French food company Danone claims it will be denied justice if it is not allowed to sue Fonterra in the High Court over last year's botulism scare.
The manufacturer is seeking damages from Fonterra after the co-operative had to recall products from shelves worldwide because of fears there was botulism in whey protein.
Fonterra is attempting to stop the case, saying the High Court should not be able to hear it while a previously agreed arbitration process is taking place in Singapore.
While the agreement involves Fonterra Limited, Danone has brought the legal action action against its parent, Fonterra Group.
Danone lawyer David Goddard said it was staff from Fonterra Group who were responsible for testing the defective product and responsible for giving Danone incorrect information.
The poor information led to Danone using potentially contaminated product to create baby formula and other food.
"Obviously it is much better to be able to stop it before it gets out to consumers, rather than have to recall it from consumers," Mr Goddard said.
"The earlier you can deal with product that you suspect to be contaminated the better, first of all for the consumers, because if it's out there it may be being consumed by the babies for whose consumption it is designed, but also in terms of cost of recall, impact on reputation, all of those things.
"A very significant part of the loss suffered by these different companies ... was caused by the non-disclosure of this risk, known to Fonterra while the product continued to make its way through the supply chain."
Mr Goddard argued arbitration could take a long time and it would be unfair to deny Danone access to swift justice for a genuine claim of negligence with a solid foundation.
However, Fonterra said its parent company did not have a case to answer and that any legal issues were with subsidiary Fonterra Limited, which owned the Hautapu plant where the suspect batch came from.
Danone has not said exactly how much it is suing Fonterra for but has previously said it wants about $330 million in compensation.
