Anonyme [France]
SpA Societate per Azioni [Italy]
S.r.l. Societate a Responsabilitate Limitata [Italy]
S.D.N.Y. Southern District of New York [Federal District Court—USA]
Switz. Switzerland
Swiss Rules Swiss Rules of International Arbitration
U.K. United Kingdom
UN United Nations
UNCITRAL United Nations Commission on International Trade Law
UNCITRAL UNCITRAL Model Law on International Commercial Arbitration of 1985
Model Law
UNIDROIT International Institute for the Unification of Private Law
UNIDROIT UNIDROIT Principles of International Commercial Contracts of 1984
Principles
UNIDROIT UNIDROIT Arbitration Rules
Rules
USA United States of America
$ United States Dollars
v. versus [against]
Vol. Volume

v
 INDEX OF AUTHORITIES

American Law RESTATEMENT (THIRD) OF AGENCY § 2.03

Institute 2006
cited as: USA REST 3d AGEN § 2.03

American “Getting Adjustments When Material Prices Increase Requires Planning,”

Subcontractors Stand Up For Subcontractors (Feb. 2005), available at:
Association <http://www.asaonline.com/pdfs/FebruaryMediaAlert.doc>
cited as: ASA

Arfazadeh, H. ORDRE PUBLIC ET ARBITRAGE INTERNATIONAL A L’EPREUVE DE LA

MONDIALISATION
LGDJ, 2005
cited as: Arfazadeh

Audit, Bernard LA VENTE INTERNATIONALE DE MARCHANDISES, CONVENTION DES

NATIONS-UNIES 1980 NO. 181
Paris: 1990
cited as: Audit

Berman, Harold J. “Excuse for Nonperformance in the Light of Contract Practices in

International Trade,”
63 COLUMBIA LAW REVIEW (1963 1413-39)
cited as: Berman63

Bianca, Cesare COMMENTARY ON THE INTERNATIONAL SALES LAW, THE 1980 VIENNA
Massimo and SALES CONVENTION
Bonell, Michael Milan: Giuffrè, 1987
Joachim (eds.) cited as: Bianca/Bonell

Bishop, R. Doak “A Practical Guide for Drafting International Arbitration Clauses,” available
at: <http://kslaw.com/library/pdf/bishop9.pdf>
cited as: Bishop

Born, Gary B. INTERNATIONAL COMMERCIAL ARBITRATION IN THE UNITED STATES,

COMMENTARY AND MATERIALS, 2d ed.
The Hague: Kluwer Law International, 2001
cited as: Born

Broches, Aron COMMENTARY ON THE UNCITRAL MODEL LAW ON INTERNATIONAL

COMMERCIAL ARBITRATIOn
Boston: Kluwer, 1990
cited as: Broches

vi
Bund, Jennifer M. “Force Majeure Clauses: Drafting Advice for the CISG Practitioner”
17 JOURNAL OF LAW AND COMMERCE 381 (1998)
cited as: Bund

Cavalieros, “Note: Sentence arbitrale du 18 avril 2000 dans l’affaire CCI no. VB/99130
Phillippe rendue à Budapest”
REVUE DE L’ARBITRAGE (4-2002), pp. 1020-33
cited as : Cavalieros

Capatina, “Romania” in J. Paulsson, (ed.), INTERNATIONAL HANDBOOK ON

Octavian COMMERCIAL ARBITRATION, Suppl. 26, Feb. 1998
cited as: Capatina

CISG Advisory CISG Advisory Council Opinion no. 2, “Examination of the Goods and
Council Notice of Non-Conformity: Articles 38 and 39,” 7 June 2004
cited as: CISG-AC2

Cooper “SPD Electrical Technical Handbook: Selecting Protective Devices Based on

Bussmann, Inc. the National Electrical Code,” 2002
available at: http://www.bussmann.com/library/docs/Spd.pdf
cited as: Bussmann

Craig, W. INTERNATIONAL CHAMBER OF COMMERCE ARBITRATION, 3rd ed.

Laurence, Park, Oceana Publications, 2000
William W., and cited as: Craig/Park/Paulsson
Paulsson, Jan

Davis, Benjamin “Pathological Clause: Frederic Eisemann’s Still Vital Criteria,”

7 ARBITRATION INTERNATIONAL 365 (1991)
cited as: Davis

Derains, Y. and A GUIDE TO THE NEW ICC RULES OF ARBITRATION, 1998

Schwartz, E. cited as: Derains/Schwartz

DiMatteo, Larry A. INTERNATIONAL SALES LAW: A CRITICAL ANALYSIS OF CISG

et. al. JURISPRUDENCE
Cambridge: Cambridge University Press, 2005
cited as: DiMatteo

DiMatteo, Larry A. “The Interpretive Turn in International Sales Law: An Analysis of Fifteen
et al. Years of CISG Jurisprudence,”
34 NORTHWESTERN JOURNAL OF INTERNATIONAL LAW & BUSINESS (Winter
2004) 299-440
cited as: DiMatteo04

vii
Eiselen, Sieg REMARKS ON THE MANNER IN WHICH THE UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL CONTRACTS MAY BE USED TO INTERPRET OR
SUPPLEMENT ARTICLE 29 OF THE CISG 2002
cited as: Eiselen

Eisemann, “La clause d’arbitrage pathologique” in ARBITRAGE INTERNATIONAL: ESSAIS

Frédéric IN MEMORIAM EUGENIO MINOLI
Rome: UTET (1974)
cited as: Eisemann

Electric Utility “Wisconsin Electric pays $25.2-Million in settlement of electric injury case,”
Week 30 Mar. 1992
cited as: Electric Utility Week

Enderlein, Fritz “Rights and Obligations of the Seller under the UN Convention
on Contracts for the International Sale of Goods” in INTERNATIONAL SALE
OF GOODS: DUBROVNIK LECTURES (eds. Petar Šarčević & Paul Volken)
New York: Oceana Publications, 1996
cited as: Enderlein96

Enderlein, Fritz INTERNATIONAL SALES LAw

and Maskow, New York: Oceana Publications, 1992
Dietrich cited as: Enderlein/Maskow

Ferrari, Franco “Applying the CISG in a Truly Uniform Manner: Tribunale di Vigevano
(Italy), 12 July 2000,”
REVUE DE DROIT UNIFORME (2001-1) 203-15
cited as: Ferrari01

Ferrari, Franco THE 1980 UNIFORM SALES LAW: OLD ISSUES REVISITED IN THE LIGHT OF
(ed.) RECENT EXPERIENCES
Milan: A. Giuffrè ; Sellier : European Law Publishers, 2003
cited as: author in Ferrari03

Flambouras, “The Doctrines of Impossibility of Performance and clausula rebus sic

Dionysios P. stantibus in the 1980 Vienna Convention on Contracts for the International
Sale of Goods and the Principles of European Contract Law: A Comparative
Analysis,”
13 PACE INTERNATIONAL LAW REVIEW (Fall 2001) 261-93
cited as: Flambouras01

Flambouras, “Remarks on the Manner in Which the PECL may be Used to Interpret or
Dionysios P. Supplement Article 79 CISG” (May 2002)
available at <http://cisgw3.law.pace.edu/cisg/text/anno-art-79.html>
cited as: Flambouras02

viii
Friedland, Paul “The Relevance of International Standards in the Enforcement of Arbitration
and Hornick, Agreements under the New York Convention,”
Robert 6 AMERICAN REVIEW OF INTERNATIONAL ARBITRATION (1995) 149-90
cited as: Friedland/Hornick

Gaillard, FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL COMMERCIAL

Emannuel and ARBITRATION
Savage, John Boston: Kluwer, 1999
cited as: Gaillard/Savage

Galston, Nina M. INTERNATIONAL SALES: THE UNITED NATIONS CONVENTION ON

and Hans Smit CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS
(eds.) Matthew Bender, New York 1984
cited as: author in GS

Henschel, René “Interpreting or supplementing Article 35 of the CISG by using the

Franz UNIDROIT Principles of international Commercial Contracts and the
Principles of European Contract Law” Nov. 2004
available at: <http:/www.cisg.law.pace.edu/cisg/biblio/henschel.html>
cited as: Henschel

Hillman, Robert Article 29(2) of the United Nations Convention on Contracts for the
A. International Sale of Goods: A New Effort at Clarifying the Legal Effect of
“No Oral Modification” Clauses
21 CORNELL INTERNATIONAL LAW JOUrnal (1988) 449-466
cited as: Hillman

Honnold, John UNIFORM LAW FOR INTERNATIONAL SALES UNDER THE 1980 UNITED
NATIONS CONVENTION, 3d ed.
The Hague: Kluwer Law International, 1999
cited as: Honnold

Honnold, John DOCUMENTARY HISTORY OF THE UNIFORM LAW FOR INTERNATIONAL

(ed.) SALES: THE STUDIES, DELIBERATIONS AND DECISIONS THAT LEAD TO THE
1980 UNITED NATIONS CONVENTION WITH INTRODUCTIONS AND
EXPLANATIONS
Deventer: Kluwer Law & Taxation Publishers, 1989
cited as: Honnold89

Hyland, R. “Conformity Of Goods To The Contract Under The United Nations Sales
Convention And The Uniform Commercial Code”
in SCHLECHTRIEM, P., EINHEITLICHES KAUFRECHT UND NATIONALS
OBLIGATIONENRECHT: REFERATE UND DISKUSSIONEN DER FACHTAGUNG
EINHEITLICHES KAUFRECHT
Freiburg i. Breisgau (16./ 17. February 1987) 305-41
cited as: Hyland/Freiburg

ix
Jenkins, Sarah "Exemption for Nonperformance: UCC, CISG, UNIDROIT Principles -- A
Howard Comparative Assessment,"
72 TULANE LAW REVIEw (1998) 2015-2030
cited as: Jenkins

Kritzer, Albert H. GUIDE TO PRACTICAL APPLICATIONS OF THE UNITED NATIONS

CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODs
Deventer, Boston 1989
cited as: Kritzer
Kruisinga, Sonja (NON-)CONFORMITY IN THE 1980 UN CONVENTION ON CONTRACTS FOR
THE INTERNATIONAL SALE OF GOODS : A UNIFORM CONCEPT?
Antwerp; New York: Intersentia; [Maastricht]: METRO, 2004
cited as: Kruisinga

Lando, Ole and PRINCIPLES OF EUROPEAN CONTRACT LAW: PARTS I AND II

Beale, Hugh The Hague: Kluwer Law International, (2000)
(eds.) cited as: Lando

Lew, Mistelis and COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION

Kröll Kluwer 2003
cited as: Lew/Mistelis/Kröll

Lohbeck, David "Hazardous-voltage primer", EDN, 11 May 2006

cited as: Lohbeck

Lookofsky, Joseph UNDERSTANDING THE CISG IN THE USA: A COMPACT GUIDE TO THE
and Bernstein, 1980 UNITED NATIONS CONVENTION ON CONTRACTS FOR THE
Herbert INTERNATIONAL SALE OF GOODS, 2nd ed.
The Hague: Kluwer Law International, 2004
cited as: Lookofsky04

Maniruzzaman, “Choice of Law in International Contracts – Some Fundamental Conflict of

A.F.M. Laws Issues,”
16 JOURNAL OF INTERNATIONAL COMMERCIAL ARBITRATION (4-1999) 141-
172
cited as: Maniruzzaman

National “Material Price Increases: Strategies For Recovery And Protection,” 21 Oct.
Electrical 2005
Contractors available at:
Association <http://www.necanet.org/cms/index.cfm?fa=viewArticle&ARTICLEID=2
393>
cited as: NESA

x
Neumayer, Karl CONVENTION DE VIENNE SUR LES CONTRATS DE VENTE
and Catherine INTERNATIONALE DE MERCHANDISES: COMMENTAIRE
Ming Lausanne: CEDIDAC 1993
cited as: Neumayer

Nicholas, Barry “Force Majeure and Frustration,”

27 AMERICAN JOURNAL OF COMPARATIVE LAW 231 (1979)
cited as: Nicholas

Nicholas, Barry Nicholas, Barry in Galston, Nina M. and Hans Smit (eds.), INTERNATIONAL
SALES: THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE
INTERNATIONAL SALE OF GOODS
New York: Matthew Bender, 1984
cited as: Nicholas84

Paulsson, J. (ed.) INTERNATIONAL HANDBOOK ON COMMERCIAL ARBITRATION, Suppl. 29

(December/1999)
cited as: Paulsson

Perillo, Joseph M. “Force Majeure and Hardship under the UNIDROIT Principles of
International Commercial Contracts” in CONTRATACIÓN INTERNACIONAL.
COMENTARIOS A LOS PRINCIPIOS SOBRE LOS CONTRATOS COMERCIALES
INTERNACIONALES DEL UNIDROIT
Universidad Nacional Autónoma de México—Universidad Panamericana
(1998) 111-32
cited as: Perillo

Piltz, Burghard INTERNATIONALES KAUFRECHT: DAS UN-KAUFRECHT (WIENER

ÜBEREINKOMMEN VON 1980) IN PRAXIS-ORIENTIERTER DARSTELLUNG
Munich: Verlag C.H. Beck, 1993
cited as: Piltz

Reitz, John C. “Centennial World Congress on Comparative Law: Political Economy as a

Major Architectural Principle of Public Law,”
75 TULANE LAW REVIEW (Mar. 2001) 1121-58
cited as: Reitz

Redfern, Alan, LAW AND PRACTICE OF INTERNATIONAL ARBITRATION, 4th ed.

