Capson, T.L. 2009. Biodiscovery research in Panama_Linking science, technology, human health, and...

8/3/2019 Capson, T.L. 2009. Biodiscovery research in Panama_Linking science, technology, human health, and conservation

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IUCN Environmental Policy and Law Paper No. 67/4

Contracting for ABS: The Legal and Scientific Implications

of Bioprospecting Contracts

ABS Series No. 4

Shakeel Bhatti, Santiago Carrizosa, Patrick McGuire, Tomme Young, Editors


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Contracting or ABS: The Legal and Scientifc

Implications o Bioprospecting Contracts


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Contracting or ABS: The Legal and Scientifc

Implications o Bioprospecting Contracts

Shakeel Bhatti, Santiago Carrizosa, Patrick McGuire, Tomme Young, Editors

IUCN Environmental Policy and Law Paper No. 67/4


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Te designation o geographical entities in this book, and the presentation o the material, do not imply the expression oany opinion whatsoever on the part o IUCN or the German Federal Ministry or Economic Cooperation and Development

(BMZ) concerning the legal status o any country, territory, or area, or o its authorities, or concerning the delimitationo its rontiers or boundaries.

Te views expressed in this publication do not necessarily reect those o IUCN or BMZ.

Tis publication has been made possible in part by unding rom BMZ.

Published by: IUCN, Gland, Switzerland in collaboration with the IUCN Environmental Law Centre,Bonn, Germany

Copyright: 2009 International Union or Conservation o Nature and Natural Resources

Reproduction o this publication or educational or other non commercial purposes isauthorized without prior written permission rom the copyright holder provided the source is ully

acknowledged.

Reproduction o this publication or resale or other commercial purposes is prohibited without

prior written permission o the copyright holder.

Citation: Young, omme (Ed.) 2009. Contracting or ABS: Te Legal and Scientifc Implications oBioprospecting Contracts. IUCN, Gland, Switzerland. xxiv + 308 pp.

ISBN: 978-2-8317-0982-6

Cover design by: magoodesign Markus Kahlenberg

Cover image by: Beverly Lorenc

Layout by: ceterum printdesign Dieter Mller, 53340 Meckenheim, Germany

Produced by: IUCN Environmental Law Centre

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A catalogue o IUCN publications is also available.

Te text o this book is printed on Novatech 90g/m made rom raw materials originating rom responsibly managed orests.


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Table o Contents

Foreword xiii

Series Editors Preace xv

About the Series xvii

Acknowledgements xix

Acronyms and Short Names xxi

Other Terms Used in Part I xxii

Introduction: Inquiring into the Legal and Scientifc Implications o

Bioprospecting Contracts xxiii

Part I 1

ABS Contracts and Contract Law 3

The contractual challenge 4The contractual side o the international ABS negotiations and implementation 4

Organisation o Part I 5

Contents, methodology, and sources used in Part I 6

Other examples 7

Other sources o relevant law 7

Commercial law and analysis 7

ABS law and analysis 8

Merging commercial and ABS legal concepts 8

Generalising about national laws 8

Integrating cultural actors 9

1 A Contractual View o ABS 11

1.1 Basic obstacles o ABS as a unctional regime 12

1.1.1 Regime gaps and inconsistencies aecting ABS contracts 12

1.1.2 Integrating ABS commercial elements with environmental and social purposes 14

1.2 Access and benet-sharing requirements 15

1.2.1 Sovereign rights in genetic resources 16

1.2.2 Scope and coverage o ABS 17

1.2.2.1 Genetic resources 17

1.2.2.2 Providers and countries o origin 181.2.3 Te paradox o ownership o genetic resources 18

1.2.4 Prior inormed consent and mutually agreed terms 20

1.2.5 Granting and obtaining reasonable access to genetic resources 21

1.2.5.1 Applying ABS in source countries with no ABS legislation 21

1.2.5.2 Practical legal administrative requirements or access 22

1.2.6 User-side measures: Te unullled requirement 23

1.2.7 Other components o the benet-sharing objective 24

1.3 Te Bonn Guidelines 25

1.3.1 Primary elements o the Bonn Guidelines relevant to ABS contracts 25

1.3.1.1 Institutional arrangements 251.3.1.2 ABS elements and processes 26

1.3.1.3 Participation 26


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1.3.1.4 Benets and benet-distribution 27

1.3.1.5 Procedural matters: Issuance, implementation and enorcement o

ABS contracts

1.3.2 Incentives and other matters o interest in ABS contract negotiations 28

1.3.3 Why were urther international ABS negotiations needed? 29

1.4 Te International reaty on Plant Genetic Resources or Food and Agriculture 30

1.4.1 Overall provisions and approach 31

1.4.1.1 Coverage 31

1.4.1.2 Implementation and Enorcement 32

1.4.1.3 Farmers rights 33

1.4.2 Access concepts 33

1.4.2.1 National legislation and sovereignty 33

1.4.2.2 Food shortage exception 34

1.4.3 Mutually agreed terms or acquiring plant germplasm 34

1.4.4 Pre-agreed benet-sharing 35

1.4.4.1 Benet-sharing at the country level 351.4.4.2 Benet sharing in individual transactions 35

1.4.5 Next steps: Coordinating with the CBD regime 37

1.5 Expectations 37

2 Applying Contract Law to ABS 39

2.1 Legal certainty a primary objective o all contracts 40

2.1.1 Contractual certainty in general 40

2.1.2 Legal uncertainty in ABS 41

2.1.2.1 Legislative, procedural and practical uncertainties 41

2.1.2.2 Conceptual uncertainty 422.1.3 Inter-sectoral uncertainties 44

2.2 Te contract mechanism and the orces that control why/how it unctions 44

2.2.1 Control 44

2.2.2 Motivation 47

2.2.3 Value 48

2.2.4 Summary 48

2.3 Contract validity: Requirements, governing law and ormalities 49

2.3.1 Requirements o a valid contract 49

2.3.1.1 Legal authority 49

2.3.1.2 Legal capacity 502.3.1.3 Fraud, misrepresentation and non-disclosure 51

2.3.1.4 Statutory and constitutional provisions 53

2.3.2 Reliance Validating an invalid contract 54

2.3.3 Contractual ormalities and the importance o a written contract 54

2.3.4 Other concepts: Governing law, customary law, traditional law and

private international law 55

2.3.4.1 Governing law 55

2.3.4.2 Industry-wide custom and practice 56

2.3.4.3 Indigenous and traditional law 56

2.4 Enorceability: Creating a binding contract 56


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2.4.1 Principles o airness, good aith and trust 57

