After the mediation process between Fiat and General Motors ended without agreement last night, Fiat issued a statement this morning reaffirming its view that the 'put' option is valid and now enforceable.

Onlookers had expected the two carmarkers to come to some sort of cash deal heavily weighed in Fiat's favour, that would in return allow GM to absolve itself of the enforceable option of buying the remaining stake in Fiat Auto it doesn't already own.

Fiat Spa issued the following statement this morning in Turin: "The mediation process, initiated by General Motors on December 16th, 2004 pursuant to Section 10.08 of the Master Agreement, ended on February 1st, 2005, as agreed between the parties. In spite of the attempts to resolve the dispute on the alliance's outstanding financial and industrial issues, no agreement has been reached between Fiat and General Motors during the mediation period.

"Fiat reaffirms its views that the sale of certain financial activities of Fiat Auto and the recapitalization of Fiat Auto Holding B. V. did not violate the Master Agreement, as General Motors claims. As a result, Fiat reasserts its view that the put option is valid, enforceable in accordance with its terms, and an important asset for the Group. The put is exercisable from today, February 2nd, 2005 through to July 24th, 2010."

With the stakes now ratcheted up, it is expected Fiat will shortly open proceedings to put the option's validity into practice, a move that will trigger a New York court hearing. Not only do Fiat see the option as a valuable asset that they want the value of clarifying, they are also keen to renegotiate the terms of their engineering partnership with GM, that they do not feel is in their best interests.

While Fiat have made their technology, including the advanced common rail multijet diesel engine range, available to the American firm, five years after they went into partnership, GM-developed floorpans and engines will only see the light of day in Fiat models this year, and only after Fiat's engineers have spent much time reworking what they regarded as being 'inferior' products.

Apart from the dreadfully slow deadlines that GM are operating under, the US giant has a woeful track record of European involvement, having allowed their European arm Adam Opel to stagnate and fall into major debt, and the Saab brand to drift aimlessly over the last few years.

On top of all this the GM agreement stops Fiat forging partnerships with other carmakers, something it is keen to pursue as it seeks cost reductions, so all in all, Fiat are looking to resolve the issue swiftly and decisively.