Contractual Joint Ventures Research Articles

Dubious Allocation of Liability in the ICC Model Joint Venture Contract

Construction joint ventures are amongst the most common instances of open joint ventures. In 2018, the International Chamber of Commerce (ICC) published a model open joint ventures contract for construction projects to provide businesses with a balanced form of the agreement, enabling them to work together as joint operators. While the model contract provides a well-structured framework to regulate the relationship between the parties, the authors of this article are of the opinion that the basis for liability among joint venture members in the ICC Model Contract is dubious, if not wholly fallacious. Although much of what we say on the issue of liability of joint venture members in this article can equally be applied to all types of open joint venture agreements, or even close joint venture contracts, our main focus in this article is to scrutinize and criticize the proposed liability clause in the ICC Model Contract.

From Public Ownership to Joint Venture Privatisation of Parastatals: A History of the Tanzania-China Friendship Textile Mill, 1968-2020

In 1968, the Tanzanian government inaugurated the Tanzania-China Friendship Textile Mill (FTM) which was built by using a Chinese interest-free loan. Built in the context of import substitution industrial strategy and the policy of socialism and self-reliance embodied in the Arusha Declaration of 1967, the FTM recorded a high productivity in the 1970s and declined in the 1980s. After the adoption of neo-liberal policies in the 1990s, the FTM was privatised to a Chinese company through a joint-venture contract (JVC) and it was renamed Tanzania-China Friendship Textile Company (FTC). In the early 2000s, FTC recovered shortly before it started to decline again until it stopped production in 2018. The extant literature fails to acknowledge interplay of both internal and external forces in FTM decline and they have not assessed the efficacy of joint venture privatisation. In addressing this lacuna, this paper argues that while the failure of government policies coupled with the impact of the global economic crisis of the 1980s to bring the textile industry to stand still in the 1990s, negative impact of economic liberalisation and the investor’s deleterious practices after privatisation were the final nails in the coffin.

Cultural communication style and international joint venture contract length

Purpose: Culturally bound communication styles affect the length of verbal and written messages. Legal contracts are no exception. This paper aims to explore the relationship between cultural communication style and the level of written detail in international joint venture (IJV) contracts. Using a database of actual IJV contracts, we empirically test the relationship between the parties’ cultural communication styles, cultural distance, and the textual length of contracts. We apply Edward T. Hall’s high- and low-context communication construct and find that contracts are longer when made between parties of low- and high-context cultures and shorter when both parties come from high-context cultures relative to when both parties are low context. Additionally, we find that the higher the cultural distance in terms of individualism versus collectivism between partners, the shorter the text of the contracts. The results highlight the influence of culture on contract text length and, as such, on contract negotiation and design costs. This article contributes to the culture and strategic alliance literature by going beyond the assumption that low-context culture contracts are longer and high-context culture contracts shorter by testing it empirically.

Joint Venture Contract Design: The Role of A Host Country’s Formal Institutional Environment

This study examines the role of a host country’s formal institutional environments on the design of international joint venture (IJV) contract and enhances our understanding on what types of IJV co...

Petroleum Exploration and Production Contracts as Regulatory Tools: The Kurdistan Region Production Sharing Contracts

The operating activities of the petroleum sector require large amounts of money and high levels of experience and technology that cannot be provided exclusively by most oil-producing countries or their public companies. Therefore, concluding a petroleum exploration and production contract is necessary to address the rights and obligations of the host State and international oil companies; while, various types of petroleum contracts have been developed to address those rights and obligations. In the Kurdistan Region, as an oil-producing region, oil and gas resources are being explored and produced by international oil companies, under production sharing contracts. This study attempts to appraise traditional and modern types of petroleum exploration and production contracts in detail, to examine the fundamental differences and similarities between them; and also to analyse the Kurdistan Region’s production sharing contracts. This research has clarified that the traditional contracts of different types of petroleum contracts are quite different, however, the modern contracts have many provisions in common. Therefore, currently, the choice of contract type might be less important than the content of particular contractual provisions. Finally, the research has clarified that the Kurdistan Region’s production sharing contracts comprise several positive provisions that have attracted a wide range of international oil companies to invest in the Kurdistan Region. Keywords : The Kurdistan Region of Iraq, The Kurdistan Regional Government, Production Sharing Contract, Concession Contract, Service Contract, Joint Venture Contract, International Oil Company, Traditional and Modern Petroleum Contracts. DOI: 10.7176/JLPG/101-17 Publication date: September 30 th 2020

