Joint Ventures 2025

Joint ventures (JVs) remain among the most resilient and versatile instruments available to businesses seeking growth, innovation and cross-border collaboration.

In today’s increasingly volatile global landscape, companies are compelled to rethink their business models in order to confront novel challenges and seize emerging opportunities.

A JV can provide a nimble platform for reducing risk, securing access to new markets or technologies, and sharing the considerable costs of large-scale projects. Unlike mergers and acquisitions (M&A) – where the emphasis is often on full integration – JVs tend to preserve flexibility, enabling partners to pool resources while maintaining their own identity and strategic independence.

According to a survey conducted by Boston Consulting Group in 2025, 60% of CEOs and business leaders said that forming JVs and partnerships will be more critical to growth over the next three to five years than pursuing M&A.

In this context, the legal and regulatory dimensions of JVs have been evolving in parallel with broader macroeconomic, geopolitical and technological shifts. In 2025, a JV is no longer a simple contractual arrangement; instead, it is a complex and often delicate partnership that requires careful navigation of international regulatory regimes, market dynamics, cultural differences and environmental, social and governance (ESG) expectations. For executives, investors and legal advisers alike, this increased reliance on JVs highlights the importance of solid governance frameworks, forward-looking risk assessment and carefully designed contractual provisions.

The Global Context

The operating environment for JVs in 2025 is more complex than at any time in recent memory. Traditional commercial considerations now intersect with geopolitical, economic, technological and social forces.

Geopolitical and regulatory profile

Geopolitical fragmentation has started to reshape investment decisions and, by extension, the structuring of JVs. Regional conflicts, tariffs and renewed political rivalry between major powers have exposed vulnerabilities in global supply chains. Cost-efficiency is no longer the only priority. Resilience, diversification and security of supply are now strategic imperatives. This shift has encouraged companies to establish “friend-shoring” or “ally-shoring” ventures in jurisdictions aligned politically or economically.

Protectionist tendencies are also gaining ground. A growing number of countries have expanded their foreign direct investment (FDI) screening regimes, often linking them explicitly to national security. Even traditionally open economies such as the United States, the United Kingdom, Canada, and several EU member states now subject foreign investors to detailed scrutiny. Legal due diligence must therefore go beyond the financial strength or commercial reputation of a potential partner: it must include a thorough assessment of political and regulatory risks, together with a clear strategy for addressing potential government concerns. In practice, this may mean redesigning the JV’s corporate structure, limiting sensitive activities or engaging proactively with regulators at an early stage.

Adding to this complexity is political volatility. Elections and government transitions in key markets can quickly alter the rules of the game through new tax regimes, changes to climate policies or tighter restrictions on inbound and outbound investment. Legal advisers are expected not only to interpret current frameworks but also to anticipate how they might evolve.

Economic forces

The global economy continues to present challenges. Although inflation has eased in some regions, borrowing costs remain relatively high, putting pressure on financing models. Traditional debt financing is less appealing, and JV parties are turning to more creative and cost-efficient approaches. Liquidity management and capital efficiency are becoming central themes when structuring contributions and profit-sharing arrangements.

In parallel, many businesses are treating JVs as an alternative to M&A. An M&A deal often brings high costs, antitrust complications and cultural integration issues. By contrast, a JV can deliver many of the same benefits – combined assets, access to new markets and risk-sharing – without the burdens of full corporate consolidation.

Recently, JVs have been seen as a way for business leaders to navigate uncertainties generated by tariffs, operating as an instrument to govern strategic decisions regarding supply chains, production locations and market access. To avoid or mitigate the costs of tariffs, companies may choose JVs with structures that localise production within the target market. By manufacturing goods in the country where they will be sold, a JV can bypass import tariffs. JVs might be structured to create more resilient supply chains by diversifying sourcing and production locations. Finally, a JV can serve as a strategic entry point into a new market, especially when that market imposes high tariffs on foreign goods.

Technological developments

Technology has frequently been the driving force for JVs. In many cases, the central asset is no longer physical infrastructure but intellectual property (IP), proprietary technology or strategic datasets. Developments in AI, machine learning and blockchain are accelerating the trend towards collaborative structures that enable companies to share risk while capturing innovation.

