FOR THE NON
GOVERNMENT SECTOR IN
James Duckworth
This has been prepared to enable a review of the laws of
To deal with this effectively, some background is necessary and a brief
explanation of the laws of
Recommendations are made as to the action that is felt necessary
although does not identify the body responsible for those.
The law is to date to
This Paper will consider the legal status of civil society organizations
(CSOs) within
Within
The other Non- Government bodies are the Falekaupule.
These are the local Government on each of the islands. They were created to try
and ensure that each
The Legal System of
The Constitution of
Legislation are those laws that have been
enacted by Parliament since independence in 1978. That legislation is extremely
limited, and on independence it was agreed that the laws of
English common law (together with those of other Commonwealth jurisdictions ) apply where necessary. Given that much of
the earlier legislative enactments are based on similar English provisions the
case law is both relevant and applicable(subject to
local conditions) . Case law created by the High Court that is Tuvaluan is
limited but is evolving albeit slowly as and when the High Court sits.
Customary law is also of application and is expressly provided for in
the Constitution (section 11(2) (b) and section 13). A society includes the
traditions and cultures of its peoples, and these need to preserved and
protected. It applies in land, crime especially in punishment, and family
matters. Of those, by far land is the most significant as land holding is based
on custom and tradition. Custom is similar to common law in so far that it
evolves and changes. It does not remain as it was and what is a custom to one
generation may not be the same to the next.
In the last decade, there are further obligations that have been created
under International treaties particularly since
Rights
of the Child ( 1995 )
Discrimination against
Women ( 1999)
These both challenge existing customs and traditions and suggest a
change from a community to an individual focus contrary to the traditional
basis on which society is based.
As yet, there has been no legislative change since becoming a party to these Conventions
but undoubtedly these will be necessary in the immediate future.
This does seem to contradict the policy adopted in the Falekaupule Act 1997. That seemed to be emphasising and
strengthening the community by transferring greater power to the communities
and islands. It therefore would seem that there is a lack of consistency how
and why legislation / treaty obligations are entered into needs to be analysed
and scrutinised closely .The impact that they have on custom needs to be
assessed.
To represent civil society the understanding of what is community (and
by implication, custom) has to be made. Civil society must include references
to how the society actually operates. This is, in practice, very different to
the ideas that exist within the more developed English based jurisdictions (although it does not mean that they
are to be preferred ).
Constitutional Rights and CSOs
Freedom of Association
The Constitution of
1)
Subject to the provisions of this part, and in
particular to-
a)
sub-section (3); and
b)
section 29 ( Protection of Tuvaluan values) ; and
c)
section 30 (Provisions relating to certain officials);
d)
section 31 ( Disciplined forces of
e)
section 32 ( Foreign Disciplined forces);
f)
section 33( Hostile disciplined forces);
g)
section 36 ( restriction on certain rights and
freedoms during public emergencies);
except with his consent no-one
shall be hindered in the exercise of his freedom of assembly and association.
2)
For the purposes of this section, freedom of assembly
and association includes:
a)
the right to assemble freely and to associate with
other persons; and
b)
the right to form or belong to political parties; and
c)
the right as
regulated by law to form or belong to trade unions or other associations for
the protection or advancement of ones interests.
3)
Nothing in or done under a law shall be considered to
be inconsistent with subsection(1) to the extent that the law makes provision-
a)
in the interests of
i)
defence;
or
ii) public safety; or
iii) public
order; or
iv) public
morality; or
v) public health;
b)
for the purpose of
protecting the rights or freedoms of other persons.
This constitutional provision therefore provides a right for individuals
to meet and associate which is guaranteed before the law. Although there is no
cases that have been considered by the courts of Tuvalu on this provision, it
would seem that this provides a right for civil society organizations to be
created albeit subject to any legislation that has been or is in existence
applied or otherwise.