North Korean Legal Systems Regarding Foreign Investment

This article reviews up-to-date North Korean laws regarding foreign investment. The legislative intricacy of North Korea has been largely influenced by China. North Korea has enacted significant economic legislation to attract foreign investors, which mirrors similar Chinese laws. Since 2011, North Korea made significant amendments to laws on foreign investment and noticeable revisions on special economic zones. The Foreign Investment Act, the Wholly Foreign-Owned Enterprise Act and the Land Lease Act were revised in 2011. With respect to special economic zones, the Rason Economic and Trade Zone Act, as well as the Kumgang International Tourism Zone Act and the Hwanggumpyong-Wihwado Economic Zone Act, were revised in 2011. In 2014, the Equity Joint Venture Act, the Contractual Joint Venture Act and the Foreign Economic Arbitration Act was revised. In 2015, the Foreign-Invested Company and Foreign Person Tax Act was revised. The North Korean Socialist Constitution revised in 2019 emphasized the importance of credit in foreign trade and the principle of equality and reciprocity. It is essential and demanded for North Korea to join the New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards) and the ICSID Convention (Convention on the settlement of investment disputes between States and nationals of other States) to protect foreign investors’ legal rights.

Culture and the Length of Joint Venture Contracts

Culturally-bound communication styles affect the specificity of verbal and written messages. Contracts are no exception. The purpose of this paper is to explore the relationship between cultural communication style and joint venture (JV) contract length. Using a database of 470 JV contracts, we empirically test the relationship between the parties’ cultural communication styles, cultural distance and JV contract length. We apply Edward T. Hall’s high- and low- context communication construct and find that JV contracts are longer when made between parties of low and high context cultures and shorter when both parties come from high context cultures. Additionally, we find the higher the cultural distance in terms of individualism vs. collectivism between partners, the shorter the contracts. These results highlight the influence of culture on contractual length and, as such, upon contract negotiation and design costs. This paper contributes to the culture and alliance literatures by moving beyond the assumption that low-context culture contracts are longer and high-context culture contracts shorter by actually testing it empirically. In addition, the paper focuses on the interaction of high- and low-context cultures, which to the best of our knowledge has not been done before, in producing shorter or longer contracts, as well as how cultural distance affects contract length.

Exploring the U.S. Securities and Exchange Commission’s Edgar database by sampling joint venture contracts

Exploring the U.S. Securities and Exchange Commission’s Edgar database by sampling joint venture contracts

북한 무역 투자를 위한 관광기업의 전략에 관한 연구

The purpose of this study is to find factors determining Korean tourism business' types, joint venture types and investment environmental factors to North Korea. This research focused on divided into three business types such as travel business, tourism development business, Hotel business. Travel businesses prefer to Equity Joint venture and graded approach procedure. Factors determinant of north Korea investment is Investment Environmental Factor that consists of cope with a difficulties ability of environmental change, South Korea supporting system and law. Tourism development businesses are preferred to contractual Joint venture and graded approach procedure. Factors determinant of North Korea investment is Investment Facility Factor that consists of negotiation facility with North Korea, political environment of South Korea, investment preferential treat policy of North Korea. Hotel businesses prefer to Equity Joint venture and graded approach procedure. Factors determinant of North Korea investment is Economical Environment Factor that consists of financing ability, financing stable. In conclusion, the Efforts in promoting the development and cooperation of North and North Korea tourism exchange will prone to be the most easy and effective way for reunification of the two Koreas.

Institutional differences and arbitration mechanisms in international joint ventures

Abstract Research summaryWe theoretically and empirically study the effects of legal institutions on the inclusion of arbitration provisions in international joint venture (IJV) contracts. Legal institutions offer a public trilateral forum to handle interpartner disputes. However, these institutions function differently across countries, which can impede IJV partners from resolving disputes effectively through court systems. Alternatively, partners can take advantage of private trilateral resolution mechanisms in the form of arbitration. We argue and demonstrate that differences among partners' home country legal institutions regarding the legal traditions, as well as the importance of procedures and costs imposed in these countries for enforcing contracts, increase the likelihood of choosing arbitration over litigation. We also compare results for partners' recourse to IJV boards as a private, bilateral means of addressing conflicts. Managerial summaryIJVs are powerful levers for market expansion and access to resources and capabilities. The risks of corrosive disputes caused by conflicting interests or misunderstandings among partners are nonetheless far from being negligible. Our study helps decision makers and managers increase their understanding of the options and remedies available for resolving disputes. We consider three mechanisms in particular: public courts, arbitration, and the board of directors. Findings show that considering the partners' home country legal environments but also the discrepancies between these environments is essential when it comes to giving preference to arbitration over public courts. Findings also suggest that decisions related to internal private ordering (i.e., relying on the JV board of directors) are driven by the exchange characteristics more than by institutional considerations.

Administration and Claims Documentation System for Non Integrated Joint Venture Contract

The development of technology in modern times requires contractors especially in Indonesia to compete and adjust their capabilities with foreign contractors whose technology has been developed rapidly. One of the efforts is to establish a joint venture company. Construction project has various risk that influence the relationship between the engaging party and might trigger conflict. In order to avoid it, it is necessary to develop administrative and claim documentation system. A case study is used to obtain this research aim and analyze factors that dominate the project claims. Therefore, unavoidable risk can be managed in this type of contract.

