TWENTY-SECOND ANNUAL
INTERCOLLEGIATE NEGOTIATION COMPETITION
9-10 DECEMBER 2023

PRELIMINARY MEMORANDUM: ROUND A(ARBITRATION)TEAM AUSTRALIA (ENGLISH)

THE AUSTRALIAN

THE UNIVERSITYTHE UNIVERSITY OF

NATIONAL UNIVERSITYOF SYDNEYTECHNOLOGY SYDNEYON BEHALF OF:

AGAINST:RED CORP.
(NEGOLAND)BLUE INC.
(ARBITRIA)COUNSEL:0

SUMMARY OF SUBMISSIONS
I.
II.
III.
IV.
V.
VI.

BLUE INC. (‘BLUE’) has an obligation to transfer half of the materials extracted and acomplete copy of the data records obtained from Area β to RED CORP (‘RED’) underthe Agreement on Distribution of Lunar Materials and Data (‘the Distribution Agreement’).
RED can withhold payment until BLUE fulfils this obligation, and when RED does pay,
it is not obligated to pay the additional US$10 million discussed in the 7 May 2023
meeting.
The arbitral tribunal should grant RED’S petition for interim measures.
RED is not obligated to make the final payment of US$75 million under the Satellite
Launch Agreement (‘Satellite Agreement’) until BLUE performs its obligations.
Pursuant to the Satellite Agreement, BLUE is obligated to pay US$150 million to RED
which comprises a refund of US$75 million and US$75 million in liquidated damages,
Mr. Bob Orange should be retained as an arbitrator.
CASE I: THE MOON CASE

I. BLUE is obligated to transfer half of the materials extracted and a complete copyof the data records obtained from Area β to RED.
1. The Distribution Agreement requires that the material collected shall be “divided equally”
between RED and BLUE [Exhibit 6 cl 2.1] and that the parties shall have “equal rights toaccess” and “equal rights to sell” the material [Exhibit 6 cl 2.3]. The Distribution Agreement
further provides that the data collected shall be “jointly owned” by RED and BLUE
[Exhibit 6 cl 1.1], that the parties shall have “equal rights to access” the data [Exhibit 6 cl
1.2], and that “[n]either Party shall withhold any portion of the data… [unless] requiredby applicable law” [Exhibit 6 cl 2.3]. This requires that both parties obtain possession
and ownership rights over half the material and data. Thus, in not providing half of thematerial to RED and withholding a copy of the data from RED [Facts ¶20–¶25; Exhibit
13-1] BLUE is in breach of its contractual obligations [art 7.1.1 UNIDROIT Principles ofInternational Commercial Contracts 2016 (‘UNIDROIT’)].
A. The Space Resources Act of Negoland (‘the Negoland Act’) did not makeperformance impossible or otherwise remove BLUE’S obligations to deliver
half the material.
2. The Negoland Act does not render impossible BLUE’S performance of its obligation totransfer half of the material under the Distribution Agreement. The Negoland Act itself does
not render RED’S possession of space materials illegal, or prevent BLUE from transferring
physical possession of the materials to RED. Therefore, the Negoland Act is not a force
majeure event [art 7.1.7 UNIDROIT], and does not make performance of this obligation“impossible in law or in fact” [art 7.2.2 UNIDROIT].
3. The statement by the President of BLUE providing that the Negoland Act prevents RED
from “owning or possessing” space materials [Exhibit 13-1] misinterprets its operation.
The Negoland Act only purports to transfer ownership rights of space resources to thestate [Exhibit 11 art 5], and places obligations on RED to transfer materials it possesses tothe state or otherwise follow state instructions [Exhibit 11 art 5.2]. RED has made clear it
is willing to become subject to the domestic obligations and regulatory consequencesthat result from asserting its right to possession of half the materials [Facts ¶22].

