Suzuki has commenced arbitration proceedings against Volkswagen that, if successful, will force Europe’s largest automaker to give up its 19.89 percent stake in the Japanese company.
“The arbitration proceedings follow Suzuki’s termination of its alliance with Volkswagen AG on 18 November 2011, and Volkswagen AG’s lack of response to Suzuki’s requests for the disposition of its shares,” Suzuki said in a statement.
Suzuki will begin the proceedings, which are aimed at compelling Volkswagen to sell its shares back to Suzuki or a third party approved by Suzuki, on November 24 at the ICC International Court of Arbitration in London.
Referring to Suzuki’s efforts to dissolve the partnership as actions “without foundation,” Volkswagen has stated that it plans to retain the shares.
The alliance began in 2009 when Volkswagen took a 19.89 stake in Suzuki and, in turn, the Japanese company acquired 1.49 percent of Volkswagen. It was originally intended to help Volkswagen expand in India, where Suzuki has experience and sales success, and to give Suzuki access to Volkswagen technologies the small automaker couldn’t afford to develop on its own.
However, the partnership began to crumble when Volkswagen wrote in an annual report that it could “significantly influence financial and operating policy decisions” at Suzuki. The Japanese automaker has since alleged that it was not given full access to Volkswagen’s technology, eventually turning to Fiat to purchase diesel engines.
“Volkswagen AG did not allow Suzuki access to Volkswagen AG’s core technology and it also became clear that there were differences between Suzuki and Volkswagen in the understanding of ‘independence,’” Suzuki said on November 18. “The cross-shareholding alliance must be dissolved immediately and in so doing the parties will return to their independent status.”
References
1.’Suzuki launches arbitration…’ view
