The employee in Petter v EMC Europe Ltd was the managing director of a British company with a US parent. In addition to substantial pay and commission, he was awarded units under a stock plan which was operated by the US parent company and expressed to be subject to Massachusetts law and to the exclusive jurisdiction of the Massachusetts courts.
Under the terms of the plan, cancellation and forfeiture provisions applied if the employee engaged in "detrimental activity" after the termination of his employment. When the employee went to work for a competitor, the US parent took action against him, in Massachusetts, under these provisions.
The employee replied with an application for an "anti-suit injunction" from the High Court to prevent the US parent from carrying on with the case. This was on the basis that the Brussels Regulation limits where an employer can bring proceedings against an employee from an EU member state – the employee can only be sued by an employer in the courts of the state in which he is domiciled (England, in this case). But the US parent argued that it was not his employer and therefore the Regulation did not apply.
The High Court, relying heavily on a previous Court of Appeal case relating to US bonuses, Samengo-Turner v J&H Marsh & McLennan (Services) Ltd, agreed with the employee that under the Brussels Regulation he could only be sued here. Although the US parent was not strictly his "employer", the Court had to look at the substance of the arrangements between the parties. Even though there was an express acknowledgement that the stock plan did not give rise to a service relationship with the US parent, the Court took the view that, because of the close connection between the award of the stock units and the employee's employment obligations, the US parent had to be regarded as a party to the contract of employment with the UK company.
However, the Court refused to grant the anti-suit injunction to the employee to prevent the Massachusetts proceedings going ahead. An injunction is a discretionary remedy and the Court appeared disinclined to help the employee, who was well remunerated, to take the significant benefits, but not the burdens, of the incentive arrangements. He had entered into the agreement willingly, the parties had made a free choice of law and this was not a case where the Massachusetts proceedings were oppressive or vexatious.
This leaves what the Court described as an "irreconcilable clash" between the UK and US courts. Under Massachusetts law, the Massachusetts court has jurisdiction. Under English law, the High Court has exclusive jurisdiction (although it would apply Massachusetts law, subject to relevant mandatory English laws). Perhaps unsurprisingly, both parties have been given leave to appeal. In the meantime, it is a reminder that, despite what the employment contract says, international employers can in certain circumstances be subject to the jurisdiction of the courts in the country where they employ staff.