At the most basic level, a strategic partnership (often used interchangeably with the term strategic alliance) is a relationship between two or more commercial enterprises to pursue a set of shared goals, while at the same time remaining independent entities A strategic alliance is generally less time-consuming and involved than a joint venture, although The Economist once described them as “often said to be like marriages.” In a quintessential strategic partnership, the larger entity provides capital, product development and marketing, with the smaller entity providing specialized technical or creative expertise. Unsurprisingly, strategic partnerships take seemingly innumerable forms, from established businesses with startups, the United States and foreign governments, one of America's largest retailers and one of the largest Chinese e-commerce sites, and content creators and distributors.

In some cases, strategic partnerships go wrong and invariably litigation ensues. For instance, in March 2017, a complaint was filed alleging that the controlling shareholder negotiated an $800 million loan and strategic alliance behind the backs of the minority shareholders. In another, discussed in this column, an existing strategic partnership between investment advisors dissolved after one partner, at the direction of its shareholders, revoked prior consent to investment of its funds in a prospective strategic alliance with the successor entity of the other partner. Litigation ensued and one claim survived a motion to dismiss in part on the rationale that a strategic partnership sufficiently creates a “special relationship” between the partners that requires a greater degree of candor and fair dealing when contemplating the prospective strategic alliance with an unrelated third party. See Kortright Capital Partners LP v. Investcorp Invest. Advisers, — F. Supp. 3d —-, 2017 WL 2790547 (S.D.N.Y. June 27, 2017).

Facts, Procedural Background

Kortright Capital Partners was an SEC-registered investment adviser and capital manager. In November 2013, Kortright entered into a project agreement with Investcorp Investment Advisers Limited, another SEC-registered investment adviser. The project agreement required Investcorp to invest in Kortright: (1) $50 million of its proprietary capital; and (2) $40 million of its clients' capital in the Kortright funds (the funds). In return for this seed capital, Kortright granted Investcorp a portion of its operating revenue, influence over its corporate governance and access to Kortright's confidential information.