1507-C THE LAWASIA INTERNATIONAL MOOT IN THE KUALA LUMPUR REGIONAL CENTRE FOR ARBITRATION SYDNEY, AUSTRALIA 2015 BETWEEN THE NEPALESE GOVERNMENT (CLAIMANT) AND THE AUSTRALIAN NATIONAL MUSEUM, THE NATIONAL MUSEUM (MALAYSIA), and Dr. JOHN THOMAS SMITH, (RESPONDENT) MEMORIAL FOR CLAIMANT
TABLE OF CONTENTS INDEX OF ABBREVIATIONS... iii STATEMENT OF JURISDICTION... 1 QUESTIONS PRESENTED... 2 STATEMENT OF FACT... 3 SUMMARY OF PLEADINGS... 6 I. NEPALESE LAW IS THE APPLICABLE LAW... 6 II. THE ORDER OF THE TRIBUNAL AGAINST RESPONDENT CAN BE ENFORCABLE... 6 III. CLAIMANT HAS THE OWNERSHIP OF THE STATUE... 6 PLEADINGS... 9 PART I: Procedural Part... 9 I. THE ARBITRAL TRIBUNAL HAS JURISDICTION OVER THE DISPUTE BETWEEN THE NEPALESE GOVERNMENT AND THE AUSTRALIAN NATIONAL MUSEUM, THE NATIONAL MUSEUM (MALAYSIA), and Dr. JOHN THOMAS SMITH, Jr.... 9 A. Source of jurisdiction... 9 B. Applicable law... 9 II. NEPALESE LAW IS THE APPLICABLE LAW... 10 A. Nepalese law is the applicable law under the KLRCA Rules (The law of the place with which the act is most closely connected)... 10 B. Nepalese law is the applicable law under the Australian Arbitration Act... 12 C. Australian law is not the applicable law... 13 III. THE ORDER OF THE TRIBUNAL AGAINST RESPONDENT IS ENFORCEABLE UNDER Art. V OF THE NYC.... 13 A. NYC is applicable to this dispute.... 13 B. The place of enforcement is Malaysia and the order of the Tribunal against RESPONDENT is enforceable under NYC... 14 PART II: Substantive Part... 18 I. Dr. Smith does not have the right to donate the Statue... 19 A. The donation between Dr. Smith and the Dean is not valid... 19 B. The lack of the authority to dispose cannot be justified by University acts as an agent on behalf of the Nepalese Museum and Government... 20 C. The gift cannot be justified by the doctrine of apparent agency... 21 II. Dr. Smith violated the Nepalese export regulation... 23 III. The contract between Dr. Smith and Australian Museum is not valid.... 25 A. The Australian Museum must not import the Statue because it was stolen... 25 B. The gift between the Australian Museum and Dr. Smith is void... 27 C. The gift cannot be justified by applying the good faith... 27 i
IV. The National Museum cannot get the property right of the Statue... 29 A. The National Museum must not import the Statue because it was stolen... 29 B. The contract between the Australian Museum and the National Museum is bailment... 31 C. The bailment is void... 32 CONCLUSION AND PRAYER OF RELIEF... 34 ii
INDEX OF ABBREVIATIONS Art. Article Ct. Court Ed. Edition ICC International Chamber of Commerce KLRCA the Kuala Lumpur Regional Centre for Arbitration Ltd. Limited No. Number NYC 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) p. Page para(s). Paragraph(s) Section v. Versus iii
INDEX AUTHORITIES Conventions & Treaties New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 p. 6,13,14,17 Rules Kuala Lumpur Regional Centre for Arbitration Rules 5,6,9,10,13,14 p. Articles Dr. Loukas Mistelis Joel R.Junker Joseph T. McLaughlint and Laurie Genevro INTERNATIONAL ARBITRATION - CORPORATE ATTITUDES AND PRACTICES - 12 PERCEPTIONS TESTED: MYTHS, DATA AND ANALYSIS RESEARCH REPORT The Public Policy Defense to Recognition and Enforcement of Foreign Arbitral Awards Enforcement of Arbitral Awards Under the New York Convention- Practice in U.S. Courts p. 14 15 18 Books p. Fridman the Law of Agency(7th edition), Butterworths, 1996, p.73 21 Gary B.Born International Commercial Arbitration 10,11 Jones William,Halsted An essay on the law of Bailments,1828,p.117 31 Kansai University The agency law in British hougaku ronshu43(3) and the apparent authority-mainly the agency of a wife-, 21 iv
p.114,1993 Lew, D. M. Julian, Mistelis, Comparative international commercial arbitration, A Loukas & Kröll, M. KLUWER LAW International 2003 Cited [Lew/Mistelis/Kroll] 12 Stefan Maekesmis&Munday An Outline of the Lawof Agency(4th edition), Butter, 1998, p. 39-40 21 Margaret L.Moses the Principles and Practice of International Commercial Arbitration Second Edition (2008) 12 The Ministry of JusticeICD, The legislation tendency and the state Minamikata Akira, of civil law now in use in Nepal,2012, p. 93 Kiahara Hiroyuki, 19,30 Matsuo hiroshi Statutes p. Art.2(i) of Tribhuvan University Act 22 Explanation of Art.25 of contract act 31 Norfolk County Council v. Secretary of State for the Environment 3 AII.E.R,673 22 The Australia Arbitration Act 12 Uniform Commercial Code 2-103 (1) (b) 26 Cases (International Chamber of Commerce Arbitration) p. ICC Case No.1422 11 ICC Case No.3742 11 ICC Case No.4434 11 ICC case No.5885 11 ICC Case No.6149 (interim award) 11 ICC Case No. 8113 11 v
Cases (Other jurisdiction) p. Biotronik Mess und Therapiegeraete GmbH & Co. v. Medford Medical Instrument Co., 415 F. Supp. 133 (D.N.J. 1976) 16 British Bank of the middle East v. Sun Life Assurance co of Canada(UK) Ltd, 1983, Lylod s Rep.9 22 Farquharson Bros $ co. v King & Co., 1902, A.C. (325) 21 Fertilizer Corp. of India v. IDI Management, Inc., 517 F. Supp. 948, 955 (S.D. Ohio 1981), reh'g denied, 530 F. Supp 542 (S.D. Ohio 16 1982) Fotochrome, Inc. v. Copal Co., 517 F.2d 512, 516 (2d Cir. 1975) 15,16 Imperial Ethiopian Gov't v. Baruch-Foster Corp., 535 F.2d 334 (5th Cir. 1976) 16 Manning v. Algard Estate Docket: S062205 ; Registry: Vancouver British Columbia Supreme Court 27 Parsons & Whittemore, 508 F.2d at 974 15 Regency Auto Investments Inc. (c.o.b. Regency Toyota Vancouver) v. Jane Doe, [1997] B.C.J. No. 2591 (S.C.) 27 Street v Derbyshire Unemployed Workers Centre [2004] EWCA Civ 964 26 Vancouver, British Columbia 27 Website p. http://www.muziumnegara.gov.my/ 29 vi
STATEMENT OF JURISDICTION The Nepalese Government ( CLAIMANT ) and the Australian National Museum, the National Museum (Malaysia), and Dr. John Thomas Smith, Jr. ( 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 Australian Centre for International Commercial Arbitration in Sydney. The dispute does not include the challenge on the propriety and validity of the arbitral agreement between the Parties. 1
