B1409-C

THE 9TH LAWASIA INTERNATIONAL MOOT COMPETITION

2014

BETWEEN

THE INTERNATIONAL COLLECTIVE IN SUPPORT OF TEXTILE WORKERS

(CLAIMANT)

AND

SPEAR SHIRTS INC.

(RESPONDENT)

MEMORIAL FOR THE CLAIMANT

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TABLE OF CONTENTS

INDEX OF AUTHORITIES ................................................................................................ IV

STATEMENT OF JURISDICTION ................................................................................... IX

QUESTIONS PRESENTED .................................................................................................. X

STATEMENT OF FACTS ................................................................................................... XI

SUMMARY OF PLEADINGS ......................................................................................... XIII

PLEADINGS ...................................................................................................................... XIII

I. THAI LAW GOVERNS THE THE PROCEDURE OF THIS ARBITRATION

AND THE ARBITRATION AGREEMENT, WHEREAS CALIFORNIA LAW

GOVERNS THE SUBSTANTIVE DISPUTE ............................................................. 1

(A) THE LAW OF THAILAND IS THE PROCEDURAL LAW AS BANGKOK IS THE SEAT

OF ARBITRATION.................................................................................................... 2

(a) Bangkok Is The Implied Choice Of Seat Of Arbitration ......................... 2

(b) As the Seat of Arbitration Is In Bangkok, the Procedural Law Must Be

The Law of Thailand ................................................................................... 4

(B) THE LAW GOVERNING THE ARBITRATION AGREEMENT IS THE LAW OF

THAILAND ............................................................................................................... 4

(C) THE SUBSTANTIVE LAW GOVERNING SUBSTANCE OF THE DISPUTE IS

CALIFORNIA LAW ................................................................................................... 6

(a) Lex Loci Delicti Is The Appropriate Conflict Of Laws Rule Concerning

The Present Tortious Dispute ..................................................................... 6

(b) California Law As The Lex Loci Delicti Is The Law Applicable To The

Substantive Dispute ..................................................................................... 7

II. THE CLAIMANT REQUESTS THAT THE MAE SOT FIRE VICTIMS BE

JOINED IN THESE ARBITRAL PROCEEDINGS ................................................... 8

(A) THE MAE SOT FIRE VICTIMS ARE PARTIES TO THE ARBITRATION AGREEMENT

THROUGH THE AGENCY OF THE CLAIMANT........................................................ 8

(B) THE RESPONDENT WILL NOT BE SUBSTANTIALLY PREJUDICED BY THE

JOINDER OF THE MAE SOT FIRE VICTIMS TO THE PRESENT ARBITRAL

PROCEEDINGS ......................................................................................................... 9

(C) CLASS ARBITRATION IS PROCEDURALLY PERMISSIBLE IN THE PRESENT

ARBITRAL PROCEEDINGS ..................................................................................... 10

III. THE RESPONDENT IS LEGALLY RESPONSIBLE FOR THE DEATHS AND

INJURIES OF THE MAE SOT FIRE VICTIMS ..................................................... 12

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(A) UNDER CALIFORNIA LAW, THE RESPONDENT IS LIABLE FOR AIDING AND

ABETTING THE COMMISSION OF TORT AGAINST THE MAE SOT FIRE VICTIMS

............................................................................................................................... 12

(a) Aiding And Abetting A Tortious Conduct Is A Specific Tort Based On

Section 876(b) Of The American Restatement (Second) Of Torts ........ 12

(b) All the Requirements for the Tort of Aiding and Abetting a Tortious

Conduct on the Part of the Respondent have been Fulfilled in the

Present Dispute .......................................................................................... 13

(B) ASSUMING, ARGUENDO, THAT THE SUBSTANTIVE LAW GOVERNING THE

SUBSTANCE OF THE PRESENT DISPUTE IS THAI LAW, THE RESPONDENT IS

NEVERTHELESS LIABLE FOR ASSISTING THE WRONGFUL ACT OF MSC LTD AS

A JOINT ACTOR UNDER THAI LAW ..................................................................... 20

IV. THE CLAIMANT IS THEREFORE ENTITLED TO RECOVER MONETARY

DAMAGES UNDER THE HEADS OF GENERAL DAMAGES, SPECIAL

DAMAGES AND PUNITIVE DAMAGES FROM THE RESPONDENT, ON

BEHALF OF THE MAE SOT FIRE VICTIMS ....................................................... 21

(A) THE CLAIMANT IS ENTITLED TO RECOVER ALL THREE TYPES OF MONETARY

DAMAGES ON BEHALF OF THE MAE SOT FIRE VICTIMS UNDER CALIFORNIA

LAW....................................................................................................................... 21

(a) The Claimant is Entitled to Recover General Damages from the

Respondent ................................................................................................. 22

(b) The Claimant is Entitled to Recover Special Damages from the

Respondent ................................................................................................. 23

(c) The Claimant is Entitled to Recover Punitive Damages from the

Respondent ................................................................................................. 24

(B) ALTERNATIVELY, THE CLAIMANT IS ENTITLED TO RECOVER BOTH GENERAL

DAMAGES AND SPECIAL DAMAGES ON BEHALF OF THE MAE SOT FIRE

VICTIMS UNDER THAI LAW ................................................................................. 26

PRAYER FOR RELIEF........................................................................................................ 28

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INDEX OF AUTHORITIES

International Treaties and Conventions

Convention on the Recognition and Enforcement of Foreign Arbitral Awards ................ 16, 18

Regulation (EC) No. 864/2007 of the European Parliament and of the Council of 11 July

2007 on the law applicable to non-contractual obligations ................................................ 20

Judicial Decisions of International Tribunals

Abaclat and Others v. Argentine Republic, ICSID Case No. ARB/07/5 ................................. 24

Municipal Laws, Statutes and Regulations

American Restatement (Second) Of Torts .................................................................... 26, 27, 31

California Civil Code, .................................................................................................. 36, 37, 38

Restatement (Second) of Conflict of Laws (1971).................................................................... 20

Thai and Civil Commercial Code ............................................................................................ 34

Thai Arbitration Act 2002 ............................................................................................ 18, 20, 25

Thai Civil and Commercial Code ................................................................................ 23, 34, 41

Thai Conflict of Laws Act, 1938 .............................................................................................. 20

Thai Consumer Case Procedure Act B.E. 2551 ................................................................. 40, 41

Thai Product Liability Act B.E.2551.................................................................................. 40, 41

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Judicial Decisions of Municipal Courts

Arsanovia Ltd and others v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm) .. 15

Beeman v Burling (1990) 216 Cal. App. 3d 1586, 1599.......................................................... 37

C V D [2007] EWHC 1541 (comm.) ........................................................................................ 19

Casey v U.S. Bank National Association, 127 Cal. App. 4th 1138, 26 Cal. Rptr. 3d 401, 405

(2005) ................................................................................................................................... 28

Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] A.C. 334 ................... 15

Cope v Price Waterhouse, 990 F. 2d 1256 (9th

Cir. 1993), ..................................................... 28

Doe I v Unocal Corporation 395 F. 3d 932 (9th Cir. 2002) .............................................. 32, 33

Donoghue v Stevenson [1932] UKHL 100 .............................................................................. 26

Ex parte Agra Bank (1868) L.R. 3 Ch. 554 ............................................................................. 30

Fiol v Doellstedt (1996) 50 Cal. App. 4th

1318 .................................................................. 26, 28

Garrity v Lyle Stuart, 40 N.Y. 2d 354, 353 N.E. 2d 793 ......................................................... 39

