Consilient Health Ltd v Gedeon Richter Plc
| Jurisdiction | England & Wales |
| Judge | Mr Justice Miles |
| Judgment Date | 07 July 2022 |
| Neutral Citation | [2022] EWHC 1744 (Ch) |
| Docket Number | Case No: BL-2022-000160 |
| Court | Chancery Division |
[2022] EWHC 1744 (Ch)
Mr Justice Miles
Case No: BL-2022-000160
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
IN THE MATTER OF THE ARBITRATION ACT 1996
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Stephen Houseman QC and Angeline Welsh (instructed by Allen & Overy LLP) for the Claimant
Lord Goldsmith QC and Andrew Scott QC (instructed by Debevoise & Plimpton LLP) for the Defendant
Hearing dates: 14–15 June 2022
APPROVED JUDGMENT
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 7 July 2022 at 10:30am.
Introduction
By an arbitration claim form dated 12 January 2022 the claimant seeks recognition and enforcement of an arbitral award issued on 11 October 2021.
The award was made in the Netherlands by an arbitral tribunal in a Dutch-seated ICC arbitration pursuant to an arbitration agreement contained in the parties' written Collaboration Agreement concluded on 19 July 2012 and amended on 19 December 2014 (“the CA”).
The award uses certain defined capitalised terms which I shall adopt unless otherwise indicated.
The award is a New York Convention (“NYC”) award.
The application for enforcement is brought under section 101 of the Arbitration Act 1996. The claim form also refers to section 66 but the claimant confirmed that the application was made under section 101.
The dispositive part of the award is contained in Section X. It required the defendant, in the event that the claimant exercised an option to purchase, to transfer to the claimant certain trade marks, regulatory authorisations and certain information and documents relating to specified pharmaceutical products marketed in the UK and Ireland.
Specifically, ¶X.3.a defined the defendant's transfer obligations in the event, as happened, that the claimant elected “to purchase full ownership of the Trade Marks of the Collaboration Products and the Marketing Authorisations of the Richter Products” in accordance with ¶X.2. The Trade Marks (“the TMs”) and associated Marketing Authorisations (“the MAs”) relate to branded generic oral contraceptives distributed in the UK and Ireland (“the Collaboration Products”). Most are manufactured by the defendant and delivered to the claimant (“Richter Products”); a limited number are made by other manufacturers and delivered to the claimant (“Non-Richter Products”).
Award ¶X.3 required the defendant to transfer and provide to the claimant (a) the TMs, (b) the MAs, (c) the full Registration Dossiers, and (d) certain information or documents to be transferred by means of the Registration Dossiers or otherwise. For convenience the term “the Registration Dossiers” is used below to refer to both (c) and (d). There was a 45 day deadline from the date of exercise of the option for these steps to take place.
There were further orders contained in award ¶X.5–6 concerning other elements of the parties' relationships.
The 45 day deadline for the asset transfer and business acquisition in award ¶X.3.a ended on Sunday 5 December 2021. The claimant provided transfer documents and tendered payment of the purchase price (£9.6m) before the deadline. The defendant returned the funds and disputed that it was required to make the transfers. It raised concerns about the confidentiality of the information required to be provided to the claimant under the award and contended that it was entitled under the terms of the award to the protection of further confidentiality terms.
At the hearing before me the focus of the claimant's application was the enforcement of award ¶X.3. The claimant said that the other elements of Section X could be addressed later.
The claim form also seeks specific mandatory relief against the defendant requiring it to take steps to transfer the TMs, MAs and the Registration Dossiers as referred to in ¶X.3 of the award.
The defendant contested the application on three main grounds: (a) that the application for enforcement should be adjourned under section 103(5) of the 1996 Act pending the defendant's application to set aside the award in Amsterdam as the curial court; (b) the court should in any event refuse to enforce the award because ¶X.3 consists solely of declarations and/or prescriptive orders that are too vague for enforcement by the English court; and (c) that the court should not grant the relief sought by the claimant because this relief seeks to modify the terms of the award. The defendant also contended specifically that the court should decline to grant mandatory relief (save possibly in relation to the English TMs and MAs) since there were insufficient connections with this jurisdiction.
