Court of Appeal Judgment Template

Neutral Citation Number: [2021] EWCA Civ 687

Case No: A4/2020/1890

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

COMMERCIAL COURT (QBD)

Sir Michael Burton GBE sitting as a Judge of the High Court

[2020] EWHC 2757 (Comm)

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 14 May 2021

Before :

SIR GEOFFREY VOS, MASTER OF THE ROLLS

LORD JUSTICE HENDERSON

and

LORD JUSTICE NUGEE

- - - - - - - - - - - - - - - - - - - - -

Between :

(1) ALTA TRADING UK LTD

(formerly known as ARCADIA PETROLEUM LTD)

(2) ARCADIA ENERGY (SUISSE) SA

(3) ARCADIA ENERGY PTE LTD

(4) FARAHEAD HOLDINGS LTD

Claimants and

Respondents

- and -

(1) PETER MILES BOSWORTH

(2) COLIN HURLEY

(3) STEPHEN CLIVE LANGFORD GIBBONS

(4) MARK RICHARD LANCE

(5) STEVEN KELBRICK

(6) SALEM MOUNZER

(7) ARCADIA PETROLEUM SAL OFFSHORE

(8) ARCADIA PETROLEUM LTD, MAURITIUS

(9) ATTOCK OIL INTERNATIONAL LTD,

MAURITIUS

(10) THE CORNHILL GROUP LTD

Defendants and

Appellants

Defendants

- - - - - - - - - - - - - - - - - - - - -

Mr Richard Eschwege (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP)

for the Appellants

Mr Fionn Pilbrow QC and Mr David Heaton (instructed by Jones Day) for the Respondents

Hearing dates: 5 and 6 May 2021

- - - - - - - - - - - - - - - - - - - - -

Approved Judgment

Covid-19 Protocol: This judgment was handed down remotely by circulation to the parties’

representatives by e-mail, release to BAILII and publication on the Courts and Tribunals

Judiciary website. The date and time for hand-down is deemed to be at 10:30am on

14 May 2021

Judgment Approved by the court for handing down.

Alta Trading UK Ltd v Bosworth

Lord Justice Nugee:

Introduction

1. This appeal is the latest round in a long-running dispute as to whether the English

court has jurisdiction over the claims brought by the Claimants (the Respondents in

this Court) against the 1

and 2

Defendants, Mr Bosworth and Mr Hurley (the

Appellants in this Court). In the action the Respondents allege that Mr Bosworth and

Mr Hurley, who formerly acted as the Chief Executive Officer (“CEO”) and Chief

Financial Officer (“CFO”) respectively of the first three Claimants (“the Arcadia

Claimants”), were guilty of a large-scale conspiracy to defraud the Arcadia

Claimants of which they were stewards.

2. The question of jurisdiction turns on whether the claims relate to individual contracts

of employment within the meaning of Art 18(1) of the Lugano Convention (or the

Lugano II Convention as it is sometimes referred to). If they do, then by Art 20(1) the

claims have to be brought in the state where the employee is domiciled. The

Appellants are British citizens but are each domiciled in Switzerland.

3. The answer to that question depends on whether they were “in a relationship of

subordination” to their employing company or companies. After a reference to the

Court of Justice of the European Union (“CJEU”), the Supreme Court remitted the

case to the Commercial Court to hear further evidence and submissions on that

question.

4. The issue was heard by Sir Michael Burton GBE sitting as a Judge of the High Court

(“the Judge”). He handed down judgment at [2020] EWHC 2757 (Comm) on 19

October 2020 (“the Judgment” or “Jmt”). He had before him a very large amount

of contested evidence, but his conclusion was a firm one, namely that the

Respondents had a good arguable case that the Appellants were not in a relationship

of subordination to the Arcadia Claimants, in that they had a more than negligible

ability to influence them (Jmt at [36]). He accordingly dismissed their challenge to

the jurisdiction.

5. The Appellants appeal, with permission granted by the Judge himself, on the basis

that he misunderstood the decisions of the CJEU and applied the wrong test to be

derived from them.

6. I consider that he applied the right test and that there is no error in his admirable

judgment. I would dismiss the appeal.

The Lugano Convention

7. The relevant rules on jurisdiction are found in the Convention on jurisdiction and the

recognition and enforcement of judgments in civil and commercial matters between

the European Community and, among others, the Swiss Confederation, signed at

Lugano on 30 October 2007 (“the Lugano Convention”).

8. Title II of the Lugano Convention (Arts 2 to 31) deals with jurisdiction. Section 5 of

Title II (Arts 18 to 21) deals with jurisdiction over individual contracts of

employment. Arts 18(1) and 20(1) respectively provide as follows:

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Alta Trading UK Ltd v Bosworth

Article 18

1. In matters relating to individual contracts of employment, jurisdiction

shall be determined by this Section, without prejudice to Articles 4 and

5(5).

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.

9. It can be seen that the wording of Art 18(1) naturally gives rise to two questions in

any particular case: is there an “individual contract of employment”? and does a

claim “relate to” that contract?

Facts

10. The facts can be taken (subject to one caveat) from the Agreed Statement of Facts and

Issues that was before the Supreme Court in 2017. The Arcadia Claimants are

respectively (1) the 1

Claimant, Alta Trading UK Ltd, an English company formerly

called Arcadia Petroleum Ltd (“Arcadia London”); (2) the 2

Claimant, Arcadia

Energy (Suisse) SA, a Swiss company (“Arcadia Switzerland”); and (3) the 3

Claimant, Arcadia Energy Pte Ltd, a Singaporean company (“Arcadia Singapore”).

They are companies in the Arcadia Group and were at the material times engaged in

the business of trading physical crude oil and oil derivatives. (This Arcadia Group

has nothing to do with the well-known retail group of the same name which went into

administration last year). The Arcadia Group (which includes other companies than

the Arcadia Claimants) is 100% owned by the 4

Claimant, Farahead Holdings Ltd

(“Farahead”), which is ultimately owned by trusts established by Mr John

Fredriksen, a successful Norwegian-Cypriot businessman with extensive shipping

interests. (As this indicates “the Arcadia Group” is used in the Agreed Statement of

Facts and Issues to mean the Arcadia Claimants and other subsidiaries of Farahead,

but not Farahead itself, and I will use it in the same sense).

11. Mr Bosworth was the de facto CEO of the Arcadia Group until February 2013, and

Mr Hurley the de facto CFO of the Arcadia Group until September 2013. They

possessed these titles although their written contracts of employment did not include

provisions that they should act as group CEO and CFO.

12. The Respondents’ pleaded case is that they are the victims of a substantial and

sustained fraud perpetrated on them by a number of individuals, including the

Appellants, and corporate entities. Proceedings were commenced against six

individuals and four associated companies; settlements have subsequently been

concluded with some of them. The Respondents believe the Appellants to have been

the principal architects of, and beneficiaries from, the alleged fraud. In a nutshell, the

fraud alleged is that they and others siphoned off sums from the Arcadia Group for

their own benefit by the insertion of corporate entities into buying 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, which

bore all the costs and risks of the transactions. The Respondents’ estimate is that

gross profits of some US$339m were diverted out of the Arcadia Group during the

period April 2007 to May 2013.

