Sectoral Equity: UN Special Rapporteur Finds Disparities in Laws for Businesses, Associations

States often impose more burdensome regulations on associations than on businesses, according to a new reportby the UN’s Special Rapporteur on the Rights to Freedom of Peaceful Assembly and of Association (A/70/266). The report notes that states have an obligation under international law to both protect the rights to freedom of peaceful assembly and of association and to promote those rights. According to the Special Rapporteur, this includes a “duty to create the best possible enabling environment for the existence and operation of associations.”

Although businesses and associations have dissimilar profit motives, they share many similarities, including acting as: vehicles for the association of multiple people; employers and providers of goods and services; magnets for investment; and possible platforms for mobilizing people and influencing policies. In addition, both businesses and associations “are crucial to economic and political development, and both have potential to enhance the protection and promotion of human rights,” the report notes.

While many countries proactively endorse measures to help businesses succeed, associations face numerous obstacles, such as more burdensome registration hurdles; limited ability to access resources; and close monitoring of their operations by authorities. States also have much broader powers to dissolve associations than businesses. The report notes that associations should never be required to register. “Allowing unregistered associations is fundamental to a good enabling environment for civil society,” the report states, adding, “A democratic State has no inherent interest in regulating this type of private activity in and of itself.” Instead, registration should be voluntary process for associations that want additional benefits, such as becoming a legal entity and qualifying for tax benefits.

Although the Special Rapporteur does not necessarily advocate “identical” treatment across the board for businesses and associations, as there may be legitimate bases for different treatment in certain cases, the report notes, he does advocate “sectoral equity.” “Equity between sectors implies a fair, transparent and impartial approach in which the regulation of each sector is grounded in domestic and international law, standards and norms,” the report states.

Associations also face harsher regulation of their operations and activities. These difficulties include stricter limits on the scope, or location, of work; more restrictions on political contributions; more intrusive audit and reporting requirements; and targeted harassment or reprisals, the report explains. Auditing requirements, for example, should be similar for associations and businesses, the report argues.

The report emphasizes that the ability to “seek, secure and use resources—from domestic, foreign and international source —is essential to the existence and effective operations of any association, no matter how small.” Intrusive restrictions on resource acquisition violate the right to freedom of association. However, many states impose restrictions on associations in this regard while simultaneously promoting business investment activity.

While some restrictions are genuinely connected to national security interests, many fail to comply with international law and “seem designed to closely regulate sectors that may pose a political rather than a security threat,” according to the report.

“[T]here is little evidence that associations are more prone to be used for terrorist financing than other legal entities,” the report notes. However, compared to the business sector, associations’ “ability to seek, receive and utilize resources is often limited under the justification of countering terrorism.” The report calls out Pakistan and Kosovo in this regard, but fails to mention the effect of the United States’ counterterrorism laws and policies on associations.

The report concludes that “in most cases, States and other actors would better promote and protect the rights to freedom of peaceful assembly and of association if they elevated their treatment of associations to the same level as their treatment of businesses.” Sectoral equity is not a difficult concept to adopt, the report notes. “It is simply a matter of political will.”

Read the full report here.