On behalf of
Essential Controls, S.A.
26 Export Pl.
Southside City
Equatoriana     Respondent

Against
Superb Paper, Plc
123 Industrial Avenue
Highlands
Mediterraneo     Claimant

Table of Contents

Index of Authorities

Index of Legal Sources

Index of Abbreviations

Statement of Facts

Introduction

Summary of CLAIMANT's Contentions

Issue 1: CLAIMANT Was Not Authorized to Avoid its Contract with RESPONDENT on 9 October 1996 in Accordance With Art. 49(1)(b) CISG

I. The Jurisdiction of the Tribunal and the Substantive Law Governing the Contract Have Not Been Denied by RESPONDENT2

II. The Requirements of Art. 49(1)(b) CISG Were Not Met, Preventing CLAIMANT from Justifiably Avoiding the Contract

III. Even if the Requirements of Art. 49(1)(b) CISG Had Been Met, CLAIMANT's Right to Avoid the Contract According to Art. 49(1)(b) CISG Was Restricted by RESPONDENT's Right to Cure Pursuant to Art. 48(2) CISG

IV. Even if CLAIMANT Had Acquired a Right to Avoid Pursuant to Art. 49(1)(b) CISG, the Avoidance of Contract Would Only Be Justified with Regard to the Installation Part, Not the Entire Contract

V. Even if CLAIMANT Once Had a Right to Avoid the Contract, CLAIMANT Lost that Right as it Did Not Declare Avoidance Within a Reasonable Time According to Art. 49(2)(b)(ii)

Issue 2: CLAIMANT Was Not Authorized by Art. 88(1) CISG to Sell the Control System on 4 April 1997, and the Sale Was Not by an Appropriate Means

I. As RESPONDENT Was Willing to Take Back the Control System, CLAIMANT Was Not Authorized to Sell it in Accordance with Art. 88(1) CISG

II. Even if CLAIMANT Had Been Entitled to Sell the Control System According to Art. 88(1) CISG, the Sale Was Not by an Appropriate Means

Issue 3: CLAIMANT Is Not Entitled to Damages and in any Case, RESPONDENT Qualifies Under Art. 79 CISG for Exemption from Paying Damages as a Result of the Delayed Installation of the Control System

I. CLAIMANT Is Not Entitled to Damages

II. Even if CLAIMANT Had Rightfully Avoided the Contract, RESPONDENT Qualifies Under Art. 79 CISG for Exemption from Paying Damages as a Result of the Delayed Installation of the Control System

Issue 4: Reliable Should Be Permitted to Join this Arbitration as RESPONDENT Qualifies for Exemption Under Art. 79(1) and (2)(a) CISG

I. Reliable Should Be Joined to this Arbitration Since the Parties Have so Agreed

II. The Preconditions of the Agreement Have Been Met

III. Because the Parties Have Agreed to a Joinder of Reliable, an Inextricable Link Between the Contracts Is Not Necessary

