German Federal Supreme Court limits the personal liability of company directors for violations of the Unfair Competition Act

In its decision of 18 June 2014 (Case ref: I ZR 242/12) the Federal Supreme Court reversed its jurisdiction according to which a company director was always already personally liable for the company’s violations of the Unfair Competition Act due to his position and the general responsibility for the business operations.

In the future the question of personal liability will always depend on whether the director was actively involved in the violation of the Unfair Competition Act or whether he was due to special circumstances in a guarantor position which required him to prevent violations of the Unfair Competition Act.

On top of this a personal liability may under the new jurisdiction only be given if the director himself created a business model actually aiming at infringing the Unfair Competition Act.