Into ABS implementation: Challenges and opportunities for the Nagoya Protocol

30 September 2014

With the Nagoya Protocol set to enter into force in October, this article explores some of the challenges facing the instrument, and looks at some possibilities for its implementation as a tool for funding conservation and sustainable use of biodiversity. 

The fair and equitable sharing of benefits arising from the use of genetic resources, one of the three pillars of the 1992 Convention on Biological Diversity (CBD), is set to enter a new phase later this month marked by the first Meeting of the Parties (MOP) to the Nagoya Protocol. The October meet will be a watershed moment in the decades of work towards making access and benefit sharing (ABS) a functional mechanism for raising funds for the conservation and sustainable use of biological diversity. A lot of effort was put into the negotiation that led to the Protocol and now is the time to make the mechanisms work by functional implementation. [Ref 1] Ensuring such modalities for access and benefit sharing (ABS) has long been a priority on both the conservation and development agendas. These interests stem from the fact that most of the world’s most biodiverse regions are in developing countries, dubbed “providers,” while “users” are more traditionally situated in richer economies. Fair and equitable ABS should in theory safeguard against the plundering and misappropriation of genetic resources and also ensures that communities benefit from profits derived from their biodiversity heritage.

Unfortunately, however, limited monetary benefits are currently shared back to the provider countries and providing groups of biodiversity under ABS-arrangements. Following the modus operandi of the Nagoya Protocol, users of genetic resources should be distributing a part of their profits and other non-monetary benefits drawn from the commercialisation of genetic resources back to conservation and sustainable use of biodiversity. This article offers a look at the outstanding challenges facing the Nagoya Protocol and opportunities for the instrument to play a real role in biodiversity conservation and sustainable use moving forward.

There are three key remaining areas to address to help make the ABS regime more functional: contractual mechanisms for access and for benefit-sharing; domestic legislative, policy, and administrative measures in both user countries and provider countries; and clarifying questions at the international level including the possibility of unregulated genetic resources in certain arenas. [Ref 2]

Making genetic resources contracts work

Article 15 of the Convention on Biological Diversity (CBD) prescribes two contractual mechanisms. A contract is a private law instrument that is binding for the two parties agreeing to its terms and conditions. CBD Article 15 prescribes one contractual mechanism at the point of access to the genetic resources and another aimed at regulating the benefit-sharing arrangements at the point of time when they are being used. According to both CBD Article 15 and the Nagoya Protocol, the main way of enforcing a country’s sovereign rights is by invoking private law contracts – mutually agreed terms – between the providing country and/or country of origin and the user, the latter often thought of as a private company from another country. ABS therefore largely relies on contracts as the relevant means of regulating exchange and sharing returns. [Ref 3] However, although these mechanisms are already stipulated by the CBD, there have been very limited efforts to systematically make the contractual system functional. There is a need for clearer incentives for companies to enter into ABS contracts and meet a fair and equitable obligation to share benefits from their research and development. Furthermore the hammering out of the Nagoya Protocol in 2010 did not appear to make these incentives significantly stronger.

For example, while the latest international instrument provides some guidelines as to the system for enforcing contracts, ABS contracts will be negotiated and enforced as commercial contracts. This raises a number of challenges. ABS contracts must be drafted in a manner making them legally viable in the jurisdiction and legal system of the user. Since the Nagoya Protocol does not prescribe a uniform system for standardised user country legislation, the contracts must resolve a number of complex legal questions, which typically vary among countries. Since ABS contract-law is a relatively new and unexplored area of law, the background jurisprudence is limited. This raises a number of technical and difficult challenges in contract law. Existing global legal contract tools do not solve these challenges and international private law has limited potential in this area.

An example of another core unresolved contracts challenge is how to regulate the subject matter that is being transferred. An ABS contract regulates a dynamic situation with a high degree of scientific and commercial potential and changes. The material transferred at the time of entering into a contract mostly goes through one or several research and development processes before reaching a final product. It is seldom “genetic resources” as they are defined in the CBD and Nagoya Protocol themselves that are directly creating a commercial product in the market, but a product with a close or more remote connection to them. [Ref 4] For a contract to grasp the creation of value arising from the use of genetic resources, it needs to some extent foresee future developments of the material. The level of change and uncertainty, however, will vary among types of users and types of uses for the genetic material. Often this is presented as a question of tracing, but it is perhaps more complex, as it is also about understanding the relative contribution from the genetic resource and research, development, and other investments.

