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Litigation Capacity For Joint Ventures
We’ve all heard about it, participated on the papers’ drafting and assessment, operationalized them, and given tasks relevant to them to litigation attorneys. This is especially true of business attorneys and lawyers. For the benefit of students, legal professionals, and other professionals, let’s examine Litigation Capacity For Joint Ventures.
What is The Litigation Capacity For Joint Ventures?
A joint venture, sometimes known as a “JV“, is an agreement between two or more companies to carry out an activity under shared commercial responsibility.
In recent years, the definition of “joint venture” has been heavily preferred, with different names to be used in different places for the concept of a joint venture.
However, this definition is used as “joint business partnership” in some decisions of the Supreme Court of Appeals, as “business partnership” 11th Corporate Tax Law (“Law No. 5520”) article 2. In Public Procurement Law No. 4734 (“Law No. 4734”), the definition of “joint venture” is used as the sub-headings of “partnership of business” and “Consortium” under the title of “joint venture“.
In Law No. 5520, in the paragraph entitled “Taxpayers”, the joint venture is defined as business partnerships, and business partnerships are defined as those who demand to establish liability in this way from the partnerships established to jointly undertake and share a certain business with each other or with individuals or real persons, as defined in Law No. 5520. Furthermore, it has been determined that joint ventures’ lack of a legal entity will not affect their obligations.
According to Law No. 4734, the joint ventures may be established by more than one natural or legal entity as:
- Business partnership,
In the same article, it is stated that the members of the consortium will be able to do all of the work together with the rights and responsibilities of the business partners, and the members of the consortium will be able to do all of the work together with the rights and responsibilities of the business partners.
In addition, the relevant article of Law No. 4734 clearly stipulates that the real or legal persons forming the business partnership are jointly and severally responsible for the fulfillment of the commitment and that the consortium and the consortium of real or legal persons who form the business partner shall be jointly and severally responsible for the fulfillment of the commitment.
What is The Legal Nature of Joint Ventures?
Joint ventures are considered ordinary partnerships. Ordinary partnerships that bring together more than one person to realize their common purpose do not have legal personality. Therefore, although joint ventures may be taxpayers within the scope of Corporate Tax, they do not have legal entities.
Since joint ventures are considered ordinary partnerships unless otherwise agreed in the joint venture agreement, the Articles of Association of the Republic of Turkey are applied.
What is The Capacity of Sue of The Joint Venture?
Article 51 of the Code of Civil Procedure No. 6100 (“Law No. 6100”) stipulates that the capacity of the case will be determined according to the capacity to exercise civil rights. Since ordinary partnerships do not have legal personality, they cannot act and have a party license. Therefore, joint ventures are considered ordinary partnerships (except in cases where special authorization is given to the managing partner) – as joint ventures – do not have the capacity to act and party.
Therefore, it is necessary to consider whether it is compulsory to include each person in the joint venture in the petition. In terms of lawsuits to be filed by the joint venture, the persons forming the ordinary partnership must act together as a party. In other words, all cases related to ordinary partnerships should be replaced by all partners.
In the above-mentioned Supreme Court Judgments, the fact that the joint competence capacity of the joint ventures is being addressed shows that there has still been confusion about this issue by the parties’ attorneys, lawyers, and the local courts.
However, to summarize the issue briefly, it is unlawful to establish a provision on behalf of the joint venture that has no legal personality and is considered an ordinary partnership.
Therefore, if the joint venture is to be represented as a party in the case, each party to the joint venture must be represented as a party, and notification must be made to the parties to the joint venture.
In cases where a lawsuit is requested to be filed on behalf of a joint venture, each party making the joint venture must be notified as a plaintiff. There is a mandatory litigation friendship among the persons who make the joint venture.
However, suppose it is desired to file a lawsuit against the joint venture. In that case, it is the responsibility of the creditor/plaintiff to open the case against whom the joint venture has a mutual joint responsibility.
In this case, if the plaintiff wishes, the plaintiff may direct the case to one of the parties who made the joint venture and show all the parties who made the joint venture as the plaintiff.
However, in cases where the joint venture is the defendant, and the subject is nothing other than money, the case must be directed against all the persons who constitute the joint venture.
Here is an article for further reading: Determination of Exit Share Value in Termination of Partnership Lawsuits Under Turkish Commercial Code.