Scorpions R

XVI NATIONAL LAW SCHOOL- TRILEGAL INTERNATIONAL ARBITRATION MOOT, 2023

Before

THE ARBITRAL TRIBUNAL

UNDER THE

SINGAPORE INTERNATIONAL ARBITRATION CENTRE (SIAC) RULES, 2016

AND

THE ARBITRATION ACT, 1996

IN THE MATTER BETWEEN:

ADORNIA LTD.
[CLAIMANT]

versus

EXCHEQUER INSURANCE PVT. LTD.

[RESPONDENT]

MEMORANDUM for RESPONDENT

 TABLE OF CONTENTS

TABLE OF ABBREVIATIONS ......................................................................................... III

TABLE OF AUTHORITIES ................................................................................................ V

STATEMENT OF JURISDICTION ..................................................................................... X

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

ISSUES RAISED ............................................................................................................. XVI

SUMMARY OF ARGUMENTS ..................................................................................... XVII

ARGUMENTS ADVANCED ............................................................................................... 1

ISSUE 1: THAT THE TRIBUNAL SHOULD APPLY THE INDIAN CONFLICT OF LAWS
RULES TO DECIDE WHETHER THE EXCHEQUER CONTRACT IS VOID FOR WANT
OF CAPACITY BY REASON OF THE 2014 ACT .............................................................. 1

a. That Party Autonomy is Paramount in Deciding the Applicable Law ...................... 1

b. The Governing Clause in the Contract is the First Choice When Deciding the
Applicable Law ............................................................................................................. 2

c. The Principle of Lex Contractus and Lex Solutionis Should Be Applied .................. 3

d. Closest Connection Test Must Be Applied In the Present Arbitration .......................... 4

ISSUE 2: THAT APPLYING THE INDIAN CONFLICT OF LAWS RULES, THE

EXCHEQUER CONTRACT IS NOT VOID FOR WANT OF CAPACITY BY REASON OF
THE 2014 ACT ..................................................................................................................... 5

a. The Contract is Governed by Indian Law ................................................................ 5

. The Capacity of the Parties To Contract is Determined By Lex Loci Contractus ......... 6

C. The 2014 Act Does Not Warrant Application ............................................................. 7

D. Adornia is Not A True Subsidiary ............................................................................... 8

ISSUE 3: ............................................................................................................................... 9

MEMORANDUM for RESPONDENT I

(A): THAT IF THE EXCHEQUER CONTRACT IS VOID, THE CLAIMANT DOES NOT
HAVE A CLAIM TO RECOVER THE PREMIUM PAID BY WAY OF RESTITUTION OF
UNJUST ENRICHMENT ..................................................................................................... 9

a. Principle of Unjust Enrichment Does Not Apply If the Contract is Void-Ab-Initio .. 9

b. Breach of Duty of Good Faith On Part of the Insured is A Defence To Unjust

Enrichment………………………………………………………………………………11

C. Non-Disclosure of A Material Fact Results in A Defence of Earned Premium

Doctrine………………………………………………………………………………….12

(B): THAT IF THE EXCHEQUER CONTRACT IS VOID, THE RESPONDENT HAS A

DEFENSE OF CHANGE OF POSITION ........................................................................... 13

a. Respondent Relied on the Representation of the Claimant ..................................... 13

b. Respondent Changed Position in Good Faith ........................................................ 14

c. The Respondent Suffered Detriment By Relying on the Claimant ......................... 15

ISSUE 4: ............................................................................................................................. 16

(A): THAT IF THE CONTRACT IS NOT VOID, THE CLAIMANT, WITHOUT THE
CONSENT OF SYNDICATE 41 INSURERS, IS NOT ENTITLED TO REFER TO THE
CONTENTS OF THE SYNDICATE 41 AWARD .............................................................. 16

a. Confidentiality Under the SIAC Rules .................................................................. 17

b. Confidentiality Under U.K. Law ........................................................................... 18

(B): THAT THE RESPPONDENT IS NOT BOUND BY ISSUE ESTOPPEL BY THE

SYNDICATE 41 TRIBUNAL’S FINDINGS & THE LOSSES FOR WHICH CLAIMANT
WAS SEEKING INDEMNITY DO NOT FALL WITHIN THE INSURING CLAUSE ...... 19

a. Respondent is Not A Party To the Syndicate 41 Arbitration .................................. 19

b. Respondent is Not Bound by the Award ................................................................ 20

(C): THAT THE LOSSES DO NOT FALL WITHIN THE INSURING CLAUSE .............. 21

a. Language of the Insurance Policy .......................................................................... 22

b. Civil Authority Actions Are Not A Covered Peril ................................................. 23

PRAYER FOR RELIEF ...................................................................................................... 25

MEMORANDUM for RESPONDENT II

 TABLE OF ABBREVIATIONS

ABBREVIATIONS EXPANSIONS
§ Section
& And
AC Appeal Cases
AIR All India Reporter
Art. Article
BomLR Bombay Law Report
Ch Chancery
Civ Civil
Cl. Clause
Comm. Committee
edn. Edition
EWCA England & Wales Court of Appeal
EWHC England & Wales High Court
HL House of Lords
Hon’ble Honorable
i.e., That is
ICA Indian Contracts Act, 1872
ICC International Commercial Court
Lloyd’s Rep Lloyd’s Law Reports
Ltd. Limited
No. Number
NYC New York Convention
p. Page
para. Paragraph
PC Privy Council
Pvt. Private
r. Rule
SC Supreme Court
SCC Supreme Court Cases

MEMORANDUM for RESPONDENT III

 SCR Supreme Court Report
SIAC Singapore International Arbitration Centre, 2016
U.K. United Kingdom
UKSC United Kingdom Supreme Court
UNCITRAL United Nations Commission on International Trade Law
v. Versus
WLR Weekly Law Reports

MEMORANDUM for RESPONDENT IV

 TABLE OF AUTHORITIES

CASES

1. Ali Shipping Corporation v. Shipyard Togir [1998] 1 Lloyd’s Rep 643 (CA). ......... 18
2. Ashok Kumar v. Union of India (2006) 1 SCC 676. ................................................. 23
3. Bajaj Allianz General Insurance Co. Ltd. v. A.K. Infra Realty Projects Pvt. Ltd. (2016)
1 SCC 421. ............................................................................................................. 22
4. Balakrishnan v. United India Insurance Co. Ltd. (2007) INCDRC 3658. ................. 23
5. Balwant Rai Saluja v. Air India (2014) 9 SCC 407. ................................................... 8
6. C v. D [2012] EWHC (Comm), p. 45. ...................................................................... 21
7. Central Bank of India v. State of Kerala (2009) 4 SCC 94. ..................................... 13
8. Central Bank of India v. State of Kerala (2009) 4 SCC 94. . .................................... 13
9. Comandate Marine Corp v. Pan Australia Shipping Pty Ltd [2006] 157 FCR 45. ...... 4
10. Dallah Real Estate and Tourism Holding Co. v. Pakistan [2010] UKSC 46, [2011] 1
AC 763. ................................................................................................................... 20
11. Damodar Valley Corporation v. K.K. Kar (1974) 2 SCR 674................................... 10
12. Delhi Cloth and General Mills Co. Ltd. v. Harnam Singh (1955) AIR 590................. 2
13. Dhanrajmal Gobindram v. Shamji Kalidas and Co (1961) AIR SC 1285. .................. 5
14. Future Generali India Insurance Co. Ltd. v. Deepak Nitrite Ltd. (2019) SCC OnLine
Bom 6601. ............................................................................................................... 23
15. Gavin Edmondson Solicitors Ltd. v. Haven Insurance Company Ltd. [2018] UKSC 21.
................................................................................................................................ 19
16. Gleeson v. Wippell [2020] EWCH 1486 (Ch) ........................................................... 20
17. Good Challenger Navegante SA v. Metalexportimport SA [2004] 1 Lloyd’s Rep 67. 19
18. Grasim Industries Ltd. v. United India Insurance Co. Ltd. (2012) 1 SCC 197 .......... 22
19. Halliburton Energy Services Inc. v. Chubb Bermuda Insurance Ltd. [2018] EWCA Civ
817. ......................................................................................................................... 18
20. Haryana Financial Corporation v. Jagdamba Oil Mills (2002) 6 SCC 336. ............ 11
21. Herbert v. Christopher son [1930] 1 Ch. 407. ........................................................... 6
22. Hindustan Petroleum Corp. Ltd. v. Union of India (2018) 17 SCC 729. .................. 10
23. ICC Case No. 6149, Interim Award (ICC International Court of Arbitration 1 January
1990). ........................................................................................................................ 4
24. ICC Case No. 6379, Award (ICC International Court of Arbitration, 1 Jan 1990. ...... 7

