EDS v Sky: the most significant judgment in an IT case ever?

Out-Law Analysis | 14 Sep 2009 | 3:11 pm | 2 min. read

OPINION: 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 of Pinsent Masons, the law firm behind OUT-LAW.COM, specialising in dispute resolution in the ICT sector. This article first appeared on ComputerWeekly.com.