AT THE THAI ARBITRATION INSTITUTE (BANGKOK) CASE CONCERNING THE INCIDENT IN MAE SOT FACTORY THE INJURED VICTIMS AND FAMILIES OF THE DECEASED VICTIMS

Transcription

1 THE 9 th LAWASIA INTERNATIONAL MOOT COMPETITION 2014 AT THE THAI ARBITRATION INSTITUTE (BANGKOK) 2014 CASE CONCERNING THE INCIDENT IN MAE SOT FACTORY THE INJURED VICTIMS AND FAMILIES OF THE DECEASED VICTIMS INVOLVED IN THE MAE SOT FACTORY INCIDENT Claimants v. SPEAR SHIRTS INC. Respondent MEMORIAL FOR THE RESPONDENT i

2 TABLE OF CONTENTS TABLE OF CONTENTS... II INDEX OF AUTHORITIES... V STATEMENT OF JURISDICTION... VII STATEMENT OF FACTS... VIII AGREEMENT FOR DISPUTE RESOLUTIONERROR! BOOKMARK NOT DEFINED. QUESTIONS PRESENTED... X SUMMARY OF PLEADINGS... XI PLEADINGS... 1 I. THE LAWS OF THAILAND GOVERNS THE PRESENT DISPUTE BETWEEN THE CLAIMANTS AND THE RESPONDENT... 1 A. THE LAWS OF THAILAND GOVERNS THE PROCEDURAL ASPECTS OF THIS ARBITRATION... 1 B. THE LAWS OF THAILAND GOVERNS THE SUBSTANTIVE MERITS OF THIS ARBITRATION... 3 (a) The Conflict Of Laws Principles Of Thailand Dictates That The Laws Of Thailand Shall Govern The Substantive Merits Of This Dispute Between The Parties... 3 (b) Further And In The Alternative, The Application Of Malaysian And United States Conflict Of Laws Principles Similarly Dictates That The Laws Of Thailand Is Applicable To The Substantive Merits Of This Dispute... 4 II. THE LARGE NUMBER OF INJURED VICTIMS AND FAMILIES OF THE DECEASED VICTIMS CANNOT BE JOINED IN A SINGLE ARBITRATION... 4 A. THE ARBITRAL AGREEMENT BETWEEN THE RESPONDENT AND THE CLAIMANTS IS GOVERNED BY THE LAWS OF THAILAND... 4 B. THE NGO IN THE PRESENT CASE CANNOT ARBITRATE THE DISPUTE ON BEHALF OF THE LARGE NUMBER OF INJURED VICTIMS AND THE FAMILIES OF THE DECEASED VICTIMS... 5 (a) The authority given to the NGO by the 15 member committee to act on behalf of the total number of victims and their families is not representative of the victims and families consent (b) The total number of victims and families of the victims have not agreed to for the NGO to submit this dispute to arbitration on their behalf... 6 ii

3 C. THE LARGE NUMBER OF CLAIMANTS CANNOT BE JOINED IN THIS ARBITRATION UNDER ART.17(5) OF THE UNCITRAL RULES AS MODIFIED UNDER THE KLRCA RULES... 7 (a) The Large Number Of Victims And Families Of The Victims Are Not Parties To The Arbitral Agreement... 7 (b) The Respondent Is Prejudiced If The Large Number Of Claimants Are Joined In This Arbitration... 8 i. The Respondent may be liable for an indefinite amount of time to indefinite numbers of Claimants because the identities and the number of Claimants cannot be ascertained... 8 ii. The Claimants are without the capacity to enter into an arbitral agreement under the laws of Thailand... 9 D. THE LARGE NUMBER OF CLAIMANTS CANNOT BE JOINED IN THIS ARBITRATION BY WAY OF CONSOLIDATION III. THE RESPONDENT AS A MERE CUSTOMER OF MAE SOT LTD. IS NOT LIABLE FOR THE INJURIES AND DEATHS OF MAE SOT CLOTHING LTD. S EMPLOYEES A. THE RELATIONSHIP BETWEEN THE RESPONDENT AND MAE SOT CLOTHING LTD. IS MERELY A CONTRACTUAL BUYER-SELLER RELATIONSHIP B. THE RESPONDENT S INVOLVEMENT IN THE OPERATIONS OF MAE SOT CLOTHING LTD. DOES NOT EXTEND BEYOND THEIR CONTRACTUAL BUYER SELLER ROLES C. THE MESSAGE DESCRIBING THE CLUTTERED CONDITIONS IN MAE SOT FACTORY BY THEODORE SNOWDEN DOES NOT AMOUNT TO ANY GROUNDS FOR LIABILITY ON THE RESPONDENT (a) The Message By Theodore Snowden To The Respondent Does Not Amount To An Evidence Of Knowledge On The Respondent As To The Cluttered Conditions In Mae Sot Factory (b) The Harm Suffered By The Injured Victims And The Deceased Victims Are Not Reasonably Foreseeable D. IN ANY EVENT, THE RESPONDENT IS NOT LIABLE FOR ANY OF MAE SOT LTD. S CONDUCTS THAT HAD CAUSED THE HARM SUFFERED BY THE CLAIMANTS BECAUSE THE RESPONDENT WAS NO LONGER DEALING WITH MAE SOT LTD. AT THE TIME WHEN THE FIRE OCCURRED IV. EVEN IF LIABILITY CAN BE ESTABLISHED, THE DAMAGES AWARDED TO THE CLAIMANTS MUST BE APPORTIONED IN ACCORDANCE WITH THE CIRCUMSTANCES AND GRAVITY OF THE RESPONDENT S LIABILITY UNDER THE LAWS OF THAILAND iii

