SEVENTH ANNUAL

WILLEM C. VIS

INTERNATIONAL
COMMERCIAL ARBITRATION MOOT

Vienna, Austria
April 14 to 20, 2000


THE PROBLEM


Organized by:

Institute of International Commercial Law
Pace University School of Law
78 North Broadway
White Plains, NY 10603
USA


25 May 1999

Mr. Adrian Winstanley, Registrar
London Court of International Arbitration
Hulton House, 6th Floor
161-166 Fleet Street
London EC4A 2DY
England

Dear Mr. Winstanley:

We represent Feed Processing Corp. in a dispute in which it is involved with Grain Dealers, PLC.

I hereby enclose four copies of a Request for Arbitration between Feed Processing Corp., Claimant, and Grain Dealers, PLC, Respondent. The registration fee of £1,500 has been transferred to the account of the London Court of International Arbitration, and I enclose a copy of the transfer order.

A copy of the Request for Arbitration with all accompanying documents is being sent at the same time to Grain Dealers, PLC by courier.

Sincerely,

(Signed)
Advocate at the Court


LONDON COURT OF INTERNATIONAL ARBITRATION

Case No. Moot 7


Feed Processing Corp.
Claimant

v.

Grain Dealers, PLC
Respondent

REQUEST FOR ARBITRATION

I. Parties

1. Feed Processing Corp. (hereinafter referred to as PROCESSING) is a company organized under the laws of the country of Mediterraneo. It has its principal office at 123 Industrial Avenue, Highlands, Mediterraneo. Telephone +123 000 000 000, Fax +123 000 000 001.

2. Grain Dealers, PLC (hereinafter referred to as DEALERS) is a company organized under the laws of the country of Danubia. It has its principal office at 26 Export Pl., Southside City, Danubia. Telephone +234 000 000 000, Fax +234 000 000 001.

II. Arbitration Clause and Contract

3. A contract for the sale of 6,000 tons of standard feed wheat was entered into between PROCESSING and DEALERS on the basis of the Standard Conditions of Sale No. 5 of the Danubia Feed and Grain Association. A copy of the Standard Conditions of Sale is enclosed as Claimant’s Exhibit No. 1.

4. The Standard Conditions of Sale contain the following arbitration clause:

"Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the Rules of the LCIA, which Rules are deemed to be incorporated by reference into this clause.

Where the dispute is for an amount of $50,000 or less, the number of arbitrators shall be one. The sole arbitrator shall be named by the LCIA Court. Where the dispute is for an amount more than $50,000, the number of arbitrators shall be three. Each party shall nominate one arbitrator and the chairman shall be appointed by the LCIA Court.

The place of arbitration shall be Vindobona, Danubia.

The language to be used in the arbitral proceedings shall be English.

The governing law of the contract shall be the substantive law of Danubia, including the United Nations Convention on Contracts for the International Sale of Goods."

III. Nature and Circumstances of the Dispute

5. On 19 February 1998 a contract for the sale of standard feed wheat was entered into between PROCESSING and DEALERS on the basis of the Standard Conditions of Sale No. 5 of the Danubia Feed and Grain Association. The contract was concluded by telephone and confirmed by PROCESSING the following day by letter. (Claimant’s Exhibit No. 2) The contract called for July 1998 delivery of 6,000 tons of standard feed wheat at a price of $60.00 per ton FOB Danubian port. The price was to be paid by means of a letter of credit expiring 30 August 1998. The letter of credit was to provide that no partial shipments were to be allowed.

6. Because of floods in the standard feed wheat producing region of Danubia, on 17 April 1998 the government of Danubia mandated an export prohibition, followed by a system of export licenses based on the situation as of 17 April 1998. In spite of the fact that DEALERS subsequently received a quota that was sufficient to service all of its contracts signed by 17 April 1998, DEALERS refused to deliver to PROCESSING more than 4,800 tons of standard feed wheat, demanded that the expiration date of the letter of credit be extended to 30 November 1998 and demanded that the letter of credit provide for partial shipments, all contrary to the contract between them. (Claimant’s Exhibits Nos. 3 – 11)

7. Following the refusal of PROCESSING to modify the contract as desired by DEALERS, on 16 June 1998 DEALERS wrongfully terminated the contract. (Claimant’s Exhibit No. 11) On 18 June 1998 PROCESSING purchased replacement standard feed wheat for July delivery at $75.00 per ton FOB Equatoriana port.

III. The Law Applicable to the Case

8. The contract provides that the contract is subject to the law of Danubia, including the United Nations Convention on Contracts for the International Sale of Goods. Since Danubia and Mediterraneo are both party to the United Nations Convention on Contracts for the International Sale of Goods, the Convention is applicable to the contract by virtue of both Article 1(1)(a) and 1(1)(b) of the Convention.

9. Danubia, where the parties have agreed the arbitration should take place, has adopted the UNCITRAL Model Law on International Commercial Arbitration.

10. Danubia and Mediterraneo are both party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

IV. Claimant Nominated Arbitrator

11. Claimant nominates as its arbitrator (name, address, telephone, facsimile and e-mail supplied).

IV. Relief Sought

12. PROCESSING requests the Tribunal:

(Signed)______________
Advocate at the Court

25 May 1999
Date


Claimant’s Exhibit No. 1

Extracts from Danubia Feed and Grain Association Standard Conditions of Sale No. 5

* * *

10. Letter of credit Buyer will open a letter of credit with a bank of international standing at least one month prior to the first day on which shipment may be made. The credit shall be for the contract price plus 10% (ten percent). The credit shall be available to Seller for presentment for at least one month subsequent to the last day on which shipment may be made. The credit shall either be opened or confirmed in Danubia. Partial shipments will be allowed.

* * *

13. Arbitration Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the Rules of the LCIA, which Rules are deemed to be incorporated by reference into this clause.

Where the dispute is for an amount of $50,000 or less, the number of arbitrators shall be one. The sole arbitrator shall be named by the LCIA Court. Where the dispute is for an amount more than $50,000, the number of arbitrators shall be three. Each party shall nominate one arbitrator and the chairman shall be appointed by the LCIA Court.

The place of arbitration shall be Vindobona, Danubia.

