MEMORANDUM ON BEHALF OF RESPONDENT

Alternative Dispute Resolution (ADR)

_________________________________________________________________________

In the matter of

Cooperand Hofstader (C&H) Architecture and Engineering Services Ltd.

…………………………..................................................................................... CLAIMANT

Versus

Koothrappali and Wolowitz (K&W) Foods Ltd.….….……...............…. RESPONDENT

Counsel for RESPONDENT: Aditya Tanwar & Bhavik Torawane

Submitted To:

Prof. Jharna Sahijwani

Submitted By:

A047 Aditya Tanwar

A069 Bhavik Torawane

____________________________________________________________________________
MEMORIAL ON THE BEHALF OF RESPONDENT

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TABLE OF CONTENTS

LIST OF ABBREVIATIONS.......................................................................................................3

INDEX OF AUTHORITIES.........................................................................................................4

STATEMENT OF FACTS...........................................................................................................5

ISSUES…………………….........................................................................................................8

SUMMARY OF ARGUMENTS..................................................................................................9

ARGUMENTS ADVANCED....................................................................................................10
1) THE ARBITRATOR DOES NOT HAVE THE JURISDICTION TO HEAR THE
DISPUTE.
2) PARTIES OBLIGATION UNDER THE AGREEMENT – BREACH
3) SUMS / DAMAGES DUE UNDER THE ARBITRATATION CLAUSE
BETWEEN BOTH THE PARTIES
4) RISK OF ENFORCEMENT IF THE ARBITRAL TRIBUNAL WERE TO ISSUE
AN AWARD IN FAVOUR OF THE CLAIMANT.

CONCLUSION ON THE MERITS............................................................................................23

REQUEST FOR
RELIEF............................................................................................................23

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LIST OF ABBREVIATIONS

¶ Paragraph
CLOUT Case Law on UNCITRAL Texts
Cl. Clause
NY Convention Convention on the Recognition and Enforcement of

Foreign Arbitral Awards Done at New York, 10 June

1958 (New York Convention 1958)

Ltd. Limited
Ors. Others
pg. Page
Para. Paragraph
Supp. Supplement
i.e. That is
UNCITRAL UNCITRAL Model Law on International

Commercial Arbitration 1985

CISG United Nations Convention on Contracts for the

International Sale of Good

v. Versus
Vol. Volume
w.r.t. With respect to

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 MEMORANDUM ON BEHALF OF RESPONDENT

INDEX OF AUTHORITIES

STATUTES AND TREATIES

CISG Convention on Contracts for the International Sale of Goods,

Vienna, 1980.
New York Convention Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, New York, 1958.
UNCITRAL Model Law UNCITRAL Model Law on International Commercial
Arbitration, 1985.

RULES, LEGISLATION, UN RESOLUTIONS AND CONVENTIONS

CIETAC Arbitration Rules on The China International Economic and

Trade Arbitration Commission, 1956.
UNCITRAL Arbitration Rules on The United Nations Commission on
International Trade Law.
Digest of Case Law on the United Nations Convention on
UNCITRAL
Contracts for the International Sale of Goods 2012 Edition.

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SUMMARY OF FACTS

 Cooper and Hofstader (C&H) Architecture and Engineering Services Ltd. are instituted
in the Republic of Narnia which is specialized in providing architectural services along
with being a consultancy firm. 

 Koothrappali and Wolowitz (K&W) Foods Ltd. is one of the biggest food chains based
in Zindia. The State of Zindia is a majority shareholder and K&W is building a new
restaurant for which it approached C&H along with two other firms concerning
providing advice and hands-on assistance regarding the layout of the new restaurant.

 K&W and C&H entered into an agreement on 15 September 2018, where C&H will
provide consultancy services to K&W following certain stages specified in the
Agreement. the price was a fixed sum of Rs. 150 million to be paid over two years.
K&W paid Rs. 5 lakhs within two weeks of entering into the Agreement. C&H expected
to generate profits of around Rs. 50-60 million on the Agreement, with most of the
profit expected to be generated in the second year of the project. 

 On 20th October 2018, K&W received an email from C&H along with a report on the
progress of the area plan and the Budget. They mentioned in the mail that there will be
an increase in the budget keeping in mind the requirements of the K&W. Earlier, the
budget was kept at 10 Lakhs which was scheduled to be delivered on 30th November
along with the Area plan.

