Even by the normal standards of investor-state dispute settlements (ISDS), Pfizer and BioNtech’s lawsuit against the government of Poland for refusing to take delivery of more unwanted vaccines is especially egregious.
Investor State Dispute Settlements, commonly abbreviated to ISDS, rightly have a bad rep, especially among the world’s poorer countries. ISDS clauses in bilateral or collective investment trade agreements effectively allow privately owned overseas corporations to sue entire nations if they feel that a law has lost them, or in some cases could lose them, money on their investment. It is what gives today’s predominantly corporate-friendly trade treaties their claws and their teeth.
This is a topic we have covered both widely and in depth over the past decade. One of my own bailiwicks, Latin America, continues to top the investment arbitration caseload at the International Centre for Settlement of Investment Disputes (ICSID), accounting for 28% of the total of registered cases by June 2022. Even the world’s richest countries are beginning to fret about ISDS clauses, as Jomo Kwame Sundaram, a former UN Assistant Secretary General for Economic Development, documented in an article we cross-posted last month.
But even by the normal standards of investor-state dispute settlements (ISDS), Pfizer and BioNtech’s lawsuit against the government of Poland over its refusal to continue paying for their COVID-19 mRNA vaccine is especially egregious, for reasons I will explain a little later. Starting this Wednesday, the suit will be heard in Belgium, the country where the EU Commission signed its notorious vaccine deal with Pfizer-BioNTech, worth up to $36 billion.
The suit will take place as both companies report falling revenues and sliding profits. Public demand for their biggest selling product, the mRNA COVID-19 vaccines they co-developed, is a shadow of its former self, for obvious reasons. This has been reflected in their market performance: since their August 2021 peak, BioNtech’s shares are down almost 75% from their peak while Pfizer’s have fallen by half.
Force Majeure: Ukraine War
The two companies are suing the Polish government for combined damages of 6 billion Polish zloty (€1.4 billion). In a statement to the British Medical Journal, Pfizer said the “formal proceedings follow a prolonged contractual breach, and lengthy discussions”:
“Poland placed a binding order and purchased all the doses that are in dispute and agreed to a specific delivery schedule in respect of those doses. Poland has, however, refused to take delivery of those doses. Pfizer and BioNTech believe it is important that all parties respect their contractual obligations under the agreement that has facilitated and underpinned the successful European pandemic response.”
Now, according to Dziennek Gazeta Prawna, the Polish financial newspaper that first broke the story about Pfizer and BioNTech’s lawsuit against Poland, Hungary has also stopped taking delivery of its Pfizer BioNtech vaccines and is also facing legal action. An article published in the newspaper on Monday claims that both Visegrad countries cited a force majeure clause in their vaccine contract. The war in Ukraine, they said, had led to millions of Ukrainian refugees flowing across their borders and into their towns and cities, draining their public coffers of much-needed funds (machine translated):
The Hungarian government refused to accept further deliveries of vaccines, citing, like Poland, the need to accept refugees from Ukraine and the related expenses, as well as problems with storing the preparation and the lack of demand for further vaccinations.
This is an unprecedented case, mainly due to the unique nature of the agreements that Pfizer has concluded with Poland, Hungary and the rest of the EU “25”. This will be the first such trial, a person from Brussels familiar with the matter tells us. Due to its sensitivity — the proceedings are just beginning — he (or she) wishes to remain anonymous. As he (or she) explains, Pfizer’s contracts with Poland, Hungary and other EU member states are not standard contracts, so there are no precedents for this situation. The total value of the agreement negotiated by the European Commission is approximately EUR 34 billion.
The lawsuit, or possibly lawsuits, are especially egregious for three main reasons.
Reason #1: An Unsafe and Ineffective Product
Pfizer-BioNTech’s COVID-19 vaccines are in much lower demand in Europe, as just about everywhere else, for a good reason: they have proven to be not nearly as safe nor as effective as their manufacturers had originally claimed. In fact, the contract the EU Commission originally signed with Pfizer-BioNtech — which was published, in full unredacted form, by Italian broadcaster RAI in April 2021 — includes the following provision (at the bottom of page 48):
The Participating Member State further acknowledges that the long-term effects and efficacy of the vaccine are not currently known and there may be adverse effects of the Vaccine that are not currently known.
