Corporate Socialisation

'Why Culture Matters in International Institutions: The Marginality of Human Rights at the World Bank' by Galit Sarfaty in (2009) The American Journal of International Law 647-683 [PDF] considers the World Bank's corporate culture and explores why the Bank has not adopted a human rights policy or agenda.

Sarfaty asks

Why do international institutions behave as they do? International organizations (IOs) have emerged as significant actors in global governance, whether they are overseeing monetary policy, setting trade or labor standards, or resolving a humanitarian crisis. They often execute international agreements between states and markedly influence domestic law, which makes it important to analyze how international institutions behave and make policy. Conducting an ethnographic analysis of the internal dynamics of IOs, including their formal and informal norms, incentive systems, and decision-making processes, can usefully aid in understanding institutional behavior and change. This article analyzes the organizational culture of one particularly powerful international institution - the World Bank (the Bank) - and explores why the Bank has not adopted a human rights policy or agenda.

Established on July 1, 1944, the World Bank has become the largest lender to developing countries, making loans worth over $20 billion per year. Its more than ten thousand employees (including economists, sociologists, lawyers, and engineers, among others) are engaged in the Bank’s mission of poverty reduction, which it primarily carries out through its development lending. While the institution has adopted various social and environmental policies and works on issues as diverse as judicial reform, health, and infrastructure, it has not instituted any overarching operational policy on human rights. Human rights concerns are not systematically incorporated into the everyday decision making of the staff or consistently taken into consideration in lending; incorporation of human rights is ad hoc and at the discretion of employees. In addition,many employees consider it taboo to discuss human rights in everyday conversation and to include references to them in their project documents. The marginality of human rights stands in contrast to the Bank’s rhetoric in official reports and public speeches by its leadership, which have supported human rights.

What do I mean by saying that human rights is a marginal issue within the Bank? In general, it means that the Bank maintains no comprehensive or consistent approach on the policy and operational levels. In more specific terms, it means that the Bank lacks at least the three following provisions/safeguards: (1) a staff policy to mitigate the impact of its projects on human rights; (2) a requirement to consider countries’ obligations under international human rights law when its employees engage in country dialogues or draft Country Assistance Strategies; and (3) guidelines on when it would suspend operations because of human rights violations. Why should we be surprised that human rights are such a marginal issue at the World Bank? I find a few compelling reasons why the Bank’s approach to human rights (or lack thereof) appears counter intuitive. First, other institutions involved in poverty reduction, including the United Nations Development Programme, the United Nations Children’s Fund, and the United Kingdom’s Department for International Development, have adopted human rights policies or a rights-based approach to development. Second, the Bank has been pressed by civil society organizations and internal advocates to integrate human rights considerations into its projects and programs. Third, private financial institutions have begun to address human rights more openly out of concern for their public image and the reputational risk of committing human rights abuses. Even the International Finance Corporation, the Bank’s private-sector arm, has openly adopted human rights as part of a risk management approach, although its engagement in selective human rights has been subject to criticism by nongovernmental organizations (NGOs). Despite these three factors, the Bank has not adopted a strategy on human rights. Whether and how the Bank should adopt human rights has been discussed at length by academics and civil society advocates. This literature primarily focuses on legal arguments for binding the Bank and its member countries to international human rights obligations. It does not investigate the internal workings of the bureaucracy so as to understand why the Bank has yet to adopt and internalize human rights norms. This article offers an empirical analysis of the Bank’s organizational culture based on extensive ethnographic field research at the institution itself, including personal interviews, participant observation, and analysis of Bank documents. This research sheds light on why organizational change has not occurred and suggests conditions under which it could happen. I selected this case because the Bank has neither adopted nor internalized human rights norms despite external pressure over the past two decades and repeated attempts by insiders to push the human rights agenda forward.

I have found that the ways norms become adopted and ultimately internalized in an institution largely depend on their fit with the organizational culture. When a new norm is introduced, employees from different professional groups within the Bank often have distinct interpretive frames that they use to define the norm, analyze its relevance to the Bank’s mission, and apply it in practice. Proponents of a norm must take internal conflict over competing frames into account when trying to persuade staff members to accept it. They must also consider the operational procedures, incentive system, and management structure of the organization when determining the most effective strategy of implementation. Thus, to bring about internalization, actors must adapt norms to local meanings and existing cultural values and practices - that is, they must “vernacularize” norms.

This article proceeds as follows. In part I, I argue that theories of international institutions should account for the internal dynamics within organizational cultures, which shape how institutions change and influence state behavior. Ethnographic research can help us analyze the conditions under which norms are internalized, including the degree to which they should be legalized. In part II, I consider why human rights have remained such a marginal issue at the Bank. I review legal constraints in the Bank’s Articles of Agreement (or Articles) and failed efforts from the early 1990s through 2004 to introduce a human rights agenda at the Bank, as well as the uncertain legal status and limited impact of a 2006 legal opinion on human rights. Part III analyzes the Bank’s organizational culture, including formal and informal processes of norm socialization and power dynamics between professional subcultures, and focuses on the prestige of economists and the lower status of lawyers in the Legal Department. In part IV, I emphasize the importance of framing norms to adapt to organizational culture, examine battles between Bank lawyers and economists over defining human rights norms and relating them to the Bank’s mission, and discuss the most recent attempt to introduce human rights into the Bank’s work. The conclusion analyzes the risks of achieving norm internalization at the Bank by “economizing” rather than legalizing human rights.

Sarfaty concludes

Analyzing organizational culture contributes usefully to understanding organizational change and predicting how IOs will behave. The conditions under which norms are adopted and internalized in an organization are shaped by its culture, including its mission, management structure, incentive system, and decision-making process. Internalization occurs when actors vernacularize norms, or adapt them to local meanings and existing cultural values and practices. There is no universal recipe for bringing about internalization in IOs. Rather, an institutional fit for norms must be found. They must be framed to be adaptable to the structural, functional, and cultural distinctiveness of each institution.

The recent initiative to push human rights forward at the Bank offers insights on how to bring about organizational change. Internal advocates attempted to appeal to the dominant subculture of economists by framing human rights as quantifiable and instrumentally valuable to achieving the economic development goals of the Bank. They called for pursuing an incremental strategy from the bottom up through country-level pilot projects, rather than a topdown official policy. By late 2006, the strategy became public and no longer under the radar, but it is too early to gauge its success. This approach represents one potentially effective way of bringing human rights norms into the Bank’s work. Another may be to alter the existing distribution of power within the institution (and thus the organizational culture) so that lawyers have more decision-making power and status in relation to economists and other professional groups. A radical change of this nature, however, would probably take many years and would require support from the leadership.

Human rights are a particularly difficult set of norms to incorporate into an economic institution because doing so forces employees into a struggle between principles and pragmatism — that is, it creates a tension between normative, intangible values and goals, and practical ways to solve problems (which may make it necessary to reconcile competing principles). In an environment like the Bank where most issues are subject to cost-benefit analysis, employees may be ambivalent about principles that appear to be non-negotiable or subject to trade-offs. They may perceive potential costs in trying to render seemingly incommensurable values commensurate.

What are the consequences of economizing rather than legalizing human rights? Some critics fear that although legalizing human rights norms may limit their persuasiveness within the Bank, an economic framework would dilute their meaning and serve as a ceiling for future human rights standards of other development agencies. Therefore, injecting human rights too far into the existing power structure involves risks. As an anthropologist has observed, if human rights “are translated so fully that they blend into existing power relationships completely, they lose their potential for social change.” This co-option is part of the dilemma of human rights framing and vernacularization strategies: they will not induce radical, long-term change if they do not challenge existing power structures and are too compatible with dominant ways of thinking. At the same time, they need to resonate with local cultural understandings if they are to appear legitimate and appealing, and thus become part of local rights consciousness. This conundrum raises important questions: Can human rights be so extensively vernacularized that they lose their essential core, or even contradict their fundamental meanings? Must human rights remain connected to a legal regime (and be linked to state obligations deriving from international law) to continue to be considered “human rights” and not another concept like “empowerment”? Ethnographic studies can illuminate the process of internalizing norms within international institutions and thus help determine how to resolve such issues and devise an appropriate strategy for organizational change.

Munchies

Footnotes and fries to go with the fava beans, chianti and human liver?  We've moved on from Dudley v Stephens to the strange Mr Meiwes

'Eat What You Kill: Or, a Strange and Gothic Tale of Cannibalism by Consent' by Charles Reid Jr in (2013) North Carolina Journal of International Law and Commercial Regulation (Forthcoming) argues that

Consent-based jurisprudence has become the dominant model for understanding much of law and ethics. It exalts freely-exchanged consent grounded on rational and autonomous decision-making. This Article means to raise questions about the foundations of consent-based jurisprudence. It does so by focusing on a recent German case. Two German computer scientists exchanged repeated and free consent to an act of cannibalism. Following these exchanges, which were not only reduced to writing but put on video-tape, the one scientist killed and ate the other. The victim, if he can be called a victim, even urged the cannibal to the completion of the task when the cannibal seemed to lose nerve. This Article reconstructs the circumstances of this case, evaluates the German law under which the cannibal was tried, examines the existing scholarship on this case, and concludes with a review of its implications for jurisprudence and morals.

