R.K. Tankha International Arbitration Moot 2019 - Memo

MEMORIAL for RESPONDENT
TC-24
5TH NLIU JUSTICE R.K. TANKHA MEMORIAL
INTERNATIONAL MOOT COURT COMPETITION, 2019
TC-24
BEFORE
5 NLIU JUSTICE R.K. TANKHA MEMORIAL
TH
INTERNATIONAL MOOT COURT COMPETITION, 2019

THE ARBITRAL TRIBUNAL CONSISTING OF
MS. RUTH GREENE (SOLE ARBITRATOR)
AT
BEFORE
BARATHEON CITY, STARK PROVINCE
THE ARBITRAL TRIBUNAL CONSISTING OF

IN THE ARBITRATION PROCEEDINGS BETWEEN
MS. RUTH GREENE (SOLE ARBITRATOR)
AT
ARCEBOR POWER PRIVATE LIMITED
BARATHEON CITY, STARK PROVINCE
(CLAIMANT)
V.
IN THE ARBITRATION PROCEEDINGS BETWEEN
RENVIDORA NATIONAL POWER COMPANY LIMITED
(RESPONDENT)
ARCEBOR POWER PRIVATE LIMITED
(CLAIMANT)
V.
RENVIDORA NATIONAL POWER COMPANY LIMITED

MEMORIAL ON BEHALF OF THE RESPONDENT
(RESPONDENT)
Page | 1
5TH NLIU R.K. TANKHA INTERNATIONAL MOOT COMPETITION
TABLE OF CONTENTS
Page | 2
Table of Abbreviations..............................................................................................................iv
Index of Authorities.................................................................................................................vii
Statement of Facts....................................................................................................................xii
Issues Raised...........................................................................................................................xiv
Summary of Arguments...........................................................................................................xv
I. There is no valid agreement in existence between the parties which refers the disputes
to arbitration under the aegis of SIAC.................................................................................xv
II. the claimant is under an obligation to disclose its source of funding for pursuing
these arbitration proceedings and the tribunal should not order security for legal costs.....xv
III. The Tribunal is devoid of Jurisdiction owing to the order of the NCLT regarding
Insolvency Proceedings.......................................................................................................xvi
IV. the ministry, government of yevadu may not be joined as a party to the present
arbitral proceedings.............................................................................................................xvi
V. The respondent is justified in terminating the agreement........................................xvi
arguments advanced...................................................................................................................1
I. No valid agreement exists between the parties which refers the disputes to arbitration
under the aegis of SIAC.........................................................................................................1
A. The arbitration Clause in the Addendum is invalid as lacks the unequivocal
consent of the respondent due to lack its of capacity to enter into the arbitration
agreement...........................................................................................................................1
B. In any case, the pathological nature of its arbitration clause 1.0 renders the clause
incapable of being performed.............................................................................................3
II. THE TRIBUNAL IS DEVOID OF JURISDICTION OWING TO THE
ORDER OF THE NCLT REGARDING INSOLVENCY PROCEEDINGS.................4
A. Claims against Respondent amount to institution of arbitration proceedings barred
under Section 14.................................................................................................................5
B. THE ARBITRATION PROCEEDINGS DO NOT FALL UNDER THE EXCEPTION TO
SECTION 14.........................................................................................................................6
C. The Claimant is under an obligation to disclose its source of funding....................8
A. The Claimant is under an obligation to disclose its source of funding..................10
III. Ministry, Government of Yevadu must not be joined as a party to the present arbitral
proceedings..........................................................................................................................13
A. The Ministry is not prima facie bound by the arbitration agreement....................13
B. There was no intention to join the Ministry to the arbitral proceedings................13
C. RESPONDENT is not an alter-ego of the Ministry...............................................14
Page | iii
IV. The claimant’s conduct amounted to fundamental breach of the agreement............15

A. [i] THE RESPONDENT SUFFERED A SUBSTANTIAL DETRIMENT...........15
B. [ii] THE DETRIMENT DEPRIVED THE RESPONDENT OF WHAT IT WAS
ENTITLED TO EXPECT UNDER THE CONTRACT..................................................16
C. [iii] THE DETRIMENT WAS REASONABLY FORSEABLE...........................16
V. The Claimant could not avail the exception under Article 79 CISG.........................17
VI. The Respondent is justified in terminating the agreement........................................18
PRAYER..................................................................................................................................19
Page | iv
TABLE OF ABBREVIATIONS
& and
Agreement Part Supply Agreement
Art Article
CIRP Corporate Insolvency Resolution Procedure
CISG United Nations Convention on Contracts for the International Sale of

Goods
ExC Claimant Exhibit
ExR Respondent Exhibit
IBC Insolvency Bankruptcy Code
ICC International Court of Chambers
IRP Insolvency Resolution Process
Ministry Ministry of Power
NCLAT National Company Law Appellate Tribunal
NCLT National Company Law Tribunal
P. Page/Pages
Para Paragraph
SC Supreme Court
Page | v
SIAC Rules Singapore International Arbitration Centre Rules 2016
Task Force ICCA-QUEEN MARY TASK FORCE ON THIRD-PARTY

FUNDING IN INTERNATIONAL ARBITRATION
UNIDROIT UNIDROIT Principles of International Commercial Contracts

Principles 2016
v. Versus
No. number
Anr Another
Ors Others
Pri Principle
Ltd Limited
PRC People’s Republic of China
Model law UNCITRAL Model Law, 1985 (without amendments)
IBA Guidelines IBA Guidelines for Conflict of Interest, 2014
R Rule
Page | vi
INDEX OF AUTHORITIES
Cases
Compromex Arbitration, Mexico [1996], a..............................................................................19
Rechtbank Rotterdam, the Netherlands, [2001], at
http://cisgw3.law.pace.edu/cases/010712n1.html................................................................19
Arbitration Court of the International Chamber of Commerce [1989] CLOUT case No. 102
..............................................................................................................................................18
Arbitration Court of the International Chamber of Commerce [1989], CLOUT case No. 102
..............................................................................................................................................18
Austrian Supreme Court [1999], CISG Online-483.................................................................19
Behring Int’l, Inc. v. Islamic Repub. of Iran [1985], Interim and Interlocutory Award in
IUSCT Case No. ITM/ITL 52382-3.......................................................................................9
Biwater Gauff (Tanzania) Ltd v. United Repub. of Tanzania [2006] ICSID Case No.
ARB/05/22, Procedural Order No. 1......................................................................................9
Bulgarian Chamber of Commerce and Industry, Bulgaria [1998], Unilex.............................18
Bundesgericht, Switzerland [2000], at http://cisgw3.law.pace.edu/cases/000915s2.html.......19
Burimi S.r.l. and Eagle Games Sh.a. v. Albania [2012] ICSID Case No. ARB/11/18,
Procedural Order No. 2..........................................................................................................8
BV Bureau Wijsmuller v. USA, 1976 A.M.C. 2514 (S.D.N.Y. 1976)......................................2
Chloro Controls Pvt. .Ltd v. Severn Trent Water Purification [2013] 1 SCC 641..................14
Cohen v. TNP 2008 Participating Notes Program, et al., B266702, 2019 Cal.App. LEXIS 76,
publication order 1/31/19.....................................................................................................15
E.I. DuPont de Nemours v. Rhone Poulenc Fiber [2001] 269 F.3d 187.................................15
Helicopteros Nacionales de Colombia v. Hall [1984], 466 U.S. 408, 416..............................15
In re Herlofson Mgt A/S and Ministry of Supply, Kingdom of Jordan [1991] AMC
2959(1991) 1.102...................................................................................................................1
Innoventive Industries Limited v. ICICI Bank Limited [2018], Supreme Court Civil Appeal
No. 3595 OF 2018..................................................................................................................6
Interim Award in Netherlands Arbitration Institute [1998] 23 Y.B. Comm. Arb. 97.............10
Jes & Ben Groupo Pvt. Ltc. v. Hell Energy Magyarorzag KFT. (Hell Hunhry Ltd.) & Anr.,
CS (COMM) 257/2019........................................................................................................14
Karnette v. Wolpoff & Abramson, LLP [2006], 444 F.Supp.2d 640..........................................4
Krushna nanda Mohanty v. state of orissa and ors., 1989 CriLJ 1025....................................15
Page | vii
KS Oils Ltd. v The State Trade Corporation of India Ltd. & Ors. [2018] 146 SCL 588...........8
Liquidazione v. Italian Republic [2015] ICSID Case No. ARB/15/50......................................9
Manuel García Armas and others v. Venezuela [2018] PCA Case No. 2016-08, Procedural
Order No. 9.............................................................................................................................8
Melvin Howard v. Canada [2010] PCA Case no. 2009-21........................................................9
nterim Award in ICC Case No. 8786 [2000] 11(1) ICC Ct. Bull. 81, 83-84.............................9
Oberlandesgericht Hamburg, Germany [1997], CLOUT case No. 277..................................18
Oberlandesgericht Hamburg, Germany [1997], Unilex; Arbitral award No. 6281.................18
Oberlandesgericht Hamburg, Germany, [1997], CLOUT case No. 277.................................18
Oberster Gerichtshof, Austria [1996], CLOUT case No.176..................................................19
Pey Casado v. Chile ICSID Case No. ARB/98/2.......................................................................8
Power Grid Corporation of India Ltd v. Jyoti Structures Ltd [18] 246 DLT 485.....................7
Reconstruction Company Ltd. v Hotel Gaudavan Pvt. Ltd [2017] AIR SC 5124.....................5
RSM Prod. Corp. v. Santa Lucia ICSID Case No. ARB/12/10..................................................8
RSM v. Saint Lucia [2019] ICSID Case No. ARB/12/10...........................................................8
RSM v. Saint Lucia [2019] ICSID Case No. ARB/12/10..........................................................9
Schiedsgericht der Handelskammer Hamburg, Germany [1996], CLOUT case No. 166.......18
South American Silver Limited v. Bolivia [2016] PCA Case No. 2013-15 Procedural Order
No. 10.....................................................................................................................................9
State Bank of India v. V. Ramakrishnan and Veeson Energy Systems, CIVIL APPEAL NO.
3595 OF 2018.........................................................................................................................5
Tjong Very Sumito v. Chan Sing En. [2017] SGHC91 14.......................................................15
Tokios Tokelés v. Ukraine [2005] ICSID Case No. ARB/02/18 Procedural Order No. 3.........9
Tokios Tokelés v. Ukraine, [2005] ICSID Case No. ARB/02/18, Procedural Order No. 3.......9
Tomolugen Holdings Ltd & Ors. v Silica Investors Ltd & Ors. [2015] SGCA 57..................14
Statutes
Article 25, CISG.......................................................................................................................16

