Did a bank doing business overseas, owe a duty to an employee posted there, not to expose him to the risk of criminal conviction in the performance of his duties?
Not on the facts of this case, held the Court of Appeal in Benyatov v Credit Suisse (Securities) Europe Ltd.
The Claimant was convicted of offences in Romania relating to his work for Credit Suisse on, principally, what was called 'the EMS transaction'. The bank, after investigation, decided the Claimant had done nothing wrong and funded his defence including an appeal against conviction. The bank was obliged by UK law to report the conviction to the FCA. This was despite the fact both the bank and the Claimant maintain nothing improper took place.
The Claimant argued that there should be a development in the law of negligence to protect employees from, what might be termed, politically motivated prosecutions overseas. The High Court decided the was no such duty here. Applying the classic Caparo v Dickman test, the conviction was not reasonably foreseeable and so there could be no duty to prevent it from happening. He said:
"Among the matters which have been taken into account in reaching the conclusion that the particular duty of care has not been established are the following factors, namely:
- The facts showing that Romania was not regarded as a high-risk country during the Relevant Period;
- The facts showing that the EMS transaction was not regarded as a high-risk transaction;
- The fact that none of the alleged amber or red flags have been established as putting the Bank on notice of some special need for vigilance in the instant case, nor in respect of various of the alleged flags were they escalated by Mr Benyatov to the Bank on the basis that they were treated as worthy of consideration at a higher level;
- The fact that...there was no standard practice in respect of commissioning a political or other detailed risk assessment...Indeed, the evidence is that international companies did not commission such an assessment;
- There were no circumstances applying specifically to Mr Benyatov including his name, his origin and his experience which made it inappropriate for him to be appointed on the EMS transaction."
That decision was upheld on appeal without any different analysis.
Thanks to Matthew Jackson of Albion Chambers for preparing this case summary.