MEMORIAL for RESPONDENT [ARGUMENTS ADVANCED]

TEAM CODE-01

IN THE

-SINGAPORE INTERNATIONAL ARBITRATION CENTRE-

SINGAPORE

[UNDER SIAC RULES 2016]

IN THE MATTER BETWEEN

CLEAN HARSTRAD LIMITED

……….CLAIMANT

VERSUS

CLEAN-UP FIRST PRIVATE LIMITED

……….RESPONDENT

-WRITTEN SUBMISSIONS ON BEHALF OF THE RESPONDENT-

OPEN CHALLENGE FOR NATIONAL LAW SCHOOL-TRILEGAL

INTERNATIONAL ARBITRATION MOOT 2022

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MEMORIAL for RESPONDENT [ARGUMENTS ADVANCED]

ARGUMENTS ADVANCED

THE TRIBUNAL ULTIMATELY CONSTITUTED SHOULD NOT EXERCISE

JURISDICTION OVER THE EMPLOYER’S CLAIMS

The Employer (hereinafter the “Appellant”) referred the matter to the tribunal for arbitration
despite the fact that the parties, in their EPC contract, agreed upon resolving the disputes,
firstly, through a pre-arbitration dispute escalation process. It is submitted that the tribunal
ultimately constituted should not exercise jurisdiction over the employer’s claim because the
pre-arbitration condition is mandatorily enforceable [A], and it has not been satisfied by the
correspondent exchanges between the employer [B]. The dispute should have been resolved
through the pre-arbitration dispute escalation process [C], and taking jurisdiction of the said
claim would go against the principle of fairness [D].

A. THE PRE-ARBITRATION CONDITION IS MANDATORILY

ENFORCEABLE

It is submitted that pre-arbitration dispute escalation agreements are per se mandatorily

enforceable [a], and even if it is assumed that they are not per se enforceable, it is submitted,
in arguendo, that the language of the agreement in the instant case mandates the fulfilment of
pre-arbitration process [b].

a. THE PRE-ARBITRATION DISPUTE ESCALATION AGREEMENTS ARE

PER SE MANDATORILY ENFORCEABLE

The pre-arbitration dispute escalation agreements are per se mandatorily enforceable because
the judicial pronouncements on the matter have laid down so [i], and because of the
application of the principle of pacta sunt servanda [ii].

i. JUDICIAL PRONOUNCEMENTS ON THE MATTER OF PRE-

ARBITRATION DISPUTE ESCALATION PROCESS

It has been held by the Singapore Appellate Court in the matter of International Research
Corp PLC v. Lufthansa Systems Asia Pacific Pte Ltd 1 that pre-arbitration clauses in the

1
International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd., [2013] SGCA 55, ¶ 71.
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MEMORIAL for RESPONDENT [ARGUMENTS ADVANCED]

contracts are per se mandatorily enforceable. 2 Similar observations have also been made by
other courts across the world such as in the English3 and the Indian jurisdiction.4

In the present case, there was a pre-arbitral clause directing for mediation, and the same was
ignored while bringing the matter to this tribunal. Following the reasoning applied in the
above-mentioned cases, it can be concluded that in the present matter as well, it should be
held that the tribunal has no jurisdiction over the matter.

ii. APPLICATION OF THE PRINCIPLE OF PACTA SUNT SERVANDA

Pacta sunt servanda is a concept widely accepted in international trade law and it means
“agreements must be kept”.5 It is a fundamental principle of law, which states that the
contractual undertakings must be respected.6 The rule is the basis of every contractual
relationship.7 A freely and validly concluded contract is binding upon the parties in their
mutual relationship8 and a unilateral right to terminate the contract does not exist. 9 A well-
regulated trade practice is possible only if contracts are kept.10

In the present matter, there existed a mutually agreed contract between the parties which
stated that in case of disputes, the matter should be referred for pre-arbitration dispute
escalation process.11 This was unilaterally terminated by the appellant when it made a direct
appeal for arbitration.12 The principle of pacta sunt servanda, as discussed above, would
apply in the instant case and therefore, it must be held that the appellant had no right to
unilaterally ignore the well-established clause of the contract, and hence, the tribunal should
not take jurisdiction of the matter.

