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Hong Kong, China – 6 to 13 March 2016

UNIVERSITY OF SAN DIEGO

SCHOOL OF LAW

MEMORANDUM FOR CLAIMANT

Kaihari Waina, Ltd. v. Vino Veritas, Ltd.

CLAIMANT ! RESPONDENT

ELIZABETH BHAPPU | ERIN LUPFER | GENEVIEVE HERBERT

IREAN ZHANG | ALEX MURER | ELYSSA KULAS | ALICIA MILLER

MELISSA CHINN | JOHN NELSON |

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | i

TABLE OF CONTENTS

INDEX OF AUTHORITIES ………..iii

INDEX OF CASES ………..xviii

INDEX OF AWARDS ………....xx

INDEX OF LEGAL SOURCES ………...xxi

INDEX OF OTHER SOURCES ………xxiii

INDEX OF ABBREVIATIONS ……….xxvi

STATEMENT OF FACTS ……….…..1

SUMMARY OF ARGUMENT ……….…...3

ARGUMENT ………...……….……….5

I. CLAIMANT IS ENTITLED TO RECOVER THE DAMAGES INCURRED DURING ITS REQUEST FOR INTERIM RELIEF AND SUCCESSFUL DEFENSE AGAINST THE DECLARATORY RELIEF PROCEEDING IN MEDITERRANEO. ………..…...5

A. ART. 74 CISG ALLOWS FOR THE RECOVERY OF ATTORNEY’S FEES BECAUSE SUCH FEES ARE A FORESEEABLE AND DIRECT CONSEQUENCE OF THE BREACH …………..…6

1. Attorney’s fees are warranted for the preliminary injunction………8

2. Recovery of attorney’s fees is warranted for Claimant’s successful defense of the Declaratory Judgment.………..10

B. CLAIMANT MITIGATED ITS LOSS PURSUANT TO ART. 77 CISG BY HIRING ADEQUATE COUNSEL AND SECURING COVER TO PREVENT GREATER DAMAGES …………..……..12

C. CLAIMANT IS ENTITLED TO DAMAGES FOR THE DECLARATORY RELIEF BECAUSE DANUBIA ALLOWS FOR CONTINGENCY FEE AGREEMENTS AND REQUIRES THAT LOSER PAYS FEES. ………13

D. THE DOCTRINE OF RES JUDICATA DOES NOT PRECLUDE CLAIMANT FROM SEEKING ATTORNEY’S FEES BECAUSE THERE HAS NOT BEEN A FINAL JUDGMENT ON THE MERITS. ………14

II. CLAIMANT IS ENTITLED TO DAMAGES, SPECIFICALLY RESPONDENT’S PROFITS FROM THE SALE OF MATA WELTIN 2014 TO SUPERWINES ………15

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | ii

A. CLAIMANT IS ENTITLED TO DISGORGEMENT OF PROFITS UNDER ART. 74 CISG...15 1. Disgorgement of profits is proper under Art. 74 CISG...16 2. Disgorgement is an alternative method when other methods are too speculative.17 3. Disgorgement of profits does not exceed the foreseeable loss. ………19 B. CLAIMANT PROPERLY MITIGATED ITS DAMAGES AS REQUIRED BY ART. 77 CISG, REGARDLESS OF RESPONDENT’S FAILURE TO GIVE PROPER NOTICE………...20

III. CLAIMANT IS ENTITLED TO DOCUMENT PRODUCTION………....22 A. THE PARTIES INTENDED TO ALLOW FOR SOME DOCUMENT PRODUCTION AND PRECLUDED AMERICAN STYLE DISCOVERY.………...22 1. The parties subjectively intended for some document production…………...23 2. An objective interpretation of the Arbitration Clause can only mean that “no

discovery” refers to American-style procedures……….24 3. CLAIMANT did not assent to modification of the Arbitration Clause...25 B. A BAR TO ALL DOCUMENT PRODUCTION WOULD LIKELY RENDER THE AWARD UNENFORCEABLE………..26 C. THE TRIBUNAL HAS THE POWER TO COMPEL DOCUMENT PRODUCTION AND SHOULD DO SO UNDER THE IBA RULES IN ORDER TO PROVE CLAIMANT’S DAMAGES ………..27 1. The Tribunal has the power to compel document production………..27 2. The IBA Rules are a contemporary collection of “best practices” and are

especially useful considering CLAIMANT’s need for documents regarding disgorgement of profits………..28 REQUEST FOR RELIEF ………..31

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | iii

INDEX OF AUTHORITIES

Andersen, Camilla Baasch

Cited as: Source: Cited in:

Andersen Comparative Analysis: Selected Notice Requirements under CISG, PECL and UNIDROIT Principles: CISG Arts. 39 & 26; UNIDROIT Principles Arts. 1.9, 3.14, 7.3.2.; PECL Arts. 1.303,

3.304, 4.112, 9.303, 13.104 Available at:

http://www.cisg.law.pace.edu/cisg/biblio/andersen2.html#cba* [Full Text in English]

¶ 80

Berger, Klaus Peter

Cited as: Source: Cited in:

Berger Private Dispute Resolution in International Business: Negotiation, Mediation, Arbitration

Volume II: Handbook

Kluwer Law International, 2009 p. 585

[Full Text in English Available Online on Kluwer]

¶ 102

Born, Gary B.

Cited as: Source: Cited in:

Born International Commercial Arbitration, Kluwer Law International, 2014

[Full Text in English Available Online on Kluwer]

¶¶ 85, 93, 94, 102, 103, 106

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | iv

Caron, David D. / Caplan, Lee M. / Pellonpää, Matti

Cited as: Source: Cited in:

Caron / Caplan / Pellonpää

The UNCITRAL Arbitration Rules: A Commentary Oxford University Press, 2006

p. 28

[Full Text in English Available in Hardcover]

¶ 103

Chengwei, Liu

Cited as: Source: Cited in:

Chengwei 2003

Remedies for Non-performance: Perspectives from CISG, UNIDROIT Principles & PECL

p. 10 (September 2003) Available At:

http://www.cisg.law.pace.edu/cisg/biblio/chengwei-74.html [Full Text in English]

¶¶ 27, 48, 53

Chengwei, Liu

Cited as: Source: Cited in:

Chengwei 2005

Force Majeure:

Perspectives from the CISG, UNIDROIT Principles, PECL, and Case Law, 2nd Ed.

§ 4.4 (2005) Available At:

http://www.cisg.law.pace.edu/cisg/biblio/liu6.html#fmiv [Full Text in English]

(6)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | v

Derains, Yves / Schwartz, Derrick C.

Cited as: Source: Cited in:

Derains / Schwartz

Guide to the ICC Rules of Arbitration (Second Edition)

Kluwer Law International, 2005 p. 229; 261-262

[Full Text in English Available Online on Kluwer]

¶ 103, 107

Dixon, David B.

Cited as: Source: Cited in:

Dixon Que Lastima Zapata! Bad CISG Ruling on Attorneys’ Fees Still Haunts U.S. Courts

Reproduced Winter 2006-2007 p. 110

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/dixon.html [Full Text in English]

¶ 28

Drymer, Stephen L. / Gobeil, Valérie

Cited as: Source: Cited in:

Drymer Document Production in International Arbitration: Communicating Between Ships in the Night

in

Legitimacy: Myths, Realities, Challenges, ICCA Congress Series, Volume 18

p. 205, 208-09

Kluwer Law International, 2015

[Full Text in English Available Online on Kluwer]

(7)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | vi

Enderlein, Fritz / Maskow, Dietrich

Cited as: Source: Cited in:

Enderlein / Maskow

Commentary on Article 74 in

International Sales Law Oceana Publication, 1992

pp. 297-98 Available at:

http://www.cisg.law.pace.edu/cisg/biblio/enderlein.html#art74 [Full Text in English]

¶ 27

Flambouras, Dionysios P.

