IT/eCommerce Update

1. eCommerce NEWS

1.1 Scope and Enforceability of ADR Clauses

IT contracts often contain an alternative dispute resolution (ADR) clause which requires the parties to attempt to resolve any disputes before resorting to Court proceedings. A recent decision by the UK High Court considered whether parties to a contract could ignore such clauses.

Cable & Wireless and IBM had entered into an agreement for the supply of information technology throughout the world. A dispute arose under the agreement. Cable and Wireless issued court proceedings. IBM successfully made an application to stay the court proceedings due to the failure by Cable and Wireless to first attempt to resolve the dispute using ADR.

The High Court found the ADR clause in question was enforceable as it clearly contained a mutual and unqualified obligation to use an identifiable ADR procedure. While the clause in the contract did not prevent the parties from initiating legal proceedings it did prevent the courts deciding the dispute before the parties had attempted to resolve the matter through ADR.

For business this decision reinforces two key points. Firstly, when entering into a contract ensure that if an ADR clause is included it creates a clear obligation to use ADR and sets out the procedure to be used. Check also to see it does not prevent the parties at least commencing legal proceedings. This allows the parties to seek interim relief from the court if necessary to protect their interests (eg an injunction) pending the results of ADR. Second, if a dispute arises check the obligations under the ADR clause to ensure it does not interfere with any court proceedings that may be planned.

Cable and Wireless plc v IBM United Kingdom Ltd - Please click through for a copy of the decision.

1.2 UK Communications Bill published

In November 2002 the UK government released the Communications Bill, which is to form the basis of a major overhaul of the regulation of media and communications in the UK. It has had to overcome a number of hurdles. An earlier draft of the Bill published in May 2002 was the subject of an extensive public consultation process. It also underwent pre-legislative scrutiny by a Parliamentary committee chaired by Lord Puttnam.

The key features of the current version of the Bill are:

The transfer of regulatory power to the Office of Communications (OFCOM). OFCOM is the new super regulator which will replace the existing five regulators (the Independent Television Commission, Radio Authority, Office of Telecommunications, Broadcasting Standards Commission and Radiocommunications Agency)

More freedom for public service broadcasters to regulate themselves

OFCOM will be given powers concurrent with the Office of Fair Trading to apply competition rules in the communications Sector

The establishment of a Content Board to advise OFCOM on the nature and quality of TV and radio programmes

The removal of the requirement for licensing of telecommunications systems and the introduction of a new regulatory regime for electronic communications networks, services and associated facilities in line with the recent EU Telecoms Directives

The provision for trading of radio spectrum

The reform the rules on media ownership

It is anticipated that the Bill will be passed by the House of Commons by early March 2003. It will then still need to be approved by the House of Lords before becoming law.

Please click through for a copy of the Bill.

1.3 New Sale and Supply of Goods to Consumers Regulations start March 31

The Sale and Supply of Goods to Consumers Regulations 2002 implement the EU Directive on the Sale of Consumer Goods and Associated Guarantees. The regulations come into force on 31...

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