1996
Legal status of international NGOs: overview and options
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Originally published in: Union of International Associations (Ed). International Associations Statutes Series (K G Saur Verlag, 1988), Appendix 1. (See other commentaries). The information in the appendices is integrated into a comparative table as Appendix 3.8 of that volume.
Introduction
Although the structure and language of the statutes and constitutions of international NGOs may bear a very strong resemblance to that of intergovernmental organizations, they are by definition based on agreement reached between nongovernmental parties, whether organizations or individuals - even in those cases where the nongovernmental bodies may represent government interests or function as quasi-governmental organizations. In such cases the statutes have no status in international law, although this situation has been modified in principle since 1 January 1991 when the 1986 European Convention on the Recognition of the Legal Personality of International Non-Governmental Organizations came into force (see Appendix 4.11).
At present however, it is important to stress that from the point of view of international law, international NGOs have no existence as such. They are international 'outlaws'. Thus bodies such as the International Political Science Association (members in 88 countries, secretariat in Canada), the International Association of Legal Science (42, France), the International Law Association (41, UK), the Institute of International Law (43, Switzerland), the International Bar Association (114, UK), the International Association of Democratic Lawyers (83, Belgium), the International Commmission of Jurists (51, Switzerland), the International Association of Judges (31, Italy), and the Inter-Parliamentary Union (107, Switerland), are all 'national' - or, at best, 'foreign' - bodies, from the point of view of both national and international law. They are no different, legally speaking, than bodies such as the American Bar Association or the American Political Science Association, which both have many members outside the USA. Where an organization is 'recognized' by an intergovernmental organization, such as through the consultative relationship arrangements provided by Article 71 of the Charter of the United Nations, it has been argued that such recognition might be interpreted as establishing (rather tenuously) the status of an international NGO in international law, but such interpretations have not been put to the test in any legal proceedings.
Those establishing an international NGO are therefore faced with a choice:
(a) Informal (unwritten rules)
They may avoid defining their relationships in any explicit form and simply create a
pattern of informal relationships with various unwritten rules. This may be perfectly
satisfactory for the kinds of activity they propose to undertake. In recent years one form
this approach has taken has lead to the creation of 'international networks' of
various kinds. This form may be deliberately chosen to avoid the administrative and
political problems which tend to be associated with more formally constituted bodies.
Clearly such bodies do not have statutes which could appear in this volume.
(b) Unregistered contract
The aims and structure of the organization may be defined, possibly in great detail,
in written form. This text is then the basis of the agreement between the members of the
organization. The text may be elaborated with the advice of lawyers in order to provide
for every eventuality. This text is then taken by the members to be the constituting
agreement of their organization. Reference is made to it to resolve any difference of
opinion concerning what may or may not be done by the organization and its
representatives. Such statutes may be elaborated quite independently of any legal system
and may be considered by the members as governing the life of their organization wherever
its secretariat is established and wherever it undertakes its activities. This is
typically true of international sporting organizations which regulate the rules of
competition between countries. Such statutes appear in this volume.
(c) Registration in accordance with national law
Whilst an essentially private agreement may be satisfactory in many instances,
considerable difficulties can arise when the organization needs to interact as an
organization with other bodies. In particular the legal acceptability of the statutes may
determine whether the international NGO can act on its own behalf, through duly appointed
representatives, or whether it has to rely on individuals to undertake legal acts for it
in their private capacity and under their personal responsibility. This applies especially
to the handling of funds, opening accounts, contractual relationships with other bodies,
responsibility in the event of legal proceedings, etc. An unincorporated association as
such cannot sign a contract or own property, though a person or persons may be entrusted
to do these things on its behalf. Furthermore, in the absence of any legally recognized
form, the state in which the international NGO has its secretariat or conducts its
activities may regard the body as contrary to public order. In such circumstances the
international NGO may seek registration under the law of a particular state, normally that
in which it has its secretariat. This usually requires that the statutes conform to the
rules and guidelines defining the acceptability of a body under the national legal
provisions for such registration. These of course vary from country to country and may
involve strict rules concerning the influence of 'foreigners', on the policies
of the organization (proportion of foreigners permissable on the governing board, voting
rules, transfer of funds, etc). The majority of international NGOs have statutes of this
type, which are therefore typical of the statutes in this volume.
