Public Version RL-109

Public Version RL-109 INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES (ICSID Case No. ARB(AF)/12/1) In the Arbitration under Chapter Eleven of the North America Free Trade Agreement (NAFTA) Between: (1) APOTEX HOLDINGS INC. (2) APOTEX INC. First and Second Claimants and UNITED STATES OF AMERICA Respondent AWARD The Arbitration Tribunal: V.V. Veeder, President J. William Rowley, Arbitrator John R. Crook, Arbitrator The Tribunal’s Secretary: Monty Taylor Date of dispatch to the Parties: 25 August 2014 Representing Apotex Holdings Inc. and Representing the United States of America: Apotex Inc.: Barton Legum, Partner Mary McLeod, Acting Legal Adviser Anne-Sophie Dufêtre, Associate Lisa J. Grosh, Assistant Legal Adviser Brittany Gordon, Associate John D. Daley, Deputy Assistant Legal Adviser Salans FMC SNR Denton Europe LLP Jeremy K. Sharpe, Investment Arbitration Chief 5, boulevard Malesherbes Neale H. Bergman, Attorney-Adviser 75008 Paris John I. Blanck, Attorney-Adviser France David M. Bigge, Attorney-Adviser Alicia L. Cate, Attorney-Adviser John J. Hay, Partner Nicole C. Thornton, Attorney-Adviser Ulyana Bardyn, Associate Office of International Claims and Investment Kristen B. Weil, Associate Disputes Dentons US LLP Office of the Legal Adviser 1221 Avenue of the Americas U.S. Department of State New York, NY 10020-1089 Suite 203, South Building USA 2430 E Street, N.W. Washington, DC 20037-2800 USA Table of Contents – Page 2 of 17 TABLE OF CONTENTS PART I – THE ARBITRATION I.01 (1) The Parties I.01 (2) The Arbitration Agreement I.01 (3) The Arbitral Tribunal I.02 (4) The Arbitral Procedure I.02 (5) The Parties’ Dispute (Jurisdiction and Merits) I.09 (6) The Parties’ Claims for Relief I.10 PART I – APPENDIX A IA.01 (1) Introduction IA.01 (2) The Parties’ Relevant Submissions IA.03 (3) Arbitral Immunity IA.05 (4) Quorum IA.05 (5) The Lex Loci Arbitri IA.06 (6) The Tribunal’s Analysis and Reasons IA.09 PART II – THE PARTIES’ DISPUTE II.01 (1) Introduction II.01 (2) The Claimants’ Case II.01 (3) The Respondent’s Case II.09 (4) The Submission of the United Mexican States II.18 PART III – THE PRINCIPAL FACTS III.01 (1) Introduction III.01 (2) The Apotex Chronology III.01 The Apotex Group of Companies III.02 The 2006 Inspections of Signet and Etobicoke III.03 The 2007 – 2008 Criticism of the FDA’s Foreign Inspection III.04 Practices The December 2008 Etobicoke Inspection III.05 January – June 2009 III.06 Dr. Hamburg and the FDA’s Policies III.09 The June 2009 Etobicoke Warning Letter III.11 The July – August 2009 Signet Inspection III.14 The Telephone Conference-Call of 17 August 2009 III.17 The 28 August 2009 Import Alert III.21 The Telephone Conference-Call of 3 September 2009 III.24 Table of Contents – Page 3 of 17 New Zealand, Australia and The European Union III.25 The September 2009 Meetings III.25 Health Canada’s Inspections October – November 2009 III.28 January – March 2010 III.28 The March 2010 Signet Warning Letter III.29 Apotex Inc. Requests Re-Inspections: August – December 2010 III.32 FDA Re-Inspections: January – February 2011 III.33 Lifting of the Import Alert: May – July 2011 III.35 Etobicoke PAI: May – November 2011 III.36 Conclusion III.38 (3) The Teva Chronology III.39 2009 III.40 2010 III.41 2011 III.43 2012 III.48 2013 III.50 Conclusion III.51 (4) The Sandoz Chronology III.52 2008 III.53 2011 III.54 2012 III.58 2013 III.68 Conclusion III.70 PART IV – THE PRINCIPAL LEGAL TEXTS IV.01 (1) The North American Free Trade Agreement (NAFTA) IV.01 (2) The Jamaica-USA BIT IV.05 (3) The ICSID Arbitration (Additional Facility) Rules IV.06 (4) The UNCITRAL Arbitration Rules 1976 IV.07 PART V – THE PRINCIPAL ISSUES V.01 (1) Introduction V.01 (2) The Principal Issues V.01 PART VI – JURISDICTION: NAFTA ARTICLE 1101(1) VI.01 (1) Introduction VI.01 (2) NAFTA Article 1101(1) VI.01 (3) Apotex-US VI.04 (4) Apotex Inc. VI.09 (5) Apotex-Holdings VI.10 Table of Contents – Page 4 of 17 PART VII – RES JUDICATA: JURISDICTION AND NAFTA VII.01 ARTICLE 1139 (1) Introduction VII.01 (2) NAFTA Article 1136(1) VII.02 (3) Res Judicata in International Law VII.03 (4) Res Judicata under the UNCITRAL Arbitration Rules VII.12 (5) Summary as to the Res Judicata Doctrine VII.13 (6) The Application of Res Judicata VII.14 (7) Conclusion VII.20 PART VII – ANNEX VIIA.01 Relevant Extracts from the Apotex I and II Award VIIA.01 PART VIII – NAFTA ARTICLES 1102 & 1103 VIII.01 (1) Introduction VIII.01 (2) Legal Standard for NAFTA Articles 1102 & 1103 VIII.02 (3) Legal and Evidential Burdens of Proof VIII.02 (4) “Treatment” VIII.04 (5) “Like Circumstances” VIII.05 (6) “Less Favorable” VIII.06 (7) Comparators VIII.07 (8) Domestic Comparators VIII.09 (9) The Tribunal’s Analysis as to NAFTA Article 1102 VIII.12 (10) Foreign Comparators and the Tribunal’s Analysis as to NAFTA VIII.18 Article 1103 (11) Conclusion VIII.23 PART IX – NAFTA ARTICLE 1105 IX.01 (1) Introduction IX.01 (2) The Claimants’ Case IX.02 (3) The Respondent’s Case IX.04 (4) The Tribunal’s Analysis and Decision IX.05 (5) The Jamaica-USA BIT IX.25 (6) Conclusion IX.27 PART X – LEGAL AND ARBITRATION COSTS X.01 (1) Introduction X.01 Table of Contents – Page 5 of 17 (2) The Claimants’ Submissions X.02 (3) The Respondent’s Submissions X.05 (4) The Tribunal’s Analysis and Decisions X.08 PART XI – THE TRIBUNAL’S SUMMARY XI.01 PART XII – THE OPERATIVE PART XII.01 Table of Contents – Page 6 of 17 GLOSSARY Act US Federal Food, Drug and Cosmetic Act ANDA Abbreviated New Drug Application API Active Pharmaceutical Ingredients Apotex The Claimants Apotex-Canada Apotex Inc. (the Second Claimant) Apotex-Holdings Apotex Holdings Inc. (the First Claimant) Apotex-US Apotex Corp., a corporation organized under the laws of Delaware, USA Apotex I & II Award The award on jurisdiction and admissibility dated 14 June 2013 made by the NAFTA tribunal (Toby T. Landau, Clifford M. Davidson, Fern M. Smith) in the UNCITRAL Arbitration between Apotex Inc. and the Respondent Apotex Costs Submission The Claimants’ first submission on costs filed on 17 January 2014 Apotex Second Costs The Claimants’ second submission on costs filed on 7 Submission February 2014 Arbitration Agreement The arbitration agreement invoked by the Claimants resulting from their Request, NAFTA Articles 1116(1), 1117(1) and 1120(1)(b) and the ICSID Arbitration AF Rules BNM Business Neatness Magnanimity BNM srl BVL Ben Venue Laboratories in Bedford, Ohio, USA [C.] [R.] [number] Exhibit [Claimant] [Respondent] CDER The FDA’s Center for Drug Evaluation and Research, Office of Compliance cGMP Current Good Manufacturing Practices Counter-Memorial The Respondent’s Counter-Memorial dated 14 December 2012 DIOP The FDA’s Division of Import Operations and Policy DWPE Detention Without Physical Examination ECJ European Court of Justice EIRs FDA’s Establishment Inspection Reports Table of Contents – Page 7 of 17 Etobicoke The drug production facility operated by Apotex Inc. and located at Etobicoke, Ontario Etobiocoke warning letter The warning letter issued by the FDA on 25 June 2009 in respect of Etobicoke FAA The US Federal Arbitration Act FARs Field Alert Reports FDA The US Food and Drug Administration Form 483 A standard form on which FDA inspectors record their written observations at the conclusion of an inspection of a drug production facility GAO The US General Accounting Office GMP Good Manufacturing Practices Guide FDA’s Guide to Inspections of Foreign Pharmaceutical Manufacturers Hearing The hearing on jurisdiction and the merits (liability) which took place at the World Bank in Washington DC, USA, from 18 November to 26 November 2013 ICAA Ontario’s International Commercial Arbitration Act ICJ The International Court of Justice ICSID (or the Centre) The International Centre for Settlement of Investment Disputes ICSID Arbitration AF Rules ICSID Arbitration (Additional Facility) Rules in force as of April 2006 ICSID Convention Convention on the Settlement of Investment Disputes Between States and Nationals of Other States dated 18 March 1965 Import Alert The FDA’s amendment of Import Alert 66-40 on 28 August 2009 to include all products produced by the Etobicoke and Signet facilities Jamaica-USA BIT Jamaica-USA bilateral investment treaty of 4 February 1994, which entered into force on 7 March 1997 Medsafe New Zealand’s Medicines and Medical Devices Safety Authority Memorial The Claimants’ Memorial dated 30 July 2012 NAFTA North American Free Trade Agreement NAI No Action Indicated NDA New Drug Application Table of Contents – Page 8 of 17 New York Convention The 1958 UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards OAI Official Action Indicated OOS Out-of-specification PAI Pre-Approval Inspection PCIJ The Permanent Court of International Justice PQA Product Quality Assessment Rejoinder The Respondent’s Rejoinder dated 27 September 2013 Rejoinder on Jurisdiction The Claimants’ Rejoinder on Jurisdiction dated 18 October 2013 Reply The Claimants’ Reply dated 24 May 2013 Reply Supp The Claimants’ Supplement to Reply dated 22 July 2013 Request (for Arbitration) The Claimants’ Request for Arbitration dated 29 February 2012 Sandoz The Sandoz/Novartis group of companies Signet The drug production facility operated by Apotex Inc. and located at Signet Drive in Toronto, Ontario Signet warning letter The warning letter issued by the FDA on 29 March 2010 in respect of Signet TD. [day] [page] Transcript of the oral hearing from 18 to 26 November 2013, with day and page reference Teva The Teva group of companies TGA Australia’s Therapeutic Goods Administration UNCITRAL Notes The UNCITRAL Notes on Organising Arbitral Proceedings USA Costs Submission The Respondent’s submission on costs filed on 17 January 2014 x examination-in-chief xx cross-examination xxx re-direct examination Table of Contents – Page 9 of 17 LIST OF LEGAL MATERIALS Cases: Abbott v.

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