Foley Hoag | Stand and Deliver: Dispute Boards and Other Mechanisms to Manage Life Sciences Disputes in Real Time

Key Takeaways:

• Recent rule developments from major international institutions provide sophisticated frameworks for managing disputes as they arise. The American Arbitration Association’s International Centre for Dispute Resolution (AAA-ICDR) is developing dispute board rules specifically tailored to the life sciences industry, signaling growing institutional focus on the sector’s unique dispute resolution needs. Rule developments from the World Intellectual Property Organization (WIPO), the International Institute for Conflict Prevention & Resolution (CPR), and the Singapore International Arbitration Centre (SIAC) similarly reflect the efficiency of resolving disputes in real time. The International Chamber of Commerce (ICC) recommends dispute boards as a major benefit to narrow issues expeditiously.
• Arbitration clauses and rules can also be adapted to establish a standing dispute resolution mechanism, including a tribunal with continued jurisdiction over an ongoing commercial relationship and the authority to resolve disputes over the parties’ project in real time.
• Parties to life sciences agreements should consider incorporating standing dispute resolution mechanisms into their contracts, to promote cooperation and efficiently resolve disputes through neutral third parties with sector-specific expertise.
• If an arbitration commences in the context of an ongoing relationship, the parties should consider whether they want to grant the tribunal continued jurisdiction over future related disputes.
• A range of complex life sciences agreements, including clinical trial services agreements with contract research organizations (CROs), manufacturing and supply agreements with contract manufacturing organizations or contract development and manufacturing organizations (CMOs/CDMOs), co-development and co-promotion arrangements, and strategic research collaborations, can benefit from standing dispute resolution mechanisms. A particularly compelling example is a License and Collaboration Agreement between an early-stage biotech licensor and a major pharmaceutical company licensee, especially where the agreement includes a Joint Steering Committee, a transfer of development responsibilities to the licensee upon the achievement of a trigger event, e.g., selection of a development candidate or after successful completion of a Phase 1 clinical trial, and a Commercially Reasonable Efforts (CRE) diligence commitment by the licensee; in that setting a standing mechanism layered on top of the JSC escalation procedure can resolve the predictable categories of disputes (JSC deadlocks, handoff disputes, and CRE disputes) in real time, preserving program value that a multi-year arbitration cannot recover.
• The same considerations apply with equal force to certain pharmaceutical M&A transactions between, e.g., an early-stage biotech target and a major pharmaceutical company acquirer, where a significant portion of the consideration is typically deferred in the form of contingent value rights or earnouts tied to development, regulatory, and sales milestones to be achieved over a multi-year post-closing period and is subject to a CRE (or similar) obligation by the acquirer. Layering a standing dispute resolution mechanism on top of the agreement’s dispute resolution provisions again allows recurring disputes (in this context milestone, efforts, and integration) to be resolved in real time before the program is deprioritized and a damages award can no longer make the selling securityholders whole.
• The decision of the Delaware Supreme Court in Johnson & Johnson v. Fortis Advisors LLC, 352 A.3d 229 (Del. 2026), dated January 12, 2026, is a useful illustration of a traditional dispute resolution approach in the life sciences industry. The Delaware Supreme Court issued its decision five years after the collapse of the parties’ project. This client note describes another approach to dispute resolution in projects involving the life sciences industry, in which disputes are resolved in real time.

 

I.    Standing Dispute Resolution Mechanisms Suit Life Sciences Relationships

Life sciences relationships possess characteristics that make standing dispute resolution mechanisms, such as dispute boards, particularly helpful. The sector is characterized by high-value collaborations spanning research and development, clinical trials, regulatory approval, manufacturing, and commercialization, often involving multiple parties, across different jurisdictions, over periods measured in years or even decades. As the WIPO Arbitration and Mediation Center has observed, this complexity can “mak[e] the sector more prone to disputes than others.”¹ Time is also often of the essence: faster cooperation means delivering therapies to patients sooner, leaving aside the incentives rewarding those that are first to market.

