CASE 1: NEW CHALLENGE CASE
Summary of FactsRed Corp. (“Red”) accepted Blue Inc. (“Blue”) request to change the cigarette of “Santa” to a
candy under the impression that Blue has checked with the movie review organisation on theirposition. Blue prior communications with Red implied that if not for the change, the movie will
be qualified as “for adults”.
Summary of Arguments
Summary of argument: Blue has accepted a duty of best efforts to prevent a drop in box officerevenue, which is equivalent to accepting a duty to negotiate in good faith. Blue has breachedthese duties by failing to act in a reasonable manner in verifying the movie review organisation’s
stance on the cigarette. As such, Blue is liable to pay all expectation interests, which is the
19.25M claimed by Red.

ISSUE 1: DID BLUE ACCEPT A DUTY OF BEST EFFORTS, WHICH IS EQUIVALENTTO A DUTY TO NEGOTIATE IN GOOD FAITH?
Blue had accepted a duty of best efforts, which is equivalent to a duty to negotiate in good faith.
1.

While the contract (Exhibit 8) does not provide for an express duty of best efforts, this obligation canbe implied into the contract as an omitted term. Following Article 4.8(2)(a) of the UNIDROIT
Principles of International Commercial Contracts 2016 (“PICC”), an omitted term can be implied
based on the intentions of the party inferred from conduct prior and subsequent to concluding thecontract (Comment 3 of Article 4.8, PICC).

2.

Additionally, a duty to use best efforts is equivalent to a duty to negotiate in good faith. Comment 3
of Article 5.1.4, PICC states that in international commercial practice, “[w]hen the parties to a longterm contract have agreed on such a duty to use best efforts, that duty may amount, for all practical
purposes, to a duty to negotiate in good faith”. This duty subsists throughout the life of the contract(Comment 1 of Article 1.7, PICC). The present case is indeed a long-term contract as both parties are
expected to work together to resolve any issues that arise during the movie making process (Comment
3, Article 5.1.4, PICC).

3.

On the facts, Blue had represented their acceptance of a duty of best efforts to ensure the box officerevenue will increase, in their emails to Red dated August 8 and August 12, 2019 when proposingchanging the cigarette to the candy (Exhibit 10, Page 37).

4.

As such, the implied duty of best efforts on Blue to increase the box office revenue imposed a positive
duty to negotiate in good faith under Article 2.1.15, PICC.
ISSUE 2: DID BLUE BREACH ITS DUTY OF BEST EFFORTS BY FAILING TO
UNDERTAKE REASONABLE MEASURES TO VERIFY THE POSITION OF THE
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MOVIE REVIEW ORGANISATION?
Blue has breached its duty of best efforts by failing to undertake reasonable measures to verify the
position of the movie review organisation.
5.

Comment 2 of Article 5.1.4, PICC states that whether one has discharged their duty of best efforts is
assessed “based on a comparison with the efforts a reasonable person of the same kind would havemade in similar circumstances”. The phrase “of the same kind” refers to, inter alia, similar experience(Illustration 2 of Comment 2 of Article 5.1.4, PICC).

6.

On the facts, Blue had breached its duty of best efforts. Despite knowing that Red Corp. viewed thechange should be made only if “absolutely necessary” as they were concerned that it would affect theworld-building of the movie and in turn the box office revenue, Blue only made the effort to checkwith the movie review organisation once in August 2019. This was despite an internal change inpolicy since July 2019 that a film can be given a “no restriction” classification even if a cigarette ispresent as long as there is a health warning in the closing credits. Swan from Blue even conceded that
if she had “directly checked in August 2019, [she] might have been able to know such change ofpolicy”. (Exhibit 16, Page 50) Swan and Blue made no efforts to follow up after sending the firstemail between August 2019 all the way to the release of “New Challenge” in October 2021, morethan 2 years in between. This was a breach of the duty of best efforts to prevent a reduction in box
office revenue. Blue failed to act reasonably to protect the world-building, and in turn, the box officerevenue. A reasonable person of similar experience in similar circumstances would have attempted
to reach out to the movie review organisation in multiple ways, either by following up through anemail, calling the organisation, or even using industry contacts to figure out the policy. ConsideringBlue had 2 years in the interim to figure out the policy, sending only one email falls far short of thereasonable standard of best efforts.

