INTERNATIONAL JOURNAL OF CIVIL SOCIETY LAW
VOLUME IV ISSUE 2
APRIL 2006
1
IJCSL EDITORIAL BOARD
Prof. Karla W. Simon
Catholic University of America
EDITOR-IN-CHIEF
Paul Bater
International Bureau of Fiscal
Documentation
SENIOR EDITOR
Dr. Leon E. Irish
Visiting Prof. of Law
Catholic University
SENIOR EDITOR
Maureen McCarthy
MANAGING EDITOR
Nasira B. Razvi
NEWSLETTER EDITOR
Malinda Baehr
ASSOCIATE EDITOR
Kevin Schwartz
ASSOCIATE EDITOR
Donna M. Snyder
EDITORIAL ASSISTANT
Alison Shea
ASSOCIATE EDITOR
Steven Young
REFERENCE LIBRARIAN
CONTRIBUTING EDITORS
& CONTRIBUTORS
Prof. Myles McGregor-Lowndes
Prof. Susan Woodward
AUSTRALIA
Terrance Carter
CANADA
Dieter Hernegger
AUSTRIA
Daniela Pais Costa
BRAZIL
Prof. Debra Morris
CAYMAN ISLANDS
Prof. Ge Yunsong
CHINA
Dr. Petr Pajas
CZECH REPUBLIC
Daniel Bekele
ETHIOPIA
Frits Handius
ROVING REPORTER, EUROPE
Michael Ernst-Pörksen
GERMANY
Paul Opoku-Mensah
GHANA
Noshir Dadrawala
INDIA
Renata Arianingytas
INDONESIA
Dr. Alceste Santuari
ITALY
Zahra Maranlou
IRAN
Tatsuo Ohta
JAPAN
Dr. Hadara Bar-Mor
ISRAEL
Dr. Abdullah El-Khatib
JORDAN
Elkanah Odembo
KENYA
Bayarsetseg, J.
MONGOLIA
Qadeer Baig
PAKISTAN
Beatriz Parodi Luna
PERU
Karin Kuntsler Goldman
UNITED STATES
Karen Nelson
SOUTH AFRICA
Dr. Antonio Itriago
VENEZUELA
Dr. Christine Barker
UNITED KINGDOM
Phuoc Luong Huu
VIET NAM
Paul Bater
WESTERN EUROPE
Tamuka Muzondo
ZIMBABWE
2
Letter from the Editor
Dear Readers,
I am writing this letter as Lee and I prepare to move our operations on May 1 to South Africa for four
months, followed by the move to China for the remainder of 2006. The peripatetic life is becoming
something of a habit, and it gives ICCSL and its affiliates in Africa and Asia secure bases of action for
work in those regions. Naturally it has made the editing of this issue of IJCSL a bit more hectic than
other issues, but the articles and other items included in the April issue are truly worth all the effort.
The first of these is a marvelous piece written by Andrew White, an American lawyer who has been
studying for an LL.M. in Asian and Islamic law at the University of Melbourne. Andrew has now been
elevated to the rank of Sessional Lecturer in the Faculty of Law, and he will be presenting his paper on
“The Role of the Islamic Waqf in Strengthening South Asian Civil Society: Pakistan as Case Study”
at the 4th International Society for Third Sector Research (ISTR) Conference in Bangkok in July.
As you will recall, we also publish student papers in our April issue every year, and this year is no
exception. We offer two excellent articles, one by Slavica Chubric, who received her LL.M. from
Central European University in 2005 and is currently working as an intern at the European Court of
Human Rights. Her article addresses the Freedoms of Association, Expression, and Peaceful Assembly
for the Macedonian minority in the Balkans. The other student article was written by Barry Rickert,
who is due to receive his JD degree from Pace University this May. He describes the ways in which the
Internal Revenue Code treats investment advisory fees and brokerage fees, suggesting that the difference
in treatment may have a less than optimal impact not only on individual investors but also on charitable
trusts.
In addition to the articles we also feature a Student Note by Jason Czyz, who is finishing his first year as
an evening student at Catholic University of America’s Columbus School of Law. Jason is Deputy
Director of International Programs for the National Association of Regulatory Commissions (NARUC).
Jason’s contribution concerns the development of consumer associations in Bangladesh and their
effectiveness in advocating for regulatory reform.
In addition to these fine articles and notes, we are also pleased to feature a Case Note by our friend and
Editorial Board member from Canada – Terrance Carter – and Anne-Marie Langan, assisted by Nancy
E. Claridge of the Carter and Associates firm. Their piece discusses the recent case in the Supreme
Court of Canada holding that the Charter of Fundamental Rights and Freedoms requires protection for
religious practices that are outside the mainstream. In their words, the Supreme Court “has sent a strong
message that Canada’s public education institutions must embrace diversity and develop an educational
culture respectful of the right to freedom of religion….[i]n its decision in Multani v. Commission scolaire
Marguerite-Bourgeoys.
This month we also are happy to report the changing of the guard on the Student Editorial Staff. While
we are sorry to bid farewell to Maureen, Alaina, Sarah, and Laura, we are pleased to have Kevin
Schwartz, Malinda Baehr, and Alison Shea joining us. This is Maureen’s last issue as Managing Editor,
and we send her off with special thanks for all the hard work that job entails. Kevin will step in as
Managing Editor in July.
Finally, we wanted to bring to your attention the fact that this issue is the first one that we are publishing
in both PDF and Word formats. We are doing the latter so as to make all the issues fully searchable on
the web. We are also creating an index so that they will be searchable in hard copy format (as they will
3
appear in hard copy by the end of 2006). Many thanks go also to our webmasters Sonya and Dennis
Hughes for helping us to achieve these important goals.
As always, we would welcome your comments and suggestions. Most of all, of course, we hope that you
will enjoy reading the articles and notes that we are happy to bring to your attention every three months.
Best wishes and good reading!
Karla W. Simon
Editor in Chief
4
TABLE OF CONTENTS
IJCSL EDITORIAL BOARD
LETTER FROM THE EDITOR
TABLE OF CONTENTS
IJCSL EDITORIAL POLICY
2
3
5
6
ARTICLES
Pakistan
The Role of the Islamic Waqf in
Strengthening South Asian Civil
Society: Pakistan as Case Study•
•
7 Andrew White
STUDENT ARTICLES
Macedonia
United States
• International Instruments for
the Protection of the Rights of
Minorities and the Status of the
Macedonian Minorities in the
Neighbouring Countries•
• The
Differing Tax Treatment of
Investment Advisory Fees and
Brokerage Fees; A General Analysis
37 Slavica Chubric
71 Barry Rickert
and An Analysis in the Context of
Charitable Investments •
STUDENT NOTE
•Building
Bangladesh
Consumer Capacity in
Bangladesh: USAID/NARUC Project
for Regulatory Capacity Building•
Canada
Supreme Court Gives Strong
Endorsement to Freedom of Religion•
91 Jason Czyz
CASE NOTES
•
5
93 Terrance Carter and Anne-Marie
Langan, assisted by Nancy E.
Claridge
IJCSL EDITORIAL POLICY
April 2006
Dear Reader
CONTENT—IJCSL PUBLISHES ARTICLES ON A VARIETY OF TOPICS, seeking to provide a
venue for an international readership to learn about and express opinions on
developments in law affecting civil society. These topics and the array of opinions on
them are complex and sometimes controversial. The opinions expressed do not
necessarily reflect the views of IJCSL or its editorial staff.
STYLE—IJCSL PUBLISHES ARTICLES BY CONTRIBUTORS FROM AROUND THE WORLD.
Therefore, IJCSL uses a flexible editorial policy regarding questions of style. Articles
submitted by persons for whom the English language is native are edited based on the
author's original syntax and spelling. Articles submitted by persons for whom the
English language is not native are edited according to American English style.
Occasionally, IJCSL publishes articles in languages other than English. In those
instances, articles are published as submitted and IJCSL provides an English-language
summary.
QUESTIONS & COMMENTS—IJCSL WELCOMES READERS’ QUESTIONS & COMMENTS
on items published in its pages. If you have a question or comment, please contact
Karla W. Simon, Editor-in-Chief
Maureen McCarthy, Managing Editor
[email protected]
[email protected]
IJCSL RETAINS FINAL EDITORIAL CONTROL of all aspects of publication and will share
copyright with authors.
We look forward to hearing from you.
Thank you.
PLEASE CITE AS
4 INT. CIV. SOC. LAW at http://www.law.cua.edu/Students/Orgs/IJCSL
6
ARTICLES
THE ROLE OF THE ISLAMIC WAQF IN STRENGTHENING
SOUTH ASIAN CIVIL SOCIETY: PAKISTAN AS CASE STUDY
BY ANDREW WHITE*
I. INTRODUCTION
Civil society -- basically the residual parts of society which fill the interstices between the State
and the individual -- has rapidly become the faddish ‘hula hoop’ or ‘new black’ of contemporary
political philosophy. Much is being written and discussed by political theorists, lawyers, and
government policy wonks about the positive effects of a strong civil society. Benefits are touted
for such wide-ranging priorities as democraticization and good governance, the rule of law,
environmental regulation, gender equality, employment/labor rights, and poverty reduction.
Although a strong civil society may not be quite the universal panacea for society’s ills that many
are seeking, it undeniably can be a powerful step in the direction of better government (more
transparency and less corruption), better wealth-distribution (greater poverty reduction), and
better provision of public services both in place of and ancillary to services provided by the State
to its citizens.
Even more fashionable than debates centered on civil society, Islam and its various movements
and belief-systems also has arisen as an enthusiastic topic of not only theological but also
political discourse, especially following the tragic events of September 11, 2001 in the United
States. Motivated in no small part by the confusion and fear (perhaps bordering on paranoia)
instilled in many of us in the ‘West’ by, among others, a new crop of cocktail party ‘Islamicists,’
fundamentalist Christian evangelists, and the popular press, Islam generally is perceived as a dark
counterpart to all the presumed virtues of (especially Western-based) civil society. It is popularly
touted as a threat to principles of democracy and good-governance, a threat to individual
freedoms and rights (especially for women), and in many ways a threat to civil society and all of
its accomplishments.
Fundamental to this juxtaposition of civil society and Islam as countervailing forces, each
fighting on the battlefield of developing nations, is not only the lack of clarity regarding the
concepts and institutions which comprise both civil society and Islam, generally, but also a lack
of understanding regarding Islamic principles and institutions which historically have been
fundamental to Islam and its adherents. The central role of philanthropy and charity1 in Islam, as
*
Andrew White is a sessional Lecturer in the Faculty of Law and a researcher in the Asian Law Centre at
the University of Melbourne in Australia, where he is completing LL.M. studies in Asian and Islamic law
and will commence a Ph.D. in July. He previously practiced law in the U.S. and Europe as principal in his
own law firm in North Carolina, as a senior attorney in a law firm in Germany, and as a partner in a major
international law firm based in Washington, D.C. The author would like to thank Prof. Mark Sidel of the
University of Iowa College of Law (Visiting Professor at University of Melbourne and Harvard University)
for his insights and suggestions with regard to this article.
1
In this paper, the term ‘philanthropy’ will be used to describe the realm of broad benevolence which
serves the public benefit, often through long-term institutional delivery of public services. ‘Charity’, on the
other hand, is more narrowly defined as relief of an immediate need, such as aid to the homeless or victims
of a disaster. This will be particularly relevant in the context of zakāt and sadaqah. See, e.g., Zafar
Hameed Ismail and Quadeer Baig, ‘Philanthropy and Law in Pakistan’ in Mark Sidel and Iftekhar Zaman
(eds), Philanthropy and Law in South Asia (2004) 245, 254. There is much confusion even in scholarly
7
a dynamic part of civil society -- and particularly as historically promoted by one such institution,
the Islamic trust or waqf -- is the primary focus of this article. Indeed, the waqf (pl. awqaf) has
been for many centuries a mainstay component of civil society in Muslim countries. Today,
awqaf are enjoying a resurgence in Muslim society, both in the traditionally Muslim countries of
the Middle East and in the Muslim-dominated countries of Asia. In these countries, the state
expressly permits the establishment of awqaf through various enabling legislation, although it
also strictly regulates and administers the creation and management of awqaf through diverse
bureaucratic vehicles such as government waqf administrators and boards. As an illustration of
such strict bureaucratic regulation, the regulatory framework in Pakistan is reviewed generally in
this article. It is suggested that especially in Pakistan -- where issues of control (and often cooption) by the government of various actors in civil society, as well as corruption and lack of
transparency within the civil society institutions themselves, are predominant concerns -- the
waqf is inherently an institution which can allay many of these concerns and, at the same time,
may provide a further dividend well-beyond mere temporal concerns.
II.
CIVIL SOCIETY IN ASIA: DEFINITION AND CONCEPTS
Civil society in Asia, as well as in the rest of the world, is not easily susceptible of definition. It
is a concept which has changed in meaning from earliest discussions by Cicero and other Roman
and Greek philosophers (who, perhaps ironically, used the term to refer to the state and
civilization based on rule of law); through modernization of the concept by Thomas Paine and
Georg Hegel as a ‘domain parallel to but separate from the state’;2 and then more recently
through the writings of Karl Marx (who saw civil society as ‘crass materialism’ emerging out of
capitalism3) and neo-Marxist theorist Antonio Gramsci, who championed civil society as the
realm of independent and autonomous political association, holding in check the tyranny of the
state.4 As various scholars struggle to define it, ‘the term “civil society” is an evolving and often
contested construct whose meaning has varied in different times and places.5
One of the simplest (and perhaps most often-quoted) contemporary definitions of ‘something
called civil society’ was succinctly stated by the late philosopher/sociologist Ernst Gellner in one
of the Tanner Lectures on Human Values at Harvard in 1990: ‘Civil society, in the relevant
sense, is first of all that part of society which is not the state. It is a residue.’6 That perhaps vague
definition, while at first blush seemingly over-broad and too all-inclusive, is in actuality quite
accurate. Civil society, as that term is used in contemporary political philosophy, subsumes
virtually all aspects of society in our world today, except for the state itself. Although ‘some civil
society enthusiasts have propagated the misleading notion that civil society consists only of noble
causes and earnest, well-intentioned actors,’ civil society also has been characterized colorfully as
literature, as well as in common parlance, regarding the meaning of ‘philanthropy’ and ‘charity.’ Many
sources quoted in this paper use the terms interchangeably, and every effort will be made to clarify the
usage in the relevant context.
2
Thomas Carothers, ‘Civil Society’ [Winter 1999-2000] Foreign Policy 18, 19.
3
See, generally, Ishtiaq Ahmed, ‘Civil Society and South Asia’, Daily Times (Pakistan), 25 August 2002,
<http://www.dailytimes.com.pk/default.asp?page=story_25-8-2002_pg3_2> at 29 June 2005.
4
Not too surprising, given that Gramsci was miserably persecuted by the state, ultimately dying in prison
solitude. See, generally, Antonio Gramsci, Selections from the Prison Notebooks (Quinton Hoare and
Geoffrey Nowell Smith, eds and trans, 1971) [trans of selected texts from Quaderni del carcere].
5
Errol E. Meidinger, ‘Environmental Law: Forest Certification’ (2001) 10 Buffalo Environmental Law
Journal 211, 226.
6
Andre Ernst Gellner, ‘The Civil and the Sacred,’ (Speech delivered at the Tanner Lectures on Human
Values, Harvard University, 20-21 March 1990) <
http://www.tannerlectures.utah.edu/lectures/Gellner_91.pdf>, at 07 July 2005.
8
‘a bewildering array of the good, the bad, and the outright bizarre.’7 Indeed, as pointed out by
Thomas Carothers of the Carnegie Endowment for International Peace, civil society includes
everyone from the Russian mafia and militia groups from Montana to a local parent-teacher
association.8 Although ‘ some civil society groups may stand for “higher” – that is, non-material
– principles and values, … much of civil society is preoccupied with the pursuit of private and
frequently parochial and grubby ends.’9
On the brighter side, of course, civil society does include those groups which are struggling to
create balance against the strong arm of the state, to achieve or maintain democracy, and
otherwise to improve the quality of life for citizens within a given state or even globally. As
optimistically described by another scholar of civil society and democracy, Larry Diamond, civil
society
involves citizens acting collectively in a public sphere to express their interests,
passions, and ideas, exchange information, achieve mutual goals, make demands on the
state, and hold state officials accountable. … Civil society encompasses “the ideological
marketplace” and the flow of information and ideas … [including] institutions belonging
to the broader field of autonomous cultural and intellectual activity – universities, think
tanks, publishing houses, theaters, film production companies, and artistic networks.10
In fact, Diamond disagrees with the definition of civil society as ‘some mere residual category,
synonymous with … everything that is not the state,’11 and he instead characterizes civil society
more heroically as having the following inherent qualities:
(1)
Civil society concerns itself ‘with public rather than private ends,’ distinguishing it from
other social groups, including political parties which might seek state power;12
(2)
Civil society ‘relates to the state in some way but does not aim to win formal power or
office in the state:’ instead, ‘civil society organizations seek from the state concessions, benefits,
policy changes, relief, redress, or accountability’ and do not desire to ‘capture state power for the
group per se;’13
(3)
Civil society ‘encompasses pluralism and diversity:’ in fact, Diamond goes so far as to
assert that, ‘[t]o the extent that an organization – such as a religious fundamentalist, ethnic
chauvinist, revolutionary, or millenarian movement – seeks to monopolize a functional or
political space in society, claiming that it represents the only legitimate path, it contradicts the
pluralistic and market-oriented nature of civil society;’14 and
(4)
Civil society is distinguished by its ‘partialness,’ such that ‘no group in civil society
seeks to represent the whole of a person’s or community’s interests. Rather, different groups
represent different interests.’15
7
Carothers, above n 2, 20.
Ibid.
9
Ibid 21.
10
Larry Diamond, ‘Toward Democratic Consolidation’ in Larry Diamond and Mark F. Plattner (eds), The
Global Resurgence of Democracy (1996) 228-229.
11
Ibid 229.
12
Ibid.
13
Ibid.
14
Ibid 229-230.
15
Ibid 230.
8
9
In the Asian context, particularly, there has been added to the mix of defining what is and what is
not civil society the further debate of whether civil society is a purely ‘Western’ concept that
simply is alien to Asian cultures. While the multifarious arguments contributed by various
theorists to this ‘Asian debate’ are beyond the scope of this article, it appears that -- regardless of
whichever abstract historical, political, or cultural theories one proffers -- the contemporary
reality is that there is a strong and thriving civil society today in Asia. Indeed, in a recent and
extensive study of Asian civil society,16 the authors provide ample evidence of both the presence
and dramatic growth of civil society organizations in Asia, especially during the past two
decades, even though ‘their breadth, depth, and density have varied over time and across
countries.’17
As with civil society elsewhere, civil society in Asia is ‘social-reality-specific.’18 That is, civil
society in Asian countries has developed in response to numerous and varied factors, ranging
from colonial domination and subsequent authoritarian governments, to the growth of capitalism
and democratic transition, to increased international support and even increased domestic
government support.19 In his extensive survey of the nature and development of Asian civil
society, Mutiah Alagappa further particularizes these factors as
anticolonial mobilization, weakness of states, resistance to repressive rule, government
sponsorship of organizations, increase in democratic space, economic growth and
development, the information and communication revolutions, change in international
normative structure, and growing international support.20
Owing in part to these varied factors which have spurred their development and growth, civil
society organizations in Asia are ‘highly diverse in composition, resource endowment, and
goals.’21 There is a wide range of actors in Asian civil society, existing in virtually every aspect
of Asian life, employment, and government – with an accompanying wide range of political
orientation.22 As a result, as noted by Alagappa, ‘struggle [is] a central feature of Asian civil
societies,’ caused by the inequalities and wide disparities among these organizations, especially
as catalyzed by the ‘totalizing goals’ of some civil society organizations.23 Especially in Asia,
certain civil society organizations ‘view civil society as a terrain for waging their battles against
other segments of society and against the state.’24
Inherent legal/regulatory constraints by the state, as illustrated by the regulatory framework for
awqaf in Pakistan discussed later in this article, also characterize civil society in Asia. Alagappa,
for example, observes that
16
Mutiah Alagappa (ed), Civil Society and Political Change in Asia (2004).
Mutiah Alagappa, ‘The Nonstate Public Sphere in Asia’ in Mutiah Alagappa (ed), Civil Society and
Political Change in Asia (2004) 457.
18
Ibid 456.
19
Ibid 456-57.
20
Ibid 459.
21
Ibid 464.
22
Ibid 465.
23
Ibid. Alagappa carefully cautions against treating Asian civil societies as a single, coherent entity -- or
even a homogenous or static group – and he does note that in some areas the ‘zero-sum struggles give way
to competition, cooperation, and compromise’: at 467.
24
Ibid 465.
17
10
[a]lthough civil society organizations have become more numerous and consequential in
politics … the institutionalism of the realm of civil society as a legally protected space
for autonomous organization and site for critical reflection, discourse, and governance
that is independent of the state has made comparatively less headway in Asian
countries.25
Many Asian countries do provide constitutional guarantees of the right to free association and
political expression. Further, in many Asian countries, the legal frameworks do expressly support
the formation and activity of civil society organizations. Factors such as political expediency by
governments, inadequacy and corruption in the legal system, and such nebulous (and self-serving)
concepts as ‘security interests’ and ‘public order,’ however, do severely constrain the activities of
civil society organizations in Asia. In South Asia, for instance, governments have taken a
‘dominant interventionist role … [taking upon themselves] a pre-eminent and monopolistic
stance’ in defining these and other related concepts.26
In some Asian countries, such as Pakistan, these factors are even more exacerbated by ‘an
ambiguous [legal and regulatory] framework that is made worse by the high discretion accorded
government officials and their arbitrary application of laws.’27 Consequently, while civil society
organizations in Asia are numerous -- Pakistan, for example, officially listed about 45,000 active,
non-profit organizations operating in 200228 -- many prefer to be off the bureaucratic radar of the
government. Alagappa estimates that, especially in authoritarian and communist countries, the
numbers of civil society organizations may be dramatically higher: many civil society
organizations avoid registration with the government or otherwise circumvent government
regulations by registering as businesses or companies.29
III.
ISLAM AS A STRONG FORCE FOR B UILDING CIVIL SOCIETY
It is against the backdrop of struggle and government constraints to the development of civil
society in Asia that Islamic institutions, such as awqaf, could be influential. Especially in South
Asia, religion and religious practices play a crucial role in the development of nonprofit legal
systems.30 Indeed, recent scholarship in the field has refocused extensive attention on the
religious roots and the influences of religion on the nonprofit world in South Asia.31 And in
Islamic countries such as Pakistan, of course, Islam is a powerful socio-political force.
Interestingly, scholars in the field of civil society also have found themselves at odds over the
issue of whether Islam is compatible with or in opposition to civil society.32 While such
25
Ibid 470.
Rajesh Tandon, Voluntary Action, Civil Society and the State (2002) 70.
27
Alagappa, above n 17, 474.
28
Ibid 457.
29
Ibid 458. As explained by Barnett Baron in his Opening Remarks for a Workshop Held at the Catholic
University of America, April 12, 2002, ‘nonprofit organizations throughout the [Asian] region are generally
more heavily regulated than commercial firms.’ Barnett F. Baron, ‘The Legal Framework for Civil Society
in East and Southeast Asia’ (2002) 4(4) The International Journal of Not-for-Profit Law, 7 <
http://www.icnl.org /journal/vol4iss4/ar_baron1.htm> at 19 July 2005.
30
Mark Sidel and Iftekhar Zaman, ‘Philanthropy and Law in South Asia: Key Themes and Key Choices’ in
Mark Sidel and Iftekhar Zaman (eds), Philanthropy and Law in South Asia (2004) 15, 19-20.
31
Ibid 20.
32
This debate, of course, is premised upon a somewhat narrow definition of civil society, and fails to take
into account the broader definition which literally includes all non-state associational life, such as Islamic
and other religious associations.
26
11
prominent scholars as Ernst Gellner and Samuel Huntington have portrayed Islam as an ‘enemy
of liberal democracy and civil society,’ others (including scholars of Islamic civil society such as
Elisabeth Özdalga and Suna Persson) have expressed their view of contemporary Islamic
movements as ‘modern propellants of civil society by serving to challenge the authoritarian
states of the Muslim world.’33 Ironically, both positions share a common foundational
assumption -- that is, that Islamic movements are invariably at odds with the secular nation-state:
Islam’s role in either propelling or undermining civil society is largely assumed to occur through
a struggle with the secular state … [and] the post-September 11 climate has reinforced the
predominant assumptions of clash, hostility and distrust as essential qualities of the Islamic
revival.34
Unfortunately, much of the juxtaposition between Islam, the state, and civil society -- especially
‘a rich variety of state-Islam interaction, ranging from contestation and negotiation to cooperation and collusion’ -- appears to be the subject of limited (and only relatively recent)
research and scholarship.35 Moreover, much of the argument of incompatibility between Islam
and civil society also appears not only to be a product of the relatively limited scholarship in this
area but also relatively limited understanding of Islam as a powerfully public (as opposed to a
purely private, inward-looking) religion.36 Indeed, Islam is a religion which incentivizes literally
every aspect of its adherents’ lives, ranging from purely spiritual matters to legal and social
relationships.
A.
Philanthropy and Charity in Islam
It is important to realize that Islam has a very rich and extensive heritage of civil society,
particularly through various philanthropic and charitable institutions. These institutions have
been a fundamental part of Islam since its very inception. Mosques, universities, museums,
libraries and other cultural treasures are the direct result of extensive private philanthropy.
Nonstate philanthropy in Islamic society also has funded and otherwise assisted in providing
even more diverse, less well-known -- and often informal -- public services and other benefits to
the poor. These have included soup kitchens, hospitals, public fountains, and even scholarship
funds and other education schemes.37 Importantly, Islamic philanthropy traditionally has sought
33
Berna Turam, ‘The politics of engagement between Islam and the secular state: ambivalences of “civil
society”’ (2004) 55(2) The British Journal of Sociology 259, 260.
34
Ibid 260.
35
Ibid 263-64. Dr. Turam agrees that this area ‘has been left understudied, if not ignored, with regard to
civil society’ -- although she does reference several key works as ‘exceptions’ to her statement.
36
An analysis of ‘public’ Islam and other similar religions (such as Catholicism) is outside the scope of this
paper. There is relatively limited scholarship on this issue, but a fascinating discussion is presented in Jose
Casanova, ‘Civil Society and Religion: Retrospective Reflections on Catholicism and Prospective
Reflections on Islam’ [Winter 2001] 68(4) Social Research 1041
<http://www.findarticles.com/p/articles/mi_m2267/is_4_68/ ai_83144759> at 11 July 2005. Professor
Casanova compares ‘various forms of public civil Islam’ with Catholicism, as a strong force for
democratization, and further, challenges Samuel Huntington’s thesis that ‘the public mobilization of Islam
is unlikely to be conducive to democracy and the emergence of civil society.’
37
Jennifer Bremer, ‘Islamic Philanthropy: Reviving Traditional Forms for Building Social Justice’ (Paper
presented at Fifth Annual Conference on ‘Defining and Establishing Justice in Muslim Societies,’ Center
for the Study of Islam and Democracy, Washington DC, 28-29 May 2004) 5 <http:www.islamdemocracy.org/ documents/pdf/5th_Annual_Conference-Bremer_paper.pdf> at 18 June 2005.
12
to integrate economic development and social services into philanthropic and charitable
activities, more so than even in the philanthropic traditions of Anglo-European society.38 Indeed,
‘[t]he emerging literature on Islamic charities … documents the highly evolutionary
nature of these important social institutions, their interaction with political, economic,
and social affairs in the societies that have created them, and the diverse roles they have
played in building these societies, responding to their needs, and providing opportunities
for voice and dissent.’39
Even though much of the institutional philanthropic structure which flourished during more than
a thousand years of Islam suffered substantially throughout the past two centuries of colonial
interests, repressive and authoritarian governments, and the overall tensions between state and
civil society occurring in most of the Muslim-dominated world, the core Islamic values of
philanthropy and charity continued unchanged.
The relative immutability of these core philanthropic and charitable values in Islamic society,
despite the vagaries of various socio-political power structures throughout the Islamic world,
derives from their place as one of the Five Pillars of Islam -- the defining and inviolate structure
upon which Islam stands.40 The Qur'ān admonishes Muslims to be charitable, to ‘spend out of
what We have given them.”41 Hadīth42 -- such as, ‘On every bone of the fingers charity is
incumbent everyday’ -- implore Muslims to charity.43 And charity is broadly interpreted:
spending out of whatever has been given to man, stands for charity in a broad sense, i.e.,
for all acts of benevolence and doing good to humanity in general. For what God has
given to man is not only the wealth which he possesses but all the faculties and powers
with which he has been gifted.44
As Professor Azim Nanji, a leading contemporary scholar of Islamic philanthropy, further
explains,
[c]ompassion, social justice, sharing and strengthening – all these are encompassed in
the Quranic articulation of the ethical concept of charitable giving. This ethic aims not
only to correct social ills but also to reflect the moral and spiritual value attached to the
use of wealth, resources and effort for the welfare of individuals and communities.45
38
Ibid 7 n 4.
Ibid 7.
40
Summarized, the ‘Five Pillars’ are belief in God as the one true God; dutiful prayer; the obligation of
charity; Hajj/ pilgrimage to Mecca; and fasting during Ramadān. Some Muslims consider jihād to be a
sixth pillar. The ‘Five Pillars’ is essentially a Sunni term. For Shi’a Muslims, these beliefs and practices
are subsumed within the Usool-ad-deen (Roots of Religion) and Furoo-ad-Deen (Branches of Religion).
See, generally, <http://www.islamicity.com/mosque/pillars.shtml> at 22 June 2005; <http://www.shia.org/
fundamental.html> at 22 June 2005.
41
The Majestic Qur'ān: An English Rendition of its Meanings (Translation Committee, Nawawi Foundation
trans, 2000 ed) [2:3].
42
Generally, the traditions, teachings and stories transmitted on the authority of the prophet Muhammad -his deeds, sayings, even tacit approval -- accepted as a source of Islamic doctrine and law. See, generally,
MSA-USC, ‘Sunnah and Hadith’ < http://www.usc.edu/dept/MSA/fundamentals/hadithsunnah/> at 12 July
2005, quoting from Muhammad Mustafa Azami, Studies in Hadith Methodology and Literature (1977).
43
Maulānā Muhammad ‘Alī, A Manual of Hadīth (2nd ed 2001) 171 [2].
44
Maulānā Muhammad ‘Alī, The Religion of Islām (1990) 339.
45
Azim Nanji, ‘Charitable giving in Islam’ (2000) 5(1) Alliance 1 <http://www.islam.co.za/awqafsa/sorce/
library/Article%209.htm> at 21 June 2005.
39
13
In essence, because Muslims believe that they are merely trustees of the wealth and property
which they may ultimately be given by God, ‘[t]hey are thus accountable for the ways they use
their resources and wealth, and they earn religious merit by utilizing them in a socially beneficial
way.’46 Indeed, the Qur'ān condemns those who ‘hoard up that which Allah has bestowed upon
them of His bounty’47 and extols ‘[t]hose that give charity, be they men or women … [They] will
be repaid manifold. They will receive a generous reward.’48
The discussion above is a brief summary of religious basis for Islamic charity and philanthropy.
How these beliefs and requirements are actually worked out in practice – in the struggles in the
Islamic world – is the focus of the remaining sections of this article.
B.
Islamic Principles and Practices of Philanthropic and Charitable Giving
Philanthropic and charitable giving in Islam manifests itself in two primary practices. The first
of these is a compulsory donation known as zakāt. Loosely analogous to the less formal
obligation of tithing practiced in Christian churches, zakāt is generally defined as obligatory
almsgiving (that is, for the benefit of the poor) by every Muslim.49 Essentially, zakāt is a ‘charge
on accumulated wealth, and is intended to do away with the inequalities of Capitalism. Wealth
has a tendency to accumulate, and zakāt aims at its partial redistribution in such a manner that
the community, as a whole, may derive advantage from it.’50
Traditionally, zakāt has been levied at a rate of 2.5% of income and other wealth generated by
one’s resources (after meeting basic family obligations), with the exception of zakāt on animals
which was levied according to a complex set of rules.51 Moreover, zakāt is to be collected and
distributed as public money by the state or, where a non-Muslim government is not able or
willing to undertake collection and distribution of zakāt, then by the Muslim community itself.52
Importantly, zakāt ‘must take the shape of a national Muslim institution in every country where
there is a Muslim population.’53 Indeed, when the prophet Muhammad established his
government, ‘he made zakāt a state institution, appointing officials to collect it and directing his
governors to do the same in distant provinces.’54
Whereas zakāt is obligatory, the second type of Islamic philanthropic and charitable practice,
known generally as sadaqah, can well be described as ‘supererogatory – beyond the demands of
46
Ibid 1.
The Majestic Qur'ān: An English Rendition of its Meanings, above n 41, [3:180].
48
The Majestic Qur'ān: An English Rendition of its Meanings, above n 41, [57:18].
49
See, e.g., Azim Nanji, above n 45, 2.
50
Maulānā Muhammad ‘Alī, above n 44, 350. There also is authority that, because zakāt is collected by
the government or community, a portion of zakāt collected may be used for defraying the costs of its
collection and distribution. In addition, while zakāt is to be used primarily for aiding the poor, there is
authority that zakāt may be used for the ‘defence and advancement of the Muslim community as a whole’ - the fi sabīli-llā (‘in the way of Allah’), meaning ‘warriors defending the faith’: at 352-53.
51
Zakāt on camels, for example, was ‘one goat for five camels, and after that, one for each five or part of
five, up to 24. When the number reached 25, a young she-camel, one year old sufficed up to 34 … [and so
forth].’ Maulānā Muhammad ‘Alī, above n 44, 349 n 20. In addition, traditions provide that zakāt be paid
by a woman out of her ornaments, by a trader on his goods, and even the property of an orphan. Maulānā
Muhammad ‘Alī, above n 43, 170.
52
Ibid 169-70.
53
Maulānā Muhammad ‘Alī, above n 44, 350-51.
54
Ibid 347.
47
14
duty.’55 In contrast to zakāt, sadaqah is voluntary giving for unrestricted purposes.56 In the
Qur'ān, the terms ‘sadaqah’ and ‘zakāt’ are often used interchangeably. Analogous to zakāt,
sadaqah is also interpreted as obligatory upon Muslims, albeit through moral imperative only.57
Traditionally, while sadaqah includes philanthropy in its broadest sense, sadaqah more often
signifies charity -- through ‘good deeds’ and non-material gifts of voluntary effort.58
Unlike zakāt, which is more like a public tax, sadaqah is often a more discreet act of charity.
