BEIJING NORMAL UNIVERSITYMEMORANDUM FOR RED TEAMCONTENTSINDEX OF AUTHORITIES ...................................................................................................... 3
TABLE OF ABBREVIATION ................................................................................................... 3
STATEMENT OF FACTS .......................................................................................................... 4
CRAB CASE .............................................................................................................................. 5
PART ONE: THE SALE AND PURCHASE AGREEMENT FOR 10,000 NEGO CRABS WASEFFECTIVELY CONCLUDED. ............................................................................................... 5I.

Red Corp. and Blue, Inc. concluded the contract through an automated system. ........ 5

II. In the automated system, there was an offer and an acceptance. ................................. 5
PART TWO: IF AN AGREEMENT WAS EFFECTIVELY CONCLUDED, THE PRICE OF
NEGO CRAB IS US$200 PER CRAB. ..................................................................................... 5I.

According to RB Dashboard, the price of Nego crab is US$200 per crab. .................. 5

II. Even if there was no agreed price, the price of Nego crab is US$200 per crab according
to the price which is generally charged on the market. ....................................................... 6
PART THREE: BLUE, INC. CAN NOT CANCEL THE AGREEMENT. ................................ 6I.

The conditions of avoiding the agreement by the party other than mistaken party are

not fulfilled. ......................................................................................................................... 6
II. The conditions of avoiding the agreement by mistaken party are not fulfilled............ 7
PART FOUR: THERE IS NO FACTUAL OR LEGAL BASIS BASED ON WHICH THE
AMOUNT TO BE PAID BY BLUE, INC. TO RED CORP. SHOULD BE REDUCED. ......... 7
I.

Red Corp. did not result in any real harm of Blue, Inc. ............................................... 7

II. Red Corp. did not result in any loss of a chance of Blue, Inc. ..................................... 7
PART FIVE: RED CORP. DOES NOT HAVE THE OBLIGATION TO PAY US$500,000 TO
BLUE, INC. FOR THE SALE OF NEGO CRABS TO GREEN CORP. .................................. 8I.

Red Corp. was not bound by the contract between Blue Inc. and Green Corp. ........... 8

II. Red Corp. was not responsible for the introduction of Green Corp. ............................ 8BLUE HOT CASE ..................................................................................................................... 8
PART ONE：SALES OF “BLUE HOT” CONSTITUTES A BREACH OF OBLIGATION BY
BLUE, INC................................................................................................................................. 8I.

The sales of “Blue Hot” in Negoland constitutes “engaging in business that competes
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BEIJING NORMAL UNIVERSITYMEMORANDUM FOR RED TEAM

with Yellow Corp.” .............................................................................................................. 8
II. The behavior that Blue, Inc. sells products to Brown Trading Corp. is against “goodfaith”. ................................................................................................................................... 9PART TWO: THE TRIBUNAL SHOULD RENDER THE ARBITRAL AWARD. .................. 9I.

Blue, Inc. should perform its obligation. ...................................................................... 9

II. The Tribunal has remedial authority to grant an injunctive relief. ............................... 9III.

Tendency of international arbitration practice recommends the Tribunal to orderinjunctive relief. ................................................................................................................ 10
PART THREE: BLUE, INC. OWES THE OBLIGATION TO PAY US$400,000 FOR
DAMAGES TO RED CORP. ................................................................................................... 10I.

The behavior of Blue, Inc. constitutes a non-performance and cannot be excused. .. 10

II. US$400,000 is the gain which Red Corp. was deprived of........................................ 10
III.

The probability of loss of a chance and the occurrence of harm is reasonably

certain…… ........................................................................................................................ 11
THIRD PARTY FUND ISSUE ................................................................................................ 11
THE BLUE, INC.’S PETITION REGARDING THE DISCLOSURE OF THIRD PARTY
FUND SHOULD BE REJECTED BY THE TRIBUNAL....................................................... 11I.