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Alta Trading UK Ltd v Bosworth

13. The Appellants have not yet pleaded their case but vigorously deny the allegations. In

summary they say that oil trading in West Africa is fraught with reputational and

regulatory risks; that Mr Fredriksen and/or Farahead knew of and consented to the

insertion of ‘sleeve’ entities into the trading transactions to distance and protect the

Arcadia Group from those risks; that there was no attempt to conceal this from the

Respondents, who were fully aware that trading in West Africa was continuing; that

Mr Fredriksen and/or Farahead knew about and authorised the continued trading; that

the Respondents knew that commission payments were made to third parties so that

such oil trading could continue; that there was no siphoning off, no evidence that they

received any of the sums allegedly diverted, and no reason to infer fraud. They also

dispute the alleged losses which have been calculated without taking account of

related hedging transactions.

14. The Appellants were authorised by Farahead to act as CEO and CFO respectively, and

invested by Farahead with, possessed, and exercised all the usual authority of a CEO

and CFO. They ran the day-to-day business of the Arcadia Group. They formed part

of the governing structure of the Arcadia Claimants and undertook to, and were

entrusted by, them to act for and on their behalf.

15. They had limited formal de jure appointments as directors as follows: Mr Bosworth

was a director of Arcadia Singapore from May 2010 to September 2013; Mr Hurley

was a director of Arcadia London from March 2006 to July 2011, and of Arcadia

Singapore from September 2011 to September 2013. Otherwise they were not

formally appointed directors of the Arcadia Claimants. But the Respondents’ case is

that they acted as de facto or shadow directors of each of the Arcadia Claimants.

16. At all material times the Appellants were also employed under contracts of

employment with one or other of the companies in the Arcadia Group. Mr Bosworth

was party to a contract of employment with Arcadia London between March 2006 and

September 2009, with Arcadia Singapore between September 2009 and May 2012,

and with a company called Arcadia Al Arabiya DMCC (a Dubai company within the

Arcadia Group but not one of the Arcadia Claimants (“Arcadia Dubai”)) from March

2012 to February/March 2013. Mr Hurley was party to a contract of employment

with Arcadia London between March 2006 and July 2011, with Arcadia Singapore

between August 2011 and July 2012, and with Arcadia Dubai from August 2012 to

September 2013.

17. None of these contracts of employment (which were drafted by, or under the direction

of, Mr Bosworth and Mr Hurley themselves) contains any provision that they act as

CEO and CFO. But notwithstanding this, they acted at all material times on behalf of

all the Arcadia Group companies, and provided services and performed functions on a

group-wide basis.

18. It is common ground that the Appellants were answerable to the ultimate shareholders

in the Arcadia Group, through Farahead, who had the power to hire and fire them.

19. These facts were all agreed by the parties before the Supreme Court in 2017. The one

caveat is that these facts did not deal in any more detail with the relationship between

the Appellants on the one hand and Farahead on the other, and the extent to which

they were given instructions by Farahead and its representatives.

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Alta Trading UK Ltd v Bosworth

Procedural history

20. It is necessary to give some account of the protracted and somewhat tortuous history

of the proceedings, which have taken over 6 years to date and not yet resolved the

question of the jurisdiction of the English court.

21. On 12 February 2015 the Respondents applied without notice to Teare J for, and were

granted, a freezing order. The Claim Form, with Particulars of Claim attached, was

issued the next day. As against Mr Bosworth and Mr Hurley these pleaded that they

each owed to the Arcadia Claimants both fiduciary duties as (de jure or de facto or

shadow) directors and contractual duties as employees, and advanced claims for

(i) unlawful means conspiracy (relying on breaches of fiduciary and contractual duties

as the unlawful means), (ii) breach of fiduciary duty, and (iii) breach of contractual

duties of loyalty and fidelity.

22. On 9 March 2015 Mr Bosworth and Mr Hurley applied for dismissal of the claims

against them for lack of jurisdiction on the grounds that such claims fell within the

exclusive jurisdiction of the courts of Switzerland, an application optimistically

described by their then solicitor as turning on a short point of law, namely that all the

claims related to their employment by the Arcadia Group.

23. That application was heard by Burton J (as the Judge then was) in the Commercial

Court. He gave judgment at [2015] EWHC 1030 (Comm) on 1 April 2015. By that

stage the Respondents had sought to delete any reference to breach of contract in their

pleading. The Judge held that the conspiracy claim was a tortious claim that did not

relate to contracts of employment, and that the Respondents had a good arguable case

that the breach of fiduciary duty claims also fell outside Art 18(1) of the Lugano

Convention save where the relevant defendant had a contract of employment with the

relevant claimant.

24. An appeal to this Court by Mr Bosworth and Mr Hurley was dismissed at [2016]

EWCA Civ 818 on 19 August 2016. In his judgment Gross LJ (with whom Gloster

and Macur LJJ agreed) agreed with the Judge that the conspiracy claims were, as a

matter of substance, correctly characterised as claims in tort and did not relate to the

Appellants’ contracts of employment, and that the breach of fiduciary duty claims did

not relate to those individual contracts of employment either, other than for the

periods for which (and in relation to the companies by which) the Appellants were

employed. He also held that claims which had been added by amendment for

dishonest assistance and knowing receipt fell to be treated in the same way as the

conspiracy claim.

25. Both before Burton J and this Court in 2016 the parties and the Court proceeded on

the basis that, at least as between the Appellants and the companies with which they

had, as a matter of domestic law, contracts of employment, they were employees for

the purposes of Arts 18 to 21 of the Lugano Convention. The argument was primarily

over whether the claims related to those contracts of employment (i.e. the second of

the two questions under Art 18(1) identified in paragraph 9 above).

26. On further appeal by the Appellants to the Supreme Court, however, the members of

the Court questioned the assumption that the Appellants were employees at all for the

purposes of the Lugano Convention. The Court made a reference to the CJEU and

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Alta Trading UK Ltd v Bosworth

included a question addressed to that issue. Four questions were asked. Questions 1

and 3 were concerned with the correct test for whether a claim “relates to” a contract

of employment. Question 4 asked whether claims by companies in the same group as

a defendant’s employer also fell within Arts 18 to 21 of the Lugano Convention.

Question 2 was in these terms:

“If a company and an individual enter into a ‘contract’ (within the meaning of

Article 5(1) of the Convention), to what extent is it necessary for there to be

a relationship of subordination between the company and the individual for

that contract to constitute an ‘individual contract of employment’ for the

purposes of Section 5 [of Title II of the Convention]? Can such a relationship

exist where the individual is able to determine (and does determine) the

terms of his contract with the company and has control and autonomy over

the day-to-day operation of the company’s business and the performance of

his own duties, but the shareholder(s) of the company have the power to

procure the termination of the relationship?”

27. Advocate General Saugmandsgaard Øe delivered his Opinion on 24 January 2019.

He gave his suggested answer to Question 2 first, although he went on to consider the

other 3 questions. The CJEU gave judgment on 11 April 2019: Bosworth v Arcadia

Petroleum Ltd (Case C-603/17) [2019] ILPr 22 (“Bosworth (CJEU)”). They also

considered Question 2 first. I will have to look in detail at their reasoning and

conclusions below, but in summary they said that, on the basis of the information

provided by the referring court, it appeared that Mr Bosworth and Mr Hurley were not

in a relationship of subordination, and that a contract concluded in circumstances such

as those at issue in these proceedings did not constitute an individual contract of

employment. There was therefore no need to answer the other questions.