7.

Blue hence breached its duty of best efforts to prevent a reduction in box office revenue.
ISSUE 3: IS BLUE LIABLE FOR ALL HEADS OF DAMAGES CLAIMED BY RED?

In light of Blue’s breach of duty of best efforts, Blue is liable for all heads of damages claimed byRed.
8.

As highlighted earlier, a duty of best efforts is equivalent to a duty to negotiate in good faith. As such,Blue’s breach of duty of best efforts amounts to a breach of duty to negotiate in good faith.

9.

Following Comment 3 of Article 2.1.15, PICC, where parties have agreed to negotiate in good faith(cf. merely the general duty not to negotiate in bad faith), all appropriate remedies for nonperformance will be available, including expectation interests. Since Blue has breached their duty tonegotiate in good faith, they are liable for all expectation interests.

10. On the facts, the expectation interest refers to the loss of profits as a result of the breach of duty by
Blue This amounts to 19.25M USD, including 0.25M USD of lost profits from the sale of “Designer
Zero'' costumes in Negoland from October 2021 to January 2022 and 19M USD of lost profits frombox office revenue in Designer Zero - New Challenge (“DZNC”) (Exhibits 14 and 15, Pages 47-49).
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ISSUE 4: CAN RED’S CLAIM OF 19.25M USD BE REDUCED BY REASONS OFFORESEEABILITY, MITIGATION, AND PARTIAL FAULT?
Red can claim the full 19.25M USD as the damages claimed should not be reduced by reasons offoreseeability, mitigation, and partial fault.
11. Blue cannot rely on the principles of remoteness of harm (Article 7.4.4, PICC), mitigation of harm
(Article 7.4.8, PICC), and contributory fault (Article 7.4.7, PICC).
12. Firstly, the harm caused by Blue’s is not too remote as the harm caused was reasonably foreseeable.
Blue knew that Red greatly valued world-building, evidenced from its prior communications withBlue (Exhibit 3, Pages 14-15 and Exhibit 6, Pages 25-26). Blue had acknowledged Red’s concernthat the change may result in a decrease in box office revenue when it undertook the duty of best
efforts by promising that the box office revenue will increase (Exhibit 10, Pages 37-39). Hence, Blue
would have known that the change would lead to drops in box office revenue and sales of the“Designer Zero” costumes.
13. Secondly, Red could not have acted in any reasonable way to mitigate their damage. Once DZNC
was released, Red could not have stopped the movie release or mitigate the loss of sales in “Designer
Zero” costumes without incurring disproportionate losses. Any mitigation of damage would haverequired disproportionate efforts and spending and hence would have been unreasonable. Blue hencecannot rely on Article 7.4.8, PICC to reduce their damages due.
14. Finally, Blue cannot rely on Article 7.4.7, PICC as Red had not been at fault. Red had fully relied onBlue’s statements in deciding to change the cigarette to a candy and Red was left with no choice but
to make the change. This is shown where Blue gave Red “no other way” despite Red’s reply that thechange would only be made if it was “absolutely necessary” (Exhibit 10, Page 37).
CONCLUSION: BLUE IS LIABLE FOR ALL 19.25M USD OF EXPECTATIONINTERESTS CLAIMED BY RED, AND NO REDUCTION OF DAMAGES SHOULD BEHELD.

CASE 2: BLUE LAND CASE
Summary of Facts

Red and Blue entered a Manufacturing and Supply Agreement in Exhibit 12 (the “Contract”)
where Red agreed to supply clothes to Blue. Red outsourced the manufacturing of clothes toBlack Inc. (“Black”) on Blue’s recommendation, after an examination of their plants and aninterview of their personnel.
Black was later discovered to have violated human rights by use of child labour, leading to public
outcry. This caused Blue a 15 million USD loss for the closure of Blue Land from 23 December
2021 to 4 January 2022, a 800,000 USD loss from the refund of clothes and a 5,330,000 USD
3loss from the fall in views of “Designer Zero - Friendship” (“DZF”) through Blue Net. This
amounted to 21,130,000 USD, which Blue seeks to claim.

