Top GM and Fiat executives will meet on Tuesday (September 21) in Paris to discuss the future ownership of Fiat Auto, but both sides seem eager to avoid a court battle over it, according to Automotive News Europe.

In December, a one-year legal truce between Fiat and General Motors expires. Then either side can litigate whether Fiat group has a legal right to force GM to buy the remaining 90% of Fiat Auto.

The stakes are high. If the put option that Fiat negotiated in the 2000 strategic alliance agreement is legally binding, Fiat could dump its troubled and unprofitable auto operation on its American partner anytime between January 24 and July 24, 2010.

General Motors, which is already struggling with unprofitable European brands, would like to avoid having to mount a capital-intensive rescue operation of Fiat.

"It suits both sides to keep up the pretence that the put might have some value - GM for a quiet life, to avoid upsetting the purchasing and powertrain joint ventures," said one analyst. But for Fiat the attitude is even more important so that Fiat group CEO Sergio Marchionne "can persuade the banks that the situation at Fiat is still underpinned."

The annual steering meeting will be the first for Marchionne and Fiat Auto CEO Herbert Demel and the third such for GM CEO Rick Wagoner and chief financial officer John Devine.

Neither side will comment specifically on how the talks to resolve their differences are proceeding.

Officially, the steering committee will review the results of the two joint-ventures in purchasing and powertrain, plus the common vehicle architecture Fiat and GM are developing for the successors to the Fiat Punto and the Opel/Vauxhall Corsa.

But even if not on the official agenda, the main topic will be the put option and master agreement.

Analysts are divided. "I think Marchionne's top priority is to extract value for that put, whether it is exercised or not," said Adam Jonas, auto analyst at Morgan Stanley in London.

Valeria Sgaramella, a financial analyst at Banca Leonardo in Milan, says "Marchionne could use the put if Fiat Auto turnaround doesn't work." She thinks that a potential time frame for that could be in the second half of 2006, if a new Punto due in September 2005 is less successful than Fiat hopes.

But other analysts doubt Fiat could even exercise the put.

"I think it would be very hard to create value out of the put. I do not think GM will get into a position of being forced to take the remaining 90% of Fiat Auto," said Arndt Ellinghorst, head of European automotive research at Dresdner Kleinwort Wasserstein in Frankfurt. "If Fiat would try to put pressure on GM, GM would announce potential job cuts in Italy."

An Italian supplier CEO, who asked not to be identified, is convinced GM and Fiat will avoid a legal battle.

"It would be simply stupid," the supplier said. "The potential value the contenders could obtain from a court victory would be less than their legal expenses."

The agreement for a legal standstill had been signed in October 2003 by Marchionne's predecessor, Giuseppe Morchio, who wanted to buy time to resolve the differences with GM.