Chuo University​B​ lue’s preliminary Memorandum

List of Abbreviation● “P. ”: Page● “¶”: Paragraph● “Ex.”: Exhibit● “Art.”: Article● “Sec.”: Section● “UPICC” : Unidroit Principles of International Commercial Contract 2016
● “Ex.11B”: Ex.11 Blue’s Written Statement● “Ex.11R”: Ex.11 Red’s Written Statement● “Air Waybill”:Ex.12 Excerpt of Conditions of Contract on Reverse Side of Air
Waybill

TRANSPORTATION CASE
Blue hereby seeks the following arbitral awards:

Red shall pay 7,750,000 Abu dollars to Blue
Blue submits that:
Issue 1
A. There was a breach of Red’s contractual obligation in relation to the damage to thegoods “Abu Propolis” and “Abu Watch”;
B. The damages of goods occured because Red did not pack the goods properly for airtransportation;
C. Red is not exempt from its liability;
Issue 2
D. As there was a breach of obligation, Red shall pay 7,750,000 Abu dollars to Blue;
E. Blue is not barred from claiming for damages;
F. Even if the amount of damages was limited, it shall be 90,200 SDR​.
Issue 1
A. There was a breach of Red’s contractual obligation in relation to the damage to thegoods “Abu Propolis” and “Abu Watch”
1) Red breached the obligation to transport the goods “Abu Propolis” and “Abu
Watch” because they were broken when they arrived at the warehouse of Blue in
NegolandUnder an agreement between Red and Blue on master agreement[​Ex.4​], Red is obligated“to provide the transportation of goods with the airplanes owned by Red between thewarehouses of Blue in Arbitria and the warehouses of Blue in Negoland”​[​Ex.4, Art.1.1.1​].
In other words, Red is obligated to provide transportation service to Blue. By thistransportation obligation, Red shall be liable for ​“damages due to loss, damage, or delay
arising from the transport of parcels, or incidental other operations by Red ​(“Damage”)
when the cause of damage occurs during the transport”​[​Ex.4, Art.7.1​].
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Chuo University​​Blue’s preliminary Memorandum
In this case, incidental other operations by Red includes packaging of the goods. When theagreement[​Ex.4​] was concluded, Red’s incidental operation was considered to be customs
clearance procedures and loading into the containers[​¶26(2)​]. However, in this case, Blue
requested Red’s cooperation for packaging work for the air transportation[​¶26, Ex.9​].
Therefore, Red’s incidental operations include customs clearance procedures, loading into
the containers, and packaging of the goods for air transportation[​UPICC4.1, 4.3(c)]​.
In this case, the cushioning materials that Red used for the packaging were not dedicatedfor air transportation[​¶31②​]. With the air pressure of the cargo room, about 30% of the air
in the cushioning material leaked out[​¶31③​]. As a result of the 30% leak of air from thecushioning materials, the violent vibration of the containers caused the violent vibration of
Abu Propolis and Abu Watches inside the cardboard boxes[​¶31⑥​]. As a result, thecontainers of 40,000 bottles of Abu Propolis and the 5,000 Abu Watches weredamaged[​¶31,¶33]​. Both parties do not dispute that such a leak of air would not haveoccurred if cushioning materials for air transportation had been used[​¶31③​]. Moreover,both parties do not dispute that Abu Propolis and Abu Watches would not have vibrated in
the cardboard boxes if no leakage of air from cushioning materials had occurred[​¶31⑥​].
In light of this fact, the damages of the goods occurred because the cushioning materials
that Red used for the packaging (Red’s incidental operation) were not dedicated for airtransportation. Moreover, Clear-air turbulence was encountered during the flight and theaircraft shook very badly. However, the damages of the goods would not have occurred if
the goods were packaged with dedicated cushioning materials[​¶31⑥​]. Therefore, Red can
not be exempt from its liability[​Ex.4, Art.7.1(6),(8)​]. Therefore, Red breached theobligation to transport the goods and therefore shall be liable for the damages to the goods“Abu Propolis” and “Abu Watch”.
2) Red is liable for the defective packaging of the Cargo performed by Red under Air
Waybill, Art.1“The Carrier (Red) is not liable for defective packaging or marking of the Cargo unlessperformed by the Carrier (Red) of someone in the Carrier’s service”​[​Air Waybill, Art.1​]​.
In other words, Red is liable for defective packaging of the Cargo performed by the Red. In
this case, Red sent two of its staff members to perform the work of packaging the goods for
air transportation in a warehouse in Arbitria on September 17[​¶27​]. From the third day(September 19), only two staffs from Red (no Blue staff) packaged the items[​Ex.11.3B]​.
As a result, the containers of 40,000 bottles of Abu Propolis and the 5,000 Abu Watches
were damaged[​¶30, 33]​. In light of these facts, The defective packaging of Abu Propolis
and Abu Watches was caused by Red’s work. Therefore, Red is liable for defective
packaging of the goods.
B. The damages of goods occured because Red did not pack the goods properly for airtransportation
1) Red breached the obligation to provide relevant materials with transportation
services as requested by Blue under Ex.4, Art.1.2.3