(d) Operation via a national member
Members of an international NGO may consider it inconvenient to go through the legal
procedures of registering or incorporating under the law of a particular country,
especially if the secretariat and office holders rotate between member countries every
year. Such rotation would then mean that the organization would have to be legally
dissolved and then reconstituted in the country to which the secretariat was being
rotated. Since such procedures take time, especially if they have to be published in some
official journal in order to become legal, this may be quite impracticable. One
alternative is then for the administrative tasks of operating the secretariat to be
entrusted to the member organization in the country to which the secretariat is being
rotated. The legal responsibility is then that of the national member. Since this body
would anyway be legally registered in order to conduct its normal business, this avoids
the need to register the international NGO in that country. It is then up to the national
member to define accounting procedures which avoid any confusion. In some cases all the
administrative procedures and costs of the international NGO are simply
'absorbed' into the operations of the national body in order to avoid
unnecessary complications. The statutes of such international NGOs would then define the
responsibility of the national member handling such administrative tasks. Such statutes
appear in this volume.
(e) Separation of legal registration and operational base
Members of an international NGO may consider it unacceptable, as a matter
of principle, to formulate their statutes in conformity with the restrictions
of the law governing national bodies in the country in which the secretariat
is located. They may nevertheless find it necessary to provide themselves
with a legally acceptable set of statutes, rather than entrust their operations
to a particular member body for whatever period. In such circumstances the
organization may register itself in a country which is legally hospitable
to international NGOs and then operate a secretariat in whatever country is
convenient for operational purposes. In such a case the organization would
have two sets of statutes, possibly with only minor differences. Only some
countries, such as Belgium, have specific legal provisions for international
NGOs to operate in this way. In such a case, when the organization ceased
operating in the secretariat country it would be dissolved there and would
then fall back on the statutes which permitted it some legal continuity between
its operations in successive secretariat countries. Such legal manoeuvres
will not be necessary, at least within Europe, if the 1986 European Convention
on the Recognition of the Legal Personality of International Non-governmental
Organizations (see Appendix
4.11) comes into force. This specifically provides for statutes formulated
according to the requirements of one country to be recognized in a second
country without further modification.
(f) Negotiated ad hoc agreement with government
In some cases, especially when the laws of the country in which the secretariat is to
be established make little provision for the establishment of an association, special
arrangements may be negotiated with the appropriate government department of the country.
Such an ad hoc 'headquarters agreement' then defines the legal status of the
organization for the period during which it is established in that country, and often that
of the staff of the organization. The agreement may well be distinct from the actual
statutes of the organization although the latter may be subject to review during the
negotiation of the agreement. This procedure is modelled to some degree on that adopted
when the secretariat of an intergovernmental organization is established in a particular
country. It is also possible for even major international associations to come to an
unwritten agreement with a government whereby its existence is accepted in a legal vacuum,
even to the point of avoiding taxation and social security obligations. This privileged
status of course carries its own risks.
(g) Establishment as trust or foundation
Another option occasionally favoured is the formation of a trust or foundation.
The law regarding such bodies tends to be more complex in the differences
between countries, especially because of the implied focus on the disbursement
of funds (5). There are however many similarities between associations
and foundations (6). Both are covered,
in relation to national legislation, by the European Convention on the Recognition
of the Legal Personality of International Non-governmental Organizations (see
Appendix 4.11). No legal
provision has as yet been made for international foundations, as such and
as distinct from NGOs, although the Netherlands and Switzerland are more hospitable
to such bodies than other countries. Improvement in the international legal
status of such bodies is a current preoccupation of INTERPHIL (International
Standing Conference on Philanthropy). The statutes of such bodies are not,
at this stage, included in this volume.
(h) Legal status within Canon Law
For the sake of completeness, it should not be forgotten that a completely different
approach is open to the many international religious orders. In the case of Catholic
orders, for example, these may acquire legal status within Canon Law. Many of these orders
function transnationally according to rules which predate, often by centuries, the efforts
to elaborate statutes for international organizations (7).
