THIRD ANNUAL

WILLEM C. VIS

INTERNATIONAL
COMMERCIAL ARBITRATION MOOT

International Arbitral Centre
Federal Economic Chamber
Vienna, Austria

March 27-31, 1996

________________________________________

THE PROBLEM

 

Further information:

International Commercial Arbitration Moot
Institute of International Commercial Law
Pace University School of Law
78 North Broadway
White Plains, NY 10603
U.S.A.

Tel: (1-914) 422-4402
Fax: (1-914) 422-4229
E-mail: ebergste@genesis.law.pace.edu


INTERNATIONAL ARBITRATION TRIBUNAL


NOTICE OF ARBITRATION AND STATEMENT OF CLAIM

 

ON BEHALF OF

Quality Manufacturing, Ltd.
Industrial Street 14
1234 Capitol City
Equatoriana                 Claimant

AGAINST

Carlson Heating & Air Conditioning Co.
5678 Warehouse Avenue
3412 Highland Park
Mediterraneo                Respondent


MAY IT PLEASE THE TRIBUNAL

I. THE FACTS OF THE CASE:

1. Quality Manufacturing, Ltd., a Equatorianan company, is a manufacturer of central heating and air conditioning equipment for use in commercial and multi-unit residential buildings. Approximately 40 per cent of its production is exported.

Carlson Heating & Air Conditioning, Co., a Mediterranean company, is a firm that specializes in the sale, installation and servicing of heating and air conditioning equipment in offices, stores, factories and multiple residence buildings.

Quality and Carlson have had infrequent, but continuous, business relations for the past ten years, during which time they have concluded a total of twenty-three contracts, including the contract involved in this request for arbitration, for the sale of heating or air conditioning units for a total contract price of $14,260,000. Until the contract in question there have been no disputes between the two companies.

2. On 15 January 1993 Quality and Carlson concluded a contract for the sale of six model 14C combination heating and air conditioning units at a price of $50,000 per unit (total $300,000) CIP (Incoterms 1990) Port Good Hope, Mediterraneo. (Exhibit 1) The contract called for the first unit to be shipped from any port Equatorianana within five months of the signing of the contract, i.e., prior to 15 June 1993. The second and third units were to be shipped within seven months of the signing of the contract, i.e., prior to 15 August 1993. The remaining three units were to be shipped within eight months of the signing of the contract, i.e., prior to 15 September 1993. According to clause 7.1 of the General Conditions, payment for each shipment was due "thirty days after notification from the Vendor to the Purchaser that the goods have been dispatched."

3. On 15 June 1993 the first unit was shipped in a container on the MS Deep Sea Carrier from Puerto Bello, Equatorianana. Notice of the shipment was sent by telex on 16 June 1993. (Exhibit 2) It arrived at Port Good Hope, Mediterraneo on 27 June 1993. Carlson transshipped the unit to Glacial City, Mediterraneo, where it and the other five model 14C combination heating and air conditioning units were to be installed by Carlson in a multi-unit residential building under construction by Mediterraneo Construction Co.

4. On 14 July 1993 Quality received a telex from Carlson saying "Model 14C heating/air conditioning unit delivered to construction site. Having difficulties getting unit to work. Will let you know more soon." (Exhibit 3) Quality replied on 15 July 1993 asking for more details and repeated its inquiries on 17 July and 23 July. (Exhibits 4, 5 and 6) On 25 July Carlson replied that the control system did not function properly and requested Quality to repair it. (Exhibit 7)

On the same day, 25 July 1993, Quality notified Carlson by telex that it was shipping by air a replacement control system for Carlson to install. Quality pointed out that replacement of the entire control system by Carlson would be considerably less expensive than if Quality were to send its personnel to Mediterraneo to repair the control system in place. (Exhibit 8)

On 26 July 1993 Carlson sent a telex to Quality that its personnel were not available to repair the unit and threatened to go to another supplier if Quality did not send its personnel to Mediterraneo to install the replacement parts. (Exhibit 9)

The following day, 27 July 1993, Quality notified Carlson by telex that the replacement control unit had been shipped the previous day and repeated that Carlson was obligated to install the replacement parts at Quality's expense. (Exhibit 10) Quality also made demand for payment of the price for the first unit, less the cost to Carlson of installing the replacement parts, i.e., $50,000 less an estimated $1,500.