The language to be used in the arbitral proceedings shall be English.

The governing law of the contract shall be the substantive law of Danubia, including the United Nations Convention on Contracts for the International Sale of Goods.


Claimant’s Exhibit No. 2

Feed Processing Corp.
123 Industrial Avenue
Highlands, Mediterraneo

20 February 1998

Mr. Ronald Stern
Grain Dealers, PLC
26 Export Pl.
Southside City, Danubia

Dear Mr. Stern:

I wish to acknowledge our telephone conversation of yesterday, 19 February 1998, in which 6,000 tons of standard feed wheat were purchased from you at $60.00 per ton FOB. The wheat is to be shipped from any Danubian port July 1998.

The contract is subject to the Danubia Feed and Grain Association Standard Conditions of Sale No. 5. The letter of credit will have an expiration date of one month after the last day for shipment, i.e., 30 August 1998. In conformity with our past practice and in derogation of the Standard Conditions, the letter of credit will provide for no partial shipments.

Sincerely,

(Signed)_______
Mr. Harold Dean
Purchasing Agent


CLAIMANT’S EXHIBIT NO. 3

Grain Dealers, PLC
26 Export Pl.
Southside City, Danubia

17 April 1998

Purchasing Department
Food Imports, Co.
125 Industrial Avenue
Highlands, Mediterraneo

Attn Mr. Harold Dean

Re: Contract 2340 with Food Imports, Co.

Dear Mr. Dean:

I refer to my letter of 24 February 1998 in which I confirmed receipt of your confirmation of the contract for 6,000 tons of standard feed wheat entered into by telephone on 19 February 1998. I am writing you today at Foods Imports with copy to you at Feed Processing Corp. I have learned since our last correspondence that you are currently employed at Feed Processing and I wish to be sure that you receive this letter at one of the two locations.

You are aware that there have been floods in the standard feed wheat growing area in Danubia and that a temporary export prohibition of standard feed wheat has been declared. We anticipate that this export prohibition will last only as long as it takes for the Ministry to determine the amount of crop loss and the amount of standard feed wheat that will need to be reserved for the domestic market. We will inform you as soon as we are in possession of more information.

Sincerely,

(Signed)____
Ronald Stern

Cc: Feed Processing Corp.


Claimant’s Exhibit No. 4

Grain Dealers, PLC
26 Export Pl.
Southside City, Danubia

5 May 1998

Mr. Harold Dean
Purchasing Department
Feed Processing Corp.
123 Industrial Avenue
Highlands, Mediterraneo

Re: Contract 2340 with Food Imports, Co.

Dear Mr. Dean:

I wish to bring you up to date with the situation in Danubia. The Ministry announced today that the export prohibition of standard feed wheat announced on 17 April 1998 is to be replaced by a system of export permits. According to the announcement, applications may be made for a total covering all firm contracts for export entered into prior to 17 April 1998 plus an amount equivalent to the average amount sold to regular customers (as defined in the governing regulations) the previous five years for which firm contracts had not been placed by 17 April.

Grain Dealers, PLC has submitted the necessary export permit application. We will inform you as soon as we have received any news from the Ministry.

Sincerely,

(Signed)____
Ronald Stern

Cc: Food Imports, Co


Claimant’s Exhibit No. 5

Grain Dealers, PLC
26 Export Pl.
Southside City, Danubia

21 May 1998

Mr. Harold Dean
Purchasing Department
Feed Processing Corp.
123 Industrial Avenue
Highlands, Mediterraneo

Re: Contract 2340 with Food Imports, Co.

Dear Mr. Dean:

The Ministry yesterday issued the anticipated export permits for standard feed wheat from Danubia for the period through August 1998. Unfortunately, the total quota that we received is not enough to cover all of our obligations. We requested a total of 300,000 tons, but received a quota of only 240,000 tons.

Therefore, we will be able to furnish you with 4,800 tons in fulfillment of our contractual obligation for 6,000 tons shipment July. We hope and anticipate that we may receive an additional quota for September or October shipment so as to be able to furnish you the remaining 1,200 tons.

In order to permit us to ship the remaining quantity, if we should receive the additional quota for shipment by the end of October, we would request that the letter of credit remain open to 30 November 1998, rather than 31 August 1998 as called for in the contract, and that partial shipments be allowed.

Sincerely,

(Signed)____
Ronald Stern

Cc: Food Imports, Co


Claimant’s Exhibit No. 6

Feed Processing Corp.
123 Industrial Avenue
Highlands, Mediterraneo

21 May 1998

Mr. Ronald Stern
Grain Dealers, PLC
26 Export Pl.
Southside City, Danubia

Dear Mr. Stern:

Re: Contract 2340

I wish to acknowledge your letter of date received by fax.

What you have suggested is not acceptable. We expect Grain Dealers, PLC to fulfill its contractual obligations to us. We note that your request to the Ministry for an export quota included an amount to cover your firm contractual obligations and an amount to cover sales to parties with whom you did not have a firm contractual obligation as of April 17, 1998. We assume that means that you have allocated some of your quota to such parties. While we can understand that allocation would have to take place if the allotment you received from the Ministry was not enough to cover all of your contractual commitments, we would not accept that you supply anyone with whom you did not have a firm contractual commitment as of April 17, 1998 at the expense of fulfilling your contractual obligations to us.

Under the circumstances we would ask you to assure us that we will receive an amount of standard feed wheat that will reflect our proportionate share of all the firm contracts that you had entered into by April 17, 1998. Otherwise, we will proceed as provided in the contract.

Under the contract we are obligated to open a letter of credit for $396,000 that will remain open until August 31, 1998. The letter of credit will call for no partial shipments, as called for by the contract.

Sincerely,

(Signed)_______
Mr. Harold Dean
Purchasing Agent

Cc: Food Imports, Co.


Claimant’s Exhibit No. 7

Grain Dealers, PLC
26 Export Pl.
Southside City, Danubia

22 May 1998

Mr. Harold Dean
Purchasing Department
Feed Processing Corp.
123 Industrial Avenue
Highlands, Mediterraneo

Re: Contract 2340 with Food Imports, Co. and Letter of 21 May 1998

Dear Mr. Dean:

I am sorry but I do not understand the tone of your letter of yesterday which you have faxed to me. It is obvious that a natural catastrophe in the nature of the floods that we have experienced in Danubia this year will cause many difficulties. There will be a major reduction in production of standard feed wheat in Danubia. There is nothing we can do about that. However, we and the government are all attempting to work out the best situation for all.

