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Director’s obligation to deliver up confidential documents upon termination of appointment

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04/02/2015

Background
The issue in Eurasian Natural Resources Corporation plc v Judge [1] concerned a claim by an employer for delivery up of confidential information by a director upon termination of  his appointment.

The director in question was a non-executive director. A dispute arose after the employer became convinced that the director was leaking confidential information to the press. The director’s service agreement provided that all information acquired by him during the term of his appointment was confidential and should not be disclosed without prior clearance. The service agreement did not, however, contain any express term requiring the director to deliver up confidential documents on the termination of his appointment.

The employer terminated the director’s appointment.

The employer sought delivery up of confidential information documents relating to the directorship. The director refused to do so, arguing that there was no implied term in his service agreement requiring delivery up of the documents and that, in any event, the employer was adequately protected by his ongoing obligations of confidentiality. He sought summary judgment to strike out the application.

Judgment
The High Court agreed with the director that there were no grounds for finding that the director was subject to an implied term requiring delivery up of the confidential information. The Court said that if it had been the “obvious but unexpressed” intention of the parties, it would have been addressed in the service agreement. Further, there was no evidence that such a provision was the norm for directorships and, in practice, such a provision would be difficult to operate, particularly in cases of multiple directorships.

WM comment
The case highlights the importance for companies of clearly documenting the post-termination obligations of their directors, rather than seeking to rely late in the day on implied duties or obligations.

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[1] [2014] EWHC 3556 (QB)

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