Article Image
Dongfeng Motor Unit Gets Arbitration Request

Monday, February, 17, 2014

The Chinese automaker Dongfeng stated this week that they were served with an arbitration request from a Brazilian company that is as yet unnamed.  The Brazilian company wants damages for failure to set up a joint venture with Dongfeng.  The arbitration request was filed with the London Court of International Arbitration, keeping the identity of the other company private for the time being. 


The company in Brazil is looking for damages of more than $700 million, arguing that Dongfeng breached their plans to enter a joint venture.  Most of Dongfeng’s cars are produced with joint-venture partners, like Nissan.  The automaker and other partners with the company make Dongfeng the second-biggest automaker in the country when it comes to volume. 


The Brazilian company argues that Dongfeng failed to live up to obligations, stating that the Chinese auto company was “jointly and severally liable” (meaning that more than one party is liable).  The Chinese automaking giant says that they plan to contest the claim and take any steps to defend their position against what they believe are inaccurate allegations.  Dongfeng feels confident that the outcome of the case will not result to any damage financially, but arbitration will render a binding decision that could lead the automaker responsible for damages. 


Dongfeng Commercial is primarily involved in research, development, and manufacturing of medium and heavy-duty busses, special vehicles, trucks and gear boxes.  If successful, the Brazilian company stands to gain significantly from a damage award in the arbitration process.