consortium

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A consortium (from Latin consortium ; more rarely also called syndicate , from French syndicat ) is a corporate amalgamation of several legally and economically independent companies for the temporary implementation of an agreed business purpose . The members of a consortium are also called consorts .

purpose

Consortia are usually set up for two different purposes:

  • The purpose of a consortium of companies in the same industry (e.g. banks, insurance companies) is to break down a large-volume transaction into mathematically exact proportions. There is usually no joint and several liability for the business. The individual consortium only participates in the risk and profit with its quantified share.
Such consortia are formed if the order size or the volume of business is too large for a single company or if this would result in too one-sided business risks for a single company . This risk is reduced by distributing it to various companies that are not affiliated with the group. The consortium is thus an essential instrument for risk diversification. From the customer's point of view, such a consortium has the advantage of being able to conclude a big deal only with the consortium leader (who agrees the terms internally with the consortium) and not having to negotiate with a large number of companies about their different prices and conditions.
  • A consortium of companies from various industries for the construction of a large, complex industrial plant or similar projects, in which the consorts are jointly and severally liable to the client for the performance of the entire contract, but internally only for their respective delivery and service share (e.g. construction, Steel construction, electrical equipment, machines, process control, know-how etc.) are responsible and carry it out independently.
In these consortia there is no capital participation, no contribution, no percentage or quantified participation and regularly no total ownership. As a rule, each consortium bears all risks in connection with its delivery and service share. If the risks meet several or all partners, they are divided in proportion to the value of their delivery and service shares, although this value can change through changes and additions. Whether a consortium makes a profit or a loss from the business is entirely up to him. In the case of international consortia in particular, arbitration agreements are regularly made, which means that German (and other national) courts are rarely involved in the matter.

A consortium ends when the consortium business has been completed and all warranty cases and other disputes have been resolved, which in individual cases can be many years after the end of the project.

Word origin and history

The word Konsorten, attested since the 16th century, is borrowed from Latin con-sortes , the plural of consors (consortis) and means having the same share, companion, fellow member . Without a rating, consorts were first used in the sense of co- fate, companions . The phrase “and consorts” preceded by proper names developed at the same time in legal language in the accusation “X and consorts” (cronies, accomplices). The colloquial meaning still fluctuates between neutral and slightly disparaging. Nevertheless, in the 17th century the German foreign word consortium developed from consors via consortium . Traditionally, companies in the tugging business of the Free and Hanseatic City of Hamburg often have the designation and consorts in the company name - including the abbreviation & Cons.

In December 1150 the Italian consuls leased their property and income in Tortosa for 29 years to a consortium, which in return undertook to protect Tortosa for Genoa . In January 1152, the salt was pledged to a consortium for 20 years. On January 18, 1622, Emperor Ferdinand II leased the coin monopoly to a consortium of lords, including Prince Liechtenstein , Wallenstein and others, for 6 million guilders; Ferdinand financed his wars with the proceeds of the consortium. The German Empire took to finance the development of transport numerous loans which banks were required placement. For this purpose, the Prussian Consortium was established in July 1859 and organized regular meetings from 1867 onwards. As a banking consortium operating across Germany, it comprised 39 member banks. The federal bond consortium, led by the Deutsche Bundesbank - which itself does not assume any syndicated quota - is responsible for handling federal bond issues and federal special funds. It was founded in 1952 as the successor to the Reich Bond Consortium and represents the largest long-term consortium. It was dissolved in December 1997 after positive experiences with pricing in the tender procedure were made; at its dissolution it consisted of 87 consorts.

species

A distinction must be made between the external consortium (“open consortium”) and the internal consortium (“silent consortium”). The consortium agreement is concluded at the external consortium between all consortia and the common customer so that the consortium members are known to them. Nevertheless, a consortium leader is appointed here - at least for the purpose of coordination in the consortium - who is contractually entitled to conduct negotiations with the customer in the name and for the account of the consortium and to collect customer payments and distribute them to the consortium. In the case of the internal consortium, on the other hand, the consortium leader acts like a general contractor towards the customer and does not reveal that he is leading a consortium. However, the customer orders are not awarded to the consortia as partial services, but distributed internally as with the external consortium.

