The IT court case of the year

By Emily Lew, April 22, 2010

Earlier this year, a long-awaited judgment was handed down on a technology "supercase" – BSkyB v EDS. Seventy witnesses took the stand and the documents filled 400 bundles. The result? A significant victory for BSkyB, with EDS being ordered to pay £270 million in interim payments pending determination of the final sum due. The remaining issues in relation to quantifying the damages payable will be decided at a further hearing later this month.

In addition to the sums at stake, the case is remarkable due to its implications for the technology industry and the pitching process. The basic facts involve the decision by BSkyB in 2000 to build a state-of-the-art customer relationship management system for their call centres, which would hugely benefit their business. Several firms pitched for the contract, the winner being EDS. But the project was beset by delays and problems, and in 2002 BSkyB terminated its relationship with EDS and took over the work itself, completing it in 2006.

The court found that during the pitching process, EDS had fraudulently misrepresented the time it would take to complete the project.

The contract signed by the parties capped liability at £30 million. But such caps can be overridden in cases involving deceit, and if the claimant can meet the high legal standard required to prove the defendant was fraudulent.

The case is being hailed as the most important in the IT arena for many years. It is likely that as a result, IT suppliers will take a more cautious approach to the statements they make during the pitching process, and insurers will take a closer interest in sales processes and the terms of contracts.

Given the sums involved, it is unsurprising that EDS, which is owned by Hewlett Packard, has sought leave to appeal the decision.

Emily Lew is a litigation associate at Herbert Smith LLP

Last updated: 11:29am, April 22 2010