4 PRAYER FOR RELIEF iv

5 Rules INDEX OF AUTHORITIES KLRCA... 7 Statutes Civil and Commercial Code of Thailand... 8, 9, 10, 16 Thailand Arbitration Act , 6, 9 Treatises & Books Gary Born, International Arbitration Cases and Materials... 2 Jean-François Poudret, Sébastien Besson, Comparative Law of International Arbitration... 2 Redfern & Hunter, Law and Practice of International Commercial Arbitration... 5 Cases (Other Jurisdictions) AT & T Technologies Inc. v. Communications Workers of Am., 475 U.S. 643, 648 (1986)... 7 Doe v. Wal-Mart Stores, Inc., 572 F.3d 677 [2009] (9th Cir.) EEOC v. Waffle House, INC., 534 U.S. 279, 122 S. CT. 754 [2002]... 7 Government of India v. Cairn Energy India Pty Ltd [2012] 3 MLRA Laabs v. Southern California Edison Co. [2009] 175 Cal. App. 4th Lueddecke. v. Chevrolet. Motor. Co. 70 F.2d 345 [1934] (8th Cir.) Williams v State Farm Mut. Auto. Ins. Co. [1994] 229 Conn. 359 Conn... 4 Yusof Ahmed v Toys 'R' Us [1997] United States Court of Appeals Second Circuit 126 F. 3d Cases (Commonwealth Jurisdictions) Arsanovia Ltd and others v. Cruz City 1 Mauritius Holdings [2012] EWHC Bank Bumiputra Malaysia Bhd & Anor v Lorrain Esme Osman & Ors [1987] 1 MLJ C v. D [2007] EWCA Civ 1282 [2007] All ER (D) v

6 Dubai Islamic Bank PJSC v. Paymentech Merchant Services Incorporated [2000] EWHC Government of the Lao People's Democratic Republic v Thai-Lao Lignite Co Ltd. [2013] MLJU Kuwait Airways Corp v. Iraqi Airways [2002] 2 AC Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd [1961] 1 All ER vi

7 STATEMENT OF JURISDICTION The injured victims and families of the deceased victims in the Mae Sot Factory incident ( Claimants ) and Spear Shirts Inc. ( Respondent ) have agreed to submit this dispute to binding arbitration pursuant to Rule 1(1) of the Kuala Lumpur Regional Centre for Arbitration Rules before the Thai Arbitration Institute in Bangkok. The dispute does not include the challenge on the propriety and validity of the arbitral agreement between the Parties. vii

8 STATEMENT OF FACTS The Parties To The Arbitral Proceeding 1. The Claimants involved in the Mae Sot Factory (physical place of the factory) incident are employees of Mae Sot Clothing Ltd. ( Mae Sot ). 2. The Respondent is one of the few largest clothing brands in the world, based in Los Angeles, California. The Respondent has been Mae Sot s largest customer for the past 10 years. 3. On the 15th of October 2013, a fire occurred in Mae Sot Factory. The fire was caused by an overheated textile machine. As a result, 50 employees died and more than 100 suffered severe injuries Facts Surrounding The Incident 4. Having been Mae Sot s customer pursuant to a Standard Purchase Order for about 10 years, the Respondent has made several suggestions to Mae Sot. In which, the Respondent s suggestions regarding the production deadlines and quality control of Mae Sot s garments were accepted by Mae Sot. 5. Several months prior to the fire, Mr. Theodore Snowden ( Snowy ), an employee of the Respondent on vacation in Phuket, has visited Mae Sot Factory. During his vacation, Snowy described his enjoyable vacation in a message forwarded to the President of the Respondent s company. In the message, he also described Mae Sot Factory to be cluttered workplace upon his visit to Mae Sot Factory. viii