IV. Even if an Inextricable Link Was Regarded as Necessary, this Requirement Would Have Been Met

Costs

Conclusion

Annex: Chronology of Events

Index of Authorities

Ahdar, Rex J.	Seller cure in the sale of goods, in: Lloyd's Maritime and Commercial Law Quarterly (Lloyd's Mar. & Com. L.Q.) 1990, at 364-382 [cited as: Ahdar, Lloyd's Mar. & Com. L.Q. 1990]
Apps, Antonia	The Right to Cure Defective Performance, in: Lloyd's Maritime and Commercial Law Quarterly (Lloyd's Mar. & Com. L.Q.) 1994, at 554 [cited as: Apps, Lloyd's Mar. & Com. L.Q. 1994]
Bergsten, Eric E. / Miller, Anthony J.	The Remedy of Reduction of Price, in: The American Journal of Comparative Law (Am. J. Comp. L.) 1979, at 255-277 [cited as: Bergsten/Miller, Am. J. Comp. L. 1979]
Bernstein, Herbert / Lookofsky, Joseph	Understanding the CISG in Europe: A compact guide to the United Nations Convention on Contracts for the International Sale of Goods, Cambridge 1997 [cited as: Bernstein/Lookofsky]
Bianca, Cesare Massimo / Bonell, Michael Joachim	Commentary on the International Sales Law - The 1980 Vienna Sales Convention, Milan 1987 [cited as: Bianca/Bonell-Reviser]
Broches, Aaron	Commentary on the UNCITRAL Model Law on International Commercial Arbitration, Deventer 1990 [cited as: Broches]
Bühler, Theodor	Vertragsrecht im Maschinenbau und Industrieanlagebau, Zürich 1987 [cited as: Bühler]
Caemmerer, Ernst von / Schlechtriem, Peter	Kommentar zum Einheitlichen UN-Kaufrecht, 2nd ed., München 1995 [cited as: v.Caemmerer/Schlechtriem-Reviser]
Diesselhorst, Malte	Mehrparteienverfahren: internationale Schiedsverfahren unter Beteiligung von mehr als zwei Parteien (Studien zum vergleichenden und internationalen Recht; Bd. 25), Frankfurt am Main 1994 [cited as: Diesselhorst]
Dölle, Hans	Kommentar zum Einheitlichen Kaufrecht, München 1976 [cited as: Dölle-Reviser]
Doralt, Peter	Das UNCITRAL-Kaufrecht im Vergleich zum Österreichischen Recht, Wien 1985 [cited as: Doralt]
Dore, Isaak I.	Theory and Practice of Multiparty Commercial Arbitration, London 1990 [cited as: Dore]
Droste, Monica	Der Liefervertrag mit Montageverpflichtung, Heidelberg 1991 [cited as: Droste]
Dünnweber, Inge	Vertrag zur Erstellung einer schlüsselfertigen Industrieanlage im internationalen Wirtschaftsverkehr, Berlin / New York 1984 [cited as: Dünnweber]
Enderlein, Fritz / Maskow, Dietrich / Strohbach, Heinz	Internationales Kaufrecht - Kaufrechtskonvention, Verjährungskonvention, Rechtsanwendungskonvention, Berlin 1991 [cited as: Enderlein/Maskow/Strohbach]
Enderlein, Fritz	Rights and Obligations of the Seller Under the UN Convention on Contracts for the International Sale of Goods, in: Sarcevic, Petar / Volken, Paul (eds.): International Sale of Goods: Dubrovnik Lectures, New York 1986, at 133-201 [cited as: Enderlein in Sarcevic/Volken]
Eörsi, Gyula	A propos the 1980 Vienna Convention on Contracts for the International Sale of Goods, in: The American Journal of Comparative Law (Am. J. Comp. L.) 1983, at 333-356 [cited as: Eörsi, Am. J. Comp. L. 1983]
Farnsworth, Allan E.	Farnsworth on Contracts, Boston (etc.) 1990 [cited as: Farnsworth]
Ferrari, Franco	Uniform Interpretation of the 1980 Uniforn Sales Law, in: Georgia Journal of International and Comparative Law (Ga. J. Int'l & Comp. Law ) 1994, at 183 [cited as: Ferrari, Ga. J. Int'l & Comp. Law 1994]
Flocke, Klaus-Joachim	Risiken beim internationalen Anlagevertrag: Hinweise zu ihrer Bewertung sowie Möglichkeiten der Risikobeschränkung durch Vertragsgestaltung, Heidelberg 1986 [cited as: Flocke]
García Camacho, F. Javier	Delivery in International Sale of Goods Contracts, in: Campbell, Dennis (ed.): Structuring International Contracts, London 1996, at 253-264 [cited as: García Camacho in Campbell]
Grigera Naón, Horacio A.	The UN Convention on Contracts for the International Sale of Goods, in: Horn, N. / Schmitthoff, C.M. (eds.): The Transnational Law of International Commercial Transactions, Deventer 1982, at 89-124 [cited as: Grigera Naón in Horn/Schmitthoff]
Gutknecht, Uta	Das Nacherfüllungsrecht des Verkäufers bei Kauf- und Werklieferungsverträgen: Rechtsvergleichende Untersuchung zum CISG, zum US-amerikanischen Uniform Commercial Code, zum deutschen Recht und zu dem Vorschlag der Kommission zur Überarbeitung des deutschen Schuldrechts, Frankfurt am Main (etc.) 1997 [cited as: Gutknecht]
Hanotiau, Bernard	Complex - Multicontract-Multiparty - Arbitrations, in: Arbitration International (Arb. Int.) 1998 at 369-394 [cited as: Hanotiau, Arb. Int. 1998]
Herber, Rolf / Czerwenka, Beate	Internationales Kaufrecht - Kommentar zum Übereinkommen der Vereinten Nationen vom 11. April 1980 über Verträge über den internationalen Warenkauf, München 1991 [cited as: Herber/Czerwenka]
Heuzé, Vincent	La vente internationale de marchandises - Droit uniform, Paris 1992 [cited as: Heuzé]
Holthausen, Rüdiger	Die wesentliche Vertragsverletzung des Verkäufers nach Art. 25 UN-Kaufrecht, in: Recht der Internationalen Wirtschaft (RIW) 1990, at 101-107 [cited as: Holthausen, RIW 1990]
Holtzmann, Howard M. / Neuhaus, Joseph E.	A Guide to the UNCITRAL Model Law on International Commercial Arbitration, Deventer 1994 [cited as: Holtzmann/Neuhaus]
Honnold, John O.	Documentary History of the Uniform Law for International Sales: The studies, deliberations and decisions that led to the 1980 United Nations Convention with introductions and explanations, Deventer 1989 [cited as: Honnold, Documentary History]
Honnold, John O.	Uniform Law for International Sales under the 1980 United Nations Convention, 2nd ed., Deventer 1991 [cited as: Honnold]
Honsell, Heinrich	Kommentar zum UN-Kaufrecht, Berlin / Heidelberg 1997 [cited as: Honsell-Reviser]
Honsell, Heinrich	Die Vertragsverletzung des Verkäufers nach dem Wiener Kaufrecht, in: Schweizerische Juristen-Zeitung (SJZ) 1992, at 345-354, 361-365 [cited as: Honsell, SJZ 1992]
Kappus, Andreas	Vertragsaufhebung nach UN-Kaufrecht in der Praxis, in: Neue Juristische Wochenschrift (NJW) 1994, at 984-985 [cited as: Kappus, NJW 1994]
Karollus, Martin	UN-Kaufrecht - Eine systematische Darstellung für Studium und Praxis, Wien 1991 [cited as: Karollus]
Karrer, Pierre A.	Multi-party and complex Arbitration under the Zurich Rules, in: Walder, H.U. (et al. eds.) Aspekte des Wirtschaftsrechts, Festgabe zum Schweizerischen Juristentag 1994, Zurich 1994, at 261-271 [cited as: Karrer in Walder]
Kock, Annette	Nebenpflichten im UN-Kaufrecht: dargestellt am Beispiel der Pflichten des Verkäufers, Regensburg 1995 [cited as: Kock]
Kritzer, Albert H.	Guide to Practical Applications of the United Nations Convention for the International Sale of Goods, Deventer / Boston 1989 [cited as: Kritzer]
Kromer, Ulrich	Der Begriff der Lieferung im Haager einheitlichen Kaufrecht: Entstehungsgeschichte, Bedeutung und Funktion in rechtsvergleichender Sicht, Pfaffenweiler 1987 [cited as: Kromer]
Leboulanger, Philippe	Multi-Contract Arbitration, in: Journal of International Arbitration (J. Int'l Arb.) 1996 No. 4, at 43-98 [cited as: Leboulanger, J. Int'l Arb. 1996]
Leser, Hans G.	Vertragsaufhebung und Rückabwicklung unter dem UN-Kaufrecht, in: Schlechtriem, Peter (ed.): Einheitliches Kaufrecht und nationales Obligationenrecht, Baden-Baden 1987, at 225-256 [cited as: Leser in Schlechtriem]
Lionnet, Klaus	Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit, Stuttgart (etc.) 1996 [cited as: Lionnet]
Lorenz, Werner	Contracts for Work on Goods and Building Contracts, in: International Encyclopedia of Comparative Law, Tübingen [cited as: Lorenz]
Magnus, Ulrich	Die allgemeinen Grundsätze im UN-Kaufrecht, in: Rabels Zeitschrift für ausländisches und internationales Privatrecht (RabelsZ) 1995, at 469-494 [cited as: Magnus, RabelsZ 1995]
Markfort, Rainer	Mehrparteien-Schiedsgerichtsbarkeit im deutschen und ausländischen Recht, Köln (etc.) 1994 [cited as: Markfort]
Mertens, Hans-Joachim / Rehbinder, Eckard	Internationales Kaufrecht: Kommentar zu den Einheitlichen Kaufgesetzen, Frankfurt am Main 1975 [cited as: Mertens/Rehbinder]
Michida, Shinichiro	Cancellation of Contract, in: The American Journal of Comparative Law (Am. J. Comp. L.) 1979, at 279-289 [cited as: Michida, Am. J. Comp. L. 1979]
Mustill, Sir Michael J.	Multipartite Arbitrations: An Agenda for Law-Makers, in: Arbitration International (Arb. Int.) 1991 at 393-402 [cited as: Mustill, Arb. Int. 1991]
Mustill, Sir Michael J. / Boyd, Stewart C.	The Law and Practice of Commercial Arbitration in England, London 1989 [cited as: Mustill/Boyd]
Neumayer, Karl H. / Ming, Catherine	Convention de Vienne sur les contrats de vente internationale de marchandises - Commentaire, Lausanne 1993 [cited as: Neumayer/Ming]
Nicholas, Barry	Impractability and Impossibility in the U.N. Convention on Contracts for the International Sale of Goods, in: Galston, N.M. / Smit, H. (eds.): International Sales: The United Nations Convention on Contracts for the International Sale of Goods, New York 1984, Chapter 5 [cited as: Nicholas in Galston/Smit]
Nicklisch, Fritz	Multi-Party Arbitration and Dispute in Major Industrial Projects, in: Journal of International Arbitration (J. Int'l Arb.) 1994 No.4, at 57-72 [cited as: Nicklisch]
Niggemann, Friedrich	Die Pflichten des Verkäufers und die Rechtsbehelfe des Käufers, in: Hoyer, Hans / Posch, Willibald (eds.): Das Einheitliche Wiener Kaufrecht: Neues Recht für den internationalen Warenkauf, Wien 1992, at 77-110 [cited as: Niggemann in Hoyer/Posch]
Piltz, Burghard	Internationales Kaufrecht - Das UN-Kaufrecht (Wiener Übereinkommen von 1980) in praxisorientierter Darstellung, München 1993 [cited as: Piltz]
Piltz, Burghard	Zum Nachlieferungsrecht im Einheitlichen Kaufrecht, in: Praxis des Internationalen Privat- und Verfahrensrechts (IPrax) 1985, at 84-85 [cited as: Piltz, IPrax 1985]
Redfern, Alan / Hunter, Martin	Law and Practice of International Commercial Arbitration, London 1991 [cited as: Redfern/Hunter]
Reinhart, Gert	UN-Kaufrecht: Kommentar zum Übereinkommen der Vereinigten Nationen vom 11. April 1980 über Verträge über den internationalen Warenkauf, Heidelberg 1991 [cited as: Reinhart]
Rudolph, Helga	Kaufrecht der Export- und Importverträge, Kommentierung des UN-Übereinkommens über internationale Warenkaufverträge mit Hinweisen für die Vertragspraxis, Freiburg / Berlin 1996 [cited as: Rudolph]
Russell, Francis / Sutton, David St. John et al. eds.	Russell on Arbitration, 21st ed., London 1997 [cited as: Russell]
Schlechtriem, Peter	Commentary on the UN-Convention on the International Sale of Goods (CISG), 2nd ed. (in translation), Oxford 1998 [cited as: Schlechtriem-Reviser]
Schlechtriem, Peter	Auslegung und Lückenfüllung im Internationalen Einheitsrecht: Erfüllungsort für Rückabwicklungen in EuGVÜ und EKG, in: Praxis des Internationalen Privat- und Verfahrensrechts (IPrax) 1981, at 113-116 [cited as: Schlechtriem, IPrax 1981]
Schlechtriem, Peter	Einheitliches Kaufrecht, in: Juristenzeitung (JZ) 1988, at 1037-1048 [cited as: Schlechtriem, JZ 1988]
Staudinger, Jochen von / Magnus, Ulrich	Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen - Wiener UN-Kaufrecht (CISG), 13th ed., Berlin 1994 [cited as: Staudinger-Magnus]
Treitel, G. H.	Remedies for Breach of Contract: a Comparative Account, New York 1988 [cited as: Treitel]
Welser, Rudolph	Die Vertragsverletzung des Verkäufers und ihre Sanktion, in: Doralt (ed.): Das UNCITRAL-Kaufrecht im Vergleich zum Österreichischen Recht, Wien 1985, at 105-132 [cited as Welser in Doralt]
Wetter, J. Gillis	A Multi-Party Arbitration Scheme for International Joint Ventures, in: Arbitration International (Arb. Int.) 1987, at 2-13 [cited as: Wetter, Arb. Int. 1987]
Ziegel, Jacob S.	The Remedial Provision in the Vienna Sales Convention: Some Common Law Perspectives, in: Galston, N.M. / Smit, H. (eds.): International Sales: The United Nations Convention on Contracts for the International Sale of Goods, New York 1984, Chapter 9 [cited as: Ziegel in Galston/Smit]
Ziegler, Ulrich	Leistungsstörungen nach dem UN-Kaufrecht, Baden-Baden 1995 [cited as: Ziegler]

Index of Legal Sources

Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 10 June, 1958 [abbreviated as: New York Convention]

Convention Relating to the Uniform Law on the International Sale of Goods, Diplomatic Conference, The Hague, 2-22 April 1964 [abbreviated as: Convention relating to ULIS]

International Arbitration Rules of the American Arbitration Association as effective from 1 April 1997 [abbreviated as: AAA-Rules]

Secretariat's Commentary on the United Nations Convention on Contracts for the International Sale of Goods (cited from Honnold, Documentary History)

Uncitral Model Law On International Commercial Arbitration as adopted by the United Nations Commission on International Trade Law on June 21, 1985, UN Doc. No. A/40/17 (Annex I) [abbreviated as: Model Law]

UNIDROIT-Principles of International Commercial Contracts, Rome 1994 [abbreviated as: UNIDROIT Principles]

Uniform Law on the International Sale of Goods, Diplomatic Conference, The Hague, 2-22 April 1964 [abbreviated as: ULIS]

United Nations Convention on Contracts for the International Sale of Goods of 11 april 1980, UN Doc. No. A/Conf. 9 7/18 (Annex 1) 1980 [abbreviated as: CISG]

Index of Abbreviations

Statement of Facts

For a summary of the facts, compare the chronology of events in the annex.

Introduction

In response to the Tribunal's Procedural Order No. 1 of 2 October 1998 and the Memorandum for CLAIMANT of 14 December 1998, counsel for Essential Controls, S.A. (RESPONDENT) respectfully requests the Tribunal:

· to declare that Superb Paper, Plc. (CLAIMANT) was not authorized to avoid the contract with RESPONDENT on 9 October 1996 under Art. 49(1)(b) CISG [Issue 1],

· to declare that CLAIMANT was not authorized by Art. 88 CISG to sell the control system on 4 April 1997 and that the sale was not by an appropriate means [Issue 2],

· to declare that RESPONDENT qualifies under Art. 79(1) and (2)(a) CISG for exemption from paying damages as a result of the delayed installation of the control system [Issue 3],

· and finally, if RESPONDENT qualifies under Art. 79(1) and (2)(a) CISG for exemption from paying damages as a result of the delayed installation of the control system, to allow Reliable Installation Co. (Reliable) to be joined to this arbitration as requested by RESPONDENT [Issue 4].

