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THE BRUNEI ECONOMIC DEVELOPMENT BOARD
The Brunei Economic Development Board
A Framework For A Joint Venture Agreement
JULY 2005
IMPORTANT NOTICE
All parts of this Framework have been prepared and set out purely for illustrative and educational
purposes only. This Framework is not intended to be an exhaustive guide to any or all the issues that
may be encountered during the process of forming a business joint venture, or to any purported strategy
to manage those issues.
Users are strongly advised to seek independent legal and other expert advice before entering
into any commercial contracts including joint venture agreements.
This Framework is not intended to be a fully usable and legally binding agreement, and shall not
be relied upon as such. Users are reminded that the BEDB does not warrant the completeness or
the accuracy of any information or representation in this Framework. Nothing in this Framework
shall be construed as any legal, financial, technical, insurance or tax advice from the BEDB. No
part of this Framework including any clause, omission, guidance notes, lists or examples shall at any
time be construed as a position or approach recommended by the BEDB, or to be considered fair and
reasonable, or reflecting the BEDB’s preferred position in any way.
Any act to download and/or acceptance of this document in either softcopy or hardcopy, whether
in whole or in parts thereof, by any recipient of this document shall constitute the recipient’s
agreement to and acceptance of the terms set forth in this Important Notice.
A Framework for a Joint Venture Agreement
The Brunei Economic Development Board
July 2005
INTRODUCTION
This Framework has been created by the Brunei Economic Development Board (BEDB) as part of its
ongoing efforts to assist Small Medium Enterprises (SMEs) in Brunei Darussalam. This Framework is
targeted at SMEs who are contemplating or negotiating to form business joint ventures in Brunei
Darussalam.
This Framework is intended to illustrate a typical structure for creating a business joint venture and to
highlight the common issues and some of the approaches used to deal with those issues. It is hoped that
local SMEs will use this Framework as a reference when considering the kind of issues to be aware of in
forming joint ventures.
However, users should bear in mind that no two joint ventures are the same. Each will have its own
unique circumstances, issues and challenges that will require its unique set of solutions, to be achieved
only through negotiations and consensus by the parties involved.
Enjoy reading and good luck!
ASSUMPTIONS
A joint venture can have any number of issues, but there are issues that are common to all joint ventures
whatever the business, whatever the size and whatever form the joint venture may take.
For the sake of consistency and ease of reference, the BEDB has made 2 assumptions in drafting this
Framework.
Firstly, we have assumed that the joint venture would be an incorporated joint venture; as opposed to
being an unincorporated joint venture. This means a separate ‘company’ would be created specifically
for the joint venture, with the parties to the joint venture as shareholders in the ‘joint venture company’.
Hence, many of the issues in this Framework have been addressed from this stand point.
An unincorporated joint venture is one where the parties are bound by contract, but no separate
company is formed. This is common when parties come together for a one-off undertaking or for a
specific project only.
Secondly, the joint venture would be a limited liability company under the Company’s Act; as opposed to
being a partnership. Many joint ventures operate as ‘partnerships’. While that is cheaper and easier to
administer, the parties to a partnership will typically be personally liable for the business. It is therefore
viewed as more risky.
Users contemplating other forms of joint venture can take the cue from how the issues are being
highlighted and addressed, and apply similar principle to their situation.
At all times, users are advised to seek independent legal and other expert advice as to what would be
the best approach for them.
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A Framework for a Joint Venture Agreement
The Brunei Economic Development Board
July 2005
CONTENTS
Para
Heading
Page
1.
PARTIES, DATE AND RECITALS
5
2.
FORMATION OF THE JOINT VENTURE COMPANY
5
3.
BUSINESS
5
4.
NAME
5
5.
ROLE/CONTRIBUTIONS TO THE JOINT VENTURE
5
6.
SHAREHOLDING
6
7.
SHARE OF PROFIT AND LIABILITIES
6
8.
THE BOARD OF DIRECTORS/OPERATING COMMITTEE
6
9.
BOARD MEETINGS/OPERATING COMMITTEE MEETINGS
7
10.
SHAREHOLDERS MEETING
8
11.
OPERATOR/MANAGEMENT
8
12.
FINANCE
9
13.
AUDITOR
9
14.
ACCOUNTING POLICY
9
15.
BANK ACCOUNTS AND SIGNATORIES
10
16.
DIVIDEND POLICY
10
17.
SALE AND TRANSFER OF SHARES
10
18.
NON-COMPETITION
11
19.
