Fujitsu Services Ltd v IBM United Kingdom Ltd
2014
TECHNOLOGY AND CONSTRUCTION COURT
UK
CORAM
- THE HON MRS JUSTICE CARR DBE
Areas of Law
- Contract Law
2014
TECHNOLOGY AND CONSTRUCTION COURT
UK
CORAM
AI Generated Summary
Fujitsu Services Limited filed a claim against IBM, alleging IBM's breach of sub-contract and fiduciary duties in failing to allocate work, leading to substantial revenue loss. The court ruled that IBM's liability for damages is excluded by clause 20.7 of the Sub-Contract but not for account claims. IBM's liability is limited by clauses 20.4(c) and (d), including damages and account claims. IBM was found not to owe FSL fiduciary duties or a duty of good faith, emphasizing that contractual terms stand paramount in defining party obligations.
Judgment
Mrs Justice Carr :
Introduction
This is a trial of preliminary issues arising out of a claim brought by Fujitsu Services Limited (“FSL”) against IBM United Kingdom Limited (“IBM”). The dispute between the parties relates to the provision of information technology (“IT”) services to the Driver and Vehicle Licensing Agency (“the DVLA”). IBM provides IT and business process change services to the DVLA under a main contract (“the PACT Agreement”). FSL provides aspects of those services under a sub-contract with IBM (“the Sub-Contract”). Both contracts were entered into on 12 th September 2002 for a period of ten years. Pursuant to extensions, they remain ongoing contracts, now due to expire on 12 th September 2015.
The Sub-Contract has been the subject of material amendment since 2002. References below to “the Original Sub-Contract” are references to the Sub-Contract as entered into in 2002 and references to “the Amended Sub-Contract” are references to the Sub-Contract as amended on 26 th June 2008. Where is it not necessary to distinguish between the two, I refer simply to “the Sub-Contract”.
Under the PACT Agreement the DVLA can request various IT and business process change services from IBM. In broad terms IBM sub-contracted the day-to-day management, support and maintenance of IT infrastructure to FSL, whilst itself retaining responsibility for IT transformation and strategy.
Under provisions the precise scope and effect of which are in dispute, IBM agreed to sub-contract to FSL specified shares of certain types of those services. FSL contends that it has no direct means by which to ascertain what services are being requested or provided under the PACT Agreement and is thus reliant on IBM to obtain work under the PACT Agreement, to notify it of such work and to sub-contract to FSL the share of work to which FSL is entitled. It contends that IBM owes FSL a duty to act in good faith and fiduciary duties.
FSL alleges that in breach of contract IBM has failed extensively to sub-contract to FSL services in accordance with the Sub-Contract, and in breach of contract has failed to implement the change of control procedures in the Sub-Contract requiring IBM to notify and seek FSL’s consent to material changes in the PACT Agreement. FSL contends that these alleged breaches also amount to breaches of alleged fiduciary duty. Additional breaches of contract or alleged fiduciary duties are said to have arisen upon an alleged breach of duty on the part