2.4.2 Characteristics o a binding contract 57

2.4.2.1 Mutual intention to be bound 57

2.4.2.2 Sufciently denite 58

2.4.2.3 Unambiguous 59

2.4.2.4 Un-coerced 60

2.4.3 Necessary components o a binding contract and o an ABS contract 61

2.4.3.1 Mutual assent and prior inormed consent 61

2.4.3.2 Agreed terms and conditions/mutually agreed terms 63

2.4.3.3 Contracts that are accepted by action (shrink-wrap and click-wrap) 63

2.4.3.4 SMA and shrink-wrap/click-wrap concepts 65

2.4.3.5 Other possible ABS use o click-wrap concepts 66

2.4.4 Assignability, transer and the rights o third parties 66

2.4.4.1 Restrictions on the transer ores 67

2.4.4.2 Assignment o contract rights and duties 67

2.4.4.3 Tird-party rights 682.5 Te taxonomy o contracts whats in a name? 68

2.5.1 Contracts vs. statutory permits 73

2.5.2 Specialized types o contracts 74

2.6 Special issues 75

2.6.1 International trade controls and related issues 75

2.6.1.1 International trade law and ABS contracts 76

2.6.1.2 Possible areas o urther analysis 76

2.7.2 Antitrust and other controls 77

3 Contract Provisions and Experience 793.1 Examples, models and orms 87

3.1.1 Using contracts as examples 89

3.1.1.1 Nature o the parties 89

3.1.1.2 Specic activities and rights granted 91

3.1.1.3 Sectoral ocus 92

3.2 Contract provisions 92

3.2.1 Identiying and binding the parties to an ABS contract 93

3.2.1.1 Ownership/rights in genetic resources 94

3.2.1.2 Authority o signatory 96

3.2.1.3 Ability to complete the contract 973.2.1.4 Rights o third parties 97

3.2.2 Core provisions: Objectives and scope 98

3.2.3 erminology 102

3.2.4 Basic ABS rights and duties 107

3.2.4.1 Access and use o genetic resources 107

3.2.4.2 Monetary provisions and other benets 113

3.2.4.3 National procedures: PIC, MA and other processes 121

3.2.5 Assignment, change o use, tracking and the conclusion o the ABS relationship 123

3.2.5.1 Assignment and transer provisions 123

3.2.5.2 Change o use 1273.2.5.3 Derivatives 128

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3.2.6 racking 128

3.2.7 Intellectual property and other intangible properties 129

3.2.7.1 IPRs 129

3.2.7.2 Licensing o existing rights in genetic resources and products 136

3.2.7.3 Condential inormation 137

3.2.7.4 Publication 143

3.2.8 Management o termination and change 144

3.2.8.1 ime issues and termination o the contract 144

3.2.8.2 Revision, rescission and amendment 149

3.2.9 Contractual technical provisions 150

3.2.9.1 Governing law and other choice-o-law provisions 150

3.2.9.2 Reporting and contract-related inspection 152

3.2.9.3 Boilerplate and contract ormalities 157

3.2.10 Compliance provisions: Addressing enorcement o the legal rights o

the parties 159

3.2.10.1 Dispute resolution 1593.2.10.2 Liability discussion 162

3.3. Aligning contractual risk with actual risk 165

3.4. A ew nal observations 166

Glossary or Part I 169

Reerences and Bibliography or Part I 175

PART II 181

4 Science, Technology, and the Renaissance o Bioprospecting: 183A Comparative Analysis

4.1 Marine Organisms 185

4.2 Symbionts: Are they the true sources o natural products? 187

4.3 Extremophiles 188

4.4 Natural products discovery: Te role o modern technologies 189

4.4.1 Accelerating the natural product discovery process: Genes, targets, and assays 189

4.4.2 Combinatorial chemistry: Exploring the linkages with natural products 190

4.4.3 Genetic engineering and bioprospecting 191

4.4.3.1 Generating chemical diversity through bioprospecting and

synthetic biology 1914.4.3.2 Creating protein diversity through directed evolution 192

4.4.3.3 Harvesting the potential o microorganisms through

site-directed mutagenesis 193

4.5 Science and its implications or ABS agreements 193

4.5.1 Identiying biological samples: Are these samples the true sources o

natural products? 193

4.5.1.1 Identiying microbes: A new challenge or the providers o

genetic resources 194

4.5.2 Supplying biological samples: A new paradigm determined by science

and technology 195


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4.5.3 ranserring technology and building capacity: Are science and technology

aecting the choices made by negotiators o ABS agreements? 196

Conclusions 197

Reerences 203

5 Research Collaborative Agreements and Bioprospecting in Costa Rica:

Scientifc, Technological and Legal Impacts 207

5.1 Overview o INBios bioprospecting approach and its technologies 207

5.1.1 NBios philosophy 207

5.1.2 Overview o INBios technological evolution 209

5.1.2.1 Te technological development o the inventorying and

biodiversity inormatics processes 209

5.1.2.2 Te technological development o the bioprospecting process 210

5.1.2.3 Te impact o the inventorying and biodiversity inormation

on the bioprospecting process 211

5.1.3 Overview o inactive bioprospecting projects 2145.1.4 Costa Rican political and legal context or the development o INBio 216

5.2 Key technologies used in the context of active bioprospecting projects 218

5.2.1 Bioprospecting projects: Objectives, partners, and negotiation process o contracts 218

5.2.1.1 Chemical prospecting projects 218

5.2.1.2 Biotechnology prospecting projects 220

5.2.2 Scientic technologies in the context o current bioprospecting projects 221

5.2.3 Contractual provisions: Addressing scientic issues and transer o technology 223

5.2.3.1 ranser o proprietary inormation and equipment 223

5.2.3.2 raining 224

5.2.3.3 Protection o inventions 2245.2.3.4 Publications 224

5.2.3.5 Benet sharing 224

5.2.4 echnologies and scientic training transerred to INBio 225

5.2.5 Issues that may hinder science and technology transer 226

5.3 Mergers, assignments and market impacts 227

Conclusions 227

Reerences 229

6 Access Issues Related to the USA National Cancer Institutes (NCI) Natural

Products Drug Discovery and Development Program 2316.1 Contract collections: 1986 to the present. Te NCI Letter o Collection (LOC) 231

6.1.1 Access to source-country resources 232

6.1.2 NCI interactions with source-country representatives 233

6.1.3 Collection specications: Conservation and sustainable use 233

6.1.4 Source-country collaboration 234

6.2 Sample volumes and initial processing 237

6.3 Distribution o extracts rom the NCI natural products repository material

transer agreements (NPR-MA) 237

6.4 Direct collaboration with source-country organizations: Te NCI memorandum

o understanding 2386.5 echnology transer 239

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6.6 Case studies: Anti-HIV agents 240

6.6.1 Michellamine B: A potential anti-HIV agent rom the Cameroon Liana,

Ancistrocladus korupensis 240

6.6.2 Te Calanolides: Potential anti-HIV agents rom Calophyllum species,

Sarawak, Malaysia 241

6.6.3 Prostratin: A potential anti-HIV agent rom Homalanthus nutans,

American Samoa

6.7 Case study: Anti-cancer agent 242

6.7.1 Halichondrin B rom the New Zealand marine sponge, Lyssodendoryxspecies 242

Conclusions 243

Recommendations 245

Appendix A. National Cancer Institute: Letter o Collection Agreement 247

Appendix B. Source-countries with which NCI has collaborated in the collection o

plants and marine organisms 251

Appendix C. Short-term (1 to 2 weeks) visitors to the USA sponsored by NCI 253

Appendix D. Long-term (1 to 12 months) visiting scientists under the auspices o theNCI LOC 255

Appendix E. National Cancer Institute: Memorandum o Understanding 257

Appendix F. MoUs between NCI and source-country organizations: Direct collaborations 261

Appendix G. Long-term (1 to 12 months) visiting scientists under the auspices o the

NCI MoU* 263

Reerences 265

7 Biodiscovery Research in Panama: Linking Science, Technology, Human Health,

and Conservation in the Host-Country Context 269

7.1 Te International Cooperative Biodiversity Groups Program: A unique model ornatural products-based drug discovery 269

7.2 Biodiscovery research in a post-CBD world: Circumstances that inuenced the

design o the Panama ICBG and its contractual arrangements 270

7.2.1 An overview o the drug-discovery and development process 270

7.2.1.1 Collecting o biological materials 270

7.2.1.2 Bioassay-guided ractionation and the isolation and characterization

o compounds 270

7.2.1.3 Development o promising candidates or the treatment o disease 271

7.2.1.4 racking o samples made available or biodiscovery research 271

7.2.1.5 Te benets to the host country rom actively participating inthe drug-discovery process 271

7.2.1.6 Case study: Te University o British Columbia and Papua

New Guinea and the development o the hemiasterlins 272

7.2.2 Commercial versus nonprot: wo paradigms or developing new medicines 273

7.2.3 Natural products and contemporary drug discovery 274

7.2.3.1 Natural products and the pharmaceutical industry 274

7.2.3.2 It is in the best interest o researchers rom industrialized

countries to play by the rules 275

7.2.3.3 Te industry standard or biodiscovery research: Long-term

relationships between host-country participants and well-dened contractual agreements 275


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7.2.3.4 Drug discovery or diseases o importance to developing countries 276

