Neutral Citation Number: [
 2016]
  
EWCA
  
Civ
  
818 
  Case No: A3/2015/175 0 
IN THE COURT OF APPEAL (
 CIVIL
  DIVISION ) 
ON APPEAL FROM THE QUEEN'S BENCH DIVISION  
COMMERCIAL COURT  
Mr Justice Burto n 
[2015] EWHC 1030 (Comm )  
 
  Royal Courts of Justice  
Strand, London, WC2A 2L L 
  19/08/
 2016 
B e f o r e :  
LORD JUSTICE GROSS  
LADY JUSTICE GLOSTER  
and 
LADY JUSTICE MACU R 
____________________  
Between:  
 
 (1) PETER MILES BOSWORTH  
(2) COLIN HURLEY   
Appellants  
 - and -  
 ARCADIA PETROLEUM LTD & 
OTHERS  Respondents  
____________________  
David Foxton QC, Adrian Briggs QC and Richard Eschwege (instructed by 
Quinn Emanuel Urquhart & Sullivan UK, LLP) for the Appellants  
Mark Howard QC, Fionn Pilbrow and Edward Harrison (instructed by 
Freshfields Bruckhaus Deringer LLP ) f or the Respondents  
 
Hearing dates : 5th and 6th May 
 2016
   
____________________  
HTML VERSION OF JUDGMENT APPROVED
 
____________________  
Crown Copyright ©  
Lord Justice Gross :   
INTRODUCTION  
1. Mr Bosworth and Mr Hurley ("the Appellants") appeal to this Court from the 
judgmen t of Burton J, dated 1st April, 2015 ("the judgment"), with the 
permission of the Judge.  
2. The principal issue goes to the proper application of Arts. 18 to 20 of the 
Lugano Convention ("the Convention"), together with Arts. 5.1 and 5.3 
thereof, in circumst ances where, on the facts available to us, the Appellants, 
though employees, exercised control over by whom, where and on what terms 
they were employed. There is no material difference between the relevant 
terms of the Convention and the corresponding prov isions of Council 
Regulation (EC) No. 44/ 2001 ("the Judgments Regulation"), so, with very 
few exceptions, reference will be made simply to the Convention.  
3. Insofar as material, Arts. 18 and 20 of the Convention provide as follows:  
" SECTION 5  
Jurisdictio n over individual contracts of employment  
Article 18  
1. In matters relating to individual contracts of employment, jurisdiction shall 
be determined by this Section….  
Article 20  
1. An employer may bring proceedings only in the courts of the State bound 
by this Convention in which the employee is domiciled."  
4. Turning briefly to the Judgments Regulation, Recital (13) provides that in 
relation to insurance, consumer contracts and employment, "…the weaker 
party should be protected by rules of jurisdiction more favourable to his 
interests than the general rules provide for." Reverting to the Convention, Art. 
5 is in these terms:  
" A person domiciled in a State bound by this Convention may, in another 
State bound by this Convention, be sued:  
1. (a) in matters relating to a contract, in the courts for the place of 
performance of the obligation in question…..  
……  
3. in matters relating to tort, delict or quasi -delict, in the courts for the place 
where the harmful event occurred or may occur."  
For c ompleteness, Art. 6.1 provides that a person domiciled in a State bound 
by the Convention may "also" be sued:  
" where he is one of a number of defendants, in the courts for the place where 
any one of them is domiciled, provided the claims are so closely co nnected 
that it is expedient to hear and determine them together to avoid the risk of 
irreconcilable judgments resulting from separate proceedings;".  
5. The First, Second and Third Respondents are companies in the Arcadia Group 
("the Arcadia Group") involved in oil trading. For convenience (judgment, at 
[3]), the First Respondent may be referred to as "Arcadia London", the Second 
Respondent as "Arcadia Switzerland" and the Third Respondent as "Arcadia 
Singapore". The Fourth Respondent ("Farahead") is the 100% owner of the 
Arcadia Group, including the other Respondents.  
6. At the material times, the Appellants, Mr Bosworth and Mr Hurley, were the 
de facto  CEO and CFO of the Arcadia Group.  
7. The Respondents allege that they are victims of a fraud committed principal ly 
by the Appellants, together with eight other parties. They advance claims in 
unlawful means conspiracy and breach of fiduciary duty against the 
Appellants. Further, the Appellants face claims of dishonest assistance in the 
breach of fiduciary duty by ot her Defendants and for knowing receipt in 
respect of such breaches of fiduciary duty.  
8. In a nutshell, the essence of the alleged fraud involved the Appellants (and 
others) siphoning off sums from the Arcadia Group for their own benefit and 
to the detriment  of the Group; as recorded in the judgment at [6], the Judge 
was told that the estimated loss was of the order of US$286.85 million and it is 
now estimated at just under US$340 million. The modus operandi  of the 
alleged fraud was the insertion of corporate  entities into both the purchasing 
and selling chains and the manipulation of those transactions so that almost all 
of the profits accumulated in the inserted corporate entities, rather than in the 
Arcadia Group. Suffice for the moment to say that the Appe llants vigorously 
deny the allegations (to the extent they can without prejudicing their 
jurisdiction objection).  
9. Procedural hostilities commenced with the Respondents obtaining an ex parte  
order on the 12th February, 2015 ("the Teare Order") including, inter alia , a 
freezing injunction and a proprietary injunction against the Appellants and all 
the other Defendants. In due course the Teare Order was continued both on an 
interim basis and, subsequently, on an inter partes basis, following a hearing 
before  Flaux J on the 1st July, 2015.  
10. For present purposes, it is fair to note that the Respondents' initial pleading 
alleged breaches of the Appellants' employment contracts, in addition to 
unlawful means conspiracy and breach of fiduciary duty.  
11. By an applica tion dated 9th March, 2015 ("the jurisdiction application"), the 
Appellants raised a jurisdictional objection to the proceedings here. As set out 
in paragraph 1 of his order dated 1st April, 2015 ("the Order"), Burton J 
declared:  
" (1) The Court has jurisdiction over the claims by the Claimants against the 
First and Second Defendants in conspiracy.  
(2) The Court has jurisdiction over the claims by the Claimants against the 
First and Second Defendants for breach of fiduciary duty, s ave to the extent 
set out at subparagraph (3) below.  
(3) The Court has no jurisdiction over any claims brought by the First, Second 
or Third Claimant against the First or Second Defendant for breach of 
fiduciary duty occurring whilst the First or Second De fendant was employed 
by the relevant respective Claimant, on the basis that any such claims are 
'matters relating to individual contracts of employment' pursuant to article 18 
of the Lugano Convention, with the result that such claims must, pursuant to 
article 20(1) of the Lugano Convention, be brought against the First and 
Second Defendants in Switzerland (where they are domiciled). All such claims 
are dismissed for want of jurisdiction."  
12. Save to the extent recorded at para. 1(3) of the Order, the Appellan ts' 
jurisdiction application was dismissed. Burton J granted the First to Third 
Respondents and the Appellants permission to appeal/cross -appeal these 
rulings.  
13. It is convenient to note here that Burton J concluded, at para. 2 of the Order, 
that, for the p urposes of para. 1(3), the relevant contracts and dates were as 
follows:  
" (1) The First Claimant employed the First Defendant between March 2006 
and 4 September 2009 and employed the Second Defendant between March 
2006 and 31 July 2011.  
(2) The Second Cl aimant did not employ the First or Second Defendants at 
any of the material times.  
(3) The Third Claimant employed the First Defendant between September 
2009 and May 2012 and employed the Second Defendant between August 
2011 and July 2012. "  
14. In the event, the Appellants appeal to this Court on the grounds that the Judge 
was wrong to hold that the (English) Court had jurisdiction over (1) the 
conspiracy claims against them; and (2) any of the claims against them for 
breach of fiduciary duty.  
15. For their part,  the Respondents submit that the Order should be upheld, 
essentially for the reasons given by the Judge.  
16. We were most grateful to leading counsel, Mr Foxton QC for the Appellants 
and Mr Howard QC for the Respondents, together with their respective teams, 
for the excellence of the assistance provided to us, both in writing and orally.  
THE JUDGMENT UNDER APPEAL  
17. Early on in the judgment (at [11]) Burton J noted that if the Appellants' 
jurisdiction application was well -founded, so that Arts. 18 and 20 of the 
Convention applied, then "….there will necessarily be [a] multiplicity of 
proceedings, because the First and Second Defendants cannot be sued here 
together with the other alleged co -conspirators…".  
