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In a recent arbitration case under the London Court of International Arbitration (LCIA) rules, BSA Law successfully represented a Kuwaiti digital marketplace company as Claimant against a U.S.-based software developer as Respondent.

The arbitration, seated in the DIFC, concluded with a favourable award for the Claimant, underscoring the strategic acumen and legal prowess of BSA’s team.

Background

The arbitration arose from a dispute over a contract for developing an e-commerce platform and multi-seller marketplace.

The Claimant alleged that the Respondent breached its contractual obligations by failing to deliver the project on time and denying access to critical source codes.

The Respondent counterclaimed, asserting that the Claimant had not fulfilled its payment obligations and had caused project delays.

Key Arguments and Evidence

Having first secured a dismissal of the Respondent’s jurisdictional challenge that revolved around an allegedly agreed time bar to commencing arbitral proceedings, the strategy applied on behalf of the Claimant focused on demonstrating the Respondent’s breaches, substandard submission of deliverables, wrongful termination and denial of access to the source code.

Central to BSA’s strategy was the argument that the Respondent wrongfully terminated the agreement due to alleged failures by the Claimant to pay compensation for excessive time spent in producing agreed deliverables.

The Claimant’s case was bolstered by evidence showing that the Respondent’s invoices were premature, as the deliverables were not compliant with the specifications agreed and as such were neither completed nor accepted by the Claimant.

BSA also highlighted the Respondent’s denial of access to the source code, which left the Claimant with incomplete and non-functional code, despite it having paid substantial sums.

Use of the Respondent’s Expert Report in the Tribunal’s Decision

BSA further pointed out aspects of the Respondent’s own expert report to support the Claimant’s claim.

While the Respondent had intended for the report to undermine the Claimant’s position, certain findings within it inadvertently corroborated key elements of the Claimant’s case.

BSA effectively highlighted these admissions during cross-examination and subsequent written submissions.

In particular, the expert report contained assessments of industry standards and contractual performance expectations that aligned with the Claimant’s arguments.

BSA referenced these aspects, substantiating the Claimant’s claim that the Respondent had not adhered to widely accepted commercial practices.

Furthermore, the expert’s evaluation of financial losses – although presented to counter the Claimant’s damage calculations – contained concessions that, when examined in context, reinforced the Claimant’ s position on liability and quantum.

Final Award

In the Final Award all of the Respondent’s allegations of project delays caused by the Claimant were dismissed as a result of evidence presented proving that the delays were attributable to the Respondent’s own mismanagement and incorrect time estimates.

All of the Respondent’s counterclaims lacked substantiation and were therefore dismissed in their entirety.

The Respondent was ordered to refund the Claimant all amounts paid to it for undelivered work, and to cover the Claimant’s arbitration and legal costs together with interest on the sums awarded.

This outcome is significant not only for the Claimant but also for the broader industry.

Key issues and implications

In this arbitration, a key challenge faced by the Claimant was the inability to access the source code of the digital deliverables in dispute.

This significantly complicated the process of exposing deficiencies in the Respondent’s coding and programming work.

Without direct technical verification, BSA had to adopt a legal strategy that relied heavily on contractual obligations rather than forensic technical evidence.

The absence of source code access meant that the Claimant was unable to produce a comprehensive expert report assessing the alleged coding and programming defects.

Instead, the case was built on the clear terms of the agreement, demonstrating that the Respondent’s deliverables fell short of its contractual commitments.

A further complicating factor was the Respondent’s attempt to obscure the deficiencies by leveraging highly specialised technical terminology.

Witness statements and evidence from the Respondent were delivered in a way that introduced unnecessary complexity on the precise nature of the programming defects.

This strategy was countered by identifying inconsistencies and contradictions in witness testimony and by simplifying the core technical issues into legally understandable terms.

The award underscored the principle that contractual compliance must be assessed based on clear obligations, rather than relying solely on expert analysis of deliverables. This legal approach played a pivotal role in securing a favourable outcome for the Claimant.