Regulating Freedom of Association


The European Commission has concluded its consultation on a a draft proposal for regulating the non-profit sector. Almost everything which is wrong with the European legislative process is illustrated by this document and the consultation process around it: it involves platinum-plating and landgrabbing (see below), and is confused, counter-productive and being carried in the teeth of objections from almost all interested parties.

The proposal arose because the EU has taken it upon itself to implement FATF Special Recommendation VIII, an international legal measure relating to terrorist front organisations. Needless to say, the FATF's own Best Practices note does not entail, and effectively recommends against, what the Commission is proposing.

In practice, EU legislation is written by the executive (of the EU and the member states) with minimal input from legislatures at either European or national level. Much EU legislation creates an obligation to legislate nationally, and many EU member states have extremely weak or non-existent legislative scrutiny of the resultant processes, which tend to be controlled by the non-elected component of the national executive. Consequently many measures not required by EU law are introduced in the course of complying with its actual requirements, and citizens (and indeed legislators) lack adequate means to contest this. This is called gold-plating when the two levels of government involved are EU and national. I propose the term "platinum-plating" for the three stage process of turning international legislation into national legislation via the EU (affording two opportunities for gold-plating). In the case of this FATF recommendation, the EU has begun the gold-plating, and the platinum may be added at member state level. This was the case with the Copyright Directive, which began life as the WIPO Copyright Treaty. Had the EU not involved itself and added additional requirements, European countries would have copyright laws better serving the public interest. The requirements added by EU legislation were passed off as international treaty obligations. Nevertheless, even some of my closest anarchist friends believe that having the EU between the nation state and the international sphere somehow protects the citizen from the harmful side-effects of globalisation.

The substance of what the Commission is proposing is the creation of a Code of Conduct for non-governmental, non-commerical organisations. The current text of the draft implies that this Code would be voluntary, but the minutes of the discussions indicate that it is contemplated to be mandatory in practice. The Code is premised on a number of misconceptions: that the EU has any right to regulate these matters, that the EU is the most appropriate level at which to do so, and that all non-profit organisations are or ought to be legal persons registered with the state or some other public body. The notion that private voluntary collective action legally can or ought to be able to take place without the permission or knowledge of the authorities seems not to have occurred to the drafters, nor the idea that such activity can or ought to be able to take place without requiring the formation of legal entity separate from the human individuals involved.

In the UK and Ireland, and possibly elsewhere such as Denmark, a group of people can form a legal organisation without the permission of anyone else. Crucially, the organisation can get a bank account in its own name. This means funds can be held separately from the members, with a third-party audit trail provided by the bank. No registration is required. For small organisations, this state of affairs is ideal; the start-up costs of getting an organisation off the ground are much lower than if one needed any formalities, and momentum is not lost while people wait for approval or fill in paperwork. The disadvantage of this method is that there is no limit to the liability of those running the organisation, and acquiring this privilege, or privileges in the tax system, do of course require registration with the public authorities. Freedom of association should be more widely understood as requiring that individuals may legally form unincorporated associations without formality and gain access to the banking system thereby. This is how sports clubs, non-Established churches, and pretty much all local community groups have operated for centuries. In contrast, non-profit associations were only legalised in France in 1901.

In its response to the consultation, the NCVO (National Council for Voluntary Organisations) claimed that tampering with freedom to associate without registration in the UK could meet "huge resistance", and the NCVO is hardly the sort of institution which engages in hyperbolic rhetoric as opposed to calculated understatement. Its Danish counterpart had similar concerns.

This is an ongoing matter which I am investigating. I include for information the response of the ECNL, and for amusement, that of the European Public Health Association, who cheekily point out that the proposal suggests that operating multiple bank accounts may be a sign of terrorist activity, but that the practice also constitutes a requirement of ... grants from the European Commission.

EU regulation of non-profit sector


I have been in contact with the European Commission over the proposal I mentioned earlier. It would seem this is not a proposal for a piece of legislation after all, but a recommendation as to how EU Member States should implement the international instrument. That is to say, the drafters seek to influence, not control, the national legislation, and the various mechanisms for avoiding national parliamentary scrutiny will be unavailable.

I'm not going to retract my earlier comments, as the minutes of the meeting show people clearly contemplating that the Code of Conduct will be mandatory.

The UK Government ran a meeting last week about the proposals, and the Commission has said it will take into account such feedback as it received in its improperly brief consultation period.