Ireland: UK Court Of Appeal Rules That An Exclusive Jurisdiction Clause In A Stock Plan Is Unenforceable

On 31 July 2015, the English Court of Appeal handed down its judgment in Petter v EMC Europe Ltd and Anor [2015] EWCA Civ 828, which was an appeal from the English High Court.  This case is important for international companies providing benefits (including stock awards) to Irish employees as it held that an exclusive jurisdiction clause in a stock plan was unenforceable.  Although a UK case, Irish employers should be aware of it as it turned on the application of an EU convention and therefore the governing principles in the case may have equal applicability in Ireland.

By way of a background, the US parent company had a number of global subsidiaries, including an English subsidiary, of which Mr Petter was an employee.  Although his contract of employment was with the English subsidiary, he was granted stock awards by the US parent company.  The stock was then distributed under a stock plan, which contained an exclusive Massachusetts jurisdiction and governing law clause.  Mr Petter resigned to join a competitor and a dispute arose over the awards granted to him.  The US parent company instituted proceedings in the Massachusetts courts.  Mr Petter then instituted proceedings in the English High Court.  

Mr Petter argued that the Massachusetts court's exclusive jurisdiction clause had no effect because of the Brussels I (Recast) Regulation (1215/2012) (the "Regulation").  The English High Court decided that it did have jurisdiction to hear Mr Petter's claim by virtue of the Regulation.  Unsurprisingly, the US parent company appealed against the decision on jurisdiction to the Court of Appeal.  The Court of Appeal upheld the findings of the High Court and assumed jurisdiction as a result of the Regulation.  

This case is interesting in that, while the US parent company was not Mr Petter's employer in a domestic law sense, the Court of Appeal found that the dispute about the stock plan was related to Mr Petter's contract of employment.  Therefore, the Regulation applied and the stock plan's exclusive Massachusetts jurisdiction clause was unenforceable.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.