Gross Negligence Interpreted And Applied

In a decision helpful to both special purpose vehicles (SPVs) and service providers utilising SPVs, the Irish Supreme Court has given effect to a gross negligence carve-out to a general (and standard-form) limitation of liability clause (Clause) in an Irish-law commercial licence. The case also highlights the dangers of taking for granted the protections such clauses purport to provide, in particular where key terms such as gross negligence and wilful default are not defined.

Findings

In GCC Foundation FI-LLC v European Computer Driving Licence Foundation Ltd [2012] IESC 55, a licensor sought to rely on the Clause to cap its liability in respect of a lower court finding that it had breached the licence. The Clause did not apply where there was gross negligence, but the term 'gross negligence' was not defined in the licence. The Court had no difficulty giving effect to the Clause, but on the facts found that the licensor's behaviour leading to the breach constituted gross negligence. Accordingly, the carve-out applied, and the...