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Co-operation Agreements in Defense Industry

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Turkey has already ratified several defense industry co-operation agreements, more are signed and waiting for approval. Although each of those is unique, the main principles apply to all.

Essentials of the Defense Industry Cooperation Agreements (‘the Agreement’)

The purpose of such agreements is generally to develop defense goods and services by cooperating on production, procurement, maintenance and technical-logistic processes. This mutual co-operation may take place within party states’ competent authorities and/or the defense industry companies.

Responsible authorities for the implementation of defense industry co-operation agreements are likely to be the authorized personnel of the parties’ National Defense Ministries (‘NDM’). Parties form a joint commission in order to organize and coordinate the cooperation fields, projects, exchange information or settle disputes. The delegation of Turkish NDM is generally represented by the Presidency of Defense Industries.

Parties may relocate personnel within other party’s territory who shall be in charge of tasks that arise from the implementation of the Agreements. Generally, these guest personnel are required to comply with the receiving countries’ law. Damage claims under cooperation agreements are limited to acts of the employee in charge. Accordingly, if guest personnel damages the host state’s property over the course of his placement, sending state shall compensate these damages under the Agreement.

A defense industry cooperation agreement may lead to complementary agreements, memorandum of understanding, protocols, contracts, especially when there are third-party beneficiaries. Because, the Agreements cover only state parties’ defense industries, the parties must achieve a mutual agreement to benefit third parties.

Certain procurement assistance and privileges may also arise from the Agreements such as mutual assistance on pricing, delivery priorities or export licenses. The most important provisions of these agreements are on the protection of intellectual property rights and confidential information, which is discussed below.

Protection of Intellectual Property Rights and Confidential Information

No doubt that parties to such agreements shall act in accordance with the law in the territory including each parties’ domestic legislation and international agreements. Besides, the agreement may provide additional project-based rights and obligations to parties regarding production license, sale to a third party, protection of patents that arise from a joint invention, etc. Such agreements also require detailed provisions about legal and financial liabilities that originate from research, development, production, procurement, technical, service, personnel support, and infrastructure services.

Like the other intellectual property-based agreements, cooperation agreements generally allow transfer or disclosure of confidential information only by written permission of disclosing party. Parties’ obligations on the protection of reproduction, copy, use or distribution of disclosed material, product and knowledge shall continue even after termination of the agreement.

Agreements categorize confidential information as top secret, secret, confidential, restricted, and unclassified (commercially sensitive). Hence, the information’s disclosure procedure shall depend on its secrecy level, a cooperation agreement may also refer to a particular security agreement which sets rules and procedures on how to exchange and protect the sensitive information. The idea of such agreements is to obtain a level of protection that is at least equal to the level that other party maintains for its own protection. It is welcomed to provide such protection on the international level considering the importance of the issue.

Dispute Settlement and Compensation

 Considering the sensitivity of agreements, dispute settlement also carries importance. The agreements generally offer diplomatic negotiations for settling disputes that arise from the interpretation of its provisions. Thus, a failure on diplomatic negotiation simply leads the whole agreement to a stalemate. This may create uncertainty and lack of confidence for possible beneficiaries. It would be appreciated if cooperation agreements include an arbitration clause to guarantee judicial review of potential breach.

Authors: Şafak Herdem & Kaan Erdoğan

 

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