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Chuo University​​Blue’s preliminary Memorandum
Red is obligated​“to provide Blue with other transportation services as requested by Blue,
such as packing, research of relevant laws and regulations, advices on logistics”​[​Ex.4,
Art.1.2.3​]. In this case, Blue requested Red to enhance the transportation system and the
MEMORANDUM[​Ex.10​] was concluded. However, Red breached the obligation[​Ex.10,
Art.2, Art.4​], this means Red did not provide Blue with appropriate transportation services.
a) Red breached the obligation to make a special arrangement of materials under Ex.10,
Art.2
Red has the obligation to make a special arrangement of relevant materials to prepare forthe increase of the volume of parcels during the Special Sales[​Ex.10, Art.2​]. In otherwords, Red is obligated to procure adequate amounts of cushioning materials. In this case,
Red prepared the cushioning materials for air transportation. However, they were gone inno time[​Ex.11.4R​]. Even if the number of products was significantly more than Red
expected[​¶28​], it could be easily expected how many cushioning materials are necessary.
This is because the average daily sales amounted to 50 million Nego-Lira at the time of
BSN 5th anniversary in 2014[​¶24​]. At that time, Red has already started the delivery
services with Blue[​¶19​]. In light of these facts, Red breached the obligation to make aspecial arrangement of relevant materials to prepare for the increase of the volume ofparcels during the Special Sales[​Ex.10, Art.2​].
b) Red breached the obligation to procure cushioning material for the air transportation
under Ex.10, Art.4
Two people who were sent from Red were obligated to procure cushioning material for the
air transportation[​Ex.10, Art.4​]. In this case, Red’s staff asked Blue to procure additional
cushioning materials urgently, but there was no special request made by Red’s staff as tothe quality of cushioning materials[​Ex.11.4B​]. These cushioning materials were notdedicated for air transportation, and their quality was not good enough[​¶31]​. In otherwords, Red did not procure appropriate cushioning material for the air transportation.
Furthermore, in this case, three types of cushioning materials were used for packaging,(1)which Red prepared, (2)which Blue usually uses, and (3)which Blue purchased for Red
for this transportation[​Ex.11.4B, 6B, 6A​]. Swan, who is from Red inadvertently thoughtthat the cushioning materials (3) were standard materials in Arbitria. Even though thecushioning materials (3) were different from the cushioning materials (1) and (2), he did
not raise any specific question about their quality[​Ex.11.6B​]. Since Red was obligated to
procure cushioning materials for air transportation, Red should have checked Blue if thecushioning materials were standard in Arbitria and suitable for air transportation. In
addition, Red is a specialist of air transportation. From these facts, Red did not procure
cushioning materials for air transportation and breached the obligation[​Ex.10, Art.4]​.
Therefore, Red breached the obligation to provide relevant materials with transportation
services as requested by Blue[​Ex.4, Art.1.2.3]​.
c) The additional cushioning material requested by Red shall be for air transportation3

