Unlocking International Joint Ventures

CHAPTER ELEVENTHE JOINT VENTURE CONTRACT:NEGOTIATING AN INTERNATIONAL JOINT VENTURE CONTRACT

‘Make fair agreements and stick to them’

– Confucius

Before establishing the IJV, you will have the opportunity to get to know your partner through negotiations of the IJV documentation, particularly the JVC.

If you do not manage to get to know your partner through the joint venture negotiations then worry not, there will still be a good chance to get to know them better through restructuring negotiations or litigation.

11.1 PART 1: WHY IS THE JVC IMPORTANT?

The JVC is a key milestone in the project and it will often be the first time you will need to negotiate at length with your local partner. In addition, it sets the scene as to how the IJV will be established and operate.

Lawyers do tend to go on about contracts and sometimes exaggerate their importance. Indeed, when looking at which IJVs work, it is clearly more important to have a good partner than a good contract. However, ideally you should have both.

JVCs are complicated. This is in large part due to the challenge of drafting a contract that seeks to regulate future behavior between two (or more) partners which are embarking upon a new endeavor.

German has the expression ‘Zweckbeziehung’ which roughly translates as ‘a relationship for a purpose.’ This is very much the case with an IJV. Although this book often makes an analogy between IJV and marriages – the IJV is different (at least in most cases) from marriage in that ...