9 6. After the fire, the Thai Fire Inspector found that many of the fire extinguishers in Mae Sot Factory were non-functional. The Respondent and the Claimants has agreed on a report by an independent auditor stating that the major cause of the death and injuries of the Claimants were due to the cluttered premise in Mae Sot Factory. Agreement For The Resolution Of The Dispute 7. Pursuant to the fire, the group of injured victims and families of the deceased victims comprising the Claimants; then selected a 15-member committee to act on their behalf. 13 out of the 15-member committee subsequently engaged with the International Collective in Support of Textile Workers ( ICSTW ), a non-governmental organisation based in India ( NGO ), to act as their legal counsel and to represent the Claimants. 8. The NGO, attempting to represent the total number of Claimants, has agreed with the Respondent to submit this dispute to arbitration for the expeditious resolution of this dispute. Hence, the NGO entered into an arbitral agreement with the Respondent to resolve their dispute in accordance with the Kuala Lumpur Regional Centre for Arbitration Rules ( KLRCA Rules ) under the supervision of the Thai Arbitration Institute. ix

10 QUESTIONS PRESENTED I. What is the proper law to be used to resolve the present dispute; II. Whether the large number of unascertainable Claimants (victims and families) can be joined in a single arbitration; and III. Whether the Respondent as a mere customer of Mae Sot Clothing Ltd. can be held liable for the injuries and deaths of Mae Sot s employees; and IV. Assuming liability can be established, whether the monetary damages awarded to the Claimants can be apportioned in accordance with circumstances and the gravity of the Respondent s liability under the laws of Thailand. x

11 SUMMARY OF PLEADINGS I. The laws of Thailand govern both the procedural and substantive matters of the present dispute. II. The large number of Claimants in the present dispute cannot be joined in a single arbitration, because the NGOs purportedly acting on behalf of the Claimants have not obtained the full consent and authority from the total number of Claimants to arbitrate the dispute on their behalf. Further, the Claimants cannot be joined in a single arbitration under Article 17(5) of the KLRCA Rules because they are not parties to the arbitral agreement between the NGOs and the Respondent. In any event, the joining of the large number of Claimants will be prejudicial to the Respondent since the exact age, identities, and exact number of Claimants cannot be ascertained. Therefore, the Respondent shall not be liable for an indefinite amount of time to indefinite numbers of Claimants. III. The Respondent as a mere customer of Mae Sot cannot be liable for the injuries and death of Mae Sot Clothing s employees because the relationship between the Respondent and Mae Sot is merely a contractual buyer-seller relationship under the laws of Thailand. A Fortiori, the Respondent is also not involved in the day-to-day operations of Mae Sot Factory, thus the relationship between the Respondent and Mae Sot does not extend beyond their contractual buyer-seller relationship. Further, the message describing the cluttered workplace in Mae Sot Factory sent by Snowy to the Respondent during his Phuket Beach Vacation does not amount to any grounds for liability on the Respondent. Moreover, the harms suffered by the Claimants are not reasonably foreseeable from the message by Snowy. In any event, Mae Sot xi

12 was no longer producing the Respondent s garments under any of the Respondent s purchase orders or instructions when the fire occurred in Mae Sot Factory. IV. Even if liability can be established, the damages awarded to the Claimants must be apportioned in accordance with the circumstance and gravity of the Respondent s liability under the laws of Thailand. xii

