AI Development Contracts in Turkey: Ownership, Confidentiality and Liability Risks for Foreign Companies 2026 Updated Guide

Foreign companies developing or commissioning AI systems in Turkey should carefully regulate intellectual property ownership, training data, source code, confidentiality, personal data, cybersecurity, AI outputs and contractual liability.

Artificial intelligence development agreements are rapidly becoming some of the most complex technology contracts used by foreign companies operating in Turkey. A typical project may involve proprietary software, machine-learning models, training datasets, customer information, source code, third-party models, cloud infrastructure and confidential business information at the same time. Turkish data-protection authorities have also increased their focus on generative and agentic AI, including data-processing risks throughout the AI lifecycle.

For foreign companies commissioning an AI platform from a Turkish developer—or developing technology jointly with a Turkish company—the contract should therefore answer three questions clearly: Who owns what? Who may use the data and technology after the project ends? Who bears the financial risk when the AI system causes a problem?

Why Ordinary Software Contracts May Be Insufficient for AI Projects

Traditional software-development agreements usually focus on source code, milestones, acceptance testing, maintenance and licensing. AI development introduces additional layers.

The finished system may depend on pre-existing models, open-source components, customer datasets, synthetic data, third-party APIs, model weights, prompts, embeddings, fine-tuning datasets and continuously generated outputs.

The contract should allocate rights separately rather than describing everything simply as “software.”

Define the AI System Precisely

The agreement should identify exactly what the developer is required to deliver.

Depending on the project, deliverables may include the application, source code, model architecture, trained model, model weights, APIs, documentation, deployment scripts, evaluation reports, prompts, fine-tuning materials and technical documentation.

Ambiguous descriptions create ownership disputes later.

Separate Background IP From Newly Developed IP

One of the most important contractual distinctions is between background intellectual property and project-created intellectual property.

Background IP generally includes technology, libraries, models, methodologies and tools that a party owned or developed independently before the project.

Project IP concerns technology created specifically during performance of the agreement.

The contract should define both categories expressly.

Who Owns the Source Code?

Foreign customers frequently assume that paying development fees automatically gives them unrestricted ownership of everything created during the project.

That assumption can be dangerous.

The contract should expressly regulate economic intellectual-property rights, source-code delivery and the customer’s rights to reproduce, modify, adapt, commercialize and permit third parties to maintain the software.

Computer programs receive copyright protection within applicable copyright frameworks, while ideas and principles underlying program elements are generally treated differently from the protected expression of the program.

AI Model Ownership Should Be Addressed Separately

Owning the user interface does not necessarily mean owning the underlying AI model.

The contract should specify ownership or licensing rights concerning the base model, fine-tuned model, weights, parameters, architecture and project-specific modifications.

This becomes particularly important when a Turkish developer builds the solution on a third-party foundation model.

Third-Party AI Models Create Additional Risks

The developer may use external AI services or foundation models rather than developing everything internally.

The foreign customer should know which third-party technologies are incorporated into the product and whether their license terms restrict commercial use, modification, redistribution or processing of customer information.

Require a Third-Party Technology Schedule

For significant AI projects, the contract can require the developer to maintain a schedule identifying important third-party software, AI models, APIs and open-source components.

The customer can then assess licensing and dependency risks before deployment.

Open-Source Software Requires Special Attention

Open-source does not mean unrestricted.

Different licenses impose different obligations. Some may require attribution, disclosure or particular treatment of derivative works.

The developer should warrant compliance with applicable licenses and disclose components capable of materially affecting the customer’s proprietary technology.

Who Owns AI-Generated Outputs?

The agreement should regulate the parties’ contractual rights concerning outputs generated through the system.

Examples include reports, images, predictions, software code, recommendations, designs, summaries and analytical results.

The contract should avoid assuming that every AI-generated output automatically receives identical intellectual-property protection.

Training Data Ownership Must Be Clear

Training datasets can be commercially more valuable than the software itself.

The agreement should identify who owns the original dataset, who may use it, whether the developer can copy it and whether it may be reused for another customer’s model.