QUESTIONS PRESENTED (a) Nepalese law should be applied to establish Nepal's right to demand the return of the statue. (b) The law of the place with which the act is most closely connected should be applied to this dispute in the case. (c) The "outcome" will be governed by NYC. The statue will return to Nepal. (d) RESPONDENT has to return the statue because CLAIMANT has the ownership of the statue. 2
STATEMENT OF FACT A stone statue of Lord Vishnu seated between goddesses Lakshmi and Garuda (hereafter referred to as the statue ) was exported by Dr. John Thomas Smith, Jr., a well-known Australian anthropologist (hereafter referred to as Dr. Smith ), from the Federal Demographic Republic of Nepal (hereafter referred to as Nepal ). 1 Under the Nepalese law, objects value for culture and religion reasons that are over one hundred (100) years old shall be classified as prohibited export object and in the event of exporting such object, a certificate from the Department of Archeology in Kathmandu is required. 2 However, despite the statue is no doubt at least three hundreds (300) years old with significant cultural value, it was taken to Australia without fulfilling the abovementioned criterion. 3 As the Government of Nepal asserted, the statue has always belonged to the People of Nepal. 4 The statue was firstly discovered by Nepalese sheep herders who turned it over to local government officials later. It was then publicly displayed at the Nepalese National Museum (Chhauni Museum) and later moved to the National University Campus in Kathmandu in 2010 and displayed in the lobby of the building housing Central Department of Sociology/Anthropology of Tribhuvan University. 5 It can be assumed that the Dean s general responsibility extend to the care and protection of the statue. 1 Moot Problem, p.1, 1 2 Moot Problem, p.2, 2 3 Moot Problem, p.2, 4 Clarification 1, p.3, B-para.5 5 Clarification 1, p.2 B-para.4, and Clarification 2, p.1,a-para.1 3
In 2014, Dr. Smith was invited by the Dean of the Central Department of Sociology/Anthropology at Tribhuvan University in Nepal as an old friend on a purely private invitation to present several lectures in the University. During the dinner after his service, he was presented the statue by the Chairman of the Department of Sociology/Anthropology at Tribhuvan University presented Dr. Smith by the statue in return for his services as a guest lecturer. Dr. Smith maintained that is was an appropriate gift in gratitude for his service without any conditions or qualifications and took it home to Australia with him. Note that Dr. Smith is capable of verifying the authenticity of antiques and he did realize the statue was authentic upon the receiving. Furthermore, there has been unconfirmed report that he sold antiquities to private collectors and there was no evidence to show that he informed the custom officers of both Nepal and Australia during the exportation of the statue. Notwithstanding, as a internationally well-known anthropologist, he often receive antiquities as gifts for guest lecturers, but the ones he previously received were not generally as rare or valuable as the statue he received in Nepal. In March, 2014, Dr. Smith subsequently donated the statue to the Australian National Museum, Sydney where it was initially displayed as part of an exhibit promoting knowledge, understanding and enjoyment of diverse culture. The museum is aware of the provenance of the statue since Dr. Smith told the Museum Director that the statue was from Nepal and that it had been given to him by a high ranking Nepalese government official. The Australia 4
National Museum also examined the authenticity of the statue before deciding to put on display. 6 It was then further loaned to the national Museum of Malaysia, KL from July, 2014 for two (2) years, and the statue is currently in the possession of the Museum of Malaysia. 7 The exportation of the statue did not come to the awareness of Nepalese government until a Nepalese tourist observed it prominently displayed at the National museum of Malaysia and reported it to Nepalese officials when she return to Nepal. Note that the statue was damaged after it left Nepal. Considering the above, the Government of Nepal demanded an immediate return of the statue, however, both Australian Museum and National Museum of Malaysia refused to do so, asserting the statue was a gift from Tribhuvan University to Dr. Smith who then donated to the Australian Museum subsequently. 8 All parties agreed to submit this dispute to binding arbitration under the auspices of the KLRCA. The claimant in this dispute is Nepalese Government while the Respondents will be Australian national Museum, The National Museum (Malaysia) and Dr. John Thomas Smith, Jr. The claimants seek the immediate return of the statue as well as the compensation from the Respondent for damages of the statue. 6 Clarification 2, p.1,a- para.1 7 Clarification 2, p.2, B-para.4 8 Moot Problem, p.2, 2 5
SUMMARY OF PLEADINGS I. NEPALESE LAW IS THE APPLICABLE LAW The parties arbitration agreement is undisputed. The parties designated Sydney as the place of arbitration, and proceedings will be administered in accordance with the KLRCA Rules. The Tribunal shall apply the law which it determines to be appropriate if the Parties have yet chose the applicable substantive law. The Tribunal should engage in a choice-of-law analysis and prioritize the object of the arbitration while using conflict of laws rules. Nepalese law is the applicable law because Nepal is has the closest connection to the merits of the party s dispute. Since Nepalese law has the closest relationship with the statue, the most important object in this matter, rather than the Australian law. As such, Nepalese law should be the applicable law. II. THE ORDER OF THE TRIBUNAL AGAINST RESPONDENT CAN BE ENFORCABLE All parties laws adopt the Convention on the Recognition and Enforcement of Foreign Arbitral Award (hereafter NYC). The Order of the Tribunal against RESPONDENT can be enforceable according to Art.5 of NYC. Nepal cannot enforce the defense of nonarbitrable subject matter (Art.5 (2) (a) of NYC) and "Public policy" defenses (Art.5 (2) (b) of NYC). III. CLAIMANT HAS THE OWNERSHIP OF THE STATUE RESPONDENT has to return the statue because CLAIMANT has the ownership of the 6
