14.1 Introduction: Regulatory Context
The Cartagena Protocol on Biosafety1 (hereafter: Cartagena Protocol) was adopted on 29 January 2000 as a supplementary agreement to the Convention on Biological Diversity and entered into force on 11 September 2003. The Cartagena Protocol pursues the goal of reconciling the economic interests of the biotechnology industry with environmental concerns2 and, by doing so, is supposed to provide a framework to meet the respective needs of trade and environmental protection with respect to the rapidly growing global biotechnology industry.3 On the one hand, the Protocol is designed to enable the access to and transfer of technologies regarding the development and use of living modified organisms (LMOs) which are seen to potentially provide considerable socio-economic benefits. Such a typically commercial use may be contained in controlled settings, or involve the release of the organisms into the environment for application in agricultural or industrial production-processes or products.4 This entails serious risks of environmental damage. The Cartagena Protocol, therefore, seeks to ensure the development of appropriate procedures to enhance the safety of biotechnology, to reduce potential threats to biological diversity, taking also into account the risks to human health.5 It does so with a particular focus on transboundary movements.6 The reasons cited for the need for a specific liability regime regarding LMOs and the potential damage they may cause relate to many of the specific problems associated with such organisms: For example, once LMOs are released, the transgenes cannot be easily recalled or removed from the environment. There may be possible long-term effects, whereby damage may only appear over time or even increase incrementally over time. Furthermore, some of the difficulties common to liability in an environmental damage context become acute when dealing with LMOs, such as in proving damage and causation, valuing areas damaged by LMOs, which may be not as well developed under existing liability regimes, as well as defining the affected persons who can bring a claim, e.g., on behalf of the environment or affected communities.7
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The Protocol however does not substantially address the question of liability in cases involving damage resulting from such risks and adverse effects. The issue of the regulation of the allocation of costs as consequences of such adverse effects had been a fiercely contested struggle8 over the liability issue during the negotiations on an international agreement and even became a major obstacle in the negotiation process: Many developing countries argued that transboundary movements should only be permitted if the allocation of the costs of any adverse effects was regulated. As a result, proposals were introduced that would address such adverse effects through the introduction of civil liability provisions. Other negotiating States, in particular developed countries, held that the issue was too complex and controversial to be resolved in the time available for the negotiations.9 To resolve the disagreement, the parties agreed to integrate a procedural solution by means of an enabling clause. The outcome was Article 27 of the Protocol which required the parties to establish a process to negotiate international rules and procedures to deal with any such damage.10
After an extensive negotiation process, the Nagoya–Kuala Lumpur Supplementary Protocol on Liability and Redress to the Cartagena Protocol on Biosafety11 (hereafter: Supplementary Protocol) was adopted on 15 October 2010 and entered into force on 5 March 2018. The Supplementary Protocol explicitly recognises, in its preamble, Principle 13 of the Rio Declaration on Environment and Development, which calls on the States Parties to develop further international law regarding liability and compensation for adverse effects of environmental damage. It has to be emphasised, however, that the supplementary protocol primarily adopts an administrative approach: The Protocol primarily contains rules for the State Parties to make sure that taken in the event of damage resulting from living modified organisms, or where there is sufficient likelihood that damage will result if timely response measures are not taken.12 Conversely, the provisions concerning civil liability are quite rudimentary: Article 12 of the Supplementary protocol obliges the Parties to provide, in their domestic law, rules and procedures that address damage, either by continuing to apply their existing rules regarding civil liability or by developing specific liability regimes. Given the initial prominence of the issue, this outcome was surprising to many observers.13
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14.2 Liability Model
14.2.1 The “Dual Approach” of the Supplementary Protocol
