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TEAM CODE:

ST_08_A

14TH SURANA AND SURANA INTERNATIONAL TECHNOLOGY LAW MOOT


COURT COMPETITION, 2015.
BEFORE
THE HONBLE INTERNATIONAL COURT OF JUSTICE
AT THE PEACE PALACE
THE HAGUE, NETHERLANDS

CASE BROUGHT BEFORE THIS AUGUST COURT THROUGH ARTICLE 40(1)


FOR ADJUDGEMENT OF VARIOUS ISSUES AS LAID DOWN IN THE
MEMORANDUM INVOKING PROVISIONS OF CONTENTIOUS JURISDICTION
OF THIS COURT AS LAID DOWN IN ARTICLE 36 OF THE ICJ STATUTE;
BETWEEN
THE FEDERAL REPUBLIC OF BAATI AND ITS NATIONAL CORPORATION
(BNC OWNED BY THE STATE)
[APPLICANT]
vs.
THE DEMOCRATIC REPUBLIC OF UNNAT AND ITS NATIONAL
CORPORATION
(UNC OWNED BY THE STATE)
[RESPONDENT]

MEMORIAL FILED ON BEHALF OF DEMOCRATIC REPUBLIC OF BAATI

14th Surana & Surana International Technology Moot Court and Judgment Writing
Competition, 2015
TABLE OF CONTENTS

LIST OF ABBREVIATIONS ...................................................................................................iii


INDEX OF AUTHORITIES..................................................................................................... iv
STATEMENT OF JURISDICTION....................................................................................... viii
STATEMENT OF FACTS ....................................................................................................... ix
ISSUES PRESENTED............................................................................................................. xii
SUMMARY OF ARGUMENTS ............................................................................................ xiii
ARGUMENTS IN DETAIL ...................................................................................................... 1

ISSUE I : WHETHER THE DEMOCRATIC REPUBLIC OF UNNAT (THROUGH


UNC) HAS VIOLATED THE BASIC PRINCIPLE AS CONTAINED WITHIN
ARTICLE 2 OF THE UN CHARTER AS A RESULT OF WHICH THE
GOVERNMENT OF BAATI COULD NOT ACQUIRE THE PATENT BEFORE THE
RESPECTIVE OFFICE? ........................................................................................................ 1
[1.1]. Unnat has failed in its obligations which has been conferred upon it by the SPA........... 1
[1.2]. The Democratic Republic of Unnat has violated the basic principle as contained within
Article 2 of the UN Charter as a result of deliberately withholding information ..................... 4

ISSUE II : WHETHER UNNAT HAS DELIBERATELY CONCEALED THE


INFORMATION

TO

HARM

OF

HUMAN

LIFE,

ENVIRONMENT

AND

ECOSYSTEM AND HENCE VIOLATED THE INTERNATIONAL OBLIGATIONS


AND PRINCIPLES OF UDHGHR, IDHGD, AND UDBHR? ........................................... 7
[2.1]. Unnat has breached the principles and obligations as contained within the UDHGHR .. 8
[2.2]. Unnat has breached the principles and obligations as contained within the UDBHR ..... 9
[2.3]. Unnat has breached the principles and obligations as contained within the IDHGD .... 10

ISSUE III : WHETHER UNNAT (THROUGH UNC) IS RESPONSIBLE FOR


FRUSTRATING ALL THE TERMS AND CONDITIONS ENTERED ON 1ST
JANUARY 2014 BETWEEN BAATI AND UNNAT? ...................................................... 11

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Written Submissions on behalf of the Applicants

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Competition, 2015

[3.1]. The non-compliance of the obligations undertaken and/or agreed among the parties led
to the performance to a state of utter physical and commercial impossibility......................... 11
[3.2]. Failure to impart and/or secure proper and necessary knowledge regarding the adverse
effects frustrated the purpose underlying the agreement reached between the parties ............ 12
[3.3]. The frustrating events ensued owing to deliberate acts coupled with negligent conduct
on the part of Unnat ................................................................................................................. 14

ISSUE IV : WHETHER UNNAT SHALL REPAY ALL THE LOSSES OF MONEY


THAT BAATI INCURRED IN PLANNING, EX . ECUTION AND ARRANGEMENTS?
.................................................................................................................................................. 15

[4.1]. Unnat breached the responsibility owed to Baati and this breach of responsibility
entails reparations, to compensate Baati for all losses it incurred as a result of the wrongful
act ............................................................................................................................................. 16
[4.2]. Breach of agreement by Unnat will entail contractual damages as laid down under
various State laws, conventions and principles........................................................................ 18

ISSUE V : WHETHER THE DEMOCRATIC REPUBLIC OF UNNAT (UNC) SHALL


PAY EXEMPLARY COMPENSATION FOR THE LOSS OF 105 LIVES? ................. 20

[5.1]. Frustration of the terms of the SPA by Unnat leading to the death of 105 citizens of
Baati would come under the ambit of consequential damages for a breach of contract .......... 21
[5.2]. Negligence has occurred by Unnat hence attracting exemplary damages ..................... 22

PRAYER .................................................................................................................................. 25

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14th Surana & Surana International Technology Moot Court and Judgment Writing
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LIST OF ABBREVIATIONS

1.

& - And

2.

A.C. - Law Reports Appeal Cases

3.

AIR - All India Reporter

4.

Anr. - Another

5.

Art. - Article

6.

Co. Company

7.

Edn. - Edition

8.

Exp. - Express

9.

GATTS - General Agreement on Tariffs and Trade

10.

Honble - Honorable

11.

I.C.H - International Conference on Harmonization of Technical Requirements for


Registration of Pharmaceuticals for Human use

12.

IDHGD - International Declaration on Human Genetic Data

13.

QB - Queens Bench

14.

S. - Section

15.

SC - Supreme Court

16.

TOT - Transfer of Technology

17.

TRIPS - The Agreement on Trade-Related Aspects of Intellectual Property Rights

18.

U.N. United Nations

19.

UDBHR - Universal Declaration on Bioethics and Human Rights

20.

UDHGHR - Universal Declaration on the Human Genome and Human Rights

21.

UNCTAD - United Nations Conference on Trade and Development

22.

UOI - Union of India

23.

vs. - Versus

24.

WIPO - World Intellectual Property Organization

25.

WTO - World Trade Organization

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INDEX OF AUTHORITIES

Judicial Precedents

Case Name

Page No.

Aetna Casualty & Sur. Co. vs. Day 487 So. 2d 830

21

Amoco International Finance Corp vs. Iran, (Iran-United States


Claims Tribunal)15 Iran-U.S. C.T.R. (1987)
Anglia Television vs. Reed [1972] 1 Q.B. 60

18

Apotex Inc. vs. Global Drug Ltd. (1998) 83 C.P.R. (3d) 448

19

Application of the Convention on the Prevention and Punishment of


the Crime of Genocide (Bosnia and Herzegovina v. Serbia and
Montenegro) 1996 I.C.J. 595
Armed Activities on the Territory of Congo 2005 I.C.J. 168

17

Arrest Warrant Case (Democratic Republic of the Congo v. Belgium)


2000 I.C.J 3
Bank Line Ltd. vs. Arthur Capel Ltd. [1919] A.C. 435

17

Black Clawson International Ltd. vs. Papierwerke WaldhofAschaffenburg AG [1981] 2 Lloyds Rep. 446
Boone vs. Eyre (1777) 1 Hy. Bl. 273n
C. Czarnikow Ltd. vs. Centrala Handlu Zagrancicznego Rolimpex
[1979] A.C. 351
Caparo Industries Plc vs. Dickman [1990] 2 A.C. 605
Denmark Production Ltd. vs. Boscobel Productions Ltd. [1969] 1
Q.B. 699
Donoghue vs. Stevenson [1932] A.C. 562
Duke of St. Albans vs. Shore (1789) 1 Hy.Bl. 27
Ellen vs. Topp (1851) 6 Ex. 424
Factory at Chorzow 1928 P.C.I.J. Reports, Series A, No. 17
Gabkovo-Nagyamaros Project (Hungary vs. Slovakia) 1997 I.C.J.
7
Hadley vs. Baxendale 9 Ex. 341, 156 Eng. Rep. 145
Hong Kong Fir Shipping Co Ltd vs. Kawasaki Kisen Kaisha Ltd.
[1962] 2 QB 26
Hutchings vs. Slemons 141 Tex. 448
In Re Comptoir Commercial Anversois and Power Sons & Co. [1920]
1 K.B. 868.
In Re Palm Harbor Homes, Inc. 129 S.W.3d 636
Joseph Constantine SS Co. vs. Imperial Smelting Corp Ltd. [1942]
A.C.154

15

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Written Submissions on behalf of the Applicants

19

18

14

14
14
23
15
23
14
14
16, 17, 18
17, 18
21, 22
14
13
13
13
15

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Case Name

Page no.

Kasikili/Sedudu Island (Botswana vs. Namibia) 1999 I.C.J. 1045

Krell vs. Henry [1903] 2 K.B. 740

13

Land and Maritime Boundary between Cameroon and Nigeria


(Cameroon vs. Nigeria: Equatorial Guinea intervening) 2002 I.C.J.
303
Leeds Shipping Co. Ltd. vs. Soc Franaise Bunge [1958] 2 Lloyds
Rep. 124
Loayaza-Tamayo vs. Peru, Reparations and Costs Ct. H.R., (ser. C),
No. 42 20
Mertens vs. Home Freeholds Co [1921] 2 K.B. 526

14
17
15

Mineral Park Land Co. vs. Howard 156 P. 458 (1916)

13

Novartis AG vs. Union Of India A.I.R. 2013 S.C. 1311

Nuclear Tests Cases (Australia vs. France; New Zealand v. France)


1974 I.C.J. 253
Ontrario Ltd. (c.o.b. M.G.W. & Associates) vs. Welsby & Assoc.
Taxation Inc. [2003] O.J. No. 591 (S.C.J)
Overseas Tankship (U.K.) Ltd. vs. Morts Dock and Engineering Co.
Ltd. [1961] A.C. 388
Papamichalopoulos and others vs. Greece App. No. 14556/89, Eur.
Ct. H.R. Series A No 330-B (1995)
Pilbrow vs. Peerless De Rougemont & Co. [1999] 3 All E.R. 355

6
19
23
18
14

Reparation for Injuries Suffered in the Service of the United Nations


1949 I.C.J. 174
Sapphire International Petroleums Ltd. of Toronto and National
Iranian Oil Company Arbitral Claim) (Canada vs. Iran) 35 I.L.R.
182
CME vs. Czech Republic 9 I.C.S.I.D. Rep. 113, 238-9 (2001)

18

Sudbrook Trading Estate Ltd. vs. Eggleton [1983] 1 A.C. 444

14

The Lusitania Case 7 R.I.A.A. 32

17

The Stork Case [1955] 2 Q.B. 68

14

Velasquez Rodriguez vs. Honduras Inter-Am. Ct. H.R., (ser. C), No.
7 (1989)
White vs. Unigard Mut. Ins. Co. 730 P.2d 1014

18

20

18

21

Essays, Articles and Journals

1. Carmel Shalev, Human Cloning and Human Rights: A Commentary, 6 Health &
Human Rights 137 (2002) ........................................................................................... 8

