Embed Size (px)
Citation preview
LEADLawEnvironment and
DevelopmentJournal
VOLUME
11/1
BEYOND THE THUMBRULE APPROACH: REGULATORYINNOVATIONS FOR BIOPROSPECTING IN INDIA
Kabir Sanjay Bavikatte and Morten Walløe Tvedt
ARTICLE
LEAD Journal (Law, Environment and Development Journal)is a peer-reviewed academic publication based in New Delhi and London and jointly managed by the
School of Law, School of Oriental and African Studies (SOAS) - University of Londonand the International Environmental Law Research Centre (IELRC).
LEAD is published at [email protected]
ISSN 1746-5893
This document can be cited asKabir Sanjay Bavikatte and Morten Walløe Tvedt, ‘Beyond the Thumbrule
Approach: Regulatory Innovations for Bioprospecting in India’,11/1 Law, Environment and Development Journal (2015), p. 1,available at http://www.lead-journal.org/content/15001.pdf
Kabir Sanjay Bavikatte, JSPS-UNU Postdoctoral Fellow, United Nations University- Institute for theAdvanced Study of Sustainability, Tokyo, Japan, Email: [email protected]
Morten Walløe Tvedt, Senior Research Fellow, Fridtjof Nansen Institute (FNI), Oslo, Norway,P.O. Box 326, 1326 Lysaker, Norway, Email: [email protected]
Published under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License
* Kabir Sanjay Bavikatte is a JSPS-UNU Postdoctoral Fellow in the Biodiplomacy Initiative of UNU-IAS. Kabir has practicedas an environmental lawyer for over a decade focusing on the rights of indigenous and local communities to their territoriesand cultures. He is the co-founder of Natural Justice an international collective of environmental lawyers providing legalassistance to communities and advising governments in Asia, Latin America, Africa and the Pacific. Kabir has been the legaladvisor to the African Group of countries through their negotiations towards the Nagoya Protocol on Access and BenefitSharing and within the Working Group on Article 8j. He has also advised the governments of India, South Africa, Namibia,Bhutan and Micronesia in developing Access and Benefit Sharing (ABS) law and policy.
** Morten Walløe Tvedt is a Senior Research Fellow at the Fridtjof Nansen Institute. He has published extensively in the areaof biological resources law and intellectual property. He has co-authored an important monograph regarding genetic resources(M.W. Tvedt and T. R. Young, Beyond Access: Exploring Implementation of the Fair and Equitable Sharing Commitmentin the CBD, IUCN Environmental Policy and Law Paper No. 67/1). Tvedt is currently working on a monograph onpatent law and the sui generis options in the plant sector for developing countries.
ARTICLE
BEYOND THE THUMBRULE APPROACH: REGULATORYINNOVATIONS FOR BIOPROSPECTING IN INDIA
Kabir Sanjay Bavikatte* and Morten Walløe Tvedt**
TABLE OF CONTENTS
1. Background 3
2. Bioprospecting and the Convention on Biological Diversity 4
3. Bioprospecting in India 6
4. The Nagoya Protocol on Access and Benefit Sharing 7
5. Private Contracts in Public International Law 8
6. ABS Agreements/Mutually Agreed Terms as Private Contracts 8
7. The Indian Situation on ABS Agreements 9
8. Bioprospecting Approval Process in India 11
9. Challenges in the Indian Bioprospecting Approval Process 13
10. Examples of the Thumb-Rule Approach 15
11. Possible Solution 16
12. Using Scoping and Actualization Agreements under the BD Act and Rules 17
13. Conclusion 19
1BACKGROUND
The Nagoya Protocol on Access and Benefit Sharing(ABS)1 and other emerging environmentalregulatory frameworks like Reducing Emissionsfrom Deforestation and Forest Degradation(REDD+)2 and Payments for Ecosystem Services
(PES),3 belong to a menu of innovative financingmechanisms designed to incentivize conservationand sustainable use of biodiversity under the rubricof the Green Economy paradigm. The GreenEconomy paradigm takes a two- pronged approachto the conservation of common pool resources. Itdoes so by affirming rights of countries andcommunities stewarding local ecosystems todetermine the access and use of such ecosystems andby ensuring that they are incentivized. Theincentivizing occurs through facilitating a flow backof monetary and non-monetary benefits arising fromthe commercial and research utilization of theresources from the ecosystems to these rightsholders, be it in the form of genes or carbon stocks.
While a vast amount of policy and regulatory effortshave been directed towards setting up theseincentivizing mechanisms, there has beeninsufficient legislative and implementationexperience on ways to effectively secure the rightsof the countries and communities who havestewarded the local ecosystems that are the basis ofthe ‘natural capital’ traded in the Green Economy.This is a result of an unstated assumption that in theGreen Economy, the market will be able to bestdevolve rights. However, a close scrutiny of the
Law, Environment and Development Journal
3
1 The Nagoya Protocol is an international treaty that wasadopted in October 2010 by the 193 Parties to theConvention on Biological Diversity (CBD). The Protocolwas intensely negotiated over six years under theframework of the CBD. The aim of the Nagoya Protocolon Access and Benefit Sharing is to give effect to the fairand equitable benefit sharing provisions of the CBD.Specifically Article 15 of the CBD that recognizes therights of States to their genetic resources and Article 8(j)that recognizes the rights of communities to theirtraditional knowledge. The Nagoya Protocol seeks toensure that commercial and research utilization of geneticresources and associated traditional knowledge shares thebenefits of such utilization with the governments andcommunities that have conserved such resources andknowledge. See Nagoya Protocol on Access to GeneticResources and the Fair and Equitable Sharing of BenefitsArising from their Utilization to the Convention onBiological Diversity (adopted 29 October 2010, enteredinto force 12 October 2014) <http://www.cbd.int/abs/doc/protocol/nagoya-protocol-en.pdf> (NagoyaProtocol).
2 In 1992, the United Nations Framework Convention onClimate Change (UNFCCC) was adopted as the basisfor a global response to the problem of climate change.With 194 Parties, the ultimate objective of theConvention is to stabilise greenhouse gas concentrationsin the atmosphere at a level that will prevent dangeroushuman interference with the climate system. TheConvention is complemented by the 1997 KyotoProtocol, which has 192 Parties. Under this treaty, 37industrialised countries and the European Communityhave committed to reducing their emissions by an averageof 5 percent by 2012 against 1990 levels. Industrializedcountries must first and foremost take domestic actionagainst climate change. But the Protocol also allows themto meet their emission reduction commitments abroadthrough so-called “market-based mechanisms”. See, AnIntroduction to the United Nations Framework Conventionon Climate Change (UNFCCC) and its Kyoto Protocol, FactSheet (UNFCC, February 2011).
3 A deûnition for payment for ecosystem services (PES)that has become fairly well accepted has been put forwardby Sven Wunder, in which he explains, “A payment forenvironmental services scheme” is a voluntary transactionin which a well deûned environmental service (ES), or aform of land use likely to secure that service is boughtby at least one ES buyer from a minimum of one ESprovider if and only if the provider continues to supplythat service (conditionality).” Wunder, Sven 2005, quotedon CIFOR website: http://www.cifor.cgiar.org/pes/_ref/about/index.htm accessed 14 September 2014. Thekey characteristic of PES deals is that the focus is onmaintaining a ûow of a speciûed ecosystem “service” —such as clean water, biodiversity habitat, or carbonsequestration capabilities — in exchange for somethingof economic value. The critical, deûning factor of whatconstitutes a PES transaction, however, is not just thatmoney changes hands and an environmental service iseither delivered or maintained. Rather, the key is thatthe payment causes the beneût to occur where it wouldnot have otherwise. That is, the service is “additional” to“business as usual”, or at the very least, the service can bequantiûed and tied to the payment. See, Payment forEcosystem Services- Getting Started: A Primer (UNEP,Forest Trends and the Katoomba Group 2008) 3.
different Green Economy models has shown thatwithout a well thought out and experienced basedstrategy to ensure corresponding Green Governance,the Green Economy will neither secure rights norfacilitate incentives to those directly involved inbiodiversity conservation. We consciously use theterm Green Governance to mean a system ofgovernance that not only concerns itself withgovernance that is efficient, fair and transparent butalso ensures the conservation and the sustainable useof the environment and upholds the rights ofcommunities and countries stewarding it.
