Sky wins high court ruling against EDS

Wednesday, January 27 2010, 09:55 GMT

By Andrew Laughlin,

Sky has won a long-running legal action against Electronic Data Systems (EDS) over a collapsed multi-million customer relationship management (CRM) contract.

In summer 2000, Sky selected EDS for a £48 million contract to design, build and implement a CRM system in its Scottish contact centres in Livingston and Dunfermline.

Sky subsequently terminated the relationship in March 2002 after EDS failed to meet its obligations, leading to the satellite firm having to bring the project in-house.

After launching a legal action against EDS in August 2004 for over £700m in damages, the case eventually reached the high court in October 2007, before concluding in July the following year.

In a judgement at the Royal Courts of Justice yesterday, Justice Ramsey found that EDS, now owned by Hewlett Packard, is indeed liable to Sky for "fraudulent misrepresentation giving rise to damages".

During the hearing, the judge was told how it took four years for Sky to successfully roll out the CRM system at a reported cost of £265m. The firm said that it would have opted for a different provider if EDS had been more honest about its limitations.

In a statement, HP said: "This is a legacy issue, dating back to the EDS business in 2000, which HP inherited when it acquired EDS in 2008.

"We are pleased the court dismissed the majority of the allegations made. While we accept that the contract was problematic, HP strongly maintains EDS did nothing to deceive Sky. HP will be seeking permission to appeal."

Final costs and damages will be decided at another hearing in February, but Sky expects that HP will have to pay out at least £200m from the settlement.