Year 2000 problem

Computer Law & Security Report Vol. 16 no. 1 2000ISSN 0267 3649/00/$20.00 © 2000 Elsevier Science Ltd. All rights reserved

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The Pre-Action Protocol that arises from an initiative of the Y2K Lawyers’ Association is destined to providevaluable additional options to those involved in Y2K disputes and ought to facilitate the resolution of disputesoutside of litigation.This article examines the background to the Protocol, how it will operate and what it is like-ly to achieve.

YEAR 2000 PROBLEM Y2K PRE-ACTION PROTOCOL — STEPS TOWARDDISPUTE RESOLUTION Graham Ross and Dr. Stephen Castell

INTRODUCTION

The ‘Y2K’ problem is the term used to refer to a variety ofproblems facing the programming of electronic circuitry,whether in the form of micro chips embedded into electron-ic equipment or within the hardware,or software,of comput-er systems. Strictly, ‘Y2K’ is an abbreviation of ‘Year 2000’referring to the fact that the problem has been most com-monly identified with the effect of the roll over from the year1999 to the year 2000.The problem is also commonly termed‘The Millennium Bug’. The issue, however, is far wider thanthe problem in relation to the roll over to year 2000,coveringother dates and effects in programming in relation to pro-cessing that may be generated or become apparent at othertimes.

The ‘Y2K Pre-Action Protocol’ (PAP) is being developedfrom an initiative by the Y2K Lawyers’Association, which wasset up in 1998 following a meeting of a number of lawyerswishing to share information, knowledge, expertise, viewsand opinion on the wide-ranging legal issues affected by theY2K problem.

Y2K poses a threat to the proper operating continuity ofcomputers, software and electronic equipment in both pri-vate and public sectors, with potentially wide-ranging conse-quential effects, such as jeopardizing the continuity of thebusiness supply chain network.The threat has been sufficientto encourage the setting up throughout the world of publicand private initiatives, including government agencies, to co-ordinate and encourage at all levels the assessment and man-agement of the risk of adverse operation. In the UK that workhas been undertaken by Action 2000 operating within theDepartment of Trade and Industry.Action 2000 has through-out monitored the response of industry and the public sectorto the Y2K problem and published a series of reports called:The State of the Nation Reports. The position as ofSeptember 1999 is that there remains a significant threat ofdamage and loss, in particular, to businesses within the ‘small-to-medium-size enterprise’ sector. Companies within this clas-sification make up over 90% of the trading companies in theUnited Kingdom.Y2K-related problems in this sector could,as a result, lead to a situation in which contracts may be

breached, statutory obligations may not be honoured andduties of care may not be properly exercised. This, in turn,may lead to a significant increase in disputes in all manner ofrelationships, including (but not limited to) those between:• commercial trading entities,• vendors and purchasers of equipment,• licensors and licensees of software,• consultants and their clients,• private individuals and the providers of public services,• companies and their directors,• employers and employees,• insurers and insured, and • companies providing maintenance of equipment and

their customers.The area of disputes that could be triggered by Y2K are

wide ranging.They cover IT disputes as to rights and obliga-tions between licensors and licensees,vendors and purchasesof computer hardware, software and electronic equipment,together with disputes relating to the insurance and mainte-nance of such items.An incomplete listing would include:• Breaches by parties to contracts in commerce resulting

from their failure to carry out their obligations under suchcontract that may be caused or contributed to by a failurein IT equipment;

• Breaches of obligations by directors to their companiesresulting from general business failure that may be causedor contributed to by IT failure and/or the response of thedirectors to the management of risk of such failure;

• Breaches of obligations by employers to employees andvice versa in respect of IT failure and responses to the riskof such failure;

• Claims for personal injury caused or contributed to by ITfailure including the failure of electronic devices such asdevices controlling and regulating safety in the workingenvironment and medical devices or other equipment theresults of the failure of which can lead to personal injury and loss;

• Failure of public services to satisfy statutory obligationsover the provision of services resulting in personal injuryand economic loss.There are various factors surrounding Y2K disputes, such

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Year 2000 problem

as technical complexity and the possible volume of disputes,that will make their resolution outside of litigation by, say,alternative dispute resolution or by private negotiationbetween the parties, likely to be of more practical benefitthan proceeding through the Courts.This is particularly so inthat many disputes may arise in a concentrated fashion over ashort timeframe,which could, therefore, stretch the resourcesof the court system. In addition to the problem for the courts,there could also be significant hidden costs for the parties toa Y2K dispute.These include diverted management time, dis-ruption to normal trading patterns,and permanent damage tothe trading relationship between the parties.All of these fac-tors may make resolution other than through litigation — i.e.generally ‘fixing’ the problem rather than seeking out dam-ages — the preferable option for both parties. However, thetechnical and general complexities, and overlapping factors,of Y2K could tend to make it difficult, without outside help,for each party involved in a dispute readily to come to agree-ment as to the facts and issues central to the dispute in such away as to encourage speedy settlement.

