RARE METALS CASE
I. Red shall pay Blue US$5 million.
1.

Red breached the Agreement of Priority Supply of Rare Metals (Exhibit 6, “Rare Metals
Agreement” concluded on August 1, 2000), and Red is liable to pay Blue damages for the lo ss of
profit of US$5 million (PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACT
7.4.1&7.4.2).

A. The “rare metals, such as Nickel and Titanium” includes Tungsten.
2.

According to Rare Metals Agreement, Red shall provide Blue the rare metals, such as Nickel and
Titanium, which are produced by Red or its affiliate in precedence to other prospective purchasersin other countries than Negoland.

3.

To determine the common intention of parties, all circumstances including circumstances listed in
Article 4.3 of PICC should be taken into account. Considering the circumstances, the terms of thecontract (PICC 4.3 (a)) and the conduct of the parties subsequent to the conclusion of the contract(PICC 4.3(c)), the object for Red’s performance shall include tungsten.
a. The terms of Rare Metals Agreement
According to Rare Metals Agreement, the object for Red’s performance is “the rare metals,
such as Nickel and Titanium, which are produced by Red or its affiliate”. According to theordinary meaning of “such as”, “ Nickel and Titanium” are the mere examples of rare metals.
Thus, “the rare metals” shall include tungsten. And Negoland Tungsten Corp., which produces
tungsten, is Red’s wholly owned subsidiary (para.21).
Accordingly, the object for Red’s performance shall include tungsten.

b. The conduct of the parties subsequent to the conclusion of the contract (P ICC Article
4.3(c))In the meeting in February 2014, when Red proposed the priority supply of tungsten, Blue
said “You already promised us the priority-of-supply arrangement in the memorandum wesigned in the past”, and confirmed that the scope of priority supply included tungsten. In
response to the remark, Red did not show any intention to deny the remark of Blue (para.19).
And from September to October in 2015, Red supplied tungsten to Blue according to the orderof Blue (Ex.9), while corporate orders began to pour in from many foreign countries (para.21).
Furthermore, when Black proposed to Red for purchasing tungsten to pay 30 percent morethan Blue, Red said, "I understand that our company has promised Blue Inc. to priorit ies Bluein our exports of rare metals” (para.22). These imply that Red and Blue had intention tungsten
1was included in the object of priority supply.
Therefore, the object for Red’s performance on Rare Metals Agreement shall include tungsten.
4.

Red may argue that the object for Red’s performance on Rare Metals Agreement is limited to
Nickel and Titanium. However, the object shall not be limited to Nickel and Titanium, on accountof preliminary negotiations between the parties and the conduct of the parties su bsequent to theconclusion between themselves.
a. The preliminary negotiations between the parties (P ICC Article 4.3(a))
In the meeting held in July 2000 , Blue and Red remarked the object of their transaction asrare metals (para.12). After that, in the E-mail communication, Blue wrote the object of thepriority supply as “rare metals” in July 7 in 2000. However, Red revised the term of the draftfor Rare Metals Agreement from “rare metals” to “rare metals (Nickel and Titanium)” in July
19 in 2000 (Ex.5). Against the revision by Red, Blue revised the terms of the draft

from“(Nickel and Titanium)” to “such as Nickel and Titanium”, because the use of parentheses inthe draft rendered the main points of the agreement unclear. And Red signed it without any
objection (Ex.6, para.13).
From the above, there is no common intention between Red and Blue that the rare metals, theobject of the priority supply, shall be limited to Nickel and Titanium.
b. The conduct of the parties subsequent to the conclusion of the contract (P ICC Article
4.3(c))In 2003, Red had Negoland Materials merged into Negoland Metals.

This merger prompted

Red and Blue to embark on platinum-related transactions (para.14). Red filled all orders
placed by Blue after 2000 without fail and without any special conditions attached, although
in and around 2004, the demand for rare metals rose sharply around the world, triggering arare metals squeeze and some overseas buyers have approached Red saying that they will pay
anything as long as they can get hold of the supply (para.15). These facts indicate that theobjection of the priority supply includes not only Nickel and Titanium but also platinum.
Therefore, the object of the priority supply is not limited to Nickel and Titanium.
B. Red has breached Rare Metals Agreement.
5.