7.2.3.5 Te importance o natural-products research or

tropical parasitic diseases 276

7.2.4 Summary: Removing access to biodiversity is a lose-lose proposition 278

7.2.5 Losing the orest or the trees? ropical biodiversity is a disappearing resource 278

7.2.6 Biodiscovery versus conservation: A alse dichotomy 279

7.3 Contemporary biodiscovery research in Latin America 279

7.3.1 Regional approaches to regulating access to biological resources in Latin America:

Decision 391 o the Cartagena Agreement 280

7.3.2 National approaches to regulating access to biological resources in Latin America:

Costa Rica 281

7.3.3 Putting the cart beore the horse: Regulations to implement the CBD are

hindering all access to biodiversity, stiing opportunities rom which

host countries could gain experience 282

7.3.3.1 Contracts as tools or building bridges between the participants

in biodiscovery research 2827.4 Te Panama ICBG: Investing in the host country in order to maximize its role

in the drug-discovery process and to link the research to conservation 283

7.4.1 Context o ABS issues in Panama at the beginning o the Panama ICBG 283

7.4.2 Overview o the Panama ICBG drug-discovery process 284

7.4.3 Associate programs in the Panama ICBG 284

7.4.4 Organisms collected by the Panama ICBG 284

7.4.5 Disease targets selected by the Panama ICBG: echnology transer and

development or bioassays 285

7.4.5.1 Drug discovery or cancer 285

7.4.5.2 Collaboration with the Novartis Institutes or Biomedical Research 2867.4.5.3 Drug discovery or malaria 286

7.4.5.4 Drug discovery or leishmaniasis 286

7.4.5.5 Drug discovery or Chagas Disease 287

7.4.6 General investments in inrastructure and in research programs 287

7.4.7 Te training o students and creation o research opportunities in the

Panama ICBG 288

7.4.8 Te Panama ICBG and traditional knowledge 288

7.4.9 Biodiversity conservation component o the Panama ICBG 288

7.4.9.1 Public outreach 288

7.4.9.2 Collections in protected areas and collaboration with ANAM 2887.4.9.3 Te Coiba National Park: Providing scientic input to

strengthen protected areas 289

7.4.9.4 Conclusion: Linking biodiscovery research to biodiversity conservation 289

7.4.10 Access and benet-sharing contracts utilized by the Panama ICBG 290

7.4.10.1 First-generation access and benet-sharing contracts or

the Panama ICBG: Te hub-and-spoke model 290

7.4.11 Elements o the ANAM-SRI agreement or the Panama ICBG 291

7.4.11.1 Key concepts and denitions specied in the agreement 291

7.4.11.2 Procedures or the collection and testing o biological materials 291

7.4.11.3 Te use o traditional knowledge 291

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7.4.11.4 Procedures or obtaining ANAMs authorization or use,

transer, and export o biological materials 292

7.4.11.5 Establishment o an environmental trust und 292

7.4.11.6 Distribution o net revenue and access ees 292

7.4.11.7 Management o intellectual property 292

7.4.11.8 Te inuence o science and technology on contract negotiations 293

7.4.12 Te essential role o USA- and Europe-based academic and

governmental collaborators or technology transer and development

or the Panama ICBG 293

7.5 Evolution o the Panama ICBG 294

7.5.1 Addition o new disease targets 294

7.5.2 Te changing landscape or biodiscovery research in Panama 294

7.5.3 South-south technology transer 295

Conclusions 295

Applying the experience in Panama in other settings 295

Biodiscovery research at a crossroads 296Reerences 297

Acknowledgements 306


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It is my pleasure to present this bookContracting or ABS: Te Legal and Scientifc Implications o Bioprospecting

Contracts, edited by Shakeel Bhatti, Santiago Carrizosa, Patrick McGuire and omme Young, which is published

as IUCN Environmental Policy and Law Paper (EPLP) No. 67/4. Tis book represents an important contribu-

tion to the body o ABS literature currently available and is provided at a critical time in the development o

ABS as a unctional concept and international regime. It is a part o IUCNs EPLP series, which dates back to

1972 and has through 35 years maintained a high standard o legal scholarship and quality outputs.

Te ABS Series, which includes this book, is the rst sub-series within the EPLP series, designed in this

way to maximize the useulness and accessibility o these writings to the broad range o participants address-

ing the ABS challenges at both national and international levels. We believe that this Series oers a substantial

contribution that will enable progress on an issue which has, to now, been stymied both by its complexity and

by its controversial nature. It is only through the understanding o those complexities that consensus and useulcompromise can be attained that will resolve the controversies and enable a unctional system or achieving the

all-important equity objective o the Convention on Biological Diversity.

Dr. Alejandro Iza

Director

IUCN Environmental Law Centre

June 2007

Foreword


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Series Editors Preace

In the course oTe ABS Project, IUCNs Environ-

mental Law Centre has taken a central position inpromoting researched and balanced analysis o critical

components o the current discussions o the inter-

national regime on access and benet sharing under

the CBD. Te ABS Seriesprovides the culmination o

these eorts, enabling recognized experts to undertake

intensive research and present detailed, balanced, and

reasonable analysis. It operates as a counterpoint to

the growing numbers o authors whose work in ABS

issues is sometimes ocused more on advocacy than on

research. With this Series we are trying to take a very

dierent approach and to achieve a very dierent objec-

tive. Simply put, we hope to provide a deeper under-

standing o the legal, economic, practical, and actual

issues aecting the debate, and to build our analyses

and recommendations on intensive legal research.

Tis ourth book in our Series, entitled Contract-

ing or ABS: Te Legal and Scientifc Implications o

Bioprospecting Contracts, is designed to provide two

types o inormation that have sometimes been in short

supply. First, it ocuses on contractual issues analysiso ABS Agreements as legal contracts, and legal advice

regarding the ways that they are dierent rom (and

more difcult to negotiate than) other types o legal

instruments and contracts. Second, it attempts to ll

a signicant gap in the awareness and inormation

available to persons negotiating the contracts regard-

ing the scientic, technical, and practical activities that

the users will be undertaking activities that must be

addressed by the Agreement.

Te editors and contributors o this book include

a number whose names and reputations are well known

in conservation and genetic resources policy, including

Shakeel Bhatti, who headed the Genetic Resources,Biotechnology, and Traditional Knowledge Section of

the World Intellectual Property Organization when

the writing o this book began and has since been

named Secretary o the International reaty on Plant

Genetic Resources, Santiago Carrizosa, currently

Regional echnical Advisor or Biodiversity with the

United Nations Development Programme/Global En-vironmental Facility, and Patrick McGuire, who headed

the UC Genetic Resources Conservation Program. It is

my pleasure, as well as my duty on behal oTe ABS

Projectto express my gratitude to these and all contribu-

tors to this book.

Tis book and indeed the entire Project owe a

great debt to our primary nancial supporter, the Ger-

man Federal Ministry or Economic Cooperation and

Development (Bundesministerium r wirtschatliche

Zusammenarbeit und Entwicklungor BMZ), and espe-

cially to Julia Kaiser, Andrea Laux and Frank Schmied-

chen without whom this work could not have been

completed. Numerous other partners and collaborators

have also made important and sustaining commitments

or which we are very grateul.

Finally, without the support and oresight o Dr.

Alejandro Iza and the IUCN Environmental Law

Centre, this book and all o the other works oTe

ABS Projectwould not exist. It was through Dr. Izaseorts that TeABS Projectbecame a reality, and his

understanding o the difculties in its implementation

as well as his support and the unstinting assistance o

the sta o the Environmental Law Centre in produc-

ing this book, including Legal Ofcer Jane Bulmer,

Project Assistant Ann DeVoy, Senior Inormation and

Documentation Ofcer Anni Lukcs, and Documen-

tation Assistant Monica Pacheco-Fabig. Collectively,

these individuals have been the primary reason that the

Project could nish its work and that outputs through-out the term o the project have achieved the level o

legal excellence expected o the IUCN Environmental

Policy and Law Papers, among which Te ABS Series

has been included.

omme Rosanne Young

Series Editor and Project Manager, Te ABS Project

August, 2009


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About the Series

Te ABS Series represents a response to two realities:

First, the ABS issue is controversial and technicallyand legally complex. Because o the constant interna-

tional concern over controversial policy and political

issues, the primary ocus o all writing on ABS has

been ocused on political positions and advocacy, even

where the expressed purpose o a particular document

is practical legal advice. Lack o a rigorous body o

ABS analysis has been one part o this implementation

problem. Many proessional inputs are characterized by

opinions that are unsupported, or supported only by

citations to the opinions o other experts or random

reerences to or excerpts rom laws and policy instru-

ments, taken out o context.

o IUCNs Environmental Law Centre, it has

become clear that the complexity and the controversial-

ity are linked problems. Solutions to the international

ABS controversies are currently stymied by the lack o

credible, non-biased technical analysis o the elements

and issues o national implementation. Serious in-

depth analyses are needed concerning not only the ew

ABS examples, but also the kinds o legal options thatare available and the manner in which they unction.

Simply put, one cannot build a structure without the

right tools and having the tools is meaningless without

knowledge o what they can and cannot do.