Summary of CLAIMANT's Contentions

In its Memorandum, CLAIMANT contends

· that the Tribunal has jurisdiction to adjudicate this dispute,

· that Reliable should not be joined as a party to the proceedings between CLAIMANT and RESPONDENT,

· that the preponderant part of the contract concluded on 10 June 1996 was one for goods as opposed to services pursuant to Art. 3(1) CISG,

· that CLAIMANT has exercised the right to avoid the contract under Art. 49(1)(b) CISG for non-delivery of an installed control system, that CLAIMANT has provided additional time for performance by RESPONDENT in accordance with Art. 47(1) CISG, that this time was reasonable, that RESPONDENT failed to perform the contract by delivering an installed control system within the additional time, that RESPONDENT cannot rely on CLAIMANT's failure to comply with its request of 19 September 1996 relating a further additional time for performance of the contract,

· that CLAIMANT has a right to damages for the loss suffered in the substitute transaction, that RESPONDENT does not qualify under Art. 79(1) and 79(2)(a) CISG for exemption from paying damages as a result of the delayed installation of the control system,

· that CLAIMANT sold the control system under the authority of Art. 88 CISG on 4 April 1997, that CLAIMANT preserved the physical hardware of the control system in accordance with Art. 86 CISG and that the sale under Art. 88 was made by appropriate means.

· CLAIMANT continues with the contention, that CLAIMANT is entitled to restitution of $153,000 by virtue of the operation of Art. 81 CISG, that Art. 82(1) CISG does not apply, as CLAIMANT was able to make restitution of the control system on 9 October 1996,

· that CLAIMANT is entitled to interest on damages, on the advance payment and on the balance after the sale of the control system, that the applicable interest rate is that of Danubia,

· that any award ordered by this Tribunal will be final and binding on the parties and capable of being enforced in Equatoriana and Mediterraneo by virtue of the New York Convention,

· and that Costs are to be ordered in CLAIMANT's favour.

RESPONDENT respectfully makes the following submissions in answer to these contentions.

Issue 1: CLAIMANT Was Not Authorized to Avoid its Contract with RESPONDENT on 9 October 1996 in Accordance With Art. 49(1)(b) CISG

RESPONDENT agrees with the jurisdiction of the Tribunal and the substantive law governing the contract [I.]. CLAIMANT was not authorized to avoid its contract with RESPONDENT, since the requirements of Art. 49(1)(b) CISG were not met [II.]. Even if they had been, CLAIMANT's right to avoid the contract according to Art. 49(1)(b) CISG was restricted by RESPONDENT's right to cure pursuant to Art. 48(2) CISG [III.]. Even if CLAIMANT had acquired a right to avoid the contract, it existed only with regard to the installation part, not the entire contract [IV.]. CLAIMANT lost any right to avoid the contract as it did not declare avoidance within a reasonable time according to Art. 49(2)(b)(ii) CISG [V.].

I. The Jurisdiction of the Tribunal and the Substantive Law Governing the Contract Have Not Been Denied by RESPONDENT

As stated in the contract between RESPONDENT and CLAIMANT [1] and as RESPONDENT has already submitted,[2] it acknowledges the jurisdiction of the Tribunal and the CISG as the substantive law governing the contract.

II. The Requirements of Art. 49(1)(b) CISG Were Not Met, Preventing CLAIMANT from Justifiably Avoiding the Contract

1. The Delay in Installation Was Not a 'Non-Delivery' in the Meaning of Art. 49(1)(b) CISG

CLAIMANT submits that although the control system had been handed over, its non-installation constituted a non-delivery in accordance with Art. 49(1)(b) CISG, which entitled CLAIMANT to avoid the entire contract [3] after expiration of a Nachfrist [4] fixed in accordance with Art. 47(1) CISG.[5] RESPONDENT asserts that it had made delivery when it delivered the control system to the premises of CLAIMANT on 20 August 1996[6] for the following reasons:

For determination of delivery, the nature and terms of the contract as well as the parties' intentions must be considered.[7] CLAIMANT holds that "the parties intended that delivery would be constituted by the installation of the control system",[8] and that this is evidenced by the fact that the contract between CLAIMANT and RESPONDENT was not signed by the parties until the installation date was confirmed with Reliable.[9] However, the fact that the installation contract with Reliable was settled first is irrelevant for determining the meaning of 'delivery' and rather aimed to co-ordinate the time table for the contractual obligations between CLAIMANT and RESPONDENT. The obligation to install the control system being delegated to a separate company shows nothing more than that RESPONDENT's contractual commitments consisted of two severable components, the delivery of the control system and the installation. This point of view is supported by CLAIMANT's own choice of words: "The delivery of the physical hardware is the precursor for further obligations detailed under the contract . . ."[10] Therefore, unaffected by the fact that the installation date was confirmed with Reliable prior to the parties' contract, the parties' intention was to consider handing over of the control system as 'delivery' and its installation as a 'further obligation'.

The fact that RESPONDENT had delivered is also supported by the determination of 'delivery' in the CISG. Delivery is defined in the CISG as the transfer of possession of goods by handing them over or even by placing them at the buyer's disposal.[11] Non-delivery is solely the case where the buyer does not receive anything at all.[12] In only this case, the buyer may proceed pursuant to Art. 49(1)(b) CISG. Obligations of the seller other than the one to provide the buyer with the physical appearance of goods, as e.g. the provision to assemble [13] the delivered goods,[14] fall within the broad category of 'further obligations'.[15] In case of their non-fulfillment, the CISG provides a large palette of remedies [16] that would do more justice to this situation, but delivery of the goods remains unaffected, so that the buyer cannot avoid the contract according to Art. 49(1)(b) CISG because of non-delivery. In the case at hand, the possession of the control system was transferred when it was delivered to the premises of CLAIMANT on 20 August 1996,[17] preventing CLAIMANT from proceeding pursuant to Art. 49(1)(b) CISG.

CLAIMANT purports that the uninstalled control system is unproductive and therefore represents non-delivery.[18] However, CLAIMANT fails to illustrate the alleged connection between productivity and delivery. It laconically states that "usually, once delivery occurs the buyer receives some benefit from the bargain."[19] RESPONDENT submits what is commonly acknowledged: non-delivery is the complete physical absence of goods. Productivity of the delivered goods is irrelevant. After all, a merchant who cannot resell the goods he bought from a prior seller could not claim that no delivery was made, just because he derived no profits from the delivered goods. Even if there was some relation between delivery and benefit, the uninstalled control system was profitable. CLAIMANT holds that its value could only be manifested through sale,[20] but the control system was in impeccable condition and could have been installed and put to work by any third party.[21] The outstanding installation did not lessen the economic value of the control system.

Summing up, RESPONDENT had delivered as defined in the CISG and in the contract of 10 June 1996. Since the non-installation was not a non-delivery, CLAIMANT was not authorized to avoid the contract in accordance with Art. 49(1)(b) CISG.

2. Even if the Non-Installation Were to Be Regarded as a Non-Delivery in the Meaning of Art. 49(1)(b) CISG, the Additional Period of Time that CLAIMANT Fixed Pursuant to Art. 49(1)(b) CISG in Conjunction with Art. 47(1) CISG Was of Unreasonable Length

On 18 September 1996, CLAIMANT set an additional period of time for performance by expecting "the system to be fully installed and operational by 9 October 1996 at the latest."[22] To be effective, such a Nachfrist under Art. 47(1) CISG must be 'of reasonable length'. The following factors are particularly relevant for deciding what is 'reasonable', as CLAIMANT admits:[23] the nature of any impediment causing the delay, RESPONDENT's time needed for delivery, CLAIMANT's interest in rapid delivery and the extent and consequences of the delay for CLAIMANT.[24]

The dominant factor rendering the granted Nachfrist unreasonable was the impediment preventing RESPONDENT's performance.[25] CLAIMANT purports that it had never insisted on specific performance by Reliable and that "[RESPONDENT] had the option of engaging an alternative supplier."[26] The truth of the matter is that RESPONDENT's duty to work with Reliable was an express obligation and accordingly an integral part of the contract between CLAIMANT and RESPONDENT: § 4 of the contract calls for "[t]he control system . . . to be installed by the Reliable Installation Co., Baltic City, Hanseatica."[27] It was not until 18 September 1996 that CLAIMANT offered by fax to relieve RESPONDENT of its duty to use Reliable for the installation.[28] Before calling on a different firm for installation, RESPONDENT would have had to avoid its contract with Reliable. This could only have been done in a justifiable manner by first granting Reliable a reasonable Nachfrist according to the applicable law between RESPONDENT and Reliable.[29] Taking such a reasonable Nachfrist into account and adding the time needed to turn to another available company in order to make a suitable arrangement, the three weeks granted by CLAIMANT were definitely too short. The inadequacy of a Nachfrist of three weeks is shown by CLAIMANT's substitute transaction: CLAIMANT itself took more than seven weeks from the date it fixed the Nachfrist (18 September 1996) until the substitute was fully installed (11 November 1996).[30]

Even if RESPONDENT would have engaged an alternative supplier immediately after receiving CLAIMANT's letter dated 18 September 1996 - thereby knowingly breaching its contract with CLAIMANT -, a Nachfrist of three weeks was not reasonable. It is undisputed that three other companies would have potentially been available to perform the installation. They all indicated that if approached at the time of the plane crash in August they would probably have been able to set qualified personnel aside.[31] But later, following September 1996, it would have been more difficult.[32] An arrangement with another company to perform the installation by 9 October 1996, taking into account that the job itself would take two weeks, was in all probability impossible. A Nachfrist of only three weeks is thus unreasonable in the present case.

