Credit Suisse have been in the news for all the wrong reasons over the last few weeks after financial woes led to a last-ditch merger with UBS. However, the Court of Appeal did deliver them some good news in the form of their judgment in the case of Benyatov v Credit Suisse (Securities) Europe Limited.
The Case
Mr Benyatov held a senior position in the UK with Credit Suisse. As part of his role, he was asked to assist with a project in Romania involving the purchase of a state-owned electricity company.
He was later arrested when on a work trip to Romania, convicted and sentenced to 4.5 years in prison for disclosing confidential state information in connection with the project. Credit Suisse conducted their own internal investigation and concluded that Mr Benyatov had done nothing wrong. However, the conviction, in practice, prevented him from working as a regulated financial professional.
He brought a claim of breach of contract against Credit Suisse claiming £66 million in loss of earnings. He alleged breach of what he argued was an implied term in the employment contract that Credit Suisse would indemnify him for any losses (including career-long loss of earnings) he suffered as a result of carrying-out work under their instruction during his employment.
He was later arrested when on a work trip to Romania, convicted and sentenced to 4.5 years in prison for disclosing confidential state information in connection with the project. Credit Suisse conducted their own internal investigation and concluded that Mr Benyatov had done nothing wrong. However, the conviction, in practice, prevented him from working as a regulated financial professional.
He brought a claim of breach of contract against Credit Suisse claiming £66 million in loss of earnings. He alleged breach of what he argued was an implied term in the employment contract that Credit Suisse would indemnify him for any losses (including career-long loss of earnings) he suffered as a result of carrying-out work under their instruction during his employment.
The Decision
The Court of Appeal concluded that such a wide indemnity could not be implied into his contract of employment and he wasn’t entitled to be indemnified for the loss of earnings.
The Court of Appeal’s decision is comforting for employers in general. The Court accepted that there is an implied term in employment contracts that the employer will indemnify the employee for expenses incurred in carrying out their duties but declined to extend this to cover lost income resulting from acts carried-out at work. If the claim had succeeded then employees could have potentially claimed under the employment contract for losses flowing from any act occurring whilst working (for example, if they were injured). This would have cut across other legal protections (such as personal injury claims and insurance) and would have led to significant potential financial exposure for employers.
The Court of Appeal’s decision is comforting for employers in general. The Court accepted that there is an implied term in employment contracts that the employer will indemnify the employee for expenses incurred in carrying out their duties but declined to extend this to cover lost income resulting from acts carried-out at work. If the claim had succeeded then employees could have potentially claimed under the employment contract for losses flowing from any act occurring whilst working (for example, if they were injured). This would have cut across other legal protections (such as personal injury claims and insurance) and would have led to significant potential financial exposure for employers.