Cable & Wireless Plc v IBM United Kingdom Ltd.

In case management, the court may revisit an earlier procedural order where circumstances have materially changed. A construction issue may be tried as a preliminary issue where it is short, sufficiently self-contained, capable of early determination, and likely to affect the scope or commercial significance of the remaining issues. The court should consider the parties’ need for an early resolution of important questions arising under a long-term contract, while maintaining sensible and proportionate case management.

Cable & Wireless sought a preliminary trial of the construction of paragraph 5.3 of Schedule 10 to a Global Framework Agreement governing the supply of IT services by IBM over 12 years. The issue was whether any price adjustment arising from benchmarking was retrospective or only prospective.

Colman J had previously refused a preliminary issue application, transferred the claim to Part 7 procedure and directed an expedited full trial: [2002] EWHC 2059. Subsequent pleadings showed that certain issues had fallen away, while the benchmarking issue had become substantially more extensive. The parties accepted that the earlier timetable and trial estimate were no longer feasible. The central question was whether the changed circumstances justified reconsidering the earlier case-management decision.

1. The application was granted. The construction issue was ordered to be determined as a preliminary issue, with directions for both that hearing and the remaining issues.
2. The court was entitled to reconsider the earlier order because there had been a real change of circumstances. The previous order was no longer appropriate or feasible in light of the abandonment of rectification and estoppel issues, the extensive nature of the Compass issue, the likely involvement of Compass, and the revised estimates for disclosure, expert evidence and trial length.
3. The construction issue was relatively short and substantially self-contained. It was not materially overlapped by the Compass issue, although some witnesses might be required for both trials. The relevant matrix evidence was limited and had already been prepared for the earlier application.
4. Early determination would affect the issues remaining for trial. If IBM succeeded, there would be no need for Cable & Wireless to establish retrospective loss. If Cable & Wireless succeeded, the parties would know whether future benchmarking operated retrospectively. That was especially significant because the agreement was long-term and a further benchmarking process was imminent.
5. The court’s task was to identify the best course for managing the proceedings, having regard to the commercial needs of parties bound by a long-term contract and the prospect of achieving an earlier and efficient resolution. Determining a preliminary issue was appropriate even though it could not eliminate the need for a further trial.