PharmaEssentia Corp (藥華醫藥) has welcomed a German Supreme Court ruling that it said “set aside” damages it was ordered to pay in a contract dispute with an Austrian drug developer.
At the same time, the Austrian company, AOP Orphan Pharmaceuticals GmbH, said the ruling validated part of its position in the dispute and vowed to continue to pursue damages for breach of contract.
In a filing with the Taiwan Stock Exchange late on Tuesday, PharmaEssentia said it had been notified by its German counsel that the German Federal Court of Justice decided to set aside an unfavorable order to the company by the International Chamber of Commerce (ICC) in 2020.
The ICC had ruled that PharmaEssentia should pay an arbitral award of 142 million euros (US$161.5 million) to AOP for improperly trying to terminate a license agreement for a new blood cancer drug.
However, the German court seemed to agree, at least to a certain extent, with PharmaEssentia’s argument that the award was greatly inflated, because it was based on incomplete information and procedurally flawed.
PharmaEssentia said that as a result of the Supreme Court ruling, it “is not ordered to pay AOP damages and to reimburse its costs.”
The court also did not refer the case back to the Higher Regional Court or the arbitral tribunal, said PharmaEssentia, a global pharmaceutical company founded by a group of Taiwanese-American scientists in 2003.
That meant “the decision of the arbitral tribunal is thus finally dropped,” an outcome that “has a positive impact on the company,” PharmaEssentia and its lawyers said
However, the Austrian company expressed a different view of the court’s ruling, arguing that “the decision has no implication regarding the merits of AOP’s claims against PharmaEssentia and will only result in protracted further proceedings.”
The German court upheld the award finding the PharmaEssentia-AOP deal valid and PharmaEssentia liable for certain damages, and it also dismissed all of PharmaEssentia counterclaims against it, AOP said.
AOP did acknowledge that the court “found procedural flaws with respect to product supply and damage quantification, impacting the damages awarded.”
AOP Health Group founder and board member Rudolf Widmann said the company was disappointed that the court found flaws in the reasoning regarding damages.
“We have no doubt that we will ultimately also recover these confirmed damages in further proceedings. We will take all necessary steps in due course to have this ultimately confirmed by an enforceable arbitral award,” he said.
The two companies inked a deal in 2008 to develop the blood cancer drug Besremi, but the agreement began to sour in the years that followed, and PharmaEssentia attempted to terminate the agreement.
AOP claimed it was being forced to renegotiate the deal on less favorable terms, with PharmaEssentia alleging that AOP was refusing to recognize its obligation to share data about the drug.
AOP started the arbitration in Frankfurt, Germany, before an ICC tribunal in 2018, which sided with AOP and issued its 142 million euros award in 2020.
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