The Ministry has given us and all the other exporters allocations based upon our firm contracts as of 17 April 1998 and the amount we had sold on average over the last five years to regular customers with whom no firm contracts had yet been entered into. Since this is the basis of the Ministry’s allocation of an export quota to us, it is only reasonable for us to use it as the basis for our allocation of shipments to our customers.

We wish to assure you that as soon as we have received further allocations, which we sincerely believe will happen, we will be pleased to ship to you the balance of the contract amount. However, for that to occur, it will be necessary for you to arrange for a letter of credit that will remain open until 30 November 1998 and that will allow partial shipments.

Sincerely,

(Signed)____
Ronald Stern

Cc: Food Imports, Co


Claimant’s Exhibit No. 8

Grain Dealers, PLC
26 Export Pl.
Southside City, Danubia

29 May 1998

Mr. Harold Dean
Purchasing Department
Feed Processing Corp.
123 Industrial Avenue
Highlands, Mediterraneo

Dear Mr. Dean:

Re: Contract 2340 with Food Imports, Co.

We have received the letter of credit today and it is not acceptable. It calls for a bill of lading showing shipment of 6,000 tons of standard feed wheat.

As I said in my letter of 22 May 1998 we are able to ship only 4,800 tons of standard feed wheat to you at this time. However, we hope to be able to ship the remaining 1,200 tons by the end of October. Therefore, I must insist that the letter be amended so that it would permit partial shipment and that it would remain open until November 30, 1998.

I look forward to a prompt and satisfactory resolution of this situation.

Sincerely,

(Signed)____
Ronald Stern

Cc: Food Imports, Co


Claimant’s Exhibit No. 9

Feed Processing Corp.
123 Industrial Avenue
Highlands, Mediterraneo

2 June 1998

Mr. Ronald Stern
Grain Dealers, PLC
26 Export Pl.
Southside City, Danubia

Dear Mr. Stern:

Re: Contract 2340

I acknowledge receipt of your letter dated 29 May 1998 sent by fax.

Amendment of the letter of credit in the manner that you suggest would not be in conformity with the contract.

We insist that Grain Dealers, PLC deliver the entire 6,000 tons of standard feed wheat contracted for. Your failure to do so will undoubtedly lead to unwanted legal consequences.

Sincerely,

(Signed)_______
Mr. Harold Dean
Purchasing Agent

Cc: Food Imports, Co.


Claimant’s Exhibit No. 10

Grain Dealers, PLC
26 Export Pl.
Southside City, Danubia

3 June 1998

Mr. Harold Dean
Purchasing Department
Feed Processing Corp.
123 Industrial Avenue
Highlands, Mediterraneo

Dear Mr. Dean:

Re: Contract 2340 with Food Imports, Co.

We seem to be coming to an impasse. It would not be possible for us to deliver to you during the July shipment period the full quantity of standard feed wheat contracted for. Doing so would require us to take that amount of standard feed wheat away from one of our other customers.

We must insist that by 15 June 1998 we receive an amendment to the letter of credit in line with our letter of 29 May 1998 or we will feel free to allocate to our other customers the standard feed wheat that would have been shipped to you.

Sincerely,

(Signed)____
Ronald Stern

Cc: Food Imports, Co


Claimant’s Exhibit No. 11

Grain Dealers, PLC
26 Export Pl.
Southside City, Danubia

16 June 1998

Mr. Harold Dean
Purchasing Department
Feed Processing Corp.
123 Industrial Avenue
Highlands, Mediterraneo

Dear Mr. Dean:

Re: Contract 2340 with Food Imports, Co.

We regret to say that we have not received an amendment to the letter of credit by yesterday, 15 June 1998.

We are taking steps to re-allocate to our other customers the standard feed wheat that we would otherwise have shipped to you.

We regret this action. We have been supplying Feed Processing Corp. through Food Imports, Co. for many years and we hope that this break in our relationship will be only temporary.

Sincerely,

(Signed)____
Ronald Stern

Cc: Food Imports, Co


London Court of International Arbitration
Hulton House, 6th Floor
161-166 Fleet Street
London EC4A 2DY

27 May 1999

Mr. _____________
Advocate at the Court
42 Court Street
Highlands, Mediterraneo

Grain Dealers, PLC
26 Export Pl.
Southside City, Danubia

Dear Sirs

Arbitration Moot No. 7 - Feed Processing Corp. v. Grain Dealers, PLC

1. We have today received in quadruplicate a Request for Arbitration (the Request), dated 25 May 1999 from Mr. ___________, Advocate at the Court, legal representative of the Claimant, copies of which we have been advised have been served on the Respondent.

2. Unless we are notified otherwise, correspondence will be with the parties’ legal representatives, where notified, without copy to the parties themselves.

3. The Request was accompanied by:

(a) a copy of a document headed "Danubia Feed and Grain Association Standard Conditions of Sale No. 5" (extracts only) (the sales and arbitration agreement);

(b) a copy of a faxed letter dated 20 February 1998 from Mr. Harold Dean to Mr. Ronald Stern confirming a telephonic contract of sale of the previous day;

(c) copies of faxed letters dated 17 April 1998, 5 May 1998, 21 May 1998, 22 May 1998, 29 May 1998, 3 June 1998 and 16 June 1998 from Mr. Ronald Stern to Mr. Harold Dean;

(d) Copies of faxed letters dated 21 May 1998 and 2 June 1998 from Mr. Harold Dean to Mr. Ronald Stern.

4. We are advised that the LCIA’s registration fee of £1,500 has been paid by bank transfer.

5. We note that, in filing the Request, the Claimant invokes the provisions of Clause 13 of the Danubia Feed and Grain Association Standard Conditions of Sale No. 5 (the Arbitration Clause), which provides as follows:

"Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the Rules of the LCIA, which Rules are deemed to be incorporated by reference into this clause.

