Comparative views on Enforceability of Restrictive Covenants in Nigeria: How has the NIC fared in up to date Occasions? -By Gbenga Bello

1. Introduction

There have been restricted alternatives for appellate supervision for judgements emanating from the Nationwide Industrial Court docket (the “NIC” or the “Court docket”)[1]. As such little consistency is offered for the authorized reasoning behind the selections of many of the rising labour/employment points determined by the Court docket. The imprecision created by judgements of the Court docket on issues go away labour practitioners to invest recommendation to purchasers who yearn for consistency required for directional coverage of their respective organisations.

One of many areas of employment legislation the place this uncertainty has been prevalent is enforceability of covenants in restraint of commerce (in any other case known as restrictive covenants). It should be said that restrictive covenants by their very nature are closely depending on different factual circumstances making it tough to discover a one-size-fits-all kind choices that give a full viewpoint when it comes to enforceability. As such like most causes of motion, every choice should mirror the vagaries offered by the factual circumstance(s) in every scenario.

Nonetheless factually dependent this attention-grabbing space of employment legislation could also be, it’s anticipated that appellate choices could be adopted for goal of consistency and predictability.

This text will try and:

1. Briefly look at the idea of restrictive covenants and the justification for its enforceability.
2. Assessment the Nigerian judicial trajectory from the Supreme Court docket case ofAndreas Koumolis v A.G. Leventis[2] and try a comparability with some current choices of the NIC, significantly in the newest choice in Iroko TV v Michael Ugwu[3].
3. Try to critically analyse the problems arising from the assessment of the circumstances,highlighting the inconsistencies within the reasoning resulting in the selections.
4. Challenge into a brand new period of consistency of reasoning.
5. Considerrecent approaches from different jurisdictions.

2. Restrictive Covenant usually context

The definition of a covenant in restraint of commerce has extra time offered a peculiar conceptual issue and a number of other jurists have testified to this issue[4]. What seems to be a working definition was supplied by Diplock L.J. (as he then was) within the English Court docket of Enchantment case of Petrofina (Nice Britain) Ltd v Martin[5].

In easy phrases, a covenantor in restrictive covenants commits to not do both a number of of the next:

1. Disclose and/or use info thought-about as a commerce secret[6] or thought-about a proprietary property[7] of the employer, which use and/or disclosure could be thought-about as injurious to the employer and to the benefit of the [former] employer’s rivals.

1. Arrange his personal enterprise in competitors together with his [former] employer or accepting a place with one of many [former] employer’s opponents[8].

1. Interact in solicitation of [former] employer’s clients[9].

1. Poach staff of [former] employers.

In view of the truth that the jurisprudential foundation for the enforceability has been a relentless battle between on the one hand, a public coverage view {that a} former worker ought to have a proper to to eke out a livelihood and benefit from the observe of his commerce, and then again, the necessity to defend info thought-about to be commerce secrets and techniques of the employer, the courts have developed a reasonableness take a look at. This take a look at imposes a burden on the employer to show that any restrictions imposed is cheap and failure to show such reasonableness makes the restriction void[10].

Theparameters for measuring whether or not a restriction is cheap normally are:

(a) the size of time the restriction is to final;

(b) the geographical limits of the restriction; and

(c) the character of the data out there to the worker.

Not too long ago, different concerns have emerged within the international panorama together with the proximity of the worker to such info thought-about a commerce secret and subsequently, the place occupied by the worker subsequently performs a significant position in deciding the justification for upholding restriction.

3. Assessment of the Nigerian judicial trajectory from Andreas Koumolis v A.G. Leventisand comparability with some current choices of the NIC, significantly in the newest choice in Iroko TV v Michael Ugwu.

Though the NIC is empowered to use worldwide greatest practices[11], the doctrine of judicial precedent which dictates that decrease courts are certain by appellate choices of superior is relevant to the NIC per drive[12]. This view will likely be mentioned later on this article. Every of the circumstances is now examined.