Blue, Inc.’s submission of the disclosure of the third party fund is inadmissible. ..... 11
A. Blue, Inc.’s submission of disclosure of the third party fund lacked relevant factors
and legal evidence. ..................................................................................................... 11
B. The third funding party of Red Corp. will not influence the justice of thearbitration…………………………. .............................................................................. 12
C. Blue, Inc. should submit the petition regarding the challenge in a good faith. .. 12

II. The Red Corp. has no obligation to disclose the contents of the agreement regarding
the fund. ............................................................................................................................. 12
A. It is the arbitrator’s duty to disclose any circumstance likely to give rise tojustifiable doubts. ....................................................................................................... 12
B. In the agreement, there are provisions prohibited the Red party from disclosing
the information to any third party. ............................................................................. 122

BEIJING NORMAL UNIVERSITYMEMORANDUM FOR RED TEAMINDEX OF AUTHORITIESBIBLIOGRAPHY

ABBREVIATIONInternational
Arbitration

CITATION

CITED

Commercial Gary B. Born
International Commercial Arbitration
Kluwer law international, 2rd ed., 2014

Chap. 23

Performance As A Remedy: Michael E. Schneider & Joachim Knoll
Chap. 3
Non-Monetary Relief in Performance As A Remedy: Non-Monetary Relief
International Arbitrationin International Arbitration
ASA Spec. Series No. 30, 2011

TABLE OF CASESSouth American
Limited v. Bolivia

Silver PCA Case No.2013-15,Procedural
No.10,11 January 2016

Sehild v. Turkmenistan

Order §69-70

ICSID Case No. ARB/ 12/ 6, Procedural Order §2
No.3,12 June 2015

TABLE OF ABBREVIATION
Chap.

chapter&andArt (s).

article (s)UNCITRAL Rules

UNCITRAL Arbitration Rule (as revised in 2010)

Principles

UNIDROIT Principles of International Commercial Contracts 2016Cl.

clausePara.

paragraph

Problem

18th Intercollegiate Negotiation Competition Problem“Blue Hot”

“Blue Hot” series

Agreement

Joint Venture Agreement“Yellow Quick”“Yellow Quick” series§

section3

BEIJING NORMAL UNIVERSITYMEMORANDUM FOR RED TEAMSTATEMENT OF FACTS
Red Corp.
Blue, Inc.

Yellow Corp.

Crab Case20122018.01

2019.03.03

2019.03.04

2019.03.05
2019.03.07

2019.03.10

A large Corporation in Negoland engaging in food and processed foodbusinesses.
A well-known corporation in Arbitria engaged in the import and sale offood products, and the manufacture and sale of processed foods and readyto-eat foods.
A joint venture by Red Corp. and Blue, Inc. engaged in manufacturing ofready-to-eat foods.

Red Corp. and Blue, Inc. introduced a new account management system (RBLink) for the sales order process.
At the request of Blue, Inc., Red Corp. created an information management
system and put it into use.
Blue, Inc. developed an AI system (Smart Blue), which could automaticallyplace an order according to the forecast.
Due to clicking on the email transmitted by Blue, Inc., hackers hacked into Red
Corp.'s information management system and changed the price information of
crabs from US$200 to US$50.
AroundSmart Blue placed an order for 10,000 Nego crabs. RB dashboard
1:00 a.m. recorded the order at the price of US$200 each. Red Corp. sent out
the delivery instruction to the warehouse promptly.
5:00 a.m. 10,000 crabs were sent from the warehouse.
8:00 a.m. Red Corp.’s person in charge immediately took measures to shut
off the unauthorized access and corrected the data.
One staff of Blue, Inc. saw the information about the transaction of 10,000 Nego
crabs. Blue, Inc., received the 10,000 Nego crabs.
By looking for a buyer, Red Corp. told Blue, Inc. that Green Corp. was willingto buy the crabs at the price of US$100 each. Blue, Inc. and Green Corp. reached
an agreement.
Blue, Inc. shipped the crabs to Green Corp., and the freight and tariff cost
US$500,000 in total, although the previous budget was US$200,000. Later,
before the payment, Green Corp. went bankrupt.

Blue Hot Case2014.12 Red Corp. and Blue, Inc. reached the Agreement of establishing Yellow Corp.
2015.01

Yellow Corp. started to operate and add “Nego Noodles” to its lineup.

2016“Yellow Quick” was developed, including beef stew and aqua pazza.

2017“Blue Hot” was developed by Blue, Inc. and sold in Arbitria.