Hadīth praises a man’s discretion in giving charity, ‘where the left hand does not know what the
right spends’59. In addition, even the slightest charitable act or ‘refrain from doing evil to any
one’60 is sadaqah. Examples in Hadīth abound with such diversity as a salutation to people,
feeding oneself, feeding one’s wife or children, and or simply saying a good word.61 As these
examples also demonstrate, sadaqah -- unlike zakāt -- is unrestricted as to its recipients. It need
not be given, for instance, only to the poor or used for the defence and advancement of the
Muslim community. Indeed, it is directed to the public at large, Muslim as well as non-Muslim.
IV.
THE WAQF: A D YNAMIC INSTITUTION PROMOTING ISLAMIC CIVIL SOCIETY
Given the paramount importance placed upon philanthropy and charity in Islam, formalized
institutions evolved in order to facilitate the practices of zakāt and sadaqah. As Azim Nanji
explains, ‘[w]ith the growth of the Muslim Umma in Medina, procedures for the collection and
distribution of sadaqa and zakat were elaborated with the interconnected and evolving political,
moral and social order.’62 By the time of the prophet Muhammad’s death in 632 CE, ‘a
framework of practices governing the collection and distribution of the sadaqa and zakat
contributions had already developed.’63 Out of this ‘Prophetic precedent’ there arose other
formal institutions for voluntary charity and philanthropy, as well as for the collection of zakāt
by the government or Islamic community.64 Most significant among these today are the zakāt
fund and the waqf. The zakāt fund, especially as a privately-managed institution (and the even
more-innovative local zakat-funded development organization), is a relatively new, somewhat
untested innovation in the Muslim world. The waqf, on the other hand, is a much older and more
established philanthropic vehicle in Islam.
The zakāt fund, an outgrowth from the mandatory system of zakāt collection and distribution by
Muslim governments and communities, collects and aggregates funds from many different
individuals for charitable purposes. These funds are then disbursed directly to needy individuals
or are used to deliver necessary social services, either directly by organizations established and
operated by the zakāt fund itself or through nonprofit organizations that deliver services to the
55
Azim Nanji, above n 45, 3.
See, generally, Azim Nanji, above n 45, 2; Bremer, above n 37, 8.
57
See, e.g., Azim Nanji, above n 45, 2; Maulānā Muhammad ‘Alī, above n 44, 340-41; Maulānā
Muhammad ‘Alī, above n 43, 169.
58
See, generally, Maulānā Muhammad ‘Alī, above n 44, 340-41; Zafar Hameed Ismail and Quadeer Baig,
above n 1, 254.
59
Maulānā Muhammad ‘Alī, above n 43, 173 [7].
60
Maulānā Muhammad ‘Alī, above n 44, 341.
61
Ibid.
62
Azim Nanji, above n 45, 3. Nanji notes that Clifford Geertz and other Western scholars of Muslim
civilization have observed, generally, that ‘the interconnectedness of “the right” and “the real” is a constant
in all aspects of the application of Islamic ideals to society.’ Ibid.
63
Ibid.
64
Ibid 4.
56
15
poor or provide other social services.65 Zakāt funds are established by governments (the more
traditional model), by banks, or by similar funds-management institutions. As mentioned above,
non-governmental zakāt fund institutions appear to be a relatively recent development in Islamic
charity. Dubai Islamic Bank, for example, claims that it established the ‘first’ Islamic Zakāt
Fund in 1975, ‘as a pioneering initiative by Dubai Islamic Bank, as part of its belief in fulfilling
the Zakat obligation imposed by God.’66 Moreover, although evidence of this is ‘anecdotal
rather than the result of in-depth study of zakat institutions,’ there may be emerging a variety of
new models.67 This includes such cross-border innovations as the recently-announced joint
venture between Dubai eGovernment and the Zakat Fund in Abu Dhabi.68 Interestingly, while
apparently they have not been studied enough yet to reach any concrete conclusions as to why
these zakāt funds may be growing in popularity, it may reflect
the opening of Islamic societies to more pluralistic and democratic approaches; the
emergence of a new and powerful Muslim middle class in the United States, Europe,
South Asia, Southeast Asia, and even in the Middle East; and the increasingly
international nature of relationships within the Islamic world.69
In contrast to the contemporary zakāt fund, the ‘idea of the waqf is as old as humanity.’70 For
millennia, societies have established temples and other places of religious worship, as well as
properties exclusively dedicated as monasteries, schools, and libraries. Some scholars argue that
the modern form of the waqf derives from Byzantine practice and, in the Abrahamaic tradition,
Abraham is regarded as the founder of the first waqf in establishing endowed temples.71
Professor Timur Kuran elaborates in an in-depth study of the origins and development of the
waqf:
The institution did not have to be developed from scratch because various ancient
peoples – Persians, Egyptians, Turks, Jews, Byzantines, Romans, and others – had
developed similar structures. Just as Islam itself did not emerge in a historical vacuum,
so the first founders of Islamic trusts and the jurists who shaped the pertinent regulations
almost certainly drew inspiration from models already present around them.72
In turn, the waqf not only established itself as a ‘defining feature of Islamic civilization … [but] it
went on to become a source of cross-civilizational emulation.’73 Scholars credit the waqf with
having influenced the development of trusts in Western Europe -- most notably the establishment
65
Bremer, above n 37, 8.
Dubai Islamic Bank website <http://www.alislami.co.ae/community/zakat.html> at 12 July 2005: ‘The
bank set up the Zakat Fund to channelise the zakat from the bank funds, such as reserve amounts and the
forwarded profits. The Fund also collects the zakat of those clients who wish the bank to distribute it on
their behalf.’
67
Bremer, above n 37, 11.
68
‘Dubai eGovernment joins hands with Zakat Fund’, AME Info FZ LLC (United Arab Emirates), 21
March 2005, < http://www.ameinfo.com/56214.html> at 12 July 2005.
69
Bremer, above n 37, 11.
70
Monzer Kahf, ‘Waqf and its sociopolitical aspects’ (1992) [published by Islamic Research and Training
Institute (IRTI) of the Islamic Development Bank (IDB), Jeddah, Saudi Arabia] <http://monzer.kahf.com/
papers/english/WAQF%20and%20its%20Sociopolitical%20Aspects.pdf> at 20 June 2005.
71
Bremer, above n 37, 9, citing John Robert Barnes, An Introduction to Religious Foundations in the
Ottoman Empire (1987) 5-6, 12-15.
72
Timur Kuran, ‘The Provision of Public Goods under Islamic Law: Origins, Impact, and Limitations of
the Waqf System’ (2001) 35 Law and Society Review 841, 848.
73
Ibid.
66
16
of such venerable educational institutions as the University of Oxford and Merton College74 -‘where the institution of the trust emerged only in the 13th century, a half millennium after it
struck roots in the Islamic Middle East.’75
Interestingly, the institutional structure of the waqf has remained relatively uniform throughout
most of its history. The basic elements are:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
A declaration of the waqf made by the legal owner of property – usually made in
writing, according to a form supplied by a notary, although oral forms appear to have
been acceptable,
that he is immobilizing that property in perpetuity,
for a particular purpose,
to be managed according to certain criteria and priorities established by the founder,
for the benefit of a selected class of beneficiaries, and
designating a mutawalli (essentially the trustee) to manage the waqf, and prescribing
the appointment of successor mutawallis;
any employees, if necessary, hired and managed by the mutawalli;
a fiduciary duty on the part of the mutawalli to manage the waqf according to the
founder’s declaration and in the interests of the beneficiaries, and
judicial oversight of the mutawalli’s appointment and activities by a local judge.76
Over time, one more crucial element could be said to be added to this list: the role of the state.
Especially in more modern times, as discussed further below, the state has exerted considerable
pressure on judges and mutawallis, and has heavily regulated the creation and operation of the
waqf. But otherwise -- even though the rules for forming awqaf somewhat ‘have varied across
regions, time, and the schools of Islamic law’77 -- the institutional structure of the waqf has not
changed.
Within this structural framework, traditional awqaf may be categorized into three types: the
religious waqf, the philanthropic waqf, and the family (or posterity) waqf. Religious awqaf
establish mosques and provide revenues for the maintenance and operation of mosques. In
Islamic history, ‘the first religious waqf is the mosque of Quba’ in Madinah … which was built
upon the arrival of the Prophet Muhammad in 622 … [and which still] stands now on the same
site with a new and enlarged structure.’78
Philanthropic awqaf are broader in their scope than merely religious awqaf: they are established
for the benefit of the poor, as well as for wide-ranging public interests such as basic social
services, education, health care, libraries, roads and bridges, and parks -- and even for the care of
animals. Islamic jurists credit the prophet Muhammad with creating the first philanthropic waqf:
according to Tradition, the Prophet inherited by Will seven orchards, which he made into a
74
See, e.g., Monica M. Gaudiosi, ‘The Influence of the Islamic Law of Waqf on the Development of the
Trust in England: The Case of Merton College’ (1988) 136 University of Pennsylvania Law Review 1231;
AbdulHasan M. Sadeq, ‘Waqf, perpetual charity and poverty alleviation’ (2002) 29 (1/2) International
Journal of Social Economics 135, citing at 139, Gaudiosi and M. Cizakca, ‘Awqaf in history and
implications for modern Islamic economics’ (Paper presented at the International Conference on Awqaf and
Economic Development, Kuala Lumpur, 2-4 March 1998).
75
Kuran, above n 72, 848.
76
See, generally, Kuran, above n 72, 861.
77
Ibid.
78
Kahf, above n 70, 3.
17
charitable waqf for the benefit of the poor.79 A Hadīth also speaks of the prophet Muhammad
directing his Companion (and second successor to the caliphate) to establish a waqf, and sets forth
clearly many of the conditions of this form of charity:
Ibn ‘Umar reported, ‘Umar ibn al-Khattāb got land in Khaibar; so he came to the
Prophet, peace and blessings of Allah be on him, to consult him about it. He said, O
Messenger of Allāh! I have got land in Khaibar than which I have never obtained more
valuable property; what dost thou advise about it? He said: “If thou likest, make a
property itself to remain inalienable, and give (the profit from) it in charity.” So ‘Umar
made it a charity on the condition that it shall not be sold, nor given away, nor inherited,
and made it a charity among the needy and the relatives and to set free slaves and in the
way of Allāh … 80
According to Tradition, after making the above-described waqf, ‘Umar decided to declare it in
writing and he invited some of the Prophet’s Companions to attest the document. According to
Jaber, one of the Companions, when word got around of what ‘Umar was doing, other real estate
owner’s starting creating their own awqaf. Supposedly, some of them not only created awqaf for
the benefit of the needy, but also included a condition that their own children and descendants
should have priority to the waqf revenues, with only the surplus going to benefit the poor.81 This
was apparently the genesis of the third type of waqf, the family or posterity waqf. Soon, Islamic
jurists rested authority for this type of waqf institution on sayings attributed to the prophet
Muhammad -- such as, ‘It is better to leave your heirs rich than to leave them destitute, begging
from others’ and ‘One’s family and descendents are fitting objects of charity … To bestow on
them and to provide for their future subsistence is more pious and obtains greater reward than to
bestow on the indigent stranger.’82 Indeed, a Hadīth reports that, at the express recommendation
of the Prophet, a certain Abu Talha created a waqf of his expansive date-palm garden from which
the wealth was to be disributed among his relatives.83
Of the three types of awqaf, the family waqf was the most troubling to most rulers of Islamic and
predominantly-Islamic states.84 Unlike the religious and purely philanthropic awqaf, the family
waqf usually added little in the way of social services,85 yet it took away part of the state’s tax
base and protected properties from confiscation in times of fiscal emergency. As such, rulers
sought to curb the creation of family awqaf by their Muslim subjects. Particularly in Islamic
states, however, they also had to walk a fine line between discouraging certain awqaf and
79
Ibid; Monzer Kahf, ‘Waqf: A Quick Overview’ [undated, unpublished paper] < http://monzer.kahf.com/
papers/english/WAQF,%20A%20QUICK%20OVERVIEW.pdf > at 20 June 2005.
80
Maulānā Muhammad ‘Alī, above n 43, 275 [14].
81
Kahf, above n 70, 4.
82
See, e.g., Kuran, above n 72, 855; David S. Powers, ‘The Islamic Family Endowment (Waqf)’ (1999) 32
Vanderbilt Journal of Transnational Law 1167, 1176; Jeffrey A. Schoenblum, ‘The Role of Legal Doctrine
in the Decline of the Islamic Waqf: A Comparison with the Trust’ (1999) 32 Vanderbilt Journal of
Transnational Law 1191, 1207-8.
83
Muhammad Ismâ'îl al-Bukhârî, Hadīth 4:30 < http://www.sacredtexts.com/isl/bukhari/bh4/bh4_29.htm>; see also, Maulānā Muhammad ‘Alī, above n 44, 516.
84
More recent governments have shared these concerns, for various reasons, including for example the
British Raj in South Asia which declared invalid family awqaf and, subsequently re-validated them, and
then placed regulatory strictures on them. See discussion, below, pp. 25-26.
85
It should be noted that, owing to the social norms of the time, even family awqaf apparently did deliver
some social service: one empirical study of Ottoman awqaf shows that only 7% of awqaf registered during
the 18th century did not provide any service outside the founder’s family; as many as 75% were family
awqaf that also served non-family interests, and the remaining 18% were strictly charitable awqaf. Kuran,
above n 72, 858.
18
avoiding the appearance of impiety, the latter of which might weaken the ruler’s legitimacy or
authority. Ironically, the same ruling elite who sought to curb the establishment of family awqaf
also needed to tread somewhat lightly because of their own interests in sheltering property in
awqaf. The ruling elite -- be they the political leadership, bureaucrats, military officials, judges
or clerics -- were also the predominant land owners and those who had the most wealth. Often,
they were vulnerable to loss of political power and, with that, having their assets confiscated.
Accordingly, ‘[m]embers of the ruling class established family waqfs as a means of ensuring their
families against loss of political influence and earning capacity. Over the centuries, countless
overconfident state officials who failed to take this precaution in a timely manner saw their assets
expropriated and their families driven into poverty.’86 Especially as options for sheltering
property were quite limited in early Islamic societies, therefore, it was in their own best interests
to preserve the institution of the family waqf.
Traditionally, all three types of waqf enjoyed enormous growth and popularity87 -- at least until
modern governments, as well, began to see the waqf as a threat to their absolute power and
control of society, and began seizing, nationalizing, replacing with state-run substitutes, or
altogether closing down awqaf and other forms of Islamic philanthropy and charity.88
Throughout Islamic history, a remarkably large proportion of lands were dedicated as waqf lands
and the awqaf were responsible for much of what comprised the classical Islamic city and society.
Typically, dedicated waqf properties would include ‘a mosque, a mausoleum for the founder, a
madrasa (Islamic school), and commercial complexes such as a hostel for traveling traders or a
covered bazaar, to generate income for the social services and religious facilities,’ and even
‘housing owned by the waqf, also rented for income, as well as other social service facilities, such
as a hospital, public water fountain, soup kitchen, or orphanage.’89 Various studies indicate that
fully three-fourths of the lands consisting of the Ottoman Empire were established as waqf lands;
in the mid-19th century, waqf ‘agricultural land constituted half of the size of land in Algeria’ and
one-third in Tunisia; and even in the mid-20th century, one-eighth in Egypt.90 Today, more than
8,000 educational institutions and more than 123,000 mosques in Bangladesh alone are waqf
institutions.91 A University in Karachi is financed by a waqf.92 A large shopping complex in
Dakha is a waqf, providing employment to a large number of people and even financing a
publication house, a large auditorium, and a mosque.93
These and other innumerable examples underscore the preeminent role of the waqf in Islamic
civil society throughout history. The waqf connected together all segments of Islamic society,
86
Ibid 857.
The various reasons for this tremendous popularity are outside the scope of this paper, but it should be
noted that -- not unlike the motives of many modern Western benefactors -- they include more than mere
altruistic zeal: founders of awqaf were often motivated by the desire to enhance their reputations for piety,
generally enhance their status in the community, spread political and religious ideology, shelter wealth
from opportunistic taxation and government confiscation, ‘launder assets,’ and to preserve pre-Islamic
inheritance customs. For a thorough discussion of these motives, see, e.g., Kuran, above n 72, 842-843,
853-861.
88
Bremer, above n 37, 12.
89
Ibid 10.
90
Sadeq, above n 74, 140.
91
Ibid 140-41.
92
Ibid 141.
93
Ibid.
87
19
even the poor and humble with the rich and influential.94 Moreover, while each individual
establishing a waqf had his or her95 own reasons for doing so -- be they altruistic or for the
preservation of family wealth -- one overriding reason for the waqf’s preeminence in Islamic
society, and that which distinguished the waqf from many types of Anglo-European trusts and
strengthened it as an integral part of civil society, was the waqf’s perpetuity.96 In Arabic,
‘waqafa’ means ‘he was still’ or ‘stationary’.97 Waqf property is locked-up forever, as an
irrevocable gift to God, for the ultimate good of mankind.98
The element of perpetuity -- both in the sense of duration as well as the repeated flow of its
benefits -- has positive economic benefits for society, especially that part of civil society
concerned with delivering important social services. As observed by leading Islamic economist
Monzer Kahf, societies benefit from the establishment of ‘revenues/services generating
permanent assets devoted to social objectives … [p]roviding for capital accumulation in the third
sector that, over time, builds necessary infrastructure for providing social services on a non-forprofit [sic] basis.’99 So important was the waqf to the provision of social services in early Islamic
cultures, that
[f]or centuries the Muslim caliphates and states did not have departments or ministries to
take care of “public works, roads, bridges, mosques, schools, libraries or hospitals, for
the yields of the [waqf] endowment properties used to cover those public needs”
(Boudjellal, 1998, p. 4). As a micro-example, Zubaidah, the wife of Caliph Harun alRashid, made a waqf of all her wealth for the purpose of a road from Baghdad to
Makkah.100
Interestingly, it has been the element of perpetuity that also has caused modern states to seek to
suppress, control, and at times, eliminate waqf institutions. Many of the same concerns that led
the early ruling elite in Islamic countries to curb the establishment of especially the family awqaf,
also has troubled modern rulers. Perpetual philanthropic institutions, such as the waqf, ‘are the
most state-threatening forms of charity, because they can endure and even grow over an indefinite
period, and because they reinforce the leadership role of private families or religious institutions
94
Nanji, above n 45, 5, observes, ‘with so much wealth tied up in them, awqaf could become important
instruments of civil society, if they were ell administered and used for the public good (and not just for the
perpetuation of family wealth).’
95
Under Islamic law, women -- as well as men -- could found awqaf. Indeed, given their ‘economic
handicaps’ they had a greater need to preserve their assets. Reportedly, during the 15th through 18th
centuries, ‘anywhere from 10 % to 50% of all waqfs were founded by women.’ Kuran, above n 72, 860.
96
While perpetuity is regarded as an essential element of the waqf, generally, it should be mentioned that
the issue of waqf perpetuity vs. temporality is not entirely settled in Islamic jurisprudence (fiqh). Within
the Maliki school of fiqh, for instance, there is some authority that temporality in waqf may be accepted by
virtue of the will of the founder. Moreover, all schools apparently agree that temporality, in a sense, may
exist (and does not defeat the validity of a waqf) by virtue of the temporary nature of the waqf assets, such
as trees, horses, slaves, etc. While this debate is well-outside the scope of this paper, a good introduction is
provided by Monzer Kahf, ‘Towards the Revival of Awqaf: A Few Fiqui Issues to Reconsider’ (Paper
presented at the Harvard Forum on Islamic Finance and Economics, Harvard University, 1 October 1999).
97
Maulānā Muhammad ‘Alī, above n 44, 516.
98
Jon E. Mandaville, ‘The Cash Waqf Controversy in the Ottoman Empire’ (1979) 10 International
Journal of Middle Eastern Studies 289, 293.
99
Kahf, above n 96, 3.
100
Sadeq, above n 74, 140.
20
…’101 Throughout the Islamic world, ‘Islamic charities emerged as the spread of wealth and
influence created an elite with the ability and the desire to establish charities.’102
Unfortunately, concomitant with the rapid growth of institutional Islamic philanthropy, ‘poor
governance’ also became a problem within the sector -- providing the modern states just the
excuse they needed to step in and expropriate awqaf assets.103 As Jennifer Bremer dramatically
summarized in a presentation at the annual meeting of the Center for the Study of Islam and
Democracy:
In country after country, the state seized upon these abuses as the excuse it needed to
suppress privately-managed charities. In the name of “reform,” the state moved to
assume control over how charitable assets could be used, or to take the revenues for its
own, and then to seize the assets themselves, greatly limiting or even eliminating
privately-managed charities altogether.
… Within the limited scope for dissent available, the elite fought back to maintain these
important assets for social and economic power. … In country after country, the period
of contention for control ended with the end of independent Islamic charitable
institutions as significant institutions for social bridging, justice, or alternative voices to
the state. …
The nature of the government in power did not appear to affect this overall progression
from emergence to independence to decay and takeover. In the Ottoman empire, the
sultan’s position as caliph, and thus defender of the faith, did not protect private charities
from being seized. The Ottoman’s severely secular successor, Kemal Ataturk, continued
the seizure of private charities begun by his religious predecessors. The sultan’s
counterparts in Egypt’s royal family progressively suppressed private charities, but no
less aggressively than did their Arab socialist over-throwers. The British colonial
powers worked to limit the power and flexibility of Islamic charities, whether in
Palestine or British India, and their efforts were continued and expanded upon by the
devoutly Muslim government leaders of Pakistan.104
It is interesting to observe also that, throughout the Islamic world and throughout time, it does not
appear to be Islam itself or Islamic movements -- as a part of civil society -- which are in
contention with the state. Instead, it is the strength of the civil society, and the assets it controls,
which is the threat to modern states in the Islamic world. As discussed above and in the
following section of this article examining regulation of awqaf in Pakistan, this struggle is even
more pronounced in Asia and is expressed in greater state regulation of the creation, governance
and operation of Islamic philanthropies and charities, such as the waqf. Under the British Raj, for
example, the colonial government in what is now Pakistan initiated a legal structure to regulate
awqaf and other endowments.105 This included requiring disputes be brought before unfamiliar
British-controlled courts, instead of the traditional religious (local) courts, placing local waqf
101
Bremer, above n 37, 12.
Ibid.
103
Ibid.
104
Ibid 13.
105
An interesting study by the late Gregory C. Kozlowski, Muslim Endowments and Society in British India
(1985), asserts that the British, rather than recognizing that Muslim property customs were different in each
country and very situation-specific, ‘concocted’ rules out of the Qur'ān and Sharī'ah to apply uniformly
throughout the British Raj -- which actually may have incentivized Muslims in what is now India, Pakistan
and Bangladesh to create awqaf in an attempt to preserve their estates by circumventing the new rules.
102
21
founders -- the local elite -- at a disadvantage.106 These moves, which diminished the socioeconomic power of the local elite in contrast to the colonial powers, were resisted by Muslim
legal activists constantly struggling with the new state.107 But, somewhat ironically, even after
the end of the British Raj, the emergent Islamic states themselves continued tight control of
Islamic charities.
V.
THE ROLE OF THE WAQF VIS-À-VIS THE STATE IN PAKISTAN
A.
Brief Overview of Civil Society in Pakistan
Civil society in Pakistan is an area which is only recently being studied in any meaningful
manner. While philanthropic and charitable activities have a long tradition in the region,
primarily through the creation of trusts for providing public services as an ancillary to the state,108
even the term ‘civil society’ has been in vogue in Pakistan only since the 1990’s and there is no
equivalent term in any of the country’s many vernacular languages.109 It is generally recognized
that philanthropy, volunteerism, and self-help activities enjoy a rich tradition in the Indus Valley
dating back as much as 5,000 years -- building on religious traditions of Hinduism, Buddhism,
Islam, Christianity, and Sikhism.110 Yet, there are those today who see civil society in Pakistan as
disintegrating, the victim of ‘unresolved questions of identity, ideology and ethnicity further
compounded by a monolithic state structure.’111 Still others are more optimistic and view civil
society in Pakistan as ‘emerging from an abysmal state and redefining itself.’112 This more
optimistic view relies on a perception that exposure of government corruption, a stronger and
more critical judiciary, and the discomfort of the populous with the ‘existing oligarchic tripolar
relationship between the bureaucracy, the military and politicians which smacks of age-old
dynastic elitism’113 is leading to a resurgence of civil society organizations in Pakistan in the face
of an uneasy state.
Whether optimist or pessimist, most scholars appear to concur that civil society in Pakistan is
struggling due to its somewhat ‘symbiotic relationship’ with a powerful state, in which a weak
civil society remains in many ways merely another branch of the monopolistic and interventionist
state structure.114 Civil society in Pakistan struggles to define itself, define its place in the
emerging sociopolitical order, and obtain some independence from the authoritarian strictures of
a state that often displays mixed and ambiguous attitudes toward civil society, embracing its
public service delivery yet often viewing it in competition and often as a direct threat to the
interests of the state. Moreover, this struggle is further complicated by the virtual absence of the
overall societal attributes that would provide a fertile ground from which civil society could
flourish. As even one of the self-proclaimed optimists readily admits, ‘[a]ccountability, a decent
educational system, egalitarian economic policies to help the have-nots and minorities, a non106
Bremer, above n 37, 14.
Ibid.
108
Muhammad Asif Iqbal, Hina Kahn, and Surkhab Javed, ‘Nonprofit Sector in Pakistan: Historical
Background’ (2004) (Social Policy and Development Centre Working Paper No. 4, in collaboration with
the Aga Khan Foundation (Pakistan) and the Center for Civil Society Studies, Johns Hopkins University) 4.
109
Adnan Sattar Rabia Baig, ‘Civil Society in Pakistan: A Preliminary Report on the CIVICUS Index on
Civil Society Project in Pakistan’ (2001) 1(11) CIVICUS Index on Civil Society Occasional Paper Series 1.
110
Muhammad Asif Iqbal, Hina Kahn, and Surkhab Javed, above n 108, 5.
111
Iftikhar H. Malik, State and Civil Society in Pakistan (1997) 9.
112
Ibid.
113
Ibid.
114
Ibid 12, 115.
107
22
partisan judiciary, a vigilant press, participation by women – all those necessary requirements of a
vibrant civil society – have suffered from constant erosion.’115
The legal environment within which civil society organizations must operate in Pakistan is also
complicated and often contradictory, at least in practice. For example, while the constitution of
the Islamic Republic of Pakistan guarantees freedom of association,116 the government also has
constrained that right -- such as through bans on public assemblies and arrests of civil society
leaders -- in the interest of sovereignty or otherwise whenever it claims that ‘national interests’
are at stake.117 As a practical matter, so long as civil society relegates itself to the role of service
delivery, philanthropy and charity, the state is relatively comfortable. It is when civil society
organizations become involved in advocacy roles that ‘national interests’ are triggered and the
state generally steps in.118
In addition, the legal framework itself is widely-regarded as confusing and, in many ways,
outdated or even obsolete.119 To illustrate the confusing maze of laws, for example, a review of
recent studies of the legal framework of philanthropic organizations in Pakistan reveals one study
that states there are ‘six different laws under which organisations can be registered’;120 another
study that states there are ‘at least seven laws that are of principal relevance to the registration
and operation of nonprofit organizations either singly or are [sic] applicable alongside others’,
while also mentioning that there are ‘eleven laws which either require registration or confer
registration either explicitly or implicitly’ to NPOs;121 and yet another study that notes the
‘plethora of laws which impact – or at the very least, marginally impinge on – philanthropic
organisations consists of a total of eighteen federal acts.’122. While it is a somewhat subjective
determination by the authors of these studies as to which laws may ‘impact’ or be ‘relevant’ to
registration and/or operation of philanthropic organizations, one can easily imagine the difficulty
for the Pakistani civil society sector in determining what law(s) may apply. Even the language
employed in the laws is complex and, as one study found, severely restricts the ability of the
public to understand the laws.123 Some of the laws are derived from laws enacted in the United
Kingdom during the early 19th century. Still others are derived from laws enacted by the British
in an effort to control civil society in the wake of the War of Independence in 1857 (or, as British
historians refer to it, the ‘Indian Mutiny’) -- ‘draconian laws used primarily either to intimidate
philanthropic organizations or pursue a vendetta against those that were critical of the
government of the day.’124 Some of these early colonial laws, such as the Societies Registration
Act of 1860, the Religious Endowment Act promulgated in 1863, and the Trusts Act of 1882,
remain valid laws today regulating certain philanthropic organizations in Pakistan.
115
Ibid.
Article 17(1): ‘Every citizen shall have the right to form associations or unions, subject to any
reasonable restrictions imposed by law in the interest of sovereignty or integrity of Pakistan, public order or
morality.’ Zafar Hameed Ismail and Quadeer Baig, above n 1, 254.
117
Adnan Sattar Rabia Baig, above n 109, 11.
118
Ibid.
119
See, e.g., Zafar Hameed Ismail, ‘Law and the Nonprofit Sector in Pakistan’ (2002) (Social Policy and
Development Centre Working Paper No. 3, in collaboration with the Aga Khan Foundation (Pakistan) and
the Center for Civil Society Studies, Johns Hopkins University) 3; Adnan Sattar Rabia Baig, above n 109,
12-13.
120
Adnan Sattar Rabia Baig, above n 109, 7.
121
Zafar Hameed Ismail, above n 119, 3.
122
Zafar Hameed Ismail and Quadeer Baig, above n 1, 252.
123
Adnan Sattar Rabia Baig, above n 109, 12.
124
Zafar Hameed Ismail and Quadeer Baig, above n 1, 253.
116
23
Under which law a civil society organization is registered is important, inasmuch as it is then that
law which will govern the operation of the organization.125 There are only two laws under which
registration appears to be mandatory, however, one applicable only to nonprofit organizations
providing for the welfare of specific disadvantaged people or for specific purposes, and the other
applicable to awqaf.126 Although certain tax and other advantages may accrue from registration,
many civil society organizations in Pakistan are never even registered. As observed in one study,
a number of nonprofit organizations are established despite a lack of awareness of the
legal/regulatory procedures and consequences regarding their establishment and operation.127
This contributes to a great deal of mistrust between civil society organizations and the
government.128 Of the 45,000 active civil society organizations in Pakistan, according to an
estimate in 2000, more than a third (34.1 percent) were not willing to be registered under any law
and more than half (55.7 percent) registered under only two laws.129
B. THE WAQF AS AN ELEMENT OF CIVIL SOCIETY IN PAKISTAN
1. BACKGROUND
Against the sociopolitical and legal/regulatory backdrop described above, the waqf (or wakf, as it
is often spelled in Pakistan) has remained virtually intact as a philanthropic and charitable
institution. Indeed, in today’s sociopolitical climate in Pakistan -- where the state is trying to
strike a balance between operating as a secular institution (resisting efforts to create a theocracy)
and yet appease the religious (especially Islamic) elite -- waqf institutions may be an effective
way for the state to strengthen its political legitimacy, remedy its problems with public services
delivery and, at the same time, endorse a venerable Islamic institution. In addition, because
awqaf are almost always local in scope and management, they could more likely be viewed as
non-threatening in a society where foreign-based philanthropy is not trusted, especially as it is
perceived by conservative religious groups as ‘trying to subvert [Pakistani] traditional and
religious value system … [wanting] to introduce western cultural practices and values some
aspects of which, according to the conservatives, are obscene and vulgar, and therefore, a threat
to [Pakistani] way of life.’130
The tradition of creating awqaf in Pakistan traces its roots back to the introduction of Muslim rule
in that region, between the 8th and 18th centuries. While there were indigenous practices of
philanthropy and charity already evident, Muslim rulers recognized that through establishment of
awqaf they not only fulfilled their religious obligations of zakāt and sadaqah, but they also
gained greater authority and power.131 As such, the Muslim aristocracy and other wealthy elite
(the enormous wealth of South Asia was centered in the hands of a few) established a great
125
Ibid 254.
Zafar Hameed Ismail, above n 119, 3: Ismail refers to the first law as the only law under which
registration of civil society organizations is mandatory; however, as is clear from the discussion of waqf
regulations below, the filing of a ‘statement of particulars’ with the court, including a copy of the waqf
deed, is clearly mandatory with respect to awqaf. In addition, the various provincial waqf ordinances also
expressly require registration of waqf property.
127
Ibid 1.
128
Ibid.
129
Zafar Hameed Ismail and Quadeer Baig, above n 1, 252.
130
Muhammad Asif Iqbal, Hina Kahn, and Surkhab Javed, above n 108, 39, quoting Mubarak Ali, ‘Are
NGOs Serving West’s Interests?’, The News (Karachi), 10 May 2003.
131
This was especially important for early Muslim rulers who had foreign origins. Ibid 7-8.
126
24
number of awqaf for myriad public purposes ranging from building mosques and schools to even
establishing an organization for financially assisting the marriage of poor girls.132
Following the end of the Muslim-era of rule in Pakistan, classical Islamic rules of establishing
and managing awqaf continued to be influential. Notwithstanding this, however, the state
(beginning with the colonial government as well as the series of governments following
independence) also has sought to maintain tight control over the registration and, especially, the
management of awqaf. Generally, the regulations promulgated by the state have not interfered
with traditional waqf principles. As is discussed below in the context of those regulations,
however, some of the contemporary laws do place constraints on the waqf and give the state
unilateral power that never existed under Sharī'ah and fiqh, Islamic law and jurisprudence.
Prior to 1913, awqaf in British India (including modern Pakistan) were simply created and
managed in accordance with traditional Sharī'ah and fiqhi principles, and the state maintained a
fairly ‘hands-off’ approach. When the colonial government promulgated the first major law for
‘improving the legal condition’ of voluntary associations -- the Societies Registration Act of 1860
(in response to the 1857 ‘Mutiny’) -- the law merely created a juridical personality and provided a
registration scheme for voluntary associations established by seven or more persons for, among
other purposes, charity.133 No specific mention was made of awqaf. Similarly, when the Trusts
Act, 1882, was passed -- extensively regulating the creation and management of trusts, setting
forth the rights and liabilities of beneficiaries and the powers and duties of trustees -- it expressly
provided that ‘nothing herein contained affects the rules of Muhammadan law as to waqf.’134
Only in response to a decision in 1894 by the British Privy Council declaring a family waqf
invalid135 did the colonial government pass any law specifically addressing the establishment of
awqaf in British India. The Mussalman Wakf Validating Act, 1913, ironically, was enacted in
order to overturn the Privy Council decision. Together with the subsequent Mussalman Wakf
Validating Act, 1930, which gave the 1913 Act retrospective effect over awqaf created prior to its
enactment,136 the Mussalman Wakf Validating Act, 1913, expressly ratifies the ‘validity of wakfs
created by persons professing the Mussalman faith in favour of themselves, their families,
children and descendants and ultimately for the benefit of the poor or for other religious, pious or
charitable purposes.’137 Interestingly, the Privy Council decision was based upon its observation
that family awqaf -- so popular among the wealthy and politically powerful Muslims in British
India -- were created merely for the aggrandizement and economic benefit of the founders’
families, contrary to true Islamic concepts of philanthropy and charity. The Privy Council noted
that ‘the provision for charity is so illusory that the poor are not entitled to receive a rupee till
132
Muhammad Asif Iqbal, Hina Kahn, and Surkhab Javed, above n 108, 8.
