Slaughter and May’s scorched earth tactics pay off

The bitterly fought dispute between Digicel and Cable & Wireless (C&W) was finally laid to rest at the end of last month (23 April) with the High Court ordering claimants Digicel to pay the defendant’s multi-million pound legal fees.

It is a major win for C&W who, advised by Slaughter and May partners Sarah Lee and Jonathan Cotton, have been fighting this case since July 2007.

Caribbean-based telecommunications company Digicel instructed US firm Jones Day to pursue C&W for damages that month.

The company alleged that C&W engaged in illegal and uncompetitive practices which delayed Digicel’s expansion into the Caribbean markets.

Instructed by Jones Day partner Nick Cotter, Fountain Court’s Stephen Rubin QC argued that between 2002 and 2006, C&W refused to okay connections between different networks in various Caribbean countries including Barbados and the Cayman Isles.

In October 2008 Digicel went to the High Court in a bid to force C&W to expand its disclosure exercise.

The defendants spent £2m on disclosure, gathering 1.1 million electronically-stored documents, including 85 email accounts. After eliminating irrelevant sub-folders and duplicates as well as 10 keyword searches and a lawyer review, C&W disclosed 5,000 documents.

Digicel argued that the keyword searches had not been agreed with the claimant. It requested a further 19 keyword searches from the court.

Like a school teacher finding middle ground between two quarrelling six-year-olds,

Mr Justice Morgan ordered C&W to carry out another eight key word searches for the disclosure round.

The squabbling at this stage became indicative of the wider arguments between the rival telecommunications companies.

After a seven month trial with Lord Grabiner QC going head to head with Rubin, Morgan J found in favour of C&W. The judge ruled in favour of Digicel on one minor point – a minor breach of contract against C&W Communications’ Turks & Caicos operating subsidiary which caused no delay to Digicel and thus no loss.

The judge ordered the defendants to pay £2 in nominal damages to Digicel for this breach.

Having defeated what was touted in the press as being a £300m claim, Slaughter and May went for the jugular – indemnified costs.

Digicel failed to comply with pre-action protocols to send a letter before action and it  deliberately had courted widespread publicity for its allegations, C&W said.

Morgan J agreed that the claimants had failed to comply with practice directions, but, he ruled, this did nothing to raise costs, neither had the publicity sought by the claimants.

The judge accepted C&W’s suggestion that the claim was “speculative, weak, opportunistic and/or thin”. He ruled: “I find that the claimants massively over claimed.

“They claimed that virtually everything the defendants did was unlawful. That fact, and the consequential matters to which it gave rise, significantly widened the scope of the dispute.”

He continued: “[The] claimants put forward an excessive number of allegations of unlawful acts and that the claimants could never reasonably have thought that they could get home on many of the matters claimed.”

Costs in this litigation are estimated to be at least £15.5m and Slaughter and May are hoping to recover the majority from the claimants.

Box:

Claimant: Digicel (St. Lucia) Limited (a company registered under the laws of St. Lucia) and ors: Jones Day partner Nick Cotter instructed Fountain Court’s Stephen Rubin QC, Essex Court’s Huw Davies QC andvStephen Houseman and  Fountain Court’s Rupert Allen.

Defendant: Cable & Wireless Plc and ors: Slaughter and May partners Sarah Lee and Jonathan Cotton instructed One Essex Court’s Lord Grabiner QC, Edmund Nourse and Conall Patton.