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Dutch Court Negates Arbitration Award in Tiffany & Co. Dispute with Swatch

Monday, March, 9, 2015


The failed partnership between Tiffany & Co. and Swiss watchmaker Swatch continues to yield unwanted fruit. A Dutch court recently set aside an arbitration award in Swatch’s favor, furthering a dispute that has been ongoing for more than four years.

 

Tiffany & Co. and Swatch entered into a partnership in 2007 to design, manufacture, and market watches branded with the Tiffany trademark. Various disagreements and practical problems doomed the partnership, which never resulted in anything of note, and which was dissolved by Tiffany and Co. in 2011.

 

Swatch considered the termination of the partnership as a breach of contract, claiming that delays on Tiffany’s end doomed the venture despite Swatch living up to all its obligations. For its part, Tiffany blamed Swatch’s inability to get the watches into retail outlets, claiming the distribution problems were entirely Swatch’s fault. Swatch took the matter to arbitration in the Netherlands. Tiffany filed counter-claims.

 

In December 2013, the arbitration panel awarded Swatch $449.5 million in damages, finding that delays stemming from Tiffany’s design and consulting on the project prevented Swatch from forming effective retail sales channels for the watches. This was adjusted down to 402 million Swiss francs, plus expenses related to the arbitration. Tiffany petitioned the courts, who are empowered to set aside arbitration awards.

 

Swatch has already declared its intention of appealing the decision. The company claims the decision cannot be enforced until the Supreme Court of the Netherlands rules on the issue.