EU-AstraZeneca contract – applicability of the CISG?

by Till Maier-Lohmann, 01 February 2021

On 29 January 2021, the "Advance Purchase Agreement" for the Production, Purchase and Supply of a COVID-19 Vaccine in the European Union (APA) between the European Commission, the EU Member States and AstraZeneca was published (PDF).

This – on its own – hardly excites the CISG-online user. Yet, section 18.4. of the APA reads:

Effect of the APA's Choice-of-law clause

This makes the heart of CISG nerds skip a beat. – . They know: If the CISG were applicable to the contract, the above clause would not suffice to exclude the applicability under Article 6 CISG (under the interpretation of most courts and scholars). Whether the parties were aware that the CISG could be applicable to this agreement at all might appear unclear but is generally considered irrelevant.

Parties' places of business in CISG Contracting States?

The spoilsport may point out that AstraZeneca is (at least partly) researching and producing in the United Kingdom (implied in section 5.4. of the APA). And as everybody knows, the UK is one of the few last trading nations that have not ratified the CISG. The CISG might, thus, neither be applicable under Article 1(1)(a) nor 1(1)(b).

Article 10(a) CISG also highlights the importance of the location with the "closest relationship to the contract" to determine the seat of business. The optimist objects by highlighting that the party referenced in the contract is AstraZeneca AB with its business address in SÖDERTÄLJA (Sweden) – not AstraZeneca UK Ltd and not the University of Oxford. Sweden is a CISG Contracting State and since the contract should at least be the starting point, the application of the Convention might, consequently, very well be moving back into sight.

Uncertainties persist also on the other side of the contract: Who is/are the buyer(s)? If the Member States were the buyers, would Sweden have its "place of business" in a different State than AstraZeneca AB?

Type of contract?

The nay-sayer may maintain that even if AstraZeneca were to have its relevant place of business in Sweden, the European Commission and the Member States were to act in a mere act of procurement and to conclude a contract under private law and were considered to have their "places of business" in different Contracting States, the APA could not be considered a contract of "sale of goods".

The title may reveal that this is only an Advance Purchase Agreement, not a sales contract. Yet, goods, price and quantity of 300 million seem to be agreed upon in the APA already (with an option to order 100 million doses more). "Advance" could be due to the fact that the vaccine was not fully developed when the contract was concluded.

Even if one were to characterize the APA as a mere framework agreement and even if one considered the CISG not to be applicable to such agreements (which is disputed), the execution of the order form in Exhibit A by the Member States (which have taken place) could be interpreted to bring specific sales contracts into existence.

The CISG is also generally equipped to apply to mixed contracts that contain provisions on aspects not typically found in a sales contract. At least the Conventions’ applicability cannot be excluded from the outset.

Biggest CISG contract in history?

Might this be the biggest CISG contract in terms of purchase price we have seen so far? Errors in redaction allowed the public to learn that the total cost of the order was EUR 870 million, which is approx. USD 1.05 billion and, hence, 8.5 times more than the biggest CISG contract on CISG-online thus far (CISG-online 2843).

Since the APA with CureVac contains the same choice of law (section 1.21.1. of the CureVac APA), there might well be other candidates for the biggest CISG contract in terms of purchase price. 

Fans of the CISG will, nevertheless, have to await whether the AstraZeneca APA and the other APA will be litigated at all. As fans of the CISG are also fans of health, everybody would be happy to treat the question of applicability as one in theory and see the contract performance to be smooth sailing from here on. If the sharp divisions last, courts in Brussels (competent under section 18.5. of the APA) might have to produce relevant material for CISG-online.org.