Satyam Computer Services Ltd v Upaid Systems Ltd

Commercial agreements forming part of the same relationship do not necessarily supersede one another. Their respective scope depends on their language, commercial purpose and factual background. An entire agreement clause supersedes an earlier agreement only so far as the clause extends to the earlier agreement's subject matter or resolves an inconsistency.

A general release requires clear language before it will surrender claims of which a party was unaware. Express words are required to release unknown claims alleging that forged documents were supplied. A jurisdiction clause in a settlement agreement does not automatically cover claims under a separate agreement merely because the settlement preserves that agreement. The parties' intention, objectively ascertained, remains decisive.

Satyam and Upaid entered into an Assignment Agreement concerning existing intellectual property, a later Services Agreement governing continuing software-development work, and a Settlement Agreement terminating aspects of their relationship. Upaid subsequently brought proceedings in Texas alleging that Satyam had supplied forged employee assignments and had breached its obligations under the Assignment Agreement.

Satyam sought to restrain the Texas proceedings. Flaux J determined preliminary issues in Upaid's favour, holding that the Assignment Agreement had survived, that the relevant claims had not been released, and that they fell outside the Settlement Agreement's English jurisdiction clause.

Satyam appealed. The principal questions were whether the later agreements superseded or released obligations under the Assignment Agreement and whether the surviving Texas claims had to be litigated in England.

1. Appeal dismissed. The Services Agreement did not supersede the Assignment Agreement. Although the agreements arose from the same commercial relationship and their provisions had some potential overlap, their subject matter differed. The Assignment Agreement transferred intellectual property generated before 15 September 1998 and imposed continuing co-operation obligations. The Services Agreement principally governed the future work of the Dedicated Team from that date. Its entire agreement clause therefore did not displace the Assignment Agreement: paras [54]–[65].

2. Clause 3.1(b) of the Settlement Agreement preserved the assignments in accordance with their terms, including the supporting obligations under the Assignment Agreement. Its language was not confined to confirming completed transfers of property. The specific saving prevailed over the Settlement Agreement's general entire agreement language: paras [66]–[70].

3. The release and covenant not to sue were confined to claims arising from or relating to the Services Agreement. Claims based upon the allegedly forged employee assignments arose under the Assignment Agreement. A merely loose or indirect connection with the parties' wider relationship could not bring them within the release. The employee assignments established the earlier link in the chain of title and were provided pursuant to the Assignment Agreement: paras [71]–[78].

4. In any event, the general release did not extend to an unknown claim that Satyam had supplied forged assignments. Following Bank of Credit and Commerce International (in liquidation) v Ali [2001] UKHL 8, clear language is required before a party is taken to surrender claims of which it was unaware. The same principle applies with particular force to fraud-based claims. Express words would have been necessary to release claims of the type advanced in Texas: paras [79]–[85].

5. The English jurisdiction clause applied to disputes arising from or relating to the Settlement Agreement, not to claims under the separately governed Assignment Agreement. The one-stop approach applicable to broad arbitration clauses did not determine whether disputes under a different contract fell within this clause. That question depended on the parties' objectively revealed intention. Clause 3.1(b) preserved the Assignment Agreement on its own terms, so claims under it did not relate to the Settlement Agreement: paras [88]–[93].

Rimer LJ and Waller LJ agreed with Lawrence Collins LJ: paras [94]–[96].

1. Court of Appeal (Civil Division): The court unanimously dismissed Satyam's appeal and upheld the determination of the preliminary issues in Upaid's favour: [2008] EWCA Civ 487.
2. High Court, Commercial Court: Flaux J determined that the Assignment Agreement had not been superseded, the Texas claims had not been compromised, the English jurisdiction clause did not govern those claims, and no injunction restraining the Texas proceedings was available. No neutral citation is stated.