b. THE LANGUAGE OF THE AGREEMENT MANDATES THE

FULFILLMENT OF THE PRE-ARBITRATION PROCESS
2
HSBC Institutional Trust Services (Singapore) Ltd. v Toshin Development Singapore Pte Ltd., Pte Ltd [2012]
SGCA 48.
3
Emirates Trading Agency LLC v. Prime Mineral Exports Private Limited, [2014] EWHC 2104 (Comm).
4
M.K. Shah Engineers & Contractors v. State of M.P., (1999) 2 SCC 594; S.K. Jain v. State of Haryana,
(2009).4 SCC 357; Oriental Insurance Company v. M/S Narbheram Power and Steel Pvt Ltd; United Insurance
Co Ltd v. Hyundai Engineering and Construction Ltd, civil appeal no. 8146 of 2018 (Supreme Court).
5
Gebhardt, J. H. “Pacta Sunt Servanda.” The Modern Law Review 10, no. 2 (1947): 159–70.
http://www.jstor.org/stable/1090065.
6
Satow, E. “Pacta Sunt Servanda or International Guarantee.” Cambridge Historical Journal 1, no. 3 (1925):
295–318. http://www.jstor.org/stable/3020784.
7
Sapphire v. National lranian Oil Company, I.L.R., 1967, 136 at 181.
8
Liamco v. Libya, Yb. Comm. Arb., 1981, 89 at 101.
9
Wehberg, H. (1959). Pacta Sunt Servanda. The American Journal of International Law, 53(4), 775–786.
https://doi.org/10.2307/2195750.
10
ibid
11
Statement of Undisputed Facts, Annexure A.
12
Statement of Undisputed Facts, ¶ 28.
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MEMORIAL for RESPONDENT [ARGUMENTS ADVANCED]

In the context of pre-arbitration dispute escalation agreements, the test is whether the
provision prescribes a sufficiently certain and unequivocal commitment to commence a
process.13 A multi-tier clause would be enforceable if it provides for a sufficiently certain and
definable minimum duty of participation and if there is an unqualified reference to
Alternative Dispute Resolution (hereinafter the “ADR”).14 In the present case, the EPC
contract between the parties unambiguously specifies that the process of mediation should be
applied for resolving such disputes.15 It makes an unqualified reference to a mode of ADR,
that is, mediation, and hence, the language of the contract in the present matter does mandate
the fulfilment of the pre-arbitration process.

Moreover, the arbitration clause must be constructed strictly for requiring a mandatory
completion of pre-conditions to arbitrate.16 A strict, literal interpretation of a contract unfolds
the intention of the parties.17 When a word expressing obligation, such as “shall” or “must”, is
used in connection with amicable dispute resolution techniques, this makes the provision
binding upon the parties.18 These words make the pre-arbitration clause mandatory in
nature.19 In the instant case, the EPC contract between the parties clearly states that “any
dispute must first be referred to for a friendly discussion”. 20 Therefore, it can be concluded
that such a clause in the contract, by the usage of the word “must”, creates an unequivocal
commitment on the parties.

B. THE CORRESPONDENT EXCHANGES DO NOT SATISFY THE PRE-

ARBITRATION ESCALATION PROCESS

The contract between the parties provided for a two-stage dispute resolution process before
referring the matter to the arbitration tribunal, firstly that the dispute must be resolved
through friendly discussion [a],21 and secondly, that the dispute must be referred for
mediation [b].22 It is submitted that none of these stages has been satisfied in the present case.

13
Holloway v. Chancery Mead Ltd, [2007] EWHC 2495 (TCC); Wah v. Grant Thornton Int’l Ltd, [2012]
EWHC 3198, ¶60-61 (Ch) (English High Ct.).
14
Cable & Wireless v IBM United Kingdom, [2002] EWHC 2059 (Comm).
15
Statement of Undisputed Facts, Annexure 1, ¶ 25.2.
16
S.K. Jain v. State of Haryana, (2009) 4 SCC 357.
17
P. Madhusudhan Rao v. Ravi Manan, 2015 SCC OnLine Hyd 87.
18
White v. Kampner, 641 A.2d 1381, 1387 (Conn. 1994).
19
Emirates Trading Agency LLC v Prime Mineral Exports Pvt Ltd., [2015] 1 WLR 102.
20
Statement of Undisputed Facts, Annexure 1, ¶ 25.1.
21
Statement of Undisputed Facts, Annexure A, ¶ 25.1.
22
Statement of Undisputed Facts, Annexure A, ¶ 25.2.
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MEMORIAL for RESPONDENT [ARGUMENTS ADVANCED]