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2. Christine Jolls, Contracts As Bilateral Commitments: A New Perspective on Contract
Modification, 26 J. of Legal Studies 21 (1997) .......................................................... 12
3. Curtis J. Mahoney, Treaties as Contracts: Textualism, Contract Theory, and the
Interpretation of Treaties, 116 Yale L.J. 824 (2007) ................................................... 3
4. David M. Haug, The International Transfer of Technology: Lessons that East Europe
can learn from the failed Third-World experience, 5 Harv. J. of L. & Tech. 212
(1992) ............................................................................................................................ 1
5. Howard A. Kwon, Patent Protection and Technology Transfer in the Developing
World: The Thailand Experience, 28 George Washington J. of Intl L. & Eco. 238
(1995) ............................................................................................................................ 1
6. Noelle Lenoir, Are attitudes of Bioethics entering a new era?, 23 J. of Med. Ethics
69 (1997) ....................................................................................................................... 8
7. Roberto Andorno, Global Bioethics at UNESCO: In Defence of the Universal
Declaration on Bioethics and Human Rights, 33 J. of Medical Ethics 151................. 9
8. Seymour J. Rubin, International Code of Conduct on the Transfer of Technology, 73
American J. of Interl L. 519 (1979) .......................................................................... 3
9. United Nations: Conference on an International Code of Conduct of the Transfer of
Technology, 19 Interl Legal Materials 789 (1980) ................................................... 3

Books

1. AM Rabello, The UNIDROIT Principles of International Commercial Contracts


and Israeli Contract Law (Kluwer Law International 1999) ..................................... 4
2. Anthony Aust, Modern Treaty Law and Practice (2nd ed. Cambridge Publishing Co.
2007) ............................................................................................................................. 3
3. Bernice Elger, Ethical Issues of Human Genetic Databases: A Challenge to Classic
Health Research Ethics (OUP 2010) ............................................................................ 9
4. Bruno Simma, The Charter of the United Nations (3rd ed. OUP) ............................ 4,6
5. Edwin Peel, The Law of Contract (13th ed. Sweet & Maxwell 2012) ........................ 14
6. Enzo Cannizzaro, The Law of Treaties: Beyond the Vienna Convention (1st ed. OUP
2011) ............................................................................................................................. 3
7. Franz Cede & Lilly Sucharipa-Behrmann, The United Nations: Law and Practice
(Martinus Nijhoff Publishers 2001) .............................................................................. 4
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8. Mohammed Bedjaoui, International Law: Achievements and Prospects (1st ed.
Martinus Nijhoff Publishers 1991) ............................................................................... 2
9. Qerim Qerimi, Development in International Law: A Policy-Oriented Inquiry (1st ed.
Martinus Nijhoff Publishers 2012) ............................................................................... 8
10. Stephen Tully, International Documents on Corporate Responsibility (Wolters
Kluwer Publisher 2011) ................................................................................................ 2
11. Yong Zhou, History of International Law: Foundations and Principles of
International Law (1st ed. North Holland Publishers 2008) ........................................ 6
12. Yusuf Kaliskan, The Development of International Investment Law: Lessons from the
OECD MAI Negotiations and Their Application to a Possible Multilateral Agreement
on Investment (Dissertation Publishers 2008) ............................................................... 3

International Instruments

1. Declaration on Principles of International Law concerning Friendly Relations and Cooperation among States, U.N. Doc. A/5217 at 121 (1970).
2. Guidelines for Good Medical Practice released by the ICH, U.N. Doc. A/45/49
(1990).
3. International Declaration on Human Genetic Data, U.N. Doc. A/45/49 (Vol. I) (2001).
4. Responsibility of States for Internationally Wrongful Acts, U.N. Doc. A/RES/61/177
(2006).
5. UN Charter TS 993.
6. UNCTADs International Code of Conduct for the Transfer of Technology, U.N. Doc.
A/43/49 (1988).
7. Universal Declaration on Bioethics and Human Rights, U.N. Doc. A/45/49 (Vol. I)
(2001).
8. Universal Declaration on the Human Genome and Human Rights, U.N. Doc.
A/RES/53/152 (1999).
9. Vienna Convention on Law of Treaty 1963, U.N. Doc. ST/SGB/1963/13.
10. WHO Guidelines on TOT in Pharmaceutical manufacturing, U.N. Doc. A/37/45 (Vol.
I) (2001).

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STATEMENT OF JURISDICTION

The Applicants have the honour to humbly submit before the Honble International Court of
Justice, the Memorandum for the Applicants adjudging the questions contained in the Special
Agreement (signed in The Hague on the first day of April in the year Two Thousand Fifteen)
between The Federal Republic of Baati and its National Corporation (BNC owned by the
State) [Applicant] and The Democratic Republic of Unnat and its National Corporation
(UNC owned by the State) [Respondent] Concerning the Differences between States in
Interpretation of Laws and Fulfillment of International Obligations Relating to the Protection
of Bioethics, Human Rights and Dignity from Conflicts that arose between Parties on Issues
of Science and Technology, Law and Economic Development and with Special References to
nanoscience and Other Issues, to the Court pursuant to Article 40(1) of the Statute of the
Court by invoking the provisions for contentious jurisdiction as laid down in Article 36 of the
Statute of the Court.

The present Memorandum sets forth the Facts, Contentions and arguments in the present
case.

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STATEMENT OF FACTS

[I]. FEDERAL REPUBLIC OF BAATI AND ITS NEW POLICIES PERTAINING TO FDI
The Federal Republic of Baati is a developing country with a large population. Due attention
was given for international collaborations from outside, and this public-private-partnership
model retained the Governmental control on major policy-matters. The Government invited
suggestions from all stakeholders for preparing a comprehensive legal-policy framework
whereby it can lead to eradication of diseases. Suggestions were received of which one core
activity to be carried on by the Government was towards identification and development of a
life-saving drug for the disease of liver cancer which afflicts the people. Baati did not have
the resources to combine both the factors of funds and knowledge and hence international
collaborations were called for. The Federal Republic of Baati is a founding member of the
UNO, WIPO and WTO. NGO (named New Age Life) did a survey and found many people of
Baati afflicted with liver cancer, which it said had very high fatality rates; conceding that
very little, including the cure for this disease, had been properly researched. Baati constituted
Special Committee of Experts that made a plan of action.

[II]. DEMOCRATIC REPUBLIC OF UNNAT AND ITS CLOSENESS WITH BAATI


Unnat is an island with abundant biodiversity and a population of close to 40 million people.
The country has taken to all forms of bio-technology development especially in the field of
pharmacology in order to bring innovation in this field. Both the states have been using the
sea-routes for commerce. The relationship between the two states is notable. Unnat is a
member of United Nations Organistation. The trade and development of the Democratic
Republic of Unnat is largely based on products that are developed from the rich flora and
fauna. There was a desire on part of Baati to use Unnats superior knowledge pertaining to
biotechnology.

[III]. INKING OF THE SPECIAL PURPOSE AGREEMENT BETWEEN BAATI AND UNNAT IN
THE SEARCH FOR A CURE FOR LIVER CANCER USING NETI LEAVES .

SPA was inked between two corporations of these countries (Baati National Corporation and
Unnat National Corporation) formed for the purpose of innovating, producing and
manufacturing a medicine using Neti leaves which grew on Unnat. There was folklore in
Unnat about Neti leaves in life-enhancing and disease-curing properties but no concrete
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research had been done in the area of cancer-cure. Professor Mruti claimed this plant to have
cancer-curing properties and that in his laboratory its effectivity of cure of liver cancer rises.
Team of experts was sent by Baati to Unnat to study these claims and it gave a positive report
highlighting usage of plants and herbs in modern medicines. However caution was alerted by
few notable social activists as they reported that proper clinical trials never had been done on
this aspect of herbs and plants. Therefore an SPA was linked which was a joint venture
between BNC and UNC wherein the sole purpose was to eradicate liver cancer.

[IV]. C OMMENCEMENT OF THE RESEARCH PROCESS .


BNC and UNC started the business transactions. The Government of Baati identified one of
army headquarters the proposed nanomaterial shall be researched. This report on the progress
of the Neti project was shared from time to time with the Government of Unnat who
reviewed. The Government of Unnat shared all the knowledge of nanoscience that are
available in their legal domain with the Government of Baati through a highly secureddocument named UNNATI. The Baati National Corporation appointed a Scientific
Committee that could understand and interpret the information. The highly secured document
UNNATI had all information regarding nanoscience as understood and recorded by the
Democratic Republic of Unnat through an expert committee of scientists who participated in
the international conferences representing the Government of Unnat. The document clearly
mentioned that the knowledge and information present contain all the processes and
procedures for making the nanomaterial. It included detailed study and step-by-step
processes. It was presumed by both the parties that the approaches, method and manner as
given in the document UNNATI will give the expected outcome.

[V]. PROBLEMS ENCOUNTERED IN MANUFACTURING.


All four steps of the formula were meticulously followed. The scientists could successfully
manufacture nanoparticles. The scientists who were working observed that many of their
team-members fell ill. It was reported to the Government of Baati and Unnat. This sudden
illness could not have happened except as a result of the laboratorial process. The
Government of Baati-appointed special task-force submitted that the scientists did indeed
perform all the four steps accurately. The results of the manufacturing process as expected
and mentioned in the UNNATI document were clearly observed under the nanomicroscope as
explained in the scientific document under Annexure IV. The scientists observed that upon
treatment of rats with nanoparticles, they died as a result of brain hemorrhage. The report
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based on the observations were noted in full details and submitted to the Government of
Baati, which it shared with the Government of Unnat.

[VI].DAMAGE TO ENVIRONMENT AND REJECTION OF PATENT CLAIM .


The scientist monitoring ear-marked area observed a drastic change in that place. Many small
and medium-size insects, grass in that area had died. The scientist noticed that the waste-bags
were torn and leaking. When done again, the same situation occurred again. Meanwhile the
Government of Baati applied for the Patent before the Baati Patent Office for recognizing that
Neti nanoparticle is new process and invention eligible for patent. The Patent Office turned
down the recognition of patent for the nanoparticle of substance. The Government of Baati
subsequently appealed against the decision of the Patent Office in the High Court of Baati,
which upheld the decision of the Patent Office as correct and valid. The Baati National
Corporation through the Government appealed again the decision of the High Court in the
Supreme Court of Baati. The Supreme Court of Baati upheld HC decision.

[VII].ARISING OF DISPUTE BETWEEN BAATI AND UNNAT.


It was argued by Government of Baati that the Government of Unnat did not share the
knowledge of the adverse effects, presumed as a part of an obligation under the knowledge
transfer in the UNNATI document shared by the Government of Unnat. The Government of
Unnat claimed that they agreed to share only the knowledge which is there in the legal
domain. Government of Unnat, which expressed that theory of knowledge is best, expressed
only within the limitations and cannot be taken to express always its possible dangers. The
Government of Baati did not agree to the stand taken by this kind of fast-approach to research
in the absence of final and ultimate effects of the knowledge at all levels which is followed
through a process and phase-wise approach to research. A plan for Special and Required
Assistance was made to the Government of Baati which it refused as the plan required further
funding from the Government of Baati which they refused as the country had lots of
economic losses. Both the parties have decided to refer the matter to the International Court
of Justice by invoking the provisions contained in the SPA, which gave scope for this
settlement of disputes.

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ISSUES PRESENTED

[A].

