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ICAP Ruling Gives UK Employers the Advantage in Non-Compete Fights

A high court justice ruled that ICAP’s former head of global e-commerce wasn’t eligible to get out of his non-compete clause under British employment transfer rules.

Former ICAP executive Dean Berry has lost his attempt to wriggle out of a non-compete clause imposed by his former employer, in a case that could have made it more difficult for some UK employers to enforce non-compete agreements.

The legal battle hinged on interdealer broker ICAP’s sale to Tullett Prebon in December 2016, which Berry believed allowed for him to be released from his obligations, as he was being transferred to a new employer under the UK’s Transfer of Undertakings Protection of Employment rules — known as the TUPE regulations — which are designed to protect employees’ benefits and pension arrangements in an instance when one company buys another, among other things. Were it successful, the case could have led to numerous other cases in a similar vein. ICAP’s win can be seen as a victory for UK employers, as it means employees must honor their non-compete obligations, even if the company is sold to another organization during the time the employee works there.

Macfarlanes, the law firm representing ICAP, said today’s High Court ruling was significant for financial firms “across the City and beyond.” Jonathan Arr, partner at the firm, said that had Dean prevailed, “it would likely have opened the door to a number of further claims and substantial uncertainty as to the state of the law.”

Berry had been the chief executive of ICAP’s global e-commerce division until he resigned in July 2016 to join arch rival BGC. Under the terms of his non-compete agreement, he was placed on paid leave until July 21, 2017. He was not permitted to work elsewhere while on leave at full pay.

Berry’s legal team argued that his non-compete agreement was unenforceable because his employer had been sold to Tullett Prebon in December 2016. Berry claimed that the sale permitted him to be free of his obligation because he could refuse to be transferred to a new employer under the TUPE regulations. But the judge did not agree.

“I reject the defendant’s TUPE argument and hold that the defendant remains subject to his contract of employment,” said High Court Justice Neil Garnham in his ruling.

“We welcome the Court’s decision to hold Mr. Berry to his contract,” a spokesman for ICAP said in an e-mailed statement. “The lengths to which the employee and BGC were prepared to go to effect an early exit from the employment contract meant there was no alternative other than to litigate to protect our business, our employees and the services we provide to our clients.”

The ruling means Berry can no longer work for BGC until the non-compete agreement expires in July. But ICAP was unsuccessful in its attempt to secure a second injunction, to prevent Berry from taking client relationships with him to his new employer, ICAP rival BGC. Were it successful, this injunction could have also significantly altered employment contracts in the UK. To counter this claim, Berry’s legal team argued that ICAP should be made to prove that certain client relationships were cultivated and developed specifically by him.

In Tuesday’s ruling, Justice Garnham said ICAP’s case to secure an injunction was “weak in the extreme,” adding that he was “unconvinced that any significant evidence of client relationships had been established.”

Some of the most high-profile figures from the broking world turned up in court to give evidence in the case. Don McClumpha, chief executive officer of global broking for ICAP parent company TP ICAP, and Sean Windeatt, CEO of BGC Group, were among those called to the stand.

In a statement, a spokesman for BGC said the company welcomed Justice Garnham’s recognition that Windeatt was “entirely reasonable” to take commercial view of the application of the TUPE rules. The spokesman added that the judge had rejected the claim that BGC had “procured or induced” Berry to breach his contract with ICAP.

Berry declined to comment.

An earlier version of this story misstated Dean Berry's role. He was previously chief executive of global e-Commerce. The story has been updated to reflect this.

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