It is therefore important to begin to facilitate thetransition into a Green Economy by firmlygrounding the principles of Green Governance bothinternationally and domestically. Of particularconcern is the need to figure out how the privatesector and research can invest in a Green Economywhile at the same time ensuring robust GreenGovernance. Ironically while the Green Economyis being hailed as the economy of the future, thisenthusiasm is not matched by an implementationof the principles of Green Governance. This is nota result of any lack of frameworks for GreenGovernance in law and policy. In the context ofgenetic resources and associated traditionalknowledge there has been a lot of progress ininternational law and domestic law establish rulesto ensure that research, development andcommercial utilization of genetic resources andassociated traditional knowledge (referred to hereonas bioprospecting) ‘give back’ to the countries andcommunities involved in biodiversity conservation.
In this article we will undertake to do the following:
i) Analyse international and domestic lawrelating to bioprospecting with a specialfocus on the Indian experience in GreenGovernance;
ii) Identify the challenges faced by Indianregulators in ensuring effective GreenGovernance;
iii) Highlight experiences from Bhutan, SouthAfrica and Australia that could aid inovercoming these challenges;
iv) Elaborate practical lessons for India basedon the experiences of the aforementionedcountries that could be easily implementedwithin the existing parameters of theIndian ABS framework.
2BIOPROSPECTING AND THECONVENTION ON BIOLOGICALDIVERSITY
The concept of ‘bioprospecting’ is based onrecognition of the importance of natural productdiscovery for the development of new crops andmedicines, often based on traditional knowledge. Forexample in many developing countries, a large partof the population depends upon traditionalmedicines for their primary health care needs. InIndia, 65% of the population only has access totraditional systems of medicine, and in Africa 80%of the population uses traditional medicines.4
Much of this knowledge has not been examinedusing the most advanced scientific methods, howeverthis is rapidly changing. As Laird and Wynberg5
note, natural products continue to play a dominantrole in the discovery of new leads for thedevelopment of drugs. They contribute significantlyto the bottom lines of large pharmaceuticalcompanies. Between January 1981 and June 2006,for example, 47 per cent of cancer drugs and 34 percent of all small molecule new chemical entities forthe treatment of all disease categories were eithernatural products or directly derived therefrom.6Research into specific natural products is usually
Regulatory Innovations for Bioprospecting in India
4
4 WHO Traditional Medicine Strategy 2002-2005 (WHO,2002); K Timmermans, ‘Intellectual Property Rights andTraditional Medicine: Policy Dilemmas at the Interface’(2003) 57/4 Social Science and Medicine 745.
5 Sarah Laird and Rachel Wynberg (eds), Access and BenefitSharing in Practice: Trends in Partnerships Across Sectors(Technical Series, No. 38, CBD Secretariat, 2008) 12.
6 D.J. Newman and G.M. Cragg, ‘Natural Products asSources of New Drugs over the Last 25 Years’ (2007) 70/3 Journal of Natural Products 461.
directed by existing knowledge, often directly fromindigenous or local communities, but now in manycases as transferred through the ‘public domain’.7
The Biodiversity Prospecting by Reid et al.8 describesbioprospecting as: ‘the exploration of biodiversityfor commercially valuable genetic and biochemicalresources’. They also suggest the need forappropriate policies and institutions ’to ensure thatthe commercial value obtained from genetic andbiochemical resources is a positive force fordevelopment and conservation.’9
The need to incentivize the conservation ofbiodiversity through fair and equitable benefitsharing saw the CBD text include elements on ‘accessand benefit-sharing’ (ABS). Article 1 of the CBD listsits three objectives as: i) the conservation ofbiological diversity; ii) the sustainable use of itscomponents; and iii) the fair and equitable sharingof benefits arising from such use. The CBDrecognizes the sovereign rights of states over geneticresources found in in situ conditions within theirterritories.
This is unprecedented in international law to theextent that it requires parties to the CBD to upholdwithin their jurisdictions, the rights of other partiesto the CBD over their (the latter’s) genetic resources.10
Specifically, the CBD, through its Article 15,11
requires access to genetic resources to be subject tothe prior informed consent of the party providingsuch resources and a fair and equitable sharing withthat party of the benefits that arise from thecommercial and other utilization of those resources.
In many ways, Article 15 was a reaction bydeveloping countries against the increasing numberof patents taken out by research and commercialsectors from the developed world overpharmaceutical, agricultural and otherbiotechnological innovations based on geneticresources freely accessed from developingcountries.12 Many developing countries saw theCBD as an effective vehicle to reclaim the politicalground that had been lost under the World TradeOrganization (WTO).13
With respect to traditional knowledge, Article 8(j)of the CBD makes a critical link between theknowledge, innovations and practices (traditionalknowledge) of indigenous peoples and localcommunities14 and conservation of biologicaldiversity. It requires states to protect and promotesuch traditional knowledge by securing the rightsof communities to consent to any non-traditionaluses of their knowledge and the right to share inany benefits that may arise from the research or
Law, Environment and Development Journal
5
7 Daniel F. Robinson, Confronting Biopiracy: Challenges,Cases and International Debates (Earthscan 2010) 11.
8 W.V. Reid et al., Biodiversity Prospecting: Using GeneticResources for Sustainable Development (World ResourcesInstitute 1993) 1.
9 ibid 2, 3.10 Doris Schroeder et al., ‘Justice and the Convention on
Biological Diversity’ (2009) 23/3 Ethics and InternationalAffairs 267.
11 Article 15.5 of the CBD: Access to genetic resources shallbe subject to prior informed consent of the ContractingParty providing such resources, unless otherwisedetermined by that Party. Article 15.6 of the CBD: EachContracting Party shall take legislative, administrative orpolicy measures, as appropriate, and in accordance withArticles 16 and 19 and, where necessary, through thefinancial mechanism established by Articles 20 and 21 withthe aim of sharing in a fair and equitable way the results ofresearch and development and the benefits arising fromthe commercial and other utilization of genetic resourceswith the Contracting Party providing such resources. Suchsharing shall be upon mutually agreed terms.
12 See generally, Gurdial Singh Nijar, In Defence of LocalCommunity Knowledge and Biodiversity: A ConceptualFramework and the Essential Elements of a Rights Regime(Third World Network 1996); P.R. Mooney, Seeds of theEarth: A Private or Public Resource? (InternationalCoalition for Development Action 1979); TewoldeEgziabher, ‘The Convention on Biological Diversity,Intellectual Property Rights and the Interests of theSouth’ in Vandana Shiva (ed), Biodiversity Conservation:Whose Resources? Whose Knowledge? (Indian NationalTrust for Art and Cultural Heritage 1994) 198–215; J.Rifkin, The Biotech Century: Harnessing the Gene andRemaking the World (Tarcher 1998) 43.
13 Based on informal conversations between one of theauthor and the delegates from developing countries atthe 9th Conference of Parties to the CBD. See generally,Susan Bragdon et al, ‘Safeguarding Biodiversity: theConvention on Biological Diversity (CBD)’ in GeoffTansey and Tasmin Rajotte (eds), The Future Control ofFood (Earthscan 2008) 82.
14 The phrase that Article 8(j) uses is ‘indigenous and localcommunities’. Here when we use the term ‘communities’it should be understood as referring to indigenous andlocal communities.
commercial uses of that knowledge.15 In sum, theCBD in Articles 15 and 8(j) recognizes the rights ofboth states and communities to their geneticresources and traditional knowledge, respectively,and emphasizes the duty to share benefits arisingfrom commercial and research use.
