SEVENTH ANNUAL

WILLEM C.VIS

INTERNATIONAL

COMMERCIAL ARBITRATION MOOT

1999-2000

INSTITUTE OF INTERNATIONAL COMMERCIAL LAW

PACE UNIVERSITY SCHOOL OF LAW

MEMORANDUM FOR RESPONDENT

UNIVERSITY OF HEIDELBERG

RICHARD BLAIR CLAUDIA BOCK

STEFAN HUBER STEFAN MAAßEN JENS WENZEL


LONDON COURT OF INTERNATIONAL ARBITRATION

Case No. Moot 7

LEGAL POSITION IN RESPONSE TO THE

MEMORANDUM FOR CLAIMANT

ON BEHALF OF :

Grain Dealers, PLC
26 Export Pl.
Southside City
Danubia

RESPONDENT

AGAINST :

Feed Processing, Corp.
123 Industrial Avenue,
Highlands,
Mediterraneo

CLAIMANT


Table of Contents

Index of Authorities

Index of Cases

Index of Legal Sources

Abbreviation Index

Introduction and Summary of CLAIMANT's contentions

ARGUMENT

I. Mr. Dean's written testimony is not to be admitted as evidence

A. Mr. Dean's written testimony is to be disregarded according to Art. 20 LCIA Rules

1. Mr. Dean's absence will be without good cause

2. A formal order of attendance was not necessary

3. The instant facts require the disregard of Mr. Dean's written testimony under Art. 20.4 LCIA Rules

B. Considerations of procedural fairness should lead this Tribunal to disregard Mr. Dean's written testimony

1. The disregard of Mr. Dean's written testimony would not deprive CLAIMANT of the possibility of putting its case

2. RESPONDENT's right to a fair trial would be violated by the admission of Mr. Dean's written testimony
C. An application of Art. 8 (3) CISG does not render Mr. Dean's written testimony admissible

II. This Tribunal has no jurisdiction to decide on the instant facts

A. No arbitration agreement exists which would allow CLAIMANT to proceed to arbitrationXXIII

1. CLAIMANT and RESPONDENT did not agree on arbitration a. The lack of an agreement on 19 February 1998 is evidenced by Mr. Stern's written testimony

b. Mr. Dean's written testimony does not establish the conclusion of an agreement on 19 February 1998

c. The parties' subsequent behaviour confirms that no agreement was entered into by CLAIMANT

2. CLAIMANT cannot rely on any agreement between RESPONDENT and IMPORTS

a. CLAIMANT cannot invoke any "third party beneficiary doctrine"

b. CLAIMANT cannot invoke the alter ego doctrine

B. Any arbitration agreement would not have met the applicable form requirements

1. CLAIMANT's letter dated 20 February 1998 does not meet the applicable form requirements

2. The letters dated 20 and 24 February 1998 did not fulfil the applicable form requirements

3. The parties' subsequent correspondences did not refer to arbitration and cannot fulfil the applicable form requirements

III. CLAIMANT and RESPONDENT never entered into a contract of sale

IV. RESPONDENT did not commit a breach of contract

A. By refusing acceptance of delivery as proposed by RESPONDENT, CLAIMANT breached its obligation to take delivery per Art. 60 CISG and its obligation of payment per Art. 54 CISG

1. CLAIMANT had no right to avoid the contract since delivery as proposed by RESPONDENT would not have constituted a fundamental breach of contract

a. Partial delivery would not have constituted a fundamental breach of the entire contract

aa. The performance of the alleged contract would not have been rendered useless in its entirety

bb. The damage expected by CLAIMANT could not lead to a fundamental breach of the entire contract

cc. Delivery in one shipment was not an essential term of the contract

b. CLAIMANT was not entitled to partially avoid the contract since the late delivery of 1,200 tons would not have constituted a fundamental breach of this part of the contract

aa. The expected delay in delivery would not have amounted to a fundamental breach

bb. CLAIMANT cannot establish a total loss of confidence in delivery of 1,200 tons by RESPONDENT

2. CLAIMANT was under an obligation to take delivery and to accommodate the letter of credit accordingly

B. In reaction to CLAIMANT's fundamental breach of contract, RESPONDENT declared an avoidance of the alleged contract in compliance with both Art. 72 and 64 (1) (b) CISG

1. RESPONDENT was allowed to avoid the contract pursuant to Art. 72 CISG

2. RESPONDENT was also allowed to avoid the contract in accordance with Art. 64 (1) (b) CISG

C. Due to its lawful avoidance, RESPONDENT could not have breached the contract

V. CLAIMANT is not entitled to damages

A. CLAIMANT cannot rely on Art. 75 CISG

B. CLAIMANT is exempt from paying damages under Art. 79 (1) CISG

1. The floods and the governmental export restrictions constituted an impediment

2. The floods and the governmental restrictions were beyond RESPONDENT's control

3. RESPONDENT could neither reasonably be expected to have taken the impediment into account nor to have overcome its consequences

C. CLAIMANT violated its duty to mitigate loss arising from Art. 77 CISG

D. The amount of damages demanded by CLAIMANT would have to be reduced by its saved expenses

E. CLAIMANT is not entitled to interest

VI. CLAIMANT should bear all legal costs

VII. Request for relief


Index of Authorities

AUDIT, Bernard La vente internationale de marchandises
Paris 1990
(cited as: AUDIT)
BAUMGÄRTEL, Andreas
LAUMEN, Hans-Willi
Handbuch der Beweislast im Privatrecht
Volume 2, BGB, Sachen-, Familien- und Erbrecht,
Recht der Europäischen Gemeinschaften,
UN-Kaufrecht
2nd Edition, Köln/Berlin 1999
(cited as: Baumgärtel/Laumen)
BENICKE, Christoph Zur Vertragsaufhebung nach UN-Kaufrecht bei
Lieferung mangelhafter Ware
in: IPRax 1997, p. 326 ff.
(cited as: Benicke)
BERGER, Klaus Peter Internationale Wirtschaftsschiedsgerichtsbarkeit
Berlin 1992
(cited as: BERGER)
BIANCA, Cesare Massimo
BONELL, Michael Joachim
Commentary on the International Sales Law
Milan 1987
(cited as: Bianca/Bonell-AUTHOR)
BORN, Gary B. International Commercial Arbitration in the
United States
Deventer 1994
(cited as: BORN)

International Civil Litigation in United
States Courts
The Hague, 1988
(cited as: BORN, International Litigation)

BOTZENHARDT, Bertrand Die Auslegung des Begriffs der wesentlichen
Vertragsverletzung im UN-Kaufrecht
Frankfurt a.M. 1998
(cited as: BOTZENHARDT
BROCHES, Aron Commentary on the UNCITRAL Model Law
on international commercial arbitration
Deventer 1990
(cited as: BROCHES)
BUCHER, Andreas Die neue internationale Schiedsgerichtsbarkeit
in der Schweiz
Basel/Frankfurt 1989
(cited as: Bucher )
CADIET, Loïc Droit Judiciaire Privé
Paris 1992
(cited as: Cadiet)
VON CAEMMERER, Ernst
SCHLECHTRIEM, Peter
Kommentar zum Einheitlichen UN-Kaufrecht
2nd edition, München 1995
(cited as: v.Caemmerer/Schlechtriem-AUTHOR)
ENDERLEIN, Fritz
MASKOW, Dietrich
International Sales Law
New York, London, Rome 1992
(cited as: ENDERLEIN/MASKOW)
ENDERLEIN, Fritz
MASKOW, Dietrich
STROHBACH, Heinz
Internationales Kaufrecht
Berlin 1991
(cited as: ENDERLEIN/MASKOW/STROHBACH)
FOX, Thomas Das Wiener Kaufrechtsübereinkommen
München 1994
(cited as: Fox)
GRANZOW, Joachim H. Das UNCITRAL-Modellgesetz über die internationale
Handelsschiedsgerichtsbarkeit von 1985
München 1988
(cited as: GRANZOW)
HASCHER, Dominique Collection of Procedural Decisions in ICC Arbitration
Paris/Deventer 1997
(cited as: ICC Procedural Decisions )
HEILMANN, Jan Mängelgewährleistung im UN-Kaufrecht
Berlin 1994
(cited as: HEILMANN)
HERBER, Rolf
CZERWENKA, Beate
Internationales Kaufrecht
München 1991
(cited as: HERBER/CZERWENKA)
HEUZE, Vincent La vente internationale de marchandises
Paris 1992
(cited as: HEUZÉ)
HOLTZMANN, Howard M.
NEUHAUS, Joseph E.
A Guide To The UNCITRAL Model Law On
International Commercial Arbitration
Deventer 1989
(cited as: HOLTZMANN/NEUHAUS)
HONNOLD, John Documentary History of the Uniform Law for
International Sales
Deventer 1989
(cited as: SECRETARIAT COMMENTARY)

Uniform Law for International Sales
2nd edition, Deventer 1991
(cited as: HONNOLD)

HONSELL, Heinrich Kommentar zum UN-Kaufrecht
Berlin, Heidelberg 1997
(cited as: Honsell-AUTHOR)
HUßLEIN-STICH, Gabriele Das UNCITRAL-Modellgesetz über die
internationale Handelsschiedsgerichtsbarkeit
Köln, Berlin, Bonn, München 1990
(cited as: HUßLEIN-STICH)
JAN, Sheng-Lin Die Erfüllungsverweigerung im deutschen und
im UN-Kaufrecht
Frankfurt a.M. 1992
(cited as: JAN)
KAROLLUS, Martin UN-Kaufrecht
Wien 1991
(cited as: KAROLLUS)

UN-Kaufrecht: Vertragsaufhebung und
Nacherfüllungsrecht bei Lieferung
mangelhafter Ware
in: ZIP 1993, Vol.1, p. 490ff
(cited as: KAROLLUS, ZIP 1993)

KEIL, Andreas Die Haftungsbefreiung des Schuldners im
UN-Kaufrecht
Frankfurt a.M. 1993
(cited as: Keil)
KRANZ, Norbert Die Schadensersatzpflicht nach den Haager
Einheitlichen Kaufgesetzen und dem Wiener
UN-Kaufrecht
Frankfurt a.M. 1989
(cited as: KRANZ)
KRITZER, Albert H. International Contract Manual
Deventer 1994
(cited as: KRITZER)
MAGNUS, Ulrich Die allgemeinen Grundsätze im UN-Kaufrecht
Rabelszeitschrift 59 (1995), p. 469 ff.
(cited as: Magnus, RabelsZ (59) 1995)
MORSCHER, Thomas Staatliche Rechtssetzungsakte als Leistungs-
hindernisse im internationalen Warenkauf
Basel, Frankfurt a.M. 1992
(cited as: MORSCHER)
NEUMAYER, Karl H.
MING, Catherine
Convention de Vienne sur les contrats de vente
internationale de marchandises
Lausanne 1993
(cited as: NEUMAYER/MING)
ORAN, Daniel Oran's Dictionary of the Law
St.Paul (Minn.,USA) 1983
(cited as: Oran's Dictionary of the Law)
PILTZ, Burghard Internationales Kaufrecht
München 1993
(cited as: Piltz)
RENCK, Andreas W. Der Einfluß der INCOTERMS 1990 auf das UN-Kaufrecht
Münster/Hamburg 1995
(cited as: Renck)
RÜEDE, Thomas
HADENFELDT, Reimer
Schweizerisches Schiedsgerichtsrecht
2. Edition, Zürich 1993
(cited as: Rüede/Hadenfeldt)
REDFERN, Alan
HUNTER, Martin
Law and Practice of International Commercial
Arbitration
2nd edition, London 1991
(cited as: REDFERN/HUNTER)
REIMERS-ZOCHER, Birgit Beweislastfragen im UN-Kaufrecht
Frankfurt 1995
(cited as: Reimers-Zocher)
REINHART, Gert UN-Kaufrecht
Heidelberg 1991
(cited as: REINHART)
RUBINO-SAMARTANO, Mauro International Arbitration Law
Deventer 1990
(cited as: RUBINO-SAMARTANO)
RYFFEL, Gritli Die Schadenersatzhaftung des Verkäufers nach
dem Wiener Übereinkommen über internationale
Warenkaufverträge vom 11. April 1980
Bern 1992
(cited as: Ryffel)
SANDERS, Pieter (Editor) Comparative arbitration practice and public
policy
Deventer 1986
(cited as: ICCA Report 1986)
SHENTON, D.W. Explanatory Note on the IBA Supplementary
Rules on the Taking of Evidence in
International Commercial Arbitration
YCA 1985, p. 145 ff.
(cited as: Shenton)
SCHLECHTRIEM, Peter Commentary on the UN Convention on the
International Sale of Goods (CISG)
2nd edition, Oxford 1998
(cited as: Schlechtriem-AUTHOR)

Internationales UN-Kaufrecht
Tübingen 1996
(cited as: SCHLECHTRIEM, UN-Kaufrecht)