MEMORANDUM for RESPONDENT V

 25. Impregilo SpA v. Argentine Republic (ICSID Case No. ARB/07/17) [2011] ICSID Rep
436, [2011] ICSID Rev-FIAA 310, (2011) 50 ILM 1089 (Award Annulment
Committee Decision). ................................................................................................ 4
26. Indian Metals and Ferro Alloys Ltd. v. State Bank of India (2016) 2 SCC 252. ....... 23
27. Indian Oil Corporation Ltd. v. State of Bihar (1986) 4 SCC 679. ............................ 13
28. Jitendra Nath Biswas v. M/s. Empire of India Life Insurance Co. Ltd. (1961) AIR 1963
SC 429. ................................................................................................................... 13
29. John Forster Emmott v. Michael Wilson & Partners Ltd [2008] EWCA Civ 184. .... 18
30. Kuju Collieries Ltd v Jharkhand Mines Ltd (1974) 2 SCC 533. ............................... 10
31. Life Insurance Corporation of India v. Asha Goel (2001) 2 SCC 160. ..................... 12
32. Mafatal Industries Ltd. v. Union of India (1997) 5 SCC 536 p. 612, 633. .................. 9
33. N. Peddanna Ogeti Balayya v. Kotta V. Srinivasayya Setti Sons (1954) AIR SC 26. . 7
34. National Fertilizers Ltd. v. Somvir Singh (2006) 5 SCC 493. .................................. 10
35. National Insurance Co. Ltd. v. B.M. Gupta [2010] EWCA Civ 1110. ....................... 9
36. National Insurance Company Ltd. v. M/S Indrani Cold Storage Ltd. (2015) NCDRC
79. ........................................................................................................................... 23
37. NTPC v. Singer Co. (1993) AIR 998. ........................................................................ 2
38. Orient Ship Supply Co. v. Kalmarasand Co. (1958) AIR TC 1. ................................. 5
39. Oriental Insurance Co. Ltd. v. L&T Chiyoda Ltd. (2018) 6 SCC 287. ..................... 23
40. Oriental Insurance Co. Ltd. v. Meena Variyal (2007) 5 SCC 428. ........................... 13
41. Oriental Insurance Co. Ltd. v. Narbheram Power and Steel Pvt. Ltd. (2008) 1 SCC 428.
................................................................................................................................ 11
42. Oriental Insurance Co. Ltd. v. Universal Fuel Injection Industries (1987) 1 SCC 682.
................................................................................................................................ 12
43. Overseas Union Insurance Ltd v. Turegum Insurance Co [2001] SGHC 147. ............ 3
44. R.K. Mohammad Ubaidullah v. Hajee C. Abdul Wahab (2000) 6 SCC 402. ............ 14
45. Ravindra N. Maitra v. Life Insurance Corporation of India (1964) AIR Cal 141. ...... 2
46. Re Missouri SS Co. [1889] 42 Ch. 321 (C.A.). .......................................................... 3
47. re Sbarro Holding, Inc 91 A.D.2d 613 (2d Dept. 1982). ........................................... 8
48. Rixtel v. Baehler [2008] EWHC 123 (Ch). .............................................................. 20
49. Salomon v. A Salomon and Co Ltd [1897] AC 22. ..................................................... 7
50. Simonin v. Mallac[1860], 2 Sw. & Tr. 67. ................................................................. 6
51. St Louis Breweries v. Apthorpe [1914] 30 RPC 124. ................................................. 8
52. State of Kerala v. Mathew (1963) INSC 199. .......................................................... 10

MEMORANDUM for RESPONDENT VI

 53. T.N.S. Firm v. Mohammad Hussain (1933) AIR Mad 756. ........................................ 6
54. Union of India v. M/s. Singh Builders Syndicate (2009) 4 SCC 523. ....................... 13
55. United Bank of India v. A.T. Ali Hussain & Co. (1978) AIR Cal 169. ..................... 14
56. United India Insurance Co. Ltd. v. M/s. Lehru Trading Company and Others (2020)
SCC OnLine SC 74. ................................................................................................ 13
57. United India Insurance Co. Ltd. v. Satya Pal Singh (2010) 3 SCC 442. .................. 11
58. Vita Food Products Inc. v. Unus Shipping Co. Ltd. [1939] UKPC 7. ......................... 1
59. W Ltd. v. M SDN BHD [2016] EWHC 422 (Comm). ............................................... 20
60. Yukos Capital Sarl v. OJSC Rosneft Oil Co (No 2) [2012] EWCA Civ 855 paras 147–
149. ........................................................................................................................ 19

STATUTES

1. Gambling Act 2005 (UK), § 19. .............................................................................. 14

2. Indian Contract Act (9 of 1872) §21. ...................................................................... 13
3. Indian Contract Act, 1872 (9 of 1872) § 70. .............................................................. 9
4. Indian Contract Act, 1872 (9 of 1872) §11. ............................................................... 7
5. Indian Contract Act, 1872 (9 of 1872) §30. ............................................................. 14
6. Indian Contract Act, 1872 (9 of 1872) §31 and 32. .................................................... 7
7. The Arbitration Act 1996 § 46(1). ............................................................................. 5
8. The Arbitration and Conciliation Act (26 of 1996) § 28(1)(b). .................................. 5
9. The Companies Act, 2013 (18 of 2013) §19(1)(b). .................................................... 7
10. The General Clauses Act, 1897 (10 of 1897) §3(22). .............................................. 14

RULES

1. Rules of the Singapore International Arbitration Centre (‘SIAC Rules’) (6 th Edn, 1

August 2016) r 33(1). ............................................................................................... 5
2. Rules of the Singapore International Arbitration Centre (‘SIAC Rules’) (6 th Edn, 1
August 2016). . .......................................................................................................... 7

MEMORANDUM for RESPONDENT VII

 BOOKS
1. A. V. Dicey, Dicey's Conflict of Laws, (4th Edition), p. 599. ..................................... 6
2. Avtar Singh, Law of Contracts and Specific Relief (12th edn, EBC 2017). ............... 14
3. G Virgo, The Principles of the Law of Restitution (3rd edn, Oxford University Press
2015) p. 391. .......................................................................................................... 15
4. G Virgo, The Principles of the Law of Restitution (3rd edn, Oxford University Press
2015) p. 683 and 684. ............................................................................................. 15
5. Gary B. Born, International Arbitration and Practice (2nd edn, Kluwer International
Law 2014). ............................................................................................................... 4
6. H Black, Black’s Law Dictionary (4th edn, West 1968). ............................................ 1
7. Jeffrey W. Stempel, Peter N. Swisher, and Erik S. Knutsen, Principles of Insurance
Law (3rd edn, West Academic Publishing 2020). ...................................................... 6
8. Kenneth S. Abraham and Daniel Schwarcz, Insurance Law and Regulation (5th
Edition, Foundation Press 2010) p. 61. .................................................................... 11
9. Roy Goode, Ewan McKendrick, and Joanna Benjamin, Commercial Law (5th edn,
Penguin Books 2020) p. 345. .................................................................................... 6
10. Sir Frederick Pollock and Sir Dinshaw Fardunji Mulla, The Indian Contract and
Specific Relief Acts (16th edn, LexisNexis 2020). ................................................... 10
11. Sir Frederick Pollock and Sir Dinshaw Fardunji Mulla, The Indian Contract and
Specific Relief Acts (16th edn, LexisNexis 2020). ..................................................... 9

CONVENTIONS
1. UNCITRAL Model Law on International Commercial Arbitration (21 June 1985) UN
Doc A/40/17. ............................................................................................................ 5

ARTICLES

1. Andrew Barraclough and Jeff Waincymer, ‘Mandatory rules of law in international

commercial arbitration’ Melbourne Journal of International Law 6(2) (2005) p. 205. . 4
2. Brian Beers, ‘A Brief Overview of the Insurance Sector’ (Investopedia, 16 April 2021).
................................................................................................................................ 16
3. Camille Jojo, ‘Res Judicata and Issue Estoppel in Arbitration: Procedural or Substantive
Law?’ (Norton Rose Fulbright, May 2016). ............................................................ 20

MEMORANDUM for RESPONDENT VIII

 4. David Goodwin and Greg Rubio, Covington & Burling LLP, ‘Business Interruption
Insurance - What you need to tell your clients’ (Lexis Nexis, 9 March 2020). ......... 21
5. Marc Blessing, ‘Party Autonomy versus Rules of Law: A Comparative Analysis’
European Review of Private Law 6(2) (2011) p. 343. ................................................ 8
6. P Mayer, ‘Mandatory Rules of Law in International Arbitration’, Arbitration
International 2 (1986) 274. ........................................................................................ 7
7. Paul Key, ‘Change of Position’ Modern Law Review 58 (1995) p. 65. .................... 15
8. Robert Keeton, ‘Insurance Law Rights at Variance with Policy Provisions’ Harvard
Law Review 83(5) (1970) p. 961-985. .................................................................... 11
9. Sophie Lee and Hill Dickinson, ‘UK – Confidentiality in Arbitration’, (Conventus Law,
7 December 2022). ................................................................................................. 18
10. V. G. Ramachandran, ‘Conflict Of Laws As To Contracts’ 12(2) (1970) Journal of the
Indian Law Institute p. 273. . ..................................................................................... 6
11. Wyndham A. Bewes ‘Contractual Capacity in Commerce’ Transactions of the Grotius
Society 16 (1930) p.13-28. ........................................................................................ 6

MEMORANDUM for RESPONDENT IX

 STATEMENT OF JURISDICTION

Exchequer Insurance Pvt. Ltd, the Respondent in the present case, has the honour to submit
this memorandum and invoke the jurisdiction of the Arbitral Tribunal located in London, UK,
in pursuance of Clause 18 of the Contract between the Claimant and Respondent dated 10
January 2015, which is governed by the Arbitration Rules of the Singapore International
Arbitration Centre and the Arbitration Act, 1996.

MEMORANDUM for RESPONDENT X

 STATEMENT OF FACTS

INTRODUCTION

Priti Hotels Ltd. (Hereinafter referred as "PHL") is India's most well-known blue-chip
corporation, founded by one of the country's most well-known entrepreneurs, Priti Karnik.
The PHL board of directors decided in the late 1990s that, while all of its hotels were
performing well, it needed to adjust to changes in customer taste. After extensive research
and consultation with external experts, the board concluded that the market for luxury items
and luxury in general was expanding significantly in India and would continue to rise. As
a result, PHL formed Adornia Ltd. in the Marshall Islands, which would operate
exclusively in the luxury space.

ESTABLISHMENT OF ADORNIA ISLAND AND INTRODUCTION OF CLAIMANT

Immediate action was taken to implement this luxury living ecosystem, which included the
acquisition of a significant amount of land on the outskirts of Mumbai on which a vast
network of facilities was constructed. In 2015, Adornia Islands became one of India's most
premium hotels with amenities such as a golf course, a modest luxury apartment, and more.

Due to the interconnected nature of Adornia's physical and infrastructural components, one
of the greatest dangers inherent in its construction was that any substantial disruption to
one section of the island would have a domino effect on the entire island's physical and
infrastructural integrity.

OBSTACLES IN OBTAINING INSURANCE COVER

Adornia (hereafter referred as the “CLAIMANT”) was aware of these risks and took
precautions such as installing the finest available backup systems in each region of the
island. Yet, they also realized that they required broad and all-encompassing insurance
coverage for the worst-case scenario. Recent legislation enacted by the government of the
Marshall Islands, the Speculative Contracts (Restrictions) Act 2014 (Hereinafter referred
as the “2014 ACT”), which prohibits any party incorporated in the Marshall Islands from
entering into a contingent contract and, if entered into, renders the contract null and void

MEMORANDUM for RESPONDENT XI

 regardless of the law governing the policy, posed a potential obstacle for the Claimant in
obtaining insurance. Due to the same reason, the Claimant sought assistance from a major
City firm and King's Counsel in London, who advised that, while the situation was not
without risk, the Claimant was permitted to enter into insurance contracts despite the 2014
Act. In reliance on this, the Claimant engaged a reputable company of insurance brokers to
secure a complete package of insurance coverage, including business interruption coverage.

