Tiffany has been ordered to pay hundreds of millions of dollars in damages to Swatch after the collapse of a partnership between the luxury US jewellery company and the Swiss watchmaker.
Tiffany was ordered to pay 402 Swiss francs ($449 million) to Swatch by the Netherlands Arbitration Institute (NAI), which issued its judgement on Sunday in a lawsuit filed by Swatch Group against Tiffany.
The NAI also dismissed a counterclaim filed by Tiffany against Swatch.
Swatch terminated a collaboration with Tiffany in September 2011, claiming breach of contract, and sued three months later. Tiffany filed its counterclaim in March 2012. Under the partnership Swatch was supposed to develop and market watches under the Tiffany brand name.
Tiffany is “shocked and extremely disappointed with the decision,” said Michael J Kowalski, Chairman and Chief Executive of the company.
He said the company had “sufficient financial resources” to pay the full amount, but said it was reviewing its legal options.
“We firmly believe the panel’s ruling is not supported by the facts of this case or the various agreements between the Swatch parties and the Tiffany parties,” Kowalski said.
One of the three members of the arbitral panel issued a dissenting opinion stating that the claims of the Swatch parties should have been dismissed.
The amount awarded reflects approximately 8.8 per cent of the amount claimed by the Swatch. Tiffany was also ordered to pay two-thirds of the costs of the arbitration.
Tiffany believes the charges associated with the award will reduce earnings in its current fiscal year, which ends January 31.