IN THE THAI ARBITRATION INSTITUTE BANGKOK, THAILAND BETWEEN THE VICTIMS OF THE MAE SOT FACTORY FIRE

Transcription

1 B1404-C THE 9 TH LAWASIA INTERNATIONAL MOOT IN THE THAI ARBITRATION INSTITUTE BANGKOK, THAILAND 2014 BETWEEN THE VICTIMS OF THE MAE SOT FACTORY FIRE REPRESENTED BY THE INTERNATIONAL COLLECTIVE IN SUPPORT OF TEXTILE WORKERS (ICSTW) (CLAIMANT) AND SPEAR SHIRTS INC. (RESPONDENT) MEMORIAL FOR CLAIMANT

2 TABLE OF CONTENTS QUESTIONS PRESENTED... iii INDEX OF AUTHORITIES... iv STATEMENT OF FACTS... 1 SUMMARY OF PLEADINGS... 3 CLAIMANT S PLEADINGS... 4 I. THE TRIBUNAL MAY JOIN A LARGE NUMBER OF CLAIMANTS IN A SINGLE ARBITRATION... 4 A. THE CLAIMANTS MAY BE JOINED BY WAY OF CLASS ARBITRATION, IN THE EVENT THAT THE FIFTEEN-MEMBER COMMITTEE IS A NAMED PARTY TO THE ARBITRATION AGREEMENT The Tribunal has jurisdiction to decide on the permissibility of class action arbitration The Parties have consented to class arbitration Class arbitration is appropriate for claims arising from a mass accident... 9 B. THE CLAIMANTS MAY BE JOINED BY WAY OF REPRESENTATIVE ACTION ARBITRATION, IN THE EVENT THAT ICSTW IS THE NAMED PARTY TO THE ARBITRATION AGREEMENT C. ALTERNATIVELY, THE CLAIMANTS MAY BE JOINED IN A SINGLE ARBITRATION BY WAY OF JOINDER UNDER THE KRLCA RULES The victims and their families are parties to the arbitration agreement a. In the case that the fifteen-member committee is the named party to the arbitration agreement, the victims and their families have impliedly consented to be the parties to the arbitration agreement b. In the case that ICSTW is the named party to the arbitration agreement, the victims and their families are parties due to their agency relationship with ICSTW Joinder of the victims and their families is beneficial rather than prejudicial to the Parties a. Joinder will not cause prejudice to any of the parties b. The Tribunal should exercise its discretion to order joinder of parties.. 15 i

3 II. RESPONDENT IS LIABLE FOR THE VICTIMS INJURIES AND DEATHS UNDER THAI LAW15 A. THAI LAW IS THE APPLICABLE LAW IN DETERMINING WHETHER RESPONDENT IS LIABLE FOR THE INJURIES AND DEATHS OF THE VICTIMS Thai law is the applicable law under the KLRCA Rules Thai law is the applicable law under the Thailand Arbitration Act B. RESPONDENT IS BOUND TO MAKE COMPENSATION TO CLAIMANTS UNDER SECTION 420 OF THE CCC Respondent has negligently and unlawfully injures the life, body and health of Claimants Respondent s actions has caused damages to Claimants C. ALTERNATIVELY, RESPONDENT IS JOINTLY LIABLE FOR THE INJURIES AND FATALITIES BY ASSISTING IN MAE SOT S WRONGFUL ACT UNDER SECTION 432 OF THE CCC D. IN ADDITION, RESPONDENT IS LIABLE UNDER SECTION 428 OF THE CCC FOR NEGLIGENTLY SELECTING MAE SOT AS ITS SUPPLIER III. THE TRIBUNAL SHOULD FIND THAT RESPONDENT IS OBLIGED TO REIMBURSE CLAIMANTS THE DAMAGES CLAIMED UNDER THAI LAW A. THE TRIBUNAL SHOULD FIND THAT RESPONDENT IS OBLIGED TO REIMBURSE CLAIMANTS THE CLAIMED DAMAGES IN THE CASE OF DEATH B. THE TRIBUNAL SHOULD FIND THAT RESPONDENT IS OBLIGED TO REIMBURSE CLAIMANTS THE CLAIMED DAMAGES IN THE CASE OF INJURY CONCLUSION AND PRAYER OF RELIEF ii

4 QUESTIONS PRESENTED A. May a large number of claimants (victims and their families) be joined in a single arbitration? B. Can Spear Shirts be held liable for the injuries and deaths of Mae Sot Clothing s employees? C. What types of monetary damages may the victims and their families recover if Spear Shirts is obligated to reimburse them for their injuries and deaths? iii

5 INDEX OF AUTHORITIES Statutes and Treaties PAGES Arbitration Rules of the Kuala Lumpur Regional Centre for Arbitration (KLRCA) (2013) 3-6, 9-11, 14, 16, 17 Belgian Judicial Code 11 England and Wales Civil Procedure Rules 5,11 France Consumer Code 11 France Environmental Code 11 France Monetary and Financial Code 11 Hong Kong Rules of High Court 11 Thailand Arbitration Act B. E (2002) 4, 6, 16, 18 Thailand Civil and Commercial Code B.E (1925) 3, 14, 16, Thailand Conflict of Laws Act B.E (1938) 4, Thailand Penal Code B.E (1956) 19 United States Federal Rules of Civil Procedure 5 International Commercial Arbitration Cases ICC Case No ICC Case No ICC Case No iv

6 ICC Case No ICC Case No ICC Case No Swiss Federal Tribunal Cases Judgment of 19 July 1988, XVI Y.B. Comm. Arb 13 Judgment of 19 August 2008, DFT 4A_128/ Thailand Cases Supreme Court Decision No.128/ Supreme Court Decision No.3344/ Supreme Court Decision No.247/ Supreme Court Decision No.1963/ Supreme Court Decision No.1921/ Supreme Court Decision No.1447/ Supreme Court Decision No.2488/ Supreme Court Decision No.75/ Supreme Court Decision No.247/ Supreme Court Decision No.3345/ Supreme Court Decision No.4859/ Supreme Court Decision No.2580/ v