The Societies Registration Act, 1860, The Pakistan Code (1966), Volume I, from 1836-1871 both
inclusive, 69.
134
The Trusts Act, 1882, The Pakistan Code (1966), Volume III, from 1882-1897 both inclusive, 5-6: also
excluded are all public or private religious or charitable endowments.
135
‘The Privy Council declared the waqf alal aulad [family waqf] invalid in 1894 in the famous case of
Abul Fata Mohomed-versus-Russomoy. The decision of the Privy Council caused considerable stir among
the Muslims who believed that the verdict was an infringement of the Muslim personal law.’
<http://banglapedia. search.com.bd/HT/W_0018.htm> at 18 July 2005. See also, R.Upadhyay, ‘WAQF
(CHARITABLE ISLAMIC TRUST) -Under sustained controversy in India?’ (2004) South Asia Analysis
Group, Paper No. 1136 < http:// www.saag.org/papers12/paper1136.html> at 19 July 2005.
136
The Mussalman Wakf Validating Act, 1930, The Pakistan Code (1966), Volume VIII, from 1924-1933
both inclusive, 484.
137
The Mussalman Wakf Validating Act, 1913, The Pakistan Code (1966), Volume VI, from 1911-1919
both inclusive, 164-5.
133
25
after total extinction of a family.’138 Notwithstanding this perhaps noble attempt to rein in the
misuse of this important philanthropic institution -- and even despite concurrence with the Privy
Council decision by many Muslim clerics and experts in Islamic law -- powerful political
interests (backed largely by the financial resources of awqaf founded by wealthy Muslims)
prevailed in the passage of the 1913 Act. As commented by a leading contemporary authority on
Muslim philanthropic endowments in British India and modern Pakistan, the late Professor
Gregory Kozlowski, ‘[t]he controversy over endowments also pointed to the possibility that
politics sometimes shaped Islam quite as much as Islam shaped politics.’139
Importantly, perhaps in deference to the powerful Muslim political interests which instigated its
promulgation, the Act carefully avoids any direct conflict with Sharī'ah or fiqh. The Act
expressly defines a waqf as the ‘permanent dedication of any property for any purpose recognised
by the Mussalman law as religious, pious or charitable.’140 The Act allows creation of a waqf that
‘in all other respects is in accordance with the provisions of Mussalman law.’141 And it includes a
saving clause expressly providing that ‘[n]othing in this Act shall affect any custom or usage
whether local or prevalent among Mussalmans of any particular class or sect.’142
Significantly, while the Act declares as valid all family awqaf which ultimately fulfill religious,
pious or charitable purposes, it does not exclude any other types of awqaf as invalid. As such, the
Act does not interfere with the establishment of religious or purely philanthropic awqaf, nor does
it appear to interfere with the establishment of awqaf for purposes outside its scope.143 The Act
very simply operates in a very limited and targeted fashion to negate the decision of the Privy
Council regarding family awqaf.
2.
The Mussalman Wakf Act, 1923
The subsequent regulation of awqaf in Pakistan following the Privy Council decision and the
consequent validating acts appear to have some positive features as well as some drawbacks.
Clearly, some regulation of awqaf -- leading to greater transparency and accountability -- was
necessary and is good. Under Islamic Rule, mutawallis were supervised by the Kazis, judges in
Islamic courts. After establishment of the British Raj, however, the Islamic courts were abolished
and mutawallis no longer feared the strictness and harshness of Islamic law. As was highlighted
by the Privy Council decision, misuse of the waqf for personal gain and corruption by mutawallis
was an increasing problem in British India throughout the 18th, 19th and early 20th centuries.
Although British colonial policy was generally not to interfere in native religious matters, the
situation worsened to such a point that the colonial government could no longer avoid taking a
more active role toward reform.
Following the 1857 ‘Mutiny’, a number of waqf properties
were placed under British control and, with passage of the Religious Endowment Act, 1863, these
awqaf were transferred to local trustees and jurisdiction for any administrative disputes was given
to the British courts. As awqaf grew in wealth and political power (including the ability to
deliver financial support and blocks of votes behind ‘friendly’ politicians), however, it became
increasingly impossible for the British to avoid undertaking more stringent reforms. Even the
Muslim press began stridently to call for action, decrying that ‘All Waqf properties have been
138
R. Upadhyay, above n 135, quoting from S. Khalid Rasid, Wakf Administration in India (1978), 127.
Gregory C. Kozlowski, above n 105, 167, quoted in R.Upadhyay, above n 135.
140
The Mussalman Wakf Validating Act, 1913, above n 137, 165 [2]: emphasis added.
141
Ibid [3]: emphasis added.
142
Ibid [5]: emphasis added.
143
This might include awqaf established for purely educational purposes or even for purely social or
political activism.
139
26
made over to the plundering hands of the non-Godfearing and evil following Mutawallies, and the
Masjids and the other places of worship have merged into the depths of oblivion’144
Finally, in 1923 the colonial government enacted the first legislation to actually regulate awqaf in
British India (including what is now Pakistan). The Mussalman Wakf Act, 1923 -- which still
continues in force today -- was promulgated for the stated purpose of making ‘provision for the
better management of wakf property and for ensuring the keeping and publication of proper
accounts in respect of such properties.’145 Toward that end, the 1923 Act requires that the
mutawalli of every religious, pious or charitable waqf, within six months of its creation, must
furnish to the local court a ‘statement of particulars’ containing the following:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
a description of the waqf property sufficient for identification;
the gross annual income from such property;
the gross amount of such income which has been collected during the past five years or,
if shorter, since the creation of the waqf;
the amount of Government revenues, local taxes and rents annually payable with respect
to the property;
an estimate of expenses annually incurred in realizing the waqf income;
an accounting of amounts set apart under the waqf for salary of the mutawalli and
allowances to individuals, for purely religious purposes, for charitable purposes, and for
any other purposes; and
‘any other particulars which may be prescribed.’ 146
The statement of particulars must be accompanied by a copy of the waqf deed or other instrument
creating the waqf; if none is available, then the statement must also contain ‘full particulars’ of
the ‘origin, nature and objects’ of the waqf.147 Once the statement of particulars has been filed
with the court, the 1923 Act further provides that the court shall ‘cause notice thereof to be
affixed to some conspicuous place in the Court-house and to be published in such other manner,
if any as may be prescribed.’148 After such public posting, any person may petition the court for
an order requiring the mutawalli to provide further information, and the court has specific
jurisdiction to so order.149
Continued transparency and accountability is also a prominent feature of the 1923 Act. In
addition to the initial statement of particulars, the mutawalli must file with the court an audited
annual statement of accounts ‘of all moneys received or expended by him on behalf of the wakf
of which he is the mutawalli.’150 And the audited annual statement of accounts (as well as the
initial statement of particulars) must be signed and verified in the same manner as pleadings filed
in accordance with Code of Civil Procedure.151
144
Ashan-ul-Akbar (Calcutta), 24 October 1902, 7, quoted in R.Upadhyay, above n 135, quoting from
S. Khalid Rasid, Wakf Administration in India (1978), 20.
145
The Mussalman Wakf Act, 1923, The Pakistan Code (1966), Volume VII, from 1920-1923 both
inclusive, 686-7.
146
Ibid 688 [3.(1)(a)-(g)].
147
Ibid 689 [3.(2)].
148
Ibid 689 [4].
149
Ibid.
150
Ibid 690 [5].
151
Ibid 691 [8].
27
Like the waqf validating acts, the 1923 Act avoids direct conflict with Sharī'ah or fiqh, by
defining a waqf as the ‘permanent dedication of any property for any purpose recognised by the
Mussalman law as religious, pious or charitable.’152 Interestingly, the 1923 Act also expressly
excludes from its definition of waqf, ‘any wakf, such as is described in section 3 of the
Mussalman Wakf Validating Act, 1913, under which any benefit is for the time being claimable
for himself by the person by whom the wakf was created or by any of his family or
descendants.’153 So long as the subject waqf is operating essentially as a family waqf, the
registration and reporting requirements of the 1923 Act do not apply to it. On the other hand, if
the personal or family benefit of the waqf ends at some point and the waqf reverts to a ‘religious,
pious or charitable’ purpose, then the mutawalli is required to register the waqf as such with the
court and his annual reporting requirements commence. The reasons for this exclusion of family
awqaf are not evident in either the 1923 Act or relevant literature, although it is likely that it was
simply in deference to powerful Muslim clerics or political interests at the time who advocated on
behalf of family awqaf.
Possibly unable to completely ignore that considerable institutional corruption and the apparent
perversion of Islamic principles of philanthropy and charity were then-occurring in the context of
family awqaf, however, the framers of the 1923 Act did include an initial filing requirement
applicable to family awqaf where ‘the person creating the wakf or any member of his family or
any of his descendants is at the commencement of this Act alive and entitled to claim any benefit
thereunder.’154 Although the continuing annual reporting requirement does not appear to apply to
this latter category of family awqaf -- until and unless the waqf reverts to religious, pious or
charitable purposes -- the added provision at least had the initial effect of greater transparency
and public accountability with respect to family awqaf which existed at the time of the law’s
enactment.
3. The Provincial Waqf Ordinances
The provisions of the 1923 Act have been criticized more recently as providing ‘relatively loose
regulatory oversight’ of waqf affairs.155 Addressing this concern, various provincial governments
promulgated ordinances in 1979 which ‘drastically supplemented’ the 1923 Act.156 While the
1923 Act may be seen as a bit loose in its regulation of awqaf, the 1979 ordinances could easily
be said to have gone to the other extreme. One such ordinance, the Punjab Waqf Properties
Ordinance, 1979,157 is an example of these ordinances. Significantly, the Punjab waqf ordinance
illustrates the extent to which the provincial governments have undertaken not only more
circumscribed regulation of awqaf, but also the direct control of waqf management in some cases.
Much of this regulation is quite broad and gives the government potentially arbitrary powers.
The Punjab waqf ordinance states its purpose as providing ‘for the proper management and
administration of waqf properties in the Province of Punjab.’158 In conjunction with the 1923 Act,
the Punjab waqf ordinance requires that every waqf property in the province be registered, as
152
Ibid: emphasis added. Unlike the validating acts, however, the 1923 Act does not contain any ‘saving’
language resolving conflicts between the Act and any local or prevalent Muslim custom or usage in favor
of the latter. Presumably, the Act -- not Sharī'ah or fiqh -- controls in the event of any such conflict.
153
Ibid 688 [2(e)]: emphasis added.
154
Ibid 689 [3.(3)(b)]: emphasis added.
155
Zafar Hameed Ismail and Quadeer Baig, above n 1, 272.
156
Ibid. There are four provincial Waqf Properties Ordinances of 1979.
157
The Punjab Waqf Properties Ordinance, 1979 <http://punjablaws.gov.pk/laws/336.html> at 07 July
2005.
158
Ibid [Preamble].
28
prescribed by law.159 Like the 1923 Act, however, the Punjab waqf ordinance also does not apply
to family awqaf, ‘under which any benefit is for the time being claimable for himself by the
person by whom the wakf was created or by any of his family or descendants.’160 The Punjab
waqf ordinance does apply once the subject waqf reverts to a purpose ‘recognised by Islam as
religious, pious or charitable.’161
Unfortunately, the Punjab waqf ordinance provides extremely broad measures by which the
provincial government may accomplish its stated purpose. These are effected through the newlycreated office of a provincial Chief Administrator of Auqaf (Awqaf). Under the ordinance, the
Chief Administrator has supervisory authority over all awqaf in the province, and in certain
circumstances, he may even assume direct responsibility for waqf administration.
Pursuant to his supervisory authority, the Chief Administrator may require ‘any person-in-charge
of or exercising control over the management of any waqf property … to furnish him with any
return, statement, statistics or other information regarding such waqf property, or a copy of any
document relating to such property.’162 There is no limitation as to scope or relevance, or with
respect to undue burden or expense (borne by the waqf), and the authority of the Chief
Administrator in this regard is simply open-ended.
Further, the Chief Administrator may issue to the person in charge or control of a waqf, ‘such
instructions or directions for the proper administration, control, management and maintenance of
such waqf property as he may deem necessary.’163 This authority also is not limited in any way by
the ordinance. To the contrary, it is incredibly broad and arbitrary in its scope. The Chief
Administrator has the express authority -- within his absolute discretion -- even to issue directions
‘prohibiting delivery of sermons, khutbas or lectures,’ if he determines that they may contain ‘any
matter prejudicial to the sovereignty and integrity of Pakistan or calculated to arouse feeling of
hatred or disaffection amongst various religious sects or groups in the country,’ or that they may
indulge in ‘party politics.’164
In those situations where the provincial government wants to do more than merely monitor and
control every aspect of a waqf’s administration and activities, the Punjab waqf ordinance provides
even broader regulation: the government, through the Chief Administrator, can actually take over
completely the waqf and (with little limitation) do as it pleases with its assets. And this action is
subject to no meaningful judicial oversight or other legal intervention.
In particular, the provincial government may vest in the Chief Administrator any waqf properties
situated in the province, including all rights, assets, debts, liabilities and obligations relating to
those awqaf.165 Furthermore, even if the provincial government as a body does not itself take
such action, the Chief Administrator has discretion on his own initiative to take over waqf
property and assume its administration, control, management and maintenance.166 Only two
conditions restrict the take over of waqf property by the Chief Administrator. First, the Chief
159
Ibid [6.].
Ibid [2.(e)]. Again, there is no explanation in the ordinance or in any literature regarding the ordinance
as to why this continues to be an exception to waqf regulation in Pakistan.
161
Ibid.
162
Ibid [20.(1)]: emphasis added.
163
Ibid [20.(2)].
164
Ibid: emphasis added.
165
Ibid [3].
166
Ibid [7].
160
29
Administrator must give notification (but not necessarily prior notice) to the waqf management or
mutawalli that the Chief Administrator is taking over the waqf property.167 Second, during the
lifetime of a person founding a waqf property, the Chief Administrator may only take over the
waqf with the consent of the founder and on such terms and conditions as may be agreed upon
between the founder and the Chief Administrator.168 Significantly, the Chief Administrator’s
power to take over waqf property expressly includes ‘control over the performance and
management of religious, spiritual, cultural and other services and ceremonies (Rasoomat) at or in
a waqf property.’169
Once the Chief Administrator has taken over a waqf property, he has relatively unfettered
discretion to do with it as he wishes. The only restriction is that a waqf property must be used for
the purpose for which it was dedicated, has been used, or for any purpose recognised by Islam as
religious, pious or charitable -- all as the Chief Administrator ‘may deem fit.’170 Furthermore, the
provincial government may even permit the Chief Administrator to sell or dispose of the property
and invest the proceeds in accordance with its directions, provided that the government is
‘satisfied’ that sale or disposal of the waqf property is necessary in order
(a) to secure maximum economic benefits out of such property and to avoid loss or
damage to such property; or
(b) to serve the best public interest and public purpose for which such property was
dedicated; or
(c) to give effect to such wishes of the person dedicating the property as can be
ascertained; or
(d) in the absence of evidence of express dedication, to enable the property to be used for
the purpose for which it has been used or for any purpose recognised by Islam as
religious, pious or charitable; or
(e) to provide maintenance to those who, on account of unemployment, sickness,
infirmity or old age, are unable to maintain themselves; or
(f) to provide education, medical aid, housing, public facilities and services such as roads,
sewerage, gas and electric power; or
(g) to prevent danger to life, property or public health.171
While this seems to contravene the very essential and distinctive element that has always
characterized waqf property -- its perpetual dedication to the waqf purpose -- at least the
regulation does require that the proceeds of the sale must first be used to satisfy the main purpose
of the waqf.172
Allowing even greater government control and intervention in the administration -- and
essentially the ownership -- of awqaf properties, the Punjab waqf ordinance also eliminates any
meaningful judicial oversight regarding action taken under the ordinance. The right to appeal a
Chief Administrator’s take-over of a waqf property, for example, is extremely limited under the
Punjab waqf ordinance. Although an appeal may be lodged with the District Court, and
subsequently appealed to the High Court, the petitioner may only seek a declaration that the
167
Ibid.
Ibid.
169
Ibid. In this regard, the Chief Administrator may prevent such services or ceremonies from taking place.
170
Ibid.
171
Ibid [16].
172
Ibid.
168
30
property is not a waqf property or that it is ‘waqf property within limits stated in the petition’173-such as, presumably, a family waqf or one where the founder is still living. Further giving the
Chief Administrator an inherent advantage, during the pendency of such an appeal neither the
District Court nor the High Court have jurisdiction to enter any temporary injunction or
restraining order enjoining the Chief Administrator from actually proceeding with taking over the
waqf property for which a notification has been issued.174
Any action taken under the ordinance or otherwise by the Chief Administrator is also beyond the
jurisdiction of any civil or revenue court, or any other authority to ‘question the legality’ of
anything done, nor can any injunctive relief be issued in that regard.175 All persons taking action
‘in good faith’ pursuant to the ordinance are immune from suit, prosecution or other legal
proceeding.176 Indeed, every action taken under the ordinance is deemed by the ordinance to have
effect, regardless of anything inconsistent with that action ‘contained in any document, decree or
order of any court, deed, enactment or any instrument having effect by virtue of any such
enactment other than this Ordinance.’177
The Punjab waqf ordinance also has harsh punitive provisions. If any person obstructs resists,
impedes or otherwise interferes with anyone acting pursuant to the ordinance, he is punishable by
fine and/or imprisonment up to five years. Similarly, willful disobedience or failure to comply
with any requisition, instruction or direction issued by the Chief Administrator is punished with a
fine of up to five hundred rupees, and as well as up to fifty rupees for every day the disobedience
or failure continues after the date of the conviction.178
As succinctly summarized in a comprehensive study of law and philanthropy in Pakistan, the
Punjab waqf ordinance ‘allows the government arbitrary and non-justiciable powers to take over
and assume the administration, control, management and maintenance of any waqf property after
the lifetime of the person creating the waqf.’179 Moving perhaps from the realm of mere political
authority to acting on behalf of Allah, ‘[t]he power to assume waqf property is not merely a penal
or remedial measure but is based on the premise that the state has an overriding right to oust the
mutawalli given that the property has in effect been gifted to Allah.’180 Despite such rigorous
regulation, however, the waqf in Pakistan appears likely to fare better than other parts of civil
society. While no studies have been undertaken directly comparing the success of awqaf with
other philanthropic and charitable institutions in Pakistan today, various studies do give the
impression that Islamic institutions in Pakistan, such as awqaf, are courted by the government and
subjected to less intimidation, than other civil society organizations.181 Other areas of
government regulation encourage Islamic philanthropy and charity. Under the current income tax
regulations, for example, the only tax-deductible donation that is exempt from the usual limits for
tax deductibility is zakāt. Under the Income Tax Ordinance, 2001, in computing taxable income,
the amount of zakāt paid is deducted from the total amount of income for the year. As observed
173
Ibid [11].
Ibid [21].
175
Ibid.
176
Ibid [23].
177
Ibid [22].
178
Ibid [24].
179
Zafar Hameed Ismail and Quadeer Baig, above n 1, 272.
180
Ibid.
181
See, generally, Baig, above n 109; Bremer, above n 37; Santosh C. Saha and Thomas K. Carr, Religious
Fundamentalism in Developing Countries (2001), esp. at 35; Iftekar H. Malik, State and Civil Society in
Pakistan (1997).
174
31
recently in a study of Islamic politics in Pakistan, Islam is important to political success in that
country.182 Most Pakistani leaders use it to ‘appease and undermine their political adversaries,
win over a predominantly illiterate, religious, and gullible population, and get money from oilrich Muslim countries (especially from the early 1970s).’183 Certainly, they do not want to push
the envelope too far in confronting Islamic institutions such as the waqf.
VI. CONCLUDING THOUGHTS
Just as there is a vibrant and dynamic civil society today throughout the world, including Asia,
Islamic civil society also continues to flourish. As Muslims look to traditions of zakāt and
sadaqah in creating innovative institutions such as the privately-managed zakāt funds and local
zakāt-funded development organizations, the waqf is a time-honored and proven institution that
also is beginning to enjoy a rebirth.184 Unlike other philanthropic and charitable institutions that
are subject to being modified or terminated -- or having their assets wasted or even expropriated
-- as a result of disgruntled beneficiaries or greedy governments, the waqf is relatively protected
from these events by more than a millennium of Islamic law, jurisprudence and tradition.
Even in countries such as Pakistan where civil society is constantly locked in a struggle not only
with the state but also within its own ranks, the waqf -- while not immune from that struggle -- at
least has the best chance of survival. Unlike most other civil society organizations operating in
these countries, the waqf benefits from age-old traditions of individual Islamic philanthropy and
charity. And unlike most other civil society organizations, the waqf also benefits from being a
tradition within the second-largest (and fastest growing) religion in the world. When states
dominate and intervene in the administration and control of waqf properties, they are confronting
a powerful sociopolitical and economic force. Little research has been undertaken in comparing
the experiences of awqaf with other civil society organizations vis-à-vis dominant and
interventionist states such as Pakistan. In the post-9/11 world where many states (especially
Islamic and predominantly-Islamic states) walk a fine line between authoritarian control and
appeasement of Islamic groups, particularly those viewed as less radical, the role of the waqf as a
dynamic actor in civil society should make interesting study. And as Islamic movements
continue to struggle to redefine Islam in a modern context, studying the role of awqaf as they
move from traditional charitable purposes to more activist roles within civil society, may become
even more imperative.
182
Mir Zohair Husain, ‘The Politics of Islam in Pakistan’ in Saha and Carr, above n 181.
Ibid 35.
184
Bremer, above n 37, 5: ironically, the ‘process is proceeding more rapidly in non-Islamic democracies,
such as the United States, than in Islamic countries.’
183
32
VIII. REFERENCES
A. Articles/Books
Ahmed, Ishtiaq, ‘Civil Society and South Asia’, Daily Times (Pakistan), 25 August 2002,
<http://www.dailytimes.com.pk/default.asp?page=story_25-8-2002_pg3_2> at 29 June 2005
Alagappa, Mutiah, ‘The Nonstate Public Sphere in Asia’ in Mutiah Alagappa (ed), Civil Society
and Political Change in Asia (2004)
‘Alī, Maulānā Muhammad, The Religion of Islām (1990)
‘Alī, Maulānā Muhammad, A Manual of Hadīth (2nd ed 2001)
Azami, Muhammad Mustafa, Studies in Hadith Methodology and Literature (1977), quoted in
MSA-USC, ‘Sunnah and Hadith’ <http://www.usc.edu/dept/MSA/fundamentals/hadith sunnah/>
at 12 July 2005
Baig, Adnan Sattar Rabia, ‘Civil Society in Pakistan: A Preliminary Report on the CIVICUS
Index on Civil Society Project in Pakistan’ (2001) 1(11) CIVICUS Index on Civil Society
Occasional Paper Series
Barnes, John Robert, An Introduction to Religious Foundations in the Ottoman Empire (1987)
[cited in Jennifer Bremer, ‘Islamic Philanthropy: Reviving Traditional Forms for Building Social
Justice’ (Paper presented at Fifth Annual Conference on ‘Defining and Establishing Justice in
Muslim Societies,’ Center for the Study of Islam and Democracy, Washington DC, 28-29 May
2004) 5 <http:www.islam-democracy.org/documents/pdf/ 5th_Annual_ConferenceBremer_paper.pdf> at 18 June 2005]
Baron, Barnett F, ‘The Legal Framework for Civil Society in East and Southeast Asia’ (2002)
4(4) The International Journal of Not-for-Profit Law < http://www.icnl.org/journal/vol4iss4/
ar_baron1.htm> at 19 July 2005
Bremer, Jennifer, ‘Islamic Philanthropy: Reviving Traditional Forms for Building Social Justice’
(Paper presented at Fifth Annual Conference on ‘Defining and Establishing Justice in Muslim
Societies,’ Center for the Study of Islam and Democracy, Washington DC, 28-29 May 2004)
<http:www.islam-democracy.org/ documents/pdf/5th_Annual_Conference-Bremer_paper.pdf> at
18 June 2005
Carothers, Thomas, ‘Civil Society’ [Winter 1999-2000] Foreign Policy 18
Casanova, Jose, ‘Civil Society and Religion: Retrospective Reflections on Catholicism and
Prospective Reflections on Islam’ [Winter 2001] 68(4) Social Research 1041 <http://www.
findarticles.com/p/articles/mi_m2267/is_4_68/ ai_83144759> at 11 July 2005
Diamond, Larry, ‘Toward Democratic Consolidation’ in Larry Diamond and Mark F. Plattner
(eds), The Global Resurgence of Democracy (1996)
--- ‘Dubai eGovernment joins hands with Zakat Fund’, AME Info FZ LLC (United Arab
Emirates), 21 March 2005, < http://www.ameinfo.com/56214.html> at 12 July 2005
33
Gaudiosi, Monica M, ‘The Influence of the Islamic Law of Waqf on the Development of the
Trust in England: The Case of Merton College’ (1988) 136 University of Pennsylvania Law
Review 1231
Gaudiosi, Monica M and M. Cizakca, ‘Awqaf in history and implications for modern Islamic
economics’ (Paper presented at the International Conference on Awqaf and Economic
Development, Kuala Lumpur, 2-4 March 1998)
Gellner, Andre Ernst, ‘The Civil and the Sacred,’ (Speech delivered at the Tanner Lectures on
Human Values, Harvard University, 20-21 March 1990) <http://www.tannerlectures.utah.edu/
lectures/Gellner_91.pdf>, at 07 July 2005
Gramsci, Antonio, Selections from the Prison Notebooks (Quinton Hoare and Geoffrey Nowell
Smith, eds and trans, 1971) [trans of selected texts from Quaderni del carcere]
Iqbal, Muhammad Asif, Hina Kahn, and Surkhab Javed, ‘Nonprofit Sector in Pakistan:
Historical Background’ (2004) (Social Policy and Development Centre Working Paper No. 4, in
collaboration with the Aga Khan Foundation (Pakistan) and the Center for Civil Society Studies,
Johns Hopkins University)
Ismail, Zafar Hameed, ‘Law and the Nonprofit Sector in Pakistan’ (2002) (Social Policy and
Development Centre Working Paper No. 3, in collaboration with the Aga Khan Foundation
(Pakistan) and the Center for Civil Society Studies, Johns Hopkins University)
Ismail, Zafar Hameed and Quadeer Baig, ‘Philanthropy and Law in Pakistan’ in Mark Sidel and
Iftekhar Zaman (eds), Philanthropy and Law in South Asia (2004) 245
Kahf, Monzer, ‘Waqf and its sociopolitical aspects’ (1992) [published by Islamic Research and
Training Institute (IRTI) of the Islamic Development Bank (IDB), Jeddah, Saudi Arabia]
<http://monzer.kahf.com/papers/english/WAQF%20and%20its%20Sociopolitical%20
Aspects.pdf> at 20 June 2005
Kahf, Monzer, ‘Waqf: A Quick Overview’ [undated, unpublished paper] <http://monzer.
kahf.com/papers/english/WAQF,%20A%20QUICK%20OVERVIEW.pdf > at 20 June 2005
Kahf, Monzer, ‘Towards the Revival of Awqaf: A Few Fiqui Issues to Reconsider’ (Paper
presented at the Harvard Forum on Islamic Finance and Economics, Harvard University,
1 October 1999)
Kuran, Timur, ‘The Provision of Public Goods under Islamic Law: Origins, Impact, and
Limitations of the Waqf System’ (2001) 35 Law and Society Review 841
Kozlowski, Gregory C, Muslim Endowments and Society in British India (1985)
--- The Majestic Qur'ān: An English Rendition of its Meanings (Translation Committee, Nawawi
Foundation trans, 2000 ed)
Malik, Iftikhar H, State and Civil Society In Pakistan (1997)
Mandaville, Jon E, ‘The Cash Waqf Controversy in the Ottoman Empire’ (1979) 10
International Journal of Middle Eastern Studies 289
34
Meidinger, Errol E, ‘Environmental Law: Forest Certification’ (2001) 10 Buffalo Environmental
Law Journal 211
Nanji, Azim, ‘Charitable giving in Islam’ (2000) 5(1) Alliance 1 <http://www.islam.co.za/
awqafsa/sorce/ library/Article%209.htm> at 21 June 2005
Powers, David S, ‘The Islamic Family Endowment (Waqf)’ (1999) 32 Vanderbilt Journal of
Transnational Law 1167
Rasid, S. Khalid, Wakf Administration in India (1978) [quoted in R Upadhyay, ‘WAQF
(CHARITABLE ISLAMIC TRUST) -Under sustained controversy in India?’ (2004) South Asia
Analysis Group, Paper No. 1136 < http:// www.saag.org/papers12/paper1136.html> at 19 July
2005]
Saha, Santosh C and Thomas K. Carr (eds), Religious Fundamentalism in Developing Countries
(2001)
Schoenblum, Jeffrey A, ‘The Role of Legal Doctrine in the Decline of the Islamic Waqf: A
Comparison with the Trust’ (1999) 32 Vanderbilt Journal of Transnational Law 1191
Sidel, Mark and Iftekhar Zaman, ‘Philanthropy and Law in South Asia: Key Themes and Key
Choices’ in Mark Sidel and Iftekhar Zaman (eds), Philanthropy and Law in South Asia (2004) 15
Tandon, Rajesh, Voluntary Action, Civil Society and the State (2002)
Turam, Berna, ‘The politics of engagement between Islam and the secular state: ambivalences of
“civil society”’ (2004) 55(2) The British Journal of Sociology 259
Upadhyay, R, ‘WAQF (CHARITABLE ISLAMIC TRUST) -Under sustained controversy in
India?’ (2004) South Asia Analysis Group, Paper No. 1136 < http:// www.saag.org/papers12/
paper1136.html> at 19 July 2005
B. Legislation
Constitution of Pakistan Article 17(1)
The Mussalman Wakf Act, 1923, The Pakistan Code (1966), Volume VII, from 1920-1923 both
inclusive, 686-7
The Mussalman Wakf Validating Act, 1913, The Pakistan Code (1966), Volume VI, from 19111919 both inclusive
The Mussalman Wakf Validating Act, 1930, The Pakistan Code (1966), Volume VIII, from
1924-1933 both inclusive
The Punjab Waqf Properties Ordinance, 1979 <http://punjablaws.gov.pk/laws/336.html> at 07
July 2005
35
The Societies Registration Act, 1860, The Pakistan Code (1966), Volume I, from 1836-1871
both inclusive
The Trusts Act, 1882, The Pakistan Code (1966), Volume III, from 1882-1897 both inclusive
C. Other Sources
Ali, Mubarak, ‘Are NGOs Serving West’s Interests?’, The News (Karachi), 10 May 2003 [op-ed
piece quoted in Muhammad Asif Iqbal, Hina Kahn, and Surkhab Javed, ‘Nonprofit Sector in
Pakistan: Historical Background’ (2004) (Social Policy and Development Centre Working Paper
No. 4, in collaboration with the Aga Khan Foundation (Pakistan) and the Center for Civil Society
Studies, Johns Hopkins University) 4]
al-Bukhârî, Muhammad Ismâ'îl, ‘Hadīth 4:30’ < http://www.sacred-texts.com/isl/bukhari/
bh4/bh4_29.htm> at 20 July 2005
Banglapedia <http://banglapedia. search.com.bd/HT/W_0018.htm> at 18 July 2005
Dubai Islamic Bank <http://www.alislami.co.ae/community/zakat.html> at 12 July 2005
<http://www.islamicity.com/mosque/pillars.shtml> at 22 June 2005
<http://www.shia.org/ fundamental.html> at 22 June 2005
MSA-USC, ‘Sunnah and Hadith’ <http://www.usc.edu/dept/MSA/fundamentals/hadith sunnah/>
at 12 July 2005
36
STUDENT ARTICLES
INTERNATIONAL INSTRUMENTS FOR THE PROTECTION OF
THE RIGHTS OF MINORITIES AND THE STATUS OF THE MACEDONIAN
MINORITIES IN THE NEIGHBOURING COUNTRIES
BY SLAVICA CHUBRIC
© Central European University November 30, 2005
Table of Contents
Executive summary.................................................................................................................p.3
Introduction.............................................................................................................................p.4
Chapter 1: Overview of International instruments relevant for the protection of minority
rights........................................................................................................................................p.6
1.1 Protection of minority rights in the UN system................................................................p.6
1.1.1 Article 27 of ICCPR...................................................................................................p.6
1.1.2 The UN Declaration on the Rights of Persons Belonging to National or Ethnic, Religious
and Linguistic Minorities..........................................................................p.7
1.1.3 International Convention on Elimination of All Forms of Racial Discrimination....p.8
1.2 Protection of minority rights in Europe...........................................................................p.8
1.2.1 Framework Convention for the Protection of National Minorities...........................p.8
1.2.2 European Charter for Regional or Minority languages.............................................p10
1.2.3 European Convention for Human Rights..................................................................p.11
1.2.4 1990 Document of the Copenhagen meeting of the Conference on the Human Dimension
of the
CSCE........................................................................................................................p.11
Chapter 2: A note on the "Macedonian question" on the
Balkan...................................................................................................................................p.13
Chapter 3: The Macedonian minority in Albania.................................................................p.16
3.1 Legal framework for the protection of minority rights...................................................p.16
3.2 Implementation of minority rights..................................................................................p.17
Chapter 4: The Macedonian minority in Greece...................................................................p.21
4.1 Legal framework for protection of minority rights.........................................................p.21
4.2 Implementation of minority rights..................................................................................p.23
4.2.1 Citizenship, repatriation and restoration of property..................................................p.27
4.3 Case law of the European Court for Human Rights related to the Macedonian minority in
Greece...................................................................................................................................p.30
4.3.1 The Case of Sidiropoulos and others v . Greece..........................................................p.31
4.3.2 The case of Ouranio Toxo and Others v. Greece..........................................................p.33
Chapter 5: The Macedonian minority in Bulgaria.................................................................p.37
5.1. Legal framework for the protection of minority rights...................................................p.37
5.2 Implementation of minority rights...................................................................................p.40
37
5.3. Case law of the European Court for Human Rights related to the Macedonian minority in
Bulgaria..................................................................................................................................p.43
5.3.1 The case of Stankov and the United Macedonian Organization Ilinden v
Bulgaria..................................................................................................................................p.44
5.3.2 The Case of the United Macedonian Organization Ilinden and Ivanov v
Bulgaria..................................................................................................................................p.45
5.3.3 Case of the United Macedonian Organization Ilinden-Pirin and Others v
Bulgaria..................................................................................................................................p.47
Chapter 6: The Macedonian minority in Serbia and Montenegro.........................................p.49
6.1 Legal framework for the protection of minority rights....................................................p.49
6.2 Implementation of minority rights...................................................................................p.50
Conclusion.............................................................................................................................p.52
Bibliography..........................................................................................................................p.55
EXECUTIVE SUMMARY
This paper analyzes the international instruments for protection of minority rights and compares
them with national solutions for minority protection and relevant state practice. The analysis is
intended to show what sort of effect those factors have on the real position of the persons
belonging to the Macedonian minority in the countries studied. Namely, are the institutional
arrangements within national legislation in accordance with international legal principles and in
addition, is national legislation implemented or just formal ornament?