2017.10Red Corp. proposed to add “Blue Hot” to the Yellow Corp. but was rejected.

2018.01

With the addition of beef stew and aqua pazza, “Blue Hot” was sold in Negoland.

2018.12

Yellow Corp.’s profit decreased by US$1 million in 2018.

4

BEIJING NORMAL UNIVERSITYMEMORANDUM FOR RED TEAMCRAB CASE
PART ONE: THE SALE AND PURCHASE AGREEMENT FOR 10,000 NEGO CRABSWAS EFFECTIVELY CONCLUDED.
I.

Red Corp. and Blue, Inc. concluded the contract through an automated system.

1. The contract was concluded through automated contracting without the intervention of anatural person [Comment 3 of Art. 2.1.1 of Principles]. The parties agreed that Blue’s AI“Smart Blue” automatically processed order through RB Link and Red’s system would
automatically give instructions to its warehouse after receiving the order without any
person’s operation. Consequently, an automated contract was concluded.
II. In the automated system, there was an offer and an acceptance.
2. Blue, Inc. informed a message “Blue, Inc. orders 10,000 Nego Crabs” via RB Link,
indicating its requirement and intention to make a contract, which was an offer [Art. 2.1.2
of Principles]. The parties agreed that order forms and acknowledgment notices need not
be exchanged if the order placed through RB Link [Cl. 4 of Exhibit 6]. Red Corp.’s system
automatically processed shipment after receiving the order without acknowledgment
notices, which was an acceptance [Art. 2.1.6 of Principles].
3. Acceptance is effective when the act is performed if the parties established the practice thatthe offeree may indicate assent by performing. Red Corp. shipped crabs at 5:00 am on
March 4 [Art. 2.1.6 of Principles], which means it made an effective acceptance at 5:00 am
on March 4.

PART TWO: IF AN AGREEMENT WAS EFFECTIVELY CONCLUDED, THE PRICE
OF NEGO CRAB IS US$200 PER CRAB.
I.

According to RB Dashboard, the price of Nego crab is US$200 per crab.

4. The price should be confirmed by the screen of the account management system of the RB
Dashboard, which is US$200 per crab. The parties confirm transactions through RB
Dashboard in real-time [Cl. 6 of Exhibit 6]. And there are two prices on the RB Dashboard,
one is from the account management system, another is from the information management
system. The functions of the two systems are different: account management system

5

BEIJING NORMAL UNIVERSITYMEMORANDUM FOR RED TEAM

handles the sales order process including the amount and the price of the transactions; andinformation management system manages the information concerning market etc. [Exhibit
7A]. Therefore, the price of the account management system is the dealing price.
II. Even if there was no agreed price, the price of Nego crab is US$200 per crab
according to the price which is generally charged on the market.
5. If a contract does not fix or make provision for determining the price, the price is generally
charged at the time of the conclusion of the contract for such performance in comparable
circumstances in the trade concerned [Art. 5.1.7(1) of Principles]. Nego crab is a luxury
food which costs over US$200 per crab in general. When Blue, Inc. ordered the crab, there
was no price fluctuation of the crab. So the market price is US$200 per crab as general atthat time.
6. Therefore, if there was no agreed price, the price of Nego crab is still US$200 per crab
according to the general charge.

PART THREE: BLUE, INC. CAN NOT CANCEL THE AGREEMENT.
7. In the contract, there is no situation of fraud, threat or gross disparity [Art. 3.2.5, 3.2.6,
3.2.7 of Principles]. The actual price of Nego crab is US$200 per crab while Blue, Inc.
thought the Nego crab was US$50 per crab due to the wrong information, which is anerroneous assumption. Even though, Blue, Inc. cannot cancel the contract: the conditionsof avoiding the agreement by the mistaken party or non-mistaken party canot be fulfilled[Art. 3.2.2 of Principles].
I.

