Mini Roundtable: Resolving Technology Disputes

IT Group experts, Tony Sykes and Chris Raske, took part in a roundtable feature for Corporate Disputes magazine entitled ‘Resolving Technology Disputes’.

Alongside David McIlwaine of Pinsent Masons,  they discuss the major trends and developments defining the technology disputes landscape and how they envisage the space to evolve over the next 12 months.

Q: In your opinion, what are the major trends and developments defining technology disputes over the past 12 months? What types of dispute are particularly common?

McIlwaine: We have noted a slight decrease in major IT project disputes in the last year. There may be a number of reasons for this. First, there are fewer major UK government IT contracts – which are often the subject of dispute, as a result of the government’s approach to smaller, more agile contracts.

Secondly, parties may be more ready to renegotiate in order to salvage projects, rather than become embroiled in litigation. Thirdly, suppliers are establishing good contract and commercial management processes, meaning issues are managed in a proactive way. However, we are also seeing an increase in other areas. These include IT outsourcing disputes, with claims relating to KPI failures and service credits. There is a rise in licensing disputes, with suppliers removing restrictions on end-users’ ability to create licences, and then relying on audit rights to ensure the correct licence fees are paid. Contentious data protection matters, where parties avoid the complications of the Defamation Act by framing the action as a breach of the DPA, are also increasing. And, of course, we are seeing a rise in cyber security related disputes.

Sykes: One noticeable trend that we have seen is the blurring of the edges that have traditionally separated construction project disputes and TMT disputes. More and more there is a significant element of TMT in what was traditionally a construction dispute requiring QS and Delay analysis. Today we find ourselves increasingly involved in major construction projects and the myriad embedded technology disputes that these tend to generate. While we are not and do not profess to be quantity surveyors or civil engineers, disputes are developing as a result of technology being deployed in areas where previously only heavy engineering existed. As large corporates continue to invest in outworking and mobility of staff, issues are increasingly to be found relating to asset management or more particularly for the lack of proper due diligence in this area leading to disputes over licensing, ownership and data security.

Raske: We have probably seen an increase across the board, but in particular there has been a rise in matters relating to data protection and trade secrets. Specifically, employees seem to have become much bolder in terms of taking company data, such as source code and database information, and using it for self-profit. The first reason for this is that the global economy has started to pick up again in the last few years. This prompts businesses to hire – or poach – new employees and individuals to fund start-ups, and for a percentage of those people the springboard effect given by using data from their previous work is worth the corresponding risk of getting caught. The second key reason is simply that everyday individuals are becoming more tech-savvy as a result of modern society, which not only enhances their ability to carry out these actions, but also gives them the confidence that they can get away with it.

Q: Have any recent technology disputes grabbed your attention? What lessons, if any, can be learned from the outcome of these disputes?

McIlwaine: The eBorders dispute – Home Department vs. Raytheon Systems – which concluded last year was a very major dispute that has commanded considerable attention; I acted for the Claimant. The dispute related to the Home Office’s eBorders system, which was designed to check people crossing the UK border against a list of known persons of interest to the UK government. The project suffered problems and the Home Office terminated Raytheon’s supply and services contract which led to an international arbitration. The outcome of that was an award in favour of Raytheon which the Home Office then challenged on grounds of serious procedural irregularity on the part of the three member tribunal. The challenge was successful with the result that the award was set aside in whole. The case highlights the importance in any international arbitration of the appointment of the arbitrator, or arbitrators, and that perhaps there is need for more international arbitrators with technology industry expertise.