Joint ventures

The phenomenon

Joint ventures are temporary and occasional forms of cooperation between enterprises set up to jointly carry out a complex work or business. For the most part, these are large public or private works that exceed the operational capacity of a single enterprise but, at the same time, have characteristics that allow for the cooperation of several separate enterprises in their implementation.

It is a widely spread phenomenon in the international arena.

The firms that join together want to join forces and cooperate with each other in the execution phase of the work, but at the same time they want to retain their operational autonomy. They each want to execute directly, with their own means and organization, a part of the work.

The enterprises concerned present themselves to the other party as separate but related enterprises. They submit a joint bid and jointly undertake to execute the overall work, entrusting one of them (parent company) with the task of jointly managing relations with the client and coordinating the work in the execution phase. Each enterprise retains full legal and economic autonomy in the completion of part of the work and is directly accountable to the client for the part under its responsibility.

Such forms of cooperation constitute, according to case law, unnamed associative contracts, an expression of the contractual autonomy of the parties under Article 1322 of the Civil Code. These phenomena, in fact, have not yet received, in Italy, an organic and unified discipline that considers both internal and external profiles of their activity.

Liability regime

A distinction must be made according to whether the work is divisible or not.

Non-splittable work: the companies are all jointly and severally liable for the entire work. The division of work in the execution phase is only of internal relevance.

Unsplittable work: only the so-called parent company is liable for the entire work. The other combined enterprises are only liable for the execution of the part under their responsibility.

Relations between companies

The legislature gives full freedom to the combined enterprises with regard to relations among themselves and toward third parties (other than the client).

Enterprises are free to maintain the minimum functional connection that derives from the collective mandate or to set up a common organization of a consortium type, intended to coordinate and regulate the execution of the work.

In addition, companies may establish a company among themselves, which automatically takes over the execution of the work, without the need for the client's authorization.

However, the liability regime of the combined companies is retained.

Reference

G. F. Campobasso, Diritto commerciale, vol. I, Diritto dell’impresa, UTET Giuridica, Milano, 2022, pp. 287-292.