Chuo University​​Blue’s preliminary Memorandum
Even if Red procured cushioning materials including additional ones[​Ex.10, Art.2​], Redshould have procured cushioning materials suitable for air transportation. However there isno special request as to the quality of cushioning materials by Red[​Ex.10, Art.4]​. The
reason why Red should have procured cushioning materials suitable for air transportationis there was common intention of the parties that cushioning materials are suitable for airtransportation[​UPICC 4.1​]. In applying UPICC 4.1, regard shall be had to all thecircumstances, including UPICC 4.3(a)(c)(d).
Blue recognized that the cushioning materials Red procured in advance shall be dedicatedfor air transportation[​UPICC 4.3(c)]​. This is because Blue requested Red to procure thecushioning materials[​Ex.10, Art.4​], and based on the request, Red had prepared thecushioning materials for air transportation[​¶28​].
The purpose of contracting the MEMORANDUM[​Ex.10​] is that Blue requested Red tocooperate in the work of packing the goods for air transportation, and then handing overthe packed products to Red[​UPICC 4.3(d)​]. This is because Blue requested Red to handle
usual Blue’s work “​(1) Blue itself packages the goods for air transportation​”[​¶26​].
Red should have procured cushioning materials suitable for air transportation because thepacking also should have been for air transportation[​UPICC 4.3(a)]​. On July 16, Blue had
discussions to request Red to cooperate in the work for packing. At the meeting, Red
accepted Blue’ requests for that Red send two people to facilitate smooth packing ofparcels for the air transportation also, Blue requests Red to procure cushioning materials
for packing[​Ex. 9.2③​].
C. Red is not exempt from its liability
1) Red is not exempt from clear-air turbulence[​Air Waybill, Art.3 and Ex.4, Art.7.1(6)(8)​]“Carrier will not be responsible for damage..., if Carrier can prove that the carrier or its
staff have taken all possible action to prevent incident from happening or that it was
impossible to do so”​[​Air Waybill, Art.3​]. However, in this case, since Red did not prepare
enough cushioning materials[​¶29​], it end up with using the cushioning materials notdedicated for air transportation[​¶31②​]. From these facts, if Red had prepared enoughcushioning materials suitable for air transportation, the damages for Abu Propolis and Abu
Watch did not occur as mentioned in A(1). Red did not take possible action to prevent
incident from happening, though it was possible for Red to expect airplane shakes during
the flight from the standpoint of a specialist of air transportation. Therefore, Red is notexempt from clear-air turbulence.
2) Red was grossly negligent for the damage[​Air Waybill, Art.2]​“Carrier is not liable for any damage of whatsoever nature arising out of or in connection
with the Carriage of Cargo, unless such damage is proved to have been caused by thegross negligence of Carrier”​[​Air Waybill, Art.2​]. However, in this case, Red did notprocure enough cushioning materials[​¶29​], though Red accepted to make a special
arrangement to prepare for the expected increase in the volume of delivery[​Ex.9.2①​].
These facts amount to gross negligence of Red, and the damage to two products was

4Chuo University​B​ lue’s preliminary Memorandum
caused by that negligence. Therefore, the damage has been caused by the gross negligenceof Red.
3) There was no contributory negligence on the part of Blue[​Air Waybill, Art.5]​“Contributory negligence on the part of Blue releases Red of its liability to the extent
provided by the Convention and applicable law”​[​Air Waybill, Art.5]​. However, in thiscase, Blue’s staffs worked with Red for the first two days so that Red’s staff could befamiliar with the work. After that, Blue handed a tablet used in Blue’s warehouse to Red’s
staff[​
Ex.11.3B​]. On the other hand, there was no special request from Red as to the qualityof cushioning materials procured by Blue[​Ex.11.4B]​. In other words, Blue provided
enough support for Red, in spite of a shortage of labor due to Blue Ultra Sale and theleaving of its staff of the warehouse[​¶26]​. Therefore, there was no contributory negligenceon the part of Blue.
Issue 2
D. As there was a breach of obligation, Red shall pay 7,750,000 Abu dollars to Blue
If there was a breach of Red’s contractual obligation in relation to the damage to the goods“Abu Propolis” and “Abu Watch”, Red shall pay 7,750,000 Abu dollars to Blue under
UPICC 7.4.1~7.4.4.
1) There was certainty of harm
Regarding the amount of damage, it is composed of damages for 40,000 bottles of Abu
Propolis, and for 5,000 Abu Watches and the cost to repair them. For Abu Propolis, thetotal damage is 150 Nego-Lira times 40,000 equals 6,000,000 Nego-Lira. For Abu
Watches, the lost profit for Abu Watch is 300 Nego-Lira times 5,000 watches, amounting
to 1,500,000 Nego-Lira. The repair cost for Abu Watch is 50 Nego-Lira times 5,000
watches equals 250,000 Nego-Lira. The total amount of damage is 1,750,000 Nego-Lira,consisting of, 1,500,000 Nego-Lira and 250,000 Nego-Lira as the repair cost[​¶34]​. Fromthese facts, the grand total amount of damage is 7,750,000 Abu dollars. In addition, thiscompensation is established with a reasonable degree of certainty because the harm
extended[​UPICC 7.4.3​].
Goods