The analysis demonstrates that the basic problem faced by the Macedonian minority is the
denial of its existence and the non- recognition of its right to identity. The main reasons for these
shortcomings are, unfortunately, political interests and considerations, which are linked to the
contesting of a distinct Macedonian nation. In the same time the overview of international
instruments protecting minorities, presented that there is a broad consensus that the right to
identity, in essence is the underlying value of all the other rights, which though are objectives to
themselves, in the same time are instrumental, for protecting the group’s identity. This study,
further illustrates how the violations of individual rights are linked with the contesting perception
of the group's identity. In turn, the paper proves that where the identity is acknowledged, there are
better conditions for integration.
INTRODUCTION
One of the issues in international law that have not been yet firmly defined and fully regulated is
the question of the protection of minorities. In the same time one of the most controversial
concerns on the Balkan, are the minorities, their treatment and the consequences they have on the
stability and political relations in the region. However, through the years, the Macedonian
minority and its status in the neighboring countries of the Republic of Macedonia, despite all the
38
interest for the Balkan, minorities and majorities, reserved its position as an "invisible" group, a
vague notion, subject to approximate conclusions and speculations.
The interest on the group, was increased by the dispute over the name with Greece, and the
cases won at the European Court for Human Rights, which became landmark decisions in the
Court's jurisprudence linked with minorities, freedom of association and freedom of assembly.
However, most of the literature focuses on political, rather than on legal dilemmas which are
surrounding the minority and does not present (sufficient) information on the current situation.
Therefore, the scope of this analysis shall be the legal aspects and recent developments of the
status of the minority, providing with brief information on the indisputable influence of political
factors. The study shall focus on compliance of the states under consideration, primarily with
international but with national legal rules on minority protection, as well.
The first chapter provides with overview of the main international instruments for minority rights.
It shows how, even documents which refer to individual can be practical for protection of
national, religious, ethnic or linguistic groups. In addition, the main emphasis is on the right to
identity of the group, despite the disputable collective dimension of minority rights.
The second chapter is a concise introduction to the so called "Macedonian question" on the
Balkan. It is included, because it gives a substantial historical and political background, necessary
for a clearer comprehension of the origins of the current problems faced by the members of the
Macedonian minority.
The third, fourth, fifth and the sixth chapter present the minority in Albania, Greece, Bulgaria and
Serbia and Montenegro, respectively. Each chapter has a part dealing with formal arrangements
on minority rights and part which examines their implementation. The chapters on Greece and
Bulgaria have special section concentrating on the case law of the Strasbourg Court related to the
Macedonian minority within their jurisdiction.
The conclusion, summarizes the most important findings of the research, and advocates certain
solutions to the identified problems.
CHAPTER 1-INTERNATIONAL INSTRUMENTS RELEVANT FOR THE PROTECTION OF MINORITY
RIGHTS
The overview of the International instruments from which minorities can benefit is divided in two
parts, the first one focuses on the system in the United Nations, while the second one on the
regional level, Europe in particular. I will illustrate how, many rights which are included in
instruments for protection of individuals, can be utilized by minorities as well, especially in light
of the fact that various provisions dealing specifically, with minority rights, do not relate to
minorities as group but to the persons which are their members. In addition, the instruments shall
be analyzed mostly in the context of provisions, which are valid to the specific issues connected
to the Macedonians as a minority in the countries covered by the research.
1.1Protection of minority rights in the United Nations system
1.1.1Article 27 of the International Covenant for Civil and Political Rights 185
"In those States in which ethnic, religious or linguistic minorities exist, persons belonging
to such minorities shall not be denied the right, in community with the other members of
185
International Covenant for Civil and Political Rights, [hereinafter referred to as ICCPR] available at
http://www.unhchr.ch/html/menu3/b/a_ccpr.htm
39
their group, to enjoy their culture, to profess and practice their own religion, or to use
their own language."
On first reading, especially because the ICCPR focuses on individual rights, the article does not
confer any rights to minorities as a group, and merely imposes a negative obligation on the States
not to deny the rights enumerated. However, the Human Rights Committee in its General
Comment on the Article, explained that the rights protected under the Article, depend on the
ability of the minority group to maintain its culture, language or religion and that positive
obligations by States may be necessary to protect the identity of the minority.(emphasis added)186.
In that regard, as the rights stipulated are to be enjoyed by members of the minority, inherent in
the Article is the existence of a group187. Subsequently, it has been argued that it is clear that the
article "enshrines a complete and absolute prohibition of forced assimilation and a right to
identity for minorities".188 A certain political dimension of the right to identity could be included
in the scope of the Article, as well.189 In addition, the General Comment on the Article insists on
its positive nature and on its "horizontal" effect.190 These aspects of the Article are further
heightened by the obligations that the States have under Article 2 of the ICCPR, namely that they
shall respect all the rights recognized in the Covenant, to all individuals within their jurisdiction,
without any distinction of any kind, including, among various grounds, race, language, religion,
political or other opinion and national origin.
1.1.2 The UN Declaration on the Rights of Persons Belonging to National or Ethnic, Religious
and Linguistic Minorities
Although, as its name suggests, the Declaration is not legally binding on States, it is a significant
contribution to the existing body of norms for protection of minority rights. In the context of the
previously elaborated identity issues, linked to minorities, the Declaration provides that the
national, ethnic, religious, linguistic or cultural identity shall be protected by the States and that
they ( the States) shall encourage the conditions for the promotion of that identity.191 This
requirement, that the States encourage the condition for promotion of the identity of minorities,
would likely require positive measures by states to foster the development of such minorities.192
The group protection nature of the instrument, and the mandatory protection of existence and
identity, are evident by the use of the term "shall".193 Subsequently, the Declaration guarantees
the rights of participation of the persons belonging to minorities in a number of areas of public
life, to form associations, expression of their culture, tradition and customs. Its collective
186
Human Rights Committee General Comment on the Article 27 ICCPR, available at
http://www1.umn.edu/humanrts/gencomm/hrcom23.htm
187
John R. Valentine, Towards a definition of national minority,32 Denv. J. Int'l L. & Pol'y 445 (2004)
188
Kristin Henrard, DEVISING AND ADEQUATE SYSTEM OF MINORITY PROTECTION.
INDIVIDUAL AND HUMAN RIGHTS,, MINORITY RIGHTS AND THE RIGHT TO SELFDETERMINATION (The Hague/Boston/London:Martinus Njihoff Publishers, 2000) [hereinafter referred
to as Henrard]
189
Id
190
Patrick Thornberry and Maria A.M. Estebanez, MINORITY RIGTHS IN EUROPE, (Council of Europe
publishing, 2004)
191
The UN Declaration on the Rights of Persons Belonging to National or Ethnic, Religious and Linguistic
Minorities, Article 1, available at
http://www.unhchr.ch/html/menu3/b/d_minori.htm
192
See John R. Valentine, supra at 3
193
Patrick Thornberry, THE UN DECLARATION ON THE RIGTHS OF PERSONS BELONGING TO
NATIONAL, ETHNIC, RELIGIOUS AND LINGUISTIC MINORITIES:BACKGROUND ANALYSIS
AND OBSERVATION, (Minority Rights Group, London, 1993)
40
dimension is emphasized with Article 3, which provides that the rights of the persons, members
of the minorities, may be exercised individually as well as in community with the other members
of the group, without any discrimination.194
1.1.3 International Convention on the elimination of all forms of racial discrimination
This instrument is of relevance for minority rights, in so far as it defines racial discrimination as
covering national or ethnic origin. The states are obliged to eliminate discrimination and
guarantees to everyone equality before law, without distinction on basis of race, color, national or
ethnic origin, in thee enjoyment of inter alia, political rights, other civil rights (freedom of
religion, opinion and expression, peaceful assembly and association) as well as economic and
social rights.195
1.2 Protection of minority rights in Europe
1.2.1The Framework Convention for the Protection of National Minorities
Regardless of the fact what its title may suggest, the Convention does not contain a definition of a
national minority, nor it guarantees the rights in form that would imply group dimension. The
framework Convention is the first legally binding multilateral instrument devoted to the
protection of national minorities in general and contains mostly programme-type provisions
which are not directly applicable, but leave the States discretion in the implementation of the
objectives which they have undertaken to achieve, thus enabling them to take particular
circumstances into account, implementing the principles is through national legislation and
appropriate governmental policies.196
The Framework Convention gives the members of national minority a right to freely choose
to be treated as such (Article 3) and guarantees that no disadvantage shall arise from that choice.
The Explanatory Report specifies that the objective criteria in that regard are linked to a person's
self-identity.197 In turn, States do not have an unqualified right to determine which groups within
their jurisdiction meet the criteria of constituting a national minority. 198Article 5 guarantees the
right of persons belonging to national minorities to maintain their culture and preserve their
identity.199 Article 7 guarantees the freedom of peaceful assembly, freedom of association,
freedom of expression and freedom of conscious, thought and religion. In accordance with the
Explanatory Report to the Convention, in Article 10, the recognition of the right of every person
belonging to a national minority to use his or her minority language freely and without
interference, confirms that it is particularly important. and is one of the principal means by which
such persons can assert and preserve their identity, which in turn enables them to exercise their
freedom of expression. 200 In addition, the Convention pledges that the persons belonging to
national minorities have a right to learn their minority language (Article 14). This right is also one
of the principal means by which such individuals can assert and preserve their identity, and there
194
Id
International Convention on the elimination of all forms of racial discrimination, Article 5, available at
http://www.unhchr.ch/html/menu3/b/d_icerd.htm
196
Explanatory Report to the Framework Convention on the Protection of National Minorities, available at
http://conventions.coe.int/treaty/en/Reports/Html/157.htm, [hereinafter referred to as Explanatory Report of
the FCNM]
197
Id
198
See John R. Valentine, supra at 3
199
The Framework Convention for the Protection of National Minorities, , [hereinafter referred to as
FCNM] available at http://conventions.coe.int/Treaty/en/Treaties/Html/157.htm
200
See Explanatory Report to the FCNM, supra at 10
195
41
can be no exceptions to this, while the right to have education in that language, is subject to
limitations depending on the available sources of the particular State.201 Although, there are
arguments that the term used "framework", implies a decrease in the legal strength of the
obligations undertaken by the States202, the Convention, is a major step forward in protecting
minorities.
1.2.2 European Charter on Regional or Minority languages
The Charter does not provide with neither individual nor collective rights of the minorities, but its
objective are to promote the regional or minority languages.203 It functions upon a sliding- scale,
the bottom end of the scale suggests the minimum right which members of a smaller, though
sufficiently numerous, linguistic minority can expect, whereas the higher end of the scale
includes more generous rights, in recognition of the larger number of individuals involved.204
None of the countries under consideration has signed neither ratified the Charter, and therefore,
this analysis covers the basic aspects of the document.205
1.2.3 European Convention for Human Rights
The European Convention for Human Rights is an instrument which protects the rights of the
individuals. However, persons belonging to minorities can benefit from the Convention, through
its relatively effective system based on the jurisprudence of the European Court for Human
Rights, indirectly. Namely, Article 14 prohibits discrimination in the enjoyment of the rights and
freedoms guaranteed by the Convention, on many grounds,, including language, religion, opinion
and association with a national minority206(emphasis added). In this context, this article does not
have its distinct existence, but needs to be invoked in conjunction with other rights provided for
in the Convention. In general, many so-called "minority" problems could be resolved through the
effective guarantee of "ordinary" human rights, such as the rights to life, personal security, nondiscrimination,
and
participation
in
a
democratic
political
process.207
In addition, even when the Strasbourg Court does not specifically find a violation of Article
14, it gives important arguments, on minority issues. Thus, in a decision regarding the
Macedonian minority in Greece, in the Case of Sidiropoulos and others v. Greece , it was
articulated that the existence of minorities was a "historical fact" which democracies must tolerate
and even protect in accordance with international legal principles.208
1.2.4 1990 Document of the Copenhagen meeting of the Conference on the Human Dimension of
the CSCE
201
Id
See Patrick Thornberry and Maria A.M. Estebanez, supra at 6
203
European Charter for Regional or Minority languages, available at
http://conventions.coe.int/Treaty/EN/Reports/Html/148.htm
204
Fernand de Varennes, The Protection of linguistic minorities in Europe and Human Rights: Possible
solutions to Ethnic Conflicts?, 2 Colum. J. Eur. L. 107 (1996)
205
Frckoski Lubomir, MEGJUNARODNO PRAVO ZA PRAVATA NA COVEKOT [International Human
Rights Law], (Magor, Skopje, 2001)
206
European Convention for Human Rights, available at
http://conventions.coe.int/treaty/en/Treaties/Html/005.htm
207
See Hurst Hannum, infra at 25
208
Case of Sidiropoulos and others v. Greece ( Application no. 57/1997/), Judgment, Strasbourg, 10 July
1998, para 41
202
42
The Copenhagen document deals with minority rights in its Part IV, again using the same
terminology, namely, that these are rights to be guaranteed to the persons belonging to the
minorities, and not to the group as such.. The principles are vague in many respects and leave a
great deal of discretion to governments in considering minority questions, and in some aspects
basically repeat existing provisions, but they are a significant achievement in efforts to define
minority rights in other international forums, including the United Nations. 209Thus, the principles
provide inter alia that the members of minorities have a right to freely express, preserve and
develop their ethnic, cultural, linguistic or religious identity and while the States in turn have an
obligation protect that identity of national minorities on their territory and create conditions for its
promotion 210 The document, enumerates a number of rights linked to the use of language, in light
of the fact that, that language usage, has been one of the tools for assimilation, but "the principle
at stake is not use of language per se; it is rather the ability of a minority to preserve its cultural
distinctiveness, including its language, in a manner that is compatible with its relationship with
the majority society in which it lives"211, which further intensifies the above mentioned right to
identity of a minority. Furthermore, in paragraph 35 the States are obliged to respect the right of
persons belonging to national minorities to effective participation in public affairs, including
participation in the affairs relating to the protection and promotion of the identity of such
minorities.
CHAPTER 2-A NOTE ON THE "MACEDONIAN QUESTION" ON THE BALKANS
In order to apprehend the reasons that could explain the status of the Macedonian minority in the
neighbouring countries of The Republic of Macedonia, this chapter shall be a brief note which
explains the political and historical considerations associated with the status of the minority.
Although the analysis in this paper is from the legal point of view, these considerations cannot be
strictly separated and are essential for understanding the substance of certain dilemmas
surrounding the minority or the persons belonging to it.
Macedonia, geographically consists of the Aegean Macedonia (North-western Greece),
the Pirin Macedonia (now part of Bulgaria) and Vardar Macedonia ( on the territory of the
Republic of Macedonia).212 After the Balkan Wars in 1912 and 1913, the part of the Ottoman
Empire, at the time, was divided when Greece gain the Aegean part, Bulgaria the Pirin and Serbia
the Vardar, which was a start of a politics of assimilation and propaganda of the named countries
over the Macedonians, who still have not constituted their own State.213 The Socialist Yugoslav
Republic of Macedonia was formed in 1945 and the Macedonian people for the first time gain the
formal status of nation, the Macedonian language was codified in its modern form and the Ohrid
Archiepiscopy ( abolished in 1767) was renewed in 1967 as the Macedonian Orthodox Church.
However, the existence of the separate Macedonian nation has been contested by Bulgaria,
Greece and Serbia. Bulgaria, perceives the Macedonians to be ethnic Bulgarians, and especially
209
Hurst Hannum, Contemporary development sin the International protection of the rights of the
minorities, 66 Notre Dame L. Rev. 1431 (1991)
210
1990 Document of the Copenhagen meeting of the Conference on the Human Dimension of the CSCE,
paragraphs 32 and 33, respectively, available at
http://www1.umn.edu/humanrts/osce/basics/copenhagen1990.html
211
See Hurst Hannum, supra at 25
See generally in ISTORIJA NA MAKEDONSKIOT NAROD [History of the Macedonian people],
Institut za nacionalna istorija [Institute for national history-Skopje], ( Prosvetno delo, Skopje, 1972)
213
Id
212
43
insists on the similarities of the languages. From a Macedonian perspective, however, Bulgaria’s
self-declared big brother status has more often than not been regarded with suspicion.214
For Greece, there is no "Macedonian question” regarding the "so-called 'Macedonian'
minority"; but it rather refers to the fact that "Skopje appropriates" Greek history and traditions
and "usurps the Greek name of Macedonia" implying territorial claims”215 Serbia’s position was
that Macedonia is southern Serbia and that ethnic Macedonians are Serbs by origin, position
which has evolved to a formal recognition of a distinct Macedonian nation.216 Albania, in turn,
does not reject the existence of a Macedonian nation but given the relatively large Albanian
population in the Republic of Macedonia, objected to its constitutional structure217 which after the
Ohrid Framework Agreement in 2001, resulted in a constitutional changes which fall within
Arend Lijphart's concept of consociationalism,218 The denial of separate existence of the
Macedonian nation, is however, not a new phenomenon which occurred recently, based upon
claims that the nation was constituted by a decree of the Communist Party in Former Yugoslavia.
A book written by one of the greatest intellectuals from (Aegean) Macedonia, which talks of the
distinctive features of the Macedonian language, the nation and the propaganda of Bulgaria,
Serbia and Greece, published in Sophia, in 1903, was ceased and destroyed by the authorities
(only ten copies were saved).219
As a result of Greece's opposition of the application of the name ‘Macedonia’ to any other
place than northern Greece, and denial of the existence of Macedonian national minority, to
which it refers as Slavophone Greeks, Macedonia could not have diplomatic recognition unless
it changed its name.220 These pressures amounted to an unprecedented shifting of a bilateral and
political problem, to a legal and international issue. Namely, the process of international
recognition of the young Macedonian state, besides the conditions set forth in the UN Charter,
the conditions set for the other four former Yugoslav republics, two additional requirements were
made: to give constitutional guarantees that it has no territorial aspirations towards Greece in light
of the constitutional declaration for paying due regard to the status of the Macedonian minority
in the neighboring countries., and to change the name "Macedonia"221 The first one was satisfied
by adoption of a Constitutional amendments,222 and the second resulted with the acceptance of the
state in the United Nations, with the provisional name, Former Yugoslav Republic of Macedonia.
Chapter 3-The Macedonian minority in Albania
3.1 Legal framework for the protection of minority rights
214
Jenny Engström, The Power of Perception: The Impact of the Macedonian Question on
Inter-ethnic Relations in the Republic of Macedonia, in The Global Review of Ethnopolitics
Vol. 1, no. 3, March 2002, 3-17, available at
http://www.ethnopolitics.org/archive/volume_I/issue_3/engstrom.pdf
215
Kathimerini (March 4,1990), cited from Evangelos Kofos, infra at 142
216
See Jenny Engström, supra at 30
217
Id
218
See Constitution of the Republic of Macedonia, available at
http://www.mlrc.org.mk/ustav_i_amandmani.htm
219
Krste Petkov Misirkov, ZA MAKEDONCKITE RABOTI [On the Macedonian matters], ( Matica
Makedonska, Skopje, 2002, Reprint)
220
See Jenny Engström, supra at 30
221
Svetomir Skaric, MAKEDONIJA NA SITE KONTINENTI [Macedonia on all continents], (Union
Trejd, Skopje, 2000)
222
See Constitution of the Republic of Macedonia, supra at 34
44
Historically, the 1946 Constitution guaranteed equality and prohibited discrimination on the
grounds of nationality, race and religion, proclaimed protection of the cultural development of the
national minorities and the free use of their language223 Subsequently, the 1976 Constitution
added the right of the minorities to study their language at school, guaranteed to them equality in
all areas of social life and proclaimed that any discrimination which violated the rights of
minorities is unconstitutional and that it will be punished.224 The same Constitution outlawed
religion, and under the 50 year long communist dictatorship, Albania was the only country in the
world with a Constitutional prohibition of freedom of conscience and religion, and was
proclaimed to be the first atheist state in the world.225
The existing basic norms which are of significance for the legal and institutional status of
minorities are to be found in the Albanian Constitution of 2003.226This legal act of paramount
importance, guarantees equality before the law to all persons and prohibits discrimination on
numerous grounds, including race, religion, ethnicity, language, political, religious or
philosophical beliefs (Article 18). In addition, in the Chapter II- Personal Rights and Freedoms,
the Constitution guarantees freedom of expression and prohibits censorship.227The 2003
Constitution guarantees freedom of religion and conscious, the right to choose and to change
religious beliefs, as well as to express them in public or private (Article 24) and asserts that the
State is neutral in matters of religion recognizing the equality of religious communities,
concurrently in Article 10. Another noteworthy aspect of the Constitution is Article 17, which
stipulates that the constitutional limitations of the guaranteed rights and freedoms may not
infringe the essence of the rights and freedoms and in no case may exceed the limitations
provided for in the European Convention on Human Rights. Besides, the basic human rights and
freedoms which are of substance for minorities as well, the constitutional framework is completed
with a section which explicitly guarantees that persons belonging to national minorities shall
exercise human rights and freedoms in full equality before the law in addition to the right to
freely express, preserve and develop their "ethnic, cultural, religious and linguistic belonging". to
have education in their mother tongue and to form associations for protection of their interests
and identity.228
3.2 Implementation of minority rights|: identifying positive trends and problems
Unlike in Greece and Bulgaria, the Macedonian national minority is recognized that it exists in
Albania. Namely, Albania recognizes as national minorities the Macedonian, the Greek and the
Montenegrin in line with the understanding of national minorities as those groups, which have
their own motherlands with which they have common characteristics such: the spiritual
constitution, the language, culture, customs and traditions, religious belief, etc. 229
During the 1945-48 period, the Macedonian national minority was recognized as such,
had opportunities to freely express culture and to use mother tongue230. The 1975 administrative
223
Vladimir Ortakovski, MINORITES IN THE BALKANS,p.300 (Stip, Vtori Avgust, 1998)
Id, Ortakovski
225
Milco Balevski, ALBANIJA DENES [Albania today], (Matica Makedonska, Skopje, 1998)
226
Constitution of Albania, approved by the Parliament on 21 October 2003, available at the web site of
the Albanian Council of Ministers
http://www.keshilliministrave.al/english/kushtetuta/kushtetuta%20e%20Shqiperise%201.htm
227
Constitution of Albania 2003, § 22
228
Constitution of Albania 2003, § 20
229
Report submitted by Albania pursuant to Article 25 of the Framework Convention of National
Minorities, 2001, available at
http://www.coe.int/T/e/human_rights/Minorities/2._FRAMEWORK_CONVENTION_%28MONITORING
%29/2._Monitoring_mechanism/3._State_Reports_and_UNMIK_Kosovo_Report/1._First_cycle/1st_SR_A
lbania.asp#TopOfPage, [hereinafter referred to as 2001 Report]
230
See Ortakovski, supra at 39
224
45
Decree introduced changing of names and surnames which were "inappropriate" and "offensive",
followed by a issuing of a Lexicon on the names of people, prepared by the Institute for Albanian
Language, which included names which can and should be given to all newborn children,
regardless of national, racial or other belonging, but in effect it specifically targeted the members
of the minorities231. Furthermore, Decree No.225 in 1975 instigated the changing of names that
have religious connotations, while the 1979 Decree5.912 provided for internment of those who
"represent a danger to the social system" ,used to diffuse the minorities throughout the country
with an aim to reduce their rights, in light of the fact that the education in mother tongue up to
fourth grade was possible only in villages settled entirely with minorities and if they were in a
sufficient number.232 The change of names and toponomy, is a practice adopted in Greece as well.
As regards names, it can be argued that this is a direct intervention in what is, by its very nature,
an extremely private affair. 233
The 1989 census in Albania showed that only 64.816 or 2.0 % of the population are
national minorities, and it is the last one, which gives information on the national minorities,
since the 2001 census did not include declaration on nationality and religion.234 The Government
claims that there are approximately 5, 000 persons belonging to the Macedonian national minority
living mostly in the region of Mala Prespa. However, Macedonian sources allege that there are
Macedonians living in other parts of Albania, as well, but which still have not had the opportunity
for national identification and that the number is much bigger, than the one officially presented.235
Nevertheless, the minority practices ( through its members) the freedom of association, and has a
number of organizations such as "Prespa", "Mir" (Peace), "MED" and "Gora", which since 2002
are organized in "Association of the Macedonians in Albania", still not registered by the
authorities.236In addition, after three delays, the court in Tirana, registered recently, the first
political party of the Macedonians -"Macedonian Alliance for European Integration" which shall
strive that the members of the minority living in the areas of Gora and Golo Brdo and in other
areas where there is large percentage of Macedonians, are acknowledged as a national minority,
and to get education in their mother tongue ( the benefits of minority rights are limited to the so
called "minority zones", and in the case of the Macedonians, that is only the Mala Prespa region),
as well as for a better participation in the state institutions.237 The regions were the minority lives
(Mala Prespa, Golo Brdo, Gora and others) are one of the least developed in the country, and the
organizations of the minority are requesting for financial help from the state in the fields of
culture, infrastructure and for creating minimal conditions for economic development.238 The
right to participation (which is ensured through freedom of association, expression, the forming
of the political party of the Macedonian minority) is meaningless unless a group has the ability
and the resources to exercise it and where minorities have been economically or socially
disadvantaged, unless special programmes, such as educational facilities, access to the public
231
See Balevski, supra at 41, p259
Ortakovski, supra at 39, p.301
233
See Varennes, supra at 20
234
Report submitted by Albania supra at 45
235
Fakti za Makedonskoto Nacionalno Malcinstvo vo sosednite zemji[ Facts on the Macedonian National
Minority in the Neighboring Countries,] given to author by the Ministry of Foreign Affairs of the Republic
of Macedonia[hereinafter referred to as Facts on MNM]
236
Id Facts on the MNM,
237
Dnevnik, 9 June 2005
232
238
Facts on the MNM supra at 51
46
service, or sometimes239 special financial loans, are established to enable them to catch up with
other communities, the disparities between them and others increase. The lack of financial
resources is a problem for the functioning of the newly established Special State Committee on
Minorities tasked with making recommendations to the government with respect to the promotion
of the rights of minorities in all fields of life, composed of one member of the three officially
recognized national and the two linguistic minorities (Vlach and Roma).240
Chapter 4-The Macedonian minority in Greece241
4.1 Legal framework for the protection of minority rights
On the international level, Greece has accepted many international instruments which are relevant
for minority rights .However, it has still not made a declaration on Article 14 of the UN
Convention on the Elimination of All forms of Racial Discrimination., which allows the
Committee for the Elimination of Discrimination to consider individual communications.
Furthermore, it has signed but not yet ratified the Framework Convention for the Protection of
National Minorities, and in addition the authorities have not signified an intention to sign and
ratify the UNESCO Convention against Discrimination in Education or the European Charter for
Regional and Minority Languages.242In this context, it is important to emphasize that the relation
between national and international law are regulated by part three of the Constitution of Greece
(Organization and Functions of the State).243Thus, Article 28, paragraph 1, stipulates that
international conventions and generally recognized rules of international law, when ratified form
an integral part of and take precedence over national legislation.
The national framework is naturally based upon the set of provisions in the Constitution
adopted on June 11th, 1975, in which individual and social rights are regulated within the part
two. Thus, article 4(1) of the Greek Constitution provides with a basic equality clause that all
Greeks are equal before the law.244 Furthermore, the constitutional provisions regulate that all
persons have the right to freely develop their personality and participate in the public life's as
long as they do not infringe the right of the others.245 The principle of equal treatment. is
guaranteed, by providing that all the persons living in Greece enjoy full protection of life and
liberty, irrespective of their nationality, race or language and of religious or political beliefs, and
that exceptions are permitted only in cases provided by international law.246
Further articles, which may be of a relevance to minorities residing in Greece, are article 11 and
12, which guarantee the right to peaceful assembly, and the right to form non-profit associations,
in compliance with law, respectively. Freedom of religion is guaranteed in article 13, which reads
239
Yash Ghai, PUBLIC PARTICIPATION AND MINORITIES, (London, Minority Rights Group
International, 2003)
240
Third Report on Albania, ECRI, 2005, available at http://www.coe.int/T/E/Human_Rights/Ecri/1ECRI/2-Country-by-country_approach/Albania/Albania_CBC_3.asp#P75_4025
241
Due to reasons explained below, Greece refers to the minority as "Slavophone Greeks" or
"Slavo-Macedonians", I shall simply call them Macedonian minority
242
European Commission against Racism and Intolerance, Third Report on Greece, available at
http://www.coe.int/t/E/human%5Frights/ecri/1%2DECRI/2%2DCountry%2Dby%2DCountry%5Fapproach
/Greece/Greece_CBC_3.asp#P103_11509
243
Greek Constitution, available at the website of the Greek Ministry of Justice,
http://www.ministryofjustice.gr/eu2003/constitution.pdf
244
Id
245
Article 5(1), Greek Constitution 1991
246
Article 5(2) Greek Constitution 1991
47
that the enjoyment of civil rights and liberties does not depend upon individual religious beliefs.
However, mainly due to the special relations between the States and the Greek Orthodox Church,
regulated in the Constitution in its first part, there have been many applications lodged with
respect to Greece at the European Court of Human Rights.247 Accordingly, article 14 protects the
freedom of expression, while its third paragraph enumerates the exceptions of the constitutional
prohibition of seizure of newspapers and publications.
As to the citizenship question, in accordance with the Constitution in article 4 (3), citizenship
may be withdrawn only in case of voluntary acquisition of another citizenship or of undertaking
service contrary to national interests in a foreign country, under the conditions and procedures
more specifically provided by law. Based on the former article 19 of the Citizenship Act many
Macedonians have been stripped off their citizenship, and have lost their property, which shall be
discussed in more detail below.
In addition to the Constitutional provisions, Greece has adopted a number of laws, which
provide with certain rights for the minorities, but all of them are only available to the Muslim
minority in Greece. This is due to the fact, that Greece invokes the Lausanne Treaty of 1923
according to which in Greece, there is only a Muslim minority.248In addition, the only case of
positive discrimination formally provided for by the legislature concerns this minority.249
The Code of Civil Procedure250 and the Code of Penal Procedure251 include provisions on the
use of language (appointment of an interpreter), but they are applicable when a subject in the
procedure does not sufficiently know the Greek language. Thus, the Macedonian minority cannot
benefit from this rights, and even more in light of the fact that the Greek authorities in 1982
adopted a decree which declared the Macedonian language as "internationally unrecognized"252
4.2 Implementation of minority rights: identifying positive trends and problems
The official attitude of the Greek authorities toward the Macedonian minority can be briefly
summarized by the response of the government to the Third report on Greece, by the European
Commission against Racism and Intolerance ( hereinafter referred to as ECRI):
“Indeed 2.500.000 Greeks who live in Greek Macedonia identify themselves as
Macedonians ( Makedones). The use of the term 'Macedonian minority' by a small
number of Greeks in Northern Greece speaking a Slavic idiom, usurps the name and the
identity of the above vast majority of Greek Macedonians"
247
See Case of Serif v Greece, Application no. 38178/97, Strasbourg, 16 December 1999; Case of Larissis
and Others v. Greece, Application nos. 23372/94;26377/94;26378/94, Strasbourg 24 February 1998; Case
of Canea Catholic Church v. Greece, Application no. 25528/94, Strasbourg. 16 December 1997, Case of
Kokkinakis v. Greece, Application no. 14307/88,Strasbourg, 25 May 1993
248
Human Rights Watch/Helsinki, DENYING ETHNIC INDENTIY: THE MACEDONIANS IN
GREECE, 1994, available at http://www.hrw.org/reports/pdfs/g/greece/greece945.pdf
249
European Monitoring Centre on Racism and Xenophobia, ANTI-DISCRIMINATION LEGISLATION
IN EU MEMBER STATES, available at
http://europa.eu.int/comm/employment_social/fundamental_rights/pdf/aneval/legel.pdf
250
Article 252, Code of Civil Procedure, unofficial translation available at
http://www.ciemen.org/mercator/butlletins/44-20-gb.htm
251
Article 233, Code of Penal Procedure, unofficial translation available at
http://www.ciemen.org/mercator/butlletins/44-19-gb.htm
252
Balevski, Milco, SOSEDSKI MITSKI PAJAZINI [Neighborly webs of myth],( Nova Makedonija,
Skopje,1994)
48
This position by the Greek government leads to the basic problem faced by the minority in
Greece. Namely, they deny the national identity of its members and claim that the group does not
speak a separate language. On the contrary, the officials tend to perceive them as Greeks who
speak a Slavic idiom. Thus, there are studies, which elaborated, “the distinct Slavic dialect spoken
in certain villages in Greek Macedonia does not necessarily certify the existence of an ethnic
minority."253On the other hand, there are authors, which confirm that there is a sizeable
population in Greece which has a separate ethnic identity and which was put under a number of
measures for assimilation.254 One of the explanations for the non-recognition of the minority is
"that the problem is not the fact that people of Slavonic-speaking origin wish to belong to, and
function as, an ethnic or national minority; it is the name they have chosen —Makedones in the
Greek language" which is used to "define the Greeks inhabitants of Greek Macedonia in the
regional and cultural sense of the term."255 Even if we accept this claim, it cannot be maintained,
that the occurrence in the early 1990s, of "a small group of Slavonic-speaking activists,
presenting themselves as representatives of a (Slav) Macedonian minority" is collateral dimension
of the dispute over the name.256 In addition, some scholars argue that denial on the part of the
Greek government that a Slavic cultural or ethnic group exists in the northern region contributed
to the "rise in pro-FYROM Macedonian national identification and sentiment among Slavicspeakers in Greece".257
After the First World War, on the basis of 1920 Treaty of Sèvres Greece was obliged to
special protection of its minorities, which guaranteed equal rights regardless; of nationality,
language and religious beliefs.258 Based upon obligations toward the minorities which had been
defined by this treaty, Greece introduced the Abecedar. Following the decision to employ the
local Slavic dialect(emphasis added) in the minority schools, the Greek government entrusted to a
three-member committee of specialists the preparation of a primer for "the Slavic speaking
population" , that became known as the “Abecedar (in Latin alphabet, and not Cyrillic) .”259
Iakovos D. Michailidis underlines that the Abecedar was never accepted by the local population,
and was therefore this "experiment never undertaken".260In addition, it is maintained that even if
the Abecedar was successful, the "Slav-Macedonian" , like any other traditional language, had
few if any chances to compete effectively with the official state language which secures economic
253
Vlassis Vlassidis, Veniamin Karakostanoglou, Recycling propaganda: Remarks on Recent Reports on
Greece's "Slavo-Macedonian" minority, in Balkan Studies, Vol. 36/1, Thessaloniki 1995, pp. 151–170.
available at http://www.datatone.com/~angelos/Vlasidis.htm
254
See generally, Hugh Poulton, THE BALKANS: MINORITIES AND STATES IN CONFLICT,
(Minority Rights Publications, London, reprint 1994)
255
Evangelos Kofos, THE UNRESOLVED "DIFFERENCE OVER THE NAME": A GREEK
PERSPECTIVE, in (Kofos and Vlasidis eds., Athens-Skopje: An uneasy symbiosis, 1995-2002, Hellenic
Foundation for European and Foreign Policy (ELIAMEP), Athens, 2003[hereinafter referred to as Kofos
eds.]