Whether the Democratic Republic of Unnat (through Unnat National Corporation) has

violated the following obligations; The basic principle of Article. 2 of the United Nations
Charter which reads as follows All Members, in order to ensure to all of them the rights
and benefits resulting from membership, shall fulfill in good faith the obligations assumed by
them in accordance with the present Charter. And that the violation of the basic principle of
Article. 2 of the United Nations Charter as a result of deliberate with holding of the
information on adverse of the nanoparticle which amounts to manifestation of mala -fide
intention; as a result of which Government of Baati could not acquire the patent before the
respective office?
[B].

Whether the Democratic Republic of Unnat (through Unnat National Corporation)

had willfully concealed the information of harm to human life, environment and ecosystem
which were well within knowledge of the Government of Unnat and thereby violated the
international obligations and principles of Universal Declaration on Human Genome and
Human Rights, International Declaration on Human Genetic Data and Universal Declaration
on Bioethics and Human Rights?
[C].

Whether The Democratic Republic of Unnat (through Unnat National Corporation) is

responsible for frustrating all the terms and conditions of the Special Purpose Agreement
entered on 1st January 2014 between the Federal Republic of Baati and the Democratic
Republic of Unnat?
[D].

Whether the Democratic Republic of Unnat (Unnat National Corporation) shall repay

all the losses of money that Government of Baati incurred in planning, execution and
arrangements together with interests and, considering the state of disturbance and interruption
to the growth and development of trade and commerce to the Federal Republic of Baati being
a developing country; that the cost-computation will be a subject matter of special agreement
later to be concluded subsequent to the order of the Court?
[E]. Whether the Democratic Republic of Unnat (Unnat National Corporation) shall also pay
exemplary compensation for the loss of lives of 85 men and 20 women due to liver cancer
and who delayed their treatment with the hope that they shall be cured by this new drug Neti
and consequently could not get the same?

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SUMMARY OF ARGUMENTS

Issue I : That Unnat has violated the basic principle as contained within Article 2 of the UN
Charter as a result of which the Govt. of Baati could not acquire the patent before the
respective office
It is humbly submitted before this Honble Court that the Democratic Republic of Unnat
(through the UNC) has failed in its duties and obligations conferred by the legally-binding
SPA in regards to a successful TOT. Unnat owed a high level of responsibility to Baati in
providing the technical know-how including knowledge in regards to the adverse effects of
the procedures and by not providing the same, amounts to a manifestation of mala fide
intention. by not providing the complete information in relation to the innovation and
manufacturing of the nanoparticle of Neti such as the adverse effects of the same, Unnat has
not only breached the principle of Good Faith contained within the UN Charter but has
violated the terms as contained within Article 1(f) of the SPA.

Issue II : That Unnat deliberately concealed information resulting in the violation of the
international obligations and principles of UDHGHR, IDHGD, UDBHR
It is contended before this Honble Court that the wilful concealment of the adverse effects of
the nanoparticles would constitute as a breach of international obligations and principles
under Universal Declaration on Human Genome and Human Rights, Universal Declaration
on Bioethics and Human Rights In the present case, the scientists were vulnerable to adverse
effects of carrying the procedure as there was a conspicuous disregard for their welfare which
increased the harm suffered by these individuals, the same which is attributable to the mala
fide concealment of knowledge in regards to the adverse effects of carrying the process out.

Issue III : That UNC is responsible for frustrating all the terms and conditions of the SPA
entered on 1st January 2014 between Baati and the Unnat

It is humbly submitted that a party to a contract is likely to be discharged off the obligations
underlying and liabilities undertaken on occurrence of circumstance(s), after its formation,
which renders the same physically and/or commercially impossible to be fulfilled or
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transforms the obligations to be performed into a radically different obligation from that
undertaken at the moment of entry into the contract. It is contended that the Honble Court
must and should consider that the obligation of transferring knowledge, available and
recognised, has not been complied with, as appears from the fact-circumstances itself.

Issue IV : That Unnat be obliged to repay all the loss of money Baati incurred in planning,
execution and arrangements

It is humbly submitted by the applicant that a bare perusal of the SPA will reveal that there
were certain considerations which each national corporation had to perform as part of the
twin-sharing formula of the Joint Venture. Despite the fact that Baati spent its resources and
technical know-how as per Article 1(c), the reciprocal part of the agreement by Unnat could
not be fulfilled by virtue of it frustrating the terms of the SPA. As a result, there exists a
situation wherein Baati has incurred certain costs and since, due to the breach by Unnat, the
objective of the agreement has also not come to fruition as highlighted in paragraph 1 of
Article 1, the state of Baati requests this honourable court to exercise its plenary powers
granted Article 36(2) read with Article 56 and to sanction reparation against Unnat, by way of
compensation to Baati for all the injuries that it has sustained due to the internationally
wrongful act and breach of State Responsibility owed by Unnat to Baati.

Issue V : That the Democratic Republic of Unnat (UNC) shall also pay exemplary
compensation for the loss of lives of 105 people.

The applicant humbly submits that when both the States of Unnat and Baati entered into an
SPA to produce the cancer medicine, they very well knew that the implications of the failure
of their venture would be just as great as the success from it. There was a duty of care owed
to the citizens of Baati by the State of Unnat as the SPA it entered into with Baati was for the
production of a medicine to eradicate liver cancer- a terminal disease which was afflicting
many people. It is common logic that any action any of the parties would take would have an
effect on millions of people affected by this disease, at the time of the agreement, as well as
in the future. The standard of duty of care in this situation was extremely high as many lives
were contingent on the complete transmission of knowledge, its proper application and then
successful production of a medicine without any adverse effects.

(xiv)
Written Submissions on behalf of the Applicants

14th Surana & Surana International Technology Moot Court and Judgment Writing
Competition, 2015
ARGUMENTS IN DETAIL

Issue 1 : Whether The Democratic Republic of Unnat (through the UNC) has violated the
basic principle as contained within Article 2 of the UN Charter as a result of which the
government of Baati could not acquire the patent before the respective office?

1. It is humbly submitted before this Honble Court that the Democratic Republic of Unnat
(through the UNC) has failed in its duties and obligations conferred by the legally-binding
SPA in regards to a successful TOT. [1.1] It is further contended that the Democratic
Republic of Unnat has violated the basic principle as contained within Article 2 of the UN
Charter as a result of deliberately withholding information which amounts to mala fide
intention.[1.2]

[1.1] UNNAT HAS FAILED IN ITS OBLIGATIONS WHICH HAS BEEN CONFERRED
UPON IT BY THE SPA
2. It is submitted before this Honble Court that there has not been a successful TOT on light
of no effective absorption or assimilation of technology in the host country.[1.1.1]
Furthermore, Unnat has failed in the completion of its duties as conferred upon it by the
international framework of TOT.[1.1.2] Lastly, it is submitted that Unnat has resorted to
unfair and dishonest practices which has manifested into the mala fide concealment of
technical know-how.[1.1.3]
[1.1.1] That there has not been a successful TOT on light of no effective absorption or
assimilation of technology in the host country
3. Transfer of Technology (hereafter referred to as ToT) is defined as "the transmission of
know-how to suit local conditions and the same requires a functional component and hence,
in order for there to be a true transfer of technology, there must be an effective absorption of
the transferred technology by the recipient/host country.1 Meaningful technology transfer
requires not only that the recipient acquire technology, but also that the recipient accumulate
the knowledge necessary to master the technology.2 The knowledge transferred should be
seen as encompassing both the technical knowledge on which the end product is based and
1

David M. Haug, The International Transfer of Technology: Lessons that East Europe can learn from the failed
Third-World experience, 5 Harv. J. of L. & Tech. 212 (1992).
2
Howard A. Kwon, Patent Protection and Technology Transfer in the Developing World: The Thailand
Experience, 28 George Washington J. of Intl L. & Eco. 238 (1995).

(1)
Written Submissions on behalf of the Applicant

14th Surana & Surana International Technology Moot Court and Judgment Writing
Competition, 2015
the knowledge to convert the relevant productive inputs into the finished item or service.3
Lastly, the WHO emphasized upon the functional aspect of the technology transferred, as
under Article 1.2 it concisely iterates that technology transfer embodies both the transfer of
documentation and the demonstrated ability of the receiving unit (RU) to effectively perform
the critical elements of the transferred technology, to the satisfaction of all parties and any
applicable regulatory bodies.4 Therefore, it can be conspicuously seen that the
implementation or the assimilation5 of the transferred technology is an essential requisite for
a successful TOT.
[1.1.2]. That Unnat has failed in the completion of its duties as conferred upon it by the
international framework of TOT
4. The World Health organization (WHO) further elaborated upon the responsibilities of the
SU (sending unit) by stating that they are to provide procedures which have been approved
and whose veracity has been tested, before the same can be transferred to the RU (receiving
unit).6 The SU additionally has the responsibility to disclose in a timely manner, the adverse
effects of a particular technology known to him in regards to the technology not meeting
particular health, safety and environmental requirements.7 The ILO has stressed upon the
safety and health aspects of the transfer of technology and calls for attention to be paid to
those susceptible by the SU.8 Lastly, the (OECD) has also stated that the element of safety is
paramount in cases of TOT and the same should only take place only upon a reasonable
assurance of the same.9
[1.1.3]. That Unnat has resorted to unfair and dishonest practices which has manifested into
the mala fide concealment of technical know-how.
5. An essential highlighted by the UNCTAD in the Code of Conduct on TOT was that when
negotiating and concluding a technology-transfer agreement, the parties should observe fair

Transfer of Technology, UNCTAD, http://unctad.org/en/docs/psiteiitd28.en.pdf (last visited Aug. 3, 2015).


WHO
Guidelines
on
TOT
in
Pharmaceutical
manufacturing,
WHO,
http://apps.who.int/prequal/info_general/documents/TRS961/TRS961_Annex7.pdf (last visited Aug. 3, 2015).
5
Mohammed Bedjaoui, International Law: Achievements and Prospects 691 (1st ed. Martinus Nijhoff
Publishers 1991).
6
Basic
Principles
of
GMP,
WHO,
http://www.who.int/medicines/areas/quality_safety/quality_assurance/TOT_Part1.pdf (last visited Aug. 3,
2015).
7
Stephen Tully, International Documents on Corporate Responsibility 585 (Wolters Kluwer Publisher 2011).
8
Safety Health and Working Conditions in the TOT of developing countries, ILO,
http://www.ilo.org/wcmsp5/groups/public/@ed_protect/@protrav/@safework/documents/normativeinstrument/
wcms_107831.pdf (last visited Aug. 3, 2015).
9
OECD Guiding Principles for Chemical Accident Prevention, Preparedness and Response, OECD,
http://www.oecd.org/chemicalsafety/chemical-accidents/Guiding-principles-chemical-accident.pdf (last visited
Aug. 3, 2015).
4

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Written Submissions on behalf of the Applicant

14th Surana & Surana International Technology Moot Court and Judgment Writing
Competition, 2015
and honest business practice and emphasizes that mutual benefits should accrue to both the
supplying party, as well as the recipient party.10 Article 5.1 of the same emphasizes that the
economic and social objectives of both the countries especially the technology acquiring
country be recognized and that the parties should observe fair and honest business practices.
The Code of Conduct additionally holds the supplying party liable in cases in which loss or
damage has been suffered to property or persons arising from the technology transferred,
provided that the same is used as specified in the agreement.11 Lastly, the Code of Conduct
may be regarded as writings under Article 38 of the ICJ Statute as many prominent
international legal scholars have participated in the negotiations on the Code of Conduct and
have submitted various legal papers in the negotiating process.12

