Semtech Corporation & Ors v Lacuna Space Ltd & Ors

Claims brought by an employer against an employee fall within the employment jurisdiction provisions where, viewed in reality and substance, they have a material nexus with the employment contract. The claims need not be pleaded as contractual claims. Relevant considerations include whether the employee’s position gave rise to the conduct complained of, whether the contract provides the legal framework for resolving the employee’s defence, and whether alleged contractual breaches form a critical component of the employer’s case. The jurisdictional protection is not displaced by the presence of co-defendants or competing tortious causes of action.

The claim concerned alleged copyright infringement, misuse of trade secrets, breach of confidence and conspiracy arising from the involvement of two former senior employees of Semtech with Lacuna Space. The employees, domiciled in France, challenged the jurisdiction of the English court under Articles 20 and 22.1 of the Recast Brussels Regulation.

The central issue was whether the claims against them related to their individual contracts of employment. The parties agreed that the applicable standard was which side had the better argument on the evidence.

1. Application granted. The claims against the fourth and fifth defendants related to their individual contracts of employment within Articles 20 and 22.1 of the Recast Brussels Regulation (Regulation 1215/2012). The English court therefore had no jurisdiction over those claims, which could only be brought in France.
2. The correct approach was the three-part formulation approved in Bosworth & Hurley v Arcadia Petroleum Ltd [2016] EWCA Civ 818: whether, as a matter of reality and substance, the claims relate to the employment contracts; whether there is a material nexus between the conduct complained of and those contracts; and whether the legal basis of the claims can reasonably be regarded as a breach of the contracts such that it is indispensable to consider them to resolve the dispute.
3. The approach was broader than asking whether the employment contract had legal relevance or whether the claim was formally brought under the contract. The fact that claims were framed in tort, confidence or intellectual property terms did not prevent them from relating to employment contracts.
4. The employees’ senior positions gave them access to the confidential and copyright materials and the ability to deal with Lacuna. Their authority to disclose materials and arrange collaborations, and whether that authority was vitiated by their undisclosed shareholdings, depended on the duties and obligations contained in their employment contracts. Those contracts supplied the legal framework for their defence.
5. The employer’s pleading itself placed alleged breaches of exclusivity, confidentiality, fidelity and conflict-of-interest obligations at the centre of the causes of action. The claims for joint liability and breach of confidence necessarily required those alleged breaches to be established. The same employment nexus applied to the copyright claims, despite additional allegations concerning the vitiation of licence agreements.
6. The policy consideration supported the result. The defendants were employees with a genuine connection to France and fell within the category of weaker parties protected by the employment jurisdiction provisions. The inconvenience of parallel proceedings and the presence of co-defendants were irrelevant to the Article 20 analysis.