TRADE MARKS AND INTELLECTUAL PROPERTY
11
20.
ORDER OF PRECEDENCE
11
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A Framework for a Joint Venture Agreement
The Brunei Economic Development Board
July 2005
Para
Heading
Page
21.
DURATION AND TERMINATION
11
22.
CONFIDENTIALITY
11
23.
NO PARTNERSHIP
12
24.
WARRANTIES
12
25.
NOTICES
12
26.
SEVERANCE
12
27.
ENTIRE AGREEMENT AND AMENDMENT
12
28.
ASSIGNMENT
12
29.
DISPUTE RESOLUTION
12
30.
GOVERNING LAW
13
___________________________
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A Framework for a Joint Venture Agreement
The Brunei Economic Development Board
July 2005
1.
2.
3.
4.
PARTIES, DATE AND RECITAL
·
Parties - The Parties to the Joint Venture Agreement (‘JVA’) can be individuals or companies.
If the JVA is being entered into by a company, one needs to check whether the signatory to
the JVA is properly authorised by the company to sign on the company’s behalf.
·
Date – The Parties may want to define a ‘Commencement Date’ in the JVA for when the JVA
becomes effective, otherwise JVA would normally be effective on the date of signing.
·
Recital – This is the part of the JVA that gives a brief background to the respective parties to
the JVA including their business activities and what they will be bringing into the Joint
Venture (‘JV’). It will also state that the Parties are entering into the JVA to as a record of
their respective rights and obligations in respect to the JV.
FORMATION OF THE JOINT VENTURE COMPANY (“JVCo”)
·
The JVA should specify that Parties will jointly incorporate a Joint Venture Company [under
the Brunei Company’s Act (Cap 39)] for the purpose of this business joint venture, in
accordance to the terms set out in the JVA.
·
The Parties shall agree that once the JVCo is formed, that they will do everything necessary
to ensure that JVCo will be bound by the JVA.
BUSINESS
·
The Parties shall define in the JVA the type of business they have agreed for JVCo to carry
out. The Parties may also leave open the possibility that the JVCo may enter into other areas
of business without invalidating the JVA, if all the shareholders agree.
·
The JVA should also state clearly that the JVCo shall operate in a proper, efficient and ethical
manner and to be as profitable as possible for its shareholders.
NAME
·
5.
The JVA should specify if the JV will operate using any particular name, trademark, brand
name etc. This is a key issue especially when one Party has intellectual property rights and
rules for how this can or cannot be applied to the JV.
ROLE / CONTRIBUTIONS TO THE JOINT VENTURE
·
Parties should set out clearly in the JVA any important contributions or agreed division of
labour to set up the JV. This covers a variety of contributions such as: land, provision of
infrastructure, license, concession, intellectual property rights, customers, off-take contract,
marketing channel, key personnel etc. Some of these contributions are so critical to the JV
that they are viewed as ‘Minimum Obligations’ of the respective Parties, and the JVA may
specify that those obligations are pre-conditions without which the JVA will not be valid.
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A Framework for a Joint Venture Agreement
The Brunei Economic Development Board
July 2005
6.
SHAREHOLDING
·
The JVA should state the JVCo’s authorised share capital and the number of shares to be
issued.
·
The JVA should detail the Parties agreed shareholdings, e.g.
Number of Shares
Party A
Party B
Party C
·
7.
8.
X
Y
Z
Percentage of Shareholding
A%
B%
C%
The Parties may want to agree in advance that if the JVCo issue new shares in the future,
every Party shall be entitled to have rights of first refusal to the new shares in proportion to
their shareholding. This is meant to maintain their percentage (%) share in the JVCo.
SHARE OF PROFIT AND LIABILITIES
·
If Parties to the JV agree to any particular profit sharing formula, [as opposed to the general
rule of sharing in accordance with their percentage (%) equity share in the JVCo.], then that
is crucial to be included in the JVA. This may be due to special circumstances such as
conditions imposed by a licensing arrangement, profit sharing arrangement with certain key
personnel, repayment of shareholder’s advance, etc.
·
Parties may want to make it clear that their liability shall be limited to their equity contribution
to the capital of the JVCo, as such Parties may seek to incorporate indemnities from the
JVCo within the JVA.
THE BOARD OF DIRECTORS
·
Number of Directors - The Parties should agree on the initial number of Directors in the JVCo.
This should comply with the Brunei Companies Act s138 which requires that each company to
have at least 2 Directors and that at least half of the Board of Directors should be nationals of
Brunei Darussalam.
