Martins Building, Water Street, Liverpool, L2 3SX

  5 Feb 2009 14:00 - 17:00 (CPD Points 2½ hours SRA)

Please reserve me .... places for the above seminar at the rate of £28.75 per person. I enclose my cheque for £...............

Name .....................................................................

Firm/Company/Chambers/Other Organization .........................................................

Postal Address ..........................................................................................................

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Post Town .................................................. Postal Code ..............................

Telephone ...................................   Email ..................................................................

Name(s) of Accompanying Person(s)

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Signature ......................................... Date ............................. 

Please make out your cheque to NIPC Ltd and send it to NIPC Ltd., the Media Centre, 7 Northumberland Street, Huddersfield, HD1 1RL, Tel 0870 990 5081.

Computer Supply Contracts: All in the Specification

Nearly all the computer supply disputes that I have seen over the last 25 years have fallen into two categories:

• Disputes over what the supplier's salesmen and literature promised compared to what the contract provided; and
• Disputes as to whether the supplier has delivered what it has promised.

As often as not disputes of the first kind tend to turn on the validity of exceptions and limitation clauses. Judges and arbitrators tend not to be very sympathetic to suppliers in those cases.   Disputes of the second kind tend to turn on what the construction of the contract. Where there is a clear specification then all well and good. Where there is not, a lot of time and money is spent on trawling through emails and correspondence.

The key to avoiding both kinds of disputes is to get the specification right. The techies should work out exactly what they want from the system long before lawyers start drafting. They should also agree objective tests for determining whether the specification has been complied with. A good draftsman or woman will centre the contract around the specification. The contract should require the customer to accept the deliverables when, and only when, it is clear that the specification has been complied with. Acceptance will then trigger payment.

Disputes Between Parties in Different EC Member States   

When a German customer refuses to pay its British software house on the grounds that the software does not meet its requirements, does the British company have to instruct German lawyers to plead its case in German? If a Polish website offers infringing copies of  UK software to UK customers, can the English company sue in England or must it go to Warsaw or Krakow?

Questions of this kind are known as "conflicts of law". They were said to hamper the development of a single European market because each EC member state's conflict rules are different. To address that problem, the European Council and Parliament have adopted regulations that determine which law is to apply and which court is to resolve a dispute between parties in different member states.

Those regulations are known as Rome I and Rome II respectively:

• Rome I provides rules for determining the laws to be applied for determining contractual disputes and comes into force on 17 Dec 2009 in respect of contracts made after that date;
• Rome II provides rules for determining intellectual property infringement, passing off and other non-contractual disputes and came into force on 11 Jan 2009.

We shall no doubt revisit both regulations as and when they are considered by the courts.

Dispute Resolution Clauses  

There are three ways in which a dispute can be resolved:

• the parties can go to court;
• they can refer their dispute to arbitration; or
• they can use some alternative method of dispute resolution.

If the dispute is very simple such as the recovery of the price of goods sold and delivered then the courts provide the best solution. But suppose there is a genuine dispute as to whether the supplier has delivered what it has promised. A busy district judge can't decide that question. All he or she can do is give directions for trial before a judge who knows nothing about computers or perhaps transfer the case to the Technology and Construction Court where the judge may well know about computers but he or she also plenty of other cases.

In many instances, time and money can be saved either by referring technical disputes to arbitration or expert determination.   If you want to do that you will need a dispute resolution agreement, either at the time the dispute arises or when the contract is negotiated.   Below is an example of the sort of clause we recommend for parties who want to refer disputes to us for arbitration:

"(1)   Unless the context requires some other meaning:

"the Arbitration" means an arbitration pursuant to sub-clause (2);

"the Arbitrator" means an arbitrator appointed in accordance with these provisions;

"Claimant" means a party serving an Invitation;

"the Company" means NIPC Ltd. a private company incorporated with limited liability in England and Wales having its registered office at HWCA Ltd., Northern Assurance Buildings, 9-21 Princess Street, Manchester, M2 4DN;

"Invitation" means the notice to refer a dispute to arbitration pursuant to sub-clause (3).

"the Panel" means the panel maintained by the Company for the time being;

"the Respondent" means a party receiving the Invitation; and"the Rules" means the Company's Dispute Resolution  Rules.

(2) Any dispute or difference that may arise between the parties will be referred to arbitration before a single arbitrator.

(3) Arbitral proceedings will be commenced where one party serves notice upon another inviting it to refer the dispute to arbitration.

(4) The Invitation will nominate at least one member of the Panel as Arbitrator and will require the Respondent to accept such nomination in which case the nominee will be appointed..

(5) Should the parties be unable to agree the Arbitrator within [14] days, either party may ask the Company to appoint an Arbitrator.

(6) The Company will manage the Arbitration.

(7) The Rules will apply.

(8) The Arbitrator will apply the laws of England and Wales".

This can be combined with a mediation clause or a med-arb (mediation followed by arbitration) clause.