Taken to arbitration after defaulting on long-term UHT milk purchase agreements, Chinese-owned Pengxin Group was ordered to pay Miraka Milk $5.9 million damages.
Able to process 250 million litres of raw milk each season, Maori-owned Miraka operates dairy plant at Mokai, north of Taupo. In 2013, Miraka teamed up with Pengxin subsidiary Milk New Zealand (Shanghai) Ltd. Shanghai agreed to take minimum quantities of Miraka processed UHT milk each season; Miraka in turn committed to increasing output with costly extensions to production facilities. Their agreement required disputes go to arbitration.
The High Court was told Miraka successfully took Shanghai to arbitration in 2018 after Shanghai failed to take up its required minimum purchases for two consecutive seasons. Terms of the agreement were not made public by the court. The arbitrator awarded damages totalling $5.9 million.
Shanghai’s appeal against this arbitration award was dismissed. Shanghai said damages should be capped at a specified percentage of the agreed price. Both the arbitrator and the High Court assessed damages against prevailing market prices.
Milk New Zealand (Shanghai) Co Ltd v. Miraka Ltd – High Court (23.10.19); Court of Appeal (21.09.20)
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