Arbitration court to rule on Volkswagen-Suzuki row by year-end: sources

BERLIN/HAMBURG Thu Jun 5, 2014 11:59am EDT

BERLIN/HAMBURG (Reuters) - Volkswagen and Suzuki Motor Corp have moved a step closer to resolving a long-running dispute over their failed partnership, sources familiar with the matter told Reuters on Thursday.

Suzuki filed for international arbitration in November 2011 after VW repeatedly refused to sell back a 19.9 percent stake in the Japanese carmaker that it acquired in January 2010 for 1.7 billion euros ($2.3 billion) as part of a cooperation tie-up.

A London-based arbitration court has now wrapped up the witness hearings and is expected to issue a ruling before the end of the year, two sources told Reuters, asking not to be identified because the matter is confidential.

It's the first development in the saga since Suzuki filed for arbitration a week after terminating its accord with VW on Nov. 18, 2011.

Both VW and Suzuki declined to comment on Thursday.

"I don't think it should take too long," Suzuki chairman Osamu Suzuki told an earnings briefing in May. "I would like for it to reach a conclusion soon in some way, but because it is already under arbitration, we can’t really say anything."

The two carmakers agreed their tie-up in December 2009, pledging to cooperate on technology such as hybrid and electric cars and on expanding in emerging economies such as India, where Suzuki's venture partner Maruti Suzuki India is market leader.

But after failure to agree on projects, Suzuki accused its German partner of withholding hybrid technology it promised to share as well as pushing plans to dominate the sector. VW, in return, was upset about Suzuki buying diesel engines from Fiat.

Europe's biggest automotive group is seeking to expand in southeast Asian markets and has been working on a budget car for China and other emerging markets, a project analysts expected VW to bring about with Suzuki.

"Expectations for cooperation between VW and Suzuki are close to zero after this long impasse," said Frankfurt-based Bankhaus Metzler analyst Juergen Pieper. "Should both still find a way to work together, it would be beneficial for VW."

(Additional reporting by Yoko Kubota in Tokyo; Editing by David Goodman)

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