Fortescue's (ASX:FMG) battery-making unit Fortescue Zero is facing a lawsuit from its US partner for allegedly sending them defective batteries, according to a Monday report by the Australian Financial Review, citing court filings.

The report said that Fortescue is fighting the allegations in the Florida Middle District Court against the Orlando-based marine propulsion company Evoa.

Evoa has claimed in its lawsuit that Fortescue did not send a prototype in time in February 2024 and instead sent "dummy packs," which were "battery cases without technology," the report said, citing the court filings.

Later in April 2024, five demonstrator packs sent by Fortescue "did not meet the specifications" that Fortescue had represented, Evoa alleges in the lawsuit.

According to Evoa's claims, Fortescue continued to promise delivery of the equipment until February 2025, before saying that Evoa should stop using the battery packs, citing a new risk assessment, the report added.

The report said that Evoa has alleged that Fortescue Zero Chief Executive Ellie Coates wrote to Evoa in March 2025 to cancel the whole program and wrote again in April 2025, demanding payment of $1.5 million, despite allegedly not delivering the equipment.

Evoa has said that it should not have to pay the amount, and Fortescue should repay about $1.3 million that Evoa deposited in May 2024, the report added.

AFR said that a Fortescue spokesman said on Monday that Fortescue "strongly rejects all allegations being made."

Fortescue did not immediately respond to MT Newswires' request for comment.

The company's shares rose 1% in recent Monday trade.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)