CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

Reg Num:

CLINICAL COURSE - IV (TA6D)

Before
THE ARBITRAL TRIBUNAL,
SINGAPORE.

AI INNOVATIONS CORPORATION

CLAIMANT

Vs

ARTIFICIANA PVT. LTD.

RESPONDENT

MEMORANDUM ON BEHALF OF THE RESPONDENT

Memorandum On Behalf of Respondent 1

 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

TABLE OF CONTENTS

1. LIST OF ABBREVIATION............................................. 3-4

2. INDEX OF AUTHORITIES............................................. 5

3. STATEMENT OF JURISDICTION................................. 6

4. STATEMENT OF FACTS............................................... 7-10

5. ISSUES RAISED.............................................................. 11

6. SUMMARY OF ARGUMENTS...................................... 12-13

7. ARGUMENTS ADVANCED .......................................... 15- 24

8. PRAYER............................................................................ 25

Memorandum On Behalf of Respondent 2

 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

LIST OF ABBREVIATION
& And
Agreement Part Supply Agreement
Art Article
CA Collateral Agreement
CISG United nations Conventions on Contracts for
the International Sale of Goods
ExC Claimant Exhibit
ExR Respondent Exhibit
IBA International Bar Association
ICC International court of Chambers
ICSID International Centre for settlement of
investment Disputes
Ministry Ministry of power
NCLAT National Company Law Appellate Tribunal
NCLT National Company Law Tribunal
P Page/Pages
Para Paragraph
SC Supreme Court
SIAC Rules Singapore International Arbitration Centre
Rules 2016
Task Force ICCA-QUEEN MARY TASK FORCE ON
THIRD-PARTY FUNDING IN
INTERNATIONAL ARBITRATION
UNODROIT Principles 2016 UNIDROIT Principles of International
Commercial Contracts
V. Versus
No. Number
Anr. Another
u/s Under Section
Ors. Others
Pri. Principle
Ltd. Limited
Model Law UNCITRAL Model Law,1985 (without
Amendments)
Memorandum On Behalf of Respondent 3
IBA Guidelines IBA Guidelines for Conflict of interest,2014
R Rule
 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

INDEX OF AUTHORITIES

TABLE OF CASES
SI.N Case Name Citation
o
1 Nirman Sindia v. Indal Electromelts Ltd AIR 1999 KERALA 440,
2000 (1)
2 Simpark Infrastructure Pvt. Ltd. Vs Jaipur S.B.ARBITRATION
Municipal Corporation APPLICATION NO.26/2011
3 Haldiram Manufacturing Company Pvt. Ltd. V. IA No. 3363/2011 in CS(OS)
DLF Commercial Complexes 2288/2010

4 Quick heal Technologies Ltd v. NCS Computech AIR 2020 (NOC) 857
Private Ltd (BOM.), AIRONLINE 2020
BOM 630
5 British Russian Gazette and Trade Outlook Ltd. V. [1933] 2 KB 616
Associated Newspapers Ltd

6 RTS Flexible Systems Ltd v Molkerei Alois Muller [2010] UKSC 14

GmbH &Co KG
7 Pannalal Jankidas v. Mohanlal AIR 1951 SC 144, 153: 1950
SCR 979
8 Hadley v. Baxendale (1854) 9 Exch 341
9 Pistons and Rings Ltd v. Buckeye Machines(P) Ltd AIR 2007 NOC 1844 (Del)
10 Madras Railway Co v. Govinda Rau ILR (1898) 21 Mad 172
11 N.S. Tallam And Ors. Vs Tallam Subbaraya Setty ILR2004KAR924
And Sons And Ors

BOOKS REFERRED

1 Law of Contracts – Avtar Singh

2 Law of Arbitration and Conciliation by Dr. Avtar Singh
3 Justice.Saraf- The Arbitration and Conciliation

LEGISLATIONS

1 THE ARBITRATION AND CONCILIATION ACT, 1996

2 Indian Contract Act, 1872

Memorandum On Behalf of Respondent 4

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STATEMENT OF JURISDICTION

The ARTIFICIANA PVT. LTD respondent has approached before the Arbitral Tribunal,
Singapore in response to the petition filed by the claimant.

The Memorandum sets forth the facts, laws and the corresponding arguments on which the
claims are based in the instant case.