Price

Quantity

Total

Abu Propolis

150 Nego-Lira

40,000 bottles(dispose)

6,000,000Nego-Lira

Abu Watch(lost profit)

300 Nego-Lira

5,000 watches(refund)

1,500,000Nego-Lira

Abu Watch(repair cost)

50 Nego-Lira

5,000 watches(repair)

250,000 Nego-Lira

Abu Propolis: Blue was forced to dispose of 40,000 bottles of Abu Propolis and its pricechanged from 50 to 150 Nego-Lira.

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Chuo University​B​ lue’s preliminary Memorandum
Abu Watches: Blue was forced to refund money for 5,000 Abu Watches that had been soldand then to spend 50 Nego-Lira per each to repair them. Although the watch could havebeen sold for 500 Nego-Lira per watch, Blue was forced to sell them for 200 Nego-Lira per
watch due to a loss of opportunity to sell.
2) There is a causal link
UPICC 7.4.2 affirms the need for a causal link between the non-performance and theharm​[​
Ex.7.4.2 Comment 1]​​. ​In this case, the cushioning materials that Red used for the
packaging were not dedicated for air transportation[​¶31②​] With the air pressure of the
cargo room, about 30% of the air in the cushioning material leaked out[​¶31③​]. As a resultof the 30% leak of air from the cushioning materials, the violent vibration of the containers
caused the violent vibration of Abu Propolis and Abu Watches inside the cardboard
boxes[​¶31⑥​]. As a result, the containers of 40,000 bottles of Abu Propolis and the 5,000
Abu Watches were damaged[​¶31​]. In light of these facts, the damages of goods occurredbecause the cushioning material that Red used was not dedicated for air transportation. If
Red had procured cushioning material dedicated for air transportation and packed thegoods with it, no damages would have occured. Therefore, Red’s non-performance caused
the harm of Abu Propolis and Abu Watches.
3) There was foreseeability
Blue requested Red to pack parcels for the air transportation[​Ex.9.2.③​]. In addition, thecore of Red’s freight transportation business is its courier service business[​¶9]​. Since 2008,
Red also expanded its business into international air cargo transportation between
Negoland and Arbitria[​¶10​]. Thus, Red could have found that the damages would becaused if Red did not pack parcels suitable for the air transportation, with its professional
knowledge for air transportation. Red requested Blue that “ ​“Abu Propolis” and “Abu
Watch” will be sold as featured products​”[​Ex.9.1​], and “Abu Propolis” was contained in a
bin and “Abu Watch” was a high functional watch[​¶25]​. In light of these facts, it was
obvious that they were fragile, and Red could have expected these products would bedamaged if Red did not pack suitably. Therefore, Red could foresee the damages.
E. Blue is not barred from claiming for damages“​
No action shall be maintained in the case of loss or damage to Goods unless a complaint
is made to Carrier in writing by the person entitled to delivery”​[​Air Waybill, Art.7]​. ​It isessential to claim for damages in writing. On October 7, Blue notified Red by email that
the Abu Watch was broken, and on October 12, Blue also notified Red by email that it had
been found that about half of the Abu Watches had been broken due to the impact during
the air transportation[​¶33]​. Therefore, Blue claimed damages of Abu Watches in writing.
In addition, Abu Watches were broken for the same reason as in the case of Abu Propolis.
It is the fact that “​Blue notified Red in writing of the damage and leakage of Abu
Propolis”​[​¶31​]. Thus, Abu Watches were broken for the same reason as in the case of Abu
Propolis which complaint was made in writing. From these facts, Blue notified the damage
by writing and Blue is not barred from claiming for damages.
6Chuo University​B​ lue’s preliminary Memorandum
F. Even if the amount of damages was limited, it shall be 90,200 SDR
1) The limitation of damages of Red is 22 SDR per kilogram for such parcel
In determining the amount to which liability is limited, ​“A carrier may stipulate that thecontract of carriage shall be subject to higher limits of liability than those provided for inthis Convention”​[​Montreal Convention Art.25]​. According to the contract of carriage,
Red’s liability for damages “​shall be limited to 22 SDR per kilogram for suchparcel”​[​Ex.4, Art.7.3]​. Thus, in case of limiting the amount of damages, the upper
limitation of the liability of Red is 22 SDR per kilogram.
2) The limited amount shall be 90,200 SDR
Regarding the actual amount of damages, the total weight was 4,100 kilograms[​¶29​].
Accordingly, the amount of damages shall be limited to 90,200 SDR, which is 22 SDRtimes 4,100 kilograms in total under the contract[​Ex.4, Art.7.3]​.