INSURANCE POLICIES OBTAINED BY CLAIMANT AND INTRODUCTION OF RESPONDENT

The Claimant obtained two insurance policies, the first of which was a £250 million policy
with Syndicate 41 insurers through the London Lloyd's market. The second insurance was
obtained with great difficulty from an Indian insurance company, Exchequer Insurance Pvt.
Ltd. (Hereinafter referred as the “RESPONDENT”), through Ms. Karnik's personal
intervention and persuasion; the cover was for £50 million with a substantial premium of
£8 million due to the inherent risks. Adornia Island was a huge success from the moment
it debuted and its reputation continued to rise. It was impossible to visit and stay there
without a reservation. The company's net profit for the fiscal year that ended on April 5,
2018 was £475 million, on the back of a very considerable sales stream.

HURRICANE INDRA AND LOSSES

However, this accomplishment was short-lived, since on August 16, 2018, Hurricane Indra
made landfall close to Adornia Island. A number of warnings were issued due to the fact
that it was deemed to be the most severe hurricane India had witnessed in several years.
The cyclone reached Category 5 on the Saffir-Simpson hurricane wind scale, proving that
these warnings were true. The hurricane's intensity fell gradually but did not weaken until
August 23, 2018. It caused flooding in Bombay, the devastation of communication and
transportation, etc., rendering the outskirts of Mumbai inhabitable for several weeks. In
response, the Indian government took rapid action, including mandatory evacuation and the
prohibition of construction without government permission. In light of this, Adornia Island
was closed to the public and evacuated on August 15, 2018, resulting in no fatalities. Even
though the physical destruction was severe, it was not catastrophic because the hurricane
did not reach Category 5 status in or near the Adornia Islands.

MEMORANDUM for RESPONDENT XII

 RE-CONSTRUCTION OF ADORNIA ISLAND

Being the largest employer, it was determined that it was the responsibility of the Claimant
to rebuild as quickly as possible, regardless of the cost. To this end, all structures were
reconstructed, and Adornia reopened on February 21, 2019. Unfortunately, there was no
business until November 29, 2019, as the State Government had prohibited access to the
region. In addition to the construction activity of the estate, the Claimant suffered a £265
million profit loss between August 2018 and November 2019 due to the absence of visitors.
Thus, Adornia made a claim on both insurance policies. Both insurers made it plain that
they did not believe this loss to have been caused by an insured hazard, but rather by the
government action, and therefore denied the claim.

ARBITRATION AND CONSOLIDATION REQUEST

The Notice of Arbitration was issued on both insurers, who were both represented by the
same law firm, BLT LLP, and Counsel. BLT LLP wrote at an early stage to request the
Claimant's approval to consolidate both arbitrations, which the Claimant opposed on
procedural grounds. The Claimant was willing to consent to the stay of one arbitration
pending the other, as the decision of both would be decisive. An order dated March 6, 2020
suspended the Respondent's arbitration proceedings until the Syndicate 41 arbitration.

SYNDICATE 41 ARBITRATION PROCEEDING AND AWARD

The Respondent participated in all phases of the Syndicate 41 arbitration, and the Claimant
did not raise an objection. The Respondent's also contributed to the costs paid by the
Syndicate 41 insurers in defending their claim, as evidenced by a joint invoice provided by
BLT LLP and stated in an uncontested witness statement. The only dispute in the Syndicate
41 Arbitration was whether or not the amount sought by Adornia was covered by the
insurance clause. After analyzing all the evidence given to the Tribunal, an order was issued
on December 21, 2020, awarding the Claimant $250 million in damages. A copy of the
award was made accessible to the parties to the Syndicate 41 arbitration as well as the
Respondent, as they were intimately involved throughout the proceedings. Yet, the

MEMORANDUM for RESPONDENT XIII

 Claimant was still out of pocket by £15 million, and it was clear that they would rely on
the award of the last arbitration.

THE DISPUTE

Thus, a week after the Syndicate 41 award was made, BLT LLP on behalf of the
Respondent wrote that the Award of the prior arbitration was confidential and that
Syndicate 41 insurers would not consent to the Claimant's effort to use it in the next
arbitration. After this, the Claimant requested the Tribunal to lift the stay, which was
granted. Before the hearing on the merits could be scheduled, the Marshall Islands Supreme
Court issued a ruling prohibiting another Marshall Islands-incorporated company, Zebra
Plastics Ltd., from engaging into an insurance contract, even for legitimate business
reasons. Having reviewed this, the Claimant requested to the Tribunal under Rule 20.5 for
permission to alter its pleadings to forward a different argument in this arbitration.

REVISED ARGUMENTS AND CONTENTIONS

The revised arguments were namely:

1. If the Exchequer Contract is void for want of capacity and therefore, Adornia is entitled
to recover all the premium of £32 million by way of restitution of unjust enrichment.

2. If the Exchequer Contract is not void, Respondent is liable to pay £15 million under the
insuring clause as it is bound by certain findings of the Syndicate 41 arbitration by way
of issue estoppel as Respondent had a relationship of privity with Syndicate 41.

3. In any event, the Tribunal should find as a matter of construction that the sum claimed
by the Claimant fell within the insuring clause.

In response to the foregoing, the Respondent stated that it objected to the Claimant's attempt
to refer to the previous award on the basis that it was confidential under Rule 39.2 of the
SIAC Rules and that confidentiality would not be waived-off, as the same was provided in
writing. Claimant argued that permission of Syndicate 41 insurers was not required since
the exception in Rule 39.2 of the SIAC Regulations applied.

MEMORANDUM for RESPONDENT XIV

 The Tribunal granted the motion to amend, but reserved consideration of the confidentiality
issue for the hearing on merits. By Procedural Order No. 4, the Tribunal has identified
all the matters to be decided in the May 2023 hearing.

MEMORANDUM for RESPONDENT XV

 ISSUES RAISED

ISSUE I

WHAT CONFLICT OF LAW RULES (IF ANY) SHOULD THE TRIBUNAL APPLY TO DECIDE WHETHER
THE EXCHEQUER CONTRACT IS VOID FOR WANT OF CAPACITY BY REASON OF THE SPECULATIVE

CONTRACTS (RESTRICTIONS) ACT, 2014?

ISSUE II

APPLYING THOSE CONFLICT OF LAW RULES, IS THE EXCHEQUER CONTRACT VOID FOR WANT OF
CAPACITY BY REASON OF THE SPECULATIVE CONTRACTS (RESTRICTIONS) ACT, 2014?

ISSUE III

IF THE EXCHEQUER CONTRACT IS VOID:

a. DOES ADORNIA HAVE A CLAIM TO RECOVER THE PREMIUM PAID BY WAY OF

RESTITUTION OF UNJUST ENRICHMENT?

b. IF SO, DOES EXCHEQUER HAVE A DEFENCE OF CHANGE OF POSITION?

ISSUE IV

IF THE EXCHEQUER CONTRACT IS NOT VOID:

a. IS ADORNIA, WITHOUT THE CONSENT OF THE SYNDICATE 41 INSURERS, ENTITLED

(WHETHER UNDER RULE 39.2 OF THE SIAC OR OTHERWISE), TO REFER TO THE

CONTENTS OF THE SYNDICATE 41 AWARD?

b. IF SO, IS EXCHEQUER BOUND BY ISSUE ESTOPPEL BY THE SYNDICATE 41 TRIBUNAL’S

FINDINGS AS TO WHETHER THE LOSSES FOR WHICH ADORNIA WAS SEEKING AN

INDEMNITY FELL WITHIN THE INSURANCE CLAUSE?

c. IF NOT, DO THOSE LOSSES IN FACT FALL WITHIN THE INSURING CLAUSE?

MEMORANDUM for RESPONDENT XVI

 SUMMARY OF ARGUMENTS

Issue 1: INDIAN CONFLICT OF LAW RULES SHOULD BE APPLIED.

The Claimant submits that it would be most appropriate in the present arbitration to apply the
Indian Conflict of Laws Rules. Firstly, party autonomy is paramount in choosing the Conflict
of Laws rules. Secondly, the governing clause in the contract is the first choice when deciding
the applicable law. Here, the parties have expressly chosen Indian Law to govern the Policy,
therefore Indian Conflict of law rules should be applied. Secondly, applying the principles of
lex loci contractus and lex loci solutionis, Indian conflict of law should be applied to choose
the conflict of law rules as the contract was made and performed in India. Lastly, applying the
closest connection test, Indian conflict of law rules must be applied to decide the validity of
the contract capacity of Adornia to enter into the same.

Issue 2: APPLYING THE INDIAN CONFLICT OF LAW RULES, THE EXCHEQUER

CONTRACT IS NOT VOID FOR WANT OF CAPACITY BY REASON OF THE 2014
ACT.

The Claimant submits that the Exchequer contract is not void for want of capacity by reason of
the 2014 Act of the Marshall Islands. Firstly, the contract is governed by Indian Law, as per the
parties’ express intention. Secondly, the capacity of a person to contract is decided by the lex
loci contractus, which is Indian law in the present case. As per Indian law, Adornia has the
capacity to enter into insurance contracts. Thirdly, the 2014 Act does not warrant application in
the present case, as there is no provision for the application of a mandatory law that is neither
the lex loci contractus nor the law of the seat. Lastly, Adornia, does not seem to be in the nature
of a true subsidiary as per the present fact matrix. The corporate veil may be pierced so as to
treat it as one with PHL.

MEMORANDUM for RESPONDENT XVII

Issue 3(A): THE CLAIMAINT DOES NOT HAVE A CLAIM TO RECOVER THE
PREMIUM PAID BY WAY OF RESTITUTION OF UNJUST ENRICHMENT.

It is submitted that if the exchequer contract is void, Adornia does not have a claim to recover
the premium paid by way of restitution to unjust enrichment. Firstly, the principle of unjust
enrichment does not apply if the contract is void-ab-initio or illegal. Secondly, under the good
faith principle, a breach of duty of good faith on part of the insured is a defence to unjust
enrichment. Thirdly, the Exchequer has the defence of the earned premium doctrine as Adornia
failed to disclose the material fact related to the risk of illegality of the contract.

