Master Alliance Provisions Guide (MAPGuideⓇ)
How Can Dispute Resolution and Termination Provisions Support the Achievement of Equitable Access Objectives?
While the partnerships formed through funding agreements may start with the best of intentions, the parties may need to address disagreements, breaches of obligations, or product failures at some point during the project. Both dispute resolution and termination provisions provide options that the agreement parties may pursue if such challenges arise. These provisions can help to ensure effective ongoing use of public and philanthropic funds and maximize the potential for achieving the equitable access goals of a project, either by facilitating continuation of the current partnership or by providing for continued product development with new partners.
1. Dispute resolution
Dispute resolution provisions provide agreement parties with a clear process to follow when disagreements arise, and can support the achievement of swift solutions so that work on the project can continue. Dispute resolution can take place through informal ‘amicable’ or ‘good faith’ discussions, or through a formal arbitration procedure. Funding agreements often provide for dispute resolution by the project steering committee in the first instance, followed by escalation to senior officials (for example, Chief Executive Officers) at each party, and finally formal arbitration if the informal process is unsuccessful. Some dispute resolutions also provide for different processes depending on the nature of the dispute. For example, expedited processes might be required if a funder considers that there is a need to act to address a public health emergency.
Examples from the MAPGuide
In the event of any dispute, controversy or claim between the Parties based on, arising out of or related to this Agreement (a “Dispute”), the Parties shall attempt in good faith to resolve such dispute promptly, voluntarily and amicably. The Vaccine Development Committee shall first attempt to resolve the dispute. If reasonably necessary to promote the prompt resolution of the dispute, either Party may, by written notice to the other, escalate the voluntary dispute resolution process to include the President or Chief Executive Officer of each Party or a senior officer designated by such President or Chief Executive Officer. The designated officers of each Party shall use reasonable efforts to resolve the dispute within forty-five (45) days after the dispute is referred to them.
Source: taken from a development funding & collaboration agreement between PATH (Funder) and Aridis (Developer) for the formulation development of a rotavirus vaccine. Read in context.
The parties shall attempt to resolve disputes through good faith negotiations. Any dispute arising under or related to this Subaward Agreement shall be resolved to the maximum possible extent through informal dispute resolution. Unresolved issues shall be arbitrated in accordance with the International Arbitration Rules of the American Arbitration Association.
Source: taken from the template CARB-X (Funder) cost-reimbursement agreement with subrecipients (Developer) for the early stage development of antibiotics, vaccines, and rapid diagnostics against bacterial threats. Read in context.
Escalation process. Any question, difference or dispute which may arise concerning the construction, meaning or effect of this Agreement, or concerning the rights or liabilities of the Parties hereunder, or any other matter arising out of or in connection with this Agreement shall first be submitted to the Chief Executive Officer of [Funder] and to the Chief Executive Officer of the [Developer] (the “Senior Officers”) for resolution (each of whom may call on others to advise them as they see fit). The Senior Officers shall discuss the matter arising in good faith and in a timely manner and endeavour to reach a mutually agreeable solution. If the Parties are unable to resolve such dispute through such negotiations within [***] of such dispute being escalated to the Senior Officers, then in respect of any dispute, controversy or claim the Parties irrevocably submit to arbitration in accordance with Clause [x – arbitration].
Arbitration. Any disputes to be resolved by binding arbitration pursuant to Clause [x – escalation] (including any question regarding its existence, validity or termination or this Agreement), shall be referred to and finally resolved by arbitration under the Rules of the London Court of International Arbitration, which Rules are deemed to be incorporated by reference into this Clause. The number of arbitrators shall be one. The seat, or legal place, of arbitration shall be London, England. The language to be used in the arbitral proceedings shall be English. Notwithstanding the foregoing, any Party may seek specific performance, interim or final injunctive relief or any other relief of similar nature or effect in any court of competent jurisdiction.
Public Health License. If [Funder] invokes its rights under a Public Health License, then the Parties will pursue an expedited resolution of any differences under Clause [x – escalation] within [***]. However, because of the exigent circumstances when there is an Outbreak, [Developer] agrees that [Funder] may proceed under a Public Health License, but [Developer] retains its right right to seek injunctive relief in addition to any other rights or remedies it may have under this Agreement, at law or in equity.
