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The Legal and Scientific Implications of Bioprospecting Contracts ABS Series No Contracting for ABS: The Legal and Scientific Implications of Bioprospecting Contracts ABS Series No. 4 Shakeel Bhatti, Santiago Carrizosa, Patrick McGuire, Tomme Young, Editors IUCN Environmental Policy and Law Paper No. 67/4 ii Contracting for ABS: The Legal and Scientific Implications of Bioprospecting Contracts i ii Contracting for ABS: The Legal and Scientific Implications of Bioprospecting Contracts Shakeel Bhatti, Santiago Carrizosa, Patrick McGuire, Tomme Young, Editors IUCN Environmental Policy and Law Paper No. 67/4 iii e designation of geographical entities in this book, and the presentation of the material, do not imply the expression of any opinion whatsoever on the part of IUCN or the German Federal Ministry for Economic Cooperation and Development (BMZ) concerning the legal status of any country, territory, or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. e views expressed in this publication do not necessarily reflect those of IUCN or BMZ. is publication has been made possible in part by funding from BMZ. Published by: IUCN, Gland, Switzerland in collaboration with the IUCN Environmental Law Centre, Bonn, Germany Copyright: © 2009 International Union for Conservation of Nature and Natural Resources Reproduction of this publication for educational or other non commercial purposes is authorized without prior written permission from the copyright holder provided the source is fully acknowledged. Reproduction of this publication for resale or other commercial purposes is prohibited without prior written permission of the copyright holder. Citation: Young, Tomme (Ed.) 2009. Contracting for ABS: e Legal and Scientific Implications of Bioprospecting Contracts. IUCN, Gland, Switzerland. xxiv + 308 pp. ISBN: 978-2-8317-0982-6 $PWFSEFTJHOCZ NBHPPEFTJHOt.BSLVT,BIMFOCFSH Cover image by: Beverly Lorenc Layout by: ceterum printdesign – Dieter Müller, 53340 Meckenheim, Germany Produced by: IUCN Environmental Law Centre Printed by: medienHaus Plump, 53619 Rheinbreitbach, Germany Available from: IUCN Publications Services Rue Mauverney 28 1196 Gland Switzerland Tel +41 22 999 0000 Fax +41 22 999 0010 [email protected] www.iucn.org/publications A catalogue of IUCN publications is also available. e text of this book is printed on Novatech 90g/m² made from raw materials originating from responsibly managed forests. iv Table of Contents Foreword xiii Series Editor’s Preface 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 Scientific Implications of Bioprospecting Contracts xxiii Part I 1 ABS Contracts and Contract Law 3 The contractual challenge 4 The ‘contractual side’ of the international ABS negotiations and implementation 4 Organisation of Part I 5 Contents, methodology, and sources used in Part I 6 Other examples 7 Other sources of 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 factors 9 1 A Contractual View of ABS 11 1.1 Basic obstacles of ABS as a functional regime 12 1.1.1 Regime gaps and inconsistencies affecting ABS contracts 12 1.1.2 Integrating ABS commercial elements with environmental and social purposes 14 1.2 Access and benefit-sharing requirements 15 1.2.1 Sovereign rights in genetic resources 16 1.2.2 Scope and coverage of ABS 17 1.2.2.1 ‘Genetic resources’ 17 1.2.2.2 ‘Providers’ and ‘countries of origin’ 18 1.2.3 e paradox of ‘ownership’ of genetic resources 18 1.2.4 Prior informed 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 for access 22 1.2.6 User-side measures: e unfulfilled requirement 23 1.2.7 Other components of the benefit-sharing objective 24 1.3 e Bonn Guidelines 25 1.3.1 Primary elements of the Bonn Guidelines relevant to ABS contracts 25 1.3.1.1 Institutional arrangements 25 1.3.1.2 ABS elements and processes 26 1.3.1.3 Participation 26 v 1.3.1.4 Benefits and benefit-distribution 27 1.3.1.5 Procedural matters: Issuance, implementation and enforcement of ABS contracts 28 1.3.2 Incentives and other matters of interest in ABS contract negotiations 28 1.3.3 Why were further international ABS negotiations needed? 