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Australian Joint Ventures and the Cross Charge

Michael Coyle, Mining Agreements III

This paper considers cross charges as a form of security between the participants of a joint venture. It is limited to unincorporated joint ventures, such as those commonly used for mining and petroleum exploration and development.

As it is in the United States, the unincorporated joint venture in Australia is a contractual creation between two or more participants, each of whom holds a certain share in the assets of the venture. There is no single joint venture vehicle constituted specifically for the purposes of the venture. Rather, the unincorporated joint venture operates essentially as a form of co-ownership by the participants.

As explained in Section 3 of this paper, the concept of a joint venture is a relatively recent phenomenon in Australia. To date (unlike partnership law, with which the law relating to joint ventures continues to be confused) there is no State or Federal statute or code governing the concept.

It has been this lack of a formal, legally recognised entity which has led to considerable confusion in the past as to whether the Australian courts would in fact recognise the concept of a “joint venture” or merely attempt to classify it as falling within an established legal category, such as a partnership. Several commentators have recently made the dangerous assertion that a joint venture is in fact a partnership, thereby denying