Source: taken from a development funding agreement between CEPI (Funder) and Valneva (Developer) for manufacturing and late-stage clinical development of a Chikungunya vaccine. Read in context.
[T]he Parties shall use reasonable endeavours to resolve amicably any dispute between the Parties arising out of or in connection with this Agreement by referral to the Executive Director of [PDP] and the Chief Executive Officer for [Company] who shall use reasonable efforts to meet in person within thirty (30) days from written notice of dispute received by one Party from the other. Should such matter remain unresolved at the end of that period, such dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with such rules. The place of arbitration shall be Geneva, Switzerland and the language of the proceedings shall be English.
Notwithstanding the dispute resolution procedures set forth [above], in the event of an actual or threatened breach of this Agreement, the aggrieved Party may seek provisional equitable relief (including restraining orders, specific performance or other injunctive relief), without first submitting to any dispute resolution procedures hereunder.
Notwithstanding [the above], any dispute concerning the ownership or inventorship of any Patent Rights arising hereunder in any given jurisdiction shall be determined by the courts of the jurisdiction in question.
Source: Taken from a collaboration agreement between DNDi/GARDP and Entasis for the development of Gonorrhea medication. Read in context.
2. Termination Rights
The exercise of termination rights might be necessary in a variety of circumstances, whether due to the fault on the part of one party, or events beyond the control of either party. Termination provisions need to address both when termination rights can be triggered and what happens when the agreement terminates.
a. Grounds for termination: The provisions of a product development funding agreement might need to consider the rights of each party if there are substantial changes or failures either affecting the developer’s business as a whole (for example, entering into bankruptcy proceedings or a change in ownership), or specific to the funded project or product (for example, a technical failure or failure to meet equitable access obligations). Funding agreements often address these risks by allowing for termination in one or more of the following circumstances:
- A material breach of the agreement by either party (for example non-compliance with confidentiality obligations or with applicable laws and regulations);
- One agreement party entering into bankruptcy or insolvency proceedings;
- Failure of the funded product to meet safety or efficacy requirements;
- Misuse of project funding by the developer;
- A failure on the part of the developer to make reasonable progress against the product development plan or project milestones; and
- A failure on the part of the developer to meet its equitable access obligations.
Examples from the MAPGuide
Termination for Breach. Subject to the provisions of Section [x – effect of termination], in the event that either Party shall breach any of the material terms, conditions or agreements contained in this Agreement and fail to remedy such breach within thirty (30) days of written notice thereof (the “Notice of Breach”) from the non-breaching Party, the non-breaching Party may terminate this Agreement, by giving the breaching Party a second notice (the “Notice of Termination”), which notice shall terminate this Agreement effective ten (10) days following the breaching Party’s receipt of such notice.
Termination in Event of Bankruptcy. Subject to the provisions of Section [x – effect of termination], a Party (the “Electing Party”) shall have the right to terminate this Agreement effective immediately upon written notice to the other Party (the “Non-Electing Party”) if: (a) the Non-Electing Party makes an assignment for the benefit of creditors; (b) a receiver is appointed for the Non-Electing Party and is not removed within sixty (60) days, or such assignment is not withdrawn within sixty (60) days; or (c) the Non-Electing Party files a voluntary petition in bankruptcy or is otherwise a party to proceedings in bankruptcy, reorganization or the appointment of a receiver, trustee, or custodian for or over its property and such proceedings, if involuntary are not vacated, set aside or stayed within sixty (60) days after commencement. The termination shall become effective on the date of receipt of the notice by the Electing Party to the Non-Electing Party.
Mutual Termination. In addition to the foregoing, this Agreement may be terminated upon the mutual written agreement of the Parties only if the Parties set forth their agreement to terminate in a written document signed by a senior executive of each Party.
Source: taken from a development funding & collaboration agreement between PATH (funder) and Aridis (developer) for the formulation development of a rotavirus vaccine. Read in context.
The [Funder] may modify, suspend, or discontinue any payment of Grant Funds or terminate this Agreement if: (a) the [Funder] is not reasonably satisfied with [Developer’s] progress on the Project; (b) there are significant changes to [Developer’s] leadership or other factors that the [Funder] reasonably believes may threaten the Project’s success; (c) there is a change in [Developer’s] control; (d) there is a change in [Developer’s] tax status; or (e) [Developer] fail to comply with this Agreement.
