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Tiffany & Co will pay AU$495 million in damages to Swatch Group
Tiffany & Co will pay AU$495 million in damages to Swatch Group

Tiffany ordered to pay $495 million damages claim

Tiffany & Co has been ordered to pay AU$495 million in damages to Swatch Group, following a contractual dispute regarding a terminated watch collaboration.

In addition to paying Swatch CFH402 million, the Netherlands Arbitration Institute also ordered the New York-based jeweller to reimburse the Swiss watchmaker more than $US9 million (AU$10 m) in legal fees. 

The dispute began in September 2011 when Swatch terminated its collaboration with Tiffany over a contract breach. The two companies signed a 20-year agreement in 2007 whereby Swatch would make and sell watches under the Tiffany brand. 

Swatch alleged that Tiffany had displayed “systematic efforts to block and delay the development of the business”, and initially pressed claims against the jeweller for CFH3.8 billion (AU$4.7 b).

Tiffany & Co chairman and CEO, Michael Kowalski
Tiffany & Co chairman and CEO, Michael Kowalski
In March 2012, Tiffany filed a CHF542 million (AU$ 667 m) counterclaim with the court of arbitration, claiming that Swatch had failed to provide appropriate marketing, management and distribution for the brand. 

Commenting on the decision, Tiffany chairman and CEO, Michael Kowalski said, “We were shocked and extremely disappointed with the decision of the majority of the arbitral panel. 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.”

According to multiple media reports, the ruling will not have any short or long-term impact on Tiffany’s business plans, including the manufacturing and distribution of its own branded watches. 

Tiffany is currently reviewing its legal options.  

And in other Swatch news, a fire that caused extensive damage to a Swatch Group building in Switzerland is said to likely cause a delay in production of several weeks. 

Swatch CEO, Nick Hayek
Swatch CEO, Nick Hayek
The fire broke out in the galvanic department of the main building of ETA Manufacture Horlogère where watch parts are treated for protection against rust. While the workshop was completely destroyed, no one was injured and the fire did not spread to other buildings. 

According to Swatch CEO Nick Hayek, the incident was a “relatively minor event” that would primarily affect watchmakers that buy components from ETA. 

“We need to clean all the machines and reorganise, there will be a small delay of three or four weeks to production, maybe a bit more,” Hayek told Reuters

ETA is the world’s largest supplier of watch movements, the internal mechanisms that drive the moving parts of a watch, counting luxury groups such as Richemont, LVMH and Hermes among its clients.

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Friday, 15 November, 2019 05:47am
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