Santander Loses Legal Battle in High Profile Dispute​

By Patricia K​

What do you need to know this week?

Santander was ordered to pay €67.8 million to Andrea Orcel, an Italian banker, after withdrawing its previous offer to make Orcel the Chief Executive Officer (CEO) of the company.

So how did we get here? It’s best to start from the beginning. In September 2018, Santander publicly appointed Andrea Orcel as the Spanish financial service company’s new CEO. However, in January 2019, Santander U-turned on its previous statement by withdrawing its offer, citing problems regarding Orcel’s payment package.

This led Orcel to sue for breach of contract. To defend this claim, Santander argued that a contract did not exist at all. Last Friday, a Madrid court ruled that Santander’s offer amounted to a valid contract and that such contract was breached when it withdrew its offer.

Santander has announced its plans to appeal the decision.

Why is this important for your interviews?

This case garnered large media interest due to the unprecedented nature of a pay dispute in the world of high finance. This is especially the case given the high-profile nature of Orcel (previous president of UBS Investment Bank) who has been described as one of the most successful investment bankers of his generation.

The court’s decision may also affect how similar institutions handle employment contracts going forward. Given the high amount of damages Santander had to pay, which included Orcel’s loss of compensation from his former employer as well as loss of prospective salary, large corporates and financial institutions will need to be cautious over what documents constitute a binding contract when making employment offers.

Furthermore, consider the reputational damage this has on Santander – for example, its sudden decision not to hire Orcel may raise questions about the company’s management direction going forward.

How is this topic relevant to law firms?

This litigation will have required the involvement of a law firm’s employment department given the importance of determining whether a contract of employment was offered.

In this case, both parties were represented by Spanish law firms – De Carlos Remon represented Andrea Orcel and Uría Menéndez acted for Santander.