SCHLECHTRIEM, Peter
MAGNUS, Ulrich
Internationale Rechtsprechung zu EKG und
EAG
Baden-Baden 1987
(cited as: SCHLECHTRIEM/MAGNUS Recht-
sprechungsreport)
SCHLOSSER, Peter Das Recht der international privaten
Schiedsgerichtsbarkeit
2nd edition, Tübingen 1989
(cited as: SCHLOSSER)
SCHMITTHOFF, Clive M. Schmitthoff's Export Trade
8th Edition, London 1986
(cited as: SCHMITTHOFF)
SCHWAB, Karl Heinz Schiedsgerichtsbarkeit
3rd Edition, München 1979
(cited as: SCHWAB)
SOERGEL, Hans Theodor Kommentar zum Bürgerlichen Gesetzbuch
Band 2/2
Stuttgart, Berlin, Köln, Mainz 1986
(cited as: Soergel-AUTHOR)
VON STAUDINGER, Julius Kommentar zum Bürgerlichen Gesetzbuch
mit Einführungsgesetz und Nebengesetzen
Wiener UN-Kaufrecht (CISG)
Berlin 1994
(cited as: Staudinger-MAGNUS)
STEIN, Friedrich Kommentar zur Zivilprozeßordnung
4. Teilband 348-510 b.
21st Edition, Tübingen 1999
(cited as: Stein/Jonas-AUTHOR)
STRAATMANN, Kuno
ULMER, Peter
Handelsrechtliche Schiedsgerichtspraxis
Köln 1975
(cited as: STRAATMANN/ULMER)
THOMAS, Heinz
PUTZO, Hans
Zivilprozeßordnung
21st Edition, München 1998
(cited as: Thomas/Putzo-AUTHOR)
VAN DEN BERG, Albert Jan The New York Arbitration Convention of 1958
Deventer 1981, reprint of 1994
(cited as: VAN DEN BERG)
ZIEGLER, Ulrich Leistungsstörungsrecht nach dem
UN-Kaufrecht
Baden-Baden 1995
(cited as: ZIEGLER)

Index of cases

Bundesgerichtshof, 18 June 1968, NJW 1968, p. 1929 ff.

Cour de Cassation, 2 Jul. 1969, Dalloz 1970, p. 150 ff.

Ditta Augusto Miserocchi v. S.p.a. Paolo Agnesi,
Corte di Cassazione, 13 Dec. 1971,YCA I 1976, p. 190 ff.

LG Düsseldorf, 10 Aug. 1981, Staudinger-Magnus, Rechtsprechungsreport Art. 8 No. 3

Essex Cement Company v. Italmare S.p.A.
US District Court S.D.N.Y., 13 May 1991, 763 F.Supp. 55

Iran Aircraft Industries v. AVCO Corp.
US Court of Appeals 2nd Circuit, 24 Nov. 1992, 980 F.2nd 141

Oberlandesgericht Frankfurt, 18. Jan. 1994, NJW 1994, p. 1013

Bundesgerichtshof, 3 Apr. 1996, IPRax 1997, p. 342

OLG Hamburg, 4 July 1997, Staudinger-Magnus, Art. 79 No. 22

MCC Marble Ceramic Center v. Ceramica Nuova D'Agostino
US Circuit Court 11th Circuit, 29 June 1998, in: Pace Database


Index of Awards

Arbitral Tribunal of Hamburger Freundschaftliche Arbitrage, Award dated 15 Dec. 1959

ICC Award No. 1434/1975, Clunet 1976, p. 978

Society of Maritime Arbitrators, Inc.,
Partial Final Award No. 1510, Nov. 28, 1980, YCA 1982, p. 151

Isovers v. Dow Chemical, ICC Interim Award, Sept. 23, 1982, ICC Awards I, p. 146

ICC Award No. 6653 of 1993, Clunet 1993, p. 1041


Index of Legal Sources

ARBITRATION RULES OF THE LONDON COURT OF INTERNATIONAL ARBITRATION, as effective of 1 January 1998

CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS, New York, 10 June 1958

UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION, as adopted by the United Nations Commission on International Trade Law on 21 June 1985, UN Doc. No. A/40/17 (Annex I)

UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS of 11 April 1980, UN Doc. No. A/Conf. 9 7/18 (Annex I) 1980


Abbreviation Index

AAA American Arbitration Association
Arb. Arbitration
Art. Article
AZ Aktenzeichen (Case reference)
BGH Bundesgerichtshof (German Federal Supreme Court)
cf. confer (compare)
CISG United Nations Convention on contracts for the International Sale of Goods of 11 April 1980
Clunet Journal du droit international (monthly French Law Journal)
e.g. exempla gratia (for example)
EWir Entscheidungen zum Wirtschaftsrecht
F.2nd Federal Reporter, Second Series (USA)
ff. following
FOB free on board (Incoterm)
F.Supp. Federal Supplement
IBA International Bar Association
ICC International Chamber of Commerce
ICCA International Council for Commercial Arbitration
ICSID International Centre for the Settlement of Investment Disputes
IPRax Praxis des Internationalen Privat- und Verfahrensrechts
i.e. id est (that means)
Incoterms     Incoterms 1990. International Commercial Terms of the ICC, ICC publication n 460
LG Landgericht (German Regional Court)
LCIA London Court of International Arbitration
NJW Neue Juristische Wochenschrift
No. Number
NY New York
NY Conv. Convention on the recognition and enforcement of foreign arbitral awards
OLG Oberlandesgericht (German Regional Court of Appeal)
p. page
para. paragraph
RabelsZ Rabels Zeitschrift für ausländisches und internationales Privatrecht
S.D. Southern District
ULIS Uniform Law on the International Sale of Goods
UML Uncitral Model Law
UN United Nations
UNCITRAL United Nations Commission on International Trade Law
UNIDROIT International Institute for the Unification of Private Law
U.S. United States
v. versus (against)
YCA Yearbook of commercial arbitration


INTRODUCTION

In response to the Arbitral Tribunal's Procedural Order No. 1, dated 30 September 1999, and the Memorandum of Feed Processing Corp. (hereinafter referred to as CLAIMANT), dated 6 December 1999, Grain Dealers PLC. (hereinafter referred to as RESPONDENT) respectfully requests this Tribunal:

not to admit the written testimony of Mr. Harold Dean (Issue I),

to decline its jurisdiction due to the lack of an arbitration agreement (Issue II),

alternatively, to declare that RESPONDENT and CLAIMANT did not conclude a sales contract (Issue III),

in the alternative, to declare that RESPONDENT did not breach this contract (Issue IV),

to declare that RESPONDENT is exempt from paying damages, should this Tribunal find that RESPONDENT breached the alleged contract (Issue V),

to order CLAIMANT to bear the legal costs arising from these proceedings (Issue VI).

In its Memorandum, CLAIMANT contends:

that the written testimony of Mr. Harold Dean[1] should be fully admissible under Art. 20 LCIA Rules and under Art. 8 (3) CISG and that its exclusion would deny CLAIMANT a reasonable opportunity of putting its case,[2]

that this Tribunal has jurisdiction because Paragraph 13 of the Danubia Feed and Grain Association Standard Conditions of Sale (hereinafter referred to as DSC) No. 5 contains a valid arbitration clause,[3]

that the parties entered into a contract of sale during their telephone conversation of 19 February 1998,[4]

that in the alternative, CLAIMANT can require performance as a third party beneficiary from a contract between RESPONDENT and Food Imports, Co. (hereinafter referred to as IMPORTS),[5]

that RESPONDENT committed an anticipatory fundamental breach of its contractual obligations both by offering partial delivery and by the allocation of 6,000 tons of wheat to other customers,[6]

that consequently, CLAIMANT lawfully avoided the contract by performing a cover purchase,[7]

that RESPONDENT is not exempt from damages under Art. 79 CISG,[8]

that CLAIMANT is entitled to damages of $90,000 per Art. 75 CISG and interest thereon from 18 June 1999 per Art. 78 CISG,[9]

that CLAIMANT is entitled to compensation for the costs of arbitration.[10]


ARGUMENT

RESPONDENT respectfully submits that this Tribunal should not accept any of CLAIMANT's contentions. It denies that any arbitration agreement or contract exists with CLAIMANT. Accordingly, by participating in these proceedings, RESPONDENT does not concede the existence of an arbitration agreement with CLAIMANT, but merely submits to the Kompetenz-Kompetenz of this Tribunal.

I. Mr. Dean's written testimony is not to be admitted as evidence

This Tribunal should disregard the written testimony of Mr. Harold Dean[11] from these arbitral proceedings according to Art. 20 LCIA Rules[12] (A.). A consideration of procedural fairness renders the disregard of the testimony proper (B.). Contrary to CLAIMANT's assertions,[13] Art. 8 (3) CISG is of no relevance to this procedural issue (C.).

A. Mr. Dean's written testimony is to be disregarded according to Art. 20 LCIA Rules

CLAIMANT's witness, Mr. Dean, will not attend the oral hearings before this Tribunal although having previously given a written testimony.[14] Contrary to CLAIMANT's assertions,[15] compliance with the general rules of Art. 20.3 and 20.6 LCIA Rules alone cannot be an adequate basis to admit Mr. Dean's written testimony. These provisions merely state that written testimonies taken by presenting counsel are not generally barred from the proceedings. However, in the case where the witness will not attend oral hearings, the specific rule of Art. 20.4 LCIA Rules governs the issue of the admissibility of a written testimony.

The conditions required for the disregard of Mr. Dean's written testimony under this provision are fulfilled. Mr. Dean's absence at the oral hearings will be without good cause (1.). On the instant facts, the issue of a formal order of attendance, as suggested by CLAIMANT,[16] is unnecessary (2.). Thus, the application of Art. 20.4 LCIA Rules demands the exclusion of the testimony in question (3.).

1. Mr. Dean's absence will be without good cause

Mr. Dean's written testimony should be disregarded since his absence will be without good cause. In seeking to establish good cause, CLAIMANT invokes its lack of coercive power due to the absence of court assistance in Mediterraneo and the fact that it is no longer Mr. Dean's employer.[17] Additionally, CLAIMANT relies upon advice not to contact Mr. Dean.[18] However, none of these reasons constitute a good cause in the sense of Art. 20.4 LCIA Rules.

From the construction of Art. 20.4 LCIA Rules, it is apparent that the circumstances amounting to good cause must relate to the personal ability of the witness to attend the oral hearings and not to the ability of the presenting party to produce the witness. Art. 20.4 LCIA Rules states that, "If [...] the witness fails to attend the oral hearing without good cause [...]" and does not refer to the party's failure to produce the witness.[19] Thus, good cause in the sense of Art. 20.4 LCIA Rules is an excuse for the witness and hence, may be illness or an accident of the witness. None of the reasons invoked by CLAIMANT hinder Mr. Dean to attend the hearings but relate exclusively to CLAIMANT itself. Thus, for this reason alone, CLAIMANT fails to establish good cause.

Furthermore, good cause in the sense of Art. 20.4 LCIA Rules does not include reasons entirely dependent on the presenting party's will. If this were the case, a party could create excuses for the non-attendance of its witnesses by its own volition. Such understanding of the notion of good cause is generally refuted.[20] On the instant facts, CLAIMANT refuses to contact Mr. Dean as a matter of tactic in different legal action, unrelated[21] to the instant arbitration. Thus, if CLAIMANT deliberately decides to pursue its interests in this other legal action, to the detriment of the present proceedings, it must bear the consequences. It cannot be allowed to escape its duty to produce its witness by invoking its own course of conduct as a purported ground for good cause.

RESPONDENT concedes that CLAIMANT lacks coercive power to enforce Mr. Dean's presence. However, CLAIMANT has not even taken steps to ascertain whether Mr. Dean would attend the hearings voluntarily. Thus, CLAIMANT's lack of coercive power does not become effective but remains pure speculation. Since Mr. Dean might attend a hearing voluntarily if asked,[22] CLAIMANT cannot rely on the fact that it lacked the power to enforce Mr. Dean's attendance without having contacted him at all. CLAIMANT's reliance on this argument should therefore be barred.

2. A formal order of attendance was not necessary

CLAIMANT argues that Art. 20.4 LCIA Rules may not form the basis of an exclusion of Mr. Dean's written testimony, since no formal order of attendance has been issued by this Tribunal.[23] However, it is clear from a purposive interpretation of Art. 20.4 LCIA Rules that this position is based on defective argument. In cases where a party offers a witness and renders a written testimony, this party must be informed whether the Tribunal wishes to hear the witness and be aware of the possible consequences of the witness' non-attendance.

On the instant facts, however, CLAIMANT itself explicitly submitted from the outset, that it would not produce Mr. Harold Dean before this Tribunal.[24] From this submission on, both the parties and the Tribunal were aware that Mr. Dean would not attend the hearings. Since the Tribunal invited the parties to present argument on the consequences of Mr. Dean's non-attendance,[25] CLAIMANT was aware that this Tribunal may disregard his written testimony. In this situation, a formal order would not have served any purpose and amounted to mere formalism. In light of CLAIMANT's awareness of the possible consequences, its refusal to contact Mr. Dean precludes it from relying on the lack of a formal order.