1

4. Whether or not it is impossible for RED to obtain ownership rights will need to be
determined by negotiation between RED and the Negolandian government. Nevertheless,the transfer of possession rights remains possible, and is required to facilitate
negotiations between RED and the Negolandian government. Thus, BLUE continues to bebound by its obligation to provide possession rights over half the material to RED.
B. The Tribunal should determine the materials be distributed in accordancewith the Distribution Agreement.
5. The division of the material should be conducted as contemplated by the agreement
between the parties. Clause 2.2 of the Distribution Agreement requires that the division bemade “based on weight, volume, and/or value as determined by the Parties” [Exhibit 6].
Thus, in the event that the Tribunal accepts RED’S above submissions, the Tribunal
should uphold the parties’ express intention and permit a negotiated division of thematerials.
6. In the alternative and without prejudice to [5], if the Tribunal itself determines thedivision of the materials it should do so in accordance with clause 2.2 of the Distribution
Agreement, which requires that the division be made “based on weight, volume, and/or
value as determined by the Parties” [Exhibit 6]. The Memorandum of Understanding [Exhibit
5 cls 2(i), 2(ii)], in specifying which materials each party is interested in, demonstrates acommon intention [art 4.1 UNIDROIT] to divide the material according to its subjective
value for either party.
7. For BLUE, the material has minimal value other than its financial return to a subsequentpurchaser [Exhibit 13-1]. For RED, it holds intrinsic value for research and determinationof the viability of future business endeavours [Facts ¶19; Exhibit 5]. The single 10 kg
rock will best serve these purposes for RED and should therefore be distributed to RED.
BLUE, which can expect the same sale value regardless of the materials it receives, should
keep the remaining rocks and regolith. Such a division will also ensure both parties
obtain an equal weight of 10 kg.
C. The Arbitrian Order concerning handling of data pertaining to the Moon (‘theOrder’) did not remove BLUE’S obligations to deliver RED a copy of thedata.
i. The Order does not make performance impossible.
8. Under Arbitrian law, BLUE is permitted to distribute the data to RED upon submitting therequired documents [Facts ¶20]. Thus, the Order does not render BLUE’S distribution of
the data “impossible in law” [art 7.2.2 UNIDROIT[ or its non-distribution “required byapplicable law” [Exhibit 6 cl 1.3]. BLUE has simply been required to take an additional
administrative step—submitting the required document to the Government of
Arbitria—in order to fulfil its obligations to distribute the data to RED.
ii. Submitting the required document does not give rise to hardship.
9. A party is only absolved of its contractual obligations for hardship where therequirements for performance become so onerous as to fundamentally alter theequilibrium of the contract [arts 6.2.1, 6.2.2 UNIDROIT]. For an increase in cost of
performance to meet this threshold, it must be a “dramatic rise” in cost, or one that2

makes performance “far more expensive” for one party [art 6.2.2 Official Commentary,
UNIDROIT].
10. Here, the Order and the subsequent government requirement for BLUE to guarantee that
RED will not use the data contrary to Arbitrian national security [Facts ¶20] does notfundamentally alter the equilibrium of the contract or so substantially increase the cost ofBLUE’S performance.
11. While there is a risk of BLUE becoming liable for a fine of US$1 million, this isconditional on the Government of Arbitria deeming RED to have used the data contrary
to national security. Even were this to eventuate, the fine would be insufficient tofundamentally alter the equilibrium of the contract. BLUE has valued a copy of the data at
US$50 million [Facts ¶24], of which the US$1 million fine is only 2%, not including thefurther value BLUE has attained through the use of the data [Exhibit 6 cl 1.2]. Thus, therisk of a US$1 million fine does not absolve BLUE of its obligations under the Distribution
Agreement [art 6.2.1 UNIDROIT].
iii. In the alternative and without prejudice to (ii), the Tribunal should
alter the Distribution Agreement to restore equilibrium.
12. In the alternative and without prejudice to [9]–[11], where the Tribunal does findhardship, it may, if reasonable, adapt the contract to restore its equilibrium [art 6.2.3(4)UNIDROIT]. When adapting a contract to restore equilibrium, the Tribunal should aim
for a ‘fair distribution’ of costs between the parties [art 6.2.3 Official Commentary,
UNIDROIT].
13. Here, the Tribunal should adapt the contract to restore equilibrium and maintaincommercially efficacious contractual relations. The Tribunal may alter clause 1.2 of theDistribution Agreement to restrict RED from using the data contrary to Arbitria’s national
security, or indemnify BLUE against the government fine contingent on RED’S use of thedata contrary to Arbitria’s national security. This adaptation would fairly distribute thechanged costs of performance between the parties and restore equilibrium whilst
maintaining BLUE’S obligation to transfer the data.
II.

RED can withhold payment, as payment is conditional upon the performanceof BLUE transferring materials and data.
A. RED can withhold payment under the Agreement for Cost Sharing for the
Lunar Probe Project (‘Cost Sharing Agreement’) until BLUE fulfils its
obligations under the Distribution Agreement.