As outlined above, the Supplementary Protocol includes basic propositions regarding civil liability, but prioritises an ‘administrative approach’, which is also denominated as ‘administrative liability’.14 This approach is, in principle,15 adopted in a similar way by the European Directive 2004/35 on environmental liability (Environmental Liability Directive) which equally entails a framework based on the polluter pays principle and, according to which, an identified polluter is required to take remedial action to address damage. The process is dealt with by a designated administrative public authority.16 The single norm on civil liability requires an adaptation of the Parties’ domestic law to provide for legal means to claim damages as defined in the Supplementary Protocol. The basic liability model thereby differs from the majority of international environmental liability treaties, such as the International Oil Pollution Conventions and several of the treaties analysed in the Annex, which opted for a civil liability approach.17
In addition, the Supplementary Protocol relies heavily on domestic decisions in accordance with national circumstances, indeed, Gupta and Orsini count 18 references to domestic law in its text. Many elements of the Supplementary Protocol, including issues of financial security and limits of liability, are also left to the discretion of national authorities.18 These elements of the Supplementary Protocol may result in considerable differences between States where it concerns the application of the regime.19
The following section describes and evaluates the framework of the regime. Given the predominantly administrative approach of the Supplementary Protocol, it will, first of all, analyse the respective allocation of responsibilities regarding response measures. The subsequent discussion of the civil liability regime necessarily is limited to the basic provisions of the Supplementary Protocol, however, it includes an example of an option to integrate diverse mechanisms to prevent, mitigate or compensate for environmental damage. In addition, the advantages and disadvantages of ‘top-down’ approaches to risk regulation may be discussed by way of contrast to the benefits of a ‘horizontal’ liability regime.20
14.2.2 Scope of the Supplementary Protocol: Regulated Organisms, Activities and Harms
Several aspects regarding the scope of the Supplementary protocol can be noted, however, the focus here is primarily on its limitations with respect to the object (LMOs) and the specific activities to be covered. With respect to initial struggles during the negotiation process over the scope of the liability regime, what was considered a narrow interpretation has presumably prevailed in several respects, such as the definition of damage and limitations of liability. These aspects will be discussed as a constitutive part of the administrative liability regime in the next subchapter.
Regulated Living Modified Organisms
It is Article 3.1 that details the Protocol’s scope in covering damage that results from LMOs, which includes whether these were intended for direct use for food, feed or for processing, for contained use or for intentional introduction into the environment. Excluded from this scope are pharmaceutical LMOs for humans, a sub-category which is also excluded from the scope of the Cartagena Protocol, Article 5 Cartagena Protocol, but is addressed by other relevant international agreements or organizations, such as the World Health Organisation. This includes genetically engineered vaccines, such as micro-organisms that have been modified to transmit the hepatitis B vaccine.21
The explicit mention of “products thereof”, i.e. processed materials of LMO origin, was removed from the operative text of the Supplementary Protocol due to various points of contention. 22 However, arguments provided in the course of the negotiations support an understanding that Parties may apply the Supplementary Protocol to damage caused by such processed materials, provided that a causal link is established between the damage and the LMO in question.23 This understanding is significant as it clarifies that the Supplementary Protocol may apply to damage caused not only by LMOs but also by their products, which may be non-living material.24
Activities Addressed
A limitation on the scope of the Supplementary Protocol results from its restriction to only damage caused by LMOs which find their origin in a transboundary movement. The Protocol accordingly does not apply to domestic damage caused by LMOs when the damage does not originate from transboundary movement.25 According to Articles 3.2. and 3.3., the supplementary Protocol applies to damage resulting from authorised and intentional (in which case the use must be authorised), as well as unauthorised and unintentional uses, including damage resulting from illegal transfers of LMOs.26
The Supplementary Protocol covers damage that occurred in areas within the limits of the national jurisdiction of Parties. Parties are free to establish criteria for addressing damage. Notably, the domestic law implementing the Supplementary Protocol shall include damage caused by LMOs from non-Parties as well, as per Article 3.7. This is considered a key provision designed to broaden the reach of the agreement to those countries that are currently LMO producers and exporters but not yet a Party to the Cartagena Protocol.27
Damage
The damage covered relates to the adverse effect on the conservation and sustainable use of biological diversity which, according to the Convention on Biological Diversity (CBD), is to be understood as “the variability among living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystems”, Art. 2 CBD.