According to Rare Metals Agreement, Red gives Blue Corporation the right to order and purchaserare metals in precedence to “other prospective purchasers in countries other than Negoland.” Theterm "other prospective purchasers of countries other than Negoland" should be interpreted as not
only purchasers who reside outside Negoland, but also purchasers in Negoland to export rare2

metals outside Negoland, on account of preliminary negotiations between the parties and th e
conduct of the parties subsequent to the conclusion between themselves.
a. preliminary negotiations between the parties
In the meeting in July 2000, Red said “We can’t touch the rare metals earmarked for sales
within Negoland”, and Blue said “Let’s agree o n US$70 million on condition that yourcompany will give priority to the supply to us except what you need for domestic sales”(para.12). This implies that rare metals which Red may reserve in Negoland are necessary forthe protection of the domestic industries, but do not include that would be exported to othercountries.
b. the conduct of the parties subsequent to the conclusion between themselves
The purpose of the agreement is Red gives Blue the interest of rare metals which would beexported to other countries than Negoland. If rare metals are exported to other countries
through companies in Negoland, the purpose would be defeated.
6.

Therefore, the term “other prospective purchasers of countries other than Negoland" is understoodas purchasers who would buy rare metals except those which is necessary in Negoland, and should
be interpreted as not only purchasers who reside outside Negoland, but also purchasers in
Negoland not to consume rare metals in Negoland but to export them.

7.

From November 2015 to March 2016, Red had increased the supply amount of tungsten to Neglanddomestic companies from 20 tons to 40 tons (Exhibit 9). 20 tons of tungsten had been supplied toBlack Negoland, a corporation that Black in Meditria has established to get supply of tungsten
from Red. Because of the circumstances of the establishment of Black Negoland, Black Negoland
had the purpose to export tungsten to other cou ntries than Negoland. Black Negoland exported
overseas all amount of the tungsten bullions it purchases. Black Negoland is formally a company
in Negoland, however should be regarded as a prospective purchaser of countries other than
Negoland.

8.

In any event, it is clear that Black Negoland was incorporated on the purpose to deviatethe Priority
Supply Agreement. During the conversation between Red and Black in September in 2015, when
Black proposed “We will purchase your tungsten at 30% higher price than other companies, so
please prioritize the sales to us”, Red responded “I understand that our company has promised
Blue Inc. to prioritize Blue in our exports of rare metals. ” Then, Black proposed “if so, ourcompany will set up a subsidiary in Negoland.

Could you sell your tungsten to that subsidiary?

That would not be exports, so you would be able to priorit ize the sale to that subsidiary”, and Red3

accept this proposal (para.22).
If it is justified on the Rare Metal Agreement that Red makes a deal with such company as Black
Negoland, the purpose of the contract is lost. Thus, “the term "other prospective purchasers ofcountries other than Negoland" should include such company that is incorporated in order todeviatethe purpose of the Rare Metal Agreement. Accordingly, Red breach the obligation underRare Metals Agreement for Red supplied tungsten to Black Negoland, and did not supply it to
Blue.
9.

In conclusion, Red Company preferentially supplied tungsten, which is subject to priority supply,
to Black Negoland and did not supply it to Blue, and this constitutes a breach of Rare Metal
Contract.

C. Red is liable to pay Blue damages for the loss of profit of US$5 million.
10. Blue would have reaped a profit of US$5 million had it been able to obtain the supply as orderedin the period from November 2015 to March 2016 (para.23). The damage was caused by Red’s
non-performance, and there were certainty and foreseeability of the harm. Thus, Red is liable topay Blue damages for the loss of profit if US$5 million.

II. Red shall pay prescribed royalties in connection with platinum refining.
A. License Agreement was amended to include the refining of platinum.
11. License Agreement 1.1 stipulates Blue grants to Red a license solely to refine Tungsten. License
Agreement (Exhibit 7, concluded on February 28, 2014) was amended to include the refining of
platinum by the conversation in November 2015 and the exchange of e -mails on December 10,
2015.
12. The License Agreement 7.10 so-called non-oral modification clause stipulates modification of thisAgreement requires to be made in writing and signed by a duly authorized represen tative of eachof the parties: provided, however, Article 2.1.18 of PICC stipulates a party may be precluded byits conduct from asserting such a clause to the extent that the other party has reasonably acted inreliance on that conduct.
13. In November 2015, Red said “We should revise the license agreement. I will contact you again
about the procedure to revise the agreement”, Blue replied “I see”. On December 10, 2015, Blue
said “Is it OK that we will amend only Article 1.1 and add platinum at the end of the article?
Should we send you the amendment agreement?” Red replied “Yes, I agree with the part to beamended. We will send the amendment agreement, so please wait a while ” (para.24). The
4

