Data centre operator loses $24m suit

Court dismisses firm's claims against design engineers over failure in power supply system

A data centre operator that could not maintain promised service levels for clients during a power outage sued the engineers that had designed its power supply system.

But Global Switch (Property) Singapore (GSS) failed in its bid to seek some $24 million in damages from the consultant engineers, Arup Singapore, over alleged breach of duties.

"I have found that Global Switch (Property) Singapore is entitled to only nominal damages of $1,000 for Arup's breach of its obligations regarding the provision of additional cooling," wrote Justice Quentin Loh in judgment grounds last week.

The judge allowed Arup's counterclaim for $71,347 in relation to unpaid design fees, in a 253-page judgment that was reserved following a 20-day hearing which ended in December 2017, and included several experts' testimonies.

The case is believed to be the first reported lawsuit relating to the design and electrical calculation of the power supply in a data centre.

GSS is part of the Global Switch group, which owns and operates data centres in cities including London, Sydney and Singapore.

Arup Singapore provides design engineering consultancy services for electrical and mechanical systems and is experienced in providing data centre solutions.

The highly technical issues involved whether Arup designed sufficient electrical power that could be supplied continuously without interruption and whether the associated cooling system was adequately determined and designed to meet cooling load requirement for the Extension. The bulk of the sums sought was for loss of opportunities claimed against Arup by Global Switch (Property) Singapore.

In 2008, GSS built a new structural extension at its data centre in Tai Seng and hired Arup to design the electrical and cooling systems.

Data centres have to provide an uninterrupted electricity supply for the proper functioning of their customers' IT equipment and it would be "very deleterious" for their customers if electricity supply were to cease, even for very short periods, noted Justice Loh.

"Disruption is discussed in the context of milliseconds. Equally significant is the cooling capacity of the data space, which cannot fail for any sustained period of time (since failure would cause the sensitive IT equipment to overheat)," he added.

Because an uninterrupted electricity supply is so crucial, data centres install back-up electrical systems that seamlessly "kick in" when electricity supply is interrupted coming off the power grid.

In 2013, electrical disturbances on two separate days interrupted operations, causing GSS to breach service-level agreements with some tenants whose IT equipment failed.

GSS, represented by Allen & Gledhill lawyers led by Mr Ho Chien Mien, then sued Arup for $24 million for defective design, with a key claim being Arup had incorrectly calculated the power requirements.

It alleged Arup had breached its duties with regard to both the original and revised design, as it had failed to provide an uninterruptible and continuous power supply as required under the contract.

GSS also claimed revenue loss from 1,400 kilowatts of power, which amounted to $13,497,612, when it was unable to accommodate a request by its customer, Microsoft, for an additional 1,500 watts of electrical power.

Arup, defended by Morgan Lewis Stamford lawyers led by Mr Daniel Chia, denied liability on various grounds, arguing the contract envisaged a process of agreeing on the design brief with GSS. It also filed a counter-claim for the balance of fees due to it.

The highly technical issues involved whether Arup designed sufficient electrical power that could be supplied continuously without interruption and whether the associated cooling system was adequately determined and designed to meet cooling load requirement for the Extension. The bulk of the sums sought was for loss of opportunities claimed against Arup by GSS.

However, Justice Loh found Arup had not miscalculated the power needs but that GSS had agreed to a lower power requirement and marketed for more instead.

He said the evidence showed at the crucial period of securing Microsoft as a tenant for the Extension, there was a lack of communication between GSS' business team and the technical team. The judge noted that how much power could be sold in the Extension "somehow failed to get transmitted to or register with GSS' business team.

"The mismatch between what was required of Arup in the Fee Proposal, what the (GSS) technical team on the ground was discussing with Arup before Microsoft came to look at leasing the whole Extension, and what power was sold to Microsoft, was obvious."

A version of this article appeared in the print edition of The Straits Times on May 14, 2019, with the headline 'Data centre operator loses $24m suit'. Print Edition | Subscribe