SUMMARY OF RED’S SUBMISSIONSRARE METALS CASEⅠ.

Red is not in breach of the obligation to supply tungsten to Blue.

Ⅱ.

Red is not under obligation to pay prescribed royalties to Blue in connection with therefining of platinum.

FISHERIES CASE
Ⅲ.

Blue is obligated to pay US$10 million in damages to Red due to a breach of theconfidentiality obligation.

Ⅳ.

The contract signed between Red and Blue on September 1, 2012 should be terminated oramended.

RARE METALS CASEⅠ.

RED IS NOT IN BREACH OF THE OBLIGATION TO SUPPLY TUNGSTEN TO
BLUE
Red submits that:
1.1

Red is not obligated to supply tungsten to Blue on a priority basis; and1.2

Even if such obligation for Red existed, Red is not obligated to supply tungsten toBlue in precedence to Black Negoland

1.1

Red is not obligated to supply tungsten to Blue because tungsten is not the subject of thePriority Supply Agreement

There was a common intention between Red and Blue to interpret “affiliate” written in the agreement
regarding the priority supply of rare metals (the “Priority Supply Agreement”)[Exhibit 6] as Negoland
Metals.
U4.1(1) stipulates that an agreement “shall be interpreted according to the common intention of theparties". In applying U4.1, regard shall be had to all the circumstances [U4.3].
The following circumstances shall be considered:a)preliminary negotiations between the parties

Blue offered a US$10 million discount regarding the plant replacement project as an exchange
for Red’s promise to supply the “rare metals produced by Negoland Metals” to Blue on a1

priority basis [¶12]. Consequently, all subsequent negotiations were conducted under thepremises that the subject of the Priority Supply Agreement would be limited to rare metals
produced by Negoland Metals.
d)the nature and purpose of the contract

The meeting between Fox and Ruby in July 2000 [¶12] was held to discuss the price for theplant replacement project for Negoland Metals. Furthermore, supply of rare metals to Blue
became realistic because Red was convinced by Blue that production output would boost by
improving refining efficiency of Negoland Metals.
Therefore, the subject of the Priority Supply Agreement is rare metals produced in Negoland
Metals, whose plant was replaced by Blue.
Therefore, it is assumed that the purpose of the Priority Agreement is to secure rare metals
produced by Negoland Metals.
In consideration of the above circumstances, it can be clearly said that there was a common intention
between Red and Blue to interpret “its affiliate” written in Priority Supply Agreement as Negoland
Metals.
Since tungsten is produced not in Negoland Metals but in Negoland Tungsten, it is not the subject of
the Priority Supply Agreement.

1.2

Red is not obligated to supply any rare metals to Blue in precedence to Black Negoland.

Even if tungsten is deemed to be the subject of the Priority Supply Agreement, Red has no obligation
to supply any rare metals to Blue in precedence to Black Negoland.
The Priority Supply Agreement determines that Red only has the obligation to prioritize Blue’s orders
over “other prospective purchasers in other countries than Negoland” [Exhibit 6].
Due to the fact that Black Negoland is a subsidiary located in Negoland, Red is not obligated to treatBlue’s orders preferentially to Black Negoland.

Ⅱ.

RED IS NOT UNDER OBLIGATION TO PAY PRESCRIBED ROYALTIES INCONNECTION WITH THE REFINING OF PLATINUM

Blue may claim that Red is obligated to pay prescribed royalties of refining platinum based on the
License Agreement [Exhibit 7] (the “License Agreement”) and U7.2.1, because the License
Agreement was modified to include the refining of platinum in the conversation between Ruby andOrange [¶24], and also because Green’s technology which was used by Red to refine platinum
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("Green’s Technology") is the same as the one Blue licensed to Red in the License Agreement(“Blue’s Technology”).
However, Red counter-argues that such a claim should not be accepted because:
2.1

The License Agreement was not modified; and2.2

Even if the License Agreement was modified, it shall not be applied since Green’s
Technology differs from the “Licensed Technology”.