Goh Suan Hee v Teo Cher Teck [2009] SGCA 52................................................................... 21

Government of India v. Cairn Energy India Pty Ltd [2012] 3 MLRA 1 ........................... 16, 18

Grand v Nacchio (2010) 236 P. 3d 398, 404 ........................................................................... 28

Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi AS v VSC Steel Co Ltd [2013] EWHC 4071

.............................................................................................................................................. 23

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Halberstam v Welch, 705 F. 2d 472, 478 (D. C. Cir. 1983) .............................................. 27, 28

Harding v Wealands [2006] UKHL 32 .................................................................................... 20

Hashimoto v Clark (2001) 264 B. R. 585, 598; ....................................................................... 28

In Re Estate of Ferdinand Marcos II, 25 F. 3d 1467, 1474-75 (9th

Cir. 1994) ........................ 33

In Re First Alliance Mortgage Company 471 F. 3d 977 (9th

Cir. 2006 ............................. 28, 39

John Pfeiffer v. Rogerson [2000] HCA 36............................................................................... 21

Kerby v Mortgage Funding Corp., 992 F. Supp. 787 (D. Md. 1998) ...................................... 26

Marubeni Hong Kong and South China Ltd v Mongolian Government [2002] 2 All ER

(Comm) 873 ......................................................................................................................... 23

Mazzaro de Abreu v Bank of America Corporation, 525 F. Supp. 2d. 381 (SDNY 2007) ..... 26

Myers v Stephens (1965) 233 Cal. App. 2d 104 ...................................................................... 36

Naviera Amazonia Peruma SA v Compania International de Seguros de Peru [1988] 1

Lloyd's Rep 116 ................................................................................................................... 17

Neilson v Union Bank of California, 290 F. Supp. 2d 1101 (C. D. Cal. 2003) ................. 29, 31

Papa v US, 281 F. 3d 1004, 1013 (9th

Cir. 2002) .................................................................... 33

Regie Nationale des Usines Renault v. Zhang (2002) 210 CLR 491....................................... 21

Rowland v Christian (1968) 69 Cal. 2d 108 ............................................................................ 26

Saunders v Superior Court (1994) 27 Cal. App. 4th

832 ......................................................... 26

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Shashoua & Ors v Sharma [2009] EWHC 957 (Comm) ......................................................... 17

Smith v Brown-Forman Distillers Corporation (1987) 196 Cal. App. 3d 503 ........................ 39

Smith v Wade, 461 U.S. 30 (1983) ........................................................................................... 39

State v Superior Court of Maricopa County (1979) 123 Ariz. 324, 331 ................................. 28

Stolt-Nielsen v Animal Feeds 130 S. Ct. 1758 (2010) ............................................................. 25

Sumitomo Heavy Industries Inc v Oil and Natural Gas Commission [1994] 1 Lloyd’s Rep. 45

.............................................................................................................................................. 17

Thing v La Chusa (1989) 48 Cal. 3d 644 ................................................................................. 26

Wells Fargo Bank v Ariz. Laborers, Teamsters, 38 P. 3d 12, 23 (Ariz. 2002) ........................ 29

Wynn v National Broadcasting Co. Inc. (2002) 234 F. Supp. 2d 1067; .................................. 26

XL Insurance Ltd v Owens Corning (2000) 2 Loyld’s Rep 500 ............................................. 19

Treatises and Textbooks

Dicey, Morris and Collins on The Conflict of Laws, ............................................................... 17

Dobbs, ‘The Law of Torts’, § 340, at 937 (2000) .................................................................... 31

Redfern & Hunter, ‘Law and Practice of International Commercial Arbitration’ (5th Ed.) .. 24

William W. Park, ‘Arbitration of International Business Disputes: Studies in Law and

Practice’ ............................................................................................................................... 24

Articles and Commentaries

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Bastian Reinschmtd, ‘The law of tort: a useful tool to further corporate social

responsibility?’, Comp.Law. 2013 ....................................................................................... 20

Combs, ‘Civil Aiding and Abeting Liability’, (2005) 58 Vand. L. Rev. 224, 293 ................... 31

Mason, ‘Civil Liability for Aiding and Abetting’, (2006) Vol. 61, No.3, Bus. Law. 1135,

p.281 ............................................................................................................................... 27, 29

Wongkaweepairot, ‘Liability for Cloud Computing under Copyright Law’, .......................... 34

Others

KLRCA Arbitration Rules ........................................................................................................ 16

UNCITRAL Arbitration Rules .................................................................................................. 22

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STATEMENT OF JURISDICTION

The International Collective in Support of Textile Workers (‘Claimant’) and Spear Shirts Inc.

(‘Respondent’) (both, collectively known as ‘Parties’) jointly submit the present dispute to

binding arbitration in Bangkok in accordance with the KLRCA Arbitration Rules (“Rules”).

The validity and enforceability of the arbitration agreement have not been disputed by the

Parties.

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QUESTIONS PRESENTED

I.

Whether a large number of claimants, namely the victims and the families of the deceased

workers of the fire incident in the Mae Sot Factory on 15 October 2013, can be joined in a

single arbitration?

II.

What are the applicable systems of law arising from the present arbitration?

III.

Whether the Respondent is liable for the death and injuries of the victims and the families of

the deceased workers of the fire incident in the Mae Sot Factory on 15 October 2013?

IV.

If the Respondent is liable, what are the types of monetary damages that are available to the

victims and the families of the deceased workers of the fire incident in the Mae Sot Factory

on 15 October 2013?

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STATEMENT OF FACTS

INTRODUCTION

1. This dispute involves claims by the victims and families of the deceased employees of

Mae Sot Clothing Ltd (‘MSC Ltd’) of a fire that has occurred at the factory of Mae Sot

Clothing Ltd, a company located in Mae Sot (‘MSC Ltd’) on 15 October 2013 (‘Mae

Sot Fire Victims’) against the Respondent, a company with its principal place of

business in Los Angeles, California. For ease of reference, this incident will hereinafter

be referred to as the ‘Mae Sot Fire Incident’.

THE RELATIONSHIP BETWEEN MSC LTD AND THE RESPONDENT

2. The Respondent is the largest customer of MSC Ltd and purchases shirts manufactured

by MSC Ltd vide the Standard Purchase Order(s) issued by the Respondent from

California.

3. The Respondent had been dealing with MSC Ltd for 10 years prior to the Mae Sot Fire

Incident. The most recent Standard Purchase Order placed by the Respondent was on 1

April 2013.

THE VISIT BY THEODORE SNOWY

4. Several months prior to the Mae Sot Fire Incident, Theodore Snowy (‘Snowy’), an

assistant to Joe Baydon (‘Baydon’), Vice President of the Respondent, visited the

factory of MSC Ltd. In his e-mail to Baydon, he described the factory as a “sweat shop”

where MSC Ltd worked “their employees to death” and observed that there were “rolls

of fabric and carts filled with partly finished shirts all over the floor.” Snowy also

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stated that he “was constantly tripping over something” and that he was “lucky” to not

break his neck.

5. Both Parties accept the finding of the independent auditor that the condition of the

MSC Ltd’s factory (including the blocked and/or cluttered aisles and stairways) led to

the deaths and injuries of the 150 employees.

THE MAE SOT FIRE INCIDENT

6. On 15 October 2013, a fire broke out in the factory of MSC Ltd, killing and injuring at

least 150 employees of MSC Ltd. At the time of the Mae Sot Fire Incident, the

employees were making shirts for the Respondent.