7 Supreme Court Decision No.516/ USA Cases Green Tree Financial Corp. v Bazzle 569 S. E. 2d Mayer v. Mylod, 988 F.2d 635, 640 (6th Cir. 1993) 27 Oxford Health Plans LLC v Sutter 675 F. 3d 215 Stolt-Nielsen S.A. v AnimalFeeds International Corp. 548 F. 3d ,23 Scholarly Work and Articles Alongkorn Tongmee, Nattapon Vachiraprasith, Legal Liability of Riot Leaders (10 Sept 2010) 22 Chukiert Ratanachaichan, A Primer on the Thai Draft Law on Class Action, (last visited 29 Aug, 2014) 20 David Engel, Tort, Custom, and Karma: Globalization and Legal Consciousness in Thailand (Stanford University Press 2010) 19 David F. Boyle,Mass Accident Class Actions, 60 Cal. L. Rev (1972) 26, 27 G. Watts (ed.), Bowstead & Reynold on Agency (2010) 12 Gary B. Born, International Commercial Arbitration (2009) 20 Holtzmann et al, National Report for the United States of America (2013) in Jan Paulsson (ed), International Handbook on Commercial Arbitration 19 J. Herbots (ed.), International Encyclopaedia of Laws: Contracts (2013) 12 vi

8 J. Moore, Federal Practice (2d ed. 1969) 9 Lara Pair; Paul Frankenstein, The New ICC Rules on Consolidation: Progress or Change?, Emory International Law Review (2011) 15 Paul G. Karlsgodt, World Class Actions: A Guide to Group and Representative Actions Around the Globe (2012) 19, 29 Sanee Surasethburana, Tort Liability of Those Who Hire Independent Contractors, Thesis (LLM), Thammasat University (2012) 23, 24 S. I. Strong, From Class to Collective: The De-Americanization of Class Arbitration, 26 Arb. Int'l 493 (2010) 20 S.I. Strong, The Sounds of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Award When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?, 30 Mich. J. Int l L (2009) 22, 24 Supichai Sirichairungson, The Comparison between the Force Majeure Provision in Thailand and the Scope of Liability of U.S. in Tort Cases, 4(1) COJ Comparative Law Journal (2012) 20 Thainland Law, Thailand Personal Injury, 19 Worrawong Atcharawongchai, The Non-Pecuniary Damages in Wrongful Acts Causing Bodily Harm and Death: The Comparative Study on U.S. and Thailand Laws, Spring Issue 1, Volume 16, Thailand Law Journal (2013) Wrongful-Acts-in-us-and-thailand-laws.html 24 vii

9 STATEMENT OF FACTS 1. Mae Sot Clothing Ltd. ( Mae Sot Clothing ) is one of the largest clothing factories located near Mae Sot, a town on the border between Myanmar and Thailand. It produces clothing for some of the world s most famous brands. 2. Spear Shirt Inc. (Defendant) is a wholesaler of apparel products who has its principle place of business in Los Angeles, California. Defendant has been purchasing men s shirt from Mae Sot Clothing Ltd. for about 10 years. 3. The most recent contract between Defendant and Mae Sot Clothing was concluded on 1 April Defendant sent the Purchase Order from California to Thailand by Fax to place the order. 4. On 15 October 2013, a fire broke out at the Mae Sot factory (the Factory ). Fifty employees were dead and more than 100 were seriously injured. All were from Myanmar Several months before the fire, Mr. Theodore Snowden, an assistant to Mr. Joe Baydon, Vice President in charge of purchasing at Spear Shirts, visited the Factory during his vacation. The General Manager of Mae Sot Clothing, Mr. Paul Castro, showed Mr. Snowden around the factory. 6. Mr. Snowden sent a text message to Mr. Baydon after his visit. In the message, Mr. Snowden pointed out that the workers at the Factory appeared to be at a young age. However, Mr. Castro assured Mr. Snowden that all workers were above the legal age. Mr. Snowden also mentioned that the factory floor was covered by rolls of fabric and carts. 1

10 7. Victims of the fire and their family members ( Claimant ) and Defendant agreed to submit the dispute to binding arbitration in Bangkok in accordance with the KLRCA Arbitration Rules. 8. Claimant and Defendant agreed to precede the legal action in three stages. The first two stages were completed In the first stage, both parties accepted the report from an independent auditor which states that the condition of the factory including the blocked and/ or cluttered aisles and stairways was the major cause in causing the many injuries and deaths. 10. In the second stage, both parties accepted the report, which concluded that Mae Sot Clothing has no assets including insurance to satisfy any claims from the victims and their families. 11. The third stage will determine the legal liability of Claimant in whole or in part for the injuries and fatalities and the potential monetary recovery or damages to be awarded under applicable law assuming liability is established. 2

11 SUMMARY OF PLEADINGS 12. A LARGE NUMBER OF CLAIMANTS MAY BE JOINED IN A SINGLE ARBITRATION. The Tribunal may join the victims and their families in a single arbitration either by way of class arbitration or representative action arbitration, as it is permissible under the Parties arbitration agreement and the applicable legal framework. Alternatively, the Tribunal may proceed by way of joinder of claimants under Article 17(5) KLRCA Rules. In order to promote efficiency of the proceedings and avoid inconsistent awards, it is appropriate for the Tribunal to exercise its to proceed on the basis of any of the above forms of collective arbitration. 13. RESPONDENT IS LIABLE FOR THE DEATHS AND INJURIES OF MAE SOT CLOTING S EMPLOYEES. Thai law is the applicable law in determining Respondent s liabilities. Respondent is directly liable under Section 420 of the Thailand Civil and Commercial Code ( CCC ). Alternatively, Respondent is jointly liable under Section 432 of the same code. In addition, Respondent is liable under Section 428 of the CCC for negligently selecting Mae Sot Clothing as its contractor. 14. CLAIMANTS CAN RECOVER DAMAGES FROM RESPONDENT. In the case of the victims death, Claimants can recover medical and funeral expenses, loss of earning prior to death, and loss of legal support from Respondent. In the case of the victims injuries, the victims can recover current and future medical expenses, loss of current and future earnings, and various types of non-pecuniary loss from Respondent. 3