5. Carlsonīs failure to reply promptly and its failure to pay the purchase price that was due on 16 July 1993 caused Quality to feel insecure as to whether Carlson had any intention to fulfill its obligations under the contract. Quality had heard rumors that as soon as Carlson found that there was a problem with the heating/air conditioning unit and before it sent the imprecise telex of 14 July 1993, Carlson had been in contact with Eastinghouse Manufacturers Inc., a manufacturer of heating and air conditioning equipment in competition with Quality, to determine whether Eastinghouse could deliver equipment to satisfy Carlson's obligations under its contract with Mediterraneo Construction Co in the necessary time and at a lower price.

As a result, on 30 July 1993 Quality sent another telex to Carlson stating that before it shipped the next two 14C units, which was due by 15 August 1993, it insisted on payment of the outstanding balance of $48,500 and establishment of a letter of credit for $275,000 with a first class international bank, confirmed by a bank in Equatoriana, that allowed for partial drawings. (Exhibit 11)

6. Carlson replied on 2 August 1993 by telex in which it purported to cancel the contract and stated that it was holding the heating/air conditioning unit for Quality. (Exhibit 12) Quality replied by telex the same day protesting Carlson's purported cancellation of the contract and indicating that it was withholding the August shipment. (Exhibit 13) Carlson sent a further telex on 1 September 1993 requesting Quality to remove the heating/air conditioning unit. (Exhibit 14)

7. During the following six months there were unsuccessful negotiations between the two parties. On 10 April 1994 Carlson sent a telex to Quality stating that it had found a buyer for the unit it was holding at a price after repair of $40,000. The telex said that Carlson would sell for the account of Quality if there was no reply by 17 April 1994. (Exhibit 15) Since Quality had already indicated in its telex of 2 August 1993 that it did not accept the cancellation of the contract and that the unit shipped belonged to Carlson, a position it had continuously upheld in the subsequent negotiations, it saw no reason to reply. Carlson sent a further telex on 20 April 1994 that it was repairing the unit for the account of Quality and that it would sell the unit when the repairs were ready. (Exhibit 16) On 2 May 1994 Carlson sent a telex that it had sold the unit for $40,000 and that it would remit to Quality $20,900, which it claimed was the difference between the price of $40,000 at which it sold the unit and its alleged costs and damages. (Exhibit 17) The following day, 3 May 1994, Quality replied by telex that it continued to hold Carlson in breach of contract, but that it was willing to settle the dispute if Carlson would pay the $50,000 for the unit shipped. (Exhibit 18)

8. Since Quality never received a reply from Carlson, on 12 August 1994 it notified Carlson by telex that it would invoke the arbitration clause in the contract of 15 January 1993. (Exhibit 19)

II. THE LEGAL POSITION

1. Arbitration clause

Clause 3 of the Special Conditions of the contract of 15 January 1993 provided that

Any controversy or claim arising out of or relating to this contract, or the breach, termination, or invalidity thereof, shall be settled by arbitration as follows:

- If the Claimant is an Equatorianan person or entity, the arbitration shall be conducted under the International Arbitration Rules of the American Arbitration Association in effect at the time of filing the claim,

- If the Claimant is a Mediterraneo person or entity, the arbitration shall be conducted under the Rules of Arbitration and Conciliation of the International Arbitral Centre of the Austrian Federal Economic Chamber,

- The place of arbitration shall be Vindobona, Danubia,

- The number of arbitrators shall be three,

- The language of the arbitration shall be English.

2. Law applicable to the contract

Clause 2 of the Special Conditions provided that the contract was to be governed by the United Nations Convention on Contracts for the International Sale of Goods. That would have been the result in the absence of clause 2, since both Equatoriana and Mediterraneo are, and were prior to the conclusion of the contract of 15 January 1993, parties to the Convention.

Clause 2 also provides that "Any matters not governed by the Convention shall be governed by the general principles of law governing international contracts."