Can the Developer Use Customer Data to Improve Its Own AI?

This should never be left ambiguous.

If a foreign company provides commercially sensitive information to a Turkish AI developer, the agreement should state whether that information can be used for model improvement, benchmarking or training services for other customers.

Where such use is prohibited, the prohibition should be explicit.

Personal Data Creates a Separate Compliance Layer

Training or operating an AI system may involve employees, customers, patients, users or other identifiable individuals.

Turkey’s Personal Data Protection Authority has specifically addressed generative AI from the perspective of personal-data processing and emphasizes data-protection considerations throughout AI systems’ lifecycle.

The parties should therefore determine their respective roles and responsibilities before personal data are processed.

Data Minimization Should Be Built Into the Project

AI developers sometimes request substantially more information than is actually necessary.

The Turkish data-protection authority’s AI recommendations emphasize evaluating the quality, nature, origin, amount and category of personal data and minimizing data use.

The contract can reinforce this by limiting datasets to those necessary for the agreed purpose.

International Data Transfers Require Particular Attention

Foreign companies frequently use global cloud infrastructure or development teams outside Turkey.

If personal data originating in Turkey will be transferred abroad, the applicable cross-border data-transfer framework should be analyzed. Turkish rules provide mechanisms including standard contracts and binding corporate rules in qualifying circumstances.

This issue should be resolved before architecture and hosting decisions become difficult to reverse.

Identify Hosting Locations

The contract should specify where production data, backups, training datasets and logs may be stored.

If subcontractors or cloud providers are used, their locations should also be evaluated.

Data Security Obligations Should Be Specific

Generic wording requiring “reasonable security” may be inadequate for high-value AI systems.

The agreement can require access controls, encryption, authentication, logging, vulnerability management, backup procedures, incident response and secure development practices.

Under Turkey’s personal-data framework, data controllers must take necessary technical and administrative measures to ensure an appropriate level of security.

Confidentiality Must Cover More Than Documents

AI projects expose information through databases, prompts, model inputs, source repositories, APIs and system logs.

The confidentiality clause should therefore cover information regardless of the technical format in which it is disclosed.

Protect Trade Secrets Explicitly

Customer lists, pricing strategies, manufacturing formulas, financial information, algorithms and business processes can all become part of an AI development project.

The agreement should prohibit unauthorized disclosure and use outside the project.

Prompt and Input Confidentiality Matters

Employees may submit confidential information through an AI interface during testing.

The contract should specify whether prompts and inputs are stored, who can access them and whether they can be reused for model training.

Subcontractors Create Additional Exposure

The developer may outsource labeling, programming, testing or cloud infrastructure.

The customer should decide whether subcontracting requires prior approval and whether the main developer remains fully responsible for subcontractor conduct.

AI Development Contracts Need Security Incident Procedures

The contract should establish what happens if training data, model credentials or confidential information are compromised.

Notification periods, investigation cooperation, evidence preservation, remediation and cost allocation should be addressed.

Performance Standards Must Be Measurable

Promises that an AI system will be “accurate” or “high quality” are difficult to enforce.

Define measurable performance criteria where possible.

Examples include accuracy thresholds, response times, uptime, false-positive rates, model-evaluation benchmarks or task-specific acceptance criteria.

AI Accuracy Cannot Usually Be Treated as Absolute

Probabilistic AI systems may produce incorrect outputs even when functioning technically as designed.

The contract should distinguish ordinary model limitations from failures to meet agreed performance specifications.

Hallucination Risk Should Be Allocated

Generative AI can produce plausible but incorrect information.

For systems used in financial, medical, legal, engineering or other sensitive contexts, the agreement should define human-review requirements and limitations on autonomous reliance.

Human Oversight May Be Contractually Required

High-impact decisions should not automatically be delegated to AI simply because the software technically allows it.

The parties can define which outputs require human review before being used operationally.

Bias and Discrimination Risks Should Be Considered

Training data and model behavior may create discriminatory or systematically inaccurate outcomes.

