Khaberni - A commercial institution legally pursued two of its employees, one a sales manager and the other an administrator, accusing them of disclosing work secrets and stealing clients, resulting in significant financial losses for two affiliated companies. After obtaining a final criminal ruling against the first defendant for disclosing secrets, the institution pursued them civilly, demanding compensation of one million dirhams.
In detail, the primary civil court in Dubai dismissed a lawsuit filed by a commercial institution against three defendants, including two former employees, demanding that they jointly pay one million dirhams in material and moral compensation, plus legal interest at a rate of 5%, for exposing it to damages resulting from "unfair competition," disclosing its business secrets, and poaching its clients.
The lawsuit stated that the first defendant had been working for the plaintiff institution as an accountant and sales manager since 2017 until the end of 2023, while the third defendant worked as an administrative employee until January 2024. It noted a decline in sales after discovering that the first defendant had established a competing company in the same field, with the help of the third employee, and they had transferred several clients to it during their employment period.
The institution based its case on a criminal ruling from the Sharjah primary court that convicted the first defendant and fined him 20,000 dirhams for disclosing company secrets and using its data for the benefit of his own company, founded in 2021. This ruling was upheld by the appellate court and became final after the expiration of the appeal period.
After reviewing the papers and legal memoranda, the civil court referred the case to a specialized expert, whose detailed report concluded that there was no direct relationship between the plaintiff institution and the competing company owned by the first defendant. The report also indicated that the documents lacked any agreement or commitment preventing the employees from competing after their employment ended.
The report further confirmed that sales at the plaintiff company did not decrease after the establishment of the competing company, but conversely, saw a noticeable increase in 2022 and 2023 compared to 2021, the year the new company was established.
According to the report, the plaintiff did not produce any audited financial documents or data proving damage or a decrease in profits, while it was revealed that the transactions conducted by the competing company with two clients from the original company occurred after the employment relationship with the first defendant had ended.
The court based its verdict on articles (282–292) of the Civil Transactions Law, which stipulate that three elements are necessary for civil liability: fault, damage, and causation.
In the rationale of its verdict, the court explained that although the fault of the first defendant was established by a criminal judgment, the court found that the damage was not substantiated by the documents, thereby negating one of the essential elements of liability.
Regarding the third defendant, the court noted that her role as an "administrative officer" did not entitle her to access company secrets or know client details, and it was not proven that she disclosed any confidential information, completely negating the element of fault from her.
Based on the foregoing, the primary civil court in Dubai dismissed the lawsuit in full, ordering the plaintiff to pay half of the fees and expenses, affirming that the absence of damage makes the demand for compensation legally unfounded.