[1.1.4]. The SPA should be viewed in light of the context, the object and purposes and the
circumstances of its conclusion.
6. It is submitted that the SPA should be viewed in light of the context, objects and purposes
of the same. Treaties should receive a fair and liberal interpretation, and to be kept with the
most scrupulous good faith.13 The Good Faith principle contained within Article 31(1) of the
VCLT prevents an excessively literal interpretation, instead requiring consideration of its
context and of other means interpretation.14 Additionally, according to Article 31 of the
VCLT, not only is the text of the treaty to be considered but also its context and the object
and the purpose of the treaty.15 Article 32 of the VCLT states that recourse may be taken to
supplementary means of interpretation such as the circumstances of the conclusion also. If an
interpretation is incompatible with the object and purpose, it may well be wrong.16 One has to
look at the treaty as a whole, plus all other relevant materials, assessing their respective
weight and value.17

Seymour J. Rubin, International Code of Conduct on the Transfer of Technology, 73 American J. of Interl L.
519 (1979).
11
United Nations: Conference on an International Code of Conduct of the Transfer of Technology, 19 Interl
Legal Materials 789 (1980).
12
Yusuf Kaliskan, The Development of International Investment Law: Lessons from the OECD MAI
Negotiations and Their Application to a Possible Multilateral Agreement on Investment 148 (Dissertation
Publishers 2008).
13
Curtis J. Mahoney, Treaties as Contracts: Textualism, Contract Theory, and the Interpretation of Treaties, 116
Yale L.J. 824, 834 (2007).
14
Enzo Cannizzaro, The Law of Treaties: Beyond the Vienna Convention 108 (1st ed. OUP 2011).
15
Anthony Aust Modern Treaty Law and Practice 234 (2d ed. Cambridge Publishing Co. 2007).
16
Kasikili/Sedudu Island (Botswana v. Namibia), 1999 I.C.J. 1045 (Dec. 13).
17
AUST, supra note 15, at 550.
10

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Written Submissions on behalf of the Applicant

14th Surana & Surana International Technology Moot Court and Judgment Writing
Competition, 2015
7. Therefore, as a patent was required to be acquired for the fulfilment of the provisions of
the SPA and considering that the parties entered into the SPA for the sole purpose for the
innovation, production and manufacturing of life-saving drugs which could be achieved once
the patent was acquired, Unnat has acted mala fide by deliberately concealing information
which was to be supplied through UNNATI and has breached the provisions of the SPA.

[1.1.5]. Unnat has violated the principle of Pacta Sunt Servanda


8. The aforementioned principle is contained within Article 26 of the VCLT and embodies an
elementary and universally agreed principle fundamental to all legal systems and means that
agreements which are legally binding must be carried out.18 The principle may be interpreted
within the broader framework of the binding power of the agreement, without depending
upon special requirements.19 Therefore, the SPA amounts to a binding force between the
parties and requires that every contracting party must keep its promise and fulfil its
obligation.
9. [ARGUENDO]:- Even if the SPA does not amount to a treaty within the definition within
VCLT, it is submitted that a perusal of Article 3(b) states that international agreements with a
similar scope and objective are not excluded from the application of any of rules set forth to
which theyd have been subjected by virtue of it being governed by International Law.

[1.2]THE DEMOCRATIC REPUBLIC OF UNNAT HAS VIOLATED THE BASIC


PRINCIPLE CONTAINED WITHIN ARTICLE 2 OF THE UN CHARTER AS A
RESULT OF DELIBERATELY WITHOLDING INFORMATION
10. As the UN Charter is the constituent treaty of the UNO, all members are bound by its
articles.20 Both the Federal Republic of Baati and the Democratic Republic of Unnat have
acquired membership to the UN21 and hence both countries would be bound by the provisions
as contained within the UN Charter. The Principle of good faith is contained within Article
2(2) of the UN Charter and the UN Charter underlines the view that its members have to
fulfil their obligations deriving from the charter honestly and seriously. 22 Not only has the
deliberate withholding of information led to a violation of the aforementioned principle but
18

Id.
A.M. Rabello, The UNIDROIT Principles of International Commercial Contracts and Israeli Contract
Law 15 (Kluwer Law International 1999).
20
Bruno Simma, The Charter of the United Nations 168 (3rd ed. OUP).
21
Moot Proposition 5.
22
Franz Cede & Lilly Sucharipa-Behrmann The United Nations: Law and Practice, 274 (Martinus Nijhoff
Publishers 2001).
19

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14th Surana & Surana International Technology Moot Court and Judgment Writing
Competition, 2015
has also led to the violation of the provision as is contained with the SPA. Unnat has also
through the deliberate withholding of information led to the breach of the provisions of
Declaration on Principles of International Law concerning Friendly Relations and Cooperation among States in accordance with the Charter of the United Nations which obliges
the States to comply fully and in good faith with its international obligations and to live in
peace with other States and the same highlights the principle that States shall fulfil in good
faith the obligations assumed by them in accordance with the UN Charter. This declaration
stresses upon the principle of good faith and makes it clear that the member states are bound
to meet their obligations not only in a legalistic fashion.23

[1.2.1]. That the responsibility lies upon Unnat to provide the requisite technical knowledge
11. In the case at hand, Baati, a developing country did not possess the requisite technical
know-how as well as the funds which was required for the production, innovation and
manufacturing of Neti medicine so as to eradicate the detrimental effects of liver cancer
which posed as a major concern for Baati.24 In order to procure the requisite technical
knowledge, Baati entered into an SPA with Unnat which also included a transfer of
knowledge provision.
Due to Baati being completely dependent on Unnat to obtain the know-how, there exists a
high level of responsibility on Unnat to provide the requisite knowledge not only in regards
to the production of the Neti medicine but also in regards to the adverse effects of the same.
Furthermore, remittance for the transfer of knowledge can also be seen in within Article 1(c)
and Article 1(d) of the SPA which provides that 70% of the funds which would be required
for the development of the medicine would be provided by Baati and additionally, 60% of the
profits would be furnished to Unnat. Lastly, all information pertaining to adverse effects of
carrying lab processes was also shared with Unnat in addition to the Notes on Understanding
in relation to UNNATI, which were only reviewed by Unnat. Unnat made no efforts to rectify
the processes so as to curtail the adverse effects of carrying the laboratorial processes out.
To conclude, Unnat owed a high level of responsibility to Baati in providing the technical
know-how including knowledge in regards to the adverse effects of the procedures and by not
providing the same, amounts to a manifestation of mala fide intention.

23
24

Supra note 11.


Moot Proposition 3.

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Written Submissions on behalf of the Applicant

14th Surana & Surana International Technology Moot Court and Judgment Writing
Competition, 2015
[1.2.2]. That the deliberate withholding of information is tantamount to a breach of the
Principle of Good Faith contained within Article 2(2) of the UN Charter
12. The principle of Good Faith is not only contained within Article 2(2) of the UN Charter
but is also found within various provisions of the Declaration on Principles of International
Law concerning Friendly Relations and Co-operation among States in accordance with the
Charter of the United Nations and the relation of both these countries is often studied and
shown as an example in the same.25 Article 2(2) lays down the obligation for all members of
the UN to fulfil their obligations under international law in accordance with the UN
Charter.26 The principle of good faith requires the parties to a transaction to deal honestly
and fairly with each other, to represent their motives and purposes truthfully and to refrain
from taking unfair advantage that might result from a literal and unintentional interpretation
of the agreement between them.27
13. The ICJ has defined the principle of Good Faith in the Nuclear Tests Case28 as, [o]ne of
the basic principles governing the creation and performance of legal obligations.
Additionally, the ICJ in the case of Cameroon v. Nigeria: Equatorial Guinea intervening29,
observed that the principle of good faith is a well-established principle of international law
and further noted that the principle is "one of the basic principles governing the creation and
performance of legal obligations. Hence, the more intensive the co-operation and the more
comprehensive the objectives, the more it is necessary that its legal constitution should also
include obligations to co-operate in good faith within the context of the aims and procedures
agreed upon.30
14. Both the countries entered into the SPA for the sole purpose for the innovation,
production and manufacturing of life-saving drugs out of a plant named Neti.31 A step
towards the achievement of the same was acquiring patent rights in relation to the formulated
drug. As per Article 1(f) of the SPA between BNC and UNC32 the drug was to be first
patented as per the laws and regulations applicable to patenting the drug in the Govt. of Baati.

25

Moot Proposition 6.
SIMMA, supra note 20, at 168.
27
Yong Zhou, History of International Law: Foundations and Principles of International 107 (1st ed. North
Holland Publishers 2008).
28
Nuclear Tests Cases (Australia v. France; New Zealand v. France), 1974 I.C.J. 253 (Dec. 20).
29
Land and Maritime Boundary between Cameroon and Nigeria (Cameroon v. Nigeria: Equatorial Guinea
intervening), 2002 I.C.J. 303 (June 11).
30
SIMMA, supra note 20, at 95.
31
Moot Proposition 8.
32
Moot Proposition Page 14.
26

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14th Surana & Surana International Technology Moot Court and Judgment Writing
Competition, 2015
15. However, the BPO turned down the recognition of the patent which was upheld by the
HC of Baati citing Section 3(D) of Indian Patents Act. Reference can be drawn to the case of
Novartis AG v UOI33, in which the Supreme Court of India laid down the definition of
efficacy as the ability to produce a desired or intended result. Therefore, in the case of a
medicine that claims to cure a disease, the test of efficacy can only be therapeutic efficacy.
16. Additionally, Unnat had provided incomplete information which led to disastrous effects
in the production of Neti nanoparticles as the same did not exhibit any characteristics as
shown by the ordinary Neti leaves. Unnat was obliged to supply information in totality in
regards to the medicine however failed to do so. The resultant not only did not add to the
therapeutic efficacy of the drug but had severely adverse effects instead as out of the
documents supplied through UNNATI, in accordance with the SPA, none pertained to the
efficacy of the output and result as well as the adverse effects. Article 2.2 of the Guideline
for Good Medical Practice released by the ICH also lays down that before a trial is initiated,
foreseeable risks and inconveniences should be weighed against the anticipated benefit for
the individual trial subject and society and that the rights, and well-being of the trial subjects
are the most important considerations and should prevail over interests of science and society.
Lastly, Article 2.4 lays down that the available nonclinical and clinical information on an
investigational product should be adequate to support the proposed clinical trial.34
17. Therefore, by not providing the complete information in relation to the innovation and
manufacturing of the nanoparticle of Neti such as the adverse effects of the same, Unnat has
not only breached the principle of Good Faith contained within the UN Charter but has
violated Article 1(f) of the SPA. Furthermore, the circumstances under which the SPA was
formulated warrants for the comprehensive provision of complete information, however the
same was not provided amounting to huge losses suffered by Baati.
Issue II : Whether Unnat has deliberately concealed the information to harm to human life,
environment and ecosystem and hence violated the international obligations and principles of
UDHGHR, IDHGD, UDBHR?

18. It is contended before this Honble Court that the wilful concealment of the adverse
effects of the nanoparticles would constitute as a breach of international obligations and
33

A.I.R. 2013 S.C. 1311.


