Fonterra fined $183m over contamination scandal

Fonterra has been ordered to pay 105 million euros (NZ$183 million) in damages to French food giant Danone as a result of the Fonterra food safety failures of 2013.

Danone had sued Fonterra as a result of the whey protein concentrate contamination scandal in 2013, when Fonterra quarantined several batches over fears it was contaminated with clostridium bacteria. It later turned out to be a false alarm.

Danone launched a legal suit in New Zealand and arbitration proceedings in Singapore, seeking restoration for the costs of recalling the whey protein concentrate.

At the time, Fonterra said it expected any court action would show the Kiwi firm didn't have any liability in the contract, and it recognised a contingent liability of just $14m over the recall.

In 2014, New Zealand's Court of Appeal upheld an earlier decision that the Singapore arbitration proceedings should be the first avenue, as provided for in the contract, but refused to permanently stay the legal suit.

The result of the Singapore proceedings was released on Friday, and Danone says it "welcomes" the decision.

"Danone welcomes this arbitration decision as a guarantee that the lessons from the crisis will not be forgotten," the company said in a media statement.

"Danone considers that this arbitration underscores the merit of its legal actions against Fonterra, including to champion the highest standards of food safety across the industry.

"In April 2014, Fonterra had already been fined by judgement of the Wellington District Court for having breached several provisions of the New Zealand food safety regulations."

NZN / Newshub.