3RD Justice J.S.

Verma Memorial National ADRCC Competition

TEAM CODE- 04

3rd JUSTICE J.S. VERMA MEMORIAL NATIONAL ADRCC

COMPETITION

Before

THE INDIAN COUNCIL OF ARBITRATION

IN THE MATTER OF

FIONA FINANCIAL

...........................................................................................................REQUESTING PARTY

Versus

GOVERNMENT OF OKRAINE

………………………………………………………………………RESPONDING PARTY

THE HUMBLE SUBMISSION ON BEHALF OF THE RESPONDING PARTY

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

TABLE OF CONTENT

INDEX OF AUTHORITIES…………………………………………………………02 - 03

STATEMENT OF JURISDICTION………………………………………………………04

STATEMENT OF FACTS ……………...……………………………………………05 - 08

ISSUES RAISED ………...……………..…………………………………………………09

SUMMARY OF ARGUMENT ………………………………………………………10 - 11

ARGUMENTS ADVANCED...……………………………………………………….12 - 15

1. THAT THE FIONA FINANCIAL HAVE NO RIGHT TO STOP MAINTENANCE

SERVICES IN OKRAINE FOLLOWING THE LACK OF PAYMENT. …………12 - 13

2. THAT THE OKRAINE WAS JUST PROHIBITING THE PAYMENT OF LOANS TO

FOREIGN AND DOMESTIC ENTITIES. ………………………..………..………13 - 16

A.THAT PROHIBITING THE PAYMENT OF LOANS TO FOREIGN AND DOMESTIC

ENTITIES DOES NOT SHOW THE MALAFIDE INTENTION OF OKRAINE.
…………………………………………………………………………………………13 - 14

B.THAT THE TIME PERIOD DEMANDED BY OKRAINE IS NOT ULTRA

VIRES…………………………………………………………………………………15 - 16

3. THAT THE OKRAINE CAN CALL UPON FIONA FINANCIAL TO CONTINUE IT’S
INVESTMENTS IN THE COUNTRY………...……………………………………..........16

PRAYER…………………………………………………………...……………………....17

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

INDEX OF AUTHORITIES

INDIAN CASES

Tatanagar foundry Company V. Their Workmen (1962) ………………………………….14

Santi Prasad Jain V. Kalingo Tubes Ltd. …………………………………………………..14

FOREIGN CASES
Attorney General V. Great Eastern Railway (1880) 5 ac 473 …………………………… 14

Florence Mining Co V. Cobalt Lake Mining Co. (1908) O.J. No. 265 …………………...14

Babcock V. Canada (Attorney General) (2002) 3 S.C.R. 3 …………………………….....14

Simpson V. London & Northwestern Railway Co. (1876) LR 1 QBD 274 ………………14

BOOKS

COMPANY LAW (Dr. N.V. PRANJAPE)…………………………………………………...

INDIAN CONTRACT ACT, 1872 (AVTAR SINGH)……………………………………….

COMPANY LAW (AVTAR SINGH)………………………………………………………...

BANKING LAW(R.N. CHAUDHARY)……………………………………………………..

INVESTMENT LAW(S.R. MYNENI) ……………………………………………………….

STATUTES

Indian Contract Act 1872………………………………………………………………...……

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

Company Law 2013…………………………………………………………………………...

Banking Regulation Act 1949…………………………………………………………………

JOURNALS AND ARTICLES

IMF Report 2022 …………………………………………………………………………………...

Business Standard ………………………………………………………………………………….

Mint Article ………………………………………………………………………………………...

OTHER AUTHORITIES

Indiankanoon.org……………………………………………………………………………...

www.lifelaw.in...........................................................................................................................

en.m.wikipdia.org……………………………………………………………………………...

www.arbitrationcaselaw.com.....................................................................................................

judgements.lawnigeria.com……………………………………………………………………

https://taxguru.in/corporate-law/doctrine-ultra-vires.html.........................................................

International Encyclopedia …………………………………………………………………...

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

STATEMENT OF JURISDICTION

As per the Agreement Signed by both parties. The Hon’ble tribunal’s jurisdiction for the
adjudication of the present dispute., and the responding party humbly submits to the
jurisdiction of the Hon’ble tribunal.

Thereby, the responding party Submits the memorial which sets forth the facts and the
laws on which the claims are based.

