ICDL GCC Foundation FZ-LLC –v- the European Computer Driving Licence Foundation Limited [2011] IEHC 343
ECDLF is an Irish company which granted ICDL a licence of a computer training package in Saudi Arabia. The licence contained an obligation on the licensee to obtain all licences etc necessary to carry on its business in Saudi Arabia. The licensor's liability was limited to €50,000, except for damage caused by "a wilful act or gross negligence". The Saudi governmental body responsible for vocational training, TVTC, wished to take over much of the training from the then-current sub-licensee in Saudi Arabia. It entered into negotiations directly with ECDLF. Eventually, it told the sub licensee in Saudi Arabia to stop providing training, saying that it was no longer lawful for it to do so. Advice to the contrary from a local firm was produced and shown to ECDLF. Nonetheless, ECDLF terminated the licence and began to contract with TVTC. This led to litigation in Saudi Arabia and Ireland. The High Court in Ireland had to decide whether the licensee was in breach of contract in failing to get the necessary permissions in Saudi Arabia and whether, if the licensor was in breach of contract by terminating the licence, that conduct amounted to gross negligence.
The High Court of Ireland held as follows:
- As to the necessary licences, it was only necessary for the licensee to obtain them if they were legally necessary to make performance lawful. The fact that TVTC's consent might be commercially necessary, or even essential for the commercial exploitation did not put the licensee in breach of contract.
- As to gross negligence, the Judge did not think it was important whether the term "gross negligence" was a term of art in any particular area of the law (it had been argued that Irish and English law drew no distinction between negligence and gross negligence). He found that in this contract "gross negligence" meant "a degree of negligence where whatever duty of care may be involved has not been met by a significant margin". The negligence may be in relation to the tort of negligence or a breach of a contractual duty of care. In this case, ECDLF had not owed any duty of care in contract or tort. The only allegation was wrongful termination. Nonetheless the Judge held that as a matter of contract interpretation this could still amount to gross negligence. If the exception for gross negligence were limited to breach of a duty of care, it would have little or not effect on liability under the contract. In order to give business efficacy, the clause limited liability for all breaches of contract, except those resulting from a "significant degree of carelessness". The Judge held that sending the Chief Executive to Saudi Arabia to negotiate directly with TVTC was not gross negligence – it was a matter of judgment. However, doing a deal with TVTC was gross negligence as the deal was done when there was still a legal relationship between the licensor and the licensee. This action was taken with the licensor's full knowledge of the commercial dispute between TVTC and the licensee.
This case is interesting because it provides judicial interpretation of "gross negligence", something that has not been done by the English courts. Note also that gross negligence was held to extend to wrongful termination which is not something that one would normally think of as "negligence".
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