129 In the SLA, the Parties agreed on adding a third treatment room to the Proton Therapy Facility. CLAIMANT was to provide materials and software for the treatment room and train RESPONDENT’S personnel. The Parties also agreed to cooperate in developing the software delivered by CLAIMANT [Claimant’s Exhibit No. 6, p. 18]. RESPONDENT alleges that named obligations qualify as “other services” under Art. 3(2) CISG leading to inapplicability of the CISG. RESPONDENT further alleges that the purchase of the software rather resembles the granting of a licence [Procedural Order No. 1, p. 34, para. 19]. However, the SLA should be considered a sale (I) and is also a contract of sale of goods in terms of Art. 1(1) CISG (II). In any case, the SLA as a whole would still be a sales contract governed by the CISG (III).
I. The Sales and Licensing Agreement Should Be Considered a Sale
130 Sales contracts in terms of the CISG are contracts directed at exchanging goods against money [OGH, 21 Jun 2005; HCC, 19 Dec 2006; Schwenzer/Hachem, in: Schlechtriem/Schwenzer, Art. 1, para. 8; Siehr, in: Honsell, Art. 2, para. 1; Piltz, para. 2.20; Westermann, in: MüKo BGB, Art. 1, para. 6; Herber/Czerwenka, Art. 1, para. 3]. The purchase of the equipment undoubtfully constitutes a sale in terms of the CISG.
131 Moreover, a licencing agreement can also classify as a sales contract [cf. Mowbray, p. 122]. Although the manufacturer retains title to the goods, the transaction shall be regarded as a sales contract if all other aspects resemble a sale[Mowbray, p. 123; Primak, p. 221; Fakes, p. 580; Larson, p. 465]. In Artt. 41, 42 CISG, a contract in which a buyer purchases software pursuant to a licence agreement is acknowledged as a sales contract even though the seller retains some property rights [Mowbray, pp. 122 et seq.; Larson, p. 468].
132 The SLA granted RESPONDENT the right to the permanent use of the software [Claimant’s
Exhibit No. 6, p. 18]. Furthermore, the SLA ensured that no royalties would have to be paid for the lifetime of the third treatment room of approximately 30 years [Claimant’s Exhibit
No. 6, p. 18]. Thus, the SLA provided for a right to use the software for an indefinite time against a one-off payment. Moreover, there is no indication in the files that RESPONDENT was restricted in the use of the software during the lifetime of the third treatment room [cf. Claimant’s Exhibit No. 6, p. 18]. Thus, the transfer of the software at hand closely resembles a sale and should be treated accordingly. Therefore, the licence of the software should be regarded a sales contract under the CISG. Consequently, the SLA as a whole is a sales contract in terms of the CISG.
ALBERT LUDWIG UNIVERSITY OF FREIBURG
33
II. The SLA Also Constitutes a Contract of Sale of Goods in Terms of Art. 1(1) CISG
133 “Goods” in terms of Art. 1(1) CISG cover all moveable objects which form the subject- matter of commercial sales contracts [Trib. di Padova, 10 Jan 2006; HG Aargau, 10 Mar 2010; Honnold/Flechtner, p. 55; Enderlein/Maskow, Art. 1, para. 2]. The materials including the magnets delivered by CLAIMANT undisputedly constitute such movable objects. 134 RESPONDENT alleges that providing the software constitutes a service in terms of
Art. 3(2) CISG [Procedural Order No. 1, p. 34, para. 19]. However, all mobile and corporal objects of a commercial sales contract are considered goods, including computer software [OGH, 21 Jun 2005; HG Zürich, 17 Feb 2000; OLG Koblenz, 17 Sep 1991; Karollus, p. 21; cf. Mistelis/Anjanette, in: Kröll/Mistelis/Viscasillas, Art. 3, paras. 23 et seqq.]. Whereas hardware is commonly seen as goods, there is no legally relevant distinction to be made between hardware and software [Green/Saidov, p. 165; Lookofsky, 2000, p. 36]. It is built to process words or bill customers and therefore comparable to a machine. Although invisible and untouchable, software is physically stored on a tangible medium [Green/Saidov, p. 166]. Thus, all software, including the software necessary to control the treatment room, should be considered as goods in terms of Art. 1(1) CISG.
135 Even if the Arbitral Tribunal were to assume that not all software is to be considered as goods, RESPONDENT’S software still classifies as goods because it is standard software.
Software created for the market in general may form the object of a sales contract under the CISG, since the sale of a mass-produced software does not differ from the sale of tangible movables [OGH, 21 Jun 2005; OLG Köln, 26 Aug 1994; LG München, 8 Feb 1995; Ferrari, in: Schlechtriem/Schwenzer (Ger.), Art. 1, para. 38; Diedrich, p. 322].