Martin Hunter, N. London: Sweet & Maxwell, 2004
Blackaby and C. cited as: Redfern/Hunter
Partasides

Šarčević, Petar/ THE INTERNATIONAL SALE OF GOODS REVISited

Volken, Paul (ed.) The Hague: Kluwer Law International, 2001
cited as: Šarčević /Volken

xi
Scalbert, Hugues “La Clause d’Arbitrage Pathologique,”
and Marville, REVUE DE L’ARBITRAGE (1-1998) 117-36
Laurent cited as: Scalbert/Marville

Schäfer, Friederike “Commentary on whether and the extent to which the UNIDROIT
Principles may be used to help interpret Article 80 of the CISG” (July 2004)
available at: http://cisgw3.law.pace.edu/cisg/text/anno-art-80.html
cited as: Schäfer

Schlechtriem, COMMENTARY ON THE UN CONVENTION ON THE INTERNATIONAL SALE

Peter and OF GOODS (CISG), 2nd. ed.
Ingeborg Oxford: Oxford University Press, 2005
Schwenzer (eds.) cited as: author in Schlechtriem2005

Schlechtriem, COMMENTARY ON THE UN CONVENTION ON THE INTERNATIONAL SALE OF

Peter, ed. GOODS, 2nd ed.
Oxford: Oxford University Press, 1998
cited as: author in Schlechtriem98

Schlechtriem, “Commentary on German Supreme Court Decision on conformity of goods

Peter and impediments excusing party from damages (BGH 24 Mar. 1999)” in
15/16 JURISTENZEITUNG (13 Aug. 1999) 794-97
cited as: Schlechtriem99

Schlechtriem, UNIFORM SALES LAW—THE UN CONVENTION ON THE INTERNATIONAL

Peter SALE OF GOODS
Manz, Vienna, 1986
cited as: Schlechtriem

Shihata, Ibrahim THE POWER OF THE INTERNATIONAL COURT TO DETERMINE ITS OWN
JURISDICTION: COMPÉTENCE DE LA COMPÉTENCE
The Hague: M. Nijhoff, 1965
cited as: Shihata

Staudinger, Julius JULIUS VON STAUDINGERS KOMMENTAR ZUM BÜRGERLICHEN GESETZBUCH

and Ulrich MIT EINFÜHRUNGSGESETZ UND NEBENGESETZEN, 13th ed.
Magnus Berlin: Sellier/de Gruyter, 2005
cited as: Staudinger/Magnus

Stoll, Hans and in Schlechtriem, Peter and Ingeborg Schwenzer (eds.), COMMENTARY ON
Gruber, Martin THE UN CONVENTION ON THE INTERNATIONAL SALE OF GOODS (CISG),
2nd ed.
Oxford: Oxford University Press, 2005
cited as: Stoll/Gruber

xii
Tallon, Denis in Bianca, Cesare Massimo and Michael Joachim Bonell (eds.), COMMENTARY
ON THE INTERNATIONAL SALES LAW: THE 1980 VIENNA SALES
CONVENTION
Milan: Giuffrè, 1987
cited as: Tallon

Tunc, André “Commentaire sur les Conventions de La Haye du ler juillet 1964 sur la
Vente internationale des objets mobiliers corporels et la Formation du
contrat de vente” in Ministry of Justice of the Netherlands (ed.), DIPLOMATIC
CONFERENCE ON THE UNIFICATION OF LAW GOVERNING THE
INTERNATIONAL SALE OF GOODS (THE HAGUE, 2-25 APR. 1964) - RECORDS
AND DOCUMENTS OF THE CONFERENCE, VOL. 1 – RECORDS
The Hague (Government) (1966) 355-91
cited as: Tunc

UNCITRAL SECRETARIAT COMMENTARY TO THE 1978 DRAFT OF THE CISG,

available at: http://www.cisg.law.pace.edu/cisg/text/secomm/
cited as: Secretariat

Utter, Robert F. “Judicial Review in the New Nations of Central and Eastern Europe: Some
and Lundsgaard, Thoughts from a Comparative Perspective,”
David C. 54 OHIO STATE LAW JOURNAL (Summer 1993) 559-607
cited as: Utter

van den Berg, THE NEW YORK ARBITRATION CONVENTION OF 1958

Albert Jan Boston: Kluwer, 1981
cited as: van den Berg

Wechem, T.H.M “Verdrag der Verenigde Naties inzake internationale koopovereenkomsten

and Christiaans, betreffende roerende zaken” in Nieuwenhuis, J.H. et. al, TEKST &
C.R. COMMENTAAR VERMOGENSRECHT
Deventer: Bijlage 26 (2002) 1775-1911
cited as: Wechem/ Christiaans

Weigand, Frank- PRACTITIONER’S HANDBOOK ON INTERNATIONAL ARBITRATION

Bernd, (ed.) Munich: C.H. Beck, 2002
cited as: Weigand

Winship, Peter “Exemptions under article 79 of the Vienna sales convention,”

68 RABELS ZEITSCHRIFT FÜR AUSLÄNDISCHES UND INTERNATIONALES
PRIVATRECHT (2004) 495-510
cited as: Winship

Wright, Arthur ELECTRIC FUSES

and Newbery, P. Peter Peregrinus Ltd (2004)
Gordon cited as: Wright/Gordon

xiii
Zeller, Bruno DAMAGES UNDER THE CONVENTION ON CONTRACTS FOR THE
INTERNATIONAL SALE OF GOODS
Dobbs Ferry: Oceana Publications, 2005
cited as: Zeller

xiv
 INDEX OF CASES

Argentina Enrique C. Wellbers S.A.I.C. A. G. v. Extraktionstechnik Gesellschaft für

Anlagenbau M.B.M.: S/ Ordinario (Cámara Nacional de Apelaciones en lo
Commercial–Sala, 26 Sept. 1988)
cited as: CLOUT Case 27 (Arg.)

Australia McRae v. The Commonwealth Disposals Commission, 84 CLR 377

cited as: McRae (Aust.)

Austria Landesgericht [District Court] Salzburg 2 Feb. 2005 (Hydraulic crane case)
cited as: LG Salzburg 2 Feb. 2005 (Aus.)

Oberster Gerichtshof [Supreme Court] 20 Mar. 1997 (2 Ob 58/97m)

cited as: OG 20 Mar. 1997 (Aus.)

Belgium Hof van Beroep [Appellate Court] Gent 28 Jan. 2004

cited as: HB Gent 28 Jan. 2004 (Belg.)

Bulgaria Bulgarian Chamber of Commerce and Industry Arbitration Award case No.
56/1995 of 24 Apr. 1996
cited as: Arb. No. 56/1995 (Bulg.)

Canada Globe Union Industrial Corp. v. G.A.P. Marketing Corp (British Columbia
Supreme Court, 18 Nov. 1994)
cited as: CLOUT Case 114 (Can.)

Onex v. Ball Corp. (Ontario Ct. of Justice, 24 Jan. 1994)

cited as: Onex v. Ball Corp. (Can.)

Finland Helsinki Court of Appeal 30 June 1998 (S 96/1215)

cited as: Helsinki CA (Fin.)

France Paris Court of Appeal, Judgment of 29 Mar. 1991

cited as: Paris Court of Appeal, Judgment of 29 Mar. 1991(Fr.)

Epoux Convert v. Société Droga (Cour de Cassation, 14 Dec. 1983)

cited as: Cour de Cassation, 14 Dec. 1983 (Fr.)

Sacovini/M Marrazza v. Les fils de Henri Ramel, Cour de Cassation [Supreme

Court] 23 Jan. 1996 (CLOUT Case. No. 150)
cited as: Sacovini (Fr.)

Calzados Magnanni v. Shoes General International, Cour d'appel [Appellate Court]

Grenoble 21 Oct. 1999 (CLOUT case No. 313)
cited as: Calzados (Fr.)

xv
 Caito Roger v. Société française de factoring, Cour d'appel [Appellate Court]
Grenoble 13 Sept. 1995 (CLOUT case No. 202)
cited as: Caito (Fr.)

Marques Roque Joachim v. Manin Rivière, Cour d'appel [Appellate Court]

Grenoble 26 Apr. 1995 (CLOUT case No. 152)
cited as: Marques (Fr.)

Germany Landgericht Duisburg, 17 Apr. 1996

cited as: LG Duisburg, 17 Apr. 1996 (Ger.)

Hanseatisches Oberlandesgericht (Hamburg) 11 Sch 6/01, 24 Jan. 2003

cited as: Hanseatisches OLG (Hamburg), 24 Jan. 2003 (Ger.)

Bundesgerichtshof [Supreme Court], 9 Jan. 2002 (VIII ZR 304/00)

cited as: BGH 9 Jan. 2002 (Ger.)

Bundesgerichtshof [Supreme Court] 3 Nov. 1999 (CLOUT case No. 319 )

cited as: BGH 3 Nov. 1999 (Ger.)

Bundesgerichtshof [Supreme Court], 24 Mar. 1999 (VIII ZR 121/98; CLOUT case

No. 271)
cited as: BGH 24 Mar. 1999 (Ger.)

Landgericht [State Court] Aachen 14 May 1993 (43 O 136/92; CLOUT case No.
47)
cited as: LG Aachen 14 May 1993 (Ger.)

Schiedsgericht der Handelskammer [Arbitral Panel of the Chamber of Commerce]

Hamburg, 21 Mar. / 21 June 1996 (CLOUT case. No. 166)
cited as: SGH Hamburg 21 Mar 1996 (Ger.)

Bayerisches Oberstes Landesgericht, 28 Feb. 2000

cited as: Bayerisches Oberstes LG 28 Feb. 2000 (Ger.)

Bundesgerichtshof [Supreme Court] 11 Dec. 1996 (CLOUT case No. 268)

cited as: BGH 11 Dec. 1996 (Ger.)

Landgericht [District Court] Paderborn 25 June 1996

cited as: LG Paderborn 25 June 1996 (Ger.)

Landesgericht Kassel, 15 Feb. 1996 (11 O 4187/95), CISG-online 190

cited as: LG Kassel 15 Feb. 1996 (Ger.)

Oberlandesgericht Hamm, 27 Sep. 2005, 29 Sch 1/05

cited as: OLG Hamm, 27 Sep. 2005 (Ger.)

xvi
 Oberlandesgericht Karlsruhe 1987
cited as: OLG Karlsruhe 1987 (Ger.)

M.V. “CEM Freighter v. T.S.,” German Maritime Arbitration Association, 8

Nov. 2005, available at: www.gmaa.de/gmitsp11.htm
cited as: CEM Freighter 2005 (Ger.)

Hong Kong Lucky-Goldstar International (H.K.) Ltd. v. Ng Moo Kee Engineering Ltd.,
(CLOUT Case 57: High Court of Hong Kong (Kaplan J.), 5 May 1993)
cited as: Lucky-Goldstar (H.K.)

Italy Bielloni Castello S.p.A. v. EGO S.A., Corte di Appello di Milano, 11 Dec. 1998
cited as: Bielloni (Ita.)

Rheinland Versicherungen v. Atlarex, Tribunale [District Court] di Vigevano 12

July 2000
cited as: Rheinland (Ita.)

Tribunale Civile [District Court] Monza 14 Jan. 1993 (R.G. 4267/88; CLOUT
case. No. 54)
cited as: TC Monza 14 Jan. 1993 (Ita.)

Corte di Appello [Court of Appeal], Salerno 31 Dec. 1990

cited as: Corte di Appello, Salerno 31 Dec. 1990 (Ita.)

Netherlands Arrondissementsrechtbank [District Court] 's-Hertogenbosch 2 Oct. 1998

(9981/HAZA 95-2299; UNILEX)
cited as: HG 2 Oct. 1998 (Neth.)

J.T. Schuermans v. Boomsma Distilleerderij/Wijnkoperij, Hoge Raad [Supreme

Court] 7 Nov. 1997
cited as: Schuermans (Neth.)

Netherlands Arbitration Institute, Case No. 2319 15 Oct. 2002

cited as: Arb. Case No. 2319 (Neth.)

People’s China International Economic & Trade Arbitration Commission Arbitration

Republic of proceeding of 7 May 1997 (Sanguinarine case)
China cited as: CIETAC 7 May 1997 (PRC)

Russia CLOUT Case 403 (Moscow City Court, 13 Dec. 1994)

Cited as: CLOUT Case 403 (Rus.)

Arb. No. 155/1994

Cited as: Arb. No. 155/1994 (Rus.)

Switzerland Preliminary Award of 25 Nov. 1994, Zurich Chamber of Commerce

cited as: Zurich CC 1994 (Switz.)

xvii
 Thermo King (Fr.); TD 15 Jan. 1998
cited as: Thermo King (Switz.)

Roland Schmidt GmbH v. Textil-Werke Blumenegg AG, Bundesgericht [Supreme

Court] 22 Dec. 2000
cited as: Roland (Switz.)

T.S.A. v. R. Établissement, HG Zurich, 30 Nov. 1998

cited as: HG Zurich 1998 (Switz.)

Geneva CCI, Case No. 193, Interim Award of 21 Oct.2002

cited as: Geneva CCI, Case No. 193, Interim Award of 21 Oct.2002 (Switz.)

United Tsakiroglou & Co Ltd v. Noblee & Thorl GmbH (1962) Appeal Cases 93,
Kingdom House of Lords
cited as: Tsakiroglou (U.K.)

Fowler v. Merril Lynch (June 10 1982) High Court, Queen's Bench Division
(Commercial Court)
cited as: Fowler v. Merril Lynch (U.K.)

United States I.T.A.D. Associates, Inc. v. Podar Brothers, 636 F.2d 75 (4th Cir. 1981)
cited as: I.T.A.D. Associates (USA)

Ledee v. Ceramichie Ragno, 684 F.2d 184 (1st Cir. 1982)

cited as: Ledee v. Ceramichie Ragno (USA)

Astra Footwear Industry v. Harwyn International, 442 F.Supp. 907 (S.D.N.Y.

1978)
cited as: Astra Footwear (USA)

Georgia Power Co. v. Cimarron Coal Corp., 526 F.2d 101 (6th Cir.1975)
cited as: Georgia Power (USA)

Laboratorios Grossman v. Forest Laboratories Inc., 295 N.Y.S.d 756 (1968)

cited as: Laboratorios Grossman (USA)

Zechman v. Merrill Lynch, Pierce, Fenner & Smith Inc., 742 F. Supp. 1359
(N.D. Ill. 1990)
cited as: Zechman v. Merrill Lynch (USA)

Samson Resources Co v. Int’l Business Partners, Inc., 906 F. Supp. 624 (N.D.
Okla. 1995)
cited as: Samson Resources (USA)

Lark Int., David L. Threkeld & Co. v. Metallgesellschaft Ltd. 923 F.2d 245, 248
(2d Cir 1991)
cited as: Lark, Threkeld & Co. (USA)

xviii
 Pepsico Inc v. Oficina de Asesoria y Ayuda Tecmica Ca, 945 F. Supp. 69 (SDNY
1996).
cited as: Pepsico Inc (USA)

Canadian Industrial Alcohol Co. v. Dunbar Molasses Co., 258 N.Y. 194, 179
N.E. 383 (1932)
cited as: Canadian Industrial (USA)

Wilson v. Lignotock U.S.A., Inc., 709 F.Supp. 797, E.D.Mich.,1989

cited as: Wilson v. Lignotock (USA)

Schulze & Burch Biscuit Co. v. Tree Top, Inc., 642 F.Supp. 1155, 1156-57 (N.D.
Ill. 1986)
cited as: Schulze & Burch Biscuit Co. v. Tree Top, Inc. (USA)

Rhone Mediterranee Compagnia Francese Di Assicurazioni E Riassicurazioni v.