12 CLAIMANT S PLEADINGS I. THE TRIBUNAL MAY JOIN A LARGE NUMBER OF CLAIMANTS IN A SINGLE ARBITRATION 15. The victims and their families from the Mae Sot factory fire may be joined in a single arbitration under the applicable legal framework. The conduct of arbitration proceedings is governed by both the procedural rules chosen by the parties and the law of the seat of arbitration. In this case, the Parties have chosen to apply the KLRCA Arbitration Rules (KLRCA Rules), and by designating Bangkok as the seat of arbitration, they have chosen to apply the laws of Thailand. 1 Neither the Thai law nor the KLRCA Rules contains provisions prohibiting the joining multiple parties in a single arbitration. 16. Since the joinder of parties is a procedural issue concerning the conduct of the proceedings, the Tribunal shall have the jurisdiction to interpret the contract and decide on the issue accordingly. According to Section 25 of the Thai Arbitration Act, the Tribunal shall have the power to conduct any proceedings in any manner, subject to contrary provisions in the Act or parties arbitration agreement. Similarly, under Article 17(1) KLRCA Rules, the Tribunal may conduct the arbitration in such manner as it considers appropriate. 17. The Tribunal should find it appropriate to join the victims and their families in a single arbitration on a collective action basis. The form of collective arbitration may vary depending on the named party to the arbitration agreement. It is unclear from the facts with whom Respondent had concluded an arbitration agreement. On one 1 Moot problem, page 3, para. 5 4

13 hand, since ICSTW is currently representing the claimants and agreed to resolve the claims by arbitration, 2 it is likely to be the named party to the arbitration agreement along with Respondent. On the other hand, ICSTW may simply be acting as a facilitator, while the fifteen-member committee may be the named party to the arbitration agreement instead. 18. In the case that the fifteen-member committee is the named party to the arbitration agreement, the Tribunal may join the large number of claimants by way of class arbitration [A]. In the case that the ICSTW is the named party to the arbitration, the Tribunal may proceed on the basis of representative action [B]. Alternatively, under both scenarios, the claimants may be joined by way of joinder under Article 17(5) KLRCA Rules [C]. A. THE CLAIMANTS MAY BE JOINED BY WAY OF CLASS ARBITRATION, IN THE EVENT THAT THE FIFTEEN-MEMBER COMMITTEE IS A NAMED PARTY TO THE ARBITRATION AGREEMENT 19. In the case that the fifteen-member committee is the named party to the arbitration, the victims and families may be joined in a single arbitration on the basis of class arbitration. Class arbitration allows a class, which is a group of claimants or respondents with similar or related claims against a common adversary, to have their claims adjudicated within a single arbitration proceeding 3. Unlike representative action, the named party to the arbitration agreement must be a member of the class. 4 2 Further Clarifications, p.4 3 Holtzmann et al, National Report for the United States of America (2013) in Jan Paulsson (ed), International Handbook on Commercial Arbitration 4 Paul G. Karlsgodt, World Class Actions: A Guide to Group and Representative Actions Around the Globe (2012); Rule 23(a), Federal Rules of Civil Procedure of the United States; Rule 19.6, Part 19 of the Civil Procedure Rules in England and Wales 5

14 Therefore, if the 15-member committee is a named party to the arbitration agreement, they may serve as class representatives in the proceeding. 20. Although class litigation is not yet available in the national courts of Thailand, 5 no provision in Thai law or the KLRCA Rules prohibits the conduct of class arbitration. Even if collective action is not available in the courts of the arbitral seat, tribunals may still proceed with collective forms of arbitration, since arbitration is capable of adopting procedures that are not found in the state's judicial systems. 6 Therefore, the Tribunal may order class arbitration as it has the discretion to conduct proceedings in any appropriate manner under Article 17(1) KLRCA Rules and Section 25 Thai Arbitration Act. 21. The Tribunal has jurisdiction to decide on the permissibility of class arbitration [1] and it should find that the Parties have consented to class arbitration [2]. Since there is a large number of similarly situated claimants with tort claims arising from the same incident, it is both efficacious and appropriate for the Tribunal to join the claimants by way of class arbitration [3]. 1. The Tribunal has jurisdiction to decide on the permissibility of class action arbitration 22. The Tribunal has jurisdiction to decide whether class arbitration is allowed, subject to the Parties agreement. According to Green Tree v. Bazzle, 7 a landmark authority on 5 Chukiert Ratanachaichan, A Primer on the Thai Draft Law on Class Action, (last visited 29 Aug, 2014), p.2-4, (Mr. Chukiert Ratanachaichan is a permanent law counselor member of the Civil Procedure Code Revision Committee, Office of the Council of State.) 6 S. I. Strong, From Class to Collective: The De-Americanization of Class Arbitration, 26 Arb. Int'l 493 (2010), p. 502;Gary B. Born, International Commercial Arbitration (2009), p Green Tree Financial Corp. v Bazzle, 539 U.S. 444 (2003) 6