In a typical arrangement, a standing dispute board² consists of a panel of one to three independent, impartial professionals appointed by the contracting parties at the outset of their relationship. One can categorize dispute boards into three types: Dispute Review Boards (DRBs), which issue non-binding recommendations; Dispute Adjudication Boards, which issue decisions that the parties may be contractually bound to implement; and Combined Dispute Boards, which can do either depending on the circumstances.

The following dispute board features promote the rapid resolution of pressing issues:³

• Dispute board procedures and evidentiary rules are flexible, facilitating the resolution of issues evolving in real time.
• They also move quickly: fixed timelines of a few months, or less, are common, allowing the parties to put the dispute behind them as soon as possible, preserving their relationship.
• Dispute board hearings are more informal, with a bigger role for client representatives. This can also help protect the parties’ relationship and promote creative solutions.
• A standing dispute board’s knowledge of the history of a relationship or project can allow the board to guide the parties efficiently through a tailored, efficient procedure.
• Finally, dispute adjudication boards issue decisions that are contractually binding (though not directly enforceable like arbitral awards). Clear results like this can help the parties move forward.

Dispute board decisions are usually effective in resolving the parties’ disputes. For example, in the construction industry, another complex sector based on long-term relationships requiring continued cooperation, where time is often of the essence, a 2018 study based on 512 decisions from over 230 construction projects found that only 6% of those decisions were referred to arbitration.⁴ When a matter does proceed to arbitration it is typically reviewed afresh (de novo) by an arbitral tribunal.

In short, dispute boards are an efficient means of addressing pressing issues, especially where it is important that the parties preserve their relationship and continue cooperating. The ICC noted the “short timescale” of dispute boards as a “major benefit” and stressed their ability to “narrow the issues.”⁵ Despite these advantages, dispute boards have not yet become widespread in the life sciences industry.⁶

There is, however, growing recognition of these mechanisms’ potential, with international arbitral institutions exploring their application to the life sciences sector.

II.    Growing Interest in Life Sciences Dispute Boards

In September 2021, the WIPO Arbitration and Mediation Center, initially under its COVID-19 Related Services and Support Package, developed specific DRB procedures tailored to life sciences. WIPO described the key features and benefits as follows: “DRBs save time as their knowledge of the project allows them to act quickly in resolving disputes as ‘reading-in’ time is significantly reduced.”⁷ WIPO further suggested that board members be appointed at the start of the contract and could include mediators who facilitated contract negotiations or experts who reviewed confidential information during the pre-contract stage.⁸

At the November 2025 Fordham Conference on International Arbitration and Mediation, Dorothee Schramm, an independent Swiss arbitrator, reported on the ongoing work of the AAA-ICDR to develop dispute board rules specifically designed for the life sciences industry.⁹ Ms. Schramm described how the AAA-ICDR’s specialized Life Sciences Panel perceives the following types of life sciences disputes as being particularly amenable to resolution by dispute boards:

• Clinical trial disputes over methodology, signal reporting, and data integrity;
• Disagreements about defects or omissions in regulatory filings;
• Disputes over the optimal pricing strategy (including issues associated with reimbursement status); and
• Manufacturing disputes.

The subsequent exchanges at the conference highlighted the ability of dispute boards to address issues in real time, and to serve as a forward-looking part of the solution. This was seen as a contrast to more formal forms of dispute resolution which, while necessary where a resolution cannot be found by other means, can strain ongoing relationships, in turn impacting clinical development timelines, regulatory submissions, and ultimately patient access to innovative therapies.

In February 2024, CPR released its Rules for Administered Dispute Prevention and Management Boards for Commercial Transactions.¹⁰ Helena Tavares Erickson, CPR’s Acting CEO, explained that “[o]ur goal was to take the proven DRB process and develop provisions that could be used across industry sectors that encourage the avoidance of disputes but also provide for the possibility that not all disputes can be avoided.”¹¹ While not focused on life sciences specifically, CPR’s work is intended to promote the use of dispute boards outside construction projects.

