Joint venture disputes can be hard to resolve because these collaborations often lack formal agreements. While joint ventures offer fantastic opportunities for businesses to work together, sometimes terms are hastily agreed upon without official documentation.
This informality makes settling disputes challenging as there are no clear terms to refer to. If you have found yourself in the middle of a joint venture dispute, our network of corporate lawyers specialise in untangling joint venture disagreements.
They can help you assess your position in the dispute and guide you on the best way forward, whether you want to know your rights or explore resolution strategies.
Contact our Legal Assessment team for a free quote and find out how our network of specialist solicitors can help resolve your joint venture dispute efficiently and effectively.
What are the common causes of joint venture disputes?
Joint venture disputes often happen when one party doesn’t stick to the joint venture agreement. Common causes include:
Lack of clarity around funding sources, amounts, types, and durations.
Breaking confidentiality agreements
Lack of clarity on each party’s expected involvement
One party directing business away from the joint venture
Arguing about where the joint venture should go
Uncertainty about selling the joint venture or bringing in new partners
Disagreements over intellectual property
Differences in how much each partner receives in terms of income and growth
Conflicts of interest
Outside pressures and influences
Claims against one of the partners.
Lack of clarity around selling the business and at what price.
How do we resolve joint venture problems?
When facing a joint venture dispute, start by trying open communication and negotiation, using the joint venture agreement to support your position if you have one.
Alternative Dispute Resolution
If that doesn't work, consider alternative dispute resolution (ADR). n. A neutral third party usually facilitates ADR, helping you to reach an agreement without the expenses and bitterness of litigation.
The main forms of ADR for joint venture disputes are mediation and arbitration. Your joint venture agreement (if you have one) should specify which is the preferred form of ADR for your joint venture
How to put forward a claim in a joint venture dispute
In a joint venture dispute, how your claim is handled depends on your unique situation and the structure of your joint venture.
Claims under the Partnership Act 1980
Under the Partnership Act 1980, partners can be held responsible for violating their joint venture agreements and failing to meet their obligations to each other.
Filing an Unfair Prejudice Petition
If your joint venture is structured as a Limited Liability Partnership (LLP), a minority shareholder may be able to file an Unfair Prejudice Petition under section 994 of the Companies Act 2006 if they feel they are being mistreated.
If successful, the court may order the majority shareholder to buy out the minority shareholder.
Filing a derivative action
A shareholder can seek court authorisation to file a derivative action, which allows them to bring a claim on behalf of the company if the issue affects the company as a whole, not just the individual shareholder.
Breach of fiduciary duty
In cases where a director has caused harm or personally benefited from the company, other directors may pursue them for breaching their fiduciary duty to the company.
What are the potential outcomes of a joint venture dispute?
In a joint venture dispute, if the parties can't resolve their issues through litigation or alternative dispute resolution (ADR), they may need to consider other options. One option is for a partner to exit the joint venture, which can be done by selling their interest in the venture.
Alternatively, the joint venture itself can be terminated. This involves disposing of the venture's assets and distributing any remaining funds. The transfer of asset ownership, including intellectual property, must be addressed, along with determining the price and any outstanding obligations.
To facilitate this process, both parties may be granted put-and-call options, allowing them to either force the sale of their interest or buy out the other party's interest at market value.
How can Lawhive help?
Our network of solicitors can help you take steps to resolve a joint venture dispute, whether through ADR or litigation.
Contact our Legal Assessment team for a free case evaluation and fixed-fee quote for the services of a specialist solicitor.