Dubai Court rejects Dh1 million claim over ex-staff 'unfair competition'

The Dubai Civil Court of First Instance has dismissed a Dh1 million compensation lawsuit filed by a commercial establishment against three defendants, including two former employees who were accused of unfair competition, leaking trade secrets and poaching clients, Emarat Al Youm reported.

The company had asked the court to order the defendants to pay Dh1 million in material and moral damages, along with 5 per cent legal interest, claiming the alleged acts had harmed its business and reputation.

According to court records, the first defendant had worked for the company as an accountant and sales manager from 2017 until the end of 2023, while the third defendant was employed as an administrative officer until January 2024. The company claimed it had noticed a decline in sales after discovering that the first defendant had established a competing firm in the same field — allegedly with the help of the administrative employee — and that both had diverted clients to the new company while still employed.

The plaintiff relied on a criminal judgment issued by Sharjah’s Court of First Instance, which convicted the first defendant of disclosing company secrets and using its data for personal benefit, fining him Dh20,000. The verdict was later upheld on appeal and became final.

After reviewing the case documents and legal submissions, the Dubai Civil Court appointed an expert, who concluded there was no direct link between the plaintiff and the competing company owned by the first defendant. The expert found no contractual clause preventing the employees from joining or establishing a competitor after leaving their jobs.

The report also showed that the company’s sales had not declined after the formation of the competing business — in fact, they had increased in 2022 and 2023 compared with 2021, the year the new company was established.

Furthermore, the plaintiff did not provide any audited financial statements or documents proving financial loss or reduced profits. The expert noted that the competing company’s dealings with two of the plaintiff’s clients occurred after the employment relationship had ended.