·
Appointment of Chairman and Secretary - The Parties should agree how the Chairman of the
Board should be appointed e.g. if the Chairman should be appointed by any particular
shareholder; otherwise the presumption is that it shall be elected by the Board. The Parties
should agree the same for the Board Secretary.
·
Changes to the Board Composition - The Parties can specify the rules with regard to the
appointment, removal, resignation and replacement of Directors. The Parties may agree for
each shareholder to be entitled to appoint and/or remove a certain number of Directors, and
that same shareholder shall be entitled to name the replacement upon the death, resignation
or removal of any Director it nominated.
·
Changes to the Size of the Board - The Parties should decide how they would agree to
changes in the size of the Board and/or changes in the numbers of directors each Party can
nominate. For example: the Parties may specify that such changes can only take place if
agreed by shareholders who among them hold [e.g.75% or more of the voting shares] in the
JVCo. It may not be a good idea to require the agreement of all shareholders because if any
shareholder increases its shareholding it would be unfair if a minority shareholder can block it
from increasing its presence on the Board.
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A Framework for a Joint Venture Agreement
The Brunei Economic Development Board
July 2005
9.
·
Initial Appointments To The Board - The Parties should agree in the JVA the initial line up of
Directors and Chairman of the Board.
·
Board Remuneration - The Parties may also decide whether Directors should receive any
remuneration for being on the Board, the amounts and any attached conditions e.g. to be
eligible for remuneration any Director must attend no less than 80% of Board Meetings.
BOARD MEETINGS
·
Function of the Board – The Parties should as a priority agree how the Board of Directors
should function. The Board of Directors should be responsible for setting the strategy
direction for the JVCo and would normally be given wide-ranging powers to make decisions
on behalf of the JVCo without having to call a shareholders meeting. However, it should not
undertake a day-to-day management role, which should be the responsibility of the
management.
·
Calling of Board Meetings - The Parties should specify how often the Board should meet and
who can call a Board Meeting. Board Meetings are usually called by the Chairman of the
Board and/or the Board Secretary and/or by an agreed minimum number [e.g. two] of
Directors.
·
Notice for meetings - There should be set procedures for how Board Meetings are called
including the form of notice for the meeting, which should specify date, time and place, and
the agenda for the meeting. The Parties should agree on a minimum notice period [usually 14
days].
·
Quorum - The Parties may specify the minimum number of Directors to be present for the
Board Meeting to be valid i.e. achieve a quorum. This requirement is particularly important for
the minority shareholder who may want to make sure that other shareholders cannot hold a
Board Meeting and make decisions without it being present.
·
Format for Board Meeting - The Parties may decide to allow alternative formats of conducting
the Board Meeting e.g. using teleconferencing. This is particularly relevant if one of the
Parties to the JV is a foreign party and its representatives on the Board are based abroad.
·
Decision of the Board – The Parties (especially the minority shareholder) should decide
clearly whether certain [important] decisions require more than a majority i.e. half the
Directors present at Board Meetings to be approved. Such decisions may require a supermajority [e.g. at least 75% of Directors] or even unanimity i.e. every Director must approve.
The following are some examples of decisions that might need a supermajority or unanimous
approval: annual budget, borrowings, guarantees, change in banking or signing authority,
major capital commitments, decision to pay dividend, increase in paid-up/issued capital,
granting of shares or options, certain related party transactions, employment of key
executives, disposal of key assets/business /licenses, incorporation/sale of subsidiary,
change of auditors, winding-up, voluntary liquidation. The downside to having such provisions
is that it may be prone to abuse by a minority shareholder to hold the JVCo ‘hostage’.
·
Decision by circular resolution – The Parties may consider allowing decisions of the Board to
be valid if in writing and signed by every Director, even if signatures are found on different but
identical copies of resolution including faxed copies. This is to enable certain urgent business
or procedural matters to be approved quickly without calling for a Board Meeting.
·
Casting vote - Parties may agree that in the event of a tie during Board Meetings, the
Chairman shall have a second or casting vote.
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A Framework for a Joint Venture Agreement
The Brunei Economic Development Board
July 2005
·
10.
11.
Independent Director – Parties may want to appoint person(s) of credibility who are not
shareholders or connected to any shareholders to be Directors for the sake of better
corporate governance. If so, the JVA should allow a non-shareholder to be appointed
Director.