Cited as: Source: Cited in:

Flambouras The Doctrines of Impossibility of Performance and clausula rebus sic stantibus in the 1980 Vienna Convention

on Contracts for the International Sale of Goods and the Principles of European Contract Law:

A Comparative Analysis Pace International Law Review

p. 261-293 (Fall 2011) Available at:

http://www.cisg.law.pace.edu/cisg/biblio/flambouras1.html [Full Text in English]

(8)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | vii

Felemegas, John

Cited as: Source: Cited in:

Felemegas An Interpretation of Article 74 CISG by the U.S. Circuit Court of Appeals

p. 31 (December 2002) Available At:

http://www.cisg.law.pace.edu/cisg/biblio/felemegas4.html [Full Text in English]

¶¶ 28

Fletcher, Harry M.

Cited as: Source: Cited in:

Fletcher Recovering Attorneys’ Fees as Damages under the U.N. Sales Convention (CISG): The Role of Case Law in the

New International Commercial Practice,

with Comments on Zapata Hermanos v. Hearthside Baking pp. 125-26 (Winter 2002)

Available at:

http://scholarlycommons.law.northwestern.edu/cgi/ viewcontent.cgi?article=1545&context=njilb

[Full Text in English]

¶¶ 25, 28, 53

Gaillard, Emmanuel / Savage, John

Cited as: Source: Cited in:

Galliard /

Savage Fouchard Gaillard Goldman on International Commercial Arbitration

Kluwer Law International, 1999

[Full Text in English Available Online on Kluwer]

(9)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | viii

Gotanda, John Yukio

Cited as: Source: Cited in:

Gotanda Awarding Costs and Attorneys’ Fees in International Commercial Arbitrations

Michigan Journal of International Law pp. 1-50 (1990)

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/gotanda.html [Full Text in English]

¶ 28, 26, 55

Greenberg, Simon / Kee, Christopher / Weermantry, J. Romesh

Cited as: Source: Cited in:

Greenberg / Kee / Weermantry

International Commercial Arbitration. An Asia-Pacific Perspective

Cambridge University Press, 2011 p. 308-309, § 7.12

[Full Text in English Available in Paperback]

(10)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | ix

Hanotiau, Bernard

Cited as: Source: Cited in:

Hanotiau Document Production in International Arbitration: A Tentative Definition of ‘Best Practices’

in

ICC International Court of Arbitration Bulletin, 2006 p. 114 Available at: http://www.arbitration-icca.org/media/4/15714523439554/media012232967911960di scovery_in_court_and_document_production_in_internaional_ commerical_arbitration.pdf [Full Text in English]

¶ 109

Honnold, John O.

Cited as: Source: Cited in:

Honnold Uniform Law for International Sales under the 1980 United Nations Convention

Kluwer Law International, 1999 pp. 445-48; 476

[Full Text in English Available Online on Kluwer]

¶ 29,74

Kantor, Mark

Cited as: Source: Cited in:

Kantor Valuation for Arbitration: Compensation Standards, Valuation Methods and Expert Evidence

Kluwer Law International, 2008 p. 38

[Full Text in English Available Online on Kluwer]

(11)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | x

Knapp, Victor

Cited as: Source: Cited in:

Knapp Article 77

in

Bianca-Bonnell Commentary on the International Sales Law, Giuffrè: Milan

pp. 559-67 (1987) Available at:

http://www.cisg.law.pace.edu/cisg/biblio/knapp-bb77.html [Full Text in English]

¶ 48

Lew, Julian D.M. / Mistelis, Loukas A. / Kröll, Stefan

Cited as: Source: Cited in:

Lew / Mistelis / Kröll

Comparative International Commercial Arbitration Kluwer Law International, 2003

p. 568

[Full Text in English Available in Hardcover]

¶ 107

Miller, Geoffrey

Cited as: Source: Cited in:

Miller The English Versus the American Rule on Attorney Fees: An Empirical Study of Public Company Contact

Cornell Law Review, Vol. 2 p. 329 (2008)

Available at:

scholarship.law.cornell.edu/cgi/viewcontent.cgi? article=3261&context=clr

[Full Text in English]

(12)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xi

Lookofsky, Joseph

Cited as: Source: Cited in:

Lookofsky The 1980 United Nations Convention on Contracts for the International Sale of Goods

p. 157 (December 2000) Available at:

http://www.cisg.law.pace.edu/cisg/biblio/lookofsky.html [Full Text in English]

¶ 48

Lücke, H.K.

Cited as: Source: Cited in:

Lücke Good Faith and Contractual Performance in

P. Finn (Ed.), Essays on Contract

The Law Book Company Limited, Sydney, 1987 p. 160

Available at:

http://cisgw3.law.pace.edu/cisg/biblio/keily.html [Full Text in English]

¶ 66

Patocchi, Paolo Michele / Meakin, Ian L.

Cited as: Source: Cited in:

Patocchi / Meakin

Procedure and the Taking of Evidence in International Commercial Arbitration: The Interaction of Civil Law and

Common Law Procedures

International Business Law Journal No. 7 p. 889 (1996)

[Full Text in English Available Online on Kluwer]

(13)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xii

Peysner, John

Cited as: Source: Cited in:

Peysner What’s wrong with Contingency Fees

Nottingham Law Journal, Vol. 10, Issue 1 pp. 22-46 (2001)

Available at:

http://irep.ntu.ac.uk/13335/1/188399_6018%20 Peysner%20Publisher.pdf

[Full Text in English]

¶ 31

Rivkin, David

Cited as: Source: Cited in:

Rivkin Foreword

to

IBA Rules on the Taking of Evidence in International Arbitration

International Bar Association, 2010 pp. 2-3

Available at: http://www.ibanet.org/

[Full Text in English]

(14)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xiii

Riznik, Peter

Cited as: Source: Cited in:

Riznik Reasonableness of the Measures Undertaken by the Party Relying on the Breach to Mitigate the Loss

in

Article 77 CISG: Reasonableness of the Measures Undertaken to Mitigate the Loss

§ 4 (November 2009) Available at:

http://cisgw3.law.pace.edu/cisg/biblio/riznik.html [Full Text in English]

¶ 79

Roth, Marianne

Cited as: Source: Cited in:

Roth False Testimony at International Arbitration Hearings Conducted in England and Switzerland - A Comparative View

Kluwer Law International, 1994 p. 15

[Full Text in English Available Online on Kluwer]

¶ 110

Saidov, Djakhongir

Cited as: Source: Cited in:

Saidov Methods of Limiting Damages under the Vienna Convention on Contracts for the International Sale of Goods

pp. 188-189 (December 2001) Available at:

http://www.cisg.law.pace.edu/cisg/biblio/saidov.html [Full Text in English]

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xiv

Schlechtriem, Peter

Cited as: Source: Cited in:

Schlechtriem 2002

Attorneys’ Fees as Part of Recoverable Damages p. 11 (Spring 2002)

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem4.html [Full Text in English]

¶ 30

Schlechtriem, Peter / Butler, Petra

Cited as: Source: Cited in:

Schlechtriem / Butler

UN Law on International Sales:

The UN Convention on the International Sale of Goods

Springer, 2009

¶ 79

Schlechtriem, Peter / Schwenzer, Ingeborg

Cited as: Source: Cited in:

Schlechtriem / Schwenzer

2005

Commentary on the UN Convention on the International Sale of Goods (CISG)

2nd Ed., Oxford University Press (2005) p. 747

[Full Text in English Available in Paperback]

¶ 79

Schlechtriem / Schwenzer

2010

3rd Ed., Oxford University Press (2010) p. 43

[Full Text in English Available Online on Kluwer]

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xv

Shenton, David W.