13 PLEADINGS I. THE LAWS OF THAILAND GOVERNS THE PRESENT DISPUTE BETWEEN THE CLAIMANTS AND THE RESPONDENT 1. In an international arbitration, multiple laws may govern different aspects of the arbitration. Generally, the laws governing the procedural aspects and the substantive merits of the dispute may be different 1. However, the laws of Thailand governs both the procedural and substantive aspects of the present dispute between the Respondent and the Claimants ( Parties ). A. THE LAWS OF THAILAND GOVERNS THE PROCEDURAL ASPECTS OF THIS ARBITRATION 2. Although the Claimants and the Respondent in the present dispute have not agreed upon any express choice of laws, the Parties have agreed to arbitrate using the KLRCA rules 2 under the supervision of the Thai Arbitration Institute In absence of an express choice of law to govern the procedural aspects of an arbitral proceeding, the laws of the seat of arbitration shall be the laws regulating the jurisdiction 1 Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd [1993] A.C. 334; Arsanovia Ltd and others v. Cruz City 1 Mauritius Holdings [2012] EWHC 3702; Kuwait Airways Corp v. Iraqi Airways [2002] 2 AC 883, Lord Nicholls at p Moot Problem, Pg.3 3 Clarifications, Pg.3, C.1 1

14 of the arbitral tribunal and the laws supervising the arbitral award 4. Hence, the law of the seat of arbitration is the law governing the procedural aspects of the arbitral proceeding Although the parties have decided to use the KLRCA rules, the parties have also agreed for this arbitration to be seated in Thailand 6. In any event, Rule 6(1) of the KLRCA rules states that although Malaysia shall be the default seat of arbitration, the arbitral tribunal must seek to choose the most appropriate seat of arbitration. 5. In determining the most appropriate seat of arbitration, it is trite that the appropriate seat of arbitration must be the most significant to the disputing parties in regard to the centrality of the dispute and the convenience of the seat of arbitration to the parties In the present case, all matters surrounding the central dispute between the parties are closely related to Thailand 8. As such, the regulation of any administrative and procedural aspects of this arbitration must be in accordance with Thailand s standards of procedures. 7. Moreover, the victims of the Mae Sot Factory incident are employed in Thailand. The Respondent, being a multinational company, is also involved in their dealings in Thailand. 8. Accordingly, Thailand is still the most appropriate and significant seat of arbitration to the Parties in regard to the centrality of the dispute and the convenience to the Parties. 4 C v. D [2007] EWCA Civ 1282 [2007] All ER (D) 61 Longmore LJ at para.17; Government of India v. Cairn Energy India Pty Ltd [2012] 3 MLRA 1; C v. D 5 Jean-François Poudret, Sébastien Besson, Comparative Law of International Arbitration 6 Clarifications, Pg.3, C-1 7 Gary Born, International Arbitration Cases and Materials, Page.587; Dubai Islamic Bank PJSC v. Paymentech Merchant Services Incorporated [2000] EWHC Moot Problem, Pg. 2&3 2

15 9. As such, the law of the seat of arbitration Thailand, shall be the law governing the procedural aspect of this arbitration between the Parties. Accordingly, the primary legislation relevant to this arbitration is the Thailand Arbitration Act B. THE LAWS OF THAILAND GOVERNS THE SUBSTANTIVE MERITS OF THIS ARBITRATION (a) The Conflict Of Laws Principles Of Thailand Dictates That The Laws Of Thailand Shall Govern The Substantive Merits Of This Dispute Between The Parties 10. Where the Parties have not agreed upon an express choice of law applicable to the substantive merits of the dispute, the Thai Arbitration Act 2002 states that the laws of Thailand shall apply. 11. In the event there is a conflict of laws, the appropriate conflict of laws rules shall be used to determine the laws applicable to the substantive merits of the dispute between the Parties 9. The conflict of laws rules referred to shall be the conflict of laws rules of the lex arbitri the Thailand Conflict of Laws Act As the dispute between the Parties is regarding the Respondent s liability arising out of a delict by Mae Sot Factory, S.15 of the Thailand Conflict of Laws Act 1938 dictates that the law of the place where the facts constitute the delict/wrongful act shall apply. 9 Thailand Arbitration Act 2002, S.34 3

16 13. As the injuries suffered by the Claimants were caused by the cluttered conditions in Mae Sot Factory that is located in Thailand 10, the laws applicable to the substantive merits of the dispute in determining the Respondent s liability shall be the laws of Thailand. (b) Further And In The Alternative, The Application Of Malaysian And United States Conflict Of Laws Principles Similarly Dictates That The Laws Of Thailand Is Applicable To The Substantive Merits Of This Dispute 14. In any event, the conflict of laws principles of Malaysia 11 and the United States 12 similarly dictates that the laws applicable to determine the Respondent s liability for a tortious act or a delict shall be the lex loci delicti. 15. Therefore, the laws applicable to the substantive matters of this dispute between the Parties remain to be the laws of Thailand. II. THE LARGE NUMBER OF INJURED VICTIMS AND FAMILIES OF THE DECEASED VICTIMS CANNOT BE JOINED IN A SINGLE ARBITRATION A. THE ARBITRAL AGREEMENT BETWEEN THE RESPONDENT AND THE CLAIMANTS IS GOVERNED BY THE LAWS OF THAILAND 16. In absence of an express agreement as to the law applicable to the arbitral agreement, and where the formation of the contract cannot be ascertained, S.13 of the Thailand Conflict of 10 Moot Problem, Pg.3, Bank Bumiputra Malaysia Bhd & Anor v. Lorrain Esme Osman & Ors [1987] 1 MLJ Williams v. State Farm Mut. Auto. Ins. Co. [1994] 229 Conn. 359 Conn. 4