Basic principles of investment in the economy of uzbekistan

The article describes scientific proposals and recommendations for investment in the economy of the Republic of Uzbekistan, improvement of their use and ways of their effective use. Theoretical and methodological and practical proposals and recommendations on the basic principles of investment in the economy of Uzbekistan are developed. It should be noted that the right decision in the allocation and allocation of investments is based on the analysis of the ratio of expected profit and risk. Therefore, when determining the nature of investments, it is important to take into account their risks and expected returns. It is also important to provide tax incentives to enterprises, especially those with newly established foreign investment or other small and medium-sized enterprises, on the basis of government support policies. Enterprises do not pay taxes during this grace period and direct these funds to expand their production. In the conditions of modernization and diversification of the current economy, the region has sufficient investment potential, but the creation of contractual joint ventures with major projects (eg, petrochemicals) where production modernization is required, as well as the creation of new joint ventures in all regions of the country. The volatility of the market increases the risk of return on investment. If the risk is not controlled, there will be significant losses through competition in the markets. In this context, non-investment in existing investment projects should be one of the priority investment principles.

Renegotiation of joint venture contracts: The influence of boards of directors and prior ties as alternative governance mechanisms

Research on alliance governance has pointed out that joint ventures (JVs) are particularly complex forms of collaboration. Partnering firms therefore often face difficulties in anticipating contingencies and collaborative behaviors at the contract negotiation stage. When initial JV contracts are incomplete, renegotiation represents a key strategic opportunity for enhancing contractual safeguards or coordination guidelines over the course of the joint venture. Costs and risks entailed by renegotiating JV arrangements at a later stage are far from trivial, however. Existing research on alliances suggests that practitioners have alternative relational and formal governance solutions at their disposal for handling possible inefficiencies caused by contractual gaps over time. Although insightful, this research does not enable a determination as to whether these alternative relational and formal mechanisms substitute for or facilitate ex post contractual renegotiation. The competing arguments found in the literature provide little guidance to JV practitioners as well. Our results show that the collaborative context within which the JV is embedded (i.e., prior inter-partner ties) obviates the need for enhancing incomplete JV contracts ex post. By contrast, ex post contractual adjustments are fostered and facilitated by the formal and administrative apparatus engaged over the course of the JV (i.e., an involved JV board of directors). Such opposing effects suggest that prior ties can “prevent” the occurrence of inefficiencies caused by contractual gaps, while an involved JV board primarily can act as a mediation and renegotiation platform to “repair” the exchange when inefficiencies occur. Our findings highlight the multidimensional nature of joint venture governance, and in particular the interplay among various formal and informal governance solutions in the execution of joint ventures. By unpacking their complex effects on the decision to renegotiate incomplete JV contracts, our study also holds important value for managers seeking to govern their JVs over time.

Dual moral hazard and adverse selection in South African agribusiness: it takes two to tango

The paper employs a dual moral hazard and adverse selection model to analyse partnerships in agribusiness under joint venture contracts with asymmetric information and imperfect quality measurement by the agent and principal both of which contribute to the final quality of the product in terms of production effort and marketing (offtake) effort, respectively. A salient feature of this paper is the analysis of the ramifications of joint venture contract for quantity and quality, which is often deficient in most previous analyses of moral hazard. The research found that contracts that have rewards based on the quantity produced weakened the agent’s incentive to make effort in ensuring quality. This finding could explain why most contracts in agriculture for products with differentiated markets rarely use retail-price conditioned contracts.

Contractual Joint Ventures in International Investment Arbitration

Contractual joint ventures, sometimes also called as consortiums, where several participants, without creating a new entity, unite their personal efforts and material resources with a view of achieving a certain common goal, remain a popular organizational form of large-scale international investment projects all over the World. In view of significant amount of their investments in these projects, any prospective foreign participants may wish to consider whether structuring their activities through a contractual joint venture would allow them to effectively protect their economic interests against possible adverse actions of a host State. Or, they should rather create a joint venture in the form of a partnership or a corporation under the laws of the project’s host State or under the laws of another country? To answer these questions, the article analyses the status of contractual joint ventures and their participants in international investment arbitration and compares it with the status of partnership and corporate joint ventures and their participants. The analysis is primarily carried out on the example of contractual joint ventures under Swiss law, because this law has been frequently chosen by participants of international investment projects as applicable law in a wide variety of international projects. Although the absence of legal personality of contractual joint ventures prevents them from acting as a claimant in both ICSID and non-ICSID investment arbitration, it does not by itself preclude individual claims of their participants in both types of arbitration. Furthermore, the comparison between possible amounts of participants’ individual claims reveals that under similar circumstances foreign investors in contractual joint ventures could potentially recover the same amount of damages as those in partnership and corporate joint ventures. On the basis of this comparison, the article argues that the use of contractual joint ventures would not put foreign investors in a disadvantageous position as concerns the possibility to protect their economic interests against an adverse action of a host State as compared with the participants in other two types of joint ventures.

