Suzuki Motor Corp. says it is confident it will be successful in its bid to sever relations with Volkswagen AG as legal arbitration between the two automakers gets under way.
Last November, Suzuki said it would use arbitration to force VW to return the 19.9 percent stake in Suzuki that it acquired in 2009 as part of a partnership agreement.
VW paid 1.7 billion euros ($2.1 billion) for the shares. Sources close to Suzuki say the company has offered to buy them back at market price, currently about 2 billion euros.
“The agreement with VW is already terminated,” said Yasuhito Harayama, Suzuki’s vice president of business development, during the company’s annual shareholders’ meeting in Hamamatsu, Japan. “Thus, VW does not have the legitimacy to keep on holding Suzuki shares… We are in arbitration in the UK for the return of these shares.”
“We are confident that we will be able to report good news,” Harayama added.
The partnership fell apart after Suzuki claimed VW had not provided technology that it had promised as part of the agreement.
Arbitration hearings will be held in London in the spring of 2013, a source said.
The legal proceedings will take place at the ICC International Court of Arbitration in London. International companies often use arbitrators in the UK capital to resolve differences because their decisions are respected and the process takes place in private.
VW says Suzuki broke the terms of their partnership when it turned to Fiat for supply of a 1.6-liter diesel engine for its SX4 subcompact SUV. “Volkswagen takes the view that this contradicts the terms of the cooperation agreement,” the company said in a statement last November.
VW originally turned to Suzuki to gain access to India’s growing market and tap Suzuki’s expertise with sub 1-liter cars. In turn, the German automaker agreed to share its technology with Suzuki.
“The management of Volkswagen and Suzuki have concluded that the complementary strengths of each company make for a perfect fit,” VW said in a statement in 2009.
- Autonews