Cited as: Source: Cited in:

Shenton Supplementary Rule Governing The Presentation And Reception Of Evidence In International Commercial Arbitration

in

Lew, Julian D.M. (Ed.), Contemporary Problems in International Arbitration

Chapter 15, pp. 188-194

Martinus Nijhoff Publishers, Dordrecht et al., 1987 [Full Text in English Available Online on Kluwer]

¶ 109

Von Mehren, George M. / Salomon, Claudia

Cited as: Source: Cited in:

Von Mehren / Salomon

Submitting Evidence in an International Arbitration: The Common Lawyer’s Guide

20 J. of Internatl. Arb. 3, p. 292 Kluwer Law International, 2003

[Full Text in English Available Online on Kluwer]

¶ 110

Voser, Nathalie

Cited as: Source: Cited in:

Voser Harmonization by Promulgating Rules of Best International Practice in International Arbitration

Zeitschrift für Schiedsverfahren (German Arbitration Journal) p. 116 (2005)

[Full Text in English Available Online on Kluwer]

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xvi

Walters, Greta

Cited as: Source: Cited in:

Walters Fitting a Square Peg into a Round Hole: Do Res Judicata Challenges in International Arbitration Constitute

Jurisdictional or Admissibility Problems?

Journal of International Arbitration, Vol. 29, Issue 6, pp. 651-80 Kluwer Law International, 2012

Available at:

http://web.law.columbia.edu/sites/default/files/microsites/ columbia-arbitration-day/files/01_2012_-_walters_.pdf

[Full Text in English]

¶ 57

Yeo, Adrian

Cited as: Source: Cited in:

Yeo Access to Justice: A Case for Contingency Fees in Singapore

Singapore Academy of Law Journal, Vol. 16, Part 1 p. 86 (2004)

Available at:

http://www.sal.org.sg/digitallibrary/Lists/SAL%20Journal/ Attachments/334/2004-16-SAcLJ-76-Yeo.pdf

[Full Text in English]

¶ 31

Yuen, P / Choong, J

Cited as: Source: Cited in:

Yuen Is Arbitration Value for Money? Assessing Some Common Complaints about the Costs of International Arbitration

Asian Dispute Review No. 76, 2008 p. 76

[Full Text in English Available Online on Kluwer]

(18)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xvii

Zoccolillo Jr., Alan F.

Cited as: Source: Cited in:

Zoccolillo Determination of the Interest Rate under the 1980 United Nations Convention on Contracts for the International Sale of

Goods: General Principles vs. National Law in

Vindobona Journal of International Commercial law and Arbitration, pp. 3-43 (1997)

Available at:

http://www.cisg.law.pace.edu/cisg/biblio/zoccolillo.html [Full Text in English]

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xviii

INDEX OF CASES France

Cited as: Source: Cited in:

SARL Case SARL Bri Production “Bonaventure” v. Society Pan African Export

Appellate Court Grenoble 22 February 1995

Available at:

http://cisgw3.law.pace.edu/cases/950222f1.html [Full Text in English]

¶ 66

Germany

Cited as: Source: Cited in:

Used Car

Case Appellate Court Köln Used Car Case 21 May 1996 Available at: http://cisgw3.law.pace.edu/cases/960521g1.html [Summary in English] ¶ 73 Hong Kong

Cited as: Source: Cited in:

Lucky Star

Case Lucky-Gold Star Internatl/ (H.K.) LTD v. NG Moo Kee Engineering LTD Arb. & Disp. Resol. L.J. 49 (H.K. Ct. First Inst.)

1994 Cited in:

Gary B. Born, International Arbitration: Cases and Materials (Second Edition), p. 337

(20)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xix

Israel

Cited as: Source: Cited in:

Steel Case Adras Building Materials Ltd. v. Harlow and Jones G.N.B.H IsrSC 42 (1) 221

1994 Available at:

¶ 65

Switzerland

Cited as: Source: Cited in:

Sizing Machine Case

Sizing Machine Case

Handelsgericht St. Gallen (Commercial Court) 3 December 2002 Available at: http://cisgw3.law.pace.edu/cases/021203s1.html [Translation in English] ¶ 51 United States

Cited as: Source: Cited in:

Compressor Case

Delchi Carrier S.p.A. v. Rotorex Corp. U.S. Court of Appeals (2nd Circuit)

6 December 1995 Available at: CISG-online.ch 140???

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xx

INDEX OF AWARDS International Chamber of Commerce

Cited as: Source: Cited in:

Foamed Board Machinery

Case

Foamed Board Machinery Case ICC Case No. 7585 of 1992

Available at:

http://cisgw3.law.pace.edu/cases/927585i1.html

¶ 29

American Arbitration Association

Cited as: Source: Cited in:

Macromex Case

Macromex Srl. V. Globex International Inc. American Arbitration Association

12 December 2007 Available at:

http://cisgw3.law.pace.edu/cases/071212a5.html

(22)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xxi

INDEX OF LEGAL SOURCES

Cited as: Source: Cited in:

CISG United Nations Convention on Contracts for the International Sale of Goods 1980 [CISG]

Federal Register, Vol. 52, 1987 pp. 6264-80

United States Code Annotated, Title 15 Appendix, Supp. 1987

Available at:

http://www.cisg.law.pace.edu/cisg/text/treaty.html   [Full Text in English]  

1 7 74 77 79 ¶ 24 ¶ 25 ¶¶ 61, 73, 79 ¶ 48 ¶ 79 IBA IBA Rules on the Taking of Evidence in International Arbitration

International Bar Association, 2010 Available at:

http://www.ibanet.org/Document/Default.aspx?DocumentUid=68 336C49-4106-46BF-A1C6-A8F0880444DC

[Full Text in English]

3 9 ¶¶ 95, 111 ¶¶ 95, 111 Model Law UNCITRAL Model Law on International Commercial

Arbitration 1985 with amendments as adopted in 2006 The United Nations

2008 Vienna Available at:

http://www.uncitral.org/pdf/english/texts/arbitration/ml-arb/07-86998_Ebook.pdf

[Full Text in English]

http://www.uncitral.org/pdf/spanish/texts/arbitration/ml-arb/ml-arb-s.pdf

(Full Text in French, Spanish, Russian, Arabic, and Chinese) 1 18 19 24 34 36 ¶ 51 ¶ 101 ¶ 106 ¶¶ 92, 94 ¶ 101 ¶ 101 NYC Convention on the Recognition and Enforcement of Foreign

Arbitral Awards The United Nations

1958 New York Available at:

http://www.newyorkconvention.org/texts

[Full Text in English, French, Russian, Spanish, and Chinese]

V(1)(b) V(2)(b)

¶ 101 ¶ 101

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xxii

UNIDROIT UNIDROIT Principles of International Commercial Contracts UNIDROIT, 2010

Rome Available at:

http://www.unidroit.org/english/principles/contracts/ principles2010/integralversionprinciples2010-e.pdf

[Full Text in English]

7.3.6 7.3.2 4.1.1 4.3 ¶ 63 ¶ 79 ¶ 86 ¶ 90 VIAC Vienna International Arbitral Centre, VIAC

Rules of Arbitration and Conciliation (Vienna Rules) Austrian Federal Economic Chamber, 2006

Available at:

http://www.viac.eu/images/documents/VIAC_Arbitration_Rules_ 2006_1.pdf

[Full Text in English]