CLAIMANT admits that in determining the reasonableness of the Nachfrist an important consideration is the buyer's need for delivery without further delay.[33] CLAIMANT alleges that the "fundamental importance of the timely installation" [34] was obvious to RESPONDENT. Yet, no evidence for this allegation is given. In fact, CLAIMANT does not claim any loss of profit nor any other damages for the period the control system was not installed at its facilities. RESPONDENT can therefore conclude that a further short delay would not have resulted in a disadvantage for CLAIMANT;[35] there is no suitable evidence for CLAIMANT's alleged "special need in prompt delivery."[36]

CLAIMANT submits that RESPONDENT never distinctly objected to the Nachfrist, giving CLAIMANT no indication that three weeks were unreasonable.[37] This statement can easily be refuted: In its letter of 19 September 1996, RESPONDENT requested a different time for performance ending on 30 October 1996,[38] thereby objecting to the original Nachfrist.

Finally, the Nachfrist fixed by CLAIMANT in accordance with Art. 47(1) CISG had to balance the interests of both parties in a fair solution. The reasonableness of the Nachfrist should be considered under the duty to mitigate loss [39] and under the limitation that contracts should not be avoided on insubstantial grounds [40] - in the words of CLAIMANT: "The CISG is concerned with preventing the use of a sledge hammer to crack a walnut with the arbitrary use of avoidance."[41] In the light of these principles, the Nachfrist fixed by CLAIMANT was not reasonable. As the requirements of Art. 49(1)(b) CISG were not met, CLAIMANT could not justifiably avoid the contract. By still over-hastily declaring avoidance, CLAIMANT breached the contract itself.

III. Even if the Requirements of Art. 49(1)(b) CISG Had Been Met, CLAIMANT's Right to Avoid the Contract According to Art. 49(1)(b) CISG Was Restricted by RESPONDENT's Right to Cure Pursuant to Art. 48(2) CISG

Even if the Tribunal considered the requirements pursuant to Art. 49(1)(b) CISG to be met, CLAIMANT's right to avoid the contract was restricted by RESPONDENT's right to cure according to Art. 48(2) CISG. Upon receipt of CLAIMANT's fax granting the Nachfrist,[42] RESPONDENT sent CLAIMANT a request in accordance with Art. 48(2) CISG inquiring "whether [CLAIMANT] would be satisfied with an installation that would be completed by October 30, 1996."[43] As CLAIMANT did not object to the offer, RESPONDENT was entitled to perform within the time indicated in its request pursuant to Art. 48(2) CISG. In support of this, RESPONDENT advances the following submissions: Art. 48(2) CISG is applicable to the present case [1.]. The requirements of Art. 48(2) CISG are met [2.]. Therefore CLAIMANT's silence was an acceptance under Art. 48(2) CISG and RESPONDENT could perform within the time it had specified [3.].

1. Art. 48(2) CISG Is Applicable to the Present Case

CLAIMANT submits that RESPONDENT's request for additional time for performance raised a conflict between Art. 49(1)(b) CISG which allows the buyer to avoid the contract after a reasonable Nachfrist and Art. 48(2) CISG which allows the seller to cure its breach of contract.[44] RESPONDENT asserts that the relationship of the two articles is quite clear in the case at hand. Leading authorities all agree that a conflict only arises once the buyer has actually acquired the right to avoid the contract under Art. 49(1) CISG, after which the buyer cannot be deprived thereof by the seller declaring its willingness to perform.[45] RESPONDENT's right to cure in accordance with Art. 48(2) CISG depended on the condition that CLAIMANT had not yet acquired the right to avoid the contract.[46] Since CLAIMANT had not yet done so on 19 September 1996 (as the Nachfrist fixed by CLAIMANT had not yet expired), RESPONDENT could on that date validly request additional time to cure in accordance with Art. 48(2) CISG.

CLAIMANT also questions whether Art. 48(2) CISG is applicable alongside Art. 47(1) CISG and whether the first mentioned article takes precedence over the latter. Following prevailing opinion, Huber patently states: "If the buyer has fixed an additional period of time for performance by the seller and the seller considers the period to be too short, but offers to perform within a longer period, Article 48(2) and (3) [CISG] apply."[47] This leaves no doubt that Art. 48(2) CISG applies even if a Nachfrist has been fixed in accordance with Art. 47(1) CISG.

Even if the Tribunal followed CLAIMANT's allegation [48] that Art. 48(2) CISG contains a requirement of uncertainty as to how long the buyer would accept performance,[49] having fixed a Nachfrist does not remove this uncertainty: The Nachfrist can always be prolonged, especially in cases such as the present one, where RESPONDENT considers the Nachfrist to be unreasonable. Therefore, in accordance with Huber's statement above, RESPONDENT must retain the possibility of clarifying the situation by applying Art. 48(2). In consequence, Art. 48(2) CISG is applicable to the present case.

2. The Requirements of Art. 48(2) CISG Are Met

a) RESPONDENT's Letter Dated 19 September 1996 Was a Request in the Meaning of Art. 48(2) CISG

Art. 48(2) CISG provides that "if the seller requests the buyer to make known whether he will accept performance and the buyer does not comply with the request within a reasonable time, the seller may perform within the time indicated in his request." In its letter of 19 September 1996 RESPONDENT asked if CLAIMANT would be satisfied with an installation that would be completed by 30 October 1996.[50] Thereby RESPONDENT indicated a specific period of time within which it would perform. Moreover, by closing with the words: "I await your reply",[51] RESPONDENT expressly requested CLAIMANT to make known whether it was willing to accept subsequent performance. Consequently, RESPONDENT's letter was a request in the meaning of Art. 48(2) CISG.

CLAIMANT argues that "the reference to 30 October 1996 as the date of installation . . . was dependent upon [RESPONDENT] engaging another installation company"[52] and that RESPONDENT's letter was therefore "an invitation for further discussion . . . rather than a . . . proposal for a fixed date for performance."[53] This presumption is indefensible because the statement at issue is not ambiguous: "I would like to know whether you would be satisfied with an installation that would be completed by 30 October, 1996."[54] The wording alone makes it clear that RESPONDENT's request did not differentiate between eventual performance by Reliable or by a third company. This is substantiated by the factual circumstances. It is irrelevant for CLAIMANT whether Reliable would have been ready to begin installation within the Nachfrist that RESPONDENT had granted or another supplier would have to be engaged, as long as the installation was completed by 30 October 1996. RESPONDENT's letter could thus not be seen as a mere invitation for further discussion but was a request in the meaning of Art. 48(2) CISG to which CLAIMANT should have objected if it did not wish to become bound by the period of time stated therein.

b) RESPONDENT's Request Was Never Answered

i) CLAIMANT Never Replied to RESPONDENT's Request

RESPONDENT's request was sent on 19 September 1996. Upon receipt of the request, CLAIMANT could evaluate its options, and if need be, reject it. But for three weeks, CLAIMANT ignored it and did not reply. Then, on 9 October 1996 CLAIMANT unjustifiably avoided the contract,[55] never once mentioning RESPONDENT's request in its communication. Since CLAIMANT had not replied to the request within a reasonable time, it was bound by Art. 48(2) CISG to the period of time stated therein (30 October 1996) [56] and could not justifiably avoid the contract until after that date.

ii) The Nachfrist CLAIMANT Fixed Was Not an Advance Rejection of RESPONDENT's Request

CLAIMANT purports that by fixing a Nachfrist in its letter of 18 September 1996 it had already answered RESPONDENT's request in advance.[57] However, even CLAIMANT has to admit that "[its] view on a further time extension was not explicitly made known . . . ."[58] The wording of Art. 48(2) CISG states that any buyer not wishing to be bound to the period of time stated in such a request must "comply with the request within a reasonable time." That phrase can only reasonably be understood to mean that a buyer must react to the request, which is only possible after receiving it. This is a reasonable solution, as granting a Nachfrist does not implicitly mean that any further extension would be rejected.[59]

CLAIMANT argues further that by threatening sanctions, RESPONDENT had to assume that grounds for avoidance would arise, if the contractual obligations were not fully fulfilled by 9 October 1996, and that this threat of avoidance already amounted to an advance rejection of any requested extension of the Nachfrist.[60] But with the wording "we will look to our legal rights" [61] CLAIMANT did not unmistakably threaten RESPONDENT with the avoidance of the contract;[62] rather, the letter must be interpreted to mean that CLAIMANT itself intended to recruit an alternative firm for the substitute installation or that CLAIMANT was prepared to accept a price reduction as compensation for its forbearance.[63] In fact, RESPONDENT's reply of 19 September 1996[64] demonstrated RESPONDENT's understanding to that effect.[65]

Even if CLAIMANT had combined the Nachfrist with a declaration of avoidance dependent on RESPONDENT's failure to perform within the Nachfrist, Art. 48(2) CISG would still be applicable. It cannot be purported that such a declaration of avoidance already amounted to a rejection of RESPONDENT's offer to cure and that therefore a repeated rejection was superfluous. In accordance with leading authorities, RESPONDENT asserts that in this case, too, the principle of good faith, which is reflected in Art. 48(2) CISG, requires that CLAIMANT send a reply if it did not agree with the specified period of time.[66]

Summing up, CLAIMANT never replied to or rejected RESPONDENT's request in the meaning of Art. 48(2) CISG, neither within a reasonable period of time after it was made, nor in advance. As a result, CLAIMANT was bound by Art. 48(2) CISG to accept RESPONDENT's performance until 30 October 1996, the period of time specified in the request.

c) Even if the Rule of Art. 48(2) CISG Should be Narrowed by the Requirements for Cure Stated in Art. 48(1) CISG, RESPONDENT's Remedy Would Not Have Involved any 'Unreasonable Inconvenience'

Even if the Tribunal followed the opinion that RESPONDENT's request according to Art. 48(2) CISG must be considered under the requirements of Art. 48(1) CISG,[67] those requirements were met: RESPONDENT's right to cure according to Art. 48(2) CISG did not involve any 'unreasonable inconvenience' for CLAIMANT pursuant to Art. 48(1) CISG. Elements of 'unreasonable inconvenience' are 'unreasonable delay' or 'uncertainty of reimbursement' according to Art. 48(1) CISG.[68] CLAIMANT had to accept RESPONDENT's attempt to cure after the date for delivery as long as it did not involve any 'unreasonable delay' for CLAIMANT. Even if the Tribunal considered the Nachfrist set by CLAIMANT in accordance with Art. 47(1) CISG to be reasonable, a further delay is not necessarily unreasonable under Art. 48(1) CISG.[69] CLAIMANT does not submit any argument why a delay of a few more days would have imposed a financial burden on it or involved any other risk; such a delay would therefore not have been unreasonable.