ALL OF WHICH ARE HUMBLY SUBMITTED

Counsel for the Respondents

Memorandum On Behalf of Respondent 5

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STATEMENT OF FACTS
1. Indovia, a vibrant and culturally diverse country, has emerged as a global technology
powerhouse with a thriving IT and software industry. Artificiana Pvt Ltd. (Artificiana), a
frontrunner in the Indovian tech landscape, stands at the forefront of this technology
revolution, driving transformative solutions across various industries.
2. On the other side of the world, Robo Nation, a land of opportunity and innovation, boasts
a robust tech ecosystem that continues to push the boundaries of scientific discovery. AI
Innovations Corp (AI Innovations) stands out for its pioneering work in artificial
intelligence.
3. AI Innovations approached Artificiana to join forces and develop cutting-edge Artificial
Intelligence (AI) products for the global market. During the course of their discussions, a
meticulous examination of the technological expertise contributed by AI Innovations, the
market insights and domain knowledge brought by Artificiana, as well as the
collaborative research and development efforts that would drive the creation of AI
solutions.
4. On March 15, 2022, the Parties entered into a detailed and comprehensive Collaboration
Agreement (Annexure A) to formalize their partnership.
5. Both Parties committed to a symbiotic relationship, wherein AI Innovations would
harness its advanced AI algorithms and expertise to engineer the software's technical
intricacies. Meanwhile, Artificiana, leveraging its profound industry insights and domain
knowledge, would facilitate the application's seamless integration into real-world
financial scenarios. This collaborative accord forms the bedrock upon which 'MindFlayer'
stands as a testament to the shared commitment of AI Innovations and Artificiana to
redefine the AI landscape and propel the realm of financial analysis into an era of
unprecedented innovation.
6. On June 13, 2022, Artificiana appointed a new CEO, Mr. Jim Brenner. Mr. Brenner,
during one of his interviews with a global business magazine ‘MindVerse,’ talked about
the new software ‘MindFlayer’ which would be a game changer for the industry. On
June24, 2022, MindVerse printed this interview with the headline ‘Artificiana’s new
Mind-Flaying invention! A game changer.’ The interview had no mention of collaboration
between the two companies.
7. After reading Mr. Jim Brenner’s interview, AI Innovations took proactive steps to address
the situation and ensure that the collaboration and their contributions were accurately

Memorandum On Behalf of Respondent 6

 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

represented and recognized. On June 29, 2022, they promptly reached out to Artificiana
following the publication of the interview. AI Innovations expressed their concerns about
the oversight and highlighted the significance of acknowledging their pivotal role in the
development of 'MindFlayer'.
8. Artificiana acknowledged the oversight and publicly issued a statement dated July
11,2022, to clarify the situation. However, in their statement, they inadvertently down
played the significance of AI Innovations' contributions, referring to them as a "technical
support partner." This choice of words could be perceived as diminishing the role of AI
Innovations in the collaborative effort.
9. On July 15, 2022, recognizing the potential impact of misrepresentation, AI Innovations
sent a formal letter to Artificiana. In this letter, they elaborated on their multifaceted
contributions to the collaborative project, highlighting their role beyond mere "technical
support."
10. Upon receiving the formal letter from AI Innovations, Artificiana’s legal representatives
wrote to AI Innovations a response dated July 25, 2022, acknowledging AI Innovations'
elaboration on their contributions and their desire for accurate representation. However,
Artificiana's response did not resolve AI Innovations' concerns about their contributions
being undervalued or misrepresented.
11. AI Innovations internally evaluated their options and started exploring their options for
securing patents and Intellectual Property Rights to assert exclusive ownership of the
application.
12. On October 10, 2022, in order to put the dispute to bed, Artificiana’s legal representative,
Ms. Nancy Hopper privately reached out to Mr. Steeve Byers from AI Innovations,
attempting to negotiate a settlement outside of arbitration. She proposed a joint statement
wherein both companies acknowledge the collaboration over the software. She further
added that in exchange for this, AI Innovations should not proceed with its patent
application. She further hinted that such an application may be deemed to be in breach of
the Agreement. Mr. Byers told Ms. Hopper that he shall discuss the proposal internally
and may reach out to her if needed.
13. On November 15, 2022, AI Innovation sent a notice invoking arbitration to Artificiana. In
its Notice of Arbitration, AI Innovation claimed that it has ownership rights over
MindFlayer till the completion of the project, pursuant to Clause 20.1, and as such is
entitled to the Intellectual Property Rights for ‘MindFlayer’. They alleged that Artificiana

