Hello, I am Attorney Park Jong-han from Cheongchul Law Firm.

In national contracts, there are cases where multiple companies become joint contractors due to the large scale of the contract or the existence of patents. This is referred to as a joint venture or consortium. In such joint ventures, various legal relationships arise due to the existence of multiple parties.

Joint ventures that adopt a joint performance method essentially have the nature of a partnership under civil law, so any claims that the joint venture has against the client as a result of the project are, in principle, collectively attributed to the members of the joint venture, which means that it is generally not possible for one member to separately claim only their share of the completed work.

However, if an agreement has been made in the construction contract between the joint venture and the client that allows individual members of the joint venture to acquire rights against the client regarding payment for construction according to their respective share ratios, then individual members can claim based on their share ratios.

In this case, it is important to explore how the construction claims among individual members of the joint venture are distributed if the share ratios of individual members differ from the actual construction ratios or contribution ratios.

[Question]

In a joint venture using the joint performance method, if the share ratios and actual construction ratios differ, to whom and how much does the payment claim for construction belong?

[Answer]

In principle, joint ventures created under the joint performance method fundamentally have the nature of a partnership under civil law, meaning that any claims they have against the client as a result of carrying out the project are primarily collectively attributed to the members of the joint venture. Absent special circumstances, it is not possible for one member to arbitrarily demand a benefit based on their share proportion from the client, nor can enforcement be conducted against debts owed to the client because of claims against one individual member.

However, if an agreement has been established that allows individual members of the joint venture, rather than the joint venture itself, to directly acquire rights against the client regarding claims arising from the construction contract according to their share ratios, it is possible for the claims related to the construction contract with the client to be attributed separately to each member of the joint venture according to their respective share ratios (Refer to Supreme Court ruling 2009Da105406, rendered on May 17, 2012).

In cases where an agreement has been made in the construction contract between the joint venture and the client that allows individual members of the joint venture to acquire rights against the client regarding payments based on their share ratios, unless there are special circumstances such as the stipulation that the performance of actual construction by individual members is a condition of acquiring the payment claims based on share ratios, or provisions to withdraw or expel a member due to non-performance of construction, leading to their complete loss of qualification, it should be considered that individual members acquire their respective portions of the construction payment claims corresponding to their share ratios, regardless of who performed the actual construction and to what extent. Furthermore, the final attribution of payment related to the performance of the construction contract in terms of actual contributions should be regarded merely as an internal accounting issue among the members of the joint venture, independent of the client.

Therefore, in cases where an agreement has allowed individual members of the joint venture to acquire rights against the client regarding the payment claims based on their share ratios, even if only a few members actually carried out the construction or performed beyond their share ratios, it cannot be claimed that the construction payment claims themselves will belong to those members according to the actual performance ratio (Refer to Supreme Court ruling 2012Da107532, rendered on February 28, 2013).

Thus, we briefly examined how the construction payment claims are attributed to whom in cases where the share ratios and actual construction ratios differ in joint ventures using the joint performance method. Disputes related to national contracts and public procurement involve very complex legal provisions, as well as frequent amendments, which require knowledge and experience. Hence, it is essential to be well-informed not only about court rulings but also about the administrative authorities' interpretations and dispositions. Therefore, I highly recommend seeking the assistance of Attorney Park Jong-han, who possesses expertise in national contract laws and has experience in resolving various disputes related to national contracts and procurement.

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