The Court of Appeal has held in Samengo-Turner v J&H Marsh & MacLennan (Services) Limited that an employee domiciled in the UK has the right only to be sued in the UK courts.

Background

The three claimants were employed by an English service company that provided the services of its employees to other companies within the Marsh group. The claimants were domiciled in England and worked in London in the business of Guy Carpenter & Co ("GC"), a company in the Marsh group.

The claimants participated in an incentive scheme, awards under which were administered by MMC, the holding company for the Marsh group, based in New York. The scheme was subject to New York law and the exclusive jurisdiction of the New York courts.

Each of the claimants gave notice to terminate their employment and disclosed that they were going to work for a competitor. MMC and GC issued proceedings in New York seeking a mandatory injunction to compel compliance with a cooperation covenant contained in the incentive scheme and repayment of the bonus awards previously made to the claimants, on the grounds that they had engaged in detrimental activity. The New York court granted the orders requested.

Decision

The claimants applied to the High Court in London for declarations on jurisdiction and a worldwide anti-suit injunction against MMC and GC, relying on provisions of the Brussels Convention which apply to disputes relating to contracts of employment. These provide that an employer may only bring proceedings in the courts in the EU member state in which the employee is domiciled. The application was rejected by the High Court. However, the Court of Appeal upheld the employees' appeal. It held that the terms upon which the claimants were employed could only be determined by looking at both their contracts of employment and at the incentive scheme agreements. The latter therefore "related to" the contracts of employment. Whilst MMC and GC were not, strictly speaking, employers of the claimants, they were to be regarded as the employers for the purposes of the Brussels Convention rules. The employees therefore had a right only to be sued in the UK courts.

Impact on employers

This case has interesting implications for multi-national businesses in which employees participate in incentive arrangements that are operated by a company outside the UK and that are governed by a foreign law. Such employers need to be aware that:-

choice of law and venue provisions in incentive plans of this nature may be displaced by Brussels Convention rules where there is a dispute involving employees who are domiciled in the UK or another EU member state and the English courts will for certain purposes regard incentive plans as part of the terms of employment and not as a separate contractual arrangement.