Summary of Arguments

Red is able to avoid the contract as it has been vitiated on the grounds of mistake. Even if Red isunable to avoid the contract, any damages imposed on Red ought to be substantially or entirely
reduced as they are not foreseeable, could have been mitigated, and/or were in part caused by
Blue.

ISSUE 1: DID RED BREACH THEIR CONTRACTUAL OBLIGATIONS GIVEN THE
CONTRACT COULD BE AVOIDED ON THE GROUNDS OF MISTAKE?
Red did not breach their contractual obligations to Blue as the contract can be avoided on the
grounds of mistake.
15. It is submitted that Red can rely on the doctrine of mistake to avoid the contract, if:
1. At the time of concluding the contract, Red was under a mistake of fact as to the work conditionsof Black; (Article 3.2.1, PICC)
2. This mistake was so important that had Red known about the mistake, they reasonably would
have contracted on materially different terms by not approaching Black or would not haveconcluded the contract at all; (Article 3.2.2(1), PICC)
3. Blue had: (Article 3.2.2(1)(a), PICC)
a. Made the same mistake; and/or
b. Caused the mistake;
4. Red was not grossly negligent in committing the mistake; (Article 3.2.2(2)(a), PICC) and
5. Red did not assume the risk of the mistake (Article 3.2.2(2)(b), PICC).

A. Red was under a mistake of fact.
16. Firstly, the requirement of a mistake has been established. A mistake is an erroneous assumption
relating to facts or to law existing when the contract was concluded (Article 3.2.1, PICC). At the timeof concluding the contract in January 2021, Red had been mistaken as they had erroneously assumed
that Black was not in violation of human rights when in fact they were.

B. The mistake was so important that the contract would have concluded on materially different
terms or not been concluded at all had it been known.
17. For a mistake to be serious enough to be caught under the doctrine of mistake, a reasonable person in
Red’s position who knew of Black’s workers’ rights violations would not have concluded the contract.
Clause 4 of the Contract requires that Red must ensure that the clothes will be manufactured andsupplied in compliance with all governmental and environmental regulations. Had Red known ofBlack’s child labour, they would have known that Clause 4 would have been breached. Therefore, toavoid a breach, a reasonable person with knowledge of the true nature of Black’s operations would
not have concluded the Contract or would have concluded the Contract on materially different terms.

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Red’s mistake as to Black’s true nature of operations led them to conclude the contract. Hence, themistake was indeed serious enough.
C. Blue made the same mistake as Red.
18. Blue made the same mistake as they were similarly unaware of Black’s violation of human rights,
fulfilling the requirement in Article 3.2.2(1)(a), PICC. Exhibit 13 documents the communications
between Red and Blue in sourcing a company to manufacture the clothes, where Blue was under the
impression that Black was a trustworthy company to be relied on for the manufacturing of clothes,given that the president of Black was once a department manager at their company, and theypreviously engaged Black for business. Blue would not have strongly recommended Black if they
were aware of Black’s violation of human rights. Therefore, Blue was also under a false impressionof Black, thereby making the same mistake as Red.

D. Blue caused the mistake to be made by Red.
19. Blue caused the mistake as the party who first recommended Black by sharing their positive
experience with them (Exhibit 13, Page 45). Red’s reliance on these statements has contributed totheir false impression of Black, and hence their mistake.

E. Red was not grossly negligent.
20. A “grave departure” from a reasonable standard of care amounts to gross negligence (Gr Engineering
Services Ltd v Investmet Ltd [2019] WASC 439). Red has taken reasonable care to ensure that the
manufacturing processes at Black were not in violation of any governmental regulations as per theContract by conducting thorough examination of the plant and its products and communicating withthe president and workers, who all represented that there were no problems with workers’ rights. Red
could not have been said to be negligent at all, and it follows that they were not grossly negligent.

