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Preliminary Memorandum by Blue Corp
Paragraph in the problem is referred as “¶”.
UNIDROIT Principles of International Commercial Contracts 2016 is referred as “U”.
Blue Corp. is referred as “BLUE”
Red Corp. is referred as “RED”
Yellow Corp. is referred as “YELLOW”

β CaseExecutive Summary
In March 1, 2011, BLUE purchased 10 sets of the α-4 and β-4 series from RED and in
January 25, 2013 the RED and BLUE signed a Memorandum of Understanding to provide thetest versions of the α and β series 1 year before their market release, in exchange for feedback
and data from Blue Village. Both parties have continued to cooperate with each other until
August 2016. However, RED refused to provide β-7 though it definitely continued to use thedata and feedback collected at Blue Village for its development.
Meanwhile, BLUE had purchased a set of underwater cameras and sensors from YELLOW
in July 2017 at US$3 million. When YELLOW was short on funds, they borrowed US$3
million from RED, offering its right to BLUE as a collateral. YELLOW went bankrupt andfailed to perform the maintenance from late November. The products became unusable byDecember and BLUE incurred losses of US$3 million.
BLUE’s Submission
BLUE requests an arbitral award that RED shall provide BLUE with β-7.
BLUE’s claim
A. RED shall bear the obligation to provide BLUE with β-7 based on Memorandum ofUnderstanding (Exhibit 6) (hereinafter “MOU”)Article 4.
B. BLUE may request the performance of the obligation.
C. RED’s anticipated rebuttal that the performance of the obligation is unreasonably burdensome.
A. RED shall bear the obligation to provide BLUE with β-7 based on the MOU Article 4.
1. MOU Article 4 stipulates that “when RED upgrades α and/or β series using the feedback and datacollected at the Blue Village, RED will provide the updated as the test version to BLUE”. As for thecase of β-7, RED shall provide BLUE with the test version of β-7 since RED used thefeedback and data collected at the Blue Village for the upgrade of β-6 to β-7.
2. On December 2012, BLUE approached RED to discuss entering an agreement where
RED can get access to feedback and data from Blue Village, getting data that was of highquality and quantity. In exchange, RED agreed to provide BLUE with a test version of
the new upgrade, 1 year before releasing it to other customers (¶25). Consequently, RED
collected the feedback and data at the Blue Village and after finishing research they
provided the upgraded version (α-5, β-5 and α-6, β-6) as a test version to BLUE (¶26¶27). In the dealings between the two companies there was no mention of “how” the data
should be used, “where” it should be used, or “what” it should be used for. Inconclusion, the primary purpose of the contract was for a useful exchange between thetwo parties.
3. Given these preliminary negotiation of the party, subsequent conduct of the party and thenature and purpose of MOU (U.4.1 and U.4.3. (a), (c) and (d)), we can see that MOU
should be interpreted as a contract where BLUE provides feedback and RED provides atest version after using the feedback and data from Blue Village regardless of how, where,
what the feedback and data was used for.
4. For the development of β-7, RED had used the feedback and data that gathered fromBlue Village after providing α-6 and β-6 to Blue (¶33). Thus, in accordance with MOU
Article 4, RED shall provide a test version of β-7 to BLUE.
5. If RED claims that the feedback and data did not make any major contribution to theimprovement of β-7, and so having to provide β-7 is unfair for RED. In response to sucha claim, we would like to argue that RED has the sole discretion whether or not to use or
how to use the data, as it intends, since Article 4 does not specify “how” the data wasused or the “what for” the data was used. In the case of the β-7, irrespective of RED’s
argument, the feedback and data from Blue Village was used, and so RED shall provide atest version of β-7 to BLUE. If such interpretation is unfair for RED, they may easily
avoid the obligation to BLUE by not using the data from Blue Village for updates.
Hence, such an argument from RED lacks legal ground.
B. BLUE may demand the performance of the obligation.
6. BLUE requested that RED shall supply the test version of β-7 and RED refused to do so
and has not yet provided BLUE with β-7. As the agreements do not stipulate when toprovide β-7, the timing should be within reasonable time after the conclusion of thecontract (U6.1.1(c)). Since β-7 was already in use by the RED’s Volleyball and Basketballteams (¶33), we can conclude that the development of β-7 was completed and it isreasonable to assume that the obligation is expected.