Should this Tribunal, nevertheless, find that a formal order of attendance is necessary, RESPONDENT reiterates the request in its Statement of Defence,[26] that such an order be given.

3. The instant facts require the disregard of Mr. Dean's written testimony under Art. 20.4 LCIA Rules

On the instant facts, this Tribunal should exercise its power to disregard Mr. Dean's written testimony pursuant to Art. 20.4 LCIA Rules. Mr. Dean's written testimony is ambiguous on issues having a material impact on the instant dispute.[27] These ambiguities cannot be clarified without the presence of the witness. RESPONDENT recognises that the value given to evidence is ultimately to be determined by this Tribunal. Yet, RESPONDENT respectfully submits that CLAIMANT's contentions concerning the credibility of Mr. Dean[28] are not persuasive.

CLAIMANT alleges that Mr. Dean had no incentive to lie, since he was unaware of the proceedings when he gave his written testimony.[29] Whilst questioning Mr. Dean's unawareness,[30] RESPONDENT submits that Mr. Dean nevertheless had substantial incentive to be untruthful. By saying that he had not told Mr. Stern that he was acting on behalf of CLAIMANT, Mr. Dean would have admitted a mistake and exposed himself to the risk of serious consequences, whether financial or disciplinary. In such a case, an incentive to be dishonest can never be excluded. Furthermore, even if Art. 20.7 LCIA Rules allows parties to rely on testimonies of their employees, this provision does not determine the weight that is to be given to these testimonies. Arbitration practice tends to consider testimony tendered by employees of a party as being less reliable.[31] Finally, CLAIMANT itself is not convinced of Mr. Dean's credibility since it fears that Mr. Dean would be inclined to be untruthful during an oral hearing because of his dismissal.[32] In the light of these circumstances, Mr. Dean's presence before this Tribunal would be indispensable to establish the credibility of his testimony.

Furthermore, since Mr. Dean's written testimony is partially contradicted by Mr. Stern's testimony, the Tribunal must have the possibility to balance the reliability of both witnesses' testimonies. This also is impossible without the witnesses being present. These remaining unsettled issues would have had to have been clarified by this Tribunal at an oral hearing. Such clarification will not be forthcoming, since CLAIMANT deliberately refuses to produce the witness before this Tribunal. CLAIMANT should be aware that such conduct might even allow adverse inferences to be drawn with regard to CLAIMANT's position.[33]

As a consequence, the disregard of Mr. Dean's written testimony is required and justified under Art. 20.4 LCIA Rules. This conclusion is reinforced by considerations of procedural fairness.

B. Considerations of procedural fairness should lead this Tribunal to disregard Mr. Dean's written testimony

RESPONDENT submits that a disregard of Mr. Dean's written testimony would not infringe CLAIMANT's opportunity to state its case (1.). The lack of efficient rebuttal, however, would violate RESPONDENT's right to a fair trial (2.). As a consequence, the written testimony should be disregarded.

1. The disregard of Mr. Dean's written testimony would not deprive CLAIMANT of the possibility of putting its case

CLAIMANT contends that any disregard of Mr. Dean's written testimony would deny it a reasonable opportunity of putting its case under Art 14.1 (i) LCIA Rules.[34] Such an assertion however is unacceptable. CLAIMANT may fully introduce Mr. Dean's testimony, if the latter attends the oral hearings. The disregard of the written testimony would merely be due to Mr. Dean's absence, caused by CLAIMANT's deliberate refusal to contact him. CLAIMANT could have relied upon Mr. Dean's testimony had it complied with the LCIA Rules. Hence, CLAIMANT does not lack any opportunity of putting its case.[35]

Furthermore, CLAIMANT founds its position on eleven documents and the testimony of two witnesses, namely Harold Dean and Edward Stanis.[36] As such, CLAIMANT has ample opportunity of presenting its position before this Tribunal. It is recognised that the disregard of one, out of several pieces of evidence, in an arbitration procedure does not infringe a party's procedural rights.[37] Moreover, the opportunity of putting one's case in the sense of Art. 14.1 (i) LCIA Rules constitutes a "reasonable" opportunity and hence, does not oblige an arbitrator to accept each and every piece of evidence. This is confirmed by the existence of Art. 20.4 LCIA Rules, specifically envisaging the exclusion of single pieces of evidence, and by the principle of international arbitration that the admission of evidence is left to the discretion of the Tribunal.[38]

Thus, a disregard of Mr. Dean's written testimony would not infringe CLAIMANT's procedural rights.

2. RESPONDENT's right to a fair trial would be violated by the admission of Mr. Dean's written testimony

RESPONDENT's right to a fair trial, on the other hand, would be violated if Mr. Dean's written testimony were admitted. Art. 14.1 (i) LCIA Rules states that a party's right to deal with the opponent's case is an integral part of procedural fairness. Accordingly, Art. 20.4 1st sentence LCIA Rules expressly grants a party the right to request the attendance of an opponent's witness before the tribunal, thereby recognising the right to question the witness. The respect of this right is considered indispensable in both common and civil law systems, to ensure a fair arbitral proceeding.[39] Since the written testimony of Mr. Dean is contradicted by evidence presented by RESPONDENT, and the witness fails to attend the hearing without valid excuse, procedural fairness demands that his written testimony be disregarded. Admitting Mr. Dean's written testimony to the proceedings would deny RESPONDENT any opportunity of verifying the authenticity and credibility of a piece of evidence upon which CLAIMANT relies. Thus, the admission of the statement would allow CLAIMANT to present its case without challenge to the credibility of its witness in an oral examination. The parties' positions would therefore be substantially different, rendering the procedure unfair. In the light of the foregoing arguments, Mr. Dean's written testimony should be disregarded.

C. An application of Art. 8 (3) CISG does not render Mr. Dean's written testimony admissible

CLAIMANT asserts that this Tribunal should admit Mr. Dean's written testimony, arguing that any relevant evidence is admissible according to Art. 8 (3) CISG.[40] However, this provision deals with the interpretation of the parties' declarations and as such is a rule of substantive law. The admissibility of evidence, a procedural issue, is to be determined by the applicable procedural rules, namely the LCIA Rules, and not by the substantive law governing the parties' legal relationship. Yet, it has been shown that an application of these rules leads to the disregard of Mr. Dean's written testimony.[41]

In exceptional circumstances, differing from the instant dispute, the CISG might influence the rules applicable to evidence. For example, Art. 8 (3) CISG provides that parties' negotiations prior to the conclusion of a contract be taken into account in determining their intent. Thus, Art. 8 (3) CISG would supersede a procedural rule specifically barring evidence related to the negotiations,[42] such as the parol evidence rule, cited by CLAIMANT.[43] Yet, Art. 8 (3) CISG does not supersede any provision prescribing the way in which evidence related to the negotiations be presented, for example provisions requiring testimonies to be given under oath.[44] The LCIA Rules allow evidence as to all circumstances of the transaction and therefore comply with Art. 8 (3) CISG.

CLAIMANT may also not invoke Art. 11 CISG, which precludes any requirement as to the form of the contract. This provision may only override a procedural rule which generally excludes a means of proof, e.g. evidence of a contract by witness.[45] On the contrary, any procedural provision dealing with the way in which the witness testimony is to be tendered is in conformity with Art. 11 CISG.[46]

Thus, the provisions concerning evidence in the LCIA Rules are in compliance with the CISG and exclusively govern the procedural question of the admissibility of Mr. Dean's written testimony. Hence, neither Art. 8 (3) nor Art. 11 CISG can serve as a basis for the admissibility of Mr. Dean's written testimony.

In the light of the foregoing arguments, Mr. Dean's written testimony should be disregarded. Should the Tribunal nevertheless find that an exclusion is not appropriate, RESPONDENT submits that at least, the weight given to the testimony be substantially reduced.[47]

II. This Tribunal has no jurisdiction to decide on the instant facts

RESPONDENT submits that this Tribunal lacks jurisdiction because no arbitration agreement exists which would allow CLAIMANT to proceed to arbitration against RESPONDENT (A.). Secondly, any material agreement would not meet the applicable form requirements and would therefore be invalid (B.).

A. No arbitration agreement exists which would allow CLAIMANT to proceed to arbitration

RESPONDENT and CLAIMANT never agreed upon the arbitration clause contained in DSC No. 5 Para. 13 (1.). Nor can CLAIMANT, as a third party, rely on any agreement between RESPONDENT and IMPORTS in order to proceed to the instant arbitration procedure (2.).

1. CLAIMANT and RESPONDENT did not agree on arbitration

CLAIMANT asserts that RESPONDENT and CLAIMANT entered into an agreement for the sale of 6,000 tons of standard feed wheat on 19 February 1998 and that this agreement, by DSC No. 5 Para. 13, incorporated an arbitration clause.[48] However, the lack of an agreement between CLAIMANT and RESPONDENT is evident from the written testimony of Mr. Stern[49] (a.) and, if admitted, even of Mr. Dean[50] (b.). Furthermore, the parties' subsequent behaviour confirms their lack of agreement (c.).

a. The lack of an agreement on 19 February 1998 is evidenced by Mr. Stern's written testimony

From Mr. Stern's written testimony it is clear that RESPONDENT and CLAIMANT did not agree upon an arbitration clause during their telephone conversation on 19 February 1998. This conclusion is prevalent from an application of Art. 8 CISG. Art. 8 (2) CISG establishes that statements are to be interpreted "according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances". To this end, all relevant circumstances have to be considered pursuant to Art. 8 (3) CISG.[51] In contrast, according to Art. 8 (1) CISG the actual intent of a party only prevails if the other party was aware of this intent or was unaware of it due to gross negligence.[52]

On the instant facts, Mr. Stern and Mr. Dean had dealt with each other on 38 prior occasions during a period of four years.[53] On each occasion, Mr. Dean dealt on behalf of IMPORTS and Mr. Stern on behalf of RESPONDENT. It is clear that this circumstance determined Mr. Stern's understanding of Mr. Dean's declarations. In the light of this experience, to be considered as a relevant circumstance under Art. 8 (3) CISG, Mr. Stern had to understand each declaration he received from Mr. Dean as being made on behalf of IMPORTS. Hence, if Mr. Dean wanted to contract on behalf of any other party on 19 February 1998, he had to make this clear. However, Mr. Dean merely made a casual mention of structural changes concerning CLAIMANT's relationship with IMPORTS.[54] He neither declared that he was employed by CLAIMANT, nor that CLAIMANT had already ceased to use the services of IMPORTS. Consequently, Mr. Stern was not aware and could not have been aware of Mr. Dean's actual intent to contract on behalf of CLAIMANT in the sense of Art. 8 (1) CISG. On the contrary, he reasonably understood that Mr. Dean was contracting on behalf of IMPORTS according to Art. 8 (2) CISG. Hence , no agreement came into existence between RESPONDENT and CLAIMANT.

b. Mr. Dean's written testimony does not establish the conclusion of an agreement on 19 February 1998

RESPONDENT submits that Mr. Dean's written testimony is to be disregarded and not to be taken into account to evidence the circumstances of the telephone conversation.[55] However, should this Tribunal reach a different conclusion, even Mr. Dean's written testimony does not establish the existence of an agreement pursuant to Art. 8 CISG. CLAIMANT's main assertion is that Mr. Dean informed Mr. Stern of changes pertaining to his employment and that, hence, Mr. Stern should have been aware that he was dealing with CLAIMANT.[56] This assertion is untenable.

On 19 February 1998, Mr. Stern believed that Mr. Dean represented IMPORTS, as had been the case on 38 prior occasions.[57] Even if Mr. Dean effectively mentioned that he was employed by CLAIMANT, he did so only in the context of future organisational changes concerning the relationship between IMPORTS and CLAIMANT.[58] Mr. Dean's testimony does not contradict the fact that this mention was casual and that the issue was not specifically discussed. Mr. Stern did not confirm that he considered the information given by Mr. Dean as being of any relevance for the instant transaction. Thus, Mr. Dean merely speculates about whether Mr. Stern understood that Mr. Dean wanted to contract on behalf of CLAIMANT. Indeed, Mr. Dean cannot rely on any factual basis for his assumption. In the light of the fact that Mr. Dean had to communicate the change in circumstances affecting his dealings with Mr. Stern,[59] he had to verify that the new situation was acknowledged and accepted by Mr. Stern as the basis for dealings, as of 19 February 1998. In the absence of such a verification, Mr. Dean had to bear the risk of any unresolved ambiguities.[60] Hence, Mr. Dean's statements were insufficient to lead to an agreement between CLAIMANT and RESPONDENT.

