Wednesday, January 8, 2014
Christmas at Tiffany's? Not so much.
Arbitrators recently ordered Tiffany & Co. to pay Swatch Group some $449 million in compensation over a contractual dispute administered by the Netherlands Arbitration Institute. The award also required Tiffany to to pay interest, the Swiss watchmaker’s legal fees of $8.8 million, and two-thirds of the cost of arbitration. The penalty reportedly exceeds Tiffany's annual earnings last year. A three-member Dutch arbitration panel ruled in Swatch's favor with one dissenting opinion. The companies formed an alliance in 2007 to develop and distribute of Tiffany brand watches. Despite a twenty-year agreement under which Swatch would create a new company, Tiffany Watch Co. Ltd., to make and sell watches under the Tiffany brand, things ended badly in 2011. Swatch alleged breach of contract, claiming Tiffany was moving too slowly to launch and promote the products. Tiffany filed a counterclaim, blaming Swatch for not getting watches onto the shelves of other retailers. Tiffany's counterclaim was dismissed. See stories here-- http://on.wsj.com/1bRee8W and http://wapo.st/JHwbjQ