SHAREHOLDERS MEETING
·
Parties may reserve certain matters to be decided only at shareholder’s meetings (as
opposed to being delegated to the Board). This may be relevant if not all shareholders are
represented on the Board; or if the issue in question is regarded to be so fundamental that it
should be put to shareholders. Some examples are: appointment or removal of Directors,
dividend policy, issuance of new shares or interests in the JVCo., appointment of JVCo.’s
auditors, merger and acquisition, voluntary liquidation, winding-up etc.
·
A shareholders meeting is required annually by law, but Parties should agree on the
procedures for convening and conducting any additional shareholder’s meetings if urgent
business arise. There are certain rules prescribed in the model Article of Association in the
Company’s Act.
OPERATOR / MANAGEMENT
·
Operator - It is essential that Parties identify who should be the operator of the JV; whether
that be any one of the Parties or some other person/entity.
·
Authority - The Parties should agree in the JVA the scope of powers to be delegated to the
operator/management and the principles to be followed by the operator/management. This
shall include setting out the delegated financial authority, authority for entering into
commitments on behalf of the JVCo and the scope of administrative authority to be delegated
to the operator/management. What should be avoided is a situation where the Board of
Directors micro-manages or interferes with the day-to-day operations of the JV; or where
every shareholder wants to get involved, or where no one is clearly responsible for the
operations/management.
·
Appointment - The Parties may also agree in the JVA to create certain key management
positions e.g. CEO or General Manager, and agree on the person(s) to be appointed to key
management positions at the onset of the JV [occasionally key terms of employment as well];
and to define the procedures for appointing/removing those key management positions.
·
Budget, business-plan and policies – The Parties should agree the ‘control points’ – of which
the annual budget, business-plan and policies are key - where the Board will give directions to
the operator/management and for the operator/management will be accountable. Parties may
want to define in the JVA how the budget and business plan should be formulated, to set
procedures for approval or amendment [e.g. giving minority shareholders certain safeguards]
and who [usually the operator/management] should be accountable for the implementation.
·
Management reporting – Parties (especially if one Party is the operator/management) should
agree on what should be included in the CEO/General Manager’s report to the Board and how
often that should be made. Usually reporting is done monthly and would include profit and
loss accounts, cash flow statement, balance sheet, status of key business activities,
performance against performance targets, key initiatives, human resource issues, security
incidents etc. These will be in addition to any external audit and/or annual reporting to
shareholders as required by law or as agreed between the Parties.
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A Framework for a Joint Venture Agreement
The Brunei Economic Development Board
July 2005
12.
13.
FINANCE
·
Funding – Parties must agree on the funding requirements to establish the JV. Agreeing to
the initial budget [possibly for more than a year] and business plan is therefore critical. The
JVCo needs to be funded by any combination of equity capital by the shareholders,
borrowings and/or advances. If the expectation is that every Party pay their own share, the
JVA can be structured so that the JV will be terminated [or it will automatically offer the stake
to other shareholders] unless such payment is made within a certain time.
·
Subsequent rounds of fund raising – Parties should agree that if the JVCo needs to raise
additional capital, and any existing shareholders unable to provide additional funding would
agree to see its percentage (%) share diluted by allowing others to provide the equity instead.
However, Parties sometimes agree to reserve certain special rights for its ‘early’ investors,
e.g. place on the Board, priority in distribution of profits, special voting rights; even after their
percentage (%) share had been diluted, by creating different classes of shares.
·
Borrowings – If Parties expect the JVCo to borrow to fund its operations, then Parties should
agree the procedure for approving the JVCo to take on debt. They should also agree how the
JVCo will provide security especially if Directors or shareholders are expected to provide
guarantees to secure the loans. This is often an issue for SMEs in Brunei Darussalam, and
has to be structured carefully e.g. Parties may limit to provide security only in proportion to
their shareholding. Alternatively, the JVCo may borrow from its shareholders in the form of an
‘advance’. In this case, the Parties should agree within the JVA the terms for the advance
[e.g. Are all shareholders required to provide advance according to their share? Is it interest
bearing? Is it secured against any asset? What are the rules on repayment? What happens
on default? Can the loans be converted into equity?]
·
Non-monetary contributions – If any Party come into the JV not as a ‘paying’ investor because
it brings with it certain assets [e.g. license, existing contract, land, technology, industry
experience], Parties to the JV should agree a value for that contribution and reflect that within
that shareholder’s equity in the JV. Alternatively, the Parties can agree the basis for the JVCo
to contract for the use of the asset e.g. by lease, license agreement.