1. Andreas Koumolis v AG Leventis (1973)

In Andreas Koumolis v AG Leventis, the Appellant (Koumolis) was recruited from Cyprus as a spare components gross sales’ supervisor. Heoversaw gross sales and operation and handled all worldwide purchasers and organisations which the Respondent was a member. He was additionally accountable for all administration and operating of the West African chain of the Respondent. In 1969, the Appellant resigned and joined one other firm known as Nigerian Technical Firm, which was nearly 400 yards from the Respondent’s former employers within the Apapa space of Lagos. The textual content of the restrictive covenant reads:

“Upon the willpower of his employment for any trigger or by any means in anyway the Worker shall not for a interval of 1 yr subsequent thereafter undertake to hold on both alone or in partnership nor be employed or immediately or not directly in any capability no matter within the enterprise of Retailers Engineers or some other enterprise carried on by the Firm inside a radius of fifty miles from any Buying and selling Station in West Africa which is now or shall at any time throughout his employment or owned or managed by the Firm and won’t through the like interval and throughout the similar space both personally or by his agent or by letters, circulars, or ads whether or not on his personal behalf or some other individual, agency or firm compete or search to finish with the Firm in any such enterprise as aforesaid nor in any approach intervene with any of the Firm’s enterprise or affairs or clients of the Firm which can have been acquired by him in the midst of or as an incident to his employment hereunder for his personal profit or to the detriment of the Firm or meant possible detriment.”

In a swimsuit earlier than the Excessive Court docket, Lambo J. awarded £1000 because the agreed damages in opposition to the Appellant for breach of clause 6 of the employment settlement, which forbids the Appellant from serving in any technical station of a competitor inside West Africa. The Appellant appealed to the Supreme Court docket that the restraint was unenforceable being too large and even when it was enforceable, the £1000 was a penalty and subsequently didn’t circulation from the damages suffered by the Respondent Firm. Udo Udoma JSC of blessed reminiscence studying the main judgement of the apex courtroom after reviewing all of the authorities and arguments held, agreeing with the Excessive Court docket and implementing the covenant as follows:

“On the proof it isn’t disputed that the appellant was employed as Spare Components Specialist Supervisor to work on this nation the place the respondents function. It is usually widespread floor that when employed by the Nigerian Technical Firm Restricted, the appellant was coping with spare components and it was within the capability of somebody dealing in spare components that he addressed Reveals F and G to the respondents.”

He continued and held that:

“On the details of the case in hand, we’re glad and maintain that the realized trial decide got here to a proper conclusion and was justified, on the proof, when he held that the covenant, the subject material of criticism on this attraction was moderately mandatory for the safety of the enterprise curiosity of the respondents and subsequently legitimate and enforceable in legislation.”

1. Hygeia HMO Restricted v Mrs. Adesimbo Ukhiri & Anor (2015)

In Hygeia HMO Restricted v Mrs. Adesimbo Ukhiri & Anor[13], The Claimant sought amongst others, particular efficiency of the restrictive covenant between the Claimant and the 1^st Defendant who was employed by the two^nd Defendant (an HMO organisation). The 1^st Defendant was employed because the Head Advertising and Enterprise Improvement of the 1^st Defendant, with duties together with conducting advertising and enterprise methods, clientele retention and operations of the Claimant. By her employment contract, the 1^st Defendant covenanted as follows:

“It’s required that you’ll not take up employment with a competing Healthcare companies firm or any organisation concerned in Well being Insurance coverage, Healthcare supply or carefully associated inside twelve months of leaving the employment of the Firm”

Proof earlier than the courtroom present that the 1^st Defendant additionally executed a contract which contained a backyard go away the place the Claimant agreed to pay the salaries of the 1^st Defendant upon termination from the Claimant’s employment whereas the restriction lasts. Upon her disengagement by resignation[14], the 1^st Defendant joined the employment of the two^nd Defendant as Managing Director and through her employment with the two^nd Defendant, the 1^st Defendant had poached employees of the Claimant to the two^nd Defendant[15].

Whereas contemplating the enforceability of the restrictive covenant, the realized trial decide held that:

1. The contract of employment of the 1^st Defendant was constructively dismissed[16]
2. That the contract of employment which contained the restrictive covenant had no firm seal of the Claimant and the designation of the one who signed was not indicated[17].
3. Using the phrase “any” earlier than the phrase “organisation concerned in Well being Insurance coverage” made the covenant too large in scope.
4. The courtroom relied on Aprofim Engineering Nigeria Restricted v Jouques Boigouret & Anor[18] and Part 17 (3) (a) and (e) of the 1999 Structure that the restrictive covenant was void and unenforceable.

Importantly, it should be famous that:

1. No effort was made to tell apart the covenant from that which was enforced in Andreas Koumolis the Court docket didn’t think about the impact of the backyard go away on the restrictive covenant;
2. the realized trial decide made no reference to the proof of poaching and the truth that the Claimant was ready proximate to commerce secrets and techniques of the Claimant; and
3. the Court docket didn’t think about the restrictive covenant and situate similar throughout the recognized parameters of evaluating its reasonableness.