3. Legal rights of the claimant

a) Quality shipped the first model 14 C combination heating and air conditioning unit within the period of time specified in the contract.

b) Carlson lost any right it may have had to rely on a lack of conformity of the unit by not giving notice specifying the nature of the lack of conformity within a reasonable time after Carlson discovered it or ought to have discovered it.

c) Even though Quality had no further obligations in regard to the model 14 C unit shipped since adequate notice of the defect was not given within the required time, Quality rectified the defect by furnishing replacement parts to Carlson for Carlson to install at Quality's cost. This action on the part of Quality fulfilled any obligation that Quality might have had under the contract and the Convention to repair the defective unit.

d) Carlson has not paid, and continues to refuse to pay, the $50,000 due for the model 14C heating/ air conditioning unit shipped.

e) Carlson has unjustifiably repudiated the entire contract by purporting to cancel the contract in its telex of 2 August 1993, leading to damages of $80,000 for loss of profits on the five model 14C heating/air conditioning units remaining to be shipped.

Accordingly,

MAY IT PLEASE THE ARBITRAL TRIBUNAL

- to order Carlson to pay Quality the $50,000 due for the model 14 C unit that was shipped, plus interest at the rate of 6 per cent per annum from 16 July 1993 to the date of payment;

- to order Carlson to pay Quality the $80,000 in damages due for the breach of the contract to purchase the remaining five model 14 C heating/air conditioning units, plus interest;

- to order Carlson to pay all costs of the arbitration, including the lawyers' fees.

 

(signed)         , 5 May 1995
Attorneys for Quality Manufacturing, Ltd., Claimant


CLAIMANT'S Exhibit 1

CONTRACT

This contract is between Quality Manufacturing Ltd., Industrial Street 14, 1234 Capitol City, Equatoriana (hereafter referred to as "Seller") and Carlson Heating & Air Conditioning, Co., 5678 Warehouse Avenue, 3412 Highland Park, Mediterraneo (hereafter referred to as "Buyer").

Seller agrees to sell and Buyer agrees to purchase six model 14C heating and air conditioning units for $50,000 per unit (total $300,000) CIP (Incoterms 1990) Port Good Hope, Mediterraneo. Specifications as per Seller's catalog dated 1 January 1993.

Special Conditions

1. Shipping dates. The first unit shall be shipped from any port Equatoriana within five months of the signing of this contract. The second and third units shall be shipped from any port Equatoriana within seven months of the signing of this contract. The fourth, fifth and sixth units shall be shipped from any port Equatoriana within eight months of the signing of this contract.

2. Choice of law. The contract is to be governed by the United Nations Convention on Contracts for the International Sale of Goods. Any matters not governed by the Convention shall be governed by the general principles of law governing international contracts.

3. Arbitration clause. Any controversy or claim arising out of or relating to this contract, or the breach, termination, or invalidity thereof, shall be settled by arbitration as follows:

- If the Claimant is an Equatorianan person or entity, the arbitration shall be conducted under the International Arbitration Rules of the American Arbitration Association in effect at the time of filing the claim,

- If the Claimant is a Mediterraneo person or entity, the arbitration shall be conducted under the Rules of Arbitration and Conciliation of the International Arbitral Centre of the Austrian Federal Economic Chamber,

- The place of arbitration shall be Vindobona, Danubia,

- The number of arbitrators shall be three,

- The language of the arbitration shall be English.

4. General conditions. The general conditions of this contract are contained in General Conditions of Sale for the Import and Export of Durable Consumer Goods and of Other Engineering Stock Articles, No. 730 (prepared under the auspices of the United Nations Economic Commission for Europe, Geneva, March 1961), as set out below.

(signed)          , 15 January 1993
Charles Truvent
Sales Manager
Quality Manufacturing, Ltd.

(signed)          , 15 January 1993
David History
Purchasing Agent
Carlson Heating & Air Conditioning, Co

CLAIMANT'S Exhibit 2

Text of a telex sent by QUALITY to CARLSON on 16 June 1993:

"Model 14 C heating/air conditioning unit shipped 15/6 Puerto Bello on MS Deep Sea Carrier. Due Port Good Hope 27/6. Documents follow."