The Turkish data-protection authority’s AI recommendations specifically emphasize preventing discrimination and adverse consequences affecting individuals.

Testing and monitoring obligations should therefore be considered where relevant to the system’s use.

Define Acceptance Testing

The customer should not be required to accept the project simply because the developer states that development is complete.

Acceptance criteria should identify testing procedures, test datasets, performance thresholds and correction periods.

Milestone Payments Can Reduce Project Risk

Large projects can divide payments according to objectively verifiable milestones.

For example, payment may be linked to architecture approval, prototype completion, security testing, acceptance testing and production deployment.

Define What Happens When Acceptance Fails

The contract should provide a correction period and specify the consequences of repeated failure.

Possible contractual remedies may include withholding milestone payments, requiring remediation, price reduction or termination depending on the agreement.

Model Drift Should Be Addressed

An AI system that performs well at deployment may deteriorate as data patterns change.

For continuing services, contracts should specify monitoring, retraining and performance-review responsibilities.

Who Pays for Retraining?

Retraining may require substantial computing resources and engineering work.

The contract should distinguish ordinary maintenance from separately chargeable model redevelopment.

Regulatory Change Clauses Are Increasingly Important

AI regulation is developing rapidly internationally.

The agreement should determine who is responsible for adapting the system when mandatory legal or regulatory requirements change during a long-term project.

Foreign Companies Should Consider EU Exposure

A foreign company operating from Turkey may also deploy an AI system in European markets.

Where relevant, contractual responsibilities should therefore account for requirements applicable in the jurisdictions where the system will actually be offered or used.

Liability for AI Decisions Must Be Allocated

If an AI system generates an incorrect recommendation causing financial loss, the contract should determine which party bears responsibility.

The answer may depend on whether the problem resulted from defective development, inaccurate customer data, misuse, unauthorized modification or a known system limitation.

Avoid Overly Broad Liability Exclusions

A developer may attempt to exclude virtually every category of AI-related loss.

The customer should evaluate whether such exclusions make the developer’s performance obligations commercially meaningless.

Liability Caps Should Reflect Actual Risk

A liability cap equal to one month’s development fee may be inappropriate where the developer processes valuable confidential datasets or controls critical business infrastructure.

Different caps can be negotiated for different categories of risk.

Certain Risks May Require Separate Treatment

Confidentiality breaches, intellectual-property infringement, intentional misconduct, serious cybersecurity incidents and data-protection violations may require different liability treatment from ordinary service-level failures.

The allocation depends on the transaction and bargaining position.

Third-Party Intellectual-Property Claims Are Important

A customer can face claims if delivered software incorporates unauthorized code or other protected material.

The agreement should contain appropriate representations concerning the developer’s rights to use incorporated technology.

IP Indemnities Should Be Carefully Drafted

An indemnity may require the developer to defend or compensate the customer where third-party intellectual-property claims arise from delivered technology.

Exceptions should be considered where infringement results from customer modifications or mandatory customer specifications.

Employee and Contractor Rights Must Be Secured

The development company should ensure that it has the rights necessary to deliver the technology promised under the contract.

This is particularly important where programmers, freelancers and external consultants contribute to development.

Source-Code Escrow May Be Useful

For business-critical proprietary systems, the customer may consider source-code escrow or another continuity arrangement.

Trigger events can include insolvency, permanent cessation of support or material contractual breach.

Exit Rights Are as Important as Development Rights

The contract should explain what happens when the relationship ends.

The customer may require return or deletion of datasets, export of model configurations, delivery of documentation and transition assistance.

Data Deletion Should Be Verifiable

Where customer data must be deleted after termination, consider requiring written confirmation covering active systems and backups subject to technically and legally appropriate retention arrangements.

Vendor Lock-In Should Be Addressed

A system can become commercially impossible to move if the customer lacks source code, model documentation, data-export rights or necessary technical information.

Portability requirements should therefore be negotiated before development begins.

Non-Competition Clauses Require Careful Drafting

Customers sometimes seek to prohibit developers from working with competitors.