F. Red did not bear the risk of mistake.
21. Holding that Red bore the risk of Black’s compliance with labour rights regulations simply becauseof the warranty is contrary to the fundamental principles of fairness and intentions of the parties.
22. On fairness, it is unfair to uphold the warranty against Red as the warranty was agreed when Red
intended to approach White Corp. (“White”) to produce the costumes. Red was instead faced withrejection from White, strong endorsement from Blue for a supplier they never worked with before,
no other suppliers who can fulfil the order, and did their due diligence by inspecting the premises ofBlack and interviewing it’s staff.
23. On the intentions of the party, the warranty was made only in Red’s original intention to contract withWhite. However, it cannot be said Red intended to bear the risk of Black’s compliance with labour
rights regulations as they had relied on Blue’s recommendations. This is evinced from Red’s relianceon Blue by stating “if you say Black Inc. is trustworthy, we really wish to outsource manufacturing
to Black Inc.” (Exhibit 13, Page 45).

5

24. It follows that Red has the grounds for avoiding the Contract. Article 3.2.14, PICC states that theeffect of avoidance is to consider the Contract to have never existed.
ISSUE 2: GIVEN THAT THE CONTRACT CAN BE AVOIDED, IS RED LIABLE TO
PAY FOR ALL HEADS OF DAMAGES PLEADED BY BLUE?
A. Red is not liable to pay for all heads of damages pleaded by Blue because the Contract has
been avoided.
25. It is trite law that if the contract is avoided, the effect is that the contract had not existed (Article
3.2.14, PICC). It has been shown above that the Contract can be avoided on grounds of mistake. Thismeans that Red would be released from its liabilities under the Contract and not liable to pay any
damages to Blue.
26. For completeness, Article 3.2.16, PICC does not apply in the present case. The requirement that a
party who knew or ought to have known about the grounds for avoidance of the Contract will be liablefor damages to put their counterparty in a position had the contract not been concluded is not madeout. Red did not know of Black’s illegal worker conditions. Furthermore, Red cannot be said to haveought to have known as they have taken all reasonable steps to ensure Black’s workers’ conditions.
B. Even if the Contract is not avoided, Red is still not liable to pay for all heads of damages
because these damages were either not reasonably foreseeable, could have been mitigated,
and/or were caused in part by Blue.

I. Red is not liable for the return of costumes and the closure of Blue Land because the harmcaused was not reasonably foreseeable.
27. Whether a harm was reasonably foreseeable is assessed on what a “diligent person could reasonably
have foreseen as the consequences of nonperformance in the ordinary course of things and theparticular circumstances of the contract” (Comment of Article 7.4.4, PICC).
28. The decrease in views of DZF was not a reasonably foreseeable outcome. When Red had concluded
the contract, Red did not know the extent to which how people in Arbitria reacted towards humanrights violations, or if the incident would be reported at all such that it may result in public outcry.
Blue informed Red about neither the importance of human rights to Arbitria, nor the precedent cases.
Red’s perception of human rights was limited insofar as the public awareness in Negoland of humanrights violations was not strong (Paragraph 30, Page 7).
29. Particularly for the return of costumes, Red was unaware, and was not informed by Blue, at the timeof concluding the contract, that Arbitria had laws which permitted customers to return products madeunder human rights violations. As seen in their email dated August 25, 2022, Red was certainly
unaware of Arbitria’s laws as Negoland’s laws did not require returning products tainted by humanrights violations (Exhibit 18, Page 53). The costume returns were hence not reasonably foreseeable.
30. The closure of Blue Land was also not a reasonably foreseeable consequence of Red’s nonperformance. While there is precedence of companies being criticised, boycotted, and closing their
shops for similar reasons (Paragraph 27, Page 7), the present case features more extreme
6consequences such as protests by demonstrators at Blue Land and bomb threats sent to Blue. Despite
Arbitria’s strong awareness in human rights violations, a diligent person could not have reasonably
foreseen that its citizens would break the law and threaten the safety of the visitors of Blue Land byprotesting and sending bomb threats.
II. The amount of damages payable to Blue for the closure of Blue Land ought to be substantiallyreduced as they failed to undertake reasonable steps to mitigate the harm caused.
31. A non-performing party is not liable for the harm suffered by the aggrieved party to the extent the
aggrieved party could have undertaken reasonable steps to mitigate the harm caused (Article 7.4.8,
PICC).
32. On the facts, Blue did not undertake any mitigatory measures to reduce the harm caused. Instead,Blue had elected to take the extreme measure of closing down the entire Blue Land for an extended
period of time. Blue could have taken measures to reduce their damage, such as reopening Blue Land
with additional security, not distributing “Designer Zero” brand costumes temporarily, and closing
the “Designer Zero” attraction.
33. In light of the above, Blue failed to undertake reasonable steps to mitigate their harm, hence, any
damages payable ought to be greatly reduced.