3BIOPROSPECTING IN INDIA
India’s ratification of the CBD in 1994 resulted inits first national law regulating bioprospecting. TheBiodiversity Act of 2002 and the Biodiversity Rulesof 2004 regulate bioprospecting of Indian biologicalresources and associated traditional knowledge. Indiais a significant source country for bioprospecting asevidenced by the report of the TraditionalKnowledge Task Force established by the WorldIntellectual Property Organization (WIPO) in 2001.The Task Force carried out a search on internationalpatent databases on patents relating to traditionalknowledge systems. The search uncovered in excessof 5000 patent references relating to 90 medicinalplants in the US Patent and Trademark Office alone.80 percent of the patents relating to these 90medicinal plants came from seven plants, all sevenof which were of Indian origin.16
To further underscore the extensive bioprospectingof Indian plants in drug discovery, 50 percent of thedrugs reported in the British Pharmacopoeia havetheir origins in medicinal plants from the Western
Himalayan region alone. This is not surprisingconsidering that the genetic diversity of the WesternHimalayas informs 80 per cent of Ayurvedic, 46 percent of Unani and 33 per cent of allopathic systemof medicines.
Despite being an early entrant among countriesdeveloping bioprospecting legislation, bioprospectingin India continues to proceed unregulated. Largeamounts of medicinal plants are exported fromunregulated local markets in Mumbai, Delhi,Chennai and Tuticorin that function through supplychains that are indifferent to regulatoryrequirements. Furthermore there is a lack ofsufficient data and trained personnel to monitor thistrade. The reasons for this include a lack ofinventories on Indian medicinal plants,unavailability of reliable systems matching tradenames to botanical names and the fact that themedicinal plant trade occurred in dried form makingthese plants difficult to identify.17 While theinventorying gaps are gradually being overcome thegreater challenge of distinguishing betweenbioprospecting and commodity trade and developingpractical ways of regulating the different stages ofbioprospecting still remain.
Besides the pharmaceutical and the cosmetics sector,Indian plant genetic resources for food and agricultureis widely used by agribusinesses including for thedevelopment of genetically modified varieties andother proprietary lines. Many of these agribusinesseshave Indian germplasm in their collections, whichthey use to develop new proprietary varieties.However despite the existence of the Biodiversity Actsince 2002, none of these companies have disclosedany information regarding their use of Indiangermplasm nor have they made any concrete offersto share any benefits arising from such use.18 While
Regulatory Innovations for Bioprospecting in India
6
15 While Article 8j of the CBD does not specifically use theterms prior informed consent, the Article has beeninterpreted to mean so through subsequent CBD COPdecisions including most explicitly in the report of theAd-hoc Technical Expert Group on TraditionalKnowledge Associated with Genetic Resourcescommissioned by the CBD COP to provide inputs tothe Working Group on ABS. See Report of the Meetingof the Group of Technical and Legal Experts onTraditional Knowledge Associated with GeneticResources in the Context of the International Regimeon Access and Benefit-Sharing, 15 July 2009, UNEP/CBD/WG-ABS/8/2.
16 Council of Scientific & Industrial Research (CSIR). 2001.CSIR News 51 (5&6: 1-3).
17 Harbir Singh, ‘Prospects and Challenges for HarnessingOpportunities in Medicinal Plants Sector in India’ (2006)2/2 Law, Environment and Development Journal 196,202,203.
18 Based on conversations conducted in the first quarter of2013 between the author and the Indian Seed Association,a confederacy of seed companies registered in India. Despiteseveral requests from the National Biodiversity Authority(the Indian national competent authority tasked withimplementing the Biodiversity Act), none of the seedcompanies have disclosed the full extent of their ongoinguse of Indian germplasm in their proprietary lines.
the CBD in 2004 in Kuala Lumpur that kicked offthe negotiations of the regime.20 The intensity ofthe negotiations towards the Nagoya Protocolpicked up from the 9th COP to the CBD21 andculminated in the adoption of the Nagoya Protocolon Access and Benefit Sharing at the 10th COP inNagoya Japan. The Nagoya Protocol sought toelaborate a legal framework in international law toimplement the ABS provisions of the CBD namelyArticles 15 and 8(j).
Fleshing out the CBD, the Nagoya Protocol detailsthe rights and obligations of countries of origin ofgenetic resources and associated traditionalknowledge (hereafter referred to as providercountries) and countries in whose jurisdiction thesegenetic resources and associated traditionalknowledge are used (hereafter referred to as usercountries). The Nagoya Protocol also recognizes therights of indigenous and local communities overgenetic resources and associated traditionalknowledge in accordance with domestic laws ofcountries where these communities are located.
The Nagoya Protocol therefore heralds anunprecedented step in public international law. Itmakes it obligatory for parties to ensure that usersof genetic resources and associated traditionalknowledge (bioprospectors) within their jurisdictioncomply with the domestic ABS regulatoryrequirements of the provider countries. Thisnational obligation on bioprospectors requires themto not only comply with domestic ABS frameworksof provider countries but where required by suchlaws enter into ABS agreements with legitimateproviders of such resources and knowledge.
some of the recalcitrance amongst agribusinesses hasto do with ignorance or wilful violation of the law,discussions between regulatory authorities andagribusinesses representatives reveal a lack of clarityand consensus on both sides regarding at the differentstages of biorpospecting and when benefits are to beshared.
4THE NAGOYA PROTOCOL ONACCESS AND BENEFIT SHARING
Nearly 11 years after the CBD came into force in1993, India was one of the leading developingcountries to push for a supplementing internationalregime on access and benefit sharing to counteractthe non-implementation of their CBD obligationsby developed states. The trigger for this was agrowing concern regarding the lack of compliancewith the Indian bioprospecting laws by users ofIndia’s biological resources and associated traditionalknowledge in jurisdictions outside India.
The continued inability to secure compliance of theIndian Biodiversity Act and Rules by bioprospectorsled India to play a key role as a part of the LikeMinded Mega Diverse Countries (LMMC) in thenegotiations towards an international regime onaccess and benefit sharing (which later took the formof the Nagoya Protocol). The negotiations weredriven by an imperative of ‘justice in exchange’19
that underscored that conservation and sustainableuse of biological resources would not be achievedunless benefits arising from the use of such resourceswere equitably shared with countries andcommunities conserving them.
The success of the LMMCs (and therefore India’s)lobbying for a binding international regime on ABSwas exemplified by the decision by the 7th COP to
Law, Environment and Development Journal
7
19 See generally, Doris Schroeder and Balakrishna Pisupati,Ethics, Justice and the Convention on Biological Diversity(UNEP 2010).
20 COP Decision VII/19 (Global Taxonomy Initiative), 13April 2004, UNEP/CBD/COP/DEC/VII/9, <http://www.cbd.int/decision/cop/?id=7756> accessed 13December 2013.
21 COP Decision IX/12 (Access and Benefit-Sharing), 9October 2008, UNEP/CBD/COP/DEC/IX/12<http://www.cbd.int/doc/decisions/cop-09/cop-09-dec-12-en.pdf> accessed 13 December 2013.
5PRIVATE CONTRACTS IN PUBLICINTERNATIONAL LAW
The Nagoya Protocol is a treaty in publicinternational law that ultimately makes it incumbenton bioprospectors to enter into private access andbenefit sharing agreements with the legitimateproviders of such resources and knowledge. Whilesuch bioprospectors would be required to complywith the domestic ABS regulatory frameworks ofprovider countries, these frameworks additionallymake the utilization of genetic resources andassociated traditional knowledge conditional onmutually agreed terms between the bioprospectorsand the domestic providers.
According to the Protocol, the mutually agreedterms would be predicated on the prior informedconsent of the providers of the resources andknowledge- meaning that the providers must bewilling to provide access to their resources andknowledge. Furthermore the mutually agreed termscould include the fair and equitable sharing ofbenefits arising from the commercial or research useof the resources and knowledge.
It is important to note that the terms of access togenetic resources and associated traditionalknowledge and the nature and extent of sharing ofbenefits arising from their utilization would all haveto be detailed out in a private contract between thebioprospectors and providers. What the NagoyaProtocol does is to require user countries to ensurethat private users in their jurisdiction enter into suchABS agreements before utilizing genetic resourcesand associated traditional knowledge from othercountries.
