TEAM CODE: ST 08 D - Surana and Surana CODE: 14TH SURANA AND SURANA INTERNATIONAL TECHNOLOGY LAW...

TEAM CODE:

14TH SURANA AND SURANA INTERNATIONAL TECHNOLOGY LAW MOOT COURT COMPETITION, 2015.

BEFORE

THE HON’BLE 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 UNNAT

ST_08_D

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

(i) Written Submissions on behalf of the Respondents

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 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 BAATI COULD NOT ACQUIRE THE PATENT

BEFORE THE RESPECTIVE OFFICE? ............................................................................. 1

[1.1]. The Democratic Republic of Unnat has not violated the Basic Principle contained

within Article 2 of the UN Charter ........................................................................................... 1

[1.2]. Both Baati and Unnat had presumed that the processes and methods for making

nanomaterial from Neti leaves would contain the same therapeutic value of Neti leaves ....... 3

[1.3]. The Patent for the process and product of Neti nanoparticles would not have been

granted by the BPO regardless of whether complete knowledge was provided by Unnat or not

.................................................................................................................................................... 5

ISSUE II : WHETHER THE REFUSAL OF THE BNC TO UNNAT’S SRA WOULD

BE CONSTRUED AS WILFUL CONCEALMENT OF INFORMATION AND

WHETHER THE SAME IS IN VIOLATION OF THE INTERNATIONAL

OBLIGATIONS AND OF PRINCIPLES OF THE UDHGHR, IDHGD, UDBHR? ........ 5

[2.1]. Unnat was ready to undertake more research and assist Baati with the plan of Special

and Required Assistance as demanded by the circumstances which were unforeseeable ......... 6

[2.2]. The UDHGHR, IDHGD, UDBHR are non-binding in nature ........................................ 6

[2.3]. Effective flow of technology has occurred from Unnat to Baati ..................................... 8


(ii) Written Submissions on behalf of the Respondents

[2.4]. Baati has violated the Basic Principle contained within Article 2 of the UN Charter as a

result of rejecting the plan for Special and Required Assistance ............................................. 10

ISSUE III : WHETHER THE GOVERNEMENT OF UNNAT BE MADE

RESPONSIBLE FOR SITUATIONS NOT CONTEMPLATED WITHIN THE

AGREED TERMS AND CONDITIONS OF THE SPA AND TO THAT EFFECT FOR

LEGAL OBLIGATIONS NOT SEPCIFIED IN THE SPA? ............................................ 10

[3.1]. That what governs responsibilities under a contract is the intention to be bound by its

terms and conditions specified therein and construed accordingly ........................................ 11

[3.2]. That the terms and conditions specified within the agreement appears comprehensive in

its scope and self-sufficient in nature leaving no scope of extrinsic evidentiary analysis ...... 12

[3.3]. That the democratic republic of Unnat should not be levied with any liability which

could not have been averted through cooperation with Baati ................................................. 14

ISSUE IV : WHETHER THE GOVERNMENT OF UNNAT BE MADE

RESPONSIBLE FOR CIRCUMSTANCES BEYOND THEIR CONTROL AND NOT

IN FORSEEABLE CONTEMPLATION OF RISKS AND FOR RESULTING

LOSSES? ............................................................................................................................... 15

[4.1]. That impossibility of performance caused due to events supervening and to the effect

beyond the control of Unnat could not hold it responsible for non-performance .................... 16

[4.2]. That the ensuing events and to that their consequences were never in foreseeable

contemplation of risks among the parties before or at the time of entering the contract ......... 17

[4.3]. That the resulting losses cannot be attributed to any default or neglect on the part of

Unnat and were independent .................................................................................................... 18

ISSUE V : WHETHER THE GOVERNEMNT OF BAATI SHALL BE ORDERED TO

PAY FOR THE LOSSES INCURRED BY THE GOVERNEMNT OF UNNAT? ........ 19

[5.1]. Baati breached the responsibility owed by it to Unnat and this breach of a State

responsibility entails reparations against Baati, to compensate Unnat for all losses it incurred

as a result of the wrongful act .................................................................................................. 20


(iii) Written Submissions on behalf of the Respondents

[5.2]. The Breach of the agreement by Baati will entail contractual damages as laid down

under various State Laws, Conventions and Principles .......................................................... 23

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

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. Hon’ble - 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 - Queen’s 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


(iv) Written Submissions on behalf of the Respondents

INDEX OF AUTHORITIES

Judicial Precedents

Case Name Page no.

Aetna Casualty & Sur. Co. vs. Day 487 So. 2d 830, 835 (Miss.

1986)

23

Application of the Convention on the Prevention and Punishment

of the Crime of Genocide (Bosnia and Herzegovina vs. Serbia and

Montenegro) 1996 I.C.J. 595 31

21

Armed Activities on the Territory of Congo (Democratic Republic

of the Congo vs. Uganda) 2005 I.C.J. 168

11

Arrest Warrant Case (Democratic Republic of the Congo vs.

Belgium) 2000 I.C.J 3

21

Bank Line Ltd. vs. Arthur Capel & Co. (1919) A.C. 435 17

Bank of Australasia vs. Palmer [1897] A.C. 540 12

BP Refinery (Westernport) Pty Ltd vs. Shire of Hastings (1977) 52

A.L.J.R. 20

14

British Sugar vs. Projects Limited (1997) 87 B.L.R. 42 22

Case Concerning Aerial Incident (Iran vs. United States) 1988

I.C.J. 161

21

CME vs. Czech Republic 9 I.C.S.I.D. Rep. 113, 238-9 (2001) 21

Doyle vs. Gordon 158 N.Y.S.2d 259 1

Evans vs. Roe (1872) L.R. 7 C.P. 138 12

Factory at Chorzow (Merits), P.C.I.J. Order of the Court, (ser. A),

No. 17 ¶ 4

20, 21

Gabčíkovo-Nagyamaros Project (Hungary vs. Slovakia) 1997

I.C.J. 7

20, 21


(v) Written Submissions on behalf of the Respondents

Goss vs. Lord Nugent (1833) 5 B. & Ad. 58 11

Hadley vs. Baxendale 9 Ex. 341, 156 Eng. Rep. 145 (1854) 22, 23

Harris vs. Rickett (1859) 4 H. & N. 1 12

Henderson vs. Arthur [1907] 1 K.B. 10 12, 13

Case Name Page No.

Imperial Chemical Industries Ltd. vs. Controller General of

Patents, Designs & Trade Marks A.I.R. 1978 Cal. 77

5

Inglis vs. Buttery (1878) 3 App. Cas. 552 12

Inntrepreneur Pub Co Ltd. vs. East Crown Ltd [2000] 2 Lloyd’s

Rep. 611

13

Lallubhai Chakubhai vs. Chimanlal Chunilal A.I.R. 1936 Bom.

99

5

Land and Maritime Boundary between Cameroon and Nigeria

(Cameroon vs. Nigeria: Equatorial Guinea intervening) 2002

I.C.J. 303

1

Leggot vs. Barrett (1880) 15 Ch.D. 306 12

Liverpool City Council vs. Irwin (1977) A.C. 239 14

London Export Corp. Ltd. vs. Jubilee Coffee Roasting Co. Ltd.

[1958] 1 W.L.R. 661

13

Luxor (Eastbourne) Ltd vs. Cooper [1941] A.C. 108 14

Mackay vs. Dick (1881) 6 App. Cas. 251 14

Mariappan vs. A.R. Safiullah (2008) 5 C.T.C. 97 4

Matthew vs. Blackmore (1857) 1 H. & N. 762 12

Mercantile Agency Co. Ltd. vs. Flitwick Chalybeate Co. (1897) 14

T.L.R. 90

12

Mercantile Bank of Sydney vs. Taylor [1893] A.C. 317 12

Miller vs. Travers (1832) 8 Bing. 244 12

Moleculon Research Corp. vs. CBS Inc.793 F.2d 1261 (Fed. Cir.

1984)

13

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

France) 1974 I.C.J. 253

1, 11


(vi) Written Submissions on behalf of the Respondents

Papamichalopoulos and others vs. Greece App. No. 14556/89,

Eur. Ct. H.R. Series A No 330-B (1995)

21

Parker vs. South Eastern Ry. (1877) 2 C.P.D. 416 11

Pickering vs. Dowson (1813) 4 Taunt. 779 12

Case Name Page No.

