Ex-Dell distributor in Lebanon ignored ban on suing US tech giant. Now four directors have been sentenced to prison in the UK A group of Lebanese IT distributors have been handed prison sentences for contempt of court after running afoul of Dell and breaching an anti-lawsuit order. An anti-suit injunction stops someone from instituting foreign court proceedings in breach of an arbitration agreement. The US megacorp secured a judgment from the UK's …
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How dare you inject facts into an internet forum!! And asking people to actually read the agreement they are discussing is simply intolerable. Next you will be telling us that we should consider both sides in an argument. Pure nonsense!
Now I need to take a lay down. What is the world coming to! This 5G isn't just causing viruses in Corona - it's addling people's brains.
This is true, but since the defendants and their sales operation are physically in Lebanon, their primary concern would be with abiding by Lebanese law.
This court decision could have the unintended consequence of Dell entirely losing access to the Lebanese market, if its government is sufficiently affronted by an attempt to pre-empt the ability of its courts to decide whether terms in contracts governing businesses in its country are valid or not.
John Savard,
No. This is perfectly normal. International contracts always specify the jurisdiction and legal system that applies. A poster above says this one was from a Dell subsidiary here anyway.
Actually it’s a large, and growing, market for UK international legal services as well. Our courts are I’m sure as bad as many other nations, but don’t have the reputation for unfairly ruling against foreign litigants. So many companies choose our system to use. Plus the City has many lawyers experienced in complex contracts (and eating big dinners) - and we have a large arbitration industry as well. Lots of Russian companies do their legal business in London for example, as Russia’s courts are likely to side with whoever Putin wants to win.
You can’t enforce unreasonable terms on consumers, who don’t have the legal resources to deal with complex contracts. UK consumer law is now excellent, and I’ve so far saved 2 friends a total of £9,000 by reading the legislation more thoroughly than the scumbag companies who they’d contracted with did. Didn't even lawyer up, or have to go to court, just wrote the right threatening letter quoting the right passages.
But this is a cross border business contract. There are no stabilisers. You’re assumed to be competent, and able to employ lawyers. By definition the contract has to be under a specific legal system. It can’t be both. If you don’t like it, don’t sign it. You can get unreasonable clauses struck down in court, but picking a jurisdiction is unlikely to be one of them. It’s probably the first line of the contract, so you’ve no excuse for missing it!
Working for a UK exporter, manufacturing in England, selling to USSR (Russia) often contracts set Swedish Law and Swedish courts as forum. Likewise English manufacture selling to P/R. China we set law of Singapore and only courts of Singapore as the law forum. This Choice of Law and Forum) is very normal in many international contracts. Likewise English company selling to Scotland made English Law and English courts as sole remedy (mercantile law in Scotland can be much more severe, as law basis is very different).
Yup - much the same for us.
We work on sites throughout Europe. If we can't get the client to accept jurisdiction of the English courts, we tend to go with Netherlands. One system of law, one language regardless of which of 8+ countries the project is in, and quite accessible from the UK. We know what our liabilities are (well, our legal bods do), so understand the commercial risks involved.
Brexit has meant that we had to set up a Dutch company and move part of the operations there. They're quite flexible. You can even opt for a Ltd. instead of a BV (the Dutch equivalent) and have your articles of association etc. all in English. It's still under Dutch law but all texts, contracts etc. are in English.
Last year they even set up the Netherlands Commercial Court (NCC). It can be chosen by parties in a contract as the jurisdiction for commercial disputes. It's all based on Dutch law but, again, with all texts in English and this time without a requirement to translate any documents to Dutch, as had hitherto been the case.
They could, perhaps, if they bribed the judge enough. But it would be hard to enforce outside Lebanon. Whereas that English judgement is more likely to be internationally enforceable because it complies with the contract as agreed and signed. Unless there’s a reason to invalidate the contract, which isn’t what they appear to have argued in our courts.
If they couldn’t live with English law and compulsory arbitration, they shouldn’t have signed.
They aren’t children. They agreed the contract. If they didn’t like it, they shouldn’t have signed it. The contract gives them recourse to English law, which has a decent enough reputation.
Obviously I don’t know if they’ve been screwed over, but if you piss off judges, they can lock you up. They know the risk of what they’re doing.
To me the bigger question is, how can a contractural term take away a right to legal redress? There is no way in a civilised system that this should be allowed. The court deserved to be treated with contempt. (even if their legal basis was sound, the system is clearly corrupt in allowing it)
There apparently WAS right to legal redress, in that the article refers to an arbitration agreement.
Not having seen the contract, I can only speculate, but it may have stated that if both sides agreed to go into arbitration, the results would be binding. If one or both parties don't wish to accept this, then they don't go to arbitration, but go to the Courts.
And it seems to me to be far from corrupt - it means that if you are in the right you can (potentially) get some certainty of a resolution without incurring very high legal costs. It reduces the ability of the person you are in dispute with from playing the legal system in an attempt to make it so expensive for you that you have to unjustly conceded, or, if you keep going and win, finding that your opponent has now declared bankruptcy, and you've won nothing but a big legal bill.
They've had their redress.
By agreeing to enter binding arbitration they agreed to be bound by the findings. Arbitration is really just like going through the courts but a hell of a lot cheaper. You both present your cases and the arbitrator makes a ruling.
I've seen cases in non-binding arbitration where one party has decided they didn't like the ruling, forcing a court case. This ultimately costs more (because you've paid out for the arbitration) and wastes everybody's time. It's an arsehole move. If you're not sincere about entering arbitration, then don't. Have your day in court and get it done with.
It is an entirely reasonable response to seek a no-suit ruling to prevent vexatious lawsuits if one party is going to play silly buggers after arbitration.
Consider this. If SETS had gone to court, they'd have been told the same thing, and if they'd then tried to bypass or reject that ruling they would have ended up in contempt. This is just the court enforcing the terms of the contract that they willingly signed. Same outcome, just via a slightly different route.
If arbitration is rigged, and you can show it, you can go to court and overturn it. Again you should have got legal advice on the contract when you signed it. But binding arbitration means no appeal if you don’t like the result.
Decent commercial contracts mean that there are processes where you can either pick or veto the arbitrators that are appointed. It’s not as one-sided a relationship as when companies try to force consumers into their own process that they call arbitration. Though obviously I’ve not seen this contract.
It's worth noting that this article and it's legal reference only pick up the story at point that SETS has burned their bridges and gone for broke. Their is no background information describing hows SETS came to that decision. It's possible to dream up scenarios ranging from "sticking up for principles" to "incompetent arrogance and/or corruption", but there is no way to know the actual scenario. The article just provides a case study of how British Law follows the letter of the law in this kind of contract, and will not hesitate to sentence some foreign corporate executives to jail.
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