The effective implementation of the NagoyaProtocol then requires three steps:
1) Provider countries have to have aregulatory framework on ABS detailing theobligations of users of genetic resources andassociated traditional knowledge and the
rights of the providers of such resourcesand knowledge;22
2) User countries have to have a regulatoryframework that requires users of geneticresources and associated traditionalknowledge in their jurisdiction to complywith the ABS regulatory framework of thecountries from where they access suchresources and knowledge;23
3) Users of genetic resources and associatedtraditional knowledge (bioprospectors),where required by the provider countryABS framework, have to enter into ABSagreements with legitimate providers ofsuch resources and knowledge.24
6ABS AGREEMENTS/MUTUALLYAGREED TERMS AS PRIVATECONTRACTS
Provider and user country legal frameworks are waysof ensuring compliance from bioprospectors. Theseframeworks could require bioprospectors usinggenetic resources and associated traditionalknowledge to enter into ABS agreements andpenalize those bioprospectors who don’t. TheNagoya Protocol is therefore public internationallaw that requires Parties to the Protocol to ensurethat users in their jurisdictions will comply withdomestic ABS frameworks of provider countries andenter into private contracts when bioprospecting ifsuch contracts are required by such frameworks.
An ABS agreement then is a contract providing abioprospector with the right to use genetic resourcesand associated traditional knowledge in exchange fora share of the benefits derived from such use. The
Regulatory Innovations for Bioprospecting in India
8
22 Nagoya Protocol (n 1) Article 6.23 ibid Article 15.24 ibid Article 5.
CBD and the Nagoya Protocol are internationaltreaties that make such agreements possible by aprocess that requires all Parties to the CBD to ensurethat the bioprospectors in their jurisdictions respectthe rights of provider countries and communitiesover genetic resources and associated traditionalknowledge. It isn’t that prior to the CBD or theNagoya Protocol, countries could not assert theirsovereign rights over their resources. However, thecrucial difference is that because of the CBD andthe Nagoya Protocol, user countries will have torecognize the resource rights of provider countriesin the former’s jurisdictions- and this isunprecedented.
The assignment of resource rights in providercountries and recognition of such rights in usercountries creates owners or holders of such resourcesacross national boundaries. These owners or holderscan through ABS agreements set the specific termsfor the use of their resources and knowledge inexchange for a share of the benefits generated fromsuch use. The benefits are usually determinedthrough the assignment of prices by market forces(however imperfectly) to research and productsbased on such resources and knowledge that werepreviously shielded from market exchange or forvarious reasons unpriced.25
Even without the Nagoya Protocol, ABS agreementscan technically be entered into with users of geneticresources or associated traditional knowledge if aprovider of such resources and knowledge has theright to do so in domestic law. This is because ABSagreements are fundamentally private contracts thatinvolve an offer by one party, its acceptance byanother party and a transfer of considerationbetween them. The advantage of an ABS agreementis that even if a user country (the country where thebioprospector operates) has no laws requiring anABS agreement, the agreement would still beenforceable since the bioprospector has voluntarily
Law, Environment and Development Journal
agreed to its terms and conditions. Nevertheless, asper the Nagoya Protocol, an ideal situation wouldbe functioning ABS legal frameworks in both userand provider countries and an ABS agreement inplace between the bioprospector and the providerof genetic resources and associated traditionalknowledge.
However, a large number of countries still do nothave “provider legislation” to regulate access togenetic resources of their countries, and even fewercountries regulate their users by requiringbioprospectors in their jurisdictions to comply withthe laws of provider countries.26
7THE INDIAN SITUATION ON ABSAGREEMENTS
The Biological Diversity Act 2002 (BD Act) and theBiological Diversity Rules 2004 (BD Rules) regulateaccess to Indian biological resources27 and associatedknowledge.28 The central regulatory authoritypermitting access to the resources and knowledge is
9
25 Castree cites N. Brenner & N. Theodore, ‘Cities and theGeographies of “Actually Existing Neoliberalism’ (2002)34 Antipode 349; J. Peck & A. Tickell, ‘NeoliberalizingSpace’ (2002) 34 Antipode 380; J. McCarthy & S. Prudham‘Neoliberal Nature and the Nature of Neoliberalism’(2004) 35 Geoforum 276.
26 See Morten Walloe Tvedt & Tomme Young, BeyondAccess: Exploring the Implementation of the Fair andEquitable Sharing Commitment in the CBD (IUCNEnvironmental Policy and Law Paper No.67/2, IUCN2007); See also Morten Walloe Tvedt & Ole KristianFauchald, ‘Implementing the Nagoya Protocol on ABS:A Hypothetical Case Study on Enforcing Benefit Sharingin Norway’ (2011) 14/5 The Journal of World IntellectualProperty 383.
27 The BD Act uses the term biological resources instead ofgenetic resources but specifies the kinds of uses ofbiological resources that are regulated under the BD Actin the definition section of the Act. This specification ofthe kinds of uses of biological resources falling under thescope of the BD Act can broadly be equated to theNagoya Protocol’s understanding of what constitutes‘utilization of genetic resources’ in Article 2(d).
28 The BD Act does not use the term ‘traditional knowledge’but instead uses ‘associated knowledge’ to meanknowledge associated with biological resources.Therefore the term ‘associated knowledge’ will be usedhereon when referring to the BD Act and Rules.
the National Biodiversity Authority (NBA). The BDAct also devolves certain powers of oversight to theState Biodiversity Boards at the state level and theBiodiversity Management Committees at the locallevel.
The BD Act and Rules bring the following activitiesin relation to Indian biological resources andassociated knowledge under the purview of ABS:
a) Commercial utilization of Indian biologicalresources to develop products such as drugs,industrial enzymes, food flavours,fragrance, cosmetics, emulsifiers,oleoresins, colours, extracts and genes usedfor improving crops and livestock throughgenetic intervention. However thiscommercial utilization does not includeconventional or traditional practices thatare used in agriculture, horticulture,poultry, dairy farming, animal husbandryor bee keeping;29
b) Research which means any study orinvestigation or technological applicationof biological resources or their derivativesto develop products or processes;
c) Biosurvey or bioutilization which meanssurvey or collection of biological resourcesfor any purpose;30
d) Application for any intellectual propertyrights based on Indian biological resourcesand associated knowledge.31
Any other uses of biological resources for e.g. directconsumption, trading, as commodities etc. do notattract the provisions of the BD Act and Rules.
The BD Act and Rules require non-Indians to getthe prior approval of the NBA when engaging inthe aforementioned activities. However, there arecertain situations where Indians are also required to
get the approval of the NBA. Non-Indians as perthe BD Act are individuals who are not citizens ofIndia, non-resident Indians (as per Section 2(30) ofthe Income Tax Act) and body corporates,associations or organizations not incorporated orregistered in India or having non-Indian participationin its share capital or management.32 Nevertheless,both Indians and non-Indians are required to get theprevious approval of the NBA when they apply forintellectual property rights or transfer for monetaryconsideration research relating to Indian biologicalresources and associated knowledge.33
The reasoning behind the distinction betweenIndians and non-Indians in the BD Act has to dowith incentivising domestic industry by giving thema free pass at least to the point where they secureproprietary rights over innovations based on Indianbiological resources and associated knowledge. Thisdistinction however has been increasingly harder tomaintain since a large number of Indian companieshave non-Indian participation in its share capital andmanagement.
