A mainland court rejected an appeal by French food giant Groupe Danone against an arbitration ruling that favoured its estranged partner Hangzhou Wahaha Group.
Wahaha said the Hangzhou intermediate court ruling was an important victory in the high-profile battle against Paris-based Danone over who has rights to the Wahaha brand on the mainland.
Danone said it would 'report' to superior judicial authorities on the mainland with respect to the ruling.
The legal fight now moves forward to Stockholm, the arbitration destination listed in the companies' joint-venture contract signed 12 years ago for what is expected to be a key decision on the dispute.
Earlier this year, Danone appealed to the Hangzhou intermediate court against a ruling last year by the Hangzhou arbitration commission. That decision granted the Wahaha brand to the Chinese side.
The French firm said the court had failed to conduct a substantive review of the case.
'Danone will continue to pursue all legal options to protect its contractual rights and financial interests,' the company said.
A Wahaha spokesman said it was looking forward to the ruling of the Arbitration Institute of Stockholm and believed both domestic and overseas courts would give fair judgments.
Since the disputes began in April last year, Danone has sued Wahaha and its chairman Zong Qinghou in courts around the world including Stockholm and California. Wahaha, on the other hand, has filed cases in mainland courts.
Danone accused Wahaha of setting up parallel operations outside a total of 39 joint ventures to sell Wahaha-branded products such as soft drinks and bottled water. The French firm owns 51 per cent of the ventures and claims the number of non-joint ventures to be 77.
In December last year, both sides returned to peace talks but new lawsuits resurfaced when they disagreed on the price for Danone to exit the joint ventures.
Both sides agree the ruling in Stockholm scheduled for January next year will be the most important one and Danone's lawyer Peter Yuen Po-kwong estimates that damages awarded could be in billions of euros.
Wahaha is also suing PricewaterhouseCoopers, which filed auditing reports for the joint ventures.