IN THE HONORABLE ARBITRAL TRIBUNAL AT SHIMLA

In the matter of

Glacier India Pvt. Ltd.

..Complainant

V.

Aristo International

.Respondent

On submission to the Honble Arbitral Tribunal

Under Article 16.2 of the LCIA Rules, 2014
Written Submission on behalf of the
Complainant

Counsel for the Appellant

Akshay Uppal
Roll No. 56
9th Semester

Memorandum on behalf of Appellants 1

TABLE OF CONTENTS

INDEX OF AUTHORITIES....................................................................................................................3
Books & Commentaries...............................................................................................................3
Statutes.........................................................................................................................................3
Judicial Decisions........................................................................................................................3
STATEMENT OF JURISDICTION..........................................................................................................4
STATEMENT OF FACTS......................................................................................................................5
STATEMENT OF ISSUES.....................................................................................................................6
SUMMARY OF ARGUMENTS..............................................................................................................7
ARGUMENTS ADVANCED..................................................................................................................8
1.

That the Substantive Law of Germany will be applicable to the present arbitral

proceedings..................................................................................................................................8
PRAYER...........................................................................................................................................12

Memorandum on behalf of Appellants 2

INDEX OF AUTHORITIES
Books & Commentaries
Cheshire, North & Fawcett, Private International Law, 14th Edition, Oxford University Press,
2008
Takwani, C.K., Civil Procedure, Eastern Book Company, Sixth Edition, 2013
Basu, D. D., Commentary to the Constitution of India, Lexis Nexis Butterwirths Wadhwa, 2010

Statutes
Code of Civil Procedure, 1908
London Court of International Arbitration Rules, 2014
Judicial Decisions

BALCO v. KAISER
Enercon (India) v. Enercon GmBH
Naviera Amazonica Peruana S.A. v. Compania Internacionale De Seguros Del Peru
NTPC v. Singer
Sulamerica v. Enesa

Memorandum on behalf of Appellants 3

STATEMENT OF JURISDICTION
THE COUNSEL ON BEHALF OF RESPONDENT APPROACHES THIS HONBLE TRIBUNAL
UNDER ARTICLE 16.2 OF THE LONDON COURT OF INTERNATIONAL ARBITRATION
RULES, 2014.
ARTICLE 16.2 OF LCIA RULES, 2014
IN DEFAULT OF ANY SUCH AGREEMENT, THE SEAT OF THE ARBITRATION SHALL BE
LONDON (ENGLAND), UNLESS AND UNTIL THE ARBITRAL TRIBUNAL ORDERS, IN VIEW
OF THE CIRCUMSTANCES AND AFTER HAVING GIVEN THE PARTIES A REASONABLE
OPPORTUNITY TO MAKE WRITTEN COMMENTS TO THE ARBITRAL TRIBUNAL, THAT
ANOTHER ARBITRAL SEAT IS MORE APPROPRIATE. SUCH DEFAULT SEAT SHALL NOT
BE CONSIDERED AS A RELEVANT CIRCUMSTANCE BY THE LCIA COURT IN
APPOINTING ANY ARBITRATORS UNDER ARTICLES 5, 9A, 9B, 9C AND 11.

STATEMENT OF FACTS
Memorandum on behalf of Appellants 4

Aristo International is a Company engaged in the business of developing indigenous

seeds of rare variety of flowers in Germany and exporting to all over the globe. Glacier

India Ltd. is a private ltd company located in Shimla India.

Glacier is doing business with Aristo since last 5 years and they have a 9 year agreement
for the business. Aristo supplies the seeds to Glaciers which is further developed in
artificial climatic condition in Shimla then the plants are sold to five star hotels located in

various hill stations.

These seed develop into flowers found only in Germany. The agreement between
Glaciers and Aristo had the arbitration clause as the dispute resolution clause. They also

agreed to abide by rules of London Court of International Arbitration (LCIA).

The consignment sent by Aristo to Glaciers in India having the value of Rs. 5 lacks was
having the deteriorated quality and therefore the seeds got spoiled during their

development at the Nursery of the Glaciers in Shimla itself and thus a dispute arose.
The tribunal was constituted in Shimla, India as agreed between both the parties and the
question was which substantive law was to be applied to the substance of the dispute. The

agreement is silent as to application of substantive law.

Both the parties are claiming application of their law. Glaciers say because they have
suffered the loss Indian law should apply. Aristo is contending because liability is to be
imposed on them therefore German law should apply so as to mitigate the liability.