CISG, Art 25............................................................................................................................10
CISG, Art 79............................................................................................................................10
Commercial Arbitration Act 1998, Sec. 4..................................................................................2
Commercial Arbitration Act 1998, Sec. 4..................................................................................2
Hong Kong AO, Section 2GB(1)(a)...........................................................................................8
Iranian Constitution, Art. 139....................................................................................................2
Page | viii
Ireland AA 1998, Section 7(2)...................................................................................................8

Nomoyi v Mbuqe [1993] 4........................................................................................................11
Saudi Arabian Law of Arbitration, Sec. 10................................................................................2
SIAC Rules 2016......................................................................................................................13
Singapore International AA, Section 12(1)................................................................................8
Singapore International Arbitration Centre, R 27(j)..................................................................8
UNCITRAL, Art 17...................................................................................................................8
UNIDROIT Principles 2016, Art. 4.6........................................................................................4
UNIDROIT Principles, 2016, Art. 3.2.7....................................................................................2
Reports
P. 7, Case Record.....................................................................................................................11
Practice and Standards Committee, Applications for Security for Costs, Para 7-8.................10
Report of the Insolvency Law Committee, March 2018, Para 5.1.............................................7
The Report of the Bankruptcy Law Reforms Committee Volume I: Rationale and Design
(November 2015), Para 6.4.1.1..............................................................................................6
The report of the Bankruptcy Law Reforms Committee Volume I: Rationale and Design
[2015], Para 6.4.1...................................................................................................................6
William A. Voxman, Jurisdiction over a Parent Corporation in Its Subsidiary's State of
Incorporation........................................................................................................................15
Online Articles
Bernard Hanotiau and Olivier Caprasse, 'Arbitrability, Due Process, and Public Policy Under
Article V of the New York Convention' pp. 721 - 741, Journal of International Arbitration,
(© Kluwer Law International; Kluwer Law International 2008, Volume 25 Issue 6)...........1
Kia Jeng Koh, Extending Your Reach To The "Invisible Parties" To The Arbitration
Agreement............................................................................................................................15
Shaun Lee, Pathological Arbitration Clauses.............................................................................3
Singapore High Court Rejects Attempt By Company Insider To Pierce The Corporate Veil,
available at < http://www.conventuslaw.com/report/singapore-high-court-rejects-attempt-
by-company/> accessed 12 February 2019..........................................................................15
Stavros Brekoulakis and Catherine Rogers, ‘Third-Party Financing in ISDS A Framework for
Understanding Practice and Policy’ (2009)
<https://www.jus.uio.no/pluricourts/english/projects/leginvest/academic-
Page | ix
forum/papers/papers/13-rogers-brekoulakis-tpf-isds-af-13-2019-version-2.pdf> accessed
5th January 2020;...................................................................................................................9
W. Craig, W. Park & J. Paulsson, ‘Annotated Guide to the 1998 ICC Arbitration Rules 137’
[1998] <http://www.kluwerarbitration.com/document/KLI-KA-Born-2014-Ch17>
accessed 17th January 2020...................................................................................................9
Books
Albert Jan vanden Berg, Yearbook Commercial Arbitration, vol. XXIII (Kluwer Law
International 1998), p. 105...................................................................................................10
Christoph Brunner, Commentary on UN Sales Law, Art 29, para 1........................................19
CISG Digest of Case Law 2016, pg 237..................................................................................19
DiMatteo Larry, Contractual Excuse Under the CISG, Impediment, Hardship, and the
Excuse Doctrines, Pace International Law Review, Vol. 27, 2015, pg. 274.......................18
Frédéric Eisemann, “La clause d’arbitrage pathologique” in Essais in Memoriam Eugenio
Minoli [1974].........................................................................................................................3
Gary Born, International Commercial Arbitration p. 736 (2nd edn, Kluwer Law International
2014),.....................................................................................................................................1
Herbert Kronke, Patrricia Nacimiento, Dirk Otto & Nicola Christine Port (ed), Recognition
and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York
Convention P. 59 (Kluwer Law International 2010),.............................................................3
HONLET, “Recent decisions on third-party funding in investment arbitration” (Vol. 30,
2015)......................................................................................................................................9
Ingeborg Schlechtriem and Peter Schwenzer, Commentary on UN International Sale of
Goods p. 431 (Ingeborg Schwenzer ed.,4th edn., 2016)......................................................16
J. Waincymer, Procedure and Evidence in International Arbitration (2012) p. 647................9
Joseph Lookofsky, Understanding the CISG, para 6.8 (Walters Kluwer, 2015 Worldwide
Edition).................................................................................................................................17
Macromex Srl v Globex International Inc, AAA, [2007], CISG Online 1645........................19
Margeret M. Moses, ‘The principles and practice of International Commercial Arbitration’
(1st ed CUP 2008), p. 8...........................................................................................................1
Nomoyi v Mbuqe [1993] 4 SA 93...............................................................................................9
Rimke Joern, Force majeure and hardship: Application in international trade practice with
specific regard to the CISG and the UNIDROIT Principles of International Commercial
Contracts, pg. 220................................................................................................................18
Page | x
UNCITRAL Legislative Guide on Insolvency Law, Pg. 84........................................................5
Other Authorities
Case Record, p 10....................................................................................................................16

Cl. Ex. C6.................................................................................................................................16
Cl. Ex. C7.................................................................................................................................16
P. 13, case record.....................................................................................................................15
P. 33, Case Record...................................................................................................................14
P. 8, Case Record.....................................................................................................................14
Page | xi
STATEMENT OF FACTS
PARTIES
1. Arcebor Power Private Limited [hereinafter the “Claimant”] is incorporated under the
laws of Xanier and owns a major manufacturing unit there. The Claimant is a market
energy leader and owns a majority of power utilities in Xanier.
2. Renvidora National Power Company Limited [hereinafter the “Respondent”], is a
company wholly owned by the Government of Yevadu, incorporated in Yevadu. It
works under the authority and directions of the Ministry of Power of the Government
of Yevadu. The Respondent owns and operates thermal power plants in remote and
hilly areas of Yevadu. One of the thermal power plants is also located in Tullyland.
THE AGREEMENT
1. In 2015, the Respondent entered into an agreement with the Claimant for supply of
parts for the Tullyland Thermal Power Plant and maintainance of the Frame 15x
Turbines for the period of 15 years.
2. Among other things, the Agreement stipulated that the Claimant would send officials
every year to test and monitor the plant [“Annual Inspection”], on the basis of which a
requisition list would be made for the supply of requisite parts. Clause 3 of the
agreement provided that the Respondent would send a purchase order 15 days prior to
the end of every quarter, on the basis of which the Claimant would send the parts.
Clause 3 also mandated that the Claimant had to supply the parts in such a manner so
as to ensure more than 85% plant availability.
THE DISPUTE
1. In the end of 2017, the Claimant introduced a new restructuring policy under which
rather than sending officials to the plant, the assistance would, provide remote access
for forming the requisition list. The Respondent accepted these changes as a welcome
initiative.
2. At two instances, namely the first and the second quarter of 2018, the Respondent did
not issue the purchase order for supply of parts but the Claimant still delivered the
parts.
Page | xii
3. In the financial year of 2018, a trade war ensued between Xanier and Zorastra which
intensified over a period of time, hence increasing the expenses for the Claimant.
Because of this, the Claimant requested for renegotiation of the agreement.
4. After the Claimant delivered the parts two weeks late for the first quarter of 2019
because of financial difficulties, the Respondent terminated the Agreement.
5. The Addendum to the Agreement amended the dispute resolution clause, stating that
all the disputes would be referred to arbitration if the managerial decisions fail. The
Defendant contends that the clause is invalid because of being pathological.
Page | xiii
ISSUES RAISED
I.
WHETHER THERE IS A VALID AGREEMENT IN EXISTENCE BETWEEN THE

