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Accountability and Supervision

International Standards


      Recommendation CM/Rec(2007)14 on the legal status of NGOs in Europe, Paras. 7, 10, 26, 62, 63, 64, 65, 67, 68, 69, 70, 71, 72,  74 and 75

I. Basic principles
7. NGOs with legal personality should have the same capacities as are generally enjoyed by other legal persons and should be subject to the administrative, civil and criminal law obligations and sanctions generally applicable to those legal persons.
10. Acts or omissions by public authorities affecting an NGO should be subject to administrative review and be open to challenge by the NGO in an independent and impartial court with full jurisdiction.

IV. Legal personality
A. General
26. The legal personality of NGOs should be clearly distinct from that of their members or founders.

VII. Accountability
 A. Transparency
  62. NGOs which have been granted any form of public support can be required each year to submit reports on their accounts and an overview of their activities to a designated supervising body.
  63. NGOs which have been granted any form of public support can be required to make known the proportion of their funds used for fundraising and administration.
  64. All reporting should be subject to a duty to respect the rights of donors, beneficiaries and staff, as well as the right to protect legitimate business confidentiality.
  65. NGOs which have been granted any form of public support can be required to have their accounts audited by an institution or person independent of their management. (...)

 B. Supervision
  67. The activities of NGOs should be presumed to be lawful in the absence of contrary evidence.
  68. NGOs can be required to submit their books, records and activities to inspection by a supervising agency where there has been a failure to comply with reporting requirements or where there are reasonable grounds to suspect that serious breaches of the law have occurred or are imminent.
  69. NGOs should not be subject to search and seizure without objective grounds for taking such measures and appropriate judicial authorisation.
  70. No external intervention in the running of NGOs should take place unless a serious breach of the legal requirements applicable to NGOs has been established or is reasonably believed to be imminent.
  71. NGOs should generally be able to request suspension of any administrative measure taken in respect of them. Refusal of a request for suspension should be subject to prompt judicial challenge.
  72. In most instances, the appropriate sanction against NGOs for breach of the legal requirements applicable to them (including those concerning the acquisition of legal personality) should merely be the requirement to rectify their affairs and/or the imposition of an administrative, civil or criminal penalty on them and/or any individuals directly responsible. Penalties should be based on the law in  force and observe the principle of proportionality.
  74. The termination of an NGO or, in the case of a foreign NGO, the withdrawal of its approval to operate should only be ordered by a court where there is compelling evidence that the grounds specified in paragraphs 44 and 45 above have been met. Such an order should be subject to prompt appeal.
  C. Liability
  75. The officers, directors and staff of an NGO with legal personality should not be personally liable for its debts, liabilities and obligations. However, they can be made liable to the NGO, third parties or all of them for professional misconduct or neglect of duties.


Explanatory Memorandum

Paragraph 7
30. The conferment of legal personality on NGOs need not involve the grant of any greater legal powers than those enjoyed by other legal persons; the most essential ones for their operation are likely to be those inherent in such personality, namely, the ability to enter into contracts related to the pursuit of their objectives, to make payments for the goods and services thereby obtained, particularly through the operation of bank accounts, and the ability to own property. However, it ought always to be possible to confer greater capacities on certain types of NGOs and indeed this may be essential for the pursuit of their objectives. Thus additional rights that have been recognised as necessary for NGOs include: the observation of trials and other proceedings2; participation in public affairs and criticism of governmental actions3; promotion of human rights ideas4; provision of advice5; provision of information to international organisations6; and seeking information7. At the same time, the enjoyment of legal capacities carries with it the responsibility to act within the law and NGOs should not expect any exemption from the application of the administrative, civil and criminal law obligations and sanctions that are generally applicable to legal persons. The application of the general law to NGOs does not, as the following paragraph makes clear, preclude the extension to NGOs of financial and other benefits not available to other legal persons.

Paragraph 10
33. The Recommendation recognises the need for some regulatory controls over the establishment and continued operation of NGOs. However, it is essential that such controls are not applied in either a mistaken or improper manner. Fundamental safeguards against such a possibility occurring will be provided by the administration being prepared itself to review decisions that it has taken and by the supervisory control of the courts. Indeed in a state governed by the rule of law it is essential that NGOs and their members should be able to challenge acts or omissions affecting them in an independent court which has the capacity to review all aspects of their legality. Without this latter possibility there is likely to be a violation of the right to an effective remedy under Article 13 of the European Convention. (...)

