On 19 June 2023, after almost 20 years of negotiations, the United Nations (“UN”) member states adopted a landmark treaty to ensure the conservation and sustainable use of marine Biodiversity of areas Beyond National Jurisdiction (the “BBNJ” treaty).
One of the cornerstones of the BBNJ treaty is the creation of a new mechanism for the fair and equitable sharing of benefits arising from activities with respect to “marine genetic resources” (“MGRs”) and “digital sequence information” (“DSI”) from MGRs. This mechanism is groundbreaking because it will require companies to pay for the use of genetic resources beyond national jurisdiction for the first time. Until now, under the existing Convention on Biological Diversity (“CBD”) and its Nagoya Protocol, companies were required to make (non-)monetary contributions only for the utilization of genetic resources under national jurisdiction (e.g., from national territories, national seas and exclusive economic zones). The BBNJ creates new “Access and Benefit-Sharing” (“ABS”) obligations on MGRs from maritime areas beyond national jurisdiction (i.e., the High Seas and the Area).
Companies in sectors whose R&D depends on marine genetic resources will be required to contribute to share financial and other benefits. In this blog we focus on those provisions of the BBNJ which will have the most direct impact on companies.
1. Scope of the new benefit-sharing mechanism
The new benefit-sharing mechanism will cover MGRs, meaning “any material of marine plant, animal, microbial or other origin containing functional units of heredity of actual or potential value”. This definition is broad and could cover a variety of uses of physical samples currently utilized in life sciences industries, such as marine mammal or fish-derived collagen, or extracts from algae.
The BBNJ will also apply to Digital Sequence Information (“DSI”) on MGRs, but it does not define this term. An earlier draft from December 2022 used the term “associated data and information”, which covered:
“relevant data and information in any format, including such data and information that could be considered as digital sequence information on genetic resources under the Convention on Biological Diversity.” (emphasis added)
Currently, the treaty has removed any express references to the CBD and leaves it to the Conference of the Parties to adopt any measures with respect to DSI from MGRs. The reason why the definition was removed is because State Parties to the CBD did not yet reach an agreement on the definition or scope of “DSI” during COP15. As a reminder, there are at least three possible definitions for DSI currently under review, covering R&D in the field of: (i) genomics only (relating to DNA and RNA), or also (ii) proteomics (relating to proteins) or including also (iii) metabolomics (relating to metabolites and other macromolecules). The broader the definition, the more R&D will be subject to the new benefit-sharing obligation.
The discussions on the exact scope of DSI are expected to continue over the next two years in the context of the CBD, with a final decision planned for November 2024. What happens under the CBD umbrella, will inform the scope of the BBNJ as regards DSI on marine genetic resources.
2. Notification to the Clearing-House Mechanism
Before carrying out “activities” (e.g., in situ collection of materials) with respect to MGRs and DSI from MGRs, interested parties will have to notify the newly created Clearing House Mechanism as early as possible and no less than six months in advance. This will allow for the monitoring of the collection and use of MGRs, as well as link it to the proper benefit-sharing obligations afterwards.
The following information must e.g. be provided to the Clearing-House:
- The nature and objectives under which the collection is carried out;
- The subject matter of the research or, if known, the MGRs to be targeted or collected, and the purposes for which such resources will be collected;
- The geographical areas in which the collection is to be undertaken;
- The name(s) of the sponsoring institution(s) and the person in charge of the project;
- Opportunities for scientists of all parties, in particular from developing States to be associated or involved in the project; etc.
Within one year after the notification, it is obligatory to notify: the repository or database where the DSI has been uploaded, where the MGRs that were collected are being held, and a report of locations where MGRs were collected, and insofar available, findings from the activities undertaken.
If the collected MGRs and DSI from MGRs have led to a commercial product or process, further information will need to be notified as soon as it becomes available, including e.g.:
- Where the results of the utilization, such as publications, patents granted and products developed, can be found;
- Where the original sample that is the subject of utilization is held;
- Once marketed, information, if available, on sales of relevant products and any further development.
The Clearing-House Mechanism will make this information publicly available.
3. Obligations under the new benefit-sharing mechanism
The BBNJ foresees monetary and non-monetary benefit-sharing.
Monetary obligations will be triggered by the “utilization” of MGRs and DSI from MGRs, which means “research and development on the genetic and/or biochemical composition of marine genetic resources, including through the application of biotechnology.”
Financial obligations could comprise:
- Milestone payments;
- Payments or contributions related to the commercialization of products, including payment of a percentage of the revenue from sales of products;
- Tiered fees paid on a periodic basis, based on a diversified set of indicators measuring aggregate level of activities by a state party.
The specifics will be further decided by the first Conference of the Parties (“COP”), which will be held one year after the entry into force of the High Seas Treaty. Notably, at the first COP, state parties to the treaty can make declarations, postponing the payment of the monetary contributions up to four years “in order to allow time for the necessary implementation”. Other details, such as whether payments will be made to the state parties, or directly to the fund created under the treaty remain to be clarified.
A number of non-monetary benefit-sharing obligations are also foreseen, e.g.:
- Access to MGR samples to third parties;
- Access to DSI to third parties;
- Open access to findable, accessible, interoperable and reusable (FAIR) scientific data;
- Transfer of marine technology;
- Capacity-building for developing States.
4. Retroactive application of the new benefit-sharing mechanism
The benefit‑sharing mechanism of the BBNJ will apply to all activities after the entry into force, and – quite uniquely – also to the “utilization” of MGR and DSI on MGR collected or generated before the entry into force of the BBNJ Treaty, unless a State Party makes an exception in writing signing up to the BBNJ.
The exact scope of this retroactive effect is not yet clear. For instance, a key question for companies is exactly what the retroactive obligation to share will cover, e.g., a defined monetary contribution based on MGRs collected in the past; a variable monetary contribution, based on the profits generated using those MGRs; information, research results and know‑how, derived from those MGRs; or some combination of the foregoing.
The High Seas Treaty was opened for signature on June 19th and will enter into force 120 days after at least 60 states ratify it. Since the devil of ABS is often in the detail, entities with past or future activities relating to marine genetic resources should make an inventory of how the BBNJ might affect them. Past due diligence activities relating to ABS under the Nagoya Protocol may be helpful in this respect.
If you find that the BBNJ may affect your business, it is recommended that you work with your government on clarifying the scope of past and future benefit-sharing obligations, and making sure that they are manageable. At this point in time, it is also still possible for parties to submit, e.g., reservations, or even not ratify the treaty at all.
Once the treaty enters into force, it will take at least one year after that for the first COP meeting to be organized, which will provide further clarifications for the creation and application of the benefit-sharing mechanism. Companies may wish to also discuss the possibility for State Parties to request the possible four-year delay for the application of the benefit-sharing mechanism at the first COP meeting.
Covington’s unique practice on Access and Benefit-Sharing from Biodiversity stands ready to assist you.