INFORMATION CASE
Blue hereby seeks the following arbitral awards:

The tribunal shall dismiss the claim of Red
Blue submits that:
Issue 1
A. Blue is not legally liable to pay 500,000 Nego-Lira to Red as compensation;
B. Even if Blue was legally liable, Blue can be exempt from its liability;
Issue 2
C. Blue is not legally liable to pay 6,500,000 Nego-Lira to Red as compensation;
D. Blue is not liable for the non-performance[​UPICC 7.4.1~7.4.4​];
E. Even if Blue was legally liable, the total amount of damages is reduced.
Issue 1
A. Blue is not legally liable to pay 500,000 Nego-Lira to Red as compensation
1) Blue performed the obligation that does not to infringe any privacy, nor have any
claim of such infringement[​Ex.8, Art.8.2(4)​]The General Data Protection Act of Arbitria (“GDPA”) stipulates that “consent” of thedata subject means indication of the data subject's wishes are freely given by which he orshe, by a statement or by a clear affirmative action, signifies agreement to the processingof personal data relating to him or her[​¶37​]. Then, the Personal Information Protection
Commission (“PIPC”) found that the method for obtaining consent used by Red Travel
was not sufficient. In this case, customers of Red Travel entered into transactions using thewebsite recorded on the server of Negoland[​¶23]​. The laws of Negoland apply totransactions on Red Travel and the method of obtaining consent which Red used would notraise any legal issues[​¶37]​.