18. At [13], Burton J made the finding as to the Appellants' employment history, 
subsequently reflected in the Order (as set out above) and not challenged on 
the appeal. It follows that the Respondents do not challenge the Appellants' 
status as employees at various times of the First and Third Respondents; also 
and as recorded by the Judge (at [15]), it follows that the Appellants were at 
no stage employed by either the Second or the Fourth Respondent. As to the 
Appellants' "senior titles in the Arcadia Group" – namely, CEO in the case of 
the First Appellant and CFO in the case of the Second Appellant – Burton J 
said this (at [14]):  
" None of the individual contracts of employment, all of which were drafted 
by the First and Second Defendants themselves, and contain an entire 
agreement clause, contain any provision th at the First or Second Defendants 
should act as CEO or CFO of the Arcadia Group. "  
19. As already noted, the Respondents' initial pleadings had included allegations 
of breach of contract. Burton J went on to recount (at [18]) that the 
Respondents had not drawn  Arts. 18 and 20 of the Convention to the attention 
of Teare J. The Respondents apologised and accepted that they had been in 
error in not doing so; the reason advanced was that it was an oversight – it had 
not occurred to them that Arts. 18 and 20 applied  and, of course, it remains the 
Respondents' case that those provisions do not apply (save in respect of those 
aspects of the breach of fiduciary duty claims recorded at para. 1(3) of the 
Order). By the time the matter came before Burton J, all references to breach 
of contract had been removed from the Respondents' amended pleadings. 
Inevitably, this topic featured in argument before the Judge (and, indeed 
before us). The judgment contains the following passages:  
" 24. There is no question in the case before me of the claim having been 
dressed up as tort to avoid Article 18, not least because Mr Croall [the 
Respondents' solicitor] has explained the non -disclosure by making clear that 
Article 18 had not even occurre d to them. So far as the pleadings are 
concerned, Mr Swainston [the Appellants' then leading counsel], is, however, 
critical of what the Claimants have sought to delete by amendment since the 
Article 18 point was raised……  
26. This is, of course, a point th at cuts both ways. Mr Swainston submits that 
it is indicative of games -playing in the pleadings, although…he says that in 
any event the fault was incurable, because the claim has always been, and 
remains, within Articles 18/20. Mr Howard would refer to it to show that the 
breach of contract claim was extremely subsidiary, and that the conspiracy and 
breach of fiduciary duty and dishonest assistance/constructive trust claims can 
and do stand without it, and are…. ' not contractual claims at all' " 
20. Burton J the n reviewed the authorities, both English and European, to all of 
which I shall come, before reaching his conclusion on the conspiracy claim. 
He said (at [42]) that "…the honesty of the parties in entering into various 
transactions…" was going to be "centra l". The Judge went on as follows:  
" 43. Mr Swainston characterised his submission by reference to Davis LJ's 
dictum at paragraph 44 of Alfa Laval  as being 'a castigation of the pleading 
approach and seeing if the nature of the claim is essentially a breac h of 
contract.'  
44. I agree. In my judgment, this is a case relating to alleged wrongs caused by 
a combination of wrongdoers, not a claim relating to an individual contract of 
employment."  
The Judge regarded it as "quite plain" (at [47]) that the substanti ve and real 
claim was and always had been a tortious claim for conspiracy against the 
First and Second Appellants and others. The contractual claims could be and 
had been "stripped out and dispensed with". Although (at [48]) the conspiracy 
had involved som e who were employees of Arcadia Group companies, 
amongst others who were not, the tortious claim was a "stand -alone claim". 
The Judge was thus content to answer the question posed by Longmore LJ in 
Alfa Laval (see further, below), namely "Do the claims mad e against an 
employee relate to the individuals' contract of employment?", by the answer, 
"No". Accordingly (at [49]), there was nothing to stand in the way of "the 
sensible course" of all the alleged co -conspirators being tried together.  
21. Turning to the cl aims for breach of fiduciary duty, the logic of Burton J's 
decision, as reflected at paras. 1(2) and (3) of the Order, appears from the 
following passage in the judgment:  
" 75. …consistent with what I have found, namely that where there is no 
contractual nexus between the party who has suffered the loss, and is claiming 
breach of fiduciary duty, and the alleged tortfeasor, the claims are in tort, and 
do not fall within Articles 18 -20. As that applies in relation to Arcadia 
Switzerland, so the same should a pply in relation to Arcadia London, `in 
relation to the period after the First Defendant had left it. ".  
Mutatis mutandis , the same logic applied in respect of the Second Appellant 
and the Third and Fourth Respondents (as against both Appellants) – though 
my understanding is that no loss has been identified in respect of either of 
these Respondents.  
THE CONSPIRACY CLAIMS  
22. (1) The rival cases in outline: For the Appellants, Mr Foxton submitted that 
the Judge had erred. The Respondents' case had a jurisdictio nal flaw. In 
essence, the conspiracy claim against the Appellants was that as CEO and 
CFO of the Arcadia Group, they had defrauded their employers. On both the 
English law authorities and the European jurisprudence such a claim fell 
squarely within Art. 18 .1 of the Lugano Convention and "no clever pleading 
or amendments" could avoid the correct jurisdictional categorisation. The 
matter was emphasised by the Respondents' pleading " volte face " in deleting 
their original contractual claims, based on the Appell ants' contracts of 
employment.  
23. In accordance with authority, the "touchstone" was not what was pleaded but 
whether the claims in question could have been pleaded as breaches of the 
Appellants' duties of loyalty and fidelity under their contracts of employ ment. 
If that was the test, as Mr Foxton submitted it was, then it was accepted by Mr 
Howard that the Appellants must succeed on this issue. Any movement away 
from this touchstone, meant ceding the jurisdictional issue to the pleader's 
choice. The relevant  question was the substance of the conduct; if the conduct 
in question constituted a breach of the Appellants' contracts of employment 
and therefore could be pleaded as such, the matter fell within Art. 18. The 
hierarchy of the Convention meant that the po licy interest underlying Art. 18 
took precedence over other considerations – even exclusive jurisdiction 
clauses under Art. 21. Moreover, Art. 18 protected employees as a class and 
there was no appeal from the Judge's finding that the Appellants here were 
employees. There was no easy escape route from Art. 18 simply by pleading 
conspiracy – and, in any event, there were historical sensitivities relating to the 
use of conspiracy in the field of labour relations.  
24. For the Respondents, Mr Howard submitted that  the relevant test was not 
mechanistic, turning on the question of whether a claim could  be pleaded in a 
particular way. It was, instead, a test of substance as to the character of the 
conduct complained of. The question was whether the claims in issue wer e, in 
substance, contractual employment claims between an employer and 
employee. The answer was that the conspiracy claims here were not in 
substance contractual employment claims; they were free -standing, 
independent claims, brought against a collection o f natural and legal persons 
(some of whom were altogether outside the Arcadia Group) who conspired 
together to steal significant sums of money from the Respondents. Some of the 
entities bringing the claims had not employed the Appellants, either at all or at 
the time when the relevant losses were incurred. Conspiracy was a joint tort; in 
respect of the same conduct it would be odd if the claims were characterised as 
contractual against some joint tortfeasors but tortious against others. As found 
by the Judg e, the Appellants had acted as de facto  CEO and CFO of the 
Arcadia Group; it was that group -wide fiduciary role that allowed them to run 
the day -to-day business of the Arcadia Group and the freedom to perpetrate 
and then conceal, the fraud with which these  proceedings are concerned. By 
contrast, the Appellants had only a limited contractual relationship with only 
certain of the Respondent entities and for limited time periods only; no claims 
were brought against them pursuant to those contracts. All this re flected the 
fact that the Appellants exercised control over by whom and on what terms 
they were employed – and took advantage of this situation to suit their own 
financial and tax position, hence their move to Switzerland.  
25. The Judge's conclusion was corre ct and accorded with authority, English and 
European, together with common sense. If the Appellants were right, the 
conspiracy claim could never be brought in a single jurisdiction – given that 
the Third and Fourth Defendants were domiciled in England. Tha t was not a 
result that a rational system could have intended.  
26. (2) The legal framework:  It is convenient to proceed in the following order. 
First, to set the context, a brief summary of the scheme of the Convention, so 
far as here relevant. Secondly, to c onsider the English authorities. Thirdly, to 
consider the European jurisprudence. Fourthly, I shall seek to pull some 
threads together.  
27. (A) The scheme of the Convention:  Art. 2 furnishes the general rule as to 
jurisdiction: a defendant must be sued in the  state where he/she is domiciled.  
28. Art. 5 provides "special jurisdiction" in respect of matters relating to a contract 
(Art. 5.1) and matters relating to tort (Art. 5.3). Thus a defendant to a 
contractual claim may be sued in the courts for the place of performance of the 
obligation in question and a defendant to a claim in tort may be sued in the 
courts for the place where the harmful event occurred. There is here a basic 
jurisdictional divide between matters re lating to a contract  and matters relating 
to tort, involving a binary division: a claim cannot concern both matters 
relating to a contract and matters relating to tort – the provisions of Arts. 5.1 
and 5.3 are mutually exclusive.  
29. The history of jurisdicti on in respect of contracts of employment and the 
emergence of Section 5 of the Convention, containing Arts. 18 and 20, is 
helpfully set out in Dicey, Morris and Collins,  The Conflict of Laws (15th ed.) 
at paras. 11 -370 and following but, as it sheds no rea l light on the resolution of 
the present appeal, I do not take time over it here. Section 5 deals with 
"Jurisdiction over individual contracts of employment", as distinct from 
collective agreements or contracts for services and it is perhaps worth noting 
(if no more) that the wording speaks of "contract of employment" rather than 
"employment relationship". In one sense, Section 5 comprises a particular 
subdivision within the basic contract/tort jurisdictional divide. It is common 
ground that the provisions of Arts. 18 and 20 must be interpreted 
autonomously. The policy, or as Mr Foxton put it, the "social purpose" 
underlying Section 5, as it underlies insurance and consumer contracts, is that 
the weaker party should be protected by rules of jurisdiction more  favourable 
to his interests than provided for under the general rules. In matters coming 
within Section 5, the employee is presumptively treated as the weaker party.  