• Studio Press v Garnesh Kadoor (2018)

In Studio Press v Garnesh Kadoor[19], the Claimant sought to implement a restrictive covenant which prevented the 1^st Defendant from taking on employment with a competitor after 2 (two) years of disengagement from the Claimant. The 1^st Defendant was employed as a chief digital community creator by the Claimant after having been granted a piece allow to work in Nigeria being an Indian. The 1^st Defendant after leaving Nigeria to India was discovered to have taken employment with the two^nd Defendant as high quality assurance supervisor. The Claimant sued the two^nd Defendant for inducing the breach of the contract of employment between the Claimant and 1^st Defendant.

In his judgement, Oyejoju. J. implementing the restrictive covenant held as follows:

1. The argument of the 1^st Defendant that he was not paid his wage was utterly rejected by the Court docket as a justification for breaching the restrictive covenant because the Court docket held that there are procedures for implementing a breach of non-payment of salaries.
2. The Court docket rejected the 1^stDefendant’s argument that he didn’t carry out the identical job capabilities in each firms by mere reference to the completely different titles and said that in as far as the 1^st Defendant had commerce secrets and techniques of the Claimant which he’s utilizing in his job position with the two^nd Defendant, the restrictive covenant should be upheld.
3. The Court docket relied on Andreas Koumolis v AG Leventis and Nissan Nig. Restricted v Yoganathan & Anor[20] and held that the restrictive covenant was cheap regardless that it was for 2 years in view of the character of the commerce secrets and techniques in custody of the 1^st Defendant and the character of the position he carried out within the 2^nd
4. The realized trial decide upheld the claims for inducement of breach in opposition to the two^nd Defendant

1. Lacasera Firm v Prahlad Kottappurath Gangadharam (2018)

In Lacasera Firm v Gangadharam[21]the Claimant employed the defendant as Chief Working Officer of the drinks/beverage firm with a restrictive covenant to not take up employment in a competitor firm in Nigeria for a interval of 5 (5) years after termination of his contract. The Claimant later took up a job as New Enterprise Improvement Supervisor with the Nigeria Bottling Firm (NBC). The Claimant introduced this declare to implement the restrictive covenant on the premise that by advantage of his place, the Defendant had commerce secrets and techniques of the Claimant’s enterprise which he would use to the detriment of the Claimant. The realized trial decide refused to implement the restrictive covenant on the grounds that:

1. There was no proof earlier than him which confirmed the job description of the defendant in each firms to allow him to conclude whether or not the duties had been associated. Suffice to level out that the difficulty of whether or not the defendant was ready proximate to commerce secrets and techniques was not thought-about.
2. That the 5-year interval within the covenant was virtually in perpetuity.
3. That the job position within the new employer (NBC) required the Defendant to make use of his expertise to market merchandise of the brand new employer and it was opposite to public coverage to stop him (being a foreigner) from exercising that talent.

1. Iroko TV.com Restricted v Michael Ugwu (2020)

In Iroko TV.com Restricted v Michael Ugwu[22]the Defendant was employed by the Claimant and after relocation to Nigeria, the Defendant signed an Worker Non-Disclosure Settlement (ENDA) to not amongst others arrange a competing enterprise in opposition to the enterprise of the Claimant which might result in misuse of confidential info. Upon disengagement, the defendant arrange a enterprise often known as Africagent restricted to conduct the enterprise of digital music in competitors with the Claimant. In deciding whether or not the ENDA which prevents the Defendant from establishing such enterprise for a interval of two two years, the realized trial decide citing Andreas Koumolis v AG Leventis amongst different circumstances held as follows:

1. The execution of the ENDA (the restrictive covenant) two months after relocation to Nigeria foisted a fait accompli on the Defendant who had no selection and was topic to the dictates of the Claimant.
2. That the ENDA signed after the employment Settlement was a change within the phrases of employment and that the Defendant was not in the identical bargaining place to refuse execution of the ENDA.
3. The ENDA was not supported by consideration.
4. There was no proof of any commerce secrets and techniques able to being utilized by the Defendant detrimental or injurious to the enterprise curiosity of the Claimant.

4. Evaluation of the problems arising from the critiques significantly the inconsistencies within the reasoning resulting in the selections

1. Andreas Koumolis enforced Restrictive Covenant

It turns into essential to critically think about the divergentbases upon which the NIC involves its choices on restrictive covenants as there doesn’t look like a constant consideration of the premise for software of the locus classicus in Koumolis v AG. Leventis.

