Sumukan Limited V Commonwealth Secretariat - Case

Case

Sumukan Limited, a London based dot-com start up, sued the Commonwealth for expropriating the ownership of its e-commerce software. The British company said it was asked to demonstrate its software to an African government as part of a Commonwealth aid program. The company said it was told that if the government liked the product they would subsequently license it in a three year deal. It signed a very short consulting agreement for the demonstration for fifteen thousand pounds. The parties fell out because the Secretariat changed internal staff and the new programme office, questioned his predecessor’s actions and refused to pay travel expenses and fees for the consulting. Approximately two years later, the Secretariat additionally began to claim ownership of the web site developed by the company as well as the software toolkit which Sumukan had used to create its demonstration to the Namibian and South African governments. Sumukan’s barrister, Rhodri Thomspon QC of Matrix Chambers described the situation thus at the hearing of the 20th February 2006: ‘Imagine that you have engaged a painter to paint your house. When he has finished painting your house, you decide you own his brushes and ladder’. Sumukan values its software toolkit as worth over several hundreds of thousands of pounds.

Unfortunately for the dotcom company, the diplomatic immunity granted to the Secretariat under the Commonwealth Secretariat Act 12965 meant there was no initial access to the UK courts.

The company was forced to take the matter to an internal tribunal set up by the Commonwealth, all of whose jurists were appointed by the London-born Commonwealth Secretary General Don McKinnon. In February 2005, the three person panel of Commonwealth jurists found the Commonwealth Secretariat owned all the software used in the demonstration, a decision that UK lawyers have described as ‘absurd’.

On 20 February 2006, Sumukan's appeal on a point of law relating to ownership of the software was heard in the UK commercial courts. Justice Colman found that the Commonwealth Secretariat internal tribunal’s judgment was indeed open to serious doubt as claimed by the dotcom company. It was also agreed that the matter was one of general public importance. Nevertheless Justice Colman found that because the Secretariat’s internal rules stated that there was no right of appeal from its tribunal, and consequently the company was excluded from bringing the matter up in the UK courts. He gave permission to appeal on this point.

Sumukan had argued that the internal rules of the Commonwealth Secretariat, which prevented appeal to the UK courts, combined with the Commonwealth Secretariat Act which granted immunity to the Commonwealth Secretariat was a violation of their Article 6 rights under the European Human Rights Act, namely the right to an independent and impartial court. Sumukan has also claimed that their European Human Rights Act Article 1 Right to the peaceful enjoyment of their property has been violated by the Commonwealth Secretariat.

It was also Justice Colman's view that he did not have substantive jurisdiction to make any ruling on the substantive points of the case. However he went on to say that the judgment of the Commonwealth Secretariat Arbitral Tribunal was 'open to serious doubt'.

The company is also arguing that Commonwealth Secretariat Arbitral Tribunal exhibits serious irregularities and is not compliant with the requirements of article 6 of the European Convention on Human Rights, which ensures the right to an independent and impartial tribunal.

Result of Court of Appeal: Failure to comply with proper procedure in appointing an arbitrator rendered the appointment invalid and the award a nullity.