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

STATEMENT OF FACTS

(¶1.)Fiona Financial is a financial services corporation located in India. They have branches
in 35 countries, including in Okraine. Okraine is a small country located in Central Europe.
Fiona Financial has invested over 10 billion euros in Okraine’s Public infrastructure with
interest rates of 4% per annum hoping to capitalize on the emerging economy. Okraine has
endured periods of instability in the past but has built up a good credit score by servicing its
debt in a timely fashion.

(¶2.)Okraine was recently invaded by their neighboring country, Isla. The ensuing war has
caused Okraine’s economy to collapse. Fiona Financial is concerned about Okraine’s ability
to meet its debt payments. While there is a 30-day grace period, Okraine has missed the due
date for their debt payment. Okraine acknowledges that they have missed their debt
payment, but feels their current circumstances warrant missing their payments. Fiona on
notice of the failure of payment by Okraine, stopped the maintenance services until the
payment is made. Okraine’s economy now needs more money to be invested to prevent a
total collapse. Okraine wants Fiona Financial to give them a break from their payments for
two years and additionally wants Fiona Financial to buy more bonds right now.

(¶3.)In the agreement between Fiona and Okraine, waiver of payment or moratorium was
nowhere mentioned, as the situation of war was not foreseeable and seemed unlikely.
Further, the relations between Fiona and Okraine were excellent to the extent that both
parties were hoping to extend the investment amount by 2 billion euros, with an interest rate
of 4.5%.

(¶4.)Okraine has the money to pay their debt for three more payments; however, this money
is now slated to be spent on weapons to fight the invaders of their country. Hence, following
the proclamation of Emergency by the Government of Okraine, signed a law, prohibiting
payment of any foreign or domestic loans to facilitate a strong budget for armed forces.

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(¶5.)Arbitration Problem Okraine is well aware of the possibility of a public backlash

against Fiona Financial, but also knows that they need Fiona Financial to continue to invest
in their country after the invading force is repelled.

(¶6.)Fiona Financial and Okraine are both aware that Okraine’s credit rating will be
downgraded once the 30-day grace period passes without Okraine making their debt
payment. Fiona Financial wants Okraine to make its debt payment and is hesitant to buy
more bonds without the original payments being kept up. However, Fiona Financial is well
aware that the world community is behind Okraine, and is outraged the country has been
invaded by Isla.

(¶7.)Fiona Financial is worried about how the public would react if they were to refuse to
help Okraine, or if they were to initiate any legal proceedings against Okraine to attempt to
get the debt paid. Fiona Financial is worried about a possible public backlash against their
company, or a very public boycott. Fiona Financial is not sure it would survive a public
boycott, as its own balance sheet is shaky due to some risky moves it made in the global
financial market.

(¶8.)Fiona Financial is concerned about the war in Okraine. They are concerned if they
press too hard for the payments, that Okraine will devalue their currency which would leave
Fiona Financial in a bad financial position. Fiona Financial wants to find another way to
receive payment because a downgrading of Okraine’s credit rating will affect their own
balance sheets. The amount they have invested in Okraine will become toxic debt they will
be unable to trade or sell. It may also make Fiona Financial a target for a hostile takeover.

(¶9.)In order to secure the debt from Okraine, Fiona Financial has initiated Arbitration
proceedings in the Indian Council of Arbitration, following their rules and regulations to
resolve the dispute in order to escape the public backlash

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

THIS MEMORANDUM OF UNDERSTANDING WITNESSETH AS UNDER: -

OBLIGATIONS OF FIONA FINANCIAL

• Fiona Financial is to provide funding and investment for the essential infrastructure of
Okraine such as Railway lines, bridges and power projects.
• Fiona Financial provides technical and maintenance services for all the infrastructure
in the public interest, built by them for a period of no less than 10 years.
• Fiona Financial to invest more in Okraine, following the good return of investments
and in the public interest.

OBLIGATIONS OF OKRAINE

• Okraine is to pay 4% of interest to Fiona Financial on their investment made in the

economy and infrastructure of the country.
• Okraine is to pay additional interest if Fiona Financial put forth more opportunities
for investment in the country.
• Okraine is to pay fees to Fiona Financial for maintenance service, failing which Fiona
has the right to halt their services.

CONFIDENTIALITY

Both the Parties shall at all times keep secret and confidential the terms of this MOU and
shall not disclose or divulge the same or any part to any third person without the prior written
consent of the other Party on that behalf, except as may be required for the proper discharge
of the obligations of the Parties under or pursuant to this MOU.

