AN ailing clothing company will have to persuade a court to make a new law if it is to win a partial victory in its legal battle with former customer Marks and Spencer.

M&S and William Baird, which has a warehousing operation in Hartlepool and a corporate clothing factory in Skelton, east Cleveland, were claiming victory last night after a London High Court hearing.

Marks and Spencer stunned Baird by terminating its 30-year supply relationship last October. Baird, which is laying off more than 4,000 staff, said the cancellation would cost £103.5m in factory closures and redundancies.

The North-East operations are not thought to be under direct threat because of the lost business.

At the High Court, Mr Justice Morrison decided Baird's principal claim had no real prospect of success and could not proceed to trial.

This element made up £38.5m of Glasgow-based Baird's £54m compensation claim.

But he said Baird's second claim, relating to costs incurred as a result of the cancelled contract, should be tested at full trial. To win, Baird is likely to have to persuade a court to make a new law.

David Suddens, chief executive of William Baird, said: "We were and are firmly of the opinion that we have a strong claim against Marks and Spencer.