Legal Framework of Unfair Competition In Jordan: Scope of Application and Legal Protection

• Author: Haitham A. Haloush
• Position: Assistant Professor of Commercial Law at the Hashemite University, Jordan. He holds Ph.D. in Commercial Law from Leeds University, England, College of Law, and LL.M. from Aberdeen University, Scotland, College of Law
• Pages: 49-65

Page 49

I Introduction

As a young democracy and fledgling market economy, Jordan’s government has pursued policies designed to strengthen its economy. The cornerstone of the government’ s long-term economic objectives has been to support economic growth via regional and global integration. Accordingly, Jordan has actively pursued World TradePage 50Organization (WTO) membership.

Unfair competition regime in Jordan proved to be a stumbling block for Jordan’s accession to the WTO. For example, Jordan committed in its accession to the WTO that it would comply fully with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), from the date of accession, without recourse to any transitional period.

Having laws that comply with the WTO''s Agreement is half the story. The second half is the enforcement of these laws. Enforcing an unfair competition regime is capable of increasing confidence among foreign investors and businesses. Enforcement of unfair competition in Jordan is an area where many factors inform policy enforcement which reflects the current status of enforcement of unfair competition in Jordan.

Enforcement of unfair competition is not cheap. It requires appropriation of millions of dollars that would eat up a good portion of the annual budget of Jordan. Any action plan, be it raids, seizures, arrests, perp walks, or education campaigns, to reduce unfair competition is constrained by limited financial resources and cultural and educational gap.

There are political and cultural factors that attribute to the plight of enforcement of unfair competition in Jordan. There is a sentiment for many Jordanians that a religiously based law is necessary barrack against Westernization and the domination of Western culture. There is mistrust among Middle Eastern countries of the West. This mistrust is based on many years of experience especially during colonialism.¹

Having said that, legally speaking, the influence of the Moslem Shari’ a Law on the commercial laws of Jordan is rather limited. This is due to the fact that commercial laws of Jordan have not drew on Al-Majallatu or Majelle which was enacted under the Ottoman empire at the year 1867. The Mejelle was in fact a codification of the rules of Moslem Shari’ a Law as ascertained and developed by the Moslem authorities more than eleven centuries ago. There are four main jurisprudence schools. They are the Hanafi School of Jurisprudence founded by Nu’ man Ibn Thabit Abu Hanifa (699-767 A.D.), the Maliki School of Jurisprudence founded by Malik Ibn Anas (712-769 A.D.), the Shafi’ i School of Jurisprudence founded by Mohammed Ibn Idris El-Shafi’ i (767-820 A.D.), and the Hanbali School of Jurisprudence founded by Ahmed Ibn Hanbal (780-855 A.D.). Of those four schools, the Mejelle drew on the Hanafi School more than the other three schools because that was and still is the most predominant in the Moslem countries.²

Page 51

Little is known about Arab and Islamic law, including Jordanian law. It is rather a realistic approach that businessmen should know about unfair competition law of other countries and that they know about effectiveness, fairness, speed and cost of judicial procedures abroad.3 As far as the author is aware, the issue of unfair competition in Arab countries, including Jordan, has not been researched before from technical and legal standpoints since unfair competition is a newly developed area. This Article represents a first attempt to examine the issues arising in this difficult and important subject. Therefore, this article will examine the suitability of the Jordanian legal system in providing sufficient protection of unfair competition. The article concludes that there are serious obstacles in terms of substantive and procedural protection of unfair competition in Jordan and provides some recommendations in this regard.

In order to examine this issue, this article is divided into two sections. First, the scope of application of unfair competition under the Jordanian law. Second, the legal Protection of unfair competition in Jordan. Finally, the conclusion of the article will relate the finding to each other in a coherent way and suggests practical solutions to some pitfalls of the current law.

