Introduction

Beneficial business opportunities in emerging markets can be enhanced through wise affiliations. Foreign investors can benefit from the expertise of local entities and, in turn, those entities can gain from the financial resources of outside firms. Particularly, in times of global economic crisis, the capacity of businesses to cope with money shortages may be enhanced by the ability to identify a compatible business partner who can provide the missing resources.

Significant infrastructure redevelopment projects that cannot easily be developed in Romania without the close cooperation of private and public entities require cooperation among diverse enterprises and government. Such forms of international cooperation are commonly referred to as “joint ventures” (sometimes abbreviated as a JV) and mean an entity formed between two or more parties to undertake some form of economic activity together. In such formations, the parties agree to create a new entity by contributing know-how and/or equity, and then share in the revenues, expenses, and control of the enterprise.

The JV can be for a specific project, or a continuing business relationship, but is distinguishable from a strategic alliance that is a much less rigid arrangement. Most significantly, as used in the international context, the term JV generally refers to the purpose of the entity and not to a type of entity. Therefore, a joint venture lato sensu can be a corporation, a limited liability company, a partnership or any other legal structure, depending upon a number of considerations such as tax and tort liability. Stricto sensu, under Romanian law, JVs are partnerships without legal personality. These latter stricto sensu JVs and the agreements that form their basis raise certain practical challenges which this article describes.

Joint Ventures as Private to Pri