LHC restores 2022 policy regulating foreign funding of NGOs and NPOs

LAHORE: The Lahore High Court on Monday overturned a previous ruling that had invalidated a federal policy introduced in 2022 to regulate foreign funding received by non-governmental organisations and non-profit organisations.

A two-member bench comprising Justice Chaudhry Muhammad Iqbal and Justice Syed Ahsan Raza Kazmi restored the Policy for Local NGOs/NPOs Receiving Foreign Contributions 2022, holding that the formulation of such a policy fell within the executive’s authority and was protected from undue judicial interference.

The matter came before the division bench through multiple intra-court appeals filed by the federation against a Sept 6, 2024 judgment. In that earlier ruling, a single bench had struck down the policy. Justice Asim Hafeez had observed that the constitutional framework did not permit the federal cabinet to exercise legislative powers unless such authority had been granted by the legislature. He had declared the policy unlawful, invalid and without legal effect.

During the proceedings, Advocate Saqib Jillani, appearing for the petitioners, argued that the 2022 policy, like a 2013 framework that had also been struck down by courts, did not have statutory backing. He further contended that it infringed constitutional protections, including the right to freedom of association and business.

The federal government, represented by Additional Attorney General Mirza Nasar Ahmad, challenged the single-bench decision and argued that the policy had been properly approved by the federal cabinet and issued under the Rules of Business, 1973.

Questions before the court

The division bench identified two main issues for determination: whether the federal government had the power to frame policies governing NGOs receiving foreign contributions, and whether constitutional courts could intervene in such policy decisions while exercising writ jurisdiction.

The bench decided both questions in favour of the federal government. It held that Articles 90 and 99 of the Constitution fully empower the federal government to conduct its affairs and formulate policy. The judges also said that the Rules of Business, 1973, framed under constitutional authority, provide a binding procedural structure for official decision-making.

The court noted that the 2022 policy had been approved by the federal cabinet and issued by the ministry of economic affairs, which it said was the competent authority to regulate foreign assistance.

According to the judgment, the policy is a comprehensive regulatory mechanism dealing with the receipt, use, monitoring and accountability of foreign contributions by NGOs.

Judicial restraint in policy matters

On the scope of judicial review, the bench reiterated that courts should show restraint in policy matters unless a policy violates fundamental rights, the Constitution, statutory law, or is made in bad faith.

“In the absence of such violations, policy-making remains the exclusive domain of the executive”, the bench observed.

The bench also held that the single judge had wrongly relied on Article 18 of the Constitution, which concerns freedom of trade and business. It ruled that the issue instead fell under Article 99, which governs the conduct of federal government business.