Danone is suing Fonterra for $500 million, alleging it twice breached the Fair Trading Act, made a negligent misstatement, and had product liability in the whey protein contamination crisis.
Fonterra applied to the High Court for a stay in the case, which Justice Venning has granted.
However, the order is temporary and the case can continue if there are still matters to be resolved after the arbitration.
Venning ruled Danone can apply to lift the stay if Fonterra delays the arbitration process.
He considered Danone’s claims in the case here could be pursued in the arbitration, and given the substantial degree of factual overlap between the two proceedings it would not be in the interests of justice for both to be heard at the same time.
“If the two were to proceed simultaneously there is a real risk of duplication in resources by the parties and inconsistent findings between the two.
“That would be both oppressive to FCGL (Fonterra) and might, in the end, delay justice if differences in factual or legal findings were to form the basis of any subsequent appeal.
“Whether or not the Singaporean arbitration ultimately determines all the issues between the Danone and Fonterra interests it will at the very least clarify the landscape for the remaining issues.
“I am satisfied that this is one of those rare and compelling cases where the circumstances require a stay,” he said.
Fonterra had submitted the High Court case was a contrivance brought to embarrass it and to evade the limits set in the supply agreement. That agreement limited any single claim to $10m and set a maximum in claims of $30m a year.
Danone said its claims were genuine and it had a right to justice.
Venning ruled Danone’s claims were not frivolous or vexatious, did not trifle with the court process, and were not improper.
While Fonterra did not go so far as to expressly say the case was not brought in good faith, that was the tenor of its submission.
He found Danone’s claim was bona fide.