30. Where Section 5 applies, it is at or very near the top of "the hierarchy of 
jurisdiction al rules" (Briggs, 
 Civil
  Jurisdiction and Judgments , 6th ed., 
2015, at para. 2.10); it "trumps" everything (or nearly everything) else. Thus, 
Section 5 applies to the exclusion of the special jurisdiction for contract and 
tort found under Art. 5. In one sense, Section 5  therefore insists on and applies 
the general rule under Art. 2 the Convention, namely, that an employee must 
be sued in the state of his domicile. Further, Art. 6.1 (set out above) cannot be 
invoked to ensure a single hearing where there are a number of d efendants. 
Still further, it is only in a very limited set of circumstances that the provisions 
of Arts. 18 and 20 can be varied by an agreement on jurisdiction under Art. 21. 
There is thus no doubt as to the importance of Section 5 in the scheme of the 
Convention if once applicable; the anterior and crucial question, of course, is 
whether Section 5 is applicable.  
31. (B) The English authorities:  In Swithenbank Foods v Bowers  [2002] EWHC 
2257 (QB); [2002] 2 All ER (Comm) 974, the claimant issued a claim form 
against nine defendants alleging breach of duty or conspiracy or both. As 
against the third defendant, the claimant advanced a tortious conspiracy claim 
and a contractual claim based on breach of duty under his contract of 
employment. The third defendant ch allenged the jurisdiction of the English 
Court, pursuant to Art. 20 of the Judgments Regulation, on the ground that he 
was domiciled in France, so that the claim could only be brought against him 
there. HHJ McGonigal, sitting in the Mercantile Court in Lee ds, held that the 
Court had jurisdiction over the conspiracy claim but not over the contractual 
employment claim.  
32. In coming to his conclusions on the conspiracy claim, HHJ McGonigal 
focused on the cause of action  relied upon and legal relevance ; his criti cal 
reasoning appears from [24] – [26], as follows:  
" 24. The policy behind section 5 is based on the probability that the employer 
is financially stronger than the employee. Therefore, if one or other of them 
has to take proceedings in a foreign court, i t should be the employer who has 
to bear the additional cost and inconvenience involved to ensure, so far as 
practicable, that the parties are on an equal footing so far as jurisdiction is 
concerned. The advantage is given to the employee as a member of a class, 
namely employees, and that advantage should be confined to cases where his 
status as an employee is legally relevant. Section 5 should not be construed as 
conferring jurisdictional advantages on a poor defendant sued by a rich 
claimant if they happe n to be employee and employer. The reference to 
'individual contracts of employment' rather than to the employment 
relationship generally, indicates that what is relevant is the contract of 
employment rather than the relationship generally. The contract of  
employment is relevant, and there is a matter relating to an individual contract 
of employment, only if the employer is seeking to rely on that contract of 
employment to bring the claim against the employee.  
25. I can see no justification of policy for co nspirators, or any other 
tortfeasors, who are employees of the claimant being given jurisdictional 
advantages not enjoyed by conspirators or other tortfeasors who are not 
employees of the claimant. I accept Mr Jory's submission that section 5 is 
limited to  claims in contract. ……  
26. Accordingly…..the phrase 'in matters relating to individual contracts of 
employment' effectively means 'where claims are made under individual 
contracts of employment'. ……If a claimant brings to the court a claim against 
a defen dant who is or was his employee which is made independently of the 
contract of employment, prima facie he should be permitted to bring it in that 
court if the court would have jurisdiction over that claim if the defendant was 
not the claimant's employer. I f an employer sought to dress up a claim under 
an employment contract as one not made under such a contract no doubt the 
courts would be astute to prevent him. But that is not this case. To interpret the 
phrase in this way provides a clear test and leads t o high predictability 
regarding jurisdiction. "  
33. Swithenbank  was referred to in passing by this Court in Samengo -Turner v 
Marsh & McLennan [2007] 
 EWCA
  
Civ
  723; [2007] 2 All ER (Comm) 
813, at [28], as "readily understandable" but not as shedding any light on the 
issue/s to be resolved in that case. I shall return to Samengo -Turner , later, in 
the context of the claims for breach of fiduciary duty. Subsequently, 
Swithenbank  was to some extent doubted but loyally followed by Briggs J (as 
he then was) at first instance in Alfa Laval Tumba v Separator Spa res 
International  [2012] EWHC 1155 (Ch) ; [2012] ILPr 40  ("Alfa Laval") .  
34. Swithenbank  was, however, overruled in Alfa Laval [2012] 
 EWCA
  
Civ
  
1569; [2013] 1 WLR 1110  in this Court. It is nonetheless helpful to keep in 
mind the reasoning of Swithenbank , so as to be clear as to t he nature of this 
Court's disapproval.  
35. The facts of Alfa Laval may be taken from the head note (at p. 1110):  
" The claimants, a Swedish company and a Polish company, designed, 
manufactured and sold marine separators. It was alleged that J, who was 
employ ed by the second claimant in Poland, conspired with the second 
defendant to obtain covertly and unlawfully copies of the claimants' design 
drawings which were then used by the first defendant, an English company 
owned by the second defendant, to manufactur e spare parts in competition 
with the claimants. In proceedings by the claimants in England alleging breach 
of copyright and misuse of confidential information by the first and second 
defendants, the claimants applied to join, inter alios, J as a defendant . Granting 
the application, the judge held that the status of J's employment by the second 
claimant was not legally relevant to the claim against him and so the claim 
was not a matter 'relating to' an individual contract of employment for the 
purposes of a rticle 18(1) ….and, that being so, he could not invoke article 
20(1)….so as to require any claim against him to proceed only in Poland, the 
member state in which he was domiciled. "  
In the event, this Court reversed the decision of Briggs J at first instan ce and 
set aside the order joining "J" to the proceedings. Swithenbank was overruled, 
with the Court holding that "legal relevance" was not the appropriate test to 
apply.  
36. Giving the first judgment of this Court, Longmore LJ spoke (at [19] and 
following) o f "difficulties" about the key paragraphs ([24] – [26]) in the 
Swithenbank  judgment. It appeared that the reasoning in the judgment of HHJ 
McGonigal was either unclear or meant that it came down to a matter of 
pleading. Longmore LJ was also (and understand ably, with respect) troubled 
(at [20]) as to whether HHJ McGonigal's reference to claims made "under" 
individual contracts of employment would draw a distinction between claims 
made "under" and those "arising out of" or "in connection with" a contract – a 
distinction which had bedevilled English arbitration law but was now 
impermissible. Longmore LJ was unwilling to accept (at [22]) that Art. 20.1 of 
the Convention applied only to claims expressly formulated in contract and 
could not apply "…if an agile ple ader can plead his case in tort or restitution 
or some other way…." and (at [23]) castigated the "pleaders' 'games'" which 
were "somewhat inevitable" on the Swithenbank construction of Section 5 - a 
matter demonstrated by the "careful and intricate" amendm ent of the pleadings 
in Alfa Laval  itself to produce a claim in tort.  
37. Continuing, Longmore LJ (at [24]) found it "impossible" to accept "legal 
relevance" as the appropriate test to apply. It was much better "…to stick with 
the actual words of article 18(1) and ask oneself the question 'do the claims 
made against an employee relate to the individual's contract of employment?'" 
He then said this:  
" This is a broad test which should be comparatively easy to apply. Sir 
Andrew Morritt C indicated in argume nt that (without proposing a test of any 
kind) it might in many cases be helpful to ask whether the acts complained of 
by the employer constitute breaches of contract by the employee. If so, the 
claims would be likely to 'relate' to the contract of employm ent. If not, not. "  
38. In Alfa Laval, the claims advanced, if substantiated, amounted to breaches of 
J's implied obligation of fidelity to his employer. This led Longmore LJ to 
observe (at [28]) that it could not be right, merely because such claims could 
also be framed in tort or delict, to conclude that Art. 20.1 did not apply; that 
would be to emasculate Art. 20.1. As to the construction of Art. 20.1, it did not 
require a "strict construction" because (at [29]) "…in cases brought against an 
employee, it pro vides for the normal rule that a defendant must be sued where 
he is domiciled."  