Reparation for Injuries Suffered in the Service of the United

Nations 1949 I.C.J. 174

21

Saint Line vs. Richardsons Westgarth & Co. Ltd. [1940] 2 K.B. 49 22

The Lusitania case 7 R.I.A.A. 32 (1923) 21

The Moorcock (1889) 14 P.D. 64 14

Velasquez Rodriguez vs. Honduras (Reparations and Costs) Inter-

Am. Ct. H.R., (ser. C), No. 7 (1989)

21

White vs. Unigard Mut. Ins. Co. 730 P.2d 1014, 1017 (Idaho

1986)

23

Essays, Articles and Journals

1. Brian Shephard, Norm Supercompliance and the Status of Soft Law, 62 Buff. L. Rev.

787 (2014) ..................................................................................................................... 7

2. George Schwazenberger, A Manual of International Law: Recognition, consent,

responsibility, self-defence and freedom of the seas, 4 Toronto L.J. 137 (1960) .... 1,5

3. Marko Divac Öberg, The Legal Effects of Resolutions of the UN Security Council and

General Assembly in the Jurisprudence of the ICJ, 16 Eur. J. of Int’l L. 885 (2006).

7

4. Michael Kirby, Human Rights and Bioethics: The Universal Declaration of Human

Rights and Universal Declaration of Bioethics and Human Rights, 25 J. of Contemp.

Health L. & Pol’y 316 (2009) ..................................................................................... 8

5. Pedro Roffe, Transfer of Technology: UNCTAD's Draft International Code of

Conduct, 19 The Int’l Lawyer 693 (1985) .................................................................. 8


(vii) Written Submissions on behalf of the Respondents

6. Roberto Andorno, Global Bioethics at UNESCO: In defence of the Universal

Declaration on Bioethics and Human Rights, 33 J. of Med. Ethics 151 (2007) ......... 7

7. United Nations: Conference on an International Code of Conduct on the Transfer of

Technology, 19 International Legal Materials 779 (1980) ......................................... 9

8. Wallace Gray & A.P. Martinich, Good Faith Among Nations, 2 Int’l J. on World

Peace 34 (1987) ............................................................................................................ 1

Books

1. G. H. Treitel, Frustration and Force Majeure (Sweet & Maxwell 2004) .......... 16

2. Ling Liu, The Doctrine of Frustration: An Overview of English Law 271 (1st ed.

OUP) ........................................................................................................................... 16

3. Bruno Simma, The Charter of the United Nations (3rd ed. OUP) ....................... 1,2,10

4. Dr. B.L. Wadhwa, Law Relating to Intellectual Property (5th ed. Universal Law

Publishing Co.) ............................................................................................................. 3

5. Felicity Callard, Mental illness, discrimination, and the law: Fighting for Social

Justice (1st ed. Wiley-Blackwell 2012) ........................................................................ 7

6. Roberto Andorno, Principles of International Biolaw: Seeking common ground at the

intersection of Bioethics and Human Rights (1st ed. Bruylant 2013) ........................... 8

7. Stephen Tully, International Documents on Corporate Responsibility (Edward Elgar

Publishing Ltd. 2005) .................................................................................................... 9

8. Ndubuisi Ekekwe, Nanotechnology and Microelectronics: Global Diffusion,

Economics and Policy (Hershey New York 2011) ....................................................... 9

International Instruments

1. Declaration on Principles of International Law concerning Friendly Relations and Co-

operation 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.


(viii) Written Submissions on behalf of the Respondents

6. UNCTAD’s 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).

STATEMENT OF JURISDICTION

The Respondents have the honour to humbly submit before the Hon’ble International Court

of Justice, the Memorandum for the Respondents 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.


(ix) Written Submissions on behalf of the Respondents

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


(x) Written Submissions on behalf of the Respondents

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 Organization. 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

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]. COMMENCEMENT 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 secured-

document 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


(xi) Written Submissions on behalf of the Respondents

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

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


(xii) Written Submissions on behalf of the Respondents

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.

ISSUES PRESENTED

[A]. Whether the Government of Unnat has not violated any obligation; basic principle of

Article 2 of the United Nations Charter to act in good faith in the performance of obligations,

and that the Special Purpose Agreement is entered by both the parties through democratic and

consensual method whereby all the information available in their legal domain in relation to

nanoparticle have been classified and its technology was transferred through UNNATI with

utmost bona-fide and, hence this presumption of violation of law stands without any legal

basis and be not allowed to raise before the court?

[B]. Whether the Government of Unnat was ready to undertake more research and assist

the Baati National Corporation with the plan of Special and Required Assistance as

demanded by the circumstance and situation domestically and internationally that was not

contemplated and those of which was not agreed by the Federal Republic of Baati and, but

consequently refused and, hence this shall not be construed as willful concealment of

information or male fide in the transfer of technology?


(xiii) Written Submissions on behalf of the Respondents

[C]. Whether the Government of Unnat cannot accept responsibility for situations not

contemplated in the agreed terms and conditions of the Special Purpose Agreement and,

hence has not accepted any other legal obligations not specified in the Special Purpose

Agreement?

[D]. Whether the Government of Unnat shall not be held responsible for circumstances

that are beyond their control and not in the foreseeable contemplation of risks and, hence they

are not responsible for the losses?

[E]. Whether the Government of Baati be ordered to pay for the losses incurred by the

Government of Unnat as they have transferred all the nano knowledge available in their legal

domain without accruing any benefit and, hence Government of Baati shall be ordered to pay

for the losses?

Summary of Arguments

Issue I : That Unnat has not 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

It is humbly submitted that the Unnat has not violated the basic principle as contained within

Article 2(2) of the UN Charter and acted in good faith in the performance of the obligations.

All the technical know-how which was available with Unnat had been transferred to Baati,

even though the SPA clearly mentioned a requirement for the transfer of only 70% of the

same and this highlights the Good faith with which Unnat has performed the obligations

which it was bound to perform in accordance with the SPA. It is further contended that no

question pertaining to the breach of the principle of Good Faith is maintainable in light of

both the countries premise upon which the assumption in relation to the efficacy of the

nanomolecule was based on was itself erroneous and Unnat cannot be held responsible for

this oversight.


(xiv) Written Submissions on behalf of the Respondents

Issue II : That the refusal of the BNC to Unnat’s Special and Required Assistance would be

construed as wilful concealment of information and whether the same is in violation of the

international obligations and of principles of the UDHGHR, IDHGD, UDBHR

It is contended before this Hon’ble Court that Unnat was ready to undertake more research

and assist the BNC with a plan of Special and Required Assistance as demanded by the

circumstances which were not contemplated but the same was subsequently refused and the

same shall not be construed as wilful concealment of information or malafide TOT.

Declarations in principle only interpret or restate the law, in which case they have no legal

effect and do not contain binding determinations or have (dis)empowering effects. Lastly,

effective TOT has flowed from Unnat to Baati.

Issue III : That the Government of Unnat should not be made responsible for situations not

contemplated within the agreed terms and conditions of the Special Purpose Agreement, and

to that effect for legal obligations, not specified within the SPA

An agreement generally being a cluster of bipartite negotiations penned formally, determines

the legal obligations that parties to it shares on a settlement reached taking into consideration

the respect for their rights and duties arising consequently. That it is submitted that the

obligations, procedures and operation asserted in relation to the material terms which

underlies the basic purpose of the agreement when stated in clear and fault-free expressions

comprehends the explicit framework of performance which form an essential part of the

agreement entered into. No additional burden of implicated obligations is levied upon Unnat

on grounds that the touchstone to determine the same is necessity rather than reasonableness.

Issue IV : That the Government of Unnat should not be made Responsible for Circumstances

beyond Their Control and Not in the Foreseeable Contemplation of Risks and, for Resulting

Losses?

Neglect does not form part of the transaction when a party to the contract, by virtue of the

position given through the contractual obligations and by exercise of its personal authority is

unable to make any adverse impact upon the course of performance of the agreement so

reached. When extraordinary or supervening events occur, without the default of either of the


(xv) Written Submissions on behalf of the Respondents

parties and these events radically and significantly alter the nature of the contractual rights

and obligations of the parties. It is submitted that it is to be appreciated that a party to a

contract is liable only to the extent of its duty in regard to what was voluntarily assumed and

mutually bestowed. One cannot be held responsible for risks coming into being which were

otherwise beyond the purview of the agreement itself.

Issue V : That the Government of Baati shall be ordered to pay for the losses incurred by the

Government of Unnat

The respondent would also like to bring the notice of this court, that as a result of the state of

Baati defaulting upon its obligations emanating from the SPA, the medicine never came to

frution and hence the benefits which were due to Unnat, never came to be. The respondent

additionally, brings to the notice of the court that Unnat has fulfilled its part of the promise

and even offered the SRA to ensure that the Neti project is completed in spite of

impediments, however Baati has refused to accept the same, thereby the lack of funding

effectively frustrating the contract and judicial propriety demands that Baati has to pay for the

loss of profits caused to Unnat as a result of non-fulfilment of the contractual obligations.