PARTIES WHICH REFERS THE DISPUTES TO ARBITRATION UNDER THE AEGIS
OF SIAC?
II.
WHETHER THE INSOLVENCY PROCEEDINGS UNDERWAY AGAINST THE

RESPONDENT IN YEVADU BARS THE JURISDICTION OF THIS TRIBUNAL?
III.
WHETHER THE CLAIMANT IS UNDER AN OBLIGATION TO DISCLOSE ITS

SOURCE OF FUNDING FOR PURSUING THESE ARBITRATION PROCEEDINGS
AND SHOULD THE TRIBUNAL ORDER SECURITY FOR LEGAL COSTS?
IV.
WHETHER THE MINISTRY OF POWER, GOVERNMENT OF YEVADU MAY BE

JOINED AS A PARTY TO THE PRESENT ARBITRAL PROCEEDINGS?
V.
WHETHER THE CLAIMANT’S CONDUCT BREACHED THE AGREEMENT AND

WHETHER THE RESPONDENT WAS JUSTIFIED IN TERMINATING THE
AGREEMENT?
Page | xiv
SUMMARY OF ARGUMENTS
I. THERE IS NO VALID AGREEMENT IN EXISTENCE BETWEEN THE
PARTIES WHICH REFERS THE DISPUTES TO ARBITRATION UNDER
THE AEGIS OF SIAC.
The Arbitration Clause 1.0 in the addendum is not valid and cannot be used to refer
the disputes arising between the parties to arbitration under the aegis of SIAC. This is
contended because the respondent did not possess the authority or have capacity to
enter into the arbitration agreement without the state’s approval which it failed to
receive. Further, the knowledge of this lack of authority possessed by the claimant
further compounds the effect of this lack of capacity of the respondent as it must be
interpreted through the UNIDROIT Principles. Even if the addendum is considered
valid, the pathology of its clause 1.0 is so grave that it cannot be interpreted to be
made valid as the non-existent institution of Singapore Arbitration Centre cannot be
inferred conclusively as any existing arbitration institution and hence the arbitration
clause of the Agreement should govern the dispute.
II. THE CLAIMANT IS UNDER AN OBLIGATION TO DISCLOSE ITS

SOURCE OF FUNDING FOR PURSUING THESE ARBITRATION
PROCEEDINGS AND THE TRIBUNAL SHOULD NOT ORDER SECURITY
FOR LEGAL COSTS.
The tribunal has the power to order security for costs under rule 27(j) of the SIAC
Rules. It is argued that if the tribunal does not order security for costs, it would lead to
irreparable harm to the respondent. It is also argued that there is a possibility of the
respondents succeeding on the merits of the case. Further, the claimant, because of its
bad financial state will not be able to satisfy an adverse costs award in case it loses
and thus, the tribunal should order security for costs.
The respondent has sought disclosure of the source of funding of the Claimant since it
believes that the claimant is being funded by a third party. Such a request should be
granted as the request is founded on the grounds that the claimant is under an
obligation to disclose its source of funding as the evidence provided by the respondent
is sufficient to reasonably believe the existence of third-party funding and also the
disclosure is relevant to the outcome of seeking costs [A]. Also, the Tribunal should
order the claimant to provide security for costs as if it does not, the respondent will
Page | xv
suffer irreparable harm and the claimant does not have the ability to satisfy an adverse
costs award [B].
III. THE TRIBUNAL IS DEVOID OF JURISDICTION OWING TO THE ORDER
OF THE NCLT REGARDING INSOLVENCY PROCEEDINGS.
In accordance with the insolvency application filed under Section 7 of the IBC by the
financial creditor, the NCLT, Nedista had declared a moratorium against the corporate
debtor/respondent which prohibits the institution and continuation of any suits or
proceedings against Respondent in order to keep it as an ongoing entity. The claims
here amount to institution of arbitration proceedings barred under Section 14 and the
said proceedings do not fall under the exception to Section 14.
IV. THE MINISTRY, GOVERNMENT OF YEVADU MAY NOT BE JOINED AS

A PARTY TO THE PRESENT ARBITRAL PROCEEDINGS.
The claimant has sought a joinder under rule 7.8 of SIAC Rules. In order for a request
of joinder to succeed, the SIAC Rules make it necessary for the consent of all the
parties, including the party to be joined, to be taken or the additional party must be
prima facie bound by the arbitration Agreement. It is clear from the RESPONDENT’s
response to the CLAIMANT’s request for a joinder of parties that the former does not
consent to such a joinder. From the Ministry’s actions also, it is clear that it never
intended to be a part of the arbitration proceedings as it was never directly involved in
the contractual negotiations, execution and payment between the CLAIMANT and the
RESPONDENT. Further, it is argued that the respondent is not an alter-ego of the
Ministry and thus, must not be added as a party to the arbitral proceedings.
V. THE RESPONDENT IS JUSTIFIED IN TERMINATING THE AGREEMENT

Article 25 of the CISG provides that for a breach to be fundamental, it must cause a
substantial depravation which must have been reasonably foreseeable at the time of
entering into the contract. These requirements have not been met in the present case
and hence there is no fundamental breach of contract. Further, the Claimant cannot
claim exception under Article 79 of CISG because it does not include financial
hardship which is a foreseeable part of a long term agreement.
Page | xvi
ARGUMENTS ADVANCED
I. NO VALID AGREEMENT EXISTS BETWEEN THE PARTIES WHICH

REFERS THE DISPUTES TO ARBITRATION UNDER THE AEGIS OF SIAC
The Arbitration Clause 1.0 in the addendum is not valid and cannot be used to refer the
disputes arising between the parties to arbitration under the aegis of SIAC. This is contended
because the RESPONDENT did not possess the authority or have capacity to enter into the
arbitration agreement without the state’s approval which is failed to receive. Also, the
knowledge of this lack of authority possessed by the CLAIMANT further compounds the effect
of this lack of capacity of the RESPONDENT [A]. Even if the addendum is considered valid,
the pathology of its clause 1.0 is so grave that it cannot be interpreted to be made valid as the
non-existent institution of Singapore Arbitration Centre cannot be inferred conclusively as
any existing arbitration institution [B].
A. THE ARBITRATION CLAUSE IN THE ADDENDUM IS INVALID AS LACKS THE
UNEQUIVOCAL CONSENT OF THE RESPONDENT DUE TO LACK ITS OF CAPACITY TO
ENTER INTO THE ARBITRATION AGREEMENT
Arbitration is a creature of consent and this consent must be given freely, knowingly and
competently.1 The capacity to enter into an agreement is an essential element to successfully
concluding any contract.2 Article V(1)(a) provides that recognition and enforcement may be
refused if the parties to the agreement were under some incapacity or if the said agreement is
not valid.3 Lack of capacity, or authority of the signatory to enter into a contract on behalf of
her company would hence render an agreement invalid.4
In the present case, the RESPONDENT made the CLAIMANT aware that any changes can be
incorporated into the contract only with the approval from the company’s high-level
management, including its Board and the Ministry of Power. 5 The addendum to the contract
was presented by the CLAIMANT to the RESPONDENT on the day of the signing of the
1
Margeret M. Moses, ‘The principles and practice of International Commercial Arbitration’ (1st ed CUP 2008),
p. 8.
2
Gary Born, International Commercial Arbitration p. 736 (2nd edn, Kluwer Law International 2014),
3
Bernard Hanotiau and Olivier Caprasse, 'Arbitrability, Due Process, and Public Policy Under Article V of the
New York Convention' pp. 721 - 741, Journal of International Arbitration, (© Kluwer Law International; Kluwer
Law International 2008, Volume 25 Issue 6).
4
In re Herlofson Mgt A/S and Ministry of Supply, Kingdom of Jordan [1991] AMC 2959(1991) 1.102.
5
ExC4
Page | 1
5TH NLIU R.K. TANKHA INTERNATIONAL MOOT
Agreement along with the Agreement itself. 6 This addendum was thus signed without any
permission from the Board or the Ministry since the RESPONDENT did not have any
knowledge of the contents of the addendum prior to signing it and hence could not have
received permission regarding the same.
In order to determine the authority of a CEO, the primary reference must be made to the laws
under which her company is organized.7 Receiving approval from the Ministry is crucial for
the wholly owned subsidiary of the Government to successfully conclude the contractual
clause given the public service intent8 of the RESPONDENT. The CEO of the RESPONDENT,
Stephina Beesly, signed the contents of the addendum without taking requisite approval from
the Board and Ministry. Further, this manifests that the RESPONDENT as a state entity could
not enter into an arbitration agreement without the permission of the state. This permission
requirement is also applicable in jurisdictions such the US 9, Venezuela10, Iran11, Saudi
Arabia12
Article 2.2.6 UNIDROIT Principles, 2016, further provides that there is no liability of the
agent since the CLAIMANT was aware of the lack of authority of the respondent to enter into
the contract without approval or even discussion with its high level management. Moreover,
the Addendum is also one of gross disparity which allows the respondent to avoid it. 13 The
Addendum was signed in a situation of unfair advantage derived by the CLAIMANT from the
RESPONDENT’S urgent need14 to sign the contract. The illustration to Art. 3.2.7 provides that a
governmental company from another country eager to enter into a contract could later avoid it
since it paid higher than the market price. Presently, the Respondent’s urgency to enter into
the Agreement15 led it to sign the Addendum which it does not wish to be bound by and
hence must be allowed to avoid it. This lack of capacity to contract on part of the
RESPONDENT thus renders the addendum invalid.
6
ClEx 5
7
Gary Born, International Commercial Arbitration P. 734 (2nd edn, Kluwer Law International 2014),
8
P. 32, Case Record
9
BV Bureau Wijsmuller v. USA, 1976 A.M.C. 2514 (S.D.N.Y. 1976)
10
Commercial Arbitration Act 1998, Sec. 4.
11
Iranian Constitution, Art. 139.
12
Saudi Arabian Law of Arbitration, Sec. 10.
13
UNIDROIT Principles, 2016, Art. 3.2.7.
14
ClEx.C 4
15
ClEx C4
Page | 2
B. IN ANY CASE, THE PATHOLOGICAL NATURE OF ITS ARBITRATION CLAUSE 1.0