39. Addressing the submission that Art. 20.1 only applied where the employee 
was sued qua employee and not in a case where wrongs were committed to 
which the employment of the emp loyee was merely incidental, Longmore LJ 
said this (at [31]):  
" In so far as this constitutes a test for the application of article 20(1), I do not 
regard it as any more helpful than the test of 'legal relevance', and I would 
reject it for similar reasons . In one sense any employee who acts in breach of 
contract is not acting qua employee but it is in just those circumstances that 
the employer will be suing the employee in the first place. "  
40. Davis LJ gave a short but, with respect, important concurring jud gment. He 
too found difficulty with the meaning and ramifications of the "legally 
relevant" test. The task of interpretation (at [41]) was to construe the phrase 
"In matters relating to individual contracts of employment". The words 
"relating to" were, in context, "…broad and unqualified words of nexus and do 
not require artificial limitation, even though it may be accepted that the nexus 
must be material" (at [43]) and, as Davis LJ had already concluded (at [42]), 
J's status as employee was "…directly and substantially material in point of 
fact to the claim advanced…". The matter should not be looked at (at [44]) 
through the "prism of English law" with its strict pleading requirements, not 
shared by all member states. In the view of Davis LJ ( loc cit ):  
" ….it is necessary to have regard to the substance of the matter"  
41. Sir Andrew Morritt C agreed with both judgments.  
42. Petter v EMC Europe Ltd [2015] 
 EWCA
  
Civ
  828; [
 2016]
  IL Pr 3 is 
another authority to which it will be necessary to return when dealing, below, 
with the claims for breach of fiduci ary duty. For immediate purposes, 
however, various dicta in Petter  are pertinent.  
43. First, as Moore -Bick LJ observed, at [18]:  
" When seeking to interpret European legislation it is important to ascertain 
the purpose which it is designed to achieve, since that is likely to provide a 
surer guide to its meaning than a close scrutiny of the words used….."  
44. Secondly, Moore -Bick LJ remarked (at [20]) that "relating to" was an 
expression "…capable of being given a broad interpretation..."; a dispute 
might "relate to" a contract of employment even though the claim itself 
sounded in tort.  
45. Thirdly, when asking (also at [20]) whether the dispute related to Mr Petter's 
contract of employment, Moore -Bick LJ answered his own question in terms 
of the "reality and substanc e" of the matter.  
46. Fourthly, as Sales LJ explained (at [57]), the policy underlying Section 5 
treated employers and employees as "general categories":  
" …it has not been thought appropriate to provide in the legislation for 
individualised assessments of relative bargaining power of employer and 
employee to be made case by case. That would be an invidious, very difficult 
and costly exercise to try to undertake."  
47. (C) The European jurisprudence: The argument before us centred on two 
authorities from the Court of Justice of the European Union ("the ECJ"). The 
first is Brogsitter v Fabrication de Montres Normandes  EURL  (Case C -
548/12); [2014] QB 753  ("Brogsitter "). This was not a Section 5 case at all; 
instead, it rested squarely on the Art. 5 division between contract and tort. The 
facts were straightforward. The German claima nt and the French defendants 
had entered into a contract; the claimant alleged that the activities of the 
defendants breached the terms of the contract; the claimant then commenced 
proceedings against the French defendants in Germany, bringing claims for 
breach of the German Law against Unfair Competition, fraud and breach of 
trust. The defendants challenged the German jurisdiction, contending that only 
the French courts had jurisdiction, under Art. 5.1, whether as a matter of 
contract or tort. The German c ourt referred to the ECJ for a preliminary ruling 
the question whether a 
 civil
  liability claim, made in tort under national law, 
nonetheless had to be regarded as concerning "matters relating to a contract" 
for the purposes of Art. 5 because of the existence of a cont ract between the 
parties to the dispute.  
48. Unusually, the ECJ chose to proceed without an Opinion from the Advocate 
General: see, Dickinson, Towards an agreement on the concept of 'contract' , 
in EU Private International Law , [2014] LMCLQ 466, at pp. 470 and  
following. The Court (at [18]) underlined the need to interpret the concepts in 
Art. 5 (matters relating to a contract and matters relating to tort, etc.) 
"independently" (i.e., autonomously) so as to ensure uniform application in all 
member states. Furth er underlining the binary division in Art. 5, the Court (at 
[20]) treated the concept of "matters relating to tort" as covering all actions 
which seek to establish the liability of a defendant and which do not concern 
"matters relating to a contract". At [ 21], the ECJ posed this question:  
" In order to determine the nature of the 
 civil
  liability claims brought before 
the referring court, it is important first to check whether they are, regardless of 
their classification under national law, contractual in nature…."  
49. The central reasoning of the Court then follows:  
" 23. …the mere fact that one contracting party brings a 
 civil
  liability claim 
against the other is not sufficient to consider that the claim concerns 'matters 
relating to a contract'….  
24. That is the case only where the  conduct complained of may be considered 
a breach of contract, which may be established by taking into account the 
purpose of the contract.  
25. That will a priori be the case where the interpretation of the contract which 
links the defendant to the applica nt is indispensable to establish the lawful or, 
on the contrary, unlawful nature of the conduct complained of against the 
former by the latter.  
26. It is therefore for the referring court to determine whether the purpose of 
the claims brought by the applic ant in the case in the main proceedings is to 
seek damages, the legal basis for which can reasonably be regarded as a 
breach of the rights and obligations set out in the contract which binds the 
parties in the main proceedings, which would make its taking into account 
indispensable in deciding the action.  
27. If that is the case, those claims concern 'matters relating to a contract' 
within the meaning of article 5(1)(a) ….Otherwise, they must be considered as 
falling under 'matters relating to tort, delict  or quasi -delict' within the meaning 
of article 5(3)….  
…….  
29. Therefore, the answer to the question referred is that 
 civil
  liability 
claims such as those at issue in the main proceedings, which are made in tort 
under national law, must none the less be considered as concerning 'matters 
relating to a contract' within the meaning of article 5(1)(a)…. where the 
conduct complained of may be considered a breach of the terms of the 
contract, which may be established by taking into account the purpose of the 
contract."  
It ma y be noted that the "operative part" of the ruling is set out thereafter in 
essentially the same terms as [29].  
50. In the judgment (at [41] – [42]), the Judge had sought to apply [26] of 
Brogsitter . Before us, there was vigorous debate as to the ratio  of Brogsitter  
and in which passage/s of the Brogsitter judgment it was to be found.  
51. Deferring my own conclusions for the moment, I turn to the second ECJ 
authority upon which argument was concentrated, namely, Holterman Ferho 
Exploitatie BV v Spies von Bulle sheim (Case C -47/14) [
 2016]
  ICR 90 
("Holterman" ). This authority post -dates the judgment. Ultimately, in my view 
and notwithstanding the significant attention focused upon it, its principal 
significance for the present appeal lies in such light as it may shed on 
Brogs itter.  
52. The facts of Holterman emerge most clearly from the Opinion of the Advocate 
General. The first claimant was the Dutch holding company of a group of 
companies; the second to fourth claimants were the three German subsidiaries 
of the Dutch holding co mpany. The defendant ("Mr Spies"), a German 
national domiciled in Germany, entered the service of the Dutch holding 
company, as managing director, under a contract described by the Dutch 
(intermediate) appeal court as a "contract of employment". Mr Spies a lso had 
the role as a director – in the company law sense – of the Dutch holding 
company. Further still, Mr Spies was a director of the three German 
subsidiaries. Mr Spies was the only employee of the Dutch holding company 
and was also a shareholder of tha t company; he worked solely in Germany.  
53. Disputes arose and the relationship between Mr Spies and all four claimant 
companies was terminated. The claimants advanced claims against Mr Spies, 
alleging that he had performed his (company law) duties as directo r 
improperly, that he had acted deceitfully or recklessly in the performance of 
his contract of employment with the Dutch holding company and that the 
serious irregularities in the performance of his duties constituted unlawful 
conduct for the purpose of a nother provision of the Dutch 
 Civil  Code. At 
first instance, Mr Spies submitted successfully that the Dutch Court had no 
jurisdiction to hear the case. The (intermediate) Dutch Court of Appeal upheld 
that decision but distinguished between the claims brought by t he Dutch 
holding company and those brought by the three German subsidiaries; on any 
view, the Dutch Court had no jurisdiction to entertain the claim of the German 
subsidiaries against the German domiciled Mr Spies. As to the claims brought 
by the Dutch hol ding company, the Dutch Court lacked jurisdiction either by 
virtue of the equivalent provisions to Section 5 of the Convention found in the 
Judgments Regulation or by virtue of the general domiciliary rule of 
jurisdiction, contained in Art. 2 of the Judgme nts Regulation.  
54. All four claimants appealed to the Supreme Court of the Netherlands but only 
in respect of the claims advanced by the Dutch holding company. The 
Supreme Court stayed the proceedings and referred three questions for a 
preliminary ruling to the CJEU. These questions, largely as summarised in the 
head note (at p.90) were as follows:  
i) Whether Arts. 18 -21 of the Judgments Regulation precluded the application 
of Arts. 5.1 and  5.3 to a claim by a company against a director and manager 
(i.e., managing director) brought both on the basis that he had improperly or 
wrongfully carried out his duties as a director and on the basis of his deceit or 
recklessness in the performance of h is contract of employment? ("question 1")  
ii) If the answer to question 1 is in the negative, whether a manager and 
director's breach of his obligation to perform his duties properly under 
company law was within the concept of "matters relating to a contra ct" in Art. 
