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1. This is a case study based on UK legal system that UK case law and practice on arbitration should be referred.
2. There are all FOUR questions and ALL should be answered.
1. Students must produce clear and comprehensive answers relevant to the questions.
2. The answer papers will be marked, where relevant, on the basis of: A. enforceable, unchallengeable decisions dealing with all relevant matters in the reference and B. comprehensive and sound reasons, consistent within the reference.
3. When using reference, the reference style must follow OSCOLA Referencing Guide.
Coursework – CASE STUDY
BACKGROUND
Paisley Manufacturing is a business, based in Scotland, which manufactures the “KidsFirst”, a novel design of collapsible pushchair for infants. MuttiSorge is a well known and highly regarded chain of retail shops specialising in equipment and clothing for babies and young children, based in Germany but with branches in other European countries. MuttiSorge makes great play of its environmental credentials and ethical approach to business in its advertising and publicity. Paisley and MuttiSorge enter into a contractual agreement whereby MuttiSorge will be designated and act as sole distributor on the European mainland for the KidsFirst. The contract provides that MuttiSorge will not sell competitor products to the KidsFirst. There is no reference in the agreement to the substantive law of the contract.
The contract contains the following clause:
Any dispute arising under or in connection with this agreement, and which cannot be otherwise resolved, shall be referred to arbitration in Dublin. The arbitral tribunal shall be appointed by the President to the Chartered Institute of Arbitrators. The UNCITRAL Rules of Arbitration shall apply.
The KidsFirst is a huge success when introduced to the market. Sales are initially well beyond expectations, and over the first 18 months of the agreement 10,000 units are sold on mainland Europe. Unfortunately after 18 months an accident occurs in which a child is killed when an KidsFirst sold by MuttiSorge is alleged to have collapsed. Paisley and MuttiSorge are both joined in the consequent litigation which becomes very high profile in the media across Europe. The matter is eventually settled out of court by the insurers to Paisley and MuttiSorge acting jointly. Although no liability is attributed to Paisley, and there is no clear evidence of a fault in the design, public confidence in the KidsFirst collapses and sales fall dramatically. MuttiSorge tells Paisley that it is terminating their agreement forthwith because the association with the KidsFirst is damaging its reputation and it will be selling an alternative product. Paisley wishes to initiate arbitration proceedings seeking a declaration that MuttiSorge is in breach of contract and claiming damages for financial loss.
There is much speculation in the media that Paisley may collapse as a result of the accident and the consequent bad publicity. Paisley has been at great pains to state publicly that it is financially secure, that it has substantial financial backing and several new products almost ready for release.
The Managing Director of Paisley writes to the President of the CIArb. The letter is headed “Notice of Arbitration” and states briefly that there is a dispute between the parties regarding their contract, and quotes the arbitration agreement in full. It requests that the president appoints a tribunal in accordance with the arbitration agreement and the UNCITRAL rules (2010).
QUESTION 1
a) Discuss in general terms the implications of the arbitration agreement.
b) Discuss the shortcomings of the letter.
QUESTION 2
You are eventually appointed sole arbitrator and you call a preliminary meeting which is attended by counsel for each party.
During the preliminary meeting the question of the substantive law of the contract is raised. The parties cannot agree. Paisley argues that it should be Scottish law, and MuttiSorge argues for German law.
Discuss the approach of the arbitrator to this situation and how a decision can be arrived at.
QUESTION 3
After the main submissions of pleadings, Paisley makes an application to the arbitrator to amend its claim to include the following: “The claimant also seeks a declaration to the effect that the KidsFirst is a safe product and no further claims against Paisley in respect of any alleged defects in the product will be valid”.
Discuss this application and how you, as arbitrator, would approach it.
QUESTION 4
An award is eventually made. You are counsel for the losing party. The Managing Director of your client asks you if there are any possible grounds for appeal or challenge to the award, or any basis to resist enforcement.
There had been an introduction of a witness statement as evidence without oral testimony or cross examination. The arbitrator admitted the witness statement as evidence and this evidence was apparently given significant weight and was highly influential in the arbitrator’s decision. The arbitrator’s order for directions following the preliminary meeting was made “by consent” and included the following “witness evidence shall be given orally at a hearing. Witness statements shall be exchanged as directed and shall be taken as examination in chief”
Make a submission to the MD in response to his question.