statements of Red made Blue believe the License Agreement was amended without amendment inwriting and sign. Blue made no objection to Red’s use of the Licensed Technology to refine
platinum from March 1, 2016 to May.
B. Red used the Technology equal to the Licensed Technology of Blue to refine platinum.
14. Whether a technology is the same as another technology should be judged on the basis ofcomprehensive consideration o f circumstances, namely the judgment of each country's agency.
Since each country independently establishes a legal system concerning patent rights, it is assumed
that infringement of a patent right is recognized in a certain country and not in a certain country.
However, judgment that recognizes patent infringement is important. In general, when patent
infringement is recognized, a certain technology is the same as a technology protected by a patentright, and if it is a comparative examination between the same technology, it is unlikely that
judgment on the identity of both technologies will be different depend on countries.
15. In the present case, there were following judgement and determinations.
a. On March 1, 2017, the Arbitration Center of Arbitria issued an arbitral award, which orderedGreen to stop using the technology immediately and compensate Blue for damages caused by
the patent infringement because the Technology used by Green at Green’s platinum refining
plants in Meditria was the same as the technology for which Blue has the patent, and the useof the Technology constituted an infringement of the patents owned by Blue in Negoland andMeditria (para.27).
b. On April 1, 2017, the Patent Office of Meditria refused the patent application by Green in
Meditria for the technology applied by Green was the same as the technology for which Bluehas the patent (para.27).
c. On April 1, 2017, the Patent Office of Negoland approved the patent filed for by Green in
Negoland, and subsequently registered Green as patent holder (para.27).
d. On May 1, 2017, the Patent Office of Negoland rejected Blue’s objection that the Patent
Office of Negoland should not have approved the patent filed by Green without judging theissue of the similarity of the Technology and the technology of Blue (para.27).
16. The facts of (a) and (b) show that the Technology was the same as Blue’s Licensed Technology.
The arbitral award which recognized the patent infringement should be regarded important. In
addition, the arbitration was held between parties of Blue and Green, and partie d elected arbitrator
by themselves. Thus, the judgement was issued by fair and equitable values. Furthermore, as tothe determination of the Patent Office Meditria, it clearly states the Technology was the same as
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Blue’s Licensed Technology.
17. On the other hand, the facts of (c) and (d) were not reliable. As to the approval of the patent by
the Patent Office of Negoland, since it did not judge about similarity of the technology, this fact
is not reliable to determine the similarity of the technology. Furthermore, since the Patent Officeof Negoland rejected the Blue’s objection without judging similarity of the technology, this is fact
also unreliable.
18. Considering overall the facts mentioned above, the Technology is the same as Blue’s Licensed
Technology and Red used the Technology to refine Platinum.
C. Red shall pay royalties for using the Licensed Technology to refine platinum.
19. In accordance with Article 3.2 of License Agreement, Red shall pay to Blue a running royalty
equal to three percent (3%) of the Production Amount each calendar month which produced byusing the Licensed Technology.

FISHERIES CASE
I. Red’s Claim shall be dismissed.
20. Blue has not breached the obligations under the Confidentiality Agreement, because theInformation exposed is not “Confidential Information”, and there was no fault of Blue as to the
publication of the Information.
A. The Information is not “Confidential Information”.
21. Blue has not breached the obligation to keep in confidence the Confidential Information of theDiscloser under Section 2(1)(i) of the Confidentiality Agreement, because the Information
exposed is not “Confidential Information”.
22. “Confidential Information” is defined as “(i) the existence of the Project, and (ii) any and all
confidential, proprietary or secret information which are disclosed by the Discloser, and are clearlylabeled as “Confidential”, or should be reasonably considered to be confidential given the natureof the information or the circumstances surrounding its disclosure” (Article 1(1) of theConfidentiality Agreement).
23. These circumstances indicate the common intention that the range of the “Confidential
Information” is limited to the information concerning fish stocks. Therefore, the confidential
information in the Confidentiality Agreement is interpreted as the information concerning fishstocks. According to this definition, the Information exposed did not directly related to the study
on fishes stocks (para. 35), and it cannot be said the “Confidential Information”.
624. In any event, the Information does not fall within the scope of the “Confidential Information” inlight of the definition of the Confidentiality Agreement.
25. The Information does not show “the existence of the Project”, because the Information is theevidence of the approval by Negoland’s Ministry of Agriculture, Forestry and Fisheries of fishingactivities carried out by Negoland’s fishing vessels along its coasts in breach of the Convention
on Fish Stocks (para.35).
26. The Information is not the information clearly labeled as “Confidential”. Since the informationmust be “clearly” labeled as “Confidential”, a description reasonably considered as “Confidential”
is insufficient, and it should definitely be shown as a "Confidential". Although some of the
documents in the Information are marked “For Ministry Internal Use Only” (para.35), these areambiguous indications and are not clearly labeled as "Confidential".
27. The Information is not the information which “should be reasonably considered to be confidential
given the nature of the information or the circumstances surrounding its disclosure ” for thefollowing reasons.
a. With respect to “the nature of the information”, [規範]. The Convention on Fish Stocks
stipulates that if any fishing activity in breach of the Convention is found, a contracting statemust administer necessary action and disclose such illegal activity to the public (para.35).
b. With respect to “the circumstances surrounding its disclosure”, the Information was originallyreceived by Red from the Ministry and was never intended to travel beyond the confines ofRed’s offices, but Red’s employee gave it together with other confidential information to Blueby mistake. Such facts are not grounds for considering the Information reasonably as
confidential. This is because there is a lot of exchange of information among companies, andif they are in a joint project implementation relationship, the amount will be even larger. If
all the information sent along with the confidential information is understood to be
confidential information, the scope of recipient's confidentiality obligation would be
excessively expanded, which puts an excessive burden on the r ecipient.
28. In conclusion, the Information exposed is not “Confidential Information”, and there was no breachof obligation by Blue to keep in confidence the Confidential Information under the Confidentiality
Agreement.
B. There was no fault of Blue as to the publication of the Information.
29. If the Information is the Confidential Information, there was no breach of the obligation by Blue.
Section 2(2)(ii) stipulates if any portion of the Confidential Information is or becomes accessible7

