Danone Asia Pacific Holdings, the local unit of the French food company, argued in the Court of Appeal it was an injustice for it to have to wait potentially until 2018 for legal action against Fonterra regarding last year's dairy contamination scare, should planned arbitration fail to resolve its issues.

Danone counsel David Goddard, QC, told the Appeal Court in Wellington that should the arbitration scheduled for 2016 in Singapore fail to appease Danone, the company wouldn't be able to pursue any outstanding issues in New Zealand's High Court until 2018. Goddard was arguing against a High Court ruling in July that granted Fonterra's application to stay proceedings during arbitration to avoid overlap and duplication of resources.

In response to questions from the Appeal Court judges, Justices Douglas White, Mark Cooper and Christine French, Goddard said he would agree to continuing the stay on the trial, on the condition pre-trial steps could continue. That would allow Danone to go straight to trial should arbitration fail. If the stay remains in place as is, it would be necessary for Danone to "crank the proceedings up from scratch" should it fail to resolve issues in arbitration, he said.

Responding for Fonterra, counsel Alan Galbraith, QC, said arbitration would deal with all the substantive issues, except for Danone's wish to widen the net of those included in the proceedings in an attempt to avoid limited caps that applied in the supply agreement between Fonterra and Danone.

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