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Chuo University​B​ lue’s preliminary Memorandum
Furthermore, for the other case argued before the Red case, the Arbitria Supreme Court
decided on January 6, 2020 that the GDPA does not apply to cases where the residents ofArbitria voluntarily accessed websites operated by foreign companies that have similarbusiness with Red travel[​¶41]​. In July 2019, the court of first instance for the same case
had rendered a judgment along the same lines as the Supreme Court decision, and Red wasaware of that fact. Although in September the court of appeals reversed such a decision,
the supreme court announced it would render its decision on January 6, 2020 upon appealof such case. Therefore, Red should have waited for such a supreme court decision.
Anyway, Red Travel is the services provided by a Negoland corporation through Negoland
servers under Negoland law. From these facts, applying the GDPA to Red Travel isexcessive extraterritorial application of law and Red should have contested the fine basedon the breach.
2) Blue performed all work called for by this agreement in compliance with applicablelaws[​
Ex.8, Art.8.3 (3)​]The terms and conditions on the Red Travel website state that the applicable laws fortransactions on Red Travel are the laws of Negoland[​¶37​]. According to the laws ofNegoland, the method of obtaining consent would not raise any legal issues. In addition,
there was no statement in the Red’s material[​Ex.8, Art.2.1]​ to the effect that thedevelopment of the site must be in accordance with the regulations of Arbitria[​¶40​]. Fromthese facts, Blue followed a material provided by Red and developed the website according
to the laws of Negoland. Consequently, the deliverable was not defective under the laws ofNegoland and Blue is not obligated to repair it. Therefore, Blue performed its obligation
under Ex.8, Art.8.3(3).
3) Blue performed the obligation that all deliverables to be prepared in a professional
diligence and skill[​Ex.8, Art.8.3 (1)]​In the Red Travel website, customers are required to scroll through the terms andconditions before making a contract, and no contract is made without customers’ clicking
on a statement that they have read and agreed to the terms and conditions[​¶37]​. It meetsthe representation and warranty that Blue shall prepare the deliverables in a workmanlike
manner and with professional diligence and skill. Therefore, Blue performed its obligation
under Ex.8, Art.8.3(1).
B. Even if Blue was legally liable, Blue can be exempt from its liability
1) Since Blue’s non-performance was caused by Red’s omission, Red may not rely on
the non-performance of Blue[​UPICC 7.1.2​]a) Red should have consulted with Blue before paying the fine
Red was aware that the court of first instance at another case had rendered a judgment that
the GDPA does not apply to cases as mentioned in A(1). However, Red paid the fine
without consulting with Blue. In this case, PIPC ordered Red to pay a fine within 3 months
from October 10, 2019[​Ex.13​]. Thus, the due date for payment of fine was on January 9,
2020. In addition, the decision of the Supreme Court was expected to be rendered on
8Chuo University​B​ lue’s preliminary Memorandum
January 6[​¶41​]. From these facts, Red had time to consult with Blue before the supreme
rendered the decision of the case. If Red consulted with Blue before paying the fine, Blue
could have advised Red not to pay the fine under the Supreme Court decision. Therefore,Blue’s non-performance was caused by Red’s omission and Blue can exempt its liability[​
UPICC 7.1.2]​.
b) Red should have indicated that the Web Site breaches the GDPA[​Ex.8, Art.2.2]​
No sentence mentioned that Red had not approved the final Web Site, namely, Redapproved the final Web Site and did not indicate the Web Site that is breaching the GDPA.
If Red pointed out that, Blue could have fixed the Web Site so as not to breach the law.
Because of Red’s omission, Blue breached the GDPA and the PIPC imposed the fine toRed. Blue’s non-performance was caused by Red’s omission and Blue can exempt its
liability[​UPICC 7.1.2​].
2) Red shall cooperate with Blue for the performance of Blue’s obligations[​UPICC
5.1.3]​“​
Each party may be under a duty not only to refrain from hindering the other party fromperforming its obligation(s), but also to take affirmative steps to enable the other party’s
performance”​[​UPICC 5.1.3 Comment1​]. Red was aware that the court of first instance inanother case had rendered a judgment that the GDPA does not apply to cases where theresidents of Arbitria voluntarily accessed websites operated by foreign businesses asmentioned in A(1). Red should have objected to the order to prevent the breach of the
GDPA, but Red did not contest and paid the fine. Therefore, Red did not take affirmative
steps to enable Blue’s performance and Blue can exempt its liability[​UPICC 5.1.3​].
Issue 2
C. Blue is not legally liable to pay 6,500,000 Nego-Lira to Red as compensation
1) Blue is not obligated to provide the system which does not have any bugs[​Ex.7,
Art.6.2​]“​
Blue does not warrant uninterrupted or "error free" operation of the Computer System orService that is not due to their negligence​”[​Ex.7,Art.6.2​]. ​Blue fixed the bugs and provided
the uninterrupted R-CMS for Red[​Ex.14]​. However, the R-CMS had another bug and theycaused the hacking. As a result, the R-CMS became the system which was notuninterrupted. In addition, since Blue confirmed that there were bugs in the R-CMS on
February 5, 2019[​Ex.14​], the R-CMS was not an error free system. ​Furthermore, such an
uninterrupted and errored system was not due to Blue’s negligence. In fact, the hacking
was caused by bugs in the R-CMS and the bugs allowed someone to steal the informationneeded to access the R-CMS customer data[​¶38]​. From these facts, Blue does not warrant
these computer systems or services. Therefore, Blue is not obligated to provide the system
which does not have any bugs.
2) Blue performed its obligation to provide the R-CMS[​Ex.7, Art.4.1]​

