Technical setback in court for GM

FRANKFURT - General Motors will seek to impose an employment ban on seven former managers, now working for Volkswagen, at a full court hearing in January after losing an appeal on technical grounds in a preliminary hearing yesterday, writes John Eisenhammer.

The dispute stems from accusations by General Motors and its European subsidiary, Opel, that Volkswagen gained an unfair competitive advantage by poaching the GM executives after Jose Ignacio Lopez de Arriortua left GM in March.

Mr Lopez, now VW's number two, is at the centre of a much wider battle between the giant car makers concerning industrial espionage. Although yesterday's case did not directly concern criminal investigations into alleged document theft and breach of trust by Mr Lopez, it has become entangled in the complex and bitter battle between the two corporations.

Yesterday's verdict did not rule on the substance of GM's case for an employment ban but rejected it on formal legal grounds.

The judge said that GM's procedure was inadmissable because it had been directed against the persons of Mr Lopez and Ferdinand Piech, VW's chairman, instead of against the company.

The two sides had sought an out- of-court settlement, but this foundered on GM's concern not to prejudice future claims should Mr Lopez or any of his colleagues be found guilty of industrial espionage.