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thread:
The AZ/EU Contract.
1. This thread will all be pie in the sky if, as reported, the EU has failed to make the necessary down payments mentioned in my previous thread here: https://twitter.com/BarristersHorse/status/1355187738304253954
The AZ/EU Contract.
1. This thread will all be pie in the sky if, as reported, the EU has failed to make the necessary down payments mentioned in my previous thread here: https://twitter.com/BarristersHorse/status/1355187738304253954
2. Two caveats:
a) contract law isn't my thing, but I'm reasonably confident I'm on the right track, and
b) The AZ/EU APA is governed by Belgian law, but the basics of contract law will be broadly similar to other jurisdictions.
a) contract law isn't my thing, but I'm reasonably confident I'm on the right track, and
b) The AZ/EU APA is governed by Belgian law, but the basics of contract law will be broadly similar to other jurisdictions.
3. The Parties:
Notably the AZ/EU APA is between the EU Commission & AstraZeneca AB "a party incorporated in Sweden".
We don't know which of AZ companies the UK contract is with, but AZ do have a limited company registered in the UK, so that seems the most obvious one.
Notably the AZ/EU APA is between the EU Commission & AstraZeneca AB "a party incorporated in Sweden".
We don't know which of AZ companies the UK contract is with, but AZ do have a limited company registered in the UK, so that seems the most obvious one.
4. If the AZ facilities in the UK are part of the AZ UK limited company, this will have implications as to whether vaccines could, in theory, be diverted under the EU's contract from UK stocks to fulfill EU stocks, as the EU & UK contracts would be between different companies.
5. As separate legal entities, the Commission could not compel AZ UK to fulfill a contractual obligation it entered into with AZ AB.
6. Section 1.9 of the APA defines Best Reasonable Efforts (BRE). Unsurprisingly AZ's BRE is compared to a similar company of similar size & how AZ's performance would relate to those similar companies.
7. The Commission & Member States BRE are compared to how "governments would undertake or use in supporting their contractor... having regard to the urgent need for a vaccine".
8. So it can be seen that both parties (Commission & AZ) are under an obligation to apply Best Reasonable Efforts in performing their functions under the contract.
If as suggested, the Commission hasn't paid the down payments, BRE hasn't been fulfilled.
If as suggested, the Commission hasn't paid the down payments, BRE hasn't been fulfilled.
9. The first up front payment was due on 1st September, 5 days after the Effective Date (date contract entered into), which was 27 August.
The monies were to be used for the facilitating of setting up production facilities & purchase of raw materials.
The monies were to be used for the facilitating of setting up production facilities & purchase of raw materials.
10. Returning to the BRE obligation on AZ, under section 5.1, as with the Curevac contract, BRE in regard to supply of 'initial doses' vaccines to member states only kicks in when approval of the vaccine under the EMA is granted, which was earlier today.
11. Very importantly, Section 5.1 references Section 7.1 which refers to AZ's funding for the set up costs I mentioned above.
Timely vaccine roll out & AZ's liability under BRE is contingent on the funding being provided to get the show on the road.
Timely vaccine roll out & AZ's liability under BRE is contingent on the funding being provided to get the show on the road.
12. The most perplexing conundrum is Section 5.4.
AZ to use BRE to make vaccines across EU ('which for the purpose of this section shall include the UK').
AZ to use BRE to make vaccines across EU ('which for the purpose of this section shall include the UK').
13. We don't know enough about the facts behind this Section, but:
a) Did the UK Oxford AstraZeneca agree to this?
b) At time contract entered into, UK was in transition period, but we've now left EU totally, so the provision is at odds with reality.
a) Did the UK Oxford AstraZeneca agree to this?
b) At time contract entered into, UK was in transition period, but we've now left EU totally, so the provision is at odds with reality.
14.
c) As mentioned at start of this thread, AZ AB & AZ UK Ltd are 2 separate legal entities & one cannot bind the other to a contract it isn't a Party to.
c) As mentioned at start of this thread, AZ AB & AZ UK Ltd are 2 separate legal entities & one cannot bind the other to a contract it isn't a Party to.
15. Section 6.2 is a little odd in that it refers AZ's ability to fulfill the contractual obligations to the Commission being impeded by a competing agreement entered into by or on behalf of the Commission?
I think someone has f*cked up big time here with a drafting error.
I think someone has f*cked up big time here with a drafting error.
16. The Section should have been drafted to state a competing agreement with another AZ customer.
The rest of the Section refers to mutually acceptable solutions being agreed.
The rest of the Section refers to mutually acceptable solutions being agreed.
17. Section 7.1 refers to the requirement of funding to enable AstraZeneca to harness supplies in Europe.
Section 7.2 Refers to a payment of €336 million as part payment for the vaccines.
Section 7.2 Refers to a payment of €336 million as part payment for the vaccines.
18.
Section 7.2(a) requires the Commission to pay two thirds of the initial funding within 5 days of the start of the contract.
Section 7.2(a) requires the Commission to pay two thirds of the initial funding within 5 days of the start of the contract.
19.
Section 7.2(b) requires the Commission to pay the remaining one third of the initial funding within 20 days of the start of contract.
Section 7.2(b) is one of the redacted parts of the APA.
Section 7.2(b) requires the Commission to pay the remaining one third of the initial funding within 20 days of the start of contract.
Section 7.2(b) is one of the redacted parts of the APA.
20.
Section 7.7 refers to late payment to AZ.
Section 7.7(a) allows AZ to charge interest on debt & 7.7(b) allows AZ to give written notice to suspend its obligations under the APA until such time the sums owed are settled by the Commission or member states.
Section 7.7 refers to late payment to AZ.
Section 7.7(a) allows AZ to charge interest on debt & 7.7(b) allows AZ to give written notice to suspend its obligations under the APA until such time the sums owed are settled by the Commission or member states.
21.
Section 16.4 Refers to the requirement of confidentiality & 16.5 refers to a requirement of due diligence in the way each Party treats the confidential information.
LOL
Section 16.4 Refers to the requirement of confidentiality & 16.5 refers to a requirement of due diligence in the way each Party treats the confidential information.
LOL
22.
Section 18.5 sets out the dispute resolution procedure. In a nutshell, there's no quick fix & this is perhaps why the EU are panicking.
Informal dispute resolution is initiated by written notice & Executive Officers meet within 20 days to resolve in good faith.
Section 18.5 sets out the dispute resolution procedure. In a nutshell, there's no quick fix & this is perhaps why the EU are panicking.
Informal dispute resolution is initiated by written notice & Executive Officers meet within 20 days to resolve in good faith.
23. I think we can all see this is deteriorating into a messy political situation.
The EU want to make up lost ground due to the delay in their vaccine scheme. They've lashed out loudly & blindly, but from a legal perspective they don't have a strong case.
The EU want to make up lost ground due to the delay in their vaccine scheme. They've lashed out loudly & blindly, but from a legal perspective they don't have a strong case.