Paragraph 26
65. The existence of legal personality has been recognised by the European Court as essential for the functioning of many NGOs (see Sidiropoulos and Others v. Greece, no. 26695/95, 10 July 1998 and Gorzelik and Others v. Poland [GC], no. 44158/98, 17 February 2004) and such personality would be meaningless if it were not distinct from that of those who have established the organisation or who belong to it. However, as Paragraph 75 of the Recommendation makes clear, the distinct personality of an organisation from that of its founders and members should not be an obstacle to either of the latter being held liable to third parties or the NGO itself for any professional misconduct or neglect of duties arising from their involvement in the activities of the NGO.

Paragraph 62
114. Those NGOs receiving any form of public support should expect to account for the use made of it. It is not unreasonable for NGOs to be required to report each year on the activities that they have undertaken and the accounts for the income and expenditure concerned. However, such a reporting obligation should not be unduly burdensome and should not require the submission of excessive detail about either the activities or the accounts. This reporting obligation is without prejudice to any particular reporting requirement in respect of a grant or donation. This requirement is distinct from any generally applicable requirement regarding the keeping and inspection of financial records and the filing of accounts.

Paragraph 63
115. In order to allay any concern that NGOs might not be devoting as much of their resources as is practicable to the pursuit of their objectives, an obligation to require them to disclose the proportion in fundraising and administrative overheads can be imposed. This provision is not meant to set a particular limit for expenditure on fundraising and administrative overheads but to ensure transparency.

Paragraph 64
116. Obligations to report should be tempered by other obligations relating to the right to life and security of beneficiaries and to respect for private life and to confidentiality. In particular a donor’s desire to remain anonymous should be respected. However, the need to respect private life and for confidentiality are not absolute and should not be an obstacle to the investigation of criminal offences (e.g., in connection with money-laundering). Nonetheless any interference with respect for private life and confidentiality should observe the principles of necessity and proportionality.

Paragraph 65
117. In order to guarantee objectivity there can be a requirement that NGOs have their accounts audited by a person or institution independent of its management. The scope of any such requirement should take account of the size of the NGO concerned. In smaller ones the requirement of independence might be satisfied where the audit is carried out by a member who has no connection with the management. For those with substantial income and expenditure the use of the services of a professional auditor is likely to be considered more appropriate. It is recognised that there may also be a general legal obligation for all entities with legal personality (including NGOs) of meeting certain objective criteria, such as net value of assets or average number of employees, to have their accounts audited, which would be applicable even where NGOs do not receive any public support. (...)

B. Supervision
Paragraph 67
119. The best means of ensuring ethical, responsible conduct by NGOs is to promote self-regulation in this sector at the national and international level. Certainly responsible NGOs are conscious of the fact that their success depends to a large extent on public opinion concerning their efficiency and ethics. Nonetheless states have a legitimate interest in regulating NGOs so as to guarantee respect for the rights of third parties (whether donors, employees, members or the public) and to ensure the proper use of public resources and respect for the law.
120. In most instances the interests of third parties can be adequately protected by enabling them to bring the relevant matter before the courts; there should generally be no need for a public body to take any other action on their behalf.
121. Whatever the form of regulatory control employed, it is essential that it be governed by objective criteria and be subject to the principle of proportionality so that its exercise can be amenable to control by the courts. It is also vital that public authorities, in supervising the activities of NGOs, apply the same assumption that holds good for individuals, namely, that their activities are lawful unless the contrary is proved.

Paragraph 68
122. It should be possible to scrutinise the financial records and activities of NGOs where there are sufficient grounds for inquiry. In most instances this is only likely to be justified where an NGO has failed to comply with reporting requirements, whether because no report has been made or because what has been produced gives rise to genuine concerns, but it is possible that circumstances will warrant an inquiry even before a report is due. Mere suspicion should not be the basis for any such inquiry; there must always be reasonable basis for believing that impropriety has occurred or is imminent.