Moreover differences between the NBA and theState Biodiversity Boards (SBBs) regarding theinterpretation of the BD Act and Rules regardingbenefit-sharing obligations of Indian companies arebecoming increasingly public and frequent. This isexemplified by actions of insufficiently funded SBBsinterpreting the BD Act as providing them with thediscretion to require Indian companies to engage inbenefit sharing where they use Indian biologicalresources from the jurisdiction of the SBBs.34
Regulatory Innovations for Bioprospecting in India
10
29 Biological Diversity Act 2002, s 2(f).30 ibid s 2(d).31 ibid s 6.
32 ibid s 3.33 ibid ss 4 & 6.34 The most recent example of this is the Madhya Pradesh
SBB issuing notices to Indian coal mining companies inits jurisdiction to engage in benefit sharing arguing thatcoal is a biological resource and that the requirementunder the BD Act for Indian companies to inform theSBB’s of their activities relating to Indian biologicalresources implies that the SBB’s have a right to requirebenefit sharing. See Sudheer Pal Singh, ‘More TroubleLikely for Captive Coal Miners in Madhya Pradesh’Business Standard (12 June 2013) <http://www.business-standard.com/article/companies/more-trouble-likely-f o r - c a p t i v e - c o a l - m i n e r s - i n - m a d h y a - p r a d e s h -113061100849_1.html> accessed 20 December 2013.
The growing frequency of SBB’s interpreting the BDAct and Rules in a manner that would generate arevenue stream for them is a key challenge for theNBA. Companies aggrieved by these actions of theSBBs have approached the NBA for redress and havealso filed petitions in courts to challenge the actionsof the SBBs. The opportunistic interpretations of theBD Act and Rules by the SBBs despite directinstructions by the NBA to the contrary are a signof the times in India where increasing administrativeand judicial battles will be fought around themeaning of the BD Act and Rules in the context ofIndia’s ratification of the Nagoya Protocol.
It is clear that the time has come for the Governmentof India to review the BD Act and Rules with theexperience of hindsight and against the backdrop ofthe Nagoya Protocol. In the meantime efforts suchas this article are being made to suggest innovativeways of interpreting the BD Act and Rules to ensurethe optimal implementation of India’s ABSframework.
Despite the interpretation challenges regarding thebenefit sharing obligations of Indians and non-Indians, the BD Rules are clear about the process ofsecuring the prior approval of the NBA for the useof Indian biological resources and associatedknowledge. The users of the resources andknowledge (bioprospectors) depending on the natureof use would have to make an application to theNBA in accordance with one of the relevant formsincluded in the BD Rules.35
8BIOPROSPECTING APPROVALPROCESS IN INDIA
The BD Act and Rules are unique to the extent thatthe approval of the NBA for bioprospecting is inthe form of a written agreement or contract between
the NBA and the bioprospector.36 The NBA isrequired by the BD Rules to provide its approval inthe form of an ABS agreement between itself andthe bioprospector that includes the terms ofutilization of the biological resources and associatedknowledge and also the quantum of benefits arisingfrom such utilization to be shared.37 However thebenefits are supposed to be mutually agreed betweenthe user of the resources and knowledge and NBAwith the latter having to consult with the localbodies38 and benefit claimers39 when determiningsuch benefits. Therefore in law, the rights overgenetic resources and associated traditionalknowledge do not rest with the NBA but with thebenefit claimers providing access to the resourcesand knowledge. However the NBA is tasked withthe role of entering into the ABS agreements andconcluding them in accordance with the mutuallyagreed terms as negotiated by the benefit claimers.
The BD Act and Rules therefore vest the powers ofnegotiating and entering into ABS agreementsrelating to Indian biological resources and associatedknowledge with the NBA. The rights of the localcustodians of the resources and knowledge is assuredthrough the requirement that the NBA consult withthe Biodiversity Management Committees (BMC) atthe village level if the subject matter of the ABSagreement has to do with the resources or knowledgefrom the jurisdiction of the BMC. However the NBAeffectively remains the only party on the Indian sideto all ABS agreements relating to Indian resourcesand knowledge. As per the requirement in the BDRules the NBA uses a standard set of ABS agreementsdepending on the nature of the resource or knowledgeutilization that will constitute an ABS approval.40
Since 2003 the NBA has received nearly 844bioprospecting applications with the numbers
Law, Environment and Development Journal
11
35 Biological Diversity Rules 2004, Forms 1, 2, 3 and 4 readwith Rules 14, 17, 18 and 19 respectively.
36 ibid Rules 14.5, 17.5, 18.5 and 19.5.37 ibid Rule 14.6.38 Biological Diversity Act 2002, s 2(h) (defines local bodies
as panchayats, municipalities and other local institutionsof self-government).
39 ibid s 2(a) (defines benefit claimers as conservers ofbiological resources and holders of knowledge relatingto such biological resources).
40 These standard agreements can be accessed on the NBAwebsite at <http://nbaindia.org/content/104/38/1/download.html> accessed 20 December 2013.
In reality, the critical step where decisions regardingterms of access and benefit sharing are made is step6 in the decision chart where the Expert Committeeon ABS applies its mind regarding a bioprospectingapplication. Prior to submitting a bioprospectingapplication for the consideration of the ExpertCommittee, the legal and technical advisors (step 4)are expected to have completed all enquiriesregarding the application, ensured that theapplication is complete in terms of the necessarydocumentation and facilitated the consultation withthe relevant bodies such as the BMCs and the SBBs(step 5).
It is only after these processes have been completedby the legal and technical advisors within the NBAwill a bioprospecting application be placed before
having increased drastically from 2006 onwards. TheNBA has since processed 477 applications, closed99 applications, entered into 117 ABS agreementsand is currently still processing 282 applications.41
The NBA therefore receives an average of around84 bioprospecting applications a year or about 7every month.
The processing of ABS applications involves varioussteps as laid down by the NBA in the decisionmaking map below.42 There are 13 steps that needto be undertaken with each of these steps being timeconsuming for various reasons ranging fromincomplete applications submitted by thebioprospector to time taken to consult the BMCsor to organize meetings of the Expert Committeeor the NBA to approve or reject the applications.
Regulatory Innovations for Bioprospecting in India
12
41 See <http://nbaindia.org/content/333/25/1/approval.html> accessed 20 December 2013.
42 See <http://nbaindia.org/uploaded/images/application-process-with-benefit-sharing-component-14-07-11.jpg>accessed 20 December 2013.
the Expert Committee. Once the Expert Committeemakes its decision, this decision is placed before theSecretary and Chairman of the NBA, who in turnplace it for final approval before a full meeting ofthe NBA which consists of a Chairperson, 10 officialrepresentatives of the different relevant ministriesand 6 non-official experts.43 It is however rare thatthe full meeting of the NBA would disagree withthe recommendations of the Expert Committee.44
9CHALLENGES IN THE INDIANBIOPROSPECTING APPROVALPROCESS
One of the key challenges we will focus on here isthe requirement to enter into a full-fledged ABSagreement between the NBA and the bioprospectorincluding benefit sharing as a condition of utilizingbiological resources and associated knowledge.
The manner in which the quantum of benefits isdetermined is usually through a meeting of theExpert Committee on ABS.45 The ExpertCommittee meets once every few months for abouttwo days and usually makes recommendations onanywhere between 14- 25 ABS applications permeeting along with discussing various other relatedmatters.46 The Expert Committee therefore
effectively spends an inadequate 15-20 minutes perABS application within which time it would haveto not only comprehend the subject of theapplication and the nature of the industry or researchsector that seeks to bioprospect but also determinewhat would constitute fair and equitable sharing ofbenefits.
ABS negotiations are unique due to the high levelsof uncertainty involved. The cases before the ExpertCommittee are usually ones where neither thebioprospector nor the members of the Committeeare able to specify the quantum of benefits likely toaccrue at the early stages of research anddevelopment. Moreover the paradox in the approvalprocess is that step 5 (the local consultation process)precedes step 6 (deliberation by the ExpertCommittee). The legal and technical staff of theNBA and the SBBs and BMCs (step 5) all rely on theExpert Committee to assist them in understandingthe nature of the bioprospecting application, thepotential benefits and the terms they shouldnegotiate. However the Expert Committeeironically requires the completion of consultationswith the SBBs and BMCs before deliberating on theapplication in question.