RENDERS THE CLAUSE INCAPABLE OF BEING PERFORMED
i. The clause is so pathological that it cannot be effectively interpreted.
Pathological clauses are arbitration clauses with apparent defect(s) that may disrupt the
smooth progress of the arbitration. 16 According to Frédéric Eisemann, there are four essential
elements of an arbitration clause and the pathology of a clause is defined by the extent to
which it deviates from these elements.17 If no meaning can be can be given to the pathological
arbitration clause, the arbitration agreement can be held to be invalid and inoperable as per
Art. II(3) as well as Art. V(1)(a) of the New York Convention, 1958.18
In HKL Group Co Ltd v Rizq International Holdings Pte Ltd 19, the Singapore High Court
opined that naming of a non-existent institution is a wide deviation from the crucial element
of establishing a clear procedure that allows rapid and efficient arbitration to ensure a
judicially enforceable award. The defect in the dispute resolution clause 1.0 of the addendum
is so grave that the clause refers to a non-existent arbitral institution called Singapore
Arbitration Centre and its non-existent rules. It further does not provide other crucial
specifics for arbitral proceedings such as the number of arbitrators and the language of the
proceedings.
In Marks 3-Zet-Ernst Marks GmbH & Co KG v. Presstek Inc.20, a US court was faced with a
similar situation wherein the arbitral rules referred to were non-existent and erroneously
named and the specific body arbitrating the dispute was not mentioned. The court found the
ambiguous arbitration clause too defective to be enforced. In Ferum-Fracht LLC v. Schenker
LLC21, the Supreme Economic Court of Ukraine held that even if there is an intention on the
part of the parties to arbitrate their disputes, the arbitration agreement would be invalid if it
has principle defects such as inconsistency, uncertainty and ambiguity. In this case, the court
found the ambiguous arbitration clause too defective to be enforced. Likewise, in the present
case, it is then submitted that the arbitration clause 1.0 is so defective as to be inoperable and
16
Frédéric Eisemann, “La clause d’arbitrage pathologique” in Essais in Memoriam Eugenio Minoli [1974]
17
Shaun Lee, Pathological Arbitration Clauses.
18
Herbert Kronke, Patrricia Nacimiento, Dirk Otto & Nicola Christine Port (ed), Recognition and Enforcement
of Foreign Arbitral Awards: A Global Commentary on the New York Convention P. 59 (Kluwer Law
International 2010),
19
[2013] SGHCR 5
20
455 F.3d 7 (1st Cir. 2006)
21
(case No 47/89)
Page | 3
incapable of being performed. Even in pro-arbitration jurisdictions, interpretation cannot

amount to rewriting of the clause or its intention.
ii. The intention of parties to refer the disputes to the arbitral institution of
SIAC cannot be inferred nor interpreted.
The present clause which refers to a non-existent “Singapore Arbitration Centre” cannot be
reasonably interpreted to intend to refer to any specific arbitration institution of Singapore.
There also exist multiple other Arbitral Institutions in Singapore such as Beihai Asia
International Arbitration Centre (BAIAC), Singapore Institute of Arbitrators (SIArb),
International Court of Arbitration of the International Chamber of Commerce, Singapore.
Additionally, as per the principle of contra proferentum22, an ambiguous clause must be

interpreted against the one who drafted the clause. Notwithstanding any federal policy
favoring arbitration, the rule of contra proferentum applies to arbitration clauses just as to
other contractual terms.23 In Mastrobuono v. Shearson Lehman Hutton, Inc.24, the US SC held
that this rule is applied to protect that party who did not draft the ambiguity, from an
unintended or unfair result. The ambiguous dispute resolution clause in the addendum should
preferably be interpreted against the party that drafted such a clause, i.e. the CLAIMANT. To
this effect, the clause cannot be inferred to refer to SIAC as the intended arbitral authority.
The arbitration clause of the Agreement should then govern the dispute resolution between
the parties.
VI. THE TRIBUNAL IS DEVOID OF JURISDICTION OWING TO THE ORDER OF

THE NCLT REGARDING INSOLVENCY PROCEEDINGS.
The RESPONDNET concurs that the contract of 14th January 2015, signed by CLAIMANT and
RESPONDENT, contains an arbitration clause [Ex.C1 Clause 11.0].However, since the
RESPONDENT has entered insolvency proceedings pursuant to the insolvency application[Ex.
R2] filed under Section 7 of IBC by the financial creditor Oriental Bank of Vodora, the
arbitration tribunal becomes devoid of jurisdiction.
The RESPONDENT submits that the declaration of moratorium under Section 14 of IBC against
the RESPONDENT prohibits the institution and continuation of suits as [A] claims against
22
UNIDROIT Principles 2016, Art. 4.6,
23
Karnette v. Wolpoff & Abramson, LLP [2006], 444 F.Supp.2d 640
24
514 U.S. 52 (1995)
Page | 4
Respondent amount to institution of arbitration proceedings barred under Section 14 and, [B]
the proceedings do not fall under the exception to Section 14.
A. CLAIMS AGAINST RESPONDENT AMOUNT TO INSTITUTION OF ARBITRATION
PROCEEDINGS BARRED UNDER SECTION 14.
According to Sec. 14 of the IBC, during the moratorium period, “the initiation of suits or the
continuation or pending suits and proceedings including the execution of any judgment,
decree or order in any court of law, tribunal, arbitration panel or any authority is
prohibited.”25 This strict interpretation of the Hon’ble Supreme Court in upholding the
provision of Section 14 of the Code is seen in the case of Alchemist Asset Reconstruction
Company Ltd. v Hotel Gaudavan Pvt. Ltd.26, where the Court said that, the moratorium that
comes into effect under Section 14(1)(a) strictly prohibits institution or continuation of
pending suits or proceedings against corporate debtor at the moment an insolvency petition is
admitted, which in this case is February 21, 2019. The court clearly mentioned in Alchemist
that “the arbitration that had been instituted after the aforesaid moratorium is non est in
law.”
In the case of Tayal Cotton Pvt. Ltd. v. The State of Maharashtra27, the Bombay High Court
interpreted clause(a) of Sec.14(1) that word ‘proceedings’ will have to be interpreted ejusdem
generis with the words ‘suits’ used earlier. The court added that the phrases ‘order’ and ‘in
Court of law’ will have to be interpreted in a way such that a proceeding which arises the
nature of a suit and orders that are passed in said proceedings and suits and would therefore
encompass arbitral proceedings also.
Some states, like India, in order to see through the effectiveness of the moratorium, have
adopted the approach that it must be broad enough, and apply to all remedies and proceedings
against the debtor and its assets, whether administrative, judicial or self-help.28 This was
affirmed in State Bank of India v. V. Ramakrishnan and Veeson Energy Systems, 29 where the
NCLAT took a broad interpretation of section 14 and recognised the absolute need of giving
a “breathing spell” to the debtor. Hence, in order to fulfil these objectives of the legislations
25
Insolvency and Bankruptcy Code, 2016, Sec 14
26
Reconstruction Company Ltd. v Hotel Gaudavan Pvt. Ltd [2017] AIR SC 5124
27
Criminal Writ Petition 1437 of 2017
28
UNCITRAL Legislative Guide on Insolvency Law, Pg. 84.
29
State Bank of India v. V. Ramakrishnan and Veeson Energy Systems, CIVIL APPEAL NO. 3595 OF 2018.
Page | 5
the moratorium has to come in force in order for the RESPONDENT to recover and be a
running entity.
Additionally, all the creditors in a proceeding, through the time-period of the moratorium,
including secured creditors who may not be part of the list of “qualifying debts” for which an
IRP is sought, will be denied permission to undertake any action to either recover debts or
start any other legal proceedings against the corporate debtor. In effect, the creditor will not
have any remedy with respect to the debt.30 Such debt/default is simpliciter a non-payment of
debt when the same becomes due and includes non-payment of even a part thereof. 31 Even
non-payment of a disputed financial debt when due would constitute a default under the
Code.32 Hence, as in the present case non-payment of the breach of contract as a default will
also fall under said category.
C. THE ARBITRATION PROCEEDINGS DO NOT FALL UNDER THE EXCEPTION TO SECTION 14.
The CLAIMANT in the present case might argue that these proceedings constitute an exception
to Section 14 of the IBC. However, the RESPONDENT humbly submits that (i)the exception of
corporate debtor being benefitted is not applicable here. (ii)the continuity of an existing suit
will be barred as well.
i. THE EXCEPTION OF CORPORATE DEBTOR BEING BENEFITTED IS NOT
APPLICABLE HERE.
The RESPONDENT would like to highlight that the intention of the legislature behind such
moratorium is to grant a calm period for insolvency resolution. One of the goals of having an
insolvency law is to ensure the suspension of debt collection actions by the creditors, and
33
provide time for the debtors and creditors to re-negotiate their contract. In that period,
corporate debtor can negotiate and reassess viability without any fear of recovery
enforcement mechanisms adopted by the creditors.
30
The Report of the Bankruptcy Law Reforms Committee Volume I: Rationale and Design (November 2015),
Para 6.4.1.1.
31
Innoventive Industries Limited v. ICICI Bank Limited [2018], Supreme Court Civil Appeal No. 3595 OF 2018
32
Ibid.
33
The report of the Bankruptcy Law Reforms Committee Volume I: Rationale and Design [2015], Para 6.4.1.
Page | 6
Subject to continuity of an arbitration proceeding during the moratorium period, the Delhi
High Court in Power Grid Corporation of India Ltd v. Jyoti Structures Ltd 34 has held that
Section 14 of the IBC would not apply to the proceedings which are “in the benefit of the
corporate debtor and whose conclusion would not endanger, diminish, dissipate or impact the
assets of the corporate debtor in any manner.”
The Court further observed that allowing the moratorium to be lifted in certain cases shall
only be in the interest of the corporate debtor and other parties in the insolvency proceedings
and maximizing the value of the assets, thereby providing a square deal to the aim of IBC.
However, in the present case the outcomes of proceedings in form of USD 5 million as
damages and costs of arbitration would not strengthen the position of the Respondent, but
only further harm the assets hence, defeating the purpose of the moratorium so applied.
Additionally, the notes on clauses for section 14, read as follows: “the purposes of the
moratorium include keeping the corporate debtor's assets together during the insolvency
resolution process and facilitating orderly completion of the processes” and “the moratorium
on initiation and continuation of legal proceedings, including debt enforcement action ensures
a stand-still period during which creditors cannot resort to individual enforcement action
which may frustrate the object of the corporate insolvency resolution process.” Thus, the
intent does not appear to be to debar only those suits or proceedings which affect the assets of
35
the corporate debtor, as these appear to be only one of the components that is barred.
Hence, the continuing suit doesn’t fall under the exception of Section 14 and the proceedings
should immediately be stopped.
ii. The continuity of an existing suit will be barred as well.

