International Construction Law Review
INTERNATIONAL CONSTRUCTION PROJECT JOINT VENTURES UNDER SWISS LAW
JACOB C JøRGENSEN*
Attorney-at-Law, LL M (Cantab)Associate with Sand & Partners Law Firm, Copenhagen, Denmark
I. INTRODUCTION
A contractual joint venture (also referred to as a “consortium”) is one of the most popular types of vehicles for collaboration between parties involved in international construction projects. A contractual joint venture is relatively easy and inexpensive to establish, administer, and terminate. It can operate with great flexibility and enables contractors, engineers and architects to undertake jointly major construction projects that would otherwise exceed their individual capabilities. From the employer’s perspective, a joint venture is an attractive contract partner, inter alia
, because of the joint and several liability carried by the venture partners.1
Indeed, employers will sometimes only accept bids from joint ventures of a certain size for the execution of major construction projects.2
Relatively few legal systems impose mandatory rules governing contractual joint ventures. This provides great flexibility, although the absence of formal legislative requirements and corporate structure requires detailed and careful drafting of joint venture agreements.3
The joint venture agreement must, for example, address issues of: guarantees, project insurance, management, organisation, termination, funding, apportionment of profits, losses and expenses, hardship, force majeure
, dispute resolution, and choice of law.4
Overlapping or interdependent project responsibilities may give rise to a variety of problems in relation to work interfaces and allocation of contractual risks, rights and liabilities
* The author would like to thank Attorney-at-Law Charles Newcomb, Nicholas R Williams, LL M, CFA, and Matthias Scherer for their valuable assistance and input in the drafting of this article.
1 Hani Sarie-Eldin, Consortia Agreements in the International Construction Industry—with Special Reference to Egypt
(Kluwer Law International, 1996) (“Sarie-Eldin”), pp. 2 et seq.
2 See Peter Gauch, Le contrat d’entreprise
(Schulthess, 1999) (“Gauch”), p. 81, n. 252. Sometimes state-financed employers in developing countries make the formation of a joint venture involving a local partner a condition for the award of the contract, in order to promote the skills and experience of the local firm through the collaboration with the foreign partners.
3 See Gauch, op. cit
. n. 2, pp. 79 et seq.
4 See Ian Hewitt, Joint Ventures
(2nd ed., London: Sweet & Maxwell) (“Hewitt”), pp. 64 et seq.
A few comments regarding some of the key drafting issues and the use of model agreements have been made below in part III.
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