Satyam Computer Services Ltd v Upaid Systems Ltd

Contracts made contemporaneously as part of one business transaction should be read together. A later agreement supersedes an earlier agreement only where there is clear and convincing evidence of that intention, particularly where the agreements address different subject matter or operate prospectively and in parallel.

A general release is construed in its contractual and commercial context. It does not readily surrender unknown claims. Claims based on fraud or allegations of dishonesty require very clear and specific language before they are released.

The common-law rule concerning foreign property does not generally bar English jurisdiction over claims concerning foreign intellectual property where validity or existence is not in issue. Claims seeking adjudication of validity remain non-justiciable.

Upaid had commenced proceedings in Texas against Satyam alleging fraud, forgery and breach of an assignment agreement relating to patent documentation and intellectual property rights. Satyam contended that the claims had been compromised by a Settlement Agreement dated 31 December 2002, or alternatively that they fell within its exclusive English jurisdiction clause. Satyam also sought an injunction restraining continuation of the Texas proceedings.

The court directed trial of three preliminary issues: whether the claims were released, whether they came within the English jurisdiction clause, and whether an injunction should be granted. The central questions were whether the Assignment Agreement had been superseded by a later Services Agreement and how the Settlement Agreement should be construed.

1. Assignment Agreement. Under Virginia law, agreements made contemporaneously as part of one business transaction are read and construed together. Supersession requires clear and convincing evidence. The Assignment Agreement and Services Agreement were contemporaneous, but they dealt with different subject matter. The Assignment Agreement concerned intellectual property existing by 11 September 1998, while the Services Agreement was principally forward-looking from 15 September 1998. Neither the entire agreement clause nor the existence of parallel cooperation obligations demonstrated an intention to supersede the Assignment Agreement. It therefore continued to operate.
2. Settlement Agreement. The third sentence of clause 3.1(b), providing that the assignments would survive and be governed by the Assignment Agreements, preserved the Assignment Agreement in full, including its continuing cooperation obligation. The general releases in clauses 2.3 and 2.4 concerned disputes arising out of or relating to the Services Agreement. They did not extend to claims arising directly from the Assignment Agreement merely because the two agreements operated in parallel. The employee assignments relied upon in Texas had also been provided pursuant to the Assignment Agreement.
3. Unknown and fraud-based claims. Applying the cautionary principle recognised in Bank of Credit and Commerce International (in liquidation) v Ali [2002] 1 AC 251 and MAN Neufahrzeuge AG v Ernst & Young [2005] EWHC 2347 (Comm), the release was not construed as surrendering unknown future claims. Claims involving fraud or dishonesty require very clear and specific language. Clauses 2.3 and 2.4 did not satisfy that standard.
4. Jurisdiction. Clause 4(c) did not impose an English jurisdiction clause on disputes under the preserved Assignment Agreement. Its wording was forward-looking, and the Assignment Agreement’s New York governing-law provision remained effective. The Texas claims therefore were not required to be litigated in England.
5. Foreign intellectual property. The court considered the two-stage analysis derived from the Mocambique rule. The rule, as applied to foreign intellectual property, should be confined to cases in which the existence or validity of the foreign right is in issue. Claims for damages for fraud or breach of the Assignment Agreement did not require adjudication of patent validity and would be justiciable in England if the jurisdiction clause applied. A declaration as to patent validity would not be justiciable.
6. The claims in Texas were neither precluded by the Settlement Agreement nor required to be pursued in England. Satyam’s application for an injunction was refused.