Like other jurisdictions around the world, the UAE has been impacted by the coronavirus outbreak and has taken positive measures to ensure its containment and management among its citizens and residents. These have included federally-mandated remote instruction across schools and universities nationwide, the testing or quarantining of passengers arriving into the UAE, and a campaign by the Ministry of Health to support hygienic practices to stop the spread of the disease.
Because of its preventive policy framework and protectionist legislation, the UAE does not suffer from many issues that are confronting other nations since the first reported cases of the coronavirus in December 2019.
Background
Based on perceived issues with pharmaceutical quality and efficacy from decades ago, the UAE elected to restrict the importation of pharmaceuticals and medical devices from China. The vast majority of medication imported into the UAE originates in Western Europe or North America. Indeed, the UAE counts Germany, the U.S., France, and Switzerland among the premier sources of its medication. Even a significant portion of herbal medication (often associated with Traditional Chinese Medicine) which enters the UAE arrives from the U.S. or Europe.
In recent years, the UAE has also begun the manufacture and exportation of generic drugs.
Therefore, with respect to pharmaceuticals and medical products, China is not a significant link in the medical supply chain of the UAE.
UAE law regarding the importation of pharmaceuticals and medical devices and related dispute resolution
In addition to the restrictions on country of origin, the UAE has very stringent laws and guidelines with respect to the importation of pharmaceuticals and medical devices. Specifically: no medication or device may be marketed within the country until it has been registered with the UAE Ministry of Health (MOH); medication or devices may only be imported into the UAE with a pharmaceutical or medical device import license as granted by the MOH, and medication or devices can only be sold or distributed by an agent who is duly registered with the MOH as well as the Ministry of Economy. The holder of a pharmaceutical license must be a UAE national.
Under applicable law, agency relationships between a principal and an agent are not arbitrable. Therefore, any disputes between a local agent and a foreign pharmaceutical company on contracts for the sale or importation of drugs or medical devices would have to be settled by the relevant UAE Courts.
A foreign medical drug or device manufacturer may set up a manufacturing presence within a free zone. However, the sale or distribution of such manufactured products would still need to be implemented by a licensed pharmacy or medical store. A foreign owner in such pharmacy or medical store would not be able to hold more than 49 per cent of that company’s shares.
Even in the nexus of these potential contractual relationships, it would be nearly impossible to avoid the application of UAE Law.
While parties in other jurisdictions may encounter issues relating to their pharmaceutical contracts and arbitration clauses contained therein, these are unlikely to affect the UAE because of various importation and legal restrictions.
Only time will tell how deeply other sectors of the UAE economy are affected by the coronavirus, and what legal knock-on effects may arise.
References available on request.
Sachin Kerur
This article appears in the March/April edition of Omnia Health Magazine. Other topics include AI in healthcare, patient safety, mobile healthcare and further updates around on COVID-19 from the healthcare industry.