2.1

The License Agreement was not modified

Article 7.10 of the License Agreement stipulates that no modification of the agreement shall bebinding unless made in writing and signed by a duly authorized representative of each of the parties.
However, neither party conducted such procedures.
Therefore, since U2.1.18 stipulates that “[a] contract in writing which contains a clause requiring any
modification or termination by agreement to be in a particular form may not be otherwise modified or
terminated”, the License Agreement was not modified.
Blue may claim that the assertion of the above stipulation should be precluded to the extent that the
party has reasonably acted in reliance on the conduct of the other party [The Proviso of U2.1.18], on
the grounds that it was reasonable for Blue to wait for Red to send the amendment agreement inreliance of the e-mail communication which took place on December 10, 2015 [¶24].
However, it cannot be said that Blue had acted reasonably in reliance on the conduct of Red. The
modification of the License Agreement required only to add platinum within Article 1.1 [¶24].
However, despite the simplicity of the modification, Blue did not remind Red to send the amendment
agreement even when Red did not send it for 5 months after the above e-mail communication. Thiscannot be regarded as a reasonable act in reliance.
Therefore, since the assertion of U2.1.18 cannot be precluded in this case, such modification of theLicense Agreement was not completed.

2.2

Even if the License Agreement was modified, it shall not be applied since Green’s
Technology differs from the “Licensed Technology” defined in Exhibit 7.

Even if it is deemed that the License Agreement had been modified, Green’s Technology differs fromBlue’s technology, which is equivalent to the “Licensed Technology” in Exhibit 7.
According to the judgement by the Patent Office of Negoland, Green’s Technology differs fromBlue’s Technology.
2.2.1“Licensed Technology” is in accordance with the patent of “Blue’s Technology” in the Law
of Negoland.
3Article 1.1 of the License Agreement in Exhibit 7, the purpose of the agreement is determined as togrant a non-exclusive license to Red. A non-exclusive license is granted in accordance with a patent.
In this case, the purpose of the License Agreement is the usage of patented technology within
Negoland. Therefore, “Licensed Technology” is in accordance with the patented technology based on
the patent law of Negoland.
2.2.2

The Patent Office of Negoland decided that the Technology is different from “Licensed
Technology” by Blue.

The Patent Office of Negoland approved the patent for both the Technology and “Licensed
Technology” [¶17, ¶27].
According to TRIPS Article 27, the patents shall be available provided that they are new, involve an
inventive step and are capable of industrial application.
Therefore, the Patent Office of Negoland does not approve the same two technologies as Negoland is amember of TRIPS [¶6] and the laws of Negoland patents are bond to TRIPS.
Therefore, the Technology differs from “Licensed Technology”.
Consequently, even if the License Agreement was modified, it shall not be applied since theTechnology used by Red differs from “Licensed Technology”.

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FISHERIES CASE
Ⅲ．

BLUE IS OBLIGATED TO PAY US$10 MILLION IN DAMAGES TO RED DUE TO
A BREACH OF THE CONFIDENTIALITY OBLIGATION
Red submits that:
3.1

The Information (information disclosed by Blue that revealed evidence of thebreach of the Convention on the Preservation of Fish Stocks) is a subject of theconfidentiality obligation set forth in the Confidentiality Agreement [Exhibit 20];
and

3.2

Blue is obligated to pay Red US$10 million in damages for its non-performance ofthe confidentiality obligation.

3.1

The Information is a subject of the confidentiality obligation set forth in the
Confidentiality Agreement

The Information comes under the “Confidential Information” defined in Section 1 of theConfidentiality Agreement.
According to the definition, information is regarded as confidential when it isa.

