Varda vs. Charles

Diamond Trading Comapny managing director Varda Shine wrote an impassioned and angry letter in response to Charles Wyndham’s attacks on her and the DTC in Polishedprices. She makes a lot of legitimate points, but the main point of contention is whether the DTC “ignored” (Wyndham’s words) the E.C.-mandated Supplier of Choice “Ombudsman” in the Jayam vs. DTC case.

This question was central to Jayam’s case (which Wyndham advised), although it didn’t seem to matter in the great scheme of things, since the Judge ended up disagreeing with the Ombudsman and voided his ruling. But let’s look at it regardless.

You may remember that Jayam thought its allocations were unfairly impacted by the DTC’s capping mechanism, which it claimed fell out of the announced Supplier of Choice criteria. The Ombudsman agreed. (I am being reductive here; hopefully both sides can agree on what I’m saying.)

Here are excerpts of the DTC’s response to Jayam, according to a letter produced in the court case. First, regarding changing Jayam’s historical allocations, the DTC says it is not able to do so …

Despite genuinely seeking to give effect to the Ombudsman’s recommendation in good faith, the DTC finds itself in a position where it is (i) unable to treat Jayam more favourably than other sightholders by disapplying the capping mechanism in its case only and (ii) unable to rerun the supplier of choice model in respect of past supply periods due to a lack of available information

It is basically arguing that changing Jayam’s allocation would requiring changing every sightholder’s allocation, and put the DTC in shakier ground legally.Which is certainly a fair point, although one would think the Ombudsman would have considered that.

So Jayam gets nothing retroactively. But the DTC does say “it will consider the effect of the Ombudsman’s recommendation on the next round of supply decisions.”

And how does it do that? It plans to add a …

“clarificatory amendment to the policy statement will address any concerns (which, in the view of the DTC, are unfounded) which might presently exist as to whether the use of an application capping mechanism would constitute an improper procedure.”

 And then there is this part of the DTC’s letter …

“… I [ed note – it is not clear who is speaking here] should briefly address Jayam’s expectation that the Ombudsman’s recommendation will result in Jayam being allocated a greater amount of goods. It is important that Jayam understand that this is not the effect of the Ombudsman’s finding ….

“To be perfectly clear on the point, the effect on Jayam of retrospective implementation of the Ombudsman’s decision would most likely be a very significant reduction in the amount of goods allocated to Jayam since mid-2003 or, quite possibly, the exclusion of Jayam from the DTC’s client list. ….

“This would be an undesirable outcome.”

Um, yeah. Let’s break this down. On one hand, the DTC lawyers, in that classic lawyerly way, say they are making best efforts to implement the Ombudsman’s decision, and I have no doubt there is some legal justification there. So they are not really ignoring it. On the other hand, you can imagine how Jayam felt – they win a victory with the Ombudsman, and all they get is a change in the fine print and a note saying they would have done worse. It’s not surprising Jayam felt ticked off enough to sue.

JCK News Director