Shopee Singapore v. Lim Teck Yong: Enforceability of Restraint of Trade Clauses in Employment Contract
Shopee Singapore Private Limited sought an interim injunction against its former employee, Lim Teck Yong, to prevent him from working for ByteDance, alleging a breach of restrictive covenants in his employment contract. The High Court of Singapore, General Division, presided over by Justice Kwek Mean Luck, dismissed Shopee's application, finding that Shopee failed to demonstrate a serious question to be tried regarding the validity and breach of the non-competition and non-solicitation clauses. The court also found that the balance of convenience did not favor granting the injunction.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Application dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Shopee seeks to restrain ex-employee Lim from joining ByteDance, alleging breach of restrictive covenants. The court dismissed Shopee's application for interim injunction.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Shopee Singapore Private Limited | Claimant | Corporation | Application dismissed | Lost | |
| Lim Teck Yong | Defendant | Individual | Application dismissed | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Kwek Mean Luck | Judge | Yes |
4. Counsels
4. Facts
- Lim was employed by Shopee from 2015 to 2023.
- Lim held various senior positions at Shopee, including Head of Regional Operations and Executive Director.
- Lim resigned from Shopee in May 2023 and served his notice period until August 31, 2023.
- Lim joined ByteDance on September 11, 2023, as the Leader for TikTok Shop Governance and Experience.
- Shopee sought an interim injunction to restrain Lim from working for ByteDance, alleging a breach of restrictive covenants.
- The restrictive covenants included a non-competition restriction and non-solicitation restrictions.
- Lim argued that his role at ByteDance was different from his role at Shopee and that the restrictive covenants were unenforceable.
5. Formal Citations
- Shopee Singapore Pte Ltd v Lim Teck Yong, , [2024] SGHC 29
- Shopee Singapore Private Limited v Lim Teck Yong, 814 of 2023, Originating Claim No 814 of 2023
- Shopee Singapore Private Limited v Lim Teck Yong, 3619 of 2023, Summons No 3619 of 2023
6. Timeline
| Date | Event |
|---|---|
| Lim Teck Yong employed by Shopee | |
| Restrictive Covenants Agreement signed | |
| Lim resigned from Shopee | |
| Lim's employment with Shopee terminated | |
| Lim commenced employment with ByteDance | |
| Shopee's solicitors sent a letter to Lim | |
| Lim's solicitors replied to Shopee's letter | |
| Originating Claim filed | |
| Judgment reserved | |
| Judgment issued |
7. Legal Issues
- Enforceability of Restraint of Trade Clauses
- Outcome: The court found that Shopee failed to demonstrate a serious question to be tried regarding the validity and enforceability of the non-competition restriction.
- Category: Substantive
- Sub-Issues:
- Protection of legitimate proprietary interest
- Reasonableness of geographical area of restraint
- Reasonableness of activity restrained
- Reasonableness of duration of restraint
- Related Cases:
- [2008] 1 SLR(R) 663
- [2012] 4 SLR 308
- Breach of Contract
- Outcome: The court found that Shopee failed to demonstrate a serious question to be tried regarding whether Lim breached the non-competition and non-solicitation restrictions.
- Category: Substantive
- Sub-Issues:
- Breach of non-competition restriction
- Breach of non-solicitation restriction
- Breach of confidentiality agreement
- Interlocutory Injunction
- Outcome: The court dismissed Shopee's application for an interlocutory injunction, finding that the balance of convenience did not favor granting the injunction.
- Category: Procedural
- Sub-Issues:
- Application of American Cyanamid test
- Balance of convenience
- Adequacy of damages
- Related Cases:
- [1975] AC 396
- [2017] 2 SLR 997
8. Remedies Sought
- Interim Injunction
- Declaration that the restrictive covenants are valid and enforceable
- Damages to be assessed
9. Cause of Actions
- Breach of Contract
- Breach of Restrictive Covenant
10. Practice Areas
- Commercial Litigation
- Employment Litigation
11. Industries
- E-commerce
- Technology
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Reed Exhibitions Pte Ltd v Khoo Yak Chuan Thomas | Court of Appeal | Yes | [1995] 3 SLR(R) 383 | Singapore | Cited for the principle that the American Cyanamid test should be applied when considering an interlocutory injunction to enforce a restraint of trade covenant. |
| American Cyanamid Co v Ethicon Ltd | House of Lords | Yes | [1975] AC 396 | England and Wales | Cited for the principles to be applied when considering the grant of an interlocutory injunction. |
| RGA Holdings International Inc v Loh Choon Phing Robin | Court of Appeal | Yes | [2017] 2 SLR 997 | Singapore | Characterized the American Cyanamid test and held that the test does not apply to an application for an interim prohibitory injunction where the respondent is about to breach, or has already breached, a negative covenant in a contract. |
| Re Fineplas Holdings Pte Ltd (formerly known as Tasinder Pte Ltd) | High Court | Yes | [2001] 1 SLR(R) 192 | Singapore | Cited for the principle that if damages would be an adequate remedy and the respondent is in a financial position to pay them, an injunction should normally not be granted. |
| Leong Quee Ching Karen v Lim Soon Huat | High Court | Yes | [2023] SGHC 359 | Singapore | Cited for the principle that if damages would not be an adequate remedy, or if the court is doubtful about the adequacy of damages, the court considers where the balance of convenience lies. |