15 class arbitration by the U.S. Supreme Court, a question on what kind of arbitration proceedings the parties agreed to is a matter for the tribunal to decide, not the courts 8. It was held that the question of whether the arbitration agreement allows class arbitration involves contract interpretation and arbitration procedures, to which arbitrators are well-suited to answer. Although subsequent decisions 9 raised doubts concerning the ruling of Bazzle, it remains as the only standing authority on this issue which has yet to be explicitly overruled or modified. 10 Therefore, the Tribunal, instead of the national courts, has the jurisdiction to decide whether there is contractual basis to support the conduct of class arbitration. 2. The Parties have consented to class arbitration 23. There is a sufficient contractual basis for the Tribunal to infer Parties implicit consent to class arbitration which is independent of the Parties mere consent to arbitrate. 11 Although the arbitration agreement is silent on the permissibility class arbitration, extrinsic evidence of the Parties conduct indicates their consent to be subject to class arbitration. 24. The Tribunal should ascertain the true intent of the Parties by taking into account the Parties intentions and expectations when entering into arbitration, as demonstrated 8 Ibid., 453 (emphasis in original) 9 Stolt-Nielsen SA v. AnimalFeeds International Corp., 130 S.Ct (2010); Oxford Health Plans LLC v. Sutter, U.S. S.Ct. (2013) 10 S. I. Strong, From Class to Collective: The De-Americanization of Class Arbitration, 26 Arb. Int'l 493 (2010), p Stolt-Nielsen S.A. v AnimalFeeds International Corp., 548 F. 3d 85. ( a party may not be compelled under the FAA to submit to class arbitration unless there is contractual basis for concluding that the party agreed to do so... But an implicit agreement to authorize class action arbitration is not a term that the arbitrator may infer solely from the fact of an agreement to arbitrate. ) 7

16 by their course of dealings. 12 As opposed to literal interpretation of the express language of the arbitration agreement, this holistic approach of contractual interpretation is consistent with the need to give full effect to the parties intention to refer their disputes to arbitration instead of litigation. 13 In this case, one of the factors contributing to the Parties consent to binding arbitration is to avoid the delay and costs associated with formal litigation. 14 Since class arbitration can improve the efficiency of the proceedings, 15 the Tribunal should find that the Parties have impliedly agreed to such procedural possibility and conduct the arbitration accordingly to give effect to the Parties intention to arbitrate. 25. The Parties implied consent to the possibility of class arbitration is also evidenced by the organisation of the claimants into a fifteen-member representative committee, which in turn authorised ICSTW to represent them in their dispute with Spear Shirts. 16 By virtue of entering into an arbitration agreement with the fifteen-member representative committee, Respondent has expected to defend claims from a class of individuals suffering from similar injuries caused by the same fire incident. Similarly, by electing a fifteen-member committee and authorising ICSTW to enter into the arbitration agreement with Spear Shirts, the claimants have expected that the dispute resolution will proceed on the basis of class arbitration. 12 S.I. Strong, The Sounds of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?, 30 Mich. J. Int'l L (2009), p Ibid., p Moot Problem, page See infra para Further Clarifications D-1 8

17 3. Class arbitration is appropriate for claims arising from a mass accident 26. The Tribunal should exercise its discretion under Art. 17(1) KLRCA Rules to proceed on the basis of class arbitration, since it is an appropriate manner 17 to conduct an arbitration concerning claims arising from a single mass accident. 18 The Mae Sot factory fire of 15 October 2013 constitutes a mass accident since it has done harm to at least 150 persons, and it was caused by a sudden, unintentional occurrence for which Spear Shirts are potentially responsible Class arbitration is an appropriate procedure in this case. The claims brought by the claimants involve common questions of law and fact, the resolution of which would affect all or most of the class members. The common questions of law include Spear Shirts tort liability under the applicable law and the types of damages available to the victims and their families. There will be common issues of fact because identical evidence will be required to establish the fire's origin and causation. Although there may be differences as to the respective damages claimed by the injured, the deceased and their families, such variance in damages should not constitute a barrier to class arbitration if there are common issues of fact and law prevailing the claims Secondly, class arbitration is appropriate because it is superior to other available procedures for the fair and efficient adjudication of the claims. 21 If Respondent succeeds in separating the claims into individual arbitrations, it could enjoy 17 Article 17(1), KLRCA Rules 18 J. Moore, Federal Practice (2d ed. 1969) para 23.43[3] 19 David F. Boyle, Mass Accident Class Actions, 60 Cal. L. Rev (1972), p.1616 ( Mass accident here includes harm to many persons or their property caused by a sudden, unintentional occurrence for which other persons are potentially responsible. ) 20 Mayer v. Mylod, 988 F.2d 635, 640 (6th Cir. 1993) 21 Boyle, supra, n.19, p

18 considerable leverage. While Respondent can prepare the same case of defense against similar claims raised by individual claimants, every victim or their families would have to expend their resources to fund and prepare arbitration against Spear Shirt. Since the victims and their families are likely to have limited financial resources, disallowing class arbitration could likely deter the claimants from bringing individual actions against Respondent. Therefore, joining the claimants by way of class arbitration would avoid this perverse outcome and is more appropriate than having their claims heard in separate arbitrations. B. THE CLAIMANTS MAY BE JOINED BY WAY OF REPRESENTATIVE ACTION ARBITRATION, IN THE EVENT THAT ICSTW IS THE NAMED PARTY TO THE ARBITRATION AGREEMENT 29. In the case that ICSTW is the named party to the arbitration agreement, the Tribunal should find it appropriate to join the victims and their families in a single arbitration by way of representative action arbitration. Representative action arbitration is a form of collective action where a party is designated to act on behalf of other parties, alleviating the need for those other parties to participate in the proceedings. 22 Unlike class arbitration where the nominal is a member of the class of wronged parties, representative action is usually sought by an approved intermediary entity, such as a governmental agency or public interest group, that is entitled to seek collective relief on behalf of all injured individuals Although there is no provision of representative action under Thai law or the KLRCA Rules, the Tribunal may adopt such procedure and its related principles so to 22 Karlsgodt, supra n.4, p.4 23 Ibid. 10

