Analysing Interim Injunctions in the context of Restraint of Trade Clauses

When a former employee leaves his erstwhile employer to join a rival company, should the erstwhile employer be allowed to maintain the interim injunctions it obtained against the former employee, on the basis of a non-compete clause and a confidentiality clause (in the employment contract between the former employee and the erstwhile employer)?

The team of Lee Eng Beng SC, Timothy Ang and Liu Yulin from Rajah & Tann Singapore LLP’s Commercial Litigation Practice Group successfully represented the defendant former employee in discharging the interim injunctions before Singapore’s High Court in MoneySmart Singapore Pte Ltd v. Artem Musienko [2024] SGHC 94. The issue was whether the interim injunctions should be maintained. The High Court held that: (a) the non-compete clause was not valid and enforceable, and thus there could not be a good arguable case that the clause had been breached; (b) the claimant failed to establish a good arguable case that the alleged information was confidential and that the defendant had breached, or would breach, the confidentiality clause; and (c) the balance of convenience was in favour of the defendant and it was inequitable to allow the interim injunctions to continue.

The decision clarifies the legal principles applicable in determining whether to grant or maintain interim injunctions, in a situation where a negative covenant has been breached or is likely to be breached, and in the specific context of restraint of trade clauses. Bare and unsubstantiated assertions of legitimate proprietary interests or that there is a real risk of breach are insufficient. Interesting points to note when drafting such clauses include the impact of a non-compete clause that has been drafted in a cascading manner, and the applicability or otherwise of the employer’s election and the doctrine of severance to such clauses. Companies should also note that the manner in which they handle information (including whether they take precautions to maintain the confidentiality of the information, selectively disclose confidential information, and expressly inform their employees about the confidential nature of certain information) would impact the Court’s assessment on whether or not such information constitutes confidential information in the first place.