The claimant contends that the defendant is seeking to obstruct and delay the business acquisition in order to further its own commercial position and is preventing the claimant from receiving and exploiting vital business assets to which it is entitled. It contends that the defendant is acting tactically and is seeking to stall to prepare to compete with the claimant once the separation has been consummated. It also contends that the defendant is seeking to pressurise it into giving up its rights to the TMs and associated rights.
The defendant denies that it is behaving tactically. It contends that it has made a genuine and substantial challenge to the award by its proceedings in the curial seat; that it has valuable proprietary know-how which will be lost or damaged if it is required to hand it over to the claimant and its suppliers. It denies that it is trying to stall to prepare to compete with the claimant in the UK and Ireland or to pressurise the claimant commercially. It accepts that it does intend to compete with the claimant once the relationship is finally severed but says that it has been preparing to do this for some years and is already ready to start competing, so there is no need for it to buy more time.
Further factual background
The claimant is a company incorporated in Ireland.
The defendant is a listed company incorporated in Hungary.
The parties entered the CA on 19 July 2012. The CA is governed by Dutch law. It contains an arbitration agreement incorporating the rules of the ICC. It is common ground that the arbitration agreement is governed by Dutch law.
The CA governs a joint business of the parties for the production, marketing and distribution of oral contraceptives (i.e. the Collaboration Products) in the UK and Ireland. Under the CA the parties had 50–50 joint ownership of the TMs under which the products are sold. The claimant was responsible for the marketing and distribution of the Collaboration Products. The defendant was responsible for manufacturing most of the Collaboration Products (the Richter Products) but some were sourced from third parties. For the Richter Products, the defendant holds the relevant MAs. These are approvals granted by the regulators in the relevant territories (here the UK and Ireland) required for the manufacture and sale of the products.
From 2015 onwards the relationship between the parties deteriorated and this led to disputes.
The claimant commenced an arbitration by a request dated 1 August 2016 (“the first arbitration”). This was concluded by an award issued on 17 December 2018 in favour of the claimant. The first tribunal found that the defendant had breached the CA in a number of ways. It had failed to confirm the claimant's orders, had not supplied orders on the requested delivery dates, had proposed increases to the ex-works prices while obstructing the claimant's attempts to review the basis of the increases, had attempted to gain access to the claimant's staff and business information, and had unjustifiably inflated its pharmacovigilance costs. The first tribunal also found that the defendant had acted against the spirit of the CA as interpreted under Dutch law.
The first tribunal granted a number of declarations in respect of the defendant's conduct and ordered the defendant to comply in the future with the CA. In particular the first tribunal ordered the claimant properly to perform its obligations under the CA until the contractual termination date of 19 December 2019 and declared that from February 2016 onwards the defendant had substantially breached its contractual obligations and/or acted unlawfully in various respects.
The first tribunal found that until 19 December 2019 neither party was allowed to prepare for the sale and distribution of products in a manner which could constitute unfair competition. It also concluded that the parties had a contractual obligation properly to discuss their post-termination relationship and that immediately after the award they should start consulting on a transition to address their post-termination relationship.
In January 2019 the claimant invited the defendant to start discussing the issues relating to the termination of the CA. Meetings took place in February 2019. The claimant stated that there were two possible options: either an amicable agreement leading to the claimant's acquisition of the TMs, or a contractual route under which the claimant would exercise a right of early termination of the CA for substantial breach followed by the claimant's acquisition of the TMs and related rights under clause 19.5 of the CA. In broad terms that clause provided that where there was a substantial breach of the CA, the innocent party had an option to acquire the TMs and associated rights for 40 per cent of their fair value.
The parties failed to reach agreement on a consensual acquisition of the TMs by the claimant.
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Consilient Health Ltd v Gedeon Richter Plc
...for the Defendant. Approved Judgment Mr Justice Miles 1 This is a consequentials hearing concerning a judgment of 7th July 2022 ( [2022] EWHC 1744 (Ch)). I shall not set out the background. Any interested reader should refer to my substantive judgment. I shall use the same 2 The first ques......