The Western Australia Supreme Court has granted Naiad Dynamics US Inc (“Naiad”), an American company based in Connecticut and represented by Harmers Workplace Lawyers (the Australian affiliate of L&E Global), an injunction to prevent an ex-employee from working for a competitor in Perth, Western Australia.
In the case (Naiad Dynamics Us Inc v Vidakovic  WASC 109), the Plaintiff, Naiad, was a company incorporated in the state of Connecticut in the USA which manufactured and distributed ship stabilisers to local and international clients. The Defendant, Dr Vidakovic, was employed by Naiad as a Global Sales Director and was responsible for, inter alia, generating sales and building and maintaining relationships with clients (including clients in Australia).
The terms and conditions of Dr Vidakovic’s contract with Naiad included a provision that prevented him from working for a competitor for a period of two years immediately following his employment. Dr Vidakovic’s contract was expressed to be governed by the law of Connecticut. In December 2016, Dr Vidakovic resigned his employment with Naiad and in January 2017 he commenced working for a company based in Western Australia which also manufactured and sold marine stabilisers.
Naiad initiated proceedings in the Supreme Court of Western Australia seeking, among other things, an injunction to restrain Dr Vidakovic from being employed or engaged by the competitor or any related entity.
Le Miere J confirmed that the Supreme Court of Western Australia has the power to issue an injunction to enforce a restrictive covenant in a contract governed by a foreign law. His Honour observed that the law of Western Australia determined the question of whether the Supreme Court had the power to grant an injunction and whether, taking the relevant discretionary factors into account, an injunction should issue. His Honour also agreed with the parties that Connecticut law was the law that determined the validity of the restraint clause.
One of the arguments advanced by Dr Vidakovic was that Naiad did not have a prime facie case because the contract had been repudiated by Naiad in that it failed to pay Dr Vidakovic a severance payment upon resignation. Le Miere J found that the question of whether the alleged repudiation affected Dr Vidakovic’s obligations under the restrictive covenant depended on the proper construction of the contract. Le Miere J was satisfied that a reasonable argument could be made that Dr Vidakovic was not entitled to the severance payment.
Dr Vidakovic also argued that an injunction should not be granted because, under the law of Connecticut, the restrictive covenant would be unenforceable. Le Miere J found that, although the restraint was expressed to operate in a number of countries, prima facie, it was “partial, and restricted in scope as to time and place…” and was “necessary to afford fair protection to the interests of Naiad”. Naiad operated in a niche market, which actively sold to customers in Australia, some of whom Dr Vidakovic personally dealt with during his employment. Le Miere J also considered that Dr Vidakovic was likely to be able to find employment in other areas and thus, considered that the restraint did not operate unreasonably, as reflected under the law of Connecticut.
Le Miere J ultimately found that Naiad would have reasonable prospects of obtaining an injunction at a final hearing, that damages would be an inadequate remedy and that the balance of convenience weighed in favour granting the injunction. Le Miere J made an order restraining Dr Vidakovic from being employed or engaged by, either directly or indirectly, by the competitor or any related entity.