FONTERRA has successfully put Danone's legal action against it in New Zealand courts on hold.
Danone, the parent company of infant formula maker Nutricia, said in January it was launching High Court proceedings in New Zealand and arbitration proceedings in Singapore "to bring all facts to light and to obtain compensation for the harm it has suffered" over a whey protein concentrate recall by New Zealand's biggest company.
The Paris-based company put the cost of Fonterra's recall at €350 million when it revealed its third-quarter results last year.
Danone wants compensation from Fonterra for losses from the botulism scare and the harm it says was caused to its reputation.
Fonterra applied last month in the High Court at Auckland to suspend the action it is facing in New Zealand pending the determination of international arbitration proceedings which began in Singapore this year and involve companies in the Fonterra group and Danone.
Justice Geoffrey Venning granted that application in a decision just publicly released.
Fonterra wrongly suspected in August last year that 38 tonnes of whey protein - used to make products including infant formula manufactured by Nutricia - had been contaminated with a botulism-causing bacterium.
The whey protein was ultimately cleared but not before a recall of baby formula products amid fears that children could be harmed.
Nutricia had to recall 67,000 cans of its Karicare baby milk brand in New Zealand.
Of the eight customers affected by Fonterra's recall, the company reached an agreement with all of them except Danone.