The Hong Kong Court of First Instance has recently handed down its decision in Marsh (Hong Kong) Limited v Bhappu & Ors, granting interlocutory injunctions to enforce 12-month post-termination restrictive covenants against four former senior employees of Marsh (Hong Kong) Limited.
The decision arises against a broader backdrop of litigation involving Howden, a competitor of the Marsh group and the new employer of the four employees concerned. The Marsh group has taken legal action against the Howden group in both the UK and the US, alleging coordinated unlawful employee recruitment and client solicitation. Other players in the insurance brokerage industry have similarly brought claims against the Howden group in relation to alleged misuse of confidential information and orchestrated departures of employee teams. Marsh considers itself to be the target of a "sustained coordinated global scheme of unlawful employee recruitment and client solicitation".
While this decision may appear to signal a shift away from the Hong Kong courts’ traditional reluctance to enforce post-termination restrictive covenants longer than 6 months, we do not think it will serve as persuasive authority going forward for the reasons explored in this article.
What happened in this case
The four defendants were senior employees of Marsh HK, a leading insurance broker in Hong Kong with over US$185 million in revenue. Between December 2024 and September 2025, each resigned and joined Howden in senior roles after serving their notice period on garden leave. Each of their employment agreements contained almost identical 12-month covenants covering non-solicitation of clients, non-dealing with clients and non-solicitation of employees.
Marsh HK launched an internal investigation following the resignation of the four employees. The investigations revealed "unusual and irregular printing activities" by the defendants. Mr Bhappu alone printed at least 110 documents including client lists and business information prior to his resignation, none of which were returned. Marsh HK also alleged that one of the defendants had submitted a quotation to an existing client with whom he had dealt with during his employment.
The defendants denied all allegations (save for the submission of a quotation) and disputed the enforceability of the covenants as unreasonable.
Applying the American Cyanamid test, the Court concluded that there was "no shortage of serious issues to be tried" and that the defendants' evidence, whilst "certainly capable of being believed," did not render Marsh HK's claims “frivolous or vexatious”. Damages were not an adequate remedy for Marsh HK given the difficulty of identifying and quantifying loss. Equally, since the former employees unanimously denied any breach, they did not stand to suffer any loss as a result an injunction restraining them from doing what they are "in any event not doing". The balance of convenience favoured Marsh HK.
The Court granted injunctions restraining each former employee from using trade secrets or confidential information and, during the 12 months following termination of their employment, from soliciting or dealing with clients of Marsh HK or soliciting its employees.
The established framework and the Court's departure from it
There is extensive Hong Kong authority establishing that, in interlocutory injunction cases concerning restrictive covenants, the American Cyanamid test applies with a rider: the court should have greater regard to the plaintiff's prospects of success at trial (Midland Business Management v Lo Man Kui [2010] HKCU 2776). The courts will therefore examine the reasonableness of the covenants to assess likely enforceability. In Cantor Fitzgerald Europe v Boyer [2012] HKCU 478, it was held that non-solicitation or non-dealing covenants beyond six months require specific and cogent evidence justifying the restriction by reference to the employer's legitimate business interests.
In contrast, the Court here did not examine reasonableness or enforceability, notwithstanding the express challenge by the former employees. It applied the American Cyanamid test in its basic form, accepted that there were obvious serious issues to be tried and focused on the adequacy of damages and the balance of convenience, the analysis of which consists of two short paragraphs. The omission of any analysis of Marsh HK’s prospects of success, together with the lack of detailed analysis of the adequacy of damages and balance of convenience, are notable departures from established practice.
The intellectual tension
The Court's reasoning on the balance of convenience is also interesting. Since the ex-employees denied any breach, the Court held that an injunction would cause them no prejudice – they cannot complain about being restrained from doing what they say they are not doing. Ordinarily, a denial of a breach is not determinative at the interlocutory stage given that no trial has taken place. There is even an argument that where defendants deny that they have committed breach and there is no evidence of the same, this weighs against relief on the basis that there is nothing to restrain. Here, the Court inverted that logic: the denial itself became a reason to grant the injunction. The result is a tactical bind for defendants: denial supports the injunction (no inconvenience), whilst admission supports it on conventional grounds.
A decision unlikely to be followed
We take the view that this decision is unlikely to be followed in future cases. The Court provided no analysis of why 12-month covenants should be enforced against these specific employees, and there was no examination of their roles, access to confidential information or client relationships. Notably absent from the judgment is any detailed analysis of Marsh HK’s evidence showing why a 12-month restraint was necessary to protect its legitimate business interests. Nor was there any assessment of the reasonableness of the clauses in question. Without such scrutiny, this decision should be treated as confined to its particular facts and not as establishing any broader principle.
What this means for employers
Employers should not assume that this decision signals a general willingness on the part of the Hong Kong courts to take a more permissive approach to longer restrictive covenants. Notwithstanding this decision, employers should continue to ensure their restrictive covenants are drafted no wider than necessary to protect their legitimate business interests. Key considerations include:
- Scope and duration. Covenants should be appropriately limited in terms of geographical scope, duration and temporal backstop (i.e. the look-back period for identifying restricted clients or employees). Employers should also carefully consider what types of covenants are really needed at the time when they sign employment contracts with their new hires. They should consider the duration of any restriction taking into account the pool of talent available, notice periods, and time taken to bed-in new hires.
- Superfluous clauses. Only strictly necessary restraints should be included. Where a restriction limits the solicitation of clients and employees and there is a non-dealing covenant in place, a non-compete covenant may be regarded as unnecessary and will be difficult to justify.
- Role-specific drafting. Employers should not expect a one-size-fits-all set of restrictive covenants would provide them with adequate protection. Restrictions should be tailored to each role within the organisation. A senior executive with access to confidential client relationships may warrant broader protection than a junior employee with limited client exposure.
- Ongoing evidence gathering. Employers should maintain records from the commencement of employment through to departure, documenting the employee’s access to confidential information, client relationships and seniority. This ensures the employer can demonstrate that any restrictions remain reasonably necessary to protect legitimate business interests at every stage of the employee’s career.
MARSH (HONG KONG) LTD V. ROHAN BHAPPU AND OTHERS [2026] HKCFI 1211 – judgment available here.