16 22 29 38 ¶ 106 ¶ 34 ¶¶ 92, 94 ¶ 101

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xxiii

INDEX OF OTHER SOURCES Advisory Opinions

Cited as: Source: Cited in:

CISG Adv. Council Opin. No. 6

Calculation of Damages under CISG Article 74

Available at:

http://cisgw3.law.pace.edu/cisg/CISG-AC-op6.html#* [Full Text in English]

¶ 26, 61, 69

CISG Adv. Council Opin. No. 7

Exemption of Liability for Damages under Article 79 of the CISG

Available at:

http://www.cisg.law.pace.edu/cisg/CISG-AC-op7.html [Full Text in English]

¶ 79

IBA Commentary

Cited as: Source: Cited in:

IBA Commentary

Commentary on the revised text of the 2010 IBA Rules on the Taking of Evidence in International Arbitration

Available at:

http://www.ibanet.org/Publications/publications_IBA_guides_ and_free_materials.aspx

[Full Text in English]

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xxiv

ICC Commission on Arbitration and ADR

Cited as: Source: Cited in:

ICC

Commission Controlling Time and Costs in International Arbitration in

ICC Arbitration Commission Report on Techniques for Controlling Time and Costs in Arbitration

p. 4 (2012) Available at: http://www.iccwbo.org/Advocacy-Codes-and- Rules/Document-centre/2012/ICC-Arbitration-Commission- Report-on-Techniques-for-Controlling-Time-and-Costs-in-Arbitration/ [Full Text in English]

¶ 107

International Commercial Arbitration Committee

Cited as: Source: Cited in:

ICAC Interim Report: “Res judicata” and Arbitration International Law Association, Berlin Conference (2004)

p. 2

[Full Text in English Available Online]

¶ 57

UNCITRAL

Cited as: Source: Cited in:

UNCITRAL Notes

UNCITRAL Notes on Organizing Arbitral Proceedings p. 4 (2004)

Available at:

https://www.uncitral.org/pdf/english/texts/arbitration/arb-notes/arb-notes-e.pdf

[Full Text in English]

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xxv

UNIDROIT

Cited as: Source: Cited in:

UNIDROIT 4.1 Comments Comments to UNIDROIT 4.1 ¶ 1 (2013) Available at: http://www.unidroit.org/instruments/commercial- contracts/unidroit-principles-2010/398-chapter-4-interpretation/941-article-4-1-intention-of-the-parties

[Full Text in English]

(27)

Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xxvi INDEX OF ABBREVIATIONS & And § / §§ Section / Sections ¶ / ¶¶ Paragraph / Paragraphs 2nd Second 3rd Third 4th Fourth AC Adv. Art. / Arts. Appellate Court Advisory Article / Articles CC CISG Commercial Court

Convention of the International Sale of Goods

Cl. CLAIMANT

Cl. Ex. CLAIMANT’S Exhibit

Conv. Convention

Dr. Doctor

Ed. Edition

ed. / eds. Editor / Editors

e.g. Exemplum gratia (for example)

Ex. Exhibit

IBA ICC

International Bar Association

International Chamber of Commerce

Inc. Incorporated

Int’l International

L.J. Law Journal

L. Rev. Law Review

Mr. / Ms. Mister / Mistress

No. / Nos. NYC

Number / Numbers

New York Arbitration Convention

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | xxvii

Proc. Ord. Procedural Order

Resp. RESPONDENT

Res. Ans. RESPONDENT’S Answer to Statement of Claim

Res. Ex. RESPONDENT’S Exhibit

St. of Claim CLAIMANT’S Statement of Claim

UNCITRAL UNIDROIT

United Nations Convention on International Trade Law International Institute for the Unification of Private Law

v. Versus

Vol. Volume

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | 1

STATEMENT OF FACTS

1. Kaihari Waina, Ltd. (“CLAIMANT”) is a wine merchant from Equatoriana that specializes in top

quality wines for the collectors and high-end gastronomy markets. [St. of Claim, ¶ 1]. CLAIMANT has a particular expertise in Mediterranean wines and is well known for selling only

diamond Mata Weltin—proclaimed one of the best white wines in the world. [Id.].

2. Vino Veritas, Ltd. (“RESPONDENT”)is a top Mediterranean vineyard that sells diamond Mata

Weltin wines. [Id.] It is the only Vuachouan vineyard that has consecutively won the Mediterranean Gold Medal for the past five years for the diamond Mata Weltin wine. [Id. at ¶ 2]. 3. On 22 April 2009, CLAIMANT and RESPONDENT entered into a Framework Agreement (“the

Contract”), where RESPONDENT guaranteed CLAIMANT annual delivery of up to 10,000 bottles in

exchange for a yearly minimum purchase of at least 7,500 bottles (“Guarantee Clause”). [Id. at ¶ 3]. The Contract ran for five years and was automatically renewed annually if neither party terminated it. [Cl. Ex. 1].

4. CLAIMANT’s successful business model is dependent on the quantity of wine guaranteed by

RESPONDENT because the majority of CLAIMANT’s customers rely on apreorder system, which

provides a quasi-guarantee. [Id. at ¶ 4; Proc. Ord. 2, ¶ 52]. Although such agreements are uncommon in the wine industry, CLAIMANT explained to RESPONDENT its need for the guarantee

during negotiations. [Res. Ex. 1]. The guarantee of a minimum purchase allowed RESPONDENT

to improve its cash flow. [Id.].

5. Art. 20 of the Contract included an Arbitration Clause stating that “no discovery shall be allowed.” [Cl. Ex. 1]. RESPONDENT recently litigated a case in which the adverse party

requested large quantities of documents covering a six-year time period. [Cl. Ex. 12; Res. Ex. 1]. Consequently, in its dealings with CLAIMANT, RESPONDENT wished to avoid broad document

requests prevalent in common law jurisdictions to ensure fast and informal arbitration. [Id.]. 6. The Contract provided that the substantive law governing the Contract would be the CISG and

the law of Danubia, which has adopted verbatim the UNCITRAL Model Law on International Commercial Arbitration with the 2006 amendments (“the Model Law”). [Cl. Ex. 1; Proc. Ord. 1, ¶ 5]. The parties agreed that any disputes would be decided by arbitration under VIAC’s International Arbitration Rules in accordance with international practice. [Cl. Ex. 1].

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7. Pursuant to the Contract, CLAIMANT annually ordered the designated quantity of that year’s

vintage wine no later than 20 December. [Cl. Ex. 1; Cl. Req., ¶ 3]. Every year, CLAIMANT

placed its orders prior to RESPONDENT’s negotiations with other customers, who concluded their

contracts with RESPONDENT in January. [Cl. Req., ¶ 3; Proc. Ord. 2, ¶ 29]. CLAIMANT always

ordered between 7,500 and 8,500 bottles, generally increasing the quantity each year. [St. of Claim, ¶ 4]. The parties had never previously disagreed regarding the quantity of CLAIMANT’s

order. [Id.].

8. In August 2014, due to poor weather conditions, RESPONDENT had one of its lowest quantity

harvests; however, the harvest was also one of outstanding quality. [Cl. Ex. 3]. This exquisite harvest won multiple awards, increasing CLAIMANT’s preorders by 20%. [Proc. Ord. 2, ¶ 8].

Around this time, RESPONDENT entered into an agreement with CLAIMANT’s main competitor,

SuperWines, reducing RESPONDENT’s overall wine supply. [Proc. Ord. 2, ¶ 21]. RESPONDENT

eventually provided SuperWines with a total of 5,500 bottles. [Proc. Ord. 2, ¶ 24].

