MEA Generic Pharmaceutical Group vs. Indian Pharmaceutical Multinational Supplier
Claim Type – Breach of Distribution Agreement, Goodwill Indemnity & Illegitimate Competition
Jurisdiction – MENA, Iraq, Jordan & Libya

CHALLENGE

A MEA leading manufacturer and distributor of high-quality generic products entered agreements with an Indian global group, to distribute medical equipment and pharmaceutical products across three MENA territories. The agreements contained overlapping LCIA and ICC arbitration provisions, Swiss and English law governed and Dubai and London were prescribed arbitration seats.

Both parties engaged in lengthy negotiations to address the outstanding payments along with matters such as non-compliant deliveries, expired products, pushed sales, rejection of supply orders and minimum purchase commitments.

The distributor’s management discovered that the Indian counterparty was conducting business with the former’s sub-agents in the respective territories regarding the same products while contemplating a comprehensive settlement. Despite ongoing negotiations, they were seeking termination of exclusivity. They initiated criminal proceedings in the UAE based on security cheques issued against mounting receivables signed by directors and resulting in Interpol arrest warrants. As the events unfolded, it led to the belief that one of the main sub-agents stopped paying the distributor at the same time the distributor and supplier began doing business together.

As a result, the distributor found itself between an unfavorable financial situation and an unusual contract, not to mention restricted mobility due to coercive measures. To resolve this problem, a multidisciplinary practical approach that cut across various professional specialties and jurisdictions was required, along with flexibility and centralized claim management.

PRACTICLAIM SOLUTION

From within the Practiclaim network, a claim management expert was sourced that fit the niche requirements of the role (arbitration counsel and arbitrator, well versed in civil and common laws). By putting processes in place, the claim expert led the claim to a successful end.

By relieving Claimholder’s internal teams from much of the work, the Practiclaim manager coordinated with management, outside arbitration counsel, regional criminal law litigators, litigation funders, and experts in order to formulate a comprehensive claim pre-assessment note, all of this at no cost.

To reduce costs, maintain tactical flexibility and centralize matters, the initial strategy was to initiate a single arbitration before the LCIA under one agreement. The claim assessment note identified multiple breaches by the supplier including bad faith, unfair and illegitimate competition practices, with damages that total USD 30 million.

Claimholder’s management and in-house legal function coordinated the Claim Pre-Assessment note confidentially, with the arbitration cost being addressed first. By working on all fronts simultaneously, it increased the Claimholder’s chances for market financing choices, while keeping settlement options open. After more than one year of cost-free preparation, the matter moved forward at the right stage.

EFFECT

Practiclaim’s solution provided full visibility regarding the claim’s possible paths, coercive measures addressed, significantly reduced litigation costs and time resources to third parties, allowing the arbitration to progress without incurring fees that usually apply. Relief exceeded the initially envisioned damages by USD 55 million.

It gave the Claimholder’s legal team the opportunity to flex its strengths and expertise to handle this mandate, without increasing in-house headcount or creating disruption, especially at a time when smart claim management is more important than ever.

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