28. That was, as Mr Fionn Pilbrow QC, who appeared with Mr David Heaton for the

Respondents, put it, a decision expressed in what seasoned observers of the CJEU

might consider unusually robust and clear terms. Nevertheless when the matter was

referred back to the Supreme Court, there were extensive submissions as to the

consequences, the Respondents suggesting that the jurisdiction challenge should be

dismissed there and then (and indeed that the breach of fiduciary duty claims which

Burton J had disallowed should be allowed back in), the Appellants that there was an

issue estoppel or abuse of process in the Respondents resiling from the position that

they were employees. All these submissions were rejected by the Supreme Court, but

they were however persuaded by the Appellants that there was further evidence on the

question of subordination which needed to be considered before the Court could reach

a conclusion on whether they were in a position of subordination. The Supreme Court

therefore remitted the case for further consideration of that question, their Order

reading in paragraph 1 as follows:

“The appeal be allowed but only to the extent of remitting the case to the

Commercial Court to hear further evidence and submissions on whether the

Appellants were in “a relationship of subordination” to their employing

company or companies in the sense used by the Court of Justice of the

European Union in its judgment of 11 April 2019, Case C-603/17, so as to

place them in an employment relationship to which Section 5, article 18(1)

of the Lugano II Convention could apply.”

Judgment Approved by the court for handing down.

Alta Trading UK Ltd v Bosworth

29. So it was that the case was remitted to the Judge, now Sir Michael Burton GBE,

almost exactly 5½ years after he had first decided it. He handed down the Judgment

on that issue on 19 October 2020.

The Judgment

30. Having set out the history at [1]-[5], the Judge dealt first with some preliminary

questions at [6]-[9], and then considered the question as to the nature of the test which

he had to adopt on a challenge to the jurisdiction, having regard to the well-known

Supreme Court decisions in Brownlie v Four Seasons Holdings Inc [2017] UKSC 80

and Goldman Sachs International v Novo Banco SA [2018] UKSC 34. His conclusion

at [13] was that the claimant must establish a good arguable case; that for this purpose

the Court must decide, it if can, who has the better of the case; but that where the

judge cannot decide, after conscientiously doing his or her best, who has the better of

the case (due to the evidential limitations involved at the jurisdiction stage), then it is

sufficient if the claimant has a plausible evidential basis. The Appellants sought to

challenge that by amending their Grounds of Appeal to add a Ground 3 directed at it

(based on the recent decision of the Supreme Court in Okpabi v Royal Dutch Shell plc

[2021] UKSC 3 (“Okpabi”)), but permission was refused by Males LJ on 17 March

2021, and again on 31 March 2021. The correctness of the Judge’s approach is

therefore not something we need to consider, but for what it is worth I do not detect in

Okpabi (which Mr Richard Eschwege, who appeared for the Appellants, in fact

showed us in the course of his submissions) any reason for thinking that there was

anything wrong with the Judge’s pithy summary of the approach. The Judge of

course has long experience as a judge of the Commercial Court and must be very

familiar with the jurisprudence and practice on challenges to the jurisdiction.

31. At [14]-[25] the Judge considered what the CJEU required in order to establish a

relationship of subordination. His conclusion at [25] was:

“I am satisfied that the issue which the CJEU resolved, though on the basis of

assumed facts which I must now reconsider, is that the Defendants had a

non-negligible influence over the Group companies of which they were CEO

and CFO.”

32. At [26] he said that both sides had directed their evidence (which was extensive) to

that issue and summarised their rival contentions as follows:

“The Claimants contend that the Defendants “called the shots” in relation to

the companies they ran, while the Defendants claim that they were entirely

subordinate to Farahead and Mr Fredriksen (and his associates).”

At [27] to [35] he summarised that evidence which he described as “a morass of

papers”. He cited from certain documents and the witness statements, and then at

[31] to [33] summarised two rival schedules, one prepared for the Appellants by their

solicitor said to contain examples of the “directorial powers that Farahead and/or Mr

Fredriksen and/or Mr Troim exercised over the Arcadia Group” (Mr Trøim being Mr

Fredriksen’s then business partner), and one prepared for the Respondents by their

junior counsel Mr Heaton said to contain examples “showing the absence of a

relationship of subordination”, identifying which of the examples in each schedule

was contested in the evidence. At [34]-[35] he considered in detail one specific area

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Alta Trading UK Ltd v Bosworth

of contentious evidence concerning a restructuring in 2008/9 for tax reasons.

33. He then gave his conclusion at [36] in terms which it is worth citing in full:

“I am left to decide the question on the basis of this very contested and

untested evidence, which I have carefully considered, both before and at the

hearing and, as Lord Templeman once advised, in my room afterwards, as to

whether the Defendants were in a relationship of subordination to the

Arcadia companies because of the degree of control of the companies and of

the Defendants by Farahead (and Mr Fredriksen). Just as the Advocate

General pointed to the fact (at paragraph 41 of his Opinion) that

in Holterman the Court “stated that a director having a sufficient share of

the capital to influence in a ‘non-negligible’ manner the persons normally

competent to give him instructions and to supervise their implementation

cannot be subordinate to the company”, so the Claimants can say here that

these Defendants between them, without a shareholding, had such power

over the Arcadia companies that they were in a position to exercise that same

influence. Whether the Defendants had the same powers as, or greater

powers than, a normal CEO and CFO in such a situation, and in a case in

which Farahead is in Cyprus, Mr Fredriksen in London and the Defendants

are running an international group of companies, I do not need to decide. I

am entirely clear however that, on the basis that the Claimants bear the onus

to establish jurisdiction and my task has been to set their evidence against the

rival evidence for the Defendants, and weigh it all in the context of such

contemporaneous documents as are before me, I am satisfied that the

Claimants have a good arguable case that there is not such a relationship, in

that the Defendants had a more than negligible ability to influence the

Arcadia companies. If I have, after such a difficult task, to conclude, on my

assessment of the present evidence, without cross-examination, weighing the

balance of the two Schedules, and taking into account, in addition to the

submissions and evidence of the parties before me, in particular the

Singapore Investment Memoranda and the witness statement of Ms Vaswani,

that the Claimants have the better case, I do so. I am in any event satisfied,

with reference to limbs (ii) and (iii) of the Brownlie test, that they have a

plausible evidential basis.”

This is a concise but admirably clear conclusion, reached as I say by a very

experienced Commercial Court judge, entirely in line with the exhortation by Davis

LJ in Kaefer Aslamientos SA de CV v AMS Drilling Mexico SA de CV [2019] EWCA

Civ 10 at [124] that judgments in such cases should so far as possible be concise.

34. The Judge therefore dismissed the defendants’ challenge to the jurisdiction in relation

to the first three Claimants (the Arcadia Claimants); and said that the same result must

also apply in respect of the fourth Claimant (Farahead) (Jmt at [37]).