AMENDMENTS

Amendment or modification of this MOU may be made only at the initiative of either party
by submitting a proposed amendment in writing to the other party and agreement of that
party to the same.

TERM

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The term of this MOU shall commence on the execution of this MOU by both parties and
continue till all obligations of either party pursuant to this MOU ceases.

DISPUTE RESOLUTION

Any dispute or difference whatsoever arising between the parties out of or relating to the
construction, meaning, scope, operation or effect of this contract or the validity or the breach
thereof shall be settled by arbitration in accordance with the Rules of Arbitration of the
Indian Council of Arbitration and the award made in pursuance thereof shall be binding on
the parties.

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

ISSUES RAISED

ISSUE-1

WHETHER FIONA FINANCIAL HAVE THE RIGHT TO STOP MAINTAINENCE

SERVICES IN OKRAINE, FOLLOWING THE LACK OF PAYMENT?

ISSUE-2

WHETHER OKRAINE WAS JUST PROHIBITING PAYMENT OF LOANS TO

FOREIGN AND DOMESTIC ENTITIES?

A.

WHETHER PROHIBITING THE PAYMENT OF LOANS TO FOREIGN AND

DOMESTIC ENTITIES SHOWS THE MALAFIDE INTENTION OF OKRAINE?

B.

WHETHER THE TIME PERIOD DEMANDED BY OKRAINE IS ULTRA VIRES?

ISSUE-3

WHETHER OKRAINE CAN CALL UPON FIONA FINANCIAL TO CONTINUE IT’S

INVESTEMENT IN OKRAINE?

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

SUMMARY OF ARGUMENTS

1.THAT THE FIONA FINANCIAL HAVE NO RIGHT TO STOP MAINTAINENCE

SERVICES IN OKRAINE FOLLOWING THE LACK OF PAYMENT.

It is humbly pleaded before this Hon’ble tribunal that: NO, Fiona Financial have no right to
stop maintenance services in Okraine because Okraine is facing invasion by their
neighboring country, Isla So, the current situation is not suitable for the payment. Since the
relationship between Fiona and Okraine was excellent in the past, and now when Okraine is
going through the great economic crisis, Fiona needs to come forward for help and hence
have no right to stop the maintenance services.

2. THAT THE OKRAINE WAS JUST PROHIBITING THE PAYMENT OF LOANS

TO FOREIGN AND DOMESTIC ENTITIES.

It is humbly pleaded before this Hon’ble tribunal that YES, Okraine was doing JUST by
prohibiting the payment of loans to Foreign and domestic entities because the protection of
the people of the nation comes first .The situation has became worse and can be more worsen
So, the Okraine Govt needs to safeguard more money for armed forces and weapons rather
than investing on repayment of loans

3. THAT THE OKRAINE CAN CALL UPON FIONA FINANCIAL TO CONTINUE

IT’S INVESTMENTS IN THE COUNTRY

It is humbly pleaded before this Hon’ble tribunal that YES, Okraine can call upon Fiona
Financial to continue its investment in the country because Okraine has endured periods of
instability in the past but has built up a good credit score by servicing its debt in a timely
fashion and even the past relations between Fiona and Okraine were excellent to the extent,
that both parties were hoping to extend the investment amount by 2 billion euro’s, with an

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

interest rate of 4.5% .but the current situation of Okraine is unfit for the payment and once it
becomes good it can surely call upon Fiona Financial to continue investment in the Country.

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

ARGUMENTS ADVANCED

1. THAT THE FIONA FINANCIAL HAVE NO RIGHT TO STOP MAINTAINENCE

SERVICES IN OKRAINE FOLLOWING THE LACK OF PAYMENT.

(¶ 1.) It is humbly pleaded before this Hon’ble tribunal that NO, Fiona Financial have no
right to stop maintenance services in Okraine because Okraine is facing invasion by their
neighboring country, Isla, So, the current situation is not suitable for the payment. Since the
relation between Fiona and Okraine was excellent in the past, and now when Okraine is
going through the great economic crisis, Fiona needs to come forward for help and hence
have no right to stop the maintenance services.

(¶ 2.) It is humbly submitted that in the obligation of Fiona Financial it is clearly mentioned
that Okraine is to provide funding for essential infrastructure of Okraine and the term
essential means to include, but not to be limited it means that the part of the public
benefit described as essential infrastructure. So the Fiona Financial needs to
understand the present essentials of Okraine and help Okraine to Overcome the worse
situation of war and hence have no right to stop the maintenance services.