Memorandum On Behalf of Respondent 7

 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

undermined the collaboration between the Parties and was in breach of Clause 5.3 of the
Agreement which constituted a material breach of the Agreement. AI Innovations further
claimed that Artificiana has not made timely payments and such non-payment of fees has
caused financial strain on their operations. AI Innovations claimed damages worth$500
million from Artificiana for the misrepresentation and for the breach of the Agreement. AI
Innovations appointed Ms. Joyce Mayfield as their arbitrator.
14. On November 29, 2022, Artificiana sent its Answer to the Request for Arbitration and
also appointed Mr Will Henderson, as its co-arbitrator. Answering the notice of
arbitration, Artificiana responded to the notice stating that the pre-arbitration stage has not
been concluded and that Parties are undergoing negotiations. Artificiana further stated
that the dispute is not arbitrable under the applicable laws. In its Answer to the Request
for Arbitration, Artificiana challenged the jurisdiction of the Arbitral Tribunal on the basis
that the arbitration agreement was not valid and effective, and, as such, that the Indovian
courts are the competent ones to determine the dispute. They further refuted the claims of
AI Innovation and alleged that AI Innovations clandestinely applied for a patent of
‘MindFlayer’ even though they were not entitled to any Intellectual Property Rights over
the software application. They further alleged that AI Innovations did not employ the
latest technology to develop the software. Artificiana claims that it has sent numerous
communications to AI Innovation to develop the software in accordance with their
discussions and the Agreement, but all in vain. They alleged that AI Innovations had
misrepresented its technological capabilities and financial standing to induce Artificiana
into entering into this collaboration. Responding to the Request for Arbitration,
Artificiana claimed that they are the actual aggrieved party and it is them who should be
granted damages, if any.
15. On 15 December 2022, in the absence of the agreement of the co-arbitrators, and upon
Claimant’s request, the SIAC appointed Ms Erica Sinclair, as chairperson. On January
5,2023, the Respondent submitted the challenge to Ms Erica’s appointment due based on
the following:
(i) Ms. Erica failed to disclose that her husband, Mr. Murray Sinclair, was the
chairman of the board of Data-mension, a Japanese-incorporated company that
held 99% of Algorithmia, a company incorporated in England, and which, in turn,
held 57% of AI Innovations’ shareholding; and

Memorandum On Behalf of Respondent 8

 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

(ii) The connection between Ms. Erica’s spouse and the Claimant in these proceedings
was sufficient to establish the lack of Ms. Erica’s independence and impartiality
under the Indovian laws, including the IBA Guidelines on Conflicts of Interest in
International Arbitration.
16. The Respondent pointed out that although the information about Mr. Sinclair was
available on the website of Data-mension since the beginning of the arbitration
proceedings, it could only confirm the information that Mr. Sinclair was Ms. Erica’s
spouse on January 4, 2023, when Ms. Erica Sinclair responded to the request for
clarifications submitted by the Respondent.
17. Subsequently, vide Procedural Order No. 5 dated March 15, 2023, the Arbitral Tribunal
identified the issues under consideration. It was decided that the hearing on merits shall
take place on June 4, 2023, and the Arbitral Tribunal shall decide upon the first 4 issues.
18. At the hearing on merits, Respondent produced a print screen of an internal email of the
Claimant, wherein Mr. Byers’ sent an email to Mr. Brenner telling him about his
interaction with Ms. Hopper. The email also mentioned the request for the use of updated
technology by the Respondent. Along with the new evidence, the Respondent moved an
application to admit the said evidence.
19. The Claimant objected to the Respondent’s submission of such document at the hearing,
stating that
(a) the purported document is inadmissible at this stage of the hearing; and
(b) the email communication is an internal communication between the legal team and
the CEO of the company and has been obtained illegally by the Respondent.
20. The Respondent submitted that it had only obtained this print screen the evening before
the hearing, and hence it could not have produced it before. The Respondent further
submitted that the said document is a crucial piece of evidence and hence must be
admitted. Seeing the nature and complexity of the dispute, the Arbitral Tribunal, issued
Procedural Order No. 6 dated June 4, 2023, amending the issues for adjudication. The
Arbitral Tribunal added the 5th issue to the pre-existing list of issues. The Arbitral
Tribunal has listed the matter for 5th November 2023, for final hearings on the issues.

Memorandum On Behalf of Respondent 9

 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

ISSUES RAISED

ISSUE 1:

WHETHER THE ARBITRAL TRIBUNAL HAS JURISDICTION TO HEAR THE

DISPUTE?

ISSUE 2:

WHETHER THE CHALLENGE RAISED BY THE RESPONDENT OVER Ms. ERICA’S

APPOINTMENT MAINTAINABLE?