Reid comments that

It is a law professor's dream hypothetical, the sort of question students would chuckle at as something so far-fetched as to be impossible: Suppose two men meet over the internet. One has had a life-long desire to eat another human being; the other has had the life-long desire to be eaten. They exchange consent not once, but repeatedly, videotaping their consent, signing a formal "willingness agreement," and performing other acts making clear the total resolve of the victim as well as the cannibal. Suppose, further, that when the cannibal loses his nerve, it is the victim that spurs him on to complete the deed. Suppose further that all of this is captured on videotape. Suppose, also, that the cannibal, who is a very legalistically-minded individual, had released a number of prospective victims because it was clear that they failed to give the same level of free, informed, and repeated consent. Suppose, further, that while there was certainly evidence of emotional unwellness on the part of both men, they were able to hold executive-level responsibilities, maintain friendships, and otherwise assume a large range of everyday duties. Suppose, finally, a statutory regime that did not punish cannibalism and only lightly punished assisted suicide. May the cannibal eat the "victim" under such circumstances?

Such a case actually occurred in Germany in the years between 2002 and 2004. The facts and the trial electrified that nation and much of the world. Two German computer specialists, Armin Meiwes and Bernd Brandes, engaged in precisely this set of behaviors, culminating in Armin's slaughter and consumption of Bernd. This case has attracted significant scholarly attention in legal and criminological circles, which is detailed towards the close of this Article. Michael Sandel, the Harvard legal philosopher, has written about the case, as has Lawrence Friedman, the legal historian at Stanford. But the case itself has never been subjected to a full-scale English-language analysis. It is the intention of this Article to fill this notable gap in the scholarship.

A second purpose of this Article is to raise questions about the nature and limitations of consent-based jurisprudence. For it seems that a system of law grounded on autonomy and consent, and nothing more, is incapable of responding coherently to the facts of this case. Commentators are led either to unqualified, unconditional support for the cannibal and his victim, and believe that their actions can be justified on libertarian premises; Or, alternatively, they are horrified at the facts of the case but lack the framework to construct a reasoned alternative jurisprudence of the case.

I cannot hope to construct that alternative jurisprudence in the context of a single law-review article, though I shall develop some constructive avenues of further investigation in the conclusion. But it is not necessary at this stage of investigation to formulate a fully-developed alternative to consent-based jurisprudence. That would be a very large undertaking, indeed. This Article, rather, is focused on five related points: It will offer a careful reconstruction of the facts of the case and the relevant personalities. It will review and analyze the German law that was employed in the trial and the appeal. It will evaluate the legal theories used to justify the trial court's verdict and the appellate review. It will carefully consider existing scholarship on the case, touching especially on some of the weaknesses in current interpretations. And finally, it will close with why I believe the cannibal and his victim were not justified in their actions.

My method in proceeding is to rely heavily on a narrative history of the case to expose the legal and philosophical issues. Without a careful reconstruction of the facts, it is impossible to understand the degree to which both parties acted freely and non-coercively. And that is what, in the end, makes the case both difficult and significant jurisprudentially: Armin Meiwes and Bernd Brandes did everything one could reasonably expect of two persons consenting to perform a momentous act, and yet we are left deeply uneasy at the final result of their consensual acts.

Reid concludes -

Armin Meiwes' case threatens our jurisprudential self-understanding. This may be an unconscious reason many of the scholars who have addressed this case tend to underplay the radically consensual nature of it. Armin secured the consent of his victim, if you can even call Bernd a victim. Bernd, after all, answered Armin's advertisement and encouraged him at every stage of the process, even after he had undergone emasculation. He signed documents evidencing his consent, he videotaped his consent, he made his will and sold his belongings, and he can be seen on the home movies Armin made of the slaughter telling Armin not to lose heart and insisting that he finish the job.

Armin and Bernd's cannibalism has to be seen as an autonomous act. And autonomy is the foundation-stone of so much about Western law. Our legal philosophers instruct us to aim at policies that maximize freedom in our personal lives and insist that we be non-judgmental as to the ways others define themselves and their private pursuits. Autonomy, in other words, is the "key component" of the "good society." Courts, in the United States, in Canada, and in Europe have elevated human autonomy to constitutionally-protected status.

And this autonomy, commentators have made clear, embraces decisions about ultimate goods, such as life and death itself. To be sure, the United States Supreme Court rejected arguments that the notion of liberty implicit in the Due Process Clause included the right to assisted suicide. Even so, the State of Oregon has moved in this direction statutorily. So also has the nation of the Netherlands. The New Jersey case of Zygmaniak v. Kawasaki Motors, furthermore, while not precisely recognizing a right to die, has been interpreted by commentators as standing for "a clear instance of voluntary euthanasia."

And, truly, all Bernd did was will his own death. To be sure, in the end, he died at the hands of another, but the evidence overwhelmingly supports the conclusion that this was the fate he devoutly longed for and desired. Suicide for exalted purposes has not only not been condemned in western literature, it has been celebrated. Cato the Younger passed sanguinary judgment on Julius Caesar's dictatorship by shedding his own blood, taking his own life as an ultimate act of protest. For this, he won the praise and glory of fellow republicans, his name enduring down the generations. Some of Shakespeare's greatest plays — Othello, Romeo and Juliet — end with the suicides of the protagonists.

Modern existentialist writers have felt the need to justify not suicide, but the decision to live. Albert Camus, Jean-Paul Sartre, and others have spoken in these terms. Why should we not regard Bernd as the brave man, the free man, the quintessentially autonomous man, who has decided that his life might be put to a higher and more beneficial purpose by being united physically, in the most intimate way imaginable, with another human being?

While classically a philosopher like Immanuel Kant objected to suicide as morally wrong and inherently incompatible with human nature (as a misuse of human freedom), even he faced opposition in his own day from thinkers like David Hume. Some modern philosophers are willing to find defensible at least some suicidal acts. Libertarian writers have in particular developed arguments such as the total ownership of one's self to justify a kind of personal sovereignty over the decision whether to live or die. And even many non-libertarians will defend assisted suicide in cases where an individual is terminally ill.

So, if we finally concede that Bernd, on at least some contemporary readings of the scope and nature of human autonomy, was justified in permitting Armin to take his life, still do we not recoil from sharing Armin's perspective? We really do not want to justify his killing of Bernd to satisfy his fixed and settled craving—his Sehnsucht, his fetish for flesh, as it has been called. But even at this outer boundary we should not be too quick to judge. After all, if Armin had a fetish for human flesh, he had a fetish every bit as strong, perhaps even stronger, for free and autonomous consent. It was part of his fantasy that he could only consume the flesh and blood of someone who gave repeated, obvious, and free consent. He wanted everlasting unity with a brother, after all, and such unity could only be the product of absolutely free consent. Was Armin a danger to others? Was he likely to repeat his crime? Perhaps, but, the evidence suggests, only with another victim as resolved to die as Bernd.

So, perhaps Bernd and Armin were right in their actions after all. Perhaps we should agree with those libertarians who see support for their cause as a litmus test for freedom. I, for one, do not wish to go there. John Stuart Mill, is taken by many as the founder and paradigm of modern libertarianism. But this is a misreading of Mill's great essay ON LIBERTY. In that essay, Mill defended the proposition that "there is a sphere of action in which society . . . has only an indirect interest," in which human beings may interact with others on the basis of "free, voluntary, and undeceived consent." So long as harm does not result to others, individuals should be free to act within this sphere "without impediment from our fellow-creatures."

If this was the totality of Mill's ON LIBERTY, one might be justified in reading his work as the libertarian ur-text, the cornerstone of consent-based jurisprudence. But Mill argued, additionally, that his notion of liberty was the product of contingent historical events—the struggle against tyrannical kings, the wars of religion, resistance to a modern tyranny of the majority. Mill saw in this grand historical movement a process of societal maturation. Liberty, as he conceived it, could not be practiced in "[the] backward states of society," and could only be adhered to by "human beings in the maturity of their faculties."

Mill, clearly, was much more than a modern libertarian. He thought deeply and profoundly about proper standards of human conduct and what it meant to live in a civilized society. While he was certainly not a recognizably Christian thinker, Mill even proposed a "Religion of Humanity" as a code to live by. Stressing altruism and sympathy for others, Mill, at least, a liberal from another age, would find it difficult to accept the legitimacy of Armin's and Bernd's essentially uncivilized acts. And I would share Mill's disquiet at Armin's and Bernd's atrocious conduct.

Networked Selves

From 'Mining the Networked Self' by Tal Zarsky in (2012) 6 Jerusalem Review of Legal Studies 120-136, a discussion of Julie Cohen's Configuring the Networked Self: Law, Code and the Play of Everyday Practice.

Cohen sets out to fulfill a challenging and difficult task—formulating an overarching theory which will enable the understanding and critique of the emerging information environment. This ambitious project sets out to address three themes that are central to almost any discussion or analysis of information law and policy: digital copyright, information privacy, and network architecture. Research projects of such scope and complexity are rare. The author correctly observes that scholarship devoted to every one of these issues is heading down different paths. Thus far, scholars writing in every one of these respective fields allowed themselves to neglect the other two important themes, while focusing on what they believed to be an autonomous analytical unit.

