Consilient Health Ltd v Gedeon Richter PLC

Factual and Procedural Background

The claimant initiated arbitration proceedings seeking recognition and enforcement of an arbitral award dated 11 October 2021, issued by a Dutch-seated ICC tribunal pursuant to an arbitration agreement under a Collaboration Agreement ("CA") between the parties dated 19 July 2012 and amended in 2014. The award required the defendant, upon the claimant's exercise of a purchase option, to transfer certain trade marks ("TMs"), marketing authorisations ("MAs"), registration dossiers, and related information concerning pharmaceutical products marketed in the UK and Ireland.

The claimant exercised the purchase option and tendered payment before the 45-day deadline for transfer, but the defendant refused to transfer the assets, returning the payment and asserting entitlement to further confidentiality protections before disclosure. The claimant then commenced enforcement proceedings in England under section 101 of the Arbitration Act 1996.

The defendant opposed enforcement on grounds including a pending challenge to the award in the Dutch courts, alleged vagueness of the award's mandatory provisions, and claimed lack of sufficient connection with the English jurisdiction for mandatory relief. The defendant's challenge in the Netherlands raised the doctrine of res judicata under Dutch law, contending that the claimant was precluded from bringing claims based on breaches previously adjudicated in a first arbitration between the parties.

The Dutch District Court granted permission to enforce the award in the Netherlands, but no further enforcement steps were taken there. The defendant's challenge to the award was timely filed in the Amsterdam Court of Appeal. The English court was tasked with deciding whether to enforce the award immediately or adjourn enforcement pending the Dutch challenge.

Legal Issues Presented

1. Whether the English court should enforce the arbitral award under section 101 of the Arbitration Act 1996 despite the pending challenge to the award in the Dutch courts.
2. Whether the enforcement should be adjourned under section 103(5) of the Arbitration Act 1996 pending resolution of the Dutch challenge.
3. Whether the award's mandatory provisions concerning transfer of assets and information are sufficiently clear and enforceable by the English court.
4. The extent to which confidentiality protections affect the defendant's obligations under the award and the enforcement proceedings.

Arguments of the Parties

Claimant's Arguments

• The defendant is acting tactically to obstruct and delay enforcement to gain commercial advantage and pressure the claimant to relinquish rights.
• The award requires unconditional transfer of the TMs, MAs, and Registration Dossiers without further contractual conditions.
• The defendant's challenge in the Dutch courts is a delaying tactic lacking merit.
• Confidentiality terms proposed by the claimant are commercially reasonable and protect the defendant's interests adequately.
• The recent Supreme Court decision in Kebab-Ji SAL v Kout Food Group supports less likelihood of adjournment absent overlapping grounds for challenge.

Defendant's Arguments

• The enforcement application should be adjourned pending the defendant's challenge to the award in the Dutch courts under section 103(5).
• The award's provisions are vague and unenforceable as they seek to modify terms beyond the tribunal's mandate.
• The defendant is entitled to further contractual confidentiality protections before transferring proprietary information and know-how.
• The challenge is brought bona fide within procedural time limits and raises serious res judicata issues under Dutch law.
• The defendant has offered undertakings including security for potential losses and continued supply on agreed terms during any adjournment.

Table of Precedents Cited

Court's Reasoning and Analysis

The court undertook a detailed analysis under section 103(5) of the Arbitration Act 1996, considering whether to adjourn enforcement pending the Dutch challenge. It applied established principles from English caselaw, emphasizing a broad and unfettered discretion that balances:

• Whether the foreign challenge is bona fide and not a delaying tactic;
• The realistic prospects of success of the foreign challenge;
• The length of delay and resulting prejudice to the claimant;
• Prejudice to the defendant if enforcement proceeds immediately.

The court found the Dutch challenge to be bona fide, timely, and raising a serious res judicata issue under Dutch law, with at least a realistic prospect of success. It rejected the claimant's allegation that the defendant was acting tactically or abusively.

Regarding prejudice, the court acknowledged some commercial prejudice to the claimant from delay, including uncertainty and potential financial impact, but noted mitigation by the defendant's offer of security and undertakings, and the relatively short duration of the adjournment in the context of a long-standing dispute.

The court found significant and irremediable prejudice to the defendant if enforcement proceeded immediately, particularly concerning the transfer of proprietary manufacturing know-how that could not be fully protected by contractual confidentiality undertakings. The risk of irreparable harm from disclosure of valuable trade secrets outweighed the claimant’s prejudice.

The court declined to decide on the precise meaning of the award’s confidentiality obligations or the reasonableness of proposed confidentiality terms, as these are governed by Dutch law and require fuller proceedings.

Balancing these factors, the court concluded that an adjournment pending the Dutch Court of Appeal’s decision was appropriate, subject to conditions including security by the defendant for the claimant’s potential financial losses and other protective undertakings.

Holding and Implications

Adjournment of enforcement proceedings granted. The English court ordered that enforcement of the arbitral award be adjourned pending the judgment of the Amsterdam Court of Appeal on the defendant's challenge to the award. The defendant must provide security to protect the claimant against financial losses arising from the delay and comply with additional protective undertakings.

The decision reflects the court’s careful balancing of enforcement policy under the New York Convention and statutory framework with the risks of irreparable harm and the bona fide nature of foreign challenge proceedings. No new precedent was established; the ruling applies the settled principles governing adjournment discretion under section 103(5) of the Arbitration Act 1996 to the particular facts concerning transfer of proprietary information and confidentiality concerns.