Court of Appeal provides important guidance on the ECJ decision in Brogsitter concerning the jurisdictional relationship between claims in contract and tort

06/09/16

Arcadia Petroleum & Others v Bosworth & Another

The Court of Appeal has dismissed an appeal against a decision of Burton J and has held that claims - including claims for conspiracy and for breach of fiduciary duty brought by the Claimant companies against their former senior management - fall outside the provisions of Section 5 of the Lugano Convention governing jurisdiction over claims relating to individual contracts of employment. The claims can therefore proceed in this jurisdiction notwithstanding that the Appellants are domiciled in Switzerland.

Section 5 of the Lugano Convention provides that in matters relating to individual contracts of employment, an employer must bring proceedings in the Convention state in which the employee is domiciled. The Appellants submitted that the non-contractual claims against them fell within Section 5 because the claims could be pleaded as breach of their employment contracts, as they had so originally been pleaded.  The Court of Appeal - after considering the Court of Appeal’s decision in Alfa Laval Tumba v Separator Spares International [2012] EWCA Civ 1155 and the decision of the ECJ in Brogsitter v Fabrication de Montres Normandes EURL [2014] QB 673 – held that the relevant test for characterising the claims for jurisdictional purposes was not a “mechanistic test” that depended on whether the conduct complained of could have been pleaded as a breach of contract, but that instead the correct approach was to consider whether “the reality and substance of the conduct relates to the individual contract of employment, having regard to the social purpose of Section 5 [of the Lugano Convention]”. 

In the course of the hearing, the Court also heard submissions from both parties as to the correct interpretation of the ECJ’s decision in Brogsitter, a decision that concerns the general divide within Article 5 of the Judgments Regulation (now Article 7 of the Recast Judgments Regulation) between contract and tort, and which provides guidance on the approach to characterising claims as either contractual or tortious for autonomous jurisdictional purposes.  The Court held that it did not suffice to ask whether the conduct complained of “may be considered a breach of contract” in order for it to be characterised as contractual, but that, correctly interpreted, the decision in Brogsitter directed focus upon the substance of the matter, the correct question being whether the legal basis of the claim can “reasonably be regarded” as a breach of contract such that it would be “indispensable” to consider the contract in order to resolve the matter in dispute.   The Court of Appeal held that this approach was consistent with the approach previously adopted in Alpha Laval.

The judgment appears here.