Fonterra is in a trading halt pending the outcome of arbitration with French food giant Danone, which chased the New Zealand co-op for compensation in the wake of 2013's botulism scare.

Fonterra said today it had requested an immediate trading halt of its securities on the NZX and ASX to give the co-operative time to consider the outcome of its arbitration with French food group Danone regarding Fonterra's 2013 whey protein concentrate precautionary recall.

Fonterra has been advised that it will receive the arbitration tribunal's decision today.

"The decision document is expected to be both lengthy and complex and neither party has been given advance notice of the tribunal's findings. Fonterra will not be in a position to immediately assess any financial implications and advise the market," Fonterra said in a statement.


Fonterra chief executive Theo Spierings said the co-operative expected to make a market announcement in relation to the Danone arbitration decision "as soon as possible" after the decision is received.

"Fonterra remains in a strong financial position and any damages award will not affect our ability to operate. We will share further details with the market, our farmers and staff as soon as practical," he said.

Fonterra, in August 2013, said products used in infant formula and sports drinks might contain botulism. The news made headlines around the world but it later turned out to be a false alarm.

In the aftermath, Danone cancelled supply agreements with Fonterra and launched a $1 billion lawsuit against the dairy co-op.

Danone alleged Fonterra breached the Fair Trading Act and wanted damages expected to exceed €630 million.

But that High Court action was deferred at Fonterra's request so arbitration in Singapore could occur first.

Arbitration is similar to a civil court contest, but its confidential nature is attractive to parties that don't want a dispute aired in public.

In Fonterra's last annual report, the company said: "Uncertainty exists regarding the outcome of the proceedings. Fonterra has provided $11 million in respect of the Danone claims, which represents the maximum contractual liability to Danone."


Fonterra's units last traded on the NZX at $6.36 per unit, having gained 45c or 7.6 per cent over the last 12 months.