Originially from: World Arbitration and Mediation Review (WAMR)

International Construction Joint Ventures: Practical Issues and Concerns By Kimberly R. Wicker
[Editor's Note: With the emergence of the global marketplace,
construction contractors are now in the position of being required to
expand their local operations in order to adapt to the new demands of the
market. Many of these parties are unfamiliar with international
commercial practices and contract procedures. This article seeks to
familiarize industry practitioners with the standard provisions of
international construction joint ventures, including dispute resolution. It
identifies the practical issues a contractor should address when entering
into an international joint venture agreement.]
International ‘Joint Ventures’:
Description and Purpose
A. Definition
An international 'joint venture' can be defined as a "contribution by
two or more parties, not all organized under the laws of the same
jurisdiction, of tangible and intangible assets toward the mutual conduct of
business activity in which the parties share in the management and the
profit or loss of that activity." In international construction joint ventures,
there is usually an 'expatriate' partner and a `host country' partner
combining resources toward a project in the `host country.' Each venturer
contributes capital, property, or services to the venture entity in exchange
for an ownership interest, sharing in the profits to the extent of that
interest. Partners also can profit from other contributions to the joint
venture, such as the supply of equipment or materials. Although joint
ventures may be formed for an indefinite duration to conduct an ongoing
business, construction joint ventures most commonly are formed on a
project-by-project (or limited duration) basis. The joint venture is an
increasingly important vehicle for facilitating the penetration of foreign
markets. Its flexible format enhances the possibility that a foreign
company can enter into a new market by bringing together companies with
similar interests in a project none of them could undertake alone.

There are two basic kinds of joint ventures: contractual joint
ventures and equity joint ventures. A "contractual" joint venture, or
'teaming arrangement,' consists of an association of moderate duration
between two parties to carry out a specific, well-defined project.
Contractual joint ventures do not involve the creation of a new corporate