The two contractual mechanisms under the CBD – found in Article 15.4 and 15.7 – have the potential to enable a functional definition of the subject matter of the contract. The careful drafting of the subject of the contract and the actions allowed by the contract will become crucial to the functionality of this type of right. The higher the degree of precision in the formulation of the subject of the contract leaves less discretion in the interpretation of a court when it is to apply the obligations in the contract. One concrete advice is to avoid as far as possible the term genetic resources as a term defining the subject of the contract. In a contract the parties should rather spell out in more detail what actions the contractual partner has the explicit right to perform with the biological material. When such explicit utilisation options are set in the contract they can be connected to specific consequences pending the realisation of each utilisation. Clarity is the key virtue in the formulation of contractual obligations. A tool capable of rendering ABS functional is to ensure these contracts are well drafted in the sense that the rights are defined and enumerated. A patent defines the subject of the exclusive right in a highly precise manner. Contracts regarding transfer of genetic resources also need to aim at a high level of clarity.

Contracts generally suffer from a lack of a clear trigger point for benefit sharing once a commercial product has been developed, a situation complicated by whether to aim governance at the point of access or the point of utilisation of GR. This problem is enhanced by the lack of a functional monitoring mechanism, along the lines of the providers’ failed attempt at linking ABS to the much stronger intellectual property rights systems through disclosure. [Editor’s note, see related article in this BioRes edition]

Domestic ABS legislation as a core tool

Both the CBD and the Nagoya Protocol are based on a perception that it is the providing countries that have the primary responsibility for regulating ABS at the point of time of access. During the negotiations that eventually lead to the new instrument, an understanding of “utilisation of genetic resources” gradually gained more momentum. The Nagoya Protocol builds on CBD Article 15.7 in defining what exactly constitutes utilization in Articles 2(c) and (d).

During the process of pinning down the Nagoya Protocol a number of countries likely halted their process of regulating access to their genetic resources while waiting for the international framework. There are number of issues to consider now as countries continue to implement ABS access-side legislation. For example, should the national ABS system be set up to avoid any use of biological diversity without a full ABS contract, or should it attempt to encourage users to enter into a contract in a more deliberate way. This is linked to which countries attempt to include stronger incentives for users to enter into such contracts.

Australian ABS legislation is viewed as pioneering in this respect, as it involves simplified mandatory permits for all types of bioprospecting, including for non-commercial use. The regulation also includes an in-built clause for “change of intent,” namely if activities change from pure scientific or non-commercial to commercial, the user must return to change the contract. Even more important, this requirement is based on an existing legal instrument known as the statutory declaration. The latter binds the user to Australian criminal law, although admittedly it has limited force if genetic material is transferred to third parties. [Ref 5] Furthermore, even though the Australian system has been in place for a while, almost none of the initial bio-prospecting agreements have resulted in the user coming back to enter into a benefit sharing contract. This demonstrates in part the scale of the challenge facing countries when it comes to surveying and tracing the use and commercialisation of products based on their genetic resources.

To increase the prospects of tracing use and follow genetic resources through to final products on the market, steps must be taken by all CBD countries, not only those currently party to the Nagoya Protocol. Making ABS functional is already an obligation on all CBD countries as demonstrated by Article 15.7. The latter contains clear requirements for parties to take measures to implement ABS both on the user and provider side. One piece of advice for provider countries is to require that all user countries report to the next CBD COP on relevant ABS measures put in place.

Avoiding fragmentation in the international arena

Among the more polarising questions in the negotiations towards the Nagoya Protocol was the relationship between the ABS in the CBD and other international legal regimes touching on genetic resources. The debate circled around rules already in place and possible new regimes. These concerns led to the inclusion of Article 4 of the Nagoya Protocol. This recognises that the Nagoya Protocol “does not apply for the Party or Parties to the specialized instrument in respect of the specific genetic resource covered by and for the purpose of the specialized instrument.” The scope of the other existing regimes will therefore be crucial to define which genetic resources are covered by the Nagoya Protocol.