(1) Written Submissions on behalf of the Respondents

Arguments in Detail

Issue I : 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 Hon’ble Court that the Democratic Republic of Unnat

(through the UNC) has not violated the basic principle as contained within Article 2(2) of the

UN Charter and acted in good faith in the performance of the obligations.[1.1] The Federal

Republic of Baati (hereinafter referred to as “Baati) as well as the Democratic Republic of

Unnat (hereinafter referred to as “Unnat”) had erroneously presumed that the processes and

methods for making nanomaterial from Neti leaves would contain the same therapeutic value

of Neti leaves while contrary evidence was also available. [1.2] Lastly, The Patent for the

process and product of the Neti leaves Nanoparticles would not have been granted by the

BPO regardless of whether complete knowledge was provided by Unnat or not. [1.2]

[1.1] THE DEMOCRATIC REPUBLIC OF UNNAT HAS NOT VIOLATED THE

BASIC PRINCIPLE CONTAINED WITHIN ARTICLE 2 OF THE UN CHARTER

2. 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’.1 The principle of good faith is

binding principle of the UN charter2 and is defined as standard of performance by nations in

their mutual relations.3 The ICJ has defined this principle in the Nuclear Tests Case4 as,

“[o]ne of the basic principles governing the creation and performance of legal obligations”.

Another Court interpretation of the meaning of good faith has been stated as “an intangible

quality with no technical meaning or statutory definition and it encompasses among other

things, an honest belief, the absence of malice and the absence of design to defraud or to seek

an unconscionable advantage”5 In the case of Cameroon vs. Nigeria: Equatorial Guinea

1 Bruno Simma, The Charter of the United Nations 168 (3rd ed. OUP). 2 George Schwazenberger, A Manual of International Law: Recognition, consent, responsibility, self-defence and freedom of the seas, 4 Toronto L.J. 137, 137-138 (1960). 3 Wallace Gray & A.P. Martinich, Good Faith Among Nations, 2 Int’l J. on World Peace 34 (1987). 4 Nuclear Tests Cases (Australia v. France; New Zealand v. France), 1974 I.C.J. 253 (Dec. 20). 5 Doyle v. Gordon, 158 N.Y.S.2d 259, 259-260 (Cal. 2013).



intervening6, observed that the principle of good faith is a well-established principle of

international law and that it 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.7

3. All the technical know-how which was available with Unnat had been transferred to Baati

through UNNATI even though the SPA clearly mentioned a requirement for the transfer of

only 70% of the same and this highlights the Good faith with which Unnat has performed the

obligations which it was bound to perform in accordance with the SPA. Furthermore, as all

knowledge had been supplied through UNNATI, it would be inequitable and prejudiced to

hold Unnat to have breached the principle of Good Faith as they themselves had no

information in relation to the adverse effects of nanoparticle. Hence, the presumption of

violation of law stands without any legal basis and should not be allowed to be raised before

this Hon’ble Court.

[1.2] BOTH BAATI AND UNNAT HAD ERRONEOUSLY PRESUMED THAT THE

PROCESSES AND METHODS FOR MAKING NANOMATERIAL FROM NETI LEAVES

WOULD CONTAIN THE SAME THERAPEUTIC VALUE OF NETI LEAVES

4. It is further contended before this Hon’ble Court that no question pertaining to the breach

of the principle of Good Faith is maintainable in light of both the countries premise upon

which the assumption in relation to the efficacy of the nanomolecule was based on was itself

erroneous and inaccurate and Unnat cannot be held responsible for this oversight.

5. Presently, both parties had inadvertently speculated on the notion that due to the

therapeutic nature of Neti leaves if the process as given in UNNATI would give the expected

outcome.8 This premise was based on the study conducted by Mruti, who claimed in his

independent study in his own laboratory that the juice from the leaves of Neti when

compressed, its molecules taken, then broken and reduced to infinitesimal sizes, then it has a

higher rate of curing liver cancer. This was partially supported by the WHO, which submitted

6 Land and Maritime Boundary between Cameroon and Nigeria (Cameroon v. Nigeria: Equatorial Guinea intervening), 2002 I.C.J. 303 (June 11). 7 SIMMA, supra note 1, at 95. 8 Moot Proposition ¶ 13.



a report which showed an estimate of close to 80% of the population from Asian and African

countries who use herbs as a medicine in preventive health care.9 Furthermore, a team of

experts comprising of Baati scientists submitted a report with enthusiasm highlighting the

possibilities of the same. Lastly, Unnat’s bona fide transfer of technology did come to fruition

as nanoparticles were successfully extracted from the Neti leaves, however the characteristics

possessed by the same were contrary to that of the actual Neti leaves and subsequently to the

expected efficacy of the same.

Therefore, in light of the error being committed by both the countries as well as Unnat

providing all the technical know-how through UNNATI, Unnat has met the requisite

contained in the principle of Good Faith and has also met the provisions as contained within

the SPA.

[1.3] THE PATENT FOR THE PROCESS AND PRODUCT OF NETI NANOPARTICLES

WOULD NOT HAVE BEEN GRANTED BY THE BPO REGARDLESS OF WHETHER

COMPLETE KNOWLEDGE WAS PROVIDED BY UNNAT OR NOT

6. It is submitted before this Hon’ble Court that the patent for the process and product of the

Neti leaves Nanoparticles would not have been granted regardless of whether complete

knowledge was provided by Unnat or not. The element of novelty in the present case is

absent [1.2.1] and in addition to the same it does not involve an inventive step.[1.2.2]

7. In the case at hand, the Law of Baati is pari materia to that of the Indian Law.10 In

furtherance of the same, in accordance with the Indian Patent Act, 1970, for getting a patent

there must be an invention11 and that invention must be patentable12 that is, (a) it must be

novel, (b) it must involve an inventive step, (c) it must be capable of industrial application,

(d) it must not fall within the subject-matter specifically excluded or made subject to

exception.

[1.3.1]. The process and product of the Neti Nanoparticles lacked novelty

9 Moot Proposition ¶ 9. 10 Moot Clarifications, Page 1. 11 Dr. B.L. Wadhwa, Law Relating to Intellectual Property 6 (5th ed. Universal Law Publishing Co.). 12 Patents Act 1970 sec 1(j).



8. Presently, the process and product of the medicine lacked novelty, without which patent

could not be granted regardless of whether complete knowledge had been provided or not.

9. An invention is said to be new if it has not been anticipated by publication in any

document or used in the country or elsewhere in the world before the date of filing of the

patent application i.e. the subject-matter has not fallen in public domain or does not form part

of the “state of the art”.13 The novelty requirement does not require absolute novelty, but

rather that a claimed invention not be found within the public knowledge.14 In an originality

case the issue is not who the first or prior inventor is, but who made the invention. Where one

party discloses a complete conception of an invention to a second party, who then through

testing demonstrates the effectiveness of the conceived invention for the contended purpose,

the work performed by the second party inures to the benefit of the original party.15 The

Supreme Court of India in Bishwanath Prasad Radhey Shyam vs. Hindustan Metal

Industries16 held that it is essential for the validity of the patent that it must be the inventor’s

own discovery as opposed to a mere verification of what was already known before the date

of invention.

10. Presently, it was Mruti who first claimed in his study that the juice from leaves of Neti

when compressed, molecules taken, then broken and reduced to infinitesimal sizes, its

effectivity of cure of liver diseases especially liver cancer increases.17 Hence, patent could

not have been granted to Baati as it was Mruti who first brought attention to the therapeutic

value of Neti Nanoparticles through a presentation in one of the international forums and

hence the claim made by Baati for a grant of patent lacked the essential element of novelty.

[1.3.2]. The claim made by Baati did not involve an inventive step

11. It is submitted that the claim made by Baati did not have any involvement of an inventive

step as Mruti had already enunciated the use and advantages of Neti Nanoparticles and Baati

made no technical advancement to the same whatsoever and utilized knowledge that was

already available through Mruti’s study which was conducted in his laboratory and his

presentation which was contributed in an international forum.

13 Patents Act 1970, sec 1(l). 14 Moleculon Research Corp. v. CBS Inc., 793 F.2d 1261 (Fed. Cir. 1984). 15 Applegate v. Scherer, 332 F.2d 571 (C.C.P.A. 1964). 16 (1979) 2 S.C.C. 511. 17 Moot Proposition ¶ 8.