RESPONDENT's right to cure would not cause CLAIMANT unreasonable uncertainty of reimbursement of any expenses CLAIMANT had advanced, since CLAIMANT had not yet paid the sum apportioned for the contractual part concerning installation.[70] Moreover, on 19 September 1996, RESPONDENT indicated its willingness to make a suitable adjustment on the purchase price to compensate CLAIMANT for its forbearance.[71] As evidenced by the factual circumstances, cure was achievable without any 'unreasonable inconvenience' for CLAIMANT.

In conclusion, RESPONDENT's request dated 19 September 1996 remained unanswered, whereby the requirements of Art. 48(2) CISG are met.

3. CLAIMANT's Failure to Respond to RESPONDENT's Request Was an Acceptance Under Art. 48(2) CISG, Allowing RESPONDENT to Perform Within the Time it Had Specified

By ignoring RESPONDENT's request to remedy its failure by 30 October 1996, CLAIMANT accepted performance in the specified period of time. RESPONDENT should therefore have been allowed to send Reliable to perform and complete the installation by 30 October 1996. CLAIMANT submits that if it had accepted RESPONDENT's request by its silence, then RESPONDENT's request was only for installation beginning on or before 9 October 1996 and that therefore CLAIMANT could avoid the contract after 9 October 1996, if installation had not yet begun.[72] However, RESPONDENT's request was clear and the only date relevant for the contractual relationship between CLAIMANT and RESPONDENT was 30 October 1996, as specified in the request. Whether or not RESPONDENT had threatened Reliable with a different deadline and whether or not Reliable was at fault by not commencing installation on 9 October 1996 were issues that did not affect CLAIMANT's remedies. The decisive factor for CLAIMANT was the time when the installation would have been finished.[73] Both parties knew that the installation would take two weeks. The contract could therefore not already be avoided on 9 October 1996, because at that moment in time - three whole weeks before the deadline of 30 October 1996 - a timely installation would still have been possible.

By silently accepting RESPONDENT's request, CLAIMANT was prevented from resorting to any remedy incompatible with performance by RESPONDENT during the period until 30 October 1996. If RESPONDENT still had not installed by then, CLAIMANT would have regained its freedom to exercise all its remedies.[74] This rule of Art. 48(2) CISG is a fair and reasonable solution for both parties, even accommodating CLAIMANT's wish that its failure to respond "should not be harshly judged."[75] The unjustified declaration of avoidance on 9 October 1996 [76] led to CLAIMANT losing its remedies.[77] On 10 October 1996, RESPONDENT rejected CLAIMANT's alleged right to cancel the contract thereby giving CLAIMANT the chance to reconsider RESPONDENT's offer of cure.[78] CLAIMANT did not accept, although cure was feasible.[79] On the contrary, with its unjustified declaration of avoidance CLAIMANT prevented an appropriate right to cure which would have permitted mitigation of the loss inherent in canceling a contract. CLAIMANT itself emphasizes that Art. 48(2) CISG "lessens the chance of the seller suffering loss."[80] For this reason RESPONDENT submits that the acceptance of the extension of the Nachfrist should also be viewed as CLAIMANT's duty to mitigate loss in accordance with Art. 77 CISG. Taking this into account, it is untenable to speak of a 'harsh judgment' with regard to the consequences of CLAIMANT's acts. CLAIMANT was not authorized to avoid the contract on 9 October 1996 under Art. 49(1)(b) CISG. Unjustifiably declaring avoidance caused CLAIMANT to breach the contract itself, thereby becoming liable for damages.[81]

IV. Even if CLAIMANT Had Acquired a Right to Avoid Pursuant to Art. 49(1)(b) CISG, the Avoidance of Contract Would Only Be Justified with Regard to the Installation Part, Not the Entire Contract

Even if the Tribunal came to the conclusion that the requirements of Art. 49(1)(b) CISG in connection with Art. 47(1) CISG were met, CLAIMANT had no right to avoid the entire contract. The CISG is governed by the principle of favor contractus,[82] which means that as much of the contract as possible should be saved. The avoidance should be limited to the defect part.[83] In CLAIMANT's words: "The CISG is concerned with preventing the use of a sledge hammer to crack a walnut with the arbitrary use of avoidance."[84] This principle is also established in Art. 51 CISG, as this article states that the buyer may declare the contract avoided only in respect of the part which is missing.[85] For Art. 51 CISG to apply,[86] the contract must be divisible.[87] Divisibility is decided by the question whether the parties' performances are apportionable.[88] This is a question of the parties' intentions as well as of the nature and terms of the contract.[89] The contract of 10 June 1996 distinguishes between the duty to deliver the control system and the duty to install.[90] Besides, there is ample authority to the fact that a contract for both the delivery and the installation of goods is an agreement consisting of two parts, as the installation constitutes a completely different type of contract than the delivery.[91] Therefore Art. 51 CISG applies, leading to the consequence that, if CLAIMANT had ever acquired a right for avoidance, it existed only for the installation part.

Although CLAIMANT has not argued to this effect in its Memorandum, Art. 51(2) CISG did not allow the entire contract to be avoided. Pursuant to Art. 51(2) CISG, the contract can only be avoided in its entirety, if the failure to completely deliver amounts to a fundamental breach of contract.[92] Even if the issue of fundamental breach was brought up at a later date,[93] RESPONDENT can still submit facts to show that the contract was not fundamentally breached. The non-installation might have been a case of fundamental breach if no other company had the technical ability to perform the installation.[94] However, as CLAIMANT agrees, "[t]he installation could be provided by a number of different companies . . . ."[95] The fact that RESPONDENT's guarantees given as to the performance of the control system allegedly would not have been in force unless installation was performed by RESPONDENT or a firm responsible to RESPONDENT [96] does not prevent a different company being recruited: It would have posed no problem for CLAIMANT to approach RESPONDENT in order to discuss possibilities for clarifying and solving the situation.[97] Furthermore, the agreement on the exclusion of the guarantees was only in force as long as the parties acted in conformity to the contract.[98] Since not installing the control system was not conforming to the contract and the parties had not agreed upon how to proceed in case of breach of contract, the relevant provisions were Arts. 45 et seq. CISG. According to Art. 45(1)(b) CISG, CLAIMANT could have had the control system installed by another installation firm and claimed damages from RESPONDENT [99] without affecting the validity of RESPONDENT's guarantees.

CLAIMANT's duty to restrict the avoidance of the contract to the installation part derives also from the concept to mitigate loss according to Art. 77 CISG as well as from the basic principle of fairness pursuant to Art. 7(2) CISG.[100] Since the contract of 10 June 1996 was a contract for sale of goods and services, it was economic waste to avoid the unimpeachable goods part. When CLAIMANT set a Nachfrist according to Art. 47(1) CISG, it did not expect RESPONDENT to deliver a new control system and install this, but rather wanted the already received control system to be installed. Therefore, should the Tribunal come to the conclusion that a right for avoidance was given, CLAIMANT was only justified to avoid the installation part of the contract.

V. Even if CLAIMANT Once Had a Right to Avoid the Contract, CLAIMANT Lost that Right as it Did Not Declare Avoidance Within a Reasonable Time According to Art. 49(2)(b)(ii)

If the Tribunal came to the conclusion that CLAIMANT did have a right to avoid its contract with RESPONDENT and that Art. 48 CISG did not apply, CLAIMANT lost its right as it did not declare avoidance within a reasonable time pursuant to Art. 49(2)(b)(ii) CISG.[101]

By 19 September 1996, one day after CLAIMANT set the additional period of time according to Art. 47(1) CISG, CLAIMANT was prepared to give up on the contract with RESPONDENT. "From [RESPONDENT's] fax of 19 September 1996 it was obvious that [RESPONDENT] did not expect to meet the deadline of 9 October 1996. Nevertheless, [CLAIMANT] waited the three weeks until the deadline expired on 9 October 1996."[102] In accordance with Art. 49(2)(b) CISG CLAIMANT should have declared the contract avoided within a "reasonable time". This period of time began on 19 September 1996, when CLAIMANT received a message from RESPONDENT that must be read as a refusal to perform by the date fixed by CLAIMANT.[103] RESPONDENT had a considerable interest in being informed of the fact that CLAIMANT would avoid the contract, because in such a case RESPONDENT had to make appropriate arrangements, for example taking steps to avoid its contract with Reliable, arranging taking back the control system or organizing a resale of the control system.[104] But for another three weeks - until 9 October 1996 - RESPONDENT, still believing in the continuation of the contract, made efforts to fulfill its obligation.[105] On the other hand, CLAIMANT needed only a short time to decide whether or not to avoid the contract. Even if a certain amount of time would be granted to allow CLAIMANT to consider and investigate the situation, e.g. obtain legal advice, it was possible for CLAIMANT to act within two or three days after it knew of the breach.[106] Hence, the declaration of the contract on 9 October 1996 was definitely not within a 'reasonable' time, and therefore not valid.

