Alta Trading UK Ltd & Ors v Bosworth & Ors

For jurisdictional purposes under Section 5 of Title II of the Lugano II Convention, whether a director is in an employment relationship depends on whether there is a relationship of subordination. That question requires assessment of all factors and circumstances characterising the relationship. A director’s ability to influence the operating company, and control over day-to-day business and personal duties, may be decisive. The mere power of shareholders to give general directions or terminate a directorship does not itself establish subordination. On a jurisdiction challenge, the claimant must show a good arguable case. The court should decide which party has the better case if possible; where the evidence is too uncertain to permit that conclusion, a plausible evidential basis is sufficient.

The claimants sought to pursue conspiracy and fraud claims in England against two senior executives of the Arcadia Group. The defendants challenged jurisdiction, relying on the employment provisions of the Lugano II Convention, which would have directed the claims to Switzerland.

The issue had previously travelled through the Court of Appeal, the Supreme Court and the CJEU. The CJEU held that a contract between a company and a director could not constitute an individual contract of employment where the director determined or could determine the contract’s terms and controlled and autonomously performed the company’s day-to-day business and his own duties. The Supreme Court remitted the matter for further evidence on whether the defendants were in a relationship of subordination.

1. Jurisdictional standard. The defendants’ challenge was dismissed in relation to the first three claimants. The claimants bore the burden of establishing jurisdiction. Applying Brownlie v Four Seasons Holdings Inc, [2018] 1 WLR 192, Goldman Sachs International v Novo Banco SA, [2018] 1 WLR 3683, Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV, [2019] 1 WLR 3514, and Aspen Underwriting Ltd v Credit Europe Bank NV, [2020] 2 WLR 919, the court held that a good arguable case ordinarily means that the claimant has the better of the argument. If the evidence is too uncertain to allow that conclusion after conscientious assessment, a plausible evidential basis is sufficient.
2. Subordination. The CJEU required the existence of a hierarchical relationship and assessment of all factors and circumstances characterising the relationship. The relevant inquiry was whether the defendants had a non-negligible ability to influence the Arcadia companies of which they were CEO and CFO. The inquiry was not confined to whether they could influence Farahead or its ultimate controller.
3. The shareholders’ power to terminate the defendants’ appointments, and general shareholder directives or legal control mechanisms, were not by themselves sufficient to establish subordination. The court considered the defendants’ actual authority, their control of day-to-day operations, their roles in appointing directors and staff, financial and commercial decision-making, remuneration, dividends and corporate restructuring, together with the Singapore Investment Memoranda and other evidence.
4. The evidence was heavily contested and untested. The claimants nevertheless had the better case that the defendants possessed more than negligible influence over the Arcadia companies. In any event, they had a plausible evidential basis. The same conclusion followed a fortiori for the fourth claimant.

1. Supreme Court: remitted the matter to the Commercial Court for further evidence and submissions on whether the defendants were in a relationship of subordination for the purposes of Section 5, Article 18(1) of the Lugano II Convention.
2. Court of Appeal: upheld the original Commercial Court judgment, [2016] EWCA Civ 818.
3. Commercial Court: the present court dismissed the defendants’ renewed jurisdiction challenge.