Turkish law does not contain the term of “contract alliancing”. There is currently no serious discussion as to the need for introducing contract alliancing into the market as an alternative to common and well-known types of contracts under Turkish law. However, there are different types of agreements that serve similar purposes to alliancing agreements, such as Joint Venture Agreements.
Joint venture agreements under Turkish law are the most common way to deliver construction projects. They are being widely used, especially in major construction projects such as the construction of the Third Bosporus Bridge and other PPP projects.
These are, to some extent, comparable to contract alliancing in that contracting parties have to act in a certain way in order to achieve a common goal without establishing an independent new legal entity.
This form of contracting is becoming more popular as it is more flexible than creating a new organisational form such as a company. Joint venture agreements can be adopted for a one-off project or can be a long-term relationship over a number of projects (such as a framework agreement).
This is being used widely for construction projects due to the requirement for different know-how and specialisation in different areas. This contracting mechanism allows a great number of legal entities to handle complex projects together to achieve one common goal. Therefore, it can lead to better results since many companies combine their know-how, technical and administrative resources and work together, sharing information instead of competing with each other.
These types of agreement are more efficient than executing agreements with all the undertakers and contractors separately. In addition, the specialisation of the companies in different areas, needs of technical support and sharing of risks and/or resources as well as an ambition to enter a new market are key drivers to the success of the alliancing.
Large-scale construction projects, especially those where technical know-how and patented technology are key requirements, cannot be undertaken without the cooperation of many different and/or multinational companies. In Turkey, these projects are usually being monitored by the government due to the fact that they concern public interests.
Key factors present in these forms of agreement include that they are multi-party, allow joint control and the right to supervision of every company. There are joint ownership rights with parties having a share of loss and profit and share of project risks and there is equality and equivalence of each alliancing/contracting partner.
To make the concept of contract alliancing successful in Turkey, it is thought that this would need serious cooperation of all stakeholders involved in construction projects on both sides, the private sector and the public sector, and further creation of an awareness of this concept from a legal perspective (legislation, jurisprudence and legal scholars). It is thought that alliancing could be beneficial for PPP and large-scale infrastructure projects with the involvement of the public sector as a party of the alliance. However, the perception is that these could lead to excessive costs due to complex and extensive agreements and that this might be a block to alliancing working.