Even though Alchemist dealt with an arbitral proceeding instituted after the imposition of
moratorium, in KS Oils Ltd. v The State Trade Corporation of India Ltd. & Ors. 36 , the
NCLAT applied the given principle to pending arbitral proceedings, that is, proceedings that
had commenced before the imposition of moratorium under IBC as well.
Hence, in the present case even though the arbitration notice is dated 15 th February, 2019 and
the NCLT order is dates 21st February, 2019, the moratorium will apply nonetheless.
34
Power Grid Corporation of India Ltd v. Jyoti Structures Ltd [18] 246 DLT 485.
35
Report of the Insolvency Law Committee, March 2018, Para 5.1.
36
KS Oils Ltd. v The State Trade Corporation of India Ltd. & Ors. [2018] 146 SCL 588.
Page | 7
Therefore, according to Section 14(1)(a), claims made against the corporate debtor ex
facie constitutes a bar to the institution of arbitration proceedings.
III. The claimant is under an obligation to disclose its source of funding for pursuing
these arbitration proceedings and the tribunal should order security for legal costs
D. THE CLAIMANT IS UNDER AN OBLIGATION TO DISCLOSE ITS SOURCE OF
FUNDING
i. Evidence is sufficient to reasonably believe the existence of third-party

funding
The Task Force on Third Party Funding’s Report places a general duty to disclose the
existence of a third-party funder in any and all arbitral proceedings. 37 The Task Force
suggested that the party and/or its representative should, through their own volition, disclose
its involvement with a third party funder. 38 Alternatively, the Tribunal, through the authority
vested in it, may order the party to disclose its source of funding when it deems such
disclosure necessary.39 In the present case, the news report by Global Arbitration News 40
proves that the law firm representing the claimant in this matter, Freshgrounds Lockhardt
Bodinger LLP, is being funded by a third party, Viability Finance.
In Muhammet Çap & Sehil Inşaat Endustri ve Ticaret Ltd. Sti. v. Turkmenistan 41, objections
were raised regarding the filing of copies of a number of newspaper and magazine articles by
the Claimant. The tribunal however found the evidences applicable and valid by exercising its
discretion. The tribunal had the capability to assess its relevance as well as its evidentiary
value. Article 19(2) of the Model Law as well as Rule 19.2 and 19.4 of SIAC Rules, 2016
provide that the Tribunal shall determine the reliability, relevance, materiality and weight of
evidence on its own discretion. Article 27(4) of the UNCITRAL Rules, 2010 also grants the
tribunal this broad authority to assess evidence as per its discretion on a case to case basis.
37
Napoleão Casado Filho, ‘The Duty of Disclosure and Conflicts of Interest of TPF in Arbitration’ [2015] at
<http://arbitrationblog.kluwerarbitration.com/2017/12/23/duty-disclosure-conflicts-interest-tpf-arbitration/ >
38
Antje Baumann and Michael M. Singh, 'New Forms of Third-Party Funding in International Arbitration:
Investing in Case Portfolios and Financing Law Firms', Indian Journal of Arbitration Law (© Indian Journal of
Arbitration Law; Centre for Advanced Research and Training in Arbitration Law, National Law University,
Jodhpur 2018, Volume VII Issue 2) pp. 29 - 44
39
Principle A1 & A2, ICCA-Queen Mary Task Force Report on Third-Party Funding in International
Arbitration, The ICCA Report No. 4.
40
ExR3
41
ICSID Case No. ARB 12/6, Procedural Order No. 2 of 23 June 2014.
Page | 8
Further, arbitrators also have the duty to make diligent enquiries to identify whether
disclosure should be ordered by investigating information reasonably available to them. 42 The
newspaper report although is unconfirmed, still provides sufficient grounds to prove that
there may be involvement from an external funder in the present matter. The Tribunal thus
has sufficient authority to consider this evidence as the basis for existence of third party
funding and subsequently possession of relevant funding documents as per Art. 3.3(c)(ii) of
the IBA Rules.
ii. Disclosure is relevant to the outcome of seeking costs
SIAC Practice Note on Arbitrator Conduct in Cases Involving External Funding 43 provides
that the Tribunal may conduct an enquiry into the external funding if it deems it necessary.
Rule 27(c) of SIAC Rules, 2016 accords the same discretionary powers of ordering disclosure
where it finds it necessary. There has been a growing trend for order disclosure of relevant
documents wherever necessary due to the increasing number of cases involving third-party
funding and increased sense of transparency especially to prevent potential arbitrator
conflicts.44
Article 7(d) of IBA Guidelines to encourage arbitrators to seek the requisite information
regarding the existence of third-party funding in order to evaluate and reveal any existing
conflicts of interest. Clause 6 of the SIAC Practice Note mandates that the arbitrator is under
an obligation to disclose any conflicts and prove independence form the parties which
requires that funded party reveals its source of funding. As per Art. 3.3(b) of the IBA Rules a
request for disclosure from the other party if the requested document must be relevant to the
case and material to its outcome. Satisfaction of these requirements in order to avoid any
conflicts of interests is imperative which can only be achieved through disclosure of funding
arrangements. Further, the presence of third-party funding is relevant and material on the
counts of seeking security of costs by the respondent as well as for finding any conflicts of
interest between the funder and the Tribunal45. The claims for security for costs is impacted
42
Richard Kreindler and Aren Goldsmith, Should Parties Disclose the Existence of a Third-Party Funder?
(Disclosure and Conflicts of Interest)', in Sherlin Tung , Fabricio Fortese , et al. (eds), Finances in International
Arbitration: Liber Amicorum Patricia Shaughnessy, (Kluwer Law International 2019) pp. 255 – 272.
43
SIAC Practice Note on Arbitrator’s Conduct in Cases Involving External Funding, Points 5 & 7.
44
Task Force, REPORT OF THE ICCA-QUEEN MARY TASK FORCE ON THIRD-PARTY FUNDING IN
INTERNATIONAL ARBITRATION (ICCA Report No.4, 2018).
45
Jonas von Goeler, 'Chapter 4: Disclosure of Third-Party Funding in International Arbitration Proceedings',
Third-Party Funding in International Arbitration and its Impact on Procedure, International Arbitration Law
Library, Volume 35 (Kluwer Law International 2016) p. 132
Page | 9
gravely by the presence of third party funding since the capacity of claimant to pay of adverse
cost award is effected by third party funding, especially if the funder may have refused to
undertake the funding of such an award.
In Muhammet Çap & Sehil Inşaat Endustri ve Ticaret Ltd. Sti. v. Turkmenistan 46, the
respondent’s request for disclosure of the claimant’s agreement of third party funding was
rejected by the arbitral tribunal also on the ground that the respondent failed to show that the
funding is relevant for the Tribunal’s determination of the issues nor that third party funding
was likely. In the present case, however, the news report sufficiently establishes the fact of
existence of third-party funding. Funding is relevant for the Tribunal’s determination of the
issues such as that of directing the claimant to pay security for costs because the fact that the
claimant is being funded by a third party hints at its bad financial state, which would thus
urge the tribunal to direct the claimant to pay security for costs to the respondent. Thus, the
disclosure of the funding arrangement must be order by the Tribunal due to its relevance and
materiality to the outcome of the dispute.
III. THE CLAIMANT IS UNDER AN OBLIGATION TO DISCLOSE ITS SOURCE