9. On 4 November 2014, CLAIMANT ordered 10,000 bottles of Mata Weltin 2014, the maximum

amount permitted under the Contract. [Cl. Ex. 2]. On 25 November, CLAIMANT’s development

manager, Isme Buharit, met with RESPONDENT’s CEO, Mr. Weinbauer, to discuss the importance

of its order. [St. of Claim, ¶ 9]. CLAIMANT explained to RESPONDENT that it had incurred a

significant number of preorders, many of which had already been accepted. [Id.]. RESPONDENT

stated that due to a decrease in the supply of wine, it would not be able to provide more than 10,000 bottles; however, it did not indicate an inability to honor its contractual obligations to CLAIMANT. [Id.]. In fact, Ms. Buharit left the meeting with the impression that RESPONDENT

was going to deliver the quantity requested by CLAIMANT. [Cl. Ex. 5].

10. However, on 1 December 2014, CLAIMANT received a letter from RESPONDENT stating it would

only deliver between 4,500-5,000 bottles of wine—3,000 less than RESPONDENT guaranteed

CLAIMANT under the Contract. [Cl. Ex. 3]. When CLAIMANT notified RESPONDENT that it

wished to enforce the Contract, RESPONDENT accused CLAIMANT of outrageous behavior, stating

that it would not deliver any of the wine, even if RESPONDENT had to drink all of it. [Cl. Ex. 7].

11. CLAIMANT, aware of its own contractual obligations, immediately sought interim relief in the

High Court of Mediterraneo to prevent RESPONDENT from distributing the wine guaranteed to

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Mediterranean firm, on a contingency fee basis to represent it in all matters in the Courts of Mediterraneo that dealt with the parties’ Contract. [Cl. Ex. 10].

12. On 12 December 2014, the High Court granted CLAIMANT’s injunction, and RESPONDENT did not

challenge the Court’s order. [Cl. Req., ¶ 10; Cl. Ex. 8]. For the interim injunction, CLAIMANT

incurred $33,750 in attorney’s fees. [Cl. Ex. 11; Proc. Ord. 2, ¶ 41.]

13. Around this same time, CLAIMANT contacted other top vineyards to make substitute

arrangements to fulfill the needs of its own customers. [Cl. Req., ¶11]. On 2 February 2015, CLAIMANT purchased 5,500 bottles of wine from Vignobilia Ltd, another high-end producer of

wine from Mediterraneo’s Vuachoua region. [Proc. Ord. 2, ¶ 11]. When RESPONDENT heard

that CLAIMANT had secured 5,500 bottles from Vignobilia, it entered into further contracts for the

same amount without first seeking permission from the High Court of Mediterraneo.

14. On 30 January 2015, RESPONDENT sought a declaratory judgment in Mediterraneo, asking the

court to find that RESPONDENT was not liable for the breach of the Contract, specifically the

non-delivery of 10,000 bottles of diamond Mata Weltin 2014. [Cl. Ex. 9]. The High Court dismissed the action for lack of jurisdiction, based on the Arbitration Clause. [Id.]. As a result of CLAIMANT’s successful defense, it incurred an additional $16,530 in attorney’s fees. [Cl. Ex. 9;

Cl. Ex. 11; Proc. Ord. 2, ¶ 41].

15. CLAIMANT commenced the current arbitral proceeding on 11 July 2015, with the Vienna

International Arbitral Centre, requesting the payment of damages for breach of contract. During a telephone conference on 1 October 2015, the parties consented to the VIAC Rules for this arbitration. [Proc. Ord. 1, ¶ 2]. The Tribunal also decided, for the purposes of this hearing, that RESPONDENT’s termination of the Contract constituted a breach. [Id. at ¶ 4].

SUMMARY OF ARGUMENT

16. Awarding CLAIMANT the $50,280 it incurred in attorney’s fees in both its application for interim

relief and its successful defense against RESPONDENT’s motion for declaratory relief would

ensure that CLAIMANT is put it in the position had the Contract been properly performed. Both

state court actions were a direct consequence of RESPONDENT’s conceded breach, as CLAIMANT

sought interim relief to protect the 10,000 bottles guaranteed to it under the Contract and RESPONDENT filed a declaratory judgment for non-liability of its breach. The attorney’s fees

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CLAIMANT incurred were foreseeable to RESPONDENT at the time of contracting; because the

parties included both a Guarantee Clause and an Arbitration Clause in the Contract, RESPONDENT

could foresee that CLAIMANT would protect and defend its right to the 10,000 bottles of wine it

was entitled to, which includes securing legal representation.

17. Additionally, CLAIMANT’s use of a contingency fee was reasonable and necessary given

CLAIMANT’s financial constraints and Mediterraneo’s requirement that parties obtain local

counsel. Moreover, even if the Tribunal were to apply the law of Danubia, CLAIMANT is still

entitled to the attorney’s fees it incurred in the declaratory relief proceeding because Danubian law permits attorney’s fees and provides that the loser of a proceeding will pay such costs. 18. Furthermore, CLAIMANT is entitled to the disgorgement of profits RESPONDENT made by selling

SuperWines the 5,500 bottles of Mata Weltin 2014 it guaranteed to CLAIMANT. Such damages

are appropriate when a party, like RESPONDENT, acts in bad faith and profits from the opposing

party’s loss. This Tribunal should disgorge RESPONDENT’s profits because it is an easier and less

speculative method to calculating damages, particularly relative to calculating loss of profit, goodwill, and cost of cover. Disgorgement of profits does not exceed what was foreseeable by RESPONDENT at the time of contracting because of the predictability of allocation and the

Guarantee Clause. Moreover, this Tribunal should disgorge RESPONDENT’s profits because

CLAIMANT properly mitigated its damages, regardless of RESPONDENT’s improper notice.

19. In order to properly calculate CLAIMANT’s damages and fully present its case, CLAIMANT needs

specific documents that are only in the hands of RESPONDENT. CLAIMANT is specifically

requesting those documents between RESPONDENT and SuperWines regarding the purchase of

Mata Weltin 2014 wine. This Tribunal should grant CLAIMANT’s document production request

because the parties intended to allow for some document production. Based on the content of the Contract, the parties subjectively and objectively agreed to only limit American-style discovery. Interpreting the language to completely bar discovery would be contrary to international practices, thereby restraining the unwaivable right of due process and likely rendering the arbitral award unenforceable. In order to preserve the integrity of the fundamental principle of equality, fairness, and the right to be heard, the Tribunal has the power, and should use such power, to allow for limited discovery under the IBA Rules. This Tribunal is likely to find that CLAIMANT

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is only asking for a limited number of specific documents that are relevant and necessary to achieving the proper outcome in the present matter.

20. CLAIMANT respectfully requests that this Tribunal find in favor of CLAIMANT on all three issues

before it.

ARGUMENT

21. Despite RESPONDENT’s claim to the contrary, the Tribunal should grant CLAIMANT the attorney’s

fees it incurred in both of the proceedings in Mediterraneo (I), damages in the form of RESPONDENT’s profits from the sale of Mata Weltin 2014 to SuperWines (II), and its document

production request (III).

I. CLAIMANT IS ENTITLED TO RECOVER THE DAMAGES INCURRED

DURING ITS REQUEST FOR INTERIM RELIEF AND SUCCESSFUL DEFENSE AGAINST THE DECLARATORY RELIEF PROCEEDING IN MEDITERRANEO.

