Court rules on Schneider Electric's legal battle with DPSA

Court rules on Schneider Electric's legal battle with DPSA

The Supreme Court of New South Wales rules in favour of Schneider Electric in its $5.4 million legal wrangle with DPSA

Schneider Electric vice-president of IT business and strategic segments, Joe Craparotta

Schneider Electric vice-president of IT business and strategic segments, Joe Craparotta

The Supreme Court of New South Wales has ruled in favour of Schneider Electric in its case over unpaid debts by Aussie data centre infrastructure distributor, DPSA.

The fallout between both companies was made public in October 2016, with both companies going to court over an apparent $5.4 million in debt that DPSA allegedly owed Schneider Electric.

According to court documents filed at the time, the dispute and debt arose from a contractual arrangement with one of DPSA's customers, Canberra Data Centres (CDC). CDC was building out its data centre in Fyshwick in November 2014, and Schneider Electric contracted DPSA to supply 52 hot aisle containment system (HACS) pods for stage one of the construction.

DPSA was Schneider Electric’s distributor for CDC for about eight years and had a ‘retain supply’ agreement to supply the next stage of CDC.

But disagreements sprouted when DPSA supplied 12 Schneider Electric HACS pods in June 2015, with the remaining 40 pods subsequently supplied by the vendor directly.

DPSA claimed it lost out on $3.5 million as a result of this, while court documents filed in May showed Schneider Electric alleged that DPSA “wrongfully failed and refused” to pay the principle outstanding amount of $5.36 million that it billed the local distributor.

The dispute has since been resolved, with the Supreme Court of New South Wales making orders in favour of Schneider Electric after DPSA discontinued its cross-claim.

DPSA has been ordered to pay its outstanding debt of $5.36 million to Schneider Electric, plus interest amounting to $106,011. It is understood that DPSA ceased its cross-claim due to factors involving the resources needed to continue with the litigation, a move which saw the court subsequently order that the company cover Schneider Electric’s court fees.

“We welcome the judgement made by the Supreme Court of NSW,” Schneider Electric vice-president of IT business and strategic segments, Joe Craparotta, said. “Schneider Electric simply wishes to be paid for the products and solutions it supplies to distributors. We are pleased with the outcome of the proceedings.”

“Our commitment to the channel is an absolute priority for the business. We made a call to support our channel partners when DPSA chose to walk away.

“We also made sure that funding was available to ensure project delivery and that all our partners were unaffected when DPSA let us down. This is a major win for all partners who have paid their bills,” he added.

CertaOne's Jacques Tesson
CertaOne's Jacques Tesson

“DPSA has been supporting APC by Schneider electric since 2004. We were a specialist distributor and very loyal, not supplying competitive products. We won APC by Schneider distribution of the year award for 2013 and 2014. That was award given by Schneider to distributors,” then DPSA CEO, Jacques Tesson, told ARN last year.

“I was invited to dinner one evening, and without any warning was told that Schneider Electric was now supplying CDC directly.

“So much for loyalty and being channel friendly. We have made a legal claim for the resulting losses. After that, Schneider Electric terminated all distribution agreements [with DPSA],” he added.

Since the dispute, Schneider Electric and DPSA have terminated their distributor agreement in Australia, ending the deal it signed with Schneider Electric in 2004, to be the non-exclusive two-tier distributor of the vendor’s products, solutions, and services within Australia.

Since then, Tesson has also closed the doors on DPSA and started a new business venture called CertaOne.

“They say every cloud has a silver lining. And I feel at least now going forward with CertOne and Huawei, we have a clearer channel program with much less scope for conflict and much more ability to earn reasonable margin for the channel again,” Tesson said.

With the exclusion of DPSA, Dicker Data, Ingram Micro, Pacific Datacom and Remington are now the distributors for the vendor in Australia.

“We would like to thank our existing distributors Dicker Data, Ingram Micro, Pacific Datacom and Remington for their constant professionalism and commitment to the channel. We look forward to a long-lasting and beneficial relationship with our distributors as we succeed together,” Craparotta added.

The decision comes as another global vendor, Kaspersky Lab UK, entwines itself in a legal battle against local distributor, Hemisphere Technologies.

The two companies are involved in legal proceedings in both Australia and Sweden to settle a dispute in which, according to court documents, Kaspersky claims that Hemisphere Technologies allegedly owes it royalties from several months' worth of distribution partnership between the two businesses.

That case continues.

Additional commentary by Leon Spencer.

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Tags court caseSchneider ElectricDPSAAPC by Schneider ElectricCertaOne

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