UK: Anti-suit injunction granted to protect English domiciled employee's right to be sued only in English court and prevent US employer suing in New York

The English High Court has granted an anti-suit injunction to prevent a US employer continuing New York proceedings against an English-domiciled employee in a dispute about entitlement to bonus payments: Gagliardi v Evolution Capital Management LLC [2023] EWHC 1608 (Comm).

The decision shows that an English court will ordinarily grant an anti-suit injunction to protect a UK-domiciled employee’s right to be sued by their employer only in the UK, regardless of where the employer is domiciled. That was the position under the employee protection provisions in the EU-wide jurisdiction regime that applied to the UK pre-Brexit. The present decision confirms that it also applies under domestic provisions introduced post-Brexit to continue similar protections for UK-domiciled employees.

Background

The recast Brussels Regulation, which applies to all EU member states, contains various provisions regulating jurisdiction in claims between employees and employers (and similar provisions relating to consumer and insurance claims). The aim of these provisions is to protect the perceived weaker party in each relationship by (in general terms) providing that the employee (or consumer or insured) can only be sued in the member state of their domicile, while allowing the stronger party (the employer, trader or insurer) to be sued in a broader range of jurisdictions.

The recast Brussels Regulation no longer applies to the UK, save in proceedings commenced before the end of the Brexit transition period (at the end of 2020). However, the UK legislated to re-introduce similar protections for UK-domiciled employees and consumers (though not insureds) post-Brexit under ss.15A to 15E of the Civil Jurisdiction and Judgments Act 1982 (“CJJA”). The provisions that are relevant to the current decision are:

• Section 15C(2): The employer may be sued by the employee- … (b) in the courts for the place in the United Kingdom where or from where the employee habitually carries out the employee’s work or last did so (regardless of the domicile of the employer)…
• Section 15C(3): If the employee is domiciled in the United Kingdom, the employer may only sue the employee in the part of the United Kingdom in which the employee is domiciled (regardless of the domicile of the employer).

In the present case, the claimant (Mr Gagliardi) brought proceedings against the defendant US company (Evolution), relying on s.15C(2)(b), for outstanding bonus payments he alleged were due to him. He also sought an anti-suit injunction to prevent Evolution continuing New York proceedings which Mr Gagliardi alleged fell within s.15C(3). Those proceedings included claims for a declaration that the bonus was not due and for recovery of bonus amounts previously paid.

Evolution challenged the jurisdiction of the English court, and that application will be heard in December 2023. The present decision relates to Mr Gagliardi’s claim for an anti-suit injunction.

Decision 

The High Court (Mr Justice Foxton) granted the anti-suit injunction.

Jurisdiction

The substantive jurisdiction challenge was not before the court, but the court had to consider whether it had personal jurisdiction over Evolution so as to grant the anti-suit injunction. That depended (inter alia) on whether there was a good arguable case that Mr Gagliardi habitually worked in England for the purposes of s.15C(2)(b). Evolution’s evidence did not suggest that Mr Gagliardi’s physical location when working for Evolution for nearly one year prior to his termination was anywhere other than London. It made no difference whether (as per Evolution’s evidence, which was disputed by Mr Gagliardi) it was intended that Mr Gagliardi was going to relocate to the US.

“In principle” entitlement to anti-suit relief

The judge noted that, in cases falling within the recast Brussels Regulation, the Court of Appeal’s decision in Samengo-Turner v J&H Marsh & McLennan (Services) [2008] ICR 18, as followed in Petter v EMC Europe Ltd [2015] CP Rep 47 (considered here), established that an anti-suit injunction should ordinarily be granted, in order to protect the employee’s rights, to restrain an employer from bringing proceedings outside the EU. While Samengo-Turner had been criticised by various commentators, and by Vos LJ in the Petter case, it was binding on the court in this case.

The judge held that the same approach applied under s.15C(3), which was intended to preserve the employee protection afforded by the recast Brussels Regulation for UK-domiciled employees. Further, the present case could not be distinguished factually from Samengo-Turner and Petter.

Application to the facts

To obtain anti-suit relief, therefore, Mr Gagliardi had to satisfy the court to a high degree of probability that s.15C(3) applied, ie that he was domiciled in England, he was an employee of Evolution, and (which was not separately disputed) the claims arose in relation to his employment. The judge was satisfied to the requisite high degree of probability as to both domicile and employee status.

Domicile is defined for the purposes of s.15C at s.41(2) of the CJJA, which requires that an individual is resident in the UK and that the nature and circumstances of that residence indicate a substantial connection to the UK. The latter requirement is presumed to be fulfilled, unless the contrary is proved, where the individual has been resident in the UK for the last three months or more. The judge was satisfied that this definition was met in this case, regardless of any future planned relocation by Mr Gagliardi.

As for whether Mr Gagliardi was an employee, Evolution alleged that he lacked the requisite degree of subordination to be an employee for the purposes of the special regime in the recast Brussels Regulation (which applies to the CJJA by virtue of s.15E(2)(a)). It relied on the CJEU decision in Arcadia Petroleum Ltd v Bosworth [2020] ICR 349 and the subsequent Court of Appeal decision in the same litigation in Alta Trading UK Ltd v Bosworth [2021] ICR 1358, where it was held that there was a good arguable case that the relevant individuals lacked the necessary relationship of subordination to be considered employees, as they had a more than merely negligible ability to influence the relevant companies. However, in the present case there was no evidence to suggest that Mr Gagliardi had influence over the activities of Evolution in its dealings with him, as opposed to having autonomy over his trading strategy and working schedule.

Strong reasons not to grant an injunction?

Although the New York court had already determined that it had jurisdiction, that was not a reason not to grant the relief: an anti-suit injunction is of value principally where the alternative court has asserted or will assert jurisdiction.

The judge held that there were no strong reasons to refuse an anti-suit injunction in this case.