This situation is experienced time and again in themeetings of the Expert Committee. It’s membersfind it difficult to assist the legal and technical staffof the NBA to ensure effective local consultationswhile at the same time determining value of aresource for a particular industry based on theexploratory phase of the research and insufficientinformation regarding market potential and variousother imponderables. There are instances wherebioprospecting applicants and industry bodies wereasked to appear before the Expert Committee toclarify the nature and goals of the bioprospectingthough in the author’s experience, there have beenno instances where the benefit claimers haveappeared before the Expert Committee to discusstheir preferred terms for the ABS agreement. Whilediscussions with applicants and industry bodiesclearly assisted the Expert Committee in its decisionmaking, it also made it obvious to the experts thatearly stage bioprospecting in most cases involveseveral uncertainties making it very difficult to havea fair approximation of the benefits that are likelyto be generated.
Law, Environment and Development Journal
13
43 Biological Diversity Act 2002, s 8.44 This view is based on the author’s (Bavikatte) experience
that during the nearly two years where he worked as alegal consultant to the NBA, a recommendation by theExpert Committee regarding benefit sharing was neverrejected by a full meeting of the NBA.
45 A committee of experts from various fields including law,science, economics, business, development etc. who aretasked with reviewing an ABS application and thendetermining what would constitute fair and equitablebenefit sharing.
46 From 2012-2014 the author worked as a legal consultantto the NBA and sat in on the Expert Committee meetingsas a legal advisor to the process. The informationpresented here is based on the first hand experience ofthe author from these meetings.
At the same time the BD Act and Rules requires anABS agreement as a pre-condition for any approvalfor the utilization of resources and knowledge fromIndia. Given the limited amount of time that theExpert Committee has to apply its mind regarding abioprospecting application and the fact thatoftentimes the members of the Expert Committeedon’t have the domain expertise in the particulararea relating to the application, it is unlikely thatdetermination of benefit-sharing can be done withany degree of accuracy or deliberation. The membersof the Committee are appointed by the full meetingof the NBA and the Chairman of the NBA usuallyprovides the NBA with a list of suggested appointees.While the Chairman tries to ensure a wide range ofexpertise on the Expert Committee and includessome scientists and economists, it is still extremelydifficult to ensure the distribution and depth ofexpertise in one committee of the varied anddynamic aspects of bioprospecting.
Due to the high volumes of bioprospectingapplications for prior approval and the need to enterinto an ABS agreement as a way of providing anapproval for bioprospecting, the Expert Committeeworks on a standardized thumb-rule for determiningbenefits. The thumb-rule pre-sets the share ofbenefits in any ABS agreement and it is rare thatthere is any negotiation between the bioprospectorand the NBA regarding benefit sharing. Thebioprospector is essentially informed that this is thepercentage or amount of benefits that is required bythe NBA and this would be included in the modelABS agreement (step 10 of the decision chart) thatthe bioprospector would then be expected to sign.The lack of negotiation between the ExpertCommittee and the bioprospector regarding thequantum of benefit sharing tends to violate the letterof the BD Act which requires benefit sharing to bein accordance with ‘mutually agreed terms’ betweenthe bioprospector, the local bodies from whosejurisdiction the resource was accessed and benefitclaimers (local stewards of the biological resourcesand associated knowledge).47 Moreover while theefficiency motives behind the thumb-rule approachis understandable, it clearly goes against the grain ofBD Act which seeks to ensure that the local holders
of biodiversity (BMCs and benefit claimers) have asay in terms of access to their resources and thenature and share of benefits accrued therein.
The thumb-rule of the Expert Committee is usuallyan up-front payment for access to biologicalresources and associated knowledge for research,biosurvey or bioutilization or commercial use.Where the bioprospector seeks an approval forapplying for an intellectual property right the ExpertCommittee will require the bioprospector to pay aroyalty of 2.0-5.0% of the ex- factory sale price ofthe product sold or used for captive consumption.In situations where the bioprospector intends tolicense the process/product/innovation based on anIndian biological resource or associated knowledgefor commercialization, the Expert Committeewould require the bioprospector to pay 5% of thefee (in any form including the license /assignee fee)and an additional 5% of royalty amount receivedannually from the assignee/licensee as benefitsharing throughout the term of agreement. On theother hand, the Expert Committee may also requirethe assignee/licensee to enter into a tripartiteagreement with the bioprospector and the NBA andagree to pay royalty 4% of the ex-factory sale priceof the product sold and also used for captiveconsumption annually. Moreover the bioprospectorshall also be required to pay 5% of the license fee (ifany) received from licensee to NBA.48
The thumb-rule approach to benefit sharing by theExpert Committee has three reasons. First, the BDAct and Rules require approval for bioprospectingto be in the form of an ABS agreement which detailsnot only terms of access and use but also benefitsharing; Second, the NBA has a limited amount oftime and human resources to research the realisticcommercial potential of every bioprospectingapplication especially considering the volume ofapplications it receives, and it needs to dispose eachapplication within a period of six months; and finally,the decisions regarding bioprospecting applications
Regulatory Innovations for Bioprospecting in India
14
47 Biological Diversity Act 2002, s 21.1.
48 This information is based on the draft template on BenefitSharing Guidelines. These Guidelines have not beenformally issued by the NBA and are still under discussion.However the percentages of benefit sharing provided hereare based on the standard practice of the ExpertCommittee.
are not made by the Secretariat of the NBA (thetechnical and legal officers, the Secretary orChairman) but rather through two large committees(the Expert Committee and the full meeting of theNBA), with only periodic time bound meetings toconclude on large numbers of applications.
Hence a thumb-rule approach seeks to be an easyand standardized fix to challenges that arise fromrules and decision-making arrangements developedmore than a decade ago when the numbers ofbioprospecting applications were few and farbetween. While concerns have been raised withinthe Secretariat of the NBA for a review of theBiodiversity Act and Rules and a simplifying of thebioprospecting approval process, there is still a longway to go before any changes will be put into effect.In the meantime, it seems like the thumb-ruleapproach is here to stay. In fact the thumb-ruleapproach is symbolic of the significant gap betweenlaw making and its implementation. In the contextof Green Governance it highlights the chasmbetween the lofty aims of ABS law and policy andthe reality of its implementation when the rubbermeets the road where the first casualty tends to bethe rights of the local stewards of biodiversity.
The thumb-rule approach to benefit sharing hascaused a fair amount of concern amongst researchersand the private sector seeking bioprospecting permitsfrom the NBA. Their main grievance is that the needto enter into full-fledged ABS agreements includingupfront payments and pre-set percentages arepremature at early stages of bioprospecting.Oftentimes it is nearly impossible to predict thelikely benefits that are to accrue to the bioprospectorat early stages of bioprospecting and a thumb ruleapproach in all fairness prevents them from actually‘negotiating’ mutually agreed terms as required bythe BD Act.49 Moreover questions regarding thelogic behind the thumb-rule and the pre-setpercentages abound from both bioprospectors andNGOs. While the thumb-rule arises from the effortsof one of the earlier Expert Committees inconsultation with a legal consultant to the NBA toestablish Access Guidelines, it is clear that not only
Law, Environment and Development Journal
15
is the thumb-rule highly dated, but also a result ofinsufficient discussions with the different sectorsengaging in bioprospecting and BMCs on theground.
The Expert Committee on the other hand is wellaware of these problems but is of the view that thisis the best possible approach considering thespecificities of India’s ABS legal framework.
10EXAMPLES OF THE THUMB-RULEAPPROACH
Some of the key examples of the thumb-ruleapproach have been highlighted in the briefingpapers of the NBA. While some of these examplesmay not cleanly fit within a Nagoya Protocolapproach of ‘utilization of genetic resources,’ theyare nevertheless how the NBA interprets its mandateunder the BD Act and Rules and its obligations underthe Nagoya Protocol.
An interesting example to consider here is the oneinvolving the seaweed (Kappaphycus alvarezii/Euchemia cottonii), 2000 tons of which has beenexported by Pepsico India to countries like Malaysia,Philippines and Indonesia. As per the ABSagreement, the exporter paid the NBA 5% of FoB(Free on Board) costs of the seaweed amounting toaround 3.9 million rupees.