14. As established at (I), BLUE has not performed its obligations under the Distribution
Agreement by its continuing failure to deliver the material and data to which RED is entitled[art 7.1.1 UNIDROIT]. RED may withhold performance until BLUE tenders performance[art 7.1.3 UNIDROIT].
15. RED may withhold performance of its obligations under the Cost Sharing Agreement untilBLUE tenders performance of its obligations under the Distribution Agreement. This isbecause the two agreements are necessarily interconnected, forming part of the same
overall project agreement in furtherance of the missions laid out in the Memorandum ofUnderstanding [Exhibit 5]. The two agreements respectively set out the burdens and3benefits borne by and afforded to the parties and their terms inform and give effect toeach other. To separate one agreement as containing obligations independent of theother would perversely distort the commercial equilibrium of the agreement – to expect
the parties to have contracted on the basis that they may incur a cost without receiving
equivalent reward is commercially unreasonable. The parties contracted on a basis ofbalanced participation, investment and reward, and therefore disproportionate
distribution of reward would be perverse to the agreement.
16. Furthermore, the reference to ‘project activities’ [Exhibit 7 cl 3.1] which precede thecalculation of costs, is to be construed to include the transfer of materials and data toreflect the common intention of the parties [arts 4.1(1), 4.3 UNIDROIT]. For RED, theentire purpose of undertaking the project was to acquire the data and materials on theMoon. This would be apparent to BLUE after two years of preliminary negotiations prior
to deciding to work jointly on resource extraction [art 4.3(a) UNIDROIT]. The
preambles, identical in both agreements, likewise ground both within a broader
contractual framework set out by the Memorandum of Understanding. Furthermore, theterms of the Cost Sharing Agreement are premised on and informed by the substantive
obligations set out in the Distribution Agreement and must therefore be interpreted in lightof it [art 4.4 UNIDROIT]. All these factors indicate that the parties’ common intention
was for settlement of funds to be conditional upon the transfer of materials and data.
17. Thus BLUE’s non-performance under the Distribution Agreement entitles RED to withhold
performance under the Cost Sharing Agreement until BLUE performs [art 7.1.3
UNIDROIT].
B. Following from (A) and in the alternative to (I), RED may terminate thecontract without payment.
18. Thus, in the alternative and without prejudice to (I), even if BLUE has been released of its
obligations to deliver the material and a copy of the data as a result of the Negoland Act
and the Order, RED may nevertheless terminate the Cost Sharing Agreement without
providing payment.
19. Though establishing force majeure, impossibility in law may remove a party's obligations
to perform, the remaining party retains the right to terminate the contract [arts7.2.2(3)(a), 7.1.7(2) Official Commentary UNIDROIT]. Since the agreements should beread in tandem, even where BLUE has been removed of its obligation, RED may
nevertheless terminate the Cost Sharing Agreement without providing payment.
C. RED is not liable to pay the additional US$10 million discussed in the May
7th meeting.
20. The Cost Sharing Agreement explicitly provides that it may only be amended by writtenagreement between the parties [Exhibit 7 cl 4.1]. A contract can only be modified inaccordance with its terms or as otherwise provided in the principles [art 1.3 UNIDROIT].
All contractual terms should be given effect [art 4.5 UNIDROIT], and out of respect forthe parties’ clear intention on contracting, “no oral modification” are binding [RockAdvertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24]. Clause 4.1 thus
prevents any remarks during oral discussion on May 7th from amending the monetaryprovisions of the Cost Sharing Agreement.

421. In the alternative and without prejudice to [20], the oral discussion was anyway
inconclusive and insufficiently determinative to effect contractual amendment [art 4.1(1)UNIDROIT]. The RED Project Manager’s statement “we could probably adjust the cost”
is properly construed only as acknowledging the possibility of further negotiation, not asa present offer of new terms [art 4.1.2 UNIDROIT]. As such it is insufficiently definite toconstitute an effective offer of new terms [art 2.1.2 UNIDROIT].
III.

The Tribunal should grant RED’S petition for interim measures.

22. The Tribunal may grant an interim injunction prohibiting BLUE from selling any of thedata or the material extracted from Area β [arts 26(2)(a)–(d) UNCITRAL Arbitration
Rules 2021 (‘UNCITRAL’)] where the Tribunal is satisfied that RED will suffer harm fromthe failure to grant an injunction, that such harm is not adequately reparable by an award
of damages, and that such harm substantially outweighs the harm to BLUE should the
injunction be granted [art 26(3)(a) UNCITRAL]. These elements are satisfied for both(A) the data and (B) the material.
23. As demonstrated by submissions (I) – (II), RED also has reasonable prospects of successin this arbitration [art 26(3)(b) UNCITRAL].
A. The Tribunal should issue an interim injunction prohibiting BLUE fromselling the material to BLACK and The Government of Arbitria.
24. To prevent imminent harm to RED [art 26(2)(b) UNCITRAL] and maintain theenforceability of an arbitral award [art 26(2)(c) UNCITRAL], BLUE‘s sale of materials to
BLACK and The Government of Arbitria must be injuncted.
25. As explained at [5], RED is entitled under clause 2.2 of the Distribution Agreement to jointly

