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@MarkusBecker has an article today in @derspiegel about the AZ-EU contract today https://www.spiegel.de/politik/deutschland/vertrag-mit-astrazeneca-ueber-corona-impfstoff-juristen-sehen-eu-kommission-im-recht-a-fabfb080-7eb9-44ce-bfd0-f236de1d5140. A few observations to follow.
1. The article quotes the EU as saying that there are "verbindliche Bestellungen" - binding orders. This seems to suggest that AZAB is under a strict obligation to deliver the Initial Europe Doses. That is not correct.
2. AZAB's key obligation (the one the EU are interested in) is in clause 5.1 to use Best Reasonable Effots to manufacture the Initial Europe Doses. It is not a strict obligation to either manufacture, let alone deliver, let alone procure the full volume of Initial Europe Doses.
3. The EU's argument relies on clause 5.4, which provides that AZAB will use BRE to manufacture the vaccine at manufacturing sites located within the EU (including UK). There is no obligation to ensure that the entire capacity of any identified source is devoted to that end.
4. As @adamjohnritchie has explained, sites have been developed in Europe for this purpose. It is also intended that in due course, doses for the EU will be manufactured in the UK.
5. The doses in the UK are being manufactured by AZUK. AZAB is under no obligation to procure that AZUK ceases to manfuacture doses so that the entire capacity (or indeed any capacity) is diverted to producing Initial Europe Doses.
6. To the extent that AZAB in due course becomes able to take capacity in UK to produce Initial Europe Doses, it shall use Best Reasonable Efforts to do so.
7. Clause 5.4 and 5.5 read together make it clear that it is up to AZAB to select its "initial manufacturing sites" and that it may also change manufacturing sites. It is obliged to notify the Commission when it does so (5.5).
8. The next point in the article is that "muss die EU-Kommission sofort über Probleme informieren" - I think this is a reference to clause 6.3. I am not entirely clear what the alleged breach is here so I do not address it. However it is difficult to see how it goes very far.
9. I do not think the Commission is saying "if only you had told us you needed more glass vials, we could have supplied them for you" or anything like that.
10. The next point made is that "In einer weiteren Passage garantiert AstraZeneca, keine Verpflichtungen gegenüber anderen Vertragspartnern zu haben, die ein Hindernis für die vollständige Erfüllung des Vertrags mit der EU wären".
11. My rough translation: "in a further passage, AZ guarantees that it has no other contractual obligations that would hinder the full performance of its obligations under its agreement with the Commission".
12. This is plainly a reference to clause 13.1(e). The primary confusion here is that it assumes that AZAB's obligations are to deliver vaccines. That is not right. Its obligation is to use BRE to manufacture and deliver vaccines.
13. Once this is appreciated, it is clear that the question is whether AZAB has any pre-existing obligations that would conflict with or impede its ability to use BRE to manufacture and produce the Initial Europe Doses.
14. Plainly, the fact that UK is a few months ahead is not hindering AZAB's ability to use BRE to now produce the Initial Europe Doses.
15. If AZAB had agreed to produce doses for UK, that would not be inconsistent with its obligations to use BRE to produce doses for EU.
16. But there appears to be a more important point which is that the vaccines in UK are currently being manufactured by a different entity, AstraZeneca UK Ltd.
17. AZAB is not obliged to procure those doses for the EU or to take over AZUK's manufacturing capacity. Nor is AZUK under any obligation at all.
18. All of this, of course, is the analysis of an English lawyer. As @MWHoyle19 rightly points out, there may be all sorts of interesting questions involving good faith under Belgian Law. But the most interesting questions may be asked of the Commission!
19. To finish off, the article quotes 2 German lawyers. @katarinabarley is quoted as saying, »AstraZeneca kann deshalb nicht Probleme in einem einzigen Werk in Belgien als Grund anführen, seine Zusagen an die EU zu brechen«.
20. But that looks at the chain from the wrong direction. The question is whether AZAB is using BRE to manufacture the Initial Europe Doses. To repeat myself: AZAB has no strict obligations to deliver anything. If the problems are in Belgium, that is where the problems are.
21. The article then quotes Prof Thomas Riehm as saying »nicht so, dass AstraZeneca sagen kann, wir können nicht genügend in der EU herstellen, also bekommt ihr weniger«.
22. I think there is a risk of confusion here. AZAB's obligations are to select manufacturing sites and use them to use BRE to manufacture and produce the Initial Europe Doses.
23. It seems that AZAB has done exactly that, and at the moment it is a bit behind. There is no obligation to then go to other sites being used to manufacture doses under other contracts and divert them to Europe.
24. But, even if there were, there is certainly no obligation to procure doses being manufactured by AZUK.
25. Oh, there is one more lawyer quoted below the ad. Prof Dr Wolfgang Voit says, »Die Produktion im Vereinigten Königreich wird meines Erachtens der Produktion in der EU gleichgestellt.«
26. Again, that is not right. It assumes that the way the contract works is to impose strict delivery obligations which AZAB has to satisfy in any way it possibly can.
27. Whereas the contract (and the commercial understanding) is that AZAB will build up manufacturing capacity in EU (which is permitted to include UK) to manufacture and deliver the doses. See above.
28. In this regard, Der Spiegel are pretty close to the right analysis: "In einem weiteren Absatz sei ausdrücklich die Rede davon, dass die Impfdosen, die AstraZeneca an die EU liefern sollte, auch in Großbritannien hergestellt werden können, um der Verpflichtung nachzukommen."
29. The contract is permissive regarding manufacture in UK. Whereas manufacture outside EU requires the Commission's consent, AZ is (a) required to use BRE to manufacture within the EU; and (b) entitled to manufacture within the UK for this purpose.
30. To conclude: the AZAB/EU contract does not oblige AZAB to deliver any and all doses that it may have, let alone doses that have been manufactured by AZUK.
