TOKYO -- Volkswagen must sell its shares in estranged partner Suzuki, an international court has decided, ending a nearly four-year battle over a dysfunctional alliance between the two carmakers.
The decision, by the International Court of Arbitration of the International Chamber of Commerce in London, was announced by Suzuki today in a filing to the Tokyo Stock Exchange.
Suzuki received the decision the day before.
“It’s good that a resolution came. I feel refreshed. It’s like clearing a bone stuck in my throat,” Suzuki Chairman Osamu Suzuki said at a hastily called news conference in Tokyo. “I’m very satisfied with the resolution. Through it, Suzuki was able to attain its biggest objective.”
The court also found that the alliance was validly terminated when Suzuki submitted notice of termination on Nov. 18, 2011, Suzuki said in the filing. The termination was effective May 18, 2012.
VW, in a separate Aug. 30 statement, acknowledged the ruling and said it will sell its stake. It added that it expects a positive impact on earnings and liquidity from the sale.
VW said it welcomed “the clarity created by this ruling.”
The decision partially upheld VW’s counterclaim against Suzuki that the Japanese automaker had breached parts of their cooperation agreement, which was inked in late 2009.
“The Tribunal upheld Suzuki’s claim regarding VW’s disposal of its shares in Suzuki and ordered VW to divest forthwith those shares to Suzuki or a third party designated by Suzuki using a method which is reasonably determined by Suzuki,” Suzuki said.
As part of the decision, Suzuki may compensate VW for its breach of agreement, Suzuki said. The amount of any damages will be addressed in another stage of arbitration, it added.
Long wait
The award ends a standoff that began in November 2011 when the Japanese carmaker took its German partner to the ICC, demanding that VW dispose of its 19.9 percent stake in Suzuki.
In September 2011, Osamu Suzuki held a Tokyo news conference to outline a list of grievances and demand a “divorce” from VW, which he dubbed a “ball and chain.”
It was a remarkable turnaround from just two years earlier in 2009, when Suzuki and VW announced the much-ballyhooed tie-up.
At the time, common wisdom held that it would be a boon to both players. Suzuki would gain access to next-generation, fuel-efficient powertrain technologies and advanced markets while VW would get help tapping India and learn low-cost manufacturing. But in less than two years, the honeymoon came to a halt without the realization of a single joint project.
The dissolution of their alliance raises questions for both companies. VW must now plow ahead independently with its own low-cost emerging car project or possibly seek a new partner to help penetrate India. Meanwhile, it puts Suzuki back in circulation as a possible partner for a bigger global player that can help it with advanced technologies and mature markets.