17 Laws Act dictates that the law applicable to a contractual agreement is the law of the place where the contract is to be performed. 17. As such, the law governing the arbitral agreement between the Parties shall be the law of Thailand since the arbitral proceeding is to take place in Thailand. B. THE NGO IN THE PRESENT CASE CANNOT ARBITRATE THE DISPUTE ON BEHALF OF THE LARGE NUMBER OF INJURED VICTIMS AND THE FAMILIES OF THE DECEASED VICTIMS (a) The authority given to the NGO by the 15 member committee to act on behalf of the total number of victims and their families is not representative of the victims and families consent. 18. In the present case, the Claimants have selected a 15-member committee to represent the Claimants. However, only 13 out of the 15 committee members have come to a consensus to allow the NGO to enter into an arbitral agreement to resolve the dispute on behalf of the Claimants Under arbitration principles, consent and agreement by the parties to submit a dispute to arbitration essential 14. An arbitral award exceeding the jurisdiction of an arbitral tribunal 13 Further Clarifications, Pg.4, D.3 14 Redfern & Hunter, Law and Practice of International Commercial Arbitration, Pg

18 over non-parties to an arbitral proceeding is liable to be set aside 15 by the courts of the seat of arbitration The fact that 2 of the 15 member committee was not of the same consensus shows a conflict in the decision of the committee. As such, the decision to authorise the NGO to arbitrate on behalf of the Claimants does not reflect the intentions and consent of the Claimants to submit this dispute to arbitration. 21. As such, this arbitral tribunal is not empowered to exercise any jurisdiction to render any arbitral award for the Claimants because the NGO has no authority to submit this dispute to arbitration on behalf of the Claimants. (b) The total number of victims and families of the victims have not agreed to for the NGO to submit this dispute to arbitration on their behalf 22. Although the NGO in the present case is trying to represent the total number Claimants, the exact numbers and identities of the Claimants that have agreed to allow the NGO to arbitrate on their behalf cannot be ascertained Moreover, some of the Claimants are still reserving their rights to be represented by a different legal counsel of their choice or to even decline to participate in this arbitration Supra, n.9, S Yusof Ahmed v. Toys 'R' Us [1997] United States Court of Appeals Second Circuit 126 F. 3d. 15; Government of the Lao People's Democratic Republic v. Thai-Lao Lignite Co Ltd. [2013] MLJU Further Clarifications, Pg.4, D.3 18 Ibid. 6

19 24. Therefore, the decision by the NGO to submit this dispute to arbitration does not represent the intent and consent of the total number of Claimants. C. THE LARGE NUMBER OF CLAIMANTS CANNOT BE JOINED IN THIS ARBITRATION UNDER ART.17(5) OF THE UNCITRAL RULES AS MODIFIED UNDER THE KLRCA RULES 25. The KLRCA Rules incorporates Article 17(5) of the United Nations Commission on International Trade Law Arbitration Rules ( UNCITRAL Rules ) as modified under the KLRCA rules. At the request of any party, the arbitral tribunal may allow one or more third person to be joined in the arbitration provided that such persons are parties to the arbitral agreement, and the joinder does not prejudice the parties 19. (a) The Large Number Of Victims And Families Of The Victims Are Not Parties To The Arbitral Agreement 26. As a general rule, only the parties to an arbitration agreement can be compelled to arbitrate 20. The arbitral agreement between the parties we agree to submit this dispute to binding arbitration in Bangkok under the supervision of the Thai Arbitration Institute does not stipulate the exact number and identities of the Claimants KLRCA, Art.17(5) 20 Ibid.,; AT & T Technologies Inc. v. Communications Workers of Am., 475 U.S. 643, 648 [1986]; EEOC v. Waffle House, INC., 534 U.S. 279, 122 S. CT. 754 [2002] 21 Clarifications, Pg.3, D.1 7