Article 2.2.b.i states that the damage must be measurable or otherwise observable, taking into account, wherever available, scientifically-established baselines recognised by a competent authority that takes into account any other human-induced and natural variations. In addition, the damage has to be “significant” under Article 2.2.b.ii, Article 2.3., where a “significant” adverse effect is determined on the basis of factors such as any long-term or permanent change, to be understood as change that will not be redressed through natural recovery within a reasonable period of time; the extent of the qualitative or quantitative changes that adversely affect the components of biological diversity; the reduction of the ability of components of biological diversity to provide goods and services; the extent of any adverse effects on human health in the context of the Protocol.
Accordingly, only adverse effects to biodiversity are “significant” and therefore considered to be damage in the sense of the Supplementary Protocol. This definition of damage is, on the one hand, rather narrow, but on the other hand, it has to be noted that the Supplementary protocol does acknowledge “pure” environmental damage as a reason for liability and thereby adopts a “relatively new concept”.28 The Supplementary Protocol states that risks to human health have to be “taken into account”. This ‘rather awkward expression’ is understood to imply a rather vague formulation of the damage concerned. As some have noted, this leads to the question, if “[…] damage to human health [is] covered directly or [if it] must [be] a consequence of damage to biodiversity? Both interpretations are plausible. In the absence of unambiguous guidance, it is left to parties to adopt either interpretation in their domestic law implementing the Protocol.”29
Irrespective of risks to human health, ‘traditional damage’ caused by LMOs, such as personal injury, property damage and economic loss, is not covered by the definition of damage in the Supplementary Protocol. Such damage is, however, addressed in the norm regarding civil liability in Article 12.2.30 Accordingly, the parties shall apply or adapt their domestic law on civil liability to provide adequate rules and procedures for material or personal damage associated with the damage defined in Article 2, paragraph 2.b. Accordingly, the administrative liability regime does not detail such damage, leaving it to be covered by domestic civil liability regimes.31
Causation
With respect to the question of the required causal link between an LMO and the damage at hand, the Supplementary protocol again defers to the discretion of the States: According to Article 4, a causal link shall be established between the damage and in accordance with domestic law.
Exemptions from Liability
The Supplementary Protocol does not provide specific defences for an operator. However, aside from the typical exemptions of an ‘act of God’ and ‘act of war’, the Supplementary Protocol gives its Parties the option to regulate, via domestic law, other exemptions or mitigations they consider appropriate. This enables the Parties to the Supplementary Protocol to introduce key defences.32 The Supplementary Protocol thus does not provide orientation with respect to important questions regarding liability, such as the legal consequences of a given permission for the activity in question or the (technical) standards which may inform national courts about what constitutes adequate levels of due care.
Limitations of Liability
The Supplementary Protocol does not provide for a liability limit. Regarding financial limits, it instead again defers to domestic laws as “Parties may provide, in their domestic law, for financial limits for the recovery of costs and expenses related to response measures”.33
In addition, Article 2.2.d. stipulates that operators can only be required to take response measures that are considered reasonable. This formulation, and the fact that the elements listed in Article 2.2.d to determine the kinds of response measures to be taken several times refer to the appropriateness of the measures to be implemented, leads Brans and Dongelmans—although Article 2.2.d of the Supplementary Protocol does not explicitly refer to the costs of such measures—to suggest that an operator cannot be forced to take disproportionately costly response measures. The Supplementary Protocol does not contain any further provisions which would help to determine the appropriateness of the costs of response measures. 34
Insurance: Financial Security
Regarding financial security, the Supplementary protocol again defers to domestic laws. Article 10.1. provides that parties retain the right to provide for financial security in their domestic law. The question of how such a provision ensures that operators can cover damage is rightly considered a crucial issue given the uncertainties of estimating the potential costs of reparation35 and the potentially large costs associated with LMO-based damage.36 Efforts to address this issue must, according to Article 10.2, be exercised in a manner consistent with the Parties’ rights and obligations under international law. In addition, the Supplementary Protocol leaves decisions on financial securities open to further negotiations. According to Article 10.3, a comprehensive study has to be undertaken after the entry into force of the Supplementary Protocol which shall address, inter alia: The modalities of financial security mechanisms, an assessment of the environmental, economic and social impacts of such mechanisms, in particular on developing countries; and an identification of the appropriate entities to provide financial security. In line with his provision, the Secretariat was asked to carry out such a study at the meeting of the Conference of the Parties of the Cartagena Protocol on 30 November 2018.37
Enforcement and Jurisdiction
The Supplementary Protocol does not provide for the transboundary recognition and enforcement of decisions related to response measures.38 As an administrative system, it provides access to justice for private entities who are not satisfied with how the authority has exercised its competence in a specific case.39 The decisions of the competent authority are subject to procedural safeguards, including administrative or judicial review (Art. 5.6).
