CLARIFICATIONS OF THE PROBLEM


November 2, 1994
To: Participants in the 1995 Willem C. Vis International Commercial Arbitration Moot
From: Eric E. Bergsten
Subject: Clarifications of the Problem

Within the last several days we have received several requests for clarification of the problem. This memorandum is being sent by fax or e-mail to all participants who have given us one or the other. It is being sent by courier to all others. If you have received this memorandum by courier, please send us immediately either or both a fax number and an e-mail address for future correspondence.

1. Does the term "law applicable to the contract" used in clause 16 of the Master Sales Agreement (page 3 of the problem) include material law as well as procedural law?

As indicated in the Preamble to the Agreement, the Master Sales Agreement was an adaptation of the model sales and EDI communications agreement prepared by the International Electronics Association. The model agreement provided "The law applicable to this contract is the law of (Fill in the name of the seller's country, if one of the two parties will always be the seller. If both of the parties will on occasion be seller, the clause might conclude 'Seller's country')." There is no record of any discussion in either the International Electronics Association or in the negotiations between Communications Corporation and Specialty Electronics Corporation as to the scope of the provision.

2. Is there any way to interrupt the period of extinctive prescription in Artt. 2213, 2214 of the Civil Code of Mediterraneo?

No act that would interrupt the period of extinctive prescription prescribed in the Civil Code of Mediterraneo has occurred.

3. How many A-14 resonators are contained in each X-23 base station?

There are two resonators in each base station. Communications Corporation ordered twenty extra resonators so that it could manufacture an extra ten base stations as a safety precaution. As stated in the Problem, the cost of the resonators in each base station would be $50, each resonator costing $25.

4. When the facts mention money, are we to assume that those dollars are US dollars?

The dollars in question are Mediterraneo dollars. The symbol for a Mediterraneo dollar is "$".

5. Which interest rate should be applied in the estimation of the damages by Communications Corporation?

An interest rate of 6% may be used for the calculation of damages.

6. What is the delivery schedule for the 10,000 X-23 units that Communications Corporation was to deliver to World Wide Telecommunications?

The contract between Communications Corporation and World Wide Telecommunications dated 2 March 1994 called for Communications Corporation to deliver the 50 base stations for testing by April 15, 1994. World Wide Telecommunications had until May 31, 1994 to complete the testing and notify Communications Corporation of the results. If the base stations were found to be acceptable, Communications Corporation was to deliver 250 units by July 1, 1994, an additional 250 units by August 1, 1994 and 500 units per month from September 1, 1994 through March 1, 1996, at which time the entire 10,000 units would have been delivered.

7. What are the relevant rules of conflicts of law (private international law) of Mediterraneo?

The rules of private international law in Mediterraneo are found in the Law on Private International Law adopted on October 3, 1989. The portions of the law relevant to contractual obligations were borrowed from the Convention on the Law Applicable to Contractual Obligations (Rome, June 19, 1990), negotiated by the then current members of the European Community. Mediterraneo is not a party to the Convention. The relevant provisions of the Law are as follows:

Article 35. The rules of this law do not apply to:

* * *

(d) arbitration agreements and agreements on the choice of court;

Article 37. A contract shall be governed by the law chosen by the parties. The choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or a part only of the contract.

Article 44. The law applicable to a contract by virtue of the provisions of this Law shall govern in particular:

(a) interpretation;

(b) performance;

(c) the consequences of breach, including the assessment of damages in so far as it is governed by rules of law;

(d) the various ways of extinguishing obligations, and prescription and limitation of actions;

(e) the consequences of nullity of contract.



November 16, 1994
To: Participants in the Willem C. Vis International Commercial Arbitration Moot
From: Eric E. Bergsten
Subject: Clarifications of the Problem

We have been asked for further clarifications of the Problem. Since the statement of claim will be due at the Institute in little more than three weeks, we will entertain no further requests for clarifications of the Problem.

1. What are the relevant rules of private international law in Danubia? Danubia has no specific statutory law on private international law. The courts regularly recognize and enforce clauses in which the parties choose the law applicable to their contract. Danubia also enforces arbitration clauses calling for arbitration in Danubia or in other countries, as is provided in the UNCITRAL Model Law on International Commercial Arbitration as its means, among other things, of implementing the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The principal authority in private international law in Danubia, Professor Herman Hermann, states in his treatise "Private International Law in Danubia", 26.3 (Vindobona 1991), that the characterization of a foreign statute of limitations or period of prescription has not arisen in the courts of Danubia. Experience in arbitrations held in Danubia is not known because the International Arbitration Association of Danubia holds tightly to the principle that arbitrations are private affairs of the parties.

2. When the resonators were sent by air, was an Incoterm utilized? The contract price for the 120 resonators was $25 CIP (Incoterms 1990), for a total of $3,000.

3. What expenditures for plant and equipment, research and development, etc. were spent to develop the X-23 base station? Unaudited figures show a total expenditure of $3,500.000,

4. Taking into account the progressive delivery schedule, what is the discount rate for the payment of awards? The discount rate should be based on the interest rate of 6% indicated in an earlier clarification of the Problem.