negotiate with BLUE regarding the division of materials, “based on weight, volume,
and/or value”. In contracting prior to negotiations, BLUE unilaterally determined thedivision of materials, to the detriment of RED. If upheld, there is a real risk that these sale
contracts will lead to imminent harm to RED [Facts ¶24], as the dissipation of assets
prevents the transfer of the materials to RED [arts 26(2)(b)–(c) UNCITRAL].
26. Without an injunction, RED would suffer harm not adequately repairable by an award ofdamages [art 26(3)(a) UNCITRAL]. Without access to the materials, RED is unable toconduct desired research and recommence its scientific exploration into semiconductors,
its main business operation [Facts ¶19; Exhibit 5 cl (2)(i)]. Because an award of damages
would not provide a substitute for RED’S uniquely obtained rocks, nor would it provide
the means to research the collected rocks, the essence of RED’S business would be lost
were the injunction not granted.
27. RED would suffer substantially more harm if an injunction were not granted than BLUEwould suffer were the injunction granted [art 26(3)(a) UNCITRAL]. Despite BLUE’S
expression of concern that government support may be withdrawn, following thetermination of the injunction, BLUE would maintain the right to sell its materials to theGovernment of Arbitria [Facts ¶24]. In contrast, without an injunction, RED would be
deprived of the essential benefit for which it entered into the Distribution Agreement[Exhibit 6 cl 2.2]. Further, if BLUE were permitted to sell the material to BLACK, RED
would be placed at a market disadvantage as BLACK is a competitor in the area ofsemiconductors [Facts ¶24].

5

B. The Tribunal should issue an interim injunction prohibiting BLUE fromselling the data.
28. Though each party has equal rights to distribute and benefit from the data [Exhibit 6 cl
1.2], selling the data before RED has obtained a copy undermines the competitive
advantage RED is entitled to expect as one of the first two actors to sell or otherwise
exploit the data commercially. There are finite resources, so early access to the data iscommercially relevant to conducting uncontested mining operations. The unquantifiable
loss of this value distorts the contract’s status quo [art 26(2)(a) UNCITRAL] and cannot
be adequately remedied by an award of damages [art 26(3)(a) UNCITRAL].
29. If the injunction were granted, BLUE would still retain its right to use the data upon the
resolution of the arbitration and so BLUE would not suffer any comparable harm [art26(3)(a) UNCITRAL].
30. In the alternative and without prejudice, to [28]–[29], an injunction should be granted toprevent BLUE transferring any data to the Government of Arbitria. Under article XI of
the Outer Space Treaty, the Arbitrian government has an obligation to inform the public
and scientific community “to the greatest extent feasible and practicable, of the nature,
conduct, locations and results…” of activities conducted in outer space. Upon receipt of
data, the government of Arbitria may be compelled under international law to publicly
distribute some elements of the data. If this data enters the public domain, RED’S ability
to benefit from the data commercially will be undermined.

CASE II: THE SATELLITE CASE
IV.

Pursuant to the Satellite Agreement, RED is not obligated to make the final
payment of US$75 million to BLUE.
A. RED can withhold payment under the Satellite Agreement until BLUE
performs its obligation.

