[2024] EWHC 2329 (TCC)

Kyndryl says that it has a right to claim as assignee under clause 2.1 of the SPA, which provides:

Paragraph 2 of schedule 1 to the SPA defines Transferred Assets as including any contract listed in schedule 1-2 to the SPA, and paragraph 6 extends the definition to include:

Schedule 1-2 comprises a table in four columns. The copy of the schedule adduced by Kyndryl in evidence is almost entirely redacted. The single unredacted line reads as follows:

Kyndryl says that that line in the schedule is referring to the DCHA. It relies on a witness statement of Martin Graves, its general counsel and company secretary. Mr Graves was the legal lead for the GTS business unit within IBM and had responsibility for the JLR relationship. He says in his statement that the spin-out of Kyndryl was a memorable episode for him. He specifically confirms that the line in schedule 1-2 refers to the DCHA. He says that JLR was an indirect subsidiary of Tata Motors Ltd at the date of the SPA and, having made enquiries, he is not aware of any other contract associated with Tata Motors to which the schedule might be referring. He says that there are other documents showing that the contract ID code in the schedule relates to JLR and the DCHA, and, in support of that point, exhibits two invoices issued by IBM under the DCHA that bear the same reference, SOM015, appearing in the schedule.

Kyndryl says that its claims under the DCHA were therefore Transferred Assets assigned to it by clause 2.1. As for its claims under the Variation Agreement and in unjust enrichment, it says that they were assigned by paragraph 6 of schedule 1 of the SPA because they are rights “exclusively arising from the ownership” of the DCHA. Notice of assignment was given by Kyndryl to JLR on 13 July 2023.

During his oral submissions in response to the application, Mr Pilling sought to raise a further, new argument. He said that Kyndryl wished also to rely on paragraph 1 of schedule 1 of the SPA, which brings within the definition of Transferred Assets all “Assets… of [IBM] that relate exclusively to the Business”, where Business is defined as “the managed IT infrastructure services business” and Assets are defined broadly as including “all assets, properties, and rights of every kind” including “Contracts and rights arising thereunder”. He produced a draft amendment to that effect. Mr Charlton, who had no prior notice of the point, said that he was not ready to address it in his reply oral submissions, and I did not think it fair to require him to do so. I have therefore not taken it into account in this judgment.

JLR argues that there was no valid assignment of the claims for essentially three reasons. First, schedule 1-2 does not refer to the DCHA. Second, schedule 1-2 does not refer to the claim under the Variation Agreement, which is a separate contract from the DCHA, or to the claim in unjust enrichment, neither of which can therefore be Transferred Assets. Third, any assignment would be void because, under clause 1.11.7 of the DCHA, JLR’s prior written consent was required but was not given.