It will be necessary therefore to consider what laws apply to this
constitutional provision and for these to be examined at length. This can best
be done by considering the nature and type of business activity within
Business: The Private Sector
Business, as in any English based legal system, is of three main types:
-
Sole trader;
-
Partnership;
-
Company.
Legislation forms the basis of what can be described as business law:
Partnership Act 1991
Companies
Act 1991
Companies( Winding up) Act 1992
Businesses have to be registered and are classified into the types
above. Companies are either private or public and although based on the
Companies Act 1985 (
Most new businesses are created as companies. All new businesses require
to be registered and have complex rules to be followed, and understood. Few
businesses following creation comply with the requirements detailed in the Act.
This is due partly because of ignorance, and lack of understanding. There is also an unwillingness of the Registrar of Companies to
take any action to secure compliance. Considerable training is required.
Despite this, local companies with a strong market presence tend to
perform reasonably well in the conditions that operate (although these tend to
be effective monopoly providers due to local conditions).
Similarly, the Partnership Act 1991 is based on the Partnership Act
1890 (
In all this legislation, the intention of these can be seen in the
Explanatory Memorandum. In the Companies Act, it states that the Act is based
and adapted to local circumstances. For this reason, some of the detail of the
1985 Act of
The Manual to the Companies Act states that it is designed for lawyers
to understand. The lack of any translation from English to Tuvaluan language or
there being sufficient local lawyers with the necessary understanding and know
how in this field has been (and is for the time being )
a major problem. Further, company documents need not be in Tuvaluan it is
only a requirement of partnership documents for those to be in dual language.
Considerable work needs to be done in this area.
There is also a notable exception to existing
Company law of major significance to CSOs. A Company being limited by guarantee seems to
be expressly excluded. There is
therefore no provision for a non-profit-making Company
with members each of whom will contribute an agreed sum. This would be
extremely useful for certain organizations and the lack of provision seems to
be an omission but not deliberate given the wording of subsequent legislation
(particularly the Income Tax Act 1992). This would be especially useful for
charitable organizations where the funds involved are large enough for
transparency and accountability to apply. For Tuvaluan purposes any
organization with a turnover in excess of A$ 30000 per
year would be large enough for those purposes.
Co-operative Societies
The exclusion of Companies limited by guarantee seems an oversight
because Co-operatives are provided for in Cap 64. It has been the policy of
successive Tuvaluan Governments to encourage the creation of co-operatives.
These have been considered the most prudent way of the people/ island
communities to form together to establish a business over which they have
collective responsibility.
Post independence this was thought to be the best way of creating
business rather than through individual enterprise.
Of these, the
As any economy grows, then competition and alternative suppliers become
necessary. The operation of a free market is of limited application given the
size of the island group but the laws of supply and demand remain. Since the
mid 1980s the TCS has faced strong competition from other retailers who have
created businesses where they have seen a sufficient opportunity to do so.
The other Co-operatives have proved less successful: the Coconut Traders
Co-operative and Solar Co-operative Society have both
suffered from poor management, lack of leadership, and excessive dependency on
Government for financial assistance. TSECS de-registered in 2001 after its
liabilities were found to exceed its assets (it was insolvent and had been for
some years). TSECS and TCTC required management committees on each island and
this in part has made management extremely difficult as this restricts the
powers that the General Manager has.
Statutory Corporations
These are designed to cover monopoly providers where
Telecommunications;
(
National Bank of
Development Bank
of
National Fishing Corporation(NAFICOT);
Tuvalu Electricity
Corporation (TEC);
Tuvalu Media Corporation
(TMC);
Vaiaku Lagi Hotel (VLH )
These are businesses established by Act of Parliament managed by a Board
where the Chairman is the Secretary of the relevant Ministry (or his nominee)
and the Members are appointed from Government and from private business. A
Corporation therefore follows the direction and policy of the Government
where its commercial interests are in conflict with those of the Government
then problems are often caused. This has enabled Government in particular to
accumulate considerable unpaid debts with Telecom and TEC which reflect its
role and position.