35. By his Order dated 19 October 2020 he declared that:

“The Claimants have a good arguable case that there was no relationship of

subordination in the sense used by the Court of Justice of the European

Union in its judgment of 11 April 2019, Case C-603/17, between the

Claimants (or any of them) and the First and Second Defendants (or either of

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Alta Trading UK Ltd v Bosworth

them) and, accordingly, that neither the First Defendant nor the Second

Defendant was in an employment relationship with the Claimants (or any of

them) to which Section 5, article 18(1) of the Lugano II Convention could

apply.”

He also granted Mr Bosworth and Mr Hurley permission to appeal in respect of two

Grounds of Appeal, but on terms that there should be no challenge to the findings in

[26] to [36] of the Judgment.

Grounds of Appeal

36. The two Grounds of Appeal are elaborated at some length but can be summarised as

follows:

(1) Ground 1 is that the Judge applied the wrong test to determine whether there

was a relationship of subordination. He should have applied the so-called

Holterman test which required the Court first to identify the relevant corporate

decision-making body that gives the individual instructions and then ask

whether the individual has a non-negligible ability to influence that body.

(2) Ground 2 is that the Judge’s approach is inconsistent with or undermines the

mechanistic nature of the jurisdiction rules in the Lugano Convention and

would unduly narrow the protection of Section 5 of Title II.

37. The Appellants derive the Holterman test from the decision of the CJEU in

Holterman Ferho Exploitatie BV v Spies von Büllesheim (Case C-47/14)

(“Holterman”) at [47]. The Appellants’ case is that this test was adopted and

endorsed by the CJEU in the present case (Bosworth (CJEU) at [31]). And although

Ground 2 is presented as a separate ground, it is really another argument put forward

by the Appellants as to why the correct test is the Holterman test rather than the test

adopted by the Judge. There is in effect therefore only one question raised by the

appeal. Indeed as Mr Eschwege said, it can be reduced to the simple question: is the

test for subordination the Holterman test or not?

Ground 1

38. Mr Eschwege developed his argument by reference first to a detailed analysis of

Holterman. Holterman was a decision on a preliminary reference from the Hoge

Raad in the Netherlands in proceedings brought by a Dutch holding company and

three German subsidiaries in the Netherlands against Mr Spies von Büllesheim, a

former manager who was domiciled in Germany. It raised questions on the

applicability of Arts 18 to 21 of the Brussels Regulation (EC Regulation 44/2001), the

wording of which is materially identical to the corresponding provisions in the

Lugano Convention.

39. I will consider Holterman in more detail below, but I prefer to start with the decision

of the CJEU in the present case (Bosworth (CJEU)). Not only is this binding on the

parties for what it decides, but the Supreme Court remitted the case to the

Commercial Court to consider whether the Appellants were in a relationship of

subordination “in the sense used by the [CJEU] in its judgment of 11 April 2019”

(paragraph 28 above). It is therefore to that judgment that we must primarily look.

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The judgment in Bosworth (CJEU)

40. In that judgment the CJEU, after a brief introduction at [1] to [2], set out the text of

the relevant articles of the Lugano Convention at [3] to [5], summarised the dispute in

the main proceedings at [6] to [14], and set out the questions referred at [15]. It is not

necessary to refer to any of that other than to note that it is clear from [6] to [8] that

they understood the difference between (i) Arcadia London, Arcadia Singapore and

Arcadia Switzerland (the three Arcadia Claimants); (ii) the Arcadia Group (including,

but not limited to, the three Arcadia Claimants, but not including Farahead, which

they referred to as the 100% owner of the Group); and (iii) the four Claimants, being

the three Arcadia Claimants and Farahead, which they referred to together as

“Arcadia”. As appears below Mr Eschwege placed some reliance on this use of

“Arcadia”, so I will say here that on my reading of the judgment they were simply

using it as a convenient shorthand for the Claimants in the litigation.

41. After disposing of a preliminary procedural point they said at [20] that it was

appropriate to examine Question 2 first. They proceeded to do that at [21] to [35].

We were taken through the entirety of this carefully by Mr Pilbrow, and I found this a

useful exercise. Judgments of the CJEU are not written in the discursive style

familiar from English judgments. They are concise and tightly worded. That

sometimes makes them opaque and their meaning has to be teased out of them. I

propose therefore to go through the judgment with comments as appropriate.

42. At [21] the CJEU restated Question 2 in their own words. At [22] they made the point

that the interpretation of the corresponding provisions of the Brussels Regulation can

be applied to the Lugano Convention – as already referred to, Holterman was itself a

decision on the Brussels Regulation.

43. At [23] they said:

“23. In order to determine whether the provisions of Section 5 of Title II (arts

18–21) of the Lugano II Convention are applicable to a situation such as

that at issue in the main proceedings, it is necessary to consider whether

Mr Bosworth and Mr Hurley can be regarded as having been party to an

“individual contract of employment”, within the meaning of art.18(1) of

that Convention, with one of the companies in the Arcadia Group, and

whether they can therefore be classified as “employees”, within the

meaning of art.18(2) of that Convention (see, to that effect, [Holterman]

[34]).”

The reference to Holterman at [34] is to a statement in Holterman that the special

rules for determining jurisdiction in Arts 18 to 21 of the Brussels Regulation only

applied if Mr Spies von Büllesheim could be considered to be bound through an

“individual contract of employment”. That is plain enough and unsurprising; it

follows from the wording of Art 18(1).

44. There is one other point to notice on [23], which is that they refer to it being necessary

to consider whether Mr Bosworth and Mr Hurley can be regarded as having been

party to a contract of employment with “one of the companies in the Arcadia Group”.

As referred to above, it is clear that they understood that the three Arcadia Claimants

were companies in the Arcadia Group, but Farahead was not. Why did they pose the

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question in this way? The explanation I think is that there is no suggestion in the

reference that Mr Bosworth or Mr Hurley ever held any position (de facto or de jure)

in, or ever acted for and on behalf of, Farahead. Nor indeed had it ever been pleaded

that they were employees of Farahead – the original pleading was that they were

employees of the Arcadia Group; and Mr Eschwege confirmed to us in terms that Mr

Bosworth and Mr Hurley never held any position in Farahead and never provided any

services to Farahead. Consistently with that the schedule to the order for reference,

which is drawn from, and closely follows, the Agreed Statement of Facts before the

Supreme Court, refers to Mr Bosworth and Mr Hurley as having been de facto CEO

and CFO of the Arcadia Group; as being responsible for the day-to-day business of

the Arcadia Group; as acting for and on behalf of Arcadia London, Arcadia

Switzerland and Arcadia Singapore; as having a contract of employment with one or

other companies in the Arcadia Group; as being on the payroll of companies in the

Arcadia Group; and as having acted on behalf of all Arcadia Group companies. In

those circumstances it is not to my mind surprising that the CJEU understood the

question to be whether Mr Bosworth and Mr Hurley had contracts of employment (in

the EU sense) with one or more companies in the Arcadia Group.

45. At [24] they said:

“24. In that regard, it should be pointed out that any such classification

cannot be determined on the basis of national law ([Holterman] [36])

and that, in order to ensure that the Lugano II Convention, in particular

art.18 thereof, is fully effective, the legal concepts it uses must be given

an independent interpretation common to all the contracting parties (see,

to that effect, judgments of 19 July 2012, Mahamdia v Algeria (C-

154/11) EU:C:2012:491; [2013] C.E.C. 452; [2012] I.L.Pr. 41, [42],

and [Holterman] [37]).”