 

CLAIMANT'S Exhibit 3

Text of a telex sent by CARLSON to QUALITY on 14 July 1993:

"Model 14 C heating/air conditioning unit delivered to construction site. Having difficulties getting unit to work. Will let you know more soon."

CLAIMANT'S Exhibit 4

Text of a telex sent by QUALITY to CARLSON on 15 July 1993:

"Please inform soonest nature of difficulties."

CLAIMANT'S Exhibit 5

Text of a telex sent by QUALITY to CARLSON on 17 July 1993:

"Waiting to know nature of difficulties. Please advise."

CLAIMANT'S Exhibit 6

Text of a telex sent by QUALITY to CARLSON on 23 July 1993:

"Please inform if unit now operating."

CLAIMANT'S Exhibit 7

Text of a telex sent by CARLSON to QUALITY on 25 July 1993:

"Automatic control system does not function. Do not have personnel available to diagnose further. Please repair promptly."

CLAIMANT'S Exhibit 8

Text of a telex sent by QUALITY to CARLSON on 25 July 1993:

"Sending replacement control system by air for you to install at our cost. Return defective control unit to us for repair. Too expensive to send our technicians.

"Payment due 15/7. Please send."

CLAIMANT'S Exhibit 9

Text of a telex sent by CARLSON to QUALITY on 26 July 1993:

"Repeat, our personnel not available. Your responsibility to repair. We will pay when unit operates. Our buyer becoming insistent. Wants unit operating before closing access to building. We must go to other supplier if you do not repair promptly. Please acknowledge."

CLAIMANT'S Exhibit 10

Text of a telex sent by QUALITY to CARLSON on 27 July 1993:

"Replacement control unit sent by air 26/7. We repeat, you obligated install at our cost. Expect you pay immediately 50,000 less repair cost. We estimate your cost 1,500."

CLAIMANT'S Exhibit 11

Text of a telex sent by QUALITY to CARLSON on 30 July 1993:

"Have not received payment. Before shipping next two units, insist on payment 48,500 and establishment confirmed l/c 275,000, international bank, partial draw allowed, for remaining 5 units."

CLAIMANT'S Exhibit 12

Text of a telex sent by CARLSON to QUALITY on 2 August 1993:

"Heating a/c unit still not working. You failed to repair as we insisted. Must supply our buyer working units. Canceling contract 15/1/93. Holding defective unit for you at your cost."

CLAIMANT'S Exhibit 13

Text of a telex sent by QUALITY to CARLSON on 2 August 1993:

"Protest your actions. Holding you for price unit shipped and damages remainder of contract. In view your actions, withholding August shipment."

CLAIMANT'S Exhibit 14

Text of a telex sent by CARLSON to QUALITY on 1 September 1993:

"Please remove your unit. You know we don't have such warehouse space."

CLAIMANT'S Exhibit 15

Text of a telex sent by CARLSON to QUALITY on 10 April 1994:

"Have found buyer your heating a/c repaired $40,000. Please advise. If no response by 17/4, will sell your account."

CLAIMANT'S Exhibit 16

Text of a telex sent by CARLSON to QUALITY on 20 April 1994:

"Repairing heating a/c unit your account. Will sell when ready."

CLAIMANT'S Exhibit 17

Text of a telex sent by CARLSON to QUALITY on 2 May 1994:

"Heating a/c unit sold your account $40,000. Will remit $20,900, price less costs and damages. Please inform bank and account number."

CLAIMANT'S Exhibit 18

Text of a telex sent by QUALITY to CARLSON on 3 May 1994:

"We have repeatedly said that you are in breach of contract dated 15/1/93. Am willing to settle on basis you pay us full $50,000 for the unit shipped. We are willing to waive damages on other five units. Sale 2/5/91 was for your account alone."

CLAIMANT'S Exhibit 19

Text of a telex sent by QUALITY to CARLSON on 12 August 1994:

"Not having heard from you, we are invoking arbitration clause."