12. Section 2(ja) of the Patents Act, 1970 defines inventive step which means a fixture of an

invention that involves technical advance as compared to the existing knowledge or having

economic significance or both and makes the invention not obvious to the person skilled in

the art. Inventive step is one essential ingredient of an invention and such step must exist for

grant of patent.18 The philosophy behind the doctrine of obviousness is that the public should

not be prevented from doing anything, which is merely an obvious extension or workshop

variation of what was already known at the prior date.19 The claim for a patent on an

invention should not be based merely on an application of an old invention which would be

no more than a workshop improvement.20

13. [ARGUENDO] : Even if it is assumed that the product and process did not lack novelty

and involved an inventive step, the product and process patent would not be granted as the

same was in the nature of discovery rather than invention. Patent can only be provided for

invention and not discovery.21 A discovery adds to the amount of human knowledge, but it

does so merely by lifting the veil and disclosing something which earlier was unseen or dimly

seen. An invention also adds to human knowledge, but not merely by disclosing something

which was earlier present. An invention necessarily involves also the suggestion of an act to

be done and it must be an act which results in new product, new result or new combination

for producing an old product or result.22 In the present case, Mruti had already claimed that

the efficacy of Neti increased when compressed, its molecules taken, then broken and

reduced to infinitesimal sizes23 A similar process had been followed by Baati scientists as can

be seen through the information supplied through UNNATI and hence a patent would not

have been granted as both the product and process were in nature of a discovery rather than

an invention.

Issue II : Whether the refusal of the BNC to Unnat’s Special and Required Assistance would

be construed as wilful concealment of information and whether the same is in violation of the

international obligations and principles of the UDHGHR, IDHGD, UDBHR?

18 Mariappan v. A.R. Safiullah, (2008) 5 C.T.C. 97. 19 PLG Research Ltd. v. Ardon International Ltd., 1995 F.S.R 116. 20 SCHWARZENBERGER, supra note 2. 21 Imperial Chemical Industries Ltd. v. Controller General of Patents, Designs & Trade Marks, A.I.R. 1978 Cal. 77. 22 Lallubhai Chakubhai v. Chimanlal Chunilal, A.I.R. 1936 Bom. 99. 23 Supra note 17.



14. It is contended before this Hon’ble Court that Unnat was ready to undertake more

research and assist the BNC with a plan of Special and Required Assistance as demanded by

the circumstances which were not contemplated but the same was subsequently refused and

the same shall not be construed as wilful concealment of information or malafide TOT.[2.1]

Additionally, it is submitted that the UDHGHR, IDHGD and the UDBHR are non-binding in

nature [2.2] and that Unnat has effectively transferred all technical know-how within their

legal domain without any malafide manifestation. [2.3] Lastly, Baati has breached the

Principle of Good Faith contained within Article 2 of the UN Charter as a result of rejecting

the Special and Required Assistance.

[2.1] UNNAT WAS READY TO UNDERTAKE MORE RESEARCH AND ASSIST BAATI

WITH THE PLAN OF SPECIAL AND REQUIRED ASSISTANCE AS DEMANDED BY

THE CIRCUMSTANCES WHICH WERE UNFORSEEABLE

15. In the present case at hand, both the States entered into an SPA for the sole purpose for

the innovation, production and manufacturing of life-saving drugs of liver cancer out of small

plant by the name Neti which grows abundantly in Unnat.24 In view of Baati being a

developing country and considering that Baati had not yet reached an optimum level to

combine and develop the two decisive factors in requirement to achieve the aforementioned

goals, indigenously, Unnat sought to supplement them by providing the technical know-how

to produce Neti nanoparticles. Even though the obligation conferred upon Unnat by the

provisions of the SPA required them to only supply 70% of the technical know-how they

supplied all the knowledge of nanoscience available in their legal domain, highlighting there

Good Faith.

16. However, as the premise upon which it was based upon was dismally flawed due to which

the desired end-product could not obtained. It was presumed by both the parties to the SPA

that the approaches, method and manner as given in UNNATI would give the expected

outcome.25 In order to remedy the same an immediate plan for Special and required

assistance was made to the Government of Baati, however, the same was promptly rejected

by the same.

17. Therefore, to conclude, no contention in regards to the malafide concealment of

information should be permitted to be raised by Baati as firstly, neither of the parties had 24 Moot Proposition ¶ 8. 25 Moot Proposition ¶ 13.



foreseen such a disastrous result corresponding to the production of Neti nanoparticles,

secondly all the technical knowledge present in Unnat’s legal domain was transferred to Baati

and thirdly, Baati out rightly rejected the plan of Special and Required Assistance, which was

proposed by Unnat, to undertake more research as demanded by the circumstance and

situation domestically and internationally which were not contemplated.

[2.2] THE UDHGHR, IDHGD AND THE UDBHR ARE NON-BINDING IN NATURE

18. The Universal Declaration on Human Genome and Human Rights, International

Declaration on Human Genetic Data and Universal Declaration on Bioethics and Human

rights are documents issued by UNESCO and like any declaration adopted by UN agencies

these UNESCO document makes up part of the so-called soft law instruments – that is

instruments which are weaker than conventions because they are not intended to oblige States

to enact enforceable rules inspired by the common standards but to merely encourage them to

do so.26 Declarations in principle only interpret or restate the law, in which case they have no

legal effect and do not contain binding determinations or have (dis)empowering effects.27 The

term “declaration” is often deliberately chosen to indicate that the parties do not intend to

create binding obligations but merely want to declare certain aspirations.28 These declarations

therefore constitute of soft-law which themselves only consist of general norms or principles

and not rules.29 Obligations under soft-law have been characterised by Prosper Weil as being

“neither soft laws nor hard laws: they are simply not law at all”.30

19. Therefore, it can be quite clearly seen that the aforementioned definitions of Declarations

that they do not cast any legally-binding obligations on the parties involved. Being soft-laws

in nature no binding obligations are formed but rather they are in the nature of

recommendations which merely lay down principles or norms rather than binding-rules. In

view of the very nature of declarations and the purposes which it seeks to seeks to satisfy,

establish the non-committing and non-binding value of the same. Lastly, it can be quite

evidently and plainly seen that by virtue of the very nature leading to the formation of 26 Roberto Andorno, Global Bioethics at UNESCO: In defence of the Universal Declaration on Bioethics and Human Rights, 33 J. of Med. Ethics 151 (2007). 27 Marko Divac Öberg, The Legal Effects of Resolutions of the UN Security Council and General Assembly in the Jurisprudence of the ICJ, 16 Eur. J. of Int’l L. 885 (2006). 28 Definition of key terms used in the UN Treaty Collection, U.N.T.C., https://treaties.un.org/Pages/overview.aspx?path=overview/definition/page1_en.xml (last visited Aug. 3, 2015). 29 Alan E. Boyle, Some Reflections on the Relationship of Treaties and Soft Law, 4 The Int’l & Comp. L. Q 25 (2000). 30 Brian Shephard, Norm Supercompliance and the Status of Soft Law, 62 Buff. L. Rev. 787 (2014).



“declarations”, the same does not legally bind Unnat to follow or to meet the expectations or

the principle enshrined within the same.

20. It is further submitted that the UDHGHR, IDGHD and the UDBHR adopted by the

UNESCO is non-binding in nature and does not confer upon any legally binding obligations

in regards to the States involved. The UDHGHR is a non-binding international instrument

which only seeks to lay down basic principles which are inherently concerned with the rights

of persons in relation to human genome research.31 The IDGHD is regarded as an extension

of the UDHGHR and also retains the non-binding nature as exhibited by the aforementioned

Declaration.32 As a non-binding instrument, the declaration must be incorporated by

UNESCO’s member states into their national laws, regulations or policies in order to take

effect. The IBC, which was responsible for preparing the aforementioned international

instrument itself recommended that this instrument be declaratory in nature (that is, non-

binding).33 None of the provisions contained within the UDBHR are binding upon the

member states of the UN.34

21. Therefore, to summarize, all three Declarations do not cast any legally-binding

obligations on the parties involved and are merely recommendatory in nature. To raise claims

alleging a violation of provisions as contained within the aforementioned provisions would be

grossly prejudicial against Unnat especially since the very nature of Declarations and the

reason they are adopted is merely to declare certain aspirations which should be met.

