Samengo-Turner & Ors v J & H Marsh & McLennan (Services) Ltd & Ors

An incentive or bonus agreement forms part of an individual contract of employment where it adds to or varies the terms governing the employment relationship. A group company which enforces such an agreement as if it were the employer may be treated as an employer for the jurisdictional purposes of section 5 of Council Regulation (EC) 44/2001.

An employee domiciled in a Member State may therefore be sued on those obligations only in the courts of that domicile. A jurisdiction agreement made before the dispute arose cannot displace that protection. Where foreign proceedings infringe the employee’s statutory jurisdictional right and the foreign court cannot give effect to the Regulation, an anti-suit injunction may be necessary and appropriate.

The claimants were senior reinsurance brokers employed in England by an English service company within a multinational group. They received cash incentive awards under bonus agreements administered by the group’s New York holding company. After the claimants resigned to join a competitor, two American group companies commenced New York proceedings to enforce the agreements’ co-operation and repayment provisions.

David Steel J refused an interim anti-suit injunction. The claimants appealed, contending that the New York claims concerned their individual contracts of employment and contravened the jurisdictional protection in section 5 of Council Regulation (EC) 44/2001. By consent, the Court of Appeal determined that jurisdictional issue finally rather than deciding only whether there was a serious issue to be tried.

The central questions were whether the bonus agreements formed part of the claimants’ employment contracts, whether the American group companies were employers for section 5, and whether the foreign proceedings should be restrained.

1. The appeal was allowed unanimously and an anti-suit injunction was granted. Tuckey LJ delivered the judgment, with which Longmore and Lloyd LJJ agreed.

2. The expressions used in Council Regulation (EC) 44/2001 required an autonomous European meaning. The Regulation sought certainty, avoidance of multiple proceedings and allocation of jurisdiction to the court most closely connected with the dispute. Section 5 protected employees as the socio-economically weaker party, but its protection applied to all employees regardless of seniority or their particular need for protection.

3. The New York claims related to individual contracts of employment within Article 18(1). A contract of employment need not be contained in one document or made at one time. An agreement which varies or adds to an earlier employment contract becomes part of that contract, even though it lacks the usual terms of a complete employment contract. The bonus agreements made payment conditional upon continued employment and added notice, non-solicitation, confidentiality, disclosure and co-operation obligations. The claimants’ employment terms could not be ascertained without considering both sets of agreements.

4. The American group companies were employers for Article 20(1)’s jurisdictional purpose. Their right to sue arose from the agreements’ wide definition of “the Company”, which allowed them to enforce employment obligations as if they were employers. Their economic interest in the agreements and their enforcement required them to observe the same jurisdictional restraint as the English employing company. This functional treatment was confined to jurisdiction and did not pierce the corporate veil for other purposes.

5. The claimants could be sued only in England. Under Article 21(1), the exclusive New York jurisdiction clause was ineffective because it had been agreed before the dispute arose. Treating all relevant group companies alike promoted certainty, prevented parallel English and New York proceedings, and respected England’s closest connection with the employment dispute.

6. An anti-suit injunction required caution and operated against the litigating parties, not the foreign court. Doing nothing would leave the claimants’ statutory rights ineffective because the New York court had upheld its jurisdiction and could not apply the Regulation. The injunction was therefore necessary. The group companies remained free to enforce the bonus agreements in England.

1. Court of Appeal (Civil Division): In [2007] EWCA Civ 723, the court unanimously allowed the claimants’ appeal and granted an anti-suit injunction restraining the New York proceedings.
2. High Court, Queen’s Bench Division (Commercial Court): David Steel J refused the claimants’ application for an interim anti-suit injunction. No citation for that decision is stated in the judgment.