Where the dispute is for an amount of $50,000 or less, the number of arbitrators shall be one. The sole arbitrator shall be named by the LCIA Court. Where the dispute is for an amount more than $50,000, the number of arbitrators shall be three. Each party shall nominate one arbitrator and the chairman shall be appointed by the LCIA Court.

The place of arbitration shall be Vindobona, Danubia.

The language to be used in the arbitral proceedings shall be English.

The governing law of the contract shall be the substantive law of Danubia, including the United Nations Convention on Contracts for the International Sale of Goods."

6. We note that the Arbitration Clause provides that disputes to which it refers shall be referred to arbitration under the rules of the London Court of International Arbitration (the LCIA), and that where the dispute is for an amount more than $50,000, the number of arbitrators shall be three, one to be nominated by each party, in which regard the Claimant nominates ________.

7. The parties are advised that the LCIA Rules in force at the date of the Request are the LCIA Arbitration Rules (1998) (the Rules), a copy of which is enclosed, together with an introductory leaflet.

8. The Respondent is advised that, in accordance with Article 2 of the Rules, they may submit a Response within thirty days of their receipt of the Request. Failure to send a Response does not, however, preclude the Respondent from denying the claim nor from setting out a counterclaim in the arbitration. Would the Claimant please provide proof of service of the Request on the Respondent and of the date on which it was served.

9. Article 6.1 of the Rules provides that, where the parties are of different nationalities, then, unless they have all agreed in writing otherwise, sole arbitrators or chairmen are not to be appointed if they have the same nationality as any party (the nationality of parties being understood to include that of controlling shareholders or interests (Article 6.2)). For the purposes of Article 6.1, we understand the Claimant to be a company incorporated under the law of Mediterraneo and the Respondent under the law of Danubia.

Yours faithfully,

(Signed)
Adrian Winstanley
Registrar


Attorneys
45 Bar Street
Southside City, Danubia

29 May 1999

Mr. Adrian Winstanley
Registrar
London Court of International Arbitration
161-166 Fleet Street
London EC4A 2DY, England

Dear Mr. Winstanley:

Grain Dealers, PLC, who we represent as counsel, has received by courier the Request for Arbitration from Feed Processing Corp. dated 25 May 1999 as well as your communication to both Feed Processing Corp. and Grain Dealers, PLC, dated 27 May 1999.

It does not seem necessary to go through the procedures of setting up an arbitral tribunal in this case. The contract in question was between Grain Dealers, PLC and Food Imports, Co. and not with Feed Processing Corp. Since there was no contract of sale with Feed Processing Corp., there was obviously also no arbitration clause. We would ask you to so inform Feed Processing Corp., with copy to us.

Sincerely,

(Signed)
Attorney

cc: Feed Processing Corp.


London Court of International Arbitration
Hulton House, 6th Floor
161-166 Fleet Street
London EC4A 2DY

1 June 1999

Mr.
Attorney
45 Bar Street
Southside City, Danubia

Dear Mr. :

Arbitration Moot No. 7 - Feed Processing Corp. v. Grain Dealers, PLC

We acknowledge receipt of the fax of 29 May 1999 from you as legal representative of Grain Dealers, PLC, which has also been sent to Mr. __, legal representative of the Claimant. We note what you say as regards the jurisdiction of the LCIA.

The position of the LCIA Secretariat is that we are required to satisfy ourselves, at least, that there is, prima facie, an arguable case that we have jurisdiction.

In this case, we have a reference to the LCIA in the arbitration clause of the Danubia Feed and Grain Association Standard Conditions of Sale No. 5, together with the submission of the Claimant that Feed Processing Corp. and Grain Dealers, PLC entered into a contract that incorporated those Conditions of Sale.

Subject to any further submission from the Claimant, I am of the opinion that the LCIA should now proceed to the appointment of the Tribunal, which will hear the arguments of the parties as concerns the LCIA’s jurisdiction if, and insofar as, the Respondents maintain their objections.

Article 23.1 of the LCIA Rules provides that the Tribunal shall have the power to rule on its own jurisdiction, and it is not for the LCIA Secretariat to deny the Claimant the opportunity to argue its case.

Nothing that we say should be taken by either party as an indication of the likely outcome of any Award on jurisdiction. This is a matter entirely for the parties and the Tribunal and the LCIA Secretariat has no role in determining this, or any other issue in the dispute.

In the circumstances, therefore, I should be grateful if Grain Dealers, PLC would let me know, as soon as possible, whether they have any further submission on this point, before I place the papers before the LCIA Court, with a view to their considering the appointment of the Tribunal.

Finally, I reiterate that failure by the Respondent to submit a Response does not preclude them from denying the claim nor from setting out a counterclaim in the arbitration.

Yours faithfully,

Adrian Winstanley

Registrar


Mr. Adrian Winstanley, Registrar
London Court of International Arbitration
Hulton House, 6th Floor
161-166 Fleet Street
London EC4A 2DY
England

Dear Mr. Winstanley:

Re: Feed Processing Corp. v. Grain Dealers, PLC, Moot Case No. 7

I hereby enclose four copies of the Response by Grain Dealers, PLC to the Request for Arbitration by Feed Processing Corp., dated 25 May 1999.

A copy of the Response with all accompanying documents is being sent at the same time to Mr. _________, legal representative of Feed Processing Corp., by courier.

Sincerely,

(Signed)
Attorney


LONDON COURT OF INTERNATIONAL ARBITRATION

 

Case No. Moot 7

Feed Processing Corp.
Claimant

v.

Grain Dealers, PLC
Respondent

RESPONSE TO REQUEST FOR ARBITRATION

I. Parties

1. Feed Processing Corp. (hereinafter referred to as PROCESSING) is a company organized under the laws of the country of Mediterraneo. It has its principal office at 123 Industrial Avenue, Highlands, Mediterraneo. Telephone +123 000 000 000, Fax +123 000 000 001.

2. Grain Dealers, PLC (hereinafter referred to as DEALERS) is a company organized under the laws of the country of Danubia. It has its principal office at 26 Export Pl., Southside City, Danubia. Telephone +234 000 000 000, Fax +234 000 000 001.