31. Under article 3.1 of the Satellite Agreement, RED’s obligation to pay BLUE US$75 million is“due upon successful orbital insertion” of Red Star. The proper interpretation of thisphrase in the context of the whole Satellite Agreement [art 4.4 UNIDROIT] is to impose on
BLUE a “duty to achieve a specific result” [art 5.1.4(1) UNIDROIT], namely the deliveryof Red Star to the target geostationary orbit [Exhibit 14 art 1.1] for its intended use by
RED as a communications satellite [Facts ¶26].
32. In order for Red Star to function as intended, it must be launched to a specific locationin geostationary orbit. The deliberate use of the term “successful”, and omission ofterms synonymous with “attempt” and “efforts”, in the expression of BLUE’s obligationin article 3.1, demonstrates that the obligation requires a specific result [art 5.1.5(a)UNIDROIT]. Other contract terms in which BLUE “commits to” and “guarantees it will
deliver the Red Star to the specific Geostationary Transfer Orbit” [Exhibit 14 art 8.2
Performance Guarantee cl 1, 2], further support this interpretation of BLUE’S duty as one toachieve the specific result of launching to the specified location in geostationary orbit [art5.1.5(b) UNIDROIT].
33. As the launch service provider, BLUE has sole responsibility for, and control over, theconduct of launch operations, such that RED has no influence over BLUE‘s performance6[art 5.1.5(d) UNIDROIT]. BLUE‘s 95% success rate of launching telecommunication
satellites indicates that the probability of non-achievement is low, which supports theconclusion that the duty is to achieve a specific result [art 5.1.5(c) UNIDROIT]. The
significance of RED’s US$150 million investment supports the conclusion that the duty is
to achieve the specific result of delivering Red Star into the specific geostationary orbit,
and not merely attempting to do so [art 5.1.5(b) UNIDROIT].
34. BLUE’s failure to achieve insertion of Red Star into the target orbit [Facts ¶29] constitutes
non-performance of BLUE’s duty under article 3.1 of the Satellite Agreement [art 7.1.1
UNIDROIT]. As RED’S payment is fixed to occur upon BLUE’s satisfaction of its specificobligation [art 6.1.1(a) UNIDROIT], RED “may withhold its performance until [BLUE] has
performed” [art 7.1.3(1) UNIDROIT].
B. In the alternative, BLUE failed in its duty to use best efforts towards
ensuring the Satellite was successfully inserted into orbit.
35. In the alternative and without prejudice to submission (A), if the duty imposed on BLUEby article 3.1 of the Satellite Agreement is not to ensure a specific result but rather a duty ofbest efforts [art 5.1.4(2) UNIDROIT], BLUE is nevertheless in breach, as it failed toexercise the level of care reasonably expected in the circumstances. Satellites are
high-value assets and achieve their purpose only if they are delivered to a specificlocation. As such, a high standard of care is expected of companies undertaking satellite
launches.
36. A reasonable company would have done more to ensure that Red Star was launchedduring conditions conducive to its successful orbital insertion. A company with BLUE’S
expertise in satellite launching would be aware that increased solar activity and thepossibility of a geomagnetic storm significantly increased the risk to which Red Star
would be exposed during launch [Facts ¶29]. BLUE was aware that should a storm escalate
to a G4 magnitude, it would not have “available technology to protect the launchvehicle” [Exhibit 15]. Consequently, BLUE’S failure to make enquiries into the likelihoodof a geomagnetic storm significantly departs from the standard of care reasonably
expected of a company contracted to perform a satellite launch. BLUE is therefore inbreach of its duty and RED may withhold payment [art 7.1.3(1) UNIDROIT].
C. BLUE’S non-performance is not excused by force majeure and RED maycontinue to withhold payment of the US$75 million.
37. The Satellite Agreement force majeure clause [Exhibit 14 art 6] prevails over the general
UNIDROIT force majeure provision [art 7.1.7 UNIDROIT] and regulates the extent towhich intervening events constitute force majeure. The geomagnetic storm which
occurred on 13 January 2023 [Facts ¶29] did not constitute force majeure under article 6of the Satellite Agreement. As such, BLUE is not excused from liability for the
non-performance of its launch obligations. In order to establish that the geomagnetic
storm of G4 magnitude was a force majeure event, BLUE would have to demonstrate thatthe storm constituted an “unforeseeable circumstance preventing fulfilment of thecontract” and an “event beyond [BLUE’S] reasonable control” [Exhibit 14 art 6.1].
38. The G4 geomagnetic storm is not an “unforeseeable circumstance”, as geomagnetic
storms were clearly within the contemplation of the contract and the parties at the timeof contracting. The Satellite Agreement implicitly allocates the risk of adverse atmospheric
7

conditions to BLUE through BLUE’S contractual guarantee under article 8.2 of the Satellite
Agreement and the Performance Guarantee. Further, BLUE’S specific experience in successfullylaunching satellites into space [Facts ¶7], demonstrates BLUE’S awareness at the time ofcontracting of the risks of a geomagnetic storm occurring and affecting launch
operations.
39. Further, it was within BLUE’S reasonable control to avoid the storm which prevented
BLUE’S fulfilment of its obligation to launch Red Star into the target orbital parameters bylaunching on another day when no possible geomagnetic storm was forecast. Given thatthe launch window had not yet closed [Exhibit 14 art 2.1], the storm’s interference withthe launch could have been avoided and was therefore not “beyond [BLUE’S] reasonable
control”. BLUE’S non-performance is not excused by force majeure, and as such, RED is
not obligated to make the final payment under article 3.1 of the Satellite Agreement.
V.