“clearly labeled as ‘Confidential”; orb. “reasonably considered to be confidential given the nature of the information or
the circumstances surrounding its disclosure”.
The Information satisfies requirement b.
First of all, the Information is reasonably considered to be confidential given its nature.
Regarding the interpretation of the word “nature of the information” in the Confidentiality Agreement,
the possibility that harm is occurred by the disclosure of the information shall be taken into
consideration, based on U4.1 and U4.3(d). This is because in general, confidentiality obligations are
determined to prevent any harm from being incurred to the discloser by the disclosure of information.
In addition, Section 5 states that the disclosure of the Confidential Information may cause irreparable
harm.
Consequently, the criterion of the Confidential Information shall be whether the information would
cause harm to the Discloser.
In this issue, the Information indicates the breach of the Convention so it is clear that its disclosure
would cause significant harm to Red.
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In consideration of its nature, therefore, the Information is reasonably considered to be confidential.
Therefore, the Information is a subject of the confidentiality obligation set forth in the Confidentiality
Agreement.

3.2 Blue is obligated to pay Red US$10 million in damages
The conditions for the liability of damages due to non-performance are as follows: (a) nonperformance [U7.4.1], (b) causal relationship between the non-performance and harm [U7.4.2], (c)certainty of the harm [U7.4.3], and (d) foreseeability of the harm [U7.4.4].
(a)There was a non-performance by Blue in relation to the Confidentiality Agreement.
Blue disclosed the Information [¶35] and thus breached the confidentiality obligation
stipulated in Section 2(1)(i) of the Confidentiality Agreement.

(b)There is a clear causal relationship between Blue's non-performance and Red's harm. The
disclosure of the Information by Blue was the direct cause of the refusals of exports ofsupplies to Negoland as well as boycotts of marine products from Negoland [¶35]. As aresult, Red suffered harm of US$10 million.

(c)

There is a reasonable degree of certainty in Red’s harm. As the Information indicates thegovernment’s breach of the Convention, it is natural that its disclosure would result in
Negoland’s loss of credibility, and lead to a plunge in sales of Red, a public corporation of
Negoland.

(d)

The harm could be foreseen.
Section 5(1) in the Confidentiality Agreement indicates that each Party acknowledges thatmonetary compensation may not be sufficient to cure the same when Confidential
Information is disclosed. Therefore, each Party already foresaw when concluding theConfidentiality Agreement that harm beyond monetary compensation such as injury ofDiscloser’s reputation when there was a non-performance of the confidentiality
obligation. It is reasonably foreseeable that Red’s sales decrease when injury of Red’s
reputation occurs.
Therefore, the harm could have been foreseen at the time of the conclusion of theConfidentiality Agreement.

Therefore, Blue is obligated to pay Red US$10 million in damages.

6Expected counterarguments by Blue
3.1'

This information is not a subject of the confidentiality obligation

Blue may claim as follows:This Information cannot reasonably be considered to be confidential from its nature.
This Information proves the permission of the illegal fishing activities by Negoland in breach of theConvention on the Preservation of Fish Stocks.
Therefore, this Information includes the nature as harming the public welfare when not disclosed.
Taking this into account, this information shall be disclosed so that it should not come under"reasonably considered to be confidential".
Red counter-argues as follows;
Even if this Information includes the nature as harming the public welfare, it can come under the"Confidential Information".
In the first place, the welfare which the Agreement protects was for the parties concerned in thenegotiation, that is, Red and Blue, not for public.
In addition, Section 2.(3) [Exhibit 20] stipulates that in case the Confidential Information is required tobe disclosed by government authorities or law, subject to taking reasonable steps, the information may
be disclosed.
This stipulation presupposes that the information which is required to be disclosed, that is, even whichis related to illegal truth would be included in the Confidential Information.
Therefore, the nature of this Information as harming the public welfare when not disclosed shall not bea criterion for judging whether it comes under the Confidential Information.
3.2' The confidentiality obligation does not apply to the Information
Blue may claim that the obligations shall not be applied in this issue according to Section 2.(2) (ii).
The Information was disclosed despite standard programs installed in the system to check virusinfected e-mails and repeated warnings toward staff to be careful with email attachments sent fromstrangers. Especially in this issue, “the email used the name of Blue's important customer andappeared very natural” [¶35].
For the reasons above, Blue may claim that since the Information became accessible to the publicthrough no fault of Blue, the confidentiality obligation does not apply to the Information in accordancewith Section 2.(2)(ii).
However, it cannot be said that Blue had no fault in the disclosure of the Information.
As Blue's employees were frequently told to be careful with e-mail attachment [¶34], they recognizedthat opening the unknown e-mail attachment would lead to the disclosure.