It is somewhat ironical that, despite their own lack of recognition in international law, a significant number of international NGOs have an international tribunicial and a legislative function (8, 9). Also of interest is the regulatory function of many international NGOs, of which the best known examples are those for sports such as football, rugby, and the Olympic games itself, or other games of importance to national prestige, such as chess. Even though some of the members may be government sponsored national representatives, it is within the appropriate organs of the NGO concerned that conflicts of interest are settled. Similarly, the Court of Arbitration of the International Chamber of Commerce is used as a means of settling international disputes in the field of commerce.
Multiple legal forms: a radical solution?
In creating new organizations there need be little sympathy for the niceties of legal status under particular regimes. Nonprofit organizations need to learn from their commercial brethren, the 'transnational corporations' who are also international 'outlaws'.
Such corporations have learnt to distinguish between their legal form in a particular country and the operational form which transcends national frontiers. Nonprofit organizations have given excessive attention to providing themselves with a single legal form, carefully choosing the country in which to do so, and accepting whatever structural compromises this forced upon them.
If organizations can distinguish between their existence as social realities and their existence as legal realities then they can follow, and improve upon, the approach taken by transnational corporations. In some countries it is possible to have de facto organizations which are not legally registered in any way. In this sense the organization's members must depend upon themselves, rather than any legal regulations, to be self-regulating.
The crucial step is to operate from this social reality, creating legal realities of whatever form, wherever it is appropriate. Since in most cases the social reality does not exist for the law, it is only through some legal 'mask' that the organization becomes visible in whatever legal system the organization chooses to operate.
In practice this means that the organization can constitute itself legally in different ways, in different countries, for different purposes. As noted above, transnational corporations can take the form of 'nonprofit' organizations in certain countries if this meets their needs. There is no reason why nonprofit organizations should not take a profit- making form where it suits them. In fact some organizations, even within a single country, choose to adopt a triple form of: nonprofit membership organization; foundation; and profit-making corporation. The only bond between them is a cross-linking directorship that guarantees the coherence of the underlying social reality.
The possibility is in fact analogous to that of multiple passport holders who choose which passport to present when they have to deal with any legal system. Since the legal system can only recognize the piece of paper, this creates no problems. Organizations should consider becoming, in effect, 'multiple passport holders'. If a particular country does not have adequate provision for nonprofit organizations, then set up the organization there as a profit-making corporation. If it requires that only nationals of the country should be on the board, then arrange matters in that way for that country.
Note also that on each occasion that an intergovernmental organization accords recognition to an international NGO, the NGO is in effect being given a separate 'passport' and identity. For such recognition is currently the only mechanism through which international NGOs acquire some very weak form of identity within the framework of international law. Governed as they are by separate treaties, the recognition by one intergovernmental body is legally distinct from that by another. Multiple 'passport holding' is therefore already a reality for some NGOs with multiple consultative status.
It may be argued that provision of national legal status, where it is supportive rather than deliberately obstructive, provides many guarantees, notably in the event of any abuse of power or funds. Whilst this may be of significance within a particular country, it is quite impractical for an organization operating in a number of countries, whose secretariat and accounts may not even be in the country where it is legally registered. In fact, unless the organization is self-regulating, so that abuse is avoided or internally controlled, it is unlikely that recourse to any national legal system would be worth the effort. And there are few documented cases of successful legal pursuit of abuse within international NGOs.
Of course some countries have taken advantage of the absurdities of the international legal system by setting themselves up as 'off-shore havens'. Transnational corporations have been very skilled in using the opportunities that these create. Is it not possible that some countries could similarly set themselves up as 'havens' for international nonprofit organizations? It could offer a lucrative opportunity for an island economy with no other resources -- provided telecommunication links were good. Note that this is primarily a question of financial transfers, not necessarily a question of having a secretariat there. And even then, as Liechtenstein has so admirably demonstrated, even grocery shops are willing to put up a brass-plate indicating that they are the 'headquarters' of some corporation. Why not of an international NGO?
Then there is the question of the name of the organization. Again provided the internal social reality is well articulated, the organization can even adopt different names in different contexts without creating any threat to its identity.