Guideline
for
Good
Clinical
Practice,
ICH,
http://www.ich.org/fileadmin/Public_Web_Site/ICH_Products/Guidelines/Efficacy/E6/E6_R1_Guideline.pdf
(last visited Aug. 3, 2015).
34

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14th Surana & Surana International Technology Moot Court and Judgment Writing
Competition, 2015
principles under Universal Declaration on Human Genome and Human Rights [2.1],
Universal Declaration on Bioethics and Human Rights [2.2] and the International Declaration
on Human Genetic Data [2.3]
19. UNESCO defines Declarations as another means of defining norms, which are not subject
to ratification and like recommendations, set forth universal principles to which the
community of States wished to attribute the greatest possible authority and to afford the
broadest possible support.35 In UN practice, a declaration is a formal and solemn instrument
suitable for rare occasions when principle of great and lasting importance are being
enunciated and is resorted to only cases where maximum compliance is expected.
20. In view of the greater solemnity and significance of a declaration, on behalf of the
organ adopting it, a strong expectation is present that Members of the international
community will abide by it. Consequently, in so far as the expectation is gradually justified
by State practice, a declaration may by custom become recognized as laying down Rules
binding upon States.36 Lastly, Judge Lauterpacht highlighted the significance of declarations
by stating that, while not bound to accept the declaration the state is bound to give due
consideration in good faith. If it decides to disregard it, it has to explain the reasons for its
decision.37

[2.1] UNNAT HAS BREACHED THE PRINCIPLES AND OBLIGATIONS AS


CONTAINED WITHIN THE UDHGHR
21. It is submitted before this Honble Court that the Declaration contains a series of
principles and rights that are based on human rights standards enshrined in other international
instruments that are legally binding such as the International Covenant on Civil and
Political Rights and since the Declaration was adopted by consensus by the General
Assembly and therefore represents a very strong commitment by States to its
implementation.38
22. The Universal Declaration on the Human Genome and Human Rights (UDHGHR)
recognizes that genetics research could have vast potential for improving the health of

35

General
introduction
to
the
standard-setting
instruments
of
UNESCO,
UNESCO,
http://portal.unesco.org/en/ev.php-URL_ID=23772&URL_DO=DO_TOPIC&URL_SECTION=201.html (last
visited Aug. 3, 2015).
36
Qerim Qerimi, Development in International Law: A Policy-Oriented Inquiry 124 (1st ed. Martinus Nijhoff
Publishers 2012).
37
1995 I.C.J. 119 (June 11).
38
Declaration
on
Human
Rights
Defenders,
OHCHR,
http://www.ohchr.org/EN/Issues/SRHRDefenders/Pages/Declaration.aspx (last visited Aug. 3, 2015).

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14th Surana & Surana International Technology Moot Court and Judgment Writing
Competition, 2015
humankind, but it also emphasizes on the need to fully respect human dignity, freedom and
human rights.39 The objective of the Declaration is to reaffirm and update the basic principles
of the human individuals dignity, of freedom of scientific research and of solidarity between
individuals and states and to apply these principles in the context of modern biomedical
sciences.40
23. Article 8 lays down that every individual shall have the right, according to international
and national law, to reparation for any damage sustained as a result of an intervention
affecting his genome while Article 19(a)(iii) states that in the framework of international
cooperation with developing countries, states should seek to encourage measures enabling
developing countries to benefit from achievements of scientific research so that their use in
favour of economic and social progress can be to the benefit of all.
24. By providing incomplete and inadequate knowledge, a clear violation of Article 8 can be
seen as the scientists embarked upon the research without knowing the adversities of the
research can be seen as damage has been suffered by the scientists involved in the research of
the nanoparticle and many complained of headache, giddiness etc.41 due to them not
disclosing the adverse effects of carrying out these processes and no reparation whatsoever
has been provided by Unnat. In addition, a noticeable breach of the provisions contained
within Article 19(a)(iii) has also occurred as through the mala fide intentions of Unnat and in
light of Baati being a developing country42, the economic and social progress of Baati has
been drastically curtailed.

[2.2] UNNAT HAS BREACHED THE PRINCIPLES AND OBLIGATIONS AS


CONTAINED WITHIN THE UDBHR
25. The UDBHR presents 15 principles, including respect for human dignity, human rights
and fundamental freedoms, and the priority of individual interests and welfare over the
interests of science and society.43 The foremost principle established in the Universal
Declaration on Bioethics and Human Rights is that for the protection of human rights.44

39

Carmel Shalev, Human Cloning and Human Rights: A Commentary, 6 Health & Human Rights 137 (2002).
Noelle Lenoir, Are attitudes of Bioethics entering a new era?, 23 J. of Med. Ethics 69 (1997).
41
Moot Proposition 14.
42
Moot Proposition 1.
43
Howard Wolinsky, Bioethics for the World, NCBI, http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1456905/
(last visited Aug. 3, 2015).
44
Bernice Elger, Ethical Issues of Human Genetic Databases: A Challenge to Classic Health Research Ethics 57
(OUP 2010).
40

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Direct contravention of Article 4, Article 8 and Article 17 which constitute a vital part of the
principles relating to bioethics45 of the same has occurred in the present case at hand.
[2.2.1]. That the Baatian Scientists were left vulnerable as they were ignorant of the adverse
effects of carrying out the laboratory procedures
26. Article 4 lays down the principle that the benefits arising out of the scientific knowledge,
medical practice etc. should be maximized in regards to patients, research participants and
other affected individuals, while any possible harm to such individuals should be minimized.
Article 8 states that human vulnerability should also be taken into account in the application
of the aforementioned processes. In the present case, the scientists were vulnerable to adverse
effects of carrying the procedure as there was a conspicuous disregard for their welfare which
increased the harm suffered by these individuals, the same which is attributable to the mala
fide concealment of knowledge in regards to the adverse effects of carrying the process out.
[2.2.2]. That severe damage has been caused to the environment, the biosphere and
biodiversity as a direct result of Unnats mala fide concealment
27. Article 17 of the UDBHR lays down the principle that due regard should be given the role
of human beings in the protection of the environment, the biosphere and biodiversity. Due to
the scientists being unaware of the dire effects of the laboratory procedure the by-products of
the same were kept for disposal in the nearby ground separately ear-marked for that
purpose.46 However, it was noticed by a scientist at a later stage that many small and
medium-size insects were lying dead on the ground, the grass in that area had also died, many
small plants and shrubs in the nearby location had started withering away and lastly some
leaves of big trees had become pale in colour. These types of destruction could have been
circumvented had knowledge in regards to the procedure been supplied in entirety and in the
absence of the same a direct violation of the principles embodied within Article 17 have been
violated.
[2.3] UNNAT HAS BREACHED THE PRINCIPLES AND OBLIGATIONS AS
CONTAINED WITHIN THE IDHGD
28. It is submitted that Unnat has wilfully concealed the information of harm to human life,
environment and ecosystem and in furtherance of the same has violated international
obligations and principles of the International Declaration on Human Genetic Data.

45

Roberto Andorno, Global Bioethics at UNESCO: In Defence of the Universal Declaration on Bioethics and
Human Rights, 33 J. of Medical Ethics 151.
46
Moot Proposition 14.

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14th Surana & Surana International Technology Moot Court and Judgment Writing
Competition, 2015
29. Article 6(a) highlights the imperativeness that genetic data and proteomic data be
collected, processed used and stored on the basis of transparent and ethically acceptable
procedures. A clear violation of the same can be seen as the Baati scientists were unaware of
the adverse effects rising out of the production of Neti nanoparticles and the same would be
tantamount to mala fide intention on the part of Unnat. The process was not a transparent
procedure as knowledge in regards to the efficacy of the output and adverse effects were not
disclosed.47

Issue III: Whether Unnat (through UNC) is responsible for frustrating all the terms and
conditions of the SPA entered on 1st January 2014 between Baati and the Unnat?

30. It is humbly submitted that the Democratic Republic of Unnat is aptly contended to be
responsible for frustrating all the terms and conditions of the abovementioned Special
Purpose Agreement entered into between the contesting parties to the present suit in issue,
thereby disadvantaging your humble petitioner from the accruing benefits agreed therein
and/or maintaining the balance between the obligations arising out of it. [3.1] Appending
further, the ensuing circumstances further enables the petitioner herein to contest the said
issue on grounds as put forth and/or listed within the claims asserted herein. [3.2]

[3.1] THE NON-COMPLIANCE OF THE OBLIGATIONS UNDERTAKEN AND/OR


AGREED AMONG THE PARTIES LED THE PERFORMANCE TO A STATE OF UTTER
PHYSICAL AND COMMERCIAL IMPOSSIBILITY
31. A party to a contract is likely to be discharged off the obligations underlying and
liabilities undertaken on occurrence of circumstance(s), after its formation, which renders the
same physically and/or commercially impossible to be fulfilled or transforms the obligations
to be performed into a radically different obligation from that undertaken at the moment of
entry into the contract.48 The analysis, if taken plainly, implies a doubtless and complete
perusal of the circumstances considered necessary and involving with the performance of the
obligations as agreed within the contract initially.49 In other words, the adjustability of the
47

Moot Proposition 16.


Guenter Treitel, Frustration and Force Majeure 505 (Sweet & Maxwell 1994); Ewan McKendrick, Force
Majeure and Frustration of Contract 45 (2d ed. Informa Law 1995); McElroy and Williams, Impossibility of
Performance in Contract 67 (Sweet & Maxwell 1945).
49
Davis Contractors Ltd. v. Fareham U.D.C., [1956] A.C. 696; National Carriers Ltd. v. Panalpina (Northern)
Ltd., [1981] A.C. 675; Pioneer shipping Ltd. v. B.T.P. Tioxide Ltd., [1982] A.C. 724. [Frustration occurs
48

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14th Surana & Surana International Technology Moot Court and Judgment Writing
Competition, 2015
intervening change within the construction of the contract, without any material change in the
subject-matter stands as another consideration.50 This scope of argument, when extended
further, entails the necessity of reaching the impression, in the light of the nature of the
contract and the relevant surrounding circumstances of its entry into force51, of the scope of
the obligation derived through literally interpreting the promises at the outset. Thus, grows
the attached incumbency, upon the courts consideration, of analysing the two circumstances,
pre and post frustration, and estimating the time, labour, money and materials in the backdrop
of the changing circumstances, thereby inducing the need for the comparison as to whether in
the light of the present circumstances, the performance of obligations, in a commercial sense,
underwent any adverse effect and that such effect was due to some radical or fundamental
change.52 It is submitted before the Ld. bench that a proper construction of the present issue
in hand in the light of the factual circumstances concerned, indisputably contemplates a basic
underlying objective in the form of an agreement for a joint collaboration with a sole purpose
to eradicate life-threatening disease of liver cancer through innovating, developing, producing
and manufacturing of a life-saving drug from the shrub of Neti53, which having been the
ultimate consideration for the collaboration or significantly the core subject matter have been,
due to default and/or non-compliance or failure to act according to the required reasonable as
well as expected standard in providing the necessary information about the adverse effects
that could be encountered during the development or manufacturing of the drug, deteriorated
to the effect of frustration54, thereby making the performance of the other party redundant,
and thus exposing them to massive losses.

