Hartford Financial Services Group Inc. unit has a duty to defend a biopharmaceutical company in arbitration proceedings under its professional services liability coverage, a federal appeals court ruled Tuesday.

Morrisville, North Carolina-based Inventiv Clinical, LLC, formerly known as PharmaNet LLC, had professional services liability coverage from Hartford unit Navigators Specialty Insurance Co., according to the ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Navigators Specialty Insurance Co. v. Inventiv Health Clinical Inc.

CEL-SCI Corp., a Vienna, Virginia-based professional contract research organization, which had been hired by PharmaNet to aid with a clinical trial’s management and administration, began arbitration proceedings alleging breach of contract and fraud charges and sought damages, in part for failures and delays, according to the ruling.

Navigators originally agreed to defend PharmaNet in the arbitration, but later disclaimed coverage, arguing the claims were based on delays that fell under its policy’s exclusion provision. The exclusion was for a “performance delay” arising out of “delay in delivery of or failure to complete” the product or work, according to the ruling.

Navigators then filed a complaint in U.S. District Court in Trenton, New Jersey, seeking a declaration that it had no duty to defend or indemnify PharmaNet. The district court ruled Navigators was obligated to defend the policyholder and the ruling was upheld by a unanimous three-judge appeals court panel.

“At least some of CEL-SCI’s damages claims were predicated on performance, failures, existing separate and apart from delays, such that the Policy’s delay exclusion did not exempt Navigators from the duty to defend (i.e., there were allegations made by CEL-SCI that were covered and not excluded by the Policy),” the ruling said.

“The delays and failures alleged by CEL-SCI are not all inexorably intertwined, indeed, there are instances where CEL-SCI alleged failure by PharmaNet that appear to exist separate and apart from allegations of delays and the failure to complete,” the ruling said,

“Thus, given the ambiguities in the complaint - namely, whether CEL-SCI sought damages due solely to delays, for delays caused by wrongful acts, or for both wrongful act sand delays - it was correct of the District Court pursuant to New Jersey law to read the complaint liberally in favor of PharmaNet,” the ruling said, in affirming the lower court’s decision.

Attorneys in the case did not respond to a request for comment.