Faced with an unsympathetic international legal system, international nonprofit organizations should be encouraged to explore these possibilities with the aid of sympathetic lawyers. In fact it might be asked why lawyers (and especially international associations of lawyers with a strong social commitment) have not taken the lead in articulating these possibilities. For make no mistake, these techniques are already used by some nonprofit organizations, notably those with something to hide. But an innovative approach to legal status can be taken without engaging in any procedures that might be considered unethical.
Proposals to improve legal status of international associations
Despite the present ambiguity and confusion, international NGOs are in general able to conduct their activities in a reasonably satisfactory manner, at least in those countries which are traditionally hospitable to association action. Many problems arise however where international NGOs need to interact with national authorities, especially those in countries where the NGO is not legally established and where it may wish to extend its activities. Some NGOs, even those with non-controversial activities, are severely hindered in the extension of their activities. This is especially the case with those countries whose legal systems make little provision for association action.
Since the beginning of the century, a number of proposals have been formulated to improve the legal, fiscal and administrative facilities of international NGOs. These are reviewed in some of the following Appendices:
Appendix 3: Commentaries
on legal status of international NGOs
This includes various texts explaining the problems and possibilities from different
perspectives.
Appendix 4: Proposed
international conventions
The texts of conventions proposed at various times since the beginning of the century
are presented. Some are more ambitious than others. None of these conventions has been
ratified.
Appendix 5: Other conventions indicative of related possibilities
The texts of a number of conventions concerning the establishment of intergovernmental
organizations, the privileges of internationally protected persons, the the establishment
of corporations at the European level, and the freedom of association, are presented
because a proportion of their articles indicate possibilities, or raise issues, which
merit reflection in considering any future legal status of international associations and
their personnel.
Appendix 6: National
law and international associations
At this time, the only specific arrangement which exists to provide legal status to
international NGOs is that resulting from the Belgian law of 25th October 1919 ('Law
granting personal civil status to international associations with philanthropic,
religious, scientific, artistic or educational objectives), as modified by the law of 6th
December 1954. The text of this law is presented here, together with the relevant French
and Swiss laws for comparison.
This collection of texts and documents presents many initiatives over the past 80 years. It does not however include those initiatives specifically focussed on the tax treatment of non-profit organizations, namely the 1971 Draft Convention on the Tax Treatment in respect of certain Non-Profit Organizations proposed by the International Standing Conference on Philanthropy (10), or the 1972 Recommendation (No. 656) of the Council of Europe. The latter emphasized the differences between the tax treatment applicable and invited 'the member governments to study the possibility of removing the judicial and fiscal obstacles to an increase in international activities by non-profit organizations, with a view to promoting European solidarity'.
The initiatives presented in the following Appendices do appear to be bearing fruit in the current initiative of the Council of Europe (see Appendix 4.11) and in the proposals for the European Community (see Appendix 4.12). This is arguably more a consequence of the pressures towards the integration of Europe into a single economic unity rather than a genuine response to the conditions of organizations operating across the more usual type of national boundaries. There is also the possibility of conflict between the potential openness of the European Convention (see Appendix 4.11, Art. 7) and the EEC-limited focus currently envisaged for the Community proposals (which make no mention of posssible implications for ACP and other associated groups of countries).
After 80 years, it remains to be seen whether such proposals come into force in Western Europe and whether they prove satisfactory in practice. It is regretable that any success will have been bought at the price of limiting application to a single region and possibly to those categories of association fulfilling special criteria. At this point in time it is unclear whether the current initiatives will offer opportunities for effective discrimination against certain types of organization, if only by privileging those more closely associated with the economic aims of the EEC. The harmonization of approach may, for example, deprive international associations of the privileges they currently enjoy under Belgian law (see Appendix 6.1) for no provisions have been made in these proposals for the status in European countries of international associations which are not specially concerned with Europe or European priorities. The very success of these proposals may effectively discriminate against such bodies, even when they have their headquarters in Europe. Unfortunately no intergovernmental effort has yet been made to recommend a more enlightened approach to the status of associations, whether national or international, outside Western Europe.
References
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