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In what's believed to be the first U.S. legal decision on asystems integration contract dispute that concerns the year
2000 date-field problem, a U.S. District Court arbitrator
ruled yesterday that systems integrator ASE Ltd. won't have
to pay $3.9 million in year 2000 expenses for client Inco
Inco, a maker of nickel alloys, had argued that ASE should
have done year 2000 compliance work as part of a five-year
outsourcing contract signed in 1995, according to the
arbitrator's report. Instead, Inco said, it had to hire
additional subcontractors. The arbitrator, whose decision is
binding, ruled yesterday in Pittsburgh that Inco's claims
were unfounded since neither the original contract nor any
of the revisions made during the last three years called for
ASE to perform year 2000 work.
Computer law specialist Esther Roditti says the case could
signal a trend in which companies seek to use year 2000 work
as a loophole to escape failing outsourcing contracts--
though she doesn't think the strategy will succeed often. "I
don't think that users can sit back and play dopes and say
'It's all [the vendors' fault]," Roditti says. "If it's not
in the contract, then they're both responsible and you're
going to see courts looking to the contracts."
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