II. Denial of Claimant’s Claims

3. DEALERS denies that it has entered into an arbitration agreement with PROCESSING. The arbitration clause set out in the Request for Arbitration was contained in a contract between DEALERS and Food Imports, Co. (hereafter referred to as IMPORTS). A statement of Mr. Ronald Stern is attached as Respondents Exhibit No. 1. Mr. Stern is the Sales Manager for DEALERS and is the person with whom Mr. Harold Dean concluded the contract by telephone on 19 February 1998.

4. DEALERS denies that it has a contract for the sale of standard feed wheat to PROCESSING. As noted above, the contract referred to in the Request for Arbitration was with IMPORTS.

5. As a subsidiary matter, DEALERS denies that it has breached the contract of sale with IMPORTS by offering to deliver 4,800 tons of standard feed wheat rather than 6,000 tons.

III. Comments on the Conduct of the proposed Arbitration

6. Although DEALERS denies that it has entered into an arbitration agreement with PROCESSING, it agrees that the arbitration agreement contained in Standard Conditions of Sale No. 5 of the Danubia Feed and Grain Association calls for any dispute in regard to the contract to be settled by arbitration to be conducted under the Rules of Arbitration of the London Court of International Arbitration by a panel of three arbitrators and that the arbitration should be conducted in English with the seat of the arbitration to be in Vindobona, Danubia.

7. DEALERS nominates as arbitrator (name, address, telephone, facsimile, e-mail supplied).

8. DEALERS, therefore, requests the Arbitral Tribunal appointed by the London Court of International Arbitration:

and, in the alternative,

(Signed)

28 June 1999
Date


Defendant’s Exhibit No. 1

Witness Statement of Ronald Stern

My name is Ronald Stern. I am the Sales Manager for Grain Dealers, PLC

On 19 February 1998 I received a telephone call from Mr. Harold Dean. He and I have spoken on the telephone a number of times in the past when he was purchasing grains for Food Imports, Co. On this occasion he told me that Feed Processing Corp. was looking for 6,000 tons of standard feed wheat for July delivery and he asked me the price that we would be asking for it. I was not surprised by his telling me that the purchase was for Feed Processing Corp. Since Food Imports purchased both for their own account and to procure goods for their customers, it was not unusual for Mr. Dean to tell me that it was one of his customers that wished the wheat. I would normally find out in any case, since the purchases were usually shipped directly to the customer when the purchase was for a customer. When I told him that we were currently asking $60.00 per ton FOB Danubian port, he said that they would take it. He went on to say that I would receive a confirmation from him that would contain the usual details, including the shipping instructions and that the letter of credit would call for no partial shipments.

During the telephone call Mr. Dean mentioned that Feed Processing Corp. was selling all of the stock that it owned in Food Imports. I think he said that the sale of the stock would be completed at the end of the week. He also mentioned that in connection with the sale of the stock, Feed Processing Corp. was building up its own purchasing department and would be ceasing to use the services of Food Imports. The mention was casual and we did not discuss it. Although I do not recall that he said so specifically, it was clear to me that he was only talking about the future and that it had nothing to do with the current sale.

(Signed)______
Ronald Stern

15 June 1999


London Court of International Arbitration
Hulton House, 6th Floor
161-166 Fleet Street
London EC4A 2DY
England

21 July 1999

Mr. _____________
Advocate at the Court
42 Court Street
Highlands, Mediterraneo

Mr. _____________
Attorneys
45 Bar Street
Southside City, Danubia

Re: Feed Processing Corp. v. Grain Dealers, PLC, Moot Case No. 7

Dear Sirs:

In reference to the above mentioned case, I am instructed to inform you that the London Court of International Arbitration has appointed an arbitral tribunal consisting of Mr. _____, Dr. _______, and Professor _________, chairman.

I am further instructed to inform you that in accordance with Article 24 of the LCIA Arbitration Rules you are each directed to deposit the sum of £ ______ as interim payment of the costs of arbitration. Upon receipt of deposits the file will be forwarded to the tribunal.

Since the parties are agreed that the place of arbitration shall be Vindobona, Danubia, I have taken the liberty of contacting the Secretary-General of the Danubia Feed and Grain Association and requested her to make such arrangements for the arbitration that the parties and the tribunal may request. The expenses of the Danubia Feed and Grain Association will be billed to the London Court of International Arbitration and will be applied against the deposits.

Sincerely,

Adrian Winstanley
Registrar


LONDON COURT OF INTERNATIONAL ARBITRATION

Case No. Moot 7

Feed Processing Corp.
Claimant

v.

Grain Dealers, PLC
Respondent

STATEMENT OF CASE

Jurisdiction of the Arbitral Tribunal

  1. The Arbitral Tribunal has jurisdiction of this dispute by virtue of the arbitral clause contained in the Danubia Feed and Grain Association Standard Conditions of Sale No. 5, (Claimant’s Exhibit No. 1) incorporated into the contract of sale of standard feed wheat entered into by Feed Processing Corp. and Grain Dealers, PLC. The contract was concluded by telephone on 19 February 1998 between Mr. Harold Dean for Feed Processing Corp. and Mr. Ronald Stern for Grain Dealers, PLC. It was confirmed by letter the following day. (Claimant’s Exhibit No. 2) During the following several months there was a series of letters between Mr. Dean and Mr. Stern referring to the contract.
  2. For a number of years Feed Processing Corp. had maintained a purchasing department that purchased goods domestically from within Mediterraneo. All purchases that needed to be imported were purchased through Food Imports, Co., a company in which Feed Processing Corp. owned 51% of the stock. In the late winter of 1997-98 Feed Processing Corp. decided to sell the stock that it owned in Food Imports, Co., a sale that was completed on 28 February 1998. At the same time it was decided to expand the purchasing department of Feed Processing Corp. and to make it responsible for the purchases for import as well as domestic goods. Attached as Claimant’s Exhibit No. 13 is the statement of Mr. Edward Stanis, President of Feed Processing Corp. to this effect.
  3. Mr. Dean was employed in the Purchasing Department of Food Import, Co., for a number of years. He handled most of the purchases for Feed Processing Corp. When Feed Processing Corp. decided to enlarge its own purchasing department and to make it responsible for purchases of imported goods, it was decided to hire Mr. Dean as a purchasing agent. He began his activities for Feed Processing Corp. on Monday, 16 February 1998.
  4. In the telephone conversation of 19 February 1998, when the contract for the purchase of standard feed wheat in question was concluded, Mr. Dean told Mr. Stern of Grain Dealers, PLC that he was now working for Feed Processing Corp. (Claimant’s Exhibit No. 12) It was clear that the contract that was concluded during that telephone conversation, and that was confirmed by letter, was between Feed Processing Corp. and Grain Dealers, PLC.
  5. Grain Dealers, PLC has breached its obligations to deliver 6,000 tons of standard feed wheat

