Merinson v Yukos International UK BV & Ors

Under Brussels Recast, a claim relates to an individual contract of employment when, in reality and substance, there is a material nexus with that contract. An intervening settlement, including a severance-style agreement, does not necessarily break the nexus.

A jurisdiction agreement departing from the protective employment regime is effective only if the parties have joined issue on a specific point and litigation about it was imminent or contemplated when the agreement was made. A wide settlement can cover potential claims without satisfying that test. A court settlement remains contractual, so a court otherwise having jurisdiction may hear a claim to annul it; enforcement provisions do not remove jurisdiction.

Yukos brought damages claims against its former employee, together with claims seeking annulment of a Dutch court settlement which contained an exclusive jurisdiction clause in favour of the Netherlands. The employee applied for a declaration that the English court lacked jurisdiction and for the claim form to be set aside.

The Deputy High Court Judge held that the action, including the annulment claims, related to an individual contract of employment, that the settlement agreement had not been entered into after the relevant dispute arose, and that Chapter IV of Brussels Recast did not bar the English court’s jurisdiction: [2018] EWHC 335 (Comm); [2018] QB 1113. The appeal concerned those three issues.

1. Disposition. Gross LJ gave the leading judgment. Peter Jackson LJ and Rose LJ agreed. The appeal was dismissed on all three issues and as a whole.
2. Issue I. The applicable inquiry under Art. 20.1 of Brussels Recast was whether, in reality and substance, there was a material nexus between the claims and the individual contract of employment. The approach was consistent with Bosworth v Arcadia Petroleum, Aspen Underwriting Ltd v Credit Europe Bank NV and the observations in Alfa Laval Tumba v Separator Spares International. The alleged breaches of the employment contract were more than historical background: they formed the basis of the annulment claims and had to be considered to resolve them. The settlement agreement was in significant respects akin to a severance agreement. Its interposition did not sever the employment nexus. The conclusion was the same even if the annulment claims were considered separately from the damages claims.
3. Issue II. The Jenard test applied to Art. 23(1). It had two cumulative limbs: the parties must have disagreed on a specific point, and legal proceedings concerning that disagreement must have been imminent or contemplated. Disagreement on a specific point required the parties to have joined issue, following communication of the subject matter by one party to the other. Mr Merinson’s knowledge of questions put to a third party did not establish an actual dispute. A broadly drafted settlement could encompass potential disputes, but settlement agreements were not a special category and could not validate a jurisdiction clause concerning a dispute which was only potential when the agreement was made. The clause therefore could not displace the protective employment jurisdiction rules. Brussels Recast supplied no forum non conveniens discretion to cure the result.
4. Issue III. Applying Solo v Boch, a court settlement was contractual in nature rather than a judgment. Under Dutch law, the settlement agreement could be impugned on the same basis as any other contract. If the English court otherwise had jurisdiction under Chapter II, incorporation of the agreement into the Dutch court settlement did not remove it. Arts. 52, 58 and 59 concerned substantive review and enforcement, not the existence of jurisdiction to entertain a distinct annulment claim. Any tension between enforcement and annulment could be managed by case management. The English court would apply Dutch law to the annulment claims.

• Court of Appeal (Civil Division): dismissed the appeal on Issues I, II and III and consequently dismissed the appeal as a whole: [2019] EWCA Civ 830.
• High Court of Justice, Business and Property Courts, Commercial Court: dismissed the employee’s application for a declaration that the English court lacked jurisdiction: [2018] EWHC 335 (Comm); [2018] QB 1113.