Alternatively, should the Tribunal admit Mr. Dean's written testimony and interpret it differently from RESPONDENT, the Tribunal should still have regard to the fact that CLAIMANT has to establish the existence of the agreement it alleges to have concluded with RESPONDENT. It is a general legal principle recognised by the CISG that a party alleging a fact must bear the burden of proving it.[61] Therefore, uncertainties as to the existence of an agreement, due to ambiguous pieces of evidence, that are contradicted, are to be resolved against CLAIMANT.

In light of the foregoing argument, CLAIMANT and RESPONDENT did not agree on arbitration on 19 February 1998.

c. The parties' subsequent behaviour confirms that no agreement was entered into by CLAIMANT and RESPONDENT

Contrary to its assertions,[62] CLAIMANT cannot rely on the parties'[63] behaviour subsequent to the telephone conversation on 19 February 1998, to establish an agreement between RESPONDENT and CLAIMANT. An interpretation of this behaviour per Art. 8 (3) CISG, demonstrates that RESPONDENT had no intention of dealing with CLAIMANT, but on the contrary, intended to deal with IMPORTS.

On receipt of a letter from CLAIMANT, dated 20 February 1998,[64] intimating that CLAIMANT considered itself to have an agreement with RESPONDENT, RESPONDENT immediately rebutted this assumption explicitly and clearly in its letter of 24 February 1998.[65] At the latest, when CLAIMANT received this letter, it was left in no doubt as to RESPONDENT's actual intent. CLAIMANT did not answer RESPONDENT's letter of 24 February 1998,[66] thereby reinforcing RESPONDENT's conclusion that no agreement was in existence between it and CLAIMANT. Throughout all later correspondences between Mr. Dean and Mr. Stern, after 24 February 1998,[67] the issue of the identity of RESPONDENT's contracting party was not discussed. Hence, RESPONDENT legitimately proceeded on the basis that it had contracted with IMPORTS.

Contrary to CLAIMANT's assertions,[68] RESPONDENT never behaved towards CLAIMANT like its contracting party and therefore did not induce any reasonable reliance as to a contractual relationship between RESPONDENT and CLAIMANT. In the header of each letter, RESPONDENT clearly referred to IMPORTS as its contracting party.[69]

The fact that RESPONDENT addressed letters to Mr. Dean at CLAIMANT, cannot establish RESPONDENT's intent to contract with CLAIMANT, not even after RESPONDENT had become aware that Mr. Dean was now working for CLAIMANT.[70] In the first place, RESPONDENT sent letters to CLAIMANT, since delivery would have been directly made to CLAIMANT.[71] Furthermore, all of RESPONDENT's correspondences were exclusively reacted to by Mr. Dean who, in turn, sent copies of his letters to IMPORTS. RESPONDENT knew this since Mr. Dean's letters contained a reference that copies thereof were sent to IMPORTS.[72] Therefore, RESPONDENT could only assume that IMPORTS had empowered Mr. Dean to complete the transactions he had initiated, when he was still employed by IMPORTS.

CLAIMANT would also be precluded from arguing that by receiving the letter of credit issued by CLAIMANT, RESPONDENT became aware and accepted that CLAIMANT was its contracting party.[73] The letter of credit merely constituted a mode of performance. The performance arrangement that RESPONDENT could legitimately consider as being agreed by IMPORTS and CLAIMANT, was of no interest to RESPONDENT, as long as IMPORTS could be held liable for the performance. The fact that a third party initiates performance, cannot modify the initial contract including the identity of the original contracting parties.[74]

Consequently, the parties' behaviour subsequent to 19 February 1998 confirms that no agreement came into existence between RESPONDENT and CLAIMANT.

2. CLAIMANT cannot rely on any agreement between RESPONDENT and IMPORTS

CLAIMANT, as a third party, cannot rely on any contract between RESPONDENT and IMPORTS, in order to proceed to arbitration. In an alternative argument on jurisdiction, CLAIMANT assumes that IMPORTS and RESPONDENT validly concluded an agreement on 19 February 1998.[75] RESPONDENT questions this assumption, since, by this day, Mr. Dean was no longer employed by IMPORTS and thus lacked the power to represent IMPORTS.[76] In any case, CLAIMANT cannot rely on a legal relationship between RESPONDENT and IMPORTS to proceed to the instant arbitration. It can neither invoke any "third party beneficiary doctrine" (a.) nor the "alter ego doctrine" (b.).

a. CLAIMANT cannot invoke any "third party beneficiary doctrine"

CLAIMANT relies on "principles of private international law" in contending that CLAIMANT is a "third party beneficiary" to a contract between RESPONDENT and IMPORTS.[77] This reliance is erroneous for two reasons.

Firstly, the CISG does not contain rules governing third party rights. According to Art. 7 (2) CISG, such questions, not expressly settled by the CISG, are to be resolved in conformity with the general principles on which the CISG is based. CLAIMANT concedes that rights of third parties cannot be deduced from general principles underlying the CISG.[78] Contrary to CLAIMANT's proposal, the remaining gap is to be filled by the law applicable by virtue of the rules of private international law, per Art. 7 (2) CISG.[79] Yet, CLAIMANT fails to determine the law applicable to this issue. Nor could it establish the existence of a "third party beneficiary doctrine" under any material or procedural rule upon which CLAIMANT relies. Recourse to international legal principles to fill a gap in the Convention, as CLAIMANT proposes, is not possible under the CISG.[80]

In addition, the invoked doctrine is not even an internationally accepted legal principle. CLAIMANT alleges that German, French and American Law recognise a "third party beneficiary doctrine", applicable to the instant facts. Even though such a doctrine may exist under German and French Law, it would not apply when a buyer seeks to enforce contractual rights against a supplier of the seller.[81] Even under American law, an application of the "third party beneficiary doctrine" to the instant facts is questionable, since the third party would have to be the intended economic beneficiary of the precise transaction and not merely a subsequent link in the commercial chain.[82] In any case, the existence of the doctrine in American law alone, would not suffice to establish an international legal principle of this content. Hence, CLAIMANT cannot rely on any "third party beneficiary" doctrine.

b. CLAIMANT cannot invoke the alter ego doctrine

CLAIMANT may also not invoke the alter ego doctrine to proceed to arbitration against RESPONDENT. No such doctrine is recognised under the procedural rules applicable to the instant dispute.[83] Moreover, an application of the doctrine would require that the non-contracting party is inextricably linked to one of the contracting parties. This means that these entities must constitute and be regarded as one economic unit.[84] On the instant facts, however, CLAIMANT only held a slight majority in the stocks of IMPORTS and neither controlled, nor interfered with IMPORTS' daily course of business.[85] The two companies operated completely separately and were not even required to be treated as a holding or subsidiary entity under Danubian law.[86] Hence, they did not constitute one economic unit. Nor had RESPONDENT to consider them as such. Direct delivery to CLAIMANT could not create the appearance of economic unity between CLAIMANT and IMPORTS, since such direct delivery is common practice in order to save costs. It was not unusual that IMPORTS required direct delivery to its customers.[87] As a conclusion, none of the requirements for an application of the alter ego doctrine are met. CLAIMANT cannot invoke any agreement between RESPONDENT and IMPORTS to proceed to arbitration against RESPONDENT.

B. Any arbitration agreement would not have met the applicable form requirements

Since Danubia has adopted the UNCITRAL Model Law (UML), the alleged agreement providing for arbitration in Danubia, would have to comply with the form requirement of Art. 7 (2) UML modelled on Art. II New York Convention (NYConv).[88] Any arbitration agreement entered into by the parties would not have met these requirements. Both provisions demand an exchange of written documents, containing each party's assent to the arbitration clause.[89]

CLAIMANT's letter dated 20 February 1998[90] cannot fulfil these form requirements since it is a single document issued by only one party (1.). Furthermore, the letters dated 20 and 24 February, respectively, do not constitute an exchange of letters in the sense of Art. 7 (2) UML and Art. II NYConv, since RESPONDENT's letter of 24 February 1998[91] does not contain its assent to enter into any agreement with CLAIMANT (2.). Later correspondences did not refer to arbitration and could therefore not fulfil any form requirement (3.).

1. CLAIMANT's letter dated 20 February 1998 does not meet the applicable form requirements

The form requirements of Art. II NYConv and Art. 7 (2) UML are not met by CLAIMANT's letter dated 20 February 1998. The formulation of these provisions requires a document signed by both parties or an exchange of written documents. A purposive interpretation of these provisions confirms this, since they serve an evidentiary purpose.[92] This purpose is not fulfilled if only one party issues a document referring to arbitration.

Moreover, RESPONDENT immediately replied to CLAIMANT's letter of 20 February 1998 by its letter of 24 February 1998 and expressly rejected not only an arbitration clause, but any agreement with CLAIMANT. Hence, CLAIMANT's letter of 20 February 1998 does not meet the form requirements demanded by Art. II NYConv or Art. 7 (2) UML.

2. The letters dated 20 and 24 February 1998 did not fulfil the applicable form requirements

CLAIMANT contends that its letter dated 20 February 1998 and RESPONDENT's letter dated 24 February 1998 contained each party's assent to the arbitration clause in DSC No. 5 Para. 13 and therefore met the form requirements.[93] However, RESPONDENT, in its letter dated 24 February 1998 precisely indicated that it rejected any alleged agreement with CLAIMANT. Thus, this written document cannot be regarded to contain RESPONDENT's assent towards CLAIMANT concerning the arbitration clause, as required by Art. 7 (2) UML and Art. II NYConv.

Should the Tribunal find that RESPONDENT cannot rely on the fact that it clearly rejected any agreement with CLAIMANT in its letter dated 24 February 1998, the exchange of letters is still insufficient to incorporate the arbitration clause into their agreement. Both letters merely contain a general reference to the DSC, i.e. the arbitration clause itself was not contained in written form in the exchanged documents. While a specific reference that precisely names an arbitration clause contained in a separate document may suffice in order to incorporate it into the agreement of the parties, a general reference to standard conditions that does not specify whether the document referred to contains an arbitration clause or not, cannot serve this purpose.[94] On the instant facts, the parties only generally referred to the DSC without any mention of the arbitration clause contained therein.

Therefore, the correspondences dated 20 and 24 February 1998 do not constitute an exchange of written documents containing each party's assent and incorporating the arbitration clause into their agreement neither in the sense of Art. II NYConv nor of Art. 7 (2) UML.

3. The parties' subsequent correspondences did not refer to arbitration and cannot fulfil the applicable form requirements

Any later correspondences by the parties did not make reference to arbitration.[95] Even if the Tribunal should consider that all later correspondences transpired from the precise terms as set out in the letters dated 20 and 24 February 1998, including the DSC referred to in those letters, the later correspondences could not fulfil the form requirements of Art. 2 NYConv and Art. 7 (2) UML.

Indeed, the parties' later correspondences do not refer to an arbitration clause.[96] An incorporation of the arbitration clause by the parties' later correspondences would have to have taken place by reference to earlier correspondences. If general references are not sufficient to incorporate an arbitration clause, a fortiori a reference to a general reference to standard conditions cannot fulfil the form requirement. Such possibility of incorporation would negate any purpose of a written form requirement. Furthermore, the parties themselves would be exposed to uncertainty as to the precise content of their obligations.

As a consequence, the parties never exchanged documents that could fulfil the form requirements neither of Art. II NYConv nor of Art. 7 (2) UML.

In light of foregoing argument, CLAIMANT and RESPONDENT did not conclude a valid arbitration agreement. Nor can CLAIMANT rely on any agreement between RESPONDENT and IMPORTS. Therefore, RESPONDENT respectfully requests this Tribunal to find that it has no jurisdiction to decide the instant dispute.

III. CLAIMANT and RESPONDENT never entered into a contract of sale

As shown above, an agreement between CLAIMANT and RESPONDENT did not arise from the parties respective statements or behaviour.[97] Neither can CLAIMANT rely on a purported contract between CLAIMANT and IMPORTS.[98] Hence, the Tribunal should find that any claim relying on a contract between CLAIMANT and RESPONDENT or a contract concluded between RESPONDENT and IMPORTS is unfounded.

IV. RESPONDENT did not commit a breach of contract

Assuming but not conceding that CLAIMANT and RESPONDENT entered into a contract, RESPONDENT did not breach its obligations under this contract. Contrary to CLAIMANT's assertions,[99] RESPONDENT's declaration in its letter dated 16 June 1998[100] not to deliver wheat to CLAIMANT, but to allocate it to other customers, constituted a lawful avoidance of the alleged contract and not a breach. On the contrary, CLAIMANT refused to comply with its obligation to take delivery per Art. 60 CISG and breached its obligation of payment per Art. 54 CISG (A.). Consequently, RESPONDENT had the right to avoid in conformity with both Art. 72 CISG and Art. 64 (1) (b) CISG (B.). Since RESPONDENT avoided the contract, it could not have breached a duty to deliver (C.).