256
Id, Kofos eds.
257
Anastasia Karaksidou, Contending Nationalisms in the Macedonian Controversy, in The Politics of
violence Vol. 1, No. 1( Spring 1996), available at http://www.hfg.org/hfg_review/1/karakasidou-2.htm
258
Frckoski et al, MEGJUNARODNO JAVNO PRAVO, [Public International Law] (Tabernakul
Skopje,1994)
259
Iakovos D. Michailidis, Minority Rights and Educational Problems in Greek
Interwar Macedonia: The Case of the Primer “Abecedar”, in Journal of Modern Greek Studies Volume
14.2 (1996) 329-343, available at
http://muse.jhu.edu/journals/journal_of_modern_greek_studies/v014TL/14.2michailidis.html
260
Id
49
and social advancement. 261However, the primer was issued in typical Macedonian form, which
clearly shows that the Greek authorities were precisely distinguishing the linguistic and national
peculiarities of the Macedonian minority.262 This is especially relevant in light of the attempts to
challenge the existence of the minority by asserting that it has always been perceived as of
Bulgarian descent, rather than “Slavo-Macedonian”. 263
Human Rights Watch264 notes that a Decree No. 332 of 1926 ordered the Slavic names of
towns, villages, mountains and rivers changed to Greek names , Law No. 87 of 1936 ordered
Macedonians to change their names to Greek names, while on July 15, 1927, there was a
decree ordering the erasure of all old Slavic inscriptions from churches; and upon which church
services in the Slavic language were forbidden, and Slavs (Macedonians) were forbidden to use
the Slavic (Macedonian) language. The Macedonian language was banned even in personal
communication between parents and children, among villagers, at weddings and work parties, and
in burial rituals. 265 Some authors argue that this were practices which were normally followed in
by nation-states.266 However, as the toponomy remains unchanged up to present, it can be
challenged with the argument that under Article 27, the state can require the use of names it has
chosen in official activities or areas, the individual use of toponomy in a minority language for
non-state
functions
should
be
free
of
state
intervention.267
In 1959, The Government passed a law on forced giving of statements of loyalty, and in
accordance with this law the population in villages near Lerin (Florina), Kostur (Kastoria) and
Kailari was asked to publicly confirm that it did not speak Macedonian.268 There are positions
according to which the oaths were taken by villagers after church service "under yet unknown
circumstances, probably at the initiative of local officials" in no more than three villages and that
they were discontinued once they became known to authorities in Athens.269 These acts were
followed by an internal regulation which in 1967 banned the use of the Macedonian language and
a Constitutional act depriving the Macedonians of their citizenship.270 Besides these formal legal
rules, in 1982 there was a confidential document by the Greek Ministry of public order, sector for
national security which insisted not to employ "Slav speakers" in public services in the Florina
(Lerin) region.271 The document contained information that the "Skopje idiom" was widely used
in the region of Florina and Edessa ( Voden), even by administrative employees, and that it was
established practice to perform songs, music and traditional dances "from Skopje."272 Efforts are
made to diminish the effect of this document, by asserting that it was just a bundle of
recommendations by a national security official, and that there was no evidence if it has ever been
translated into governmental policy.273
4.2.1 Citizenship, repatriation and restoration of property
Citizen is “a person who, by either birth or naturalization, is a member of political community,
owing allegiance to the community and being entitled to enjoy all its civil rights and protections;
261
Vlassidis and Karakostanoglou, supra at 66
See Balevski, supra at 68
263
On the contestations of the separateness of the minority’s identity see generally Dean M. Poulakidas,
Macedonia : far more than a name to Greece, 18 Hastings Int’l & Comp. L. Rev. 397
264
Human Rights Watch/Helsinki, supra at 64
265
John Shea, MACEDONIA AND GREECE: THE STRUGGLE TO DEFINE A NEW BALKAN
NATION, 1997 London: McFarland & Co
266
Vlassis and Karakostanoglou, supra at 69
267
See Varennes supra at 20
268
See Ortakovski, supra at 39
269
Vlassis and Karakostanoglu, supra at 69
270
Id,
271
Balevski, supra at 68
272
Id
273
Vlassis and Karakostanoglu, supra at 69
262
50
a member of the civil state, entitled to all its privileges"274 In light of this defintion, when
analyzing the citizenship issues, it is important to point out that the Greek legal order
differentiates among Greeks by origin (homogeneis,) , who are considered as Greeks regardless of
their citizenship status, and Greeks who do not have Greek national descent (alogeneis), nonGreek even if they posses Greek citizenship275 The use of the concept of allogeneis was the most
common method for depriving both ethnic Turks and to a lesser extent, ethnic Macedonians of
Greek citizenship, during the second half of the twentieth century.276
During the Civil War (1946-49) in Greece, the Macedonians were fighting on the side of the
Communists, and as they were seen as potentially disloyal to the Greek state, on October 1, 1947
Greece passed a decree for the withdrawal of their citizenship.277 As a consequence of the Decree
No. 2536 of August, 23, 1953 numerous Macedonians- refugees from Greece - were deprived of
their Greek citizenship and their properties were confiscated.278
The Greek Nationality Law, Article 19 (repealed in 1998) read:
"a person of non-Greek ethnic origin, who has left Greece with no intention to return,
may be declared as having lost Greek citizenship. This also applies to an allogenis born
and domiciled abroad. His/her minor children living abroad may be declared as having
lost their Greek citizenship if both their parents and their surviving parent have lost it as
well. Decisions on these matters are reached by the Interior Minister, with the concurring
opinion of the Citizenship Council"279
When it comes to repatriation, Greece passed the Law 3370/1955 on the Greek nationality
and Ministerial decree No 106841/29 Dec. 1982 on the free repatriation and return to Greek
citizenship of political refugees of the Greek Civil War. However, the acts are criticized that they
"both accept as a criterion ethnic identity (genos) of the citizens and apparently contradict the
Greek Constitution"280. In practical terms, they discriminate on grounds of ethnic origin, so in
order to apply for Greek citizenship; one would have to express possessing a Greek national
identity. In the Constitution, there is a basic constitutional equality clause, which guarantees "full
protection of life, honour ad liberty irrespective nationality, race or language and of religious or
political beliefs" and exceptions from it are allowed only in accordance with international law.(
Article 5, paragraph 2). In addition, the International Convention for Elimination of all Forms of
Racial Discrimination, which Greece has ratified, in Article 5, obliges the states not to
discriminate and ensure full equality before the law in the enjoyment of certain rights, including
the right to nationality. In that context, though the granting of citizenship is clearly a state's
prerogative, in the sense that the state is not obligated to grant it to any individual, once the state
has established a naturalization process, it must respect the human rights to equality and nondiscrimination in its policies,281 which is applicable to restoration of citizenship as well.
The realisation of property rights of Macedonians in Greece was hindered with the passing of
Law No. 1540 in 1985. 282 The right to property is regulated in Article 17 of the Greek
274
BLACK’S LAW DICTIONARY 237 (7th ed. 1999).
Konstatinos Tsitselikis, Citizenship in Greece: Present challenges for future changes,, University of
Macedonia, Thessalonica, Greece, available at http://www.kemo.gr/gr/index.asp [hereinafter referred to as
Tsitselikis, Citizenship]
276
Id, Tsitselikis, Citizenship
277
See Ortakovski, Vladimir, supra at 39
278
Id,
279
See Tsitselikis, supra at 90
280
Vlassis Vlasidis, Veniamin Karakostanoglou, supra 69
281
See Fernand de Varennes, supra at 20
282
See, Ortakovski , supra at 39
275
51
Constitution, which stipulates that "no one shall be deprived of his property except for public
benefit which must be duly proven, when and as specified by statute and always following full
compensation corresponding to the value of the expropriated property at the time of the court
hearing". Apparently, these constitutional provisions have a questionable application as regards
the Macedonian minority in Greece.
Nevertheless, there are attempts not to justify the instruments, but at least to perceive
them in light of "the Macedonian question on the Balkans, its special and complex relation to the
Greek Civil War, when Greek Macedonia became the target of Yugoslav territorial expansionism
using Slav-Macedonian activists in Greece as a vehicle for these aspirations"283.Thus, Kofos
argues that the return to Greece of thousands of people "with a deeply entrenched SlavMacedonian consciousness and attitude" may not be perceived as repatriation., but as an
"arbitrary transplant of an alien nationalist minority" .284 The result of a possible repatriation
would be:
-
Creation of risks of conflicts,
The domino effect, meaning that similar claims would arise from Albanian Cham
refugees , Bulgarian political exiles as well as from the Thrace and Turkish Muslims
Inevitable mini cultural war at the prize of the history, the culture and the very name of
Macedonia.285
However, legally speaking there must be recognition that the majority should be subjected to the
restraint of fundamental human rights or the desire to arrive at a political compromise that
recognizes minority interests.286
4.3 Case law of the European Court for Human Rights related to the Macedonian minority in
Greece
In the two cases under analysis, the Court found a violation of freedom of association, and in the
second of the right to fair trial as well. With no ambition to generalize, it can be argued that the
findings of the Court raise issues, in view of the obligation not to discriminate in the enjoyment
of freedom of association under the Convention for Elimination of All forms of Racial
Discrimination (Article 5). Furthermore, as it was indicated in the overview of international
instruments, there is an obligation on the states to respect the right set forth in the ICCPR
regardless of, inter alia, language, political or other opinion and national origin. Article 14 of the
ICCPR guarantees the right to be tried without undue delay, which is relevant for Ouranio Toxo
case, while freedom of association is covered in Article 22.
4.3.1 The Case of Sidiropoulos and others v . Greece
The Court in Strasbourg has found a violation of freedom of association by the Greek State,
because of the refusal of the national courts to register an association of the Macedonian minority
in Greece.287 The applicants wanted to form a non-profit association called "Home of Macedonian
283
Id, supra at 11
Evangelos Kofos, Unexpected initiatives : Towards the resettlement of a Slav-Macedonian minority in
Macedonia?, To Vima, June 25, 2003
285
Id
286
See Fernand Varennes, supra at 20
287
Case of Sidiropoulos and others v. Greece ( Application no. 57/1997/), Judgment, Strasbourg, 10 July
1998 [hereinafter referred to as Sidiropoulos]
284
52
Civilization" with headquarters in Florina (Northern Greece), which was supposed to deal with
promotion of the culture of the minority in Greece. However, their request was refused by the
Court of First Instance in Florina because the "true aim of the association was a promotion of the
idea that there is a Macedonian minority in Greece, which is contrary to the country's national
interests, and consequently contrary to law." This conclusion was based upon writings in
newspapers which provided with information that the applicant took part in the Conference of
Security and Co-operation in Europe, where they maintained that there is a Macedonian minority
in Greece, and that one of the applicants in former court proceedings refused to accept that he was
Greek288 The Sallonica Court of Appeal, refused the complaint lodged by the applicants, and held
that the very name of the association envisages specifically Slavic civilization which does not
exist in the region, and that the purpose of using the term "Macedonian" showed intention of the
founders to undermine Greece's territorial integrity.289
The Strasbourg Court had no problems in establishing that the refusal to register the
association had amounted to inference with freedom of association.290 It then went on to examine
if the interference has been "prescribed by law", and found that this requirement was satisfied.
Subsequently, it was the protection of national security and preventing disorder that were held to
be "legitimate aims", and not the objective raised by the Government of upholding Greece's
cultural traditions and historical and cultural symbols291 The last part of the test, was to determine
if the interference was "necessary in a democratic society", by the Courts jurisprudence, this
presupposes that there was "a pressing social need" and that the means are proportional to that
need. In this context, the Court explained:
"That citizens should be able to form a legal entity in order to act collectively in a filed of
mutual interest is one of the most important aspects of the right to freedom of association,
without which that right would be derived of any meaning. The way in which national
legislation enshrines this freedom and its practical application by the authorities reveal
the sate of democracy in the country concerned."292
It went on to emphasise that only convincing and compelling reasons can justify restrictions
to the freedom of association, and that in the same time in determining if the necessity defined in
Article 11, paragraph 2 exists, have "only a limited margin of appreciation".293 Subsequently, the
judgement reaffirms that is primarily the national courts role to asses the evidence, but however,
notes that it is by giving decisive influence in the outcome of the case on press articles, and by
giving regard to the political dispute between Greece and FYROM, domestic courts held that the
association as a danger to Greece's territorial integrity. This amounted to "mere suspicion" on the
true intentions of the applicants.294 Without the threatening nature, it is quite possible that the
European Court's analysis could have ended with a determination that there was no legitimate aim
in denying the application.295 It was also underlined that it was possible that an association can
have aims, other then those in memorandum, but in the present case, it was impossible to
288
Sidiropoulos, para 10
Sidiropoulos, para 11
290
Sidiropoulos, para 31
291
Idem, para 37
292
Idem, para 40
293
Idem, para 40
294
Idem, para 45
289
295
Lance S. Lehnhof, Freedom of religious association: the right of religious organizations to obtain legal
entity status under the European Convention, 2002 B.Y.U. L. Rev. 56 (2002)
53
determine because the association did not have time to take any action, and that according to the
Greek constitution forming of associations cannot be subjected to prior authorization.296The
European Court for Human Rights consequently held that the last part of the test was not
satisfied, namely the "refusal to register the applicant's association was disproportionate to the
objectives pursued", and this constituted a violation of Article 11 of the ECHR.
One of the most important aspects of this judgment is the fact that it stresses, "the existence of
minorities and different cultures in a country is historical fact that a democratic society has to
tolerate and even protect and support according to the principles of international law."297
4.3.2 The case of Ouranio Toxo and Others v. Greece
This case is about the political party of the Macedonians in Greece, called Rainbow founded in
1994, which was from the very beginning not welcomed, and not only by the local population.
Thus, Kofos argues that the activists of the party "chose to be identified as a distinct ‘national’
group, a part of the ‘Macedonian nation’ —the Makedonci" and this was "supported, if not
prompted of by pro-minority activists in Greece and abroad, as also by the Slav Macedonian
nationalists in FYROM".298 In addition, it is said that the poor results of the party at elections
demolished the myth of demolished the myth of a sizeable and ‘oppressed’ minority.299
When the party established its headquarters in Florina, 1995 it affixed a sign with the party’s
name in the two languages spoken in the region, Greek and Macedonian, on its premises. They
included the word “vinozito”, written in the “Slav alphabet”, which means “rainbow” in
Macedonian, but was also the rallying cry of forces who had sought to take the town of Florina
during the civil war in Macedonia.300The priests of the church in Florina and town council called
the population on protests against the party, and on the following night, the police removed the
sign, while after midnight the headquarters have been broken into by a number of people.301 They
did so, ostensibly, because the sign contained Cyrillic "(i.e., Slavic) lettering", which is often
regarded in Greece as somehow threatening to national solidarity.302
In the Chamber judgement Ouranio Toxo and Others v. Greece303. The Strasbourg Court
unanimously found violation of the right to fair trial (Article 6, paragrapgh1 of the ECHR), on
account of the length of the proceedings, and a violation of the freedom association and assembly
( Article 11 of the ECHR). First, the Court held that the fact that the procedure lasted for seven
years and one moth, solely for the investigation of the case, in light of the facts of the case, was
excessive and was in contravention with the requirement of "reasonable time". In addition, what
concerns the freedom of association, the Court noted that Rainbow (Ouranio Toxo) was a legally
constituted party of the Macedonian minority in Greece and putting a sign to the front of its
headquarters with the party’s name written in Macedonian could not constitute in itself a present
and imminent threat to public order. Furthermore, although it acknowledged that the use of the
296
Idem, paras 45-46
Idem, para 41
298
See Kofos eds, supra at 71
299
Id
300
Case of Ouranio Toxo (The Rainbow Party) and Others v. Greece, (Application no. 74989/01)
Judgement, Strasbourg, 20 October 2005,The judgement is available only in French, so this analysis is
based upon a summary by the Registry of the Court, available at
http://www.echr.coe.int/Eng/Press/2005/Oct/ChamberjudgmentOuranioToxovGreece201005.htm#_ftn1
[Hereinafter Ouranio Toxo summary]
301
Case of Oranio Toxo summary
302
See Anastasia Karaksidou, supra at 73
303
Case of Ouranio Toxo (The Rainbow Party) and Others v. Greece, supra at 97
297
54
term "vinozhito"(rainbow) could possibly offend the political views of the majority in Florina, the
Strasbourg court stressed that the risk of causing tension within the community could not in itself
justify interference with freedom of association.304 What is important in representing the attitude
of the authorities towards the Macedonian minority, the judgment points out that they acted
contrary to their roles as promoters of democratic values, and have "clearly incited the town
population to gather in protest and had thus helped to arouse the hostile sentiment of a section of
the population against the applicants." Another aspect of the reasoning of the Court is useful for
the purposes of this paper. Firstly, it is emphasized that the police could have foreseen the danger
of violence and the violations of the freedom of association, but failed to undertake appropriate
measure, for an alleged lack of manpower, for which the Greek Government had not provided
any explanation despite the fact that the when the incidents were foreseeable.305 Secondly, it is
noted that it was the applicants who lodged a complaint to open investigation, and not the public
prosecutor, which is not in line with the duty of competent authorities to take effective
investigative measure when freedom of association is violated by individuals.306 Furthermore, it
was the applicants who have been prosecuted for "sowing discord among the local population”
but were acquitted in 1998.307
Expressions of Slavic cultural or ethnic distinctiveness are not tolerated in north-western
Greece, and persons who utter about such differences are labelled by Greek nationals as traitors,
specifically as "Skopians," a derogatory term used for Macedonia and its citizens and they are
still continue marginalized in the economic life of the region, many facing discrimination in the
job market.308 In addition, “cross-border interaction and exchange among the region's minority
members, including those living in Greece but with relatives in the FYROM, is discouraged and
those who cross the Greek-FYROM border are reported to Greek security agencies.”309
CHAPTER 5-THE MACEDONIAN MINORITY IN BULGARIA
5.1 Legal framework for the protection of minority rights
The Bulgarian Constitution of 1991 makes no explicit mention of the concept of "national
minority".310 In Judgment 2 of 18 February 1998, the Constitutional Court elaborated that there is
no definition of the term in international law as well, that the notion national minority was a term
of convenience, and that it was not necessary for every term of convenience to be present in the
Constitution for its constitutional validity to be recognised.311 However, the equality clause in
Article 6, paragraph 2 among the grounds for non-discrimination enumerates "race,
nationality312, ethnic self-identity, sex, origin, religion, education, opinion, political affiliation,
personal or social status or property status." (emphasis added). Historically, the 1947 Constitution
304
Id
Id
306
Id
307
For reactions of the public, articles from newspapers, statements during the procedure of the trial of the
leaders of Rainbow, see generally in GREECE AGAINST ITS MACEDONIAN MINORITY: THE
RAINBOW TRIAL, Greek Helsinki Monitor ( Etepe, 1998)
308
See Anastasia Karaksidou, supra at 73
309
Id
310
Bulgarian Constitution, State Gazette No 56/13.07.1991, available at the web site of the Bulgarian
Institute for Legal Development, http://www.bild.net/legislation/
311
Decision No. 2 of 18 February 1998, Bulgarian Constitutional Court para 7-11available at
http://www.bild.net/ccourt/1998/2_18_2.htm (in Bulgarian) [hereinafter referred to as Decision 2/1998]
312
It is more likely that the term nationality does not refer to citizenship, but to national belonging
[NARODNOST]
305
55
guaranteed the minorities a right to be educated in their mother tongue and to develop culture313,
which is also mentioned in the above mentioned Decision of the Constitutional Court. The 1991
Constitution, does not stipulate such a right, but a right to citizens whose mother tongues is not
Bulgarian, to use and study their language (so, not education in that language, but a right to
learn it).314 Other provisions, which can be used to the benefit of the minorities can be also found
in the Second Chapter of the Constitution, under the title Fundamental Rights and Obligations of
Citizens. In that context, there are guarantees for freedom of religion, conscience and the
freedom of thought ( Article 37), to express an opinion or to publicize it through words ( Article
38), right to peaceful assembly under condition laid down by law ( Article 43), as well as the right
to develop one's own culture in accordance with ethnic self-identification (Article 56).
One of the provisions which are very important to analyse in respect of the status of the
Macedonian minority, is the Constitutional prohibition of formation of political parties "on
ethnic, racial or religious lines" as well as on parties "which seek the violent usurpation of state"(
Article 11, paragraph 4). This provision has been qualified as an example of "constitutional
authority" for militant democracy, whose meaning and scope are "not self-evident and ultimately
require judicial interpretation".315 Indeed, the Bulgarian Constitutional Court delivered two
decisions, which are connected to the prohibition of forming political parties on the grounds
enumerated above. Namely in 1992, there was a petition to the Court to declare as
unconstitutional the Movement for Rights and Freedoms (political party of the Turkish minority
in Bulgaria), on the grounds of Article 11 (4). In its Decision No. 4, dated 21st of April 1992, the
Court rejected the request and interpreted the provision. The decision clarifies that this provision
had two functions, the first one being the protective, meaning that the objective was to protect the
state and the state authority316 The second purpose of the provision was not to ban political parties
formed by members of ethnic, ethnic, racial or religious minorities, but not to allow the formation
and functioning of parties which are closed for persons who do not share the ethnic, racial or
religious characteristics as the members of the party in question.317
The second provision which proved to be vital for the Macedonian minority, is the stipulation
on freedom of association, Article 44, its second paragraph in particular, which prohibits
organizations to act to the detriment of the country's sovereignty and national integrity, or the
unity of the nation, to incite racial, national, ethnic or religious enmity or to encroach on the
rights and freedoms of citizens; or to establish clandestine or paramilitary structures or shall seek
to attain its aims through violence. In the same time this is a second constitutional norm which
could fall under the auspices of militant forms of democracy. In the absence of a clearer
understanding of the legality of militant democracy, constitutional provisions -explicitly or
implicitly- authorizing militant forms of democracy create ostensible authority for abusive state
action.318 Thus, on the grounds of these provisions, the political party of the Macedonians in
Bulgaria (UMO Ilinden-Pirin), was declared as unconstitutional and consequently dissolved. In
judgment No.1 of 29 February 2000, it was said that all the activities if the party were in
contravention with the Constitution, aiming against the territorial integrity of the State, and the
breach was established even in absence of effective damage.319 The Court stated that the action to
313
See Ortakovski, p.263, supra at 39
Bulgarian Constitution, Article 36, paragraph 1
315
Patrick Macklem, Militant Democracy, Legal Pluralism and the paradox of Self-Determination, paper
presented at Conference on Islam, Budapest, 3-4 June 2005, on file with author
316
Decision No. 4, 21 April 1992, Bulgarian Constitutional Court, available at
http://www.bild.net/ccourt/1992/R4-d1. ( in Bulgarian), [hereinafter referred to as Decision 4/1992]
317
Id, Decision 4/1992
318
See Macklem, supra at 124
319
See UMO Ilinden Pirin, para 27,infra at 98
314
56
declare the party as unconstitutional was in line with Article 22 (2) of IICPR as well as with
Article 11 ( 2) of the ECHR.320 However, the Chamber Judgment of the European Court for
Human Rights delivered recently, in the case of UMO Ilinden-Pirin v Bulgaria (which shall be
analyzed below in detail), proved the contrary. Interestingly, in the decision on the
constitutionality of the party, the Constitutional Court held that the party was not incompatible
with Article 11(4) of the Constitution, since it found that there was no Macedonian ethnos in
Bulgaria, and hence it could not be said the party was based on ethnic origin.321
As regards the right of peaceful assembly and freedom of association, the Bulgarian
authorities have refused to register an association of the Macedonians and conducted a practice of
sweeping bans on its planned meetings. With due regard to all circumstances, this has been
already found as a violation of the right to peaceful assembly in the case of Stankov and UMO
Ilinden v Bulgaria in 2001 (discussed in detail below). However, the practice has continued even
after the judgment by the Strasbourg court, and had resulted in another case against Bulgaria,
which also showed a violation of Article 11 of the ECHR (UMO Ilinden and Ivanov v Bulgaria,
analyzed below). The Stankov case in conjunction with the Ivanov judgment ( which is not yet
final) raise another issue under of the European Convention for Human Rights, in view of the
obligation of the Contracting Parties to abide by the final judgment in cases to which they are
parties.
5.2 Implementation of minority rights: identifying positive trends and problems
The Bulgarian Constitutional Court elaborated that "the existence of a given ethnic, religious and
linguistic minority in the Republic of Bulgaria is not dependent on any state body’s decision, but
requires evidence of objective criteria"322 How is this applied to the Macedonians, it shall be
explained in more detail, below.
In accordance with the census in 2001, in Bulgaria of a total population of 7 928 901, 746
664 persons, or 9.4% of the population belongs to the Turkish ethnic group, 370 908 persons, or
4, 6 % Roma ethnic group, while all the remaining ethnic groups number of 69 204.323 The
1992 census, showed that 10 803 persons identified themselves Macedonians, and 3109 of them
declared Macedonian as their mother tongue.324 However, in the census administered in 1946,
according to some sources 252,908 declared themselves as Macedonians.325 This, variation in
numbers, the authorities explain, is a result of activities of the Communist party, which at the
time encouraged the Macedonian identity and pursued a policy of making forced entries in the
statistical data.326 However, the variation in the numbers of the people who declared as
Macedonians can be also analyzed by the changes of the official policy towards the minority.
In order to fully comprehend the status of the minority, it has to be noted that Bulgaria claims
that the Macedonians are of Bulgarian ethnicity. While, there are arguments that for the Greeks
the very name Macedonians (Makedontsi) is a problem, the Bulgarian attitude was to accept the
320
Id
Id
322
See Decision 2/1998, supra at 126
323
Report submitted by Bulgaria pursuant to Article 25 of the FCNM, available at
http://www.coe.int/T/e/human_rights/Minorities/2._FRAMEWORK_CONVENTION_%28MONITORING
%29/2._Monitoring_mechanism/3._State_Reports_and_UNMIK_Kosovo_Report/1._First_cycle/1st_SR_B
ulgaria.asp#TopOfPage [hereinafter referred to as Bulgarian Report on the FCNM]
324
Id, Bulgarian Report on the FCNM
325
See Ortakovski, p.271, supra at 39
326
See Bulgarian Report on the FCNM, supra at 138
321
57
term as one which defined the Bulgarians of the Macedonian region at large.327 The changes of
the official attitude can be exemplified by the fact that during the period of 1945-48 Bulgaria
fully recognized the Macedonian as a distinct nation, and allowed contacts between Pirin
Macedonia and the, at the time, People's Republic of Macedonia.328 In this period, the cultural
autonomy of Pirin Macedonia was recognized and it was possible to learn the Macedonian
language, teachers from PR of Macedonia were sent to Bulgaria for this cause, followed by
openings of theatres and many cultural organizations.329 Nevertheless, very soon there was a
deterioration of the Yugoslav-Bulgarian relations, which resurrected the claims that there was no
separate Macedonian nation, which logically had reflections on the status of the minority.330
Subsequently, the 1960s, witnessed that Bulgarian authorities, wrote in the new identification
cards of all who declared Macedonians, to be ethnic Bulgarians, followed by political trials with
accusations of Macedonian nationalism.331 In this context, the 1968 Criminal Law was used for
the trials of those accused for "agitation and propaganda against the state" and of forming,
leading or for membership of illegal groups, while the forceful resettlement of the members of the
Macedonian minority, was facilitated with the adoption of the 1976 Law on the People's Militia
which had provisions on administrative punishment without trial.332 Some authors note that in
Bulgaria it was forbidden to sing Macedonian songs, traditional dances, and other traditional
customs, which characterizes the national identity of the Macedonians.333
The denying of the existence of the minority has continued up to present moment. On the
request to the Government to acknowledge that there is Macedonian national minority, the
authorities have responded that the Bulgarian law does not recognize the notion of national
minority and in that regard it could not “better acknowledge” anyone’s existence specifically as a
“national” minority, in addition to the fact when such claims stem from groups of individuals
which effectively enjoyed all rights and freedoms guaranteed to all Bulgarian citizens.334
However, it is essential to put the denial of the existence of the minority in context with the
traditional perception of Bulgaria that the Macedonian people originate from the Bulgarian nation
and that the Macedonian language is simply a dialect of Bulgarian.335 In addition, in so far as the
exercise of political influence and participation is concerned, the general principle of nondiscrimination is not sufficient., considering that as a minority, group’s interests may well be
different from those of the majority; and its culture is likely to be marginalized by that of the
majority336, regardless of the fact that Bulgaria, denies the existence of such minority ( the right to
identity and the questionable practice so states to deny existence of minorities on their territories
shall be discussed below).
5.3. Case law of the European Court for Human Rights related to the Macedonian minority in
Bulgaria
327
Evangelos Kofos, Greece's Macedonian adventure: Controversy over FYROM's Independence and
Recognition, p.361-394, in Van Coufoudakis et al eds. GREECE AND THE NEW BALKANS:
CHALLENGES AND OPPPORTUNITIES Pella, New York, 1999)
328
See Ortakovski, p.269, supra at 39
329
See Balevski, p. 131, supra at 68
330
Id, p 132-134
331
Id, Ortakovski, p.271, supra at 39
332
Id, p.271
333
See, supra at 68
334
See Appendix to ECRI's Third Report on Bulgaria, available at
http://www.coe.int/T/E/human_rights/Ecri/1-ECRI/2-Country-bycountry_approach/Bulgaria/Bulgaria_CBC_3.asp#TopOfPage
335
See Jenny Engström, supra at 30
336
See Yash Ghai, supra at 55
58
The cases analyzed below, exemplify, violations of freedom of assembly in conjunction with
freedom of expression, since the bans on the planned meetings, are mostly a reaction to views
expressed on history and politics. Besides with the ECHR, the violations are in contravention
with the obligation for non- discrimination in the enjoyment of freedom of expression, opinion
and assembly, as set forth in the Convention for Elimination of All Forms of Racial
Discrimination.337 In addition, Article 2 of the ICCPR obliges the Sates to respect the right
guaranteed by the Covenant, to all individuals with no distinction on a number of grounds,
including political or other opinion and national origin.
5.3.1 The case of Stankov and the United Macedonian Organization Ilinden v Bulgaria
The United Macedonian Organization Ilinden, according to its statute worked to unite all the
Macedonians in Bulgaria on regional and cultural basis and to achieve recognition of the
Macedonian minority in Bulgaria, without recourse to violent and unlawful means.338 The
Blagoevgrad Regional and the Supreme Court refused to register the association, on the basis,
that it was directed against the unity of the nation, promoted national, ethnic hatred, was
dangerous for the territorial integrity of Bulgaria, and consequently, its registration would be
contrary to the Constitution.339 In addition, the organization had attempted to organize meetings,
which were banned by the authorities.
The reasoning of the Court followed the traditional test and at the outset, it inquired if there
had been interference. In this regard, it found that there was established practice of the
authorities to ban the assemblies which have been planned by the applicants, which has not
changed since 1992.340Furthermore, the analysis showed that the repeatedly invoked lack of
registration of the applicant association, could not in itself under the applicable law justify the ban
of the meetings, but the alleged danger to public order did satisfy the prescribed by law
requirement.341After determining that there was legitimate aim pursued, the Court continued to
examine if the interference was "necessary in a democratic society". In this context the judgment,
points out that although, Article 11 has it's autonomous meaning, it must be considered in light of
freedom of expression, especially in cases like the present, where the reactions of the authorities
was at least in part as a result of the views presented by the applicants.342 The Court emphasised
that "demanding territorial changes in speeches and demonstrations does not automatically
amount to a threat to the country’s territorial integrity and national security."343 It then gave one
of the most important parts of the reasoning, which reads:
"Freedom of assembly and the right to express one’s views through it are among the
paramount values of a democratic society. The essence of democracy is its capacity to
resolve problems through open debate. Sweeping measures of a preventive nature to
337
Convention for Elimination of All Forms of Racial Discrimination, Article 5, supra at 11
Case of Stankov and the United Macedonian Organization Ilinden v Bulgaria, Application nos 29221/95
and 29225/95, Strasbourg, 2 October 2001[ Hereinafter referred to as Stankov] , para 10 available at
http://www.worldlii.org/eu/cases/ECHR/2001/567.html
339
Stankov paras 12-13
338
340
Stankov paras 79-80
341
Stankov, paras 81-81
Stankov, para 85
343
Stankov, para 97
342
59
suppress freedom of assembly and expression other than in cases of incitement to
violence or rejection of democratic principles (...) do a disservice to democracy and often
even endanger it."344
The Court concluded that by preventing the applicants from dissemination of their views
when there was no real risk of violence and where it could not be determined that they pursued
undemocratic values, the authorities have overstepped their margin of appreciation, and that
consequently the interference was not necessary in a democratic society.345
5.3.2 The Case of the United Macedonian Organization Ilinden and Ivanov v Bulgaria
This case is closely connected to the case of Stankov and UMO Ilinden v Bulgaria. Namely, the
one of the applicants is the same organization (Ilinden), whose subsequent attempts to register
were unsuccessful (1998-99 and 2002-2004), and the practice of prohibiting its meetings to
commemorate historical events has also continued.346
Unlike in the Stankov case, in the present case the Government, had a position that the
meetings of the organization were of a peaceful character.347 The Court concluded that there have
been interferences with the applicants' freedom of assembly on all occasion under examination,
except on three the events.348Therefore, it continued to examine, if the interference was
"prescribed by law". In that regard, it reaffirmed the position in Stankov, that the applicable law
did not expressly require the non-registration of the association, but as it was relied on other
grounds, it accepted that the requirement was satisfied. 349 An interesting aspect in the Court's
reasoning in this part of the judgment, is that although, on some occasions there were no formal
bans, it still accepts that the interference was prescribed by law. However, the European Court,
noted that "when the authorities have grounds to believe that there is a genuine risk that serious
offences may be committed during a public event, they may act pre-emptively", but underlined
that "such a power must however be used sparingly and only when indeed warranted."350 The
aims of the interference claimed by the Government were accepted as legitimate ones.