(¶ 3.) It is humbly submitted that the rights of Reciprocal promise does not arises in the
present circumstance because Okraine is just asking for the extra time period for the
repayment of debt rather than denying from the payment because the present economic
condition of okraine is not suitable for reaping the debt.

(¶ 4) It is humbly submitted that as per IMF1 report, during the time of Covid-19 the
situation of whole world had become worse up to such a great extent that there was more
than 50% chance that the debt could not be recovered but, since the DSSI understood the

1
IMF Report 2022

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

situation and helped by providing them the grace periods so that once the situation becomes
fit for served they can go for the repayment, and they could repay it in a successful manner.

2. THAT THE OKRAINE WAS JUST PROHIBITING THE PAYMENT OF LOANS

TO FOREIGN AND DOMESTIC ENTITIES.

(¶ 5) It is humbly pleaded before this Hon’ble tribunal that YES, Okraine was doing JUST
by prohibiting the payment of loans to Foreign and domestic entities because the protection
of sovereignty of the nation comes first instead of to safeguard the economic interest of the
nation. The economic interest of the nation is directly proportional to the sovereignty of the
nation. So, once the Okraine loses its sovereignty then there is no matter of economic
progress and protection, simply means repayment of loan is nowhere left the substantial issue
for the Fiona financial. Thus, to safe the interest of our country within all perspective
including political and economic is our need. The law regarding prohibition of the repayment
of loan is not in absolute sense but it is a partial prohibition for the specific time being. Thus,
it is strongly submitted before this hon’ble tribunal that the prohibition is just and fair and
without any violation of the terms and conditions of the bilateral agreement between the
parties. Presently, the Okraine Govt is facing the war situation from it’s neighbor country, so
it is the primary duty of the Govt. of Okraine to protect the right and interest of her people
and for this emergency situating. of Okraine is in dire need to spend more and more money
for war budget i.e., for the arms and ammunitions.

(¶ 6) It is humbly submitted that according to 2005 World Summit Outcome Document2

Each individual State has the responsibility to protect its populations from genocide, war
crimes, ethnic cleansing and crimes against humanity. This responsibility entails the
prevention of such crimes, including their incitement, through appropriate and necessary
means.

2
World Summit Outcome Document 2005

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(¶ 7) It is humbly submitted that according to Sec-55A of the Banking Regulation Act which
deals with Power to remove difficulties i.e., If any difficulties arisen in giving effect to the
provision of this act, the central Govt. may by order as occasion requires, do anything which
appears to be necessary for the purpose of removing the difficulty.

(¶ 8) Government contracts are not the ironclad agreements they appear to be because
governments may change or cancel them by enacting legislation, during special
circumstances.

A. THAT PROHIBITING THE PAYMENT OF LOANS TO FOREIGN AND DOMESTIC

ENTITIES SHOWS THE MALAFIDE INTENTION OF OKRAINE

(¶ 9) It is humbly pleaded before this Hon’ble tribunal that No, the Okraine was not having
any malafide intention in prohibiting the payment of loans to foreign and domestic entities.
Okraine prohibits the payment of loans to Foreign and domestic entities because the
protection of the people, assets and interest of the nation is paramount. Two years grace
period makes sense because even if the war ends soon our situation is not going to improve
overnight, that is why we are demanding two years of the time period. Fiona has well
knowledge about the invasion of Isla on okraine, therefore, to prevent further invasion, for
that okraine needed a strong defense budget. this view was further supported in case of
Simpson v. London & Northwestern Railway co3, by emphasizing special circumstances
are already within the knowledge of the party, and the formality of communicating may not
be necessary. The similar view was also stated in Tata Nagar Foundry Company V. Their
Workmen (1962)4

(¶ 10) It is humbly submitted that, we are just demanding an extension of time for repayment
of debt amount as it is necessity to protect the sovereignty of our nation , and if it is not
protected how the obligation will discharge. So, as a sovereign country if we are investing in
military operation activities to protect our own sovereignty which ultimately is implied
assurance to discharge any type of liability including the debt loan provided by the Fiona

3
(1876) LR 1 QBD 274
4
Tatanagar Foundry Company V. Their Workmen (1962)

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

financial ,in this way we have not done anything with malafide intention rather it is a safe
grade measure which will assurance in future to meet our all the liability undertaken by our
country. As it is a proven fact, we have endured periods of instability in the past but have
built up a good credit score by servicing our debt in a timely fashion. Thus, our approach is
nowhere of malafide intention, and we are just demanding an Extension of time of repayment
of the loan.

