Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


High Court rules Fonterra, Danone arbitration to come first

Singapore arbitration the place for Fonterra, Danone dispute, judge rules

By Paul McBeth

July 18 (BusinessDesk) - The High Court has agreed with Fonterra Cooperative Group that its dispute with French food group Danone should be dealt with in arbitration, but won't grant a permanent stay on legal proceedings.

In the High Court in Auckland, Justice Geoffrey Venning granted Fonterra's application to stay proceedings brought against the New Zealand dairy firm by Danone, while "expressly reserving leave for the Danone plaintiffs to seek to lift the stay in the event Fonterra delays the arbitration process," according to a judgment delivered yesterday.

Justice Venning said the substantial overlap between the claims in the New Zealand courts and the Singapore arbitration meant it "would not be in the interests of justice for both claims to proceed in tandem" and would be "oppressive" to Fonterra due to the duplication of resources and the potential for inconsistent findings in the separate hearings.

"In my view the arbitration should go first because the parties agreed the arbitration process was to apply to claims arising out of the supply of product by Fonterra to Danone AP," the judgment said.

The judge weighed up the potential for delay in the arbitration process, because it would likely be at least two years before completion, noting the financial consequences of a protracted hearing could be addressed by an award of a realistic interest rate because the claim is for monetary compensation. Further, if Fonterra held up proceedings, Danone could seek to lift the stay, he said.

Danone is seeking damages for the costs of recall, loss of profits, and loss of business and reputation, alleging lost sales of 350 million euros and projecting cost impacts of 280 million euros, the judgment said.

Last August, Fonterra quarantined several batches of whey protein concentrate amid fears it was contaminated with a potentially dangerous form of the clostridium bacteria. The whey protein was ultimately cleared as a false alarm. Fonterra cut deals with seven of the eight customers affected and recognised a contingent liability of just $14 million for the recall in its accounts.

Fonterra claimed the New Zealand court proceedings were a "contrivance brought to embarrass FCGL (Fonterra Cooperative Group Ltd) and to seek to evade the negotiated limitations on liability contained within the supply agreement," the judgment said.

Danone and Fonterra's supply agreement included a provision limiting Fonterra's liability to A$10 million per claim or series of claims, with total liability in any one year capped at A$30 million.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Housing: Affordability Drops 14%, Driven By Auckland Prices

Housing affordability across New Zealand fell 14 percent in the year ending November 2014, with Auckland’s lack of affordability set to reach levels it hit during the height of the global financial crisis, according to the latest Massey University Home Affordability Report More>>

ALSO:

The Dry: Fonterra Drops Forecast Milk Volumes By 3.3 Percent

Fonterra Cooperative Group, the worlds largest dairy exporter, reduced its milk volume forecast for the 2014-2015 season by 3.3 per cent due to the impact of dry weather on production in recent weeks. More>>

ALSO:

Strike: Lyttelton Port Workers Vote To Escalate Dispute

Members of the Rail and Maritime Transport Union (RMTU) at Lyttelton Port today voted to escalate their industrial action. Around 200 RMTU members have been operating an overtime ban since 17 December and today they endorsed a series of full withdrawals of labour at the port. More>>

ALSO:

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news