The Court of Appeal has dismissed an appeal by Arabic Computer Systems (ACS) and National Technology Group (NTG) over which law should govern disputed questions of authority and ratification in a claim brought by Microsoft Ireland Operations Limited.
The court held that Irish law, the law expressly chosen in the disputed agreements, is the law to use when determining whether the signatories had ostensible authority to bind the companies and whether the agreements were later ratified. It rejected the appellants’ argument that Saudi Arabian law, as the law of their place of incorporation, should apply to those questions.
The ruling does not determine whether the signatories had authority, whether the agreements are binding, or whether Microsoft Ireland is owed the amount it claims. The appeal addressed one legal issue. The court said its decision did not alter the High Court order allowing service of the proceedings in Saudi Arabia or that court’s jurisdiction to hear the substantive claim. It also left open whether an exception to the putative-law approach might apply in a future case involving particular unfairness or exceptional circumstances.
Microsoft Ireland’s 2018 summary summons seeks $31,539,677.95 from ACS and NTG. The claim against ACS concerns invoices under two Microsoft Channel Partner Agreements said to have been made in 2014 and 2016. The claim against NTG relies on a 2019 guarantee said to cover ACS’s debts. Those are pleaded claims, not findings made in this appeal.
The appellants argued that the people who signed the agreements lacked authority and that the agreements were therefore invalid. ACS also maintained that its contractual arrangements were with Microsoft Arabia, a Saudi-registered Microsoft subsidiary, rather than Microsoft Ireland. Microsoft Ireland argued that the signatories had apparent authority and that the companies later ratified the agreements. The High Court had found that Microsoft Ireland had a “good arguable case” on those issues for the purpose of deciding whether service outside Ireland should stand; that was not a final determination of the underlying dispute.
In dismissing the appeal, the Court of Appeal said the putative proper law approach offered predictability in international commerce and took account of the contracting third party’s perspective. It found no authority or academic support for the appellants’ proposed rule that the law of the principal company’s place of incorporation should govern ostensible authority and ratification. The court proposed that Microsoft Ireland recover its appeal costs jointly and severally from ACS and NTG, subject to a possible application for a different costs order within 21 days.