Source: taken from a grant agreement between the Bill & Melinda Gates Foundation (funder) and Arsanis (developer) for the preclinical development of a monoclonal antibody treatment for respiratory syncytial virus infections. Read in context.
Termination by Either Party for Default or Insolvency. Either Party (the “Terminating Party”) may terminate this Agreement by giving written notice of termination, effective immediately, if the other Party (the “Defaulting Party”):
(a) breaches a material obligation in this Agreement and either fails to cure that breach within a cure period of [***] after notice from the Terminating Party or longer time if agreed in writing or if prompt and reasonable steps to cure the breach are undertaken when the breach is not reasonably capable of cure with [***] and such diligent efforts are maintained until cure is achieved; or
(b) makes any arrangement with its creditors, resolves to or undergoes any insolvency proceeding anywhere in the world (except for the purpose of solvent amalgamation or reconstruction).
Other Termination by [Funder]. [Funder] shall be entitled to terminate this Agreement by providing written notice of termination to [Developer] in the following circumstances:
(a) with [***] if [Funder] notifies [Developer] that there are material safety, regulatory or ethical issues with continuing the Project, as reasonably determined by [Funder];
(b) subject to Clause [x – changes in scope] upon [***] prior written notice, if [Funder] determines that the Project must be limited in scope or terminated;
(c) [Funder] reasonably determines that [Developer] is unable, or shall become unable, to discharge its obligations under this Agreement, [***] and [Developer] does not reasonably alleviate [Funder]’s concerns within a cure period of [***] or such longer time as may be agreed by the Parties in writing; or
(d) [Developer] does not satisfy the criteria in Clause [x – payments] required for [Funder] to pay funding tranches under a Work Package and fails to satisfy those criteria in full within a cure period of [***] or such longer time as may be agreed by the Parties in writing.
(e) [Developer] has committed fraud or a Financial Irregularity. For purposes of this Agreement, “Financial Irregularity” refers to any and all kinds of corruption, including bribery, nepotism and illegal gratuities; misappropriation of cash, inventory and all other kinds of assets; and making fraudulent financial and non-financial statements to [Funder].
Source: taken from a development funding agreement between CEPI (funder) and Novavax (developer) for a COVID-19 vaccine. Read in context.
b. Effects of termination: what happens when the agreement terminates can depend on the reasons for termination, as well as the other rights and obligations of each party under the agreement. Some common examples of the consequences of termination in funding agreements are:
- If the funder terminates the agreement for cause (i.e. due to a fault on the part of the developer), then the funder has the right to exercise an Access License and the developer must undertake activities to enable the funder to exercise the license. These activities could include technology transfer to a new partner, the assignment of third party contracts and the transfer of regulatory approvals.
- The developer may use any product inventory remaining at the termination date to fulfill obligations under any existing supply agreements.
- The developer must return any unspent funds, and in the case of fraud or other misuse of funds must repay all improperly spent funds. The funder must pay any non-cancellable expenses to the developer.
- If the agreement is terminated due to the developer’s default or inability to meet its obligations, it must make all project data publicly available.
- The developer has the right to continue the use of its intellectual property.
- The parties will work together to ensure the responsible and ethical wind-down of any ongoing clinical trials.
- Both parties must destroy any confidential information received from the other party.
It is also important to consider which rights and obligations under the funding agreement should survive its termination, for example:
- Confidentiality obligations – to ensure the continued protection of the confidential information of each party.
- Access obligations – to ensure continued rights of the funder related to development and commercialization of the funded product, and the associated fulfillment of equitable access goals.
- Data sharing obligations – to ensure that the developer continues to publish data generated in connection with the project funding.
Examples from the MAPGuide
[Funder]’s right to use the Background Technology and Project Technology, where the [Developer] is the Defaulting Party or where termination is pursuant to Clause [x – termination by funder]. With effect from the expiry of the Project Term (“Termination Date”), [Funder]s licenses hereunder to the Background Technology and Project Technology in the Field and in the Affected Territories, as well as the Commercial Benefits sharing shall survive to:
- Develop and use the Platform for use in the Field via Trusted Manufacturers; Manufacture Product for use in the Field via Trusted Manufacturers;
- Compare and contrast the relative advantages and disadvantages of the Platform and alternative platforms for use in the Field; and
- Compare and contrast the relative advantages and disadvantages of Project Vaccines for use in the Field against the advantages and disadvantages of alternative equivalent products for use in the Field.