 On 30th October 2018, a general vote ballot was organized in the State of Zindia on the
question whether the State should remain a member of the MERCOSUR, a Regional
Union of neighboring states with reciprocal agreements regarding preferential measures
on trade and investment along with favored treatment for certain goods and services
where Zindia was ousted from MERCOSUR 

 The ousting of Zindia led to the change in the management of K&W. An acting
Government was appointed to manage the said transition. This led to massive protests

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from the side supporting the past Government which paralyzed the working of the
capital for 72 hours.

 Mr. Holmes who was a new representative was appointed to look after undergoing new
projects. He decided that a uniform email be sent to all the firms which were dealing
with K&W stating, “Thank you for your message. Please bear with us as the new team
gets acquainted with K&W's new and ongoing projects. We will revert shortly.”

 The change in the management K&W had a huge impact on the services provided by it
along with various firms backing out in their dealings with K&W, which led to it
running into losses.

 On 18th November 2018, C&H informed K&W that keeping in mind the change in
circumstances, there shall be a delay in submitting the Budget. On a telephonic
conversation with representatives of C&H, K&W agreed to defer the date of Stage 1.

 On 20th December 2018, C&H sent the Area plan report and a tentative Budget to
K&W wherein they also incorporated the additional expenses borne by them due to the
revised requirements of K&W. C&H also tendered an invoice for the work completed to
the date of Rs. 50,00,000. On 25th January 2019, Mr. Holmes sent an email to C&H
stating “Thank you for your message. We are reviewing it and will get back to you.”

 C&H sent a notice to K&W on 15th April 2019 declaring the termination Agreement
terminated and claiming payment of the invoice of Rs. 50, 00, 000 along with the
payment of additional costs of Rs. 2,00,000 incurred by C&H between October 2018 to
April 2019. Furthermore, they also demanded damages Rs. 30 Million for the failure of
K&W to perform its contractual obligations about Stage 1 and loss of profits.

 The Agreement had the following provision: “Article 15: Governing Law and Dispute
Resolution: In the event of any dispute arising under or concerning this Agreement the
Parties will use their best efforts to negotiate an amicable result, the outcome of which
shall be approved by the Zindian Ministry of Food and Agriculture. Should negotiations
not prove fruitful, any Party may refer the dispute to arbitration under the UNCITRAL
Arbitration Rules. The Arbitral Tribunal shall decide the case applying the principles of

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lex mercatoria and good faith in contractual relations. Any dispute relating to the
interpretation of the Agreement shall be decided by the courts of Narnia."

 C&H couriered a Notice of Arbitration to its latest known address which was received
and signed for on 15th June 2016. In its Notice of Arbitration, C&H requested the
Director of Narnia International Centre for Arbitration (NICA) to act as Appointing
Authority and appoint a sole arbitrator along with determining the place of arbitration.

 On 20th June 2019, the NICA acknowledged receipt of the Notice of Arbitration and
invited comments from K&W as to the designation of the Appointing Authority. On 5th
July 2019, having not heard from K&W nor received an indication that emails had
bounced back, the NICA appointed Ms. Amy Farrah Fowler as the Sole Arbitrator. Ms.
Amy Farrah Fowler is a well-respected arbitrator who lectures frequently at arbitration
conferences. On 15th July 2019, Ms. Fowler wrote to the Parties to ask (1) whether
C&H wished for its Notice of Arbitration to serve as its Statement of Claim; (2) whether
K&W intended to participate in the proceedings; and (3) whether the Parties had
comments on the place of arbitration.

 On 30th July 2019, Counsel for C&H also requested that the dispute be decided without
a hearing based on the pleadings given K&W’s lack of participation in the proceedings,
to save costs.

 On 5th August 2019, having received no reply from K&W or indication that emails were
not being received, Ms. Fowler issued a Procedural Order, to the effect that a) The
Notice of Arbitration served as Statement of Claim; b) The place of arbitration was
Narnia; and c) The dispute would be decided on the basis of the pleadings and without a
hearing. She also declared the pleadings closed and that she would proceed to render an
Award.

ISSUES

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Whether the Arbitrator has the jurisdiction to hear the dispute;

II

Whether any Party is in breach of its obligations under the Agreement;

III

Whether there are any sums/damages due under the Agreement

IV

Whether there be a risk of enforcement if the Award was delivered in favour of the Claimant.

SUMMARY OF ARGUMENTS

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A. Herein, a period of 30 days was not given to the RESPONDENT to give a reply to the
CLAIMANT to the designation of appointing authority, the appointment of a sole
arbitrator and the other things stated under Article 4(2). On 15 June 2019,
RESPONDENT accepted the notice of arbitration and on 5th July 2019, NICA
appointed the sole arbitrator.