ISSUE 3:

WHETHER THE CLAIMANT HAS OWNERSHIP AND PROPRIETARY RIGHTS OVER

THE INTELLECTUAL PROPERTY RIGHTS OF MINDFLAYER?

ISSUE 4:

WHETHER THE RESPONDENT HAS BREACHED THE AGREEMENT, THERE BY

ENTITLING THE CLAIMANT TO SEEK DAMAGES?

ISSUE 5:

WHETHER THE PRINT SCREEN PRODUCED BY THE RESPONDENT AT THE STAGE

OF HEARING, ADMISSIBLE?

Memorandum On Behalf of Respondent 10

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SUMMARY OF ARGUMENTS

ISSUE -1:
1. Whether the arbitral tribunal has jurisdiction to hear the dispute?

It is humbly submitted that the Arbitral Tribunal has no jurisdiction to hear the
dispute as, the arbitration Clause 25.1 and 25.2 are pre- arbitration clauses of CA which
need to be fulfilled to invoke arbitration before the tribunal as per 25.3 and pre-
arbitration stage has not been concluded and the time period of 45 days as mentioned in
25.1 has not been reached to come to conclusion. Hence the arbitral tribunal has no
jurisdiction to hear the dispute at this stage.

ISSUE 2:
2. Whether the challenge raised by the respondent over Ms. Erica’s appointment
maintainable?
It is humbly submitted that Ms. Erica should be removed from the arbitral tribunal
due to her connection with her husband who was the chairman of company which holds
57% shares of AI Innovation and there is no express writing about her relationship. As she
has missed to disclose her relationship with the Mr Sinclair. Her Appointment as an
arbitrator is against sec 12 of 1996 Act and also against the entry 2.2.2 of waivable red list
under IBA Guidelines on conflict of interest. Hence the challenge raised by the
respondent over Ms. Erica’s appointment is maintainable.

ISSUE 3:

3. Whether the claimant has ownership and proprietary rights over the intellectual
property rights of MindFlayer?
It is humbly submitted that the claimant has no ownership and proprietary rights
over the intellectual property rights of ‘MindFlayer’. The obligation of the claimant in CA
is to provide technological expertise, AI algorithms, and innovation to the respondent.
And inconsideration of these services the claimant shall retain all rights to any intellectual
property created or developed during the course of the project only till the completion of

Memorandum On Behalf of Respondent 11

 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

the project. Hence the claimant has no permanent ownership and proprietary rights over
the intellectual property rights of ‘MindFlayer’.

ISSUE 4:

4. Whether the respondent has breached the agreement, thereby entitling the claimant to
seek damages?

It is humbly submitted that in the present case respondent has not breached the
agreement and the claimant is not entitle to seek damages from the respondent. Instead,
the claimant has breached the agreement and respondent are entitled to seek damages
caused by the Claimant.

ISSUE 5:

5. Whether the print screen produced by the respondent at the stage of hearing,
admissible?

It is humbly submitted that in the present case respondent has not breached the
agreement and the claimant is not entitle to seek damages from the respondent. Instead,
the claimant has breached the agreement and respondent are entitled to seek damages
caused by the Claimant.

Memorandum On Behalf of Respondent 12

 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

ARGUMENTS ADVANCED
ISSUE -1:
1. Whether the arbitral tribunal has jurisdiction to hear the dispute?

It is humbly submitted that the Arbitral Tribunal has no jurisdiction to hear the dispute
as, the arbitration Clause 25.1 and 25.2 are pre- arbitration clauses of CA which need to
be fulfilled to invoke arbitration before the tribunal as per 25.3 and pre- arbitration stage
has not been concluded and the time period of 45 days as mentioned in 25.1 has not been
reached to come to conclusion. Hence the arbitral tribunal has no jurisdiction to hear the
dispute at this stage.

The clause 25 of the Collaboration agreement states as below in 25.1 , 25.2 and 25.3.

1.1. Clause 25: Dispute Resolution Clause

25.1. Any dispute, claim or difference arising out of or in connection with this
Collaboration Agreement, including any question regarding its existence, validity or
termination ("Dispute") shall be attempted to be resolved amicably and in good faith
through direct negotiations. Either Party may initiate the negotiation process with the
other Party outlining the nature of the dispute. The other Party shall respond
promptly to participate in the dispute resolution process. The negotiation process may
be concluded within 45 days unless otherwise agreed between the Parties. During the
process of negotiation, both Parties shall engage in a sincere exchange of information
and make good faith efforts to reach a resolution. If the Parties successfully resolve
the dispute during this duration, they shall formalize the agreement in writing, and no
further arbitration will be pursued.
25.2. In the event the negotiation under Clause 25.1 fails, the Dispute shall be subject
to the exclusive jurisdiction of the Indovian courts, except for Clause 25.3.
25.3. Notwithstanding the provisions of Clause 25.2, any Dispute may, upon the will
of either Party, be referred to and finally resolved in accordance with the Arbitration
Rules of the Singapore International Arbitration Centre (“SIAC”), 2016, which rules
are, subject to he provisions of this Clause 25, deemed to be incorporated by
reference into this Clause 25.

