Court affirms Del Monte’s US$29M arbitration win against Costa Rican pineapple grower

April 24 , 2019

The Eleventh Circuit Court of Appeals has upheld a US$29.3 million award issued to Monaco-based Del Monte International following a dispute with Costa Rican pineapple producer Inprotsa. 

The decision relates to the previous ruling that Inprotsa had breached an agreement with Del Monte by selling pineapples grown with Del Monte seeds after their contract ended.

The contract, which spanned more than a decade, involved Inprotsa obtaining bulk lots of MD-2 sweet-pineapple seeds from Del Monte. In return, Inprotsa grew MD-2 crops and supplied the resulting fruit to Del Monte exclusively. 

Inprotsa’s revenue increased exponentially over the course of the deal, as the grower sold more than US$230 million worth of product to Del Monte, according to the latter company. 

But when the arrangement was terminated in 2013, Del Monte commenced arbitration, accusing Inprotsa of ditching its contractual obligation to return or destroy accumulated inventory, and to refrain from selling MD-2 pineapples to Del Monte competitors.

Inprotsa argued in the arbitration that Del Monte had fraudulently roped it into the deal by representing that Del Monte was the exclusive producer of the MD-2 variety, when in reality internal memos dating back to 1993 acknowledged the pineapple was not proprietary.

The arbitration yielded a US$29 million award against Inprotsa in 2016, which the grower tried but failed to have overturned in the Southern District of Florida. Though the arbitration was in Miami, it was covered under multinational arbitration law due to the parties being overseas entities. 

Inprotsa had argued before the court in January that its initial challenge to the award was improperly removed from state court to the federal court where it was struck down. 

According to Del Monte’s attorney Brian Stack, the appeal presented gripes about how the arbitrators evaluated the underlying contract, and tries to stretch those grievances into an allegation that the arbitrators grossly exceeded their authority. CourtHouse News reported.

The MD-2 variety was developed by the Pineapple Research Institute of Hawaii, an agricultural research organization that at one point was run jointly by Del Monte, the Dole Fruit Company, and the Maui Pineapple Company, according to court documents.

However, the documents say that Dole withdrew from the Institute before the MD-2 was created, and Maui played little to no role in developing the variety. Instead, they say, the MD-2’s commercial development was driven largely, if not solely, by Del Monte.

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