3.3.1. Unfair competition
Acts of unfair competition are governed by national legislation. Subjects capable of committing such acts are generally individuals or entities engaged in economic activity, service or business. In matters regulated by individual labour law employees, acting on their own behalf may behave in such a way that their action or inaction may be regarded as an act of unfair competition. [footnote 162 ] According to Polish legislation, the Act of April 16, 1993 on Unfair Competition, [footnote 163 ] states that an employee may commit acts of unfair competition, passing, disclosing or using someone else’s trade secrets (Article 11 of the Unfair Competition Act), urging other workers to non-performance or
improper performance of work duties (Article 12 of the Act) or disseminating false or misleading information about their employer (Article 14 of the Act). Assessing whether the acts committed by an employee may be treated as acts of unfair competition and
assessing the legal consequences of acts committed in individual employment
relationships involving an international element, are dealt with in Article 6 of Regulation No. 864/2007, which lists the determinants indicating the relevant national substantive labour law system of the country in which the unfair competition occurred, or there is likelihood the breach will occur. In matters relating to the regulation of the conflict rules of substantive laws, applicable to cases of unfair competition, the general principle expressed in Article 4, paragraph 1 of Regulation No. 864/2007 applies, reproduced in Article 6, paragraph 1 of the said Regulation. This principle is, however, used only in situations where illegal acts of unfair competition committed by employees are prejudicial to the interests of two or more unidentified competitors. In a situation where an act of unfair competition affects exclusively the interests of a competitor the general principle formulated in Article 4, paragraph 1 of the Regulation is applied. In labour relations involving a foreign element, the employee, due to their knowledge of the employer, may primarily act in a way which leads to unfair competition against their own employer.
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In special situations, a worker employed by employer X may be able to carry out acts of unfair competition also against other entrepreneurs. For this reason, a book dedicated to resolving conflicts of substantive labour law should provide legal solutions used in the provisions on the law applicable to contractual obligations, which may be used in individual employment relationships. The main problem arising from the conflict rules in Article 6, paragraph 3, point “a” of the Regulation No. 864/2007, is the inability to solve the conflict dispute between the second-degree determinants indicating the national substantive law in force in the country on whose market the conduct (practice) had the effect of unfair
competition and regulations in force in the country whose market is likely to produce such an effect. The organisation established in Article 6, paragraph 3, point “a” of the conflict rules determines the order in the selection of the competing national substantive law systems. In those cases where the act or acts of unfair competition have caused the legally prohibited effects, the law of the particular country, applicable to the disadvantaged entrepreneurs, applies as the appropriate law. Only then, when an act of unfair competition has not caused adverse effects on a business, the conflict rules are subject to the national substantive law of that country, in which likely such an effect took place. The general
principle mentioned in Article 4, paragraph 1 of the Regulation is subject to Article 6, paragraph 3, point “a” and is interpreted broadly, since it covers situations in which the damage subsequent to an act of unfair competition has not eventuated, but whether there is probability of the damage occurring. If the result of an act of unfair competition is
damage brought about on the market of one country or is likely to result in the damage of a market for more than one country, the injured person, who initiates litigation proceedings in an appropriate jurisdiction based on the domicile of the defendant who has committed an act of unfair competition may, on the basis of a filed claim, cite the provisions in force in the country in which the person has requested the settlement of the dispute (Article 6, paragraph 3, point “b”). A necessary condition for filing a claim is that the market of a Member State chosen by the injured person or entity (the plaintiff) belonged to one of the markets directly and was significantly affected by the restriction of the competition, from which the non-contractual obligation formed the basis for the filed claim. The injured party by an act of unfair competition has the option of selecting a national system of substantive law, provided the claim has been filed in court and considered by the plaintiff as an
appropriate law (lex cause). The analysed regulation explicitly prohibits the parties to non-contractual obligations to enter into agreements, which exclude the applicable law as a consequence (Article 6, paragraph 4).
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3.3.2. Unjust enrichment
A non-contractual obligation arising out of unjust enrichment, concerns a relationship existing between the parties, such as one arising out of a contract or a tort, that is closely connected with that unjust enrichment, it shall be governed by the appropriate law that governs that relationship, as is provided in Article 10, paragraph 1 of the Regulation No.