Te second reality aced by this project is the

act that, despite the long-extending international ne-

gotiations, genetic resources are being taken, studied,

developed, and utilized every day. Countries do not

have the luxury o waiting or international negotia-tions to answer their questions, beore taking action.

It is consequently urgent or all parties (users, source

countries, source communities and resource owners,

user countries, researchers, middlemen, and others) to

have some basis or taking these actions. More impor-

tant, each party needs to have some certainty that this

basis will be robust enough to protect its rights, even

ater international negotiations provide some guidance

or assistance to all or part o the ABS issue. Even where

national laws and practices exist, they are proving inad-equate to this objective, in some measure owing to the

lack o technical help, as described above.

Consequently, Te ABS Seriesocuses on national

implementation and the legal and legislative issues thatmust be addressed, rather than advocating or addressing

a particular side or position in the international negotia-

tions. Trough this process, Te ABS Seriesseeks to cre-

ate the best possible basis o researched inormation on

the practical application issue. It is thus not only a tool

or national decision-makers but also or implementers.

While it is not always possible to be certain that one has

been unbiased, we have made an eort, at minimum,

to note the existence o other credible positions on the

issues discussed, and to give some reason why these

positions were not more ully expounded.

As o this writing, the international process or

development o the ABS regime is still ongoing. While

not intended to inuence that process, Te ABS Series

has been designed and written in the hope that a bet-

ter knowledge o the realities o ABS will enable the

negotiators to develop the regime as a unctional and

eective tool o conservation, equity, and international

development. As such, we believe that the books in this

Series will continue to be primary works o scholarshipand proessional analysis on which the architects and

implementers o the ABS regime will rely long ater the

negotiations have concluded. In addition, it is hoped

that the authors in the Series (or a team o similarly

qualied experts) will be engaged to update relevant

books rom the Series, when the time is right.

arget audiences: Writing or a broad audience

can sometimes be challenging or lawyers. In Te ABS

Series, however, we recognize that our primary audienceincludes national decision-makers, NGOs, and others,

as well as lawyers and economists. We have endeavored

to present our research in an accessible way, without

doing harm to our absolute standard o legal correct-

ness. Although many readers would like a simplied

pamphlet-style analysis o the ABS issue, which can

answer all o their questions in a ew pages, this is not

possible the only simple act about ABS is that it is

not simple. Te ABS Seriesprovides summaries o the

complexities in the issue that legal specialists mustgrapple with, but at the same time attempts to avoid

legalese and its companion econo-ese. In this way,


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we eel that Te ABS Seriesprovides both clarity and

understandability or the non-lawyer, who may obtain

a thorough grounding in the ABS issue through reading

these books. For the legal or economics proessional,

however, these books also provide resources and inor-

mation that will enable their deeper understanding o

ABS issues.

Te uture: Te ABS issue is still evolving. Ater the

commencement oTe ABS Project, the CBD entered

on a groundbreaking process o re-evaluating ABS and

attempting to develop the necessary tools, consensus,

and understanding (e.g., a clearer and more unctional

international ABS regime) that will enable progress

toward achieving the goals o the CBD. With this de-

cision, Te ABS Projectunderwent its rst evolution.It had begun as a project aimed at helping national

governments to nd some positive steps to enable them

to try to achieve the xed language o CBD Article 15.

In 2004, it necessarily expanded that ocus embracing

the goal o inorming all participants and interested

persons (at national, regional, and international level)

regarding the options, instruments, practices, and

processes that can enable the ABS regime to become

a unctional mechanism or achievement o the CBD

third objective. Only time can decide how ar the in-

ternational negotiations will go toward assisting and

supporting ABS implementation. Te team o proes-

sionals who have worked to provide Te ABS Serieshope

that a useul and innovative result is quickly obtained,

and that we will all have the opportunity to extend the

work o this Series and to guide, analyze, and promote

the new regime components that will be developed.


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xix

Acknowledgements

Te editors and authors o this book wish to express

our gratitude to those who made the most signicantcontributions to its completion and substantive cor-

rectness. Among these, we are grateul or inormation,

documents, research, and other inputs rom and or

substantive input and comments rom Jorge Cabrera

Medaglia, Jorge Caillaux, Fernando Casas, Carlos

Correa, Jose Esquinas Alcazar, Valerie Etim, Ute Feit,

Jos Carlos Fernndez Ugalde, Jagath Gunawaredena,

Francis Gurry, John Herity, Sarah Hernandez, imothy

Hodges, Olivier Jalvert, Ted James, Nancy Kgeng-enyane, Richard Kjeldgaard, Bernard LeBuanec, Rob-

ert Lettington, Ikechi Mgbeoji, Phyllida Middlemiss,

Gerald Moore, Valerie Normand, Dan Ogalla, MariaJulia Oliva, Alberto Parenti, Franois Pythoud, Preeti

Ramdasi, Manuel Ruiz, Sezanneh M. Seymour, Clive

Stannard, Caroline Strulik, Seizo Sumida, Antony

aubman, and Morten Walle vedt.

We are also grateul to the numerous commercial,

academic, and other persons and entities who shared

contractual examples, models, orms, and other inor-

mation about the true-lie use o contracts in ABS.


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xxi

Acronyms and Short Names

ABS or access and access to genetic resources and equitable sharing o the benets arising rom their utilisation or

beneft-sharing access and benet-sharing as conceived in Articles 1 and 15 o the CBDAHWG-ABS or CBD Ad-hoc Open-ended Working Group on Access and Benet Sharing

Working Group

Bonn Guidelines Bonn Guidelines on Access to Genetic Resources and Fair and Equitable Sharing o the

Benets Arising Out o Teir Utilization (2002)

Cartagena Protocol Cartagena Protocol on Biosaety to the Convention on Biological Diversity (Nairobi,

2000)

CBD Convention on Biological Diversity (Rio, 1992)

CHM Clearinghouse Mechanism o the CBD

CNA competent national authority (on ABS matters, unless otherwise stated)

COP Conerence o the Parties (o the CBD unless stated otherwise)

DNA deoxyribonucleic acid

GEF Global Environment Facility

IGC WIPO Intergovernmental Committee on Intellectual Property and Genetic Resources,

Traditional Knowledge and Folklore

ITPGRFA International reaty on Plant Genetic Resources or Food and Agriculture (Rome,

2001)

MAT Mutually Agreed erms

MLS Te Multilateral System o Access and Benet-sharing created under Part IV (Articles

10-1) o the IPGRFA

MOP Meeting o the Parties

MTA Material ranser Agreement

NFP National Focal Point1

PIC Prior Inormed Consent

SCBD Secretariat o the Convention on Biological Diversity

SMTA Standard Material ranser Agreement, adopted in 2006 by the governing body o the

IPGRFA

TRIPS Agreement rade-Related Intellectual Property Rights Agreement

1 Within the CBD, each Contracting Party is expected to designate at least one national CBD ocal point. In addition, the Bonn Guidelinesrecommend that each Party designate a national ABS ocal point. I they choose not to identiy a separate NFP or ABS, the countrys CBDNFP will ll both roles, receiving all ABS related inormation and inquiries.


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xxii

UPOV International Union or the Protection o New Varieties o Plant (Union internationale

pour la protection des obtentions vgtales)

WIPO World Intellectual Property Organization

WSSD World Summit on Sustainable Development (Johannesburg, 2002)

WTO World rade Organization

In attempting to discuss ABS issues, the authors o Part I have requently been stymied by the act that many

terms are used imprecisely. For example, the common mode o discussing ABS relationships is to use three terms

user, provider country (or country providing genetic resources) and country o origin. Tese terms are dened

in ways which, in many cases, would not be precise enough to enable a court or other legal expert to determine

clearly when those terms apply. Te authors thereore elt that is appropriate to introduce some clarity into our

own terminological choices by spelling out the precise way we are using terms within this book. Te usage othe key terms o ABS within this book is thereore set out in the Glossary, ound at page 169 and the reader is

reerred to this Glossary in case o any questions over terminological issues.

Other Terms Used in Part I


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xxiii

Contracts and contract law are deeply integrated into

ABS. o address them, this book is divided into twovery separate component parts.

Part I ocuses on the creation o ABS contracts,

with particular attention to the actors and issues which

cause such contracts to be very dierent rom other

types o contracts. Its goal is to provide a unied start-

ing point rom which those whose primary expertise

is in commercial and contractual law and practice can

gain an understanding o the ABS concept and the

special concerns o contracts or genetic resources. At

the same time Part I should allow ABS experts and bio-

prospectors to gain some insight into contract law and

the reasons that ABS contracts adopted have later been

discovered to be legally awed and un-implementable

as commercial instruments. Besides the dierence, Part

I also notes certain similarities which exist between

ABS contracts and commercial contracts used in other

elds.

