Pfizer and BioNTech Are Suing Poland Over Its Refusal to Pay for More COVID-19 Vaccines. Are They Also Suing Hungary?

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. In January this year, the New York Times lodged a complaint against the Commission in the EU’s top court, the Court of Justice of the European Union (CJEU), arguing that the Commission has a legal obligation to release VdL’s text messages, since they could contain information on the bloc’s deals to purchase billions of euros worth of COVID-19 doses.

Reason #3: Potential Chilling Effect

Finally, the third reason why the Pfizer-BioNtech lawsuit is especially egregious is that Pfizer-BioNTech has signed similar vaccine contracts with scores of countries around the world. As we reported in March 2021, Pfizer was demanding all sorts of guarantees from national governments to ensure that all payments would be made. In some cases, the company’s lawyers requested that governments put up sovereign assets, such as federal bank reserves, embassy buildings and military bases, as insurance against the cost of any future legal cases involving Pfizer BioNTech’s vaccine.

Many of the contracts allegedly contained punitive clauses to discourage governments from revealing their terms. And many of those same governments are now presumably sitting on huge stockpiles of unwanted COVID-19 vaccines. If Pfizer wins this case and the Polish government is forced to pay out damages, it could have ramifications not only across the EU but beyond its borders. After all, one of the key attractions of high-profile ISDS cases for global corporations is the chilling effect they can have on government policy in other countries.

Pfizer and BioNTech may also have a close ally in Poland’s new government. The incoming administration, led by Donald Tusk, a former prime minister of Poland and ex-president of the EU Council, is likely to be far more aligned with EU positions on key matters than the outgoing government, led by populist firebrand Mateusz Morawiecki of the Law and Justice (PiS) party, including quite possibly on the hugely controversial issue of the Commission’s vaccine procurement practices.

The suit marks the culmination of a 19-month struggle between Warsaw and Pfizer over a massive glut of vaccine doses, reports Politico Europe, whose article on the lawsuit, like so much of the little press coverage on the Pfizergate scandal, makes virtually no mention of Pfizer’s German partner, BioNTech.*  Poland’s former health minister Adam Niedzielski branded the new vaccine deal struck by the European Commission earlier this year as “absolutely insufficient and unsatisfactory,” lambasting Pfizer for “demand[ing] payment for those preparations that will not be delivered” at “more or less half of the full price.”

Poland’s government has so far held out, and now Pfizer and BioNTech want to claw back every last cent through Belgium’s legal system. If there is a silver lining to all of this, it is that new details of the EU’s negotiations with Pfizer may seep out during the trial. And that is probably the last thing Commission President von der Leyen wants right now.

VdL is already facing growing criticism around Europe over her woeful handling of the war in Ukraine, her role in the EU’s self-harming sanctions on Russia and her unwavering support for Israel’s war crimes in Gaza. She has also faced reprimands, including from the Commission’s chief diplomat Josep Borrell, for failing to consult EU capitals properly before making important policy decisions. As the conservative Spanish daily La Razón noted in a short piece on Sunday, the cases against VdL are growing.

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* As independent journalist Robert Kogon has noted, this may have something to do with the fact that Politico Europe is owned by the German media conglomerate Axel Springer, which, like the German government and the EU Commission, has played a huge role in promoting BioNTech. The company also received significant seed funding in its early years from two successive German governments — both headed by Angela Merkel and in which European Commission President Ursula von der Leyen performed a variety of roles, including most notably (and most notoriously) as minister of defence — as well as €150 million in debt financing from the EU’s European Investment Bank (EIB), under the stewardship of its long-standing president, former German foreign office official Werner Hoyer.