Such complexities do not make it easy for parties readilyto identify, from the documents they hold, those that are rele-vant to the issues, and therefore discoverable to the otherparty. Further, since many disputes will involve parties withina business or other supply chain, many disputes will effec-tively be part of a chain of disputes.These may therefore runthe risk of triggering, or be triggered by, a domino effectwhich, if not controlled, may remove from the parties thefullest opportunity to resolve disputes outside of litigation.Many disputes will also involve complications relating tojurisdiction and the applicability of foreign laws.

For all these reasons, the setting up of a Pre-ActionProtocol will provide valuable additional options to thoseinvolved in Y2K disputes and ought to facilitate the resolutionof disputes outside of litigation. For those disputes thatremain unresolved, following the Protocol should at leastensure that both sides are fully aware of the issues and of theevidence at an early stage, and thus help make faster and lesscostly any subsequent litigation.

OBJECTIVE OF THE PROTOCOL

The objective of the Y2K Pre-Action Protocol is to increasethe opportunities for parties to disputes relating to Y2K toresolve their disputes without recourse to litigation, or, if liti-gation is inevitable, to ensure each party has the fullest under-standing of the case of the other party and of the availableevidence so as to assist efficient management of such litiga-tion. It aims to achieve this by:• Requiring at the outset a full and frank disclosure of all rel-

evant documents.• Providing assistance in the identification of such docu-

ments (and software).• Requiring parties to set out in detail the precise nature of

their claim and/or response to the claim.• Offering facilities for the appointment of (a) mutual

expert assessor(s), to assist both parties in identifying theclaim and the response to the claim (for the purposes onlyof the proper operation of this Protocol).

• Requiring parties to attempt to co-operate with eachother as much as possible so as to ensure that the conti-

nuity of the business of either party to a dispute is notthreatened simply by the fact that the dispute exists; andto ensure that neither party to the dispute takes advan-tage, for the purposes only of increasing its negotiatingposition, of the impact of the continuation of the disputeitself on the business of the other party.

• Ensuring that the costs of resolving a dispute are propor-tionate to the value of the dispute, and generally not suchas to: (1) create an imbalance in the opportunity for eitherparty to pursue a fair resolution of the dispute; or (2) pro-vide a disincentive to either party from seeking a fair andjust resolution of the dispute.

• Assisting the parties, to the extent that such does notunfairly prejudice the continuity of the business of eitherparty to a dispute, to identify as best as possible disputesof a similar nature and/or involving similar facts,products,equipment, parties, so that parties with common interestscan work together to resolve jointly a series of related dis-putes.

• Assisting the parties with identifying the impact on thedispute of any jurisdictional issues.

BACKGROUND TO FIRST MEETING OF Y2KPAP WORKING PARTY The first meeting of the Y2K PAP Working Party was held on15 October 1999 at Withers, Solicitors, Gough Square,London. At the time of writing two further meetings areplanned.

The objective of the Working Party is to present to theLord Chancellor’s Department a suggested PAP (once final-ized) that, all being well, will be incorporated into the CivilProcedure Rules. The court rules for civil claims have radical-ly changed this year to reflect the Woolf Report into civil liti-gation. Protocols are very much encouraged to help reducethe numbers of disputes that end up in the courts, or at leastensure that those that do are managed more efficiently.

To see other Procotols already operating go to:<http://www.open.gov.uk/lcd/civil/procrules_fin/cprotfr.htm>.

Protocols need not be as structured as the courts rulesthemselves since the intention is to free-up the parties to‘sort it out’ between them rather than to tie them down totoo many rules. Y2K brings with it its’ own complexitieswhich probably justify greater detail in a Y2K PAP than forother types of dispute.A good balance, however, needs to beachieved and the input and perspective of all concernedand interested parties is warmly welcomed by the WorkingParty.

Essentially we are dealing with the following principles:• The sooner parties to a dispute fully understand the true

nature of the other side’s case and the evidence in sup-port (and indeed fully understand the nature of their owncase!) the sooner parties are able to reach resolution ofthe dispute.A ‘cards on the table’ approach is, therefore, anecessary element to any PAP.

• Helping parties to narrow the issues in dispute betweenthem speeds up resolution of the dispute, or at least helpsmake litigation faster and cheaper. Parties therefore needto be encouraged to commit themselves to identifyingissues to be agreed, rather than disputing every aspect ofthe other side’s case.

Year 2000 problem

• Alternative Dispute Resolution is to be encouraged by theProtocol.