Lauro, 555 F.Supp. 481 (D.C.Virgin Islands,1982)
cited as: Rhone Mediterrannee v. Achille Lauro (USA)

MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova D’Agostino 144 F.3d

1384 (11th Cir. 1998)
cited as: MCC (USA)

International ICC Case No. 5103 (1994)

Chamber of cited as: ICC Case No. 5103
Commerce
Arbitrations ICC Case No. 5294 (1998) (Karrer)
cited as: ICC Case No. 5294

ICC Case No. 6149 (1990)

cited as: ICC No. Case 6149

ICC Award No. 8128 (1995)

cited as: ICC Case 8128

ICC Award No. 7197 (1992)

cited as: ICC Case 7197

ICC Award No. 7453

cited as: ICC Award No. 7453

Partial Award in ICC Case No. 7920, 1993

cited as: Partial Award in ICC Case No. 7920,1993

xix
 STATEMENT OF FACTS

Equatoriana Office Space Ltd. (“Claimant”) is a property developer incorporated and based in
Equatoriana [Statement of Claim ¶1]. For a development in Mountain View, Equatoriana, Claimant
required five primary distribution fuse boards (“the Fuse Boards”) to connect the development to
the electrical grid of the only local supplier, Equalec [Statement of Claim ¶5; Clar. Q. 31]. Claimant
prepared detailed engineering drawings for the Fuse Boards (“the Drawings”) based on comments
from Equatoriana Switchboards Ltd. (“Switchboards”) [Statement of Claim ¶9]. The Drawings
specified that the fuses were to be “Chat Electronics JP type,” that is, JP type fuses made by Chat
Electronics (“Chat”), and that the Fuse Boards were “to be lockable to Equalec requirements” [id.].
Switchboards quoted a price of US$180,000 for the Fuse Boards [Statement of Claim ¶10].
In search of a lower price, Herbert Konkler, Claimant’s Purchasing Director, contacted Peter Stiles,
Sales Manager for Mediterraneo Electrodynamics S.A. (“Respondent”), on 22 Apr. 2005 [Re. Ex.
1]. Claimant asked Respondent, who has specialized in the fabrication and distribution of electrical
equipment for over forty years [Answer 2; Re. Ex. 1], whether it could fabricate the Fuse Boards.
Respondent replied, “we would certainly be able to do it,” but requested the Drawings before
quoting a price [Re. Ex. 1]. After Respondent reviewed the Drawings, the parties agreed to a price
of US$168,000, and concluded a written contract (“the Contract”) on 12 May 2005 [Cl. Ex. 1]. The
Contract stated that the Drawings “are attached and made part of the contract” [id.] and that
“amendments…must be in writing” [id. ¶32]. It also included an arbitration clause. Initially,
Respondent offered its standard arbitration clause, calling for institutional “arbitration at the
Mediterraneo International Arbitration Center” [Answer ¶5; Re. Ex. 1]. Claimant, however,
substituted its own clause, which required disputes to be “settled by the International Arbitration
Rules used in Bucharest” [Cl. Ex. 1 ¶34]. Respondent acknowledges that it “did not object to its
inclusion” [Answer ¶5; Re. Ex. 1].
Sometime that spring, Respondent ran out of Chat JP fuses [Re. Ex. 1]. Respondent tried to order
the Chat JP fuses it needed to fulfill the Contract but learned that Chat could not deliver Chat JP
fuses until at least mid-August due to production problems [id.]. On 14 July 2005, Stiles attempted
to contact Konkler, who had exclusively handled the negotiations [Re. Ex. 1; Cl. Ex. 2]. Konkler
was away on a business trip [Cl. Ex. 3]. Stiles spoke instead with Steven Hart, an employee in
Claimant’s Purchasing Department. Stiles said that delivery of the Fuse Boards would be delayed
until “early September at the earliest” [Re. Ex. 1], and that the only “three possible actions” were to
wait for Chat to deliver JP fuses, use a different brand of JP fuses or use Chat JS type fuses [Re. Ex.

1
1]. Hart replied that it was not possible to wait for Chat to fix its problems since the development
had an occupancy deadline of 1 Oct. 2005, and the Fuse Boards were required to connect to
Equalec’s electrical grid in order to allow occupancy [id.]. Hart said that Claimant preferred Chat
equipment [Cl. Ex. 2], but that he himself was “not very well versed” in electrical goods [Re. Ex. 1].
Hart sought Stiles’ recommendation. Stiles explained that JS fuses are larger than JP, so that “once
one type is installed it cannot be replaced by the other” [id.], and that only JS fuses are available at
ratings of more than 400 amps [Re. Ex. 1; Re. Ex. 2]. As the fuses here were all less than 400 amps
[Statement of Claim ¶9; Re. Ex. 1; Clar. Q. 27], Stiles assured Hart that “it really did not matter which
type was used,” but that Respondent needed to know “promptly” [Re. Ex. 1]. Stiles suggested using
Chat JS fuses as the “better solution” [Cl. Ex. 2]. Hart said that that “was probably the best way to
proceed” [id.]. Neither party ever submitted a written amendment request [id.].
The Fuse Boards, using Chat JS fuses, were delivered on 22 Aug. 2005 and installed on 1 Sept. 2005
[Statement of Claim ¶14]. The Fuse Boards could not be properly inspected until they were connected
[Clar. Q. 32]. On 8 Sept. 2005, Equalec personnel refused to make the electrical connection
[Statement of Claim ¶14]. Claimant immediately complained to Equalec [Cl. Ex. 3]. Equalec explained
that it had adopted a policy (“the Fuse Policy”) in July 2003 of connecting to JS fuse boards only
for loads greater than 400 amps, to reduce the safety risk of improperly rated fuses [Cl. Ex. 4].
The next morning, Claimant demanded that Respondent provide conforming goods [Cl. Ex. 3; Re.
Ex. 1], but Respondent stated that it “might be several months yet” before it could deliver [Re. Ex.
1]. As Respondent already knew, an electrical connection for the Fuse Boards was essential to
meeting the development’s impending occupancy deadline of 1 Oct. 2005; otherwise, Claimant
risked significant penalties and lost profits [Re. Ex. 1; Statement of Claim ¶16]. Respondent suggested
complaining to Equalec or the Equatoriana Electrical Regulatory Commission (“the
Commission”), but Claimant had already complained to Equalec to no avail, and there was not
enough time to start a Commission proceeding [Re. Ex. 1]. Claimant informed Respondent of its
intent to find another supplier and to hold Respondent liable for its costs [Cl. Ex. 3; Re. Ex. 1].
Within three weeks, Claimant removed the original Fuse Boards to install substitutes from
Switchboards, paying US$180,000 for the substitutes and US$20,000 for installation [Cl. Ex. 3;
Statement of Claim ¶18]. On 15 Aug. 2006, Claimant submitted this dispute (“the Claim”) to the
Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry
of Romania, located in Bucharest [Notice of Arbitration].

2
 SUMMARY OF ARGUMENT

PART ONE. THE TRIBUNAL HAS JURISDICTION OVER CLAIMANT’S CLAIM.

The Tribunal may rule on its own jurisdiction under the Romanian Rules and according to the well-
established kompetenz-kompetenz principle. The Tribunal should look to the standards set out in Art.
II of the New York Convention to rule that the arbitration agreement is valid and enforceable. The
parties clearly intended to submit disputes arising out of the Contract to arbitration, and their
agreement is neither null and void, nor inoperable, nor incapable of being performed. Moreover,
the parties agreed to institutional arbitration, and, specifically, to institutional arbitration under the
Romanian Rules. The only possible institution which the parties could have contemplated at the
time of contracting—according to the plain language of the arbitration agreement and the parties'
conduct—is the Court of International Commercial Arbitration attached to Chamber of Commerce
and Industry of Romania. Finally, the present dispute is within scope of the arbitration agreement
and is arbitrable.

PART TWO. RESPONDENT BREACHED THE CONTRACT AND IS LIABLE TO

CLAIMANT.
Respondent breached the Contract by delivering fuse boards that were neither of the quality and
description required by the Contract nor fit for a particular purpose made known to Respondent
under Art. 35 CISG. The Contract was never amended to permit the delivery of JS fuses because
the parties explicitly agreed to a “no oral modification” provision and Claimant is not precluded
from asserting its requirements under Art. 29(2) CISG. Thus, Respondent is liable under Art. 36
CISG.

PART THREE. RESPONDENT IS NOT EXCUSED FROM LIABILITY.

Respondent cannot escape liability under any theory of exemption. Respondent’s liability is not
excused by the fact that Claimant did not complain to the Commission about Equalec’s refusal to
connect the Fuse Boards. Under Art. 79 CISG, Respondent cannot satisfy the requirements of
causality, unforeseeability, unavoidability, and notice. Under Art. 80, Respondent is not excused
because no part of its failure was caused by Claimant’s conduct. Lastly, complaint to the
Commission was not required as a mitigation measure under Art. 77 CISG.

3
 ARGUMENT
PART ONE. THE TRIBUNAL HAS JURISDICTION.
1. The Tribunal has jurisdiction over Claimant’s claim. Generally, an arbitral tribunal may assume
jurisdiction over a claim when it determines that a valid arbitration clause exists. According to the
kompetenz-kompetenz principle, it is generally recognized that the tribunal itself is empowered to make
this determination. This Tribunal is competent to rule on its own jurisdiction (I). Moreover, the
Tribunal should determine that a valid arbitration agreement exists (II) and that the parties agreed to
the application of the Romanian Rules (III). Finally, the Tribunal should find that the claim falls
within the scope of the parties’ arbitration agreement and is arbitrable (IV).

I. THE TRIBUNAL IS COMPETENT TO DETERMINE ITS OWN JURISDICTION.

2. This Tribunal is constituted under the Romanian Rules [Letter to the Court of International Commercial
Arbitration attached to the CCI of Romania, 4 Sept. 2006, p. 18]. Under the Romanian Rules, the Tribunal
is competent to rule on jurisdictional objections and therefore may dispose of Respondent’s
contention at Para. 17 of its Answer. Art. 15(2) of the Romanian Rules states in relevant part that
“the Arbitral Tribunal verifies its own authority to settle the dispute.” Similarly, pursuant to Art. 79
of the Romanian Rules, those rules are supplemented by the Romanian Code of Civil Procedure
(“RCCP”). Art. 3433 thereof provides that “the arbitral tribunal shall examine its jurisdiction to
settle the dispute.”

3. Even if the Romanian Rules did not apply to this arbitration, a determination by the Tribunal of its
own jurisdiction is in keeping with established practice in international arbitration [Gaillard/Savage
213; Redfern/Hunter ¶¶5-39 to 5-44; see Rule 4(6) of the ICC Rules; see Art. 21 of the UNCITRAL
Arbitration Rules; see Art. 23 of the LCIA Rules]. Indeed, where an arbitration agreement fails expressly
to provide for such authority, it is generally accepted that the authority exists as an inherent power
of the arbitral tribunal [Redfern/Hunter ¶5-38 (the power of the arbitral tribunal “to investigate its own
jurisdiction…is a power inherent in the appointment of an arbitral tribunal”); Shihata 47; Arfazadeh 46-8].

4. Additionally, the Tribunal may look to the law of the arbitral situs [Redfern/Hunter ¶¶2-10, 2-14; Born
84; see also ICC Case No. 5294; Derains/Schwartz 200; Gaillard/Savage 254]. Here the parties chose to
site their arbitration in Danubia, which has adopted the 1985 UNCITRAL Model Law in its entirety
without amendment [Statement of Claim ¶21]. The above-referenced kompetenz-kompetenz principle is
codified in Art. 16 of Danubia’s Arbitration Law, which states that an arbitral tribunal may “rule on
its own jurisdiction, including any objections to the existence or validity of the arbitration

4
 agreement.” Determinations by arbitral tribunals under identical provisions of the UNCITRAL
Model Law have repeatedly been upheld by national courts reviewing such awards [see, e.g., CLOUT
Case 114 (Can.), CLOUT Case 403 (Rus.), CLOUT Case 27 (Arg.)]. There is no reason to believe that
Danubian courts would rule otherwise.

II. THE TRIBUNAL SHOULD FIND THAT THE PARTIES CONCLUDED A VALID ARBITRATION
AGREEMENT.
5. The arbitration agreement concluded by the parties in Para. 34 of the Contract is both valid and
enforceable. Art. II of the New York Convention governs the formation of the arbitration
agreement (A). Para. 34 of the Contract is an arbitration agreement under Art. II(1) of the New
York Convention (B) and is legally valid under Art. II(3) of the New York Convention (C).

A. The arbitration agreement is within the scope of Article II of the New York
Convention.
6. The Tribunal should apply the standards in the New York Convention because those standards are
the ones that national courts look to, in the absence of other applicable law, in deciding whether to
compel arbitration and to recognize and enforce awards. The standards articulated in Art. II are the
threshold requirements for a determination that a valid arbitration agreement exists. The New York
Convention is directly applicable because Equatoriana, Mediterraneo, and Danubia are all parties to
it [Clar. Q. 1, Statement of Claim ¶21; Statement of Claim ¶2]. Therefore, the parochial nuances of
national law are not relevant to a threshold determination of whether a valid arbitration agreement
exists, so long as the requirements of Art. II of the New York Convention are satisfied [van den Berg
123, 282-4; Friedland/Hornick 149-60]. In international commercial arbitration, tribunals often look
to Art. II of the New York Convention because an arbitration agreement in conformity with the
requirements of Art. II ensures that any award will not be refused enforcement for reasons of ex ante
invalidity [van den Berg 177; Gaillard/Savage 124; Redfern/Hunter 10-25; Lew/Mistelis/Kröll 159; Born
168; see also ICC Case No. 6149].

B. The parties agreed to submit their dispute to arbitration.

7. The arbitration agreement, in Para. 34 of the Contract, manifests the clear intent of the parties to
submit their dispute to arbitration. Art. II(1) of the New York Convention defines an arbitration
agreement as “…an agreement in writing under which the parties undertake to submit to arbitration
all or any differences which have arisen or which may arise between them in respect of a defined
legal relationship….” Art. II(2) defines an “agreement in writing” as “an arbitral clause in a
contract…signed by the parties….” The arbitration clause here constitutes such an agreement.

5
8. Both Claimant and Respondent agreed to submit disputes “arising out of or in connection with” the
Contract to arbitration [Cl. Ex. 1 ¶34]. It is common ground that the parties intended to submit
their dispute to arbitration [see Answer ¶15]. The contract originally prepared by Respondent
contained an arbitration clause calling for arbitration at the Mediterraneo International Arbitral
Center [Re. Ex. 1]. In its counter-offer (ultimately accepted by Respondent and reflected by the
Contract), Claimant replaced Respondent’s arbitration clause with the one providing this Tribunal
with jurisdiction. Respondent acknowledges that it “did not object to its inclusion” [Answer ¶15.].

C. The arbitration agreement is valid.

9. The arbitration agreement is valid under Art. II(3) of the New York Convention. Under Art. II(3),
an arbitration agreement is invalid if it is “null and void, inoperative or incapable of being
performed.” Since Respondent has alleged invalidity [Proc. Ord. No. 1 ¶4], it bears the burden of
showing that the arbitration agreement is invalid [Gaillard/Savage 124]. However, the arbitration
agreement at issue before this Tribunal is neither null and void (1), nor inoperative (2), nor incapable
of being performed (3).

1. The arbitration agreement is not null and void.

10. There was no defect in the formation of the arbitration agreement that would render it “null and
void.” Generally, subject to specific national law definitions of the same, as well as UNCITRAL
Model Law Art. 8, an arbitration agreement is null and void when it was defective or invalid at
formation, typically as a result of “fraud, duress, illegality, mistake, and lack of capacity” [van den Berg
155-8; Born 160]. Here, Respondent did not—because it could not—provide this Tribunal with
evidence of any of the above-referenced deformities or any other grounds of nullity.