[2.3] EFFECTIVE FLOW OF TECHNOLOGY HAS OCCURRED FROM UNNAT TO

BAATI

22. It is submitted before this Hon’ble Court that bona fide, effective and successful TOT

(transfer of technology) has taken place in the case at hand. The UNCTAD’s Code of

Conduct defines TOT as the systematic knowledge for the manufacture of a product, for an

application of a process or for the rendering of a service and highlights the principle of

31 Felicity Callard, Mental illness, discrimination, and the law: Fighting for Social Justice 200 (1st ed. Wiley-Blackwell 2012). 32 Roberto Andorno, Principles of International Biolaw: Seeking common ground at the intersection of Bioethics and Human Rights 228 (1st ed. Bruylant 2013). 33 Adele Langlois, The UNESCO Universal Declaration on Bioethics and Human Rights: Perspectives from Kenya and South Africa, U.S.P.M.C., http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2226192/ (last visited Aug. 3, 2015). 34 Michael Kirby, Human Rights and Bioethics: The Universal Declaration of Human Rights and Universal Declaration of Bioethics and Human Rights, 25 J. of Contemp. Health L. & Pol’y 316 (2009).



mutuality and also of mutual confidence between the parties involved.35 The concept of

‘transfer’ implies that technology must flow from one undertaking to another.36 On the basis

of the plethora of definitions abovementioned, it is contended that bona fide and effective

TOT has taken place. Unnat, through UNNATI supplied the technical know-how in totality

which and as a result of which, Baati was able to successfully produce Neti nanoparticles.37

The efficacy was unknown to both the parties involved, by virtue of which Unnat was unable

to furnish information in those regards. The terms of the SPA are clear in relation to the

amount of know-how to be transferred and the requisite laid down has also been met. Not

only has flow of technical know-how been achieved from Unnat to Baati, but also the SPA

also is based upon mutuality and the same has been entered into by both parties through a

democratic and consensual process.

[2.3.1]. The Obligations conferred upon Unnat through the international framework of TOT

has been met

23. It is further submitted that the responsibilities and obligations, within the TOT framework

which are conferred upon Unnat, as a Supplying Unit (SU) towards Baati, the host, have been

diligently adhered to. Two prominent responsibilities can be seen in the form of the two

basic principles upon which UNCTAD’s Code of Conduct is based upon are firstly, that

States involved should employ all appropriate means of facilitating and regulating the transfer

of technology, in a manner consistent with their international obligations and taking into

consideration of the legitimate interests of the parties concerned and secondly, that mutual

benefits should accrue to the technology supplying and recipient parties in order to maintain

and increase the international flow of technology.38 Another pertinent responsibility is that of

the SU’s commitment that the relevant technical documentation and other data required from

the SU for a particular purpose defined in terms directly specified in the agreement will be

35 Pedro Roffe, Transfer of Technology: UNCTAD's Draft International Code of Conduct, 19 The Int’l Lawyer 693 (1985). 36 Guidelines on the application of Article 101 of the Treaty on the Functioning of the European Union to Technology Transfer Agreements, 3 Official Journal of European Union 354 (2014). 37 Moot Proposition ¶ 16. 38 United Nations: Conference on an International Code of Conduct on the Transfer of Technology, 19 International Legal Materials 779 (1980).



transferred in a timely manner and as correctly and completely for such purpose agreed

upon.39

The responsibilities have been duly met by Unnat, as Unnat has facilitated not only the TOT

but has also aided Baati in conducting the further clinical trials and laboratory procedure by

providing complete procedural knowledge to produce nanoparticles from Neti and the same

was found to be comprehensive as nanoparticles of Neti leaves were successfully produced.

Furthermore, not only would both the parties have accrued mutual benefits upon the

successful completion of the SPA but additionally, all relevant know-how available in

Unnat’s legal domain has been furnished in a timely manner to serve the common purpose of

both the parties.

Lastly, TOT is not solely the responsibility of the research group trying to get its results put

into practice. There is growing recognition that TOT now is both the SU’s and the hosts

responsibility40 and in view of the same that holding Unnat liable for deliberately concealing

the adverse effects of the nanoparticles would be extremely prejudicial especially since

neither of the parties knew or were aware of the efficacy of the same.

[2.4] BAATI HAS VIOLATED THE BASIC PRINCIPLE CONTAINED WITHIN

ARTICLE 2 OF THE UN CHARTER AS A RESULT OF REJECTING THE PLAN FOR

SPECIAL AND REQUIRED ASSISTANCE

24. It is submitted that in view of Baati deliberately rejecting the plan for Special and

Required Assistance, the same constitutes as a breach of the principle of Good Faith as

contained within Article 2. Both Unnat and Baati being member of the UN are bound by the

articles of the UN Charter, by virtue of it being the constituent treaty of the UN.41 In relation

to the aforementioned definitions and interpretations of the same, Baati had a noticeable duty

and obligation owed to Unnat, which was that of ensuring the production of Neti medicine,

especially in view of all TOT having occurred already. Baati’s action has prevented the

collaboration from reaching materialization and fruition. The sole purpose Unnat entered into

an SPA with Baati was for the development of the Neti drug to eradicate liver cancer. Baati

has malafidely jeopardized this collaboration by rejecting assistance offered by Unnat

39 Stephen Tully, International Documents on Corporate Responsibility 596 (Edward Elgar Publishing Ltd. 2005). 40 Ndubuisi Ekekwe, Nanotechnology and Microelectronics: Global Diffusion, Economics and Policy 330 (Hershey New York 2011). 41 SIMMA, supra note 1, at 170.



rendering all technical know-how supplied and assistance provided by Unnat to be rendered

superfluous and redundant and in doing so has also breached the Principle of Good Faith as

contained within Article 2 of the UN Charter.

Issue III: Whether the Government of Unnat be made responsible for situations not

contemplated within the agreed terms and conditions of the Special Purpose Agreement, and

to that effect for legal obligations, not specified within the Special Purpose Agreement?

25. That it is humbly submitted before the Ld. Bench that liabilities arising out of a written

agreement must be weighed as against the scope and specifications set out by the agreement

reached between the parties mutually, thereby upholding the claims and contentions very

aptly put forth that in absence of any specifications to the required effect, the Democratic

Republic of Unnat shall not be held liable for situations beyond reasonable contemplation,

not commensurate with and out of the scope of performance as agreed by and among the

parties.[3.1]Appending further, the same being not part of the agreement could not impose

any further legal obligations other than what has been mutually agreed and composed which

enables the Respondents herein to seek an outright rejection of the allegations put forth.[3.2]

[3.1] THAT WHAT GOVERNS RESPONSIBILITIES UNDER A CONTRACT IS THE

INTENTION TO BE BOUND BY ITS TERMS AND CONDITIONS SPECIFIED THEREIN

AND CONSTRUED ACCORDINGLY

26. An agreement generally being a cluster of bipartite negotiations penned formally,

determines the legal obligations that parties to it shares on a settlement reached taking into

consideration the respect for their rights and duties arising consequently.42This in turn

establishes that statements of such effect can create legal obligations if they are made in clear

and specific terms43 and if their legal effect evaluated through their actual content as well as

the circumstances in which they were made44 points towards such consensus reached among

the parties which renders the arrangement legally binding in the course of the performance of

responsibilities undertaken thereto. Under these circumstances it must be considered that the

42 Case Concerning Armed Activities on the territory of Congo (Democratic Republic of the Congo v. Uganda), 2005 I.C.J. 168 (December 19). 43 Nuclear Tests Case (Australia v. France) (New Zealand v. France), 1974 I.C.J. 267. 44 Id at 269-270.



scope and effect of obligations under an agreement validly created owes its appropriate

determination to the exact terms of the contract45 evaluated through a comparative

importance given to such obligations. It should further be understood that bringing into the

scope of such determination, (in the context discussed above) issues which do not find their

place within the contractual terms and conditions either because of their scope being outside

the purview of the contractual objectives or they being omitted at the time the contract was

embodied into writing46, would be detrimental and would render the efforts underwent to

make contractual position more comprehensive and less ambiguous.

27. This scope of argument, when extended further, entails the necessity of reaching the

impression essentially embodies within it the parol evidence rule which clearly enunciates

that verbal evidence against an agreement reduced into writing is not allowed to be given47 in

any form having an effect to contradict, vary, add to or subtract from the terms of a written

contract, or the terms in which the parties have deliberately agreed to record any part of their

contract.48 The rule does not only exclude evidences in oral form but also has been extended

to apply on matters concerning extrinsic evidences in writing such as drafts,49 preliminary

agreements50 and letters of negotiation51, having been justified on grounds of upholding

written proof,52 effectuating the finality intended by the parties in recording their contract in

written form53 and eliminating “great inconvenience and troublesome litigation in many

instances.”54

[3.2] THAT THE TERMS AND CONDITIONS SPECIFIED WITHIN THE AGREEMENT

APPEARS COMPREHENSIVE IN ITS SCOPE AND SELF-SUFFICIENT IN NATURE

LEAVING NO SCOPE OF EXTRINSIC EVIDENTIARY ANALYSIS

45 Parker v. South Eastern Ry., [1877] 421 2 C.P.D. 416. 46 Heibut, Symons & Co. v. Buckleton, [1913] 50 A.C. 30. (Such collateral considerations, the sole effect of which is to vary or add to the terms of the written contract, are therefore viewed with suspicion by the law. the terms of the contract should bore the animus contrahendi on the part of all the parties to the contract). 47 Goss v. Lord Nugent, [1833] 5 B. & Ad. 58. 48 Bank of Australasia v. Palmer, [1897] 545 A.C. 540. 49 Miller v. Travers, [1832] 8 Bing. 244; Inglis v. Buttery, [1878] 3 App. Cas. 552; National Bank of Australasia v. Falkhingam & sons, [1902] A.C. 585. 50 Evans v. Roe, [1872] 7 C.P. 138; Leggot v. Barrett, [1880] 309 15 Ch.D. 306; Henderson v. Arthur, [1907] 1 K.B. 10. 51 Mercantile Bank of Sydney v. Taylor, [1893] 321 A.C. 317. 52 Pickering v. Dowson, (1813) 784 4 Taunt. 779. 53Supra note 8. 54 Mercantile Agency Co. Ltd. v. Flitwick Chalybeate Co., [1897] 14 T.L.R. 90.