OF FUNDING FOR PURSUING THESE ARBITRATION PROCEEDINGS AND THE
TRIBUNAL SHOULD ORDER SECURITY FOR LEGAL COSTS
A. THE CLAIMANT IS UNDER AN OBLIGATION TO DISCLOSE ITS SOURCE OF FUNDING

i. Evidence is sufficient to reasonably believe the existence of third-party
funding
The Task Force on Third Party Funding’s Report places a general duty to disclose the
existence of a third-party funder in any and all arbitral proceedings. 47 The Task Force
suggested that the party and/or its representative should, through their own volition, disclose
its involvement with a third party funder. 48 Alternatively, the Tribunal, through the authority
vested in it, may order the party to disclose its source of funding when it deems such
46
47
Napoleão Casado Filho, ‘The Duty of Disclosure and Conflicts of Interest of TPF in Arbitration’ [2015] at
<http://arbitrationblog.kluwerarbitration.com/2017/12/23/duty-disclosure-conflicts-interest-tpf-arbitration/ >
48
Antje Baumann and Michael M. Singh, 'New Forms of Third-Party Funding in International Arbitration:
Investing in Case Portfolios and Financing Law Firms', Indian Journal of Arbitration Law (© Indian Journal of
Arbitration Law; Centre for Advanced Research and Training in Arbitration Law, National Law University,
Jodhpur 2018, Volume VII Issue 2) pp. 29 - 44
Page | 10
disclosure necessary.49 In the present case, the news report by Global Arbitration News 50
proves that the law firm representing the claimant in this matter, Freshgrounds Lockhardt
Bodinger LLP, is being funded by a third party, Viability Finance.
In Muhammet Çap & Sehil Inşaat Endustri ve Ticaret Ltd. Sti. v. Turkmenistan 51, objections
were raised regarding the filing of copies of a number of newspaper and magazine articles by
the Claimant. The tribunal however found the evidences applicable and valid by exercising its
discretion. The tribunal had the capability to assess its relevance as well as its evidentiary
value. Article 19(2) of the Model Law as well as Rule 19.2 and 19.4 of SIAC Rules, 2016
provide that the Tribunal shall determine the reliability, relevance, materiality and weight of
evidence on its own discretion. Article 27(4) of the UNCITRAL Rules, 2010 also grants the
tribunal this broad authority to assess evidence as per its discretion on a case to case basis.
Further, arbitrators also have the duty to make diligent enquiries to identify whether
disclosure should be ordered by investigating information reasonably available to them. 52 The
newspaper report although is unconfirmed, still provides sufficient grounds to prove that
there may be involvement from an external funder in the present matter. The Tribunal thus
has sufficient authority to consider this evidence as the basis for existence of third party
funding and subsequently possession of relevant funding documents as per Art. 3.3(c)(ii) of
the IBA Rules.
ii. Disclosure is relevant to the outcome of seeking costs
SIAC Practice Note on Arbitrator Conduct in Cases Involving External Funding 53 provides
that the Tribunal may conduct an enquiry into the external funding if it deems it necessary.
Rule 27(c) of SIAC Rules, 2016 accords the same discretionary powers of ordering disclosure
where it finds it necessary. There has been a growing trend for order disclosure of relevant
documents wherever necessary due to the increasing number of cases involving third-party
49
Principle A1 & A2, ICCA-Queen Mary Task Force Report on Third-Party Funding in International
Arbitration, The ICCA Report No. 4.
50
ExR3
51
52
Richard Kreindler and Aren Goldsmith, Should Parties Disclose the Existence of a Third-Party Funder?
(Disclosure and Conflicts of Interest)', in Sherlin Tung , Fabricio Fortese , et al. (eds), Finances in International
Arbitration: Liber Amicorum Patricia Shaughnessy, (Kluwer Law International 2019) pp. 255 – 272.
53
SIAC Practice Note on Arbitrator’s Conduct in Cases Involving External Funding, Points 5 & 7.
Page | 11
funding and increased sense of transparency especially to prevent potential arbitrator

conflicts.54
Article 7(d) of IBA Guidelines to encourage arbitrators to seek the requisite information
regarding the existence of third-party funding in order to evaluate and reveal any existing
conflicts of interest. Clause 6 of the SIAC Practice Note mandates that the arbitrator is under
an obligation to disclose any conflicts and prove independence form the parties which
requires that funded party reveals its source of funding. As per Art. 3.3(b) of the IBA Rules a
request for disclosure from the other party if the requested document must be relevant to the
case and material to its outcome. Satisfaction of these requirements in order to avoid any
conflicts of interests is imperative which can only be achieved through disclosure of funding
arrangements. Further, the presence of third-party funding is relevant and material on the
counts of seeking security of costs by the respondent as well as for finding any conflicts of
interest between the funder and the Tribunal55. The claims for security for costs is impacted
gravely by the presence of third party funding since the capacity of claimant to pay of adverse
cost award is effected by third party funding, especially if the funder may have refused to
undertake the funding of such an award.
In Muhammet Çap & Sehil Inşaat Endustri ve Ticaret Ltd. Sti. v. Turkmenistan 56, the
respondent’s request for disclosure of the claimant’s agreement of third party funding was
rejected by the arbitral tribunal also on the ground that the respondent failed to show that the
funding is relevant for the Tribunal’s determination of the issues nor that third party funding
was likely. In the present case, however, the news report sufficiently establishes the fact of
existence of third-party funding. Funding is relevant for the Tribunal’s determination of the
issues such as that of directing the claimant to pay security for costs because the fact that the
claimant is being funded by a third party hints at its bad financial state, which would thus
urge the tribunal to direct the claimant to pay security for costs to the respondent. Thus, the
disclosure of the funding arrangement must be order by the Tribunal due to its relevance and
materiality to the outcome of the dispute.
54
Task Force, REPORT OF THE ICCA-QUEEN MARY TASK FORCE ON THIRD-PARTY FUNDING IN
INTERNATIONAL ARBITRATION (ICCA Report No.4, 2018).
55
Jonas von Goeler, 'Chapter 4: Disclosure of Third-Party Funding in International Arbitration Proceedings',
Third-Party Funding in International Arbitration and its Impact on Procedure, International Arbitration Law
Library, Volume 35 (Kluwer Law International 2016) p. 132
56
Page | 12
VII. MINISTRY, GOVERNMENT OF YEVADU MUST NOT BE JOINED AS A

PARTY TO THE PRESENT ARBITRAL PROCEEDINGS.
The CLAIMANT has sought a joinder under rule 7.8 of SIAC Rules. In order for a request of
joinder to succeed, the SIAC Rules make it necessary for the consent of all the parties,
including the party to be joined, to be taken or the additional party must be prima facie bound
by the arbitration Agreement. 57 It is clear from the RESPONDENT’s response to the
CLAIMANT’s request for a joinder of parties that the former does not consent to such a
joinder. From the Ministry’s actions also, it is clear that it never intended to be a part of the
arbitration proceedings as it was never directly involved in the contractual negotiations,
execution and payment between the CLAIMANT and the RESPONDENT.
A. THE MINISTRY IS NOT PRIMA FACIE BOUND BY THE ARBITRATION AGREEMENT.

The reference to ‘prima facie’ establishes a relatively low threshold for Rule 7.1(a) to be
engaged: the SIAC Court only needs to consider whether there exists an arbitration clause
which is valid and covers the dispute at hand and the non-party concerned; it does not need to
make an actual determination of the existence and scope of the arbitration agreement in
question.58
In the present case, the arbitration clause does not cover the non-party concerned and due to
the same, it must be concluded that the additional party is not prima facie bound by the
arbitration agreement.
E. THERE WAS NO INTENTION TO JOIN THE MINISTRY TO THE ARBITRAL PROCEEDINGS.