Issue 2: CLAIMANT Was Not Authorized by Art. 88(1) CISG to Sell the Control System on 4 April 1997, and the Sale Was Not by an Appropriate Means

As shown above,[107] CLAIMANT had no right to avoid the contract of 10 June 1996, and by unjustifiedly doing so, it breached the contract itself.[108] Nevertheless, after the avoidance of the contract had been declared on 9 October 1996, RESPONDENT could not be expected to send an installation company to CLAIMANT as evidence of its willingness to perform its contractual commitments, as the latter had already contracted with Bridget Controls GMBH on 10 October 1996,[109] thus indicating its unwillingness to accept RESPONDENT's performance and pay for it.[110] In the end, as RESPONDENT had consented to restitution and was willing to take back the control system, CLAIMANT should have handed it out and had no right to sell it [I.]. Even if CLAIMANT was authorized to sell the control system, the sale was not by an appropriate means [II.].

I. As RESPONDENT Was Willing to Take Back the Control System, CLAIMANT Was Not Authorized to Sell it in Accordance with Art. 88(1) CISG

Pursuant to Art. 88(1) CISG, the buyer may sell the goods he received under the contract if the seller unreasonably delays taking them back. CLAIMANT alleges that RESPONDENT delayed taking back the control system.[111] In fact, it was RESPONDENT who kept insisting since the date of CLAIMANT's avoidance that the control system should be returned to it. CLAIMANT does not dispute [112] that RESPONDENT maintained this position during the negotiations [113] and underlined it in its letters of 17 February and 20 March 1997.[114] RESPONDENT did therefore not delay taking back the control system.

CLAIMANT submits further that RESPONDENT delayed restitution by not reimbursing the purchase price of $400,000.[115] RESPONDENT asserts that it was entitled to retain the sum for three reasons:

Firstly, RESPONDENT did not have to reimburse the sum as long as CLAIMANT had not returned the control system. The parties had not contractually agreed on the procedure of restitution in the case of avoidance, so the provisions of the CISG applied. According to Art. 81(2) CISG, if both parties are bound to make restitution, they must do so concurrently,[116] which means that each party only has to perform when it receives performance from the other.[117] Although the exact sequence of performance under restitution is not settled in the CISG, it is commonly acknowledged that in the process of restitution, the sequence of performance conforms to the sequence followed when performing the original obligations.[118] As the parties' contract, in connection with Art. 58(1) CISG, called for delivery first and then payment,[119] it led to RESPONDENT only having to reimburse the sum after the control system had been returned.[120]

Secondly, although CLAIMANT has made no submissions to this effect in its Memorandum, it could not purport that holding the control system at RESPONDENT's disposal complied with CLAIMANT's duty to restitute.[121] It could be argued that the place for restitution should be at the buyer's facilities. However, this solution would only be tenable in the case where the buyer justifiedly avoided the contract, since then the buyer should not be bound to advance the costs for discharge of the goods and thus bear the risk of insolvency of the seller.[122] Where the buyer breached the contract, it is the seller who must be protected.[123] If the place of restitution is unsettled by the parties, the provisions for the place of performance of the original obligations must apply.[124] As the contract of 10 June 1996 called for RESPONDENT to send the control system to CLAIMANT, return would have been made by sending the control system back to RESPONDENT.[125] As CLAIMANT never discharged the control system, RESPONDENT did not delay taking back the control system.

Thirdly, even if CLAIMANT had purported that the control system need only be returned when RESPONDENT signaled its willingness for concurrent restitution, RESPONDENT met this requirement. It offered to reimburse $330,000 in exchange with the control system, the $330,000 being the $400,000 less the damages of $70,000 suffered due to CLAIMANT's breach of contract.[126] As the avoidance of the contract constituted a breach of contract on behalf of CLAIMANT, it is bound to pay damages according to Arts. 45(1)(b) and 74 CISG equivalent to RESPONDENT's loss of profit.[127] RESPONDENT was entitled to set off the monetary obligations against one another, based on the principle of concurrency.[128] In its letter of 20 March 1997,[129] RESPONDENT therefore offered to reimburse the $400,000 less the damages of $70,000 in exchange for the return of the control system. CLAIMANT refused this. Therefore, it was due to CLAIMANT that restitution was not made. RESPONDENT was not delayed in taking back the control system, and CLAIMANT was thus not authorized to sell the control system in accordance with Art. 88(1) CISG.

II. Even if CLAIMANT Had Been Entitled to Sell the Control System According to Art. 88(1) CISG, the Sale Was Not by an Appropriate Means

According to Art. 88(1) CISG, the sale must be by an appropriate means. Not only the modes, but also the amount of the price obtained in the sale must be appropriate.[130] RESPONDENT warned CLAIMANT in its letter of 20 March 1997 that it would be held responsible if it sold the control system for less than $290,000.[131] The list price for the control system ex works being $390,000 in 1997,[132] the amount of $290,000 was the lowest acceptable price to be obtained for it. Nonetheless, in the sale of 4 April 1997 CLAIMANT only realized a price of $250,000. The sale was therefore not by an appropriate means. As it disregarded its obligation under Art. 88(1) CISG to realize an appropriate price, it also violated the principle of mitigation of loss pursuant to Art. 77 CISG and the principle of fairness according to Art. 7(2) CISG and is therefore liable to RESPONDENT for the difference of the stipulated and the obtained price in the amount of $40,000.

Issue 3: CLAIMANT Is Not Entitled to Damages and in any Case, RESPONDENT Qualifies Under Art. 79 CISG for Exemption from Paying Damages as a Result of the Delayed Installation of the Control System

I. CLAIMANT Is Not Entitled to Damages

As shown above, CLAIMANT is not entitled to any damages as it had not justifiably avoided its contract with RESPONDENT.[133] According to counsel's agreement, the issue of damages[134] is not to be discussed in this part of the arbitration, but will be dealt with in the second phase.[135]

II. Even if CLAIMANT Had Rightfully Avoided the Contract, RESPONDENT Qualifies Under Art. 79 CISG for Exemption from Paying Damages as a Result of the Delayed Installation of the Control System

1. The Question of RESPONDENT's Exemption Must Be Discussed Under Art. 79(2) CISG and Not Under Art. 79(1) CISG alone

RESPONDENT qualifies under Art. 79(1) and (2)(a) CISG for exemption from paying damages as a result of the delayed installation of the control system. Reliable, whom RESPONDENT engaged to perform part of its own contract with CLAIMANT - namely the entire installation -,[136] is a third person in the meaning of Art. 79(2) CISG.[137] Therefore RESPONDENT's exemption must be discussed under Art. 79(2) CISG and not under Art. 79(1) CISG alone, which is emphasized by counsel's agreement [138] and the Tribunal's Procedural Order No. 3.[139] Counsel are agreed that the question whether Reliable would be exempt from liability for damages under Art. 79(2)(b) CISG is not to be dealt with in this first phase of the arbitration. [140] The remaining letter (a) refers discussion to the preceding paragraph, i.e. to Art. 79(1) CISG. So, the question whether RESPONDENT is exempt from liability for damages in accordance with Art. 79(2)(a) CISG must be considered under the requirements of Art. 79(1) CISG. The only difference to an examination under paragraph (1) alone is that any arguments concerning the exemption of Reliable are to be disregarded, as they would be dealt with under Art. 79(2)(b) CISG.

2. RESPONDENT Has Met All the Requirements Under Art. 79(1) CISG in Conjunction with Art. 79(2)(a) CISG for Exemption from Having to Pay Damages

a) RESPONDENT's Failure to Perform Was Due to an Impediment Beyond RESPONDENT's Control

i) An Impediment Preventing RESPONDENT's Performance Existed

Reliable's failure to perform its entrusted part of the contract constituted an impediment for RESPONDENT. It all began with the unfortunate plane crash,[141] a devastating and tragic occurrence for Reliable and its personnel. The plane crash meant that the team originally slotted for installing CLAIMANT's control system was no longer available. Although it at first seemed to be of short duration, Reliable's shortage of personnel lasted until mid-October.[142] Reliable's performance had temporarily become impossible. At the same time RESPONDENT remained obligated to have the installation performed by Reliable and no other firm, on the grounds of an explicit clause contained in the contract between CLAIMANT and RESPONDENT. This clause called for "[t]he control system . . . to be installed by the Reliable Installation Co., Baltic City, Hanseatica",[143] preventing RESPONDENT from recruiting a different firm. The contract between RESPONDENT and Reliable was knowingly signed before conclusion of the main contract, thereby taking on the function of a prerequisite for the main contract.[144] As such, having Reliable perform the installation was just as much an obligation for RESPONDENT as the delivery of the control system or the installation itself. Because RESPONDENT was bound by its contract with CLAIMANT, recruiting any substitute firm to perform the installation would have constituted a breach of that contract. Therefore, RESPONDENT's situation constituted an impediment for performance: the only firm that it could assign to the installation under observance of contractual conformity was unable to perform. CLAIMANT itself admits that the plane crash, the initial trigger, must be regarded as an impediment.[145] It stresses the fact that the impediment was temporary, which RESPONDENT does not deny: The impediment lasted only so long - but for the entire duration - as Reliable, and with it RESPONDENT, was not able to perform.[146]

ii) The Impediment Was Beyond RESPONDENT's Control

The impediment was clearly beyond RESPONDENT's control. Reliable had been fixed in the main contract as the company to perform the actual installation and could therefore not be replaced by any other firm without RESPONDENT breaching its contract with CLAIMANT.[147] The risk for choosing and relying on only the one firm must be carried by CLAIMANT,[148] who expressly requested Reliable in the first place.[149] That the principal carry such a risk in lieu of the contractor is justified in those cases where the principal can influence the impediment.[150] In the case at hand, CLAIMANT could have undertaken to modify the contract binding RESPONDENT to the unavailable Reliable, thereby weakening the impediment. As CLAIMANT did not offer to do so until 18 September 1996,[151] its carrying the risk is justified. Any modification of the contract could only have been initiated by CLAIMANT since it itself had wished the installation to be performed by Reliable and RESPONDENT was merely trying to fulfill its part of the bargain as best it could by constantly pressing Reliable for performance. Besides being the only company contractually allowed to perform the installation, Reliable could not perform, as the plane crash had triggered the unavailability of personnel assigned to RESPONDENT. There was nothing RESPONDENT could do to force performance. All factors considered, the impediment was beyond RESPONDENT's control.