Te authors do not wish to suggest that a contract

that does not meet basic legal standards is not valid.So long as there is good will among the parties to a

contract, it does not matter whether its provisions are

legally enorceable or not. In the current climate o un-

certainty and in some cases distrust between providers

o genetic resources and various types o users, however,

it is important or all parties to nd a way o clariying

the meaning and requirements o their contracts and

ensuring that those documents are legally valid. Such

certainty will enable all parties to avoid misunderstand-

Introduction: Inquiring into the Legal and

Scientifc Implications o Bioprospecting

ContractsThere has been a temptation in policy discussions to think o development and the preservation o the environment inantagonistic terms We have to move away rom the limited and limiting idea that the environment is basicallyin confict with development.

Professor Amartya Sen2

2 Address to the 22d UNEP Governing Council, February 2003.

ings, litigation and other conict.

Chapters 1 and 2 seek to provide a basis or ap-

proaching these two aspects o ABS in an integrated

way. In Chapter 3, a more immediately practical

discussion uses examples rom a collection o actual

ABS contracts, to provide some ideas or negotiators

regarding some o the options available to them. While

it does not attempt to identiy best practices or provide

some standard or model or negotiation, Chapter 3 is

oered in the hope that negotiations will be improved

by a broader knowledge o the provisions actually be-

ing used.

Part I oers an analysis o, and lessons learned

rom, a wide range o existing ABS contracts and seeks

to present these lessons in systematic orm according

to clearly dened categories o contractual issues which

have been customized according to their relevance or

ABS contracts.

Following this analysis Part II(Chapters 4-7) be-

gins the books attempt to provide a better understand-ing o many o the possible scientic bases on which

ABS contracts may be built. In this part, the objective

was satised through rst-hand accounts. In early

2005, key scientists and lawyers rom three organiza-

tions involved in bioprospecting practices were asked

to develop three in-depth reports (Chapters 5 through

7) about scientic issues associated with bioprospect-

ing contracts. Specic issues that all o the experts were

asked to discuss included:


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xxiv

Currentscienceandtechnologyappliedbytheir

organizationandthemannerinwhichthistech -

nologymayinuencethecontractnegotiation

process.

Usesof microorganism, molecules, genes, and

othersubstancesidentiedbytheirorganization

inthecontextofbioprospectingagreements.

Theimpactthatthese scienticoptions upon

contractualnegotiatingstrategiesandcontents.

Chapter 4 provides an overview o science and technol-

ogy in the context o bioprospecting projects imple-

mented since the CBD came into orce and presents a

comparative analysis o key.

Finally, we note that this book includes statements

and opinions rom numerous dierent authors, which

are not in all cases shared by all. In all cases, we agree

that the most important aspect o this work is its abil-

ity to provide critical inormation o value to all parties

and other stakeholders, and sincerely hope that it has

done so.

Shakeel Bhatti

Santiago Carrizosa

Patrick McGuire

omme Young

June 2009


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Part I


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3

ABS Contracts and Contract Law

Te Convention on Biological Diversity (CBD)1 hasbeen described as everything rom the key document

regarding sustainable development to a display o all

the reasons why UN eort to conserve the environment

rarely succeed.2 Tis divergence seems relatively minor

when compared to the level o divergence displayed in

CBD discussions o Article 15 and the other concepts

linked together under the sobriquet access to genetic

resources and equitable sharing o the benets arising

rom their use (usually shortened to access and benet-

sharing or ABS.)

From the earliest negotiations, the ABS issue engen-

dered controversy. While the negotiations or the CBD

began rom a conservation objective, the third objective

o equitable benet-sharing was added as an integral part

o the Convention. Tis basic objective ocuses on equity

and the need to address the possibility that the relation-

ship between developed and developing countries might

be inequitable, rather than on strict conservation and

environmental concerns. In addition, it uses commercialconcepts as its tool or achieving equity. Specically, it

directly ocuses on the companies, researchers, and in-

dustries that are increasingly applying technologies that

usethe unique properties o biological resources, but donot need to purchase bulk quantities o specimens rom

the source country in order to do so. 3 As a result o this

technological evolution, developing countries ability to

directly reap benets rom those that use their biologi-

cal resources (i.e., to sell those resources in bulk) is di-minishing. A commercial developer or researcher might

obtain immense value by utilizing the unique proper-

ties o a particular species, subspecies, or variety, having

only taken (either with or without payment) a very small

number or volume o samples or extracts o the species.Te resulting new commercial paradigm would separate

the developing country rom obtaining value rom the

species, without enabling them to share in the new mar-

ket, whether nancially, technologically, or developmen-

tally.

While the existence o these activities and commer-

cial evolutions was undisputed, there was dispute rom

the beginning o the CBD negotiations as to whether

they create inequity. One o the roots o this controversylies in a very simple question why is ABS created un-der the CBD, rather than a trade or commercial regime?Te answer to this question helps to clariy the equity

question. Te CBD was intended to address the growing

diculties with preservation o the green web o lie on

Planet Earth. Its rst goal (both in time and as expressed

in the nal instrument) was and is conservation o bio-

logical resources and especially o the diversity among

them a quality that is essential or the continued health

and existence o lie on earth.

Second, it sought/seeks to ensure that human utili-

sation o the worlds biological resources is sustainable.

Tis second objective is essential both or conservation

and or the creation o resource-dependent enterprises

and societies. Communities and countries that develop

on the basis o their biological wealth risk catastrophe

i that wealth should disappear. Hence, it is essential to

them, as well as to planetary conservation principles that

biological resources should be used sustainably.

Consequently, the justication o the CBDs bene-

t-sharing provision was not solely based on commercial

1 Rio, 1992, entry into orce, 1993.

2 First quote rom Report o the th Norway-UN Conerence on Biodiversity, (rondheim, 2007); second rom Oxley, A., Green Gold and CargoCults, CS Daily, 29 March 2006.

3 In general, these activities are thought o as utilization o genetic resources, however, it is not clear what specic role genes must play in theutilisation. Many activities that have been assailed or announced as the utilisation o genetic resources have involved a range o dierent types oactivities that are not specically utilizinggeneticresearch (such as the synthetic replication obiochemicalormulas or use in urther research and

development). Similarly a number o conventional agricultural development activities (such as seed propagation and new variety development), andeven activities that do not involve any replication at all (such as the direct use o naturally collected essences that have been purchased in bulk in thesource country) have sometimes been considered to be utilization o genetic resources.See, e.g., Mgbeoji, 2006b; and Laird and en Kate, et al., 1998(and other case studies posted on the CBD website at http://www.cbd.int/abs/cs.shtml).


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4

equity. Negotiators and other commentators assumed

that ABS would operate as an incentive to conservation.

Since the opening o negotiations, the scope and eec-

tiveness o ABS to realistically address these inequities

and to provide a unctional incentive to conserve bio-

diversity and to use it sustainably has oten been ques-tioned.

Te third objective was both last to be developed

and most controversial. It was intended to recognise two

critical acts: First, that conservation is a dicult burden

when it prevents the conserver rom obtaining reason-

able value and return on the resource being conserved.

Second, that the above-described evolution in the use

o biological resource has resulted in a diminishing in-

centive (or even a disincentive) or developing countries

(stewards o a large share o the worlds biodiversity) to

grant access to their biological largesse.

Stated directly, ABS was expected to be a quid proquo o the Convention. Developing countries were gen-erally unwilling to make another international commit-

ment to conservation at the request o more developed

countries, without some reciprocal benet to them. Ul-

timately, the bargain was successul ABS was adopted

as part o the CBD and the overwhelming majority o

developing countries signed and later ratied it.