The principle that concepts used in EU instruments are not to be understood by

reference to national law but are to be given an independent or autonomous

interpretation is very well established. This paragraph contains two more references

to Holterman at [36] and [37], but these say no more than that, in the specific context

of a contract of employment for the purpose of Art 18(1) of the Brussels Regulation.

46. At [25] they said:

“25. As regards the concept of “employee”, it must also be recalled that, as

the Court has consistently held, that concept must be defined in

accordance with objective criteria which distinguish the employment

relationship by reference to the rights and duties of the persons

concerned. The essential feature of an employment relationship is that,

for a certain period of time, a person performs services for and under the

direction of another person, in return for which he receives remuneration

(see, in particular, judgment of 20 September 2007, Kiiski v Tampereen

Kaupunki (C-116/06) EU:C:2007:536; [2008] 1 C.M.L.R. 5; [2008]

C.E.C. 199, [25] and the case law cited).”

If one follows up the reference to Kiiski v Tampereen Kaupunki (C-116/06) (“Kiiski”)

at [25] one there finds the Court saying that the concept of worker is another example

of something that may not be interpreted differently according to national law but

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Alta Trading UK Ltd v Bosworth

must be given a Community meaning, and describing the essential feature of an

employment relationship in the terms here set out, referring to a line of cases back to

1986. The CJEU is not bound by any rigid doctrine of precedent but seeks to

maintain consistency in its decisions in the interests of legal certainty, and frequently,

as here, cites propositions verbatim as settled law. Kiiski was not a case about

jurisdiction, and I accept Mr Pilbrow’s submission that what one can take from this

paragraph is that the essence of an employment relationship – the performing of

services for and under the direction of another in return for remuneration, or what the

Advocate General in this case described at [AG34] as the features of “the

performance of services, remuneration and subordination” – is the same across all

areas of EU law.

47. But I also accept his further submission that although the basic features of the concept

of employee or worker run across the whole of EU law, that does not mean that one

can automatically transpose the working out of that concept from one area to another

unthinkingly. This is well illustrated by the Advocate General in the present case.

Having referred at [AG48] to cases (Danosa v LKB Līzings SIA (Case C-232/09) and

Balkaya v Kiesel Abbruch- und Recycling Technik GmbH (Case C-229/14)) in which

the Court had held that directors could be workers for the purposes of directives

relating respectively to the rights of pregnant workers and to collective redundancies,

he continued at [AG49]:

“However, the interpretation which the Court of Justice gives to a concept in

one field of EU law cannot automatically be applied in a different field. As I

have indicated, this is only one source of inspiration. The concept of

“individual contract of employment”, within the meaning of Section 5, must

be interpreted principally by reference to the scheme and objectives of the

Lugano II Convention and the Brussels I Regulation and to the general

principles emerging from national legal systems. The abovementioned

precedents may therefore be transposed to those instruments only with

caution. I would also note that, in the judgment in Holterman, the Court did

not apply that case law in express terms; it merely referred to it on certain

points.”

A similar point was made by Advocate General Cruz Villalón in Holterman at

[AG25].

48. Reverting to the judgment of the CJEU, at [26] they said:

“26. It follows that an employment relationship implies the existence of a

hierarchical relationship between the worker and his employer, and that

the issue whether such a relationship exists must, in each particular case,

be assessed on the basis of all the factors and circumstances

characterising the relationship between the parties ([Holterman] [46],

and [judgment] of 20 November 2018, Sindicatul Familia Constanta v

Directia Generala de Asistenta Sociala si Protectia Copilului Constanta

(C-147/17) EU:C:2018:926; [2019] 2 C.M.L.R. 8, [42]).”

Two points can be taken from this paragraph. First the focus is on the relationship

between the worker and his putative employer and whether that is hierarchical. That

makes logical sense. The question is whether A (a person providing services) is in an

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employment relationship with B (his putative employer). That, according to the

CJEU depends on whether that relationship is hierarchical.

49. Second, the question whether a relationship exists must be assessed on the basis of all

the factors and circumstances that characterise that relationship. That is indeed what

is said in Holterman at [46], and repeated in the Constanţa case at [42]. There is

obviously a tension between the requirement to assess the relationship on the basis of

all the factors and circumstances that characterise it, and the desire that questions of

jurisdiction under the Brussels Regulation and Lugano Convention should be

determined with a high degree of predictability, a point I will come back to under

Ground 2. For present purposes it is to be noted that the inquiry is a factual one, not

one determined solely on the basis of the terms of the contract. For that one can refer

to the Opinion of the Advocate General (who was again Advocate General

Saugmandsgaard Øe) in BU v Markt24 GmbH (Case C-804/19) [2021] IL Pr 14 at

[AG29] fn 15:

“15. I do not mean to suggest that a contract is classified, for the purposes of

art.20(1) of the Brussels Ia Regulation, solely on the basis of its terms.

Indeed, where those terms do not reflect how that relationship is

conducted in practice, the factual reality prevails (see [AG61] of this

Opinion). Specifically, a contract held out as being an “individual

contract of employment” will not be classified as such if, in actual fact,

one party is not subordinated to the other, and vice versa (see, by

analogy, [Bosworth (CJEU)], [34]).”

50. At [27] of the present case the CJEU said:

“27. It should, moreover, be noted that, according to the wording of the

provisions of Section 5 of Title II (arts 18–21) of the Lugano II

Convention, the conclusion of a contract is not a condition for the

application of the rules of special jurisdiction laid down in those

provisions, and therefore that, as the Advocate General, in essence,

indicated in [AG34]–[AG36] of his Opinion, the absence of any formal

contract does not preclude the existence of an employment relationship

that falls within the concept of “individual contract of employment”

within the meaning of those provisions.”

This point is explained in greater detail at [AG34] to [AG36], where the Advocate

General says that the absence of a formal contract in substantive law between Mr

Bosworth and Mr Hurley and one or other Arcadia company does not rule out the

possibility of inferring a “contract” for the purposes of the Lugano Convention on the

facts; and conversely that the contracts concluded between them and other companies

of the group would not necessarily be regarded as contracts of employment for those

purposes.

51. At [28] the CJEU said:

“28. However, such a relationship can be treated as an “individual contract of

employment” within the meaning of the provisions of Section 5 of Title

II (arts 18–21) of the Lugano II Convention only if there is a relationship

of subordination between the company and the director concerned.”

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This is the first reference in the CJEU judgment to “subordination”, but it was used

in Question 2 itself, and extensively by the Advocate General in his Opinion. So far

as one can tell from the material before us, the term comes from Holterman: see at

[40] where the CJEU referred to the Report by Mr Jenard and Mr Möller on the

Lugano Convention, according to which the concept of a “contract of employment”

might be considered to presuppose a relationship of subordination of the employee to

the employer (and see also the Opinion of the Advocate General in that case at

[AG28] to [AG32]). It is however entirely consistent with the basic features of the

EU concept of employment under which an employee provides services for and under

the direction of his employer.