28. That as a part of the common usage, it’s generally seen that parties to an agreement

intend, in order to mitigate future inconveniences, to demonstrate all other aspect of their

previously reached consensus within a complete document by reducing into record all such

terms particularly. On such intention being established, the complete nature and independent

operation of the contract requires a careful perusal of what is already being agreed in the

express covenants relating to a particular subject matter rather than unnecessary implications

of the same.55 The simple test which follows the ascertainment of the same is that the

substantive and procedural facets encasing the fundamental obligations forming material part

of the contractual transaction must lie within specific stipulations of a certain nature

contained within a written document coupled with certainty in intention and unanimity in

agreement.56

It is to be understood in the light of the facts that the Special Purpose Agreement being the

sole document governing the contractual relations in regard to the subject matter, the scope of

other arrangements among the parties indicating any intention to the contrary is negligible,

thus eliminating the possibility of any implications that could be drawn having any additional

bearing upon the set of obligations57 other than what Unnat already accrues by virtue of the

terms and conditions of the agreement.

29. That with a view to denude the possibility of a collateral warranty from having legal

effect58, to render inadmissible extrinsic evidence to prove terms other than those in the

written contract and thus to restrict the subjective ambiguity of implied conditions which

could not be given a literal colour and an objective interpretation, the efficiency within an

agreement of an entire agreement clause is sought to put into effect. That the said clause runs

in an agreement to supersede all previous arrangements deliberated upon the subject matter in

question and acknowledges non-reliance upon representations or undertaking which do not

find expressly incorporated within the agreement. The provisions of the Special Purpose

Agreement forming part of clause (h) of Article 1 bars any inferential deviation in the form of

change, amendment, revision or modification which could portray an adverse effect upon the

legal character of the Special Purpose Agreement except those which are subsidiary to the

agreement, therefore seeking to maintain the sanctity of the terms and conditions agreed upon

55 Matthew v. Blackmore, [1857] 772 1 H. & N. 762. 56 Harris v. Rickett, [1859] 7 4 H. & N. 1. 57 Henderson v. Arthur, [1907] 1 K.B. 10. 58 Inntrepreneur Pub Co. Ltd. v. East Crown Ltd., [2000] 614 2 Lloyd’s Rep. 611.



consensus by diminishing influences of any secondary considerations other than what has

been expressly stated herein.

30. That it is also submitted that the obligations, procedures and operation asserted in relation

to the material terms which underlies the basic purpose of the agreement when stated in clear

and fault-free expressions comprehends the explicit framework of performance which form

an essential part of the agreement entered into. It is contended that the scope and nature of

such contractual resolution, uttered through the different parts embodying it, must be studied

in accordance with the statement of material terms present well within the document itself.

However, it is to be noticed that such perusal to locate the fundamentality in terms of the

relevant expressions, which underlay the arrangement between the parties, must be done in

total compliance with the effectual wording where the contract is not silent on such matter

and not in the light of extrinsic evidences suggesting it to be a collateral contract. It is to be

appreciated that no stretch of implication could possibly be adopted in derogation of the

fundamental elements of the contract or if such implication is unable to sustain or is

inconsistent with the tenor of the contract as a whole.59 Therefore, it is to the kind

appreciation of the Bench that upon the transfer of the knowledge in the form of the highly

secured document UNNATI containing all information regarding nanoscience,

nanotechnology and nanobiomedicine 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 alleged concealment of

knowledge on adverse effects does not stand and therefore of implication of the same under

the present circumstances would stand in complete neglect to the express wording of the

contract.60 It is to the kind perusal of the Bench that the contract being laid upon a framework

of bona fide presumption that the precise application of the formula would provide the

required result in appropriate conditions, it could not be said that the same was in knowledge

of Unnat or was materially ignored.61 Therefore, there being no knowledge or ignorance

about the contentions present, holding Unnat responsible for something done in good faith

would absolutely cause a great travesty of justice. Thus no additional burden of implicated

obligations is levied upon Unnat on grounds that the touchstone to determine the same is

necessity rather than reasonableness.62 Thus is humbly submitted that the Bench desist from

59 London Export Co. Ltd. v. Jubilee Coffee Roasting Co. Ltd., [1958] 675 1 W.L.R. 661. 60 BP Refinery (Westernport) Pty Ltd v. Shire of Hastings, [1977] 26 52 A.L.J.R. 20, PC. 61The Moorcock, (1889) 14 P.D. 64, 68. 62 Liverpool City Council v. Irwin, [1977] 254 A.C. 239.



making any implication of obligations since the agreement in question is one very carefully

drafted containing detailed terms agreed between them.63

[3.3] THAT THE DEMOCRATIC REPUBLIC OF UNNAT SHOULD NOT BE LEVIED

WITH ANY LIABILITY WHICH COULD NOT HAVE BEEN AVERTED THROUGH

COOPERATION WITH BAATI

31. A term in the agreement that the parties are willing to co-operate to ensure the

performance of their bargain, whether expressed or implied, forms important part of the

Court’s consideration.64 In this respect it is also incumbent upon the court to look into or

determine the degree of co-operation not on terms of reasonableness but by the construction

of the terms imposed mutually upon the parties by the agreement and in light of the

surrounding circumstances.65 The concurrence and participation among the parties to the

subject matter in question is a prerequisite or essential element of determining the scope and

extent of the duty to co-operate obviously under the circumstances when such duty seeks to

uphold the ultimate venture which the agreement proposes. Though it is an essential part of

the process of drawing implications in respect to what has been stated above that the same

should be done keeping in mind clarity and precision as the governing elements, however a

little deviation from these principles if serves the fulfilment of the subject matter agreed

within the terms of the contract or some holistic purpose which led the formation of the same,

would not serve as contrary to the incumbent principles of construction. It must be noted by

the Ld. Court that Unnat, in order to save the purpose undertaken by virtue of the agreement

from frustrating tried to exhaust all possible means by which the harm could be averted. This

could be determined on grounds that Unnat being ready to undertake more research and assist

the Baati National Corporation with the plan of Special and Required Assistance as

demanded by the circumstance and situation, which subsequently and without consideration

was out-rightly rejected by Baati which led to the situation being dragged to the court which

prospectively would have been otherwise averted.

32. Therefore, it is humbly submitted that on grounds of lack of co-operation from the side

Baati in upholding the basic principles underlying the Special Purpose Agreement, Unnat

should not be held responsible or burdened with any additional obligation.

63 Luxor (Eastbourne) Ltd. v. Cooper, [1941] 137 A.C. 108. 64 Mackay v. Dick, (1881) 6 App. Cas. 251, 263. 65 Id at 263.



Issue IV: Whether the Government of Unnat be made Responsible for Circumstances beyond

Their Control and Not in the Foreseeable Contemplation of Risks and, for Resulting Losses?

