“Vaccine Wars” and the Law – Dispute Resolution on an International Scale
No sooner had the UK officially left the European Union, than the first real test of our continued relationship with it promptly arrived. The cause of the unease arose out of the Covid-19 pandemic and our responses to it. In particular, the UK and the EU clashed over the production of sufficient vaccinations to properly protect their populations against the disease, resulting in what the media has dubbed a “vaccine war.”
The dispute involves a combination of general jurisdictional issues and contract law, which will definitely ring a bell with those of us who deal with contractual disputes on a daily basis. Recent talks have apparently been productive, although not fully resolving the situation, but whatever the outcome it is a useful reminder of how these kinds of dispute can arise and be responded to.
A Production “Glitch”
The Anglo-Swedish company AstraZeneca has a number of plants which produce its vaccine, two of which are in the UK and several others across the EU. During January 2021 there was an anomaly in the supply chain; a plant producing the vaccine in Belgium suffered a “glitch” which produced a shortfall of around 50 million doses. By marked contrast, the UK plants had managed to reach their targets for supply to recipients within the UK of two million doses per week. Owing to this large shortfall, the EU called on AstraZeneca to start sharing its UK supply more widely and even threatened to block exports of the vaccine outside the EU if it did not.
First come, first served?
AstraZeneca’s reaction to the EU’s demands was to state that the respective contractual arrangements between it, the EU and the UK were different. Its contract with the UK Government in effect gave the UK first claim over vaccines produced domestically. By contrast, its contract with the EU instead required its “best efforts” to deliver the doses on time for distribution within the EU, using the UK plants to do so. AstraZeneca’s response received the backing of the UK Government, which also stated that the UK deal predated AstraZeneca’s contract with the EU by several months, however the EU was not impressed. The EU Health Minister, Stella Kyriakides, said pointedly in a statement, “we reject the logic of ‘first come, first served.’ That may work in a butcher’s shop but not in contracts and not in our advanced purchase agreements.” The EU rejected all argument that because it entered into the contract later, somehow this put it in a weaker position, or that the UK plants should therefore not then be used to fulfil the EU-wide supply.
Although these contracts are entered into on an international scale, certainly from the way it was reported the situation bore similarities with disputes involving commercial contracts that are much closer to home and which we see with our own commercial clients. Here we have one party (AstraZeneca) entering into commercial agreements with two different parties, each with competing interests for the same supply and yet on differing terms – its prior obligation to offer the UK first claim over domestic supply, compared with its subsequent (and seemingly weaker) obligation to use its “best efforts” to meet its supply targets with the EU, including by using the UK plants.
AstraZeneca’s position was unenviable. The EU’s assertion was that, by prioritising the UK with the supply from the UK plants, it was potentially breaching its obligation to meet the EU-wide targets. Yet if it sought to change its supply within the UK and distribute more widely, as the EU apparently demanded of it, amongst other things this could put it in direct breach of its original obligations under the agreement with the UK Government. Not only could either option lead to potential contractual claims for vast sums, but in this particular situation its decision was also a real matter of life and death.
Breaking the Deadlock
In the event, and as also is commonly the case with commercial parties, the dispute looks to be resolving itself through negotiation and discussion between the parties, although this is not to say that the situation is fully sorted as yet. It is interesting to note that the EU had attempted to break the deadlock using threats regarding the supply of other vaccines over which it had more control. It is a common feature of commercial dispute resolution where the parties have a longstanding commercial relationship that one or both parties will seek to enforce their position by using leverage from outside the dispute. However, in this particular case this has caused a separate headache to the EU regarding exports to other territories, so this is not quite an end to the matter just yet.
However it will eventually resolve itself, it has certainly been very interesting to see the similarities in disputes which occur on an international scale and ones that occur much closer to home with our own commercial clients.
If you are in the midst of a commercial dispute and need specialist legal advice, contact me directly via ieuan.jones@GAsolicitors.com or call 01752 203500.