STATEMENT OF ISSUES

ISSUE 01: WHETHER THE SUBSTANTIVE LAW APPLICABLE TO THE PRESENT

ARBITRAL PROCEEDING WILL BE OF INDIA OR GERMANY?
Memorandum on behalf of Appellants 5

SUMMARY OF ARGUMENTS
ISSUE 01: WHETHER THE SUBSTANTIVE LAW APPLICABLE TO THE PRESENT
ARBITRAL PROCEEDING WILL BE OF INDIA OR GERMANY?

Memorandum on behalf of Appellants 6

ARGUMENTS ADVANCED

Memorandum on behalf of Appellants 7

1. That the Substantive Law of Germany will be applicable to the present arbitral
proceedings
1.1 Closest Connection Test
It is humbly submitted before this arbitral tribunal that there are three laws that are potentially
applicable to an arbitration agreement. Firstly, the law of the arbitration agreement, i.e. governing
law. Secondly, the proper law of the contract, i.e. substantive law. Thirdly, the law of the seat of
arbitration. An arbitration agreement is valid so far as the intention of the parties to resolve the
disputes by arbitration is clear; any allegation of non-conclusion of the main contract is
immaterial.
With respect to applicability of law, the governing law in most of the circumstances generally
describes which law will be applicable. However, if the governing law remains undefined,
according to the decision of the Honble Apex Court in NTPC v Singer1, the substantive law is
normally the governing law as well. However, in exceptional circumstances and if there is no
substantive law defined, the law of the seat will be deemed to be the governing law as the law
bearing the closest connection to the dispute.
English arbitration law has developed in a subtle but distinct way since issues relating to
governing law were first considered. The difference lies in what is now said to indicate the
closest system of law to the arbitration agreement. The authors of a seminal text on English
arbitration law (Mustill & Boyd, Commercial Arbitration (1989)) described the common law
position over two decades ago, when they stated that if there is no express or implied choice of
law, the arbitration agreement will be governed by the law with which the agreement has its
closest and most real connection. Indeed, that precise language forms the backbone of the
current legal test. However, the prevailing view at the time was that, as a general rule, the law
with the closest connection to the arbitration agreement was the law governing the contract, since
the arbitration agreement was considered part of the substance of the underlying contract.
The High Court of England & Wales has confirmed the nature of the test that will be applied
when determining the proper law of an arbitration agreement in the absence of the parties
express or implied choice. In two recent cases, Sulamrica CIA. Nacional De Seguros S.A. and
1 [AIR 1993 SC 998]
Memorandum on behalf of Appellants 8

Ors. v Enesa Engenharia S.A. ENESA and Anr.2 and Abuja International Hotels Limited v
Meridien SAS3, the court heard argument in two very different contexts on the law governing the
parties agreement to arbitrate, but delivered judgments affirming the same principle.
In Sulamerica v. Enesa4 (Sulamerica) the governing law is either (i) expressly chosen; (ii)
impliedly chosen; and (iii) in the event it is neither expressly nor impliedly chosen, it is the law
of the seat of the arbitration. Although the court took note of the fact that an express choice of
substantive law (Brazil) is a persuasive indicator of governing law, it went on to hold that the
identification of the seat as London is a more impressive factor in arriving at the conclusion that
the English Arbitration Act would have the closest connection and held that the governing law
would be English law. This position was confirmed by the English Commercial Court in Habas
Sinai v. VSC5, where the court, in a dispute where neither the substantive law nor the governing
law was specified, applied the closest connection test to conclude that the law of the seat would
be the law applicable to the arbitration agreement.
Moreover, according to Article 16 of London Court of International Arbitration, the law
applicable to the Arbitration Agreement and the arbitration shall be the law applicable at the seat
of the arbitration, unless and to the extent that the parties have agreed in writing on the
application of other laws rules of law and such agreement is not prohibited by the law applicable
at the arbitral seat.
In the present case the parties have chosen to abide by the rules of LCIA. They have not
expressly or impliedly mentioned that the rules of a particular country will apply. Taking the
closest connection test into consideration, German laws should be applicable because facts have
clearly mentioned that these seed develop into flowers found only in Germany. Glacier is doing
business with Aristo since last 5 years and they have a 9 year agreement for the business.
2 [2012] EWHC 42 (Comm)
3 [2012] EWHC 87 (Comm)
4 [(2012) EWCA Civ 638]
5 [(2013) EWHC 4071]
Memorandum on behalf of Appellants 9

