Philips and Funai will solve their differences in court as the Japanese company filed a counterclaim against its former Dutch partner asking for compensation for damages, following Philips' recent decision to terminate their sale and licensing deal. Philips had signed an agreement regarding the transfer of its Audio, Video, Multimedia and Accessories business to Funai on January 29, 2013. In October, Philips said that Funai had refused to take the necessary steps to enable completion of the transaction and the transfer of the business, and that arbitration proceedings in the International Court of Arbitration (ICC) would follow.

Funai Electric has now filed a counterclaim against Philips.

The company claims that Philips was unable to timely complete the spin-off of its 'Lifestyle Entertainment Business'. Funai says that the business Philips intended to sell to Funai differed from what Philips explained to Funai, and the profitability of the business had been notably declining. The Japanese company added that itwas continuing with negotiations to complete the transaction based on its "good business relationship of mutual trust" with Philips for over 25 years. However, Funai says Philips "suddenly and unilaterally" broke off negotiations and filed a petition for arbitration with the International Court of Arbitration.