The International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA), for example, has been in force since 2004. It is a global instrument designed to promote the conservation of plant genetic resources and to help protect farmers’ rights, and ensure the fair and equitable sharing of benefits arising from the use of plant genetic resources. The Plant Treaty establishes a Multilateral System (MLS) under which selected crops are exchanged without individual regulation, subject to a standard contract where less focus is on monetary benefits, and access to plant genetic resources is termed as a benefit in itself. One challenge concerning this instrument is that not all parties to the CBD are members of the Plant Treaty. There are a number of unresolved and disputed questions between the scope of the ITPGRFA and general ABS. It is not clear what plant resources are mandatory under the scope of the Plant Treaty. There is a substantial difference between the views expressed by Halewood et al. [Ref 6] and Cabrera et al. [Ref 7] on the interpretation of the mandatory scope. These differences have also been surfacing in the so-called “tandem meetings” between the CBD and ITPGRFA focal points that have been organised the last year by the ABS Capacity Building Initiative, and also in a recent Nordic meeting on access and benefit sharing in September. One key grey zone is that ABS in the Plant Treaty differs from the ABS regime of the CBD in being voluntary, basically nonmonetary, without a link to benefit sharing and return to specific providers. In effect, concern for food security trumps the greater emphasis on equity found in the ethos of the CBD ABS. Beyond these unresolved questions work is also ongoing under the Plant Treaty aiming at exploring the conditions for expanding the scope of the list of crops that are covered by the MLS. Expanding the scope of the multilateral system under the Plant Treaty necessarily leads to a narrower scope for the Nagoya Protocol.

The Commission on Genetic Resources for Food and Agriculture under the UN Food and Agriculture Organisation (FAO) is also discussing questions related to access and benefit sharing for six groups of genetic resources, namely, animals; aquatic; invertebrates; plants; forest; and microbial genetic resources. Any agreement in the Commission on a need for specialised regimes for ABS holds potential to exclude commercially valuable groups of ABS governed by the CBD and the Nagoya Protocol. Providers fought a long and hard battle to include domesticated – valuable – genetic material in the ABS system of the CBD, based on equitable benefit sharing. Thus it would be a controversial move politically to empty the CBD and Nagoya Protocol of these valuable genetic resources. In effect, there has been some political discussion and wrangling among parties to the Commission concerning the extent to which new regimes for ABS for these groupings of genetic resources are needed. Currently, the mandate is not to negotiate any specialized regimes, but to explore the questions relating to and needs for these groupings.

Another international platform for regulating access and benefit sharing reached agreement a year after Nagoya was clinched; the World Health Organisation (WHO) in 2011 gave the green light for two standard material transfer agreements concerning exchange and use of viral genetic resources with pandemic potential for humans. In these two standard contracts globally negotiated terms and conditions both for rapid access and benefit sharing are pre-set. For exchange of viral, human pandemic material, time and unhindered access are crucial to combat potential outbreaks.

For almost a decade, the question of access and benefit sharing from genetic resources in the area beyond national jurisdiction (ABNJ) has been on the agenda of the UN Convention on the Law of the Sea (UNCLOS). Negotiations are currently underway towards reaching a consensus on a mandate for future talks around a special regime for this category of genetic resources. This could include, for example, genetic resources taken from the seabed and/or the high seas. Discussion under the auspice of the Antarctic Treaty is also ongoing around how to regulate genetic resource material from one of the world’s most remote, yet biologically unique areas.

In addition there are large collections of foreign genetic material held in genebanks. Some scholars and lawyers see these collections as outside the scope of the CBD given that they were collected prior to its entry into force. Whether these collections will be subject to benefit sharing and with whom is currently an unresolved question.

The Nagoya Protocol itself foresees two important mechanisms for handling ABS in relation to special branches of genetic resources. Article 19 outlines the need to develop and update information on model contracts. The essence here is that sectoral and cross-sectoral model contracts can be negotiated under the auspices of the Nagoya Protocol to serve special purposes. This is one potential tool for preventing ABS from becoming fragmented by a number of international organisations negotiating separate systems for access and benefit sharing.

A second mechanism foreseen in the Nagoya Protocol is the possible Global Multilateral Benefit-Sharing Mechanism outlined in Article 10. [Ref 8] Among other aims, the mechanism could essentially act as a “catch” in instances where it is unclear who should benefit, or indeed if the genetic resource in question has multiple beneficiaries as would be the case with transboundary genetic resources. Such a system also holds potential to narrow some of the grey zones around ABS and genetic resources that appear to be left out of the general scope of the Nagoya Protocol. The October MOP of the Nagoya Protocol is scheduled to address the need for, and modalities of, such a mechanism. The mechanism remains undecided and no agreement has emerged around how it should be designed.

