A Danone spokesperson said the company regrets the decision of the New Zealand court to delay its legal action challenging Fonterra Co-Operative Group’s recall of baby-milk products.
The French company is seeking compensation for costs incurred last year, when it was forced to recall baby-milk products following a food-safety scare associated with dairy products supplied by Fonterra.
Danone, which owns infant formula business Nutricia, launched the legal action against Fonterra after cancelling its supply contract with the dairy co-operative this year.
In a written judgment published on the court’s website, Justice Geoffrey Venning said he believed a continuing international arbitration process should be allowed to finish first, since the parties had previously agreed to such a procedure for legal claims linked to Fonterra supplies.
Danone began the court action in January in the High Court, while at the same time launching proceedings against Fonterra through an international arbitration panel in Singapore. Fonterra has previously denied all wrongdoing.
“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,” Justice Venning said.
Danone said it believes the court decision to stall the New Zealand case for now creates “undue delay” and that it sees “no reason both matters cannot proceed together.” The company said it would consult with its legal team to consider the next steps.
The Wall Street Journal reports that the Paris-based maker of Evian water and Activia yogurt is still battling to win back market share in baby food, after Fonterra warned last August that some of its products might contain clostridium botulinum, which can cause botulism.
“Danone reiterates that this affair illustrated serious failings throughout the Fonterra group of companies in applying the quality standards required in the food industry,” the French group said.
A Fonterra spokesperson said the company welcomed the court’s decision.