SUBMISSION TO ARBITRATION

7. The Claimant is authorised to represent the Mae Sot Fire Victims in this present

arbitration. The Parties have agreed to submit the dispute to binding arbitration, in

accordance with the KLRCA in Bangkok (“Arbitration Agreement”).

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SUMMARY OF PLEADINGS

I. Thai law governs the procedure of this arbitration and the Arbitration Agreement as the

seat of arbitration is in Bangkok. The substantive dispute i.e. issues of liability of the

Respondent and the heads of damages claimable is governed by California law.

II. The Mae Sot Fire Victims ought to be joined to these arbitral proceedings as they are

parties to the Arbitration Agreement through the agency of the Claimant. Further, the

Respondent will not be substantially prejudiced by this joinder as the few remaining

outstanding issues can be resolved in favour of the Mae Sot Fire Victims as whole and

the individual circumstances of each of the Mae Sot Fire Victims can be taken into

account in the subsequent assessment proceedings. Further, class arbitration is

procedurally allowed in the present proceedings as long as the Tribunal has jurisdiction

over their claims. The KLRCA UNCITRAL Arbitration Rules do not limit the number of

claimants that can be joined.

III. The Respondent is legally responsible for the deaths and injuries of the Mae Sot Fire

Victims under California law. This is because the Respondent had committed the tort of

aiding and abetting a tortious conduct by knowingly providing substantial assistance to

MSC Ltd in committing an underlying tort against the Mae Sot Fire Victims.

Alternatively, under Thai law, the Respondent will still nevertheless be liable for

assisting the wrongful conduct of MSC Ltd as a joint actor of the said tort.

IV. Therefore, under California law, the Claimant is entitled to recover monetary damages

under the heads of general damages, special damages and punitive damages from the

Respondent, on behalf of the Mae Sot Fire Victims. Alternatively, the Claimant will

also be entitled to recover general damages and special damages under Thai law but

punitive damages will not be awarded against the Respondent under Thai law.

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PLEADINGS

I. THAI LAW GOVERNS THE THE PROCEDURE OF THIS ARBITRATION

AND THE ARBITRATION AGREEMENT, WHEREAS CALIFORNIA LAW

GOVERNS THE SUBSTANTIVE DISPUTE

1. In Arsanovia Ltd and others v Cruz City 1 Mauritius Holdings,1 the English High Court

listed four aspects of an international arbitration that may be governed by differing

systems of laws:

1.1. The curial law or procedural law that governs the conduct and procedure of the

arbitration (lex arbitri);

1.2. The law that governs the scope of the jurisdiction of the tribunal (the law of the

reference);

1.3. The law applicable to the arbitration agreement (the law of the arbitration

agreement); and

1.4. The substantive law applicable to the underlying or the substance dispute (lex

causae).

2. Lord Mustill in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd,2 stated at

pages 357-358 that:

“It is by now firmly established that more than one national system of

law may bear upon an international arbitration. Thus, there is the

proper law which regulates the substantive rights and duties of the

1 [2012] EWHC 3702 (Comm)

2 [1993] A.C. 334

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parties to the contract from which the dispute has arisen.

Exceptionally, this may differ from the national law governing the

interpretation of the agreement to submit the dispute to arbitration.

Less exceptionally it may also differ from the national law which the

parties have expressly or by implication selected to govern the

relationship between themselves and the arbitrator in the conduct of

the arbitration: the “curial law” of the arbitration, as it is often

called.” (Emphasis added)

3. In the present dispute, the Claimant submits that the procedural law governing this

arbitral proceedings and the Arbitration Agreement is the law of Thailand, whereas the

substantive law governing the substantive dispute, i.e. liability of the Respondent and

the heads of damages, claimable is California law.

(A) THE LAW OF THAILAND IS THE PROCEDURAL LAW AS BANGKOK IS THE SEAT

OF ARBITRATION

4. Generally, the legal system of the seat of arbitration is the procedural law of the

arbitration.3 Therefore, in order to determine the procedural law of this Tribunal, the

seat of arbitration must be determined first.

(a) Bangkok Is The Implied Choice Of Seat Of Arbitration

5. The Parties have agreed to submit this dispute to this arbitration, which is to be carried

out in Bangkok in accordance with the Rules.4

3 Article V(1)(d) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (‘New York

Convention’); Government of India v. Cairn Energy India Pty Ltd [2012] 3 MLRA 1;

4 Moot Problem, p.3.

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6. Ergo, the seat of arbitration is to be determined by reference to the Rules. One of the

methods pursuant to Rule 6(1) of the Rules in determining the seat is by reference to the

agreement between the parties to the dispute.

7. Although Bangkok was not expressly designated as the seat of arbitration, it being the

venue of these proceedings5 is presumed to be the juridical seat of arbitration.

6 For

instance, in Shashoua v Sharma7 the English High Court held that in the absence of

contrary indications, a choice of ‘venue’ normally equates to a choice of legal seat of

arbitration.8 This is further supported by the following statement in Dicey, Morris and

Collins on The Conflict of Laws9 :-

"[the seat] is in most cases sufficiently indicated by the country

chosen as the place of the arbitration. For such a choice of place not

to be given effect as a choice of seat, there will need to be clear

evidence that the parties…agreed to choose another seat for the

arbitration and that such a choice will be effective to endow the courts

of that country with jurisdiction to supervise and support the

arbitration".

5 Moot Problem, p.3; Clarifications, D-1.

6 Sumitomo Heavy Industries Inc v Oil and Natural Gas Commission [1994] 1 Lloyd’s Rep. 45.

7 Shashoua & Ors v Sharma [2009] EWHC 957 (Comm) (07 May 2009); Naviera Amazonia Peruma SA v

Compania International de Seguros de Peru [1988] 1 Lloyd's Rep 116

8 Jonathan Hill, ‘Determining the seat of an international arbitration: party autonomy and the interpretation of

arbitration agreements’, International & Comparative Law Quarterly, 2014, 63(3), p.517-534; Naviera

Amazonia Peruma SA v Compania International de Seguros de Peru [1988] 1 Lloyd's Rep 116; DStJ Sutton, J

Gill and M Gearing, Russell on Arbitration (23rd Ed. Sweet & Maxwell 2007) para. 2-100

9 Dicey, Morris and Collins on The Conflict of Laws, para. 16-035

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8. Since Bangkok is explicitly chosen as the physical venue of arbitration under the

Arbitration Agreement,10

the necessary implication is that the parties have intended

Bangkok to be the seat of arbitration.

(b) As the Seat of Arbitration Is In Bangkok, the Procedural Law Must Be

The Law of Thailand

9. Article V(1)(d) of the New York Convention provides that an award may be set aside by

the courts of the country where enforcement of an arbitral award is sought if “the

arbitral procedure was not in accordance with the agreement of the law of the country

where the arbitration took place.” Thus, the law of the seat is necessarily the

procedural law governing the arbitration.11

10. This position is supported by the Malaysian Federal Court decision in Government of

India v. Cairn Energy India Pty Ltd,12

where it was held that the law of the seat of

arbitration shall be the curial law of the arbitration.

11. It follows therefore that with Bangkok being the seat of arbitration, the procedures of

this present arbitration is governed by the Thai Arbitration Act 2002 (‘TAA 2002’).

This includes the power of the arbitral tribunal to determine the applicable law to the

substantive issue (lex causae).13

(B) THE LAW GOVERNING THE ARBITRATION AGREEMENT IS THE LAW OF

THAILAND

10

Moot Problem, p.3; Clarifications, C-1.

11 Yann Guermonprez, ‘How do you Determine the Procedural Law Governing an International Arbitration?’,

Fenwick Elliot, 31 May 2006.