Subsequently, the judgement emphasizes that with few exceptions, the authorities continued the
practice from the Stankov case, and provided with substantially the same justification for doing
so from the Stankov case, which was consequently held as not necessary in a democratic
society.351 The Court made a very important point, based on the its case law, by stating that an
effective freedom of assembly, does not only presuppose that the state shall not interfere with it,
but it enshrines a duty on part of the state to undertake reasonable and appropriate measures to
enable lawful demonstrations to proceed peacefully.352In the present case, this was not satisfied,
and hence it was held that Bulgaria failed to fulfil the positive obligations under Article 11 of the
344
Id, para 97
Id, paras 110-112
346
The case of The United Macedonian Organization Ilinden and Ivanov v Bulgaria, Application no. .
44079/98, Strasbourg, 20 October 2005, paras 10-11 [hereinafter referred to as UMO Ilinden and Ivanov]
available at
347
Case of UMO Ilinden and Ivanov, para 98
348
Case of UMO Ilinden and Ivanov para 106
349
Id, para 108
350
Id, para 109
351
Id, para 114
352
Id, para115
345
60
ECHR, and based upon this analysis, found that there has been a violation of the freedom of
assembly353
5.3.3 Case of the United Macedonian Organization Ilinden-Pirin and Others v Bulgaria
UMO Illinden Pirin was a political party founded in 1998, but was dissolved since it was declared
as unconstitutional by the Bulgarian Constitutional Court, on the grounds that it was de facto a
successor of the organization Ilinden (from the cases elaborated previously), and that the party
threatened to secede Pirin Macedonia from Bulgaria, which threat constituted an activity aimed
against the territorial integrity of the country within the meaning of Article 44 § 2 of the
Constitution 354
The dissolution of the party was found as amounting to interference within the scope of
Article 11 of the ECHR.355 The European Court, did not accept the arguments of the applicants,
and underlined that the variation from the Constitutional Court's case law, was not such as to
become arbitrary and thus it satisfied the requirement "prescribed by law".356The alleged threat to
national security was accepted as legitimate objective of the interference.357 In analysing if the
interference was "necessary in a democratic society", the judgement emphasizes that it could not
established that the party leaders rejected democratic values and the party had not engaged in any
practical actions which could effectively endanger the country’s territorial integrity (which was
used as grounds for declaring the party unconstitutional).358 Furthermore, the fact that the
applicant party’s political programme was considered incompatible with the current principles
and structures of the Bulgarian State did not mean that it is incompatible with the rules and
principles of democracy.359 In this part of the reasoning, the Court underlined:
"In a democratic society based on the rule of law, political ideas which challenge the
existing order without putting into question the tenets of democracy, and whose
realisation is advocated by peaceful means must be afforded a proper opportunity of
expression through, inter alia, participation in the political process. However shocking
and unacceptable the statements of the applicant party’s leaders and members may appear
to the authorities or the majority of the population and however illegitimate their
demands may be, they do not appear to warrant the impugned interference."360
Consequently, it was held that there was no pressing social need, which required the dissolution
of the party, and thus the interference with Article 11 of the ECHR was not necessary in
democratic society.361These three interrelated judgements clearly show, how besides denial of
right to identity, the minority members have trouble in exercising fundamental rights and how the
European Court, contributes to minority rights protection, though it deals exclusively with
individual rights.
353
Id para 115-117
Case of the United Macedonian Organization Ilinden-Pirin and Others v Bulgaria, Application no.
59489/00, Judgement, Strasbourg, 20 October 2005 [hereinafter UMO Ilinden- Pirin], paras 26-27
355
UMO Ilinden Pirin, para 51
356
UMO Ilinden-Pirin, para 54
357
UMO Ilinden-Pirin, para 55
358
Id, para 58
359
Id, para 61
360
Id, para 61
361
Id, para 62
354
61
Chapter 6-The Macedonian minority in Serbia and Montenegro
6.1 Legal Framework for the protection of minority rights
There are not many studies on the Macedonians in Serbia and Montenegro. Due to the fact, that
more than 90 % of the Macedonians live in Serbia, I shall analyze the Serbian Constitution.362
Thus, Article 13 guarantees equal rights and duties and equal protection before the State and other
authorities, irrespective of race, sex, birth, language, nationality, religion, political or other belief,
level of education, social origin, property status, or any other personal attribute. The Constitution
guarantees freedom of religion (Article 41), freedom of peaceful assembly ( Article 43), freedom
of association( Article 44) and freedom of expression, thought and conscious. (Article 45).363 In
addition, Article 39, provides with the freedom to express national affiliation and culture, and
freedom to use his language and alphabet, followed by a stipulation that citizen is not bound to
declare his national affiliation.
Although it is a well-established international practice to regulate minority protection with
neighbouring countries through means of bilateral acts, the only country with which Republic of
Macedonia, has concluded some form of bilateral regulation, is Serbia and Montenegro. This was
done by concluding an Agreement between, the two countries.364 In accordance with Article 3 of
the Agreement concluded between the Republic of Macedonia and Serbia and Montenegro, the
State Parties have declared that they recognize the right of the minority to use the mother tongue
in public and private life, and the right to have their names written in that language in personal
and official documents. 365The parties agreed they through national legislation, shall enable the
members of the minorities to use their mother tongue in the local administration, and with the
judicial and administrative authorities, as well as the use of topography, names of streets and
institutions in the appropriate languages. The Agreement guarantees that they will avail the
members of the minorities the possibility to learn their mother tongue or to have education in
those languages, through national legal acts. In addition, in Article 5, they obliged that they shall
enable the members of the minorities, to express individually or in community with the other
members of the group, their ethnical, linguistic or religious identity. The Agreement establishes a
special Intergovernmental body, a Commission, with a task to control the implementation of the
concluded agreement.366
6.2 Implementation of minority rights: identifying positive trends and problems
According to 1991 census, in Serbia and Montenegro, there were 47.118 Macedonians or 0, 47 %
of the total population, living mostly in Serbia (46, 046 of all Macedonians), in Kacarevo and
362
Constitution of Serbia, available at the web site of the Serbian Parliament,
http://www.parlament.sr.gov.yu/content/lat/akta/ustav/ustav_1.asp
363
Id
364
Agreement between Republic of Macedonia and Serbia and Montenegro on the protection of the
Macedonian national minority in Serbia and Montenegro, and the Protection of the Serbian and the
Montenegrin national minority in the Republic of Macedonia, 6 July 2004, given to the author by the
Macedonian Ministry of Foreign Affairs [hereinafter referred to as Agreement on minority protection]
365
Id
366
Id, Article 14
62
Jabuka in particular, recognized as a national minority.367 In the census of 2003, only 25,847
persons declared as Macedonians.368
Apparently, by recognizing the Macedonians as national minority, there is a departure; from
the position that Macedonia is just a Southern part of Serbia an that Macedonians have Serbian
ethnicity. This is also confirmed by the fact, that the two countries concluded a bilateral
agreement for minority protection. However, despite declarations, besides advisory help by the
Ministry for Human Rights, there was no financial support in the activities for implementation of
guaranteed rights. In addition, the request for restoration of the previously guaranteed rights to
use the Macedonian language as official and education in the mother tongue, have not been
realized.369 As linguistic rights depend on relative number of individuals and geographic
concentration, it is reasonable to permit some degree of that language's use in state services and
activities370. Some progress was made, when in 2004, in Belgrade formed a National Council of
the Macedonian national minority was constituted, and in turn, when its representative was
included in the Council for National Minorities, institutionally confirming the states of national
minority, which shall provide with opportunities for articulation of the distinctive characteristics
if the group, in accordance with national legislation.371
Conclusion
As far as international instruments are concerned, the research proved that although the Sates are
still not willing to undertake far-reaching obligations with respect to minorities, there is a broad
consensus that they cannot go under certain limits. Thus, forced assimilation is strictly prohibited
and while the principle of non-discrimination is very important, it is not sufficient for minority
rights. In addition, there is still not a document, which insists on collective rights, but the
existence of the community is inherent in provisions, dealing with minority rights. On of the most
important rights, somewhere guaranteed explicitly, while somewhere being implicit, is the right
to identity of minorities, which is an underlying value of the rights, related to minorities.
The basic problem of the Macedonian minority in Greece and Bulgaria is the refusal to accept
the existence of the minority within their jurisdiction, which as consequence has that it cannot
benefit from the rights intended for minority protection, provided for in the national legal
frameworks. The denial of the identity of the minority though legally impermissible, stems from
complex historical and political controversies, which do not appear to be solved in near future.
Consequently, it is even harder for the group itself to preserve its identity when it cannot govern
its own cultural affairs and feed into national plans, particularly on education.372 Thus, from a
universalist-Kantian perspective, both national majority and national minority identities are
constitutionally protected as long as they do not limit the other group's identity or interfere with
367
Report submitted by the Federal Republic of Yugoslavia, pursuant to Article 25, paragraph 2 of the
FCNM, 2002, available et
http://www.coe.int/T/e/human_rights/Minorities/2._FRAMEWORK_CONVENTION_%28MONITORING
%29/2._Monitoring_mechanism/3._State_Reports_and_UNMIK_Kosovo_Report/1._First_cycle/PDF_1st_
SR_FRY.asp#TopOfPage, [hereinafter referred to as Report 2002]
368
See Facts on MNM, supra at 51
369
Id
370
See Fernand Varennes, supra at 20
371
Id
372
See Geoff Gilbert, Autonomy and minority groups: a right in international law?, 35 Cornell Int'l L.J. 307
63
individual autonomy.373 On the other hand, efforts by national minorities to protect their unique
identities and traditions are not attempts to garner special treatment and should be respected. 374
Ironically, a principle in the minority rights, that the existence of minorities is a question of
fact, and not question of law, was established in the Advisory Opinion Greco-Bulgarian
Community by the Permanent Court of International Justice in 1930. 375 In this context, the
Human Rights Committee has stated, in its General Comment 23 that "the existence of an ethnic,
religious or linguistic minority in a given State party does not depend upon a decision by the State
party but requires to be established by objective criteria".376 The Strasbourg Court, as well,
confirmed that the "existence of minorities is a historical fact".377
By denying the right to identity of the persons belonging to the Macedonian minority, Greece
and Bulgaria, deny the very essence of the relation between rights and minorities- "the claim to
distinctiveness" and their contribution to the cultural heritage of mankind"378. As the PCIJ noted
in 1935, "[There] would be no true equality between a majority and a minority if the latter were
deprived of its own institutions, and were consequently compelled to renounce that which
constitutes the very essence of its being as a minority."379
The aforementioned problems of restoration of citizenship of the refugees from the Greek
Civil War, as well as the problems of expressing their own identity and separate characteristics in
both Greece and Bulgaria, are questionable under Kymlicka’s concept of ethnocultural justice.380
Namely, in order to be legitimate nation-building in a liberal democracy must include in
"membership of the nation" all long-term residents, which also would apply to restoration of
citizenship, especially when the process is privileging only persons of Greek descent (the norm is
formally repealed but in fact there is still no improvement).381 Subsequently, nation-building
must promote a pluralist and tolerant conception of national identity and national integration and
in the same time allow the minorities to maintain themselves as distinct societal cultures.382 The
General Comment on article 27 ICCPR, clarifies that the protection of the rights enumerated in it
is "directed towards ensuring the survival and continued development of the cultural, religious
and social identity of the minorities concerned, thus enriching the fabric of society as a whole."383
Even if we accept the objections on the distinctiveness of the Macedonian nation, liberal
States recognize that "territorially concentrated groups" involuntarily concentrated into the state
should not be forced to adopt the majority's national identity.384 On the contrary, the members of
373
Andras Sajo, Protecting nation states and national minorities: a modest case for nationalism in Eastern
Europe, 1993 U. Chi. L. Sch. Roundtable 53
374
Andras Sajo, Id
375
Advisory Opinion Greco-Bulgarian Community by the Permanent Court of International Justice in 1930,
cited from Kymlicka eds, infra at 193
376
Human Rights Committee,General Comment on article 27, supra at 2
377
See Sidiropoulos supra at 102
378
See Patrick Thornberry, supra at 9
379
Advisory Opinion of 6 April 1935 on Minority Schools in Albania, 1935 P.C.I.J. (ser. A/B) No. 64, cited
from Geoff Gilbert, supra at 187
380
Will Kymlicka and Magda Opalski eds, CAN LIBERAL PLURALISM BE EXPORTED? WESTERN
POLTICAL THEORY AND ETHNIC RELATIONS IN EASTERN EUROPE, (Oxford University press,
Oxford, 2001) [hereinafter referred to as Kymlicka eds]
381
Id, Kymlicka eds
382
Id
383
See General Comment, supra at 2
384
Id
64
the minority still face problems in expressing their identity, their views over history in exercising
freedom of association and peaceful assembly, rights to which they are entitled not only by the
national, but by virtue of international norms to which the states have adhered. This, especially
when in accordance with the Bulgarian Constitution international agreements form part of
national legal order and prevail over national legislation385 and with basically the same obligation
in Article 28 of the Greek Constitution.386
As regards what was said so far, it is not constructive to discuss about possible solutions,
which presuppose a group, when the existence of the minority is not recognized, but solution
should be sought within the corpus of individual rights. While the full guarantee of existing
human rights norms may adequately redress minority complaints of discrimination, physical
violence, or land seizures, these norms are not adequate to respond to economic and political
demands.387Nevertheless, although, the rights of expression, association, and privacy remain
essentially individualistic in their outlook, they also protect minority views and cultures. 388 And
when, these rights are violated within a particular state, the minority (through its members), may
theoretically, try to seek redress by applying to the European Court for Human Rights, as it was
illustrated before. So far, the Court in Strasbourg has considered the protection of the right to
identity (Sideropoulos v Greece) and political participation (dissolution of political parties,
freedom of expression and assembly, even political representation).389 The case law of the
European court of Human Rights suggests "the combination of rights to freedom of expression
and freedom of assembly for minority groups show how political participation for such groups
can be upheld through a judicial process". The Court has, however, with regard to language
rights, held that these rights of minorities are limited to the right not to be discriminated in the
enjoyment of the Convention rights.
When it comes to Serbia and Albania, the situation is largely better. The main inconvenience
in Albania is the concept of the so-called minority zones, in accordance, which, minorities enjoy
the guaranteed rights only in those zones where they are recognized as such. Thus, the
Macedonians, which do not reside in the only recognized zone, have a problem in enjoying the
rights guaranteed by the Constitution. The whole conception of universal and human rights
suffers when some individuals or groups are denied rights on the grounds of their religion,
language or colour,390 even in cases such as this one, when the rights as such, are not denied but
their effective exercise. In both, Serbia and Albania, there are problems with funding, especially
in the fields of culture. Having a publicly funded education in one's mother tongue is crucial
because it guarantees the passing of the language and its associated traditions to the future
generations.391 Furthermore, there is ample room for improvement of the political participation,
especially when participation in public affairs by minorities is central to their sense of identity
and essential to the protection of their interests. 392 The problem of unequal distribution of
financial and other resources remains an open question, but no constitutional or human rights
385
Article 5, Constitution of Bulgaria, supra at 125
Constitution of Greece, supra at 59
387
Hurst Hannum, Rethinking Self-Determination, 34 Va. J. Int'l L. 1,(1993)
388
Id
389
Roberta Medda-Windischer, The European Court for Human Rights and Minority Rights, in European
Integration, Vol. 25 (3), September, 2003, available at
http://taylorandfrancis.metapress.com/openurl.asp?genre=article&issn=07036337&volume=25&issue=3&spage=249
390
See Yash Ghai supra at 55
391
See Kymlicka, eds, supra at 182
392
See Yash Ghai supra at 55
386
65
principle exists which would guarantee equal distribution of resources.393 The granting of special
subsidies remains a matter of government discretion although the State should not discriminate
among members within the same class of beneficiaries. 394In these two countries answers, can and
should be found through an integrationist approach, which values minority cultures and identities,
but seeks to establish a political system in which all citizens participate equally, and provides
constitutional and political incentives for people of different groups to cooperate.395
393
See Andras Sajo supra at 188
Id
395
Id
394
66
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http://muse.jhu.edu/journals/journal_of_modern_greek_studies/v014TL/14.2michailidis.html
Jenny Engström, The Power of Perception: The Impact of the Macedonian Question on Interethnic Relations in the Republic of Macedonia, in The Global Review of Ethnopolitics Vol. 1, no.
3, March 2002, 3-17, available at
http://www.ethnopolitics.org/archive/volume_I/issue_3/engstrom.pdf
John R. Valentine, Towards a definition of national minority,32 Denv. J. Int'l L. & Pol'y 445
(2004)
Konstatinos Tsitselikis, Citizenship in Greece: Present challenges for future changes,, University
of Macedonia, Thessalonica, Greece, available at http://www.kemo.gr/gr/index.asp
Lance S. Lehnhof, Freedom of religious association: the right of religious organizations to obtain
legal entity status under the European Convention, 2002 B.Y.U. L. Rev. 56 (2002)
Patrick Macklem, Militant Democracy, Legal Pluralism and the paradox of Self-Determination,
paper presented at a Conference on Islam Budapest,3-4 June 2005, on file with author
Roberta Medda-Windischer, The European Court for Human Rights and Minority Rights, in
European Integration, Vol. 25 (3), September, 2003, available at
http://taylorandfrancis.metapress.com/openurl.asp?genre=article&issn=07036337&volume=25&issue=3&spage=249
68
Vlassis Vlassidis, Veniamin Karakostanoglou, Recycling propaganda: Remarks on Recent
Reports on Greece's "Slavo-Macedonian" minority, in Balkan Studies, Vol. 36/1, Thessaloniki
1995, pp. 151–170 available at http://www.datatone.com/~angelos/Vlasidis.htm
Albania
Constitution of Albania, approved by the Parliament on 21 October 2003, available at the web
site of the Albanian Council of Ministers
http://www.keshilliministrave.al/english/kushtetuta/kushtetuta%20e%20Shqiperise%201.htm
Report submitted by Albania pursuant to Article 25 of the Framework Convention of National
Minorities, 2001, available at
http://www.coe.int/T/e/human_rights/Minorities/2._FRAMEWORK_CONVENTION_%28MON
ITORING%29/2._Monitoring_mechanism/3._State_Reports_and_UNMIK_Kosovo_Report/1._Fi
rst_cycle/1st_SR_Albania.asp#TopOfPage
Third Report on Albania, ECRI, 2005, available at http://www.coe.int/T/E/Human_Rights/Ecri/1ECRI/2-Country-by-country_approach/Albania/Albania_CBC_3.asp#P75_4025
Bulgaria
Bulgarian Constitution, State Gazette No 56/13.07.1991, available at the web site of the
Bulgarian Institute for Legal Development, http://www.bild.net/legislation/
Decision No. 2 of 18 February 1998, Bulgarian Constitutional Court available at
http://www.bild.net/ccourt/1998/2_18_2.htm (in Bulgarian)
Decision No. 4, 21 April 1992, Bulgarian Constitutional Court, available at
http://www.bild.net/ccourt/1992/R4-d1. (In Bulgarian)
Report submitted by Bulgaria pursuant to Article 25 of the FCNM, available at
http://www.coe.int/T/e/human_rights/Minorities/2._FRAMEWORK_CONVENTION_%28MON
ITORING%29/2._Monitoring_mechanism/3._State_Reports_and_UNMIK_Kosovo_Report/1._Fi
rst_cycle/1st_SR_Bulgaria.asp#TopOfPage
European Commission against Racism and Intolerance, Third Report on Bulgaria, available at
http://www.coe.int/T/E/human_rights/Ecri/1-ECRI/2-Country-bycountry_approach/Bulgaria/Bulgaria_CBC_3.asp#TopOfPage
Greece
European Commission against Racism and Intolerance, Third Report on Greece, available at
http://www.coe.int/t/E/human%5Frights/ecri/1%2DECRI/2%2DCountry%2Dby%2DCountry%5
Fapproach/Greece/Greece_CBC_3.asp#P103_11509
Greek Constitution, available at the website of the Greek Ministry of Justice
European Monitoring Centre on Racism and Xenophobia, ANTI-DISCRIMINATION
LEGISLATION IN EU MEMBER STATES, available at
http://europa.eu.int/comm/employment_social/fundamental_rights/pdf/aneval/legel.pdf
Code of Civil Procedure, article 252, unofficial translation available at
http://www.ciemen.org/mercator/butlletins/44-20-gb.htm
Article 233, Code of Penal Procedure, unofficial translation available at
http://www.ciemen.org/mercator/butlletins/44-19-gb.htm
Macedonia
Fakti za Makedonskoto Nacionalno Malcinstvo vo sosednite zemji[ Facts on the Macedonian
National Minority in the Neighboring Countries] Ministry of Foreign Affairs of the Republic of
Macedonia
Constitution of the Republic of Macedonia, available at
http://www.mlrc.org.mk/ustav_i_amandmani.htm
69
Serbia and Montenegro
Constitution of Serbia, available at the web site of the Serbian Parliament,
http://www.parlament.sr.gov.yu/content/lat/akta/ustav/ustav_1.asp
Agreement between Republic of Macedonia and Serbia and Montenegro on the protection of the
Macedonian national minority in Serbia and Montenegro, and the Protection of the Serbian and
the Montenegrin national minority in the Republic of Macedonia, 6 July 2004, Macedonian
Ministry of Foreign Affairs
Report submitted by the Federal Republic of Yugoslavia, pursuant to Article 25, paragraph 2 of
the FCNM, 2002, available et
http://www.coe.int/T/e/human_rights/Minorities/2._FRAMEWORK_CONVENTION_%28MON
ITORING%29/2._Monitoring_mechanism/3._State_Reports_and_UNMIK_Kosovo_Report/1._Fi
rst_cycle/PDF_1st_SR_FRY.asp#TopOfPage
Table of cases
(all cases available at http://www.echr.coe/int)
Case of Serif v Greece, Application no. 38178/97, Strasbourg, 16 December 1999;
Case of Larissis and Others v. Greece, Application nos. 23372/94;26377/94;26378/94,
Strasbourg 24 February 1998;
Case of Canea Catholic Church v. Greece, Application no. 25528/94, Strasbourg. 16 December
1997,
Case of Kokkinakis v. Greece, Application no. 14307/88, Strasbourg, 25 May 1993
Case of Ouranio Toxo (The Rainbow Party) and Others v. Greece, (Application no. 74989/01)
Judgement, Strasbourg, 20 October 2005
http://www.echr.coe.int/Eng/Press/2005/Oct/ChamberjudgmentOuranioToxovGreece201005.htm
#_ftn1
Case of Sidiropoulos and others v. Greece (Application no. 57/1997/), Judgment, Strasbourg, 10
July 1998,
Case of Stankov and the United Macedonian Organization Ilinden v Bulgaria, Application nos
29221/95 and 29225/95, Strasbourg, 2 October 2001
Case of The United Macedonian Organization Ilinden and Ivanov v Bulgaria, Application no. .
44079/98, Strasbourg, 20 October 2005,
Case of the United Macedonian Organization Ilinden-Pirin and Others v Bulgaria, Application no.
59489/00, Judgement, Strasbourg, 20 October 2005
Advisory Opinion Greco-Bulgarian Community by the Permanent Court of International Justice
in 1930
Newspapers:
Dnevnik, 9 June 2005
To Vima, June 25 2003,Evangelos Kofos, Unexpected initiatives : Towards the resettlement of a
Slav-Macedonian minority in Macedonia?
Kathimerini March 4,1990
70
THE DIFFERING TAX TREATMENT OF INVESTMENT ADVISORY FEES AND BROKERAGE
FEES; A GENERAL ANALYSIS AND AN ANALYSIS IN THE CONTEXT OF CHARITABLE
INVESTMENTS
BARRY RICKERT396
I.
Introduction
Investing in securities has inherent risks. The specific securities in an investor’s portfolio may
plummet overnight, the market could crash, or an investment professional could engage in
fraudulent activity, leading to an investor loss. A 2002 poll concluded that forty percent of
Americans had at least $10,000 invested in the stock market at that time.397 Considering the large
percentage of Americans investing in securities, it would seem rational to expect that tax laws
would be written in a way that encourages taxpayers to seek investment professionals who are
held to high standards of conduct. However, the tax laws not only fail to provide incentives for
taxpayers to seek the advisors with the highest degree of fiduciary duties, but they actually favor
the use of investment professionals with the least accountability. The message being sent to
individual investors is clear: “the lower the fiduciary duty, the better the tax consequences.” This
article will explore the current tax laws, analyze the policy considerations and propose
alternatives to the current system, especially as regards individual taxpayers.
The fiduciary duty implications discussed in this paper are mainly addressed in the context of
taxable persons (individual taxpayers); however, the differing duties are also applicable to the
investment advisors and brokers hired by charitable organizations. Trustees of charitable trusts,
in making investment decisions, are “under a duty similar to that of the trustee of a private
trust.”398 The Introduction of the Restatement (Third) of Trusts summarized principles of
prudence designed to instruct trustees.399 One of those principles is that “trustees have a duty to
avoid fees and other costs that are not justified by the needs and realistic objectives of the trust’s
investment program.”400 Because trustees of charitable trusts have a duty to avoid unjustified fees
and costs, an analysis of the fiduciary consequences of hiring an investment advisor or a broker is
relevant to the management of such trusts.
Generally speaking, investment advisory fees may be deducted under Internal Revenue Code
(“IRC”) § 212(2)401 if: (1) an individual taxpayer elects to itemize his402 deductions, pursuant to
396
Juris Doctor Candidate, Pace University School of Law (May 2006); Student Attorney in Pace Law’s
Securities Arbitration Clinic; B.A., Villanova University. Many thanks to Professor Bridget J. Crawford,
Associate Professor of Law, Pace University School of Law, for her invaluable consultation and assistance
with this article. Thanks also to Ian Yankwitt, a registered investment advisor, who provided valuable
insight on many of the topics presented.
397
See J. Brent Wilkins, Comment, The Sarbanes-Oxley Act of 2002: The Ripple Effects of Restoring
Shareholder Confidence, 29 S. Ill. U. L. J. 339 (2005).
398
Marion Fremont-Smith, GOVERNING NONPROFIT ORGANIZATIONS (Belknap, Harvard 2004) at 190-191
(citing Restatement (Second) of Trusts, §389 (revised)).
399
Fremont-Smith at 191 (citing Restatement (Third) of Trusts: Prudent Investor Rule, Introductory Note).
400
Id.
401
Unless otherwise provided all citations to the IRC are to the Internal Revenue Code of 1986, as
amended.
71
IRC § 67(e); and (2) only to the extent that those fees exceed two-percent of the taxpayer’s
adjusted gross income.403 Brokerage fees, in contrast, are treated as capital expenditures,404 which
are proper adjustments to basis.405 Therefore, when a taxpayer sells a security with a higher basis
(due to brokerage fee adjustments), he does not recognize as much gain as he would without the
basis adjustment—thereby reducing his overall tax liability.
Section II of this article describes the various types of fees that taxpayers incur in investing in
securities. Section III analyzes how the tax law treats investment advisory fees versus brokerage
fees. Section IV examines the legislative history of particular sections of the IRC in order to
understand Congress’ intent in enacting them. Then section V analyzes the duties that investment
advisors and brokers owe to their clients. Section VI scrutinizes the policy implications of the
current Code’s differing treatment of brokerage fees and investment advisory fees. Section VII
looks at the practical implications of this differing treatment in the context of charitable
organizations and analyzes the ways in which both private foundations and public charities
should address the issues. Finally, section VIII proposes revisions to the current Code to better
align the IRC with investors’ expectations for their financial professionals.
II.
Fees that Taxpayers Incur in Securities Investments
A. Types of Financial Services Professionals:
Although the National Association of Securities Dealers (“NASD”) 406 lists many designations407
used to describe investment professionals, there are two main categories: (1) brokers and (2)
registered investment advisors.408 Brokers are regulated by the NASD and investment advisors
are governed by the Securities and Exchange Commission (“SEC”).409 Investment advisors are
defined in the Investment Advisors Act (“IAA”) as,
402
Use of the masculine pronoun throughout this paper is not meant to favor one gender, but is substituted
in place of “his or her” for improved readability. See IRC § 7701(o)(1)(3) (providing that words importing
the masculine gender include the feminine as well).
403
See IRC § 67(a).
404
See Treasury Regulation (“Regulation”) § 1.263(a)-2(e).
405
See IRC § 1016(a).
406
The NASD is a self regulated organization which serves as the primary private-sector regulator of
America’s securities industry. It oversees the activities of over 5,100 brokerage firms, and more than
657,690 registered securities representatives. The NASD licenses individuals and admits firms to the
industry, writes rules governing their behavior, ensures regulatory compliance and sanctions those who do
not comply. NASD also operates the largest securities dispute resolution forum in the world—processing
over 8,000 arbitrations and 1,000 mediations per year. See the NASD website, available at www.nasd.com
(last visited February 21, 2006).
407
To view a complete list of NASD’s professional designations and descriptions of each see
http://apps.nasd.com/investor_Information/resources/designations/AllDesigByAcronym.asp (last visited
February 21, 2006).
408
See Dean Starkman, ISO: An Advisor to Trust, Washington Post (September 18, 2005).
409
The SEC was established by Congress in 1934 to enforce the Securities Act of 1933 and the Securities
Exchange Act of 1934, promote stability in the markets and to protect investors. The SEC requires
publicly-traded companies to disclose meaningful financial and other information to the public. Further,
the SEC oversees stock exchanges, broker-dealers, investment advisors, mutual funds, and public utility
holding companies. The primary concern of the SEC is to promote the disclosure of important information,
enforcing the securities laws, and protecting investors who interact with these various organizations or
individuals. See the SEC website, available at www.sec.gov (last visited February 21, 2006).
72
…any person who, for compensation, engages in the business of advising others,
either directly or through publications or writings, as to the value of securities or
as to the advisability of investing in, purchasing, or selling securities, or who, for
compensation and as part of a regular business, issues or promulgates analyses or
reports concerning securities…410
The definition specifically excludes other professionals from this definition, including brokers, so
long as the broker’s “…performance of such service is solely incidental to the conduct of his
business as a broker or dealer and receives no special compensation therefor…”411 Brokers are
defined under the Securities Exchange Act (“SEA”) as “…any person engaged in the business of
effecting transactions in securities for the account of others.”412 The core role of a broker is to
execute transactions for customers—no other investment professional can perform this
function.413 Brokers may provide a wide range of services for their clients related to the securities
transaction, such as research and advice prior to effectuating a trade, but for the most part, their
function is execution of trades.414
B. Common Fee Structures:
According to the NASD, investment professionals are most commonly paid in one or more of the
following ways: (1) hourly fee; (2) fee-only; (3) commissions on the investment products they
sell; (4) a percentage of the value of the assets they manage; and (5) a combination of fees and
commissions.415 This article will examine in detail three of these: commissions; fee-only; and
fee-based accounts.416
A. Commissions:
For investment professionals who charge commissions, they typically earn them on a transaction
by transaction basis.417 Brokers are the only investment professionals who are authorized to
charge commissions.418 To the extent that commissions depend on the volume of transactions,
there is a built-in incentive for brokers to trade frequently (whether or not such trading is
necessary for that particular investor).419 Commission fees are not only incurred through the use
of live brokers. Several companies primarily offer brokerage services online or via automatedservice telephone for customers to effectuate transactions themselves without the assistance of a
broker. 420 Even firms that primarily market live brokers, also offer online and telephonic
services.
410
IAA §202(a)(11), 15 U.S.C. §80b-2(a)(11).
IAA § 202(a)(11)(C), 15 U.S.C. §80b-2(a)(11)(C).
412
SEA §3(a)(4)(A), 15 U.S.C. §78c(4)(A).
413
See Barbara Black, Brokers and Advisors – What’s in a Name?, 11 Fordham J. Corp. & Fin. L. 31, 36
(2005).
414
Id.
415
See http://apps.nasd.com/investor%5FInformation/resources/designations/ (last visited February 21,
2006).
416
Interview with Ian Yankwitt (“Yankwitt Interview”), in White Plains, N.Y. (October 27, 2005).
417
Id.
418
Id. (Mr. Yankwitt noted that some investment advisors may also be brokers; in which case they may
charge commissions).
419
See discussion infra Section V.A.ii.
420
Four major companies in this category are: E*Trade, Scottrade, Fidelity and Ameritrade.
411
73
Some examples can best illustrate the actual fees that industry-leading companies charge their
customers in brokerage commissions. For broker-assisted trades, Charles Schwab’s commission
rates range from $35 plus 1.70% of the principal trade size, for trades between $0-$2,499, and
$270 plus 0.09% of the trade size for trades of $500,000 and over.421 Commissions for executing
trades online range from $9.95 per trade, to $19.95 per trade.422 Automated phone stock trade
commission rates range from $14.95 per trade to $29.95 per trade—based on the frequency of a
customer’s trading.423 Vanguard offers similar services. For broker-assisted transactions,
Vanguard’s standard commission rate is $45 plus $0.05 per share.424 The standard commission
rate for online-transactions is the greater of $25 or $0.025 per share.425 Similarly, Ameriprise
Financial charges $75 per trade of 1,000 shares or less for broker-assisted transactions.426 For
online trades, Ameriprise charges $19.95 for trades of 1,000 shares or less.427
Several companies place their primary focus on services which allow investors to execute their
trades online without the assistance of a broker. For example, E*Trade’s commissions range
from $6.99 to $9.99 per trade based on the number of trades per quarter.428 E*Trade recently has
offered one-hundred free trades to persons opening new accounts.429 Ameritrade customers can
trade unlimited shares at a rate of $10.99 per transaction online.430 Scottrade boasts of $7 per
transaction commissions on its online trading.431 Fidelity Investments charges a standard
commission rate of $19.95 per trade and as low as $8.00 per trade for persons with $1,000,000 in
household assets or who perform 120 trades per year and have $25,000 in household assets.432
Because the commission fees are notably less expensive with online transactions, it is logical to
surmise that some level of advise is contemplated for the use of a live broker.
B. Fee-Only:
In a “fee-only” type arrangement the investment professional charges a either a flat annual fee or
a flat percentage based on the size of the account and is indifferent to the number of transactions
that occur.433 Investment advisers normally charge their clients fees in this manner.434 Ameriprise
describes this type of an account as one in which “[y]our Ameriprise financial advisor may
charge a flat, fixed fee for your planning services based on your financial goals and advice
needs.”435 Charles Schwab offers two fee accounts: (1) “Schwab Portfolios™ with Advised
Investing,” and (2) “Schwab Advisor Network®.”436 “Schwab Portfolios™” charges 1.25% of
the eligible assets in the account and “Schwab Advisor Network®” charges an average of 1% of
421
See Charles Schwab website, available at www.schwab.com (last visited February 21, 2006).