B. THAT THE TIME PERIOD DEMANDED BY OKRAINE IS NOT ULTRA VIRES

(¶ 11) It humbly pleaded before this Hon’ble tribunal that No, the time demanded by Okraine
is reasonable and not ultra vires. Ultra Vires means, A body exercising an invalid excess or
beyond the power of authority. Lack of authority deals with situations where the parties of the
agreement act within the object of the MOU but without authority to do so, but here in our case
we are a democratic country, and we have legislative supremacy and authority to make any law
to protect the sovereignty of our nation, social order, and economic justice of our country.

(⁋ 12) It is humbly submitted that in the case of Attorney General V. Great Eastern Railway5,
it was held that if the acts performed are dependent upon the provisions of the object clause of
the memorandum, then the acts performed are valid unless expressly prohibited by law. During
the war between Russia and Ukraine, the similar situation on part of Ukraine as our present case
and creditors of Ukraine agreed to provide extention for the repayment i.e. according to the
article of Business Standard, Ukraine's creditor6s have agreed a two-year moratorium (debt
relief) on $20 billion owed abroad.

5
Attorney General V. Great Eastern Railway (1880) 5 AC 473, Florence Mining Co V. Cobalt Lake Mining Co, (1908)
O.J. No. 196, 18 O.L.R. 275. Clitheroe v. Hydro One Ine (2009), 96 O.R. (3d) 203 (Sup. Ct. J.) Babcock V. Canada
(Attorney General) (2002) 3 S.C.R. 3, 2002 S.C.C. 39, Attorne General V. De Keyser’s Royal Hotel, 1920 A.C. 508
ASHBURY RAILWAY CARRIAGE AND IRON CO. V. RICH 3PLR/1875/1 (DC-E)
6
BUSINESS STANDARD 11 August 2022

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

(⁋ 13) It is humbly submitted that article 38(1) of the Indian Constitution clearly states that
the state shall strive to promote the welfare of the people by securing and protecting as
effectively as it may a social order in which justice, social, economic, and political, shall
inform all the institutions of the national life.

3. THAT THE OKRAINE CAN CALL UPON FIONA FINANCIAL TO CONTINUE

IT’S INVESTMENTS IN THE COUNTRY

(¶ 14)It is humbly pleaded before this Hon’ble tribunal that YES, Okraine can call upon
Fiona Financial to continue its investment in the country because Okraine has endured periods
of instability in the past but has built up a good credit score by servicing its debt in a timely
fashion and even the past relations between Fiona and Okraine were excellent to the extent,
that both parties were hoping to extend the investment amount by 2 billion euro’s, with an
interest rate of 4.5% .but the current situation of Okraine is unfit for the repayment and here
Fiona financial needs to understand the present situation and should come forward to help
Okraine. Therefore Okraine can call upon Fiona Financial to continue investment in the
Country.

(⁋ 15) It is humbly submitted that, During the world war7, the war debt payments by the
Allies to the US had been suspended in 1931, and its repayments resumed after the war.

(⁋ 16) It is humbly submitted that recently during the Sri Lanka economic crises a CHEXIM
announced after the International Monetary Fund (IMF) said that Sri Lanka has secured
financing assurances from China and all its major bilateral creditors. This development sets
the stage for the final approval of the IMF’s $2.9 billion, four-year bailout for the island
nation on March 20. The government has taken the decision and provided not to repay the
Principal and Interest of loans during this period of the economic crisis in Sri Lanka 8.

7
International Encyclopedia
8
IMF Report (Mint Article)

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 3RD Justice J.S. Verma Memorial National ADRCC Competition

PRAYER

Wherefore, in the light of the facts stated, arguments advanced, and authorities cited, it is most
humbly prayed and implored before the Hon’ble Tribunal, that it may be graciously pleased to
adjudge and declare:

1) Fiona Financial shall continue its maintenance services.

2) Fiona Financial shall Provide a break from their payments for two years.
3) Fiona Financial shall buy more Bonds and provide additional aid/support
to Okraine.

Or pass any such or other orders as this Hon’ble Tribunal may deem fit in the interests of justice,
equity, and good conscience.

For this act of kindness, the Responding Party shall duty-bound forever pray.

ALL OF WHICH IS RESPECTFULLY SUBMITTED

S/d

COUNSELS for THE RESPONDING PARTY

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