C. RED’s anticipated rebuttal that the performance of the obligation is unreasonably
burdensome.
7. RED may argue that BLUE maynot claim the performance of provision of β-7 because
the performance is unreasonably burdensome as the Negoland Sports Agency(hereinafter “Sports Agency”)asked RED to refrain from exporting β-7 and disobeying
the instruction would cause deterioration of its relationship with Sports Agency(U7.2.2(b)).
8. However, the concern of the deterioration of relationship with Sports Agency is just a
remark from Hawk, who is the head of sensor department of RED. The remark itself is
not a fact but a possibility. Hence it cannot be said that the performance is unreasonably
burdensome for RED solely based on this remark.
9. Moreover, “Commentary on the UNIDROIT principles of International Commercial Contracts” 1(hereinafter “Commentary of UNIDROIT”) states that “If the goods or services are of a unique
1 Stefan Vogenauer 『Commentary on the UNIDROIT principles of international commercial contracts(PICC)』（Oxford University Press, 2nd edition, 2015）2and/or irreplaceable character, the non-performing party cannot easily rely upon the exception under Art
7.2.2(b)” (pg. 894 ¶29).
10. U7.2.2(b) should not be easily applied to this case because β-7 series has an irreplaceablecharacter. β-7 is the newest version of β series which is, according to Ruby, world-classtechnology (¶21, 33). β-7 has AI driven analyses, it can transmit the real-time results to
PC or mobile devices, it can achieve all this without physical sensors and it can also help
coaches identify weaknesses and flaws of the players and the opponents. Using β-7,RED’s Volleyball and Basketball teams achieved excellent results in the 2017 Negoland
national league season (¶33). The Sports Agency is willing to go to the extent of
restricting the export of β-7 (¶34). If athletes could easily find out the replacement of β-7,Sports Agency should not have restricted RED from exporting β-7. From the above, it isclear that β-7 is a product that is of unique value and has an irreplaceable character.
11. Further, considering that RED is one of the biggest companies in Negoland and has
developed many kinds of world-class sports-related products, RED is very important for
the Sports Agency to boost Negoland’s sports industry. Given the facts mentioned
previously and considering the α and β series developed by RED requires frequent
maintenance (¶22) and have multiple updates, it is extremely difficult for the Sports
Agency to cut relationship with RED.
12. Considering these factors, U7.2.2(b) should not easily be applied for this case because β-7
series has an irreplaceable character. In addition, RED made a business decision to value
their connection with Sports Agency over their obligation to BLUE, hence it was notunreasonably burdensome for RED.
BLUE’s Submission
BLUE requests that RED should compensate for BLUE’s damage of US$5 million incase RED refuses to perform the Obligation.
BLUE’S claim
D. RED shall compensate for BLUE’s damage of US$5 million.
E. RED’s anticipated refutation that RED may set off the compensation of US$5 million by
BLUE’s obligation to pay US$3 million to RED.
F. BLUE’s response against RED’s refutation that RED may not use the arbitration to set off
its right.
G. BLUE’s response against RED’s refutation that BLUE may also set off the payment of US$3
million by YELLOW’s obligation to pay US$3 million
H. BLUE’s response against RED’s refutation that BLUE may terminate the Exhibit 7
D. RED shall compensate for BLUE’s damage of US$5 million.
13. In case RED does not perform the obligation to provide β-7, RED shall compensate forBLUE’s damage of US$5 million based on Maintenance Agreement (hereinafter “Exhibit5”) Article 7.
14. Though the performance arises from MOU Article 4, Exhibit 5 Article 7 can be applied
for this case as MOU was made as “addition to the existing Maintenance Agreement” (MOU
preamble).
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15. In this case, RED did not perform the obligation to provide β-7 based on Article 4 of
MOU. Therefore, RED shall pay US$5 million under this agreement (Exhibit 5 Article 7).