12 [2012] 3 MLRA 1

13 Section 34 of TAA 2002

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12. With regard to the question of the proper law governing the Arbitration Agreement,

reference is made to the English Court of Appeal decision in Sulamerica CIA Nacional

de Seguros SA and others v. Enesa Egenharia SA and others14

(“the Sulamerica

case”). In the Sulamerica case, the Court of Appeal laid down a three-stage enquiry,

whereby the applicable law of an arbitration agreement is determined by:-

12.1. the express choice of the parties; but in the absence thereof;

12.2. the implied choice of the parties; but in the absence thereof;

12.3. the law with the closest and most real connection with the dispute between the

parties.

13. The Court of Appeal in the Sulamerica case also stated that the choice of seat of

arbitration is always an indicator of the parties implied agreement that the law of the

seat of arbitration shall apply to the arbitration agreement.15

14. This approach has also been observed in the Republic of People’s China where in the

absence of parties' specific designation of the law governing the arbitration agreement,

the People's Courts will apply the law of the place of arbitration to determine the

validity of the arbitration agreement.16

15. As such, the Respondent submits that the law governing the arbitration agreement in

this instance is the law of Thailand since the seat of arbitration is in Bangkok.

14

[2012] EWCA Civ 638

15 Citing with approval XL Insurance Ltd v Owens Corning (2000) 2 Loyld’s Rep 500 and C v D [2007] EWHC

1541 (Comm.)

16 Fan Yang, ‘Applicable laws to arbitration agreements under current arbitration law and practice in mainland

China’, International & Comparative Law Quarterly, 2014, 63(3), pp. 741-754.

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(C) THE SUBSTANTIVE LAW GOVERNING SUBSTANCE OF THE DISPUTE IS

CALIFORNIA LAW

16. Where there is no agreed choice of law such as the present case, according to Section

34 of TAA 2002, the Tribunal has the discretion in adopting the appropriate conflict of

law rules. Consequently, this Tribunal is not bound by the Thai Conflict of Laws Act,

1938. This is particularly so where there is conflict between the application of Thai law

and California law on the issue of the Respondent’s liability.

17. The adopted conflict of law rules in turn becomes the standard to determine the law

applicable to the issues of the Respondent’s liability.

18. Further, heads of damages is widely regarded as substantive and thus are subject to the

same system of law applicable to issues of liability.17

19. For reasons set out below, the Claimant submits that the issues of liability and heads of

damages are subject to California law.

(a) Lex Loci Delicti Is The Appropriate Conflict Of Laws Rule Concerning

The Present Tortious Dispute

20. The Claimant submits that the most appropriate principle governing a tortious dispute is

lex loci delicti which is the law of the place where the wrongful act occurs.18

21. This can be seen as the position in numerous civil and common law jurisdictions

worldwide. For instance, while the High Court of Australia in John Pfeiffer v.

17

Section 171 of the Restatement (Second) of Conflict of Laws (1971) (‘US Second Restatement’); Harding v

Wealands [2006] UKHL 32; Article 15(c) of Regulation (EC) No. 864/2007 of the European Parliament and of

the Council of 11 July 2007 on the law applicable to non-contractual obligations (‘Rome II Regulation’)

18 Bastian Reinschmtd, ‘The law of tort: a useful tool to further corporate social responsibility?’, Comp.Law.

2013, 34(4), pp. 103-111.

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Rogerson19

was addressing the appropriate conflict of law rule in the context of inter-

state torts in a federal system, the Court identified the advantages of adopting lex loci

delicti as the applicable substantive law:

21.1. it accords with “the reasonable expectation of the parties”;

21.2. application of lex loci delicti recognises the predominant concern of the local

legislature in a federal system with “acts, matters and things” within its territory;

and

21.3. “liability is fixed and certain” as opposed to lex fori where liability depends on

which court the victim choose to bring his or her claim.

22. In Regie Nationale des Usines Renault v. Zhang20

, the court accepted that, “despite the

absence of the significant factor of federal considerations” (Gleeson CJ, Gaudron,

McHugh, Gummow and Hayne JJ), the same reasoning applied in the context of

international torts and required the adoption of lex loci delicti as the applicable

substantive law.21

(b) California Law As The Lex Loci Delicti Is The Law Applicable To The

Substantive Dispute

23. In the present case, the Claimant submits that the wrongful act complained of here is

the provision of commercial incentive to MSC Ltd for the continuance of MSC Ltd’s

tort in failing/negligently provide safe working condition. This takes the form of the

19

[2000] HCA 36

20 (2002) 210 CLR 491

21 Goh Suan Hee v Teo Cher Teck [2009] SGCA 52

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purchase orders issued from California which will form the basis of the Respondent’s

liability.22

24. Therefore, as California is the lex loci deliciti, the law applicable to the substantive

issues is California law.

II. THE CLAIMANT REQUESTS THAT THE MAE SOT FIRE VICTIMS BE

JOINED IN THESE ARBITRAL PROCEEDINGS

25. Article 17(5) of the UNCITRAL Arbitration Rules, adopted as Part II of the Rules,

provides that at the request of any party to the arbitration, one or more third persons

may be joined in the arbitration as a party provided two requirements are being fulfilled:

25.1. such person is a party to the arbitration agreement; and

25.2. there is no prejudice to any of the present parties to the arbitral proceedings.

26. Notably, Article 17(5) of the UNCITRAL Arbitration Rules does not limit the number of

claimants that can be joined.23

27. The Claimant contends that the Mae Sot Fire Victims are at all times parties to the

Arbitration Agreement. The onus is then on the Respondent to show that prejudice

occasioned by this joinder, if any, is substantial and cannot be compensated with costs.

(A) THE MAE SOT FIRE VICTIMS ARE PARTIES TO THE ARBITRATION AGREEMENT

THROUGH THE AGENCY OF THE CLAIMANT

22

Infra., paragraph 61 of this Memorial.

23 Article 17(5) of the UNCITRAL Arbitration Rules allows “one or more third persons to be joined…”

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28. The issue of ostensible authority of the Claimant to create privity of contract between

the Mae Sot Fire Victims and the Respondent is governed by the same system of law

that governs the Arbitration Agreement namely, Thai law.24

29. The concept of ostensible authority is recognized under Section 821 of the Thai Civil

and Commercial Code, pursuant to which a person who holds out another as his agent

or knowingly allows the other to represent himself as an agent, is liable to the third

party as if the other was in fact his agent.

30. In the present case, it is clear to both Parties that the Arbitration Agreement was entered

into on behalf the Mae Sot Fire Victims.25

Further, the Arbitration Agreement was

entered subsequent to the occurrence of the present dispute, which means that all

parties to the dispute are fairly capable of description. The Claimant was in no doubt

representing not its own interests but the interests of the Mae Sot Fire Victim.

31. A fortiori, it is agreed between both Parties that the Claimant was authorized by the 15-

member committee which in turn represents the Mae Sot Fire Victims.26

The Claimant

was at all times representing the interests of Mae Sot Fire Victims in their dispute with

the Respondent. On the strength of these authorizations and Section 801(6) of the Thai

Civil and Commercial Code, the Claimant has special authority to submit to arbitration

on behalf of the Mae Sot Fire Victims.

