TWENTY-NINTH ANNUAL

WILLEM C. VIS INTERNATIONAL COMMERCIAL ARBITRATION MOOT

VIENNA, AUSTRIA — 9 APRIL TO 14 APRIL 2022

MEMORANDUM FOR RESPONDENT

UNIVERSITY OF INNSBRUCK

Ref.: AIAC / INT / ADM-123-2021

ON BEHALF OF: AGAINST:

JAJA Biofuel Ltd ElGuP plc

9601 Rudolf Diesel Street 156 Dendé Avenue
Oceanside Capital City
Equitoriana Mediterraneo

RESPONDENT CLAIMANT

FABIAN ABFALTER - KATHARINA GÄCHTER - LUKAS JÄGER - MATTHIAS L. KRIVDIĆ

ALEKSANDRA MARKOVIĆ - KATHARINA STÖBICH




 UNIVERSITY OF INNSBRUCK MEMORANDUM FOR RESPONDENT

Table of Contents

Index of Abbreviations v

Index of Authorities vii

Index of Court Decisions xi

Index of Arbitral Awards xii

STATEMENT OF FACTS 1

SUMMARY OF ARGUMENT 3

ISSUE I: This tribunal does not have jurisdiction over the present dispute
because the arbitration agreement has not been validly concluded 4
A. The Arbitration Agreement has not been successfully incorporated into the contract
under the law of Mediterraneo 4

1. Mediterranean contract law governs the Arbitration agreement 4

1.1. The Parties did not expressly choose a law to govern their arbitration agreement
4
1.2. The Parties implicitly chose Mediterranean law to govern the arbitration
agreement 5
1.3. Absent a choice-of-law agreement, Mediterranean law should apply as it has the
closest connection to the arbitration agreement 7
1.4. The validation principle should not be applied because this rule can apply only
once it has been ascertained that the Parties actually agreed on arbitration 8
2. The CISG is applicable to the arbitration agreement 8
2.1. The CISG applies to the arbitration agreement despite not expressly including it in
its scope of application 9
2.2. The legislative history of the CISG does not sufficiently demonstrate that
arbitration agreements are not subject to the CISG 10
2.3. Art 19 (3) and Art 81 (1) clearly point towards the CISG’s applicability to
arbitration agreements 10
2.4. The application of the CISG is further supported by the fact that the CISG has the
closest connection to the contract 11
3. Under Mediterranean law including the CISG, the arbitration agreement was not validly
incorporated into the alleged contract 11

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4. Even if the CISG was not applicable, the Parties would not have concluded an arbitration
agreement 12
4.1. The arbitration agreement would not have been validly incorporated into the
contract 13
4.2. The Parties did not conclude an arbitration agreement in their correspondence 14
4.3. Even if the Parties had agreed to arbitrate, they did not do so in a formally valid
way 14
B. Even if Danubian law governs the arbitration agreement (quod non), it was not
incorporated into the contract 15

1. The Parties did not agree to arbitrate 15

2. Even if the Parties had consented to arbitration, they did not do so in a formally valid way
16

ISSUE II: The Parties have not concluded a contract of sale of goods, but
were still at the stage of negotiation 17
A. Whether a contract was concluded (quod non) is determined by the law of
Mediterraneo including the CISG 17

B. RESPONDENT’s offer in its email on 1 April was not accepted by CLAIMANT 19

1. RESPONDENT’s email on 1 April os no contract-concluding notice to CLAIMANT’s

oral offer from 28 March at the palm oil summit, but constitutes a counter offer instead 19
2. CLAIMANT did not accept RESPONDENT’s counter-offer from 1 April in its reply on 9
April because of material alterations in it 20
2.1. Omitting the Transparency Rules constitutes a material change 21
2.2. The agreement to arbitrate constitutes a material change 21
C. RESPONDENT did not accept CLAIMANT’s counter-offer 22

1. RESPONDENT did not accept CLAIMANT’s counter-offer by conduct 22

2. RESPONDENT could not accept CLAIMANT’s counter-offer for lack of established
business practice 24
2.1. Even if a business practice was established between CLAIMANT and Southern
Commodities, it does not translate to the present case 26
2.2. Even if a business practice was established, it would not be applicable in the
present case as the Parties have introduced numerous materially altering changes
27

ISSUE III: The General Conditions of Sale were not agreed on by the
Parties 27

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A. Since the Parties did not conclude a contract, they did not agree on the General
Conditions of Sale as part of the alleged contract 27

B. Had a contract been concluded, quod non, the General Conditions of Sale would not
have been incorporated 31

1. CLAIMANT’s reference to its General Conditions of Sale was not sufficient for their
incorporation 32
2. CLAIMANT did not satisfy the requirements of the “make available test” 33
2.1. RESPONDENT never received CLAIMANT’s General Conditions of Sale 33
2.2. CLAIMANT’s General Conditions of Sale are not easily accessible on its Website
34

CONCLUSION AND REQUESTS 35

CERTIFICATE 36

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Index of Abbreviations

AIAC Asian International Arbitration Centre

Art / Arts Article / Articles
CEO Chief Executive Officer
CISG United Nations Convention on Contracts for the International Sale of Goods,
1980
COO Chef Operating Officer
DAL Danubian Arbitration Law
DRM Dispute Resolution Mechanism
e.g. exempli gratia (for example)
ed. / eds. edition / Editor / Editors
et al. et alii (and others)
Exh C CLAIMANT’s Exh
Exh R RESPONDENT’s Exh
GC General Conditions of Sale
ICC International Chamber of Commerce
ICJ International Court of Justice
icw in connection with
i.e. id est (that is to say)
Inc. Incorporated
Ltd Limited Company
MAL Mediterranean Arbitration Law
MfC Memorandum for CLAIMANT
MfR Memorandum for RESPONDENT
Mr Mister
Ms Miss
No. / N° Number
NoA Notice of Arbitration
NYC United Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards 1958 (“New York Convention”)

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 UNIVERSITY OF INNSBRUCK MEMORANDUM FOR RESPONDENT

para / paras paragraph / paragraphs

para / paras paragraph in Memorandum
PICC UNIDROIT Principles for International Commercial Contracts, 2016
plc public limited company
p. / pp. Page(s)
PO 1 Procedural Order No. 1
PO 2 Procedural Order No. 2
RNoA Response to Notice of Arbitration
SoF Statement of Facts
tribunal The Tribunal of the Arbitration case Ref. AIAC / INT / ADM-123-2021;
respectively Prof. Nikolaus von Jacquin as Presiding Arbitrator, Ms Tenera
Nigrescens as First Arbitrator and Mr Georges Chavanne as Second Arbitrator
U.S. United States of America
UK United Kingdom of Great Britain and Ireland
UN United Nations
UNCITRAL United Nations Commission on International Trade Law
UNCITRAL ML UNCITRAL ML on International Commercial Arbitration 2006
UNIDROIT International Institute for the Unification of Private Law
v. versus

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Index of Authorities

Cited as Reference in para

Ashford, 2019 Ashford, P. (2019) 'The Proper Law of the Arbitration Agreement', 28
Arbitration: The International Journal of Arbitration, Mediation
and Dispute Management, 85(3), pp. 276 – 299.
A/CONF.97/ Official Records of the United Nations Conference on Contracts 49
L.19 for the International Sale of Goods. Vienna, 19 March 1980
Binder, 2019 Binder P. (2019) ‘Article 7 (2006 Version): Definition and Form of 68
the Arbitration Agreement’, in Binder P. (ed) International
Commercial Arbitration and Mediation in UNCITRAL Model Law
Jurisdictions. 4th eds. pp. 129-145. AAlphen aan den Rijn: Kluwer
Law International
Born, 2014 Born, G. (2014) ‘The Law Governing International Arbitration 43
Agreements: An International Perspective’, Singapore Academy of
Law Journal (Special Issue), 2014(26), pp. 814 – 848.
Born, 2021 Born, G. (2021) International Commercial Arbitration. 3rd ed. 25, 29,
Aalphen aan den Rijn: Kluwer Law International 79
Brunner, 2019 Brunner, C. et al. (2019) Commentary on the UN Sales Law 84-85,
(CISG). Alphen an den Rijn: Wolters Kluwer Law & Business 103-104,
109
CISG-AC Op. CISG-AC Opinion No° 13 Inclusion of Standard Terms under 57, 130,
N°13 the CISG, Rapporteur: Professor Sieg Eiselen, College of Law, 132,
University of South Africa, Pretoria, South Africa. Available at: 140-142,
h t t p s : / / w w w. c i s g a c . c o m / f i l e / r e p o s i t o r y / 148-150
CISG_Advisory_Council_Opinion_No_13.pdf (Accessed 10
January 2022)
Commentary Commentary to Trans-Lex Principle, https://www.translex.org/ 40
to Trans-Lex 968902 (Accessed 20 January 2022)
Principle

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 UNIVERSITY OF INNSBRUCK MEMORANDUM FOR RESPONDENT

Dewan, 2021 Dewan N. (2021) ’Chapter 6: The Laws Applicable to an 38

Arbitration’, in Dushyant D., Hunter M., et al. (eds), Arbitration
India. Kluwer Law International, pp. 103 - 122
Dobrynski, Dobrynski, L. (2018) ‘The Incorporation of Standard Terms into 57
2018 International Sales Contracts under the CISG’, Quid? Fribourg
Law Review, 1/2018. Available at: https://student.unifr.ch/quid/fr/
assets/public/Dobrynski_Quid_1_2018.pdf (Accessed 10 January
2022)
Flecke- Flecke-Giammarco, G. and Grimm A. (2015) ‘CISG and 54
Giammarco Arbitration Agreements: A Janus-Faced Practice and How to Cope
and Grimm, with It’, Journal of Arbitration Studies, 25(3), pp. 33-58. DOI:
2015 10.16998/jas.2015.25.3.33
Honsell, 2009 Honsell, H. et al. (2009) Kommentar zun UN-Kaufrecht. 2nd 85, 87,
eds. Heidelberg: Springer 91
Hope and Hope J. and Johansson L. (2021) ‘Chapter 9: What is the 32, 35
Johansson, Governing Law of the Arbitration Agreement? A Comparison
2021 Between the English and Swedish Approaches’, in Calissendorff
A. and Schöldström P. (eds), Stockholm Arbitration Yearbook
Series. Volume 3. Kluwer Law International, pp. 139 - 166
Huber and Huber P. and Mullis A. (2007) The CISG: A New Textbook for 99
Mullis, 2007 Student’s and Practitioners. Munich: Sellier European Law
Publishers
Kröll, 2000 Kröll, S. (2000) ‘Selected Problems Concerning The CISG’s Scope 48
of Application. Available at: https://uncitral.un.org/sites/
uncitral.un.org/files/media-documents/uncitral/en/kroll.pdf
(Accessed 13 January 2022)

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Kruisinga, Kruisinga, S. (2013) ‘Incorporation of standard terms according to 58