III. Any damages payable by Red ought to be substantially, if not completely, reduced as Blue had
caused Red’s non-performance.
34. Article 7.1.2, PICC sets out the general principle that a party may not rely on the non-performance ofthe other party to the extent that such non-performance was caused by the first party’s act or omission.
Article 7.4.7, PICC applies Article 7.1.2, PICC to the context of damages, and states that where theharm is due to the aggrieved party, the amount of damages shall be reduced to the extent that thesefactors have contributed to the harm.
35. Blue is barred from relying on Red’s non-performance (if any) as they have caused Red’s nonperformance by introducing and strongly recommending Black. Had Blue not introduced andrecommended Black, Red would not have outsourced manufacturing to Black, and the human rights
violations would have been avoided. According to the email dated 19 January 2021 (Exhibit 13, Page45), Red explicitly relied on Blue's recommendations that Black was trustworthy in arriving at thedecision to outsource manufacturing to Black.
36. Additionally, Blue’s degree of fault in recommending Black in blind faith far outweighs any fault on
Red, who has done everything reasonably necessary to ascertain Black’s compliance with labour
regulations. Hence, Red's non-performance is excused substantially, if not altogether (Comment 3 ofArticle 7.4.7, PICC). Blue should not be awarded any damages against Red. Nevertheless, even if
Blue were to be awarded damages, the amount should be greatly reduced.
CONCLUSION: RED IS NOT LIABLE FOR ANY OF THE DAMAGES PLEADED BYBLUE BECAUSE THE DAMAGES WERE NOT REASONABLY FORESEEABLE, AND
EVEN IF THEY WERE THE DAMAGES SHOULD BE GREATLY REDUCED AS THEY
COULD HAVE BEEN MITIGATED, AND/OR WERE PARTLY CAUSED BY BLUE.
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CASE 3: CARD CASE
Summary of Facts

On June 1, 2022, Blue started to distribute DZNC through Blue Net and sold cards at Blue Landon which famous scenes of DZF and DZNC are printed. Red claims that Blue had no right todistribute DZNC through Blue Net and to sell the cards in Blue Land, without Red’s consent.
Blue disputed this claim and justified their actions by saying that they got consent from Minna
Friends. After several failed negotiation attempts, and Blue’s refusal to proceed with mediation,
Red filed a petition for arbitration. Blue claimed that Red was not allowed to do so as 6 months
have yet to elapse, as previously agreed in the dispute resolution clause (Clause 21(f) of Exhibit
7, Page 31 (“Clause 21(f)”).
Summary of Arguments
The Arbitral Tribunal has jurisdiction to hear the Card Case as Clause 21(f) is not enforceable
and/or because negotiation and mediation efforts have been futile. Furthermore, since Blue does
not have the right to distribute cards in Blue Land and DZNC on Blue Net, damages of 50% of
the revenue from each infraction should be awarded against Blue.

ISSUE 1: DOES THE ARBITRAL TRIBUNAL HAVE JURISDICTION IN RELATION TO
THE CARD CASE?

