Zong Qinghou

Wahaha-Danone talks hit by court ruling

PUBLISHED : Tuesday, 15 July, 2008, 12:00am
UPDATED : Tuesday, 15 July, 2008, 12:00am


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Signalling the end of a short-lived truce, Wahaha Group says negotiations to settle disputes with estranged joint-venture partner Groupe Danone have almost collapsed after a Swedish court ruled in favour of the Hangzhou-based beverage company.

Wahaha founder and chairman Zong Qinghou said by phone yesterday that the ruling had boosted the company's confidence and it would resort to legal judgments to resolve trademark disputes.

An arbitration tribunal in Stockholm last Friday rejected Danone's requests for interim measures to prevent Wahaha and Mr Zong from increasing production capacity at firms outside of their ventures or setting up new ones, according to a statement released by Wahaha.

The panel also rejected Danone's demand that any goods made by Wahaha on its own must be sold through the joint ventures, but it granted Danone the right to access all premises at all of the ventures, the statement said. The requests were filed by Danone in October last year.

'As both sides have almost ceased talks, we will wait for the court to resolve the disputes,' said Mr Zong, adding that Danone initiated the arbitration procedure in Stockholm.

A Danone spokeswoman declined to comment on whether Danone initiated the court case, but said the talks were ongoing as far as she knew.

In a statement released by Danone yesterday, the French food and beverage giant said the reason for the panel's decision was that 'it declines to make any early judgments on disputes in the case'.

Danone said it welcomed the ruling, but added the interim measures would be reviewed again when the court made a final ruling on the arbitration procedures it filed in May last year.

Since the disputes began in April last year, Danone has sued Wahaha and Mr Zong in courts around the world including Stockholm and California. Wahaha, on the other hand, filed cases in mainland courts.

Danone accused Wahaha of setting up parallel operations outside their joint ventures formed in 1996 to sell Wahaha-branded products such as soft drinks and bottled water. The French firm owns 51 per cent of the ventures.

Mr Zong in May said Wahaha was splitting with Danone while the two sides negotiated the terms and pricing of the French firm's departure.

Mr Zong, who was a delegate to National People's Congress from 2002 to last year, was recently dogged by scandals such as tax evasion and holding a United States green card.