Dell Emerging Markets (Emea) Ltd v Systems Equipment
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Moulder |
| Judgment Date | 19 April 2018 |
| Neutral Citation | [2018] EWHC 702 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 19 April 2018 |
| Docket Number | Case No: CL-2018-000100 |
[2018] EWHC 702 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
The Rolls Building
7 Rolls Building
Fetter Lane
London, EC4A 1NL
Mrs Justice Moulder
Case No: CL-2018-000100
Ms Sara Masters QC and Mr Andrew Feld (instructed by Osborne Clarke LLP) for the Claimants
Mr Yash Kulkarni QC (instructed by DWF LLP) for the Defendant
Hearing dates: 23 March 2018
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is the reserved judgment on the claimants' application dated 6 March 2018 for an interim anti-suit injunction restraining the defendant (“SETS”) from continuing proceedings commenced against the claimants in Lebanon (the “Lebanese proceedings”). Although the application was made formally on a “without notice” basis, SETS was served with the application informally on 7 March 2018 and formal service was effected on 13 March 2018 and both parties were represented at the hearing on 23 March 2018 by leading counsel.
Following the hearing on 23 March 2018 an interim injunction was made restraining SETS from pursuing the Lebanese proceedings, and/or commencing any further proceedings in Lebanon against the claimants until this judgment is handed down.
In support of the application I have three witness statements from Mr Charles Wedin, a partner at Osborne Clarke LLP, solicitors acting for the claimants.
For the respondent I have a witness statement of Mr Anthony Woodhouse, a partner at DWF LLP, solicitors acting for the respondent. Mr Woodhouse's witness statement attaches an expert report from Mr Devot, a French lawyer, and an expert report from Professor Mallat, a lawyer qualified in Lebanese law.
Background
The 1991 IDA
In 1991 Dell Computer SA (“Dell France”) entered into an international distribution agreement with SETS (the “1991 IDA”). This appointed SETS to distribute products in the Lebanon. Clause 1 of Appendix A provided that:
“the designation of the Distributor as a “Dell-Approved International Distributor” is in no way exclusive.”
The 1991 IDA took effect for one year and was then renewed:
“tacitly every year unless one of the parties notifies the other of the decision not to renew the Agreement by sending prior written notification to this effect with 90 days notice.”
The 1991 IDA was governed by French law and the parties agreed to the “exclusive jurisdiction of the “Business Court of Versailles”.”
The 2004 IDA
In 2004 Dell Emerging Markets (EMEA) Ltd (at that time Dell Distribution (EMEA) Ltd) (“Dell UK”) entered into an international distributor agreement with SETS (the “2004 IDA”). It is the claimants' case that SETS was appointed as a non-exclusive distributor and that the 2004 IDA superseded the 1991 IDA.
In particular by letter of 23 March 2004, Mr Pim Dale, Managing Director of European Distribution Business, EMEA, wrote to SETS enclosing copies of the “updated Dell Distributor Agreement”.
The letter stated:
“it has been some time since this Agreement has been updated and I hope you will find that the enclosed Agreement reflects our continued working relationship.”
“Could you please sign and return both copies of this Agreement… This document supersedes any previous distribution Agreement which you have entered into with Dell…” [Emphasis added]
Under clause 2.1 of the 2004 IDA, Dell granted to SETS the “non-exclusive right to market and distribute”, on its own account goods and services supplied by Dell in Lebanon.
Pursuant to clause 2.4 of the 2004 IDA, SETS was not entitled to any priority of supply over Dell's other customers (including other distributors).
Clause 14 of the 2004 IDA sets out the rights of termination including at 14.2 (a):
“if the other party commit any material or persistent breach of any term of this Agreement… and (in the case of breach capable of being remedied) shall have failed, within 30 days after the receipt of a request in writing from the other party so to do, to remedy the breach….”
Clause 14.3 provided that the distributor was not entitled to any compensation as a result of the termination of the 2004 IDA.
Clause 27 stated:
“this Agreement shall be governed by and construed in accordance with the laws of England and shall be subject to the exclusive jurisdiction of the High Court of England.”