Issue 3(B): THE RESPONDENT HAS A DEFENCE OF CHANGE OF POSITION.

It is submitted that the Exchequer has a defence of change of position as the Exchequer
reasonably relied on the representation of Adornia. Insurance contracts being one of utmost
good faith, Exchequer changed its position in good faith, acting honestly with Adornia.
However, Adornia failed to disclose the risk of illegality of the contract. Due to this, Exchequer
acted to its detriment as a result of relying on the said representation.

Issue 4(A): THE CLAIMANT WITHOUT THE CONSENT OF THE SYNDICATE 41

INSURERS, IS NOT ENTITLED TO REFER TO THE CONTENTS OF THE
SYNDICATE 41 AWARD.

The seat and the appropriate arbitral rules influence confidentiality in commercial arbitration.
The current dispute has its seat in London, U.K., and the arbitral rules are SIAC Rules. Under
Rule 39.1 of the SIAC Rules, there is an express duty of confidentiality with regard to the
awards. The 'legitimate interest of the parties' is an exception, but there appears to be no other
ground of action other than economic motives. Under English law, there is an implied
obligation of confidentiality, and several cases have concluded that the exceptions will not
apply if the parties are ready to refer to a previous award simply to save costs and time. As a
result, Respondent contends that Claimant is not permitted to refer to the contents of the
earlier arbitration without the consent of Syndicate 41 insurers as they are only willing to do
that for saving costs and time.

MEMORANDUM for RESPONDENT XVIII

Issue 4(B): THE RESPONDENT IS NOT BOUND BY ISSUE ESTOPPEL BY THE
SYNDICATE 41 TRIBUNAL’S FINDINGS AND THE LOSSES FOR WHICH
ADORNIA IS SEEKING INDEMNITY DO NOT FALL WITHIN THE INSURING
CLAUSE.

There are specific requirements for establishing issue estoppel, one of which is that the
parties in the past and current arbitrations be the same. The Respondent is not a party to the
earlier arbitration in the current facts matrix since the Claimant refused consolidation at an
early stage. Because the payment was paid in response to a joint invoice provided by BLT
LLP for the specific proportion of risks involved, the Respondent is not bound by privity to
the Syndicate 41 insurers. As a result, the Respondent contends that, because it is neither a
party nor a privy, the Syndicate 41 Tribunal's conclusions are not subject to issue estoppel,
and the losses sought by Adornia do not fall within the scope of the insuring clause.

Issue 4(C): THE LOSSES IN FACT DO FALL WITHIN THE INSURING CLAUSE.

The language of the insurance policy must be read in its entirety and not in portions; when
read in this manner, it makes it abundantly evident that there is no room for actions to be
taken by civil authorities in relation to the language of the policy. In addition, for insurance
policies to cover instances involving civil authorities, the coverage must be specifically stated
in the policy. As a result, the Respondent contends that the losses in question do not fit within
the parameters of the insurance provision

MEMORANDUM for RESPONDENT XIX

 ARGUMENTS ADVANCED

ISSUE 1: THAT THE TRIBUNAL SHOULD APPLY THE INDIAN CONFLICT OF

LAWS RULES TO DECIDE WHETHER THE EXCHEQUER CONTRACT IS VOID
FOR WANT OF CAPACITY BY REASON OF THE 2014 ACT

1. Conflict of Laws is defined as “That branch of jurisprudence, arising from the diversity of
the laws of different jurisdictions in their application which reconciles the inconsistency,
decides which law or system is to govern in the particular case, either where it differs from
the domestic law or where the domestic law differs from”.1

2. It is submitted before the arbitral tribunal that it would be most appropriate in the present
arbitration to apply the Indian Conflict of Laws Rules as: (A) party autonomy is paramount
in deciding the applicable law; (B) the governing clause in the contract is the first choice
when deciding the applicable law; (C) the principle of lex contractus and lex
incorporationis should be applied and lastly, (D) closest connection test must be applied to
decide the conflict of laws system.

a. THAT PARTY AUTONOMY IS PARAMOUNT IN DECIDING THE APPLICABLE LAW

3. International commercial law favours arbitration because parties can customise

proceedings. Private international law is founded on the principle that “the law of the
contract is the law chosen by the parties”. Arbitral tribunals, international agreements, and
national laws weigh parties’ wishes when defining substantive and procedural laws for
arbitrations.

4. In the absence of domestic codification on international contracts, the Indian judiciary

relies, for its persuasive value, on the traditional common law position as enunciated in Vita
Food Products Inc. v. Unus Shipping Co. Ltd.,2 where the Privy Council held that the

1
H Black, Black’s Law Dictionary (4th edn, West 1968).
2
Vita Food Products Inc. v. Unus Shipping Co. Ltd. [1939] UKPC 7.

MEMORANDUM for RESPONDENT 1

 parties were free to choose any governing law, regardless of its connection with the
contract, provided that the choice was bona fide, legal, and not contrary to public policy.

5. In Delhi Cloth and General Mills Co. Ltd. v. Harnam Singh,3 the Supreme held that the
choice of an unrelated law in an international contract would be unjustified unless it is the
proper law.

6. The Supreme Court overturned the narrow approach in NTPC v. Singer Co.,4 the parties
could choose the stated legislation even if the contract requirement had no geographical
link. The Court stated that only bona fide or public policy grounds limited the parties’
freedom to choose.

7. In the present case, both the parties decided to choose Indian law to govern their contract.
Therefore, Indian law becomes the proper law by which the dispute has to be adjudicated.

b. THE GOVERNING CLAUSE IN THE CONTRACT IS THE FIRST CHOICE WHEN

DECIDING THE APPLICABLE LAW

8. Dicey has laid down three sub-rules for determining the proper law of a contract which may
be summarised as follows5:
(1) The parties’ intention determines the contract's proper law and overrides all
presumptions.
(2) The contract’s proper law is derived from the contract’s provisions and the case’s
general circumstances where the intention is not stated.
(3) In the absence of countervailing considerations, the following presumptions as to the
proper law of a contract apply: prima facie lex loci contractus is the proper law, and lex
loci solutionis is the proper law if a contract is made in one country and performed in
another, either wholly or partly.

3
Delhi Cloth and General Mills Co. Ltd. v. Harnam Singh (1955) AIR 590.
4
NTPC v. Singer Co. (1993) AIR 998.
5
Ravindra N. Maitra v. Life Insurance Corporation of India (1964) AIR Cal 141.

MEMORANDUM for RESPONDENT 2

9. The approach of the Singapore courts in determining the governing or “proper” law of the
contract is set out in Overseas Union Insurance Ltd v Turegum Insurance Co.6 and
comprises three stages:
(a) Examine the contract itself to determine whether it states expressly what the governing
law should be.
(b) In the absence of an express provision, see whether the intention of the parties as to the
governing law can be inferred from the circumstances.
(c) If neither of the above can be done, then determine with which system of law the
contract has it most close and real connection.

10. In re Missouri S.S. Co.,7 there was an exemption clause in a contract that was void under
the law of Massachusetts, however, the same was valid in English law. Thus, it was held
that the English law was the proper law, as the parties must have intended that their contract
as well as the exemption clause in question must be valid. Thus, until there appears anything
contrary in the contract, the court will consider the proper law in the law which validates,
rather than invalidates the contract.

11. Applying the above, in the present case, the Exchequer Contract clearly provides for Indian
law to be the governing law of the contract. Since an express choice has been made by the
parties and an intention is clearly visible, there is no reason for the contract to be governed
by Marshall Law as Indian law becomes the first choice.

c. THE PRINCIPLE OF LEX CONTRACTUS AND LEX SOLUTIONIS SHOULD BE APPLIED

12. In Conflict of Laws, “law of the place where the contract is made” is called lex loci
contractus. “Law of the location where relevant performance occurs” is lex loci solutionis.
In the current factual matrix, contract was made in India. The place of performance of the
contract, i.e., the property that is insured against risks, Adornia Island, is also located in
Mumbai, India.

13. It is humbly submitted before the tribunal that, where only one party seeks application of
the law, and the parties are experienced, had legal advice before entering into the contract,

6
Overseas Union Insurance Ltd v. Turegum Insurance Co [2001] SGHC 147.
7
Re Missouri SS Co. [1889] 42 Ch. 321 (C.A.).

MEMORANDUM for RESPONDENT 3

 and consented freely to the choice of law clause (as has happened in the present case), there
is little reason to consider their wishes once they are in dispute.8

14. Therefore, in light of the above made arguments, the counsels for Respondent, submit that,
in the present case, Indian Law should be applied as it is the expressly chosen as the
governing law by the parties.

d. CLOSEST CONNECTION TEST MUST BE APPLIED IN THE PRESENT ARBITRATION

15. Another method which has been adopted by a number of arbitral awards employs the
conflict of laws system of the state most closely connected to the parties’ dispute.9 The
arbitrators determine the closest connection on the basis of various criteria such as the place
of the arbitral seat, the seat of the parties and the place of contracting. 10

16. The case of Comandate Marine Corp v Pan Australia Shipping Pty Ltd,11 involved a dispute
between a Panamanian company and an Australian company over a shipping contract. The
Australian Federal Court applied the closest connection test to determine the governing law
of the contract and held that it was English law, as the contract was performed in England
and the parties had chosen English law as the governing law.

17. In another case, the tribunal held that the law of the country with which the dispute was
most closely connected was Argentine law, as the investment was made in Argentina and
the dispute concerned measures taken by the Argentine government.12

18. In the present fact matrix, 13 the place of contracting is India and Exchequer is also
incorporated in India. Moreover, the dispute arose in Mumbai, India as the property
Adornia Island is situated within the Indian territory. Additionally, Indian law was chosen
as the governing law for the contract.