2013 the CISG and the CESL: Will these competing Instruments
Enhance Legal certainty in Cross-Boarder Sales Transactions?’,
European Business Law Review, Vol 24(3), pp. 341-362. Available
at: https://kluwerlawonline.com/journalarticle/
European+Business+Law+Review/24.3/EULR2013018 (Accessed
29 December 2021)
Lakhina, 2020 Lakhina, B. (2020) ‘Applicability of The CISG To Arbitration 50
Clauses’, Law Et Justicia Law Review, 1(1). Available at: https://
lawetjusticia.com/wp-content/uploads/2021/02/7-edited.pdf
(Accessed 13 January 2021)
Saenger, 2021 Saenger, I. (2021) ‘CISG Art 4‘ in Hau W. and Poseck R. BeckOK 51
BGB. 58th ed. C.H.Beck
Schlechtriem Schlechtriem P. and Schwenzer I. (2016) Commentary on the UN 142
and Convention on the International Sale of Goods (CISG). 4th eds.
Schwenzer, Oxford: Oxford University Press
2016
Schramm, SCHRAMM D. et al. (2010) ‘Article II’, in: KRONKE H. et al. 70, 78
2010 (eds.) Recognition and Enforcement of Foreign Arbitration
Awards: A Global Commentary on the new York Convention.
Alphen aan den Rijn: Kluwer Law International, pp. 37-114
Schroeter, Schroeter (2019) ‘Vorbemerkungen zu Art. 14-24‘ in 51, 57
2019 SCHWENZER I. et al. (2019) Kommentar zum UN-Kaufrecht.
7th ed. Munich: C.H. Beck
Schwenzer and Schwenzer I. and Beimel I. (2020) ‘Das auf die 52
Beimel, 2021 Schiedsvereinbarung anwendbare Recht – Zugleich: Anmerkung
zu BGH, Urteil vom 26.11.2020 – I ZR 245/19‘, IWRZ 2021(51)
Available at: https://beck-online.beck.de/Dokument?
vpath=bibdata%2Fzeits%2Fiwrz%2F2021%2Fcont%2Fiwrz.2021
.51.1.htm&pos=10&hlwords=on (Accessed 13 January 2022)

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 UNIVERSITY OF INNSBRUCK MEMORANDUM FOR RESPONDENT

Schwenzer and Schwenzer, I. and Jaeger, F. (2016) ´Das CISG im 46-47,

Jaeger, 2016 Schiedsverfahren: Die Tücken des anwendbaren materiellen 53
Rechts im Schiedsverfahren´, IWRZ, 2016(99) Available at: https://
b e c k - o n l i n e . b e c k . d e / D o k u m e n t ?
vpath=bibdata%2Fzeits%2Fiwrz%2F2016%2Fcont%2Fiwrz.2016
.99.1.htm&pos=3&hlwords=on#FN77 (Accessed 13 January
2022)
Schwenzer, Schwenzer, I. et al. (2019) Kommentar zum UN-Kaufrecht. 7th 84-85,
2019 eds. Munich: C.H. Beck 91, 113,
117-118
Singh, Singh, K., Kartikey, M. and Foo, A. (2017) ‘Two Roads Diverged 36
Kartikey and in a Clause – the Law of a Free-Standing Arbitration Agreement
Foo, 2017 vs. The Law of an Arbitration Agreement That Sits Within a Main
Contract’, Kluwer Arbitration Blog, 4th January. Available at:
http://arbitrationblog.kluwerarbitration.com/2017/01/04/two-roads-
diverged-in-a-clause-the-law-of-a-free-standing-arbitration-
agreement-vs-the-law-of-an-arbitration-agreement-that-sits-within-
a-main-contract/ (Accessed: 13 January 2021)
Traitler and Traitler, H. and Dieffenbacher, A. (1985) ‘Palm oil and palm kernel 125
Dieffenbacher, oil in food products.’, Journal of the American Oil Chemist’s
1985 S o c i e t y , Vo l 6 2 ( 2 ) . A v a i l a b l e a t : h t t p s : / /
aocs.onlinelibrary.wiley.com/doi/abs/10.1007/BF02541414
(Accessed on 13 January 2022)
Weigand and Weigand F. and Baumann A. (2019) Practitioner’s Handbook on 27, 32,
Baumann, International Commercial Arbitration. 3rd eds. Oxford: Oxford 37
2019 University Press

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Index of Court Decisions

Cited as Reference in para

Austria
OGH 2 Ob 547/93 Anonymous, Austrian Supreme Court, OGH 2 Ob 547/93 85
OGH 8 Ob 104/16a Anonymous, Austrian Supreme Court, OGH 8 Ob 104/16a 94
Propane gas case Propane gas case CISG-online 224, Austrian Supreme Court, 113
6 February 1996, OGH 10 Ob 518/95
Tantalum powder case Tantalum powder case II CISG-online 1093, Austrian 109, 123
II Supreme Court, 31 August 2005, OGH 7 Ob 175/05v
Italy
Granitalia v Agenzia Corte de Cassazione (Granitalia v. Agenzia Marittima 70, 78
Marittima Sorrentini, Sorrentini, decision in 2000), YCA XXVII (2002), 506
2000
Takap B.V. v. Case 1189, Italy: Tribunale di Rovereto n. 914/2006 S.r.l., 21 129
EUROPLAY, 2007 November 2007
Germany
Dutch plants case I Dutch plants case I CISG-online 1447, District Court Coburg, 109
12 December 2006, 22 O 38/06
Machinery Case BGHZ vol. 149 113, 116 et seq. (Germany 31 October 2001) 58, 150
Supreme Court
Pizza boxes case Pizza boxes case CISG-online 659, Local Court Duisburg, 13 109
April 2000, 49 C 502/00
Vine wax case Vine wax case CISG-online 470, District Court Frankenthal, 113, 117
17 April 1997, 8 O 1995/95
Serbia
T-18/07 Anonymous, Serbian Chamber of Commerce, T-18/07 85
Singapore
BCY v BCZ Singapore High Court Decision [2016] SGHC 249 36

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Concordia Concordia Agritrading Pte Ltd v Cornelder Hoogewerff 79

Agritrading Pte Ltd v (Singapore) Pte Ltd [1999] SGHC 269
Cornelder
Hoogewerff, 1999
United Kingdom of Great Britain and Ireland
Sulamerica v Enesa, [2012] EWCA Civ. 638 28, 32,
2012 39
United States of America
Magellan case Magellan International Corporation v. Salzgitter Handel 100
GmbH, U.S. District Court of Illinois, 7 December 1999

Index of Arbitral Awards

Cited as Reference in para

ICC
Food products Food products case CISG-online 750, Paris (France), ICC 118
case International Court of Arbitration, Dec 1997

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STATEMENT OF FACTS

1 The Parties to this arbitration (“arbitration”) are ElGup plc (“CLAIMANT”), a company
engaged in the production and sale of RSPO-certified palm oil and palm kernel oil, registered in
Mediterraneo and JAJA Biofuel Ltd (“RESPONDENT”), a producer of biofuel registered in
Equatoriana. Since the acquisition in late 2018, RESPONDENT has been a 100% subsidiary of
Southern Commodities.
2 In October 2011, CLAIMANT submitted its General Conditions of Sale (“GC”) to Southern
Commodities, as applicable to their business transaction, containing an arbitration clause in Art 9
(“original clause”) according to the model of the FOSFA / PORAM Contract Form 81.
3 In 2014, Ms Bupati acting as purchase manager for palm kernel oil at Southern Commodities
examined CLAIMANT’s arbitration clause as applicable pre-2016 in due process of arbitration
proceedings initiated by CLAIMANT against Southern Commodities.
4 In 2016, Mr Chandra acting as COO for CLAIMANT informed Ms Bupati in a phone call that
CLAIMANT had changed the wording and content of Art 9 to the AIAC Model Clause and that
the arbitration agreement would be removed from the contract template but would still be
applicable to CLAIMANT’s transactional business activities via its GC.
5 In March 2019, Ms Bupati was appointed as RESPONDENT’s Head of Purchasing following
its acquisition as a 100% subsidiary by Southern Commodities in 2018.
6 In January 2020, CLAIMANT decided that the law applicable to its contracts to be the law of
Mediterraneo, a signatory state of the CISG, but was yet to amend its GC.
7 On 28 March 2020, on the occasion of a meeting at the Palm Oil Summit, Ms Bupati and Mr
Chandra deliberated and agreed on a sales contract for the period of 2021-2025 for RESPO-
certified palm oil at a price of 900 USD/t for the first and 5% inferior to the market price for the
subsequent years (“offer”), but for which Ms Bupati would seek RESPONDENT’s management
approval due to alleged controversies regarding CLAIMANT’s palm oil business within three
days. Mr Chandra mentioned that the contract was supposed to be governed by to the law of
Mediterraneo.
8 On 1 April 2020, Ms Bupati acting as representative of RESPONDENT, placed an order of
delivery of 20,000 t of RSPO-certified palm oil per annum starting in January 2021 (“order”)
via email, including the commercial terms as discussed at the Palm Oil Summit.

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9 On 9 April 2020, the unilaterally signed contract containing the details as previously agreed was
transmitted to RESPONDENT. The accompanying email highlighted the submission to the law
of Mediterraneo and the fact that the contract form used was a customised and shortened version
of the FOSFA / PORAM 81 form which also constituted the basis of the previous contracts
(more than 40) concluded by Mr Chandra and Ms Bupati. The extended applicability of
CLAIMANT’s GC to any issues not regulated in the contract was declared.
10 On 3 May 2020, Mr Rain acting for CLAIMANT as assistant to Mr Chandra, was contacted by
Ms Fauconnier acting for RESPONDENT as assistant to Ms Bupati, to discuss details pertaining
to the letter of credit as provided in the contract via phone call and promised to look into the fact
that the contract had not been signed yet.
11 On 29 October 2020, an article published by Commodities News annunciated that all
negotiations between RESPONDENT and CLAIMANT regarding the contract had been
discontinued.
12 On 30 October 2020, Ms Lever acting as CEO for RESPONDENT declared all negotiations
regarding the contract to be terminated and renounced all presupposed contractual relations.
13 In November 2020, after several rounds of negotiations and attempted mediation had proved
unfruitful, it became clear that an agreement between the Parties was impossible.
14 On 15 July 2021, CLAIMANT submitted its Commencement Request and Notice of Arbitration
(“NoA”) to the Asian International Arbitration Centre (“AIAC”) against RESPONDENT and
requested a declaration of RESPONDENT’s obligation for contractual performance.
15 On 14 August 2021, RESPONDENT submitted its Response to NoA (“RNoA”) to the AIAC
requesting the rejection of all claims and to order CLAIMANT to bear the costs of arbitration
and legal representation.
16 On 7 October 2021, the Parties consensually agreed in a telephone conference that the 2021
AIAC rules should be applicable to the proceedings.

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SUMMARY OF ARGUMENT

17 In respect of two persons’ contractual relationship a certain level of trust in and expectation of
repetitive behaviour is of course permissible, but in a commercial setting the circumstance of
either party — most prominently the party’s professional ties to a company — must always be
taken into account. It is not tolerable that CLAIMANT acted on its mere presumption of Ms
Bupati’s acceptance despite the fact that at the crucial time she was already representing a
different set of interests. CLAIMANT now tries to shift the drawback of its inactivity onto
RESPONDENT and reap the benefits as if a contract had been concluded.
18 CLAIMANT tries to construct the obligation on a multitude of levels: it alleges that a five-year
contractual agreement had been concluded and entangles RESPONDENT in legal proceedings.
RESPONDENT must now withstand the attempt fabricate an arbitration agreement and a
contractual obligation to performance. As both allegations lack the very basis of a contractual
relationship, namely consensus, both must fail.
19 ISSUE I: To evaluate its own jurisdiction, the tribunal should first determine that the CISG is
applicable to the potential arbitration agreement. However, any law which could reasonably be
considered to be applicable, would regard it impossible, that an arbitration agreement could have
been concluded in absence of the Parties’ consensus.
20 ISSUE II: As the Parties never mutually agreed to a set of terms but rather both introduced
materially altering changes in their alleged acceptance, no contract was concluded. This further
negates the possibility of an arbitration agreement having been introduced by virtue of the
contract and precludes any contractual obligation of RESPONDENT.
21 ISSUE III: Finally, even if the contract had been concluded, the Parties would not have not
validly included CLAIMANT’s GC nor agreed on those terms in a separate agreement,
preventing the inclusion of an arbitration agreement via inclusion in standard terms.

