LAHORE: The Lahore High Court (LHC) has set aside a federal government policy introduced in 2022 to regulate foreign funding of non-governmental and non-profit organisations.

The Human Rights Commission of Pakistan (HRCP) and others had challenged the ‘Policy for Local NGOs/NPOs Receiving Foreign Contributions 2022’ mainly questioning the federal cabinet’s lack of requisite legislative authorisation.

The policy apparently was a step taken to deal with the difficulties encountered in the wake of the classification of the country in the non-compliant category under the Financial Action Task Force (FATF) regime.

The policy provided that an authorised officer of the Ministry of Economic Affairs (MoEA), not below the rank of BS-21, shall approve or reject a request of the NPOs and NGOs for execution of a memorandum of understanding (MoU) with the ministry.

Verdict says policymaking in absence of legislative authorisation akin to encroachment on parliamentary domain

The petitioners said the policy, conspicuously, extended superintending role for the security agencies — whose designation remained unidentified. The policy also spelt out that security agencies were required to grant clearance before signing of an MoU. The petitioners/NGOs argued that their registration was made under the statutory framework “the Societies Registration Act 1860”.

They said no restrictions or limitations could be imposed on their rights/entitlements to receive and utilise foreign funds/contributions without the sanction of law.

HRCP’s lawyer Hina Jillani pointed out that previously a similar attempt was unsuccessfully made by promulgating a policy, approved by the Economic Coordination Committee of the Cabinet in 2013, for regulation of the organisations receiving foreign contributions, but the same was invalidated by courts.

A deputy attorney general, assisted by an officer of the MoEA, explained before the court that the federal cabinet, in exercise of its executive authority, was competent, eligible and vested with the authority to frame and introduce the policy.

He said the purpose was to regulate the foreign funding received, collected, and utilised by the NGOs.

He argued that the role of security agencies was limited to the rendering of assistance regarding matters touching national security and terrorism financing issues, and the absence of such checks would exacerbate difficulties for the government in the context of the FATF regime, which if not addressed, had the potential of threatening the financial autonomy of the country.

In his 16-page judgement, Justice Asim Hafeez observed that the constitutional scheme does not envisage the exercise of legislative powers by the federal cabinet unless such power/authority was exercised under the authority of the legislature.

He observed that an act of policymaking, in the absence of legislative authorisation, manifested encroachment on the legislative domain.

The judge observed that no prerogative/authority could be extended to the federal cabinet to curtail fundamental rights through executive action, upon framing of policy unless such action is backed by a law.

He observed that a policy, claiming force of law, can be framed by the executive if it is made under the authority of parliament, but not otherwise. “The authority of law is conspicuously missing,” the judge said, referring to the impugned policy.

Justice Hafeez noted that an unlawful and unreasonable gatekeeper’s role, for assessing the entity’s suitability and the purposes for signing an MoU, was assigned to the security agencies, without identifying the description/title of the security agencies and explaining under what authority of law such a role could be assigned. Allowing the petitions, the judge declared the policy unlawful, invalid and of no legal effect.

The HRCP has welcomed the LHC ruling, terming it a key decision for civil society organisations and for civic spaces in general.

It said many NGOs’ operations have been curtailed by the policy imposing onerous requirements and giving security agencies the authority to arbitrarily deny organisations clearance.

The statement said the State Bank of Pakistan, in its response to the petition, had clarified that it had not instructed banks to withhold NGOs’ funds if they were not registered with the economic affairs division.

Published in Dawn, September 8th, 2024