Fieldfisher's EU Regulatory team wins appeal before ECHA's Board of Appeal against ECHA's decision on data and cost-sharing under the BPR

ECHA BoA annuls ECHA's decision granting permission to refer to the Appellant's studies.

On 3 November 2020, in Case A-009-2019, ECHA's Board of Appeal (BoA) annulled an ECHA decision granting Dow Benelux B.V. permission to refer to studies concerning the active substance tetrakis(hydroxymethyl)phosphonium sulphate (2:1) (THPS) owned by the Appellant, Solvay Solutions UK Limited.

Background

In October 2012, Dow Benelux B.V. requested a letter of access from the Appellant in order to rely on the studies for inclusion in the BPR Article 95 list of active substance suppliers. Over the next four years, the two parties took part in data and cost-sharing negotiations, during which they concluded an Every Effort and Secrecy Agreement. The agreement included a clause (7.5) providing that the parties would have to stop negotiating a Data Sharing Agreement if no chemical similarity could be found between their respective sources of THPS on the basis of assessment by a jointly-appointed technical consultant.

In November 2015, the technical consultant reported that its assessment of chemical similarity was inconclusive. Dow Benelux B.V. then applied to ECHA to carry out an assessment of chemical similarity. In July 2016, ECHA concluded that the two sources of THPS were not chemically similar. The Applicant consequently refused to share data and costs with Dow Benelux B.V. until it could establish chemical similarity.

Notwithstanding clause 7.5, Dow Benelux B.V. subsequently applied to ECHA for permission to refer to the studies. ECHA granted permission to refer in November 2016.

On 7 March 2018, the BoA accepted a first appeal by the Applicant against ECHA's decision (Case A-014-2016) on the grounds that ECHA had failed to consider Dow Benelux B.V.'s non-compliance with clause 7.5 of the Every Effort and Secrecy Agreement. The BoA annulled the decision and referred the case back to ECHA for re-examination.

On 6 May 2019, ECHA again granted Dow Benelux B.V. permission to refer to the studies, considering that the BPR's data-sharing rules could not be waived by a contract, and that, under the BPR, the absence of chemical similarity was not a valid reason for refusing to share data and costs. The Applicant was therefore found to be in breach of the obligation to make every effort to reach an agreement.

The Appeal

The Appellant contested this second decision on seven grounds, including ECHA's breach of the Appellant's right of defence by failing to hear the Appellant before adoption of the contested decision. It argued that ECHA had failed to hear its views on the meanings and implications of the Board of Appeal's first decision.

The BoA observed that ECHA should have let the Appellant provide its views on the first decision prior to adopting the second decision, as the latter "significantly affects" the Appellant's interests, and the first decision "constituted a new factor which was highly relevant to the assessment of the case." In failing to do so, ECHA infringed the Appellant's right to be heard. The BoA considered that the outcome of the decision might have been different if the Appellant had been heard. In such case, following settled case law, ECHA's decision must be annulled.

The BoA then examined whether Dow Benelux B.V.'s application for permission to refer should be granted. Pursuant to Article 63(3) of the BPR, a potential applicant must fulfil the following criteria for such permission to be granted:
•    Make every effort to reach an agreement; and
•    Pay the data owner a share of the costs incurred.
The BoA stated that neither ECHA nor the BoA were competent "to declare null and void a contractual agreement between private parties to a data and cost-sharing dispute". It therefore found that Dow Benelux B.V., in violating clause 7.5 of the Every Effort and Secrecy Agreement, had failed to make every effort to reach an agreement.

Furthermore, with respect to the share of costs, the BoA considered that the objective of this condition was to ensure a contribution to costs on the part of the potential applicant, and to reduce the number of compensation claims in this regard. Therefore, the amount should not be "manifestly unreasonable". It also found that Article 63(3) does not imply that ECHA is not competent to examine the amount paid. According to the BoA's evaluation within ECHA's remit, Dow Benelux B.V.'s contribution was small enough to qualify as manifestly unreasonable, and the second condition had consequently not been fulfilled either.

The BoA therefore annulled ECHA's decision and rejected Dow Benelux B.V.'s application for permission to refer.

Your Take-Away

The BoA's decision confirms the contractual freedom of parties during the negotiations. Unless a Member State court annuls an agreement or one or more of its clauses, neither ECHA nor the BoA will question its terms. The decision also confirms, contrary to ECHA's previous arguments, that ECHA is competent to assess the share of the cost against a 'manifestly reasonable' test.

The Appellant was represented by Koen Van Maldegem and Peter Sellar of Fieldfisher's EU Regulatory team.