JOINT VENTURE – RIGHTS OF THE CONSTITUENT COMPANIES
The recent England and Wales (Technology and Construction Court) decision of Darchem Engineering Ltd v Bouygues Travaux Publics & Anor [2026] EWHC 220 (TCC) is a reminder that when dealing with joint ventures, parties should pay attention to how the obligations and liabilities have been structured.
Background. Darchem Engineering Ltd v Bouygues Travaux Publics & Anor [2026] EWHC 220 (TCC) (the “Judgment”) pertains to an application to enforce, by way of summary judgment, an adjudicator’s decision by the claimant, Darchem Engineering Limited (“Darchem”) (Judgment [1]).
The main contractor, an unincorporated joint venture known as “BYLOR”, consisting of Bouygues Travaux Publics and Laing O'Rourke Delivery Limited, formerly Laing O'Rourke Construction Limited, had engaged the subcontractor, another unincorporated joint venture known as “EDEL”, consisting of Darchem and Framatome Limited, formerly known as Efinor Limited before it became part of the EDF Group) (Judgment [2]).
Three adjudications were brought by Darchem alone, of which the third application formed the subject of the application before the court (Judgment [3]).
In each of these adjudications, Darchem stated that it brought the applications “acting jointly and severally as the Subcontractor in accordance with the Agreement and clause 12.6 of the Subcontract” (Judgment [3]).
And in each of these adjudications, the jurisdiction of the adjudicator was challenged on the basis that Darchem was not a party to the subcontract and was not entitled to bring an adjudication (Judgment [3]).
The key clause. The key clause in question identified at Judgment [14] is clause 2.2 of Option W, as set out below (excerpted from Judgment [10]).
"2.2 Notwithstanding any other provision of the Dispute Resolution Rules, any Party may at any time
2.2.1 seek adjudication of any Dispute, in which case the adjudication procedure set out in Rule 4 applies, […]"
The key question was simply this: was Darchem a “Party” for the purposes of this clause? If not, Darchem would not have a right to commence adjudication.
The analysis. This was a question of contractual analysis. And after reviewing the whole of the contract, the court held that the “whole of the Conditions of Subcontract are drafted in a manner objectively consistent with the Subcontract being bilateral, with two parties, rather than four or six” (Judgment [17]).
Among others, at Judgment [18] – [19], the court found that it was significant that there was a clause which addressed a situation where a “Party” referred to a constituent of each of the two joint ventures, as opposed to the wording for Option W:
“18. Clauses 91.1 and 91.2 are also strongly supportive of Ms Stephens KC's position. Having stipulated that either Party may terminate if the other Party has one of a number of things relating to winding up, administration and liquidation etc, the clause specifically addresses the situation where a Party comprises two or more companies acting in joint venture. In these circumstances, a reference to Party 'in this clause 91.1' is deemed to be a reference to each such company individually. The obvious inference is that, save for the deeming provision specific to this clause, the word 'Party' is not elsewhere a reference to each constituent of the two JVs. Similar deeming language exists in clause 91.2 in respect of the word 'Subcontractor', and that too is limited to deeming the wider meaning to the term 'in this paragraph', and not more broadly.
19. In this respect, there is no equivalent wording in Option W deeming the word 'Party' in clause 2.2 to be a reference to each company individually. These clauses demonstrate a clear objective intention that (a) Party is not generally understood as a reference to the constituent companies making up a Joint Venture, but to the Joint Venture indivisible entity; and (b) where Party is to be deemed to mean otherwise (and, in particular, a reference to the constituent parts of the Joint Venture), the parties have said so. It follows that, all things being equal, the word 'Party' is not a reference to one of the constituent parts of the JV, but to the JV itself.”
Additionally, at Judgment [23], the court also referred to the statement prior to the executory signatures and held that the wording used was consistent with there being only two “Parties”, with the constituent companies of each of the joint ventures being not itself a Party. See Judgment [23] as set out below:
“23. The word 'Parties' is repeated at the end of the Agreement, prior to the executory signatures. Immediately following the statement that the Agreement has been executed and delivered as a deed, 'by the Parties', the Agreement continues: 'Where either Party constitutes (under applicable laws) a joint venture, consortium or other unincorporated grouping of two or more persons the liability of such persons to the other Party under this Agreement shall be joint and several.' This sentence is consistent with there being only two 'Parties'. It is also language which specifically contemplates, as is the case here, that one or more of the (two) Parties is a joint venture consisting of more than one legal entity. A natural reading of the words is that each of the constituent entities is not itself a 'Party', but forms part of a Party; and that joint and several liability is imposed in respect of the obligations undertaken by that 'Party'. Read in this light, the plural word 'Parties' in the immediately preceding sentence, would naturally mean the two JVs, not each constituent entity.”
The court also addressed Clause 12.6, which is excerpted below:
“12.6 If the Subcontractor comprises two or more companies or other entities acting in joint venture, consortium, partnership, unincorporated grouping or otherwise, each such company or other entity is jointly and severally liable to the Contractor tor the performance of the subcontract works and all of the Subcontractor's obligations under this subcontract. These companies or entities notify the Contractor of their leader who has authority to bind the Subcontractor and each of the companies or entities and in the absence of notification the Contractor is entitled to rely upon each such company or other entity as having authority to bind the Subcontractor and each of them. The Subcontractor does not alter his composition or legal status without the prior consent of the Contractor."
The court held at Judgment [30] – [33] that this Clause 12.6 did not assist Darchem: the court held that the clause did not alter the status of a constituent company within the joint venture (and thus would not make it a “Party” for the purpose of Option W) and that the reference to acting jointly and severally was “better construed as no more than a reference to the facts that (a) Efinor is acting with Darchem as 'the Subcontractor', and that (b) their liability for the JV is joint and several.”
The result was, therefore, Darchem was not a Party under the subcontract: it could not operate clause 2.2 of Option W in its own right, and therefore the summary judgment application failed (Judgment [43]).
Conclusion. While in Singapore, the Building and Construction Industry Security of Payment Act 2004 is different from the adjudication regime in England and Wales, nonetheless, the points raised by this Judgment are not limited to adjudications alone.
This is because joint ventures are commonly encountered in the construction industry, and what this Judgment makes clear is that when parties enter into contracts with (or as) a joint venture, it is important to pay careful attention to the rights and liabilities of both the joint venture and the constituent companies of the joint venture.
It is important to check and confirm if, for example, a constituent company of the joint venture has the right to commence arbitration alone, or if arbitration can only be commenced by the joint venture company.
Failing to pay careful attention to the rights and liabilities may potentially lead to issues down the road like what occurred in this Judgment. Such issues should therefore be addressed in the contract so as to avoid the potential for disputes in the future.
This publication is not intended to be, nor should it be taken as, legal advice; it is not a substitute for specific legal advice for specific circumstances. You should not take, nor refrain from taking, actions based on this publication. Chancery Law Corporation is not responsible for, and does not accept any responsibility for, any loss or damage that may arise from any reliance based on this publication.