8
Andrew Barraclough and Jeff Waincymer, ‘Mandatory rules of law in international commercial arbitration’
Melbourne Journal of International Law 6(2) (2005) p. 205.
9
Gary B. Born, International Arbitration and Practice (2nd edn, Kluwer International Law 2014).
10
ICC Case No. 6149, Interim Award (ICC International Court of Arbitration 1 January 1990).
11
Comandate Marine Corp v. Pan Australia Shipping Pty Ltd [2006] 157 FCR 45.
12
Impregilo SpA v. Argentine Republic (ICSID Case No. ARB/07/17) [2011] ICSID Rep 436, [2011] ICSID Rev-
FIAA 310, (2011) 50 ILM 1089 (Award Annulment Committee Decision).
13
Moot Proposition, Annexure 3.

MEMORANDUM for RESPONDENT 4

19. In light of this, India has the closest connection to the dispute at hand and therefore, Indian
conflict of law rules should be applied to decide the applicable law and resolve the conflict.

ISSUE 2: THAT APPLYING THE INDIAN CONFLICT OF LAWS RULES, THE

EXCHEQUER CONTRACT IS NOT VOID FOR WANT OF CAPACITY BY
REASON OF THE 2014 ACT

1. The Claimant submits that the Exchequer contract is not void for want of capacity by reason
of the 2014 Act of the Marshall Islands as: (A) the contract is governed by Indian Law; (B)
the capacity is decided by lex loci contractus, (C) the 2014 Act will not be applied as
overriding and (D) Adornia is not a true subsidiary.

a. THE CONTRACT IS GOVERNED BY INDIAN LAW

2. The Arbitration Act of the UK, 14 The Arbitration and Conciliation Act of India15, the SIAC
Rules16, as well as the UNCITRAL Model Law on International Commercial Arbitration17
state that the tribunal shall apply the law or rules of law as designated by the parties as
applicable to the substance of the dispute.

3. In Dhanrajmal Gobindram v Shamji Kalidas and Co,18 the Supreme Court observed that
where the parties had expressly mentioned the law governing the contract, the intention so
expressed overrode the presumption that the proper law applicable was either the lex loci
contractus or lex loci solutionis.

4. In Orient Ship Supply Co. v. Kalmarasand Co.,19 the intention of the parties expressed in
words determine the proper law of the contract, provided the intention of the parties is bona
fide and legal and the contract has some visible real connection with the country where law
is selected.

14
The Arbitration Act 1996 § 46(1).
15
The Arbitration and Conciliation Act (26 of 1996) § 28(1)(b).
16
Rules of the Singapore International Arbitration Centre (‘SIAC Rules’) (6 th Edn, 1 August 2016) r 33(1).
17
UNCITRAL Model Law on International Commercial Arbitration (21 June 1985) UN Doc A/40/17.
18
Dhanrajmal Gobindram v. Shamji Kalidas and Co (1961) AIR SC 1285.
19
Orient Ship Supply Co. v. Kalmarasand Co. (1958) AIR TC 1.

MEMORANDUM for RESPONDENT 5

5. The insurance contract states that Indian law shall govern the Policy. 20 Adornia sought
insurance to reduce the danger of infrastructure damage in Mumbai. 21 That was bonafide
and legal since Indian Law was used to defend the company’s interests.

6. India, where the cause of action occurred and where one party is from, has a meaningful
link to the contract. Thus, Indian Law is the proper law of the contract.

b. THE CAPACITY OF THE PARTIES TO CONTRACT IS DETERMINED BY LEX LOCI

CONTRACTUS

7. The capacity of the parties to a contract is determined by the lex loci contractus, which
refers to the law of the country where the contract is made. 22 The capacity of a corporation
cannot in all respects follow the rules for determining the capacity of a human, however,
the capacity of a corporation is also subject to the law of the locus contractus when its agent
contracts abroad.23

8. Insurance contracts are included in ordinary mercantile contracts.24 The Court in T.N.S.
Firm v. Mohammad Hussain,25 referring to Dicey’s Conflicts of Law, clarified that the
capacity of parties to enter into contracts in the case of ordinary mercantile contract, is
governed by the lex loci contractus (the place where the contract was formed) and not by
the law of domicile.

9. In the present arbitration, the contract was formed in India and Resppondent is also an
Indian insurance company. 26 This means that the capacity of the parties shall be determined
by Indian law.

20
Moot Proposition, Annexure 3.
21
Moot Proposition, para 4.
22
Herbert v. Christopher son [1930] 1 Ch. 407; Simonin v. Mallac[1860], 2 Sw. & Tr. 67; V. G. Ramachandran,
‘Conflict Of Laws As To Contracts’ 12(2) (1970) Journal of the Indian Law Institute p. 273.
23
Wyndham A. Bewes ‘Contractual Capacity in Commerce’ Transactions of the Grotius Society 16 (1930) p.13-
28.
24
Roy Goode, Ewan McKendrick, and Joanna Benjamin, Commercial Law (5th edn, Penguin Books 2020) p.
345; Jeffrey W. Stempel, Peter N. Swisher, and Erik S. Knutsen, Principles of Insurance Law (3rd edn, West
Academic Publishing 2020).
25
T.N.S. Firm v. Mohammad Hussain (1933) AIR Mad 756; A. V. Dicey, Dicey's Conflict of Laws, (4th Edition),
p. 599.
26
Moot Proposition, para 7.

MEMORANDUM for RESPONDENT 6

10. To have the capacity to contract under Indian law, the parties must have attained the age of
majority, be of sound mind, and not be disqualified from contracting by the law to which
they are subject.27

11. Corporations, as a separate legal entity, also have the capacity to contract under Indian
law. 28 They can lawfully can enter into contingent contracts, including insurance
contracts.29 It is thus submitted that Adornia Ltd., a subsidiary corporation, has the capacity
to enter into the present insurance contract formed in India as per the lex loci contractus.

c. THE 2014 ACT DOES NOT WARRANT APPLICATION

12. A mandatory rule is an imperative provision of law which must be applied to an

international relationship irrespective of the law governing the relationship. 30 The phrase
“irrespective of the law governing the contract” used in the 2014 Act 31 implies that the law
is in the nature of a mandatory rule.

13. As per rule 27 of the SIAC rules,32 the tribunal's powers are also subject to any mandatory
rules of law applicable to the arbitration, and in particular those of the seat of the arbitration.
The rules however, do not talk about the applicability of the mandatory rules of a third
country which is neither the lex loci contractus nor the law of the seat.

14. An arbitral tribunal sitting in Germany in respect of a dispute between an Italian supplier
and a Belgian distributor, in a case where the choice of law was in favour of the Italian
substantive laws, did not apply the well-known Belgian mandatory laws protecting agents
and distributors in Belgium (by requiring a 36 months’ notice period and by providing a
local forum.33

27
Indian Contract Act, 1872 (9 of 1872) §11.
28
Salomon v. A Salomon and Co Ltd [1897] AC 22; The Companies Act, 2013 (18 of 2013) §19(1)(b).
29
Indian Contract Act, 1872 (9 of 1872) §31 and 32; N. Peddanna Ogeti Balayya v. Kotta V. Srinivasayya Setti
Sons (1954) AIR SC 26.
30
P Mayer, ‘Mandatory Rules of Law in International Arbitration’, Arbitration International 2 (1986) 274.
31
Moot Proposition, Annexure 1.
32
Rules of the Singapore International Arbitration Centre (‘SIAC Rules’) (6 th Edn, 1 August 2016).
33
ICC Case No. 6379, Award (ICC International Court of Arbitration, 1 Jan 1990.

MEMORANDUM for RESPONDENT 7

15. In deciding whether the rule is applicable or not, the tribunal should consider whether there
is a legitimate purpose to prohibiting insurance contracts or not.34 The consequence of
declaring said contract void will affect the people of Mumbai, the place of performance of
the contract, rather than the Marshall Islands.

16. It is submitted that no legitimate purpose to prohibit insurance contracts is evident in the
fact matrix. Further, Marshall Islands is neither the law of the seat nor lex loci contractus.
Therefore, its mandatory provision need not be applied.

d. ADORNIA IS NOT A TRUE SUBSIDIARY

17. In re Sbarro Holding, Inc.,35 the Court explained that the corporate veil will be pierced to
achieve equity, even absent fraud, where the officers and employees of a parent corporation
exercise control over the daily operations of a subsidiary corporation and act as the true
prime movers behind the subsidiary’s actions. The corporate veil has also been pierced
when the subsidiary has been set up solely to evade a taxing statute.36

18. Here, Adornia was incorporated in the Marshall Islands solely for tax reasons.37 Its real
operations are remarkably similar to those of PHL and are limited to India. PHL has input
on all decisions made by Adornia. This is indicated as either PHL Board or Ms Karnik, the
CEO of PHL, were involved in the decisions taken by Adornia. 38

19. Therefore, it is submitted that Adornia is not a true subsidiary, and it may be fair to treat
Adornia and PHL as a single entity, in which case the Marshall Islands statute is irrelevant.

34
Marc Blessing, ‘Party Autonomy versus Rules of Law: A Comparative Analysis’ European Review of Private
Law 6(2) (2011) p. 343.
35
re Sbarro Holding, Inc 91 A.D.2d 613 (2d Dept. 1982).
36
St Louis Breweries v. Apthorpe [1914] 30 RPC 124; Balwant Rai Saluja v. Air India (2014) 9 SCC 407.
37
Moot Proposition, para 2.
38
Moot Proposition, paras 4, 7, 13,

MEMORANDUM for RESPONDENT 8

 ISSUE 3:

(A): THAT IF THE EXCHEQUER CONTRACT IS VOID, THE CLAIMANT DOES

NOT HAVE A CLAIM TO RECOVER THE PREMIUM PAID BY WAY OF
RESTITUTION OF UNJUST ENRICHMENT

20. Unjust enrichment is defined as “person shall not be allowed to profit or enrich himself
inequitably at another’s expense”39 it is based on the principle of Nemo debet locupletari
ex aliena jactura, i.e., no man should grow rich out of another person's loss. 40

21. S. 70 of the Indian Contract Act, 1872 states that if a person legitimately does or delivers
anything to another, not intending to do so gratuitously, and the other person benefits from
it, the later must compensate the former or restore the object done or delivered. 41

22. It is submitted that if the Exchequer contract is void, Claimant does not have a claim to
recover the premium paid by way of restitution to unjust enrichment as: (A) Principle of
Unjust Enrichment does not apply if the contract is void-ab-initio; (B) A breach of duty of
good faith on part of the insured is a defense to unjust enrichment; and lastly (C) Non-
disclosure of a material fact results in a defense of earned premium doctrine.

a. PRINCIPLE OF UNJUST ENRICHMENT DOES NOT APPLY IF THE CONTRACT IS VOID-

AB-INITIO

23. In India, if an insurance contract is found to be void, the principle of unjust enrichment
cannot be applied. This is because a void contract is considered to be non-existent and
cannot be enforced, and therefore, the question of enrichment or unjust enrichment does
not arise.

