It is now about a year since the trial in the dispute between
BSkyB and EDS drew to a close. At the time, judgment was expected
within a couple of months.
The absence of a judgment becomes more conspicuous by the day.
We can surely expect a verdict this side of Christmas. Can't
we?
For those who cannot wait for what is expected to be the
most significant judgment ever given in an IT case, here are
some predictions about what might happen.
The first scenario is the one that will send shock waves through
the supplier community. For this is a case about deceit. BSkyB
claims that EDS was deceptive in overselling its
CRM system, by describing the system as "proven" when it was
not, by overstating its capabilities in relation to resources and
implementation methodologies and by understating the amount of time
and cost required to implement the system.
Crucially, if BSkyB is successful in its argument that
misrepresentations were made fraudulently rather than negligently,
then there will be no possibility of EDS's relying on the
contractual cap on liability. BSkyB's full damages claim of £700m
will then be in play. This outcome would mean all suppliers would
need to scrutinise their sales processes, and be very careful about
what is said and written in future bids.
The second scenario is that EDS successfully defends its sales
people and the fraud claim falls away. Some may claim that this
could give a wide licence to suppliers on what they say. EDS could
still find itself liable for substantial damages, but in this
scenario the damages award is likely to be capped at somewhere near
the contract value, reported to be about £50m. This outcome would
have the hallmarks of a pyrrhic victory, given that legal costs are
reported to be in excess of £70m already.
The third scenario is that this will be "a case decided on its
own unique facts". It took the court nearly a year to hear the
arguments and the evidence, and so there will be plenty of factual
detail upon which to base the judgment. There is a legal axiom that
hard cases make bad law. We should not be too surprised if the
judgment seeks to avoid setting any great precedent by emphasising
the particular facts to the case, and avoiding findings of legal
principle.
If the third scenario seems underwhelming to those holding their
breath, the fourth will be a distinct disappointment. BSkyB versus
EDS could yet be the most important judgment we never had. It is
quite common for settlement negotiations to carry on during and
after trial, and the case could be settled at any point until
judgment is delivered. So we may yet find that a deal is reached
and the eagerly awaited ruling remains under wraps forever.
If we do get a judgment, that is unlikely to mark the end of the
matter. Given the sums at stake, there is every chance of an appeal
to the Court of Appeal and, with over £70m of legal costs incurred,
arguments about who should bear those could also become quite
protracted.
Clive Seddon and David Barker are partners at international
law firmPinsent
Masonsspecialising in dispute resolution in the ICT
sector.
EDS/Sky
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Legal costs of dispute between BSkyB and EDS rise to £70m
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