E. RED’s anticipated claim for Set-off by BLUE’s obligation of US$3 million
16. RED may claim that RED may set off the compensation of US$ 5 million damages byBLUE’s obligation to pay US$ 3 million to RED(U8.1(1)).

Image 1: Simplified explanation of the Set-off by respective corporations

F. BLUE’s response against RED’s refutation that RED may not use the arbitration to
set off its right.
17. However, since there is no arbitration clauses in the Sales Agreement between YELLOW
and BLUE (hereinafter referred to as "Exhibit 7"), RED may not use arbitration to setoff against BLUE.
18. Exhibit 5 Article 12 b stipulates that “Any dispute arising out of or under this contract shall besettled by arbitration”. The account receivable in question here originates from Exhibit 7,
which is totally independent from Exhibit 5 and it is not the scope of “any dispute”
stipulated in Exhibit 5.
19. On the other hand, Exhibit 7 Article 12 states that “The parties submit to the non-exclusive
jurisdiction of the Nego-Town District Court of Negoland in respect to all controversies arising from or in
relation to the Agreement”. From these, both parties have a clear intention not to finallysettle the controversies as to the existence nor exercise of this account receivable byarbitration. Therefore, the arbitral tribunal does not assume the jurisdiction over RED’s
claim of set off, considering both parties’ mutual intention.
20. In this regard, RED may argue that RED may claim the equitable set off, which is widelyadopted in Common Law. However, RED’s claim is not valid because the governing law
here is UNIDROIT 2016, not Common Law.
21. RED may also argue that RED’s claim of setoff shall be allowed based on the principle ofgood faith and fair dealing (U1.7). However, RED knew that BLUE needed the regular
maintenance by YELLOW in order to use YELLOW’s products which are the target ofthe account receivable for a long time and that YELLOW’s working capital plummeted.
4In other words, RED knew the possibility of non-performance of YELLOW’s regular
maintenance though BLUE would pay the account in order to use its products.
Nonetheless, RED falsely explained to BLUE that the business condition of YELLOW is
not getting bad. This explanation is clear intention of making BLUE taking the risk sothat RED could avoid the default risk of YELLOW. Considering these factors, it isagainst the principle of good faith and fair dealing to allow RED’s claim of set off.
G. BLUE’s response against RED’s refutation that BLUE may also set off the payment
of US$3 million by YELLOW’s obligation to pay US$3 million
22. U9.1.13 stipulates that “The obligor may exercise against the assignee any right of set-off
available to the obligor against the assignor up to the time notice of assignment wasreceived”. However, U8.1(2) stipulates that if the obligations of both parties arise fromthe same contract, the right of set-off may be exercised even if the existence or amountof the counterparty's obligation has not been ascertained.
23. Considering the above two together, if the obligations of both parties arise from the same
contract, even if the existence or amount of the counterparty's obligation has not been
determined by the time of the notice of assignment, the obligor may exercise the right to
set-off against the assignee by the time of notice.
24. In this case, YELLOW had the right to claim the payment of US$ 3 million based on
Exhibit 7. BLUE had the right to claim damages of US$3 million against YELLOW due
to the non-performance of the Maintenance Agreement (hereinafter “Exhibit 8”).
BLUE’s damages may be claimed (see 25). And it can be said that Exhibit 7 and Exhibit 8
are substantially same contracts (see 26-). Therefore, BLUE may exercise the right of setoff against RED.
25. Based on Article 2 of Exhibit 8, YELLOW shall bear the obligation to perform themaintenance service of YELLOW’s products. However, YELLOW did not perform themaintenance that was scheduled in late November and BLUE incurred the damages of
US$ 3million due to its non-performance. Hence, BLUE has the right to claim damages
from YELLOW based on U7.4.1 to U7.4.4.
26. Commentary of UNIDROIT states that “obligations arising from a complex contract
should be considered as arising from the same contract.” (P.1052 ¶46) and “A complex
contract exists when two or more contracts concluded separately are linked by theintention of the parties in such a way that they should be considered to be unified both
economically and in law” (P.1052 ¶44).
