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Johnson & Johnson pursues arbitration in contract dispute case


New Jersey based health-care products company Johnson & Johnson is involved in a breach of contract suit. Reports say that the company has sued drug maker Boehringer Ingelheim over a contract dispute. Boehringer makes lung cancer medication and a system of testing genes to determine which medication is most appropriate for a specific patient.

While the companies have not commented about the recent suit, reports speculate that the dispute is arising over cancer medication contract. Reports say that Johnson & Johnson and Boehringer had a contract where Boehringer supplied Johnson & Johnson with the cancer drug Doxil. Last year, Boehringer experienced a Doxil shortage after a production plant was temporarily shut down after questions arose about the drug's quality. Following this shortage, Johnson & Johnson announced its intention to switch suppliers.

Recently, Johnson & Johnson has asked a court to enforce an arbitration agreement between the two companies and keep the dispute out of court. If the court sides with Johnson & Johnson and enforces the arbitration agreement, an arbitrator will likely determine the outcome of the breach of contract case, and not a judge.

Arbitration is one form of alternative dispute resolution. Typically, in arbitration a neutral third-party -- called in arbitrator -- will hear a case from both sides of a particular dispute. Then, the arbitrator will make a decision on how the dispute should be resolved. Sometimes, this decision is binding on the parties, sometimes it is not.

Forms of alternative dispute resolution including arbitration and mediation can sometimes be helpful in resolving contract disputes between New Jersey businesses. Sometimes, these methods are cheaper and faster than traditional contract litigation. However, in some situations, a New Jersey court is in the best position to resolve a dispute.

Source: Bloomberg Businessweek, "J&J Sues Rival Boehringer Ingelheim Over Arbitration Dispute (1)," Jef Feeley, Sept. 9, 2013

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