What has happened?
Efforts to roll out vaccines to control the spread of COVID-19 have been dealt a major blow because of an emerging dispute between the EU and AstraZeneca. Amid shortages due to production problems, the pharmaceutical company has been accused of breaching its contract to supply the EU, whose member States lag far behind countries like Britain and the US in delivering vaccines to its people. [1]
What does this mean?
The conflict has only escalated with both sides clearly not on the same page. The EU expects the company to fulfill the order on time, while AstraZeneca maintains that delivery figures in the contract were targets rather than commitments. [2] The dilemma is the wider ramifications this commercial dispute will have on the worldwide vaccine effort moving forward.
For one, the tension has led to concerns about the international competition for limited supplies of vaccine shots. Robert Yates, director of the global health program at the Chatham House, claims that this dispute highlights the impact of ‘vaccine nationalism’. [3] With most of the AstraZeneca production taking place in Britain, supply has essentially been prioritised for the UK over the EU. This raises deeper ethical questions about who deserves the first claim to life-saving vaccines. Despite calls by EU officials for UK doses to be diverted to the bloc, Downing Street has made it clear that Britain will not accept interruptions to its own supplies. [4] This ‘Britain first’ approach has led to accusations by the EU that the UK is trying to start a so-called ‘vaccine war’ in a post-Brexit world. [5]
This dispute has consequently led to the EU intervening in the global supply chain and imposing export controls on vaccines, such as Pfizer, that are produced in the bloc. This drastic move by the EU is seen as a retaliatory measure to impose a more ‘Europe first’ system amid vaccine shortages. [6]
How will this affect the legal industry?
As the dispute intensifies, attention will turn to the correct interpretation of the EU contract and whether the UK contract should, as AstraZeneca claims, take precedence because it was signed earlier. With the EU exploring legal action, questions will be raised about the procedural implications of cross-border litigation, such as the governing law and the jurisdiction of the contracts. [7]
Furthermore, there have been discussions about whether the EU has the authority to impose export controls. EU law does in fact afford the European Commission the right to subject exports to authorisation in situations where it needs to prevent a critical crisis from arising as a result of a shortage of essential products. [8]
However, rules set out by the World Trade Organisation (WTO) prevent the EU from imposing restrictions on goods traded between WTO member states. [9] This prohibition does not apply to export restrictions put in place to relieve critical shortages of essential commodities, but it can be argued that the EU’s shortage is no more critical than the rest of the world’s. Under WTO law, a member state must first explore a less restrictive way of achieving its goal, which it appears the EU did not do. For example, the EU could have temporarily changed its patent laws to allow other manufacturers to produce vaccine doses, which is a much more effective solution to alleviate their vaccine shortage than imposing export controls. [10]
Whether the EU’s decision is legal or not is debatable, but ultimately it is pharmaceutical companies like Pfizer who will suffer the consequences, given that they face potential legal retaliation over breach of contractual commitments due to vaccine delays.
Written by Shanye Ghelani
Assessing Firms:
#Arnold & Porter, #Freshfields, #Clifford Chance, #Gowling WLG, #Stephenson Harwood, #Covington & Burling
Footnotes:
1. Nikos Chrysoloras, Suzi Ring and Jonathan Stearns, ‘EU Fails to Sway AstraZeneca to Tap UK Supply for Vaccines’ (Bloomberg, 2021) < https://www.bloomberg.com/news/articles/2021-01-27/astrazeneca-eu-still-at-loggerheads-over-vaccine-supplies>.
2. Sam Meredith, ‘EU Piles Pressure on AstraZeneca over Delayed Vaccines, Reveals Details of Contract’ (CNBC, 2021) < https://www.cnbc.com/2021/01/29/eu-publishes-astrazeneca-vaccine-contract-as-battle-over-supplies-heats-up.html>.
3. Raf Casert, Samuel Petrequin and Danica Kirka, ‘Tensions Rise as AstraZeneca, EU Spar over Vaccine Delays’ (ABC News, 2021) < https://abcnews.go.com/Health/wireStory/eu-official-astrazeneca-pulls-vaccine-delivery-talks-75510022>.
4. Nick Triggle, ‘UK Vaccine Supplies won’t be Interrupted’ (BBC News, 2021) < https://www.bbc.com/news/uk-55838272>.
5. Jamie Dettmer, ‘Britain Refuses EU’s Demand for Vaccine Doses’ (VOA News, 2021) < https://www.voanews.com/covid-19-pandemic/britain-refuses-eus-demand-vaccine-doses>.
6. Johnathan Stearns, Alberto Nardelli and Nikos Chrysoloras, ‘Faced with Vaccine Shortages, EU Set to Impose Export Controls’ (Bloomberg, 2021) < https://www.bloomberg.com/news/articles/2021-01-28/europe-opens-door-to-vaccine-export-ban-risking-global-backlash>.
7. Kevin Rawlinson, ‘Lawyers Disagree over AstraZeneca’s Duty to Supply Vaccines to EU’ (The Guardian, 2021) https://www.theguardian.com/business/2021/jan/30/lawyers-disagree-over-astrazenecas-duty-to-supply-vaccines-to-eu>.
8. Stuart MacLennan, ‘COVID Vaccines: Is it Legal for the EU to restrict exports?’ (The Conversation, 2021) < https://theconversation.com/covid-vaccines-is-it-legal-for-the-eu-to-restrict-exports-154527>.
9. Ibid.
10. Ibid.
Disclaimer: This article (and any information accessed through links in this article) is provided for information purposes only and does not constitute legal advice.