2. The arbitration agreement is not inoperative.

11. Respondent cannot legitimately claim that the arbitration agreement is inoperative. Tribunals may
find that an agreement is inoperative where it was once valid but has ceased to have effect. This
may be the case, inter alia, where the agreement was explicitly or implicitly revoked or waived, where
it is res judicata, or where a relevant time limit has expired [van den Berg 158-9; Born 160]. Respondent
has not argued and cannot argue any of these. Therefore, the Tribunal should not find the
arbitration clause inoperative.

3. The arbitration agreement is not incapable of being performed.

12. The arbitration agreement is sufficiently comprehensive, specific, and clear to permit performance.
Courts have found performance impossible where the parties have agreed upon a specific procedure

6
 that cannot be realized or where the terms of an arbitration agreement are so vague, indefinite, or
internally contradictory that the Tribunal cannot ascertain the parties’ intent [Born 160; Corte di
Appello, Salerno 31 Dec. 1990 (Ita.); Wilson v. Lignotock (USA); Fowler v. Merril Lynch (U.K.)]. Such
clauses are commonly referred to as “pathological” [Lew/Mistelis/Kröll 154; see also Eisemann 129
(origin of the term “clause d’arbitrage pathologique”)].

13. Tribunals and courts have found arbitration clauses to be pathological in the following
circumstances: 1) equivocation as to whether binding arbitration is intended; 2) designation of an
arbitrator who is deceased or refuses to participate; 3) designation of an arbitral institution that does
not exist or refuses to organize an arbitration; 4) conditions specified by the parties cannot be met
by the arbitrators; and 5) the agreement specifically provides for procedures that are mutually
exclusive or indiscernible [Bishop 18-19; see also Lew/Mistelis/Kröll 154-9; Davis 367-8, 378]. Even a
pathological clause will be upheld, however, as long as the court or the tribunal can discern and give
effect to the parties’ intent [Lew/Mistelis/Kröll 156-7; Gaillard/Savage 264]. Respondent alleges only
that the arbitration agreement fails to indicate clearly the applicable rules of procedure and/or an
arbitral institution and therefore is so unclear as to be a “nullity” [Proc. Ord. No. 1 ¶4]. This
argument fails.

14. As will be discussed below (see infra ¶¶16-28) the arbitration agreement is not so ambiguous or vague
as to be pathological. The arbitration clause is valid because the parties unequivocally agreed to
submit disputes “arising out of or in connection with” the Contract to arbitration [Cl. Ex. 1¶34].
Never during the negotiations did the parties consider submitting their dispute to an alternative
forum. Moreover, the procedures chosen by the parties do not render the agreement invalid. As
will be discussed below (see infra ¶¶16-28), the parties’ intent to arbitrate under the Romanian Rules
and under the aegis of the Court of International Commercial Arbitration attached to the CCI of
Romania is discernable and should be given effect.

15. Moreover, if the Tribunal were to find that the arbitration agreement is so ambiguous or vague as to
be pathological, it should nevertheless give expression to the parties’ intent by curing the ambiguity
[Lew/Mistelis/Kröll 156-7; Gaillard/Savage 264-6; Davis 378]. Ambiguities in the wording of an
arbitration agreement are usually not fatal (see infra ¶¶16-28). Where, as is the case here, it is clear
that both parties intended to submit their dispute to arbitration, the Tribunal should interpret the
agreement in a manner that favors validity and respects the parties’ intent [Lew/Mistelis/Kröll 155;
(when clauses “show clearly that the parties intended to submit their disputes to arbitration…courts and tribunals are

7
 reluctant to consider these clauses void for uncertainty.”); Gaillard/Savage 264].

III. PARAGRAPH 34 OF THE CONTRACT CALLS FOR ARBITRATION UNDER THE ARBITRATION
RULES OF THE COURT OF INTERNATIONAL COMMERCIAL ARBITRATION ATTACHED TO
THE CHAMBER OF COMMERCE & INDUSTRY OF ROMANIA.

16. The Tribunal should respect the parties’ intent to submit their dispute to institutional arbitration at
the Court of International Commercial Arbitration attached to the CCI of Romania. The New York
Convention favors party autonomy and places strong emphasis on the interpretation of party intent
[van den Berg 282; Broches ¶3; Gaillard/Savage 125]. Tribunals and courts dealing with contested (and
allegedly pathological) clauses similar to the one before this Tribunal generally seek to uphold the
parties’ intent to arbitrate and interpret the clauses so as to render them effective [Gaillard/Savage
262-3; Lew/Mistelis/Kröll 155-6]. This Tribunal should do the same.

17. Where a party has alleged that the terms of an arbitration agreement are ambiguous, ascertaining the
parties’ intent requires the Tribunal to consider the following factors: whether the parties agreed to
arbitrate, whether they intended institutional or ad hoc arbitration, and where and under which rules
the arbitration should take place [see, e.g. Geneva CCI, Case No. 193, Interim Award of 21 Oct.2002
(Switz.); Partial Award in ICC Case No. 7920, 1993; OLG Hamm, 27 Sep. 2005 (Ger.); see also Born 185-9;
Scalbert/Marville 118-9, 128-9; Gaillard/Savage 264]. Evidence of such intent can be found in both the
language of the arbitration agreement and in the surrounding circumstances [Gaillard/Savage 262-3;
Lew/Mistelis/Kröll 155-6].

18. Once a tribunal has established that the parties intended arbitration, it will give effect to that intent
by construing the language of the clause broadly [see, e.g. Lucky-Goldstar (H.K.) (reference to a non-existent
institution and rules disregarded by J. Kaplan and ad hoc arbitration instituted, in order “to give effect to the clear
intention of the parties [to arbitrate].”); Laboratorios Grossman (USA) (no clear designation of an arbitral
institution or procedural rules, but a dominant purpose by the parties to submit their disputes to arbitration; the court
cured the agreement and directed arbitration before the “most appropriate” tribunal in the circumstances.)]. A broad
construction of an arbitral clause will look to the geographical specifications included in the parties’
agreement in order to choose between ad hoc and institutional arbitration and to determine the
institution and rules most likely intended by the parties. For example, in Lucky-Goldstar, the tribunal
held a clause providing for arbitration in a “third country” under non-existent rules (those of the
International Commercial Arbitration Association) to commit the parties to ad hoc arbitration
[Lucky-Goldstar (H.K.)]. By contrast, where the agreement included specific geographical indications,
such as “Tribunal de la Seine” [Craig/Park/Paulsson 159 n.4] or “Court of Arbitration of Budapest,

8
 Hungary” [Cavalieros 1022-5], arbitrators and courts have referred the parties to arbitration before a
tribunal most clearly linked to that geographical location. Arbitral clauses have not been given effect
only in those instances where the parties explicitly designated a non-existent or non-inferable
institution [see, e.g. Scalbert/Marville 128; Gaillard/Savage 264-8; Lew/Mistelis/Kröll 155-9)].

19. In this case, both the language and the circumstances indicate that the parties not only agreed to
institutional arbitration (A), but also to institutional arbitration under the Romanian Rules (B),
administered by the Court of International Commercial Arbitration attached to the CCI of Romania
(C).

A. The parties agreed to institutional arbitration.

20. The Tribunal should find that the arbitration agreement manifests an intent by the parties to submit
their dispute to institutional arbitration. According to the arbitration agreement, the parties chose
the “International Arbitration Rules used in Bucharest” [Cl. Ex. 1 ¶34]. Despite the language of
Para. 34, Respondent may argue that the agreement calls for ad hoc arbitration. However, the
language of the agreement itself calls for arbitration under the “International Arbitration Rules used
in Bucharest” (emphasis added). This reference to use in a particular geographic location cannot be
read to call for ad hoc arbitration because ad hoc arbitration, unlike institutional arbitration, is not
tied to an institution situated in any one geographic location [Gaillard/Savage ¶201].

21. Furthermore, the surrounding circumstances—essential in ascertaining party intent—refute the

argument that the parties intended ad hoc arbitration. During contractual negotiations, Respondent
initially offered its standard arbitration clause, calling for institutional “arbitration at the
Mediterraneo International Arbitral Center” [Re. Ex. 1]. Respondent had engaged in institutional
arbitration under this clause in two out of three of its past arbitrations [Clar. Q. 15]. Since
Respondent’s own default choice of arbitral proceedings was institutional arbitration, it is reasonable
to assume that Respondent intended institutional arbitration in this case as well. Claimant’s
alternative arbitration clause, which subsequently became the arbitration agreement, did not alter this
expectation—but only the form [Re. Ex. 1]. As for Stiles’ later statement—made after the request
for arbitration was filed—that “it looked strange to him” that “no institution was mentioned” in the
amended clause, the Tribunal should note that reference to rules rather than an institution is
commonplace [Zurich CC 1994 (Switz.); ICC Case No. 5103; see also Born 187-8].

22. Not only does the text of the parties’ agreement indicate that institutional arbitration was intended,
but it is also reasonable to presume that the parties wished to avail themselves of the benefits of

9
 institutional arbitration. Institutional arbitration offers, among other benefits, advantages such as
the security of established procedural rules and professional supervision of the proceedings, recourse
to independent review and revision of the award, greater certainty with regard to costs, and a body
of practice and commentary to inform the resolution of complex issues that may arise
[Redfern/Hunter ¶¶1-101 to 1-102; Born 12]. This reasonable presumption in favor of institutional
arbitration, in combination with the language of the arbitration agreement and the circumstances
surrounding its formation, indicates that the parties intended institutional arbitration in this case.

B. The parties agreed to institutional arbitration under the Romanian Rules.

23. The arbitration agreement designates the Romanian Rules as the procedural rules that govern the
Claim. As noted above, the agreement specifically calls for the arbitration to be “settled by the
International Arbitration Rules used in Bucharest” [Cl. Ex. 1 ¶34]. Respondent may note that the
proper title of the Romanian Rules is in fact “Arbitration Rules” [Art. I(1) Romanian Rules].
However, the Tribunal should not sacrifice the substance of the parties’ intent on the altar of banal
linguistic formality. Chapter Eight of the Romanian Rules, which is entitled “Special Provisions
Regarding International Commercial Arbitration,” contains those portions of the Romanian Rules
that are specific to international arbitrations. Thus, use of the term “International” conveys the
parties’ intent that these specific provisions of the Romanian Rules apply. Likewise, the
capitalization by the parties of “International Arbitration Rules” indicates that such designation was
not meant to be merely descriptive, but denotes a proper name. The parties’ decision to designate
the rules in this way shows that they intended arbitration according to specific named rules rather
than a general set of “international rules.”

24. The term “the International Arbitration Rules used in Bucharest” also indicates party intent to select
the rules most closely associated with Bucharest and constitutes an attempt to distinguish the rather
ambiguously-named “Arbitration Rules” from similar procedural frameworks. As noted above (see
infra ¶17), tribunals have relied on the geographic location specified by the parties to determine party
intent to arbitrate under the rules most commonly associated with that geographical location [see, e.g.,
Preliminary Award of 25 Nov. 1994, Zurich CC (Switz.) (“international trade arbitration organization in
Zurich” interpreted as Zurich Chamber of Commerce International Arbitration Rules); ICC Case No. 5103
(reference to Paris Chamber of Commerce interpreted as reference to ICC)); see also Gaillard/Savage 262-3;
Lew/Mistelis/Kröll 156 (where designation of the institution under the rules of which an arbitration should take
place was unclear, “the reference to a particular city…allowed the courts to identify the chosen institution.”)]. There

10
 is no other organization in Bucharest that conducts international commercial arbitrations [Clar. Q.
10]. The CCI of Romania most often organizes arbitrations according to the Romanian Rules [Clar.
Q. 12]; in fact, the letter of 28 Aug. 2006 from the Court of International Commercial Arbitration to
Respondent refers to the Romanian Rules as “our rules” [Letter to Re., 28. Aug. 2006, p.16]. No
procedural rules other than the Romanian Rules satisfy the parties’ express requirements that the
rules be specific to international commercial arbitration and have a particular attachment to
Bucharest.

25. Respondent incorrectly alleges that the arbitration agreement is ambiguous because “International
Arbitration Rules” could mean either the Romanian Rules themselves or allow for the operation of
the UNCITRAL Arbitration Rules [Art. 72(2) Romanian Rules]. This interpretation is circular and, if
accepted, would endanger the viability of the Romanian Rules themselves. While Art. 72(2) does
provide that the parties are “free to decide either for these Rules, or for other rules of arbitral
procedure,” it goes on to say that, “in case the parties have opted for UNCITRAL Rules of
Arbitration, the Arbitrator Appointing Authority shall be the President of the Court of International
Commercial Arbitration.” Thus, the drafters of the Romanian Rules anticipated that if parties
intended arbitration under the UNCITRAL Rules in Romania, they should so designate in the
arbitration agreement. In fact, Art. 5 of the Romanian Rules specifies that, where organization of
the arbitration has been entrusted to the Romanian Court of International Commercial Arbitration,
the Romanian Rules apply by default. Art. 72(2) simply codifies the freedom of parties to agree to
an institutional arbitration organized by the CCI of Romania but not subject to the Romanian Rules.
The parties did not designate the UNCITRAL rules in this case. Moreover, these rules are almost
never used by tribunals organized by the CCI of Romania [Clar. Q. 12].

C. The parties agreed to institutional arbitration administered by the Court of

International Commercial Arbitration attached to the Chamber of Commerce &
Industry of Romania.
26. The parties’ arbitration agreement was clear given that the Romanian Rules refer to an institution,
the “CCI of Romania and Bucharest,” that no longer exists [Clar. Q. 10]. The CCI of Bucharest
does not typically deal with international arbitration, while the CCI of Romania has attached to it a
“Court of International Commercial Arbitration.” Therefore, the CCI of Romania is the only
institution in Bucharest that uses international arbitration rules. In other words, “International
Arbitration Rules used in Bucharest” can refer only to arbitration organized by the CCI of Romania.

27. Courts have refused to compel arbitration where an arbitration agreement refers specifically to a

11
 non-existent institution, e.g. the “CCI of Utopia” [see infra ¶17; see furthermore Scalbert/Marville 119;
Astra Footwear (USA); Bayerisches Oberstes LG, 28 Feb. 2000 (Ger.)]. However, where the agreement
permits an interpretation that accords with both party intent and logic, the agreement should be
construed in favor of arbitration at the institution that best effectuates the parties’ intent
[Gaillard/Savage 262-3; Lew/Mistelis/Kröll 155-6; see also Cour de Cassation, 14 Dec. 1983 (Fr.) (Belgrade
Chamber of Commerce interpreted as Foreign Trade Arbitration Court at the Economic Chamber of Yugoslavia)].
An agreement stating no more than “arbitration: Hamburg, West Germany” was interpreted by the
Arbitration Court of the German Coffee Association as conferring jurisdiction based on its
reference to a geographical location and party intent expressed outside the agreement. This award
was recognized by a German court [Hanseatisches OLG (Hamburg), 24 Jan. 2003 (Ger.)]. In the present
case, the arbitration agreement not only designated a geographical location, but a set of rules specific
to that location, i.e. the International Arbitration Rules.

28. In sum, both the language of the arbitration agreement and the surrounding circumstances indicate
that the parties agreed to institutional arbitration under the Romanian Rules administered by the
Court of International Commercial Arbitration at the CCI of Romania.

