Determination of Breach of a Non-Compete Clause by a Former Employee

Facts

Waro AG was founded in 1969 and operates department stores and shopping centers. Its Managing Director, Hans Rudolf Stahel, signed an employment contract that bound him to a non-compete clause for two years after the contract's expiration. In November 1971, Stahel left Waro AG and in February 1972 founded two companies, and in March 1972 an additional company, which pursued similar purposes as Waro AG.

In May 1972, Waro AG filed a lawsuit with the Commercial Court of the Canton of Zurich, seeking a declaration that Stahel had breached the non-compete clause. The Commercial Court dismissed the claim, as it did not see a legal interest of the plaintiff in an immediate determination of the breach.

Waro AG appealed this judgment to the Federal Supreme Court.

Considerations

The Federal Supreme Court granted the appeal and remanded the case to the lower court for a new assessment. It stated that the plaintiff did have a legitimate interest in the determination of the contractual breach, as it could not yet quantify the damage and could not assert further claims. A partial claim for the payment of the contractual penalty would indeed require an examination of the contractual breach, but there is a risk of contradictory judgments if later damage…