The six-year-long partnership between Volkswagen and Suzuki has come to an end after an arbitral tribunal in London decided that the Japanese company could terminate the agreement. The decision has put an end to a four-year dispute between the companies.
As per the international court's decision, Volkswagen will have to sell its 19.9 percent stake in Suzuki. However, since arbitrators ruled that Suzuki breached contractual obligations, it will have to pay damages to Volkswagen.
Volkswagen expects a 'positive effect' on the company's earnings and liquidity through the sale of the shares. In a statement issued, the German company said: "We welcome the clarity created by this ruling. The tribunal rejected Suzuki's claims of breach and found that Volkswagen met its contractual obligations under the cooperation agreement.
Nevertheless, the arbitrators found that termination of the cooperation agreement by Suzuki on reasonable notice was valid, and that Volkswagen must dispose of the shares purchased. This decision is based on the principle that a contract may be terminated upon reasonable notice.”
Dipan Sur
Viraaj Bhatnagar
Suraj Viswanathan
Hormazd Sorabjee
