Microsoft Ireland Operations Ltd v Arabic Computer Systems

• Jurisdiction: Ireland
• Judge: Mr. Justice David Barniville
• Judgment Date: 30 October 2020
• Neutral Citation: [2020] IEHC 549
• Docket Number: [2018 No. 1057 S.]
• Court: High Court
• Date: 30 October 2020

BETWEEN

MICROSOFT IRELAND OPERATIONS LIMITED

PLAINTIFF

AND

ARABIC COMPUTER SYSTEMS AND NATIONAL TECHNOLOGY GROUP

DEFENDANTS

[2020] IEHC 549

David Barniville

[2018 No. 1057 S.]

THE HIGH COURT

COMMERCIAL

Summary judgment – Contracts – Service of proceedings – Defendants seeking orders setting aside service of the proceedings on them in Saudi Arabia – Whether the case was a proper one for service out of the jurisdiction

Facts: The plaintiff, Microsoft Ireland Operations Ltd (Microsoft Ireland), sought summary judgment against the first defendant, Arabic Computer Systems (ACS), in the sum of US$31,539,677.95 (or the euro equivalent of that sum) on foot of two written contracts which it claimed were entered into between Microsoft Ireland and ACS on 1st September, 2014 and on 1st September, 2016. Microsoft Ireland sought summary judgment against the second defendant, National Technology Group (NTG), on foot of a guarantee in writing dated 19th December, 2011, under which it was alleged that NTG agreed to guarantee certain debts allegedly due by ACS to Microsoft Ireland. The defendants applied to the High Court for orders under O. 12, r. 26 of the Rules of the Superior Courts (RSC) setting aside service of the proceedings on the defendants in the Kingdom of Saudi Arabia or, alternatively, discharging the order of the High Court (McDonald J) of 21st August, 2018, permitting service of the proceedings on them. The defendants contended that the persons who signed the contracts between Microsoft Ireland and ACS on behalf of ACS were not authorised to do so and that, as a consequence, those contracts were null and void. They further contended that ACS did not contract with Microsoft Ireland but maintain rather that its contractual arrangements were with Microsoft Arabia, a Microsoft subsidiary registered under the laws of Saudi Arabia. The defendants relied on the law of Saudi Arabia in support of their principal contention that the persons who signed the contracts on behalf of ACS were not actually authorised to do so and also that they did not have implied, apparent or ostensible authority to sign the contracts. They contended that as the contracts between Microsoft Ireland and ACS relied upon by Microsoft Ireland in the proceedings are null and void for that reason, NTG could have no liability under the alleged guarantee. They also contended that the person who signed the alleged guarantee was similarly not authorised to do so on behalf of NTG.

Held by Barniville J that Microsoft Ireland had established to the required standard that the order made by the High Court on 21st August, 2018 was properly made and that it was an appropriate exercise of the discretion of the Court to grant leave to Microsoft Ireland to serve notice of the proceedings on the defendants in Saudi Arabia under the provisions of O. 11, r. 1(e)(iii) RSC. Barniville J concluded that Microsoft Ireland had demonstrated to the required standard that, insofar as each of the three contracts the subject of the proceedings were concerned, the action brought by Microsoft Ireland was one brought to enforce or otherwise affect a contract or for other relief in respect of an alleged breach of a contract by ACS and/or NTG and that, in respect of each such contract, the contract was by its terms governed by Irish law. Barniville J also concluded that, on the evidence, Microsoft Ireland had satisfied the requirements of O. 11, r. 2 RSC and O. 11, r. 5 RSC and it had persuaded him that this case was a proper one for service out of the jurisdiction under O. 11.

Barniville J held that, in those circumstances, the application by the defendants to set aside service of the proceedings on them in Saudi Arabia or, alternatively, to discharge the order made by the High Court on 21st August, 2018, should be refused.

Application refused.

JUDGMENT of Mr. Justice David Barniville delivered on the 30 ^th day of October, 2020

Introduction

1 This is my judgment on an application by the defendants for orders under O. 12, r. 26 RSC setting aside service of the proceedings on the defendants in the Kingdom of Saudi Arabia or, alternatively, discharging the order of the High Court (McDonald J.) of 21 ^st August, 2018, permitting service of the proceedings on them.

2 The plaintiff, Microsoft Ireland Operations Limited (“Microsoft Ireland”), is an Irish company. The first defendant, Arabic Computer Systems (“ACS”), and the second defendant. National Technology Group (“NTG”), are both companies incorporated in Saudi Arabia. NTG is the parent of ACS. For convenience, I will refer to the defendant companies collectively as the “defendants” and, where applicable, seperately as ACS and NTG.