A. By refusing acceptance of delivery as proposed by RESPONDENT, CLAIMANT breached its obligation to take delivery per Art. 60 CISG and its obligation of payment per Art. 54 CISG

Art. 60 CISG obliges the buyer to take delivery of the goods. RESPONDENT offered delivery of 4,800 tons of wheat in July and the remaining 1,200 tons by October.[101] CLAIMANT refused this mode of delivery, alleging that it was not in conformity with the contract.[102]

However, per Art. 60 CISG a buyer is required to take delivery, even if delivery is not in complete conformity with the terms of the contract.[103] Under the CISG, a buyer may normally rely on the remedies of repair, price reduction and damages.[104] These remedies imply that the buyer has to accept the goods. Only the specific remedies of avoidance and substitute delivery allow a buyer to reject goods. However, those remedies are subject to the strict condition of a fundamental breach.[105] Allowing the buyer to refuse to take delivery in every case of non-conformity would undermine this strict condition. Thus, unless the buyer is entitled to avoid the contract, the CISG does not allow him to reject the goods.[106]

On the instant facts, CLAIMANT was not entitled to avoid the contract (1.). Consequently, CLAIMANT was under an obligation to accept delivery as proposed by RESPONDENT and to accommodate its letter of credit accordingly (2.).

1. CLAIMANT had no right to avoid the contract since delivery as proposed by RESPONDENT would not have constituted a fundamental breach of contract

Prior to the date of performance, the right to avoid a contract is governed by Art. 72 CISG. On the instant facts, the date of delivery had not yet arrived when CLAIMANT refused to take delivery.[107] Hence, Art. 72 CISG, requiring an anticipatory fundamental breach of contract, governs the question of whether CLAIMANT had the right to avoid the contract. This is also admitted by CLAIMANT.[108]

Yet, contrary to CLAIMANT's assertions,[109] the requirements for an avoidance under Art. 72 CISG were not fulfilled. The subject of the alleged contract was the delivery of 6,000 tons of wheat, a generic good, capable of being delivered in parts. RESPONDENT was able and willing to deliver 4,800 tons at the contractual date of delivery.[110] In such a case, Art. 51 (1) CISG restricts the buyer's remedies, including an avoidance per Art. 72 CISG,[111] to the remaining part of the stipulated delivery. Avoidance of the entire contract is only permitted, according to Art. 51 (2) CISG, where incomplete delivery would amount to a fundamental breach of the entire contract. On the instant facts, the mode of delivery proposed by RESPONDENT would not have amounted to a fundamental breach of the contract. Consequently, CLAIMANT was not allowed to avoid the entire contract according to Art. 72 and 51 (2) CISG and thus could not refuse to take delivery of 4,800 tons in July (a.). In addition, since late delivery of the remaining 1,200 tons did not amount to a fundamental breach, CLAIMANT was also not entitled to partial avoidance concerning these 1,200 tons, pursuant to Art. 72 and 51 (1) CISG and would have had to accept this delivery (b.).

a. Partial delivery would not have constituted a fundamental breach of the entire contract

Pursuant to Art. 25 CISG, a breach of contract is fundamental "if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect", unless this detriment was not foreseeable. As such, the interest affected by the breach must be so fundamental that its frustration renders the implementation of the contract useless for the injured party.[112] This high threshold is confirmed by court decisions, holding that even delivery of goods that cannot be used for the purpose for which they were intended, does not necessarily amount to a fundamental breach of the contract.[113]

Since CLAIMANT could have used the wheat regardless of the amount delivered in a first shipment, CLAIMANT would not have lost any interest in the delivery of 4,800 tons in July (aa.). CLAIMANT can neither establish a loss of interest by the alleged amount of damages expected (bb.), nor by relying on the stipulation that delivery was to be in one shipment (cc.). Thus, the delivery proposed by RESPONDENT would not have amounted to a fundamental breach of the entire contract. CLAIMANT could therefore not avoid the contract pursuant to Art. 72 and 51 (2) CISG.

aa. The performance of the alleged contract would not have been rendered useless in its entirety

CLAIMANT cannot establish that delivery of 4,800 tons would have been of no interest to it. Partial delivery only renders the entire contract useless in cases where the buyer cannot use the delivered goods without the remaining amount.[114] Since CLAIMANT is a feed processor, it could process 4,800 tons of wheat in the same way as it would have processed 6,000 tons.[115] There is no reason why CLAIMANT should have lost an interest in the delivery of 4,800 tons of wheat, merely because the additional 1,200 tons would not have been delivered on time. In addition, the remaining amount of wheat contracted for could easily have been replaced by CLAIMANT.[116] Loss of interest, therefore, is not an argument CLAIMANT can invoke in establishing a fundamental breach of the entire contract committed by RESPONDENT.

bb. The damage expected by CLAIMANT could not lead to a fundamental breach of the entire contract

CLAIMANT asserts that the importance of the damage it expected from partial delivery, leads to the conclusion that RESPONDENT committed a fundamental breach.[117] Yet, it is accepted that substantial detriment in the sense of Art. 25 CISG is not the actual damage incurred by a party, but rather the loss of interest that party has in the further implementation of the contract.[118] Consequently, the importance of any expected damage is only one circumstance to be taken into account in qualifying a breach as being fundamental in nature.

In addition, RESPONDENT rejects CLAIMANT's contentions as to its expected damage, since they are clearly based on miscalculation.[119] Furthermore, the instant facts show that any damage possibly caused to CLAIMANT by a partial delivery, could not have outweighed the interest that it would have had in upholding the contract.[120] RESPONDENT was ready to deliver the entire amount of wheat contracted for at $60 per ton.[121] Freight costs for a partial delivery of 4,800 tons would have increased by $4 per ton.[122] Since at the time of CLAIMANT's cover purchase, the market price had risen to $75 per ton,[123] CLAIMANT had to bear an even higher loss without the wheat that RESPONDENT proposed to deliver at $60 per ton.

Consequently, the partial delivery offered by RESPONDENT did not render the contract useless for CLAIMANT. On the contrary, the contract still represented an economically reasonable solution for CLAIMANT concerning its wheat supply. Indeed, any reasonable buyer would have accepted the first shipment of 4,800 tons.[124] Therefore, CLAIMANT cannot establish a fundamental breach on the basis of the amount of damages expected.

cc. Delivery in one shipment was not an essential term of the contract

CLAIMANT alleges that the partial delivery would have constituted a fundamental breach of the contract, because the parties had agreed on delivery in one shipment as an essential term. On the instant facts however, delivery in one shipment was never agreed as being an essential term of the contract. Consequently, non-compliance with the shipment clause does not amount to a fundamental breach.

A contractual clause is only an essential term if, at the time of conclusion of the contract, both parties understand that its violation shall allow repudiation.[125] CLAIMANT cannot establish that the contract was intended to stand or fall on the basis of the shipment clause. The fact alone that it was agreed upon by the parties and inserted into the contract is not sufficient to render this stipulation an essential term.[126] In fact, the parties did not agree about its quality as an essential term, but only amended the DSC[127] to accommodate CLAIMANT. Therefore, this term may not be qualified as essential merely due to its existence.

In order to determine which weight parties intend to confer to a clause, all contractual circumstances have to be taken into account.[128] On the instant facts, CLAIMANT does not allege any particular interest in this clause which might indicate its essential character, nor that such interest was known to RESPONDENT. CLAIMANT wanted to take delivery of 6,000 tons in one shipment, but cannot establish any need to do so.[129] Plainly, its main interest in the contract was the receipt of 6,000 tons of processable wheat and not the receipt of a certain amount at a certain date. Even if CLAIMANT should have had a particular interest in delivery in one shipment, this interest was not discernible to RESPONDENT. The only apparent reason for delivery in one shipment was the fact that CLAIMANT would have saved freight costs.[130] However, as shown above,[131] the increase in freight costs would not have rendered delivery economically useless.

The fact that CLAIMANT now relies on the violation of the shipment clause in order to avoid the contract also cannot prove its essential character. Otherwise, a party could unilaterally render any clause an essential term, even after the conclusion of the contract by merely insisting on that clause.[132]

Consequently, the stipulation of delivery in one shipment does not allow the conclusion that such delivery was of particular importance for CLAIMANT.

In light of the above arguments, CLAIMANT cannot establish a fundamental breach of the contract in its entirety. Thus, it was not entitled to avoid the entire contract according to Art. 72, 51 (2) CISG and would have had to accept delivery of 4,800 tons per Art. 60 CISG. According to Art. 51 (1) CISG, any remedies would have been restricted to the remaining 1,200 tons.

b. CLAIMANT was not entitled to partially avoid the contract since the late delivery of 1,200 tons would not have constituted a fundamental breach of this part of the contract

As to the remaining 1,200 tons of wheat, CLAIMANT could only reject this second partial delivery, if it had had the right to partially avoid the contract. According to Art. 72 and 51 (1) CISG, a partial avoidance requires a fundamental breach of the part of the contract to be avoided.[133] On the instant facts, the late delivery would not have constituted a fundamental breach even in respect of the 1,200 tons, since the delay did not substantially deprive CLAIMANT of what it was entitled to expect under the contract (aa.). Furthermore, no loss of confidence could result from RESPONDENT's behaviour (bb.).

aa. The expected delay in delivery would not have amounted to a fundamental breach

RESPONDENT offered delivery of the remaining 1,200 tons of wheat as soon as it obtained an additional export-quota. RESPONDENT anticipated that this would be the case, at the latest in October and therefore requested a letter of credit which should remain open until the end of November.[134] This delay could only amount to a fundamental breach per Art. 25 CISG if it had substantially deprived CLAIMANT of what it was entitled to expect under the contract.

CLAIMANT cannot establish the loss of any interest in the proposed late delivery of 1,200 tons of wheat. CLAIMANT and RESPONDENT had not agreed on a specific day of delivery, but on delivery during the month of July.[135] Thus, CLAIMANT did not require an exact specification of the date of delivery in order to organise its production process. Furthermore, the fact that delivery could take place within a whole month indicates that a delay of less than three months is not unreasonable. CLAIMANT is a feed processor and could use the wheat at any time.[136] Hence, there is no reason why it should lose any interest in a late delivery. This is especially true as the wheat was sold at a price of only $60 per ton, an "excellent price" according to CLAIMANT.[137] This price became even more competitive after the occurrence of the floods when the market price increased to $75.[138] Thus, CLAIMANT would not have been substantially deprived of what it was entitled to expect under the contract.

Hence, late delivery of 1,200 tons would not have caused a substantial detriment to CLAIMANT and consequently would not have constituted a fundamental breach.

bb. CLAIMANT cannot establish a total loss of confidence in delivery of 1,200 tons by RESPONDENT

Any assertion by CLAIMANT that it had no further interest in the delivery of 1,200 tons of wheat because it lost its confidence in the implementation of the delivery of 1,200 tons by RESPONDENT, would be unfounded. As will be shown under (V.), it was not RESPONDENT's deliberate decision to propose a modified mode of delivery. RESPONDENT was compelled to allocate its stock in compliance with the export-quota granted. RESPONDENT had ensured that it would allocate the remaining 1,200 tons of wheat to CLAIMANT as soon as it received an additional quota. Thus, there was no reason to doubt this performance by RESPONDENT.

2. CLAIMANT was under an obligation to take delivery and to accommodate the letter of credit accordingly

As a conclusion of the above argument, partially late delivery would not have constituted a fundamental breach neither of the entire contract nor of any part of it. Therefore, CLAIMANT could not avoid the contract neither in its entirety per Art. 72 and 51 (2) CISG, nor partially pursuant to Art. 72 and 51 (1) CISG in respect of the 1,200 tons of wheat. As a consequence, CLAIMANT had to accept the proposed delivery pursuant to Art. 60 CISG.[139]

Furthermore, due to the altered mode of delivery, a letter of credit not providing for partial shipments could no longer have fulfilled CLAIMANT's obligation of payment per Art. 54 CISG. Thus, as a consequence of CLAIMANT's obligation to accept partial delivery, it had to accommodate the letter of credit accordingly.

B. In reaction to CLAIMANT's fundamental breach of contract, RESPONDENT declared an avoidance of the alleged contract in compliance with both Art. 72 and 64 (1) (b) CISG

CLAIMANT declared that it would not accept delivery of the wheat as proposed by RESPONDENT.[140] Thereby, it committed a fundamental anticipatory breach of the contract, allowing RESPONDENT to avoid the contract according to Art. 72 CISG (1.). Furthermore, CLAIMANT refused to accommodate its letter of credit accordingly, violating its obligation of payment and allowing RESPONDENT to avoid the contract pursuant to Art. 64 (1) (b) CISG, after having set a reasonable Nachfrist[141] (2.). RESPONDENT exercised this right by its declaration to allocate the wheat to other customers contained in its letter dated 16 June 1998.[142]

1. RESPONDENT was allowed to avoid the contract pursuant to Art. 72 CISG

CLAIMANT clearly and repeatedly declared that it would not take delivery of the wheat, as proposed by RESPONDENT, although it was obliged to do so per Art. 60 CISG.[143] Such conduct is widely recognised as being an anticipatory breach of contract in the sense of Art. 72 CISG.[144] This anticipatory breach committed by CLAIMANT was fundamental in the sense of Art. 25 CISG, because it rendered any implementation of the contract entirely impossible.[145] Thus, any interest RESPONDENT could have had in its implementation was frustrated. RESPONDENT informed CLAIMANT in its letter dated 3 June 1998 that it would proceed to an avoidance of the contract, if CLAIMANT persisted in its refusal to accept delivery.[146] Since CLAIMANT persistently refused, RESPONDENT was entitled to avoid the contract pursuant to Art. 72 (1) CISG.