The very first thing that runs via the circumstances is the veiled reference to Andreas Koumolis solely as a common rule {that a} restrictive covenant is unenforceable and customarily void and in opposition to public coverage. Not one of the circumstances referred to above (apart from Studio Press v Garnesh Kadoor case) thought-about the exception (which gives stability to the doctrine) {that a} restrictive covenant is enforceable when cheap and protects a commerce secret. Other than the Studio Press case, not one of the circumstances cited Andreas Koumolis as having enforced the restrictive covenant. As such, the sensation any perceptive reader of the judgements of the NIC will get is that the realized judges of the NIC haven’t thought-about the bases for the enforceability of restrictive covenants. One then wonders whether or not Andreas Koumolis solely exists for the negativity that has been ascribed to restrictive covenants fairly than the stability it brings to defending using commerce secrets and techniques vis-á-vis the best of the worker to work.

The realized trial decide in Studio Press v Garnesh Kadoor case not solely thought-about Andreas Koumolis case primarily based on that stability however went additional to think about the parameters for enforcement of a restrictive covenant when it comes to reasonableness.

1. Constitutionality of Restrictive Covenant

In Hygeia’s case, one of many inexplicable bases for refusal to implement the restrictive covenant was that such clause violates 17 (3) (a) and (e) of the 1999 Structure (as amended).Other than the truth that the realized trial decide didn’t invite events to deal with the query of constitutionality or in any other case of restrictive covenants[23], Andreas Koumolis by no means referenced such distant consideration. In any occasion, the Court docket didn’t think about that part  17 (3) (a) and (e) of the 1999 Structure (as amended) kinds a part ofCHAPTER II of the Structure (consisting of sections 13 to 24) and it offers with “Basic Goals and Directive Rules of State Coverage”. This a part of the Structure is just not justiciable and are solely declaratory and no extra[24].

• Non-payment of salaries or breach of employment contract as justification to not implement restrictive covenants

One of many concerns exterior of the reasonableness of the restrictive covenant which the NIC used to justify non-enforceability of restrictive covenants is any perceived breach of the employment contract by the employer in whose favour the restrictive covenant was made. This development was obvious in Hygeia, Lacasera Firm and Iroko TV Circumstances.

This author respectfully submits that this strategy is just not solely misconceived however reveals nothing however a pretentious derision of the ideas of legislation enshrined within the foundational foundation of the doctrine of restrictive covenants. Within the 3 (three) circumstances talked about above, the NIC had left the main focus (which is the reasonableness of the restrictive covenant) and used the non-payment of salaries to invalidate the covenant. Nonetheless, the right strategy was lucidly utilized within the case of Studio Press, when the realized trial decide said  whereas contemplating the non-payment of salaries as a foundation for breaching the restrictive covenant, that the argument of the worker (1^st defendant) that he had not been paid his wage is just not an excuse for breach of the restrictive covenant. One widespread denominator on this line of circumstances is that the worker by no means sues for fee of salaries, however they select to both be part of a competitor or arrange a rival enterprise. The all-important query is; are actions exterior of the parameters for figuring out reasonableness i.e. geographical, size of time and proximity to commerce secrets and techniques now a foundation to invalidate a restrictive covenant? It’s the view of this author that this strategy is just not solely unfair however places an unwieldy stretch on the consideration as to the reasonableness of the doctrine of restrictive covenants.

Additionally, one finds that the NIC introduces the narrative of “unequal bargaining energy” in consideration of the reasonableness query. This was utilized within the Iroko TV.com case. Other than the truth that this consideration is completely exterior of the recognized conceptual concerns, no employer wouldfind a good consideration earlier than the NIC as a result of no worker (besides maybe in very uncommon circumstances) has an equal bargaining energy with the employer. Nonetheless, there may be at all times the query of option to proceed when offered with the choice of taking employment. Each worker who executes a contract of employment waives his unequal bargaining place to the dominance of his employer save for such vitiating parts corresponding to fraud, misrepresentation, duress and mistake. Past these vitiating parts, it turns into an anomaly to make use of an unruly “bargaining energy” argument to push the unreasonableness place.  Once more, the realized trial decide in Studio Press appropriately brings this to bear when he utilized Ariori v Elemo[25] making use of the waiver rule to the difficulty of breach and bargaining energy.