24. In the case of National Insurance Co. Ltd. v. B.M. Gupta,42 the insured had purchased a
Medi claim policy from the insurer. When the insured suffered medical expenses, the

39
Mafatal Industries Ltd. v. Union of India (1997) 5 SCC 536 p. 612, 633.
40
Sir Frederick Pollock and Sir Dinshaw Fardunji Mulla, The Indian Contract and Specific Relief Acts (16th edn,
LexisNexis 2020).
41
Indian Contract Act, 1872 (9 of 1872) § 70.
42
National Insurance Co. Ltd. v. B.M. Gupta [2010] EWCA Civ 1110.

MEMORANDUM for RESPONDENT 9

 insurer repudiated the claim on the ground of non-disclosure of material facts. The court
held that the insurance contract was void ab initio due to non-disclosure, and therefore, the
principle of unjust enrichment could not be applied.

25. In the case of Damodar Valley v. K, K. Kar,43 the Supreme Court held that Section 70 of
the Indian Contract Act does not apply to cases where a contract is illegal or void ab initio.
The court observed that in such cases, the contract is not capable of creating any rights or
obligations between the parties, and therefore, the question of restitution under Section 70
does not arise. The section would not apply when the claim is under a contract that is
contrary to the provisions of a statute.44

26. Section 70 of the Indian Contract Act does not apply to cases where a contract is void due
to an illegality or public policy.45 In National Fertilizers Ltd. v Somvir Singh,46 the Court
refused to pay as restitution to worksmen who were illegally appointed for their duration
of service.

27. In the present arbitration, the Zebra Plastics Ltd. case, interpreting the 2014 Act, declared
all speculative contracts including insurance contracts, entered into even for legitimate
commercial reasons to be void.47 Further, The City firm and King’s Counsel in London had
advised the Claimant that entering into such a contract was “not without risk”, which was
not informed to the Respondent.48

28. Due to all of the above reasons, as the contract is void-ab-initio, unjust enrichment cannot
be claimed by the Claimant in the present proceedings and the Respondent is not liable to
return the premium received.

43
Damodar Valley Corporation v. K.K. Kar (1974) 2 SCR 674.
44
Sir Frederick Pollock and Sir Dinshaw Fardunji Mulla, The Indian Contract and Specific Relief Acts (16th edn,
LexisNexis 2020); Kuju Collieries Ltd v Jharkhand Mines Ltd (1974) 2 SCC 533.
45
State of Kerala v. Mathew (1963) INSC 199; Hindustan Petroleum Corp. Ltd. v. Union of India (2018) 17 SCC
729.
46
National Fertilizers Ltd. v. Somvir Singh (2006) 5 SCC 493.
47
Moot Proposition, para 24.
48
Moot Proposition, para 6.

MEMORANDUM for RESPONDENT 10

 b. BREACH OF DUTY OF GOOD FAITH ON PART OF THE INSURED IS A DEFENCE TO
UNJUST ENRICHMENT

29. The principle of good faith operates as a defence in the context of unjust enrichment. In the
case of Haryana Financial Corporation v. Jagdamba Oil Mills,49 the Supreme Court held
that a person who receives a benefit in good faith and without any knowledge of its illegality
is not liable to restore it.

30. In Oriental Insurance Co. Ltd. v. Narbheram Power and Steel Pvt. Ltd., 50 it was held that
if an insurer had issued a policy in good faith and received a premium, the insurer should
not be required to return the premium to the insured if the policy was later found to be void
ab initio. This is especially the case if the insured has failed to disclose material
information. 51

31. In an insurance contract, a material breach occurs when the policyholder fails to comply
with a condition of the policy that is considered essential to the insurer’s risk. 52 A failure to
disclose important information that would have influenced the policyholder's decision to
contract may constitute a breach of the insurer's duty of good faith and fair dealing.53

32. In the present arbitration, Respondent was not aware of the contract’s illegality, in line with
the “generally accepted view” and indicated by the fact that the validity of the contract was
not previously challenged. It has also disclosed all facts material to the policy, such as the
limit to which it can accept claims. 54

33. The “risk” of illegality of the contract was a material one as the Respondent was previously
reluctant to enter the contract due to already high risk. This risk was thus one that would
have influenced Respondent’s decision to enter into the contract, but the Claimant failed to

49
Haryana Financial Corporation v. Jagdamba Oil Mills (2002) 6 SCC 336.
50
Oriental Insurance Co. Ltd. v. Narbheram Power and Steel Pvt. Ltd. (2008) 1 SCC 428.
51
United India Insurance Co. Ltd. v. Satya Pal Singh (2010) 3 SCC 442.
52
Kenneth S. Abraham and Daniel Schwarcz, Insurance Law and Regulation (5th Edition, Foundation Press 2010)
p. 61.
53
Robert Keeton, ‘Insurance Law Rights at Variance with Policy Provisions’ Harvard Law Review 83(5) (1970)
p. 961-985.
54
Moot Proposition, paras 7, 19 and 20.

MEMORANDUM for RESPONDENT 11

 disclose the same.55 The Respondent has acted in good faith, however, the Claimant has
failed to disclose material information which constitutes a material breach.

c. NON-DISCLOSURE OF A MATERIAL FACT RESULTS IN A DEFENCE OF EARNED

PREMIUM DOCTRINE

34. A common defence to restitution by way of unjust enrichment held by courts is the earned
premium doctrine which holds that an insurance company is entitled to keep a portion of
the premium based on the amount of time the policy was in effect.

35. In case of Oriental Insurance Co. Ltd. v. Universal Fuel Injection Industries,56 the
insurance policy was void because the insured party had failed to disclose material
information. Despite this, the insurer cancelled the policy and retained a portion of the
premium under the earned premium doctrine. The court upheld the doctrine and held that
the insurer was entitled to retain a portion of the premium.

36. The Supreme Court in Life Insurance Corporation of India v. Asha Goel,57 held the
insurance policy void because the insured failed to disclose material information. The
insurer cancelled the policy and kept part of the premium under the earned premium
doctrine. The court upheld the doctrine and allowed the insurer to keep part of the premium.

37. Here, the Respondent was not informed of the great risk involved in entering into an
insurance contract and this was a material fact as no other insurance company was willing
to enter the contract. The non- disclosure of this fact acts as a defence and it is submitted
that the Claimant are not entitled to recover the insurance premium.

55
Moot Proposition, para 6.
56
Oriental Insurance Co. Ltd. v. Universal Fuel Injection Industries (1987) 1 SCC 682.
57
Life Insurance Corporation of India v. Asha Goel (2001) 2 SCC 160.

MEMORANDUM for RESPONDENT 12

(B): THAT IF THE EXCHEQUER CONTRACT IS VOID, THE RESPONDENT HAS A
DEFENSE OF CHANGE OF POSITION

38. In the context of unjust enrichment, the defence of change of position is available to a party
that (A) relied on the representation of the other party,58 (B) changed its position in good
faith,59 and (C) acted to its detriment as a result of relying on the aforementioned
representation.60 It is submitted that these essentials are satisfied in the present proceedings.

a. RESPONDENT RELIED ON THE REPRESENTATION OF THE CLAIMANT

39. Reasonable reliance requires checking whether the person taking the defence had a duty to
verify the information or payment received, and whether failed to exercise reasonable care
in doing so.61

40. In United India Insurance Co. Ltd. v. M/s. Lehru Trading Company and Others,62 the Court
held that the proposer of the insurance policy has a duty to disclose material facts, and
failure to do so entitles the insurer to repudiate the policy. Material facts are the facts that
are relevant to the risk being insured.

41. In the present arbitration, the Respondent had accepted the claim based on Claimant’s
representation, however, the Claimant failed to mention the 2014 Act 63 as well as the
probability of its application to the Contract, despite being aware that there was a risk of
the same.

42. The 2014 Act is a Marshall Islands Law. However, the Respondent is an Indian Insurance
Company and it made a contract governed by Indian law.64 Therefore, there was prima facie
no link between the contract and the Marshall Islands law. Furthermore, as per Indian law,
there is no expectation on parties to know or find out about a foreign law. 65

58
Union of India v. M/s. Singh Builders Syndicate (2009) 4 SCC 523.
59
Indian Oil Corporation Ltd. v. State of Bihar (1986) 4 SCC 679; Jitendra Nath Biswas v. M/s. Empire of India
Life Insurance Co. Ltd. (1961) AIR 1963 SC 429; Central Bank of India v. State of Kerala (2009) 4 SCC 94.
60
Central Bank of India v. State of Kerala (2009) 4 SCC 94.
61
Oriental Insurance Co. Ltd. v. Meena Variyal (2007) 5 SCC 428.
62
United India Insurance Co. Ltd. v. M/s. Lehru Trading Company and Others (2020) SCC OnLine SC 74.
63
Moot Proposition, Annexure 1.
64
Moot Proposition, Annexure 3.
65
Indian Contract Act (9 of 1872) §21.

MEMORANDUM for RESPONDENT 13

43. Furthermore, the generally accepted view about the Act was that it did not extend to
insurance contracts.66 Many countries have similar Acts which prohibit contracts based on
the happening of uncertain events, but these extend only to gambling and wagering
contracts, not insurance. 67

44. Thus, the Claimant could not assume that the Respondent had constructive knowledge of
the “risk” of the Act applying to the contract, and the duty of disclosure of the same lay on
the Claimant. However, it failed to disclose it, and the Respondent relied on the same.

b. RESPONDENT CHANGED POSITION IN GOOD FAITH

45. A contract of insurance is called a contract of absolute good faith, uberrima fides. This is
because an insurance company knows nothing about the life or circumstances of the
assured. It has to depend on the disclosures made by the assured. It is, therefore, the duty
of the assured to put the insurer in possession of all the material facts affecting the risk
covered.68

46. In United Bank of India v. A.T. Ali Hussain & Co.,69 the defence of change of position
was available to a customer that had encashed a cheque in good faith, but the bank later
discovered that the cheque was a forged one.