Pursuant to the Satellite Agreement, BLUE is obligated to pay US$170 million toRED.
A. Under the Performance Guarantee, RED has the right to recover liquidated
damages in the amount of US$75 million.

40. Clause 3(b)(iii) of the Performance Guarantee sets out that “liquidated damages equivalent to100% of the Launch Service Fee” are payable if there is a total loss of Red Star. The total
loss of the Red Star [Facts ¶29] is not excused by an exception in the Performance Guarantee
and therefore RED retains the right to recover liquidated damages under this clause. As
RED has paid US$75 million of the Launch Service Fee to date [Facts ¶27], this is thecurrent payable amount of liquidated damages under clause 3(b)(iv) of the Performance
Guarantee.
i. The Satellite malfunction or anomaly exception in clause 4(a) of the
Performance Guarantee is inapplicable.
41. The vanishing of the Blue Super Rocket No. 5 (“Launch Vehicle”), along with Red Star,
does not constitute a Satellite malfunction or anomaly within the meaning of clause 4(a)of the Performance Guarantee. Clause 4(a) of the Performance Guarantee should be construed
as exempting BLUE from liability only for anomalies in the Satellite arising out of a failure
by RED in constructing Red Star. It would be inconsistent with the nature and purpose of
the Satellite Agreement, and commercially unsound, if BLUE were exempted due toanomalies associated with its own Launch Vehicle [art 4.3(d) UNIDROIT].
42. The anomaly was not an anomaly in the Red Star. The anomaly was initially detected inBLUE’S Launch Vehicle guidance system and was concluded to be an anomaly in the
Launch Vehicle’s sensor [Facts ¶29]. As an anomaly in the Launch Vehicle’s sensor does
not fall within the scope of clause 4(a) of the Performance Guarantee BLUE may not rely on
this exception.

8

ii. The Act of God exception in clause 4(b) of the Performance
Guarantee is inapplicable.
43. The geomagnetic storm of G4 magnitude cannot be characterised as an “Act of God”
and therefore BLUE may not rely on the exception in clause 4(b) of the Performance
Guarantee. An “Act of God” is conventionally understood as “[a]n event due to naturalcauses … so exceptionally severe that no-one could reasonably be expected to anticipate
or guard against it” [Oxford Dictionary of Law, 2018].
44. Although a geomagnetic storm of G4 magnitude is a severe event, BLUE’S decision tolaunch on 13 January 2023, despite the warnings of increased solar activity and reliablepredictions of a possible geomagnetic storm, meant that it failed to take steps within its
reasonable control to “anticipate or guard against [the storm]”. As explained at [39], it
was within BLUE’S reasonable control to launch on a later date within the stipulated
launch window.
B. BLUE cannot invoke article 4.3 of the Satellite Agreement to claim that RED
has waived its claim, as BLUE was grossly negligent in conducting thelaunch services.
45. The Cross-Waiver Clause in article 4.3 of the Satellite Agreement excludes BLUE’S liability“arising out of the launch services” except where BLUE is grossly negligent. The term
“gross negligence” must be given the meaning that a reasonable person in RED andBLUE’S position would give it at the time of contracting [art 4.1(2) UNIDROIT]. Thisshould be interpreted in light of the conventional understanding that gross negligence is“more fundamental than a failure to exercise proper skill and care constituting
negligence”, and typically demonstrated where a party’s actions are “undertaken withactual awareness of obvious risks involved, and with serious disregard to these risks.”[Hellespont Ardent (Red Sea Tankers Ltd v Papachristidis) [1997] 2 Lloyd’s Rep 547 [18]–[19]].
46. BLUE’S (i) staff drinking to excess causing the launch failure on 10 January 2023 [Facts¶28]; (ii) subsequent decision to launch on 13 January 2023 with knowledge of a possible
geomagnetic storm [Facts ¶29]; and (iii) failure to thoroughly investigate and repair
anomalies in the rocket [Facts ¶29] together reflect BLUE’S serious disregard of obvious
risks of which it was aware, constituting BLUE’S gross negligence, such that RED is entitled
to claim for damages.
i. BLUE was grossly negligent in failing to launch on 10 January 2023.
47. Article 2.1 of the Satellite Agreement sets out the “period of time” within which BLUE wasrequired to perform its launch obligations [art 6.1.1(b) UNIDROIT], specifically between
15 December 2022 and 31 January 2023. Within this “launch window” [Exhibit 14 art
2.1] BLUE was obligated to launch the Satellite at a time when “performance could be
rendered” [art 6.1.2 UNIDROIT].
48. It was decided that BLUE would perform the launch on 10 January 2023, a “beautiful day”
on which no geomagnetic storm was predicted [Facts ¶27–¶28]. These circumstanceswere conducive to a successful launch. However, BLUE failed to perform its obligation ata time when circumstances indicated performance could be rendered because its
personnel “had been drinking excessively the day before'' [Facts ¶28].

