Nationality-based Requirements for NGO Registration

 

By Karla W. Simon

 

Case Note on Commission of the European Communities v the Kingdom of Belgium (European Court of Justice 1999).

 

In the June 29, 1999, decision of the European Court of Justice (ECJ) in Commission of the European Communities v the Kingdom of Belgium, the Court held that the Kingdom of Belgium was not compliant with its obligations under the Treaty of the European Community (EC Treaty). Specifically, provisions of Belgian law were held to be in violation of Article 6 (now Article 12) of the EC Treaty. This article prohibits discrimination against EC nationals on the basis of nationality. The offending provisions of Belgian law required the presence of at least one Belgian national in an association registered as a legal person under Belgian law:

 

1)       under Article 1 of the Law of 25 October 1919, granting legal personality to international associations involved in various philanthropic activities, an "international association" was required to have one Belgian national in its management; and

2)       under Article 26 of the Law of 27 June 1921, granting legal personality to not-for-profit associations and institutions promoting the public interest, an organization was required to have Belgian nationals as three-fifths of its members.

 

Although the case involves an interpretation of the EC Treaty and is thus relevant only to states party to that Treaty as well as to accession states, it raises an issue that is of more general interest. Is it appropriate for the law to require that a certain minimum number of citizens be members of or be present in the governance structure of a domestically registered NGO? In both the World Bank's draft Handbook on Good Practices for Law Relating to Nongovernmental Organizations and the Open Society Institute's Guidelines for Law Affecting Civic Organizations, the issue of the registration of foreign organizations is discussed. Both books take a strong position that foreign NGOs should be allowed to register branches, affiliates, or subsidiaries in any state, under terms and conditions applicable to domestic NGOs. See, Guidelines Section 10.1 and Handbook Section 35. But neither book deals with the issue discussed here.

 

In the elaboration of the principles behind permitting foreign NGOs to register, both the Handbook and the Guidelines stress that a state does have appropriate interests at stake in protecting its citizens from harm by an entity that has activities or operations within its borders. There is thus a need for a foreign NGO to be subject to court jurisdiction in any state in which it has more than a minimum of activities. This is necessary in case it or its agents breach a contract, or commit negligent or criminal acts. Similar concerns appear to have been relevant when the Belgian parliament inserted the provision in the 1919 law requiring the presence of a Belgian national in the management of an international association. According to Dirk Longtings, an attorney with the Brussels office of Hogan & Hartson, this provision was intended to ensure that "the Belgian authorities would always have jurisdiction over at least one person connected with the association." See Dirk Longtings, "The Practice of the Ministry of Justice Regarding International Non-Profit Associations," in REEKS: NON-PROFIT RECHT & MANAGEMENT 11, 21 (1996). Similar concerns presumably animated the similar provision in the 1921 law.

 

Belgium must now amend its laws to remove discrimination against the citizens of other EU countries. In order to come into compliance with the EC Treaty, it could do so by eliminating only the discrimination against other citizens of the European Union. The question that remains, however, is whether amendments that are so limited would make good policy sense.

 

Clearly, any country has a legitimate interest in assuring that it has meaningful jurisdiction over an entity that is operating on its territory. In order to be able to enforce its laws and protect its citizens, any state must be able to assert jurisdiction over entities formed by foreigners. This legitimate state interest is met, however, if the entity itself is properly formed under the laws of that country (e.g., Belgium), whether any individual Belgian citizens are active as managers or members. A well-crafted law on foundations or associations should require that any entity formed under Belgian law have a locally-resident agent for acceptance of service of legal process or other binding legal documents. If service on an organization's designated agent is sufficient to assert jurisdiction over it, Belgium will be able to enforce its laws against that entity and assure its citizens that they can bring lawsuits effectively against that entity in a Belgian court.

 

Consistent with the position taken in the Handbook and the Guidelines, a state should also not limit the access of foreign NGOs to operations within its borders. The state's important and legitimate interests in protecting its citizens and ensuring jurisdiction over the foreign NGOs would seem to be satisfied once there is assurance that legal process can be served locally upon an authorized representative of foreign persons. It seems neither necessary nor appropriate for foreign persons to be excluded from the country, to be forced to register a domestic entity, or to have any entity that is registered dominated or controlled by local citizens. In a rapidly globalizing world, the life of civil society, like all other major human activities, will inevitably become more internationalized, with activities of NGOs and interactions between them increasingly flowing across national boundaries.

 

In short, it seems both unnecessary and undesirable for laws relating to NGOs to exclude foreign persons, including foreign NGOs, or to impose strict nationalistic requirements upon the membership or governance structure of a locally registered NGO. The anti-discrimination provision of the EC Treaty represents a form of good practice, one that should be emulated by countries in their own laws. Any forward-looking nation should embrace the non­discrimination principle embodied in the EC Treaty and recently applied vigorously by the European Court of Justice.

 

ICNL would like to thank Bart Servaes, an attorney in the Brussels office of JP Morgan, who provided access to materials that were used in writing this note.