Roger DuBuis SA, Helvetia dispute ending U.S. distribution contract

A top Swiss luxury watch brand and its North American distributor are in litigation over whether the watch brand can cancel its contract with the distributor. Both accuse each other of alleged product shortages to clients and supposedly diverting watches to the “grey market.”

Roger DuBuis SA, based near Geneva, Switzerland, says it ended its contract with Helvetia Time Corp., doing business as Roger DuBuis North America (RDNA), in November for “many breaches of contract.” However, the U.S. firm, based in Wilkes-Barre, Pa., denies that and contends the watchmaker actually wants to take over the business in America. RDNA has taken legal action here and in Switzerland to block what its president Alex J. Nobile calls the “unjust termination.”

The contract runs through May 2009, with an option to renew until 2017.

RDNA’s bid for an injunction to stop the termination, alleged unfair competition, and contact with its customers and employees by the watchmaker was approved in December by the Pennsylvania and federal courts. A hearing in federal court on the watchmaker’s challenge to the injunction is set for Jan. 19.

RDNA also filed for an injunction in the Geneva court, opposed by the watchmaker, and has asked the arbitration panel of the International Chamber of Commerce, based in Switzerland, to review the issue and order the Swiss watchmaker to continue the contract.

In a Jan. 11 statement given to JCK, watchmaker Roger DuBuis SA says that due to “many breaches of contractual obligations” by RDNA it was “obliged to cancel the contract,” effective Nov. 11. It alleges there were “many late payments” and that despite “reminders and warnings … a substantial number of invoices remained outstanding.” It also claims the North American distributor “frequently disposed of watches on the parallel [i.e., grey] market,” damaging the image and economic interests of the Swiss watchmaker and its retailers worldwide.

In a JCK interview Jan. 17, however, Nobile denied any breaches of contract, and said RDNA had been sending “payments on account.” He contends that the Swiss watchmaker was trying to “unjustly terminate” the contract and held “as hostage and leverage,” more than 100 watches of RDNA’s customers, some since June, sent there for repair. “When they release the watches, repaired to our satisfaction and that of our customers, we will pay everything that’s due,” he said.

As for the ‘parallel market’ charge, Nobile called that “an absurd statement. Nothing in their legal responses raised that issue.” Instead, a Dec. 27 letter to RDNA’s customers about the dispute (following one sent Dec. 16 by the watchmaker), from Steve Holtzman, RDNA chief executive officer, said the Swiss watchmaker “created product shortages [and] diverted products to fuel the ‘grey market” and was now trying to blame RDNA.

The U.S. firm is also seeking one million Swiss francs (about $780,000) for alleged unpaid advertising costs. That is also contested by the Swiss watch manufacturer.

In its statement, Roger DuBuis SA said it is “currently restructuring and improving its international distribution network,” and the dispute won’t affect the growth and development of its business or sales in North America.

Nobile said, however, RDNA “took an unknown luxury brand, worked hard and invested heavily in making it successful here. We are the exclusive distributor of Roger DuBuis watches for North America, Central America, and the Caribbean.”

Manufacture Roger Dubuis SA began in 1995 and is sold worldwide. It produces only 28 of most new models in its several collections of large-sized watches. Its specially-built facility in Meyrin-Satigny, outside Geneva, has almost 400 employees and produces, an estimated 25,000 to 30,000 watches a year. In 2005, it significantly expanded its headquarters, introduced two more movements and launched its own line of jewelry.

Helvetia Time (as RDNA) began distribution of the watches in North America in 1999 and now has about two dozen high-end retail jewelry clients here.