  6. The sequence of events that led to the breach of contract are sufficiently set out in the correspondence attached as Exhibits 3 to 11 of the Request for Arbitration. The floods in Danubia led the government of Danubia to impose an export prohibition on 17 April 1998, which was changed to a system of export licenses on 21 May 1998. The quota that Grain Dealers, PLC received was equal to more than the amount for which they had contracted to deliver as of 17 April 1998. Nevertheless, Grain Dealers, PLC refused to deliver the full amount, claiming that they had a right to supply other parties with which they had not had a contract as of 17 April 1998 out of the quota given them by the government. No such right exists in the United Nations Convention on Contracts for the International Sale of Goods.
  7. Furthermore, Grain Dealers, PLC refused to accept the letter of credit that was issued in conformity with the contract, insisting that it be amended to permit partial shipments and that the expiration date be extended from 31 August 1998 to 30 November 1998.
  8. The floods in Danubia coincided with a bad growing season in other major standard feed wheat producing areas. As a result of the reduction in production of standard feed wheat, the market price for July delivered standard feed wheat rose from the contract price of $60.00 a ton to $75.00 a ton. It is reasonable to assume that Grain Dealers, PLC sold the amount allocated to it for export by the government of Danubia for an amount equal to, or close to, $75.00. That would explain the refusal of Grain Dealers, PLC to ship the contract amount to Feed Processing Corp.
  9. What is more certain is that Feed Processing Corp. made a substitute purchase of July delivered standard feed wheat for $75.00.
  10. Request for relief

  11. Feed Processing Corp. repeats its request for relief set out in the Request for Arbitration, namely that the Arbitral Tribunal:

(Signed)______________
Attorneys

12 August 1999
Date


Claimant’s Exhibit No. 12

Statement of Harold Dean

My name is Harold Dean. Since 16 February 1998 I have been employed by Feed Processing Corp., 123 Industrial Avenue, Highlands, Mediterraneo, as a purchasing agent. For the six years prior to that I was employed by Food Imports, Co. as a purchasing agent.

My duties at Food Imports had encompassed the purchase of various food products, including standard feed wheat, for importation into Mediterraneo. One of the companies from which I purchased standard feed wheat for Food Imports, Co. was Grain Dealers, PLC. In some cases Food Imports purchased for its own account and later re-sold the items on the market in Mediterraneo. In other cases, it received orders from various companies in Mediterraneo and filled those orders by purchasing from its list of suppliers outside of Mediterraneo and re-selling them to its customer. On occasion Food Imports purchased and re-sold outside of Mediterraneo.

Throughout the period I worked for Food Imports, Feed Processing Corp. purchased some of its needs through Food Imports. Before 1998 the purchasing department of Feed Processing Corp. bought only from within the country. Any importing that needed to be done was handled through Food Imports. In early 1998 I heard that Feed Processing Corp. was planning to sell its holdings of stock in Food Imports and to create an import capacity within the purchasing department. I was approached as to whether I would wish to work for them, and I began on 16 February 1998.

Later that week, on Thursday, 19 February 1998, I was asked to purchase 6,000 tons of standard feed wheat for importation. I called Grain Dealers, PLC and spoke to Mr. Ronald Stern. He gave me a quotation of $60.00 per ton FOB Danubian port, which was an excellent price. During the telephone call I told him that Feed Processing Corp. was breaking its ties with Food Imports and I was now the responsible person in Feed Processing Corp. for purchasing of standard feed wheat. The rest of the conversation dealt with the technical details of the purchase, including the fact that the purchase would be subject to the Standard Conditions of Sale No. 5 of the Danubia Feed and Grain Association, the letter of credit would call for no partial shipments and shipment should be made to Feed Processing Corp. It was clear that Mr. Stern knew that I had already begun working for Feed Processing Corp. and was not acting for Food Imports.

(Signed)
Harold Dean

18 May 1999
Date


Claimant’s Exhibit No. 13

Statement of Edward Stanis

My name is Edward Stanis and I am the President of Feed Processing Corp.

Feed Processing Corp. is a manufacturer of animal food stuffs. Standard feed wheat is one of the primary ingredients of many of our products. For the past ten years we have procured our standard feed wheat in two different ways. A small portion has been purchased directly by our own purchasing department from domestic suppliers. The remainder has come from outside the country. The standard feed wheat that came from outside Mediterraneo was purchased through Food Imports, Co.

Food Imports, Co. is engaged in the general importation into Mediterraneo of various food items and is one of the larger firms in Mediterraneo in its line of business. Feed Processing Corp. owned 51% of the capital stock of Food Imports, and three of the nine members of the Governing Board of Food Imports also served on the Governing Board of Feed Processing, but the two firms operated completely separately.

When purchases were made through Food Imports, shipment was always made directly to Feed Processing. The foreign exporter received payment from Food Imports, often by means of a letter of credit, and we paid Food Imports 112% of that amount.

In early 1998 an agreement was reached to sell the 51% of the stock of Food Imports owned by Feed Processing. The agreement called for the transfer of the stock on 28 February 1998. In connection with the sale the purchasing department of Feed Processing was increased in size in order to take over such of the purchasing that had previously been done through Food Imports.

Harold Dean was one of the purchasing agents for Food Imports, and at that firm he handled the purchases that were made for the account of Feed Processing. He was hired by Feed Processing and began working for us on 16 February 1998. Since he joined the staff of Feed Processing he has used his knowledge of world wide sources of supply to significantly strengthened our ability to engage in direct purchasing and importing.

