(Bloomberg) -- Morgan Stanley is fighting to overturn a French court ruling ordering it to pay €1.4 million ($1.5 million) in bonuses to a banker who quit the firm, in a case that could affect how investment banks try to prevent their best performers from leaving.

At the heart of the dispute at the Paris court of appeals is the question of whether the bank could withhold deferred bonuses once the employee had resigned. Morgan Stanley argues that sums claimed by Bernard Mourad were a reward for loyalty only collectible if he’d stayed on.

“The worry for a group like Morgan Stanley — and this is true for all investment banks — is to retain its talents,” the Wall Street firm’s attorney François Farmine told a panel of three judges. “We signed him up to these compensation plans so that he would stay within the group.” 

Mourad’s lawyer, Eric Manca, countered by saying that the bonus was explicitly linked to performance and that France’s top court prohibits requiring an employee to stay on in order to receive staggered payments for work he or she has already done. “It’s totally illegal,” Manca said.

The bonus clash echoes a spate of earlier disputes involving bankers at firms from the likes of BNP Paribas SA to Credit Suisse. The outcome of the case could be an added wrinkle for those banks that have expanded their headcounts in Paris after Brexit. Staff losing deferred pay when they jump to a rival is standard practice in London and New York — and they are rarely challenged.

See: BNP Trader Sues for Bonus Held Back After He Quit to Join SocGen

The key issue in Tuesday’s case is whether US labor law or France’s more protective legislation applies. In 2019, the Paris employment tribunal favored the latter and said the bank owed Mourad nearly €1.2 million linked to deferred pay in shares for work performed between 2012 and 2014 and €250,000 for another bonus. 

To make its point, Morgan Stanley’s legal team sought to cast Mourad as disingenuous. The compensation plans, the bank says, were decided and administered by the group at a global level in the US, and Mourad can hardly pretend he didn’t know New York law was applicable. 

“Mourad was no ordinary executive,” Farmine said. “He not credible when he says he didn’t know the compensation plans and the way they worked.” The attorney further pointed to the fact that Mourad had accessed a website specifically dedicated to the compensation plan multiple times.

Manca responded that his client never signed any document agreeing that New York law would prevail. “It matters little that he logged onto the website a zillion times, it matters little that he was a managing director, in French law what binds the parties is what they acquiesce to.”

The appellate court is expected to issue its ruling on March 14.

Mourad left Morgan Stanley to work for telecommunications mogul Patrick Drahi’s Altice Media Group. He later took a role on Emmanuel Macron’s 2017 presidential campaign, did a short stint at Bank of America Merrill Lynch in Paris and was then active in various business ventures.

--With assistance from Steven Arons and Tom Metcalf.

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