Memorandum On Behalf of Respondent 13

 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

1.2. As per the clause 25 only when 25.1 fails the parties can go ahead with the 25.2 or
with 25.3 notwithstanding 25.2 didn’t work out at the will of either of the party, they
can refer the matter to arbitral tribunal. In the given case Artificiana has made good
effort to resolve the issue amicably as per 25.1 and the pre- arbitration stage has not
been concluded and the parties are undergoing negotiations.
1.3. Therefore, as per CA approaching the arbitral tribunal under 25.3 was the final stage
of the dispute clause only when 25.1 and 25.2 the pre-arbitration clauses have been
tried and no solutions has been obtained.
1.4. In the given case the Respondents legal representative, Ms.Nancy Hopper privately
reached out to Mr. Steeve Byers from AI Innovations On October 10, 2022
attempting to negotiate a settlement outside of arbitration.
1.5. On November 15, 2022, AI Innovation sent a notice invoking arbitration to
Artificiana which is the breech of 25.1 under Dispute Resolution Clause as it clearly
states that either Party may initiate the negotiation process with the other Party
outlining the nature of the dispute. The other Party shall respond promptly to
participate in the dispute resolution process. The negotiation process may be
concluded within 45 days unless otherwise agreed between the Parties. During the
process of negotiation, both Parties shall engage in a sincere exchange of information
and make good faith efforts to reach a resolution.
1.6. AI Innovations have not involved in sincere exchange of information or never made
any good efforts in good faith to reach a resolution. Instead they have invoked the
arbitration clause under 25.3 even before the time period of 45 days as said in 25.1
which makes it clear that there in breech of the CA.
1.7. In Nirman Sindia v. Indal Electromelts Ltd1., Coimbatore, the Kerala High Court
observed that the parties need to comply with the agreed procedure for dispute
resolution and the parties cannot resort to final stage without complying the primary
stage of clause.
1.8. In Simpark Infrastructure Pvt. Ltd. vs Jaipur Municipal Corporation2, the Rajasthan
High Court observed that the parties need to follow the agreed procedure for
invoking the arbitration and if the same is not followed then the application for
arbitration will be premature.
1
AIR 1999 KERALA 440, 2000 (1)
2
S.B.ARBITRATION APPLICATION NO.26/2011

Memorandum On Behalf of Respondent 14

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1.9. In Haldiram Manufacturing Company Pvt. Ltd. v. DLF Commercial Complexes3, the
Delhi High Court emphasized upon the importance of fulfillment to fulfill the pre-
condition of mutual discussion before commencing arbitration.
1.10.In the case of Quick heal Technologies Ltd v. NCS Computech Private Ltd4, the
Bombay High Court emphasized the significance of differentiating between the use
of "may" and "shall" in an arbitral clause. “This distinction is crucial as it determines
the nature of the requirement imposed. When the clause employs "shall," it indicates
a mandatory obligation that parties must comply with. On the other hand, the use of
"may" grants parties the discretion to decide whether or not to fulfill the contractual
pre-conditions for arbitration. Regarding "May" clauses, which are contractual pre-
conditions for arbitration, there is limited flexibility provided in terms of deviating
from these pre-conditions compared to the binding nature of "Shall" clauses.” In the
given case the clause 25.1 uses the word “Shall” and makes it mandatory pre-
arbitration condition.

Therefore, in the light of the above arguments placed and merit on record it is contended
that Clause 25.1 and 25.2 are pre-arbitration clauses of CA which need to be fulfilled to
invoke arbitration before the tribunal as per 25.3 and pre- arbitration stage has not been
concluded and the time period of 45 days as mentioned in 25.1 has not been reached to
come to conclusion. Hence the arbitral tribunal has not jurisdiction to hear the dispute at
this stage.