III.    Other Recent Developments Promoting Standing Mechanisms

SIAC’s 2025 Arbitration Rules, which came into effect on January 1, 2025, introduced Rule 17 on Coordinated Proceedings. While not a dispute board mechanism, it facilitates arrangements akin to a standing arbitral tribunal. Under Rule 17, where the same tribunal is constituted in two or more arbitrations and “a common question of law or fact arises out of or in connection with all the arbitrations,” a party may apply for the arbitrations to be coordinated.¹² This could allow a tribunal to continue to be appointed in respect of disputes arising on the same project, while judiciously using case management tools to handle the disputes as efficiently as possible, and while building the same sort of ongoing knowledge of the parties’ relationship that a standing dispute board acquires. It should also avoid the prejudice that can arise from inconsistent decisions on common issues, and duplicative procedures.

Arbitration organizations have experience with arbitral tribunals functioning in real time to help parties resolve disputes as they arise in the performance of a project. As an example, in an arbitration administered by the AAA-ICDR, the parties agreed in Procedural Order No. 1 that all disputes arising or related to the parties’ project would be decided by the same arbitral tribunal. The tribunal issued four partial final awards in less than a year, as the parties moved forward with their project.¹³ When an arbitration clause or Procedural Order No. 1 includes appropriate language, the same arbitral tribunal will resolve multiple disputes arising in the performance of a project, instead of multiple tribunals resolving separate disputes about the project. As the tribunal issues partial final awards, the parties also will have the opportunity to move to confirm or vacate these partial awards in court.

Where appropriate, courts have also taken steps to appoint the same arbitral tribunal to resolve disputes arising from the same contract. For instance, under the facts of one particular case, the Supreme Court of India ruled that it would be “unwarranted” to appoint different tribunals to resolve disputes between the same parties arising from the same contract.¹⁴

On January 12, 2026, the Delaware Supreme Court issued its decision in Johnson & Johnson v. Fortis Advisors LLC. The case arose from Johnson & Johnson’s acquisition of Auris Health Inc., a medical robotics start-up company. This case reflects a traditional dispute resolution approach in litigation or arbitration. The Merger Agreement closed in 2019. To bridge the valuation gap, the parties agreed to a $3.4 billion upfront cash payment plus $2.35 billion in earnouts tied to a series of regulatory and sales milestones to be achieved over a specified period of time. Thus, the parties were involved in a project, which involved achieving milestones over a period of time. A number of disputes arose in rapid succession as the parties moved forward with their project. The Delaware lawsuit started in October 2020. The Delaware Supreme Court issued its decision in January 2026. That litigation involved a ten-day trial in Delaware Chancery Court, more than 30 witnesses, and the production of 1.5 million documents. The Delaware Supreme Court issued its decision five years after the collapse of the parties’ project.

The Delaware Supreme Court decision reflects that several critical disputes in the case focused on contract interpretation and Delaware law or did not involve a significant number of documents. A properly drafted arbitration clause helps create the potential to resolve these types of disputes in real time.

Because so many life-sciences M&A or licensing agreements involve lengthy contractual relationships, it is critical to carefully consider the most appropriate dispute resolution mechanism at the drafting stage.

IV.    Application to License and Collaboration Agreements

Standing dispute resolution mechanisms are well suited to a wide range of complex life sciences agreements that contemplate long-term cooperation between sophisticated counterparties. Examples include clinical trial services agreements with contract research organizations (CROs), manufacturing and supply agreements with contract manufacturing organizations (CMOs) or contract development and manufacturing organizations (CDMOs), co-development and co-promotion arrangements, strategic research collaborations and alliance agreements, and joint ventures formed to advance a particular asset or platform. Each of these typically involves multi-year performance obligations, technical and regulatory subject matter, and a continuing need for cooperation that is poorly served by traditional litigation or arbitration commenced after the relationship has broken down. A particularly compelling example, and the focus of the balance of this Section, is a typical pharmaceutical License and Collaboration Agreement (“LCA”) between an early-stage biotech licensor and an established pharmaceutical company licensee. These agreements typically span a decade or more, contemplate multiple sequential development phases, and require continued cooperation between parties of materially different size, capitalization, and risk tolerance. Disputes that arise during the relationship, often involving fast-moving scientific, regulatory, or commercial decisions, are poorly suited to multi-year litigation or arbitration commenced after the program has already stalled.