This apparent disconnect in the literature is quite unfortunate. As Professor Cohen explains, scholarly neglect is leading to unacceptable outcomes. Such shortcomings are only visible when obtaining a very broad perspective of the entire realm of academic discussions—a perspective Cohen's work enables. This perspective reveals that when turning to separately address every one of the three themes mentioned, scholars addressing today's information environment rely upon similar basic philosophical frameworks (such as an economic analysis or the principles of the liberal state). Yet their theoretical conclusions and the policy recommendations that follow from them might turn out to be extremely different from each other, regardless of the common ground they hold. Cohen convincingly argues that as scholarship in the field of information law is maturing, scholars should no longer be allowed to overlook this systematic flaw. Put differently, when confronted with critiques that their work and its underlying assumptions carry problematic implications when applied to other central themes of information law, scholars may no longer respond: “this is merely an IP/privacy/cyberlaw project – I need not deal with the other two elements here – that is someone else's problem.”

In “Configuring the Networked Self,” the author demonstrates that establishing a coherent theory that touches upon the three core issues of information law is an achievable, yet very difficult task. Professor Cohen sets forth such a theory, which is premised on the notion of “play”—“the modality through which situated subjects advance their own contingent goals, constitute their communities, and imagine their possible futures.”3 The author notes several requirements which are crucial to assure that a sufficient level of “play” is available to members of society—elements which pertain to all three themes of information law detailed above. One such requirement calls for allowing individuals to maintain a limited realm of solitude to develop their subjective being. A second important requirement calls for assuring that individuals are provided with a basic level of transparency. Cohen describes this complex term as an understanding of how mechanisms (be them regulatory, social or technological) work, so that the affected individuals can interact with them (and therefore, with each other) effectively. The author explains this theory in great length, grounding it in various fields of knowledge and finally demonstrating how it could be translated into policy recommendations. I will revisit the theory’s two central requirements—transparency and the realm of solitude4—throughout this short article.

Credit

The National Consumer Credit Protection Regulations 2010 (Cth) under the National Consumer Credit Protection Act 2009 (Cth) have been amended by the National Consumer Credit Protection Amendment Regulation 2013 (No. 1) (Cth) to provide for hardship variations in consumer credit contracts.

Google

France's Commission Nationale de l’Informatique et des Libertés (CNIL) - the national data protection watchdog - has announced  that the French, UK, German, Netherlands, Spanish and Italian privacy regulators will take joint action over Google's refusal to change the search giant's privacy policy.

Last year I noted expressions of unhappiness by those regulators, including disquiet about Google's disregard of requested policy changes. This week's announcement indicates that "the EU Data protection authorities asked Google to comply with their recommendations within four months" but "After this period has expired, Google has not implemented any significant compliance measures".

Google is reported as commenting that

Our privacy policy respects European law and allows us to create simpler, more effective services. We have engaged fully with the data protection authorities involved throughout this process, and we'll continue to do so going forward.

The agencies obviously have a very different view of full engagement and of the forward direction.

National legislation across the EU provides for financial penalties that Google would consider to be trivial. Those penalties however signal official unhappiness and potentially action by the EU governments to crimp Google's operation within the region.

Pharma Patents Review Draft Report

The Pharmaceutical Patents Review noted here and here has released its draft report [PDF].

The Introduction states that -

The pharmaceutical industry relies on patents more than most: successful pharmaceuticals require significant Research and Development (R&D), yet competitors can cheaply copy those drugs. The patent system restricts such free riding by giving patentees a period of market exclusivity. It allows a reward for past investments and, more importantly, it grants an incentive for continued innovation.

Patents also have negative effects. They may increase prices – and so restrict supply – by more than the amount that would be required to provide the necessary incentives to innovate. This is important for pharmaceuticals because of their importance to human health. And though innovators seeking a patent must disclose considerable information about their inventions - thus providing a platform to others for further innovation - patents can also restrict follow-on innovators.

For these reasons, the question of how much patent protection to offer is crucial. Pharmaceutical patent rights that run for too long or that are defined too expansively will deprive people of drugs because purchasers, including governments, cannot afford them. An overly miserly patent system means patients will suffer because the industry has inadequate incentives to develop new drugs.

International Context

Judgements about patent adequacy and sufficiency are made more complex because the patent system operates within an international system. Some critical features of Australia’s patent system have been set by international agreements. Countries that are major net exporters of intellectual property have tended to seek longer and stronger patents, not always to the global good. The acquiescence of Australia and other countries to that agenda means that some features of Australia’s patent law are of little or no benefit to patentees.

International agreements also explain in some part why the patent term in Australia has been steadily increasing over time. The life of patent protection, originally 14 years and more recently 16 years, is now set at 20 years by the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In signing the Australia-United States Free Trade Agreement (AUSFTA) Australia agreed that it would preserve a further extension to patents for pharmaceuticals beyond the 20 years that it had already legislated, without careful regard to whether this was in our own economic interest.

In negotiating such agreements, Australia needs a more active strategic engagement with the issues. While the patent system must be strong to be effective it should also be parsimonious, avoiding restrictions on trade and innovation where it is not necessary for it to deliver incentives to innovate.

Beyond this, international negotiations should address critical issues arising from the limitations of patents in providing incentives to innovate, including the need to develop drugs with high social value and not well rewarded in markets ....

There are signs that these past failures are being replicated in the current Tran-Pacific Partnership (TPP) negotiations because small, net importers of intellectual property, including Australia, have not developed a reform agenda for the patent system that reflects their own economic interests – and those of the world. Chapter three offers recommendations about Australia’s stance in international forums where patent systems feature.

Chapter four considers two pressing issues covered by international agreements that have materially limited Australia’s welfare without providing offsetting benefits to the patentee. One issue concerns Australia’s ability to manufacture generic pharmaceuticals for export to countries where there is no applicable patent (MFE). Perversely, if the applicable patent has not expired in Australia, it seems Australian generic manufacturers must establish manufacturing facilities overseas to serve those markets to avoid infringing Australian patent rights. This result offers no obvious benefit to the original patentee in Australia, but it reduces investment and employment in Australia.

The other issue relates to the manner in which current patent law prevents a generic manufacturer stockpiling generic pharmaceuticals for future export to a country or for future sale in Australia, in anticipation of the expiry of an applicable patent. This is an important issue, because the firm that first satisfies the market acquires strong ‘first mover’ advantages. This again imposes major restrictions on Australia’s ability to manufacture generic pharmaceuticals, while providing negligible benefits to the Australian patentee, for generics can be stockpiled and imported from other countries with weaker, or shorter patent regimes.

The above examples are not new, but they have yet to be rectified. A decade ago, the Productivity Commission identified MFE as an important issue. At that time, the then Department of Industry, Tourism & Resources estimated export losses of $2.2bn from 2001 to 2009 unless patent laws were changed. Generic manufacturers continue to ask the government to intervene. In Chapter four, the Panel recommends that the government act on these matters.

Extensions of Term

An important part of the terms of reference of this inquiry is the extension of term that the Australian patent system allows. It applies to some pharmaceuticals for which patentees have taken at least five years from the effective patent filing date to obtain regulatory approval for the pharmaceutical’s use. The scheme reflected a similar extension arrangement introduced in 1989 when the standard term of a patent was 16 years. The government then claimed that the extension would “encourage the development of the pharmaceutical products industry in Australia”. That arrangement was repealed in 1994 after TRIPS mandated a 20 year patent term. The current scheme dates from 1998. It too aims to attract investment in pharmaceutical R&D in Australia, as well as providing an effective patent term for pharmaceuticals more in line with that available to other technologies.

At the time, the annual cost of the extension to the Pharmaceutical Benefit Scheme (PBS) was estimated to grow from $6m in 2001-02 to $160m in 2005-06. The cost arises because there is a delayed entry to the pharmaceutical benefits scheme (PBS) of cheaper generic drugs. The estimate for 2012-13 is over $200m if the earlier figure is inflated by, say, 4% per annum.

Another way to measure the cost of the extension scheme is to estimate savings from reducing the length of the extension. AUSFTA requires that Australia has a pharmaceutical extension provision but it is silent as to the length of the extension. Actual savings obtained from reducing the extension term would be affected by many factors, including price changes caused by increasing sales volumes, the 16% mandated price reduction following the entry of a second drug, the influence of competing generic manufacturers and reductions from price disclosure mechanisms.

The Panel is still developing estimates of savings from reducing patent extension terms, but initial figures suggest they amount to some hundreds of millions of dollars a year. These amounts represent the subsidy which the government decided to provide to the pharmaceutical industry partly to effect an increase in pharmaceutical R&D investment in Australia.

Using the patent scheme to provide indirect subsidies to one industry appears inconsistent with the rationale that patent schemes be technologically neutral. More importantly, particularly where there is already substantial patent protection and where increased patent protection only comes into effect after a patent term has already run 20 years, patents are at the limits of their policy effectiveness and most unlikely to be as effective as direct funding as a policy instrument.