INTERNATIONAL ARBITRATION TRIBUNAL

STATEMENT OF DEFENSE

ON BEHALF OF

Carlson Heating & Air Conditioning Co.
5678 Warehouse Avenue
3412 Highland Park
Mediterraneo                Respondent

AGAINST

Quality Manufacturing, Ltd.
Industrial Street 14
1234 Capitol City
Equatorianana                Claimant


MAY IT PLEASE THE TRIBUNAL

I. THE FACTS OF THE CASE:

1. Carlson Heating & Air Conditioning Co. (hereafter CARLSON) entered into the contract of 15 January 1993 with Quality Manufacturing, Ltd (hereafter QUALITY) (Claimant's exhibit 1) in order to fulfill its obligations to Mediterraneo Construction Co. (hereafter CONSTRUCTION). CONSTRUCTION was constructing a large residential complex in Glacial City, Mediterraneo. On 12 January 1993 CARLSON and CONSTRUCTION concluded a contract whereby CARLSON undertook to furnish and install six central combination heating and air conditioning units. The contract between CARLSON and CONSTRUCTION specified the technical characteristics of the six units, but did not specify any particular brand. The contract did say, however, that all six units had to be from the same manufacturer.

2. The model 14 C combination heating and air conditioning units produced by QUALITY met the technical specifications in the contract of 12 January 1993 between CARLSON and CONSTRUCTION, as did the units produced by several other manufacturers.

3. As set out in the statement of claim, the first model 14 C unit arrived in a container at Port Good Hope, Mediterraneo on 27 June 1993. The unit was transshipped in the sealed container to the construction site in Glacial City, where it arrived on 1 July 1993. The container was opened and the unit removed on 3 July 1993. It was installed during the period 5-10 July 1993. As soon as it was installed, CARLSON undertook to do the basic testing of the unit. CARLSON personnel at the job site could not get the unit to operate properly. As a result, on 14 July 1993 CARLSON sent the telex referred to in the statement of claim. (Claimant's exhibit 3) Further testing took place during the following week until CARLSON determined that the difficulties were in the control system. Mr. Thomas Winslow, the only CARLSON employee who was trained to diagnose further the QUALITY control system, was committed to other projects. As a result, on 25 July 1993 CARLSON sent the telex referred to in the statement of claim (Claimant's exhibit 7) requesting QUALITY to repair the unit.

4. QUALITY's reply telex of 25 July 1993 that it was shipping a replacement control system for CARLSON to install (Claimant's exhibit 8) was not sufficient in the circumstances, and CARLSON reiterated in its telex of 26 July 1993 that its personnel were not available to fix the unit. All of this time CONSTRUCTION was pressing CARLSON as to when the unit would be functioning. It wished to complete the outside wall, thereby closing access to the location for the heating/air conditioning unit. However, it did not wish to do so until it was assured that a functioning heating/air conditioning unit had been installed. Therefore, CARLSON felt it necessary to inform QUALITY that CARLSON would have to look to another supplier of the heating/air conditioner unit if QUALITY did not put the unit in operating order. Instead of repairing the unit as CARLSON expected it to do, QUALITY attempted to change the payment terms of the contract in its telexes of 27 and 30 July 1993. (Claimant's exhibits 10 and 11)

5. By this time it was clear to CARLSON that QUALITY would not repair the unit in time for CARLSON to fulfill its contractual obligations to CONSTRUCTION. Therefore, on 2 August 1993 it notified QUALITY by telex that it was canceling the contract. (Claimant's exhibit 12) On 8 August 1993 CARLSON removed the defective heating/air conditioning unit from the construction site and stored it in its warehouse. On 1 September 1993 it requested QUALITY to remove the unit. (Claimant's exhibit 14) This was of particular importance to CARLSON because CARLSON has limited warehouse space.

6. After six months of frustratingly unsuccessful negotiations, CARLSON finally notified QUALITY by telex that it had found a buyer for QUALITY's unit. (Claimant's exhibit 15) No reply having been received, on 20 April 1994 CARLSON notified QUALITY that it would repair the unit preparatory to sale for QUALITY's account. (Claimant's exhibit 16) The unit was sold on 2 May 1994 for $40,000, of which fact QUALITY was notified by telex the same day. (Claimant's exhibit 17) In the telex CARLSON notified QUALITY that it would remit the sale price less its costs and the damages it had had to pay to CONSTRUCTION for delay in fulfillment of its contract with CONSTRUCTION. The net amount to be remitted was $20,900.

