Experts: EU’s legal threats against AstraZeneca likely to end in failure
Judging by clauses contained in the complete and uncensored vaccine procurement contract between the EU and AstraZeneca, the European Commission’s case against the Anglo-Swedish pharmaceutical company seems hopeless. Earlier this week, Health Minister Hugo de Jonge was blindsided during a press conference with a report that AstraZeneca would only meet half of its EU vaccine distribution target in the second quarter, a claim the company denied. We asked legal experts for their verdict on a contractual dispute.
The European Commission’s legal threats against AstraZeneca for the delay in Covid-19 vaccine deliveries are likely to end in failure. This is what several clauses in the EU’s contract with the Anglo-Swedish company seem to confirm, according to legal experts with whom we shared the uncensored contract.
The most crucial provision, among those redacted in the document made public on January 27, states that "the European Commission and member states waive any claims against AstraZeneca for delays in delivery". According to Colin McCall, partner at international law firm Taylor Wessing, this leaves no doubt that the Commission’s claims are unfounded. Clive Douglas, attorney and commercial mediator at Nexa Law, agrees. The claims concern the 60 percent cut in doses scheduled for the first quarter of 2021, announced by AstraZeneca on 22 January 22.
At this point, the Commission’s legal team seems to have very little room for maneuver. Now they have to declare whether there is in fact any case to be made, in response to a question submitted in late January by a group of Social Democratic MEPs. One of these MEPs, Andrea Cozzolino, announced that this response should arrive in early March.
"I wouldn't be surprised if the same disclaimer is also present in the contracts signed with other pharmaceutical companies," McCall says. "Given the experimental nature of the vaccines, it is unlikely that the manufacturers have agreed to binding deadlines." Article 5.1 states that the company will make "the Maximum Reasonable Effort" to deliver between 80 and 100 million doses between January and March.
The commitment to "Maximum Reasonable Effort", repeated in multiple sections of the agreement, is the technicality to which the Commission clings. "The inclusion of the word 'approximately' implies that the delivery dates are not precise," explains Nexa Law's Clive Douglas, referring to the calendar indicating the agreed monthly supplies.
"Moreover, the obligation of Maximum Reasonable Effort is not specifically mentioned for the delivery dates." According to the London-based jurist, the final judgment on obligations and limitations of liability lies with the Brussels court.
There is also the issue of the order form, an integral part of the contract, with which Member States had to expressly request delivery of their allocated doses. The order was to be signed 10 days after the Commission allocated the quotas. "The order form, as set forth in the agreement, does not contain any additional information on delivery times," Douglas explains, "so unless governments have negotiated special terms in their individual order forms, those in the contract apply."
Indeed, articles 8.1 and 8.2 allow AstraZeneca to independently set quantities and delivery dates as it sees fit. "Governments have the right to stop payments (but not invoke penalties) only for late receipt of doses, as notified by the supplier, but not for failure to ship the full amount of doses agreed for a given month," Douglas concludes.
This article was part of the project "Who is cashing in on the Covid-19 pandemic" supported by Investigative Journalism for EU.