33. That it is humbly submitted before the Ld. Bench that liabilities in the course of a

contractual agreement accrues normally due to advertent neglect of rights and obligations

arising out of the same and resulting into its breach and subsequently, losses suffered by the

party so aggrieved. However, such neglect does not form part of the transaction when a party

to the contract, by virtue of the position given through the contractual obligations and by

exercise of its personal authority is unable to make any adverse impact upon the course of

performance of the agreement so reached and thus it is on such grounds it is contended

hereinafter the Democratic Republic of Unnat shall not be held liable for circumstances

beyond their reasonable control and not in any way within the foreseeable contemplation of

risks. [4.1] Appending further, the same being not a result of any breach, neglect or

misconduct is unable to hold liable Unnat for the losses suffered on justifiable grounds. [4.2]

[4.1] THAT IMPOSSIBILITY OF PERFORMANCE CAUSED DUE TO EVENTS

SUPERVENING AND TO THE EFFECT BEYOND THE CONTROL OF UNNAT COULD

NOT HOLD IT RESPONSIBLE FOR NON-PERFORMANCE

34. When extraordinary or supervening events occur, without the default of either of the

parties and these events radically and significantly alter the nature of the contractual rights

and obligations of the parties,66 the contract may be automatically brought to an end by

operation of the doctrine of frustration67, which finds itself in place where in the course of

performing the contractual objectives, the unfolding events, occurring after the formation of

the contract68 make such performances more onerous or even impossible.69 This is further

accompanied by a radical change in the obligations to be performed, a test which implies that

there has to be a break in identity between the contract as provided for and contemplated and

66 G.H. Treitel, Frustration and Force Majeure 505 (Sweet & Maxwell 1994). 67 Ling Liu, The Doctrine of Frustration: An Overview of English Law 271 (1st ed. OUP). 68 Amalgamated Investment & Property Co. Ltd. v. John Walker & Sons Ltd., [1977] 1 W.L.R. 164. 69 Id.



its performance in the new circumstances70which destroys the very nature and purpose

intended to be given sanctity at the time the contract was formed. Under this circumstance it’s

submitted that the Hon’ble Bench must relook at the principle originally adopted in Taylor vs.

Caldwell71 and further reiterated in F.A. Tamplin SS. Co Ltd vs. Anglo-Mexican Petroleum

Products Co Ltd72 that the circumstances prevailing at the time the contract was entered into

force and the ones at the time the performance became impossible must be given due weight

and that the court ought to balance both in a bid to explain their bearing upon each other. It is

essentially due to a drastic change in the circumstances, though not contemplated beforehand

but became very apparent during the performance of a contract. It is further submitted that

operation and effects of the doctrine does not depend on the action, inaction or will of the

parties to continue the contract.73 As stated above, it brings the contract automatically to an

end notwithstanding the fact that parties might continue to perform their contractual

obligations. As a matter of fact it must be noticed that, mere hardship or inconvenience will

not amount to discharge by frustration74but there rather must be a change in the significance

of the obligation that the thing undertaken would, if performed, be a different thing from that

contracted for.75 However, the determination of the doctrine in Edwinton Commercial

Corporation vs. Tsavliris Russ76 led to the enunciation of a ‘multi-factorial’ approach

requiring consideration of terms of the contract, their context, matrix of facts, parties’

reasonable expectations and especially their knowledge, assumptions and contemplations

regarding the particular risk.

35. Under the situation which have been given effect, it is put forth that the doctrine

contended runs independent of the conduct of the parties without any regard to their

knowledge, assumptions or contemplations therefore making it beyond what could be

actively controlled by and among the parties, and thus the occurrence of which could not be

denoted as a responsibility to one.

70 Edwinton Commercial Corporation and Global Tradeways Ltd. v. Tsavliris Russ (Worldwide Salvage and Towage) Ltd. “Sea Angel”, 2 Lloyd’s Rep. 517 (C.A. 2007). 71 Taylor v. Caldwell, [1863] 3 B. & S. 826. 72 F.A. Tamplin SS. Co. Ltd. v. Anglo-Mexican Petroleum Products Co. Ltd., [1916] 2 A.C. 397. 73 Hirji Mulji v. Cheong Yue Steamship Co., [1926] A.C. 497. 74 M. P. Furmston, Cheshire, Fifoot and Furmston’s Law of Contract 716 (Oxford 2012). 75Davis Contractors Ltd. v. Fareham Urban District Council, [1956] U.K.H.L. 3. 76 Edwinton Commercial Corporation and Global Tradeways Ltd. v. Tsavliris Russ (Worldwide Salvage and Towage) Ltd. “Sea Angel”, 2 Lloyd’s Rep. 517 (C.A. 2007).



[4.2] THAT THE ENSUING EVENTS AND TO THAT THEIR CONSEQUENCES WERE

NEVER IN FORESEEABLE CONTEMPLATION OF RISKS AMONG THE PARTIES

BEFORE OR AT THE TIME OF ENTERING THE CONTRACT

36. That it is to be appreciated that a party to a contract is liable only to the extent of its duty

in regard to what was voluntarily assumed and mutually bestowed. One cannot be held

responsible for risks coming into being which were otherwise beyond the purview of the

agreement itself. It is submitted that a risk to be allocated within the reasonable

contemplation of the parties, the same must be a positive or negative implication77 arising

from a specific clause or to that extent circumstances prevailing at the time the contract was

entered into force. It is further submitted that the fact-circumstances upon the issue in hand

clearly enunciates that under all circumstances taken into account to ensure the realisation of

the purpose with which Baati and Unnat formed the contractual relations, there always was

conjoined a presumption that the meticulous subscription to their respective obligations with

due care, would result into the fulfilment of the same. Therefore, the sudden change in results

accompanied by its drastic impacts were neither within what the parties contemplated nor

within what they could foresee78, therefore invocation of the doctrine is aptly justified and

reflected upon the circumstances so ensued.

[4.3] THAT THE RESULTING LOSSES CANNOT BE ATTRIBUTED TO ANY DEFAULT

OR NEGLECT ON THE PART OF UNNAT AND WERE INDEPENDENT

37. Compensation for losses incurred due to bad commercial bargains could not be attributed

or implied to be within the scope and extent upon which the doctrine of frustration runs. The

economic consequences of the frustration are that ''losses lie where they fall.''79 Advance

payments if already paid, shall not be reimbursed. This was attested in Lloyd Royal vs.

Stathatos80 where the Court of Appeal rejected the charterers’ claim for the return of hire paid

in advance. Though there has been a little deviation from this course,81 it must be noted that

the general rule stands as what has been explained above and any deviation, which is rarely

seen cannot be looked upon to imply any changes upon the applicability of the doctrine in

this regard. Nevertheless, this is considered to be a very rare case in practice.

77 Bank Line Ltd. v. Arthur Capel & Co., [1919] A.C. 435. 78 Ewan McKendrick, Force Majeure and Frustration of Contract 35 (Informa Law 1995). 79Occidental v. Skibs A/S Avanti, 1 Lloyd’s Rep. 293 (Q.B. 1976). 80Lloyd Royal Belge SA v. Stathatos, 30 Great Britain Times Law Reports 70 (1917). 81 Fibrosa Spolka v. Fairbairn, [1942] U.K.H.L. 4.



38. It is further submitted before the Hon’ble Court that the present fact-circumstances

granted the parties very limited or almost no allocation of risks accrued out of the agreement.

That there being a general practice that commercial contracts presupposes the happening of

any future event, to mitigate which certain mitigating circumstances are created so that the

balance of rights and obligations as among the parties remains stable. However, the peculiar

characteristic of the same being that it reduces the court’s subjectivity in determining the

circumstances which prevailed at the time of the entering into the contract and the intention

of the parties. In regard to this, the doctrine of frustration stands on a very relative plane. It

must be taken into regard that the wider is the scope of the contractual clauses the narrower

becomes the function of the doctrine.82 This being the situation in the present issue in hand,

the narrowness in the clauses upon risk allocation attributes the application of the doctrine.

39. That it should further be acknowledged that a contractual obligation, implying mutuality

of arrangement and seeking factors of co-operation denotes liability upon both the parties to

stabilise the situation with the required assistance needed to that effect. Under these

circumstances, it must be noted that in order to mitigate the differences that arose in the

course of such unforeseen and non-contemplated situations, the Democratic republic of Unnat

sought to assist Baati, keeping in view the holistic purpose of the arrangement, by way of a

Special and Required Assistance Plan, but the same being refused by Baati made situation

adverse for both the parties especially Unnat, since in exchange of the know-how and

technical assistance it received nothing in return.

40. It is further submitted that Baati itself was in breach of the Special Purpose Agreement

wherein it was decided that all aspects of the commercial venture shall be done only by a

democratic and consensual method of decision making processing all its aspects at every

stage of the process between the parties since the circumstances enumerated therein justifies

that on several such aspects, the move of Baati was without any prior intimation of Unnat.

Since the project was more of a joint venture agreed between the parties, the presence of

Unnat in the development of the project was reduced to a bare minimum. There were mere

reviews upon the project that were sought with no actual presence or participation being

realised. Thus, the situation enumerated forms enough justification to claim that the change in

the result of the venture spearheaded towards production of drug to combat life-threatening

82 Total Gas Marketing Ltd. v. Arco British Ltd., [1998] 2 Lloyd’s Rep. 209. [In a case of an elaborately drafted contract a court may conclude, as a matter of interpretation, that the parties preferred the “certainty” of termination pursuant to one of the terms of the contract to the uncertainty of possible discharge under the doctrine of frustration].



liver cancer was solely and under autonomous supervision of Baati and no liability upon

Unnat for any of their default, negligence or misconduct could be levied.