b) RESPONDENT Could Not Reasonably Be Expected to Have Taken the Impediment into Account at the Time of the Conclusion of the Contract

As Stoll so pertinently states: "[T]here is hardly any state or event which is unforeseeable in abstract terms."[152] Thus an impediment's foreseeability must be considered under the circumstances of the entire situation and be judged according to the principle of reasonableness.[153] In the present case, it was not reasonably foreseeable that the installation would not be able to be performed. At the time of the conclusion of the contract, Reliable had already prepared the assignment and knew which personnel it would deploy for the installation. RESPONDENT could at that time not reasonably be expected to take the remote possibility into account that exactly those employees would fall victim to an unforeseeable plane crash. RESPONDENT regarded Reliable to be a company pooling talent for specialized installations. Since such firms regularly perform numerous contractual obligations simultaneously, RESPONDENT was of the opinion that it was up to Reliable to organize the pooling of its personnel and that Reliable's plentiful experience would allow it to do so in a capable manner. Thus, although RESPONDENT was aware at the time of the conclusion of the contract that it was contractually obligated towards CLAIMANT to utilize Reliable for performing the installation, it could never have guessed that Reliable would find itself unable to perform under the circumstances, and that in such a case CLAIMANT would not immediately allow a different firm to be hired. In any case, the risk in hiring only the one company must be carried by CLAIMANT as shown above.[154] RESPONDENT could therefore not reasonably be expected to have taken the impediment into account at the time of conclusion of the contract.

c) The Impediment or its Consequences Could Not Reasonably Have Been Avoided or Overcome

As previously stated, RESPONDENT was bound by the contract to have Reliable install, and as CLAIMANT itself quotes, "a party who is under an obligation . . . must do all in his power to carry out his obligation . . . ."[155] RESPONDENT did so, by constantly reminding Reliable of its own obligation [156] and pressing for performance even in spite of the obvious impediment. It was not one of RESPONDENT's options to recruit a substitute firm, not without express permission from CLAIMANT to so modify the contract. It was not until 18 September 1996 that any of CLAIMANT's communications could be interpreted to contain any such offer of modification.[157] The end of the impediment was in the foreseeable future, and another short extension of the delivery date seemed reasonable. After all, it seemed almost certain that Reliable would be able to perform before any alternate firm could be engaged. Even more so, because before being able to release Reliable from its obligation, RESPONDENT would have to grant it a Nachfrist, thereby delaying performance even further. CLAIMANT did not answer to RESPONDENT's stipulation of an additional period of time, therefore accepting it pursuant to Art. 48(2) CISG.[158] Underlining the reasonability of the extension of the delivery period is the fact that such a substitute cannot be found from one day to the next (just as CLAIMANT's own substitute purchase required lengthy negotiations [159]). CLAIMANT contends that three other installation firms could have shifted personnel to provide an installation team if approached at the time of the plane crash in August. At that time, the extent of the impediment was not clear and Reliable still maintained the installation would be completed on schedule,[160] so there seemed no need to contact any further company, which RESPONDENT could not have done anyway on the grounds of the binding contractual clause previously elucidated. CLAIMANT also agrees that "re-contracting installation with one of those firms would have been difficult after that date . . . ."[161]

3. No Damages Are Owed Under Art. 79(4) CISG Either, Since there Was no 'Failure to Notify' in the Meaning of that Paragraph

Although CLAIMANT has not argued to this effect in its Memorandum, RESPONDENT's exemption would not be narrowed by any alleged failure of notification. Paragraph (4) of Art. 79 CISG merely allows a promisee to claim his reliance interest and not to circumvent the exemption.[162] In the present case not even that is possible, since RESPONDENT fully complied with the requirement of notifying CLAIMANT of the impediment.[163] This is not disputed by CLAIMANT. Even if the Tribunal should find that RESPONDENT neglected its duty of notification, the situation remains the same: a notification is not necessary if the other party is already aware of the impediment, as CLAIMANT was in this case. It had been informed of the plane crash.[164] Additionally, "the duty to notify exists only when the occurrence of the impediment is certain, not when it may still be avoided . . . ."[165] It remained probable that Reliable would be able to perform, as Reliable itself kept promising prompt performance.[166] Therefore RESPONDENT was excused from its duty of notification.

In the present case, the requirements for exemption from damages under Art. 79 CISG have been met, preventing any claim for damages raised by CLAIMANT from being enforced.

Issue 4: Reliable Should Be Permitted to Join this Arbitration as RESPONDENT Qualifies for Exemption Under Art. 79(1) and (2)(a) CISG

I. Reliable Should Be Joined to this Arbitration Since the Parties Have so Agreed

1. The Parties Have Shown Their Intention to Join Reliable in § 24 of Their Contract

As CLAIMANT states in its Memorandum, it agrees that there should "be consent from all parties involved for a joinder to occur."[167] In the present case this requirement is fulfilled by the joinder agreement: RESPONDENT and CLAIMANT both agreed in § 24 of their contract that "if [CLAIMANT] shall make a claim which . . . would give rise to a claim by [RESPONDENT] against one of its suppliers, [CLAIMANT] agrees that the claim of [RESPONDENT] against the supplier may be settled in the arbitration between [CLAIMANT] and [RESPONDENT] . . . ."[168] This clause shows that CLAIMANT and RESPONDENT have both agreed to a third party joining this arbitration.[169] Therefore, § 24 of the contract between RESPONDENT and CLAIMANT should be regarded as a contractual basis for a joinder of Reliable.

2. The Parties' Joinder Agreement Was Specifically Tailored for a Possible Joinder of Reliable

RESPONDENT submits that Reliable should be joined to this arbitration because RESPONDENT and CLAIMANT both agreed to join Reliable when creating § 24 of their contract. Considering the circumstances that led to the creation of § 24, it is obvious that during the negotiations both parties were thinking of a possible joinder of Reliable, since CLAIMANT expressly suggested Reliable perform the installation.[170] As Reliable was the only external party involved in the performance of the contract between RESPONDENT and CLAIMANT, it is evident that § 24 was tailored for its joinder, regardless of whether one would call it a 'supplier' under other circumstances or not. § 24 deals primarily with the situation of a recourse claim and it is irrelevant whether RESPONDENT files this claim against a 'supplier' in the technical meaning of the word or against any other person which is involved in its contract with CLAIMANT.

3. The Parties Agreed on a Joinder for a Situation Such as the Present One

CLAIMANT submits that joining Reliable would be impossible because CLAIMANT itself has no claim against Reliable.[171] This allegation should be disregarded since in § 24 of the contract between RESPONDENT and CLAIMANT, CLAIMANT had agreed to a joinder if RESPONDENT brought a claim against Reliable. It is RESPONDENT who has a claim against Reliable because of CLAIMANT's claim, if the latter was found to be justified. As Russell states, it is one of the typical joinder-situations that a "respondent seeks to recover from a third party in respect of the claim made against him."[172] Redfern/Hunter argue that "in such a situation, it would be desirable if the parties could be brought into the same [arbitration], so as to save time and expense and avoid the risk of inconsistent awards."[173] It is evident that the present situation is a typical joinder situation: § 24 of the contract between RESPONDENT and CLAIMANT describes this situation by providing for a joinder if CLAIMANT should put forward a claim which would give rise to a claim by RESPONDENT against one of its suppliers.

RESPONDENT submits that Reliable should be joined to this arbitration in accordance with § 24 of the contract between RESPONDENT and CLAIMANT.[174] § 24 provides for a joinder of a supplier in the case that CLAIMANT makes a claim against RESPONDENT which gives rise to a claim of RESPONDENT against this supplier. Since RESPONDENT submits that it is exempt from paying damages under Art. 79(2)(a) CISG it requests Reliable to be joined to this arbitration on the grounds of § 24 of the contract to clarify the question whether or not Reliable is also exempt from paying damages under Art. 79(2)(b) CISG. The issue of Reliable's exemption is a preliminary question in the matter of RESPONDENT's possible claim against Reliable according to § 24. If Reliable is not exempt under Art. 79(2)(b) CISG, RESPONDENT has a recourse claim against it. The fact that it is not yet certain whether or not RESPONDENT has a claim against Reliable is irrelevant. § 24 states that a joinder is already possible if there is a claim against RESPONDENT, which, if found to be justified, would give rise to a claim against Reliable. Therefore, it is legitimate to join Reliable to the arbitration, since the possibility suffices that RESPONDENT could have a claim against it and since the situation which is required in the joinder agreement of § 24 of the contract between RESPONDENT and CLAIMANT has arisen.

Also CLAIMANT's submission [175] that Reliable should not be joined to the arbitration because the communication concerning the performance of the installation was between RESPONDENT and CLAIMANT and not between Reliable and CLAIMANT is of no importance. § 24 of the contract between RESPONDENT and CLAIMANT states that a supplier of RESPONDENT may join the arbitration. It is normal that suppliers of a company do not communicate with the company's clients directly. Also the contract dated 10 June 1996 between RESPONDENT and CLAIMANT explicitly calls for Reliable to perform the installation.[176] These considerations show that CLAIMANT was involved with Reliable.

Thus, RESPONDENT submits that the joinder agreement in § 24 of the contract between RESPONDENT and CLAIMANT was made with a situation such as the present one in mind.