Commercial investment decisions are generally made before or early in the term of a patent and in such circumstances the net present value of some future extension of market exclusivity is much diminished over the course of a normal patent term. In 1984, the Government’s Intellectual Property Advisory Committee found it difficult to believe that the prospect of additional returns from an extension of the then 16 year standard patent life could materially influence investment decisions made many years beforehand. This argument remains valid today, and indeed gathers additional force in light of extension of the standard patent term to 20 years.

Even if it were increasing investment, it is difficult to see why a pharmaceutical firm would chose to conduct R&D in Australia, merely because the Government decided to offer an extension of term here. More fundamental issues such as relative costs of R&D and skill availability should influence the location of R&D spending.

It is posited in Chapter five that, if the government wishes to support Australian-based pharmaceutical R&D, it may be more efficient to reduce the five-year extension of patent term and to use some of the savings to provide a direct subsidy than to retain the five-year extension. A dollar of subsidy paid directly to a pharmaceutical research entity as it starts to develop a product may be more efficient in promoting Australian-based pharmaceutical R&D than an equivalent subsidy provided indirectly in the future through the PBS via the extension of patent term. This reflects several factors including the difference in discount rates applicable to government and commercial firms, the effect of subsidising activity at the beginning of product development instead of at the end, and the ability of a subsidy to be linked to spending on pharmaceutical R&D in Australia. Lastly, a direct subsidy has an additional benefit because it can be directed towards investment in pharmaceuticals which are not well addressed by the patent scheme (examples include too little research for new antibiotics – because once developed they must be used as sparingly as possible to prevent the development of antibiotic resistance). Likewise, even with stronger patents, the market cannot provide adequate rewards for pharmaceuticals to address rare diseases, paediatric illnesses and endemic health issues in low income countries.

The introduction of the extension of term in 1998 provided a wind-fall to pharmaceutical companies: they were rewarded with an incentive for work they had already undertaken. But there are problems in reducing the extension of term provisions immediately without compensation. Pharmaceutical research bodies would observe that they had embarked on projects in anticipation of the possible - even if remote - benefits available under those provisions.

Another option which the Panel is considering is to align more closely patent expiry dates in Australia with those in competing countries. The advantages available to first-movers have been discussed above. A disadvantage faced by Australian-based companies manufacturing generic pharmaceuticals is the propensity for patents to expire later in Australia than overseas. This can occur because pharmaceutical companies that have developed drugs (originators) tend first to seek regulatory approval overseas for marketing these drugs. There are also international differences in the speed with which regulators finalise applications for marketing approval. The misalignment of patent expiration can be partly addressed through deeming that the date of regulatory approval, for the purpose of calculating patent term extensions in Australia, is the date when approval was granted in specified countries. This would encourage originators to align as best they can approval dates in Australia with overseas approval dates. Alternatively, close alignment can be achieved by terminating an extension of term in Australia at the date it is terminated in specified countries. Again, this would encourage originators to achieve the optimum market time for each market.

Chapter six of the report canvasses some technical issues concerning extensions of term. The class of pharmaceuticals that is eligible for extension of term in Australia is narrower than that in many developed countries (on the other hand, there are countries, such as Canada, that do not provide for extensions of term). Originators call for a widening of eligibility to accord with that used in the United States and Europe. In considering these submissions, the Panel takes the approach that it would not recommend more generous patent protection than exists, unless there was evidence that such was justified by national interest considerations.

As mentioned earlier, there is evidence that the current patent term is inadequate to support the development of some drugs, such as those for some paediatric conditions. But for reasons discussed earlier, the Panel believes a direct subsidy would be more effective than additional patent extensions.

The Panel accepts recommendations from many parties that the Patents Act 1990 (Cth) (Patents Act) be amended to repeal the provision requiring applicants to provide the Department of Health & Ageing with information on Commonwealth money spent on drugs subject to an extension of term. Although these data - much of which appear to be inadequate - have been provided to the Commonwealth since 1999, there is no evidence that they have ever been used. Complying with the requirement is costly and the Panel sees little reason for its continuation.

Similarly, the Panel accepts that there is a technical anomaly with the legislative provision concerning the eligibility of drugs for extension. In one case, a court found that the presence of impurities in an earlier drug shortened the extension of term available to a patent. The Panel is inclined to support an amendment if it did not risk a costly broadening of eligibility.

A pharmaceutical company can indirectly infringe a patent if it supplies a drug specifically for a purpose which is different to another, patented use but where it is still possible that the drug could be put to the patented use. This infringement can occur even when the company has not induced or supported that use. As a number of submissions recommend, the Panel supports an amendment to the Patents Act to protect a pharmaceutical manufacturer that has taken reasonable steps to avoid indirect infringement.

Evergreening and Follow-on Patents

In most developed countries, including the United States and Europe, there are concerns about pharmaceutical manufacturers using patents and other management approaches to obtain advantages that impose a large cost on the general community. The cost arises because these actions impede the entry of generic drugs to the market. Although some find the term to be pejorative, relevant literature has handily summarised these actions as evergreening: steps taken to maintain the market place of a drug whose patent is about to expire. Chapter seven discusses these and associated matters.

The Panel has little doubt that pharmaceutical manufacturers act to preserve the profitability of their products. A failure to do so would rightly be criticised by shareholders. And it is logical that patentees will seek further patents for improvements to their drugs - so called follow-on patents - with an eye to extending the market life of the original drug. Similarly, patentees are entitled to market these newly patented drugs before the original patent expires.

It is probable that less than rigorous patent standards have in the past helped evergreening through the grant of follow-on patents that are not sufficiently inventive. The newly proclaimed Raising the Bar legislation should moderate this problem somewhat, though the extent to which it will address the problem is unclear at this stage. The Panel, however, sees a need for an external body to audit the patent grant processes to help ensure these new standards are achieved, and the government should ask the Productivity Commission to review the effectiveness of the legislation.

Another approach used to protect a product is to entangle it in a knot of patents, a so-called patent thicket, which raises costs for new entrants. Such thickets would stymie generic manufacturers or developers of new pharmaceuticals. Though opinions will differ as to whether the term ‘thicket’ applies, the interaction of patents, follow-on patents, and drug marketing practices may have an impact on pharmaceutical prices and the costs of the PBS. ....

Australia’s intellectual property system, like any other, works best when property rights are tightly delineated and there is an efficient adjudication system to resolve disputes. Chapter eight discusses these matters. There are three dispute mechanisms that involve the Patent Office. These non-judicial mechanisms have been affected by recent changes to the law, but they are not typically favoured by disputants as to the validity of individual patents because they lack the certainty offered by courts.

As in other matters heard by Australian courts, patent challenges and patent infringement cases are expensive. Where a generic manufacturer is the potential challenger of a patent, it must consider whether the small size of the Australian market and the relatively small margins from generic drugs make a challenge worthwhile. In addition, although the Commonwealth does not contribute to a challenger’s costs, it can be the major single beneficiary from a finding that a pharmaceutical patent is invalid. The benefits come from reduced drug prices for the PBS. On the other hand, the Commonwealth can incur important additional costs when an originator succeeds in obtaining an injunction for the sale of a generic drug. And the originator, with its higher margins from drug sales, has stronger incentives than its putative opponents to litigate.

The Panel is aware that the Commonwealth has started to seek costs from relevant parties because injunctions - and subsequent findings of patent invalidity can delay price reductions for the PBS. The Panel, however, recommends that the government - as the annual funder of the $9bn PBS - should become more closely involved in pharmaceutical patent cases. For example, there are likely benefits to the government from improving incentives for generic manufacturers to test the validity of patents.

As a result of AUSFTA, there are complex procedures that must be followed when a generic pharmaceutical manufacturer wishes to enter the market. Some submissions question the adequacy of these processes and others the impetus they provide to seek injunctions against the sale of the generic. The Panel recommends a mechanism to reduce the risk that generic manufacturers wishing to enter a market will inadvertently infringe a patent. The Panel also wishes to explore mechanisms to reduce the incidence of court proceedings when a generic manufacturers plan to enter the market. It is thus inclined to a system which requires each originator to list its relevant patents for a drug listed on the Australian Register of Therapeutic Goods (ARTG). That listing might not identify all applicable patents but it would capture all of the originator’s applicable patents. If such a register was established, the Panel further suggests it could be appropriate for generic manufacturers to advise originators of their application for regulatory approval. That latter step would provide originators with time to explore their options without immediate recourse to injunctions.

Data Protection

When an originator seeks regulatory approval for a drug, it must provide data to the Therapeutic Goods Administration (TGA) demonstrating the drug’s safety and efficacy. Although these data remain confidential to the TGA, the TGA may use them after a five year period to approve a generic or equivalent drug. This saves the pointless replication of tests to show safety and efficacy. A number of submissions argue that the five-year period of data exclusivity in Australia is too short.

A number of countries have a five-year exclusivity period; it is also the period Australia agreed under AUSFTA. Other countries, especially in North America and Europe, have longer periods. For many drugs the data exclusivity period is largely redundant because the relevant patent expires later. For some drugs, the data exclusivity period adds to the protection afforded by patent.