47. Section 3(22) of the General Clauses Act70 says that a thing shall be deemed to be done in
“good faith” where it is in fact done honestly, whether it is done negligently or not. Good
faith is a question of fact, dependant on the circumstances of the case, and that good faith
lays an emphasis on honesty, based on the General Clauses Act.

48. The Respondent had an honest belief in the contract’s validity, as evidenced by the fact that
it filed it in the current it was willing to pay the property damage claims. It did not act in

66
Moot Proposition, para 24.
67
Indian Contract Act, 1872 (9 of 1872) §30; Gambling Act 2005 (UK), § 19.
68
Avtar Singh, Law of Contracts and Specific Relief (12th edn, EBC 2017).
69
United Bank of India v. A.T. Ali Hussain & Co. AIR 1978 Cal 169.
70
The General Clauses Act, 1897 (10 of 1897) §3(22); R.K. Mohammad Ubaidullah v. Hajee C. Abdul Wahab
(2000) 6 SCC 402.

MEMORANDUM for RESPONDENT 14

 any way that has shown malice or ill-will towards Claimant. As a result, Respondent has
changed its position in good faith.

c. THE RESPONDENT SUFFERED DETRIMENT BY RELYING ON THE CLAIMANT

49. The term “detriment” in this defence generally refers to the harm or loss suffered by the
defendant as a result of their change of position. This can include actual financial losses, as
well as other types of harm such as the loss of opportunities or the damage to reputation. 71

50. The basis of this defence is that detrimental reliance has diminished the original objective
enrichment. In other words, it is not unconscionable to devalue the objective enrichment
because, acting in detrimental reliance, the party claiming the defence has expended an
equivalent proportion of his wealth.72

51. According to the lost benefit test, the defence is open to the party if he or she no longer
retains the actual benefit which had been received from the Claimant. The test of causation
is satisfied where, even though the defendant has retained the particular benefit which he
or she received from the Claimant, the Respondent relied on the validity of the receipt of
the benefit and suffered detriment in other ways. 73

52. In the present arbitration, no insurance company was willing to enter into an insurance
contract with Claimant and the Respondent was persuaded with great difficulty, and even
then at a very high premium. 74 However, the Claimant failed to disclose the fact that it may
lack capacity to enter into the Contract as per the 2014 Act. The risk relating to incapacity
of Claimant as per the 2014 Act is not one the Respondent agreed to at the time of the
Contract.

53. Insurance companies work on the probability of a risk materialising. At the time of making
the Contract, the insured person discloses all material facts on the basis of which the

71
G Virgo, The Principles of the Law of Restitution (3rd edn, Oxford University Press 2015) p. 391.
72
Paul Key, ‘Change of Position’ Modern Law Review 58 (1995) p. 65.
73
G Virgo, The Principles of the Law of Restitution (3rd edn, Oxford University Press 2015) p. 683 and 684.
74
Moot Proposition, para 7.

MEMORANDUM for RESPONDENT 15

 premium is calculated.75 The insurer takes a number of insurance claims based on the
relative probabilities of their risk materialising.

54. Thus, the present contract has influenced other contracts and relying on the validity of the
same, the Claimant has expended this money on claims of other insured persons. The
present claim for restitution puts a burden on the Respondent to pay back money it has
already spent on premiums of other people. Thus, by accepting unwanted and unknown
risk that materialised, it has suffered detriment. This risk has also devalued the original
objective enrichment that was already expended.

ISSUE 4:

(A): THAT IF THE CONTRACT IS NOT VOID, THE CLAIMANT, WITHOUT THE
CONSENT OF SYNDICATE 41 INSURERS, IS NOT ENTITLED TO REFER TO THE
CONTENTS OF THE SYNDICATE 41 AWARD

55. The nature of arbitration proceedings and extent of confidentiality is dependent upon: -
The seat of the Arbitration and;
The arbitral rules applicable to the Arbitration.76

56. In the present arbitration, the rule applicable is the Arbitration Rules of the Singapore
International Arbitration Centre (Hereinafter referred as the “SIAC Rules”) and the seat of
Arbitration is London, UK. 77

57. “Confidentiality” is typically used to refer to the obligation not to disclose information
concerning the arbitration to third parties. 78 There may be trade secrets or competitive
practices to protect, or there may simply be a reluctance to have details of a commercial
dispute (or some bad decision making) made the subject of adverse publicity. 79

75
Brian Beers, ‘A Brief Overview of the Insurance Sector’ (Investopedia, 16 April 2021).
76
Mayank Samuel, ‘Confidentiality in International Commercial Arbitration: Bedrock or Window-Dressing?’,
(Kluwer Arbitration Blog, 21 February 2017).
77
Moot Proposition, Annexure 3, Clause 17.
78
Gary B. Born, International Arbitration and Practice (1st edn, Kluwer International Law 2012) Chapter 10.
79
Alan Redfern & Others, International Arbitration (5th edn Oxford University Press 2009), p. 33.

MEMORANDUM for RESPONDENT 16

 a. CONFIDENTIALITY UNDER THE SIAC RULES

58. SIAC has elected to impose an express confidentiality obligation on the parties, the tribunal,
and anybody appointed by the tribunal, unless the parties agree otherwise. Unless the
parties agree otherwise, Rule 39.180 requires the parties to regard all matters relevant to
the proceedings and the award as confidential. 81

59. The Rule 39.282 of the SIAC Rules states that the exceptions are applicable ‘without prior
consent of the parties’ and then it gives the exception 39.2(c)83 which states ‘for the purpose
of pursuing or enforcing a legal right or claim’.84

60. However, in the present arbitration proceeding, the Syndicate 41 insurers have clearly
notified the Claimant that the award was confidential and did not consent the usage of the
same in future proceedings. 85

61. Even if the notification had no value, Claimant still has no “legal right or claim”86 under
the exception and is merely to save money and time in this arbitration. Claimant lost its
legal right or claim when it refused the consolidation request 87 through which
confidentiality could have been waived off.

62. Therefore, Claimant cannot waive off the confidentiality under Rule 39.188 guaranteed to
the Respondent through the exception 39.2(c)89 as the same does not hold any ground with
respect to the matter at hand.

80
Rules of the Singapore International Arbitration Centre (‘SIAC Rules’) (6 th edn, 1 August 2016) r 39.1.
81
John Choong, Mark Mangan, and Nicholas Lingard, A Guide to the SIAC Arbitration Rules (2nd edn, Oxford
University Press 2018).
82
Rules of the Singapore International Arbitration Centre (‘SIAC Rules’) (6 th edn, 1 August 2016) r 39.2.
83
Ibid.
84
Ibid.
85
Moot Proposition, para 22.
86
Rules of the Singapore International Arbitration Centre (‘SIAC Rules’) (6 th edn, 1 August 2016) r 39.2.
87
Moot Proposition, para17.
88
Rules of the Singapore International Arbitration Centre (‘SIAC Rules’) (6 th edn, 1 August 2016) r 39.1.
89
Rules of the Singapore International Arbitration Centre (‘SIAC Rules’) (6 th edn, 1 August 2016) r 39.2(c).

MEMORANDUM for RESPONDENT 17

 b. CONFIDENTIALITY UNDER U.K. LAW

63. There is an implied rule of confidentiality under the U.K. Law in absence of an agreement
between the parties.90 English-seated arbitrations are both private and confidential, if the
law governing the confidentiality of the arbitration, is English law. 91

64. In John Forster Emmott v Michael Wilson & Partners Ltd92 the English Court of Appeal
stated: There is an implied obligation (arising out of the nature of arbitration itself) on
both parties not to disclose or use for any other purpose any documents prepared for and
used in the arbitration, or disclosed or produced in the course of the arbitration, the
award, save with the consent of the other party,

65. Arbitral confidentially protects the fact that the arbitrators in each arbitration are
specifically appointed to resolve the disputes in that arbitration between those specific
parties. As a result, past arbitral tribunal rulings cannot be relied on to establish a party's
position, even if those findings were obtained based on mainly comparable and closely
inter-related matters.93

66. Even though “reasonable necessity” and “legitimate interests” save time and money, parties
cannot use them to salvage a commercial position. 94 The Court of Appeal upheld disclosing
material from the first arbitration in later arbitrations in Ali Shipping Corporation v.
Shipyard Togir 95 because it was not reasonably essential to build a case on the merits but
would have only saved time and money.

67. In the current arbitration, the Syndicate 41 insurers did not provide the Claimant permission
to disclose information.96 The only “reasonable necessity” is that the same action would
save time and money.

90
Alan Redfern and Others, Redfern and Hunter on International Arbitration (5th edn Oxford University Press
2009).
91
Halliburton Energy Services Inc. v. Chubb Bermuda Insurance Ltd. [2018] EWCA Civ 817.
92
John Forster Emmott v. Michael Wilson & Partners Ltd [2008] EWCA Civ 184.
93
Lincoln National Life Insurance Co v. Sun Life Assurance Co of Canada [2005] 1 Lloyd’s Rep 606.
94
Sophie Lee and Hill Dickinson, ‘UK – Confidentiality in Arbitration’, (Conventus Law, 7 December 2022).
95
Ali Shipping Corporation v. Shipyard Togir [1998] 1 Lloyd’s Rep 643 (CA).
96
Moot Proposition, para 22.

MEMORANDUM for RESPONDENT 18

68. Therefore, it is contended by the Respondent, that the award of the Syndicate 41 arbitration
is confidential in nature and cannot be used in the present arbitration.

(B): THAT THE RESPPONDENT IS NOT BOUND BY ISSUE ESTOPPEL BY THE

SYNDICATE 41 TRIBUNAL’S FINDINGS & THE LOSSES FOR WHICH
CLAIMANT WAS SEEKING INDEMNITY DO NOT FALL WITHIN THE
INSURING CLAUSE

69. Issue estoppel precludes a party from disputing a previous ruling. The doctrine may prevent
a party from reopening an issue already decided in a final judgement on the merits of a
competent court between the same parties and their privies. 97

70. The plea of issue estoppel has certain conditions which need to be met before it can be
binding on the parties, there conditions are as follows 98:
(a) The judgement must be given by a foreign court of competent jurisdiction;

(b) the judgement must be final and conclusive on the merits;

(c) there must be identity of parties; and

(d) there must be identity of subject matter.

a. RESPONDENT IS NOT A PARTY TO THE SYNDICATE 41 ARBITRATION

71. The ‘identification of parties’99 criteria is not met in the current arbitration. This is a critical
prerequisite. The Supreme Court ruled in Gavin Edmondson Solicitors Ltd. v. Haven
Insurance Company Ltd.100 that issue estoppel did not apply in arbitration because the
parties were not the same as in the previous lawsuit. It was determined that issue estoppel
could only apply if the arbitration was between the same parties.

