In our Law Now article of 21 December 2010, we advised that the Court of Appeal had unanimously ruled that a corporate undertaking, upon which the OFT had imposed a penalty for breaches of competition law, could not sue its former directors, officers or employees for damages equivalent to that penalty or the costs of the OFT investigation that the claimant had had to bear.

The Court of Appeal held that Safeway’s claim should be struck out as under the Competition Act 1998 such penalties were intended to be personal to the corporate undertaking and therefore any claim against its directors or employees would be barred by the maxim ‘ex turpi causa’ (i.e. a claimant cannot recover for the consequences of his own criminal or quasi criminal act).

Safeway sought permission from the Supreme Court to appeal against the Court of Appeal’s decision. The Supreme Court has refused permission to appeal, meaning that the unanimous decision of the Court of Appeal remains good law and directors and employees cannot be made to compensate their current or former employers if such a penalty is imposed by the OFT.

This decision is positive news for senior management (or potentially more junior employees) in industry who would otherwise potentially risk being the subject of claims for significant damages should the OFT impose a fine on their employer. It will also be of interest to D&O insurers to whom senior management might have turned if such claims had been permitted.