ISSUE 2:

3
IA No. 3363/2011 in CS(OS) 2288/2010
4
AIR 2020 (NOC) 857 (BOM.), AIRONLINE 2020 BOM 630

Memorandum On Behalf of Respondent 15

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2. Whether the challenge raised by the respondent over Ms. Erica’s appointment
maintainable?
It is humbly submitted that Ms. Erica should be removed from the arbitral tribunal
due to her connection with her husband who was the chairman of company which holds
57% shares of AI Innovation and there is no express writing about her relationship. As she
has missed to disclose her relationship with the Mr Sinclair. Her Appointment as an
arbitrator is against sec 12 of 1996 Act and also against the waivable red list if IBA
Guidelines on conflict of intrest. Hence the challenge raised by the respondent over Ms.
Erica’s appointment is maintainable.

2.1 According to Section 12(1) of the 1996 Act 5, an arbitrator, upon being appointed,
must reveal:

- Any direct or indirect connections with either party.

- Any relationships with the subject matter in dispute, encompassing financial,

business, professional, or other affiliations that might impact the impartiality of
the resolution process.

2.2 Under Section 12(2) of the 1996 Act, challenging the appointment of an arbitrator is
permissible only if:

- There are circumstances raising justifiable doubts about the arbitrator's

independence or impartiality.

- The appointed arbitrator lacks the qualifications agreed upon by the parties
involved.

2.3 In the current case Ms Erica has never disclosed her relationship with Mr. Murray
Sinclair until the dispute has been raised by the respondent before the SIAC on
January 5, 2023.

2.4 Under IBA Guidelines on Conflicts of Interest in International Arbitration under

waivable red list under the point 2.2.2 it has been stated as below.

5
THE ARBITRATION AND CONCILIATION ACT, 1996

Memorandum On Behalf of Respondent 16

 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

- 2.2.2 A close family member of the arbitrator has a significant economic interest
in the outcome of the dispute.

2.5 In the current case Mr. Murray Sinclair, was the chairman of the board of Data-
mension, a Japanese-incorporated company that held 99% of Algorithmia, a company
incorporated in England, and which, in turn, held 57% of AI Innovations’
shareholding is a spouse of Ms. Erica which establish as a close family member of the
arbitrator has a significant economic interest in the outcome of the dispute under 2.2.2
of waivable red list. Though it is waivable criteria Ms. Erica has not disclosed such
relationship in writing and got ascent from both the parties to continue as chairperson
which clearly shows lack of Ms. Erica’s independence and impartiality.

2.6 The Respondent pointed out that although the information about Mr. Sinclair was
available on the website of Data-mension since the beginning of the arbitration
proceedings, it could only confirm the information that Mr. Sinclair was Ms. Erica’s
spouse on January 4, 2023, when Ms.Erica Sinclair responded to the request for
clarifications submitted by the Respondent.

From the above arguments it is clear that Ms. Erica has violated to disclose her
relationship with Mr. Murray Sinclair when she was appointed as a chairperson by SIAC
upon the request of Claimant in the aim of obtaining favorable outcome from the
arbitration. Hence invocation of the justifiable doubts doctrine in the present case is valid
and the challenge raised by the respondent over Ms. Erica’s appointment is maintainable.

Memorandum On Behalf of Respondent 17

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ISSUE 3:

3. Whether the claimant has ownership and proprietary rights over the intellectual
property rights of MindFlayer?

It is humbly submitted that the claimant has no ownership and proprietary rights
over the intellectual property rights of ‘MindFlayer’. The obligation of the claimant in CA
is to provide technological expertise, AI algorithms, and innovation to the respondent.
And in consideration of these services the claimant shall retain all rights to any
intellectual property created or developed during the course of the project only till the
completion of the project.

3.1 Further, the CA is a valid contract under Indian Law. Under Indian Contract Act, 1872
an agreement becomes a contract when the following conditions are satisfied, i.e,
There is some consideration for it, the parties are competent to contract, their consent
is free, their object is lawful6.

3.2 Contracts are seen as relationships consisting of promises which are enforceable by
law. 7The right originates and subsists by virtue of the contract itself. It is the duty of
the Court, while interpreting the contract to decipher the true and correct meaning the
parties intended and enforce the rights arising out of the contract.

3.3 Under clause 20 - intellectual property rights of CA, the clause 20.1 states as “AI
Innovation shall retain all rights to any intellectual property (“IP”) created or
developed during the course of the project till the completion of the project”. This
Clause provide IP rights to AI Innovations during the course of the project and such
rights ends when the project is completed.