Such clauses should be assessed carefully for scope, duration, subject matter and enforceability rather than drafted as unlimited restrictions.

Governing Law Must Be Chosen Clearly

Cross-border AI projects may involve a Turkish developer and foreign customer.

The contract should expressly select governing law rather than leaving the issue to later conflict-of-laws arguments.

Choose the Dispute Resolution Mechanism

The parties should decide whether disputes will be resolved through Turkish courts, foreign courts or arbitration.

For technically complex and international projects, arbitration may be considered depending on the transaction.

Evidence Preservation Is Important

AI disputes may depend on source-code versions, prompts, model logs, datasets and deployment histories.

The agreement should require preservation of appropriate technical records.

Change-Control Procedures Prevent Scope Disputes

AI projects often evolve during development.

Every significant change in functionality, model architecture, dataset or performance requirement should pass through a written change-control mechanism specifying cost and timing consequences.

Documentation Should Be a Contractual Deliverable

The customer should receive sufficient documentation to understand, operate and maintain the system according to the agreed scope.

Documentation may include architecture, deployment, API, security and operational materials.

Foreign Companies Should Conduct AI Vendor Due Diligence

Before signing, investigate the developer’s technical capacity, security practices, use of subcontractors, financial stability, IP ownership and reliance on third-party AI providers.

A strong contract cannot fully compensate for an incapable vendor.

2026 AI Contract Checklist for Foreign Companies

Before signing an AI development agreement in Turkey, foreign companies should verify the definition of deliverables, background IP, project IP, source-code rights, model ownership, training-data rights, third-party AI dependencies, open-source components, output rights, confidentiality, personal-data processing, international transfers, cybersecurity, performance criteria, acceptance testing, model monitoring, liability caps, IP indemnities, subcontracting, termination, data deletion, portability and dispute resolution.

Frequently Asked Questions

Does paying for AI development automatically give the customer ownership?

No assumption should be made. Ownership and exploitation rights should be addressed expressly in the contract.

Who owns the training data?

The agreement should identify ownership and permitted uses clearly, particularly where customer datasets are used for model development.

Can a Turkish AI developer use customer data to train other models?

The contract should expressly regulate this issue. Personal-data processing must also comply with applicable data-protection requirements.

Can personal data be transferred outside Turkey for AI processing?

Potentially, but the applicable cross-border transfer requirements must be satisfied. Turkey’s current framework includes mechanisms such as standard contracts and binding corporate rules in qualifying cases.

Who is liable if an AI model gives an incorrect answer?

Liability depends on the contract and circumstances, including whether the problem resulted from development defects, customer data, misuse or known limitations.

Should the contract regulate third-party AI models?

Yes. The customer should know which external models, APIs and services are necessary to operate the system.

Should source code be delivered?

That depends on the commercial model. If source-code access is important for independence or continuity, the right should be expressly negotiated.

Can confidential information be entered into the AI system?

Only within a properly controlled contractual and technical framework. Storage, reuse, model-training and access rules should be defined.

What happens when the AI development agreement terminates?

The agreement should regulate data return or deletion, transition assistance, continued licenses, source-code access and other exit requirements.

What is the biggest contractual mistake foreign companies make?

Treating an AI development agreement as an ordinary software purchase without separately regulating model ownership, training data, third-party AI dependencies, personal data, outputs, confidentiality and liability.

Client-Focused Legal Support for AI Development Contracts in Turkey

Fırat Fesih Kaya Law Office assists foreign companies, technology investors, software developers and international businesses with AI development, software licensing, technology-transfer, confidentiality, intellectual-property and data-protection agreements in Turkey. Lawyer Fırat Fesih Kaya provides legal support in drafting and negotiating AI development agreements, allocating ownership of software and models, protecting confidential information, structuring data-processing arrangements, managing cross-border technology projects and resolving contractual disputes arising from AI systems.

Phone:
+90 312 434 22 22

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+90 532 769 22 22

Email:
info@firatfesihkaya.av.tr

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