Danone slams NZ High Court for 'undue delay' in Fonterra WPC case

Danone slams NZ High Court for 'undue delay' in Fonterra WPC case

Danone has slammed a New Zealand High Court decision to stall its legal battle to recoup money lost as a result of the Fonterra whey protein concentrate (WPC) botulism scare.

New Zealand High Court judge Justice Geoffrey Venning last week approved Fonterra's request for a temporary stay in the case launched by Danone in January 2014 "to bring all facts to light and to obtain compensation for the harm it has suffered."

Danone claims to have lost sales worth €370m (US$510m, NZ$593m) as a result of the August 2013 WPC botulism alert.

Under the terms of its supply agreement with Fonterra, which Danone terminated in January, arbitration proceedings were simultaneously launched in Singapore.

Approving Fonterra's application for a temporary stay, Venning ordered that the arbitration be completed first.

“Given the substantial degree of factual overlap between the claims in the Singaporean arbitration and these proceedings I consider that it would not be in the interests of justice for both claims to proceed in tandem,” said Venning.

“It is in the interests of cost, convenience and justice that the factual matters be determined first, either in these proceedings or the Singaporean arbitration," the Justice added.

Danone may still pursue its New Zealand High Court if "there are issues not resolved in the arbitration."

"Undue delay"

In a statement sent to DairyReporter.com, Danone questioned why both cases can't continue concurrently. 

“Danone believes this decision creates undue delay in having its separate High Court claims heard and that there is no reason both matters cannot proceed together," said Danone.

“Danone reiterates that this affair illustrates serious failings throughout the Fonterra group of companies in applying the quality standards required in the food industry. Danone will consult with its legal team to consider next steps in relation to the High Court claim.”

DairyReporter.com approached Fonterra for comment, but no response was forthcoming prior to publication.

Fonterra alerted eight customers, including Danone subsidiaries Nutricia Australia New Zealand (Nutricia ANZ) and Dumex, on August 2 2013 that three batches of WPC potentially contaminated with botulism-causing Clostridium botulinum had entered the supply chain.

Tests later revealed that the bacteria found were Clostridium sporogenes - a non-toxic Clostridium strain.

This information came too late, however, for Nutricia ANZ and Dumex, who, without proof their products were tainted, pulled thousands of units of infant formula from shelves in New Zealand, Cambodia, Thailand, Hong Kong, China, Malaysia, and Singapore.

Fonterra, which vowed previously to "vigorously defend any proceedings", has budgeted for a payout of just NZ$11m (US$9.5m, €7m) to Danone. This figure, Fonterra claims, represents "the maximum contractual liability to Danone."

Related News

(Image: Fonterra)

Job cuts proposed at botulism scare impacted Fonterra Canpac plant

If Danone sells Nutricia and buys Mead, it will become the world's 2nd biggest formula player

Danone sets its sights on becoming number one in milk formula as it is rumoured to be selling its medical nutrition business

NZ infant formula deals 'key to restoring...trust': Nutricia ANZ

New Zealand infant formula acquisitions 'key to restoring...trust': Nutricia ANZ

Asia infant formula sales are "now back to pre-crisis levels," says Danone.

Danone Q3 results 'buoyed' by Asian infant formula recovery

China implemented the temporary ban in the midst of the 2013 Fonterra botulism scare, which was found to be a false alarm.

China lifts 2013 ban on Fonterra infant formula ingredients

Danone loses bid to restart stalled NZ$1bn Fonterra WPC damages suit

Danone loses bid to restart stalled NZ$1bn Fonterra WPC damages suit

Danone to sue Fonterra over WPC botulism recalls

Danone to sue Fonterra over WPC botulism recalls

Fonterra issued the alert over concerns three batches of one of its whey protein concentrate products is contaminated with Clostridium Botulinum bacteria.

Fonterra issues botulism warning to whey protein concentrate customers

Abbott making 'progress' repairing Fonterra botulism scare damage

Abbott making 'progress' repairing Fonterra botulism scare damage

Submit a comment

Your comment has been saved

Post a comment

Please note that any information that you supply is protected by our Privacy and Cookie Policy. Access to all documents and request for further information are available to all users at no costs, In order to provide you with this free service, William Reed Business Media SAS does share your information with companies that have content on this site. When you access a document or request further information from this site, your information maybe shared with the owners of that document or information.