14.3 The “Administrative Regime” on Liability and Redress
14.3.1 Actors Addressed by the Regime
The Supplementary Protocol imposes liability on the operator, who is defined in Article 2.c as “any person in direct or indirect control of the living modified organism which could, as appropriate and as determined by domestic law, include, inter alia, the permit holder, person who placed the living modified organism on the market, developer, producer, notifier, exporter, importer, carrier or supplier”.
Given the wide range of actors addressed as “operators”, depending on how the Supplementary Protocol is being implemented in domestic law, diverse potential and possibly solvent addressees are available in the event of damage. There may, therefore, be more than one addressee of an administrative order available not only to immediately inform the competent authority of damage that occurred or is occurring and to evaluate such damage but also to take the appropriate response measures.40
As indicated above, the Supplementary Protocol provides for administrative liability and, as such, it allocates responsibility for the implementation and enforcement of its provisions to the regulatory authorities of the States. While response measures are an integral part of this administrative regime,41 liability under the Supplementary Protocol does not rely on State liability. Instead, the Protocol stipulates that domestic legislation shall allocate the burden of liability to the relevant private actors.42
14.3.2 Response Measures
Under Article 5.1, Parties shall require the operator or operators, in the event of damage, to immediately inform the competent authority, evaluate the damage and take appropriate response measures. The competent authorities have the responsibility to identify the operator who has caused the damage, undertake their own evaluations of the damage and determine which response measures should be taken by the operator.
According to Article 2.2.d. “response measures” mean reasonable actions to:
1.
Prevent, minimize, contain, mitigate, or otherwise avoid damage, as appropriate;
2.
Restore biological diversity through actions to be undertaken in the following order of preference:
(a)
Restoration of biological diversity to the condition that existed before the damage occurred, or its nearest equivalent; and where the competent authority determines this is not possible;
(b)
Restoration by, inter alia, replacing the loss of biological diversity with other components of biological diversity for the same, or for another type of use either at the same or, as appropriate, at an alternative location.
Response measures, accordingly, in the first instance are determined as measures to restore the affected environmental conditions to that which existed before the damage occurred. The approach of the Supplementary Protocol thereby differs from other international regimes and, specifically, civil liability regimes which limit compensation for impairment of the environment to the costs of measures of restatement actually undertaken or not undertaken.43 Where relevant information indicates that there is a sufficient likelihood that damage may result if timely response measures are not taken, the operator shall be required to take appropriate response measures so as to avoid such damage, as per Article 5.3. In this regard, Article 5.4 states that the competent authority may implement appropriate response measures, especially when the operator has failed to do so. It also has the right to recover from the operator the costs and expenses of, and incidental to, the evaluation of the damage and the implementation of any such appropriate response measures, as detailed in Article 5.5.
The authority must adhere to a predefined set of rules, provided by Article 5.6, when requiring the operator to take response measures. These include providing notification to the operator of the decision requiring the operator to take response measures, reasons for the decision and notification of the remedies available under domestic law for challenging these decisions. This includes recourse to courts or other authorities to challenge any decision made.44
14.3.3 Standard of (Administrative) Liability
Given the primarily administrative nature of the Supplementary Protocol, it obliges the States Parties and their regulatory authorities to require operators to take adequate response actions irrespective of any infringement of standards regarding due diligence or due care. The standard of liability of the Supplementary Protocol, in line with its character as an administrative instrument, is accordingly strict. The civil liability clause, as will be outlined below, indicates at alternative options in local civil law.
