On 14 December 2023, the DIS organized a Lunch DIScussion on arbitration proceedings in the life sciences sector. The DIScussion was moderated by Inken Knief, partner at Hogan Lovells, with Ingrid Sollerer, General Counsel and Chief Compliance Officer of Sandoz, Martin Fürle, General Counsel & Chief Compliance Officer Europe of Daiichi Sankyo Europe GmbH and Oliver Brupbacher, partner at Bär & Karrer, as panelists. The DIScussion’s organizer was Torsten Lörcher, member of the DIS Board.
As the ICC statistics shows, the number of arbitration proceedings in in the life sciences sector have increased significantly and more than doubled between 2015 and 2020. The first discussion point were the reasons for this increase. Reasons identified were that life sciences is a growth market with an increasing number of contracts, such as co-development and co-commercialization agreements, which tend to entail an increasing number of disputes. Furthermore, globalization as well as COVID, and more recently the energy crisis, have led to an increase of the number of disputes. Related market developments, such as the increased implementation of dual sourcing strategies, reducing the dependency from single suppliers, may further contribute.
A further issue discussed was, in which cases players from the life sciences industry agree on arbitration. In this respect there was consensus that in most international agreements it is without alternative to agree on arbitration as the dispute resolution mechanism of choice. A key reason put forward was the possibility to enforce arbitral awards internationally under the New York Convention. Furthermore, the higher level of confidentiality of arbitration compared to state court proceedings and the better protection of confidential (IP) information, the possibility for the Parties to choose arbitrators with industry expertise, the greater speed of arbitration proceedings compared to state court proceedings with several instances and the possibility to agree on English (or another language) as language of the proceedings were stated as reasons why companies from the life sciences industry prefer arbitration over state court proceedings.
Particularities of life science industry disputes identified in the discussion were that, in addition to confidentiality, disputes in the life sciences sector are often high-value, fact-heavy and complex requiring the involvement of a large variety of key stakeholders and business units from the companies involved as well as the frequent involvement of party-appointed experts. Another complex issue frequently occurring in life sciences disputes is the quantification of damages, frequently in the form of lost profits. The quantification of lost profits may entail complex market prognoses, sometimes with regard to products which have never reached the market.
Many thanks to the panelists Ingrid Sollerer, Martin Fürle and Oliver Brupbacher and the moderator Inken Knief for an exciting and insightful Lunch DIScussion on the topic of arbitration in the life sciences sector!
Inken Knief and Torsten Lörcher