• Expert evidence that is obtained in an adversarial atmos-phere in which expert witnesses perceive themselves tobe ‘fighting a case’ on behalf of the party instructing them,often prevents agreement on issues and speedier resolutionof disputes.Protocols should encourage the sharing of jointexperts and acceptance of their objective opinions.Any Pre-Action Protocol is entirely voluntary and parties

can agree to amend its detail as they wish. The LordChancellor’s Department, indeed, expects that all Protocolsmay be amended in time to reflect the experience of theiruse.Therefore, it is far better that a Protocol be in place ratherthan that there be none available at all.

If the Y2K Protocol is accepted and incorporated into theCivil Procedure Rules then, whilst it is entirely voluntary toparticipate in it, anyone who litigates without following theY2K PAP beforehand, and without good reason, could be sub-ject to sanctions from the court by way of, for example, high-er costs orders and interest payments.

THE WORKING PARTY PRESENTLYCOMPRISES:Graham Ross (solicitor, Ross & Co), Chairman; John MelvilleWilliams QC (Counsel); Adam Taylor (solicitor, Withers);Andrew Rigby (solicitor, Tarlo Lyons); Michael Mendelowitz(solicitor, Barlow Lyde & Gilbert); Andrew Nurse (Action2000); Dr Stephen Castell (IT Expert, CASTELL Consulting);John Harris (Federation of Small Business); Tim Humphries(Association of British Insurers); John Tuttlebee or RogerBrowne (Business Links Network); Martin Hunt (BusinessConnect Wales — Welsh Office); Professor Avrom Sherr(Woolf Professor of Legal Education, Institute of AdvancedLegal Studies); John Ivinson (British Computer Society);TonyHills (or alternative) (CSSA); A Representative of theFederation of the Electronics Industries; Shanti Thiagarajah(Researcher/Secretary to the Working Party); Pat Reed(Observer for Lord Chancellor’s Department); Dan Lambeth(Observer for the Law Society).

Anyone wishing to contribute to the deliberations of thisWorking Party, should not worry about any lack of knowledgeof the law.Your input is invited as a potential consumer of,participator in, or commentator on, legal services in relationto Y2K disputes. Lawyers are in the minority and it probablymakes for a healthy balance that it should remain that way.

FREQUENTLY ASKED QUESTIONS ABOUTTHE Y2K PAP Where can I find out the latest on the Y2K PAP?You can linkdirect to a Web site with more information — it is the top linkon the home page: <www.y2kalert.com>. If you wish to beincluded on the consultation list, please complete the formonline.

Won’t Y2K disputes cover a wide range of types ofactions, so that, as a result, scoping of the Y2K PAP will notbe easy? This is a valid concern. Indeed the issue took up

much time at the first meeting of the Working Party.The cur-rent intention, as far as scoping is concerned, is to follow theline of the US Y2K Act (albeit not its actual definition clause,which is arguably rather badly drafted), and define by the fac-tual and technical subject matter rather than the legal natureof the dispute.This will provide overlaps, most notably withthe existing Personal Injury and Clinical Negligence PAPs,butoptions will be provided.

Isn’t a February 2000 implementation date for the Y2KPAP a bit late? This may seem so at first glance.The problemhas been the late start. The Working Party only got goingbecause the suggestion was raised with the LCD a couple ofmonths ago, who were supportive.As the Dublin taxi driver isreported to have said when asked directions:“I wouldn’t startfrom here.”We will have to do the best we can.Of course manyY2K disputes will not be date-rollover triggered, or indeedeven date-rollover connected.Some may arise over MillenniumBug software fixes which themselves go wrong,and some Y2Kconsequential effects could be latent rather than patent, invisi-ble until well into the year 2000. In any event, the February2000 target date is only for incorporation within the CPR,whereas parties are free beforehand to follow the Y2K Protocolonce finalised, albeit without force of court sanctions.

How important will the involvement of appropriateindependent and professional IT experts in Y2K disputesbe? Very important. Such matters as:• how to get the ‘right expert assessor’• what expert investigation procedures are advisable or

should be mandated • what technical evidence is to be regarded as reliable and

comprehensive• what sort of ‘model expert conclusions’ should be defined

(if any) are all issues which the Working Party will hope toaddress.GGrraahhaamm RRoossss, Solicitor and DDrr SStteepphheenn CCaasstteellll, Report

CorrespondentBased on a presentation for the 8th Annual NCC

Computer Law Conference, London, November 1999.

GGrraahhaamm RRoossss,, SSoolliicciittoorrRoss & Co, SolicitorsHinderton Hall, Hinderton, near NestonSouth Wirral, Cheshire, L64 7TS, UKTel: +44 (0)151 336 3000 Fax: +44 (0)151 336 5783 Y2K Web site: <http://www.y2kalert.com>Y2K Lawyers Association: <http://www.y2klaw.org>

DDrr SStteepphheenn CCaasstteellllChairman, CASTELL ConsultingTel: +44 1621 891776Fax: +44 1621 892553Mob: +44 831 349 162E-mail: cstll01@attglobal.net20 Grange RoadWickham BishopsWitham, Essex CM8 3LTUK

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