A JV allows partner companies to pool their financial resources and expertise to undertake research and development (R&D) projects. By sharing the costs and risks, the individual partners can pursue ambitious technological goals that might be too expensive or risky to pursue alone. Alternatively, one partner might contribute its core technology, patents or know-how, while the other provides a different technology, a manufacturing process or a distribution network. The JV serves as a legal and operational entity where technologies can be integrated and exploited to create a new product or service.

This makes IP one of the most sensitive points of negotiation. Parties must look beyond simple licensing; they need to address the ownership and exploitation of jointly developed IP, including self-learning technologies and data-driven applications. Questions about who owns training data, or who can use the outputs of AI models once the JV ends, can be difficult to resolve. Cybersecurity adds another layer of concern. The potential for cyber-attacks or the theft of confidential information means that clear contractual safeguards, governance standards and liability provisions are indispensable.

Sustainability and ESG

ESG considerations are no longer secondary; they now sit at the centre of JV structuring. Investors, regulators and consumers expect transparency and concrete commitments to sustainability. ESG due diligence therefore extends well beyond compliance; it encompasses a partner’s carbon footprint, labour practices, supply chain resilience and governance culture. These assessments increasingly shape contractual terms. Many JV agreements now embed ESG metrics directly into governance frameworks, with dedicated committees monitoring performance and incentive structures tied to sustainability outcomes.

Sectors aligned with ESG priorities are particularly attractive. JVs in renewable energy, sustainable infrastructure and the circular economy are increasing in number.

Legal Architecture of JVs

Behind the commercial rationale of any JV lies a complex legal architecture. While the details differ across sectors and jurisdictions, several issues recur.

Choice of structure

The choice between an incorporated entity (corporate JV) and a purely contractual arrangement is fundamental. Incorporated JVs benefit from separate legal personality, limited liability and clear ownership structures. Contractual JVs may be more flexible but often carry higher risks of liability and enforcement challenges.

Governance and control

Governance arrangements are often decisive for a JV’s success or failure. The allocation of board seats, voting thresholds, veto rights and reserved matters must strike a balance between efficiency and the protection of minority interests. Cross-border ventures add cultural differences and different legal frameworks into the mix, making it even more important to anticipate how decisions will be made and how deadlocks will be resolved.

Exit strategies

JVs are not intended to last forever, and planning for exit is therefore essential. Mechanisms may include buyout rights, put or call options, IPOs or liquidation. If these provisions are poorly designed, disputes are almost inevitable. The challenge lies in combining flexibility with predictability, ensuring that neither party is unfairly disadvantaged when circumstances change. For this reason, agreeing upfront how the exit can be triggered; what the shareholders’ rights are; how valuations, assets and IPs are assigned; and what mechanisms would be employed can all make for a smoother exit.

Dispute resolution

Disputes in JVs tend to be multifaceted, involving not only straightforward contractual claims but also fiduciary duties, shareholder rights and, occasionally, regulatory compliance. For this reason, the mechanisms chosen for dispute resolution are of critical importance. Arbitration continues to be the preferred forum for cross-border disputes, offering neutrality and flexibility, but it is rarely the only step in the process. Increasingly, parties adopt multi-tiered clauses that require preliminary negotiation or mediation before escalation to arbitration or litigation, with the aim of preserving the commercial relationship and containing costs.

Equally decisive is the choice of governing law and jurisdiction. In international ventures, parties must carefully determine both the substantive law applicable to their contractual relationship and the procedural framework that will govern the resolution of disputes. These choices have far-reaching implications: they influence the interpretation of key provisions, the enforceability of contractual protections, the scope of available remedies and even the allocation of evidentiary burdens.

Compliance and risk management

Compliance obligations cut across anti-bribery rules, sanctions, competition law, data protection and sector-specific regulation. Failure in any of these areas can undermine the success of the JV. Effective governance therefore requires comprehensive compliance programmes, independent audits and a clear allocation of responsibility between the partners.

Conclusion

JVs in 2025 operate within a multifaceted framework shaped by geopolitical developments, economic dynamics, technological progress and sustainability requirements. They are influenced by regulatory shifts, the cost and structure of capital, the centrality of IP and data, and the increasing relevance of ESG factors. From a legal standpoint, JVs require careful consideration of structural models, governance mechanisms, exit strategies, the dispute resolution framework, compliance assessment and risk management.