(B) THE RESPONDENT WILL NOT BE SUBSTANTIALLY PREJUDICED BY THE

JOINDER OF THE MAE SOT FIRE VICTIMS TO THE PRESENT ARBITRAL

PROCEEDINGS

24

Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi AS v VSC Steel Co Ltd [2013] EWHC 4071; Marubeni Hong

Kong and South China Ltd v Mongolian Government [2002] 2 All ER (Comm) 873

25 Further Clarifications, D-1.

26 Ibid.

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10

32. Naming the Mae Sot Fire Victims will ensure that any award eventually made will

reflect the privity of the Arbitration Agreement i.e. between the Mae Sot Fire Victims

and the Respondent. Further, no prejudice can be occasioned when most of factual

issues have been determined by consensus of both Parties27

with only a few remaining

issues to be resolved.28

33. Even if there is prejudice due to an increment of cost and delay, this can be remedied

by Article 42 of the KLRCA UNCITRAL Arbitration Rules which states that the

Tribunal may apportion each of such costs between the parties if it determines that

apportionment is reasonable, taking into account the circumstances of the case.

(C) CLASS ARBITRATION IS PROCEDURALLY PERMISSIBLE IN THE PRESENT

ARBITRAL PROCEEDINGS

34. Class arbitration is a representative action in a legal proceeding that “enables the claims

of a number of persons with the same interest (the class members) to be brought by one

or a number of claimants (the representative claimant(s)) against the same

respondent.”29

35. According to the decision of an international arbitration known as Abaclat,30

the claims

were brought by an association acting as agent for approximately 60,000 Italian

bondholders. The majority of the arbitral tribunal regarded “mass action” not as a

matter of jurisdiction but rather of procedural “admissibility”.31

It was emphasised that

27

Moot Problem p.3.

28 Moot Problem, p.4.

29 Redfern & Hunter, ‘Law and Practice of International Commercial Arbitration’ (5th Ed.)

30 Abaclat and Others v. Argentine Republic, ICSID Case No. ARB/07/5

31 William W. Park, ‘Arbitration of International Business Disputes: Studies in Law and Practice’

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11

the Tribunal has jurisdiction over each individual claim. Hence the form of proceeding

does not require a specific consent. The reasoning was as follows:

“Assuming that the Tribunal has jurisdiction over the claims of

several individual Claimants, it is difficult to conceive why and [how]

the tribunal could lose such jurisdiction where the number of

Claimants outgrows a certain threshold.”

36. Similarly, although the Rules and the Thai Arbitration Act 2002 do not provide for any

procedure for class arbitration, we submit that class arbitration is not prohibited by law

as long as this Tribunal has jurisdiction over each claim irrespective of the number of

claimants.

37. Admittedly, Stolt-Nielsen v Animal Feeds32

provides that express consent for class

arbitration is usually required. However, the Arbitration Agreement in the present

dispute is a post-dispute arbitration agreement which means both parties have a clear

understanding of the potential claimants involved, i.e. the Mae Sot Fire Victims, as well

as the nature of the dispute.

38. As an agent specifically authorized to represent the Mae Sot Fire Victims, the Claimant

is acting well within its capacity and authority to bring the dispute to speedy resolution

where the issues concerns the Mae Sot Fire Victims as a whole, for example the issue

of Respondent’s liability and where certain issues can be determined in advance such as

the heads of damages claimable before proceeding to assessment of damages.

39. Thus, for these reasons, as long as the Tribunal has jurisdiction over the claims, class

arbitration by the Mae Sot Fire Victims is permissible.

32

130 S. Ct. 1758 (2010)

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12

III. THE RESPONDENT IS LEGALLY RESPONSIBLE FOR THE DEATHS AND

INJURIES OF THE MAE SOT FIRE VICTIMS

(A) UNDER CALIFORNIA LAW, THE RESPONDENT IS LIABLE FOR AIDING AND

ABETTING THE COMMISSION OF TORT AGAINST THE MAE SOT FIRE VICTIMS

(a) Aiding And Abetting A Tortious Conduct Is A Specific Tort Based On

Section 876(b) Of The American Restatement (Second) Of Torts

40. One is subject to liability for a harm resulting to a third person from the tortious

conduct of another under the tort of aiding and abetting a tortious conduct if he “knows

that the other's conduct constitutes a breach of duty and gives substantial assistance or

encouragement to the other so to conduct himself”.33

41. The tort of aiding and abetting a tortious conduct is distinct from the common-law tort

of negligence, which necessitates the pre-existence of a duty of care being owed by a

tortfeasor to a victim before any form of liability can be imposed on the tortfeasor.34

42. While the Claimant acknowledges that the tort of aiding and abetting a tortious conduct

is one that is alien to most common-law jurisdictions, it is nevertheless a well-

established tort in many states in the USA. 35

43. In fact, under California law specifically, the court in Neilson v Union Bank of

California36

had expressly recognised that a civil liability for aiding and abetting a

33

Restatement (Second) of Torts, s.876(b)

34 Rowland v Christian (1968) 69 Cal. 2d 108; Thing v La Chusa (1989) 48 Cal. 3d 644; Donoghue v Stevenson

[1932] UKHL 100

35 Fiol v Doellstedt (1996) 50 Cal. App. 4

th 1318; Mazzaro de Abreu v Bank of America Corporation, 525 F.

Supp. 2d. 381 (SDNY 2007); Saunders v Superior Court (1994) 27 Cal. App. 4th

832; Wynn v National

Broadcasting Co. Inc. (2002) 234 F. Supp. 2d 1067; Kerby v Mortgage Funding Corp., 992 F. Supp. 787 (D.

Md. 1998)

36 290 F. Supp. 2d 1101 (C. D. Cal. 2003)

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13

tortious conduct will be imposed on the aider and abettor as long as it can be shown that

he “knowingly gave substantial assistance to someone who performed wrongful

conduct”.37

(b) All the Requirements for the Tort of Aiding and Abetting a Tortious

Conduct on the Part of the Respondent have been Fulfilled in the

Present Dispute

44. In essence, in order for the Respondent to be liable for aiding and abetting a tortious

conduct under Section 876(b) of the Restatement (Second) of Torts, there are three

requirements that need to be fulfilled:-38

44.1. There must be an existing underlying tort by the principal tortfeasor;

44.2. The Respondent must have knowledge of the said underlying tort; and

44.3. The Respondent must have provided substantial assistance in the commission of

the said underlying tort.

45. In this regard, the Claimant submits that all the aforementioned requirements have been

satisfied in the present dispute.

(i) There was an underlying tort committed by MSC Ltd., the principal

tortfeasor

46. This requirement is fundamental in providing a standing for the Claimant to sue the

Respondent for aiding and abetting a tortious conduct.39

This is because the said tort is

37

Neilson v Union Bank of California, 290 F. Supp. 2d 1101, 1134 (C. D. Cal. 2003); see also: Halberstam v

Welch, 705 F. 2d 472, 478 (D. C. Cir. 1983)

38 Ibid.

39 Mason, ‘Civil Liability for Aiding and Abetting’, (2006) Vol. 61, No.3, Bus. Law. 1135, p.281

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14

“premised on the finding of a primary violation.”40

. This primary violation can be a

breach of a civil and/or criminal duty which arises from either common-law or statute.41

47. In the present dispute, the fact that MSC Ltd had committed an underlying tort as the

principal tortfeasor is not in dispute. This is for the following reasons:-

47.1. First, the legal counsel for both the Claimant and the Respondent have accepted

an independent auditor’s report that the unsafe working condition of MSC Ltd’s

factory, “including the blocked and/or cluttered aisles stairways” was the major

factor in causing the injuries and deaths of the Mae Sot Fire Victims.42

47.2. Second, the issue of whether the Respondent is legally responsible for the injuries

and death of the Mae Sot Fire Victims is to be determined by this Tribunal on the

basis that MSC Ltd had operated its factory “in a negligent – or possibly grossly

negligent – manner” i.e. a tortious conduct.43

48. Hence, the first requirement of the tort of aiding and abetting a tortious conduct has

been satisfied in the present dispute.