19 conduct the arbitration in an appropriate manner 24. Various jurisdictions providing for representative actions generally require that the claimants represented by the authorised association must (1) be named and ascertained 25, and (2) share the same interests 26 or have suffered damage resulting from the same cause 27. In this case, ICSTW amounts to an Indian-based public interest group which investigates and reports on working conditions throughout Asia. 28 The claimants can be easily ascertained since they are confined to the victims and their families from the Mae Sot factory fire, who share the same interests in claiming against Spear Shirt for damages suffered from the fire accident. Therefore, in light of procedural efficiency, the Tribunal should find it appropriate to proceed on the basis of representative action arbitration, if ICSTW, instead of the fifteen-member committee, is the named party to the arbitration agreement. C. ALTERNATIVELY, THE CLAIMANTS MAY BE JOINED IN A SINGLE ARBITRATION BY WAY OF JOINDER UNDER THE KRLCA RULES 31. Regardless of whether the fifteen-member committee or ICSTW is the named party to the arbitration agreement, the Tribunal may order joinder of claimants under the KLRCA Rule as an alternative to class arbitration or representative action. Under Article 17(5) KLRCA Rules, any party may request third persons to be joined in the arbitration, as long as such person is a party to the arbitration agreement [1] and that 24 Supra, para Article 4, C.A.O. Wet/Loi C.C.T.; Art Belgian Judicial Code (Belgium) 26 Part 19.6 CPR of England and Wales; Prudential Assurance Co Ltd v Newman Industries [1981] Ch.229 (United Kingdom). O.15 r.12 Rules of the High Court (Hong Kong) 27 Article Consumer Code, Article L Monetary and Financial Code, Article L Environmental Code (France) 28 Moot Problem, page 1 11

20 no party would be subject to prejudice caused by such joinder [2]. These two requirements are satisfied under either scenario concerning the named party to the arbitration agreement. Therefore, the Tribunal may join the additional claimants (the victims and their families) together with the named claimant in a single arbitration against Spear Shirts. 1. The victims and their families are parties to the arbitration agreement 32. Despite the non-signatory status of the victims and their families, they are parties to the arbitration agreement taking into account the context in which such agreement was concluded. a. In the case that the fifteen-member committee is the named party to the arbitration agreement, the victims and their families have impliedly consented to be the parties to the arbitration agreement 33. Although the arbitration agreement was concluded between the fifteen-member committee and Respondent, the victims and their families became a party to the agreement under an apparently authority. Where a party s conduct created the appearance of authorising an entity to act on its behalf, leading a counter-party to believe that the authorization actually existed, then the party will be bound by the acts of that entity. 29 Here, the victims and family members of deceased workers appointed a fifteen-member committee to serve as their representatives. 30 Regardless of whether there exists any formal agreement conferring such representative capacity upon the fifteen-member committee, the victims and their families gave the appearance of authority to the committee. Therefore, the committee, as the victims 29 Gary Born, International Commercial Arbitration, page 1425; J. Herbots (ed.), International Encyclopaedia of Laws: Contracts 242 (1993 & Update 2013); UNIDROIT, Principles of International Commercial Contracts Art (2004); G. Watts (ed.), Bowstead & Reynold on Agency (19th ed. 2010) 30 Further Clarifications D-1 12

21 and their families representative, obtained the implied authority to conclude an arbitration agreement on their behalf. Thus, the victims and their families are parties to the arbitration agreement. b. In the case that ICSTW is the named party to the arbitration agreement, the victims and their families are parties due to their agency relationship with ICSTW 34. In the case that ICSTW is the named party to the arbitration agreement, the signatories to this agreement include Respondent on one hand and ICSTW on the other. Although the victims and their families are not signatories to the arbitration agreement, they are still bound by it because it was executed on their behalf by ICSTW. Where a party has granted another party the power to act on its behalf and refer a dispute to arbitration, then the arbitration agreement would be binding on the first party even though it is a non-signatory to the arbitration agreement. 31 Since ICSTW was given full authority to represent the victims and their families in their dispute with Spear Shirts, it has acted as a representative on behalf of the victims and their families in concluding the arbitration agreement ICSTW was sufficiently authorised to enter into an arbitration agreement which binds the victims and their families. The Tribunal should find that the agency law relevant to the determination of this issue is the law of the arbitral seat 33 or the law governing the arbitration agreement. 34 Since Bangkok is chosen as the arbitral seat, 31 Judgement of 19 July 1988, XVI Y.B. Comm. Arb. 180, 181 (Swiss Federal Tribunal) 32 Further Clarifications D-1 33 Judgment of 19 August 2008, DFT 4A_128/2008, (Swiss Federal Tribunal). 34 Gary Born, International Commercial Arbitration, page

22 the relevant agency law should be found in the laws of Thailand. 35 Under Section 801(6) CCC, an agent with a special authority may do on behalf of his principal whatever is necessary for the due execution of the matters entrusted to him, including the submitting a dispute to arbitration on behalf of its principal. 36 In this case, since the victims and their families authorises ICSTW to represent them specifically for dispute resolution with Spear Shirts, the relationship between them amounts to agency relationship with special authority within the meaning of Section 801(6) CCC. 36. Therefore, the victims and their families have sufficiently authorised ICSTW to enter an arbitration agreement on their behalf and so amount to parties within the meaning of Article 17(5) KLRCA Rules. 2. Joinder of the victims and their families is beneficial rather than prejudicial to the Parties 37. The second requirement under Article 17(5) KLRCA Rules is also satisfied to allow joinder because doing so will not cause any prejudice to any of the parties [a]. Instead, joining the large number of victims and their families in a single arbitration would be beneficial to all parties by enhancing the efficiency and quality of the proceedings [b]. a. Joinder will not cause prejudice to any of the parties 38. The joinder of claimants is unlikely to result in prejudice of undue delay against any party, when it may in fact benefit all parties by minimising delay in the resolution of the dispute and resulting in a more expeditious payment to the victims and/or their 35 Clarifications C(sic)-1-A 36 C.f. Section 801(6), Thailand Civil and Commercial Code 14

