Israel's High Court of Justice has accepted an appeal by Proneuron Biotechnologies Inc. that its legal proceedings against Teva Pharmaceutical Industries Ltd. (Nasdaq:TEVA; TASE:TEVA) will not be delayed in favor of arbitration proceedings.
In 2005, an agreement was signed between Teva and Proneuron to jointly develop a molecule for the treatment of amytrophic lateral sclerosis (ALS), or Lou Gehrig's disease. Under the agreement, Teva was to conduct a clinical trial for the treatment of ALS. The agreement stipulated that the parties would settle any disputes in arbitration hearings in London, although Israeli law applied to the agreement.
However, in 2007, Proneuron filed a lawsuit with the Tel Aviv District Court alleging that Teva "was negligent to the point of jeopardizing patients' lives. The company asked the court to nullify the agreement. Teva insisted that the trial was safe and conducted properly.
The Tel Aviv District Court thought that the severity of Proneuron's claims against Teva required a legal hearing rather than arbitration.
Teva appealed the ruling but the High Court of Justice also thought that the dispute demanded court proceedings.
Teva then claimed there had been a substantial change in circumstances because patients who had taken part in the trial had filed suit against the company and asked the Tel Aviv District Court to reconsider the case. The court accepted Teva's claim and ruled that legal proceedings be delayed according to arbitration law.
But today Judges Elyakim Rubinstein, Ayala Procaccia and Yoram Danziger accepted Proneuron's appeal and ruled that there was no grounds for reconsidering the previous decision not to delay legal proceedings in favor of arbitration.
Teva's share price was up 1.11% to NIS 192.10 in early afternoon trading on the TASE, having closed at $53.18 on Nasdaq yesterday, giving a market cap of $47.76 billion.
Published by Globes, Israel business news - www.globes-online.com - on October 7, 2010
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