Id.
423
Id.
424
See Vanguard website, available at www.vanguard.com (last visited February 21, 2006).
425
Id.
426
See Ameriprise Financial website, available at www.ameriprise.com (last visited February 21, 2006).
427
Id.
428
See E*Trade Financial website, available at www.etrade.com (last visited December 1, 2005).
429
Id.
430
See Ameritrade website, available at www.ameritrade.com (last visited February 21, 2006).
431
See Scottrade website, available at www.scottrade.com (last visited February 21, 2006).
432
See Fidelity Investments website, available at www.fidelity.com (last visited February 21, 2006).
433
Id.
434
Id.
435
See Ameriprise website, supra note 31.
436
See Charles Schwab website, supra note 26, at
http://www.schwab.com/public/schwab/home/advice/advised_investing?cmsid=P993478&lvl1=home&lvl2=advice&refid=P-1056397&refpid=P-998828 (last visited February 21, 2006).
422
74
the assets under management.437 Thus the fee-only arrangement, unlike a commission
arrangement, is indifferent to the quantity of transactions made on an account.
C. Fee-based accounts:
In the case of fee-based accounts, companies either charge both fees and commissions or charge
fees and receive other revenue streams that are commission-like.438 For these account, as in feeonly accounts, the fees are generated based on the amount of assets under management.439 In feebased accounts, however, the investment professional receives additional revenue, either from
commissions, 12(b)(1) fees or from other revenue sharing arrangements, depending on the
products purchased or sold by the client.440 When major brokerage firms began offering feebased accounts in 1999, there was some debate as to whether brokers would be regulated under
the IAA when servicing such accounts because the charges were based both on commissions and
advice-related fees.441 On April 12, 2005, however, the SEC adopted Rule 202(a)(11)-1, which
eliminated “no special compensation”442 as a requirement for exclusion from the statutory
definition.443 Rule 202(a)(11)-1 excludes brokers who use fee-based accounts from the definition
of investment advisors. Therefore, brokers remain excluded from IAA provisions when using
fee-based accounts.
Several companies currently offer fee-based accounts. Consider, for example, Ameriprise
Financial. That company explains that its asset-based fee accounts operate as follows:
Ameriprise Financial Services also offers other fee-based advisory services
available in separate “wrap accounts.” Part of the annual asset-based fee for the
advice and related services on the assets in the wrap account is paid to your
advisor. This fee includes transactional fees and could be ideal for clients who
prefer not to pay fees for each transaction like they would in a typical brokerage
account.444
Thus, Ameriprise and its brokers may enjoy the lower fiduciary duty standards imposed on
brokers while offering an investment advisory type account. Charles Schwab also offers two
types of fee-based accounts: “Advised Investing Signature,” and “Schwab Private Client™.”445
In the descriptions of both accounts, some level of advice is contemplated, yet a footnote is
careful to disclose that the accounts are “brokerage accounts.” The footnote states:
These are brokerage services. The Securities and Exchange Commission
requires all broker-dealers who give brokerage advice for a fee to make the
following disclosure. Accounts enrolled in these services are brokerage accounts
and not advisory accounts. Our interests may not always be the same as yours.
437
Id.
See Yankwitt Interview, supra note 21.
439
Id.
440
Id.
441
See Black, supra note 18, at 33.
442
See IAA, supra note 16.
443
Rule 202(a)(11)-1, 17 C.F.R. §275.202(a)(11)-1.
444
See Ameriprise Financial website, supra note 31.
445
See Charles Schwab website, supra note 26, at
http://www.schwab.com/public/schwab/home/advice/advised_investing?cmsid=P993478&lvl1=home&lvl2=advice&refid=P-1056397&refpid=P-998828 (last visited February 21, 2006).
438
75
Please ask us questions to make sure you understand your rights and our
obligations to you, including the extent of our obligations to disclose conflicts of
interest and to act in your best interest and to act in your best interest. We are
paid both by you and, sometimes, by people who compensate us based on what
you buy. Therefore, our profits, and our salespersons’ compensation, may vary
by product and over time. Please call us at 888-878-3892 if you have questions
about the difference between a brokerage service and an advisory service.446
The “Advised Investing Signature” account charges 0.50% on eligible assets, with a $250
quarterly minimum charge.447 The first 60 equity trades per year will not incur any
commission charges.448 The minimum assets needed to maintain this account is
$150,000.449 The fees incurred in a “Schwab Private Client™” account are a maximum
of 0.75% on eligible assets, with a minimum quarterly charge of $1,000.450 The first 120
equity trades per year will not incur any commission charges.451 The minimum amount
of assets in this account is $500,000.452
The fee-based account is a compelling example of the danger of providing preferential
tax treatment for brokerage fees. Firms have successfully classified these accounts as
brokerage accounts, thereby maintaining a lower fiduciary duty standard. Fee-based
accounts, however, resemble investment advisory accounts in that they do not charge fees
based on a transactional basis. However, as the Schwab footnote states, brokers are paid
by the customers and sometimes “by people who compensate us based on what you
buy.”453 There is a potential danger that brokers could make recommendations based on
more than what is in a customer’s best interest. An investor could foreseeably make an
investment decision based on preferable tax treatment without considering the potentially
harmful fiduciary consequences.454
III.
How the Internal Revenue Code Treats Investment Advisory Fees and Brokerage Fees
A. Investment Advisory Fees:
Private investors frequently seek assistance from professionals when making investment
decisions. Investment advisors almost always charge their clients fees for services rendered.
Generally speaking, investment advisory fees are considered personal expenses and therefore are
not deductible under IRC § 262(a).455 Yet, it will be very difficult for taxpayers to receive a tax
benefit in connection with the fees paid for investment advice due to the narrow constraints of the
IRC. Therefore, taxpayers must pay nearly all investment advisory fees out-of-pocket and likely
are not able to deduct any of these expenses.
446
Id.
Id.
448
Id.
449
Id.
450
Id.
451
Id.
452
Id.
453
See Schwab, supra note 51, and accompanying text.
454
See discussion infra Section V.
455
See IRC § 262(a).
447
76
As a preliminary matter, a taxpayer will not be concerned about the deductibility of investment
advisory fees unless he itemizes his deductions. IRC § 63(e) states in relevant part “[u]nless an
individual makes an election under this subsection for the taxable year, no itemized deduction
shall be allowed for the taxable year.”456 Once a taxpayer makes an election under IRC § 63(e)
to itemize his/her deductions, the analysis turns to whether the fees paid to an investment advisor
may be deductible. IRC § 212(2) allows for a deduction of “all the ordinary and necessary
expenses paid or incurred during the taxable year…(2) for the management, conservation, or
maintenance of property held for the production of income.”457 Treasury Regulation
(“Regulation”) § 1.212-1(b) defines income for the purposes of § 212 as: “… not merely income
of the taxable year but also income which the taxpayer has realized in a prior taxable year or may
realize in subsequent taxable years; and is not confined to recurring income but applies as well to
gains from the disposition of property.”458 Regulation § 1.212-1(g) sets forth an example of a
qualifying expenditure:
[f]ees for services of investment counsel, custodial fees, clerical help, office rent,
and similar expenses paid or incurred by a taxpayer in connection with
investments held by him are deductible under section 212 only if (1) they are
paid or incurred by the taxpayer for the production of income; and (2) they are
ordinary and necessary under all the circumstances, having regard to the type of
investment and to the relation of the taxpayer to such investment.459
Case law provides further guidance on what types of expenses may be deducted under § 212.
The Tax Court, in Honodel v. Commissioner460 set forth the basic rule that “[f]ees paid for
investment counsel and advice concerning existing and future or potential investments have been
held to be deductible as ‘ordinary and necessary expenses paid or incurred by an individual
during the taxable year for the production or collection of income.’”461 Courts, in determining
whether expenses fall under § 212, look to “whether the services were performed in the process
of acquisition or for investment advice.”462 Thus fees paid to investment advisors that satisfy the
requirements of § 212 may be deductible as a miscellaneous itemized deduction.
Miscellaneous itemized deductions are itemized deductions other than those specifically listed
under IRC § 67(b).463 Section 212 deductions are not listed under section 67(b), and thus are
classified as miscellaneous itemized deductions. Further Regulation § 1.67-1T(ii) provides an
example of an expense that would be classified as a miscellaneous itemized deduction:
“[e]xpenses for the production or collection of income for which a deduction is otherwise
allowable under section 212(1) and (2), such as investment advisory fees, subscriptions to
investment advisory publications…”464
If a taxpayer successfully classifies fees paid to an investment advisor as a miscellaneous
itemized deduction under § 212, there is another step in determining whether that expense will be
recognized as a deduction. A taxpayer still must comply with IRC § 67’s two-percent floor on
456
Id.
Id.
458
Id.
459
Id.
460
76 T.C. 351, 364 (1981)
461
Id.
462
Id. at 365.
463
See IRC § 67(b).
464
Id.
457
77
miscellaneous itemized deductions. As a general rule under IRC § 67(a), “[i]n the case of an
individual, the miscellaneous itemized deduction for any taxable year shall be allowed only to the
extent that the aggregate of such deductions exceeds 2-percent of adjusted gross income.”465
Therefore, a taxpayer may only deduct investment advisory fees to the extent that those fees
exceed 2-percent of that taxpayers adjusted gross income.466
In summary, a taxpayer may recognize a deduction for expenses that comply with § 212, if (1)
those fees exceed 2-percent of the taxpayer’s adjusted gross income and (2) the taxpayer makes
an election under § 63(e) to itemize his deductions.
Example I:
In 2004 Rhonda (an individual taxpayer) has an adjusted gross income of
$100,000 and spends $2,500 on investment advisory fees. Assume Rhonda elects
to itemize her deductions.
Since Rhonda has decided to itemize her deductions467, the next inquiry is whether the fees she
paid to her investment advisor exceed 2-percent of her adjusted gross income.468 Two-percent of
$100,000 is $2,000. The amount that Rhonda spent in excess of $2,000 may be deducted.
Rhonda spent a total of $2,500 on investment advisory fees. Accordingly, Rhonda is able to
deduct $500 from her taxable income. The remaining $2,000 will not be deductible.
B. Brokerage Fees:
Fees that investors pay in connection with acquiring or disposing of securities (brokerage fees)
are treated, for tax purposes, entirely differently than investment advisory fees. Brokerage fees
will result in a basis adjustment to a taxpayer’s security regardless of his adjusted gross income or
whether the taxpayer elects to itemize his deductions. Brokerage fees receive a favorable tax
treatment when compared to investment advisory fees.
The Tax Court in Honodel stated: “expenditures that are capital in nature are not deductible under
§ 212 because such expenditures fail to satisfy the ‘ordinary and necessary’ requirement of that
section.”469 Regulation § 1.212-1(n) states: “[c]apital expenditures are not allowable as nontrade
or nonbusiness expenses…where, however, the item may properly be treated only as a capital
expenditure or where it was properly so treated under an option granted in subtitle A of the Code,
no deduction is allowable under section 212.”470 IRC § 263 (“Capital expenditures”) states, “[n]o
deduction shall be allowed for—(1) any amount paid out for new buildings or for permanent
improvements or betterments made to increase the value of any property or estate.”471 Regulation
§ 1.263(a)-2(e) lists two examples of capital expenditures: “[c]omissions paid in purchasing
securities [and] [c]omissions paid in selling securities..”472 The Supreme Court in Woodward v.
465
Id.
See William L. Rudkin Testamentary Trust v. Comm’r, 124 T.C. 304 (2005) (holding that even a trust’s
investment advisory fees are only deductible to the extent that they exceed two-percent of the trust’s
adjusted gross income).
467
See IRC § 67(e).
468
See IRC § 67(a).
469
See Honodel, supra note 62, at 364. (citing Regulation § 1.212-1(n) and Woodward v. Commissioner,
397 U.S. 572, 575 (1970)).
470
Id.
471
Id.
472
Id.
466
78
Commissioner further summarized the law concerning capital expenditures as follows: “[i]t has
long been recognized, as a general matter, that costs incurred in the acquisition or disposition of a
capital asset are to be treated as capital expenditures. The most familiar example of such
treatment is the capitalization of brokerage fees for the sale or purchase of securities…”473 Thus,
brokerage fees (if paid in the acquisition or disposition of securities) will be classified as capital
expenditures.
Once an expense is properly classified as a capital expenditure under § 263, the basis in the
capital asset (in this case the security) may be adjusted accordingly. IRC § 1016(a) provides the
general rule that, “[p]roper adjustment in respect of the property shall in all cases be made…for
expenditures, receipts, losses, or other items, properly chargeable to capital account…”474 Thus,
brokerage fees associated with the purchase or sale of securities may be offset against the
purchase or sale price of stock to decrease a capital gain or increase a capital loss.475
Example II:
Tom is a private investor who files his tax return as an individual taxpayer with
an adjusted gross income of $80,000. Tom purchased one share of a stock
(“Security X”) in 1999 for $100, and paid his broker $5 to execute the purchase.
Tom sells Security X in 2004 for $200, and pays his broker $5 to execute the
sale.
Tom can increase his basis in Security X to the extent of $10 ($5 brokerage fee for purchasing
the stock plus $5 brokerage fee for selling the stock) , leaving him with an adjusted basis of $110
in Security X. Tom sold Security X for $200, so his total capital gain is $90 ($200 minus $110).
Tom, in effect, has reduced his overall tax liability by $10, having properly adjusted his basis in
Security X by the amount he paid in brokerage fees.
Example III:
Same facts as “Example II,” except in addition to brokerage fees, Tom also pays
$20 to his investment advisor in 2004.
For the reasons set forth in “Example II,” Tom would be permitted to increase his basis in
Security X to the extent of $10. Tom’s investment advisory fees, however, would not be
deductible. Two-percent of Tom’s adjusted gross income is $1,600 (80,000 * .02). Tom only
spent $20 on investment advisory fees, which is below the 2-percent floor of $1,600. Pursuant to
IRC § 67(a), Tom may only deduct investment advisory fees to the extent that they exceed 2percent of his adjusted gross income. Thus, Tom’s investment advisory fees are not deductible.
C. Summary:
When determining the tax treatment of fees associated with securities investments, a taxpayer
should look to “whether the services were performed in the process of acquisition or for
investment advice.”476 The taxpayer may be able to deduct investment advisory fees (if related to
investment advice), but only if the taxpayer itemizes his deductions and only to the extent that the
473
See Woodward, supra note 74, at 575-576 (citing Regulation § 1.263(a)-2(e) and Helvering v. Winmill,
305 U.S. 79 (1938)).
474
Id.
475
See Regulation § 1.263(a)-2(e).
476
See Honodel, supra note 65, at 365.
79
fees exceed 2-percent of the taxpayer’s adjusted gross income. With regards to brokerage fees,
however, a taxpayer may use those fees as an offset against the selling or purchasing price of the
security, without regard to the 2-percent floor or whether the taxpayer itemizes his deductions.
IV.
Legislative History
It is no secret that provisions in the IRC influence taxpayers’ conduct. Tax legislation may be
motivated explicitly by lawmakers’ desire to encourage or discourage certain behavior by
taxpayers. Some times certain language inadvertently promotes or discourages conduct by
taxpayers. This section will examine the congressional intent behind the enactment of the
relevant IRC provisions discussed in this paper.
IRC §212 was originally enacted as the Internal Revenue Act (“IRA”) of 1939 as section
23(a)(2). 477 No substantive changes were made when the Code number was changed to §212 in
the IRA of 1954.478 In the 1954 Code, § 212, provided that an individual who has elected to
itemize his deductions shall be allowed as a deduction all the ordinary and necessary expenses
paid or incurred during the taxable year (1) for the production or collection of income, (2) for the
management, conservation, or maintenance of property held for the production of income, or, (3)
in connection with the determination, collection or refund of any tax.479 Thus, from 1954 through
1986 a taxpayer could deduct investment advisory fees as long as he itemized his deductions,
unlike current law where fees must exceed § 67’s two-percent floor in order to be deductible.
Regulation 1.263(a)-2, the provision dealing with examples of capital expenditures, was
promulgated on November 26, 1960. Yet, even prior to the Regulation, courts consistently had
held that brokerage commissions were a proper adjustment to basis.480 Thus, § 1.263(a)-2 was a
mere codification of prior case law and practice.
The most significant legislative action came by way of the Internal Revenue Code of 1986 (the
“1986 Code”). One of the apparent goals of the 1986 Code was to simplify the prior tax laws.
The Committee on Ways and Means in the House of Representatives wrote: “The committee
believes that, where possible, the tax system should be made more simple. The complexity of the
current tax system exacts a cost of time, effort, and burdensome recordkeeping. To some extent,
this complexity is necessary to assess accurately one’s ability to pay taxes…for the majority of
taxpayers, however, the tax system need not be complex. ”481 The Committee continued by
offering, what it believed to be, two major simplifications:
Perhaps the most important steps taken by the committee bill to reduce the
complexity found by many taxpayers are the significant increase in the standard
deduction and the imposition of a floor under itemized deductions. Due to these
changes, an estimated 13 million taxpayers who presently file itemized returns
are expected to file nonitemized returns, which is a 30 percent reduction in the
477
See 1 INTERNAL REVENUE ACTS OF THE UNITED STATES: THE REVENUE ACT OF 1954 WITH
LEGISLATIVE HISTORIES AND CONGRESSIONAL DOCUMENTS A59 (Bernard D. Reams, Jr. ed. 1982).
478
Id.
479
Id.
480
See Helvering v. Wilmington Trust Co., 305 U.S. 79 (1938).
481
See H.R. REP. NO. 99-426, at 58 (1985).
80
number of itemized returns. These taxpayers will be freed from the need for
recordkeeping for many incidental expenditures.482
The law prior to the 1986 code was that a taxpayer could deduct investment advisory fees from
his ordinary income as long as he itemized his deductions. Several proposals were presented to
significantly restrict this deduction when the 1986 code was enacted. Under the House bill, the
total of the taxpayer’s miscellaneous itemized deductions would be allowable only to the extent
exceeding one percent of the taxpayer’s adjusted gross income.483 The Senate Amendment
suggested repealing all miscellaneous itemized deductions that were allowable under then-current
law, with the exception of eight deductions (investment advisory fees did not fall within the
exception).484 Thus, the Senate proposed to completely disallow an investment advisory fee
deduction. Finally, President Reagan’s proposal was as follows: “[t]he miscellaneous itemized
deductions would be moved ‘above-the-line’ (i.e., would also be deductible by nonitemizers), and
allowed only to the extent that, when aggregated with the employee expenses described below,
they exceeded one percent of the taxpayer’s adjusted gross income (AGI).”485 The final
negotiated version of the bill subjected miscellaneous itemized deductions to a floor of two
percent of the taxpayer’s adjust gross income.486
Prior to the passage of the 1986 Code, the Joint Committee on Taxation wrestled with the issue of
whether to impose a floor on miscellaneous itemized deductions.487 The Committee recognized
competing policy considerations in imposing such a floor.488 The policy in favor of enacting a
floor was as follows:
In one sense, the use of a deduction floor fosters simplicity. It relieves taxpayers
of the need to keep records substantiating incidental expenses unless they have
reason to expect that their allowable deductions may exceed the floor. It also
relieves the Internal Revenue Service of the need to audit and verify deductions
claimed for numerous small items. The Administration proposal is based on the
view that this problem is particularly significant in the case of miscellaneous
deductions, and that taxpayers make numerous errors of law regarding allowable
deductions in the miscellaneous category.489
Clearly an objective of the Committee was to simplify the tax laws and reduce potential
errors that taxpayers would make in calculating their tax liability. The Committee also
acknowledged the potential inequity of a floor on miscellaneous itemized deductions:
On the other hand, to the extent a deduction that ought in theory to be allowable
in full is restricted by the use of a floor, the floor is arguably unfair. It penalizes
taxpayers who have deductions that are subject to the floor, in comparison to
other taxpayers, by depriving them at least in part of a deduction that may be
important to the accurate measurement of income. For example, a taxpayer who
earned $1,000 in a stock transaction, but paid a broker $500 to manage his assets,
482
Id.
See 1986 U.S.C.C. & A.N. 4118, at II-33 (1986).
484
Id.
485
See JCS-44-85, at 10 (1985).
486
See 1986 U.S.C.C. & A.N. 4118, at II-33 (1986).
487
See generally JCS-36-85 (1985).
488
Id at 206
489
Id.
483
81
would not be able to deduct the fee if his or her total miscellaneous deductions
equaled less than one percent of adjusted gross income. Taxpayers with
miscellaneous deductions might not object to the burden of keeping accurate
records if the result were to reduce their tax liabilities.490
The Committee’s contemplation of situations where taxpayers would be deprived of a deduction
demonstrates a clear recognition that the imposition of a floor would be unfair to some taxpayers.
The Committee also considered the implications of classifying miscellaneous deductions
as “above-the-line” or “below-the-line” deductions:
First, there may be a policy decision that all taxpayers should be allowed to
benefit from the deduction. However, it is not necessarily clear why this concern
should be more applicable to miscellaneous deductions than, for example, to
deductions for home mortgage or consumer interest, casualty losses, or medical
expenses. Further, nonitemizers benefit from the allowance of deductions that
can be claimed only by itemizers, since the zero bracket amount is intended to
reflect such expenditures typically made by nonitemizers.
Second, as a matter of tax policy there is a general distinction between above-theline and itemized deductions, although many deductions may be allocated
inconsistently with this theoretical distinction. In principle, a deduction is
allowed above-the-line if, as an expense of generating income, it must be
subtracted from gross income in order to arrive at an accurate measurement of
the taxpayer’s true net income. By contrast, itemized deductions generally are
considered to reflect personal expenditures which, although not properly
deductible in measuring economic income, are allowed for reasons of social
policy…
However, in view of the fact that the Administration proposal generally keeps
other itemized deductions below-the-line, the proposal to move miscellaneous
deductions above-the-line may instead be based on the view that they are
properly allowable in calculating economic income—a view theoretically
inconsistent with the decision to allow them only to the extent in excess of a
floor, although arguably supportable for simplification purposes.491
Applying the principles that the Committee set forth for classifying deductions as “above-theline” or “below-the-line” it would seem that investment advisory fees are more like expenses of
generating income as opposed to personal expenditures. Once again, however, it seems as though
simplicity trumped that rationale.
Judging by the legislative debates and the differing proposals from the House of
Representatives, Senate and President Reagan, it is apparent that the legislative focus was
principally centered around simplifying the tax code by means of reducing the number of
itemizing taxpayers. Unfortunately, Congress did not indicate any concern over the
fiduciary duties of investment professionals and the fact that the 1986 Code would favor
the use of brokers rather than investment advisors. The next section will examine the
490
491
Id.
Id. at 207.
82
fiduciary duty implications applicable to investment professionals since Congress ignored
this important issue in enacting the 1986 Code.
V.
Fiduciary Duties of Investment Advisors and Brokers
Investment advisors are regulated by the SEC and brokers are regulated by the NASD.492
Although these terms are sometimes used synonymously, their roles with clients and fiduciary
duty standards are very different.493 As Professor Jill Gross has explained, “[o]n the spectrum of
advisors, brokers are the least accountable to investors.”494 That being said, there are welldefined duties that brokers and investment advisors owe to their respective clients.
A. Duties Owed by Brokers:
The degree of duty owed by brokers depends on the relationship between the broker and his
client. “It is settled law, however, that brokers are not liable for their customers losses unless
they made an unsuitable recommendation, exercised control over the account, or made a material
misstatement of fact. A broker can stand by even if he knows that the customer is engaged in an
unsuitably risky investment strategy without an understanding of the risks involved.”495 The
important concept here is that a brokers relationship with his customer is not generally considered
a fiduciary one, “unless the broker exercises investment discretion over the customer’s
account.”496 The following subsections will set forth specific duties that brokers owe to their
clients.
i.
Suitability:
Brokers have a duty to recommend only those securities that they reasonably believe are suitable
for the customer, based on information disclosed by the customer about his other security
holdings, his financial status, and his investment objectives.497 NASD Rule 2310(a) states: “(a) In
recommending to a customer the purchase, sale or exchange of any security, a member shall have
reasonable grounds for believing that the recommendation is suitable for such customer upon the
basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his
financial situation and needs.”498 Paragraph (b) goes on to provide that prior to the execution of a
transaction recommended to a non-institutional customer, brokers should make reasonable efforts
to obtain information concerning the customers: (1) financial status; (2) tax status; (3) investment
objectives; and (4) such other information used or considered to be reasonable by such member or
registered representative in making recommendations to the customer.499
492
See supra note 14 and accompanying text.
See Black supra note 18, at 35 (Professor Black argues that investors are often confused about the roles
and responsibilities of the various financial services professionals).
494
See Starkman, supra note 13 (quoting Professor Gross, Associate Professor of Law, Pace University
School of Law; and co-director of Pace Law’s Securities Arbitration Clinic).
495
Barbara Black and Jill I. Gross, Economic Suicide: The Collision of Ethics and Risk in Securities Law,
64 U. Pitt. L. Rev. 483, 486.
496
See Black, supra note 18, at 36.
497
See Black and Gross, supra note 100, at 490.
498
See NASD Conduct Rule 2310, NASD Manual (CCH) 4111 (1998) [“NASD Manual”], available at
http://nasd.complinet.com/nasd/display/display.html?rbid=1189&element_id=1159000466 (last visited
February 21, 2006).
499
Id.
493
83
ii.
Churning:
If a broker exercises control over his customer’s account, excessive trading or churning may
occur. The SEC describes churning on its website as, “excessive buying and selling in your
account by your broker. For churning to occur, your broker must exercise control over the
investment decisions in your account, either through formal written discretionary agreement or
otherwise, and must engage in excessive trading in light of the financial resources and character
of the account for purpose of generating commissions.”500 As can be surmised from the SEC
definition, churning can occur whether a broker has actual authority to make investment decisions
or de facto authority.501
NASD Conduct Rule 2310-2(b)(2) prohibits excessive trading or churning,502 but recognizes that
there is not a bright-line rule to determine what constitutes excessive trading: “[t]here are no
specific standards to measure excessiveness of activity in customer accounts because this must be
related to the objectives and financial situation of the customer involved.”503 With regards to
discretionary accounts, NASD Conduct Rule 2510(a) states, “[n]o member shall effect with or for
any customer’s account in respect to which such member or his agents or employee is vested with
any discretionary power any transactions of purchase or sale which are excessive in size or
frequency in view of the financial resources and character of such account.”504
The New York Stock Exchange505 (“NYSE”) also has a churning rule which provides: “No
member or allied member or employee of a member organization exercising discretionary power
in any customer’s account shall (an no member organization shall permit any member, allied
member, or employee thereof exercising discretionary power in any customer’s account to) effect
purchases or sales of securities which are excessive in size or frequency in view of the financial
resources of such customer.”506 Thus, if a broker exercises control over his client’s account, he
has a duty to refrain from excessively trading or churning the account.
iii.
Material Misrepresentations:
Brokers may be liable for fraud or negligence if a client seeks their advice about selling or
holding a security, and the broker provides false or misleading information.507 Federal securities
laws provide guidance on the standard of conduct that brokers owe to their clients with regards to
disclosure of information. Section 17(a) of the SEA of 1933, makes it unlawful for any person,
by the use of the mails or interstate commerce, “in the offer or sale of any securities: (1) to
employ any device, scheme, or artifice to defraud, or (2) to obtain money or property by means of
any untrue statement of a material fact or any omission to state a material necessary in order to
make the statements made, in the light of the circumstances under which they were made, not
misleading, or to engage in any transaction, practice, or course of business that operates or would
500
See SEC website, supra note 14, at http://www.sec.gov/answers/churning.htm (last visited February 21,
2006).
501
See also Black and Gross, supra note 100.
502
NASD views churning as a violation of a brokers duty of fair dealing.
503
See NASD Conduct Rule 2310-2, NASD Manual, supra note 103.
504
See NASD Manual, supra note 103, at Conduct Rule 2510(a).
505
The NYSE regulates brokers who are authorized to trade on its exchange.
506
See NYSE Rule 408(c), available at
http://rules.nyse.com/nysetools/Exchangeviewer.asp?SelectedNode=chp_1_1&manual=/nyse/nyse_rules/n
yse-rules/ (last visited on February 21, 2006).
507
See Black, supra note 18, at 36.
84
operate as a fraud or deceit upon the purchaser.”508 Section 17(a) does not apply to purchases of
securities. An individual is a seller under Section 17(a) even though he does not own the security
being sold, so long as: (1) he solicits the transaction and (2) his solicitation is motivated by
personal financial gain.509 The second prong is satisfied if the person anticipates a share of the
profits, even though he may not receive a salary or a commission for his selling efforts.510
In addition, Section 9(a)(4) of the SEA Act of 1934 provides guidance on false or misleading
statements. Section 9(a)(4) makes it unlawful for any dealer or broker “to make, regarding any
security registered on a national securities exchange, for the purposes of inducing the purchase or
sale of such security, any statement which was at the time and in the light of the circumstances
under which it was made, false or misleading with respect to any material fact, and which he
knew or had reasonable grounds to believe was so false or misleading.”511 Section 9(a)(4), unlike
Section 17(a), applies to both fraudulent purchases and sales.512 However, the scope of 9(a)(4) is
narrower than Section 17(a) in that: (1) it applies only to exchange-listed securities; (2) it
prohibits fraudulent misstatements but not omissions; (3) it requires that the broker have the
specific purpose of inducing the purchase or sale of the security; and (4) it expressly requires that
the broker know or have reason to know of the falsity of the statement.513
B. Fiduciary Duties Owed by Investment Advisors:
In stark contrast to the duties owed by brokers, investment advisors are held to a fiduciary duty
standard—regardless of the degree of control investment advisors exercise over a client’s
account. The principal that investment advisors owe their clients a fiduciary duty is not expressly
mandated by the IAA, but in SEC v. Capital Gains Research Bureau, Inc.,514 the United States
Supreme Court held that Section 206 of the Act imposes fiduciary duties on investment advisors
by operation of law.515 Section 206 of the IAA states, in relevant part, “[i]t shall be unlawful for
any investment adviser, by use of the mails or any means or instrumentality of interstate
commerce, directly or indirectly—(1) to employ any device, scheme, or artifice to defraud any
client or prospective client; (2) to engage in any transaction, practice, or course of business which
operates as a fraud or deceit upon any client or prospective client.”516 An investment advisor may
violate Section 206(2) if he fails to act with “the utmost good faith” with respect to his clients,
and or fails to satisfy its affirmative duty to disclose all material facts and conflicts of interest.517
In general there are three main fiduciary duties which are enforceable under IAA §206: (1)
disclosure; (2) best interests of clients; and (3) fairness.518
Disclosure. The first fiduciary duty, of disclosure, requires investment advisors to disclose all
material facts about the advisory relationship.519 The standard for materiality is: whether there is
a substantial likelihood that a reasonable client would attach importance to it.520
508
SEA of 1933 §17(a), 15 U.S.C. §77q.
Norman S. Poser, Broker-Dealer Law and Regulation, 3rd Ed. (supplemented 2005), §3.01[B].
510
Id., citing Meadows v. Securities and Exch. Commn., 119 F.3d 1219, 1225-1226 (5th Cir. 1997).
511
SEA of 1934 §9(a)(4), 15 U.S.C. §78i(a)(4).
512
See Poser, supra note 114.
513
Id.
514
375 U.S. 180, 191 (1963).
515
Investment Advisors: Law & Compliance, Matthew Bender & Company, Inc. (2005), §9.02.
516
15 U.S.C. §80b-6.
517
See SEC v. Capital Gains, supra note 119 at 192; and Investment Advisors, supra note 117.
518
See Investment Advisors, supra note 120.
519
Id.
509
85
Acting in Client’s Best Interests. Investment advisors also has a duty to act only in the best
interests of its clients, which requires that the advisor place his clients interests above his own
interests when a conflict arises.521 If a conflict may be present, the investment advisor must
disclose the existence of any conflict and obtain his client’s consent to the applicable
agreement.522 Courts and the SEC have placed a great deal of emphasis on the duty to disclose all
material conflicts of interest.523
Fairness. An investment advisor also has a fiduciary duty to treat each client fairly.524 What this
fiduciary duty requires is that the investment advisor makes certain that he does not benefit one
client to the disadvantage of another.525
Duty of Care. The SEC has also has read an implied duty of care into Section 206.526 Investment
advisors must exercise due care when recommending securities, however, this duty does not
extend to the eventual success or failure of his recommendations.527 It is currently unclear how
thoroughly an investment advisor must investigate the securities he recommends.528 Investment
advisors are required to familiarize themselves with the facts which provide the basis for their
recommendations and verify them if the source of the information has a substantial interest in the
security in question.529 Courts have held investment advisers liable for failing to disclose they
were relying on third-party analysis, especially when the accuracy and comprehensiveness of the
information was in question.530
Suitability. Investment advisers also have an implicit duty under the IAA, to provide only
suitable investment advice to their clients.531 The suitability doctrine has arisen predominantly
from SEC enforcement actions. A typical situation is where the client’s circumstances called for
conservative or low-risk investments or when the adviser represented that the investments would
be low risk.532 Other cases have involved aggravating factors, such as the investment in securities
of the advisor or its affiliates, or the use of margin.533 The SEC has articulated policy statements
regarding suitability obligations of investment advisors and the steps which advisers should take
in satisfying those obligations.534
VI.
520
See Basic, Inc. v. Levinson, 485 U.S. 224, 232 (1987); TSC Indus., Inc. v. Northway, Inc., 426 U.S.
438, 449 (1976).
521
See Investment Advisors, supra note 120.
522
Id.
523
Id.
524
Id.
525
Id.
526
Id.
527
Id. citing, Jones Mem’l Trust v. Tsai Inv. Servs., Inc., 367 F. Supp. 491, 497, 500 (S.D.N.Y. 1973)
(standing for the idea that duty of care does not oblige an advisor to “prevent any decline in the client’s
portfolio”).
528
Id.
529
Id.
530
Id.; See also, People v. Goldsmith, 86 N.Y.S.2d 12 (1948) (adviser concealed a material fact by failing
to disclose that his market letter was based not on recognized sources, but on comic strips).
531
Id. at §9.03.
532
Id.
533
Id.
534
Id.
86
Policy Considerations
In light of the preferable tax treatment of brokerage fees as compared with investment advisory
fees, the higher standard of fiduciary duties owed by investment advisors versus brokers, and
Congress’ failure to consider the implications of favorable tax treatment for brokerage fees,
Congress should revisit the issue. Specifically, the law should be changed to level the playing
field by allowing a basis adjustment for investment advisory fees, similar to that for brokerage
fees, or it should grant preferential treatment to those fees.
