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Biel/Bienne, Switzerland--The Swatch Group Ltd. announced Monday that it is terminating its watch distribution agreement with Tiffany & Co., with both sides claiming that the other failed to live up to the terms of the contract inked more than three years ago.

Swatch said Tiffany Watch Co. Ltd., the company founded under the partnership in 2008, will have two years to wind down its current business following effective termination of the cooperation contract. Tiffany Watch Co. Ltd. developed, produced and distributed “Tiffany & Co.” branded watches, which were sold in stores worldwide by Tiffany, The Swatch Group and independent retailers.

Swatch said it opted to terminate the contract because of Tiffany’s “systematic efforts to block and delay development of the business.”

In a response issued within a couple of hours on Monday, Tiffany fired back, stating that it had upheld its end of the contract and that it was Swatch that erred.

“Tiffany has honored its obligations under the agreement and insisted that Swatch honor its own obligations, particularly its obligation to respect Tiffany’s rights regarding brand-management and product design,” Tiffany said.

Arbitration is pending in the case.