3.4 Under clause 20 - intellectual property rights of CA, the clause 20.2 states as upon
successful completion AI Innovation shall transfer and assign to Artificiana all rights,
title, and interest in and any IP created, developed, or otherwise arising from the

6
Indian Contract Act, 1872 – Sec 2d, 25, 11, 12, 13-22 & 23-30
7
British Russian Gazette and Trade Outlook Ltd. v. Associated Newspapers Ltd [1933] 2 KB 616

Memorandum On Behalf of Respondent 18

 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

project, including but not limited to patents, copyrights, trademarks, trade secrets,
and any associated moral rights.
3.5 Also, under 20.4 AI Innovation can withhold the transfer and assignment of the IP
Rights only until all outstanding fees and expense owed to AI Innovation are settled
by Artificiana.

3.6 On October 10, 2022 the legal representative of Artificiana reached out to
representative of the claimant to acknowledge the collaborations in exchange it was
requested that AI Innovations should not proceed with its patent application. It was
also hinted by representative of Artificiana such application may be deemed to be in
breach of the Agreement under clause 20.

3.7 Further, Lord Clarke said in RTS Flexible Systems Ltd v Molkerei Alois Muller
GmbH &Co KG8;“Whether there is a binding contract between the parties and, if so,
upon what terms depends upon what they have agreed. It depends not upon their
subjective state of mind, but upon a consideration of what was communicated
between them by words or conduct, and whether that leads objectively to a conclusion
that they intended to create legal relations and had agreed upon all the terms which
they regarded or the law requires as essential for the formation of legally binding
relations.”

Therefore, in the present case parties are bind to the terms of the contract. Thus, the
claimant’s submit patent application because it was mutually agreed by the parties that the
ownership of the IP will be transferred to responded upon successful completion of the
project. The claimant is bind to the terms of the CA.

8
[2010] UKSC 14

Memorandum On Behalf of Respondent 19

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ISSUE 4:

4. Whether the respondent has breached the agreement, thereby entitling the claimant to
seek damages?
It is humbly submitted that in the present case respondent has not breached the
agreement and the claimant is not entitle to seek damages from the respondent. Instead,
the claimant has breached the agreement and respondent are entitled to seek damages
caused by the Claimant.

4.1 It is submitted that, the parties to a contract must either perform, or offer to perform,
their respective promises, unless such performance is dispensed with or excused under
the provisions of this Act, or of any other law. 9 In view of section 37 it is obvious that
promises made are binding under excelled under the provisions of contract act itself
or under any other law it is well established principle of law that parties and privities
to contract are undoubtedly bound by it.

4.2 Further, Lord Clarke said in RTS Flexible Systems Ltd v Molkerei Alois Muller
GmbH &Co KG10 “Whether there is a binding contract between the parties and, if so,
upon what terms depends upon what they have agreed. It depends not upon their
subjective state of mind, but upon a consideration of what was communicated
between them by words or conduct, and whether that leads objectively to a conclusion
that they intended to create legal relations and had agreed upon all the terms which
they regarded or the law requires as essential for the formation of legally binding
relations.”

4.3 Therefore, it can be concluded that parties are bind to the terms of the contract. But
there are some events which amounts to the breach of agreement by the claimant i.e.
- AI Innovation has submitted patent Application to secure the IP rights of the
application which is against the clause 20 of the agreement.
- AI Innovations have initiated the arbitration against Artificiana even before the
pre- arbitration condition given under clause 25.1 and 25.2 are satisfied.
- AI Innovations did not employ the latest technology to develop the software.

9
Indian Contract Act, 1872, Sec 37
10
[2010] UKSC 14

Memorandum On Behalf of Respondent 20

 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

- AI Innovations had misrepresented its technological capabilities and financial

standing to induce Artificiana into entering into this collaboration.

4.4 It is humbly submitted that the party in breach must make compensation in respect of
the direct consequences flowing from the breach.11 Also, section 73, of the Indian
Contract Act, 1872, provides that, “When a contract has been broken, the party who
suffers by such breach is entitled to receive, from the party who has broken the
contract, compensation for any loss or damage caused to him thereby, which naturally
arose in the usual course of things from such breach, or which the parties knew when
they made the contract, to be likely to result from the breach of it. Such compensation
is not given for any remote and indirect loss or damage sustained by the reason of the
breach.”

4.5 Where two parties have made a contract which one of them has broken, the damages
which the other party ought to receive in respect of such breach of contract should be
such as may fairly and reasonably be considered either arising naturally, i.e.,
according to the usual course of things, from such breach of contract itself, or such as
may reasonably be supposed to have been in the contemplation of both parties, at the
time they made the contract, as the probable result of the breach of it.12 The defendant
is liable for all that which naturally happens in the usual course of things after the
breach.13 The extent of liability in ordinary cases is what may be foreseen by “the
hypothetical reasonable man”, as arising naturally in the usual course of things14.

