Lawyers for both parties agreed at a Frankfurt High Court hearing to a settlement in principle of GM's attempt to ban seven of its former managers from working for VW.
The seven executives left GM and its European subsidiary, Adam Opel, to follow GM's former production chief, Jose Ignacio Lopez de Arriortua, to VW. Mr Lopez, now VW's number two, is accused by GM of having stolen large quantities of secret company material.
The industrial espionage dispute - the focus of criminal investigations on both sides of the Atlantic - was not directly at issue in yesterday's hearing. While both sides agreed to remain silent on details of the settlement, sources said Opel was prepared to see the number of managers suspended at VW reduced and any ban
GM first attempted to ban the seven managers poached by Mr Lopez from working for VW for a year on the grounds that they could unfairly damage the American company's position. This was turned down in May.
Yesterday's settlement must now be put to the supervisory boards of VW and Opel. Judge Fritz Traub set a deadline of 11 November for approving the compromise. Failing this, the court case will resume in mid-December.
Opel is now said to be concentrating on Mr Lopez's four main ex-GM colleagues - Jose Gutierrez, Jorge Alvarez, Hugo van der Auwera and Francisco Garcia.
As the judge announced the compromise, the smiles of the VW legal team contrasted with the severe faces of Opel's lawyers, underlining the fact that in this legal dispute the American company's subsidiary has the weak hand.
However, Mr Lopez is the subject of an FBI Grand Jury investigation in the US and a criminal investigation by the Darmstadt state prosecutor's office in Germany on suspicion of document theft and breach of trust, as well as an investigation by the Hamburg state prosecutor's office on suspicion of perjury. The last inquiry involves charges that Mr Lopez submitted false statements in civil proceedings in Frankfurt and Hamburg.