Merchants are indoctrinated for competition which is essential and perhaps inevitable in all commercial fields in order to attract customers. However, it has been argued that although every competitor who wins customers from another justifiably damages the business of the losing competitor, that damage is merely damnum absque injuria.⁴ In other words, the justified diminution, injury, even the destruction, of the business of a competitor is not an injury, in the legal sense, and will warrant no relief, because it is the effect of the exercise of an unquestioned right.⁵ Thus, legal framework that allows fair competition to develop and flourish is needed for both traders and customers.⁶ Until the year 2000, there was no specific statute enacted in Jordan that regulates unfair competition. In the year 2000, the Jordanian Unfair Competition Law No. 15 of 2000 (hereinafter referred to as (“JUCL”) was enacted.7

Although the JUCL purports to implement a general legal regime on unfair competition, it includes very little in terms of substantive or procedural protection of unfair competition. The Law deals with the issue of unfair competition in a very genericPage 52way. There is an article discusses broadly the actions constituting unfair competition. Another article describes generally litigation procedures. The remaining few articles discusses trade secrets and intellectual property licensing in a rather generic way. The law includes only 8 articles. In addition to the JUCL, the principal statutory source of protection is implemented through the general rules and principles of civil law, particularly, tort law and injurious acts.

The case law, in this area, is rather non-existent. This reflects, to a large extent, the noticeable absence of litigation in Jordan with regards to unfair competition. For example, trademarks infringement cases which have been dealt with specifically under the Jordanian trademarks Law No. 33 of the year 1999, can be categorized under unfair competition. For some unknown reasons, however, disputants in Jordan are prone to resort to specific laws that address the issue at hand, i.e., trademarks law, rather than unfair competition law. This might be attributed to the educational and cultural gap in the field of unfair competition. In a leading case in trademarks infringement in Jordan, the claimant, a foreign company, filed a lawsuit against another local company, which was engaged in the manufacturing of products which were identical to those of the claimant’s thereby constituting trademark infringement, and impliedly, unfair competition. The claimant requested the seizure of the products and paying compensation according to the provisions of the Jordanian Trademarks Law. After the Court has examined the case, it was proved that the local company sold products bearing trademarks imitating the claimant's trademarks and illegally used the claimant's registered trademark to mislead customers and sold the imitated products to the public with a noticeable difference in price and quality in addition to the different origin of the products. Therefore, the court has decided to charge the infringer company to pay 1,100 Jordanian Dinars (1 Dinar is equivalent to 71 American Cents) as a compensation along with the official fees, expenses, and JD70 as the lawyer's remunerations.⁸ Surprisingly, there was no reference whatsoever to unfair competition law.

II The Scope of Application of Unfair Competition under the Jordanian Law

Competition law in the broad sense comprises two branches: antitrust law which introduces a prohibition of abuse of economic dominance, i.e. the law relating to restrictive practices, monopolies and mergers, and the law of unfair competition whichPage 53relates to a wide range of trade practices, e.g., deceptive advertising, trade marks, trade names and trade secrets protection, counterfeit of non-protected products, concepts and configurations, interference with contractual relationships of all kinds (distribution systems, client or labor relations), disparagement of competitors, etc.⁹ There is a close link between the two parts of competition law. Although they are the object of two different Acts with their own substantive rules and procedures, some scholars argue that restrictive practices can be qualified as acts of unfair competition.¹⁰ However, critical analyses of the inter-relationship between antitrust law and unfair competition law and various forms of unfair trade practices are beyond the limits of this article. So that it was decided not to examine these issues here. This is not because such issues are not valid and important. Rather, it presents legal questions which are fundamentally different from legal questions in the JUCL. However, it might be useful to provide brief analyses of those issues where appropriate.

The concept of unfair competition is at best amorphous; its definition has traditionally been a subject of lengthy debate.¹¹ It is impossible to frame definitions which embrace all unfair practices. There is no limit to human inventiveness in this field. Even if all known unfair practices were specifically defined and prohibited, it would be at once necessary to begin over again.¹²

Broadly speaking, unfair competition refers to the passing-off of one's goods, products or services as the goods, products or services of another competitor. Such practice, which contradicts laws, ultimately results in creating uncertainty with regards to a competitor's goods product or services.¹³

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