Tiffany ordered to pay Swatch damages

Tiffany & Co said a Dutch arbitration court ruled that it must pay Swatch Group 402 million Swiss francs (HK$3.47 billion) in damages over their failed joint venture to produce and market watches, and the New York-based jeweller slashed its profit outlook for the year.

Swatch, the world's largest watchmaker, and Tiffany, a New York-based jeweller, had struck an agreement in 2007 to develop watches under the Tiffany brand together.

The arrangement, intended to last for 20 years and give Tiffany a much bigger place in the luxury watch market, never turned into big business for either company, and the deal ended in acrimony in 2011.

The companies sued one another in arbitration court in the Netherlands, where their Tiffany Watch joint venture was domiciled. The case went to arbitration last year.

Michael Kowalski, the chief executive of the luxury retailer, said in a statement that he was "shocked and extremely disappointed" with the court ruling, issued on December 20, and that the company was reviewing its options.

In their lawsuits, Swatch Group had faulted Tiffany for "systematic efforts to block and delay development of the business", while Tiffany had said that Swatch did not honour the terms of the joint agreement, including the provision of adequate distribution.