Key personnel?

For some reason that has never been explained to us simple commercial lawyers, commercial law is rarely recognised as one area of law.  This means that cases in one field of contractual law can easily be missed by another.  For example,  take a recent judgement of the Technology and Construction Court (TCC): Fitzroy Robinson Ltd -v- Mentmore Towers Ltd.

The case involved the appointment of architects.  It has been widely reported in construction law updates but we have not seen any reference to it,  for example, in IT law updates.  This is a mistake, as the case has much more universal application.

In essence, the leader of the architects’ team, who had been named as project leader on the bid documents to the client and had been involved in all the pre-contract meetings, resigned from the architects just before the appointment agreements were signed.  However, his notice period was long (one year), so he did start working on the relevant projects.  At a critical later point in the project, the client was informed that the project leader had given his notice.  Naturally, the client became upset that the project was losing a key person.  At the TCC, the failure by the architects to tell the client that the key person had resigned was held to be fraudulent misrepresentation.

So what are the lessons?

• Firstly, all professional consultants and service providers should inform their clients or customers of changes in key personnel. 
• Secondly, particularly from clients’  point of view, if there are key personnnel,  then appropriate provisions must be included in the relevant consultancy or services agreement.  A finding of fraudulent misrepresentation alone may not be entirely helpful, given that a claimant must demonstrate that it suffered loss as a result of the misrepresentation.  The TCC suggested on the facts of Fitzroy Robinson that this would be limited to the cost of any disruption and duplication of work arising out of the key person’s resignation.

Will European MSS get off the ground?

In our blog European Space War? we noted that the European Commission and the ITU may have a difference of opinion about the EU’s allocation of spectrum to 2 mobile satellite services’ (MSS) operators.  Inmarsat and Solaris Mobile were announced as the the lucky winners in the Official Journal on 12 June 2009.

Our earlier blog was really concerned about the issue of setting national spectrum licence fees for these MSS operators.  Set too low and the terrestrial mobile operators could easily get upset at being put to a significant disadvantage.  Too high and the whole project gets killed off or delayed, as happened to 3G.

So has Ofcom got the level right?  In their statement on licensing the complementary ground components, they have set the licence fee at £554,000 per 2 x 1 MHz nationwide, being the Administered Incentive Pricing of the GSM mobile operators’ spectrum first described in their January 2008 consultation paper (which has a very straight forward explanation of the 2GHz mobile satellite system, including the use at this spectum by complementary ground components).

Our gut instinct is that this is too high, given the overall costs of the infrastructure of mobile satellite systems complementary ground components AND the manufacture, launch and operation of the satellites themselves, particularly if this level of licence fees are set in all other member states.   Maybe that’s why we’re lawyers, and not regulatory economists?

We only met the once

We have been reminded by a judgement of the European Court of Justice concerning the meaning of “concerted practice” in Article 81(1) EC that a single meeting is sufficient to establish that there is a concerted practice.

The case arose because the national competition authority in the Netherlands had fined the country’s mobile phone operators in connection with an alleged concerted practice in breach of national competition law (Article 6(1)). “Concerted practice” in the Netherlands competition law is expressly defined as meaning any concerted practice with the meaning of Article 81(1) EC, so the case was referred by the Administrative Court for Trade and Industry to the ECJ for it to give a preliminary ruling on what was meant under Article 81(1) by a concerted practice.

In the UK the Chapter I prohibition on anti-competitive agreements etc. in the Competition Act 1998  includes the phrase “concerted practices” (section 2(1)), which would be interpreted by any UK court in line with this ECJ judgement.

To fine, or not to fine: that is the question

Compare and contrast the following recent data protection cases:

1.  HSBC: fined, after discount, over £3m by the FSA.

2.  Ian Kerr: prosecuted and fined £5,000.

3. Highland Council: asked to give undertaking to get its laptops encrypted.

The HSBC case highlights yet again the lack of enforcement powers given to the Information Commissioner under the Data Protection Act 1998.  It also highlights the lack of regulatory powers the ICO has to set data protection rules.  After all, HSBC was fined by the FSA for breach of FSA rules, not for breach of any legislation.

This is demonstrated in the Ian Kerr case.  Although this involved systematic and blatant breaches of the data protection principles, including in respect of the processing of sensitive personal data (trade union membership), the prosecution was for the offence of not being notified to the Information Commissioner.  However, a fine at the top of the scale was imposed by the court.

When no statutory offences have been committed, the Information Commissioner must fall back on the enforcement notice powers and the more recent innovation of getting data controllers to volunteer undertakings rather than be made the subject of an enforcement notice, as shown by Highland Council. 

The Highland Council case on the face of its facts may be argued to be a little harsh.  It concerned the theft of 2 password-protected laptops from a locked office.  The laptops had personal data for over 1,400 individuals, including sensitive personal data (medical information).  The key point, however, is that the laptops were unencrypted.  This is yet another reminder that no-one using unencrypted laptops for personal data should expect any leniency from the Information Commissioner if they go missing.

Defence of Net Neutrality

At CRITique we are big fans of OUT-LAW, but we have to question their finding that neither regulators nor the law protect net neutrality in Britain.  We think there may be tools available to defend net neutrality.

Exhibit 1 for the defence is the Regulation of Investigatory Powers Act 2000. This makes interception of communications in a public telecommunications system, which would include the internet (to the extent that internet traffic is carried by UK ISPs), unlawful except for certain defined lawful circumstances. We would argue that throttling or blocking any particular internet traffic, such as BBC iPlayer or Google YouTube traffic, necessarily involves unlawful interception.

Exhibit 2 is made up of the relevant conditions in the Special Conditions addressed to the UK dominant wholesale local access providers, BT and Kingston. In particular, it is arguable that a case could be made that any interference with some content providers’ internet traffic would amount to a breach of (in the case of BT):

Condition FA2 – Requirement not to unduly discriminate
FA2.1 The Dominant Provider shall not unduly discriminate against particular persons or against a particular description of persons, in relation to matters connected with Network Access.

Exhibit 3 may be the Unfair Terms in Consumer Contracts Regulations, as mentioned in OUT-LAW.  To what extent would it be fair to include a term in an ISP’s service agreement to exclude access to content providers, at the ISP’s discretion?

Exhibit 4 may be the Consumer Protection from Unfair Trading Regulations.  There is already an argument that the practice of advertising internet services as being “up to x Mb”  may not be properly understood by the “average consumer” (as defined in the Regulations), let alone the question of contention ratios, so that there is unfair trading in the ISP market.  How will restricted access to popular content providers’ websites be dealt with in ISP marketing?

We may work up these ideas to see if they are sound, in which case we’ll go for a published article on the subject. Watch this space.