Court ruling in AstraZeneca-Commission case lets both sides claim a win
The Commission won’t get its doses on time — but it gets to say it was right.
A Belgian court has pulled off what no one thought was possible: Making both the European Commission and AstraZeneca happy.
In an interim decision, the Belgian court of first instance in Brussels ordered the drugmaker on Friday to deliver 50 million doses of its coronavirus vaccine between now and late September, or pay a €10 fine per delayed dose.
With the 30 million doses the drugmaker delivered at the end of March, the ruling means the company has to hand over a total of 80 million doses by September 27, or face a fine of up to €500 million.
At face value, this decision sounds like a win for the Commission, but this was a far cry from what the EU wanted.
In court hearings last month, the EU’s lawyers asked a judge to order the company to deliver 120 million doses by the end of June and the entire tranche of 300 million doses ordered by the end of September — or face billions in fines.
Considering the company has already delivered 70 million doses and plans to deliver another 10 million within the coming weeks, it’s unlikely to face any penalty or even struggle to meet the court’s demands, an AstraZeneca representative close to the case asserted.
“The court case would absolutely have no impact and no change in terms of how fast we will get the doses of vaccine into the arms of the EU citizens,” the representative added.
But this case was never really about the doses. The Commission’s case was about proving AstraZeneca was wrong. Here, the EU succeeded.
“The judgment has recognized that AstraZeneca has breached, perhaps intentionally, at least seriously, the contract,” a lawyer representing the Commission said. “Therefore on the principles and the way that the contract must be performed in the future, the judgment is entirely satisfying.”
AstraZeneca’s delivery delays impeded the bloc’s fight against the virus. When the viral vector vaccine was approved in the EU at the end of January, the doses were crucial to decreasing coronavirus case numbers and hospitalizations during the grip of the third wave. One Commission official went so far as to imply that people likely died because of the delays.
The court acknowledged how badly the bloc needed the doses then. “The fact of being able to have vaccines at the end of the period planned was for the European Union of particular importance in the context of the current health crisis, which AstraZeneca could not ignore in its capacity as a pharmaceutical company,” the court wrote.
But the massive delivery shortages also humiliated Commission President Ursula von der Leyen, who spearheaded the collective effort to purchase vaccines as a bloc and faced fierce backlash when the U.S. and U.K. raced ahead with vaccinations early in the year.
Friday’s ruling was vindication for von der Leyen.
“This decision confirms the position of the Commission: AstraZeneca did not live up to the commitments it made in the contract. It is good to see that an independent judge confirms this,” von der Leyen wrote in a statement. “This shows that our European vaccination campaign not only delivers for our citizens day by day. It also demonstrates that it was founded on a sound legal basis.”
Under the decision, the court ordered the drugmaker to deliver 15 million doses by July 26, 20 million doses by August 23 and a final 15 million doses by September 27. In terms of material damages, this came as a relief to the drugmaker: It won’t have to cough up millions more doses to the bloc or pay the potentially billions of euros in fines that the Commission requested.
When pressed by reporters whether the exercise was a waste of time, however, a Commission lawyer insisted that the case prompted AstraZeneca to speed up the delivery of doses.
“AstraZeneca has indeed anticipated that [it] would be condemned in the judgment, and has already delivered approximately 40 million doses in the period between end [of] March and now approximately,” the lawyer said.
The lawyer agreed the court’s order was “limited” to 50 million doses, but pointed to the broader success: The court ruled that AstraZeneca committed a “serious breach” of its contract with the EU, pointing out that it didn’t use a site in the U.K. explicitly mentioned in the agreement (Oxford Biomedica) to meet its obligations to the bloc. Rather, it chose to “monopolize” the site for “the benefit of third parties [the U.K.].”
“It seems [AstraZeneca] freely violated its contractual guarantee,” the judge wrote, citing a contract provision clearly stating that AstraZeneca didn’t have any other competing contracts to block its obligations to the EU.
Still, the judge refused the Commission’s request to create a binding delivery schedule for the rest of the 220 million doses, calling it “premature” because it’s too soon to say whether the company will fall short on its full schedule of obligations.
“Even if AstraZeneca appears to have failed in its contractual obligations in the past, it has not been sufficiently established that following our decision, it will persist in ignoring them and [/] or refuse to take measures to remedy them in the future,” the judgment said. “We cannot … rule on … possible future contractual breaches of which nothing clearly indicates that they will be committed.”
As Commission spokesperson Stefan De Keersmaecker saw it, “the court really laid the tracks for future deliveries by the company” by telling AstraZeneca it breached its contract with the EU and should have used the Oxford Biomedica site in the U.K.
“The company can no longer hide behind the fact that the U.K. is not part of the EU,” he said. “The court attaches importance to principles that now the company has to respect.”
Still, AstraZeneca gave no indication that the British plant would suddenly make millions of doses for the EU. When asked by reporters if the court’s decision could affect British supply of Oxford/AstraZeneca doses, the firm’s representative pointed out that the court didn’t actually order the company to use its British plant.
“So I don’t believe that we can infer … that there would be an obligation and breach of the contract if we were not to use it,” the representative said.
This is not the last word by any stretch.
The Commission and AstraZeneca will face each other in court again on September 24 and September 29 in a longer case “on the merits” of the dispute. The court will assess how AstraZeneca is keeping up with its delivery schedule and whether further action is needed — a decision that could produce a more clear-cut winner.
The one clear loser Friday was AstraZeneca CEO Pascal Soriot, who had insisted earlier this year in La Repubblica that the company’s delivery schedule was a best estimate rather than hard commitment. The company had made its “best reasonable efforts” to do so, he argued.
Not so, said the court.
“A marginal examination of this file reveals that in doing so, AstraZeneca has not made its Best Reasonable Efforts to manufacture and deliver part of the 300 million doses promised in the expected deadlines,” the court said.
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