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Therefore, the employee's negligence of checking the address of the virus-infected e-mail and his
opening the attachment inadvertently [¶34] caused the disclosure of this Information.
Therefore, as Blue's employee in question had a clear fault, Blue also had a fault.
Consequently, Blue is not exempted from the breach of the confidential obligation.

Ⅳ.

THE CONTRACT SIGNED BETWEEN RED AND BLUE ON SEPTEMBER 1, 2012
SHOULD BE TERMINATED OR AMENDED
Red submits that:
4.1

If the court finds hardship, the Requirements Contract (the “Contract”)[Exhibit 17]
may be amended or terminated;

4.1

4.2

Hardship exists; and4.3

The Contract shall be amended as is stated in Exhibit 21 or terminatedIf the court finds hardship, the Contract may be amended or terminatedU6.2.3(1) stipulates that in case of hardship the disadvantaged party is entitled to request
renegotiations.
In this issue, if hardship is deemed to exist, U6.2.3(4) can be applied because the agreement between
Red and Blue could not be reached within a reasonable time [¶37, U6.2.3(3)].
Therefore, Red may resort to the court, and if the court finds hardship, the Contract may be amended
or terminated.

4.2

Hardship exists

According to U6.2.2, “[t]here is hardship where the occurrence of events fundamentally alters theequilibrium of the contract either because the cost of a party’s performance has increased or because
the value of the performance a party receives has diminished”, and the “events” have to meetrequirement (a)～(d).
4.2.1

The equilibrium of the Contract was fundamentally altered because the cost of Red’s
performance has increased, and the value of the performance Red receives has diminished.

This was caused by the occurrence of these events stated in Exhibit 21: ①a decrease in Red’s catch of
Negoland fish (“Event 1”), ②changes in foreign exchange rates (“Event 2”), and ③refusal to sellingredients by suppliers ( “Event 3”)8

4.2.1.1

The cost of Red's performance has increased.

As the result of Event 2, the cost of the production of the Product has doubled, causing an increase in
the cost of Red’s performance.
4.2.1.2

The value of the performance Red receives has diminished.

At the time the Contract was entered into, Red could benefit from securing stable sales from Blue by
imposing a minimum purchase quantity.
However, Red's production of the Product was reduced by half as a result of Event 1 and 3.
On the contrary, the demand for the Product remains unchanged, consequently leading to excessive
demand.
In this situation, there is no benefit for Red in securing a minimum purchase quantity of 1,000 tons
from Blue.
Therefore, the value of the performance Red receives has diminished.
4.2.1.3

The equilibrium of the contract was altered fundamentally.

As is written above in 4.1.1.1 and 4.1.1.2, whereas Red is disadvantaged by its obligation to sell at
least 1,000 tons of the Product at a 10 % discount to Blue despite the twofold increase in the cost of
production, Blue still benefits from securing the Product at a discount.
Therefore, the equilibrium of the contract was altered fundamentally.
4.2.2