IV. THE PARTIES’ DISPUTE FALLS WITHIN THE SCOPE OF THE ARBITRATION AGREEMENT
AND IS ARBITRABLE.

29. Not only is the parties’ agreement to arbitrate valid and sufficiently specific in designating an arbitral
institution and a set of procedural rules, but the scope of the agreement is broad enough to
encompass the issue in dispute (A) and the Claim is arbitrable (B), both as required by Art. II(1) of
the New York Convention.

A. The dispute is within the scope of the arbitration agreement.

30. The specific wording of the arbitration clause determines the scope of the agreement [Broches 39-40;
Redfern/Hunter ¶¶3-37 to 3-41]. The phrase “arising out of or in connection with” is the broadest
language common to standard form arbitration clauses. This language has been interpreted to
require arbitration of all claims flowing from contractual obligations [Redfern/Hunter 3-40; Born 319-
20]. Here, the Contract submits “all disputes arising out of or in connection with [the] Contract” to
arbitration [Cl. Ex. 1 ¶34], and Claimant has asserted a contract claim.

B. The Claim is arbitrable.

31. An arbitration agreement is valid and an award rendered on the basis of that agreement is
enforceable only if the underlying subject matter is arbitrable. Arbitrability is defined in the New

12
 York Convention in Art. II(1), dealing with validity, and Art. V(2)(a), dealing with recognition and
enforcement of awards. Both articles require that the subject matter of the arbitration be “capable
of settlement by arbitration” in connection with the formation of a valid arbitration agreement [van
den Berg 152-4; Born 243]. Typically, tribunals have found that claims dealing with “anti-trust and
competition, securities transactions, insolvency, intellectual property rights, illegality and fraud,
bribery and corruption, and investments in natural resources” are incapable of settlement by
arbitration, although even these claims are being increasingly recognized as arbitrable
[Lew/Mistelis/Kröll 201; Gaillard/Savage 339-42]. The subject-matter of the present dispute, a breach
of contract claim for delivery of non-conforming goods, does not fall within any of these categories.

32. Respondent may argue that the Tribunal would be required to consider the legality of Equalec’s
refusal to connect the JS Fuse Boards, and that, therefore, the claim is not arbitrable. This, however,
does not present an obstacle to arbitrability. The legality of Equalec’s Fuse Policy under ESRA has
no effect on the parties’ obligations to each other (see supra ¶70).

PART TWO. RESPONDENT BREACHED THE CONTRACT AND IS LIABLE TO

CLAIMANT.
33. On 12 May 2005, Respondent contracted to deliver five primary distribution fuse boards for
Claimant’s development in Mountain View [Cl. Ex. 1]. Respondent breached the Contract under
Art. 35 CISG by delivering fuse boards that were neither of the required quality and description nor
fit for a particular purpose made known to Respondent (I). The Contract was not modified to allow
delivery of JS fuses because the parties explicitly agreed to a “no oral modification” provision and
Claimant is not precluded by its conduct from asserting this provision under Art. 29(2) CISG (II).

I. RESPONDENT BREACHED THE CONTRACT BY DELIVERING NON-CONFORMING GOODS.

34. On 22 Aug. 2005, Respondent delivered five primary distribution fuse boards containing Chat JS
fuses [Re. Ex. 1; Statement of Claim ¶14]. The Fuse Boards did not conform to the Contract because
they were neither of the required quality and description under Art. 35(1) CISG (A), nor fit for a
particular purpose made known to Respondent under Art. 35(2)(b) (B).

A. The Boards were not of the quality and description required by the Contract.
35. Respondent breached the Contract because it did not provide goods of the required quality and
description. Under Art. 35(1) CISG, the seller must deliver goods that are of the “quantity, quality
and description required by the contract.” In other words, parties must comply with the terms of
their contract [Bianca in Biance-Bonell 271; Honnold 254; Lookofsky 90; Sacovini (Fr.); LG Paderborn 25

13
 June 1996 (Ger.)]. The seller must respect the particularities of each sale and do all that is necessary
to make the goods usable and conform to the parties’ agreement [Neumayer 275-6]. The agreement
between the parties is the primary source for assessing conformity [Henschel §c, citing UNCITRAL
Secretariat Commentary, UNIDROIT Principle 7.1.1 and PECL Art. 8:101; see also Kritzer 282; Schwenzer in
Schlechtriem98 276]. Once the buyer has made the claim of non-conformity, the burden of proving
conformity shifts to the seller [Schlechtriem05 481]. Respondent cannot meet this burden. The
Contract required Respondent to deliver “five primary distribution fuse boards” [Cl. Ex. 1]. The
quality and description of the Fuse Boards were defined by expressly incorporating the Drawings
[id.]. The descriptive notes on the Drawings thereby became binding terms of the Contract under
Art. 8 CISG (1) and obligated Respondent to deliver fuse boards that contained Chat JP fuses (2)
and that were “lockable to Equalec requirements” (3).

1. Respondent was bound by the notes on the Drawings.

36. The descriptive notes on the Drawings became binding terms of the Contract. Under Art. 8 CISG,
the parties’ intent is central to interpreting the Contract [Bianca in Bianca/Bonell 272; Lookofsky 56;
Schwenzer in Schlechtriem05 413; MCC (USA.)]. The test for intent is two-fold. First, the Tribunal
gives effect to a party’s subjective intent under Art. 8(1) if the “other party knew or could not have
been unaware” of this intent [Eörsi in Galston/Smit 2-13; Enderlein/Maskow 63; Farnsworth in
BIANCA/BONELL 99; Calzados (Fr.); BGH 11 Dec. 1996 (Ger.)]. Second, if Art. 8(1) does not
apply, the Tribunal looks to the objective “understanding that a reasonable person of the same kind
as the other party would have had in the same circumstances” under Art. 8(2) [Honnold 118;
Farnsworth in Bianca/Bonell 98; Schuermans (Neth.); Roland (Switz.); OG 20 Mar. 1997 (Aus.)]. The notes
on the Drawings were binding terms of the Contract because Respondent “knew or could not have
been unaware” of Claimant’s intent to incorporate them under Art. 8(1) CISG (a). Even if Art. 8(1)
does not apply, “a reasonable person” in Respondent’s position would have understood Claimant’s
intent under Art. 8(2) CISG (b).

a. Respondent knew or could not have been unaware of Claimant’s intent to

incorporate the notes on the Drawings.
37. Respondent’s conduct shows that it knew of Claimant’s intent to incorporate the notes on the
Drawings. On 22 Apr. 2005 Respondent specifically requested the Drawings before quoting a price
[Re. Ex. 1]. Claimant complied by 4 May 2005, giving Respondent ample time to study the
Drawings [id.]. When the parties concluded the Contract on 12 May 2005, they explicitly agreed that
the Drawings were “attached and made part” of the Contract [Cl. Ex. 1]. The descriptive notes

14
 were an integral and necessary part of the Drawings. The quality and description of the Fuse Boards
could not be complete without them. These notes specified both that the fuses were to be “Chat
Electronics JP type” and that the Fuse Boards were “to be lockable to Equalec requirements”
[Statement of Claim ¶9]. After Respondent had depleted its inventory of Chat JP fuses, it attempted to
order the Chat JP fuses that it “would need to fulfill the contract” with Claimant [Re. Ex. 1].
Respondent admitted, “engineering drawings…attached to the contract indicated that the
fuses…were to be Chat Electronics JP type fuses” [id.]. If a change of fuse type was merely a
“minor adjustment…made all the time” [id.], Respondent had no reason to contact Claimant on 14
July 2005 [Cl. Ex. 2; Re. Ex. 1].

38. Even if Respondent was not actually aware of Claimant’s intent, it “could not have been unaware”
of it. This standard is met when the intent was expressed clearly enough to be apparent without
further inquiry, i.e. “facts that are before the eyes of one who can see” [Honnold 260; LG Kassel 15
Feb. 1996 (Ger.)]. Claimant’s intent was literally “before the eyes” of Respondent in the form of two
plain notes on the Drawings. Understanding them did not require further investigation or even
significant effort on the part of Respondent.

b. A reasonable person in Respondent’s position would have understood

Claimant’s intent.
39. Even if Art. 8(1) does not apply, a reasonable person in Respondent’s position would have
understood Claimant’s intent to incorporate the notes under Art. 8(2) CISG. Art. 8(2) envisions a
reasonable person not in the abstract, but rather, of the same kind as the other party in the same
circumstances [Farnsworth in Bianca/Bonell 99; Schmidt-Kassel in Schlectriem05 121-2; Tunc 551]. The
relevant circumstances include the “negotiations…usages and any subsequent conduct of the
parties” [Art. 8(3) CISG; see also Enderlein/Maskow 66-7]. A reasonable person in Respondent’s
position would have understood Claimant’s intent because of the conduct of the parties (see supra
¶37), Respondent’s skill and experience, the customized nature of the Fuse Boards, and a prevailing
trade usage in the electrical industry.

40. Respondent’s skill and experience implied strict adherence to specifications. Respondent has been a
specialist in the fabrication and distribution of electrical equipment for over forty years [Answer ¶2;
Re. Ex. 1]. It is well aware that Fuse boards are “fabricated to meet the specific requirements of
each customer” based on “detailed engineering drawings” [Fuse Boards “need to be specially fabricated,”
Re. Ex. 1; see also Statement of Claim ¶9]. Such highly customized goods demand exacting adherence to

15
 the specifications or, otherwise, fabricators risk creating useless goods of marginal resale value. The
Fuse Boards here are a good example. Their residual value was essentially that of the constituent
fuses [Clar. Q. 34]. There were 300 to 450 fuses in the Fuse Boards [Statement of Claim ¶¶5-6]. All the
fuses were Chat JS type at ratings of 100 to 250 amps [Re. Ex. 1; Clar. Q. 27] with a retail price of
US$37.05 each [Re. Ex. 2]. Assuming the fuses could be resold for retail price, the residual value for
the Fuse Boards was US$11,115 to $16,672.50—at most, less than one-tenth of the $168,000
Contract price [Cl. Ex. 1].

41. Respondent was required to strictly adhere to specifications as a trade usage of the electrical
industry. In addition to the relevance of usages in determining reasonableness under Art. 8(2), Art.
9(2) CISG directly applies a “usage of which the parties knew or ought to have known and which in
international trade is widely known to, and regularly observed by, parties to contracts of the type
involved in the particular trade concerned” [see also Honnold 128-9]. The technical handbook of a
major global distributor, for example, states that an “electrical contractor’s proposal shall be based
upon the fuses specified…as called for in the specification or on the drawings” [Bussmann 177]. The
“type, class and manufacturer specified” of parts are vital to electrical design [id.]. Respondent knew
or ought to have known of this usage as an experienced fabricator of customized fuse boards (see
supra ¶40) and as a frequent exporter [“We have often supplied…to customers in Equatoriana,” Re. Ex. 1].

42. Whether by the subjective test of Art. 8(1) or the objective test of Art. 8(2), the conduct of the
parties and the circumstances show that the Contract incorporated the notes on the Drawings. The
Contract thus obligated Respondent to deliver Fuse Boards containing Chat JP fuses and lockable to
Equalec requirements. Respondent failed to do either.

2. Respondent failed to deliver Fuse Boards containing Chat JP fuses.

43. Respondent delivered non-conforming goods by supplying Chat JS fuses instead of Chat JP fuses
[Re. Ex. 1; Statement of Claim ¶14]. The Contract required delivery of Chat JP fuses, but did not
require that the fuses be directly from the maker Chat (a). Respondent should have been aware that
the distinction between JP and JS fuses was important (b).

a. The Contract did not require fuses directly from the maker Chat.
44. There was no contractual requirement that Respondent had to directly obtain the fuses from the
maker Chat by any interpretation under Art. 8 CISG. Parties cannot be held to a purely subjective
intent if it was not expressed or not expressed clearly [Schlechtriem05 421]. The Contract required
Chat JP fuses [Statement of Claim ¶9], but the fuses did not need to come directly from the

16
 manufacturer, Chat. There is no hint of such a requirement in the record. In the 14 July 2005 call,
for example, Hart stated that there was a “preference in the firm for Chat Electronics equipment”
[Cl. Ex. 2]. Even if he had “seemed to insist” [Re. Ex. 1], there was no mention that fuses had to be
directly from Chat. In fact, the circumstances point to an implicit understanding that Respondent
was free to obtain Chat JP fuses from Chat or secondary sources. The record shows that Chat fuses
were generally available from at least three suppliers: Chat, Respondent, and Switchboards [Cl. Ex.
3; Re. Ex. 1]. In all likelihood, there were significantly more suppliers than this because of Chat’s
reputation for quality [Clar. Q. 26]. Respondent also knew that Claimant faced tight time pressures
[Re. Ex. 1]. In these circumstances, restricting where Respondent could obtain Chat fuses could not
have been in the interests of either party nor served any reasonable purpose. There is no evidence,
for example, that the Chat fuses from Switchboards were inferior in any way. There is no evidence
that either party considered or ever had reason to favor restricting the source of Chat fuses. Even if
Respondent had intended that the fuses must come directly from Chat, this intent falls far short of
either subjective or objective intent under Art. 8.

b. Respondent should have been aware that the distinction between JP and JS
fuses was important.
45. JP type fuses differ significantly from JS type fuses in safety and economic risks. Contrary to
Respondent’s assertions that a change of fuse type is a “minor adjustment” and that “it really did not
matter which type was used” [Re. Ex. 1], the “type, class and manufacturer specified” of parts are
vital to electrical design [Bussmann 177]. A JP fuse fixing center is 82mm, while that of a JS fuse is
92mm [Re. Ex. 2]. “[O]nce one type is installed it cannot be replaced by the other” [Re. Ex. 1], short
of replacing the entire fuse board at significant time and expense [Cl. Ex. 3; Statement of Claim ¶18].
Only JS fuses are available at ratings more than 400 amps [Re. Ex. 1; Re. Ex. 2]. In the context of
the Fuse Boards, where all the fuses were intended to be less than 400 amps [Statement of Claim ¶9;
Re. Ex. 1; Clar. Q. 27], there is a significant safety difference in fuse types. Unlike JP fuses, JS fuses
pose the safety risk that fuses at ratings more than 400 amps could be inadvertently or illegitimately
used [Cl. Ex. 3; Cl. Ex. 4]. This risk is both in initial installation and in any subsequent replacement
of the fuses. Whenever a fuse blows in a primary distribution fuse board, for example, Equalec is
responsible for replacing it [Statement of Claim ¶6]. Even if the likelihood of improperly rated fuses is
small, the safety and economic consequences are substantial. A properly rated fuse is a safety valve
that keeps the flow of current at safe levels [Wright/Gordon; Bussmann 1]. A fuse rated at 100 amps,
for example, lets through current of up to 100 amps [Bussmann 1,3]. When the current exceeds 100

17
 amps, the fuse melts, breaking the circuit and preventing the power surge from damaging the rest of
the circuit and any connected equipment [id.]. Putting an 800 amp fuse, for example, in a circuit
designed for 100 amps, would allow currents of up to 800 amps to pass through. Such overcurrents
could cause equipment damage, fires, blackouts, and severe monetary losses, if not injury or death
[Lohbeck; Bussmann 1]. It was because of such risks that Equalec adopted its Fuse Policy in July 2003,
requiring JP fuses in circuits rated less than 400 amps [Cl. Ex. 2; Cl. Ex. 3]. Respondent’s delivery
of Fuse Boards with JS rather than JP fuses was far from a “minor change;” it implied substantial
safety and economic risks in breach of the Contract.