The Arbitral Tribunal has the jurisdiction to hear the Card Case as Clause 21(f) is unenforceable
and/or the negotiation and mediation efforts have been futile.
A. Clause 21(f) is unenforceable as it is neither certain nor mandatory.
37. Clause 21(f) is unenforceable as it has insufficient terms to render it certain and mandatory.
38. The general view is that agreements to negotiate and mediate are unenforceable because they are
inherently aspirational (Gary Born, International Commercial Arbitration (Kluwer Law
International), 3rd ed, 2021 (“Born”) at 975). They are “primarily expression[s] of intention” and“should not be applied to oblige the parties to engage in fruitless negotiations or to delay an orderly
resolution of the dispute.” (Interim Award in ICC Case No. 10256; Born at 981)
39. Such clauses may be deemed enforceable only if they are both sufficiently certain and mandatory.
Due regard is paid to whether there are sufficient guidelines to the negotiation and mediation process
in the clause, such as duration, number of sessions, participants, and specified rules, as well as thenature of the terms (Born at 977-978; 985-986).
40. The terms in Clause 21(f) are insufficiently detailed to be certain or mandatory. While Clause 21(f)does state the duration of negotiation and mediation, it leaves out critical details such as the numberof negotiation and mediation sessions, who will participate in the sessions, and under what mediation
rules. On balance, the clause is neither certain nor mandatory.
8

41. In any case, Born at 986 recommends focussing on the “inherently imperfect and aspirational” natureof obligations to negotiate and mediate, and prioritising parties’ “access to legal process andremedies”. Hence, “doubts regarding the mandatory character of contractual negotiation provisions
should generally be resolved in favour of their aspirational, non-binding nature”. This suggests a very
high threshold to enforce Clause 21(f), which has not been met.
42. Since Clause 21(f) is neither sufficiently certain nor mandatory, it is unenforceable. This Honourable
Tribunal hence has jurisdiction to hear the Card Case.
B. Even if Clause 21(f) is enforceable, the parties have been discharged from their obligations tonegotiate and mediate as their attempts to negotiate have proven futile.
43. The parties should not be restricted from entering arbitration as negotiations have stalled without theprospect of success and Blue refuses to enter mediation.
44. Parties do not need to fulfil their obligations when it is shown that such efforts to negotiate and/or
mediate are, and will continue to be, futile. This occurs when neither party is altering their positions
meaningfully, and no agreement would be reached (Born at 995). Furthermore, a party will be
prevented from insisting on negotiation and mediation just to delay arbitral proceedings (Born at 996).
45. Throughout the course of negotiation, Blue repeatedly disclaimed responsibility and attributed theparties’ disagreements to “difference in viewpoints”. Red also refused to proceed with negotiations
unless Blue temporarily suspended card sales and Internet distributions of DZNC. Seeing as parties
are unwilling to alter their position to reach a negotiated agreement, Red suggested moving intomediation, to which Blue refused. Parties cannot reach a negotiated agreement, yet cannot consent tomediation (Exhibit 19, Pages 55-56). The Honourable Tribunal should disallow Blue from continuing
to stall the process and delay moving to arbitration.
46. The Honourable Tribunal deciding that it has jurisdiction to hear the Card Case promotes commercial
efficiency and prevents further losses to Red. Furthermore, “a party suffers no injury from being
denied participation in negotiations that will produce no progress towards resolution of the parties’
dispute”, especially when “the same party may be in part responsible for the futility of thenegotiations” (Born at 996). This is precisely the case here, where Blue is in part responsible forstalling the negotiations.
47. As such, the Honourable Tribunal should decide that it has jurisdiction to hear the case.
ISSUE 2: SHOULD THE HONOURABLE TRIBUNAL ISSUE A DECLARATION THATBLUE HAS NO RIGHTS TO DISTRIBUTE DZNC ON BLUE NET, AN ORDER FOR
BLUE TO PAY RED 50% OF THEIR REVENUE FROM DISTRIBUTING DZNC ON
BLUE NET, AND AN INJUNCTION TO STOP DISTRIBUTING DZNC ON BLUE NET?
A. Blue has no rights to distribute DZNC on Blue Net.
48. Blue did not have the rights to distribute DZNC on Blue Net as Minna Friends’ consent to distributing
DZNC does not amount to a valid contract between Blue and Red.
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49. Firstly, at no time did Red accept the offer to enter into a conditional distribution agreement with Bluefor DZNC. Referring to Comment 1 of Article 2.1.6, PICC, a mere expression of interest in an offer
is insufficient. Furthermore, acceptance of an offer cannot be qualified with conditions. On the facts,
Red had never represented an unequivocal acceptance of Blue’s proposal to distribute DZNC throughBlue Net. Red agreed with the idea of distributing DZNC on Blue Net, but qualified it by saying
Minna Friend’s views had needed to be sought first (Exhibit 6, Page 26). This was not a valid
acceptance.
50. Secondly, the offer to distribute DZNC is no longer valid. Red mentioned that Minna Friends did notwant to commit to distributing DZNC until knowing the quality of the completed work, and it was
too early to promise to agree to distribute DZNC. Blue counter-proposed distributing only DZF witha lower payout to Red. This was accepted by Red, and crystalised in the contract in Clause 2 of Exhibit
8, Page 32. By contracting to distribute only DZF on Blue Net for less consideration, the offer to
distribute DZNC was hence no longer valid.
51. Finally, Blue had represented that if Minna Friends approved the distribution of DZNC on Blue Net,
“specific procedures will be followed toward conclusion of an agreement” (Exhibit 6, Page 26). Thismeans that Minna Friends’ approval itself does not conclude the agreement, and parties will need toundertake “specific procedures” to conclude the agreement. Since nothing was done after Minna
Friends’ approval, the contract was never concluded.
B. Blue is liable to pay damages of 50% of the revenue from distribution of DZNC on Blue Net toRed.
52. Blue should compensate Red for violating Red's proprietary rights over DZNC by distributing DZNC
on Blue Net. Blue should pay Red 50% of the revenue. While there is no contract regarding the
distribution of DZNC, it was previously agreed that if both DZF and DZNC were distributed on Blue
Net, Blue and Red would split the revenue 50-50 (Exhibit 6, Page 26). Ordering Blue to pay 50% of
the revenue will uphold the intention of both parties.
53. For completeness, Blue cannot rely on Clause 2 of Exhibit 8, Page 32, as the revenue ratio of 1:2 wasmade in the context of only DZF being distributed, whereas currently both films are being distributed.
C. An injunction restricting Blue from distributing DZNC on Blue Net should be issued as therequirements from the UNCITRAL Arbitration Rules (2021) have been satisfied.
54. The requirements to issue interim measures such as an injunction are distilled from Articles 26(2) and(3) of the UNCITRAL Arbitration Rules (2021). Red submits that:
1. An injunction is an interim measure which will cause Blue to cease in an action which is likely
to cause current or imminent harm (Article 26(2)(b)(i));
2. Harm not adequately reparable by an award of damages is likely to result if the injunction is notordered and such harm substantially outweighs the harm of not allowing Blue to sell cards at
Blue Land in the interim (Article 26(3)(a));
3. There is a reasonable possibility of Red succeeding on the merits of its claim (Article 26(3)(b)).