B. The RESPONDENT humbly submits that the CLAIMANT is in breach of its obligation
under the agreement as it fails to address the Area Plan and the Budget and
RESPONDENT's silence was a clear sign that it considered the agreement has come to
end about the changed circumstances. Despite giving the area plan and budget late, they
managed to give only the tentative budget and not the final budget.

C. The Respondent alleges that Stage 1 of the Agreement scheduled on 30th November,
2018 involved delivery of an area plan and budget which was priced at 10,00,000 and
after a a couple of visits, it had anyhow become visible to the Claimant that the
Respondents had a number of conditions which were unpredicted at the time of entering
the Arbitration Clause and afterward decided that there was a need to reassess the
criterion for the budget and site visit was to be hindered. The Respondents are not liable
to pay any damages based on a hypothetical claim made by the Claimants of loss of
profits as there had been no progress at all.

D. The Respondent submits that there is a risk of enforcement if the Tribunal were to issue
an award in favor of the claimant as there would be a risk of enforcement for violation
of Article V 2(b) of New York Convention, because it will go against the public policy
of India and will thus become unenforceable under the Indian Law. Also, the
enforcement of the agreement would be punishable for the Respondent as it against the
law i.e., Bill 275. 
 

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ARGUMENTS ADVANCED

 THE ARBITRATOR DOES NOT HAVE THE JURISDICTION TO HEAR

THE DISPUTE.

1. The RESPONDENT firstly would wish to submit before the tribunal that in the current case
arbitrator has no jurisdiction to hear the dispute as it lacks the consent of one of the parties
about the classification of designating authority and appointment of an arbitrator. In the present
case on 10th June 2019 CLAIMANT couriered a notice of arbitration which states that the
Director of NICA to act as appointing authority and him to appoint a sole arbitrator and place of
arbitration to the RESPONDENT. It was accepted and signed by RESPONDENT on 15th June
2019. On 20th June NICA acknowledged the receipt of the Notice and invited comments from
the RESPONDENT. On 5th July 2019, NICA appointed Ms. Amy Farrah Fowler as the sole
arbitrator.

2. The RESPONDENT shall communicate to the CLAIMANT a response to the notice of

arbitration within 30 days which includes the response to the information in the notice of
arbitration. The response to the notice of arbitration involves a proposal for designation of
appointing authority, the appointment of a sole arbitrator, etc. [UNCITRAL Arbitration Rules,
Art. 4]. If all parties have not accepted on the choice of an appointing authority within 30 days
after a proposal made, any party may demand the Secretary-General of the PCA to assign the
appointing authority. [UNCITRAL Arbitration Rules, Art.6]

3. Herein, a period of 30 days was not given to the RESPONDENT to give a reply to the
CLAIMANT to the designation of appointing authority, the appointment of a sole arbitrator and
the other things stated under Article 4(2). On 15 June 2019, RESPONDENT accepted the notice
of arbitration and on 5th July 2019, NICA appointed the sole arbitrator. No former consent of
the RESPONDENT was taken by the CLAIMANT concerning the designation of appointing
authority or the appointment of a sole arbitrator. They were not given the chance to respond to
the notice of arbitration to offer anything or agree/disagree upon anything. Certainly, in
accordance to article 4, a period of 30 days is given but hereinbefore the completion of the

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period of 30 days the sole arbitrator was appointed and also no consent was taken in views to
designating authority.
There was a time gap of only 20 days between the receipt of notice and appointment of the sole
arbitrator. So, in agreeing upon the choice of designating authority no consent of the
RESPONDENT was taken and 30 days were not given to them to respond. They could have
waited for them upholding the principle of
“lex mercatoria” and good faith.

4. The arbitral tribunal shall hold oral hearings at an appropriate stage of the proceedings on a
request by a party unless the parties have agreed that no oral hearing shall be held under the
Act, - Art. 24.

In the present case, the counsel for the CLAIMANT requested that the dispute be decided
without even hearing to save the costs and Ms. Fowler issued a Procedural Order agreeing upon
that. The CLAIMANT here represented the wrong picture of the RESPONDENT. Ms. Fowler
gave procedural order that dispute would be decided based on the pleading without a hearing
which is violative of Article 24 of the act as no consent of the RESPONDENT was taken before
deciding that no oral hearings will take place.
Being stated, in the article very clearly that unless the parties have agreed upon the same matter,
the dispute can’t be decided or be uphold without oral hearings.