23 families. 37 Neither will there be prejudice of undue process, since the Parties choice of the KLRCA Rules as the procedural law indicates their consent to the possibility of joining multiple claimants in a single arbitration under Article 17(5). Besides, b. The Tribunal should exercise its discretion to order joinder of parties 39. The Tribunal should allow joinder of the claimants in order to enhance the efficiency of proceedings and avoid inconsistent findings. According to Article 17(1) KLRCA Rules, the Tribunal is under the duty to conduct the proceedings in such manners which could avoid unnecessary delay and expense, and to ensure a fair and efficient process for resolving the Parties dispute. 40. Given that the claims are related and arose from the same incident, joining the claimants in a single arbitration will allow the Tribunal to benefit from common findings of fact. Time and costs can be saved by sharing the witness testimony, expert evidence and legal fees common to the claims of all claimants. Joining the claimants in a single arbitration can also avoid inconsistent awards granted against claimants of comparable claims arising from the same incident and governed by the same arbitration agreement. 38 Therefore, the Tribunal should join the victims and families and hear the claims together to acquire the best understanding of the facts and avoid inconsistent findings. II. RESPONDENT IS LIABLE FOR THE VICTIMS INJURIES AND DEATHS UNDER THAI LAW 41. Thai law is the applicable law in determining whether Respondent is liable for the injuries and deaths of the victims [A]. Even though Respondent is a corporate entity, 37 Ibid 38 Lara Pair; Paul Frankenstein, The New ICC Rules on Consolidation: Progress or Change?, Emory International Law Review (2011) 15

24 it can still be sued under the CCC as a juristic person. According to the CCC, a juristic person has rights and duties in conformity with the provisions of this Code or other law, 39 and enjoys the same right and is subject to the same duties as a natural person. 40 Hence, Respondent is subject to liabilities under the CCC. 42. Respondent is liable for the victims injuries and deaths for committing a wrongful act [B]. Alternatively, Respondent is jointly liable for the injuries and deaths by assisting Mae Sot s wrongful act [C]. In addition, Respondent is liable for negligently selecting Mae Sot as its supplier [D]. A. THAI LAW IS THE APPLICABLE LAW IN DETERMINING WHETHER RESPONDENT IS LIABLE FOR THE INJURIES AND DEATHS OF THE VICTIMS 43. Thai law is the applicable law in determining whether Respondent is liable for the injuries and deaths of the victims. In the absence of an express choice of law agreement, the Tribunal is required to select the applicable substantive law, by either applying some set of conflict of laws rules or directly applying a substantive law. 41 In this case, Claimant and Respondent had chosen the KLRCA Rules as the institutional rules and Thailand as the seat of the arbitration. 42 Thus, the KLRCA Rules and the arbitration law of Thailand are relevant in determining the substantive law. 44. The Tribunal should find that, under both the KLRCA Rules [1] and the Thailand Arbitration Act [2], Thai law is the applicable law to the dispute. 39 Section 66, Thailand Civil and Commercial Code 40 Section 67, Thailand Civil and Commercial Code 41 Born, page Moot Problem, page 3, para

25 1. Thai law is the applicable law under the KLRCA Rules 45. The KLRCA Rules provide for the applicability of Thai law as the substantive law to the dispute. Under Article 35 KLRCA Rules, the Tribunal shall apply the law which it determines to be appropriate if the parties have not chosen the applicable substantive law. In determining the appropriate law, the Tribunal should engage in a choice-of-law analysis and apply objective and defined conflict of laws rules to choose the applicable substantive law. 43 This is because directly applying a substantive law leaves the parties substantive rights to turn on subjective, unarticulated instincts of individual arbitrators and does little to further interest of predictability or fairness Commentators and various arbitral tribunals are of the view that the choice-of-law rules of the arbitral seat should be applied to determine the substantive law. 45 By agreeing on arbitration at a specified place pursuant to specified arbitration rules and procedures, there should be deemed implied agreement on the conflict of laws rules of the law of the seat of arbitration. 46 Under the Thailand Conflict of Laws Act, an obligation arising out of a wrongful act is governed by the law of the place where the facts constituting such wrongful act have taken place. 47 In this case, the facts constituting the wrongful act took place at the Mae Sot factory located in Mae Sot, 43 Born, page Ibid; Partial Award in ICC Case No (2003) 45 Born, page 2646; Award in ICC Case No ; Award in ICC Case No. 8385; Award in ICC Case No. 7262; Preliminary Award in ICC Case No Born, pages ; ICC Case No (2001); ICC Case No (2004) 47 Section 15, Chapter III of the Thailand Conflict of Laws Act 17

26 Thailand. 48 Therefore, the appropriate law to be applied by the Tribunal to the dispute should be the law of Thailand. 2. Thai law is the applicable law under the Thailand Arbitration Act 47. The Tribunal should find that the Thailand Arbitration Act also leads to the conclusion that Thai law is the applicable law. Under the Thailand Arbitration Act, if the parties fail to designate the governing law, the arbitral tribunal shall apply Thai law to the dispute. 49 However, when there is a conflict of laws, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable. 50 As demonstrated above, and in a number of contemporary awards, many arbitral tribunals have applied the choice-of-law rules of the arbitral seat. 51 As applying the Thailand Conflict of Laws Act would result in Thai law being the applicable law to the dispute, the Tribunal should find that, under the Thailand Arbitration Act, Thai law is the applicable law to the dispute. B. RESPONDENT IS BOUND TO MAKE COMPENSATION TO CLAIMANTS UNDER SECTION 420 OF THE CCC 48. Respondent is bound to make compensation to Claimants because it has injured the life, body and health of the victims. Section 420 of the CCC provides that a person who, willfully or negligently, unlawfully injures the life, body, health, liberty, property or any right of another person, is said to commit a wrongful act and is bound to make compensation therefore. Respondent is liable under this provision 48 Moot problem, pages Section 34, Chapter V of the Thailand Arbitration Act 50 Ibid 51 Supra para.46 18

