1

VOLUME IV ISSUE 2 APRIL 2006 INTERNATIONAL JOURNAL OF CIVIL SOCIETY LAW

2

IJCSL EDITORIAL BOARD

Prof. Karla W. Simon Catholic University of America

EDITOR-IN-CHIEF

Paul Bater International Bureau of Fiscal

Documentation

Dr. Leon E. Irish Visiting Prof. of Law Catholic University

SENIOR EDITOR SENIOR EDITOR

Maureen McCarthy Nasira B. Razvi MANAGING EDITOR NEWSLETTER EDITOR

Malinda Baehr Kevin Schwartz Alison Shea

ASSOCIATE EDITOR ASSOCIATE EDITOR ASSOCIATE EDITOR

Donna M. Snyder Steven Young EDITORIAL ASSISTANT REFERENCE LIBRARIAN

CONTRIBUTING EDITORS

& CONTRIBUTORS

Prof. Myles McGregor-Lowndes

Prof. Susan Woodward AUSTRALIA

Dieter Hernegger AUSTRIA

Daniela Pais Costa BRAZIL

Terrance Carter CANADA

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

Zahra Maranlou IRAN

Dr. Hadara Bar-Mor ISRAEL

Dr. Alceste Santuari ITALY

Tatsuo Ohta JAPAN

Dr. Abdullah El-Khatib JORDAN

Elkanah Odembo KENYA

Bayarsetseg, J. MONGOLIA

Qadeer Baig PAKISTAN

Beatriz Parodi Luna PERU

Karen Nelson SOUTH AFRICA

Dr. Christine Barker UNITED KINGDOM

Karin Kuntsler Goldman UNITED STATES

Dr. Antonio Itriago VENEZUELA

Phuoc Luong Huu VIET NAM

Paul Bater WESTERN EUROPE

Tamuka Muzondo ZIMBABWE

3

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

4

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

5

TABLE OF CONTENTS

IJCSL EDITORIAL BOARD 2 LETTER FROM THE EDITOR 3 TABLE OF CONTENTS 5 IJCSL EDITORIAL POLICY 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 • International Instruments for

the Protection of the Rights of Minorities and the Status of the

Macedonian Minorities in the Neighbouring Countries•

37 Slavica Chubric

United States • The Differing Tax Treatment of Investment Advisory Fees and

Brokerage Fees; A General Analysis and An Analysis in the Context of

Charitable Investments •

71 Barry Rickert

STUDENT NOTE

Bangladesh •Building Consumer Capacity in Bangladesh: USAID/NARUC Project

for Regulatory Capacity Building•

91 Jason Czyz

CASE NOTES

Canada • Supreme Court Gives Strong Endorsement to Freedom of Religion•

93 Terrance Carter and Anne-Marie Langan, assisted by Nancy E. Claridge

6

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 simon@cua.edu Maureen McCarthy, Managing Editor 40mccarm@cua.edu

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

7

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

8

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 co-option) 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.

9

‘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. 8 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.

10

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). 17 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.

11

[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 BUILDING 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. 26 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.

12

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 co-operation 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.islam-democracy.org/ documents/pdf/5th_Annual_Conference-Bremer_paper.pdf> at 18 June 2005.

13

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. 39 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.

14

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. 47 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.

15

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 DYNAMIC 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. 56 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.

16

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. 66 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.

17

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) 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,

(2) that he is immobilizing that property in perpetuity, (3) for a particular purpose, (4) to be managed according to certain criteria and priorities established by the founder, (5) for the benefit of a selected class of beneficiaries, and (6) designating a mutawalli (essentially the trustee) to manage the waqf, and prescribing

the appointment of successor mutawallis; (7) any employees, if necessary, hired and managed by the mutawalli; (8) 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 (9) 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.

18

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.sacred-texts.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.

19

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. 87 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.

20

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-for-profit [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 al-Rashid, 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.

21

…’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. 102 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.

22

founders -- the local elite -- at a disadvantage.106 These moves, which diminished the socio-economic 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 non- 106 Bremer, above n 37, 14. 107 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.

23

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. 116 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.

24

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. 126 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.

25

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. 133 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.

26

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. 139 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.

27

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) a description of the waqf property sufficient for identification; (2) the gross annual income from such property; (3) the gross amount of such income which has been collected during the past five years or,

if shorter, since the creation of the waqf; (4) the amount of Government revenues, local taxes and rents annually payable with respect

to the property; (5) an estimate of expenses annually incurred in realizing the waqf income; (6) 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

(7) ‘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].

28

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].

29

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 newly-created 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.]. 160 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].