[3.2] FAILURE TO IMPART AND/OR SECURE PROPER AND NECESSARY


KNOWLEDGE REGARDING THE ADVERSE EFFECTS FRUSTRATED THE PURPOSE
UNDERLYING THE AGREEMENT REACHED BETWEEN THE PARTIES
32. An agreement resurfacing commercial association implies a certain classification of
obligations arising out of it and creates a distinct sense of mutuality55 among the parties
whenever the law recognises that a contractual obligation has become incapable of being performed because the
circumstances in which the performance is called for would render it a thing radically different from that which
was undertaken by the contract. Non haec in foedera veni (it was not this that I promised to do) finds an
underlying relevance which signifies a change in the resultant if the obligation is pressed for performance].
50
Davis Contractors Ltd. v. Fareham Urban District Council, [1956] A.C. 696.
51
Id at 720-721.
52
Tsakiroglou & Co. Ltd. v. Noblee Thorl GmbH, [1962] 688 A.C. 675.
53
Article 1 of the Special Purpose Agreement; Moot Proposition, Page 14.
54
Taylor v. Caldwell, (1863) 3 B. & S. 826.
55
Trans Ocean Van Service v. The United States, 470 F.2d 604.

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connected through it. This aspect finds itself reflected upon the liability so divided and
commitments owed towards specified courses of conduct56, thereby underlining the sole
objective of upholding the purpose in mind at the time an agreement was reached 57, which so
long maintained addresses parties welfare through convenient performances.58 However, such
commitments are infrequently relaxed on grounds that the purpose intended to have been
achieved stands frustrated on account of supervening circumstances rendering performances
burdensome on the part of either party,59 with the mitigating factors at extreme, thus making
the bargain detrimental to mutualism.60 The groundwork to this reasoning was employed in
Krell vs. Henry61, fondly remembered as the Coronation Case wherein, on a purposive
construction, the broader contractual objective was addressed and its frustration led to the
discharge of obligations arsing thereto. It is to the appraisal of this Honble Court that the
scope, nature and content of the Special Purpose Agreement endorses its bilateral nature
which signifies promises flowing from both sides62, which brings us to the judgment that the
same requires mutuality of obligations.63
33. The analysis of the issue in hand demands, from this Honble Court, an appreciation and
evaluation of the obligations clearly enumerated within the Special Purpose Agreement
which requires Unnat to transfer 70% of technical know-how of nanoscience, nanotechnology
and nanobiology available and recognized in their legal domain64 in the light of the facts that
Unnat shared all the knowledge of nanoscience that are available in their legal domain with
Baati65. It needs to be borne into mind that recognition is an action or fact of perceiving that
something is the same thing as one previously known.66 The use or employment of the term,
specifically with the intent of denoting obligations concerned with the prerequisites of the
transfer of technology, expressly signifies, as part of its performance, that the required
56

Charles Fried, Contract as Promise 13 (Harvard University Press 1981).


Christine Jolls, Contracts As Bilateral Commitments: A New Perspective on Contract Modification, 16 J. of
L. Studies 203 (1997). [Contracts are individual commitments, but nothing more; both parties commitments are
only as strong as their contracting partners desire to hold them to their original promises].
58
Id at 204.
59
Mineral Park Land Co. v. Howard, 172 Cal. 289 (1916); In the matter of Comptoir Commercial Anversois
and power Sons & Co., [1920] 1 K.B. 868.
60
The interdependence of two parties on one another, whether in a biological, social or financial relationship,
with an objective to secure benefits out of the alliance is mutualism.
61
Krell v. Henry, [1903] 2 K.B. 740.
62
Hutchings v. Slemons, 141 Tex. 448, 452. [A bilateral contract is one in which there are mutual promises
between two parties to the contract, each being both a promisor and a promisee].
63
In re Palm Harbor Homes Inc., 129 S.W.3d 636. [Thus, valid consideration for a bilateral contract involves
mutuality of obligation].
64
Article 1 (c) of the Special Purpose Agreement.
65
Moot Proposition 10.
66
The Oxford English Dictionary,ed. 2nd, Vol. XIII, Clarendon Press, Oxford, prepared by J.A. Simpson and
E.S.C. Weiner, 1991.
57

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process must be duly substantiated and verified with the necessary amount of knowledge and
consciousness about the effectiveness, end-results and adverse effects, after necessary
acknowledgement and consideration, of the technology so made to be transferred.
34. Upon perusal of the abovementioned, it is contended that the Honble Court must and
should consider that the obligation of transferring knowledge, available and recognised, has
not been complied with, as appears from the fact-circumstances itself.

[3.3] THE FRUSTRATING EVENTS ENSUED OWING TO DELIBERATE ACTS


COUPLED WITH NEGLIGENT CONDUVT ON THE PART OF UNNAT
35. Frustration, though in the ordinary course of usage is treated as discharge from
contractual obligations as a legal consequence due to certain supervening events that render
its performance illegal or impossible or provides for certain allied analogous circumstances,
does not exclude from its scope frustration self-induced67 owing to the conduct of the party
itself or of those for whom it is responsible.68 The test is to determine whether an event,
following naturally or due to default of either party, deprives the aggrieved party, who has
further undertakings still to perform, from the whole benefit agreed as consideration for the
performance of such undertakings.69 This brings into question the extent of default in conduct
due to non-performance or defect in the performance agreed, of the party against whom
frustration is being alleged. The latter circumstance in question has a somewhat relative
quotient of contractual breach70 where the performance in question appears moderately of the
same kind however differs in point of time, quantity or quality rendering the same defective
and prejudicial to the execution of obligations and the resulting rights accruing out of the
agreement already reached.71 This on equitable grounds also does not extend any protection
to the party in breach (however the other party may rely upon it as a ground of frustration)
67

Bank Line Ltd. v. Arthur Capel Ltd., [1919] 452 A.C. 435; Sudbrook Trading Estate Ltd. v. Eggleton, [1983]
497 1 A.C. 444.
68
C. Czarnikow Ltd. v. Centrala Handlu Zagrancicznego, [1979] A.C. 351 [Frustration is not self-induced
where the cause of the delay is the act of a third party for whom the defendant is not responsible nor merely
because one of the parties is an enterprise controlled by a State which has by some legislative or executive act
prevented performance of the contract or made it illegal].
69
Hongkong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd., [1962] 2 Q.B. 26 [This test is applicable
whether or not the event occurs as a result of the default of one of the parties to the contract, but the
consequences of the event are different in the two cases. Where the event occurs as a result of the default of one
party, the party in default cannot rely upon it as relieving himself of the performance of any further undertakings
on his part, and the innocent party, although entitled to, need not treat the event as relieving him of the further
performance of his own undertakings].
70
Edwin Peel, The Law of Contract 72 (13th Sweet & Maxwell 2012 London); Boone v. Eyre, (1777) 1 Hy. Bl.
273; Duke of St. Albans v. Shore, (1789) 1 Hy.Bl. 270; Ellen v. Topp, (1851) 4426 Ex. 424.
71
The Stork, [1955] 2 Q.B. 68; Leeds Shipping Co. Ltd. v. Soc Franaise Bunge, [1958] 1452 Lloyds Rep.
124; Pilbrow v. Peerless De Rougemont & Co., [1999] 3603 All E.R. 355.

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that may arise out of the frustrating event72 or even in circumstances where the alleged act is
not in itself a breach of the contract73 but just another factor leading to frustration.
36. Even though the effect of negligence is not well recognised as a ground for frustration,
deliberate omission to exercise reasonable care and skill resulting into loss and consequential
damages forms an important part of the transaction. The observation in Joseph Constantine
SS Co. vs. Imperial Smelting Corp Ltd.74 holds great relevance here wherein the assessment
so made indicates that incapacity deliberately induced could not be protected under a claim of
frustration.
37. That it is submitted before the Ld. Bench that on the grounds stated above the perception
is not far-fetched there have been utter non-compliance of the obligations undertaken wilfully
with a view to aggravate the already persisting problem that afflicts the Baatian community
and with several other ulterior motives which any civilised state under the paradigm of
peaceful co-existence and co-operative will not resort to. Such defaults, when taken into
account in nature, scope and effect would seek out to the conclusion that the circumstances
justify self-induced frustration which destroys the underlying objective of the Special
Purpose Agreement.

Issue IV : Whether Unnat shall repay all the losses of money that Baati incurred in planning,
execution and arrangements?
38. It is humbly submitted by the applicant that a bare perusal of the SPA will reveal that
there were certain considerations which each national corporation had to perform as part of
the twin-sharing formula of the Joint Venture. Despite the fact that Baati spent its resources
and technical know-how as per Article 1(c), the reciprocal part of the agreement by Unnat
could not be fulfilled by virtue of it frustrating the terms of the SPA. As a result, there exists
a situation wherein Baati has incurred certain costs and since, due to the breach by Unnat,
the objective of the agreement has also not come to fruition as highlighted in paragraph 1 of
Article 1, the state of Baati requests this honourable court to exercise its plenary powers
granted Article 36(2) read with Article 56 and to sanction reparation against Unnat, by way of
compensation to Baati for all the injuries that it has sustained due to the internationally
72

Mertens v. Home Freeholds Co., [1921] 2 K.B. 526.


Denmark Production Ltd. v. Boscobel Productions Ltd., [1969] 1 Q.B. 699; Black Clawson International Ltd.
v. Papierwerke Waldhof-Aschaffenburg A.G., [1981] 4572 Lloyds Rep. 446.
74
Joseph Constantine SS Co. v. Imperial Smelting Corp Ltd., [1942] A.C.154. [There was an inclination
towards the view that reliance on frustration could be made so long as the incapacity to perform the obligations
was not deliberately induced in order to get out of the arrangement].
73

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wrongful act and breach of State Responsibility owed by Unnat to Baati. [4.1] The contract
laws of most countries, both civil and common law countries, lay down the proposition that
all losses attributable to the party that breached the contract must be paid to the other
contracting party such that the effect of the breach is nullified, the situation is restored to
what it was before the breach took place, and the other party is made whole again. Various
international conventions, principles and state laws, including the Baatian law are a testament
to this state practice which forms a part of Customary International Law as is under Article
38(1)(b) of the statute of the ICJ. [4.2]

[4.1] UNNAT BREACHED THE RESPONSIBILITY OWED TO BAATI AND THIS


BREACH OF STATE RESPONSIBILITY ENTAILS REPARATIONS, TO COMPENSATE
BAATI FOR ALL LOSSES IT INCURRED AS A RESULT OF THE WRONGFUL ACT
[4.1.1]. The Chorzow Factory Case and the Principle of Reparation laid therein
39. It is a principle of international law that the breach of an engagement involves an
obligation to make reparation in an adequate form. Reparation therefore is the indispensable
complement of a failure to apply a convention and there is no necessity for this to be stated in
the convention itself. The Permanent Court of International Justice in the Chorzow Factory
Case said in no unambiguous terms:
"The Court observes that it is a principle of international law, and even a general conception
of law, that any breach of an engagement involves an obligation to make reparation75. The
ideal form of reparation, doubtless, is the restoration of the situation exactly as it was before
the injury. "The essential principle contained in the actual notion of an illegal act- a
principle which seems to be established by international practice and in particular by the
decisions of arbitral tribunals-is that reparation must, as far as possible, wipe out all the
consequences of the illegal act and reestablish the situation which would, in all probability,
have existed if that act had not been committed. Restitution in kind, or if this is not possible,
payment of a sum corresponding to the value which a restitution in kind would bear; the
award, if need be, of damages for loss sustained which would not be covered by restitution in
kind or payment in place of it-such are the principles which should serve to determine the
amount of compensation due for an act contrary to international law."76
40. The Dictionnaire Salmon has taken views consistent with these principles. It defines the
notion of reparation as leading to the restoration of the state of affairs prior to the occurrence
75
76

Factory at Chorzow (Merits), P.C.I.J. Order of the Court, (ser. A), No. 17 4 (July 14, 1928).
Supra note 47.

