02 January 2014

Bilateral Investment Treaties: Eli Lilly and Co. v Government of Canada

in "Bilateral Investment Treaties: Claiming Compensation from Foreign Governments under Bilateral Investment Treaties for failing to provide adequate IP Protection" 27 July 2013 I mentioned a possible claim by the US company Eli Lilly & Co. against the Canadian government under Chapter II of the agreement between the US, Canadian and Mexican governments establishing the North America Free Trade Area ("NAFTA") for compensation for the invalidation of its Canadian patents by the courts of Canada. Eli Lilly claims that the invalidation of those patents is tantamount to expropriation which is contrary to art 1110 (1) of NAFTA.

Lawyers acting for Eli Lilly have now filed a notice of arbitration demanding that their claim be referred to arbitration under art 3 of the UNCITRAL Arbitration Rules before a tribunal consisting of three arbitrators, one appointed by each of the parties and the third presiding member to be appointed by agreement of the appointing parties with the seat of the arbitration in New York.

The significance of this claim for British business is that Chapter II of NAFTA is in similar terms to over 100 bilateral investment treaties ("BIT") which Her Majesty's Government has concluded with foreign governments mainly in the developing world. If a British company finds that its brands, technology or other intellectual assets have been appropriated or exploited in a foreign country without its licence and that the local intellectual property laws provide inadequate protection or remedies the company may be entitled to claim compensation under a BIT between HMG and the government of that country.

There has already been a similar claim by Philip Morris Asia against the Australian government under the BIT between Australia and Hong Kong on the ground that Australia's Tobacco Plain Packaging Act 2011 amounts to expropriation of Philip Morris's trade mark rights. Philip Morris's notice of arbitration and the Australian government's response appear on the Australian Attorney-General's website.  According to that website
"Australia and Philip Morris have agreed that three arbitrators will hear the case. Australia appointed Professor Don McRae of the University of Ottawa as an arbitrator. Philip Morris Asia appointed Professor Gabrielle Kaufmann-Kohler as an arbitrator. The Secretary-General of the Permanent Court of Arbitration appointed Professor Dr Karl-Heinz Böckstiegel as the presiding arbitrator. The tribunal was constituted on 15 May 2012. The First Procedural Meeting was held on 30 July 2012 in Singapore."
I discussed these developments in an article entitled "Bilateral Investment Treaties: A Remedy for SME?" which has now been published in Issue 12 of Volume 35 of the European Intellectual Property Review on page 759 and I have also written about the UAE's bilateral investment treaties in "The UAE's Bilateral Investment Treaties" in my NIPC Gulf blog (26 July 2013).

Because of our chambers' strength in public law and arbitration, this is an area of law of intellectual property law in which we feel entitled to claim expertise. We are planning a conference on claims under bilateral investment treaties in chambers and how they can be funded as soon as it can be arranged at which I and other colleagues from 4-5 Gray's Inn Square will speak.  If you want to discuss this note or any of my publications you may call me on 020 7404 5252 during normal office hours or you can message me through my contact form.  You can also tweet me, write on my wall or send me a message through G+, Linkedin or Xing.

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