International construction joint ventures between Singapore and developing countries

PurposeThe purposes of this paper is twofold: first, to assess the risks associated with the international construction joint ventures (ICJVs) between Singapore and developing countries and second, to investigate the risk allocation preferences in these ICJVs.Design/methodology/approachA questionnaire survey was conducted and responses were received from 38 firms that had participated in ICJVs with developing countries. A risk criticality (RC) index was adopted to evaluate the criticality of each risk.FindingsThe survey results reported “political instability” as the most critical risk and market-level risks were less critical than country and project-level risks. Additionally, the results showed agreement on the risk ranking between building and infrastructure ICJVs, despite significant differences in the criticalities of five risks. Furthermore, five risks were preferably allocated to host and foreign partners, respectively, while 13 risks could be shared among partners.Research limitations/implicationsFirst, due to the sample size, one should be cautious when interpreting and generalizing the results. Second, the RC index proposed in this study was subjective as it was influenced by the individual experience and risk attitude of the respondents. Also, the RC values were calculated without considering the weights of the respondents. Lastly, the questionnaire survey, which has been widely used in identifying risk allocation preferences, may not identify the insights of practitioners into the risk allocation practices.Practical implicationsThis study provides a clear understanding of the risks associated with forming ICJVs with developing countries and the preferred risk allocation. Although, this study is focused on the risks faced by the Singapore-developing country ICJVs, the identification of the potential risks allows companies from other countries to customize their risk profile and assess the risks before they form ICJVs with developing countries.Originality/valueAs few studies have explored the risk allocation preferences in ICJVs, this study expands the literature and provides practitioners with important information for preparing joint venture contracts or agreements. Thus, this study can contribute to the literature relating to ICJVs.

Legal Forms of Running Business by Russian Entrepreneurs in China

The article considers the issues related to the legal regulation of establishing enterprises with 100%Russian capital and Russian-Chinese enterprises on the territory of the People’s Republic of China.The establishment of enterprises with 100% Russian capital is studied on the example of a company with limited liability. This legal form is most frequently chosen by Russian entrepreneurs as it is identical formally to the widespread in the Russian Federation limited liability company. However, despite the similarities, a limited liability company in China and a limited liability company in Russia have a number of substantial differences which have been identified in the comparative analysis of the principal legalcharacteristics of these entities and are seen in a different order of formation and the size of the sharecapital, organization of management etc. These differences should be taken into account by Russian investors to minimize risks and avoid misperception on the legal aspects of doing business in China.The paper also discusses regulatory features of establishing joint Russian-Chinese enterprises whichare of two types - contract (cooperative) joint ventures and share joint ventures. The conducted research allowed revealing the advantages and disadvantages of each form of doing business in questionby Russian businessmen in China. For example, establishing an enterprise with 100% Russiancapital is quite a lengthy and costly (a large size of the authorized capital) process, but the advantages are a convenient control system with the possibility of delegating powers to the employees, the abilityto select the co-founders irrespective of nation, in addition to Russia, the risk of loss of property only to the extent of the share in authorized capital makes it attractive for Russian investors. In case of unwillingness or lack of financial ability to run an individual business, China’s domestic investors may join such a venture selecting one of the two types of joint ventures. Share joint ventures run is subjectto the law. Contractual joint ventures are largely governed by the agreement on contractual enterprise.

On the Improvement of China’s Legal System of Foreign Direct Investment

China has not enacted unified foreign direct investment code, and the legal system of foreign direct investment is composed of separate laws and numerous regulations and rules at both national and local level. The establishment of all foreign investment enterprises in China is subject to examination and approval of relevant authorities, only after which enterprises can be registered. The operation duration of equity joint ventures, contractual joint ventures and solely foreign-founded enterprises shall comply with relevant provisions of Chinese laws. The operation duration and disillusion of foreign-invested stock joint limited companies are subject to Chinese Company Law. The 2-track legislation model, under which foreign investment enterprises and domestic enterprises are governed by different laws and regulations, caused conflicts among different laws and difficulties in application of laws. To overcome the defaults China must enact unified law on foreign direct investment.

Kickbacks, stark violations, client billing, and joint ventures: Facts and controversies

Many current business trends in the field of dermatopathology deserve ethical scrutiny. An important point to consider in these analyses is that which is legal is not necessarily ethical. We examine the topics of client billing, contractual joint ventures, and health information technology donations, including both the legal implications as pertaining to the Stark Law and Anti-Kickback Statute, and the ethical ramifications of these practices.

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