20 27. Moreover, the decision to submit this dispute to arbitration is the sole decision of the NGO in the present case 22. Therefore, the signatories to the arbitral agreement are only the Respondent and the NGO and not the total number of victims and the families of the deceased victims in the Mae Sot incident. 28. In light of this ambiguity, the burden of proof is on the Claimants to establish that the arbitral agreement is inclusive of the total number of victims and families of the victims 23. (b) The Respondent Is Prejudiced If The Large Number Of Claimants Are Joined In This Arbitration i. The Respondent may be liable for an indefinite amount of time to indefinite numbers of Claimants because the identities and the number of Claimants cannot be ascertained 29. Although the NGO is purportedly representing the total number of Claimants, the exact number and identities of the Claimants are unascertainable. 30. In the present case, 50 employees died, and more than 100 were injured 24. Notwithstanding the aforesaid, the NGO in the present dispute is attempting to represent the total number of Claimants that have not been ascertained. 22 Further Clarifications; Pg.4, D.1 23 Civil and Commercial Code of Thailand, S Moot Problem, Pg.2 8

21 31. Furthermore, all employment records of the purported Claimants were destroyed in the fire 25. As such, whether or not these large numbers of Claimants are in fact persons harmed by the fire or are actual employees of Mae Sot cannot be ascertained. ii. The Claimants are without the capacity to enter into an arbitral agreement under the laws of Thailand 32. Although the NGO is attempting to arbitrate on behalf of the Claimants, many of these victims are thought to be below the legal age of employment the age of Even if the Claimants are of the legal age of employment, they are still below the legal age of capacity to consent for an arbitral agreement the age of As such, any arbitral award rendered by this arbitral tribunal is unenforceable against the Claimants that are without the capacity to consent for an arbitral agreement If the Claimants are indeed without the capacity to enter into an arbitral agreement under the laws of Thailand, the welfare of these Claimants should be managed by an appropriate state institution and not through the mechanism of a commercial arbitration. 35. For the above reasons, the inclusion of the large number of unascertainable Claimants in this arbitration will be prejudicial to the Respondent because the Respondent may be liable for an indefinite amount of time to an indefinite number of Claimants. 25 Further Clarifications, Pg.1, A.3 26 Moot Problem, Pg.2 27 Civil and Commercial Code of Thailand, S Supra, n.9, S.43 9

22 D. THE LARGE NUMBER OF CLAIMANTS CANNOT BE JOINED IN THIS ARBITRATION BY WAY OF CONSOLIDATION 36. The arbitral tribunal may consolidate several arbitral proceedings and concurrent hearings under Rule 8 of the KLRCA if the parties have conferred such powers to the arbitral tribunal. 37. However, the arbitral agreement between the Parties does not stipulate any possibility of a consolidation of arbitral proceedings 29. Nonetheless, there exists only one arbitral agreement between the Respondent and the NGOs that are purportedly acting on behalf of the large number of Claimants. Therefore, there are no multiple arbitral proceedings to be consolidated in the first place. 38. The Respondent respectfully submits that the large number of Claimants cannot be joined in this arbitration by way of consolidation of proceedings and concurrent hearings under Rule 8 of the KLRCA rules. III. THE RESPONDENT AS A MERE CUSTOMER OF MAE SOT LTD. IS NOT LIABLE FOR THE INJURIES AND DEATHS OF MAE SOT CLOTHING LTD. S EMPLOYEES A. THE RELATIONSHIP BETWEEN THE RESPONDENT AND MAE SOT CLOTHING LTD. IS MERELY A CONTRACTUAL BUYER-SELLER RELATIONSHIP 29 Clarifications, Pg.3, D.1 10

23 39. A buyer-seller relationship under the laws of Thailand is defined as the exchange of ownership in property for payment 30. At all instances, the relationship between the Respondent and Mae Sot reflects the traits of a buyer-seller relationship. 40. Including Mae Sot, the Respondent uses a Standard Purchase Order 31 ( SPO ) for all its purchases of clothing products 32. Throughout the past 10 years, the relationship between the Respondent and Mae Sot is governed solely by the SPO that is consistently used by both the Respondent and Mae Sot The SPO stipulates that the transaction between the Respondent and Mae Sot is an exchange of payment by the Respondent to Mae Sot for the delivery of goods and merchandise garments that are ordered by the Respondent, attached with the Respondent s logo Notwithstanding the fact that the Respondent is the largest customer of Mae Sot 35 ; and that Mae Sot produces garments for at least 5 other clothing companies 36, Mae Sot is not under any legal obligation to accept any of the Respondent s orders pursuant to the SPO and may even decline to produce the Respondent s garments. 30 Civil and Commercial Code of Thailand, S Clarifications, Attachment #1 32 Clarifications, Pg.3, B.10 (may be indicated as B.7 in uncorrected documents of the Clarifications) 33 Further Clarifications, Pg.5, D.4 34 Further Clarifications, Pg.2, B.1 35 Clarifications, Pg.1, A.2 36 Clarifications, Pg.3, C.1 11