Therefore, in the light of the above discussion and merit on record the respondent submits
that in the present case the claimant has breached the agreement. And pursuant to the
breach of agreement non breaching party has contractual right under clause 23.2 of CA to
terminate the agreement. Thus, the contract is terminated from respondent side. Also, the
respondent is entitled for damages of 650 million dollars.

ISSUE 5:

11
Patanjali Shastri J. in Pannalal Jankidas v. Mohanlal AIR 1951 SC 144, 153: 1950 SCR 979: (1951) 21
12
Hadley v. Baxendale (1854) 9 Exch 341
13
Pistons and Rings Ltd v. Buckeye Machines(P) Ltd, AIR 2007 NOC 1844 (Del)
14
Madras Railway Co v. Govinda Rau ILR (1898) 21 Mad 172

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 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

5. Whether the print screen produced by the respondent at the stage of hearing,
admissible?

It is humbly submitted that in the present case the print screen produced by the
respondent at the stage of hearing is admissible as it is the discretion of the tribunal to
accept it at any stage.

5.1 In the case of N.S. Tallam And Ors. vs Tallam Subbaraya Setty And Sons And Ors15
it has been observed that “no fetters are placed on the power of the Court to receive
the documents. As the law stands today there is no prohibition in the code for the
Court to receive documents at the subsequent stage of the hearing. In exercise of the
said power if the Court either receives the documents at a subsequent stage of the
hearing or refuses to receive the documents the Court cannot be found fault with. It is
not sufficient cause for delay in filing the documents which is to be considered by the
Court, but it is relevancy of the said documents which is the criteria which the Court
has to consider either for receiving or rejecting the documents”.

5.2 There are some provisions which deals with the power of arbitral tribunal regarding
admissibility of evidence.
- Article 27(4) of the UNCITRAL Rules provides equally broad discretion to
arbitrators to determine the admissibility of evidence16.
- Article 9(1) of IBA Rules also provide broad discretion to arbitrators on questions
of admissibility of evidence, while Article 9(2) sets outs specific grounds on
which evidence can be excluded, such a legal impediment or privilege and
political or institutional sensitivity17.
- Also, Rule 19.2 of SIAC states the tribunal "shall determine the relevance,
materiality, and admissibility of all evidence. The Tribunal is not required to apply
the rules of evidence of any applicable law in making such determination.18
5.3 It should be noted that Respondent produced a print screen of an internal email of the
Claimant, wherein Mr. Byers’ sent an email to Mr. Brenner telling him about his
interaction with Ms. Hopper. The email also mentioned the request for the use of
15
ILR2004KAR924
16
UNCITRAL Arbitration Rules, art. 27, cl. (4)
17
IBA rules 2020, art. 9
18
SIAC Rules, 2016, Rule. 19.2

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 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

updated technology by the Respondent. Which is a crucial piece of evidence which

clearly shows that the AI Innovations have breached the contractual obligations.

5.4 As it has been objected by the claimant that the email communication is an internal
communication between the legal team and the CEO of the company and has been
obtained illegally by the Respondent. It is the duty of the Claimant to protect their
internal communication if such communication has been exposed to the responded
through an unknown source it cannot be considered as obtained illegal.

Therefore, in the light of the above discussion and merit on record it is stated that the
evidence filed by the respondent is admissible at the stage of hearing. Further, the tribunal
has power to decide the admissibility of the evidence at any stage.

__________________________________________________________________________

PRAYER

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 CLINICAL COURSE - IV (TA6D) MOOT COURT EXERCISE

___________________________________________________________________________

Wherefore, in the lights of facts stated, issues raised, authorities cited and argument
advanced, it is most humbly prayed and implored before the tribunal, that it may be
graciously pleased to Dismiss the adjudge and declare:

1. That the tribunal have no jurisdiction to hear the dispute.

2. That Ms. Erica must be removed from the arbitral tribunal.
3. That the claimant has no ownership and proprietary rights over the Intellectual
Property Rights of ‘MindFlayer’.
4. That the claimant is not entitled for damages instead Respondent is entitled for
the damages.
5. That the Print screen produced by the respondent at the stage of hearing is
admissible.

AND /OR

Pass any other order, directions that it may deem fit in the best interest of justice,
fairness, equity and good conscience. All of which is humbly prayed.

ALL OF WHICH IS HUMBLY PRAYED

____________________________
PLACE: ____________________________

DATE: April XX, XXXX COUNSELS FOR THE RESPONDENT

Memorandum On Behalf of Respondent 24