27 because it has negligently and unlawfully injures the life, body and health of the victims [1] and caused damages to them [2]. 1. Respondent has negligently and unlawfully injures the life, body and health of Claimants 49. Respondent was acting negligently when turning a blind eye to the sweatshop conditions of Mae Sot Clothing. 52 Negligent means acting without the degree of care that a person would exercise in the circumstances, taking into account his capabilities. 53 The term unlawful refers to not only violation of certain laws but to negligent acts causing damages that the actor had no right to inflict on another. 54 Such unlawful act also includes an omission which must be done in order to prevent such consequence Respondent knew that the only reason Mae Sot Clothing was able to provide the men s shirts in such a low price was because of the sweatshop conditions as pointed out my Mr. Snowden. 56 As Mae Sot Clothing s largest customer, Respondent managed to enter contracts with Mae Sot in a ridiculously low price. The price was so low that made it impossible for Mae Sot Clothing to properly maintain its factory without violating any labour laws. In Mr. Snowden s words, Mae Sot work their 52 Claimants do not have to establish that Respondent owes Claimants a duty of care under Section 420 of the CCC per Consultation note by Thai Council of State, < 53 David Engel, Tort, Custom, and Karma: Globalization and Legal Consciousness in Thailand (Stanford University Press 2010), p.53; Section 59, Thailand Penal Code (TPC) 54 David Engel, Tort, Custom, and Karma: Globalization and Legal Consciousness in Thailand (Stanford University Press 2010), p Thainland Law, Thailand Personal Injury, < TPC, Chapter 4 56 Moot Problem, page 2, para. 2 19

28 employees to death. 57 It was very unfortunate that in this case, this happened literally. With such knowledge in mind, Respondent continued to hire Mae Sot to produce its shirts. It knew that the factory was poorly maintained and that the working environment was far from safe. It did nothing to change the situation even though it was within their power to make changes. 58 Under these circumstances, it is clear that Respondent was aware of the possible harm to the workers working in the factory. Its failure to respond to such possible harm with a degree of care for a person in its capacity means that it has acted negligently. Such inaction is unlawful because it is the unsafe working environment like the blocked aisles and stairways that caused the many injuries and fatalities in this case Respondent s actions has caused damages to Claimants 51. The victims suffered damages recognized under the CCC. Although the CCC does not expressly define damage, Section 420 of the CCC indicates that damage includes injury to life (death), body, health and property. Claimants in this case either lost their lives or suffered injuries. 60 These damages are recognizable under the CCC. 52. Respondent s acts caused the victims damages. In determining the causation issue, Thai courts mostly apply the direct cause test. 61 Under this test, the wrongdoer will be fully liable as long as his wrongful act contributed to the damages, no matter how 57 Ibid 58 Clarifications B-3 59 Moot Problem, page 3, Scope of Hearing Further Clarifications, A-The Victims-2 61 Supichai Sirichairungson, The Comparison between the Force Majeure Provision in Thailand and the Scope of Liability of U.S. in Tort Cases, 4(1) COJ Comparative Law Journal (2012), p

29 little the contribution is. 62 In the case of an intervening event, the original wrongdoer is liable if the damages caused by the intervening event are foreseeable. 63 It is undisputed that Mae Sot s cluttered and blocked aisles and stairways are a major cause to Claimants damages. 64 However, as previously submitted, Respondent s omission in exercising its power to change the unsafe working condition while knowingly takes advantage of the workers toil has also contributed to the victims damages. And under Thai law, no matter how little its contribution is, it will be fully liable. 53. Respondent might argue that the fire is and accidence and should break the chain of causation as an intervening event. Nevertheless, since Respondent was aware of Mae Sot s unsafe conditions after Snowden s visit, 65 the injuries and deaths in case of a fire are foreseeable. Therefore, the fire did not break the chain of causation and Respondent is liable for causing Claimants damages. As a result, Respondent is liable under Section 420 of the CCC for causing damages to the victims. C. ALTERNATIVELY, RESPONDENT IS JOINTLY LIABLE FOR THE INJURIES AND FATALITIES BY ASSISTING IN MAE SOT S WRONGFUL ACT UNDER SECTION 432 OF THE CCC 54. It is not disputed that Mae Sot Clothing is liable for committing a wrongful act under Section 420 of the CCC. Mae Sot was operated in a negligent manner, which caused 62 Ibid 63 Ibid, p Moot Problem, page 3, para.3 65 Moot Problem, page 2, para.2; Further Clarifications, A-Spear Shirts-3,4 21