5. The RESPONDENT further humbly submits that the parties be treated with equality and both
the parties be given a full opportunity to present his case under [ ARB. & CONC. Act, Art. 8]
and in the present case the RESPONDENT was not given the full opportunity to present his
case as the CLAIMANT did not wait for the period of 30 days for the response of the notice and
no consent was taken before appointing of the sole arbitrator. Moreover, the exparte order was
given without taking into consideration the consent of the RESPONDENT.

6. In Yam Seng v international trade corp (EWHC 111 (QB)), “[M]any contracts do not fit [ the
arm’s length] model and involve a longer-term relationship between the parties to which they
make a substantial commitment. Such “relational” contracts …may acquire a high degree of
communication, co-operation and involve expectations of loyalty which are not legislated for in
the express terms but are implicit in the parties’ understanding and necessary to give business
efficacy to the arrangements. Examples of such relational contracts might include some joint

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venture agreements, franchise agreements, and long term distributorship agreements.” At the
heart of the judgment is a realization that there are certain contracts which are fundamentally
different to the traditional “arms’ length” or one-offf transactional contract; contracts premised
on the idea of cooperation, to which good faith is quintessential.

7. As stated above, each party to a contract has an obligation to do everything that the contract
assumes he or she will do to fulfill its purpose , the duty of good faith and fair dealing means,
for instance, that parties cannot escape the vitality of the bargain, lack diligence or slack off,
perform mistakenly on purpose, abuse their power when specifying the terms of a contract, or
conflict with or fail to cooperate in the other party’s performance, the existence of good faith
obligations will ordinarily broaden the circumstances in which the parties are able to terminate
the contract, and seek remedies following such termination: if a party has not dealt justly with
the other, or has acted in a way that undermines the purpose of the agreement, that might not
otherwise entitle the innocent party to terminate. If, though, good faith obligations endure, such
conduct is likely to entitle the innocent party to annul.

 PARTIES OBLIGATION UNDER THE AGREEMENT – BREACH

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 Under Article 25 of United Nations Convention on Contracts for the International Sales
of the Goods if one of the parties committed a breach of contracts it is necessary if it
results in such detriment to the other party as essentially to deprive him of what he is
entitled to expect under that contract.

 The RESPONDENT humbly submits that the CLAIMANT is in breach of its obligation
under the agreement as it fails to address the Area Plan and the Budget and
RESPONDENT’s silence was a clear sign that it considered the agreement has come to
end about the changed circumstances. This lead to depriving him of what he was entitled
to get i.e. the area plan and budget. Stage 1 of the agreement was scheduled to be on the
date of 30th November 2018 regarding the delivery of an area plan and budget.

 The CLAIMANT sent an email to the RESPONDENT concerning the revised

parameters demanding a significant increase in the budget and they requested for the
meeting for scheduling of the new date but the RESPONDENT didn’t reply about the
same. There was a change in management of the RESPONDENT company as the
government stepped down in the country of Zindia.

 The CLAIMANT informed the RESPONDENT about the delay in submitting the
budget considering the changed circumstances over a telephonic conversation. The
CLAIMANT failed in submitting the area plan report and budget on the required date
which was the first stage. They submitted it on 20th December and that too no final
budget was given only tentative budget was given. Despite giving the area plan and
budget late, they managed to give only the tentative budget and not the final budget.

 The CLAIMANT violated article 15 of the agreement which states that-

 In the event of any dispute arising under or concerning this Agreement, the Parties will
use their best efforts to negotiate an amicable result, the outcome of which shall be
approved by the Zindian Ministry of Food and Agriculture.

 Should negotiations not prove fruitful, any Party may refer the dispute to arbitration
under the UNCITRAL Arbitration Rules. The Arbitral Tribunal shall decide the case
applying the principles of lex mercatoria and good faith in contractual relations.

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 In the present case, it is mentioned in the article that the parties will use their best of
efforts to negotiate an amicable result and if they failed to come into any conclusion
then the party may refer to the arbitration but herein there was no prior negotiation done
between the CLAIMANT and RESPONDENT.