It is conceivable that drugs might not be brought to Australia, for example, because regulatory and marketing costs cannot be recouped within five years. Medicines Australia submits that some of its members chose not to supply a total of 13 drugs to the Australian market because of the inadequacy of the data exclusivity period. However, they are only able to identify three of these, and the Panel’s analysis - shown in chapter nine - suggests they are not convincing. AbbVie offers a more compelling example, but even there the Panel believes that expanding data exclusivity for all or for a wide class of drugs is a poor response to issues affecting a small number of pharmaceuticals. A policy of subsidising drug development discussed above seems more appropriate.

Chapter nine also discusses the desirability of publishing data used for regulatory approval, much as information provided in patent applications must be published. The Panel does not recommend that Australia unilaterally release data submitted to the TGA, such publication has international repercussions, but it recommends that the government work with other countries to achieve that end.

An Integrated Approach to the Pharmaceutical System

In concluding, Chapter ten considers the need for a non-statutory body to oversee and report to government and parliament on the complex inter-relationships and linkages between TGA, PBS, IP Australia, international agreements and industry, budgetary and economic matters. The complexity of these issues- especially as they inter-relate - means that isolated consideration of particular features would likely not give optimum results. Measured by dollars alone, the size of the pharmaceutical industry and the PBS and the economic consequences of patents warrant a mechanism that requires close collaboration between agencies in identifying the best options for the national interest. 

The report's draft recommendations are -

Draft Recommendation 3.1 - The Government should expeditiously seek a situation where Australia has strong yet parsimonious IP rights – that is, rights that are strongly enforced and that provide the incentive necessary to underpin an appropriate level of investment in innovation but that are not defined so broadly as to impose costs on innovation or other activity without commensurate benefits. For instance such strong yet parsimonious IP rights could provide a desired level of incentive to invest in pharmaceutical innovation without preventing our industry from servicing offshore generic markets, as current law does. Australia should take a leadership role in seeking consensus with jurisdictions with similar interests to identify and pursue a range of changes in international patent law and practice along these lines.

Draft Recommendation 3.2 - The Government should ensure that future trade negotiations and renegotiations are based on a sound and strategic economic understanding of the costs and benefits to Australia and the world and of the impacts of current and proposed IP provisions, both for Australia and other parties to the negotiations. The Government should strongly resist changes – such as retrospective extensions of patent rights – which are likely to reduce world economic welfare and lead other countries in opposing such measures.

Draft Recommendation 4.1 - As an interim measure, the Government should actively seek the agreement of the owners of Australian pharmaceutical patents to voluntarily agree not to enforce their patents in respect of manufacturing for export.

Draft Recommendation 5 - Option 5.1 The current model of using the patents system to subsidise pharmaceutical R&D indirectly should be replaced with a direct subsidy. To this end, the Government should reduce extensions of term for pharmaceutical patents and use part of the associated savings to fund R&D directly. Some of this funding should be targeted to socially beneficial research for which patents provide inadequate incentives to conduct. Such areas include new antibiotics which, once developed, must be used as sparingly as possible to prevent the development of antibodies and pharmaceuticals to address rare diseases, paediatric illnesses and endemic health issues in low income countries. This option could also include an annual review of the savings delivered through any reduction in the length of extensions of term to be used in allocating funding to the replacement R&D subsidies.

Draft Recommendation 5 - Option 5.2 The Government should change the current extension of term provisions such that patents receiving an extension of term in Australia will not expire later than the equivalent patents in major trading partners. Potential ways of achieving this include:

(a) Providing an extension expiring up to 5 years after the original patent term or upon the expiry of the equivalent patent extension in one of a list of other jurisdictions including the United States and European Union. This option ensures Australian extended patents would not expire later than equivalent patents elsewhere. If originators are unable to seek regulatory approval in Australia at the same time as elsewhere, this option would reduce the effective patent life.

(b) Changing the method of calculating the length extensions of term to provide an incentive to submit applications for regulatory approval in Australia earlier than is currently the practice. This could be similar to the US method described above. This option creates an incentive to seek regulatory approval in Australia as soon as possible, reducing delays in access to medicines for Australian health consumers. Under this system, one-to-one compensation is still provided for the time taken to process applications for regulatory approval. 

Draft Recommendation 6.1 The Government should maintain the current approach that allows extensions for drugs and formulations but not for methods of use and manufacture, which will continue to provide an incentive for the development and supply of active pharmaceutical ingredients and new formulations, without adding to the existing cost of medicines in Australia.

Draft Recommendation 6.2 Section 76A of the Patents Act should be deleted. The Pharmaceutical System Coordinating Committee recommended in Draft Recommendation 10.1 should consider whether a mechanism for reporting on the use of public and private research funds in pharmaceutical R&D, similar to that established by the PMPRB and superior to s.76A, can and should be developed.

Draft Recommendation 6.3 Section 70(3) should be amended to clarify that the ARTG registration on which an extension of term is based is that of the relevant product, the use of which would infringe the claim. The Panel requests feedback from stakeholders on the effects of clarifying the legislation in this manner.

Draft Recommendation 6.4 Section 117 of the Patents Act should be amended to provide that the supply of a pharmaceutical product subject to a patent which is used for a non-patented indication will not amount to infringement where reasonable steps have been taken to ensure that the product will only be used in a non-infringing manner. Policy should further impose a presumption that “reasonable steps” have been taken where the product has been labelled with indications which do not include any infringing indications

Draft Recommendation 7.1 - The Government should ask the Productivity Commission to review the effectiveness of Raising the Bar Act at the earliest opportunity and not later than three years from the commencement of the Act.

Draft Recommendation 7.2 - The Government should establish an external patent oversight committee that is tasked with reviewing grants and decisions issued by IP Australia and auditing the processes involved in making such decisions.

Draft Recommendation 8.1 - As the party that ‘internalises’ the most benefits of a successful challenge to a patent for a product on the PBS, the Government should take a more active role in managing the cost of the PBS where a patent relating to a PBS-listed pharmaceutical is successfully challenged in the courts. This could involve ensuring that the Government recoups more of the cost to the PBS arising from delayed generic entry. It should also include implementing measures to reduce disincentives for generic manufacturers to challenge patents by providing negotiated incentives for a party who successfully challenges a patent.

Draft Recommendation 8.2 - A transparency register linking therapeutic goods registered with the TGA with related patents should be introduced.

Draft Recommendation 9.1 - The Government should actively contribute to the development of an internationally coordinated and harmonised system where data protection is provided in exchange for the publication of clinical trial data.

Draft Recommendation 10.1 - The Government should establish a non-statutory Pharmaceutical System Coordinating Committee (PSCC) that reports to Parliament on an annual basis on the success and effectiveness of the patent, marketing approval and PBS systems, particularly where these interface. The PSCC should ensure there is sufficient engagement and coordination between the relevant agencies and take account of costs to government, efficiency of registration and approval processes and respond to issues raised by industry. The PSCC should comprise senior officials from at least DIICCSRTE, IP Australia, DoHA (Pharmaceutical Benefits Division and TGA), DFAT, Finance and Treasury (as chair).

Draft Recommendation 10.2 - When drafting the objects clause to be inserted in the Patents Act, as agreed to in the Government’s response to the Senate Community Affairs Committee’s Gene Patents report, the Government should take into account that the purpose of the legislation is to: • further Australia’s national interest and enhance the well-being of Australians, including by providing reasonable access to healthcare; and • provide strong, targeted IP protection - but only up to the point at which the costs (to consumers and the impediment of ‘follow on innovation’) are no greater than the benefits of incentivising innovation that would otherwise not occur.

The draft report also includes Draft Findings, including 

Draft finding 3.1 - In their negotiation of international agreement, Australian Governments have lacked strategic intent, been too passive in their IP negotiations, and given insufficient attention to domestic IP interests. For example, preventing MFE appears to have deprived the Australian economy of billions of dollars of export revenue from Australian based generic manufactures. Yet allowing this to occur would have generated negligible costs for Australian patentees. The Government does not appear to have a positive agenda regarding the IP chapters of the TPP Agreement which comprehends national and regional economic interests. The Government has rightly agreed to only include IP provisions in bilateral and regional trade agreements where economic analysis has demonstrated net benefits, however this policy has not always been followed.

Draft finding 4.1 Governments appear to have shown little strategic interest in the issue of MFE, despite a number of opportunities to do so and the significant potential advantages MFE could provide for Australia. If MFE had been rendered unambiguously consistent with our international obligations, it is likely that Australia’s annual pharmaceutical exports would have been several hundreds of millions of dollars higher than they are.

Draft finding 9.1 The Panel considered whether data protection should be increased for biologics. The Panel is unconvinced that an extension of data protection would be beneficial. The Panel found no evidence to suggest that patents for biologics will be more difficult to obtain than patents for small molecule drugs, or that effective patent life would be substantially reduced by the complexity of biologics. Additionally, given that the generic manufacturer of a biosimilar cannot rely solely on the clinical data of the reference product to obtain regulatory approval, there is reduced advantage to be gained from granting an additional term of data protection. The Panel is of the view that given the substantial market opportunity that will arise in the near future for biosimilars, and the corresponding potential for cost savings to the PBS and consumers, competition in this area should be encouraged. At present the Panel does not have sufficient evidence to support an increase in data protection beyond the current five year period for biologics.

