Western Digital said it will move forward with arbitration to get a say over Toshiba's sale of its chip unit after the Japanese company agreed to provide notice before closing.

The companies announced Friday they'd reached an agreement providing for two weeks' advance notice. The two manufacturers, which are in a joint venture to produce memory chips, submitted the agreement to a San Francisco state judge who had proposed it two weeks ago.

San Francisco Superior Court Judge Harold Kahn on Friday approved an agreement between the two.

Notice from Toshiba to Western Digital will give Western Digital the opportunity to come back to the court or an arbitration panel to argue for a chance to stop the deal. The agreement also puts off a final decision on the question of whether the California court has jurisdiction over Toshiba, one of Japan's largest companies.

Toshiba is scrambling to sell its flash memory unit to cover losses from its nuclear reactor business. In late June, Toshiba announced its preferred bidder was a group made up of Bain Capital, South Korean chip maker SK Hynix and Japanese-government backed banks that offered $18 billion. But that deal has not come together, so Toshiba's board met last week to consider other bidders.

Western Digital sued Toshiba in San Francisco County Superior Court in mid-June, saying it believed a joint venture with Toshiba means Toshiba needs its consent to sell the flash business.

Western Digital filed its lawsuit in San Francisco to prevent Toshiba from closing the sale of its memory unit before an arbitration panel has a chance to play out.

The deal reached on Friday requires Toshiba to announce within a day the signing of any agreement that would result in the sale of the joint venture and give notice before the close. It stays in effect until 60 days after arbitration has begun.

"The agreement protects SanDisk's JV interests and preserves SanDisk's consent rights until SanDisk's request for further injunctive relief can be heard by the ICC International Court of Arbitration," WD said. "Our ongoing discussions with Toshiba and its stakeholders have been constructive, and we will continue to work to seek a solution that is in the best interests of all parties," the U.S. company added.

Toshiba said that thes agreement does not obligate Toshiba to provide notice regarding transactions undertaken in the ordinary course of its NAND flash memory business, nor does it constitute any agreement by Toshiba that SanDisk has any consent rights over any sale of the shares of Toshiba Memory Corporation.

"The agreement also preserves Toshiba's jurisdictional objections and does not mean that Toshiba is submitting to the jurisdiction of the California court for any purpose other than entering and enforcing this limited joint stipulation," Toshiba added.

Dr. Yasuo Naruke, Senior Executive Vice President of Toshiba Corporation stated, "We are very pleased to have reached this mutually acceptable understanding which is effective for a very limited time and which recognizes Toshiba's right to negotiate and sign a definitive agreement for the sale of its memory business. Nothing in the agreement requires Toshiba to alter its position that there is no contractual requirement to seek SanDisk's consent to the transfer of Toshiba's memory business.

"Further, as a practical matter, we don't expect to close a deal during the period addressed in the order. Closing a transaction of this magnitude would require many months - well beyond the limited timeframe specified in the ruling. Toshiba therefore remains focused on preparing for the ICC (Chamber of Commerce) arbitration process, which we believe is the appropriate venue to address these issues. We look forward to successfully presenting Toshiba's position to the tribunal, which we believe will be formed within the next month or so."