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Chuo University​B​ lue’s preliminary Memorandum
Blue shall build the computer System in accordance with and subject to the terms of thisAgreement and the Schedule herein[​Ex.7, Art.4.1]​. Regarding this point, the R-CMS is notnecessarily an uninterrupted or error free system[​Ex.7, Art.6.2]​. In fact, Blue completed tobuild R-CMS in December 2018, and provided it until January 1, 2019[​¶22​]. Thus, there
was no breach of Blue’s obligation to provide the R-CMS.
3) Red may not rely on the non-performance of Blue[​UPICC 7.1.2]​
Red may not rely on the non-performance of Blue[​Ex.7, Art.5.1(c) and Art.6.1]​ to theextent that such non-performance was caused by Red’s omission[​UPICC 7.1.2]​. In thiscase, the hacking and the leaking was caused by the bugs. Red knew there wasunauthorized access before the hacking was caused. However, Red did not make enoughefforts to prevent the hacking. In addition, the personal information was leaked because
Red did not take any actions to prevent from stealing the passcode. As a result, thepasscode was stolen and the personal information which should have been treated asconfidential information was leaked. In light of these facts, Blue's non-performance wascaused by Red’s omission. Therefore, Blue can be exempt from its liability.
D. Blue is not liable for the non-performance[​UPICC 7.4.1~7.4.4​]
1) There are no causal link between non-performance of Blue and the damage
In this case, Blue confirms that the bug which caused the hacking and leaking of personal
information was something they had not thought before. It was hard to find unlessspending three or four days doing intensive checks. On January 21, 2019, Red told Blue
that Red found evidence of an unauthorized access by email[​Ex.14]​. At that time, Blue wasextremely busy and Red also knew it. However, Red did not take immediate measures suchas temporary suspension of the system when Red noticed the unauthorized access on
January 21. Red could have made temporary suspension because Red could use the backup
system and there was no financial damage on Red caused by making the suspension[​¶42]​.
If Red had taken any actions to prevent the hacking, the leaking of the personal
information would not have happened. Therefore, there was no causal link between Blue’s
performance[​Ex.7, Art.4.2, Art.4.4, Art.5.1(c), Art.6.1]​ and the damage of 1,500,000
Nego-Lira for the fine and 5 million Nego-Lira for the solatium.
E. Even if Blue was legally liable, the total amount of damages is reduced
1) The damages of 1,500,000 Nego-Lira shall be reduced under UPICC 7.4.7
Where the harm is due in part to an omission of Red, the amount of damages shall be
reduced to the extent that these factors have contributed to the harm[​UPICC 7.4.7]​. ​In thiscase, Red knew there was unauthorized access before the hacking was caused. However,Red did not make enough efforts to prevent the hacking. Red paid 1,500,000 Nego-Lira as
the fine for leaking the personal information. From these facts, the damage of 1,500,000
Nego-Lira was caused by Red because Red did not take any action for bugs. Therefore,
there are causal relationships between Red’s omission and the damage of 1,500,000
Nego-Lira, and​​Blue can reduce the amount of damage.