a. DISPUTE RESOLUTION THROUGH FRIENDLY DISCUSSIONS DID NOT

TAKE PLACE

A random collection of meetings does not satisfy the requirement of the pre-arbitration
dispute escalation process.23 The Singapore Appellate Court in the matter of International
Research Corp PLC v. Lufthansa Systems Asia Pacific Pte Ltd 24 rejected the claim that the
meetings between two parties can be considered as a pre-arbitration process. It was held by
the court that it had to be specifically proven that the meetings were for dispute solutions.25

In the present case, the appellant contended that the correspondent exchanges between the
parties through emails have satisfied the pre-arbitration dispute escalation process. 26
However, the emails were based on ordinary business discussions and it is nowhere proven
that they were intended for dispute resolution. Moreover, the appellant itself, in the email
dated 20 April 2020, stated that the said email should not be considered anything but their
willingness to continue friendly ties.27 Therefore, it can be concluded that the appellant
themselves have acquiesced to the possibility of considering email exchanges as a method of
dispute resolution.

b. DISPUTE RESOLUTION THROUGH MEDIATION DID NOT TAKE PLACE

It is stated in the EPC contract signed by the parties that the pre-arbitration dispute escalation
process should be conducted in the form of mediation. 28 In a mediation procedure, a neutral
intermediary, the mediator, helps the parties to reach a mutually satisfactory settlement of
their dispute.29 In the instant case, no neutral third party was involved and the correspondent
communication took place just between the two parties therefore, it can be stated that
mediation has not been conducted.

C. THE DISPUTE SHOULD HAVE BEEN RESOLVED THROUGH THE PRE-

ARBITRATION DISPUTE ESCALATION PROCESS

23
International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and another [2013] SGCA 55, ¶
57.
24
International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and another [2013] SGCA 55.
25
International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and another [2013] SGCA 55, ¶
58.
26
Statement of Undisputed Facts, ¶ 28.
27
Statement of Undisputed Facts, Annexure B.
28
Statement of Undisputed Facts, Annexure A, ¶ 25.2.
29
What is mediation, World Intellectual Property Organisation (Date Accessed March 16, 2022),
https://www.wipo.int/amc/en/mediation/what-mediation.html.
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MEMORIAL for RESPONDENT [ARGUMENTS ADVANCED]

The EPC contract between the parties stated that any dispute arising between the parties
should be first referred to as mediation. 30 It is submitted that such a clause should have been
exercised as the pre-arbitration dispute escalation process provides for effective dispute
resolution [a], and it would have been an efficacious process, specifically in the instant case
[b].

a. PRE-ARBITRATION DISPUTE ESCALATION PROCESS PROVIDES FOR

EFFECTIVE DISPUTE RESOLUTION

Under the pre-arbitration dispute escalation process, a process-based approach is used. 31

These procedures are designed to help resolve disputes efficiently. 32 Mediation, specifically,
has been considered an amicable and cost-effective solution.33 It has been observed that “an
ounce of mediation is worth a pound of arbitration and a ton of legislation”. 34 There have
been instances of successful mediation which has led to huge cost benefits and saving of
business relations.35

Therefore, it can be concluded that a pre-arbitration dispute escalation process such as

mediation provides for an effective, amicable dispute resolution process.