At this writing, negotiations are ongoing to clariy and

improve the unctionality o the international regime on

ABS.5 While some participants are proposing that sec-

toral Material ranser Agreements (MAs) would bring

The contractual challenge

Unortunately, the initial quid pro quowas only part othe ABS challenge. Developed countries, already bur-

dened with signicant international nancial obliga-

tions, were beginning to express an unwillingness to in-

crease those burdens, even where issues o environment

were at stake. In particular, they were not willing to com-

mit to resolve these inequities through direct assistance

and other intergovernmental mechanisms, or to assume

nancial responsibility or the equitable sharing. Hence,

another important compromise was also built into theABS process, and continues to be important today. Spe-

cically, the ABS concept was based on strongly stated

assumptions that the private sector the users o genetic

resources (a term that is oten used but as yet ambigu-

ously dened) would bear the primary burden o ben-

et sharing. Most important, although not expressed in

documents, it was broadly assumed and stated that con-tractual mechanismswould be the vehicle or this shar-ing.4 Given this historical genealogy and these tacit as-

sumptions, the law o contract assumes a role which is

central to the implementation o ABS under the CBD,

but which has not been explicitly stated in the Conven-

tion.

Starting rom these statements and assumptions,

some companies, countries, communities, and individu-

als took the initiative o attempting to negotiate ABS con-

tracts and to adopt basic legislation and other practices

regarding access to genetic resources. Tese early ABS

systems were based on the assumption that each countrycan control all access to its own genetic resources, and

that it can require benet-sharing as a prerequisite to

release o that control. In other words, they assumed that

one could not gain access to or utilize genetic resources

without rst obtaining an ABS contract. Over the years,

many deciencies have been ound in this ABS paradigm

particularly the idea that existing contractual practices,

coupled with source country legislation would be a su-

cient unctional basis or control o access to genetic

resources and traditional knowledge.

4 See, e.g., Report o the International Negotiating Committee, and International Committee or the CBD (ICCBD), as well as Glowka, 1998 at 80,and en Kate and Laird, et al., 1999, throughout.

5 Te current status o the international ABS regime negotiations is reported in the (regularly updated) ABS pages o the CBDs website athttp://www.cbd.int/

The contractual side of the international ABS negotiations and implementation

an increased use o contract mechanism, others are rec-

ognizing that new legislation and practices are needed

to enable all ABS contracts (standard or non-standard)

to unction eectively and to ensure that the regime eq-


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5


althoughusedinABS,contractlawsareunaected

by the uniqueness o ABS, and

thereforethereisnoneedtostudyorconsidercon-

tractual legal and practical issues in the course o

ABS implementation or even ABS contractual ne-gotiations.

In act, however, the law o contracts is complex and

highly relevant to ABS. Many actors relating to ABS

make it very dicult to apply contract law easily or

simply. Attempts to determine and apply contract law

to ABS have long been recognized as quite complex by

experts working in natural resource industries and relat-

ed commercial sectors, such as orestry, agriculture, and

sheries.7 Consequently, the government ocials and le-

gal experts who have actually applied relevant commer-

cial law to ABS contracts in non-theoretical situations

(i.e., in real lie) generally disagree with the ABS expert

view that the contractual and legal concerns o ABS are

relatively simple and ew.

Organisation of Part I

In Part I, this book attempts to provide some insight

into the application o contractual and commercial law

to ABS. Part I begins with a discussion o some o the

components of ABS relationships and factors rel-

evant to how they are negotiated and documented

(Chapter 1) and

areasinwhichABSprocesses, systems, anddocu-

ments raise substantive challenges and other ques-

tions under contract law that have not been an-

swered as yet, either in legislation or by judicial

decisions (Chapter 2).

Following this background, Chapter 3 ocuses on par-

ticular examples, providing

adviceregardingtheadvantagesanddisadvantages

o the development, use, and reliance on model

contracts, orm contracts, and specimen provisions

rom other contracts, Chapter 3, and

actualABSexamples(contracts inforce,contracts

negotiated, orm contracts, and model contracts), as

described below.

Part I is intended to assist negotiators in preparing anddiscussing ABS contracts and related instruments aect-

ing those relationships.

6 Tis comment was most oten made by technical assistance providers involved in the negotiations o the Philippines Executive Order 247, whichcontinues to have unctional problems arising rom the original system design. Benevidez, 2004.

7 Young, 1994.

uitably addresses the needs o both the provider and the

user.

For a variety o reasons, the application o contract

law and practice to ABS has not yet been the subject

o in-depth legal analysis or commentary. Most authorswho have considered the legislative and commercial law

aspects o ABS have been writing at the theoretical level

rather than on the basis o practical legal research into

commercial law issues. For example, early national ABS

legislation was later in some cases described as an experi-

ment in ABS implementation.6 Such legislation oten

did not address or coordinate with national contractual

principles, much less the more dicult problems o in-

ternational contractual law described in this book.

In this legal ambience, many existing legal works

on ABS address the relevance o contract law oten with

only a ew sentences, indicating three key perceptions:

contractlawisrelativelysimple,


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6

Contents, methodology and sources used in Part I

In undertaking this task, the authors have drawn on a

wide range o sources o contracts and other legal in-

struments, studies, and databases, including the WIPO

Contracts Database, as a source o real-lie contracts andother ABS instruments. Te authors interpretation o

contractual issues has been based on a number o general

sources discussing contractual law under various legal

systems, supported by the authors own experience with

contractual negotiations and the application o contrac-

tual and commercial law, both in the ABS context and

more generally.

Te compilation and completion o the chapters

was aided by the existence o the WIPO Contracts Da-

tabase,8compiled by the Genetic Resources, Biotechnol-ogy, and raditional Knowledge Section o WIPO. Te

Database contains over 30 contracts and other legal in-

struments, both models and examples, whose authors or

parties have allowed these instruments to be made pub-

licly available. As noted in chapter 3, only a portion o

these instruments are actually ABS Contracts that is,

contracts between users rom one country and a provider

rom a dierent source country (or the source country

itsel). Te remainder consist primarily o post-access

contracts, transerring rights and resources between theuser and other researchers, distributors, or licensees/de-

velopers. Although this latter group o contracts are not

specically examples o user-provider relationships in the

narrow sense o the term as dened in an ABS context,

they provide important examples which can enlighten

contractual practices and terminology in the primary ne-

gotiations between users and providers as well.

Te WIPO Contracts Database represents only

a part o the collection o contracts used in this Part.Other contract examples which have not been redacted

and/or approved or public release were also used. Specic

elements have been excerpted rom both public and non-

public contracts within that collection and provided here

as tables showing a variety o actual current approaches

to particular issues or contractual requirements. In addi-

tion, the book utilizes other examples and inormation,

obtained through interviews and other personal commu-

nications, regarding which they are similarly bound by

commitments o condentiality, although permitted topublish redacted excerpts. In order to ensure protection

o the various parties who have submitted condential

inormation to the authors, no inormation about the

parties or sources o any o the contracts discussed are

provided. Consequently, these tables do not include the

names o particular parties or other details that would

allow the reader to identiy a provision as being part o a

particular contract. Where possible, the actual wording

and material rom actual contracts has been used, with

indications to note where the instrument being used is a

model or orm.9

Te authors are happy to note that the WIPO Con-

tracts Database will continue to be updated, and to pro-

vide parties with a basis or analyses o current practices

and provisions in ABS agreements and contracts or the

use o traditional knowledge. Further inormation is

available by contacting the Genetic Resources, Biotech-

nology, and raditional Knowledge Section o WIPO

directly at the contact address given in the WIPO Con-

tracts Database.

Most importantly, the Database is an important

contribution to promoting the unctionality o ABS, and

its transparency, and might over time become a refec-

tion o the evolution o ABS practices. ABS has existed

or a very short time relative to most legal concepts, and

in many ways it is not parallel to any other existing legal

or commercial system. Consequently, it is important to

build a body o practical experience and knowledge o

the provisions and practices being used to apply the ABSconcept. Tis will enable both sides o an ABS transac-

tion to know better what to expect and what their rights

are within those relationships. In addition, transparency

provides a useul base o inormation or those trying to

produce legislation and/or to negotiate a uture instru-

ment addressing the utilisation o genetic resources and

8 Available online at http://www.wipo.int/tk/en/databases/contracts/index.html

9 Where only an excerpt o a provision has been used, we have endeavoured to provide sucient inormation to enable the reader to understand thecontext o the excerpt.


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7


traditional knowledge. Finally, a broader understanding

o how actual ABS contracts unction is critical to the

system, enabling all stakeholders to evaluate the suc-

cess o ABS in achieving the objectives and o the CBD.

Consequently, parties to ABS agreements and related in-

struments are encouraged to continue providing copies

o those documents to the WIPO Contracts Database

and similar initiatives.

