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Yamaha has hit back at accusations made by former sponsorship partner Altadis, by arguing that it did not breach its agreement with the cigarette maker by ending the contract early.

Altadis is pursuing compensation after Yamaha said it was switching to Camel as the sponsor for its motorcycle grand prix team this year.

Yamaha insists there is no case for compensation, and that Altadis is wrong to believe that clauses remain in force from the previous contract.

A statement issued by Yamaha's factory racing team reads: "Yamaha no longer has any sponsorship agreement with Altadis, as the previous sponsorship agreement was terminated in all respects for the 2006 season.

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"Yamaha strongly denies that it has ever breached its previous sponsorship agreement with Altadis.

"In the absence of any agreement in force between Altadis and Yamaha, there exists no legal obligation preventing Yamaha from contracting with a tobacco sponsor or any other sponsor for the 2006 season."

Each parties claims it tried to resolve the issue amicably, but was met with opposition.

Both are now seeking damages in what has become a fierce dispute.

"Yamaha deplores the fact that Altadis' unreasonable actions have frustrated Yamaha's good-faith efforts to resolve this matter in an amicable fashion, and has seen fit to make its unmerited allegations in a public forum," the statement continued.