Paulo Monteverde Teresa Teixeira September 3 2015 Arbitrator removed after repeated appointment in patent enforcement disputes BMA | Arbitration & ADR - Portugal Paulo Monteverde, Teresa Teixeira Arbitration & ADR IntroductionFactsDecisionIntroductionLaw 62/2011 – which established a mandatory arbitration system for the resolution of disputes concerning industrial property rights relating to reference and generic medicines – has resulted in a significant increase in patent enforcement arbitration proceedings in Portugal.There is a risk that each marketing authorisation application published on the Infarmed(1) website could lead to new arbitration proceedings against the applicant.The appointment of arbitrators by the parties is relevant to arbitrations concerning disputes between patentees and applicants for marketing authorisation for generic medicines, as arbitration is mandatory.Therefore, it is fundamental to guarantee the independence and impartiality of the person who will act as arbitrator and not to promote circumstances in which the arbitrator must resolve a dispute in which:there is a serious risk that he or she will be put under pressure; orhis or her relationship with one of the parties may influence him or her to decide in a certain way.The law requires that arbitrators be independent and impartial and disclose any information that may cast doubt on their impartiality and independence when invited to perform such duties.(2)Impartiality and independence are of paramount importance, to the extent that:"an arbitrator can only be refused if circumstances exist that give rise to justifiable doubts as to the arbitrator's impartiality or independence and such an obligation is maintained until the extinction of the judicial power."(3)FactsOn March 24 2015 the Lisbon Court of Appeal delivered a judgment concerning a request for the removal of an arbitrator in proceedings between a patentee and the applicant for marketing authorisation for a generic medicine.(4)The arbitrator in question had been appointed by the plaintiff's legal representatives in 50 mandatory arbitrations in the previous three years. Further, in 19 of these proceedings the arbitrator had been appointed by the plaintiff in disputes concerning the same active ingredient.The Lisbon Court of Appeal had to decide whether the repeated appointment of the same arbitrator by the same representatives regarding the same substances was grounds for his removal by the adverse party and whether these circumstances created doubts for the adverse party that justified a duty of disclosure by the arbitrator.The court considered that it was justified to question the arbitrator's impartiality and independence given his repeated appointment by the same representatives when the same type of interest was at stake, particularly as he did not comply with his obligation of disclosure.The court also considered that the number of times that an arbitrator is appointed by the same parties or representatives constitutes circumstances that could increase his or her economic dependence on the appointing parties and create suspicion and the impression of a commitment to the interests of the parties that appointed him or her.The court also referenced the guidelines of the International Bar Association, whose Orange List prescribes circumstances identical to those of the judgment and that could be relevant to circumstances in which there is justified doubt regarding the arbitrator's impartiality or independence.(5)The court stated that although the specific situations described in the International Bar Association's list correspond to non-categorical situations – whose disclosure does not necessitate the automatic disqualification of the arbitrator – it can hardly be considered that they do not correspond to circumstances that objectively justify refusal.The circumstances described in the International Bar Association's Orange List are based on reasonability criteria, good judgement and good faith on the part of the arbitrator and the parties. The court considered that such criteria were exhausted in view of the repeated appointments by the same party in matters with the same interests at stake.DecisionThe Lisbon Court of Appeal decided that the repeated appointment of the same arbitrator by the same parties or representatives in disputes that arose from patents with the same active ingredient corresponded to circumstances that – "in the eyes of the parties" – cast doubt on the arbitrator's independence and neutrality. Thus, the court ordered the arbitrator's disqualification.This judgment was confirmed by a Constitutional Court decision on July 9 2015, which paved the way for the long-awaited end of successive appointments of the same arbitrators by the same parties in arbitrations concerning medicinal products.(6)For further information on this topic please contact Paulo Monteverde or Teresa Teixeira at Baptista Monteverde & Associados by telephone (+351 213 806 530) or email ([email protected] or [email protected]). The Baptista Monteverde & Associados website can be accessed at www.bma.com.pt.Endnotes(1) The authority responsible for ensuring the existence and update of a national database of medicinal products, whose introduction on the market has been duly authorised.(2) See Articles 9 and 13(1) and (2) of Law 63/2011.(3) See Article 13(3) of Law 63/2011.(4) Judgment of the Lisbon Court of Appeal, available at www.dgsi.pt/jtrl.nsf/33182fc732316039802565fa00497eec/d7f471fde47d350980257e2a004b026c?OpenDocument.(5) For example, Guidelines 3(1)(3), 3(1)(5) and 3(3)(8).(6) Judgment available at www.tribunalconstitucional.pt/tc/acordaos/20150366.html.