52. It may be noted that in [28] the CJEU gives their answer to the first part of Question

2, which was in these terms (see paragraph 26 above):

“If a company and an individual enter into a ‘contract’ (within the meaning of

Article 5(1) of the Convention), to what extent is it necessary for there to be

a relationship of subordination between the company and the individual for

that contract to constitute an ‘individual contract of employment’ for the

purposes of Section 5 [of Title II of the Convention]?”

The answer given by the CJEU at [28] is that it is necessary. The combined effect of

[27] and [28] is that in order for there to be a contract of employment for the purposes

of the Lugano Convention you do not need anything in the way of a formal contract of

employment but you do need a relationship of subordination. Again it is to be noted

that the answer in [28] is framed in terms of a relationship between a company and the

director concerned.

53. At [29] to [30] the CJEU said:

“29. In the present case, it should be noted that, according to the information

provided by the referring court, Mr Bosworth and Mr Hurley were,

respectively, chief executive officer and chief financial officer of the

Arcadia Group, that they were directors of Arcadia London, Arcadia

Singapore and Arcadia Switzerland, that they were each party to a

contract of employment with one of those companies drafted by

themselves or at their direction and that they acted at all material times

on behalf of all Arcadia Group companies.

30. It is also apparent from the order for reference that Mr Bosworth and Mr

Hurley exercised control over by whom, where and on what terms they

were employed.”

These matters were, as they say, all taken from the order for reference. The four

matters referred to in [29] are each found in the Agreed Statement of Facts before the

Supreme Court. None of them is disputed. The fifth matter, referred to in [30], is not

in terms found there but it was in the schedule to the order for reference, and was

taken from the judgment of Gross LJ in the judgment of this Court in 2016 at [2].

There was some debate before the Judge whether this could be reopened before him

(Jmt at [9]), but on the present appeal Mr Eschwege accepted that the Judge recorded

that one of the items on the Respondents’ schedule was that the Appellants moved

their employment to different Arcadia Group entities as they considered expedient,

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Alta Trading UK Ltd v Bosworth

including for their own benefit, and determined the terms on which they were

employed (Jmt at [33(13)]), and that the Judge found that there was a good arguable

case on the point. He also expressly accepted that the CJEU were right in what they

said in [30], although he said that that was incomplete because it did not include any

reference to what he called the instruction-giving role of Farahead.

Bosworth (CJEU) at [31]

54. At [31] the CJEU said:

“31. In the circumstances, it appears that Mr Bosworth and Mr Hurley had an

ability to influence Arcadia that was not negligible and that, therefore, it

must be concluded that there was no relationship of subordination (see,

to that effect, [Holterman] [47]), irrespective of whether or not they held

part of the share capital of Arcadia.”

55. The interpretation of this paragraph is the key battleground for Ground 1. Before

coming to Mr Eschwege’s argument, I will say what it seems to me, on a simple

reading of the paragraph, the CJEU was saying. First, the reference to “In the

circumstances” shows that their conclusion is built on the factors and circumstances

that they have just referred to. That can only be a reference to the matters set out at

[29] and [30], which, as I have said, have either always been common ground ([29]),

or have now been found by the Judge to be a matter on which the Respondents have

established a good arguable case ([30]). Second, the CJEU said that it did not matter

whether or not the Appellants held any of the share capital. That is no doubt because

in Holterman it was the fact that Mr Spies von Büllesheim had a shareholding in the

Dutch holding company that raised a question whether his relationship with that

company was one of subordination. What the CJEU is saying here is that that is not

the only circumstance which gives rise to that question.

56. Third, on the face of the paragraph the CJEU says that the circumstances they have

referred to establish that the Appellants had a non-negligible ability to influence

“Arcadia” and that that was sufficient to demonstrate that there was no relationship of

subordination. I will come back to the use of the term “Arcadia” here, which gave

rise to some argument, but, leaving that point aside, the reasoning of the CJEU seems

simple enough. It is that if A is in a position where he can exercise non-negligible

influence over B, A is not in a relationship of subordination to B. The CJEU also

evidently thought that they had enough material to reach a conclusion on that, in

particular in the facts recited at [30] that the Appellants exercised control over who

employed them and on what terms. That too does not seem very complex or very

surprising: the CJEU’s reasoning is evidently that if you can choose your own

employer and your own terms of employment, it can be concluded that you have a

non-negligible influence over your employer.

57. Now of course the Supreme Court was persuaded by the Appellants that the CJEU did

not in fact have all the evidential material necessary to reach that conclusion, and

remitted the case for further evidence. But that does not change the nature of the

inquiry. The question remitted by the Supreme Court, namely whether the Appellants

were in “a relationship of subordination” to their employing company or companies

(see paragraph 28 above) to my mind therefore required the Judge to decide, at least

in relation to each of the Arcadia Claimants, whether each of the Appellants was in a

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Alta Trading UK Ltd v Bosworth

position to exercise non-negligible influence over that Claimant. If so, he was not in a

relationship of subordination to that Claimant, and hence did not have an employment

relationship with that Claimant. (I will come back to the position of Farahead where

the issue is not quite the same).

Holterman at [47]

58. Why then does Mr Eschwege say that the Judge erred in his identification of the test?

The entirety of his argument relies on the reference in Bosworth (CJEU) at [31] to

“see, to that effect, [Holterman] [47]”. Mr Pilbrow, referring to the fact that the

French text of the report (which he suggested was the original language of the

judgment) has “voir, en ce sens”, submitted that all the CJEU meant by this cross-

reference was to explain what was meant by a “non-negligible” ability to influence,

or in other words a semantic or textual explanation. I do not think this particular point

carries the weight he sought to put on it. It is not clear to me that the French text was

in fact the original – the French text itself refers to the language of the case being

English (which is what one would expect in a reference from the United Kingdom) in

which case my understanding is that the primary text of the judgment will be the

English text – but in any event it would appear that that the French phrase “voir, en ce

sens” is the standard equivalent of the English phrase “see, to that effect” and that

that is the ordinary way in which the CJEU cross-refers to one of its earlier decisions:

see for example Bosworth (CJEU) at [22], [23] and [24]. Those references are

references to earlier decisions for propositions of law, and there is no particular reason

to think that the reference in [31] is any different.

59. Nevertheless the question remains what the proposition of law was that the CJEU

meant by the cross-reference. Holterman, as I have already referred to, was a case

where proceedings were brought in the Netherlands by (i) a Dutch holding company

(Holterman Ferho Exploitatie BV, “Holterman”) and (ii) three German subsidiaries

against Mr Spies von Büllesheim, a German national domiciled in Germany. He was

engaged as managing director of Holterman under a contract, described by the Dutch

court as a “contract of employment”, and also had a contract with each of the German

subsidiaries, and in fact carried out his duties in Germany. Unlike the present case

therefore, he was a putative employee of the holding company Holterman.

Importantly, he also had a shareholding in Holterman. The four companies brought

claims for damages for improper performance of his duties as director, deceitful or

reckless performance of his duties under his contract of employment, and unlawful

conduct. By the time it reached the Hoge Raad (Supreme Court of the Netherlands)

the claims by the subsidiaries had been held to be justiciable only in Germany and the

only issue left was the claim by Holterman. One of the issues raised (it appears

initially by the Commission) was whether the contract was a contract of employment

for the purposes of Art 18(1) of the Brussels Regulation (see at [AG22]). The

Commission’s argument was that the relationship of a managing director to his

company was not one of subordination at all.

