The use of international arbitration has augmented over the years to include a wide range of sectors. While the majority of financial disputes still transpire in court, some of them are submitted to arbitration.
Life sciences giants often move out of their domestic markets in search of better growth opportunities in developed and emerging markets. Many of those developed and emerging markets already have their own pharma companies with significant annual revenues. For example, Mexico, Brazil, Russia, MEA REGION, India, Indonesia and South Africa all have pharmaceutical companies with revenue of USD 1 billion. The complex supply and distribution chains engaged by many pharma companies often extent multiple jurisdictions. Arbitration is well-suited for the settlement of disputes arising out of these types of complex, multi-jurisdictional agreements.
In 2015, 236 mergers and acquisitions between pharmaceutical companies were locked worldwide, for a total value of over USD 403 billion collectively. This is not only a good indicator of the potential future growth of the sector, but it may also lead to further disputes.
The complex cross-border nature of many of these mergers and acquisitions suggest that arbitration is possible to be used as a dispute resolution mechanism. The life science industry is already the fifth biggest contributor to LCIA’s caseload. It encompasses 15% of arbitrations and mediations sent to the World Intellectual Property Organization (WIPO), and various institutions (including the International Chamber of Commerce (ICC) and American Arbitration Association (AAA)).
In light of the same, the London Court of International Arbitration, on October 1, 2020, revised the LCIA Arbitration Rules 2014 (“2014 Rules”) and released the new amendments in the form of the LCIA Rules 2020 (“the 2020 Rules”).
The 2020 Rules have mended several important rules that give flexibility and efficiency in the arbitration process. The 2020 Rules recognize the increasing role of technology that plays in arbitration, due to the recent COVID-19 pandemic.
The key changes have been summarized below:
A key feature of the 2020 Rules takes into account technological advances and has adopted a very proactive approach. The Key amendments include the following:
The 2020 Rules contain a number of other important updates relating to procedure, people and costs. They are as follows:
Pharma company’s disputes already contain a significant number of arbitration disputes and the number of arbitrations in the sector is likely to grow. In recent years there have been numerous investment treaty arbitrations relating to Pharma companies.
In the wake of the pandemic, the revised rules of LCIA provide ease of adjudicating the disputes between parties by using electronic communication. The virtual hearing will significantly cut down the attorney’s cost as well as the attorney can appear anywhere from the globe. Pharma companies contain a lot of personal data, the new rules of LCIA ensure data protection at an early stage of hearing.
On procedures, the speedy trials would determine claims, defenses and jurisdiction quickly and a cap of 500 Pounds for arbitrators' fee will give a fair estimate of arbitration cost. To sum up, the revised rules of LCIA will be preferred to adjudicate parties disputes quickly and in a cost-effective manner.