24 43. Therefore, the contractual buyer-seller relationship between the Respondent and Mae Sot cannot give rise to any duty and liabilities on the Respondent for the injuries and deaths of Mae Sot s employees under the laws of Thailand. B. THE RESPONDENT S INVOLVEMENT IN THE OPERATIONS OF MAE SOT CLOTHING LTD. DOES NOT EXTEND BEYOND THEIR CONTRACTUAL BUYER SELLER ROLES 44. The relationship between the Respondent and Mae Sot has never extended beyond their stipulated contractual roles. This is evidenced by the fact that for the past 10 years of dealing with one another, the Respondent has never had any previous communication with Mae Sot as to the working conditions in Mae Sot Factory Moreover, the Respondent does not own any shares or any form of interests in Mae Sot Factory 38. Therefore, the proximity of relationship between the Respondent and Mae Sot and any duties arising therein does not extend beyond a contractual buyer seller relationship. 46. Although the Respondent has made several suggestions to Mae Sot which were all subsequently put into place 39, these suggestions do not include suggestions as to the Board of Directors in Mae Sot and are only regarding the production deadlines and quality control of the Respondent s garments Clarifications, Pg.2, B.8 38 Clarifications, Pg.2, B.2 39 Clarifications, Pg.2, B.3 40 Further Clarifications, Pg.5, E.1 12

25 47. Hence, the Respondent s suggestions regarding production deadlines and quality control of the Respondent s garments that were put into place by Mae Sot were merely efforts by Mae Sot to fulfil their contractual obligations with the Respondent pursuant to the Respondent s SPO. 48. Therefore, the implementation of Mae Sot s contractual obligations from the SPO in regard to the production deadlines and quality control of the Respondent s garments does not amount to any form of control over the day-to-day operations of Mae Sot Factory 41. C. THE MESSAGE DESCRIBING THE CLUTTERED CONDITIONS IN MAE SOT FACTORY BY THEODORE SNOWDEN DOES NOT AMOUNT TO ANY GROUNDS FOR LIABILITY ON THE RESPONDENT (a) The Message By Theodore Snowden To The Respondent Does Not Amount To An Evidence Of Knowledge On The Respondent As To The Cluttered Conditions In Mae Sot Factory 49. Although Mr. Theodore Snowden ( Snowy ) described the environment in Mae Sot Factory to be cluttered, the descriptive message was sent whilst Snowy was on a vacation in Phuket, Thailand 42. Hence, the message sent by Snowy was not in the course of his employment. 41 Lueddecke. v. Chevrolet. Motor. Co. 70 F.2d 345 [1934] (8th Cir.); Doe v. Wal-Mart Stores, Inc., 572 F.3d 677 [2009] (9th Cir.) 42 Moot problem, Pg.2 13

26 50. In addition, Snowy was not visiting Mae Sot in a representative capacity for the Respondent, nor was the description of the factory for any formal purposes or report. 51. In any event, the message by Snowy was merely forwarded to the President of the Respondent s company 43, whether or not the message was read is inconclusive. Therefore, the description of Mae Sot Factory being a cluttered environment by Snowy does not evidence any knowledge on the Respondent s part as to the cluttered working conditions in Mae Sot Factory. (b) The Harm Suffered By The Injured Victims And The Deceased Victims Are Not Reasonably Foreseeable 52. Even if Snowy s message amounts to any evidence of knowledge regarding the cluttered conditions in Mae Sot on the Respondent s part, the Respondent is not liable for the remote harm suffered by the Claimants. 53. It is trite that the liability for a delict or tortious act does not extend to circumstances where the harm suffered was not reasonably foreseeable Assuming that the Respondent had knowledge of the cluttered conditions in Mae Sot, it is only foreseeable that the cluttered conditions in Mae Sot may cause an employee to trip and fall. It is not reasonably foreseeable from Snowy s message that a textile machine in 43 Further Clarifications, Pg.1, Spear Shirts, A.4 44 Overseas Tankship (UK) Ltd. v. Morts Dock and Engineering Co Ltd [1961] 1 All ER 404; Laabs v. Southern California Edison Co. [2009] 175 Cal. App. 4th