30

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. 168 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.

31

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]. 174 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).

32

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 oil-rich 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. 183 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.’

33

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_Conference-Bremer_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

34

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

35

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 1911-1919 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

36

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

37

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

38

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

39

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

40

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 SELF-DETERMINATION (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)

41

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 195 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

42

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, non-discrimination, 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 202 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

43

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 25 212 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

44

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) 222See Constitution of the Republic of Macedonia, supra at 34

45

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) 224 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_Albania.asp#TopOfPage, [hereinafter referred to as 2001 Report] 230 See Ortakovski, supra at 39

46

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 232 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

238 Facts on the MNM supra at 51

47

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/1-ECRI/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 242European 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

48

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"

247See 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)

49

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 Slavic-speakers 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

258Frckoski 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

50

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 66 262 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

51

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), non-Greek 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 non-discrimination 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). 275 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 277See Ortakovski, Vladimir, supra at 39 278Id, 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

52

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 Slav-Macedonian 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 11 284 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]

53

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 10 289 Sidiropoulos, para 11 290 Sidiropoulos, para 31 291 Idem, para 37 292 Idem, para 40 293 Idem, para 40 294 Idem, para 45

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)

54

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 45-46 297 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

55

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 305 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]

56

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 39 314 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

57

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 321 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_Bulgaria.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

58

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 non-discrimination 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-by-country_approach/Bulgaria/Bulgaria_CBC_3.asp#TopOfPage 335 See Jenny Engström, supra at 30 336 See Yash Ghai, supra at 55

59

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 11 338 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

340 Stankov paras 79-80

341 Stankov, paras 81-81 342 Stankov, para 85 343 Stankov, para 97

60

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 97 345 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

61

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 115-117 354 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

62

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

63

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

64

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

65

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 125 386 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=0703-6337&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

66

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 188 394 Id 395 Id

67

Bibliography Books: BLACK’S LAW DICTIONARY 237 (7th ed. 1999) Evangelos Kofos, THE UNRESOLVED "DIFFERENCE OVER THE NAME": A GREEK PERSPECTIVE, in (Kofos and Vlasidis editorrs., Athens-Skopje: An uneasy symbiosis, 1995-2002, Hellenic Foundation for European and Foreign Policy (ELIAMEP), Athens, 2003) 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) Hugh Poulton, THE BALKANS: MINORITIES AND STATES IN CONFLICT, (Minority Rights Publications, London, reprint 1994) GREECE AGAINST ITS MACEDONIAN MINORITY: THE RAINBOW TRIAL, (Greek Helsinki Monitor, Etepe, 1998) ISTORIJA NA MAKEDONSKIOT NAROD [History of the Macedonian people], Institut za nacionalna istorija [Institute for national history-Skopje], ( Prosvetno delo, Skopje, 1972) John Shea, MACEDONIA AND GREECE: THE STRUGGLE TO DEFINE A NEW BALKAN NATION, (McFarland & Co, London: 1997) Kristin Henrard, DEVISING AND ADEQUATE SYSTEM OF MINORITY PROTECTION. INDIVIDUAL AND HUMAN RIGHTS, MINORITY RIGHTS AND THE RIGHT TO SELF-DETERMINATION (The Hague/Boston/London: Martinus Njihoff Publishers, 2000) Krste Petkov Misirkov, ZA MAKEDONCKITE RABOTI [On the Macedonian matters], ( Matica Makedonska, Skopje, 2002, Reprint) Frckoski Lubomir, MEGJUNARODNO PRAVO ZA PRAVATA NA COVEKOT [Internationl Human Righs Law], (Magor, Skopje, 2001) Ljubomir Frckoski, Vladimir Ortakovski and Vasil Tupurkovski, MEGJUNARODNO JAVNO PRAVO, [Public International Law] (Tabernakul Skopje, 1994) Milco Balevski, ALBANIJA DENES [Albania today], (Matica Makedonska, Skopje, 1998) Milco Balevski, SOSEDSKI MITSKI PAJAZINI [Neighborly webs of myth] (Nova Makedonija, Skopje, 1994) Patrick Thornberry, THE UN DECLARATION ON THE RIGHTS OF PERSONS BELONGING TO NATIONAL, ETHNIC, RELIGIOUS AND LINGUISTIC MINORITIES: BACKGROUND ANALYSIS AND OBSERVATION, (Minority Rights Group, London, 1993) Patrick Thornberry and Maria A.M. Estebanez, MINORITY RIGHTS IN EUROPE, (Council of Europe publishing, 2004) Svetomir Skaric, MAKEDONIJA NA SITE KONTINENTI [Macedonia on all continents], (Union Trejd, Skopje, 2000) Vladimir Ortakovski, MINORITES IN THE BALKANS, (Stip, Vtori Avgust, 1998) Yash Ghai, PUBLIC PARTICIPATION AND MINORITIES, (London, Minority Rights Group International, 2003) 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) Documents: International Covenant for Civil and Political Rights, available at http://www.unhchr.ch/html/menu3/b/a_ccpr.htm Human Rights Committee General Comment on the Article 27 ICCPR, available at http://www1.umn.edu/humanrts/gencomm/hrcom23.htm 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

