We know from Strides Shasun’s financial reports that it has been notified of claims by Mylan which relate to Mylan’s purchase of Agila and which involve a third party. Strides has stated that “A significant portion of these are in the nature of estimates of potential claims / losses that Mylan expects to incur and involve significant uncertainties.”
Mylan will seek to recover from Strides any amount payable to POH, determined by either award or settlement, plus legal costs of this arbitration. If Strides doesn’t agree it is liable, or doesn’t agree to the amount for which Mylan says that is liable, then Strides and Mylan are headed to arbitration in London, as per the terms of their 2013 Sale and Purchase Agreement.
I believe that Mylan is likely to prefer an award over a settlement agreement with POH. I think it would be prudent for Mylan to obtain an arbitral award, not because that award is directly enforceable against Strides, but because of its “persuasive significance”.
“…an award can neither directly confer rights nor impose obligations upon a person who is not party to the arbitration agreement…
Nonetheless, an award may often have a significant indirect effect on persons who were not party to the arbitration. For example, a third party may be affected by an award where one person is jointly liable with another who is party to the arbitration. The award would not be res judicata in any subsequent claim against the third party, but it would be of persuasive significance. Conversely, it is possible that an award against one of the persons who was jointly liable would have the effect of discharging the third person’s liability.”
Redfern, Alan Law and Practice of International Commercial Arbitration. Sweet & Maxwell, 2004, pp. 388,389.
POH Price at posting:
1.5¢ Sentiment: Hold Disclosure: Held
(20min delay)