Danone’s tangle in China has taken a fresh twist with the ruling over an arbitration clause in the company’s contract with the former head of its local venture being switched to a different court.
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The French food and beverage giant today (13 December) issued a statement expressing its “concern” over the move.
Danone said that a court in Zhejiang Province will now rule on the legitimacy of an arbitration clause in its contract with Zong Qinghou, the former head of the company’s venture with Chinese firm Wahaha.
A court in Hangzhou had previously been in charge of the case and Danone is worried about the switch.
“We have learned from a report in Caijing Magazine, that the Higher People’s Court of Zhejiang Province has taken over the case concerning confirmation of legitimacy of an arbitration clause contained in Mr. Zong’s service contract,” Danone said.
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By GlobalData“According to this report, a special procedure will be adopted for this case, under which, the presiding judge may render a judgement, after internal review, without an open hearing, and such first-instance judgment will be the final one. We are highly concerned about this.”
The switch marks the latest episode in Danone’s increasingly messy beverage venture in China. Danone joined forces with Wahaha in 1996 and has 51% stake in the original venture, which has turned sour after the French firm accused its partner selling drinks under the Wahaha trademark outside the venture without permission.
In May, Danone filed for arbitration against Wahaha in Sweden in a bid to resolve the dispute.
On Monday (10 December), a court in Hangzhou ruled that the period under which Danone could file its case against Wahaha had lapsed.
Danone has insisted the beverage venture still controls the Wahaha trademark despite the arbitration court ruling in favour of its estranged business partner.
