Commercial Court finds that Italian distributor breached obligation to transfer product registrations

17/05/11

A Nelson & Co Ltd v Guna SpA [2011] EWHC 1202 (Comm)

On 16 May 2011, HHJ Mackie QC handed down judgment on issues of liability and mitigation in proceedings brought by a manufacturer of homeopathic products ("Nelsons") against its former Italian distributor ("Guna").

Guna had acted as Nelsons' Italian distributor for many years, pursuant to an exclusive distribution agreement. In 2008, the relationship came to an end. Nelsons considered that Guna was obliged on the termination of the agreement between the parties to transfer to Nelsons' new distributor various registrations which were required under Italian law in order to sell Nelsons' products as homeopathic in Italy. Guna disagreed and refused to transfer the registrations.

Nelsons sought a mandatory interim injunction requiring the transfer of the registrations. After a long process, including extended discussions with the relevant Italian authorities, the injunction sought was finally granted in December 2009: click here for a link to a news article about the injunction.

Nelsons pursued its claim to establish its permanent entitlement to control of the registrations and for damages to compensate it for the period when it was unable to sell its products on the Italian market.

Guna maintained its argument that it was not contractually obliged to transfer the registrations and contended that various provisions of the distribution agreement between it and Nelsons were anti-competitive. It also argued that Nelsons had failed to take reasonable steps to mitigate its loss.

In February 2011, the Court ordered that the trial should be split, with issues of liability and factual questions on mitigation being heard ahead of issues relating to the quantum of damages due to Nelsons.

The first stage of the trial was heard in February and March 2011. In the Judgment of 16 May 2011, HHJ Mackie QC has found that:
1. Guna was contractually obliged to transfer the benefit of the Italian registrations to Nelsons' new distributor at the end of the relationship;
2. Guna had not made out its competition case; and
3. Nelsons had not failed to take the steps required to mitigate its loss.

Issues relating to the quantum of damages due to the Claimants will be determined at a further hearing in July 2011.

The judgment is here.