Petter v EMC Europe Ltd & Anor

For jurisdiction under section 5 of the Brussels I (Recast) Regulation (1215/2012), an employment relationship may extend beyond the employer identified under domestic law. A parent company may be treated as an employer where an incentive or share award agreement is closely connected with the employee’s work, incorporates employment obligations, and forms part of the overall employment package. The court must examine the substance of the arrangements. An exclusive jurisdiction clause in favour of a non-Member State may be ineffective under the Regulation. However, an anti-suit injunction is not automatic. Its grant remains discretionary and requires consideration of comity, the parties’ choice of law, the foreign court’s ruling, and the balance of convenience.

Mr Petter, formerly employed by EMC Europe Ltd, received restricted stock units under agreements made with EMC Corporation, its Massachusetts parent. After his employment ended and he joined a competitor, EMC Corporation commenced proceedings in Massachusetts concerning forfeiture and rescission of the awards. Mr Petter brought proceedings in England and sought declarations and an interim anti-suit injunction.

EMC Corporation challenged the English court’s jurisdiction, arguing that it was neither Mr Petter’s employer nor party to a contract of employment. The central issues were whether the RSU agreements formed part of an employment contract for the purposes of section 5 of the Brussels I (Recast) Regulation (1215/2012), and whether an injunction should restrain the Massachusetts proceedings.

1. EMC Corporation’s jurisdiction challenge was dismissed. The claimant had to show a good arguable case that the claim fell within the Regulation. The relevant concepts had an autonomous European meaning, and employment jurisdiction rules protected the weaker party.

2. Applying the criteria identified in WPP Holdings Italy SRL v Benatti [2006] EWHC 1641 (Comm), the ordinary employment relationship was between Mr Petter and EMC Europe. Nevertheless, that did not determine whether EMC Corporation was an employer for the purposes of the Regulation.

3. The court followed the reasoning of Samengo-Turner v J&H Marsh & McLennan (Services) Ltd [2007] EWCA Civ 723, [2008] ICR 18. The substance of the arrangements had to be examined. The RSU agreements rewarded and incentivised employment, depended on a continuing service relationship, incorporated the Key Employee Agreement, and imposed employment-related obligations owed to EMC Corporation.

4. Accordingly, there was a good arguable case that the RSU agreements formed part of Mr Petter’s employment contract and that EMC Corporation was an employer for the Regulation, even though it would not be an employer under ordinary English law. Articles 21 and 22 therefore permitted Mr Petter to sue in England and required EMC Corporation to sue him in the courts of the Member State where he was domiciled. The Massachusetts jurisdiction clause had no legal force in England by reason of Articles 23 and 25.4.

5. The interim anti-suit injunction was refused. Although there was a serious issue to be tried, the injunction was discretionary. The court was not bound automatically to grant one merely because the Regulation conferred jurisdiction. The Massachusetts court had ruled that it possessed exclusive jurisdiction, and an injunction would probably be final in effect. Comity, the parties’ choice of Massachusetts law, the risk of irreconcilable judgments, and the practical inability to secure recognition of an English declaration outweighed the case for relief. The approach in Samengo-Turner was not applied to require an injunction as a matter of course.

6. Costs were to follow the event on both applications, subject to detailed assessment if not agreed. Both parties were given permission to appeal.