Hello, this is Attorney Park Jong-han from Cheongchul Law Firm.
In national contracts, there are cases where multiple companies become joint signatories due to the large scale of the contract or because part of it has patents. This is referred to as a joint venture or consortium. In the case of such a joint venture, various legal relationships arise because there are multiple parties involved.
Among these, in the relationship between the principal and the joint venture, the issue is who holds the rights under the contract signed between the principal and the joint venture, and what the legal nature of those rights is. This is connected to whether one party in the joint venture can claim payment from the principal on the grounds that they have fulfilled their part of the contract.
Therefore, it is necessary to look into the legal nature of the joint venture in the context of national contract relationships and what legal relationships pertain to the attribution of rights.
[Question]
The legal nature of a joint venture in the execution method and whether one member of the joint venture can make a claim.
[Answer]
A joint venture in the execution method fundamentally has the nature of a partnership under civil law, so the claims the joint venture has against the principal as a result of executing the project are, in principle, jointly owned by the members of the joint venture. Therefore, unless there are special circumstances, one member cannot arbitrarily claim provisions from the principal according to their shareholdings, and it is not possible to execute against the individual member as a debtor concerning the joint venture's claims against the principal.
However, when the joint venture and the principal agree that an individual member will directly acquire rights against the principal according to their shareholding regarding claims arising from the construction contract, the claims related to the construction contract might be attributed separately to each member of the joint venture according to their shareholding, and such agreements can be made both explicitly and implicitly.
A joint agreement where joint venture members agree to receive progress or final payments directly according to each member's stakes is reasonable in the absence of special circumstances and represents an agreement among members to acquire claims against the principal according to their shareholding in relation to the construction cost.
Furthermore, if the representative of the joint venture submits a joint agreement document concerning the segregation of construction payment claims to the principal, intending to pay the claims to each member, as per Article 11 of the revised Joint Contract Guidelines on January 8, 1996, and the principal receives these without any objections, then the members of the joint venture can acquire rights against the principal regarding their shareholding proportion based on an implicit agreement (see the Supreme Court ruling on May 17, 2012, in case 2009da105406).
This implicit agreement can also be found in the Joint Contract Guidelines and the joint agreement document, which allows for submission by all other members if the representative cannot submit the application due to unavoidable circumstances such as bankruptcy. The same judgment applies even if the respective investment ratios and actual construction ratios of the joint venture members do not match.
Thus, we have briefly examined the legal nature of joint ventures in the execution method and whether one member can make a claim. In disputes related to national contracts and public procurement, the relevant laws are very complex and frequently revised, so it is essential to be knowledgeable and experienced in this area, as well as being familiar with not only the court’s judgments but also the administrative agency’s interpretations and enforcement cases. Therefore, it is advisable to seek assistance from a lawyer with expertise in national contract laws and experience in dispute resolution related to various national contracts and procurement.
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