Whilst there have been numerous headlines in recent months regarding the dispute between W Clappison Limited and Aldi Stores Limited, aside from the dramatic nature of the allegations, there is an important legal issue to be decided with significant impact on the Groceries sector.
Part 5 of The Groceries (Supply Chain Practices) Market Investigation Order 2009 established a dispute resolution scheme for enforcing the Groceries Supply Code of Practice, which now operates under the ambit of the Groceries Code Adjudicator (GCA).
In summary, the formal dispute resolution process under the Code is triggered by an aggrieved supplier informing the retailer’s Code Compliance Officer (CCO) that they believe it has not fulfilled its obligations under the Code, and that they wish to initiate the dispute resolution procedure. The parties then have 21 days from the date of the dispute arising to resolve the matter to the satisfaction of the supplier can request arbitration under the GCA scheme, which the retailer must submit to, within four months of the dispute arising.
In a fast-paced trading environment, especially where a major contract or trading relationship may have been lost or harmed, four months can disappear extremely quickly. Whilst the Order creates certainty, as retailers are not left waiting indefinitely for arbitration to begin, four months is extremely tight.
But is there another way forwards? Firstly, the dispute resolution scheme does not say when a supplier must inform the CCO that a dispute has arisen, it simply sets out the process once it has done so. As such, suppliers could tactically wait to raise Code breaches until they are in a position to deal with them properly, rather than acting in haste and ‘starting the clock’.
Secondly, the supplier may be able to pursue a breach of the Code in the courts, by way of a claim for ‘breach of a statutory duty’. In this instance, the supplier would have 6 years from the breach of the duty to bring a claim. Clearly, this massively increases the period of risk for retailers.
It is not yet clear if a breach of the Order or Code gives rise to the necessary right to bring such a claim. There are parallels with other regulatory frameworks, but unless and until the court makes a decision on this issue, retailers and suppliers cannot be sure.
This is why Clappison is so key to the sector. In the proceedings, Clappison has brought a £3.5m damages claim arising from breaches of the Code. So the Court may be called upon to consider the issue of the enforceability of Code breaches in High Court proceedings, rather than by way of the GCA’s arbitration scheme.
Interestingly, the GCA has applied to intervene in the proceedings to “assist the Court in resolving the Groceries Code matters in dispute between the parties” . A hearing in respect of the GCA’s proposed intervention took place in February 2025, and the outcome is eagerly awaited.
Of course, this matter may not be settled until a final judgment is handed down by the court. Ultimately, the vast majority of claims issued are settled before reaching trial - Let’s not forget, the industry (and Aldi) has seen a case of this nature before, which was settled on confidential terms.
If the Court does find that Code breaches can be litigated by way of a damages claim, it may well be that a number of historic cases rear their head, as suppliers are buoyed by the newfound certainty and increased time limits. The clarity of any judgment is eagerly awaited by suppliers and retailers alike.
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