A European railway consortium has announced that it is sueing the Taiwan High Speed Rail Corporation in a Taipei court to challenge the group's decision to award a three-billion dollar contract to a Japanese consortium.

A spokesman for the French, German and British group, Eurotrain, said it had been given priority negotiating rights in a contract signed in 1997 to build trains and engines for the island's high speed railway project.

The spokesman said the contract obliged Taiwan to award the contract to Eurotrain if its price was reasonable.

He said the purpose of the injunction was to stop further negotiation with the Japanese group, Shinkansen.

A spokesman for the Taiwanese corporation dismissed the legal action as a business trick.

From the newsroom of the BBC World Service