Some legal issues of virtual organisations: the MARVIN experience

1. Some legal issues of virtual organisations: the MARVIN experience Emily M. Weitzenböck Institutt for Rettsinformatikk University of Oslo

2. Approach • What is a Virtual Enterprise (VE)? • Types of business structures: organisational forms • Legal classification • The MARitime VIrtual enterprise Network (MARVIN) Project • Description of this VE network • Some legal issues that arise

3. What is a Virtual Enterprise (VE)? • Much discussion on definition of VE • Working definition: • “A virtual enterprise is a co-operation form of legally independent enterprises, institutions and/or individuals, that produce a service on the basis of a common business understanding. The co-operating units participate in the horizontal and/or the vertical collaboration with their core competencies and appear to third parties as a homogeneous enterprise. Furthermore the institutionalisation of central management functions for design, management and development of the Virtual Enterprise are extensively abandoned and the necessary demand for co-ordination and harmonisation is covered by appropriate information and communication systems. The Virtual Enterprise is connected to a mission and ends with this mission.” • (Arnold et al.)

4. General Characteristics of a VE • Complementary core competencies - the sharing of resources • Geographical dispersion of activities • Changing participants • Participant equality • Electronic communication

5. Reasons for emergence of VE • Flexibility • Necessary because of increased changeability of the business environment • Separate organisations do not have necessary scale & depend on collaboration • Efficiency • Collaboration important to be able to react to the demands of the business and market environment • Sharing resources = better use of scale & experience  increase in efficiency • Carrying out activities together enhances risk spreading & risk reduction

6. Characteristics of the two types of VE

7. Types of network organisations

8. Advantages of using ICT • Facilitates communication between the VE members  increases efficiency + flexibility of VE • In a stable VE: • Electronic Commerce acts as a distribution channel for the distribution of goods & services between the VE & its clients • In a dynamic VE: • Electronic Commerce functions as a sort of market place between the parties forming part of the VE and the public at large

9. Business structures - Legal Classification • The main business structures used throughout Europe: • Sole trader • Partnership/civil law partnership • Limited liability company • Consortium • Joint venture

10. Relations between the client & service providers • Some possible configurations: • User contracts with each enterprise: • no one guarantees performance of the whole project to client • One main contractor with a number of sub-contracts: • main contractor responsible for the whole project  Risk assessment • Service providers team together to provide the service, e.g. consortium agreement: • liability shared • provide one face to the customer

11. The MARVIN Project • Collaboration between 10 partners from 4 European countries • Some of the tasks: • Develop software toolkit: • Development of a software tool - the Maritime enterprise integration tool (MEIT) - based on Internet technology, to model, facilitate and co-ordinate the interaction between companies forming a virtual organisation in the maritime industry • Examine two scenarios: • Emergency repair following a ship casualty • Routine Maintenance of a ship • Examine legal framework for running the maritime VE

12. MARVIN - Emergency Response Scenario • Client: • Ship owner/ ship manager • Service Providers: • Emergency-Response Company • Tug Company • Classification Society • Shipyard • Hull Insurer • P&I Club • Marvin participants: • - Classification societies: DNV, GL • - ER-Service: GL • - Ship manager: Marenostrum • - Shipyards: Lisnave, Neorion • - Universities: IST, IWI, LMS, IRI

13. MARVIN - The software tool • Software tool accessible via Internet … • … to registered users • Registration form for all entities who are interested to: • offer their services, e.g. ship repair yards, classification societies, ER-companies, etc. • use services (i.e. ER & maintenance) on offer: shipowner, ship manager

14. Characteristics of the VE in MARVIN • Characteristics: • The VE is formed specifically at the order of the client (shipowner/ship manager) • Some members of the loose “organisation” unite to provide the service depending on various factors; others do not • The objects of this VE, once created, are extremely limited & last until the service is completed • The association created is an “ad hoc” one • Distinguish between: • The MARVIN Tool: registration, information, links to other sites, etc. • Creation of the VE upon request by client (casualty, routine maintenance) - the partners are selected with the assistance of the MARVIN Tool, and the VE is formed

15. MARVIN - Some legal issues • FOCUS: Emergency Repair Scenario • APPROACH: Examination of the relationship between: • the users and the MEIT: confidentiality and other security concerns • the tool developers and the users - MEIT as a product: contractual concerns • the users between themselves: special maritime contracts