2. RESPONDENT was also allowed to avoid the contract in accordance with Art. 64 (1) (b) CISG

Art. 54 CISG obliges the buyer to take all necessary steps to enable payment as provided for in the contract. According to DSC No. 5 Para. 10, a letter of credit was to be opened to RESPONDENT at least one month prior to the first day on which shipment was to be made.[147] On the instant facts, delivery was to be made in July.[148] Consequently, the letter of credit had to be opened by 1 June 1998. CLAIMANT's letter of credit, opened on 29 May 1998, did not provide for partial shipments.[149] Since CLAIMANT had the duty to accept this mode of delivery on the basis of Art. 60 CISG, it had the duty to modify the letter of credit accordingly. No such amended letter was opened to RESPONDENT by 1 June 1998. Hence, CLAIMANT was late in its obligation to pay the price. In its letter dated 3 June 1998,[150] RESPONDENT urged CLAIMANT to send an accommodated letter of credit by 15 June 1998. Thereby, RESPONDENT set a reasonable Nachfrist in compliance with Art. 64 (1) (b) and 63 (1) CISG.[151] Since CLAIMANT did not accommodate the letter of credit within this period,[152] RESPONDENT was entitled to avoid the contract according to Art. 64 (1) (b) CISG.

RESPONDENT avoided the contract by its declaration to allocate the wheat to other customers contained in its letter of 16 June 1998.

C. Due to its lawful avoidance, RESPONDENT could not have breached the contract

CLAIMANT contends that RESPONDENT breached its duty to deliver under the alleged contract.[153] RESPONDENT does not deny that the mode of delivery proposed to CLAIMANT in the letters dated 21 and 29 May 1998[154] would have deviated from the terms of the alleged contract. However, on the instant facts a breach in the sense of the CISG was never realised. Art. 45 CISG defines a breach as a "failure to perform any of its obligations under the contract". Such failure can only occur on the contractual date for performance.[155] On the instant facts, delivery would have been due in July 1998. However, since RESPONDENT lawfully avoided the contract on 16 June 1998, it was no longer under any obligation to deliver in July. Thus, on the instant facts, a breach of this duty was impossible.

As a conclusion, RESPONDENT did not breach any contractual obligation that might have existed towards CLAIMANT. On the contrary, RESPONDENT lawfully avoided the alleged contract as a result of CLAIMANT's wrongful refusal to accept delivery.

V. CLAIMANT is not entitled to damages

According to Art. 45 (1) (b) and 74 ff. CISG, a party is only entitled to damages if it suffers a breach of contract by the other party. As established above, RESPONDENT did not breach any contractual obligation that might have existed towards CLAIMANT. Consequently, CLAIMANT cannot rely upon Art. 74 ff. and, therefore, cannot recover damages.

Even if this Tribunal should find that RESPONDENT committed a breach of contract, CLAIMANT's reliance on Art. 75 CISG is unfounded, since it never declared an avoidance (A.). In the alternative, RESPONDENT submits that it would be exempt from paying damages per Art. 79 CISG (B.). In any case, the amount of damages CLAIMANT demands would have to be reduced, since CLAIMANT violated its duty to mitigate its loss arising from Art. 77 CISG (C.) and saved expenses due to lower transport costs (D.). Any damages due would not be subject to interest (E.).

A. CLAIMANT cannot rely on Art. 75 CISG

CLAIMANT bases its demand for damages on Art. 75 CISG.[156] However, the application of this provision is conditional on a prior avoidance of the contract. Thus even if this Tribunal should find that CLAIMANT had the right to avoid the contract due to a fundamental breach committed by RESPONDENT, CLAIMANT's reliance on Art. 75 CISG would be precluded, since it did not declare its avoidance. On 18 June 1998, CLAIMANT proceeded to a cover purchase without prior notification to RESPONDENT.[157] However, the CISG does not recognise any ipso facto or tacit avoidance.[158] In order to guarantee both parties certainty as to the legal situation, Art. 26 CISG requires a written or oral declaration of avoidance.[159] Exceptions to this principle are barred by the clear and unambiguous language of Art. 26 CISG.[160] Hence, CLAIMANT, who failed to declare the alleged contract avoided, is not entitled to damages per Art. 75 CISG.

B. CLAIMANT is exempt from paying damages under Art. 79 (1) CISG

CLAIMANT's request for damages is furthermore unfounded since RESPONDENT is exempt from paying damages per Art. 79 (1) CISG. RESPONDENT could not deliver the wheat in conformity with the alleged contract due to floods and governmental export regulations.[161] These incidents constituted an impediment (1.) beyond RESPONDENT's control (2.). RESPONDENT could neither be expected to have taken this impediment into account nor to have overcome its consequences (3.). Thus, the requirements of Art. 79 (1) CISG are met on the instant facts.

1. The floods and the governmental export restrictions constituted an impediment

The exemption under Art. 79 CISG depends on impediment. This is an objective event, exterior to the party and affecting the party's ability to perform.[162] Hence, natural catastrophes and governmental measures affecting the market of the sold goods are classical cases of impediment.[163] On the instant facts, RESPONDENT, in assuming a contractual obligation towards IMPORTS, intended to deliver 6.000 tons of wheat directly to CLAIMANT. Yet, due to floods in the wheat growing area of Danubia, the Danubian government announced an export prohibition for wheat on 17 April 1998, which was replaced by an export licence system on 5 May 1998.[164] The floods and the export licence system in Danubia fundamentally affected RESPONDENT's course of business. Consequently, they constituted an impediment in the sense of Art. 79 (1) CISG.

2. The floods and the governmental restrictions were beyond RESPONDENT's control

The floods and governmental export restrictions in Danubia arose outside RESPONDENT's sphere of control. RESPONDENT's sphere of control covered risks that are typically attributed to a seller of goods in international trade.[165] Examples given by legal authorities show that this includes only normal business risks.[166] RESPONDENT is aware that the seller of generic goods, like wheat, bears the risk of procuring the goods. Consequently, a seller may have to bear the risk that its supplier cannot supply the goods or that prices have risen. On the contrary, it would place an overly heavy burden on the seller, if he even had to bear the risk of natural catastrophes and governmental measures affecting the domestic market of the sold goods.[167] Consequently, the floods and the Danubian export restrictions did not fall within RESPONDENT's sphere of control.

CLAIMANT invokes the FOB clause contained in the alleged contract to establish that RESPONDENT bore the risk of obtaining the export licence.[168] However, according to the INCOTERMS, governing the instant clause, the FOB term holds the seller only to export formalities which exist or are announced at the time of the conclusion of the contract.[169] Since no restrictions for the export of Danubian wheat were announced when the contract was purportedly concluded,[170] RESPONDENT did not have to bear the risk of the governmental export licence system installed on 17 April 1998.

As a result, the floods and the governmental export restrictions constituted an impediment beyond RESPONDENT's control.

3. RESPONDENT could neither reasonably be expected to have taken the impediment into account nor to have overcome its consequences

Since comparable floods had never occurred and governmental export restrictions for wheat had never existed in Danubia before,[171] RESPONDENT could not reasonably be expected to have taken this impediment into account.

Furthermore, RESPONDENT could not reasonably have been expected to have overcome the consequences of the floods and export restrictions. Pursuant to Art. 79 (1) CISG a party is exempt, even if it had the possibility to overcome the consequences but no reasonably thinking person could have expected the party to do so.[172]

RESPONDENT was granted an export quota of 240,000 tons, equalling only 80 % of the amount RESPONDENT had requested.[173] The export licence issued by the Danubian government was based on RESPONDENT's firm contracts as of 17 April 1998 and on the amount RESPONDENT had sold on average over the last five years to regular customers, with whom no firm contracts had yet been entered into.[174] RESPONDENT could not reasonably be expected to have used the quota in a different way. The amount of wheat sold to regular customers in the past was taken into account by the Government for the calculation of the export quota in order to protect the markets of the Danubian exporters.[175] The purpose of this governmental decision would have been contradicted, if RESPONDENT had used the whole allocation to serve all existing contracts at 100%. Moreover, it could not have concluded new contracts until a new allocation of wheat was made.[176] In the meantime, RESPONDENT's position in the market could have been severely prejudiced, since RESPONDENT faced a real possibility of losing customers and of severe economic consequences which would have ensued. As such, due to these circumstances, the limit of sacrifice had been reached. RESPONDENT could no longer reasonably have been expected to deliver, in a first delivery, more than 4,800 tons, corresponding to the proportionate share (80%) of the export quota in relation to the requested amount.

Contrary to CLAIMANT's assertions,[177] RESPONDENT could also not reasonably have been expected to procure wheat in replacement outside of Danubia. It has been held that a seller cannot reasonably be expected to procure goods abroad, in cases where the entire domestic market of this good is affected by a natural catastrophe or by export restrictions.[178] Such a conclusion must especially be reached in cases like that of the instant facts. The specific circumstances of the instant transaction demonstrate that RESPONDENT's obligation to procure wheat was limited to the Danubian wheat market.[179] The place of delivery was a Danubian port, and RESPONDENT's business is limited to the export of Danubian wheat.[180] RESPONDENT's experience, as well as its business facilities, are not adapted to the import of wheat. Consequently, RESPONDENT could not reasonably have been expected to have overcome the consequences of the impediment.

In the light of the above arguments, all conditions of Art. 79 (1) CISG are met and RESPONDENT is exempt from paying damages.

C. CLAIMANT violated its duty to mitigate loss arising from Art. 77 CISG

Even if this Tribunal should find that CLAIMANT is entitled to damages resulting from its cover purchase, it is not entitled to the full amount of $90.000, since it violated its duty to mitigate loss.

According to Art. 77 CISG, a party invoking a breach of contract must take such measures as are reasonable in the circumstances to mitigate the loss. The purpose of Art. 77 CISG is to protect the party in breach from paying higher damages than its breach inevitably caused to the other party.[181] In order to guarantee this protection, the duty to mitigate loss arises even before the occurrence of the actual breach of contract, at the moment when the breach is foreseeable.[182] In its letter dated 3 June 1998, RESPONDENT announced that it would allocate the wheat to other customers if CLAIMANT did not modify the letter of credit by 15 June 1998.[183] Assuming but not conceding, that the final allocation of the wheat to other customers was a breach, CLAIMANT's duty to mitigate its foreseeable loss, therefore, arose when it received this letter.

CLAIMANT's damage would have been diminished substantially, had CLAIMANT accepted RESPONDENT's proposal to deliver 4,800 tons of wheat and had it performed a cover purchase for the remaining 1,200 tons only.[184] Indeed, every reasonable buyer would have accepted at least the proposed 4,800 tons.[185] Even if CLAIMANT should not have had the obligation to accept 4,800 tons per Art. 60 CISG, the duty to mitigate would include such conduct since the scope of this duty is much broader than the scope of the initial contractual obligations.[186] This is justified, since the obligation of Art. 60 CISG binds the party and is enforceable, whereas the duty to mitigate loss cannot be enforced.[187] It refers to measures that may be taken by the aggrieved party in its own interest, and the only consequence of non-compliance is the reduction of the damages to which the aggrieved party is entitled.[188] By accepting the proposed 4,800 tons of wheat, CLAIMANT would have mitigated its loss by $52,800.[189] As a consequence of CLAIMANT's non-compliance with Art. 77 CISG, its claim for damages should be reduced by this amount.

D. The amount of damages demanded by CLAIMANT would have to be reduced by its saved expenses

The amount of damages would have to be reduced by the costs which CLAIMANT saved. Since CLAIMANT bought replacement wheat in Equatoriana, it spent $22 per ton for the transport instead of $24 per ton, which it would have had to pay for a shipment from Danubia.[190] Thereby, CLAIMANT saved two dollars per ton for the transport, amounting to a total of $12,000. Since the injured party may only recover its actual loss, the calculation of damages must take into account saved expenses that are a consequence of the breach of contract.[191] Otherwise, the injured party would be placed in a better economic position than it would have been in, if the contract had been performed. On the instant facts, the sum of $12,000 has to be deducted from the alleged $90,000 of damages.[192] Hence, the maximum sum CLAIMANT could recover, if its contentions concerning a breach of contract by RESPONDENT were established, would be $78,000.