The conditions of avoiding the agreement by the party other than mistaken party

are not fulfilled.
8. Red Corp. did not have the same erroneous assumptions [Arts. 3.2.2 (1) (a) of Principles].
The erroneous assumptions were not caused by Red Corp. for the information was correct,
which is inputted by Red Corp. while the hacker changed the data. However, Red Corp.
had installed the newest type of anti-virus system, and the virus causing of the hacking wasin the mail sent by Blue [Para. 15 of Problem]. Red Corp. did not be aware of whether theorders are based on customers’ order or on AI’s prediction [Para. 11 of Problem]. Red Corp.
had already shipped these Nego crabs, and it is reasonable to act in reliance of the contract
6

BEIJING NORMAL UNIVERSITYMEMORANDUM FOR RED TEAM

[Art. 3.2.2 (1) (b) of Principles].
II. The conditions of avoiding the agreement by mistaken party are not fulfilled.
9. If Blue, Inc. claims that Red Corp. did make the same mistake or caused the mistake, such
petition still cannot be granted. Firstly, AI works 24 hours a day, 365 days a year, and thus
information of transactions never stops coming up in RB Dashboard [Exhibit 7]. Blue, Inc.
had the failure to monitor the transactions in real time, which is grossly negligent [Art.
3.2.2 (2) (a) of Principles]. Secondly, both parties have agreed that Red Corp. would not
be responsible for the accuracy of the information provided by the information
management system [Exhibit 7]. Such prior consent indicates that Blue, Inc. had noticed
the risks on the accuracy of the information in advance.

PART FOUR: THERE IS NO FACTUAL OR LEGAL BASIS BASED ON WHICH THE
AMOUNT TO BE PAID BY BLUE, INC. TO RED CORP. SHOULD BE REDUCED.
I.

Red Corp. did not result in any real harm of Blue, Inc.

10. Red Corp. delivered 10,000 crabs promptly after receiving the order of Blue, Inc., which
complied with the contract and Principles. The contract came into force at 5:00 a.m. on
March 4 and cannot be cancelled. Blue, Inc. should perform the obligation to pay US$200
per crab according to the contract. All crabs arrived at Blue, Inc. on March 5. The behavior
of Red Corp. did not affect Blue, Inc.'s payment obligation, nor did it cause any real harmto Blue, Inc.
II. Red Corp. did not result in any loss of a chance of Blue, Inc.
11. Loss of a chance is only compensated when obviously in proportion to the probability of
its occurrence [Comment 1 of Art. 7.4.3 of Principles]. Even if Blue, Inc. had known thetransaction information earlier, it would be uncertain whether it could find the trading
partner before the crabs arrived. In fact, Blue, Inc. did not find a trading partner for quite along time after the arrival of crabs, that is to say, the loss of a trading chance of Blue, Inc.
was very uncertain, so Red Corp. did not cause loss of a chance of Blue, Inc., and there
should be no compensation.

7

BEIJING NORMAL UNIVERSITYMEMORANDUM FOR RED TEAMPART FIVE: RED CORP. DOES NOT HAVE THE OBLIGATION TO PAY US$500,000
TO BLUE, INC. FOR THE SALE OF NEGO CRABS TO GREEN CORP.
I.

Red Corp. was not bound by the contract between Blue Inc. and Green Corp.

12. Red Corp. only introduced Green Corp. to Blue Inc. with a view to their concluding acontract as an intermediary who was not the principal or agent [Comment 2 of Article 2.2.1
of Principles]. Red Corp. was not responsible for the introduction of Green Corp, which
did not grant the authority to Blue, Inc.
II. Red Corp. was not responsible for the introduction of Green Corp.
13. The conversation between Red Corp. and Blue, Inc. was not legally binding. The parties

did not concluded a contract expressly or impliedly [Article 2.1.1 of Principles].
14. Red Corp. did not breach the good faith principle [Article 1.7 of Principles]. Blue, Inc.

asked Red Corp.’s view of Green Corp. Red Corp. gave its view of Green Corp. basing on
the past trade with it and did not exaggerate or cover anything. The bankruptcy of Green
Corp. surprised the whole industry, Red Corp. could not have known or ought to have
known the information in advance.

BLUE HOT CASE
PART ONE：SALES OF “BLUE HOT” CONSTITUTES A BREACH OF OBLIGATIONBY BLUE, INC.
I.