Shoring up conservation and sustainable use

Access and benefit sharing of the dividends from genetic resources has now entered a critical phase following the entry into force of the Nagoya Protocol. One might expect that examples of functional benefit sharing contracts would need to be seen in relatively short timeframe for the Nagoya system not to lose momentum and the CBD to retain credibility.

One certain observation is that collections of plant genetic material by groups such as the Global Crop Diversity Trust and other collections are intensifying. The rationale for such collections is to secure biodiversity in a changing climate when species and plant extinctions are a real risk. At the same time, new genetic variations could hold potential for helping to adapt to a warmer climate. However, these collection activities are going on under unclear domestic legislations. If access is not regulated, the providing countries run the risk of these genetic resource extractions falling outside the scope of mandatory benefit sharing obligations.

Access and benefit sharing is also often confronted with a paradox when business representatives often claim that genetic resources have limited value. At the same time, however, business is vocal in voicing that access to genetic resources must be secured. The question necessarily follows that if there is no value – potential or current – why should access to genetic resources be important to business? Furthermore, the fact that patents are taken out on bio-innovation outcomes, the value for business created from the utilisation of genetic resources would appear not to be wholly insignificant.

If the current system for access and benefit sharing in relation to genetic resources does not end up providing funds for conservation and sustainable use of biological diversity, a core raison d’être of the CBD is in jeopardy. It is therefore increasingly urgent for the CBD to make ABS work as was intended. The entry into force of the Nagoya Protocol represents a step in this direction. The new instrument, however, cannot reach these goals alone and so much will rely on functional implementation moving forward.

Morten Walløe Tvedt, Senior Research Fellow, The Fridtjof Nansen Institute

[Ref 1] Oberthür, Sebastian and G. Kristin Rosendal (eds.) (2014), Global governance of Genetic Resources: Access and benefit-sharing after the Nagoya Protocol, Routledge, Oxfordshire.

[Ref 2] Tvedt, Morten Walløe (2014), Beyond Nagoya: Towards a Legally Functional System of Access and Benefit-sharing, in Oberthür, S. and G.K. Rosendal (eds.), Global Governance of Genetic Resources: Access and Benefit Sharing after the Nagoya Protocol, Routledge, Oxfordshire.

[Ref 3] Tomme Rosanne Young, An International Cooperation Perspective on the Implementation of the Nagoya Protocol (2013), in  Elisa Morgera, ‎Matthias Buck and ‎Elsa Tsioumani, The 2010 Nagoya Protocol on Access and Benefit-sharing in Perspective - Implications for International Law and Implementation Challenges, Leiden, Martinus Nijhoff.

[Ref 4] Tvedt, Morten Walløe and Peter Johan Schei (2014), The Term 'Genetic Resources': Flexible and Dynamic while Providing Legal Certainty? In Oberthür, S. and G.K. Rosendal (eds), Global Governance of Genetic Resources: Access and Benefit Sharing after the Nagoya Protocol. London/New York, Routledge.

[Ref 5] Prip, Christian, G. Kristin Rosendal, Steinar Andresen and Morten Walløe Tvedt (2014), The Australian ABS Framework: A Model Case for Bioprospecting? FNI Report 1/2014.

[Ref 6] Halewood, Michael, Elsa Andrieux, Leontine Crisson, Jean Rwihaniza Gapusi, John Wasswa Mulumba, Edmond Kouablan Koffi, Tashi Yangzome Dorji, Madan Raj Bhatta and Didier Balma (2013), Implementing ‘Mutually Supportive’ Access and Benefit Sharing Mechanisms Under the Plant Treaty, Convention on Biological Diversity, and Nagoya Protocol, in Law, Environment and Development Journal 9 2.

[Ref 7] Medaglia, Jorge Cabrera, Morten Walløe Tvedt, Frederic Perron-Welch, Ane Jørem and Freedom-Kai Phillips (2013), The Interface between the Nagoya Protocol on ABS and the ITPGRFA at the International Level - Potential Issues for Consideration in Supporting Mutually Supportive Implementation at the National Level, Lysaker, Fridtjof Nansens Institutt, FNI Report, no. 1/2013.

[Ref 8] Tvedt, Morten Walløe (2011), A Report from the First Reflection Meeting on the Global Multilateral Benefit-Sharing Mechanism, Lysaker, Fridtjof Nansens Institutt, FNI Report, no. 10/2011.

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