1. Absence of proof of Job description to find out existence of Commerce Secrets and techniques

One other uncommon burden positioned on employers now could be to offer evidenceto present that the identical job description is what the worker performs within the new competitor. In Andreas Koumolis, no such burden was positioned on the Respondent (employer). It was sufficient that the worker has been employed by a competitor and whether or not he performs the identical job operate is irrelevant. The Supreme Court docket thought-about the strict strategy that the truth that the worker by his proximity to the commerce secret of the previous employer and by purpose of his place within the employer was sufficient to limit him from employment by a competitor. It might have been a unique case if the worker didn’t possess commerce secrets and techniques and was not proximate to similar. It is very important observe that the Appellant counsel in Andreas Koumoulis case argued (like has been argued within the NIC just lately) that there was no proof and there was no discovering of the trial courtroom that the appellant (worker) possessed any commerce secrets and techniques and as such the covenant was too large. Udo Udoma JSC nevertheless said in his judgement as follows:

“The quick reply to that is that there was uncontradictory proof that the appellant as a Spare Components Gross sales Supervisor dealt immediately on behalf of the respondents and as their agent with clients of the respondents each Abroad and on this nation. He was in possession of the respondents commerce secrets and techniques and shortly after his resignation and departure from this nation the respondents misplaced Abroad Businesses for which they had been negotiating to their rivals, the Nigerian Technical Firm Restricted and thereafter they had been suggested in letters signed by the appellant to take care of their competitor primarily based about 400 yards away, by whom the appellant was then employed. That proof was accepted by the realized trial decide. Absolutely, the inference that the appellant had one thing to do with the sudden change as regards the respondents’ sellers or suppliers is irresistible.”

The realized jurist additional held as follows:

“In Industrial Plastics Restricted v. Vincent (supra) it was held that regardless that it was tough to categorise any specific merchandise of data within the (then) plaintiff’s possession as being confidential (apart from info contained in doc which will be protected by different acceptable authorized cures), the truth that the (then) defendant may most likely keep in mind usually in relation to any matter regarding in that case, adhesive tape, what was the issue and what was the answer, what experiments had been made and whether or not the outcomes had been constructive or detrimental, meant that the plaintiffs had confidential info able to being protected by a suitably drafted situation or covenant in restraint of commerce.”

The above quoted parts of the judgement in Andreas Koumolis (which quite a few counsel and the NIC haven’t averted their minds to) is to the impact that there isn’t any must impose a burden on the employer to tender proof of the brand new position undertaken within the new employer. So long as it may be proven that the worker was capable of keep in mind any facets of his job capabilities which is important to the employers enterprise to offer it an edge in opposition to its opponents, then the possession of commerce secrets and techniques shouldn’t be a tough truth to show.

1. Fee of Consideration to validate Restrictive Covenants

One other consideration that has discovered its approach into the concerns for reasonableness as the premise for enforceability of restrictive covenants is the fee of consideration as a foundation for enforceability. This was obvious from the choice of the NIC in Iroko TV.com’s case the place the realized trial decide held that as a result of the restrictive covenant (ENDA) was signed two months after the resumption of the worker, the restrictive covenant should be supported by consideration.

Sadly, and but once more, that is one other false impression of the legislation of contracts. Firstly, the idea ofconsideration is normally erroneously considered as change of cash for a service. Nonetheless, the legislation of contract is settled that “a peppercorn doesn’t stop to be good consideration whether it is established that the promisee doesn’t like pepper and can throw away the corn”[26]. Contracts are backed up by change of guarantees and the change of these guarantees represent good consideration. Within the case of employment contracts, the employment of the worker along with fee of wage is sufficient consideration for the worker to ship companies and maintain commerce secrets and techniques of the employer. It’s a misconceptionof the idea of restrictive covenant to demand consideration for obligations corresponding to non-compete, which run with the employment.  A restrictive covenant is just not an obligation exterior the employment contract because the covenant itself is an intrinsic a part of employment by advantage of the place held by the worker and which the events have agreed to kind a part of obligations of the worker. As such the contract continues to be the identical contract and the duty to honour the restrictive covenant runs with employment and never distinct, exterior and separate from employment.