9

49. BLUE was aware that staff drinking to the point of professional incapacitation was arecurring issue within BLUE which had repeatedly caused launch delays in 2022 [Facts¶29]. BLUE responded to this serious issue only with “warnings” rather than “concretemeasures” to prevent this behaviour [Facts ¶29], thus allowing the problem to continue
and impact the Red Star launch. Noting the limited launch window of 48 days [Exhibit 14
art 2.1] and RED’S significant US$150 million investment in the launch of Red Star
[Exhibit 14 art 3], failing to ensure that its staff were capable of launching on 10 January2023 demonstrates BLUE’S serious disregard for the risk this posed to the successful
launch of Red Star. Consequently, BLUE significantly increased the risk of exposing the
Red Star launch to adverse weather conditions by reducing the launch window to lessthan 21 days.
50. The statement RED made to BLUE “that can’t be helped” [Facts ¶28] must be given themeaning a reasonable person in BLUE’S position would give it in the circumstances [art4.2(2) UNIDROIT]. This statement cannot be reasonably ascribed a meaning other thana conversational professional nicety calculated to maintain a positive working relationship[art 5.1.3 UNIDROIT]. It would be unreasonable to construe this as a concession thatBLUE is not responsible for the conduct of its employees.
ii. BLUE was grossly negligent in launching on 13 January 2023 duringa predicted geomagnetic storm.
51. Following BLUE’S failure to launch on 10 January 2023, BLUE decided to launch Red Star
on 13 January 2023 during a predicted possible geomagnetic storm, which further
constitutes grossly negligent conduct as it had “actual awareness of [the] obvious risks”.
52. BLUE was aware that “reliable space forecasts” indicated a risk of increased solar activity
and the possibility of a geomagnetic storm on 13 January 2023 [Exhibit 16]. As discussed
at [36], BLUE failed to make further inquiries into the precise probability of adverse
weather. Further, it was within BLUE’S reasonable control to reschedule the launch to alater day within the stipulated launch window, as explained at [39] [Exhibit 14 art 2.1].
Choosing to proceed to launch Red Star, with full knowledge of the substantial increased
risk to which Red Star may be exposed, indicates BLUE’S serious disregard for the obvious
risk.
iii. BLUE was grossly negligent in failing thoroughly to investigate andrepair anomalies before launching on 13 January 2023.
53. BLUE failed thoroughly to investigate and repair anomalies in the Launch Vehicle before
launching [Exhibit 16], which, in the context of the launch conditions, contributes toBLUE’S grossly negligent conduct.
54. BLUE’S inadequate investigation of the Launch Vehicle’s guidance system and repairs of
the Launch Vehicle’s sensors resulted in the Launch Vehicle anomaly remaining
unrepaired [Facts ¶29]. The consequence of conducting a Launch Vehicle inspection with
only one person [Facts ¶29] was the inaccurate conclusion that the Launch Vehicle
anomaly had been repaired [Exhibit 15]. This approach, particularly when launching
during a heightened risk of launch failure due to atmospheric conditions [51]–[52],amounts to gross negligence by BLUE as it reflects a serious disregard for the impact
Launch Vehicle abnormalities, an obvious risk, may have on a successful satellite launch.

10

C. Under article 5.1 of the Satellite Agreement, RED has the right to a refund of
the portion of the Launch Service Fee already paid.
55. RED is entitled to a “refund of 50% of the total contract amount” following a launch
failure attributable to BLUE [Exhibit 14 art 5]. A refund of 50% of the total contract
amount equates to US$75 million [Exhibit 14 art 3.1]. Therefore, BLUE must provide RED
a US$75 million refund.
56. The words “launch failure” should be interpreted in “the light of the whole contract” [art4.4 UNIDROIT], the overriding objective of which is the launch of Red Star into a
specific geostationary orbit [Exhibit 14 art 1.1]. Restrictive interpretation of “launch
failure” would be contrary to this overriding intention and at odds with the commitments
made by BLUE in the Performance Guarantee. Accordingly, the incident on 13 January 2023
[Facts ¶29] constituted a launch failure attributable to BLUE, entitling RED to a refund of
US$75 million.
D. Further, pursuant to article 5.2 of the Satellite Agreement, BLUE is liable to apenalty of US$20 million.
57. The launch failure on 13 January 2023 constitutes breach of the Satellite Agreement suchthat BLUE is obligated to pay a penalty of US$20 million [Exhibit 14 art 5.2]. The penalty
clause in article 5.2 was expressly distinguished from the liability cap pertaining todamages in article 4.2 of the Satellite Agreement and clause 3(b)(iv) of the Performance
Guarantee [art 4.1(1) UNIDROIT]. Therefore, the penalty does not fall within the scopeof the liability cap.
VI.

