Schrödinger’s CAT
Many will be familiar with the infamous thought experiment devised by the Austrian physicist and Nobel prize winner Erwin Schrödinger to illustrate the paradox of the Copenhagen interpretation of quantum mechanics. Schrödinger surmised that a cat (of a domestic feline variety) placed in a sealed box and exposed to a vile of poison triggered (or not triggered) by the random emission of a sub atomic particle could be both dead and alive at the same time.
Whilst such phenomena are believed to occur only in the quantum world occasionally opportunistic defendants will seek to run alternative defences to claims which exhibit similar characteristics to the concept of quantum superposition, i.e. two contradictory realities existing at the same time. The defendants’ “alternative defences”, recently articulated (but unsurprisingly not pleaded in detail), in the case of JJH Enterprises (Trading as ValueLicensing) v Microsoft Corporation & Others is an interesting example of this phenomenon.
In its judgment handed down on 28 November 2024 (a copy of the judgment can be found here), following a hearing on 20 to 22 November 2024, the Competition Appeal Tribunal dismissed JJH’s application to strike out Microsoft’s “alternative defences” to JJH’s claims for breaches of articles 101 and 102 of TEFU. JJH, which until it was forced to cease trading as a result of Microsoft’s actions, was a second hand licence reseller operating in the European market. It claims that Microsoft deliberately restricted the supply of second hand licenses in the period from 2014 to 2023 by employing a series of measures with the object or effect of preventing or encouraging enterprise customers, who were migrating to Microsoft’s subscription licensing model, from selling their redundant perpetual licences. JJH had recognised that Microsoft’s shift from perpetual to subscription licensing would (or should have) produced an increase in the supply of perpetual licences.
Microsoft’s primary defence is that its conduct (a significant part of which is admitted - including a global contractual term requiring customers to retain licences in order to continue benefitting from preferential pricing) was not abusive, amounted to competition on the merits and had no appreciable effect on competition. Specifically it pleads that its use of the conduct complained of was limited and the offending global term was withdrawn following notification of JJH’s claim, it did not take steps to enforce the terms and in any event customers generally had no desire to sell their redundant perpetual licences.
However, Microsoft also seeks to argue, in the alternative, that if, contrary to its primary defence, its conduct was prima facie anti-competitive it was nevertheless objectively justified and/or led to efficiencies. In particular it argues that its conduct was necessary and proportionate to achieve legitimate aims, which include protecting its copyright in the perpetual licences in question owing to its belief (as revealed for the first time in its skeleton argument filed on Thursday 14 November 2024) that “copyright infringement in the second hand market is rife.” During the hearing Microsoft argued that it was justified in essentially shutting down the second hand market by preventing customers from selling their redundant licences as this was a necessary and proportionate means of protecting its copyright.
The CAT, in its judgment, noted that the primary and alternative defences are difficult to reconcile but that it was in no position, on the evidence before it, to reconcile the alternative cases on a summary basis (see paragraph 36 of the Judgment). The CAT noted, however, that the tension may be something which will weigh in its mind at trial.
Charles Fussell & Co LLP together with Maya Lester KC, Jon Lawrence, Max Schaefer, Andris Rudzitis (Brick Court) and Matthew Lavy KC (4 Pump Court) and Henry Edwards (8 New Square) represent the Claimant.
Recognition in the 2025 edition of Legal 500
Charles Fussell & Co LLP is proud to have been ranked as a Tier 4 firm for Commercial Litigation (Mid-Market) in the 2025 Legal 500 rankings.
The ranking of Tier 4 is a rise in ranking from the firm’s previous position of Tier 5, which reflects the substantial matters of financial significance and legal importance on which the firm has recently worked. The Legal 500 recognises the firm’s recent work on cases including acting for Hummingbird Resources, JJH Enterprises (trading as ValueLicensing) ‘in securing an important victory against Microsoft at a [strike out] hearing’ and acting for Neil Gerrard in relation to ENRC’s application to commit him for contempt. For more information on the firm’s recent work, please click here.
Testimonials that the firm’s clients have provided to the Legal 500 include statements that the firm ‘punches way above its weight. It is able to take on the big beasts, despite being relatively small’ and that the firm’s lawyers are ‘a super-dedicated team that is a pleasure to work with. Very highly recommended.’
