New Zealand judge grants stay in Danone's lawsuit against Fonterra over damages from 2013 botulism scare

Nevin Barich

WELLINGTON, New Zealand , July 18, 2014 (Australian Associated Press) – Fonterra has halted French food company Danone's legal action against it in New Zealand for damages from the 2013 botulism scare.

In a reserved decision released on Friday, Justice Geoffrey Venning granted a stay in the case.

He said the stay order was not in the terms sought by Fonterra.

"There will be an order staying this proceeding until further order of the court, and expressly reserving leave for the Danone plaintiffs to seek to lift the stay," he said.

The judgment said that while Danone had arguable claims against Fonterra they could be pursued in an arbitration process in Singapore.

"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."

Fonterra recalled some of its products in August 2014 after testing showed 38 tonnes of whey protein, which is used to make infant formula, could be contaminated with a botulism-causing bacteria.

But further testing showed the bacteria wasn't present and there was never a health risk.

Danone's New Zealand infant formula unit, Nutricia, posted a 97 per cent drop in profit in 2013 thanks to plunging sales after infant formula was recalled.

The French company terminated its supply agreements with Fonterra. It has estimated the scare cost it 350 million euros ($A524.97 million).

To require Fonterra to respond to the allegations raised would be oppressive to Fonterra, unnecessarily duplicative and contrary to the interests of justice, the judgment said.

AAP pjg

(c) 2014 Australian Associated Press

© 2024 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.