(1) Interactive E-Solutions JLT v O3B Africa Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,Lord Justice Lewison,Lady Justice Asplin |
| Judgment Date | 30 January 2018 |
| Neutral Citation | [2018] EWCA Civ 62 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2017/2781 |
| Date | 30 January 2018 |
[2018] EWCA Civ 62
Lady Justice Arden
Lord Justice Lewison
Lady Justice Asplin
Case No: A3/2017/2781
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, COMMERCIAL COURT
Mr Richard Salter QC sitting as a Deputy High Court Judge
CL-2016-00456
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Nigel Jones QC & Mr Edward Rowntree (instructed by Child & Child) for the Appellant
Mr David Cavender QC & Mr Michael Clark (instructed by Milbank, Tweed, Hadley and McCloy LLP) for the Respondent
Hearing date: 23 rd January 2018
Judgment Approved
The issue on this appeal from Mr Richard Salter QC is whether Interactive E-Solutions JLT can establish an arguable cause of action which is not barred by an exclusion clause contained in a Master Services Agreement (the “MSA”) made between it and O3B Africa Ltd. The judge decided that it could not; and refused Interactive permission to re-re-re-amend its Defence and Counterclaim. At the end of the hearing we announced that the appeal would be dismissed, with reasons to be given later. These are my reasons for joining in that decision.
The MSA concerns the provision by O3B of global satellite services in Pakistan. Interactive provides satellite-based internet backbone infrastructure for fixed line and mobile telephone operators. The MSA operated as the governing framework agreement for specific orders of bandwidth from O3B's satellites, which were to be provided under specific Service Orders. The combination of the MSA and the Service Orders (of which there are three) required Interactive to pay monthly service fees. The obligation to pay was triggered by the service by O3B of a Service Commencement Notice specifying a Service Commencement Date. That is defined by Appendix B to the MSA as:
“… the date set forth in a notice from O3B to [Interactive] that the Satellite System has been successfully placed into commercial operation and is ready for Service to commence…”
It is Interactive's case that in order for the satellite system to be successfully placed into commercial operation it must comply with Pakistani regulatory requirements. These are twofold. First, the approval of the Pakistan Telecommunication Authority (the “PTA”) is required. This takes the form of a Telecommunications Infrastructure Licence. Second, there must be legal intercept compliance. This enables Pakistani law enforcement authorities to analyse and monitor communications.
O3B served a Service Commencement Notice on Interactive. Interactive has consistently maintained that that notice was defective because at the date that it was served the system could not have been successfully placed into commercial operation by reason of lack of regulatory approval. It has therefore refused to pay the Service Fees. In consequence of the non-payment O3B has purported to terminate the MSA.
Interactive pleads that the purported termination of the MSA was a repudiatory breach of contract, which it has not accepted. It claims specific performance of the MSA and, in the alternative, it counterclaims damages for breach of contract quantified at USD $55 million. The problem that the counterclaim faces is clause 10 (c) of the MSA. That provides:
“ Limitation of O3b's Liability. THE PARTIES AGREE THAT O3B'S SOLE OBLIGATION AND CUSTOMER'S EXCLUSIVE REMEDIES FOR ANY CAUSE WHATSOEVER (EXCLUDING FRAUD BUT INCLUDING LIABILITY ARISING FROM NEGLIGENCE), ARISING OUT OF OR RELATING TO THIS MSA, ANY SERVICE ORDER, OR ANY OTHER AGREEMENT BETWEEN CUSTOMER AND O3B ARISING OUT OF OR RELATED TO THIS MSA OR ANY SERVICE ORDER, UNDER ANY THEORY OF LAW OR EQUITY ARE LIMITED TO THOSE SET FORTH IN SECTION 6 AND SECTION 8 OF THIS MSA, AND ALL OTHER RIGHTS AND REMEDIES OF CUSTOMER OF ANY KIND ARE EXPRESSLY EXCLUDED AND WAIVED. Nothing in this MSA limits the liability of either Party arising from fraud. In no event shall O3b be liable for any indirect, incidental, consequential, punitive, special or other similar damages or loss of revenues, profits, business, savings or goodwill, whether foreseeable or not. Except as expressly provided in Section 6 and Section 8 of this MSA, in no event will O3b or any O3b Group member be liable to Customer or any End User for any loss, damages, liabilities, expenses or otherwise if occasioned by any defect in any of the Network Facilities, or the provision of Service to Customer, or any failure or delay in provision of Service to Customer, or any other cause. Without limiting the generality of the foregoing, Customer acknowledges and agrees that it shall have no right of recovery for the satisfaction of any cause whatsoever, arising out of or relating to this MSA or any Service Order, except against O3b for Confirmed Outages as provided in Section 6 of the MSA, against (i) O3b or any member of the O3b Group, (ii) any supplier of equipment or services to O3b in connection with (A) the launch, construction, operation, maintenance, tracking, telemetry and control of the Satellite System, (B) the Network Facilities, (C) Service, or (D) the provision of Service to Customer in any circumstances in which O3b would be obliged to indemnify such supplier, or (iii) any officer, director, employee, agent, partner or shareholder of any such supplier. The limitations of liability set forth in this Section 10 shall apply to the O3b Group.”
The essential question on the appeal is whether Interactive's counterclaim falls within the words “excluding fraud”. The mere fact that O3B repudiated the contract plainly does not. The nature of Interactive's case and its relationship to “fraud” is not entirely clear. I think that it is as follows (although I must make it clear that most if not all of the case is hotly disputed).
It was O3B's responsibility under the MSA to obtain all necessary regulatory approvals. O3B elected to provide the Services using a company whose name is abbreviated to TIS. On 15 February 2013 TIS applied to the PTA for a Telecommunications Infrastructure Licence, which was granted on 4 November 2013. On 31 March 2014, TIS applied for a commencement certificate pursuant to the terms of that licence. Following an inspection by the PTA, the PTA required certain matters to be addressed before granting the commencement certificate. In response to the requirements of the PTA Mr Naveed Malik, the Vice President (Finance) of TIS wrote to the PTA on 15 July 2014. His letter contained three untrue statements, which it is alleged that Mr Malik knew to be untrue. It is “likely” that the content of the letter was copied to or made known to O3B.
On 21 August 2014 the PTA provided a commencement certificate. Although it is not clear from the draft pleading whether this was the same thing as the Telecommunications Infrastructure Licence (neither of which is in the appeal bundle), it seems probable that it was not. Some of the terms of the Telecommunications Infrastructure Licence are pleaded. Clause 6.9 of the Licence is headed “Commencement Certificate”. It provides that a licensee must not provide infrastructure to a licensed telecom operator unless it has obtained from the PTA a commencement certificate evidencing that the PTA is satisfied that it has established its infrastructure; and in addition that the PTA is satisfied that the licensee is able to provide the services to the required quality.
The PTA provided the commencement certificate on 21 August 2014. However, despite the provision of that certificate, the PTA wrote to TIS on 16 October 2015, directing it to ensure legal intercept compliance. It also wrote to Interactive's sister company (Diallog Broadband) on 25 January 2016 to instruct it not to...
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