| Maldives Airports Co Ltd and another v GMR Malé International Airport Pte Ltd | Court of Appeal | Yes | [2013] 2 SLR 449 | Singapore | Cited for the principle that the court should take whichever course appears to carry the lower risk of injustice if that course should ultimately turn out to have been the “wrong” course. |
| Man Financial (S) Pte Ltd (formerly known as E D & F Man International (S) Pte Ltd) v Wong Bark Chuan David | Court of Appeal | Yes | [2008] 1 SLR(R) 663 | Singapore | Cited for the two-stage test for determining whether a restrictive covenant in restraint of trade is enforceable and that an employer can have legitimate proprietary interests in restraining an employee from misusing any trade secrets, protecting the special trade connections established by the employee with the employer’s customers, and maintaining a stable, trained work force. |
| Smile Inc Dental Surgeons Pte Ltd v Lui Andrew Stewart | Court of Appeal | Yes | [2012] 4 SLR 308 | Singapore | Cited for the principle that the courts adopt a stricter approach when considering restrictive covenants in the context of a contract of employment as compared to the situation where such a clause is contained in a contract for the sale of a business. |
| Goh Seng Heng v RSP Investments and others and another matter | High Court | Yes | [2017] 3 SLR 657 | Singapore | Cited for the requirements that need to be satisfied for the grant of springboard injunctions. |
| Buckman Laboratories (Asia) Pte Ltd v Lee Wei Hoong | High Court | Yes | [1999] 1 SLR(R) 205 | Singapore | Cited for the principle that the court in determining whether there is a “serious question to be tried” should not attempt to resolve conflicts of evidence on affidavit pertaining to facts on which the claims of either party may ultimately depend, as these should be properly dealt with at trial. |
| Jardine Lloyd Thompson Pte Ltd v Howden Insurance Brokers (S) Pte Ltd and others | Court of Appeal | Yes | [2015] 5 SLR 258 | Singapore | Cited for the principle that the court in determining whether there is a “serious question to be tried” should not attempt to resolve conflicts of evidence on affidavit pertaining to facts on which the claims of either party may ultimately depend, as these should be properly dealt with at trial. |
| Vefa Ibrahim Araci v Kieren Fallon | England and Wales Court of Appeal | Yes | [2011] EWCA Civ 668 | England and Wales | Cited as an English case which concerned an interim prohibitory injunction which was granted to restrain a jockey from acting in breach of a negative covenant in his contract with a racehorse owner not to ride a rival owner’s horse. |
| HT SRL v Wee Shuo Woon | High Court | Yes | [2019] 5 SLR 245 | Singapore | Cited for the principle that it is doubtful whether there is any legitimate proprietary interest covered under the Non-Competition Restriction. |
| Herbert Morris, Limited v Saxelby | House of Lords | Yes | [1916] 1 AC 688 | England and Wales | Cited for the principle that general knowhow appears to be more akin to the “general character and principle” type of confidential information which could not be a trade secret meriting protection. |
| Lek Gwee Noi v Humming Flowers & Gifts Pte Ltd | High Court | Yes | [2014] 3 SLR 27 | Singapore | Cited as a High Court decision that critiqued the ruling in Man Financial. |
| PH Hydraulics & Engineering Pte Ltd v Intrepid Offshore Construction Pte Ltd and another | High Court | Yes | [2012] 4 SLR 36 | Singapore | Cited for the principle that there existed such a form of proprietary interest on the facts as the marine winch industry is a relatively small and specialised one. |
| 3D Networks Singapore Pte Ltd v Voon South Shiong and another | High Court | Yes | [2023] 4 SLR 396 | Singapore | Cited for the principle that the maintenance of a stable, trained workforce is a legitimate proprietary interest that the employer is entitled to protect via a non-solicitation clause. |
| Tan Kok Yong Steve v Itochu Singapore Pte Ltd | High Court | Yes | [2018] SGHC 85 | Singapore | Cited for the principle that there is a difference between an ex-employee who has threatened to breach the restrictive covenant and one who has not. |
| Heller Factoring (Singapore) Ltd v Ng Tong Yang | High Court | Yes | [1993] 1 SLR(R) 495 | Singapore | Cited for the principle that an injunction would be warranted so as to better enforce it given the ex-employee’s proclivity for breaching the restrictive covenant. |
| QBE Management Services (UK) Ltd v Dymoke and others | Employment Appeal Tribunal | Yes | [2012] IRLR 458 | United Kingdom | Cited for the principle that the springboard injunction would only be correctly sought against the party that obtained a head start from the use of the confidential information. |
| Fellowes & Son v Fisher | Court of Appeal | Yes | [1976] QB 122 | England and Wales | Cited for the principle that if the clause is invalid, and yet an injunction is granted, it would be difficult to assess the damages recoverable by the defendant upon the undertaking in damages. |
| Hi-P International Ltd v Tan Chai Hau and others | High Court | Yes | [2020] SGHC 128 | Singapore | Cited for the principle that the loss of customer connections and goodwill, and disruptions to Shopee’s workforce have been recognised as difficult or potentially impossible to compensate in damages. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Restrictive Covenant
- Non-Competition Restriction
- Non-Solicitation Restriction
- Confidential Information
- Interlocutory Injunction
- Springboard Injunction
- Legitimate Proprietary Interest
- Balance of Convenience
- American Cyanamid Test
- Termination Date
- Competitor
- Restricted Territories
15.2 Keywords
- Shopee
- Lim Teck Yong
- ByteDance
- TikTok
- Restrictive Covenant
- Injunction
- Employment Law
- Singapore
- High Court
- Breach of Contract
17. Areas of Law
16. Subjects
- Employment Contracts
- Restrictive Covenants
- Interlocutory Injunctions
- Restraint of Trade