Ex-Dell distributor in Lebanon ignored ban on suing US tech giant. Now four directors have been sentenced to prison in the UK
18- and 9-month terms dished out for contempt of court
A group of Lebanese IT distributors have been handed prison sentences for contempt of court after running afoul of Dell and breaching an anti-lawsuit order.
An anti-suit injunction stops someone from instituting foreign court proceedings in breach of an arbitration agreement.
The US megacorp secured a judgment from the UK's High Court in April committing four current and former directors of Systems Equipment Telecommunication Services SAL (SETS) to prison, having spent in excess of £225,000 on the case.
Maher Chahlawi, Marwan Junior Chahlawi, Pierra Chalhoub, and Sarah Bibi were all sentenced in their absence, as the court's full judgment, published last week, explains.
The four broke anti-lawsuit injunctions that Dell had previously secured against them. SETS was an authorised, non-exclusive Dell distributor between 2004 and 2017 until the contract was terminated. Dell claimed SETS broke the contract; SETS said Dell wrongfully terminated the contract and sued in Lebanese courts.
Citing an "exclusive jurisdiction" clause in the contract, Dell filed an anti-lawsuit case in London's High Court. As Mr Justice Henshaw put it in a previous judgment, "SETS nonetheless continued to pursue the Lebanese proceedings, and indeed commenced a second set of proceedings" against Dell in mid-2018.
Dell hit back, securing an anti-lawsuit injunction from the High Court which should have prevented SETS from suing it anywhere at all over the end of the contract. The final court order banning SETS from suing Dell had a couple of sentences in block capitals:
IF YOU SYSTEMS EQUIPMENT TELECOMMUNICATIONS SERVICES S.A.L. DISOBEY THIS ORDER YOU MAY BE HELD TO BE IN CONTEMPT OF COURT AND YOU MAY BE FINED AND HAVE YOUR ASSETS SEIZED AND ANY OF YOUR DIRECTORS MAY BE IMPRISONED, FINED OR HAVE THEIR ASSETS SEIZED.
ANY OFFICER, EMPLOYEE, REPRESENTATIVE, AGENT OR SERVANT OF THE DEFENDANT WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS THE DEFENDANT TO BREACH THE TERMS OF THIS ORDER MAY ALSO BE HELD TO BE IN CONTEMPT OF COURT AND MAY BE IMPRISONED, FINED OR HAVE THEIR ASSETS SEIZED.
Meanwhile, SETS kept its Lebanese lawsuit going, egging on local courts to declare the High Court's anti-lawsuit order invalid in that country. Maher Chahlawi told the High Court that Lebanese law meant he had to sue Dell for terminating his company's contract, claiming he had "no choice" about it.
SETS broke both interim and final anti-suit orders made against it by the High Court on four occasions, the court found, by ignoring it and keeping the Lebanese lawsuit going. Mr Justice Henshaw also rejected Maher Chahlawi's legal arguments that he was somehow forced to sue Dell, adding that they "had no substance."
Although Bibi ceased to be a director of SETS during the legal proceedings, being replaced by Pierre Chalhoub, the judge held that none of SETS' directors (some of whom were also shareholders) had done anything to halt the Lebanese case.
Maher and Marwan Junior Chahlawi were ordered to be committed to prison for 18 months with Sarah Bibi and Pierre Chalhoub both receiving nine-month sentences. The judge made "non-binding" statements in his judgment committing them all to prison that "the court would be likely to give favourable consideration" to halving everyone's sentences if the Lebanese legal case was dropped.
None of the three appeared, although they had at prior hearings, with the judge noting the defendants had been offered the opportunity to "participate in this hearing remotely by telephone".
There were some procedural arguments about whether the penal notices had been correctly served on SETS' directors, with Dell's law firm Osborne Clarke telling the court it was "unable to find a private investigation firm willing to effect such service, those firms whom they approached having previously encountered physical violence or arrest and detention without charge when attempting such service in other cases."
Big American tech firms make occasional use of the London courts to enforce their contracts, as well as pursuing UK distributors who upset them for one reason or another. In other cases, however, US firms get distinctly upset when British judges rule against them.
A Dell spokeswoman told The Register: "Dell welcomes this judgment. Dell will always, where necessary, take appropriate steps to defend its rights." ®