Termination of the 2004 IDA
It is SETS' case that it was an exclusive distributor of Dell's products and services in Lebanon and it registered itself as such with the Lebanese Commercial Registry and Ministry of Trade and Economy. SETS also brought proceedings against another distributor, Ingram Micro Levant SAL (“IM”) in Lebanon which SETS said had been supplied with goods falling under the distribution agreement in breach of the distribution agreement. Dell's lawyers sent a letter on 29 September 2017 setting out the alleged breaches of the 2004 IDA and requiring SETS to withdraw the Lebanese proceedings against IM and to deregister its exclusivity. By letter of 7 November 2017 Dell UK lawyers wrote to SETS, stating that the 2004 IDA was terminated with effect from the date of that letter and subsequently sought damages.
The Lebanese Proceedings
SETS rejected the validity of Dell's termination and on 5 December 2017 commenced proceedings in the Lebanon against the claimants based on Decree 34/67. Proceedings were brought against Dell Technologies (“Dell US”), Dell France, Dell Computer FZ – LCC (“Dell Dubai”) and Dell UK.
The case against the claimants records the facts as asserted by SETS. The claim in the Lebanese Proceedings states that in 1991 SETS obtained an “exclusive agency” to market and sell Dell products in the Lebanon and refers to certain documents in support of that assertion. It further states that in 2004 SETS was asked to sign a contract reflecting the growth and expansion of Dell on the basis that the nature of the relationship continued on the basis of exclusivity. SETS referred to the letter from Mr Dale in this regard. At paragraph 12 SETS stated:
“the exclusive relationship between the plaintiff and the defendant remained in a good state until the end of the year 2016, when the defendant,… started a plan of clear bad will in order to exercise pressure on the defendant to abandon its exclusive agency and cede its contractual and legal rights without anything in return… This plan was exposed when the defendant unilaterally ended the exclusive commercial representation relation with the plaintiff on November 07 2017 in an arbitrary way and without any proven legitimate fault committed by the plaintiff…”
Dell US is included in the claim as the first defendant on the basis that it is the “mother company” and the other defendants are “branches and representation offices for the first defendant”. As a result SETS asserts that (paragraph 25 of the claim):
“ any contract signed by any of these branches or representation offices, or even affiliated companies created by the mother company is considered as a contract with the latter.”
“ All this makes the defendant, with all its members, and all contracts, documents and appendices signed by all its mentioned members a single commercial relationship and a single contractual mass that complete each other, and this also makes them responsible jointly and severally among all member and without and division for the arbitrary termination of the exclusive agency of the plaintiff” [emphasis added]
In its claim SETS agrees that some clauses in the agreement do not conform with exclusive representation but refers to proving the contrary with written evidence or similar. SETS refers to the relationship between the two parties extending for 22 years during which time it had not competed with another agent in its work in Lebanon.
Further, SETS asserts that the jurisdiction clauses in the 1991 IDA and in the 2004 IDA are void so far as they exclude the Lebanese courts from considering the issue of the commercial representation.
SETS (page 27 of the claim) asks the court:
“to decide on the responsibility of the defendant jointly and severally among its members, for the termination of the commercial representation relationship and the exclusive agency…”
and seeks compensation for damages and lost profits.
In seeking that relief, SETS relies on it being proven (page 24 of the claim) that it was the “commercial representative and the exclusive agent” in Lebanon of Dell products from 1991 and that the defendant:
“unilaterally terminated the commercial representation relationship and the exclusive agency with the plaintiff, without any faults committed by the latter”
Further SETS asserts that the reasons mentioned in the termination letter dated 7 November 2017 for the justification of the “arbitrary termination” are
“illegitimate and illegal, and do not prove that the plaintiff committed any fault that justifies the termination…”
SETS then seeks (page 27) compensation pursuant to article 4 of the Decree 34/67 “resulting from the termination of the relationship in bad faith by the defendant” noting that (page 31) article 4 states that the termination of the commercial representation contract “without fault by the representative agent or without a legitimate reason” allows the agent to claim compensation equal to the incurred damage and the lost profit.
No hearing date has yet been listed for the first hearing of the claim in the Lebanese proceedings....
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