E. CLAIMANT is not entitled to interest

Even if this Tribunal should find that CLAIMANT is entitled to damages, CLAIMANT cannot recover interest on such damages. Contrary to CLAIMANT's assertion,[193] the right to interest on damages is exclusively governed by Art. 78 CISG.[194] From the language of this provision - "sum that is in arrears" - it is clear that interest is only due on a liquidated sum.[195] Since the amount of damages is disputed and therefore not certain on the instant facts,[196] Art. 78 CISG does not permit CLAIMANT to recover interest as of the day of the cover purchase.

VI. CLAIMANT should bear all legal costs

According to Art. 28.4 LCIA rules, this Tribunal should order CLAIMANT to bear the costs of these proceedings as well as any other legal costs.

. Request for relief

In the light of the above submissions, RESPONDENT respectfully requests this Tribunal

to disregard Mr. Dean's written testimony for the purpose of these proceedings,

to decline jurisdiction on the instant facts,

in the alternative, to declare that no contract has been concluded between CLAIMANT and RESPONDENT,

alternatively, to declare that RESPONDENT did not breach the alleged contract,

further, to declare that RESPONDENT is exempt from paying damages under Art. 79 (1) CISG, or that the alleged damages are to be reduced by $52,800 per Art. 77 CISG, or at least by $12,000 for saved expenses,

to order CLAIMANT to bear all costs of these proceedings and any other legal costs.

For Grain Dealers PLC.

(signed) , 12 February 2000

Attorneys


FOOTNOTES

1. CLAIMANT's exhibit No. 12.

2. Memorandum for CLAIMANT, p. 1-4.

3. Memorandum for CLAIMANT, p. 5-8.

4. Memorandum for CLAIMANT, p. 9-13.

5. Memorandum for CLAIMANT, p. 10-12.

6. Memorandum for CLAIMANT, p. 13-18.

7. Memorandum for CLAIMANT, p. 13.

8. Memorandum for CLAIMANT, p. 20-22.

9. Memorandum for CLAIMANT, p. 22-27.

10. Memorandum for CLAIMANT, p. 28.

11. CLAIMANT's exhibit No. 12.

12. CLAIMANT purports the existence of an agreement for arbitration to be conducted under the LCIA Rules, cf. CLAIMANT's exhibit No. 1. RESPONDENT voluntarily submitted to the Kompetenz-Kompetenz of this Tribunal in the Response to Request for Arbitration, dated 28 June 1999, and thereby accepted the application of the LCIA Rules.

13. Memorandum for CLAIMANT, p. 2.

14. Procedural Order No.1, Para. 3.

15. Memorandum for CLAIMANT, p. 1.

16. Memorandum for CLAIMANT, p. 4.

17. Memorandum for CLAIMANT, p. 5.

18. Memorandum for CLAIMANT, p. 5.

19. In fact, a rule grounding good cause in the presenting party itself would be constructed, "If the party fails to produce the witness without good cause [...]". This conclusion is also justified from a comparison of Art. 20.4 LCIA Rules with respective provisions in other procedural rules which precisely address the party: e.g. Art. 9 (5) IBA Rules of Evidence '99 refers to the case where "a party fails without satisfactory explanation to make available evidence...".

20. The very idea of good cause excludes any deliberate interference by the parties. Cf. Oran's Dictionary of the law, "Good Cause" p. 189; Thomas/Putzo-Thomas,  381 No. 2; Stein/Jonas-Berger,  381 No. 10; Cadiet, p. 506.

21. Procedural Order No. 1 Para. 3-4, Procedural Order No. 2, Clarification No. 32.

22. Procedural Order No. 2, Clarification No. 34.

23. Memorandum for CLAIMANT, p. 4.

24. Procedural Order No. 1, Para. 3.

25. Procedural Order No. 1, Para. 7.

26. Statement of Defence, Para. 4.

27. Mr. Dean omits to detail what steps he took after receiving RESPONDENT's letter dated 24 February 1998, and he does not mention whether and how Mr. Stern reacted to his purported explanation that he was no longer employed by IMPORTS. Furthermore, Mr. Dean's conclusion that Mr. Stern was aware of his new employment is mere speculation.

28. CLAIMANT contends that the written testimony of Mr. Dean contains "highly credible evidence of the intent of the contracting parties", Memorandum for CLAIMANT, p. 3.

29. Memorandum for CLAIMANT, p. 3.

30. The written testimony was precisely taken by counsel for CLAIMANT on 18 May 1999, in view of obtaining evidence for the procedure, cf. Mr. Dean's written testimony, CLAIMANT's exhibit No. 12. At this time, Mr. Dean had already been the responsible person in the purchase department at CLAIMANT for 15 months. The correspondence with RESPONDENT demonstrates that Mr. Dean was aware of the problems caused by the purported contract.

31. ICC Procedural Decisions, p. 101, explanatory note to procedural order 7319/1992; cf. ICCA Report 1986, p. 99-100.

32. Memorandum for CLAIMANT, p. 3.

33. Cf. Redfern/Hunter, p. 327; Art. 9 (5) IBA Rules of Evidence '99.

34. Memorandum for CLAIMANT, p. 4.

35. Cf. Iran Aircraft Industries v. AVCO Corp., US Court of Appeals 2nd Cir., 24 Nov. 1992, 980 F.2d 141 (148).

36. CLAIMANT's exhibits 1-13.

37. Essex Cement Company v. Italmare S.p.A., US District Court S.D.N.Y., 13 May 1991, 763 F.Supp.55 (58).

38. This principle is set out in Art. 25 (6) UNCITRAL Arbitration Rules; Art. 9 (1) IBA Rules on Evidence '99; Art. 34 (1) ICSID Rules of Procedure for Arbitration Proceedings; Art. 21 (6) AAA International Rules; cf. also Art. 14.2 LCIA Rules.

39. Rüede/Hadenfeldt, p. 262; Stein/Jonas-Berger  397 No. 2; Born, p. 89; Shenton, p. 148 (stating that the opportunity to cross-examine is fundamental to a fair arbitral proceeding in the regard of common law). Accordingly, Art. 4 (8) IBA Rules of Evidence '99 states that "the Arbitral Tribunal shall disregard that Witness Statement" under such circumstances.

40. Memorandum for CLAIMANT, p. 2.

41. Cf. supra, I A, p. 2 ff.

42. MCC - Marble Ceramic Center, Inc v, Ceramica Nuova D'Agostino S.p.A., US Circuit Ct. 11th Circ., 29 June 1998, 789 F.Supp. 1229 (1237); Honnold, Art. 8 No. 110; Staudinger-Magnus, Art. 8 No. 23; Enderlein/Maskow/Strohbach, Art. 8 No. 8.

43. Memorandum for CLAIMANT, p. 2.

44. Cf. Dölle-Reinhart, Art. 15 No. 59 (giving explanation based on the similar provision of Art 15 ULIS).

45. V. Caemmerer/Schlechtriem-Schlechtriem, Art. 11 No. 13; Bianca/Bonell-Rajski, Art. 11 No. 2.2; Reinhart, Art. 11 No. 9; Herber/Czerwenka, Art. 11 No. 6; Honsell-Melis, Art. 11 No. 6; Staudinger-Magnus, Art. 11 No. 16; Honnold, Art. 11 No. 127; Piltz, p.105.

46. Staudinger-Magnus, Art. 11 No. 17; Neumayer/Ming, Art. 11 No. 2; v. Caemmerer/Schlechtriem-Schlechtriem, Art. 11 No. 12; Piltz, p.105.

47. Cf. authorities who require, at least, that such testimonies be given less weight: Redfern/Hunter, p. 337 (stating that arbitrators tend to give less weight to written witness testimony if the witness has not been tested by cross-examination ); ICCA Report 1986, p. 103 (ICC General Counsel stating that "Less weight will generally speaking be given to affidavits under any circumstances").

48. Memorandum for CLAIMANT, p. 5 f.

49. RESPONDENT's exhibit No. 1.

50. CLAIMANT's exhibit No. 12.

51. Reinhart, Art. 8 No. 4; Bianca/Bonell-Farnsworth, Art. 8 No. 2.6.

52. Staudinger-Magnus, Art 8, No. 11 and 12; Honsell-Melis, Art. 8 No. 6.

53. Statement of Defence, Para. 2.

54. RESPONDENT's exhibit No. 1.

55. Cf. supra I, p.2 ff.

56. Memorandum for CLAIMANT, p. 9.

57. Cf. Statement of Defence, Para. 2.

58. CLAIMANT's exhibit No. 12.

59. Cf. supra II A 1 a, p. 9.

60. Neumayer/Ming, Art. 8 No. 4; Enderlein/Maskow/Stohbach, Art. 8 No. 3.1.

61. ICC Award No. 6653 of 1993, Clunet 1993, p. 1041, (1044 f.); ICC Award No. 1434 of 1975, Clunet 1976, p. 978, (982); LG Düsseldorf, 10 Aug. 1981, in: Staudinger/Magnus-Rechtsprechungsreport, Art. 8 No. 3; Staudinger-Magnus, Art. 4 No. 67, Art. 7 No. 57; Henninger, p. 195 f.; Honsell-Siehr, Art. 4 No. 10; Imberg, p. 31 f.; Magnus, RabelsZ (59) 1995, p. 469 (489); Neumayer/Ming, Art. 4 No. 13; Reimers-Zocher, p. 133 ff.; Baumgärtel/Laumen, before Art. 1 No. 17 and Art. 18 No. 1.

62. Memorandum for CLAIMANT, p. 10.

63. By using the term "parties", RESPONDENT does not concede that CLAIMANT and RESPONDENT entered into a contract. The term exclusively refers to CLAIMANT's and RESPONDENT's quality in these proceedings.

64. CLAIMANT's exhibit No. 2.

65. RESPONDENT's exhibit No. 2. Indeed, 20 February 1998 was a Friday. Hence, there was only one business day between receipt of the letter and the reply.

66. Statement of Defence, Para. 5.

67. CLAIMANT's exhibits No. 3-11.

68. Memorandum for CLAIMANT, p. 10.

69. Cf. CLAIMANT's exhibits No. 3, 4, 5, 7, 8, 10, 11 and RESPONDENT's exhibit No. 2. The letters contained the reference: "Re: Contract 2340 with Food Imports, Co."

70. CLAIMANT's exhibit No. 3; Procedural Order No. 2, Clarification No. 8.

71. RESPONDENT's exhibit No. 1.

72. CLAIMANT's exhibits No. 4, 6, 9.

73. Contrary to CLAIMANT's assertions, it was not agreed that CLAIMANT would open the letter of credit, when the purported agreement was formed (cf. Memorandum for CLAIMANT, p. 9; CLAIMANT's exhibit No. 2; RESPONDENT's exhibit No. 1).

74. Cf. Staudinger-Magnus, Art. 8 No. 25. The fact that a third party actually performs the contract is even envisaged by Art. 79 (2) CISG. Yet, the CISG does not indicate that the third party performing the contract thereby becomes a contracting party.

75. Memorandum for CLAIMANT, p. 10 ff.

76. Mr. Dean had the power to represent IMPORTS until 13 February 1998, cf. Procedural Order No. 2, Clarification No. 32.

77. Memorandum for CLAIMANT, p. 10 ff.

78. Memorandum for CLAIMANT, p. 11.

79. V. Caemmerer/Schlechtriem-Schlechtriem, Art. 7 No. 35; Piltz, No. 130; Heuzé, p. 80; Karollus, p. 17 f.

80. V. Caemmerer/Schlechtriem-Schlechtriem, Art. 7 No. 35; Staudinger-Magnus, Art. 7 No. 40; Enderlein/Maskow/ Strohbach, Art. 7 No. 9.2; Bianca/Bonell-Bonell, Art. 7 No. 2.3.3.1.

81. In German and French law, parties have to stipulate that a third party may enforce performance or the third party must be the only party interested in performance (e.g. the case of a life insurance in benefit of a husband); cf. BGH, 18 Jun. 1968, NJW 1968, 1929 ff.; MüKo-Gottwald,  328 BGB No. 61; Cour de Cassation, 2 Jul. 1969, Dalloz 1970, p. 150 ff.; Ghestin, No. 873 ff.

82. Cf. Restatement Contract 2nd, Para. 302, illustrations 17 and 19.

83. Cf. LCIA Rules and UML.

84. Isovers v. Dow Chemical, ICC Interim Award, 23 Sept. 1982, No. 4131, 1982, ICC Awards I, p. 146 (149); Society of Maritime Arbitrators, INC., Partial Final Award No. 1510, 28 Nov. 1980; YCA 1982, p. 151 (153). The linked entities always constitute a corporate group and operate under essentially the same name. Cf. also Born, p. 155 f.

85. Procedural Order No. 2, Clarification No. 54.

86. Procedural Order No. 2, Clarification No. 54.

87. RESPONDENT's exhibit No. 1.

88. Broches, p. 39 ff.; Hußlein-Stich, p. 39; Holtzmann/Neuhaus, p. 260, 262; Granzow, p. 84, 86, 89.

89. 2nd Working Group Report (A/CN.9/232) in: Holtzmann/Neuhaus, p. 279; Commission Report (A/40/17) in: Holtzmann/Neuhaus, p. 300; Rubino-Sammartano, p. 122 f.; Granzow, p. 87; Bucher, No. 120 ff.