Other examplesIn addition, many specic issues or experiences are dis-

cussed in detail in Part II o this book. Tose examples

are provided with all respect and gratitude to the coun-

tries and projects described in those chapters and case

studies.

Other sources of relevant law

o achieve its purposes, this Part cannot ocus solely on

this small range o existing ABS contracts, none o which

have been legally interpreted by a court or governmental

body. It must look to the elements o law that are both

primary and essential. In the commercial world, very ew

contractual elds are governed entirely by specialized law

o their particular type o contract. Even concepts such

as intellectual property rights (IPRs), although governed

by a large body o detailed and specialized statutes and

regulations, are also directly subject to contract law and

to laws that govern the legal and commercial rights o

the parties (property ownership, anti-trust, unjust en-

richment, national organic instruments, sovereign

rights and many other matters). In addition, the bodyo practical knowledge and analysis o ABS extends well

beyond the ew available contracts.

Commercial law and analysis

A critical source o this work is the long-established law

and analysis o the law o contract ormation, implemen-

tation and enorcement, which is heavily linked to com-

mercial, procedural and organic laws, including legal

systems governing intellectual property rights, trade, an-

ti-trust and other commercial issues. Te complexity othis body o law is signicantly increased in trans-border

contracts where any contract question may be governed

by the laws o two or more countries in various situa-

tions.

In any country, the law libraries will contain thou-

sands o books addressing contracts and commercial law,

including both those which provide the specic elements

and decisions o the countrys own law and those which

describe these issues in comparison with other countries

and systems. Analytical works on any sub-area o con-

tract law, limited to any one country or legal system will,

in that country, be many times the length o the current

book. Beyond this, one must also consider the nascent

body o private and public international law address-

ing these issues. Once a contract is international, the

amount o relevant legal material that must be examined

increases. In the words o one o the most respected legal

compendiums:

Of all areas of law, perhaps none has been sub-

jected to comparative study as consistently, frequentlyand intensely as contract law. Te International En-cyclopaedia of Comparative Law devotes two out ofseventeen volumes to the subject of contract law, andcontract law takes up more than half of the subjectmatter in [another basic compendium]. It is by far themost prominent topic in international debates aboutprivate law.10

International principles generally rely on national law o

one or more countries, so that they may be understoodonly by considering national contract law in detail.

wo other critical sources o research data and ana-

lytical material are case law (judicial decisions) and case

studies (analyses o how a particular contract worked in

real lie). Both are essential elements o any legitimate

advice or analysis in contract law and practice. In many

countries, the past decisions by judges regarding a partic-

10 Reinmann and Zimmermann, 2006, at 900.


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8

ular law or legal principle have a dening role, with prior

court decisions becoming part o the legal requirements

imposed on each party to a new or ongoing contract. Tis

approach, incorporating judicial law or precedent into

a single seamless body o national law o contracts, is nor-

mally associated with common law legal systems. How-ever, companies in nearly all countries study how judges

and other decision-makers are applying contract law and

terms o specic contracts. It is the basis on which they

build their expectations, and negotiate contracts that are

commercially reasonable and enorceable.11 Te cumula-

tive impact o business practices within a given sector or

industry may eventually come to be accepted as de factolegal standards.12 Especially in the years beore such stan-

dards are recognized, it is important to be broadly aware

o provisions that are being negotiated and how they are

applied and implemented.

ABS law and analysis

A second basis or this Part is ound in legal and policy

work under the CBD and IPGRFA. Te authors note

the existence o literally hundreds (at least) o dierent

articles, books, and discussions on ABS, ABS transac-

tions, and related matters such as IPRs in GR and K.

While some o these specically address some contract

law matters, most do not, although they may raise issues,

objectives, and concerns o great relevance to the con-tents, interpretation, implementation, and enorcement

o ABS Contracts.

Merging commercial and ABS legal concepts

Obviously, all o the data in the two elds cannot be

amalgamated in this section. Instead, the intent is to

provide a basis or integrating these two large bodies

o legal literature (contract law and ABS legal issues),

which dier in one very serious respect. Contract law is

long-established and based on a process o development,scholarship, detail, and accuracy. It addresses known re-

lationships and has evolved out o practical application

through many centuries. By contrast, ABS consists pri-

marily o policy-type documents and a very limited body

o relatively new and untested legal instruments the

CBD, IPGRFA, Bonn Guidelines, and a small num-

ber o national ABS laws and policy documents. ABS

legal work has ocused on an entirely dierent set o legal

issues and principles, relating to national implementa-

tion, policy- and equity-based objectives and the practi-

cal questions o how a new international system can becreated.

o date, there has been relatively little crossover be-

tween contractual and ABS expertises even when writing

about the intersection o these two specialties. Tis lack

o integration has proven problematic where companies

and source countries attempt to apply ABS principles to

create legally certain and enorceable contracts.

Although Part I is an attempt to inorm contractual/

commercial specialists about ABS and the ABS specialist

about contracts, it is not intended as a treatise on either

issue. Its more modest expectation is simply to provide a

uniying summary, at a level that will be useul to both

lawyers and non-lawyers. It is designed to be used in prac-

tice, rather than studied by legal theorists. o this end,

the authors have attempted to avoid legalese and tried to

keep discussions o dicult issues o law relatively short

and ocused. In some cases, reerences to sources o more

detailed discussion have been provided or particular legal

issues that might be studied to shed more light on thelegal details o the concept have been identied.

Generalising about national laws

In discussing these complexities, one must be careul

because many points which are considered obvious or

unchallengeable in one countrys contract law will not

exist in another countrys system. Unortunately, it was

not possible, within the time available or researching

and writing this book, to deeply research all o the con-

tractual issues, questions, problems and situations thatarise in the ABS context in all legal systems. In the end,

some o the issues were dicult to analyse in even one

system.13 While recognizing that there are numerous di-

erences among national legal systems and international

codes, as well as many points o similarity, this book does

11 See, e.g., Visser t Hoot, 2002, at 25, citing recent studies in Japan, considering the disposition o 114 court cases on commercial contract disputes.

12 SeeVisser t Hoot, 2002, noting that Japanese law specically authorizes or requires the recognition o customs within the relevant industry, as ameans o determining the meaning and validity o contracts.

13 It is notable that the authors come rom dierent legal backgrounds. Both have worked extensively with many dierent legal systems, writing andadvising on legislation, contractual negotiations, and legal advocacy, in over 100 countries, as well as acilitating or participating in internationaltribunals and arbitration. Tis experience has colored their understandings o the issues described in this Part.


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9


not (cannot) inquire in detail into the underlying legal

issues in any single country. When used in any trans-

action, this book should probably be supplemented by

speaking with legal experts with substantial contract law

experience and knowledge o legal issues and practices in

the countries involved in that transaction.

Integrating cultural factors

Finally (and perhaps most important), throughout Part

I, it will be most important to remember that contracts

are one o the key areas in which the law interaces with

cultural actors in determining how commercial and reg-

ulatory systems actually unction.

Every legal system needs to be understood in its own

cultural, economic and political context. Even i black-

letter law14 as expressed in legislation and caselaw may

turn out to be quite similar (between various countries

legal systems), the political and cultural context o the

law, such as the provisions or dispute resolution and

peoples attitudes to the law, may lead to a divergence

rather than a convergence o actual living law.15

Tis statement is equally true between countries

within the same region or sharing a common type o

legal system (i.e., between two common law countries

or between two civil law countries, or example) as be-

tween those with completely divergent systems. In act,

countries with the most in common, legally, will otenbe so dierent, in cultural and geographic terms, that

their practical needs and implementation o ABS will be

entirely dierent in some ways.16

Part I is backed by extensive research in interna-

tional/comparative law and in national law to the extent

available to us. It was not possible in the space available

to provide a detailed account o all relevant research. Te

authors hope and believe that the most immediate need

in ABS contracts is not or a detailed legal tome, but or

an analysis that can help guide parties negotiating ABS

Contracts and those advising them.

14 A legal colloquialism, reerring to written law as distinguished rom the way that the law works.15 Visser t Hoot, W., 2002, at 15.

16 Id., identiying signicant similarities between the legal systems o Japan and the Netherlands with regard to contracts.


