IDA wins court battle over repayment of €1.19m grant from failed Shannon pharma venture
Gordon Deegan
The Court of Appeal has ordered that a UK-based pharma firm repay €1.19 million in a Research and Development (R&D) grant to the IDA from a failed Shannon venture.
In this case, the Court of Appeal has dismissed the appeal by Avara Pharma Services Ltd against the High Court granting summary judgment to the IDA for €1.19 million in October 2024 against the pharma firm.
The summary judgment arose from Shannon Development providing a R&D grant of €1.2 million to Shannon-based firm UCB Manufacturing Ireland in February 2012.
In February 2016, Avara Pharma Services purchased UCB Manufacturing while Shannon Development’s rights in the case transferred to the IDA in 2014.
In the course of implementing the sale of UCB to Avara, the IDA, UCB and Avara all entered into a 2017 Deed of Novation where the purpose of which was to transfer all rights and obligations under the R&D Grant Agreement from UCB to Avara Shannon.
However, the Avara plant in Shannon was struggling and in 2019, the High Court made orders winding up Amara’s Shannon business with the loss of up 114 jobs after it heard that the business was losing €9.5 million per annum.
The 2012 R&D grant came with conditions attached and the IDA subsequently but unsuccessfully pursued Avara Pharma Services for the repayment of the €1.19 million R&D grant.
The Court of Appeal ruling refers to a letter from the majority shareholder at Avara, Leonard M. Levie to the then CEO of IDA Ireland, Martin Shanahan, regarding the request for repayment of the grant.
In the letter, Mr. Levie refers to investment by the Avara Group of €16 million in Avara Shannon over a three-year period, which investment ultimately was lost owing to the failure of Avara Shannon.
In the letter, Mr Levie told Mr Shanahan said “Recently, I received a very puzzling letter from your team, seeking the repayment of a grant awarded to UCB in December 2011 for a total amount of €1,193,634, payable immediately.
He said: “My understanding is that the UCB Pharma Group benefited from the bulk of the referenced amount and that Avara received merely a trivial amount from this grant in 2018.”
Ms Justice Donald Binchy stated, “Somewhat surprisingly, Mr. Levie expresses himself to be perplexed as to why a research and development grant has migrated into an obligation to repay enforced by a lawsuit.”
Mr Levie said that in his experience research and development grants are not liabilities, they are incentives for investment and are not usually repayable. In any case he said, any obligation to repay is that of UCB and not Avara.
In his findings, Mr Justice Binchy concluded that the claim in these proceedings is a simple one.
He said that the IDA advanced a grant to UCB, and now seeks repayment of it on the grounds of a breach of the Grant Agreement pursuant to which it was advanced to UCB, and based on the Deed of Novation.
Mr Justice Binchy stated that he was rejecting the Avara appeal in its entirety.
He said that since the IDA has been entirely successful in this appeal, “my provisional view is that it is entitled to an order requiring the appellant to discharge the costs of this appeal in full, the same to be determined by adjudication in default of agreement”.
He said that if Avara wishes to contend for a different order, it may do so by making submissions not to exceed 1,500 words within two weeks from the date of delivery of this judgment.
