Western Digital has sought international arbitration to stop partner Toshiba from selling its chips arm without its consent, potentially delaying a possible capital injection for the struggling Japanese company.

The two companies jointly operate Toshiba's main semiconductor plant but Western Digital is obviously not seen as a favored bidder for the world's second biggest NAND chip producer.

As a result, several of Western Digial's SanDisk subsidiaries have filed a Request for Arbitration with the ICC International Court of Arbitration related to three NAND flash-memory joint ventures operated with Toshiba.

The arbitration demand seeks among other things an order requiring Toshiba to unwind the transfer to Toshiba Memory, and injunctive relief preventing Toshiba from further breaching the Flash JV agreements by transferring its Flash JV interests, or any interest in an affiliate that holds its Flash JV interests, without SanDisk's consent. Per the provisions of the joint venture agreements, the arbitration will take place in San Francisco, California.

Western Digital chief executive officer Steve Milligan stated, "The Flash JVs have been operated with Toshiba for the past 17 years and have been highly successful for the JV partners and for Japan. We continue to be actively engaged in discussions with Toshiba's stakeholders to ensure that they are fully aware of our joint venture rights and of our desire to work with Toshiba to achieve a favorable outcome for all parties. We firmly believe that we provide Toshiba with the optimal solution to address its challenges, and that we are the best partner to advance its legacy of technology innovation in Japan."

Milligan added, " Toshiba's attempt to spin out its joint venture interests into an affiliate and then sell that affiliate is explicitly prohibited without SanDisk's consent. Seeking relief through mandatory arbitration was not our first choice in trying to resolve this matter. However, all of our other efforts to achieve a resolution to date have been unsuccessful, and so we believe legal action is now a necessary next step. We are confident in our ability to protect our rights and interests and to improve our value creation opportunities."

On or around April 1, 2017, Toshiba transferred its joint venture interests to a subsidiary, Toshiba Memory, as part of an open auction to sell its joint venture interests to a third party. Western Digital believes that these actions violate the anti-transfer provisions of the joint venture agreements.

Toshiba said while it yet to be notified of any arbitration, there had been no breach of contract and Western Digital had no grounds to interfere with the sale process.

A legal battle could delay or put an end to the auction that could fetch some $18 billion and has attracted suitors such as private equity firm KKR & Co LP , Taiwan's Foxconn and U.S. chipmaker Broadcom.

Toshiba said on Monday in an unaudited earnings release that it ended the year with a 950 billion yen ($8.4 billion) net loss and negative shareholder equity worth 540 billion.

The Japanese company, whose U.S. nuclear unit Westinghouse Electric has filed for bankruptcy protection, reported a 950 billion yen ($8.4 billion) net loss for the fiscal year that ended March.

The loss was about double the 460 billion yen ($4.1 billion) loss racked up the previous fiscal year.

However, Toshiba said it expects to return to profit for the fiscal year through March 2018, of 50 billion yen ($442 million).