WPP Holdings Italy Srl & Ors v Benatti

For the purposes of Section 5 of the Judgments Regulation, whether an agreement is an individual contract of employment is determined autonomously by reference to substance rather than labels. Relevant criteria include the provision of services for remuneration, control and direction, and integration into the counterparty’s organisation. The assessment is one of fact and degree, informed principally by the contract and also by the parties’ conduct, with employment and services agreements serving as reference points. The assessment is made at termination or commencement of proceedings, but having regard to the contract’s whole preceding life. An exclusive jurisdiction clause remains effective where the agreement is not an employment contract. Third parties with a good arguable case that they may enforce the agreement may also rely on its jurisdiction clause.

The claimants sought damages, equitable relief and declarations against an Italian-domiciled businessman arising from a consultancy agreement governed by English law and containing an exclusive English jurisdiction clause. The defendant challenged the English court’s jurisdiction, relying principally on the employment provisions of the Judgments Regulation and on alleged defects concerning which courts were first seised.

The court considered the validity and timing of the English and Italian proceedings, whether the agreement was an individual contract of employment for the purposes of Section 5, whether third-party claimants could rely on the jurisdiction clause, and whether fiduciary-duty claims fell within it.

1. First seised. Proceedings were instituted in England when the Claim Form was issued under CPR 7.2. The incorrect jurisdiction endorsement, omission of an endorsement from the Particulars of Claim, and failures concerning the joinder order did not invalidate the proceedings under CPR 3.10. The English court was first seised of WPP Italy’s claims on 11 January 2006 and of the fiduciary-duty claims on 15 February 2006.
2. The Italian proceedings against WPP 2005 were not first seised on receipt of the writ by the Italian service authority. Under Article 30(2) of the Judgments Regulation, the document had subsequently to be served in compliance with the Service Regulation. The absence of a certified translation meant that service by post was non-compliant.
3. Burden and standard. Once WPP Italy established that the jurisdiction clause satisfied Article 23(1), the burden was on the defendant to establish that the agreement fell within the employment provisions. The applicable standard was the good arguable case test, namely that one side had a much better argument on the available material. The court did not pre-empt the trial on the underlying contractual status.
4. Employment status. The autonomous employment inquiry considers whether services are provided over time for remuneration, whether the counterparty exercises control and direction, and whether the provider is integrated into its organisational framework. The court must consider the contractual terms and conduct, the fact-sensitive nature of the inquiry, the employment and services paradigms, and the protective purpose of Section 5.
5. The agreement was assessed at termination, alternatively commencement of proceedings, while considering its whole preceding life. Despite features pointing towards employment, its limited working commitment, commission-based remuneration, permission to retain competing business interests, advisory nature and the parties’ treatment of the relationship made the argument that it was a contract for services much stronger. It was a self-employed management consultancy agreement, not an individual contract of employment.
6. WPP Italy therefore established jurisdiction under Article 23. WPP 2005 and BSH had a good arguable case that they could enforce the agreement under the Contracts (Rights of Third Parties) Act 1999 and rely on its jurisdiction clause. The fiduciary-duty claims arose directly from, and related to enforcement of, the agreement and were likewise within the clause. The defendant’s jurisdiction challenge was dismissed.