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Chuo University​B​ lue’s preliminary Memorandum
2) The damages of 5 million Nego-Lira shall be reduced under UPICC 7.4.7
The R-CMS was hacked and the personal information of 50,000 Red Travel’s customer
was leaked. For the solatium, Red decided to pay 100 Nego-Lira per person which is morethan in the same level leakage in the past, without consulting with Blue. As a result, Red
paid 5 million Nego-Lira in total to 50,000 of their customer as solatium. However, Redshould have consulted with Blue because this amount was not reasonable. If Red consulted
with Blue, Blue could have advised the reasonable price for this problem. From these facts,
there are causal relationships between Red’s omission and the damage of 5 million
Nego-Lira. Therefore, Blue can reduce the amount of damage.
Annotation The exchange rate for the payment of damages from Blue shall be based on(1)when the problem occured, before January 2020. (2)Even if it was not allowed, when
the arbitration proceeding started, as of March 16, 2020.
Arbitration Procedure​Issue 1
A. The arbitral tribunal does not have authority to make a decision to conduct the online
examination of witnesses without the consent of both parties
The arbitral tribunal, in exercising its discretion, shall conduct the proceedings so as
to...provide fair and efficient process for resolving the parties’ dispute[​UNCITRAL
Arbitration Rules 2013 version(“UNCITRAL Rules”) Art.17.1]​. In addition, therecognition and enforcement of the arbitral award may be refused “​if the party was unable
to present his case”[​​the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards(“the New York Convention”) Art.5.1(b)]​. From these provisions, without
the consent of both parties, the online examination of witnesses may not give the party
which disagrees with conducting the examination remotely an opportunity to present its
case. In such cases, the recognition and enforcement of the award may be refused, and thatis the breach of the tribunal’s obligation to provide an efficient process for resolving
parties’ dispute. Therefore, the tribunal does not have authority to make a decision to
conduct the online examination of witnesses if there was no consent of both parties.
B. Even if the arbitral tribunal has authority to make such a decision, it is possible only
if the following conditions are met
1) The parties are treated with equality
The arbitral tribunal may conduct the arbitration in such manner as it considers
appropriate, provided that the parties are treated with equality[​UNCITRAL Rules Art.17.1​].
The online examination of witnesses may ruin ​the parties’ right to be treated equally, suchas semi-remote hearings, in which one side or its witnesses participates remotely, but not
the other. In such cases, one party’s witnesses might be coached from outside of thetribunal. Thus, in case of the online examination of witnesses, the tribunal is much required
to treat the parties equally under Art.17.1.
2) Efficient process for resolving the parties’ dispute
11

Chuo University​B​ lue’s preliminary Memorandum
The arbitral tribunal is obligated to provide an efficient process for resolving the parties’
dispute[​UNCITRAL Rules Art.17.1]​. In order to make the tribunal’s award efficient, it must
be recognized and enforced in Arbitria and Negoland. Regarding this point, the recognitionand enforcement of the arbitral award may be refused if the party was unable to present his
case[​
the New York Convention Art.5.1(b)]​. Considering these provisions, the online
examination of witnesses may not give the parties an opportunity to present its case, andthere is a possibility that the award will be refused. Therefore, in such circumstances, theonline examination of witnesses shall not be considered as an efficient process under
Art.17.1.
Issue 2
C. If certain conditions need to be met, following conditions need to be met in theexamination of witnesses using Zoom
1) Due process consideration
In order to prove the credibility of witnesses, it is appropriate to ensure a 360-degree viewof the witnesses’ venue, such as using multiple cameras. It is more difficult to assess thecredibility of witnesses remotely, because of the loss of non-verbal cues and the inability toinspect the person's behavior. Moreover, remotely heard witnesses might be coached orotherwise unduly influenced[​Maxi Scherer, Remote Hearings in International Arbitration:
Analytical Framework, Sec.5.2[b][ii]​].
2) Technical framework
The tribunal needs to be satisfied that all remote participants have a sufficiently goodinternet connection and hardware set-up.The need for interpreters is also one of the factors
the tribunal should take into account. In addition, it is necessary to consult between thetribunal and the parties regarding the incidental measures in case of sudden technicalfailures, disconnection, power outages[​ICC Guidance Note on Possible Measures Aimed at
Mitigating the Effects of the COVID-19 Pandemic ANNEX Ⅰ.B(iv)​]​.
3) Confidentiality, privacy and security
The parties and arbitral tribunal should discuss data security or cybersecurity, in order toensure that unauthorized third parties cannot gain access to the remote hearing. Data
privacy or confidentiality should also be secured, to avoid that the remote hearing provider
or any other involved third party which stores, transmits, or otherwise has access to data
during the remote hearing might misuse it outside the arbitral proceedings[​ICC GuidanceNote ANNEX Ⅰ.C]​.
4) Test sessions before the online examination
In advance of the hearing, it is appropriate to conduct a minimum of two mock sessions.
They should be held within the month preceding the hearing to test connectivity andstreaming, with the last session one day before the hearing[​ICC Guidance Note ANNEX
Ⅰ.B(v)​].
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