Benyatov v Credit Suisse (Securities) Europe Ltd [2022]

The Court of Appeal has ruled that there was no duty of care for an employer to protect an employee from criminal conviction or indemnify against any loss

In the matter of Benyatov v Credit Suisse (Securities) Europe Ltd [2022], the Claimant/employee, a former banker, sought to recover over £66m for his loss of earnings from his employer after he was arrested and convicted in Romania in connection with work that he did advising on the privatisation of a state utility.

The Court of Appeal found that an employer did not owe an employee a duty of care to protect him from criminal conviction in the performance of his duties, or to compensate him pursuant to the implied duty to indemnify.

The Claimant argued that there should be a development in the law of negligence to protect employees from ‘politically motivated prosecutions’ overseas as both the employer and the employee maintained that nothing improper took place. In considering whether a duty of care should be recognised in a unique situation such as this, the correct approach applied the factors established in the case of Caparo Industries plc v Dickman [1990] – these were (1) foreseeability, (2) proximity, and (3) fairness, justice, and reasonableness. The risk of the employee being convicted in Romania was not reasonably foreseeable by the employer. Romania was not regarded as a high-risk Country during the relevant period and the transaction was not regarded as high risk either. There was also no standard practice in commissioning political or other detailed risk assessments; hence, no duty of care was established and, in any event, the negligence claim was out of time.

In relation to the implied duty to indemnify the employee for losses incurred, it was held that there was no common law authority establishing a general principle that if a person acts on the instruction of another, they are entitled to be indemnified against all losses, of any kind, suffered because of doing so. Moreover, it would not be reasonable or fair to imply such an indemnity, notwithstanding fault of the employer. To do so would adversely impact the way in which the law has addressed the issue of the obligations of employers to compensate employees for harm suffered in the course of their employment, either on the basis of strict liability, or on the basis of breach of a duty of care. To extend that duty to cover all circumstances would create liability in a significantly wide range of circumstances.