A non-signatory can be bound by an arbitration agreement on the basis of the “Group of
Companies” doctrine, where the conduct of the parties evidences a clear intention of the
parties to bind both the signatory as well as the non-signatory parties.59
Even in the leading case, the SC held that the words “under and in connection with”
appearing in the arbitration clause in the principal agreement was broad to cover the third
parties under the arbitration agreement contained in the mother agreement. 60 In the present
case, however, the arbitration clause states that the ‘parties’ will attempt to negotiate through
high level managerial discussions and if such discussions prove to be unsuccessful, any
dispute arising between the parties shall be referred to arbitration. The term ‘parties’ is
57
SIAC Rules 2016
58
Tomolugen Holdings Ltd & Ors. v Silica Investors Ltd & Ors. [2015] SGCA 57.
59
Jes & Ben Groupo Pvt. Ltc. v. Hell Energy Magyarorzag KFT. (Hell Hunhry Ltd.) & Anr., CS (COMM)
257/2019
60
Chloro Controls Pvt. .Ltd v. Severn Trent Water Purification [2013] 1 SCC 641
Page | 13
inclusive only of the claimant and the RESPONDENT and thus, the scope of the arbitration
clause has been narrowed down to not have any third party join the arbitration proceedings.61
The lack of intent on part of the required parties, thus, must not allow the Ministry to be
joined as a party to the arbitral proceedings.
F. RESPONDENT IS NOT AN ALTER-EGO OF THE MINISTRY.

"Piercing the corporate veil" refers to the situation where the company's separate legal
personality can be disregarded, and the individual shareholders can be made personally liable
for the acts of the company.62 When the company is used as an extension or alter ego of its
controller to carry out his own business, the corporate veil can be pierced so as to impose
liability on the controller under the contract and the arbitration Agreement. 63 If the separation
between the parent and the subsidiary is fictious, they are, for practical purposes, the same
entity64. However, the separation in the present case is not fictious as the respondent and
ministry do not share the relationship of alter-ego.65
In Tjong Very Sumito v. Chan Sing En, the court allowed the piercing of corporate veil on
the basis of alter ego observing that the two entities, in reality, did not operate as two separate
entities.66
In the present case, however, the RESPONDENT, as per clause 3 of the Agreement was only
supposed to ‘consult’ the ministry before issuing a purchase order or for making any other in
the Agreement.67 This means that the RESPONDENT could also act contrary to the advice given
by the ministry and the final decision-making power was in the hands of the RESPONDENT
itself.68 Even though the termination of the Agreement was done pursuant to the intructions
given by the Ministry, the termination clause in Agreement, does not, in any way, obligate
the RESPONDENT to give effect to termination only after the approval of the Ministry. Thus,
the RESPONDENT and Ministry cannot be considered to be acting as one single entity.
61
P. 8, Case Record; P. 33, Case Record.
62
Kia Jeng Koh, Extending Your Reach To The "Invisible Parties" To The Arbitration Agreement.
63
Singapore High Court Rejects Attempt By Company Insider To Pierce The Corporate Veil, available at <
http://www.conventuslaw.com/report/singapore-high-court-rejects-attempt-by-company/> accessed 12 February
2019; Cohen v. TNP 2008 Participating Notes Program, et al., B266702, 2019 Cal.App. LEXIS 76, publication
order 1/31/19; E.I. DuPont de Nemours v. Rhone Poulenc Fiber [2001] 269 F.3d 187
64
Helicopteros Nacionales de Colombia v. Hall [1984], 466 U.S. 408, 416.
65
William A. Voxman, Jurisdiction over a Parent Corporation in Its Subsidiary's State of Incorporation
66
Tjong Very Sumito v. Chan Sing En. [2017] SGHC91 14
67
P. 13, case record.
68
Krushna nanda Mohanty v. state of orissa and ors., 1989 CriLJ 1025
Page | 14
VIII. THE CLAIMANT’S CONDUCT AMOUNTED TO FUNDAMENTAL

BREACH OF THE AGREEMENT.
Article 25 of CISG provides the definition for ‘fundamental breach of contract’, which
constitutes a precondition for avoiding the contract in accordance with Article 49. For there
to be a ‘fundamental breach of contract’, there must exist a breach of contractual obligations,
this breach must cause a substantial detriment to the other party. 69 Also, the detriment caused
must be reasonably foreseeable at the time of entering the contract.70 These conditions intend
to reflect the importance given by the aggrieved party to the fulfilment of its interests under
the contract.71
The Claimant failed to make the delivery for the last quarter of 2018 on time and delivered
the parts in the second week of 2019, after the set time limit was lapsed. 72 This, coupled with
the changes in customer policy, amounted to a fundamental breach. This is because [i] The
respondent suffered a detriment, [ii] the detriment substantially deprived it of what it was
entitled to expect under the contract and [iii] the substantial detriment was reasonably
foreseeable.
A. [I] THE RESPONDENT SUFFERED A SUBSTANTIAL DETRIMENT.
The conduct of the Claimant caused a detriment to the Respondent. Clause 3 of the agreement
provided that the Claimant had an obligation to send an official every year to monitor, test
and inspect the plant and identify the parts to be replaced. On the basis of this, the
Requisition List would be formed. However, the Claimant failed to send an official for
Annual Inspection, citing changes in the customer policy, under which the Claimant would
instead provide remote access.73 The Respondent subsequently raised doubts on the viability
of remote access system due to lack of proper network availability. 74 The new policy worked
towards Respondents detriment and caused a decrease of 5% in the plant availability. This led
to a reduction in plant availability to 93%.
69
Article 25, CISG
70
Id
71
Ingeborg Schlechtriem and Peter Schwenzer, Commentary on UN International Sale of Goods p. 431
(Ingeborg Schwenzer ed.,4th edn., 2016).
72
Case Record, p 10;
73
Cl. Ex. C6
74
Cl. Ex. C7
Page | 15
Further, the Claimant failed to make timely delivery of the parts due for the last quarter of
2018, causing the plant availability to drop to 87%, dangerously close to the minimum 85%
minimum requirement.
Since the Claimant failed to perform the basic requirements set under the agreement, namely
the annual inspection by the officials and the timely delivery of the parts, the Respondent
suffered a substantial detriment.
G. [II] THE DETRIMENT DEPRIVED THE RESPONDENT OF WHAT IT WAS

ENTITLED TO EXPECT UNDER THE CONTRACT
According to Article 25 of CISG, the party affected by the breach must be such as to
substantialy deprived him of what he is entitled to expect under the contract. The
requirements for a detriment are not only met if there is a measurable damage, but also if the
seller's behaviour results in an unfavourable situation for the buyer. 75 Also, the ‘detriment’
does not refer to the loss suffered but instead to the importance of the interest which the
contract and its obligations have created for the promisee.76
Purpose has to be considered when determining whether a party is substantially deprived of
what it was entitled to expect under the contract. 77 Whether or not it was unreasonable for the
buyer to hold on to the contract has not to be measured according to the objective extent of
the damage. Rather the importance of each obligation and the buyer’s interest in it has to be
taken into account.78 In the present case, the performance of Annual Inspection by the
Respondent’s representatives and timely delivery of the requisite parts formed the essence of
the contract and the Respondent was reasonably expected their performance.
H. [III] THE DETRIMENT WAS REASONABLY FORSEABLE

Art. 25 CISG provides that, unless the party in breach did not foresee and a reasonable person
of the same kind in the same circumstances would not have foreseen such a result, the breach
is fundamental. Even if the breach causes a substantial depravation, it wont be fundamental
until if it wasn’t forseable by a reasonable man.
Claimant could have easily foreseen that economic hardships and market fluctuations might
arise in a long term agreement. These could not be a reason for suspending the contractual
75
Joseph Lookofsky, Understanding the CISG, para 6.8 (Walters Kluwer, 2015 Worldwide Edition)
76
Ingeborg Schlechtriem and Peter Schwenzer, Commentary on UN International Sale of Goods p. 409
(Ingeborg Schwenzer ed.,4th edn., 2016).
77
Supra. note 8 at p. 408.
78
Supra note 8 at p. 402
Page | 16
obligations. Further, in a contract where time is of essence, and a deadline has been provided,
the Claimant could have forseen that a late delivery would hamper the Respondents intrests.
Further, the Claimant was also made aware that due lack of network infrastructure, the
remote access system might not be beneficial for the Respondent. Therefore, the substantial
detriment was foreseeable.
IX. THE CLAIMANT COULD NOT AVAIL THE EXCEPTION UNDER

ARTICLE 79 CISG.
Article 79 provides for exceptions to performance of obligations if the seller proves that the
failure was due to an impediment beyond his control and that he could not reasonably be
expected to have taken the impediment into account at the time of the conclusion of the
contract.
In the present case, the Claimant failed to make a timely delivery because of the imposition
of tariffs resulting in financial hardship. However, this does not entitle the Claimant to avail
the exception. This is because financial hardship does not fall within the ambit of Article 79
of CISG and several courts have expressly commented that a party is deemed to assume the
market risks, fluctuations and other cost factors while entering the contract. 79 In various
cases, the sellers have been unsuccessful in claiming that an increase in the cost of
performing the contract should excuse them from damages for failing to deliver the goods. 80
As a matter of fact, the provision for hardship was considered during the drafting process of
the CISG but was later deliberately omitted, which indicates that it is beyond the scope of
Article 79.81
X. THE RESPONDENT IS JUSTIFIED IN TERMINATING THE AGREEMENT.