90. CLAIMANT's exhibit No.2.

91. RESPONDENT's exhibit No.2.

92. Holtzmann/Neuhaus, p. 260; Schlosser, No. 373; Rubino-Sammartano, p. 124.

93. Memorandum for CLAIMANT, p. 7.

94. Ditta Augusto Miserocchi v. S.p.a. Paolo Agnesi, Corte di Cassazione, 13 Dec. 1971, YCA I (1976), p. 190; van den Berg, p. 218; Schwab, p. 346, Schlosser, No. 373.

95. Cf. CLAIMANT's exhibits No. 3-11.

96. The only documents that refer to the DSC containing an arbitration clause are the letters dated 20 and 24 February 1998, respectively.

97. Cf. supra, II A 1, p. 8 ff.

98. Cf. supra, II A 2, p. 12 ff.

99. Cf. Memorandum for CLAIMANT, p. 14 f.

100. CLAIMANT's exhibit No. 11.

101. CLAIMANT's exhibit No. 5.

102. CLAIMANT's exhibit No. 9.

103. OLG Frankfurt, 18 Jan. 1994, NJW 1994, 1013; Schlechtriem, No. 221; Staudinger-Magnus, Art. 60 No. 21; Karollus, p. 174 f.; Neumayer/Ming, Art. 60 No. 5; Piltz, p. 148.

104. Audit, p. 119; Heuze, p. 327; Ziegler, p. 270; Fox, p. 210.

105. Ziegler, p. 270; Jan, p. 17 f.

106. The fact that the CISG provides for specific performance does not invalidate this argument. When the buyer is entitled to specific performance he is always allowed to avoid the contract, since specific performance requires a fundamental breach of contract according to Art. 46 (2) CISG, which also entitles the buyer to avoid the contract pursuant Art. 49 CISG.

107. The wheat was to be shipped in July 1998 (cf. CLAIMANT's exhibit No. 2). CLAIMANT refused to take delivery on 21 May 1998 (CLAIMANT's exhibit No. 6).

108. Memorandum for CLAIMANT, p. 13.

109. Memorandum for CLAIMANT, p. 13 - 20.

110. Cf. CLAIMANT's exhibits No. 5, 8.

111. Herber/Czerwenka, Art. 51 No. 3; Neumayer/Ming, Art. 51 No. 2; Honsell-Schnyder/Straub, Art. 51 No. 5 and Art. 72 No. 60; V. Caemmerer-Schlechtriem-Schlechtriem, Art. 51 No. 4; Honnold, Art. 51 No. 316; Enderlein/Maskow, Art. 51 No. 3.

112. Staudinger-Magnus, Art. 25, No. 13; Enderlein/Maskow, Art. 25 No. 3; Honsell-Karollus, Art. 25 No. 17; Neumayer/Ming, Art. 25 No. 3; Herber/Czerwenka, Art. 25 No. 8; Reinhart, Art. 25 No. 5; Heilmann, p. 461; Fox, p. 207.

113. BGH, 3 Apr. 1996, IPRax 1997, p. 342; cf. Benicke, IPRax 1997, p. 326 ff.

114. Schlechtriem-Huber, Art. 51 No. 5; Enderlein/Maskow, Art. 51 No. 5; Honnold, Art. 51 No. 317.

115. Procedural order No. 2, Clarification No. 11.

116. As is evidenced by the fact that CLAIMANT actually proceeded to a cover purchase.

117. Memorandum for CLAIMANT, p. 16 f.

118. Bianca/Bonell-Will, Art. 25, No. 2.1.1.2; Staudinger-Magnus, Art. 25, No. 12; v. Caemmerer/Schlechtriem-Schlechtriem, Art. 25 No. 9; Enderlein/Maskow, Art. 25 No. 3; Schlechtriem, No. 111; Karollus, p. 91.

119. Memorandum for CLAIMANT, p. 16 f.: The calculation is incorrect since CLAIMANT takes freight costs for 1,200 tons into account twice. Additionally, CLAIMANT would not have lost the alleged amount of $44,400 in order to replace the remaining 1,200 tons of wheat. Since RESPONDENT would have delivered these 1,200 tons of wheat at a later moment, CLAIMANT would have saved the above mentioned $44,400 at that moment.

120. Even if the erroneous calculation of CLAIMANT could be accepted, the expected damages of $78,000 would still have been inferior to the damage caused by its cover purchase.

121. CLAIMANT's exhibits No. 5 and No. 8.

122. Procedural Order No. 2, Clarification No. 51.

123. Cf. Statement of Case, Para. 7.

124. Procedural Order No. 2, Clarification No. 11.

125. Neumayer/Ming, Art. 25 No. 5; Honsell-Karollus, Art. 25 No. 11; v. Caemmerer/Schlechtriem-Schlechtriem, Art. 25 No. 13.

126. Cf. v. Caemmerer/Schlechtriem-Schlechtriem, Art. 25 No. 14; Staudinger-Magnus, Art. 25 No. 13; Neumayer/Ming, Art. 25 No. 4; Honsell-Karollus, Art. 25 No. 20.

127. The DSC provided for partial shipments, cf. DSC No. 5, Para. 10, CLAIMANT's exhibit No. 1.

128. Cf. Art. 8 (3) CISG.

129. Procedural Order No. 2, Clarification No. 12.

130. Procedural Order No. 2, Clarification No. 10.

131. Cf. supra bb, p. 19.

132. Honsell-Karollus, Art. 25 No. 16; Bianca/Bonell-Will, Art. 25 No. 2.1.2.1.; v. Caemmerer/Schlechtriem-Schlechtriem, Art. 25 No. 15.

133. V. Caemmerer/Schlechtriem-Schlechtriem, Art. 51 No.4; Staudinger-Magnus, Art. 51 No. 13; Herber/Czerwenka, Art. 51 No. 3; Honnold, Art. 51 No. 316.

134. CLAIMANT's exhibits No. 5, 7, 8.

135. CLAIMANT's exhibit No. 2.

136. Procedural Order No. 2, Clarification No. 11.

137. CLAIMANT's exhibit No. 12.

138. Procedural Order No. 2, Clarification No. 47 and Statement of Case, Para. 7.

139. Cf. supra A, p. 17.

140. CLAIMANT's exhibits No. 6 and 9.

141. I.e. an additional period of time during which performance can be made.

142. CLAIMANT's exhibit No. 11.

143. Cf. supra A.2, p. 20; CLAIMANT's exhibits No. 6 and 9.

144. Honnold, Art. 72 No. 396; v. Caemmerer/Schlechtriem-Leser, Art. 72 No. 27; Staudinger-Magnus, Art. 72 No. 11; Piltz, p. 235; Neumayer/Ming, Art. 72 No. 2; Herber/Czerwenka, Art. 72 No. 3; Enderlein/Maskow, Art. 72 No. 1; Ziegler, p. 271; Jan, p. 106.

145. Schlechtriem-Schlechtriem, Art. 25 No. 23; Staudinger-Magnus, Art. 25 No. 20; Botzenhardt, p. 267.

146. CLAIMANT's exhibit No. 10.

147. CLAIMANT's exhibit No. 1.

148. CLAIMANT's exhibit No. 2.

149. CLAIMANT's exhibit No. 8.

150. CLAIMANT's exhibit No. 10.

151. Memorandum for CLAIMANT, p. 13 - 18.

152. CLAIMANT's exhibit No. 11.

153. Memorandum for CLAIMANT, p. 13 ff.

154. CLAIMANT's exhibits No. 5 and 8.

155. Schlechtriem-Huber, Art. 45 No. 8.

156. Memorandum for CLAIMANT, p. 22 ff.

157. CLAIMANT's Request for Arbitration, Para. 3.

158. V. Caemmerer/Schlechtriem-Leser, Art. 26 No. 2; Neumayer/Ming, Art. 26 No. 1; Honsell-Karollus, Art. 26 No. 1.

159. Secretariat's Commentary, Art. 24 No. 4; Bianca/Bonell-Date-Bah, Art. 26 No. 3.1; Enderlein/Maskow, Art. 26 No. 1.2.

160. Art. 72 (3) CISG is not an exception. An application of Art. 72 (3) CISG would not exempt the injured party from the declaration of avoidance. Art. 72 (3) CISG refers only to the notice which, according to Art. 72 (2) CISG, is to be given to the party in breach prior to an avoidance. The avoidance itself is nevertheless to be declared to the party in breach. E.g. Staudinger-Magnus, Art. 72 No. 20.

161. Statement of Defence, Para. 9 ff.

162. Keil, p. 105; Ziegler, p. 79; Herber/Czerwenka, Art. 79 No. 8; Staudinger-Magnus, Art. 79 No. 16.

163. Kritzer, Art. 79, p. 650; Ziegler, p. 219; Heilmann, p. 630; v. Caemmerer/Schlechtriem-Stoll, Art. 79 No. 21; Ryffel, p. 90.

164. CLAIMANT's exhibits No. 3 and 4.

165. Cf. Enderlein/Maskow, Art. 79 No. 4.1.; v. Caemmerer/Schlechtriem-Stoll, Art. 79 No. 9 and 20.

166. Ryffel, p. 90; Staudinger-Magnus, Art. 79 No. 18; Kranz, p. 197; v. Caemmerer/Schlechtriem-Stoll, Art. 79 No. 27 ff.; Enderlein/Maskow, Art. 79 No. 4.1.

167. OLG Hamburg, 4 Jul. 1997, in: Staudinger/Magnus, Art. 79 No. 22; Kranz, p. 198; Honsell-Magnus, Art. 79 No. 14; v. Caemmerer/Schlechtriem-Stoll, Art. 79 No. 14.

168. Memorandum for CLAIMANT, p. 21.

169. Renck, p. 197; cf. also Arbitral Tribunal of Hamburger Freundschaftliche Arbitrage, 15 Dec. 1959, in: Stratmann/Ulmer, I E 4 d Nr. 1.

170. Procedural Order No. 2, Clarification No. 25.

171. Procedural Order No. 2, Clarification No. 25 and 44.

172. This is confirmed by the wording of the Article: "... he [the party] could not reasonably be expected to have avoided or overcome it [impediment] or its consequences." Morscher, p. 140; Jan, p. 314; Herber/Czerwenka, Art. 79 No. 8 and 12 f.; v. Caemmerer/Schlechtriem-Stoll, Art. 79 No. 40; Honsell-Magnus, Art. 79 No. 14.

173. CLAIMANT's exhibit No. 5.

174. CLAIMANT's exhibits No. 4 and 7.

175. Procedural Order No. 2, Clarification no. 43.

176. Cf. CLAIMANT's exhibit No. 5. A new allocation of wheat was expected for September or October.

177. Memorandum for CLAIMANT, p. 21.

178. OLG Hamburg, 4 Jul. 1997, in: Staudinger-Magnus, Art. 79 No. 22; cf. Schmitthoff, p. 152 p.

179. Cf. Jan, p. 320, referring to the contractual circumstances to determine the conduct that can reasonably be expected.

180. Request for Arbitration, Para. 5; CLAIMANT's exhibit No. 7.

181. Honnold, Art. 77 No. 417; Kranz, p. 225; Ziegler, p. 213; Jan, p. 297; Ryffel, p. 192.

182. Honsell-Magnus, Art. 77, No. 5; Enderlein/Maskow, Art. 77 No. 2.

183. CLAIMANT's exhibit No. 10.

184. CLAIMANT would have mitigated its loss by $11 per ton ($15 less for the purchase of each ton, but $4 increase in transport costs per ton) for 4,800 tons potentially accepted (= $52,800).

185. Procedural Order No. 2, Clarification No. 11.

186. Cf. the examples given in: Honsell-Magnus, Art. 77 No. 8; Kranz, p. 228; Heilmann, p. 612.

187. Kranz, p. 228; Staudinger-Magnus, Art. 77 No. 5; Heilmann, p. 609.

188. Kranz, p. 227, Ziegler, p. 214; Jan, p. 297; Herber/Czerwenka, Art. 77 No. 2.

189. Cf. supra footnote 184.

190. Procedural Order No. 2, Clarification No. 51 and 52.

191. Secretariat's Commentary, Art. 71 No. 3; Bianca/Bonell-Knapp, Art. 75 No. 2.3.; Heilmann, p. 581.

192. Cf. Memorandum for CLAIMANT, p. 24.

193. Memorandum for CLAIMANT, p. 26 f.

194. V. Caemmerer/Schlechtriem-Eberstein/Bacher, Art. 78 No. 9; Honsell-Magnus, Art. 78 No. 4; Staudinger-Magnus, Art. 78 No. 1.

195. Staudinger-Magnus, Art. 78 No. 8; Honnold, Art. 78 No. 422.

196. Cf. supra V C and D, p. 28 ff.