·
Financial Procedures – Parties should agree as much and as early as possible, the financial
procedures for the JVCo, including budget, levels and limits of delegated financial authority,
procedures for approving financial commitments, banking authority, cheque signing authority,
procedures for keeping of financial records, audit policy etc. because this is a fertile area for
dispute between Parties in a JV. If necessary, Parties should seek independent advice from
experts to have a fair, robust and transparent procedure in place.
AUDITOR
· Auditor - Parties should agree in the JVA the Auditor for the JVCo.
14.
ACCOUNTING POLICY
· Accounting policy – Parties in a JV, especially when the JV is with a foreign party, should
agree on the accounting policies of the JVCo. There may be critical differences in the
accounting rules and regulatory compliance between the different Parties to the JV, so this
need to be ascertained with expert advice.
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A Framework for a Joint Venture Agreement
The Brunei Economic Development Board
July 2005
15.
BANK ACCOUNTS AND SIGNATORIES
·
16.
DIVIDEND POLICY
·
17.
Parties should agree [that once the JVCo is incorporated] to do all that is necessary e.g. to
pass a Board Resolution to authorise a specific representative to open the Company’s bank
accounts at a choice of bank agreed by the Parties in accordance to the Parties’ signing
instructions, and arrange for shareholder’s funds to be paid into the JVCo.
The Parties should agree on how much of the JVCo’s profits should be returned to
shareholders as dividends and not retained within the JVCo. It could be a policy to distribute
an agreed percentage (%) of the JVCo’s net profits, usually subject to retaining a prudent
level of working capital and cash reserve. The Parties will also make sure this policy cannot
easily be changed.
SALE AND TRANSFER OF SHARES
·
Restriction on Transfer – Parties in a JV will often agree on certain process and safeguards
for any sale, transfer, assignment of shares by another shareholder; so that the remaining
Parties have some control over the emergence of a new shareholder or changes in the
shareholding. Often, such transactions will require the consent of existing shareholders, who
will also have the first right of refusal to take up the shares. The Parties will usually agree on
a formula for agreeing the share price for this transaction e.g. based on the price currently on
offer by a third party, to be determined by an independent third party such as an investment
bank or auditor,or determined by a pre-set formula.
·
Withdrawal – The JVA should specify how any Party can withdraw from the JV and the
conditions for doing so. Parties need to determine the rights [e.g. entitlement to share of
profits] and obligations [e.g. any penalty, duty on confidentiality, non-competition] of the
withdrawing Party; and the procedures by which that Party’s shareholding can be disposed
off. Often, the Parties may specify a minimum period of time when no Party can withdraw
[without penalty] to ensure that all Parties stay committed to the JVCo.
·
Buy-out – The Parties may want to plan for circumstances when one shareholder can
out’ another shareholder e.g. in event of death, insolvency, bankruptcy, acquisition
competitor, major disagreement/deadlock in JVCo, termination of JVA.
In
circumstances, the Parties should pre-determine in the JVA the procedure and how the
should be calculated.
·
Use of shares as collateral – Parties should agree whether any shareholders should be able
to pledge or mortgage or use the shares as security for loans; and if that is allowed whether
the JVCo or other shareholders need to give written consent and whether that should be
subject to any conditions.
·
New shareholders to be bound by JVA - As an additional safeguard, the Parties may insist in
the JVA, that any Party transferring its shares must ensure that the new shareholders will be
bound in writing to the terms of the JVA, otherwise the JVCo would refuse to approve and
register the transfer.
‘buyby a
such
price
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A Framework for a Joint Venture Agreement
The Brunei Economic Development Board
July 2005
18.
NON-COMPETITION
·
19.
TRADE MARKS AND INTELLECTUAL PROPERTY
·
20.
22.
If the JV makes use of any intellectual property rights [e.g. brand name, trademarks, images,
patent, processes, trade secrets, licenses] controlled by any of the Parties, the owner of that
intellectual property will normally insist that the Parties to the JV take all necessary steps to
ensure that the JVCo will enter into certain agreements and/or observe certain conditions for
using the intellectual property. Usually, the JVA will also contain terms that are designed to
protect such intellectual property prior to the formation of the JVCo or if the JVCo is wound-up
to ensure that the Parties to the JV have certain direct legal obligations.
ORDER OF PRECEDENCE
·
21.
