The partnership between Volkswagen and Suzuki has been deemed terminated as an arbitral tribunal in London has announced its ruling. The arbitrators have confirmed that Volkswagen has met the contractual obligations under the cooperation agreement and also found that Suzuki has terminated the agreement upon reasonable notice.
As per the ruling of the arbitral tribunal, Volkswagen will have to sell the 19.9% stake in Suzuki, while Suzuki will have to pay damages to Volkswagen for breaching the contractual obligations.
Volkswagen expects the sale of the stake will have a positive effect on the earnings of the company and liquidity. The partnership was announced in 2009 where Volkswagen and Suzuki came together to jointly develop eco-friendly and economical cars for the emerging markets.
In the statement issued, Volkswagen 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 sell-off the shares purchased. This decision is based on the principle that a contract may be terminated upon reasonable notice. Volkswagen expects a positive effect on the its earnings and liquidity through the sale of the Suzuki shares.”
The press release has been embedded below for further information.