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Boston Program Focuses on Key Issues and Best Practices in Life Sciences Disputes

A Boston program organized by the ICC and USCIB in partnership with the Boston International Arbitration Council (BIAC) and SVAMC and hosted by Charles River Associates discussed the benefits of international arbitration for resolving life sciences disputes and complex issues arising in life sciences arbitration. Malgorzata Mrózek of Fitch Law Partners in Boston reports.

Jared Hubbard, counsel at Fitch Law Partners and President of the Boston International Arbitration Council, welcomed the attendees and highlighted Boston’s preeminent place in the life sciences industry and the wealth of available experts and counsel experienced in international arbitration headquartered in Boston.

Nancy M. Thevenin, General Counsel for USCIB/ICC USA, introduced the program by emphasizing the importance of the international arbitration as a dispute resolution mechanism in cross-border partnerships. She explained the growth of pharmaceutical expansion into emerging markets and the numerous global partnerships such expansion requires. When disputes arise in the course of these global partnerships international arbitration is the best mechanism for dispute resolution.

Conna Weiner, JAMS Arbitrator and Vice-Chair, Northeast Arbitration Subcommittee, USCIB/ICC USA, moderated the first panel discussion on why international arbitration should be used for life sciences disputes. The panel included the perspectives of outside counsel, transactional counsel, and the arbitral institutions. The discussion focused on the types of life sciences disputes which arise, how the disputes can be resolved through international arbitration, and aspects of international arbitration which often surprise American litigators.

Morgan Lewis partner Carl Valenstein explained that disputes arise at all stages of life science company development from co-inventorship and licensing issues at the beginning of a start-up to disputes relating to the merger or acquisition of a start-up by a larger pharmaceutical company. Later stage disputes can also involve co-promotion and marketing of products.

Rachael Kent, Vice Chair of the international arbitration group at WilmerHale in Washington D.C., noted that disputes in the life sciences industry are both general commercial disputes, such as those arising from contract interpretation or production issues, as well as industry specific disputes, namely patent disputes and regulatory issues. This variety of disputes leads to life sciences companies benefiting from the flexibility of international arbitration, as the parties can select arbitrators experienced in the industry specific issues in dispute and the parties can agree to timelines for speedy resolution of the disputes if timeliness is a priority.

The panel dispelled common misconceptions about international arbitrations. Marek Krasula, Counsel of the North American case management team of the ICC International Court of Arbitration in New York, explained that the concern of arbitrators “splitting the baby” in arbitral awards is unfounded. The vast majority of arbitral panels found in favor of one party and against the other. Even when some claims are resolved in favor of one party, and other claims in favor of the other, this is a result of the complicated nature of the disputes between life sciences companies.

Additionally, arbitral awards are predominantly voluntarily complied with and rarely challenged in domestic courts. Even when such a challenge occurs, an arbitral award can only be overturned on very narrow grounds implicating the due process rights of the parties. Thus, arbitral awards have much greater enforcement assurance that judgments from national courts.

The entire first panel highlighted that the main benefits of international arbitration for life science industry disputes are the ability of the parties to customize the proceedings to meet their needs – including through the selection of experienced arbitrators – , the neutrality of the arbitrators, and the enforceability of arbitral awards.

J.P. Duffy, a partner in Baker McKenzie’s New York office, moderated the second panel, which took a deeper dive into the complex issues that can arise in life sciences disputes. The panel started by considering jurisdictional issues which may arise in the course of international arbitrations, including when certain national laws prohibit a tribunal from considering patent validity. Further, criminal liability issues cannot be arbitrated, and should allegations of criminal misconduct arise in the course of an arbitration, the pause button may need to be pushed.

Lauren Ann Pond, Commercial Counsel for Biogen (and speaking only in her personal capacity), emphasized the importance of in-house counsels to co-ordinate with all the key players within and outside the company when such unexpected issues may arise. Moreover, in-house counsels play the important role of helping companies manage their expectations and understand the process of international arbitrations.

Philip O’Neill, Chair of the Northeast Arbitration Subcommittee USCIB/ICC USA and an independent arbitrator, stressed the importance of being mindful of potential arbitral pitfalls during the drafting of arbitration provisions. It is important not to set too ambitious of time limits on arbitral proceedings or specify in too great detail the qualifications of potential arbitrators as this can hinder the resolution of disputes. He also emphasized that the arbitrators should craft the issues that they address to avoid jurisdictional pitfalls and ensure an enforceable award. When dealing with patent licenses in jurisdictions where the tribunal cannot evaluate a patent’s validity, the tribunal may choose to consider whether the license itself would be enforceable under that nation’s laws.

Managing a life science company’s expectations is particularly important in the context of experts. Dr. Greg Bell, Group Vice-President and Life Sciences Practice Leader at Charles River Associates, proffered the expert witness perspective, and the need to have industry experts and quantum experts work closely together (or be the same expert) to increase their credibility to the tribunal. He also offered his guidance for best practices in expert conferences (or hot tubbing), including that the tribunal should take the lead, with parties having the opportunity to cross-examine on particular issues following the tribunal’s questions on that issue.

The program took place on April 10 at Charles River Associates (CRA) in Boston and was organized by the International Court of Arbitration of the International Chamber of Commerce (ICC), the United States Counsel for International Business (USCIB/ICC USA) in partnership with the Boston International Arbitration Council (BIAC) and the Silicon Valley Arbitration and Mediation Center (SVAMC).

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