to the public through no fault of the Recipient, the obligation set out in Section 2(1) shall no t apply
to the information.
30. The existence of “fault” should be judged by whether or not the Recipient observe a duty of care
under the Confidentiality Agreement. According to Section 2(2)(iv), the Recipient shall use (a) areasonable degree of care at least, and (b) the same degree of care as the Recipient would use withrespect to its own confidential information of similar importance. This is a duty of care, and “nofault” means to observe this duty of care. Blue has observed this duty of care as below.
a. Blue paid a reasonable degree of care to the Information. “A reasonable degree of care” means
attention to the extent that it avoids the risk of information leakage which is usually assumed.
This is because it is impossible for companies to take measu res against unprecedented risks.
Blue has a standard program for checking the presence or absence of viruses from external emails, and also frequently calls attention to officials not to open strange attachments (para.
34). If it is an ordinary virus, it could be detected by the virus-infected e-mail program, but
the e-mail was loaded with a new kind of virus and passed through the program. In addition,
if the e-mail was sent from an unknown name, the employee did not open the attached file.
However, the email used the name of Blue’s important customer and approved very natural ,and the employee opened the attached file inadvertently. From the above, Blue used areasonable degree of care that can avoided a normal risk of information leakage.
b. Blue paid the same degree of care to the Information as Blue would use with respect to Blue’s
confidential information. This is confirmed by the fact that some internal confidential
information of Blue also has been exposed (para.34). Blue used the same degree of care to
the Information as Blue used to the Blue’s confidential information.
31. In conclusion, the Information became to the public through no fault of Blue, and the obligation
under Section 2(1) cannot be applied to Blue. Then, there was no breach of the Confidentialit yAgreement. Then, Blue is not liable to pay US$ 10 million to Red

II. Red’s Claim shall be dismissed.
A. There is no hardship.
32. Red may argue that the following events serve as evidence of a hardship. However, the events(Exhibit 21) shall not serve as evidence of a hardship. Thus, the Requirements Contract, signed
between Red and Blue on September 1, 2012 (Exhibit 17), shall not be terminated and amended.
a. Because of the global warming and change of ocean currents, catch of Negoland fish reduce d
8

by half.
b. The import cost of ingredients has increased sharply due to changes in foreign exchange rate.
c. After the publication of the Information, some suppliers refused to sell Red ingredientsneeded for the production of Super Red Mix, and Red is only ab le to secure a supply
equivalent to about 1/2 of the previous level from new sources of supply.
33. The each event is not (1) an event which has causes a fundamental alteration of the equilibrium of
the contract, (2) Red can reasonably consider event at the time of concluding the contract, and (3)the event was not beyond the control of Red. In addition, (4) the risk of the event was assumed by
Red (PICC 6.2.2).
34. (1) The events do not cause fundamental alteration of the equilibrium of the contract. According
to PICC 6.2.2, the fundamental alteration of the equilibrium of the contract must be caused by theincrease of cost of a party’s performance.
a. The equilibrium of the Requirement Contract is that Red promises Blue to sell the Super Red
Mix at 10% discount of regular price and to provide it on a maximum total quantity of 5,000
tons, while Blue promises to buy it on a minimum total quantity of 1,000 tons.
b. In the present case, the cost of production has doubled and the cost of Red’s performance has
increased. However, it has not caused any alteration of the equilibrium of the Requirement
Contract. This is because, Red is able to obtain consideration for the increase in performancecost by raising the regular price of the Super Red Mix. Furthermore, if the regular price of
the Super Red Mix raises, Red may sale Blue 1,000 tons of the Super Red Mix , because Blueis obliged to purchase minimum total quantity of 1,000 tons. Accordingly, increase of the costof production of the Super Red Mix has not caused the alteration of the equilibrium of theRequirement Contract.
35.

