Sir Dudley Smith, Legal Affairs Committee of the Parliamentary Assembly of the Council of Europe
Appendix 3.6 of the International Associations Statutes Series vol 1, UIA eds (1988)
In 1985 the Legal Affairs Committee of the Parliamentary Assembly of the Council of Europe supplied the following explanatory memorandum (1) concerning its opinion on the European Convention in its draft form. The Rapporteur for the Committee was Sir Dudley Smith.
A draft European Convention on recognition of the legal personality of international non-governmental organisations was adopted by the European Committee on Legal Cooperation (CDCJ) at its meeting of 25-29 June 1984. The Committee of Ministers, prior to considering this draft Convention and opening it for signature and ratification by Council of Europe member States, decided to submit it to the Parliamentary Assembly. The request for an opinion, as well as the text of the draft Convention and its explanatory memorandum, are reproduced in an Assembly document (Doc. 5315). It was referred to the Legal Affairs Committee and to the Committee on Parliamentary and Public Relations.
The original intention of the Legal Affairs Committee was to submit its opinion to the January 1985 part-session of the Assembly. The Committee felt, however, that it was useful to have the comments of the NGOs concerned and also of such organisations as The Hague Conference on private international law. Moreover it seemed inappropriate to cut short a public discussion on the draft Convention which has only just started. This explains the delays in the preparation on the draft opinion which, generally speaking, met with wide approval in the Legal Affairs Committee.
The draft European Convention on recognition of the legal personality of international non-governmental organizations
Many international non-governmental organisations (NGOs), ie private international organisations, contribute to the aims of the Council of Europe. There is a close cooperation with many of these organisations, a number of which obtained consultative status with the Council. These organisations are very useful to the Council of Europe as they provide information, documentary material and proposals and give publicity to its work. The draft European Convention on recognition of the legal personality of non governmental organisations aims at giving these organisations the legal status abroard they enjoy at home. The draft Convention, however, does not limit itself to organisations having consultative status. It will apply to associations andfoundations but also to other private institutions for instance Churches, trade unions and mutual companies provided their legal capacity and personality is recognised in one of the Contracting States and they comply with the other conditions of the draft Convention as well.
Before an NGO may have its legal personality and capacity recognised abroad it must comply with the criteria laid down in Article 1 of the draft convention. Thus it is provided, inter alia, that the organisation must have a non-profit making aim of international utility and carry on its activities with effect in atleast two states. Some explanations of these concepts are given in the explanatory report of the draft Convention which may facilitate their interpretation. However, they do not correspond to the established legal concepts and in practice may give rise to some legal difficulties. For instance, what is meant with an "aim of international utility"? Of course, there will be no doubt in this respect in the case of NGOs which have consultative status with the Council of Europe or with any other respectable international organisation. The preamble to the draft Convention provides some useful pointers towards this interpretation but there may still be some cases in which there may be doubts about the international utility of an organisation's aim. The hope may be expressed that Contracting States will not refuse recognition of legal personality and capacity to an organisation which has for instance been critical of that country's protection of human rights.
Another provision which will need clarification in practice is the provision that the NGO must carry on its activities with effect in atleast two States. When is an organisation active in another State? Is it sufficient that its Executive Secretary from time to time attends conferences abroad or does one need much more? Does an organisation which has its seat in one country and directs its activities exclusively to international governmental organisations also carry on activities in "at least" two States? Such difficulties as may arise in respect of interpretation of the concepts of Article 1 are less likely to arise in respect of Article 4a which was taken literally from Article 11 of the European Convention on Human Rights.
The last requirement for recognition abroad which Article 1 of the draft Convention imposes on NGOs is that they must have their statutory office in the territory of a Contracting State. Furthermore if their central management and control is not in that same state it should be in another Contracting State. The convention therefore adopted a system of laying before two anchors : both the statutory and the real seat of an NGO must be within the territory of the Contracting States. The statutory seat is important because it normally determines the law applicable to the NGO's structure in accordance with the law of most Council of Europe member States. The real seat is of course of importance from a practical point of view. Through this double condition the draft convention precludes non European organisations from taking advantage of its provisions.
It may be welcomed that the draft convention provides that no reservations may be made (Article 9) and that, after its entry into force, the Committee of Ministers of the Council of Europe may invite non-member States to accede to the convention (Article 7, par. 1). Widening the territorial scope of the draft convention will obviously increase its use.
It may be mentioned that The Hague conference on Private International Law concluded, in 1956, a Convention on the recognition of the legal personality of foreign companies, associations and foundations and that the six original EEC member states adopted, in 1968, a treaty on the mutual recognition of companies and legal persons. Some more attention will be paid to this latter convention in the next chapter. Neither of these two international instruments ever entered into force, mainly because of the complex problems which arise in respect of the recognition of foreign commercial companies.
By singling out international non-profit-making NGOs the draft Convention is, in fact, covering one category of the organisations covered by The Hague Convention. As some provisions of these two international instruments are not compatible with each other ratification of one instrument would render difficult, if not impossible, the ratification of the other. For instance, application of The Hague Convention may be refused only for reasons of public policy (2) whereas Article 4 of the draft Convention reads as follows:
"In each Contracting State the application of this convention may only be excluded if the NGO invoking this convention, by its object, its purpose or the activity which it actually exercises:
- contravenes national security, public safety, or is detrimental to the prevention of disorder or crime, and protection of health or morals, or the protection of the rights and freedoms of others ; o
- jeopardises relations with another state or the maintenance of international peace and security".