5.1(a), and whether the "place of performance of the obligation in question" in 
Art. 5.1(a) would be the place where the company had its central 
administration? ("question 2")  
iii) If the answer to question 1 is in the negative, whether "matter s relating to 
tort, delict or quasi -delict" in Art. 5.3 included a case where a company sued a 
director and manager on the basis of his improper performance of his duties 
under company law, and whether the "place where the harmful event 
occurred" in Art. 5 .3 referred to the place for performance of those duties? 
("question 3")  
55. As will be apparent, the questions and the answers to them given by the ECJ 
as such are not centrally relevant to the present case. Plainly this is so with 
regard to questions 2 and 3 , given the premise on which each was put: namely, 
that Section 5 did not preclude the application of Arts. 5.1 or Art. 5.3, as the 
case may be.  
56. So far as question 1 is concerned, the issue (at [33] – [49] of the ECJ 
judgment) was whether Mr Spies was an employee  at all. The Court recited 
that Art. 18 must be given an independent interpretation common to all 
member states. It further rehearsed the policy aim of Section 5 of protecting 
weaker parties to employment contracts; the provisions of Section 5 were  (at 
[44]) "…not only specific but also exhaustive". However, for Section 5 to 
apply, Mr Spies had to be an employee – and for there to be a contract of 
employment (at [40]) "…it may be considered that it presupposes a 
relationship of subordination of the employee to employer". The essential 
feature of an employment relationship was that (at [41]) "….for a certain 
period of time one person performs services for and under the direction of 
another in return for which he receives remuneration..". The upshot wa s the 
ECJ's conclusion, expressed as follows:  
" 47. It is for the referring court to examine the extent to which Mr Spies…., in 
his capacity as a shareholder in ….[the Dutch holding company]…, was able 
to influence the will of that company's administrativ e body of which he was 
the manager. In that case, it will be necessary to establish who had authority to 
issue him with instructions and to monitor their implementation. If it were to 
turn out that …[Mr Spies's]…ability to influence that body was not negli gible, 
it would be appropriate to conclude that there was no relationship of 
subordination for the purposes of the court's case law on the definition of a 
worker.  
….. 
49. In the light of all the foregoing considerations, the answer to the first 
question is  that, in a situation such as that at issue in the main proceedings in 
which a company sues a person, who performed the duties of director and 
manager of that company, in order to establish misconduct on the part of that 
person in the performance of his du ties and to obtain redress from him, the 
provisions of Chapter II, Section 5 (articles 18 -21) of Regulation No 44/2001 
must be interpreted as meaning that they preclude the application of article 
5(1) and (3) of that Regulation, provided that that person, in his capacity as 
director and manager, for a certain period of time performed services for and 
under the direction of that company in return for which he received 
remuneration, that being a matter for the referring court to determine. "  
57. In the present ca se, the issue raised by question 1 in Holterman does not arise. 
Despite the Appellants' seniority, the Respondents have not sought to 
challenge the Judge's conclusion that they were employees, for the periods 
specified, of companies in the Arcadia Group (a s set out above). As Mr 
Howard put it (on Day 2 of the hearing before us):  
" ….although they were senior people and they actually effectively ran their 
own show in Arcadia, that's part of what went wrong here, we say, that they 
were left to their own devi ces. But…ultimately, they were answerable to the 
ultimate shareholders in Arcadia through Farahead….there was a power to 
hire and fire [them]."  
58. Against this background, the relevance of Holterman to the present appeal 
may be summarised as follows. First an d although the Advocate General's 
Opinion must be treated with caution – as it is not adopted "wholesale" in the 
Holterman judgment – the careful scrutiny in that Opinion of what is needed 
for the application of Section 5 is striking. Thus (at [26]) the Ad vocate 
General set out the English language version of Art. 18 before turning to the 
German language version, described as "a little more specific", which applies 
"….if the subject matter of the proceedings is an individual contract of 
employment or claims  deriving from an individual contract of employment…. " 
(emphasis added). Accordingly, the Advocate General concluded (at [26] and 
[33]) that the decisive factor for the application of Section 5 was that the 
defendant was being sued in his capacity as a par ty to an "individual contract 
of employment" and that the claim was "derived from that contract". In order 
to determine whether the claim derived from the "individual contract of 
employment", the Advocate General (at [34]) had regard to Brogsitter , at [23]  
– [25]. The mere fact that there was a contract of employment between the 
parties was not sufficient to justify the application of Section 5: [35]. The 
Advocate General went on (at [36]) to utilise the Brogsitter test, at [24], in 
posing the question for the referring court (so far as relevant for present 
purposes).  
59. Secondly, the Advocate General, albeit when dealing with question 2 (at [48]), 
shed some light on the interpretation of Brogsitter, at [26], saying this:  
" It is for the referring court to de termine whether the actions brought by the 
applicant constitute a claim for liability that might reasonably be considered to 
be based on a failure to respect the rights and obligations under the 'contract' 
(for the purposes of the Regulation) between the p arties, with the result that it 
is indispensable to consider that 'contract' in order for the case to be 
resolved….. "  
Thus, where the legal basis for the claim may "reasonably be regarded" as a 
breach of contract, the result  is that it is "indispensable" to consider the 
contract for the case to be resolved.  
60. Thirdly, the ECJ judgment (at [71]) when dealing with question 3 and 
summarising the test for determining whether Art. 5.1 or Art. 5.3 was 
applicable, applied Brogsitter  "by analogy". Of interest for pr esent purposes, 
the Court referred to Brogsitter  at [24] – [27].  
61. Before parting from the European jurisprudence, it is necessary to record that 
the parties sought to refer us to a number of academic "Commentaries". These 
had been canvassed before the Judg e, as appears from the judgment (at [19] 
and [20]) and Mr Howard submitted that they were "on the whole" supportive 
of the Respondents' position on the appeal and their interpretation of recent 
European case law. For my own part and with respect, I am not persuaded that 
the Commentaries provide any significant assistance with the arguments on 
this appeal. I therefore say no more of them.  
62. (D) Pulling some threads together:  It is time to pull some threads together as 
to the authorities.  
63. First, it is helpful to clear the decks. Thus:  
i) Plainly, we are bound by previous Court of Appeal authority – Alfa Laval  
specifically. Likewise, the decisions of the ECJ, Brogsitter and Holterman,  are 
binding.  
ii) In my judgment (and as dealt with belo w), there is no conflict between the 
English authorities and the ECJ decisions.  
iii) Both parties to the appeal accept and rely on the English and European 
authorities but draw very different conclusions from them.  
iv) With respect and contrary to Mr Fox ton's submissions as to the nature of 
the Respondents' case, both parties focus on the substance of the conduct in 
question, not on the substance of the cause of action. They disagree, 
fundamentally, as to where they go from there.  
64. Secondly, Mr Foxton sub mitted that the "touchstone legal issue" in respect of 
the conspiracy claims was whether they could  have been pleaded as a breach 
of the Appellants' contracts of employment. If the conduct in question 
constituted a breach of those contracts and therefore c ould be pleaded as such, 
Art. 18 applied without more. As already foreshadowed, Mr Howard accepted 
that if that was the test, then the Respondents must lose on the jurisdictional 
issue before us. For my part and as explained below, I am unable to accept th at 
either the English or ECJ authorities oblige us to accept the test as formulated 
by Mr Foxton. Unless that test is binding upon us, I would not choose to adopt 
it, for these reasons:  
i) It is mechanistic and of potentially unacceptable width. It is com mon ground 
that the mere fact that there is a contract between the parties does not suffice 
for the application of Art. 18. Yet, if this were the test, there are any number of 
matters of misconduct in the employment field which could arguably  be 
pleaded as  a breach of contract but which may not "relate to" the individual 
contract of employment, even giving that expression a broad interpretation. 
Put another way, there is no necessary relationship between this test and the 
underlying social purpose of Sectio n 5; as underlined by Moore -Bick LJ in 
Petter (supra) , at [18], that purpose is of the first importance.  
ii) I do not agree that any movement away from this "touchstone" means 
ceding the jurisdictional issue to the pleader's choice. Provided that the test  is 
one of the substance of the conduct in issue, the pleader's choice, skill or 
artifice is irrelevant.  
65. Thirdly, as a matter of English law, Alfa Laval does not oblige us to adopt that 
mechanistic test. As already discussed, Longmore LJ was anxious to re ject the 
"legal relevance" test adopted in Swithenbank (supra)  and, for very good 
reason, to discourage "pleaders' games". It simply does not follow from 
Longmore LJ's approach that, merely because a matter could be pleaded as a 
breach of contract, therefo re Art. 18 applies. Instead, Longmore LJ favoured, 
as we have seen, sticking with the actual words of Art. 18.1 and asking 
whether the claims made against the employee relate to individual contracts of 
employment. That is a broad test and involves a broad inquiry, not a 
mechanistic approach; the wording of Art. 18.1 does not require any gloss. For 
his part, Davis LJ likewise focused on the words of Art. 18.1, saying that they 
were broad and unqualified words of nexus, not requiring artificial limitation. 