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11

A Contractual View o ABS1Shakeel Bhatti* and omme Rosanne Young**

Dating rom the CBD negotiations, it has been requent-

ly stated that ABS would be implemented by contracts

between the user (individual or entity) and the source

country (and/or the private provider where national law

gives private individuals or entities the right to contract

as providers o genetic resources.) Te intention o thepersons making these statements was to support their

claim that ABS would operate on the basis o an existing

legal system, so that countries would not have to create

detailed national ABS provisions, nor would any system

be needed in the CBD. Tese statements grew more em-

phatic as the deadline or adoption o CBD approached

with the parties still unable to agree on clear statements

about how ABS would unction.

In order to rely on contract law, however, CBD ne-

gotiators and advisors made several additional assump-

tions. First, they specically stated that questions o

ownership o genetic resources would be decided under

national law o property,1 assuming that existing proper-

ty law in all countries would be sucient to address these

matters. Second, they assumed that it would be possible

or all countries to control the access to and use o ge-

netic resources to detect access and prevent use o ge-

netic resources, unless it was based on a contract. Finally,

they assumed that, despite the signicant lack o agree-

ment among the countries regarding what ABS woulddo and require, it would be possible or the courts to

apply and enorce ABS contracts in transborder (multi-

country) transactions without any special adjustment to

existing international law and practice. As discussed in

the next section, however, none o these assumptions was

ultimately true.

Tis chapter cannot provide a complete or detailed

summary o the ABS system and processes. Te authors

presume that any readers needing such a description willturn to other sources, including the other books in the

ABS Series, as well as numerous publications, case stud-

ies, and other documents available through the CBD-

CHM,2 the IPGRFA website,3 and elsewhere. Instead,

this chapter will provide a contractual perspective o

ABS, discussing

thechallengesandobstaclesthatindicatethatcon-

tractual negotiators need to investigate ABS issues

more closely;

the CBD provisions most relevant to ABS con-

tracts;

howABScontractstwithintheABSsystem;

two of the most important international instru-

ments which have sought to clariy and simpliy

ABS contractual discussions (the Bonn Guidelines

and the SMA o the IPGRFA); and

obstacles and disconnections which are currently

impacting the role o contracts in the negotiation,

implementation, and enorcement o ABS con-

tracts.

* he speciic statements and contents o this chapter do not necessarily relect the opinions o the World Intellectual Property Organisation, itsSecretariat or Member States, nor the IUCN, with which he was ailiated during the writing o this chapter, nor those o the Governing Body o theInternational reaty on Plant Genetic Resources or Food and Agriculture, its Secretariat or its Contracting Parties, with which he has become closelyailiated in the interim between writing and publication o this book.

** omme Rosanne Young is an independent consultant on environmental law and policy, currently based in Bonn, Germany.

1 Glowka, et al., 1994, at 76.

2 www.cbd.int/chm

3 www.planttreaty.org


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12

Te current gaps and ambiguities in the ABS concept

have existed since the CBDs adoption. Tis is one o the

main reasons that new international negotiations havecommenced regarding ABS. Tis book is not aimed at

remedying those gaps and obstacles, or at advising or

predicting the outcome o those negotiations. Rather its

goal is assisting countries and users who are today nego-

tiating ABS contracts, licenses, and permits, under the

current legislative and political systems. Given that most

contract parties engage in that work without rst study-ing the ABS issue, it seems appropriate to summarize

some o the conceptual obstacles that are most directly

relevant to ABS contracts, beore beginning a more sys-

tematic examination o those issues.

1.1 Basic obstacles o ABS as a unctional regime

1.1.1 Regime gaps and inconsistencies aecting ABS contracts

Te heart o the problems acing ABS implementation

arise rom the act that there is little legislation imple-

menting ABS at the national level, and most o it is not

unctioning eectively. Although a ew countries have

adopted legislative systems or granting permits to use

their own genetic resources, none has yet complied with

the CBDs requirements regarding user measures4 mea-

sures applicable to the users under their jurisdiction

when they utilize genetic resources o oreign origin. 5

Even rom the provider side, at the time that the

CBD was adopted (and still today) no country had ad-

opted a workable system or identication o ownership

o genetic resources.6 Although the denitions are con-tested, genetic resources can be ound in and derived

rom virtually any biological material. Consequently, it

is normally not possible to control or track the physi-

cal ability to obtain (and thereater test) samples, unless

either (i) the users voluntarily provide the relevant inor-

mation and agree to these controls, or (ii) both source

and user countries (and other countries in which the

biological material has been held) are willing and ableto oversee all potential utilization activities involving ge-

netic resources derived rom any biological material.7

It is still unclear whether either challenge mustbeaddressed under the CBD. It remains true that many

parties to the current ABS negotiations expect users and

user countries to control the utilization o all genetic

resources o oreign origin. Tis approach appears to as-

sume that any person/entity whose products are basedon genetic inormation rom species not endemic to

the user country are by denition potentially engaging

in misappropriation o genetic resources regardless o

4 User measures is the common way to reer to the obligations under CBD Art. 15.7. Most relevantly, it requires that each Contracting Party shalltake legislative, administrative or policy measures, with the aim o sharing in a air and equitable way the results o research and development andthe beneits arising rom the commercial and other utilization o genetic resources . A ew countries have adopted laws calling or the disclosurein patent applications o the origin or source o genetic resources used in the invention/innovation. However, as a study by the Spanish patent oiceindicated, until recently most disclosures have been voluntary oered by patent applicants. Such disclosure has usually been contained within thedescription o the invention (in the patent application). Even in those countries with mandatory disclosure requirements, those requirements couldtheoretically be a basis or reusal to grant a patent. Once the patent is granted, they rarely aect the validity o the patent, and do not create any

obligation (or incentive) to share beneits with the provider o the genetic resources.5 here are many possible reasons or Parties poor Article 15 perormance to date. National legislative dratsmen generally ind it very diicult to

create legislation that implements ABS due to the ambiguities and uncertainties regarding the practical meaning o Article 15. Standard examples oambiguity include the impenetrability o the terms genetic resources and utilization o genetic resources, as well as the uncertainty regarding themeaning o access and its relationship to the obligation to share beneits. hese points are considered in more detail in Cabrera and Lopez, 2007 at1.2 and 2.1.3, and vedt and Young, 2007 at Chapter 2.

6 At least one country, Australia, has legislated in a way that indicates that any person that owns or possesses as specimen o biological origin also ownsthe rights to genetic resources it contains. SeeAUSRALIA, Environment Protection and Conservation Regulations, 2000, Statutory Rules 2000N 181, as amended (taking into account amendments up to SLI 2006 N 131, Parts 8A, 9, 10, and 17).And see, Queensland Biodiscovery Act, ActN 19, 24 Aug 2004; and other documents available on the CBDs ABS Measures database. http://www.cbd.int/abs/measures.shtml. his provision,however, appears to be inconsistent with the Australian law on patents, which apparently recognizes the right to patent naturally occurring genes

without getting permission rom the owners o rights in that material. Consequently, although having espoused this approach to ownership o geneticresources, it cannot be said that Australia has integrated that approach into its property/commercial law.

7 Even i all uture movement o biological material rom the source country can be controlled, this may not enable any actual control o the utilization

o genetic resources rom that material. Various aspects o the proposals or control or tracking o access and utilization o genetic resources arediscussed in detail in Ruiz and Lapea, 2007, Book 3 in this Series. his separation between beneit-sharing and control is equally true or traditionalknowledge, where widespread dispersion o such knowledge among communities and oten among community members makes it diicult tocondition beneit-sharing on control o even the most sacred or secret species-related knowledge.


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13

A Contractual View of ABS

the conditions under which the resources or inorma-

tion was acquired, unless the user previously obtained

ABS permission rom the country o origin.8 By con-

trast, most userseel that ABS responsibilities apply onlywhere the user specically obtained the resource rom

the source country directly i.e., by engaging in directbioprospecting under a permit.9 Tey appear to eel that,

i the material is acquired rom another collector, it is

not covered by ABS. Tis approach appears to create a

signicant loophole.10

From the most basic legal perspective, it is not yet

even clear what kindo property genetic resources mightbe. Tis determination would be critical to any attempt

to deal with genetic resources as property under nation-

al law, given that in virtually all countries the rules gov-

erning ownership o land and permanently constructed

improvements are very dierent rom those governing

ownership o other types o property, such as movable

property, common property, sovereign property, patrimo-

ny, intellectual property and other kinds o intangible

property. Within these categories, there are oten dozens

o more specialized categories which again are subject to

unique rules, including rules determining who may own

(

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