Parties should agree that no party should be allowed to undertake any activity that competes
with the JV either directly or indirectly, for the duration of the JV and usually for a certain time
after as well. This is particularly relevant if one Party has certain product, technology, skill,
client base critical to the JV’s business.
When JVs are formed, the Parties would enter into a number of agreements amongst them
such as the JVA, share subscription agreement, licensing agreement etc. Parties usually
agree in the JVA which of their agreements will prevail over other agreements if there is any
inconsistency among them. Often Parties would agree that the JVA will take precedence over
the Articles of Association. No agreements can take precedence over the law and rarely over
the Memorandum of Association.
DURATION AND TERMINATION
·
Duration - Parties should agree from the onset whether the JV should be for a specific
purpose and/or specific period of time, or whether it should be continuing going concern.
·
Termination events - Parties should agree on the situations when the JVA will automatically
be terminated. Some common termination events are: when one party holds all the shares in
the JVCo, when a resolution is passed to wind-up the company, when certain licenses to
operate cease to be available, etc. The Parties should also agree on the areas where the
Parties to the JVA can choose to terminate the JVA if another Party is in breach or default.
·
Procedures for termination - the Parties should agree from the onset the procedures, notice
period and the consequences of termination e.g. whether the JVCo will be liquidated, trigger a
‘Buy-Out’ etc. Usually, the procedure will include an agreed time period and/or steps to allow
the Party in default/ in the breach to remedy the situation; before allowing for the JVA to be
terminated if the situation persists.
CONFIDENTIALITY
·
The Parties should agree (right from the onset, even before the JVA) certain undertakings to
keep all confidential information, commercially sensitive information, and deliberations
between the Parties in forming the JV confidential. The Parties should also agree in the JVA
to ensure that this legal obligation extends to anyone who has access to confidential
information e.g. Directors and employees of the JVCo, advisers, business partners. This is
essential in order to facilitate the release of information during due diligence, and to impose a
confidentiality obligation even if the JV does not go ahead. This part of the JVA should
survive for an agreed period of time after termination, or any Party’s withdrawal from the JVA.
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A Framework for a Joint Venture Agreement
The Brunei Economic Development Board
July 2005
23.
NO PARTNERSHIP
·
24.
WARRANTIES
·
25.
The Parties should agree that the JVA will supersede any previous agreements, and that any
amendment or variation of the Agreement shall be effective only if it is in writing and signed
and confirmed by the Parties.
ASSIGNMENT
·
29.
The Parties should agree that if any clause in the JVA is considered void, illegal or
unenforceable, that would not by itself affect the rest of the JVA.
ENTIRE AGREEMENT AND AMENDMENT
·
28.
The Parties should agree what constitutes a valid notice for matters under the JVA.
SEVERANCE
·
27.
Each Party to the JVA should make certain warranties, usually on matters of fundamental
concern that are not easily verified by the other Party. For example: if dealing with a
company, Parties may require a warranty that the company is duly incorporated, registered
and is not subject to certain legal action; and that the persons signing the JVA is duly
authorized to contract. When contracting with an individual, the Party should warrant that
they are not under any bankruptcy proceedings/receiving order. If any Party is to contribute
certain assets to the JVCo, it should give a warranty that it has legal rights to those assets
and has the right to contribute it to the JVCo in the agreed manner.
NOTICES
·
26.
The Parties should make it clear that the JVA should not by itself constitute a partnership
between the Parties. A partnership would give a Party the ability to bind, commit or pledge
the credit of the other Parties.
A Party is usually not allowed to assign its rights and obligations in the JVA to others, unless
with certain agreed consent from the other Parties.
DISPUTE RESOLUTION
·
This is a key issue for the Parties to have a clear understanding of from the onset. One
commonly used route is as follows: (1) At the first sign of a dispute, the Parties would agree
to try and settle the dispute through informal consultation between a senior representative
from each Party who had not previously been involved with the dispute [e.g. the company
Chairman], with a view to having ‘cooler heads’ to resolve the differences; and (2) if that fails,
then the Parties can agree to refer the matter to arbitration or mediation. Occasionally, the
JVA will also agree the procedure, format and choice of arbitrators or mediator. If the JVA is
silent on this, the Parties can always resort to resolving the dispute in court.
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A Framework for a Joint Venture Agreement
The Brunei Economic Development Board
July 2005
30.
GOVERNING LAW
·
For a JV operating in Brunei Darussalam, unless the Parties agree otherwise, the JVA should
normally be governed by, and construed in accordance with the laws of Brunei Darussalam.
________________________________
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