II. THE LEGAL POSITION

1. Legal rights of the respondent

1. There is common ground between CARLSON and QUALITY that the model 14 C heating/air conditioning unit was defective.

2. CARLSON inspected the unit promptly after it was delivered to the construction site where it was to be installed. As soon as CARLSON had determined that the unit was defective it notified QUALITY of the defect.

3. QUALITY refused to repair the unit after CARLSON repeatedly required it to do so.

4. The unrepaired unit could not be used by CARLSON to fulfil its contractual obligations to CONSTRUCTION. CARLSON was being pressed by CONSTRUCTION to install the first of six functioning heating/air conditioning units promptly so that CONSTRUCTION could continue with the construction of the residential complex. Therefore, CARLSON was within its rights to cancel the contract with QUALITY and to purchase replacement units from another supplier.

5. CARLSON is entitled to reimbursement for its expenses in preserving and selling QUALITY's unit, including its expenses in repairing the unit prior to sale. Such reimbursement can be recovered from the $40,000 for which QUALITY's unit was sold.

6. CARLSON is also entitled to recover the damages it was required to pay to CONSTRUCTION for delay in furnishing heating/air conditioning units under the contract between them of 12 January 1993, which delay was caused by QUALITY's failure to fulfill its obligations to CARLSON.

Accordingly,

MAY IT PLEASE THE TRIBUNAL

- to declare that CARLSON was within its rights when it canceled the contract of 15 January 1993;

- to declare that CARLSON properly sold the model 14 C heating/air conditioning unit for the account of QUALITY;

- to declare that QUALITY is liable to CARLSON for the expenses it incurred in preserving and selling QUALITY's unit, including its expenses in repairing the unit prior to sale.

- to declare that QUALITY is liable to CARLSON for the damages that CARLSON was required to pay to CONSTRUCTION for delay in furnishing heating/air conditioning units under the contract between them of 12 January 1993;

- to declare that CARLSON may reimburse itself for these expenses and damages from the amount it collected for QUALITY upon the sale of the unit, leaving a balance due to QUALITY of $20,900

- to order QUALITY to pay all costs of the arbitration, including the lawyers' fees.

(signed)          , 30 June 1995
Attorneys for Carlson Heating & Air Conditioning Co., Respondent

 

INTERNATIONAL ARBITRATION TRIBUNAL

NOTICE TO PRODUCE DOCUMENTS

ON BEHALF OF

Quality Manufacturing, Ltd.
Industrial Street 14
1234 Capitol City
Equatoriana       Claimant

AGAINST

Carlson Heating & Air Conditioning Co.
5678 Warehouse Avenue
3412 Highland Park
Mediterraneo      Respondent


MAY IT PLEASE THE TRIBUNAL:

This arbitration will involve two primary factual questions:

1) whether CARLSON had any legitimate reason under the contract and the applicable law to refuse to install the replacement control system for the model 14 C combination heating and air conditioning unit, and

2) whether CARLSON was attempting to take advantage of the admitted, but easily repaired, defect in the unit shipped in order to terminate the contract of 15 January 1993 with QUALITY so as to take advantage of a lower price for functionally similar equipment subsequently offered by Eastinghouse Manufacturers, Inc.

The answers to those two questions lie primarily in documents in the possession of CARLSON that are not in the possession of QUALITY.

Therefore, QUALITY requests the Tribunal to order CARLSON to furnish QUALITY within a reasonable period of time to be fixed by the Tribunal with the following documents:

1) all work assignments of Mr. Thomas Winslow during the period 5 July 1993 to 2 August 1993, including location of the job and technical description of actual work done; and

2) all records of communications with Eastinghouse Manufacturers, Inc. during the period 15 January 1993 to 5 August 1993 that might be relevant to the contract of 2 August 1993 between CARLSON and Eastinghouse in which Eastinghouse contracted to supply the combination heating/air conditioning units for installation in the residential complex under construction by Mediterraneo Construction Co., including letters, faxes and other written forms of communication sent and received and memoranda recording telephone calls and face to face conversations.