The Respondent is justified in terminating the agreement because [i] there was a fundamental
breach of contact by the Claimant and [ii] the respondent did not breach the terms of the
agreement .
79
See Bulgarian Chamber of Commerce and Industry, Bulgaria [1998], Unilex; Arbitration Court of the
International Chamber of Commerce [1989] CLOUT case No. 102 ; Oberlandesgericht Hamburg, Germany
[1997], CLOUT case No. 277; Schiedsgericht der Handelskammer Hamburg, Germany [1996], CLOUT case
No. 166
80
Oberlandesgericht Hamburg, Germany [1997], Unilex; Arbitral award No. 6281, Arbitration Court of the
International Chamber of Commerce [1989], CLOUT case No. 102 ; Oberlandesgericht Hamburg, Germany,
[1997], CLOUT case No. 277.
81
Rimke Joern, Force majeure and hardship: Application in international trade practice with specific regard to
the CISG and the UNIDROIT Principles of International Commercial Contracts, pg. 220, available at
https://www.cisg.law.pace.edu/cisg/biblio/rimke.html last accessed 15 January 2020; DiMatteo Larry,
Contractual Excuse Under the CISG, Impediment, Hardship, and the Excuse Doctrines, Pace International Law
Review, Vol. 27, 2015, pg. 274
Page | 17
[i] The was a fundamental breach by the Claimant.

The function of Art. 25 CISG is to allow a contract to be cancelled. 82 Also, under article 49
(1) (a) any fundamental breach as defined in article 25 justifies the avoidance of the contract.
Thus in order for the buyer to have proper grounds to avoid the contract under article 49 (1)
(a), the seller must have failed to perform an obligation (i.e., have breached), and the seller’s
non-performance must substantially deprive the buyer of what he was objectively entitled to
expect under the contract.83 Since these requirements have clearly been met in the present
scenario, the Claimant could avoid the contract pursuant to Article 49(1)(a).
[ii] The Respondent did not breach the terms of the Agrement
Article 29 of CISG provides that a contract can be modified by mere agreement of the parties.
Freedom from requirement as to form by virtue of Article 11 also applies to an agreement to
modify a contract.84 Thus, it is possible to modify a written contract by an oral agreement or
even implicitly under Article 29.85 This is further substantiated by the general principle of
informality which flows from Article 7 of CISG. 86 Clause 3 of the Agreement mandated that
the Respondent had to issue a formal purchase order before every delivery. However, this
requirement was modified when the Respondent didn’t issue a formal purchase order and the
Claimant nevertheless supplied the parts.
82
Supra p. 473
83
CISG Digest of Case Law 2016, pg 237.
84
Macromex Srl v Globex International Inc, AAA, [2007], CISG Online 1645; Ingeborg Schlechtriem and Peter
Schwenzer, Commentary on the UN CISG, p.473, para.4 (Ingeborg Schwenzer ed.,3rd edn., 2010).
85
Austrian Supreme Court [1999], CISG Online-483; Christoph Brunner, Commentary on UN Sales Law, Art
29, para 1.
86
CISG Digest of Case Law 2016, pg 44; Tribunale di Padova, Italy, [2004], at
http://cisgw3.law.pace.edu/cases/040331i3.html; Rechtbank Rotterdam, the Netherlands, [2001], at
http://cisgw3.law.pace.edu/cases/010712n1.html; Bundesgericht, Switzerland [2000], at
http://cisgw3.law.pace.edu/cases/000915s2.html; Compromex Arbitration, Mexico [1996], at
www.uc3m.es/cisg/rmexi2.htm; Oberster Gerichtshof, Austria [1996], CLOUT case No.176.
Page | 18
PRAYER
The Respondent respectfully requests this Tribunal, on the basis of prior and foregoing
written submissions to FIND and DECLARE that:-
1. There is no valid agreement in existence a between the Parties.
2. The insolvency proceedings underway against the Respondent in Yevadu bar the
jurisdiction of this Tribunal.
3. The Claimant is under an obligation to disclose its source of funding for pursuing
these arbitration proceedings and the Tribunal should order security for legal costs.
4. The Ministry of Power, Government of Yevadu is not to be joined as a party to the

present arbitral proceedings.
5. The Claimant’s conduct did breach the Agreement and the Respondent was justified
in terminating the Agreement.
And to ORDER the CLAIMANT to :-
1. Furnish security for legal costs for defending the arbitration by the Respondent.
Page | 19

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MEMORIAL for RESPONDENT

5TH NLIU JUSTICE R.K. TANKHA MEMORIAL

INTERNATIONAL MOOT COURT COMPETITION, 2019

INTERNATIONAL MOOT COURT COMPETITION, 2019

MS. RUTH GREENE (SOLE ARBITRATOR)

THE ARBITRAL TRIBUNAL CONSISTING OF

RENVIDORA NATIONAL POWER COMPANY LIMITED

IV. The claimant’s conduct amounted to fundamental breach of the agreement............15

Agreement Part Supply Agreement

CIRP Corporate Insolvency Resolution Procedure

CISG United Nations Convention on Contracts for the International Sale of

ExC Claimant Exhibit

ExR Respondent Exhibit

IBC Insolvency Bankruptcy Code

ICC International Court of Chambers

IRP Insolvency Resolution Process

Ministry Ministry of Power

NCLAT National Company Law Appellate Tribunal

NCLT National Company Law Tribunal

SIAC Rules Singapore International Arbitration Centre Rules 2016

Task Force ICCA-QUEEN MARY TASK FORCE ON THIRD-PARTY

UNIDROIT UNIDROIT Principles of International Commercial Contracts

PRC People’s Republic of China

Model law UNCITRAL Model Law, 1985 (without amendments)

IBA Guidelines IBA Guidelines for Conflict of Interest, 2014

Article 25, CISG.......................................................................................................................16

Ireland AA 1998, Section 7(2)...................................................................................................8

UNCITRAL Legislative Guide on Insolvency Law, Pg. 84........................................................5

Case Record, p 10....................................................................................................................16

WHETHER THERE IS A VALID AGREEMENT IN EXISTENCE BETWEEN THE

WHETHER THE INSOLVENCY PROCEEDINGS UNDERWAY AGAINST THE

WHETHER THE CLAIMANT IS UNDER AN OBLIGATION TO DISCLOSE ITS

WHETHER THE MINISTRY OF POWER, GOVERNMENT OF YEVADU MAY BE

WHETHER THE CLAIMANT’S CONDUCT BREACHED THE AGREEMENT AND

II. THE CLAIMANT IS UNDER AN OBLIGATION TO DISCLOSE ITS

IV. THE MINISTRY, GOVERNMENT OF YEVADU MAY NOT BE JOINED AS

V. THE RESPONDENT IS JUSTIFIED IN TERMINATING THE AGREEMENT

I. NO VALID AGREEMENT EXISTS BETWEEN THE PARTIES WHICH

A. THE ARBITRATION CLAUSE IN THE ADDENDUM IS INVALID AS LACKS THE

UNEQUIVOCAL CONSENT OF THE RESPONDENT DUE TO LACK ITS OF CAPACITY TO

ENTER INTO THE ARBITRATION AGREEMENT

B. IN ANY CASE, THE PATHOLOGICAL NATURE OF ITS ARBITRATION CLAUSE 1.0

i. The clause is so pathological that it cannot be effectively interpreted.

incapable of being performed. Even in pro-arbitration jurisdictions, interpretation cannot

Additionally, as per the principle of contra proferentum22, an ambiguous clause must be

VI. THE TRIBUNAL IS DEVOID OF JURISDICTION OWING TO THE ORDER OF

A. CLAIMS AGAINST RESPONDENT AMOUNT TO INSTITUTION OF ARBITRATION

PROCEEDINGS BARRED UNDER SECTION 14.

i. THE EXCEPTION OF CORPORATE DEBTOR BEING BENEFITTED IS NOT

ii. The continuity of an existing suit will be barred as well.

D. THE CLAIMANT IS UNDER AN OBLIGATION TO DISCLOSE ITS SOURCE OF

i. Evidence is sufficient to reasonably believe the existence of third-party

ii. Disclosure is relevant to the outcome of seeking costs

III. THE CLAIMANT IS UNDER AN OBLIGATION TO DISCLOSE ITS SOURCE

A. THE CLAIMANT IS UNDER AN OBLIGATION TO DISCLOSE ITS SOURCE OF FUNDING

ii. Disclosure is relevant to the outcome of seeking costs

funding and increased sense of transparency especially to prevent potential arbitrator

VII. MINISTRY, GOVERNMENT OF YEVADU MUST NOT BE JOINED AS A

A. THE MINISTRY IS NOT PRIMA FACIE BOUND BY THE ARBITRATION AGREEMENT.

E. THERE WAS NO INTENTION TO JOIN THE MINISTRY TO THE ARBITRAL PROCEEDINGS.

F. RESPONDENT IS NOT AN ALTER-EGO OF THE MINISTRY.

VIII. THE CLAIMANT’S CONDUCT AMOUNTED TO FUNDAMENTAL

A. [I] THE RESPONDENT SUFFERED A SUBSTANTIAL DETRIMENT.

G. [II] THE DETRIMENT DEPRIVED THE RESPONDENT OF WHAT IT WAS