27. In this case, Orange from YELLOW stated to BLUE that maintenance is absolutely
necessary and only YELLOW’s technical team can perform maintenance. Moreover, hesaid “please consider a maintenance contract as attached to the product purchase” (¶29).
It means that these two agreements are economically inseparable because BLUE is able togain the expected benefit only if it agreed upon both agreements. Further, twoagreements are considered to be unified in law because preamble of Exhibit 8 clearlystates that “Further to the Sales Agreement”.
28. Therefore, it can be said that Exhibit 7 and Exhibit 8 are complex contract and regarded
as “arising from the same contract”. Hence, BLUE may also set off its payment of US$3
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million by Yellow’s obligation to pay US$3 million.
H. BLUE’s response that RED’s claim for set-off is not valid based on the termination.
29. Since BLUE may terminate Exhibit 7, RED’s right to claim US$ 3 million from BLUE,
which originally comes from YELLOW’s right no longer exists.
30. YELLOW did not perform the obligation of maintenance and it amounts to afundamental non-performance (see 31 below). BLUE may terminate the Exhibit 8(U7.3.1) and as a result, BLUE may terminate the Exhibit 7, which should be regarded assame as Exhibit 8 (see 32 below).
31. Non-performance of Exhibit 8 amounts to a fundamental non-performance. While
discussing the purchase of products from, in the conversation between Sapphire andOrange, Orange said that "maintenance is absolutely necessary" and “only the technicalteam from YELLOW” can perform the maintenance (¶ 29). With this in mind, Blue
entered the maintenance contract to receive maintenance by YELLOW for use of theirproducts. Failure of performance of the maintenance is an act of substantially depriving
Blue of what is expected, which amounts to a fundamental non-performance(U.7.3.1(2)(a))
32. As mentioned previously in 27, the purposes of Exhibit 7 and Exhibit 8 are intimately
connected with each other and mere satisfaction of either contract cannot achieve its
entire purpose for BLUE. In such cases, it is against both parties’ intention to separate
these two contracts. Therefore, BLUE also claim the termination of Exhibit 7 based on
the fundamental non-performance of YELLOW’s obligation.
Event Case
Executive Summary
RED and BLUE agreed to organize the Nego-Abu Cup, a series of sports events between
Negoland and Arbitria. Each company was to perform its obligations and cooperate to makethe event successful. However, it was RED’s interferences that caused BLUE to not be able
to perform its obligations. RED cancelled Bolt’s appearance, leading to BLUE’s nonperformance. RED failed to arrange a suitable venue for tennis, causing BLUE to excuse
Williams’s refusal to appear. As for Hosszu, her appearance was cancelled due to the force
majeure event of volcanic eruptions. Lastly, RED insists that they do not need to split
internet streaming profits, despite using the shared videography by RED and BLUE for its
internet streaming.
Blue’s Submission
BLUE requests an arbitral award that BLUE does not have to pay US$2.1 million to RED
Blue’s claim
I. RED may claim US$2.1 million in compensation from BLUE.
J. RED cannot claim damages for Bolt’s non-appearance, due to RED’s own interference.
K. RED cannot claim damages for Williams’s non-appearance, due to RED’s own interference.
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L. BLUE shall not bear the responsibility for the damages RED suffered as it was caused by theforce majeure event.
M. Damages awarded to RED shall be reduced by RED’s additional profits from Internet
streaming
N. RED shall bear the obligation to share profits from Internet streaming
I. RED may claim US$2.1 million in compensation from BLUE.
33. It is expected that RED will claim compensation of US$2.1 million from BLUE, based on
Exhibit 9 Agreement (hereinafter “AGREEMENT”) Article 3(9).
34. RED may claim that BLUE shall bear the obligation to ensure the participation of Carl
Bolt and Margaret Williams, based on AGREEMENT Article 3(2).
35. RED will likely claim that BLUE had the obligation to ensure the participation of Sarah
Hosszu, based on the modification of the AGREEMENT, based on Exhibit 10.
