Determination of Damage

To hold a Member responsible, a tribunal must decide that damage to biological diversity was caused by the release of an LMO by that Member. This requires: (1) establishing a baseline of biological diversity of the affected species or natural resources service in the habitat and measuring the change from the baseline, (2) determining through science-based evidence whether that change is significant and adverse, (3) assessing whether the LMO and the release of the LMO by the Member caused that damage, and (4) deciding what remedy should be provided.

Damage to Biological Diversity

To prove that there has been damage to biological diversity, a State must show that the change to biological diversity is measurable, significant and adverse.

The first step is to measure the alleged change to biological diversity. The State must establish a baseline of the state of biological diversity prior to the change in biological diversity allegedly caused by the LMO. The baseline can only include data from the twenty-five year time period preceding the date the alleged damage occurred.

The second step is determining whether the measured change is significant and adverse. A significant and adverse change is that which results in one of four conditions: (1) the species cannot maintain itself on a long-term basis as a viable component of its natural habitat; (2) the natural range of the species has been reduced to an unsustainable level; (3) a sufficient habitat no longer exists to maintain species population on a long-term basis; or (4) some other species in the affected ecosystem related to or dependent upon the species in question cannot maintain itself on a long term basis as a viable component of the ecosystem.

Causation

Determining causation is a science-based, fact-driven analysis of three traditional factors:

  • LMO Causation: A tribunal ascertains whether the LMO caused the damage in question, looking specifically at whether the alleged change to the species of ecosystem can be caused by the LMO in question and whether the damage alleged actually did result from the genetic modification of that specifically identified LMO.
  • Member Causation: A tribunal ensures that the Member named is the responsible party. A Member is responsible when the release of an LMO by that Member caused the damage.
  • Superseding Event: The damage must not have been caused by a superseding event or a logically unrelated or remote event that altered the chain of events that otherwise might have connected the LMO or the Member’s release to the alleged damage.

If there are multiple causes of the damage, the tribunal will apportion responsibility by assigning percentages of responsibility for each cause. If a Member is fifty percent responsible, it pays half of the total damage amount. This system is the fairest way to assure that each Member is only responsible for the portion of the problem it actually caused.

Defenses

A Member has six defenses that reduce the Member’s obligation in accordance with the percentage of responsibility assigned to the activity giving rise to that defense.

The first three defenses cover activities and events accepted or authorized by the State bringing the claim: (1) a risk explicitly assessed and accepted as part of the State’s authorization process for the LMO in question; (2) a risk posed by an activity specifically authorized or permitted by the State, or (3) damage caused by compliance with a compulsory measure imposed by the State.
The other three defenses account for superseding factors outside of the Member’s control. These defenses include (4) an act of God, (5) an act of war or civil unrest, or (6) misuse of the LMO by another person or entity.

The “Misuse” defense assures that a Member is only liable for its own product or conduct. Misuse exists when another person violated a law or regulation, or a prescribed condition, safety measure or standard governing the LMO; that violation caused the improper release of the LMO; the LMO damaged biological diversity; and compliance with the law, regulation, condition, safety measure or standard would have prevented the LMO’s release and the damage. To assure that this misuse defense is not misinterpreted to provide a broad defense, the Compact instructs the tribunal to narrowly construe this defense when invoked by a Member.

Remedies

If a Member is responsible, in whole or in part, for the alleged damage, the tribunal will determine the award. Remediation is preferred, though compensation is available.

Where remediation is sought, the State will propose a remediation plan, which can be further developed in coordination with the potentially responsible Member to assist the tribunal. The plan sets forth a process for remediating the species or natural resource service to an appropriate remediation end. The remediation end point is reached when: (a) population dynamics data for the species demonstrate that it can maintain itself on a long-term basis; (b) the natural range of the species has been increased to a sustainable level; (c) a sufficient habitat is generated to maintain the species population on a long-term basis; and (d) one or more other species in that ecosystem related to or dependent upon the species can maintain itself on a long-term basis.

The tribunal also takes into consideration the benefits of the LMO and will try to preserve those benefits under the plan. Accordingly, the tribunal can tailor remediation to preserve benefits, require both remediation and compensation, or order compensation alone. Also, if remediation is impossible or would cost more than the economic value of the damage, the tribunal can order the Member to compensate the State for that economic value. Assessing the appropriate compensation, whether combined with remediation or not, must be done through objective processes and objective criteria and be supported by science-based evidence.

Financial Limits

Tribunal awards must stay within the Compact’s financial limits. Those limits are based on the International Monetary Fund’s (IMF) unit of money called Special Drawing Right (SDR). SDRs can be readily converted into the foreign currency of a State.

The limits encourage remediation: the limit for remediation alone is 30 million SDR for a single incident and 150 million SDR for all incidents caused by an LMO; limits for compensation alone are 15 million SDR and 75 million SDR, respectively.

An award in the form of both remediation and compensation is to be infrequent under the Compact. Should any award include both, however, the maximum sum for a single Incident is 30 million SDR, of which no more than 15 million SDR can be for compensation. For all Incidents of Damage Caused by a single LMO the maximum sum is 150 million SDR, of which no more than 75 million SDR can be for compensation.

Enforcement

An award under the Compact is a commercial arbitration award that is final, binding and not appealable. Any challenges to the enforcement of an award can only be made under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

If a State alleges a breach of a Member’s response obligations, the State must provide written notice to the Member, who has a prescribed period of time to respond to or cure the breach. If the breach is not resolved, the State alleging the breach seeks a determination of the breach from the presiding arbitrator of the tribunal, or other neutral appointed by the PCA.

If a Member is deemed in breach, a State can file an enforcement action in its own jurisdiction or in the domicile State of the Member, among other jurisdictions. In addition, the other Members of the Compact are required to file a separate specific enforcement action against any recalcitrant Member.
If a Member needs to enforce the Compact against a State, for example to avoid double or multiple recovery, the primary option is for the Member is to enforce the Compact under the judicial system of the State that signed the arbitration agreement.