(ii) The Respondent had knowledge of the said underlying tort

49. With regard to this requirement, “the requisite degree of knowledge for an aiding and

abetting claim is actual knowledge”.44

However, this knowledge need not be specific;

40

Grand v Nacchio (2010) 236 P. 3d 398, 404; see also: Halberstam v Welch, 705 F. 2d 472, 478 (D. C. Cir.

1983); State v Superior Court of Maricopa County (1979) 123 Ariz. 324, 331

41 Mason, ‘Civil Liability for Aiding and Abetting’, (2006) Vol. 61(3) Bus. Law. 1135, p.279; Combs, ‘Civil

Aiding and Abeting Liability’, (2005) 58 Vand. L. Rev. 224, 279

42 Moot Problem, p.3

43 Moot Problem, p.4

44 Hashimoto v Clark (2001) 264 B. R. 585, 598; see also: Cope v Price Waterhouse, 990 F. 2d 1256 (9

th Cir.

1993), para.35; In Re First Alliance Mortgage Company 471 F. 3d 977 (9th

Cir. 2006); Fiol v Doellstedt, 50 Cal.

App. 4th 1318, 58 Cal. Rptr. 2d 308, 312 (1996); Casey v U.S. Bank National Association, 127 Cal. App. 4th

1138, 26 Cal. Rptr. 3d 401, 405 (2005)

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15

an aider and abettor only needs to possess a general awareness that his role contributed

to a tortious conduct. 45

50. Furthermore, the aider and abettor need not reach an agreement to participate in the

underlying tort for a particular harm to occur. The mere fact that the aider and abettor

knows that the principal tortfeasor’s conduct constitutes a breach of duty, and reach a

conscious decision to participate in that tortious activity is sufficient for the purposes of

satisfying this requirement. 46

51. In addition to the above, the court in Wells Fargo Bank v Ariz Laborers Teamsters 47

held that the actual knowledge of an aider and abettor in relation to the wrongful

conduct can be inferred from the surrounding circumstances.

52. In the present dispute, the Claimant submits that the Respondent did have specific

actual knowledge that MSC Ltd, the principal tortfeasor, had been operating the factory

in a negligent manner i.e. providing an unsafe working environment for the Mae Sot

Fire Victims.

53. This is evident from the e-mail that was sent to Baydon (the Vice-President of the

Respondent who is in charge of purchasing clothing from MSC Ltd) by Snowy, his

assistant. This e-mail was sent after Snowy’s visit to MSC Ltd’s factory as suggested

by Baydon. The relevant excerpt of the said e-mail is reproduced as follows:-

“Now I understand how they [MSC Ltd.] can supply us with such

great shirts at such a ridiculously low price. The place’s a “sweat

45

SEC v Coffey, 493 F. 2d 1364 (6th

Cir. 1974)

46 Neilson v Union Bank of California, 290 F. Supp. 2d 1101 (C. D. Cal. 2003); Mason, ‘Civil Liability for

Aiding and Abetting’, (2006) Vol. 61, No.3, Bus. Law. 1135, p.288

47 Wells Fargo Bank v Ariz. Laborers, Teamsters, 38 P. 3d 12, 23 (Ariz. 2002)

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16

shop” – they work their employees to death. And there is stuff – rolls

of fabric and carts filled with partly finished shirts all over the floor, I

was constantly tripping over something like I do back in the office –

lucky I didn’t break my neck!”48

(Emphasis added)

54. Based on the said e-mail, it is clear that Snowy had the knowledge of the negligent

operation of the MSC Ltd’s factory. Since the Respondent is a corporation and

therefore an artificial entity, it can only possess such knowledge through its officers49

.

55. Hence, the Claimant contends that the knowledge of the underlying tort committed by

MSC Ltd possessed by Snowy is imputed onto the Respondent for the following

reasons:-

55.1. It was Baydon, as the Vice-President of the Respondent, who suggested that

Snowy visit MSC Ltd’s factory;50

55.2. Pursuant to the suggestion made by Baydon, Snowy had visited MSC Ltd’s

factory and updated Baydon on, inter alia, the unsafe working condition in the

premises via the aforementioned e-mail;51

and

55.3. The said e-mail was duly noted by Baydon and was subsequently forwarded to

the President of the Respondent himself.52

56. Owing to the above, the Claimant submits that the second requirement for the tort of

aiding and abetting has also been satisfied in the present dispute.

48

Moot Problem, p.2

49 Ex parte Agra Bank (1868) L.R. 3 Ch. 554

50 Moot Problem, p.2

51 Ibid.

52 Further Clarifications, A-4 (‘Spear Shirts’)

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17

(iii) The Respondent had provided substantial assistance in the

commission of the said underlying tort

57. The third and final requirement of the tort of aiding and abetting a tortious conduct is

that the aider and abettor must have had provided substantial assistance to the principal

tortfeasor, acting in a manner that enables the principal tortfeasor to commit the

underlying tort. 53

58. A substantial assistance may come in many forms; it does not necessarily denote

physical assistance or direct participation. In fact, a mere moral advice and/or

encouragement can also constitute a substantial assistance, provided that the aider and

abettor knows that the act encouraged is tortious in nature.54

59. Under California law, the requirement of substantial assistance is characterised by the

substantial factor test in order to establish the causal link between the assistance

provided by the aider and abettor and the harm suffered by the victim. Hence, in the

present dispute, it is vital for the Claimant to “show that the aider and abettor [the

Respondent] provided assistance that was a substantial factor [i.e. not the sole factor]

in causing the harm suffered.”55

It is therefore evident that the substantial factor test

differs from the classic common-law ‘but-for’ test.56

60. Further, the Official Comment to Clause (b) of Section 876 of the Restatement (Second)

of Torts lists five factors to be considered in analysing whether an alleged aider and

abettor’s participation was a substantial factor in the resulting wrongful act:-

53

Neilson v Union Bank of California, 290 F. Supp. 2d 1101 (C. D. Cal. 2003)

54 Restatement (Second) of Torts, s.876

55 Neilson v Union Bank of California, 290 F. Supp. 2d 1101 (C. D. Cal. 2003); see also: Metge v Baehler, 762 F.

2d 621, 624 (8th Cir. 1985); Combs, ‘Civil Aiding and Abeting Liability’, (2005) 58 Vand. L. Rev. 224, 293

56 Combs, ‘Civil Aiding and Abeting Liability’, (2005) 58 Vand. L. Rev. 224, 293; Dobbs, ‘The Law of Torts’, §

340, at 937 (2000)

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18

60.1. The nature of the act encouraged;

60.2. The amount of assistance given by the aider and abettor;

60.3. The aider and abettor’s presence or absence at the time of the tort commission;

60.4. The aider and abettor’s relationship with the principal tortfeasor; and

60.5. The aider and abettor’s state of mind.

61. In the present dispute, the Claimant submits that the Respondent had provided

substantial assistance to MSC Ltd in the form of a commercial incentive to continue

with the commission of the underlying tort. This commercial incentive is the (lucrative)

contract of sale of clothing (i.e. in the form of the Standard Purchase Orders) between

the Respondent and MSC Ltd despite the former being well-aware of the latter’s

negligent operation of its factory.57

62. In this regard, the Claimant submits that a reference to the Federal District Court in Los

Angeles’ case of Doe I v Unocal Corporation58

would prove instructive in the present

dispute. In this case, Unocal Corporation entered into an agreement with the Burmese

military junta to build an infrastructure despite having actual knowledge that military

junta had been using forced labour to provide such a service. Unocal Corporation was

eventually found to have provided substantial assistance to the military junta in the

form of a commercial incentive to build the infrastructure using forced labour.

