Wed, Dec. 10, 2014

Non-Poaching Clause in German Law

Sometimes, a landmark case in Germany is exciting to German lawyers, but when translated into English, an implied issue seems more important to an American reader.

Contract penalties are such an issue, which the report Non-solicitation agreements enforceable only in exceptional cases by Hamburg attorney Christian Soltau mentions only in passing. Why skip the issue? In German law, contract penalties are legal. Liquidated damages are conceptually similar but stated differently. The author explains a high court decision in a competition matter that involves a non-solicitation clause. The court decided on April 30, 2014 that clauses impeding the poaching of employees from another employer generally violate §75f of the German Competition Statute.

However, the court carved an exception for special relationships which Soltau explains with helpful advice. His key statement that a two-year time limit should control the exception seems less exciting than the rule that German courts will enforce contractual penalties for breaches of contract. The best news is that American and German practices converge somewhat in this area.

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