However, the nexus needed to be material and it was "…necessary to have 
regard to the substance of the matter". So far as concerns the observation of 
Sir Andrew Morritt C in argument (recorded at [25]), the important point is 
that it was not proposed as "a t est of any kind". In many cases, it might, with 
respect, indeed be helpful to ask the question of whether the acts complained 
of by the employer constituted a breach of the contract of employment by the 
employee. But it would be wrong to elevate that quest ion into a test or 
touchstone – and nothing in Alfa Laval  requires us to do so. For my part, the 
correct approach as a matter of English law is to consider the question whether 
the reality and substance of the conduct relates to the individual contract of 
employment, having regard to the social purpose of Section 5: see too, the 
observations of Moore -Bick LJ in Petter , at [18] and [20].  
66. Fourthly, the ECJ authorities do not require the adoption of the mechanistic 
test. With respect to Mr Foxton's argument to the contrary, I am unable to 
accept that the ratio  of Brogsitter  is to be found (in effect) solely in paragraphs 
[24] and [29]. There is more to it than that, as appears from the discussion in 
Holterman , set out above, especially the r eference by the Court in Holterman 
to paragraphs [24] – [27] of Brogsitter. To my mind, the true ratio  of 
Brogsitter  appears from the entirety of the passage at [24] – [27]; there can be 
no good reason to look at paragraphs [24] and [29] in isolation. It m ay be 
remarked that the point is even clearer if regard is had to the German language 
text but I do not rest my conclusion on that consideration. Accordingly, it does 
not suffice to pose the – literal – question as to whether the conduct 
complained of "may  be considered a breach of contract". Instead, the 
requirement that the legal basis of the claim "can reasonably be regarded" as a 
breach of contract, assists in directing the focus of the inquiry to the substance 
of the matter, with the result that it is "indispensable" to consider the contract 
in order to resolve the matter in dispute. This is a test and an approach 
indistinguishable to my mind from that adopted in Alfa Laval , so that (in Davis 
LJ's words) there will be a material nexus between the conduc t complained of 
and the individual contract of employment.  
67. (3) Discussion:  I turn to apply these conclusions of law to the facts of the 
appeal. As a matter of reality and substance, do the conspiracy claims relate to 
the Appellants' individual contracts o f employment? Is there a material nexus 
between the conduct complained of and those contracts? Can the legal basis of 
these claims reasonably be regarded as a breach of those contracts so that it is 
indispensable to consider them in order to resolve the ma tter in dispute? As it 
seems to me and however precisely the test is formulated, the answer is the 
same and is clearly "no". My reasons follow.  
68. First, the Appellants' roles. The key to the alleged fraud lies not in the 
Appellants' contracts of employment but in their de facto  roles as Arcadia 
Group CEO and CFO respectively. As the Judge held (at [14] of the judgment, 
set out above), none of the individual contracts of employment, drafted by the 
Appellants themselves and which contained entire agreement cla uses, 
provided for the Appellants to act as Group CEO or CFO as the case may be. 
The reality – or substance – of the matter is that these over -arching claims 
concern the Appellants acting outside of their contracts of employment and 
ranging across the Grou p.  
69. Secondly, while it cannot be gainsaid that the conspiracy allegations could be 
pleaded as breaches of the Appellants' implied duties of fidelity and loyalty 
under their contracts of employment, as a matter of substance those contracts 
simply form part of the history and thus a very small part of the picture. They 
provided the opportunity for the Appellants' allegedly nefarious activities but 
no more than that; these claims are instead about the alleged dishonesty of a 
number of alleged conspirators acti ng in combination. In these circumstances, 
such nexus as there was between the conspiracy claims and the Appellants' 
individual contracts of employment was tenuous and, in my judgment, not 
material. Put another way, those contracts do not feature at all, l et alone are 
indispensable, in the resolution of these claims.  
70. Thirdly, as to parties and as already foreshadowed, neither the Second nor the 
Fourth Respondent was ever party to a contract of employment with the 
Appellants. With regard to the alleged cons pirators, some were never 
employees of the Respondents at all. In this regard, Mr Howard submitted that 
conspiracy is a joint tort and the (alleged) conspirators are joint tortfeasors; if, 
however, the Appellants are correct, the claim against them must be  
characterised differently from the claims against other joint tortfeasors. There 
is some force in that but it cannot be taken too far. It does not follow and I do 
not suggest, that there is a special rule for conspiracy; that every conspiracy 
must be outs ide of individual contracts of employment and that simply by 
pleading a claim in conspiracy the provisions of Arts. 18.1 and 20.1 of the 
Convention can be circumvented. Quite the contrary; on the approach which I 
favour – a focus on the reality and substan ce of the conduct complained of – 
there is no way of circumventing Arts. 18 and 20 simply by pleading 
conspiracy. It is the substance of the matter and the facts of the particular case 
which determine its proper characterisation.  
71. Fourthly, the facts of the present case are plainly distinguishable from those in 
Alfa Laval . Although the claims in Alfa Laval  could be framed in tort, they 
were, in substance, related to the individual contract of employment; there was 
a material nexus. There was no wider -ranging conspiracy, free -standing and 
outside the contracts of employment as is alleged here. The only escape in Alfa 
Laval  from the requirements of Arts. 18.1 and 20.1 of the Convention was by 
way of a focus on the cause of action and l egal relevance. The position here is 
very different, to repeat, as a matter of the substance of the conduct 
complained of. Moreover, Alfa Laval  involved bringing a Polish employee, J, 
with no other English connections, into proceedings in this jurisdiction . By 
contrast, here, the Appellants had very strong connections with the jurisdiction 
and only became residents in Switzerland for their own financial and tax 
purposes. Still further, the Respondents have submitted (without contradiction) 
that the Appellan ts have opted to be taxed in Switzerland under a regime 
which precluded any employment or gainful activity in Switzerland; hence the 
Appellants' choice of employment with Arcadia Singapore rather than Arcadia 
Switzerland. In cases such as this under the Co nvention, the "merits" may 
matter little – and I do not rest my judgment on them – but a "reality check" 
can be worthwhile.  
72. Fifthly, I turn to the policy and social purpose underlying Arts. 18.1 and 20.1 
of the Convention: the use of jurisdictional rules for the protection of the 
weaker party and, in the employment context, treating the employee as 
presumptively the weaker party. As is clear, powerful though the Appellants 
were, their status (with some of the Respondents) was that of employees and 
must be treated as such. It does not, however, follow that there is a policy 
interest in shoehorning the conspiracy claims against them into the framework 
of Section 5. The mere fact that the Appellants and some Respondents were 
parties to contracts of employment does not, of itself, suffice for Section 5 to 
apply: Brogsitter , at [23]. Nor does it follow that the control which the 
Appellants exercised over by whom, where and on what terms they were 
employed, is irrelevant. To the contrary, that control illuminates the substance 
of the matter and the conduct complained of, rendering (for the reasons 
already given) the individual contracts of employment no more than part of the 
history. Once that reality is grasped it is apparent, in my judgment, that these 
conspiracy  claims do not relate to the Appellants' individual contracts of 
employment.  
73. Sixthly, I accordingly agree with the conclusions expressed by the Judge 
(outlined earlier), at [42] – [44] and [47] – [48] of the judgment. I further 
agree with the Judge's obse rvation (at [49]) that there was therefore nothing 
and, for the reasons I have sought to give, certainly no countervailing policy 
interest, to stand in the way of the "sensible course" of all the alleged co -
conspirators being tried together in this jurisdi ction.  
74. In my judgment, the Respondents have a good arguable case that the 
conspiracy claims fall outside of Arts. 18.1 and 20.1 of the Convention. They 
are correctly characterised as claims in tort and, whether under Art. 5.3 or Art. 
6.1 of the Convention  this Court has jurisdiction to try these claims. I would 
dismiss the Appellants' objection to the jurisdiction in respect of the 
conspiracy claims.  
THE CLAIMS FOR BREACH OF FIDUCIARY DUTY   
75. (1) Introduction and recap:  Burton J dealt with these claims at [ 50] et seq  in 
the judgment; the summary of the Respondents' pleaded case there set out 
suffices and need not be repeated here. In the event, as reflected at para. 1(3) 
of the Order (set out above), Burton J drew a distinction between those claims 
where the re was a contractual nexus between the relevant Respondent and the 
Appellants and those claims where there was no such nexus: see esp., at [60], 
[61] and [75] of the judgment. In the case of the former, Burton J held that 
there was no good arguable case th at the fiduciary duties in question fell 
outside Arts. 18 and 20 of the Convention; in the case of the latter, the claims 
were for these purposes to be characterised as tortious and thus outside Arts. 
18 and 20. The practical consequences, as earlier outli ned, were that the 
entirety of Arcadia Switzerland's claims for breach of fiduciary duty could 
proceed in this jurisdiction, as could Farahead's; that Arcadia London's claims 
could proceed in respect of the period after the Appellants had left its 
employme nt and that Arcadia Singapore's claims could proceed in respect of 
the period before and after the Appellants were employed by it.  