Overview of Typical JSC Provisions. Most LCAs establish a Joint Steering Committee (“JSC”) to oversee the collaboration. Typical JSC provisions provide for: (i) equal representation, with a fixed number of voting members appointed by each party; (ii) regular scheduled meetings (often quarterly), supplemented by ad hoc meetings as needed; (iii) a defined scope of authority, including, e.g., oversight of the development plan, review of progress against milestones, and approval of material amendments to the development plan or budget; (iv) a tie-breaking mechanism that allocates final decision-making authority to one party or the other or requires resolution in accordance with the agreement’s dispute resolution provisions, subject to express carve-outs protecting the other party’s economic, regulatory, and reputational interests (for example, matters that would materially increase a party’s costs, alter the indication or territory, or impair the value of retained rights); and (v) an internal escalation procedure requiring referral to designated senior executives of each party for a defined period (often 30 to 60 days) before a matter may be submitted to formal dispute resolution. JSCs are designed to facilitate cooperation and resolve operational issues, but they are not adjudicative bodies and routinely deadlock on the most consequential questions.

The Development Handoff. The assumed structure, under which development responsibilities transfer from the licensor to the licensee upon selection of a development candidate or upon completion of Phase 1, creates predictable inflection points at which disputes are most likely to arise. These include disputes over whether development candidate selection criteria have been satisfied, the adequacy and completeness of the technology transfer package, the interpretation of Phase 1 data and the resulting go/no-go decision, and the scope and timing of the licensee’s assumption of regulatory sponsorship. Each of these issues is technical, time-sensitive, and capable of derailing the program if left unresolved, and each is squarely within the type of factual and scientific inquiry that a standing panel with sector-specific expertise is well suited to address.

Commercially Reasonable Efforts. The licensee’s obligation to use Commercially Reasonable Efforts to continue development and commercialization following the handoff is a further source of recurring and high-stakes disputes. CRE obligations are inherently fact-intensive, require continuous evaluation of the licensee’s conduct against an evolving benchmark (typically by reference to comparable programs in the licensee’s portfolio or in the industry), and frequently turn on internal prioritization decisions that the licensor has limited ability to monitor in real time. Traditional litigation or arbitration commenced years after a perceived breach is poorly suited to evaluating CRE while the program is still capable of being saved, and a damages award rendered after the asset has been deprioritized or returned often cannot make the licensor whole, particularly where the licensed program is the licensor’s principal asset and its enterprise value depends on the program’s continued advancement.

Drafting Recommendations. Parties negotiating an LCA in this structure should consider layering a standing dispute board with continued jurisdiction over the relationship, on top of the JSC’s internal escalation procedure. Because the same dispute board hears successive disputes over the life of the collaboration, it acquires institutional knowledge of the parties, the program, and the relevant scientific and regulatory context, enabling it to act quickly and consistently. Key drafting considerations include: (i) defining which categories of matters may be referred to the standing panel following exhaustion of JSC escalation, including deadlocks on matters carved out of a tie-breaking party’s final decision-making authority, disputes over development candidate selection criteria or interpretation of Phase 1 data, disputes over the adequacy of the technology transfer, and CRE disputes during the licensee-led phase; (ii) specifying expedited timelines tied to the development calendar (for example, decisions within 60 to 90 days of referral) so that the panel can act before the disputed decision becomes moot; (iii) addressing whether the panel’s decisions are binding, and the extent (if any) to which CRE and other determinations are subject to de novo review in any subsequent full-merits arbitration; (iv) coordinating the standing mechanism with the agreement’s broader arbitration or litigation provisions, including any carve-outs for IP validity, confidentiality injunctions, and provisional relief; and (v) appointing the panel at signing, ideally including at least one member with relevant scientific, regulatory, or commercial expertise, so that no time is lost convening the panel when the first dispute arises. Parties should also keep in mind that, as described above, an arbitral tribunal is also able to decide disputes in real time as they arise in the performance of a project.