What’s extra is that to demand consideration with a view to implement a restrictive covenant is to create a collateral contract[27] to employment.  By this, the NIC assumes {that a} restrictive covenant is a separate and unbiased contract to the contract of employment with a lifetime of its personal, i.e. bearing its personal provide, acceptance, consideration, intention to enter authorized relations and so on. Subsequently, if this was the case, the NIC would think about enforceability primarily based on existence ofall the weather of a sound contract to implement the restrictive covenant, together with provide, acceptance, intention to enter authorized relations along with consideration. This can’t be the legislation. Nothing of such consideration was thought-about within the case of Andreas Koumolis case and this turns the legislation on its head with the doctrine of precedent relevant in Nigeria. It’s this author’s thought-about view subsequently that to demand consideration is to increase the ideas of enforceability of restrictive covenants past cheap limits. It’s famous that few writers[28] have urged that consideration turns into one of many circumstances for enforcement of restrictive covenants and some jurisdictions have thought-about such within the enforceability of restrictive covenants. Nonetheless, these views haven’t averted their mindsto the collateral contract argument and intrinsic nature of restrictive covenant to employment argument. In any occasion, the Nigerian locus classicus makes no such situation mandatory.

5. Will there be a brand new period of consistency of reasoning? Does Precedent nonetheless have a spot within the NIC?

The problems highlighted on this write-up brings to the fore the inconsistencies inherent within the choices of the NIC as regards the enforceability of restrictive covenants. Whereas it’s recognised that the NIC has proven that it’s mandatory as a specialised  courtroom to offer a “human face” to employment by affording safety to staff, the NIC must stability the safety within the face of a aggressive enterprise atmosphere the place innovation turns into one of the priced property of companies and subsequently interprets to enjoyment of market share. It nevertheless turns into a distortion of the equilibrium if the NIC pushes a line that doesn’t discover worth in preserving this equilibrium by tilting the stability in most conditions to the safety of the worker inflicting a distorted employment panorama. What’s much more worrisome is the shortage of consistency within the authorized reasoning that informs these choices. The introduction of nebulous concerns corresponding to unconstitutionality, non-payment of salaries, proof of job description and fee of consideration additional imposes extra burden in real circumstances the place a restrictive covenant is important to guard commerce secrets and techniques that an employer has constructed extra time.

One other disconcerting function is the virtually complete jettisoning of the doctrine of precedent which has been firmly rooted in our hierarchical adjudicatory construction. Stare decisis turns into mandatory for the understanding, predictability and consistency it brings to justice[29]. A deviation from precedent might deliver chaos into judicial seek for justice. Subsequently, one finds that presently, the ratio decidendi for comparable circumstances on comparable details relies on nebulous concerns because it issues enforcement of restrictive covenant within the NIC. Andreas Kumoulis is usually cited within the NIC with out concerns of the binding ratio it establishes.   In Hygiea, Lacasera and Iroko circumstances, the realized trial judges cited the final rule with none veiled try to think about the intricate exceptions which supplies stability, symmetry and a way of broad justice to a posh doctrine. Solely in Studio Press was the authority of Andreas Koumolis utilized to its full amplitude. This portends a harmful outlook for the understanding and predictability earnestly sought forin the labour/employment panorama.

Whereas this author recognises the ability of the courtroom to use worldwide greatest practices in Part 254C (1) (h) of the Structure, it’s nevertheless submitted that such energy can’t override the doctrine of precedent. The NIC has proven a predilection to attract from different nations corresponding to India, such choices with out the consideration of the truth that India has legislated for many of those rising points in its municipal legal guidelines as a foundation for software of what’s imported into our well-developed jurisprudence. As such, ideas like restrictive covenants, unfair labour practices and constructive dismissal are nicely codified. In any occasion, we should be reminded that choices of overseas courts have not more than persuasive authority in Nigeria and can’t supplant choices of superior courts on the subject material[30]. It is usually essential to notice that what is taken into account “worldwide greatest observe” is a query of truth because it pertains to any scenario for a decide to imagine for the events. As such, it should be incumbent on a decide who seeks to use any overseas choice to permit/afford the events to current proof and tackle the courtroom on whether or not a overseas choice constitutes worldwide greatest observe at that cut-off date and whether or not similar doesn’t contravene any present judgment of the Court docket of Enchantment or Supreme Court docket which the NIC is certain to comply with.

One would subsequently hope that the NIC would look inward into the sturdy choices of superior courts with the hope of sustaining consistency within the labour habitat of Nigeria.

