HP reaches good settlement over BSkyB v EDS case

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BSkyB and HP-owned EDS have settled the litigation between them which has lasted for much of the past decade.

HP, on behalf of EDS, has agreed to pay Sky a total - including legal fees - of £318m, which is only about £50m more than the interim payments awarded by the High Court earlier this year.

Sky had originally claimed £700m from EDS and HP after a CRM system that Sky ordered from EDS in 2000 failed to meet expectations.

The High Court found that EDS had misrepresented its abilities and the time it would take to complete the CRM installation. 

Since the verdict, the two companies have been negotiating a final agreement. For HP the settlement is a good one because, on top of the interim damages of £270m, it could have faced paying Sky hundreds of millions pounds more had the judge ruled that Sky's claim of £700m was reasonable in the circumstances.

As it is, HP and BSKyB have settled for the interim sum HP has already paid of £270m plus only about £5m more than Sky's legal costs of about £45m.
It's a good deal for BSkyB too. Had the case gone to appeal,  HP is likely to have argued that it should not have lost such a large and complex case on the basis of misrepresentations by  one employee only, Joe Galloway.

HP has made the point that the UK court had already dismissed the majority of BSkyB's claims against EDS but found the company liable in certain areas.

BSkyB says it has "finally and fully" settled a suit it brought against EDS six years ago.

In 2000, BSkyB hired EDS in a £48 million contract to provide A CRM system for its help centres but it ended the contract two years later and completed the job using in-house staff.

BSkyB later issued a writ against EDS for misrepresenting its capabilities in the bidding process. Though the initial contract included a liability clause that capped damages at £30 million, the clause was rendered invalid in cases of deceit.

"This matter is now closed, having been settled fully and finally on mutually agreed terms," a spokesman for Hewlett-Packard said.

Links:

Seminar on BSkyB judgment - IT Projects Blog

BSkyB v EDS judgment not as significant as first thought? - IT Projects Blog

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