The claimant (R) claimed sums said to be due under a "parachute" clause contained in an agreement made between R and the defendant (M). R was the chief executive of a Bermuda based insurance group (T). In 2000 T was acquired by M, a US corporation based in Virginia. As part of the process of acquisition M agreed to continue to employ R. The parachute clause (clause 7(c)) entitled R to leave his employment on favourable terms within a specified period of the acquisition of T by M. R exercised the parachute clause and disputes arose as to the correct interpretation of the clause in respect of bonuses to which R was entitled. The agreement was governed by the law of Virginia.

HELD: (1) The meaning of clause 7(c)(ii)(2) of the agreement was that the "highest bonus amount" was to be calculated by reference to the fiscal year (either 1997, 1998 or 1999) in relation to which the highest bonus had been paid by the date of termination. (2) By clause 7(c)(ii) the "severance amount" was to be calculated by deducting from other items an amount equal to the "earned special bonus" paid to the executive pursuant to clause 3(b) and the correct deduction under that provision was US$2.5 million as M contended. (3) R was not entitled to a pro rata bonus for the year 2000. (4) R's entitlement to continued participation in all of the company's executive and executive welfare and fringe benefit plans included an entitlement to continued pension contributions by M. The relevant contract provisions were not governed by a federal US benefits statute because the meanings of those statutory terms were not brought home to R nor were they uniform or notorious in the trade or by custom. (5) The right to interest was governed by the law of Virginia but the rate of interest was a procedural matter and thus to be governed by the lex fori, English law ( Lesotho Highlands Development Authority v Impregilo Spa (2003) EWCA Civ 1159, (2004) 1 All ER (Comm) 97 applied).

Judgment accordingly.

Counsel:
For the claimant: Christopher Jeans QC, Rebecca Tuck