Joint ventures established for the performance of public procurement contracts frequently give rise to disputes between their members, particularly in relation to the exercise of the Leader’s mandate, the distribution of benefits, and the scope of contractual liability. These conflicts highlight the importance of clearly structuring the Joint Venture Agreement and of observing the legal limits of representation.
The Leader’s Mandate and the Relationship with the Contracting Authority
The Leader of the joint venture plays a key role in the relationship with the Contracting Authority; however, its powers of representation are not unlimited. In the absence of express clauses in the Joint Venture Agreement, the provisions of the Civil Code set the framework within which the Leader may act, generally limiting its authority to acts of administration and preservation. Practice has shown that exceeding these limits, by assuming additional obligations or entering into settlements without the consent of the other members, represents a constant source of disputes, particularly where penalties or damages are accepted for delays or non-performance attributable to other members of the joint venture.
Distribution of Benefits and Failure to Achieve Expected Profits
The performance of a public procurement contract does not automatically entitle each joint venture member to the share of benefits provided for in the Agreement. The right to benefits is closely linked to proof of each member’s effective contribution, namely the works performed or services rendered. In practice, courts and arbitral tribunals rely decisively on clear supporting documents evidencing the services or works carried out.
Disputes are further intensified where the anticipated benefits fail to materialise, either due to the elimination of certain activities through contractual variations or as a result of increased execution costs. In such cases, dispute resolution depends on a technical assessment of the interdependence between the members’ activities and on how the losses were generated and allocated.
Joint and Several Liability Between Joint Venture Members
Joint and several liability represents the general rule in the context of joint ventures, being enshrined in both public procurement legislation and the Civil Code. Nevertheless, practice has highlighted the existence of certain exceptions, such as the novation of obligations through addenda concluded solely between the Contracting Authority and one of the members, the express limitation of joint and several liability through the Joint Venture Agreement, or the necessary distinction between joint and several financial liability and individual administrative liability, which is particularly relevant in the context of negative performance certificates.
Sarbu Partners’ Expertise in Public Procurement and Construction Disputes
Sarbu Partners provides legal assistance and representation in complex litigation and arbitration in the field of public procurement and construction contracts, including disputes between members of joint ventures, offering services from structuring agreements to representation before courts and arbitral tribunals.
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For further information or legal assistance tailored to your specific situation, please contact us at office@sarbupartners.ro.