3. Respondent failed to deliver fuse boards lockable to Equalec requirements.

46. Even if Respondent was not obligated to deliver Chat JP fuses, the Fuse Boards still had to be
lockable in the manner that Equalec required per Art. 8 CISG (a). Respondent was bound to
observe Equalec’s connection requirements in so far as they were pre-requisites for Equalec to lock
the Fuse Boards (b).

a. The Contract required fuse boards lockable to Equalec requirements.

47. The Contract required the Fuse Boards “[t]o be lockable to Equalec requirements” [Statement of Claim
¶7]. Respondent was bound to observe the notes on the Drawings under both Art. 8(1) and Art.
8(2) CISG (see supra ¶36). In particular, a reasonable party in Respondent’s position would have
understood Claimant’s intent to incorporate Equalec’s requirements under Art. 8(2) for several
reasons. Respondent had significant skill and experience in fabricating custom fuse boards (see supra
¶40), multiple dealings with clients in Equatoriana [Re. Ex. 1], and demonstrated familiarity with
electrical supply requirements, such as its knowledge of the Commission and certification [Re. Ex.
1]. Respondent was also bound by a trade usage it either knew or should have been aware of as part
of the electrical industry. As the electricity provider in Mountain View, Equalec had managerial
control over the Fuse Boards, even though Claimant purchased and installed them [Statement of Claim
¶7]. The normal procedure was for Equalec to lock such fuse boards with a small padlock so that it
has exclusive access [Statement of Claim ¶8]. Such procedures are typical in the industry, especially
given the economic, safety, and liability risks involved [Electric Utility Week]. Contrary to
Respondent’s assertion [Answer ¶25(d)], Equalec’s requirements were then readily known to
Respondent and integral to its contractual obligations (see also infra ¶¶49-50).

48. Respondent was obliged to meet Equalec requirements despite the fact that Equalec's policies only
apply in Equatoriana. If a seller has been informed of the country in which the goods will be used,

18
 the seller must “accommodate the characteristics required for the actual use of the goods in this
country” [Schwenzer in Schlechtriem05 420; see also Honnold 256]. In one case, for example, the court
ruled that a seller of cheeses, in dealing with the buyer for several months, must have known that the
cheese was destined for the buyer's country and was thereby bound to meet the marketing
regulations of the buyer's country [Caito (Fr.)]. Similarly here, from the day that Respondent
received the Drawings around 4 May 2005, through months of dealing with Claimant, Respondent
must have known that it was bound to observe Equalec requirements in the country of Equatoriana
(see supra ¶37). Respondent was expressly aware of where the Fuse Boards were to be used even
before the conclusion of the Contract (see infra ¶53). The only use of the Fuse Boards was for
connecting the Mountain View development to Equalec's electrical grid. Equalec's requirements
were "characteristics required" for such use. Respondent was then obliged to deliver Fuse Boards
meeting Equalec's requirements.

b. The Contract incorporated Equalec’s connection requirements to the extent

that they were pre-requisites for locking the Fuse Boards.
49. The Contract required the Fuse Boards “[t]o be lockable to Equalec requirements,” meaning
“Equalec’s requirements for connecting the distribution fuse boards to the electric current and to
lock the fuse boards” [Statement of Claim ¶9]. To conform to the Contract, the Fuse Boards had to be
fabricated such that Equalec would lock them. “[L]ockable to Equalec requirements” does not
mean only that the Boards must be physically lockable. Both parties were at least generally aware
that Equalec would not lock fuse boards unless they met electric service requirements [Statement of
Claim ¶9; Re. Ex. 1]. If the parties had meant only that the Fuse Boards must be physically lockable,
then the Contract would have said only that they needed to be “lockable,” and not “lockable to
Equalec requirements.” Even if there were testimony that “lockable to Equalec requirements”
meant “Equalec would lock the fuse boards with a padlock” [Clar. Q. 21], this would not establish
that the Contract required only that the Fuse Boards be physically lockable.

50. Regardless, Respondent neither asked for clarification of the Equalec note on the Drawings nor
indicated that it had not understood it. Where one party finds the other party’s expressed intent
vague or ambiguous, it should inquire as to its meaning [Junge in Schlectriem98 71; Neumeyer 114].
Consistent with the trade usage that electrical contractors strictly adhere to specifications (see supra
¶41), the Equalec note at least put Respondent on notice that Equalec’s requirements were relevant
to the Contract. In the circumstances, especially given Respondent’s skill and experience (see supra
¶40) as well as its knowledge of Claimant’s tight time pressures [Re. Ex. 1], the note would have

19
 prompted a reasonable party to investigate by accessing the Equalec website [Clar. Q. 24], consulting
with Equalec, knowledgeable suppliers or industry groups, or, at least, by requesting clarification
from Claimant itself.

51. Respondent was bound to observe Equalec’s connection requirements in so far as they were pre-
requisites for Equalec to lock the Fuse Boards. Equalec’s refusal to connect and lock the Fuse
Boards on 8 Sept. 2005 [Statement of Claim ¶14] shows that the Fuse Policy was such a pre-requisite,
giving independent grounds for Respondent’s breach.

B. The Fuse Boards were not fit for a particular purpose made known to
Respondent.
52. Even if the Fuse Boards were of the quality and description required by the Contract under Art.
35(1) CISG, they were not fit for the particular purpose of connecting Mountain View Office Park
to Equalec’s electrical grid. Goods do not conform to the original contract under Art 35(2)(b) when
they are not “fit for any particular purpose expressly or impliedly made known to the seller at the
time of the conclusion of the contract.” This means that regardless of the express terms of the
Contract, the goods should fulfill any particular purpose communicated to the seller [Schwenzer in
Schlechtriem05 421; Neumayer 278; Bianca in Bianca/Bonell B 275; Marques (Fr.), cited in Lookofsky 93].
However, Art. 35(2)(b) provides an exception where “the circumstances show that the buyer did not
rely, or that it was unreasonable for him to rely, on the seller’s skill and judgement” [see also Bianca in
Bianca/Bonell 274; Schlechtriem in Galston/Smit 6-20; Lookofsky 92; Henschel §m; Helsinki CA (Fin.)].
Claimant expressly or impliedly made known to Respondent the particular purpose of connecting to
Equalec’s electrical grid (1). Claimant relied on Respondent’s skill and judgment (2) and this reliance
was reasonable (3).

1. Claimant made known the particular purpose of connecting to Equalec’s grid.

53. The particular purpose of the Fuse Boards was for them to connect the Mountain View Office Park
to Equalec’s electrical grid. Under Art. 35(2)(b) CISG, the communication of a particular purpose
may be either “express” or “implied” [see also Schlechtriem 280]. Claimant expressly informed
Respondent of this purpose by 4 May 2005 when it sent the Drawings with the Equalec note,
obliging Respondent to deliver Fuse Boards meeting Equalec requirements (see supra ¶46). Even if
the specification “lockable to Equalec requirements” was not an express communication of the
particular purpose, Claimant impliedly informed Respondent. Respondent, as an experienced
specialist [Answer 2; Re. Ex. 1], knew that the Fuse Boards had no other purpose than to connect to

20
 an electrical grid. The Fuse Boards were not merchantable to any other buyer or for any other
purpose, given their highly customized nature [Re. Ex. 1; Statement of Claim ¶9] and minimal residual
value (see supra ¶40). One court has held that such a total lack of merchantability implies that the
goods are not fit even for ordinary use under Art. 35(1) CISG [Arb. Case No. 2319 (Neth.), cited in
DiMatteo04 397-8]. From the first call on 22 Apr. 2005, Respondent knew that the Fuse Boards were
for a project in Mountain View [Re. Ex. 1]. Together with the notes on the Drawings, Respondent
knew that the Fuse Boards were to connect the development to the electrical grid of Equalec, the
sole power supplier in the area [Clar. Q. 31]. Expressly or impliedly, Claimant made known to
Respondent the particular purpose of connecting to Equalec’s electrical grid.

2. Claimant relied on Respondent’s skill and judgment.

54. After the buyer shows that it communicated a particular purpose to the seller, the burden shifts to
the seller to demonstrate that the buyer did not rely, or that it was unreasonable for it to rely, on the
seller’s expertise [Kritzer 283; Lookofsky 92; Honnold 257; Hyland/Freiburg 322]. For the purposes of
Art. 35(2)(b), the buyer must only have relied on those skills of the seller which the buyer does not
possess [Neumayer 280, Schwenzer in Schlechtriem05 422]. Even in marginal cases, where both the buyer
and the seller had expertise relevant to the particular purpose, the seller is held to a higher standard
and considered to know the goods better [Staudinger/Magnus Art. 35 §31; Neumayer 280]. Here,
Claimant is a property developer [Answer ¶1; Statement of Claim ¶1], while Respondent is a fuse board
fabricator and therefore could be expected to have greater knowledge of the policies of power
distributors. The Drawings attached to the Contract by Claimant stated only that Claimant required
that the Fuse Boards be lockable to Equalec’s requirements; it did not spell out what those
requirements were. By its plain language, Claimant put itself in Respondent’s hands with respect to
fulfilling Equalec’s requirements. That is the definition of reliance.

3. Claimant’s reliance was reasonable.

55. Whether reliance is reasonable depends on the specific circumstances of a given case [Bianca/Bonell
275; Schlechtriem05 421]. The CISG does not define the term “reasonableness,” but commentators
agree that it must be judged according to what persons acting in good faith in the same situation as
the parties would consider to be reasonable [Kritzer 121; see also PECL 1:302; Farnsworth in
Bianca/Bonell 99; Tunc 26]. Furthermore, reliance is per se reasonable where the seller specializes or
holds itself out as a specialist in “the manufacture or the procurement of goods for the particular
purpose intended by the buyer,” unless the seller “informs the buyer that he has no special

21
 knowledge” [Schlechtriem05 422; see also Bianca in Bianca/Bonell 276]. Respondent is an experienced
specialist with particular knowledge of electrical equipment [Answer 2; Re. Ex. 1], implying much
greater knowledge of primary distribution fuse boards than Claimant. Claimant reasonably relied on
Respondent’s skill and judgment to provide fuse boards that would be fit for the particular purpose
of connecting to Equalec’s electrical grid.

56. The Fuse Boards delivered by Respondent were neither of the quality and description required by
the Contract under Art. 35(1) CISG nor fit for a particular purpose made known to Respondent
under Art. 35(2)(b). Art. 36 CISG provides that the “seller is liable in accordance with the contract
and this Convention for any non-conformity which exists at the time when the risk passes to the
buyer, even though the non-conformity only becomes apparent after that time” [see also
Enderlein/Maskow 149]. Respondent is therefore fully liable for its breach of contract to Claimant.

II. THE CONTRACT WAS NOT MODIFIED TO PERMIT DELIVERY OF JS FUSES.

57. The Contract was not modified to allow delivery of JS fuses instead of JP fuses. The 14 July 2005
phone call did not modify the Contract because of the explicit “no oral modification” clause in the
Contract (A). Furthermore, Respondent’s reliance on the phone call was not reasonable and it does
not preclude Claimant from enforcing the “no oral modification” provision (B).

A. The 14 July 2005 phone call did not modify the Contract.
58. The 14 July 2005 conversation did not amend the Contract to permit Respondent to provide JS
instead of JP fuses. The Contract itself and the applicable substantive law governing its
interpretation do not allow for oral modifications. According to Art. 29(2) CISG, “a contract in
writing which contains a provision requiring any modification or termination by agreement to be in
writing may not be otherwise modified or terminated by agreement.” The purpose of Art. 29(2) is
to protect the intent of the parties, ensure clarity of obligations, and prevent any confusion during
performance by rendering oral modifications void where the parties have prescribed formalities
[Schlechtriem05 333; Eislen (d); Hillman 449]. Here, Respondent and Claimant agreed to just such a
protective measure. Para. 32 of the Contract reads: “Amendments to the contract must be in
writing” [Cl. Ex. 1]. Consequently, regardless of any oral statements made during the 14 July 2005
conversation, any modification of the Contract had to be in writing. Since there was no writing, the
Contract was never modified to allow delivery of JS fuses.

59. In accordance with the terms of the Contract, which includes this no-oral-modification term,
Claimant had a policy requiring that any proposed modifications to a contract be submitted for

22
 review and “circulated to all interested persons…including the engineering department” [Cl. Ex. 2].
Therefore, had Respondent submitted a written proposal for a contractual modification for JS
instead of JP Fuses, Claimant’s engineers would have noted the substitution and, accordingly,
reviewed the conformity of the modification with Equalec’s Fuse Policy. Claimant’s losses could
have been avoided or diminished. However, because Respondent proceeded to deliver non-
conforming goods without submitting the change in writing, Claimant never had an opportunity to
perform this review.

60. Respondent may argue that Art. 29(2) CISG does not apply because it uses the word “modification,”
while Para. 32 of the Contract uses “amendment,” but these two words are not different in this
context. “Where it has been agreed that writing is necessary to modify or terminate a contract, 29(2)
requires all such amendments to comply with the formal requirements agreed.” [Schlechtriem05 331-2].
According to this wording, “amendment” includes both modifications and terminations. Thus, the
14 July 2005 phone call did not—because it could not—“modify,” “amend,” or “terminate” any
term of the Contract as written and agreed to on 12 May 2005.

B. Respondent did not reasonably rely on the 14 July 2005 phone call.
61. Respondent cannot raise the defense that it reasonably relied on Claimant’s oral conduct. Under
the second sentence of Art. 29(2) CISG, “a party may be precluded by his conduct from asserting [a
no-oral-modification clause] to the extent that the other party has relied on that conduct.” For a
breaching party to invoke the second sentence of Art. 29(2) CISG, the reliance must have been
reasonable under the circumstances [Eiselen §i; Hillman 459; Enderlein/Maskow 124]. The nature of
the contract and the circumstances of the case are relevant factors to take into consideration when
assessing reasonableness [Eiselen §j; Kritzer 126; Vilus]. It was unreasonable in this transaction for a
sophisticated party like Respondent (see supra ¶40) to rely on the oral statements of an employee with
neither actual (1) nor apparent (2) authority under domestic law or the Convention on Agency
[Enderlein/Maskow 123]. No other conduct is relevant to the validity of the amendment.