Therefore, Unocal Corporation was held liable for aiding and abetting the military junta

in committing a tortious conduct i.e. forced labour.

57

Clarifications, Attachment #1; Moot Problem, p.2

58 395 F. 3d 932 (9th Cir. 2002)

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19

63. While the Claimant acknowledges that the aforementioned case was decided pursuant

to the concept of aiding and abetting a tortious conduct under the Alien Tort Statute,59

the Claimant submits that there is no necessity for a distinction between the concept of

aiding and abetting under the Alien Tort Statute and the Restatement (Second) of Torts.

This is because the Federal District Court in the said case was at pains to point out that

“the standard for aiding and abetting in international criminal law is similar to the

standard for aiding and abetting in domestic tort law”. 60

64. Therefore, drawing a parallel between the facts in Doe I v Unocal Corporation and the

facts in the present dispute, it can similarly be seen that the Respondent had also

provided a commercial incentive to MSC Ltd to commit and perpetuate the wrongful

conduct of negligently operating its factory.

65. Without the enormous and lucrative orders that were placed by the Respondent, being

MSC Ltd’s largest customer,61

there would not have been such huge clutters of rolls of

fabrics and carts (constituting a fire hazard) all over the floor. Since the fact that the

blocked and/or cluttered aisles and stairways was the substantial factor that caused the

death and injuries of the Mae Sot Fire Victims is not in dispute, the Claimant contends

that the Respondent had provided substantial assistance to MSC Ltd in committing the

tortious conduct. This is further substantiated by the fact that MSC Ltd was indeed

producing shirts for the Respondent at the time of the fire.62

66. Owing to all the above, the Claimant respectfully requests this Tribunal to find the

Respondent liable for aiding and abetting MSC Ltd’s negligent operation of the factory

59

28 U.S.C., s.1350

60 Doe I v Unocal Corporation, 395 F. 3d 932, 949 (9th Cir. 2002); see also: Papa v US, 281 F. 3d 1004, 1013

(9th

Cir. 2002); In Re Estate of Ferdinand Marcos II, 25 F. 3d 1467, 1474-75 (9th

Cir. 1994)

61 Clarifications, A-2

62 Clarifications, C-3

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20

despite having the knowledge of the circumstances, and should therefore be legally

responsible for the death and injuries of the Mae Sot Fire Victims.

(B) ASSUMING, ARGUENDO, THAT THE SUBSTANTIVE LAW GOVERNING THE

SUBSTANCE OF THE PRESENT DISPUTE IS THAI LAW, THE RESPONDENT IS

NEVERTHELESS LIABLE FOR ASSISTING THE WRONGFUL ACT OF MSC LTD AS

A JOINT ACTOR UNDER THAI LAW

67. Under Thai law, Section 432 of the Thai Civil and Commercial Code provides that “[i]f

several persons by a joint wrongful act cause damage to another person, they are

jointly bound to make compensation for the damage”. The very same provision also

deems anyone who assists another in the commission of a wrongful conduct to be joint-

actors.

68. However, the Claimant acknowledges that – unlike the tort of aiding and abetting a

tortious conduct under California law – the said joint-actor liability under Thai law

implies the principle of accessory.63

Hence, in addition to the knowledge and

substantial assistance requirement, there is also a need to fulfil the requirement of a

common agreement under Thai law.

69. Section 86 of the Thai and Civil Commercial Code provides that, under the principle of

accessory, the Respondent must have its wilfulness to assist the MSC Ltd. as the

principal tortfeasor in committing the wrongful conduct.

70. In the present dispute, the Respondent submits that paragraphs 49 to 66 of this

Memorial shall apply mutatis mutandis with regard to the elements of knowledge and

substantial assistance. As for the additional common agreement requirement, the

63

Wongkaweepairot, ‘Liability for Cloud Computing under Copyright Law’, p.106

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21

Respondent had indeed tacitly agreed to the commission of the primary tort by MSC

Ltd by deliberately turning a blind eye to the discovery by Snowy despite being in a

position to put an end to the commission of the said tort.64

71. Hence, the Respondent would also be liable for the deaths and injuries of the Mae Sot

Fire Victims even assuming that Thai law shall be the applicable law of the substance

of the present dispute.

IV. THE CLAIMANT IS THEREFORE ENTITLED TO RECOVER MONETARY

DAMAGES UNDER THE HEADS OF GENERAL DAMAGES, SPECIAL

DAMAGES AND PUNITIVE DAMAGES FROM THE RESPONDENT, ON

BEHALF OF THE MAE SOT FIRE VICTIMS

72. For the purposes of the present arbitral proceedings, the Claimant’s submission under

this issue shall be limited to only the types of monetary damages that it is seeking. This

is because it has been agreed by both the Claimant and the Respondent that the issue of

quantification of damages shall be determined at a future hearing should this Tribunal

find the Respondent liable for the death and injuries of the Mae Sot Fire Victims.65

Hence, the Claimant reserves its right in this regard.

73. As already established in paragraphs 18 to 24 of this Memorial, the law applicable to

the determination of the head of damages is the lex causae i.e. California law.

(A) THE CLAIMANT IS ENTITLED TO RECOVER ALL THREE TYPES OF MONETARY

DAMAGES ON BEHALF OF THE MAE SOT FIRE VICTIMS UNDER CALIFORNIA

LAW

64

Moot Problem, p.2; Clarifications, C-1

65 Moot Problem, p.4

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22

74. Under California law, only persons who have suffered detriment from an unlawful act

are entitled to recover compensation in the form of monetary damages.66

A ‘detriment’

in turn is statutorily defined as “a loss or harm suffered in person or property”.67

75. First and foremost, the Claimant acknowledges that it has not personally suffered any

detriment by virtue of the Respondent’s commission of the tort of aiding and abetting

the tortious conduct of MSC Ltd. However, as established in paragraphs 28 to 31 of this

Memorial, the Claimant has commenced the present arbitral proceedings on behalf of

the Mae Sot Fire Victims in its capacity as their fully-authorised representative.68

76. In the present dispute, the Mae Sot Fire Victims (for whose benefit the Claimant has

commenced the present arbitral proceedings) have unquestionably suffered some form

of harm and/or loss owing to the tortious act committed by the Respondent. Fifty of the

Mae Sot Fire Victims had lost their lives, while more than a hundred of them were

seriously injured.69

Hence, the Claimant is in a position to claim for the three types of

monetary damages from the Respondent, on behalf of the Mae Sot Fire Victims.

(a) The Claimant is Entitled to Recover General Damages from the

Respondent

77. General damages comprise non-pecuniary losses such as, inter alia, pain,

physical/mental suffering, emotional distress and loss of companionship. This has been

affirmed by the Californian Court of Appeal in Myers v Stephens.70

66

California Civil Code, s.3281

67 Ibid., s.3282

68 Moot Problem, p.1, para.3; Further Clarifications, D-1

69 Moot Problem, p.2; Further Clarifications, A-2 (‘The Victims’)

70 (1965) 233 Cal. App. 2d 104; see generally: California Civil Code, s.1431.2(b)(2)

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23

78. In the present dispute, virtually all the Mae Sot Fire Victims suffered burns of varying

degree, and many of them have suffered permanent damage to their respiratory system

as well. 71

All these would have definitely caused a great degree of inconvenience, pain,

physical/mental suffering and emotional distress to them. As such, the Claimant is

entitled to recover the aforementioned general damages for the benefit of the Mae Sot

Fire Victims who were fortunate enough to survive the fire, as well as for the estates of

the Mae Sot Fire Victims who had not died instantaneously.