14.4 The Civil Liability Clause
Article 12 of the Supplementary Protocol contains basic provisions on civil liability. Article 12.1 stipulates that Parties shall provide rules and procedures that address damage in their domestic law. To implement this obligation, Parties shall provide for response measures in accordance with this Supplementary Protocol and may, as appropriate, apply their existing domestic laws, including where applicable, general rules and procedures on civil liability and/or develop specific rules and procedures concerning civil liability. According to Article 12.2, adequate civil liability rules and procedures shall more concretely regulate material and personal damage associated with adverse effects on the conservation and sustainable use of biodiversity that result from the use of LMOs. When developing civil liability laws to adequately regulate damage to biodiversity as well as material and personal damage, Article 12.3 requires that the parties shall, as appropriate, address issues related to damage that include, but are not limited to: the standard of liability, including strict or fault-based liability; channelling of liability, where appropriate; the right to bring claims.
Scholars have deduced some basic substantial provisions from the formulation of the norm: E.g. the integration of ‘associated’ material and personal damage in the civil liability clause also seems to point to a basic understanding of a causal link as it plausibly implies that the damage must be a consequence of damage to biodiversity. “An example would be when an LMO contaminates the environment and damages biodiversity. At the same time, it may cause material and physical loss to a farmer whose field is affected by the contamination. This damage would clearly be covered.”45 It also has to be noted that the Supplementary Protocol stipulates that, where respective rules do not yet exist, substantial and procedural adaptations of national civil liability laws should be made to make it possible to take into account pure environmental damage (subject to the limitations of the definition of damage according to Article 2 of the Supplementary Protocol).
The Supplementary Protocol implicitly obliges parties to review their domestic laws to assess whether or not they have in place adequate rules and procedures on civil liability.46 It does so, however, by relying heavily on formulations that entail significant leeway regarding the implementation of the norms. It therefore almost entirely leaves the implementation of civil liability up to existing domestic laws or the development of relevant new laws at the discretion of the parties. Given that it does not stipulate the relevant substantive content for any of the suggested elements of liability, which could provide for significant international harmonisation, it is considered by some to be spectacularly deficient.47 Others acknowledge the fact that the Supplementary Protocol at least provides an obligation to develop domestic civil liability legislation, where it may not yet exist.48 The basic propositions of the Supplementary Protocol are hoped to potentially trigger further work on an international civil liability regime.49 The first review of the Supplementary Protocol, which is scheduled to take place five years after its entry into force (2023), shall include an assessment of the effectiveness of the provision on civil liability, Article 13 Supplementary Protocol.
14.5 Special Features of the Liability Regime
A dual approach to a liability regime in the regulatory context of the Supplementary Protocol can have several advantages. According to Newell, the provisions of the public, administrative regime and the civil liability regime may have, “[r]ather than pulling in different directions […] interacted in a mutually supportive way with each approach building on the limitations of the other”. Regulation focusing on civil liability may, accordingly, help to construct “new normative frameworks”, to generate “fresh expectations” and brings into the regulatory process a wider circle of stakeholders.50 This could give more voice to categories of interests not always well represented by States and their governments, such as indigenous and local communities, environmental organisations and smallholder farmers.51 Public regulation, in contrast, can provide the authority, legitimacy and enforceability of environmental rules and standards.52
The Supplementary Protocol could thus have contributed to a well-adapted integration of a top-down instrument, e.g. by clarifying the implications of public permits for civil regulation for civil liability. However, given the high degree of discretion of the parties regarding the configuration of civil liability, this opportunity has not been taken. The implementation of a balanced and functional civil liability regime, which may “bolster the effectiveness of public regulation while simultaneously providing an avenue for the expression of particular civic interests or concerns”53 still hinges on the goodwill and readiness of the parties.