 They violated the said provision of the agreement by not negotiating beforehand sending
the arbitration notice and carried forward the proceedings in the absence of the
RESPONDENTs and didn’t even wait for 30 days for the RESPONDENT to give a
response to the notice of arbitration. In accordance to the article 15 of the agreement the
arbitral tribunal shall decide the case applying the principles of lex mercatoria and good
faith in contractual relations but in the present case the principle of lex mercatoria and
good faith is not applied as they were not given the chance of fair hearing and no
consent was taken before the designation of the appointing authority and the
appointment of the sole arbitrator. They were not given 30 days to give a response to the
notice of arbitration so that they can suggest the name of a sole arbitrator or propose
anything further. According to the principles of natural justice, a party should be given a
chance of fair hearing and herein the RESPONDENT didn’t get an opportunity to
present their case at all. The CLAIMANT didn’t even ask for the consent of the
RESPONDENT before deciding the dispute based on pleadings and without a hearing
which violates article 24 of Arbitration and Conciliation Act. The procedural order was
not given according to equity and good conscience.

 In light of the abovementioned reasons, they breached the contract as they failed to
submit the area plan report and the budget and they acted contrary to article 15 of the
agreement.

 SUMS / DAMAGES DUE UNDER THE ARBITRATATION CLAUSE

BETWEEN BOTH THE PARTIES

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1. The Respondents humbly submit that no sum is due to the Claimant according to the
invoice dated 20th December 2018. The Respondent alleges that Stage 1 of the Agreement
scheduled on 30th November, 2018 involved delivery of an area plan and budget which
was priced at ₹ 10,00,000 and after a a couple of visits, it had anyhow become visible to
the Claimant that the Respondents had a number of conditions which were unpredicted at
the time of entering the Arbitration Clause and afterward decided that there was a need to
reassess the criterion for the budget and site visit was to be hindered. On 26th October
2018, during which the site visits were at a halt, the Claimants sent an email to the
Respondents intimating that a significant increase in the Budget was needed and demanded
a meeting wherein they could jot down a new schedule of dates along with the Budget.
Hence, the Claimants failed to deliver the Area plan and decided to stop the work on the
visits in an attempt to meet unforeseen conditions of the Respondents. Following, on 18th
November 2018, the Claimants asserted that there be a setback in the submission of the
Budget but were inadequate to communicate any details to the progress in Plan.

2. The Respondents highlights the claims again that, due to the current Government of Zindia
descending, the working of the capital was non-functional for 3 days. This shift in the
Government and opting-out from the MERCOSUR led to a change in the managing board
of Respondents as well, and new management was appointed to examine into the
undergoing projects. Mr. Holmes, the new representative of the firm communicated to the
Claimants about the changes in the company and said that they'll answer back in some
time. Though, the lack of further communication by the Respondents was wrongly
understood by the other party. In this case, mere silence does not amount to acceptance of
alteration or novation to the agreement. 

3.    The Respondents also humbly submit that on a conversation over telephones with the
representatives of the Claimants, the Respondents only agreed to delay the date of Stage 1.
Nonetheless, they neither directly nor in an intended manner approved the revised Budget
as was expected under the evaluation by the Claimants. On 20th December 2018, the
Claimants eventually sent the Area Plan report and a tentative Budget wherein they
consolidated the additional expenses borne by them which weren’t mutually determined by
both parties. The Claimants also tendered the receipt of ₹ 50,00,000 for the work which
was accomplished. The updated terms of Respondents were considered until the 20th of
October, 2018 whereas the costs were estimated till the 20th December, 2018. In contempt

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of the characteristics of the project and the need for reassessment by the Respondents
as well, the Claimants proceeded with the Area plan exhibiting further added costs on their
own will which were not foreseen by either of the parties at the time of entering the
agreement. Hence, no sums are due under the invoice of December’18.

1.   30 million in lost profits – Datsun Contract

 The Respondent claims that, when the Claimants submitted their proposal, they were
going through the second, out of 5 stages, of a tender process to provide services to
Datsun Inc. in connection with a new automobile plant that they were building in Zindia.
However, having received the request for proposal from the Respondents in connection
with the Zindia project, withdrew their offer to Datsun on their own will.

 The Respondents humbly submit that no profits were lost given that “loss of profits can
be awarded only when it is clear that the rescission is invalid and illegal. Moreover, no
evidence was led in respect of loss of profits and only an estimate has been awarded.
Compensation for loss of profits cannot be based on conjecture, and has to be based on
real evidence.”

 In Ahluwalia Contract (India) vs The Union of India, the arbitrator had rejected ACIL's
claim for loss of profits during the extended period. The arbitrator attained the claim to
be theoretical and the High Court did not accept the contention that the preceding aspect
is not a credible and settled that the claim for loss be damages and will be incumbent on
any party claiming such damages to authenticate the same with a firm conviction.
Hence, the Respondents are not liable to pay any damages based on a hypothetical claim made
by the Claimants of loss of profits as there had been no progress at all.