statue. Firstly the donation between the Dean and Dr. Smith is void because the Dean does not have the ownership of the statue and the authority to dispose it. Thus the Tribhuvan University and the Dean do not have the ownership to the statue. On top of this, the donation is void contract. Moreover the lack of the agency cannot be justified by the apparent agency. Considering that Tribhuvan University did not give the representation, the reliance cannot be justified and furthermore Dr. Smith did not accept the benefit, the abovementioned requirements are therefore not fulfilled. Secondly the donation between Dr. Smith and the Australian Museum is void because he did not have the ownership of the statue. Moreover the good faith cannot be applied. The requirements of good faith are the expectation that the other party has the ownership of a good and justice expectation. In the present case, the high cultural and significance of the statue was implied considering the fact that Dr. Smith accepted the statue from a high official of Nepal. Especially that the statue is principally prohibited from import from Nepal and a special certification was not issued. Thirdly the loan contract between the Australian Museum and the National Museum is void because the Australian Museum does not have the ownership of the statue. Moreover the doctrine of good faith cannot apply to the loan contract. In the present case, the National Museum is professional in dealing with the antiques, thus it is expected of them to have the 7
essential and comprehensive knowledge about them. However they accepted the statue without conducting investigation and therefore the justice of the expectation is lacking in this case. 8
PLEADINGS PART I: Procedural Part I. THE ARBITRAL TRIBUNAL HAS JURISDICTION OVER THE DISPUTE BETWEEN THE NEPALESE GOVERNMENT AND THE AUSTRALIAN NATIONAL MUSEUM, THE NATIONAL MUSEUM (MALAYSIA), and Dr. JOHN THOMAS SMITH, Jr. A. Source of jurisdiction 1. The Office of the Arbitration Tribunal attached to the Australian Centre for International Commercial Arbitration (hereafter,"acica") has the jurisdiction over the dispute between the Nepalese Government and the Australian National Museum, the National Museum (Malaysia), and Dr. John Thomas Smith(hereafter referred as the Parties ), Jr. The Arbitral Tribunal has the authority to rule on its own jurisdiction. The decision is final and binding on the Parties. B. Applicable law 2. In this case, the Parties chose to apply the KLRCA Arbitration Rules (KLRCA Rules), and by designating Sydney as the seat of arbitration, they chose to apply the laws of Australia. However, Nepalese law shall be the applicable law to the disputes presented before the arbitral tribunal because Nepal is the state which most closely connected to this dispute. 9
II. NEPALESE LAW IS THE APPLICABLE LAW 3. Nepalese law is the applicable law. In the absence of an express choice of law agreement, the Tribunal is required to select the applicable substantive law, by either applying conflict of laws rules or directly applying a substantive law. 9 In this case, CLAIMANT and RESPONDENT had chosen the KLRCA Rules as the institutional rules 10. The CLAIMANT and the RESPONDENT do not have mutual consent about the applicable law. 11 Pursuant to the principle of the law of the place with which the facts are most closely connected to, the applicable law in determining the procedure is Nepalese Law. Since in the present case, all matters surrounding the central dispute between the Parties are closely related to Nepal. A. Nepalese law is the applicable law under the KLRCA Rules (The law of the place with which the act is most closely connected) 4. Pursuant to the KLRCA Rules, the Australian law is applicable as the substantive law to the dispute. Under Art.35 of KLRCA Rules, the Tribunal shall apply the law which it determines to be appropriate if the Parties have yet chose the applicable substantive law. In determining the appropriate law, the Tribunal should engage in a choice-of-law analysis 12 and prioritize the object of the arbitration while using conflict of laws rules. 9 Born, p.2624 10 Moot Problem, p.3, 4 11 Moot Problem, p.3, 4 12 Born, p.2646 10
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. 13 5. One of the approaches that is applied to the choice of the applicable law by international arbitral tribunals involves selecting the conflict of laws system of the state that is most closely connected to the merits of the party s dispute. Application of the choice-of-law rules of the place with which the act is most closely connected introduces into a form of renvoi into conflicts analysis. 14 Some arbitration legislation prescribes a closest connection standard for arbitral tribunals seated on national territory. Where such legislation is applicable, arbitral tribunals typically have applied to its closest connection standard. This analysis has been adopted in a number of awards. 15 6. The place with which the act is most closely connected is the connection to designate the applicable law over the international dispute. When the place is chosen, various affairs are comprehensively taken into account, such as the concerned party s place of residence. 7. In this case, Smith was given the stone statue of Lord Vishnu seated between goddesses Lakshmi and Garuda (hereafter, the statue ) during his stay in Nepal. And the statue 13 Partial Award in ICC Case No. 8113 (2003) 14 Born, p.2624 15 Award in ICC Case No.1422, 101 J.D.I (Clunet) 884 (1974); Award in ICC Case No.3742 111 J.D.I. (Clunet) 910 (1984); Award in ICC Case No.4434, 110 J.D.I. (Clunet) 893 (1983); Final Award in ICC case No.5885, 1(2) ICC Ct,Bull.23 (1990); Interim Award in ICC Case No.6149, XX Y.B. Comm. Arb. 41(1995). 11