22. Under the parties’ 22 April 2009 Contract, CLAIMANT promised to purchase a minimum of 7,500

bottles of diamond quality wine from RESPONDENT. [Cl. Ex. 1]. In exchange, RESPONDENT

guaranteed to offer CLAIMANT up to 10,000 bottles. [Id.]. However, Respondent failed to follow

through on this guarantee and now concedes that it breached the Contract when it failed to fulfill CLAIMANT’s 4 December 2014 order for 10,000 bottles of diamond Meta Weltin 2014. [Proc.

Ord. 1, ¶ 2]. As a result of RESPONDENT’sbreach of the Contract, CLAIMANT incurred $50,280

in attorney’s fees in preliminary court proceedings. [Cl. Ex. 11].

23. CLAIMANT is entitled to its attorney’s fees under both the CISG and Danubian law. Art. 74

CISG allows for the recovery of attorney’s fees because such fees are a foreseeable and direct consequence of the breach (A). Claimant mitigated its loss pursuant to Art. 77 CISG by hiring adequate counsel and securing cover to prevent greater damages (B). Claimant is also entitled to damages incurred in the declaratory relief action because Danubia allows for contingent fee agreements and requires that loser pays attorney’s fees (C).

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A. ART. 74 CISG ALLOWS FOR THE RECOVERY OF ATTORNEY’S FEES BECAUSE SUCH FEES ARE A FORESEEABLE AND DIRECT CONSEQUENCE OF THE BREACH. 24. The Tribunal should apply the CISG to any substantive issues arising from the Contract. The

parties agreed that the CISG is the applicable law and are both from signatory states— Equatoriana and Mediterraneo, respectively. [Cl. Ex. 1, Art. 20; see CISG Art. 1]. Moreover, the dispute between the parties pertains to a disagreement arising from a contract for the international sale of wine, satisfying the Convention’s requirement regarding the sale of goods. [Cl. Ex 1, Art. 20; see CISG Art. 1].

25. When interpreting the CISG, the Tribunal should seek to promote uniformity, thereby deferring to international standards and norms. [See CISG Art. 7]. It is appropriate to award the prevailing party attorney’s fees, even without statutory approval, in order to ensure the international, uniform application of the CISG. [Fletcher, p. 125].

26. Under Art. 74 CISG, a party can recover damages if the loss was a foreseeable direct consequence of the breach. Although recovery is limited to the amount suffered as a consequence of the breach, such damages are recoverable as long as the amount is reasonable and appropriate. [CISG Adv. Council Opin. No. 6]. When a party seeks attorney’s fees as damages under Art. 74, tribunals hold the fees recoverable when the fee is appropriate and reasonable in proportion to the claim sought. [Gotanda, p. 7]. “The costs and fees recoverable are generally those reasonable and necessary for the litigation.” [Id.].

27. Art. 74 CISG seeks to return the aggrieved party to the position it would have been in had the contract been performed. [Chengwei 2003, p. 16; Enderlein / Maskow, pp. 297-98]. This is the “full compensation rule,” which includes reimbursement of attorney’s fees as necessary to accommodate the consequences of the breach. [Chengwei 2003, p. 10].

28. There must be an “objective connection” to prove causation between the breach and damages. [Saidov, 188]. Although Art. 74 CISG explicitly mentions lost profits, it provides for the recovery of any damages in consequence of the breach. [Dixon, p. 110]. Legal costs, like attorney’s fees, can be incurred by a party remedying a breach; thus, Art. 74 CISG allows for such costs as a direct consequence of the breach. [Fletcher, p. 126; Felemegas, p. 31]. Moreover, a prevailing party can recover reasonable and necessary costs associated with litigation, including filing fees, witness fees, transportation costs, and attorneys’ fees. [Gotanda,

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p. 7]. Because a party would not have incurred these costs had the contract been performed, awarding such fees is necessary to return the party to its rightful position. [Chengwei 2003, p. 10].

29. As a limit on damages, Art. 74 CISG requires foreseeability of the damages—what the parties foresaw or ought to have foreseen at the time of contracting. Foreseeability prevents “extreme and unpredictable” damages. [Honnold, p. 406]. In Foamed Board Machinery, the seller sought recovery of the legal expenses it incurred when it sued a buyer who failed to make a payment and consequently breached. The tribunal awarded the seller attorney’s fees, holding that legal and arbitration costs are reasonably foreseeable under Art. 74 CISG because such damages are predictable when a party avoids or breaches a contract. [Foamed Board Machinery Case (ICC) 1992].

30. Contingent fees are also recoverable under Art. 74 CISG when the agreement was “necessary for the pursuit of the claim.” [Schlechtriem 2002, p. 11]. This reasoning emphasizes the foreseeability and causation requirements of Art. 74 CISG. When contingent fee agreements involve a foreign attorney, such fees are recoverable under Art. 74 CISG following an investigation that concludes that the agreement was necessary to pursue a claim. [Id.]. In Macromex, the tribunal held that a contingent fee agreement was recoverable because holding contrary would penalize the damaged party for an amount that the breaching party was obligated to pay. [Macromex Case (American Arbitration Association) 2007].

31. Moreover, contingent fees encourage attorneys to work diligently and quickly because the amount paid is solely dependent on the outcome of the case, rather than time spent. [Peysner, p. 46]. Contingency fees motivate lawyers to produce economically efficient work and to be “more skillful and less wasteful” in the litigation of a claim. [Id.]. As opposed to a contingency fee basis, a lawyer working on an hourly basis will be tempted to incur greater fees by “overstating the hours he works, putting in more hours than is required for the efficient resolution of the case, discouraging settlement or encouraging litigation, since any of these will maximize the number of his billable hours and accordingly maximize his total fees.” [Yeo, p. 86]. Therefore, contingency fees dissuade lawyers from incurring fees greater than what is necessary to successfully litigate a case. [Id.].

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1. Attorney’s fees are warranted for the preliminary injunction.

32. The attorney’s fees CLAIMANT incurred in seeking interim relief in the High Court of

Mediterraneo were not only a foreseeable direct consequence of RESPONDENT’s breach on 4

December 2014, but were also reasonable and necessary for CLAIMANT to properly protect its

rights under the Contract.

33. CLAIMANT’s request for interim relief was a direct consequence of RESPONDENT’s breach on 4

December 2014. The parties’ 22 April 2009 Contract provided that RESPONDENT would

guarantee a maximum of up to 10,000 bottles of diamond quality wine. [Cl. Ex. 1]. CLAIMANT

specialized in top quality collectors’ wines and built a reputation for a particular expertise in Mediterranean Mata Meltin wines of diamond quality. [St. of Claim, ¶ 1]. The Guarantee Clause allows CLAIMANT to provide a preorder service for this unique type of wine to its

customers, many whom are high-end collectors. [Proc. Ord. 2, ¶ 6]. Thus, the contractual guarantee is integral to the success of CLAIMANT’s business.

34. In early December 2014, CLAIMANT had preorders for 6,500 bottles of RESPONDENT’s Mata

Weltin vintage 2014. [Proc. Ord. 2, ¶ 7]. Thus, when RESPONDENT unreasonably refused to

deliver any wine to CLAIMANt in its 4 December 2014 letter, CLAIMANT had no choice but to

immediately take action to assure its own contractual obligations to its collector customers. [Cl. Ex 7]. CLAIMANT filed for injunctive relief in the High Court of Mediterraneo, permitted under

VIAC Art. 22(6), to prevent RESPONDENT from contracting with other parties and selling the

bottles to which CLAIMANT was entitled. Because CLAIMANT specialized in wine of diamond

quality and its customers had already requested this specific type of wine, the injunction was the best means to secure the 6,500 bottles for CLAIMANT’s preorders. [Proc. Ord. 2, ¶ 7].

