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

The New Zealand Court of Appeal in Auckland today refused a request by Danone to overturn the earlier High Court decision to bring a temporary halt to the French dairy giant’s legal battle with Fonterra.

In July 2014, the New Zealand High Court approved Fonterra’s application for a temporary stay until the completion of arbitration proceedings between the parties in Singapore - triggered when Danone terminated its supply contract with Fonterra.

Dismissing Danone's appeal, Justice White emphasized the temporary nature of the High Court decision.

“Danone’s High Court proceeding has not been struck out or stayed permanently," ​he said.

“It has only been stayed on a temporary basis pending expeditious resolution of the Singapore arbitration.”​

Damages

Danone announced the termination of its supply contract with Fonterra and launched legal action in January 2014, in the wake of the New Zealand dairy exporter's whey protein concentrate (WPC) botulism scare.

In August 2013, Fonterra informed eight customers, including Danone, that three batches of WPC potentially contaminated with botulism-causing Clostridium botulinum had entered the supply chain.

Around 2,000 tonnes of this potentially tainted WPC was supplied to Danone. 

Later tests revealed the contaminant was Clostridium sporogenes - a non-toxic Clostridium strain. This came too late, however, for two Danone businesses.

In New Zealand, Nutricia Australia New Zealand (Nutricia ANZ) pulled 67,000 units of Karicare brand infant formula from shelves.

Dumex meanwhile initiated product recalls in China, Hong Kong, Thailand, Cambodia, Laos, Malaysia and Singapore.

Danone is seeking damages "projected to exceed" ​€630m (US$780m, NZ$1bn), according to today's Court of Appeal judgment.