 Felthouse negotiated to purchase a horse from his nephew. There was a mix-up with the
price, as the uncle offered less than the nephew desired. The uncle gave a definite offer
to the nephew in January, however, no response was given, and no actions were
performed as the horse remained in the possession of the nephew. In February the
nephew sold all of his farm stock in an auction, and the horse, despite the nephew's
instructions that it be reserved, was sold. Felthouse sued the auctioneer, Bindley, in

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conversion to recover the horse. Felthouse was successful at trial, receiving £33, which
Bindley appealed

Held:
 Appeals were allowed and Acceptance cannot be assumed if there is no notification of
acceptance, or implied acceptance through action present.
 You cannot impose obligations on an unwilling party.
 Silence does not amount to acceptance.

Willes, writing for a unanimous court, says that it is clear here that nothing had been done at the
time of the auction to imply that the property had changed hands to the uncle, and the
nephew had given no acceptance. Therefore, with no acceptance or implied acceptance
through actions, the property remained that of the nephew at the time of the auction, and
the uncle has no case against the auctioneer for selling goods that were not owned by the
nephew. If the nephew wanted to enter into the contract he must have given a clear
indication of his acceptance, which he had failed to do.

Govt Of Nct Of Delhi vs M/S Hurryson Enterprises in Delhi High Court 

 RISK OF ENFORCEMENT IF THE ARBITRAL TRIBUNAL WERE TO
ISSUE AN AWARD IN FAVOUR OF THE CLAIMANT.

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 Respondent submits that any potential award in favour of Claimant would most
probably be refused enforcement by the domestic courts in India on the basis of Article
V (2)(b) 1 of the New York Convention (the Convention), i.e. contradiction with Indian
public policy, for two reasons:[A] a violation of procedural public policy and [B]
contradiction with the most basic principles of Indian legal system.

A VIOLATION OF PROCEDURAL PUBLIC POLICY.

 The Respondent humbly submits that the enforcement of the award may also be refused
on the basis of Article V(2)(b) of the conventions which reads as,

 “Recognition and enforcement of an arbitral award may also be refused if the

competent authority in the country where recognition and enforcement is sought finds
that:
o The subject matter of the difference is not capable of settlement by arbitration
under the law of that country; or
o The recognition or enforcement of the award would be contrary to the public
policy of that country.”

 Thus, because of the illegality of the contract according to Bill 275 of India, the
contract violates the public policy of India and an award of enforcing the liquidated
damage clause of such illegal contract cannot be enforced by the court. Further, it is an
accepted principle that ‘public policy’ as a ground of Article V (2)(b) of the Convention
covers also procedural aspects.2

 Article V (2) (b) of the New York Convention of 1958 and Section 7(1)(b)(ii) of the
Foreign Awards Act do not postulate refusal of recognition and enforcement of a
foreign award on the ground that it is contrary to the law of the country of enforcement
and the ground of challenge is confined to the recognition and enforcement being
contrary to the public policy of the country in which the award is set to be enforced.
Applying the said criteria it must be held that the enforcement of a foreign award would
be refused on the ground that it is contrary to public policy if such enforcement would
1
New York Convention, 1958. 28
Ibid.
2
Traxy Euro S.A. vs. Balaji Coke Industry Pvt. Ltd., Federal Court, Australia, (2012) FCA 276

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be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii)
justice or morality.3
 The Delhi High Court in the case of, COSID v Steel Authority of India Ltd 31 held that
the award given violated Indian public policy by imposing damages for actions that
would have supposedly breached Indian export control legislation and hence declared
the award to be unenforceable.
 Public policy as defined by the Supreme Court of India is “The principles of law that
ensure justice, fair play and bring transparency and objectivity and promote probity in
the discharge of public functions would also constitute public policy. It follows that any
rule, contract or arrangement that actually defeats or tends to defeat the high ideals of
fairness and objectivity in the discharge of public functions.”4
 The Respondent humbly submits that the Bill 275 was passed with the intention to
control the increasing percentage of people smoking in India as well as to reduce the
pollution caused by such smoking activities. Bill 275 falls under the category of public
policy rules because it is mandatory and at the same time form part of the State’s public
policy. It is the view of the legislation in India that Bill 275 is part of the public policy
of the Indian government to protect public health & safety.
 Since it falls within the sovereignty of the state, the tribunal should refrain from issuing
the award as the position of the state was clear that the enforcement will violate the
public policy of India.
 It is further contended that if the Tribunal renders an award in the present proceedings
without redirecting the Parties to negotiation, such award would be made contrary to
the procedure agreed upon by the Parties which is set out in Clause 65 of the Contract.
Non adherence to the pre- arbitration procedure served as a ground of enforcement in
the decisions of national courts.

