Joint Venture Dispute Resolution Solicitors
A joint venture can bring huge benefits to businesses – each year companies across the globe enter into joint ventures as a way of expanding their knowledge, client reach and capacity.
However, there is always the risk when collaborating with other parties that conflict might arise, jeopardising working relationships and sometimes even the future of the partnership. Disputes arising from joint venture agreements are on the rise and can be complicated and costly to resolve.
Lupton Fawcett have a team of expert commercial litigation solicitors who have extensive experience of helping business and individuals to resolve their disputes arising from joint ventures.
If you are facing issues from an existing joint venture, or are looking to find the right joint venture agreement for your business, it’s crucial that you seek expert legal guidance. Speak to us – we will get to know you and your business and will give you clear and invaluable advice on how to negotiate the challenges you are facing.
What is a joint venture?
A joint venture, broadly speaking, is an agreement between different parties who set out to achieve a common objective together. The parties may contribute different skills or assets to the project (e.g. brands or other intellectual property rights) or may be in different geographic locations, but usually agree to pool their resources to work towards a commercial goal together.
The advantages of joint ventures include a broader business reach, and the ability to share the risks and costs between more than just one party. The most common form of joint venture is the joint venture company (‘JV Co’) where a new company is set up and both parties hold shares in that company. The JV Co can be deadlocked wherever each party has 50% of the share capital and an equal number of directors or one party may hold a minority shareholding depending on the relative contributions made. Other types of joint ventures include:
- contractual joint ventures
- partnership joint ventures
- limited liability partnerships.
Why do disputes arise in joint ventures?
Entering into a joint venture can be an exciting proposition, but planning, preparation and a clearly defined agreement are the key to a successful relationship. The scope for a dispute to arise is great due to the diverse nature of the type of ventures and number of parties that can enter into them. Management of the joint venture can cause disagreements, and if a venture fails, working relationships can be affected. Common causes of joint venture disputes include:
- lack of a joint venture agreement
- disagreements over the direction of the business as it grows and moves forward
- allegations of fraud
- misappropriation of proprietary information
- disputes over the distribution of profit or share of the business between each party
- lack of clarity over the amount of input or contribution expected from each party
- disagreements over whether the business should be sold, and if so, the terms of sale.
What is a joint venture agreement?
A joint venture agreement (JVA) is a formal agreement which can be made between individuals, partnerships, limited liability partnerships (LLPs) and limited companies who are embarking on a business project or activity collaboratively. The agreement states various terms which each party should agree to, usually concerning factors such as the share that each party has in the venture, each party’s responsibilities and roles within the venture, and any stipulations relating to ending the venture.
A JVA will differ depending on the type of joint venture concerned, and may take the form of:
- a Partnership Agreement, where the venture is between partners
- a shareholder agreement, where a joint venture is through a company
- an LLP agreement if the joint venture concerns a Limited Liability Partnership.
Although it can be difficult to anticipate every potential cause for dispute, there are strategies that can be employed to help to avoid them as far as possible. If you need advice on drawing up a JVA to suit your needs, one of our experienced solicitors can guide you to the right solution.
How can JV disputes be avoided or resolved?
The best way to avoid a dispute is to ensure the agreement between the parties is clearly documented with both parties taking legal advice. Our corporate finance team have extensive experience of all types of joint venture agreements and should be your first point of contact if you are considering a joint venture project.
If disputes does arise, where there is a JVA in place, this will be the starting point to look for guidance, depending on the nature of the disagreement. Where there is no JVA, the process of resolving the dispute can be complicated, disruptive – and expensive.
The method of resolution will depend on the type of business venture concerned and the nature of the dispute or breach that has occurred. There are several different forms that a court process may take.
Where a dispute might constitute a breach of the Shareholder Agreement, there may be grounds for an Unfair Prejudice Petition under section 994 of the Companies Act 2006, which can lead to the majority shareholder being ordered to buy out the minority shareholder. If the dispute relates to a loss to the company a shareholder may be able to bring a claim in the name of the company, known as a derivative action. If a dispute occurs between partners, the breach could potentially be pursued under the Partnership Act 1890, whilst if the breach relates to financial mismanagement, a director might be pursued for that breach.
When seeking to resolve a dispute, you need to give careful consideration to what would be the best possible outcome for your business. Do you want to continue the relationship, or is ending the joint venture, and losing with it the time and resources invested, the best solution? The action required will depend on the ultimate outcome desired – whether the ultimate aim is to recover damages, or another remedy, such as a cease-and-desist order.
One of our commercial litigation experts can help you to fully comprehend the implications of the actions available to you, factoring in any potential consequences, and assist you with exploring how to resolve your dispute.
Alternative dispute resolution
In instances where the aim is to continue the joint venture and to preserve working relationships, participating in some form of alternative dispute resolution (ADR) can be key to working through any issues. We can assist you with understanding the various forms of ADR available to you, such as mediation, enabling parties to reach an efficient and cost-effective resolution.
Making a claim
If you want to take action over a dispute that has arisen from your joint venture, we can assist you in building your case. It’s helpful if you can keep a record of each incident where breaches have occurred over a prolonged period of time and state the breach clearly. We will work to demonstrate the commercial impact of any breach upon your business and will seek the most appropriate resolution for you.
Defending a claim
If you find yourself facing accusations of breaching a JVA, you will need to seek legal advice as swiftly as possible. We can assess the situation, putting the claim into context and working with you to formulate the best response to the allegations.
How can joint venture disputes be avoided?
If you are thinking of entering into a joint venture, anticipating any potential danger areas from the outset, and detailing them in a well drafted agreement is key. A JVA is invaluable to this end, setting out how any disagreements should be dealt with if they arise, and all parties should work to define their obligations and expectations as specifically as possible.
Obviously, any disputes can be extremely disruptive and destructive to your business and should be avoided at all costs. Taking the right legal advice is also essential to ensure that you have the right kind of agreement for your venture. Lupton Fawcett employ experts in this area of the law, and if you need advice on the best way to avoid disputes arising from a joint venture, we’re here to help.
Why choose Lupton Fawcett?
As a law firm with over 100 years’ experience, we work across diverse industry sectors and our commercial dispute solicitors have a proven track record in this area of law.
We will provide you with tailored legal advice that best serves your business interests, and we will always seek to resolve any disputes as efficiently – and ethically- as possible. Although we are a Yorkshire based law firm, we have a proven track record of supporting clients nationally and internationally.
Whether you are looking to find the right JVA for your venture, you are looking to bring a claim, or find yourself having to defend yourself over a JVA breach, speak to us today to see how we can support you.
Within every area of law, we put your interests first.
We provide a personalised service, with sector specialists and extensive resources to ensure we are giving you the best solutions to your problems.
Lupton Fawcett has long been recognised for our expertise in Contract Disputes.
Our Joint Venture Dispute Solicitors act regularly for clients across the United Kingdom including Bradford, Birmingham, Hull, Liverpool, London, Manchester, and Nottingham.
We can support your needs wherever you live in England, Wales & Northern Ireland.
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