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ISSUE I: This tribunal does not have jurisdiction over the present dispute because the
arbitration agreement has not been validly concluded
A. The Arbitration Agreement has not been successfully incorporated into the contract
under the law of Mediterraneo
1. Mediterranean contract law governs the Arbitration agreement

22 Contrary to the arguments brought forth by CLAIMANT the law that governs the arbitration
agreement is the law of Mediterraneo as the law of the main contract and not the law of
Danubia. The fact that the Parties expressly chose Mediterranean law to govern the entire
contract shows that they also implicitly chose said law to govern the arbitration agreement.
Additionally, the law of the main contract also has the closest connection to the arbitration
agreement and should therefore be applied absent a choice of law agreement. Further, the
validation principle should not be applied.

1.1. The Parties did not expressly choose a law to govern their arbitration agreement

23 The reason for the discussion on the law applicable to the arbitration clause is that the agreement
lacks an express choice of law in this regards. Had there been an express choice, the law
applicable to the arbitration agreement would be clear.
24 Since the alleged choice of law clause is contained in the GC, the non-inclusion of the GC as
argued in paras 122-151 consequently renders any choice of law contained in the GC
inapplicable. Even if the GC were included in the contract (quod non), there would still not be
any express choice of the law of Danubia, but rather a general choice of Mediterranean law.
25 While it is possible for arbitration agreements to contain a choice of law clause specifically
aimed at the arbitration agreement and hereby expressly choosing the law applicable to said
arbitration agreement (Born, 2021, p. 525), Art 9 GC does not provide such express choice of
Danubian law. Contrary to CLAIMANT’s opinion the choice of law clause contained in Art 9

GC is not an express choice of law only for the arbitration agreement but rather a general choice
of law for the entire sales contract, including the arbitration clause.
26 First, the wording “this contract” in Art 9 GC clearly indicates that CLAIMANT intended the
entire contract to be governed by the substantive law of Danubia and not just the arbitration
agreement. Otherwise CLAIMANT would have worded it to specifically aim at the arbitration
agreement. Secondly, Mr Chandra explicitly asked Mr Rain to point out to Ms Bupati, that the

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sales contract should be governed by the law of Mediterraneo in deviation from the choice of
law clause contained in CLAIMANT’s sales conditions because the GC had not been revised
accordingly yet. (Exh C1, N° 13; Exh C5, N° 2) While this change might not have been made
yet at the time of negotiations between CLAIMANT and RESPONDENT, the clause in Art 9
GC was however amended accordingly by the Parties in their correspondence. Therefore Art 9
should be read as “this contract shall be governed by the substantive law of Mediterraneo”.
27 Also the fact that the 2021 AIAC rules now contain a choice of law clause specifically pointed at
the arbitration clause does not necessarily lead to a different interpretation of the choice of law
clause contained in the 2017 rules. The changes made in the 2021 model clause merely reflect
the now generally recognized view amongst arbitrators, tribunals and commentators that in order
to avoid any delays or costs, resulting out of the need to examine the law governing the
arbitration agreement, one should always specify the applicable law. (Weigand and Baumann,
2019, p. 10)
28 Further, CLAIMANT’s position that the doctrine of separability also allows the arbitration
agreement to be governed by a law other than the law of the main contract does not hold up, as
the doctrine of separability only applies in cases where the main contract is not valid, non-
existent or simply ineffective. Apart from these cases, the arbitration agreement is just a clause
of the main contract and should therefore not be treated as separate from the rest of the contract.
(Ashford, 2019, p. 290; Sulamerica v Enesa, 2012, para 26)
29 Second, even if the doctrine of separability was applicable to the determination of the applicable
law, this would not lead to the conclusion, that the law governing the arbitration agreement must
be different from the one governing the main contract. In fact, it is rather common that the
arbitration agreement as well as the underlying contract are governed by the same law. (Born,
2021, p. 511)
30 By changing the clause contained in Art 9 GC the parties chose the law of Mediterraneo to
govern the entire contract.

1.2. The Parties implicitly chose Mediterranean law to govern the arbitration agreement

31 RESPONDENT disputes CLAIMANT’s position that the choice of seat should also be an
implicit choice of law governing the arbitration agreement because (1) the Parties did not wish
to submit the contract to multiple different laws, (2) the previous contracts have no relevance

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when determining the applicable law in the present case, (3) commercial Parties can expect a
choice of law to extend to the entire contract and (4) the arbitration agreement does not become
a separate contract on its own, just because it is contained in a different document.
32 While CLAIMANT tries to make it seem as if the choice of the seat is generally regarded as an
implicit choice of law governing the arbitration agreement this approach is highly controversial,
in fact, there is a variety of different approaches to this issue. Among those, the most convincing
approach is that the law chosen to govern the main contract should also be the one governing the
arbitration agreement, because parties of a contract usually want the entire contract to be
submitted to the same law. (Sulamerica v Enesa, 2012, paras 11,15, 26) This assumption also
extends to the arbitration clause. (Hope and Johansson, 2021, p. 156) In the absence of any
factors suggesting otherwise, the Parties clearly intended to submit the arbitration clause to the
law of Mediterraneo. (Weigand and Baumann, 2019, p. 10) In contrast, the choice of the seat of
arbitration in Danubia is not by itself sufficient to reject the general inference, that the choice of
law for the main contract also applies to the arbitration agreement included in the main contract.
(Hope and Johansson, 2021, p. 152).
33 The argument made by CLAIMANT in para 34 of its Memorandum, that the previous sales
contracts between Mr Chandra and Ms Bupati have all been governed by Danubian law and that
the change of the substantive law was only made in order to secure a more favourable position
with regards to unjustified terminations of the contracts and that the change therefore had no
relation to the arbitration agreement, is not convincing. First, the previous contracts do not have
any relevance in determining the law that should be applicable to the arbitration agreement at
hand, because they contained a different arbitration and choice of law clause. Second, the
reasons for the change of the applicable law were not known to RESPONDENT.
RESPONDENT was merely informed of the change of the applicable law to the law of
Mediterraneo but was never informed about the reasons for this change. Therefore
RESPONDENT could only assume that this change was made in order to secure a more
favourable position with regard to all matters of the contract, including the arbitration agreement
RESPONDENT justifiably assumed that any arbitration should also be submitted to the law of
Mediterraneo.
34 While CLAIMANT alleges that the choice of law as well as the choice of seat in Art 9 GC
should be the only basis for determining the governing law of the arbitration agreement

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CLAIMANT fails to realise two important points: First, the GC have not even been validly
included into the contract as will be shown in paras 120-151. Secondly, the choice of law clause
in Art 9 GC has been amended as already argued in paras 25-26.
35 Also, the doctrine of separability does not apply to questions of the applicable law as argued in
paras 28-29. The fact that the doctrine of separability has no bearing in deciding the law
applicable to the arbitration agreement is further substantiated by the fact that this doctrine is
one, which is usually not very well known among commercial parties. Therefore, commercial
Parties can reasonably expect that a choice of law extends to the entire contract. (Hope and
Johansson, 2021, p. 156) Since the contract was not negotiated by lawyers, but instead Ms
Bupati and Mr Chandra, RESPONDENT could reasonably believe that the change of law to the
law of Mediterraneo also meant that the arbitration agreement will be governed by
Mediterranean law as well.
36 Also, the arbitration agreement in the present case does not form a free-standing document, but
instead is part of the main contract. Just because the arbitration agreement is contained in a
different document, does not make it a free-standing one. In fact, free-standing agreements are
very rare. In BCY v BCZ the Singapore High Court named two examples of free-standing
arbitration agreements: (1) when Parties conclude a single arbitration agreement to cover
disputes arising out of several contracts and (2) if the arbitration agreement is concluded after a
dispute has already arisen. (Singh, Kartikey and Foo, 2017) Therefore, an arbitration agreement
contained in a different document does not automatically make it freestanding. While the GC
may be applied to a multitude of cases the arbitration agreement between CLAIMANT and
RESPONDENT would have solely been concluded (quod non) for the contract at hand.
Consequently, any argument that the arbitration agreement should be governed by the law of the
seat because it does not form part of the main contract fails to convince.

1.3. Absent a choice-of-law agreement, Mediterranean law should apply as it has the closest
connection to the arbitration agreement

37 When applying the closest connection test in the case at hand, it results in the law of
Mediterraneo being the law with the closest connection to the arbitration agreement.Determining
the law with the closest connection, in absence of indications to the contrary, there is a
presumption that the law of the contract should also apply to the arbitration agreement. (Dewan,

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2021, p. 112, Weigand and Baumann, 2019, p. 10) The arguments brought forward by
CLAIMANT fails to portray any indication strong enough to rebut this presumption.
38 The choice of a seat alone is insufficient to disprove the presumption that the law of the main
contract has the closest connection to the arbitration agreement. Only in such cases, where there
is no express choice of substantive law the law of the seat would presumably have the closest
connection. (Dewan, 2021, p. 113)
39 Further, the law with the closest connection is the law of Mediterraneo because of the close
commercial connection between the contract and Mediterraneo (Sulamerica v Enesa, 2012)
Contract negotiations took place in Mediterraneo (NoA, N°4) and CLAIMANT’s place of
business is also located there. (NoA, N°1)

1.4. The validation principle should not be applied because this rule can apply only once it
has been ascertained that the Parties actually agreed on arbitration

40 While the validation principle tries to give recognition to the parties’ common intent to have
disputes decided by an arbitral tribunal, in the case at hand there was never any common intent
regarding arbitration. (Commentary to Trans-Lex Principle) The validation principle therefore
cannot be applied.
41 First of all, the Parties in the present dispute never even agreed to arbitrate. While it is true that
RESPONDENT suggested that if they were to agree to arbitration, they should “at least select a
non-industry related arbitration institution” (Exh C2), this is not enough to infer a common
intent of the Parties to agree to arbitration.
42 In fact, RESPONDENT clearly objected to arbitration in its email on 1 April 2020, stating that
“the submission of the sales contract to Mediterranean law, … is less a problem for us than the
submission to arbitration, in particular if we submit to an institution which exclusively deals
with palm oil”. (Exh C2) By stating this RESPONDENT clearly showed that it did not want to
agree to arbitration in general, irrespective of the institution.
43 Since the purpose of the validation principle is to uphold Parties’ commercial intentions (Born,
2014, p. 838) it cannot be applied in cases where one Party clearly has absolutely no intention to
agree to arbitration.

2. The CISG is applicable to the arbitration agreement

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44 Besides not being expressly submitted to its scope of application, the CISG should also apply to
arbitration agreements for multiple reasons as argued in paras 45-48. Further, the legislative
history does not exclude arbitration agreements from the applicability of the CISG as assumed
by CLAIMANT (MfC paras 56-58). Also Arts 19 (3) and 81 (1) CISG clearly point towards its
applicability. Last, the CISG has the closest connection of eligible laws to an international sales
contract.