According to Article V of the NYC [1] as it states,

3
Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644 31
AIR 1986 Delhi High Court
4
Board of Control for Cricket in India v. Cricket Association of Bihar, (2015) 3 SCC 251

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“Recognition and enforcement of an arbitral award may also be refused if the competent
authority in the country where recognition and enforcement is sought finds that:  
a) The subject matter of the difference is not capable of settlement by arbitration under the law
of that country, or 
b) The recognition or enforcement of the award would be contrary to the public policy of that
country.” 
 
Furthermore, under Section 34 (2) (b) (ii) of the Arbitration and Conciliation Act , “An arbitral
award may be set aside by the Court only if— the arbitral award is in conflict with the
public policy of India.” and Section 48 (2) (b) of the Arbitration and Conciliation Act states
that the enforcement of a foreign awards may also be refused if the court finds that, “the
enforcement of the award would be contrary to the public policy of India.”
 
 In the current case, if the arbitral bench was to issue an award in courtesy of the
claimant, there would be a risk of enforcement as it would be against the public policy
as it would stand against the interest of State of Zindia as the governing law is the
similar as that of Narnia which is pari materia to the law of India.

 In the case of Renusagar Power Co. Ltd. v. General Electric Co. [1994 Supp. 1 SCC
644] the Supreme Court elaborately dealt with the notion of public policy and stated that
enforcement of a foreign award would be rejected on the ground that it is against to
public policy if such enforcement would be contrary to (i) the fundamental policy of
Indian law; or (ii) the interests of India; or (iii) justice or morality.

Moreover, another landmark case is that of ONGC v. Saw Pipes [AIR 2003 SC 2629] can
be safely categorized as one of the most renowned cases defining the concept of ‘public
policy’ under the Arbitration Act. The Court in the case held that the term ‘public policy’
could not be given a more restricted meaning. The Court’s observation in the case was that
the phrase ‘Public Policy of India’ used in Section 34 in context is required to be given a
wider meaning. It can be stated that the concept of public policy connotes some matter
which concerns the public good and the public interest. What is for the public good or in
public interest or what would be injurious or harmful to the public good or public interest
has varied from time to time. However, the award which is, on the face of it, patently in

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 MEMORANDUM ON BEHALF OF RESPONDENT

violation of statutory provisions cannot be said to be in public interest. Such

award/judgment/decision is likely to adversely affect the administration of justice. Hence,
in our view in addition to narrower meaning given to the term ‘public policy’ in
Renusagar’s case, it is required to be held that the award could be set aside if it is patently
illegal. The result would be – award could be set aside if it is contrary to: –
(a) the fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality, or
(d) also, if it is patently illegal.
 
 In the current case, the state of Zindia possesses majority shares in K&W and hence
K&W is state entity as per Article 12 of the Constitution of India. The respondent’s
restaurant was intended for the public welfare and therefore if the arbitral tribunal
permits an award in favor of the claimant, it will be against the interest of the state as not
only will the state needlessly lose out money but also face unwarranted criticism despite
no fault on its behalf. The interest of the state is remarkably significant and enforcement
of an award that does not keep said interest in mind will, therefore, be against the public
policy of the State of Zindia.

It is important to note that Chapter V of CISG includes exemptions under its section IV Article
79 as it follows
"A party is not liable for a failure to perform any of his obligations if he 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 or to
have avoided or overcome it, or its consequences.
(2) If the party’s failure is due to the failure by a third person whom he has engaged to perform
the whole or a part of the contract, that party is exempt from liability only if:
(a) he is exempt under the preceding paragraph; and
(b) the person whom he has so engaged would be so exempt if the provisions of that paragraph
were applied to him.
(3) The exemption provided by this article affects for the period during which the impediment
exists.

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 MEMORANDUM ON BEHALF OF RESPONDENT

(4) The party who fails to perform must give notice to the other party of the impediment and its
effect on his ability to perform. If the notice is not received by the other party within a
reasonable time after the party who fails to perform knew or ought to have known of the
impediment, he is liable for damages resulting from such non-receipt.
(5) Nothing in this article prevents either party from exercising any right other than to claim
damages under this Convention. "

The writer would like to bring the fact into the light that the changes such reforms in the
Government and opting-out from the MERCOSUR, caused the firm's failure which was
due to an obstruction beyond the firm's control and that the firm could not reasonably be
expected to have taken the impediment into account at the time of the outcome of the
contract or to have avoided or overcome it, or its consequences.
 
