The application to the Hangzhou Arbitration Committee, if successful, could result in Danone losing the right to the Wahaha trademark it has used since the joint venture between the companies was agreed in 1996.

While Danone's strategy of investing in established brands in China was instantly rewarded with a ready made market, the lengthy dispute with its partners serves as a warning to those planning to emulate the venture east.

The basis for Wahaha's application is its claim that the contract with Danone was not approved by China's trademark authority, effectively invalidating the contract.

Danone accuses its partner, with Wahaha's founder and former chairman, Zong Qinghou, of setting up operations that compete with its own dairy operations, in defiance of contractual obligations.

These operations, which include bottling plants and wholesalers, are parallel to their own and have resulted in an estimated $100m loss of revenue.

Zong has not denied his involvement with external operations, but insists the greater issue goes beyond alleged brand theft.

Despite Danone's 51 per cent stake of the 39 joint venture, control of the Chinese operations had largely remained with Zong, who resigned on 6 June.

Although his departure has allowed Danone to bring in their own man, Emmanuel Faber, the company's position looked precarious when a number of executives, supported by Zong, threatened to split from venture to form a rival firm.

In other reports in the media it is claimed that a shareholder in Bright & Dairy food, in which Danone also has an interest, plans to sue the French company for alleging a conflict of interests.

H&J Vanguard Research and Consulting, which holds an unspecified stake, is reported to claim that Bright & Dairy has been run counter to shareholders interests.