(2) The events could reasonably have been taken into account by Red (PICC 6.2.2(b)).
Fluctuations in exchange rates usually occur, and the parties involved in international transactions
usually enter into contracts taking into account the risk of the change of exchange rates. In orderto submitthat fluctuations in exchange rates could not reasonably be considered, it is necessary for
it to fluctuate sharply in the short term. Illustration 3 of Article 6.2.2 in specific states that 80%
change of currency value in one month is a case of hardship. In the present case, the fluctuationof the exchange rate from January 2016 to September is 40%. In light of this example, the currency
fluctuation is moderate, and it should be said that this degree of fluctuatio n could be consideredreasonably.
936. (3) The publication of the Information is under Red’s control. PICC clearly states that the hardship
event impeding performance must be external to the party invoking it. Thus, the debtor may not
rely on self-induced hardship. That is to say, the difficulties of performance by the debtor may not
be the result of its own act or negligence. The Publication of the Information was caused by Red
incorrectly providing the Information to Blue, which Red should have been held in Red’s offices.
(paras.34-35). The event was led by Red's own negligence, and was under Red’s control.
37. (4) The risk of the following events was assumed by Red.

a. The assumption of risks need not be explicit, but is presumed by circumstances. At the timeof the preliminary negotiations between Red and Blue, Blue asked Red “what is yourproduction capacity like for Super Red Mix?”, and Red replied “Our recent study confirmedthat there is plenty of supply of Negoland fish, enough for our production of the Super Red
Mix”. This fact shows that concluding 15-year long-term contract, Red ensured that it would
be able to provide Super Red Mix to Blue stably. Accordingly, the reduction of Negoland fish
has been assumed by Red.
b. In international trades, exchange rate frequently changes, and each party assumes the risk ofsuch fluctuations and enters into a transaction. If the fluctuation is small, each party should
assume the risk. They may hedge risk by foreign exchange contract. In the present case, therate of Nego-Lira has dropped just 30% from January 2016 to January 2016 (Ex.4). Red did
not take the measure to hedge the risk expected by the contract with Blue. Therefore, Redshall undertake the risk of exchange rate.
From the above, Red may not invoke Article 6.2.2, because the increase of the expense of
performance does not cause the fundamental alteration of the equilibrium of the contract or fulfill
the additional requirements to claim hardship.
B. The tribunal shall adapt the contract what is following.
38. In any case of hardship, it is not reasonable to adapt Red’s requests. According to Article 6.2.3(4)(b), the tribunal may adapt the contract with a view of restoring its equilibrium. Thus, theadaption it may direct is limited to the extent that it is enough to restore the equilibrium of thecontract.
39. The equilibrium of Requirement Contract is kept by the relation that Red has the obligation toprovide Super Red Mix to Blue at 10 % discount of regular price on a maximum total quantity of
5,000 tons, on the other hand, Blue has obligation to buy it on a minimum total quantity of 1,000
10tons.
Although the profit of Red from Requirements Contract has been decreasing because the cost of
production has doubled, Red has the right to raise the regular price of Super Red Mix and rectify
the imbalance of Requirements Contract. Thus, the provision stipulating 10% discount in Article
2 of the Requirements Contract should not be deleted. And the supply volume of Super Red Mix,
which Red can supply, has decreased by half. Then, both the maximum supply amount, which Red
is obliged to supply, and the minimum supply amount, which Blue is obliged to purchase, shall be
reduced to half.

Namely, the minimum total quantity of “1,000 tons” of Article 4.1 should be

revised as “500 tons”, and the maximum total quantity of “5,000 tons” of Article 4.2 should be
revised as “2,500 tons”.
40. In conclusion, Requirements Contract should not be amended or terminate, because there is nohardship in the present case. In any case of hardship, the tribunal should adapt the contract as ismentioned above.

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