Another case involves the export of around 2000kilograms of neem leaves (Azadirachta indica) toJapan by the Bio India Biologicals Company.According to the ABS agreement, here too the 5%of FOB rule was applied and the NBA was paid asum of 55,035 rupees as benefit sharing.
The thumb rule approach goes beyond bulk exportsof Indian biological resources and extends toapprovals by the NBA for patent applications. Amuch-publicized example by the NBA refers to anABS agreement relating to the patenting of an anti-venom tablet by an Indian doctor. The benefits to
49 Based on conversations conducted in the first quarter of2013 between the author and legal advisors representingthe bioprospectors.
be shared with the NBA as per this agreement were2% of the gross sales of the final product.50
From the examples here, it seems that for better orworse, the thumb rule approach ensures thatbioprospecting applications are cleared within areasonable period given the challenges mentionedabove. Nevertheless, this still leaves open thequestion of whether there are other possibleapproaches that could address the concerns of theExpert Committee within the limited regulatory andbureaucratic parameters in which it operates.
In the authors considered opinion, there could be abetter solution to speedily process the high volumesof ABS applications while at the same time movingaway from a thumb rule approach that is arbitraryand unpopular amongst not only bioprospectors butalso communities on the ground who are keen onbeing actively involved in negotiating benefits arisingfrom the use of their resources. It is this solutionthat we will elaborate upon here.
11POSSIBLE SOLUTION
An approach adopted by countries such as SouthAfrica51, Bhutan52 and Australia53 on processingbioprospecting applications could offer a possiblesolution to the NBA. In both these countries, likein India, situations abound where bioprospectors
seek access to genetic resources and/or associatedtraditional knowledge and are at a stage of researchand development where they are unable torealistically quantify the benefits likely to accrue.However the regulatory frameworks in SouthAfrica, Bhutan and Australia as we shall see belowhave been developed on the premise that situationslike this are less an exception and more the rule.The national competent authorities in thesecountries regulating bioprospecting are uniquelyempowered to provide bioprospectors access to thegenetic resources and/or associated traditionalknowledge without concluding a benefit sharingagreement.
In Bhutan and South Africa they are able to do soby virtue of being able to enter into what is called a‘scoping agreement.’ A scoping agreement enables abioprospector to conduct research on the geneticresource and/or associated traditional knowledgewithin an agreed period of time without benefitsharing. The bioprospector is authorized by theagreement to undertake only specified kinds ofresearch activities and prohibited from any stepstowards commercialization including market testing,product development, advertising, manufacturingand applying for intellectual property rights.
In Bhutan’s case for example, the possible risks of abioprospector being provided access to resourceswithout a full-fledged benefit sharing agreement iscountered by the bioprospector having to depositan agreed sum of money in the national competentauthority’s trust account as a security deposit. Thesecurity deposit would be returned to thebioprospector at conclusion of the scopingagreement. If the research results are positive andthe bioprospector intends to commercialize itsfindings, then it would then enter into a benefitsharing agreement with the national competentauthority. The authority can also require thebioprospector in the scoping agreement to providesupport to Bhutan’s research sector throughtechnology transfer and training.
In South Africa on the other hand, no such depositis required, but rather clear conditions are laid downin the scoping agreement (or what they refer as thediscovery phase of bioprospecting). These conditionsinclude prohibitions on various kinds of activities that
Regulatory Innovations for Bioprospecting in India
16
50 National Biodiversity Authority, Access and BenefitSharing Experiences from India <http://nbaindia.org/uploaded/pdf/ABS_Factsheets_1.pdf> accessed 12December 2014.
51 See the South African National EnvironmentManagement: Biodiversity Act 2004.
52 The approach here is a part of Bhutan’s draft ABS policycurrently before the Bhutanese parliament for adoption.However the National Biodiversity Center in Bhutan,which is charged with regulating access to Bhutan’sgenetic resources and associated traditional knowledge,has already begun using this approach when dealing withbioprospecting applications.
53 See Christian Prip et al, ‘The Australian ABS Framework:A Model Case for Bioprospecting?’ (Fridtjof NansenInstitute Report 1 2014).
would be deemed as moving beyond the discoveryphase into the commercialization phase. Furthermore,the scoping agreement prevents the bioprospectorfrom transferring any of the acquired resources tothird parties and is required to report back to thenational competent authority at pre-agreed intervalsto ensure effective checks and balances.
The system in the Australian federal legislation todistinguish between the discovery and thecommercialization phase of bioprospecting does notinvolve scoping agreements. Instead it builds on twotypes of bioprospecting permits provided by thenational competent authority. These are permits forcommercial or potentially commercial purposes ornon-commercial purposes. Permits for commercialor potentially commercial purposes require a benefitsharing agreement with the provider of the resource.Permits for non-commercial purposes do not requirebenefit-sharing agreements. However, applicants arerequired to provide a statutory declaration statingthat they will not conduct, or allow others toconduct commercial research without entering intoa benefit sharing agreement. The statutorydeclaration in Australia is a general means ofdeclaring that the signatory undertakesresponsibility for the statement. It includes areference that the signatory understands the natureof the statement, and that s/he explicitly acceptscriminal sanctions in cases of non-compliance.
The ABS regulatory frameworks of Bhutan, SouthAfrica and Australia are built on an understandingthat bioprospecting involves high levels ofuncertainty and that many bioprospectors would beunable to specify the quantum of benefits likely toaccrue at the early stages of research anddevelopment. An initial research or a scopingagreement for the discovery period with certainguarantees is intended take care of the interests ofthe bioprospector in identifying commercialviability and that of the governments for security.If the bioprospecting proves viable with anindication of a profit-generating outcome, then theABS frameworks of these countries require asubsequent actualization or commercializationagreement that is based on a realistic estimate ofbenefits and a fair and equitable sharing of the same.Besides clarity regarding benefits, the addedadvantage of such an approach is that it fosters a
long-term partnership between the parties byensuring collaborative problem solving with thecommon aim of maximizing benefits frombioprospecting, not to mention offering innovativeoptions for non-monetary benefit sharing.
The breaking down of bioprospecting processes withscoping/research and actualization agreements allowsfor the much needed flexibility amidst theuncertainties of bioprospecting and facilitates fasteragreements at the early stages while saving thedifficult benefit sharing negotiations to a later stagewhen there is more clarity regarding research anddevelopment outcomes. Some companies andresearch institutions continue to raise concernsregarding the risks of investing large amounts offinancial and human resources in research anddevelopment at the scoping phase without theguarantees of an actualization agreement should theydiscover something of value. Be that as it may, thistwo step approach is more advantageous for thebioprospector especially if the alternative is, as in theIndian context, being forced to enter into a full-fledged benefit sharing agreement based on pre-setpercentages at a scoping stage where there is little orno clarity as to the outcomes of the bioprospecting.
We believe that the two-step approach could beadapted for the Indian context as it fits neatly intothe framework of the BD Act and Rules as we showbelow. Its merit is that it does not require anyamendments to the BD Act and Rules nor arestructuring of the bioprospecting approval process.Moreover it has the added advantage of effectivelyresolving the challenge of time-bound processing ofthe high volumes of bioprosecting applications theNBA receives.
12USING SCOPING AND ACTUALIZATIONAGREEMENTS UNDER THE BD ACTAND RULES
The BD Rules require that any approval for accessto Indian biological resources and associated
Law, Environment and Development Journal
17
knowledge shall be in the form of an agreementbetween the NBA and the bioprospector. The BDRules even provide the elements of such anagreement including a requirement that lists thequantum of monetary and other incidental benefitsand if required a commitment to enter into a freshagreement particularly in case the biological materialis taken for research purposes and later on sought tobe used for commercial purposes or in case of anyother change in use.54
It is therefore possible to read the BD Rules asproviding the space for scoping and actualizationagreements as a way for the NBA to provideapprovals for different stages of bioprospecting.Section 3 of the BD Act requires the previousapproval of the NBA to embark on any research,bio-survey and bio-utilization and commercialutilization of Indian biological resources andassociated knowledge. Rule 14 of the BD Rulesrequires such an approval to be in the form of acontract between the NBA and the bioprospector.Section 3 of the BD Act read with Rule 14 of the BDRules therefore allows for the NBA to enter intoscoping agreements with bioprospectors. Thesescoping agreements can be used to provide speedyapprovals for bioprospecting and can include specificrestrictions as to what will not be allowed duringthe scoping phase of bioprospecting.