was originally in Nepal. When the statue was given to Smith, they were in Nepal. As discussed above, place with which the act is most closely connected is Nepal in this case. B. Nepalese law is the applicable law under the Australian Arbitration Act 8. Art.28 Chapter VI of the Australia Arbitration Act provides Rules applicable to substance of the dispute. It says that the arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute. Any designation of the law or legal system of a given State shall be construed, unless otherwise expressed, as directly referring to the substantive law of that State and not to its conflict of laws rules. 16 If failing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable and the arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so. 17 9. Direct determination allows a tribunal to select the applicable substantive law or rules relevant for the particular case without reference to any conflict of laws rules. 18 Both phrases ex aequo et bono or as amiable compositeur mean that the Tribunal does not have to strictly apply the law, but can render a decision based on reasonableness and fairness. Although most modern arbitration rules and laws permit arbitrators to matters 16 Art.28 (1) of Australia Arbitration Act 17 Art.28 (2) (3) of Australia Arbitration Act 18 Lew/Mistelis/Kröll, para.17-67, p.434 12
in this way, the power to do so must be expressly granted to the arbitrators by the parties. 19 Limitation of the Australian Arbitration Act does not apply to the Nepalese law. C. Australian law is not the applicable law 10. In this case, the statue over this dispute is in the possession of the Australian National museum in Sydney, Australia, which then it was on loan to the Malaysian Museum now. There is an award, which says that if the disputed property has been in a certain country, for over thirty years, the country s law is the applicable law because the country s interest outweighs the counterpart s. If several decades passed since it came from Nepal, the CLAIMANT s interest would outweigh the RESPONDENT s. The statue, however, has been there for only one year. Therefore it doesn t seem to have a profound interest involving a third party. Although the statue is in the possession of Australian National MuseumMalaysia now, Nepalese law should be applied to this arbitration instead of the Australian law. III. THE ORDER OF THE TRIBUNAL AGAINST RESPONDENT IS ENFORCEABLE UNDER Art. V OF THE NYC. A. NYC is applicable to this dispute. 11. The KLRCA rules contain an entire Section governing arbitral awards, so it s clear that the Tribunal is empowered to make them. 20 According to Art. 34.1 of the KLCRA Rules, 19 The Principles and Practice of International Commercial Arbitration, Moses, 2008 [hereinafter Moses] p.78 20 KLRCA Rules The Award IV 13
the arbitral tribunal may make separate awards on different issues at different times. 21 This means that no matter how the Tribunal elects to approach the issues and parties at hand, it has the authority to determine proper awards in each circumstance. Based on Art. 35 of the KLRCA rules, the tribunal should determine remedies by applying the rules of law that it deems applicable to the substance of the dispute. KLCRA Rule 35.2 states that The arbitral tribunal shall decide as amiable compositeur or ex aequo et bono only if the parties have expressly authorized the arbitral tribunal to do so. The parties in the case at hand have not expressly authorized this. Therefore, the Tribunal must make a determination about remedies for CLAIMANTs based on whatever laws they apply to the substantive liability issue. 12. The Tribunal should exercise its broad authority. An arbitration award is more easily enforceable than any foreign judgment. This is due to the widely ratified NYC, which reduces the formalities, linked with the recognition of awards and also limits the grounds on which a court may rely to refuse enforcement. 22 All states involved are members to the NYC. So, NYC is applicable to this dispute according to Art.3 of NYC. B. The place of enforcement is Malaysia and the order of the Tribunal against RESPONDENT is enforceable under NYC 21 KLRCA Rule 35.2. 22 Dr. Loukas Mistelis, International Arbitration - Corporate Attitudes and Practices - 12 Perceptions Tested: Myths, Data and Analysis Research Report (2004) 15 Am. Rev. Int'l Arb. 525, 548) 14
13. The place of enforcement is Malaysia because at this moment the statue is in Malaysia. 23 (1) "Public policy" defenses should be rejected 14. Art.V (2) (b) provision of a "public policy" defense to enforcement of an arbitral award under Art. V (2) (b) might appear to have created a major loophole in the NYC's pro-enforcement policy. 24 While concern about this possibility has been expressed, 25 precedent has shown that U.S. courts will uphold this defense only where enforcement would violate the "most basic notions of morality and justice." 26 15. "Public policy" defenses have been rejected because of the U.S. courts' narrow interpretation of Art. V (2) (b). In re Fotochrome 27, for example, illustrates this practice. While involved in arbitration in Japan, Fotochrome, a U.S. company, filed for bankruptcy. The U.S. Bankruptcy Court issued a stay of all actions by the company's creditors. The Japanese arbitration nonetheless proceeded and resulted in an award against the U.S. Company. The Bankruptcy Court subsequently refused to recognize this award. The district court, however, reversed on the grounds that the Bankruptcy Court did not have the power to disturb the findings of a foreign arbitration begun before the commencement of bankruptcy proceedings. Emphasizing both the Supremacy Clause, 23 Moot Problem p.2, 2 24 Enforcement of Arbitral Awards under the NewYork Convention - Practice in U.S. Ct. Joseph T. McLaughlin/Laurie Genevro 25 The Public Policy Defense to Recognition and Enforcement of Foreign Arbitral Awards, 7 CALIF. W. INT'L L.J. 228, 228-29 n. 1 (1977) and authorities cited therein. 26 Fotochrome, Inc. v. Copal Co., 517 F.2d 512, 516 (2d Cir. 1975); Parsons & Whittemore, 508 F.2d at 974 27 F. Supp. 26 (E.D.N.Y. 1974) 15
