Cases Round-up

May 3, 2015

Internet Streaming and Broadcasters’ Rights

The CJEU has ruled on a reference relating to the Infosoc Directive and communication to the public

In  Case C-279/13 C More Entertainment, a reference for a preliminary ruling from the Högsta domstolen (Sweden), the Court of Justice of the European Union had to consider issues surrounding the direct broadcast of a sporting fixture on an internet site. The internet site provided links enabling users to access the site of a broadcasting organisation and watch live broadcasts of ice hockey matches without having to pay the broadcasting organisation’s fee. Was circumventing the paywall in this way allowable?

The Swedish court initially referred five questions to the CJEU but withdrew four of them. The one remaining was as follows:

‘May the Member States give wider protection to the exclusive right of authors by enabling “communication to the public” to cover a greater range of acts than provided for in Article 3(2) of [Directive 2001/29]?’

The CJEU’s formal ruling was as follows:

Article 3(2) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as not precluding national legislation extending the exclusive right of the broadcasting organisations referred to in Article 3(2)(d) as regards acts of communication to the public which broadcasts of sporting fixtures made live on internet, such as those at issue in the main proceedings, may constitute, provided that such an extension does not undermine the protection of copyright.

Defamation in False Online Review

In The Bussey Law Firm PC & Anor v Page [2015] EWHC 563 (QB), a case brought by a US law firm in respect of a defamatory allegation on the firm’s Google Maps profile, it was held that the posting of a negative review by an English poster amounted to defamation deserving of substantial damages. The offending post read as follows:

‘Scumbag Tim Bussey, pays for false reviews, loses 80% of his cases.

Not a happy camper’

The central issue on liability was whether Mr Page was responsible for the posting. He admitted that the posting had been made from his Google account. Mr Page’s response was to advance certain hypothetical explanations as to how an unidentified third party might have posted the allegations via his account but without his knowledge. While Sir David Eady paid appropriate respect to the somewhat convoluted explanations from Mr Page, none of them were convincing. As it was proved that Mr Page advertised on Twitter as being willing to post ‘feedback’ or ‘testimonial’ for $5 via the web site, he faced an uphill task in backing up his explanations. This was made even more difficult because Mr Page’s Paypal records disclosed substantial dollar payments and, though he said he was never paid for any such transaction involving the claimants, there was an unexplained gap (an apparent deletion) covering the period embracing the date of the relevant posting.

What might have been the one weakness in the claimant’s case was the failure to plead the jurisdiction of the English court properly. But Mr Page failed to take advantage of that; the late application to amend the pleading to the effect that the posting was actionable under the lex loci delicti as well as under English law and to rely on the presumption that the relevant foreign law (in the state of Colorado) is the same as that applying in England was not opposed. Those familiar with the law in Colorado may well be surprised by the presumption’s application.

Since damages were capped at £50,000 that was the total extent of the award, although the judge made it clear that a greater sum would otherwise have been payable.

CJEU VAT Ruling: ebooks are not Books

The Court of Justice of the European Union has given its judgments in Cases C-479/13 and C-502/13 Commission v France and Commission v Luxembourg. It has supported the EU Commission view that France and Luxembourg were in breach of the VAT Directive by applying a reduced rate of VAT to ebooks.


In France and in Luxembourg, the supply of electronic books is subject to a reduced rate of VAT. Accordingly, since 1 January 2012, France has applied a VAT rate of 5.5% and Luxembourg a rate of 3% to the supply of electronic books.

The digital or electronic books at issue include books supplied, for consideration, by download or web streaming (‘streaming’), from a website so that they can be viewed on a computer, a smartphone, electronic book readers or other reading system.

The Commission asked the Court to declare that, by applying a reduced rate of VAT to the supply of electronic books, France and Luxembourg have failed to fulfil their obligations under the VAT Directive. 


In the CJEU judgments, the Court upholds the Commission’s action for failure to fulfil obligations.

The Court points out that a reduced rate of VAT can apply only to supplies of goods and services covered by Annex III to the VAT Directive. That annex refers in particular to the ‘supply of books … on all physical means of support’. The Court concludes that the reduced rate of VAT is applicable to a transaction consisting of the supply of a book found on a physical medium. While in order to be able to read an electronic book, physical support (such as a computer) is required, such support is not included in the supply of electronic books, and it follows that Annex III does not include the supply of such books within its scope.

Moreover, the Court finds that the VAT Directive excludes any possibility of a reduced VAT rate being applied to ‘electronically supplied services’. The Court holds that the supply of electronic books is such a service. The Court rejects the argument that the supply of electronic books constitutes a supply of goods (and not a supply of services). Only the physical support enabling an electronic book to be read could qualify as ‘tangible property’ but such support is not part of the supply of electronic books.

Arbitration: Serious Irregularity Leads to Rehearing

In The Secretary of State for the Home Department v Raytheon Systems Limited [2014] EWHC 4375 (TCC) and [2015] EWHC 311 (TCC) the Home Office succeeded in its application to set aside  a £200m+ arbitration award made by an arbitral tribunal last year. The judgment is concerned almost exclusively with the law affecting arbitration and the duties of arbiters; the context just happens to be a high-value technology contract.

US defence company Raytheon Systems Limited (RSL) was engaged by the Home Office in 2007 to design, develop and deliver the £750 million e-Borders technology system, in order to reform UK border controls by putting in place an electronic system to vet travellers leaving and entering Britain by checking their details against police, security and immigration watchlists. By 2010, key milestones had been missed and parts of the programme were running at least one year late leading to its termination by the Home Office. RSL claimed that the termination was unlawful and that it was entitled to recover substantial damages for wrongful termination.  A confidential arbitration process was then commenced, with the issue of the award in August 2014 which held that the termination was unlawful and directed the Home Office to pay substantial sums to RSL, comprising £49.98 million for damages, £9.6 million for disputed contract change notices, £126 million for assets acquired by the Home Office during the contract and substantial sums in respect of interest and RSL’s costs of the arbitration.

The Home Office’s challenge to the award, under s 68(1) and s 68(2)(d) of the Arbitration Act 1996, was upheld by Mr Justice Akenhead, who determined in his first judgment that the award had been tainted by serious irregularity so as to cause substantial injustice and, in his second judgment, that the consequence was that the Award must be set aside in total and reheard by a new Tribunal.

While some of the grounds of challenge were unsuccessful, Akenhead J found that the arbitration tribunal had failed to assess the nature and seriousness of any defaults of RSL in determining whether it was objectively reasonable and proportionate for the Home Office to terminate the contract and that RSL should not be permitted to recover costs for the Transferred Assets without any consideration of whether it was itself responsible for those costs through its own deficient performance. He found that the failure to address the issues had caused substantial injustice.

Akenhead J found that defects in the process meant that the award should be set aside in total and the matter determined by a new tribunal.  He considered that it would be ‘invidious and embarrassing’ for the existing tribunal to try and re-determine the issues that were the subject of the successful challenge.  Should the Tribunal reach the same overall outcome on a rehearing, that might well lead to a strong belief objectively that justice had not been or been seen to be done.