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of the loss by either putting things backs as they were or by compensating the loss suffered.
The reparation should in principle erase insofar as possible-because irreversible situations
do occur-the wrongful act and restore the state of affairs that existed prior to it.77

[4.1.2]. The Draft Articles on Responsibility of States for Internationally Wrongful Acts and
its implications in the case at hand
41. In the Draft Articles on Responsibility of States for Internationally Wrongful Acts78,
Article 31 states the principle relating to the obligation to make reparation for the
consequences of an internationally wrongful act. After reading the provision, it ought to be
brought to the notice of the Honble Court that the obligation to make full reparation is
affirmed; even if this affirmation of the obligation to make full reparation is relatively
succinct79. Article 31 reflects the rule of adequacy of reparation as laid down in the Chorzow
case wherein it is stated that It is a principle of international law that the breach of an
engagement involves an obligation to make reparation in an adequate form. The court has in
Loayaza-Tamayo vs. Peru (Reparations and Costs) case, recognized that a state bears
responsibility for an internationally wrongful act and is under an obligation to make full
reparation for the injury caused by that act 80. In Lusitania case81 held the remedy should be
commensurate with the loss, so that the injured party may be made whole. Furthermore, the
there is a fine line dividing restitution and compensation, and the Articles talk of restitution to
be prioritized over compensation82. However, in this case, the court will be confronted with
the dilemma that restitution would equate to compensating the parties for all the losses
incurred and the State of Baati, having a choice in opting for the mode of reparation83,
requests the court to grant sanction for reparation in the form of compensation to revert the

77

Dictionnaire De Droit International Public 975,999 (Brussels, Bruylant/AUF, 2001).


The Draft Articles are a combination of codification and progressive development. The International Court of
Justice has already cited them for example, in Gabkovo-Nagyamaros Project (Hungary v. Slovakia), 1997
I.C.J. 7. On 12 December 2001, the United Nations General Assembly adopted resolution 56/83, which
"commended [the articles] to the attention of Governments without prejudice to the question of their future
adoption or other appropriate action."[G.A. Res. 56/83, para. 3 (Dec. 12, 2001).]
79
The ICJ affirmed the obligation to make full reparation (citing article 31) in Application of the Convention on
the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v. Serbia and Montenegro),
1996 I.C.J. 595 31 (July 11). Also affirmed in Arrest Warrant Case (Democratic Republic of the Congo v.
Belgium), 2000 I.C.J 3, 31-32 (April 11).
80
Loayaza-Tamayo v. Peru, Reparations and Costs, Order of the Court Inter-Am. Ct. H.R., (ser. C), No. 42 20
(Apr. 15, 1998).
81
The Lusitania case, 7 R.I.A.A. 32, 39 (1923).
82
Article 34 and 36 of ARSIWA, 2001.
83
Article 43(2)(b) of the ILC Articles. Also, Iran for instance, chose compensation as a form of reparation in the
Case Concerning Aerial Incident (Iran v. United States), 1988 I.C.J. (July 3).
78

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situation to what it was before the wrong took place in pristinum. Article 36 of the
ARSIWA expresses the entitlement to compensation84.
42. The principle of full reparation, adopted by the Permanent Court in the Chorzow Factory
case, has been affirmed and applied in the decisions of the International Court 85, regional
courts and tribunals86, and arbitral bodies87. It is also reflected in codification efforts88 and in
the most unambiguous and certain way, reflects the state practice of many countries and the
customary international law in this regard.
[4.2] BREACH OF AGREEMENT BY UNNAT WILL ENTAIL CONTRACTUAL
DAMAGES AS LAID DOWN UNDER VARIOUS STATE LAWS, CONVENTIONS AND
PRINCIPLES
[4.2.1]. Breach of Reliance Interest as a result of Frustration by Unnat.
43. The applicant humbly brings to the notice of the court that it is an indisputable principle
of law in almost all the legal systems across the world that if there is a breach of contract,
then the breaching party will be forced to pay damages to the party that has incurred losses as
a direct result of that breach. This is a method of remedying the wrong that has been caused
to the aggrieved party and in contract law, there exists the concept of reliance interest
wherein, once the plaintiff has changed their position because of their reliance on the contract
with a defendant, the object is to put the plaintiff in as good a position as they were prior to
the promise and the State of Baati believes that it too, having allocated enormous amounts of
money to the Neti project, which never came to fruition as a result of the breach, is entitled to
damages based on reliance interest so that the effect produced is such that Baati is put back in
the position it was, had the SPA never been made. The leading case regarding reliance

1. The State responsible for an internationally wrongful act is under an obligation to compensate for the
damage caused thereby, insofar as such damage is not made good by restitution.
2. The compensation shall cover any financially assessable damage including loss of profits insofar as it is
established.
85
Gabkovo-Nagyamaros Project (Hungary v. Slovakia), 1997 I.C.J. 7; Armed Activities on the Territory of
Congo, 2005 I.C.J. 168. In respect of international organisations, Reparation for Injuries Suffered in the Service
of the United Nations, Advisory Opinion, 1949 I.C.J. 174, 181.
86
See Papamichalopoulos and others v. Greece, App. No. 14556/89, Eur. Ct. H.R. Series A No 330-B (1995);
Velasquez Rodriguez v. Honduras, (Reparations and Costs), Judgment, Inter-Am. Ct. H.R., (ser. C), No. 7
(1989).
87
See C.M.E. v. Czech Republic, Partial Award, 9 I.C.S.I.D. Rep. 113, 238-9 (2001); Amoco International
Finance Corp v. Iran, (Iran-United States Claims Tribunal), 15 Iran-U.S. C.T.R. (1987).
88
Codification efforts are described in FV Garcia Amador, First Report on International Responsibility, ILC
Yearbook 1956, Vol II, 174, 177-178,221-226; and in R Ago, First Report on State Responsibility, ILC
Yearbook 1969, Vol II 125.
84

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interest, followed in many countries is that of Anglia Television v. Reed89, in which the court
held that the defendant would have known that had the contract not been performed the
plaintiff would have incurred losses due to the hiring of actors, props etc. for the film,
expecting the plaintiff to perform his end of the contract. In the USA, in the Second
Restatement of Contract90, S. 351(3) states that A court may limit damages for foreseeable
loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in
reliance, or otherwise if it concludes that in the circumstances justice so requires in order to
avoid disproportionate compensation.

[4.2.2]. State Practice regarding Compensation for Contractual Damages


44. The Applicant will also cite a few relevant Articles from the UNIDROIT Principles of
Commercial Contracts of 201091, since the agreement between BNC and UNC was a
commercial venture and this document is an embodiment of general international principles
of contract law and will guide the court in determining the International Law in this regard.
Also, in the International Sale of Good Convention92, to which many countries are parties,
Article 74 resonates the same principles.
45. The Applicant would also attract the attention of the court to the Indian Contract Act93,
wherein s.73 and s.75 state very clearly that the party who suffers by the breach is entitled to
receive compensation for any loss or damage and that a person who rightfully rescinds a
contract is entitled to consideration for any damage which he has sustained through the nonfulfillment of the contract.
46. The Applicant would also cite the Sapphire-NIOC Arbitration case94 to guide court
towards the proper application of law. The arbitrator held that NIOC had broken its

89

Anglia Television v. Reed, [1972] 1 Q.B. 60 (C.A.), Also enunciated in Apotex Inc. v. Global Drug Ltd.,
(1998) 83 C.P.R. (3d) 448 (Ont. Gen. Div) affd [2001] O.J. No. 3849 (C.A.) (QL); 9000567 Ontrario Ltd.
(c.o.b. M.G.W. & Associates) v. Welsby & Assoc. Taxation Inc., [2003] O.J. No. 591 (S.C.J) (Q.L.).
90
Available at http://www.lexinter.net/LOTWVers4/restatement_(second)_of_contracts.htm.
91
ARTICLE 7.4.1 (Right to damages)
Any non-performance gives the aggrieved party a right to damages either exclusively or in conjunction with any
other remedies except where the non-performance is excused under these Principles.
ARTICLE 7.4.2 (Full compensation)
(1) The aggrieved party is entitled to full compensation for harm sustained as a result of the non-performance.
Such harm includes both any loss which it suffered and any gain of which it was deprived, taking into account
any gain to the aggrieved party resulting from its avoidance of cost or harm.
(2) Such harm may be non-pecuniary and includes, for instance, physical suffering or emotional distress.
92
International
Sale
of
Goods
Convention
(2010),
https://www.uncitral.org/pdf/english/texts/sales/cisg/V1056997-CISG-e-book.pdf.
93
Indian Contract Act (1872), http://comtax.up.nic.in/Miscellaneous%20Act/the-indian-contract-act-1872.pdf.
94
Sapphire International Petroleums Ltd. of Toronto and National Iranian Oil Company Arbitral Claim)
(Canada v. Iran), 35 I.L.R. 182 (Federal Tribunal of Swiss Supreme Court 1963).

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obligations and that a fundamental principle of law is that contractual undertakings must be
respected: The rule pacta sunt servanda is the basis of every contractual relationship
examining the damages, which the plaintiff has a right to claim under the rules stated by him,
the arbitrator expressed his views in passage which should be another powerful contribution
to international case law.
"According to the generally held view, the object of damages is to place the party to whom
they are awarded in the same pecuniary position that they would have been in if the contract
had been performed in the manner provided for by the parties at the time of its conclusion.
That should be the natural consequence of the breach (Art. 1149, 11,50 of the French Civil
Code: Esmein-Radouant-Gabolde, op. cit., Vol. VII, N. 855; Lehmann, op. cit., para. 14, VI,
page 59). This rule is simply a direct deduction from the principle pacta sunt servanda, since
it only effect is to substitute a pecuniary obligation for the obligation, which was promised
but not performed. It is therefore normal that the creditor is thereby given complete
compensation. This compensation includes the loss suffered (damnum emergens), for example
the expenses incurred in performing the contract, and the profit lost (lucrum cessans), for
example the net profit which the contract would have obtained. The award of compensation
for the lost profit or the loss of a possible benefit has been frequently allowed by
international arbitral tribunals.

Issue V: Whether The Democratic Republic of Unnat (Unnat National Corporation) shall also
pay exemplary compensation for the loss of lives of 105 people?