which makes treaties part of the supreme law of the United States, and the importance of laws affecting international trade, the district court criticized the U.S. company's attempt to avoid final and binding judgment abroad through filing of a bankruptcy petition. 28 16. A public policy defense based on grounds that the award was made by arbitrators with undisclosed connections to the prevailing party has also been rejected in two different cases. 29 The Court of Appeals for the Second Circuit affirmed the district court's decision, but did not specifically decide whether U.S. bankruptcy law was a "public policy" that precluded enforcement of foreign arbitral awards. 30 The court noted that the New York Convention is silent on the subject of bankruptcy, providing no indication of whether bankruptcy should fall under the public policy rubric. Citing the Parsons & Whittemore standard, the court asserted that "[t]he public policy in favor of international arbitration is strong," and thus the public policy defense should be construed narrowly. 31 Since the award was a valid determination on the merits of the dispute, it was not reviewable by the Bankruptcy Court. While the district court suggested that a Bankruptcy Court would have authority to stay a domestic arbitration (and therefore an award made in violation of the stay would not be enforceable), it concluded that the 28 Id. at 30-32. 29 Fertilizer Corp. of India v. IDI Management, Inc., 517 F. Supp. 948, 955 (S.D. Ohio 1981), reh'g denied, 530 F. Supp 542 (S.D. Ohio 1982); Imperial Ethiopian Gov't v. Baruch-Foster Corp., 535 F.2d 334 (5th Cir. 1976). 30 Fotochrome, Inc. v. Copal Co., 517 F.2d 512 (2d Cir. 1975). 31 Id. at 516. 16
New York Convention mandated enforcement of the foreign award. 32 17. An open question remains as to whether one can invoke the public policy defense to block enforcement of awards obtained by fraud. In Biotronik, 33 a federal district court was directly confronted with the question of whether the defense of fraud applied to the New York Convention under U.S. law by reason of section 208 of the implementing legislation. 34 18. The Art. V public policy defense has been partly successful, however, in at least one. 35 This defense is not applied broadly. 19. In the present case, the order of the Tribunal against RESPONDENT does not harm the public policy of Malaysia under NYC. So, the order is enforceable. (2) The defense of nonarbitrable subject matter should be rejected 20. Closely related to the public policy defense of Art. V (2) (b) is the nonarbitrable subject matter provision of Art. V (2) (a). If the grounds of a dispute cannot be settled by arbitration under the domestic law, a court may refuse to enforce an award granted through arbitration abroad. Although traditionally nonarbitrable under U.S. law, disputes over patent rights are now arbitrable under recent legislation. 36 Similarly, agreements to 32 Id 33 Biotronik Mess und Therapiegeraete GmbH & Co. v. Medford Medical Instrument Co., 415 F. Supp. 133 (D.N.J. 1976) 34 9 U.S.C. 208. See supra notes 27-29 and accompanying text. 35 Laminoirs-Trefileries-Cableries de Lens v. Southwire Co., 484 F. Supp. 1063 (N.D. Ga.1980) 36 Patent Law Amendments Act of 1984, Pub. L. 98-622, 105, 98 Stat. 3383-85 (1984)(amending 35 U.S.C. 135) 17
arbitrate alleged violations of U.S. racketeering laws arising from international transactions will not be enforced under the New York Convention. 37 21. The defense of nonarbitrable subject matter is unique in that it has met with some success in U.S. courts. 38 However, the defense may be limited to a few areas, such as nationalization decrees, and thus cannot demonstrate a general policy on the part of U.S. courts against enforcement of arbitral awards. 39 22. In the present case, this defense also should be rejected because the dispute has no relation to the national and governmental policies of Malaysia. PART II: Substantive Part 23. In the present case, the Dean of the of the Central Department of Sociology/Anthropology at Tribhuvan University (hereafter referred to as the Dean ) gave the stone statue of Lord Vishnu seated between goddesses Lakshmi and Garuda (hereafter referred to as the statue ) to Dr. John Thomas Smith, Jr.,(hereafter referred to as Dr. Smith in appreciation for his service as the guest lecturer at the University. Smith subsequently donated the statue to the Australian National Museum, Sydney upon his return to Australia. The statue was exported from Nepal without the required 37 S.A. Mineracao de Trindade-Samitri v. Utah Int'l, Inc., 576 F. Supp. 566 (S.D.N.Y.1983), modified, 579 F. Supp. 1049 (1984), aff'd, 745 F.2d 190 (2d Cir. 1984) 38 Libyan American Oil Co. v. Socialist People's Libyan Arab Jamahirya, 482 F. Supp. 1175 (D.D.C. 1980); vacated without op., 684 F.2d 1032 (D.C.Cir. 1981) [hereinafter cited as LIAMCO]. 39 Enforcement of Arbitral Awards under the New York Convention - Practice in U.S. Ct. Joseph T. McLaughlin/Laurie Genevro 18
special certification, despite the fact that it is at least three hundreds (300) years old with an estimated market value of over 100,000 dollars 40. Nepalese government believes that the statue belongs to the People of Nepal and the Dean has no authority to give away the statue. Thus CLAIMANT seeks an immediate return of the statue. In the present memorial, CLAIMANT would demonstrate that CLAIMANT has the rightful ownership to the statue and has the right to demand an immediate return of the statue from RESPONDENT. I. Dr. Smith does not have the right to donate the statue 24. In the present case, the contract between Dr. Smith and the Dean is of a donation nature 41. In order to form the contract lawfully, the donor has to have the right to donate and transfer the legal title as well as the property right of the object. A. The donation between Dr. Smith and the Dean is not valid 25. According to Art.13 (4) (h) of Contract Act of Nepalese law, a contract which is considered impossible to fulfill even at the time is invalid. 26. The conclusion of a gift contract has the purpose, and the effect, of transferring property from the done to the donee. If, however, the donor has no property rights on the goods he gives, the object of the contract is impossible. 40 Moot Problem, p.2, footnotes3 41 Moot Problem, p.2, 2 19