V.    Application to Pharmaceutical M&A Transactions

The typical pharmaceutical M&A transaction between an early-stage biotech target and a major pharmaceutical company acquirer presents many of the same conditions that make a standing dispute board, or an arbitral tribunal functioning in real time, attractive in the LCA context. This is squarely illustrated by the Johnson & Johnson v. Fortis Advisors litigation discussed above. These deals are commonly structured with a substantial upfront cash payment supplemented by contingent consideration, contingent value rights, earnout payments, or milestone payments, tied to the achievement of development, regulatory, and commercial milestones over a period that often spans five to ten years or more following closing. The target’s former securityholders, typically represented by a stockholder representative, retain a significant economic interest in the continued advancement of the acquired assets/pipeline, but no operational control over it. The acquirer, in turn, assumes responsibility for development and commercialization subject to an express CRE obligation, and must integrate the acquired assets/pipeline into a much larger portfolio in which prioritization decisions are made on an enterprise-wide basis. Parties should anticipate that an acquirer may resist this mechanism if it feels that it is inappropriately intruding on the operational discretion a pharmaceutical company expects to retain when integrating an acquired asset into an enterprise-wide portfolio, and its inclusion may therefore be heavily negotiated rather than readily accepted. The securityholders, however, can respond that the standing board serves both parties’ interests by resolving milestone and efforts disputes while the program is still capable of being saved, preserving value that neither side can recover once the asset has been deprioritized or discontinued. The seller can further argue that a neutral panel with sector-specific expertise and ongoing knowledge of the relationship produces faster, better-informed, and more consistent outcomes than years of litigation, reduces the cost and distraction of serial disputes, and gives the acquirer greater certainty and finality as each milestone comes due.

Predictable Categories of Post-Closing Disputes. The structure of these transactions gives rise to a recurring and predictable set of disputes over the lifespan of the payments. These typically include: (i) whether and when a specified development or regulatory milestone has been achieved, including disputes over the scientific or regulatory characterization of clinical data, the scope of a regulatory approval, or the labeling ultimately obtained; (ii) whether sales-based milestones have been met, including disputes over net sales calculations, allocation of bundled or combination-product revenue, and the treatment of authorized generics or biosimilar competition; (iii) whether the acquirer has satisfied its CRE obligation in continuing development and commercialization, including disputes over prioritization, resourcing, indication selection, and decisions to discontinue or out-license the program; and (iv) breaches of post-closing covenants regarding information rights, recordkeeping, and consultation with the stockholder representative. Each of these categories is fact-intensive, technical, and time-sensitive, and each tends to recur as successive milestones come due. It bears emphasis that a standing dispute board complements, but does not replace, rigorous drafting of the underlying terms. If the CRE standard and the milestone criteria are loosely defined, a real-time board relocates the dispute earlier in time but does not resolve the underlying ambiguity; the parties still require a tightly defined efforts benchmark and objective, measurable milestone definitions for the mechanism to add meaningful value.

Why Traditional Dispute Resolution Falls Short. As Johnson & Johnson v. Fortis Advisors illustrates, traditional litigation or arbitration over a single dispute commenced after the relationship has broken down is poorly suited to resolve these disputes while the program is still capable of being saved. By the time a court or arbitral tribunal issues a final decision, often years after the disputed conduct, the acquired program may have been deprioritized, the development candidate may have been discontinued, or the commercial opportunity may have been lost to competitors. A damages award rendered at this stage frequently cannot make the selling securityholders whole, particularly where the consideration at risk represented the bulk of the deal value and where the underlying asset was the target’s principal program.