Policy is heavily influenced and determined by Government. The effect of
this is to create uncertainty, encourage poor management (
the Government will always be there to inject finance) and operates as a
restriction to their activities( a restriction on the ability to associate?).
Further, it does not help the long term development of the Corporations themselves.
TANGO ( the NGO sector)
All other organizations within
These are all organizations that have been created to represent a group
of people with a common interest within the community. These are within the
freedom of association provision of the Constitution. These may overlap with
Government ministries, and where this happens. co-operation
can be a problem which leads to unnecessary duplication of service provision (
although at times this may be of use dependant on the level of Government
control).
NGOs are based on the outer
Churches and the Law
Churches seem to be included as they are non- Government. However, they
do have a clear and separate legal identity and have to be registered in accordance
with the Religious Bodies Registration Ordinance Cap 28. That provides for
registration of all religious bodies and details certain requirements that must
be followed. It anticipates that all Churches will be created by Trust Deed
that follow specimen drafts for similar Churches
across the Pacific.
Changes in Trustees have to be notified and the only provision that
should be referred to is should membership fall below 50 members then the
Church should deregister. This does not take place in practice for there are
Churches where the membership is below the required number and they continue to
worship.
There is a question as to whether
or not the de-registration provision is enforceable. The Constitution
guarantees freedom of worship and prohibits discrimination on religious
grounds. For this reason the provision referred to is of questionable validity
and it is though that a challenge on those grounds would succeed ( the
legislation predates the Constitution and must be read subject to it-1949).
Once the Church is registered then it is to the Church itself to create
its own rules as to how the Church is to be organised and structured. This will
depend from Church to Church.
In most English based jurisdictions Churches have charitable status. The objects of the Church are for religious and
charitable purposes for the well being of the people and the alleviation of
poverty as part of its mission.
Again, this charitable position under Tuvaluan law is far from clear.
Charities as such do not seem to exist although under applied law (and subject
to it being declared to be applied by Parliament and/ or by the High Court )it
would seem that the Charities Act 1960 will apply so far as is practicable.
In
Churches do fall within the definition of the CSO and it is for this
reason that they belong and are full members of TANGO. They do represent a
considerable number of people with various interests but all are presumed to be
serving their respective Church.
Other NGOs
When a group of people wish to create an association, the usual practice
for all organizations that are not Churches is to create a written document a
Constitution which will create rules as to how the organization is to be
managed. Further, this will state the nature and purpose of the organization
and give its objectives ( see Appendix 2 for an
example ).
These Constitutions are long documents and the length and complexity of
these will vary depending on the organization itself. All NGOs operate through
members paying an annual fee and whom at a General
Meeting elect a Committee to carry out and set policy as well as appointing
salaried members of staff. The Co-ordinator is the principal staff member and
is accountable to the Committee. Yearly auditing of accounts provide
accountability to donors and fund providers.
Each organization pays a fee for membership of TANGO.
There is no legal basis for the creation of nor
the registration of a non- Governmental organization. For this reason, the
legal status is questionable. In law, these seem to be voluntary associations ( or unincorporated associations) using constitutions for
their rules irrespective of their size and needs. This may be acceptable where
the association has been newly formed. However, where an organization such as
the National Council for Women has been in existence for over 25 years and is
diverse in its needs expanding its activities well beyond what was originally
envisaged then a better structure has to be put in place.
Although contained in no written document, it would seem that there is
an unwritten rule that an NGO has to be registered with the Ministry in
Government under whose subject heading the NGO would fall. For example, the
Family Health Association (TUFHA) should be registered under the Ministry of
Education and Health. This is a once only registration it need not be renewed
nor is there any need for filing of accounts/ notification of changes to the
Executive
Further, the Government of Tuvalu has an Aid Co-ordinator through whom
all aid applications have to be submitted. Once approved, the monies even
though they belong to those who submitted the Project proposal have to be sent
and allocated through Government. This is a considerable restriction on the
right to associate and exerts some regulatory control. This is a reaction to
past problems that have been experienced but reflect on poor management and in
particular structures that are not understood nor
practicable for the day to day situation which applies on the ground.
