Employers can sue employees in employers' jurisdiction where a tortious conspiracy has taken place. This was the clear message from a recent case brought by Arcadia Petroleum, the oil trading firm owned by billionaire John Fredriksen, against a group of its former employees.
Former Arcadia CEO Peter Bosworth and ex-CFO Colin Hurley are among the four employees who had worked for Arcadia at a senior level in Switzerland and who are alleged to have perpetrated a substantial fraud valued at US$286 million. Arcadia brought a claim in London against the individuals alleging conspiracy, breach of fiduciary duty and breach of their employment contracts, and obtained a "without notice" freezing injunction.
Bosworth and Hurley applied to have the claims struck out on the ground that, under Europe-wide rules forming part of English law, claims against employees in relation to employment contracts have to be brought in the country where the employees are domiciled – in this case, Switzerland.
However, the High Court held that where an employer brings a claim in tort rather than a contractual claim against an employee, the courts of the European country where the harmful event occurred will have jurisdiction. Therefore, because the claims of conspiracy were tortious and did not relate to the employment contracts, they could be brought in England where the harm was suffered, while the claims for breach of fiduciary duty fell within the employment relationship and were struck out.
For Arcadia – and for future claimants who are bringing fraud claims against their European employees – this is a good result, even though only one part of this claim could proceed. By taking a robust attitude to what is effectively an employment dispute, the court allowed Arcadia to maintain its case before the claimant-friendly English court and benefit from one of its two nuclear weapons, the freezing order.
Arcadia Petroleum Ltd v Bosworth and others
Robert Wynn Jones
Partner, Dispute Resolution