Issue V : Whether The Government of Baati shall be ordered to pay for the losses incurred by

the Government of Unnat?

41. It is humbly submitted by the respondent that as is evident from Article 1(c) of the SPA,

the state of Unnat had provided both technical know-how and funds as part of the twin

sharing formula to the tune of 70% and 30% respectively. The respondent would also like to

bring the notice of this court to Article 1(d), according to which, for this contribution of

technical know-how and funds to the Neti-project, there were to be profits for the state of

Unnat to the tune of 60% upon successful production of the liver-cancer medicine. However,

as a result of the state of Baati defaulting upon its obligations emanating from the SPA, the

medicine never came to fruition and hence the benefits which were due to Unnat, never came

to be. Consequently, there exists a situation wherein Unnat has incurred large losses and the

state of Unnat requests this honourable court to exercise its plenary powers granted under

Article to sanction reparation against Baati, by way of compensation to Unnat for all the

injuries that it has sustained due to the wrongful act and breach of State Responsibility [5.1].

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. [5.2]

[5.1] BAATI BREACHED THE RESPONSIBILITY OWED BY IT TO UNNAT AND THIS

BREACH OF STATE RESPONSIBILITY ENTAILS REPARATIONS AGAINST BAATI,

TO COMPENSATE UNNAT FOR ALL LOSSES IT INCURRED AS A RESULT OF THE

WRONGFUL ACT

[5.1.1]. The Chorzow Factory Case and the Principle of Reparation laid therein



42. 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 reparation”83. 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."84

[5.1.2]. The Draft Articles on Responsibility of States for Internationally Wrongful Acts and

its implications in the case at hand

43. In the Draft Articles on Responsibility of States for Internationally Wrongful Acts85,

Article 31 states the well-established 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 honorable court that the obligation to make full reparation

although succinct, it has been affirmed86. The court has also recently recognized in Loayaza-

Tamayo vs. Peru (Reparations and Costs) case, 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 act87. The Umpire in the Lusitania case88 held “the remedy should be

commensurate with the loss, so that the injured party may be made whole”. The Respondents

83 Factory at Chorzow (Merits), P.C.I.J. Order of the Court, (ser. A), No. 17 ¶ 4 (July 14, 1928). 84 Supra note 47. 85 The Draft Articles are a combination of codification and progressive development. The International Court of Justice has already cited them for example, in Gabčíkovo-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."[GA Res. 56/83, para. 3 (Dec. 12, 2001).]. 86 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). 87 Loayaza-Tamayo v. Peru, Reparations and Costs, Order of the Court Inter-Am. Ct. H.R., (ser. C), No. 42 20 (Apr. 15, 1998). 88 The Lusitania case, 7 R.I.A.A. 32, 39 (1923).



would like to bring to the notice of the court that there is a fine line dividing restitution and

compensation, and the court will be confronted with the dilemma that compensation would be

a more apt and equitable remedy than restitution in this case, and the State of Unnat having a

choice in opting for the mode of reparation89, requests the court to grant sanction for

reparation in the form of compensation to place them in a situation that they would be in, had

the contract been performed. Article 36 of the ARSIWA expresses the entitlement to

compensation90.

44. 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 Court91, regional

courts and tribunals92, and arbitral bodies93. It is also reflected in codification efforts94 and in

the most unambiguous and certain way, reflects the state practice of many countries and the

customary international law in this regard.

[5.2]. BREACH OF AGREEMENT BY BAATI WILL ENTAIL CONTRACTUAL

DAMAGES AS LAID DOWN UNDER VARIOUS STATE LAWS, CONVENTIONS AND

PRINCIPLES

[5.2.1]. Breach of Expectation Interest due to frustration of SPA by Baati

45. The respondent humbly brings to the notice of the court that Unnat has fulfilled its part of

the promise and even offered the SRA to ensure that the Neti project is completed in spite of

89 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. 161 (July 3). 90 “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.” 91 See Gabčíkovo-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. 92 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). 93 See C.M.E. v. Czech Republic, Partial Award, 9 I.C.S.I.D. Rep. 113, 238-9 (2001); Amoco International Finance Co. v. Iran, (Iran-United States Claims Tribunal), 15 Iran-U.S. C.T.R. 161 (1987). 94 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.



impediments, however Baati has refused to accept the same, thereby the lack of funding

effectively frustrating the contract and judicial propriety demands that Baati has to pay for the

loss of profits caused to Unnat as a result of non-fulfilment of the contractual obligations. 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 including consequential damages. Unnat is

well within its rights to claim for the damages relating to its expectation interest, which was

laid down by Lord Atkinson in Wertheim vs. Chicoutimi Pulp Company95 which is well

embedded in both civil and common law countries, where it was stated that “it is the general

intention of the law that, in giving damages for breach of contract, the party complaining

should, so far as it can be done by money, be placed in the same position as would have been

if the contract had been performed.”

46. 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. Baxendale96:

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 English courts have repeatedly made it

clear that an exclusion of ‘indirect or consequential loss’ does not exclude ‘loss of profit’ that

arises directly and naturally from the breach, that is loss of profits that a reasonable

businessperson would expect to flow from such a breach in the usual course of events97. The

respondent submits that the lost profits in the present case would come under the first limb of

the Hadley vs. Baxendale rule.

47. [In arguendo]:- Even if the Loss of Profits were to be construed as Consequential :-The

respondent 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.98 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

95 Wertheim v. Chicoutimi Pulp Company, [1911] A.C. 301 (P.C.). 96 Hadley v. Baxendale, 9 Ex. 341, 156 Eng. Rep. 145 (1854). 97 Saint Line v. Richardsons Westgarth & Co. Ltd., [1940] 2 K.B. 49; British Sugar v. Projects Limited, (1997) 87 B.L.R. 42. 98 The decision is cited with approval by the highest courts of 43 states.



reason to know."99 But courts freely interchange these expressions with the statement that

consequential damages may be recovered if they were a "foreseeable" result of breach100.

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."101

[5.2.2]. State Practice regarding Compensation for Contractual Damages

48. The Respondent will also cite a few relevant Articles from the UNIDROIT Principles of

Commercial Contracts of 2010102, 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 Convention103, to which many countries are parties,

Article 74 resonates the same principles.

49. The Respondent would also attract the attention of the court to the Indian Contract Act104,

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 non-

fulfillment of the contract.

50. The Respondent would also cite the Sapphire-NIOC Arbitration case105 to guide the

court towards the proper application of the law.�Examining the question of damages, which

the plaintiff has a right to claim under the rules stated by him, the arbitrator expressed his

views in a passage, which should be another powerful contribution to international case law. 99 Restatement (Second) of Contracts §§ 351(1), (2)(b) (1979). 100 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). 101 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”. 102 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.” 103 International Sale of Good Convention (2010) United Nations Conference on Trade and Development, https://www.uncitral.org/pdf/english/texts/sales/cisg/V1056997-CISG-e-book.pdf. 104 Indian Contract Act, [1872] http://comtax.up.nic.in/Miscellaneous%20Act/the-indian-contract-act-1872.pdf. 105 Sapphire International Petroleum 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).



`"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. This rule is simply a direct deduction

from the principle of pacta sunt servanda since its 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.”

PRAYER

Wherefore, it is prayed, in light of the issues raised, arguments advanced, and authorities

cited, that his Hon’ble Court may be pleased to declare that:

a. The Government of Unnat has not violated any obligation and that all the information

available in their legal domain in relation to nanoparticle was transferred through

UNNATI with utmost bona-fide leading to a successful ToT and, hence this presumption

of violation of law stands without any legal basis and cannot stand;

b. The Government of Unnat was ready to undertake more research and assist the Baati

National Corporation with the plan of SRA as demanded by the circumstance that was

not contemplated and those of which was not agreed by the Federal Republic of Baati

and, but consequently refused and, hence this shall not be construed as willful



concealment of information and that the Government of Baati has breached the principle

of Good Faith as contained within Article 2 of the UN Charter as a result of deliberately

rejecting the plan for SRA as a result of which the joint venture could not reach fruition.

c. The Government of Unnat can’t accept liability for situations not contemplated in the

SPA and, hence has not accepted any other legal obligations not specified in the SPA and

that Baati has frustrated the terms of the agreement; �

d. The Government of Unnat shall not be held liable for losses arising due to circumstances

that are beyond their control and not in the foreseeable contemplation of risks; �

e. As the Government of Unnat have transferred all the nano knowledge available in their

legal domain without accruing any benefit and incurring losses, Government of Baati

shall be ordered to pay for the losses. �

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 Respondents)

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