The Court of Appeal (Simler and Elisabeth Laing LJJ) has considered an unusual non-compete covenant in Verition Advisors (UK Partners) LLP v Jump Trading International Ltd [2023] EWCA Civ 701. The dispute concerns a contract of employment which provided that the duration of the restraint was a period of zero to twelve months as elected by the employer within twenty business days following a notice of termination.
The appellant/employee sought to appeal a case management order made by the High Court for a speedy trial on various grounds, including that such a clause was so uncertain and/or offensive that there was no serious issue to be tried in respect of it.
In dismissing that application, the Court of Appeal observed that it could see no meaningful distinction between: (a) a non-compete clause which is for a period of zero to twelve months, and (b) a covenant which imposes a restriction for a fixed period of twelve months, but expressly gives the employer a discretion unilaterally to reduce the length fixed (particularly given that, in practice, an employer always retains a discretion unilaterally to reduce the length of a fixed restriction by any amount or to waive it entirely). The employee accepted that there could be no challenge to the latter type of clause merely by virtue of the discretion to reduce or waive the restraint period and was unable to identify any qualitative difference between a clause providing for a unilateral discretion to reduce the non-compete period and the non-compete covenant in this case.
The Court of Appeal made clear that regardless of the period elected, the employer would have to justify the non-compete covenant as at the time the contract was entered into (not as at the time of election), on the basis of the maximum permissible period, namely 12 months. That was an issue best left to be resolved at trial, when the factual matrix and surrounding circumstances were established. Nor it held was the clause obviously and inevitably void for uncertainty given that it provided machinery for resolving the question of the period, subject to a maximum permissible period of 12 months.
The Court further held that it was not open to the employee to challenge the order for a speedy trial on the basis that there was no serious issue to be tried. That ground of appeal did not challenge the order for expedition, but instead attempted to challenge a stage in the reasoning that led to the judge’s decision in refusing interim relief. Moreover whether or not there is a serious issue to be tried was irrelevant to the question whether or not there should be a speedy trial. There is no threshold that must be met before a party can pursue a civil claim; subject to an application to strike out the claim (not made here) a claimant has an absolute right to litigate it.
A copy of the decision can be found here.
David Craig KC, leading Judy Stone and Celia Rooney, appeared for the Respondent employer, Jump Trading International Limited, instructed by Sarah Henchoz at Allen & Overy LLP
