Task #1 - Memorandum from Supervisor

MEMORANDUM

File No. ARB-5214802-583314-01

Client Neptune Freight Company Inc.(“Neptune”)
Matter Contract with True North Maritime Operations Ltd (“True North”)
Date Today’s date
From Supervisor
To Colleague

Dear Colleague
I spoke to Neptune’s Managing Director, Jeremy De Klerk, on the telephone this morning.
He explained that Neptune has limited experience of international arbitration and requires
some advice about a number of key aspects of the arbitration agreement that we have been
asked to draft. I summarise his concerns below.
Please make sure that you think about these concerns when drafting the arbitration
agreement and explain your reasoning in the memorandum that you have kindly agreed to
draft for us.
Mr De Klerk has also raised some further questions about whether and if so, to what extent,
Neptune will be able to interview potential arbitrators that may be appointed to handle any
disputes that arise. I have set out below the specific questions that he would like you to
address.

1. Arbitration Rules

True North has suggested that the parties choose to adopt the 2016 Northern International
Court of Arbitration Rules.
Both parties would prefer to have a sole arbitrator resolve any potential dispute. However,
Neptune is unsure if the arbitration rules suggested by True North would permit a sole
arbitrator to be appointed. They are seeking more clarity from you regarding the possibility
of appointing a sole arbitrator and, in the affirmative, the appointment process to follow.
Please bear in mind that the 2016 Northern International Court of Arbitration Rules are
acceptable to both parties and that these Rules incorporate the UNCITRAL Arbitration Rules
(2010) in their entirety.
2. Substantive Law
During negotiations, the parties have agreed on the substantive law that will apply to the
Contract. However, one of the employees in Neptune’s legal department remembers having
read somewhere that parties to a contract can also identify in the relevant arbitration
agreement a law applicable solely to the arbitration agreement. Neptune is however unsure
about the usefulness of such choice and its practical consequences. They would appreciate
your views on this issue.
Mr De Klerk would also like to know whether it makes any difference if the parties choose
different governing substantive laws for the contract and the arbitration agreement.

3. Arbitration Seat

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Task #1 - Memorandum from Supervisor

During negotiations, True North kept mentioning to Neptune their desire to agree on
Northedale, Northistan as the seat of arbitration to be mentioned in the arbitration clause.
Neptune agreed on this point, although they were not very sure about the concept or the
consequences of the seat of arbitration. They have asked you to clarify these two points in
your memorandum.
Neptune is aware that Northistan’s arbitration law is the Northistan International Arbitration
Act, which came into force in August 2015, and which incorporates the UNCITRAL Model
Law (2006) in its entirety.
4. Language
Neptune has explained that during the negotiations, the parties provisionally agreed to leave
the issue of language to be decided by the arbitral tribunal, once it has been appointed.
Mr De Klerk has some reservations about this approach and would like your views on
whether this provisional agreement is a good idea, or whether this is an element the parties
should consider including in the potential arbitration agreement, and if so, why?
Please note that the languages spoken in Northistan and Southland are as different from
each other as Spanish and Japanese.
5. Interviewing potential arbitrators
Neptune is also keen to ensure full control over the determination of the right candidate for
appointment as future arbitrator.
They would like to know what scope they have to interview potential candidates about e.g.
their educational background, their decision-making tendencies, and their potential conflicts
of interest or links with counsel for True North.
Mr De Klerk is conscious that there might be some limitations on whether Neptune can
interview arbitrators at all, and which questions parties can ask potential arbitrator
candidates. He therefore asks for your advice. In particular, Neptune would be grateful if you
could point them to any potential set(s) of guidelines or rules about this step in the
constitution of the future tribunal, and if you could explain the process briefly.
Lastly, they ask whether you believe this issue is something that should be raised with True
North at this stage and included in the arbitration agreement that you are drafting.

6. Drafting an arbitration agreement

Using the model arbitration agreement frequently use by this firm and taking into account the
background and the concerns that Neptune has raised, as summarised in this Memorandum;
please prepare a draft arbitration agreement. A Model Arbitration Clause is attached.

Thank you again for your help with this task. If you have any questions or concerns, please
let me know.

Best regards
Supervisor

Model Arbitration Clause

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Task #1 - Memorandum from Supervisor

Any dispute, controversy, or claim arising out of or in connection with this contract, or the
breach, termination or validity thereof, shall be submitted to the
…………………………………………. and settled by final and binding arbitration in
accordance with the ……………………………………………………… Rules.
A sole arbitrator shall be appointed by agreement of the parties. If the parties have not
agreed on the appointment of a sole arbitrator within 30 days of the respondent’s receipt of a
notice of arbitration, then, at the request of one of the parties, a sole arbitrator shall be
appointed by the ……………………….
The seat of arbitration shall be …………………….. The proceedings shall be conducted in
accordance with the arbitration law of the seat of the arbitration. The language of the
arbitration proceedings shall be …………………………………………………. The contract
shall be governed by the substantive law of ……………………….. The arbitration agreement
shall be governed by ……………………………. law.