27. In common law 42, if a donor causes the right transfer by giving away a gift and the gift which he or she gives is that something belongs to a third party, the transfer is generally considered to be voided. CONTRACT ACT was enacted in reference to the Indian civil law and common law 43. Thus it is appropriate to refer to common law in interpreting the Nepalese contract law. 28. In the present case, the contract between Chuanni University and Tribhuvan University is not a sale and the aim was merely "on display" and both parties agreed orally that it would be returned if the Museum wanted it back or the University was unable to properly display it 44. Thus the Dean and Tribhuvan University has no authority to give away the statue because they do not have the ownership of it. 29. Therefore the donation between the Dean and Dr. Smith is void. B. The lack of the authority to dispose cannot be justified by University acts as an agent on behalf of the Nepalese Museum and Government 30. Pursuant to Art. 56 of the Contract Act, Any person may appoint any other person as his/her agent to do anything on his/her behalf. 42 Art.21 Sale of Goods Act, Sale by person not the owner (1)Sublect to this Act, where goods are sold by a person who is not their owner, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller s authority to sell.this act applies sales of good, but in respect of transferring goods, the present case is similar to sales of goods. Therefore, the Tribunal should refer to this means of good faith. 43 The legislation tendency and the state of civil law now in use in Nepal, the Ministry of JusticeICD, Minamikata Akira, Kiahara Hiroyuki, Matsuo hiroshi,2012, p.94 44 Clarification2, p.1, A-para.1 20
31. In the present case, although the Dean is a person of high authority in the National University, he cannot be classified as an agent to the Government, nor is he appointed as the agent to do so statue. To conclude the contract with a party as an agent, the party has to be given the right as an agent to do so in advance. 32. However neither the Nepalese Government nor Tribhunvan University gave the Dean such authority. Therefore the contract cannot be justified by arguing the Dan is acting as an agent, and thus considered to be void C. The gift cannot be justified by the doctrine of apparent agency 33. In Nepalese Law, there is no rule about the apparent agency. However in common law, the apparent authority is derived from the estoppel rule 45. Thus in the present case, whether the apparent agency is applicable or not becomes a problem. 34. According to the estoppel doctrine, Estoppel arises when a party reasonably relies on the appointment of agency from another party and is harmed or damaged if such promise is denied. 46. In that case, the agency relationship between the principle and the other person would be created only between the above two parties 47. The requirements for apparent authority are representation, relance and the change of the position.in the following, the above three requirements are not satisfied. Firstly representation 45 Freeman and Lockyer v. Buckhurst Park Properties Ltd,1964,All.E.R.630 46 The agency law in British and the apparent authority-mainly the agency of a wife-, Kansai University hougaku ronshu43(3), p.114,1993 47 Fridman, the Law of Agency(7th Ed.), Butterworths, 1996, p.73 21
means that the principal indicated his intention that the other person has requisite agency 48. Or it means that the principal did not prevent the other person appearing like an agent. 35. In the present case, the Tribhuvan University has not indicated that Dean has the authority to dispose a cultural heritage that carries national interest. Simply it represents that he is representative of the faculty. Therefore the representation criterion is not satisfied. 36. Secondly the reliance criterion is not satisfied. Reliance means that the party believes the other person has the authority by judging on his appearance 49. If the other person performed conduct that is potentially outside of the scope of his or her authority, the appointing party has the obligation to investigate whether he or she has the authority to do so 50. 37. In the present case, the donor is the Dean. Disposing antique usually does not include in Dean s responsibility as the chief of an Institute or Faculty 51. In addition, Dr. Smith is capable of verifying the authenticity of antiques and he realized the statue was authentic when upon receiving it in from the Dean of the Central Department of Sociology/Anthropology at Tribhuvan University 52. It is expected of him to 48 Maekesmis&Munday, An Outline of the Lawof Agency(4th Ed.), Butter, 1998, p. 39-40 49 Farquharson Bros $ co. v King & Co., 1902, A.C. (325) 50 British Bank of the middle East v. Sun Life Assurance co of Canada(UK) Ltd, 1983, Lylod s Rep.9 51 Art.2(i) of Tribhuvan University Act 52 Clarification3, E-para.12 22
suspect whether the Dean has the authority to give away the statue, especially considering the cultural value attached to the antique. Thus Dr. Smith has the obligation to investigate whether the Dean has the authority to transfer the property right and legal title of the statue. 38. However he accepted the statue without any investigation or questioning. Thus the reliance cannot be argued here and therefore the criterion is not satisfied. 39. Thirdly the criterion of the change of the position is not satisfied. This requirement means that the other party accepts the loss by trust toward his or her appearance 53. 40. In the present case, Dr. Smith donated the statue to Australian Museum after receiving it 54. Thus he did not make any benefit from the statue. 41. Thus it cannot be said that the Tribhuvan University cause him the appearance which the other party may thought he has the agency to give. 42. Therefore the gift cannot be justified by the apparent authority. II. Dr. Smith violated the Nepalese export regulation 43. According to Art.6(a) of UNESCO convention, The States Parties to this Convention undertake to introduce an appropriate certificate in which the exporting State would specify that the 53 Norfolk County Council v. Secretary of State for the Environment 3 AII.E.R,673 54 Moot Problem, p.2, 2 23