29 1.4 e International Treaty on Plant Genetic Resources for Food and Agriculture 30 1.4.1 Overall provisions and approach 31 1.4.1.1 Coverage 31 1.4.1.2 Implementation and Enforcement 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 for acquiring plant germplasm 34 1.4.4 Pre-agreed benefit-sharing 35 1.4.4.1 Benefit-sharing at the country level 35 1.4.4.2 Benefit 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 of 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 42 2.1.3 Inter-sectoral uncertainties 44 2.2 e contract mechanism and the forces that control why/how it functions 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 formalities 49 2.3.1 Requirements of a ‘valid contract’ 49 2.3.1.1 Legal authority 49 2.3.1.2 Legal capacity 50 2.3.1.3 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 formalities’ and the importance of 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 Enforceability: Creating a ‘binding’ contract 56 vi Table of Contents 2.4.1 Principles of fairness, good faith and trust 57 2.4.2 Characteristics of a binding contract 57 2.4.2.1 Mutual intention to be bound 57 2.4.2.2 ‘Sufficiently definite’ 58 2.4.2.3 Unambiguous 59 2.4.2.4 Un-coerced 60 2.4.3 Necessary components of a binding contract and of an ABS contract 61 2.4.3.1 ‘Mutual assent’ and ‘prior informed 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 SMTA and shrink-wrap/click-wrap concepts 65 2.4.3.5 Other possible ABS use of click-wrap concepts 66 2.4.4 Assignability, transfer and the rights of third parties 66 2.4.4.1 Restrictions on the transfer of res 67 2.4.4.2 Assignment of contract rights and duties 67 2.4.4.3 ird-party rights 68 2.5 e taxonomy of contracts – what’s in a name? 68 2.5.1 Contracts vs. statutory permits 73 2.5.2 Specialized types of 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 of further analysis 76 2.7.2 Antitrust and other controls 77 3 Contract Provisions and Experience 79 3.1 Examples, models and forms 87 3.1.1 Using contracts as examples 89 3.1.1.1 Nature of the parties 89 3.1.1.2 Specific activities and rights granted 91 3.1.1.3 Sectoral focus 92 3.2 Contract provisions 92 3.2.1 Identifying and binding the parties to an ABS contract 93 3.2.1.1 Ownership/rights in genetic resources 94 3.2.1.2 Authority of signatory 96 3.2.1.3 Ability to complete the contract 97 3.2.1.4 Rights of third parties 97 3.2.2 Core provisions: Objectives and scope 98 3.2.3 Terminology 102 3.2.4 Basic ABS rights and duties 107 3.2.4.1 Access and use of genetic resources 107 3.2.4.2 Monetary provisions and other benefits 113 3.2.4.3 National procedures: PIC, MAT and other processes 121 3.2.5 Assignment, change of use, tracking and the conclusion of the ABS relationship 123 3.2.5.1 Assignment and transfer provisions 123 3.2.5.2 Change of use 127 3.2.5.3 Derivatives 128 vii 3.2.6 Tracking 128 3.2.7 Intellectual property and other intangible properties 129 3.2.7.1 IPRs 129 3.2.7.2 Licensing of existing rights in genetic resources and products 136 3.2.7.3 Confidential information 137 3.2.7.4 Publication 143 3.2.8 Management of termination and change 144 3.2.8.1 Time issues and termination of 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-of-law provisions 150 3.2.9.2 Reporting and contract-related inspection 152 3.2.9.3 ‘Boilerplate’ and contract formalities 157 3.2.10 Compliance provisions: Addressing enforcement of the legal rights of the parties 159 3.2.10.1 Dispute resolution 159 3.2.10.2 Liability discussion 162 3.3.
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