On 22 January 2020, Roger ter Haar QC sitting as a Deputy High Court Judge refused to strike out a claim for career losses by a former employee, Vadim Benyatov. In doing so, he found the claims that there was an implied indemnity for future losses arising from the lawful performance by an employee of their duties and also an implied duty of care to assess the risks to which an employee may be subject in carrying out their role had a reasonable prospect of success.
The claim arises out of Vadim Benyatov’s employment as a senior investment banker with Credit Suisse. In the course of conducting a transaction for the bank in Romania, Mr Benyatov was arrested, prosecuted and convicted for various crimes under Romanian law, even though it is common ground between the parties that he was not guilty of any wrongdoing and that his conduct was in accordance with international banking standards. Mr Benyatov’s employment was subsequently terminated. His claim is essentially for career loss of earnings.
The Court rejected Credit Suisse’s argument that the claim should be struck out as a whole, and ruled that Mr Benyatov could proceed to trial with his case that:
- Credit Suisse owed him an indemnity to cover loss of earnings resulting from his inability to work as a finance professional following his conviction in Romania, which occurred as a result of the proper performance by him of his duties for Credit Suisse; and
- Credit Suisse was in breach of a duty of care to undertake an adequate assessment of the risks to Mr Benyatov flowing from his work for Credit Suisse in Romania.
Following detailed analysis of the relevant authorities, the Court found these claims to have a real prospect of success. The Court considered that the law on the scope of the implied contractual indemnity in employment and/or agency relationships was a developing area of law, and therefore the issue was not suitable for summary determination and required a finding of the facts (see paras 52 and 155-156). The Court similarly found that the claim in relation to breach of a duty of care to assess the risks faced by Mr Benyatov was best determined after a trial of the facts (see paras 210, 225 and 232). The Court did, though, strike out Mr Benyatov’s claims relating to the adequacy of the steps Credit Suisse took to assist Mr Benyatov after his arrest. Further, the Court rejected Credit Suisse’s applications for a conditional order and security for costs.
The consequences of the case are potentially wide-reaching, particularly for global institutions sending employees overseas, as the Court noted at paras 208(7) and 231-2. The Court further noted that the decision has considerable implications in respect of the scope of the employers’ responsibility to indemnify employees and agents who suffer serious harm while carrying out their duties (see para 152).
This case is on The Lawyer’s list of ‘Top 20 Cases’ of 2020.
A copy of the judgment can be found here.