Mexican transport firm TMM and U.S. rail firm Kansas City Southern Industries Inc. said Wednesday they had reached a truce in their dispute over TMM's stake in railroad operator TFM.

The two companies disagree over the interpretation of the truce. They have been embroiled in a bitter quarrel ever since TMM pulled out of a deal to sell TFM to Kansas City Southern last August.

TFM -- which owns a concession to operate through 2047 the only Mexican freight line to Laredo, Texas -- is already 39 percent owned by Kansas City Southern. TMM has a 41 percent stake, and the rest is owned by the Mexican government.

The companies said in a joint statement they had agreed to halt arbitration for now and "discharge in good faith" all the obligations of an April 2003 agreement for Kansas City Southern to buy TMM's 41 percent stake in TFM, Mexico's top freight railroad, for $412 million.

A spokesman for TMM said the company understood by the wording "discharge obligations" that the sale of TFM was off -- while Kansas City Southern said as far as it was concerned, it was open to pursue the deal.

The companies translated the original English-language agreement differently in their Spanish-language versions.

"We have decided not to pass to the second phase of arbitration to make some space for cooling off ... to induce talks without the pressure of arbitration hanging over us," said TMM spokesman Marco Provencio.

"I am not satisfied with the Spanish translation that Kansas did of the word discharge," he added. "Because from our perspective, it does not have the meaning that Kansas gave it in its Spanish text, and for us it is not valid."

A spokesman for Kansas City Southern, Warren Erdman, said the U.S. company disputed TMM's interpretation of "discharge" as meaning it was free of obligations and could shelve the sale.

"The word in English is 'discharge' and in the context of this agreement it means to fulfill or to comply with, not to free. To free is the opposite of the true meaning," Erdman said.

"As far as Kansas City Southern is concerned, we believe we are bound by the duties of the (sale) agreement and we will honor those; and we believe TMM will honor those duties."

Erdman said the two companies had agreed to work together towards a closing of the acquisition, adding it was hard to say how long the process would take.

Struggling with large debts, TMM agreed in April 2003 to sell its 41 percent in TFM to Kansas City Southern, but called off the deal after TMM shareholders rejected the sale in August.

Kansas City Southern opposed the pullout, and both sides eventually agreed to arbitration to resolve their differences.

On March 22, an arbitration panel ordered TMM to honor the original accord, saying it was still valid and binding.