36. However, Bolt, Williams, and Hosszu did not appear in the Nego-Abu Cup.
37. Due to BLUE’s failure to provide participation of the three athletes, RED believes it has
incurred damages of lost profits of ticket sales and broadcasting rights, amounting to
US$2.1 million.
J. RED cannot claim damages for Bolt’s non-appearance, due to RED’s own interference.
38. RED may claim that BLUE failed to perform its responsibility to have Bolt participate in
the Nego-Abu Cup, and Bolt’s participation in Nego-Abu Cup became impossible due toBolt’s 4-year doping violation suspension. However, RED cannot claim damages forBLUE’s non-performance, as it was RED’s interference of cancelling Bolt’s appearance
that led to the damages, not the 4-year suspension. Refer to timeline below for sequenceof events.

Image 2: Timeline of Bolt’s issue

39. Bolt’s appearance in the Nego-Abu Cup was not impossible 2 . As written in theconversation between RED and BLUE on May 7th, 2018, BLUE filed a petition requesting
arbitration of the Sports Arbitration Tribunal of Arbitria to seek an annulment or reductionof the suspension (¶40). It was highly likely that Bolt’s suspension would be greatly
shortened because there was no “gross error or negligence”; therefore, Bolt’s appearance
in the Nego-Abu Cup was not impossible.
2 The definition of “impossibility” comes from U 7.2.2, Comment 3(a).

740. In this situation, Bolt did not commit any “gross error or negligence.” If there is no “grosserror or negligence,” Arbitria’s Anti-Doping Organization would shorten the suspension
to a maximum of 2 years (¶40). Bolt’s trainer administered supplements to Bolt without
realizing the existence of a prohibited supplement (¶40). Thus, it is highly likely that Bolt
did not realize he committed a doping violation.
41. In addition, BLUE was aware that Bolt’s suspension could be greatly shortened. Knowingof the lack of “gross error or negligence,” Diamond from BLUE states “I expect that Bolt’ssuspension will be reduced to one month or so at the longest” (¶40). BLUE is a company
that specializes in professional athlete management (¶16, ¶17) and is likely familiar withsports arbitration cases, making Diamond’s statement valid and credible.
42. Red may argue that the decision by the Arbitration Tribunal was made only two weeks
before the Nego-Abu Cup (¶40), and thus there would not be enough time to search for
new athletes. However, since this is an emergency arbitration, it is highly likely that the
Tribunal would do its best to make a decision as soon as possible. Diamond from BLUE,states “it won’t take longer than two weeks for the Sports Arbitration Tribunal of Arbitria
to decide on the case” (¶40). Again, as BLUE manages athletes, it is likely familiar withsports arbitration cases. Although the decision by the Arbitration Tribunal was made only
two weeks before the Nego-Abu Cup, this is due to special circumstances of foreignlaboratory testing to examine the evidence of the supplements, which was unforeseeable atthe time of the meeting. As such, there is no difference in the fact that it was highly possible
for the arbitral decision to be made before the event.
43. RED may claim that because Bolt’s trainer only tested a few supplements (¶40), there was“gross error or negligence.” However, the prohibited substance was found in only one
supplement. As such, Bolt’s trainer had paid reasonable extent of care regarding prohibited
substances. Hence, there was no “gross error or negligence.”
K. RED cannot claim damages for Williams’s non-appearance, due to RED’s own
interference.
44. BLUE is not liable for the damages caused by Williams’s non-appearance by U 7.1.2, as
BLUE’s non-performance resulted from RED’s interference of failing to perform its
responsibility of arranging a suitable venue.
45. “Interference” in this situation is interpreted as the interference of U 5.1.3, the duty forparties to cooperate with each other when cooperation may be reasonably expected.
46. RED’s act of not changing the venue to the more suitable venue of Negoland Tennis
Coliseum caused BLUE’s non-performance. RED was obligated to the planning,organization, promotion, ticket sales of the games held at venues in Negoland(AGREEMENT Article 3(1)), and parties were responsible to arrange the venue suitable
for the games (AGREEMENT Article 3(3)). Since tennis games were held in Negoland,
RED was responsible for finding the suitable venue for tennis.