6. Current approaches from different jurisdictions

It’s worthy to notice that as a lot because the NIC is empowered to use worldwide greatest observe, it stays blurry whether or not this energy is optimised to its fullest with the array of examples to select from. One would count on the NIC to think about learnings that mirror up to date pondering on the topic. On this regard if the realized trial decide thought-about the case of PepsiCo, Inc. v. Redmond[31], the case of Lacasera Firm v Gangadharam might have been determined otherwise. In Lacasera case, the realized trial decide required proof of job description to resolve whether or not a Chief Operations Officer could possibly be in possession of commerce secrets and techniques. In PepsiCo’s case Redmond was Basic Supervisor in PepsiCo and was supplied the place of Vice President on Premises Gross sales for Gatorade. The US courtroom of Enchantment utilized the identical doctrine in Andreas Koumolis and determined that PepsiCo has proved a declare of commerce secret misappropriation by demonstrating that Redmond’s new employment would inevitably lead him to depend on PepsiCo’s commerce secrets and techniques. So far as the courtroom was involved, in as far as Redmond (worker) who had from year-to-year seen the enterprise plans, forecast.And so forth., as contained in yearly brochures circulated amongst high tier employees, there may be an inevitability that such secrets and techniques could be disclosed.

The inevitability precept was additionally utilized within the case of Company Applied sciences Inc. v Brian Harnett[32]. On this case, the defendant, a profitable IT salesman for the Claimant resigned and joined OnX, a competitor. The defendant had signed a non-solicitation/non-compete clause which prevents solicitation of consumers of the Plaintiff. Upon his resumption at OnX, OnX despatched an e-mail to about 100 potential clients informing them of the resumption of the defendant in its firm. The courtroom held that the e-mail constituted solicitation as such e-mails would attain clients of the Claimant. The courtroom additionally held that due to the place he held within the Claimant firm, the defendant can’t merely overlook the sequence of data he has in advertising the purchasers of the Claimant and it was inevitable that such info could be used to the detriment of the Claimant.

In Tillman v Egon Zehnder Ltd[33]theAppellant (Tillman) was recruited at marketing consultant stage and had in 8 years risen to Co-World head of the monetary service group of the Respondent firm. Upon her termination, she took up employment with a competitor. She had executed a restrictive covenant which prevented her inside 6 (six) months from termination of her employment with the Respondent from immediately or not directly be occupied with any enterprise carried on in competitors with the enterprise of Egon Zehnder.  There was additionally a separate clause stopping her from holding 5% shareholding in a competitor. The Supreme Court docket upholding the restrictive covenant agreed with the corporate that the pure which means of non-compete restriction prevented Mrs. Tillman from holding shares in a competitor. In overruling the Court docket of Enchantment, the Supreme Court docket utilized the blue pencil rule and severed the phrases “occupied with” as being too large however left the non-compete a part of the clause intact.  Whereas this author respectfully thinks that the realized trial decide in Hygeia case wrongfully held that using the phrase “any” within the clause solely certified “well being organisation”, assuming that was too large, the courtroom may have utilized the blue pencil rule in such circumstances the place it so deserving.

7. Backyard Depart

Backyard Depart describes a interval an worker below a restrictive covenant stays away from work for an agreed interval whereas nonetheless receiving salaries through the absence from work. That is to permit the employer to alter its methods ought to the affected worker take employment with a competitor. Employers use this observe to stop the worker from taking up-to-date confidential info to a competitor. The presence of backyard go away makes it simpler for an employer to show the reasonableness of a restrictive covenant because the worker continues to be in its employment through the backyard go away. The NIC had an opportunity to think about the impact of this revolutionary observe for the primary time in Nigeria within the Hygeia Case, nevertheless, the NIC missed that golden alternative. The chance to deepen the Nigerian jurisprudence was sacrificed on the altar of inapplicable [un]constitutional comfort. Therefore, we stay the place we’re.

8. Conclusion

It’s hoped that the NIC will, respectfully, rethink its stance and think aboutratiosfrom different jurisdictions the place the reasonableness take a look at has been deepened to stability the lean,whereas making use of Andreas Koumolis the place the details are comparable. It’s noteworthy that way back to 1973, the Supreme Court docket already recognized the central place of proximity to confidential info and the inevitability of the temptation to make use of that info the place the chance presents itself.  The NIC whereas pushing the “human face” narrative for workers should additionally search a stability that’s seen to deliver symmetry into the labour area by consistency and predictability in reasoning.

*Gbenga Bello is a Authorized Practitioner and practices in Lagos

[2](1973) 11 SC 100

[3] SUIT NO: NICN/LA/169/2015 delivered on 12^th November 2020

[4]See Lord Reid and Lord Wilberforce’s dicta in Esso Petroleum v Harper’s storage (Stouport) Ltd (1968) A.C. 269; Lord Reid said at web page 298 that he “wouldn’t try and outline the dividing line between contracts which aren’t in restraint of commerce” whereas Lord Wilberforce at web page 332 said that “no exhaustive take a look at will be stated- most likely no exact non-exhaustive take a look at”. He goes on to say that this isn’t to be regretted as a result of “the widespread legislation has typically (if generally unconsciously) thrived on ambiguity and it might be mistaken , even when it had been doable, to attempt to crystallize the principles of this or any facet of public coverage into neat propositions. The doctrine of restraint of commerce is one to be utilized to factual conditions with a broad and versatile rule of purpose.