(Signed)
Edward Stanis

15 May 1999
Date


LONDON COURT OF INTERNATIONAL ARBITRATION

Case No. Moot 7

Feed Processing Corp.
Claimant

v.

Grain Dealers, PLC
Respondent

STATEMENT OF DEFENSE

Jurisdiction of the Arbitral Tribunal

  1. The Respondent, Grain Dealers, PLC (DEALERS), reiterates its position stated in the Response to the Request for Arbitration that there is neither a contract of sale between it and Feed Processing Corp. (PROCESSING), as alleged by the Claimant, nor an arbitration agreement between them.
  2. During the past four years Food Imports, Co. (IMPORTS) has contracted with DEALERS on 45 separate occasions, prior to the contract in question, for shipments of standard feed wheat. On each occasion the contract was on the basis of Standard Conditions of Sale No. 5 of the Danubia Feed and Grain Association. On each occasion payment for the standard feed wheat was by means of a letter of credit opened by IMPORTS, but shipment was usually made directly to the customer of IMPORTS. Eighteen of the 45 contracts called for shipment directly to PROCESSING. The purchasing agent for IMPORTS was Mr. Harold Dean in 38 of the 45 contracts DEALERS had with IMPORTS. On no occasion has DEALERS ever sold standard feed wheat directly to PROCESSING.
  3. In regard to the contract in question, on 19 February 1998 Mr. Harold Dean telephoned DEALERS and requested a quotation for 6,000 tons of standard feed wheat for July delivery. When told that DEALERS could furnish the standard feed wheat at $60.00 per ton FOB Danubian port, he said he would take it. He further said he would confirm the contract in writing. Although Mr. Dean stated that the delivery would be directly to PROCESSING, which was a normal requirement in IMPORT's contracts, he did not state or even suggest that he was purchasing directly for PROCESSING rather than for IMPORTS. This is confirmed by the written witness statement of Mr. Ronald Stern, which was submitted with the Response to the Request for Arbitration as Respondent’s Exhibit No. 1.
  4. The only suggestion that DEALERS concluded the contract on 19 February 1998 with PROCESSING is contained in the witness statement of Mr. Harold Dean. (Claimant’s Exhibit No. 12, attached to the Statement of Case) Since Mr. Dean’s statement is crucial to Claimant’s case and is, at best, directly contradictory to the statement of Mr. Stern in regard to the question as to whether Mr. Dean had made it clear that he was contracting for PROCESSING, DEALERS requests that Mr. Dean should attend for oral questioning at a hearing before the Arbitral Tribunal.
  5. On 20 February 1998 DEALERS received the confirmation letter (Claimant’s Exhibit No 2) by fax and two days later by courier. On 24 February 1998 DEALERS replied to Mr. Dean at IMPORTS with copy to PROCESSING that it had received the confirmation and would proceed to implement the contract. (Defendant’s Exhibit No. 2) It noted, however, that the letter was written on stationery of PROCESSING, which would normally indicate that PROCESSING was the purchasing party. DEALERS stated in its letter that it assumed there was a mistake of some kind since the contract had been entered into with IMPORTS. Neither Mr. Dean nor anyone else acting for PROCESSING or IMPORTS replied to this letter.
  6. By the time of DEALERS’s letter of 17 April 1998 informing Mr. Dean of the export prohibition (Claimant’s Exhibit No. 3), DEALERS had learned that Mr. Harold Dean, the person responsible for the contract and therefore in our experience for its implementation, was working for PROCESSING. Nevertheless, the letter was addressed to him at IMPORTS, with copy to PROCESSING. This action on the part of DEALERS is understandable only as a reflection of the belief on the part of DEALERS that its contracting partner was IMPORTS. The copy to PROCESSING was normal since DEALERS was aware that PROCESSING was the ultimate buyer of the standard feed wheat and that it would be the party most directly affected by the export prohibition. It is also striking that the remainder of the correspondence in regard to this contract, set out as Claimant’s Exhibit’s 4 to 11, was copied to IMPORTS. That would have been of no relevance if the contract had been concluded directly between DEALERS and PROCESSING.
  7. Conclusion of the contract of sale

  8. The discussion above in regard to the lack of jurisdiction of the arbitral tribunal because of the lack of an arbitral agreement between PROCESSING and DEALERS is also applicable to the contract of sale of the standard feed wheat itself. There was no contract of sale between them. It is true, of course, that there was correspondence between them in regard to the implementation of the contract entered into with IMPORTS, but that was merely a reflection of the fact that the standard feed wheat was to be sent directly to PROCESSING and it was the ultimate party in interest.
  9. Performance of the contract

