A none-compete clause was deemed unreasonable

On October 17, 2024, an arbitration award was issued in a case concerning, among other things, the validity and reasonableness of a twelve-month non-compete clause in an employment agreement between a senior executive and a Swedish limited company. Additionally, the dispute addressed whether the employment offered to the senior executive in the management of a foreign parent company of a subsidiary that conducted business competing with the Swedish company should be considered covered by the non-compete clause. The parties in the case had agreed that the 2015 Agreement on the Use of Non-Compete Clauses in Employment Agreements between the Confederation of Swedish Enterprise and PTK would apply between them.

In the award, the arbitration tribunal noted that the senior executive, through its position in the group management, would indirectly engage in or contribute to the activities of the subsidiary in a way that constitute competition with the business conducted by the former employer. The arbitration tribunal thus made an extensive interpretation of the clause's scope of application and further concluded that the non-compete clause was unreasonably long and adjusted it to a validity period of six months. Zellberg Advokatbyrå AB represented the senior executive in the arbitration proceedings.