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A Consortium Agreement is a contractual framework that enables two or more companies to collaborate for a specific project, typically a government tender, infrastructure initiative, or engineering contract, without creating a separate legal entity.

Each company, called a Member, contributes its own expertise and resources while maintaining independence. This structure is ideal when the project requires multidisciplinary capabilities, yet the parties prefer to remain legally and financially distinct.

Structure and Legal Nature

Unlike a Joint Venture or a Special Purpose Vehicle (SPV), a consortium has no separate legal personality. It exists solely as a cooperative arrangement governed by a written agreement among its members. Each party is responsible for its defined share of the project, and the consortium as a whole acts through a designated Lead Member, who manages communication, tender submission, and client coordination. The agreement clarifies that the consortium is not a partnership or company, ensuring no unintended tax or liability consequences arise from the collaboration.

Roles, Responsibilities, and Financial Framework

The Consortium Agreement precisely allocates each member’s scope of work and financial participation. Costs incurred before bidding—such as design preparation, documentation, and feasibility studies—are shared as agreed, while execution costs correspond to each member’s portion of work. Revenues from the client are distributed proportionally, often through a joint account managed by the Lead Member.

To enhance transparency, professional agreements include audit and record-keeping clauses, ensuring financial accountability among all members.

Liability is generally individual, but the agreement allows for joint and several liability when a client requires it—especially in EPC or PPP projects. This dual structure balances operational cooperation with individual protection.

Confidentiality, Intellectual Property, and Compliance

Since members often exchange sensitive data and proprietary designs, confidentiality clauses form a critical part of the contract. Each company must protect project-related information and refrain from disclosing it without consent. Intellectual property (IP) created during the project may be jointly owned or assigned to the client, depending on the tender’s terms.

This arrangement promotes innovation while protecting pre-existing rights. Compliance provisions require all members to observe laws related to labor, environment, and export control, ensuring the consortium meets both local and international standards.

Term, Termination, and Dispute Resolution

A Consortium Agreement is inherently temporary, dissolving automatically upon completion of the project or upon termination by mutual consent. It includes clear procedures for dispute resolution, beginning with negotiation and followed by arbitration under international rules such as ICC or UNCITRAL. Governing law is chosen based on the project’s jurisdiction, ensuring predictability in enforcement. To further strengthen authenticity, the document often includes a Notary Acknowledgment, which verifies signatures and enhances its evidentiary value in cross-border transactions.

Why the Consortium Agreement Matters

In modern infrastructure, energy, and construction projects, collaboration is essential—but not every partnership requires incorporation. The Consortium Agreement offers a flexible, legally sound method for combining capabilities, distributing risk, and presenting a unified proposal to a client while preserving each member’s independence. It stands as a cornerstone of collaborative contracting—balancing efficiency, autonomy, and accountability.

Please Check out more pages of our website for related content:

• Project Consortium Agreement
• International Joint Ventures
• Joint Venture Agreement (JVA) – Ver 1
• Collaboration Agreement
• Proforma Invoice (For Project execution)

References:

• European Commission – Horizon Europe Model Consortium Agreement Framework – “Guidance on Consortium Agreements for Multi-Partner Projects”
• UNIDO (United Nations Industrial Development Organization) – “Partnership and Consortium Structures in Industrial and Infrastructure Projects”
• World Bank – Procurement Regulations for IPF Borrowers: Multi-Party Project Arrangements and Consortia
• OECD – Public-Private Partnerships and Infrastructure

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