27 Mae Sot Factory may overheat, giving rise to a fire that caused the deaths of 50 employees and the injuries of more than 100 employees in Mae Sot Therefore, the Respondent cannot be liable for the harm suffered by the Claimants, as the magnitude of harm suffered by the Claimants was not reasonably foreseeable from the message that was sent by Snowy to the Respondent. D. IN ANY EVENT, THE RESPONDENT IS NOT LIABLE FOR ANY OF MAE SOT LTD. S CONDUCTS THAT HAD CAUSED THE HARM SUFFERED BY THE CLAIMANTS BECAUSE THE RESPONDENT WAS NO LONGER DEALING WITH MAE SOT LTD. AT THE TIME WHEN THE FIRE OCCURRED 56. At the time of the fire, Mae Sot was no longer manufacturing garments based on the Respondent s purchase orders. The most recent purchase order sent by the Respondent was on the 1st of April It only takes Mae Sot days to produce, fulfil, and deliver the Respondent s products However, the fire occurred on the 15th of October , a four month period since Mae Sot fulfilled the Respondent s last purchase order. In this period of 4 months, no new instruction or purchase orders were made by the Respondent. 58. Although Mae Sot was producing the Respondent s garments at the time of the fire 49, it is the practice of Mae Sot to produce garments in excess of the purchase order for their own 45 Moot Problem, Pg.2 46 Clarifications, Pg.2, B.5 47 Further Clarifications, Pg.2, B.4 48 Supra, n.45 15

28 convenience in anticipation of future purchase orders by its customers or to replace previously rejected goods As such, even if Mae Sot was producing garments for the Respondents, it is merely on Mae Sot s own accord and practice for their own convenience and is not based on any new purchase orders or instructions from the Respondent. Hence, the Respondent is no longer purchasing garments from Mae Sot through any new purchase orders and is therefore not liable to compensate the Claimants for Mae Sot s manufacturing practices. IV. EVEN IF LIABILITY CAN BE ESTABLISHED, THE DAMAGES AWARDED TO THE CLAIMANTS MUST BE APPORTIONED IN ACCORDANCE WITH THE CIRCUMSTANCES AND GRAVITY OF THE RESPONDENT S LIABILITY UNDER THE LAWS OF THAILAND 60. Assuming the Respondent s liability can be established, it is acknowledged that the Claimants are entitled to several heads of damage under the Civil and Commercial Code of Thailand However, the total amount of compensation must be apportioned in accordance with the circumstance and gravity Respondent s liability vis-à-vis the injuries and deaths suffered by the Claimants Clarifications, Pg.3, C.1 50 Further Clarifications, Pg.2, B.3 51 Civil and Commercial Code of Thailand, S.443, S.444, S.445, S Ibid., S

29 62. In the present case, the Parties have agreed that the main contributing cause of the deaths and injuries suffered by the Claimants were due to the cluttered working conditions in Mae Sot Factory 53. In this regard, the Respondent is not involved in the day-to-day operations in Mae Sot Factory that had caused the clutter as submitted in paragraphs 41 to 45 above. 63. Therefore, even assuming liability can be established, the Respondent s liability is merely based on the Respondent s relationship with Mae Sot. 64. As such, the Respondent s involvement as to the cluttered working conditions in the present dispute is minimal, thus the damages awarded to the Claimants must be apportioned to a minimal sum in accordance to the circumstances and gravity of the Respondent s liability for the deaths and injuries suffered by the Claimants. 53 Moot Problem, Pg.3 17

30 PRAYER FOR RELIEF The Respondent requests this arbitral tribunal to find that: I. The seat of this arbitration is Thailand. Further, the laws of Thailand applies to the procedural and substantive aspects of the present dispute; and II. The large number of Claimants (injured victims and families of the deceased victims) cannot be joined in this arbitration; and III. The Respondent as a customer to Mae Sot is not liable for the injuries and deaths of Mae Sot s employees arising out of the cluttered working conditions in Mae Sot; and IV. Even assuming liability can be established, the damages awarded to the Claimants must be apportioned in accordance with circumstances and gravity of the Respondent s liability under the laws of Thailand. Respectfully submitted, Counsel for the Respondent. 18