Draft finding 10.1 The patent system is of obvious significance to the pharmaceutical industry, trade negotiations and health policy. However, the government agencies with policy and program responsibility in these areas are not engaging sufficiently with each other and are not taking highly relevant issues into account. Each agency needs to be actively engaging from its own perspective – end users, innovation, industry and international implications – in order to optimise policy settings for the pharmaceutical system in what is a complex regulatory and service delivery environment. The areas of government responsible for regulating pricing of pharmaceuticals particularly have the need for and the resources to obtain a well-informed appreciation of the pharmaceutical patent system and its impact on a range of health issues. However, the only area in which they appear to have a strong view is in relation to gene patents.

Jury Directions Report

Executive Summary from the NSW Law Reform Commission Jury Directions report  [PDF] -

Trial by judge and jury is a central feature of our criminal justice system. Although jury trials make up a relatively small proportion of the total number of criminal trials in NSW, they generally involve the determination of serious criminal charges that carry a potential sentence of imprisonment.

This report is about the directions that judges give to juries in the course of a criminal trial, and particularly at the summing up. These directions are designed to help jurors understand as much of the law and the issues that arise in the case as they need to make proper use of the evidence and to reach a verdict.

There is growing awareness that jury directions are not always working well in guiding jurors in their task. There are concerns that jury directions are becoming too complex and uncertain to meet their intended purposes, and that they rely on outmoded communication methods that may confuse rather than assist the jury

The system of jury directions may also exacerbate inefficiencies in the trial process. There are concerns that lengthy and complex directions unnecessarily prolong already lengthy trials.

Juries also face many challenges that arise from the impact on the criminal trial process of recent technological and scientific innovations, including:

• the increasing volume of evidence (for example, audio and video evidence from surveillance devices); 

• the increasing complexity of the evidence (for example, expert evidence in relation to DNA profiling and statistical analysis); 

• jurors’ changing expectations as to the type of evidence that is presented and the ways in which it is presented. A framework for reform

We have considered a range of options for devising a general approach to reform. Options that we have considered and rejected are:

• replacing the existing framework, which rests partly on the common law and partly on statute, with a statutory scheme or code; and 

• retaining the existing framework and supplementing it through the introduction of model jury directions (that have been developed and approved for use otherwise than through legislation) which judges are expected to use.

Our preferred approach is to retain the existing framework, and strengthen it through:

• refinement and encouragement of greater use of the suggested directions contained in the Judicial Commission of NSW’s Criminal Trial Courts Bench Book (“Bench Book”); and  

• the adoption of trial management strategies to facilitate the jury’s task, by - encouraging greater pre-trial management; - enhancing the participation of jurors in the trial process in particular by informing them, so far as is possible, of the issues and the law that they will be expected to apply to the case; - increasing the use of aids aimed at enhancing jurors’ understanding of the evidence and their ability to apply the directions that they are given; and - removing any existing impediments to the provision of various forms of assistance; 

• providing greater direction in relation to the process by which juries reason their decision through the use of special verdicts or question trails.

This approach accepts the desirability of the Bench Book including suggested directions that can be tailored to the individual case and that can evolve in response to appellate decisions.

The main concerns to be addressed are to ensure that:

• jury directions and the trial process provide appropriate help (in the context of a fair trial) to jurors to follow the evidence, to understand the issues, and to apply the directions to the evidence and issues; and 

• jury directions and the trial process do not add unnecessarily to the complexity and length of the trial.

Formulating jury directions

It is important to ensure that jury directions are comprehensible to a cross-section of the community, while accurately stating the relevant law. We consider that the Judicial Commission of NSW Criminal Trial Courts Bench Book Committee should continue to undertake a comprehensive review of the suggested directions contained in the Bench Book and, as part of this review, undertake empirical testing in relation to any proposed directions. (Recommendations 3.1 and 3.5)

We recommend that the Bench Book should provide guidance to judges in delivering directions by setting out:

•  an outline of the general principles that would assist in identifying when a jury direction is required and the content of that direction; (Recommendation 3.3) 

• a basic guide on the composition and delivery of directions, and on the construction and delivery of a summing up, including the use of plain English principles; (Recommendation 3.4(a)-(c)) 

• guidance on giving practical advice to jurors as to how they might go about their deliberations and on responding to jury questions; (Recommendation 3.4(d)-(e) 

• a checklist against which a proposed summing up could be compared for completeness.

The Bench Book should also include suggested directions in relation to offences arising under laws of the Commonwealth. (Recommendation 3.2)

Directing the jury on the criminal standard of proof

The standard of proof that must be reached before a person can be convicted of a criminal offence is proof “beyond reasonable doubt”. It is crucial that this direction is readily comprehensible and consistently applied.

However, empirical studies and anecdotal evidence from case law and other judicial commentary suggest that jurors may not so readily understand the meaning of “beyond reasonable doubt”. This position is exacerbated by the general prohibition, in Australia, against any explanation of the expression.

Other jurisdictions permit an explanation of “beyond reasonable doubt” and, in some cases, allow an alternative formulation of the direction. We conclude that there is a strong case for providing additional guidance to juries on the standard of proof and see merit in considering alternative formulations that may enhance jurors’ understanding of such a fundamental aspect of the criminal process.

However, it is not feasible to recommend the introduction of a legislative formulation that would apply in NSW alone. We therefore recommend that the NSW Government should ask the Standing Council on Law and Justice to consider developing uniform legislation on directing juries about the criminal standard of proof in criminal trials in all Australian jurisdictions. (Recommendation 4.1)

We also consider that a range of formulations should be considered, and subjected to empirical testing to ensure that the chosen formulation is more easily understood, consistently applied and does not result in a change in the standard required. (Recommendation 4.2)

Assisting jurors in areas requiring special knowledge

We propose ways of assisting juries where the assessment of particular types of evidence requires some form of special knowledge. These forms of assistance include the use of expert evidence and, the use of specific directions and the introduction of procedural reforms.

DNA evidence

DNA evidence presents problems in trials because of the impact it can have on juries, in particular because of its complexity and also because the expectations of many jurors who have been influenced by popular media depictions.

We propose three approaches to assist juries in dealing with DNA evidence:

• The development of a suggested direction in relation to DNA evidence, that can be adapted to each individual case and which notes the limitations of DNA evidence, identifies issues that may arise in the trial concerning, for example,  crime scene or laboratory contamination or innocent explanation, explains the implications of the statistical match probability, and emphasises that DNA evidence must be considered in the context of all of the other evidence in the case. (Recommendation 5.1)  

• The introduction of a practice note in relation to the pre-trial disclosure of DNA evidence in order to identify with precision the DNA issues that need to be left to the jury and to facilitate the presentation of the evidence, and ultimately the framing of a jury direction. (Recommendation 5.2)  

• The preparation of a standard audio-visual presentation that can be tendered in evidence to provide jurors with a basic understanding of DNA evidence so as to place them in a position to assess that evidence and any issue relating to it. (Recommendation 5.3)

Expert evidence and procedural reform

The current practice of leading the evidence for the prosecution and the defence in separate blocks may not be the best way to present conflicting expert evidence to the jury. In order to allow the jury more effectively to assess expert evidence and any issues that arise, we propose consideration be given to:  permitting, in appropriate cases, expert evidence called by the prosecution and defence to be given in a block;  permitting the trial judge to give directions as to the order in which such witnesses should be cross-examined; and  ensuring that expert witnesses are subject to the Expert Witness Code of Conduct. (Recommendation 5.4)

Child sexual abuse – expert evidence and directions

Jurors may bring misconceptions to a trial in relation to the capacity of children to give reliable evidence, and in relation to the way in which children might behave in response to sexual abuse. These misconceptions should be addressed by the NSW Government asking the Standing Council on Law and Justice to consider:  commissioning further research on the issue;  amending the uniform Evidence Acts to facilitate the reception of expert evidence concerning the misconceptions; and clarifying the extent to which a judicial direction could be given in relation to the misconceptions. (Recommendation 5.5(1))

We also recommend that the Bench Book include a suggested direction concerning those aspects of childhood development and response to sexual abuse that may be relevant for an understanding and assessment of the reliability of the evidence of child sexual abuse victims. (Recommendation 5.5(2))

Identification from still and video footage

Recognition or identification of suspects through the use of CCTV and similar technology, is likely to be relied on increasingly in the future. We, therefore, recommend that the Bench Book include a commentary on the considerations that arise in this context and a suggested direction to acquaint the jury with the possible difficulties that can arise in relation to the identification or recognition of people from still and video images. (Recommendation 5.6)

Indigenous witnesses

We have considered the directions currently given in a number of Australian jurisdictions in relation to various cultural and linguistic factors that can be relevant to an assessment of the evidence of Indigenous witnesses. In our view, the question of the content of directions that may be required in the NSW context should be the subject of further consideration by the Judicial Commission, involving consultation with NSW Indigenous and other communities and experts in the fields of culture and linguistics of relevance to those individual communities. (Paragraphs 5.123-5.133)

We have also considered an alternative approach of making express provision to allow expert evidence to be led in relation to linguistic or cultural differences either generally or in relation to a particular witness’s evidence. However, we consider that it would be appropriate for this to be the subject of a more specific consultation process and inquiry than we have been able to undertake. (Paragraphs 5.134- 5.137)

Assistance to the jury

We have considered a number of measures that could assist jurors in engaging more effectively in the trial process and in understanding and applying the directions they are given. Consistent with our general approach, our recommendations aim to encourage, rather than compel, the adoption of best practice for effective communication.