Because of the tax law’s impact on taxpayer behavior, it is critical that the tax laws do not
provide incentives to retain financial services providers who have limited fiduciary duties to their
clients. For some investors, brokers may be the most optimal investment professional if that
investor simply needs a transaction executed. Other investors may be best suited to hire
investment advisors to manage their accounts. Congress should be concerned with the class of
investors who are unaware of the differences between brokers and investment advisors.535 With a
tax policy that favors brokers, the investor motivated by tax concerns conceivably could choose
brokerage services without knowledge of the fiduciary consequences. If an investor is uncertain
on which type of account to open, the tax law should not favor of a brokerage accounts due to the
provisions in the IRC.
There is also a danger that financial services providers will encourage investors to open brokerage
accounts because it translates into lower fiduciary obligations on the part of the companies.
Vanguard’s website, for example, provides information on how cost basis is calculated: “[y]our
cost basis is generally the price you paid for your shares. Make sure you include reinvested
dividends or capital gains distributions as part of your cost basis, since these are considered
purchases or shares. Sales charges or transaction fees you paid when you bought your shares are
also part of your cost basis. (Other fees charged by a mutual fund, such as account maintenance
fees, don’t affect your cost basis).”536 While Vanguard is not explicitly stating that investors
should open brokerage accounts, the website does note an advantage in incurring brokerage fees
as opposed to account maintenance fees. Further, account representatives could potentially
mention to investors that their commissions will be added to the security’s basis, and therefore
will not be as costly as investment advisory fees. The savvy investor likely will understand the
differing fiduciary relationships of brokers and investment advisors, but those investors will also
be better prepared to recognize potentially fraudulent activity and account irregularities. Less
sophisticated investors, however, are not likely to understand the fiduciary relationships of
various investment advisors and may not be able to identify misconduct.
Understandably, one of Congress’ goals in enacting the 1986 Code was simplicity.537 Simplicity
should not, however, come before protecting investors from fraudulent conduct. Even assuming,
arguendo, that the IRS has valid reasoning for providing preferential tax treatment for brokerage
fees versus investment advisory fees, the fiduciary duty issues cannot be ignored. It is relatively
simple and sensible to adjust a security’s basis for acquisition or disposition costs (brokerage
fees). Because investment advisory accounts are usually geared towards maintenance and
management, it may be difficult and impractical to allow a basis adjustment for those types of
fees. In attempting to simplify the Code, Congress failed to consider the implications of heavily
favoring brokers fees over investment advisory fees. Congress should completely reverse its
535
See Black, supra note 18, at 35.
See http://flags hip2. vanguard.com/VGApp/hnw/content/ PlanEdu/ General/PEdGPTaxSav
CalcCostBasisContent.jsp (last visited February 21, 2006).
537
Whether or not that was achieved is a matter of significant academic question.
536
87
position and encourage the use of investment advisors as opposed to brokers. The next section
will propose ways Congress could rectify this inequity.
VII.
POLICY IMPLICATIONS FOR CHARITIES
The fact that brokerage fees result in a better tax result for individual investors is, of course, not
relevant to charities that do not pay tax. On the other hand, it is clear that both private
foundations and public charities should try to find investment advice that is practical and useful.
As Jane Nober has recently pointed out, “foundations need to ensure that the deals they make
with money managers are wise investments as well.”538 If the Code encourages individuals to use
brokers rather than investment advisors, it may well be that charities may follow that path
because the costs of brokerage services are lower than investment management services.
This may well be inconsistent with the fiduciary duties of trustees of charities or directors of
charitable corporations, whose duties of care and loyalty have an obvious impact on what
decisions should be made with regard to investments of the funds placed in their care. Public
charities and private foundations are becoming more sophisticated in investment and business
transactions with each other and with individuals. While these transactions are opportunities for
significant benefit, they are also encumbered with risk, both tax and financial. In making
investment decisions, the fiduciaries of charities are “under a duty similar to that of the trustee of
a private trust.”539 Given that fact, the choice to use an investment advisor should not be
governed solely by market principles.
In the end, of course, the aim of investing funds for charities should have both charitable and
financial goals. As one long-time donor has put it: “Charitable giving strategy is like investment
strategy in that you want your “investments” to be successful—in this case measured by
charitable rather than financial objectives. A good philanthropic “portfolio” should be
diversified, with some seasoned organizations and some smaller and more venturesome
causes.”540
VIII.
Proposed Revisions to the Internal Revenue Code
Having set forth the basic premise that the IRC improperly provides favorable tax treatment to
brokerage fees, this section will propose some alternatives to the IRC’s current provisions.
One idea would be to disallow basis adjustments for brokerage fees. This approach would
certainly be met with a great deal of opposition, especially considering the drastic consequence
this provision would have on taxpayers’ capital gains. Further, brokerage firms would no longer
be able to tell their clients that commissions would be a proper basis adjustment. From a fairness
standpoint, it seems counter-intuitive to repeal a long-standing rule that brokers commissions are
a proper basis adjustments. Thus, instead of altering the treatment of brokerage fees, it is likely
538
Jane C. Nober, Legal Brief, Conflicts of Interest, Part 3, in Foundation News and Commentary,
September/October 2004, available at http://www.foundationnews.org/CME/article.cfm?ID=3006.
539
Marion Fremont-Smith, GOVERNING NONPROFIT ORGANIZATIONS (Belknap, Harvard 2004) at 190-191
(citing Restatement (Second) of Trusts, §389 (revised)).
540
David A. Strawbridge, in BEYOND, the T. Rowe Price magazine on charitable giving, available at
http://www.programforgiving.org/newsletter/winter02.pdf#page=5.
88
more advantageous to address alternatives to the current IRC provisions dealing with investment
advisory fees.
Congress could revise the tax laws to allow a basis adjustment for investment advisory fees,
thereby granting equal treatment for the both types of fees. That proposal would be logically
sound because investment advisory fees are incurred in managing capital assets (securities), and
should therefore be proper adjustments to basis. Further, it would place investment advisory fees
on the same footing as brokerage fees and would eliminate the preferential treatment of brokerage
fees.
Another idea would be to treat investment advisory fees as itemized deductions, instead of
miscellaneous itemized deductions—thereby eliminating the two-percent floor requirement of
IRC § 67(a). It is doubtful that this revision would be codified because it would significantly
decrease the adjusted gross incomes of taxpayers who use investment advisors. From a policy
standpoint, however, this revision would encourage taxpayers to seek investment professionals
who owe them a higher level of fiduciary duty. Further with the heightened fiduciary duties,
there may be a decline in securities disputes; or alternately, investors will have an easier time
recovering monies lost from unscrupulous behavior.
A less desirable alternative would be to decrease the floor to one-percent of a taxpayer’s adjusted
gross income, as the House of Representatives proposed for the 1986 Code.541 With a lower
floor, taxpayers would be more likely to get some tax advantage from using investment advisors.
Even so, the disparity with regards to brokers’ fees would still be significant considering there is
a proper basis adjustment without regard of a taxpayer’s decision to itemize his deductions nor
his adjusted gross income.
Finally, Congress could revert back to President Reagan’s proposal542 of imposing a floor on
investment advisory fees, but categorizing those deductions as “above-the-line” deductions—
thereby eliminating the need to itemize deductions in order to recognize such tax benefit. Again,
an imposition of a floor would prejudice those taxpayers whose investment advisory fees do not
exceed the floor.
Optimally tax laws should be rewritten to grant preferential treatment to investment advisory fees.
However, the most practical and reasonable revision would be to treat investment advisory fees as
proper adjustments to basis. Since Congress was concerned with simplicity in the tax laws, this
proposal would be consistent with that strong policy consideration. Recognizing investment
advisory fees as proper basis adjustments would arguably be simpler than the current tax law
because it would eliminate taxpayers’ need to calculate the two-percent floor and to decide
whether to itemize their deductions. Further, this revision would provide an element of
consistency in the tax treatment of investment advisory and brokerage fees. Eliminating the
preferential treatment of brokerage fees would have a positive impact on the securities industry
by accounting for the fiduciary duty implications of brokers versus investment advisors.
VIII.
Conclusion
541
542
See supra note 87 and accompanying text.
See supra note 90 and accompanying text.
89
Due to the number of Americans and of American charities investing in securities markets,543
there needs to be as much protection for them as possible to prevent misconduct. While the
primary burden for protecting investors rests on the SEC, tax laws could be an important source
of aid. The current tax law is seriously flawed in that it provides a considerable motivation for
taxpayers to retain brokers rather than investment advisors to manage their investment accounts.
Brokers are required to meet a level of fiduciary duty that is significantly lower than that of
investment advisors, yet brokerage fees are granted preferential tax treatment. At a minimum, the
IRC should be modified to treat investment advisory fees and brokerage fees equally as proper
adjustments to basis. A better alternative would be to amend the IRC to grant preferable tax
treatment for investment advisory fees. Investors deserve investment professionals who are held
to a high level of fiduciary duty; Congress should revise the tax laws with this in mind.
543
See Wilkins, supra note 2.
90
STUDENT NOTES
BUILDING CONSUMER CAPACITY IN BANGLADESH: USAID/NARUC
PROJECT FOR REGULATORY CAPACITY BUILDING
BY JASON CZYZ*
Through support from the United States Agency for International Development (USAID), the
National Association of Regulatory Utility Commissioners (NARUC) is in the initial stages of
working with the Consumer Association of Bangladesh (CAB). Founded in 1978, CAB has
worked to protect consumer rights in such vital areas as food safety, women’s health, price
gauging, and environmental sustainability to name a few areas of focus. However, CAB has not
been involved in energy issues because the energy industry is primarily controlled by the
Government of Bangladesh (GoB). With the creation of the Bangladesh Energy Regulatory
Commission (BERC), CAB has become more interested in advocating consumer rights in the
field of energy.
BERC came into existence through a law passed by the Bangladesh National Assembly in 2003.
BERC has the standard powers of an energy regulatory body, their authority covers licensing,
tariffs, consumer protection, etc. In April 2004, the GoB appointed two Commissioners and the
Chairman was appointed in June 2005. The appointment of the remaining two Commissioners is
still pending GoB action. To date, the BERC suffers from a lack of technical staff, their only
staff consisting of borrowed staff from the utilities BERC is supposed to regulate.
NARUC began working with BERC in June 2004, providing technical assistance and training.
This collaboration resulted in BERC’s first public hearing, the licensing of several captive power
producers, and the development of an organization chart and position descriptions. In addition,
NARUC and BERC have developed a number of procedural and technical regulations, including
a license regulation.
As with many nascent regulators around the world, the BERC is subject to outside resistance,
which has hampered its efforts to become fully operational and from asserting its legally
mandated authority. Unlike in many developing countries, regulation developed in the United
States because of popular outcry against the pricing practices of monopoly industries, such as the
railroads and granaries. In developing countries, regulatory agencies typically develop from
internal political or external (donor) pressure to encourage investment in the energy sector. This
is not to say that consumer protection is not included in the regulator’s mandate, it just happens
that pressing economic concerns have a tendency to minimize the degree of attention given to
consumer rights. However, there is emerging recognition among donors that more attention
needs to be given to the “demand side” of regulation: developing credibility in the eyes of
consumers, including increased participation by civil society in regulatory processes.544
Rationale for Working with CAB
*Jason Czyz is Deputy Director of International Programs, NARUC and a first year evening law student at
the Catholic University of America’s Columbus School of Law.
544
For example, “When regulation doesn’t work (as planned),” Bernard Tenenbaum, World Bank Energy
Week 2006.
91
Apart from the importance of encouraging civil society participation in the energy sector, which
will hopefully lead to enforced consumer rights and better governance in Bangladesh’s energy
sector, there are also strategic reasons directly related to the development of BERC. As stated
above, BERC and many nascent regulators face significant operational hurdles within their
governments and within the industries they are supposed to regulate. Sometimes, the industries
are supportive of the creation of a regulator, but this is less likely in a system predominately run
by state-owned enterprises.
NARUC’s goal in working with CAB is to create awareness among consumers in Bangladesh
about:
1. The existence, role, and responsibilities of the BERC.
2. Consumer rights and responsibilities.
3. The need for consumers to participate in the regulatory decision making process to
safeguard their rights.
4. Building capacity within representative organizations such as CAB so that the association
may meaningfully represent consumers and disseminate information to consumers.
5. The need to sensitize BERC and the utilities to consumer issues.
In collaboration with CAB, NARUC would like to foster a greater public understanding of the
benefits of regulation. Ideally, this work will not only lead to substantive rights for consumers,
but will also build both political and public support for an autonomous regulator with the
authority necessary to regulate Bangladesh’s energy sectors.
Achieving these goals will be accomplished through workshops for CAB volunteers (including
outside of Dhaka), creation of a regular section on energy in CAB’s newsletter, and targeted
training (both legal and technical) for senior CAB staff so that they will be able to meaningfully
participate in BERC public hearings. This project will also sponsor CAB participation at
community events to disseminate information about BERC, conservation, and other important
energy topics.
In addition, NARUC intends to work with the Energy Reporters Forum (ERF) to include
journalists’ participation in BERC hearings as well as assist them with providing information
about BERC’s decisions and regulatory developments to the public. The ERF is quite active and
vocal within Bangladesh and are in an ideal position to raise public awareness about consumer
rights and the functioning of the regulator.
The idea behind this undertaking with CAB is to build mutual understanding between consumers
and regulators for the improvement of Bangladesh’s energy sector. Bangladesh is currently
experiencing a power shortage that is unlikely to end soon. Investment in Bangladesh’s energy
sector and improvement to the energy sector will only be sustainable if the efforts are transparent
and promote sound governance. Bangladesh is one of the most corrupt countries in the world,
and without an effective regulator the situation is likely to continue to deteriorate. However,
BERC is going to need public support in order to assert its mandate, overcome government
resistance, and create a strong energy sector in Bangladesh.
92
CASE NOTES
CANADIAN SUPREME COURT GIVES STRONG ENDORSEMENT
TO FREEDOM OF RELIGION
BY TERRANCE S. CARTER AND ANNE-MARIE LANGAN*
ASSISTED BY NANCY E. CLARIDGE
INTRODUCTION
The Supreme Court of Canada has sent a strong message that Canada’s public education
institutions must embrace diversity and develop an educational culture respectful of the right to
freedom of religion. In its decision in Multani v. Commission scolaire Marguerite-Bourgeoys
(“Multani”),545 the Court confirmed the right of an orthodox Sikh student to wear his ceremonial
dagger at school. The Court concluded that the Charter of Rights and Freedoms (the “Charter”)
establishes a minimum constitutional protection for freedom of religion that must be taken into
account by the legislature and by administrative tribunals. Safety concerns must be unequivocally
established for the infringement of a constitutional right to be justified. As such, the Court gave
new guidance to administrative bodies dealing with Charter issues, declaring that administrative
bodies must apply the principles of constitutional justification when a Charter right has been
infringed. This article will review the decision and discuss its implications for future challenges
before both administrative tribunals and the courts, particularly as it relates to freedom of
religion.
BACKGROUND
In 2001, a thirteen-year-old orthodox Sikh accidentally dropped his kirpan546 while in his
schoolyard.547 The school board sent a letter to the child’s parents authorizing the child to wear
his kirpan to school, provided that he complied with certain conditions to ensure that it was
sealed inside his clothing. The child and his parents agreed to this arrangement. However, the
governing board of the school refused to ratify the agreement citing the school’s Code de vie
(code of conduct), which prohibited the carrying of weapons on school grounds. This decision
was upheld by the school board’s Council of Commissioners. In place of a real kirpan, the
Council of Commissioners was willing to accept the child wearing a symbolic kirpan in the form
of a pendant or one in another form made of a material rendering it harmless.
*
Terrance S. Carter practices charity and non-profit law as managing partner of Carters Professional
Corporation, is counsel to Fasken, Martineau DuMoulin LLP on charitable matters, is a member of the
Charities Advisory Committee for Canada Revenue Agency, and editor of www.charitylaw.ca. AnneMarie Langan practices in the area of human rights with Carters Professional Corporation.
545
Multani v. Commission scolaire Marguerite-Bourgeoys, 2006 SCC 6. [2006] S.C.J. No. 6. Justice Major
took no part in the judgment. Justice Charron wrote the majority decision, Chief Justice McLachlin and
Justices Bastarache, Binnie and Fish concurring. Justices Deschamps and Abella wrote joint concurring
reasons, and Justice LeBel wrote concurring reasons.
546
A religious object resembling a dagger that orthodox Sikhs are required wear.
547
Orthodox Sikhs must comply with a strict dress code requiring them to wear religious symbols
commonly referred to as the “Five Ks”: (1) the kesh (uncut hair); (2) the Kangha (a wooden comb); (3) the
kara (a steel bracelet worn on the wrist); (4) the kaccha (a special undergarment); and (5) the kirpan (a
metal dagger or sword).
93
The Quebec Superior Court548 declared the Council of Commissioners’ decision to be of no force
and effect and authorized the child to wear his kirpan at school, provided he complied with the
following conditions:
•
•
•
•
•
•
The kirpan must be worn under his clothes;
The kirpan must be carried in a sheath made of wood, not metal, to prevent it
from causing injury;
The kirpan must be placed in its sheath and wrapped and sewn securely in a
sturdy cloth envelope, and that this envelope be sewn to the guthra;
School personnel must be authorized to verify, in a reasonable fashion, that
these conditions were being complied with;
The petitioner must be required to keep the kirpan in his possession at all
times, and its disappearance must be reported to school authorities
immediately; and
In the event of a failure to comply with the terms of the judgment, the
petitioner would definitively lose the right to wear his kirpan at school.
The Court of Appeal set aside the Superior Court’s judgment and restored the Council of
Commissioners’ decision,549 saying that the applicable standard of review was reasonableness
simpliciter, which requires the tribunal’s decision to be “clearly wrong.” Such a standard requires
the reviewing court to accept the tribunal’s decision even if the court would have come to a
different conclusion. Although finding that the child’s father had proven that his son’s need to
wear the kirpan was a sincerely held religious belief and was not capricious, the court held that
the child’s freedom of religion could be limited in instances where the safety of others was at
issue. The “pressing and substantial objective” to ensure the safety of the school’s students and
staff was directly and rationally connected to the prohibition against wearing a kirpan on school
premises and the objective of maintaining a safe school environment. The court reasoned that the
conditions imposed at the Superior Court level did not eliminate every risk and only “delayed
access” to the kirpan, which could be used as a weapon. Allowing a student to wear a kirpan
would require the school board to reduce its safety standards, which would be an undue hardship.
As a result, the Court of Appeal held that the Council of Commissioners’ decision was not
“clearly wrong” and should not be overturned by the courts.
THE SUPREME COURT’S DECISION
The Supreme Court of Canada disagreed with the Court of Appeal’s decision on the grounds that
administrative law principles should not be used to avoid a thorough constitutional analysis,
particularly where Charter rights are involved. More specifically, the Court stated that such an
approach,
… could well reduce the fundamental rights and freedoms guaranteed by the
Canadian Charter to mere administrative law principles or, at the very least,
cause confusion between the two. … [T]he fact that an issue relating to
constitutional rights is raised in an administrative context does not mean that the
constitutional standards must be dissolved into the administrative law standards.
The rights and freedoms guaranteed by the Canadian Charter establish a
548
549
See [2002] Q.J. No. 1131.
See [2004] R.J.Q. 284.
94
minimum constitutional protection that must be taken into account by the
legislature and by every person or body subject to the Canadian Charter.550
Since this complaint was based entirely on the issue of freedom of religion, the Court determined
that the administrative law standard of review was not relevant. In other words, the child’s father
was not challenging the Council of Commissioners’ jurisdiction to approve the code of conduct,
or the administrative or constitutional validity of the rule against carrying weapons and dangerous
objects. Rather, the concern was that the refusal to agree to a reasonable accommodation violated
his son’s freedom of religion. The Court concluded that “it is the constitutionality of the decision
that is in issue in this appeal, which means that a constitutional analysis must be conducted.”551
Following precedent, this required that the decision be subjected to the test set out in section 1 of
the Charter.552
Was There a Charter Infringement?
The Court found that the Council of Commissioners’ decision clearly infringed the student’s
freedom of religion. In this respect, the Court reviewed previous decisions on the issue, approving
the key principles, such as:





The essence of the concept of freedom of religion is:
o the right to entertain such religious beliefs as a person chooses;
o the right to declare religious beliefs openly and without fear of hindrance
or reprisal; and
o the right to manifest religious belief by worship and practice or by
teaching and dissemination;553
No one is to be forced to act in a way contrary to his or her beliefs or
conscience, subject to such limitations as are necessary to protect public
safety, order, health, or morals or the fundamental rights and freedoms of
others;554
It is not for the state to dictate what are the religious obligations of the
individual, it is for the individual to determine;555
Freedom of religion consists of:
o the freedom to undertake practices and harbour beliefs, having a nexus
with religion, in which an individual demonstrates he or she sincerely
believes or is sincerely undertaking in order to connect with the divine or
as a function of his or her spiritual faith
o this is irrespective of whether a particular practice or belief is required by
official religious dogma or is in conformity with the position of religious
officials;556
In order to establish that a claimant’s freedom of religion has been infringed,
it must be shown that the claimant sincerely believes in a practice or belief
550
Multani, supra note 545 at para. 16 [emphasis in original].
Ibid. at para. 21 [emphasis in original].
552
Slaight Communications Inc. v. Davidson, [1989] 1 S.C.R. 1308.
553
R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295 (“Big M. Drug”).
554
Ibid.
555
Ibid.
556
Syndicat Northcrest v. Amselem, [2004] 2 S.C.R. 551 (“Amselem”). For more discussion of the Amselem
decision, see e.g. Terrance S. Carter, “Supreme Court of Canada Adopts Broad View of Religious
Freedom” in Church Law Bulletin No. 5 (23 August 2004), available at www.churchlaw.ca.
551
95

that has a nexus with religion, and that the impugned conduct of a third party
interferes with the claimant’s ability to act in accordance with that practice or
belief;557 and
This interference must be more than trivial or insubstantial.558
In Multani, the Supreme Court of Canada noted that the requirement for orthodox Sikhs to wear a
kirpan at all times was not contested by any party, and accepted that the child’s refusal to wear a
symbolic kirpan made of a material other than metal, as suggested by the Council of
Commissioners, was “based on a reasonable religiously motivated interpretation,”559 and a sincere
belief that he must “adhere to this practice in order to comply with the requirements of his
religion.”560 Following the Court’s lead in the Amselem decision, the Court in Multani affirmed
that “the fact that other Sikhs accept such a compromise [wearing a plastic or wooden kirpan] is
not relevant.”561
As the child was being forced to choose between leaving his kirpan at home and leaving the
public school system, the Court accepted that the infringement was not a trivial or insignificant
interference with the child’s right to freedom of religion.562 Thus, the Court concluded that the
Council of Commissioners’ decision to prohibit the wearing of a kirpan on school premises
constituted an infringement of the claimant’s freedom of religion.
Section 1 Analysis
The principles of constitutional justification have been refined through a long line of decisions
since the inception of the Charter, and are variously described in a number of multi-pronged
tests.563 In order to justify an infringement of a constitutionally protected right, the government or
body acting under governmental authority needs to prove a number of elements:






The Charter infringement must be reasonable;
The infringement is prescribed by law;
The infringement is demonstrably justified in a free and democratic society,
which requires that:
o there was a pressing and substantial objective;
o the means are proportional to the objective:
The means are rationally connected to the objective;
There is a minimal impairment of rights; and
There is proportionality between the salutary and deleterious effects of the
requirement.
Applying this test to the Multani case, the Court held that a total prohibition from wearing a
kirpan to school “undermines this religious symbol and sends students the message that some
religious practices do not merit the same protection as others.”564 While accepting that the
557
Ibid.
Ibid.
559
Multani, supra note 545 at para. 36.
560
Ibid. at para. 38.
561
Ibid. at para. 39.
562
Ibid. at para. 40.
563
See e.g. R. v. Oakes, [1986] 1 S.C.R. 103; R. v. Edwards Books and Art Ltd., [1986] 2 S.C.R. 713; Big
M Drug, supra note 553.
564
Multani, supra note 545 at para. 79.
558
96
objective of ensuring safety in schools “is sufficiently important to warrant overriding a
constitutionally protected right or freedom,” the Court determined that instead of pursuing an
“absolute” level of safety in schools, the Council of Commissioners had chosen to pursue a
“reasonable” level, which was still recognized as a pressing and substantial objective. The ban on
kirpans was found to be rationally connected to this objective. However, on the issue of minimal
impairment, the Court emphasized the importance of religious tolerance in Canadian society and
suggested that the arguments respecting the kirpan being a symbol of violence and its likelihood
to make schools unsafe was not supported by the evidence and was “disrespectful to believers in
the Sikh religion and [did] not take into account Canadian values based on multiculturalism.”565
Fears of harm have to be justified before an infringement of a constitutional right can be justified.
The Court rejected “expert” evidence presented by the Council of Commissioners that suggested
that allowing a student to wear a kirpan would engender a feeling of unfairness among the
students in a situation similar to the right of Muslim women to wear the chador, because “to
equate a religious obligation such as wearing the chador with the desire of certain students to
wear caps is indicative of a simplistic view of freedom of religion that is incompatible with the
Canadian Charter.”566 The Court concluded that deleterious (harmful) effects of a total ban
outweighed the salutary (beneficial) effects, and supported the Superior Court’s decision to allow
the student to wear the kirpan under certain conditions. Such an approach “demonstrates the
importance that our society attaches to protecting freedom of religion and to showing respect for
its minorities.”567
CONCURRING REASONS
Although concurring with Justice Charron’s reasons, Justice LeBel stated that he remained
“concerned about some aspects of the problems of legal methodology raised by this case.”568 In
his opinion, it is not always necessary to resort to the Charter when a decision can be reached by
applying general administrative law principles or the specific rules governing the exercise of a
delegated power, but admitted that “the context of a dispute sometimes makes a constitutional
analysis unavoidable.”569 Still, Justice LeBel contends that not all issues can be resolved through
a Section 1 analysis, and in some cases the scope and content of a right does not lend itself to the
necessity of justifying an infringement under Section 1. As such, Justice LeBel maintained the
importance of establishing the boundaries of the nature and scope of a right, saying “we not only
have rights, we also have obligations.”570
A simplistic formulaic or mechanical approach to reconciling conflicting fundamental rights was
soundly rejected. Instead, it was suggested that the “Court has never definitively concluded that
the Section 1 justification analysis must be carried out mechanically or that all its steps are
relevant to every situation.”571 Further, it was suggested that “the approaches followed to apply
565
Ibid. at para. 70-71.
Ibid. at para. 74.
567
Ibid. at para. 79.
568
Ibid. at para. 141.
569
Ibid. at para. 144.
570
Ibid. at para. 147.
571
Ibid. at para. 150.
566
97
the Canadian Charter must be especially flexible when it comes to working out the relationship
between administrative law and constitutional law.”572
Turning to the facts in Multani, Justice LeBel concluded that:
… in the case of an individualized decision made pursuant to statutory authority,
it may be possible to dispense with certain steps of the [Oakes] analysis. The
existence of a statutory authority that is not itself challenged makes it pointless to
review the objectives of the act. The issue becomes one of proportionality or,
more specifically, minimal limitation of the guaranteed right, having regard to
the context in which the right has been infringed.573
As such, Justice LeBel concluded the Council of Commissioners had not shown that the kirpan
ban was justified and met the constitutional standard.
Justices Deschamps and Abella, while concurring in the conclusion, took a different approach to
resolving the issue. It was their view that the case was more appropriately decided through an
administrative law analysis, thereby reviewing the reasonableness of the decision. The justices
suggested that “the prohibition on the wearing of a kirpan cannot be imposed without considering
conditions that would interfere less with freedom of religion.”574 By applying the code of conduct
literally rather than sufficiently considering the right to freedom of religion and the
accommodation measure proposed which posed little or no risk, the justices concluded that the
school board made an unreasonable decision.575
COMMENTARY
The Supreme Court of Canada’s decision is first and foremost an important victory for freedom
of religion. In this regard, there is confirmation from the Supreme Court that the principles that
have been developed in such cases as Big M Drug and Amselem are not to be relegated to
constitutional history. The Charter protects the rights of Canadians to entertain their religious
beliefs and to openly declare those beliefs without fear of hindrance or reprisal. Canadians also
have the right to manifest their religious beliefs through worship and practice as well as by
teaching and dissemination, and to be free from discrimination because of their religious beliefs.
Religious observances should be accommodated to the point of undue hardship.
The decision is also important for its dictum that there is a role for educators to play in
engendering tolerance for others’ culture and religion in Canadian society. As Canada continues
to develop as an increasingly multicultural society, there will be further debates about the
boundary between the “public” and “private” domain, and particularly where the two converge.
Canadian society is also facing political and social changes. Religious organizations and their
members are being forced to respond to these changes.
572
Ibid. at para. 152.
Ibid. at para. 155.
574
Ibid. at para. 99.
575
Ibid.
573
98
Turning to its impact on courts and administrative tribunals, the decision provides some important
guidance on the interplay between freedom of religion and other socially important values. As
was conceded by the claimant, the Court confirmed that the freedom of religion can be limited
when the individual’s freedom may cause harm to or interfere with the rights of others. However,
any limitation has to be done through a reconciliation of the competing rights which must be
achieved through a constitutional justification. The Court’s decision makes the important
declaration that safety and other concerns must be unequivocally established before an
infringement of freedom of religion is justified.
Administrative tribunals and bodies that govern many important areas of our daily lives regularly
encounter decisions involving competing rights. The Multani decision provides important
guidance for them and for the courts as to the proper relationship between administrative
decisions and the protection of fundamental rights and freedoms in Canada. Given the Charter’s
mere two decades of existence, both courts and administrative tribunals have not yet clearly
defined the exact boundaries between various rights and freedoms contained therein. As the scope
of one’s rights and freedoms can be affected through the decisions of administrative tribunals in a
variety of situations, it is very important for there to be a clear standard of review in order to
ensure that Charter rights are minimally infringed.
As noted above, the majority of the Supreme Court of Canada determined that the administrative
law standard of review was insufficient when determining whether a Charter right infringement
has occurred and whether such an infringement is justified. The Court determined that a
constitutional analysis was required in these situations because “the rights and freedoms
guaranteed by the Canadian Charter establish a minimum constitutional protection that must be
taken into account by the legislature and by every person or body subject to the Canadian
Charter.”576
It is generally recognized that in reviewing an administrative tribunal’s decision, courts will pay
“curial deference” within the tribunal’s areas of specialized expertise regardless of whether there
is a “privative clause” protecting the decision from judicial review. “Curial deference” means that
the courts ought not to intervene in a tribunal’s decision where the tribunal’s knowledge,
experience, and expertise with the subject matter, places it in a better position than the reviewing
court to make the proper determination of the issues involved.577A “privative clause” may be
found in the enabling legislation for an administrative tribunal, insulating the tribunal’s decisions
from judicial review.
Notwithstanding the legislature’s attempt to shield the decisions of administrative tribunals from
the preying eyes of the courts through the use of privative clauses, reviewing courts have tended
to regard privative clauses as just one factor to look at in determining the appropriate standard of
review. The other factors include: statutory rights of appeal; expertise of the tribunal; the purpose
of the enabling legislation as a whole, and the impugned provision in particular; and the nature of
the problem.578 Based on the review of these factors, the reviewing court will determine where
576
Ibid. at para. 16.
Melanie Aitken, Russell Cohen and Mariana Silva, “Curial Deference to Administrative Tribunals”
(Paper presented to the The Law Society of Upper Canada Special Lectures 2001 Constitutional and
Administrative Law).
578
Guy Pratte and Michelle Flaherty, “Appeals, Judicial Review and Standard of Review” in Public Law
Reference Materials, Law Society of Upper Canada, 48th Bar Admission Course, 2005 at 127ff.
577
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upon the spectrum of standards the decision should be reviewed. Although the list is not closed,
there are presently three standards recognized on the spectrum:

Patently unreasonable: a patently unreasonable decision is one that involves a
breach of the rules of natural decision and for which there is no evidence to
provide support. In such situations, the reviewing court will pay the highest
level of deference and the decision must be found to be patently
unreasonable for the court to substitute its own decision;

Correctness: under the correctness standard of review, the reviewing court
will pay the lowest level of deference. The decision must be appropriate and
proper in the circumstances or the court will substitute its own opinion;

Reasonableness simpliciter: falling somewhere in between the two extremes,
if the decision is defective, it will survive if it can stand up to a somewhat
probing examination.
Applying these standards of review in a case involving a possible Charter violation may result in
a diminution of an individual’s rights and freedoms in any given area governed by administrative
law. Through the application of the stricter constitutional justification analysis, reviewing courts
across the country now have a mandated method for reviewing administrative decisions dealing
with constitutional issues. Administrative bodies, on the other hand, have a single, common
direction for appropriately and justly dealing with their cases. In the end, individual Canadians
are the winners, as they can ensure that their constitutionally protected rights and freedoms will
not receive a lesser form of protection through administrative tribunals than through the courts.
CONCLUSION
Despite the Court’s proclamations concerning the importance our society attaches to protecting
freedom of religion and to showing respect for its minorities, reaction from the general public to
the Multani decision ranged from support to strong opposition.579 Still, the Multani decision is an
important victory for freedom of religion that can be applied to all rights and freedoms that may
be affected by any one of the thousands of administrative tribunals rendering decisions affecting
the rights and freedoms of Canadians every day. The Court’s conclusion that the administrative
law standard of review was inappropriate for dealing with the infringement of a constitutionally
protected right means that the minimum constitutional protection as set out by the Charter must
be taken into account by the legislature and by every person or body subject to the Charter.
Looking at the Multani decision with respect to its impact on the exercise of freedom of religion,
it is an important confirmation that in these challenging times for many of the world’s religions,
the Courts are still willing to recognize the importance of protecting religious freedom from
unjustifiable interference from state authorities. In the increasingly multicultural society that is
Canada, we are bound to continue to run into conflicts between religious freedom and other
important social values. As such, it is increasingly important for courts and administrative
579
Aside from anti-religious postings on the Globe and Mail website comments section, the decision met
with resistance from parents of school children and educators. As reported in the National Post, a teacher at
the school at the centre of this decision said the court had gone too far and asked if someone could “bring a
Kalashnikov to school in the name of whatever religion and fire on anyone?” Janice Tibbetts, “Dagger Ban
Struck Down: Supreme Court says schools must allow kirpans” National Post (3 March 2006) A1.
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tribunals to ensure that an appropriate balance is found between competing rights and obligations.
In the Multani decision, the court has firmly established the principles that religious observances
must be accommodated to the point of undue hardship and that infringement of freedom of
religion will not be justified unless there is substantial evidence that the infringement is necessary
to protect the safety of the public and that the right is being infringed as minimally as possible.
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