97
Yukos Capital Sarl v. OJSC Rosneft Oil Co (No 2) [2012] EWCA Civ 855 paras 147–149.
98
Good Challenger Navegante SA v. Metalexportimport SA [2004] 1 Lloyd’s Rep 67.
99
Ibid.
100
Gavin Edmondson Solicitors Ltd. v. Haven Insurance Company Ltd. [2018] UKSC 21.

MEMORANDUM for RESPONDENT 19

72. If the parties have not agreed on it, issue estoppel does not apply in arbitration. It is only
applicable if the parties have agreed to it in their arbitration agreement.101 The notion of
issue estoppel is not a general norm in international law, therefore arbitration agreements
must incorporate it.102

73. In the current arbitration, BLT LLP requested consolidation 103 but Claimant refused,
indicating that the parties to both arbitrations will be different. The Claimant cannot allege
that the Respondent were a party to the previous arbitration because that would contradict
the entire basis for not consolidating. but the same was not consented to by Claimant.104

74. The parties have no documented estoppel agreement. Syndicate 41 has rejected Claimant's
request to use the arbitration verdict in the upcoming arbitration. The Claimant never
mentioned utilising the award as an issue estoppel even if the conclusion would determine
the other.

75. As a result, issue estoppel cannot be applied because Respondent were not a party to the
previous arbitration and no express agreement was reached between the parties.

b. RESPONDENT IS NOT BOUND BY THE AWARD

76. The term “privies” refers to individuals or organisations that have been described as having
a “legal or beneficial stake in the preceding litigation or its subject matter.”105 ‘Privies’
include not just successors in title, but also third parties who are sufficiently closely related
to a party to be bound by a decision binding the party.106

77. In Dallah Real Estate and Tourism Holding Co. v. Pakistan,107 the UK Supreme Court
ruled that a “third party beneficiary” of an arbitration agreement could be bound by an
award. It also acknowledged that privity was an important arbitration criterion but might
be transcended in certain circumstances.

101
Rixtel v. Baehler [2008] EWHC 123 (Ch).
102
W Ltd. v. M SDN BHD [2016] EWHC 422 (Comm).
103
Moot Proposition, Annexure 5.
104
Moot Proposition, Annexure 4, para 17.
105
Camille Jojo, ‘Res Judicata and Issue Estoppel in Arbitration: Procedural or Substantive Law?’ (Norton Rose
Fulbright, May 2016).
106
Gleeson v. Wippell [2020] EWCH 1486 (Ch).
107
Dallah Real Estate and Tourism Holding Co. v. Pakistan [2010] UKSC 46, [2011] 1 AC 763.

MEMORANDUM for RESPONDENT 20

78. As privity is a key principle in arbitration, a non-signatory to an arbitration agreement
cannot be bound by an award unless they expressly agreed to be bound or there was proof
of a “clear and unmistakable” desire to do so.108

79. In the present arbitration, the Respondent are not the “third party beneficiary”. For the
establishment of the same, the Respondent were sent a joint invoice by BLT LLP and
Respondent only paid for its own proportion of risks. 109

80. Claimant did not raise any claim for confidentiality110 when the Respondent attended that
Syndicate 41 and Adornia Ltd. arbitration. Therefore, the main contention that the
Respondent attending the arbitration does not amount to them being a party to the same.

81. There is no express agreement between the parties for being bound by the previous
decision. Therefore, the Respondent cannot be bound by issue estoppel as it is not bound
by privity to the previous arbitration.

(C): THAT THE LOSSES DO NOT FALL WITHIN THE INSURING CLAUSE

82. Business interruption insurance replaces the earnings lost during the time needed to return
the business to its pre-accident state. Hence, business interruption insurance covers
damages when a risk or peril covered under the commercial property insurance contract
causes property damage and economic losses, subject to the policy’s limitations and
exclusions111.

108
C v. D [2012] EWHC (Comm), p 45.
109
Moot Proposition, para 19.
110
Ibid.
111
David Goodwin and Greg Rubio, Covington & Burling LLP, ‘Business Interruption Insurance - What you need
to tell your clients’ (Lexis Nexis, 9 March 2020).

MEMORANDUM for RESPONDENT 21

 a. LANGUAGE OF THE INSURANCE POLICY

83. Based on the policy’s text and the surrounding circumstances, an insurance policy must be
read as a whole and in light of the risks covered to give effect to the parties’ reasonable
expectations.112

84. The business interruption clause must be understood in light of the policy’s precise terms
and conditions, not in isolation; it must be read as a whole, and the parties’ intent must be
determined by reviewing the policy language and the surrounding circumstances.113

85. The biggest risk in building Adornia Island was that any major disruption to one part or
component of the Island would likely affect all of it, since they were connected both
physically and infrastructurally. 114 This was identified by the Claimant and was the major
reason why they took an insurance policy for business interruption. 115

86. When the insurance policy is read in its entirety, it is evident that the Respondent’s aim
was merely to indemnify the Claimant for losses that might occur as a result of physical
damage to any section of the Island or Adornia Island itself. The Claimant had previously
made no mention of civil authority actions, merely of the potential infrastructure damage.116

87. For the reasons stated above, the Respondent entered into an insurance policy with such
high risks solely to cover physical and infrastructure damages at a high premium.117

88. As implied by the contract’s language, it is argued before the tribunal that the policy should
be read in its entirety and that the intent of both parties must be taken into account.

112
Bajaj Allianz General Insurance Co. Ltd. v. A.K. Infra Realty Projects Pvt. Ltd. (2016) 1 SCC 421.
113
Grasim Industries Ltd. v. United India Insurance Co. Ltd. (2012) 1 SCC 197.
114
Moot Proposition, para 4.
115
Ibid.
116
Ibid.
117
Moot Proposition, para 7.

MEMORANDUM for RESPONDENT 22

 b. CIVIL AUTHORITY ACTIONS ARE NOT A COVERED PERIL

89. The insurance contract covered coverage for loss of profits due to “accidental, physical loss
of or damage to the property insured”, but did not specifically mention civil authority
actions, according to the decision in National Insurance Company Ltd. v. M/S Indrani Cold
Storage Ltd.118

90. In Future Generali India Insurance Co. Ltd. v. Deepak Nitrite Ltd.,119 a government order
to close a manufacturing unit for environmental infractions disrupted the insured's business.
The insurance policy covered loss of earnings due to “interruption of or interference with
the business carried on by the Insured”, but not civil authority actions. The policy did not
cover civil authority losses.

91. Balakrishnan v. United India Insurance Co. Ltd.120 held that civil authority action must be
clearly listed in the insurance clause to be insured. Ashok Kumar v. Union of India121
concluded that “the government action was in the interest of public safety and that the
petitioner was not entitled to any compensation for the ensuing loss of business.”

92. Similarly, several judgments make it clear that there should be an express confirmation in
the business interruption cover and the insurance clause with respect to the civil authority
actions, so that they become insured.122

93. The arbitration agreement explicitly mentions “damage, destruction, and physical loss”123
but the business interruption cover does not include civil authority action and its
consequences. As it’s not mentioned, it’s not insured. The insurance policy cannot cover
the government’s entry restriction for public benefit.124

118
National Insurance Company Ltd. v. M/S Indrani Cold Storage Ltd. (2015) NCDRC 79.
119
Future Generali India Insurance Co. Ltd. v. Deepak Nitrite Ltd. (2019) SCC OnLine Bom 6601.
120
Balakrishnan v. United India Insurance Co. Ltd. (2007) INCDRC 3658.
121
Ashok Kumar v. Union of India (2006) 1 SCC 676.
122
Indian Metals and Ferro Alloys Ltd. v. State Bank of India (2016) 2 SCC 252; Oriental Insurance Co. Ltd. v.
L&T Chiyoda Ltd. (2018) 6 SCC 287.
123
Moot Proposition, Annexure 3.
124
Moot Proposition, para 13.

MEMORANDUM for RESPONDENT 23

94. It is submitted before the Tribunal that since the contract of insurance between the
Respondent and the Claimant125 did not include the express term of civil authority actions
and the actions of the government were only for the public good, the same is not an insured
peril and the does not in fact fall under the insuring clause.

125
Moot Proposition, Annexure 3.

MEMORANDUM for RESPONDENT 24

 PRAYER FOR RELIEF

In the light of the facts stated, issues raised, authorities cited and arguments advanced, the
Counsel, for the Respondent, respectfully requests the Hon’ble Arbitral Tribunal on the basis
of prior written submissions to find and declare that:

1. The Arbitral Tribunal should apply the Indian conflict of law rules to decide
whether the Exchequer Contract is void for want of capacity by reason of the
Speculative Contracts (Restrictions) Act, 2014.

2. The Exchequer Contract is not void for want of capacity by reason of The
Speculative Contracts (Restrictions) Act, 2014 by applying the Indian conflict of
law rules.

3. That if the contract is void, the Claimant does not have a claim to recover the
premium paid by way of restitution of unjust enrichment and the Respondent does
has the defence of change of position.

4. That if the contract is not void, the Claimant cannot refer to the contents of the
Syndicate 41 Award without the consent of the Syndicate 41 insurers under Rule
39.2(c) SIAC Rules; the Respondent is not bound by issue estoppel by the Syndicate
41 Tribunal’s findings and the losses for which the Claimant is seeking indemnity
do not fall within the insuring clause; If not, the losses in fact do not fall within the
insuring clause.
AND/OR

Pass any order or declaration that the Hon’ble Tribunal may deem fit in the light of justice,
equity and good conscience.

Dated: All of which is most humbly prayed

Sd/-

Place: COUNSEL FOR RESPONDENT

EXCHEQUER INSURANCE PVT. LTD.

MEMORANDUM for RESPONDENT 25