2021 LS&HC Horizons - Flipbook - Page 55
Life Sciences and Health Care Horizons 2021
55
Dispute resolution for global life sciences companies
China’s engagement with the global life sciences
industry - pharmaceuticals, medical devices,
diagnostics, and biotech, has rapidly increased.
In 2013, China became the world’s secondlargest healthcare market. Due to its size and
growth potential, China’s life sciences market is
one of the most attractive in the world for foreign
investors. It is a high strategic priority market for
global life sciences investors and companies.
Given the increase in investment and
collaboration between Chinese life sciences
companies and MNCs, parties are recommended
to choose international arbitration as a method
of resolving their disputes. This is in large due to
the traditional benefits of arbitration – the ease
of enforcement of an award under the New York
Convention, neutrality, finality, confidentiality,
and flexibility.
Although litigation has long been the default
mechanism for resolving life sciences disputes,
arbitration is on the rise. For example, a review
of development collaboration and license
agreements that are non-confidential exhibits
to reports filed with the United States Securities
and Exchange Commission during the first
seven months of 2020 revealed that disputes
shall be resolved by arbitration. These are
agreements between biopharmaceutical firms for
the development of preclinical or clinical stage
assets, and the commercialization worldwide
of one or more approved drugs developed from
those assets.
One of the most important elements when
drafting an arbitration agreement is the choice
of the seat of arbitration. Hong Kong still is
and will continue to be a popular destination
for international arbitration, in light of its
well-regarded and independent judiciary and
arbitration institutions, and its arbitrationfriendly laws.
Hong Kong also has a unique advantage for
arbitrations involving interests in mainland
China that global life sciences companies should
consider. It is the first and only jurisdiction
outside the mainland where the mainland courts
can grant interim measures in aid of a foreign
arbitration if administered by an institution
based in Hong Kong. To date, the Hong Kong
International Arbitration Centre (HKIAC) has
processed 37 applications made to the Mainland
Chinese courts for interim measures. Interim
measures are a handy weapon for global life
sciences companies to protect, for example,
intellectual property rights and trade secrets.
In addition, Chinese courts have historically
enforced Hong Kong seated awards including
those administered by the HKIAC. There
have been very few Hong Kong awards that
have been refused enforcement in mainland
China (since 1999, only three HKIAC awards
have been refused enforcement, according to
that institution and confirmed by the Chinese
Supreme People’s Court).
Other recent developments in Hong Kong, such
as allowing for third-party funding in arbitrations
and the amendment to the Arbitration Ordinance
to provide for clarification on the arbitrability
of intellectual property rights, which are often
a source of disputes in life sciences agreements,
means that global life sciences companies should
consider Hong Kong as the seat of arbitration for
transactions with a mainland interest.
James Kwan
Partner, Hong Kong
james.kwan@hoganlovells.com