Individuals at the firm have also been recognised in the Legal 500 for their individual skillsets. Charles Fussell is described as a ‘very experienced and canny litigator’. Simon Winter is recognised as being ‘experienced in disputes involving property, commercial fraud, commercial contracts, shareholders, and professional negligence’, and Jonathan Cohen is ‘clearly trusted, respected and liked by clients’. Elizabeth Stoppelmoor is also praised for being ‘notably experienced in evidence, disclosure and trial preparation.’ Catherine Stockler was recognised in these rankings in her role at her previous firm as acting ‘in civil fraud claims, and contract, shareholder and breach of directors’ duty disputes.’
DIFC Court of Appeal upholds judgment on US Iranian sanctions issue
Charles Fussell & Co LLP, in conjunction with Zoe O’Sullivan KC of Serle Court, represented the successful respondent, Qatar Insurance Company (“QIC”), in an appeal against a decision of the DIFC Court on the applicability of a sanctions exclusion clause brought by a number of US owned reinsurers. The DIFC Court of Appeal’s judgment, which was handed down on 20 September 2024, can be found here.
The issue raised on appeal by the reinsurers concerned the application of a sanctions limitation and exclusion clause (the “Sanctions Clause”) contained in a number of reinsurance contracts and in particular whether the reinsurers could avail themselves of the exclusion by virtue of the US Iranian Transactions and Sanctions Regulations (“ITSR”) and avoid paying out under the contracts.
QIC had sought to reinsure its obligations with the reinsurers arising under an insurance policy QIC had entered into with a UAE based bank. One of the bank’s customers, a Hong Kong based entity, which was wholly owned by three Iranian nationals, was defrauded to the tune of AED 36.5 million, by one of the bank’s employees. The bank re-imbursed its customer in full and made a claim against QIC under the insurance policy which has also been paid in full. QIC sought reimbursement under the reinsurance contracts and whilst the non-US reinsurers paid out, the US owned reinsurers sought to invoke the Sanctions Clause on the basis of the bank’s customer’s ownership by Iranian nationals. The reinsurers issued proceedings in the DIFC Court seeking a declaration of non-liability. The DIFC Court (Justice Lord Angus Glennie) dismissed the reinsurers claim and granted QIC’s counterclaim for damages in the sum of the reinsurance monies owed in a judgment handed down on 26 February 2024.
The issues in the appeal included (a) the proper meaning and effect of the Sanctions Clause and (b) whether, as a matter of US law, the provision of cover or payment under the reinsurance contracts would expose the reinsurers to any sanction, prohibition or restriction under ITSR.
The DIFC Court of Appeal, Michael Black KC giving the leading judgment, upheld the Judge’s ruling and dismissed the appeal. A central issue addressed by the Court was whether it could be said that sanctioned persons, namely the bank’s customer’s owners, have benefitted directly or indirectly from the reinsurance cover or the payment of it. The Court rejected the reinsurers’ arguments and held that the Sanctions Clause was not engaged. The Court followed the judgment of Teare J in Mamancochet Mining Limited v Aegis Managing Agency Ltd & ors [2018] EWHC 2643 (Comm) in determining that the words “would expose” (as found in the Sanctions Clause) meant that the risk of sanctions would need to be concrete rather than just a possibility.
In summary, the Court held that on the evidence before the court it could not be said that the reinsurance cover or the payment of reinsuruance to the insurer pursuant to the reinsurance contracts amounted to the provision of services or a payment to a sanctioned person within the meaning of the ITSR.
Congratulations to Harry Prebensen
Charles Fussell & Co is pleased to announce that Harry Prebensen has been admitted to the Roll of Solicitors.
Harry graduated from Oxford University with a first in History and then completed the GDL. After gaining experience as a paralegal at Slaughter & May and then Charles Fussell & Co, he completed the LPC and started a training contract with the firm in mid-2022. He has excelled throughout his training contract (on one occasion, as a third seat trainee, being mistaken for a senior associate by a member of the counsel team on a large case), and Charles Fussell & Co is delighted that he has chosen to remain with the firm upon qualification. Harry has spent significant time during his training contract dealing with competition law, and is looking forward to specialising in that area in addition to his general commercial litigation practice.
The firm is very much looking forward to working with Harry in his new role as junior associate.
High Court rules on scope of UK GDPR in landscape gardener case
The case has attracted some publicity already in the specialist property press and two national newspapers, The Times and The Daily Mail.
