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Termination Agreement Of Joint Venture
It is also essential that the current CAPEX and OPEX requirements of the Joint Undertaking are understood in such a way that termination does not create a funding gap. The outgoing partner may also have granted a parent company guarantee for the joint venture, which may need to be replaced. In the absence of the dissolution of the entire joint venture, part of a joint venture may be dismissed from a joint venture if it refuses to fulfil the bulk of its obligations[xv]. In the event of termination of the report, the termination of this joint venture must be served[xvi]. This is the last article in our series that studies joint ventures in the field of energy & natural resources. Previously, we have taken into account the legal mechanisms available to parties when they try to terminate a joint venture in a risk situation. This article continues this question by examining the main causes of termination and listing the top ten issues to consider in determining whether to terminate a joint venture. It is possible for a joint venture to end as a result of a failure. A well-developed Joint Undertaking Agreement (“CSA”) will specify the obligations of the parties to the Joint Undertaking and will clearly and accurately express the circumstances or events constituting a `failure event`. Common default scenarios include: (i) the insolvency of a party (or possibly its parent company), (ii) a material or persistent breach of the CSA; (iii) a change of control of a joint venture (in particular where the party acquiring control is a competitor of the other joint venture) or (iv) an attempt to transfer a party`s stake in the joint venture in a manner other than that of the CSA. Joint ventures can end simply with the sale of the shares of one or all of the parties in the joint venture (as was the case with the TNK-BP joint venture we discussed in our first article). Please click here to see.
However, some courts have found that it is not necessary for the notice of dissolution to be notified to each member of a joint venture[xiii]. It is possible that, as a result of a deadlock, the parties may not be willing or unable to continue the joint venture, leading to the continuation of an exit. Our second article in this series contains more details on this topic and highlights the different mechanisms available to deal with such a situation. Please click here to see. If the termination of a joint venture occurs in circumstances where a party continues to operate the joint venture, it does so with increased risk and ultimately bears the sole risk of failure. . . .