68

The Framework Convention for the Protection of National Minorities, available at http://conventions.coe.int/Treaty/en/Treaties/Html/157.htm European Convention for Human Rights, available at http://conventions.coe.int/treaty/en/Treaties/Html/005.htm 1990 Document of the Copenhagen meeting of the Conference on the Human Dimension of the CSCE, available at http://www1.umn.edu/humanrts/osce/basics/copenhagen1990.html European Charter for Regional of Minority Languages, available at http://conventions.coe.int/Treaty/EN/Treaties/Html/148.htm International Convention on the elimination of all forms of racial discrimination, available at http://www.unhchr.ch/html/menu3/b/d_icerd.htm Explanatory report to the European Charter for Regional or Minority Languages, available at http://conventions.coe.int/Treaty/EN/Reports/Html/148.htm Articles 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 Andras Sajo, Protecting nation states and national minorities: a modest case for nationalism in Eastern Europe, 1993 U. Chi. L. Sch. Roundtable 53 Human Rights Watch/Helsinki, DENYING ETHNIC INDENTIY: THE MACEDONIANS IN GREECE, 1994, available at http://www.hrw.org/reports/pdfs/g/greece/greece945.pdf 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) Geoff Gilbert, Autonomy and minority groups: a right in international law?, 35 Cornell Int'l L.J. 307 Dean M. Poulakidas, Macedonia : far more than a name to Greece, 18 Hastings Int’l & Comp. L. Rev. 397 Hurst Hannum, Contemporary development sin the International protection of the rights of the minorities, 66 Notre Dame L. Rev. 1431 (1991) Hurst Hannum, Rethinking Self-Determination, 34 Va. J. Int'l L. 1,(1993) 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 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 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=0703-6337&volume=25&issue=3&spage=249

69

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_%28MONITORING%29/2._Monitoring_mechanism/3._State_Reports_and_UNMIK_Kosovo_Report/1._First_cycle/1st_SR_Albania.asp#TopOfPage Third Report on Albania, ECRI, 2005, available at http://www.coe.int/T/E/Human_Rights/Ecri/1-ECRI/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_%28MONITORING%29/2._Monitoring_mechanism/3._State_Reports_and_UNMIK_Kosovo_Report/1._First_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-by-country_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%5Fapproach/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

70

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_%28MONITORING%29/2._Monitoring_mechanism/3._State_Reports_and_UNMIK_Kosovo_Report/1._First_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

71

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.

72

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).

73

…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 automated-service 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). 411 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.

74

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). 422 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=P-993478&lvl1=home&lvl2=advice&refid=P-1056397&refpid=P-998828 (last visited February 21, 2006).

75

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 fee-only accounts, the fees are generated based on the amount of assets under management.439 In fee-based 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 fee-based 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. 438 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=P-993478&lvl1=home&lvl2=advice&refid=P-1056397&refpid=P-998828 (last visited February 21, 2006).

76

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. 447 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).

77

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. 457 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.

78

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. 466 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.

79

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 2-percent 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.

80

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).

81

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. 483 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.

82

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-the-line 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-the-line” 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 Id. 491 Id. at 207.

83

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 well-defined 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. 493 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.

84

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/nyse-rules/ (last visited on February 21, 2006). 507 See Black, supra note 18, at 36.

85

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. 509 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.

86

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.

87

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. 536 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.

88

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.

89

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 See supra note 87 and accompanying text. 542 See supra note 90 and accompanying text.

90

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.

91

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.

92

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.

93

CASE NOTES

C A N A D I A N S U P R E M E C O U R T G I V E S S T R O N G E N D O R S E M E N T T O F R E E D O M O F R E L I G I O N

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. Anne-Marie 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).

94

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 See [2002] Q.J. No. 1131. 549 See [2004] R.J.Q. 284.

95

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]. 551 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.

96

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. 558 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.

97

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. 566 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.

98

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. 573 Ibid. at para. 155. 574 Ibid. at para. 99. 575 Ibid.

99

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. 577 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.

100

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.

101

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.