1. Hart did not have actual authority to modify the Contract.

62. Respondent did not reasonably rely on the 14 July 2005 conversation because Hart had no actual
authority to modify the Contract. Actual authority is generally related to an agent’s actual power of
representation granted by his principal [Schlechtriem05 332; Honnold 231]. The CISG itself does not
address agency and authority. In contracts governed by the CISG, the authority of an agent is
determined by the domestic law that governs the relationship between the particular principal and

23
 agent [Schlechtriem05 332; OLG Karlsruhe 1987 (Ger.); HG Zürich 1998 (Switz.)]. Here Konkler is the
principal and Hart his agent. Since this representation occurred in Equatoriana, Equatoriana law
governs. Equatoriana has adopted the Convention on Agency as its national law [Clar. Q. ¶16].
According to Art. 14(1) thereof, “[w]here an agent acts without authority or acts outside the scope
of his authority, his acts do not bind the principal.” Hart did not have the authority to change the
type of fuses since he had “no responsibility for the contract with Mediterraneo Electrodynamics”
[Clar. Q. ¶17]. While Hart did have the authority to sign contracts limited to US$250,000, he did not
have any authority over this Contract, as he did not work in the area of electrical goods [Clar Q. ¶17;
Answer ¶8]. At no point did Konkler grant Hart the actual authority to modify or amend this
Contract, even during his absence. Hart was merely one “member of the Purchasing Department”
and therefore, had no actual authority to modify the Contract [Answer ¶7].

2. Respondent could not reasonably have believed Hart to have the authority to modify
the Contract.
63. Konkler, the principal, did not act in any way that could reasonably cause Respondent to believe
Hart was authorized to modify the Contract. The second sentence of Art. 14 of the Convention on
Agency clarifies that “when the conduct of the principal causes the third party reasonably and in
good faith to believe that the agent has authority,” the principal cannot invoke lack of authority. [See
also USA REST 3d AGEN § 2.03 (“an agent has apparent authority where it is reasonable for a third party to
believe that an agent has authority, so long as the belief is traceable to manifestations of the principal.”) See also
CEM Freighter 2005 (Ger.) (interpreting §164(1) BGB to mean that a principal is only liable for his agent’s
actions under apparent authority when the principal could have known of and prevented such conduct)]. Konkler at
no point before, during, or after his vacation indicated or suggested to Respondent in any manner
that Hart had any authority in the transaction [Clar. Q. ¶17]. Furthermore, when Stiles called on 14
July 2005, he asked to speak to Konkler. Konkler’s secretary told Stiles that Konkler was
unavailable, but that he “could” speak to Hart, noting that Hart was merely a “procurement
professional” [Clar. Q. ¶18]. That Hart did not have authority should have been clear based on the
fact that. Konkler alone had handled all prior negotiations regarding the Contract [Cl. Ex. 2].
Indeed, Hart specifically informed Stiles that “he was not particularly knowledgeable about electrical
equipment” and that “it was not the area in which he worked” [Answer ¶ 8]. None of Konkler’s
conduct was sufficient to cloak Hart in the authority necessary to alter the Contract. Therefore, it
was unreasonable for Respondent to rely on a phone conversation with someone lacking knowledge
of the subject matter, especially given the highly technical nature of proposed change.

24
64. As the Contract was not amended to permit the delivery of JS fuses, Respondent breached the
Contract and is liable to Claimant.

PART THREE. RESPONDENT IS NOT EXCUSED FROM LIABILITY.

65. Respondent cannot escape liability under any theory of exemption. On 8 Sept. 2005, Claimant
learned of Respondent’s breach and Equalec’s subsequent refusal to connect the Fuse Boards
[Statement of Claim ¶14; Cl. Ex. 3]. The same day, Claimant complained to Equalec [Cl. Ex. 3], but
Equalec insisted on its Fuse Policy [Re. Ex. 1]. Since Respondent was unwilling to promise timely
substitute goods [Cl. Ex. 3; Re. Ex. 1], Claimant was forced to find another supplier. Respondent
may allege, however, that its liability is excused by the fact that Claimant did not also appeal to the
Commission about Equalec’s refusal to connect the Fuse Boards. This claim has no merit. First,
under Art. 79 CISG, Respondent fails to satisfy the requirements of causality, unforeseeability,
unavoidability, and notice (I). Second, under Art. 80 CISG, Respondent is not excused because no
part of its failure was caused by Claimant’s conduct (II). Last, complaint to the Commission was not
required as a mitigation measure under Art. 77 CISG (III).

I. RESPONDENT’S LIABILITY IS NOT EXCUSED UNDER ART. 79 CISG.

66. The drafters of the CISG intended Art. 79 to be a narrow and rarely-applied exemption. Art. 79(1)
provides that: “A party is not liable for a failure to perform any of his obligations if he proves that
the failure was due to an impediment beyond his control.” Some commentators suggest that Art. 79
applies only to situations of non-delivery or late delivery and is entirely unavailable to sellers, like
Respondent, who provide non-conforming goods [Honnold 477-9; Nicholas84 5-14]. Even advocates
of a more generous reading of Art. 79 admit that the possibility of an exemption in cases of
defective performance is “something near nil” [Lookofsky04 127; see also Enderlein/Maskow 321].
Decisions have shown a “rather restrictive attitude towards permitting any exemptions”
[Šarčević/Volken 32; see also DiMatteo 159-60; HG 2 Oct. 1998 (Neth.); BGH 24 Mar. 1999 (Ger.)].

67. Even if exemption applies in principle to Respondent’s defective performance, Respondent is not
excused under Art. 79. No part of Respondent’s failure to perform was due to the fact that
Claimant did not also complain to the Commission (A). Even if this lack of complaint caused
Respondent’s failure to perform, Respondent could reasonably be expected to have taken it into
account beforehand (B). Respondent could reasonably be expected to have overcome the
consequences of any impediment through its own complaint or substitute goods (C). Respondent
failed to give timely notice per Art. 79(4) CISG (D). The exhaustive scope of Art. 79 precludes the

25
 application of external hardship principles (E).

A. No part of Respondent’s failure to perform was due to the lack of complaint.

68. To be excused under Art. 79(1) CISG, a party must show that “an unforeseeable and insuperable
impediment is the sole reason” for its failure to perform [Stoll/Gruber 818 (emphasis added); see also
Staudinger/Magnus 782; Tallon 583; Arb. No. 56/1995 (Bulg.); ICC Case No. 7197]. Causality with
regard to breach is the “decisive prerequisite for an impediment to be taken into consideration”
[Enderlein/Maskow 321]. Art. 79 only permits exemption to the degree that the impediment
precluded performance [Honnold 491]. To escape liability Respondent would have to prove that all
of its failures to perform were solely “due to” the lack of complaint. Respondent was obliged to
deliver fuse boards with Chat JP fuses (1), lockable to Equalec requirements (2), and fit for the
particular purpose of connecting to Equalec’s electrical grid (3). None of these obligations required
Claimant to complain to the Commission.

1. Respondent’s failure to deliver Chat JP fuses was not due to the lack of complaint.
69. There was no prospect of complaint until Equalec refused to connect the Fuse Boards on 8 Sept.
2005 [Statement of Claim ¶14; Cl. Ex. 3]. Neither party was aware of the Fuse Policy until that time
[Cl. Ex. 3; Clar. Q. 24-5]. Claimant could not have complained about a policy it was not aware of
and had no obligation to be informed of (see supra ¶52-55). Respondent delivered the non-
conforming Fuse Boards without Chat JP fuses on 22 Aug. 2005 [Statement of Claim ¶14]. As early as
14 July 2005, Respondent had committed itself to using Chat JS fuses [Re. Ex. 1]. On 9 Sept. 2005,
when Claimant demanded that Respondent provide conforming goods, Respondent objected solely
on the basis of Chat’s production problems, not because of the lack of complaint [id.]. Simply as a
matter of timing, Respondent’s failure to deliver Chat JP fuses could not have been due to the lack
of complaint or the Fuse Policy.

2. Respondent’s failure to meet Equalec’s requirements was not due to the lack of
complaint.
a. Respondent was required to meet Equalec’s requirements regardless of their
validity under Equatoriana law.
70. Respondent neither inquired into Equalec’s requirements nor objected to their incorporation into
the Contract, so it was bound to deliver fuse boards meeting those requirements (see supra ¶¶49-50).
This is so regardless of whether the Fuse Policy was valid under Equatoriana’s domestic law. The
relevant law in Equatoriana is the Electric Service Regulatory Act (“ESRA”). The ESRA only
governs the provision of electric service in Equatoriana; this Contract is not for the provision of

26
 electric service.

b. There is no reasonable basis to believe the Fuse Policy is invalid.

71. Even if the validity of the Fuse Policy were relevant to the parties’ obligations, there is no reasonable
basis to believe the policy is invalid or even illegal. There is nothing in the text of the ESRA that
suggests—as Respondent asserts—that “Equalec was required by law to connect to the fuse boards”
[Re. Ex. 1]. Art. 14 ESRA prohibits “undue or unjust requirements for providing” electric service
[Re. Ex. 4], but gives no guidance as to what “undue” or “unjust” mean. However, the Tribunal
should look to the context of this requirement for guidance. Art. 14 ESRA requires that electric
service be “safe and adequate,” while Art. 15 ESRA provides that the Commission “shall certify the
safety of all equipment” [Re. Ex. 4]. Taken together, these provisions indicate that the primary goal
of the ESRA is ensuring the safety of the power grid.

72. The Equalec Fuse Policy was designed to prevent the use of improperly rated fuses thereby reducing
safety risks (see supra ¶45). The Fuse Policy does not obstruct or evade the requirements of the
ESRA or any safety standards of the Commission; it improves on them. There is no reason to
believe that policies such as Equalec’s would be considered “undue or unjust” under Art. 14 ESRA.

73. Claimant reasonably relied on Equalec’s justification of the Fuse Policy [Cl. Ex. 4] and the policy’s
general acceptance. “What is ‘reasonable’ can appropriately be determined by ascertaining what is
normal and acceptable in the relevant trade” [Honnold 101; see also Lando 127 ref. PECL 6:104, 6:105
and 6:106(2)]. The Fuse Policy had been in place since July 2003 without Commission challenge
[Clar. Q. 29]. Equalec insisted on its policy even after Claimant’s complaint [“Equalec had said that that
was their policy,” Re. Ex. 1] and confirmed the policy in writing by letter dated 15 Sept. 2005 [Cl. Ex.
4]. The general commercial acceptance of the Fuse Policy since its inception is strong evidence of
reasonability. Claimant acted no differently than any other firm in the trade [Clar. Q. 29]. The Fuse
Policy remains in effect today [id.].

3. Respondent’s failure to deliver Fuse Boards that could be connected to Equalec’s

electrical grid was not due to the lack of complaint.
74. The lack of complaint did not frustrate or impede Respondent’s ability to deliver the Fuse Boards
for the contractual purpose of connecting to Equalec’s electrical grid. In the circumstances,
Claimant made a reasonable effort to obtain an electrical connection. Claimant learned of
Respondent’s breach and Equalec’s subsequent refusal to connect on 8 Sept. 2005 [Statement of Claim
¶14; Cl. Ex. 3]. It then immediately appealed to Equalec [Cl. Ex. 3], the sole provider of electric

27
 power in Mountain View [Clar. Q. 31]. After Equalec insisted on its Fuse Policy [Re. Ex. 1],
Claimant gave Respondent the opportunity to provide conforming goods [Statement of Claim ¶17; Cl.
Ex. 3; Re. Ex. 1]. Respondent was unwilling to promise timely delivery of conforming goods [Re.
Ex. 1 (suggesting a delivery timeframe “in several months yet”)]. As Respondent knew, an electrical
connection for the Fuse Boards was essential to meeting the development’s occupancy deadline of 1
Oct. 2005 [Re. Ex. 1; Statement of Claim ¶16]. Otherwise, Claimant risked significant penalties and
lost profits [id.]. Claimant was left with no reasonable option but to find another supplier.

75. Claimant reasonably declined to complain to the Commission. On 9 Sept. 2005, Respondent did
not mention the ESRA [Re. Ex. 1]. Even if Claimant was familiar with ESRA or had time to
investigate applicable laws, Claimant had no reasonable basis to suspect illegality (see supra ¶73). The
required time for Commission action indefinitely ranged from one week to over two years [Clar. Q.
30]. There was not enough time for Claimant to arrange representation and a properly documented
complaint to even initiate a Commission proceeding [“there was not sufficient time to start a proceeding,”
Re. Ex. 1]. Rather than running the substantial risk of greater damages, for which Respondent
would ultimately be liable, Claimant prudently limited losses and secured a connection to Equalec’s
electrical grid by promptly obtaining substitute fuse boards [Cl. Ex. 3; Statement of Claim ¶18].

B. Respondent could reasonably be expected to have taken the lack of complaint

into account beforehand.
76. Even if Respondent’s failure to perform was due to the lack of complaint, Respondent must further
prove that it “could not reasonably be expected to have taken the impediment into account at the
time of the conclusion of the contract” [Art. 79(1) CISG]. The Secretariat Commentary recognizes
the difficulty of this inquiry in that “[a]ll potential impediments to the performance of a contract are
foreseeable to one degree or another” [Secretariat Art. 65 ¶5 (draft counterpart of Art. 79); see also Perillo
122]. It anticipated a two-step resolution to the problem of foreseeability in Art. 79. First, the
tribunal should enforce, per Art. 6 CISG, any agreement between the parties over the impediment
[Secretariat Art. 65 ¶5]. Parties may agree explicitly that “the occurrence of the impending event would
exonerate the non-performing party” or implicitly that a party would “perform an act even though
certain impediments might arise” [Secretariat Art. 65 ¶5; see also Tallon 576; Honnold 475; Nicholas84 5-
9; Stoll/Gruber 835]. Second, absent such an understanding, the Tribunal must make a “case-by-
case” determination of “whether the non-performing party could reasonably have been expected to
take it into account at the time of the conclusion of the contract” [Secretariat Art. 65 ¶5]. The parties
did not explicitly agree to exonerate Respondent’s failure (1). The parties here implicitly understood

28
 performance would be required despite an impediment (2). Even if there was no such
understanding, Respondent could reasonably have anticipated the Fuse Policy beforehand (3).

1. The parties did not explicitly agree to exonerate Respondent’s failure.

77. There was no explicit agreement between the parties to exonerate Respondent’s failure in the event
Equalec refused to connect the Fuse Boards and Claimant did not complain about it to the
Commission [Cl. Ex. 1]. “The seller cannot always control the physical nature of the goods, but he
can control the risk of damage liability. If he cannot bear that risk, or does not want to, he must
contractually limit it or exclude it” [Schlechtriem99 §1(d); see also Lookofsky04 128; Tallon 576; Audit
172]. Practitioners and industry groups alike recommend that exporters, such as Respondent,
include their own exemption provisions [Bund 10; Kritzer 519; NECA; ASA]. Respondent had
ample opportunity to do so as the drafter of the standard form that was the basis of the Contract.

2. The parties implicitly understood performance would be required despite an

impediment.
78. The “context of the contract” [Secretariat Art. 65 ¶5] suggests the parties implicitly understood
Respondent’s performance would be required despite an impediment. Respondent had particular
skill and experience in the fabrication of fuse boards (see supra ¶40). Respondent had particular
knowledge of electric safety requirements in Equatoriana and knew that Equalec could deny a
connection on safety grounds. Even if not, the reference to “Equalec requirements” in the drawings
[Statement of Claim ¶9] put Respondent on notice that such requirements were at least relevant if not
essential to the Contract (see supra ¶50). Respondent knew as early as 14 July 2005 of the importance
of the Contract and Claimant’s tight time pressures [Cl. Ex. 2; Re. Ex. 1]. On 9 Sept. 2005,
Respondent only objected to the request for conforming goods because of Chat’s production
problems, not because of the lack of complaint [Re. Ex. 1]. There was no hint of an impediment
claim until a year later [Letter from Horace Fasttrack, 4 Sept. 2006, 18].