76. The Judge's answer has, it may be said, a common sense attraction. Moreover, 
it is not immediately obvious how much in pract ice turns on the jurisdiction 
issue as to these claims, given the conclusion already reached as to the 
conspiracy claims. Nevertheless, the Appellants contend that the Judge was 
wrong and I turn to the rival cases on the appeal.  
77. (2) The rival cases:  Mr Fo xton's submission, as crystallised in oral argument, 
was this: the claims for breach of fiduciary duty were contractual in nature 
even for the "non -employing entities" because they follow from the 
Appellants' assumption of office/s; claims for breach of du ties owed by 
directors in a company law sense were to be regarded as contractual for the 
purposes of the Convention. The Appellants, as Arcadia Group CEO and CFO, 
had provided services and performed functions not limited to the employing 
entity; they were provided on a group -wide basis. For the purposes of Art. 18, 
the separate corporate entities were to be disregarded – it was the Group which 
mattered as a socio -economic entity. This approach did not involve piercing 
the corporate veil; it was simply an al location of jurisdiction. Group 
companies other than the employing entities were not free to "evade" Art. 18. 
Further and as found by the Judge (at [62]), the bonus to which the Appellants 
were entitled under their contracts of employment fell to be calcul ated by 
reference to the consolidated profits of the Arcadia Group, thus, for example, 
including those of Arcadia Switzerland.  
78. Mr Howard relied on the Judge's fact findings as to the Appellants' periods of 
employment with particular Group companies. As Mr  Howard put it in his 
skeleton argument:  
" ….the Judge's conclusion that a claim for breach of fiduciary duty between 
parties who are not in a contractual relationship cannot relate to an individual 
contract of employment is …..clearly correct. The Appell ants' position 
faces….an insuperable problem: claims between parties ….not in a contractual 
relationship with each other cannot sensibly be said to be 'matters relating to a 
contract'; it follows therefore that they cannot be 'matters relating to individua l 
contracts of employment'. "  
Developing this submission orally, Mr Howard submitted that the issue, put 
simply, was whether "non -employers" were to be treated under the 
Convention as if they were employers. This was largely a factual point 
determined by t he Judge in favour of the Respondents. There was no basis in 
law for treating any company, merely by virtue of its membership of the 
Arcadia Group, as an employer. As to the bonus arrangements, the Appellants 
acquired no rights against non -employers; all t he scheme did was to calculate 
the bonus with reference to Group profits. As a result of the Appellants' own 
choice, there was no contractual nexus, whether as a matter of fact or law, 
with the non -employers in the Group; in consequence:  
" ….it would be a  slightly odd conclusion to say that where somebody has, as 
it were, strained every sinew not to have a contract and still less to have a 
contract of employment, to say that, despite that, they are entitled to say for 
the purposes of the regulation that th ere is a contract of employment or they 
should be treated as if there were."  
79. (3) Authority:  Mr Foxton relied heavily and concentrated much of the thrust of 
his submissions on three authorities: Samengo -Turner, Petter  and Holterman 
(all supra ).  
80. Samengo -Turner concerned the Marsh McLennan ("MM") group of 
companies. The claimants, domiciled in England, were employed as 
reinsurance brokers under written contracts of employment with "MSL", an 
English member of the MM group. The claimants successfully obtained a nti-
suit injunctions on the basis of Arts. 18 and 20 of the Judgments Regulation, 
when proceedings were brought against them in New York by "GC" and 
"MMC", two Delaware companies forming part of the same group – GC being 
a sister company of MSL and MMC the  holding company.  
81. In a nutshell, the facts were these. The claimants gave MSL notice to 
terminate their contracts of employment and indicated that they intended to 
work for a competitor. They were at once put on "garden leave". Shortly 
thereafter, GC and MMC commenced the New York proceedings, founded 
upon the terms of the incentive award granted to the claimants - under which 
they assumed obligations to repay the award if they engaged in detrimental 
activity and to provide infor mation to enable "the company" to determine 
whether they had complied with the terms of the award. The suspicion was 
that the claimants had been behind the recruitment by the competitor of a 
number of GC staff. The incentive award was subject to terms and conditions 
contained in "the bonus agreement". The claim in the New York proceedings 
was for breach of the bonus agreement.  
82. Giving the only substantive judgment in this Court and overruling the decision 
of the Judge, Tuckey LJ held that the claim related to the claimants' individual 
contracts of employment. He said this, at [31]:  
" ….I cannot see how it can be said that the claimants' bonus agreements do 
not relate to their contracts of employment. They are part of them. One cannot 
ascertain the terms upo n which they were employed without looking at both 
the original contracts and the bonus agreements."  
83. The next question was whether the claim in New York had been brought by an 
"employer" within Art. 20. Under the bonus agreement, the claimants had 
assumed obligations to all the companies in the MM group in matters relating 
to their contracts of employment. Tuckey LJ observed (at [33]) that GC and 
MMC were bringing an employment claim against employees "…and one 
would expect such a claim to be made by an emp loyer". Tuckey LJ then 
continued as follows:  
" 33. ….MMC and GC have only been able to sue in the right of and as if they 
were employers because of the wide definition of 'the Company' in the bonus 
agreement and so I think they should be regarded as emplo yers for the purpose 
of Section 5. MSL, who also come within this wide definition, could only have 
sued in England to enforce the terms of the claimants' employment. MMC and 
GC as companies within the same group have an economic interest in the 
contracts c ontaining those terms and their enforcement and should be subject 
to the same jurisdictional restraint as MSL. I do not think that this is a strained 
construction. It simply recognises the reality of the situation without adopting 
an over -formalistic appro ach. …..  
34. Nor does this construction pierce the corporate veil in any real way. The 
Jurisdiction Regulation is only concerned with the allocation of jurisdiction. 
The fact that MMC and GC should be treated as employers for such purposes 
does not mean th at they should be so treated for any other purpose.  
35. A construction of Section 5 in the way I have indicated gives effect to the 
objectives of the Jurisdiction Regulation. It achieves certainty and avoids 
multiplicity of proceedings by ensuring that al l those companies in the MM 
group who wish to sue on the terms of the bonus agreement are required to sue 
in the courts of the employees' domicile. Otherwise MMC and any other 
company in the MM group could sue in New York and MSL would have to 
sue in Engla nd. …..This construction also offers the claimants protection from 
proceedings in jurisdictions other than that of their domicile. Section 5 applies 
to all employees irrespective of any particular need for protection… "  
84. Mr Foxton sought to extract from Samengo -Turner  the proposition that, for 
Art. 18 purposes, the separate corporate personality of group companies could 
be disregarded. With respect, however, I do not think that Samengo -Turner 
will bear the weight Mr Foxton rests upon it. The key to Samengo -Turner is 
the finding of fact (at [31]) that the bonus agreement was part of the claimants' 
contracts of employment. On this footing, the contractual claim based on the 
bonus agreement not only (self -evidently) related to the claimants' individual 
contracts  of employment but GC and MMC were bringing it as employers. 
This falls a long way short of a general proposition that in this sphere – 
regardless of the facts – the separate corporate personality of group companies 
can be disregarded.  
85. Petter  was a case o n strikingly similar facts to Samengo -Turner. Mr Petter was 
an important employee of EMC Europe, a subsidiary of a US -based parent 
company, EMC. As Mr Petter could be expected to make a significant 
contribution to the success of EMC's overall business, EMC  included him in a 
share distribution scheme, known as a "Stock Plan". The value of awards 
under this scheme could be considerable. Such awards were made by the 
employee's acceptance in writing of an offer contained in a document known 
as a Restricted Stoc k Unit Agreement ("RSU Agreement"). The awards were 
conditional upon Mr Petter observing the "key employment agreement" 
incorporated into his contract of employment and into the RSU Agreement. 
The RSU Agreement contained an exclusive jurisdiction agreement  in favour 
of the Massachusetts courts. In the event, Mr Petter decided to leave EMC 
Europe and take up employment with a local subsidiary of another US 
company. Disputes arose; EMC commenced proceedings against Mr Petter in 
the courts of Massachusetts; in  turn, Mr Petter commenced proceedings 
against EMC and EMC Europe in the English High Court. Mr Petter also 
sought an anti -suit injunction prohibiting EMC from pursuing the proceedings 
against him in Massachusetts. The Judge held that Mr Petter could show a 
good arguable case that the English Court had jurisdiction under Section 5 of 
the Judgments Regulation but declined to grant the anti -suit injunction. EMC 
appealed unsuccessfully against the English Court assuming jurisdiction. Mr 
Petter cross -appealed, successfully, against the refusal to grant an anti -suit 
injunction.  
