Tuesday 2 February 2021

AstraZenenca Contracts: Amateur Lawyers at Work

Declaration: I am not a lawyer...

... just an old commercial negotiator, fairly well versed in the 'anglo' commercial law that dominates world trade.  With these instincts, my ears pricked up when I heard sundry euro-wallahs stating rather unequivocally that AZ was in breach of its contractual obligations to make "best efforts" on their vaccine delivery obligations to the EC.

Now "best efforts" is not a particularly English-law phrase - I associate it more with the American jurisdictions (Texas, New York) which I meet in the energy business.  We tend to go for "endeavours".  But here's the point: best endeavours is a very demanding obligation.  Roughly speaking, it means, if you can (legally) do it, you must - at whatever cost to yourself.  In any sphere where obligations can be genuinely difficult to perform, you'd mostly want to be held only to reasonable endeavours; a middle course being all reasonable endeavours.  Then, there would probably be a contractual definition of what's considered reasonable; but in the absence of that, there's no end of case law as to what constitutes reasonableness.  It would rarely include willfully breaching properly disclosed pre-existing commitments.  So - taking the reports at face value, I'm starting to think AZ might be on thin ice.

Then ... a redacted version of one of the vexed contracts was published.  Of course, any redaction makes definitive interpretation impossible for the third-party reader**: but one couldn't but help notice that AZ had only committed to "best reasonable efforts".   Ahhhh.  And the contract defines "reasonable" in a fairly conventional way.  Now it has also to be noted immediately that the contract is subject to Belgian law, about which I know nothing whatever; but still.  Suddenly, this amateur is starting to suspect the euro-tossers are protesting too much - a feeling reinforced by their shrill, know-nothing tone as contrasted to the measured, thorough responses of the rather impressive AZ CEO Soriot (French) who seems to be comprehensively the master of his brief.

Still, a bunch of truly amateurish lawyers - German and EC officials (and their apologists on CiF, naturally) were thundering pacta sunt servanda ... yes, yes, we know about that.  Germans are very ready with this stuff, Latin and all, until they run into a situation where they don't like the consequences, e.g. as in this first-hand story I've recounted several times here and elsewhere.  It's then down to looking for some Civil Code let-out (when they're weaseling in a relatively civilised way); or just plain blustering and bullying, might-is-right.  It infects the whole of the EU - the "rules-based" EU as it likes to claim, hahah.  Until it suits them otherwise.

And then they wonder why the whole of global commerce is conducted under English / American law, wherever humanly possible ...  They've gone a bit quiet for now, anyhow. 



** As we now discover:  UPDATE - it turns out that in the contract, AZ was granted a sweeping indemnity from liability, the very thing the euro-wallahs claimed they'd been taking pains (and time) to keep out of their vaccine dealings, unlike, errrr, the reckless UK / US buyers ... 


andrew said...

I followed your link

A staggering 43 percent of German business executives polled by EY (formerly Ernst & Young) think bribery and corruption are fairly commonplace in Europe's economic powerhouse. That's a big jump from just 26 percent in 2015.

I thought Wirecard was a one - off

dearieme said...

They think AZ can be bullied whereas Pfizer, being American, can't.

Cowards as well as c...s.

CityUnslicker said...

love this post ND!

Mark Wadsworth said...

I had wondered about all this.

"It would rarely include willfully breaching properly disclosed pre-existing commitments. So - taking the reports at face value, I'm starting to think AZ might be on thin ice."

Would AZ have had to wilfully (one "l") breach a pre-existing commitment to supply EU member states?

And if so, would that be a get-out under the "reasonable" excuse? Or do you mean it is NOT an excuse, seeing as only AZ can know how likely they are to have surplus capacity?

Logic says it's not a proper excuse, or else Bob the Builder could sign up to do your loft conversion, take your deposit, and then cheerfully say that he can't do it until three year's time because he's booked up until then.

Nick Drew said...

Mark - looking back at the post, I should have made "So - taking the reports ..." a seperate paragraph because it doesn't follow (and wasn't meant to follow) directly from the preceding sentence.

I was thinking Thin Ice For AZ when I thought it was a pure Best Efforts / Best Endeavours commitment, without the "reasonable" insertion. In such a case, AZ may very well have had to interrupt UK supplies (or be in a completely untenable position of their own making).

But if you (a) take on a Reasonable Endeavours commitment having (b) disclosed that you have binding commitments elsewhere, then in very many circumstances it would be unreasonable to be expected to breach the pre-existing obligation if your "ordinary reasonable efforts" weren't enough.

