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Directors, Officers and employees not liable for penalties imposed by OFT investigation

The Court of Appeal has unanimously ruled that a corporate undertaking, upon which the OFT had imposed a penalty for breaches of competition law, could not sue its former directors, officers or employees for damages equivalent to that penalty or the costs of the OFT investigation that the claimant had had to bear. The Court of Appeal held that such liabilities were intended, under the relevant statutory scheme of the Competition Act 1998, to be personal to the corporate undertaking and any claim against its directors or employees was barred by the maxim ‘ex turpi causa’ (i.e. a claimant cannot recover for the consequences of his own criminal or quasi criminal act). As a consequence, the claimants' claims were struck out.

This decision reverses a first instance judgment of the Commercial Court which had held that such a claim was arguable and so should proceed to trial.

The judgment will be welcomed by those individuals occupying senior management positions (and, indeed, less senior positions) in industry and other potentially interested parties such as individuals' D&O insurers.

This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, please go to www.law-now.com

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