14.6 Rationale Behind the Chosen Liability Model
Historically, the specific regulatory model of the Supplementary protocol is widely considered to be a consequence of the need to find the middle ground to circumvent the points of contention between the negotiating States, specifically regarding the integration of a regulation on civil liability.54 The fact that negotiators opted for the administrative approach and provided the parties with almost complete discretion regarding whether or not to apply civil liability procedures, time limits, financial limits and financial security, can seemingly only be explained by their need to overcome a deadlock in the negotiations.55 A somewhat similar reason for not adopting internationally binding provisions on civil liability, which some commentators suggest was to improve the prospects of gaining ratifications and enabling the agreement to enter into force.56
Notwithstanding these historic and political reasons for the chosen liability model, scholars also point to several functional reasons driving a primarily administrative liability approach. The merits of such an approach, as Singh Nijar points out, may be summarised as follows: First, an administrative approach is based on strict liability. Secondly, there is no need to go through a court adjudicatory process to ascertain liability before requiring response measures, which is seen as a significant advantage, especially where immediate remedial measures are required to address already materialised or to prevent imminent damage. Thirdly, the administrative approach is seen to be particularly suitable where the damage is diffused and there is no easy way to ascertain the wrongdoer. In addition, a significant lag time between the movement or use of LMO and any potential harm they may cause make it difficult for an injured party to determine the harm's source as during this period other intervening forces may affect biodiversity and human health.57 Fourthly, the approach is, in principle, also suited to ‘pure’ environmental damage, i.e. where there is no clear ownership of an object damaged, such as may frequently be the case when biodiversity is affected. As such, it may avoid procedural obstacles in some jurisdictions, which give standing to sue only to those who can establish their direct interest in the subject matter over and above that of the general public. Fifthly, the approach channels liability to the operator, i.e. the person involved in the activity causing the damage, and thereby implements the ‘polluter pays principle’. Finally, commentators consider the flexibility of this approach to accommodate the different priorities, legal systems and practices of the operators involved as an advantage and highlight the reliance on science-based proof of damage and its acceptance by industry as being transparent and fair.58
Conversely, the success of this approach to efficiently put in place preventative measures and then deal with reparations in the event of damage largely depends on the abilities and readiness of the ‘competent authorities’ of the parties, in particular on their having the necessary resources and expertise to determine adequate response measures in a timely manner. Specifically, developing countries may face challenges related to their lack of relevant capacities. Finally, it has also been suggested that an administrative approach may be inappropriate for smaller-scale damage.59
14.7 Practical Relevance and Evaluation: A Model for the Liability Regulation of Risk Technologies?
Given the short time that has passed since the entry into force of the Supplementary Protocol, it is too early to properly evaluate its effects and effectiveness. Nevertheless, based on this brief analysis, several conclusions can be drawn regarding the prospects of success of the Supplementary Protocol.
As the administrative public law approach of the treaty is still unusual for international environmental treaties,60 and given the concerns raised concerning the potential of effective implementation, it remains to be seen if it will be successful. The functional scope of the Supplementary Protocol, however, is limited as it only addresses damage to biodiversity resulting from transboundary movements of LMOs. This does not mean that an administrative liability approach cannot be suited for application to such or other activities and/or types of damage. It could, according to Lefeber, also be introduced for: (a) damage to biodiversity caused by other activities, such as the transboundary movement of invasive alien species under the Convention on Biological Diversity; (b) damage to the environment under other multilateral environmental agreements; or (c) other types of damage, such as public health costs resulting from unexpected negative effects caused by the introduction of medicines.61 As such, the rather modest approach of the Supplementary Protocol could, if its administrative regime, contrary to concerns regarding practicability and feasibility of an effective implementation, turns out to be successful, serve as a starting point for more demanding strategies. Practically, the ongoing struggles and potential deadlocks during the negotiations on the regime may, however, ultimately temper such hopes. In addition to the limited scope and definitions, the flexibility provided to the parties regarding the implementation of crucial aspects of the regime such as exemptions from or limitations to liability and financial security62 may also limit the potential of the Supplementary Protocol to be an effective, internationally harmonised (administrative) liability regime.
The deficits arising from the lack of substance of the liability clause have been described above and, given these shortcomings, scholars predominantly perceive that an opportunity to develop a harmonised liability approach with respect to potential harm from the specific characteristics of an emerging modern technology has been missed.63 The (empirical) question of whether the rather rudimentary obligations regarding the development and implementation of national civil liability norms concerning the (environmental) damage addressed may lead to substantial changes in the positive framework or application of national laws, remains to be answered. Article 13 requires the Conference of Parties to review the effectiveness of the liability clause of the Supplementary Protocol 5 years after the entry into force of the Supplementary Protocol and every 5 years thereafter. Based on this review, adaptations of the civil liability regime could follow.
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