10

55. Firstly, Blue continuing to distribute DZNC on Blue Net causes harm to Red’s proprietary rights over
DZNC, as well as imminent reputational harm. People in Negoland can access DZNC on Blue Net
online and further criticise Red due to the loss of world-building (Paragraph 12, Page 4, and Exhibit
15, Pages 48-49).
56. Secondly, proprietary and reputational losses are not adequately repairable by damages as they areunquantifiable. The risk of Red’s long-term loss of proprietary rights and reputation far outweighs
the harm of not allowing Blue to distribute DZNC in the interim, which is merely a short-term
pecuniary loss.
57. Finally, the merits of Red’s claim has been detailed above, and there is indeed a reasonable possibilityof Red succeeding on the merits of its claim.
58. As all three criteria have been satisfied, this Honourable Tribunal should issue an injunction to restrict
Blue from distributing DZNC on Blue Net.
ISSUE 3: SHOULD THE HONOURABLE TRIBUNAL ISSUE A DECLARATION THATBLUE HAS NO RIGHTS TO SELL THE CARDS AT BLUE LAND, AN ORDER FOR
BLUE TO PAY RED 50% OF THEIR REVENUE FROM SELLING THE CARDS, AND
AN INJUNCTION TO STOP SELLING THE CARDS AT BLUE LAND?