2.1. The CISG applies to the arbitration agreement despite not expressly including it in its
scope of application

45 Contrary to CLAIMANT’s opinion that the CISG should not be applied as it only governs
“contracts for international sale of goods” and an arbitration being a “contract on procedure” the
scope of applicability of the CISG also extends to arbitration agreements.
46 First, one cannot just see the entire arbitration agreement as being procedural. Moreover, one has
to differ between a contractual and a procedural component of the arbitration agreement.
(Schwenzer and Jaeger, 2016, para 103). Therefore, only the procedural aspects, namely
questions of form, fall outside the scope of applicability of the CISG. Questions regarding the
contractual components (e.g. the valid conclusion) are, however, governed by the provisions of
the CISG. (Schwenzer and Jaeger, 2016, para 104)
47 Further, arbitral tribunals tend to apply the law with the closest connection to the arbitration
agreement, if there was no explicit or implicit choice by the Parties. The same rule should also
be applied, when the issue at hand is not which of the different national laws should be applied,
but whether one should apply the non-harmonized or the harmonized law within the same
national law. Absent a clear choice by the Parties as of whether or not the CISG should apply to
the arbitration agreement as well, the fact, that the contract at hand is an international sales
contract clearly shows, that the CISG, as the harmonized contractual law, has a closer
connection than the non-harmonized law. (Schwenzer and Jaeger, 2016, para 105).
48 Second, Art 4 CISG has been widely criticized in the past as it is too narrow and does not
mention matters which are clearly covered by the CISG, for example the interpretation of
statements (Art 8 CISG) and contract modifications. (Art 29 CISG; Kröll, 2000, p. 41)
Therefore, CLAIMANT cannot just rely on the wording of Art 4 CISG to argue that matters of
arbitration are excluded from the scope of application. While it is widely recognised that

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questions of jurisdiction of courts are not governed by the CISG, the arbitration agreement in the
case at hand forms a part of the general contract between CLAIMANT and RESPONDENT.
(Kröll, 2000, p. 43). As a consequence, the issue of consent in regard to the procedural clause is
closely connected to the contract conclusion. Consequently, since the contract is governed by the
CISG, the same should apply to questions of validity of the arbitration clause. (Kröll, 2000, p.
43)

2.2. The legislative history of the CISG does not sufficiently demonstrate that arbitration
agreements are not subject to the CISG

49 In its argument (MfC para 58) CLAIMANT neglects that the article that was proposed by
Mexico, Panama and Peru in the process of drafting the CISG did not concern the applicability
of the CISG to arbitration agreements. Instead it was supposed to acknowledge the ways of
dispute settlement available to parties of international commercial contracts. This was also
explicitly stressed out by the proposing sponsors of the article. Since the proposal suggested that
disputes should be settled solely by either “the ordinary judicial channels or by arbitration”. (A/
CONF.97/L.19, paras 54, 55) By providing parties with only these two choices the suggestion
left out other recognised methods of dispute resolution such as mediation. Therefor it seems
reasonable that the drafters of the convention felt like limiting dispute resolution to only these
two options was outside of their competence.

2.3. Art 19 (3) and Art 81 (1) clearly point towards the CISG’s applicability to arbitration
agreements

50 In Art 19 (3) CISG dispute settlement procedure is regarded as a materially altering term of the
contract. Additionally, Art 81 (1) CISG states that the avoidance of a contract does not have any
effect on the means of dispute settlement. Therefore, the CISG clearly recognizes arbitration
clauses in contracts and should also apply to them. (Lakhina, 2020, p. 11)
51 The fact that Art 19 (1) CISG states that any deviation in the acceptance of the contract
regarding dispute settlement clauses counts as materially altering and causes the non-conclusion
of the contract at the same time means, that in the case of concurring statements by the Parties
automatically make them part of the contract. (Schroeter, 2019, para 50; Saenger, 2021, para 19)
Therefore, the conclusion of settlement agreements is regulated by the CISG and shows that the
CISG should also be applied to the formation of arbitration clauses.

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52 Also, Art 81 (1) CISG only states that arbitration agreements are separable from the remainder
of the contract for purposes of affirming their validity in case a contract is declared invalid. It
does however not state in any shape or form, that arbitration agreements are in fact separate in
every manner from the contract. (Schwenzer and Beimel, 2021, p. 56)
53 From the wording of both, Art 19 (3) as well as Art 81 (1) CISG it is obvious that the CISG
treats arbitration agreements equal to other contractual provisions. (Schwenzer and Jaeger,
2016, p. 103)

2.4. The application of the CISG is further supported by the fact that the CISG has the
closest connection to the contract

54 If one rejected any choice of law approach, as regularly done in France, one would apply
international substantive law rules to the arbitration agreement. (Flecke-Gimmarco and Grimm,
2015, p. 45) Since the contract at hand is an international sales contract, the only set of specific
international rules that would make sense to be applied, would be the CISG, as it is the law,
which has the closest connection to an international sales contract. This further substantiates
RESPONDENT’s position that the CISG should be applicable to the arbitration agreement.

3. Under Mediterranean law including the CISG, the arbitration agreement was not validly
incorporated into the alleged contract

55 If the Parties had concluded a contract (quod non) as they could not have validly incorporated an
arbitration agreement into the contract due to a lack of incorporation of CLAIMANT’s GC as
elaborated by RESPONDENT in paras 120-151.
56 As CLAIMANT rightfully acknowledges in para 68 “the arbitration agreement forms an integral
part of the GCS” and its incorporation is therefore “inseparably intertwined” with the valid
incorporation of the GC. It must therefore not be subjected to a different legal standard of
incorporation but must satisfy the requirements of the CISG. (see MfR paras 44-54) The issue
at hand is a question of contract formation and should be evaluated under the same standard
(MfC paras 118-119) due to its close affiliation via its embeddedness in CLAIMANT’s GC
which could be part of the contract (quod non) allegedly concluded by the Parties.
57 A person thus seeking to incorporate an arbitration agreement via inclusion in its standard terms
must first show her intent to incorporate said terms and second, make them available to the other
person in a reasonable manner. (Dobrynski, 2018 p. 6) The intention to incorporate

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CLAIMANT’s standard terms and the therein embedded arbitration agreement must be clear to a
reasonable person’s understanding as set out in Art 8 (2) CISG, (CISG-AC Op. 13, N°5.1;
Schroeter, 2019, Art 14 para 44) which will be discussed in paras 102.
58 However, RESPONDENT disputes CLAIMANT’s assumption that the “make available test” is
optional and satisfied in the case at hand (MfC paras 122, 130-132). This test mandates, that GC
be transmitted in text or made available in another term by the Party using them (Machinery
Case), establishing the offeror’s duty. CLAIMANT’s position that upon satisfaction of the first
requirement there shall be a shift of this burden (MfC para 122) as to require RESPONDENT to
investigate would not only be irrational but render the second condition, which must be
cumulatively satisfied, obsolete, allowing for the incorporation of terms whose content one Party
of a bilateral accord might not have been privy to. Due to the extensive implications which any
manner of dispute resolution exerts on a contractual relationship, mutual knowledge of the
clause’s actual content is necessary. Even more so, as provisions within standard terms typically
serve the interests of the Party introducing them. (Kruisinga, 2013, p. 352) As RESPONDENT
was not aware of the GC’s content as further argued in paras 146-151 it also could not have been
aware of the arbitration agreement. If CLAIMANT argues that RESPONDENT must have been
aware of the arbitration agreement included in it GC (MfC para 66) it does not act in good faith,
as Ms Bupati’s email on 1 April, objecting to the submission to arbitration and in particular any
“institution which exclusively deals with palm oil” (Exh C2) does not find a proxy in
CLAIMANT’s GC at the time of the contract, which already provides for the neutral AIAC.
59 Even if the tribunal were to find, that CLAIMANT’s GC were validly incorporated into the
contract, Parties would not have agreed on the submission to arbitration as provided in Art 9 of
CLAIMANT’s GC as RESPONDENT, for lack of awareness, could not have consented.

4. Even if the CISG was not applicable, the Parties would not have concluded an arbitration
agreement

60 As discussed above, the Parties’ arbitration agreement does not satisfy the conditions to be
validly incorporated into the contract. (paras 55-59) This is a logical consequence of the fact
that one Party could not have been aware of the arbitration terms the other attempted to impose
upon their relationship. The legal system chosen by the Parties (paras 31-36) simply adheres to
the standards developed in international business transactions and any developed legal system

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RESPONDENT will demonstrate the fact by considering the only other legal order to be
reasonably considered to be applicable to the Parties’ arbitration agreement (though it is not)
taking into consideration the Parties’ justified expectation at the time of contract formation: the
national arbitration law and general non-harmonised contract law of Mediterraneo excluding the
CISG which are verbatim adoptions of the UNCITRAL ML and UNIDROIT Principles
respectively.

4.1. The arbitration agreement would not have been validly incorporated into the contract

61 The Parties could only have concluded an arbitration agreement if they had established
consensus regarding arbitration as their method of dispute settlement, which they did not.
62 Even if one were to find, that the mere reference to CLAIMANT’s GC in the contract template
(Exh C3) and statement in the Email on 9 April that the GC were to apply to “issues not
regulated in the attached [contractual] document” (Exh C4) was sufficient to incorporate the Art
9 arbitration agreement into its offer (quod non, see paras 141-144), RESPONDENT could not
have been aware of the actual terms proposed the text was never transmitted nor otherwise
accessible in a reasonable manner. (see paras 145-151) A shift of burden as to force
RESPONDENT to inquire about the terms provided in the supposed arbitration agreement, as
assumed by CLAIMANT (MfC para 122) further is preposterous as standard terms typically
serve the party using them and CLAIMANT chose to again amend them to enhance its position
should a dispute arise.
63 Further, if CLAIMANT construes RESPONDENT’s assent to the arbitration agreement as
incorporated in its GC, it omits Ms Bupati’s objections to arbitrate in general and especially any
“institution which exclusively deals with palm oil.” (Exh C2) As the AIAC is a non-specialised
arbitration centre, RESPONDENT apparently did not have access to the GC as CLAIMANT
looked to incorporate them into the contract. Since then, RESPONDENT never indicated any
change in its displeasure with the proposed DRM. RESPONDENT never affirmed
CLAIMANT's offer as required by Art 2.1.1 UNIDROIT Principles in neither acceptance nor
conduct which could have expressed its agreement.
64 If one were to ignore the absence of consent, the substantive criterion for contract formation, as
CLAIMANT appears to do by restricting its evaluation to the formal prerequisite, the most basic
principle of contract law - consent - would be neglected.

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4.2. The Parties did not conclude an arbitration agreement in their correspondence

65 As an arbitration agreement may be either incorporated by reference in Parties’ preceding

negotiations, which it did not, or have been concluded as an autonomous agreement,
RESPONDENT will briefly address the issue though no such claim can be reliably derived from
Parties’ statements (Exh C1, R3) nor their common communication via electronic media.
66 Ms Bupati’s Email in 1 April clearly expressed her discontent with CLAIMANT’s choice of
DRM and even more so, with any arbitral institution specialising on the palm oil trade (Exh C2).
Acting for RESPONDENT, she identifies it as a “problem”, implicating a substantial
impediment to the contract’s conclusion and nowise abandons this position in the later stages of
negotiations.