86. For present purposes, it is only necessary to refer to the judgment of Moore -
Bick LJ. At [9], Moore -Bick LJ's observations as to Samengo -Turner  reinforce 
my view as to the correct interpr etation of that decision:  
" ….Accordingly, the bonus agreement, on which the claim in New York was 
based, was part of the claimants' contracts of employment for the purposes of 
art. 18(1)… MMC was to be regarded as the claimants' employer for the 
purposes  of the Regulation and s.5 of the Regulation was therefore 
engaged…"  
87. In coming to his conclusion as to the jurisdiction of this Court, Moore -Bick LJ 
had regard (at [16]) to the autonomous meaning to be given to "employer" for 
the purpose of Section 5 and to the underlying policy of Section 5 being "…to 
protect employees because they are considered from a socio -economic point of 
view to be the weaker parties to the contract…" (at [17]). Moore -Bick LJ's 
observations at [18] (as to purpose) and [20] (as to th e meaning of "relating 
to") have already been recounted. At [20], the passage where Moore -Bick LJ 
referred to "reality and substance", (see above) continued as follows:  
" …If in the present case one asks whether the dispute between Mr Petter and 
EMC 'rela tes to' his contract of employment, it is not difficult to see that in 
reality and substance it does. Although he may have had no right in law to 
receive an award of stock units, I have little doubt that he, and for that matter 
both EMC and EMC Europe, reg arded such awards as intrinsically bound up 
with his contract of employment. They were made available to him as an 
important employee and were intended to act as a reward for past efforts and 
an incentive to make efforts in the future. They were probably a lso viewed by 
EMC as a way of retaining highly valued employees. The awards were made 
by EMC as the parent company both for its own benefit and for the benefit of 
the subsidiaries by whom recipients were employed....."  
88. Moore -Bick LJ went on to say (at [21] ) that he could see no distinction 
between Samengo -Turner and the case with which he was concerned; he 
viewed Samengo -Turner  as binding authority for the proposition:  
"…that a company which provides benefits to employees of associated 
companies within the  same group may be regarded as an employer for the 
purposes of the Regulation if it provides those benefits in order to reward and 
encourage those employees for the benefit of their immediate employer and 
the group as a whole. "  
In this way, no doubt, effe ct could be given to "…the substance of the 
relationship rather than the legal structure within which it sits" (at [19]).  
89. Again, I am not persuaded that Petter, by which we are of course bound, 
carries the debate in the present case significantly further, apart from the 
comfort it provides in interpreting Samengo -Turner . As it seems to me, Petter  
does not stand for some wider proposition as to disregarding the separate 
corporate personality of different entities in a group of companie s. Like 
Samengo -Turner , it was concerned with an awards scheme, which (in Petter ) 
gave rise to a contract between Mr Petter and EMC (see, at [15] and [16]). The 
only remaining questions, already dealt with above, were whether the claim in 
question related to Mr Petter's individual contract of employment and whether 
EMC was to be treated as an "employer" for the purpose of Section 5. The 
difficulty for Mr Foxton is that the facts of the present case contain nothing 
similar. The only contracts are between the  Appellants and the various 
individual Respondent companies of whom they were employees. The bonus 
arrangements conferred no rights and gave rise to no contractual relationship 
with any other companies in the Arcadia Group – a conclusion unaffected by 
the fact that Farahead appears to have run the bonus scheme.  
90. Holterman can be taken very briefly. Question 2 (as defined above) was 
answered by the ECJ saying that an action by a company against its managing 
director on the basis of an alleged breach of his o bligations under company 
law could  (emphasis added) fall within the concept of "matters relating to a 
contract" in Art. 5.1(a). It will be recollected that question 2 only arose if the 
answer to question 1 was that Mr Spies did not perform his duties as an  
employee of the Dutch holding company. Assuming question 2 did arise, then, 
as the Court observed (at [53]), on the factual premise that Mr Spies and the 
Dutch holding company had freely assumed mutual obligations, their 
relationship "may be regarded as … contractual in nature…". With respect to 
Mr Foxton's submissions, it is altogether too great a leap from the answer to 
question 2 in Holterman to a more generalised conclusion that, without more, 
claims for breach of fiduciary duties owed by directors in a  company law 
sense must be regarded as contractual for the purpose of the Convention – still 
less that they must be regarded as relating to an individual contract of 
employment.  
91. For completeness, Mr Foxton placed reliance before us, as the Appellants did 
before the Judge (see the judgment, at [55] and [57]), on the writings of Prof. 
Briggs. Before this Court, Mr Foxton made reference to Prof. Briggs' views as 
they appear in the 2015 edition (Briggs, op cit ). Prof. Briggs here argues (at 
para. 2.171) that i f fiduciary duties are imposed by equity on a defendant as a 
result of a relationship freely entered into, then the "preferable view" – but 
free of authority – is that their enforcement is contractual for the purposes of 
the Convention. If such duties are imposed on a defendant without the 
agreement of the claimant, then the matter will fall on the tortious or delictual 
side of the divide. Prof. Briggs goes on to observe ( loc. cit ):  
" And even if these two cases do represent the two sides of the argument, there 
will still be cases which appear to fall rather closer to the borderline, such as 
that of the company director who diverts a corporate opportunity to his own 
secret profit. "  
92. In a subsequent passage (at para. 2.196), Prof. Briggs addresses the contra ct/ 
tort divide for the purposes of Art. 5 by asking whether the claim is "rooted in 
an agreement between the parties" (contract) or from the unilateral conduct of 
a defendant (tort). In this passage, the view is expressed (rather less 
tentatively) that th e secret profit of a company director should fall on the 
contract side of the line. It is further contended that there is an exception to the 
tortious characterisation of an equitable obligation arising from the unilateral 
conduct of a defendant "…where th is arises from a contractual relationship, 
such as employment."  
93. Building on these passages, Mr Foxton submits that in acting as de facto CEO 
and CFO of the Arcadia Group, the equitable obligations incurred by the 
Appellants arising from a relationship fre ely entered into, are to be 
characterised as contractual rather than a matter relating to tort. Plainly, Prof. 
Briggs' views are entitled to respect and provide a helpful foundation for a 
generalised characterisation of fiduciary duties, having regard to t he binary 
contract/tort divide. That said they are not presented as and could not stand as 
a hard and fast characterisation, regardless of the facts of the particular case. 
Furthermore, the autonomous characterisation of an obligation as contractual 
does n ot – without more – entail its characterisation as a matter relating to an 
individual contract of employment. Any such further characterisation is 
necessarily fact specific.  
94. (4) Conclusions: I can express my conclusions relatively briefly. First, it is 
necessary to guard against over -elaboration. The starting point is to consider 
the reality or substance of the matter, as a matter of fact. In order to decide 
whether the Appellants' fiduciary duties related to their individual contracts of 
employment, it is  inescapably necessary to consider the contracts to which 
they were party and the other parties thereto.  
95. Secondly, as already underlined, the only contracts to which the Appellants 
were parties were those with the corporate entities who employed them for the 
periods set out above. Unless bound to do so, I would not wish to treat the 
Appellants as parties to contracts with other companies in the Arcadia Group.  
96. Thirdly, I would be all the more unwilling to treat the Appellants as parties to 
contracts with o ther companies in the Arcadia Group when, as Mr Howard 
tellingly put it, the Appellants "strained" not to have any such contracts – and 
indeed devised the contractual arrangements which there were.  
97. Fourthly, absent any other contractual relationships beyo nd their contracts of 
employment to which the Appellants were parties, I agree with Mr Howard's 
submission and the Judge's conclusion that claims between parties not in a 
contractual relationship cannot be said to be "matters relating to a contract", a 
fortiori cannot be matters relating to their individual contracts of employment.  
98. Fifthly and for the reasons already given, neither Samengo -Turner  nor Petter 
entitles or obliges a wholesale disregarding of separate corporate personality 
between group compani es; the decisions in those cases were rooted in their 
own facts and the particular contractual bonus arrangements; there is nothing 
like that here.  
99. Sixthly, even if the logic of Prof. Briggs' writing is that the equitable 
obligations assumed by the Appell ants flowing from their acting as de facto  
CEO and CFO are to be characterised as contractual, it is a step too far to 
contend that they must therefore be treated as matters relating to the 
Appellants' individual contracts of employment. The blunt answer is that, on 
the facts and as a matter of reality, they do not relate to those individual 
contracts of employment – other than for the periods when the Appellants 
were employed.  
100. It follows that I would dismiss the appeal in respect of the claims for 
breach of fiduciary duty.  
DISHONEST ASSISTANCE AND KNOWING RECEIPT  
101. The claims under this heading brought by the Respondents against the 
Appellants were contained in an amended pleadin g. Although not originally 
part of the appeal before us – indeed, as I understood it, they did not feature 
before the Judge – good sense on the part of all concerned prevailed and it was 
agreed that we should seek to deal with these claims, rather than doo m the 
parties to a further hearing. Moreover, it was common ground or certainly not 
seriously in dispute that the jurisdiction outcome in respect of these claims 
would follow the outcome in respect of the conspiracy claims. Accordingly 
and for ( mutatis mut andis ) the same reasons as those given in respect of the 
conspiracy claims, I would conclude that this Court has jurisdiction to deal 
with the claims of dishonest assistance and knowing receipt.  
OVERALL CONCLUSION  
102. It follows, for the reasons given, that I  would dismiss the appeal. I 
would be grateful for the assistance of counsel in drawing up the order, not 
least bearing in mind the need to regularise the procedural position with regard 
to dishonest assistance and knowing receipt.  
Lady Justice Gloster:  
103. I agree.  
Lady Justice Macur:  
104. I also agre e