With effect from the Termination Date, the provisions of Clause [x – Outbreak] will cease to have effect.
[Developer] supplies of Product. The [Developer] shall have the right to exhaust supplies of Project Vaccines then in inventory in performance of its obligations under any agreement for supply with a public sector agency or if no such agreement exists at the Termination Date, immediately transfer ownership of the same to [Funder] at no cost and inform any Third Party GMP storage facility of the same forthwith.
Transfer of applications to and approvals from Regulatory Authorities. The [Developer] shall use all reasonable endeavors to transfer to [Funder] (or its nominee) promptly and at the [Developer]’s cost, all submissions to Regulatory Authorities, Regulatory Filings, Platform Confirmations and Master Files related thereto.
Materials. To the extent not already provided, the [Developer] shall provide to [Funder] (or its nominee) at the [Developer]’s cost all Materials, Data, Documents and Know-how required to exercise [Funder]’s rights under this Clause within [*****] of [Funder] requesting such Materials.
Contracts. Subject to applicable confidentiality obligations, the [Developer] shall provide [Funder] with copies of all Sub-Contracts which relate to the Development of the Platform for use in the Field, the Development of Project Vaccine and the Manufacturing of Product in the Field and access to which is required for Third Party Manufacturers within [*****] of the Termination Date. Provided that the termination of this Agreement was not caused directly or indirectly by the Sub-Contractor and that Sub-Contractor is not then in breach, the [Developer] shall use all Reasonable Efforts, at [Funder]s reasonable request, to facilitate the conclusion of a direct contractual relationship between the Sub-Contractor and [Funder] or Trusted Manufacturer, to the extent required for [Funder] or its nominee.
Unspent [Funder] funding. Where termination occurs prior to the end of a Work Package and affects such Work Package, [Funder] shall not be required to make any further payments of [Funder] funding to the [Developer] under this Agreement or any Work Package Statement other than to reimburse the [Developer] for any non-cancellable expenses incurred in accordance with the Work Package Budget prior to the Termination Date and the [Developer] shall return any Work Package Budget received from [Funder] under the Work Package Budget under this Agreement which is unspent at the date of termination (after deduction of costs incurred and non-cancellable commitments incurred prior to the date of termination) within [*****] after the date of the notice of termination.
Repayment of [Funder] funding by [Developer].
- Where termination is due to any material financial irregularity or as a consequence of fraudulent or illegal activity by the [Developer]. [Developer] shall repay to [Funder] (to the extent it is able to without triggering its insolvency, breach of another philanthropic donor’s grant or contract with [Developer]) the amount of funds directly related to such financial irregularity or fraudulent or illegal activity within [*****] of the notice of termination. The [Developer] shall use its Reasonable Efforts to insert and enforce similar reimbursement provisions in its agreements with Sub-Contractors.
- Where termination is for failure to achieve one or more Milestones by the applicable Milestone Date and such failure constitutes a material breach by [Developer] of its obligations under this Agreement, and that breach has not been remedied, [Developer] will return a sum equal to the [Funder] funding that [Funder] has paid to it for the then ongoing Work Package or Additional Work Package, as at the date of notice of termination (less the unspent funds, which are to be handled in accordance with Clause and also less funds which have been spent or reasonably committed to third parties) to [Funder] within [*****] of the notice of termination.
Use of Platform and Project Vaccines by [Developer]. Consistent with other obligations in this Agreement, the [Developer] may at its discretion continue to use the Project Technology for any purpose.
Effects of Termination where [Funder] is the Defaulting Party. Where termination occurs prior to the end of the Project Term, [Funder] shall make all payments agreed to be made for any Work Package in regard to expenditures that have been committed by the [Developer].
If the [Developer] terminates this Agreement during or after the Project Term for cause, owing to a material and unrepaired breach by [Funder], the licenses granted under this Agreement shall terminate and the survival under this Clause [x] shall not apply.