47. In this situation, RED arranged the Nego-Town Tennis Center, which was not a suitablevenue. The obligation to change the venue to Negoland Tennis Coliseum is within therange of reasonable cooperation. For a sports event, a suitable venue includes the good
health of the players. Thus, a suitable venue must have anti-heat measures, as playing tennis
for long hours in extreme heat poses a health risk. The outdoor Nego-Town Tennis Center
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that RED arranged did not have anti-heat measures (¶42). The temperature during thetennis events was expected to continuously be 35 degrees, with a 50% chance that thetemperature would go over 40 degrees (¶42). When considering the good health of players,
it is necessary for RED to change the venue to the Negoland Tennis Coliseum, which had
sufficient air-conditioning (¶42).
48. It was reasonably expected that not changing the venue to the Negoland Tennis Coliseum
would lead to significant damages. Large ticket sale refunds and cancelling of broadcastingrights would be expected after the non-appearance of a favorite player such as Williams. In
reality, once Williams’s appearance was cancelled, the expected profits of USD550,000
diminished to a deficit of USD700,000. This is clear in hindsight, but this deficit is
USD550,000 less than the profits from changing the venue to the Negoland Tennis
Coliseum (refer to table below).
(in thousands)
Ticket Revenue from Operating
Profits*¹
Revenue Broadcasting
Costs
RightsNego-Town Tennis
75
100
120
55
Center (outdoor)
Williams’s non50
0
120
-70
appearance
Negoland Tennis
50
100
-15
160＋5*²
Coliseum (indoor)*¹Profits = (Ticket Revenue + Revenue from Broadcasting Rights) - Operating Costs*²Cancellation fee for Negoland Tennis Center

Table 1: Calculation of profits difference for Williams’ issue

49. RED’s interference caused BLUE’s non-performance. As a result of RED not arranging asuitable venue, BLUE excused Williams’s refusal to appear in the event (¶43). In addition,
two other players refused to appear (¶43), justifying Williams’s refusal to appear as a valid
concern for health risks. For BLUE, as an athlete management company, it is natural to
excuse appearances when there are health risks. In addition, in the 2018 US Open, one of
the most prestigious events in professional tennis, anti-heat measures became an issue
after players suffered heat related health issues and some were even forced to retire, due
to the extreme heat.3
L. BLUE shall not bear the responsibility for the damages RED suffered as it wascaused by the force majeure event.
50. BLUE’s non-performance was due to the volcanic eruptions which caused the airport toshut down for a week, and she could not board her flight (¶44). By AGREEMENT
Article 4(1), BLUE’s non-performance is excused.
news.com.au (2018), Heatwave conditions at US Open becoming dangerous for players in New York.
[Accessed 21 Nov 18], https://www.news.com.au/sport/tennis/heatwave-conditions-at-us-openbecoming-dangerous-for-players-in-new-york/news-story/0b77b6f5174c7f66eb7e5a2733051d67.
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51. The volcanic eruptions fall under “natural disaster” (AGREEMENT Article 4(1)), which
resulted in the closure of the airport. Both the natural disaster and its result are beyond
the reasonable control of BLUE. Thus, BLUE shall not be liable for the damages RED
suffered as a result of the non-performance. Both the Steering Committee and RED were
notified of BLUE’s non-performance (¶44).
52. RED may argue that Hosszu’s non-appearance was preventable if Emerald had booked
the original flight correctly, as the volcanic eruptions happened after this original flight(¶44). However, BLUE was not responsible for arranging the first-class flight; it was theSteering Committee’s responsibility. “[Hosszu] requested first-class air travel… thesteering committee accepted her request” (¶38) Hence, BLUE could not have reasonably
prevented Hosszu’s non-appearance. Even if BLUE had the obligation to arrange thefirst-class flight, BLUE did not have the obligation to arrange a specific flight. Suchobligation was not required of BLUE from the contract.
53. RED may insist that BLUE bore the responsibility to prevent the damages and have
Hosszu arrive as early as possible to avoid force majeure events. However, thisinterpretation ultimately results in the obligor to perform its duty in the earliest measurepossible to avoid any unexpected events, which is an unnecessary burden on the obligor.