Juror orientation

We recognise the importance of good orientation practices for jurors, as a means of enhancing their understanding of the role that they are expected to perform. We support the continuing refinement of the information that is provided to jurors during the orientation process, and consider that the jury handbook, or similar written advice prepared by the Judicial Commission should be routinely provided to jurors, and be available for reference during the trial. (Recommendation 6.1)

Majority verdicts

In order to avoid the risk of the jury being confused by any references during the course of a trial to the potential availability of a majority verdict, we recommend that the Bench Book should include, in the preliminary directions for trials involving  offences against NSW law, a statement to the effect that the jury will be asked to return a unanimous verdict; and a majority verdict may be permitted in certain circumstances that will be explained if the occasion arises. (Recommendation 6.2)

Access to a transcript of the proceedings

Having access to the trial transcript can, in appropriate cases, help jurors accurately recall the evidence, counsels’ addresses, and the judge’s directions. We recommend that s 55C of the Jury Act 1977 (NSW) - which currently provides that a copy of all or part of the transcript of evidence at a trial may be supplied to the jury upon the jury’s request, if the judge considers it is appropriate and practicable to do so – should be amended to make it clear that copies can also be provided of the transcript of the addresses and summing up, and to delete any pre-condition that is dependent upon the request of the jury. (Recommendation 6.3)

In order to facilitate access to the transcript consideration should be given, at least in long and complex trials, to providing jurors with the means of accessing transcripts electronically, and in a searchable form. (Recommendation 6.4)

Access to pre-trial audio and video recordings and transcripts

The Bench Book should provide: guidance concerning the considerations that apply in relation to the prerecorded evidence of witnesses, and to the other audio and video recordings and relevant transcripts that may properly be admitted as exhibits; and suggested directions as to the ways in which the jury should approach each type of recording. (Recommendation 6.5)

Questions from the jury

The jury’s ability to ask the trial judge questions is an important way to help jurors understand the directions and the issues at trial.

In order to overcome the reluctance of some jurors to ask questions, the Bench Book should include:  more positive statements in suggested directions to encourage jurors to ask questions to clarify the evidence, the law, or the issues in the trial; and  guidance to courts as to the way in which questions can be encouraged and managed. (Recommendation 6.6(a) and (b))

The Jury Guide issued by the Office of the Sheriff, should also be amended to make it clear that jurors can ask questions during the trial in relation to the evidence, and not only after they have retired to consider the verdict. (Recommendation 6.6(b))

Judge’s preliminary address to the jury

We recommend that s 161 of the Criminal Procedure Act 1986 (NSW) should be amended to permit the judge to deliver a preliminary address to the jury before the closing addresses of counsel. (Recommendation 6.7) We envisage that this would not constitute a full address but might involve a summary of the elements of the offence(s) charged, of any defences and of any relevant legal issues. It would be given only in appropriate cases, after consultation with counsel, for example, where the judge has considered it desirable to provide, in advance of the addresses of counsel, written directions to the jury. Provision of written summaries of evidence and addresses

The Jury Act 1977 (NSW) currently permits the delivery of written directions of law but does not address the issue of whether the jury can be provided with a written summary of the evidence or addresses of counsel. We consider that the ability of the judge, in appropriate cases, to provide such components of the summing up to the jury in writing, should be clarified. (Recommendation 6.9)

Integrated summing up and question trails

A “question trail” is a visual representation of an integrated summing up which restructures the summing up into a series of steps that logically follow on from each other. Each step presents a question of fact, tailored to the legal concepts involved. Instead of an explicit explanation of the law, the legal issues are incorporated into the questions of fact that arise in the trial. They are usually presented as a diagram or flow chart to present the sequential list of questions.

Courts in Australia and overseas have increasingly supported their use. Research suggests that jurors find it easier to understand concrete, factual scenarios, which break down the complexity of the issues they must consider into smaller, more manageable segments, rather than more abstract discussions of legal concepts.

We support the use of integrated directions and written question trails, provided they are used where appropriate, after consultation with counsel and with an explanation to the jury as to their use. We recommend that the Criminal Procedure Act 1986 (NSW) be amended to authorise their use. (Recommendation 6.10)

The summing up – use of visual aids

Empirical evidence suggests that the use of visual aids in the presentation of information in the courtroom can improve jurors’ comprehension levels.

We consider that the use of such aids, for example presentation software, can potentially supplement the oral summing up both in relation to the directions and the summary of the issues and evidence. We recommend the amendment of the Jury Act 1977 (NSW) to confirm the permissible use of such aids in the summing up where they would be of assistance and the inclusion of good practice guidance in the Bench Book. (Recommendation 6.11)

Setting the scene for the jury – early issue identification

We have considered ways in which the issues in a criminal trial can be identified for the jury from the outset, through the use of pre-trial case management, opening addresses and preliminary directions from the judge.

Pre-trial disclosure and trial management

We support the use of pre-trial disclosure and trial management as a means of establishing the real issues in the trial from the outset. Such approaches can result in shorter and more streamlined trials, and reduce the burden on juries. They can also help in establishing a clear framework for counsel’s opening addresses and provide a basis from which the judge can give meaningful introductory directions. This will better enable the jury to follow the evidence and place it and the directions in their proper context. 

We recommend that the Trial Efficiency Working Group be reconvened to consider possible reforms to existing trial management procedures, particularly the ways in which they might be used on a more consistent and frequent basis. The Trial Efficiency Working Group should look at the legislation from the jury perspective, and consider whether further improvement could be made to facilitate jury decisionmaking, without affecting the fairness of the trial. (Recommendation 7.1)

A roadmap for the jury

The opening addresses of counsel, and the preliminary remarks of the trial judge which precede those addresses, each have a role to perform in informing the jury of the nature of the charge(s) and of the issues likely to arise.

We see merit in the jury being provided with written guidance, from the outset, in relation to the way that the proceedings are expected to unfold. This could include the provision of a roadmap or chronology or summary of some or all of the facts, a copy of the indictment, a statement of the elements of the offence(s) charged, a summary of the issues, and preliminary directions of law in relation to those elements and issues.

Accordingly we recommend that the Trial Efficiency Working group look at possible amendments to the Criminal Procedure Act 1986 (NSW) with a view to conferring a discretionary power in the court to require the prosecution to prepare (with defence agreement) the relevant documentation and to present outlines of issues and summaries of the elements of the offence and any relevant defences, together with any necessary preliminary directions. The provision of any of these documents should remain a matter for the discretion of the judge, following consultation with counsel, depending on the complexity and circumstances of the individual case. (Recommendation 7.2)

Formulating jury directions

The Judicial Commission of NSW Criminal Trial Courts Bench Book Committee should continue to undertake a comprehensive review of the suggested directions contained in the Criminal Trial Courts Bench Book. This review should ensure that the directions are comprehensible to a cross-section of the community, while accurately stating the relevant law.

The Criminal Trial Courts Bench Book should include suggested directions in relation to offences arising under laws of the Commonwealth.

The Criminal Trial Courts Bench Book should include an outline of the general principles that would assist judges to identify when a jury direction is required and the content of that direction. The outline should state that:

(a) jury directions should aim to inform jurors about as much of the law as they need to know to decide the issues of fact and reach a verdict;

(b) the judge should direct the jury whenever necessary to protect the fairness of the trial and to promote the public interest in seeing that justice is done;

(c) jury directions must be legally accurate and fairly state the case for the accused and prosecution;

(d) jury directions should be tailored to the particular circumstances of the case;

(e) the judge’s role is to hold the balance between the contending parties and not to enter the fray, for example, by advancing an argument in support of the prosecution case that was not put by the prosecution; and

(f) jury directions should be as clear, simple, brief and comprehensible as possible without compromising their legal accuracy.

The Criminal Trial Courts Bench Book should set out a basic guide and checklist for jury directions, including:

(a) general guidance on how directions should be composed and delivered;

(b) general guidance on how a summing up should be constructed and delivered;

(c) general guidance on the use of plain English principles, in particular on forms of legalese and sentence construction that can affect the comprehensibility of directions;

(d) a template for use by the judge in giving practical advice to jurors as to how they might go about their deliberations; (e) advice on how to respond to jury questions about directions; and

(f) a checklist against which a proposed summing up could be compared for completeness.

The Judicial Commission of NSW Criminal Trial Courts Bench Book Committee should undertake empirical testing and consultation with experts in plain English communication, in order to assess the comprehensibility of any proposed directions.

Directing the jury on the criminal standard of proof

(1) The NSW Government should ask the Standing Council on Law and Justice to consider developing uniform legislation on directing juries about the criminal standard of proof in all Australian jurisdictions.

