Steven Barrett

Can the EU win a case against AstraZeneca? I’m not convinced

Can the EU win a case against AstraZeneca? I'm not convinced
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The contract between AstraZeneca and the EU has now been published. It confirms my view, expressed on Coffee House, that the EU does not – despite its claims – have any form of ‘strong case’ or way to jump a queue to speed up its vaccine rollout.

Both contracts (the one, published previously, which I used as an example in my last post, and today's) are what the EU calls advance purchase agreements, or APAs. The latest contract has slightly different wording in some places. But the differences are not substantial. This, then, appears to be bad news for the EU if it is serious about taking action against AstraZeneca.

The words ‘Reasonable best efforts’ remains in the contract and is the cornerstone of the obligation AstraZeneca is under. Clause 5.1 says they must use their reasonable best efforts to deliver the due doses. The definitions used here differ slightly from the previous contract published. But still: it is hard to see that will help the EU's cause.

What our courts say is that if you wanted the contract to say X, you should have written it as X. If they wanted a strict guarantee, they should have written in a strict guarantee. If parties write they must use best efforts, it means they must use best efforts. Attempts to erode that or increase the burden bump headfirst into this problem.

This contract does contain, as the president of the EU commission has said, 'binding orders'. But these are binding orders to use best efforts. If you leave those words out, as Ursula von der Leyen has done in her public statements, people do not get the full picture. So the publication of this contract doesn't change my view that statements made by the commission remain wrong and unhelpful.

After all, it will be very difficult to show that AstraZeneca has not used its best efforts. It is a factual question, of course, so it may be for a court. But if the EU’s argument is as I set out above, that AstraZeneca are in breach by supplying others, I do not see any way of that argument working in English law. Would it work under Belgian law?

If so, it would come as surprise to me. But then, I am not qualified in Belgian law. Where Belgian law differs from our law it does so by having a ‘good faith’ principle in contract. We have always rejected that in English law, because it causes confusion and what business needs is certainty. Our view of law is that law facilitates, or helps, business to function.

Perhaps here is where the problem arises. If so, maybe the best solution is for all business contracts to in future choose to use English law.

It is possible the EU’s odd statements over the last few days relate to an over reliance on clause 13.1(e). This is a warranty, a statement by AstraZeneca that, at the time it signed the contract in August 2020, it did not have any other contracts which might hinder this one. But contracts must be read as a whole and this warranty cannot rewrite clause 5.1.

Worse, for anyone arguing this is a plausible legal argument, is clause 6.2:

'In the event AstraZeneca's ability to fulfill [sic] its obligations under this Agreement is impeded by a competing agreement entered into by or on behalf of the Commission … AstraZeneca shall not be deemed in breach of this Agreement as a result of any such delay due to the aforementioned competing agreement(s).'

That would destroy any argument the EU has made in public, at least in an English court, because you cannot turn 'try' in to 'do'. What it would do in a Belgian court is harder to say. But again, I'd be surprised if a Belgian judge took a different view.

If AstraZeneca is in the wrong, clause 8.2 seems to limit the impact of a failure to meet any due delivery. If AstraZeneca fails to meet a monthly delivery then 'the obligation of payment will be suspended'. This doesn’t exclude any other remedy, but is an indication that the normal response to a failure to deliver is just to not get paid. That is more normal in a contract, and a far cry from the more outlandish claims which have been made of the potential consequences of failing to deliver.

To make matters worse, the EU published this contract earlier today without correctly redacting confidential information. No doubt a court would find interest in that; the confidentiality clause is in clause 16.

This is an unseemly row between the EU and AstraZeneca, but if what matters is this contract (and in law, that’s all that matters) then under it the EU do not seem to have any case at all.