Hence, RED’s interpretation of Article 4(1) is unreasonable.
54. In addition, there is no dispute that Hosszu could have arrived in time for Nego-Abu
Cup by boarding the replacement flight without the volcanic eruptions (¶44). Thus, it
stands that BLUE’s non-performance was caused by volcanic eruptions.
M. Damages awarded to RED shall be reduced by RED’s additional profits from Internet
streaming
55. From U7.4.2(1), RED shall not be enriched as a result of BLUE’s non-performance. RED
gained profits of US$1 million from
56. Internet streaming (¶48). If Bolt, Williams and Hosszu participated in Nego-Abu Cup,profits from Internet streaming would have been limited to only US$800,000 (¶48).
57. As submitted below, profits from Internet streaming shall be shared equally. After sharing
profits with BLUE, RED earned US$500,000 over the initial amount of US$400,000, whichamounts to a total of US$100,000 gain. This amount constitutes an enrichment of RED.
Therefore, even if any damages are to be awarded to RED, the amount of US$100,000 shallbe reduced from the total damages awarded.
58. Further, if the submission below cannot be accepted, RED would have gained US$200,000
from the non-appearance of BLUE’s athletes. As such, the amount of US$200,00 shall be
reduced from the total damages awarded.
Blue’s Submission:
Blue requests an arbitral award that Red shall pay US$500,000 to Blue
Blue’s claim
N. RED shall bear the obligation to share profits from Internet streaming
59. As stipulated in Article 3(8) of the AGREEMENT, “Profits from event telecasting will be sharedequally between Red and Blue.” Profits from event telecasting includes profits from Internet
10

streaming because there exists a common intention (U4.1) for profits from Internet
streaming to be shared equally. Hence, BLUE has the right to require payment of
US$500,000 from RED based on U7.2.1.
60. From Article 3(7) of the AGREEMENT, ‘RED’s streaming programs’, ‘BLUE’s own cable
TV channels’ and ‘terrestrial TV networks’ were listed as three methods of video
distribution. However, instead of using any of the same terms in the following Article 3(8),the comprehensive term ‘event telecasting’ was used. As such, it is natural to assume thatthe term ‘event telecasting’ refers to all method of video distribution mentioned in theprevious article.
61. There is a common intention to share equally the profits from services that are directly
generated from videos whose responsibility is held by both parties. From the preliminary
negotiations between both parties, ticket sales revenue in Negoland will go to RED, while
ticket sales revenue in Arbitria will go to BLUE (¶37(9) and (10)). This implies that when
the responsibility is held solely by one party, all profits generated from said responsibility
is given to that party.
62. On the other hand, profits from sales of broadcasting rights were shared equally, as said
profits originated from responsibilities and costs bore by both RED and BLUE. Each party
was responsible for videography and the cost thereof for games held in their respective
countries (¶37(5) and (6)). As each country hosted the same number of games (¶37(9)), theresponsibility of videography for both parties are similar. Hence, both parties should beentitled to profits resulting from videos of Nego-Abu Cup, which was contributed to asimilar extent by both parties.
63. In applying the common intention from both parties, the distribution of profits fromInternet streaming must also be shared equally, as it originated from contribution of bothparties. In addition, RED’s streaming program was paid per-view, and the profits were a
direct result of the Nego-Abu Cup videos. Therefore, the comprehensive term “event
telecasting” includes Internet streaming, and RED must pay US$500,000 to BLUE.
64. With regards to the profits earned from Blue TV, if RED can submit a claim with sufficientevidence to prove that the profits were earned directly from the videos of Nego-Abu Cup,BLUE shall compensate half of the profits of Blue TV to the extent that Red has proven.
65. RED may further claim that BLUE is not entitled to receive US$500,000 because theprofits were a result of its efforts to minimize BLUE’s defaults. However, the interpretationof an existing contract shall not vary depending on any incidents that occurs after theconclusion of said contract. BLUE’s right to receive profits from Internet streaming is notaffected by the method of which RED gained such profits. Hence, RED must pay
US$500,000 to BLUE.

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