1.2 Determination of seat of the arbitration

It is humbly submitted before this arbitral tribunal that the governing law will be first determined
by the seat of arbitration which differs from the place of arbitration. In order to find out the
applicability of substantive law, it is pertinent to determine the seat of arbitration.
In BALCO vs. KAISER6, the choice of the country as the seat of arbitration inevitably imports an
acceptance that the law of that country shall be applicable to the arbitration proceedings. Seat
of arbitration and place of arbitration are used interchanging but the seat shall remain the place
mentioned in the arbitration agreement. Parties of different nations are involved in international
commercial arbitration and hence the venue for arbitration might change but the seat shall remain
the same. It therefore contemplates a situation where even though the parties have provided for a
particular place for arbitration, that some of the proceedings themselves may be conducted in
other territories as may be convenient to all.
In Naviera Amazonica Peruana S.A. vs. Compania Internacionale De Seguros Del Peru7:
The preceding discussion has been on the basis that there is only one place of arbitration.
This will be the place chosen by or on behalf of the parties; and it will be designated in the
arbitration agreement or the terms of reference or the minutes of proceedings or in some
other way as the place or seat of the arbitration. This does not mean, however, that the
arbitral tribunal must hold all its meetings or hearings at the place of arbitration. International
commercial arbitration often involves people of many different nationalities, from many
different countries. In these circumstances, it is by no means unusual for an arbitral tribunal
to hold meetings or even hearings in a place other than the designated place of arbitration,
either for its own convenience or for the convenience of the parties or their witnesses. It may
be more convenient for an arbitral tribunal sitting in one country to conduct a hearing in
another country, for instance, for the purpose of taking evidence. In fact circumstances each
6 (2012) 9 SCC 552
7 [1988] 1 Lloyd's. Rep. 116

Memorandum on behalf of Appellants 10

move of the arbitral tribunal does not of itself mean that the seat of arbitration changes. The
seat of arbitration remains the place initially agreed by or on behalf of the parties.
Moreover, the Supreme Court of India in Enercon (India) v. Enercon GmBH 8 observed:
The mention in the arbitration clause that London was the venue of the arbitration could
not lead to the inference that London was to be the seat. This was so in particular because
although London was termed as the venue, the law governing the substantive contract, the
law governing the arbitration agreement and the law governing the conduct of the arbitration
were chosen to be Indian law; and the closest and most real connection was with India.
Given the connection to India of the entire dispute between the parties, it is difficult to
accept that parties have agreed that the seat would be London and that venue is only a
misnomer. The parties having chosen the Indian Arbitration Act, 1996 as the law governing
the substantive contract, the agreement to arbitrate and the performance of the agreement
and the law governing the conduct of the arbitration; it would, therefore, in our opinion,
be vexatious and oppressive if Enercon GMBH is permitted to compel EIL to litigate in
England. London was designated only as a convenient place for hearings by virtue of the use
of the word venue. London is mentioned only as a "venue" of arbitration which, in the facts
of this case cannot be read as the "seat" of arbitration. Venue which is not the same as seat
of arbitration is merely a geographical location of the arbitration proceedings chosen on the
basis of convenience. However, its the seat that actually decides the appropriate court
which will have exclusive jurisdiction to support the arbitration proceedings. In this case, the
apex court differed with the Bombay High Courts ruling, saying merely because the venue
of arbitration is chosen to be London, it could not lead to the inference that UK courts could
be approached by either the Indian or the German entity to seek interim measures during
arbitration proceedings. Otherwise, it would lead to utter chaos, confusion and unnecessary
complications.

PRAYER

8 2014(4)ARB 713, 2014 (1) ARBLR 257 (SC)

Memorandum on behalf of Appellants 11

Wherefore it is humbly prayed before this honorable court that in light of the facts stated,
issues raised, arguments advanced & authorities cited, the Honble Court may be pleased to

recognize Germany as seat of arbitration and law of Germany as substantive law

applicable in the arbitration

& pass any further decree in the favor of the Appellant in conformity with the principles of
justice, equity & good conscience. And for this, the Appellant shall ever pray.

Dated: 01-10-2015

All of which is respectfully submitted

______________________

Counsel for the Appellant

Memorandum on behalf of Appellants 12