10 February, 2016
In the recent case of Eastern Athletic Association Football Team Ltd v Alessandro Ferreira Leonardo (HCA 2383/2015), the Hong Kong High Court refused to grant an interlocutory injunction to a football club, Eastern Athletic Association (EAA), to restrain one of its players from playing for a rival club (Kitchee). This decision recognises both the special nature of the relationship between an employer and employee and the public policy basis for the courts' refusal to order specific performance of employment contracts.
Background
In May 2015, the Defendant, Alessandro Ferreira Leonardo, signed a "provisional contract" to play football for the EAA from 1 June 2015 to 31 May 2017, with an option for the EAA to extend the term to 31 May 2018.
Shortly after signing, the Defendant, through his lawyers, challenged the validity of the provisional contract. The Defendant subsequently signed to play for Kitchee.
The EAA initially referred the dispute to the Hong Kong Football Association (HKFA), but when the HKFA declined to get involved, the EAA commenced legal action seeking an interlocutory injunction to restrain Mr Leonardo from playing for another club until 31 May 2018.
The application was dismissed on the following two grounds (either of which would have sufficed on its own).
Injunction is tantamount to an order of specific performance
It is a well-established common law principle that a court will not order specific performance of a contract of personal service because, as the English High Court has put it:
"there is something morally repugnant in the notion of shackling together in a relationship of mutual trust, dependence and daily personal contact, individuals who are at loggerheads or who have lost confidence in one another."
In this case, the EAA did not seek specific performance per se, but rather an interlocutory injunction restraining the Defendant from playing for a rival club in breach an implied term of his employment that he play only for the EAA.
The court held that this case was analogous to the 2007 Hong Kong case of Worth Achieve Associates Ltd v Huang Sheng Yi, which involved a contractual dispute between an actress and her agency. The agency had been appointed as the exclusive manager and agent for a three year term. The relationship broke down and the actress sought to appoint a new manager and agent. The Court refused to grant an injunction restraining such appointment, on the basis that if an injunction was granted, the actress would be left with two choices:
- cease all public performances and use of her image / name for promotional purposes; or
- continue to work with the plaintiff against her wishes.
The court accepted that an actress could not realistically be expected to sit idle until the dispute had been resolved; that would end her career. Similarly, a professional footballer needs to compete to maintain his skills and enhance his prospects of selection in the national team. Choosing to sit out from competition rather than play for the EAA until 2018 was not a realistic option if the Defendant wished to continue his professional career.
So, for both the actress and the professional football player, the injunction sought would be tantamount to an order of specific performance of the employment contract, which the courts have consistently refused to grant.
EAA's delay
The court also criticised the EAA's delay in applying for an injunction. Under the well- established principles in the 1975 case of American Cyanamid Co v Ethicon Ltd, an injunction is only available where (among other things) the plaintiff would suffer "irreparable damage" (for which an award of compensation could not adequately remedy) if the injunction were denied. In this case, the EAA's failure to apply for the injunction until after the football season had commenced undermined its claim that irreparable damage would result from the Defendant being allowed to play for another club.
Commentary
This case highlights that a court will not restrain an employee from working for others if that would be akin to an order for specific performance of his existing employment contract. Whether that is the case will depend on the facts and the extent to which an extended break would have lasting repercussions for the employee's career. While the cases so far are limited to actresses and professional footballers, the categories of employees for whom a similar argument could be made are not closed. Employers should therefore think carefully about the potential career implications for their employees before seeking an injunction of this nature.
This case is also a timely reminder of the need for an applicant to act quickly when seeking an interlocutory injunction.
For further information, please contact:
Gareth Thomas, Partner, Herbert Smith Freehills
gareth.thomas@hsf.com
