Legal success for VW against ES Autoguss

Withdrawal from supply contract between VW and Prevent subsidiary legal

In the case between VW and the now former supplier Prevent a judgement was pronounced. Until March, the Prevent subsidiary had been a supplier for many parts of the automobile manufacturer. However, VW cancelled the business relationship and thus dissolved the contracts. According to Prevent, this was a break with the contract components and thus the action was brought before the Higher Regional Court in Dresden.

Supply relationship does not have to be maintained

According to the judgment, VW is not obliged to continue to purchase transmission parts from ES Automobilguss GmbH. The Regional Court of Leipzig had previously ordered that approximately one third of the castings required should still be purchased from ES Automobilguss GmbH, but this has been annulled with the new decision.
The Saxon company ES Automobilguss is part of the Prevent Group, along with Halberg-Guss from Leipzig and Saarbrücken.

Imposed contracts

Prevent’s aim in bringing this action was to ensure that VW would remain a customer for castings until at least 2022. Contracts from 2006 were used as the basis for this claim. Volkswagen, on the other hand, claimed that the contracts had only been concluded because Prevent forced them to conclude by stopping deliveries.
The judges of the Higher Regional Court also shared this opinion, “because VW had been able to rightfully withdraw from the supply agreement concluded in July 2016. This had only come about as a result of the plaintiff’s unlawful threat to paralyse VW’s production by discontinuing supply relationships.”

Supplier not dependent on car group

The court also concluded that Prevent has sufficient orders even without the supply relationship and is not dependent on the car manufacturer. “This was particularly true because Prevent itself had terminated its supply relationship with VW from one day to the next in 2016” the judges said. Prevent sees the matter differently and plans to close the Hallberg-Guss plant in Leipzig by the end of next year.