60. The Advocate General did not accept this (see [AG30]), nor did he accept that the

mere fact that the managing director has a shareholding is sufficient to prevent a

relationship of subordination (see [AG31]); it all depended on the facts (see [AG 32]).

The CJEU agreed (see [45] and [46]). They continued at [47]:

“47 It is for the referring court to examine the extent to which Mr Spies von

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Büllesheim, in his capacity as a shareholder in Holterman Ferho

Exploitatie, was able to influence the will of that company’s

administrative 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

von Büllesheim’s ability to influence that body was not negligible, 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.”

61. Mr Eschwege drew from this the proposition that Holterman had laid down a two-

stage test. First you had to ask who had the authority to issue instructions and

monitor their implementation, and then you had to ask if the putative employee had a

non-negligible ability to influence that body. By cross-referring to this paragraph in

Bosworth (CJEU) at [31] the CJEU had, he submitted, incorporated and endorsed the

whole of this two-stage test. The Judge had therefore applied the wrong test (and, he

continued, if he had applied this two-stage test, he would or should have found that

the instruction-issuing body for the Arcadia Claimants was Farahead, and that the

Appellants had no ability to influence Farahead, as the Judge recorded to be common

ground (Jmt at [25])).

62. With all respect to Mr Eschwege, this seems to me an ingenious but overelaborate

reading of Bosworth (CJEU) [31]. If the CJEU had meant to refer to and incorporate

a two-stage test, one would expect them to explain how that two-stage test applied to

the present case. But there is no trace of that in their reasoning. What one can see

from what they say is that if A has a non-negligible ability to influence B, then A is

not in a relationship of subordination to B. That is to my mind the simple proposition

for which they referred to Holterman at [47] and which they proceeded to apply.

How you establish in any particular case whether A does have a non-negligible ability

to influence B must depend on all the facts and circumstances, and Holterman at [47]

contains some guidance as to how to assess whether a managing director of a

company who holds a shareholding in the company is in a position to influence the

company. But the question remained whether he was in a relationship of

subordination to the company which employed him. I do not think the CJEU was

laying down any sort of universal test of how to assess whether there was such a

relationship; it was explaining on the facts of that case the inquiries that would need

to be made. There is no reason why that should be applied unthinkingly to the rather

different position of a Group CEO and Group CFO who decide who their employer is

and write their own contracts, where, as I have said, the CJEU evidently thought that

one could conclude that they had a non-negligible ability to influence their employers.

63. Mr Eschwege sought to place some reliance on BU v Markt24 GmbH where the CJEU

again referred to Holterman (as well as Bosworth (CJEU)). But although this was

another case which concerned Art 18(1) of the Brussels Regulation, it had nothing to

do with any question of subordination (BU was engaged to carry out cleaning work),

and there is no reference to how one establishes whether the relationship is one of

subordination. I found it of no assistance on the present question.

64. For these reasons, I do not accept Mr Eschwege’s Ground 1. The reference in

Bosworth (CJEU) at [31] to Holterman at [47] does not in my judgment import the

whole of that paragraph in the form of the so-called Holterman test or require the two

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stages identified by Mr Eschwege to be applied. The test for whether Mr Bosworth or

Mr Hurley were in a relationship of subordination to each of the Arcadia Claimants is

the simple one: did they have a non-negligible ability to influence that Claimant?

65. This is precisely what the Judge concluded when he said (Jmt at [25]) that the issue

which the CJEU was concerned with, and which he had to reconsider, was whether

the Defendants had a non-negligible influence over the Group companies of which

they were CEO and CFO, that is the Arcadia Claimants (see paragraph 31 above). In

my judgment he was entirely right in this conclusion. Indeed the detailed forensic

scrutiny of the CJEU’s decision before us over a day and a half has only served to

increase my admiration for the Judge’s Judgment which not only dealt with this point

entirely correctly in my view, but also covered a large amount of other ground, legal

and factual, efficiently and effectively.

66. Having correctly identified the task that the Supreme Court set him, he then

proceeded to answer that question. Given the terms on which permission to appeal

was granted, none of that is, or can be, challenged before us. Indeed Mr Eschwege

accepted in terms that the Appellants had a more than negligible ability to influence

the Arcadia Claimants. Subject to the separate position of Farahead, that is sufficient

to justify dismissing the appeal.

67. It is only necessary to add some brief points on other aspects.

The reference to Arcadia in Bosworth (CJEU) at [31] and the position of Farahead

68. Mr Eschwege placed some reliance on the fact that the CJEU referred (twice) in [31]

to Arcadia, which meant all four Claimants together. He suggested that this meant

that focus had to be on the group as a whole, and that the question therefore was

whether the Appellants had a non-negligible ability to influence the group, including

Farahead, which they did not.

69. I do not think that this is what the CJEU meant. As I have referred to, the question

posed at [23] was whether the Appellants were in an employment relationship with

one or other of the companies in the Arcadia Group. This echoes the Advocate

General’s Opinion at [AG38] where he said:

“Therefore, it is necessary next to determine whether the relationships that

existed between the defendants in the main proceedings, in their capacity as

company directors, and each of the Arcadia companies (whether or not a

formal contract existed at a given moment) may be regarded as “individual

contracts of employment” within the meaning of the provisions of

Section 5.” (emphasis in original)

The resolution of that question depended on whether they were in a hierarchical

relationship with their putative employer [26]. That is only the case if there is a

relationship of subordination between the company and the director concerned [28].

How do you assess whether a person is in a hierarchical relationship, or a relationship

of subordination, with a putative employer? By having regard to all the factors and

circumstances characterising the relationship between the parties [26].

70. The question is therefore whether Mr Bosworth and Mr Hurley were in a hierarchical

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Alta Trading UK Ltd v Bosworth

relationship, or relationship of subordination, with one or more putative employers,

namely the companies in the Arcadia Group for which they acted as CEO and CFO.

For the purposes of the claims in these proceedings that means the three Arcadia

Claimants. As Mr Pilbrow said one had in theory to ask in turn if Mr Bosworth had

an employment relationship with Arcadia London, with Arcadia Switzerland or with

Arcadia Singapore, and then the same with Mr Hurley.

71. Mr Pilbrow said that it was unclear whether the CJEU really meant Arcadia rather

than the Arcadia Group, but that it did not matter. On any view the CJEU was saying

that Mr Bosworth or Mr Hurley had a non-negligible ability to influence the Arcadia

Claimants. It did not matter whether they really meant to say anything about the

ability of Mr Bosworth and Mr Hurley to influence Farahead, as this was not in play

before them, it not being suggested that they had any role in Farahead. Moreover

when the matter was remitted to the Judge, it was agreed that he would only need to

consider the position of Farahead separately if he concluded that the Appellants were

in an employment relationship with one or more of the Arcadia Claimants.