4. The Parties Have Agreed to Join Reliable as a Party and Not Only as a Witness

Reliable must be joined to this arbitration as a party and cannot only be heard as a witness, as this is the intention of the parties according to § 24 of the contract between RESPONDENT and CLAIMANT and the only possible way to deal with the present situation. As already explained,[177] the issue of Reliable's exemption according to Art. 79(2)(b) CISG is only a preliminary question in the matter of RESPONDENT's recourse claim against it. For the discussion of the recourse claim against Reliable it is indispensable to join Reliable as a party and not only as a witness. Otherwise, Reliable would not be bound by the arbitral award and a second arbitration against it would be necessary, increasing costs and complexity of the arbitral proceedings.

5. The Parties' Agreement Calls for a 'De-Iure Consolidation' Instead of a 'De-Facto Consolidation' as Alleged by CLAIMANT

CLAIMANT alleges that a joinder of Reliable could not be conducted on the grounds of § 24 of the contract between RESPONDENT and CLAIMANT since this clause would "merely provide . . . a way for two disputes to be heard at the same time" by the same arbitrators.[178] According to CLAIMANT, this case would be the situation of a 'de-facto consolidation' and not of a 'de-iure consolidation'.[179] CLAIMANT holds that settling a claim against a third party in an existing arbitration of two other parties would not mean consolidating these disputes, in other words joining this third party, but rather having the same arbitrators hear the disputes in parallel. It is submitted by RESPONDENT that the wording of § 24 does not contemplate a 'de-facto consolidation'. Hearing two disputes at the same time in parallel would mean that two separate arbitrations existed, one between RESPONDENT and CLAIMANT, the other between RESPONDENT and Reliable. 'Settling a claim in the arbitration' implies that there is only one arbitration, involving all three parties. A plural number of arbitrations is neither mentioned nor intended by § 24.

Though it may be true that consolidation is not the only way to deal with related disputes, a 'de-facto consolidation' is also inappropriate for other reasons. Since Reliable has agreed to accept RESPONDENT's appointment of an arbitrator [180] and since the two disputes would be heard by the same arbitrators,[181] CLAIMANT would be allowed to appoint an arbitrator for an arbitration in which it itself does not participate. This is not in accordance with the principle of equality according to Art. 18 Model Law and Art. 16 AAA-Rules[182] and should therefore be denied.

CLAIMANT also suggested that a 'de-facto consolidation' would be less expensive and complicated than a joinder of Reliable.[183] That is not correct: As there would be two separate arbitrations, it would be even more complicated and expensive and would take more time than a consolidated arbitration. It is one of the widely accepted advantages that a joinder of a third party lowers costs and reduces complications for the solution of multi-party situations.[184]

Summing up, Reliable has to be joined to this arbitration because § 24 of the contract between RESPONDENT and CLAIMANT shows their intention to join Reliable. The clause was specifically tailored for joining Reliable in situations like the present one. RESPONDENT and CLAIMANT also agreed that Reliable must be joined as a party and not only as a witness and to consolidate the disputes in a 'de-iure consolidation' and not in a 'de-facto consolidation'.

II. The Preconditions of the Agreement Have Been Met

1. CLAIMANT Filed a Claim that Gives Rise to a Claim of RESPONDENT Against Reliable

2. Reliable Agreed to Have the Matter Settled in this Arbitration

CLAIMANT alleges that the wording of the contract between RESPONDENT and Reliable does not correlate to the wording of the contract between RESPONDENT and CLAIMANT indicating that Reliable would not agree to join the arbitration.[185]

§ 14 of the contract between RESPONDENT and Reliable states that Reliable "will be liable to [RESPONDENT] to the same degree and in the same amount as [RESPONDENT] was found liable to [CLAIMANT]" if RESPONDENT was found liable on the basis of a failure in respect of the installation of the control system.[186] This sentence, explaining that Reliable acknowledges to be liable against RESPONDENT, shows that Reliable did not only intend to defend RESPONDENT in this arbitration but was willing to compensate any recourse claim that might arise.

Reliable's agreement to defend RESPONDENT [187] does correlate to the fact that a claim of RESPONDENT against Reliable may be settled in this arbitration.[188] Defending RESPONDENT is only of interest for Reliable if RESPONDENT has a claim against it. In any other case there would be no need for Reliable to deal with the present dispute. Also the mere wording of such clauses should not be the only means of interpretation. The circumstances and the intention of the parties must also be taken into account.[189] It is obvious that Reliable always agreed to join this arbitration if necessary, especially if one takes into account that Reliable explicitly repeated its intention to join the arbitration in its letter dated 3 August 1998.[190]

Therefore, the requirement that Reliable agree to join the arbitration has also been met.

3. Reliable Agreed to Accept RESPONDENT's Appointment of an Arbitrator

Although the fact that this requirement is met is not disputed by CLAIMANT, RESPONDENT considers it appropriate to make some further submissions: Reliable twice agreed to accept RESPONDENT's appointment of an arbitrator.[191] The agreement is valid since the interests if RESPONDENT and Reliable are the same, namely to show that they are exempt from paying damages under Art. 79 CISG. Also with regard to the recourse claim against Reliable it is not relevant that Reliable has agreed to waive its right to appoint an arbitrator. Since it has repeated its agreement after CLAIMANT has raised its claim against RESPONDENT,[192] its intention has to be respected according to the principle of party autonomy. Even if this question was regarded as relevant for the present arbitration, any refusal to join Reliable by CLAIMANT would be a breach of good faith, as CLAIMANT has also agreed to § 24 of the contract between RESPONDENT and CLAIMANT, which contains the requirement of Reliable waiving its right to appoint an arbitrator.

4. A Joinder of Reliable Does Not Raise any New Questions of Law or Fact

CLAIMANT submits that a joinder of Reliable would raise new questions of law such as whether the CISG applies to the contract with Reliable even though it is a contract for the sale of services as opposed to goods.[193] RESPONDENT asserts that joining Reliable to discuss the question of Art. 79(2)(b) CISG does not raise any new questions of law or fact. The question of Art. 79(2)(b) CISG exclusively concerns the relationship between RESPONDENT and CLAIMANT and must be discussed to answer the question of RESPONDENT's exemption according to Art. 79(2) CISG. The matter of RESPONDENT's exemption is no new question of law or fact.

Even if the relationship between RESPONDENT and Reliable was regarded as relevant for RESPONDENT's exemption, the contract between RESPONDENT and Reliable is a contract for the sale of services and is governed by the UNIDROIT Principles.[194] The relevant Article 7.1.7(1) is of the same meaning as Art. 79 CISG [195] and it is therefore not evident what new questions of law should be raised. Thus, no new questions of law would be raised by joining Reliable.

Also CLAIMANT's allegation that the question of damages was a new question of law [196] should be disregarded, as the question of damages would be discussed in any case and also belongs to those questions which CLAIMANT has agreed to discuss in § 24 of the contract between RESPONDENT and CLAIMANT. The main reason for joining Reliable is not the question of damages but its exemption under Art. 79(2)(b) CISG.[197]

For these reasons RESPONDENT submits that a joinder of Reliable does not raise any new questions of law or fact.

III. Because the Parties Have Agreed to a Joinder of Reliable, an Inextricable Link Between the Contracts Is Not Necessary

CLAIMANT purports that the agreement between RESPONDENT and Reliable is not inextricably linked to the contract between RESPONDENT and CLAIMANT and that therefore a joinder of Reliable should not be allowed.[198]

Considering that RESPONDENT and CLAIMANT had explicitly agreed joining Reliable in a case like the present one,[199] RESPONDENT submits that the alleged additional requirement of inextricable linkage for a joinder is not relevant for the present case of multi-party arbitration.

The cases [200] and the passages of the essay by Leboulanger [201] cited by CLAIMANT in support of this requirement are not relevant for the present situation, since they deal with multi-contract and not with multi-party arbitration.[202] The difference is that multi-contract arbitration includes two parties only, not involving any third party as is the case in multi-party arbitration. Leboulanger himself states that the solutions of multi-contract arbitration are therefore not transposable and should be strictly distinguished from multi-party arbitration.[203] Therefore, such an alleged requirement is not necessary for a possible joinder of Reliable.

IV. Even if an Inextricable Link Was Regarded as Necessary, this Requirement Would Have Been Met

CLAIMANT submits that the installation contract between RESPONDENT and Reliable is not linked to the contract of sale between RESPONDENT and CLAIMANT. To explain under which circumstances such a link would be given, CLAIMANT mentions the example of a contract for the management of the water quality of a dam which would be meaningless without an earlier contract for the construction of the dam.[204] Also in the present case, the installation of a computerized control system is meaningless if the system has not been sold and delivered beforehand. If the system has not been delivered, it cannot be installed. This is also admitted by CLAIMANT, who states that "no-one would be able to do the [installation] if the hardware is not delivered to the premises of [CLAIMANT] as provided for by clause 1 of the June 10 contract."[205] This shows that the contract between RESPONDENT and CLAIMANT is inextricably linked to the contract between RESPONDENT and Reliable.

Therefore, a joinder of Reliable to the arbitration should be permitted.

Costs

Counsel have agreed not to discuss the issue of costs in this phase of the arbitration,[206] but in response to CLAIMANT's contention, costs are to be paid in full by CLAIMANT as it alone is the responsible and unsuccessful party.

Conclusion

In response to the Tribunal's Procedural Order No. 1, and in view of the above submissions on behalf of our client Essential Control, S.A., may it accordingly please the honorable Tribunal:

Basel, 14 February 1999
Lorenz Aebersold University of Basel	Christiana Fountoulakis University of Basel
Dominic Morris University of Basel Counsel for Superb Paper, PLC	Petra Reinhard-Brandenberg University of Basel

Counsel for Essential Controls, S.A.

Annex

Chronology of Events