Mr. Bob Orange should be retained as an arbitrator.

58. Arbitrators are required to disclose any circumstances likely to give rise to justifiabledoubts as to their impartiality [art 11 UNCITRAL]. Further, arbitrators are open tochallenge if any circumstances exist that give rise to justifiable doubts as to theirimpartiality [art 12(1) UNCITRAL]. The threshold for “justifiable doubts” is high,namely where a “reasonable and informed third party would [believe] that there is alikelihood that the arbitrator may be influenced by factors other than the merits of thecase” [art 2(c) IBA Guidelines on Conflicts of Interest in International Arbitration 2021 (‘IBA
Guidelines’)].
59. The mere expression of a legal opinion on an issue arising in arbitration is insufficient tocast justifiable doubt on an arbitrator’s impartiality [art 4.1.1 Green List IBA Guidelines].
On 25 September 2023 Mr. Orange made a general comment expressing a legal opinion
in the abstract in the context of a hypothetical factual scenario materially different fromthe one at hand [Facts ¶33]. Mr. Orange made no statements which reflect a particular
view of the parties and specific issues involved in these proceedings. Having regard to thegeneral and hypothetical nature of his comment, no reasonable third party would
conclude that Mr. Orange’s comments demonstrated the influence of a factor beyond themerits of the case.
60. As legal professionals do, Mr. Orange made an academic observation on the content of
the law, suggesting that the bar to proving force majeure in the context of knowledge of alikely geomagnetic storm is high [Facts ¶33]. This observation was neither definitive nor
unequivocal. Further, this comment does not indicate prejudgment of BLUE‘s conduct

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and the strength of its argument, nor does it shed light on Mr. Orange’s own state ofmind regarding BLUE‘s capacity to meet the hypothetical threshold.
61. Moreover, Mr. Orange’s comment pertains specifically to force majeure in the context ofknowledge of a likely geomagnetic storm. By contrast, the forecasts at hand predict thepossibility of a G1 geomagnetic storm, not its likelihood [Facts ¶29; Exhibit 15; Exhibit16]. Mr. Orange’s comment implicitly acknowledges that the probability of risks involved
may influence determination of force majeure, and deals with a hypothetical situationmaterially different from the relevant facts of these proceedings. As such, there are no
circumstances likely to give rise to justifiable doubts as to Mr. Orange’s impartiality, andMr. Orange should be retained as an arbitrator.
62. Requests to remove an arbitrator may be made for tactical reasons. The evidence
suggests that BLUE has formed the view that, owing to Mr. Orange’s critical legal mind
and expertise in the space industry, he will assess the merits of the case and may ruleagainst BLUE on the law. This does not constitute legitimate grounds for removal.

ORDERS SOUGHT
Counsel for RED respectfully request of the Tribunal that:
I.
II.
III.
IV.
V.
VI.
VII.

An arbitral award be granted in the MOON CASE to the effect that BLUE must provide
RED with half the materials, with the division to be determined through negotiation
between the parties, or, in the alternative, with the 10 kg rock being provided to RED.
An arbitral award be granted in the MOON CASE to the effect that BLUE must submit
the required document to the Arbitrian Government, and subsequently provide RED
with a copy of the data.
BLUE’S request for an arbitral award requiring RED to pay US$110 million be rejected.
An interim injunction preventing BLUE from selling the material and data to BLACK
and the Government of Arbitria be issued.
BLUE’S request for an arbitral award requiring RED to pay US$75 million be rejectedin the SATELLITE CASE.
An arbitral award be granted in the SATELLITE CASE to the effect that BLUE is liable
and must pay RED in the amount of US$170 million, which comprises US$75 million
in liquidated damages, a refund of US$75 million and a penalty of US$20 million.
BLUE’S petition to remove Mr. Bob Orange as an arbitrator be rejected.

CERTIFICATE OF VERIFICATION
We hereby confirm that only members of Team Australia whose names are listed below havewritten this memorandum.
Respectfully signed and submitted by Counsel on the twenty-seventh day of November 2023.

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