export of the cultural property in question is authorized. The certificate should accompany all items of cultural property exported in accordance with the regulations. 44. Furthermore, Art.6(b) indicated that, the state party shall undertake actions to prohibit the exportation of cultural property from their territory unless it is accompanied by the above-mentioned export certificate. 45. According to Art.3(1)(j) of Export and Import (Control) Act, 2013 (1957) Date of Authentications, to protect national assets (heritage) of artistic, historic or archaeological, the government of Nepal may, by a notified order, prohibit, or apply full or quantitative restriction on, the exportation or importation of such goods, with or without specifying any specific condition or period value. 46. According to Art.13(2) of AN ACT MADE TO PRESERVE THE ANCIENT MONUMENTS AND ARCHAEOLOGICAL, HISTORICAL OR ARTISTIC, If a person or an institution has, in its personal, traditional or ancestral collections, any archaeological object of more than one hundred years, the owner of such collections shall have to register such object in a prescribed office within a prescribed time as prescribed by His Majesty's Government in a notification published in the Nepal Gazette. Nepalese law prohibits the export of 24
objects over 100 years old, such as sacred images, paintings, manuscripts that are valued for culture and religious reasons. 47. In the present case, if the donation the stature is considered as export, the export of antiques from Nepal would require a special certification from the Department of Archeology in Kathmandu. 48. According to Art.2(b) of An Act Made for Prohibition or Control of Export and Import, export means to export goods out of the State of Nepal. 49. According to Nepalese Export Regulations, Nepalese law prohibits the export of objects over 100 years old, such as sacred images, paintings, manuscripts that are valued for culture and religious reasons. The export of antiques from Nepal requires a special certification from the Department of Archeology in Kathmandu. 50. In the present case, the statue is at least 300 years old and its market value is well over 100,000 dollars 55. The requirement about the ages is satisfied. 100,000 dollars are expensive, thus the requirement about the value is satisfied. 51. Consequently Smith did bring the statue out of Nepal illegally. III. The contract between Dr. Smith and Australian Museum is not valid. A. The Australian Museum must not import the statue because it was stolen 55 Moot Problem, p.2, footnote3 25
52. According to the Convention of the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property 1970 Art. 8 (b) (i), the state party have to undertake actions to prohibit the import of cultural property stolen from a museum or a religious or secular public monument or similar institution in another State Party to this Convention after the entry into force of this Convention for the States concerned, provided that such property is documented as appertaining to the inventory of that institution 53. The government enacted the Australian Museum Act, thereby incorporating it and establishing a Board of Trustees consisting of 24 members. Thus the Australian Museum has the obligation not to import a stolen good because its museum is under the jurisdiction of Australia government. 54. The targeted object of this convention is the cultural heritage stolen by the others. This convention cannot applied if the statue is not admitted as a stolen object,. Whether the object is stolen or not would depends on the civil law. So as mentioned above, to begin with, the Dean has no authority to give the statue and the doctrine of good faith cannot be applied. Secondly the donation between the Australian Museum and Dr. Smith is void contract and, again, cannot be justified by the doctrine of good faith. 55. The reason why the contract between the Australian Museum and Dr. Smith cannot be justified sets as follows. 26
B. The gift between the Australian Museum and Dr. Smith is void 56. So as mentioned, if the giver has no the ownership of the object, its gift is void because it is cannot be performed under Art. 13(4)(j) of Contract Act. 57. In the present case, Dr Smith cannot receive the ownership of the statue because the Dean has no title to it. Therefore its gift is void. C. The gift cannot be justified by applying the good faith 58. RESPONDENT would insist that even if Dr. Smith does not have title of the statue, RESPONDENT can get the ownership of the statue by application of good faith. 59. Good faith is defined as honesty in fact in the conduct or transaction concerned 56. 60. It is clear from the authorities 57 that the content of a duty of good faith is heavily conditioned by its context. There may be a core meaning of honesty but, put into context, the meaning of the phrase will call for further elaboration. Examples of different interpretations by the courts include: faithfulness to an agreed common purpose, acting within the spirit of the contract, observing reasonable commercial standards of fair dealing and acting consistently with the justified expectations of the parties. 61. The law provides exceptions to this rule, as we have seen, when someone buys the goods in good faith and without notice. In such a case the courts would try to balance 56 Uniform Commercial Code 2-103 (1) (b) 57 Street v Derbyshire Unemployed Workers Centre [2004] EWCA Civ 964 27
the interests of the owner of the goods and those of the person who bought the goods. 62. It means that if you bought a stolen car in the "open market," say in Dubai or in a showroom in Nairobi, in good faith and without notice that it had been stolen, you have not stolen it. It is your car, unless a court of law rules otherwise. The requirements of good faith in the contract are the expectation and the honest of the party. Two requirements depend on the context in the circumstance of concluding the contract. To establish a lack of good faith, the estate must prove that Ms. Ovsenek acted dishonestly and not merely negligently. Dishonesty can be shown where a purchaser was willfully. A purchaser will be found to be wilfully blind where she possessed knowledge of such circumstances as might lead her to wish not to make any further inquiries lest she find out that there is something wrong 58 In the case, the expectation and the honesty are interpreted by the knowledge and the job of party 59. If the party is amateur who has no exclusive knowledge about the merchant, the expectation should be protected. And the party s act is not thought to be the willfully because it is natural for amateur. 63. In the present case, the other party of donation is a museum. Museum usually has the exclusive knowledge about the cultural property because it exhibits the antique, paintings and images and the staff need to know the usage to conduct them. According 58 Regency Auto Investments Inc. (c.o.b. Regency Toyota Vancouver) v. Jane Doe, [1997] B.C.J. No. 2591 (S.C.) 59 Manning v. Algard Estate Docket: S062205 ; Registry: Vancouver British Columbia Supreme Ct.Vancouver, British Columbia 28
