For many years, Zap! and DaimlerChrysler have been in and out of court over a large order of Smart cars (see this USA Today article from March 2006 for a bit of history). Basically, in 2005, Zap ordered a $1 billion batch of Smart cars but ran into trouble when it actually tried to get their hands on them and sell them. This week, that court battle continued when the Court of Appeal for the State of California heard oral arguments in a lawsuit brought by Zap! against DaimlerChrysler, Smart GMBH and Smart Chairman Ulrich Walker. As our tipster Domenick says, "This could get interesting." Zap! has issued a press release about the court proceedings, and says we should have a decision in the case, which revolves around which jurisdiction should actually hear Zap!'s case, in the next 90 days. Smart itself will begin selling the Smart ForTwo in the U.S. in January.

Here's how Zap! describes the current legal situation:

In the preceding year and a half, the defendants have engaged in activity that inadvertently proves the truth of those initial allegations made against them by ZAP. ZAP's initial complaint alleged that the defendants engaged in unlawful actions in order to eliminate ZAP as a competitor in the California market. Since the trial court dismissal on jurisdictional grounds, defendants have proven their true intentions to bring the Smart ForTwo to California and to eliminate any competition standing in its way. (there's more after the break)

Read more about Zap!'s Americanized Smart car here. We'll keep an eye out for the court's decision when it comes down. Alternately, we'll wait for Domenick to tip us. :)

[Source: Zap!, USA Today, h/t to Domenick]