- Superior Court, Province of Quebec, District of Montreal
- Enerchem Transport Inc. et al vs Nicolas R. Gravino et al
LONG-TERM CONTRACTS - SHAREHOLDERS AGREEMENT - BETWEEN CANADIAN PARTIES - REFERENCE TO UNIDROIT PRINCIPLES IN SUPPORT OF SOLUTION ADOPTED ON THE BASIS OF THE APPLICABLE DOMESTIC LAW (QUEBEC LAW)
DUTY OF LOYALTY AND GOOD FAITH OF EMPLOYEES TOWARDS THEIR EMPLOYER EVEN AFTER TERMINATION OF THEIR EMPLOYMENT CONTRACT - CANNOT BE EXCLUDED BY AGREEMENT - REFERENCE TO ARTICLE 1.7(2) UNIDROIT PRINCIPLES
A Canadian shipping company sued several former senior officers shareholders of that company for breach of their duty of loyalty towards the company by exploiting for their own benefit a business opportunity that they had developed for the company while in office. The defendants objected that the non-competition clause contained in the shareholder agreement expressly excluded its application to shareholders exercising a put/call option for their shares, as the defendants had done.
The Court decided in favour of the plaintiff. After recalling that a number of provisions of the Civil Code of Quebec, such as Articles 322, 323, 2138, 2146 and 2088, lay down the duty of loyalty and good faith of directors and employees of a company, the Court pointed out that such duties were obligations of public order that cannot be excluded by agreement. In this context the Court quoted Professor Philippe Le Tourneau who, in support of his statement that general principle of loyalty and good faith is of public order which cannot be contractually excluded, referred to the UNIDROIT Principles "which provide, expressis verbis, that the parties may neither exclude nor limit the scope of the requirement for good faith".