4.3. Even if the Parties had agreed to arbitrate, they did not do so in a formally valid way

67 Even if the Parties had consented to arbitration, which they did not, they would have needed to
do so in accordance with both, Art 7 MAL and Art II NYC for the clause to be formally valid and
enforceable as sought by CLAIMANT.
68 First, Art 7 MAL does not impose any formal requirements on the Parties’ arbitration agreement,
but was based on the intent, that if the Parties’ had overtly agreed to submit their dispute to
arbitration and given the widespread acceptance of arbitration in commercial transactions, they
should not have to expend much energy to and should not be hindered by what had come to be
considered a formality. (Binder, 2019, p. 9; UNCITRAL secretariat, 2008, p. 28) At the time of
active negotiation on the non-concluded contract, the general appreciation for the benefits of
arbitration had not ceased, but RESPONDENT disfavoured this method of dispute resolution for
the potential contractual relationship with CLAIMANT, which it clearly expressed in its
correspondence. (Exh C2)
69 Second, Art II NYC demands the arbitration agreement to either be in writing or adhere to the
more lax standards of national law. The writing, here, is neither satisfied by the Parties
correspondence nor by CLAIMANT’s reference in the contract template. Parties never declared
an analogous intent to arbitrate any disputes arising from the legal relationship (paras 65-66, Exh
C2, R3)
70 Should an arbitration agreement be concluded via reference, as CLAIMANT attempts to do, it
must be specific and ensure that the parties are aware of their agreeing to a condition of such

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potent consequence. (Granitalia v. Agenzia Maritime Sorrentini, 2000) A reference as general as

in the case at issue would simply not suffice. (Schramm, 2010, p. 91) One may only figure an
arbitration agreement arising out of CLAIMANT’s contract template, had it been accepted by
RESPONDENT, pertaining to monetary grievance arising of poor or absent contractual
performance (Art 7, Exh C3). This particular provision would further discourage any devoir of
RESPONDENT to expect a clause regarding the Parties DRM in CLAIMANt’s GC.
71 If CLAIMANT were to rely on the “more favourable law provision” of the NYC, thus seeking to
submit the arbitration agreement to the formal requirements of Equatoriana, the seat of
RESPONDENT’s headquarters, it would have to comply with the more strict requirements of Art
7 Option II UNCITRAL ML which equals the prevalent provision of DAL. (see paras 77-80)
72 Hence, had the Parties concluded an arbitration agreement, quod non, it would not satisfy the
formal standards exacted by Art 7 MAL, Art II NYC and Art VII NYC ice Art 7 Option II
UNCITRAL ML.

B. Even if Danubian law governs the arbitration agreement (quod non), it was not
incorporated into the contract

73 Contrary to CLAIMANT’s assertion (MfC paras 45-47), the Parties did not conclude a valid
arbitration agreement under Danubian law as they have never consented to such an agreement
(1). Moreover, even if the Parties had consented to arbitration, the formal requirements for a
valid agreement would not have been met (2).

1. The Parties did not agree to arbitrate

74 As with any other contract governed by the UNIDROIT Principles, an arbitration agreement can
only be concluded by acceptance of an offer. Under Art 2.1.1. UNIDROIT Principles, which
regulates the basic principles of contract formation, RESPONDENT would have had to accept
an offer of CLAIMANT to conclude an arbitration agreement either explicitly or by conduct
showing agreement.
75 Even if one, like CLAIMANT seems to do (MfC, para 45), were to regard CLAIMANT’s email
of 9 April 2020, in which it stated that its GC apply “to issues not regulated in the attached
[contractual] documents” as an offer to conclude an arbitration agreement (quod non), an
arbitration agreement would not have been concluded. RESPONDENT never responded to this

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offer in any way, let alone formally accepted it, but rather clearly stated that it was not happy
with the suggested DRM both in its email of 1 April 2020 and at the summit (Exh C2). After
that, RESPONDENT has never acted in a way that could have made CLAIMANT believe that it
had changed its mind. The Parties have therefore not agreed to arbitration.
76 Ignoring this lack of consent, CLAIMANT simply states that, according to PO 1, Danubian law
only requires a clear statement that standard conditions are included in a contract to incorporate
such conditions (MfC paras 45). It further asserts that, therefore, CLAIMANT’s statement in its
email of 9 April 2020 to RESPONDENT, in which it pointed to the fact that its GC apply to
‘issues not regulated in the Contract’, suffices for the incorporation of these terms (MfC para
45). This way, CLAIMANT brushes aside the basic substantive requirement for the formation of
an arbitration agreement (consent) and only focuses on the formal prerequisites (clear statement
referring to GC). It thus tries to hide that the very foundation of every agreement to arbitrate,
party consent, is missing in the case at hand.

2. Even if the Parties had consented to arbitration, they did not do so in a formally valid way

77 Even if the Parties had consented to arbitration, they would still not have concluded a valid
arbitration agreement as also the formal requirements for an arbitration agreement have not been
met. Firstly, contrary to CLAIMANT’s assertion, the lax standard regarding the inclusion of GC
under Danubian law referred to in PO 1 is of no relevance for arbitration agreements. PO 1 only
addresses “Danubian general contract law” (PO 1 N°3) and thus explicitly excludes areas of law
which are regulated by special provisions, such as arbitration law. This is only logical because
Art II NYC and Art 7 (6) DAL provide for special (and stricter) rules for the incorporation of
arbitration through reference to GC. Secondly, the requirements of Art II NYC and Art 7 (6)
DAL have not been met in the case at hand.
78 Article II NYC requires that a reference to an arbitration agreement in GC has to be specific (i.e.
the arbitration clause must be addressed explicitly) (Granitalia v. Agenzia Marittima Sorrentini,
2000). General references to the GC do not suffice as the Parties would otherwise not even have
the chance to be aware that they are taking the big step of submitting to arbitration (see e.g.
Schramm, 2010, p. 91). This, however, is exactly the case here: CLAIMANT sent
RESPONDENT some contractual documents (which did not include its GC) and added that
issues not regulated in the documents would be governed by the GC. A more general reference

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can hardly be imagined. RESPONDENT had no chance to be aware that this was an offer
concerning an arbitration agreement, especially as (1) it had told CLAIMANT several times that
it did not want to submit to arbitration as suggested, (2) CLAIMANT had not attached its GC
and (3) RESPONDENT had never seen CLAIMANT’s arbitration clause before. It is evident
that the requirements of Art II NYC have not been met in this case.
79 The same is true for the prerequisites set forth in Art 7 (6) DAL: Art 7 (6) DAL states that
arbitration clauses can be incorporated by reference, ‘provided that that the reference is such as
to make that clause part of the contract’. It is clear already from the wording of the provision that
the reference must specifically address the arbitration clause (see e.g. Concordia Agritrading Pte
Ltd v Cornelder Hoogewerff, 1999). This is convincing as it ensures that the Parties are aware of
taking the big step of submitting to arbitration (see generally regarding the “warning function”
of form requirements Born, 2021, p. 701). As has been shown in the paragraph above,
RESPONDENT could in no way have been aware that the offer included a submission to
arbitration.
80 The requirements of Art 7 (6) DAL have therefore not been met. Consequently, even if the
Parties had agreed on arbitration, they would not have done so in a formally valid way.

ISSUE II: The Parties have not concluded a contract of sale of goods, but were still at
the stage of negotiation
A. Whether a contract was concluded (quod non) is determined by the law of
Mediterraneo including the CISG

81 Contrary to CLAIMANT’s assertions in para 70, the law applicable to the conclusion of the
contract is not the CISG itself, but the law of Mediterraneo including the CISG. It is further not
clear why CLAIMANT refers to PO 2 N°31 (which is related to the GC) when stating that the
Parties had agreed on the CISG to govern their contractual relationship, when it is clarified in
PO 2 N°33 that the Parties wanted the law of Mediterraneo including the CISG to govern a
potential contract. The Parties’ agreement on the law of Mediterraneo including the CISG
suffices for a valid choice-of-law agreement regarding a potential contract and must also be
applied to the conclusion of the contract.
82 The existence and validity of a contract is determined by the law which would govern it if the
contract was valid. Due to the principle of party autonomy, the expressed will of the Parties is

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crucial in determining the substantive law which governs a contract (see e.g. Introduction to the
Hague Principles on Choice of Law in International Commercial Contracts). CLAIMANT and
RESPONDENT exchanged several emails regarding the law applicable to a potential contract.
(Exh C 1, Exh C 4, RNoA N°10) Due to the facts of the case as well as PO 2 N°33 there is no
doubt that the Parties expressly chose the law of Mediterraneo to govern a potential contract.
The Parties’ agreement on the law of Mediterraneo for their potential contract, which they then
never concluded, suffices for a valid choice-of-law agreement and thus has to be respected by
the arbitral tribunal.
83 The Parties’ choice of law regarding the contract must also be applied to the conclusion of the
contract. This follows from principles of international law. Art 9 (1) Hague Principles is based
on the principle that, unless the Parties agree otherwise, the law chosen shall govern all aspects
of the contract from its formation until its end. (Commentary on Hague Principles, Art 9)
Particularly Art 9 (1e) states that the validity of the contract, which must include its conclusion,
shall be governed by the law chosen by the Parties. Similarly, Art 10 Rome I Regulation
determines that the existence and validity of a contract shall be determined by the law which
would govern it if the contract was valid. An equivalent rule is also found in Art 12 Mexico City
Convention. Consequently, the conclusion of the contract follows the law of Mediterraneo.
84 Had a contract been concluded between CLAIMANT and RESPONDENT, it would meet the
territorial, material and temporal requirements for the applicability of the CISG. First, the
potential contract is of an international nature with CLAIMANT’s place of business being
Mediterraneo and RESPONDENT’s place of business being Equatoriana, both of which are, as
required in Art 1 (1)a CISG, contracting states of the CISG. (PO 1) Second, the potential
contract is a contract of sale of goods. RSPO-certified palm oil as an aggregated asset certainly
falls under the category of “goods” in the meaning of the CISG. (Brunner, 2019, p. 31;
Schwenzer, 2019, p. 28) Since most sub- and special forms of sale, including purchase according
to type and delivery of goods by instalments, are covered by the CISG (Brunner, 2019, p. 31)
and the potential contract does not fall under any of the exclusions in Art 2, it lies within the
material scope of application. Third, the temporal scope of application of the CISG is also met .
(Art 100 CISG) Furthermore, it follows from the facts that the parties have not excluded the
application of the CISG under Art 6 CISG. (PO 2 N°16) Whether a contract was concluded

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between CLAIMANT and RESPONDENT, therefore is to be determined by the law of

Mediterraneo including the CISG.

B. RESPONDENT’s offer in its email on 1 April was not accepted by CLAIMANT

1. RESPONDENT’s email on 1 April os no contract-concluding notice to CLAIMANT’s
oral offer from 28 March at the palm oil summit, but constitutes a counter offer instead

85 On 28 March 2020 CLAIMANT orally proposed to RESPONDENT the sale of 2/3 of the
annual Palm-Oil production for a duration of five years to a price 5% below the future market
price, starting 2021 with USD 900/t. According to Art 14 (1) CISG the sufficient definiteness
and the offeror’s intention to be bound are the necessary elements for constituting a binding
offer. The first element means the clear indication of the good and the quantity, whereby the
quantity does not need to be defined minutely (Schwenzer, 2019, Art 14 CISG, para 46;
Brunner, 2019, p. 126; Honsell, 2009, p. 104; OGH 2Ob547/93). The price may be determinable
expressly or via reference, such as a future market price (Brunner, 2019, p. 125-126; Schwenzer,
2019, Art 14 CISG, para 56; T-18/07). CLAIMANT’s intention to be bound was more than
obvious, because he has lost a major business partner recently and needed someone to sell its
product to. RESPONDENT knew about this precarious situation (Exh R3 N°6). Both necessary
elements for constituting a legally binding offer were met perfectly. However, RESPONDENT
wanted to consult the management for approval first. Art 18 (3) CISG was taken out of effect,
because both sides agreed that RESPONDENT would transfer the answer to the oral offer
within three days. The next contact the Parties had was RESPONDENT’s email on 1 April.
According to the rules of counting of Art 20 CISG, the period begins to run the moment the offer
reaches the offeree (here: 28 March), and non-business-days are included. This means, a reply
had to reach the offeror on 30 March at the latest. As this did not happen, the oral offer lost its
legally binding character and fell apart. RESPONDENT obviously knew that he was late with
an acceptance and therefore titled the email on 1 April with “purchase offer” and expressed that
he is “strongly interested”, indicating the nature of this email clearly (Exh C2). RESPONDENT
wanted to make a counter-offer.
86 In this email RESPONDENT requested 20,000t RSPO/certified palm oil p.a. between 2021 and
2025 to a price of 900 USD/t for the first year and 5% below the market price afterwards.
Additionally, RESPONDENT requested a different arbitration clause in order to not submit to a

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palm-oil-industry bound institution. Furthermore, RESPONDENT asked for the applying of the
UNCITRAL Transparency rules (Exh C2). This “package” states a new and independent offer. It
is hardly worth mentioning that it fulfils the just explained elements needed to state a binding
offer according to Art 14 (1) CISG.