A. Blue has no rights to sell cards at Blue Land.
59. Blue has no rights to sell cards at Blue Land as they did so on their own accord, when they ought tohave sought to reach an agreement with Red beforehand.
60. Referring to Clause 10(b) of both Exhibits 4 and 7, Pages 20 and 30 (“Clause 10(b)”), both Blue andRed have mutual control over the development, production, and exploitation of any Derivative Works.
When a proposal is made by either party on Derivative Works, both parties will seek to reach an
agreement on its terms within a reasonable time. It is clear that the cards Blue is selling in Blue Land,featuring famous scenes of the two “Designer Zero” movies, is indeed a “Derivative Work” as definedin Clause 10(a).
61. While Blue admittedly has the final say over the production, development, and exploitation of such
Derivative Works, this is only when there is a disagreement between Red and Blue on the matter. In
the present case, Blue has clearly failed to carry out their contractual obligations by producing andselling the cards without consulting Red prior to production and sales. Blue’s right to unilaterally
decide on developing and selling the cards does not arise, as there was no prior disagreement.
62. In fact, Blue had a positive duty to consult Red “regarding the design and operation of the attraction
on [a] continuing basis” (Clause 8(2) of Exhibit 8, Page 33 (“Clause 8(2)”)).
63. For completeness, Blue cannot solely rely on Minna Friends’ approval to develop and sell the cards.
The proprietary rights stemming from the “Designer Zero” movie franchise is owned by Red andBlue in an undivided 50-50 split (Clause 9 of both Exhibit 4, Page 19 and Exhibit 7, Page 29 (“Clause9”)). Minna Friends’ approval is hence insufficient. Furthermore, Red’s intention to grant a licence
to Blue to “Designer Zero” in Blue Land instead of being involved in the construction of the11attraction (Exhibit 6, Page 26) has been superseded by the contractual provisions in Clause 10(b) and
Clause 8(2) above.
B. Blue is liable to pay 50% of the revenue gained from the sale of cards in Blue Land.
64. Since Blue has violated Red’s proprietary and control rights by producing and distributing the cards,
Blue is liable for damages.
65. As to the proportion of revenue made payable to Red, Blue should pay Red 50% of the revenue gained
from the card sales. While Clause 10(b) is silent as to the distribution of the profits, Article 4.4, PICC
allows Clause 10(b) to be interpreted “in the light of the whole contract or statement in which they
appear”. This implies that other terms of the contract can be referred to. In clauses 6, 8, and 9 of
Exhibits 4 and 7, the parties have agreed on a general 50-50 split in financing, division of receipts,
and proprietary rights. There are no other terms in the contract indicating a numerical split. Therefore,
this Honourable Tribunal should similarly infer and impose a 50-50 split in revenue between Red andBlue.

C. An injunction restricting Blue from selling the cards at Blue Land should be issued as therequirements under the UNCITRAL Arbitration Rules (2021) have been fulfilled.
66. The requirements for awarding an injunction have been set out in Paragraph 54 above.
67. Firstly, granting an injunction will cause Blue to cease selling cards in Blue Land. Selling cards inBlue Land without consulting Red causes harm to their proprietary and control rights to the Derivative
Work under Exhibits 4 and 7.
68. Secondly, this harm is not adequately reparable if an injunction is not awarded because the loss ofproprietary and control rights are unquantifiable and not adequately repairable by pecuniary damages.
Furthermore, as “Designer Zero'' is synonymous with Red, any backlash stemming from selling thecards, notably with the ongoing controversy surrounding DZNC’s world-building, will result in a
reputational loss for Red, which is also unquantifiable. The potential long-term harm on Red’s
proprietary rights, control, and reputation far outweighs the short-term pecuniary harm of notallowing Blue to sell cards in the interim.
69. Finally, the merits of Red’s claim has been detailed above, and there is indeed a reasonable possibilityof Red succeeding on the merits of its claim.
70. As all three criteria have been satisfied, this Honourable Tribunal should issue an injunction to restrict
Blue from selling the cards in Blue Land.
CONCLUSION: RED SHOULD BE ALLOWED TO BRING THE CARD CASE TO
ARBITRATION, AND SHOULD BE PAID 50% OF THE REVENUE FROM THE
DISTRIBUTION OF DZNC THROUGH BLUE NET, AND THE REVENUE FROM THE
SALES OF CARDS AT BLUE LAND.

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