For example in 1999 the former Treasurer of TUFHA was sentenced to 3
years imprisonment for embezzlement of funds. This is not an isolated problem-
the Red Cross has had similar problems and a President has run away to
Australia having taken over A$50000 in Project money.
It would seem that there is some support for registration of NGOs and that requirements similar to those for Companies can be
created. All this information can be made available and is open for the public
to consider and see. This would avoid abuse. However, this creates the same
problems as with Companies who is going to enforce and monitor this ? Further it does not deal with the question of status.
The problems outlined can best be illustrated by considering the
National Council for Women. Its structure is complicated each island has its
own representative to the Executive Council who must be residing on
Those activities are themselves broad and include advise
concerning the legal rights of women, creating micro-finance schemes to help
those setting up in business, making an selling handicrafts, and the provision
of a snack bar. This list is not extensive and many more projects are aimed at
improving the well being of the people themselves.
The TNFCW relies heavily on donor funding and grants from Government . The diversity of its work means that it is
important that its legal status becomes clearer. This status should reflect
what it actually does looking to the future rather than to the past.
This has led to problems. In funding applications, it is often a
requirement that a registration certificate of legal status is provided. This
cannot be done in
these cases as there is no power for such certificates to be
granted. This can only respond to legal process. A certificate cannot be issued
because a particular organization has a need for it. It has resulted in large
amounts of finance not being available which would have enhanced the work being
done.
Legal Status of Non Governmental Organizations- A Critical Approach to
the Existing Structure
Private Sector
The legal status of particular organizations is confirmed by statute.
Registration requirements and the process that needs to be followed is provided for. These need to be understood and followed.
If they are not, this is a weakness that exists within the framework (for
example, the Companies Act 1985). This is the weakness that exists within the
framework as it is.
Ten years have now passed since the enactment of that Act and the
Registrar of Companies has over 500 companies registered. However, it is
unlikely that any of those companies comply with the Act and most could
therefore be struck off.
Similarly, the Co-operatives Act has not been followed which has
resulted in de-registration and potential insolvency for the Co-operatives
involved. These all reflect the following problems:
-
lack of understanding ;
-
lack of translation of the relevant Act into Tuvaluan
from English language;
-
lack of capability or willingness to follow up and
secure compliance;
-
the suitability of
the legislation itself to Tuvaluan society as it is ( the assumption being that
what is appropiate for English jurisdictions is
necessary here without taking into account local circumstances). Further, the
procedures assume management skills and human resources that tend to be
lacking.
Further, there needs to be clarification of laws that are applied and those that are not. To
date, no true assessment has been made and given the limited capacity of the
legislature (there is no Parliamentary draftsman) this cannot be done without
help from overseas consultants. It would seem therefore that the High Court
will need to provide the confirmation required ( per Donne CJ in re: the Matter
of the Constitution of Tuvalu and the Laws of Tuvalu Act ) .
CSOs
There is no current piece of legislation in this field to confirm
existing practice. The most relevant piece of English legislation for this
purpose which may be applied is :
-
Charities Act 1960;
There is no Societies Act that may be found in other Commonwealth
jurisdictions.
With no specific legislation, one needs to see whether there is any
assistance from other legislation. The Income Tax Act 1992 is of some help.
This Act is the only Tax Act in existence and includes individuals, corporate
and private sector, and voluntary sector taxation. There is little or no
guidance through case law on this area to assist.
