BSkyB win case against EDS
29 January 2010
One of the longest-running and most complicated disputes in the technology sector has finally come to an end, with the Technology and Construction Court finding EDS guilty of fraudulent misrepresentation.
BSkyB expects that EDS will be ordered to pay them damages, of around £200 million. The precise figure will not be known until after various issues on quantum have been determined, and legal costs running into the millions of pounds will need to be dealt with too.
The dispute arose out of a contract agreed in 2000 under which Electronic Data Systems (EDS), now owned by HP, were appointed to build a new Customer Relationship Management system. The deal was worth approximately £48 million. However, as the judge said "The relationship was not a success". Delays and cost overruns plagued the project which was finally completed in March 2006, rather than the intended date of March 2002 at, BSkyB contended, a cost of around £265 million. Unsurprisingly, BSkyB blamed EDS and issued proceedings against them.
BSkyB claimed that EDS had made a number of misrepresentations, they had misdescribed the CRM system as "proven leading-edge technology", overstated their capabilities in terms of resources and implementation methodologies, and understated the cost and time required to implement the system. The case lasted for 109 days over a ten month period and involved thousands of documents, many witnesses and expert evidence.
Legal argument covered the alleged misrepresentations, construction of the entire agreement and exclusion clauses, causation, mitigation and damages. On any analysis, this was a complex case. Overall, it can best be described as a mixed result in that Mr Justice Ramsay did find that EDS had made certain fraudulent misrepresentations and one negligent misrepresentation but did not find that they were liable to BSkyB for any of the other representations.
A spokesperson for HP has said that HP will be seeking permission to appeal. In the meantime it will be interesting to see if sales people pitching for business are more careful about what they say and how they represent their company and its products.