An international cooperation agreement is a contractual framework for cooperation without a joint venture. In our practice, we see various forms: strategic alliances, co-development, distribution partnerships, or MOUs. A lighter structure than a joint venture, but certainly not legally simple. Those unfamiliar with the legal pitfalls may unintentionally become liable as a partner of the other party or find themselves in fiscally disadvantageous positions.
What is the legal problem?
Cooperation agreements are legally diverse: alliances, MOUs, partnerships, frameworks, or co-development agreements. The degree of binding nature, shared responsibility, and liability differs per type. Without clear demarcation, you run the risk of classification as a general partnership or limited partnership, resulting in unintended joint and several liability and tax consequences under Article 18 of the Income Tax Act 2001.
What does the law say?
Under Dutch law, a general partnership arises under Article 7A:1655 of the Dutch Civil Code if the parties work for common account and risk. A general partnership under Article 16 of the Commercial Code can arise from a joint enterprise with public exercise. In Germany, a GbR can arise unintended under Section 705 of the German Civil Code. Competition law (Article 101 TFEU) restricts agreements between competitors.
Sector rules (finance, energy, defense) may require additional permits. Specific rules apply to the co-development of IP under Regulation (EU) 2023/1066 (R&D Exemption Regulation, since 1 July 2023).
What risks do companies face?
Unintended joint and several liability under Section 18 of the Commercial Code can expose your company to debts arising from the collaboration. Unexpected tax classification (partnership taxation) leads to a different tax burden. Competition fines accumulate in the event of ill-considered non-competition agreements. IP rights arising within a collaboration can end up with the wrong party without an arrangement. Exiting without an agreement leads to costly litigation.
Practical example from our practice
We advised a Dutch and a French company on joint product development under an MOU. In the event of commercial success, the French party claimed joint IP ownership based on French co-copyright (Article L113-3 Code de la propriete intellectuelle). Upon renegotiation, we drafted a Co-Development Agreement: a clear separation between background IP (owned by the contributing party), foreground IP (owned by the investing party), and cross-licensing. Loss of market access was avoided, resulting in an estimated saving of 1.2 million euros.
What can you do?
Make the type of cooperation explicit (non-corporate alliance, not a partnership). Regulate contributions, costs, revenues, and liability. Agree on IP rights (background, foreground, sideground IP). Build in governance, confidentiality, exclusivity, and exit mechanisms. Align with Article 101 TFEU in the case of cooperating competitors. See also our article on Letter of Intent: binding or not?