Enforceability of certain commercial contract clauses in terms of Maltese law and a consideration of public policy

Abstract

The Maltese position regarding commercial clauses is rather ambiguous due to lack of both local legislation and jurisprudence. In today's global economy, with individual shifting from one employment to another at a rate which has never been seen before, when a contract of employment is entered into, there are certain clauses which are increasingly included. This article deals with a couple of such clauses, that is, non-compete clauses, non-solicitation clauses and severability clauses. The aim of these clauses is to create an ambit of fair competition between the contracting parties by striking a balance between the legitimate interests of both. This approach is key in preserving and strengthening trade in general. Despite the vagueness of the Maltese legal order on the topic, latent trends in the Maltese Courts' reasoning when dealing with commercial matters, seem to indicate that our justice system does appreciate the significance of the above-mentioned clauses which is crucial in today's ever-increasing competitive industries. However, it is important to outline that, in principle, for contractual provisions to be enforceable, these should be reasonable in nature and do not breach public policy. Under Maltese law, public policy is still a rather abstract concept, a matter which is dealt with in this article, in an attempt to provide a non-exhaustive collection of principles which appear to constitute public policy according to the Maltese courts.