Clinical Trial Wind-down. Where at the date of termination there is an on-going clinical trial, unless agreed otherwise by the Parties in writing, the [Developer] shall procure that no further trial subjects are entered into the clinical trial, and the JMAG and TSC shall work together to plan for the appropriate and ethical completion or wind-down of Development activities in an orderly fashion, with due regard for patient safety and the rights of any subjects that are participants in clinical trial and in consultation with any relevant ethical committee.
Source: taken from a development funding agreement between CEPI (Funder) and CureVac (Developer) for the development of CureVac’s mRNA platform for the rapid manufacturing of vaccines against infectious diseases. Read in context.
Obligations on Termination by [Developer] Pursuant to Clause [x] (Termination for Default): [Funder] shall reimburse [Developer] for all reasonably incurred non-cancellable expenses relating to the Project which were authorised by [Funder] and which arise after the termination date, solely to the extent they are not otherwise covered by [Funder] funding.
Obligations on Expiration or Termination Pursuant to Clause [x] (Termination due to Safety, Regulatory or Ethical Issues): [Funder] shall reimburse [Developer] for all reasonably incurred non-cancellable expenses which were authorised by [Funder] and which arise after the termination date, solely to the extent they are not otherwise covered by [Funder] funding, and the Parties will work together to plan and implement a wind-down of the Work Package in an orderly fashion relating to the Project.
Obligations on Termination by [Funder] Pursuant to Clauses [x] (Termination For Default; [Funder]’s Reasonable Determination that [Developer] is or will be Unable to Perform; or Failure to Satisfy Clause [x – payments], respectively): Solely at [Funder]’s discretion, [Funder] may reimburse [Developer] for some or all or [Developer]’s reasonably incurred non-cancellable expenses relating to the Project which were authorised by [Funder] and which arise after the termination date.
Subject to Clause [x – data sharing], [Developer] shall promptly make all Project Data publically available in such manner as [Funder] may direct, save to the extent that to do so would result in the public disclosure of Enabling Technology which would not otherwise be publically disclosed.
[Funder] shall have the right to require [Developer], at [Funder]’s discretion, to either: (i) perform Technology Transfer to a Trusted Collaborator (including any Trusted Collaborator appointed pursuant to Clause 17.3) on an expedited basis at the [Developer]’s cost, or (ii) if Technology Transfer has already occurred at the date of termination and certain costs in relation to such Technology Transfer were borne by [Funder], reimburse [Funder] for such costs.
[Funder] shall have the right to exercise the Public Health License, pursuant to Clause [x – public health license].
[Developer] shall use all reasonable endeavours to promptly transfer to [Funder] (or its nominee), at [Developer]’s cost, any regulatory approvals and applications for regulatory approvals relating to the Product.
[Developer] shall ship to [Funder] (or its nominee) all Project Materials within [***] of [Funder] requesting such Materials.
[Developer] shall provide [Funder] with a list of all sub-license, contract manufacturing agreements and other agreements and arrangement to which [Developer] is a party which relate to the development and marketing of the Product (the “Contracts”), within [***] of the Termination Date. [Funder] may request copies of any Contracts, which [Developer] will promptly provide.
[Funder] shall have the right to require [Developer] to: (i) assign the benefit (subject to the assumption of the burden) of one or more Contracts to [Funder] or its nominee and, where consent of a third party is required, seek to obtain such consent; (ii) novate one or more Contracts to [Funder] or its nominee; or (iii) terminate one or more Contracts in accordance with its terms at [Developer]’s cost.
Where termination is due to any financial irregularity or fraudulent or illegal activity by [Developer], [Developer] shall repay to [Funder] the amount of funds related to such financial irregularity or fraudulent or illegal activity within [***] of the notice of termination. “Financial irregularity” refers to all kinds of: corruption, including bribery, nepotism and illegal gratuities; misappropriation of cash, inventory and all other kinds of assets; and financial and non-financial fraudulent statements.
Source: taken from a development funding agreement between CEPI (Funder) and Valneva (Developer) for manufacturing and late-stage clinical development of a Chikungunya vaccine. Read in context.
Authors: Bridie Telford
First publication date: November 21, 2022