Paragraph 69
123. This provision requires that NGOs should have the benefit of the guarantees applicable to the search of persons and premises under Article 8 of the European Convention; see, e.g., Funke v France, no. 10828/84, 25 February 1993.
124. Judicial authorisation should normally be obtained prior to any such search taking place but this can be dispensed with where the power is subject to both very strict limits and subsequent judicial control, providing a sufficient guarantee against arbitrary interference with the right to respect for private life; see Camenzind v. Switzerland, no. 21353/93, 16 December 1997.

Paragraph 70
125. Intervention by an external body in the actual running of an NGO should be extremely rare. It should be based on the need to bring an end to a serious breach of legal requirements where either the NGO has failed to take advantage of an opportunity to bring itself into line with those requirements or an imminent breach of them should be prevented because of the serious consequences that would follow.

Paragraph 71
126. The possibility of seeking suspension of administrative action is something expected of all administrative law systems – see Recommendation Rec(2003)16 of the Committee of Ministers on the execution of administrative and judicial decisions in the field of administrative law – but it is especially important that this is available in respect of directions to an NGO to desist from particular activities as these are often tied to particular moments in time and so could not usefully be undertaken at a later date after a challenge to the directions has been successfully pursued.
127. Although there may be good reasons in a particular case for refusing suspension of an order to desist from certain activities or of any other measure taken in respect of an NGO, the significance of so doing is such that there should then be the possibility of this being subjected to a prompt judicial challenge.

Paragraph 72
128. NGOs, like everyone else, are subject to the law and sanctions may thus be imposed on them for failing to observe its requirements. However, it is essential that the principle of proportionality be respected in both framing and applying sanctions for non-compliance with a particular requirement. Moreover there should always be a clear legal basis for any sanctions that are imposed in a given case.

Paragraph 74
130. The need to respect the principle of proportionality should mean that resort to the sanction of enforced termination of an NGO for the reasons set out in Paragraph 44 of the Recommendation should be very rare. An extremely well-founded basis for such drastic action as enforced termination is essential; see United Communist Party of Turkey and Others v. Turkey, no. 19392/92, 30 January 1998, Socialist Party and Others v. Turkey [GC], no. 21237/93, 25 May 1998 and Refah Partisi (The Welfare Party) and Others v. Turkey [GC], nos. 41340/98, 41342/98, 41343/98 and 41344/98, 13 February 2003.
131. Moreover in making any assessment about the need for enforced termination it will be important to be sure that the reprehensible activities of members and even office-holders of an NGO can justifiably be regarded as engaging the responsibility of the latter; see Dicle for the Democratic Party (DEP) of Turkey v. Turkey, no. 25141/94, 10 December 2002.
132. Where enforced termination does appear to be justified, it is a measure that must be adopted by a court and should be subject to appeal. It should only be in the most exceptional case that the effect of a termination ruling would not be suspended until the outcome of an appeal; see the contribution of the absence of such a possibility to the measure being found to be disproportionate in the United Communist and Socialist Party cases. 

Paragraph 75
133. The principles set out in this provision are a necessary consequence of the legal personality of an NGO. Such personality confers on it a separate existence from its members and founders and it should normally, therefore, be the only one liable for its debts, liabilities and obligations. However, legal personality cannot operate as a barrier to liability on the part of an NGO’s members, founders and staff for any professional misconduct or neglect of duties with regard to its functioning that affects the rights or other legal interests of third parties.
134. In some countries it is possible to choose to establish an NGO with legal personality where the officers can be held personally liable for the NGO’s debts, liabilities and obligations (for example, informal associations in the Netherlands). 