[5] (1966) Ch. 146 the place the time period was outlined thus

“A contract in restraint of commerce is one by which a celebration (the covenantor) agrees with some other celebration (the covenantee) to limit his liberty sooner or later to hold on a commerce with different individuals not events to the contract in such a fashion as he chooses.”

[6]Lansing Linde Ltd v Kerr (1991) 1 WLR 251

[7]Printers & Finishers Restricted v Holloway (1964) 3 All ER @ 735 and 736

[8] Industrial Plastics Ltd v Vincent (1965) 1 QB. 625

[9] S.W. Unusual V Mann (1965) 1 W.L.R.  629.

[10]Mitchel v Reynolds (1711) 1 P. Wms.; Nordenfeldt v Maxim Nordenfeldt Weapons and Ammunition Firm (1894) AC 535, 565

[11]See Part 254C(f) Structure of the Federal Republic of Nigeria 1999 as amended

[12]Nigeria Arab Financial institution Ltd. V. Barri Engineering Nig. Ltd. (1995) LPELR-2007(SC)

[13] Unreported –NICN/LA/454/2013, judgement delivered by Amadi J. on March 20, 2015

[14]Though the 1^st Defendant claimed she was pressured to resign

[15]It should be said that the details of the presence of Backyard Depart within the contract and the very fact of poaching of the Claimant’s employees weren’t mirrored within the judgement of the Court docket.

[16]That the 1^st defendant didn’t resign voluntarily

[17]This situation was by no means raised by the Defendants and the realized trial decide picked it and determined it suo motu with out affording events the chance to deal with it

[18] (2015) 52 NLLR (Pt 173) 1

[19] Unreported – NICN/LA/144/2015 judgement delivered by Hon. Justice Oyewunmi Oyebiola Oyejoju

[20](2010) 4 NWLR (pt. 1183) 135

[21] Unreported –NICN/LA/533/2013 judgement delivered by Hon. Justice J.D. Peters

[22]Unreported –NICN/LA/169/2015 judgement delivered by Hon. Justice J.D. Peters

[23]The problem was raised suo motu within the judgement

[24]Archbishop Anthony Okogie v. AG Lagos State (1981) 2 NCLR 337 at 350; AG Ondo V .AG Federation (2002) 9 NWLR (half 772) p.22.

[25](1983) 1 SCNLR 1

[26]Chappell & Co Ltd v Nestle Co Ltd ([1960] AC 87). What this implies is that courts won’t usually inquire into the adequacy or relative worth of the consideration offered by every celebration. So, if a contract requires one celebration to surrender one thing of nice worth, whereas the opposite celebration provides up one thing of a lot lesser worth, then it’s going to usually nonetheless be thought-about a sound contract, regardless that the change of worth significantly favours one facet

[27]Collateral contracts are unbiased oral or written contracts which can be made between two events to a separate settlement or between one of many unique events and a 3rd celebration. Any such contract is normally made earlier than or concurrently with the unique contract.The options of collateral contracts are:

• Be in line with the primary contract
• Be promissory
• Observe the promise with a press release
• Comprise all parts of a contract

[28]https://allanjanes.com/-Consideration-For-Restrictive-Covenants – consideration for restrictive covenants – Allan James Solicitors. See additionally https://www.ashfords.co.uk/news-and-media/general/consideration-must-be-paid-to-be-able-to-enforce-restrictive-covenants-inserted-as-part-of-a-contract-variation

[29]Hon. Justice A. Aboki JCA “The Doctrine of Stare Decisis: The necessity for certainty of Judicial Selections”, referred to by Hon. Justice Idahosa, C.J. of Edo State on the convention of all Judges of the decrease courts between 21^st 025 November 2016

[30]Araka V. Egbue (2003) 3 WRN 20; Carribbean Buying and selling & Constancy Company V. NNPC (1992) 7 NWLR pt 252

[31]54 F.3d 1262 (seventh Cir. 1995)

[32]No 12 – 12385-DPW (D-Mass Could 3, 2013)

[33][2019] UKSC 32

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