A Dutch appeals court has sided with Swatch Group in its ongoing battle with Tiffany & Co. The Court of Appeal of Amsterdam ruled on Tuesday that Swatch Group deserves to be compensated in connection a $405 million fight with the New York-based jewelry company over a failed deal to produce and market watches.
The two have been battling since 2011 when Swatch alleged that Tiffany & Co. “systematically block[ed] and delay[ed] development of the business,” a licensing deal of sorts according to which Swatch was enlisted to produce and market watches under the Tiffany name. The arrangement, which was slated to last for 20 years and give Tiffany a significant bigger presence in the luxury watch market, never turned into big business for either company.
As noted by Forbes’ Ariel Adams, “By 2010, things started to go bad. Tiffany was supposed to promote the watches by displaying them prominently in their stores and spending marketing dollars to advertise them. According to the Swatch Group they did very little or none of these things.”
After terminating the parties’ deal, Swatch Group filed suit against Tiffany in 2011, asserting an assortment of breach of contract claims and seeking full compensation – 3.8 billion Swiss francs (just over $3.8 billion) – for all losses in connection with Tiffany’s “past and continuing breaches of its obligation.” Tiffany responded with a breach of contract countersuit for over $590 million dollars, arguing that Swatch was unwilling to honor the terms of their agreement.
Swatch and Tiffany attempted to handle the matter by way of arbitration and in December 2013, Dutch arbitrators decided that Tiffany owed Swatch 402 million Swiss francs ($404.5 million) in damages – largely centering on the loss of future profits – for failing to deliver on its end of the bargain.
Thereafter, a Dutch court overturned the panel's ruling, which Swatch then appealed. (Note: While arbitration awards are traditionally final, Dutch law provides for limited grounds on which arbitration awards may be set aside, Tiffany said in the regulatory statement in 2015). And as of this week, the Court of Appeal of Amsterdam reinstated the original $404.5 million damages sum awarded to Swatch by the arbitration board.
Swatch responded to the decision in a statement on Tuesday, saying: "Swatch Group was convinced that the arbitration award of December 21, 2013 was issued correctly and contained no formal error. This was confirmed by the judgement of the Court of Appeal of Amsterdam today.”
But the fight is not necessary over just yet. According to a statement from Tiffany, "We have the right to appeal the Appellate Court's decision to the Supreme Court of the Netherlands and are evaluating that option.”