BTW, at the time of contract signing the EC lawyers would (should) have known, even if they hadn't explicitly been told, that "reasonable" in the text meant they weren't getting an absolute first-priority commitment from AZ. The very use of a hybrid formulation like Best Reasonable just screams "they were trying for an absolute comitment, but AZ wouldn't give it to them".

The euro-wallahs taking it upon themselves to give amateur readings of this stuff were not taking legal advice, I think we may safely conclude

Graeme said...

When you are brewing DNA in order to generate the right kind of RNA to grow the Spike protein, no sensible lawyer would allow you to make commitments. As it is, AZ seem to find it more difficult in some plants to create the right RNA than in others. It seems that the variables are not all controllable

Anonymous said...

Always an interesting read and a different perspective to my own. I worked in the diamond industry for 30 years and had a lot of dealings with both Belgian and German businesses and my own experience was that the ground under your feet could move suddenly. The real problem was that you could not tell who was going to cut up rough, sometimes it was the charmers, sometimes the thugs. There were no nice guys.

Keep up the good work


jim said...

For those tired of amateurism a visit to David Allen Green's blog is refreshing. The bottom line is that all that verbiage in the contract is meaningless, it sits in the bottom drawer. Once you get the lawyers involved the job is totally screwed up. If you want to stay in the business keep the lawyers out of it. Like insurance policies, they are only of value when the house burns down.

The UK is making a big noise banging the AZ drum because Boris has a lot riding on keeping confidence going. The reality is that so long as AZ holds down hospital admissions it will have done its job. Products to solve variants should appear and our arms will probably be like pincushions by the time Covid goes away. An abundance of caution by the EU may (or not) prove more useful. Time will tell.

Nick Drew said...

Charles - @ the ground under your feet could move suddenly. The real problem was that you could not tell who was going to cut up rough, sometimes it was the charmers, sometimes the thugs

At least when doing business in Russia, you know they are all going to cut up rough (even Exxon eventually found this out at Sakhalin, having previously considered themselves immune: http://www.cityunslicker.co.uk/2020/10/decline-and-fall-of-exxon.html)

- unless you really have got them by the short hairs. Even then, they're just biding their time & watching for their moment

you just have to build it into the price (as well they know)

E-K said...

The UK understood why a certain French company had to honour its contract with the Argentinian Air Force.

We didn't reach for lawyers and wouldn't have done even if we'd been using the same product at the time.

Elby the Beserk said...

EU. Well, well, well. I mistakenly switched on Today this morning, to find the odious Robinson talking to a Irish minister (sorry, talking AT - he kept talking over the minister - happily the minister ignored him and spoke on.

It seems that the recent overnight intro by the EU of a "hard" border to NI, which they swiftly reversed as a "mistake" (in judgement, sure, but that's an EU norm) took place without the EU informing.

The PM
The Taoiseach

I'd say "unbelievable" except that it isn't.

Anonymous said...

Related news, good to see that the Russian vaccine seems pretty good. I hope they and AZ get together on adjuvants in case they can up the AZ protection by another 10%.

Bill Quango said...

There must be a definitive account of that Excocet story. I’ve read several versions in a few different books.

Some accounts have the UK threatening to sink French ships.
Others have the French government adopting all kinds of lost paperwork problems, to ensure supplies already at sea, or in foreign nations, could not deliver.

It does appear no fresh missiles arrived from France. And not many fro elsewhere. Despite the Argentines, on discovering what a long range weapon they actually had, trying to buy up worlds supplies.

Israel supplied as much military equipment as they could during the war. And they had been a major buyer of French military equipment before the Falklands war.

Dassault continued to have its technical people working very successfully with the Argentines during the war.
Mitterrand might have known. But I doubt it. He did ban exports of all arms to both sides. Meaning, in reality, only, Argentina.
He allowed UK ships to use french ports.

But then, those techies did get the Argentine missiles launched.

dearieme said...

"Israel supplied as much military equipment as they could during the war." To whom?

Unknown said...

In John Knott's autobiography, he revealed that British intelligence worked flat out to disrupt Israel's delivery of Exocets to the Argentinians.

dearieme said...

In the Golden Age of Blogs I came across "I anal" quite often. Even the memory makes me grin.

But then when I first came across LOL I thought how friendly blog denizens were; lots of love, indeed.

Mark Wadsworth said...

ND, thanks for extra explanation. As you say in the update, it's all academic anyway.