28.02.2024 Dispute Resolution successes

Partner Jaak Siim successfully represented the client in a lawsuit regarding the violation of competition restrictions

Jaak Siim, a partner of Cuesta Law Office, successfully represented a company operating in the field of installation of industrial machinery and equipment in the legal proceedings, who filed a lawsuit against the former CEO in connection with the violation of competition restrictions. The plaintiff established that, while working for him, the CEO secretly acted in the interests of and for the benefit of a competing company operating in the same field of activity, including persuaded business partners to sign cooperation agreements with the aforementioned competitor, for whom he later started working himself. Due to the identified circumstances, he was demanded to pay the contractual penalty stipulated in the CEO’s contract in the lawsuit, as well as compensation for patrimonial damage in the form of out-of-court legal aid costs incurred by the plaintiff. The decision of the Tartu District Court of 06.11.2023 entered into force with the Supreme Court’s order of 12.02.2024, with which the court reduced the amount of the contractual penalty awarded to the CEO by the decision of the Tartu County Court of 29.10.2021 but awarded the defendant a total of more than 24,000 euros in contractual penalty, penalty for late payment and damages. With an earlier decision, the district court had annulled the decision of the county court and dismissed the lawsuit, but the Supreme Court satisfied the appeal filed by Jaak Siim on behalf of the client on 10.07.2023 and ordered the district court to re-examine the case. As a result of the Supreme Court’s explanations, it is not the wording of the agreement between the parties, which the district court had deemed insufficient, that is of sole determining importance when evaluating the validity of the restriction of competition, but also the previous cooperation of the parties, experiences and other circumstances of the conclusion of the agreement that may influence the understanding of the parties. During the second review of the case, the district court considered the non-competition clause to be valid and found that its violation by the former CEO was sufficiently proven.