Accordingly, any legal costs incurred in the pursuit of this vital injunctive order are a direct consequence of RESPONDENT’s breach of contract.

35. Furthermore, the Guarantee Clause adopted by the parties on 22 April 2009, demonstrates that RESPONDENT could have foreseen that CLAIMANT would protect its right to the 10,000 bottles of

wine it was entitled to under the Contract. [Cl. Ex. 1]. RESPONDENT’s recognition of its legal

obligation is further evidenced by CLAIMANT’sobligation, under the same clause, to purchase a

minimum of 7,500 bottles of wine per year. [Id.]. RESPONDENT’s CEO, Mr. Weinbauer,

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RESPONDENT to improve its cash flow and allocate bottles at short notice. [Res. Ex. 1]. The

parties recognized the implications of breach and the legal obligations based on the Guarantee Clause in the Contract.

36. Moreover, CLAIMANT’s use of a contingent fee agreement was reasonable because it was

necessary. Mediterranean law requires parties to be represented by local counsel. Because of CLAIMANT’s recent liquidity issues, CLAIMANT could not afford to pay the average $350 hourly

rate of a Mediterranean partner—a rate much higher than that in Equatoriana. Therefore, CLAIMANT had no choice but to utilize a contingent fee agreement to secure Mediterranean

council and ensure successful litigation. CLAIMANT did not request an arbitral tribunal to grant

interim relief because at the time no tribunal had been appointed. [Proc. Ord. 2, ¶ 46]. Thus, seeking interim relief in RESPONDENT’s state was a more effective and efficient means of

securing the necessary relief. [Proc. Ord. 2, ¶ 46].

37. Additionally, in Mediterraneo, contingent fee agreements are common and allowed by the courts. [Proc. Ord. 2, ¶ 40]. RESPONDENT used a contingent fee agreement in previous proceedings with

LiquorLoja, furthering the contention that such use is a reasonable and common business practice. [Proc. Ord. 2, ¶ 42]. CLAIMANT’s agreement with LawFix contains a provision stating,

“[t]he attorney agrees to perform [their legal services] faithfully and with due diligence,” indicating that LawFix would not incur more fees than were reasonably necessary. [Cl. Ex. 10]. 38. The amount of the fee is also reasonable because it is proportional to the damages CLAIMANT

would have incurred had the interim relief not been granted. Without seeking interim relief to prevent RESPONDENT from selling the 10,000 bottles, CLAIMANT would have been unable to sell

the diamond quality wine upon which it had built its entire business. CLAIMANT would likely

struggle to maintain relationships with customers that had taken years to build and consequently suffer a loss of profits far greater than the $30,000 it incurred in attorney’s fees. Furthermore, the contingency fee itself encouraged LawFix to avoid incurring more fees than were reasonably necessary to litigate the case. The invoice between CLAIMANT and LawFix—showing LawFix

was able to work diligently for seven and a half hours—indicates LawFix worked as efficiently as was necessary to ensure CLAIMANT’s request for interim relief would be granted. [Cl. Ex. 11].

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Memorandum for CLAIMANT,Kaihari Waina, Ltd. | 10

2. Recovery of attorney’s fees is warranted for Claimant’s successful defense of the Declaratory Judgment.

39. As with the attorney’s fees spent in the interim relief action, the attorney’s fees CLAIMANT

incurred in its successful defense against RESPONDENT’s declaratory relief action was not only a

reasonable and foreseeable consequence of RESPONDENT’s breach, but also necessary and

proportional when examined in the context of the underlying dispute.

40. RESPONDENT notified CLAIMANT on 14 January 2015, of its intent to seek declaration of

non-liability. [Res. Ex. 2]. This letter sought to clarify the existence of the Arbitration Clause. [Id.] RESPONDENT agreed to acknowledge the Arbitration Clause only if CLAIMANT agreed to exclude

document disclosure. [Id.]. CLAIMANT was unwilling to waive its valuable right to document

production (as discussed below in Part III). Given the circumstances, CLAIMANT found it most

practical to defend itself against RESPONDENT’s Motion for the Declaration of Non-liability in

the High Court of Mediterraneo. [Proc. Ord. 2, ¶ 57]. The Court rejected RESPONDENT’s motion

on the basis of the Arbitration Agreement, ultimately deciding in favor of CLAIMANT. [Cl. Ex. 9].

41. RESPONDENT’s declaration requested that the Court find that RESPONDENT, “by itself, agents, or

representatives is not liable for the breach of the contract... namely the non-delivery of 10,000 bottles of the diamond Mata Weltin 2014, due to an Act of God and a rightful termination of the underlying contract.” [Id.]. By referring to its breach of contract, RESPONDENT itself

acknowledged the objective connection between the declaratory relief it sought and its breach of contract.

42. Had the Court found in favor of RESPONDENT, CLAIMANT would have faced a significant

obstacle in recovering damages for RESPONDENT’s breach from the arbitral proceedings;

however, RESPONDENT’s declaration was meritless. [Id.]. Although RESPONDENT’s wine

production was greatly impeded by the weather, the Contract did not provide for avoidance of liability in the event of force majeure; nor is weather alone sufficient to allow for avoidance of contract. [Cl Ex. 1; Chengwei 2005, ¶ 4.4] Expectedly, the Tribunal indicated it also believed that RESPONDENT’s motion was meritless. [St. of Claim, ¶ 12].

43. On 22 April 2009, the parties signed the Contract, including the Arbitration Clause that stated, “If no agreement can be reached the dispute shall be decided by arbitration in Vindobona by the International Arbitration Tribunal (VIAC) under its International Arbitration Rules in accordance

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with international practice.” [Cl. Ex. 1]. Both parties acknowledge that the ambiguous language used in Arbitration Clause was in reference to VIAC. [Cl. Ex. 9; Proc. Ord. 2, ¶ 65]. Despite such language, the Mediterranean High Court and the Tribunal agree on the validity of the Arbitration Clause. [Id.]. The Arbitration Clause makes it foreseeable at the time of contract, that if either party breached this clause, it would likely be responsible for the damages incurred by the non-breaching party, including the cost of securing legal representation.

44. CLAIMANT’s use of a contingency fee agreement in order to properly defend itself against

RESPONDENT’s declaratory judgment was reasonable because it was necessary to avoid an unjust

loss of rights. Because Mediterranean law requires a local attorney, CLAIMANT had to choose

from a limited selection of law firms. [Proc. Ord. 2, ¶ 39]. CLAIMANT sought legal

representation from two other Mediterranean firms, but LawFix was the only firm willing to work under a contingent fee. [Id.]. Due tofinancial constraints, the contingency fee agreement was CLAIMANT’s best recourse to secure competent counsel. [St. of Claim, ¶ 13]. Under the

contingency fee agreement, LawFix was willing to provide its services at a rate of $150 per hour, an amount significantly less than the average rate of $350 per hour for partners at other Mediterranean firms. [Proc. Ord. 2, ¶ 39]. In exchange for this agreement, CLAIMANT agreed to

incur an additional fee of $15,000 during the court proceedings if LawFix had a procedural win and a fee of $30,000 for any win on a merits issue. [Cl. Ex. 10].

45. This amount reflects the significance of the contractual rights CLAIMANT tried to protect by

defending itself against RESPONDENT’s motion for declaratory judgment. The meeting between

CLAIMANT and its attorney regarding declaratory relief, its attorney’s research, and the drafting

and filing of a response serve as evidence of these costs. [Cl. Ex. 11]. LawFix was the only firm able to provide legal representation on a contingency fee basis; thus, it was reasonable and necessary for CLAIMANT to use the contingent fee agreement to secure representation for its

defense against RESPONDENT’s declaratory relief.

