Malik v Bank of Credit and Commerce International SA

Ratio Decidendi

তথ্য

The Bank of Credit and Commerce International (BCCI) collapsed in 1991 after it emerged that the bank had been operated in a corrupt and dishonest manner, involving large-scale fraud and money laundering. Mr Malik and Mr Mahmud were former employees who had had no involvement in the wrongdoing but who, they said, found it difficult to obtain new employment in the financial sector because of the stigma of having worked for the disgraced bank. In the liquidation they claimed damages for the resulting handicap on the labour market — so-called 'stigma damages'. The case reached the House of Lords on a preliminary issue, decided on the assumption that the pleaded facts were true.

রায়ের সারসংক্ষেপ

The House of Lords held that every contract of employment contains an implied term that the employer will not, without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between employer and employee, and that running a dishonest and corrupt business was capable of breaching that term even where the individual employee was unaware of the corruption at the time. Crucially, the Lords held that damages for breach of the implied term were not confined to injured feelings but could, in principle, include financial loss — such as the handicap on the labour market caused by the stigma of association with the disgraced employer — provided the employee could actually prove that the stigma had caused an identifiable loss, a matter of causation and remoteness left to be established at trial. Lord Nicholls and Lord Steyn gave the leading speeches. The decision established the modern implied term of mutual trust and confidence as a central organising principle of employment law, although the practical reach of 'stigma damages' was later narrowed by the courts' insistence on strict proof of loss.

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