Introduction: The Biotechnology Sector is Built on Multinational Partnerships

By 2025, biotechnology companies will:

• gene therapy,

• mRNA technologies,

• CRISPR-based products,

• cell therapies,

• development of biosimilar drugs,

• recombinant protein production,

• clinical platform technologies

Establishing international partnerships (Joint Ventures – JVs) in areas such as these is now the general norm in the sector.

The most critical legal issue in such partnerships is:

➡️ The jurisdiction agreement (jurisdiction clause) and the validity of the applicable legal provisions in Turkey.

The problem with biotechnology JVs is this:

• R&D is done in Türkiye

• The patent is obtained in the USA

• The clinical trial is conducted in the EU

• The investment comes through the Cayman Islands

• The JV headquarters is planned to be located in Switzerland.

This multiple structure a conflict of jurisdiction and applicable law .

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1. What is an Authorization Agreement? Why is it vital in biotechnology JVs?

A jurisdiction agreement is a provision that determines which country's courts will have jurisdiction in the event of a dispute between the parties .

In biotechnology JVs, a jurisdiction agreement is vital for managing the following risks:

• Patent rights and technology transfer

• Know-how protection

• Joint invention disputes

• Misuse of R&D funds

• Privacy breaches

• Clinical data ownership

• Royalty payments

• Dissolution of the JV or exit from the partnership

Therefore, a "poorly chosen" authorization clause can lead companies to millions of dollars in losses.

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2. According to the Turkish Code of Private International Law, can the parties enter into a jurisdiction agreement?

Yes, according to Article 47 of the Private International Law Act:

✔ The parties may enter into a jurisdiction agreement in private law relationships involving a foreign element.

However, there are limits to this:

❗ The power of attorney agreement cannot override public order.

❗ Not applicable to exclusive jurisdictions.

❗ It cannot override mandatory provisions of Turkish law.

These limitations come into play quite frequently in biotechnology JVs.

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3. In Biotechnology JVs, Under What Circumstances is a Power of Attorney Agreement Considered Invalid?

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A. Patent Registration in Türkiye

Patent invalidation and infringement cases fall under the exclusive jurisdiction of the Ankara Court of Patent and Trademark Office.

Because:

➡️ "English courts have jurisdiction in all disputes" are invalid for patent disputes.

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B. If know-how was used unfairly in Türkiye

This constitutes a tort → Turkish courts have jurisdiction according to Article 35 of the Private International Law Act.

The authorization agreement is unenforceable.

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C. If clinical data was collected in Türkiye

Law (KVKK) and health law are mandatory , foreign court jurisdiction is invalid in data protection disputes.

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If D. JV is actually operating in Türkiye

Even if the headquarters are located abroad, if the operations are in Türkiye, Turkish courts have jurisdiction.

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E. If it contains provisions that are contrary to Turkish public order

For example:

• Provisions regarding the transfer of invention rights of employees working in Turkish R&D centers

• Articles that circumvent the Personal Data Protection Law (KVKK)

• Provisions that grant foreign authorities unlimited access to health data

It is invalid.

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4. Most Commonly Used Authorization Requirements in Biotechnology JVs

✔ English Courts (London)

✔ Switzerland (Zurich or Geneva)

✔ Delaware Courts

✔ New York State

✔ ICC / LCIA Arbitration

Many of these conditions may apply to general R&D disputes; however, to the exclusive jurisdictions .

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5. Is Arbitration the Most Suitable Solution in Biotechnology JVs?

Partially yes; however, there are limitations.

Arbitration is applicable in the following cases:

✔ Royalty calculation

✔ Breach of contract

✔ JV terminated

✔ Know-how contractual obligations

✔ Technology transfer provisions

✔ Scope of the license

✔ Dispute over shareholding

However, arbitration is invalid:

❌ Patent invalidation

❌ Data disputes related to the Personal Data Protection Law (KVKK)

❌ Clinical trial consent and health data

❌ Product safety issues related to public order

Therefore, biotechnology JV agreements arbitration and exception clauses .

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6. Most Common Jurisdiction Disputes in Biotechnology JVs

1) Whose joint invention is it?

Patent law → Exclusive jurisdiction in Türkiye.

2) The dispute over ownership of clinical data

KVKK (Personal Data Protection Law) → Turkish courts get involved.

3) Leaking of know-how

Tort → Place where the damage occurred: Turkish law.

4) Transfer of the biosimilar development platform

Arbitration is possible.

5) Misuse of R&D funds

Arbitration according to the terms of the contract.

6) Disputes regarding the dissolution of the JV

Arbitration or the court specified in the contract.

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7. Validity Criteria of Jurisdiction Agreements from the Perspective of Private International Law

✔ The parties must be foreign legal entities or natural persons

✔ The agreement must be international in nature

✔ Authorization must be clear and in writing

✔ It should not contradict public order

✔ Should not cover exclusive jurisdiction areas

✔ Mandatory provisions should not be disregarded

✔ The competent court and arbitration venue must be clearly specified

These criteria must be met in biotechnology JVs.

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8. Strategic Recommendations for Companies in Biotechnology Partnerships

✔ Customize the authorization requirements separately on a "subject-by-subject" basis

—> Patent matters are separate from contractual matters.

✔ Leave disputes related to the Personal Data Protection Law to Turkish courts

✔ Clearly specify the location for clinical data collection

✔ Conduct a risk analysis based on the countries where R&D activities are carried out

✔ Write the arbitration clause in detail; the "scope of arbitration" is especially important

✔ Add a mandatory provisions clause (“Turkish mandatory rules apply”)

✔ Prepare a special protocol for the joint meeting

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9. Conclusion: Authorization Agreements in Biotechnology JVs are the Most Strategic Area of ​​Private International Law

According to the 2025 plan:

• In biotechnology JVs, authorization agreements can be made, but they are limited

• Foreign authorizations are invalid in the areas of patents, clinical data, GDPR, and public order

• Arbitration is suitable for most commercial disputes, but it is not absolute

• Contracts must include a subject-based authorization system

• Mandatory provisions take precedence over enabling provisions

Therefore, it is a critical success factor for biotechnology companies to design the jurisdiction clauses in their JV agreements in a way that is compliant with the Turkish Private International Law Act and intellectual property law.