The scoping phase involving Indian biologicalresources and associated knowledge would be theinitial exploratory phase of research anddevelopment with the aim of establishing marketor research potential. This would be the phase wherethe Expert Committee, the benefit claimers and thebioprospector would find it hard to predict thenature and extent of benefits that could be derivedfrom the resources and knowledge. The scopingphase can require a ‘scoping agreement’ with theNBA. The NBA, if satisfied with the informationreceived from a bioprospector intending to engagein the scoping phase can issue the bioprospector witha scoping permit. This scoping permit shall be inthe form of an agreement between the NBA and thebioprospector and will contain a set of conditions
for utilization, including the condition to secure afull-fledged benefit sharing agreement prior toentering into the actualization phase ofbioprospecting. The scoping permit can be madeconditional on the payment of a processing fee anda cash guarantee deposit returnable on theconclusion of the scoping phase (See Annex 1 for aModel Scoping Agreement).
The scoping agreement does not have to be devoidof all benefit sharing. It could along with guaranteedeposits, also require technology transfer,collaboration with domestic research institutes,training, fellowships etc. In our opinion aninnovative scoping agreement could lay thefoundations of a long-term relationship between theNBA and the bioprospector and involve the sharingof different kinds of benefits depending on whetherthe research is at the discovery stage or thecommercialization stage.
The actualization phase would then be the phasewhen specific steps are undertaken to commercializeor engage in focused research on Indian biologicalresources and associated knowledge. Theactualization phase would include, but not be limitedto applications for intellectual property rights,product testing and marketing. The actualizationphase can only begin with an actualization permitissued by the NBA, which will be in the form of anABS agreement between the bioprospector, and theNBA.
The reality of bioprospecting in India is howeverthat only a fraction of the bioprospecting at thescoping phase) actually will lead to the actualizationphase.55 This is a situation similar to other countrieswith extensive bioprospecting. Under the federalAustralian ABS legislation with two types of permitsdescribed above, all permits but one have been fornon-commercial purposes and none of the non-commercial permit holders have so far come backto national competent authority to declare that theiractivity has developed into a commercial intent thusrequiring a benefit sharing agreement. A largeamount of time and energy of the Expert Committee
Regulatory Innovations for Bioprospecting in India
18
54 Biological Diversity Rules 2004, Rule 14.6.55 See <http://nbaindia.org/content/333/25/1/approval.html>
accessed 20 December 2013.
and the NBA is consumed because of the need toenter into full-fledged ABS agreements with detailsof the nature of benefits and how they will be sharedwhen neither the Committee, the NBA nor thebioprospector can realistically estimate the quantumand likelihood of benefits.
By dividing bioprospecting in India under the BDAct and Rules into a scoping and an actualizationphase the NBA can speedily process a large numberof applications by requiring the bioprospectors toagree to scoping agreements that do not requiredetermining benefits or any negotiations. Since onlya fraction of those with scoping permits are likelyto engage in actualization, the Expert Committeeand the NBA can then effectively use its time andresources to effectively consult with the BMCs andbenefit claimers and thereafter negotiate ABSagreements at the actualization phase when there isgreater clarity regarding the benefits that will accrue.
Such an approach acts like a funneling system wherea large number of initial applications are quicklydisposed off through scoping contracts and thesmaller number of ABS agreements can get theattention they deserve. Moreover this funnelingsystem also foregrounds good Green Governance byensuring that the rights of the BMCs and benefitclaimers are effectively upheld by freeing up the timeand resources required for effective consultations asrequired by the BD Act. Clearly there are risksinvolved in scoping agreements and this is becausebioprospectors have rapid access to resourceswithout entering into full-fledged benefit sharingagreements. But such a risk exists even without thetwo-step process. In fact the NBA currently faceshuge challenges of monitoring and tracking thedevelopment of existing ABS agreements due tolimited human resources and because a large amountof the efforts of the Secretariat is spent in processingthe high volume of bioprospecting. All thingsconsidered, we believe that the adoption of the two-step approach to processing bioprospectingapplications might ensure that the finite resourcesof the NBA are focused on negotiating andmonitoring high quality ABS agreements with a clearunderstanding of the benefits that are likely to ensue.
13CONCLUSION
Bioprospecting works with high levels ofunpredictability. Bioprospectors embark on theresearch and development of genetic resources orassociated traditional knowledge with varied levelSof certainty regarding the ultimate product. Thevalue chain beginning with the identification ofgenetic resources and/or associated traditionalknowledge of potential value and culminating in thefinal commercial or research success is on manyoccasions a long and uncertain one. FurthermoreABS as an innovative financing mechanism forbiodiversity conservation can only work if realbenefits from bioprospecting can be generated andlocal rights to biodiversity are respected. This impliesthatboth provider countries, communities andbioprospectors would have to engage in not onlylater stage benefit sharing but also early stage ‘risksharing’.
The risk incurred by the bioprospector is investingin the research and development of genetic resourcesand associated traditional knowledge with thepossibility of failure. The risk that a providercountry or a community would incur is providingaccess to its resources and knowledge with thechance that the bioprospector could default onobligations to share benefits. However this situationshould not have to be dealt with by making itmandatory to enter into a full-fledged ABSagreement at the outset. Doing so results innegotiating in the blind escalating transaction costsand leading to perverse incentives.
Instead standard scoping agreements could beentered into resulting in simplified access by savingtime and resources. The scoping agreements willbind the bioprospectors to specific uses of the geneticresources and associated traditional knowledge andrequire them to come back and negotiate ABSagreements if they intend to enter into theactualization or commercialization phase. Such an
Law, Environment and Development Journal
19
approach has the dual benefit of incentivizingcompliance by bioprospectors by radically reducingtransaction costs and early-stage benefit-sharingburdens while at the same time reducing theworkload of the competent national authoritiestasked with approving bioprospecting. However, itis not necessary to enter into scoping agreements inevery situation of bioprospecting and a final ABSagreement can be entered into at the outset. Forcertain kinds of new products, for e.g. specificfragrances or moisturizers,56 the final output is clearat the beginning along with a fair understanding ofmarket potential and possible revenues.
The scoping and actualization approach has been usedwith some success in Australia, Bhutan and SouthAfrica, where ABS administrative structures that aremuch smaller than India’s. India would do well toconsider using a similar model. In the long run, themeasurement of success of ABS as a financing modelshould depend on whether the benefits/revenues itgenerates outweigh the capital outlay in regulatingit. If the costs of regulating ABS are far more thanthe benefits derived from it, then it is perhaps bestthat a country’s investment into ABS is re-routeddirectly into conservation. In the Indian case, since2002, its investment into the ABS regulatory systemwith the NBA, SBBs and BMCs has been far morethan the benefits earned since the inception of theBD Act and Rules.57 We hope that the solutionsoffered here would be a useful contribution inlessening the gap between India’s investment intoABS and the benefits it derives from it.
Regulatory Innovations for Bioprospecting in India
20
56 Based on information provided to the author by cosmeticmanufacturers in South Africa negotiating an ABSagreement with the Bushbuckridge Traditional HealersAssociation.
57 Based on conversations between the author and some ofthe staff at the Secretariat of the NBA.
LEAD Journal (Law, Environment and Development Journal) is jointly managed by theLaw, Environment and Development Centre, SOAS University of London
http://www.soas.ac.uk/ledcand the International Environmental Law Research Centre (IELRC)
http://www.ielrc.org