30 or contributed to injuries and deaths of the victims. 66 The requirements for establishing liability under Section 420 CCC are therefore satisfied. 55. Therefore, even if Respondent cannot be found directly liable for the victims injuries and deaths, it is jointly liable for the victims damages because it has assisted Mae Sot s wrongful act. Under Section 432 of the CCC, if several persons by a joint wrongful act cause damage to another person, they are jointly bound to make compensation for the damage and persons who instigate or assist in a wrongful act are deemed to be joint actors. 56. Respondent is jointly liable for assisting in Mae Sot s wrongful Act. Assisting is broadly interpreted by Thai courts to include any act in support of the wrongful act. 67 Even failure to act or take control could amount to assisting. 68 Although Respondent was aware of Mae Sot s safety condition, 69 it failed to take any action to protect the victims from potential harms when it was within its power to do so. This amounted to assisting in Mae Sot s wrongful act, which makes Respondent jointly liable for the victims injuries and deaths. D. IN ADDITION, RESPONDENT IS LIABLE UNDER SECTION 428 OF THE CCC FOR NEGLIGENTLY SELECTING MAE SOT AS ITS SUPPLIER 57. Respondent is also liable for negligently selecting an incompetent supplier of its men s shirts. Under Section 428 of the CCC, a hirer will be liable for damages caused by the contractor to third persons if the hirer is at fault in selecting the 66 Moot Problem, page 4, para.2 67 Alongkorn Tongmee, Nattapon Vachiraprasith, Legal Liability of Riot Leaders, 10 Sept 2010, < 68 Ibid 69 Moot Problem, page 2, para.2 22

31 contractor. The hirer is at fault if he is negligent in finding a competent contractor The relationship between Respondent and Mae Sot is that of hirer and contractor. Such relationship is defined under Section 587 of the CCC as a hire of work, whereby the hirer pays the contractor a remuneration for the result of that work. 71 As the buyer of men s shirts, Respondent paid Mae Sot an individual purchase price upon completing the production under each purchase order. Mae Sot is therefore Respondent s contractor. 59. Mae Sot is not a competent contractor. A competent contractor should be one with proper knowledge, skill, experience, including all relevant factors a reasonable person would consider essential for the contractor to have to be able to do the work properly. 72 As the victims employer, Mae Sot is required by governmental regulations to have sufficient area, suitable ventilation, enough emergency exits, steady staircase, etc. for business operation. 73 With non-functioning fire extinguishers, blocked aisles and stairways, Mae Sot is assumed operating in a negligent manner, 74 therefore falling below the standard of a competent contractor. 70 Sanee Surasethburana, Tort Liability of Those Who Hire Independent Contractors, Thesis (LLM), Thammasat University, 2012, p.(6) < 71 Section 587, Thailand Civil and Commercial Code 72 Sanee Surasethburana, Tort Liability of Those Who Hire Independent Contractors, Thesis (LLM), Thammasat University, 2012, p.(7) < 73 Thai Ministerial Regulation No. 2 issued pursuant to the Factory Act B.E (1992), Clause 5 74 Moot Problem, page 4, para.2 23

32 60. Respondent is negligent in finding a competent contractor. A hirer should use reasonable care in finding a competent contractor. 75 Despite the fact that Mr. Baydon, Respondent s Vice President of Purchasing has authority to decide which companies manufacture Spear Shirts products, and was aware of Mae Sot s incompetence, 76 Respondent kept ordering from Mae Sot until the accident happened. Respondent therefore failed to take reasonable care in finding a competent contractor. And as it is undisputed that Mae Sot caused the victims damages, Respondent is at fault in selecting Mae Sot as its contractor and consequently liable for the damages. 61. In conclusion, Respondent is liable for the victims injuries and deaths under Thai law. Respondent is directly liable for its wrongful act towards the victims under the section 420 of the CCC. Alternatively, it is jointly liable for assisting in Mae Sot s wrongful act under the same Code. Finally, Respondent is aslo liable for faultily selecting the incompetent Mae Sot as its contractor. III. THE TRIBUNAL SHOULD FIND THAT RESPONDENT IS OBLIGED TO REIMBURSE CLAIMANTS THE DAMAGES CLAIMED UNDER THAI LAW 62. Under Thai law, Claimants have the burden to prove that they in fact sustained the claimed damages, 77 either as victims or their families. Nevertheless, the Tribunal has discretion under Section 438 of the CCC to award damages to Claimants according to the circumstances and gravity of the wrongful act. This is the case even if 75 Sanee Surasethburana, Tort Liability of Those Who Hire Independent Contractors, Thesis (LLM), Thammasat University, 2012, p.(7) < 76 See supra para Worrawong Atcharawongchai, The Non-Pecuniary Damages in Wrongful Acts Causing Bodily Harm and Death: The Comparative Study on U.S. and Thailand Laws, Spring Issue 1, Volume 16, Thailand Law Journal (2013) < 24

33 Claimants are unable to adduce adequate evidence proving that they actually suffered the type of damages. 78 The Tribunal should find that Respondent is obliged to reimburse Claimants the claimed damages in the case of death [A] and in the case of injury [B]. A. THE TRIBUNAL SHOULD FIND THAT RESPONDENT IS OBLIGED TO REIMBURSE CLAIMANTS THE CLAIMED DAMAGES IN THE CASE OF DEATH 63. For victims died as a result of the accident, their families are entitled to claim the funeral and other necessary expenses from Respondent. 79 If the victims did not die immediately after the accident, Respondent should in addition reimburse the victims and their families the medical expenses and loss of earning prior to death Respondent should also reimburse the victims families for loss of legal support from the deceased under Section 443 of the CCC. Given that in Thai Law, children are bound to maintain their parents 81 and in this case many of the deceased were of a young age 82 and able to support their families for a long time, the families should be compensated with the loss of legal support. B. THE TRIBUNAL SHOULD FIND THAT RESPONDENT IS OBLIGED TO REIMBURSE CLAIMANTS THE CLAIMED DAMAGES IN THE CASE OF INJURY 65. The victims under this category are entitled to recover from Respondent any expenses that they need to pay due to the injuries. 83 These expenses are broadly 78 Ibid 79 Section 443, Thailand Civil and Commercial Code 80 Ibid 81 Section 1563, Thailand Civil and Commercial Code 82 Moot Problem, page 2, para.8 83 Section 444, Thailand Civil and Commercial Code 25