72. I confess to being left in some doubt why the CJEU said that the Appellants had a

non-negligible ability to influence Arcadia, and whether they really intended to

include Farahead in that. It may be, although this is admittedly not quite what they

say, that all they meant was that the Appellants did not have the requisite relationship

of subordination with any of the four Claimants, although strictly the reason for that

in the case of the Arcadia Claimants was because of the non-negligible ability to

influence them, and in the case of Farahead was because it had not been put forward

as a putative employer at all. But for the reasons given by Mr Pilbrow, I do not see

that it matters.

73. The Supreme Court remitted to the Judge the question whether the Appellants were in

a position of subordination to “their employing company or companies” (paragraph

28 above). That undoubtedly required the Judge to consider whether they were in a

position of subordination to each of the Arcadia Claimants, which he proceeded to do.

It is not clear whether the Supreme Court considered that the expression “employing

company or companies” would or might include Farahead; I rather doubt it given the

way the case had been pleaded and presented, but it matters not as the Judge

proceeded to consider it anyway (Jmt at [37]), where he said that given his

conclusions in relation to the first three Claimants, the same must apply to Farahead.

Mr Eschwege had an argument that if the Arcadia Claimants were employers then

Farahead would be as well for the purposes of Art 18(1) (see Jmt at [27]) but there is

no suggestion in the Judgment that he was maintaining that Farahead could be an

Art 18(1) employer if none of the Arcadia Claimants was, and we were referred to

passages in the transcript which appear to bear out what Mr Pilbrow said, namely that

it was agreed that in those circumstances it would be unnecessary to consider

separately the position of Farahead.

74. In those circumstances I do not think that the reference by the CJEU in [31] to

Arcadia as opposed to the Arcadia Group assists Mr Eschwege. It does not detract

from the fact that what the Judge had to consider, and did consider, was the question

whether each of the Appellants was in a relationship of subordination to, at least, each

of the three Arcadia Claimants; and that he in fact considered the position of Farahead

as well.

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Bosworth CJEU at [32] to [35]

75. I can deal with the remainder of the judgment of the CJEU quite briefly. At [32] to

[35] they said this:

“32. The fact that Mr Bosworth and Mr Hurley were answerable to the

Arcadia Group’s shareholders who, through Farahead Holdings, had the

power to “hire and fire” them, is irrelevant in that regard.

33. As the Advocate General noted in [AG46] of his Opinion, neither the

general directives which a director may be given by the shareholders of

the company he directs for the orientation of that company’s business

nor the legal mechanisms for control by shareholders point, in

themselves, to the existence of a relationship of subordination, and

therefore the mere fact that the shareholders have the power to revoke a

directorship is not sufficient for the conclusion to be drawn that such a

relationship exists.

34. It follows from this that a contract concluded between a company and

the director of that company does not constitute, in circumstances such

as those at issue in the main proceedings, an “individual contract of

employment” within the meaning of Section 5 of Title II (arts 18–21) of

the Lugano II Convention.

35. Having regard to the above, the answer to the second question is that the

provisions of Section 5 of Title II (arts 18–21) of the Lugano II

Convention must be interpreted as meaning that a contract between a

company and a natural person performing the duties of director of that

company does not create a relationship of subordination between them

and cannot, therefore, be treated as an “individual contract of

employment”, within the meaning of those provisions, where, even if the

shareholder(s) of that company have the power to procure the

termination of that contract, that person is able to determine or does

determine the terms of that contract and has control and autonomy over

the day-to-day operation of that company’s business and the

performance of his own duties.”

[32] and [33] are responding to the part of Question 2 which refers to the power of

shareholders to procure termination; [34] is a conclusion expressed in definite terms

that the Appellants did not have contracts of employment; and [35] is the formal

answer to Question 2, reflected in their ruling or dispositif. It may be noted that both

in [34] and in [35] they refer to a contract between a company and a “director of that

company”, which may serve as further confirmation that they were focusing on the

relationship between the Appellants and the Arcadia Claimants (of which they were

(de jure or de facto or shadow) directors) and not on the relationship between the

Appellants and Farahead (of which they were not).

Ground 2

76. I can deal with Ground 2 very shortly. As already explained, this is not a freestanding

challenge to the Judge’s conclusion but a second reason why it is suggested that the

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Alta Trading UK Ltd v Bosworth

Judge adopted the wrong test and should have adopted the Holterman test. The point

put forward by Mr Eschwege is that the rules in Arts 18 to 21 are designed to be

mechanistic in nature, and require certainty and predictability in application, but the

test adopted by the Judge is too open-ended and would lead to many senior managers

not being within the protection of Arts 18 to 21.

77. This really encompasses two points. The first is that the test should be easy to apply

and not require a fact-intensive inquiry. The difficulty with that is that it runs straight

into the jurisprudence of the CJEU that the question of subordination depends on all

the factors and circumstances (Holterman at [46], Bosworth (CJEU) at [26]), coupled

with the principle that this is to be determined on the basis of the actual facts, not the

terms of the contract of employment (see paragraph 49 above).

78. The second is that it should not result in too many people losing the protection of Arts

18 to 21. I do not think we can assess how widespread the impact might be, but I

doubt that this case will be a precedent for many others. Even senior managers are

usually in a relationship of subordination to their employers. The Appellants had (or,

to be more precise, the Respondents have established a good arguable case that they

had) an unusually free hand in running the Arcadia Group as their own private

fiefdom to the extent of writing their own contracts of employment. I do not think the

Judge’s Judgment means that any senior manager, or even director, who is given a

degree of autonomy as to how he does his job is outside the protection of Art 18(1); as

the Master of the Rolls said in argument, this may appear a low bar but it is not in fact

because it is quite unusual for employees, even in the case of senior managers, to be

in a position of influencing the decision-making of the company that is employing

them.

79. There is in my view therefore nothing, or at any rate not enough, in Ground 2. But in

any event, Ground 2 can only at best support Mr Eschwege’s argument on Ground 1.

If, as for the reasons I have given is in my view the case, Ground 1 falls to be

dismissed, Ground 2 cannot get him home by itself.

Conclusion

80. I would dismiss the appeal.

Lord Justice Henderson:

81. I agree, and I also agree with the judgment of the Master of the Rolls, which I have

had the advantage of seeing in draft.

Sir Geoffrey Vos, Master of the Rolls:

82. I agree entirely with Lord Justice Nugee’s judgment. I add just a few words because

of the tortuous history of this case. It seems that the defendants have spared no

expense in seeking to challenge the jurisdiction of the English court over them. There

have now been no fewer than 6 substantive hearings at different levels from the

Commercial Court to the CJEU, and many interlocutory ones. The claim form was

issued as long ago as 13 February 2015, now 6¼ years ago, but the defendants have

yet even to file a defence to the claimants’ claims for some US$339 million. This, I

regret to say, is an indictment of a system that has, in this case, allowed relatively

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Alta Trading UK Ltd v Bosworth

straightforward jurisdictional arguments to expand into an unrestrained litigation

extravaganza. Courts at all levels need to keep a close eye on proportionality.

83. In my judgment, the defendants’ jurisdiction challenges must now be considered to

have been finally resolved, and the litigation should move to its substantive phase.

84. This appeal will be dismissed. In doing so, I too would like to pay tribute to Sir

Michael Burton’s clear and accurate judgment.