The case arose out of the recording of two telephone conversations between Mr Cameron and a former customer of his gardening business called Mark Harrison. Mr Harrison, whose business is in property development, had engaged Alasdair Cameron Limited to redesign and landscape the gardens at his home in Kingston-upon-Thames but terminated his contract with the company towards the end of the project.
During the telephone calls, Mr Harrison said (amongst other things):-
“… you try and take anything offsite, and you will have a visit from two of my friends from Manchester, you try and take any materials off this site … and I will send some people to pay you a visit you will never forget, you and your family will never forget …”
“I’m going to administer an education, that’s what I’m going to do”
“Yeah, now listen go away I will see you in a couple of hours and then we will thrash it out, THRASH being the operative word, in a couple hours, bye bye”
As the judge found:-
“Mr Harrison’s behaviour during those calls … [was] seriously and persistently menacing. It is true, as Mr Harrison asserted, that he wanted Mr Cameron to “go away”. But it is manifest that to achieve that object Mr Harrison resorted to serious and ugly threats of violence to intimidate Mr Cameron into compliance”.
Mr Cameron shared the recordings he had made with a limited circle of friends, family and colleagues, but copies found their way to other people connected with the property industry and Mr Harrison alleged that a substantial property deal involving the Grosvenor Estate had been derailed by the dissemination of the recordings.
But he did not sue for damages, instead making claims under the Data Protection Act 2018 and the UK General Data Protection Regulation. He alleged that Mr Cameron was a data controller in his personal capacity and had refused to answer a data subject access request in breach of his legal obligations. He further alleged that Alasdair Cameron Limited had not complied with a data subject access request properly by refusing to give the names of those persons with whom the recordings had been shared.
These claims failed. The Court found that Mr Cameron was acting as a director of his company and was not a data controller and that Alasdair Cameron Limited had responded within its rights by refusing to name third parties who (it was reasonable to suppose) might be subject to intimidating conduct.
The full judgment is available here.
The case raised a number of important legal issues including the scope of the so-called “household exemption” and the circumstances in which a director of a company can be a data controller in a personal capacity (following the judgments of Richards J In re Southern Pacific Personal Loans Ltd [2014] Ch 426 at [19] and Lewison LJ in Ittihadieh v 5-11 Cheyne Gardens RTM Company Ltd [2017] EWCA Civ 121 at [70]-[71]). The judgment also examined the post-Brexit decision of the European Court of Justice in the Austrian Post case and the “rights of others” exemption in Article 15 of the UK GDPR and Schedule 2, paragraph 16 of the Data Protection Act 2018.
Charles Fussell & Co LLP instructed Kate Wilson of 5RB and later Robin Hopkins of 11KBW, who appeared at the trial. The Claimant was represented by Rosenblatt who instructed Sara Mansoori KC of Matrix Chambers.
Charles Fussell ranked in Spear’s 500
Charles Fussell is delighted to have been ranked in Spear’s 500 Litigation and Dispute Resolution. The entry can be found here.
ValueLicensing v Microsoft: Claim Proceeds to the Competition Appeal Tribunal
On 16 November 2022, Mr Justice Foxton ordered the transfer from the Commercial Court to the Competition Appeal Tribunal (the “CAT”) of the standalone competition claim of our client JJH Enterprises Limited (trading as ValueLicensing) (“VL”) against Microsoft Corporation, Microsoft Limited and Microsoft Ireland Operations Limited.
The CAT has listed the case management conference for 9-10 May 2023.
The CAT was established by the Enterprise Act 2002 as a specialist competition and regulatory tribunal whose remit includes competition claims such as VL’s under the competition rules in Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) and Article 102 TFEU, and Chapters I and II of the Competition Act 1998. These provisions cover agreements whose object or effect is to prevent restrict or distort competition, and abuse of dominant position. The CAT panels comprise a High Court Judge as Chair, with two other members who have expertise in finance, economics, law, accountancy and other related areas.
VL believes that the transfer to the CAT will accelerate the hearing of its case.
Mr Justice Waksman recuses himself from Gerrard contempt proceedings
The Charles Fussell team, which included Sasha Wass KC of 6KBW and Michal Hain of Twenty Essex, have persuaded Mr Justice Waksman to recuse himself from hearing ENRC's application for permission to bring committal proceedings against Neil Gerrard in the well-publicised and long-running claim by ENRC against Dechert and the Serious Fraud Office. A further, full update will follow once the approved judgment is available.