136 As CLAIMANT needed medical expertise to develop the appropriate software, the first version of the basic software was developed with regard to RESPONDENT’S needs [Procedural Order No. 2, p. 61, para. 24]. However, RESPONDENT provided a model for other cancer treatment centres. CLAIMANT could have received the data and the support from any other cancer research clinic and had already started developing the software before it cooperated with RESPONDENT [Procedural Order No. 2, p. 62, para. 28]. Therefore, CLAIMANT did not develop the software particularly for RESPONDENT but for future customers which is why Art. 11 SLA was included into the contract [Procedural Order No. 2, p. 61, para. 24]. In fact, the active scanning technique has been sold within a package largely comparable to two other proton therapy facilities [Request for Arbitration, p. 7, para. 17]. Hence, the sale of the control software is to be considered a sale of goods under the CISG.
ALBERT LUDWIG UNIVERSITY OF FREIBURG
34 III. Alternatively, the SLA Would Still Be a Sales Contract Governed by the CISG 137 Even if software were not to be considered as goods in the sense of the CISG, the SLA would
still constitute a sales contract governed by the CISG. Pursuant to Art. 3(2) CISG, the Convention “does not apply to contracts in which the preponderant part consists in the
supply of labour or other services”. In order to determine what “preponderant” means, regard is to be given to the parties’ intent and the economic value of the contract [LG München, 16 Nov 2000; Butler, § 2.07; Benicke, in: MüKo HGB, Art. 3, para. 8].
138 Concerning the economic value, it is usually an indication that the CISG is not applicable under Art. 3(2) CISG if the value of the services significantly exceeds 50% [KG Zug, 25 Feb 1999; Schwenzer/Hachem, in: Schlechtriem/Schwenzer, Art. 3, para. 20; Lüderitz- Fenge, in: Soergel, Art. 3, para. 4]. However, an economic analysis of the SLA proves to be unreliable. The value of the service obligations, consisting of 50% software and 10% personnel, does not represent reliable numbers since they involve considerable guesswork [cf. Procedural Order No. 2, p. 62, para. 29]. Thus, the Arbitral Tribunal should not only rely on the economic terms of the SLA. Instead, one must all the more look to the Parties’ intent. 139 Considering the Parties’ intent, the software was not the preponderant part. RESPONDENT
stated that the third treatment room had been purchased to extend the treatment options [Claimant’s Exhibit No. 4, p. 16, para. 2]. This shows that the SLA was about new machinery, necessarily run by new software. Considering Art. 2 SLA, the Parties emphasised that their focus was on the treatment facility. Art. 2 SLA starts with the obligation to sell a treatment room while the other obligations were only set out as the scope of delivery [Claimant’s Exhibit No. 6, p. 18]. The feeless use of the software was linked to the lifetime of the facility [Claimant’s Exhibit No. 6, p. 18] which shows that the software is only a necessary feature. In result, the Parties’ intent leads to the conclusion that the software was not the preponderant part. Thus, even if the Arbitral Tribunal were to find that software is not to be considered as goods, the SLA would still be a contract of sale.
CONCLUSION OF THE THIRD ISSUE
140 The Standard Terms 2011 have been validly included into the SLA because they were part of the offer RESPONDENT accepted. The choice of law clause in Section 22 of the Standard Terms 2011 leads to the application of the CISG. Moreover, pursuant to Art. 1(1)(a) CISG, the CISG is applicable to the SLA as it constitutes a contract of sale of goods.
ALBERT LUDWIG UNIVERSITY OF FREIBURG
35 REQUEST FOR RELIEF
For the above reasons, Counsel for CLAIMANT respectfully requests the Arbitral Tribunal to find that
(1) the Arbitral Tribunal has jurisdiction to deal with the payment claims raised by CLAIMANT under the FSA and the SLA;
(2) the Arbitral Tribunal has jurisdiction to hear both claims in a single arbitration and that both claims shall be heard in a single arbitration;
ALBERT LUDWIG UNIVERSITY OF FREIBURG
XL CERTIFICATE
Freiburg im Breisgau, 12 December 2013
We hereby confirm that this Memorandum was written only by the persons whose names are listed below and who signed this certificate.
(signed) Tobias Geser (signed) Nikita Grätsch (signed) Leonid Guggenberger (signed) Carolin Janssen (signed) Lea Kuhmann (signed) Stefanie Leclerc (signed) Victoria Oltmanns (signed) Franziska Schaible