Steven Barrett

The vaccine row shows the EU doesn’t understand contract law

The vaccine row shows the EU doesn't understand contract law
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The EU rejects 'the logic of first-come first-serve,' said the EU's health commissioner Stella Kyriakides. 'That may work at the neighbourhood butcher's but not in contracts, and not in our advanced purchase agreements'.

Contract law is an area of law I know well. And it is not a political comment to say the commissioner is wrong.

We don't know precisely what the contract between AstraZeneca and EU member states says. But the EU did publish another vaccine supply contract here.

In any would-be-case involving this contract, the EU has two massive hurdles to jump. Firstly, contractors undertake to use their 'reasonable best efforts' to manufacture enough supply. On Page 10, we see that is further limited, because it is defined as:

'a reasonable degree of best effort to accomplish a given task, acknowledging … the timely availability of raw materials, inventories and liquid funds; yield of process; the … contractor's commitments to other purchasers of the Product … and any other currently unknown factors which may delay or render impossible, contractor's successful completion of the particular task'

To win a case, the EU has to show that the other side didn’t act with a reasonable degree of best effort. All a contractor need do is show that delay is caused by either a shortage of ingredients, lower yield from a batch, or the fact the contractor is already under a different contract to supply doses to a different country.

That is basic contract law, true in most jurisdictions. It is also how a queue works.

This shows that Kyriakides's view of contract law is wrong. And the EU knew that, because they signed these contracts. Indeed, in all likelihood, they wrote them. Put simply – 'I promise to try' is not 'I promise to do'.

The second point is that in order to complain in contract law, you must have suffered a breach. We do not know, but it is suggested, that the number of vaccines the EU asked for may not be met. Under clause (the EU call them ‘articles’) 1.11.4 (c) we see that the date these doses are due (in the published contract) are 'at the latest by the later of … the end of the estimated delivery periods'.

For deliveries expected in Q1 2021, that would be the end of Q1, 1 April 2021. We are in January. So under the terms of this contract, the EU could not claim there had been a breach until that date had passed.

What’s more, an EU ‘official’ briefed Tony Connelly at RTE that the ECJ could decide the case. But under the contract above, the companies, the EU and the 27 Members have all agreed to 'irrevocably submit to the exclusive jurisdiction' of the Belgian Courts, and Belgian domestic law decides any case.

As for whether the EU can seize doses of vaccine meant for other countries if it wins a case? That's a matter for Belgian law, so outside my abilities. But as far as I understand it, only if the EU suffers a breach – and then only if that breach isn’t justified under the reasonable best efforts test – would the EU even be able to ask.

All this makes it very difficult to see what case the EU has. If some other contract exists, the EU can release it. No good faith principle can turn ‘try’ in to ‘do’.

As matters stand, making claims suggesting that you do have a case, or that your court may decide it, risks misleading both the press and the people. Making public comment on contract law which is simply wrong is not helpful, and the EU should know better.