29th January 2021

A dispute has arisen between the UK and the EU concerning the distribution of Covid vaccines made by AstraZeneca. For what it’s worth I offer the following thoughts, as a long-retired English solicitor who once specialised in shipping and international trade.

There are two contracts involved: an ‘advance purchase agreement’ (the APA) between AstraZeneca (AZ) and the European Commission, (EC), acting as agent for the 27 states who are members of the European Union (EU), a redacted copy of which is available at https://ec.europa.eu/commission/presscorner/api/files/attachment/867990/APA%20-%20AstraZeneca.pdf; and a presumably similar contract between AZ and the British Government (UK govt). The terms of this second contact have not been disclosed.

UK govt are said to have ‘bought’ a certain quantity of Covid vaccine from AZ. Perhaps it is more accurate to say they have ‘agreed to buy’ a certain number of doses, when available. UK govt have bought and used some vaccines already.

In the recitals to the APA, AZ ‘has committed to use its Best Reasonable Efforts (as defined …) to build capacity to manufacture 300 million Doses of the Vaccine [defined terms], …. for distribution within the EU … with an option for .. [EC] .. to order an additional 100 million Doses …’

‘Best Reasonable Efforts’ is defined at clause 1.9.

The contract is subject to Belgian law.

Clause 5.4 specifies that AZ will use Best Reasonable Efforts to manufacture in the EU. This clause is to be understood so as to include the UK temporarily within the EU.

Clause 8.3(b) ‘In the event that … the number of Doses set forth in the Binding Allocation [as defined in 8.3(a)] does not equal 300 million, then … the .. allocation of the Initial Europe Doses shall be made on a pro-rata basis to reflect the respective populations of each of the Participating Member States …’

AZ’s obligations under the contract are to make ‘Best Reasonable Efforts’ to make and supply vaccines.

In the English law of contracts a distinction is made between an undertaking (a contractual promise) to do something, and an offer to ‘use best endeavours’ to do something, which is not an undertaking, or contractual promise – it is merely a promise to try.

What does Belgian law say about this? Is ‘Best Reasonable Efforts’ a legally-defined phrase, in the way that to ‘use best endeavours’ is in English law?

The reason why, in English law, a party may contract only to use best endeavours is because in the particular circumstances, they cannot control or guarantee the outcome. They will try to bring it about, but they cannot guarantee it.

I do not know whether there is a similar distinction in Belgian law.

Given the extraordinary circumstances of the Covid-19 epidemic and the very rapid development of vaccines, it is understandable that any supplier of vaccines would not guarantee a particular level of supply, and indeed cl 8.3(b) sets out a mechanism for distribution in the event that targets are not met, despite ‘Best Reasonable Efforts’.

In cl 13, Representations and Warranties, AZ says, (e), ‘.. it is not under any obligation, contractual or otherwise, to any Person or third party in respect of the Initial Europe Doses or that conflicts with or is inconsistent… with the terms … or would impede the complete fulfilment of its obligations ….’

Cl 13 gives some assurance that the operation of the second contract, with the UK, does not interfere. Supplies of vaccine which would otherwise have gone to the EU are unaffected.

Vaccine nationalism does not help the human race. Dr Mike Ryan of the World Health Organisation has said that squabbles among the rich nations about how the cake should be divided are particularly repugnant to people who do not have even the crumbs.

Hugh Bryant

29th January 2021

PS – 31st January 2021 – In the light of various press reports.

In the AZ context, there are at least two contracts, the ‘Advance Purchase Agreement’ between AZ and the EU and (probably) a similar agreement between AZ and the UK. Nobody mentions the second agreement and nobody knows what it says. 

In that these ‘APAs’ are in effect contracts to contract, or agreements to agree, in English law they would most probably be construed as being of no binding effect. Only the eventual actual agreement to purchase vaccine would be contractually binding. But Belgian law may not agree …