(signed)        , 20 July 1995
Attorneys for Quality Manufacturing, Ltd., Claimant

 

INTERNATIONAL ARBITRATION TRIBUNAL

RESPONSE TO NOTICE TO PRODUCE DOCUMENTS

ON BEHALF OF

Carlson Heating & Air Conditioning Co.
5678 Warehouse Avenue
3412 Highland Park
Mediterraneo      Respondent

AGAINST

Quality Manufacturing, Ltd.
Industrial Street 14
1234 Capitol City
Equatoriana      Claimant


MAY IT PLEASE THE TRIBUNAL:

The request for documents filed by the Claimant, QUALITY, is unjustified and improper. It asks for communications of the Respondent, CARLSON, with a competitor of QUALITY, including internal memoranda of oral communications with that competitor. The request also asks for internal records of work assignments of one of the Respondent's employees who had no contact with Claimant in respect of the contract of 15 January 1993, which is the subject matter of this arbitration.

Therefore, Respondent respectfully requests the Tribunal to reject Claimant's Notice to Produce Documents dated 20 July 1995.

(signed)        , 6 September 1995
Attorneys for Carlson Heating & Air Conditioning Co., Respondent

 

INTERNATIONAL ARBITRATION TRIBUNAL

in the Matter of

Quality Manufacturing, Ltd.      Claimant


Carlson Heating & Air Conditioning Co.      Respondent


ORDER

The Claimant, Quality Manufacturing, Ltd., has served on the Respondent, Carlson Heating & Air Conditioning Co., with copies to the Tribunal, a notice to produce documents dated 20 July 1995. In the said notice the Claimant has requested the Tribunal to order the Respondent to furnish the Claimant within a reasonable period of time to be fixed by the Tribunal with the following documents:

1) all work assignments of Mr. Thomas Winslow during the period 5 July 1993 to 2 August 1993, including location of the job and technical description of actual work done; and

2) all records of communications with Eastinghouse Manufacturers, Inc. during the period 15 January 1993 to 5 August 1993 that might be relevant to the contract of 2 August 1993 between CARLSON and Eastinghouse in which Eastinghouse contracted to supply the combination heating/air conditioning units for installation in the residential complex under construction by Mediterraneo Construction Co., including letters, faxes and other written forms of communication sent and received and memoranda recording telephone calls and face to face conversations.

The Respondent served on the Claimant, with copies to the Tribunal, a response to the notice to produce documents dated 6 September 1995 in which Respondent requested the Tribunal to reject Claimant's request.

The Tribunal has discussed the matter in a conference call. It finds that it is unprepared to rule on the request in the present state of the arbitration. In order to make such a ruling, the Tribunal would need to be clear as to three points:

1) the legal, as well as factual, basis for Claimant's claim and Respondent's defense to that claim:

2) the relevance of the requested documents to either Claimant's claim or to Claimant's resistance to Respondent's defense; and

3) if the requested documents are relevant to either Claimant's claim or to Claimant's resistance to Respondent's defense, the legality and appropriateness of ordering Respondent to make them available to Claimant.

The pleadings in the case so far do not permit the Tribunal to rule on the notice to produce documents. Therefore, the Tribunal has authorized me as President to issue the following ruling:

THE PRESIDENT OF THE TRIBUNAL,

Acting under authority of Article 27(2) of the American Arbitration Association International Arbitration Rules, orders both parties to prepare memoranda instructing the Tribunal on the three points set out above.

The Claimant's memorandum in 30 copies shall be submitted to the registry of the Tribunal by 6 December 1995.

The Respondent's memorandum in 30 copies shall be submitted to the registry of the Tribunal by 14 February 1996.

If, on the basis of the written memoranda, the Tribunal determines that it wishes to hear oral arguments in regard to any matter raised in the memoranda, the arguments will be scheduled during the period 27 to 31 March 1996 at the premises of the Danubian Arbitration Centre.

(signed)        , 2 October 1995
President, International Arbitration Tribunal