46. The $15,000 contingency fee incurred by CLAIMANT is also reasonably proportional to the

amount of harm CLAIMANT would have suffered if it did not defend itself against RESPONDENT’s

declaratory relief. As with the interim relief, CLAIMANT’s defense against the declaratory relief

was imperative for CLAIMANT to continue its business. Thus, $15,000 is an even more

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spent preparing its defense demonstrates just how efficiently and diligently it worked to protect CLAIMANT’s business interests. [Cl. Ex. 11].

47. Thus, CLAIMANT is entitled to the fees it incurred in the interim relief action and its successful

defense of RESPONDENT’s motion for declaratory judgment because both proceedings were a

foreseeable direct consequence of RESPONDENT’s breach, and CLAIMANT reasonably utilized a

contingency fee agreement.

B. CLAIMANT MITIGATED ITS LOSS PURSUANT TO ART. 77 CISG BY HIRING ADEQUATE COUNSEL AND SECURING COVER TO PREVENT GREATER DAMAGES. 48. A party seeking damages has a duty to mitigate its loss. [CISG Art. 77]. If a party fails to

mitigate its loss, the breaching party will not be required to pay the excessive damages. [Id.]. A party will often incur significant additional financial costs while trying to mitigate its damages. [Knapp, p. 506]. A party’s ability to avoid incurring additional damages will be “construed in the light of the circumstances in question.” [Chengwei 2003, ¶¶ 90-91]. Parties are not required to make “exceptional efforts” to mitigate damages after a breach of contract. [Id.]. Instead, a tribunal will analyze “the buyer’s ingenuity, experience, and financial resources (ability to obtain credit quickly, etc.).” [Lookofsky, p. 157].

49. CLAIMANT sought a court injunction on 8 December 2014, to prevent RESPONDENT from selling

the 10,000 bottles of wine guaranteed to it under the Contract; in turn, preventing further damages by assuring that RESPONDENT would comply with an award in CLAIMANT’s favor. At

the time of CLAIMANT’s injunction, it already had 6,500 preorders. [Proc. Ord. 2, ¶ 7].

50. In addition to the preliminary injunction, CLAIMANT contacted top vineyards to secure 5,500

substitute bottles of wine in the event that RESPONDENT ignored the court’s injunction. [St. of

Claim, ¶11]. CLAIMANT did not notify the Court of this substitute arrangement to ensure that

RESPONDENT would provide the bottles in the event that the Court found in CLAIMANT’s favor.

The preliminary injunction and cover purchase prove CLAIMANT’s efforts to reasonably mitigate

damages as required by the Art. 77 CISG. As stated earlier, the contingent fee agreement was reasonable and necessary in light of CLAIMANT’s limited financial resources.

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C. CLAIMANT IS ENTITLED TO DAMAGES FOR THE DECLARATORY RELIEF BECAUSE DANUBIA ALLOWS FOR CONTINGENCY FEE AGREEMENTS AND REQUIRES THAT LOSER PAYS FEES.

51. The parties agreed that Danubian law governed outside of the arbitration and that the CISG governed the Arbitration Clause. [Cl. Ex. 1]. Thus, even if the CISG was not applicable to RESPONDENT’s request for declaratory relief, the Tribunal would determine the law governing

the breach of the Arbitration Clause. The Tribunal may use the national law chosen by the parties if the CISG is silent. [See Sizing Machine Case (Switzerland CC) 2002 (where the tribunal applied the CISG in conjunction with the law chosen by the parties because the CISG was silent whereas the law chosen was not)]. Danubia has adopted the Model Law, which may alternatively be appropriate to award CLAIMANT’s damages, specifically attorney’s fees. [Proc.

Ord. 1, ¶ 5; see also Model Law Art. 1 (stating that the Model Law applies when “the place of arbitration... contract performance, or... subject matter of the dispute is situated outside the state [of either party’s place of business] or where parties expressly agree”)]. The parties agreed that Vindobona, governed by the law of Danubia, would be the place of arbitration.

52. The parties agreed that Danubian law would govern the arbitration, but the law is silent regarding attorney’s fees as an appropriate remedy. [Id.]. However, Danubia allows contingent fee agreements, which reasonably raises the presumption that such agreements are considered an ordinary cost incurred during a judicial proceeding. [Proc. Ord. 2, ¶ 40].

53. There is no Danubian case law pertaining to the recovery of attorney’s fees for breach of an arbitration clause—and nothing in the Contract prohibiting such recovery—thereby providing the Tribunal with broad discretion in determining whether to allow an award of attorney’s fees. [Proc. Ord. 2, ¶ 56]. The Tribunal should exercise its discretion in favor of CLAIMANT to ensure

it is put in the position it would have been in had the contract been fulfilled, thereby achieving the most fair and equitable result. [See Chengwei 2003, p. 10; see also Fletcher, p. 125]. 54. Furthermore, the Model Law may be used to supplement the CISG. In Foamed Board

Machinery, the Helsinki Court of Appeal was tasked with applying a combination of Finnish procedural law and the CISG. The Court determined that while Art. 74 CISG was the best mechanism for determining liability, the Finnish Law of Civil Procedure was better suited to calculate the precise amount of damages awarded. [Id.]. The resulting judgment was a fusion of

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both bodies of law, which ultimately conceived a more equitable result than would have been available through the independent application of either authority. [Id.]. The Court reasoned that the contract between the parties is of utmost importance in deciding the applicable law. [Id.]. 55. In the present case, the Tribunal may apply both the CISG and Danubian law, as the CISG is

appropriate to determine liability while procedural law may be used to calculate damages. The Tribunal may apply the CISG to determine the parties’ liability, as it governs the Contract between CLAIMANT and RESPONDENT. Because the Contract is silent regarding attorney’s fees,

the Tribunal may apply Danubian law to calculate the damages awarded for RESPONDENT’s

breach of the Arbitration Clause. [See Gotanda, ¶ 69]. Since CLAIMANT utilized a contingent

fee agreement, and such fees are common in Danubia, it logically follows that CLAIMANT’s

attorney’s fees as damages are permitted. Danubia also provides that “costs follow the event”, or that the prevailing party is entitled to the litigation costs incurred. [Proc. Ord. 2, ¶ 43; see also Gotanda, ¶ 20; Miller, p. 329 (the losing party commonly pays attorney fees in most jurisdictions)]. Although Danubia lacks cases awarding damages for the breach of an Arbitration Clause, such action is commonplace in international arbitration. [Proc. Ord. 2, ¶ 56].

56. Thus, even if the Tribunal applied Danubian Law, it should still award CLAIMANT attorney’s fees

for its successful defense against declaratory relief because Danubia generally allows for contingency agreements and provides that “costs follow the event.”

D. THE DOCTRINE OF RES JUDICATA DOES NOT PRECLUDE CLAIMANT FROM SEEKING ATTORNEY’S FEES BECAUSE THERE HAS NOT BEEN A FINAL JUDGMENT ON THE MERITS.

57. If there was never a judgment on the merits, then res judicata does not bar a tribunal from awarding attorney’s fees. [Walters, p. 652]. Res judicata refers to the concept that an “earlier and final adjudication... is conclusive in subsequent proceedings.” [ICAC, p. 2 (emphasis added)]. Res judicata prohibits a tribunal from revisiting an issue when there has been a decision “based on the merits.” [Walters, p. 676 (emphasis added)].

58. In the present case, as evidenced by this arbitral proceeding, there has not been a final adjudication regarding the damages owed by RESPONDENT. CLAIMANT’s request for interim

relief was necessary to ensure that RESPONDENT would provide CLAIMANT relief following the

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