DeHeng Won Final Appeal in a Complex Non-Compete Dispute

2024-08-20

DeHeng recently secured a victory in a non-compete dispute, with the appellate court overturning a first-instance ruling and fully dismissing the employer’s claims against the employee. The case involved disputed compensation exceeding RMB 17 million, with DeHeng representing the employee.

In this case, the employer is a global leader in a niche sector while the employee is its former senior executive. 

Learning that the employee joined a company in the same industry in 2022 after resignation, the employer accused the employee of breaching a non-compete agreement and claimed more than RMB 17 million in compensation. The case underwent arbitration and two court hearings. Arbitration fully dismissed the employer’s claims, while the first-instance court partially upheld them. However, the appellate court dismissed the claims entirely after considering DeHeng’s evidence and arguments.

During the hearing of the case, DeHeng lawyers presented the employee’s posting situation in more than ten years, the resignation process, contributions to the employer, and the similarities and differences of affiliated enterprises, and proved with legal and effective evidence that there were obvious flaws in the signing process of the non-compete agreement and that the non-competition clause could not reflect the genuine intention of the parties, demonstrating that it would be contrary to the law and manifestly unfair to the employee if the court ruled that the employee should continue to undertake the non-compete obligation.

The appellate court, after deliberation, adopted DeHeng’s opinions and ruled that the non-compete clause was not valid. As such, the court annulled the lower court’s ruling, fully dismissing the employer’s claims.