3. Respondent could reasonably have anticipated the fuse policy beforehand.

79. The Tribunal must determine whether a reasonable businessperson in Respondent’s situation would
have anticipated the impediment at the time of contracting [Stoll/Gruber 817; Zeller 181]. Where the
impediment existed prior to the conclusion of a contract, “it has to be required that the party
concerned neither knew nor, as we believe, ought to have been aware of it because otherwise he
would have had to take it into consideration” [Enderlein/Maskow 323; see also Secretariat Art. 65 ¶4;
Tallon 580-581; ICC Case No. 7197; Arb. No. 56 (Bulg.); HG 2 Oct. 1998 (Neth.); CIETAC 7 May 1997

29
 (PRC)]. At the time of contracting, the obligor “must be expected to assure himself by all normal
and reasonable methods that there is no impediment to his performance” [Stoll in Schlechtriem98 609
ref. McRae (Aust.)]. The Fuse Policy, underlying any theory of exemption, had been in place since
July 2003 [Cl. Ex. 4]. A prudent businessperson in Respondent’s situation would have been aware
of the Fuse Policy through the “normal and reasonable” method of accessing the Equalec website or
by contacting knowledgeable parties (see supra ¶50).

C. Respondent could reasonably be expected to have overcome Claimant’s lack of

complaint or its consequences.
80. Even if Respondent could not have taken the lack of complaint into account beforehand,
Respondent could reasonably be expected to have “overcome it or its consequences” [Art. 79(1)
CISG; see also Tallon 581]. The test here must be “very strict” [Stoll/Gruber 817]. The promisor must
overcome an impediment in order to perform even when this results in greatly increased costs [id.;
see also Piltz 165; Staudinger/Magnus 783; Arb. No. 155/1994 (Rus.)]. “[A] party who is under an
obligation to act must do all in his power to carry out his obligation and may not await events which
might later justify his non-performance” [Secretariat Art. 65 ¶7]. After the closure of the Suez Canal,
for example, English courts ruled that going around the Cape of Good Hope instead was not
“commercially or fundamentally different” and therefore could reasonably be expected of the
promisor [Tsakiroglou (U.K.) cited in Stoll/Gruber 817; see also Berman63 1420-4]. Far less is asked here.
At least two reasonable measures were available to Respondent: Respondent could have complained
to the Commission on its own (1) and Respondent could have provided timely substitute goods (2).

1. Respondent itself could reasonably have complained to the Commission.

81. An appeal to the Commission about Equalec’s refusal to connect the Fuse Boards lacked sufficient
merit or time to succeed (see supra ¶75). To whatever extent Commission complaint could have
succeeded, Respondent could have initiated it. The record is silent as to what if any criteria limit
who may complain to the Commission. Some countries use a “concrete” model of regulatory
enforcement that requires petitioners to have actual interests at stake, whereas others allow
“abstract” review [Reitz 1132-6; Utter 592-3]. Respondent’s potential liability in the case at issue
allows it to meet even the more restrictive “concrete” review requirement. Even an informal inquiry
might have resolved the Fuse Policy issue [Clar. Q. 30].

2. Respondent could reasonably have provided timely substitute goods.

82. Respondent could reasonably have avoided the consequences of any impediment by making a

30
 greater effort to obtain Chat JP fuses. On 9 Sept. 2005, Respondent stated that it could not deliver
fuse boards with Chat JP fuses within any period better than “several months yet” because of Chat’s
production problems [Re. Ex. 1]. Though the Contract required “Chat Electronics JP type” fuses, it
did not require that the fuses come directly from Chat (see supra ¶44). Chat JP fuses were readily
available from other distributors, such as Switchboards [Statement of Claim ¶14; Cl. Ex. 3; Clar. Q. 33].
Even Claimant, which is not an industry specialist like Respondent (see supra ¶40), had no difficulty
in obtaining proper fuses [Statement of Claim ¶14; Cl. Ex. 3].

83. Even if other sources were not available or the Contract required fuses directly from Chat,
Respondent, as the seller, bears the “acquisition risk” that its supplier will not timely deliver the
goods [BGH 24 Mar. 1999 (Ger.); see also SGH Hamburg 21 Mar 1996 (Ger.); Lookofsky04 127; ICC
Case No. 8128]. In a similar case, the tribunal denied Art. 79 exemption to a seller because it should
have foreseen or overcome an emergency production stoppage at its own supplier’s plant [Arb. No.
155/1994 (Rus.)]. In another notable case, under the related doctrine of impossibility, it was
physically impossible for the contractually specified refinery to produce the required quantity.
Nonetheless, the court ruled that the seller was not excused because it had failed to show what
efforts it had made at fulfilling the contract [Canadian Industrial (US), cited in Perillo 121]. Respondent
here similarly failed to show reasonable effort at providing timely substitute goods.

D. Respondent is fully liable for its failure to give timely notice under Art. 79(4)
CISG.
84. Even if Respondent satisfies all the requirements of exemption under Art. 79(1), it must still “give
notice to the other party of the impediment and its effect on his ability to perform…within a
reasonable time” or otherwise, be held “liable for damages resulting from such non-receipt” [Art.
79(4) CISG]. Respondent was obliged to give specific and timely notice of any impediment from the
lack of complaint (1). Respondent failed to do so (2).

1. Respondent was obliged to give specific and timely notice of any impediment to its
ability to perform from Claimant’s lack of complaint.
85. The central purpose of notice requires that notice be precise. Notice under Art. 79(4) is meant “to
enable the [non-defaulting party]…to take all the steps necessary to overcome the consequences of
the failure” [Tallon 586; see also Zeller 186]. This is the same underlying policy goal as notice of non-
conformity under Art. 39(1) CISG, where courts have held that a notice of non-conformity must be
specific enough to enable the seller to take remedial steps [BGH 3 Nov. 1999 (Ger.); LG Salzburg 2
Feb. 2005 (Aus.); HB Gent 28 Jan. 2004 (Belg.); Rheinland (Italy) cited in Ferrari01 212; see also CISG-AC2

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 Case Annex; Enderlein96 171-2]. The alleged impediment here is the fact that Claimant did not also
appeal to the Commission about Equalec’s refusal to connect the Fuse Boards [Proc. Order No. 1
¶11]. Mere awareness of the Fuse Policy did not reasonably alert Claimant to the need for steps
beyond what it had already taken (see supra ¶74). Any claim that the Fuse Policy itself was an
impediment is excluded in this stage of arbitration; “[o]nly those issues set out in paragraph 11 of
Procedural Order No. 1 are to be discussed” [Proc. Order No. 2].

2. Respondent failed to give specific or timely notice of impediment.

86. No communication from Respondent could be construed as proper notice under Art. 79(4).
Respondent’s only communication related to the Commission was its inquiry, on 9 Sept. 2005,
whether Claimant had “insisted, either to Equalec or to the Commission, that Equalec was required
by law to connect” [Re. Ex. 1]. By then, both parties were aware of the Fuse Policy and Claimant
had already complained to Equalec [Statement of Claim ¶14; Re. Ex. 1]. Respondent itself implied that
complaint “either to Equalec or to the Commission” was enough [Re. Ex. 1 (emphasis added)]. In no
way did Respondent suggest that the lack of further complaint had had or would have any “effect on
his ability to perform,” as Art. 79(4) requires. Respondent only objected to the request for substitute
goods because of Chat’s production problems, for example, not because of the lack of complaints
[Re. Ex. 1]. There was no hint of an impediment claim until a year later when Respondent’s Answer
was filed [Letter from Horace Fasttrack, 4 Sept. 2006, 18]. To whatever extent that Respondent’s breach
was due to the lack of complaint, Respondent’s failure to give timely or proper notice deprived
Claimant of a meaningful opportunity to address the impediment.

87. Respondent is then still liable for the full amount of damages under Art. 79(4). Generally, there is a
distinction between damages that result from the failure to give notice under Art. 79(4) as opposed
to those from non-performance [Secretariat Art. 65 ¶15; Stoll/Gruber 834; Audit 176]. In this case,
however, the two are equal because the lack of notice precluded Claimant from taking steps to
alleviate the lack of complaint.

E. The scope of Art. 79 CISG precludes the application of external hardship

principles.
88. The intent of Art. 79 CISG is to “exhaustively determine the limits of the promisor’s performance
guarantee” [Stoll/Gruber 824] through a “closed system of remedies” [Kruisinga 149; see also
Wechem/Christiaans 1890]. The parties’ choice of the CISG [Cl. Ex. 1; Statement of Claim ¶19]
generally precludes the application of outside hardship principles or laws. First, the use of external

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 laws, especially domestic provisions such as Wegfall der Geschäftsgrundlage or imprévision, would produce
greatly divergent results, contravening the uniformity mandate of Art. 7(1) CISG [Tallon 593-4;
Stoll/Gruber 807; Flambouras02 §2]. Second, gap-filling principles do not allow the introduction of
external principles here because there is no relevant gap; the CISG drafters considered the problem
of hardship and deliberately omitted it from the CISG [Honnold89 349-50; Tallon 593-4]. For both
these reasons, where the parties have chosen the CISG, courts have declined to apply outside
hardship principles [LG Aachen 14 May 1993 (Ger.); TC Monza 14 Jan. 1993 (Italy); Bielloni (Italy); see
also Winship 509-10]. Even if external principles could apply, hardship requires unforeseeable
circumstances “so severe and fundamental that the promisor cannot be held to its promise in spite
of the possibility of performance” [Jenkins 2027; see also Perillo 114-6]. The lack of complaint here is
neither exceptional nor unforeseeable (see supra ¶¶79-80).

89. Respondent can neither satisfy the necessary elements of causality, unforeseeability, unavoidability,
and notice under Art. 79, nor resort to hardship in principle or on the merits.

II. RESPONDENT IS NOT EXCUSED UNDER ART. 80 CISG BECAUSE NO PART OF ITS
FAILURE WAS CAUSED BY CLAIMANT.
90. Art. 80 CISG does not excuse Respondent because Claimant caused no part of Respondent’s failure.
Art. 80 provides: “[a] party may not rely on a failure of the other party to perform, to the extent that
such failure was caused by the first party's act or omission.” It is a “concrete manifestation” of the
general principle of good faith that a party may not contradict its own behavior [Enderlein/Maskow
335; see also Stoll/Gruber 838; Tallon 596]. The concept of conduct under Art. 80 is broad [Schäfer
§2(a)], but the “decisive criterion” is that it was highly probable that the conduct would lead to the
failure to perform [Tallon 599]. The breach of contract must be a “characteristic consequence” of
the act [Enderlein/Maskow 337]. Where a legal act “by a completely unusual chain of cause and
effect, leads to the breach of contract, there will be no reason for exemption” [Enderlein/Maskow
338]. Claimant’s lack of complaint did not cause any part of Respondent’s failure (see supra ¶68).
Even if it had, Respondent’s failure to deliver conforming goods was not highly probable or a
“characteristic consequence.”

91. Any excuse under Art. 80 would be partial at most because Respondent contributed to the failure to
perform. If both parties to a contract have contributed to the failure to perform, Art. 80 requires an
“apportionment of the causes depending on their degree of objective causation” [Tallon 599; see also
Enderlein/Maskow 339; SGH Hamburg 21 Mar 1996 (Ger.)]. If damages are at issue, they are to be

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 allocated by the portion each party contributed to the failure [id]. Irrespective of its contractual
obligations, Respondent contributed to the failure in at least three ways: first, it failed to investigate
Equalec requirements; second, it failed to make a reasonable effort at finding other sources of Chat
JP fuses (see supra ¶74); and third, it failed to complain to the Commission (see supra ¶81). In
particular, Respondent’s failure to meet Equalec requirements and to further the contractual purpose
of connecting to Equalec’s electrical grid are both characteristic consequences of Respondent’s
neglect in investigating applicable requirements and other sources of fuses.

III. COMPLAINT TO THE COMMISSION WAS NOT REQUIRED AS A MITIGATION MEASURE

UNDER ART. 77 CISG.
92. Claimant was not obliged to complain to the Commission as a mitigation measure under Art. 77
CISG. Art. 77 requires only “such measures as are reasonable in the circumstances” [(emphasis added);
see also Achilles 77/4; Schlechtriem04 731]. The aggrieved party is not required to take all potential
measures that might have mitigated losses, but only those “under the particular
circumstances…[that] could be expected…[of] a person acting in good faith” [Schlechtriem05 588].
Claimant reasonably acted to mitigate losses in three ways. First, Claimant immediately complained
to Equalec about its refusal to connect the Fuse Boards [Cl. Ex. 3]. Second, Claimant gave
Respondent an opportunity to provide conforming goods (see supra ¶74). Last, when Respondent
was unwilling to promise timely delivery, Claimant promptly obtained substitute goods from
Switchboards [Cl. Ex. 3; Statement of Claim ¶18]. Substitute transactions are the typical example of
mitigation [Schlechtriem04 732; Arbitral Tribunal Vienna, 15 June 1994]. In the circumstances, Claimant
reasonably declined to complain to the Commission because such complaint lacked sufficient merit
or time to succeed while risking far greater losses (see supra ¶75). Even if complaint to the
Commission was required for mitigation, Respondent could have done so itself (see supra ¶81).

93. By any theory of exemption, Respondent remains fully liable to Claimant.

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 PRAYER FOR RELIEF

In light of the above submissions, Counsel respectfully request that the Tribunal find that:
• The Tribunal has jurisdiction to consider the dispute between Equatoriana Office Space Ltd
and Mediterraneo Electrodynamics S.A.;
• The Fuse Boards did not conform to the Contract;
• The Contract was not amended to allow the delivery of JS fuses;
• Respondent’s liability is not excused by Claimant’s failure to complain to the Commission
about Equalec’s refusal to connect the Fuse Boards;

Consequently, Equatoriana Office Space Ltd requests the Tribunal to order Mediterraneo
Electrodynamics S.A. to pay:
• Equatoriana Office Space Ltd as damages the sum of US$200,000, calculated US$180,000 as
the cost of the replacement distribution fuse boards purchased from Equatoriana
Switchboards Ltd and US$20,000 for the cost of removing the non-conforming fuse boards
and replacing them with conforming ones;
• Interest at the prevailing market rate in Equatoriana on the said sum from the date of breach
to the date of payment; and
• All costs of arbitration, including costs incurred by the parties.

(signed)

/S/ Zuzana Blazek /S/ Tanner Jones /S/ Gary Li

Zuzana Blazek Tanner Jones Gary Li

/S/ Meyghan McCrea /S/ Shawn Oakley /S/ Nina Yadava

Meyghan McCrea Shawn Oakley Nina Yadava

7 December 2006

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