Canada: Pharma In Brief - Federal Court Of Appeal Clarifies Requirement For A Binding Settlement Agreement

Case: Apotex Inc v Allergan Inc, 2016 FCA 155
Nature of case: Motion for an Order enforcing settlement
Successful parties: Apotex Inc and Apotex Pharmachem Inc
Date of decision: May 18, 2016  


The Federal Court of Appeal (FCA) has clarified the requirements for a binding settlement agreement, and has stated that determination of whether settlement had been reached is to be assessed from an objective standpoint. The FCA warned that "[i]f a party does not want to be bound until it has agreed to all terms it subjectively considers essential to the deal, in every offer it communicates it must make that wish objectively clear." In this case, the FCA found that no settlement agreement had been reached by the parties.    


In August 2010, Allergan brought an infringement action against Apotex relating to gatifloxacin.  

In April 2012, Apotex's counsel made an offer to settle to Allergan's counsel (Initial Offer). Allergan sought clarification on the scope of the limitations imposed on Apotex.  Allergan never accepted the Initial Offer nor indicated that the clarifications received from Apotex were satisfactory. The parties re-engaged in debate regarding the scope of limitations imposed on Apotex.

Further communications regarding settlement took place in late 2013 and early 2014.  In January 2014, Allergan's counsel advised that it had recommended that Allergan accept Apotex's December 2013 revisions to the minutes of settlement, and circulated a draft.  Two weeks later, Allergan's counsel proposed certain amendments to the draft.  Apotex's counsel rejected these amendments, but indicated a willingness to recommend that Apotex accept the January 2014 draft.  In February, Allergan's counsel advised that Allergan accepted the terms of the January 2014 draft.  Allergan subsequently advised the Court that in its view a settlement had been reached; however, Apotex did not agree.  

Allergan brought a motion before the Court for an order enforcing the settlement agreement, and the Federal Court granted Allergan's motion (2015 FC 367).  Applying a subjective standard, Hughes J. found that the parties agreed to the essential terms of the agreement and that any differences could be attributed to "fussing and wordsmithing".  Apotex appealed the order.  

The Federal Court has jurisdiction

The FCA held that the Federal Court has jurisdiction to determine whether a patent infringement action had been settled and, if so, to enforce the settlement agreement.  While contract law is normally a matter of provincial jurisdiction, the Federal Court has jurisdiction when the contract at issue is tied to a matter over which the Court has statutory jurisdiction or where the existence of a settlement agreement affects the status of proceedings before the Court.  Where there is concurrent juridiction with a provincial court, the Federal Court may decline jurisdiction if it considers the provincial court to be a more appropriate forum.  

Requirements for a settlement agreement in a common law jurisdiction

The FCA clarified the requirements to determine whether a settlement agreement has been reached.  

  • There must be an objective, mutual intention to create legal relations:  Would a reasonable businessperson viewing the parties objectively conclude that both parties intended to enter into legal relations?    
  • There must be consideration flowing in return for a promise:  The Court stated that this requirement will "almost certainly never [be] a problem" as settlements are by definition compromises with consideration flowing both ways.
  • Objectively, the terms of the settlement must be sufficiently certain: A court cannot make "a new agreement for the parties" where they "were never ad idem".    
  • There must be an objective agreement on all essential terms:   Viewed through the eyes of a reasonable businessperson, did the parties agree on all the essential elements?
  • Proper authority must be established:  In the case of parties represented by counsel, if counsel has qualified its authority with "subject to instructions" or "subject to my client's approval", there can be no agreement until the client is heard from.      

The FCA overruled Hughes J.'s subjective approach, holding that evidence of the parties' subjective intentions is irrelevant in determining whether a settlement agreement has been reached.   

The FCA held that the scope of limitations on Apotex were essential terms to the Initial Offer, and on an objective review of the evidence, there could be no agreement.  With respect to the settlement exchanges in early 2014, the FCA found that counsel for Apotex had only agreed to recommend the settlement to Apotex and did not have the apparent authority to bind Apotex.  The FCA found that no settlement agreement had been reached.

Link to decisions:

Federal Court of Appeal Decision: Apotex Inc v Allergan, Inc, 2016 FCA 155

Federal Court Decision: Allergan, Inc v Apotex Inc, 2015 FC 367

About Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global law firm. We provide the world's preeminent corporations and financial institutions with a full business law service. We have 3800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

For more information about Norton Rose Fulbright, see

Law around the world

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.