In other words, both the European Commission and the governments of European member states knew perfectly well that there was no way of knowing whether the vaccines were either safe or effective, yet they told a very different story to the European public. Lest we forget, the Commission’s “Green Pass” vaccine passport system — which the World Health Organisation has announced it planss to use as a template for a global digital health certificate — helped to ensure there was healthy demand for the vaccines, at least in the first year of their roll out.
Now that most people have cottoned on to the mRNA vaccines’ abject lack of efficacy and safety and are no longer willing to roll up their sleeves for more booster shots, EU governments are sitting on vast stockpiles of unwanted vials. This is particularly true of many countries in Central and Eastern Europe where vaccine uptake was already low to begin with.
By the summer off 2022 a coalition of 10 nations was asking for the deal to be renegotiated. Poland was joined by Bulgaria, Croatia, Estonia, Hungary, Latvia, Lithuania, Romania, Slovakia, and Slovenia. As I reported in January, Germany’s government had accumulated more than 150 million unused vials in its central warehouse and was even talking of cancelling or reducing the additional orders it had made.
That was enough to get the European Commission, kicking and screaming, back to the negotiating table. But the result of that renegotiation was a deal that was still far more favourable to Pfizer than it was to European taxpayers. According to Martin Sonneborn, a German MEP and former editor-in-chief of the German Satirical magazine Titanic, the result of the deal was to “replace Pfizer’s existing €10 BILLION payment obligation with a €10 BILLION payment obligation to Pfizer,” albeit spread out over a longer period of time.
Reason #2: Pfizergate
The second reason why the lawsuit is especially egregious, even by usual ISDS standards, is that the EU’s purchases of Pfizer-BioNTech vaccines are themselves the subject of a criminal investigation. That’s right: Pfizer and BioNTech are trying to force payment through the Belgian court system of a contract that is being investigated by the Luxembourg-based European Public Prosecutor’s Office (EPPO) for criminal malpractice. Meanwhile, BioNtech is facing a rash of lawsuits in its native Germany for suspected injuries and adverse events caused by its COVID-19 vaccine while Pfizer is facing a trial in Texas for misrepresenting the efficacy of its vaccine.
The EU’s vaccine procurement scandal began in earnest in April 2021 when European Commission President Ursula Von der Leyen (whom I shall refer to from now on as VdL) bragged in an interview with the New York Times that she had personally helped secure a massive vaccine deal with Pfizer BioNtech through direct phone conversations and text messages with Pfizer CEO Albert Bourla. Weeks later, the Commission closed the world’s largest ever pharmaceutical deal, worth apparently €35 billion.
Shortly afterwards, the European Commission refused to accede to a Belgian journalist’s freedom of information (FOI) request for Commission President Ursula von der Leyen’s text messages with Pfizer CEO Albert Bourla — the same messages she had boasted about to the New York Times. The Commission’s initial response was to stonewall the journalist, arguing that its “record-keeping policy would in principle exclude instant messaging.”
In response, EU Ombudsman Emily O’Reilly launched an inquiry that concluded that the Commission’s refusal to cooperate constituted “maladministration.” A report by the EU’s Court of Auditors found that VdL’s participation in preliminary negotiations for the vaccine contract represented a complete departure from the EU’s standard negotiating procedures. The Commission refused to provide the auditors with records of the discussions with Pfizer, either in the form of minutes, names of experts consulted, agreed terms, or other evidence.
This was enough to trigger a formal investigation into the Commission’s acquisition of COVID-19 vaccines by the European Public Prosecutor’s Office. A Belgian citizen has also denounced the Commission for alleged corruption and destruction of documents.
VdL has also faced accusations of conflicts of interest over her husband’s role as scientific director at US biotech company Orgenesis, which received around €320 million in subsidies from the Italian government. After Orgenesis received the money, which was backed by EU funds, Heiko von der Leyen was elected to sit on the supervisory board of the project. He would later step down from the board after EU lawmakers and Italian media had drawn attention to his role.
While senior EU lawmakers, with help from most European media outlets, are doing everything they can to bury the Pfizergate story, others are refusing to let it go…
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Nick Corbishley 