(b) The Claimant is Entitled to Recover Special Damages from the

Respondent

79. Under California law, special damages are losses that arise indirectly from the tortious

conduct, being dependent on the “circumstances peculiar to the infliction of each

respective injury”.72

Such losses are out of pocket expenses that can be proved or

verified by documentations e.g. receipts, cheques, pay slips etc.73

80. In the present dispute, the Claimant is therefore entitled to recover for the following on

behalf of the injured Mae Sot Fire Victims and/or the estates of the deceased Mae Sot

Fire Victims:-

80.1. Medical expenses incurred by the injured Mae Sot Fire Victims and the deceased

Mae Sot Fire Victims (prior to their respective deaths);

80.2. Loss of income of the injured Mae Sot Fire Victims from the date of the fire to

the date of the awarding of the final arbitral award;

71

Further Clarifications, A-2 (‘The Victims’)

72 Myers v Stephens (1965) 233 Cal. App. 2d 104, 120-121; see also: Beeman v Burling (1990) 216 Cal. App. 3d

1586, 1599

73 California Tort Damages (Cont. Ed. Bar 1988) §1.4, p.6; see generally: California Civil Code, s.1431.2(b)(1)

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24

80.3. Loss of income of the deceased Mae Sot Fire Victims from the date of the fire to

their respective dates of death; and

80.4. Funeral expenses for the burial/cremation of the deceased Mae Sot Fire Victims.

81. The Claimant acknowledges that there were some rumours of a number of the Mae Sot

Fire Victims being underage workers – which, if proven to be true, would preclude the

recovery of the special damages under paragraphs 80.2 and 80.3 of this Memorial.

82. However, the Claimant submits that the aforementioned rumours are completely

unsubstantiated.74

Furthermore, there was no evidence whatsoever of underage workers

found in the most recent inspection conducted by a Thai government entity.75

83. Notwithstanding that, should there be any evidence in the future which confirms and

verifies these rumours, the Claimant concedes that it will not be able to recover the

special damages under paragraphs 80.2 and 80.3 of this Memorial for the benefit of the

Mae Sot Fire Victims who were under the minimum working age in Thailand.

(c) The Claimant is Entitled to Recover Punitive Damages from the

Respondent

84. As long as it is proven that a tortfeasor has been guilty of oppression, punitive damages

can be awarded to the claimant76

“for the sake of example and by way of punishing the

74

Clarifications, A-6

75 Ibid.

76 California Civil Code, s.3294(a)

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25

defendant”.77

Further, an arbitral tribunal such as this Tribunal does indeed have the

power to award damages that are punitive in nature.78

85. Oppression has been statutorily defined as a “despicable conduct that subjects a person

to cruel and unjust hardship in conscious disregard of that person's rights”.79

In this

regard, the Californian Court of Appeal’s decision in Smith v Brown-Forman Distillers

Corporation80

would prove to be instructive in determining if a tortious conduct

amounts to ‘oppression’.

86. In the aforementioned case, the defendant-employer required its employees to work in

places where they will have no choice but to involve themselves in illegal activities,

despite the fact that it had such knowledge. Hence, the defendant-employer could still

“obtain the competitive benefits of such [an] illegal conduct”81

and at the same time

deny any form of responsibility by turning a blind eye to the particular circumstances.

87. The Claimant submits that the principle that was adopted in the aforementioned case is

equally applicable to the facts of the present dispute by way of analogy. This is

because:-

87.1. the Respondent did in fact obtain such a competitive benefit by being able to

purchase the clothing from MSC Ltd at a ridiculously low price;82

77

In Re First Alliance Mortgage Company 471 F. 3d 977 (9th Cir. 2006); see also: Smith v Wade, 461 U.S. 30

(1983).

78 Garrity v Lyle Stuart, 40 N.Y. 2d 354, 353 N.E. 2d 793

79 California Civil Code, s.3294(c)(2)

80 (1987) 196 Cal. App. 3d 503

81 Ibid., 516

82 Moot Problem, p.2

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26

87.2. the Respondent was well aware of not just the unsafe working environment in

MSC Ltd’s factory, but also of the severe ill-treatment of all the workers there by

MSC Ltd;83

and

87.3. the Respondent had perpetuated the oppression of MSC Ltd’s factory workers by

not halting its provision of commercial incentive (as can be reasonably inferred

from the fact that MSC Ltd was actively producing clothing for the Respondent

when the fire occurred84

) to MSC Ltd for the commission of the said wrongful

conduct.

88. Moreover, the awarding of punitive damages is not contrary to the public policy of

Thailand (being the forum). This is because Thai law expressly recognises and

empowers the courts to grant punitive damages to various injured persons under several

Thai statutes, 85

albeit in a different context from the one in the present dispute.

89. However, this difference does not preclude the awarding of punitive damages against

the Respondent in the present dispute. The reason for this is that Thai law nevertheless

recognises the existence of the type of damages of ‘punitive damages’ at the very least.

Hence, it is appropriate for the Respondent to compensate the Claimant in the form of

punitive damages in order to punish and deter the Respondent from committing such a

tort again.

(B) ALTERNATIVELY, THE CLAIMANT IS ENTITLED TO RECOVER BOTH GENERAL

DAMAGES AND SPECIAL DAMAGES ON BEHALF OF THE MAE SOT FIRE

VICTIMS UNDER THAI LAW

83

Ibid.; Further Clarifications, A-3 & A-4 (‘Spear Shirts’)

84 Clarifications, C-1

85 Thai Product Liability Act B.E.2551; Thai Consumer Case Procedure Act B.E. 2551

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27

90. The Claimant’s submissions under this heading will be made on the assumption that

Thai law is the law governing the substance of the present dispute (which is denied in

any event).

91. In essence, Thai law also allows for the Claimant to recover the same heads of damages

under special,86

as well as general87

damages on behalf of the Mae Sot Fire Victims.

Hence, the Claimant’s submissions from paragraphs 77 to 83 of this Memorial shall

apply mutatis mutandis to this part of its submissions.

92. However, as established in paragraph 88 of this Memorial, Thai law only permits the

awarding of punitive damages in the context of consumer-related claims.88

Hence, it

must be acknowledged that the Claimant will not be able to recover punitive damages

from the Respondent should Thai law be the applicable law to the substance of the

present dispute.

86

Thai Civil and Commercial Code, ss.443-444

87 Thai Civil and Commercial Code, s.446

88 Thai Product Liability Act B.E.2551; Thai Consumer Case Procedure Act B.E. 2551

B1409-C

28

PRAYER FOR RELIEF

Based on the foregoing reasons, the Claimant respectfully requests this Tribunal to order

that:-

1. The Mae Sot Fire Victims be joined as claimants to these arbitral proceedings;

And adjudge and declare that:-

2. The procedural law of these arbitral proceedings and the law governing the Arbitration

Agreement is Thai law, whereas the issues of liability of the Respondent and the

recoverable heads of damages are to be determined by reference to California law;

3. The Respondent is legally responsible for the deaths and injuries of the Mae Sot Fire

Victims; and

4. The Respondent is therefore required to compensate the Claimant in the form of general

damages, special damages and punitive damages which are to be assessed at subsequent

hearings.

Respectfully submitted,

Counsel for the Claimant.