Event 1, 2, 3 each satisfies all of the additional requirements stipulated in U6.2.2 (a)~(d).
(a) Event 1, 2, 3 occurred after the conclusion of the contract
Event 1, 2, 3 occurred in and after 2016, while the Contract was concluded in 2012, andtherefore satisfy requirement (a).
(b) Event 1, 2, 3 could not reasonably have been taken into account by Red at the time of theconclusion of the contract
Regarding Event 1, it was confirmed that there was a plentiful supply of Negoland fish [¶32]
at the time of the conclusion of the contract. In this situation, Red could not have reasonably
considered that the catch of Negoland fish would be reduced by half.
Regarding Event 2, Negoland's economy remains on a solid trajectory [¶3], and according to
Exhibit 4, foreign exchange rates have been extremely stable from 2000 to 2015.
Regarding Event 3, Negoland's Ministry of Agriculture, Forestry and Fisheries has failed toact on news of illegal fishing activities [¶35]. At the time the Contract was concluded, Red did
not have any information which would lead to supply refusals. In addition, since theConfidentiality Agreement was concluded in 2015, the damage caused by the disclosure of theconfidential information could not reasonably considered at the time the Contract was made.
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Consequently, Red could not have reasonably taken into account any of the occurrences ofEvent 1, 2, 3 at the time of the conclusion of the Contract, still less their simultaneous
occurrence. Thus, requirement (b) is satisfied.
(c) Event 1, 2, 3 was beyond Red's control
Regarding Event 1, the change of the ocean currents is a natural phenomenon, and thus was
beyond Red’s control.
Regarding Event 2, the rapid change of foreign exchange rates were triggered by the negative
views and activities of speculators [¶6], which was beyond Red’s control.
Regarding Event 3, the disclosure was caused by Blue's breach of the confidentiality
obligation, and thus was beyond Red's control.
Therefore, requirement (c) is satisfied.
(d) The risks of Event 1, 2, 3 were not assumed by Red
According to comment 3 of U6.2.2, a risk is assumed when it is taken over expressly, or isfollowed from the nature of the contract.
First, no statements within the Contract refer to the assumption of any risk.
Second, as contracts related to fisheries do not assume risks from their nature, no risks follow
from this Contract from its nature.
Consequently, the risks of Event 1, 2, 3 were not assumed by Red, and thus requirement (d) issatisfied.
For these reasons above, hardship does exist.

4.3

The Contract shall be amended as is stated in Exhibit 21 or terminated

4.3.1

The 10% discount should be terminatedIn the Contract, Red's benefit of securing stable sales and Blue's benefit of purchasing on a 10%
discount and securing a stable supply was in equilibrium.
As is shown in ⑥ on Exhibit 21, however, now the demand for Super Red Mix surpasses the supply.
In this situation, Red no longer benefits from securing the stable sales.
As a result, the equilibrium of the contract was lost, and the discount only opposes Red on significant
disadvantages.
Consequently, the 10% discount should be terminated to restore the equilibrium of the Contract.
4.3.2

The regular price should be increased from 1.8 Nego-Lira to 2.5 Nego-Lira

10

Regarding the changes in the exchange rate between the Abu-Dollar and the Nego-Lira, 1 Abu-Dollar
was equal to 1 Nego-Lira. Now the exchange rates are changed and 1 Abu-Dollar is equal to 1.4 NegoLira.
Accordingly, increasing the regular price from 1 Nego-Lira to 2.5 Nego-Lira does not change the ratio
between these two currencies.
Therefore, increasing the regular price from 1.8 Nego-Lira to 2.5 Nego-Lira is necessary to restore theequilibrium of the Contract.
4.3.3

The amount of maximum supply shall be lowered to 1,200 tons

Due to the significant decrease of production, keeping the supply of 5,000 tons to Blue shall lead tothe termination of the relationship with Red and other customers.
Furthermore, admitting the maximum supply of 5,000 tons leads to a significant harm in the futurewhen the production of Super Red Mix recovers, since Blue would be the only existing customer inspite of the recovered production.
Under such circumstances, it is a disadvantage for Red to admit the maximum supply of 5,000 tons of
the Super Red Mix.
In order to keep the relationship with all the customers and treat them fairly, the supply of Super Red
Mix to all the customers including Blue shall be limited to half of their demands.
In order to achieve the above, the amount of maximum supply shall be reduced to 1200 tons, half ofthe quantity of supply in 2016.

11