Deadlock mechanisms in joint venture agreements

The most common problem in equal joint ventures is the partners’ inability to agree on key decisions. If the agreement does not address this in advance, the company’s operations may be disrupted for a long time.

Escalation

The first step is usually escalation to senior management. If no agreement is reached within a set period, referral to an independent expert or mediator may be provided for.

Exit mechanisms

Buy-sell mechanisms such as Russian roulette and Texas shoot-out provide a definitive solution but may produce unfair outcomes where the partners’ financial strength differs. They must be structured consistently with share transfer restrictions and the articles of association under Turkish law.

This article is for general information.