The most common forms are the bank consortium for loans or securities issues , the collateral pool for the joint management of loan collateral or the plant construction consortium for the implementation of major projects. In addition, insurance companies come together to form consortia in order to reduce major risks; alternatively, there is still the option of reinsurance . The Lloyd's of London, which are often mentioned in this context, are not a consortium, but a regulated market for insurance, which is taken out (possibly on a pro rata basis) by the syndicates working at Lloyd's .

Legal bases

The companies combined in a consortium form a company under German law according to §§ 705 ff. BGB .

The external consortium enters into contractual relationships with the business partner as such, with the consortium leader acting on behalf of the consortium towards the business partner. The partners are also announced to the business partner in the open internal consortium . In the case of the internal consortium, the consortium leader acts exclusively in his own name, but for the account of the partners. In the case of the internal consortium, legal relationships also only exist between the customer and the consortium leader. Only as an external consortium does it enjoy legal and party status and can thus become the owner of a claim or debtor of the business partner. According to the rulings of the Federal Court of Justice, the consorts are ancillary liability for breaches of duty by the consortium leader.

This external liability can be distributed within the consortium in the consortium agreement. For the internal relationship between lead manager and company regulations apply over the management contract ( §§ 675 ff. BGB). In the case of the centralized consortium, the business is handled by the consortium leader who invoices proportionally internally with the consortium, which is why the internal consortium is regularly run as a centralized consortium. The sole creditor of the claims and sole debtor of the liabilities is the lead manager in both cases, so that the business partner only has to account for a claim / liability against him .

Consortium leader

As primus inter pares, the consortium leader (s) takes on the coordination between the consortium and the business partner, both when drawing up the consortium contract and when processing the consortium business. Notwithstanding § 709 BGB, the management authority rests with the consortium leader, which includes at least the conduct of negotiations with the business partner. As a rule, the consortium leaders also have a higher consortium quota than the other consortiums. In order to limit the liability of the consortia to their consortium quotas, an express limitation of liability is required in the consortium agreement, whereby an externally identified regulation in the internal relationship is not sufficient.

Consortium agreement

The consortium contract is to be distinguished from the contract for the business object (e.g. a loan agreement or a construction contract), which follows the statutory provisions provided for this purpose (i.e. loan or work contract law ). Regulations typical of a consortium, such as the management of the consortium or the liability quotas of the consortium, follow the provisions of §§ 705 ff. In conjunction with § 675 BGB. In the external consortium, the consortium agreement is concluded in the name of the consortium; the consortium leader represents the consortium vis-à-vis the business partner.

In the case of a plant construction, the consortium in the consortium contract delimit the service areas from one another ( interfaces ) and, above all, establish liability regulations in the event that the business partner claims a consortium for an error caused by another consort.

English speaking area

Banking consortia

A bank loan consortium is called syndicate or pool in the English-speaking world , more rarely a consortium . The UK Loan Market Association (LMA) and its US counterpart Loan Syndications and Trading Association have specialized in developing standardized syndicated contracts to facilitate negotiations on the subject of the consortium and the internal relationship within the consortium for the consortium and their customers. In the process, clauses were developed that have also found their way into German contractual practice. The contracts are structured according to the Anglo-Saxon case law and define any situation even considered unlikely. Certain minimum building blocks ( English boiler plates ) deal with the legal issues relevant to the contract.

The borrower is the lender committed in the LMA-standard contracts to assurances that aim, the original business foundation in the loan approval during the repayment term to maintain. There are assurances that the borrower must have fulfilled before the loan is disbursed / made available ( conditions precedent ; see disbursement requirements and conditionality ) and those that the borrower must comply with without interruption during the loan term ( covenants in the narrower sense). The borrower makes assurances to the lender in the form of non-financial covenants through positive , negative or pari passu clauses ( paripassu clause ), which prohibit the subsequent provision of collateral to other creditors unless the lender is treated equally. This also includes the material adverse change clauses , which use individually listed examples to define a significant deterioration in the economic and / or legal situation of the borrower and, if they occur, trigger additional collateral obligations or even a loan termination . The latter also applies to cross-default clauses if the debtor breaches contracts with third party creditors. In addition, the borrower hereby undertakes to provide the lender with precisely specified information on specific dates (e.g. quarterly reports , confirmations of compliance with at least the financial covenants ).

