CASE LAW DEVELOPMENTS
A Pharmaceutical Conflict over an ICC Award Is Building Momentum
The Taiwanese company PharmaEssentia is trying to challenge an ICC award issued in a dispute with its Austrian counterparty. The dispute arose over a license agreement for the development and commercialization of a leukemia drug.
In October 2020, the ICC tribunal ruled in favor of the Austrian company AOP Orphan Pharmaceuticals, awarding it EUR 2 billion. The dispute resulted from PharmaEssentia's attempt to terminate a license agreement, under which it undertook to provide to AOP Orphan Pharmaceuticals a substance for the drug for running clinical trials before releasing the drug into the market. In response, AOP Orphan Pharmaceuticals initiated an arbitration claiming damages for the uncertainty created and a delay of clinical trials.
PharmaEssentia is now challenging that decision before a Frankfurt court on several grounds, most of which are related to the fact that it was not given the opportunity to present its case when AOP Orphan Pharmaceuticals advanced a new argument on the eve of the last hearing.
Had the tribunal ruled in favor of PharmaEssentia, AOP Orphan Pharmaceuticals would have probably lost its licence to sell the drug, worth approximately EUR 1.3 billion. The decision of the Frankfurt court is expected soon.
Attack Is the Best Defense
On 13 January, Empresas Públicas de Medellín (EPM) announced that it filed a claim against the Spanish insurance company Mapfre with the Arbitration Court of the Medellín Chamber of Commerce (MCC) after the collapse of a hydroelectric dam that caused a severe flood.
The disaster occurred in the course of multi-billion construction of the Hidroituango hydroelectric dam: water burst into a blocked tunnel in the dam after a heavy rain and several landslides in 2018, causing a flood that destroyed houses, bridges and schools, leaving hundreds of people without a home.
EPM has also filed a USD 2.8 billion claim with the administrative court of Antioquia against the construction and audit companies behind the project - CCC Ituango, Generación Ituango, and Ingetec-Sedic. In the proceedings, EPM is claiming compensation of losses for the alleged mistakes that caused the dam's collapse.
In turn, the CCC Ituango consortium initiated an MCC arbitration against EPM, intending to prove that it was not liable for the disaster. CCC Ituango is also claiming compensation of reputational and economic losses suffered due to EPM's accusations.
Arbitral Award Upheld in the Snoop Dogg Royalties Dispute
A US court has upheld an award issued by the elected ICC Court President Claudia Salomon against the French cognac producer in a dispute that partially arose from failure to pay royalties to the US rapper Snoop Dogg.
In 2008, Cognac Ferrand granted the five-year exclusive right to import and sell certain products in the US to the drink's importer Mystique Brands. Under the agreement, Mystique entered into a marketing contract with Calvin Broadus, also known as Snoop Dogg, undertaking to cover the rapper's costs for promoting Cognac Ferrand products together with royalties on their sale.
In 2009, Cognac Ferrand terminated the contract invoking Mystique's bankruptcy and inability to pay the amounts due to Snoop Dogg. Mystique commenced an ICDR arbitration, arguing that the contract was terminated unlawfully and claiming damages of USD 238.000. Cognac Ferrand responded with a counterclaim on the compensation of USD 4.5 million of losses.
The original proceedings where the arbitrator concluded that Mystique was undeniably insolvent, was later suspended as Mystique initiated bankruptcy. The proceedings resumed no earlier than 2017, with Claudia Salomon appointed as the new arbitrator. She found that Mystique had not breached its minimum-purchase obligations under the contract and dismissed the claim for Snoop Dogg's royalties, since Cognac Ferrand presented no proof of losses or causation.
Cognac Ferrand tried to challenge the award, referring to Salomon's failure to take into account the first partial award in the original proceedings. The court disagreed with Cognac Ferrand and concluded that Salomon could rule in favor of Mystique, since in the arbitration before her, Cognac Ferrand failed to prove its claims.
Tribunal Orders Moldovagaz to Pay Its USD 246.4 Mln Debt to Gazprom
On 17 September 2020, the International Commercial Arbitration Court at the Russian Chamber of Commerce and Industry rendered an award recovering USD 246.4 million of debt for the gas supplied in 2017 from Moldovagaz to Gazprom.
As of November 2020, the total debt owed by Moldovagaz to Gazprom amounted to USD 7.24 billion. The Republic's President Maia Sandu, however, stated that Chisinau would not recognize its debt for the Russian gas supplied to Transnistria.
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