The sales of “Blue Hot” in Negoland constitutes “engaging in business thatcompetes with Yellow Corp.”
15. Neither party shall carry on nor be engaged in any business that competes with the businessof Yellow during the period of this Agreement [Cl. 14.3 of the Agreement].
16. The business of Yellow is producing Products, which are instant food. So far, Yellow
Corp.'s Products include “Blue Noodles” and “Yellow Quick”. Behaviors that reduce thesales volume of these two products are regarded as the “business that competes with thebusiness of Yellow”.
17. “Blue Hot” is a kind of instant food, and beef stew and aqua pazza of “Yellow Quick” wereadded to “Blue Hot”. The sales of “Blue Hot” greatly reduced the sales volume of “Yellow

8

BEIJING NORMAL UNIVERSITYMEMORANDUM FOR RED TEAM

Quick” [Exhibit 12]. As a result, the sales of “Blue Hot” in Negoland constitutes “engaging
in business that competes with Yellow Corp.”
II. The behavior that Blue, Inc. sells products to Brown Trading Corp. is against“good faith”.
18. Both parties shall use their best efforts and shall cooperate with each other in good faith to
make the business of Yellow to be successful [Cl. 14.1 of the Agreement].
19. Good faith is a fundamental idea [Art. 1.7 of Principles]. It is a mandatory term and Blue,
Inc. must act in accordance with it through the life of the contract, including but not limited
to the negotiation and implementation of the contract.
20. Red Corp. communicated with Blue, Inc. about whether “Blue Hot” was possible to be
added as the joint venture Products in October of 2017. Blue, Inc. claimed that it would notsell “Blue Hot” in Negoland [Exhibit 11]. However, in January 2018, Blue, Inc. allowed
Brown Trading Corp. to sell “Blue Hot” in Negoland. Blue, Inc. was not in line with its
previous commitments totally, and thus, Blue, Inc.’s behavior is against “good faith”.

PART TWO: THE TRIBUNAL SHOULD RENDER THE ARBITRAL AWARD.
I.

Blue, Inc. should perform its obligation.

21. A party who owes an obligation other than one to pay money does not perform. The otherparty may require performance [Art. 7.2.2 of Principles].
22. The Agreement stipulates that neither party shall carry on nor be engaged in any businessthat competes with the business of Yellow during the period of this Agreement. Blue, Inc.
should perform its obligation but in reality it breached it.
II. The Tribunal has remedial authority to grant an injunctive relief.
23. Arbitration is about consent and thus all arbitration ultimately relies on the parties’ will tosubmit it [Performance as A Remedy: Non-Monetary Relief in International Arbitration].
Parties’ will be the source of arbitrators’ power, which can be interpreted by the agreement.
Consequently, the agreement gives the remedial authority to grant an injunctive relief[International Commercial Arbitration].
24. The Agreement confirms the responsibility of Blue, Inc. which should not engage inbusiness that competes in Yellow Corp. Therefore, the Tribunal has the remedial authority
9

BEIJING NORMAL UNIVERSITYMEMORANDUM FOR RED TEAM

to grant an injunctive relief.
III. Tendency of international arbitration practice recommends the Tribunal to orderinjunctive relief.
25. Some International arbitration conventions and national arbitration statutes stipulate that atribunal can grant an injunctive relief.
26. The English Arbitration Act, 1996 provides that a tribunal has the power to grant
declaratory and injunctive relief [English Arbitration Act, 1996, §48(5)]. Hong Kong
Arbitration Ordinance grants that the tribunal has the same power as the Court to orderspecific performance of any contract [Hong Kong Arbitration Ordinance, 2013, Art. 70].
Although UNCITRAL Rules did not clearly give the tribunal the authority to order the
injunctive relief, granting such relief in arbitration law is an acceptable practice whichshould not be ignored by the Tribunal.

PART THREE: BLUE, INC. OWES THE OBLIGATION TO PAY US$400,000 FOR
DAMAGES TO RED CORP.
I.

The behavior of Blue, Inc. constitutes a non-performance and cannot be excused.

27. Any non-performance gives the aggrieved party a right to damages either exclusively or in
conjunction with any other remedies except where the nonperformance is excused underthese Principles [Art. 7.4.1 of Principles].
28. There was a breach of obligation on the part of Blue, Inc. in Issue ① and therefore, Red
Corp., as the aggrieved party, has the right to damages. In addition, the non-performanceof Blue, Inc. does not constitute force majeure or exemption clauses stipulated in Principle
and cannot be excused.
29.