47. The applicant humbly submits that when both the States of Unnat and Baati entered into
an SPA to produce the cancer medicine, they very well knew that the implications of the
failure of their venture would be just as great as the success from it. This is true especially
since they knew that the lives of many cancer patients hinged on the successful production of
this medicine; and this would also include many cancer patients who had delayed their
regular cancer treatment with the belief that production of this medicine would give them a
better chance of fighting the odds, as is common among many people afflicted with terminal
diseases. Therefore, when this medicine could never be produced as a result of the frustration
of the agreement by Unnat, the loss of lives of these very people must be termed as
consequential damages due to this breach, attributable to Unnat which must also be held

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liable for the tort of negligence.[4.1] The applicant humbly submits that this very cause of
action emanating from the realm of contractual law, supplemented by Unnats tortious
liability for negligence must give way to a successful claim for exemplary damages, which
this august court has the power to give, in this case, as a means to supplement the regular
compensation as well as deter such grave violations in the future.[4.2]

[5.1] FRUSTRATION OF THE TERMS OF THE SPA BY UNNAT LEADING TO THE


DEATH OF 105 CITIZENS OF BAATI WOULD COME UNDER THE AMBIT OF
CONSEQEUNTIAL DAMAGES FOR BREACH OF A CONTRACT
48. The general rule under Common Law countries for the recovery of damages following
breach of contract was set down in the landmark English case of Hadley vs. Baxendale95:
Recoverable damages are those either (i) arising naturally or directly from the breach of
contract (direct loss), or (ii) within the contemplation of the parties at the time they made
the contract (indirect or consequential loss). The applicant would like to bring to the
knowledge of the court that that the English case of Hadley vs. Baxendale has been
recognized in American jurisprudence as the definitive source for determining when
consequential damages may be recovered for breach of contract.96 The Restatement (Second)
of Contracts provides that consequential damages may be recovered if they were "a probable
result of the breach when the contract was made ... as a result of special circumstances,
beyond the ordinary course of events, that the party in breach had reason to know."97 But
courts freely interchange these expressions with the statement that consequential damages
may be recovered if they were a "foreseeable" result of breach 98. With respect to economic
loss, U.C.C. 2-715(2)(a) permits recovery of consequential damages for "any loss resulting
from general or particular requirements and needs of which the seller at the time of
contracting had reason to know."99
The applicant believes that the court must be made aware of the practice of consequential
damages exclusion clause, which is prevalent in many countries. What it seeks to do is
Hadley v. Baxendale, 9 Ex. 341, 156 Eng. Rep. 145 (1854).
The decision is cited with approval by the highest courts of 43 states.
97
Restatement (Second) of Contracts 351(1), (2)(b) (1979).
98
White v. Unigard Mut. Ins. Co., 730 P.2d 1014, 1017 (Idaho 1986); Aetna Casualty & Sur. Co. v. Day, 487
So. 2d 830, 835 (Miss. 1986).
99
31. U.C.C. 2-715(2)(a) provides:Consequential damages resulting from the seller's breach include any loss
resulting from general or particular requirements and needs of which the seller at the time of contracting had
reason to know and which could not reasonably be prevented by cover or otherwise.
95
96

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exempt the other contracting party from any loss that may arise from the second limb of the
Hadley case i.e. any consequential loss which the parties, before entering into a contract,
choose to specifically exclude from a claim for damages for a breach in the future. The
parties may choose to widen the ambit of this exclusion or narrow it; in most countries, the
statutory law will have such an effect that an exclusion clause will be able to exclude only so
much as law mandates100. With that having been said, it must be observed that the ICJ may
go through the SPA to determine the intent and obligations of the parties to one another101,
and upon a perusal of the SPA, the court will find that there is an absence of any provision of
such kind and it must be assumed that the parties never intended to exclude any form of
liability arising out of consequential damages, which ensures that Unnat can be held liable for
the death of 105 citizens, a liability which will fall squarely within the ambit of consequential
damages for breach of the SPA.

[5.2]. NEGLIGENCE BY UNNAT ATTRACTING EXEMPLARY DAMAGES


[5.2.1]. Breach Of Duty of Care by Unnat which it owed to Baatian Citizens
49. There was a duty of care owed to the citizens of Baati by the State of Unnat as the SPA it
entered into with Baati was for the production of a medicine to eradicate liver cancer- a
terminal disease which was afflicting many people. It is common logic that any action any of
the parties would take would have an effect on millions of people affected by this disease, at
the time of the agreement, as well as in the future. The standard of duty of care in this
situation was extremely high as many lives were contingent on the complete transmission of
knowledge, its proper application and then successful production of a medicine without any
adverse effects. This would be achieved only by the proper performance of the SPA and the
directions issued in ancillary documents; which the state of Baati failed to do. It is humbly
100

See for Example, In England and Wales, it does not exclude any loss which arises as a direct and natural
consequence of the breach of contract; as such, by itself, it excludes relatively little. In Australia the courts will
take this to mean indirect losses that arise under the second limb of Hadley v. Baxendale rather than direct
losses occurring under the first limb of Hadley v. Baxendale. Under the German law on damages it is basically
irrelevant if damage has occurred (directly) to the contractual object itself or (indirectly) to other legally
protected goods. The crucial issue is the general obligation for compensation for all adequately caused
consequences of the damaging event irrespective of the question whether the damages are direct or indirect.
Correspondingly, German law actually does not have a distinct differentiation between direct and indirect
damages or direct/indirect and consequential damages nor a legal definition of these terms. Dutch law does not
clearly define consequential loss; in each case the court will have to interpret the meaning of an exclusion of
consequential loss. In Sweden, Exclusion of consequential and indirect loss in a contract will generally exclude
loss that is not a direct and foreseeable consequence of the breach of contract; loss resulting from reduction or
loss of production or turnover, other loss resulting from the goods being unfit for use in the intended manner,
loss of profit resulting from a contract with a third party not being performed or not correctly performed, and
other similar loss, if such loss was difficult to foresee.
101
Article 3(b) of Special Agreement between Baati and Unnat, as in Annexure II.

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submitted by the applicant that it was this very failure to perform the obligations conferred
upon it by the SPA, which consequently led to the death of 105 persons, would constitute
breach of duty of care and for this, the state of Baati, on the behalf of its citizens, brings an
action for exemplary damages for the tort of negligence.
50. Lord Atkins words in Donoghue vs. Stevenson102, laid the basis for the neighbor
principle in tort of negligence as it stands in various states, even today: You must take
reasonable care to avoid acts or omissions which you can reasonable foresee would be likely
to injure your neighbor. Who, then in law is my neighbor? The answer seems to be- persons
who are so closely and directly affected by my act that I ought reasonably to have them in
contemplation as being so affected when I am directing my mind to the acts or omissions
which are called in question. The state of Baati humbly submits that its citizens would be
construed as neighbors of state of Unnat. The state of Unnat has also satisfied and affirmed
all the conditions of the so-called tripartite (or threefold) test in Caparo Industries Plc vs.
Dickman103, which asks whether the harm was foreseeable, whether there was sufficient
proximity between the parties and whether the imposition of a duty of care would be fair, just
and reasonable. The case in England, which lay down the precise extent of causation and
remoteness of damage, was the Wagon Mound case104 wherein it was held that If some
limitation must be imposed upon the consequences, and some test there must be.why should
that test (reasonable foreseeability) be rejected which, since he is judged by what the
reasonable man ought to foreseeand a test (the direct; consequence) be substituted which
leads to nowhere but the never-ending and insoluble problems of causation.

[5.2.2]. Grant of Exemplary Damages in International Law


51. The Applicant seeks exemplary damages as grant of regular damages to the tune of
ordinary compensation will not be apt for the current crisis and they will have to be
supplemented by additional costs; along with this, the state of Baati has suffered tremendous
loss in the form of death of many of its citizens and wishes the court to sanction damages
supplementary to ordinary compensation which will also have a deterrent effect, in principle
condemning the actions of the state of Unnat. The applicant is aware that this case would be a
first of its kind wherein exemplary damages will be awarded to serve an extra-compensatory
process and believes that it is its duty to let the court know of international practice and prior
102

Donoghue v. Stevenson, [1932] A.C. 562.


Caparo Industries Plc v. Dickman, [1990] 2 A.C. 605.
104
Overseas Tankship (U.K.) Ltd. v. Morts Dock and Engineering Co. Ltd., [1961] A.C. 388.
103

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decisions where damages more than the loss have been awarded in the past in International
Law. Exemplary damages are known to practically all common law countries, albeit with
variation. In the US, for instance, exemplary damages (punitive damages) take a prominent
position in the law of remedies. The most important field of application for these damage
awards in municipal law are cases of injury to the person or to personal reputation. In France,
exemplary damages are granted in the form of contractual fines.
52. The applicant would also like to bring the courts notice to the draft of the United Nations
Council on Trade and Development (UNCTAD) on "International Code of Conduct for the
Transfer of Technology." Chapter 5 of the code holds the know-how transferor responsible
for any defective products105.
53. There are early cases which may be taken as examples of exemplary damages in which
the award seems to have gone far beyond the mere compensation of non-material damage.106
In other cases, substantial damages were awarded as an expression of regret for the indignity
inflicted upon another State by mistreating one of its nationals107. In another case it was
explicitly held that the injury to the alien and more importantly, the failure to prosecute the
alleged perpetrators amounted to a severe offence against the State of nationality which was
awarded a substantial amount of damages for the indignity108.

In the Fabiana Case,

dommage cause par la faillite and dommage indirect constituted three times as much as all
other items combined109. In the Rainbow Warrior case110, the Secretary General of the UN,
acting as a mediator, awarded substantial damages for grave violations of international law
committed by France. In this case too, the compensation awarded exceeded the value of the
material loss suffered by New Zealand, and hence it was in the nature of exemplary damages.

Article 5.4(xv) states that The supplying party shall be liable according to the appropriate applicable law
for the loss of, damage or injury to property or persons, arising from the technology transferred or the goods
produced by it, provided that the technology is used as specified in the agreement, or in absence of such
specification, in a technically correct manner.
106
Laura M.B. Janes et al Case (U.S.A. v. United Mexican States), award at 97, 98(General Claims Commission
1926), http://legal.un.org/riaa/cases/vol_IV/82-98.pdf.
107
Maal Case (Netherlands v. Venezuela), 10 R.I.A.A. 730, 732-733 (Netherlands-Venezuelan Commission,
1903).
108
Heirs of Jean Maninat Case (France v. Venezuela), award at 80, 31 VII (1905)
http://legal.un.org/riaa/cases/vol_X/55-83.pdf.
109
In the case of the Masonic, $5,000 a year was allowed for anticipated profits. In the arbitration of 1839
between Great Britain and Brazil, there was allowed, among other things, losses in port charges or in freight due
at the port of discharge, losses due to inability to fulfill charter parties, demurrage, wages, etc.
110
Rainbow Warrior (France v. New Zealand), 82 I.L.R. 500 (France-New Zealand Arbitration Tribunal 1990).
105

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PRAYER

Wherefore, it is prayed, in light of the issues raised, arguments advanced, and authorities
cited, that his Honble Court may be pleased to declare that =:
a.

The Democratic Republic of Unnat (through UNC) has violated the basic principle of
Article. 2 of the United Nations as a result of deliberate with holding of the information
on adverse of the nanoparticle which amounts to manifestation of mala -fide intention; as
a result of which Government of Baati could not acquire the patent.

b. The Democratic Republic of Unnat (through UNC) had willfully concealed the
information of harm to human life and environment; which were within the knowledge of
the Government of Unnat and violated various international obligations;
c. The Democratic Republic of Unnat (through Unnat National Corporation) is responsible
for frustrating all the terms and conditions of the SPA between the Federal Republic of
Baati and the Democratic Republic of Unnat;
d. The Democratic Republic of Unnat (UNC) shall repay all the losses of money that
Government of Baati incurred in planning, execution and arrangements together with
interests and, considering the interruption to the growth and development of trade and
commerce and Baati being a developing country; that the cost-computation will be a
subject matter of special agreement to be concluded post-order.
e. The Democratic Republic of Unnat (Unnat National Corporation) shall also pay
exemplary compensation for the loss of lives of 105 citizens due to liver cancer and who
delayed their treatment with the hope that they shall be cured by this new drug Neti and
consequently could not get the same.

And Pass any other Order, Direction, or Relief that it may deem fit in the Best Interests
of Justice, Fairness, Equity and Good Conscience.
For this Act of Kindness, the Appellant Shall Duty Bound Forever Pray.

Sd/.
(Counsel for the Applicants)

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