to the Art.2.2 Valid Title of ICOM code of Ethics for Museums, no object or specimen should be acquired by purchase, gift, loan, bequest, or exchange unless the acquiring museum is satisfied that a valid title is held. Furthermore,evidence of lawful ownership in a country is not necessarily valid title. 64. According to the commentary, the property is said to be the right which is backed from the origin from discover and formation of materials. The ICOM code is the minimum standard of the museums in exporting and importing the antique and cultural property. The staff of the Australian Museum should have investigated the provenance and the ownership of the statue. They had to know that whether Dr. Smith had the title of the statue or not. In the case where the merchant is an antique, it is possible that the antique is a stolen good because of its high value. Thus the act of the Australian Museum is willfully and the expectation is not worth protecting. 65. Therefore the requirement of the good faith was not satisfied And the title of the statue should not recognized. IV. The National Museum cannot get the property right of the statue A. The National Museum must not import the statue because it was stolen 66. As mentioned above, according to the Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property 1970, the state party have to undertake to prohibit the import of cultural property stolen 29
from a museum or a religious or secular public monument or similar institution in another State Party to this Convention after the entry into force of this Convention for the States concerned, provided that such property is documented as appertaining to the inventory of that institution. 67. In the present case, Institutional power and the ruling government in Malaysia may shape their identity of the so-called national museum in the ideological state they own and construct it ever since the independence of Malaysia. The National Museum of Malaysia is a public institution regulated by the Department of Museums, Malaysia. Its objective is to preserve, conserve and disseminate knowledge about the country s historical, cultural and natural heritage in order to create awareness among the people of this country s heritage and history in multiracial cultures and maintain harmony in Malaysia 60. 68. The Department of Museums Malaysia is under the jurisdiction of the Ministry of Information, Communications & Culture which upholds the aspirations of the National Cultural Policy. Thus the National Museum is belonging to Malaysia. Therefore the National Museum has the obligation to follow the UNESCO convention. 60 http://www.muziumnegara.gov.my/ According to the official website of the Department of Museums Malaysia, the objective is stated as follows: This department is responsible for preserving, conserving and disseminating knowledge about the country s historical, cultural and natural heritage in order to create awareness among the people of the country s rich heritage of history, mu ltiracial cultures and natural environment to create a harmonious society with high moral standard and to assist the government in promoting and developing the tourism industry. 30
69. Whether the object is stolen or no art depends on the civil law. So as mentioned, to begin with, the Dean has no the authority to give the statue and the good faith cannot apply. Secondly the donation between the Australian Museum and Dr. Smith cannot be justified by the doctrine of good faith. Furthermore, the loan between the Australian Museum and the National Museum is void. Thus, it is appropriate to argue that the National Museum has no property right to the statue. CLAIMANT would demonstrate the reason why the National Museum and the Australian Museum cannot be justified as follows. B. The contract between the Australian Museum and the National Museum is bailment 70. According to Art.25 of Contract Act, a contract relating to bailment shall be deemed to have been concluded in case any person delivers any property to another person on a returnable basis or for handing it over to any other person or selling it as ordered by him/her. The bailment includes the loan and so on 61. The Bailment is derived from common law 62. The Nepal contract law was made from the India civil law and the India law inherits genealogy of common law. Thus to interpret the Nepalese contract law, common law should be referenced. 61 The legislation tendency and the state of civil law now in use in Nepal, the Ministry of JusticeICD, Minamikata Akira, Kiahara Hiroyuki, Matsuo hiroshi,2012,p. 93 62 Supra. p. 62 31
71. In the present case, Australian Museum lent the statue to the National Museum 63. property includes any movable property and title to such property 64.In the present case, the statue can be classified as a movable property. Thus the contract between Australian Museum and the National Museum is a bailment. C. The bailment is void 72. According to Art.13(4)(h) of contract act of Nepalese law, A contract concluded which is considered impossible to fulfill even at the time is concluded. 73. If the lender is stipulated as an owner, the bailment by him or her is void because he or she does not have the title to the object. 74. The bailment means that the type of transferring which the owner is different from the possessor like deposit 65. 75. According to Art.32 (2) of contract act, an owner is written as a lender. 76. Hence in Nepal law, a lender means an owner. In the present case, the Australian Museum has no the ownership of the statue because Dr. Smith does not have the title of it. Therefore the loan is void. (a) The good faith cannot apply to the National Museum 77. Even if the donation between Smith and Australian Museum and the loan contract Between Australian Museum and the National Museum are effective, originally the 63 Moot Problem, p.2, 2 64 Explanation of Art.25 of contract act 65 An essay on the law of Bailments, Jones k,halsted,1828,p.117 32