864/2007. A necessary condition for the application of the status of a contractual
relationship resulting from a contract or contractual obligation with the unjust enrichment element, are the closely determinanted events underlying the non-contractual obligations in the obligation relations entered into earlier. For non-contractual obligation of unjust enrichment, in which there are foreign elements could be treated by the law applicable to a legal relationship, to which it is is closely related, and the two legal relationships (the contractual relationship based on an agreement of obligations for non-contractual unjust enrichment, or the provision of non-contractual relationship with another non-contractual obligation, such as as unjust enrichment), should occur concurrently. In Article 10,
paragraph 1 of the Regulation there is a collision between one of the two non-contractual obligations (undue or unjust enrichment provision) and the previously entered into
agreements by the same parties, in contractual or non-contractual relationships. The provision does not govern only the relationship between other non-contractual obligations and the undue or unjust enrichment provision. Legal relationships between these types of obligations can be well illustrated with examples from the areas of individual employment law. Individual, statutory work relationship, based on an employment contract, in which there are foreign elements, governed by the provisions of labour law chosen by the parties or designated by using a determinant as is defined in Article 8-4, paragraph 2 of
Regulation No. 593/2008 provides the basis for the application of the contract of
employment to an unjustly enriched employee who improperly received pay for work, as well as an employee who negligently carried out their employee’s duties becoming the source of the augmentation without a legal basis. Depending on whether the same or any other national measures of substantive labour law apply to the regulation of contractual relationships in which they remain with one employer, a worker unjustly enriched, and a worker who has decided to distribute the excess sums of wealth, two related
non-contractual obligations under the unjust enrichment and misappropriation benefits will be subject to national regulation of the same or two different systems of substantive labour law. In the latter case because of the relationship between the rules governing regulation of the employment contract and one of the two mentioned in Article 10, paragraph 1 of Regulation No. 864/2007 contractual obligations, relevant national rules of substantive labour law applies to the case of unjust or undue enrichment. The same legal mechanism is used in the case of the relationship between a non-contractual obligations and the undue or unjust enrichment provision.
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The injured party, who did not acquire the rights for work accident or occupational illness cover due to lack of legal conditions to qualify for these events into the category of work accidents or occupational illness, yet received by mistake from the pension granting institution undue benefits, therefore becoming unduly enriched, the injured party is required to repay the benefits within the limits prescribed by the regulations that were applicable to non-contractual obligation arising out of tort (lex loci damnum). However, an employee from the pension granting institution, who breached the obligations set out in the contract of employment or in the provisions of relevant labour law, having caused or contributed to payout of the amount wrongly received will be liable to the employer for the
contractual obligation in respect of undue benefits under the provisions of which the employee is subject to the individual employment relationship. The above examples concerning the relationship between non-contractual obligation (accident at work or occupational illness) and unjust enrichment and the obligations arising from contracts of employment and not due provision shall apply only in cases in which both coincide there aspects of legal relations abroad.
In case the use of determinants listed in Article 10, paragraph 1 of Regulation No.
864/2007 is not possible to determine the law applicable to regulate the legal relations arising from the contractual obligations specified in that provision, Article 10, paragraph 1 of the regulation requires the use of a determinant of common habitual residence of the parties in the same country at the time of the event, which is the source of unjust
enrichment. The legislation is in force in the country in which both of the parties to the non-contractual obligation have a permanent residence and it is this law that is applicable to regulate legal relations set out in Article 10 of the Regulation. One event is usually the source of two different non-contractual obligations, one of unjust enrichment, the second is for undue benefits. Due to the use of the following term in Article 10, paragraph 2 of the Regulation, the time of the event giving rise to unjust enrichment, there may be doubts as to whether the change of habitual residence by a natural person – an employee who determines on behalf of the employer or another entity (the pension fund) about the payment for an unauthorised person who wrongly receives, in the period occurring
between the decision and the date of unjust enrichment of a person not entitled to benefits, does not permit the use of the residency in the same country determinant. It would be possible if a person who makes the decision directly about the distribution of payment changed the place of residence. In cases regulated by individual employment law, such a situation may arise when transferring residence to another country by a natural person who acted as an employer to an employee unjustly enriched. Also moving the
headquarters or enterprises in the period between the decision made by the employee acting on behalf of the employer to make undue payments and the date, in connection with a procurement of property, which is seen as unjust enrichment may not apply Article 10, paragraph 2 of the Regulation. The legislature had foreseen complications that can occur when indicating national systems of substantive law in the process of applying Article 10, paragraph 2 of the Regulation.
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Therefore, in Article 10, paragraph 3 the legislature decided that if the appropriate law
cannot be determined according to the provisions of Article 10, paragraph 1 or 2 of the Regulation, the appropriate law deemed will be the law of the country in which the unjust enrichment occurred.
Just like in the case of a conflict of substantive law applicable to contractual obligations, Article 10, paragraph 4 of Regulation has included an escape clause that allows the courts to identify the applicable law to non-contractual agreements from the rules mentioned in Article 10, paragraphs 1-3 of the Regulation when all the circumstances of the case clearly show that non-contractual obligations of unjust enrichment are manifestly more closely connected with a country other than that indicated in Article 10, paragraphs 1-3. In such a situation, the law applicable is the law of that country with which these obligations are closely connected to. With the exception of Article 10, paragraph 1 of the Regulation, none of the provisions of Article 10, paragraphs 2-4 include a contractual obligation of undue benefits to which the same determinants are applied as are applied to the conflict rules stipulated in Article 10, paragraphs 2-4. This was not necessary, since the same event is both a source of unjust enrichment and undue benefits. The order of the two
non-contractual obligations remain as they were presented in Article 10, paragraph 1 of the Regulation. Presenting the chronological relationship between these two non-contractual obligations undue benefit should be mentioned first, because in most cases, unjust enrichment is a consequence of it. Article 10, paragraph 1 of the Regulation serves as a general principle in the case of non-contractual obligation of unjust enrichment. This article addresses the substantive scope of a conflict of substantive law and therefore also applies to undue benefits in all other cases provided for in Article 10, paragraphs 2-4.
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