One of the twists in the very public dispute between the European Commission and drugmaker AstraZeneca over the delays in supply of vaccines saw the European Commission publish the contract which was entered into between them in August 2020.
The much-publicised delays in deliveries of vaccines to the EU meant that the EU was expected to receive far less than the 100 million doses they were expecting to receive by March. Before publishing the contract, the head of the European Commission, Ursula Von der Leyen, had made statements suggesting that the contract between the parties contained “binding orders” and had demanded “plausible explanations” for the delays in delivery.
AstraZeneca advised that the contract stated that the company would make its “best effort” to meet EU demand and did not compel the company to deliver by a specific timetable – and it is this element which is disputed by the EU, which has now published the contract to back up its argument that AstraZeneca is failing to comply with its contractual obligations.
Confidentiality provisions in contracts – acting quickly to prevent a breach
It is standard practice in commercial contracts, particularly those of a sensitive nature, to ensure that there is a confidentiality provision which prohibits either party disclosing details of the contract. A customer may not want its competitors to know what it is up to; and the supplier may be concerned that if details of the contract were made public, other customers may look for the same concessions (particularly on price) that may have been made in the course of negotiations.
The practical difficulty with confidentiality provisions is that once they have been breached, the information is already in the public domain and so it is too late to put the genie back in the bottle. But where, as in the case of the EU Commission stating it intended to publish, there is some form of advance warning that a party to a contract may breach such obligations of confidentiality, the other party may seek a court order to prevent the intended breach. But it would have to act quickly as if the details are published before any court order is granted, their only remedy is to look for damages, which may be extremely difficult to establish.
Freedom of information obligations in the UK
Issues of confidentiality are further complicated when dealing with government bodies. Under Freedom of Information legislation in the UK, anyone can request that a government body (which includes any organisation or any entity controlled by a government body) disclose relevant information on the grounds of public interest. This can include copies of contracts that the public body has entered into, and there is a statutory obligation upon the public body to release such information. There are, of course, qualifications – the information does not require to be released if it is commercially sensitive or of a confidential nature – but when dealing with government bodies it is common to provide in the contract that the private party acknowledges the public body has an obligation to disclose under the Freedom of Information legislation if requested to do so. The other contracting party may look to discuss the issue with the public body and suggest what information is sensitive and may require to be redacted, but ultimately it is the public body which decides what it is obliged to disclose.
In this case there was no formal request for the European Commission to publish the contract, it decided to do so off its own bat. The fact that it went ahead and published only a few hours after suggesting it might do so shows the speed with which concerned parties have to act if there is a threat that confidentiality provisions might be breached. The value of such provision is seen in their deterrent effect, not the damages that a breach of them might allow to be recovered. And even in the midst of lockdown the courts are able to act quickly if the circumstances require it.
Get in touch – we’re here to help
You may not be contracting with the EU Commission, but if you do find yourself in the position where a third party is threatening to breach a confidentiality provision, Harper Macleod recognises the urgency of the situation and is ready to react.
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