Suzuki Motor Corp. is confident that it would be able to cut its ties with Volkswagen AG as the legal arbitration between the two carmakers is expected to commence in the spring of 2013 in London. In November 2011, Suzuki said it would pursue arbitration to force the German carmaker to return a 19.9 percent stake in Suzuki that it bought in 2009 as part of a partnership deal that saw VW paying EUR1.7 billion ($2.1 billion) for the shares. Source privy to Suzuki said that the Japanese carmaker has offered to buy back the shares at market price, currently pegged at around EUR2 billion.
Yasuhito Harayama, Suzuki's vice president of business development, said during the annual shareholders' meeting that agreement with VW is already terminated.
Harayama remarked that because of the termination of the deal, VW has no legitimacy to keep on holding Suzuki shares. He disclosed that the company is in arbitration in the UK for the return of the shares.
The partnership between Suzuki and VW broke down after the Japanese carmaker claimed that its German partner failed to provide the technology it had pledged as part of the agreement. On the other hand, VW said in statement in November 2011 that Suzuki broke the terms of their alliance when it sought Fiat for the supply of a 1.6-liter diesel engine for its SX4 subcompact sports utility vehicle.
The legal proceedings will be held at the ICC International Court of Arbitration in London. Global firms usually use arbitrators in London to resolve differences as their decisions are respected and the arbitration process takes place in private. [source: Autonews]