 

 
 

  [1] New York Convention, 1958.

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 MEMORANDUM ON BEHALF OF RESPONDENT

CONCLUSION ON THE MERITS

The Arbitral Tribunal does not have jurisdiction to deal with this dispute in light of the 30 days
negotiation period stipulated in the arbitration agreement. Respondent is not liable to pay
liquidated damaged as the conditions prevalent for the non-performance of the contract was
unforeseeable and beyond the control of either of the parties. Hence, the exemption is granted
under Article 79 of CSIG.

REQUEST FOR RELIEF

In the light of the arguments advanced the Respondent requests the tribunal to find and declare
that:

1. The tribunal has does not have any jurisdiction to adjudicate the dispute between the
Claimant & the Respondent.
2. Decide that the Respondent is not liable to pay, as alleged termination penalty.
3. The award if rendered in favour of Claimant will suffer from risk of non enforcement.

4. The Claimant shall pay the costs of arbitration, including Respondent’s expenses for
legal representation, the arbitration fee paid and the additional expenses of the
arbitration as set out

Respectfully signed and submitted by the counsel ____________________________________

Counsel on behalf of the Respondent

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 INDEX OF AUTHORITIES

Bharat Petroleum Bharat Petroleum Corp. Ltd. vs. Great Eastern

Shipping Co. Ltd.
AIR 2008 SC 357
Cited in ¶:43
Corporacion Corporacion Transnacional de Inversiones,
S.A. de C.V. vs. STET International,
S.p.A. (2000),
49 O.R. (3d) 414
Cited in ¶:64, 68
Demerara Demerara Distilleries Private Limited vs.
Demerara Distillers Limited
(2015) 13 SCC 610
Cited in ¶:32
East Mediterranean East Mediterranean Gas S.A.E. vs. Egyptian
General Petroleum Corporation and Egyptian
Natural Gas Holding Company and Israel
Electric Corporation Ltd.
ICC, 18215/GZ/MHM
Cited in ¶:69
Holloway Holloway vs. Chancery Mead
2007
EWHC 2495 (TCC)
Cited in ¶:28
Industrial Industrial Developments Limited vs. The
Ministry of Petroleum Resources of the
Federal Republic of Nigeria
January 2017
Cited in ¶:70

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Lord Lord Hailsham, L.C. in Cassel & Co. Ltd. v.
Broome,
1972
1 All ER 801 (HL) at 823e
Cited in ¶:57
MC Dermott MC Dermott international Inc., vs Burn
Standard Co. Ltd.
2006
11 SCC P.181
Cited in ¶:20
Re Corporacion Re Corporacion Transnacional de Inversiones,
S.A. de C.V. et al. and STET International,
S.p.A. et al.
(1999), 45 O.R. (3d) 183
Cited in ¶:64
Ronald Ronald Elwyn Lister Ltd. vs. Dunlop Canada
Ltd.,
1982 1 S.C.R. 726
Cited in ¶:67
Strategic Outsourcing Strategic Outsourcing, Inc. vs. Continental
Casualty Company
414 F. Supp. 2d 545
Cited in ¶:46
Sulamerica CIA Sulamerica CIA Nacional De Seguros S.A. and
others vs. Enesa Engenharia S.A. and others
2012
1 Lloyd’s Rep 671
Cited in ¶:29
Swiss Swiss Timing Limited vs. Commonwealth
Games 2010 Organizing Committee.
(2014) 6 SCC 677

Cited in ¶:31

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The Bank of India The Bank of India Ltd. vs. Rustom Fakirji
Cowasjee
AIR 1955 Bombay 419
Cited in ¶:43
Travaux Travaux préparatoires, United Nations
Conference on International Commercial
Arbitration, Recognition and Enforcement of
Foreign Arbitral Awards, Comments by
Governments on the draft Convention on the
Recognition and Enforcement of Foreign
Arbitral Awards
E/CONF.26/3/Add.1
Cited in ¶:59

UNCITRAL Rules UNCITRAL Arbitration Rules (2013)

Cited throughout

UNIDROIT Principles UNIDROIT Principles of International

Commercial Contracts Rome, 2010
Cited in ¶:62
Visa Visa International Limited vs. Continental
Resources (USA) Limited
2009
2 SCC 55
Cited in ¶:31

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