In the definitions section to that Act it defines the following terms
that are of some relevance:
-
approved community service organization;
-
business;
-
company;
-
exempt income ;
An approved community service organization is defined as:
Is any organization
(not being a benevolent, religious, educational, cultural, amateur sporting or
charitable organization) which the Minister is satisfied :
a)
is, and operates as, a non-profit enterprise serving
general community interests; and
b)
is not for the direct or indirect personal gain of
members,
and approves accordingly by
public notice;
Charitable is not defined nor is it defined in any other piece of
legislation. This definition therefore recognises that charitable organizations
exist ( being for benevolent, religious and educational purposes) and must
therefore refer to some other enactment ( although it is possible that the Act
was prepared by Consultants who used standard clauses and did not check what
the status was before the legislation was drafted this is a common problem
and is realised only when the Act has been in force for some time the Foreign
Direct Investment Act 1996 is another example of this).
Indeed, it is hard to see what NGOs can be caught by this exemption for
all seem to be covered by the wider definition above. It is understood that no
Public Notice has ever been issued by the Minister (s) involved. The only
involvement of the Minister arises on this initial registration.
In Schedule 1 of the same Act, it defines as exempt income:
PART 2: Business and Investment Receipts and benefits
2. The income of:
a)
any benevolent, religious, educational, charitable,
cultural or amateur sporting institution, or organization approved by the
Minister by regulation;
b)
any organization which is at the time an approved
community service organization;
c)
any trade union; and
d)
any local authority
Provided that:
e)
this exemption shall not extend to the income derived
by any such institution or organization from any business it conducts or from
any passive investments that it holds unless the annual taxable income so
derived is less than A$250 in the aggregate; and
f)
in the case of an
institution or organization referred to in sub-paragraphs a) and b) the
exemptions shall only operate so long as any conditions stipulated by the
Minister are so met.
So this Act makes further reference to benevolent, religious,
educational, and charitable organizations without consideration as to whether
or not these are in existence under the laws of
Assistance can also be derived from the Customs Act Cap 55. This
pre-dates the Income Tax Act being passed in 1964 but has been amended
subsequently by Legal Notices.
In this Act, exemptions can be given for specific goods should they be
used for particular purposes such as:
Cultural
and educational articles (Exemptions on Imports
Section 3(a) to Schedule1)
Approved
volunteer organizations;
Religious Goods;
Sports
Goods and equipment for clubs
Although community service organizations may be covered
, it is not clear and requires clarification. Currently, although given
a Government grant, CSOs may be liable to customs
duty on goods purchased through the grant that they have been given. Such a
position makes little or no sense.
In addition to the above, there is a discretion
of the Minister to grant exemptions on goods that are being brought in for such
purposes. This has to be reclaimed so follows payment of the duty itself. How
frequently this is used is questionable.
It would therefore seem that existing legislation does provide some
indirect recognition to organizations that are charitable (for religious,
educational, and benevolent purposes) and to approved community service
organizations. Yet the position is far from clear. How either of these types of
organizations is registered with the exception of religious bodies and Trade
Unions - seems unclear. Although CSOs are recognised,
how those can be distinguished from charities?
Further, the tax legislation that exists does not distinguish between
the organizations themselves save on the returns from investment income.
Neither does that legislation seem to give any tax breaks for donations to such
organizations, membership fees or any system of giving through covenanting.
Indeed it seems to penalise organizations for having any form of investment
income.
It is accepted that it is necessary to distinguish between the size of
organizations, their assets, and the work that they do. However, the effect of
these provisions is to hold back the work of the smaller organizations and
prevent them from effective long term planning.
The Way Forward Proposals for the Future
Action needs to be considered
once a review of all the existing legislation has taken place to draw together
the various references from the legislation in existence. A Plan for the future
is therefore suggested:
DATED this 21st
day of AUGUST 2002
JAMES
DUCKWORTH
PEOPLES LAWYER
FERENCES:
Case Law:
In the Matter of the
Constitution of
Legislation:
Constitution of
-
sections
Customs Act Cap 55
Co-operatives Act Cap 64
Trade Union Act Cap 86
Companies Act 1991
Partnership Act 1991
Income Tax Act 1992
Foreign Direct Investment Act 1996
Falekaupule Act 1997