In Benyatov v. Credit Suisse (Securities) Europe Ltd  EWCA Civ 140, the Court of Appeal held that an employer did not owe an employee a duty of care to avoid a criminal conviction and that there was no implied term requiring them to indemnify him against loss of future earnings due to his conviction.
Mr Benyatov was an employee of Credit Suisse from 1996 to June 2015, based in London. In November 2006, Mr Benyatov was arrested by the Romanian authorities on suspicion of criminal wrongdoing. This related to a project on which he was advising, concerning the purchase of a state-owned electricity company. In January 2007, Mr Benyatov was charged and on 3 December 2013 the Romanian authorities found him guilty of wronging and sentenced him to 10 years’ imprisonment.
Credit Suisse supported Mr Benyatov with his appeal to the Romanian courts and his complaint to the European Court of Human Rights in July 2015. On 27 January 2015, the Romanian Appeal Court overturned the conviction, replacing it with a different charge which attracted a lesser sentence of four and half years.
Upon his conviction, Credit Suisse informed the Financial Conduct Authority (FCA) and Mr Benyatov could no longer work as a regulated financial professional in the UK or elsewhere. Mr Benyatov’s employment with Credit Suisse was terminated on 13 June 2015.
In 2018, Mr Benyatov brought a claim against Credit Suisse in the High Court for career-loss earnings of £66 million, alleging:
- Credit Suisse breached its duty of care not to expose him to a risk of criminal conviction in the performance of his duties (the Negligence Claim); and
- it was an implied term of his contract that Credit Suisse would indemnify him against a loss of the kind suffered (the Contractual Indemnity Claim).
The High Court dismissed both claims and held that, whilst there was in principle a duty for an employer to take reasonable care to protect an employee from consequential economic loss, much depends on the facts. In this case, it was not appropriate to imply such a duty. Romania was not a high-risk country and Mr Benyatov was not involved in a high-risk transaction. The conviction was not reasonably foreseeable in the performance of Mr Benyatov’s duties and so a duty of care was not established. The Court therefore dismissed both claims.
Mr Benyatov appealed this decision.
The Court of Appeal judgment
In relation to the Negligence Claim, the court held that the correct approach in determining the existence of a duty of care would be to consider the three factors identified in Caparo Industries plc v. Dickman  2 AC 605. These are (i) foreseeability, (ii) proximity, and (iii) fairness, justice and reasonableness. In this case, the High Court had given appropriate consideration to these factors, based on the particular facts of this case. The most pertinent issue for determination was foreseeability and it was found that the High Court had not erred in its findings. Credit Suisse did not have actual or constructive knowledge of the risk of criminal conviction to Mr Benyatov and could not be taken to have assumed responsibility for risks that were not reasonably foreseeable.
In relation to the Contractual Indemnity Claim, it was common ground between the parties that it was an implied term of Mr Benyatov’s employment contract that Credit Suisse would indemnify him in respect of expenses and liabilities reasonably incurred by him in carrying out his duties as an employee. However, it would not be fair or reasonable to imply the indemnity sought by Mr Benyatov on the facts of this case. The Court of Appeal considered the current position to strike a fair balance between the parties’ interests and found that such an indemnity would make employers liable to compensate employees for loss of earnings, even where the loss was caused by a third party and there was no fault on the employer’s part, merely because the employee had suffered harm while doing their job. The decision is a useful consideration of the extent to which the courts will impose a duty of care and imply an indemnity to compensate an employee for losses that they incur during employment. This case is a reminder both of the principles that the courts will take into account and also that cases such as this will always turn on their own facts.