2. CLAIMANT did not accept RESPONDENT’s counter-offer from 1 April in its reply on 9
April because of material alterations in it

87 Whether a contract was concluded or not now depends on CLAIMANT’S reaction to the
offer from 1 April 2020. This reaction was the email of 9 April 2020. According to Art 18
(1) CISG an offer is accepted by the indication of assent. This means the expression of the
will to be bound and to conduct the contract to the terms proposed (Honsell, 2009, p. 143).
However, this did not only not happen. Hereby Art 19 CISG clearly and expressively
prohibits the conclusion of a contract.
88 CLAIMANT did not accept RESPONDENT’s offer from 1 April 2020 since it presented
material alterations and modifications in its response email of 9 April 2020, making it a counter-
offer according to Art 9 (1) CISG, which in turn was not accepted by RESPONDENT. (see
paras 89-96). First, it is undisputed that RESPONDENT made a valid offer (see also MfC
72-83) in its proposal to conclude a contract, which was sufficient enough and indicated its
intention to be bound in case of acceptance in its wording that RESPONDENT was “strongly
interested in securing a long-term supply at the conditions we discussed at the summit.” (Exh
C2) The exact goods, their price and quantity were expressly set forth by RESPONDENT
pursuant to Art 14 (1) CISG. (NoA N°5-6; Exh C2)
89 The alterations to RESPONDENT’s offer as introduced by CLAIMANT, first, the switch in
choice-of-law from Danubian to Mediterranean contract law. (Exh C1 N°3, C4), represent a
deviation, not only from alleged previous practice, but from the Parties negotiated terms at the
palm oil summit which were incorporated in Ms Bupati’s offer by clear reference in her email on
1 April 2020. She made her intentions abundantly clear by writing “I would like to place the
following order with you as agreed at the Summit.” (Exh 2) Second, the notification that the
contract was to be submitted to CLAIMANT’s GC - which in itself does not amount to a
counter-offer (see paras 133-135)— and which were thus far unbeknownst to RESPONDENT
altogether, since they were not transmitted in tandem with the contractual document or made

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available in another way. (see paras 145-151)

2.1. Omitting the Transparency Rules constitutes a material change

90 The UNCITRAL Transparency Rules are a set of rules of procedural nature in case of
arbitration. CLAIMANT in its reply on 9 April 2020 did not mention them or added them to
the contractual documents.
91 Art 19 CISG states that additions, limitations or other modifications in a reply are
incompatible with an assent, if they have to be seen as materially altering. What “materially
altering” exactly means needs would be interpreted case-by-case according to the model-
figure of Article 8 CISG, as no legal definition exists (Honsell, 2009, p. 166; Schwenzer,
2019 Art 19, para 43). Furthermore, the subjective importance of a matter to a Party has to
be seen as a fair guideline.
92 In our case the mentioned case-by-case-assessment is obsolete, because Art 19 (3) CISG
clearly states that matter regarding the “settlement of disputes” is always materially
altering. This is additionally reinforced by the fact that RESPONDENT clearly pointed out
the necessity of providing some transparency in relation to arbitration due to the strong
opposition in Equatoriana (Exh C2).
93 Insofar CLAIMANT accepted the essentialia negotii, but completely ignored this
procedural matter, which is of high importance to RESPONDENT. Therefore, only a part of
the offer was accepted, not all of it. This is not mutual assent as required by the CISG´s
contract concluding mechanism.

2.2. The agreement to arbitrate constitutes a material change

94 On top of that, CLAIMANT wrote a short note on the contractual documents sent on 9
April 2020, saying that its GC were to apply (Exh C3). Ms Bupati received earlier in her
career CLAIMANT’s GC. But from 2016 onwards a different arbitration-institution shall be
consolidated in case of disputes (Exh R4). And it is very disputed if a current version of the
GC was ever properly transmitted to RESPONDENT. However, under the jurisdiction for
the CISG GC have to be provided in written form and before the conclusion, if they shall
become part of a contract (OGH8Ob 104/16a). Therefore, if CLAIMANT cannot prove that
RESPONDENT had enough access to the new GC, the change of the arbitration-institutions

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is a materially altering change according to Art 19 (3) CISG as well, because these changes
again concern the crucial matter of “settlement of disputes”. RESPONDENT most certainly
had not enough access to them. If RESPONDENT had access to them, why would he ask
about the comparability of the contractual documents to previous business-cases (Exh C2)
95 In conclusion it has to be recorded that CLAIMANT’s email from the 9 April contained one
obvious material change regarding the omission of the transparency rules. This alone is
enough to not qualify CLAIMANT’s email from the 9 April as an acceptance. And
furthermore, there was one probable material change.
96 For the aforementioned reasons, CLAIMANT’s Email from 9 April 2020 does not
constitute an acceptance, but instead another counter-offer in accordance with Art 19 (1)
CISG. However, even this counter-offer may be seen as deficient, because the GC might not
have been provided to RESPONDENT properly.

C. RESPONDENT did not accept CLAIMANT’s counter-offer

1. RESPONDENT did not accept CLAIMANT’s counter-offer by conduct

97 After receiving CLAIMANT’s email on 9 April, RESPONDENT remained silent, thus did not
agree to the conclusion of the contract. Rather, the only information received by CLAIMANT
was that Ms Fauconnier, as acting agent, wanted to amend two existing terms of the contractual
documents on 3 May 2020 and her desire to meet Mr Rain in person, though said meeting never
took place. (Exh R2) RESPONDENT’s behaviour leading up to that email and the email’s
content must have certainly prompted CLAIMANT to believe that the contract would not be
pursued in the way it had proposed in its counter-offer on 9 April. Added to that, CLAIMANT
has clearly been made aware of the fact, that RESPONDENT has been in contact with other
palm oil producers. (Exh R2) Thus, at the very least, it should have been lear to CLAIMANT
that no contract hade been concluded on 3 May 2020, when Ms Fauconnier suggested changes
to the existing terms of the contractual documents, therein still not accepting the offer. (Exh R2)
98 Since RESPONDENT never explicitly accepted CLAIMANT’s counter-offer, an acceptance
could only have taken place by conduct. Contrary to CLAIMANT’s assertions, the simple
performance of “necessary preparatory work” does not constitute an acceptance by conduct.
99 While, as CLAIMANT states, “acts of a more preparatory nature may also amount to
acceptance” (Huber and Mullis, 2007 p. 85), this is not true for the present case. CLAIMANT

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refers to several cases in order to demonstrate how RESPONDENT’s actions may have
amounted to an acceptance of CLAIMANT’s counter-offer, yet these assertions fail to convince.
None of the cases cited by CLAIMANT are applicable to the case at issue.
100 It may be true that in Magellan International Corporation v. Salzgitter Handel GmbH (Magellan
case), the Illinois Court concluded that there was an acceptance when the buyer issued the letter
of credit which claimed specific performance showing its willingness to pay the price of the
counter-offer amended by the seller. RESPONDENT, however, only enquired about the letter of
credit but never actually issued it.
101 As CLAIMANT correctly pointed out, Ms Fauconnier approached CLAIMANT to discuss the
opening of the required letter of credit and wanted to directly determine the names of the banks
which would classify as ‘recognized banks’ in the sense of the Contract.” (Exh R2, N°2). It is
further true that on 30 May 2020, Ms Fauconnier contacted “several of the acceptable banks to
get quotations as to the terms for the letter of credit” (PO2 N°23). However, none of these
actions amount to an acceptance under the CISG. While RESPONDENT may have
contemplated accepting CLAIMANT’s counter-offer and wanted to be prepared in case it
decided to take the counter-offer, it never actually accepted it.
102 CLAIMANT further points to Art 8 CISG, which states the Parties’ conduct should be
interpreted according to their intents and consider all relevant circumstances such as the process
of the negotiation and the usage established between them. It seems necessary to point out that
CLAIMANT and RESPONDENT had never even concluded a contract at the point of their
contract negotiations in the present case (PO 2 N° 3), which is why no practice could have been
established between them in the first place. For this reason alone, CLAIMANT had no reason to
assume that RESPONDENT’s behaviour amounted to an acceptance by conduct.
103 An acceptance by conduct consists of an implicit indication by the offeree of its acceptance of
the offer (Brunner, 2019, p. 138). However, pursuant to the reliance principle as established in
Art 8 (2) CISG, this requires that an intention to be bound to the offer in question is expressed
with sufficient clarity. (Brunner, 2019, p. 138) RESPONDENT may have undertaken
preparatory steps for a potential acceptance, such as enquiries about the letter of credit, but never
actually intended to accept the counter-offer. It certainly did not express an intention to be bound
to the offer with sufficient clarity to constitute an acceptance under the CISG. When Ms
Fauconnier and Mr Rain discussed issues concerning the letter of credit, Mr Rain pointed out to

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her that CLAIMANT had not yet received a signed copy of the contract (NoA, N°8). Mr. Rain’s
efforts to clarify that no signed copy of the contract had been returned at that point in time
clearly demonstrate his awareness that no contract had been concluded at stage of negotiations.
If the contract conclusion by conduct had been sufficiently clear, it would not have mattered
whether the contract papers had been signed or not. When Ms Fauconnier promised that she
would look into it (NoA N°8), she was referring to the state of the contract negotiations.
104 The CISG clearly states in Art 18 (1) second sentence that silence or inactivity alone do not
constitute an acceptance. Silence in response to an offer may only be taken as acceptance in
context with further relevant circumstances if this is justified on the basis of the principle of
good faith (Brunner, 2019, p. 138). Thus CLAIMANT had no reason to assume that
RESPONDENT’s inactivity after the counter-offer constituted a valid acceptance.