  10. During the months of March and April 1998 there were major floods in the standard feed wheat growing area of Danubia. On 17 April 1998 the government of Danubia announced a general export embargo of standard feed wheat in order to assure adequate supplies for the domestic market. DEALERS notified IMPORT of the embargo immediately on 17 April 1998. (Claimant’s Exhibit No. 3)
  11. On 5 May 1998 the export embargo was replaced by a system of export licenses, of which we notified Mr. Dean and IMPORTS immediately. (Claimant’s Exhibit No. 4) According to the export control regulations, exporters could apply for a blanket license to cover all of their expected exports. Expected exports were defined as those for which a firm contract had been concluded plus an amount to cover sales to regular customers, as defined in the regulations, with which firm contracts had not yet been concluded. In accord with these regulations, DEALERS applied for a license for 300,000 tons, i.e., sufficient to cover the 180,000 tons of standard feed wheat for which it had firm contracts and the 120,000 tons of standard feed wheat for sale to regular customers with which firm contracts had not yet been completed. On 21 May 1998 DEALERS was notified by the Ministry of Commerce that it would be permitted to export 240,000 tons, i.e.,, 80% of the amount requested.
  12. On 21 May 1998 DEALERS notified IMPORT that it would be able to ship 4,800 tons and requested that the letter of credit called for in the contract should permit partial shipments and have an expiration date of 30 November 1998 (Claimant’s Exhibit No. 5) This request in regard to the letter of credit was in order to permit DEALERS to ship the remaining standard feed wheat under the contract if it should become available for shipment by the end of October. As indicated in the Request for Arbitration, PROCESSING replied the same day by faxed copy of letter to us that it expected DEALERS to fulfill its contractual obligations. (Claimant’s Exhibit No. 6) It reminded DEALERS that the contract called for PROCESSING to open a letter of credit for $396,000 and that the contract as expressed in the confirmation letter provided that partial shipments were not allowed. PROCESSING indicated that it would be opening the letter of credit within the following few days. DEALERS replied the following day, 22 May 1998, reiterating the reasons why it was necessary to ship less than the contract amount in July, but that it hoped to be able to do so later in the year, if the letter of credit was amended so as to permit it. (Claimant’s Exhibit No. 7)
  13. On 29 May 1998 DEALERS received a letter of credit for this contract from Super Bank. The credit called for no partial shipments and it would expire on 30 August 1998. The same day DEALERS notified PROCESSING that the letter of credit was not acceptable and requested PROCESSING to have an amendment issued. (Claimant’s Exhibit No. 8) PROCESSING replied that that would not be in conformity with the contract. (Claimant’s Exhibit No. 9) PROCESSING demanded that DEALERS deliver the full amount of wheat contracted for. DEALERS replied on 3 June 1998 that it could not do so. If it did not receive an amendment to the credit by 15 June 1998, it would allocate the standard feed wheat to its other customers.
  14. When the letter of credit was not amended by 15 June 1998, DEALERS allocated the 4,800 tons of standard feed wheat to its other customers. (Claimant’s Exhibit No. 11)
  15. Procedural Order Requested of the Arbitral Tribunal

  16. As indicated in paragraph 4, above, DEALERS requests the Arbitral Tribunal to order that Mr. Harold Dean should attend for oral questioning at a hearing before the Arbitral Tribunal.
  17. Findings Requested of the Arbitral Tribunal

  18. DEALERS requests the Arbitral Tribunal appointed by the London Court of International Arbitration:

(Signed)
Attorney

10 September 1999


Defendant’s Exhibit No. 2

Grain Dealers, PLC
26 Export Pl.
Southside City, Danubia

24 February 1998

Mr. Harold Dean
Purchasing Department
Food Imports, Co.
125 Industrial Avenue
Highlands, Mediterraneo

Dear Mr. Dean:

Re: Contract 2340 with Food Imports, Co.

I wish to thank you for your order, confirmed by your letter of 20 February 1998, for 6,000 tons of standard feed wheat at $60.00 per ton FOB Danubian port, shipment July any port Danubia direct to Feed Processing Corp., 123 Industrial Avenue, Highlands, Mediterraneo. Payment by confirmed irrevocable letter of credit, partial shipments not allowed. The contract is subject to the Danubia Feed and Grain Association Standard Conditions of Sale No. 5.

I note in passing that your letter was sent from Feed Processing rather than from Food Imports, Co. We are curious as to the significance of this fact. We are, of course, happy to work directly with Feed Processing in the implementation of this contract, as we have done in regard to previous contracts where you have purchased grain for your customers. However, our contract is with Food Imports, and we will hold you responsible for its performance.

Sincerely,

(Signed)____
Ronald Stern

Cc: Feed Processing Corp.


LONDON COURT OF INTERNATIONAL ARBITRATION

Case No. Moot 7

Feed Processing Corp.
Claimant

v.

Grain Dealers, PLC
Respondent

PROCEDURAL ORDER NO. 1

  1. The Arbitral Tribunal, composed of Mr. _____, Dr. _______, and myself as chairman, has authorized me in conformity with LCIA Arbitration Rules, Article 14.3, to make procedural rulings alone.
  2. On 30 September 1999 I met with __________________, counsel for the Claimant, Feed Processing Corp., and _______________________, counsel for the Respondent, Grain Dealers, PLC. We discussed the procedures that should be followed in the arbitration. Counsel agreed that, with one notable exception, there were few factual issues to be decided by the Tribunal. The factual issues that may be found to be open will be determined in accordance with the procedures found in the Rules of the Seventh Annual Willem C. Vis International Commercial Arbitration Moot. In accordance with those Rules questions may be submitted to Professor Eric Bergsten, preferably by e-mail at eric.bergsten@chello.at, by Friday, 22 October 1999. The answers will be distributed to all parties by Friday, 29 October 1999.
  3. The one exception to this procedure is in regard to the request of the Respondent that Mr. Harold Dean should attend for oral questioning at a hearing before the Arbitral Tribunal. Counsel for the Claimant has informed the Arbitral Tribunal that Mr. Dean was involuntarily terminated from his position with Feed Processing Corp. on 31 August 1999 for reasons unrelated to this dispute. Counsel has informed the Tribunal and opposing Counsel that it would not be possible for Feed Processing Corp. to produce Mr. Dean at a hearing in this arbitration.
  4. In answer to a question asked by Counsel for the Respondent, Counsel for the Claimant stated that Feed Processing Corp. had not spoken to Mr. Dean about the arbitration. Litigation was expected between Feed Processing Corp. and Mr. Dean arising out of his dismissal and counsel for Feed Processing Corp. in that affair, who are not the same as Counsel for Feed Processing Corp. in this arbitration, had advised against contacting him in any context.
  5. Counsel for Respondent requested the Chairman of the Arbitral Tribunal, in accordance with LCIA Arbitration Rules, Article 20.4, to exclude the written statement of Mr. Dean, Claimant’s Exhibit No. 12, altogether from the record of this arbitration unless Mr. Dean were to appear at a hearing for questioning as they had requested.
  6. Since the request made by Counsel for Respondent might have a direct effect on the outcome of this dispute, I did not feel that the request was for a procedural ruling, but was one that should be considered by the full Arbitral Tribunal.
  7. Counsel for Claimant and Respondent agreed that normally all questions concerning the jurisdiction of the Arbitral Tribunal should be considered prior to any consideration of the substance of the dispute. In this case, however, Counsel were agreed that, due to the lack of dispute over the substantive facts, the arbitration might be expedited if the substantive issues were argued at the same time as the jurisdictional issues. Therefore, the following procedure was agreed:
  8. (Signed)_________
    Prof.
    Chairman

    30 September 1999