UAE: Laundry owner sues former employee for starting competing business next door
Fujairah Federal Court dismisses case, finds no evidence of wrongdoing by ex-worker
Fujairah: A woman who owns a laundry shop filed a lawsuit before the Fujairah Federal Court demanding to shut down a laundry shop owned by a former employee.
After resigning, the man opened a similar business next to her former employer. The woman is seeking Dh100,000 in compensation for material damages and lost earnings due to “unfair competition”.
She claims the former employee “siphoned off a considerable number of customers”, resulting in significant financial losses.
The lawsuit notes that the worker, who was employed by the plaintiff for ironing, was privy to the laundry’s clients and trade secrets.
The plaintiff requested the court to oblige the defendant to pay compensation for damages caused to her due to unfair competition, in addition to shutting down the new business.
Competition is not illegal
The court remarked on the case’s facts and the defendant’s liability, saying: “Simply having competition does not imply liability; a combination of fault and competition is necessary, meaning that unfair competition must stem from the fault of the offending party.”
The court noted that the plaintiff sought a ruling to compel the two defendants — the new establishment and its owner—to close the laundry, de-register its operations, and jointly pay her Dh100,000 for material damages and lost profits resulting from unfair competition.
No wrongdoing
However, the court found no evidence in the case files proving that the defendants used illegal methods, caused confusion between the businesses, or adversely affected the plaintiff’s customers.
The court ruled that the accounting expert report in criminal case No. 38 of 2023 did not demonstrate any embezzlement. Consequently, the court determined that the lawsuit lacked substantial evidence of unfair competition and the element of fault, leading to its dismissal and requiring the plaintiff to cover fees, expenses, and attorney’s fees.