(2) The options that should be considered and tested include directions that:

(a) the jury must be satisfied beyond reasonable doubt so that it is sure that the accused is guilty; or

(b) without reference to the phrase “beyond reasonable doubt”, the prosecution proves its case if the jury is sure that the accused is guilty; or

(c) use one or more of the following explanations of the expression “beyond reasonable doubt”: (i) proof beyond “reasonable doubt” involves a very high standard of proof that requires the jury to be sure that the accused is guilty; (ii) the standard of proof required is higher than a belief that the accused person is probably guilty or even that the accused person is very likely guilty, but does not require absolute certainty; (iii) “reasonable doubt” involves a reasonable uncertainty that remains about the accused’s guilt, after careful and impartial consideration of all of the evidence; (iv) an imaginary, or fanciful or frivolous doubt, or one based on sympathy or prejudice alone does not amount to a reasonable doubt.

Any recommendation for reformulation of the direction on the criminal standard of proof should be subject to empirical testing, for the purpose of ascertaining whether the proposed formulation:

(a) is more easily understood than the current direction on reasonable doubt;

(b) is consistently applied by a large number of people; and

(c) results in individuals applying a standard of proof that is higher, lower or the same as that applied under the current direction on reasonable doubt.

Assisting jurors in areas requiring special knowledge

The Criminal Trial Courts Bench Book should include a suggested jury direction relating to the use and significance of DNA evidence.

The courts should introduce a practice note in relation to the use of DNA evidence in criminal trials that would:

(a) mandate prosecution and defence disclosure of the intention to lead such evidence, to challenge its admissibility or to dispute its accuracy; and

(b) encourage pre-trial determination of the admissibility of such evidence and identification of any issues that might need to be left to a jury in relation to that evidence.

(1) The Forensic and Analytic Science Service, the Office of the Director of Public Prosecutions and the Public Defenders Office should prepare a standard audio-visual presentation that a party can tender in evidence to provide the jury with a basic understanding of DNA evidence so as to place it in a position to assess that evidence and any issue relating to it.

(2) A practice note should require the prosecution to notify the defence that it proposes to use such a presentation and should also require defence notification of any objection to its use in the particular case, with a view to determining the visual aid’s admissibility before trial.

(1) Consideration should be given to amending the Criminal Procedure Act 1986 (NSW) and to introducing a practice note to permit expert evidence called by the prosecution and defence to be given in a block, and to permit the trial judge to give directions as to the order in which such witnesses should be cross-examined.

(2) Consideration should be given to amending the District Court Rules 1973 (NSW) so as expressly to require experts called in criminal trials to be subject to the Expert Witness Code of Conduct.

(1) The NSW Government should ask the Standing Council on Law and Justice to consider the issue of the evidence of child sexual assault victims and their response to sexual abuse in the light of this report and the report of the NSW and Australian Law Reform Commissions on Family Violence, with a view to:

(a) commissioning further research on the issue of juror and public misconceptions concerning the reliability of the evidence of children and their response to sexual abuse; and

(b) amending the uniform Evidence Acts to facilitate the reception of expert evidence concerning the reliability of the evidence of children and their response to sexual abuse, and/or clarifying the extent to which a judicial direction could be given in this respect.

(2) The Criminal Trial Courts Bench Book should include a suggested direction concerning those aspects of childhood development and response to sexual abuse that may be relevant for an assessment of the reliability of the evidence of child sexual abuse victims.

The Criminal Trial Courts Bench Book should:

(a) set out the considerations that arise when an identification of an accused is sought to be made from images captured in relation to a crime scene or connected events;

(b) confirm that the issue for the jury is whether they are satisfied that the accused is the person shown in the images and not, where a witness gives evidence of an identification made from those images, whether that identification was correctly made; and

(c) include a suggested direction that would: (i) draw attention to the considerations that the jury needs to have in mind when asked to determine whether a person shown in the image is the accused; and (ii) deal both with the cases where evidence from a witness is called in support of the images, and the cases where the exercise is confined to a jury comparison alone.

Assistance to the jury

As a matter of course on empanelment, jurors should be provided with written information to assist their orientation either in the form of the Juror Handbook or an Advice to Jurors on Empanelment prepared by the Judicial Commission of NSW and this information should remain with them throughout the trial.

The Criminal Trial Courts Bench Book should include, in the preliminary directions to the jury in trials involving offences against NSW law, a statement to the effect that:

(a) the jury will be asked to return a unanimous verdict; and

(b) a majority verdict may be permitted in certain circumstances that will be explained if the occasion arises.

Section 55C of the Jury Act 1977 (NSW) should be amended to empower the trial judge to provide the jury with a copy of the transcript of proceedings, including the transcript of the evidence, counsel’s opening and closing addresses, and the summing up, either on the request of the jury or on the judge’s own motion, where it is considered that this would be of material assistance to the jury and would not interfere with the fairness of the trial.

Jurors should be provided with the means of accessing transcripts electronically and in a searchable form.

The Criminal Trial Courts Bench Book should provide: (a) guidance concerning the different considerations that apply in relation to the pre-recorded evidence of witnesses, and to the other audio and video recordings and relevant transcripts that may properly be admitted as exhibits; and (b) suggested directions as to the ways in which the jury should approach each type of recording.

(1) The suggested opening remarks, and the suggested directions for the summing up, in the Criminal Trial Courts Bench Book should include a more positive statement to encourage jurors to ask questions where they consider they need clarification about the evidence, the law, or the issues in the trial.

(2) The Criminal Trial Courts Bench Book should include a basic guide as to the way in which questions can be encouraged and managed.

(3) The Jury Guide issued by the Office of the Sheriff, should be amended to make it clear that jurors can ask questions during the trial in relation to the evidence and not only after they have retired to consider the verdict.

Section 161 of the Criminal Procedure Act 1986 (NSW) should be amended to permit the judge to deliver a preliminary address to the jury before the closing addresses of counsel.

The Criminal Trial Courts Bench Book should:

(a) emphasise the need for judges: (i) to ensure that oral and written directions are consistent; and (ii) to invite counsel to identify any potential deficiency or inconsistency in the directions that are given; and

(b) include a suggested direction inviting jurors, if they perceive any inconsistency or have a difficulty in understanding the oral or written directions, to seek clarification.

Section 55B of the Jury Act 1977 (NSW) should be amended to allow written summaries of the evidence and of the addresses of counsel to be given to the jury in cases where the judge considers that such written summaries would be likely to assist the jury in its deliberations.

(1) The Criminal Procedure Act 1986 (NSW) should be amended to authorise the use of question trails.

(2) The Criminal Trial Courts Bench Book should include a suggested direction about the use of question trails along with some possible examples. The model direction should:

(a) emphasise that the question trail is a guide only and is a way of working through the jury’s deliberations;

(b) make it clear that jurors do not have to address the issues in the same sequence as that set out in the question trail;

(c) explain to jurors that the question trail is intended for their individual use in coming to the jury’s verdict; and

(d) direct the jury that if, after considering all of the questions they are unanimous (or after a Black direction, agree by a majority) that one element of the offence charged has not been proved, they should return a verdict of not guilty, even if they do not agree on which particular element that is.

(3) The Criminal Trial Courts Bench Book should note that it is good practice for the judge to consult counsel on the terms of the question trail before presenting it to the jury.

Section 55B of the Jury Act 1977 (NSW) should make it clear that a judge has the power to use visual aids as part of the judge’s directions to the jury where the judge considers that this would be likely to assist the jury in its deliberations.

Setting the scene for the jury – early issue identification

(1) The Trial Efficiency Working Group should be reconvened to consider further reform of trial management in criminal proceedings on indictment, including revisiting the use of case conferencing. (2) The terms of reference of the Trial Efficiency Working Group should specifically require it to consider the ways in which improved criminal trial management could enhance jury decision-making.

The Trial Efficiency Working Group, in looking at possible amendments to the Criminal Procedure Act 1986 (NSW), should consider giving a discretionary power to the court:

(a) to require the prosecution to prepare (and to seek defence agreement to) a draft outline of the issues in the trial that would set out any or all of the following: (i) the elements of the offence or offences charged; (ii) the elements that are and are not in dispute; (iii) a summary of the prosecution case; and (iv) a reference to the defences that the defence intends to raise, based on the notice of the prosecution case and defence response required under s 137 and s 138 of the Criminal Procedure Act 1986 (NSW), and on any notice of pre-trial disclosure  required by an order made under s 141(1) of the Criminal Procedure Act 1986 (NSW).

(b) to give to the jury, at any time including at the commencement of the trial (either before or after the opening addresses): (i) a copy of the outline of issues, if one has been required; or (ii) a summary of the elements of the offence(s) charged and any relevant defences, together with preliminary directions of law in relation to the elements of the offence(s) and defence(s) so identified;

(c) to require the prosecution and the defence to identify, in the course of a pre-trial conference, any warnings or limitations on use that they consider the judge should give the jury in relation to the evidence that is likely to be admitted;

(d) to require the prosecution and the defence to provide to the court before the closing addresses, a summary of the directions of law that each consider should be given to the jury in relation to the elements of the offence(s) charged and of any defence(s) raised.