2. RESPONDENT could not accept CLAIMANT’s counter-offer for lack of established

business practice

105 RESPONDENT also did not accept CLAIMANT’s counter-offer by way of a past practice
established between the Parties under the CISG.
106 CLAIMANT’s assumption that CLAIMANT and RESPONDENT had established a business
practice under the CISG is unfounded and was pulled out of thin air. CLAIMANT and
RESPONDENT had never entered into a contractual relationship before commencing
negotiations in the present case (PO 2 N°3) and therefore could not have established a business
practice. Neither did CLAIMANT establish a business practice with Southern Commodities,
which could be applied to the negotiations in the case at issue. Therefore, CLAIMANT had no
reason to believe that a valid contract could have been concluded without RESPONDENT
accepting the offer either explicitly or by conduct.
107 CLAIMANT tries to establish a business practice where there never was one. It is true that the
contract negotiations between CLAIMANT and RESPONDENT show similarities to previous
commercial transactions between CLAIMANT and Southern Commodities. What CLAIMANT
fails to recognize however, is that CLAIMANT and Southern Commodities never established a
business practice in the first place. Where there is no business practice, such practice cannot be
extended to similar transactions.
108 According to CLAIMANT, a practice had been established between the Parties that if

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RESPONDENT did not timely reject the contract terms sent by CLAIMANT, the contract was
nevertheless concluded even without RESPONDENT’s signature. It may be correct that in past
transactions concluded between Ms Bupati and Mr Chandra as actors for their respective
companies, sometimes contracts were performed without the contracts having been signed by
Ms Bupati. This negligence on her part, however, does not fulfil the requirements of a business
practice under the legal regime of the CISG.
109 Practices pursuant to Art 9 (1) CISG “become applicable based on the Parties’ mutual express or
implicit intent”. (Brunner, 2019, p. 100) An established practice requires “a certain duration of
the commercial relationship, or a number of contracts concluded, so that it appears justified for
one Party to rely on a particular conduct as being usual”. (Brunner, 2019, p. 100; Pizza boxes
case; Tantalum powder case II; Dutch plants case I).
110 Over the years, Mr Chandra and Ms Bupati concluded overall around 40 contracts. In around
80% of the cases, Ms Bupati then signed the documents and returned a copy of the contract to
Mr Chandra. In three cases, she deemed the added terms unacceptable and asked for changes
after having received the contract documentation. The contracts were signed after the
documentation was changed accordingly. In only five cases did Ms Bupati not return a signed
version of the respective contract but nevertheless performed all of them (Exh R3). Between
2016 and 2018, Mr Chandra and Ms Bupati concluded eight contracts, two of which – one large
and one small contract – were not signed but were performed (PO 2 N° 7). In total, only five out
of 40 contracts concluded between Ms Bupati and Mr Chandra were not signed and yet
performed. How CLAIMANT deduces a business practice from an occurrence which took place
in 12,5 % of their commercial transactions is unclear.
111 In order to establish a business practice under the legal regime of the CISG, the conduct of the
Parties shall be interpreted according to their subjective intent; if the subjective intent cannot be
established, the conduct of the Parties shall be interpreted objectively. (Art 8 (1) CISG; Art 8 (2)
CISG)
112 RESPONDENT showed neither subjective nor objective intent to be bound to CLAIMANT’s
offers without signing them first. For the five unsigned contracts between Southern
Commodities and CLAIMANT, a letter of credit was opened following the receipt of the
contracts by Southern Commodities (PO 2 N° 7). In the present case, RESPONDENT enquired
about the letter of credit, but never opened one (PO 2 N° 23). This shows even more clearly that

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RESPONDENT never intended to accept CLAIMANT’s counter-offer in the case at hand.

113 In order to establish a practice, it is further necessary that the behaviour is recognised as a
practice by the parties. (Schwenzer, 2019, Art 9 CISG para 8a; Propane gas case; CISG online,
224) This presupposes that a behaviour gives rise to the legitimate expectation that the same
behaviour will occur in the future. (Schwenzer, 2019, Art 9 CISG para 8a; Vine wax case; CISG
online, 479) As elaborated extensively above, this was never the case, which is why no
individual practice was established between CLAIMANT and RESPONDENT.

2.1. Even if a business practice was established between CLAIMANT and Southern
Commodities, it does not translate to the present case

114 While an individual practice may have been established between CLAIMANT and Southern
Commodities, such practice would not apply to contract conclusions between CLAIMANT and
RESPONDENT.
115 It is true that RESPONDENT was acquired by Southern Commodities and is now a 100%
subsidiary of Southern Commodities. However, it remained otherwise an independent legal
entity (PO 2 N°4). When Southern Commodities’ palm kernel oil unit was transferred to JAJA
Biofuel and became a wholly owned subsidiary of JAJA Biofuel, 26 out of 40 employees
became employees of JAJA Biofuel’s subsidiary and stayed in Ruritania where the subsidiary
was located (PO 2 N°5). 10 employees were moved from the palm kernel oil unit to the newly
founded palm oil unit within JAJA Biofuel and had to move to Equatoriana and JAJA Biofuels’
headquarters. The same applied to Ms Bupati who was promoted to become the Head of
Purchasing for all types of oil products, in part due to her connections with the palm oil industry
(PO 2 N°5).
116 In the light of these structural and personnel changes, it is incomprehensible why CLAIMANT
would believe that any business practice established between CLAIMANT and Southern
Commodities would transfer to business relationships between CLAIMANT and
RESPONDENT.
117 Pursuant to Art 9 para 2 CISG, the parties are bound to practices which they have established
between themselves. It seems necessary to point out that in this context, the emphasis is to be
put on the phrase “the parties themselves”. Even if CLAIMANT and Southern Commodities had
established a business practice as described in para 110, they never intended such practice to be

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extended to any contractual relationships other than contacts concluded between CLAIMANT
and Southern Commodities. It is a core characteristic of any business practice established under
Art 9 CISG that such practice justifies the legitimate expectation that the same practice will
occur in the future (Schwenzer, 2019, Art 9 CISG para 8a; Vine wax case; CISG-online, 479). In
the case at hand, the parties never gave rise to a legitimate expectation that such practice would
extend to any other contract than a contract concluded between CLAIMANT and Southern
Commodities. For CLAIMANT and RESPONDENT to establish a business practice, would
require them to actually have concluded a number of contracts before, which they have not
(Schwenzer, 2019, Art 9 CISG para 8a).
118 Finally, it is deemed necessary to point to the fact that an established practice may be subject to
change and may be terminated (Schwenzer, 2019, Art 9 CISG para 9; Food products case;
CISG-online, 750). A termination may occur through a change of the foundation of the business
relationship (Schwenzer, 2019, Art 9 CISG para 9). Considering the structural and personnel
changes involved with Southern Commodities’ acquisition of RESPONDENT, it is clear that
any established business practice between CLAIMANT and Southern Commodities was
terminated when Southern Commodities’ palm kernel oil unit was transferred to
RESPONDENT.

2.2. Even if a business practice was established, it would not be applicable in the present
case as the Parties have introduced numerous materially altering changes

119 Even if the arbitral tribunal comes to the conclusion that a business practice was established
between CLAIMANT and RESPONDENT, such business practice would not be applicable to
the present case due to the materially altering changes contained in CLAIMANT’s counter-
offer. (see paras 87-96) Due to the introduction of these materially altering changes, any
business practice, which might have been established between CLAIMANT and
RESPONDENT (quod non) could not extend to the case at issue.

ISSUE III: The General Conditions of Sale were not agreed on by the Parties
A. Since the Parties did not conclude a contract, they did not agree on the General
Conditions of Sale as part of the alleged contract

120 Mediterranean law including the CISG is applicable to the review of the existence of an alleged
contract conclusion since the factual, temporal and local requirements of the application of the

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CISG are met. The same goes for the review of whether the GC form part of the alleged
contract.
121 A contract for the delivery of 100.000 t of palm oil for 5 years, at the price of 900 USD/t,
thereafter at 5 % below the “market price” has not been established between the Parties, as the
business dealing remained at the stage of negotiations (see paras 85-119).
122 RESPONDENT has not accepted CLAIMANT’s counter-offer on 9 April 2020, neither by
express acceptance nor conduct as per Art 18 (1) CISG (see paras 97-119), it simply remained
silent. CLAIMANT should have known that RESPONDENT’s silence was not to be interpreted
as acceptance, since this was the first contract negotiation between these Parties, because of the
(partially) new acting agents (see para 124) different goods (RSPO-certified palm oil instead of
palm oil), a different management and company as CLAIMANT’s contractual partner and a
strong importance placed on environmental issues based on RESPONDENT’s attitude towards
this topic, (Exh C1 N°10) which altogether completely differs from Ms Bupati’s contract
conclusion handlings back at Southern Commodities. Thus, there is no established practice for
CLAIMANT to base its assumptions of RESPONDENT’s silence counting as acceptance of the
transmitted contractual documents, as will be explained below in paras 123-126.
123 In contrast to opposing counsel’s claims of a business practice being established and it being
transferred to present case with Ms Bupati’s silence counting as acceptance one week after the
transfer of the contract documents, none of this is true because of the simple fact that at the time
of the contract negotiations the acting agent worked for completely different companies. They
may be entangled – RESPONDENT is Southern Commodities’ subsidiary company – but
certainly do not share the same identity, purpose, management or share of capital, as
RESPONDENT is an independent legal entity (PO 2 N°4). Furthermore, the present deal is not
similar enough to Southern Commodities’ prior commercial transactions, as opposed to
CLAIMANT’s counsel’s claims, bearing in mind the Tantalum powder case II, for following
reasons:
124 The acting agents differ from the previous transactions between Southern Commodities and
RESPONDENT, as there are Ms Bupati and Ms Fauconnier on RESPONDENT’s side and Mr
Chandra and Mr Rain on CLAIMANT’s side. Even though, Ms Bupati was part of the contract
conclusions for Southern Commodities from 2010 to 2018 — in a different position as opposed
to now as the Head of Purchasing — she switched firms, (Exh C1 N°8; Exh R3 N°4) making the
practice not applicable to the present case. Thus, the only consistent factor in regards to the

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acting agents is Mr Chandra, who was Head of Sales for CLAIMANT for 8 years and in 2018
became its COO, thereby only broadening his area of responsibility at the same company (Exh
C1 N°2).
125 The goods in question might have similar names and revolve around similar commodities, palm
oil and palm kernel oil, but in present case RESPONDENT requested RSPO-certified palm oil
in its offer, which makes a big difference regarding qualification, price and sustainability.
Equatoriana and RESPONDENT itself place extreme importance on the compliance with
sustainability obligations (Exh C1 N°5, C6, C7, R1) and it was precisely the lack thereof (non-
compliance of the certification) which caused RESPONDENT to finally terminate its
negotiations with CLAIMANT altogether (Exh C7). To be noted is also the price difference
between palm oil and RSPO-certified palm oil, which can differ to up to USD 70 / t (RNoA
N°6). Solely as a response to CLAIMANT’s memorandum, RESPONDENT would also like to
point out that there is even a significant difference between palm oil and palm kernel oil (despite
there being “no difference in the certification requirements of the contractual documents”), as
palm oil is primarily used for chocolate production and is also suitable for CBE (cocoa butter
equivalent) formulations, while palm kernel oil primarily suits the production of confectionery
products.(Traitler and Dieffenbacher, 1985)
126 Added to that, RESPONDENT points out that Southern Commodities is the parent company of
RESPONDENT but does not have nearly as much control over its subsidiary as CLAIMANT
tries to make believe. It is undisputed that 36 employees transferred to RESPONDENT and its
subsidiary in 2018 (PO 2 N°5.), but CLAIMANT does not control RESPONDENT’s actions or
employ respectively lay off their employees. These 36 employees were simply transferred to
RESPONDENT for logistical and convenience purposes, as Southern Commodities “lost” its
palm kernel oil unit after acquiring RESPONDENT in 2018 and the palm oil activities were
centralised at subsidiary’s headquarters. They willingly transferred and were not made to do
anything by Southern Commodities, as is quite clear with three employees leaving Southern
Commodities after the acquisition of JAJA Biofuel.
127 Thus, for aforementioned reasons the practice between Southern Commodities and
CLAIMANT for the contracts concluded between 2010 and 2018 cannot be transferred to
RESPONDENT and the present case. Moreover, RESPONDENT’s offer from 1 April 2020 was
not accepted by CLAIMANT (see paras 85-96), resulting in no reached agreement between the
Parties regarding the alleged contractual relations.

