Respondent was not entitled to withhold payments under the Sales and Licensing Agreement.

Claimant suppose that according to the Sales and Licensing Agreement

which was concluded between the parties Respondent obliged to make payments for the delivered software as there was not fault in it.

1) [Article 1.3 of UNIDROIT PRINCIPLES] holds that a contract validly entered into is binding upon the parties. It can only be modified or terminated in accordance with its terms or by agreement or as otherwise provided in these Principles. This Article lays down another basic principle of contract law, that of pacta sunt servanda.

The binding character of a contractual agreement obviously presupposes that an agreement has actually been concluded by the parties and that the agreement reached is not affected by any ground of invalidity.

Under [Article 1.7 of UNIDROIT PRINCIPLES], Each party must act in accordance with good faith and fair dealing in international trade.

2) The Respondent was unbelievably negligent about the principles of working of the active scanning technology in the moment of breaking the agreement. It is known, that the Respondent changed his medical director to professor Cliff Szabo. According to Procedural order No 2, para. 7, in several publications and interviews Professor Szabo has doubted whether proton therapy really has the positive effects attributed to it. In his view the benefits in comparison to the conventional radiotherapy are marginal and do not justify the costs associated with the technology. Moreover, according to [Claimant’s Exhibit No 7], he complained, that software often calculated inaccurate targets. In particular is the software unable to cope with respiratory movement by the patients and that precludes its use for a number of the anticipated cancers. But, according to Procedural order No 2, para 8, the Respondent had been interested in the third treatment room primarily to treat prostate cancer. It is hard to imagine the situation, when the software’s inability to cope with respiratory movement by the patients could bring the problems with treating the prostate cancer.

[Article 3.2.2 of UNIDROIT PRINCIPLES] in its turn claims that (1) A party may only avoid the contract for mistake if, when the contract was concluded, the mistake was of such importance that a reasonable person in the same situation as the party in error would only have concluded the contract on materially different terms or would not have concluded it at all if the true state of affairs had been known, and

(a) the other party made the same mistake, or caused the mistake, or knew or ought to have known of the mistake and it was contrary to reasonable commercial standards of fair dealing to leave the mistaken party in error; or

(b) the other party had not at the time of avoidance reasonably acted in reliance on the contract.

(2) However, a party may not avoid the contract if

(a) it was grossly negligent in committing the mistake; or

(b) the mistake relates to a matter in regard to which the risk of mistake was assumed or, having regard to the circumstances, should be borne by the mistaken party.

None of these positions can be seen in the situation between the Claimant and the Respondent.

3) Moreover, Article 7.2.1 says that where a party who is obliged to pay money does not do so, the other party may require payment.

This Article reflects the generally accepted principle that payment of money which is due under a contractual obligation can always be demanded and, if the demand is not met, enforced by legal action before a court. The term “require” is used in this Article to cover both the demand addressed to the other party and the enforcement, whenever necessary, of such a demand by a court.

4) Also it is necessary to say that article 4.1 of above-mentioned principles points that a contract shall be interpreted according to the common intention of the parties. Paragraph (1) of this Article lays down the principle that in determining the meaning to be attached to the terms of a contract, preference is to be given to the intention common to the parties. In consequence, a contract term may be given a meaning which differs both from the literal sense of the language used and from the meaning which a reasonable person would attach to it, provided that such a different understanding was common to the parties at the time of the conclusion of the contract.

According to the Sales and Licensing agreement, common intention means that the parties undertake to co-operate in the development of the software necessary for the active scanning technology. Both parties knew, that the software needs a lot of time and work to become ideal.

5)In addition to this, [Article 35 of CISG] notes, that the seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract.

(2) Except where the parties have agreed otherwise, the goods do not conform with the contract unless they:

(a) are fit for the purposes for which goods of the same description would ordinarily be used.The standard of article 35 (2) (a), however, requires only that the goods be fit for the purposes for which they are ordinarily used. It does not require that the goods be perfect or flawless, unless perfection is required for the goods to fulfil their ordinary purposes.[ICC Arbitration Case No. 8247, June 1996, International Court of Arbitration Bulletin, vol. 11, p. 53 (2000) (microcrystalline chemicals that had solidified but could easily be re-transformed into crystals did not fail to conform to the contract].

Just like in the shown case, the software for the Third treatment room was going to get tested and prepared for medical examination through testing it on the patients. Moreover, under the [p. 3 art. 10 of Sales and Licensing agreement], the Buyer is responsible for obtaining both (a) any ethical approvals required under the law of Equatoriana and (b) such patient consent as may be required by the law of Equatoriana. So, he had to tell all the patients, that the Treatment room is being tested and there is no guarantee of it’s effectiveness.

6)Under Sales and Licensing Agreement art.10 The Parties hereby undertake to co-operate in the development of the software necessary for the active scanning technology. The Seller is responsible for the development of the active scanning technology (additional parts and software). The Buyer is responsible for providing the Seller with the necessary medical data for the fine-tuning of the active scanning technology and for testing that technology. It means that Respondent knew about possible risks which may be appeared.

7) Respondent has known that software was not finished yet and has promised to assist Claimant to develop software. According to the [Claimant’s exhibit No. 4], the first results the Respondent had with the Proton Therapy Facility with the two treatment rooms using the passive scattering technique were strongly admired by the Respondent. He was extremely interested in extending the treatment option and in purchasing the active scanning technology.

Respondent was well informed, that the development of the active scanning technology has reached a stage where only the required clinical trials were standing in the way of its approval by the Medical Certification Authority.

Claimant’s Exhibit No. 4 ,para 3 : «If our information is correct the development of the active scanning technology has reached a stage where only the required clinical trials are standing in the way of its approval by the Medical Certification Authority.

We would like to suggest that we provide you with the medical data you probably need to fine-tune the technology and to conduct the necessary trials. We will take responsibility for obtaining the necessary ethical approval. In addition, we would also assist you with obtaining approval for the active scanning technology from the Medical Certification Authority.»

7)In Procedural order № 2 para 25 it is said that after the basic software for the third treatment room had been installed Claimant started with the data provided by Respondent and in co-operation with Respondent’s operating personnel to modify, improve and fine-tune the software. Thus, both parties are responsible for the viability of software.

8)Procedural order № 2 para 28: Since it is a completely new technology and Claimant does not know whether the anticipated sales will be reached, which form the basis for the pro-rata allocation of the original development costs for the software the figures involve considerable guesswork. It confirms that RESPONDENT realized future issues which may happen to software.

Date: 2015-12-11; view: 961