Liability clauses contain regulations that limit the consortium leader's liability . According to this, the consortium leader assumes no responsibility for the appropriateness ( English fairness ), correctness ( English accuracy ) and completeness ( English completeness ) of agreements made (Section 32.8a model contract). An exclusion of liability is also required according to No. 32.8b Standard contract for the legality ( English legality ), validity ( english validity ), efficacy ( english effectiveness ) and enforceability ( English enforceablilty provided) by financing documents. In addition, it is customary to limit the consortium leader's liability to intent and gross negligence (Section 32.9a). The consortium agreement is a partnership agreement according to §§ 705 ff. BGB, which is excluded from the application of the general terms and conditions according to § § 305 ff. BGB according to § 310 Para. 4 BGB . Such exemption clauses therefore comply with German law.

Plant construction consortia

In international business, consortia for the construction of industrial plants or major projects are regularly concluded on the basis of a consortium agreement . The umbrella working group, which is often used in the German construction business, is not known internationally. There is no generally introduced standardized contract model, but common formulations have developed from the same problems, which are agreed in a large number of consortium contracts. Arbitration agreements are regularly made, in which, however, German law is extremely rarely agreed.

literature

  • Burkard Lotz: The consortium contract for plant construction at home and abroad . In: Journal for German and International Building Law (ZfBR) . tape 19 , 1996, ISSN  0170-0413 , pp. 233 ff .
  • Andreas Jacob, Christian Brauns: The industrial plant consortium agreement. Cooperation for the joint production of industrial plants, power plants and construction projects . Carl Heymanns, Cologne a. a. 2006, ISBN 3-452-25714-2 .
  • Bernhard Steinrücke, Herbert Scholze: The syndicated business of the German banks. Duncker & Humblot, Berlin 1956.
  • Marcus Rayermann: The international consortium agreement . Publisher: Carl Heymanns Verlag 2002, ISBN 3-452-25239-6 .
  • Guido Möllering : cartels, consortia, cooperations and the emergence of new markets. In: Journal for Business Research (PDF) Vol. 62, H. 7, 2010, pp. 770–796.

Web links

Wiktionary: Konsorte  - explanations of meanings, word origins, synonyms, translations
Wiktionary: Consortium  - explanations of meanings, word origins, synonyms, translations

Individual evidence

  1. ↑ Consortium - Duden ; accessed on February 27, 2016.
  2. ^ Syndicate - Duden ; accessed on February 27, 2016.
  3. ↑ consort - Duden ; accessed on February 27, 2016.
  4. ↑ Ursula Hermann, Knaurs etymologisches Lexikon , 1982, p. 268.
  5. ^ Consors Heinrich Georges : Comprehensive Latin-German concise dictionary , Volume 1, Column 1542, 1913. Zeno.org, accessed on June 20, 2019.
  6. ↑ ... and consorts Friedrich Kluge : Etymological dictionary of the German language . 24th, revised and expanded edition. Edited by Elmar Seebold . Walter de Gruyter: Berlin, New York 2002, accessed June 20, 2019.
  7. ↑ Duden, The dictionary of origin. Etymology of the German Language , Mannheim 2007, Lemma Konsorten
  8. ↑ Otto Langer: Political history of Genoas and Pisas in the XII. Century. 1882, p. 43.
  9. ↑ Herrmann Emil Ays: The story of the Ays family. 2007, p. 89.
  10. ↑ Hans E. Büschgen: Banking apprenticeship. 1991, p. 294.
  11. ↑ Thomas Werani: Practice-oriented business-to-business marketing. 2006, p. 187.
  12. ↑ BGH NJW 1991, 2629
  13. ↑ Dorothee Einsele, Banking and Capital Market Law. National and international banking , Mohr Siebeck, Tübingen 2006, ISBN 3-16-148903-9 , p. 311.
  14. ↑ BGH NJW 2001, 1056.
  15. ↑ a b Peter Derleder , Kai-Oliver Knops , Heinz Georg Bamberger (ed.): Handbook on German and European banking law , Springer, Berlin a. a. 2003, ISBN 3-540-00944-2 , p. 457.
  16. ↑ BGHZ 146, 341, 343 ff.
  17. ^ Herbert Schimansky , Hermann-Josef Bunte , Hans-Jürgen Lwowski (Hadding): Banking Law Handbook , § 87 Rd. 34.
  18. ↑ BGHZ 142, 315.