      Fundamental Principles on the Status of Non-Governmental Organisations in Europe, Principles 9, 60, 61, 62, 63, 64, 66, 67, 68, 69 and 71

9. Any act or omission by a governmental organ affecting an NGO should be subject to administrative review and be open to challenge in an independent and impartial court with full jurisdiction.
Transparency and accountability
60. NGOs should submit an annual report to their members or directors on their accounts and activities. These reports can also be required to be submitted to a designated supervising body where any taxation privileges or other public support has been granted to the NGOs concerned.
61. NGOs should make a sufficiently detailed report to any donors who so request, on use made of donations to demonstrate the fulfilment of any condition which was attached to them.
62. Relevant books, records and activities of NGOs may, where specified by law or by contract, be subject to inspection by a supervising agency. NGOs can also be required to make known the percentage of their funds used for fundraising purposes.
63. All reporting and inspection shall be subject to a duty to respect the legitimate privacy of donors, beneficiaries and staff, as well as the right to protect legitimate business confidentiality.
64. NGOs should generally have their accounts audited by an institution or person independent of their management. (...)
Supervision
66. NGOs may be regulated in order to secure the rights of others, including members and other NGOs, but they should enjoy the benefit of the presumption that any activity is lawful in the absence of contrary evidence.
67. NGOs should not be subject to any power to search their premises and seize documents and other material there without objective grounds for taking such measures and prior judicial authorisation.
68. Administrative, civil and/or criminal proceedings may be an appropriate response where there are reasonable grounds to believe that an NGO with legal personality has not observed the requirements concerning acquisition of such personality.
69. NGOs should generally be able to request suspension of administrative action requiring that they stop particular activities. A refusal of the request of suspension should be subject to prompt judicial challenge.

Explanatory Memorandum

24. Judicial protection: in a state governed by the rule of law it is essential that NGOs should be entitled, in the same way as other legal entities, to challenge decisions affecting them in an independent court which has the capacity to review all aspects of their legality, to quash them where appropriate and to provide any consequential relief that might be required. The principle established in the previous paragraph holds good, that is any act or decision affecting an NGO must be subject to the same administrative and judicial supervision as is generally applicable in the case of other legal entities. There should be no need for special provisions to this effect in legislation on NGOs. (...)
66. As regards its activities and financial position, an NGO is accountable to a number of parties, first and foremost its members. It is thus good practice that it should submit an annual report on its accounts and activities to them. Secondly, an NGO which has benefited from public support or preferential tax treatment can be expected to account to the community concerning the use made of public funds. Lastly, donors may stipulate by contract that an NGO is required to report on the use made of individual donations.
67. However, reporting requirements must be tempered by other obligations relating to the respect for privacy and confidentiality. In particular, a donor’s desire to remain anonymous must be observed. The respect for privacy and confidentiality is, however, not unlimited. In exceptional cases, the general interest may justify authorities’ having access to private or confidential information, for instance in order to combat black market money transfers. Any exception to business confidentiality or to the privacy and confidentiality of donors, beneficiaries and staff shall observe the principle of necessity and proportionality.
68. In order to guarantee objectivity, the fundamental principles lay down the principle that NGOs should have their accounts audited by a person independent of its management, although this person could still be a member of the NGO in question. As tends to happen with small commercial companies, small NGOs may be exempted from the obligation of having their accounts audited by an independent person.
69. Whereas the previous section concerned oversight of an NGO’s accounts and performance, in relation to the objectives defined in its statutes, this section deals with supervision of compliance with the civil, criminal and administrative law in force.
70. The best means of ensuring ethical, responsible conduct by NGOs is to promote self-regulation in this sector at national and international levels. Responsible NGOs are increasingly conscious of the fact that the sector’s success depends to a large extent on public opinion concerning their efficiency and ethics. Furthermore, in some countries codes of conduct are often drawn up to enable groups of NGOs in a given sector to ensure that the sector’s needs and challenges are met and widely understood.
71. States nevertheless have a legitimate interest in regulating NGOs so as to guarantee respect for the rights of third parties, and this may include action to safeguard the reputation and economic interests of other NGOs in particular. State intervention may also be needed to protect members against abuse of an NGO’s dominant position, particularly against exclusion in breach of the organisation’s rules, imposition of certain unfavourable conditions, or even adoption of wholly unreasonable or arbitrary rules. However, in most instances, the appropriate form of protection would be the possibility for members to bring the matter before the courts; there should generally be no need for a public body to take action on the members’ behalf.
72. In supervising the activities of NGOs, the administrative authorities should apply the same assumption as holds good for individuals, namely that, failing proof to the contrary, their activities are lawful. The powers of the administrative authorities and the police, notably as regards search and seizure, and the penalties that may be imposed, must be consistent with the principle of proportionality and be subject to judicial supervision.



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