Blue, Inc. knew that Brown Trading Corp. intended to sell “Blue Hot” in Negoland.
However, there is no provision in the contract [Exhibit 13]. Blue, Inc.'s breach of obligation
is not due to an impediment beyond its control, so the behavior of Blue, Inc. constitutes a
non-performance and cannot be excused.
II. US$400,000 is the gain which Red Corp. was deprived of.

30. The aggrieved party is entitled to full compensation for harm sustained as a result of the
non-performance. Such harm includes both any loss which it suffered and any gain of10

BEIJING NORMAL UNIVERSITYMEMORANDUM FOR RED TEAM

which it was deprived [Art. 7.4.2 (1) of Principles].
31. The aggrieved party is entitled to compensation not only of loss which it has suffered, butalso of any gain of which it has been deprived as a consequence of the non-performance.
Due to the sales of “Blue Hot” in Negoland, the profit loss Red Corp suffered was 400,000.
If Blue, Inc. had not violated the obligation, US$400,000 would have been the benefit
which would normally have accrued to Red Corp. Therefore, US$400,000 is the gain which
Red Corp. was deprived of and should be fully compensated.
III. The probability of loss of a chance and the occurrence of harm is reasonably
certain.
32. Compensation is due only for harm, including future harm, which is established with areasonable degree of certainty [Art. 7.4.3 (1) of Principles]. Compensation may be due forthe loss of a chance in proportion to the probability of its occurrence [Art. 7.4.3 (2) ofPrinciples].
33. The loss of a chance of Red Corp. is in proportion to the probability of its occurrence. BothRed Corp. and Blue, Inc. agree on Mr. Bob Orange’s reliability as an expert. The expert’s
opinion clearly shows that the total annual sales in FY 2018 were down by about US$10
million [Exhibit 12]. As a result, the probability of the loss of the chance and the occurrenceof harm is reasonably certain.

THIRD PARTY FUND ISSUE
THE BLUE, INC.’S PETITION REGARDING THE DISCLOSURE OF THIRD PARTY
FUND SHOULD BE REJECTED BY THE TRIBUNAL.
I.

Blue, Inc.’s submission of the disclosure of the third party fund is inadmissible.
A. Blue, Inc.’s submission of disclosure of the third party fund lacked relevant factors
and legal evidence.

34. The arbitrator has the power to refuse a petition regarding challenge of the arbitrator due
to lack relevant factors.
35. In case Sehil dv. Turkmenistan, the Respondent has failed to show that third party fundingis likely, or that it is relevant for the Tribunal’s determination of the issues currently under

11

BEIJING NORMAL UNIVERSITYMEMORANDUM FOR RED TEAM

deliberation between the Tribunal members. Further, no reasons have been given as to why
this information is relevant. In the present case, Blue, Inc. merely raised a petition regarding
the challenge of arbitrators without relevant evidence.
36. Blue, Inc. could make further request for disclosure at a later stage in this arbitration if it
has additional information.
B. The third funding party of Red Corp. will not influence the justice of the arbitration.
37. In the present case, all the arbitrators have made an additional disclosure statement. The
arbitrators have no knowledge of who the third party fund provider to Red Corp. is. Red
Corp. has no information on whether the fund has a vested interest in one of the arbitrators.
C. Blue, Inc. should submit the petition regarding the challenge in a good faith.
38. In the present case, Blue, Inc. submitted the petition just a few days before the hearing. The
behavior of the claimant may show its intention to defer the procedure of the hearing. The
deferring may cause unnecessary waste of time and fee.
II. The Red Corp. has no obligation to disclose the contents of the agreement
regarding the fund.
A. It is the arbitrator’s duty to disclose any circumstance likely to give rise tojustifiable doubts.
39. An arbitrator, from the time of his or her appointment and throughout the arbitralproceedings, shall without delay disclose any such circumstances to the parties and theother arbitrators unless they have already been informed by him or her in thesecircumstances [Art. 11 UNCITRAL Rules].
B. In the agreement, there are provisions prohibited the Red party from disclosing
the information to any third party.
40. In case Guaracachi v. Bolivia, the UNCITRAL Tribunal ordered that there is no basis toorder the disclosure of the agreement entered into with the founder.

12