3 Microsoft Ireland has brought these summary proceedings in Ireland on foot of leave granted to it to issue and serve notice of the proceedings outside the jurisdiction on ACS and NTG in Saudi Arabia. An order giving that leave to Microsoft Ireland was made by the High Court (McDonald J.) on 21 ^st August, 2018. The order was made under O. 11, r. 1(e)(iii) RSC.

4 Microsoft Ireland seeks summary judgment against ACS in the sum of US$31,539,677.95 (or the euro equivalent of that sum) on foot of two written contracts which it claims were entered into between Microsoft Ireland and ACS on 1 ^st September, 2014 and on 1 ^st September, 2016. Microsoft Ireland seeks summary judgment against NTG on foot of a guarantee in writing dated 19 ^th December, 2011, under which it is alleged that NTG agreed to guarantee certain debts allegedly due by ACS to Microsoft Ireland.

5 The defendants have brought this application to set aside service of the proceedings on them in Saudi Arabia and, alternatively, to discharge the order made by the High Court on 21 ^st August, 2018. They contend that the persons who signed the contracts between Microsoft Ireland and ACS on behalf of ACS were not authorised to do so and that, as a consequence, those contracts are null and void. They further contend that ACS did not contract with Microsoft Ireland but maintain rather that its contractual arrangements were with Microsoft Arabia, a Microsoft subsidiary registered under the laws of Saudi Arabia. The defendants rely on the law of Saudi Arabia in support of their principal contention that the persons who signed the contracts on behalf of ACS were not actually authorised to do so and also that they did not have implied, apparent or ostensible authority to sign the contracts. They contend that as the contracts between Microsoft Ireland and ACS relied upon by Microsoft Ireland in the proceedings are null and void for that reason, NTG can have no liability under the alleged guarantee. They also contend that the person who signed the alleged guarantee was similarly not authorised to do so on behalf of NTG.

6 Microsoft Ireland disputes these contentions. It asserts that the persons who signed the relevant agreements on behalf of ACS were authorised to do so, at least in the sense that those persons had apparent or ostensible authority and further that ACS ratified the agreements and is otherwise estopped from denying the existence and enforceability of them. It disputes the contention that the law of Saudi Arabia is relevant and argues that, as a matter of Irish law, it was entitled to proceed on the basis that the persons who signed the contracts on behalf of ACS were authorised to do so. It further disputes the contention that the relevant contractual relationship was between ACS and Microsoft Arabia. Not surprisingly, it relies in support of its case on the written agreements entered into between Microsoft Ireland and ACS. It further disputes the contention that the person who signed the guarantee on behalf of NTG was not authorised to do so and maintains that he too had apparent or ostensible authority.

7 The defendants have, in addition to relying on the alleged non-application of O. 11, r. 1(e)(iii) RSC, also contended that Saudi Arabia and not Ireland is the natural and appropriate forum to determine the dispute between Microsoft Ireland and those companies on forum non conveniens grounds. It was, however, confirmed in the course of the hearing that the defendants were only seeking to rely on the forum non conveniens grounds in respect of the claim by Microsoft Ireland against NTG, in the event that the court were to find that the Irish courts did not have jurisdiction in respect of Microsoft Ireland's claim against ACS under Order 11. rule 1(e)(iii). For that reason, the doctrine of forum non conveniens did not play a significant part in the evidence and submissions before the court.

8 As will be seen later in this judgment, both parties relied on evidence from Saudi Arabian qualified lawyers. Those lawyers provided written reports which were exhibited to the affidavits sworn on behalf of the parties. Somewhat unusually, Microsoft Ireland requested that the two Saudi Arabian lawyers whose reports had been provided on behalf of the defendants be produced for cross-examination on the issues of Saudi Arabian law raised in their reports. That request was accepted by the defendants. It was, therefore, necessary for the court to hear evidence by video link from three Saudi Arabian lawyers (two on behalf of the defendants and one on behalf of Microsoft Ireland). The evidence was complicated and confusing in many respects. While ultimately I have concluded that the disputed issues concerning apparent and ostensible authority and ratification have to be decided (to the appropriate standard) in accordance with Irish law, rather than the law of Saudi Arabia, insofar as it has been necessary for me to express a view on disputed issues of Saudi Arabian law relevant to jurisdiction. I have preferred the evidence of Microsoft Ireland's Saudi Arabian lawyer over the two Saudi Arabian lawyers called on behalf of the defendants. In my view, insofar as it has been necessary for me to...