b. PRE-ARBITRATION DISPUTE ESCALATION WOULD BE AN

EFFICACIOUS PROCESS IN THE INSTANT CASE

Pre-arbitration processes like mediation are based on the consensus of the parties and help in
finding an amicable solution.36 It has been held in several cases that mediation would not
have been an effective solution due to the hostile circumstances of the case. 37 In Quick Heal
Technology Ltd. v. NCS Private Computed Ltd38, it was observed that ignorance of repeated
requests made to pay outstanding debts lead to the circumstances being hostile.
30
Statement of Undisputed Facts, Annexure A, ¶ 25.2.
31
Klaus Peter Berger, Integration of Mediation Elements into Arbitration — Hybrid Procedures and Intuitive
Mediation by International Arbitrators, 19 Arb. Int’l 387 (2003).
32
James H. Carter, Issues Arising from Integrated Dispute Resolution Clauses: Part I, in New Horizons in
International Commercial Arbitration and Beyond, ICCA Congress Series No. 12, 446 [A.J. van den Berg (Ed.),
2005].
33
John McMillan, Paving the road to arbitration with good intentions: escalation clauses in commercial
contracts, (Date Accessed March 16, 2022).
34
Sanghita Majhi, Benefit of Mediation over Litigation (Date Accessed March 16, 2022),
https://kalingatv.com/miscellany/benefit-of-mediation-over-litigation.
35
Keith Seat, Notable Mediation U.S Cases (Date Accessed March 16, 2022),
https://www.mediate.com/articles/notable.cfm.
36
Sompong Sucharitkul, Mediation and Conciliation as Alternative Means of Settling International Disputes
(Date Accessed March 16, 2022), https://digitalcommons.law.ggu.edu/cgi/viewcontent.cgi?
article=1557&context=pubs
37
Quick Heal Technologies Ltd. v. NCS Computech Ltd., 2018 SCC OnLine Cal 3976.
38
ibid
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MEMORIAL for RESPONDENT [ARGUMENTS ADVANCED]

However, in the present case, there were no such hostile circumstances, and both the parties
shared amicable relationships. Parties were continuously engaging with each other through
emails.39 The parties explicitly conversed about maintaining amicable and friendly ties. 40
Under these circumstances, it can be concluded that a pre-arbitration dispute escalation
process like mediation would have provided an amicable and efficacious resolution to the
dispute.

D. TAKING JURISDICTION OF THE SAID CLAIM WOULD GO AGAINST

THE PRINCIPLE OF FAIRNESS

SIAC rules state that the tribunal shall be guided by fairness in the resolution of a dispute. 41
The thumb rule to adopt is to treat the parties equally. 42 Fairness is a multi-dimensional
concept and it requires weighing of the interest of both parties. 43 Additionally, it is a well-
established principle of fairness that the parties must approach the courts/tribunals with clean
hands.44

In the present case, the EPC contract was mutually signed by the parties 45 and it mandated
that before taking it to the arbitral tribunal, the dispute must first be referred for pre-
arbitration processes.46 However, this clause was unilaterally breached by the appellants when
they ignored the requirement for referring the matter to mediation and served the notice for
arbitration.47 If the tribunal takes jurisdiction of the matter, it would go against the principle
of fairness as it would give undue advantage to one party who has breached the clause, that
is, the appellants. Following the above-laid principles, it can be concluded that if the tribunal
takes the jurisdiction of the said matter, it would breach the principle of fairness, and
therefore, it should reject the matter on the basis of non-fulfilment of due procedure.

39
Statement of Undisputed Facts, Annexure B.
40
Statement of Undisputed Facts, Annexure C.
41
Singapore International Arbitration Centre Rules 2016, Rule 19.1.
42
Soh Beng Tee v Fairmount Development, CA 100/2006, ¶ 65.
43
PT Tugu Pratama Indonesia v Magma Nusantara Ltd., [2003] 4 SLR(R).
44
Chafee, Zechariah. “Coming into Equity with Clean Hands. I.” Michigan Law Review 47, no. 7 (1949): 877–
906. https://doi.org/10.2307/1284375.
45
Statement of Undisputed Facts, ¶ 5.
46
Statement of Undisputed Facts, Annexure 1, ¶ 25.1.
47
Statement of Undisputed Facts, ¶ 27.
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MEMORIAL for RESPONDENT [PRAYER FOR RELIEF]

PRAYER FOR RELIEF

In light of the arguments advanced, RESPONDENT respectfully requests the Tribunal:

TO FIND THAT THE TRIBUNAL ULTIMATELY CONSTITUTED SHOULD NOT EXERCISE

JURISDICTION OVER THE EMPLOYER’S CLAIMS SINCE THE PARTIES HAD NOT SATISFIED

THE ENFORCEABLE MANDATORY PRE-ARBITRAL DISPUTE ESCALATION PROCESS

CONTAINED IN THE DISPUTE RESOLUTION CLAUSE OF THE EPC CONTRACT.

RESPONDENT reserves the right to amend its request for relief as may be required.

Respectfully submitted,

Counsel for Respondent

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