Mitigation of contractual breaches in international construction joint ventures under conditions of absent legal recourse: case studies from Iran

Abstract

Purpose

Legal remedies are incorporated into international construction joint ventures (ICJVs) to mitigate contractual breaches. The effectiveness of remedies is predicated on two conditions; the comprehensiveness of the contract and its enforceability within the jurisdiction of interpretation. Relational-related weaknesses contribute to contracting parties placing a premium on the contract's capacity for mediating the relationship. However, contracts are not always enforceable. This study aims to examine means by which joint venture relational governance can be maintained under conditions of minimal legal recourse.

Design/methodology/approach

A relational contracting (RC) theory was used as the theoretical underpinning of the paper. Data were collected and analyzed following a multiple-case study approach from case projects in which ICJVs' was used.

Findings

The findings reveal (1) 17 relational and contractual governance problems; the main six being contractual flexibility, contractual joint venture system, contract reviewing, project conflict, national culture and leader–follower transgressions; (2) relational and contractual governance problems are managed differently, depending on financing sources and partners' national culture; and (3) that a developed RC-based framework comprising four stages is able to facilitate relational and contractual governance in ICJVs.

Originality/value

This study is novel in providing a guided approach to developing non-legal remedies for the mitigation of contractual breaches in ICJVs, grounded in theory and contextualized for the construction sector.

Citation

Mirzaee, A.M., Hosseini, M.R., Martek, I., Rahnamayiezekavat, P. and Arashpour, M. (2023), "Mitigation of contractual breaches in international construction joint ventures under conditions of absent legal recourse: case studies from Iran", Engineering, Construction and Architectural Management, Vol. 30 No. 4, pp. 1481-1495. https://doi.org/10.1108/ECAM-08-2021-0751