European firms face Y2K legal chaos in wake of Good Samaritan Act

A US law could turn the wrath of Y2K litigation on European companies.

President Clinton signed the Year 2000 Information and Readiness Disclosure Act - dubbed the Good Samaritan Act - into law on 19 October. The act grants US companies limited immunity from Y2K litigation.

Businesses will be able to nominate certain past statements about their Y2K preparedness and the compliance of their products, which can't then be used against the company in a future lawsuit.

European companies need to move fast to take advantage of the Act though. Those who do business with US companies or operate in the US must nominate any qualifying statements by 3 December.

"The implications for US businesses are colossal, absolutely colossal," explained Tony Lewis, chief executive of the CSSA. "They were talking about trillions of dollars worth of litigation. Suddenly the ground has shifted, the rules of what everyone expected for Year 2000 suits has shifted. Companies can make these statements and have immunity."

The worry is that if the UK has no similar protection, then frustrated companies who are blocked from suing in the US, could simply sue in Europe.

Andrew Rigby, a lawyer with Tarlo Lyons, said, "Clinton felt that Y2K litigation would have a significant effect on the US economy. There will be a commercial disadvantage for UK plc. If the US has fewer lawsuits, Europe may have lots and lots and lots."

However, Action 2000 says the UK government isn't planning to implement similar legislation, and he defends Pledge 2000 as all that is necessary in the UK.

"The US needed the act because of their antitrust laws and the American propensity to litigate," said Andy Nurse, Action 2000's programme manager for Pledge 2000. "Pledge 2000 is set at a level that is more appropriate to the UK."

But Lewis insisted: "If companies are hamstrung in the US they could seek redress under our excellent legal system. We should look to address the balance."

The advice from Tarlo Lyons is that European companies who do business with the US should seek legal advice immediately, trawl through any legal auditing they have already prepared, and try to get appropriate statements protected under US law.