VERDICT:
In the case of New York jeweler, Tiffany &
Co. versus Swiss watch company, Swatch, a Dutch arbitration court has ruled in
favour of the Swiss, ordering Tiffany to pay $449 million in damages to Swatch
on December 21, 2013.
BRIEF
OF FACTS:
Swatch and Tiffany entered into a joint
venture to develop Tiffany-branded watches. The joint venture, which was
supposed to last for 20 years and give Tiffany a better foothold in the watch
world, began to fall apart in 2011 when Swatch cancelled its co-operation with
the jeweler. Swatch alleged Tiffany of breaching terms of contract by delaying
introduction of their joint products. Tiffany countersued the Swiss watch
company for not getting watches onto the shelves of other retailers and in 2012
the case went into arbitration in the Netherlands, where the joint venture had
been established.
Trouble began brewing in the year 2009.
Tiffany wanted a company with watch expertise to take over its still-new
luxury-watch business that made up a small percentage of its annual overall
take and Swatch wanted to have a high-end jewellery-watch brand as part of its
large portfolio of timepieces.
CONCLUSION:
The $449 million that Swatch was awarded is ‘only
a fraction of the total amount they wanted in damages.’ The informant had
originally asked for $4.2 billion.
Tiffany is to pay the amount awarded as
penalty plus a statutory compound interest from June 30, 2012 up to the period
of payment. The amount awarded reflects approximately 8.8% amount claimed by
the informant. The defendant is required to pay two-thirds of the costs of
arbitration. Also, it is required to pay two-thirds of the reasonable
legal-fees, expenses and other costs incurred by Swatch for arbitration purpose
aggregating to approximately $8.8 million.
The award will help offset the $1 billion
Swatch paid to acquire Harry Winston earlier this year when it decided that
instead of partnering with a luxury jewellery maker, it might be better to just
have one in the brand stable.