The Legal Affairs Committee considered the draft Convention at its meeting of 17 December, 14 and 29 January and 4 March last. At the first of these meetings the Committee heard two representatives of the NGOs. They expressed the wish that more facilities be given to international NGOs for instance for the transfer of funds, the appointment of international staff and their financing from international sources. The convention, however, only deals with the question of the recognition of international NGOs and it does not seem appropriate to introduce other elements into the draft Convention. The wishes formulated by the NGOs may later become the subject of a further convention.
The Secretary General of The Hague Conference on private international law, at my request, also submitted written comments on the draft convention. The Hague Convention is in favour of it and participated actively in its preparation although the Council of Europe text will no doubt mean the finishing stroke of its ownConvention on the recognition abroad of companies, foundations and associations. The text of the comments of Mr Droz, Secretary General of The Hague Conference, was made available to members of the Legal Affairs Committee at its meeting of 29 January 1985. Thus the Committee was informed of the results of the 15th session of The Hague Conference on 20 October 1984 which resulted in the adoption of a Convention on the law applicable to trusts and on their recognition. This Convention may well be the subject of further studies by the Legal Affairs Committee.
Finally I received observations from the World Association of Children's Friends. This is an organisation which has consultative status with the Council of Europe but it has its statutory and real seat in Monaco. This NGO would therefore not have the benefit of the provisions of the Convention which provides that NGOs must have their statutory office in the territory of Contracting States and the central management and control in that state or in another Contracting State (Article 1, paragraph d). It may, however, be observed that the Convention will enter into force when 3 Member States of the Council of Europe have ratified (Article 6) and that subsequently other States may be invited to accede (Article 7).
During the discussions in the Legal Affairs Committee it appeared that several members were rather critical of the vague wording in which some of the provisions of the Convention were couched. In this respect they mentioned Article 1 of the draft Convention. They feared that the wide and inarticulate definition of the international NGOs in this article might open the door to undemocratic and subversive organisations. It was also observed that the restrictions, limitations or special procedures provided for the exercise of the rights under the Convention in Article 2, paragraph 2, were defined so imprecisely. Some members of the Committee expressed a preference for limiting the draft Convention to NGOs having consultative statut with the Council of Europe. As it will extend well beyond this circle a much larger number of NGOs may have the benefit of the draft Convention. Thus the draft Convention may contribute to the development of a European law on associations, which should be seen as a positive factor. Committee members expressed satisfaction that the draft Convention had been sent for an opinion to the Assembly and hoped that such transmission would become normal practice.
Statutory or real seat?
In accordance with Article 2, par. 1 of the draft convention "The legal personality and capacity, as acquired by an NGO in the Contracting State in which it has its statutory office, shall be recognised as of right in the other contracting states."
By deciding in favour of the statutory seat the authors of the draft convention made a fundamental choice. The explanatory memorandum gives two reasons in support of this choice. The first of these is the fact that in deciding on its statutory office the NGO manifests a wish to be subject to a given system of law, andthat this wish should be respected. The second reason is an essentially practical one: the statutory seat system makes it possible to avoid any break in continuity in the legal personality of an NGO when its real seat changes (3).
The authors of the draft Convention are, however, aware that introduction of the principle of the statutory seat will entail an important change in the law of states where the rules of private international law are based on the concept of the real seat. It is not certain,however, tghat all of these states are prepared to change their law in this respect. Fortunately the effects of this basic choice made in the draft convention are attenuated by the requirement that the NGO's real seat must also be one of the Contracting States. The explanatory memorandum in this respect states "that the Council of Europe constitutes a community where respect for human rights and democratif principles constitutes the unifying element, ie a homogenous legal grouping characterised by a measure of mutual recognition as between legal systems. In addition, the economic reasons underlying the principle of the real seat in the case of commercial companies are less important in the case of NGOs, which pursue non-profit-making aims" (4).
No doubt the choice between the statutory or real set system becomes more important in respect of commercial companies and it is one of the main reasons why the Treaty of 29 February 1968 on the mutual recognition of companies and legal persons never entered into force. It was ratified by five out of the original six EEC member States but the Netherlands did not accede, one of the reasons being that the Dutch feared that their system of workers'participation in the structures of Dutch commercial companies might be evaded by companies having their statutory seats abroad but their factories in the Netherlands. When new member states adhered to the EEC they undertook to accede to the Treaty. In 1972 the EEC Commission proposed a number of adjustements. The file was however shelved by the Council of Ministers in 1981. It was then clear that there were too many complex legal issues on the one hand and that there was case-law of the European Court of Justice and a liberal attitude towards recognition in EEC member States on the other hand which made the treaty less of a necessity than it had seemed in 1968.
The choice between the statutory seat (or incorporation) system and the real seat system appeared to be a very complex and delicate one. Until now, all those international conventions which had to make a choice between those systems did not receive enough support from States to enter into force. These conventions included the EEC Treaty, the Hague Convention but also the European Convention on Establishment of Companies (5).
In conclusion the Assembly may welcome the draft convention and recommend to the Committee of Ministers to adopt it and open it soon to member States for signature and ratification. Thus the European Convention on recognition of the legal personality ofinternational non governmental organiszations may become the first international instrument on this subject to enter into force.
- Council of Europe. Doc 5381 (26 March 1985, ADOC5381.J). See also Doc. 5315 and Reference No. 1467
- Article 8 of The Hague Convention (see Appendix 4.9)
- Para. 14 of the explanatory memorandum to the draft Convention
- Para. 15 of the explanatory memorandum to the draft Convention
- Concluded by the Council of Europe in 1966 (European Treaty Series, No. 57)