Drafting Recommendations. For the reasons discussed above with respect to LCAs, parties negotiating a pharmaceutical M&A transaction with a meaningful contingent consideration component should consider incorporating a standing dispute board with continued jurisdiction over post-closing disputes into the merger agreement, contingent value rights agreement, or earnout agreement, alongside and without displacing the broader dispute resolution provisions. Key drafting considerations include: (i) defining the categories of post-closing disputes referable to the dispute board, including milestone achievement disputes, net sales and royalty calculation disputes, and efforts disputes; (ii) specifying expedited timelines (for example, decisions within 60 to 90 days of referral); (iii) providing the stockholder representative with appropriate information and audit rights so that efforts and milestone disputes can be evaluated on a complete record; (iv) addressing whether the dispute board’s decisions are binding or recommendatory, and the extent (if any) to which CRE determinations are subject to de novo review in any subsequent full-merits proceeding; (v) coordinating the standing mechanism with the agreement’s broader arbitration or litigation provision, including carve-outs for IP validity, confidentiality injunctions, and provisional relief; and (vi) appointing the dispute board at signing, ideally including at least one member with relevant scientific, regulatory, or commercial expertise so that no time is lost convening the dispute board when the first milestone or efforts dispute arises. As with LCAs, parties should keep in mind that an arbitral tribunal is also able to decide disputes in real time while the project is ongoing.

Conclusion

Standing dispute resolution mechanisms have long proven their value in construction. The life sciences sector presents equally compelling conditions for their adoption. This can be effected by agreeing to dispute board arrangements, or by adopting a well-drafted arbitration clause.
Foley Hoag’s International Litigation and Arbitration Practice regularly advises clients on dispute resolution mechanisms for complex cross-border commercial relationships. It also represents them in such proceedings, including by appearing before dispute boards. As noted above, the team is also at the forefront of adjusting other rule-sets to create standing mechanisms. For questions about dispute boards, standing dispute resolution mechanisms, or life sciences arbitration, please contact the authors.

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¹WIPO Magazine, “Resolving Life Sciences Disputes Beyond the Courts” (September 21, 2023).
²Ad hoc dispute boards are also used in the construction context, but do not offer quite the same benefits as the standing mechanisms focused on in this article. For one, an ad hoc board has to be brought up to speed on the relationship after the dispute arises, which can take time.
³Chanter et al. “Dispute Boards: A Novel Dispute-Resolution Technique for Life Sciences Companies Fighting COVID-19,” Lexology (2020).
⁴Dispute Resolution Board Foundation, Dispute Board Manual, Chapter 2, p. 11.
⁵International Chamber of Commerce, Guide to Effective Conflict Management (2023), p. 34.
⁶“Dispute Boards: A Novel Dispute-Resolution Technique for Life Sciences Companies Fighting COVID-19,” Lexology (2020).
⁷WIPO Arbitration and Mediation Center, “WIPO Model Dispute Resolution Board (DRB) Clause for the Resolution of Life Sciences Disputes.”
⁸Id.
⁹Dorothee Schramm, Presentation at the Fordham Conference on International Arbitration and Mediation (November 2025).
¹⁰CPR Press Release, “CPR Releases Innovative Rule Set to Prevent Disputes Between Businesses” (February 22, 2024).
¹¹Id.
¹²SIAC Rules 2025, Rule 17.1; Foley Hoag, “Key Changes in the 2025 SIAC Arbitration Rules” (April 3, 2025) available at Key Changes in the 2025 SIAC Arbitration Rules | Foley Hoag LLP.
¹³For full disclosure, one of the authors of this article was the chair of this ICDR tribunal.
¹⁴Gammon India Ltd. & Ors. vs National Highways Authority Of India, OMP (COMM) 392/2020, Delhi High Court (23 June 2020), ¶¶ 28, 32 (“Considering that a previously appointed Tribunal was already seized of the disputes between the parties under the same contract, the constitution of three different Tribunals was unwarranted and inexplicable. A situation where multiple Arbitral Tribunals parallelly adjudicate different claims arising between the same parties under the same contract, especially raising overlapping issues, is clearly to be avoided…However, what can lead to enormous uncertainty and confusion which ought to be avoided is the constitution of separate Arbitral Tribunals for separate claims in respect of the same contract, especially when the first Arbitral Tribunal is still seized of the dispute or is still available to adjudicate the remaining claims.”) citing Dolphin Drilling Ltd. v. Oil and Natural Gas Corporation Ltd., Supreme Court of India, 3 SCC 267 (2010).

 

 

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