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128 Since a contract has not been concluded between RESPONDENT and CLAIMANT for the
delivery of the 100.000 t of RSPO-certified palm oil, the GC could not form part of the alleged
contract since it is non-existent. Furthermore, the GC could not have been concluded as a stand-
alone contract as they regularly form part of a different (sales) contract and are purposeless as an
individually formed agreement or “umbrella” document. It is impossible for the Parties to apply
it with no scope of application.
129 For GC to be applicable to a contract, which in this case does not exist since it has not been
concluded by the Parties (see paras 85-119), their content has to be known by both Parties, thus
the GC have to be made available to the party not proposing their inclusion. When both Parties
are aware of their content the GC have to be agreed upon by the Parties in order to be included
into a contract. As the Italian court of Rovereto held in Takap B.V. v. EUROPLAY “standard
terms can only be validly incorporated into a contract, if the addressee of the proposal was aware
of such terms”, bearing in mind the provision of Art 7 and 8 CISG. And finally, the offer of
including the GC has to be accepted. (Takap B.V. v. EUROPLAY, 2007)
130 Under the CISG the inclusion of standard terms is determined as per the rules of the formation
of a contract (CISG-AC Op. N°13, 2013, p. 6). The inclusion of GC into a contract occurs
through the acceptance of an offer, which has to be sufficiently definite and indicate the intention
of the offeror to be bound in case of acceptance.
131 First, CLAIMANT has not made a valid offer for the incorporation of the GC into an alleged
contract for the sale of palm oil since it has not sent a proposal including the essentialia negotii,
which in itself would be insufficient for a valid offer, but would also have to be sufficiently
definite and indicate the intention of the offeror to be bound in case of acceptance as per Art 14
(1) CISG.
132 The standard terms can only be included into an existing contract, where the Parties have
expressly or implicitly agreed to their inclusion at the time of the contract formation and only if
the other Party had a reasonable opportunity to take notice of the terms and familiarise itself
with those terms (CISG-AC Op. N°13, 2013, p. 7). RESPONDENT was not given a reasonable
opportunity to take notice of standard terms, which will be further discussed in paras 140-151.
133 The wording in Mr Rain’s email from 9 April 2020 “CLAIMANT’s General Conditions of Sale
apply to issues not regulated in the attached document” (Exh C4) is not an offer as it does not
contain the essentialia negotii, which are the “goods” — a commodity — being offered to
RESPONDENT, and the “price”, the service rendered in return for the goods. A reference in a

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contract template is firstly not an offer as per Art 14 (1) CISG and secondly does not fulfill any
of the required prerequisites for a valid offer, thus is not enough for the inclusion of the GC (Exh
C3).
134 The only possibility for an existing offer regarding the GC is the proposal of the inclusion of the
GC into a contract made by CLAIMANT to Southern Commodities in October 2011, if it met
all necessary requirements, but it would not translate to present case since CLAIMANT’s
contracting Party is RESPONDENT and not Southern Commodities.
135 Since none of the given proposals meet the criteria of an offer according to the CISG and no
other offers have been made by RESPONDENT for the application of the GC, no legally
binding agreement has been concluded between the Parties for application of the GC to a non-
existent contract or for the GC as a stand-alone contract.
136 Even if a valid offer for the inclusion of the GC had reached RESPONDENT, quod non, it
would not have been accepted by it, since acceptance is given through an explicit statement or
other conduct indicating assent to the offeree as per Art 18 (1) CISG, and not by remaining silent
or inactive (i.e. by not answering an email or staying out of contact altogether, as is the case
presently), also explicitly stated in Art 18 (1) CISG.
137 The non-existent offer of the GC inclusion has also not been accepted through an act as a result
of established usage between the Parties as per Art 18 (3) CISG, as no practice has been
established between RESPONDENT and CLAIMANT (see paras 105-118, 123-127).
138 Even if a business practice had been established, quod non, it would not apply to the present
case as too many material alterations have been presented in this case (see paras 88-96, 119).
139 Therein, if Ms Bupati has ever spoken of an established business practice, it is of that regarding
pre-2016 GC for Southern Commodities, since only these were made available to her in 2011
and consequently allowed her to take notice of their content and be able to accept their
incorporation into past contracts. Regarding Ms Bupati’s wording to “re-establish our long-
lasting and successful business relationship in my new function”, it was not a phase used in any
way of legally binding effect. Ms Bupati is not a professional of the law and cannot be subjected
to the same standards as one.

B. Had a contract been concluded, quod non, the General Conditions of Sale would not
have been incorporated

140 If a contract had been concluded (quod non) the GC would not have been incorporated into the

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alleged contract since both Parties, i.e. also the other Party (RESPONDENT) expressly or
implicitly has to agree to their inclusion at the time of the formation of the contract after having
had the opportunity to familiarise itself with their content. (CISG-AC Op. N°13, 2013, p. 7) This
would have been the case if the terms had been attached to the contractual documents, the terms
were made available to the Parties during the negotiations in each other’s presence or made
available and retrievable electronically by the first Party and are accessible to the other Party at
the time of contract negotiations. (RNoA N°14;CISG-AC Op. N°13, 2013 p. 12). The contract
negotiations lasted until 30 October 2020, when Ms Lever finally terminated all pending
negotiations with her letter to Mr Chandra, so CLAIMANT had enough opportunities to make
the terms available to RESPONDENT, but did not manage to do so at any point. Point 3.4 –
“where the Parties have had prior agreements subject to the same terms” – does not apply to this
case as only Southern Commodities had concluded five contracts with CLAIMANT under the
same standard terms, the post-2016 GC, from 2016 to 2018, which simply does not translate to
RESPONDENT for aforementioned reasons (see paras 114-118, 123-126).

1. CLAIMANT’s reference to its General Conditions of Sale was not sufficient for their
incorporation

141 A reference to the GC may only be sufficient for an incorporation, if the other Party has also
agreed to their inclusion whether explicitly or implicitly, it has had reasonable opportunity to
take notice of the standard terms/their content by having had the chance to look through it at the
time of contract negotiations and the reference is clear to a reasonable person in the same
circumstances (CISG-AC Op. N°13, 2013, p. 15)
142 RESPONDENT has not had reasonable opportunity to look through the GC, since they were not
included into CLAIMANT’s letter from 9 April, any email sent thereafter or anywhere else
(NoA N°7). While the references to the GC were quite clear (to a reasonable person in the same
circumstances) in the contractual documents (Exh C3) and in the accompanying letter (Exh C4),
solely these requirements are not enough for the inclusion of the GC, as was brought forward
above. This way of alleged incorporations of GC – “by reference in a written communication
without clear and express agreement on the incorporation” (Schlechtriem and Schwenzer, 2016,
Art 14 para 37) – is insufficient and unfulfilling, as the Party using the GC cannot prove whether
they have validly included these standard terms. (CISG-AC Op. N°13, 2013, p. 5)
RESPONDENT herein attests that it had no access to CLAIMANT’s post-2016 GC.

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143 RESPONDENT has not agreed to the inclusion of the GC into an alleged contract neither
explicitly nor implicitly – there was no mention of the GC in Ms Bupati’s email from 1 April or
Ms Fauconnier’s email from 3 May (Exh C5, C2). Given the size of the contract and the
political sensitivity of the palm oil expansion, Ms Bupati and Ms Fauconnier were both very
hesitant to agree to any (commercial or) standard terms prematurely (RNoA N°8), as they have
both stated on several occasions. (Exh R2, C2) After all, they did not agree on any of the
CLAIMANT’s proposed terms. (Exh C7)
144 Only under Danubian contract law is the reference to the use of GC in a contract document
sufficient for the incorporation of these standard terms, (NoA N°16) but in present case the
applicable contract law is the law of Mediterraneo including the CISG, thus only a reference to
§the application of the GC to rules not regulated in the contract” is in no way shape or form
sufficient for their inclusion into an alleged contract.

2. CLAIMANT did not satisfy the requirements of the “make available test”

145 It is uncontested, that RESPONDENT has not had reasonable opportunity to look through the
GC, since they were not included into CLAIMANT’s letter from 9 April accompanying the
contractual documents (NoA N°7) nor were they made available to RESPONDENT at the Palm
Oil Summit in 2020. They are also not easily accessible on CLAIMANT’s website, thus
RESPONDENT had no opportunity to look through the (post-2016) GC.

2.1. RESPONDENT never received CLAIMANT’s General Conditions of Sale

146 The only time Ms Bupati in her function as main purchase manager of Southern Commodities –
and not RESPONDENT – was sent the GC was when they were transmitted to Southern
Commodities in October 2011 and once more when she had a closer look at them in 2014 for the
purpose of an arbitration between CLAIMANT and Southern Commodities (RNoA N°11.).
Both times the GC contained the arbitration clause of the FOSFA/PORAM contract Form 81
(Exh R3) and not the recent AIAC arbitration clause (Exh R4), making this transfer of the
pre-2016 GC irrelevant for present case.
147 While it is uncertain whether Southern Commodities received a copy of the post-2016 version of
the GC, Ms Bupati has not had access to them during the negotiation process, only thereafter, as
Mr Dosep, a former employee of CLAIMANT, provided them in June 2020. (PO 2 N°19)

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Further, it is undisputed that RESPONDENT has never been sent the current or any previous
version of the GC (Exh C1, RNoA N°13, PO 2 N°18).
148 When CLAIMANT speaks of the fact that RESPONDENT should have requested a copy of the
GC if it wanted to have a look at them, it forgets that it is not offeree’s, RESPONDENT’s,
responsibility to request a copy of the standard terms from the party, which seeks to incorporate
those terms. (CISG-AC Op. N°13, 2013, p. 10)

2.2. CLAIMANT’s General Conditions of Sale are not easily accessible on its Website

149 For GC to be validly incorporated into any alleged contract, they have to be made available to
the other Party so that any concurrence of wills of the Parties can include the same content.
(CISG-AC Op. N°13, 2013, p. 8) The least the Party, seeking to incorporate the standard terms
could do, is provide the other Party with a link to easily accessible GC, which was omitted.
Moreover, CLAIMANT’s GC are not easily accessible on its website, making it even harder for
RESPONDENT to familiarise itself with their content. (PO 2 N°18)
150 The Machinery case, dealing with the sufficient incorporation of standard terms, was interpreted
by the German Federal Supreme Court in the way that the Party seeking the inclusion of the
standard terms also needs to “transmit the text or make it available in another way” to the other
Party (Machinery case). This is a reasonable approach to this issue, as the other Party knowing
the content of a set of standard terms is the minimum requirement for this Party to be able to
agree to its incorporation (CISG-AC Op. N°13, 2013, p. 8-9). There is simply no other way for
an agreement to be formed based on the principles of simple contract law.
151 Since CLAIMANT has not provided RESPONDENT with any copy of the GC nor has it
provided a link to its website nor is CLAIMANT’s website easily accessible, the GC have not
been incorporated into the non-existent contract.

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CONCLUSION AND REQUESTS

152 Despite either Parties earnest intention, they could not agree on a mutually acceptable manner of
dispute resolution and hence not conclude a contract for the sale and delivery of RSPO-certified
palm oil. RESPONDENT has voiced its objections to arbitration as the DRM proposed by
CLAIMANT from the very start of negotiations, preventing any consensus being established on
the conditions of the business transaction.
153 Even if the tribunal were to find that a contract had been concluded between the Parties, the
arbitration agreement would not have been incorporated into said contract for lack of
incorporation of CLAIMANT’s GC as they were not made available to RESPONDENT and for
lack of RESPONDENT’s awareness of the individual clause containing the arbitration
agreement.
154 The arbitral tribunal is empowered to examine the Parties potential arbitration agreement under
the law of Mediterraneo including the CISG as the presumably applicable law, however, as the
agreement has never been validly concluded in neither formation nor form, it shall subsequently
refer the dispute to national arbitration.
155 In view of the above, RESPONDENT respectfully requests the honourable tribunal to affirm

I. the consensual presumptive submission of both the substantial contract and arbitral
agreement to the law of Mediterraneo including the CISG,

II. the lack of Parties’ consensus to conclude either agreement, and

III. thereof resulting jurisdiction of the national courts of Equatoriana.

156 RESPONDENT reserves the right to amend its requests as may be necessary.

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CERTIFICATE

We hereby confirm that this Memorandum was only written by the persons whose names are listed
below and who signed the certificate.

Fabian Abfalter

Katharina Gächter

Mag. Lukas Jäger, B.A.

Matthias L. Krivdić, B.A. LL.B.

Aleksandra Marković

Mag.a Katharina Stöbich, B.A.

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